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BankUnited, Inc. Reports First Quarter 2020 Results

MIAMI LAKES, Fla.--(BUSINESS WIRE)--Apr. 29, 2020-- BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended March 31, 2020.

“The COVID-19 pandemic has altered life as we know it. While extraordinary changes in the economic backdrop and the implications of the COVID-19 outbreak had a material impact on our provision for credit losses this quarter, BankUnited’s capital and liquidity positions are strong. We are prepared to navigate these challenging circumstances and are intently focused on doing what we can to support our customers, communities and employees in these unprecedented times. I would be remiss not to add that I am extremely proud of the commitment demonstrated by our employees, many of whom have been working around the clock to help our clients during this difficult time. I am confident we will emerge stronger on the other side of this pandemic, well positioned to partner with our customers as they chart a path forward,” said Rajinder Singh, Chairman, President and Chief Executive Officer.

For the quarter ended March 31, 2020, the Company reported a net loss of $(31.0) million, or $(0.33) per diluted share, compared to net income of $66.0 million, or $0.65 per diluted share, for the quarter ended March 31, 2019. Results for the quarter ended March 31, 2020 were negatively impacted by the application of the Current Expected Credit Losses ("CECL") accounting methodology, including the expected impact of COVID-19 on the provision for credit losses.

Our Response to the COVID-19 Pandemic

The COVID-19 pandemic has caused substantial disruption to the global economy and the communities we serve. In response to the pandemic, we have:

  • Prioritized the well-being of our employees, operational resilience, liquidity, support to our customers, and asset quality.
  • Activated our business continuity and contingency funding plans.
  • Enabled 79% of our total employees, and 97% of our non-branch employees, to work remotely. We have not experienced any significant operational issues or disruptions in customer service as a result.
  • Expanded certain employee benefits and launched a number of programs to keep our employees healthy and engaged.
  • Implemented modified service models for all of our branches. To promote social distancing, customers are being served in these branches through drive through or lobby appointments only, and in some cases, with reduced hours. 24% of our retail branches are temporarily closed based on customer traffic counts and staffing levels.
  • Supported our clients through participating in the Small Business Administration’s Paycheck Protection Program ("PPP"), and granting forbearance, deferrals and fee waivers on a case-by-case basis.
  • Enhanced daily monitoring of liquidity trends and deposit flows, and confirmed and optimized sources of contingent liquidity.
  • Pro-actively reached out to all of our borrowers with total credit exposure of $5 million or more, and to all borrowers in certain high-risk segments to assess the potential impact of COVID-19.
  • Segregated certain segments of the loan portfolio for enhanced monitoring, including franchise finance, hotels and retail.
  • Augmented our stress testing protocols.

We remain confident in our long-term underlying strength and stability, and our ability to navigate these challenging conditions.

