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BankUnited, Inc. Reports Third Quarter 2019 Results

MIAMI LAKES, Fla.--(BUSINESS WIRE)--

BankUnited, Inc. (the “Company”) (BKU) today announced financial results for the quarter ended September 30, 2019.

For the quarter ended September 30, 2019, the Company reported net income of $76.2 million, or $0.77 per diluted share, compared to $97.3 million, or $0.90 per diluted share, for the quarter ended September 30, 2018. Non-loss share diluted earnings per share, as previously reported, for the quarter ended September 30, 2018 was $0.64.

For the nine months ended September 30, 2019, the Company reported net income of $223.6 million, or $2.23 per diluted share, compared to $272.5 million, or $2.49 per diluted share, for the nine months ended September 30, 2018.

The annualized return on average stockholders’ equity for the nine months ended September 30, 2019 was 10.2%, while the annualized return on average assets was 0.91%.

Rajinder Singh, Chairman, President and Chief Executive Officer, said, "This was another solid quarter of earnings growth, delivering a 20% increase over Non-loss share EPS for the third quarter of the prior year. BankUnited 2.0 implementation continues on track to deliver the target $60 million in pre-tax benefit."

Quarterly Highlights

  • Loans and leases, including equipment under operating lease, grew by $253 million during the quarter ended September 30, 2019. For the nine months ended September 30, 2019, loans and leases grew by $873 million, net of the sale of $168 million in loans from the Pinnacle portfolio during the quarter ended September 30, 2019.
  • The cost of total deposits declined by 0.03% compared to the immediately preceding quarter ended June 30, 2019, to 1.67%.
  • Non-interest bearing demand deposits grew by $506 million for the nine months ended September 30, 2019, to 17.2% of total deposits at September 30, 2019 compared to 15.4% of total deposits at December 31, 2018. Non-interest bearing demand deposits grew by $27 million during the quarter ended September 30, 2019. Total deposits grew by $34 million and $482 million for the quarter and nine months ended September 30, 2019, respectively.
  • Net interest income decreased by $66.3 million to $185.7 million for the quarter ended September 30, 2019 from $252.0 million for the quarter ended September 30, 2018. The net interest margin, calculated on a tax-equivalent basis, was 2.41% for the quarter ended September 30, 2019 compared to 2.52% for the immediately preceding quarter ended June 30, 2019 and 3.51% for the quarter ended September 30, 2018. The most significant reason for the declines in net interest income and the net interest margin for the quarter ended September 30, 2019 compared to the quarter ended September 30, 2018 was the decrease in accretion on formerly covered residential loans.
  • During the quarter ended September 30, 2019, the Company repurchased approximately 0.2 million shares of its common stock for an aggregate purchase price of approximately $8 million. During the nine months ended September 30, 2019, the Company repurchased approximately 4.4 million shares of its common stock for an aggregate purchase price of $150 million, at a weighted average price of $34.39 per share.
  • As previously reported, on September 12, 2019 the Board of Directors of the Company authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock.
  • Six months into the implementation phase, BankUnited 2.0 continues on track to achieve our previously disclosed targets of incremental annual pre-tax impact of $40 million in cost savings and $20 million in revenue lift by mid-2021. Non-interest expense for the quarter and nine months ended September 30, 2019 included costs directly related to BankUnited 2.0 implementation of $2.0 million and $14.5 million, respectively.
  • Book value per common share grew to $30.60 at September 30, 2019 from $29.49 at December 31, 2018 while tangible book value per common share increased to $29.78 from $28.71 over the same period.

     

Loans and Leases

Loans, including premiums, discounts and deferred fees and costs, totaled $22.9 billion at September 30, 2019 compared to $22.0 billion at December 31, 2018.

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

 

September 30, 2019

 

June 30, 2019

 

December 31, 2018

Residential and other consumer loans

$

5,571,104

 

 

24.4

%

 

$

5,267,788

 

 

23.3

%

 

$

4,948,989

 

 

22.5

%

Multi-family

2,221,525

 

 

9.7

%

 

2,383,116

 

 

10.5

%

 

2,585,421

 

 

11.8

%

Non-owner occupied commercial real estate

4,789,673

 

 

21.0

%

 

4,862,256

 

 

21.5

%

 

4,611,573

 

 

21.0

%

Construction and land

173,345

 

 

0.8

%

 

220,536

 

 

1.0

%

 

210,516

 

 

1.0

%

Owner occupied commercial real estate

1,936,516

 

 

8.5

%

 

1,966,004

 

 

8.7

%

 

2,007,603

 

 

9.1

%

Commercial and industrial

4,477,062

 

 

19.6

%

 

4,531,948

 

 

20.1

%

 

4,312,213

 

 

19.6

%

National commercial lending platforms

 

 

 

 

 

 

 

 

 

 

 

Pinnacle

1,236,121

 

 

5.3

%

 

1,269,468

 

 

5.7

%

 

1,462,655

 

 

