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Form 8-K BankUnited, Inc. For: Jul 22

July 22, 2021 6:48 AM EDT

Exhibit 99.1
 
BANKUNITED, INC. REPORTS SECOND QUARTER 2021 RESULTS
 
Miami Lakes, Fla. — July 22, 2021 — 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.
1


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, 2021March 31, 2021December 31, 2020
Residential and other consumer loans$7,076,274 30.9 %$6,582,447 28.1 %$6,348,222 26.6 %
Multi-family1,256,711 5.5 %1,507,462 6.5 %1,639,201 6.9 %
Non-owner occupied commercial real estate4,724,183 20.7 %4,871,110 20.9 %4,963,273 20.8 %
Construction and land218,634 1.0 %287,821 1.2 %293,307 1.2 %
Owner occupied commercial real estate1,960,900 8.6 %1,932,153 8.3 %2,000,770 8.4 %
Commercial and industrial4,205,795 18.4 %4,048,473 17.3 %4,447,383 18.6 %
PPP491,960 2.1 %911,951 3.9 %781,811 3.3 %
Pinnacle1,046,537 4.6 %1,088,685 4.7 %1,107,386 4.6 %
Bridge - franchise finance463,874 2.0 %524,617 2.2 %549,733 2.3 %
Bridge - equipment finance421,939 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.
2


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 DeferralCARES 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-family9,602 — 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 33,40525,647
Total commercial247,1102,205435,773
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, 2021March 31, 2021December 31, 2020
Special mention$138,064 $420,331 $711,516 
Substandard - accruing1,684,666 1,983,191 1,758,654
Substandard - non-accruing229,646 189,589 203,758
Doubtful17,332 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.
3


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,
 2021202020212020
Beginning balance$220,934 $250,579 $257,323 $108,671 
Cumulative effect of adoption of CECL— — — 27,305 
Balance after adoption of CECL220,934 250,579 257,323 135,976 
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.
4


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.
5


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).
Contact
BankUnited, Inc.
Investor Relations:
Leslie N. Lunak, 786-313-1698
llunak@bankunited.com
Source: BankUnited, Inc.
6


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 bearing877,446 377,483 
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 securities164,959 195,865 
Loans held for sale— 24,676 
Loans22,885,074 23,866,042 
Allowance for credit losses (175,642)(257,323)
Loans, net22,709,432 23,608,719 
Bank owned life insurance 303,519 294,629 
Operating lease equipment, net667,935 663,517 
Goodwill77,637 77,637 
Other assets649,422 571,051 
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 bearing3,218,441 3,020,039 
Savings and money market13,578,526 12,659,740 
Time2,978,074 4,807,199 
Total deposits28,609,269 27,495,816 
Federal funds purchased— 180,000 
FHLB advances2,681,505 3,122,999 
Notes and other borrowings721,639 722,495 
Other liabilities526,331 506,171 
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 outstanding932 931 
Paid-in capital1,011,786 1,017,518 
Retained earnings2,173,698 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 

7


BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
Three Months EndedSix Months Ended
 June 30,March 31,June 30,June 30,June 30,
 20212021202020212020
Interest income:    
Loans$202,520 $205,335 $213,938 $407,855 $448,297 
Investment securities37,674 38,501 50,932 76,175 106,992 
Other1,607 1,593 2,908 3,200 6,628 
Total interest income 241,801 245,429 267,778 487,230 561,917 
Interest expense:
Deposits17,316 22,376 50,187 39,692 133,009 
Borrowings26,174 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 fees5,417 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, net4,155 2,365 6,836 6,520 3,383 
Lease financing13,522 12,488 16,150 26,010 31,631 
Other non-interest income7,429 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 benefits56,459 59,288 48,877 115,747 107,764 
Occupancy and equipment 11,492 11,875 11,901 23,367 24,270 
Deposit insurance expense4,222 7,450 4,806 11,672 9,209 
Professional fees 2,139 1,912 3,131 4,051 6,335 
Technology and telecommunications16,851 15,741 14,025 32,592 26,621 
Depreciation of operating lease equipment12,834 12,217 12,219 25,051 24,822 
Other non-interest expense14,455 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 taxes140,150 131,304 96,904 271,454 56,482 
Provision for income taxes36,176 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 

