News Release

MIAMI LAKES, Fla.--(BUSINESS WIRE)--Oct. 24, 2018-- BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended September 30, 2018.

For the quarter ended September 30, 2018, the Company reported net income of $97.3 million, or $0.90 per diluted share compared to $67.8 million, or $0.62 per diluted share, for the quarter ended September 30, 2017, a 45% increase in diluted earnings per share. For the nine months ended September 30, 2018, the Company reported net income of $272.5 million, or $2.49 per diluted share, compared to $196.5 million, or $1.79 per diluted share, for the nine months ended September 30, 2017.

Non-loss share earnings per share⁽¹⁾ for the trailing four quarters ended September 30, 2018 increased by 28% to a total of $2.39 from a total of $1.87 for the preceding four quarters.

The annualized return on average stockholders’ equity for the nine months ended September 30, 2018 was 11.80% compared to 10.21% for the nine months ended September 30, 2017, while the annualized return on average assets was 1.19% compared to 0.92% for the same periods.

Rajinder Singh, President and Chief Executive Officer, said, "Results for this quarter were marked by strong growth in both GAAP and non-loss share EPS and by continued success increasing non-interest bearing DDA balances."

Performance Highlights

• Net interest income increased by $10.7 million to $252.0 million for the quarter ended September 30, 2018 from $241.3 million for the quarter ended September 30, 2017. Interest income increased by $48.3 million, driven by increases in the average balances of loans and investment securities outstanding as well as increases in yields on interest earning assets. Interest expense increased by $37.6 million, driven primarily by increases in average interest bearing deposits and an increase in the cost of interest bearing liabilities. For the nine months ended September 30, 2018, net interest income increased by $43.6 million to $755.0 million from $711.4 million for the nine months ended September 30, 2017.
• The net interest margin, calculated on a tax-equivalent basis, was 3.51% for the quarter ended September 30, 2018 compared to 3.60% for the immediately preceding quarter ended June 30, 2018 and 3.62% for the quarter ended September 30, 2017. Significant factors contributing to the decline in the net interest margin from the comparable quarter of the prior year were (i) an increase in the cost of interest bearing liabilities; (ii) the impact on tax equivalent yields of the reduction in the statutory federal income tax rate; and (iii) although yields on all categories of interest earning assets increased, non-covered loans and investment securities were added to the balance sheet at yields lower than the existing yield on earning assets, which is impacted by the yield on covered loans.
• The provision for loan losses for the quarter ended September 30, 2018 totaled $1.2 million compared to $37.9 million for the quarter ended September 30, 2017. The provision for the quarter ended September 30, 2017 included $32.7 million related to taxi medallion loans.
• Non-covered loans and leases, including equipment under operating lease, grew by $211 million during the quarter ended September 30, 2018. For the nine months ended September 30, 2018, non-covered loans and leases grew by $708 million.
• For the quarter ended September 30, 2018, total deposits increased by $127 million, of which $98 million was non-interest bearing demand deposits. Total deposits increased by $427 million for the nine months ended September 30, 2018, of which $343 million was non-interest bearing demand deposits.
• Book value per common share grew to $29.63 at September 30, 2018 from $28.32 at December 31, 2017 while tangible book value per common share increased to $28.88 from $27.59 over the same period.

• During the quarter ended September 30, 2018, the Company completed the $150 million share repurchase program authorized by its Board of Directors, repurchasing 2.4 million shares for an aggregate purchase price of $96 million. During the nine months ended September 30, 2018, the Company repurchased approximately 3.8 million shares of its common stock for an aggregate purchase price of $150.0 million.
• On October 23, 2018 the Board of Directors of the Company authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock. Any repurchases will be made in accordance with applicable securities laws from time to time in open market or private transactions. The extent to which the Company repurchases shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of retained earnings, regulatory requirements and other considerations. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time.

(1) Non-loss share earnings per share is a non-GAAP measure. See section entitled "Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measurements to their comparable GAAP financial measurements.

