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BankUnited, Inc. Reports 2020 Results

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BankUnited, Inc. (the "Company") (NYSE: BKU) today announced financial results for the quarter and year ended December 31, 2020.

"Overall, this was an excellent quarter. We saw improvement in the economic outlook leading to a reduction in credit costs and continued to execute on our core strategy of improving the deposit mix, lowering the cost of funds and growing net interest income," said Rajinder Singh, Chairman, President and Chief Executive Officer.

For the quarter ended December 31, 2020, the Company reported net income of $85.7 million, or $0.89 per diluted share, compared to $66.6 million, or $0.70 per diluted share, for the immediately preceding quarter ended September 30, 2020 and $89.5 million, or $0.91 per diluted share, for the quarter ended December 31, 2019. On an annualized basis, earnings for the quarter ended December 31, 2020 generated a return on average stockholders' equity of 11.6% and a return on average assets of 0.96%.

For the year ended December 31, 2020, the Company reported net income of $197.9 million, or $2.06 per diluted share, compared to $313.1 million, or $3.13 per diluted share, for the year ended December 31, 2019. Results for the year ended December 31, 2020 were negatively impacted by the application of the Current Expected Credit Losses ("CECL") accounting methodology, including the impact of COVID-19 on the provision for credit losses.

Financial Highlights

  • Net interest income increased by $5.9 million compared to the immediately preceding quarter ended September 30, 2020 and by $8.1 million compared to the quarter ended December 31, 2019. The net interest margin, calculated on a tax-equivalent basis, was 2.33% for the quarter ended December 31, 2020 compared to 2.32% for the immediately preceding quarter. The net interest margin was 2.41% for the quarter ended December 31, 2019.

  • The average cost of total deposits continued to decline, dropping by 0.14% to 0.43% for the quarter ended December 31, 2020 compared to 0.57% for the quarter ended September 30, 2020. The average cost of total deposits was 1.48% for the quarter ended December 31, 2019. On a spot basis, the average annual percentage yield ("APY") on total deposits declined to 0.36% at December 31, 2020 from 0.49% at September 30, 2020 and 1.42% at December 31, 2019.

  • For the quarter ended December 31, 2020, the Company recorded a net recovery of credit losses of $1.6 million compared to a provision for credit losses of $29.2 million for the immediately preceding quarter ended September 30, 2020. The reduction in the provision for credit losses reflected improvements in forecasted economic conditions, which offset the impact of some further downward risk rating migration and increases in specific reserves. The provision for credit losses was $178.4 million for the year ended December 31, 2020. At December 31, 2020, the allowance for credit losses ("ACL") was $257 million, or 1.08% of the loan portfolio, compared to $274 million, or 1.15% at September 30, 2020. The reduction in the ACL as a percentage of loans was attributable primarily to charge-offs taken during the quarter, coupled with the lower provision for credit losses.

  • Pre-tax, pre-provision net revenue ("PPNR") was $105.3 million for the quarter ended December 31, 2020 compared to $104.1 million for the quarter ended December 31, 2019 and $115.1 million for the immediately preceding quarter ended September 30, 2020. PPNR for the quarter ended December 31, 2020 was impacted by year-end adjustments to certain compensation accruals. For the year ended December 31, 2020, PPNR improved to $427.8 million from $412.9 million for the year ended December 31, 2019.

  • Average non-interest bearing demand deposits grew by $966 million for the quarter ended December 31, 2020 compared to the immediately preceding quarter and by $2.9 billion compared to the quarter ended December 31, 2019. At December 31, 2020, non-interest bearing demand deposits represented 25% of total deposits, compared to 18% of total deposits at December 31, 2019. Total deposits grew by $899 million and $3.1 billion during the quarter and year ended December 31, 2020, respectively, of which $219 million and $2.7 billion respectively was non-interest bearing. Higher cost time deposits continued to runoff, declining by $1.1 billion and $2.5 billion for the quarter and year ended December 31, 2020, respectively.

