UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):October 19, 2023 (October 19, 2023 )
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| | ||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(Registrant’s telephone number, including area code): (305 ) 569-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Class | Trading Symbol | Name of Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 2.02 Results of Operations and Financial Condition.
On October 19, 2023, BankUnited, Inc. (the “Company”) reported its results for the quarter ended September 30, 2023. A copy of the Company’s press release containing this information and slides containing supplemental information related to this release are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | ||||||||||
| October 19, 2023 | |||||||||||
| October 19, 2023 | |||||||||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: | October 19, 2023 | BANKUNITED, INC. | |||||||||
| /s/ Leslie N. Lunak | |||||||||||
| Name: | Leslie N. Lunak | ||||||||||
| Title: | Chief Financial Officer | ||||||||||
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EXHIBIT INDEX
| Exhibit Number | Description | ||||||||||
| October 19, 2023 | |||||||||||
| October 19, 2023 | |||||||||||
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Exhibit 99.1
BANKUNITED, INC. REPORTS THIRD QUARTER 2023 RESULTS
Miami Lakes, Fla. — October 19, 2023 — BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended September 30, 2023.
"This quarter we made significant progress on key strategic priorities. Margin, the funding mix, asset mix, capital and liquidity all improved, while continuing to prepare for a possible economic slowdown," said Rajinder Singh, Chairman, President and Chief Executive Officer.
For the quarter ended September 30, 2023, the Company reported net income of $47.0 million, or $0.63 per diluted share, compared to $58.0 million, or $0.78 per diluted share for the immediately preceding quarter ended June 30, 2023 and $87.9 million, or $1.12 per diluted share, for the quarter ended September 30, 2022. Earnings for the quarter ended September 30, 2023 were impacted by an increase in the provision for credit losses, the most significant driver of which was the impact of a less favorable economic forecast, while annualized net charge-offs remained low at 0.07%. For the nine months ended September 30, 2023, the Company reported net income of $157.9 million or $2.11 per diluted share compared to $220.8 million or $2.71 per diluted share for the nine months ended September 30, 2022.
Quarterly Highlights
•We gained momentum executing on near-term strategic priorities this quarter:
◦The net interest margin, calculated on a tax-equivalent basis, expanded this quarter to 2.56% from 2.47% for the immediately preceding quarter.
◦Non-brokered deposits grew by $484 million for the quarter ended September 30, 2023. Total deposits grew by $274 million.
◦Non-interest bearing deposits grew by $52 million for the quarter, remaining consistent at 28% of total deposits at both September 30, 2023 and June 30, 2023.
◦Residential loans declined by $225 million and securities declined by $257 million for the quarter, while our core C&I and commercial real estate portfolios grew by a net $147 million.
◦FHLB advances declined by $810 million for the quarter, as consistent with our strategy to re-position the balance sheet, cash flows from the residential and securities portfolios were used to pay down wholesale funding.
◦The loans to deposits ratio declined to 93.3% at September 30, 2023, from 95.3% at June 30, 2023.
◦We have maintained ample liquidity. Total same day available liquidity was $14.4 billion, the available liquidity to uninsured, uncollateralized deposits ratio was 161% and an estimated 66% of our deposits were insured or collateralized at September 30, 2023.
◦Our capital position remains robust. At September 30, 2023, CET1 increased to 11.4% at the holding company and 13.2% at the Bank. Pro-forma CET1 at the holding company and the Bank, including accumulated other comprehensive income, were 9.8% and 11.5%, respectively at September 30, 2023.
•For the quarter ended September 30, 2023, the provision for credit losses was $33.0 million. The ratio of the ACL to total loans increased to 0.80%, at September 30, 2023 from 0.68% at June 30, 2023. The largest driver of the provision for credit losses and increase in the ACL for the quarter was a less favorable economic forecast.
•The annualized net charge-off ratio for the nine months ended September 30, 2023 was 0.07%. NPAs remained low, totaling $140.5 million at September 30, 2023 compared to $120.8 million at June 30, 2023. Most of the increase was in the franchise finance portfolio. The NPA ratio at September 30, 2023 was 0.40%, including 0.11% related to the guaranteed portion of non-performing SBA loans. At June 30, 2023 the NPA ratio was 0.34%, including 0.10% related to the guaranteed portion of non-performing SBA loans.
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•Total loans declined by $274 million quarter-over-quarter. As expected, most of the decline was attributable to residential which was down by $225 million.
•Consistent with industry trends, rising interest rates and restrictive monetary policy contributed to an increase in the average cost of total deposits to 2.74% for the quarter ended September 30, 2023 from 2.46% for the immediately preceding quarter. This increase of 0.28% was smaller than the 0.41% increase in the cost of deposits for the quarter ended June 30, 2023, continuing the trend of a declining rate of increase in deposit costs. The yield on average interest earning assets increased to 5.52% for the quarter ended September 30, 2023 from 5.30% for the immediately preceding quarter.
•Commercial real estate exposure is modest. Commercial real estate loans totaled 23.5% of loans at September 30, 2023, representing 168% of the Bank's total risk based capital. At September 30, 2023, the weighted average LTV of the CRE portfolio was 55.8% and the weighted average DSCR was 1.80. 58% of the portfolio was secured by collateral properties located in Florida and 25% was secured by properties in the New York tri-state area.
•We remain committed to keeping the duration of our securities portfolio short; the duration of the available for sale securities portfolio was 2.02 at September 30, 2023. Held to maturity securities were not significant.
•Book value and tangible book value per common share were $33.92 and $32.88, respectively, at September 30, 2023, compared to $33.94 and $32.90, respectively at June 30, 2023.
•In October 2023, BankUnited was named #1 on the list of the healthiest 100 workplaces in America published by Healthiest Employers/Springbuk, highlighting our commitment to employee wellness initiatives and programs.
Deposits and Funding
Total deposits grew by $274 million during the quarter ended September 30, 2023. Non-interest bearing demand deposits grew by $52 million, interest-bearing non-maturity deposits grew by $552 million and time deposits declined by $330 million.
Consistent with the current interest rate environment and restrictive monetary policy, the cost of total deposits increased to 2.74% from 2.46% for the immediately preceding quarter, while the cost of interest bearing deposits increased to 3.76% for the quarter ended September 30, 2023 from 3.39% for the preceding quarter.
FHLB advances declined by $810 million for the quarter, as we used cash flows from the residential and securities portfolios to reduce wholesale funding levels and allow for future re-deployment of capital into higher yielding assets.
