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):July 21, 2022 (July 21, 2022 )
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| | ||||||||||||||
| (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 July 21, 2022, BankUnited, Inc. (the “Company”) reported its results for the quarter ended June 30, 2022. 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 | ||||||||||
| July 21, 2022 | |||||||||||
| July 21, 2022 | |||||||||||
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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: | July 21, 2022 | BANKUNITED, INC. | |||||||||
| /s/ Leslie N. Lunak | |||||||||||
| Name: | Leslie N. Lunak | ||||||||||
| Title: | Chief Financial Officer | ||||||||||
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EXHIBIT INDEX
| Exhibit Number | Description | ||||||||||
| July 21, 2022 | |||||||||||
| July 21, 2022 | |||||||||||
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Exhibit 99.1
BANKUNITED, INC. REPORTS SECOND QUARTER 2022 RESULTS
Miami Lakes, Fla. — July 21, 2022 — BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended June 30, 2022.
"This quarter saw strong loan growth and margin expansion. We celebrated the opening of our Dallas branch and Atlanta wholesale banking office and are looking forward to continued growth of the franchise." said Rajinder Singh, Chairman, President and Chief Executive Officer.
For the quarter ended June 30, 2022, the Company reported net income of $65.8 million, or $0.82 per diluted share, compared to $67.2 million, or $0.79 per diluted share for the immediately preceding quarter ended March 31, 2022 and $104.0 million, or $1.11 per diluted share, for the quarter ended June 30, 2021. For the six months ended June 30, 2022, the Company reported net income of $132.9 million, or $1.60 per diluted share, compared to $202.8 million, or $2.17 per diluted share, for the six months ended June 30, 2021. Earnings for the six months ended June 30, 2021 were favorably impacted by a $55.5 million recovery of the provision for credit losses.
Quarterly Highlights
•During the second quarter, we continued to build out our wholesale banking teams in Atlanta and opened a banking center in Dallas.
•Total loans, excluding the runoff of PPP loans, grew by $780 million, of which $553 million was in commercial segments, for the quarter ended June 30, 2022.
•Average non-interest bearing demand deposits increased by $371 million for the quarter. Total deposits remained relatively consistent with the prior quarter-end, declining by $80 million, while non-interest bearing demand deposits declined by $18 million at June 30, 2022 compared to March 31, 2022. At June 30, 2022, non-interest bearing demand deposits represented 34% of total deposits, consistent with the prior quarter-end.
•The net interest margin, calculated on a tax-equivalent basis, expanded to 2.63% for the quarter ended June 30, 2022 from 2.50% for the immediately preceding quarter and 2.37% for the quarter ended June 30, 2021. Net interest income increased by $16.8 million compared to the immediately preceding quarter ended March 31, 2022 and by $27.1 million compared to the quarter ended June 30, 2021.
•In response to the rising interest rate environment, the average cost of total deposits increased to 0.30% for the quarter ended June 30, 2022, from 0.17% for the immediately preceding quarter ended March 31, 2022 and 0.25% for the quarter ended June 30, 2021. On a spot basis, the average annual percentage yield on total deposits increased to 0.45% at June 30, 2022, from 0.16% at March 31, 2022.
•For the quarter ended June 30, 2022, the Company recorded a provision for credit losses of $24.0 million compared to a provision of $7.8 million for the immediately preceding quarter ended March 31, 2022 and a recovery of the provision for credit losses of $(27.5) million for the quarter ended June 30, 2021. The ratio of the ACL to total loans was consistent with the prior quarter-end at 0.54%.
•The ratio of non-performing loans to total loans was 0.60% at June 30, 2022 compared to 0.65% at March 31, 2022. The guaranteed portion of SBA loans on non-accrual status represented 0.18% of total loans and 30% of non-performing loans at June 30, 2022. The positive trend in levels of criticized and classified loans continued during the quarter ended June 30, 2022 with a decline of $181 million and the annualized net charge-off ratio declined to 0.23% from 0.29% for the year ended December 31, 2021.
1
•Results for the quarter continued to be impacted by declines in the fair value of investment securities. Accumulated other comprehensive loss increased by $163 million for the quarter ended June 30, 2022, primarily due to an increase in unrealized losses on investment securities available for sale. Non-interest income was impacted by a $9.3 million decline in the fair value of certain preferred stock investments. These declines in the fair value of securities resulted primarily from widening spreads and rising interest rates related to the Fed's quantitative tightening and inflationary concerns. None of the unrealized losses were attributable to credit loss impairments; the Company expects to recover the amortized cost basis of its available for sale securities.
•At June 30, 2022, book value per common share and tangible book value per common share were $32.15 and $31.16, respectively.
•During the quarter ended June 30, 2022, the Company repurchased approximately 6.1 million shares of its common stock for an aggregate purchase price of $243.6 million, at a weighted average price of $39.94 per share.
Loans
A comparison of loan portfolio composition at the dates indicated follows (dollars in thousands):
| June 30, 2022 | March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||
| Residential and other consumer loans | $ | 8,840,387 | 36.7 | % | $ | 8,612,839 | 36.8 | % | $ | 8,368,380 | 35.2 | % | |||||||||||||||||||||||
| Multi-family | 1,017,500 | 4.2 | % | 1,072,981 | 4.6 | % | 1,154,738 | 4.9 | % | ||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 4,276,697 | 17.7 | % | 4,284,675 | 18.3 | % | 4,381,610 | 18.4 | % | ||||||||||||||||||||||||||
| Construction and land | 213,833 | 0.9 | % | 176,825 | 0.8 | % | 165,390 | 0.7 | % | ||||||||||||||||||||||||||
| Owner occupied commercial real estate | 1,907,349 | 7.9 | % | 1,905,395 | 8.2 | % | 1,944,658 | 8.2 | % | ||||||||||||||||||||||||||
| Commercial and industrial | 5,423,998 | 22.5 | % | 4,951,999 | 21.2 | % | 4,790,275 | 20.2 | % | ||||||||||||||||||||||||||
| PPP | 29,828 | 0.1 | % | 80,296 | 0.3 | % | 248,505 | 1.0 | % | ||||||||||||||||||||||||||
| Pinnacle | 977,930 | 4.1 | % | 935,915 | 4.0 | % | 919,641 | 3.9 | % | ||||||||||||||||||||||||||
| Bridge - franchise finance | 262,570 | 1.1 | % | 306,563 | 1.3 | % | 342,124 | 1.4 | % | ||||||||||||||||||||||||||
| Bridge - equipment finance | 333,125 | 1.4 | % | 341,369 | 1.5 | % | 357,599 | 1.5 | % | ||||||||||||||||||||||||||
| Mortgage warehouse lending ("MWL") | 816,797 | 3.4 | % | 701,172 | 3.0 | % | 1,092,133 | 4.6 | % | ||||||||||||||||||||||||||
| $ | 24,100,014 | 100.0 | % | $ | 23,370,029 | 100.0 | % | $ | 23,765,053 | 100.0 | % | ||||||||||||||||||||||||
In aggregate, commercial loans, excluding the runoff of PPP, grew by $553 million during the quarter ended June 30, 2022. The largest increase was in the commercial and industrial segment, including owner-occupied commercial real estate, which grew by $474 million for the quarter, followed by growth in MWL of $116 million. MWL utilization was 46% at June 30, 2022 compared to 39% at March 31, 2022 and 56% at December 31, 2021. Residential and other consumer loans grew by $228 million during the quarter ended June 30, 2022.
