MIAMI LAKES, Fla.–(BUSINESS WIRE)–BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended June 30, 2022.
“This quarter saw strong loan growth and margin expansion. We celebrated the opening of our Dallas branch and Atlanta wholesale banking office and are looking forward to continued growth of the franchise,” said Rajinder Singh, Chairman, President and Chief Executive Officer.
For the quarter ended June 30, 2022, the Company reported net income of $65.8 million, or $0.82 per diluted share, compared to $67.2 million, or $0.79 per diluted share for the immediately preceding quarter ended March 31, 2022 and $104.0 million, or $1.11 per diluted share, for the quarter ended June 30, 2021. For the six months ended June 30, 2022, the Company reported net income of $132.9 million, or $1.60 per diluted share, compared to $202.8 million, or $2.17 per diluted share, for the six months ended June 30, 2021. Earnings for the six months ended June 30, 2021 were favorably impacted by a $55.5 million recovery of the provision for credit losses.
Quarterly Highlights
During the second quarter, we continued to build out our wholesale banking teams in Atlanta and opened a banking center in Dallas.
Total loans, excluding the runoff of PPP loans, grew by $780 million, of which $553 million was in commercial segments, for the quarter ended June 30, 2022.
Average non-interest bearing demand deposits increased by $371 million for the quarter. Total deposits remained relatively consistent with the prior quarter-end, declining by $80 million, while non-interest bearing demand deposits declined by $18 million at June 30, 2022 compared to March 31, 2022. At June 30, 2022, non-interest bearing demand deposits represented 34% of total deposits, consistent with the prior quarter-end.
The net interest margin, calculated on a tax-equivalent basis, expanded to 2.63% for the quarter ended June 30, 2022 from 2.50% for the immediately preceding quarter and 2.37% for the quarter ended June 30, 2021. Net interest income increased by $16.8 million compared to the immediately preceding quarter ended March 31, 2022 and by $27.1 million compared to the quarter ended June 30, 2021.
In response to the rising interest rate environment, the average cost of total deposits increased to 0.30% for the quarter ended June 30, 2022, from 0.17% for the immediately preceding quarter ended March 31, 2022 and 0.25% for the quarter ended June 30, 2021. On a spot basis, the average annual percentage yield on total deposits increased to 0.45% at June 30, 2022, from 0.16% at March 31, 2022.
For the quarter ended June 30, 2022, the Company recorded a provision for credit losses of $24.0 million compared to a provision of $7.8 million for the immediately preceding quarter ended March 31, 2022 and a recovery of the provision for credit losses of $(27.5) million for the quarter ended June 30, 2021. The ratio of the ACL to total loans was consistent with the prior quarter-end at 0.54%.
The ratio of non-performing loans to total loans was 0.60% at June 30, 2022 compared to 0.65% at March 31, 2022. The guaranteed portion of SBA loans on non-accrual status represented 0.18% of total loans and 30% of non-performing loans at June 30, 2022. The positive trend in levels of criticized and classified loans continued during the quarter ended June 30, 2022 with a decline of $181 million and the annualized net charge-off ratio declined to 0.23% from 0.29% for the year ended December 31, 2021.
Results for the quarter continued to be impacted by declines in the fair value of investment securities. Accumulated other comprehensive loss increased by $163 million for the quarter ended June 30, 2022, primarily due to an increase in unrealized losses on investment securities available for sale. Non-interest income was impacted by a $9.3 million decline in the fair value of certain preferred stock investments. These declines in the fair value of securities resulted primarily from widening spreads and rising interest rates related to the Fed’s quantitative tightening and inflationary concerns. None of the unrealized losses were attributable to credit loss impairments; the Company expects to recover the amortized cost basis of its available for sale securities.
At June 30, 2022, book value per common share and tangible book value per common share were $32.15 and $31.16, respectively.
During the quarter ended June 30, 2022, the Company repurchased approximately 6.1 million shares of its common stock for an aggregate purchase price of $243.6 million, at a weighted average price of $39.94 per share.
