BankUnited - Q2 2023
July 25, 2023
Transcript
Operator (participant)
Day. Thank you for standing by. Welcome to the BankUnited Q2 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Susan Greenfield. Please go ahead.
Susan Greenfield (SVP of Investor Relations and Corporate Secretary)
Thank you, Latonya. Good morning, and thank you for joining us today on our Q2 2023 results conference call. On the call this morning are Raj Singh, our Chairman, President, and CEO, Leslie Lunak, our Chief Financial Officer, and Tom Cornish, our Chief Operating Officer. Before we start, I'd like to remind everyone that this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect the company's current views with respect to, among other things, future events and financial performance. Any forward-looking statements made during this call are based on the historical performance of the company and its subsidiaries, or on the company's current plans, estimates, and expectations.
The inclusion of this forward-looking information should not be regarded as a representation by the company that the future plans, estimates, or expectations contemplated by the company will be achieved.
Such forward-looking statements are subject to various risks and uncertainties and assumptions, including, without limitations, those relating to the company's operations, financial results, financial condition, business prospects, growth strategy, and liquidity, including as impacted by external circumstances outside the company's direct control, such as adverse event, events impacting the financial services industry. The company does not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments, or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors should not be construed as exhaustive.
information on these factors can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2022, and any subsequent quarterly report on Form 10-Q or current report on Form 8-K, which are available at the SEC's website, www.sec.gov. With that, I'd like to turn the call over to Raj.
Raj Singh (Chairman, President and CEO)
Thank you, Susan. Welcome, everyone. Thank you for joining us. 90 days ago, when we last spoke to you, I was just thinking of it this morning, the day before our last earnings release, Leslie and Tom and myself, we were huddled in a room and doing dry runs of what the earnings release would be like. I think we did two dry runs, which we've never done before, but we did those on that day. Every question that you could possibly ask, we wanted to be sure we were prepared with the answers. We have all kinds of data available to us at our fingertips so that we could answer all your questions at that time. Compare that to yesterday, Tom and I were at a golf outing for our top clients, where we had a great day.
We did leave Leslie back in the office, but that's mostly.
Susan Greenfield (SVP of Investor Relations and Corporate Secretary)
Yeah.
Raj Singh (Chairman, President and CEO)
Because she doesn't, she doesn't like golf. 90 days can make a big difference. We're happy we were able to entertain all our clients, and life has sort of gone back to normal. The day of earnings last quarter, actually, that day or maybe the next day, I called a senior leadership team meeting, and the top 10, 12 people in the company, we huddled together in a conference room for half a day, and we did something which we rarely do with the company, which is we actually had a short-term strategy session. We always talk about long-term strategy. That day we said: Listen, the environment that we're in, now, again, reminding you, this is late April.
We said, "Okay, we're still in a tense environment. The worst may have passed, but maybe it hasn't. What are the things that we could do in the short term, sort of very tactically, and short term defined as in the next quarter or two, that will improve the standing of the company?" It was a whiteboarding session, and we started writing things on a whiteboard, anything that came to anyone's mind, you know. You know, things like it was a very metrics-driven conversation. You know, let's improve our loan-to-deposit ratio. Let's improve our, you know, total deposits. Let's pay down FHLB borrowings. Let's start an expense management program. Let's improve liquidity coverage. Let's improve our uninsured deposit levels and so on and so forth.
We wrote down a whole bunch of things. Of course, somebody said, "Okay, let's make sure credit remains pristine." We put all of that on a whiteboard, and we stared at it for collectively for a period of time and said: Okay, some of these things are things that, you know, we should be doing all the time anyway, but what are the most actionable things that we can achieve in a matter of a couple of months or a couple of quarters? We made a laundry list, and that became sort of our short-term call it, you know, I don't even think it's really strategic. It really was tactical. We started executing on all of that.
Standing here exactly three months from that, and reporting our Q2 numbers, I'm very happy that we've actually hit pretty much all of those metrics that we laid out for ourselves. We improved liquidity. We improved capital. We grew deposits. We improved our loan deposit ratio. We ran down our mortgage book, our securities book. We paid down FHLB. I'll talk about margin. While margin came down this quarter, we stabilized that as well. We'll talk about that a little bit, in a little more detail in a few minutes. I'm pretty happy and, you know, where we are in a very short period of time. Last quarter, I had made a comment that, you know, the Q1 could be viewed really as two different sort of timelines.
It was everything from January first to March 10th, and then everything from March 11th to the end of March. This quarter, if I was to try and do the same, there wasn't that much of a clear demarcation, but I do feel the first half of the quarter felt very different from the second half of the quarter. Going into July, you know, that has continued, and things feel fairly back to normal. I'm happy about that. A quick comments about the environment, you know, things that we don't control, but we react to. First and foremost, the economy. The economy is very resilient. I'm kind of, like, tired of saying this over and over on every call, but that's how we see it.
We don't see the stresses that we're all afraid of showing up anywhere in any of our geographies. The economy is strong and resilient. Florida is twice as strong as the national average. If you look at Florida's GDP, unemployment rate, and so on, unfortunately, that also means inflation is much higher in Florida than the rest of the country. The economy is very resilient. On the rate environment, it does feel like the Fed is very much at... You know, I think they will raise rates. That's what the street is pricing in. Given where CPI and PPI data is, it does feel like we are very close to the inflection point on Fed policy. That's good.
The banking environment, generally speaking, while it has improved tremendously from, you know, the chaos of three months ago, it is still a challenging environment. Challenging for the reasons of the curve being inverted and the competition for deposits still being very intense, and still some concerns about the economy eventually slowing down or faltering. It's still, that is an expectation out in the future. It's not here and now. With that, let me quickly go over some of the numbers. Leslie will do and Tom will both do a deeper dive. I'll run through these quickly. Net income came at $58 million, $0.78 a share. I think that's right on top of consensus from what I checked a couple of days ago. Deposits grew by $116 million.
NIDDA went down, but only by $62 million, which is a big improvement over the big declines that we've seen in non-interest DDA over the course of last many quarters. You know, our, the ratio of non-interest DDA to total deposits came in at 28.3, you know, relatively stable to what it was in March. I think it was 28.6% at that time. Loans declined by $263 million, but the largest portion of that was residential, which, you know, we had gotten residential heavy, as you know, in the last couple of quarters, mostly after the pandemic. Taking that down was a very deliberate decision by us. Total loans declined by $263 million, but resi was $184 million off that.
