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BankUnited, Inc. Reports Third Quarter 2020 Results

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BankUnited, Inc. (the "Company") (NYSE:BKU) today announced financial results for the quarter ended September 30, 2020.

"We were pleased with our results for the quarter. The deposit mix and cost of funds improved, PPNR continued to show growth over the prior year and we saw some positive signs around credit as loans on deferral declined," said Rajinder Singh, Chairman, President and Chief Executive Officer.

For the quarter ended September 30, 2020, the Company reported net income of $66.6 million, or $0.70 per diluted share, compared to $76.5 million or $0.80 per diluted share for the immediately preceding quarter ended June 30, 2020 and $76.2 million, or $0.77 per diluted share, for the quarter ended September 30, 2019.

For the nine months ended September 30, 2020, the Company reported net income of $112.1 million, or $1.17 per diluted share, compared to $223.6 million, or $2.23 per diluted share, for the nine months ended September 30, 2019. Results for the nine months ended September 30, 2020 were negatively impacted by the application of the Current Expected Credit Losses ("CECL") accounting methodology, including the expected impact of COVID-19 on the provision for credit losses.

Financial Highlights

  • Non-interest bearing demand deposits grew by $906 million, or 15%, for the quarter ended September 30, 2020, to 26% of total deposits, compared to 23% of total deposits at June 30, 2020 and 18% of total deposits at December 31, 2019. Total deposits increased by $527 million during the quarter ended September 30, 2020, as growth in non-interest bearing deposits was partially offset by continued runoff of higher cost time deposits. Average non-interest bearing demand deposits increased by $874 million for the quarter ended September 30, 2020 compared to the immediately preceding quarter and by $2.2 billion compared to the quarter ended September 30, 2019.
  • The average cost of total deposits declined by 0.23% to 0.57% for the quarter ended September 30, 2020, its lowest level since the Company's inception. The cost of total deposits was 0.80% for the quarter ended June 30, 2020 and 1.67% for the quarter ended September 30, 2019. On a spot basis, the average annual percentage yield ("APY") on total deposits declined to 0.49% at September 30, 2020 from 0.65% at June 30, 2020 and 1.42% at December 31, 2019.
  • Loans under COVID related deferral continued to decline. We reported at the end of the second quarter that we had granted initial 90-day payment deferrals on loans totaling $3.6 billion or approximately 15% of the total loan portfolio. At September 30, 2020, $1.1 billion, or approximately 5% of total loans were still subject to a short-term COVID related payment deferral or longer term modification under the CARES Act, or were in the process of modification. At October 25, 2020, $983 million, or approximately 4%, of loans remained on deferral or modification.
  • Investment securities grew by $607 million for the quarter ended September 30, 2020 while loans and leases, including operating lease equipment, declined by $69 million as liquidity was deployed into investment securities in the current challenging credit environment. We experienced growth in the residential and mortgage warehouse loan portfolio segments, offset by net runoff in other commercial and commercial real estate segments.
  • Pre-tax, pre-provision net revenue ("PPNR") continued to improve year-over-year, increasing by $12.9 million to $115.1 million for the quarter ended September 30, 2020 from $102.2 million for the quarter ended September 30, 2019. PPNR was $122.3 million for the quarter ended June 30, 2020. For the nine months ended September 30, 2020, PPNR improved to $322.5 million from $308.8 million for the nine months ended September 30, 2019.
  • The net interest margin, calculated on a tax-equivalent basis, was 2.32% for the quarter ended September 30, 2020 compared to 2.39% for the immediately preceding quarter. Deployment of liquidity into the securities portfolio contributed to the decline in the net interest margin for the quarter. The yield on interest earnings assets declined by 0.22% while the cost of interest bearing liabilities declined by 0.15% for the quarter ended September 30, 2020 compared to the quarter ended June 30, 2020. The net interest margin was 2.41% for the quarter ended September 30, 2019.
  • The provision for credit losses totaled $29.2 million for the quarter ended September 30, 2020 compared to $25.4 million for the immediately preceding quarter ended June 30, 2020. The provision for credit losses was $180.1 million for the nine months ended September 30, 2020. For the quarter and nine months ended September 30, 2019, the Company recorded provisions for loan losses, under the incurred loss model, of $1.8 million and $9.4 million, respectively. At September 30, 2020, the allowance for credit losses ("ACL") was $274 million, or 1.15% of the loan portfolio, compared to $266 million, or 1.12% at June 30, 2020.
  • The net unrealized gain (loss) on investment securities available for sale continued to improve during the quarter to a net unrealized gain of $62.0 million at September 30, 2020 compared to net unrealized losses of $2.6 million and $249.8 million at June 30, 2020 and March 31, 2020, respectively.
  • Stockholders' equity increased by $110 million during the quarter ended September 30, 2020 to $2.9 billion. The increase was driven by the recovery of $61 million in accumulated other comprehensive income, related primarily to the reduction in unrealized losses on investment securities available for sale, and by the retention of earnings. At September 30, 2020, book value per common share and tangible book value per common share were $31.01 and $30.17, respectively, compared to $29.81 and $28.97, respectively at June 30, 2020 and $31.33 and $30.52, respectively at December 31, 2019.
  • A dividend of $0.23 per common share was declared for the quarter ended September 30, 2020.