6.6

%

Bridge - franchise finance

605,896

 

 

2.6

%

 

593,005

 

 

2.6

%

 

517,305

 

 

2.4

%

Bridge - equipment finance

682,149

 

 

3.0

%

 

677,061

 

 

3.0

%

 

636,838

 

 

2.9

%

Small Business Finance

256,490

 

 

1.1

%

 

256,274

 

 

1.1

%

 

252,221

 

 

1.1

%

Mortgage warehouse lending

905,619

 

 

4.0

%

 

564,393

 

 

2.5

%

 

431,674

 

 

2.0

%

 

$

22,855,500

 

 

100.0

%

 

$

22,591,849

 

 

100.0

%

 

$

21,977,008

 

 

100.0

%

Operating lease equipment, net

$

696,899

 

 

 

 

$

707,680

 

 

 

 

$

702,354

 

 

 

Loan and lease growth for the quarter ended September 30, 2019 was primarily driven by a $341 million increase in mortgage warehouse outstandings and growth in the residential portfolio of $308 million, of which $182 million was related to our government insured residential loan buyout program. This growth was partially offset by declines in most other portfolio segments, generally driven by payoff activity.

Asset Quality and Allowance for Loan and Lease Losses

For the quarters ended September 30, 2019 and 2018, the Company recorded provisions for loan losses of $1.8 million and $1.2 million, respectively. For the nine months ended September 30, 2019 and 2018, the Company recorded provisions for loan losses of $9.4 million and $13.3 million, respectively. The provision for the quarter and nine months ended September 30, 2018 included a net recovery of $1.8 million and a provision of $12.2 million, respectively, related to taxi medallion loans.

Excluding the net recovery related to taxi medallion loans, the provision for loan losses decreased by $1.3 million for the quarter ended September 30, 2019, as compared to the quarter ended September 30, 2018. Significant factors contributing to this decrease in the provision for loan losses included (i) a decrease in the provision related to specific reserves; offset by (ii) an increase in the provision related to criticized and classified assets not individually evaluated for impairment.

Factors contributing to the decrease in the provision for loan losses for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018 included (i) the reduction in the provision related to taxi medallion loans; (ii) a net decrease in the non-taxi provision related to specific reserves and criticized and classified loans not individually evaluated for impairment; offset by (iii) increases related to the relative impact on the provision of changes in certain quantitative and qualitative loss factors.

Non-performing loans totaled $137.6 million or 0.60% of total loans at September 30, 2019, compared to $129.9 million or 0.59% of total loans at December 31, 2018. Non-performing loans included $33.1 million and $17.8 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.14% and 0.08% of total loans at September 30, 2019 and December 31, 2018, respectively.

The ratios of the allowance for loan and lease losses to total loans and to non-performing loans were 0.47% and 78.80%, respectively, at September 30, 2019, compared to 0.50% and 84.63%, at December 31, 2018. The annualized ratio of net charge-offs to average loans was 0.06% for the nine months ended September 30, 2019, compared to 0.28% for the year ended December 31, 2018, of which 0.18% related to taxi medallion loans.

The following table summarizes the activity in the allowance for loan and lease losses for the periods indicated (in thousands):

 

Three Months Ended September 30,

 

2019

 

2018

 

Residential

and Other

Consumer

 

Commercial

 

Total

 

Residential

and Other

Consumer

 

Commercial

 

Total

Beginning balance

$

11,236

 

 

$

100,905

 

 

$

112,141

 

 

$

10,338

 

 

$

124,633

 

 

$

134,971

 

Provision

158

 

 

1,681

 

 

1,839

 

 

240

 

 

960

 

 

1,200

 

Charge-offs

 

 

(6,141

)

 

(6,141

)

 

(740

)

 

(12,340

)

 

(13,080

)

Recoveries

5

 

 

618

 

 

623

 

 

465

 

 

1,184

 

 

1,649

 

Ending balance

$

11,399

 

 

$

97,063

 

 

$

108,462

 

 

$

10,303

 

 

$

114,437

 

 

$

124,740

 

 

Nine Months Ended September 30,

 

2019

 

2018

 

Residential

and Other

Consumer

 

Commercial

 

Total

 

Residential

and Other

Consumer

 

Commercial

 

Total

Beginning balance

$

10,788

 

 

$

99,143

 

 

$

109,931

 

 

$

10,720

 

 

$

134,075

 

 

$

144,795

 

Provision

439

 

 

8,934

 

 

9,373

 

 

334

 

 

13,008

 

 

13,342

 

Charge-offs

 

 

(13,985

)

 

(13,985

)

 

(1,244

)

 

(34,736

)

 

(35,980

)

Recoveries

172

 

 

2,971

 

 

3,143

 

 

493

 

 

2,090

 

 

2,583

 

Ending balance

$

11,399

 

 

$

97,063

 

 

$

108,462

 

 

$

10,303

 

 

$

114,437

 

 

$

124,740

 

Charge-offs related to taxi medallion loans totaled $13.4 million for the nine months ended September 30, 2018.