Financial Highlights

  • The Company and its banking subsidiary exceeded all regulatory guidelines required to be considered well capitalized at March 31, 2020. The Company's and the Bank's CET1 risk-based capital ratios were 11.8% and 12.9% at March 31, 2020, respectively. The Company's and the Bank's Tier 1 leverage ratios were 8.5% and 9.3% at March 31, 2020, respectively.
  • Our liquidity position remains strong. At March 31, 2020, the Bank had total same day available liquidity of approximately $8.5 billion.
  • Non-interest bearing demand deposits grew by $305 million for the quarter ended March 31, 2020, to 18.4% of total deposits at March 31, 2020 compared to 17.6% of total deposits at December 31, 2019 and 15.9% of total deposits one year ago. Total deposits grew by $606 million for the quarter ended March 31, 2020.
  • The average cost of total deposits declined to 1.36% for the quarter ended March 31, 2020, from 1.48% for the immediately preceding quarter ended December 31, 2019, and 1.67% for the quarter ended March 31, 2019. On a spot basis, the average annual percentage yield ("APY") on total interest-bearing deposits declined to 1.35% at March 31, 2020 from 1.71% at December 31, 2019, reflecting recent actions taken to reduce the cost of deposits.
  • The provision for credit losses totaled $125.4 million for the quarter ended March 31, 2020, reflecting the application of the CECL methodology and encompassing the expected economic impact of the COVID-19 pandemic. The provision included approximately $93 million related to changes in the economic forecast since the initial adoption of CECL on January 1, 2020 and was impacted by an increase of approximately $16 million in specific reserves during the quarter. Most of the increase in specific reserves related to credits in the franchise finance portfolio segment. The provision for credit losses, excluding the portion related to unfunded commitments, was 0.53% of average loans for the quarter ended March 31, 2020. For the quarter ended March 31, 2019, the Company recorded a provision for loan losses, under the incurred loss model, of $10.3 million.
  • The Allowance for Credit Losses ("ACL") represented our current estimate of expected lifetime credit losses from the loan portfolio and totaled $251 million, or 1.08% of total loans, at March 31, 2020. Upon initial adoption of CECL, at January 1, 2020, the ACL was 0.59% of total loans and at December 31, 2019, calculated under an incurred loss methodology, the ACL was 0.47% of total loans.
  • Pre-tax, pre-provision income totaled $85.0 million for the quarter ended March 31, 2020 compared to $100.5 million for the quarter ended March 31, 2019. Pre-tax, pre-provision income for the quarter ended March 31, 2020 included a $5.0 million unrealized loss on marketable equity securities, resulting from the impact on markets of the COVID-19 crisis. Inclusive of this $5.0 million unrealized loss, loss on investment securities was $(3.5) million for the quarter ended March 31, 2020 compared to a gain on investment securities of $5.8 million for the comparable quarter of the prior year, a negative variance of $9.2 million. Additional factors contributing to the decline in pre-tax, pre-provision income were a $10.3 million decline in net interest income, discussed further below, partially offset by a $7.8 million decrease in total non-interest expense.
  • The net interest margin, calculated on a tax-equivalent basis, was 2.35% for the quarter ended March 31, 2020, compared to 2.41% for the immediately preceding quarter ended December 31, 2019 and 2.54% for the quarter ended March 31, 2019. Both yields on interest earning assets and the cost of interest bearing liabilities declined for the quarter ended March 31, 2020 as compared to the quarters ended December 31, 2019 and March 31, 2019; however, the repricing of interest bearing liabilities, particularly deposits, lagged the repricing of interest earning assets.
  • Stockholders' equity was impacted by a decline of $291.8 million in accumulated other comprehensive income for the quarter ended March 31,2020, attributed to an increase in unrealized losses on investment securities available for sale and derivative instruments. The Company currently expects to recover the amortized cost basis of its available for sale securities portfolio. Share repurchases totaling approximately $101 million during the quarter ended March 31, 2020 also impacted stockholders' equity. As previously reported, the Company has temporarily suspended its share repurchase program.
  • As previously reported, the Company announced an increase of $0.02 in its quarterly cash dividend to $0.23 per common share, reflecting a 10% increase from the previous quarterly cash dividend of $0.21 per common share.

     

Capital

The Company's and BankUnited, N.A.'s regulatory capital ratios at March 31, 2020 and December 31, 2019 were as follows:

 

March 31, 2020

 

December 31, 2019

 

Required to be Considered Well Capitalized

 

BankUnited, Inc.

 

BankUnited, N.A.

 

BankUnited, Inc.

 

BankUnited, N.A.

 

Tier 1 leverage

8.5

%

 

9.3

%

 

8.9

%

 

9.3

%

 

5.0

%

Common Equity Tier 1 ("CET1") risk-based capital

11.8

%

 

12.9

%

 

12.3

%

 

12.9

%

 

6.5

%

Total risk-based capital

12.6

%

 

13.7

%

 

12.8

%

 

13.4

%

 

10.0

%

As permitted by a recently issued inter-agency interim final rule, the Company has elected the option to temporarily delay the effects of the adoption of CECL on regulatory capital for two years, followed by a three-year transition period. On a fully phased in basis, at March 31, 2020, the Company's and the Bank's CET1 risk-based capital ratios would have been 11.5% and 12.6%, respectively.

