BankUnited, Inc. Reports Second Quarter 2021 Results

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BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended June 30, 2021.

“We're very happy with results for the quarter and optimistic about a strong economic recovery" said Rajinder Singh, Chairman, President and Chief Executive Officer.

For the quarter ended June 30, 2021, the Company reported net income of $104.0 million, or $1.11 per diluted share, compared to $98.8 million or $1.06 per diluted share for the immediately preceding quarter ended March 31, 2021 and $76.5 million, or $0.80 per diluted share, for the quarter ended June 30, 2020.

For the six months ended June 30, 2021, the Company reported net income of $202.8 million, or $2.17 per diluted share, compared to $45.6 million, or $0.47 per diluted share, for the six months ended June 30, 2020. On an annualized basis, earnings for the six months ended June 30, 2021 generated a return on average stockholders' equity of 13.2% and a return on average assets of 1.15%.

Financial Highlights

  • Pre-tax, pre-provision net revenue ("PPNR") was $112.6 million for the quarter ended June 30, 2021 compared to $103.3 million for the immediately preceding quarter ended March 31, 2021 and $122.3 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021 and 2020, PPNR was $215.9 million and $207.3 million, respectively.
  • Net interest income increased by $2.1 million compared to the immediately preceding quarter ended March 31, 2021 and by $8.0 million compared to the quarter ended June 30, 2020. The net interest margin calculated on a tax-equivalent basis, impacted by elevated levels of liquidity, decreased to 2.37% for the quarter ended June 30, 2021 from 2.39% for both the immediately preceding quarter ended March 31, 2021 and the quarter ended June 30, 2020.
  • The average cost of total deposits continued to decline, dropping by 0.08% to 0.25% for the quarter ended June 30, 2021 from 0.33% for the immediately preceding quarter ended March 31, 2021, and 0.80% for the quarter ended June 30, 2020. On a spot basis, the average annual percentage yield ("APY") on total deposits declined to 0.22% at June 30, 2021 from 0.27% at March 31, 2021 and 0.36% at December 31, 2020.
  • For the quarter ended June 30, 2021, the Company recorded a recovery of credit losses of $(27.5) million compared to a recovery of $(28.0) million for the immediately preceding quarter ended March 31, 2021 and a provision for credit losses of $25.4 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021 and 2020, the provision for (recovery of) credit losses was $(55.5) million and $150.8 million, respectively.
  • As expected, the Company's levels of criticized and classified loans, which had increased as a result of the COVID-19 pandemic, have started to decline. During the quarter ended June 30, 2021, total criticized and classified loans declined by $541 million or 21%, to $2.1 billion at June 30, 2021 from $2.6 billion at March 31, 2021.
  • Loans currently under short-term deferral totaled $41 million and loans modified under the CARES Act totaled $456 million for a total of $497 million at June 30, 2021, down from a total of $762 million at March 31, 2021.
  • Non-interest bearing demand deposits grew by $869 million during the quarter ended June 30, 2021 while total deposits grew by $877 million. Average non-interest bearing demand deposits grew by $673 million for the quarter ended June 30, 2021 compared to the immediately preceding quarter and by $2.9 billion compared to the second quarter of the prior year. At June 30, 2021, non-interest bearing demand deposits represented 31% of total deposits, compared to 25% of total deposits at December 31, 2020.
  • Investment securities grew by $987 million for the quarter ended June 30, 2021, while loans and operating leases, excluding PPP loans, declined by $69 million. Excess liquidity was deployed into the investment portfolio during the quarter as loan growth continued to lag growth in deposits.
  • Book value per common share and tangible book value per common share at June 30, 2021 increased to $33.91 and $33.08, respectively, from $32.05 and $31.22, respectively at December 31, 2020.
  • On July 21, 2021, the Company's Board of Directors authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock.

Loans and Leases

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

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

Residential and other consumer loans

$

7,076,274

 

 

30.9

%

 

$

6,582,447

 

 

28.1

%

 

$

6,348,222

 

 

26.6

%

Multi-family

1,256,711

 

 

5.5

%

 

1,507,462

 

 

6.5

%

 

1,639,201

 

 

6.9

%

Non-owner occupied commercial real estate

4,724,183

 

 

20.7

%

 

4,871,110

 

 

20.9

%

 

4,963,273

 

 

20.8

%

Construction and land

218,634

 

 

1.0

%

 

287,821

 

 

1.2

%

 

293,307

 

 

1.2

%

Owner occupied commercial real estate

1,960,900

 

 

8.6

%

 

1,932,153

 