Deposits

At September 30, 2019, deposits totaled $24.0 billion compared to $23.5 billion at December 31, 2018. The average cost of total deposits was 1.67% for the quarter ended September 30, 2019, compared to 1.70% for the immediately preceding quarter ended June 30, 2019, and 1.35% for the quarter ended September 30, 2018.

Net interest income

Net interest income for the quarter ended September 30, 2019 decreased to $185.7 million from $252.0 million for the quarter ended September 30, 2018. Net interest income was $567.5 million for the nine months ended September 30, 2019, compared to $755.0 million for the nine months ended September 30, 2018. Interest income decreased by $34.3 million and $61.9 million for the quarter and nine month periods, respectively, primarily due to a decrease in both the yield on and average balance of formerly covered residential loans. Interest income on formerly covered residential loans declined by $65.6 million to $15.7 million for the quarter ended September 30, 2019 from $81.3 million for the quarter ended September 30, 2018. Interest income on formerly covered residential loans declined by $198.3 million to $48.5 million for the nine months ended September 30, 2019 from $246.8 million for the nine months ended September 30, 2018. Interest expense increased by $32.0 million and $125.7 million for the quarter and nine month periods, respectively, due to increases in both average interest bearing liabilities and the cost of funds.

The Company’s net interest margin, calculated on a tax-equivalent basis, decreased to 2.41% for the quarter ended September 30, 2019, from 2.52% for the immediately preceding quarter ended June 30, 2019 and 3.51% for the quarter ended September 30, 2018. The Company's net interest margin, calculated on a tax-equivalent basis, was 2.49% for the nine months ended September 30, 2019, compared to 3.56% for the nine months ended September 30, 2018.

The most significant factor impacting the decreases in net interest margin for the quarter and nine months ended September 30, 2019 compared to the quarter and nine months ended September 30, 2018 was the decrease in accretion on formerly covered residential loans. Both the average balance of and yield on these loans declined. The decline in the average balance resulted from the sale of a substantial portion of the loans during 2018. The yield on the remaining loans declined to 35.49% and 34.15%, respectively, for the quarter and nine months ended September 30, 2019 from 79.67% and 71.46%, respectively, for the quarter and nine months ended September 30, 2018, due primarily to changes in assumptions about the remaining period over which accretable yield would be realized, attributable to management's decision to retain certain loans beyond expiration of the Single Family Shared-Loss Agreement.

Other offsetting factors contributing to these declines in the net interest margin included:

  • The tax-equivalent yield on loans other than formerly covered residential loans increased to 4.18% and 4.23%, respectively, for the quarter and nine months ended September 30, 2019, from 4.05% and 3.94%, respectively, for the quarter and nine months ended September 30, 2018. The most significant factor contributing to these increases was the impact of increases in benchmark interest rates during 2018.
  • The tax-equivalent yield on investment securities increased to 3.55% for the nine months ended September 30, 2019 from 3.26% for the nine months ended September 30, 2018.
  • The average rate on interest bearing liabilities increased to 2.14% for both the quarter and nine months ended September 30, 2019, from 1.74% and 1.57%, respectively, for the quarter and nine months ended September 30, 2018, reflecting higher average rates on both interest bearing deposits and FHLB advances. Increases in the cost of interest bearing liabilities primarily reflected the impact of increases in market interest rates.
  • Average non-interest bearing demand deposits increased as a percentage of total deposits for the quarter and nine months ended September 30, 2019 compared to the quarter and nine months ended September 30, 2018.

     

Non-interest income

Non-interest income totaled $37.9 million and $109.4 million, respectively, for the quarter and nine months ended September 30, 2019 compared to $38.7 million and $98.7 million, respectively, for the quarter and nine months ended September 30, 2018. Excluding the impact of transactions in the formerly covered assets, including Income from resolution of covered assets, Net gain (loss) on FDIC indemnification and Gain on sale of covered loans, non-interest income totaled $27.5 million and $85.2 million for the quarter and nine months ended September 30, 2018.

Factors contributing to the increases in non-interest income, excluding the impact of transactions in the formerly covered assets for 2018, for the quarter and nine months ended September 30, 2019 compared to the corresponding periods in the prior year included:

  • Increases of $3.4 million and $10.8 million, respectively, in gain on investment securities; gains on investment securities related to sales of securities in the course of managing the Company's liquidity position, portfolio duration and mix, and to increases in the fair values of certain marketable equity securities.
  • Lease financing income increased by $4.5 million and $7.1 million, respectively.
  • Deposit service charges and fees increased by $0.5 million and $1.6 million, respectively, beginning to reflect the implementation of some of our BankUnited 2.0 initiatives.

Gain on sale of loans, net included gains from the sale of Pinnacle loans totaling $2.4 million for both the quarter and nine months ended September 30, 2019.