     

Capital

The Company's and BankUnited, N.A.'s regulatory capital ratios at September 30, 2020 and December 31, 2019 were as follows:

 

September 30, 2020

 

December 31, 2019

 

Required to be

Considered Well

Capitalized

 

BankUnited, Inc.

 

BankUnited, N.A.

 

BankUnited, Inc.

 

BankUnited, N.A.

 

Tier 1 leverage

8.6

%

 

9.5

%

 

8.9

%

 

9.3

%

 

5.0

%

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

12.2

%

 

13.5

%

 

12.3

%

 

12.9

%

 

6.5

%

Total risk-based capital

14.3

%

 

14.4

%

 

12.8

%

 

13.4

%

 

10.0

%

On a fully-phased in basis with respect to the adoption of CECL, the Company's and the Bank's CET1 risk-based capital ratios would have been 11.9% and 13.2%, respectively, at September 30, 2020. The increase in the total risk-based capital ratio for BankUnited, Inc. from December 31, 2019 to September 30, 2020 includes the issuance of $300 million in subordinated debt in the second quarter of 2020.

Loans and Leases

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

 

September 30, 2020

 

June 30, 2020

 

December 31, 2019

Residential and other consumer loans

$

5,940,900

 

 

25.1

%

 

$

5,577,807

 

 

23.5

%

 

$

5,661,119

 

 

24.5

%

Multi-family

1,810,126

 

 

7.6

%

 

1,893,753

 

 

7.9

%

 

2,217,705

 

 

9.6

%

Non-owner occupied commercial real estate

4,910,835

 

 

20.7

%

 

4,940,531

 

 

20.7

%

 

5,030,904

 

 

21.7

%

Construction and land

263,381

 

 

1.1

%

 

246,609

 

 

1.0

%

 

243,925

 

 

1.1

%

Owner occupied commercial real estate

2,051,577

 

 

8.6

%

 

2,041,346

 

 

8.6

%

 

2,062,808

 

 

8.9

%

Commercial and industrial

4,427,351

 

 

18.6

%

 

4,691,326

 

 

19.7

%

 

4,655,349

 

 

20.1

%

PPP

829,798

 

 

3.5

%

 

827,359

 

 

3.5

%

 

 

 

%

Pinnacle

1,157,706

 

 

4.8

%

 

1,242,506

 

 

5.2

%

 

1,202,430

 

 

5.2

%

Bridge - franchise finance

606,222

 

 

2.5

%

 

623,139

 

 

2.5

%

 

627,482

 

 

2.6

%

Bridge - equipment finance

530,516

 

 

2.2

%

 

589,785

 

 

2.5

%

 

684,794

 

 

3.0

%

Mortgage warehouse lending ("MWL")

1,250,903

 

 

5.3

%

 

1,160,728

 

 

4.9

%

 

768,472

 

 

3.3

%

 

$

23,779,315

 

 

100.0

%

 

$

23,834,889

 

 

100.0

%

 

$

23,154,988

 

 

100.0

%

Operating lease equipment, net

$

676,321

 

 

 

 

$

689,965

 

 

 

 

$

698,153

 

 

 

Growth in residential and other consumer loans for the quarter was mainly attributable to GNMA early buyout loans. At September 30, 2020, June 30, 2020 and December 31, 2019, the residential portfolio included $1.1 billion, $805 million and $676 million, respectively, of GNMA early buyout loans. Residential activity for the quarter included purchases of approximately $418 million in GNMA early buyout loans, offset by approximately $154 million in re-poolings and paydowns.

Residential and other consumer loans, excluding GNMA early buyout loans, experienced a net increase of approximately $99 million.

For most commercial portfolio segments, production for the quarter in a challenging credit environment was not sufficient to offset payoffs and lower line utilization. The decline in multi-family balances was driven primarily by continued runoff of the New York portfolio.

Mortgage warehouse outstandings increased by $90 million during the quarter ended September 30, 2020. Mortgage warehouse commitments totaled $2.0 billion at September 30, 2020, an increase of 53% compared to $1.3 billion at December 31, 2019. Line utilization was 63% at September 30, 2020 compared to 59% at December 31, 2019.