8


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 assets1,380,317 1,607 0.47 %1,062,840 1,593 0.61 %765,848 2,908 1.53 %
Total interest earning assets34,216,303 245,885 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 assets1,732,676 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 deposits13,541,237 11,307 0.33 %12,793,019 12,127 0.38 %10,450,310 17,447 0.67 %
Time deposits3,380,582 3,415 0.41 %4,330,781 7,475 0.70 %7,096,097 28,018 1.59 %
Total interest bearing deposits19,991,764 17,316 0.35 %20,066,674 22,376 0.45 %19,994,952 50,187 1.01 %
Federal funds purchased— — — %8,000 0.15 %119,835 32 0.11 %
FHLB and PPPLF borrowings2,873,922 16,922 2.36 %3,072,717 17,558 2.32 %4,961,376 21,054 1.71 %
Notes and other borrowings721,753 9,252 5.13 %722,305 9,252 5.12 %493,278 6,168 5.00 %
Total interest bearing liabilities23,587,439 43,490 0.74 %23,869,696 49,189 0.83 %25,569,441 77,441 1.22 %
Non-interest bearing demand deposits8,163,879 7,491,249 5,313,009 
Other non-interest bearing liabilities851,044 746,973 820,439 
Total liabilities32,602,362 32,107,918 31,702,889 
Stockholders' equity3,131,466 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 spread2.14 %2.15 %2.13 %
Net interest margin2.37 %2.39 %2.39 %
(1)    On a tax-equivalent basis where applicable
(2)    Annualized
(3)    At fair value except for securities held to maturity








9


BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
Six Months Ended June 30,
20212020
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 assets1,222,456 3,200 0.53 %706,238 6,628 1.89 %
Total interest earning assets33,950,795 495,486 2.93 %32,115,045 571,062 3.57 %
Allowance for credit losses(234,686)(196,619)
Non-interest earning assets1,728,449 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 deposits13,169,195 23,434 0.36 %10,431,256 55,203 1.06 %
Time deposits3,853,057 10,890 0.57 %7,303,083 66,125 1.82 %
Total interest bearing deposits20,029,012 39,692 0.40 %20,045,425 133,009 1.33 %
Federal funds purchased3,978 0.10 %106,951 399 0.75 %
FHLB and PPPLF borrowings2,972,770 34,480 2.34 %4,688,102 46,138 1.98 %
Notes and other borrowings722,028 18,505 5.13 %461,188 11,458 4.97 %
Total interest bearing liabilities23,727,788 92,679 0.79 %25,301,666 191,004 1.52 %
Non-interest bearing demand deposits7,829,422 4,840,781 
Other non-interest bearing liabilities799,297 784,770 
Total liabilities32,356,507 30,927,217 
Stockholders' equity3,088,051 2,854,283 
Total liabilities and stockholders' equity$35,444,558 $33,781,500 
Net interest income$402,807 $380,058 
Interest rate spread2.14 %2.05 %
Net interest margin2.38 %2.37 %
(1)    On a tax-equivalent basis where applicable
(2)    Annualized
(3)    At fair value except for securities held to maturity


10


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,
c2021202020212020
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 outstanding93,245,282 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 share92,003,901 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
— — 
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 share92,003,901 91,202,151 91,937,407 92,022,654 
Dilutive effect of stock options and certain shared-based awards181,061 705 137,542 126,858 
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 

11



BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Financial ratios (4)
    
Return on average assets1.17 %0.90 %1.15 %0.27 %
Return on average stockholders’ equity13.3 %11.6 %13.2 %3.2 %
Net interest margin (3)
2.37 %2.39 %2.38 %2.37 %
 June 30, 2021December 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 loans0.77 %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, 2021December 31, 2020Required to be Considered Well Capitalized
BankUnited, Inc.BankUnited, N.A.BankUnited, Inc.BankUnited, N.A.
Capital ratios
Tier 1 leverage8.8 %9.8 %8.6 %9.5 %5.0 %
Common Equity Tier 1 ("CET1") risk-based capital13.5 %15.1 %12.6 %13.9 %6.5 %
Total risk-based capital15.4 %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.
12


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 EndedSix Months Ended June 30,
June 30, 2021March 31, 2021June 30, 202020212020
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, 2021March 31, 2021December 31, 2020
Total loans (GAAP)$22,885,074$23,361,067$23,866,042
Less: Government insured residential loans1,863,7231,759,2891,419,074
Less: PPP loans491,960911,951781,811
Less: MWL1,018,2671,145,9571,259,408
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 %
13