Non-interest expense

Non-interest expense totaled $121.3 million and $368.1 million, respectively, for the quarter and nine months ended September 30, 2019 compared to $170.8 million and $493.9 million, respectively, for the quarter and nine months ended September 30, 2018. The most significant component of these decreases in non-interest expense was the decrease in amortization of the FDIC indemnification asset. The FDIC indemnification asset was amortized to zero during the fourth quarter of 2018 in light of the expected termination of the Single Family Shared-Loss Agreement.

Employee compensation and benefits declined by $8.5 million and $18.6 million for the quarter and nine months ended September 30, 2019 relative to the comparable periods of the prior year, primarily due to a reduction in headcount. Professional fees decreased by $2.3 million during the quarter ended September 30, 2019, primarily due to fees incurred related to the implementation of CECL and certain technology projects during the third quarter of 2018. Professional fees increased by $7.0 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. This increase was primarily attributable to consulting services related to our BankUnited 2.0 initiative. Increased technology and telecommunications expense related primarily to investments we are making in cloud technology, our digital platforms, data initiatives and enhancement of some of our risk management capabilities.

Non-interest expense for both the quarter and nine months ended September 30, 2019 included a loss of $3.8 million related to the extinguishment of certain higher cost FHLB advances. Other non-interest expense for both the quarter and nine months ended September 30, 2019 included a loss on the sale of OREO of $2.4 million.

Costs incurred directly related to the implementation of our BankUnited 2.0 initiative during the three and nine months ended September 30, 2019 included professional fees of $0.4 million and $10.7 million, respectively; branch closure expenses of $1.0 million and $2.3 million, respectively; and severance costs of $0.6 million and $1.5 million, respectively.

Provision for income taxes

The effective income tax rate was 24.1% and 25.3% for the quarter and nine months ended September 30, 2019. The effective income tax rate differed from the statutory federal income tax rate of 21% for the quarter and nine months ended September 30, 2019 due primarily to the impact of state income taxes, partially offset by the benefit of income not subject to federal tax.

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, October 23, 2019 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.

The earnings release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. The call may be accessed via a live Internet webcast at www.bankunited.com or through a dial in telephone number at (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the confirmation number for the call is 2673066. A replay of the call will be available from 12:00 p.m. ET on October 23rd through 11:59 p.m. ET on October 30th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The pass code for the replay is 2673066. 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 $33.0 billion at September 30, 2019, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 77 banking centers in 14 Florida counties and 5 banking centers in the New York metropolitan area at September 30, 2019.

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” 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. 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, 2018 which is 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,
2019

 

December 31,
2018

ASSETS

 

 

 

Cash and due from banks:

 

 

 

Non-interest bearing

$

15,401

 

 

$

9,392

 

Interest bearing

214,827

 

 

372,681

 

Cash and cash equivalents

230,228

 

 

382,073

 

Investment securities (including securities recorded at fair value of $7,960,656 and $8,156,878)

7,970,656

 

 

8,166,878

 

Non-marketable equity securities

272,789

 

 

267,052

 

Loans held for sale

46,332

 

 

36,992

 

Loans (including covered loans of $201,376 at December 31, 2018)

22,855,500

 

 

21,977,008

 

Allowance for loan and lease losses

(108,462

)

 

(109,931

)

Loans, net

22,747,038

 

 

21,867,077

 

Bank owned life insurance

280,839

 

 

263,340

 

Operating lease equipment, net

696,899

 

 

702,354

 

Goodwill and other intangible assets

77,685

 

 

77,718

 

Other assets

628,069

 

 

400,842

 

Total assets

$

32,950,535

 

 

$

32,164,326

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Liabilities:

 

 

 

Demand deposits:

 

 

 

Non-interest bearing

$

4,126,788

 

 

$

3,621,254

 

Interest bearing

1,847,301

 

 

1,771,465

 

Savings and money market

10,935,779

 

 

11,261,746

 

Time

7,046,560

 

 

6,819,758

 

Total deposits

23,956,428

 

 

23,474,223

 

Federal funds purchased

175,000

 

 

175,000

 

Federal Home Loan Bank advances

4,930,638

 

 

4,796,000

 

Notes and other borrowings

403,832

 

 

402,749

 

Other liabilities

575,362

 

 

392,521

 

Total liabilities

30,041,260

 

 

29,240,493

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value $0.01 per share, 400,000,000 shares authorized; 95,070,399 and

99,141,374 shares issued and outstanding

951

 

 

991

 

Paid-in capital

1,077,946

 

 

1,220,147

 

Retained earnings

1,859,055

 

 

1,697,822

 

Accumulated other comprehensive income (loss)

(28,677

)

 

4,873

 

Total stockholders' equity

2,909,275

 

 

2,923,833

 

Total liabilities and stockholders' equity

$

32,950,535

 

 

$

32,164,326

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Interest income:

 

 

 

 

 

 

 

Loans

$

248,770

 

 

$

293,543

 

 

$

738,766

 

 

$

855,807

 

Investment securities

69,413

 

 

59,319

 

 

218,554

 

 

165,396

 

Other

5,219

 