Capital

The Company and its banking subsidiary continue to exceed all regulatory guidelines required to be considered well capitalized. The Company’s and BankUnited, N.A.'s regulatory capital ratios at September 30, 2018 were as follows:

				BankUnited, Inc.			BankUnited, N.A.
Tier 1 leverage				9.5%			10.3%
Common Equity Tier 1 ("CET1") risk-based capital				13.2%			14.3%
Tier 1 risk-based capital				13.2%			14.3%
Total risk-based capital				13.8%			14.9%

Loans and Leases

Loans, including premiums, discounts and deferred fees and costs, totaled $21.9 billion at September 30, 2018 compared to $21.4 billion at December 31, 2017. Non-covered loans grew to $21.6 billion while covered loans declined to $360 million at September 30, 2018.

A comparison of non-covered loan and lease portfolio composition at the dates indicated follows:

		September 30, 2018						June 30, 2018						December 31, 2017
Residential and other consumer loans		$	4,563,578			21.0%		$	4,448,660			20.6%		$	4,196,080			19.8%
Multi-family		2,762,998				12.8%		2,861,559				13.4%		3,218,953				15.4%
Non-owner occupied commercial real estate		4,567,589				21.4%		4,526,922				21.2%		4,474,801				21.5%
Construction and land		244,619				1.1%		255,393				1.2%		310,484				1.5%
Owner occupied commercial real estate		2,091,978				9.7%		2,046,266				9.6%		2,012,742				9.7%
Commercial and industrial		4,708,545				21.9%		4,594,857				21.5%		4,137,827				19.9%
Commercial lending subsidiaries		2,620,097				12.1%		2,684,716				12.5%		2,562,499				12.2%
		$	21,559,404			100.0%		$	21,418,373			100.0%		$	20,913,386			100.0%
Equipment under operating lease, net		$	661,677					$	591,267					$	599,502

Residential and other consumer loans grew by $115 million for the quarter ended September 30, 2018. Multi-family loans declined by $99 million for the quarter ended September 30, 2018, primarily due to continued run-off of the New York portfolio, which decreased by $91 million. Commercial and industrial loans, inclusive of owner occupied commercial real estate, grew by $159 million for the quarter ended September 30, 2018, driven largely by growth in the Florida portfolio. Loans and leases for the commercial lending subsidiaries increased slightly, reflecting growth of $70 million in equipment under operating lease, largely offset by a decline in balances outstanding at Pinnacle Public Finance.

Asset Quality and Allowance for Loan and Lease Losses

For the quarters ended September 30, 2018 and 2017, the Company recorded provisions for loan losses of $1.2 million and $37.9 million, respectively, substantially all of which related to non-covered loans. For the nine months ended September 30, 2018 and 2017, the Company recorded provisions for loan losses of $13.3 million and $63.6 million, respectively, substantially all of which related to non-covered loans. The Company recorded net recoveries of $1.0 million and a provision of $32.7 million related to taxi medallion loans for the quarters ended September 30, 2018 and September 30, 2017, respectively. For the nine months ended September 30, 2018 and 2017, the provision related to taxi medallion loans totaled $13.0 million and $49.6 million, respectively.

Significant factors impacting the decrease in the provision for loan losses related to non-covered loans for the quarter and nine months ended September 30, 2018 as compared to the quarter and nine months ended September 30, 2017 were (i) lower loan growth; (ii) a net decrease in the provision related to certain quantitative and qualitative loss factors; (iii) a decrease in the provision related to taxi medallion loans; (iv) a decrease in the provision related to the impact of hurricanes during the third quarter of 2017; partially offset by (v) an increase in the provision related to specific reserves for loans other than taxi medallion loans.

Non-covered, non-performing loans totaled $206.1 million or 0.96% of total non-covered loans at September 30, 2018, compared to $172.0 million or 0.82% of total non-covered loans at December 31, 2017. Non-performing taxi medallion loans comprised $80.2 million or 0.37% of total non-covered loans at September 30, 2018 and $106.1 million or 0.51% of total non-covered loans at December 31, 2017. At September 30, 2018 and December 31, 2017, the entire taxi medallion portfolio was on non-accrual status.

