BankUnited, Inc. Reports 2013 Results, Strong Organic Growth

BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter and year ended December 31, 2013.

For the quarter ended December 31, 2013, the Company reported net income of $52.4 million, or $0.50 per diluted share, as compared to $62.5 million, or $0.61 per diluted share, for the quarter ended December 31, 2012.

For the year ended December 31, 2013, the Company reported net income of $208.9 million, or $2.01 per diluted share, generating a return on average stockholders’ equity of 11.16% and a return on average assets of 1.55%. The Company reported net income of $211.3 million, or $2.05 per diluted share, for the year ended December 31, 2012.

John Kanas, Chairman, President and Chief Executive Officer, said, “Organic growth continues to drive our Company’s success in all of our markets. We are particularly pleased with the early success of our New York operations and expect this momentum to continue in the future.”

Performance Highlights
  • New loans grew by $1.3 billion during the fourth quarter of 2013. For the year ended December 31, 2013, new loans increased by $3.9 billion to $7.6 billion.
  • Total deposits increased by $684 million for the quarter ended December 31, 2013 to $10.5 billion, with demand deposits totaling $2.8 billion, or 27% of total deposits. For the year ended December 31, 2013, total deposits grew by $2.0 billion.
  • The net interest margin, calculated on a tax-equivalent basis, was 5.24% for the quarter ended December 31, 2013 compared to 6.72% for the quarter ended December 31, 2012, and 5.73% compared to 6.05% for the years ended December 31, 2013 and 2012, respectively. The most significant factor impacting this expected trend in the net interest margin was the origination of new loans at yields lower than those on the covered loan portfolio. As discussed further below, the net interest margin for the quarter ended December 31, 2012 also benefited to a greater extent from the inclusion in interest income of proceeds from the sale of ACI loans from a pool that has a carrying value of zero.
  • The cost of deposits continues to trend downward. The cost of deposits was 0.63% for the fourth quarter of 2013 as compared to 0.73% for the fourth quarter of 2012 and 0.65% for the year ended December 31, 2013 as compared to 0.81% for the year ended December 31, 2012. Excluding the impact of hedge accounting and accretion of fair value adjustments, the cost of deposits was 0.58% for the quarter ended December 31, 2013.
  • Earnings for the quarter ended December 31, 2013 included net securities gains of approximately $2.3 million related to sales of certain securities in response to regulatory changes, as discussed further below. Additionally, earnings for the fourth quarter of 2013 benefited from a reduction in the effective income tax rate resulting from changes in certain state tax positions and apportionment factors.
  • Book value and tangible book value per common share grew to $19.09 and $18.41, respectively, at December 31, 2013.

Capital

The Company and its banking subsidiary continue to exceed all regulatory guidelines required to be considered well capitalized. The Company’s regulatory capital ratios at December 31, 2013 were as follows:
Tier 1 leverage       12.4%
 
Tier 1 risk-based capital 21.1%
 
Total risk-based capital 21.9%

Loans and Leases

Loans, net of premiums, discounts and deferred fees and costs, increased to $9.1 billion at December 31, 2013 from $5.6 billion at December 31, 2012. New loans grew by $3.9 billion to $7.6 billion at December 31, 2013 from $3.7 billion at December 31, 2012. Covered loans declined to $1.5 billion at December 31, 2013 from $1.9 billion at December 31, 2012.

New loans, net of premiums, discounts and deferred fees and costs, grew by $1.3 billion in the fourth quarter of 2013. The New York franchise contributed $720 million to new loan growth for the quarter while the Florida franchise contributed $247 million and our national platforms contributed $347 million. We refer to our three commercial lending subsidiaries, our residential mortgage purchase program and our indirect auto platform as national platforms. At December 31, 2013, the new loan portfolio included $3.2 billion, $1.6 billion and $2.8 billion attributable to the Florida franchise, the New York franchise and our national platforms, respectively.

For the quarter ended December 31, 2013, new commercial loans, including commercial loans, commercial real estate loans and leases, grew $1.0 billion to $5.5 billion, reflecting the successful launch of lending operations in New York and continued growth in the portfolios of our Florida franchise and lending subsidiaries. New residential loans grew by $196 million to $1.8 billion during the fourth quarter of 2013, primarily as a result of the continuation of the Company’s residential loan purchase program. For the year ended December 31, 2013, new commercial loans grew by $2.8 billion while new residential loans grew by $879 million and new consumer loans, comprised primarily of indirect auto loans, grew by $180 million.