Asset Quality and the Allowance for Credit Losses ("ACL")
Non-performing loans totaled $144.0 million or 0.60% of total loans at June 30, 2022, compared to $150.8 million or 0.65% of total loans at March 31, 2022. Non-performing loans included $43.4 million and $41.9 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.18% of total loans at both June 30, 2022 and March 31, 2022.
The following table presents criticized and classified commercial loans at the dates indicated (in thousands):
| June 30, 2022 | March 31, 2022 | December 31, 2021 | |||||||||||||||
| Special mention | $ | 89,153 | $ | 95,250 | $ | 148,593 | |||||||||||
| Substandard - accruing | 787,399 | 956,318 | 1,136,378 | ||||||||||||||
| Substandard - non-accruing | 117,518 | 104,329 | 129,579 | ||||||||||||||
| Doubtful | 7,971 | 26,678 | 47,754 | ||||||||||||||
| Total | $ | 1,002,041 | $ | 1,182,575 | $ | 1,462,304 | |||||||||||
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The following table presents the ACL and related ACL coverage ratios at the dates indicated and net charge-off rates for the periods ended June 30, 2022 and March 31, 2022, and the year ended December 31, 2021 (dollars in thousands):
| ACL | ACL to Total Loans (1) | ACL to Non-Performing Loans | Net Charge-offs to Average Loans (2) | ||||||||||||||||||||
| December 31, 2021 | $ | 126,457 | 0.53 | % | 61.41 | % | 0.29 | % | |||||||||||||||
| March 31, 2022 | $ | 125,443 | 0.54 | % | 83.17 | % | 0.15 | % | |||||||||||||||
| June 30, 2022 | $ | 130,239 | 0.54 | % | 90.45 | % | 0.23 | % | |||||||||||||||
(1) ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 0.61%, at both June 30, 2022 and March 31, 2022, and 0.62% at December 31, 2021.
(2) Annualized for the three months ended March 31, 2022 and the six months ended June 30, 2022.
The ACL at June 30, 2022 represents management's estimate of lifetime expected credit losses 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 June 2022, economic information provided by additional sources including developments subsequent to publishing of the scenarios, information about borrower financial condition and collateral values and other relevant information.
For the quarter ended June 30, 2022, the Company recorded a provision for credit losses of $24.0 million, which included a provision of $23.2 million related to funded loans. Factors impacting the provision for credit losses for the quarter ended June 30, 2022 included loan growth, an increase in qualitative factors and an increase in specific reserves.
The following table summarizes the activity in the ACL for the periods indicated (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Beginning balance | $ | 125,443 | $ | 220,934 | $ | 126,457 | $ | 257,323 | |||||||||||||||
| Provision (recovery) | 23,207 | (27,663) | 30,653 | (53,969) | |||||||||||||||||||
| Net charge-offs | (18,411) | (17,629) | (26,871) | (27,712) | |||||||||||||||||||
| Ending balance | $ | 130,239 | $ | 175,642 | $ | 130,239 | $ | 175,642 | |||||||||||||||
Net Interest Income
Net interest income for the quarter ended June 30, 2022 was $225.4 million compared to $208.6 million for the immediately preceding quarter ended March 31, 2022 and $198.3 million for the quarter ended June 30, 2021. Interest income increased by $31.0 million for the quarter ended June 30, 2022 compared to the immediately preceding quarter. Interest expense increased by $14.2 million compared to the immediately preceding quarter.
The Company’s net interest margin, calculated on a tax-equivalent basis, increased by 0.13% to 2.63% for the quarter ended June 30, 2022, from 2.50% for the immediately preceding quarter ended March 31, 2022. Factors impacting the net interest margin for the quarter ended June 30, 2022 included:
•The tax-equivalent yield on investment securities increased to 2.12% for the quarter ended June 30, 2022, from 1.73% for the quarter ended March 31, 2022. This increase resulted from the reset of coupon rates on variable rate securities and purchases of higher-yielding securities.
•The tax-equivalent yield on loans increased to 3.59% for the quarter ended June 30, 2022, from 3.36% for the quarter ended March 31, 2022. The resetting of variable rate loans to higher coupon rates and origination of new loans at higher rates contributed to the increase.
•The average rate paid on interest bearing deposits increased to 0.45% for the quarter ended June 30, 2022, from 0.24% for the quarter ended March 31, 2022, primarily in response to the rising interest rate environment.
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Non-interest income and Non-interest expense
Non-interest income totaled $13.5 million for the quarter ended June 30, 2022 compared to $14.3 million for the quarter ended March 31, 2022 and $32.8 million for the quarter ended June 30, 2021.
•Gain (loss) on investment securities was a net loss of $(8.4) million for the quarter ended June 30, 2022 compared to a net loss of $(7.9) million for the quarter ended March 31, 2022, and a net gain of $4.2 million for the quarter ended June 30, 2021. The net losses for the quarters ended June 30, 2022 and March 31, 2022 were attributable to $9.3 million and $10.5 million declines, respectively, in the fair value of certain preferred stock investments resulting from rising market interest rates.
