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):January 21, 2021 (January 21, 2021 )
(Exact name of registrant as specified in its charter)
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(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 January 21, 2021, BankUnited, Inc. (the “Company”) reported its results for the quarter ended December 31, 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 8.01 Other Events
On January 20, 2021, the Company’s Board of Directors reinstated the share repurchase program that the Company suspended on March 16, 2020. Authorization to repurchase up to approximately $44.9 million in shares of its outstanding common stock remains under the share repurchase program. Any repurchases under the program 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | ||||||||||
| January 21, 2021 | |||||||||||
| January 21, 2021 | |||||||||||
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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: | January 21, 2021 | BANKUNITED, INC. | |||||||||
| /s/ Leslie N. Lunak | |||||||||||
| Name: | Leslie N. Lunak | ||||||||||
| Title: | Chief Financial Officer | ||||||||||
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EXHIBIT INDEX
| Exhibit Number | Description | ||||||||||
| January 21, 2021 | |||||||||||
| January 21, 2021 | |||||||||||
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Exhibit 99.1
BANKUNITED, INC. REPORTS 2020 RESULTS
Miami Lakes, Fla. — January 21, 2021 — BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter and year ended December 31, 2020.
“Overall, this was an excellent quarter. We saw improvement in the economic outlook leading to a reduction in credit costs and continued to execute on our core strategy of improving the deposit mix, lowering the cost of funds and growing net interest income." said Rajinder Singh, Chairman, President and Chief Executive Officer.
For the quarter ended December 31, 2020, the Company reported net income of $85.7 million, or $0.89 per diluted share, compared to $66.6 million, or $0.70 per diluted share, for the immediately preceding quarter ended September 30, 2020 and $89.5 million, or $0.91 per diluted share, for the quarter ended December 31, 2019. On an annualized basis, earnings for the quarter ended December 31, 2020 generated a return on average stockholders' equity of 11.6% and a return on average assets of 0.96%.
For the year ended December 31, 2020, the Company reported net income of $197.9 million, or $2.06 per diluted share, compared to $313.1 million, or $3.13 per diluted share, for the year ended December 31, 2019. Results for the year ended December 31, 2020 were negatively impacted by the application of the Current Expected Credit Losses ("CECL") accounting methodology, including the impact of COVID-19 on the provision for credit losses.
Financial Highlights
•Net interest income increased by $5.9 million compared to the immediately preceding quarter ended September 30, 2020 and by $8.1 million compared to the quarter ended December 31, 2019. The net interest margin, calculated on a tax-equivalent basis, was 2.33% for the quarter ended December 31, 2020 compared to 2.32% for the immediately preceding quarter. The net interest margin was 2.41% for the quarter ended December 31, 2019.
•The average cost of total deposits continued to decline, dropping by 0.14% to 0.43% for the quarter ended December 31, 2020 compared to 0.57% for the quarter ended September 30, 2020. The average cost of total deposits was 1.48% for the quarter ended December 31, 2019. On a spot basis, the average annual percentage yield ("APY") on total deposits declined to 0.36% at December 31, 2020 from 0.49% at September 30, 2020 and 1.42% at December 31, 2019.
•For the quarter ended December 31, 2020, the Company recorded a net recovery of credit losses of $1.6 million compared to a provision for credit losses of $29.2 million for the immediately preceding quarter ended September 30, 2020. The reduction in the provision for credit losses reflected improvements in forecasted economic conditions, which offset the impact of some further downward risk rating migration and increases in specific reserves. The provision for credit losses was $178.4 million for the year ended December 31, 2020. At December 31, 2020, the allowance for credit losses ("ACL") was $257 million, or 1.08% of the loan portfolio, compared to $274 million, or 1.15% at September 30, 2020. The reduction in the ACL as a percentage of loans was attributable primarily to charge-offs taken during the quarter, coupled with the lower provision for credit losses.
•Pre-tax, pre-provision net revenue ("PPNR") was $105.3 million for the quarter ended December 31, 2020 compared to $104.1 million for the quarter ended December 31, 2019 and $115.1 million for the immediately preceding quarter ended September 30, 2020. PPNR for the quarter ended December 31, 2020 was impacted by year-end adjustments to certain compensation accruals. For the year ended December 31, 2020, PPNR improved to $427.8 million from $412.9 million for the year ended December 31, 2019.
•Average non-interest bearing demand deposits grew by $966 million for the quarter ended December 31, 2020 compared to the immediately preceding quarter and by $2.9 billion compared to the quarter ended December 31, 2019. At December 31, 2020, non-interest bearing demand deposits represented 25% of total deposits, compared to 18% of total deposits at December 31, 2019. Total deposits grew by $899 million and $3.1 billion during the quarter and year ended December 31, 2020, respectively, of which $219 million and $2.7 billion respectively was non-interest bearing. Higher cost time deposits continued to runoff, declining by $1.1 billion and $2.5 billion for the quarter and year ended December 31, 2020, respectively.
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•Loans on deferral totaled $207 million or less than 1% of total loans at December 31, 2020. Loans modified under the CARES Act totaled $587 million at December 31, 2020. In the aggregate, this represents $794 million or 3% of the total loan portfolio at December 31, 2020, down from $3.6 billion or 15% of total loans that were granted an initial 90 day deferral as reported at the end of the second quarter. As of December 31, 2020, commercial loans on short-term payment deferral totaled $63 million and commercial loans subject to CARES Act modifications totaled $575 million or 3% of the total commercial portfolio. Residential loans still on deferral were $144 million and those modified under the CARES Act were $12 million, for a total of $156 million or 2% of the residential portfolio at December 31, 2020.
•Book value per common share and tangible book value per common share at December 31, 2020 increased to $32.05 and $31.22, respectively, from $31.01 and $30.17, respectively at September 30, 2020 and $31.33 and $30.52, respectively at December 31, 2019.
•On January 20, 2021, the Company’s Board of Directors reinstated the share repurchase program that the Company suspended on March 16, 2020. Authorization to repurchase up to approximately $44.9 million in shares of its outstanding common stock remains under the share repurchase program. Any repurchases under the program 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.
Loans and Leases
A comparison of loan and lease portfolio composition at the dates indicated follows (dollars in thousands):
| December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||
| Residential and other consumer loans | $ | 6,348,222 | 26.6 | % | $ | 5,940,900 | 25.1 | % | $ | 5,661,119 | 24.5 | % | |||||||||||||||||||||||
| Multi-family | 1,639,201 | 6.9 | % | 1,810,126 | 7.6 | % | 2,217,705 | 9.6 | % | ||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 4,963,273 | 20.8 | % | 4,910,835 | 20.7 | % | 5,030,904 | 21.7 | % | ||||||||||||||||||||||||||
| Construction and land | 293,307 | 1.2 | % | 263,381 | 1.1 | % | 243,925 | 1.1 | % | ||||||||||||||||||||||||||
| Owner occupied commercial real estate | 2,000,770 | 8.4 | % | 2,051,577 | 8.6 | % | 2,062,808 | 8.9 | % | ||||||||||||||||||||||||||
| Commercial and industrial | 4,447,383 | 18.6 | % | 4,427,351 | 18.6 | % | 4,655,349 | 20.1 | % | ||||||||||||||||||||||||||
| PPP | 781,811 | 3.3 | % | 829,798 | 3.5 | % | — | — | % | ||||||||||||||||||||||||||
| Pinnacle | 1,107,386 | 4.6 | % | 1,157,706 | 4.9 | % | 1,202,430 | 5.2 | % | ||||||||||||||||||||||||||
| Bridge - franchise finance | 549,733 | 2.3 | % | 606,222 | 2.4 | % | 627,482 | 2.6 | % | ||||||||||||||||||||||||||
| Bridge - equipment finance | 475,548 | 2.0 | % | 530,516 | 2.2 | % | 684,794 | 3.0 | % | ||||||||||||||||||||||||||
| Mortgage warehouse lending ("MWL") | 1,259,408 | 5.3 | % | 1,250,903 | 5.3 | % | 768,472 | 3.3 | % | ||||||||||||||||||||||||||
| $ | 23,866,042 | 100.0 | % | $ | 23,779,315 | 100.0 | % | $ | 23,154,988 | 100.0 | % | ||||||||||||||||||||||||
| Operating lease equipment, net | $ | 663,517 | $ | 676,321 | $ | 698,153 | |||||||||||||||||||||||||||||
Growth in residential and other consumer loans for the quarter was mainly attributable to GNMA early buyout loans. At December 31, 2020, September 30, 2020 and December 31, 2019, the residential portfolio included $1.4 billion, $1.1 billion and $676 million, respectively, of GNMA early buyout loans. Residential activity for the quarter included purchases of approximately $472 million in GNMA early buyout loans, offset by approximately $142 million in re-poolings and paydowns. Residential and other consumer loans, excluding GNMA early buyout loans, grew by approximately $77 million.
