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Text: We're coming to you in strange times.
This is the first call that we've ever done where the management team is not together in one location.
So Leslie and Tom are in Miami, I'm in New York, and we are doing this virtually.
Also, I've never done a conference call where we've had more than one or two pieces of paper in front of me with some bullet points on them.
And today, Leslie has put in front of me a 27-page deck and talking points that are several pages long.
So forgive me for all the shuffling that you might hear on the call.
Instead of jumping straight into the earnings for the quarter, I would like to take five minutes of your time to first talk about exactly -- give you kind of a state of the union for BankUnited.
What is it that we've been doing over the last six to seven weeks as the situation has evolved?
What are we prioritizing now and then give you just a lay of the land, and then we'll get into the numbers and discuss in detail what first quarter was like.
So let me start by, first and foremost, giving a big shout out to the BankUnited team.
Every person who comes here calls this home and works hard.
A crisis revealed the character of people.
I think that is true, not just for people, but also reveals the true character of an organization.
And I'm very proud to say that what I have seen over the last six or seven weeks, it really fills me with great pride that I'm leading this organization.
People have come together, as help each other, work ungodly hours while they were under immense amount of personal distress.
So there are too many examples to get into, but I just want to give a big one shout out to everyone in the company, not just people working in PPP, on the branches or keeping our call centers up, but everyone, right down to the person who's making sandwiches in the cafeteria all the way to the last day when we shut down the cafeteria.
We have, as you can imagine, going through this early in March, we made our employees' wellbeing and safety our No.
We enable 97%, as of now, 97% of our employees are working from home.
And this is 97% of our nonbranch employees, of course.
We have extended our paid time off policy.
We have increased our health benefits to cover any expense associated with this COVID.
We have not furloughed any employees.
I'm a very superstitious person, so it is -- I'd say this very carefully.
We were recently awarded by South Florida Business Journal an award for being one of the healthiest employers in South Florida.
And I hope that we can claim this again next year.
So far, we've had only one confirmed COVID case in the employee base.
We do think there are a couple of others who will never get tested but have overcome COVID as well.
It sounds like it, but only one confirmed COVID case, which is pretty good, given though what is going on.
When you take care of your employees, they in turn then take care of your customers.
And if they take care of your customers, then that takes care of the company.
That's sort of the chain that I follow.
So quickly, let me tell you what we've been doing to support our customers.
The most obvious thing is offering the operational resilience that is needed at a time like this.
We activated our business continuity plan.
We beefed up all the back office IT infrastructure that is needed to run the company from afar with no really any significant operational issues on customer service disruptions.
If you'd asked me this -- how I felt about our ability to do this in the first week of March when we were preparing to do this, I was pretty nervous, but I'm happy to say that everything has also gone without a glitch and the bank is working fine from an operational perspective.
Our employees, several hundreds of them, have worked tirelessly now for about three weeks to deliver the PPP program.
We are also -- I think as of last night, are close to $700 million or maybe over $700 million in loans that we've done through the PPP program.
And our estimates are that we've helped retain about 85,000 or 86,000 jobs in our footprint through this program.
And we're not done.
There's more going through as we speak.
The team has been working around the clock, and we will help a few hundred more small businesses before eventually the money runs out on the PPP.
We have approved deferrals for many borrowers who have contacted us and asked for assistance because of pandemic.
And equally importantly, we have honored all our commitments whether they were lines that we've had or a business that was in the pipeline where we had made a commitment to close in our loan.
We did not back away from anyone, and that is equally important.
We have waived select fees, and we have also temporarily halted new residential foreclosure actions.
By the way, while all this is happening, I just want to clarify, when I say 97% of the employees, nonbranch employees are working remotely, 76% of our branches are still open.
They are open on a limited basis, of course, drive-throughs and appointment-only method, but they are open and we are serving clients.
The traffic, as you can imagine has gone down substantially.
Also, we have -- from somewhere in the second week of March or mid-March, we have made sure that we have enough liquidity to take care of any client needs in case somebody would need it.
We continue to hold an excessive amount of liquidity, but we now feel the time is right to start taking it down.
I think beginning next week, we will take down this excess liquidity that we've been sitting on to serve our clients.