Loans
A comparison of loan portfolio composition at the dates indicated follows (dollars in thousands):
| September 30, 2023 | June 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||
| Residential | $ | 8,380,568 | 34.4 | % | $ | 8,605,838 | 34.9 | % | $ | 8,900,714 | 35.7 | % | |||||||||||||||||||||||
| Non-owner occupied commercial real estate | 5,296,784 | 21.7 | % | 5,302,523 | 21.5 | % | 5,405,597 | 21.7 | % | ||||||||||||||||||||||||||
| Construction and land | 445,273 | 1.8 | % | 393,464 | 1.6 | % | 294,360 | 1.2 | % | ||||||||||||||||||||||||||
| Owner occupied commercial real estate | 1,851,246 | 7.6 | % | 1,832,586 | 7.4 | % | 1,890,813 | 7.6 | % | ||||||||||||||||||||||||||
| Commercial and industrial | 6,658,010 | 27.4 | % | 6,575,368 | 26.8 | % | 6,417,721 | 25.9 | % | ||||||||||||||||||||||||||
| Pinnacle - municipal finance | 900,199 | 3.7 | % | 951,529 | 3.9 | % | 912,122 | 3.7 | % | ||||||||||||||||||||||||||
| Franchise finance | 196,745 | 0.8 | % | 207,783 | 0.8 | % | 253,774 | 1.0 | % | ||||||||||||||||||||||||||
| Equipment finance | 219,874 | 0.9 | % | 237,816 | 1.0 | % | 286,147 | 1.1 | % | ||||||||||||||||||||||||||
| Mortgage warehouse lending ("MWL") | 407,577 | 1.7 | % | 523,083 | 2.1 | % | 524,740 | 2.1 | % | ||||||||||||||||||||||||||
| $ | 24,356,276 | 100.0 | % | $ | 24,629,990 | 100.0 | % | $ | 24,885,988 | 100.0 | % | ||||||||||||||||||||||||
Consistent with our balance sheet strategy, for the quarter ended September 30, 2023, residential loans declined by $225 million while C&I grew by $101 million and CRE grew by $46 million. Franchise and equipment finance declined by $29 million in aggregate, MWL declined by $116 million, primarily due to low levels of activity in the residential real estate sector, and municipal finance declined by $51 million. As we continue to emphasize high quality relationship based lending, we chose to
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exit approximately $297 million of commercial loans during the quarter due to lower profitability, the lack of deposit relationships or, in some cases, to take advantage of opportunities to reduce criticized and classified assets.
Asset Quality and the Allowance for Credit Losses ("ACL")
The following table presents the ACL and related ACL coverage ratios at the dates indicated and net charge-off rates for the periods ended September 30, 2023, June 30, 2023 and December 31, 2022 (dollars in thousands):
| ACL | ACL to Total Loans | ACL to Non-Performing Loans | Net Charge-offs to Average Loans (1) | ||||||||||||||||||||
| December 31, 2022 | $ | 147,946 | 0.59 | % | 140.88 | % | 0.22 | % | |||||||||||||||
| June 30, 2023 | $ | 166,833 | 0.68 | % | 140.52 | % | 0.09 | % | |||||||||||||||
| September 30, 2023 | $ | 196,063 | 0.80 | % | 143.22 | % | 0.07 | % | |||||||||||||||
(1) Annualized for the six months ended June 30, 2023 and the nine months ended September 30, 2023.
The ACL at September 30, 2023 represents management's estimate of lifetime expected credit losses given an assessment of historical data, current conditions, and a reasonable and supportable economic forecast as of the balance sheet date. For the quarter ended September 30, 2023, the provision for credit losses was $33.0 million, including $30.9 million related to funded loans. The most significant factor impacting the provision for credit losses and increase in the ACL for the quarter ended September 30, 2023 was the impact on quantitative modeling of a less favorable economic forecast. Changes in portfolio composition as well as risk rating migration and increases in certain specific reserves also had an impact.
The following table summarizes the activity in the ACL for the periods indicated (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
| Beginning balance | $ | 166,833 | $ | 158,792 | $ | 130,239 | $ | 147,946 | $ | 126,457 | |||||||||||||||||||
| Impact of adoption of new accounting pronouncement (ASU 2022-02) | N/A | N/A | N/A | (1,794) | N/A | ||||||||||||||||||||||||
| Balance after impact of adoption of new accounting pronouncement (ASU 2022-02) | 166,833 | 158,792 | 130,239 | 146,152 | 126,457 | ||||||||||||||||||||||||
| Provision | 30,877 | 14,195 | 2,753 | 62,667 | 33,406 | ||||||||||||||||||||||||
| Net charge-offs | (1,647) | (6,154) | (2,321) | (12,756) | (29,192) | ||||||||||||||||||||||||
| Ending balance | $ | 196,063 | $ | 166,833 | $ | 130,671 | $ | 196,063 | $ | 130,671 | |||||||||||||||||||
Non-performing loans totaled $136.9 million or 0.56% of total loans at September 30, 2023, compared to $118.7 million or 0.48% of total loans at June 30, 2023. Non-performing loans included $37.8 million and $35.9 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.16% and 0.15% of total loans at September 30, 2023 and June 30, 2023, respectively.
The following table presents criticized and classified commercial loans at the dates indicated (in thousands):
| September 30, 2023 | June 30, 2023 | December 31, 2022 | |||||||||||||||
| Special mention | $ | 341,999 | $ | 233,004 | $ | 51,433 | |||||||||||
| Substandard - accruing | 534,336 | 525,643 | 605,965 | ||||||||||||||
| Substandard - non-accruing | 96,248 | 80,642 | 75,125 | ||||||||||||||
| Doubtful | 19,344 | 14,954 | 7,990 | ||||||||||||||
| Total | $ | 991,927 | $ | 854,243 | $ | 740,513 | |||||||||||
Net Interest Income
Net interest income for the quarter ended September 30, 2023 was $214.8 million, compared to $213.9 million for the immediately preceding quarter ended June 30, 2023 and $235.8 million for the quarter ended September 30, 2022. Interest income increased by $7.1 million for the quarter ended September 30, 2023 compared to the immediately preceding quarter while interest expense increased by $6.2 million.
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The Company’s net interest margin, calculated on a tax-equivalent basis, increased by 0.09% to 2.56% for the quarter ended September 30, 2023, from 2.47% for the immediately preceding quarter ended June 30, 2023. Factors impacting the net interest margin for the quarter ended September 30, 2023 were:
•The tax-equivalent yield on loans increased to 5.54% for the quarter ended September 30, 2023, from 5.35% for the quarter ended June 30, 2023. The resetting of variable rate loans to higher coupon rates, paydown of lower rate residential loans and origination of new loans at higher rates contributed to the increase.
•The tax-equivalent yield on investment securities increased to 5.48% for the quarter ended September 30, 2023, from 5.19% for the quarter ended June 30, 2023. This increase resulted primarily from the reset of coupon rates on variable rate securities.
•The average cost of interest bearing deposits increased to 3.76% for the quarter ended September 30, 2023 from 3.39% for the quarter ended June 30, 2023, in response to the interest rate environment.
•The average rate paid on FHLB advances decreased to 4.57% for the quarter ended September 30, 2023, from 4.59% for the quarter ended June 30, 2023, primarily due to repayment of higher rate advances.
•The reduction in the proportion of total funding comprised of more expensive wholesale funding also contributed to the increase in the net interest margin.
Earnings Conference Call and Presentation
A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Thursday, October 19, 2023 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, Chief Financial Officer, Leslie N. Lunak and Chief Operating Officer, Thomas M. Cornish.
The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at https://ir.bankunited.com. To participate by telephone, participants will receive dial-in information and a unique PIN number upon completion of registration at https://register.vevent.com/register/BI8dd0dafa7e284086a3d06fd4752fdebf. For those unable to join the live event, an archived webcast will be available in the Investor Relations page at https://ir.bankunited.com approximately two hours following the live webcast.
About BankUnited, Inc.
BankUnited, Inc., with total assets of $35.4 billion at September 30, 2023, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida that provides a full range of banking and related services to individual and corporate customers through banking centers located in the state of Florida, the New York metropolitan area and Dallas, Texas, and a comprehensive suite of wholesale products to customers through an Atlanta office focused on the Southeast region. BankUnited also offers certain commercial lending and deposit products through national platforms. For additional information, call (877) 779-2265 or visit www.BankUnited.com.