 

4,855

 

 

15,140

 

 

13,145

 

Total interest income

323,402

 

 

357,717

 

 

972,460

 

 

1,034,348

 

Interest expense:

 

 

 

 

 

 

 

Deposits

99,483

 

 

75,257

 

 

296,891

 

 

196,916

 

Borrowings

38,229

 

 

30,492

 

 

108,095

 

 

82,392

 

Total interest expense

137,712

 

 

105,749

 

 

404,986

 

 

279,308

 

Net interest income before provision for loan losses

185,690

 

 

251,968

 

 

567,474

 

 

755,040

 

Provision for (recovery of) loan losses (including ($50) and $517

for covered loans for the three and nine months ended September

30, 2018)

1,839

 

 

1,200

 

 

9,373

 

 

13,342

 

Net interest income after provision for loan losses

183,851

 

 

250,768

 

 

558,101

 

 

741,698

 

Non-interest income:

 

 

 

 

 

 

 

Income from resolution of covered assets, net

 

 

3,134

 

 

 

 

10,689

 

Net gain (loss) on FDIC indemnification

 

 

3,090

 

 

 

 

(1,925

)

Deposit service charges and fees

4,269

 

 

3,723

 

 

12,389

 

 

10,811

 

Gain on sale of loans, net (including $5,037 and $4,739 related to

covered loans for the three and nine months ended September

30, 2018)

5,163

 

 

8,691

 

 

10,220

 

 

12,960

 

Gain on investment securities, net

3,835

 

 

432

 

 

13,736

 

 

2,938

 

Lease financing

18,583

 

 

14,091

 

 

52,774

 

 

45,685

 

Other non-interest income

6,006

 

 

5,574

 

 

20,329

 

 

17,536

 

Total non-interest income

37,856

 

 

38,735

 

 

109,448

 

 

98,694

 

Non-interest expense:

 

 

 

 

 

 

 

Employee compensation and benefits

57,102

 

 

65,612

 

 

179,586

 

 

198,185

 

Occupancy and equipment

14,673

 

 

13,812

 

 

42,477

 

 

42,355

 

Amortization of FDIC indemnification asset

 

 

48,255

 

 

 

 

132,852

 

Deposit insurance expense

3,781

 

 

5,375

 

 

12,849

 

 

14,810

 

Professional fees

2,923

 

 

5,240

 

 

17,731

 

 

10,772

 

Technology and telecommunications

10,994

 

 

9,262

 

 

34,175

 

 

26,121

 

Depreciation of equipment under operating lease

11,582

 

 

9,870

 

 

34,883

 

 

28,662

 

Loss on debt extinguishment

3,796

 

 

 

 

3,796

 

 

 

Other non-interest expense

16,455

 

 

13,372

 

 

42,584

 

 

40,105

 

Total non-interest expense

121,306

 

 

170,798

 

 

368,081

 

 

493,862

 

Income before income taxes

100,401

 

 

118,705

 

 

299,468

 

 

346,530

 

Provision for income taxes

24,182

 

 

21,377

 

 

75,826

 

 

74,067

 

Net income

$

76,219

 

 

$

97,328

 

 

$

223,642

 

 

$

272,463

 

Earnings per common share, basic

$

0.78

 

 

$

0.90

 

 

$

2.23

 

 

$

2.50

 

Earnings per common share, diluted

$

0.77

 

 

$

0.90

 

 

$

2.23

 

 

$

2.49

 

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

 

 

 

Three Months Ended September 30,

 

 

2019

 

2018

 

 

Average
Balance

 

Interest (1)(2)

 

Yield/
Rate (1)(2)

 

Average
Balance

 

Interest (1)(2)

 

Yield/
Rate (1)(2)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Non-covered loans

 

$

22,733,875

 

 

$

252,896

 

 

4.43

%

 

$

21,311,706

 

 

$

216,746

 

 

4.05

%

Covered loans

 

 

 

 

 

%

 

408,182

 

 

81,302

 

 

79.67

%

Total loans

 

22,733,875

 

 

252,896

 

 

4.43

%

 

21,719,888

 

 

298,048

 

 

5.47

%

Investment securities (3)

 

8,295,205

 

 

70,427

 

 

3.40

%

 

7,118,626

 

 

60,677

 

 

3.41

%

Other interest earning assets

 

573,630

 

 

5,219

 

 

3.61

%

 

507,318

 

 

4,855

 

 

3.80

%

Total interest earning assets

 

31,602,710

 

 

328,542

 

 

4.14

%

 

29,345,832

 

 

363,580

 

 

4.94

%

Allowance for loan and lease losses

 

(112,784

)

 

 

 

 

 

(137,784

)

 

 

 

 

Non-interest earning assets

 

1,652,901

 

 

 

 

 

 

1,859,619

 

 

 

 

 

Total assets

 

$

33,142,827

 

 

 

 

 

 

$

31,067,667

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

 

$

1,872,573

 

 

6,705

 

 

1.42

%

 

