Business Wire | Oct 28, 2020 06:45AM EDT

BankUnited, Inc. Reports Third Quarter 2020 Results

Oct. 28, 2020

MIAMI LAKES, Fla.--(BUSINESS WIRE)--Oct. 28, 2020--BankUnited, Inc. (the "Company") (NYSE: BKU) today announced financial results for the quarter ended September 30, 2020.

"We were pleased with our results for the quarter. The deposit mix and cost of funds improved, PPNR continued to show growth over the prior year and we saw some positive signs around credit as loans on deferral declined," said Rajinder Singh, Chairman, President and Chief Executive Officer.

For the quarter ended September 30, 2020, the Company reported net income of $66.6 million, or $0.70 per diluted share, compared to $76.5 million or $0.80 per diluted share for the immediately preceding quarter ended June 30, 2020 and $76.2 million, or $0.77 per diluted share, for the quarter ended September 30, 2019.

For the nine months ended September 30, 2020, the Company reported net income of $112.1 million, or $1.17 per diluted share, compared to $223.6 million, or $2.23 per diluted share, for the nine months ended September 30, 2019. Results for the nine months ended September 30, 2020 were negatively impacted by the application of the Current Expected Credit Losses ("CECL") accounting methodology, including the expected impact of COVID-19 on the provision for credit losses.

Financial Highlights

* Non-interest bearing demand deposits grew by $906 million, or 15%, for the quarter ended September 30, 2020, to 26% of total deposits, compared to 23% of total deposits at June 30, 2020 and 18% of total deposits at December 31, 2019. Total deposits increased by $527 million during the quarter ended September 30, 2020, as growth in non-interest bearing deposits was partially offset by continued runoff of higher cost time deposits. Average non-interest bearing demand deposits increased by $874 million for the quarter ended September 30, 2020 compared to the immediately preceding quarter and by $2.2 billion compared to the quarter ended September 30, 2019. * The average cost of total deposits declined by 0.23% to 0.57% for the quarter ended September 30, 2020, its lowest level since the Company's inception. The cost of total deposits was 0.80% for the quarter ended June 30, 2020 and 1.67% for the quarter ended September 30, 2019. On a spot basis, the average annual percentage yield ("APY") on total deposits declined to 0.49% at September 30, 2020 from 0.65% at June 30, 2020 and 1.42% at December 31, 2019. * Loans under COVID related deferral continued to decline. We reported at the end of the second quarter that we had granted initial 90-day payment deferrals on loans totaling $3.6 billion or approximately 15% of the total loan portfolio. At September 30, 2020, $1.1 billion, or approximately 5% of total loans were still subject to a short-term COVID related payment deferral or longer term modification under the CARES Act, or were in the process of modification. At October 25, 2020, $983 million, or approximately 4%, of loans remained on deferral or modification. * Investment securities grew by $607 million for the quarter ended September 30, 2020 while loans and leases, including operating lease equipment, declined by $69 million as liquidity was deployed into investment securities in the current challenging credit environment. We experienced growth in the residential and mortgage warehouse loan portfolio segments, offset by net runoff in other commercial and commercial real estate segments. * Pre-tax, pre-provision net revenue ("PPNR") continued to improve year-over-year, increasing by $12.9 million to $115.1 million for the quarter ended September 30, 2020 from $102.2 million for the quarter ended September 30, 2019. PPNR was $122.3 million for the quarter ended June 30, 2020. For the nine months ended September 30, 2020, PPNR improved to $322.5 million from $308.8 million for the nine months ended September 30, 2019. * The net interest margin, calculated on a tax-equivalent basis, was 2.32% for the quarter ended September 30, 2020 compared to 2.39% for the immediately preceding quarter. Deployment of liquidity into the securities portfolio contributed to the decline in the net interest margin for the quarter. The yield on interest earnings assets declined by 0.22% while the cost of interest bearing liabilities declined by 0.15% for the quarter ended September 30, 2020 compared to the quarter ended June 30, 2020. The net interest margin was 2.41% for the quarter ended September 30, 2019. * The provision for credit losses totaled $29.2 million for the quarter ended September 30, 2020 compared to $25.4 million for the immediately preceding quarter ended June 30, 2020. The provision for credit losses was $180.1 million for the nine months ended September 30, 2020. For the quarter and nine months ended September 30, 2019, the Company recorded provisions for loan losses, under the incurred loss model, of $1.8 million and $9.4 million, respectively. At September 30, 2020, the allowance for credit losses ("ACL") was $274 million, or 1.15% of the loan portfolio, compared to $266 million, or 1.12% at June 30, 2020. * The net unrealized gain (loss) on investment securities available for sale continued to improve during the quarter to a net unrealized gain of $62.0 million at September 30, 2020 compared to net unrealized losses of $2.6 million and $249.8 million at June 30, 2020 and March 31, 2020, respectively. * Stockholders' equity increased by $110 million during the quarter ended September 30, 2020 to $2.9 billion. The increase was driven by the recovery of $61 million in accumulated other comprehensive income, related primarily to the reduction in unrealized losses on investment securities available for sale, and by the retention of earnings. At September 30, 2020, book value per common share and tangible book value per common share were $31.01 and $30.17, respectively, compared to $29.81 and $28.97, respectively at June 30, 2020 and $31.33 and $30.52, respectively at December 31, 2019. * A dividend of $0.23 per common share was declared for the quarter ended September 30, 2020.