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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 limitation) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside the Company's direct control, such as but not limited to adverse events or conditions impacting the financial services industry. 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, 2022 and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are available at the SEC’s website (www.sec.gov).
Contact
BankUnited, Inc.
Investor Relations:
Leslie N. Lunak, 786-313-1698
llunak@bankunited.com
Source: BankUnited, Inc.
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BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except share and per share data)
| September 30, 2023 | June 30, 2023 | December 31, 2022 | |||||||||||||||
| ASSETS | |||||||||||||||||
| Cash and due from banks: | |||||||||||||||||
| Non-interest bearing | $ | 12,391 | $ | 18,355 | $ | 16,068 | |||||||||||
| Interest bearing | 379,494 | 282,814 | 556,579 | ||||||||||||||
| Cash and cash equivalents | 391,885 | 301,169 | 572,647 | ||||||||||||||
Investment securities (including securities reported at fair value of $8,876,484, $9,133,937 and $9,745,327) | 8,886,484 | 9,143,937 | 9,755,327 | ||||||||||||||
| Non-marketable equity securities | 312,159 | 317,759 | 294,172 | ||||||||||||||
| Loans | 24,356,276 | 24,629,990 | 24,885,988 | ||||||||||||||
| Allowance for credit losses | (196,063) | (166,833) | (147,946) | ||||||||||||||
| Loans, net | 24,160,213 | 24,463,157 | 24,738,042 | ||||||||||||||
| Bank owned life insurance | 319,808 | 318,935 | 308,212 | ||||||||||||||
| Operating lease equipment, net | 460,146 | 514,734 | 539,799 | ||||||||||||||
| Goodwill | 77,637 | 77,637 | 77,637 | ||||||||||||||
| Other assets | 781,332 | 734,151 | 740,876 | ||||||||||||||
| Total assets | $ | 35,389,664 | $ | 35,871,479 | $ | 37,026,712 | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
| Liabilities: | |||||||||||||||||
| Demand deposits: | |||||||||||||||||
| Non-interest bearing | $ | 7,356,523 | $ | 7,304,735 | $ | 8,037,848 | |||||||||||
| Interest bearing | 3,290,391 | 2,929,870 | 2,142,067 | ||||||||||||||
| Savings and money market | 10,276,071 | 10,084,276 | 13,061,341 | ||||||||||||||
| Time | 5,189,681 | 5,519,771 | 4,268,078 | ||||||||||||||
| Total deposits | 26,112,666 | 25,838,652 | 27,509,334 | ||||||||||||||
| Federal funds purchased | — | — | 190,000 | ||||||||||||||
| FHLB advances | 5,165,000 | 5,975,000 | 5,420,000 | ||||||||||||||
| Notes and other borrowings | 715,197 | 715,302 | 720,923 | ||||||||||||||
| Other liabilities | 872,731 | 816,215 | 750,474 | ||||||||||||||
| Total liabilities | 32,865,594 | 33,345,169 | 34,590,731 | ||||||||||||||
| Commitments and contingencies | |||||||||||||||||
| Stockholders' equity: | |||||||||||||||||
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 74,413,059, 74,429,948 and 75,674,587 shares issued and outstanding | 744 | 744 | 757 | ||||||||||||||
| Paid-in capital | 279,672 | 274,202 | 321,729 | ||||||||||||||
| Retained earnings | 2,650,850 | 2,623,926 | 2,551,400 | ||||||||||||||
| Accumulated other comprehensive loss | (407,196) | (372,562) | (437,905) | ||||||||||||||
| Total stockholders' equity | 2,524,070 | 2,526,310 | 2,435,981 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 35,389,664 | $ | 35,871,479 | $ | 37,026,712 | |||||||||||
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BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||
| Loans | $ | 337,014 | $ | 326,153 | $ | 244,884 | $ | 971,962 | $ | 645,669 | |||||||||||||||||||
| Investment securities | 122,857 | 120,604 | 77,109 | 362,219 | 174,928 | ||||||||||||||||||||||||
| Other | 10,668 | 16,664 | 4,031 | 40,195 | 8,364 | ||||||||||||||||||||||||
| Total interest income | 470,539 | 463,421 | 326,024 | 1,374,376 | 828,961 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 176,974 | 156,868 | 53,206 | 467,472 | 85,569 | ||||||||||||||||||||||||
| Borrowings | 78,723 | 92,675 | 36,982 | 250,310 | 73,498 | ||||||||||||||||||||||||
| Total interest expense | 255,697 | 249,543 | 90,188 | 717,782 | 159,067 | ||||||||||||||||||||||||
| Net interest income before provision for credit losses | 214,842 | 213,878 | 235,836 | 656,594 | 669,894 | ||||||||||||||||||||||||
| Provision for credit losses | 33,049 | 15,517 | 3,720 | 68,354 | 35,546 | ||||||||||||||||||||||||
| Net interest income after provision for credit losses | 181,793 | 198,361 | 232,116 | 588,240 | 634,348 | ||||||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||||||
| Deposit service charges and fees | 5,402 | 5,349 | 6,064 | 16,296 | 17,920 | ||||||||||||||||||||||||
| Gain (loss) on investment securities, net | 887 | 993 | 135 | (10,669) | (16,125) | ||||||||||||||||||||||||
| Lease financing | 16,531 | 12,519 | 13,180 | 42,159 | 39,958 | ||||||||||||||||||||||||
| Other non-interest income | 4,904 | 6,626 | 3,693 | 21,960 | 9,070 | ||||||||||||||||||||||||
| Total non-interest income | 27,724 | 25,487 | 23,072 | 69,746 | 50,823 | ||||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||
| Employee compensation and benefits | 68,825 | 67,414 | 66,097 | 207,290 | 195,646 | ||||||||||||||||||||||||
| Occupancy and equipment | 10,890 | 11,043 | 11,719 | 32,735 | 34,630 | ||||||||||||||||||||||||
| Deposit insurance expense | 7,790 | 7,597 | 4,398 | 23,294 | 11,794 | ||||||||||||||||||||||||
| Professional fees | 2,696 | 3,518 | 3,184 | 9,132 | 8,702 | ||||||||||||||||||||||||
| Technology | 19,193 | 20,437 | 19,813 | 61,356 | 54,715 | ||||||||||||||||||||||||
| Depreciation of operating lease equipment | 11,217 | 11,232 | 12,646 | 33,970 | 37,841 | ||||||||||||||||||||||||
| Other non-interest expense | 26,479 | 23,977 | 20,248 | 77,311 | 48,503 | ||||||||||||||||||||||||
| Total non-interest expense | 147,090 | 145,218 | 138,105 | 445,088 | 391,831 | ||||||||||||||||||||||||
| Income before income taxes | 62,427 | 78,630 | 117,083 | 212,898 | 293,340 | ||||||||||||||||||||||||
| Provision for income taxes | 15,446 | 20,634 | 29,233 | 55,039 | 72,576 | ||||||||||||||||||||||||