•The decline in other non-interest income for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021 reflected declines in BOLI revenue and gain on sale of loans.
Employee compensation and benefits declined by $4.6 million for the quarter ended June 30, 2022, compared to the quarter ended March 31, 2022. Seasonal declines in payroll taxes and certain other benefits combined with lower compensation expense related to liability classified share awards resulting from a lower stock price were partially offset by the impact of salary increases and higher head count.
Earnings Conference Call and Presentation
A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Thursday, July 21, 2022 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, Chief Financial Officer, Leslie N. Lunak and Chief Operating Officer, Thomas M. Cornish.
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 https://ir.bankunited.com. To participate by telephone, participants will receive dial-in information and a unique PIN number upon completion of registration at https://register.vevent.com/register/BI46cdf2737b4a45dc8e0f6a39d5fdf9c1. For those unable to join the live event, an archived webcast will be available in the Investor Relations page at https://ir.bankunited.com approximately two hours following the live webcast.
About BankUnited, Inc.
BankUnited, Inc., with total assets of $36.6 billion at June 30, 2022, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 60 banking centers in 12 Florida counties, 4 banking centers in the New York metropolitan area, and 1 banking center located in Dallas, Texas.
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 external circumstances outside the Company's direct control. 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, 2021 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
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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)
| June 30, 2022 | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Cash and due from banks: | |||||||||||
| Non-interest bearing | $ | 18,531 | $ | 19,143 | |||||||
| Interest bearing | 495,242 | 295,714 | |||||||||
| Cash and cash equivalents | 513,773 | 314,857 | |||||||||
| Investment securities (including securities recorded at fair value of $10,093,504 and $10,054,198) | 10,103,504 | 10,064,198 | |||||||||
| Non-marketable equity securities | 213,409 | 135,859 | |||||||||
| Loans | 24,100,014 | 23,765,053 | |||||||||
| Allowance for credit losses | (130,239) | (126,457) | |||||||||
| Loans, net | 23,969,775 | 23,638,596 | |||||||||
| Bank owned life insurance | 310,970 | 309,477 | |||||||||
| Operating lease equipment, net | 605,769 | 640,726 | |||||||||
| Goodwill | 77,637 | 77,637 | |||||||||
| Other assets | 756,567 | 634,046 | |||||||||
| Total assets | $ | 36,551,404 | $ | 35,815,396 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Liabilities: | |||||||||||
| Demand deposits: | |||||||||||
| Non-interest bearing | $ | 9,645,056 | $ | 8,975,621 | |||||||
| Interest bearing | 2,868,417 | 3,709,493 | |||||||||
| Savings and money market | 13,222,845 | 13,368,745 | |||||||||
| Time | 2,724,581 | 3,384,243 | |||||||||
| Total deposits | 28,460,899 | 29,438,102 | |||||||||
| Federal funds purchased | — | 199,000 | |||||||||
| FHLB advances | 4,005,000 | 1,905,000 | |||||||||
| Notes and other borrowings | 721,166 | 721,416 | |||||||||
| Other liabilities | 858,322 | 514,117 | |||||||||
| Total liabilities | 34,045,387 | 32,777,635 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 77,944,216 and 85,647,986 shares issued and outstanding | 779 | 856 | |||||||||
| Paid-in capital | 387,583 | 707,503 | |||||||||
| Retained earnings | 2,438,050 | 2,345,342 | |||||||||
| Accumulated other comprehensive loss | (320,395) | (15,940) | |||||||||
| Total stockholders' equity | 2,506,017 | 3,037,761 | |||||||||
| Total liabilities and stockholders' equity | $ | 36,551,404 | $ | 35,815,396 | |||||||
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BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||
| 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||
| Loans | $ | 209,223 | $ | 191,562 | $ | 202,520 | $ | 400,785 | $ | 407,855 | |||||||||||||||||||
| Investment securities | 54,771 | 43,048 | 37,674 | 97,819 | 76,175 | ||||||||||||||||||||||||
| Other | 2,979 | 1,354 | 1,607 | 4,333 | 3,200 | ||||||||||||||||||||||||
| Total interest income | 266,973 | 235,964 | 241,801 | 502,937 | 487,230 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 20,501 | 11,862 | 17,316 | 32,363 | 39,692 | ||||||||||||||||||||||||
| Borrowings | 21,056 | 15,460 | 26,174 | 36,516 | 52,987 | ||||||||||||||||||||||||
| Total interest expense | 41,557 | 27,322 | 43,490 | 68,879 | 92,679 | ||||||||||||||||||||||||
| Net interest income before provision for credit losses | 225,416 | 208,642 | 198,311 | 434,058 | 394,551 | ||||||||||||||||||||||||
| Provision for (recovery of) credit losses | 23,996 | 7,830 | (27,534) | 31,826 | (55,523) | ||||||||||||||||||||||||
| Net interest income after provision for credit losses | 201,420 | 200,812 | 225,845 | 402,232 | 450,074 | ||||||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||||||
| Deposit service charges and fees | 5,896 | 5,960 | 5,417 | 11,856 | 10,317 | ||||||||||||||||||||||||
| Gain (loss) on investment securities, net | (8,392) | (7,868) | 4,155 | (16,260) | 6,520 | ||||||||||||||||||||||||