The primary reason for the decline in the Company's regulatory capital ratios from December 31, 2019 to March 31, 2020 was share repurchases executed during the first quarter. During the quarter ended March 31, 2020, the Company repurchased approximately 3.3 million shares of its common stock for an aggregate purchase price of $101 million, at a weighted average price of $30.36 per share.

Liquidity

BankUnited's liquidity position remains strong. At March 31, 2020, same day available liquidity totaled approximately $8.5 billion, including cash, borrowing capacity at the Federal Home Loan Bank of Atlanta and the Federal Reserve Discount Window and Federal Funds lines of credit. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Bank's amortizing securities and loan portfolios. At March 31, 2020, BankUnited had available borrowing capacity at the Federal Home Loan Bank of $4.5 billion, unused borrowing capacity at the Federal Reserve of $3.3 billion and unused Federal funds lines of credit totaling $225 million. The Bank utilizes the Federal Reserve's Paycheck Protection Program Liquidity Facility to provide liquidity to fund PPP loans.

Asset Quality and the Allowance for Credit Losses

Effective January 1, 2020, the Company adopted the Current Expected Credit Losses ("CECL") methodology for estimating its ACL as prescribed by Accounting Standards Codification ("ASC") 326. This accounting standard establishes a single framework for estimating expected credit losses for all financial assets carried at amortized cost and certain off-balance sheet credit exposures. The framework requires that management's estimate reflect expected credit losses over the remaining lives of financial instruments and consider historical events, current conditions and reasonable and supportable economic forecasts.

The following table presents the ACL at the dates indicated, related ACL coverage ratios, as well as net charge-off rates for the quarter ended March 31, 2020 and the year ended December 31, 2019 (dollars in thousands):

 

ACL

 

ACL to Total Loans

 

ACL to Non-Performing Loans

 

Net Charge-offs to Average Loans

December 31, 2019 (incurred loss)

$

108,671

 

 

0.47

%

 

53.07

%

 

0.05

%

January 1, 2020 (initial date of CECL adoption)

$

135,976

 

 

0.59

%

 

66.4

%

 

N/A

 

March 31, 2020 (expected loss)

$

250,579

 

 

1.08

%

 

126.41

%

 

0.13

%

The Company based its reasonable and supportable forecast used in estimating the ACL at March 31, 2020 on Moody's March Mid-Cycle Baseline forecast dated March 27, 2020. This forecast incorporated a number of macroeconomic variables and other data and featured a peak-to-trough drop of approximately 20% in real GDP and a national unemployment rate approaching 9% in the second quarter 2020, with recovery beginning in the second half of 2020. For the quarter ended March 31, 2020, the Company recorded a provision for credit losses of $125.4 million, which included $3.6 million related to unfunded loan commitments.

The following table summarizes the activity in the ACL for the periods indicated (in thousands):

 

Three Months Ended March 31,

 

2020

 

2019

Beginning balance

$

108,671

 

 

$

109,931

 

Cumulative effect of adoption of CECL

27,305

 

 

 

Balance after adoption of CECL

135,976

 

 

109,931

 

Provision

121,865

 

 

10,281

 

Charge-offs

(7,806

)

 

(6,133

)

Recoveries

544

 

 

624

 

Ending balance

$

250,579

 

 

$

114,703

 

Non-performing loans totaled $198.2 million or 0.85% of total loans at March 31, 2020, compared to $204.8 million or 0.88% of total loans at December 31, 2019. Non-performing loans included $49.1 million and $45.7 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.21% and 0.20% of total loans at March 31, 2020 and December 31, 2019, respectively.

