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BankUnited, Inc's Q3 2017 Guidance On NYC Taxi Medallion Values

|About: BankUnited, Inc. (BKU)

Summary

BKU wrote down NYC taxi medallion marks to $351,000 for Allowance for Loan and Lease Loss purposes

To be even more conservative, BKU took a further 15% haircut to set up a "specific reserve," effectively marking NYC medallion loan values to $298,000 (see below)

During Q3, BKU put all taxi medallion loans on non-accrual status

Note: This piece is focused narrowly on taxi medallions

On its Q3 2017 quarterly earnings conference call held on October 31, 2017, BKU discussed its exposure to New York City taxi medallions.  BKU's taxi medallion loan book now totals $120.6MM, equivalent to 0.3% of the aggregate value of all NYC taxi medallions.  (Taxi medallion loans comprise 0.6% of BKU's net loans.)

As of September 30, 2017, BKU reduced its valuation per NYC taxi medallion by 19% to $351,000, from $432,000 as of June 30, 2017.

President and CEO Singh said that, in addition, BKU took a further 15% haircut which essentially brought medallion valuations to "a tad under $300,000".

Putting a finer point on the accounting machinations of their medallion valuation process, CEO Lunak stated that although BKU did not take charge-downs below $351,000, BKU did put up an additional "specific reserve" representing an additional 15% haircut to medallion valuations.

Also, CFO Lunak stated that in Q3, BKU put the entire taxi medallion loan portfolio on non-accrual.  As a result: 1) interest is not being recognized as income; and, 2) all cash flow, whether principal or interest, goes toward reduction of the principal of the loans.



BKU CFO Lunak indicated that "since the beginning of time", BKU has taken possession of seven taxi medallions, although it is not clear if BKU still owns those medallions.

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