The following table presents information about commercial loan portfolio sub-segments that we have identified for enhanced monitoring related to the potential impact of the COVID-19 pandemic (dollars in thousands):

 

September 30, 2020

 

Total Loans in the

Sub-Segment

 

% of Total

Loans

 

Loans on Payment

Deferral, Modified

or Pending

Modification

 

% of Total

Loans

Retail exposure in the CRE portfolio

$

1,421,782

 

 

6.0

%

 

$

42,206

 

 

0.2

%

Retail exposure in the C&I portfolio (1)

321,077

 

 

1.4

%

 

40,004

 

 

0.2

%

Bridge - franchise finance

606,222

 

 

2.5

%

 

75,606

 

 

0.3

%

Hotel

619,012

 

 

2.6

%

 

291,972

 

 

1.2

%

Airlines and aviation authorities

145,921

 

 

0.6

%

 

 

 

%

Cruise lines

72,962

 

 

0.3

%

 

47,500

 

 

0.2

%

 

$

3,186,976

 

 

13.4

%

 

$

497,288

 

 

2.1

%

_____________

(1)

Includes $211 million of owner-occupied commercial real estate loans.

Asset Quality and the Allowance for Credit Losses

The following table presents the ACL at the dates indicated, related ACL coverage ratios, as well as net charge-off rates for the nine months ended September 30, 2020 and the year ended December 31, 2019 (dollars in thousands):

 

ACL

 

ACL to Total Loans

 

ACL to Non-

Performing Loans

 

Net Charge-offs to

Average Loans (1)

December 31, 2019 (incurred loss)

$

108,671

 

 

0.47

%

 

53.07

%

 

0.05%

January 1, 2020 (initial date of CECL adoption)

$

135,976

 

 

0.59

%

 

66.40

%

 

N/A

September 30, 2020 (expected loss)

$

274,128

 

 

1.15

%

(2)

136.86

%

 

0.25%

_____________

(1)

Annualized for the nine months ended September 30, 2020.

(2)

ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 1.33% at September 30, 2020.

The ACL at September 30, 2020 represents management's estimate of lifetime expected credit losses from the loan portfolio given our assessment of historical data, current conditions and a reasonable and supportable economic forecast as of the balance sheet date. The estimate was informed by Moody's economic scenarios published in September 2020, economic information provided by additional sources, data reflecting the impact of recent events on individual borrowers and other relevant information.

For the quarter ended September 30, 2020, the Company recorded a provision for credit losses of $29.2 million, which included a provision of $27.6 million related to funded loans as well as immaterial components related to accrued interest receivable, unfunded loan commitments and an AFS debt security.

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

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Beginning balance

$

266,123

 

 

$

112,141

 

 

$

108,671

 

 

$

109,931

 

Cumulative effect of adoption of CECL

 

 

 

 

27,305

 

 

 

Balance after adoption of CECL

266,123

 

 

112,141

 

 

135,976

 

 

109,931

 

Provision

27,646

 

 

1,839

 

 

181,095

 

 

9,373

 

Charge-offs

(23,770)

 

 

(6,141)

 

 

(50,754)

 

 

(13,985)

 

Recoveries

4,129

 

 

623

 

 

7,811

 

 

3,143

 

Ending balance

$

274,128

 

 

$

108,462

 

 

$

274,128

 

 

$

108,462

 

Charge-offs for the quarter ended September 30, 2020 included $22.1 million related to one commercial and industrial relationship that had been downgraded to substandard prior to the onset of COVID.

Non-performing loans totaled $200.3 million or 0.84% of total loans at September 30, 2020, compared to $204.8 million or 0.88% of total loans at December 31, 2019. Non-performing loans included $43.6 million and $45.7 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.18% and 0.20% of total loans at September 30, 2020 and December 31, 2019, respectively.

Net interest income

Net interest income for the quarter ended September 30, 2020 was $187.5 million compared to $190.3 million for the immediately preceding quarter ended June 30, 2020 and $185.7 million for the quarter ended September 30, 2019. Interest income decreased by $13.2 million for the quarter ended September 30, 2020 compared to the immediately preceding quarter, and by $68.8 million, compared to the quarter ended September 30, 2019. Interest expense decreased by $10.3 million compared to the immediately preceding quarter and by $70.6 million compared to the quarter ended September 30, 2019. Decreases in interest income resulted from declines in market interest rates, partially offset by increases in average interest earning assets. Declines in interest expense reflected decreases in market interest rates and to a lesser extent, declines in average interest bearing liabilities.