The following table shows the composition of the Company's criticized and classified commercial loans at the dates indicated (dollars in thousands):

 

March 31, 2020

 

December 31, 2019

Special Mention

$

288,148

 

 

$

72,881

 

Substandard accruing

238,786

 

 

180,380

 

Substandard non-accruing

181,278

 

 

185,906

 

Total criticized and classified

$

708,212

 

 

$

439,167

 

Percent of total loans

3.10

%

 

1.90

%

The increase in special mention and substandard accruing loans was primarily attributed to downgrades in the Bridge franchise finance portfolio during the quarter ended March 31, 2020.

Loans and Leases

A comparison of loan and lease portfolio composition at the dates indicated follows (dollars in thousands):

 

March 31, 2020

 

December 31, 2019

Residential and other consumer loans

$

5,634,823

 

 

24.4

%

 

$

5,661,119

 

 

24.5

%

Multi-family

1,967,578

 

 

8.5

%

 

2,217,705

 

 

9.6

%

Non-owner occupied commercial real estate

4,987,798

 

 

21.5

%

 

5,030,904

 

 

21.7

%

Construction and land

222,223

 

 

1.0

%

 

243,925

 

 

1.1

%

Owner occupied commercial real estate

2,026,510

 

 

8.7

%

 

2,062,808

 

 

8.9

%

Commercial and industrial

5,008,573

 

 

21.6

%

 

4,655,349

 

 

20.1

%

Pinnacle

1,187,607

 

 

5.0

%

 

1,202,430

 

 

5.2

%

Bridge - franchise finance

647,699

 

 

2.8

%

 

627,482

 

 

2.6

%

Bridge - equipment finance

649,154

 

 

2.8

%

 

684,794

 

 

3.0

%

Mortgage warehouse lending

852,313

 

 

3.7

%

 

768,472

 

 

3.3

%

 

$

23,184,278

 

 

100.0

%

 

$

23,154,988

 

 

100.0

%

Operating lease equipment, net

$

684,563

 

 

 

 

$

698,153

 

 

 

For the quarter ended March 31, 2020, total loans grew by $29 million. Commercial and industrial loans grew by $353 million and mortgage warehouse outstandings increased by $84 million due to increased utilization. The decline in multi-family balances was driven primarily by continued runoff of the New York portfolio. Residential activity for the quarter included purchases of approximately $286 million in GNMA early buyout loans, offset by approximately $202 million in re-poolings and paydowns. The core portfolio experienced a net decline of approximately $111 million driven by higher prepayment speeds in the current rate environment.

The following table presents loan portfolio sub-segments that, in light of current circumstances, have been identified for enhanced monitoring as of March 31, 2020 (dollars in thousands):

 

March 31, 2020

 

Amount

% of Total Loans

Retail exposure in the CRE portfolio

$

1,446,599

6.2

%

Retail exposure in the C&I portfolio (1)

346,915

1.5

%

Bridge - franchise finance

647,699

2.8

%

Hotel

619,482

2.7

%

Airlines

84,649

0.4

%

Cruise lines

71,374

0.3

%

Energy

46,348

0.2

%

 

$

3,263,066

14.1

%

(1)

 

Includes $216 million of owner-occupied commercial real estate loans.

There is also exposure to energy in the operating lease portfolio, primarily railcars, totaling $291 million at March 31, 2020.

Investment Securities

Investment securities totaled $7.9 billion at March 31, 2020 compared to $7.8 billion at December 31, 2019, substantially all of which were available for sale ("AFS"). The AFS portfolio was in a net unrealized loss position of $249.8 million at March 31, 2020, compared to a net unrealized gain position of $38.3 million at December 31, 2019. Unrealized losses were primarily attributable to spread widening. The majority of the unrealized losses at March 31, 2020 related to the private label commercial mortgage backed security ("CMBS") and collateralized loan obligation ("CLO") portfolio segments. The CMBS and CLO portfolio segments, which totaled $1.6 billion and $1.1 billion at March 31, 2020, respectively, were in net unrealized loss positions of $123.8 million and $74.7 million, respectively. The Company monitors its AFS securities at the individual security level to evaluate whether any of the unrealized losses are indicative of credit losses. At March 31, 2020, our security level analysis incorporated assumptions about underlying collateral defaults, delinquencies, severity and other relevant factors generally consistent with those observed at the most severe point in the global financial crisis. Based on this analysis, due in large part to the level of credit enhancement provided by the structure of these securities, none of the AFS securities were determined to be credit loss impaired.

