UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):October 28, 2020 (October 28, 2020 )
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
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| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(Registrant’s telephone number, including area code): (305 ) 569-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Class | Trading Symbol | Name of Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 2.02 Results of Operations and Financial Condition.
On October 28, 2020, BankUnited, Inc. (the “Company”) reported its results for the quarter ended September 30, 2020. A copy of the Company’s press release containing this information and slides containing supplemental information related to this release are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | ||||||||||
| October 28, 2020 | |||||||||||
| October 28, 2020 | |||||||||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: | October 28, 2020 | BANKUNITED, INC. | |||||||||
| /s/ Leslie N. Lunak | |||||||||||
| Name: | Leslie N. Lunak | ||||||||||
| Title: | Chief Financial Officer | ||||||||||
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EXHIBIT INDEX
| Exhibit Number | Description | ||||||||||
| October 28, 2020 | |||||||||||
| October 28, 2020 | |||||||||||
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Exhibit 99.1
BANKUNITED, INC. REPORTS THIRD QUARTER 2020 RESULTS
Miami Lakes, Fla. — October 28, 2020 — BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended September 30, 2020.
“We were pleased with our results for the quarter. The deposit mix and cost of funds improved, PPNR continued to show growth over the prior year and we saw some positive signs around credit as loans on deferral declined," said Rajinder Singh, Chairman, President and Chief Executive Officer.
For the quarter ended September 30, 2020, the Company reported net income of $66.6 million, or $0.70 per diluted share, compared to $76.5 million or $0.80 per diluted share for the immediately preceding quarter ended June 30, 2020 and $76.2 million, or $0.77 per diluted share, for the quarter ended September 30, 2019.
For the nine months ended September 30, 2020, the Company reported net income of $112.1 million, or $1.17 per diluted share, compared to $223.6 million, or $2.23 per diluted share, for the nine months ended September 30, 2019. Results for the nine months ended September 30, 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.
Financial Highlights
•Non-interest bearing demand deposits grew by $906 million, or 15%, for the quarter ended September 30, 2020, to 26% of total deposits, compared to 23% of total deposits at June 30, 2020 and 18% of total deposits at December 31, 2019. Total deposits increased by $527 million during the quarter ended September 30, 2020, as growth in non-interest bearing deposits was partially offset by continued runoff of higher cost time deposits. Average non-interest bearing demand deposits increased by $874 million for the quarter ended September 30, 2020 compared to the immediately preceding quarter and by $2.2 billion compared to the quarter ended September 30, 2019.
•The average cost of total deposits declined by 0.23% to 0.57% for the quarter ended September 30, 2020, its lowest level since the Company's inception. The cost of total deposits was 0.80% for the quarter ended June 30, 2020 and 1.67% for the quarter ended September 30, 2019. On a spot basis, the average annual percentage yield ("APY") on total deposits declined to 0.49% at September 30, 2020 from 0.65% at June 30, 2020 and 1.42% at December 31, 2019.
•Loans under COVID related deferral continued to decline. We reported at the end of the second quarter that we had granted initial 90-day payment deferrals on loans totaling $3.6 billion or approximately 15% of the total loan portfolio. At September 30, 2020, $1.1 billion, or approximately 5% of total loans were still subject to a short-term COVID related payment deferral or longer term modification under the CARES Act, or were in the process of modification. At October 25, 2020, $983 million, or approximately 4%, of loans remained on deferral or modification.
•Investment securities grew by $607 million for the quarter ended September 30, 2020 while loans and leases, including operating lease equipment, declined by $69 million as liquidity was deployed into investment securities in the current challenging credit environment. We experienced growth in the residential and mortgage warehouse loan portfolio segments, offset by net runoff in other commercial and commercial real estate segments.
•Pre-tax, pre-provision net revenue ("PPNR") continued to improve year-over-year, increasing by $12.9 million to $115.1 million for the quarter ended September 30, 2020 from $102.2 million for the quarter ended September 30, 2019. PPNR was $122.3 million for the quarter ended June 30, 2020. For the nine months ended September 30, 2020, PPNR improved to $322.5 million from $308.8 million for the nine months ended September 30, 2019.
•The net interest margin, calculated on a tax-equivalent basis, was 2.32% for the quarter ended September 30, 2020 compared to 2.39% for the immediately preceding quarter. Deployment of liquidity into the securities portfolio contributed to the decline in the net interest margin for the quarter. The yield on interest earnings assets declined by 0.22% while the cost of interest bearing liabilities declined by 0.15% for the quarter ended September 30, 2020 compared to the quarter ended June 30, 2020. The net interest margin was 2.41% for the quarter ended September 30, 2019.
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•The provision for credit losses totaled $29.2 million for the quarter ended September 30, 2020 compared to $25.4 million for the immediately preceding quarter ended June 30, 2020. The provision for credit losses was $180.1 million for the nine months ended September 30, 2020. For the quarter and nine months ended September 30, 2019, the Company recorded provisions for loan losses, under the incurred loss model, of $1.8 million and $9.4 million, respectively. At September 30, 2020, the allowance for credit losses ("ACL") was $274 million, or 1.15% of the loan portfolio, compared to $266 million, or 1.12% at June 30, 2020.
•The net unrealized gain (loss) on investment securities available for sale continued to improve during the quarter to a net unrealized gain of $62.0 million at September 30, 2020 compared to net unrealized losses of $2.6 million and $249.8 million at June 30, 2020 and March 31, 2020, respectively.
•Stockholders' equity increased by $110 million during the quarter ended September 30, 2020 to $2.9 billion. The increase was driven by the recovery of $61 million in accumulated other comprehensive income, related primarily to the reduction in unrealized losses on investment securities available for sale, and by the retention of earnings. At September 30, 2020, book value per common share and tangible book value per common share were $31.01 and $30.17, respectively, compared to $29.81 and $28.97, respectively at June 30, 2020 and $31.33 and $30.52, respectively at December 31, 2019.
•A dividend of $0.23 per common share was declared for the quarter ended September 30, 2020.
Capital
The Company's and BankUnited, N.A.'s regulatory capital ratios at September 30, 2020 and December 31, 2019 were as follows:
| September 30, 2020 | December 31, 2019 | Required to be Considered Well Capitalized | |||||||||||||||||||||||||||
| BankUnited, Inc. | BankUnited, N.A. | BankUnited, Inc. | BankUnited, N.A. | ||||||||||||||||||||||||||
| Tier 1 leverage | 8.6 | % | 9.5 | % | 8.9 | % | 9.3 | % | 5.0 | % | |||||||||||||||||||
| Common Equity Tier 1 ("CET1") risk-based capital | 12.2 | % | 13.5 | % | 12.3 | % | 12.9 | % | 6.5 | % | |||||||||||||||||||
| Total risk-based capital | 14.3 | % | 14.4 | % | 12.8 | % | 13.4 | % | 10.0 | % | |||||||||||||||||||
On a fully-phased in basis with respect to the adoption of CECL, the Company's and the Bank's CET1 risk-based capital ratios would have been 11.9% and 13.2%, respectively, at September 30, 2020. The increase in the total risk-based capital ratio for BankUnited, Inc. from December 31, 2019 to September 30, 2020 includes the issuance of $300 million in subordinated debt in the second quarter of 2020.