| Net income | $ | 46,981 | $ | 57,996 | $ | 87,850 | $ | 157,859 | $ | 220,764 | |||||||||||||||||||
| Earnings per common share, basic | $ | 0.63 | $ | 0.78 | $ | 1.13 | $ | 2.12 | $ | 2.73 | |||||||||||||||||||
| Earnings per common share, diluted | $ | 0.63 | $ | 0.78 | $ | 1.12 | $ | 2.11 | $ | 2.71 | |||||||||||||||||||
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BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Three Months Ended September 30, | Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest (1) | Yield/ Rate (1)(2) | Average Balance | Interest (1) | Yield/ Rate (1)(2) | Average Balance | Interest (1) | Yield/ Rate (1)(2) | |||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 24,417,433 | $ | 340,357 | 5.54 | % | $ | 24,680,919 | $ | 329,494 | 5.35 | % | $ | 24,053,742 | $ | 248,168 | 4.11 | % | |||||||||||||||||||||||||||||||||||
Investment securities (3) | 9,034,116 | 123,794 | 5.48 | % | 9,369,019 | 121,520 | 5.19 | % | 9,981,486 | 77,840 | 3.12 | % | |||||||||||||||||||||||||||||||||||||||||
| Other interest earning assets | 785,146 | 10,668 | 5.39 | % | 1,323,025 | 16,664 | 5.05 | % | 596,879 | 4,031 | 2.68 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets | 34,236,695 | 474,819 | 5.52 | % | 35,372,963 | 467,678 | 5.30 | % | 34,632,107 | 330,039 | 3.80 | % | |||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (173,407) | (162,463) | (133,828) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,747,310 | 1,744,693 | 1,703,371 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 35,810,598 | $ | 36,955,193 | $ | 36,201,650 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 3,038,870 | $ | 25,491 | 3.33 | % | $ | 2,772,839 | $ | 18,417 | 2.66 | % | $ | 2,306,906 | $ | 4,104 | 0.71 | % | |||||||||||||||||||||||||||||||||||
| Savings and money market deposits | 10,205,765 | 97,956 | 3.81 | % | 10,285,494 | 88,892 | 3.47 | % | 13,001,566 | 39,838 | 1.22 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 5,420,522 | 53,527 | 3.92 | % | 5,494,631 | 49,559 | 3.62 | % | 3,255,869 | 9,264 | 1.13 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing deposits | 18,665,157 | 176,974 | 3.76 | % | 18,552,964 | 156,868 | 3.39 | % | 18,564,341 | 53,206 | 1.14 | % | |||||||||||||||||||||||||||||||||||||||||
| Federal funds purchased | — | — | — | % | — | — | — | % | 153,905 | 833 | 2.12 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB advances | 6,040,870 | 69,525 | 4.57 | % | 7,288,187 | 83,429 | 4.59 | % | 4,739,457 | 26,890 | 2.25 | % | |||||||||||||||||||||||||||||||||||||||||
| Notes and other borrowings | 715,307 | 9,198 | 5.14 | % | 719,368 | 9,246 | 5.14 | % | 721,164 | 9,259 | 5.14 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 25,421,334 | 255,697 | 3.99 | % | 26,560,519 | 249,543 | 3.77 | % | 24,178,867 | 90,188 | 1.48 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 6,937,537 | 7,067,053 | 8,749,794 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 868,178 | 798,279 | 697,440 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 33,227,049 | 34,425,851 | 33,626,101 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,583,549 | 2,529,342 | 2,575,549 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 35,810,598 | $ | 36,955,193 | $ | 36,201,650 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 219,122 | $ | 218,135 | $ | 239,851 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate spread | 1.53 | % | 1.53 | % | 2.32 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.56 | % | 2.47 | % | 2.76 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(1) On a tax-equivalent basis where applicable
(2) Annualized
(3) At fair value except for securities held to maturity
8
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest (1) | Yield/ Rate (1)(2) | Average Balance | Interest (1) | Yield/ Rate (1)(2) | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||
| Loans | $ | 24,606,425 | $ | 981,976 | 5.33 | % | $ | 23,706,606 | $ | 655,114 | 3.69 | % | |||||||||||||||||||||||
Investment securities (3) | 9,356,211 | 364,980 | 5.20 | % | 10,180,351 | 177,047 | 2.32 | % | |||||||||||||||||||||||||||
| Other interest earning assets | 1,048,313 | 40,195 | 5.13 | % | 663,189 | 8,364 | 1.69 | % | |||||||||||||||||||||||||||
| Total interest earning assets | 35,010,949 | 1,387,151 | 5.29 | % | 34,550,146 | 840,525 | 3.25 | % | |||||||||||||||||||||||||||
| Allowance for credit losses | (162,395) | (130,258) | |||||||||||||||||||||||||||||||||
| Non-interest earning assets | 1,761,500 | 1,682,618 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 36,610,054 | $ | 36,102,506 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 2,728,287 | $ | 54,781 | 2.68 | % | $ | 2,658,558 | $ | 7,215 | 0.36 | % | |||||||||||||||||||||||
| Savings and money market deposits | 10,844,838 | 278,243 | 3.43 | % | 13,150,357 | 62,704 | 0.64 | % | |||||||||||||||||||||||||||
| Time deposits | 5,150,486 | 134,448 | 3.49 | % | 3,129,247 | 15,650 | 0.67 | % | |||||||||||||||||||||||||||
| Total interest bearing deposits | 18,723,611 | 467,472 | 3.34 | % | 18,938,162 | 85,569 | 0.60 | % | |||||||||||||||||||||||||||
| Federal funds purchased | 47,334 | 1,611 | 4.54 | % | 152,028 | 1,046 | 0.92 | % | |||||||||||||||||||||||||||
| FHLB advances | 6,596,465 | 220,993 | 4.48 | % | 3,796,484 | 44,680 | 1.57 | % | |||||||||||||||||||||||||||
| Notes and other borrowings | 718,507 | 27,706 | 5.14 | % | 721,283 | 27,772 | 5.13 | % | |||||||||||||||||||||||||||
| Total interest bearing liabilities | 26,085,917 | 717,782 | 3.68 | % | 23,607,957 | 159,067 | 0.90 | % | |||||||||||||||||||||||||||
| Non-interest bearing demand deposits | 7,152,362 | 9,071,135 | |||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 829,464 | 650,936 | |||||||||||||||||||||||||||||||||
| Total liabilities | 34,067,743 | 33,330,028 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 2,542,311 | 2,772,478 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 36,610,054 | $ | 36,102,506 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 669,369 | $ | 681,458 | |||||||||||||||||||||||||||||||
| Interest rate spread | 1.61 | % | 2.35 | % | |||||||||||||||||||||||||||||||