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, 2021December 31, 2020
Total stockholders’ equity (GAAP)$3,161,543 $2,983,012 
Less: goodwill77,637 77,637 
Tangible stockholders’ equity (non-GAAP)$3,083,906 $2,905,375 
 
Common shares issued and outstanding93,238,553 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 
14
July 22, 2021 Q2 2021 – Supplemental Information Exhibit 99.2


 
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of BankUnited, Inc. (“BankUnited,” “BKU” or the “Company”) with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this presentation are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitation) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by 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). 2


 
Financial Highlights


 
Continued Strong Results; Positive Credit Trends 4 Operating results Continued improvement in deposit mix Asset Quality Robust capital levels • EPS for the quarter of $1.11 • Annualized ROE for the 6 months ended June 30 of 13.2% and ROA of 1.15% • PPNR increased to $112.6 million, from $103.3 million linked quarter. • Net interest income grew by $2 million linked quarter and $8 million compared to Q2 2020 • NIM relatively stable at 2.37% compared to 2.39% for the prior quarter; impacted by elevated liquidity • Recovery of credit losses of $(28) million reflecting an improving economic forecast • Non-interest DDA grew by $869 million for the quarter • Non-interest DDA now 31% of total deposits compared to 25% at 12/31/20 • Average non-interest DDA up $2.9 billion compared to Q2 2020 • Average total cost of deposits continued to decline, to 0.25% for the quarter • “Spot” APY on total deposits was 0.22% at June 30, 2021 • Total criticized and classified loans declined by $541 million or 21% during the quarter • Loans on short-term deferral and CARES Act Modifications totaled $497 million at June 30, 2021, down $265 million in total from March 31 • The Company's Board authorized the repurchase of up to an additional $150 million in shares of common stock • CET1 ratios of 13.5% at the holding company and 15.1% at the bank at June 30, 2021 • Book value per share grew to $33.91 and tangible book value grew to $33.08 at June 30, 2021


 
Highlights from Second Quarter Earnings 5 Key Highlights Improving economic forecast and reductions in criticized/classified loans 51% YoY non-interest DDA growth 10% YoY deposit growth, primarily from non-interest bearing Spot APY on total deposits declined to 0.22% at June 30, 2021 Increase in NPA ratio attributable to one commercial relationship (1) PPNR is a non-GAAP financial measure. See section entitled “Non-GAAP Financial Measures” on page 31 (2) Includes guaranteed portion of non-accrual SBA loans. (3) Annualized ($ in millions, except per share data) Q2 21 Q1 21 Q2 20 Q1 21 Q2 20 Net Interest Income $198 $196 $190 $2 $8 Provision for (Recovery of) Credit Losses ($28) ($28) $25 $0 ($53) Total Non-interest Income $33 $30 $38 $3 ($5) Total Non-interest Expense $118 $123 $106 ($5) $12 Net Income $104 $99 $77 $5 $27 EPS $1.11 $1.06 $0.80 $0.05 $0.31 Pre-Provision, Net Revenue (PPNR) (1) $113 $103 $122 $10 ($9) Period-end Loans $22,885 $23,361 $23,835 ($476) ($950) Period-end Non-interest DDA $8,834 $7,966 $5,883 $869 $2,951 Period-end Deposits $28,609 $27,732 $26,070 $877 $2,539 CET1 13.5% 13.2% 11.8% 0.3% 1.7% Total Capital 15.4% 15.2% 13.9% 0.2% 1.5% Yield on Loans 3.59% 3.58% 3.71% 0.01% (0.12%) Cost of Deposits 0.25% 0.33% 0.80% (0.08%) (0.55%) Net Interest Margin 2.37% 2.39% 2.39% (0.02%) (0.02%) Non-performing Assets to Total Assets (2) 0.83% 0.67% 0.60% 0.16% 0.23% Allowance for Credit Losses to Total Loans 0.77% 0.95% 1.12% (0.18%) (0.35%) Net Charge-offs to Average Loans(3) 0.24% 0.17% 0.20% 0.07% 0.04% Change From


