BankUnited Inc (BKU) 2003 Q3 法說會逐字稿

Good afternoon and welcome ladies and gentlemen to the BankUnited third quarter 2003 earnings conference call. At this time, I would like to inform you that this conference is being recorded and that all participants on a listen-only mode. At the request of the company, we will open the conference up for question and answer session after the presentation. This conference call they contain certain forward-looking statements. Which are based on management’s expectations regarding factors that may impact the company's earnings a future periods. Factors that could cause future results to vary materially from current management's expectations include but are not limited to general economic conditions, changing in interest rates, deposit flows, loan demands. Real estate values and competition, changing in accounting principles, policies or guidelines, changing in legislation or regulation and other economic competitive governmental regulatory and technological facts effecting the company's operations, pricing, products and services. At this time I would like to turn the call over to Alfred Camner, Chairman and Chief Executive Officer of BankUnited. Please go ahead, sir.

Thank you for joining us, the third quarter conference call for fiscal year 2003. Together with me on the call is our Chief Operating Officer, Ramiro Ortiz and Chief Financial Officer, Bert Lopez. We are proud to announce the results of another successful quarter which again yielded record net income. This marks our tenth consecutive quarter of record earnings. And with this strong quarter, we are very proud we have displayed a consistent track record in our overall execution. Net income was $9.6 million up 23% from this time last year. Basic earnings were 35 cents per share and diluted earnings were 33% -- 33 cents per share for the quarter. Versus 31 and 29 respect actively last year. On a net link quarter basis, net income for the 9 months ended, June 30, 2003 was $28 million, up 26% from the same period last year. Basic diluted earnings per share for the 9 months were $1.07 and 99 cents respectively as compared to 88 and 83 for the same period in the prior year.

In addition to (inaudible) earnings by 23% as compared to this time last year and growing assets to $7 billion. Several factors serve to further distinguish this quarter for BankUnited. We receive several indicators of wall street's acceptance of our management team and strategy. This is made evident by a successful public offering of more than $3 million share of the class A common stock accomplished during the quarter. We raised $72.8 million in this offer, our market capitalization increased to $594 million this quarter, up 22% from this time last year. This shows ability to increase the value of the company. We are particularly pleased with the success of our offering especially in light of the generally challenging equity market it in which it was accomplished. In June of this year, BankUnited was also added to the NASDAQ financial 100 index. Further highlighting our strength and stability and exposing BankUnited to a larger audience of investors. Overall the bank is making improvements in almost (inaudible) key indicators. Total loan production continues to be a strong point and we generated record level residential and consumer lending numbers. We also demonstrated our ability to significantly increase core deposits at the center of our consumer banking strategy. We anticipate building our momentum in the generation of loans and capitalizing on a very strong loan pipeline. Likewise, our micro-market strategy in full swing will service in the gathering and serving a number of new relationships as well as those we are pleased to currently have. Additionally, as Bert will highlight, we will are taking steps to positively impact our net interest market -- margin and anticipate improvements in this area, as these steps and other factors come together in our favor in the coming quarters. Now turn to call over to our CFO Bert Lopez to discuss our financial results for the quarter.

Thank you, Fred. As Fred indicated, it was another strong quarter for our company. Our lending activities were very strong again this quarter and this will play a significant role in our transformation of our overall portfolio. (inaudible) originations continued its positive trend, increasing 35% to reach $746 million compare to the same period last year. Two areas that made a significant impact on our numbers this quarter were residential loan origination and our branch originated specialty consumer mortgage production. Residential mortgage loan origination increased 52% from the third quarter of 2002 to reach $527 million for this quarter. Our branch originated specially consumer mortgage loans and our regular consumer loan production reached $174 million this quarter, up an impressive 131% from the same period in 2002. Both the numbers for this quarter are records to for the company. Our total loan portfolio stood at $4.1 billion at the end of the quarter. A noteworthy aspect of this portfolio growth is that the bank originated loan portfolio grew by $171 million or 5% on a linked quarter basis when compared to March. This again demonstrates our ability to grow our loan portfolio balances.

Core deposits are likewise moving steadily in the right direction and at June 30, 2003 core deposits had grown to reach $1.4 billion up 19% as compared to this time last year. And they now comprise 45% of total deposits up from 40% of total deposits at the close of third quarter 2002. In specific, we're very pleased with the jump in non-interest bearing deposits which reached $174 million at June 30th up 20% from the March quarter and total deposits now stand at $3.2 billion has compared to $3.0 billion at June 30th 2002 (inaudible) with overall strong deposit growth.