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Loans and Leases
A comparison of loan and lease portfolio composition at the dates indicated follows (dollars in thousands):
| September 30, 2020 | June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||
| Residential and other consumer loans | $ | 5,940,900 | 25.1 | % | $ | 5,577,807 | 23.5 | % | $ | 5,661,119 | 24.5 | % | |||||||||||||||||||||||
| Multi-family | 1,810,126 | 7.6 | % | 1,893,753 | 7.9 | % | 2,217,705 | 9.6 | % | ||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 4,910,835 | 20.7 | % | 4,940,531 | 20.7 | % | 5,030,904 | 21.7 | % | ||||||||||||||||||||||||||
| Construction and land | 263,381 | 1.1 | % | 246,609 | 1.0 | % | 243,925 | 1.1 | % | ||||||||||||||||||||||||||
| Owner occupied commercial real estate | 2,051,577 | 8.6 | % | 2,041,346 | 8.6 | % | 2,062,808 | 8.9 | % | ||||||||||||||||||||||||||
| Commercial and industrial | 4,427,351 | 18.6 | % | 4,691,326 | 19.7 | % | 4,655,349 | 20.1 | % | ||||||||||||||||||||||||||
| PPP | 829,798 | 3.5 | % | 827,359 | 3.5 | % | — | — | % | ||||||||||||||||||||||||||
| Pinnacle | 1,157,706 | 4.8 | % | 1,242,506 | 5.2 | % | 1,202,430 | 5.2 | % | ||||||||||||||||||||||||||
| Bridge - franchise finance | 606,222 | 2.5 | % | 623,139 | 2.5 | % | 627,482 | 2.6 | % | ||||||||||||||||||||||||||
| Bridge - equipment finance | 530,516 | 2.2 | % | 589,785 | 2.5 | % | 684,794 | 3.0 | % | ||||||||||||||||||||||||||
| Mortgage warehouse lending ("MWL") | 1,250,903 | 5.3 | % | 1,160,728 | 4.9 | % | 768,472 | 3.3 | % | ||||||||||||||||||||||||||
| $ | 23,779,315 | 100.0 | % | $ | 23,834,889 | 100.0 | % | $ | 23,154,988 | 100.0 | % | ||||||||||||||||||||||||
| Operating lease equipment, net | $ | 676,321 | $ | 689,965 | $ | 698,153 | |||||||||||||||||||||||||||||
Growth in residential and other consumer loans for the quarter was mainly attributable to GNMA early buyout loans. At September 30, 2020, June 30, 2020 and December 31, 2019, the residential portfolio included $1.1 billion, $805 million and $676 million, respectively, of GNMA early buyout loans. Residential activity for the quarter included purchases of approximately $418 million in GNMA early buyout loans, offset by approximately $154 million in re-poolings and paydowns.
Residential and other consumer loans, excluding GNMA early buyout loans, experienced a net increase of approximately $99 million.
For most commercial portfolio segments, production for the quarter in a challenging credit environment was not sufficient to offset payoffs and lower line utilization. The decline in multi-family balances was driven primarily by continued runoff of the New York portfolio.
Mortgage warehouse outstandings increased by $90 million during the quarter ended September 30, 2020. Mortgage warehouse commitments totaled $2.0 billion at September 30, 2020, an increase of 53% compared to $1.3 billion at December 31, 2019. Line utilization was 63% at September 30, 2020 compared to 59% at December 31, 2019.
The following table presents information about commercial loan portfolio sub-segments that we have identified for enhanced monitoring related to the potential impact of the COVID-19 pandemic (dollars in thousands):
| September 30, 2020 | |||||||||||||||||||||||
| Total Loans in the Sub-Segment | % of Total Loans | Loans on Payment Deferral, Modified or Pending Modification | % of Total Loans | ||||||||||||||||||||
| Retail exposure in the CRE portfolio | $ | 1,421,782 | 6.0 | % | $ | 42,206 | 0.2 | % | |||||||||||||||
Retail exposure in the C&I portfolio (1) | 321,077 | 1.4 | % | 40,004 | 0.2 | % | |||||||||||||||||
| Bridge - franchise finance | 606,222 | 2.5 | % | 75,606 | 0.3 | % | |||||||||||||||||
| Hotel | 619,012 | 2.6 | % | 291,972 | 1.2 | % | |||||||||||||||||
| Airlines and aviation authorities | 145,921 | 0.6 | % | — | — | % | |||||||||||||||||
| Cruise lines | 72,962 | 0.3 | % | 47,500 | 0.2 | % | |||||||||||||||||
| $ | 3,186,976 | 13.4 | % | $ | 497,288 | 2.1 | % | ||||||||||||||||
(1) Includes $211 million of owner-occupied commercial real estate loans.
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Asset Quality and the Allowance for Credit Losses
The following table presents the ACL at the dates indicated, related ACL coverage ratios, as well as net charge-off rates for the nine months ended September 30, 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 (1) | ||||||||||||||||||||
| 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 | % | 66.40 | % | N/A | ||||||||||||||||
| September 30, 2020 (expected loss) | $ | 274,128 | 1.15 | % | (2) | 136.86 | % | 0.25 | % | ||||||||||||||
(1) Annualized for the nine months ended September 30, 2020.
(2) ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 1.33% at September 30, 2020.
The ACL at September 30, 2020 represents management's estimate of lifetime expected credit losses from the loan portfolio given our assessment of historical data, current conditions and a reasonable and supportable economic forecast as of the balance sheet date. The estimate was informed by Moody's economic scenarios published in September 2020, economic information provided by additional sources, data reflecting the impact of recent events on individual borrowers and other relevant information.
For the quarter ended September 30, 2020, the Company recorded a provision for credit losses of $29.2 million, which included a provision of $27.6 million related to funded loans as well as immaterial components related to accrued interest receivable, unfunded loan commitments and an AFS debt security.
The following table summarizes the activity in the ACL for the periods indicated (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Beginning balance | $ | 266,123 | $ | 112,141 | $ | 108,671 | $ | 109,931 | |||||||||||||||
| Cumulative effect of adoption of CECL | — | — | 27,305 | — | |||||||||||||||||||
| Balance after adoption of CECL | 266,123 | 112,141 | 135,976 | 109,931 | |||||||||||||||||||
| Provision | 27,646 | 1,839 | 181,095 | 9,373 | |||||||||||||||||||
| Charge-offs | (23,770) | (6,141) | (50,754) | (13,985) | |||||||||||||||||||
| Recoveries | 4,129 | 623 | 7,811 | 3,143 | |||||||||||||||||||
| Ending balance | $ | 274,128 | $ | 108,462 | $ | 274,128 | $ | 108,462 | |||||||||||||||
Charge-offs for the quarter ended September 30, 2020 included $22.1 million related to one commercial and industrial relationship that had been downgraded to substandard prior to the onset of COVID.
Non-performing loans totaled $200.3 million or 0.84% of total loans at September 30, 2020, compared to $204.8 million or 0.88% of total loans at December 31, 2019. Non-performing loans included $43.6 million and $45.7 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.18% and 0.20% of total loans at September 30, 2020 and December 31, 2019, respectively.
Net interest income
Net interest income for the quarter ended September 30, 2020 was $187.5 million compared to $190.3 million for the immediately preceding quarter ended June 30, 2020 and $185.7 million for the quarter ended September 30, 2019. Interest income decreased by $13.2 million for the quarter ended September 30, 2020 compared to the immediately preceding quarter, and by $68.8 million, compared to the quarter ended September 30, 2019. Interest expense decreased by $10.3 million compared to the immediately preceding quarter and by $70.6 million compared to the quarter ended September 30, 2019. Decreases in interest income resulted from declines in market interest rates, partially offset by increases in average interest earning assets. Declines in interest expense reflected decreases in market interest rates and to a lesser extent, declines in average interest bearing liabilities.
The Company’s net interest margin, calculated on a tax-equivalent basis, decreased by 0.07% to 2.32% for the quarter ended September 30, 2020, from 2.39% for the immediately preceding quarter ended June 30, 2020. The decline in the yield on interest earning assets outpaced the reduction in cost of interest bearing liabilities for the quarter. The deployment of liquidity into the securities portfolio in a challenging lending environment contributed to the decline in the yield on interest earning
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assets. Offsetting factors contributing to the decrease in the net interest margin for the quarter ended September 30, 2020 compared to the immediately preceding quarter ended June 30, 2020 included:
•The average rate paid on interest bearing deposits decreased to 0.75% for the quarter ended September 30, 2020, from 1.01% for the quarter ended June 30, 2020. This decline reflected continued initiatives taken to lower rates paid on deposits in response to declines in general market interest rates and the re-pricing of term deposits. We expect the cost of interest bearing deposits to continue to decline; at September 30, 2020, approximately $1.5 billion or 25% of the time deposit portfolio, with an average rate of 1.67%, has not yet repriced since March 2020 when the Fed last cut rates. The majority of these CDs will mature through the first quarter of 2021.
•The tax-equivalent yield on investment securities decreased to 2.00% for the quarter ended September 30, 2020 from 2.48% for the quarter ended June 30, 2020. This decrease resulted from the impact of purchases of lower-yielding securities, prepayments of higher yielding mortgage-backed securities and decreases in coupon interest rates on existing floating rate assets.
•The tax-equivalent yield on loans decreased to 3.61% for the quarter ended September 30, 2020, from 3.71% for the quarter ended June 30, 2020. Factors contributing to this decrease included the decline in benchmark interest rates which impacted the rates earned on both existing floating rate assets and new production, and the runoff of loans originated in a higher rate environment.
•The average rate paid on borrowings increased to 2.40% for the quarter ended September 30, 2020, from 1.97% for the quarter ended June 30, 2020, reflecting the maturity of short-term, lower rate FHLB advances. The issuance of $300 million of 5.125% subordinated notes in June 2020 also contributed to the increase.