 
Continuing to Transform our Deposit mix ($ in millions) 6 $6,335 $6,820 $7,347 $4,807 $3,784 $2,978 $10,715 $11,262 $10,622 $12,660 $12,885 $13,579 $1,758 $1,771 $2,131 $3,020 $3,097 $3,218 $3,071 $3,621 $4,295 $7,009 $7,966 $8,834$21,879 $23,474 $24,395 $27,496 $27,732 $28,609 12/31/17 12/31/18 12/31/19 12/31/20 3/31/21 6/30/21 Non-interest Demand Interest Demand Money Market / Savings Time Non-interest bearing demand deposits have grown at a compound annual growth rate of 62% since December 31, 2019 Quarterly Cost of Deposits 0.94% 1.52% 1.48% 0.43% 0.33% 0.25% Non-interest bearing as % of total deposits 14.0% 15.4% 17.6% 25.5% 28.7% 30.9% We have consistently priced down our deposit portfolio since the Fed began lowering interest rates in late 2019 Spot Average Annual Percentage Yield (“APY”) At December 31, 2019 At March 31, 2020 At June 30, 2020 At September 30, 2020 At December 31, 2020 At March 31, 2021 At June 30, 2021 Total non-maturity deposits 1.11% 0.83% 0.44% 0.37% 0.29% 0.24% 0.20% Total interest-bearing deposits 1.71% 1.35% 0.82% 0.65% 0.48% 0.36% 0.30% Total deposits 1.42% 1.12% 0.65% 0.49% 0.36% 0.27% 0.22%


 
Prudently Underwritten and Well-Diversified Loan Portfolio At June 30, 2021 ($ in millions) 7 Loan Portfolio Over Time CRE C&I Lending Subs Residential Loan Product Type $4,949 $5,661 $6,348 $6,582 $7,076 $7,501 $7,493 $6,896 $6,666 $6,200 $6,478 $6,718 $6,448 $5,981 $6,167 $782 $912 $492 $432 $768 $1,259 $1,146 $1,018$2,617 $2,515 $2,133 $2,074 $1,932 $21,977 $23,155 $23,866 $23,361 $22,885 12/31/18 12/31/19 12/31/20 3/31/21 6/30/21 Residential CRE C&I PPP Mortgage Warehouse Lending Lending Subs Non-owner Occupied 76% Multi- family 20% Construction and Land 4% Commercial and Industrial 63% Owner Occupied 30% SBA PPP 7% Pinnacle 54% Bridge - Franchise 24% Bridge - Equipment 22% 30 Yr Fixed 22% 15 & 20 Year Fixed 10%10/1 ARM 15% 5/1 & 7/1 ARM 25% Formerly Covered 2% Govt Insured 26%


 
SBA PPP Loans At June 30, 2021 ($ in millions) 8 Loan Count UPB Loan Count UPB Loans funded to date 3,581 876$ 1,420 291$ Forgiveness applications received 3,307 761$ - -$ Full forgiveness granted / loan paid off 3,063 628$ - -$ First Draw Program Second Draw Program


 
Allowance for Credit Losses


 
CECL Methodology 10 Underlying Principles Economic Forecast Key Variables • The ACL under CECL represents management’s best estimate at the balance sheet date of expected credit losses over the life of the loan portfolio. • Required to consider historical information, current conditions and a reasonable and supportable economic forecast. • For most portfolio segments, BankUnited uses econometric models to project PD, LGD and expected losses at the loan level and aggregates those expected losses by segment. • Qualitative adjustments may be applied to the quantitative results. • Accounting standard requires an estimate of expected prepayments which may significantly impact the lifetime loss estimate. • Our ACL estimate was informed by Moody’s economic scenarios published in June 2021. • Unemployment at 5.2% for Q3 2021, steadily declining to 4.5% through end of 2021, and continuing to 3.5% by end of 2022 • Annualized growth in GDP at 6.7% for Q3 2021, increasing to 6.8% by end of 2021 and an average of 3.1% throughout 2022 • VIX trending at stabilized levels through the forecast horizon • S&P 500 averaging near 4,000 through the R&S period • 2 year reasonable and supportable forecast period. • The models ingest numerous national, regional and MSA level economic variables and data points. Economic data and variables to which portfolio segments are most sensitive: • Commercial o Market volatility index o S&P 500 index o Unemployment rate o A variety of interest rates and spreads • CRE o Unemployment o CRE property forecast o 10-year treasury o Baa corporate yield o Real GDP growth • Residential o HPI o Unemployment rate o Real GDP growth o Freddie Mac 30-year rate