| Lease financing | 13,363 | 13,415 | 13,522 | 26,778 | 26,010 | ||||||||||||||||||||||||
| Other non-interest income | 2,583 | 2,794 | 9,663 | 5,377 | 20,206 | ||||||||||||||||||||||||
| Total non-interest income | 13,450 | 14,301 | 32,757 | 27,751 | 63,053 | ||||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||
| Employee compensation and benefits | 62,461 | 67,088 | 56,459 | 129,549 | 115,747 | ||||||||||||||||||||||||
| Occupancy and equipment | 11,399 | 11,512 | 11,492 | 22,911 | 23,367 | ||||||||||||||||||||||||
| Deposit insurance expense | 3,993 | 3,403 | 4,222 | 7,396 | 11,672 | ||||||||||||||||||||||||
| Professional fees | 3,256 | 2,262 | 2,139 | 5,518 | 4,051 | ||||||||||||||||||||||||
| Technology and telecommunications | 17,898 | 17,004 | 16,851 | 34,902 | 32,592 | ||||||||||||||||||||||||
| Depreciation and impairment of operating lease equipment | 12,585 | 12,610 | 12,834 | 25,195 | 25,051 | ||||||||||||||||||||||||
| Other non-interest expense | 15,810 | 12,445 | 14,455 | 28,255 | 29,193 | ||||||||||||||||||||||||
| Total non-interest expense | 127,402 | 126,324 | 118,452 | 253,726 | 241,673 | ||||||||||||||||||||||||
| Income before income taxes | 87,468 | 88,789 | 140,150 | 176,257 | 271,454 | ||||||||||||||||||||||||
| Provision for income taxes | 21,704 | 21,639 | 36,176 | 43,343 | 68,666 | ||||||||||||||||||||||||
| Net income | $ | 65,764 | $ | 67,150 | $ | 103,974 | $ | 132,914 | $ | 202,788 | |||||||||||||||||||
| Earnings per common share, basic | $ | 0.82 | $ | 0.79 | $ | 1.12 | $ | 1.61 | $ | 2.18 | |||||||||||||||||||
| Earnings per common share, diluted | $ | 0.82 | $ | 0.79 | $ | 1.11 | $ | 1.60 | $ | 2.17 | |||||||||||||||||||
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BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Three Months Ended June 30, 2022 | Three Months Ended March 31, 2022 | Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest (1) | Yield/ Rate (1)(2) | Average Balance | Interest (1) | Yield/ Rate (1)(2) | Average Balance | Interest (1) | Yield/ Rate (1)(2) | |||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 23,709,190 | $ | 212,395 | 3.59 | % | $ | 23,349,143 | $ | 194,551 | 3.36 | % | $ | 22,996,564 | $ | 205,940 | 3.59 | % | |||||||||||||||||||||||||||||||||||
Investment securities (3) | 10,477,600 | 55,488 | 2.12 | % | 10,083,083 | 43,719 | 1.73 | % | 9,839,422 | 38,338 | 1.56 | % | |||||||||||||||||||||||||||||||||||||||||
| Other interest earning assets | 718,904 | 2,979 | 1.66 | % | 674,640 | 1,354 | 0.81 | % | 1,380,317 | 1,607 | 0.47 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets | 34,905,694 | 270,862 | 3.11 | % | 34,106,866 | 239,624 | 2.83 | % | 34,216,303 | 245,885 | 2.88 | % | |||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (127,864) | (129,028) | (215,151) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,669,689 | 1,674,476 | 1,732,676 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 36,447,519 | $ | 35,652,314 | $ | 35,733,828 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 2,576,257 | $ | 1,742 | 0.27 | % | $ | 3,078,176 | $ | 1,369 | 0.18 | % | $ | 3,069,945 | $ | 2,594 | 0.34 | % | |||||||||||||||||||||||||||||||||||
| Savings and money market deposits | 13,052,566 | 15,213 | 0.47 | % | 13,401,332 | 6,931 | 0.21 | % | 13,541,237 | 11,307 | 0.33 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 2,812,988 | 3,546 | 0.51 | % | 3,319,585 | 3,562 | 0.44 | % | 3,380,582 | 3,415 | 0.41 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing deposits | 18,441,811 | 20,501 | 0.45 | % | 19,799,093 | 11,862 | 0.24 | % | 19,991,764 | 17,316 | 0.35 | % | |||||||||||||||||||||||||||||||||||||||||
| Federal funds purchased | 115,146 | 155 | 0.53 | % | 187,400 | 58 | 0.12 | % | — | — | — | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB advances | 4,373,736 | 11,644 | 1.07 | % | 2,248,889 | 6,146 | 1.11 | % | 2,873,922 | 16,922 | 2.36 | % | |||||||||||||||||||||||||||||||||||||||||
| Notes and other borrowings | 721,284 | 9,257 | 5.13 | % | 721,405 | 9,256 | 5.13 | % | 721,753 | 9,252 | 5.13 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 23,651,977 | 41,557 | 0.70 | % | 22,956,787 | 27,322 | 0.48 | % | 23,587,439 | 43,490 | 0.74 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 9,419,025 | 9,047,864 | 8,163,879 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 654,162 | 623,200 | 851,044 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 33,725,164 | 32,627,851 | 32,602,362 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,722,355 | 3,024,463 | 3,131,466 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 36,447,519 | $ | 35,652,314 | $ | 35,733,828 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 229,305 | $ | 212,302 | $ | 202,395 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate spread | 2.41 | % | 2.35 | % | 2.14 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.63 | % | 2.50 | % | 2.37 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(1) On a tax-equivalent basis where applicable
(2) Annualized
(3) At fair value except for securities held to maturity
8
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest (1) | Yield/ Rate (1)(2) | Average Balance | Interest (1) | Yield/ Rate (1)(2) | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||
| Loans | $ | 23,530,162 | $ | 406,946 | 3.47 | % | $ | 23,271,410 | $ | 414,761 | 3.58 | % | |||||||||||||||||||||||