•The increase in average non-interest bearing demand deposits as a percentage of average total deposits also positively impacted the cost of total deposits and the net interest margin.
The Company's net interest margin, calculated on a tax-equivalent basis, was 2.35% for the nine months ended September 30, 2020, compared to 2.49% for the nine months ended September 30, 2019. Factors contributing to the decline were largely consistent with those enumerated above.
Non-interest expense
Non-interest expense totaled $108.6 million for the quarter ended September 30, 2020 compared to $106.4 million for the immediately preceding quarter ended June 30, 2020 and $121.3 million for the quarter ended September 30, 2019. Non-interest expense totaled $333.9 million and $368.1 million for the nine months ended September 30, 2020 and 2019, respectively, a decline of approximately 9%.
•Compensation and benefits decreased by $8.7 million and $23.4 million, respectively, for the quarter and nine months ended September 30, 2020 compared to the corresponding periods in 2019. These decreases reflected reductions in headcount related to our BankUnited 2.0 initiative. Lower variable compensation costs and a decrease in equity based compensation expense related to the impact of a declining stock price on liability-classified awards also contributed to the declines.
•Cost reductions stemming from our BankUnited 2.0 initiative contributed to year over year reductions in Occupancy and equipment expense and Other non-interest expense.
•The increasing trend year over year in technology and telecommunications expense is reflective of investments in digital and data analytics capabilities and in the infrastructure to support cloud migration.
•The increase in deposit insurance expense reflects an increase in the assessment rate related to increases in the level of criticized and classified assets.
•Costs incurred directly related to the implementation of our BankUnited 2.0 initiative during the nine months ended September 30, 2020 and 2019 totaled $0.3 million and $14.5 million, respectively.
•For the quarter and nine months ended September 30, 2020, non-interest expense included approximately $0.5 million and $2.0 million, respectively, in costs directly related to our response to the COVID-19 pandemic.
Earnings Conference Call and Presentation
A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, October 28, 2020 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.
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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. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at http://ir.bankunited.com/. The dial in telephone number for the call is (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the conference ID for the call is 1134069. A replay of the call will be available from 12:00 p.m. ET on October 28th through 11:59 p.m. ET on November 4th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The conference ID for the replay is 1134069. 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 $35.0 billion at September 30, 2020, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 71 banking centers in 14 Florida counties and 5 banking centers in the New York metropolitan area at September 30, 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).
Contact
BankUnited, Inc.
Investor Relations:
Leslie N. Lunak, 786-313-1698
llunak@bankunited.com
Source: BankUnited, Inc.
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BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except share and per share data)
| September 30, 2020 | December 31, 2019 | ||||||||||
| ASSETS | |||||||||||
| Cash and due from banks: | |||||||||||
| Non-interest bearing | $ | 175 | $ | 7,704 | |||||||
| Interest bearing | 369,601 | 206,969 | |||||||||
| Cash and cash equivalents | 369,776 | 214,673 | |||||||||
| Investment securities (including securities recorded at fair value of $9,290,883 and $7,759,237) | 9,300,883 | 7,769,237 | |||||||||
| Non-marketable equity securities | 208,614 | 253,664 | |||||||||
| Loans held for sale | 3,816 | 37,926 | |||||||||
| Loans | 23,779,315 | 23,154,988 | |||||||||
| Allowance for credit losses | (274,128) | (108,671) | |||||||||
| Loans, net | 23,505,187 | 23,046,317 | |||||||||
| Bank owned life insurance | 292,773 | 282,151 | |||||||||
| Operating lease equipment, net | 676,321 | 698,153 | |||||||||
| Goodwill and other intangible assets | 77,641 | 77,674 | |||||||||
| Other assets | 593,586 | 491,498 | |||||||||
| Total assets | $ | 35,028,597 | $ | 32,871,293 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Liabilities: | |||||||||||
| Demand deposits: | |||||||||||
| Non-interest bearing | $ | 6,789,622 | $ | 4,294,824 | |||||||
| Interest bearing | 2,916,891 | 2,130,976 | |||||||||
| Savings and money market | 11,002,794 | 10,621,544 | |||||||||
| Time | 5,887,903 | 7,347,247 | |||||||||
| Total deposits | 26,597,210 | 24,394,591 | |||||||||
| Federal funds purchased | 180,000 | 100,000 | |||||||||
| FHLB and PPPLF borrowings | 4,118,460 | 4,480,501 | |||||||||
| Notes and other borrowings | 722,592 | 429,338 | |||||||||
| Other liabilities | 545,511 | 486,084 | |||||||||
| Total liabilities | 32,163,773 | 29,890,514 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
| Common stock, par value $0.01 per share, 400,000,000 shares authorized; 92,388,641 and 95,128,231 shares issued and outstanding | 924 | 951 | |||||||||
| Paid-in capital | 995,438 | 1,083,920 | |||||||||
| Retained earnings | 1,950,288 | 1,927,735 | |||||||||
| Accumulated other comprehensive loss | (81,826) | (31,827) | |||||||||
| Total stockholders' equity | 2,864,824 | 2,980,779 | |||||||||
| Total liabilities and stockholders' equity | $ | 35,028,597 | $ | 32,871,293 | |||||||
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BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||
| Loans | $ | 208,646 | $ | 213,938 | $ | 248,770 | $ | 656,943 | $ | 738,766 | |||||||||||||||||||
| Investment securities | 44,604 | 50,932 | 69,413 | 151,596 | 218,554 | ||||||||||||||||||||||||
| Other | 1,322 | 2,908 | 5,219 | 7,950 | 15,140 | ||||||||||||||||||||||||
| Total interest income | 254,572 | 267,778 | 323,402 | 816,489 | 972,460 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 37,681 | 50,187 | 99,483 | 170,690 | 296,891 | ||||||||||||||||||||||||
| Borrowings | 29,412 | 27,254 | 38,229 | 87,407 | 108,095 | ||||||||||||||||||||||||
| Total interest expense | 67,093 | 77,441 | 137,712 | 258,097 | 404,986 | ||||||||||||||||||||||||
| Net interest income before provision for credit losses | 187,479 | 190,337 | 185,690 | 558,392 | 567,474 | ||||||||||||||||||||||||
| Provision for credit losses | 29,232 | 25,414 | 1,839 | 180,074 | 9,373 | ||||||||||||||||||||||||
| Net interest income after provision for credit losses | 158,247 | 164,923 | 183,851 | 378,318 | 558,101 | ||||||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||||||
| Deposit service charges and fees | 4,040 | 3,701 | 4,269 | 11,927 | 12,389 | ||||||||||||||||||||||||
Gain on sale of loans, net | 2,953 | 4,326 | 5,163 | 10,745 | 10,220 | ||||||||||||||||||||||||
Gain on investment securities, net | 7,181 | 6,836 | 3,835 | 10,564 | 13,736 | ||||||||||||||||||||||||
| Lease financing | 13,934 | 16,150 | 18,583 | 45,565 | 52,774 | ||||||||||||||||||||||||
| Other non-interest income | 8,184 | 7,338 | 6,006 | 19,140 | 20,329 | ||||||||||||||||||||||||
| Total non-interest income | 36,292 | 38,351 | 37,856 | 97,941 | 109,448 | ||||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||
| Employee compensation and benefits | 48,448 | 48,877 | 57,102 | 156,212 | 179,586 | ||||||||||||||||||||||||
| Occupancy and equipment | 12,170 | 11,901 | 14,673 | 36,440 | 42,477 | ||||||||||||||||||||||||
| Deposit insurance expense | 5,886 | 4,806 | 3,781 | 15,095 | 12,849 | ||||||||||||||||||||||||
| Professional fees | 2,436 | 3,131 | 2,923 | 8,771 | 17,731 | ||||||||||||||||||||||||
| Technology and telecommunications | 15,435 | 14,025 | 10,994 | 42,056 | 34,175 | ||||||||||||||||||||||||
| Depreciation of operating lease equipment | 12,315 | 12,219 | 11,582 | 37,137 | 34,883 | ||||||||||||||||||||||||
| Loss on debt extinguishment | — | — | 3,796 | — | 3,796 | ||||||||||||||||||||||||
| Other non-interest expense | 11,937 | 11,411 | 16,455 | 38,154 | 42,584 | ||||||||||||||||||||||||
| Total non-interest expense | 108,627 | 106,370 | 121,306 | 333,865 | 368,081 | ||||||||||||||||||||||||
| Income before income taxes | 85,912 | 96,904 | 100,401 | 142,394 | 299,468 | ||||||||||||||||||||||||
| Provision for income taxes | 19,353 | 20,396 | 24,182 | 30,278 | 75,826 | ||||||||||||||||||||||||
| Net income | $ | 66,559 | $ | 76,508 | $ | 76,219 | $ | 112,116 | $ | 223,642 | |||||||||||||||||||
| Earnings per common share, basic | $ | 0.70 | $ | 0.80 | $ | 0.78 | $ | 1.17 | $ | 2.23 | |||||||||||||||||||
| Earnings per common share, diluted | $ | 0.70 | $ | 0.80 | $ | 0.77 | $ | 1.17 | $ | 2.23 | |||||||||||||||||||
8