| Net interest margin | 2.55 | % | 2.63 | % | |||||||||||||||||||||||||||||||
(1) On a tax-equivalent basis where applicable
(2) Annualized
(3) At fair value except for securities held to maturity
9
BANKUNITED, INC. AND SUBSIDIARIES
EARNINGS PER COMMON SHARE
(In thousands except share and per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| c | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Basic earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 46,981 | $ | 87,850 | $ | 157,859 | $ | 220,764 | |||||||||||||||
Distributed and undistributed earnings allocated to participating securities | (700) | (1,343) | (2,378) | (3,258) | |||||||||||||||||||
| Income allocated to common stockholders for basic earnings per common share | $ | 46,281 | $ | 86,507 | $ | 155,481 | $ | 217,506 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | 74,416,698 | 77,912,320 | 74,530,871 | 81,039,561 | |||||||||||||||||||
| Less average unvested stock awards | (1,165,105) | (1,221,971) | (1,180,570) | (1,230,396) | |||||||||||||||||||
| Weighted average shares for basic earnings per common share | 73,251,593 | 76,690,349 | 73,350,301 | 79,809,165 | |||||||||||||||||||
| Basic earnings per common share | $ | 0.63 | $ | 1.13 | $ | 2.12 | $ | 2.73 | |||||||||||||||
| Diluted earnings per common share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Income allocated to common stockholders for basic earnings per common share | $ | 46,281 | $ | 86,507 | $ | 155,481 | $ | 217,506 | |||||||||||||||
Adjustment for earnings reallocated from participating securities | 3 | 6 | 8 | 9 | |||||||||||||||||||
| Income used in calculating diluted earnings per common share | $ | 46,284 | $ | 86,513 | $ | 155,489 | $ | 217,515 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average shares for basic earnings per common share | 73,251,593 | 76,690,349 | 73,350,301 | 79,809,165 | |||||||||||||||||||
| Dilutive effect of certain share-based awards | 537,230 | 433,472 | 388,372 | 308,608 | |||||||||||||||||||
Weighted average shares for diluted earnings per common share | 73,788,823 | 77,123,821 | 73,738,673 | 80,117,773 | |||||||||||||||||||
| Diluted earnings per common share | $ | 0.63 | $ | 1.12 | $ | 2.11 | $ | 2.71 | |||||||||||||||
10
BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
| At or for the Three Months Ended | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | September 30, 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Financial ratios (4) | |||||||||||||||||||||||||||||
| Return on average assets | 0.52 | % | 0.63 | % | 0.96 | % | 0.58 | % | 0.82 | % | |||||||||||||||||||
| Return on average stockholders’ equity | 7.2 | % | 9.2 | % | 13.5 | % | 8.3 | % | 10.6 | % | |||||||||||||||||||
Net interest margin (3) | 2.56 | % | 2.47 | % | 2.76 | % | 2.55 | % | 2.63 | % | |||||||||||||||||||
| Loans to deposits | 93.3 | % | 95.3 | % | 88.7 | % | |||||||||||||||||||||||
| Tangible book value per common share | $ | 32.88 | $ | 32.90 | $ | 30.97 | |||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | December 31, 2022 | |||||||||||||||
| Asset quality ratios | |||||||||||||||||
Non-performing loans to total loans (1)(5) | 0.56 | % | 0.48 | % | 0.42 | % | |||||||||||
Non-performing assets to total assets (2)(5) | 0.40 | % | 0.34 | % | 0.29 | % | |||||||||||
| Allowance for credit losses to total loans | 0.80 | % | 0.68 | % | 0.59 | % | |||||||||||
Allowance for credit losses to non-performing loans (1)(5) | 143.22 | % | 140.52 | % | 140.88 | % | |||||||||||
Net charge-offs to average loans (4) | 0.07 | % | 0.09 | % | 0.22 | % | |||||||||||
(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 as applicable
(5) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $37.8 million or 0.16% of total loans and 0.11% of total assets at September 30, 2023, $35.9 million or 0.15% of total loans and 0.10% of total assets at June 30, 2023 and $40.3 million or 0.16% of total loans and 0.11% of total assets at December 31, 2022.
| September 30, 2023 | June 30, 2023 | December 31, 2022 | Required to be Considered Well Capitalized | ||||||||||||||||||||||||||||||||||||||
| BankUnited, Inc. | BankUnited, N.A. | BankUnited, Inc. | BankUnited, N.A. | BankUnited, Inc. | BankUnited, N.A. | ||||||||||||||||||||||||||||||||||||
| Capital ratios | |||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage | 7.9 | % | 9.1 | % | 7.6 | % | 8.8 | % | 7.5 | % | 8.4 | % | 5.0 | % | |||||||||||||||||||||||||||
| Common Equity Tier 1 ("CET1") risk-based capital | 11.4 | % | 13.2 | % | 11.2 | % | 13.0 | % | 11.0 | % | 12.4 | % | 6.5 | % | |||||||||||||||||||||||||||
| Total risk-based capital | 13.4 | % | 13.9 | % | 13.0 | % | 13.6 | % | 12.7 | % | 12.9 | % | 10.0 | % | |||||||||||||||||||||||||||
| Tangible Common Equity/Tangible Assets | 6.9 | % | N/A | 6.8 | % | N/A | 6.4 | % | N/A | N/A | |||||||||||||||||||||||||||||||
11
Non-GAAP Financial Measures
Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions as it is a metric commonly used in the banking industry. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share at the dates indicated (in thousands except share and per share data):
| September 30, 2023 | June 30, 2023 | September 30, 2022 | |||||||||||||||
| Total stockholders’ equity | $ | 2,524,070 | $ | 2,526,310 | $ | 2,480,985 | |||||||||||
| Less: goodwill and other intangible assets | 77,637 | 77,637 | 77,637 | ||||||||||||||
| Tangible stockholders’ equity | $ | 2,446,433 | $ | 2,448,673 | $ | 2,403,348 | |||||||||||
| Common shares issued and outstanding | 74,413,059 | 74,429,948 | 77,599,408 | ||||||||||||||
| Book value per common share | $ | 33.92 | $ | 33.94 | $ | 31.97 | |||||||||||
| Tangible book value per common share | $ | 32.88 | $ | 32.90 | $ | 30.97 | |||||||||||
12
October 19, 2023 Q3 2023 – Supplemental Information 1 Exhibit 99.2
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of BankUnited, Inc. (“BankUnited,” “BKU” or the “Company”) with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this presentation are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitation) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside the Company's direct control, such as but not limited to adverse events or conditions impacting the financial services industry. 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, 2022 and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are available at the SEC’s website (www.sec.gov). 2