The Company's net interest margin, calculated on a tax-equivalent basis, decreased by 0.07% to 2.32% for the quarter ended September 30, 2020, from 2.39% for the immediately preceding quarter ended June 30, 2020. The decline in the yield on interest earning assets outpaced the reduction in cost of interest bearing liabilities for the quarter. The deployment of liquidity into the securities portfolio in a challenging lending environment contributed to the decline in the yield on interest earning assets. Offsetting factors contributing to the decrease in the net interest margin for the quarter ended September 30, 2020 compared to the immediately preceding quarter ended June 30, 2020 included:

  • The average rate paid on interest bearing deposits decreased to 0.75% for the quarter ended September 30, 2020, from 1.01% for the quarter ended June 30, 2020. This decline reflected continued initiatives taken to lower rates paid on deposits in response to declines in general market interest rates and the re-pricing of term deposits. We expect the cost of interest bearing deposits to continue to decline; at September 30, 2020, approximately $1.5 billion or 25% of the time deposit portfolio, with an average rate of 1.67%, has not yet repriced since March 2020 when the Fed last cut rates. The majority of these CDs will mature through the first quarter of 2021.
  • The tax-equivalent yield on investment securities decreased to 2.00% for the quarter ended September 30, 2020 from 2.48% for the quarter ended June 30, 2020. This decrease resulted from the impact of purchases of lower-yielding securities, prepayments of higher yielding mortgage-backed securities and decreases in coupon interest rates on existing floating rate assets.
  • The tax-equivalent yield on loans decreased to 3.61% for the quarter ended September 30, 2020, from 3.71% for the quarter ended June 30, 2020. Factors contributing to this decrease included the decline in benchmark interest rates which impacted the rates earned on both existing floating rate assets and new production, and the runoff of loans originated in a higher rate environment.
  • The average rate paid on borrowings increased to 2.40% for the quarter ended September 30, 2020, from 1.97% for the quarter ended June 30, 2020, reflecting the maturity of short-term, lower rate FHLB advances. The issuance of $300 million of 5.125% subordinated notes in June 2020 also contributed to the increase.
  • The increase in average non-interest bearing demand deposits as a percentage of average total deposits also positively impacted the cost of total deposits and the net interest margin.

The Company's net interest margin, calculated on a tax-equivalent basis, was 2.35% for the nine months ended September 30, 2020, compared to 2.49% for the nine months ended September 30, 2019. Factors contributing to the decline were largely consistent with those enumerated above.

Non-interest expense

Non-interest expense totaled $108.6 million for the quarter ended September 30, 2020 compared to $106.4 million for the immediately preceding quarter ended June 30, 2020 and $121.3 million for the quarter ended September 30, 2019. Non-interest expense totaled $333.9 million and $368.1 million for the nine months ended September 30, 2020 and 2019, respectively, a decline of approximately 9%.

  • Compensation and benefits decreased by $8.7 million and $23.4 million, respectively, for the quarter and nine months ended September 30, 2020 compared to the corresponding periods in 2019. These decreases reflected reductions in headcount related to our BankUnited 2.0 initiative. Lower variable compensation costs and a decrease in equity based compensation expense related to the impact of a declining stock price on liability-classified awards also contributed to the declines.
  • Cost reductions stemming from our BankUnited 2.0 initiative contributed to year over year reductions in Occupancy and equipment expense and Other non-interest expense.
  • The increasing trend year over year in technology and telecommunications expense is reflective of investments in digital and data analytics capabilities and in the infrastructure to support cloud migration.
  • The increase in deposit insurance expense reflects an increase in the assessment rate related to increases in the level of criticized and classified assets.
  • Costs incurred directly related to the implementation of our BankUnited 2.0 initiative during the nine months ended September 30, 2020 and 2019 totaled $0.3 million and $14.5 million, respectively.
  • For the quarter and nine months ended September 30, 2020, non-interest expense included approximately $0.5 million and $2.0 million, respectively, in costs directly related to our response to the COVID-19 pandemic.

     

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, October 28, 2020 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.

The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at http://ir.bankunited.com/. The dial in telephone number for the call is (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the conference ID for the call is 1134069. A replay of the call will be available from 12:00 p.m. ET on October 28th through 11:59 p.m. ET on November 4th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The conference ID for the replay is 1134069. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.

About BankUnited, Inc.

BankUnited, Inc., with total assets of $35.0 billion at September 30, 2020, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 71 banking centers in 14 Florida counties and 5 banking centers in the New York metropolitan area at September 30, 2020.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to, among other things, future events and financial performance.

The Company generally identifies forward-looking statements by terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "could," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates, " "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company's current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitations) those relating to the Company's operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by the COVID-19 pandemic. If one or more of these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, the Company's actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are available at the SEC's website (www.sec.gov).

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands, except share and per share data)

 

 

September 30,

2020

 

December 31,

2019

ASSETS

 

 

 

Cash and due from banks:

 

 

 

Non-interest bearing

$

175

 

 

$

7,704

 

Interest bearing

369,601

 

 

206,969

 

Cash and cash equivalents

369,776

 

 

214,673

 

Investment securities (including securities recorded at fair value of $9,290,883 and $7,759,237)

9,300,883

 

 

7,769,237

 

Non-marketable equity securities

208,614

 

 

253,664

 

Loans held for sale

3,816

 

 

37,926

 

Loans

23,779,315

 

 

23,154,988

 

Allowance for credit losses

(274,128)

 

 

(108,671)

 

Loans, net

23,505,187

 

 

23,046,317

 

Bank owned life insurance

292,773

 

 