 

8.3

%

 

2,000,770

 

 

8.4

%

Commercial and industrial

4,205,795

 

 

18.4

%

 

4,048,473

 

 

17.3

%

 

4,447,383

 

 

18.6

%

PPP

491,960

 

 

2.1

%

 

911,951

 

 

3.9

%

 

781,811

 

 

3.3

%

Pinnacle

1,046,537

 

 

4.6

%

 

1,088,685

 

 

4.7

%

 

1,107,386

 

 

4.6

%

Bridge - franchise finance

463,874

 

 

2.0

%

 

524,617

 

 

2.2

%

 

549,733

 

 

2.3

%

Bridge - equipment finance

421,939

 

 

1.8

%

 

460,391

 

 

2.0

%

 

475,548

 

 

2.0

%

Mortgage warehouse lending ("MWL")

1,018,267

 

 

4.4

%

 

1,145,957

 

 

4.9

%

 

1,259,408

 

 

5.3

%

 

$

22,885,074

 

 

100.0

%

 

$

23,361,067

 

 

100.0

%

 

$

23,866,042

 

 

100.0

%

Operating lease equipment, net

$

667,935

 

 

 

 

$

681,003

 

 

 

 

$

663,517

 

 

 

Residential and other consumer loans grew by $494 million during the quarter, including growth of $102 million in GNMA early buyout loans and $392 million of growth in the rest of the portfolio. GNMA early buyout loans totaled $1.8 billion at June 30, 2021.

Commercial and industrial loans, including owner-occupied commercial real estate, grew by $186 million for the quarter ended June 30, 2021. The remaining commercial portfolio segments showed net declines for the quarter. The New York multi-family portfolio continued to run off, declining by $225 million. MWL line utilization was 52% at June 30, 2021 compared to 55% at March 31, 2021 and 62% at December 31, 2020.

PPP loans declined by $420 million during the quarter ended June 30, 2021 as $438 million in loans originated under the First Draw Program were fully or partially forgiven. PPP loans under the Second Draw Program totaling $17 million were originated during the quarter.

Asset Quality and the Allowance for Credit Losses

The following table presents information about non-performing loans, loans on deferral and CARES Act modifications at June 30, 2021 (dollars in thousands):

 

Non-Performing Loans

 

Currently Under Short-Term Deferral

 

CARES Act Modification

Residential and other consumer (1)

$

45,553

 

 

$

38,584

 

 

$

20,135

 

Commercial:

 

 

 

 

 

CRE by Property Type:

 

 

 

 

 

Retail

21,382

 

 

 

 

15,871

 

Hotel

22,143

 

 

 

 

225,436

 

Office

5,263

 

 

1,681

 

 

43,179

 

Multi-family

9,602

 

 

 

 

13,872

 

Other

4,783

 

 

 

 

 

Owner occupied commercial real estate

26,582

 

 

 

 

15,223

 

Commercial and industrial

123,950

 

 

524

 

 

96,545

 

Bridge - franchise finance

33,405

 

 

25,647

Total commercial

247,110

 

2,205

 

435,773

Total

$

292,663

 

 

$

40,789

 

 

$

455,908

 

______________

(1)

Excludes government insured residential loans.

In the table above, "currently under short-term deferral" refers to loans subject to a 90-day payment deferral at June 30, 2021 and "CARES Act modification" refers to loans subject to longer-term modifications that, were it not for the provisions of the CARES Act, would likely have been reported as TDRs. Non-performing loans may include some loans that have been modified under the CARES Act.

Non-performing loans increased to $292.7 million or 1.28% of total loans at June 30, 2021, from $233.6 million or 1.00% of total loans at March 31, 2021 and $244.5 million or 1.02% of total loans at December 31, 2020. The increase in non-performing loans during the quarter ended June 30, 2021 was primarily attributable to one $69 million commercial and industrial relationship. Non-performing loans in the majority of portfolio sub-segments declined during the quarter ended June 30, 2021. Non-performing loans included $47.7 million, $48.2 million and $51.3 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.21%, 0.21% and 0.22% of total loans at June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

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

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

Special mention

$

138,064

 

 

$

420,331

 

 

$

711,516

 

Substandard - accruing

1,684,666

 

 

1,983,191

 

 

1,758,654

Substandard - non-accruing

229,646

 

 

189,589

 

 

203,758

Doubtful

17,332

 

 

17,903

 

 

11,867

 

Total

$

2,069,708

 

 

$

2,611,014

 

 

$

2,685,795

 

As expected, total criticized and classified loans declined during the quarter ended June 30, 2021. The increase in substandard non-accruing loans was related primarily to the commercial and industrial relationship discussed above.