$

1,592,908

 

 

4,550

 

 

1.13

%

Savings and money market deposits

 

10,907,317

 

 

51,229

 

 

1.86

%

 

10,483,248

 

 

38,520

 

 

1.46

%

Time deposits

 

6,845,643

 

 

41,549

 

 

2.41

%

 

6,728,915

 

 

32,187

 

 

1.90

%

Total interest bearing deposits

 

19,625,533

 

 

99,483

 

 

2.01

%

 

18,805,071

 

 

75,257

 

 

1.59

%

Short term borrowings

 

115,209

 

 

670

 

 

2.31

%

 

89,218

 

 

445

 

 

2.00

%

FHLB advances

 

5,414,963

 

 

32,252

 

 

2.36

%

 

4,772,902

 

 

24,743

 

 

2.06

%

Notes and other borrowings

 

403,788

 

 

5,307

 

 

5.26

%

 

402,782

 

 

5,304

 

 

5.27

%

Total interest bearing liabilities

 

25,559,493

 

 

137,712

 

 

2.14

%

 

24,069,973

 

 

105,749

 

 

1.74

%

Non-interest bearing demand deposits

 

3,963,955

 

 

 

 

 

 

3,369,393

 

 

 

 

 

Other non-interest bearing liabilities

 

704,995

 

 

 

 

 

 

520,118

 

 

 

 

 

Total liabilities

 

30,228,443

 

 

 

 

 

 

27,959,484

 

 

 

 

 

Stockholders' equity

 

2,914,384

 

 

 

 

 

 

3,108,183

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

33,142,827

 

 

 

 

 

 

$

31,067,667

 

 

 

 

 

Net interest income

 

 

 

$

190,830

 

 

 

 

 

 

$

257,831

 

 

 

Interest rate spread

 

 

 

 

 

2.00

%

 

 

 

 

 

3.20

%

Net interest margin

 

 

 

 

 

2.41

%

 

 

 

 

 

3.51

%

(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,

 

 

2019

 

2018

 

 

Average
Balance

 

Interest (1)(2)

 

Yield/
Rate (1)(2)

 

Average
Balance

 

Interest (1)(2)

 

Yield/
Rate (1)(2)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Non-covered loans

 

$

22,407,271

 

 

$

751,672

 

 

4.48

%

 

$

21,073,130

 

 

$

622,039

 

 

3.94

%

Covered loans

 

 

 

 

 

%

 

460,485

 

 

246,811

 

 

71.46

%

Total loans

 

22,407,271

 

 

751,672

 

 

4.48

%

 

21,533,615

 

 

868,850

 

 

5.39

%

Investment securities (3)

 

8,333,600

 

 

221,901

 

 

3.55

%

 

6,932,504

 

 

169,645

 

 

3.26

%

Other interest earning assets

 

532,062

 

 

15,140

 

 

3.80

%

 

503,378

 

 

13,145

 

 

3.49

%

Total interest earning assets

 

31,272,933

 

 

988,713

 

 

4.22

%

 

28,969,497

 

 

1,051,640

 

 

4.85

%

Allowance for loan and lease losses

 

(113,694

)

 

 

 

 

 

(141,047

)

 

 

 

 

Non-interest earning assets

 

1,615,548

 

 

 

 

 

 

1,905,278

 

 

 

 

 

Total assets

 

$

32,774,787

 

 

 

 

 

 

$

30,733,728

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

 

$

1,783,611

 

 

18,569

 

 

1.39

%

 

$

1,604,666

 

 

12,902

 

 

1.07

%

Savings and money market deposits

 

11,093,290

 

 

156,236

 

 

1.88

%

 

10,610,889

 

 

100,891

 

 

1.27

%

Time deposits

 

6,898,947

 

 

122,086

 

 

2.37

%

 

6,507,726

 

 

83,123

 

 

1.71

%

Total interest bearing deposits

 

19,775,848

 

 

296,891

 

 

2.01

%

 

18,723,281

 

 

196,916

 

 

1.41

%

Short term borrowings

 

127,908

 

 

2,297

 

 

2.39

%

 

30,066

 

 

445

 

 

1.97

%

FHLB advances

 

5,037,299

 

 

89,890

 

 

2.39

%

 

4,665,799

 

 

66,028

 

 

1.89

%

Notes and other borrowings

 

403,574

 

 

15,908

 

 

5.26

%

 

402,809

 

 

15,919

 

 

5.27

%

Total interest bearing liabilities

 

25,344,629

 

 

404,986

 

 

2.14

%

 

23,821,955

 

 

279,308

 

 

1.57

%

Non-interest bearing demand deposits

 

3,835,248

 

 

 

 

 

 

3,327,521

 

 

 

 

 

Other non-interest bearing liabilities

 

654,692

 

 

 

 

 

 

498,368

 

 

 

 

 

Total liabilities

 

29,834,569

 

 

 

 

 

 

27,647,844

 

 

 

 

 

Stockholders' equity

 