Now turning back internally, as you can well imagine, we are prioritizing the risk management and credit quality and credit quality risk management.
We've identified portfolios and borrowers that we believe will be under an increased stress in the environment.
I call these sort of the sort of the -- you're in direct line of fire-type of our portfolios.
We have reached out to every single borrower in these segments, and we will talk in detail about what these segments are and how big they are.
But we have reached out to all borrowers in these segments.
And in other segments, we have reached out to everyone over $5 million in exposure to understand this exactly what the impact will be to our balance sheet.
While we always do stress testing sort of it's a routine business for us, in this environment, we have significantly enhanced these processes that you would expect us to.
But through all of this, I -- it's important while you're managing a crisis, not to forget what the long-term plan is and to keep those long-term plan is and to keep those long-term strategic objectives in mind, and we're doing that while we're fighting the immediate economic crisis.
So again, so I think the biggest question here that you probably have is, what does it mean for our balance sheet, right?
I will start by saying that our balance sheet is strong.
I feel very good about our balance sheet, our capital levels, our liquidity levels.
And you see at March 31, our regulatory ratio, no matter which you look at bank holding company, they're also insignificantly in excess of well-capitalized thresholds.
We are committed to our dividend, which we very recently increased by 10%.
I think it was in the middle of February.
We did, however, stopped our share buyback program.
We were very -- we had an authorization from I guess -- I think it was the fourth quarter, it was authorized $150 million.
We executed about $101 million, and we stopped that, and we're going to put it aside at least until the dust settles on the economy.
A question that we have seen a lot of other bank teams have been asked, who presented earnings in the last week or so, anticipating the same question, we did some analysis for you.
By the way, there's a slide deck.
Like I said, this time around, we've never had a slide in our calls, but at this time, we have provided a lot more disclosure and there's a 27-page slide deck.
So from time to time, I will make references to certain slides.
I'm not going to flip every page, but I will make the references.
So for example, right now, I'm talking about Page 4 in the slide deck, which then takes the DFAST severely adverse scenario for 2018 and 2020 and runs that on the March 31, 2020, portfolio to see what the losses would be.
And by the way, not just 9 quarters of losses, but lifetime losses.
DFAST is a nine-quarter exercise.
But with this, we've actually used lifetime losses.
And we have used those, which we don't think are really relevant.
But nevertheless, since that question will probably be asked, we did that analysis anyway.
We use full 2018 and to 2020 DFAST severely adverse scenario, and said, OK, if -- what are the losses that are generated, and you can see them on Slide 4.
And if those were the -- channels were to be used now, would we still be well capitalized and the capital ratios hold up?
And the answer is yes, they do.
So quickly, one question so I don't forget again about liquidity, which is the next slide.
We have tons of liquidity.
We are -- we currently have over $8 billion, I think it's $8.5 billion of liquidity, safe liquidity available.
A lot of it is in cash.
We will take some of the cash position down as we think things are settling down in the marketplace.
But with that, let me switch over quickly and talk about the quarter.
We reported a net loss of $31 million, $0.33 a share.
This is driven in the large part to the large provision that we do.
The provision for this quarter was $125 million.
This increased our credit losses to $251 million, which is 1.08%.
So we used to be, at December 31st, we were at $109 million or 47 basis points.
On January 1st, under CECL, that number bumped up to $136 million or 59 basis points and now in the end of March, we were at 1.08% or $251 million.
And that obviously was the biggest driver in the $31 million loss that we are posting this quarter.
I will ask Leslie to give you some more detail around CECL and the assumptions that went into calculating that provision.
But I will say, before I hand it over to her, is that we believe this at March 31st, our reserve estimate is based on both data that is current and conservative at that quarter end.
This reflects our best estimate of lifetime credit losses on the portfolio.
In second quarter, we will go through the same exercise.
There are three big areas, which will impact our CECL estimates for the next quarter, which is going to be an update of the macroeconomic outlook.
An update of our portfolio, especially our high-risk sectors.
And also, our assessment of impact of government stimulus because we've seen more stimulus this time around than we've ever seen in the history of the Republic.
So $2.5 trillion and counting in fiscal stimulus and God knows how much on the monetary side.
So I'm going to refer you to Slide 8 in the supplemental deck that talks a little bit about our CECL methodology.