Investment securities (3) | 10,281,431 | 99,207 | 1.93 | % | 9,456,929 | 77,525 | 1.64 | % | |||||||||||||||||||||||||||
| Other interest earning assets | 696,894 | 4,333 | 1.25 | % | 1,222,456 | 3,200 | 0.53 | % | |||||||||||||||||||||||||||
| Total interest earning assets | 34,508,487 | 510,486 | 2.97 | % | 33,950,795 | 495,486 | 2.93 | % | |||||||||||||||||||||||||||
| Allowance for credit losses | (128,443) | (234,686) | |||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,672,070 | 1,728,449 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 36,052,114 | $ | 35,444,558 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 2,825,830 | 3,111 | 0.22 | % | $ | 3,006,760 | 5,368 | 0.36 | % | |||||||||||||||||||||||||
| Savings and money market deposits | 13,225,986 | 22,866 | 0.35 | % | 13,169,195 | 23,434 | 0.36 | % | |||||||||||||||||||||||||||
| Time deposits | 3,064,887 | 6,386 | 0.42 | % | 3,853,057 | 10,890 | 0.57 | % | |||||||||||||||||||||||||||
| Total interest bearing deposits | 19,116,703 | 32,363 | 0.34 | % | 20,029,012 | 39,692 | 0.40 | % | |||||||||||||||||||||||||||
| Federal funds purchased | 151,074 | 213 | 0.28 | % | 3,978 | 2 | 0.10 | % | |||||||||||||||||||||||||||
| FHLB and PPPLF borrowings | 3,317,182 | 17,790 | 1.08 | % | 2,972,770 | 34,480 | 2.34 | % | |||||||||||||||||||||||||||
| Notes and other borrowings | 721,344 | 18,513 | 5.13 | % | 722,028 | 18,505 | 5.13 | % | |||||||||||||||||||||||||||
| Total interest bearing liabilities | 23,306,303 | 68,879 | 0.59 | % | 23,727,788 | 92,679 | 0.79 | % | |||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 9,234,469 | 7,829,422 | |||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 638,767 | 799,297 | |||||||||||||||||||||||||||||||||
| Total liabilities | 33,179,539 | 32,356,507 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,872,575 | 3,088,051 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 36,052,114 | $ | 35,444,558 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 441,607 | $ | 402,807 | |||||||||||||||||||||||||||||||
| Interest rate spread | 2.38 | % | 2.14 | % | |||||||||||||||||||||||||||||||
| Net interest margin | 2.57 | % | 2.38 | % | |||||||||||||||||||||||||||||||
(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
EARNINGS PER COMMON SHARE
(In thousands except share and per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| c | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Basic earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 65,764 | $ | 103,974 | $ | 132,914 | $ | 202,788 | |||||||||||||||
Distributed and undistributed earnings allocated to participating securities | (999) | (1,338) | (1,927) | (2,589) | |||||||||||||||||||
| Income allocated to common stockholders for basic earnings per common share | $ | 64,765 | $ | 102,636 | $ | 130,987 | $ | 200,199 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | 80,300,069 | 93,245,282 | 82,629,098 | 93,160,962 | |||||||||||||||||||
| Less average unvested stock awards | (1,257,258) | (1,241,381) | (1,234,678) | (1,223,555) | |||||||||||||||||||
| Weighted average shares for basic earnings per common share | 79,042,811 | 92,003,901 | 81,394,420 | 91,937,407 | |||||||||||||||||||
| Basic earnings per common share | $ | 0.82 | $ | 1.12 | $ | 1.61 | $ | 2.18 | |||||||||||||||
| Diluted earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Income allocated to common stockholders for basic earnings per common share | $ | 64,765 | $ | 102,636 | $ | 130,987 | $ | 200,199 | |||||||||||||||
Adjustment for earnings reallocated from participating securities | 3 | 2 | 4 | 3 | |||||||||||||||||||
| Income used in calculating diluted earnings per common share | $ | 64,768 | $ | 102,638 | $ | 130,991 | $ | 200,202 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average shares for basic earnings per common share | 79,042,811 | 92,003,901 | 81,394,420 | 91,937,407 | |||||||||||||||||||
| Dilutive effect of certain share-based awards | 350,734 | 181,061 | 244,808 | 137,542 | |||||||||||||||||||
Weighted average shares for diluted earnings per common share | 79,393,545 | 92,184,962 | 81,639,228 | 92,074,949 | |||||||||||||||||||
| Diluted earnings per common share | $ | 0.82 | $ | 1.11 | $ | 1.60 | $ | 2.17 | |||||||||||||||
10
BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Financial ratios (4) | |||||||||||||||||||||||
| Return on average assets | 0.72 | % | 1.17 | % | 0.74 | % | 1.15 | % | |||||||||||||||
| Return on average stockholders’ equity | 9.7 | % | 13.3 | % | 9.3 | % | 13.2 | % | |||||||||||||||
Net interest margin (3) | 2.63 | % | 2.37 | % | 2.57 | % | 2.38 | % | |||||||||||||||
| June 30, 2022 | December 31, 2021 | ||||||||||
| Asset quality ratios | |||||||||||
Non-performing loans to total loans (1)(5) | 0.60 | % | 0.87 | % | |||||||
Non-performing assets to total assets (2)(5) | 0.41 | % | 0.58 | % | |||||||
| Allowance for credit losses to total loans | 0.54 | % | 0.53 | % | |||||||
Allowance for credit losses to non-performing loans (1)(5) | 90.45 | % | 61.41 | % | |||||||
Net charge-offs to average loans (4) | 0.23 | % | 0.29 | % | |||||||
(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 and six month periods.
(5) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $43.4 million or 0.18% of total loans and 0.12% of total assets at June 30, 2022 and $46.1 million or 0.19% of total loans and 0.13% of total assets at December 31, 2021.