 
Drivers of Change in the ACL 11 ACL 3/31/21 ACL 6/30/21 Net Portfolio Migration ($ in millions) % of Total Loans 0.95% 0.77% • Risk rating migration • Changes in specific reserves • $27.2MM increase related to one C&I loan • New loans • Exits/runoff • Portfolio composition changes • Seasoning • Resi loans exiting deferral • Changes in borrower financial condition • Current market adjustment • Changes to forward path of economic forecast Change in Qualitative Overlay Net Charge- Offs Economic Forecast Portfolio Changes


 
Allocation of the ACL 12 ($ in millions) (1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $47.7 million, $48.2 million, and $51.3 million or 0.21%, 0.21%, and 0.22%, of total loans and 0.13%, 0.14%, and 0.15% of total assets, at June 30, 2021, March 31, 2021, and December 31, 2020. (2) 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. See section entitled “Non-GAAP Financial Measures” on page 32. (3) The increase in non-performing loans to total loans and non-performing assets to total assets at June 30, 2021 was primarily attributable to one $69 million commercial and industrial relationship. Balance % of Loans Balance % of Loans Balance % of Loans Residential and other consumer 18.7$ 0.29% 15.8$ 0.24% 11.9$ 0.17% Commercial: Commercial real estate 104.6 1.52% 95.2 1.43% 44.1 0.71% Commercial and industrial 91.0 1.07% 78.6 0.98% 98.6 1.28% Pinnacle 0.3 0.03% 0.2 0.02% 0.2 0.02% Franchise finance 36.3 6.61% 24.4 4.65% 15.6 3.37% Equipment finance 6.4 1.34% 6.7 1.46% 5.2 1.23% Total commercial 238.6 1.36% 205.1 1.22% 163.7 1.04% Allowance for credit losses(2) 257.3$ 1.08% 220.9$ 0.95% 175.6$ 0.77% December 31, 2020 June 30, 2021March 31, 2021 Asset Quality Ratios December 31, 2020 March 31, 2021 June 30, 2021 Non-performing loans to total loans (1)(3) 1.02% 1.00% 1.28% Non-performing assets to total assets (3) 0.71% 0.67% 0.83% Allowance for credit losses to non-performing loans (1) 105.26% 94.56% 60.02% Net charge-offs to average loans 0.26% 0.17% 0.24%


 
Loan Portfolio and Credit


 
Loan Portfolio – Geographic Distribution At June 30, 2021 Commercial (1) Residential CRE (1) Includes PPP, MWL, BFG and Pinnacle FL 37% NY Tri-State Area 22% Other 41% 14 CA 32% FL 9% NY 22% Other 37% FL 56% NY Tri-State Area 35% Other 9%


 
15 Loan Portfolio – Granular, Diversified Commercial & Industrial Portfolio At June 30, 2021 ($ in millions) • Includes $2.0 billion of owner- occupied real estate • Some key observations: • Educational services – well established private colleges, universities and high schools • Transportation and warehousing – cruise lines, aviation authorities, logistics • Health care – larger physician practice management companies, HMO’s, mental health & substance abuse; no small practices • Arts and entertainment – stadiums, professional sports teams, gaming • Accommodation and food services – time share, direct food services businesses and concessionaires (1) Excludes PPP loans Industry Balance(1) Commitment % of Portfolio Finance and Insurance 940$ 1,802$ 15.2% Educational Services 695 742 11.3% Wholesale Trade 601 924 9.7% Transportation and Warehousing 458 555 7.4% Health Care and Social Assistance 406 508 6.6% Manufacturing 350 527 5.7% Information 389 566 6.3% Retail Trade 305 413 4.9% Accommodation and Food Services 250 299 4.1% Real Estate and Rental and Leasing 312 506 5.1% Public Administration 232 248 3.8% Professional, Scientific, and Technical Services 223 347 3.6% Other Services (except Public Administration) 236 292 3.8% Construction 209 355 3.4% Administrative and Support and Waste Management 166 232 2.7% Arts, Entertainment, and Recreation 173 218 2.8% Utilities 164 252 2.7% Other 58 86 0.9% 6,167$ 8,872$ 100.0%