282,151

 

Operating lease equipment, net

676,321

 

 

698,153

 

Goodwill and other intangible assets

77,641

 

 

77,674

 

Other assets

593,586

 

 

491,498

 

Total assets

$

35,028,597

 

 

$

32,871,293

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Liabilities:

 

 

 

Demand deposits:

 

 

 

Non-interest bearing

$

6,789,622

 

 

$

4,294,824

 

Interest bearing

2,916,891

 

 

2,130,976

 

Savings and money market

11,002,794

 

 

10,621,544

 

Time

5,887,903

 

 

7,347,247

 

Total deposits

26,597,210

 

 

24,394,591

 

Federal funds purchased

180,000

 

 

100,000

 

FHLB and PPPLF borrowings

4,118,460

 

 

4,480,501

 

Notes and other borrowings

722,592

 

 

429,338

 

Other liabilities

545,511

 

 

486,084

 

Total liabilities

32,163,773

 

 

29,890,514

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value $0.01 per share, 400,000,000 shares authorized; 92,388,641 and 95,128,231 shares issued and outstanding

924

 

 

951

 

Paid-in capital

995,438

 

 

1,083,920

 

Retained earnings

1,950,288

 

 

1,927,735

 

Accumulated other comprehensive loss

(81,826)

 

 

(31,827)

 

Total stockholders' equity

2,864,824

 

 

2,980,779

 

Total liabilities and stockholders' equity

$

35,028,597

 

 

$

32,871,293

 

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2020

 

2020

 

2019

 

2020

 

2019

Interest income:

 

 

 

 

 

 

 

 

 

Loans

$

208,646

 

 

$

213,938

 

 

$

248,770

 

 

$

656,943

 

 

$

738,766

 

Investment securities

44,604

 

 

50,932

 

 

69,413

 

 

151,596

 

 

218,554

 

Other

1,322

 

 

2,908

 

 

5,219

 

 

7,950

 

 

15,140

 

Total interest income

254,572

 

 

267,778

 

 

323,402

 

 

816,489

 

 

972,460

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

37,681

 

 

50,187

 

 

99,483

 

 

170,690

 

 

296,891

 

Borrowings

29,412

 

 

27,254

 

 

38,229

 

 

87,407

 

 

108,095

 

Total interest expense

67,093

 

 

77,441

 

 

137,712

 

 

258,097

 

 

404,986

 

Net interest income before provision for credit losses

187,479

 

 

190,337

 

 

185,690

 

 

558,392

 

 

567,474

 

Provision for credit losses

29,232

 

 

25,414

 

 

1,839

 

 

180,074

 

 

9,373

 

Net interest income after provision for credit losses

158,247

 

 

164,923

 

 

183,851

 

 

378,318

 

 

558,101

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Deposit service charges and fees

4,040

 

 

3,701

 

 

4,269

 

 

11,927

 

 

12,389

 

Gain on sale of loans, net

2,953

 

 

4,326

 

 

5,163

 

 

10,745

 

 

10,220

 

Gain on investment securities, net

7,181

 

 

6,836

 

 

3,835

 

 

10,564

 

 

13,736

 

Lease financing

13,934

 

 

16,150

 

 

18,583

 

 

45,565

 

 

52,774

 

Other non-interest income

8,184

 

 

7,338

 

 

6,006

 

 

19,140

 

 

20,329

 

Total non-interest income

36,292

 

 

38,351

 

 

37,856

 

 

97,941

 

 

109,448

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

48,448

 

 

48,877

 

 

57,102

 

 

156,212

 

 

179,586

 

Occupancy and equipment

12,170

 

 

11,901

 

 

14,673

 

 

36,440

 

 

42,477

 

Deposit insurance expense

5,886

 

 

4,806

 

 

3,781

 

 

15,095

 

 

12,849

 

Professional fees

2,436

 

 

3,131

 

 

2,923

 

 

8,771

 

 

17,731

 

Technology and telecommunications

15,435

 

 

14,025

 

 

10,994

 

 

42,056

 

 

34,175

 

Depreciation of operating lease equipment

12,315

 

 

12,219

 

 

11,582

 

 

37,137

 

 

34,883

 

Loss on debt extinguishment

 

 

 

 

3,796

 

 

 

 

3,796

 

Other non-interest expense

11,937

 

 

11,411

 

 

16,455

 

 

38,154

 

 

42,584

 

Total non-interest expense

108,627

 

 

106,370

 

 

121,306

 

 

333,865

 

 

368,081

 

Income before income taxes

85,912

 

 

96,904

 

 

100,401

 

 

142,394

 

 

299,468

 

Provision for income taxes

19,353

 

 

20,396

 

 

24,182

 

 

30,278

 

 

75,826

 

Net income

$

66,559

 

 

$

76,508

 

 

$

76,219

 

 

$

112,116

 

 

$

223,642

 

Earnings per common share, basic

$

0.70

 