Fundamentally, for the substantial majority of our portfolio segments, we're using econometric models that forecast PDs, LGDs and expected losses at the loan level for those are then aggregated by portfolio segment.
Our March 31st estimate was largely driven by the Moody's March mid-cycle pandemic baseline forecast that was issued on March 27.
This forecast assumes an approximate 20% decline in GDP in Q2, unemployment reaching about 9% in Q2, the VIX approaching 60 and year-over-year decline in the S&P 500 approaching close to 30%.
The forecast path assumes a recovery beginning in the second half of 2020, with unemployment levels remaining elevated into 2023.
I know there's been a lot of focus on GDP and the current unemployment in all the discussions taking place around the CECL forecasts, and those are certainly important reference points.
But I do want to remind you that these are very complex models, and there are, in fact, hundreds, if not thousands, of national, regional and MSA-level economic variables and data points that inform our loss estimates.
Some of the more impactful ones are listed on the right side of Slide 8 there for you.
Another thing that I want to point out about our CECL estimate at 3/31, we did not make a qualitative overlay.
We don't think our models really take into account fully the impact of all of the government assistance that's being provided to our clients, PPP, other deferral programs that we might have in place.
We did not make this qualitative overlay for that at March 31st.
The reason we didn't is we just felt it was premature to really be able to dimension those things at March 31st.
And as Raj pointed out, that's something we'll take into account when we consider our second quarter estimate.
I want to refer you now to Slide 9.
Leslie, just one second.
I just got a text from someone saying that the call cut off for about 20 seconds, and they couldn't hear you for the first 20 seconds.
So you may want to just repeat what you said because I think those are important points because I want to make sure everyone gets those.
So best to start on CECL.
Maybe I'll do better this time.
Hopefully, I won't contradict myself.
So again, I'm referring to Slide 8 in the deck about our CECL methodology.
Fundamentally, for the substantial majority of our portfolio segments, we use econometric models that forecast PDs, LGDs, and expected losses at the loan level, which are then aggregated by portfolio segment.
Our March 31st estimate was largely driven by Moody's March mid-cycle pandemic baseline forecast that was issued on March 27th.
That forecast assumes an approximate 20% decline in GDP in Q2, unemployment reaching about 9% in Q2, the VIX approaching 60, and year-over-year decline in the S&P 500 approaching close to 30%.
The forecast pass assumes a good recovery beginning in the second half of 2020 with unemployment levels remaining elevated into 2023.
And well, there's been a lot of focus on GDP and unemployment, and the discussions taking place around these CECL forecasts, and those are certainly important reference points, these are complex models, and there are, in fact, hundreds, if not thousands, of national, regional and MSA-level economic variables and data points that inform the loss estimates, and some of the more impactful ones of those are listed for you on Slide 8.
I also want to mention briefly that we did not incorporate in our CECL estimates at 3/31 any significant qualitative overlay related to the impact of the government direct assistance, PPP, deferral programs that we may put in place.
At 3/31, we felt we just didn't have enough data to properly dimension the impacts of those, so we did not reduce our reserve levels to take those into account.
And as Raj mentioned, that's something we'll be considering in more detail in Q2.
And now I'll refer you back to the deck and look at Slide 9.
And Slide 9 provides for you a visual picture of what changed our reserve form 12/31/19 to 3/31/20.
We started at $108.7 million.
You can see here the $27.3 million impact of the initial implementation of CECL.
The most significant driver of the increase in the reserve from January 1st after initial implementation to March 31st is not surprisingly, the change in the reasonable and supportable forecast, which increased the reserve by about $93 million.
We've also taken an additional $16 million in specific reserves this quarter, the majority of this related to the franchise finance portfolio.
While the credits that are driving these reserves had been identified as potential problem loans prior to the onset of COVID, we believe the underlying issues and amount of those reserves were certainly further aggregated by the COVID crisis and particularly as workout solutions have become more limited.
I want to reemphasize that we ended at -- for the quarter at 3/31/20 with a reserve of 1.08% of loans, and we certainly don't think that's outside in comparison to other banks whose results we've seen released.
I want to take a minute and just focus you on Slide 10.