Net interest income

Net interest income for the quarter ended March 31, 2020 decreased to $180.6 million from $190.9 million for the quarter ended March 31, 2019 and $185.3 million for the immediately preceding quarter ended December 31, 2019. Interest income and interest expense decreased by $27.7 million and $17.4 million, respectively, for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019 and by $15.3 million and $10.5 million, respectively, compared to the immediately preceding quarter. Decreases in both interest income and expense are primarily a result of decreases in benchmark interest rates.

The Company’s net interest margin, calculated on a tax-equivalent basis, decreased to 2.35% for the quarter ended March 31, 2020, from 2.41% for the immediately preceding quarter ended December 31, 2019, and 2.54% for the quarter ended March 31, 2019. Declines in yields on interest earning assets outpaced declines in average rates on interest bearing liabilities, at least in part because repricing of deposits lagged repricing of interest earning assets.

Significant factors contributing to these declines in the net interest margin included:

  • The tax-equivalent yield on loans decreased to 4.18% for the quarter ended March 31, 2020, from 4.27% for the quarter ended December 31, 2019 and 4.50% for the quarter ended March 31, 2019. The most significant factor contributing to these decreases was the impact of decreases in benchmark interest rates.
  • The tax-equivalent yield on investment securities decreased to 2.81% for the quarter ended March 31, 2020 from 3.18% for the quarter ended December 31, 2019 and 3.64% for the quarter ended March 31, 2019. The most significant factors contributing to these decreases were the impact of decreases in benchmark interest rates and, to a lesser extent, increased prepayment speeds.
  • The average rate on interest bearing liabilities decreased to 1.82% for the quarter ended March 31, 2020 from 1.96% for the quarter ended December 31, 2019 and 2.10% for the quarter ended March 31, 2019, reflecting lower average rates on interest bearing deposits, short term borrowings and FHLB advances. Decreases in the cost of interest bearing liabilities primarily reflect decreases in benchmark interest rates.

For the quarter ended March 31, 2020 the increase in average non-interest bearing demand deposits as a percentage of total deposits positively impacted the net interest margin.

Non-interest income

Non-interest income totaled $23.3 million for the quarter ended March 31, 2020 compared to $36.3 million for the quarter ended March 31, 2019.

The most significant factor contributing to the decrease in non-interest income for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019 was the decrease of $9.2 million in gain (loss) on investment securities. The loss on investment securities for the quarter ended March 31, 2020 included $5.0 million of unrealized losses on marketable equity securities offset by $1.5 million in realized gains on available for sale securities.

Non-interest expense

Non-interest expense totaled $118.9 million for the quarter ended March 31, 2020 compared to $126.7 million for the quarter ended March 31, 2019.

Significant factors contributing to the decrease in non-interest expense for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019 included:

  • Employee compensation and benefits decreased by $6.3 million, primarily due to a reduction in headcount and a decrease in equity based compensation expense related to the impact of a declining stock price on liability-classified awards.
  • Professional fees decreased by $4.7 million, primarily due to the consulting services in 2019 related to our BankUnited 2.0 initiative.

     

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, April 29, 2020 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.

The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. The call may be accessed via a live Internet webcast at www.bankunited.com or through a dial in telephone number at (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the confirmation number for the call is 4568078. A replay of the call will be available from 12:00 p.m. ET on April 29th through 11:59 p.m. ET on May 6th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The pass code for the replay is 4568078. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.

About BankUnited, Inc.

BankUnited, Inc., with total assets of $33.6 billion at March 31, 2020, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 74 banking centers in 14 Florida counties and 5 banking centers in the New York metropolitan area at March 31, 2020.