In the aggregate, commercial loans declined by $321 million for the quarter ended December 31, 2020 as the environment remained challenging for production and our approach to new lending remained disciplined. The largest decline was in the multi-family segment which decreased by $171 million for the quarter, driven primarily by $151 million in runoff of the New York portfolio. Loans and operating lease equipment at Bridge declined by a total of $124 million during the quarter.
During the quarter ended December 31, 2020, the Company began processing forgiveness applications with the SBA, resulting in a $48 million decline in PPP loans.
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Mortgage warehouse commitments totaled $2.1 billion at December 31, 2020, an increase of 60% compared to $1.3 billion at December 31, 2019. Line utilization was 62% at December 31, 2020 compared to 59% at December 31, 2019.
Asset Quality and the Allowance for Credit Losses
The following table presents information about non-performing loans, loans on deferral and CARES Act modifications at December 31, 2020 (dollars in thousands):
| Non-Performing Loans | Currently Under Short-Term Deferral | CARES Act Modification | |||||||||||||||
Residential and other consumer (1) | $ | 28,828 | $ | 144,189 | $ | 12,050 | |||||||||||
| Commercial: | |||||||||||||||||
| CRE - Property Type: | |||||||||||||||||
| Retail | 16,566 | 28,542 | 18,526 | ||||||||||||||
| Hotel | 35,390 | 1,055 | 343,492 | ||||||||||||||
| Office | 9,436 | — | 47,949 | ||||||||||||||
| Multi-family | 24,090 | — | 15,776 | ||||||||||||||
| Other | 7,379 | 1,789 | — | ||||||||||||||
| Owner occupied commercial real estate | 23,152 | 8,432 | 6,198 | ||||||||||||||
| Commercial and industrial | 54,584 | 2,191 | 117,836 | ||||||||||||||
| Bridge - franchise finance | 45,028 | 20,797 | 24,816 | ||||||||||||||
| Total commercial | 215,625 | 62,806 | 574,593 | ||||||||||||||
| Total | $ | 244,453 | $ | 206,995 | $ | 586,643 | |||||||||||
(1) Excludes government insured residential loans.
In the table above, "currently under short-term deferral" refers to loans subject to either a first or second 90-day payment deferral at December 31, 2020 and "CARES Act modification" refers to loans subject to longer-term modifications that, were it not for the provisions of the CARES Act, would likely have been reported as TDRs. Non-performing loans may include some loans that have been modified under the CARES Act.
Non-performing loans totaled $244.5 million or 1.02% of total loans at December 31, 2020, compared to $200.3 million or 0.84% of total loans at September 30, 2020 and $204.8 million or 0.88% of total loans at December 31, 2019. The largest increases in non-performing loans during the quarter ended December 31, 2020 were in the multi-family, franchise finance and residential sub-segments, while non-performing commercial and industrial loans declined. Non-performing loans included $51.3 million, $43.6 million and $45.7 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.22%, 0.18% and 0.20% of total loans at December 31, 2020, September 30, 2020 and December 31, 2019, respectively.
The following table presents criticized and classified commercial loans at the dates indicated (in thousands):
| December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||||||||||
| Special mention | $ | 711,516 | $ | 951,981 | $ | 72,881 | |||||||||||
| Substandard - accruing | 1,758,654 | 1,376,718 | 180,380 | ||||||||||||||
| Substandard - non-accruing | 203,758 | 187,247 | 185,906 | ||||||||||||||
| Doubtful | 11,867 | 938 | — | ||||||||||||||
| Total | $ | 2,685,795 | $ | 2,516,884 | $ | 439,167 | |||||||||||
The following table presents the ACL at the dates indicated, related ACL coverage ratios, as well as net charge-off rates for the years ended December 31, 2020 and 2019 (dollars in thousands):
| ACL | ACL to Total Loans | ACL to Non-Performing Loans | Net Charge-offs to Average Loans | ||||||||||||||||||||
| December 31, 2019 (incurred loss) | $ | 108,671 | 0.47 | % | 53.07 | % | 0.05 | % | |||||||||||||||
| January 1, 2020 (initial date of CECL adoption) | $ | 135,976 | 0.59 | % | 66.40 | % | N/A | ||||||||||||||||
| September 30, 2020 (expected loss) | $ | 274,128 | 1.15 | % | 136.86 | % | 0.25 | % | |||||||||||||||
| December 31, 2020 (expected loss) | $ | 257,323 | 1.08 | % | (1) | 105.26 | % | 0.26 | % | ||||||||||||||
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(1) ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 1.26% at December 31, 2020.
The ACL at December 31, 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 December 2020, economic information provided by additional sources, data reflecting the impact of recent events on individual borrowers and other relevant information. The decline in the ACL from September 30, 2020 to December 31, 2020 related primarily to charge-offs taken during the quarter, coupled with the lower provision for credit losses.
For the quarter ended December 31, 2020, the Company recorded a net recovery of credit losses of $1.6 million, which included a provision of $1.2 million related to funded loans offset by a recovery of $2.9 million related to unfunded loan commitments as well as immaterial components related to accrued interest receivable and an AFS debt security. The provision for credit losses reflected improvements in forecasted economic conditions, which largely offset the impact of risk rating migration and increases in certain specific reserves.
The following table summarizes the activity in the ACL for the periods indicated (in thousands):
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Beginning balance | $ | 274,128 | $ | 108,462 | $ | 108,671 | $ | 109,931 | |||||||||||||||
| Cumulative effect of adoption of CECL | — | — | 27,305 | — | |||||||||||||||||||
| Balance after adoption of CECL | 274,128 | 108,462 | 135,976 | 109,931 | |||||||||||||||||||
| Provision (recovery) | 1,244 | (469) | 182,339 | 8,904 | |||||||||||||||||||
| Charge-offs | (18,848) | (3,556) | (69,602) | (17,541) | |||||||||||||||||||
| Recoveries | 799 | 4,234 | 8,610 | 7,377 | |||||||||||||||||||
| Ending balance | $ | 257,323 | $ | 108,671 | $ | 257,323 | $ | 108,671 | |||||||||||||||
$13.8 million of the charge-offs recognized during the quarter ended December 31, 2020 related to $57.6 million of non-performing loans that were sold during the quarter, or held for sale at quarter-end.
Net interest income
Net interest income for the quarter ended December 31, 2020 was $193.4 million compared to $187.5 million for the immediately preceding quarter ended September 30, 2020 and $185.3 million for the quarter ended December 31, 2019. While average interest earning assets have increased quarter-over-quarter and year-over-year, average interest bearing liabilities have continued to decline as average non-interest bearing demand deposits have grown.
Interest income decreased by $3.5 million for the quarter ended December 31, 2020 compared to the immediately preceding quarter, and by $58.3 million, compared to the quarter ended December 31, 2019. Interest expense decreased by $9.3 million compared to the immediately preceding quarter and by $66.3 million compared to the quarter ended December 31, 2019. Decreases in interest income resulted from declines in market interest rates including the impact of repayment of assets originated in a higher rate environment, partially offset by increases in average interest earning assets. Declines in interest expense reflected decreases in market interest rates, the impact of our strategy focused on lowering the cost of deposits and improving the deposit mix and declines in average interest bearing liabilities.