As Fred indicated earlier, we're working to effect improvements on margin which sustained some compression this quarter to 181 basis points as compared to 196 basis points in the previous quarter. Due particularly to competitive pressures that hampered our deposit re-pricing effort and as you know an industry wide high level of residential loan pre-payments. These factors notwithstanding, as Fred mentioned, we do feel cautiously optimistic that indication of change in economic trends and some specific steps were taken should ultimately have a positive effect on our net interest margin. We listed these steps briefly in the press release but let me highlight them. First and foremost, it was affecting our growth in core deposits our micro -- market strategy has taken hold as we originated and Ramiro will have a few more comments on that to follow. But our core deposits are given us our lower cost funding. And these of course are more loyal customers that give us some cross sale opportunity. As mentioned earlier, we had a strong increase in non-interest bearing deposits. These not only are obviously the lowest cost of funding, but also with the ability of cross selling, we can increase the opportunities through service charges to increase our non-increased income.

Another aspect of improving the margin is capitalizing our deposit re-pricing opportunities, due to the (inaudible) nature of deposit re-pricing, this leaves us with several opportunities to re-price our deposits as time continuing in the future quarters. Another aspect of expanding the portfolio of BankUnited originated loans. As we discussed early, this gives us a tremendous opportunity to increase our loan balances through cross sell measures. These loan haves a significantly lower prepay rate then purchase loans. Our loans – our self originated loans are running at CPRs in the mid 20’s where our purchase loans the LSBO loans are running at a CPR of 70 – or just over 70. Successful execution of the strategies should allow the company to overcome the pressure of prepayment on our margin in the long term. Talk a little bit about the LSBO's. But the even run offs of previously purchased loan service by others which are running at more than twice the rate of our self originated portfolio is continued to follow in the company policy of allowing these loans to continue to run off. Replacing them with loans originated by BankUnited. The negative effect of this portfolio will begin to decline when it's fully depleted in the coming quarters. However, until fully depleted, we expect that these payments will continue to adverse effect on our interest margin.

Another step we’re taking at targeting consumer and commercial loan growth in diversifying our portfolio. We're focused on developing these lending areas more – which are more profitable and will serve to diversify the bank loan portfolio. We’ve had very positive results when you consider the re-pricing of our time deposits and also increase in commercial and consumer relationship helps build our core deposit base. We presently have an asset sensitive deposit sheet and it should allow us to increase our – re-price ours assets faster than our liabilities in a rising interest rate environment. This quarter also took a few steps to reduce our high interest trust deferred debt. On the last day of the quarter we completely redeemed our BankUnited capital three, 9% cumulative trust deferred securities with an aggregate liquidation amount of $103 million. Due to the time of this redemption obviously, we'll see the benefits in the quarter ended September 30th and future quarters. In addition, at mid-quarter we retired $13.2 million of our BankUnited capital, 10.25% cumulative trust deferred securities through purchases on the open market. The full benefit of this retirement will not be fully realized until the September quarter and in future quarters.

When you take into account the redemption at the end of the quarter of the 9.0 % trust – I’m sorry of the 9.6% deferred, which total $46 million we’ve effectively reduced our outstanding debt by $162 million at a weighted average rate of 9.3% further reducing the pressure on interest margin. As we capitalize on our growth, growing loan generation capacity, develop additional non-credit products and diligently collect fees, we’re generating significant non-interest income which was $10 million for the quarter, up 134% from the same period last year. As noted with the record loan products we continue long standing practice of selling and securitizing loans of longer durations to minimize interest rate risk and during the quarter we sold $203 -- $230 million worth of loan and generated $2.3 million in income for the quarter. Also, we always attempt to take securities gains when appropriate. In this quarter we sold $203 million of mortgage back securities which yielded a gain of $4.3 million. On the expense side as indicated in our press release, we did experience increases as a result of the write-off of deferred issuance charges related to trust preferred redemption and the open market transaction. However, when looking at the core exclusives of charges which were $3.7 million for this quarter and $1.8 million dollars for the March quarter, we would have displayed a quarter to quarter reduction in non-interest expenses of 3%.