 
Loan Portfolio – Commercial Real Estate by Property Type At June 30, 2021 Property Type Balance FL NY Tri State Other Wtd. Avg. DSCR Wtd. Avg. LTV Non- Performing Office 1,986$ 60% 25% 15% 2.32 62.6% 5$ Multifamily 1,361 40% 55% 5% 1.72 59.0% 7 Retail 1,226 54% 39% 7% 1.53 68.7% 21 Warehouse/Industrial 861 64% 23% 13% 2.27 56.4% - Hotel 594 76% 15% 9% 1.17 56.7% 22 Other 172 38% 32% 30% 1.90 56.2% 8 6,200$ 56% 35% 9% 1.90 61.4% 63$ • Commercial real estate loans are secured by income-producing, non-owner occupied properties, typically with well capitalized middle market sponsors • Construction and land loans, included in the table above by property type, represent only 1% of the total loan portfolio. • Average rent collections for the second quarter, based on a sample of borrowers: • Office – 98% NY, 98% FL • Multi-family – 91% NY, 96% FL • Retail – 85% NY, 95% FL • Hotel occupancy – 75% for second quarter of 2021 excluding one NY hotel which re-opened in June. • All non-performing hotel loans are in the SBA portfolio. • NY Commercial Real Estate portfolio contains $163 million of mixed-used properties; $86 million included in the table above in multi-family, $58 million in retail and $19 million in office. • Non-performing CRE loans declined by 22% this quarter ($ in millions) 16


 
17 Loan Portfolio – Deferrals and Modifications At June 30, 2021 ($ in millions) • Loans subject to COVID related deferral or modification under the CARES Act totaled $497 million down from $762 million at March 31, 2021. By comparison, at June 30, 2020 we reported that we had granted initial 90-day payment deferrals on $3.6 billion of loans. • Commercial CARES Act modifications are most often 9 to 12- month interest only periods. • $218 million in commercial loans have rolled off of deferral/modification. 100% of them have resumed regular payments. • Through June 30, 2021 a total of $532 million of residential loans, excluding government insured loans had been granted at least one short term (90 day) deferral. 1. Includes $20 million in residential loans modified under the CARES act that are continuing to make payments. Balance % of loans Balance % of loans Residential -excluding government insured 59$ (1) 1% 439$ 93% 34$ 7% CRE by Property Type: Retail 16$ 1% 3$ 100% -$ - Hotel 225 42% 118 100% - - Office 45 2% - - - - Multifamily 14 1% 10 100% - - Total CRE 300$ 5% 131$ 100% -$ - C&I - Industry: Accomm. and Food Services 31$ 12% -$ - -$ - Retail Trade 32 11% 1 100% - - Finance and Insurance 17 2% 1 100% - - Other 32 3% 60 100% - - Total C&I 112$ 2% 62$ 100% -$ - BFG - Franchise 26$ 6% 25$ 100% -$ - Total Commercial 438$ 3% 218$ 100% -$ - Total 497$ 2% 657$ 95% 34$ 5% Paid Off or Paying as Agreed Not Resumed Regular Payments Loans That Have Rolled Off of Short-Term Deferral or CARES Act Modification Under Short Term Deferral or CARES Act Modification as of June 30, 2021 % of Portfolio


 
Loan Portfolio – Retail At June 30, 2021 ($ in millions) Retail - Commercial Real Estate • No significant mall or “big box” exposure • $40 million and $18 million of Retail-Unanchored and Retail-Anchored, respectively, are mixed-used properties Retail – Commercial & Industrial 18 Property Type Balance Short-Term Deferral or CARES Modification Non-Performing Loans Special Mention Classified Retail - Anchored 628$ 6$ 10$ 19$ 41$ Retail - Unanchored 547 10$ 11 2 186 Construction to Perm 7 - - - 4 Gas Station 22 - - - - Restaurant 22 - - - 10 1,226$ 16$ 21$ 21$ 241$ Industry Not Secured by Real Estate Owner Occupied Real Estate Total Balance Short-Term Deferral or CARES Modification Non- Performing Loans Special Mention Classified Gasoline Stations 1$ 82$ 83$ -$ 1$ 1$ 2$ Health and Personal Care Stores 35 6 41 13 - - 13 Furniture Stores 15 5 20 - 1 - 1 Vending Machine Operators 20 - 20 19 - - 20 Specialty Food Stores 1 11 12 - 1 - 1 Grocery Stores 1 19 20 - - - 1 Automobile Dealers 8 6 14 - - - - Clothing Stores 1 10 11 - - - 3 Florists 11 - 11 - - - - Other 29 44 73 - 3 1 9 122$ 183$ 305$ 32$ 6$ 2$ 50$