| June 30, 2022 | December 31, 2021 | Required to be Considered Well Capitalized | |||||||||||||||||||||||||||
| BankUnited, Inc. | BankUnited, N.A. | BankUnited, Inc. | BankUnited, N.A. | ||||||||||||||||||||||||||
| Capital ratios | |||||||||||||||||||||||||||||
| Tier 1 leverage | 7.5 | % | 8.8 | % | 8.4 | % | 9.6 | % | 5.0 | % | |||||||||||||||||||
| Common Equity Tier 1 ("CET1") risk-based capital | 11.3 | % | 13.3 | % | 12.6 | % | 14.5 | % | 6.5 | % | |||||||||||||||||||
| Total risk-based capital | 13.0 | % | 13.8 | % | 14.3 | % | 14.9 | % | 10.0 | % | |||||||||||||||||||
11
Non-GAAP Financial Measures
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 the dates indicated (dollars in thousands):
| June 30, 2022 | March 31, 2022 | December 31, 2021 | |||||||||||||||
| Total loans (GAAP) | $ | 24,100,014 | $ | 23,370,029 | $ | 23,765,053 | |||||||||||
| Less: Government insured residential loans | 1,928,779 | 1,938,479 | 2,023,221 | ||||||||||||||
| Less: PPP loans | 29,828 | 80,296 | 248,505 | ||||||||||||||
| Less: MWL | 816,797 | 701,172 | 1,092,133 | ||||||||||||||
| Total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP) | $ | 21,324,610 | $ | 20,650,082 | $ | 20,401,194 | |||||||||||
| ACL | $ | 130,239 | $ | 125,443 | $ | 126,457 | |||||||||||
| ACL to total loans (GAAP) | 0.54 | % | 0.54 | % | 0.53 | % | |||||||||||
| ACL to total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP) | 0.61 | % | 0.61 | % | 0.62 | % | |||||||||||
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):
| June 30, 2022 | December 31, 2021 | ||||||||||
| Total stockholders’ equity (GAAP) | $ | 2,506,017 | $ | 3,037,761 | |||||||
| Less: goodwill | 77,637 | 77,637 | |||||||||
| Tangible stockholders’ equity (non-GAAP) | $ | 2,428,380 | $ | 2,960,124 | |||||||
| Common shares issued and outstanding | 77,944,216 | 85,647,986 | |||||||||
| Book value per common share (GAAP) | $ | 32.15 | $ | 35.47 | |||||||
| Tangible book value per common share (non-GAAP) | $ | 31.16 | $ | 34.56 | |||||||
12
July 21, 2022 Q2 2022 – Supplemental Information 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 external circumstances outside the Company's direct control. 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, 2021 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
Quarterly Highlights
Quarterly Snapshot 4 Operating results Loans and Deposits Asset Quality Capital • Net income for the quarter of $65.8 million and EPS of $0.82 • NIM expanded by 13bps to 2.63% • Non-interest income impacted by $9.3 million decline in fair value of preferred stock investments • Loan growth of $780 million, excluding PPP runoff • Average non-interest bearing demand deposits grew by $371 million, totaling 34% of total deposits • Quarter-end deposits relatively flat to prior quarter; declined by $80 million • Average cost of total deposits 0.30% for the quarter • Total criticized and classified loans declined by $181 million • NPA ratio of 0.41% at June 30; guaranteed portion of SBA loans included in NPAs was 0.12% of total assets • Total share repurchases of $244 million in Q2 • CET1 ratios of 11.3% at the holding company and 13.3% at the bank at June 30, 2022 • Book value per share and tangible book value per share were $32.15 and $31.16, respectively at June 30 Expansion Activity • Opened Dallas, TX branch in April • Successful launch of Atlanta corporate banking office with continued build-out of C&I, CRE and treasury management teams
Highlights from Second Quarter Earnings 5 Key Highlights Loan growth, increases in specific reserves and qualitative factors Reflects declines in value of preferred stock investments in 2022 Q2 2021 favorably impacted by reserve release 9% YoY non-interest DDA growth; (1) Includes guaranteed portion of non-accrual SBA loans. (2) Annualized for the periods ended June 30, 2022, March 31, 2022 and June 30, 2021. (3) PPNR is a non-GAAP financial measure. See section entitled “Non-GAAP Financial Measures” on page 25. ($ in millions, except per share data) Q2 22 Q1 22 Q2 21 Q1 22 Q2 21 Net Interest Income $225 $209 $198 $16 $27 Provision for (Recovery of) Credit Losses $24 $8 ($28) $16 $52 Total Non-interest Income $13 $14 $33 ($1) ($20) Total Non-interest Expense $127 $126 $118 $1 $9 Net Income $66 $67 $104 ($1) ($38) EPS $0.82 $0.79 $1.11 $0.03 ($0.29) Pre-Provision, Net Revenue (PPNR)(3) $111 $97 $113 $14 ($2) Period-end Loans $24,100 $23,370 $22,885 $730 $1,215 Period-end Non-interest DDA $9,645 $9,663 $8,834 ($18) $811 Period-end Deposits $28,461 $28,541 $28,609 ($80) ($148) CET1 11.3% 12.5% 13.5% (1.2%) (2.2%) Total Capital 13.0% 14.3% 15.4% (1.3%) (2.4%) Yield on Loans 3.59% 3.36% 3.59% 0.23% - Cost of Deposits 0.30% 0.17% 0.25% 0.13% 0.05% Net Interest Margin 2.63% 2.50% 2.37% 0.13% 0.26% Non-performing Assets to Total Assets (1) 0.41% 0.42% 0.83% (0.01%) (0.42%) Allowance for Credit Losses to Total Loans 0.54% 0.54% 0.77% - (0.23%) Net Charge-offs to Average Loans(2) 0.23% 0.15% 0.24% 0.08% (0.01%) Change From
Transformed Deposit mix ($ in millions) 6 $6,335 $6,820 $7,347 $4,807 $3,384 $2,725 $10,715 $11,262 $10,622 $12,660 $13,369 $13,223 $1,758 $1,771 $2,131 $3,020 $3,709 $2,868 $3,071 $3,621 $4,295 $7,009 $8,976 $9,645$21,879 $23,474 $24,395 $27,496 $29,438 $28,461 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 6/30/22 Non-interest Demand Interest Demand Money Market / Savings Time Non-interest bearing demand deposits have grown at a compound annual growth rate of 38% since December 31, 2019 Quarterly Cost of Deposits 0.94% 1.52% 1.48% 0.43% 0.19% 0.30% Non-interest bearing as % of Total Deposits 14.0% 15.4% 17.6% 25.5% 30.5% 33.9% Spot Average Annual Percentage Yield (“APY”) At December 31, 2019 At December 31, 2020 At December 31, 2021 At June 30, 2022 Target Federal Funds Rate Upper Limit 1.75% 0.25% 0.25% 1.75% Total non-maturity deposits 1.11% 0.29% 0.14% 0.44% Total interest-bearing deposits 1.71% 0.48% 0.23% 0.67% Total deposits 1.42% 0.36% 0.16% 0.45%