A comparison of portfolio composition at December 31, 2013 and December 31, 2012 follows:
  New Loans   Total Loans
December 31,   December 31, December 31,   December 31,
2013 2012 2013 2012
Single family residential and home equity 24.0% 25.0% 34.3% 45.3%
Commercial real estate 38.5% 31.8% 34.3% 25.6%
Commercial 34.7% 42.3% 29.0% 28.5%
Consumer 2.8% 0.9% 2.4% 0.6%
100.0% 100.0% 100.0% 100.0%

The Company’s portfolio of equipment under operating lease grew by $158 million and $11 million for the year and quarter ended December 31, 2013, respectively, to $196 million.

Asset Quality

Asset quality remained strong. Credit risk continues to be limited, though to a declining extent, by the Loss Sharing Agreements with the FDIC. At December 31, 2013, covered loans represented 16.4% of the total loan portfolio, as compared to 33.5% at December 31, 2012.

The ratio of non-performing new loans to total new loans was 0.31% at December 31, 2013 and 0.43% at December 31, 2012. The ratio of total non-performing loans to total loans was 0.39% at December 31, 2013 as compared to 0.62% at December 31, 2012. At December 31, 2013, non-performing assets totaled $76.2 million, including $40.6 million of other real estate owned (“OREO”), as compared to $110.6 million, including $76.0 million of OREO, at December 31, 2012. At December 31, 2013, 68% of total non-performing assets were covered assets.

For the quarters ended December 31, 2013 and 2012, the Company recorded provisions for loan losses of $12.5 million and $1.0 million, respectively. Of these amounts, $(0.8) million and $(1.6) million, respectively, related to recoveries of loan losses on covered loans, and $13.3 million and $2.7 million, respectively, related to provisions for new loans.

For the years ended December 31, 2013 and 2012, the Company recorded provisions for loan losses of $32.0 million and $18.9 million, respectively. Of these amounts, $(1.7) million and $(0.5) million, respectively, related to recoveries of loan losses on covered loans, and $33.7 million and $19.4 million, respectively, related to provisions for new loans.

The provisions related to new loans reflect growth in the new loan portfolio offset in part by reductions in general loss factors. For the year ended December 31, 2013, the provision for new loans was also impacted by specific reserves recognized on impaired loans, particularly related to one commercial relationship.

The recoveries of loan losses related to covered loans were significantly mitigated by offsetting decreases in non-interest income recorded in “Net gain (loss) on indemnification asset.”

The following tables summarize the activity in the allowance for loan and lease losses for the quarter and year ended December 31, 2013 and 2012 (in thousands):

    Three Months Ended December 31, 2013   Three Months Ended December 31, 2012
ACI Loans  

Non-ACI Loans
  New Loans   Total ACI Loans  

Non-ACI Loans
  New Loans   Total
Balance at beginning of period $ 3,345 $ 10,743 $ 45,531 $ 59,619 $ 9,922 $ 10,865 $ 39,629 $ 60,416
Provision (452) (299) 13,263 12,512 (698) (942) 2,670 1,030
Charge-offs - (1,083) (1,644) (2,727) (1,205) (519) (1,235) (2,959)
Recoveries   -   140   181   321   -   470   164   634
Balance at end of period $ 2,893 $ 9,501 $ 57,331 $ 69,725 $ 8,019 $ 9,874 $ 41,228 $ 59,121
    Year Ended December 31, 2013   Year Ended December 31, 2012
ACI Loans  

Non-ACI Loans
  New Loans   Total ACI Loans  

Non-ACI Loans
  New Loans   Total
Balance at beginning of period $ 8,019 $ 9,874 $ 41,228 $ 59,121 $ 16,332 $ 7,742 $ 24,328 $ 48,402
Provision (2,892) 1,153 33,703 31,964 (4,347) 3,844 19,399 18,896
Charge-offs (2,234) (4,306) (18,481) (25,021) (3,966) (3,591) (2,929) (10,486)
Recoveries   -   2,780   881   3,661   -   1,879   430   2,309
Balance at end of period $ 2,893 $ 9,501 $ 57,331 $ 69,725 $ 8,019 $ 9,874 $ 41,228 $ 59,121