The following table presents the ACL at the dates indicated, related ACL coverage ratios and net charge-off rates for the quarters ended June 30, 2021 and March 31, 2021 and the year ended December 31, 2020 (dollars in thousands):

 

ACL

 

ACL to Total Loans (1)

 

ACL to Non-Performing Loans

 

Net Charge-offs to Average Loans (2)

December 31, 2020

$

257,323

 

 

1.08

%

 

105.26

%

 

0.26

%

March 31, 2021

$

220,934

 

 

0.95

%

 

94.56

%

 

0.17

%

June 30, 2021

$

175,642

 

 

0.77

%

 

60.02

%

 

0.24

%

______________

(1)

ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 0.90%, 1.13% and 1.26% at June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

(2)

Annualized for the periods ended March 31 and June 30, 2021.

The ACL at June 30, 2021 represents management's estimate of lifetime expected credit losses given our assessment of historical data, current conditions and a reasonable and supportable economic forecast as of the balance sheet date. The estimate was informed by Moody's economic scenarios published in June 2021, economic information provided by additional sources, data reflecting the impact of recent events on individual borrowers and other relevant information. The decline in the ACL and in ACL coverage ratios from December 31, 2020 to June 30, 2021 related primarily to the recovery of credit losses recorded during the six months ended June 30, 2021 and to a lesser extent, charge-offs.

For the quarter ended June 30, 2021, the Company recorded a recovery of credit losses of $(27.5) million, which included a recovery of $(27.7) million related to funded loans, partially offset by an immaterial provision related to unfunded loan commitments. The recovery of provision for credit losses was largely driven by improvements in forecasted economic conditions, the reduction in criticized and classified loans and a reduction in certain qualitative loss factors. These impacts were partially offset by an increase in the ACL on non-performing loans, primarily an increase of $27.2 million in the reserve related to the commercial relationship discussed above.

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

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Beginning balance

$

220,934

 

 

$

250,579

 

 

$

257,323

 

 

$

108,671

 

Cumulative effect of adoption of CECL

 

 

 

 

 

 

27,305

 

Balance after adoption of CECL

220,934

 

 

250,579

 

 

257,323

 

 

135,976

 

Provision (recovery)

(27,663)

 

 

31,584

 

 

(53,969)

 

 

153,449

 

Net charge-offs

(17,629)

 

 

(16,040)

 

 

(27,712)

 

 

(23,302)

 

Ending balance

$

175,642

 

 

$

266,123

 

 

$

175,642

 

 

$

266,123

 

Net interest income

Net interest income for the quarter ended June 30, 2021 increased to $198.3 million from $196.2 million for the immediately preceding quarter ended March 31, 2021 and $190.3 million for the quarter ended June 30, 2020.

Interest income decreased by $3.6 million for the quarter ended June 30, 2021 compared to the immediately preceding quarter, and by $26.0 million compared to the quarter ended June 30, 2020. Interest expense decreased by $5.7 million compared to the immediately preceding quarter and by $34.0 million compared to the quarter ended June 30, 2020. Decreases in interest income resulted from the impact on portfolio yields of declines in market interest rates in early 2020 including the impact of repayment of assets originated in a higher rate environment and origination of assets at lower prevailing rates, as well as a decline in average loans. Declines in interest expense also reflected the impact of decreases in market interest rates, our strategy focused on lowering the cost of deposits and improving the deposit mix and declines in average interest bearing liabilities.

The Company’s net interest margin, calculated on a tax-equivalent basis, decreased by 0.02% to 2.37% for the quarter ended June 30, 2021, from 2.39% for both the immediately preceding quarter ended March 31, 2021 and the quarter ended June 30, 2020. The net interest margin for the quarter ended June 30, 2021 was negatively impacted by excess liquidity, reflected in higher levels of cash as well as deployment of liquidity into the investment portfolio as loan production lagged deposit growth. Offsetting factors impacting the net interest margin for the quarter ended June 30, 2021 included:

  • The average rate paid on interest bearing deposits decreased to 0.35% for the quarter ended June 30, 2021, from 0.45% for the quarter ended March 31, 2021. This decline reflected continued initiatives taken to lower rates paid on deposits including the re-pricing of term deposits.
  • The tax-equivalent yield on investment securities decreased to 1.56% for the quarter ended June 30, 2021 from 1.73% for the quarter ended March 31, 2021. This decrease resulted from the impact of purchases of lower-yielding securities coupled with amortization, maturities and prepayment of securities purchased in a higher rate environment. Accounting adjustments related to faster prepayment speeds of securities purchased at a premium negatively impacted the yield on investment securities for the quarter ended June 30, 2021 by approximately 0.10%.
  • The tax-equivalent yield on loans increased to 3.59% for the quarter ended June 30, 2021, from 3.58% for the quarter ended March 31, 2021. Accelerated amortization of origination fees on PPP loans that were partially or fully forgiven during the quarter impacted the yield on loans by approximately 0.11% for the quarter ended June 30, 2021, compared to 0.06% for the quarter ended March 31, 2021. Factoring out the impact of accelerated amortization of PPP origination fees, the yield on loans for the quarter ended June 30, 2021 decreased by 0.04% compared to the immediately preceding quarter.
  • The increase in average non-interest bearing demand deposits as a percentage of average total deposits also positively impacted the cost of total deposits and the net interest margin.

Capital Actions

On July 21, 2021, the Company's Board of Directors authorized the repurchase of up to $150 million in shares of its outstanding common stock. This authorization is in addition to $37.7 million in remaining authorization under a previously announced share repurchase program. Any repurchases under the program will be made in accordance with applicable securities laws from time to time in open market or private transactions. The extent to which the Company repurchases shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of retained earnings, regulatory requirements and other considerations. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued without prior notice at any time.

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Thursday, July 22, 2021 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 http://www.ir.bankunited.com/. The dial in telephone number for the call is (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the conference ID for the call is 7297918. A replay of the call will be available from 12:00 p.m. ET on July 22nd through 11:59 p.m. ET on July 29th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The conference ID for the replay is 7297918. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.

About BankUnited, Inc.

BankUnited, Inc., with total assets of $35.7 billion at June 30, 2021, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 65 banking centers in 13 Florida counties and 4 banking centers in the New York metropolitan area at June 30, 2021.

Forward-Looking Statements

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

The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitations) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by the COVID-19 pandemic. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are available at the SEC’s website (www.sec.gov).

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands, except share and per share data)

 

 

June 30,
2021

 

December 31,
2020

ASSETS

 

 

 

Cash and due from banks:

 

 

 

Non-interest bearing

$

17,902

 

 

$

20,233

 

Interest bearing

877,446

 

 

377,483

 

Cash and cash equivalents

895,348

 

 

397,716

 

Investment securities (including securities recorded at fair value of $10,222,035 and $9,166,683)

10,232,035

 

 

9,176,683

 

Non-marketable equity securities

164,959

 

 

195,865

 

Loans held for sale

 

 

24,676

 

Loans

22,885,074

 

 

23,866,042

 

Allowance for credit losses

(175,642)

 

 

(257,323)

 

Loans, net

22,709,432

 

 

23,608,719

 

Bank owned life insurance

303,519

 

 

294,629

 

Operating lease equipment, net

667,935

 

 

663,517

 

Goodwill

77,637

 

 

77,637

 

Other assets

649,422

 

 

571,051

 

Total assets

$

35,700,287

 

 

$

35,010,493

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Liabilities:

 

 

 

Demand deposits:

 

 

 

Non-interest bearing

$

8,834,228

 

 

$

7,008,838

 

Interest bearing

3,218,441

 

 

3,020,039

 

Savings and money market

13,578,526

 

 

12,659,740

 

Time

2,978,074

 

 

4,807,199

 

Total deposits

28,609,269

 

 

27,495,816

 

Federal funds purchased

 

 

180,000

 

FHLB advances

2,681,505

 

 

3,122,999

 

Notes and other borrowings

721,639

 

 

722,495

 

Other liabilities

526,331

 

 

506,171

 

Total liabilities

32,538,744

 

 

32,027,481

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value $0.01 per share, 400,000,000 shares authorized; 93,238,553 and 93,067,500 shares issued and outstanding

932

 

 

931

 

Paid-in capital

1,011,786

 

 

1,017,518

 

Retained earnings

2,173,698

 

 

2,013,715

 

Accumulated other comprehensive loss

(24,873)

 

 

(49,152)

 

Total stockholders' equity

3,161,543

 

 

2,983,012

 

Total liabilities and stockholders' equity

$

35,700,287

 

 

$

35,010,493

 

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

2021

 

2021

 

2020

 

2021

 

2020

Interest income:

 

 

 

 

 

 

 

 

 

Loans

$

202,520

 

 

$

205,335

 

 

$

213,938

 

 

$

407,855

 

 

$

448,297

 

Investment securities

37,674

 

 

38,501

 