Prudently Underwritten and Well-Diversified Loan Portfolio At June 30, 2022 ($ in millions) 7 Loan Portfolio Over Time CRE C&I Other Residential Loan Product Type Non-owner Occupied 78% Multi- family 18% Construction and Land 4% Pinnacle 61% Bridge - Franchise 16% Bridge - Equipment 21% PPP 2% Commercial and Industrial 74% Owner Occupied 26% $4,949 $5,661 $6,348 $8,368 $8,840 $7,501 $7,493 $6,896 $5,702 $5,508 $6,478 $6,718 $6,448 $6,735 $7,331 $432 $768 $1,259 $1,092 $817 $2,617 $2,515 $2,915 $1,868 $1,604 $21,977 $23,155 $23,866 $23,765 $24,100 12/31/18 12/31/19 12/31/20 12/31/21 6/30/22 Residential CRE C&I Mortgage Warehouse Lending Other(1) (1) Includes lending subs and PPP. PPP totaled $782 million, $249 million, and $30 million at December 31, 2020, December 31, 2021, and June 30, 2022, respectively. 30 Yr Fixed 40% 15 & 20 Year Fixed 14% 10/1 ARM 2% 5/1 & 7/1 ARM 21% Formerly Covered 1% Govt Insured 22%
Allowance for Credit Losses
Drivers of Change in the ACL 9 ACL 03/31/22 ACL 6/30/22 Portfolio Changes Economic Forecast Net Charge- Offs Change in Qualitative Overlay ($ in millions) % of Total Loans 0.54% 0.54% • New loans • Repayments and runoff • Portfolio seasoning • Changes in borrower financial condition • Migration • Current market adjustment • Changes to forward path of economic forecast • Increased qualitative overlay related to economic uncertainty Change in Specific Reserves
Allocation of the ACL 10 ($ in millions) (1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $43.4 million, $46.1 million, and $51.3 million or 0.18%, 0.19%, and 0.22%, of total loans and 0.12%, 0.13%, and 0.15% of total assets, at June 30, 2022, December 31, 2021, and December 31, 2020, respectively. (2) Annualized for the period ended June 30, 2022. Balance % of Loans Balance % of Loans Balance % of Loans Residential and other consumer 18.7$ 0.29% 9.2$ 0.11% 9.0$ 0.10% Commercial: Commercial real estate 104.6 1.52% 28.8 0.51% 31.2 0.57% Commercial and industrial 91.0 1.07% 68.0 0.84% 80.8 0.99% Pinnacle 0.3 0.03% 0.2 0.02% 0.1 0.01% Franchise finance 36.3 6.61% 16.7 4.90% 6.3 2.38% Equipment finance 6.4 1.34% 3.6 1.00% 2.8 0.84% Total commercial 238.6 1.36% 117.3 0.76% 121.2 0.79% Allowance for credit losses 257.3$ 1.08% 126.5$ 0.53% 130.2$ 0.54% December 31, 2020 June 30, 2022December 31, 2021 Asset Quality Ratios December 31, 2020 December 31, 2021 June 30, 2022 Non-performing loans to total loans (1) 1.02% 0.87% 0.60% Non-performing assets to total assets (1) 0.71% 0.58% 0.41% Allowance for credit losses to non-performing loans (1) 105.26% 61.41% 90.45% Net charge-offs to average loans (2) 0.26% 0.29% 0.23%
Loan Portfolio and Credit
12 Granular, Diversified Commercial & Industrial Portfolio At June 30, 2022 (1) Includes $1.9 billion of owner-occupied real estate (2) Excludes PPP loans ($ in millions) Industry Balance(1)(2) Commitment % of Portfolio Finance and Insurance 1,313$ 2,391$ 17.9% Educational Services 686 745 9.4% Wholesale Trade 640 959 8.7% Health Care and Social Assistance 489 624 6.7% Transportation and Warehousing 422 523 5.8% Manufacturing 585 824 8.0% Information 503 745 6.9% Real Estate and Rental and Leasing 466 744 6.4% Utilities 340 487 4.6% Construction 315 533 4.3% Retail Trade 309 377 4.2% Other Services (except Public Administration) 233 321 3.2% Professional, Scientific, and Technical Services 266 378 3.6% Public Administration 193 208 2.6% Accommodation and Food Services 185 232 2.5% Administrative and Support and Waste Management 163 215 2.2% Arts, Entertainment, and Recreation 161 189 2.2% Other 62 92 0.8% 7,331$ 10,587$ 100.0%
13 Commercial Real Estate by Property Type At June 30, 2022 Property Type Balance FL NY Tri State Other Wtd. Avg. DSCR Wtd. Avg. LTV Office 1,848$ 58% 25% 17% 2.35 65.3% Multifamily 1,133 45% 54% 1% 2.31 53.9% Retail 902 59% 33% 8% 1.88 62.9% Warehouse/Industrial 1,013 61% 19% 20% 2.46 58.3% Hotel 458 81% 11% 8% 2.24 57.0% Other 154 55% 43% 2% 2.46 55.8% 5,508$ 58% 32% 10% 2.28 60.3% ($ in millions)
Asset Quality Metrics - Continued Positive Trends Non-performing Loans to Total Loans Non-performing Assets to Total Assets Net Charge-offs to Average Loans(1) (1) YTD net charge-offs, annualized at June 30, 2022. 14 0.88% 1.02% 0.87% 0.60% 0.68% 0.80% 0.68% 0.42% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 12/31/19 12/31/20 12/31/21 6/30/22 Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 0.63% 0.71% 0.58% 0.41% 0.49% 0.56% 0.45% 0.29% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 12/31/19 12/31/20 12/31/21 6/30/22 Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 0.05% 0.26% 0.29% 0.23% 0.00% 0.20% 0.40% 0.60% 12/31/19 12/31/20 12/31/21 6/30/2022
Non-Performing Loans by Portfolio Segment ($ in millions) (1) Includes the guaranteed portion of non-accrual SBA loans totaling $43.4 million, $46.1 million, $51.3 million, and $45.7 million at June 30, 2022, December 31, 2021, December 31, 2020, and December 31, 2019, respectively. $19 $29 $29 $19 $18 $36 $19 $6 $24 $11 $11 $65 $43 $58 $47 $21 $14 $45 $33 $14 $62 $67 $56 $53 $205 $244 $206 $144 12/31/19 12/31/20 12/31/21 6/30/22 Residential and Other Consumer CRE Multifamily C&I Equipment Franchise SBA(1) 15