Quarterly Highlights 3
Improve Asset Mix Improve Funding Profile 2 Maintain Robust Liquidity and Capital Improve Net Interest Margin Execution on Near-term Strategic Priorities Manage Expenses 5 4 3 4 1 • NIDDA grew by $52 million and was stable at 28% of deposits • Non-brokered deposits grew by $484 million • Paid off $1 billion in wholesale funding • Resi and securities declined by $483 million • Core C&I and CRE loans grew by $147 million • Net interest margin expanded to 2.56% from 2.47% • Same day available liquidity $14.4 billion • Available liquidity 161% of uninsured, uncollateralized deposits • CET 1 ratio of 11.4% • Operating expenses flat to prior quarter Built Reserves 6 • ACL/Loans increased to 0.80% • Annualized net charge-offs 0.07%
Topics of Current Interest Capital • CET1 ratios of 11.4% at the holding company and 13.2% at the bank • Pro-forma holding company CET1 of 9.8% including AOCI • Book value and tangible book value per share of $33.92 and $32.88 Deposits and Funding • Total deposits grew by $274 million in Q3 • Non-brokered deposits grew by $484 million • Non-interest bearing DDA stable at 28% of total deposits • FHLB advances paid down by $810 million Asset Quality • Low NPA ratio of 0.40% at September 30; 0.29% excluding guaranteed portion of non-accrual SBA loans • Annualized net charge-off rate of 0.07% High Quality CRE Portfolio • High quality CRE portfolio; wtd average DSCR 1.80; wtd average LTV 55.8%; 58% Florida • CRE office wtd average DSCR 1.69; wtd average LTV 64.1%; 58% Florida • Substantially all CRE loans are performing • CRE to total loans 24% • CRE to total risk based capital 168% 1. Tangible book value per share is a non-GAAP financial measure. See section entitled “Non-GAAP Financial Measures” on page 33 5 Net Interest Margin • Net interest margin expanded to 2.56% from 2.47% for the prior quarter • Cost of deposits of 2.74% • Yield on interest earning assets of 5.52%
Highlights from Third Quarter Earnings Change From ($ in millions, except per share data) Q3’23 Q2’23 Q3’22 Q2’23 Q3’22 Key Highlights Net Interest Income $215 $214 $236 $1 $(21) Provision for Credit Losses $33 $16 $4 $17 $29 Less favorable economic outlook impacted quantitative modeling Total Non-interest Income $28 $25 $23 $3 $5 Total Non-interest Expense $147 $145 $138 $2 $9 Net Income $47 $58 $88 $(11) $(41) Pre-Provision, Net Revenue (PPNR)(3) $95 $94 $121 $1 $(26) EPS $0.63 $0.78 $1.12 $(0.15) $(0.49) Period-end Core C&I and CRE loans $14,251 $14,104 $13,283 $147 $968 Period-end Loans $24,356 $24,630 $24,267 $(274) $89 Strategic runoff in residential and equipment/franchise lending Period-end Non-interest DDA $7,357 $7,305 $8,794 $52 $(1,437) YoY impacted by cyclicality in residential real estate sector Period-end Deposits $26,113 $25,839 $27,349 $274 $(1,236) Loans to Deposits 93.3% 95.3% 88.7% (2.0)% 4.6% CET1 11.4% 11.2% 11.3% 0.2% 0.1% Total Capital 13.4% 13.0% 13.0% 0.4% 0.4% Yield on Loans 5.54% 5.35% 4.11% 0.19% 1.43% Yield on Securities 5.48% 5.19% 3.12% 0.29% 2.36% Cost of Deposits 2.74% 2.46% 0.78% 0.28% 1.96% Net Interest Margin 2.56% 2.47% 2.76% 0.09% (0.20)% Non-performing Assets to Total Assets(1) 0.40% 0.34% 0.43% 0.06% (0.03)% Increase primarily related to franchise finance segment Allowance for Credit Losses to Total Loans 0.80% 0.68% 0.54% 0.12% 0.26% Net Charge-offs to Average Loans(2) 0.07% 0.09% 0.16% (0.02)% (0.09)% 1. Includes guaranteed portion of non-accrual SBA loans. 2. Annualized for the periods ended September 30, 2023 and June 30, 2023. 3. PPNR is a non-GAAP financial measure. See section entitled “Non-GAAP Financial Measures” on page 34 6
Deposits 7
Deposit Mix and Cost of Deposits Impacted by Current Rate Environment ($ in millions) $23,474 $24,395 $27,496 $29,438 $27,509 $25,839 $26,113 $6,820 $7,347 $4,807 $3,384 $4,268 $5,520 $5,190 $11,262 $10,622 $12,660 $13,369 $13,061 $10,084 $10,276 $1,771 $2,131 $3,020 $3,709 $2,142 $2,930 $3,290 $3,621 $4,295 $7,009 $8,976 $8,038 $7,305 $7,357 Non-interest Demand Interest Demand Money Market / Savings Time 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 09/30/23 Quarterly Cost of Deposits 1.52% 1.48% 0.43% 0.19% 1.42% 2.46% 2.74% Non-interest bearing as a % of Total Deposits 15.4% 17.6% 25.5% 30.5% 29.2% 28.3% 28.2% 8 • 60% of deposits commercial or municipal • Approximately 80% of commercial deposits considered relationship deposits • Diverse deposit book by industry sector; largest segment title solutions at $2.8 billion ◦ Approximately 80% of deposits in this segment are in operating accounts
Cost of Funds Trend 9 1.42% 0.36% 0.16% 1.92% 2.60% 2.84% 1.75% 0.25% 0.25% 4.50% 5.25% 5.50% Spot APY - Total Deposits Target Federal Funds Rate Upper Bound 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 09/30/23 (1.00)% —% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Spot Average Annual Percentage Yield (“APY”) At December 31, 2019 At December 31, 2020 At December 31, 2021 At December 31, 2022 At June 30, 2023 At September 30, 2023 Total non-maturity deposits 1.11% 0.29% 0.14% 1.83% 2.30% 2.54% Total interest-bearing deposits 1.71% 0.48% 0.23% 2.66% 3.53% 3.87% Total deposits 1.42% 0.36% 0.16% 1.92% 2.60% 2.84% Spread Between Fed Funds Upper Bound and Spot APY of Total Deposits
Loans and the Allowance for Credit Losses 10
11 Prudently Underwritten and Well-Diversified Loan Portfolio At September 30, 2023 ($ in millions) Loan Portfolio Over Time $5,661 $6,348 $8,368 $8,901 $8,606 $8,381 $7,493 $6,896 $5,702 $5,700 $5,696 $5,742 $6,718 $6,448 $6,735 $8,305 $8,407 $8,508 $768 $1,259 $1,092 $525 $523 $408 $2,515 $2,915 $1,868 $1,455 $1,398 $1,317$23,155 $23,866 $23,765 $24,886 $24,630 $24,356 Other (1) Mortgage Warehouse Lending C&I CRE Residential 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 09/30/23 1. Includes Pinnacle municipal finance, franchise and equipment finance, and PPP.