Capital

The Company's and BankUnited, N.A.'s regulatory capital ratios at September 30, 2020 and December 31, 2019 were as follows:

September 30, 2020 December 31, 2019 Required to be Considered BankUnited, BankUnited, BankUnited, BankUnited, Well Inc. N.A. Inc. N.A. Capitalized

Tier 1 8.6 % 9.5 % 8.9 % 9.3 % 5.0 %leverage

CommonEquity Tier1 ("CET1") 12.2 % 13.5 % 12.3 % 12.9 % 6.5 %risk-basedcapital

Totalrisk-based 14.3 % 14.4 % 12.8 % 13.4 % 10.0 %capital

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 11.9% and 13.2%, respectively, at September 30, 2020. The increase in the total risk-based capital ratio for BankUnited, Inc. from December 31, 2019 to September 30, 2020 includes the issuance of $300 million in subordinated debt in the second quarter of 2020.

Loans and Leases

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

September 30, 2020 June 30, 2020 December 31, 2019

Residentialand other $ 5,940,900 25.1 % $ 5,577,807 23.5 % $ 5,661,119 24.5 %consumerloans

Multi-family 1,810,126 7.6 % 1,893,753 7.9 % 2,217,705 9.6 %

Non-owneroccupied 4,910,835 20.7 % 4,940,531 20.7 % 5,030,904 21.7 %commercialreal estate

Construction 263,381 1.1 % 246,609 1.0 % 243,925 1.1 %and land

Owneroccupied 2,051,577 8.6 % 2,041,346 8.6 % 2,062,808 8.9 %commercialreal estate

Commercialand 4,427,351 18.6 % 4,691,326 19.7 % 4,655,349 20.1 %industrial

PPP 829,798 3.5 % 827,359 3.5 % - - %

Pinnacle 1,157,706 4.8 % 1,242,506 5.2 % 1,202,430 5.2 %

Bridge -franchise 606,222 2.5 % 623,139 2.5 % 627,482 2.6 %finance

Bridge -equipment 530,516 2.2 % 589,785 2.5 % 684,794 3.0 %finance

Mortgagewarehouse 1,250,903 5.3 % 1,160,728 4.9 % 768,472 3.3 %lending("MWL")

$ 23,779,315 100.0 % $ 23,834,889 100.0 % $ 23,154,988 100.0 %

Operatinglease $ 676,321 $ 689,965 $ 698,153 equipment,net

Growth in residential and other consumer loans for the quarter was mainly attributable to GNMA early buyout loans. At September 30, 2020, June 30, 2020 and December 31, 2019, the residential portfolio included $1.1 billion, $805 million and $676 million, respectively, of GNMA early buyout loans. Residential activity for the quarter included purchases of approximately $418 million in GNMA early buyout loans, offset by approximately $154 million in re-poolings and paydowns.

Residential and other consumer loans, excluding GNMA early buyout loans, experienced a net increase of approximately $99 million.

For most commercial portfolio segments, production for the quarter in a challenging credit environment was not sufficient to offset payoffs and lower line utilization. The decline in multi-family balances was driven primarily by continued runoff of the New York portfolio.

Mortgage warehouse outstandings increased by $90 million during the quarter ended September 30, 2020. Mortgage warehouse commitments totaled $2.0 billion at September 30, 2020, an increase of 53% compared to $1.3 billion at December 31, 2019. Line utilization was 63% at September 30, 2020 compared to 59% at December 31, 2019.

The following table presents information about commercial loan portfolio sub-segments that we have identified for enhanced monitoring related to the potential impact of the COVID-19 pandemic (dollars in thousands):

September 30, 2020

Loans on Total Loans % of Payment % of in the Total Deferral, Total Sub-Segment Loans Modified Loans or Pending Modification

Retail exposure in the CRE $ 1,421,782 6.0 % $ 42,206 0.2 %portfolio

Retail exposure in the C&I 321,077 1.4 % 40,004 0.2 %portfolio ^(1)

Bridge - franchise finance 606,222 2.5 % 75,606 0.3 %

Hotel 619,012 2.6 % 291,972 1.2 %

Airlines and aviation 145,921 0.6 % - - %authorities

Cruise lines 72,962 0.3 % 47,500 0.2 %

$ 3,186,976 13.4 % $ 497,288 2.1 %

_____________(1)

Includes $211 million of owner-occupied commercial real estate loans.

Asset Quality and the Allowance for Credit Losses

The following table presents the ACL at the dates indicated, related ACL coverage ratios, as well as net charge-off rates for the nine months ended September 30, 2020 and the year ended December 31, 2019 (dollars in thousands):

_____________(1) Includes $211 million of owner-occupied commercial real estate loans.

Asset Quality and the Allowance for Credit Losses

The following table presents the ACL at the dates indicated, related ACL coverage ratios, as well as net charge-off rates for the nine months ended September 30, 2020 and the year ended December 31, 2019 (dollars in thousands):

ACL to Net ACL to Non- Charge-offs ACL Total Performing to Loans Loans Average Loans ^(1)

December 31, 2019 $ 108,671 0.47 % 53.07 % 0.05%(incurred loss)

January 1, 2020 (initial $ 135,976 0.59 % 66.40 % N/Adate of CECL adoption)

September 30, 2020 $ 274,128 1.15 % (2) 136.86 % 0.25%(expected loss)

_____________(1)

Annualized for the nine months ended September 30, 2020.

(2)

ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 1.33% at September 30, 2020.

