The next issue to consider is how well Bank United is managing to do this.
On the residential mortgage side, Bank United has slashed its nonperforming loans from 30% of its portfolio to about 3% while also reducing its overall holdings of residential loan assets.
On the growth side, it has increased their C&I loans almost sixfold in three years, from $267 million to $1.56 billion, while reducing the nonperforming percentage of these loans from about 5% to 1.5%.
Bank United has done almost the same with its commercial real estate portfolio, increasing it almost 3.5 times, from about $390 million to $1.32 billion, and also reducing the nonperforming percentage from about 10% to about 0.2%.Again, on multi-family dwellings too, the portfolio loans have increased 4.5 fold from $90 million to $410 million, while the nonperforming percentage has been reduced from 17% to about 0.5%. The same pattern is exhibited across the other loan sectors the bank is in or has expanded into and diversified into within the past three years. The Bank United experience reminds me of Capital One's (COF) turnaround. Capital One faced troubles about 20 years when it was concentrated in subprime credit cards, much of it to college students, and began to experience a high percentage of defaults. Capital One quickly switched its focus from subprime to prime credit card lending, managing its legacy losses and growth simultaneously. Capital One has gone on to become very successful, and the managers of Bank United are exhibiting the same skills. At the time of publication the author had no position in any of the stocks mentioned.