Our efficiency ratio was up this quarter reflecting high higher expense for the quarter as we’ve mentioned and would have shown a year-over-year decrease excluding those expenses we took to improve future periods. Our efficiency ratio for this most recent quarter is 55.72% as compared to 55.6 more the March quarter. Having covered our lending performance in our overall loan portfolio, I want to make take a moment to cover our focus on maintained high credit quality. This quarter, while we did successfully reduce certain non-performing assets, we did experience an increase in non-performing assets to 75 basis point from 64 basis point as a percent of total assets. This increase was due primary to the quarter end deterioration of one secured credit relationship. Our allowance for loan loss stands at a prudent 54 basis points up from 49 basis points last year and our charge operation continues to be low at 6 basis points, consistent at last quarter also at 6 basis points and an improvement from last June's number of 15 basis points. We expect going forward this number to remain in the 5 to 10 basis point range. I'll now turn the call over to Ramiro to further discuss some results and shed light on the progress we are making.

Thank you, Bert. During our last call, and during the road show, we introduced the micro-market initiatives for our retail bank. We are now in the third month of executions and the early returns are very, very encouraging. We're focusing on specific lifestyles and demographic sectors and servicing them with products and services that are unique to that particular market. This is a real market driven strategy and allows us to do the best of both worlds in term of servicing consumers. This strategy allows us to compete versus regional banks as though we were a community bank and allows us to commute – to compete versus community banks as though we were a regional bank . Best of both worlds. We continue to build momentum with this initiative and have started the process of introducing a similar strategy for our small business area. We talked during the road show of cross sell opportunities out of our mortgage originations. We’re now on the 4th week of that and the early results are very, very encouraging. We have a $200 million a month origination machinery that never touched the consumer banking division, now it does. The early results of that , in 4 weeks we sold 59 deposit account and 44 loan accounts very small numbers in terms of everything we’re talking about but it indicates that the strategy is sound and that the strategy is working.

Our branch network plays a vital role in all of this, we plan to open 4 additional branches by December 31st. Driving our growth and progress is a strong leadership theme and we continue to make important additions to this team. Specifically, we are pleased to bring in

Able Inglesias (ph). Able is a seasoned commercial lender, he’s know, he’s well respected in the South Florida community. In addition to that Able has brought on two experienced commercial lenders. I can tell you that we've already developed a strong and very solid pipeline in this short period of time. Additionally Clay Wilson was promoted from within and now he is heading up our commercial real estate division. Clay is a knowledgeable lender, has a deep understanding of the real estate market in South Florida. I can tell you because I know our competition fairly well that I would stack our real estate team against anybody in south Florida and feel proud of what we will do. Another significant addition to the management team was Felix Garcia. Felix is now running our risk management area. Felix is a former bank regulator, 15 years experience with the OCC and 15 years experience with the Republic National Bank and was really the credit administrator who was credited with a lot of their successes. These three executives add a lot to our management team. Remember, that our overall management team has strong local experience and the deep understanding of the financial needs of South Florida. Before I turn the call back to Fred, I want to underscore what I said in the past. There are tremendous opportunities in the front of us. In the past, we've been talking about our strategy and talking about what we are going to do. We are now executing our strategy and things are falling in to place very nicely. It’s a very exciting time at BankUnited and I would like to turn it back over to Fred.

Thank Ramiro. We are ready to accept calls moderator if you please proceed.

Thank you. At this time, we will now open the phone calls to investment banking professionals and analyst questions only to create the broadest possible questioning. BankUnited wants to answer all

stockholder questions. BankUnited has established a shareholder question line where individual shareholders can ask Alfred Camner, CEO, Ramiro Ortiz, COO, Bert Lopez, CFO, and Lauren Camner of Investor Relations any additional questions they may have. Shareholders are invited to call starting 10 minutes after this conference call ends. To 1-800-915-4836 up until 3.30 p.m. eastern time if you have any additional questions that have not yet been answered. The question and answer session will begin at this time. If you're using a speakerphone, please pick up the handset before pressing any numbers. Should you have a questions, press star one on your push button telephone. If you wish to withdraw, press star two. Your question will be taken in order it is received. Stand by for the first question . The first question comes from Jennifer Dunbar with Robinson Humphry. Please state your question.

Good afternoon. I was wondering if you would give us some more color behind the big jump in non-interest bearing deposits from the second quarter to the third quarter. And then secondly, I'm wondering how much of CDs you have re-pricing throughout the next couple of quarters

I'm going to turn that one over first on the non-interest bearing. Ramiro, if you can discuss how we’ve been working our campaign there. And Bert can get a little into detail of the second question.

