BankUnited Q3 2024 10-Q Filed

Ticker: BKU · Form: 10-Q · Filed: Nov 4, 2024 · CIK: 1504008

Sentiment: neutral

Topics: financials, earnings, banking, sec-filing

Related Tickers: BKU

TL;DR

**BKU Q3 10-Q is IN: Focus on loan/deposit interest income & expenses. Check financials.**

AI Summary

BankUnited, Inc. filed its 10-Q for the period ending September 30, 2024. The filing details financial performance, including interest income and expense related to loans, leases, deposits, and borrowings. Key financial data points and disclosures relevant to its operations as a federally chartered savings institution are presented.

Why It Matters

This filing provides investors and analysts with a detailed look at BankUnited's financial health and operational performance during the third quarter of 2024, impacting investment decisions.

Risk Assessment

Risk Level: medium — As a financial institution, BankUnited is subject to inherent risks related to interest rate fluctuations, credit quality, and regulatory changes.

Key Numbers

Key Players & Entities

FAQ

What were the primary drivers of interest income for BankUnited in Q3 2024?

The filing references 'InterestAndFeeIncomeLoansAndLeases' as a key component, suggesting income from loans and leases was a primary driver.

How did interest expense on deposits compare to interest expense on borrowings?

The filing lists both 'InterestExpenseDeposits' and 'InterestExpenseBorrowings', indicating these are significant expense categories to be detailed within the report.

What is the net amount of loans and leases receivable reported?

The filing includes a reference to 'LoansAndLeasesReceivableNetOfDeferredIncome', which represents the net value of these assets.

What is BankUnited's primary business classification?

BankUnited, Inc. is classified under 'SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035]'.

When does BankUnited's fiscal year end?

BankUnited's fiscal year ends on December 31st.

Filing Stats: 4,462 words · 18 min read · ~15 pages · Grade level 17.5 · Accepted 2024-11-04 16:32:07

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

ITEM 1. Financial Statements (Unaudited) Consolidated Balance Sheets 1 Consolidated Statements of Income 2 Consolidated Statements of Comprehensive Income 3 Consolidated Statements of Cash Flows 4 Consolidated Statements of Stockholders' Equity 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 35

Quantitative and Qualitative Disclosures About Market Risk

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 70

Controls and Procedures

ITEM 4. Controls and Procedures 70

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

ITEM 1. Legal Proceedings 70

Risk Factors

ITEM 1A. Risk Factors 70

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 70 ITEM 5. Other Information 70

Exhibits

ITEM 6. Exhibits 71

SIGNATURES

SIGNATURES 72 i GLOSSARY OF DEFINED TERMS The following acronyms and terms may be used throughout this Form 10-Q, including the consolidated financial statements and related notes. ACL Allowance for credit losses AFS Available for sale ALCO Asset Liability Committee ALM Asset Liability Management AOCI Accumulated other comprehensive income APY Annual Percentage Yield ARM Adjustable rate mortgage ASU Accounting Standards Update BKU BankUnited, Inc. BOLI Bank Owned Life Insurance BankUnited BankUnited, National Association The Bank BankUnited, National Association Bridge Bridge Funding Group, Inc. Buyout loans FHA and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA securitizations CCAR Comprehensive Capital Analysis and Review CD Certificate of Deposit CECL Current expected credit losses CET1 Common Equity Tier 1 capital C&I Commercial and Industrial loans, including owner-occupied commercial real estate CLO Collateralized loan obligations CMBS Commercial mortgage-backed securities CMOs Collateralized mortgage obligations CPR Constant prepayment rate CRE Commercial real estate loans, including non-owner occupied commercial real estate and construction and land DSCR Debt Service Coverage Ratio EVE Economic value of equity FDIA Federal Deposit Insurance Act FDIC Federal Deposit Insurance Corporation FHA Federal Housing Administration FHLB Federal Home Loan Bank FICO Fair Isaac Corporation (credit score) FRB Federal Reserve Bank GAAP U.S. generally accepted accounting principles GDP Gross Domestic Product GNMA Government National Mortgage Association HTM Held to maturity ISDA International Swaps and Derivatives Association LGD Loss Given Default LIHTC Low Income Housing Tax Credits LTV Loan-to-value MBS Mortgage-backed securities MSA Metropolitan Statistical Area MWL Mortgage warehouse lending ii NIDDA Non-interest bearing de