Criticized and Classified Loans ($ in millions) Commercial Real Estate Commercial & Industrial (1) Franchise Finance(3) Equipment Finance SBA(2) (1) Substandard non-accruing and doubtful includes $1.1 million and $27.8 million of loans rated doubtful at June 30, 2022 and December 31, 2021, respectively. (2) Includes the guaranteed portion of non-accrual SBA loans totaling $43.4 million, $46.1 million, $51.3 million, $45.7 million, at June 30, 2022, December 31, 2021, December 31, 2020, and December 31, 2019, respectively. (3) Substandard non-accruing and doubtful includes $6.9 million and $20.0 million of loans rated doubtful at June 30, 2022 and December 31, 2021, respectively. $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 16 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000
Criticized and Classified – CRE by Property Type ($ in millions) Office Multifamily Retail Warehouse/Industrial Hotel Other $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 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 17 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450
Asset Quality – Delinquencies ($ in millions) Commercial (1) CRE Residential (2) (1) Includes lending subsidiaries (2) Excludes government insured residential loans 18 $0 $20 $40 $60 $80 12/31/19 12/31/20 12/31/21 3/31/22 6/30/22 $0 $20 $40 $60 $80 12/31/19 12/31/20 12/31/21 3/31/22 6/30/22 $0 $20 $40 $60 $80 12/31/19 12/31/20 12/31/21 3/31/22 6/30/22
Credit Quality – Residential At June 30, 2022 High quality residential portfolio consists primarily of prime jumbo mortgages with de-minimis charge- offs since inception as well as fully government insured assets FICO Distribution(1) Breakdown by LTV(1) Breakdown by Vintage(1) (1) Excludes government insured residential loans. FICOs are refreshed routinely. LTVs are typically based on valuation at origination. 19 <720 or NA 9% 720-759 18% >759 73% Prior 21% 2018 3% 2019 5% 2020 14% 2021 47% 2022 10% 60% or less 37% 61% - 70% 26% 71% - 80% 36% More than 80% 1%
Investment Portfolio
21 Investment Securities AFS ($ in thousands) Portfolio Composition Ratings Distribution NR 1% Gov 29% AAA 60% AA 7% A 3% Portfolio Net Unrealized Gain(Loss) Fair Value Net Unrealized Gain(Loss) Fair Value Net Unrealized Gain(Loss) Fair Value US Government and agency (3,939)$ 3,249,950$ (56,692)$ 3,150,849$ (97,506)$ 2,908,462$ Private label RMBS and CMOs (10,716) 2,149,420 (119,128) 2,708,041 (233,613) 2,636,906 Private label CMBS (680) 2,604,010 (40,945) 2,711,986 (94,508) 2,684,630 Residential real estate lease-backed securities 2,123 476,968 (12,242) 493,869 (18,493) 491,478 CLOs (931) 1,078,286 (6,740) 1,072,480 (23,332) 1,023,704 State and Municipal Obligations 16,559 222,277 2,359 207,279 (5,023) 149,706 Other 1,419 152,510 (1,884) 117,398 (4,200) 107,761 3,835$ 9,933,421$ (235,272)$ 10,461,902$ (476,675)$ 10,002,647$ December 31, 2021 June 30, 2022March 31, 2022 US Government and agency 29% Private label RMBS and CMOs 27% Private label CMBS 27% Residential real estate lease- backed securities 5% CLO 10% State Municipal Obligations 1% Other 1%
22 Investment Securities – Asset Quality of Select Non-Agency Securities At June 30, 2022 Strong credit enhancement levels Private Label RMBS AAA 95% AA 1% A 4% Private Label CMBS CLOs AAA 79% AA 17% A 4% AAA 85% AA 11% A 4% Rating Min Max Avg AAA 30.0 94.9 44.2 5.5 AA 29.2 88.5 42.8 6.0 A 24.4 65.8 36.1 5.8 Wtd. Avg. 29.7 93.1 43.7 5.6 Subordination Wtd. Avg. Stress Scenario Loss Rating Min Max Avg AAA 3.0 90.9 17.2 1.8 AA 18.3 31.7 22.9 4.2 A 20.9 24.5 21.7 4.2 Wtd. Avg. 3.9 87.4 17.5 1.9 Subordination Wtd. Avg. Stress Scenario Loss Rating Min Max Avg AAA 41.3 61.0 44.6 7.2 AA 30.8 40.4 34.7 6.8 A 24.8 28.4 26.2 6.6 Wtd. Avg. 38.8 56.2 42.2 7.1 Subordination Wtd. Avg. Stress Scenario Loss
Recognitions and Rankings 23 South Florida-based Community Bank based on assets, South Florida Business Journal, October 2021 # 1 Largest Florida-based Bank based on assets, Florida Business Journals, December 2020 # 3 South Florida Business Journal, June 2021 Healthiest Employer in South Florida,#1 100 Healthiest Workplaces in America, Springbuk, October 2021 #13 Superior rating by BauerFinancial consecutively since its inception Newsweek, March 2022 #4 America’s Most Trusted companies (Banking),
Non-GAAP Financial Measures
25 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 recent volatility of the provision for credit losses. This measure also provides a meaningful basis for comparison to other financial institutions since it is commonly employed and is a measure frequently cited by investors and analysts. The following table reconciles the non-GAAP financial measure of PPNR to the comparable GAAP financial measurement of income (loss) before income taxes for the periods indicated (in thousands): June 30, 2022 March 31, 2022 June 30, 2021 Income before income taxes (GAAP) 87,468$ 88,789$ 140,150$ Plus: provision for (recovery of) credit losses 23,996 7,830 (27,534) PPNR (non-GAAP) 111,464$ 96,619$ 112,616$ Three Months Ended
26 Non-GAAP Financial Measures Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful 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 June 30, 2022 (in thousands except share and per share data): June 30, 2022 Total stockholders’ equity (GAAP) 2,506,017$ Less: goodwill 77,637 Tangible stockholders’ equity (non-GAAP) 2,428,380$ Common shares issued and outstanding 77,944,216 Book value per common share (GAAP) 32.15$ Tangible book value per common share (non-GAAP) 31.16$