Securities portfolio, also, we let that run down. That's also, larger than what we need it to be. It came down by $390 million. On the other side of the balance sheet, we did pay off you know, FHLB advances to the tune of $1.6 billion. Margin was 2.47 for the quarter. That's a decline from 2.62 last quarter, but I want to make a finer point here. Last quarter, when we looked at our margin, our margin was declining from January to February, from February to March. It was coming down, we ended up overall for the quarter at 2.62. This quarter, we entered this quarter at 2.47, we ended this quarter at 2.47.
There, you know, relative to last quarter, where this was, you know, coming down hard and fast, this quarter, while it was lower, it felt a lot better because it was stable. I'm happy about that. Cost of deposits increased to 2.46%. That was compared to 2.05% last quarter. The increase this quarter was 41 basis points. Last quarter was more, it was 63 basis points. Slight improvement on at least the velocity with which deposits are repricing. On the credit front, quickly, there isn't really much to talk about because everything is fairly stable. NPAs were 34 basis points. If you exclude the SBA guaranteed loans, then they were 24 basis points. That's 2 basis points higher than last quarter.
Charge-offs were 9 basis points, very much in line with last quarter. In fact, compared to last year, I think last year we were averaging 22 basis points, so much better than last year. On the credit side, there isn't much of a story. Obviously, everyone is focused on office CRE. You know, our total CRE levels are fairly low compared to our peers, and I'm defining peers as sort of banks between 10 and 100 billion. Yeah, what we did last quarter also, we gave you a lot of information on our office portfolio. This quarter, we've given you even more information. We are spending a lot of time looking every which way possible on this in this book to see if there's any trouble.
This is not something that is causing us any kind of heartburn. This is a very good portfolio where, you know, a large part of the exposure is Florida, and whatever exposure we have in New York City is pristine. I mean, it is really hard to poke holes in this portfolio. As of right now, this is not what we're losing sleep on. Lastly, just to comment about capital. I said at the beginning of the call, we also improved our capital position, not because we needed to, but in a time like this, and volatile time like this, you know, more capital is always better. Our SEC 1 improved, our tangible common equity ratio improved by 30 basis points.
Overall, you know, a tangible book value increase and so on. Overall, I, you know, our collective blood pressures is down a lot in the last three months, and that's a good thing. I would say that we're basically back to doing, you know, and executing on the long-term plan that we'd already set out for ourselves. I hope it stays like this, and we can come back to you in 90 days and talk more about the progress we've made on that front. I will turn it over quickly to Tom, who will go a little more detailed into the numbers.
Tom Cornish (COO)
Great. Thank you, Raj. First on deposits again. In aggregate, deposits were up $116 million for the quarter. NIDDA, as Raj mentioned, was down $62 million. Non-maturity, interest-bearing deposits were down $92 million, while time deposits were up for the quarter by $270 million. I think the biggest kind of impact on deposits in the quarter was we have a large government municipal portfolio. It's a seasonal portfolio that was, you know, part of the $378 million decline in that book for the quarter, which we expected, and that will kind of come and go up and go down as tax collections happen and whatnot.
In terms of new business, we have a very solid line of sight into new business coming through our treasury management operations platform and our systems. We track it in various stages and have about $1.6 billion in deposits that are operating type deposits running through our treasury products that we expect to realize over the next couple of quarters. There's always some timing difference, especially in bilateral relationships and middle market relationships with onboarding. Overall, the deposit book, from a pipeline perspective, looks very, very strong. As discussed on slide eight of the deck, our largest deposit vertical is in the title solutions business, with total deposits of $2.7 billion as of June 30th. This is predominantly in operating accounts.
It's over 700 accounts and grows by 30-40 accounts per quarter, and we feel very good about that. There are no other industry verticals with deposits over $1 billion as of June 30th. Loan-to-deposit ratio ended the quarter at 95%, compared to 97% on March 31st, and we would like to continue to improve that and bring it down into the low 90s over time. A little more detail on the loan portfolio. As Raj said, the overall portfolio was down $263 million for the quarter. We, we kind of have, and I'll talk about this as we go through these numbers, sort of what we view as the core portfolio, which I would call kind of corporate banking, commercial banking, small business banking, and CRE.
Then we have some other national businesses that have more volatility, and some of those are trending down. As Raj mentioned, the residential portfolio and BFG, you know, has been trending down for a period of time. I'll break some of my comments into where we expect core growth versus other areas that, you know, we will likely see edge down, you know, over time. The CRE portfolio was up $24 million for the quarter. C&I was down $73 million. Pinnacle up $32 million. Franchise finance and equipment finance continued to go downward, and we expect that to continue to happen over the next couple of quarters. Pinnacle will likely be fairly flattish to down, just seasonally and again, in their sector over the next couple of quarters.
Pipelines in the core areas remain, you know, very, very strong over the next Q2. Average rate on new production for the quarter was about 8% for the C&I portfolio and about 7.6% for the CRE. Most of the things that we're seeing in the pipeline in both segments are, you know, north of SOFR plus 300. I would say we're seeing many things in the 325-350 range. Overall demand is good, pricing is good and attractive across most of the market segments that we're in and most of the geographies that we're in. Consistent with our strategy of de-emphasizing non-relationship credit business, we have strategically exited about $75 million of shared national credits-
$175 of shared national credits last quarter. We will continue to look at doing that kind of opportunistically over the next couple of quarters as we try to shift some business that we did during the during the pandemic period of time when we had, you know, some more shared national credit exposure and now shifting it into more relationship and deposit oriented business. I'll take a few minutes to speak about the CRE portfolio. As Raj said, I know there's a lot of interest in this. Slides 12 through 15 of your deck give some additional disclosure on this. Overall, the CRE portfolio is very high quality. As Raj said, it's about 23% of the overall loan book, which we feel very comfortable at that level.
It's well-positioned, high quality, low LTVs, attractive debt service coverage ratios. 60% is in Florida. As Raj said, the demographics continue to be extremely strong in Florida. I just finished up this month, kind of a tour of different offices and different markets, and I can tell you, Florida ranges from very good to sizzling. I don't mean the temperature, depending upon, you know. It, that's sizzling, too, actually. Whether you're in, you know, Orlando, the suburban markets in Orlando, the Tampa market is extremely strong. Miami, you read about every day in every publication, in terms of what's going on in that market, in terms of new to market and net absorption. You know, we see tremendous new to market movement into Fort Lauderdale, in Palm Beach.