  • Loans on deferral totaled $207 million or less than 1% of total loans at December 31, 2020. Loans modified under the CARES Act totaled $587 million at December 31, 2020. In the aggregate, this represents $794 million or 3% of the total loan portfolio at December 31, 2020, down from $3.6 billion or 15% of total loans that were granted an initial 90 day deferral as reported at the end of the second quarter. As of December 31, 2020, commercial loans on short-term payment deferral totaled $63 million and commercial loans subject to CARES Act modifications totaled $575 million or 3% of the total commercial portfolio. Residential loans still on deferral were $144 million and those modified under the CARES Act were $12 million, for a total of $156 million or 2% of the residential portfolio at December 31, 2020.

  • Book value per common share and tangible book value per common share at December 31, 2020 increased to $32.05 and $31.22, respectively, from $31.01 and $30.17, respectively at September 30, 2020 and $31.33 and $30.52, respectively at December 31, 2019.

  • On January 20, 2021, the Company’s Board of Directors reinstated the share repurchase program that the Company suspended on March 16, 2020. Authorization to repurchase up to approximately $44.9 million in shares of its outstanding common stock remains under the share repurchase program. Any repurchases under the program will be made in accordance with applicable securities laws from time to time in open market or private transactions. The extent to which the Company repurchases shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of retained earnings, regulatory requirements and other considerations. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time

Loans and Leases

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

December 31, 2020

September 30, 2020

December 31, 2019

Residential and other consumer loans

$

6,348,222

26.6

%

$

5,940,900

25.1

%

$

5,661,119

24.5

%

Multi-family

1,639,201

6.9

%

1,810,126

7.6

%

2,217,705

9.6

%

Non-owner occupied commercial real estate

4,963,273

20.8

%

4,910,835

20.7

%

5,030,904

21.7

%

Construction and land

293,307

1.2

%

263,381

1.1

%

243,925

1.1

%

Owner occupied commercial real estate

2,000,770

8.4

%

2,051,577

8.6

%

2,062,808

8.9

%

Commercial and industrial

4,447,383

18.6

%

4,427,351

18.6

%

4,655,349

20.1

%

PPP

781,811

3.3

%

829,798

3.5

%

%

Pinnacle

1,107,386

4.6

%

1,157,706

4.9

%

1,202,430

5.2

%

Bridge - franchise finance

549,733

2.3

%

606,222

2.4

%

627,482

2.6

%

Bridge - equipment finance

475,548

2.0

%

530,516

2.2

%

684,794

3.0

%

Mortgage warehouse lending ("MWL")

1,259,408

5.3

%

1,250,903

5.3

%

768,472

3.3

%

$

23,866,042

100.0

%

$

23,779,315

100.0

%

$

23,154,988

100.0

%

Operating lease equipment, net

$

663,517

$

676,321

$

698,153

Growth in residential and other consumer loans for the quarter was mainly attributable to GNMA early buyout loans. At December 31, 2020, September 30, 2020 and December 31, 2019, the residential portfolio included $1.4 billion, $1.1 billion and $676 million, respectively, of GNMA early buyout loans. Residential activity for the quarter included purchases of approximately $472 million in GNMA early buyout loans, offset by approximately $142 million in re-poolings and paydowns. Residential and other consumer loans, excluding GNMA early buyout loans, grew by approximately $77 million.

In the aggregate, commercial loans declined by $321 million for the quarter ended December 31, 2020 as the environment remained challenging for production and our approach to new lending remained disciplined. The largest decline was in the multi-family segment which decreased by $171 million for the quarter, driven primarily by $151 million in runoff of the New York portfolio. Loans and operating lease equipment at Bridge declined by a total of $124 million during the quarter.

During the quarter ended December 31, 2020, the Company began processing forgiveness applications with the SBA, resulting in a $48 million decline in PPP loans.

Mortgage warehouse commitments totaled $2.1 billion at December 31, 2020, an increase of 60% compared to $1.3 billion at December 31, 2019. Line utilization was 62% at December 31, 2020 compared to 59% at December 31, 2019.