The Company’s net interest margin, calculated on a tax-equivalent basis, increased by 0.01% to 2.33% for the quarter ended December 31, 2020, from 2.32% for the immediately preceding quarter ended September 30, 2020. Offsetting factors contributing to the increase in the net interest margin for the quarter ended December 31, 2020 compared to the immediately preceding quarter ended September 30, 2020 included:
•The average rate paid on interest bearing deposits decreased to 0.58% for the quarter ended December 31, 2020, from 0.75% for the quarter ended September 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 December 31, 2020, approximately $1.0 billion or 21% of the time deposit portfolio, with an average rate of 1.61%, has not yet repriced since March 2020 when the Fed last cut rates. The majority of these CDs will mature in the first quarter of 2021.
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•The tax-equivalent yield on investment securities decreased to 1.82% for the quarter ended December 31, 2020 from 2.00% for the quarter ended September 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 3.55% for the quarter ended December 31, 2020, from 3.61% for the quarter ended September 30, 2020. Factors contributing to this decrease included the impact of runoff of loans originated in a higher rate environment, originations at lower prevailing market rates and interest income reversed on loans placed on non-accrual during the quarter.
•The average rate paid on FHLB and PPPLF borrowings increased to 2.07% for the quarter ended December 31, 2020, from 1.95% for the quarter ended September 30, 2020, reflecting the maturity of short-term, lower rate FHLB advances and the payoff of all PPPLF borrowings.
•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 year ended December 31, 2020, compared to 2.47% for the year ended December 31, 2019. The decline in the yield on interest earning assets outpaced the reduction in cost of interest bearing liabilities for the period. The offsetting factors discussed above with respect to the yields on loans and securities, the average rate paid on deposits and the growth in non-interest bearing demand deposits also impacted the the net interest margin for the year ended December 30, 2020 compared to the prior year. Declines in market interest rates had a significant impact on year-over-year changes in yields earned on interest earning assets and rates paid on interest bearing liabilities.
Non-interest expense
Non-interest expense totaled $123.3 million for the quarter ended December 31, 2020 compared to $108.6 million for the immediately preceding quarter ended September 30, 2020 and $119.0 million for the quarter ended December 31, 2019. Non-interest expense totaled $457.2 million and $487.1 million for the year ended December 31, 2020 and 2019, respectively, a decline of approximately 6%.
•Compensation and benefits increased by $12.5 million for the quarter ended December 31, 2020 compared to the immediately preceding quarter. This increase included an increase of $6.6 million in variable compensation accruals related to stronger than initially anticipated operating results over the second half of the year; a $2.2 million vacation accrual related to rollover vacation days provided to employees in response to COVID-19; and an increase of $2.5 million in the accrual related to liability classified share awards stemming from an increase in the stock price.
•Cost reductions stemming from our BankUnited 2.0 initiative contributed to the declining trend in occupancy and equipment expense and other non-interest expense.
•The increasing trend in technology and telecommunications expense is reflective of investments in digital and data analytics capabilities and in the infrastructure to support cloud migration.
•The increasing trend in deposit insurance expense reflects an increase in the assessment rate.
•For the quarter and year ended December 31, 2020, non-interest expense included approximately $2.8 million and $4.8 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 Thursday, January 21, 2021 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.
The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. 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 9281414. A replay of the call will be available from 12:00 p.m. ET on January 21st through 11:59 p.m. ET on January 28th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The conference ID for the replay is 9281414. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.
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About BankUnited, Inc.
BankUnited, Inc., with total assets of $35.0 billion at December 31, 2020, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 70 banking centers in 14 Florida counties and 4 banking centers in the New York metropolitan area at December 31, 2020.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance.
The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitations) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by the COVID-19 pandemic. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are available at the SEC’s website (www.sec.gov).
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)
| December 31, 2020 | December 31, 2019 | ||||||||||
| ASSETS | |||||||||||
| Cash and due from banks: | |||||||||||
| Non-interest bearing | $ | 20,233 | $ | 7,704 | |||||||
| Interest bearing | 377,483 | 206,969 | |||||||||
| Cash and cash equivalents | 397,716 | 214,673 | |||||||||
| Investment securities (including securities recorded at fair value of $9,166,683 and $7,759,237) | 9,176,683 | 7,769,237 | |||||||||
| Non-marketable equity securities | 195,865 | 253,664 | |||||||||
| Loans held for sale | 24,676 | 37,926 | |||||||||
| Loans | 23,866,042 | 23,154,988 | |||||||||
| Allowance for credit losses | (257,323) | (108,671) | |||||||||
| Loans, net | 23,608,719 | 23,046,317 | |||||||||
| Bank owned life insurance | 294,629 | 282,151 | |||||||||
| Operating lease equipment, net | 663,517 | 698,153 | |||||||||
| Goodwill and other intangible assets | 77,637 | 77,674 | |||||||||
| Other assets | 571,051 | 491,498 | |||||||||
| Total assets | $ | 35,010,493 | $ | 32,871,293 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Liabilities: | |||||||||||
| Demand deposits: | |||||||||||
| Non-interest bearing | $ | 7,008,838 | $ | 4,294,824 | |||||||
| Interest bearing | 3,020,039 | 2,130,976 | |||||||||
| Savings and money market | 12,659,740 | 10,621,544 | |||||||||
| Time | 4,807,199 | 7,347,247 | |||||||||
| Total deposits | 27,495,816 | 24,394,591 | |||||||||
| Federal funds purchased | 180,000 | 100,000 | |||||||||
| FHLB advances | 3,122,999 | 4,480,501 | |||||||||
| Notes and other borrowings | 722,495 | 429,338 | |||||||||
| Other liabilities | 506,171 | 486,084 | |||||||||
| Total liabilities | 32,027,481 | 29,890,514 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
| Common stock, par value $0.01 per share, 400,000,000 shares authorized; 93,067,500 and 95,128,231 shares issued and outstanding | 931 | 951 | |||||||||
| Paid-in capital | 1,017,518 | 1,083,920 | |||||||||
| Retained earnings | 2,013,715 | 1,927,735 | |||||||||
| Accumulated other comprehensive loss | (49,152) | (31,827) | |||||||||
| Total stockholders' equity | 2,983,012 | 2,980,779 | |||||||||
| Total liabilities and stockholders' equity | $ | 35,010,493 | $ | 32,871,293 | |||||||
7
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
| Three Months Ended | Years Ended | ||||||||||||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||