You know, unemployment rates in most of the Florida markets are in the mid 2 range. You know, you're seeing dramatically better economic metrics in Florida, really than, you know, than anywhere else. At June 30th, the weighted average LTV of the portfolio was 57%, and the weighted average DSCR was 1.88. About 16% of the CRE portfolio matures in the next 12 months. About 7% both matures in the next 12 months and is fixed rate, which includes swap loans, which are fixed to the borrower. At everybody's favorite topic, office. As Raj said, we feel really good about our office portfolio. We look at every loan, every quarter.
We have a, you know, very high level of analytics running through the entire, you know, portfolio, which is just less than $1.9 billion, about $1.85 billion. The weighted average LTV of the office portfolio was 66%. Weighted average DSCR was 1.6 at June 30th. There's additional breakdowns in your, in your, supplemental deck on 12. Substantially, all the office portfolio was performing. In the entire portfolio, we had $313,000 in non-performing loans, and 95% was pass rated as of June 30th. 59% of the office portfolio is in Florida, where the demand, the demographics, as I mentioned, continues to be very favorable, and there's breakdowns on the Florida and New York Tri-State portfolios in the package. Substantially, all the Florida exposure is classified as suburban.
It's well diversified across all of the major markets that we're in Florida. With respect to the New York portfolio, we have $181 million or so in loans in New York City and Manhattan, specifically, where obviously that's a center point of attention. They're kind of spread all over the borough of Manhattan. They're all well-performing properties, and as I mentioned in the last call, they're all to long-term sponsors, not fund-related business, and they're all to sponsors that have generally owned these properties, you know, for generations and have very low basis. The properties, our portfolio in Manhattan is 94% occupancy rates and has a 5%, 12-month lease rollover. We feel about as good about a portfolio as we could possibly feel about the overall, you know, office portfolio.
As I said, we've, you know, stepped up our level of analytics substantially in the book, you know, over the last couple of quarters. I can almost say we are intimately familiar with every single loan in the portfolio. With that, I'll turn it over to Leslie.
Leslie Lunak (CFO)
Thanks, Tom. I'll get into a little bit more detail about some of the numbers. As Raj said, the NIM for the quarter was 2.47%, compared to 2.62% last quarter, so down 15 basis points. I'll reiterate what Raj said, that the NIM has been stable this quarter, month-to-month. You know, April was the same as May, is the same as June, so we're very happy to see that stability. The decline in NIM is mainly due to the mix shift on average in funding. We saw average deposits down $794 million and average FHLB advances up $680 million. That just all reflects the impact of the events of March. You saw all of that stabilize considerably, and deposits come up and FHLB come down by quarter end.
The cash levels we held were up on average by about $300 million for the quarter, and all of that taken together, we estimate, accounted for about 9 basis points of that decline in NIM. Again, we saw some improvement and stability towards the end of the quarter. Cost of deposits was up 41 basis points, from 2.05 to 2.46, and the rate of increase in deposit costs slowed this quarter. Cost of total deposits was up 41 basis points this quarter, compared to an increase of 63 basis points last quarter, so we were happy to see that. The average cost of FHLB advances increased from 4.27 to 4.59, again, reflective of the additional wholesale funding we had to put on the balance sheet in March.
Looking forward, I would say, you know, we saw stability in the NIM during the quarter. Our best estimate is we will continue to see that stability. Obviously, you know, we're making assumptions there about deposits and depositor behavior, that in this environment, are very difficult to pin down. Our best estimate is that we'll see stability in the near term in the NIM. A few comments on liquidity. About 66% of our deposits are insured or collateralized at June 30th, up from 62% at the last quarter end. Same day, available liquidity at June 30th was $14.7 billion, up from $9.4 billion at March 31st. The ratio of available liquidity to uninsured deposits was up to 167% at June 30th, from 95% at March 31st. All positive trends there.
The provision for credit losses this quarter was $15.5 million. The ratio of ACL to loans increased from 64 to 68 basis points. This quarter's provision just, you know, really was impacted by the Moody's baseline economic forecast being a little less favorable than it was in the prior quarter, and we also placed a little bit greater weight on the downside scenario in our modeling, just to recognize that there is still some risk of, you know, a recession coming. We'd had some shift from the qualitative to the quantitative portion of the reserve this quarter. You'll see that in our slide deck, as we are now capturing in the modeling, with the weighting of that downside scenario, some of the economic uncertainty we had previously been capturing qualitatively.
Reserve on CRE Office was up to 83 basis points at June 30th from 56 basis points at March 31st. We did add something qualitative to that reserve this quarter, just in view of the uncertainty that's out there. I echo what both Tom Cornish and Raj Singh have said, that we really feel very good about the quality and potential loss content, if any, in that office portfolio. We've also added some stress testing results to our slide deck this quarter based on the CCAR severely adverse scenario. I thought that that would be interesting to you guys. In the CCAR severely adverse scenario, lifetime expected losses on the loan portfolio in the aggregate were projected at 2.2%. That's 3.3% for CRE, and 4.7% or a total of $90 million for CRE Office.
That, again, I remind you, is in the CCAR severely adverse. In the Moody's S4 recessionary scenario, projected losses for office were only 1.7% or $45 million. That's a portfolio that's projected to perform extraordinarily well, even under a period of hypothetical severe stress. Fluctuation in non-interest income compared to the prior quarter, the biggest driver there was $13.3 million in the prior quarter of losses that we took on some preferred equity investments that did not recur in the current quarter. On the non-interest expense category, we saw compensation and benefits down, primarily due to normal seasonal fluctuations in payroll taxes and benefits. We also saw last quarter, we recognized $4.4 million in operational losses that didn't recur as well.
We think probably, you know, in the terms of guidance about expenses, we think the second half will probably be flat to the first half in terms of total non-interest expense. With that, I will turn it over to Raj for any closing comments that he wants to make.
Raj Singh (Chairman, President and CEO)
Oh, I think we should go straight to Q&A.
Operator (participant)
Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from Brady Gailey of KBW. Your line is open.
Brady Gailey (Equity Research Analyst)
Hey, thanks. Good morning, guys.
Tom Cornish (COO)
Morning.