Financial Statements and Supplementary Data

Item 1. Financial Statements and Supplementary Data BANKUNITED, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED (In thousands, except share and per share data) September 30, 2024 December 31, 2023 ASSETS Cash and due from banks: Non-interest bearing $ 14,746 $ 14,945 Interest bearing 875,122 573,338 Cash and cash equivalents 889,868 588,283 Investment securities (including securities reported at fair value of $ 9,109,860 and $ 8,867,354 ) 9,119,860 8,877,354 Non-marketable equity securities 237,172 310,084 Loans 24,398,703 24,633,684 Allowance for credit losses ( 228,249 ) ( 202,689 ) Loans, net 24,170,454 24,430,995 Bank owned life insurance 306,313 318,459 Operating lease equipment, net 241,625 371,909 Goodwill 77,637 77,637 Other assets 741,816 786,886 Total assets $ 35,784,745 $ 35,761,607 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Demand deposits: Non-interest bearing $ 7,635,427 $ 6,835,236 Interest bearing 5,171,865 3,403,539 Savings and money market 10,324,697 11,135,708 Time 4,724,236 5,163,995 Total deposits 27,856,225 26,538,478 FHLB advances 3,580,000 5,115,000 Notes and other borrowings 708,694 708,973 Other liabilities 832,022 821,235 Total liabilities 32,976,941 33,183,686 Commitments and contingencies Stockholders' equity: Common stock, par value $ 0.01 per share, 400,000,000 shares authorized; 74,749,012 and 74,372,505 shares issued and outstanding 747 744 Paid-in capital 296,107 283,642 Retained earnings 2,749,314 2,650,956 Accumulated other comprehensive loss ( 238,364 ) ( 357,421 ) Total stockholders' equity 2,807,804 2,577,921 Total liabilities and stockholders' equity $ 35,784,745 $ 35,761,607 1 The accompanying notes are an integral part of these consolidated financial statements BANKUNITED, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED (In thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED September 30, 2024 Note 1 Basis of Presentation and Summary of Significant Accounting Policies BankUnited, Inc. is a national bank holding company with one wholly-owned subsidiary, BankUnited, collectively, the Company. BankUnited, a national banking association headquartered in Miami Lakes, Florida, provides a full range of banking services to individual and corporate customers through banking centers in Florida, the New York metropolitan area and Dallas, Texas. The Bank also offers certain commercial lending and deposit products through national platforms and regional wholesale banking offices. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, these financial statements do not include all of the information and footnotes required for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP and should be read in conjunction with the Company's consolidated financial statements and the notes thereto appearing in BKU's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected in future periods. The Company has a single operating segment and thus a single reportable segment. While management monitors the revenue streams of its various business units, the business units serve a similar base of primarily commercial clients, providing a similar range of products and services, managed through similar processes and platforms. The Company'

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED September 30, 2024 ASU No. 2023-09— Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU requires entities to provide additional disclosures, primarily related to the income tax rate reconciliation and income taxes paid. The guidance also eliminates certain existing disclosure requirements related to uncertain tax positions among others. This ASU is effective for the Company for fiscal years beginning after December 15, 2024. The adoption of this ASU is not expected to have an impact on the Company's consolidated financial position, results of operations and cash flows. Adoption will lead to revised disclosures about income taxes in the Company's financial statements. Note 2 Earnings Per Common Share The computation of basic and diluted earnings per common share is presented below for the periods indicated (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, c 2024 2023 2024 2023 Basic earnings per common share: Numerator: Net income $ 61,452 $ 46,981 $ 163,165 $ 157,859 Distributed and undistributed earnings allocated to participating securities ( 850 ) ( 700 ) ( 2,282 ) ( 2,378 ) Income allocated to common stockholders for basic earnings per common share $ 60,602 $ 46,281 $ 160,883 $ 155,481 Denominator: Weighted average common shares outstanding 74,753,372 74,416,698 74,675,279 74,530,871 Less average unvested stock awards ( 1,079,182 ) ( 1,165,105 ) ( 1,105,654 ) ( 1,180,570 ) Weighted average shares for basic earnings per common share 73,674,190 73,251,593 73,569,625 73,350,301 Basic earnings per common share $ 0.82 $ 0.63 $ 2.19 $ 2.12 Diluted earnings per common share: Numerator: Income allocated to common stockholders for basic earnings per common share $ 60,602 $ 46,281 $ 160,883 $ 155,481 Adjustment for earnings reallocated from participating securities 6 3 9 8 Income used in calculating dilut