And it gives you a distribution of the reserve by portfolio segment at March 31st.
And you can see here that on a percentage basis, the franchise portfolio, not surprisingly, carries the highest reserve, followed by the C&I portfolio.
And you can see the results of those on Slide 4 in the deck.
And what we did here was we took our March 31, 2020, portfolio, and we ran that portfolio through both 2018 DFAST severely adverse scenario and the 2020 DFAST severely adverse scenario.
In the table here showing you total lifetime, not nine-quarter, projected credit losses for our significant portfolio, C&I, CRE, BFG, residential under each of those scenarios as well as the bank's pro forma regulatory capital ratios.
Now those were calculated as if all incremental losses were applied to the March 31, 2020, our capital position.
So they don't really take into account any PPNR that might offset losses over the course of the forecast horizon or any actions management might take to reduce risk weight -- risk-weighted assets during a period of stress, both of which would have been taken into account in a DFAST regulatory submission.
So you can see that our reserves at March 31, 2020, stand at about 44% of severely adverse projected losses under 2018 DFAST and about 56% of some severely adverse projected losses under the 2020 DFAST severely adverse scenario.
And you can see in the box there that all of our capital ratios that remain in excess of our well-capitalized threshold of under those distressed scenarios.
Let's talk PPNR, pre-provision pre-tax net revenue.
It came in at $85 million this quarter, and that compares to $104 million last quarter.
So what was that delta of that $19 million?
So, really three buckets.
First, NII was down by $5 million.
NII really is for two reasons; one, our margin contracted by 6 basis points from 2.41% to 2.35%.
And the reason for that is asset yields came down faster.
Deposit pricing really wasn't changed much until pretty late in the quarter.
You will see a very meaningful impact on deposit pricing going forward.
But for this quarter, that the basis risk between these assets are priced and what things they're tied to versus deposits.
There was that gap of a few weeks, which is what caused margin to come down.
Also, first quarter is not a very strong asset growth quarter for us.
The nature of our business is first quarter tends to be our slowest quarter.
So we didn't see that much in terms of asset growth.
So you combine little-to-no asset growth.
And by the way, a lot of other banks are seeing asset growth coming from time draws.
Our business is not built around that kind of business.
And we did not get that benefit, and we did not see a lot of line growth.
I don't think it's a benefit.
I think it's a good thing that we did not have that business but that creates little bit of asset growth and NIM that compressed 6 basis points leads to a $5 million reduction in NII.
Also on fee income.
Last quarter, we had $7.5 million or so of securities gains.
Well, this quarter, we've had $3.5 million of securities losses.
So that's an $11 million-or-so swing in fee income.
By the way, in the $3.5 million securities losses in this quarter, it includes a $5 million of unrealized losses on equity securities.
We haven't sold them, but the accounting makes us take it through the P&L.
And lastly for expenses, again, first-quarter expenses are always higher because you start to fight the cycle all over again.
HSA contributions, the 401(k) contribution, and all that stuff hits in the first quarter, so that is what drove expenses higher.
If you compare it into expenses from a year ago, that's probably a better way to compare, and those expenses were obviously much lower.
Our first quarter this year, it was much lower.
So what does it really mean for next quarter?
Well, for next quarter, we expect asset growth to pick up for no other reasons, and we're doing a lot of PPP loans.
We'll probably do some Main Street Lending loans.
We expect margin to expand.
Deposit prices have come down very, very aggressively, not just in the middle of this March, but also at the beginning of May.
And that should feed into margin, and we are very positively biased toward our margin in the second quarter and beyond.
Expenses should come down as well because all that five-level stuff that I talked to you about will be behind us after the first quarter.
And naturally, expenses will get better next quarter.
So that's what all the guidance we'll be able to give you, but I do feel it's important to mention these things in some level of detail.
I mentioned a little bit on PPP program.
So I think we could rename BankUnited for the month of April as Bank of PPP.
That's like all we've been doing.
To give you a little comparison, we have an SBA business where we probably do roughly about 200 units of business in a year.
We are now in the process of trying to do over 3,000 loans through the SBA in less than a month or so.
It has -- has been a very large operational challenge that people across the company have been recruited to help in.
And so far, we've already close to $700 million of loans that we've done and we're not done yet.