 

$

0.80

 

 

$

0.78

 

 

$

1.17

 

 

$

2.23

 

Earnings per common share, diluted

$

0.70

 

 

$

0.80

 

 

$

0.77

 

 

$

1.17

 

 

$

2.23

 

 

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

 

 

Three Months Ended

September 30, 2020

 

Three Months Ended

June 30, 2020

 

Three Months Ended

September 30, 2019

 

 

 

 

Average

Balance

 

Interest (1)(2)

 

Yield/

Rate (1)(2)

 

Average

Balance

 

Interest (1)(2)

 

Yield/

Rate (1)(2)

 

Average

Balance

 

Interest (1)(2)

 

Yield/

Rate (1)(2)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

23,447,514

 

 

$

212,388

 

 

3.61

%

 

$

23,534,684

 

 

$

217,691

 

 

3.71

%

 

$

22,733,875

 

 

$

252,896

 

 

4.43

%

Investment securities (3)

9,065,478

 

 

45,351

 

 

2.00

%

 

8,325,217

 

 

51,684

 

 

2.48

%

 

8,295,205

 

 

70,427

 

 

3.40

%

Other interest earning assets

552,515

 

 

1,322

 

 

0.95

%

 

765,848

 

 

2,908

 

 

1.53

%

 

573,630

 

 

5,219

 

 

3.61

%

Total interest earning assets

33,065,507

 

 

259,061

 

 

3.13

%

 

32,625,749

 

 

272,283

 

 

3.35

%

 

31,602,710

 

 

328,542

 

 

4.14

%

Allowance for credit losses

(272,464)

 

 

 

 

 

 

(254,396)

 

 

 

 

 

 

(112,784)

 

 

 

 

 

Non-interest earning assets

1,897,723

 

 

 

 

 

 

1,976,398

 

 

 

 

 

 

1,652,901

 

 

 

 

 

Total assets

$

34,690,766

 

 

 

 

 

 

$

34,347,751

 

 

 

 

 

 

$

33,142,827

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

$

2,800,421

 

 

4,127

 

 

0.59

%

 

$

2,448,545

 

 

$

4,722

 

 

0.78

%

 

$

1,872,573

 

 

$

6,705

 

 

1.42

%

Savings and money market deposits

10,664,462

 

 

15,853

 

 

0.59

%

 

10,450,310

 

 

17,447

 

 

0.67

%

 

10,907,317

 

 

51,229

 

 

1.86

%

Time deposits

6,519,852

 

 

17,701

 

 

1.08

%

 

7,096,097

 

 

28,018

 

 

1.59

%

 

6,845,643

 

 

41,549

 

 

2.41

%

Total interest bearing deposits

19,984,735

 

 

37,681

 

 

0.75

%

 

19,994,952

 

 

50,187

 

 

1.01

%

 

19,625,533

 

 

99,483

 

 

2.01

%

Short term borrowings

53,587

 

 

14

 

 

0.10

%

 

119,835

 

 

32

 

 

0.11

%

 

115,209

 

 

670

 

 

2.31

%

FHLB and PPPLF borrowings

4,117,181

 

 

20,146

 

 

1.95

%

 

4,961,376

 

 

21,054

 

 

1.71

%

 

5,414,963

 

 

32,252

 

 

2.36

%

Notes and other borrowings

722,271

 

 

9,252

 

 

5.12

%

 

493,278

 

 

6,168

 

 

5.00

%

 

403,788

 

 

5,307

 

 

5.26

%

Total interest bearing liabilities

24,877,774

 

 

67,093

 

 

1.07

%

 

25,569,441

 

 

77,441

 

 

1.22

%

 

25,559,493

 

 

137,712

 

 

2.14

%

Non-interest bearing demand deposits

6,186,718

 

 

 

 

 

 

5,313,009

 

 

 

 

 

 

3,963,955

 

 

 

 

 

Other non-interest bearing liabilities

803,498

 

 

 

 

 

 

820,439

 

 

 

 

 

 

704,995

 

 

 

 

 

Total liabilities

31,867,990

 

 

 

 

 

 

31,702,889

 

 

 

 

 

 

30,228,443

 

 

 

 

 

Stockholders' equity

2,822,776

 

 

 

 

 

 

2,644,862

 

 

 

 

 

 

2,914,384

 

 

 

 

 

Total liabilities and stockholders' equity

$

34,690,766

 

 

 

 

 

 

$

34,347,751

 

 

 

 

 

 

$

33,142,827

 

 

 

 

 

Net interest income

 

 

$

191,968

 

 

 

 

 

 

$

194,842

 

 

 

 

 

 

$

190,830

 

 

 

Interest rate spread

 

 

 

 

2.06

%

 

 

 

 

 

2.13

%

 

 

 

 

 

2.00

%

Net interest margin

 

 

 

 

2.32

%

 

 

 

 

 

2.39

%

 