Forward-Looking Statements

This press release contains 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.

The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates, ” "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release 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 the COVID-19 pandemic. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, 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. Information on these factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 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).

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands, except share and per share data)

 

March 31,
2020

 

December 31,
2019

ASSETS

 

 

 

Cash and due from banks:

 

 

 

Non-interest bearing

$

8,905

 

 

$

7,704

 

Interest bearing

757,793

 

 

206,969

 

Cash and cash equivalents

766,698

 

 

214,673

 

Investment securities (including securities recorded at fair value of $7,864,601 and $7,759,237)

7,874,601

 

 

7,769,237

 

Non-marketable equity securities

281,714

 

 

253,664

 

Loans held for sale

17,655

 

 

37,926

 

Loans

23,184,278

 

 

23,154,988

 

Allowance for credit losses

(250,579

)

 

(108,671

)

Loans, net

22,933,699

 

 

23,046,317

 

Bank owned life insurance

288,869

 

 

282,151

 

Operating lease equipment, net

684,563

 

 

698,153

 

Goodwill and other intangible assets

77,663

 

 

77,674

 

Other assets

670,209

 

 

491,498

 

Total assets

$

33,595,671

 

 

$

32,871,293

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Liabilities:

 

 

 

Demand deposits:

 

 

 

Non-interest bearing

$

4,599,337

 

 

$

4,294,824

 

Interest bearing

2,535,696

 

 

2,130,976

 

Savings and money market

10,323,899

 

 

10,621,544

 

Time

7,541,839

 

 

7,347,247

 

Total deposits

25,000,771

 

 

24,394,591

 

Federal funds purchased

 

 

100,000

 

Federal Home Loan Bank advances

5,144,409

 

 

4,480,501

 

Notes and other borrowings

428,579

 

 

429,338

 

Other liabilities

505,783

 

 

486,084

 

Total liabilities

31,079,542

 

 

29,890,514

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value $0.01 per share, 400,000,000 shares authorized; 92,406,294 and 95,128,231 shares issued and outstanding

924

 

 

951

 

Paid-in capital

987,757

 

 

1,083,920

 

Retained earnings

1,851,040

 

 

1,927,735

 

Accumulated other comprehensive loss

(323,592

)

 

(31,827

)

Total stockholders' equity

2,516,129

 

 

2,980,779

 

Total liabilities and stockholders' equity

$

33,595,671

 

 

$

32,871,293

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

 

Three Months Ended March 31,

 

2020

 

2019

Interest income:

 

 

 

Loans

$

234,359

 

 

$

240,632

 

Investment securities

56,060

 

 

76,345

 

Other

3,720

 

 

4,852

 

Total interest income

294,139

 

 

321,829

 

Interest expense:

 

 

 

Deposits

82,822

 

 

97,421

 

Borrowings

30,741

 

 

33,507

 

Total interest expense

113,563

 

 

130,928

 

Net interest income before provision for credit losses

180,576

 

 

190,901

 

Provision for credit losses

125,428

 

 

10,281

 

Net interest income after provision for credit losses

55,148

 

 

180,620

 

Non-interest income:

 

 

 

Deposit service charges and fees

4,186

 

 

3,830

 

Gain on sale of loans, net

3,466

 

 

2,936

 

Gain (loss) on investment securities, net

(3,453

)

 

5,785

 

Lease financing

15,481

 

 

17,186

 

Other non-interest income

3,618

 

 

6,518

 

Total non-interest income

23,298

 

 

36,255

 

Non-interest expense:

 

 

 

Employee compensation and benefits

58,887

 

 

65,233

 

Occupancy and equipment

12,369

 

 

13,166

 

Deposit insurance expense

4,403

 

 

4,041

 

Professional fees

3,204

 

 

7,871

 

Technology and telecommunications

12,596

 

 

11,168

 

Depreciation of operating lease equipment

12,603

 

 

11,812

 

Other non-interest expense

14,806

 

 

13,399

 