The non-interest bearing deposits would have two answers. The first one is the early results of our micro-market strategy which is a very market-specific way of doing business . There are unique campaigns that are taking place as we are speaking unique to the different markets. And the early results have been very encouraging. The other piece of that is, as we're gearing up our commercial strategy in a fast and hard way, the deposits are the first part of the relationship that come over and I would tell you that we have benefited this proportionally from non-interest bearing deposits before we even gotten to analyze some credits, in many cases. I would tell you to answer your question specifically, our micro-market strategy and commercial strategy.

Let me add to that before we go over to Bert on the 2nd portion of your question and that is since Ramiro has come on board back in August, he has preached at every management meeting and at every gathering of branch managers, et cetera that we want non-interest bearing deposits. While we realize that in the short run they're not quite as valuable from the viewpoint that rates are at a lower level presently, we feel they are gong to be extraordinarily valuable as we go down down the road. Bert, if you could answer the question on the CDs.

Sure, Jennifer, to answer your questions on the CDs, we’ve got $1.2 billion of CDs coming can due in the next 12 months. That's about two thirds of our portfolio. Coming due at an average rate of 324. So obviously there's pretty strong re-pricing opportunities there. Just further clarification of 1.2 billion about two thirds of that, is coming due in the next 6 months. So there’s a reasons we feel we have some strong opportunities in re-pricing our deposits.

Okay. Thank you.

Yeah.

The next question comes from John Pandtle with Raymond James. Please state your question.

Good afternoon everyone I have a couple of questions, actually. Bert, could you comment on any plans to replace the trust preferred that was redeemed in the quarter, if any. And also could you break out your unrealized gain on securities, what the balance is at quarter end and maybe how the up tick in rates we had, maybe effecting that. And I know I said two questions but I'll add a third. That is the commercial loan growth improved on a linked quarter end year over year basis. Any color on that

Sure, John I’ll take the first piece. We did reduce our debt substantially this quarter and actually in the last two quarters. We now have about $160 million of trusts deferred outstanding. From time to time, we do take a look at our debt position and take a look at some other opportunities in terms of financing. So we will be taking a look at some of those opportunities in the not too distant future. But net result will be is we won’t – we will not have as much debt on the balance sheet has we had recently, so we’ll have an overall decrease. In terms of your second question which is the unrealized gains or losses in the portfolio. Right now for the end of the quarter, we have a total after-tax of about $18 million in unrealized securities. I'm remembering that we sold about -- securities that yielded about $4.3 million in gains. We've decreased our unrelated gain a little bit, but we stand right at $18 million after tax for the end of quarter. Then third question, related to --

Let me handle that. You asked about the commercial loan growth. Since I arrived on the scene, I've been talking about the shift that's going to take place in the commercial area. We're going to focus in the 5 to 50 range the early returns on that are very, very encouraging. I would tell you that now bolstering up the commercial loan team with Abel and the two lenders – experience lenders that we brought on board are very helpful. In addition to that, I want to tell you that we got a very strong commercial pipeline that we anticipate most of it can be closed during the next quarter.

Very good. Thank you

Let me go back to the second part of you second question. Which was the effect of the interest rates on portfolio. The vast majority of those gains – almost entirely are generated from MBS – unrealized gains are generated from the MBS securities. Those have a relatively short duration on them by design. We presently have the model at 1.8 years. Even with a rise in interest rates there's not much about extension. We would end up about two and a half years -- in terms of overall duration.

John Pandtle; How much of a rise in rates?

*: 100 basis points.

Okay. Thanks again

Ramiro Ortiz; You're welcome

When Ramiro is referring to $5 million to $50 million, we're talking about the sales in the business, not $50 million loans.

These are companies in with revenue and size of 5 to 50

We're ready for next question.

The next question comes from Arielle Whitman with Sandler O'Neill.

I have three questions. I'm wondering one if, Bert, you can comment and drove done own core earnings excluding the gain on sales, loan securities and then off set by the servicing impairment expenses associated with the offering and calling the trust preferred ? The second question has to deal with the non-performing assets that came on and what industry -- few more metrics (ph) about that. And third is sort of the servicing book in terms of what's a real run rate after we get to the amortization and impairment charges?