 

 

 

 

2.41

%

_____________

(1)

On a tax-equivalent basis where applicable

(2)

Annualized

(3)

At fair value except for securities held to maturity

 

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

 

 

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

 

Average

Balance

 

Interest (1)(2)

 

Yield/

Rate (1)(2)

 

Average

Balance

 

Interest (1)(2)

 

Yield/

Rate (1)(2)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

23,278,042

 

 

$

668,187

 

 

3.83

%

 

$

22,407,271

 

 

$

751,672

 

 

4.48

%

Investment securities (3)

 

8,501,513

 

 

153,987

 

 

2.42

%

 

8,333,600

 

 

221,901

 

 

3.55

%

Other interest earning assets

 

654,623

 

 

7,950

 

 

1.62

%

 

532,062

 

 

15,140

 

 

3.80

%

Total interest earning assets

 

32,434,178

 

 

830,124

 

 

3.42

%

 

31,272,933

 

 

988,713

 

 

4.22

%

Allowance for credit losses

 

(222,085)

 

 

 

 

 

 

(113,694)

 

 

 

 

 

Non-interest earning assets

 

1,874,709

 

 

 

 

 

 

1,615,548

 

 

 

 

 

Total assets

 

$

34,086,802

 

 

 

 

 

 

$

32,774,787

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

 

$

2,475,388

 

 

15,808

 

 

0.85

%

 

$

1,783,611

 

 

18,569

 

 

1.39

%

Savings and money market deposits

 

10,509,559

 

 

71,056

 

 

0.90

%

 

11,093,290

 

 

156,236

 

 

1.88

%

Time deposits

 

7,040,101

 

 

83,826

 

 

1.59

%

 

6,898,947

 

 

122,086

 

 

2.37

%

Total interest bearing deposits

 

20,025,048

 

 

170,690

 

 

1.14

%

 

19,775,848

 

 

296,891

 

 

2.01

%

Short term borrowings

 

89,033

 

 

412

 

 

0.62

%

 

127,908

 

 

2,297

 

 

2.39

%

FHLB and PPPLF borrowings

 

4,496,407

 

 

66,284

 

 

1.97

%

 

5,037,299

 

 

89,890

 

 

2.39

%

Notes and other borrowings

 

548,851

 

 

20,711

 

 

5.03

%

 

403,574

 

 

15,908

 

 

5.26

%

Total interest bearing liabilities

 

25,159,339

 

 

258,097

 

 

1.37

%

 

25,344,629

 

 

404,986

 

 

2.14

%

Non-interest bearing demand deposits

 

5,292,702

 

 

 

 

 

 

3,835,248

 

 

 

 

 

Other non-interest bearing liabilities

 

791,057

 

 

 

 

 

 

654,692

 

 

 

 

 

Total liabilities

 

31,243,098

 

 

 

 

 

 

29,834,569

 

 

 

 

 

Stockholders' equity

 

2,843,704

 

 

 

 

 

 

2,940,218

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

34,086,802

 

 

 

 

 

 

$

32,774,787

 

 

 

 

 

Net interest income

 

 

 

$

572,027

 

 

 

 

 

 

$

583,727

 

 

 

Interest rate spread

 

 

 

 

 

2.05

%

 

 

 

 

 

2.08

%

Net interest margin

 

 

 

 

 

2.35

%

 

 

 

 

 

2.49

%

_____________

(1)

On a tax-equivalent basis where applicable

(2)

Annualized

(3)

At fair value except for securities held to maturity

 

BANKUNITED, INC. AND SUBSIDIARIES

EARNINGS PER COMMON SHARE

(In thousands except share and per share amounts)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2020

 

2019

 

2020

 

2019

Basic earnings per common share:

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Net income

$

66,559

 

 

$

76,219

 

 

$

112,116

 

 

$

223,642

 

Distributed and undistributed earnings allocated to participating securities

(2,896)

 

 

(3,174)

 

 

(4,816)

 

 

(9,247)

 

Income allocated to common stockholders for basic earnings per common share

$

63,663

 

 

$

73,045

 

 

$

107,300

 

 

$

214,395

 

Denominator:

 

 

 

 

 

 

 

Weighted average common shares outstanding

92,405,239

 

 

95,075,395

 

 

92,918,030

 

 

97,113,878

 

Less average unvested stock awards

(1,183,564)

 

 

(1,098,509)

 

 

(1,164,317)

 

 

(1,147,988)

 

Weighted average shares for basic earnings per common share

91,221,675

 

 

93,976,886

 

 

91,753,713

 

 

95,965,890

 

Basic earnings per common share

$

0.70

 

 

$

0.78

 

 

$

1.17

 

 

$

2.23

 

Diluted earnings per common share:

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Income allocated to common stockholders for basic earnings per common share

$

63,663

 

 

$

73,045

 

 

$

107,300

 

 

$

214,395

 