 
Loan Portfolio – BFG Franchise Finance At June 30, 2021 ($ in millions) Portfolio Breakdown by Concept Portfolio Breakdown by Geography CA 20% FL 10% TX 7% UT 7% Other 56% 19 Balance % of BFG Franchise Short-Term Deferral or CARES Modification Non-Performing Loans Special Mention Classified Restaurant Concepts: Burger King 59$ 12% -$ -$ -$ 21$ Popeyes 20 4% - - - 6 Dunkin Donuts 19 4% - - - 15 Jimmy John's 17 4% - - - 5 Domino's 8 2% - - - - Other 147 32% 26 28 2 60 270$ 58% 26$ 28$ 2$ 107$ Non-Restaurant Concepts Planet Fitness 93$ 20% -$ -$ -$ 64$ Orange Theory Fitness 70 15% - 5 - 67 Other 31 7% - - - 14 194$ 42% -$ 5$ -$ 145$


 
Loan Portfolio – Hotel At June 30, 2021 ($ in millions) • 76% of our exposure is in Florida, followed by 15% in New York • Includes $57.6 million in SBA loans • All hotel properties in FL and NY are now open • Total criticized and classified hotel loans decreased by $207 million during the quarter ended June 30, 2021, to $314 million from $521 million at March 31. Exposure by Flag Marriott $171 29% Independent $151 26% Others $101 17% Hilton $85 14% IHG $48 8% Sheraton $38 6% Total Portfolio: $594 million 20


 
Credit Quality – Residential At June 30, 2021 High quality residential portfolio consists of primarily prime jumbo mortgages with de-minimis charge- offs since inception as well as fully government insured assets FICO Distribution(1) Breakdown by LTV(1) Breakdown by Vintage(1) (1) Excludes government insured residential loans. FICOs are refreshed routinely. LTVs are typically based on valuation at origination. <720 or NA 11% 720-759 18% >759 71% 60% or less 34% 61% - 70% 25% 71% - 80% 39% More than 80% 2% Prior 32% 2017 9% 2018 6% 2019 9% 2020 23% 2021 21% 21


 
Asset Quality Metrics Non-performing Loans to Total Loans(2) Non-performing Assets to Total Assets(2) Net Charge-offs to Average Loans(1) (1) YTD net charge-offs, annualized at March 31, 2021 and June 30, 2021. (2) The increase in non-performing loans to total loans and non-performing assets to total assets at June 30, 2021 was primarily attributable to one $69 million commercial and industrial relationship. 0.88% 1.02% 1.00% 1.28% 0.68% 0.80% 0.79% 1.07% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 12/31/19 12/31/20 3/31/21 6/30/21 Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 0.63% 0.71% 0.67% 0.83% 0.49% 0.56% 0.53% 0.70% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 12/31/19 12/31/20 3/31/21 6/30/21 Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 22 0.05% 0.26% 0.17% 0.24% 0.00% 0.20% 0.40% 0.60% 12/31/19 12/31/20 3/31/21 6/30/21


 
Non-Performing Loans by Portfolio Segment ($ in millions) (1) Includes the guaranteed portion of non-accrual SBA loans totaling $47.7 million, $48.2 million, $51.3 million, and $45.7 million at June 30, 2021, March 31, 2021, December 31, 2020, and December 31, 2019, respectively. $19 $29 $26 $46 $18 $36 $38 $27 $6 $24 $13 $7 $65 $43 $58 $119 $21 $14 $45 $36 $33 $62 $67 $63 $61 $205 $244 $234 $293 12/31/19 12/31/20 3/31/21 6/30/21 Residential and Other Consumer CRE Multifamily C&I Equipment Franchise SBA(1) 23