Let me take the first and the third but in between I’ll give it to Ramiro for the non-performing. At core earnings, we did have $3.7 million of deferred issuance charges that we took off related obviously to redemption during this quarter. Then we also had increase of amortization and mortgage servicing right of about 300,000 quarter over quarter and then that was offset by gains of $4.3 million in the securities area as we mentioned

One to one?

Pretty much, yes.

Okay.

The increase. We're talk about the MSR, we're first referring to the increase in the MSR which has already been running at the high rate. If you took at the rest of the MSR and reduce it to a more normal rate, there would have been a higher basic core earnings beyond what we just discussed.

Okay.

We would have to make estimate of the normal MSR and more typical period. We're running a high prepayment period. I think everybody knows we have our LSBOs . Those are loans serviced by others that we purchased as loans at early earlier period. That has declined again down paying off sharply over 70 CPR rates. This quarter we feel is pretty well coming towards the end of the impact of that. It may have a little bit after this quarter. But as that finishes off and you look at our where our EPR is on the rest of the portfolio, there are, you know, basics and concepts relating to the MSRs. There's possible. It may ultimately likewise slow down, down the road. It's probably more of the confused statement I made. But give you some concept as Burt mentioned we use that word cautiously optimistic. We are heading to a turn around and getting point for our margins to start improving.

This is Ramiro Ortiz . How are you?

Well, thanks

On the non-performers the quarter was a story of news of happy news at the beginning of the quarter. We talked about non-performer that we expected to pay off early in the quarter. That happened just as we had stated. Bad news late in the quarter where we had one particular credit secured by commercial real estate that went sideways on us. These are wholesale paper distributors.

Wholesale paper distributors? What was the sizable one?

It was a $13 million sale. $10 million of it is secured of by commercial real estate.

I mean are you expected -- the business the still intact?

We don't like to get in to the detail of the particular relationship. But this relationship is secured not only by real estate but pieces of the additional credit beyond the real estate is also secured by a government agency guarantee . So it is very difficult to get in to the details because you're always in the process of acting in terms of collection. But essentially I think from our viewpoint, we still feel intact that our goals of somewhere between 5 and 10 basis points in terms of charge offs are well intact.

Okay. Thank you. Bert, can you comment on a little bit on the servicing book in terms of what is the value of the servicing rates?

We presently have $987 million of loan service for others. We got them valued at right at 120 basis points. Most of that though season brands new. It's been originated between the last 8 to 10 months. We can carry a pretty good evaluation on those loans .

Okay. Thank you .

The next questions comes in Scott Valentin from Friedman, Billings, Ramsey Group Inc.

Good Afternoon,. Question with regard to the asset growth. Seems like to last two quarters, most of the asset growth has come from the securities portfolio. You mentioned you had near record originations. When do we start seeing the loan portfolio drive most of the growth rather than the securities

Scott, I think we tried to indicate in talking about portfolio that actually it's in, Bert may chime in on some actual number for you but actually it 's grown quite a bit over this last year. What has detracted from that relates to that category we refer to loan service by others or loans we purchased from others a number of years ago. We’ve allowed that to run off at an extraordinary high rate. In a sense that's disguise with otherwise very strong loan growth . I don't know many as growing rapidly as we are on loan side. Let me have Burt give you more on that side.

Let me clarify on the investment portfolio. Basically comprised of mortgage back securities. We show an increase of about $159 million quarter over quarter. But give you a little bit of color behind that. We actually increased the balances right at quarter end by about $247 million. The reason it shows on there is a wonderful thing in accounting called trade data accounts. Basically in the last week of the quarter, we saw an opportunity to purchase some securities and bought the $247 million. That's recorded in this quarter even though it doesn’t technically settle until July . Thereby showing an increase in portfolio of the 159 as I mentioned. But you take out the 247, this quarter's portfolio of mortgage back securities is 1,846,000 and that's actually down from last quarter of 1,967,000. We are starting to see the investment portfolio begin to run down. That's evidenced by the average balanced also.

I can't stress enough the kick that we're going to let as LSBO portfolio continues to run off which is now down to the $200 million dollar range?

It's $280 million.

$280 million from what was once $700 million. That's where you really see the loan production take over in terms of balances.

*: And, Scott, to emphasize that, when you look at the growth in the loan portfolio year-over-year, we increased $812 million on our loan portfolio or about 27% growth. You are seeing the growth in the loan portfolio materialize. Just this last quarter we grew $171 million or 5% on a linked quarter basis

Okay. One other question on non-performing assets. How long was that asset on the books? When was it originated? Was it recent origination or older?