The ratios of the allowance for non-covered loan and lease losses to total non-covered loans and to non-performing, non-covered loans were 0.58% and 60.51%, respectively, at September 30, 2018, compared to 0.69% and 84.03%, at December 31, 2017. The annualized ratio of net charge-offs to average non-covered loans was 0.21% for the nine months ended September 30, 2018, compared to 0.38% for the year ended December 31, 2017. The annualized ratio of charge-offs of taxi medallion loans to average non-covered loans was 0.09% for the nine months ended September 30, 2018, compared to 0.29% for the year ended December 31, 2017. The most significant factors impacting the decline in the ratio of the allowance for non-covered loan and lease losses to total non-covered loans were (i) a decrease in certain loss factors, (ii) a decline in total criticized, classified and impaired loans, which typically carry higher reserves on a percentage basis, as a percentage of total loans and (iii) the impact of charge-offs on the ratio.

The following table summarizes the activity in the allowance for loan and lease losses for the periods indicated (in thousands):

		Three Months Ended September 30, 2018																Three Months Ended September 30, 2017
		ACI Loans				Non-ACI Loans				Non-Covered Loans				Total				ACI Loans				Non-ACI Loans				Non-Covered Loans				Total
Balance at beginning of period		$	—			$	590			$	134,381			$	134,971			$	1,812			$	2,737			$	151,099			$	155,648
Provision (recovery)		—				(50		)		1,250				1,200				—				261				37,593				37,854
Charge-offs		—				(740		)		(12,340		)		(13,080		)		—				—				(36,028		)		(36,028		)
Recoveries		—				214				1,435				1,649				—				38				1,061				1,099
Balance at end of period		$	—			$	14			$	124,726			$	124,740			$	1,812			$	3,036			$	153,725			$	158,573

		Nine Months Ended September 30, 2018																Nine Months Ended September 30, 2017
		ACI Loans				Non-ACI Loans				Non-Covered Loans				Total				ACI Loans				Non-ACI Loans				Non-Covered Loans				Total
Balance at beginning of period		$	—			$	258			$	144,537			$	144,795			$	—			$	2,100			$	150,853			$	152,953
Provision		—				517				12,825				13,342				1,812				881				60,880				63,573
Charge-offs		—				(979		)		(35,001		)		(35,980		)		—				(55		)		(61,034		)		(61,089		)
Recoveries		—				218				2,365				2,583				—				110				3,026				3,136
Balance at end of period		$	—			$	14			$	124,726			$	124,740			$	1,812			$	3,036			$	153,725			$	158,573

Charge-offs related to taxi medallion loans totaled $0.7 million and $35.3 million for the quarters ended September 30, 2018 and 2017, respectively, and $14.2 million and $47.1 million for the nine months ended September 30, 2018 and 2017. The majority of charge-offs for the quarter ended September 30, 2018 related to one commercial relationship.

Deposits

At September 30, 2018, deposits totaled $22.3 billion compared to $21.9 billion at December 31, 2017. The average cost of total deposits was 1.35% for the quarter ended September 30, 2018, compared to 1.19% for the immediately preceding quarter ended June 30, 2018, and 0.87% for the quarter ended September 30, 2017. The average cost of total deposits was 1.19% for the nine months ended September 30, 2018, compared to 0.80% for the nine months ended September 30, 2017.

Net interest income

Net interest income for the quarter ended September 30, 2018 increased to $252.0 million from $241.3 million for the quarter ended September 30, 2017. Net interest income was $755.0 million for the nine months ended September 30, 2018, compared to $711.4 million for the nine months ended September 30, 2017. Increases in interest income were partially offset by increases in interest expense. The increases in interest income were primarily attributable to increases in the average balances of loans and investment securities and related average yields. Interest expense increased due to increases in average interest bearing deposits and the cost of funds.

The Company’s net interest margin, calculated on a tax-equivalent basis, was 3.51% for the quarter ended September 30, 2018, compared to 3.62% for the quarter ended September 30, 2017. Net interest margin, calculated on a tax-equivalent basis, was 3.56% for the nine months ended September 30, 2018, compared to 3.69% for the nine months ended September 30, 2017.