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Three Months Ended September 30, 2020 | Three Months Ended June 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest (1)(2) | Yield/ Rate (1)(2) | Average Balance | Interest (1)(2) | Yield/ Rate (1)(2) | Average Balance | Interest (1)(2) | Yield/ Rate (1)(2) | |||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 23,447,514 | $ | 212,388 | 3.61 | % | $ | 23,534,684 | $ | 217,691 | 3.71 | % | $ | 22,733,875 | $ | 252,896 | 4.43 | % | |||||||||||||||||||||||||||||||||||
Investment securities (3) | 9,065,478 | 45,351 | 2.00 | % | 8,325,217 | 51,684 | 2.48 | % | 8,295,205 | 70,427 | 3.40 | % | |||||||||||||||||||||||||||||||||||||||||
| Other interest earning assets | 552,515 | 1,322 | 0.95 | % | 765,848 | 2,908 | 1.53 | % | 573,630 | 5,219 | 3.61 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets | 33,065,507 | 259,061 | 3.13 | % | 32,625,749 | 272,283 | 3.35 | % | 31,602,710 | 328,542 | 4.14 | % | |||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (272,464) | (254,396) | (112,784) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,897,723 | 1,976,398 | 1,652,901 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 34,690,766 | $ | 34,347,751 | $ | 33,142,827 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 2,800,421 | $ | 4,127 | 0.59 | % | $ | 2,448,545 | $ | 4,722 | 0.78 | % | $ | 1,872,573 | $ | 6,705 | 1.42 | % | |||||||||||||||||||||||||||||||||||
| Savings and money market deposits | 10,664,462 | 15,853 | 0.59 | % | 10,450,310 | 17,447 | 0.67 | % | 10,907,317 | 51,229 | 1.86 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 6,519,852 | 17,701 | 1.08 | % | 7,096,097 | 28,018 | 1.59 | % | 6,845,643 | 41,549 | 2.41 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing deposits | 19,984,735 | 37,681 | 0.75 | % | 19,994,952 | 50,187 | 1.01 | % | 19,625,533 | 99,483 | 2.01 | % | |||||||||||||||||||||||||||||||||||||||||
| Short term borrowings | 53,587 | 14 | 0.10 | % | 119,835 | 32 | 0.11 | % | 115,209 | 670 | 2.31 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB and PPPLF borrowings | 4,117,181 | 20,146 | 1.95 | % | 4,961,376 | 21,054 | 1.71 | % | 5,414,963 | 32,252 | 2.36 | % | |||||||||||||||||||||||||||||||||||||||||
| Notes and other borrowings | 722,271 | 9,252 | 5.12 | % | 493,278 | 6,168 | 5.00 | % | 403,788 | 5,307 | 5.26 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 24,877,774 | 67,093 | 1.07 | % | 25,569,441 | 77,441 | 1.22 | % | 25,559,493 | 137,712 | 2.14 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 6,186,718 | 5,313,009 | 3,963,955 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 803,498 | 820,439 | 704,995 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 31,867,990 | 31,702,889 | 30,228,443 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,822,776 | 2,644,862 | 2,914,384 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 34,690,766 | $ | 34,347,751 | $ | 33,142,827 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 191,968 | $ | 194,842 | $ | 190,830 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate spread | 2.06 | % | 2.13 | % | 2.00 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.32 | % | 2.39 | % | 2.41 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(1) On a tax-equivalent basis where applicable
(2) Annualized
(3) At fair value except for securities held to maturity
9
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 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 | $ | 23,278,042 | $ | 668,187 | 3.83 | % | $ | 22,407,271 | $ | 751,672 | 4.48 | % | ||||||||||||||||||||||||||
Investment securities (3) | 8,501,513 | 153,987 | 2.42 | % | 8,333,600 | 221,901 | 3.55 | % | ||||||||||||||||||||||||||||||
| Other interest earning assets | 654,623 | 7,950 | 1.62 | % | 532,062 | 15,140 | 3.80 | % | ||||||||||||||||||||||||||||||
| Total interest earning assets | 32,434,178 | 830,124 | 3.42 | % | 31,272,933 | 988,713 | 4.22 | % | ||||||||||||||||||||||||||||||
| Allowance for credit losses | (222,085) | (113,694) | ||||||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,874,709 | 1,615,548 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 34,086,802 | $ | 32,774,787 | ||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 2,475,388 | 15,808 | 0.85 | % | $ | 1,783,611 | 18,569 | 1.39 | % | ||||||||||||||||||||||||||||
| Savings and money market deposits | 10,509,559 | 71,056 | 0.90 | % | 11,093,290 | 156,236 | 1.88 | % | ||||||||||||||||||||||||||||||
| Time deposits | 7,040,101 | 83,826 | 1.59 | % | 6,898,947 | 122,086 | 2.37 | % | ||||||||||||||||||||||||||||||
| Total interest bearing deposits | 20,025,048 | 170,690 | 1.14 | % | 19,775,848 | 296,891 | 2.01 | % | ||||||||||||||||||||||||||||||
| Short term borrowings | 89,033 | 412 | 0.62 | % | 127,908 | 2,297 | 2.39 | % | ||||||||||||||||||||||||||||||
| FHLB and PPPLF borrowings | 4,496,407 | 66,284 | 1.97 | % | 5,037,299 | 89,890 | 2.39 | % | ||||||||||||||||||||||||||||||
| Notes and other borrowings | 548,851 | 20,711 | 5.03 | % | 403,574 | 15,908 | 5.26 | % | ||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 25,159,339 | 258,097 | 1.37 | % | 25,344,629 | 404,986 | 2.14 | % | ||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 5,292,702 | 3,835,248 | ||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 791,057 | 654,692 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | 31,243,098 | 29,834,569 | ||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,843,704 | 2,940,218 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 34,086,802 | $ | 32,774,787 | ||||||||||||||||||||||||||||||||||
| Net interest income | $ | 572,027 | $ | 583,727 | ||||||||||||||||||||||||||||||||||
| Interest rate spread | 2.05 | % | 2.08 | % | ||||||||||||||||||||||||||||||||||
| Net interest margin | 2.35 | % | 2.49 | % | ||||||||||||||||||||||||||||||||||
(1) On a tax-equivalent basis where applicable
(2) Annualized
(3) At fair value except for securities held to maturity
10
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, | ||||||||||||||||||||||
| c | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Basic earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 66,559 | $ | 76,219 | $ | 112,116 | $ | 223,642 | |||||||||||||||
Distributed and undistributed earnings allocated to participating securities | (2,896) | (3,174) | (4,816) | (9,247) | |||||||||||||||||||
Income allocated to common stockholders for basic earnings per common share | $ | 63,663 | $ | 73,045 | $ | 107,300 | $ | 214,395 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | 92,405,239 | 95,075,395 | 92,918,030 | 97,113,878 | |||||||||||||||||||
| Less average unvested stock awards | (1,183,564) | (1,098,509) | (1,164,317) | (1,147,988) | |||||||||||||||||||
Weighted average shares for basic earnings per common share | 91,221,675 | 93,976,886 | 91,753,713 | 95,965,890 | |||||||||||||||||||
| Basic earnings per common share | $ | 0.70 | $ | 0.78 | $ | 1.17 | $ | 2.23 | |||||||||||||||
| Diluted earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
Income allocated to common stockholders for basic earnings per common share | $ | 63,663 | $ | 73,045 | $ | 107,300 | $ | 214,395 | |||||||||||||||
Adjustment for earnings reallocated from participating securities | 4 | 7 | 3 | 20 | |||||||||||||||||||
Income used in calculating diluted earnings per common share | $ | 63,667 | $ | 73,052 | $ | 107,303 | $ | 214,415 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average shares for basic earnings per common share | 91,221,675 | 93,976,886 | 91,753,713 | 95,965,890 | |||||||||||||||||||
| Dilutive effect of stock options and certain shared-based awards | 171,054 | 285,934 | 142,008 | 303,524 | |||||||||||||||||||
Weighted average shares for diluted earnings per common share | 91,392,729 | 94,262,820 | 91,895,721 | 96,269,414 | |||||||||||||||||||
| Diluted earnings per common share | $ | 0.70 | $ | 0.77 | $ | 1.17 | $ | 2.23 | |||||||||||||||
11
BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Financial ratios (4) | |||||||||||||||||||||||
| Return on average assets | 0.76 | % | 0.91 | % | 0.44 | % | 0.91 | % | |||||||||||||||
| Return on average stockholders’ equity | 9.4 | % | 10.4 | % | 5.3 | % | 10.2 | % | |||||||||||||||
Net interest margin (3) | 2.32 | % | 2.41 | % | 2.35 | % | 2.49 | % | |||||||||||||||
| September 30, 2020 | December 31, 2019 | ||||||||||
| Asset quality ratios | |||||||||||
Non-performing loans to total loans (1)(5) | 0.84 | % | 0.88 | % | |||||||
Non-performing assets to total assets (2)(5) | 0.58 | % | 0.63 | % | |||||||
| Allowance for credit losses to total loans | 1.15 | % | 0.47 | % | |||||||
Allowance for credit losses to non-performing loans (1)(5) | 136.86 | % | 53.07 | % | |||||||
Net charge-offs to average loans (4) | 0.25 | % | 0.05 | % | |||||||
(1) We define non-performing loans to include non-accrual loans and loans other than purchase credit deteriorated and government insured residential loans that are past due 90 days or more and still accruing. Contractually delinquent purchase credit deteriorated and 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 and nine month periods.