It was originated about two years ago?

Somewhere I believe 2 and 3 years ago . I don't like to get in to details normally of these. They're in collection phase. You know, it's a fair fairly well-known company that had a number of the majors institutions in the area that have lent quite a bit of money to it. We are, I would say, in a sense of more secured position than others. We have the real estate as well as substantial portion of the rest of it is on a government agency guarantee. So we feel pretty comfortable about it.

And then getting back to the margin you mentioned the structural changes the in the balance sheet should help the margin along. Could you comment on what we’re seeing in the current rate environment, you’ve seen a rapid move in say 5 year treasury in which loans are priced off of? Could you talk about the benefits that will have on your margin? Or negative, if that’s the case.

We think they will have some very positive benefits. The sharpening of the yield curve as well as the fact that we really have position in our balance sheet. The benefited by is loan interest rates by interest rates in general going upward. So this is somewhat on the lines on our expectations for a while. And we have continued to build towards that. I don't know if you got some more to answer on that.

We seen a very steep yield curve in the last few weeks. That's helping us. We've been able to price up our loans slightly. We haven't seen a decrease in production volumes. I think that will bode well for us coming into this quarter

Thank you very much .

The next question comes from Jim Akil with RBC Markets. Please state your question.

I've got two questions. First, I was wondering if you guys might be able to refresh my memory with regard to some of your long-term borrowings that are hampering your funding cost or ability to ratchet down funding cost on total basis in term of size of long-term borrowing portfolio and price per cost you're paying and what, if anything, can be done to eliminate that problem? Also, I think there was one question with regard to the unrealized gains on the portfolio, the securities portfolio. And if I recall I heard $18 million. And I was wondering what, if any, impact this recent surge in long term interest rates had on unrealized gains if that's something that can be quantified? Thank you.

Burt will chime on in on some of the things. First of all, some of these are longer terms items we pretty well have paid it all off. With a very small amount have not. That piece we swapped out frankly. This is on the trust preferred side. And would all appeared as debt obligations of the holding company. You're talking about somewhere but $150 million that we've moved around in either in total pay off or where we haven't replaced it or we have replaced it to much lower rates. There is a piece of home loan bank advances which we continually look at and address and if given the right timing and pricing we might do something with, as rates move up and duration of obligations come up and openly shortly, there are a lot of questions of that and what the effect will be in the next several years. We have additional borrowing of $700 million that comes due, Bert, I think it's in member that is a note of something unique that we created where we had an obligation secured by learnings of credit of home loan bank. And that was a long-term note which is now going to be coming due in February. And with that will be re-priced down quite a bit. So I hope I can give you a pretty good idea of that. If you need more details, you know, you're welcome to try to get with Bert. And you can see -- try to direct you in the spot for additional information.

Okay. Thank you. Also on the unrealized gains?

I'm going to make a -- I don't know if Bert Lopez can give you a number. Basically the duration is so short that the movement in recent movement in rate doesn't have that significant effect on our pricing of those items. Because the short end as they essentially where it is. The longer the yield curve got sharper effectively. So it hasn't had that significant effect

Jim, just to put some numbers to that the duration of portfolio is 1.8 years. With 100 basis point rate shock it extends about half the year about 2.4 to 2.5. Relatively a short duration assets without a great deal of extension on it.

Thanks.

Next questions come from Jeff Hallison with KBW.

My question is on the transaction that you put on the end of the quarter. Can you talk a little bit about the $247 million and what the asset is there about what the corresponding liability is?

It's -- it wasn't specifically leveraged transaction. It's just continuing to rebuild our portfolio because of expecting during the quarter. What we saw was a bit of improvement in interest rates. We took some opportunity there. The type of securities pretty much the same thing as what's in the portfolio. Relatively short duration securities. three ones and five ones, mortgage backs.

If we’re going to model the securities book and the earnings assets, should we expect you to use some leverage in the next two or three quarters or should we expect kind of following up on -- that the loan growth should drive the balance sheet growth?

The loan growth will be driving the balance sheet . We have different projections internally of where we want to be in terms of securities. We're not looking for any significant increases in securities. But I think what Bert was trying to indicate is, just happened to be, a treasure felt essentially last day of the month that he saw an opportunity for some particular securities that he thought would fit well in the portfolio. And rather than I try to make everybody in life totally happy exactly in the analyst world, I rather him make sure we're doing the right thing. Doing the trade the very last day essentially by the new accounting methodology, it shows up as being a last quarter acquisition as opposed to what would have been this quarter acquisition.