 

50,932

 

 

76,175

 

 

106,992

 

Other

1,607

 

 

1,593

 

 

2,908

 

 

3,200

 

 

6,628

 

Total interest income

241,801

 

 

245,429

 

 

267,778

 

 

487,230

 

 

561,917

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

17,316

 

 

22,376

 

 

50,187

 

 

39,692

 

 

133,009

 

Borrowings

26,174

 

 

26,813

 

 

27,254

 

 

52,987

 

 

57,995

 

Total interest expense

43,490

 

 

49,189

 

 

77,441

 

 

92,679

 

 

191,004

 

Net interest income before provision for credit losses

198,311

 

 

196,240

 

 

190,337

 

 

394,551

 

 

370,913

 

Provision for (recovery of) credit losses

(27,534)

 

 

(27,989)

 

 

25,414

 

 

(55,523)

 

 

150,842

 

Net interest income after provision for credit losses

225,845

 

 

224,229

 

 

164,923

 

 

450,074

 

 

220,071

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Deposit service charges and fees

5,417

 

 

4,900

 

 

3,701

 

 

10,317

 

 

7,887

 

Gain on sale of loans, net

2,234

 

 

1,754

 

 

4,326

 

 

3,988

 

 

7,792

 

Gain on investment securities, net

4,155

 

 

2,365

 

 

6,836

 

 

6,520

 

 

3,383

 

Lease financing

13,522

 

 

12,488

 

 

16,150

 

 

26,010

 

 

31,631

 

Other non-interest income

7,429

 

 

8,789

 

 

7,338

 

 

16,218

 

 

10,956

 

Total non-interest income

32,757

 

 

30,296

 

 

38,351

 

 

63,053

 

 

61,649

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

56,459

 

 

59,288

 

 

48,877

 

 

115,747

 

 

107,764

 

Occupancy and equipment

11,492

 

 

11,875

 

 

11,901

 

 

23,367

 

 

24,270

 

Deposit insurance expense

4,222

 

 

7,450

 

 

4,806

 

 

11,672

 

 

9,209

 

Professional fees

2,139

 

 

1,912

 

 

3,131

 

 

4,051

 

 

6,335

 

Technology and telecommunications

16,851

 

 

15,741

 

 

14,025

 

 

32,592

 

 

26,621

 

Depreciation of operating lease equipment

12,834

 

 

12,217

 

 

12,219

 

 

25,051

 

 

24,822

 

Other non-interest expense

14,455

 

 

14,738

 

 

11,411

 

 

29,193

 

 

26,217

 

Total non-interest expense

118,452

 

 

123,221

 

 

106,370

 

 

241,673

 

 

225,238

 

Income before income taxes

140,150

 

 

131,304

 

 

96,904

 

 

271,454

 

 

56,482

 

Provision for income taxes

36,176

 

 

32,490

 

 

20,396

 

 

68,666

 

 

10,925

 

Net income

$

103,974

 

 

$

98,814

 

 

$

76,508

 

 

$

202,788

 

 

$

45,557

 

Earnings per common share, basic

$

1.12

 

 

$

1.06

 

 

$

0.80

 

 

$

2.18

 

 

$

0.47

 

Earnings per common share, diluted

$

1.11

 

 

$

1.06

 

 

$

0.80

 

 

$

2.17

 

 

$

0.47

 

 

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

 

 

Three Months Ended

June 30, 2021

 

Three Months Ended

March 31, 2021

 

Three Months Ended

June 30, 2020

 

 

 

 

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

$

22,996,564

 

 

$

205,940

 

 

3.59

%

 

$

23,549,309

 

 

$

208,821

 

 

3.58

%

 

$

23,534,684

 

 

$

217,691

 

 

3.71

%

Investment securities (3)

9,839,422

 

 

38,338

 

 

1.56

%

 

9,070,185

 

 

39,188

 

 

1.73

%

 

8,325,217

 

 

51,684

 

 

2.48

%

Other interest earning assets

1,380,317

 

 

1,607

 

 

0.47

%

 

1,062,840

 

 

1,593

 

 

0.61

%

 

765,848

 

 

2,908

 

 

1.53

%

Total interest earning assets

34,216,303

 

 

245,885

 

 

2.88

%

 

33,682,334

 

 

249,602

 

 

2.98

%

 

32,625,749

 

 

272,283

 

 

3.35

%

Allowance for credit losses

(215,151)

 

 

 

 

 

 

(254,438)

 

 

 

 

 

 

(254,396)

 

 

 

 

 

Non-interest earning assets

1,732,676

 