Total non-interest expense

118,868

 

 

126,690

 

Income (loss) before income taxes

(40,422

)

 

90,185

 

Provision (benefit) for income taxes

(9,471

)

 

24,213

 

Net income (loss)

$

(30,951

)

 

$

65,972

 

Earnings (loss) per common share, basic

$

(0.33

)

 

$

0.65

 

Earnings (loss) per common share, diluted

$

(0.33

)

 

$

0.65

 

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

 

 

Three Months Ended March 31,

 

 

2020

 

2019

 

 

Average
Balance

 

Interest (1)(2)

 

Yield/
Rate (1)(2)

 

Average
Balance

 

Interest (1)(2)

 

Yield/
Rate (1)(2)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

22,850,065

 

 

$

238,108

 

 

4.18

%

 

$

21,974,453

 

 

$

245,010

 

 

4.50

%

Investment securities (3)

 

8,107,649

 

 

56,951

 

 

2.81

%

 

8,520,555

 

 

77,607

 

 

3.64

%

Other interest earning assets

 

646,628

 

 

3,720

 

 

2.31

%

 

496,141

 

 

4,852

 

 

3.96

%

Total interest earning assets

 

31,604,342

 

 

298,779

 

 

3.79

%

 

30,991,149

 

 

327,469

 

 

4.26

%

Allowance for credit losses

 

(138,842

)

 

 

 

 

 

(111,074

)

 

 

 

 

Non-interest earning assets

 

1,749,752

 

 

 

 

 

 

1,603,922

 

 

 

 

 

Total assets

 

$

33,215,252

 

 

 

 

 

 

$

32,483,997

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

 

$

2,173,628

 

 

6,959

 

 

1.29

%

 

$

1,702,479

 

 

5,639

 

 

1.34

%

Savings and money market deposits

 

10,412,202

 

 

37,756

 

 

1.46

%

 

11,453,980

 

 

52,817

 

 

1.87

%

Time deposits

 

7,510,070

 

 

38,107

 

 

2.04

%

 

6,907,011

 

 

38,965

 

 

2.29

%

Total interest bearing deposits

 

20,095,900

 

 

82,822

 

 

1.66

%

 

20,063,470

 

 

97,421

 

 

1.97

%

Short term borrowings

 

94,066

 

 

367

 

 

1.56

%

 

137,378

 

 

824

 

 

2.40

%

FHLB advances

 

4,414,830

 

 

25,084

 

 

2.29

%

 

4,660,222

 

 

27,374

 

 

2.38

%

Notes and other borrowings

 

429,098

 

 

5,290

 

 

4.93

%

 

404,852

 

 

5,309

 

 

5.25

%

Total interest bearing liabilities

 

25,033,894

 

 

113,563

 

 

1.82

%

 

25,265,922

 

 

130,928

 

 

2.10

%

Non-interest bearing demand deposits

 

4,368,553

 

 

 

 

 

 

3,605,131

 

 

 

 

 

Other non-interest bearing liabilities

 

749,101

 

 

 

 

 

 

657,360

 

 

 

 

 

Total liabilities

 

30,151,548

 

 

 

 

 

 

29,528,413

 

 

 

 

 

Stockholders' equity

 

3,063,704

 

 

 

 

 

 

2,955,584

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

33,215,252

 

 

 

 

 

 

$

32,483,997

 

 

 

 

 

Net interest income

 

 

 

$

185,216

 

 

 

 

 

 

$

196,541

 

 

 

Interest rate spread

 

 

 

 

 

1.97

%

 

 

 

 

 

2.16

%

Net interest margin

 

 

 

 

 

2.35

%

 

 

 

 

 

2.54

%

   

(1)

 

On a tax-equivalent basis where applicable

(2)

 

Annualized

(3)

 

At fair value except for securities held to maturity

BANKUNITED, INC. AND SUBSIDIARIES

EARNINGS (LOSS) PER COMMON SHARE

(In thousands except share and per share amounts)

 

Three Months Ended March 31,

2020

 