Loans
A comparison of loan portfolio composition at the dates indicated follows (dollars in thousands):
June 30, 2022
March 31, 2022
December 31, 2021
Residential and other consumer loans
$
8,840,387
36.7
%
$
8,612,839
36.8
%
$
8,368,380
35.2
%
Multi-family
1,017,500
4.2
%
1,072,981
4.6
%
1,154,738
4.9
%
Non-owner occupied commercial real estate
4,276,697
17.7
%
4,284,675
18.3
%
4,381,610
18.4
%
Construction and land
213,833
0.9
%
176,825
0.8
%
165,390
0.7
%
Owner occupied commercial real estate
1,907,349
7.9
%
1,905,395
8.2
%
1,944,658
8.2
%
Commercial and industrial
5,423,998
22.5
%
4,951,999
21.2
%
4,790,275
20.2
%
PPP
29,828
0.1
%
80,296
0.3
%
248,505
1.0
%
Pinnacle
977,930
4.1
%
935,915
4.0
%
919,641
3.9
%
Bridge – franchise finance
262,570
1.1
%
306,563
1.3
%
342,124
1.4
%
Bridge – equipment finance
333,125
1.4
%
341,369
1.5
%
357,599
1.5
%
Mortgage warehouse lending (“MWL”)
816,797
3.4
%
701,172
3.0
%
1,092,133
4.6
%
$
24,100,014
100.0
%
$
23,370,029
100.0
%
$
23,765,053
100.0
%
In aggregate, commercial loans, excluding the runoff of PPP, grew by $553 million during the quarter ended June 30, 2022. The largest increase was in the commercial and industrial segment, including owner-occupied commercial real estate, which grew by $474 million for the quarter, followed by growth in MWL of $116 million. MWL utilization was 46% at June 30, 2022 compared to 39% at March 31, 2022 and 56% at December 31, 2021. Residential and other consumer loans grew by $228 million during the quarter ended June 30, 2022.
Asset Quality and the Allowance for Credit Losses (“ACL”)
Non-performing loans totaled $144.0 million or 0.60% of total loans at June 30, 2022, compared to $150.8 million or 0.65% of total loans at March 31, 2022. Non-performing loans included $43.4 million and $41.9 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.18% of total loans at both June 30, 2022 and March 31, 2022.
The following table presents criticized and classified commercial loans at the dates indicated (in thousands):
June 30, 2022
March 31, 2022
December 31, 2021
Special mention
$
89,153
$
95,250
$
148,593
Substandard – accruing
787,399
956,318
1,136,378
Substandard – non-accruing
117,518
104,329
129,579
Doubtful
7,971
26,678
47,754
Total
$
1,002,041
$
1,182,575
$
1,462,304
The following table presents the ACL and related ACL coverage ratios at the dates indicated and net charge-off rates for the periods ended June 30, 2022 and March 31, 2022, and the year ended December 31, 2021 (dollars in thousands):
ACL
ACL to Total
Loans (1)
ACL to Non-
Performing Loans
Net Charge-offs to
Average Loans (2)
December 31, 2021
$
126,457
0.53
%
61.41
%
0.29
%
March 31, 2022
$
125,443
0.54
%
83.17
%
0.15
%
June 30, 2022
$
130,239
0.54
%
90.45
%
0.23
%
______________________________
(1)
ACL to total loans, excluding government insured residential loans, PPP loans and MWL, which carry nominal or no reserves, was 0.61%, at both June 30, 2022 and March 31, 2022, and 0.62% at December 31, 2021.
(2)
Annualized for the three months ended March 31, 2022 and the six months ended June 30, 2022.
The ACL at June 30, 2022 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 2022, economic information provided by additional sources including developments subsequent to publishing of the scenarios, information about borrower financial condition and collateral values and other relevant information.
For the quarter ended June 30, 2022, the Company recorded a provision for credit losses of $24.0 million, which included a provision of $23.2 million related to funded loans. Factors impacting the provision for credit losses for the quarter ended June 30, 2022 included loan growth, an increase in qualitative factors and an increase in specific reserves.