| Loans | $ | 207,232 | $ | 208,646 | $ | 242,642 | $ | 864,175 | $ | 981,408 | |||||||||||||||||||
| Investment securities | 42,260 | 44,604 | 62,006 | 193,856 | 280,560 | ||||||||||||||||||||||||
| Other | 1,628 | 1,322 | 4,762 | 9,578 | 19,902 | ||||||||||||||||||||||||
| Total interest income | 251,120 | 254,572 | 309,410 | 1,067,609 | 1,281,870 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 29,290 | 37,681 | 88,289 | 199,980 | 385,180 | ||||||||||||||||||||||||
| Borrowings | 28,464 | 29,412 | 35,810 | 115,871 | 143,905 | ||||||||||||||||||||||||
| Total interest expense | 57,754 | 67,093 | 124,099 | 315,851 | 529,085 | ||||||||||||||||||||||||
| Net interest income before provision for credit losses | 193,366 | 187,479 | 185,311 | 751,758 | 752,785 | ||||||||||||||||||||||||
| Provision for (recovery of) credit losses | (1,643) | 29,232 | (469) | 178,431 | 8,904 | ||||||||||||||||||||||||
| Net interest income after provision for credit losses | 195,009 | 158,247 | 185,780 | 573,327 | 743,881 | ||||||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||||||
| Deposit service charges and fees | 4,569 | 4,040 | 4,150 | 16,496 | 16,539 | ||||||||||||||||||||||||
Gain on sale of loans, net | 2,425 | 2,953 | 1,899 | 13,170 | 12,119 | ||||||||||||||||||||||||
Gain on investment securities, net | 7,203 | 7,181 | 7,438 | 17,767 | 21,174 | ||||||||||||||||||||||||
| Lease financing | 13,547 | 13,934 | 13,857 | 59,112 | 66,631 | ||||||||||||||||||||||||
| Other non-interest income | 7,536 | 8,184 | 10,412 | 26,676 | 30,741 | ||||||||||||||||||||||||
| Total non-interest income | 35,280 | 36,292 | 37,756 | 133,221 | 147,204 | ||||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||
| Employee compensation and benefits | 60,944 | 48,448 | 55,744 | 217,156 | 235,330 | ||||||||||||||||||||||||
| Occupancy and equipment | 11,797 | 12,170 | 13,697 | 48,237 | 56,174 | ||||||||||||||||||||||||
| Deposit insurance expense | 6,759 | 5,886 | 4,142 | 21,854 | 16,991 | ||||||||||||||||||||||||
| Professional fees | 2,937 | 2,436 | 2,621 | 11,708 | 20,352 | ||||||||||||||||||||||||
| Technology and telecommunications | 16,052 | 15,435 | 13,334 | 58,108 | 47,509 | ||||||||||||||||||||||||
| Depreciation of operating lease equipment | 12,270 | 12,315 | 13,610 | 49,407 | 48,493 | ||||||||||||||||||||||||
| Loss on debt extinguishment | — | — | — | — | 3,796 | ||||||||||||||||||||||||
| Other non-interest expense | 12,565 | 11,937 | 15,860 | 50,719 | 58,444 | ||||||||||||||||||||||||
| Total non-interest expense | 123,324 | 108,627 | 119,008 | 457,189 | 487,089 | ||||||||||||||||||||||||
| Income before income taxes | 106,965 | 85,912 | 104,528 | 249,359 | 403,996 | ||||||||||||||||||||||||
| Provision for income taxes | 21,228 | 19,353 | 15,072 | 51,506 | 90,898 | ||||||||||||||||||||||||
| Net income | $ | 85,737 | $ | 66,559 | $ | 89,456 | $ | 197,853 | $ | 313,098 | |||||||||||||||||||
| Earnings per common share, basic | $ | 0.89 | $ | 0.70 | $ | 0.91 | $ | 2.06 | $ | 3.14 | |||||||||||||||||||
| Earnings per common share, diluted | $ | 0.89 | $ | 0.70 | $ | 0.91 | $ | 2.06 | $ | 3.13 | |||||||||||||||||||
8
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Three Months Ended December 31, 2020 | Three Months Ended September 30, 2020 | Three Months Ended December 31, 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 | $ | 23,706,859 | $ | 210,896 | 3.55 | % | $ | 23,447,514 | $ | 212,388 | 3.61 | % | $ | 22,986,427 | $ | 246,458 | 4.27 | % | |||||||||||||||||||||||||||||||||||
Investment securities (3) | 9,446,389 | 42,966 | 1.82 | % | 9,065,478 | 45,351 | 2.00 | % | 7,929,948 | 62,948 | 3.18 | % | |||||||||||||||||||||||||||||||||||||||||
| Other interest earning assets | 726,273 | 1,628 | 0.89 | % | 552,515 | 1,322 | 0.95 | % | 627,001 | 4,762 | 3.01 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets | 33,879,521 | 255,490 | 3.01 | % | 33,065,507 | 259,061 | 3.13 | % | 31,543,376 | 314,168 | 3.97 | % | |||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (280,243) | (272,464) | (110,503) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,817,476 | 1,897,723 | 1,655,342 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 35,416,754 | $ | 34,690,766 | $ | 33,088,215 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 2,903,300 | $ | 3,637 | 0.50 | % | $ | 2,800,421 | $ | 4,127 | 0.59 | % | $ | 1,947,034 | $ | 6,485 | 1.32 | % | |||||||||||||||||||||||||||||||||||
| Savings and money market deposits | 11,839,631 | 14,517 | 0.49 | % | 10,664,462 | 15,853 | 0.59 | % | 10,416,964 | 41,705 | 1.59 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 5,360,630 | 11,136 | 0.83 | % | 6,519,852 | 17,701 | 1.08 | % | 7,016,192 | 40,099 | 2.27 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing deposits | 20,103,561 | 29,290 | 0.58 | % | 19,984,735 | 37,681 | 0.75 | % | 19,380,190 | 88,289 | 1.81 | % | |||||||||||||||||||||||||||||||||||||||||
| Short term borrowings | 20,707 | 6 | 0.12 | % | 53,587 | 14 | 0.10 | % | 115,928 | 505 | 1.73 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB and PPPLF borrowings | 3,698,666 | 19,207 | 2.07 | % | 4,117,181 | 20,146 | 1.95 | % | 5,244,495 | 30,011 | 2.27 | % | |||||||||||||||||||||||||||||||||||||||||
| Notes and other borrowings | 722,581 | 9,251 | 5.12 | % | 722,271 | 9,252 | 5.12 | % | 404,086 | 5,294 | 5.24 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 24,545,515 | 57,754 | 0.94 | % | 24,877,774 | 67,093 | 1.07 | % | 25,144,699 | 124,099 | 1.96 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 7,152,967 | 6,186,718 | 4,292,943 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 772,277 | 803,498 | 686,027 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 32,470,759 | 31,867,990 | 30,123,669 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,945,995 | 2,822,776 | 2,964,546 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 35,416,754 | $ | 34,690,766 | $ | 33,088,215 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 197,736 | $ | 191,968 | $ | 190,069 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate spread | 2.07 | % | 2.06 | % | 2.01 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.33 | % | 2.32 | % | 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)
| Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
| Average Balance | Interest (1) | Yield/ Rate (1) | Average Balance | Interest (1) | Yield/ Rate (1) | |||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||||||||||||||||
| Loans | $ | 23,385,832 | $ | 879,082 | 3.76 | % | $ | 22,553,250 | $ | 998,130 | 4.43 | % | ||||||||||||||||||||||||||
Investment securities (2) | 8,739,023 | 196,954 | 2.25 | % | 8,231,858 | 284,849 | 3.46 | % | ||||||||||||||||||||||||||||||
| Other interest earning assets | 672,634 | 9,578 | 1.42 | % | 555,992 | 19,902 | 3.58 | % | ||||||||||||||||||||||||||||||
| Total interest earning assets | 32,797,489 | 1,085,614 | 3.31 | % | 31,341,100 | 1,302,881 | 4.16 | % | ||||||||||||||||||||||||||||||
| Allowance for credit losses | (236,704) | (112,890) | ||||||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,860,322 | 1,625,579 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 34,421,107 | $ | 32,853,789 | ||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 2,582,951 | 19,445 | 0.75 | % | $ | 1,824,803 | 25,054 | 1.37 | % | ||||||||||||||||||||||||||||
| Savings and money market deposits | 10,843,894 | 85,572 | 0.79 | % | 10,922,819 | 197,942 | 1.81 | % | ||||||||||||||||||||||||||||||
| Time deposits | 6,617,939 | 94,963 | 1.43 | % | 6,928,499 | 162,184 | 2.34 | % | ||||||||||||||||||||||||||||||