2,940,218

 

 

 

 

 

 

3,085,884

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

32,774,787

 

 

 

 

 

 

$

30,733,728

 

 

 

 

 

Net interest income

 

 

 

$

583,727

 

 

 

 

 

 

$

772,332

 

 

 

Interest rate spread

 

 

 

 

 

2.08

%

 

 

 

 

 

3.28

%

Net interest margin

 

 

 

 

 

2.49

%

 

 

 

 

 

3.56

%

(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,

2019

 

2018

 

2019

 

2018

Basic earnings per common share:

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Net income

$

76,219

 

 

$

97,328

 

 

$

223,642

 

 

$

272,463

 

Distributed and undistributed earnings allocated to

participating securities

(3,174

)

 

(3,771

)

 

(9,247

)

 

(10,444

)

Income allocated to common stockholders for basic

earnings per common share

$

73,045

 

 

$

93,557

 

 

$

214,395

 

 

$

262,019

 

Denominator:

 

 

 

 

 

 

 

Weighted average common shares outstanding

95,075,395

 

 

105,063,770

 

 

97,113,878

 

 

105,914,807

 

Less average unvested stock awards

(1,098,509

)

 

(1,178,982

)

 

(1,147,988

)

 

(1,170,209

)

Weighted average shares for basic earnings per common

share

93,976,886

 

 

103,884,788

 

 

95,965,890

 

 

104,744,598

 

Basic earnings per common share

$

0.78

 

 

$

0.90

 

 

$

2.23

 

 

$

2.50

 

Diluted earnings per common share:

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Income allocated to common stockholders for basic earnings

per common share

$

73,045

 

 

$

93,557

 

 

$

214,395

 

 

$

262,019

 

Adjustment for earnings reallocated from participating

securities

7

 

 

13

 

 

20

 

 

37

 

Income used in calculating diluted earnings per common

share

$

73,052

 

 

$

93,570

 

 

$

214,415

 

 

$

262,056

 

Denominator:

 

 

 

 

 

 

 

Weighted average shares for basic earnings per common

share

93,976,886

 

 

103,884,788

 

 

95,965,890

 

 

104,744,598

 

Dilutive effect of stock options and certain share-based

awards

285,934

 

 

499,431

 

 

303,524

 

 

512,801

 

Weighted average shares for diluted earnings per common

share

94,262,820

 

 

104,384,219

 

 

96,269,414

 

 

105,257,399

 

Diluted earnings per common share

$

0.77

 

 

$

0.90

 

 

$

2.23

 

 

$

2.49

 

BANKUNITED, INC. AND SUBSIDIARIES

SELECTED RATIOS

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Financial ratios (5)

 

 

 

 

 

 

 

Return on average assets

0.91

%

 

1.24

%

 

0.91

%

 

1.19

%

Return on average stockholders’ equity

10.4

%

 

12.4

%

 

10.2

%

 

11.8

%

Net interest margin (4)

2.41

%

 

3.51

%

 

2.49

%

 

3.56

%

 

September 30, 2019

 

December 31, 2018

Asset quality ratios

 

 

 

Non-performing loans to total loans (1) (3) (6)

0.60

%

 

0.59

%

Non-performing assets to total assets (2) (6)

0.43

%

 

0.43

%

Allowance for loan and lease losses to total loans (3)

0.47

%

 

0.50

%

Allowance for loan and lease losses to non-performing loans (1) (6)

78.80

%

 

84.63

%

Net charge-offs to average loans (5)

0.06

%

 

0.28

%

 

September 30, 2019

 

BankUnited, Inc.

 

BankUnited, N.A.

Capital ratios

 

 

 

Tier 1 leverage

8.7

%

 

9.1

%

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

12.2

%

 

12.9

%

Total risk-based capital

12.7

%

 

13.4

%

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

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

(3) Total loans include premiums, discounts, and deferred fees and costs.

(4) On a tax-equivalent basis.

(5) Annualized for the three month and nine month periods.

(6) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $33.1 million or 0.14% of total loans and 0.10% of total assets, at September 30, 2019; compared to $17.8 million or 0.08% of total loans and 0.06% of total assets, at December 31, 2018.

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 base for comparison to other financial institutions. 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 September 30, 2019 (in thousands except share and per share data):

Total stockholders’ equity

$

2,909,275

 

Less: goodwill and other intangible assets

77,685

 

Tangible stockholders’ equity

$

2,831,590

 

 

 

Common shares issued and outstanding

95,070,399

 

 

 

Book value per common share

$

30.60

 

 

 

Tangible book value per common share

$

29.78

 

Non-interest income excluding the impact of transactions in the formerly covered assets is a non-GAAP financial measure. Management believes disclosure of this measure provides readers with information that may be useful in comparing current period results to the comparable periods of the prior year. The following table reconciles the non-GAAP financial measurement of Non-interest income excluding the impact of transactions in the formerly covered assets to the comparable GAAP financial measurement of Non-interest income for the periods indicated (in thousands):

