BankUnited
BankUnited, headquartered in Miami Lakes, Florida, opened its Atlanta office in April. Since then, it's hired a team of bankers and support staff and booked "a fair amount of business," according to Singh.
"We don't disclose geographically where our numbers break out, but [Atlanta] is exactly on track with what we thought we would be able to achieve," Singh said. "I'm happy with the very early success we've had."
BankUnited opened a branch in Dallas in April. While the operation there is limited to deposit-gathering, the company is taking a hard look at lending opportunities. "We have been doing some work trying to understand the lending side in Texas, whether it's something we want to play [in] and when we want to do that," Singh said. "We've been out there to the market, we've met a lot of participants, and we will have a view, hopefully in the next three months or six months."
Singh added the $36.6 billion-asset BankUnited is also eyeing "some of the Eastern Seaboard, markets that we may already be servicing a little bit out of Florida or out of New York. … But like I said, we're deliberate in taking these steps. We just don't jump in. I want to make sure Atlanta is off to a very healthy start before we talk to you about something else."
BankUnited currently operates 60 branches in Florida, along with four in the metropolitan New York area.
Singh's expansion musings came as the company declared net earnings totaling $87.9 million for the quarter ending Sept. 30, in line with results from a year earlier but 34% higher than the $65.8 million quarterly profit it reported for the three months ending June 30.
Singh attributed the growth in earnings to net interest margin expansion, a trend that has pushed net income higher at a number of institutions, including Comerica, which
Bank United "beat our earnings-per-share estimate by 20 cents per share, or 21.7%, on better spread and a lower provision," Janney Montgomery Scott Research Director Christopher Marinac wrote Thursday in a research note.
Bank United's commercial real estate portfolio totaled $4.4 billion on Sept. 30, up 2% from the June 30 figure. The modest CRE bump ended a string of six consecutive quarterly declines.
"It's good to see the CRE [portfolio] rebound," Ben Gerlinger, who covers BankUnited for Hovde, said on the conference call. "Hopefully, the trend will continue."
"It's not a very big positive, but it is a positive quarter, and we were very happy about that," Singh said of the CRE results.
Overall, BankUnited reported $444 million of growth in its commercial-and-industrial and CRE portfolios, though that total was partially offset by a $194 million decline in mortgage warehouse lending.
Mortgage warehouse utilization rates are at "pretty historic lows" Chief Financial Officer Thomas Cornish said on the conference call, but he added BankUnited has no plans to pull back from the business.
"We like this business and remain committed to it," Cornish said. "There's been no deterioration in the client base, but you can't outrun the cycle."
BankUnited reported a 3% year-over-year decline in total deposits to $27.3 billion. The drop-off was most prominent in noninterest demand deposits, which fell 4% to $8.8 billion. BankUnited's results ran counter to those at other banks, which noted slower declines in noninterest deposits. Indeed, Comerica CFO James Herzog said Wednesday that the trend of sticky noninterest demand deposits could be long-lasting because many corporate borrowers want to keep cash on hand in more liquid accounts.
"That explains why they're maybe going to their interest-bearing accounts first," Herzog said.
However, BankUnited's noninterest demand deposits have been hurt by the company's substantial investment in the real estate title business, which has seen its business shrink markedly as rates have risen. Fewer home sales have led to a steep decline in deposits connected to the process.
As with mortgage warehouse, BankUnited plans to ride out the economic storm. It is even adding to its client real estate title client base, according to Cornish.
"Our new account business in the title industry is up 25% this year over last year," Cornish said.
BankUnited, like most other banks, continues to report few if any credit-quality concerns, with nonperforming loans totaling 0.64% of total loans on Sept. 30. Annualized net charge-offs totaled 0.16% of total loans, down from 0.29% at Dec. 31, 2021.
"We're not seeing any systemic credit issues," Singh said. "We're looking very hard."