| Total interest bearing deposits | 20,044,784 | 199,980 | 1.00 | % | 19,676,121 | 385,180 | 1.96 | % | ||||||||||||||||||||||||||||||
| Short term borrowings | 71,858 | 418 | 0.58 | % | 124,888 | 2,802 | 2.24 | % | ||||||||||||||||||||||||||||||
| FHLB and PPPLF borrowings | 4,295,882 | 85,491 | 1.99 | % | 5,089,524 | 119,901 | 2.36 | % | ||||||||||||||||||||||||||||||
| Notes and other borrowings | 592,521 | 29,962 | 5.06 | % | 403,704 | 21,202 | 5.25 | % | ||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 25,005,045 | 315,851 | 1.26 | % | 25,294,237 | 529,085 | 2.09 | % | ||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 5,760,309 | 3,950,612 | ||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 786,337 | 662,590 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | 31,551,691 | 29,907,439 | ||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,869,416 | 2,946,350 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 34,421,107 | $ | 32,853,789 | ||||||||||||||||||||||||||||||||||
| Net interest income | $ | 769,763 | $ | 773,796 | ||||||||||||||||||||||||||||||||||
| Interest rate spread | 2.05 | % | 2.07 | % | ||||||||||||||||||||||||||||||||||
| Net interest margin | 2.35 | % | 2.47 | % | ||||||||||||||||||||||||||||||||||
(1) On a tax-equivalent basis where applicable
(2) 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 December 31, | Years Ended December 31, | ||||||||||||||||||||||
| c | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Basic earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 85,737 | $ | 89,456 | $ | 197,853 | $ | 313,098 | |||||||||||||||
Distributed and undistributed earnings allocated to participating securities | (4,015) | (3,971) | (8,882) | (13,371) | |||||||||||||||||||
Income allocated to common stockholders for basic earnings per common share | $ | 81,722 | $ | 85,485 | $ | 188,971 | $ | 299,727 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | 92,725,905 | 95,000,894 | 92,869,736 | 96,581,290 | |||||||||||||||||||
| Less average unvested stock awards | (1,160,984) | (1,065,813) | (1,163,480) | (1,127,275) | |||||||||||||||||||
Weighted average shares for basic earnings per common share | 91,564,921 | 93,935,081 | 91,706,256 | 95,454,015 | |||||||||||||||||||
| Basic earnings per common share | $ | 0.89 | $ | 0.91 | $ | 2.06 | $ | 3.14 | |||||||||||||||
| Diluted earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
Income allocated to common stockholders for basic earnings per common share | $ | 81,722 | $ | 85,485 | $ | 188,971 | $ | 299,727 | |||||||||||||||
Adjustment for earnings reallocated from participating securities | (67) | (41) | (123) | (175) | |||||||||||||||||||
Income used in calculating diluted earnings per common share | $ | 81,655 | $ | 85,444 | $ | 188,848 | $ | 299,552 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average shares for basic earnings per common share | 91,564,921 | 93,935,081 | 91,706,256 | 95,454,015 | |||||||||||||||||||
| Dilutive effect of stock options | 20,179 | 186,967 | 24,608 | 202,890 | |||||||||||||||||||
Weighted average shares for diluted earnings per common share | 91,585,100 | 94,122,048 | 91,730,864 | 95,656,905 | |||||||||||||||||||
| Diluted earnings per common share | $ | 0.89 | $ | 0.91 | $ | 2.06 | $ | 3.13 | |||||||||||||||
11
BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Financial ratios (4) | |||||||||||||||||||||||
| Return on average assets | 0.96 | % | 1.07 | % | 0.57 | % | 0.95 | % | |||||||||||||||
| Return on average stockholders’ equity | 11.6 | % | 12.0 | % | 6.9 | % | 10.6 | % | |||||||||||||||
Net interest margin (3) | 2.33 | % | 2.41 | % | 2.35 | % | 2.47 | % | |||||||||||||||
| December 31, 2020 | December 31, 2019 | ||||||||||
| Asset quality ratios | |||||||||||
Non-performing loans to total loans (1)(5) | 1.02 | % | 0.88 | % | |||||||
Non-performing assets to total assets (2)(5) | 0.71 | % | 0.63 | % | |||||||
| Allowance for credit losses to total loans | 1.08 | % | 0.47 | % | |||||||
Allowance for credit losses to non-performing loans (1)(5) | 105.26 | % | 53.07 | % | |||||||
| Net charge-offs to average loans | 0.26 | % | 0.05 | % | |||||||
(1) We define non-performing loans to include non-accrual loans and loans other than purchased credit deteriorated and government insured residential loans that are past due 90 days or more and still accruing. Contractually delinquent purchased 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 month period.
(5) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $51.3 million or 0.22% of total loans and 0.15% of total assets, at December 31, 2020; and $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.
| December 31, 2020 | December 31, 2019 | Required to be Considered Well Capitalized | |||||||||||||||||||||||||||
| BankUnited, Inc. | BankUnited, N.A. | BankUnited, Inc. | BankUnited, N.A. | ||||||||||||||||||||||||||
| Capital ratios | |||||||||||||||||||||||||||||
| Tier 1 leverage | 8.6 | % | 9.5 | % | 8.9 | % | 9.3 | % | 5.0 | % | |||||||||||||||||||
| Common Equity Tier 1 ("CET1") risk-based capital | 12.6 | % | 13.9 | % | 12.3 | % | 12.9 | % | 6.5 | % | |||||||||||||||||||
| Total risk-based capital | 14.7 | % | 14.8 | % | 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 12.4% and 13.7%, respectively, at December 31, 2020. The increase in the total risk-based capital ratio for BankUnited, Inc. from December 31, 2019 to December 31, 2020 includes the issuance of $300 million in subordinated debt in the second quarter of 2020.
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 months and year ended December 31, 2020 and 2019 and the three months ended September 30, 2020 (in thousands):
| Three Months Ended December 31, | Three Months Ended September 30, | Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
| Income before income taxes (GAAP) | $ | 106,965 | $ | 85,912 | $ | 104,528 | $ | 249,359 | $ | 403,996 | |||||||||||||||||||
| Plus: Provision for (recovery of) credit losses | (1,643) | 29,232 | (469) | 178,431 | 8,904 | ||||||||||||||||||||||||
PPNR (non-GAAP) | $ | 105,322 | $ | 115,144 | $ | 104,059 | $ | 427,790 | $ | 412,900 | |||||||||||||||||||
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 December 31, 2020 (dollars in thousands):
| Total loans (GAAP) | $ | 23,866,042 | |||
| Less: Government insured residential loans | 1,419,074 | ||||
| Less: PPP loans | 781,811 | ||||
| Less: MWL | 1,259,408 | ||||
| Total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP) | $ | 20,405,749 | |||
| ACL | $ | 257,323 | |||
| ACL to total loans (GAAP) | 1.08 | % | |||
| ACL to total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP) | 1.26 | % | |||
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):
| December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||||||||||
| Total stockholders’ equity | $ | 2,983,012 | $ | 2,864,824 | $ | 2,980,779 | |||||||||||
| Less: goodwill and other intangible assets | 77,637 | 77,641 | 77,674 | ||||||||||||||
| Tangible stockholders’ equity | $ | 2,905,375 | $ | 2,787,183 | $ | 2,903,105 | |||||||||||
| Common shares issued and outstanding | 93,067,500 | 92,388,641 | 95,128,231 | ||||||||||||||
| Book value per common share | $ | 32.05 | $ | 31.01 | $ | 31.33 | |||||||||||
| Tangible book value per common share | $ | 31.22 | $ | 30.17 | $ | 30.52 | |||||||||||
14
BankUnited, Inc. Q4 2020 – Supplemental Information January 21, 2021 Exhibit 99.2