Thanks a lot.

yes.

The next questions comes from Irwin Katz with Raymond James.

Hi, gentlemen as we start hearing people talk about the economy getting better and as we get better growth, are you seeing any pick up in the various type of customer base you have that maybe you're getting a little bit more aggressive and maybe doing things, business is picking up a little bit, willing to make some commitments that maybe in the last quarter or the quarters before they weren't willing to make?

Irwin, on the commercial side is where we typically see that. The pipeline of commercial opportunity is actually stronger than what I had anticipated . And is good chuck of that our new capital expenditures are companies that now want to expand.

And I guess I would presume that under new Micro-market strategies, you're probably taking business away from other banks.

On the commercial side particularly, we're being very successful. We understand the market a little bit better and can execute. We're benefiting from that.

Hopefully the spreads are a little bit better in these types of thing

: Our self market has generally done than the rest of the U.S. economy. And that's continued on. But I have been talking to various people in the community, some of who probably would be considered in a, you know, higher levels of business, et cetera. And they're talking about situations picking up. And they're starting to feel more comfortable of where the economy is going. I'm also even noting where I felt that home prices in the upper ends had pretty well reached a ceiling. We're starting to see a little bit of strength in that market as well where even that's starting to pick up again. And the sales of land relating to development, that's also we're starting to see pick up even more. It's been good housing all alone, but there are people coming in and talking to us about additional projects. So we think there's a lot of opportunity and since we're with some of the people Ramiro Ortiz mentioned and building our team in the commercial and commercial real estate area and will be doing some more in the building area, we see a lot of opportunity in as we're moving forward

And Irwin keep in mind that the folks that joined us are all seasoned experienced lenders who have portfolios, these are not rookies that we're recruiting .

The people that are coming in that are maybe looking at land or things where they might be able to develop stuff, are those primarily people that have been in the market already or have experienced, are or are you starting to see people from other part of the country coming in to capture that market

More of my connection would be people who have been in this market and are looking to build on it. There's no question there's a lot of continued movement of people in the south Florida. I mean the communities are growing quite a bit . There are certain areas -- somebody said recently that they had slowed down in terms of some of the communities in terms of their ranking at the highest end because the base of these communities is gone up. So their percentage of growth is not as high as it once was to rank in top 20 of the country. In absolute numbers, there's fairly dramatic growth in Broward County around other counties are doing well. Most information we get from other people in the state are reporting a pick up in business.

Thank you . And look forward to lucky number 11 quarter that we're in now.

Ramiro Ortiz; Thank you

Thank you .

Once again, ladies and gentlemen if you have a question please press star one on your telephone at this time -- touch-tone phone at this time. The next question comes from David Bringham with (inaudible) Associates.

Could you address -- could you address reinstating the common dividend? And are you considering any listing New York or American listing for the stock?

What we recently were added to the NASDAQ 100 which I think is financial-100 which I think has been good for us. And we've been pleased with our situation on NASDAQ. Doesn't mean we don't look at and don't get solicited from the New York exchange. But a lot of questions in the whole world of corporate governance and other in this things that are going on in the -- hard to keep up with all of that than to right now even consider about moving exchanges. In terms of dividend, we believe that we will be seriously looking at a dividend after this fiscal year end and if the economy continues to improvement then I have some belief that there will be a much more serious review of concept of paying a dividend .

BankUnited wants to answer all stockholder questions. BankUnited has established a question line which you can ask any of the officers any additional questions they may have. Shareholders are invited to call to this call starting 10 minutes after this conference call. To 1800 -if you have any additional questions that have not been answered . I will now turn the question now back to Alfred Camner to conclude.

We appreciate everyone being on this call. We had excellent quarter results. We're quite optimistic that the economy nationally is improving. We had a strong economy, we believe that that only could answer the strength in the south part of markets and to our opportunities to continue to expand in the areas that we focused on and we look forward to our next conference call with all of you. Thank you.

Ladies and gentlemen, if you wish to access the replay to this call dial, 1800- 428-6051 . With a ID number of 301081. This concludes conference for today. Thank you all for participating and have a nice day. All parties may now disconnect .