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED September 30, 2024 Note 3 Investment Securities Investment securities include investment securities available for sale, marketable equity securities, and investment securities held to maturity. The investment securities portfolio consisted of the following at the dates indicated (in thousands): September 30, 2024 Amortized Cost Gross Unrealized Carrying Value (1) Gains Losses Investment securities available for sale: U.S. Treasury securities $ 194,852 $ 2,298 $ ( 7,315 ) $ 189,835 U.S. Government agency and sponsored enterprise residential MBS 2,401,069 10,472 ( 20,514 ) 2,391,027 U.S. Government agency and sponsored enterprise commercial MBS 550,738 795 ( 51,219 ) 500,314 Private label residential MBS and CMOs 2,512,471 1,446 ( 217,672 ) 2,296,245 Private label commercial MBS 2,045,819 1,294 ( 43,443 ) 2,003,670 Single family real estate-backed securities 352,086 — ( 6,300 ) 345,786 Collateralized loan obligations 1,068,109 2,353 ( 140 ) 1,070,322 Non-mortgage asset-backed securities 98,982 167 ( 2,636 ) 96,513 SBA securities 83,775 37 ( 2,516 ) 81,296 9,419,082 $ 19,224 $ ( 357,214 ) 9,081,092 Investment securities held to maturity 10,000 10,000 $ 9,429,082 9,091,092 Marketable equity securities 28,768 $ 9,119,860 9 Table of Contents BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED September 30, 2024 December 31, 2023 Amortized Cost Gross Unrealized Carrying Value (1) Gains Losses Investment securities available for sale: U.S. Treasury securities $ 139,858 $ 532 $ ( 9,798 ) $ 130,592 U.S. Government agency and sponsored enterprise residential MBS 1,962,658 1,810 ( 40,261 ) 1,924,207 U.S. Government agency and sponsored enterprise commercial MBS 561,557 107 ( 63,805 ) 497,859 Private label residential MBS and CMOs 2,596,231 268 ( 300,769 ) 2,295,730 Private label commercial MBS 2,282,833 678 ( 84,768 ) 2,198,743 Single family real estate-backed securities 383,984 — ( 17,729 ) 366,255 Collateralized loan obligations 1,122,799 735 ( 10,710 ) 1,112,824 Non-mortgage asset-backed securities 106,095 156 ( 3,471 ) 102,780 SBA securities 106,237 41 ( 3,254 ) 103,024 9,369,428 $ 5,042 $ ( 539,838 ) 8,834,632 Investment securities held to maturity 10,000 10,000 $ 9,379,428 8,844,632 Marketable equity securities 32,722 $ 8,877,354 (1) At fair value except for securities held to maturity. Investment securities held to maturity at September 30, 2024 and December 31, 2023, consisted of one State of Israel bond, which matured in October 2024. Accrued interest receivable on investments totaled $ 33 million and $ 37 million at September 30, 2024 and December 31, 2023, respectively, and is included in other assets in the accompanying consolidated balance sheets. At September 30, 2024, contractual maturities of investment securities available for sale, adjusted for anticipated prepayments when applicable, were as follows (in thousands): Amortized Cost Fair Value Due in one year or less $ 1,133,013 $ 1,111,336 Due after one year through five years 4,772,683 4,689,303 Due after five years through ten years 2,343,958 2,211,818 Due after ten years 1,169,428 1,068,635 $ 9,419,082 $ 9,081,092 The carrying value of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED September 30, 2024 The following table provides information about gains (losses) on investment securities for the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Gross realized gains on investment securities AFS $ 76 $ 242 $ 501 $ 1,861 Gross realized losses on investment securities AFS ( 67 ) ( 27 ) ( 170 ) ( 47 ) Net realized gain 9 215 331 1,814 Net gain (loss) on marketable equity securities recognized in earnings 118 672 992 ( 12,483 ) Gain (loss) on investment securities, net $ 127 $ 887 $ 1,323 $ ( 10,669 ) The following tables present the aggregate fair value and the aggregate amount by which amortized cost exceeded fair value for investment securities available for sale in unrealized loss positions aggregated by investment category and length of time that individual securities had been in continuous unrealized loss positions at the dates indicated (in thousands): September 30, 2024 Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities $ 25,182 $ ( 78 ) $ 52,341 $ ( 7,237 ) $ 77,523 $ ( 7,315 ) U.S. Government agency and sponsored enterprise residential MBS 6,972 ( 5 ) 1,000,170 ( 20,509 ) 1,007,142 ( 20,514 ) U.S. Government agency and sponsored enterprise commercial MBS — — 422,627 ( 51,219 ) 422,627 ( 51,219 ) Private label residential MBS and CMOs 33,769 ( 227 ) 2,126,772 ( 217,445 ) 2,160,541 ( 217,672 ) Private label commercial MBS 21,250 ( 178 ) 1,643,558 ( 43,265 ) 1,664,808 ( 43,443 ) Single family real estate-backed securities — — 320,786 ( 6,300 ) 320,786 ( 6,300 ) Collateralized loan obligations 233,704 ( 135 ) 11,957 ( 5 ) 245,661 ( 140 ) Non-mortgage asset-backed securities — — 73,825 ( 2,636 ) 73,825 ( 2,636 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED September 30, 2024 December 31, 2023 Less than 12 Months 12 Mon

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