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 Quarterly Results in a Challenging Environment Robust capital levels Loan deferrals and modifications Operating results Continued improvement in deposit mix 4 • CET1 ratios of 12.6% at the holding company and 13.9% at the bank at December 31, 2020 • Book value per share grew to $32.05 and tangible book value grew to $31.22 at December 31, 2020 • Reinstated our share repurchase program with authorization to repurchase approximately $44.9 million in shares of common stock • EPS for the quarter of $0.89 • Annualized ROE for the quarter of 11.6% and ROA of 0.96% • Net interest income grew by $6 million linked quarter and $8 million compared to Q4 2019 • NIM of 2.33% compared to 2.32% linked quarter • Lower provision for credit losses reflecting an improving economic forecast • Average non-interest DDA up $966 million linked quarter and $2.9 billion compared to Q4 2019 • Non-interest DDA grew by $219 million for the quarter to 25% of total deposits from 18% a year ago • Average total cost of deposits continued to decline, to 0.43% for the quarter, lowest in the Company’s history • “Spot” APY on total deposits was 0.36% at December 31, 2020 • Loans on deferral totaled $207 million or less than 1% of total loans at December 31, 2020 • Commercial: $63 million or less than 1% of commercial loans • Residential: $144 million or 2% of residential loans • CARES Act modifications totaled $587 at December 31, 2020 • Commercial: $575 million or 3% of commercial loans • Residential: $12 million or less than 1% of residential loans
Highlights from Fourth Quarter Earnings 5 (1) PPNR is a non-GAAP financial measure. See section entitled “Non-GAAP Financial Measures” on page 32 (2) Includes guaranteed portion of non-accrual SBA loans. (3) YTD net charge-offs, annualized for Q3 20 Change From ($ in millions, except per share data) Q4 20 Q3 20 Q4 19 Q3 20 Q4 19 Key Highlights Net Interest Income $ 193 $ 187 $ 185 6 8 Provision for Credit Losses $ (2) $ 29 $ - (31) (2) Continuing stabilization of reserves as economic forecast improves. Total Non-interest Income $ 35 $ 36 $ 38 (1) (3) Total Non-interest Expense $ 123 $ 109 $ 119 14 4 Q4 20 impacted by variable compensation accrual adjustments. Net Income $ 86 $ 67 $ 89 19 (3) EPS $ 0.89 $ 0.70 $ 0.91 0.19 (0.02) Pre-Provision, Net Revenue (PPNR) (1) $ 105 $ 115 $ 104 (10) 1 Period-end Loans $ 23,866 $ 23,779 $ 23,155 87 711 3.0% YoY loan growth. Period-end Deposits $ 27,496 $ 26,597 $ 24,395 899 3,101 13.0% YoY deposit growth, primarily from non-interest bearing. CET1 12.6 % 12.2 % 12.3 % 0.4 % 0.3 % Total Capital 14.7 % 14.3 % 12.8 % 0.4 % 1.9 % Reflects $300 million in subordinated notes issued in Q2 20. Yield on Loans 3.55 % 3.61 % 4.27 % (0.06)% (0.72)% Turnover of portfolio at lower prevailing rates. Cost of Deposits 0.43 % 0.57 % 1.48 % (0.14)% (1.05)% Spot APY on total deposits declined to 0.36% at December 31, 2020. Net Interest Margin 2.33 % 2.32 % 2.41 % 0.01 % (0.08)% Non-performing Assets to Total Assets (2) 0.71 % 0.58 % 0.63 % 0.19 % 0.14 % Allowance for Credit Losses to Total Loans 1.08 % 1.15 % 0.47 % (0.07)% 0.61 % Decline from Q3 20 primarily due to charge-offs taken. Net Charge-offs to Average Loans (3) 0.26 % 0.25 % 0.05 % 0.01 % 0.21 %
6 Continuing to Transform our Deposit Mix ($ in millions) $7,081 $7,046 $7,347 $7,542 $6,731 $5,888 $4,807 $10,911 $10,936 $10,622 $10,324 $10,590 $11,003 $12,660 $1,831 $1,847 $2,131 $2,536 $2,866 $2,917 $3,020 $4,099 $4,127 $4,295 $4,599 $5,883 $6,789 $7,009 $23,922 $23,956 $24,395 $25,001 $26,070 $26,597 $27,496 Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 Non-interest Demand Interest Demand Money Market / Savings Time Non-interest bearing demand deposits have grown at a compound annual growth rate of 39% since December 31, 2018 We have consistently priced down our deposit portfolio since the Fed began lowering interest rates in late 2019 Cost of Deposits 1.70% 1.67% 1.48% 1.36% 0.80% 0.57% 0.43% Non-interest bearing 17.1% 17.2% 17.6% 18.4% 22.6% 25.5% 25.5% Spot Average Annual Percentage Yield (“APY”) At December 31, 2019 At March 31, 2020 At June 30, 2020 At September 30, 2020 At December 31, 2020 Total non-maturity deposits 1.11% 0.83% 0.44% 0.37% 0.29% Total interest-bearing deposits 1.71% 1.35% 0.82% 0.65% 0.48% Total deposits 1.42% 1.12% 0.65% 0.49% 0.36%
7 Prudently Underwritten and Well-Diversified Loan Portfolio At December 31, 2020 ($ in millions) Loan Portfolio Over Time $21,416 $21,977 $23,155 $23,185 $23,835 $23,779 $23,866 $4,699 $4,949 $5,661 $5,635 $5,578 $5,941 $6,348 $8,005 $7,501 $7,493 $7,178 $7,081 $6,984 $6,896 $5,689 $6,478 $6,719 $7,035 $7,559 $7,308 $7,230 $459 $432 $768 $852 $1,161 $1,251 $1,259 $2,564 $2,617 $2,514 $2,485 $2,456 $2,295 $2,133 12/31/2017 12/31/2018 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 Residential CRE C&I Mortgage Warehouse Lending Lending Subs CRE Non-Owner Occupied 72% Multi-family 24% Construction and Land 4% Residential Loan Product Type 30 Yr Fixed 17% 15 & 20 Year Fixed 9% 10/1 ARM 20% 5/1 & 7/1 ARM 30% Formerly Covered 2% Govt Insured 22% Owner Occupied 28% Commercial and Industrial 61% SBA PPP 11% C&I Lending Subs Pinnacle 52% Bridge - Franchise 26% Bridge - Equpment 22%
Allowance for Credit Losses
9 CECL Methodology Underlying Principles Economic Forecast Key Variables • The ACL under CECL represents management’s best estimate at the balance sheet date of expected credit losses over the life of the loan portfolio. • Required to consider historical information, current conditions and a reasonable and supportable economic forecast. • For most portfolio segments, BankUnited uses econometric models to project PD, LGD and expected losses at the loan level and aggregates those expected losses by segment. • Qualitative adjustments may be applied to the quantitative results. • Accounting standard requires an estimate of expected prepayments which may significantly impact the lifetime loss estimate. • Our ACL estimate was informed by Moody’s economic scenarios published in December 2020. • Unemployment at 6.7% for Q1 2021, stable through end of 2021, declining to 5.4% by end of 2022. • Annualized growth in GDP 4% for Q1 2021, increasing to 4.1% by end of 2021 and 4.7% by end of 2022. • VIX trending down to stabilized levels through the forecast horizon. • S&P 500 stable near 3500, through the R&S period. • 2 year reasonable and supportable forecast period. • The models ingest numerous national, regional and MSA level economic variables and data points. Economic data and variables to which portfolio segments are most sensitive: • Commercial o Market volatility index o S&P 500 index o Unemployment rate o A variety of interest rates and spreads • CRE o Unemployment o CRE property forecast o 10-year treasury o Baa corporate yield o Real GDP growth • Residential o HPI o Unemployment rate o Real GDP growth o Freddie Mac 30-year rate
10 Drivers of Change in the ACL ($ in millions) ACL 9/30/20 ACL 12/31/20 Assumption Changes Portfolio Changes Change in Qualitative Overlay • New loans • Exits/runoff • Portfolio seasoning • Current market adjustment • Changes to forward path of economic forecast % of Total Loans 1.15% 1.08% Economic Forecast • Additional qualitative overlay for borrowers impacted by COVID- 19 Charge-Offs • $13.8 million related to loans sold during the quarter, or held for sale at quarter- end Net Portfolio Migration • Risk rating migration • Changes in specific reserves • Primarily updates to behavioral assumptions about residential loans with payment deferrals