Significant offsetting factors impacting the declines in net interest margin for the quarter and nine months ended September 30, 2018, compared to the quarter and nine months ended September 30, 2017, included:

• The tax-equivalent yield on loans increased to 5.47% and 5.39%, respectively, for the quarter and nine months ended September 30, 2018, compared to 5.15% for both the quarter and nine months ended September 30, 2017, reflecting increased yields on both non-covered and covered loans.
• The tax-equivalent yield on non-covered loans was 4.05% and 3.94%, respectively, for the quarter and the nine months ended September 30, 2018, compared to 3.79% and 3.73% for the quarter and nine months ended September 30, 2017. The most significant factor contributing to the increased yield on non-covered loans was the impact of increases in benchmark interest rates.
• The tax-equivalent yield on covered loans increased to 79.67% and 71.46%, respectively, for the quarter and nine months ended September 30, 2018 from 56.70% and 53.54% for the quarter and nine months ended September 30, 2017, reflecting continued improvements in expected cash flows from ACI loans.
• The tax-equivalent yield on investment securities increased to 3.41% and 3.26%, respectively, for the quarter and nine months ended September 30, 2018 from 3.14% and 3.07% for the quarter and nine months ended September 30, 2017.
• Tax-equivalent yields on non-covered loans and investment securities and the net interest margin were each negatively impacted by approximately 0.08% for the quarter ended September 30, 2018 as compared to the quarter ended September 30, 2017 as a result of the reduction in the statutory federal income tax rate. For the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017, the tax rate change negatively impacted the net interest margin by approximately 0.08%.
• Growth of non-covered loans and investment securities at yields lower than the overall yield on interest earning assets, which is impacted by the yield on covered loans.
• The average rate on interest bearing liabilities increased to 1.74% and 1.57%, respectively for the quarter and nine months ended September 30, 2018, from 1.17% and 1.08% for the quarter and nine months ended September 30, 2017, reflecting higher average rates on both interest bearing deposits and FHLB advances. Increases in the cost of interest bearing liabilities primarily reflect increases in market interest rates and extension of the duration of FHLB advances.

Non-interest income

Non-interest income totaled $38.7 million and $98.7 million, respectively, for the quarter and nine months ended September 30, 2018 compared to $53.3 million and $111.4 million, respectively, for the quarter and nine months ended September 30, 2017.

The most significant factors contributing to these decreases in non-interest income included (i) decreases of $26.5 million and $26.3 million, respectively, in gain on investment securities and (ii) increases of $10.5 million and $10.7 million, respectively, in gain on sale of covered loans, inclusive of the impact of FDIC indemnification for the quarter and nine months ended September 30, 2018, as compared to the corresponding periods in the prior year. During the quarter ended September 30, 2018, under the terms of the Purchase and Assumption Agreement with the FDIC, the Company sold approximately $154 million in unpaid principal balance of covered residential loans. Decreases in gain on investment securities primarily reflected gains recognized in the quarter ended September 30, 2017 from the sale of certain securities formerly covered under the Commercial Shared-Loss Agreement and originally acquired at significant discounts in the FSB Acquisition.

Non-interest expense

Non-interest expense totaled $170.8 million and $493.9 million, respectively, for the quarter and nine months ended September 30, 2018 compared to $156.7 million and $473.7 million for the quarter and nine months ended September 30, 2017. The most significant components of non-interest expense are employee compensation and benefits and amortization of the FDIC indemnification asset. Employee compensation and benefits increased by $7.3 million and $19.8 million for the quarter and nine months ended September 30, 2018, compared to the quarter and nine months ended September 30, 2017, mainly due to an increase in the number of employees and compensation increases.

Amortization of the FDIC indemnification asset was $48.3 million and $132.9 million, respectively, for the quarter and nine months ended September 30, 2018, compared to $45.2 million and $135.4 million for the quarter and nine months ended September 30, 2017. The amortization rate increased to 103.87% and 76.73% for the quarter and nine months ended September 30, 2018 from 46.62% and 41.19% for the quarter and nine months ended September 30, 2017. As the expected cash flows from ACI loans have increased, expected cash flows from the FDIC indemnification asset have decreased, resulting in continued increases in the amortization rate. Although the amortization rate increased, total amortization expense declined for the nine months ended September 30, 2018 due to the reduction in the average balance of the indemnification asset.

Provision for income taxes

The effective income tax rate was 18.0% and 21.4% for the quarter and nine months ended September 30, 2018, compared to 32.2% and 31.2% for the quarter and nine months ended September 30, 2017. These declines in the effective income tax rate were primarily attributable to the reduction of the statutory corporate federal income tax rate from 35% to 21%, effective January 1, 2018. Additionally, the effective income tax rate differed from the statutory federal income tax rate of 21% in both periods due primarily to income not subject to tax, offset by state income taxes.