Asset Quality and the Allowance for Credit Losses

The following table presents information about non-performing loans, loans on deferral and CARES Act modifications at December 31, 2020 (dollars in thousands):

Non-Performing Loans

Currently Under Short-Term Deferral

CARES Act Modification

Residential and other consumer (1)

$

28,828

$

144,189

$

12,050

Commercial:

CRE - Property Type:

Retail

16,566

28,542

18,526

Hotel

35,390

1,055

343,492

Office

9,436

47,949

Multi-family

24,090

15,776

Other

7,379

1,789

Owner occupied commercial real estate

23,152

8,432

6,198

Commercial and industrial

54,584

2,191

117,836

Bridge - franchise finance

45,028

20,797

24,816

Total commercial

215,625

62,806

574,593

Total

$

244,453

$

206,995

$

586,643

(1)

Excludes government insured residential loans.

In the table above, "currently under short-term deferral" refers to loans subject to either a first or second 90-day payment deferral at December 31, 2020 and "CARES Act modification" refers to loans subject to longer-term modifications that, were it not for the provisions of the CARES Act, would likely have been reported as TDRs. Non-performing loans may include some loans that have been modified under the CARES Act.

Non-performing loans totaled $244.5 million or 1.02% of total loans at December 31, 2020, compared to $200.3 million or 0.84% of total loans at September 30, 2020 and $204.8 million or 0.88% of total loans at December 31, 2019. The largest increases in non-performing loans during the quarter ended December 31, 2020 were in the multi-family, franchise finance and residential sub-segments, while non-performing commercial and industrial loans declined. Non-performing loans included $51.3 million, $43.6 million and $45.7 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.22%, 0.18% and 0.20% of total loans at December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

The following table presents criticized and classified commercial loans at the dates indicated (in thousands):

December 31, 2020

September 30, 2020

December 31, 2019

Special mention

$

711,516

$

951,981

$

72,881

Substandard - accruing

1,758,654

1,376,718

180,380

Substandard - non-accruing

203,758

187,247

185,906

Doubtful

11,867

938

Total

$

2,685,795

$

2,516,884

$

439,167

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

ACL

ACL to Total Loans

ACL to Non-Performing Loans

Net Charge-offs to Average Loans

December 31, 2019 (incurred loss)

$

108,671

0.47

%

53.07

%

0.05

%

January 1, 2020 (initial date of CECL adoption)

$

135,976

0.59

%

66.40

%

N/A

September 30, 2020 (expected loss)

$

274,128

1.15

%

136.86

%

0.25

%

December 31, 2020 (expected loss)

$

257,323

1.08

%

(1)

105.26

%

0.26

%

(1)

ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 1.26% at December 31, 2020.

The ACL at December 31, 2020 represents management's estimate of lifetime expected credit losses from the loan portfolio given our assessment of historical data, current conditions and a reasonable and supportable economic forecast as of the balance sheet date. The estimate was informed by Moody's economic scenarios published in December 2020, economic information provided by additional sources, data reflecting the impact of recent events on individual borrowers and other relevant information. The decline in the ACL from September 30, 2020 to December 31, 2020 related primarily to charge-offs taken during the quarter, coupled with the lower provision for credit losses.

For the quarter ended December 31, 2020, the Company recorded a net recovery of credit losses of $1.6 million, which included a provision of $1.2 million related to funded loans offset by a recovery of $2.9 million related to unfunded loan commitments as well as immaterial components related to accrued interest receivable and an AFS debt security. The provision for credit losses reflected improvements in forecasted economic conditions, which largely offset the impact of risk rating migration and increases in certain specific reserves.

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

Three Months Ended December 31,

Years Ended December 31,

2020

2019

2020

2019

Beginning balance

$

274,128

$

108,462

$

108,671

$

109,931

Cumulative effect of adoption of CECL

27,305

Balance after adoption of CECL

274,128

108,462

135,976

109,931

Provision (recovery)

1,244

(469)

182,339

8,904

Charge-offs

(18,848)

(3,556)

(69,602)

(17,541)

Recoveries

799

4,234

8,610

7,377

Ending balance

$

257,323

$

108,671

$

257,323

$

108,671

$13.8 million of the charge-offs recognized during the quarter ended December 31, 2020 related to $57.6 million of non-performing loans that were sold during the quarter, or held for sale at quarter-end.