 

Three Months Ended

September 30, 2018

 

Nine Months Ended

September 30, 2018

Non-interest income (GAAP)

$

38,735

 

 

$

98,694

 

Less: Income from resolution of covered assets

3,134

 

 

10,689

 

Less: Net gain (loss) on FDIC indemnification

3,090

 

 

(1,925

)

Less: Gain on sale of covered loans

5,037

 

 

4,739

 

Non-interest income, excluding the impact of transactions in the formerly covered

assets (non-GAAP)

$

27,474

 

 

$

85,191

 

Non-loss share diluted earnings per share is a non-GAAP financial measure. Management believes disclosure of this measure provides readers with information that may be useful in understanding the impact of the covered loans and FDIC indemnification asset on the Company’s earnings for periods prior to the termination of the Single Family Shared-Loss Agreement. The following table reconciles this non-GAAP financial measurement to the comparable GAAP financial measurement of diluted earnings per common share for the three months ended September 30, 2018 (in millions except share and per share data. Shares in thousands):

 

Three Months Ended

September 30, 2018

Net Income (GAAP)

$

97.3

 

Less Loss Share Contribution

(28.3

)

Net Income as reported, minus Loss Share Contribution

$

69.0

 

Diluted earnings per common share, excluding Loss Share Contribution:

 

Diluted earnings per common share (GAAP)

$

0.90

 

Less: Net impact on diluted earnings per common share of Loss Share Contribution (non-GAAP)

(0.26

)

Non-loss share diluted earnings per common share (non-GAAP)

$

0.64

 

Non-loss share diluted earnings per share:

 

Loss Share Contribution

$

28.3

 

Weighted average shares for diluted earnings per common share (GAAP)

104,384

 

Impact on diluted earnings per common share of Loss Share Contribution (non-GAAP)

0.27

 

Impact on diluted earnings per common share of Loss Share Contribution:

 

Loss Share Contribution, net of tax, allocated to participating securities

(1.0

)

Weighted average shares for diluted earnings per common share (GAAP)

104,384

 

Impact on diluted earnings per common share of Loss Share Contribution allocated to participating

securities (non-GAAP)

(0.01

)

Net impact on diluted earnings per common share of Loss Share Contribution (non-GAAP)

$

0.26

 

Supplemental Calculations

Calculation of Loss Share Contribution and Non-Loss Share Earnings Per Share

Non-Loss Share Earnings are calculated by removing the total Loss Share Contribution from Net Income. The Loss Share Contribution is a hypothetical presentation of the impact of the covered loans and FDIC indemnification asset on earnings for each respective quarter, reflecting the excess of Loss Share Earnings over hypothetical interest income that could have been earned on alternative assets (in millions except share and per share data):

 

Three Months Ended

September 30, 2018

Net Income As Reported

$

97.3

 

Calculation of Loss Share Contribution:

 

Interest Income - Covered Loans (Accretion)

$

81.3

 

Net impact of sale of covered loans

10.4

 

Amortization of FDIC Indemnification Asset

(48.3

)

Loss Share Earnings

43.4

 

Hypothetical interest income on alternate assets (1)

(4.9

)

Loss Share Contribution, pre-tax

38.5

 

Income taxes (2)

(10.2

)

Loss Share Contribution, after tax

$

28.3

 

 

 

Net Income as reported, minus Loss Share Contribution

$

69.0

 

 

 

Diluted Earnings Per Common Share, as Reported

$

0.90

 

Earnings Per Share, Loss Share Contribution

(0.26

)

Non-Loss Share Diluted Earnings Per Share

$

0.64

 

(1) See section entitled "Supplemental Calculations - Calculation of Hypothetical Interest Income on Alternate Assets" below for calculation of these amounts and underlying assumptions.

(2) An assumed marginal tax rate of 26.5% was applied.

Calculation of Hypothetical Interest Income on Alternate Assets

The hypothetical interest income calculated below reflects the estimated income that may have been earned if the average balance of covered loans and the FDIC indemnification asset were liquidated and the proceeds assumed to be invested in securities at the weighted average yield on the Company’s investment securities portfolio as reported. Historically, cash received from the repayment, sale, or other resolution of covered loans and cash payments received from the FDIC under the terms of the Shared Loss Agreement have generally been reinvested in non-covered loans or investment securities. There is no assurance that the hypothetical results illustrated below would have been achieved if the covered loans and FDIC indemnification asset had been liquidated and proceeds reinvested (dollars in millions):

 

Three Months Ended

September 30, 2018

Average Balances (1)

 

Average Covered Loans

$

408

 

Average FDIC Indemnification Asset

170

 

Average Loss Share Asset

$

578

 

 

 

Yield

 

Yield on securities - reported (2)

3.41

%

Hypothetical interest income on alternate assets

$

4.9

 

(1) Calculated as the simple average of beginning and ending balances reported for each period.

(2) The weighted average yield on the Company’s investment securities as reported for the applicable quarter.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191023005191/en/