We still have a few more that we will do over the course of today and tomorrow, or day after, until the money runs out.
We're also now on a case-by-case basis providing deferrals to borrowers, who are being impacted by the pandemic, and that started somewhere in the middle of March.
Those requests have now tapered off somewhat in the last week to two weeks, and Tom can talk about that in a little more.
But before that, Tom, why don't you spend a little time talking about loans and deposits?
Just give a little more detail around that.
So let's start off with deposits, where we've continue to make good progress on our deposit growth initiatives.
As you can see, deposits grew for the quarter by $606 million, and just over 50% of that or $305 million was noninterest DDA, which now stands at the 18.4% of total deposits, compared to 15.9% a year ago.
I guess, as we've talked in all of these calls, growing noninterest DDA is one of the most important things that we're trying to do in the bank right now.
And unlike what some other banks have reported, most of this DDA growth was really core DDA growth.
This wasn't related to draws on lines of credit.
And I'll go into a little bit more detail about that later.
We've consistently been moving down deposit pricing as the Fed has reduced rates.
The cost of total deposits declined by 12 basis points this quarter from 1.48% to 1.36%.
Additional moves by the Fed in late March had minimal impact on our ability to move cost of funds down further in Q1.
But as Raj mentioned, you'll see that impact much larger in Q2.
To give you a better idea of this, the spot rate on total interest-bearing deposits, including our certificates of deposit, declined by 36 basis points of December 31, 2019, to March 31, 2020, and then by another 27 basis points through April 17th of 2020.
So a total of 63 basis points decline during that period of time.
And if you go to Slide 7 in the deck, you'll get a little bit more information and detail on that.
On the loan side, Raj mentioned, loans that are relatively flat for the quarter with net growth of $29 million.
There were some parts of the portfolio where we actually saw very good growth.
The C&I business had total growth of $353 million, which was a good quarter for that segment.
Mortgage warehouse outstandings have also increased by $84 million, but really offsetting that, our CRE book declined by $315 million, which is pretty much in line with what we expected, primarily driven by the continued decline in New York multi-family, which was $249 million.
And unlike a lot of banks, particularly some of the larger banks, we have not experienced any real growth in our line utilization since the onset of this crisis.
The majority of our C&I growth, as I mentioned, was not the result of draws.
Our utilization ratio, which we track consistently throughout this process really hasn't moved too much during this entire thing, only by a few percentage points through the total period of time.
It has generally remained in line with our three-year averages with the exclusion of the mortgage warehouse business.
I would like you to flip to Page 16.
This is what I was talking about at the beginning of the call.
These are the segments that we have sort of circled around and saying these are the portfolios that will have increased stress based on our estimation: this is retail in the CRE book; retail in the C&I book; the franchise finance that we've talked about to you in the last six months; hotels for obvious reasons, airlines, cruise lines and energy.
So in total, it's about 14% of our portfolio.
What we're trying to show you here is what -- as of March, what part of these individual portfolios were past-weighted and what were classified, criticized and nonperforming.
So now let me say something sort of which is obvious, but I'll mention it anyway.
Just because we have highlighted these portfolios, I'm not trying to say that loans on these portfolios are going to go back.
We also expect the large portion of these loans will be just fine.
Sponsors with deep pockets will be able to bear the brunt of the pain here.
But in terms of monitoring, we are calling these sort of the ones what we will monitor on a heightened basis because we think these are in harms' way more than other parts of the portfolio.
By the same logic let me say, it doesn't mean that anything that is outside of this portfolio is all fine.
We have to monitor everything because there will second, third, fourth quarter impacts in other parts of the business as well and we will monitor them, too.
But this is where that the heightened monitoring will be.
So it's too early to really see the impact of the COVID situation on risk rating migration.
And you can see that, with the exception of franchise finance portfolio, substantially, most of these segments are past-rated at March 31st.
We did move a bunch in the franchise portfolio into those lower categories in the quarter.
Let me talk a little bit about NPAs, a little bit of our course of actions and then charge-offs.
NPAs -- of NPLs for this quarter, they were basically flat.
NPAs were down a little bit, a couple of basis points.
NPLs were also down a few basis points from 88 basis points to 85 basis points.