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,
2022
2021
2022
2021
Beginning balance
$
125,443
$
220,934
$
126,457
$
257,323
Provision (recovery)
23,207
(27,663
)
30,653
(53,969
)
Net charge-offs
(18,411
)
(17,629
)
(26,871
)
(27,712
)
Ending balance
$
130,239
$
175,642
$
130,239
$
175,642
Net Interest Income
Net interest income for the quarter ended June 30, 2022 was $225.4 million compared to $208.6 million for the immediately preceding quarter ended March 31, 2022 and $198.3 million for the quarter ended June 30, 2021. Interest income increased by $31.0 million for the quarter ended June 30, 2022 compared to the immediately preceding quarter. Interest expense increased by $14.2 million compared to the immediately preceding quarter.
The Company’s net interest margin, calculated on a tax-equivalent basis, increased by 0.13% to 2.63% for the quarter ended June 30, 2022, from 2.50% for the immediately preceding quarter ended March 31, 2022. Factors impacting the net interest margin for the quarter ended June 30, 2022 included:
The tax-equivalent yield on investment securities increased to 2.12% for the quarter ended June 30, 2022, from 1.73% for the quarter ended March 31, 2022. This increase resulted from the reset of coupon rates on variable rate securities and purchases of higher-yielding securities.
The tax-equivalent yield on loans increased to 3.59% for the quarter ended June 30, 2022, from 3.36% for the quarter ended March 31, 2022. The resetting of variable rate loans to higher coupon rates and origination of new loans at higher rates contributed to the increase.
The average rate paid on interest bearing deposits increased to 0.45% for the quarter ended June 30, 2022, from 0.24% for the quarter ended March 31, 2022, primarily in response to the rising interest rate environment.
Non-interest income and Non-interest expense
Non-interest income totaled $13.5 million for the quarter ended June 30, 2022 compared to $14.3 million for the quarter ended March 31, 2022 and $32.8 million for the quarter ended June 30, 2021.
Gain (loss) on investment securities was a net loss of $(8.4) million for the quarter ended June 30, 2022 compared to a net loss of $(7.9) million for the quarter ended March 31, 2022, and a net gain of $4.2 million for the quarter ended June 30, 2021. The net losses for the quarters ended June 30, 2022 and March 31, 2022 were attributable to $9.3 million and $10.5 million declines, respectively, in the fair value of certain preferred stock investments resulting from rising market interest rates.
The decline in other non-interest income for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021 reflected declines in BOLI revenue and gain on sale of loans.
Employee compensation and benefits declined by $4.6 million for the quarter ended June 30, 2022, compared to the quarter ended March 31, 2022. Seasonal declines in payroll taxes and certain other benefits combined with lower compensation expense related to liability classified share awards resulting from a lower stock price were partially offset by the impact of salary increases and higher head count.
Earnings Conference Call and Presentation
A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Thursday, July 21, 2022 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, Chief Financial Officer, Leslie N. Lunak and Chief Operating Officer, Thomas M. Cornish.
The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at https://ir.bankunited.com. To participate by telephone, participants will receive dial-in information and a unique PIN number upon completion of registration at https://register.vevent.com/register/BI46cdf2737b4a45dc8e0f6a39d5fdf9c1. For those unable to join the live event, an archived webcast will be available in the Investor Relations page at https://ir.bankunited.com approximately two hours following the live webcast.
About BankUnited, Inc.
BankUnited, Inc., with total assets of $36.6 billion at June 30, 2022, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 60 banking centers in 12 Florida counties, 4 banking centers in the New York metropolitan area, and 1 banking center located in Dallas, Texas.