11 (1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $51.3 million, $43.6 million, and $45.7 million or 0.22%, 0.18%, and 0.20% of total loans and 0.15%, 0.12%, and 0.14% of total assets, at December 31, 2020, September 30, 2020, and December 31, 2019. (2) ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 1.26% at December 31, 2020. See section entitled “Non-GAAP Financial Measures” on page 33. ($ in millions) Allocation of the ACL Asset Quality Ratios December 31, 2019 September 30, 2020 December 31, 2020 Non-performing loans to total loans (1) 0.88% 0.84% 1.02% Non-performing assets to total assets 0.63% 0.58% 0.71% Allowance for credit losses to non-performing loans (1) 53.07% 136.86% 105.26% Net charge-offs to average loans 0.05% 0.26% Balance % of Loans Balance % of Loans Balance % of Loans Residential and other consumer 19.3$ 0.34% 16.0$ 0.27% 18.7$ 0.29% Commercial: Commercial real estate 16.7 0.22% 113.3 1.62% 104.6 1.52% Commercial and industrial 83.6 1.12% 114.4 1.34% 91.0 1.07% Pinnacle 0.4 0.03% 0.4 0.03% 0.3 0.03% Franchise finance 9.0 1.44% 24.4 4.03% 36.3 6.61% Equipment finance 7.0 1.02% 5.6 1.05% 6.4 1.34% Total commercial 116.7 0.67% 258.1 1.45% 238.6 1.36% Allowance for credit losses 136.0$ 0.59% 274.1$ 1.15% 257.3$ 1.08% (2) December 31, 2020January 1, 2020 September 30, 2020
Loan Portfolio and Credit
13 Loan Portfolio – Geographic Distribution At December 31, 2020 NY Tri-State Area 24% FL 38%Other 38% CA 31% NY 22%FL 11% Other 36% NY 36% FL 53% Other 11% Commercial (1) Residential CRE (1) Includes PPP, MWL, BFG and Pinnacle
14 ($ in millions) Loan Portfolio – Granular, Diversified Commercial & Industrial Portfolio At December 31, 2020 • Includes $2 billion of owner-occupied real estate • Some key observations: • Educational services – well established private colleges, universities and high schools • Transportation and warehousing – cruise lines, aviation authorities, logistics • Health care – larger physician practice management companies, HMO’s, mental health & substance abuse; no small practices • Arts and entertainment – stadiums, professional sports teams, gaming • Accommodation and food services – time share, direct food services businesses and concessionaires (1) Excludes PPP loans Industry Balance (1) Commitment % of Portfolio Finance and Insurance $1,054 $1,775 16.4% Educational Services 654 696 10.1% Wholesale Trade 652 1,022 10.1% Transportation and Warehousing 472 594 7.3% Health Care and Social Assistance 443 610 6.9% Manufacturing 343 460 5.3% Information 330 515 5.1% Real Estate and Rental and Leasing 309 497 4.8% Accommodation and Food Services 300 400 4.7% Retail Trade 298 416 4.6% Professional, Scientific, and Technical Services 273 361 4.2% Construction 252 431 3.9% Public Administration 238 254 3.7% Other Services (except Public Administration) 230 280 3.6% Administrative and Support and Waste Management 199 263 3.1% Arts, Entertainment, and Recreation 186 232 2.9% Utilities 174 228 2.7% Other 41 52 0.6% $6,448 $9,086 100.0%
15 • Commercial real estate loans are secured by income-producing, non-owner occupied properties, typically with well capitalized middle market sponsors • 74% of the CRE portfolio, 79% of the retail segment and 55% of the hotel segment have LTVs less than 65% • Construction and land loans, included in the table above by property type, represent only 1% of the total loan portfolio. • Average rent collections for the fourth quarter, based on a sample of borrowers: • Office – 90% NY, 97% FL • Multi-family – 90% NY, 96% FL • Retail – 94% NY, 98% FL • Hotel occupancy – averaging 46% in Florida, over 50% for December. • NY commercial Real Estate portfolio contains $264 million of mixed-used properties; $194 million included in the table above in multi-family, $51 million in retail and $19 million in office ($ in millions) Loan Portfolio – Commercial Real Estate by Property Type At December 31, 2020 Property Type Balance FL NY Other Wtd. Avg. DSCR Wtd. Avg. LTV Non- Performing Office 2,117$ 60% 24% 16% 2.24 58.7% 9$ Multifamily 1,800 31% 62% 7% 1.62 57.5% 24 Retail 1,369 52% 40% 8% 1.39 61.0% 17 Warehouse/Industrial 841 64% 19% 17% 2.34 56.4% - Hotel 622 74% 16% 10% 1.13 64.5% 35 Other 147 82% 11% 7% 1.79 54.1% 7 6,896$ 53% 36% 11% 1.81 59.0% 92$
16 • Loans subject to COVID related deferral or modification under the CARES Act totaled $794 million or 3% of the total loan portfolio at December 31, 2020. By comparison, at the end of Q2, we reported that we had granted 90-day payment deferrals on $3.6 billion of loans or 15% of the total loan portfolio. • Commercial CARES Act modifications are most often 9 to 12-month interest only periods. • Commercial deferrals remained consistent quarter over quarter at 4% of the commercial portfolio • Residential deferrals and modifications declined to 2% of the residential portfolio at December 31, 2020 from 8% at September 30 ($ in millions) Loan Portfolio – Deferrals and Modifications At December 31, 2020 Residential – Excluding Government Insured (1) Includes $23 million of loans continuing to make payments. Through December 31, 2020, a total of $525 million of residential loans, excluding government insured loans, had been granted an initial short-term payment deferral. The status of those loans at December 31, 2020 is presented in the table below: Loans Still Under Short-Term Deferral Loans That Have Rolled Off of Short-Term Deferral Paying as Agreed Not Resumed Regular Payments Balance % of Loans Initially Granted Short-Term Deferral (1) Balance % of Loans Rolled Off Short-Term Deferral Balance % of Loans Rolled Off Short-Term Deferral $144 27% $362 95% $19 5% Currently Under Short-Term Deferral CARES Act Modifications Total % of Portfolio Residential - excluding government insured $ 144 $ 12 $ 156 2% CRE - Property Type: Retail $ 29 $ 19 $ 48 4% Hotel 1 343 344 55% Office - 48 48 2% Multifamily - 16 16 1% Other 2 - 2 1% Total CRE $ 32 $ 426 $ 458 7% C&I - Industry: Accomm. and Food Services $ - $ 15 $ 15 5% Retail Trade 1 17 18 6% Manufacturing 2 11 13 4% Transportation and Warehousing (cruise lines) - 48 48 10% Finance and Insurance - 18 18 2% Other 7 15 22 1% Total C&I $ 10 $ 124 $ 134 2% BFG - Franchise $ 21 $ 25 $ 46 8% Total Commercial $ 63 $ 575 $ 638 4% Total Loans $ 207 $ 587 $ 794 3% % of Total Loans <1% 2% 3%
17 Loan Portfolio – Segments Identified for Heightened Monitoring At December 31, 2020 Moderate exposure to sectors most impacted by the pandemic ($ in millions) • 79% of commercial loans deferred or modified and 55% of criticized and classified assets are in these sub- segments Portfolio Balance % of Total Loans Short-Term Deferral or CARES Modification % of Portfolio Segment Non-Performing Loans Special Mention Classified Retail - CRE 1,369$ 6% 48$ 4% 17$ 87$ 301$ Retail - C&I 298 1% 18 6% 8 12 50 BFG - franchise finance 550 2% 46 8% 45 72 287 Hotel 622 3% 344 55% 35 69 440 Airlines and aviation authorities 120 1% - - - 35 43 Cruise line 71 - 48 67% - - 71 Total 3,030$ 13% 504$ 17% 105$ 275$ 1,192$
18 Loan Portfolio – Retail At December 31, 2020 ($ in millions) • No significant mall or “big box” exposure • $46 million and $19 million of Retail-Unanchored and Retail- Anchored, respectively, are mixed-used properties Retail - Commercial Real Estate Retail – Commercial & Industrial Property Type Balance Currently Under Short- Term Deferral CARES Act Modification Retail - Anchored 699$ -$ 6$ Retail - Unanchored 615 24 13 Construction to Perm 24 - - Gas station 24 - - Restaurant 7 5 - 1,369$ 29$ 19$ Industry Not Secured by Real Estate Owner Occupied Real Estate Total Balance Currently Under Short- Term Deferral CARES Act Modification Gasoline Stations 1$ 86$ 87$ -$ -$ Health and Personal Care Stores 18 6 24 - 17 Furniture Stores 17 6 23 - - Vending Machine Operators 20 1 21 - - Specialty Food Stores 1 18 19 - - Grocery Stores 1 17 18 - - Automobile Dealers 7 7 14 - - Clothing Stores 1 11 12 - - Office Supplies, Stationery, and Gift Stores 11 1 12 - - Other 19 49 68 1 - 96$ 202$ 298$ 1$ 17$