 

 

 

 

 

1,724,176

 

 

 

 

 

 

1,976,398

 

 

 

 

 

Total assets

$

35,733,828

 

 

 

 

 

 

$

35,152,072

 

 

 

 

 

 

$

34,347,751

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

$

3,069,945

 

 

$

2,594

 

 

0.34

%

 

$

2,942,874

 

 

$

2,774

 

 

0.38

%

 

$

2,448,545

 

 

$

4,722

 

 

0.78

%

Savings and money market deposits

13,541,237

 

 

11,307

 

 

0.33

%

 

12,793,019

 

 

12,127

 

 

0.38

%

 

10,450,310

 

 

17,447

 

 

0.67

%

Time deposits

3,380,582

 

 

3,415

 

 

0.41

%

 

4,330,781

 

 

7,475

 

 

0.70

%

 

7,096,097

 

 

28,018

 

 

1.59

%

Total interest bearing deposits

19,991,764

 

 

17,316

 

 

0.35

%

 

20,066,674

 

 

22,376

 

 

0.45

%

 

19,994,952

 

 

50,187

 

 

1.01

%

Federal funds purchased

 

 

 

 

%

 

8,000

 

 

3

 

 

0.15

%

 

119,835

 

 

32

 

 

0.11

%

FHLB and PPPLF borrowings

2,873,922

 

 

16,922

 

 

2.36

%

 

3,072,717

 

 

17,558

 

 

2.32

%

 

4,961,376

 

 

21,054

 

 

1.71

%

Notes and other borrowings

721,753

 

 

9,252

 

 

5.13

%

 

722,305

 

 

9,252

 

 

5.12

%

 

493,278

 

 

6,168

 

 

5.00

%

Total interest bearing liabilities

23,587,439

 

 

43,490

 

 

0.74

%

 

23,869,696

 

 

49,189

 

 

0.83

%

 

25,569,441

 

 

77,441

 

 

1.22

%

Non-interest bearing demand deposits

8,163,879

 

 

 

 

 

 

7,491,249

 

 

 

 

 

 

5,313,009

 

 

 

 

 

Other non-interest bearing liabilities

851,044

 

 

 

 

 

 

746,973

 

 

 

 

 

 

820,439

 

 

 

 

 

Total liabilities

32,602,362

 

 

 

 

 

 

32,107,918

 

 

 

 

 

 

31,702,889

 

 

 

 

 

Stockholders' equity

3,131,466

 

 

 

 

 

 

3,044,154

 

 

 

 

 

 

2,644,862

 

 

 

 

 

Total liabilities and stockholders' equity

$

35,733,828

 

 

 

 

 

 

$

35,152,072

 

 

 

 

 

 

$

34,347,751

 

 

 

 

 

Net interest income

 

 

$

202,395

 

 

 

 

 

 

$

200,413

 

 

 

 

 

 

$

194,842

 

 

 

Interest rate spread

 

 

 

 

2.14

%

 

 

 

 

 

2.15

%

 

 

 

 

 

2.13

%

Net interest margin

 

 

 

 

2.37

%

 

 

 

 

 

2.39

%

 

 

 

 

 

2.39

%

______________

(1)

On a tax-equivalent basis where applicable

(2)

Annualized

(3)

At fair value except for securities held to maturity

 

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

 

 

Six Months Ended June 30,

 

2021

 

2020

 

Average

Balance

 

Interest (1)

 

Yield/

Rate

(1)(2)

 

Average

Balance

 

Interest (1)

 

Yield/

Rate

(1)(2)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans

$

23,271,410

 

 

$

414,761

 

 

3.58

%

 

$

23,192,374

 

 

$

455,799

 

 

3.94

%

Investment securities (3)

9,456,929

 

 

77,525

 

 

1.64

%

 

8,216,433

 

 

108,635

 

 

2.64

%

Other interest earning assets

1,222,456

 

 

3,200

 

 

0.53

%

 

706,238

 

 

6,628

 

 

1.89

%

Total interest earning assets

33,950,795

 

 

495,486

 

 

2.93

%

 

32,115,045

 

 

571,062

 

 

3.57

%

Allowance for credit losses

(234,686)

 

 

 

 

 

 

(196,619)

 

 

 

 

 

Non-interest earning assets

1,728,449

 

 

 

 

 

 

1,863,074

 

 

 

 

 

Total assets

$

35,444,558

 

 

 

 

 

 

$

33,781,500

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

$

3,006,760

 

 

5,368

 

 

0.36

%

 

$

2,311,086

 

 

11,681

 