Net interest income

Net interest income for the quarter ended December 31, 2020 was $193.4 million compared to $187.5 million for the immediately preceding quarter ended September 30, 2020 and $185.3 million for the quarter ended December 31, 2019. While average interest earning assets have increased quarter-over-quarter and year-over-year, average interest bearing liabilities have continued to decline as average non-interest bearing demand deposits have grown.

Interest income decreased by $3.5 million for the quarter ended December 31, 2020 compared to the immediately preceding quarter, and by $58.3 million, compared to the quarter ended December 31, 2019. Interest expense decreased by $9.3 million compared to the immediately preceding quarter and by $66.3 million compared to the quarter ended December 31, 2019. Decreases in interest income resulted from declines in market interest rates including the impact of repayment of assets originated in a higher rate environment, partially offset by increases in average interest earning assets. Declines in interest expense reflected decreases in market interest rates, the impact of our strategy focused on lowering the cost of deposits and improving the deposit mix and declines in average interest bearing liabilities.

The Company’s net interest margin, calculated on a tax-equivalent basis, increased by 0.01% to 2.33% for the quarter ended December 31, 2020, from 2.32% for the immediately preceding quarter ended September 30, 2020. Offsetting factors contributing to the increase in the net interest margin for the quarter ended December 31, 2020 compared to the immediately preceding quarter ended September 30, 2020 included:

  • The average rate paid on interest bearing deposits decreased to 0.58% for the quarter ended December 31, 2020, from 0.75% for the quarter ended September 30, 2020. This decline reflected continued initiatives taken to lower rates paid on deposits in response to declines in general market interest rates and the re-pricing of term deposits. We expect the cost of interest bearing deposits to continue to decline; at December 31, 2020, approximately $1.0 billion or 21% of the time deposit portfolio, with an average rate of 1.61%, has not yet repriced since March 2020 when the Fed last cut rates. The majority of these CDs will mature in the first quarter of 2021.

  • The tax-equivalent yield on investment securities decreased to 1.82% for the quarter ended December 31, 2020 from 2.00% for the quarter ended September 30, 2020. This decrease resulted from the impact of purchases of lower-yielding securities, prepayments of higher yielding mortgage-backed securities and decreases in coupon interest rates on existing floating rate assets.

  • The tax-equivalent yield on loans decreased to 3.55% for the quarter ended December 31, 2020, from 3.61% for the quarter ended September 30, 2020. Factors contributing to this decrease included the impact of runoff of loans originated in a higher rate environment, originations at lower prevailing market rates and interest income reversed on loans placed on non-accrual during the quarter.

  • The average rate paid on FHLB and PPPLF borrowings increased to 2.07% for the quarter ended December 31, 2020, from 1.95% for the quarter ended September 30, 2020, reflecting the maturity of short-term, lower rate FHLB advances and the payoff of all PPPLF borrowings.

  • The increase in average non-interest bearing demand deposits as a percentage of average total deposits also positively impacted the cost of total deposits and the net interest margin.

The Company's net interest margin, calculated on a tax-equivalent basis, was 2.35% for the year ended December 31, 2020, compared to 2.47% for the year ended December 31, 2019. The decline in the yield on interest earning assets outpaced the reduction in cost of interest bearing liabilities for the period. The offsetting factors discussed above with respect to the yields on loans and securities, the average rate paid on deposits and the growth in non-interest bearing demand deposits also impacted the net interest margin for the year ended December 30, 2020 compared to the prior year. Declines in market interest rates had a significant impact on year-over-year changes in yields earned on interest earning assets and rates paid on interest bearing liabilities.

Non-interest expense

Non-interest expense totaled $123.3 million for the quarter ended December 31, 2020 compared to $108.6 million for the immediately preceding quarter ended September 30, 2020 and $119.0 million for the quarter ended December 31, 2019. Non-interest expense totaled $457.2 million and $487.1 million for the year ended December 31, 2020 and 2019, respectively, a decline of approximately 6%.

  • Compensation and benefits increased by $12.5 million for the quarter ended December 31, 2020 compared to the immediately preceding quarter. This increase included an increase of $6.6 million in variable compensation accruals related to stronger than initially anticipated operating results over the second half of the year; a $2.2 million vacation accrual related to rollover vacation days provided to employees in response to COVID-19; and an increase of $2.5 million in the accrual related to liability classified share awards stemming from an increase in the stock price.