Adjustment for earnings reallocated from participating securities

4

 

 

7

 

 

3

 

 

20

 

Income used in calculating diluted earnings per common share

$

63,667

 

 

$

73,052

 

 

$

107,303

 

 

$

214,415

 

Denominator:

 

 

 

 

 

 

 

Weighted average shares for basic earnings per common share

91,221,675

 

 

93,976,886

 

 

91,753,713

 

 

95,965,890

 

Dilutive effect of stock options and certain shared-based awards

171,054

 

 

285,934

 

 

142,008

 

 

303,524

 

Weighted average shares for diluted earnings per common share

91,392,729

 

 

94,262,820

 

 

91,895,721

 

 

96,269,414

 

Diluted earnings per common share

$

0.70

 

 

$

0.77

 

 

$

1.17

 

 

$

2.23

 

 

BANKUNITED, INC. AND SUBSIDIARIES

SELECTED RATIOS

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Financial ratios (4)

 

 

 

 

 

 

 

Return on average assets

0.76

%

 

0.91

%

 

0.44

%

 

0.91

%

Return on average stockholders' equity

9.4

%

 

10.4

%

 

5.3

%

 

10.2

%

Net interest margin (3)

2.32

%

 

2.41

%

 

2.35

%

 

2.49

%

 

September 30, 2020

 

December 31, 2019

Asset quality ratios

 

 

 

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

0.84

%

 

0.88

%

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

0.58

%

 

0.63

%

Allowance for credit losses to total loans

1.15

%

 

0.47

%

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

136.86

%

 

53.07

%

Net charge-offs to average loans (4)

0.25

%

 

0.05

%

_____________

(1)

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

(2)

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

(3)

On a tax-equivalent basis.

(4)

Annualized for the three and nine month periods.

(5)

Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $43.6 million or 0.18% of total loans and 0.12% of total assets, at September 30, 2020; and $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.

Non-GAAP Financial Measures

PPNR is a non-GAAP financial measure. Management believes this measure is relevant to understanding the performance of the Company attributable to elements other than the provision for credit losses and the ability of the Company to generate earnings sufficient to cover estimated credit losses, particularly in view of the adoption of the CECL accounting methodology, which may impact comparability of operating results to prior periods. This measure also provides a meaningful basis for comparison to other financial institutions and is a measure frequently cited by investors. The following table reconciles the non-GAAP financial measurement of PPNR to the comparable GAAP financial measurement of income before income taxes for the three and nine months ended September 30, 2020 and 2019 and the three months ended June 30, 2020 (in thousands):

 

Three Months Ended

September 30,

 

Three Months Ended

June 30,

 

Three Months Ended

September 30,

 

Nine Months Ended September 30,

 

2020

 

2020

 

2019

 

2020

 

2019

Income before income taxes

(GAAP)

$

85,912

 

 

$

96,904

 

 

$

100,401

 

 

$

142,394

 

 

$

299,468

 

Plus: Provision for credit losses

29,232

 

 

25,414

 

 

1,839

 

 

180,074

 

 

9,373

 

PPNR (non-GAAP)

$

115,144

 

 

$

122,318

 

 

$

102,240

 

 

$

322,468

 

 

$

308,841

 

ACL to total loans, excluding government insured residential loans, PPP loans and MWL is a non-GAAP financial measure. Management believes this measure is relevant to understanding the adequacy of the ACL coverage, excluding the impact of loans which carry nominal or no reserves. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of ACL to total loans, excluding government insured residential loans, PPP loans and MWL to the comparable GAAP financial measurement of ACL to total loans at September 30, 2020 (dollars in thousands):

Total loans (GAAP)

$

23,779,315

 

Less: Government insured residential loans

1,089,055

 

Less: PPP loans

829,798

 

Less: MWL

1,250,903

 

Total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP)

$

20,609,559

 

 

 

ACL

$

274,128

 

 

ACL to total loans (GAAP)

1.15

%

 

 

ACL to total loans, excluding government insured residential loans, PPP loans and MWL (non-GAAP)

1.33

%

Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions as it is a metric commonly used in the banking industry. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share at the dates indicated (in thousands except share and per share data):

 

September 30, 2020

 

June 30, 2020

 

December 31, 2019

Total stockholders' equity

$

2,864,824

 

 

$

2,755,053

 

 

$

2,980,779

 

Less: goodwill and other intangible assets

77,641

 

 

77,652

 

 

77,674

 

Tangible stockholders' equity

$

2,787,183

 

 

$

2,677,401

 

 

$

2,903,105

 

 

 

 

 

 

 

Common shares issued and outstanding

92,388,641

 

 

92,420,278

 

 

95,128,231

 

 

 

 

 

 

 

Book value per common share

$

31.01

 

 

$

29.81

 

 

$

31.33

 

 

 

 

 

 

 

Tangible book value per common share

$

30.17

 

 

$

28.97

 

 

$

30.52

 

 

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