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 external circumstances outside the Company’s direct control. 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, 2021 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,
2022
December 31,
2021
ASSETS
Cash and due from banks:
Non-interest bearing
$
18,531
$
19,143
Interest bearing
495,242
295,714
Cash and cash equivalents
513,773
314,857
Investment securities (including securities recorded at fair value of $10,093,504 and $10,054,198)
10,103,504
10,064,198
Non-marketable equity securities
213,409
135,859
Loans
24,100,014
23,765,053
Allowance for credit losses
(130,239
)
(126,457
)
Loans, net
23,969,775
23,638,596
Bank owned life insurance
310,970
309,477
Operating lease equipment, net
605,769
640,726
Goodwill
77,637
77,637
Other assets
756,567
634,046
Total assets
$
36,551,404
$
35,815,396
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Demand deposits:
Non-interest bearing
$
9,645,056
$
8,975,621
Interest bearing
2,868,417
3,709,493
Savings and money market
13,222,845
13,368,745
Time
2,724,581
3,384,243
Total deposits
28,460,899
29,438,102
Federal funds purchased
—
199,000
FHLB advances
4,005,000
1,905,000
Notes and other borrowings
721,166
721,416
Other liabilities
858,322
514,117
Total liabilities
34,045,387
32,777,635
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 77,944,216 and 85,647,986 shares issued and outstanding
779
856
Paid-in capital
387,583
707,503
Retained earnings
2,438,050
2,345,342
Accumulated other comprehensive loss
(320,395
)
(15,940
)
Total stockholders’ equity
2,506,017
3,037,761
Total liabilities and stockholders’ equity
$
36,551,404
$
35,815,396
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,
2022
2022
2021
2022
2021
Interest income:
Loans
$
209,223
$
191,562
$
202,520
$
400,785
$
407,855
Investment securities
54,771
43,048
37,674
97,819
76,175
Other
2,979
1,354
1,607
4,333
3,200
Total interest income
266,973
235,964
241,801
502,937
487,230
Interest expense:
Deposits
20,501
11,862
17,316
32,363
39,692
Borrowings
21,056
15,460
26,174
36,516
52,987
Total interest expense
41,557
27,322
43,490
68,879
92,679
Net interest income before provision for credit losses
225,416
208,642
198,311
434,058
394,551
Provision for (recovery of) credit losses
23,996
7,830
(27,534
)
31,826
(55,523
)
Net interest income after provision for credit losses
201,420
200,812
225,845
402,232
450,074
Non-interest income:
Deposit service charges and fees
5,896
5,960
5,417
11,856
10,317
Gain (loss) on investment securities, net
(8,392
)
(7,868
)
4,155
(16,260
)
6,520
Lease financing
13,363
13,415
13,522
26,778
26,010
Other non-interest income
2,583
2,794
9,663
5,377
20,206
Total non-interest income
13,450
14,301
32,757
27,751
63,053
Non-interest expense:
Employee compensation and benefits
62,461
67,088
56,459
129,549
115,747
Occupancy and equipment
11,399
11,512
11,492
22,911
23,367
Deposit insurance expense
3,993
3,403
4,222
7,396
11,672
Professional fees
3,256
2,262
2,139
5,518
4,051
Technology and telecommunications
17,898
17,004
16,851
34,902
32,592
Depreciation and impairment of operating lease equipment
12,585
12,610
12,834
25,195
25,051
Other non-interest expense
15,810
12,445
14,455
28,255
29,193
Total non-interest expense
127,402
126,324
118,452
253,726
241,673
Income before income taxes
87,468
88,789
140,150
176,257
271,454
Provision for income taxes
21,704
21,639
36,176
43,343
68,666
Net income
$
65,764
$
67,150
$
103,974
$
132,914
$
202,788
Earnings per common share, basic
$
0.82
$
0.79
$
1.12
$
1.61
$
2.18
Earnings per common share, diluted
$
0.82
$
0.79
$
1.11
$
1.60
$
2.17
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
Three Months Ended June 30, 2022
Three Months Ended March 31, 2022