Brady Gailey (Equity Research Analyst)
I just wanted to start with the margin. You know, I heard your guidance about how near term you expect the margin to be stable. I would think with the balance sheet of BankUnited, once the Fed hits the terminal rate, deposit costs are steady, you'll still have some loan repricings going higher. That, is there a scenario that maybe in the medium term, you could see NIM expansion?
Leslie Lunak (CFO)
Yeah. Brady, there's a scenario, even in the near term, where we could see NIM expansion. You know, it all depends on stability of the deposit base. You know, the stable NIM guidance that I gave is predicated on a slight decline in NIDDA and a flat deposit scenario. If we are more successful than we think we'll be, or if we're more successful than that, or as successful as we think we can be in growing deposits and keeping NIDDA stable, there is some potential upside. You know, that's all dependent on what we're able to do on the funding side, Brady.
Brady Gailey (Equity Research Analyst)
Okay. Then loan growth, you know, has been pretty flat in the first half of the year. Is that what we should think about for loan growth for the back half of the year as well, just not much of it?
Tom Cornish (COO)
I would from the core growth perspective, we expect to see growth in the C&I book. You know, we expect to see growth in the CRE book. Some of that will be shifted out of resi, and, you know, BFG. We expect Pinnacle to be fairly flat. It'll be kind of the core part of the book that is a better yielding part, I think will be growing for the second half of the year, grew slightly in the first half of the year. I think we'll see accelerated growth in the second half of the year, but that will be offset by exiting other, you know, loan assets that are lower-yielding assets. We expect to see, obviously, a yield pickup in doing that.
Leslie Lunak (CFO)
Yep.
Brady Gailey (Equity Research Analyst)
All right. Finally for me, just on the share buyback. You know, it doesn't look like you guys repurchased any stock in the Q2. I know historically, you had been a big stock repurchaser, maybe just updated thoughts on the buyback headed to the back half of this year?
Tom Cornish (COO)
We stopped our buyback, back in March. I think we may have a little bit left in the authorization. We're not buying back stock. We will discuss with our board, as we do.
in the ordinary course. I think the board meeting is in a month or so. You know, we've gone through some pretty volatile times, so I think it was the right decision to halt. At some point in the future, the board will decide to reengage, but not right now.
Brady Gailey (Equity Research Analyst)
Okay. All right, great. Thanks, guys.
Operator (participant)
One moment for our next question. Our next question will come from Jared Shaw of Wells Fargo. Jared, your line is open.
Leslie Lunak (CFO)
Morning, Jared.
Timor Braziller (Equity Research Analyst)
Hi, good morning. This is Timor Braziller, filling in for Jared.
Leslie Lunak (CFO)
Okay.
Timor Braziller (Equity Research Analyst)
Do you hear me?
Leslie Lunak (CFO)
Yes.
Tom Cornish (COO)
Yes, yes. Go ahead.
Timor Braziller (Equity Research Analyst)
Hi. Sorry about that. Maybe just starting on the credit, the increase in special mentions. I know you talked about your comfort in the commercial real estate book, maybe just talking about the C&I portfolio and more generally, what are some areas that you could end up seeing more stress if it's not coming out of the CRE book?
Leslie Lunak (CFO)
I would say, first of all, that the increase in special mention was. There's no correlated risk there. We've done, obviously, a deep dive. We know what each of those credits are, and there's no correlated risk or anything systemic in a particular sector of the book there. We aren't concerned about loss content in those particular credits at this point in time. We've put them in special mention for some additional monitoring because they're under a little bit of stress, but we aren't concerned about loss content in those particular credits at this time. We saw the substandard category actually come down this quarter. We feel like credit's holding up pretty well, and we're not seeing anything of systemic concern.
Raj Singh (Chairman, President and CEO)
Yeah, the larger loans that we downgraded at the end of the quarter, it's already paid off.
Tom Cornish (COO)
Yeah.
Leslie Lunak (CFO)
Yeah, that's in the earnings release. Yeah.
Raj Singh (Chairman, President and CEO)
You know.
Leslie Lunak (CFO)
So.
Raj Singh (Chairman, President and CEO)
That was a $22 million exposure. Not exposure, outstanding.
Tom Cornish (COO)
Yeah, UPV. It's a $50 million exposure.
Raj Singh (Chairman, President and CEO)
Yeah, sometimes the timing doesn't work right. You know, we should have paid off in the last week of June, but it waited till, I think, the 12th or 13th of July when it paid off, so.
Tom Cornish (COO)
Yeah, we actually had a couple of payoffs after quarter end. I would echo what Leslie said. I mean, there's a couple of, you know, idiosyncratic moves this quarter. We expect to see those come back, but there's no underlying... You know, each was from a different industry sector. There was no two in any one industry sector, and our C&I book tends to be, you know, extremely wide and well diversified across, you know, 100 different industry segments. And as I mentioned, and Raj said, we saw two of those pay off after the end of the quarter. And there's no particular sector we're really, you know, concerned about. The health of the consumer looks good.
Leslie Lunak (CFO)
None of it was commercial real estate.
Tom Cornish (COO)
Right. None of it was commercial real estate.
Timor Braziller (Equity Research Analyst)
Okay, maybe just parlaying that commentary into the allowance. I mean, you guys have been pretty efficient in how you run the bank from an allowance standpoint. I appreciate the waterfall on kind of the quarter-to-quarter changes. As we look out going forward, the overlays that were applied in the Q2, you know, what would need to happen in the back end of the year to continue seeing, reserve build? Is that kind of implied in your modeling as we get closer to whatever the recessionary period might look like?
Leslie Lunak (CFO)
Again, the thing that would lead to reserve build is if the, broadly, the view of the future of the economy deteriorates. I personally don't expect that to happen, but I could personally be wrong. That would be the thing that would really lead to reserve build, is if we saw deterioration in not only actual economic conditions, but forecasted economic conditions. I think that would be the thing that would lead to significant reserve build. You'll also see some reserve build just happen naturally as the composition of the portfolio shifts from residential to commercial, because the commercial portion of the portfolio carry higher reserves than the resi portfolio. Some of that will happen as well.
Timor Braziller (Equity Research Analyst)
Okay, that's good color. Then switching gears, just looking at the DDA stability, that was encouraging to see in the Q2. I know you talked about some of the municipal balances that are a bit seasonal in nature, how should we be thinking about DDA balances going forward? Is there actually an outlook where you can see DDA-?