(5) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $43.6 million or 0.18% of total loans and 0.12% of total assets, at September 30, 2020; and $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.
12
Non-GAAP Financial Measures
PPNR 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 and the ability of the Company to generate earnings sufficient to cover estimated credit losses, particularly in view of the adoption of the CECL accounting methodology, which may impact comparability of operating results to prior periods. This measure also provides a meaningful basis for comparison to other financial institutions and is a measure frequently cited by investors. The following table reconciles the non-GAAP financial measurement of PPNR to the comparable GAAP financial measurement of income before income taxes for the three and nine months ended September 30, 2020 and 2019 and the three months ended June 30, 2020 (in thousands):
| Three Months Ended September 30, | Three Months Ended June 30, | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
| Income before income taxes (GAAP) | $ | 85,912 | $ | 96,904 | $ | 100,401 | $ | 142,394 | $ | 299,468 | |||||||||||||||||||
| Plus: Provision for credit losses | 29,232 | 25,414 | 1,839 | 180,074 | 9,373 | ||||||||||||||||||||||||
PPNR (non-GAAP) | $ | 115,144 | $ | 122,318 | $ | 102,240 | $ | 322,468 | $ | 308,841 | |||||||||||||||||||
ACL to total loans, excluding government insured residential loans, PPP loans and MWL is a non-GAAP financial measure. Management believes this measure is relevant to understanding the adequacy of the ACL coverage, excluding the impact of loans which carry nominal or no reserves. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of ACL to total loans, excluding government insured residential loans, PPP loans and MWL to the comparable GAAP financial measurement of ACL to total loans at September 30, 2020 (dollars in thousands):
| Total loans (GAAP) | $ | 23,779,315 | |||
| Less: Government insured residential loans | 1,089,055 | ||||
| Less: PPP loans | 829,798 | ||||
| Less: MWL | 1,250,903 | ||||
| Total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP) | $ | 20,609,559 | |||
| ACL | $ | 274,128 | |||
| ACL to total loans (GAAP) | 1.15 | % | |||
| ACL to total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP) | 1.33 | % | |||
13
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 basis for comparison to other financial institutions as it is a metric commonly used in the banking industry. 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 the dates indicated (in thousands except share and per share data):
| September 30, 2020 | June 30, 2020 | December 31, 2019 | |||||||||||||||
| Total stockholders’ equity | $ | 2,864,824 | $ | 2,755,053 | $ | 2,980,779 | |||||||||||
| Less: goodwill and other intangible assets | 77,641 | 77,652 | 77,674 | ||||||||||||||
| Tangible stockholders’ equity | $ | 2,787,183 | $ | 2,677,401 | $ | 2,903,105 | |||||||||||
| Common shares issued and outstanding | 92,388,641 | 92,420,278 | 95,128,231 | ||||||||||||||
| Book value per common share | $ | 31.01 | $ | 29.81 | $ | 31.33 | |||||||||||
| Tangible book value per common share | $ | 30.17 | $ | 28.97 | $ | 30.52 | |||||||||||
14
Exhibit 99.2 BankUnited, Inc. Q3 2020 – Supplemental Information October 28, 2020
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of BankUnited, Inc. (“BankUnited,” “BKU” or the “Company”) 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 presentation 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). 2
Financial Highlights
Strong Results in a Challenging Environment • PPNR continued to grow YoY to $115 million for Q3 2020 from $102 million for Q3 2019 Operating results • NIM of 2.32% compared to 2.39% linked quarter – liquidity deployed into securities • Continued Non-interest DDA grew by $906 million during the quarter to 26% of total deposits • Average non-interest DDA up $874 million linked quarter and $2.2 billion compared to Q3 2019 improvement in • Total cost of deposits declined to 0.57% for the quarter, lowest in the Company’s history deposit mix • “Spot” APY on total deposits was 0.49% at September 30, 2020 • 3.2% of total commercial loans were on deferral, modified or in process of modification at October Loan deferrals and 25, 2020. For Q2, we reported that initial deferrals had been granted for 17% of the commercial modifications continue portfolio and that re-deferral requests had been received for 4% of the portfolio. to decline • 8% of residential loans, excluding government insured loans, were on deferral or modified at September 30, 2020, down from 13% at June 30, 2020. • Available liquidity totaling $9.7 billion at September 30, 2020 Robust capital and • CET1 ratios of 12.2% at the holding company and 13.5% at the bank at September 30 liquidity • Book value per share grew to $31.01 at September 30, back to almost pre-COVID levels 4
Highlights from Third Quarter Earnings Change From ($ in millions, except per share data) 3Q20 2Q20 3Q19 2Q20 3Q19 Key Highlights Net Interest Income $ 187 $ 190 $ 186 (3) 1 Provision for Credit Losses $ 29 $ 25 $ 2 4 27 Reflects CECL implementation in 1Q20; reserve build moderated in Q2 and Q3 Total Non-interest Income $ 36 $ 38 $ 38 (2) (2) Total Non-interest Expense $ 109 $ 106 $ 121 3 (12) YoY decline reflects improvements generated by BankUnited 2.0 Net Income $ 67 $ 77 $ 76 (10) (9) EPS $ 0.70 $ 0.80 $ 0.77 (0.10) (0.07) Pre-Provision, Net Revenue (PPNR) (1) $ 115 $ 122 $ 102 (7) 13 Continued YoY improvement in PPNR Period-end Loans $ 23,779 $ 23,835 $ 22,856 (56) 923 4.0% YoY loan growth Period-end Deposits $ 26,597 $ 26,070 $ 23,956 527 2,641 11.0% YoY deposit growth, primarily from non-interest bearing CET1 12.2 % 11.8 % 12.2 % 0.4 % - % Total Capital 14.3 % 13.9 % 12.7 % 0.4 % 1.6 % Reflects $300 million in subordinated notes issued in Q220 Yield on Loans 3.61 % 3.71 % 4.43 % (0.10)% (0.82)% Reflects decline in benchmark interest rates Cost of Deposits 0.57 % 0.80 % 1.67 % (0.23)% (1.10)% Spot APY on total deposits declined to 0.49% at September 30, 2020 Net Interest Margin 2.32 % 2.39 % 2.41 % (0.07)% (0.09)% Impacted by deployment of liquidity into securities portfolio Non-performing Assets to Total Assets(2) 0.58 % 0.60 % 0.60 % (0.02)% (0.02)% Allowance for Credit Losses to Total Loans 1.15 % 1.12 % 0.43 % 0.03 % 0.72 % Net Charge-offs to Average Loans(3) 0.25 % 0.20 % 0.06 % 0.05 % 0.19 % 3Q20 charge-offs largely attributable to one commercial loan relationship (1) PPNR is a non-GAAP financial measure. See section entitled “Non-GAAP Financial Measures” on page 35 (2) Includes guaranteed portion of non-accrual SBA loans. (3) YTD net charge-offs, annualized. 5