High Quality CRE Portfolio At September 30, 2023 ($ in millions) Property Type Balance % of Total CRE FL NY Tri State Other Wtd. Avg. DSCR Wtd. Avg. LTV Office $ 1,831 32 % 58 % 24 % 18 % 1.69 64.1 % Warehouse/Industrial 1,261 21 % 58 % 9 % 33 % 1.98 51.6 % Multifamily 831 14 % 48 % 52 % — % 1.97 45.1 % Retail 846 15 % 58 % 25 % 17 % 1.65 60.4 % Hotel 432 8 % 80 % 4 % 16 % 2.08 49.8 % Construction and Land 445 8 % 55 % 43 % 2 % N/A N/A Other 96 2 % 75 % 11 % 14 % 2.08 47.3 % $ 5,742 100 % 58 % 25 % 17 % 1.80 55.8 % 12 Insignificant amount of non-performing CRE loans (other than non-accrual SBA guaranteed loans of $14 million) Florida NY Tri State Property Type Wtd. Avg. DSCR Wtd. Avg. LTV Wtd. Avg. DSCR Wtd. Avg. LTV Office 1.74 64.9 % 1.57 58.5 % Warehouse/Industrial 2.12 50.7 % 1.81 38.0 % Multifamily 2.74 42.0 % 1.26 48.1 % Retail 1.82 57.8 % 1.24 65.0 % Hotel 2.17 47.6 % 1.99 21.6 % Other 2.30 44.2 % 1.13 72.6 % 2.00 55.2 % 1.40 52.6 %
Manageable CRE Maturity Risk At September 30, 2023 ($ in millions) Property Type Maturing in the Next 12 Months % Maturing in the Next 12 Months Fixed Rate or Swapped Maturing in the Next 12 Months Fixed Rate to Borrower as a % of Total Portfolio Office $ 338 18 % $ 234 13 % Warehouse/Industrial 81 6 % 69 5 % Multifamily 81 10 % 34 4 % Retail 154 18 % 82 10 % Hotel 40 9 % 15 3 % Construction and Land 134 30 % — — % Other 26 27 % 26 27 % $ 854 15 % $ 460 8 % 13 Just 8% of total CRE portfolio fixed and maturing in the next 12 months Property Type 2023 2024 2025 2026 Thereafter Total Office $ 172 $ 235 $ 406 $ 339 $ 679 $ 1,831 Warehouse/Industrial 40 113 156 370 582 1,261 Multifamily 3 111 80 189 448 831 Retail 70 106 140 203 327 846 Hotel 26 18 45 218 125 432 Construction and Land 1 175 101 52 116 445 Other 12 13 8 27 36 96 $ 324 $ 771 $ 936 $ 1,398 $ 2,313 $ 5,742 Maturity Distribution of CRE Loans
CRE Office Portfolio - Additional Information At September 30, 2023 14 • Rent rollover in next 12 months approximately 11% of the total office portfolio; 14% for FL and 6% in NY Tri State • Manhattan portfolio has approximately 95% occupancy and rent rollover in the next 12 months of 5% • Substantially all of the Florida portfolio is suburban • 17% of the total office portfolio is medical office 44% 19% 20% 12% 4% 1% Manhattan NY Tri-State Other Long Island Queens Brooklyn Bronx 28% 23%21% 11% 7% 10% Tampa Orlando Boca/Palm Beach Broward Miami-Dade Other NY Tri-State by Sub-Market Florida by Sub-Market
Granular, Diversified Commercial & Industrial Portfolio At September 30, 2023 ($ in millions) Industry Balance(1) % of Portfolio Finance and Insurance $ 1,612 19.0 % Manufacturing 828 9.8 % Educational Services 709 8.3 % Utilities 636 7.5 % Wholesale Trade 629 7.4 % Information 578 6.8 % Health Care and Social Assistance 540 6.3 % Real Estate and Rental and Leasing 508 6.0 % Transportation and Warehousing 402 4.7 % Construction 383 4.5 % Retail Trade 301 3.5 % Professional, Scientific, and Technical Services 288 3.4 % Public Administration 249 2.9 % Other Services (except Public Administration) 239 2.8 % Administrative and Support and Waste Management 198 2.3 % Arts, Entertainment, and Recreation 191 2.2 % Accommodation and Food Services 150 1.8 % Other 68 0.8 % $ 8,509 100.0 % 151. Includes $1.9 billion of owner-occupied real estate Geographic Distribution Florida 36% New York Tri-State 31% Other 33%
Drivers of Change in the ACL - Current Quarter ($ in millions) $166.8 $12.3 $17.5 $(1.6) $(2.9) $4.0 $196.1 Risk Rating Migration and Specific Reserves Economic Forecast Net Charge- Offs Change in Qualitative Overlay ACL 09/30/23 ACL 06/30/23 0.80%0.68%% of Total Loans 16 • Current market adjustment • Changes to forward path of economic forecast Other • Portfolio and assumption changes • New Loans, net of Runoff
Allocation of the ACL ($ in millions) December 31, 2022 June 30, 2023 September 30, 2023 Balance % of Loans Balance % of Loans Balance % of Loans Residential $ 11.7 0.13 % $ 8.9 0.10 % $ 8.0 0.10 % Commerical: Commercial real estate 24.8 0.43 % 29.7 0.52 % 34.8 0.61 % Commercial and industrial 97.2 1.10 % 121.0 1.35 % 140.5 1.58 % Pinnacle - municipal finance 0.2 0.02 % 0.2 0.02 % 0.2 0.03 % Franchise finance 11.7 4.63 % 4.3 2.07 % 9.0 4.56 % Equipment finance 2.3 0.82 % 2.7 1.16 % 3.6 1.63 % Total commercial 136.2 0.85 % 157.9 0.99 % 188.1 1.18 % Allowance for credit losses $ 147.9 0.59 % $ 166.8 0.68 % $ 196.1 0.80 % Asset Quality Ratios December 31, 2022 June 30, 2023 September 30, 2023 Non-performing loans to total loans(1) 0.42 % 0.48 % 0.56 % Non-performing assets to total assets(1) 0.29 % 0.34 % 0.40 % Allowance for credit losses to non-performing loans(1) 140.88 % 140.52 % 143.22 % Net charge-offs to average loans(2) 0.22 % 0.09 % 0.07 % 17 1. Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $37.8 million, $35.9 million and $40.3 million or 0.16%, 0.15% and 0.16% of total loans and 0.11%, 0.10% and 0.11% of total assets at September 30, 2023, June 30, 2023 and December 31, 2022, respectively. 2. Annualized for the periods ended June 30, 2023 and September 30, 2023. Office Portfolio ACL: 0.99% at September 30, 2023
Asset Quality Metrics 18 Non-Performing Loans to Total Loans Non-Performing Assets to Total Assets Net Charge-offs to Average Loans 0.88% 1.02% 0.87% 0.42% 0.48% 0.56% 0.68% 0.80% 0.68% 0.26% 0.33% 0.40% Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 09/30/23 —% 0.25% 0.50% 0.75% 1.00% 1.25% 0.63% 0.71% 0.58% 0.29% 0.34% 0.40% 0.49% 0.56% 0.45% 0.18% 0.24% 0.29% Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 09/30/23 —% 0.25% 0.50% 0.75% 1.00% 1.25% 0.05% 0.26% 0.29% 0.22% 0.07% 12/31/19 12/31/20 12/31/21 12/31/22 09/30/23 —% 0.20% 0.40% 0.60%
Non-Performing Loans by Portfolio Segment ($ in millions) 19 $205 $244 $206 $105 $119 $137 $19 $29 $29 $21 $23 $21 $24 $60 $30 $3 $3 $65 $43 $58 $22 $48 $48 $21 $14 $45 $33 $13 $4 $18 $46 $51 $46 $40 $36 $38 $16 $16 $10 $9 $5 $9 Non-Guaranteed Portion of SBA Guaranteed Portion of SBA Franchise Equipment C&I CRE Residential and Other Consumer 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 09/30/23 NPLs Remain Below Pre-Pandemic Levels
Criticized and Classified Loans ($ in millions) 20 Commercial Real Estate(1) Commercial(1)(2) Special Mention Substandard Accruing Substandard Non-accruing and Doubtful 12/31/19 12/31/20 12/31/21 12/31/22 09/30/23 $— $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 12/31/19 12/31/20 12/31/21 12/31/22 09/30/23 $— $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Criticized and Classified CRE by Property Type at September 30, 2023 $98 $40 $63 $90 $42 $16 $15 Multifamily Hotel Retail Office Construction & Land Other SBA 1. Excludes SBA 2. Includes Pinnacle, franchise finance and equipment finance $146 $14 $73 $91 $2 $30 Criticized and Classified CRE by Property Type at December 31, 2022