Leslie Lunak (CFO)
Can you tell us?
Raj Singh (Chairman, President and CEO)
No, let me try to answer that.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
In the relative state stability you saw in DDA, I wanna, you know. That's the net number. The gross number is different. The reason is that movement of money out of DDA into money market, or in our case, very often it's that money getting used for whatever it gets used for, right? Somebody buys a building, somebody buys another company, somebody expands a warehouse.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
That's what happens. It's not that people, you know, there's certainly movement into interest bearing as well, but a lot of that movement is something, you know, the whole industry's been suffering from now for a better part of a year. That is still happening, right? It's not like suddenly the 28% DDA we have, all these people decided to just stay. The reason the number was stable is because whatever left to go into other places got replaced with new business that we are doing. The pipeline that we talked about at the last. That is a pretty big deal given the environment that we were in, especially in the first half of the quarter, to actually keep executing on the sales strategy of bringing in new business.
You know, Tom mentioned the title business. I'll just talk about that. We brought in 35 new relationships this quarter. We brought in 35 new relationships last quarter. I may be off by 1 or 2, but roughly that. That was the velocity of new business in the Q4 last year and in the quarter before that. The fact that we haven't missed a beat, despite the distraction in March and April, that is actually the real story here. Without that, I don't think we would have been able to hold it, hold the DDA steady. It really is trying to fill the bucket faster than the natural attrition that is happening.
That natural attrition will eventually slow down. It is still happening. We really just have to run harder and faster on the treadmill to stay ahead of it.
Operator (participant)
Great. Thanks for the color. One moment for our next question. Our next question will come from David Rochester of Compass P. Your line is open.
David Rochester (Equity Research Analyst)
Hey, good morning, guys. How you doing?
Raj Singh (Chairman, President and CEO)
Morning.
Leslie Lunak (CFO)
Good morning, Dave.
David Rochester (Equity Research Analyst)
On the margin front, with the stability you guys are looking for, was just wondering what that means for NII going forward, if you're looking for stable levels there? On the deposit pipeline, you mentioned the $1.6 billion. Was just wondering what portion of that was non-interest-bearing?
Raj Singh (Chairman, President and CEO)
You want to take the first part?
Leslie Lunak (CFO)
Yeah. So I would say on the NII outlook, again, Dave, it depends on the success that we have growing deposits, because we are, in the short term, focused on reducing the wholesale funding level. You saw some of that this quarter. Earning asset or loan growth will come from deposit growth. I think if we are able to achieve net deposit growth, that will generate net loan growth, which will then you know, lead to NII growth. I'm not trying to be evasive, I just think deposit growth and depositor behavior is very hard to predict right now. We think we can succeed in growing deposits. That's what that depends on. The $1.6 billion, Tom, you want to comment on that?
Raj Singh (Chairman, President and CEO)
Yeah, I would say when you look at that, Dave, that since that is what's coming through the pipeline in our treasury management team, that's largely operating the NIDDA accounts.
David Rochester (Equity Research Analyst)
Great. Okay. On the expense front, you guys had mentioned an expense management program when you were talking about that whiteboard at the beginning of the call. Was just wondering what you guys are thinking about on that front and what the chances are you could actually see lower expenses in the back half of the year versus the first half?
Raj Singh (Chairman, President and CEO)
I would say flat expenses is the guidance we give you. From here on, over the next couple of quarters, you shouldn't expect expense growth. That, again, in an inflationary environment, that doesn't happen by itself. It happens because of all the things that we've been working on for the last two months that are being put into motion as we speak.
Leslie Lunak (CFO)
I will say we are still investing in certain parts of the business.
Raj Singh (Chairman, President and CEO)
Yeah.
Leslie Lunak (CFO)
You know, we're still hiring producers and investing in growth opportunities.
Raj Singh (Chairman, President and CEO)
Yeah
Leslie Lunak (CFO)
... you know, we have not gotten to the point yet where we want to do draconian things and cut things off that we're going to have to turn around a year from now and figure out a way to rebuild.
Raj Singh (Chairman, President and CEO)
Yeah.
David Rochester (Equity Research Analyst)
All right. Great. Thanks, guys.
Operator (participant)
One moment for our next question. Our next question will come from Steven Alexopoulos of JP Morgan. Your line is open.
Steven Alexopoulos (Equity Research Analyst)
Hey, good morning, everyone.
Raj Singh (Chairman, President and CEO)
Good morning.
Leslie Lunak (CFO)
Good morning, Steve.
Steven Alexopoulos (Equity Research Analyst)
I want to start on the loan side. The pace of residential loan runoff was a bit elevated in the quarter. What explains that, and do you think runoff will continue at the pace we saw at Q2?
Leslie Lunak (CFO)
I think the reason the pace was accelerated was because in the Q1, we still had some, you know, committed pipeline that we were, you know, putting on. I don't think there's been really any change in the rate of amortization. The prepay speeds are extraordinarily slow, as you can well imagine. It's really just amortization that's going on. I don't, you know.
Raj Singh (Chairman, President and CEO)
Steve, we did not do anything inorganic.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
It's not like we sold anything.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
It's, it's just that we-
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
we tightened up the new originations, and that took effect in the quarter, which is what you saw. Yeah, second half of the year, it should stay at similar speed. You know, people forget, a large part of our portfolio, we do have this six, you know, in one of the slides, it, you know, is arms and hybrids. You know, I think only 30% or so of our portfolio is fixed, a 30-year fixed. It does have a better CPR than most people think, and it runs off, so, and which is a good thing in this environment. We do expect more runoff in the third and Q4. We do expect some runoff in the securities portfolio as well, maybe not as much as we saw this quarter.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
Yeah, those trends should continue.
Leslie Lunak (CFO)
Yeah, I would say, based on what we know today, that resi portfolio will probably run down by another $450 between now and the end of the year.
Steven Alexopoulos (Equity Research Analyst)
Got it. Okay, that's helpful. on the commercial side, given that your core markets are fairly vibrant, I mean, you sound pretty optimistic on the call, why are you seeing stronger commercial loan growth here?
Raj Singh (Chairman, President and CEO)
Again, the devil's in the detail. On one hand, we are growing core business, but we're also letting go of-
Speaker 12
Non-core.
