EX-99.1 2 earningsdoc99120190930.htm EX-99.1 Exhibit
Exhibit 99.1
 
BANKUNITED, INC. REPORTS THIRD QUARTER 2019 RESULTS
 
Miami Lakes, Fla. — October 23, 2019 — BankUnited, Inc. (the “Company”) (NYSE: 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.

1
 
 
 

•
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.

2
 
 
 

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.

3
 
 
 

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.

4
 
 
 

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.

5
 
 
 

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

6
 
 
 

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



7
 
 
 

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


8
 
 
 

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


9
 
 
 

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


10
 
 
 

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,
c
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



11
 
 
 


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.

12
 
 
 

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


13
 
 
 

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



14
 
 
 

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.


15
 
 
 


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.



16