Continuing to Transform our Deposit Mix ($ in millions) Non-interest bearing demand deposits have grown at a compound annual growth rate of 43% since December 31, 2018 $25,001 $26,070 $26,597 $23,679 $23,922 $23,956 $24,395 Non-interest Demand $5,883 $6,789 $3,765 $4,099 $4,127 $4,295 $4,599 Interest Demand $1,761 $1,831 $1,847 $2,131 $2,536 $2,866 $2,917 Money Market / Savings Time $10,622 $10,324 $11,386 $10,911 $10,936 $10,590 $11,003 $6,767 $7,081 $7,046 $7,347 $7,542 $6,731 $5,888 Mar 19 Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 Sep 20 Cost of Deposits 1.67% 1.70% 1.67% 1.48% 1.36% 0.80% 0.57% Non-interest bearing 15.9% 17.1% 17.2% 17.6% 18.4% 22.6% 25.5% We have consistently priced down our deposit portfolio since the Fed began lowering interest rates in late 2019 Spot Average Annual At December 31, 2019 At March 31, 2020 At June 30, 2020 At September 30, 2020 Percentage Yield (“APY”) Total non-maturity deposits 1.11% 0.83% 0.44% 0.37% Total interest-bearing deposits 1.71% 1.35% 0.82% 0.65% Total deposits 1.42% 1.12% 0.65% 0.49% 6
Prudently Underwritten and Well-Diversified Loan Portfolio At September 30, 2020 ($ in millions) Loan Portfolio Over Time CRE C&I Construction Residential CRE C&I Mortgage Warehouse Lending Lending Subs and Land Owner Occupied 4% SBA PPP Non-Owner 28% Occupied 11% 70% Multi-family $23,835 $23,779 Commercial and 26% $23,155 $23,185 Industrial $21,977 61% $21,416 $2,456 $2,295 $2,514 $2,485 $2,617 $1,161 $1,251 $2,564 $768 $852 $432 $459 Residential Loan Product Lending Subs Type $6,719 $7,035 $7,559 $7,308 $5,689 $6,478 30 Yr Fixed Govt 14% Insured Bridge - 15 & 20 18% Equpment Formerly Year Fixed 23% Covered 9% 2% Pinnacle 51% $7,493 $7,178 $7,081 $6,984 5/1 & 7/1 10/1 ARM Bridge - $8,005 $7,501 ARM 22% Franchise 35% 26% $5,661 $5,635 $5,578 $5,941 $4,699 $4,949 7 12/31/2017 12/31/2018 12/31/2019 3/31/2020 6/30/2020 9/30/2020
Allowance for Credit Losses
CECL Methodology CECL Methodology Underlying Principles Economic Forecast Key Variables • The ACL under CECL represents • Our ACL estimate was informed by • The models ingest numerous national, management’s best estimate at the Moody’s economic scenarios regional and MSA level economic balance sheet date of expected credit published in September 2020. variables and data points. Economic losses over the life of the loan data and variables to which portfolio portfolio. • Unemployment starting at 8%, segments are most sensitive: rising to 9% by end of 2020, • Required to consider historical declining to 8% by end of • Commercial information, current conditions and a 2021, then trending down o Market volatility index reasonable and supportable • Annualized growth in GDP o S&P 500 index economic forecast. starting at 27%, decreasing to o Unemployment rate 3% by end 2020, exceeding o A variety of interest rates • For most portfolio segments, pre-recession levels by end- and spreads BankUnited uses econometric models 2023. Averaging 4.3% for 2020 to project PD, LGD and expected and 3.5% for 2021 • CRE losses at the loan level and • VIX trailing average starting at o Unemployment aggregates those expected losses by 26, trending down to 18 by o CRE property forecast segment. end 2022 o 10-year treasury • S&P 500 starting at 3200, o Baa corporate yield • Qualitative adjustments may be declining moderately in Q4 o Real GDP growth applied to the quantitative results. 2020 before trending up, but staying below recent highs • Residential • Accounting standard requires an until mid-2022 o HPI estimate of expected prepayments o Unemployment rate which may significantly impact the • 2 year reasonable and supportable o Real GDP growth lifetime loss estimate. forecast period. o Freddie Mac 30-year rate 9
Drivers of Change in the ACL ($ in millions) Net Economic Portfolio Portfolio Forecast Change in Migration Changes Charge-Offs Assumption Qualitative Changes Overlay • New loans • Current • Exits/runoff market • Portfolio adjustment • Risk rating • Largely seasoning • Changes to • Additional migration attributable forward qualitative • Changes in to one path of overlay for specific commercial economic borrowers reserves loan forecast impacted relationship by COVID- 19 ACL ACL 6/30/20 9/30/20 %of Total 1.12% 1.15% Loans 10
Allocation of the ACL ($ in millions) January 1, 2020 June 30, 2020 September 30, 2020 Balance % of Loans Balance % of Loans Balance % of Loans Residential and other consumer $ 19.3 0.34% $ 10.7 0.19% $ 16.0 0.27% Commercial: Commercial real estate 16.7 0.22% 108.9 1.54% 113.3 1.62% Commercial and industrial 83.6 1.12% 120.6 1.38% 114.4 1.34%(3) Pinnacle 0.4 0.03% 0.2 0.02% 0.4 0.03% Franchise finance 9.0 1.44% 19.4 3.12% 24.4 4.03% Equipment finance 7.0 1.02% 6.3 1.07% 5.6 1.05% Total commercial 116.7 0.67% 255.4 1.40% 258.1 1.45% Allowance for credit losses $ 136.0 0.59% $ 266.1 1.12% $ 274.1 1.15%(4) Asset Quality Ratios December 31, 2019 June 30, 2020 September 30, 2020 Non-performing loans to total loans (1) 0.88% 0.86% 0.84% Non-performing assets to total assets (1) 0.63% 0.60% 0.58% Allowance for credit losses to non-performing loans (1) 53.07% 130.29% 136.86% Net charge-offs to average loans (2) 0.05% 0.20% 0.25% (1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $43.6 million, $45.7 million, and $45.7 million or 0.18%, 0.19%, and 0.20% of total loans and 0.12%, 0.13%, and 0.14% of total assets, at September 30, 2020, June 30, 2020, and December 31, 2019. (2) YTD net charge-offs, annualized at ended June 30, 2020 and September 30, 2020. (3) Decline in the ACL in part attributable to charge-offs for the quarter ended September 30, 2020. (4) ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 1.33% at September 30, 2020. See section entitled “Non-GAAP Financial Measures” on page 36. 11
Loan Portfolio and Credit
Loan Portfolio – Geographic Distribution At September 30, 2020 Commercial (1) Residential NY Tri-State Area 22% Other 36% CA 31% FL Other 40% NY 38% FL 22% 11% CRE NY 38% Other 10% FL 52% (1) Includes PPP, MWL, BFG and Pinnacle 13
Loan Portfolio – Granular, Diversified Commercial & Industrial Portfolio At September 30, 2020 ($ in millions) • Includes $2.1 billion of owner-occupied real estate • Some key observations: Industry Balance (1) Commitment % of Portfolio • Educational services – Finance and Insurance $902 $1,708 14.0% well established private Wholesale Trade 670 1,022 10.3% colleges, universities Educational Services 665 704 10.3% and high schools Transportation and Warehousing 487 616 7.5% • Transportation and Health Care and Social Assistance 484 642 7.5% warehousing – cruise Manufacturing 371 508 5.7% lines, aviation Retail Trade 321 436 5.0% authorities, logistics Accommodation and Food Services 311 408 4.8% • Health care – larger Information 307 491 4.7% physician practice Real Estate and Rental and Leasing 303 473 4.7% management Construction 272 453 4.2% companies, HMO’s, Professional, Scientific, and Technical Services 253 362 3.9% mental health & Public Administration 242 259 3.7% substance abuse; no Other Services (except Public Administration) 238 285 3.7% small practices Arts, Entertainment, and Recreation 216 262 3.3% • Arts and entertainment Administrative and Support and Waste Management 200 263 3.1% – stadiums, professional Utilities 197 206 3.0% sports teams, gaming Other 40 64 0.6% • Accommodation and $6,479 $9,162 100.0% food services – time share, direct food services businesses and (1) Excludes PPP loans concessionaires 14