19 Loan Portfolio – BFG Franchise Finance At December 31, 2020 ($ in millions) Portfolio Breakdown by Concept CA 19% FL 8% TX 7% UT 6% Other 60% Portfolio Breakdown by Geography Restaurant Concepts Balance % of BFG Franchise Currently Under Short- Term Deferral CARES Act Modifications Burger King 63$ 11% -$ -$ Dunkin Donuts 28 5% - - Popeyes 28 5% - - Jimmy John's 20 4% - - Domino's 18 3% - - Other 170 32% - - 327$ 60% -$ -$ Non-Restaurant Concept Balance % of BFG Franchise Currently Under Short- Term Deferral CARES Act Modifications Planet Fitness 98$ 18% -$ 25$ Orange Theory Fitness 85 15% 19 - Other 40 7% 2 - 223$ 40% 21$ 25$
20 Loan Portfolio – Hotel At December 31, 2020 ($ in millions) • 74% of our exposure is in Florida, followed by 16% in New York • Includes $61.8 million in SBA loans • All hotel properties in Florida and two of three properties in New York are now open Exposure by Flag Marriott $171 28% Independent $162 26% Hilton $86 14% IHG $59 9% Sheraton $39 6% Other $105 17% Total Portfolio: $622mm
High quality residential portfolio consists of primarily prime jumbo mortgages with de-minimis charge-offs since inception as well as fully government insured assets 21(1) Excludes government insured residential loans. FICOs are refreshed routinely. LTVs are typically based on valuation at origination. Credit Quality – Residential At December 31, 2020 Breakdown by LTV(1) More than 80% 3% 71% - 80% 41% 61% - 70% 24% 60% or less 32% <720 or NA 11% 720-759 19% >759 70% FICO Distribution(1) Breakdown by Vintage(1) 2020 23% 2019 13% 2018 8%2017 12% 2016 15% Prior 29%
22 Asset Quality Metrics 0.59% 0.88% 0.85% 0.86% 0.84% 1.02% 0.51% 0.68% 0.64% 0.67% 0.66% 0.80% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% Dec 18 Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans Non-performing Loans to Total Loans Non-performing Assets to Total Assets Net Charge-offs to Average Loans(1) 0.43% 0.63% 0.61% 0.60% 0.58% 0.71% 0.37% 0.49% 0.46% 0.47% 0.46% 0.56% 0.00% 0.25% 0.50% 0.75% 1.00% Dec 18 Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 0.28% 0.05% 0.13% 0.20% 0.25% 0.26% 0.00% 0.20% 0.40% 0.60% Dec 18 Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 (1) YTD net charge-offs, annualized at September 30, 2020, June 30, 2020 and March 31, 2020.
23 Non-Performing Loans by Portfolio Segment ($ in thousands) (1) Includes the guaranteed portion of non-accrual SBA loans totaling $51.3 million, $43.6 million, $45.7 million, $49.1 million, $45.7 million and $17.8 at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and December 31, 2018, respectively. $7,254 $18,894 $16,956 $13,183 $12,120 $28,828 $11,928 $17,997 $11,202 $21,748 $30,941 $36,557 $25,560 $6,138 $6,011 $6,011 $24,090 $28,309 $65,296 $51,130 $65,588 $65,248 $42,824 $17,424 $20,939 $11,561 $1,148 $5,308 $13,631 $37,635 $32,857 $32,762 $45,028 $34,108 $61,892 $63,726 $63,713 $59,233 $67,126 $129,891 $204,787 $198,221 $204,248 $200,304 $244,453 12/31/2018 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 Residential CRE Multifamily C&I Equipment Franchise SBA(1)
24 (1) Substandard non-accruing and doubtful includes $11.7 million of loans rated doubtful at December 31, 2020. (2) Substandard non-accruing and doubtful includes $0.2 million of loans rated doubtful at December 31, 2020. (3) Includes the guaranteed portion of non-accrual SBA loans totaling $51.3 million, $43.6 million, $45.7 million, $49.1 million, $45.7 million and $17.8 at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and December 2018, respectively. Criticized and Classified Loans ($ in millions) $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Commercial Real Estate Commercial & Industrial (2) Franchise Finance(1) Equipment Finance SBA(3) $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000
25 Criticized and Classified - CRE by Property Type ($ in millions) $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Warehouse/Industrial Hotel Other $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Office Multifamily Retail $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450
26 Criticized and Classified – BFG Franchise Finance ($ in millions) $0 $20 $40 $60 $80 $100 $120 $140 $160 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 $0 $20 $40 $60 $80 $100 $120 $140 $160 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 Restaurant Concepts (1) Fitness Concepts $0 $20 $40 $60 $80 $100 $120 $140 $160 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 Other (1) Substandard non-accruing and doubtful includes $11.7 million of loans rated doubtful at December 31, 2020.
27 Asset Quality - Delinquencies ($ in millions) Commercial Residential (2) $0 $20 $40 $60 $80 $100 $120 $140 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 $0 $20 $40 $60 $80 $100 $120 $140 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 (1) (1) Increase in 60-89 Days PD at 9/30/20 impacted by $70MM of In Process CARES Act Modifications. (2) Excludes government insured residential loans. $0 $20 $40 $60 $80 $100 $120 $140 12/31/18 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 CRE (1)
Investment Portfolio
29 Investment Securities AFS ($ in thousands) The AFS debt securities portfolio of $9.1 billion was in a net unrealized gain position of $85.6 million at December 31, 2020 Portfolio Composition Ratings Distribution Gov 36% AAA 56% AA 5% A 2% NR 1% US Government and agency 35% Private label RMBS and CMOs 11% Private label CMBS 28% Residential real estate lease-backed securities 7% CLOs 13% State and Municipal Obligations 3% Other 3% Portfolio Net Unrealized Gain (Loss) Fair Value Net Unrealized Gain (Loss) Fair Value Net Unrealized Gain (Loss) Fair Value Net Unrealized Gain (Loss) Fair Value US Government and agency 10,516$ 2,826,207$ (23,649)$ 2,893,932$ 22,342$ 3,174,959$ 23,752$ 2,944,924$ Private label RMBS and CMOs 10,840 1,012,177 (11,659) 1,173,880 17,135 1,167,706 15,713 998,603 Private label CMBS 5,456 1,724,684 (123,796) 1,604,814 (1,859) 2,440,550 12,083 2,526,354 Residential real estate lease-backed securities 2,566 470,025 (21,188) 528,793 13,745 768,898 14,819 650,888 CLOs (7,539) 1,197,366 (74,676) 1,094,793 (16,010) 1,142,404 (8,449) 1,140,274 State and Municipal Obligations 15,774 273,302 15,431 271,033 19,962 242,921 21,966 235,709 Other 733 194,904 (10,283) 255,161 6,660 251,839 5,755 565,657 Total 38,346$ 7,698,665$ (249,820)$ 7,822,406$ 61,975$ 9,189,277$ 85,639$ 9,062,409$ December 31, 2019 March 31, 2020 September 30, 2020 December 31, 2020
30 Investment Securities – Asset Quality of Select Non-Agency Securities At December 31, 2020 Strong credit enhancement levels on CLOs and CMBS Collateralized Loan Obligations (CLOs) Private Label Commercial Mortgage-Backed Securities (CMBS) AAA 84% AA 13% A 3% AAA 90% AA 7% A 3% Wtd. Avg. Rating Min Max Avg Stress Scenario Loss AAA 36.0 48.4 43.3 20.4 AA 26.9 40.7 32.5 23.0 A 24.5 29.9 26.5 23.0 Wtd. Avg. 34.5 46.8 41.3 20.8 Subordination Wtd. Avg. Rating Min Max Avg Stress Scenario Loss AAA 27.9 96.3 41.9 12.0 AA 19.1 52.2 34.5 11.2 A 21.5 80.9 38.0 10.9 Wtd. Avg. 27.1 92.7 41.3 11.9 Subordination
Non-GAAP Financial Measures
32 Non-GAAP Financial Measures
33 Non-GAAP Financial Measures (continued)