And just to remind you that these numbers in NPAs and NPLs, the way we report them included guarantee portion of nonaccrual SBA loans.
So really just keep that in mind that the criticized classified this quarter went up by $269 million, $207 million of that $269 million was in the franchise portfolio.
And 90% of that $207 million was really attributable to COVID as that kind of play itself out in the month of March.
Charge-offs were 13 basis points.
They elevated from last quarter mostly because of one credit in BFG equipment where we took the charge-off, but we're already seeing recoveries from that situation this quarter.
So more detailed metrics are toward the end of the slide deck, Page 22, 23, 24 and 25.
So I will encourage you to spend some time on to those as well.
Tom, I mentioned these portfolios for heightened monitoring.
So, why don't you spend a few minutes and just give them a little more -- with a little more detail?
So we'd refer you to Slide 14 in the deck, which provides some additional detail around the level of deferrals and segments.
But through April 20, we have received request for deferrals from almost 800 commercial borrowers and approved modifications for about 500 of those borrowers, totaling a little over $2 billion.
We've also processed about $500 million in residential deferrals, excluding the Ginnie Mae that's early buyout portfolio, which would represent about 10% of that portfolio.
These deferrals typically take the form of a 90-day principal and/or interest payment deferrals for commercial loans, and those payments are generally due at maturity.
For residential borrowers, these payments are typically at the end of the deferral period consistent with deferral programs being offered by the GSEs.
Now we'll obviously be reassessing each of these loans at the end of the 90 days and looking in making the best decisions we can at that point in time.
As you can see, the large amount of commercial deferrals is in the commercial real estate portfolio, particularly the hotel subsegment, where 90% of the borrowers, by dollars, have requested and been approved for deferrals, followed by the retail subsegment.
We have also received a high level of deferral requests from borrowers in the franchise finance portfolio, as we've mentioned, where 74% of the borrowers have been approved for deferrals.
On other C&I portfolio subsegments with this -- where we're seeing higher levels of deferral request include accommodation and food services, arts and entertainment and recreation and the retail trade.
At this point, and as of today, modification requests appear to be slowing over the last 10 to 15 days.
Starting on Slide 17, we provide a little bit deeper dive into some of the higher-risk portfolios, subsegments that Raj has already mentioned.
And in the retail segment, the CRE book contains no significant exposure to big box or large shopping malls.
We estimate that about 60% of the CRE retail exposure is supported by businesses that we would categorize as essential or moderately essential and the remainder we would categorize as nonessential businesses.
Within this segment, LTVs averaged 57.5%, and 84% of the total are below the 65% level.
Retail exposure in the C&I book is well diversified with the largest concentration of being to gas station and convenience store owner operators.
I'll refer you to page -- on Slide 18, where you could see further breakdown of the franchise portfolio, which is a fairly diverse portfolio, both by some concept in geography.
We saw over a $200 million increase in criticizing classified assets in this segment during the first quarter.
Approximately 90% of these downgrades were directly related to the COVID-19 crisis.
I'll also mention that the current environment to fitness center -- and to fit this sector, which up until now, has been really the better-performing sector in this book, is coming under stress as most of these are now closed with the social distancing guidelines.
Some of the restaurant concepts actually may fare better, particularly those with heavy drive through exposure and good digital strategies.
On Slide 19, you can see that most of the hotel book represents well-known flags and is within our footprint.
So to be clearly -- on revenues in this segment have declined dramatically with the social distancing measures and travel restrictions that are currently in place.
LTVs in this segment averaged 54% and 78% of this segment has LTVs under 65%.
And finally, referring to Slide 20, our energy exposure, particularly in the loan portfolio, remains somewhat minimal.
The majority of this exposure relates to railcars in our operating lease portfolio.
So with that, I'll go back to Leslie for a little more detail on the quarter.
I want to take a minute to discuss the unrealized losses on the securities portfolio that impacted other comprehensive income and our GAAP capital at March 31st.
I'll remind you that these unrealized losses do not impact regulatory capital, and I'll be referring to Slides 26 and 27 in the deck for this part of the discussion.
The available-for-sale securities portfolio was in a net unrealized loss position of $250 million at March 31st.