Covered loans and the FDIC indemnification asset

As the Company’s expected cash flows from ACI loans have improved since the FSB Acquisition, the Company has reclassified amounts from non-accretable difference to accretable yield, resulting in increases in the yield on covered loans. Non-accretable difference at acquisition represented the difference between the total contractual payments due and the cash flows expected to be received on ACI loans. The accretable yield on ACI loans represented the amount by which undiscounted expected future cash flows exceeded the recorded investment in the loans.

Changes in accretable yield on ACI loans for the nine months ended September 30, 2018 and the year ended December 31, 2017 were as follows (in thousands):

Balance, December 31, 2016		$	675,385
Reclassifications from non-accretable difference, net		81,501
Accretion		(301,827		)
Balance, December 31, 2017		455,059
Reclassifications from non-accretable difference, net		78,561
Accretion		(249,609		)
Balance, September 30, 2018		$	284,011

At September 30, 2018, total future estimated amortization of the FDIC indemnification asset was approximately $82 million.

The estimates of expected cash flows from ACI loans underlying the balance of accretable yield and future estimated amortization of the FDIC indemnification asset reflected above as of September 30, 2018 were predicated on the assumption that a final sale of all of the remaining covered loans would occur in the second quarter of 2019. Based on preliminary discussions with the FDIC that have taken place subsequent to September 30, 2018, there is a reasonable possibility that a portion of these loans may be retained by the Bank and that the sale of any loans not retained may occur earlier than the second quarter of 2019. If a decision is made to retain a portion of the covered loan portfolio and the timing of sale of the remaining loans is accelerated, we expect the amount of estimated future amortization of the FDIC indemnification asset to increase and the timing of that amortization to be accelerated. Additionally, we expect that the balance of accretable yield will increase, in part due to expected collection of additional contractual interest, and that accretion will occur over a longer period of time reflective of the expected lives of the retained loans. Loss share coverage with respect to any loans retained is expected to terminate no later than May 21, 2019.

Impact of Hurricane Michael

In October, 2018, Hurricane Michael made landfall in the Florida panhandle as a category 4 hurricane, impacting some areas of Florida and the southeastern United States with significant wind damage, flooding and power outages. While the Company does not have physical operations in areas significantly impacted by the storm, some of the Company's borrowers may have been impacted. The Company is in the process of assessing the potential impact of the hurricane on the value of collateral underlying our loans and the ability of borrowers to repay their obligations to the Bank. Uncertainty remains as to the ultimate impact of the storm on the allowance for loan and lease losses.

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, October 24, 2018 with 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 7741909. A replay of the call will be available from 12:00 p.m. ET on October 24th through 11:59 p.m. ET on October 31st by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The pass code for the replay is 7741909. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.

About BankUnited, Inc. and the FSB Acquisition

BankUnited, Inc., with total assets of $31.5 billion at September 30, 2018, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 86 banking centers in 15 Florida counties and 5 banking centers in the New York metropolitan area at September 30, 2018.

On May 21, 2009, BankUnited acquired substantially all of the assets and assumed all of the non-brokered deposits and substantially all other liabilities of BankUnited, FSB from the FDIC, in a transaction referred to as the FSB Acquisition. Concurrently with the FSB Acquisition, BankUnited entered into two loss sharing agreements, or the Loss Sharing Agreements, which covered certain legacy assets, including the entire legacy loan portfolio and OREO, and certain purchased investment securities. Assets covered by the Loss Sharing Agreements are referred to as “covered assets” (or, in certain cases, “covered loans”). The Loss Sharing Agreements do not apply to subsequently purchased or originated loans or other assets. Effective May 22, 2014 and consistent with the terms of the Loss Sharing Agreements, loss share coverage was terminated for those commercial loans and OREO and certain investment securities that were previously covered under the Loss Sharing Agreements. Pursuant to the terms of the Loss Sharing Agreements, the covered assets are subject to a stated loss threshold whereby the FDIC will reimburse BankUnited for 80% of losses, including certain interest and expenses, up to the $4.0 billion stated threshold and 95% of losses in excess of the $4.0 billion stated threshold. The Company’s estimate of cumulative losses on the covered assets, as of September 30, 2018, is approximately $3.5 billion. The Company has received $2.7 billion from the FDIC in reimbursements under the Loss Sharing Agreements for claims filed for incurred losses as of September 30, 2018.