Loan Portfolio – Commercial Real Estate by Property Type At September 30, 2020 ($ in millions) Wtd. Avg. Wtd. Avg. Non- Property Type Balance FL NY Other DSCR LTV Performing Office $ 2,089 59% 26% 15% 2.13 59.0% $ 9 Multifamily 1,937 28% 65% 7% 1.72 56.0% 3 Retail 1,422 51% 40% 9% 1.54 59.7% 11 Warehouse/Industrial 770 69% 18% 13% 2.50 55.4% - Hotel 619 75% 16% 9% 1.35 57.6% 32 Other 147 82% 11% 7% 1.78 54.2% 4 $ 6,984 52% 38% 10% 1.86 57.7% $ 59 • Commercial real estate loans are secured by income-producing, non-owner occupied properties, typically with well capitalized middle market sponsors • 75% of the CRE portfolio, 79% of retail segment and 76% of hotel segment have LTVs less than 65% • Construction and land loans, included in the table, represent only 1% of the total loan portfolio. • Average rent collections for the third quarter, based on a sample of borrowers: • Multi-family – averaging 92% • Office – averaging 97% • Retail – averaging 90% • Hotel occupancy – averaging 41% in Florida • NY portfolio contains $284 million of mixed-used properties; $203 million categorized in multi-family, $62 million in retail and $19 million in office 15
Loan Portfolio – Deferrals and Modifications At September 30, 2020 ($ in millions) Commercial Currently In Process • At the end of Q2, we reported that we had Under Short- CARES Act CARES Act % of granted 90-day payment Term Deferral Modifications Modifications Total Portfolio deferrals on $3.6 billion of CRE - Property Type: loans, approximately 15% of the total loan portfolio. Retail $ 20 $ 6 $ 16 $ 42 3% Hotel 2 127 163 292 47% • At September 30, loans on Office 5 41 30 76 4% deferral, modified or in process of modification Multifamily 20 - 4 24 1% totaled $1.1 billion, Total CRE $ 47 $ 174 $ 213 $ 434 6% approximately 5% of the C&I - Industry: total loan portfolio. Accomm. and Food Services $ 55 $ - $ 7 $ 62 20% • With commercial data Retail Trade 21 19 - 40 12% updated through October Manufacturing 12 - - 12 3% 25, this total has declined Other 22 53 - 75 1% to $983 million or 4% of the total loan portfolio. Total C&I $ 110 $ 72 $ 7 $ 189 3% BFG - Equipment $ 1 $ - $ - $ 1 0% • Commercial deferrals and BFG - Franchise $ 76 $ - $ - $ 76 12% modifications declined from initial deferrals of 17% to Total Commercial $ 234 $ 246 $ 220 $ 700 4% 3% of the commercial portfolio at October 25. Updated through October 25, 2020 $ 74 $ 312 $ 181 $ 567 3% • Residential deferrals and modifications declined from 13% to 8% of the residential portfolio. 49% of residential loans on deferral continue Residential – Excluding Government Insured Loans to make payments. Currently Under Short-Term Currently Under Short-Term Deferral Deferral Continue to Pay CARES Act Modifications • Commercial CARES Act modifications are most % of % of % of often 9 to 12-month Count Balance Portfolio Count Balance Deferral Count Balance Portfolio interest only periods. Residential 833 $ 395 8% 417 $ 195 49% 30 $ 21 0% 16
Loan Portfolio – Segments Identified for Heightened Monitoring At September 30, 2020 Moderate exposure to sectors most impacted by the pandemic ($ in millions) Loans on Payment % of Total Deferral, Modified or % of Total Portfolio Balance Loans Pending Modification Loans Special Mention Classified Retail - CRE $ 1,422 6% $ 42 0% $ 86 $ 250 Retail - C&I 321 1% 40 0% 12 46 BFG - franchise finance 606 2% 76 0% 140 246 Hotel 619 3% 292 1% 203 282 Airlines and aviation authorities 146 1% - 0% 35 26 Cruise line 73 0% 48 0% 59 14 Total $ 3,187 13% $ 498 2% $ 535 $ 864 • Over 70% of commercial loans deferred or modified and over 50% of criticized and classified assets are in these sub-segments 17
Loan Portfolio – Retail At September 30, 2020 ($ in millions) Retail - Commercial Real Estate Currently Under Short- In Process Term CARES Act CARES Act • No significant mall or “big Property Type Balance Deferral Modification Modification box” exposure Retail - Anchored $ 721 $ - $ 6 $ 10 Retail - Unanchored 645 13 - - • $57 million and $19 million of Retail-Unanchored and Retail- Construction to Perm 25 4 - - Anchored, respectively, are Gas station 24 - - - mixed-used properties Restaurant 7 3 - 6 $ 1,422 $ 20 $ 6 $ 16 Retail – Commercial & Industrial Currently Under Short- Not Secured by Owner Occupied Total Term CARES Act Industry Real Estate Real Estate Balance Deferral Modification Gasoline Stations $ 1 $ 93 $ 94 $ - $ - Health and Personal Care Stores 30 6 36 - 19 Furniture Stores 18 6 24 - - Vending Machine Operators 21 1 22 20 - Specialty Food Stores 2 18 20 - - Grocery Stores 1 18 19 - - Automobile Dealers 7 7 14 - - Clothing Stores 1 11 12 - - Office Supplies, Stationery, and Gift Stores 1 10 11 - - Other 28 41 69 1 - $ 110 $ 211 $ 321 $ 21 $ 19 18
Loan Portfolio – BFG Franchise Finance At September 30, 2020 ($ in millions) Portfolio Breakdown by Concept Currently Under Short- CARES Act Restaurant Concepts Balance % of BFG Franchise Term Deferral Modification Burger King $ 65 11% $ - $ - Dunkin Donuts 43 7% 4 - Popeyes 28 5% 5 - Jimmy John's 23 3% - - Domino's 21 3% - - Other 185 31% 26 - $ 365 60% $ 35 $ - Currently Under Short- CARES Act Non-Restaurant Concept Balance % of BFG Franchise Term Deferral Modification Planet Fitness $ 106 18% $ - $ - Orange Theory Fitness 86 14% 41 - Other 49 8% - - $ 241 40% $ 41 $ - Portfolio Breakdown by Geography CA 18% FL 11% Other TX 58% 7% UT 19 6%
Loan Portfolio – Hotel At September 30, 2020 ($ in millions) Exposure by Flag • 75% of our exposure is in Florida, followed by 16% in New York Other $102 Marriott • Includes $58.6 million in SBA 16% Sheraton $171 loans of which $13.7 million is $39 28% guaranteed 6% • All hotel properties in Florida IHG $59 and two of three properties in 10% New York are now open Hilton Independent $86 $162 14% 26% Total Portfolio: $619mm 20
Credit Quality – Residential At September 30, 2020 High quality residential portfolio consists FICO Distribution(1) of primarily prime jumbo mortgages with de-minimis charge-offs since <719 or inception as well as fully government NA insured assets 11% 720-759 18% >760 71% Breakdown by LTV(1) Breakdown by Vintage(1) More 2020 than 80% 11% 3% 60% or Prior less 2019 71% - 33% 31% 15% 80% 42% 61% - 2018 70% 9% 24% 2016 2017 17% 15% (1) Excludes government insured residential loans. FICOs are refreshed routinely. LTVs are typically based on valuation at origination. 21
Asset Quality Metrics Non-performing Loans to Total Loans Non-performing Assets to Total Assets Incl. guaranteed portion of non-accrual SBA loans Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 1.00% 0.86% 1.00% 0.88% 0.85% 0.84% 0.75% 0.67% 0.66% 0.75% 0.59% 0.63% 0.61% 0.60% 0.58% 0.68% 0.64% 0.50% 0.50% 0.43% 0.47% 0.46% 0.51% 0.49% 0.46% 0.25% 0.25% 0.37% 0.00% 0.00% Dec 18 Dec 19 Mar 20 Jun 20 Sep 20 Dec 18 Dec 19 Mar 20 Jun 20 Sep 20 Net Charge-offs to Average Loans(1)(2) 0.60% 0.40% 0.28% 0.25% 0.20% 0.20% 0.13% 0.05% 0.00% Dec 18 Dec 19 Mar 20 Jun 20 Sep 20 (1) YTD net charge-offs, annualized at September 30, 2020, June 30, 2020 and March 31, 2020. 22 (2) Net charge-offs for the three months ended September 30, 2020 included $22.1 million related to one commercial and industrial relationship.