Raj Singh (Chairman, President and CEO)
Non-core, or what I would call, sort of credit-only, business, like the $175 million in SNICS, as an example. Some of the, you know, the leasing business, that we've been running down for now several quarters, so the franchise business we've been running down. The core business that we want to grow, which comes with deposits, is growing healthy. Actually, even in New York, it's growing. What is not growing or shrinking is the stuff that is transactional.
Tom Cornish (COO)
I would also add, Steven, that when, you know, when there are opportunities in that, you know, sort of back book of shared national credits or other things that fall into that category, you have to exit opportunistically, right? Your middle market business kind of builds over a period of time. We're seeing a good quarter so far this quarter in terms of closings and fundings and new originations and things of that nature.
Those come on, you know, over a period of time, where some of the shared national credits, you know, they don't necessarily mature, but you get an upsizing opportunity or you get a redial of that deal, or it comes where it's going to come within 12-month period of time, then you have the opportunity to exit at that period of time. We're taking advantage of those opportunities to exit. That $175 million of, you know, deals that we got out of in Q2 will be, you know, a strategy that we will continue to think through in Q3 and subsequent quarters, is how we can redirect that effort into higher generating bilateral loans that come with deposits in TM business.
Steven Alexopoulos (Equity Research Analyst)
Should we expect net commercial loan growth in the second half?
Tom Cornish (COO)
Yes.
Speaker 12
Yes.
Tom Cornish (COO)
Yes.
Steven Alexopoulos (Equity Research Analyst)
We should.
Tom Cornish (COO)
Yes.
Steven Alexopoulos (Equity Research Analyst)
Okay. Enough to offset the $450, Leslie, where we'll see flattish loans? Will there be enough?
Speaker 12
Yeah, I think so, Steve.
Steven Alexopoulos (Equity Research Analyst)
Okay, that's all. Final question: Raj, in terms of getting back on offense here, back to the long-term plan-
Raj Singh (Chairman, President and CEO)
Yeah
Steven Alexopoulos (Equity Research Analyst)
I feel like when you launched BankUnited 2.0, the industry had their eye off the ball in terms of non-interest bearing deposits. Now everybody's trying to grow and retain non-interest bearing deposits. Do you reenter the market with the same playbook? Like, what's your ability now to actually improve? I know the pipeline's fairly strong right now, but it's a totally different environment today than where it was even a year ago?
Raj Singh (Chairman, President and CEO)
Yeah. I listen, you know, the most common question that I get from investors is, you know, where will NIDDA, as a percentage of deposits, end up when all the dust settles over the course of next year or two? Because everyone has backed off from, yeah, we were at a high of 32%, and we're down to 28%.
Speaker 12
At one point, yeah.
Raj Singh (Chairman, President and CEO)
You know, I've heard some, you know, bizarre projections, let's call them that, you know, you go back to 2019 levels. Some say you'll go back to 2008 levels. I remind them we didn't exist in 2008. I'm not sure we'll go back to that level. The prior bank only had $50 million in DDA when we bought it. I'm 100% certain we're not getting there. You know, stabilizing DDA and doing that through new business, that is probably the most important thing when it comes to building long-term value and even short-term earnings, by the way. That's the key driver.
We're focused on that $1.6 billion pipeline, more than we're focused on anything else, you know, and executing against that. The long-term plan is still, you know, goes right through building a better deposit base than what we have. Not only better, but also bigger, right? We want to take down FHLB more, have more core business, grow more of the core bank, need more funding to have a bigger loan book. We don't want to run the bank over a 100% loan-to-deposit ratio. I've been very vocal about that. We're happy we've created a little more breathing room for ourselves this quarter, but if I can create even more breathing room, that's even better, right?
We don't need to be at 80%, but I don't want to get close to 100% or over 100%. I, you know. The long-term strategy doesn't change that often. You know, if it changes that often, then it's not really long-term strategy, then it's tactics. We just want to put the noise behind us and get back to executing what we're executing. Yes, environments change, interest rates go up and down, economies go up and down, but long term, you still got to, you know, the North Star really hasn't changed in what we're trying to build.
Tom Cornish (COO)
Yeah, Steve, I would add a couple of points to that as well. When you think about execution strategy, one would be a word that Raj used, which I would say is intense focus on doing it. I think the second you probably may have picked up, we added a number of quality producers in the last quarter. As Leslie alluded to, we continue to invest, you know, in the talent base of people that came from, you know, really excellent banks that have business that they can bring to us, that, you know, we have added to the talent base in the commercial areas all year, really, but particularly over the last quarter. The third is the continued investment in technology-driven cash management type programs, API connectivity, you know, payables and receivables, integration opportunities.
It's focus, people, and product that are gonna be the three things that are gonna get us there.
Steven Alexopoulos (Equity Research Analyst)
Got it. Thanks for all the color.
Operator (participant)
One moment for our next question. Our next question will come from Brodie Preston of UBS. Your line is open, Brodie.
Brodie Preston (Equity Research Analyst)
Hey, good morning, everyone.
Raj Singh (Chairman, President and CEO)
Morning.
Leslie Lunak (CFO)
Morning, Brodie.
Brodie Preston (Equity Research Analyst)
Hey, I just wanted to ask real quick on the securities yield. you know, I think it was 65%-70% floating rate, Leslie, is what I had written down. The yield came up a little bit less than I was looking for. I was hoping maybe you could give me some details as to why.
Leslie Lunak (CFO)
Yeah, I, it is about 68% floating. Brodie, and I don't have all the exact numbers around this with me, but there are some securities in the portfolio that hit caps, and so that's why that trajectory came down a little bit.
Brodie Preston (Equity Research Analyst)
Got it. Okay. Okay, thanks for that. Then I did wanna ask, just on the spot rate on the interest-bearing deposit costs, it didn't look too terribly far off as to kind of where, you know, the average would say you would, you would end the quarter. So I guess when you look at the trajectory going forward on the interest-bearing deposit costs, do you have a sense for, you know, what the expected step up is within the margin guidance that you gave?
Leslie Lunak (CFO)
I mean, Brodie, it is gonna step up again, I think, you know, without question, next quarter.
Raj Singh (Chairman, President and CEO)
Time deposits are rolling. The Fed is about to go up, yeah.
Leslie Lunak (CFO)
You know, time deposits are rolling. You know, so far, the all-in, you know, beta, including CDs, I think through the cycle is a little over 50%, and I think that is gonna be a little bit higher.