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” 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. 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, 2017 which is 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)
		September 30, 2018				December 31, 2017
ASSETS
Cash and due from banks:
Non-interest bearing		$	11,644			$	35,246
Interest bearing		268,155				159,336
Cash and cash equivalents		279,799				194,582
Investment securities (including securities recorded at fair value of $7,217,403 and $6,680,832)		7,227,403				6,690,832
Non-marketable equity securities		273,427				265,989
Loans held for sale		37,179				34,097
Loans (including covered loans of $359,767 and $503,118)		21,919,171				21,416,504
Allowance for loan and lease losses		(124,740		)		(144,795		)
Loans, net		21,794,431				21,271,709
FDIC indemnification asset		152,517				295,635
Bank owned life insurance		262,987				252,462
Equipment under operating lease, net		661,677				599,502
Goodwill and other intangible assets		77,729				77,796
Other assets		746,487				664,382
Total assets		$	31,513,636			$	30,346,986
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Demand deposits:
Non-interest bearing		$	3,413,610			$	3,071,032
Interest bearing		1,587,812				1,757,581
Savings and money market		10,588,075				10,715,024
Time		6,715,793				6,334,842
Total deposits		22,305,290				21,878,479
Federal funds purchased		175,000				—
Federal Home Loan Bank advances		4,946,000				4,771,000
Notes and other borrowings		402,780				402,830
Other liabilities		609,678				268,615
Total liabilities		28,438,748				27,320,924
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 103,793,325 and 106,848,185 shares issued and outstanding		1,037				1,068
Paid-in capital		1,364,864				1,498,227
Retained earnings		1,667,092				1,471,781
Accumulated other comprehensive income		41,895				54,986
Total stockholders' equity		3,074,888				3,026,062
Total liabilities and stockholders' equity		$	31,513,636			$	30,346,986

BANKUNITED, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED (In thousands, except per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2018				2017				2018				2017
Interest income:
Loans		$	293,543			$	253,815			$	855,807			$	739,586
Investment securities		59,319				51,851				165,396				141,624
Other		4,855				3,777				13,145				10,606
Total interest income		357,717				309,443				1,034,348				891,816
Interest expense:
Deposits		75,257				45,919				196,916				120,161
Borrowings		30,492				22,260				82,392				60,209
Total interest expense		105,749				68,179				279,308				180,370
Net interest income before provision for loan losses		251,968				241,264				755,040				711,446
Provision for (recovery of) loan losses (including ($50), $261, $517 and $2,693 for covered loans)		1,200				37,854				13,342				63,573
Net interest income after provision for loan losses		250,768				203,410				741,698				647,873
Non-interest income:
Income from resolution of covered assets, net		3,134				6,400				10,689				22,066
Net gain (loss) on FDIC indemnification		3,090				(4,838		)		(1,925		)		(14,174		)
Deposit service charges and fees		3,677				3,251				10,674				9,706
Gain (loss) on sale of loans, net (including $5,037, $0, $4,739 and $(1,582) related to covered loans)		8,691				2,447				12,960				6,601
Gain on investment securities, net		432				26,931				2,938				29,194
Lease financing		14,091				13,287				45,685				40,067
Other non-interest income		5,620				5,848				17,673				17,903
Total non-interest income		38,735				53,326				98,694				111,363
Non-interest expense:
Employee compensation and benefits		65,612				58,327				198,185				178,386
Occupancy and equipment		18,887				18,829				56,704				56,689
Amortization of FDIC indemnification asset		48,255				45,225				132,852				135,351
Deposit insurance expense		5,375				5,764				14,810				16,827
Professional fees		5,240				2,748				10,772				12,573
Telecommunications and data processing		4,187				3,452				11,772				10,481
Depreciation of equipment under operating lease		9,870				8,905				28,662				25,655
Other non-interest expense		13,372				13,455				40,105				37,735
Total non-interest expense		170,798				156,705				493,862				473,697
Income before income taxes		118,705				100,031				346,530				285,539
Provision for income taxes		21,377				32,252				74,067				89,060
Net income		$	97,328			$	67,779			$	272,463			$	196,479
Earnings per common share, basic		$	0.90			$	0.62			$	2.50			$	1.79
Earnings per common share, diluted		$	0.90			$	0.62			$	2.49			$	1.79
Cash dividends declared per common share		$	0.21			$	0.21			$	0.63			$	0.63