The ACL at September 30, 2020 represents management's estimate of lifetime expected credit losses from the loan portfolio given our assessment of historical data, current conditions and a reasonable and supportable economic forecast as of the balance sheet date. The estimate was informed by Moody's economic scenarios published in September 2020, economic information provided by additional sources, data reflecting the impact of recent events on individual borrowers and other relevant information.

For the quarter ended September 30, 2020, the Company recorded a provision for credit losses of $29.2 million, which included a provision of $27.6 million related to funded loans as well as immaterial components related to accrued interest receivable, unfunded loan commitments and an AFS debt security.

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

_____________(1) Annualized for the nine months ended September 30, 2020.

ACL to total loans, excluding government insured residential loans, PPP(2) loans and MWL, which carry nominal or no reserves, was 1.33% at September 30, 2020.

The ACL at September 30, 2020 represents management's estimate of lifetime expected credit losses from the loan portfolio given our assessment of historical data, current conditions and a reasonable and supportable economic forecast as of the balance sheet date. The estimate was informed by Moody's economic scenarios published in September 2020, economic information provided by additional sources, data reflecting the impact of recent events on individual borrowers and other relevant information.

For the quarter ended September 30, 2020, the Company recorded a provision for credit losses of $29.2 million, which included a provision of $27.6 million related to funded loans as well as immaterial components related to accrued interest receivable, unfunded loan commitments and an AFS debt security.

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

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Beginning balance $ 266,123 $ 112,141 $ 108,671 $ 109,931

Cumulative effect of - - 27,305 - adoption of CECL

Balance after adoption of 266,123 112,141 135,976 109,931 CECL

Provision 27,646 1,839 181,095 9,373

Charge-offs (23,770) (6,141) (50,754) (13,985)

Recoveries 4,129 623 7,811 3,143

Ending balance $ 274,128 $ 108,462 $ 274,128 $ 108,462

Charge-offs for the quarter ended September 30, 2020 included $22.1 million related to one commercial and industrial relationship that had been downgraded to substandard prior to the onset of COVID.

Non-performing loans totaled $200.3 million or 0.84% of total loans at September 30, 2020, compared to $204.8 million or 0.88% of total loans at December 31, 2019. Non-performing loans included $43.6 million and $45.7 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.18% and 0.20% of total loans at September 30, 2020 and December 31, 2019, respectively.

Net interest income

Net interest income for the quarter ended September 30, 2020 was $187.5 million compared to $190.3 million for the immediately preceding quarter ended June 30, 2020 and $185.7 million for the quarter ended September 30, 2019. Interest income decreased by $13.2 million for the quarter ended September 30, 2020 compared to the immediately preceding quarter, and by $68.8 million, compared to the quarter ended September 30, 2019. Interest expense decreased by $10.3 million compared to the immediately preceding quarter and by $70.6 million compared to the quarter ended September 30, 2019. Decreases in interest income resulted from declines in market interest rates, partially offset by increases in average interest earning assets. Declines in interest expense reflected decreases in market interest rates and to a lesser extent, declines in average interest bearing liabilities.

The Company's net interest margin, calculated on a tax-equivalent basis, decreased by 0.07% to 2.32% for the quarter ended September 30, 2020, from 2.39% for the immediately preceding quarter ended June 30, 2020. The decline in the yield on interest earning assets outpaced the reduction in cost of interest bearing liabilities for the quarter. The deployment of liquidity into the securities portfolio in a challenging lending environment contributed to the decline in the yield on interest earning assets. Offsetting factors contributing to the decrease in the net interest margin for the quarter ended September 30, 2020 compared to the immediately preceding quarter ended June 30, 2020 included:

* The average rate paid on interest bearing deposits decreased to 0.75% for the quarter ended September 30, 2020, from 1.01% for the quarter ended June 30, 2020. This decline reflected continued initiatives taken to lower rates paid on deposits in response to declines in general market interest rates and the re-pricing of term deposits. We expect the cost of interest bearing deposits to continue to decline; at September 30, 2020, approximately $1.5 billion or 25% of the time deposit portfolio, with an average rate of 1.67%, has not yet repriced since March 2020 when the Fed last cut rates. The majority of these CDs will mature through the first quarter of 2021. * The tax-equivalent yield on investment securities decreased to 2.00% for the quarter ended September 30, 2020 from 2.48% for the quarter ended June 30, 2020. This decrease resulted from the impact of purchases of lower-yielding securities, prepayments of higher yielding mortgage-backed securities and decreases in coupon interest rates on existing floating rate assets. * The tax-equivalent yield on loans decreased to 3.61% for the quarter ended September 30, 2020, from 3.71% for the quarter ended June 30, 2020. Factors contributing to this decrease included the decline in benchmark interest rates which impacted the rates earned on both existing floating rate assets and new production, and the runoff of loans originated in a higher rate environment. * The average rate paid on borrowings increased to 2.40% for the quarter ended September 30, 2020, from 1.97% for the quarter ended June 30, 2020, reflecting the maturity of short-term, lower rate FHLB advances. The issuance of $300 million of 5.125% subordinated notes in June 2020 also contributed to the increase. * The increase in average non-interest bearing demand deposits as a percentage of average total deposits also positively impacted the cost of total deposits and the net interest margin.

The Company's net interest margin, calculated on a tax-equivalent basis, was 2.35% for the nine months ended September 30, 2020, compared to 2.49% for the nine months ended September 30, 2019. Factors contributing to the decline were largely consistent with those enumerated above.

