BankUnited's NIDDA Milestone Masks a Contrarian Bet Against the Data Center Rush
The Florida regional bank hits a record non-interest DDA ratio and shuns AI-infrastructure lending even as the tape cools on data-center names.
BKU · Earnings Call · 2026-07-22
Record Deposit Quality, No Acquisitions
Raj Singh opened the Q2 call by pointing to a single metric: NIDDA growth. The bank crossed a high-water mark, with NIDDA-to-total-deposits at 34.4%, an all-time high.
We have finally crossed the high-water mark of NIDDA to total deposits... it's a very important number for us in terms of building long-term franchise value.
Singh emphasized that nearly all of the $10B deposit growth over the last decade was NIDDA, built “one client at a time” and not through acquisitions. This is a recurring theme in the NIDDA growth story, but reaching the prior COVID-era peak in a higher-rate world is a genuine inflection.
Q2 NII rose $6M quarter-over-quarter and $9M year-over-year, with NIM up 13 basis points from a year ago. The driver was pure mix: average deposit cost fell 42 basis points from a year ago, while the Deposit cost on interest-bearing accounts dropped another 3 basis points even as rates were rising. This is the operational payoff of the NIDDA push.
Holding the Line on Pricing
Singh and Tom Cornish were blunt about the competitive landscape. Loan production is strong, but they are deliberately walking away from business because pricing does not clear their bar. “We have let some business go. There were some strategic exits... about $230 million, $240 million that fall into this category.” — Raj Singh, Chairman, President, and Chief Executive Officer · 2026-07-22 They characterized these as reactions to competitors “mispricing credit” and moving away from relationship banking. The bank’s Credit spreads are being held firm, and they are not bending the credit box. Notably, they are also not chasing Loan yields with looser terms.
This discipline is consistent with prior quarters – management has repeatedly refused to trade loan growth for margin. But the scale of the exit ($230M+) is new, and it shows in the guidance. Full-year core loan growth was trimmed to 4%-5% from 6%, and NII growth to 5%-6% from 9%. The explanation is timing and mix, not a demand problem.
The Contrarian Stance on Data Centers
The most distinctive element of the call was a pointed aside on data centers. When asked about the lending pipeline, Tom Cornish mentioned expected CRE growth in industrial and retail, and Raj Singh added a footnote that the bank has deliberately avoided financing data centers. “We have not been able to wrap our head around the risk, especially the risk of obsolescence on long-dated assets, and we've stayed away from the data center.” — Raj Singh, Chairman, President, and Chief Executive Officer · 2026-07-22 This is a direct contrast to the broader market, where the global keyword “data center” has soared to the top of BKU's own keyword trajectory for 20263 (rank 1) and where peers are aggressively participating. The tape has been punishing AI-infrastructure names over the last month – the 30-day decliner list is full of data-center exposure – but BKU is not even in that game. It is a deliberate, capital-discipline choice that sets the bank apart.
“Overall deposit performance was really the operational highlight of the quarter.” — Tom Cornish, Chief Operating Officer · 2026-07-22 Cornish's comment reinforces that the bank is funding itself cheaply while refusing to chase riskier asset classes.
Raising the Buyback, Staying Prudent
Capital remains strong, with CET1 at 12.3% and $50M of buybacks executed in Q2, leaving $146M of capacity. Management reiterated that they will likely exhaust the authorization by year-end and then ask the board for more. “We are committed to using what we have... we are committed to getting to our targeted capital levels of CET1 in the mid-11% over time.” — Jim Mackey, Chief Financial Officer · 2026-07-22
The guidance revisions are modest, but the market should pay attention to the message behind them: the bank is prioritizing profitability over growth. “The overall story has not changed. Deposit trends remain stronger than we originally anticipated.” — Jim Mackey, Chief Financial Officer · 2026-07-22
Looking back at prior calls, this is not a new philosophy – Singh has called NIDDA growth the “most important thing” before. What is new is the explicit decision to sit out the data-center lending boom and the willingness to shrink the loan book to protect credit pricing. That is a differentiated stance for a regional bank, and it is the reason the stock has held up relatively well (down just 9% from its February peak) even as the AI trade unwinds.
“We were growing double digits NIDDA when Fed funds was over 5%. So it is not about pricing.” That prior claim is now validated: the bank hit a record NIDDA ratio even with rates near 4%.
In sum, BankUnited is not just reporting a solid quarter – it is signaling a strategic choice to compound its franchise value through sticky, low-cost deposits and disciplined credit, rather than chase the hot themes of the day. For investors, that is a rare kind of clarity.