  • Cost reductions stemming from our BankUnited 2.0 initiative contributed to the declining trend in occupancy and equipment expense and other non-interest expense.

  • The increasing trend in technology and telecommunications expense is reflective of investments in digital and data analytics capabilities and in the infrastructure to support cloud migration.

  • The increasing trend in deposit insurance expense reflects an increase in the assessment rate.

  • For the quarter and year ended December 31, 2020, non-interest expense included approximately $2.8 million and $4.8 million, respectively, in costs directly related to our response to the COVID-19 pandemic.

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Thursday, January 21, 2021 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.

The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at http://ir.bankunited.com/. The dial in telephone number for the call is (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the conference ID for the call is 9281414. A replay of the call will be available from 12:00 p.m. ET on January 21st through 11:59 p.m. ET on January 28th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The conference ID for the replay is 9281414. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.

About BankUnited, Inc.

BankUnited, Inc., with total assets of $35.0 billion at December 31, 2020, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 70 banking centers in 14 Florida counties and 4 banking centers in the New York metropolitan area at December 31, 2020.

Forward-Looking Statements

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

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

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands, except share and per share data)

December 31,
2020

December 31,
2019

ASSETS

Cash and due from banks:

Non-interest bearing

$

20,233

$

7,704

Interest bearing

377,483

206,969

Cash and cash equivalents

397,716

214,673

Investment securities (including securities recorded at fair value of $9,166,683 and $7,759,237)

9,176,683

7,769,237

Non-marketable equity securities

195,865

253,664

Loans held for sale

24,676

37,926

Loans

23,866,042

23,154,988

Allowance for credit losses

(257,323)

(108,671)

Loans, net

23,608,719

23,046,317

Bank owned life insurance

294,629

282,151

Operating lease equipment, net

663,517

698,153

Goodwill and other intangible assets

77,637

77,674

Other assets

571,051

491,498

Total assets

$

35,010,493

$

32,871,293

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:

Demand deposits:

Non-interest bearing

$

7,008,838

$

4,294,824

Interest bearing

3,020,039

2,130,976

Savings and money market

12,659,740

10,621,544

Time

4,807,199

7,347,247

Total deposits

27,495,816

24,394,591

Federal funds purchased

180,000

100,000

FHLB advances

3,122,999

4,480,501

Notes and other borrowings

722,495

429,338

Other liabilities

506,171

486,084

Total liabilities

32,027,481

29,890,514

Commitments and contingencies

Stockholders' equity:

Common stock, par value $0.01 per share, 400,000,000 shares authorized; 93,067,500 and 95,128,231 shares issued and outstanding

931

951

Paid-in capital

1,017,518

1,083,920

Retained earnings

2,013,715

1,927,735

Accumulated other comprehensive loss

(49,152)

(31,827)

Total stockholders' equity

2,983,012

2,980,779

Total liabilities and stockholders' equity

$

35,010,493

$

32,871,293

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

2020

2020

2019

2020

2019

Interest income:

Loans

$

207,232

$

208,646

$

242,642

$

864,175

$

981,408

Investment securities

42,260

44,604

62,006

193,856

280,560

Other

1,628

1,322

4,762

9,578

19,902

Total interest income

251,120

254,572

309,410

1,067,609

1,281,870

Interest expense:

Deposits

29,290

37,681

88,289

199,980

385,180

Borrowings

28,464

29,412

35,810

115,871

143,905

Total interest expense

57,754

67,093

124,099

315,851

529,085

Net interest income before provision for credit losses

193,366

187,479

185,311

751,758

752,785

Provision for (recovery of) credit losses

(1,643)

29,232

(469)

178,431

8,904

Net interest income after provision for credit losses

195,009

158,247

185,780

573,327

743,881

Non-interest income:

Deposit service charges and fees

4,569

4,040

4,150

16,496

16,539

Gain on sale of loans, net

2,425

2,953

1,899

13,170

12,119

Gain on investment securities, net

7,203

7,181

7,438

17,767

21,174

Lease financing

13,547

13,934

13,857

59,112

66,631

Other non-interest income

7,536

8,184

10,412

26,676

30,741

Total non-interest income

35,280

36,292

37,756

133,221

147,204

Non-interest expense:

Employee compensation and benefits

60,944

48,448

55,744

217,156

235,330

Occupancy and equipment

11,797

12,170

13,697

48,237

56,174

Deposit insurance expense

6,759

5,886

4,142

21,854

16,991

Professional fees

2,937

2,436

2,621

11,708

20,352

Technology and telecommunications

16,052

15,435

13,334

58,108

47,509

Depreciation of operating lease equipment

12,270

12,315

13,610

49,407

48,493

Loss on debt extinguishment

3,796

Other non-interest expense

12,565

11,937

15,860

50,719

58,444

Total non-interest expense

123,324

108,627

119,008

457,189

487,089

Income before income taxes

106,965

85,912

104,528

249,359

403,996

Provision for income taxes

21,228

19,353

15,072

51,506

90,898

Net income

$

85,737

$

66,559

$

89,456

$

197,853

$

313,098

Earnings per common share, basic

$

0.89

$

0.70

$

0.91

$

2.06

$

3.14

Earnings per common share, diluted

$

0.89

$

0.70

$

0.91

$

2.06

$

3.13

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

Three Months Ended
December 31, 2020

Three Months Ended
September 30, 2020

Three Months Ended
December 31, 2019

Average
Balance

Interest
(1)(2)

Yield/
Rate (1)(2)

Average
Balance

Interest
(1)(2)

Yield/
Rate (1)(2)

Average
Balance

Interest
(1)(2)

Yield/
Rate (1)(2)

Assets:

Interest earning assets:

Loans

$

23,706,859

$

210,896

3.55

%

$

23,447,514

$

212,388

3.61

%

$

22,986,427

$

246,458

4.27

%

Investment securities (3)

9,446,389

42,966

1.82

%

9,065,478

45,351

2.00

%

7,929,948

62,948

3.18

%

Other interest earning assets

726,273

1,628

0.89

%

552,515

1,322

...

0.95

%

627,001

4,762

3.01

%

Total interest earning assets

33,879,521

255,490

3.01

%

33,065,507

259,061

3.13

%

31,543,376

314,168

3.97

%

Allowance for credit losses

(280,243)

(272,464)

(110,503)

Non-interest earning assets

1,817,476

1,897,723

1,655,342

Total assets

$

35,416,754

$

34,690,766

$

33,088,215

Liabilities and Stockholders' Equity:

Interest bearing liabilities:

Interest bearing demand deposits

$

2,903,300

$

3,637

0.50

%

$

2,800,421

$

4,127

0.59

%

$

1,947,034

$

6,485

1.32

%

Savings and money market deposits

11,839,631

14,517

0.49

%

10,664,462

15,853

0.59

%

10,416,964

41,705

1.59

%

Time deposits

5,360,630

11,136

0.83

%

6,519,852

17,701

1.08

%

7,016,192

40,099

2.27

%

Total interest bearing deposits

20,103,561

29,290

0.58

%

19,984,735

37,681

0.75

%

19,380,190

88,289

1.81

%

Short term borrowings

20,707

6

0.12

%

53,587

14

0.10

%

115,928

505

1.73

%

FHLB and PPPLF borrowings

3,698,666

19,207

2.07

%

4,117,181

20,146

1.95

%

5,244,495

30,011

2.27

%

Notes and other borrowings

722,581

9,251

5.12

%

722,271

9,252

5.12

%

404,086

5,294

5.24

%

Total interest bearing liabilities

24,545,515

57,754

0.94

%

24,877,774

67,093

1.07

%

25,144,699

124,099

1.96

%

Non-interest bearing demand deposits

7,152,967

6,186,718

4,292,943

Other non-interest bearing liabilities

772,277

803,498

686,027

Total liabilities

32,470,759

31,867,990

30,123,669

Stockholders' equity

2,945,995

2,822,776

2,964,546

Total liabilities and stockholders' equity

$

35,416,754

$

34,690,766

$

33,088,215

Net interest income

$

197,736

$

191,968

$

190,069

Interest rate spread

2.07

%

2.06

%

2.01

%

Net interest margin

2.33

%

2.32

%

2.41

%

(1)