Deposits

At December 31, 2013, deposits totaled $10.5 billion compared to $8.5 billion at December 31, 2012. Demand deposits, including non-interest bearing and interest bearing deposits, comprised 27% of total deposits at December 31, 2013, compared to 22% of total deposits at December 31, 2012. The average cost of deposits was 0.63% for the quarter ended December 31, 2013 as compared to 0.73% for the quarter ended December 31, 2012 and 0.65% for the year ended December 31, 2013 as compared to 0.81% for the year ended December 31, 2012. The decrease in the average cost of deposits was attributable to both the growth in non-interest bearing deposits as a percentage of average total deposits and a decline in market rates of interest. Excluding the impact of hedge accounting and accretion of fair value adjustments, the average cost of deposits was 0.60% for the year ended December 31, 2013.

Net interest income

Net interest income for the quarter ended December 31, 2013 decreased to $164.3 million from $174.6 million for the quarter ended December 31, 2012. Net interest income for the year ended December 31, 2013 was $646.2 million as compared to $597.6 million for the year ended December 31, 2012. Trends in the amount of net interest income were impacted by proceeds, which were recorded in interest income, from the sale of loans from a pool of ACI loans carried at zero. Interest income included $11.7 million and $50.6 million of such proceeds, respectively, for the quarter and year ended December 31, 2013 compared to $29.9 million for both the quarter and year ended December 31, 2012. In 2012, all sales of covered loans took place in the fourth quarter. The impact of sales of loans from this pool is expected to decrease in the future.

The Company’s net interest margin, calculated on a tax-equivalent basis, was 5.24% for the quarter ended December 31, 2013 as compared to 6.72% for the quarter ended December 31, 2012. Net interest margin, calculated on a tax-equivalent basis, was 5.73% for the year ended December 31, 2013 as compared to 6.05% for the year ended December 31, 2012. Significant factors impacting this expected trend in net interest margin for the quarter and year ended December 31, 2013 included:
  • The tax-equivalent yield on loans declined to 7.80% from 12.73% and to 9.18% from 12.05%, respectively, for the quarter and year ended December 31, 2013 compared to the quarter and year ended December 31, 2012, primarily because new loans, originated at yields lower than those on the covered loan portfolio, comprised a greater percentage of total loans. The decline in the fourth quarter of 2013 compared to 2012 was also impacted by loan sale activity related to the pool of ACI loans with a carrying value of zero, as discussed above.
  • The yield on new loans decreased to 3.61% and 3.77%, respectively, for the quarter and year ended December 31, 2013 from 4.12% and 4.34% for the quarter and year ended December 31, 2012, primarily reflecting the impact of lower market interest rates on new production.
  • The yield on covered loans for the quarter ended December 31, 2013 decreased to 26.77% from 27.93% for the quarter ended December 31, 2012 while the yield on covered loans for the year ended December 31, 2013 increased to 26.13% from 21.80% for the year ended December 31, 2012. These changes in yields on covered loans reflected (i) improvements in expected cash flows and corresponding transfers from non-accretable difference to accretable yield and (ii) changes in the timing and amount of interest income recognized in connection with the sale of ACI residential loans from the pool with a carrying value of zero, which accounted for a 3.10% decline in the quarterly yield and a 1.68% increase in the annual yield.
  • The average rate on interest bearing liabilities declined to 0.91% and 0.94%, respectively, for the quarter and year ended December 31, 2013 from 1.17% and 1.33% for the quarter and year ended December 31, 2012, primarily due to declining market interest rates.
  • Non-interest bearing deposits comprised a greater percentage of average total deposits for the quarter and year ended December 31, 2013 than for the quarter and year ended December 31, 2012. Average non-interest bearing deposits were 19% and 17%, respectively, of average total deposits for the quarter and year ended December 31, 2013 as compared to 15% and 13%, respectively, of average total deposits for the quarter and year ended December 31, 2012.

As anticipated, the net interest margin for the quarter ended December 31, 2013 declined by 0.46% in comparison to the immediately preceding quarter, largely due to a decline in the average yield on loans. This decline resulted primarily from continued growth of new loans as a percentage of the total loan portfolio. The cost of interest bearing liabilities remained relatively stable quarter over quarter.