Non-Performing Loans by Portfolio Segment ($ in thousands) Residential CRE C&I Equipment Franchise SBA(1) $204,787 $204,248 $198,221 $200,304 $61,892 $63,713 $59,233 $63,726 $129,891 $13,631 $32,857 $32,762 $20,939 $34,108 $37,635 $1,148 $5,308 $11,561 $17,424 $65,296 $65,588 $65,248 $28,309 $51,130 $24,135 $37,488 $17,213 $27,759 $30,941 $18,894 $16,956 $7,254 $13,183 $12,120 12/31/2018 12/31/2019 3/31/2020 6/30/2020 9/30/2020 (1) Includes the guaranteed portion of non-accrual SBA loans totaling $43.6 million, $45.7 million, $49.1 million, $45.7 million and $17.8 at September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and December 2018, respectively. 23
Criticized and Classified Loans ($ in millions) Commercial Real Estate Commercial & Industrial $800 $800 $700 $700 $600 $600 $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 Franchise Finance Equipment Finance SBA(1) $800 $800 $800 $700 $700 $700 $600 $600 $600 $500 $500 $500 $400 $400 $400 $300 $300 $300 $200 $200 $200 $100 $100 $100 $0 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 (1) Includes the guaranteed portion of non-accrual SBA loans totaling $43.6 million, $45.7 million, $49.1 million, $45.7 million and $17.8 at 24 September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and December 2018, respectively.
Criticized and Classified - CRE by Property Type ($ in millions) Office Multifamily Retail $275 $275 $275 $250 $250 $250 $225 $225 $225 $200 $200 $200 $175 $175 $175 $150 $150 $150 $125 $125 $125 $100 $100 $100 $75 $75 $75 $50 $50 $50 $25 $25 $25 $0 $0 $0 Warehouse/Industrial Hotel Other $275 $275 $275 $250 $250 $250 $225 $225 $225 $200 $200 $200 $175 $175 $175 $150 $150 $150 $125 $125 $125 $100 $100 $100 $75 $75 $75 $50 $50 $50 $25 $25 $25 $0 $0 $0 25
Criticized and Classified – BFG Franchise Finance ($ in millions) Restaurant Concepts Fitness Concepts $160 $160 $140 $140 $120 $120 $100 $100 $80 $80 $60 $60 $40 $40 $20 $20 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 Other $160 $140 $120 $100 $80 $60 $40 $20 $0 26 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20
Asset Quality - Delinquencies ($ in millions) Commercial CRE (1) $140 $140 $120 $120 $100 $100 $80 $80 $60 $60 $40 $40 $20 $20 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 Residential (2) (1) $140 $120 $100 $80 $60 (1) Increase in 60-89 Days PD at 9/30/20 impacted by $70MM of In Process CARES Act $40 Modifications. (2) Excludes government insured residential loans. $20 $0 27 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20
Investment Portfolio
Investment Securities AFS ($ in thousands) The AFS debt securities portfolio of $9.2 billion was in a net unrealized gain position of $62.0 million at September 30, 2020 Portfolio Composition Ratings Distribution State and Other A NR Municipal 3% 1% 1% Obligations AA 3% CLOs 6% Residential 12% US Gov real estate Government 34% lease-backed and agency securities 34% 8% AAA Private 58% label Private label CMBS RMBS and 27% CMOs 13% December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Net Unrealized Net Unrealized Net Unrealized Net Unrealized Portfoio Gain (Loss) Fair Value Gain (Loss) Fair Value Gain (Loss) Fair Value Gain (Loss) Fair Value US Government and agency 10,516 2,826,207 $ (23,649) 2,893,932 $ 17,035 $ 3,167,239 $ 22,342 $ 3,174,959 Private label RMBS and CMOs 10,840 1,012,177 (11,659) 1,173,880 14,696 1,116,086 17,135 1,167,706 Private label CMBS 5,456 1,724,684 (123,796) 1,604,814 (32,063) 2,043,620 (1,859) 2,440,550 Residential real estate lease-backed securities 2,566 470,025 (21,188) 528,793 10,188 618,207 13,745 768,898 CLOs (7,539) 1,197,366 (74,676) 1,094,793 (38,176) 1,128,753 (16,010) 1,142,404 State and Municipal Obligations 15,774 273,302 15,431 271,033 19,993 259,495 19,962 242,921 Other 733 194,904 (10,283) 255,161 5,677 261,531 6,660 251,839 Total $ 38,346 $ 7,698,665 $ (249,820) $ 7,822,406 $ (2,650) $ 8,594,931 $ 61,975 $ 9,189,277 29
Investment Securities – Asset Quality of Select Non-Agency Securities At September 30, 2020 Strong credit enhancement levels on CLOs and CMBS A 3% Collateralized Loan Obligations (CLOs) AA 13% Subordination Wtd. Avg. Rating Min Max Avg Stress Scenario Loss AAA 36.0 48.5 43.1 20.2 AA 27.7 40.8 32.8 21.6 AAA A 24.9 30.0 26.9 24.9 84% Wtd. Avg. 34.6 46.9 41.2 20.5 A AA 4% Private Label Commercial Mortgage-Backed Securities (CMBS) 7% Subordination Wtd. Avg. Rating Min Max Avg Stress Scenario Loss AAA 29.4 95.1 41.3 12.0 AA 28.3 45.2 35.0 11.4 A 21.5 79.8 37.1 11.7 AAA Wtd. Avg. 29.0 90.9 40.7 12.0 89% 30
Liquidity and Capital
Strong Capital – Well-Positioned to Withstand Severe Stress Stress Testing Results ($ in millions) BankUnited N.A. Regulatory Capital Total Risk Based Capital 14.4% CET1 Capital 13.8% 14.2% Tier 1 Leverage • We stressed our March 31, 2020 portfolio using both the 2018 DFAST 10.0% and 2020 DFAST severely adverse 9.5% 8.9% 9.1% scenarios. 13.5% • The table summarizes projected 5.0% 12.5% 12.9% lifetime losses under both DFAST scenarios and the pro-forma impact 6.5% of immediate recognition of additional stressed losses without PPNR benefit on BankUnited N.A.’s Current Ratios Lifetime Losses Lifetime Losses September 30, 2020 regulatory Required to be and Actual ACL – Projected Under Projected Under capital ratios. Considered “Well September 30, 2018 DFAST 2020 DFAST Capitalized” 2020 Severely Adverse¹ Severely Adverse¹ Expected • Pro-forma regulatory capital ratios n/a $274mm $575mm $445mm Lifetime Losses continue to exceed “well capitalized” Current ACL / guidelines under stress. Stress Scenario n/a – 48% 62% Lifetime Losses (1) The Pinnacle portfolio, which is a primarily investment grade municipal portfolio, was excluded from this stress testing exercise. 32
Robust Liquidity Position Key Liquidity Ratios 12/31/19 6/30/20 9/30/20 30 Day Liquidity Ratio • We have not experienced 1.8x 2.4x 2.7x stress on our liquidity Loans to Deposits 95.1% 91.4% 89.4% position through the period of the pandemic Wholesale Funding / Total Assets 25.3% 25.8% 24.3% $9.8BN $9.7BN Cash, $0.3 Cash, $0.3 Unpledged Unpledged Agency Securities Agency Securities $2.0 $2.2 Unpledged PPP Loans Unpledged PPP Loans $0.2 $0.1 FRB Discount FRB Discount Window Window $2.9 $2.4 FHLB Atlanta FHLB Atlanta $4.3 $4.7 Other, $0.1 June 30, 2020 September 30, 2020 33
Non-GAAP Financial Measures
Non-GAAP Financial Measures PPNR 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 and the ability of the Company to generate earnings sufficient to cover estimated credit losses, particularly in view of the adoption of the CECL accounting methodology, which may impact comparability of operating results to prior periods. This measure also provides a meaningful basis for comparison to other financial institutions and is a measure frequently cited by investors. The following table reconciles the non-GAAP financial measurement of PPNR to the comparable GAAP financial measurement of income before income taxes for the three months ended September 30, 2020 and 2019 and the three months ended June 30, 2020 (in thousands): 35
Non-GAAP Financial Measures (continued) ACL to total loans, excluding government insured residential loans, PPP loans and MWL is a non-GAAP financial measure. Management believes this measure is relevant to understanding the adequacy of the ACL coverage, excluding the impact of loans which carry nominal or no reserves. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of ACL to total loans, excluding government insured residential loans, PPP loans and MWL to the comparable GAAP financial measurement of ACL to total loans at September 30, 2020 (dollars in thousands): 36