 

1.02

%

Savings and money market deposits

13,169,195

 

 

23,434

 

 

0.36

%

 

10,431,256

 

 

55,203

 

 

1.06

%

Time deposits

3,853,057

 

 

10,890

 

 

0.57

%

 

7,303,083

 

 

66,125

 

 

1.82

%

Total interest bearing deposits

20,029,012

 

 

39,692

 

 

0.40

%

 

20,045,425

 

 

133,009

 

 

1.33

%

Federal funds purchased

3,978

 

 

2

 

 

0.10

%

 

106,951

 

 

399

 

 

0.75

%

FHLB and PPPLF borrowings

2,972,770

 

 

34,480

 

 

2.34

%

 

4,688,102

 

 

46,138

 

 

1.98

%

Notes and other borrowings

722,028

 

 

18,505

 

 

5.13

%

 

461,188

 

 

11,458

 

 

4.97

%

Total interest bearing liabilities

23,727,788

 

 

92,679

 

 

0.79

%

 

25,301,666

 

 

191,004

 

 

1.52

%

Non-interest bearing demand deposits

7,829,422

 

 

 

 

 

 

4,840,781

 

 

 

 

 

Other non-interest bearing liabilities

799,297

 

 

 

 

 

 

784,770

 

 

 

 

 

Total liabilities

32,356,507

 

 

 

 

 

 

30,927,217

 

 

 

 

 

Stockholders' equity

3,088,051

 

 

 

 

 

 

2,854,283

 

 

 

 

 

Total liabilities and stockholders' equity

$

35,444,558

 

 

 

 

 

 

$

33,781,500

 

 

 

 

 

Net interest income

 

 

$

402,807

 

 

 

 

 

 

$

380,058

 

 

 

Interest rate spread

 

 

 

 

2.14

%

 

 

 

 

 

2.05

%

Net interest margin

 

 

 

 

2.38

%

 

 

 

 

 

2.37

%

______________

(1)

On a tax-equivalent basis where applicable

(2)

Annualized

(3)

At fair value except for securities held to maturity

 

BANKUNITED, INC. AND SUBSIDIARIES

EARNINGS PER COMMON SHARE

(In thousands except share and per share amounts)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

2021

 

2020

 

2021

 

2020

Basic earnings per common share:

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Net income

$

103,974

 

 

$

76,508

 

 

$

202,788

 

 

$

45,557

 

Distributed and undistributed earnings allocated to participating securities

(1,338)

 

 

(3,353)

 

 

(2,589)

 

 

(1,939)

 

Income allocated to common stockholders for basic earnings per common share

$

102,636

 

 

$

73,155

 

 

$

200,199

 

 

$

43,618

 

Denominator:

 

 

 

 

 

 

 

Weighted average common shares outstanding

93,245,282

 

 

92,409,949

 

 

93,160,962

 

 

93,177,243

 

Less average unvested stock awards

(1,241,381)

 

 

(1,207,798)

 

 

(1,223,555)

 

 

(1,154,589)

 

Weighted average shares for basic earnings per common share

92,003,901

 

 

91,202,151

 

 

91,937,407

 

 

92,022,654

 

Basic earnings per common share

$

1.12

 

 

$

0.80

 

 

$

2.18

 

 

$

0.47

 

Diluted earnings per common share:

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Income allocated to common stockholders for basic earnings per common share

$

102,636

 

 

$

73,155

 

 

$

200,199

 

 

$

43,618

 

Adjustment for earnings reallocated from participating securities

2

 

 

 

 

3

 

 

 

Income used in calculating diluted earnings per common share

$

102,638

 

 

$

73,155

 

 

$

200,202

 

 

$

43,618

 

Denominator:

 

 

 

 

 

 

 

Weighted average shares for basic earnings per common share

92,003,901

 

 

91,202,151

 

 

91,937,407

 

 

92,022,654

 

Dilutive effect of stock options and certain shared-based awards

181,061

 

 

705

 

 

137,542

 

 

126,858

 

Weighted average shares for diluted earnings per common share

92,184,962

 

 

91,202,856

 

 

92,074,949

 

 

92,149,512

 

Diluted earnings per common share

$

1.11

 

 

$

0.80

 

 

$

2.17

 

 

$

0.47

 

 

BANKUNITED, INC. AND SUBSIDIARIES

SELECTED RATIOS

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Financial ratios (4)

 

 

 

 

 

 

 

Return on average assets

1.17

%

 

0.90

%

 

1.15

%

 

0.27

%

Return on average stockholders’ equity

13.3

%

 

11.6

%

 

13.2

%

 

3.2

%

Net interest margin (3)

2.37

%

 

2.39

%

 

2.38

%

 

2.37

%

 

June 30, 2021

 

December 31, 2020

Asset quality ratios

 

 

 

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

1.28

%

 

1.02

%

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

0.83

%

 

0.71

%

Allowance for credit losses to total loans

0.77

%

 

1.08

%

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

60.02

%

 

105.26

%

Net charge-offs to average loans (4)

0.24

%

 

0.26

%

______________

(1)

 

 

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

(2)

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

(3)

 

On a tax-equivalent basis.