On a tax-equivalent basis where applicable

(2)

Annualized

(3)

At fair value except for securities held to maturity

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

Years Ended December 31,

2020

2019

Average
Balance

Interest (1)

Yield/
Rate (1)

Average
Balance

Interest (1)

Yield/
Rate (1)

Assets:

Interest earning assets:

Loans

$

23,385,832

$

879,082

3.76

%

$

22,553,250

$

998,130

4.43

%

Investment securities (2)

8,739,023

196,954

2.25

%

8,231,858

284,849

3.46

%

Other interest earning assets

672,634

9,578

1.42

%

555,992

19,902

3.58

%

Total interest earning assets

32,797,489

1,085,614

3.31

%

31,341,100

1,302,881

4.16

%

Allowance for credit losses

(236,704)

(112,890)

Non-interest earning assets

1,860,322

1,625,579

Total assets

$

34,421,107

$

32,853,789

Liabilities and Stockholders' Equity:

Interest bearing liabilities:

Interest bearing demand deposits

$

2,582,951

19,445

0.75

%

$

1,824,803

25,054

1.37

%

Savings and money market deposits

10,843,894

85,572

0.79

%

10,922,819

197,942

1.81

%

Time deposits

6,617,939

94,963

1.43

%

6,928,499

162,184

2.34

%

Total interest bearing deposits

20,044,784

199,980

1.00

%

19,676,121

385,180

1.96

%

Short term borrowings

71,858

418

0.58

%

124,888

2,802

2.24

%

FHLB and PPPLF borrowings

4,295,882

85,491

1.99

%

5,089,524

119,901

2.36

%

Notes and other borrowings

592,521

29,962

5.06

%

403,704

21,202

5.25

%

Total interest bearing liabilities

25,005,045

315,851

1.26

%

25,294,237

529,085

2.09

%

Non-interest bearing demand deposits

5,760,309

3,950,612

Other non-interest bearing liabilities

786,337

662,590

Total liabilities

31,551,691

29,907,439

Stockholders' equity

2,869,416

2,946,350

Total liabilities and stockholders' equity

$

34,421,107

$

32,853,789

Net interest income

$

769,763

$

773,796

Interest rate spread

2.05

%

2.07

%

Net interest margin

2.35

%

2.47

%

(1)

On a tax-equivalent basis where applicable

(2)

At fair value except for securities held to maturity

BANKUNITED, INC. AND SUBSIDIARIES

EARNINGS PER COMMON SHARE

(In thousands except share and per share amounts)

Three Months Ended December 31,

Years Ended December 31,

2020

2019

2020

2019

Basic earnings per common share:

Numerator:

Net income

$

85,737

$

89,456

$

197,853

$

313,098

Distributed and undistributed earnings allocated to participating securities

(4,015)

(3,971)

(8,882)

(13,371)

Income allocated to common stockholders for basic earnings per common share

$

81,722

$

85,485

$

188,971

$

299,727

Denominator:

Weighted average common shares outstanding

92,725,905

95,000,894

92,869,736

96,581,290

Less average unvested stock awards

(1,160,984)

(1,065,813)

(1,163,480)

(1,127,275)

Weighted average shares for basic earnings per common share

91,564,921

93,935,081

91,706,256

95,454,015

Basic earnings per common share

$

0.89

$

0.91

$

2.06

$

3.14

Diluted earnings per common share:

Numerator:

Income allocated to common stockholders for basic earnings per common share

$

81,722

$

85,485

$

188,971

$

299,727

Adjustment for earnings reallocated from participating securities

(67)

(41)

(123)

(175)

Income used in calculating diluted earnings per common share

$

81,655

$

85,444

$

188,848

$

299,552

Denominator:

Weighted average shares for basic earnings per common share

91,564,921

93,935,081

91,706,256

95,454,015

Dilutive effect of stock options

20,179

186,967

24,608

202,890

Weighted average shares for diluted earnings per common share

91,585,100

94,122,048

91,730,864

95,656,905

Diluted earnings per common share

$

0.89

$

0.91

$

2.06

$

3.13

BANKUNITED, INC. AND SUBSIDIARIES

SELECTED RATIOS

Three Months Ended December 31,

Years Ended December 31,

2020

2019

2020

2019

Financial ratios (4)