These unrealized losses were mainly attributable to market dislocation and widening spreads reflecting the reaction of the markets to the COVID crisis.
As you can see on Slide 26, 90% of the available-for-sale portfolio is in governance, agencies or is now rated AAA.
At March 31st, we stressed the entire nonagency portfolio at the individual security level, modeling collateral losses that we believe to be consistent with levels reflecting the trough of the 2008 global financial crisis.
Based on that analysis, none of the securities in this portfolio are expected to take credit losses.
The majority of the unrealized losses, as you can see, are in the private label CMBS and CLO portfolios.
On Slide 27, we show you the ratings distribution of these portfolio segments along with levels of credit enhancement compared to stress losses, illustrating the high credit quality of these bonds.
We also priced the March 31 portfolio as of April 22, and you can see that our results of that on Slide 26.
And although unrealized losses remain significant, you can see that valuations have started to come back and to recover some.
I also want to point out that none of our holdings have been downgraded since the onset of the COVID crisis.
To Provide a little more color around the NIM.
The NIM declined by 6 basis points this quarter from 2.41% to 2.35% compared to the immediately in the proceeding quarter.
To get a little bit into the components of that, the yield on interest-earning assets declined by 18 basis points.
That reflects a decline of 9 basis points in the yield on loans and a 37-basis-point decline in the yield on investment securities.
These declines related to, obviously, declines in benchmark interest rates and also reflect turnover of the portfolios at lower prevailing rates.
The decline in the yield on securities reflects the very short duration of that portfolio and to an extent, increases in prepayment speeds, which contribute about 5 basis points to the decline.
The cost of interest-bearing liabilities declined by 14 basis points quarter over quarter.
I'll remind you that reductions in deposit costs that we have done in response to the Fed-reducing rates in late March were not fully felt this quarter.
A couple of items I want to mention that impacted noninterest income and noninterest expense for the quarter.
Raj already pointed out the unrealized loss on marketable equity securities that negatively impacted noninterest income in this quarter.
Our largest contributor of the $6.8 million decline in the other noninterest income line compared to the immediately preceding quarter was a reduction in income related to our customer swap program, and this was really attributable just to lower levels of activity in that space during the quarter.
Employee compensation in benefits actually increased by $3 million compared to immediately our preceding quarter.
And as Raj pointed out, there are always seasonal items that impact comp in the first quarter.
So, a better comparison might be to the first quarter of the prior year, and compensation expense declined by $6.3 million compared to the first quarter of 2019.
We'll try and wrap this up and open this up for Q&A.
But let me say regarding guidance, we are withdrawing our guidance that we gave you at the last earnings call.
We generally have a pretty good idea of what we're seeing in the business and the economies where we operate or we can look out about 6 months or so.
But at this time, it is very hard to look at a month or two.
So to try and give you guidance at really an uncertain time, it's very hard.
What we can say is we are -- you will see a growth in PPP loans.
Like I said, -- rough, so somewhere in the $800 million number is what will people end up with.
Main Street Lending facility, we're still waiting a lot of details in that, but we hope to do some of those loans, but it's hard to tell you how much we will be able to do or what we would want to do.
And even deposit growth can be hard to predict.
But so -- our priority is the deposit side will maintain, which is grow DDA and bring down cost of funds.
We feel fairly confident of that into this quarter.
And in fact, I would even go as far to say that maybe for the full year, we'll be higher than what you saw for this quarter.
Any question that you asked about CECL, the only thing we can say about CECL is provisioning going forward in the second quarter as the rest of the year is that it will be very volatile.
Given the fact that the economic environment is extremely volatile.
And very importantly, we have not lost sight.
Once again, I will say, we've not lost sight of what we're trying to build in the long term.
We actually are fighting in this healthcare crisis in the short term, but in the medium and long term, we're still focused on building what we set out to build.
So whether it's BankUnited 2.0 or all the other things that we're working on, they continue.
Some of the initiatives around BankUnited 2.0, especially around revenue might get pushed out by a couple of months because it's new products that are being launched.
It's going to be hard to try and launch them in the next couple of months when we are going through social distancing the way we are.
But overall, the numbers don't change, and it just gets pushed out a little more.

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bankunited q1 loss per share $0.33.
q1 loss per share $0.33.

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