BankUnited Inc (NYSE:BKU) Q2 2020 Earnings Conference Call - Final Transcript

Jul 29, 2020 • 09:00 am ET


BankUnited Inc (NYSE:BKU) Q2 2020 Earnings Conference Call - Final Transcript


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Rajinder P. Singh

make it even harder to read where the economy is headed in the next 100 days and beyond. But overall, we are much more optimistic today, but I would still say we are cautiously optimistic than we were three months ago.

When all this started, we started having Board meetings. Early on, it was actually on a weekly basis to inform our Board, but then eventually every two weeks. And in one of the early Board meetings, a question was brought up, which I want to share with the shareholders, which was about how are we going to deal with this crisis and, over the course of the next year or so and what are the principles around which we will react to all this. And three principles already lay on the table, which we have used in doing everything that we're doing in the bank.

First is intellectual honesty with yourself, which is to say, don't try and be overly optimistic and say, oh, this is okay, it will all be fine. So be intellectually honest with yourself. Second, be transparent with all stakeholders. That includes, of course, shareholders, but also includes our regulators, rating agencies, even our customers, our employees. Be transparent, provide more information than usual and don't try and hide anything. Third, be proactive. Or put differently, don't try to kick the can down the road because eventually you're going to have a deal with the issues. So be proactive and deal with them early, get in front of the issues rather behind them. So we've used these three principles in all the decisions that we've made over the course of the last three months, I guess, four months now.

And with that, let me quickly turn into what the earnings were for the quarter. We reported $76.5 million of earnings this quarter, $0.80 per share. This compares to $0.81 per share last year this time. The annualized ROE and ROA was 11.6% and 90 basis points for ROA. We told you last time when we spoke to you that the PPNR would trend favorably. We told you that NIM will increase. The cost of funds will decline, will probably be the biggest decline in the history of the company. We told you operating expenses would trend downwards, and all of those things have happened. PPNR is up $37 million or 44% quarter-over-quarter. $10 million of that $37 million came from net interest income, $15 million came from noninterest income and $12 million came from expenses.

Leslie will get into the details of all that. But overall, across the board, all items went the right way. Unlike peers, mostly have reported declines in NIM. Our NIM actually improved from 2.35% to 2.39% as we had indicated three months ago, driven mostly because of cost of deposits. Our total cost of deposits declined 56 basis points from last quarter. So we went from 136 basis points down to 80 basis points. And on a spot basis, at