Return on average assets

0.96

%

1.07

%

0.57

%

0.95

%

Return on average stockholders’ equity

11.6

%

12.0

%

6.9

%

10.6

%

Net interest margin (3)

2.33

%

2.41

%

2.35

%

2.47

%

December 31, 2020

December 31, 2019

Asset quality ratios

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

1.02

%

0.88

%

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

0.71

%

0.63

%

Allowance for credit losses to total loans

1.08

%

0.47

%

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

105.26

%

53.07

%

Net charge-offs to average loans

0.26

%

0.05

%

(1)

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

(2)

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

(3)

On a tax-equivalent basis.

(4)

Annualized for the three month period.

(5)

Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $51.3 million or 0.22% of total loans and 0.15% of total assets, at December 31, 2020; and $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.

December 31, 2020

December 31, 2019

Required to be Considered Well Capitalized

BankUnited, Inc.

BankUnited, N.A.

BankUnited, Inc.

BankUnited, N.A.

Capital ratios

Tier 1 leverage

8.6

%

9.5

%

8.9

%

9.3

%

5.0

%

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

12.6

%

13.9

%

12.3

%

12.9

%

6.5

%

Total risk-based capital

14.7

%

14.8

%

12.8

%

13.4

%

10.0

%

On a fully-phased in basis with respect to the adoption of CECL, the Company's and the Bank's CET1 risk-based capital ratios would have been 12.4% and 13.7%, respectively, at December 31, 2020. The increase in the total risk-based capital ratio for BankUnited, Inc. from December 31, 2019 to December 31, 2020 includes the issuance of $300 million in subordinated debt in the second quarter of 2020.

Non-GAAP Financial Measures

PPNR is a non-GAAP financial measure. Management believes this measure is relevant to understanding the performance of the Company attributable to elements other than the provision for credit losses and the ability of the Company to generate earnings sufficient to cover estimated credit losses, particularly in view of the adoption of the CECL accounting methodology, which may impact comparability of operating results to prior periods. This measure also provides a meaningful basis for comparison to other financial institutions and is a measure frequently cited by investors. The following table reconciles the non-GAAP financial measurement of PPNR to the comparable GAAP financial measurement of income before income taxes for the three months and year ended December 31, 2020 and 2019 and the three months ended September 30, 2020 (in thousands):

Three Months Ended
December 31,

Three Months Ended
September 30,

Three Months Ended
December 31,

Years Ended
December 31,

2020

2020

2019

2020

2019

Income before income taxes (GAAP)

$

106,965

$

85,912

$

104,528

$

249,359

$

403,996

Plus: Provision for (recovery of) credit losses

(1,643)

29,232

(469)

178,431

8,904

PPNR (non-GAAP)

$

105,322

$

115,144

$

104,059

$

427,790

$

412,900

ACL to total loans, excluding government insured residential loans, PPP loans and MWL is a non-GAAP financial measure. Management believes this measure is relevant to understanding the adequacy of the ACL coverage, excluding the impact of loans which carry nominal or no reserves. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of ACL to total loans, excluding government insured residential loans, PPP loans and MWL to the comparable GAAP financial measurement of ACL to total loans at December 31, 2020 (dollars in thousands):

Total loans (GAAP)

$

23,866,042

Less: Government insured residential loans

1,419,074

Less: PPP loans

781,811

Less: MWL

1,259,408

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

$

20,405,749

ACL

$

257,323

ACL to total loans (GAAP)

1.08

%

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

1.26

%

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

December 31, 2020

September 30, 2020

December 31, 2019

Total stockholders’ equity

$

2,983,012

$

2,864,824

$

2,980,779

Less: goodwill and other intangible assets

77,637

77,641

77,674

Tangible stockholders’ equity

$

2,905,375

$

2,787,183

$

2,903,105

Common shares issued and outstanding

93,067,500

92,388,641

95,128,231

Book value per common share

$

32.05

$

31.01

$

31.33

Tangible book value per common share

$

31.22

$

30.17

$

30.52

View source version on businesswire.com: https://www.businesswire.com/news/home/20210121005156/en/

Contacts

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