BANKUNITED, INC. AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (Dollars in thousands)
		Three Months Ended September 30,
		2018										2017
		Average Balance				Interest (1)				Yield/ Rate(1)(2)		Average Balance				Interest (1)				Yield/ Rate(1)(2)
Assets:
Interest earning assets:
Non-covered loans		$	21,311,706			$	216,746			4.05%		$	19,710,115			$	187,928			3.79%
Covered loans		408,182				81,302				79.67%		518,026				73,452				56.70%
Total loans		21,719,888				298,048				5.47%		20,228,141				261,380				5.15%
Investment securities (3)		7,118,626				60,677				3.41%		7,002,615				55,046				3.14%
Other interest earning assets		507,318				4,855				3.80%		545,224				3,777				2.75%
Total interest earning assets		29,345,832				363,580				4.94%		27,775,980				320,203				4.60%
Allowance for loan and lease losses		(137,784		)								(160,231		)
Non-interest earning assets		1,859,619										1,699,912
Total assets		$	31,067,667									$	29,315,661
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits		$	1,592,908			4,550				1.13%		$	1,590,206			3,415				0.85%
Savings and money market deposits		10,483,248				38,520				1.46%		9,968,512				21,964				0.87%
Time deposits		6,728,915				32,187				1.90%		6,290,056				20,540				1.30%
Total interest bearing deposits		18,805,071				75,257				1.59%		17,848,774				45,919				1.02%
Federal funds purchased		89,218				445				2.00%		—				—				—%
FHLB advances		4,772,902				24,743				2.06%		4,924,325				16,946				1.37%
Notes and other borrowings		402,782				5,304				5.27%		402,828				5,314				5.28%
Total interest bearing liabilities		24,069,973				105,749				1.74%		23,175,927				68,179				1.17%
Non-interest bearing demand deposits		3,369,393										3,036,046
Other non-interest bearing liabilities		520,118										468,735
Total liabilities		27,959,484										26,680,708
Stockholders' equity		3,108,183										2,634,953
Total liabilities and stockholders' equity		$	31,067,667									$	29,315,661
Net interest income						$	257,831									$	252,024
Interest rate spread										3.20%										3.43%
Net interest margin										3.51%										3.62%

______
(1)		On a tax-equivalent basis where applicable
(2)		Annualized
(3)		At fair value except for securities held to maturity

BANKUNITED, INC. AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (Dollars in thousands)
		Nine Months Ended September 30,
		2018										2017
		Average Balance				Interest (1)				Yield/ Rate (1)(2)		Average Balance				Interest (1)				Yield/ Rate (1)(2)
Assets:
Interest earning assets:
Non-covered loans		$	21,073,130			$	622,039			3.94%		$	19,169,479			$	535,926			3.73%
Covered loans		460,485				246,811				71.46%		560,934				225,194				53.54%
Total loans		21,533,615				868,850				5.39%		19,730,413				761,120				5.15%
Investment securities (3)		6,932,504				169,645				3.26%		6,569,553				151,337				3.07%
Other interest earning assets		503,378				13,145				3.49%		557,623				10,606				2.54%
Total interest earning assets		28,969,497				1,051,640				4.85%		26,857,589				923,063				4.59%
Allowance for loan and lease losses		(141,047		)								(157,015		)
Non-interest earning assets		1,905,278										1,754,499
Total assets		$	30,733,728									$	28,455,073
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits		$	1,604,666			12,902				1.07%		$	1,564,229			8,913				0.76%
Savings and money market deposits		10,610,889				100,891				1.27%		9,557,907				55,741				0.78%
Time deposits		6,507,726				83,123				1.71%		5,988,433				55,507				1.24%
Total interest bearing deposits		18,723,281				196,916				1.41%		17,110,569				120,161				0.94%
Federal funds purchased		30,066				445				1.97%		—				—				—%
FHLB advances		4,665,799				66,028				1.89%		4,889,578				44,262				1.21%
Notes and other borrowings		402,809				15,919				5.27%		402,821				15,947				5.28%
Total interest bearing liabilities		23,821,955				279,308				1.57%		22,402,968				180,370				1.08%
Non-interest bearing demand deposits		3,327,521										3,034,682
Other non-interest bearing liabilities		498,368										443,430
Total liabilities		27,647,844										25,881,080
Stockholders' equity		3,085,884										2,573,993
Total liabilities and stockholders' equity		$	30,733,728									$	28,455,073
Net interest income						$	772,332									$	742,693
Interest rate spread										3.28%										3.51%
Net interest margin										3.56%										3.69%