 
Criticized and Classified Loans ($ in millions) Commercial Real Estate Commercial & Industrial (2) Franchise Finance(1) Equipment Finance SBA(3) (1) Substandard non-accruing and doubtful includes $0.5 million of loans rated doubtful at June 30, 2021. (2) Substandard non-accruing and doubtful includes $16.9 million of loans rated doubtful at June 30, 2021. (3) Includes the guaranteed portion of non-accrual SBA loans totaling $47.7 million, $48.2 million, $51.3 million, and $45.7 million at June 30, 2021, March 31, 2021, December 31, 2020, and December 31, 2019, respectively. $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 12/31/19 12/31/20 3/31/21 6/30/21 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 12/31/19 12/31/20 3/31/21 6/30/21 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 12/31/19 12/31/20 3/31/21 6/30/21 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 12/31/19 12/31/20 3/31/21 6/30/21 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 12/31/19 12/31/20 3/31/21 6/30/21 24


 
Criticized and Classified – CRE by Property Type ($ in millions) Office Multifamily Retail Warehouse/Industrial Hotel Other $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 12/31/19 12/31/20 3/31/21 6/30/21 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 12/31/19 12/31/20 3/31/21 6/30/21 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 12/31/19 12/31/20 3/31/21 6/30/21 25 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 12/31/19 12/31/20 3/31/21 6/30/21 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 12/31/19 12/31/20 3/31/21 6/30/21 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 12/31/19 12/31/20 3/31/21 6/30/21


 
Criticized and Classified – BFG Franchise Finance ($ in millions) Restaurant Concepts (1) Fitness Concepts Other (1) Substandard non-accruing and doubtful includes $0.5 million of loans rated doubtful at June 30, 2021. $0 $20 $40 $60 $80 $100 $120 $140 $160 12/31/19 12/31/20 3/31/21 6/30/21 $0 $20 $40 $60 $80 $100 $120 $140 $160 12/31/19 12/31/20 3/31/21 6/30/21 $0 $20 $40 $60 $80 $100 $120 $140 $160 12/31/19 12/31/20 3/31/21 6/30/21 26


 
Asset Quality – Delinquencies ($ in millions) Commercial(1) CRE Residential (2) (1) Includes lending subsidiaries (2) Excludes government insured residential loans. $0 $20 $40 $60 $80 $100 $120 $140 12/31/19 12/31/20 3/31/21 6/30/21 $0 $20 $40 $60 $80 $100 $120 $140 12/31/19 12/31/20 3/31/21 6/30/21 $0 $20 $40 $60 $80 $100 $120 $140 12/31/19 12/31/20 3/31/21 6/30/21 27


 
Investment Portfolio


 
29 Investment Securities AFS ($ in thousands) The AFS debt securities portfolio of $10.1 billion was in a net unrealized gain position of $67.3 million at June 30, 2021 Portfolio Composition Ratings Distribution Gov 34% AAA 59% AA 5% A 2% US Government and agency 34% Private label RMBS and CMOs 20% Private label CMBS 25% Residential real estate lease- backed securities 6% CLO 9% State Municipal Obligations 2% Other 4% Portfolio Net Unrealized Gain(Loss) Fair Value Net Unrealized Gain(Loss) Fair Value Net Unrealized Gain(Loss) Fair Value US Government and agency 7,593$ 2,463,476$ 24,682$ 3,025,775$ 19,400$ 3,207,665$ Private label RMBS and CMOs 10,840 1,012,177 15,713 998,603 7,148 2,111,727 Private label CMBS 5,456 1,724,684 12,083 2,526,354 14,061 2,594,024 Residential real estate lease-backed securities 2,566 470,025 14,819 650,888 9,176 617,445 CLOs (7,539) 1,197,366 (8,450) 1,140,274 (3,947) 982,267 State and Municipal Obligations 15,774 273,302 21,966 235,709 18,834 228,625 Other 3,656 557,635 4,822 484,806 2,667 392,140 38,346$ 7,698,665$ 85,635$ 9,062,409$ 67,339$ 10,133,893$ December 31, 2019 December 31, 2020 June 30, 2021


 
Non-GAAP Financial Measures


 
31 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 measure of PPNR to the comparable GAAP financial measurement of income before income taxes for the periods indicated (in thousands): June 30, 2021 December 31, 2020 June 30, 2020 Income before income taxes (GAAP) 140,150$ 106,965$ 96,904$ Plus: provision for (recovery of) credit losses (27,534) (1,643) 25,414 PPNR (non-GAAP) 112,616$ 105,322$ 122,318$ Three Months Ended


 
32 Non-GAAP Financial Measures (continued) ACL to total loans, excluding government insured residential loans, PPP 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 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 the dates indicated (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%


 


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