Brodie Preston (Equity Research Analyst)
Okay.
Leslie Lunak (CFO)
.Before we get to terminal rates. It is gonna go up again.
Brodie Preston (Equity Research Analyst)
Got it. I also wanted to ask on the non-interest bearing. you know, when I look at the average balance sheet in the period end.
Leslie Lunak (CFO)
Yeah.
Brodie Preston (Equity Research Analyst)
It sort of implies that you had some strong growth in NIBs in the back half of the quarter. Raj, you know, or maybe this is for Tom. You know, could you maybe help me understand what drove the rebound in non-interest bearing in the back half of the quarter? Was there anything seasonal, you know, that drove that, and should that kind of stick around going forward?
Raj Singh (Chairman, President and CEO)
I don't think there was anything seasonal.
Leslie Lunak (CFO)
No, I don't think so.
Raj Singh (Chairman, President and CEO)
No. It We do have fluctuations sort of month-end versus middle of the month that is, you know, a pattern to the deposit flows, but that's always there in every month.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
There's no. I think it's just a sales cycle when some, you know, deals happened or didn't happen, and when we boarded people onto our system. There was nothing unique about, you know, worth mentioning. I don't know, Tom.
Leslie Lunak (CFO)
No, I don't think so.
Raj Singh (Chairman, President and CEO)
No, I would say, you know, normally, you see a trend of corporates wanting to build up some liquidity at quarter end for financial reporting purposes, but other than that.
Leslie Lunak (CFO)
No, I don't think it's anything unusual.
Raj Singh (Chairman, President and CEO)
Nothing unusual.
Leslie Lunak (CFO)
It is true, the back half, I do think we saw a stronger onboarding of new accounts in the back half.
Raj Singh (Chairman, President and CEO)
Mm-hmm..
Leslie Lunak (CFO)
Than we saw in the beginning of the quarter was, as we all know, a pretty weird time.
Raj Singh (Chairman, President and CEO)
Yeah, maybe that's what, that's what it was, probably.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
It was a little distraction.
Leslie Lunak (CFO)
You know, I don't think in April anybody was thinking about moving their deposit relationship from bank to, you know, from bank to bank. You know, everybody was... I think that probably had something to do with it also.
Raj Singh (Chairman, President and CEO)
Yeah. As Raj said, the quarter was really Q2 within a quarter.
David Rochester (Equity Research Analyst)
Yeah.
Raj Singh (Chairman, President and CEO)
The Q1 was still kind of recovering from the Q1.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
The second part of the Q2 was starting to get back.
Leslie Lunak (CFO)
Normal sales cycle.
Raj Singh (Chairman, President and CEO)
business as normal.
Leslie Lunak (CFO)
Yeah.
Brodie Preston (Equity Research Analyst)
Got it. Okay. And then Raj, just on the within the DDA book, you know, the title solutions at $2.7 billion, that's obviously the largest segment that you have, and I think was a zero deposit business back in 2018. You've spoken before about other non-interest-bearing deposit businesses that, you know, that you've grown sort of since then. I know that nothing's over $1 billion, but I guess I wanted some more detail, you know, beyond title solutions. What are some of the other areas of success that you've had building non-interest-bearing deposits over the last several years?
Raj Singh (Chairman, President and CEO)
Yeah.
Brodie Preston (Equity Research Analyst)
You know, that are kind of different, I guess maybe different than just the excess non-interest-bearing deposit flow that the industry saw during COVID?
Raj Singh (Chairman, President and CEO)
Yeah. Just to clarify.
Leslie Lunak (CFO)
Yeah.
Raj Singh (Chairman, President and CEO)
The title is not all DDA. It is majority DDA and has a very low cost of funds, so it's operating, but there's always some money markets that come with it. Likewise, you know, the other business I would point to is the HOA business, which we also built over the last few years, which is also around $1 billion. Again, very, you know, nice amount of DDA, but some money market as well. That's also growing very nicely. They're already having a great year. I think they already met their year-end goals by June, so pretty solid year for that team. There are some other businesses that, you know, we're investing in that we haven't launched yet. I don't like to talk about them for competitive reasons.
Leslie Lunak (CFO)
No.
Raj Singh (Chairman, President and CEO)
We are always experimenting and tinkering with other sort of niches that are out there. Sometimes they're successful, sometimes they're not. These are small investments that we make all the time. We're spending a lot of time and focus on one right now, which will probably bear fruit in maybe two or three years' time, much like the title. You know, you never heard us talk about the title business in 2018 or 2019 when we were busy building this. You know, those, you know, HOA and the title are sort of the two most prominent ones. You know, there'll be more to hopefully more to share with you in a couple of years.
Brodie Preston (Equity Research Analyst)
Got it. Last one for me, just real quick. We've seen a few banks, you know, sell some office loans, this quarter. You know, depending on, I guess, what type of office building it's been, we've seen a pretty wide range of outcomes. I know the book is performing well for you, but is, you know, you've never been afraid before to kind of strategically exit something. You know, is there anything within the portfolio you look at and you say, you know, maybe it might make sense to, you know, do a loan sale, you know, here or there?
Speaker 12
Brody, I don't see selling any of that portfolio at a discount. We like the portfolio.
Raj Singh (Chairman, President and CEO)
Yeah.
Brodie Preston (Equity Research Analyst)
Fantastic. Thank you guys very much for the questions. I appreciate it.
Raj Singh (Chairman, President and CEO)
Thanks.
Operator (participant)
One moment for our next question. Our next question will come from Christian DeGrassi of Goldman Sachs. Your line is open, Christian.
Christian DeGrassi (Equity Research Analyst)
Hey, good morning.
Speaker 12
Morning, Christian.
Christian DeGrassi (Equity Research Analyst)
Just, another follow-up on the $1.6 billion pipeline. What type of customer demographic and geography is this coming from? It just seems that deposit competition?
Raj Singh (Chairman, President and CEO)
Oh, yeah.
Christian DeGrassi (Equity Research Analyst)
is as fierce as it's ever been right now, and that's like a really valuable, you know, amount. Where are you really seeing this opportunity?
Raj Singh (Chairman, President and CEO)
Yeah, it's, I'm going to give you a strange answer. It's everywhere. You know, it's all over our geographies. It's within HOA, as Raj mentioned. It's within the title solutions areas, within CNI, small business, core middle market. It's in all of the geographies, you know, that we work in: New York, Florida, Atlanta. It's in a lot of places.