_______
(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 PER COMMON SHARE (In thousands except share and per share amounts)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2018				2017				2018				2017
Basic earnings per common share:
Numerator:
Net income		$	97,328			$	67,779			$	272,463			$	196,479
Distributed and undistributed earnings allocated to participating securities		(3,771		)		(2,525		)		(10,444		)		(7,331		)
Income allocated to common stockholders for basic earnings per common share		$	93,557			$	65,254			$	262,019			$	189,148
Denominator:
Weighted average common shares outstanding		105,063,770				106,809,381				105,914,807				106,488,396
Less average unvested stock awards		(1,178,982		)		(1,101,485		)		(1,170,209		)		(1,102,381		)
Weighted average shares for basic earnings per common share		103,884,788				105,707,896				104,744,598				105,386,015
Basic earnings per common share		$	0.90			$	0.62			$	2.50			$	1.79
Diluted earnings per common share:
Numerator:
Income allocated to common stockholders for basic earnings per common share		$	93,557			$	65,254			$	262,019			$	189,148
Adjustment for earnings reallocated from participating securities		13				6				37				21
Income used in calculating diluted earnings per common share		$	93,570			$	65,260			$	262,056			$	189,169
Denominator:
Weighted average shares for basic earnings per common share		103,884,788				105,707,896				104,744,598				105,386,015
Dilutive effect of stock options and executive share-based awards		499,431				365,286				512,801				479,459
Weighted average shares for diluted earnings per common share		104,384,219				106,073,182				105,257,399				105,865,474
Diluted earnings per common share		$	0.90			$	0.62			$	2.49			$	1.79

BANKUNITED, INC. AND SUBSIDIARIES SELECTED RATIOS
		Three Months Ended September 30,				Nine Months Ended September 30,
		2018		2017		2018		2017
Financial ratios (5)
Return on average assets		1.24%		0.92%		1.19%		0.92%
Return on average stockholders’ equity		12.42%		10.21%		11.80%		10.21%
Net interest margin (4)		3.51%		3.62%		3.56%		3.69%

		September 30, 2018				December 31, 2017
		Non-Covered		Total		Non-Covered		Total
Asset quality ratios
Non-performing loans to total loans (1) (3)		0.96%		0.94%		0.82%		0.81%
Non-performing assets to total assets (2)		0.68%		0.70%		0.60%		0.61%
Allowance for loan and lease losses to total loans (3)		0.58%		0.57%		0.69%		0.68%
Allowance for loan and lease losses to non-performing loans (1)		60.51%		60.47%		84.03%		83.53%
Net charge-offs to average loans (5)		0.21%		0.21%		0.38%		0.38%

_____
(1)		We define non-performing loans to include non-accrual loans, and loans, other than ACI loans and government insured residential loans, that are past due 90 days or more and still accruing. Contractually delinquent ACI loans and government insured residential loans on which interest continues to be accreted or accrued are excluded from non-performing loans.
(2)		Non-performing assets include non-performing loans, OREO and other repossessed assets.
(3)		Total loans include premiums, discounts, and deferred fees and costs.
(4)		On a tax-equivalent basis.
(5)		Annualized for the three and nine month periods.

Non-GAAP Financial Measures

Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful base for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share at September 30, 2018 (in thousands except share and per share data):

Total stockholders’ equity		$	3,074,888
Less: goodwill and other intangible assets		77,729
Tangible stockholders’ equity		$	2,997,159
Common shares issued and outstanding		103,793,325
Book value per common share		$	29.63
Tangible book value per common share		$	28.88

View source version on businesswire.com: https://www.businesswire.com/news/home/20181024005186/en/

Source: BankUnited, Inc.

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