(4)

 

Annualized for the three and six month periods.

(5)

 

Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $47.7 million or 0.21% of total loans and 0.13% of total assets, at June 30, 2021; and $51.3 million or 0.22% of total loans and 0.15% of total assets, at December 31, 2020.

 

 

June 30, 2021

 

December 31, 2020

 

Required to be

Considered Well Capitalized

 

BankUnited, Inc.

 

BankUnited, N.A.

 

BankUnited, Inc.

 

BankUnited, N.A.

 

Capital ratios

 

 

 

 

 

 

 

 

 

Tier 1 leverage

8.8

%

 

9.8

%

 

8.6

%

 

9.5

%

 

5.0

%

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

13.5

%

 

15.1

%

 

12.6

%

 

13.9

%

 

6.5

%

Total risk-based capital

15.4

%

 

15.7

%

 

14.7

%

 

14.8

%

 

10.0

%

On a fully-phased in basis with respect to the adoption of CECL, the Company's and the Bank's CET1 risk-based capital ratios would have been 13.4% and 15.0%, respectively, at June 30, 2021.

Non-GAAP Financial Measures

PPNR is a non-GAAP financial measure. Management believes this measure is relevant to understanding the performance of the Company attributable to elements other than the provision for credit losses and the ability of the Company to generate earnings sufficient to cover estimated credit losses, particularly in view of the volatility of the provision for credit losses resulting from the COVID-19 pandemic. 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 measurement of PPNR to the comparable GAAP financial measurement of income before income taxes for the periods indicated (in thousands):

 

Three Months Ended

 

Six Months

Ended June 30,

 

June 30,

2021

 

March 31,

2021

 

June 30,

2020

 

2021

 

2020

Income before income taxes (GAAP)

$

140,150

 

 

$

131,304

 

 

$

96,904

 

 

$

271,454

 

 

$

56,482

 

Plus: Provision for (recovery of) credit losses

(27,534)

 

 

(27,989)

 

 

25,414

 

 

(55,523)

 

 

150,842

 

PPNR (non-GAAP)

$

112,616

 

 

$

103,315

 

 

$

122,318

 

 

$

215,931

 

 

$

207,324

 

ACL to total loans, excluding government insured residential loans, PPP loans and MWL is a non-GAAP financial measure. Management believes this measure is relevant to understanding the adequacy of the ACL coverage, excluding the impact of loans which carry nominal or no reserves. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of ACL to total loans, excluding government insured residential loans, PPP loans and MWL to the comparable GAAP financial measurement of ACL to total loans at June 30, 2021, March 31, 2021 and December 31, 2020 (dollars in thousands):

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

Total loans (GAAP)

$

22,885,074

 

$

23,361,067

 

$

23,866,042

Less: Government insured residential loans

1,863,723

 

1,759,289

 

1,419,074

Less: PPP loans

491,960

 

911,951

 

781,811

Less: MWL

1,018,267

 

1,145,957

 

1,259,408

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

$

19,511,124

 

$

19,543,870

 

$

20,405,749

 

 

 

 

 

 

ACL

$

175,642

 

$

220,934

 

$

257,323

 

 

 

 

 

 

ACL to total loans (GAAP)

0.77

%

 

0.95

%

 

1.08

%

 

 

 

 

 

 

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

0.90

%

 

1.13

%

 

1.26

%

 

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

 

June 30, 2021

 

December 31, 2020

Total stockholders’ equity (GAAP)

$

3,161,543

 

 

$

2,983,012

 

Less: goodwill

77,637

 

 

77,637

 

Tangible stockholders’ equity (non-GAAP)

$

3,083,906

 

 

$

2,905,375

 

 

 

 

 

Common shares issued and outstanding

93,238,553

 

 

93,067,500

 

 

 

 

 

Book value per common share (GAAP)

$

33.91

 

 

$

32.05

 

 

 

 

 

Tangible book value per common share (non-GAAP)

$

33.08

 

 

$

31.22