Asset Quality - Delinquencies ($ in millions) 21 Commercial(1) CRE 12/31/19 12/31/20 12/31/21 12/31/22 09/30/23 $— $20 $40 $60 $80 $100 Residential(2) 12/31/19 12/31/20 12/31/21 12/31/22 09/30/23 $— $20 $40 $60 $80 $100 30-59 Days PD 60-89 Days PD 90 Days+ PD 12/31/19 12/31/20 12/31/21 12/31/22 09/30/23 $— $20 $40 $60 $80 $100 1. Includes Pinnacle, franchise finance and equipment finance 2. Excludes government insured residential loans
Residential Portfolio Overview At September 30, 2023 22 Residential Loan Product Type FICO Distribution(1) Breakdown by LTV 1. Excludes government insured residential loans. FICOs are refreshed routinely. LTVs are typically based on valuation at origination Prior 19% 2019 4% 2020 13%2021 43% 2022 17% 2023 4% >759 76% 720-759 15% <720 or NA 9% Breakdown by Vintage(1) 60% or less 35% 61% - 70% 25% 71% - 80% 39% More than 80% 1% 30 Yr Fixed 32% 15 & 20 Year Fixed 13% 10/1 ARM 12% 5/1 & 7/1 ARM 26% Formerly Covered <1% Govt Insured 17% High quality residential portfolio consists primarily of high FICO, low LTV, prime jumbo mortgages with de-minimis charge-offs since inception as well as government insured loans
Investment Portfolio 23
High Quality, Short-Duration Securities Portfolio ($ in millions) December 31, 2022 June 30, 2023 September 30, 2023 Portfolio Net Unrealized Loss Fair Value Net Unrealized Loss Fair Value Net Unrealized Loss Fair Value US Government and Agency $ (146) $ 2,780 $ (132) $ 2,686 $ (144) $ 2,642 Private label RMBS and CMOs (334) 2,531 (318) 2,384 (353) 2,290 Private label CMBS (121) 2,524 (98) 2,282 (95) 2,256 Single family real estate-backed securities (32) 470 (23) 438 (25) 393 CLOs (30) 1,136 (19) 1,081 (12) 1,048 Other (11) 213 (9) 196 (15) 202 $ (674) $ 9,654 $ (599) $ 9,067 $ (644) $ 8,831 Portfolio Composition US Government and Agency 30% Private label RMBS and CMOs 26% Private label CMBS 26% Single family real estate- backed securities 4% CLOs 12% Other 2% Rating Distribution GOV 30% AAA 60% AA 7% A 2% NR 1% • No expected credit losses on AFS securities • AFS portfolio duration of 2.02; approximately 68% of the portfolio floating rate • HTM securities totaling $10 million with unrealized loss of $0.1 million 24
High Quality, Short-Duration Securities Portfolio At September 30, 2023 Strong credit enhancement levels Private Label RMBS Subordination Wtd. Avg. Stress Scenario LossRating Min Max Avg. AAA 3.0 90.5 17.7 2.3 AA 19.9 34.0 24.5 5.3 A 26.4 27.4 26.9 5.4 Wtd. Avg. 4.1 87.0 18.1 2.5 Private Label CMBS Subordination Wtd. Avg. Stress Scenario LossRating Min Max Avg. AAA 30.0 97.4 44.0 6.2 AA 29.4 96.8 37.8 7.0 A 25.1 75.2 44.8 8.3 Wtd. Avg. 29.8 96.3 43.4 6.4 CLOs Subordination Wtd. Avg. Stress Scenario LossRating Min Max Avg. AAA 38.8 69.6 47.0 10.9 AA 31.2 44.3 36.4 9.1 A 29.5 32.7 30.7 10.0 Wtd. Avg. 37.2 64.1 44.7 10.6 AAA 94% AA 4% A 2% AAA 86% AA 10% A 4% AAA 80% AA 16% A 4% 25
Appendix - Additional Information 26
Strong Capital Position Relative to Peers and Regulatory Requirements 27 6.5% 6.5% 13.2% 11.4%11.5% 9.8% 12.2% 11.3% 11.8% Required to be Considered Well Capitalized CET1 CET1 including AOCI CET1 Peer Median(1)(2) CCAR Stress Test Trough BankUnited, N.A BankUnited, Inc —% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 1. Peer information based on June 30 Call Report data for banks with total assets between $20 billion and $100 billion 2. Peer information for comparison to BankUnited, Inc. is based on June 30 data for publicly traded companies between $20 billion and $100 billion. At September 30, 2023
Stress Testing Results(3) ($ in millions) 28 2.7% 3.3% 0.7% 2.2% Commercial CRE Residential Total —% 1.0% 2.0% 3.0% 4.0% 4.7% 0.5% 3.1% 2.6% 6.6% 4.8% 3.3% 2.3% 0.2% 1.5% 1.0% 5.3% 1.9% 1.7% CCAR Severely Adverse Scenario Moody’s S4 Office Industrial Multifamily Retail Hotel Other Total —% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% $237 $187 $49 $473 Lifetime expected losses in the CCAR severely adverse scenario $90 $6 $36 $23 $28 $4 $187 Lifetime expected losses in the CCAR severely adverse scenario 1. Excludes Pinnacle municipal finance and mortgage warehouse lending. 2. Construction loans are included in the chart by their applicable property type. • Bank remains well above well capitalized threshold under hypothetical severe stress • CET 1 ratio trough of 11.8% at the Bank level in CCAR severely adverse scenario CRE Portfolio Stress Test Results(2) Loan Portfolio Stress Test Results(1) 3. Stress testing results based on loan portfolio as of December 31, 2022.
Liquidity 29
Ample Liquidity Coverage of Uninsured Deposits ($ in millions) 30 Insured Deposits Total Deposits $ 26,113 Estimated Uninsured Deposits $ 12,033 Less: Collateralized deposits (2,830) Less: Affiliate deposits (312) Adjusted Uninsured Deposits $ 8,891 Estimated Insured and Collateralized Deposits $ 17,222 Insured and Collateralized Deposits to Total Deposits 66 % Available Liquidity(1) $ 14,356 Available Liquidity to Uninsured, Uncollateralized Deposits Ratio 161 % 1. Cash + Capacity at FHLB + Capacity at FRB + Unencumbered securities At September 30, 2023
Available Liquidity ($ in millions) 31 Same Day Available Liquidty $14,673 $14,356 $301 $379 $4,554 $4,970 $8,947 $7,857 $871 $1,150 Cash FHLB Capacity Capacity at the Fed Unencumbered Securities 06/30/23 09/30/23
Non-GAAP Financial Measures 32
Non-GAAP Financial Measures 33 Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions as it is a metric commonly used in the banking industry. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share at September 30, 2023 (in thousands except share and per share data): September 30, 2023 Total stockholders’ equity (GAAP) $ 2,524,070 Less: goodwill 77,637 Tangible stockholders’ equity (non-GAAP) $ 2,446,433 Common shares issued and outstanding 74,413,059 Book value per common share (GAAP) $ 33.92 Tangible book value per common share (non-GAAP) $ 32.88
Non-GAAP Financial Measures 34 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. This measure also provides a meaningful basis for comparison to other financial institutions since it is commonly employed and is a measure frequently cited by investors and analysts. The following table reconciles the non-GAAP financial measure of PPNR to the comparable GAAP financial measurement of income before income taxes for the periods indicated (in thousands): Three Months Ended September 30, 2023 June 30, 2023 September 30, 2022 Income before income taxes (GAAP) $ 62,427 $ 78,630 $ 117,083 Plus: provision for credit losses 33,049 15,517 3,720 PPNR (non-GAAP) $ 95,476 $ 94,147 $ 120,803