Non-interest expense

Non-interest expense totaled $108.6 million for the quarter ended September 30, 2020 compared to $106.4 million for the immediately preceding quarter ended June 30, 2020 and $121.3 million for the quarter ended September 30, 2019. Non-interest expense totaled $333.9 million and $368.1 million for the nine months ended September 30, 2020 and 2019, respectively, a decline of approximately 9%.

* Compensation and benefits decreased by $8.7 million and $23.4 million, respectively, for the quarter and nine months ended September 30, 2020 compared to the corresponding periods in 2019. These decreases reflected reductions in headcount related to our BankUnited 2.0 initiative. Lower variable compensation costs and a decrease in equity based compensation expense related to the impact of a declining stock price on liability-classified awards also contributed to the declines. * Cost reductions stemming from our BankUnited 2.0 initiative contributed to year over year reductions in Occupancy and equipment expense and Other non-interest expense. * The increasing trend year over year in technology and telecommunications expense is reflective of investments in digital and data analytics capabilities and in the infrastructure to support cloud migration. * The increase in deposit insurance expense reflects an increase in the assessment rate related to increases in the level of criticized and classified assets. * Costs incurred directly related to the implementation of our BankUnited 2.0 initiative during the nine months ended September 30, 2020 and 2019 totaled $0.3 million and $14.5 million, respectively. * For the quarter and nine months ended September 30, 2020, non-interest expense included approximately $0.5 million and $2.0 million, respectively, in costs directly related to our response to the COVID-19 pandemic.

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, October 28, 2020 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.

The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at http://ir.bankunited.com/. The dial in telephone number for the call is (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the conference ID for the call is 1134069. A replay of the call will be available from 12:00 p.m. ET on October 28th through 11:59 p.m. ET on November 4th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The conference ID for the replay is 1134069. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.

About BankUnited, Inc.

BankUnited, Inc., with total assets of $35.0 billion at September 30, 2020, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 71 banking centers in 14 Florida counties and 5 banking centers in the New York metropolitan area at September 30, 2020.

Forward-Looking Statements

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

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

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands, except share and per share data)

September 30, December 31, 2020 2019

ASSETS

Cash and due from banks:

Non-interest bearing $ 175 $ 7,704

Interest bearing 369,601 206,969

Cash and cash equivalents 369,776 214,673

Investment securities (including securitiesrecorded at fair value of $9,290,883 and 9,300,883 7,769,237 $7,759,237)

Non-marketable equity securities 208,614 253,664

Loans held for sale 3,816 37,926

Loans 23,779,315 23,154,988

Allowance for credit losses (274,128) (108,671)

Loans, net 23,505,187 23,046,317

Bank owned life insurance 292,773 282,151

Operating lease equipment, net 676,321 698,153

Goodwill and other intangible assets 77,641 77,674

Other assets 593,586 491,498

Total assets $ 35,028,597 $ 32,871,293



LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Demand deposits:

Non-interest bearing $ 6,789,622 $ 4,294,824

Interest bearing 2,916,891 2,130,976

Savings and money market 11,002,794 10,621,544

Time 5,887,903 7,347,247

Total deposits 26,597,210 24,394,591

Federal funds purchased 180,000 100,000

FHLB and PPPLF borrowings 4,118,460 4,480,501

Notes and other borrowings 722,592 429,338

Other liabilities 545,511 486,084

Total liabilities 32,163,773 29,890,514



Commitments and contingencies



Stockholders' equity:

Common stock, par value $0.01 per share,400,000,000 shares authorized; 92,388,641 and 924 951 95,128,231 shares issued and outstanding

Paid-in capital 995,438 1,083,920

Retained earnings 1,950,288 1,927,735

Accumulated other comprehensive loss (81,826) (31,827)

Total stockholders' equity 2,864,824 2,980,779

Total liabilities and stockholders' equity $ 35,028,597 $ 32,871,293

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,

2020

2020

2019

2020

2019

Interest income:

Loans

$

208,646

$

213,938

$

248,770

$

656,943

$

738,766

Investment securities

44,604

50,932

69,413

151,596

218,554

Other

1,322

2,908

5,219

7,950

15,140

Total interest income

254,572

267,778

323,402

816,489

972,460

Interest expense:

Deposits

37,681

50,187

99,483

170,690

296,891

Borrowings

29,412

27,254

38,229

87,407

108,095

Total interest expense

67,093

77,441

137,712

258,097

404,986

Net interest income before provision for credit losses

187,479

190,337

185,690

558,392

567,474

Provision for credit losses

29,232

25,414

1,839

180,074

9,373

Net interest income after provision for credit losses

158,247

164,923

183,851

378,318

558,101

Non-interest income:

Deposit service charges and fees

4,040

3,701

4,269

11,927

12,389

Gain on sale of loans, net

2,953

4,326

5,163

10,745

10,220

Gain on investment securities, net

7,181

6,836

3,835

10,564

13,736

Lease financing

13,934

16,150

18,583

45,565

52,774

Other non-interest income

8,184

7,338

6,006

19,140

20,329

Total non-interest income

36,292

38,351

37,856

97,941

109,448

Non-interest expense:

Employee compensation and benefits

48,448

48,877

57,102

156,212

179,586

Occupancy and equipment

12,170

11,901

14,673

36,440

42,477

Deposit insurance expense

5,886

4,806

3,781

15,095

12,849

Professional fees

2,436

3,131

2,923

8,771

17,731

Technology and telecommunications

15,435

14,025

10,994

42,056

34,175

Depreciation of operating lease equipment

12,315

12,219

11,582

37,137

34,883

Loss on debt extinguishment

-

-

3,796

-

3,796

Other non-interest expense

11,937

11,411

16,455

38,154

42,584

Total non-interest expense

108,627

106,370

121,306

333,865

368,081

Income before income taxes

85,912

96,904

100,401

142,394

299,468

Provision for income taxes

19,353

20,396

24,182

30,278

75,826

Net income

$

66,559

$

76,508

$

76,219

$

112,116

$

223,642

Earnings per common share, basic

$

0.70

$

0.80

$

0.78

$

1.17

$

2.23

Earnings per common share, diluted

$

0.70

$

0.80

$

0.77

$

1.17

$

2.23

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September June 30, September September 30, 30, 30,

2020 2020 2019 2020 2019

Interest income:

Loans $ 208,646 $ 213,938 $ 248,770 $ 656,943 $ 738,766

Investment 44,604 50,932 69,413 151,596 218,554 securities

Other 1,322 2,908 5,219 7,950 15,140

Total interest 254,572 267,778 323,402 816,489 972,460 income

Interest expense:

Deposits 37,681 50,187 99,483 170,690 296,891

Borrowings 29,412 27,254 38,229 87,407 108,095

Total interest 67,093 77,441 137,712 258,097 404,986 expense

Net interestincome before 187,479 190,337 185,690 558,392 567,474 provision forcredit losses

Provision for 29,232 25,414 1,839 180,074 9,373 credit losses

Net interestincome after 158,247 164,923 183,851 378,318 558,101 provision forcredit losses

Non-interest income:

Deposit service 4,040 3,701 4,269 11,927 12,389 charges and fees

Gain on sale of 2,953 4,326 5,163 10,745 10,220 loans, net

Gain on investment 7,181 6,836 3,835 10,564 13,736 securities, net

Lease financing 13,934 16,150 18,583 45,565 52,774

Other non-interest 8,184 7,338 6,006 19,140 20,329 income

Total non-interest 36,292 38,351 37,856 97,941 109,448 income

Non-interest expense:

Employeecompensation and 48,448 48,877 57,102 156,212 179,586 benefits

Occupancy and 12,170 11,901 14,673 36,440 42,477 equipment

Deposit insurance 5,886 4,806 3,781 15,095 12,849 expense

Professional fees 2,436 3,131 2,923 8,771 17,731

Technology and 15,435 14,025 10,994 42,056 34,175 telecommunications

Depreciation ofoperating lease 12,315 12,219 11,582 37,137 34,883 equipment

Loss on debt - - 3,796 - 3,796 extinguishment

Other non-interest 11,937 11,411 16,455 38,154 42,584 expense

Total non-interest 108,627 106,370 121,306 333,865 368,081 expense

Income before 85,912 96,904 100,401 142,394 299,468 income taxes

Provision for 19,353 20,396 24,182 30,278 75,826 income taxes

Net income $ 66,559 $ 76,508 $ 76,219 $ 112,116 $ 223,642

Earnings percommon share, $ 0.70 $ 0.80 $ 0.78 $ 1.17 $ 2.23 basic

Earnings percommon share, $ 0.70 $ 0.80 $ 0.77 $ 1.17 $ 2.23 diluted

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

Three Months EndedSeptember 30, 2020

Three Months EndedJune 30, 2020

Three Months EndedSeptember 30, 2019

AverageBalance

Interest (1)(2)

Yield/ Rate (1)(2)

AverageBalance

Interest (1)(2)

Yield/ Rate (1)(2)

AverageBalance

Interest (1)(2)

Yield/ Rate (1)(2)

Assets:

Interest earning assets:

Loans

$

23,447,514

$

212,388

3.61

%

$

23,534,684

$

217,691

3.71

%

$

22,733,875

$

252,896

4.43

%

Investment securities (3)

9,065,478

45,351

2.00

%

8,325,217

51,684

2.48

%

8,295,205

70,427

3.40

%

Other interest earning assets

552,515

1,322

0.95

%

765,848

2,908

1.53

%

573,630

5,219

3.61

%

Total interest earning assets

33,065,507

259,061

3.13

%

32,625,749

272,283

3.35

%

31,602,710

328,542

4.14

%

Allowance for credit losses

(272,464)

(254,396)

(112,784)

Non-interest earning assets

1,897,723

1,976,398

1,652,901

Total assets

$

34,690,766

$

34,347,751

$

33,142,827

Liabilities and Stockholders' Equity:

Interest bearing liabilities:

Interest bearing demand deposits

$

2,800,421

4,127

0.59

%

$

2,448,545

$

4,722

0.78

%

$

1,872,573

$

6,705

1.42

%

Savings and money market deposits

10,664,462

15,853

0.59

%

10,450,310

17,447

0.67

%

10,907,317

51,229

1.86

%

Time deposits

6,519,852

17,701

1.08

%

7,096,097

28,018

1.59

%

6,845,643

41,549

2.41

%

Total interest bearing deposits

19,984,735

37,681

0.75

%

19,994,952

50,187

1.01

%

19,625,533

99,483

2.01

%

Short term borrowings

53,587

14

0.10

%

119,835

32

0.11

%

115,209

670

2.31

%

FHLB and PPPLF borrowings

4,117,181

20,146

1.95

%

4,961,376

21,054

1.71

%

5,414,963

32,252

2.36

%

Notes and other borrowings

722,271

9,252

5.12

%

493,278

6,168

5.00

%

403,788

5,307

5.26

%

Total interest bearing liabilities

24,877,774

67,093

1.07

%

25,569,441

77,441

1.22

%

25,559,493

137,712

2.14

%

Non-interest bearing demand deposits

6,186,718

5,313,009

3,963,955

Other non-interest bearing liabilities

803,498

820,439

704,995

Total liabilities

31,867,990

31,702,889

30,228,443

Stockholders' equity

2,822,776

2,644,862

2,914,384

Total liabilities and stockholders' equity

$

34,690,766

$

34,347,751

$

33,142,827

Net interest income

$

191,968

$

194,842

$

190,830

Interest rate spread

2.06

%

2.13

%

2.00

%

Net interest margin

2.32

%

2.39

%

2.41

%

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

Three Months Ended Three Months Ended Three Months Ended September 30, 2020 June 30, 2020 September 30, 2019

Average Interest ^ Yield/ Average Interest^ Yield/ Average Interest ^ Yield/ Balance (1)(2) Rate ^ Balance (1)(2) Rate ^ Balance (1)(2) Rate ^ (1)(2) (1)(2) (1)(2)

Assets:

Interestearning assets:

Loans $ 23,447,514 $ 212,388 3.61 % $ 23,534,684 $ 217,691 3.71 % $ 22,733,875 $ 252,896 4.43 %

Investmentsecurities ^ 9,065,478 45,351 2.00 % 8,325,217 51,684 2.48 % 8,295,205 70,427 3.40 %(3)

Otherinterest 552,515 1,322 0.95 % 765,848 2,908 1.53 % 573,630 5,219 3.61 %earningassets

Totalinterest 33,065,507 259,061 3.13 % 32,625,749 272,283 3.35 % 31,602,710 328,542 4.14 %earningassets

Allowance for (272,464) (254,396) (112,784) credit losses

Non-interestearning 1,897,723 1,976,398 1,652,901 assets

Total assets $ 34,690,766 $ 34,347,751 $ 33,142,827

Liabilitiesand Stockholders'Equity:

Interestbearing liabilities:

Interestbearing $ 2,800,421 4,127 0.59 % $ 2,448,545 $ 4,722 0.78 % $ 1,872,573 $ 6,705 1.42 %demanddeposits

Savings andmoney market 10,664,462 15,853 0.59 % 10,450,310 17,447 0.67 % 10,907,317 51,229 1.86 %deposits

Time deposits 6,519,852 17,701 1.08 % 7,096,097 28,018 1.59 % 6,845,643 41,549 2.41 %

Totalinterest 19,984,735 37,681 0.75 % 19,994,952 50,187 1.01 % 19,625,533 99,483 2.01 %bearingdeposits

Short term 53,587 14 0.10 % 119,835 32 0.11 % 115,209 670 2.31 %borrowings

FHLB andPPPLF 4,117,181 20,146 1.95 % 4,961,376 21,054 1.71 % 5,414,963 32,252 2.36 %borrowings

Notes andother 722,271 9,252 5.12 % 493,278 6,168 5.00 % 403,788 5,307 5.26 %borrowings

Totalinterest 24,877,774 67,093 1.07 % 25,569,441 77,441 1.22 % 25,559,493 137,712 2.14 %bearingliabilities

Non-interestbearing 6,186,718 5,313,009 3,963,955 demanddeposits

Othernon-interest 803,498 820,439 704,995 bearingliabilities

Total 31,867,990 31,702,889 30,228,443 liabilities

Stockholders' 2,822,776 2,644,862 2,914,384 equity

Totalliabilitiesand $ 34,690,766 $ 34,347,751 $ 33,142,827 stockholders'equity

Net interest $ 191,968 $ 194,842 $ 190,830 income

Interest rate 2.06 % 2.13 % 2.00 %spread

Net interest 2.32 % 2.39 % 2.41 %margin

_____________(1)

On a tax-equivalent basis where applicable

(2)

Annualized

(3)

At fair value except for securities held to maturity

_____________(1) On a tax-equivalent basis where applicable

(2) Annualized

(3) At fair value except for securities held to maturity

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

Nine Months Ended September 30,

2020

2019

AverageBalance

Interest (1)(2)

Yield/ Rate (1)(2)

AverageBalance

Interest (1)(2)

Yield/ Rate (1)(2)

Assets:

Interest earning assets:

Loans

$

23,278,042

$

668,187

3.83

%

$

22,407,271

$

751,672

4.48

%

Investment securities (3)

8,501,513

153,987

2.42

%

8,333,600

221,901

3.55

%

Other interest earning assets

654,623

7,950

1.62

%

532,062

15,140

3.80

%

Total interest earning assets

32,434,178

830,124

3.42

%

31,272,933

988,713

4.22

%

Allowance for credit losses

(222,085)

(113,694)

Non-interest earning assets

1,874,709

1,615,548

Total assets

$

34,086,802

$

32,774,787

Liabilities and Stockholders' Equity:

Interest bearing liabilities:

Interest bearing demand deposits

$

2,475,388

15,808

0.85

%

$

1,783,611

18,569

1.39

%

Savings and money market deposits

10,509,559

71,056

0.90

%

11,093,290

156,236

1.88

%

Time deposits

7,040,101

83,826

1.59

%

6,898,947

122,086

2.37

%

Total interest bearing deposits

20,025,048

170,690

1.14

%

19,775,848

296,891

2.01

%

Short term borrowings

89,033

412

0.62

%

127,908

2,297

2.39

%

FHLB and PPPLF borrowings

4,496,407

66,284

1.97

%

5,037,299

89,890

2.39

%

Notes and other borrowings

548,851

20,711

5.03

%

403,574

15,908

5.26

%

Total interest bearing liabilities

25,159,339

258,097

1.37

%

25,344,629

404,986

2.14

%

Non-interest bearing demand deposits

5,292,702

3,835,248

Other non-interest bearing liabilities

791,057

654,692

Total liabilities

31,243,098

29,834,569

Stockholders' equity

2,843,704

2,940,218

Total liabilities and stockholders' equity

$

34,086,802

$

32,774,787

Net interest income

$

572,027

$

583,727

Interest rate spread

2.05

%

2.08

%

Net interest margin

2.35

%

2.49

%

BANKUNITED, INC. AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS

(Dollars in thousands)

Nine Months Ended September 30,

2020 2019

Average Interest ^ Yield/ Average Interest ^ Yield/ Balance (1)(2) Rate ^ Balance (1)(2) Rate ^ (1)(2) (1)(2)

Assets:

Interestearning assets:

Loans $ 23,278,042 $ 668,187 3.83 % $ 22,407,271 $ 751,672 4.48 %

Investmentsecurities ^ 8,501,513 153,987 2.42 % 8,333,600 221,901 3.55 %(3)

Otherinterest 654,623 7,950 1.62 % 532,062 15,140 3.80 %earningassets

Totalinterest 32,434,178 830,124 3.42 % 31,272,933 988,713 4.22 %earningassets

Allowance for (222,085) (113,694) credit losses

Non-interestearning 1,874,709 1,615,548 assets

Total assets $ 34,086,802 $ 32,774,787

Liabilitiesand Stockholders'Equity:

Interestbearing liabilities:

Interestbearing $ 2,475,388 15,808 0.85 % $ 1,783,611 18,569 1.39 %demanddeposits

Savings andmoney market 10,509,559 71,056 0.90 % 11,093,290 156,236 1.88 %deposits

Time deposits 7,040,101 83,826 1.59 % 6,898,947 122,086 2.37 %

Totalinterest 20,025,048 170,690 1.14 % 19,775,848 296,891 2.01 %bearingdeposits

Short term 89,033 412 0.62 % 127,908 2,297 2.39 %borrowings

FHLB andPPPLF 4,496,407 66,284 1.97 % 5,037,299 89,890 2.39 %borrowings

Notes andother 548,851 20,711 5.03 % 403,574 15,908 5.26 %borrowings

Totalinterest 25,159,339 258,097 1.37 % 25,344,629 404,986 2.14 %bearingliabilities

Non-interestbearing 5,292,702 3,835,248 demanddeposits

Othernon-interest 791,057 654,692 bearingliabilities

Total 31,243,098 29,834,569 liabilities

Stockholders' 2,843,704 2,940,218 equity

Totalliabilitiesand $ 34,086,802 $ 32,774,787 stockholders'equity

Net interest $ 572,027 $ 583,727 income

Interest rate 2.05 % 2.08 %spread

Net interest 2.35 % 2.49 %margin

_____________(1)

On a tax-equivalent basis where applicable

(2)

Annualized

(3)

At fair value except for securities held to maturity

_____________(1) On a tax-equivalent basis where applicable

(2) Annualized

(3) At fair value except for securities held to maturity

BANKUNITED, INC. AND SUBSIDIARIES

EARNINGS PER COMMON SHARE

(In thousands except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Basic earnings per common share:

Numerator:

Net income

$

66,559

$

76,219

$

112,116

$

223,642

Distributed and undistributed earnings allocated to participating securities

(2,896)

(3,174)

(4,816)

(9,247)

Income allocated to common stockholders for basic earnings per common share

$

63,663

$

73,045

$

107,300

$

214,395

Denominator:

Weighted average common shares outstanding

92,405,239

95,075,395

92,918,030

97,113,878

Less average unvested stock awards

(1,183,564)

(1,098,509)

(1,164,317)

(1,147,988)

Weighted average shares for basic earnings per common share

91,221,675

93,976,886

91,753,713

95,965,890

Basic earnings per common share

$

0.70

$

0.78

$

1.17

$

2.23

Diluted earnings per common share:

Numerator:

Income allocated to common stockholders for basic earnings per common share

$

63,663

$

73,045

$

107,300

$

214,395

Adjustment for earnings reallocated from participating securities

4

7

3

20

Income used in calculating diluted earnings per common share

$

63,667

$

73,052

$

107,303

$

214,415

Denominator:

Weighted average shares for basic earnings per common share

91,221,675

93,976,886

91,753,713

95,965,890

Dilutive effect of stock options and certain shared-based awards

171,054

285,934

142,008

303,524

Weighted average shares for diluted earnings per common share

91,392,729

94,262,820

91,895,721

96,269,414

Diluted earnings per common share

$

0.70

$

0.77

$

1.17

$

2.23

BANKUNITED, INC. AND SUBSIDIARIES

EARNINGS PER COMMON SHARE

(In thousands except share and per share amounts)

Three Months Ended September Nine Months Ended September 30, 30,

2020 2019 2020 2019

Basic earnings per common share:

Numerator:

Net income $ 66,559 $ 76,219 $ 112,116 $ 223,642

Distributed andundistributedearnings (2,896) (3,174) (4,816) (9,247) allocated toparticipatingsecurities

Income allocatedto commonstockholders for $ 63,663 $ 73,045 $ 107,300 $ 214,395 basic earningsper common share

Denominator:

Weighted averagecommon shares 92,405,239 95,075,395 92,918,030 97,113,878 outstanding

Less averageunvested stock (1,183,564) (1,098,509) (1,164,317) (1,147,988) awards

Weighted averageshares for basic 91,221,675 93,976,886 91,753,713 95,965,890 earnings percommon share

Basic earnings $ 0.70 $ 0.78 $ 1.17 $ 2.23 per common share

Diluted earnings per common share:

Numerator:

Income allocatedto commonstockholders for $ 63,663 $ 73,045 $ 107,300 $ 214,395 basic earningsper common share

Adjustment forearningsreallocated from 4 7 3 20 participatingsecurities

Income used incalculating $ 63,667 $ 73,052 $ 107,303 $ 214,415 diluted earningsper common share

Denominator:

Weighted averageshares for basic 91,221,675 93,976,886 91,753,713 95,965,890 earnings percommon share

Dilutive effectof stock optionsand certain 171,054 285,934 142,008 303,524 shared-basedawards

Weighted averageshares for 91,392,729 94,262,820 91,895,721 96,269,414 diluted earningsper common share

Diluted earnings $ 0.70 $ 0.77 $ 1.17 $ 2.23 per common share

BANKUNITED, INC. AND SUBSIDIARIES

SELECTED RATIOS

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Financial ratios (4)

Return on average assets

0.76

%

0.91

%

0.44

%

0.91

%

Return on average stockholders' equity

9.4

%

10.4

%

5.3

%

10.2

%

Net interest margin (3)

2.32

%

2.41

%

2.35

%

2.49

%

BANKUNITED, INC. AND SUBSIDIARIES

SELECTED RATIOS

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Financial ratios^ (4)

Return on average assets 0.76 % 0.91 % 0.44 % 0.91 %

Return on average 9.4 % 10.4 % 5.3 % 10.2 %stockholders' equity

Net interest margin^ (3) 2.32 % 2.41 % 2.35 % 2.49 %

September 30, 2020

December 31, 2019

Asset quality ratios

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

0.84

%

0.88

%

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

0.58

%

0.63

%

Allowance for credit losses to total loans

1.15

%

0.47

%

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

136.86

%

53.07

%

Net charge-offs to average loans (4)

0.25

%

0.05

%

September 30, December 31, 2020 2019

Asset quality ratios

Non-performing loans to total loans^ (1)(5) 0.84 % 0.88 %

Non-performing assets to total assets ^(2)(5) 0.58 % 0.63 %

Allowance for credit losses to total loans 1.15 % 0.47 %

Allowance for credit losses to non-performing 136.86 % 53.07 %loans^ (1)(5)

Net charge-offs to average loans ^(4) 0.25 % 0.05 %

_____________(1)

We define non-performing loans to include non-accrual loans and loans other than purchase credit deteriorated and government insured residential loans that are past due 90 days or more and still accruing. Contractually delinquent purchase 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 nine month periods.

(5)

Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $43.6 million or 0.18% of total loans and 0.12% of total assets, at September 30, 2020; and $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.

Non-GAAP Financial Measures

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

_____________ We define non-performing loans to include non-accrual loans and loans other than purchase credit deteriorated and government insured residential(1) loans that are past due 90 days or more and still accruing. Contractually delinquent purchase 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 nine month periods.

Non-performing loans and assets include the guaranteed portion of(5) non-accrual SBA loans totaling $43.6 million or 0.18% of total loans and 0.12% of total assets, at September 30, 2020; and $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.

Non-GAAP Financial Measures

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

Three Three Three Months Months Months Nine Months Ended Ended Ended Ended September 30, September June 30, September 30, 30,

2020 2020 2019 2020 2019

Incomebeforeincome $ 85,912 $ 96,904 $ 100,401 $ 142,394 $ 299,468 taxes(GAAP)

Plus:Provision 29,232 25,414 1,839 180,074 9,373 for creditlosses

PPNR $ 115,144 $ 122,318 $ 102,240 $ 322,468 $ 308,841 (non-GAAP)

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 September 30, 2020 (dollars in thousands):

Total loans (GAAP) $ 23,779,315

Less: Government insured residential loans 1,089,055

Less: PPP loans 829,798

Less: MWL 1,250,903

Total loans, excluding government insured residential loans, PPP $ 20,609,559 loans and MWL (non-GAAP)



ACL $ 274,128



ACL to total loans (GAAP) 1.15 %



ACL to total loans, excluding government insured residential 1.33 %loans, PPP loans and MWL (non-GAAP)

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, June 30, 2020 December 31, 2020 2019

Total stockholders' equity $ 2,864,824 $ 2,755,053 $ 2,980,779

Less: goodwill and other 77,641 77,652 77,674 intangible assets

Tangible stockholders' equity $ 2,787,183 $ 2,677,401 $ 2,903,105



Common shares issued and 92,388,641 92,420,278 95,128,231 outstanding



Book value per common share $ 31.01 $ 29.81 $ 31.33



Tangible book value per common $ 30.17 $ 28.97 $ 30.52 share

View source version on businesswire.com: https://www.businesswire.com/news/home/20201028005384/en/

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