2019

Basic earnings per common share:

 

 

 

Numerator:

 

 

 

Net income (loss)

$

(30,951

)

 

$

65,972

 

Distributed and undistributed earnings allocated to participating securities

 

 

(2,697

)

Income (loss) allocated to common stockholders for basic earnings per common share

$

(30,951

)

 

$

63,275

 

Denominator:

 

 

 

Weighted average common shares outstanding

93,944,529

 

 

98,856,775

 

Less average unvested stock awards

(1,101,370

)

 

(1,171,921

)

Weighted average shares for basic earnings (loss) per common share

92,843,159

 

 

97,684,854

 

Basic earnings (loss) per common share

$

(0.33

)

 

$

0.65

 

Diluted earnings (loss) per common share:

 

 

 

Numerator:

 

 

 

Income (loss) allocated to common stockholders for basic earnings per common share

$

(30,951

)

 

$

63,275

 

Adjustment for earnings reallocated from participating securities

 

 

5

 

Income (loss) used in calculating diluted earnings per common share

$

(30,951

)

 

$

63,280

 

Denominator:

 

 

 

Weighted average shares for basic earnings (loss) per common share

92,843,159

 

 

97,684,854

 

Dilutive effect of stock options and certain shared-based awards

 

 

279,779

 

Weighted average shares for diluted earnings per common share

92,843,159

 

 

97,964,633

 

Diluted earnings (loss) per common share

$

(0.33

)

 

$

0.65

 

BANKUNITED, INC. AND SUBSIDIARIES

SELECTED RATIOS

 

Three Months Ended March 31,

 

2020

 

2019

Financial ratios (4)

 

 

 

Return on average assets

(0.37

)%

 

0.82

%

Return on average stockholders’ equity

(4.1

)%

 

9.1

%

Net interest margin (3)

2.35

%

 

2.54

%

 

 

March 31, 2020

 

December 31, 2019

Asset quality ratios

 

 

 

Non-performing loans to total loans (1)(5)

0.85

%

 

0.88

%

Non-performing assets to total assets (2) (5)

0.61

%

 

0.63

%

Allowance for credit losses to total loans

1.08

%

 

0.47

%

Allowance for credit losses to non-performing loans (1) (5)

126.41

%

 

53.07

%

Provision for credit losses to average loans (4)

0.53

%

 

0.04

%

Net charge-offs to average loans (4)

0.13

%

 

0.05

%

 
 

 

(1)

 

We define non-performing loans to include non-accrual loans and loans other than government insured residential loans that are past due 90 days or more and still accruing. Contractually delinquent government insured residential loans on which interest continues to be accrued are excluded from non-performing loans.

(2)

 

Non-performing assets include non-performing loans, OREO and other repossessed assets.

(3)

 

On a tax-equivalent basis.

(4)

 

Annualized for the three month periods.

(5)

 

Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $49.1 million or 0.21% of total loans and 0.15% of total assets, at March 31, 2020; compared to $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.

Non-GAAP Financial Measures

Pre-tax, pre-provision income is a non-GAAP financial measure. Management believes this measure is relevant to understanding the performance of the Company attributable to elements other than the provision for credit losses, particularly in view of the adoption of the CECL accounting methodology in the current quarter, which may impact comparability of operating results to prior periods. This measure also provides a meaningful basis for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of pre-tax, pre-provision income to the comparable GAAP financial measurement of income (loss) before income taxes for the three months ended March 31, 2020 and 2019 (in thousands):

 

Three Months Ended March 31,

 

2020

 

2019

Income (loss) before income taxes (GAAP)

$

(40,422

)

 

$

90,185

 

Plus: Provision for credit losses

125,428

 

 

10,281

 

Pre-tax, pre-provision income (non-GAAP)

$

85,006

 

 

$

100,466

 

 

BankUnited, Inc.
Investor Relations:
Leslie N. Lunak, 786-313-1698
llunak@bankunited.com

Source: BankUnited, Inc.