Speaker 12
I want to clarify. This doesn't mean that $1.6 billion of growth is going to happen this quarter.
Christian DeGrassi (Equity Research Analyst)
Correct.
Speaker 12
This is a pipeline.
Christian DeGrassi (Equity Research Analyst)
Right.
Speaker 12
It takes, you know, 2-3 quarters-
Christian DeGrassi (Equity Research Analyst)
Right
Speaker 12
- to execute.
Brodie Preston (Equity Research Analyst)
It won't all close.
Speaker 12
Some of it probably won't pan out as well.
Brodie Preston (Equity Research Analyst)
Yes.
Speaker 12
It is, but it is, these are not like, you know, I think I have a name of somebody that I might call who might give me deposits. This is people who we have.
Brodie Preston (Equity Research Analyst)
Proposals out.
Speaker 12
proposals out and have at least a handshake and are in some, somewhere in the pipeline, whether the accounts are open or,
Raj Singh (Chairman, President and CEO)
Process.
Speaker 12
You know, treasury trading is happening or, you know, we're somewhere in the pipeline where there's a good level of certainty that this business will come. Sometimes even after accounts are open, the business doesn't show up. I just want to have be grounded in the expectation. Billion 6 pipeline in this environment is actually commendable, and the reason is because we're focused on this more than, like I said, anything else. This is the most important thing. That's what people are getting paid to do this year.
Christian DeGrassi (Equity Research Analyst)
Yeah, thank you. That's definitely very helpful. And then, Leslie, I think you mentioned a number of different scenarios you guys were looking at at the NIM. If, you know, hypothetically, we see a rate hike, you know, this week, and we stay in a higher for longer scenario for, you know, quite some time, call it, you know, a year or so. I think Tom mentioned some pretty attractive new loan yields you guys are putting on, but how do you see deposit rates kind of shifting in a, you know, prolonged rate pause environment?
Leslie Lunak (CFO)
you know, Christian, the guidance that I gave is predicated on a forward curve that at the time we printed the forecast, it feels like it changes every five minutes, had two rate hikes in it and then a pause. Now we're looking more at one rate hike and then a pause. you know, and as I said to, I think, Brody, I do think from here, you know, deposit betas are going to accelerate a little bit. We're in the low 50s now. We'll probably get to, you know, a little bit higher than that, and that's what's kind of baked into that.
Christian DeGrassi (Equity Research Analyst)
Thank you.
Operator (participant)
One moment for our next question. Our last question will come from John Ortstrom of RBC Capital Markets. Your line is open.
John Ortstrom (Equity Research Analyst)
Thanks. Good morning.
Raj Singh (Chairman, President and CEO)
Good morning.
Speaker 12
Good morning, John.
Brodie Preston (Equity Research Analyst)
I appreciate you letting me in. I'm exhausted on the $1.6 billion conversations. Couple big picture ones. Raj, you talked about the tactical near-term exercise you went through. Is that same exercise a priority right now? You know, what would be the near term tactical priorities for you?
Raj Singh (Chairman, President and CEO)
I think some of that stuff is still relevant and some less so. Honestly speaking, you know, levels of liquidity and, you know, uninsured deposits to available liquidity, those things feel a lot less important today than they did 90 days ago. However, you know, NIM stabilization, expense management, things of that nature, DDA growth, deposit growth, they are still very relevant. I think we'll still keep an eye on liquidity metrics, for example, but probably move that down a little bit in terms of, you know, is that what I'm looking at every day? Yeah, I used to get. When this crisis hit in March, I was getting 2 or 3 emails a day about wires that were going in and out of the bank.
I don't get that report anymore. Actually, I don't want to see that report again. It's irrelevant today. We've stepped it down from, you know, twice a day to once a day to once a week. Now it is at a place where we've gone back to normal, that I don't need to look at that information.
Leslie Lunak (CFO)
I get them more than he does.
Raj Singh (Chairman, President and CEO)
Yeah. One less thing in my inbox that I can then focus my time on looking at other things.
Yeah, tactically, it still feels like, you know, that whiteboard that, you know, is still, you know, a large part of that is still relevant and will stay relevant, but, not all of it.
John Ortstrom (Equity Research Analyst)
Okay, good. A bunch of different ways I could go, but just one more, I guess. That the shared national credit, the single relationship transactional pool, how big is that? Do you expect to bring that down over time, or is this something that's basically going to churn over time?
Tom Cornish (COO)
Oh, it will come down, you know, over time. I think part of that was built up during the pandemic when there was an opportunity to put, you know, liquidity into play at floating rate, high quality, you know, opportunities when the, you know, local middle market type business across most of our business units was not available or not accessible because of the health reasons and, you know, other issues. That has never been, you know, a principal strategy of the organization. We will continue to be in, you know, credits that we are the lead or an important, you know, left lead with deposit business.
It will not be, you know, an important factor in our long-term growth, and we will exit, you know, opportunities where we think it's the right opportunity to get out and redistribute to better quality relationships in terms of the overall business that it brings to BankUnited, not necessarily the risk ratings of those underlying credits.
John Ortstrom (Equity Research Analyst)
Have you disclosed how big that portfolio is in size?
Leslie Lunak (CFO)
No, we have not. I think we have in the past disclosed total shared national credits, but we have not disclosed the portion of that we're referring to here, because some of that business is relationship business.
John Ortstrom (Equity Research Analyst)
Yeah. Right.
Speaker 12
Fair enough. I don't think we have. We'll have to dig into that a little more.
John Ortstrom (Equity Research Analyst)
Okay, good. I'll let you go. Thank you very much. I appreciate it.
Speaker 12
Thank you.
Operator (participant)
I'm showing no further questions at this time. I would now like to turn the call back to Raj Singh for closing remarks.
Raj Singh (Chairman, President and CEO)
I'll end the call the same way I started it. It does feel very different from 90 days ago. We're thankful to the market gods for that, and happy to be focusing on what we've always focused on, is building a long-term, you know, relationship-oriented bank. Appreciate you taking the time and engaging with us, and we'll see you or talk to you again in 90 days. Thank you. Bye.
Operator (participant)
This concludes today's conference call. Thank you for participating. You may now disconnect.