Three Months Ended June 30, 2021
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
$
23,709,190
$
212,395
3.59
%
$
23,349,143
$
194,551
3.36
%
$
22,996,564
$
205,940
3.59
%
Investment securities (3)
10,477,600
55,488
2.12
%
10,083,083
43,719
1.73
%
9,839,422
38,338
1.56
%
Other interest earning assets
718,904
2,979
1.66
%
674,640
1,354
0.81
%
1,380,317
1,607
0.47
%
Total interest earning assets
34,905,694
270,862
3.11
%
34,106,866
239,624
2.83
%
34,216,303
245,885
2.88
%
Allowance for credit losses
(127,864
)
(129,028
)
(215,151
)
Non-interest earning assets
1,669,689
1,674,476
1,732,676
Total assets
$
36,447,519
$
35,652,314
$
35,733,828
Liabilities and Stockholders’ Equity:
Interest bearing liabilities:
Interest bearing demand deposits
$
2,576,257
$
1,742
0.27
%
$
3,078,176
$
1,369
0.18
%
$
3,069,945
$
2,594
0.34
%
Savings and money market deposits
13,052,566
15,213
0.47
%
13,401,332
6,931
0.21
%
13,541,237
11,307
0.33
%
Time deposits
2,812,988
3,546
0.51
%
3,319,585
3,562
0.44
%
3,380,582
3,415
0.41
%
Total interest bearing deposits
18,441,811
20,501
0.45
%
19,799,093
11,862
0.24
%
19,991,764
17,316
0.35
%
Federal funds purchased
115,146
155
0.53
%
187,400
58
0.12
%
—
—
—
%
FHLB advances
4,373,736
11,644
1.07
%
2,248,889
6,146
1.11
%
2,873,922
16,922
2.36
%
Notes and other borrowings
721,284
9,257
5.13
%
721,405
9,256
5.13
%
721,753
9,252
5.13
%
Total interest bearing liabilities
23,651,977
41,557
0.70
%
22,956,787
27,322
0.48
%
23,587,439
43,490
0.74
%
Non-interest bearing demand deposits
9,419,025
9,047,864
8,163,879
Other non-interest bearing liabilities
654,162
623,200
851,044
Total liabilities
33,725,164
32,627,851
32,602,362
Stockholders’ equity
2,722,355
3,024,463
3,131,466
Total liabilities and stockholders’ equity
$
36,447,519
$
35,652,314
$
35,733,828
Net interest income
$
229,305
$
212,302
$
202,395
Interest rate spread
2.41
%
2.35
%
2.14
%
Net interest margin
2.63
%
2.50
%
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
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
Six Months Ended June 30,
2022
2021
Average
Balance
Interest (1)
Yield/
Rate
(1)(2)
Average
Balance
Interest (1)
Yield/
Rate
(1)(2)
Assets:
Interest earning assets:
Loans
$
23,530,162
$
406,946
3.47
%
$
23,271,410
$
414,761
3.58
%
Investment securities (3)
10,281,431
99,207
1.93
%
9,456,929
77,525
1.64
%
Other interest earning assets
696,894
4,333
1.25
%
1,222,456
3,200
0.53
%
Total interest earning assets
34,508,487
510,486
2.97
%
33,950,795
495,486
2.93
%
Allowance for credit losses
(128,443
)
(234,686
)
Non-interest earning assets
1,672,070
1,728,449
Total assets
$
36,052,114
$
35,444,558
Liabilities and Stockholders’ Equity:
Interest bearing liabilities:
Interest bearing demand deposits
$
2,825,830
3,111
0.22
%
$
3,006,760
5,368
0.36
%
Savings and money market deposits
13,225,986
22,866
0.35
%
13,169,195
23,434
0.36
%
Time deposits
3,064,887
6,386
0.42
%
3,853,057
10,890
0.57
%
Total interest bearing deposits
19,116,703
32,363
0.34
%
20,029,012
39,692
0.40
%
Federal funds purchased
151,074
213
0.28
%
3,978
2
0.10
%
FHLB and PPPLF borrowings
3,317,182
17,790
1.08
%
2,972,770
34,480
2.34
%
Notes and other borrowings
721,344
18,513
5.13
%
722,028
18,505
5.13
%
Total interest bearing liabilities
23,306,303
68,879
0.59
%
23,727,788
92,679
0.79
%
Non-interest bearing demand deposits
9,234,469
7,829,422
Other non-interest bearing liabilities
638,767
799,297
Total liabilities
33,179,539
32,356,507
Stockholders’ equity
2,872,575
3,088,051
Total liabilities and stockholders’ equity
$
36,052,114
$
35,444,558
Net interest income
$
441,607
$
402,807
Interest rate spread
2.38
%
2.14
%
Net interest margin
2.57
%
2.38
%
Contacts
BankUnited, Inc.
Investor Relations:
Leslie N. Lunak, 786-313-1698
llunak@bankunited.com