The Company’s net interest margin continues to be impacted by reclassifications from non-accretable difference to accretable yield on ACI loans. Non-accretable difference at acquisition represented the difference between the total contractual payments due and the cash flows expected to be received on these loans. The accretable yield on ACI loans represented the amount by which undiscounted expected future cash flows exceeded the carrying value of the loans. As the Company’s expected cash flows from ACI loans have increased since the FSB Acquisition (as defined below), the Company has reclassified amounts from non-accretable difference to accretable yield.

Changes in accretable yield on ACI loans for the years ended December 31, 2013 and 2012 were as follows (in thousands):
  Balance, December 31, 2011 $ 1,523,615
  Reclassifications from non-accretable difference 206,934
Accretion   (444,483)
Balance, December 31, 2012 1,286,066
Reclassifications from non-accretable difference 282,952
Accretion   (410,446)
Balance, December 31, 2013 $ 1,158,572

Non-interest income

Non-interest income totaled $5.9 million and $31.1 million for the quarter and year ended December 31, 2013 as compared to $5.5 million and $89.2 million for the quarter and year ended December 31, 2012.

As anticipated, in 2013, the Company began amortizing the FDIC indemnification asset. In prior periods, we recorded accretion of discount on the FDIC indemnification asset. Non-interest income included amortization of the FDIC indemnification asset of $(15.2) million and $(36.9) million, respectively, for the quarter and year ended December 31, 2013 compared to accretion of $0.8 million and $15.3 million, respectively, for the quarter and year ended December 31, 2012. As the expected cash flows from ACI loans have increased, resulting in an increased yield on ACI loans as discussed above, expected cash flows from the FDIC indemnification asset have decreased, resulting in a declining, and ultimately negative, yield on the FDIC indemnification asset.

The consolidated statement of income line items Provision for (recovery of) losses on covered loans, Income from resolution of covered assets, net, Loss on sale of covered loans, Loss on covered investment securities, Impairment of other real estate owned and Gain on sale of other real estate owned relate to transactions in the covered assets. The line item Net gain (loss) on indemnification asset represents the mitigating impact of FDIC indemnification on gains and losses arising from these transactions in the covered assets. The impact on pre-tax earnings of these transactions, net of FDIC indemnification, for the quarter and year ended December 31, 2013 was $6.0 million and $20.4 million, respectively, compared to $5.0 million and $10.5 million, respectively, for the quarter and year ended December 31, 2012.

Income from resolution of covered assets, net was $14.5 million and $78.9 million, respectively, for the quarter and year ended December 31, 2013 compared to $11.4 million and $51.0 million for the quarter and year ended December 31, 2012. These increases in income resulted mainly from higher income from commercial recoveries and lower losses from residential foreclosure resolutions.

Loss on the sale of covered loans was $6.8 million and $16.2 million, respectively, for the quarter and year ended December 31, 2013, compared to $29.3 million for each of the quarter and year ended December 31, 2012. The decline in losses for the year ended December 31, 2013 as compared to 2012 was primarily a result of improved pricing. As discussed above, the Company sold covered loans quarterly in 2013, but only in the fourth quarter of 2012.

Net gain (loss) on indemnification asset was $(2.9) million and $(50.6) million, respectively, for the quarter and year ended December 31, 2013, compared to $20.6 million and $(6.0) million for the quarter and year ended December 31, 2012. Variances in net gain (loss) on indemnification asset are directly related to variances in income from resolution of covered assets, net, the loss on sale of covered loans, the loss on covered investment securities, the provision for (recovery of) losses on covered loans, OREO impairment and gains on the sale of OREO.

Securities gains for the year ended December 31, 2013 related primarily to sales of securities to fund loan originations. Gains on investment securities available for sale for the quarter ended December 31, 2013 included $2.3 million in net gains related to the liquidation of our positions in collateralized loan obligations and certain re-securitized real estate mortgage investment conduits in response to the release of the Volcker Rule. Securities gains for 2013 also included $1.6 million related to the sale of securities in conjunction with the merger of Herald National Bank into BankUnited.

During the fourth quarter of 2012, we sold investment securities, utilizing the proceeds to extinguish Federal Home Loan Bank (“FHLB”) advances and terminate a related cash flow hedge, with a combined cost of borrowing of 3.46%. We realized a pre-tax gain on the sale of securities of $10.0 million and a combined pre-tax loss of $22.9 million on the extinguishment of the advances and termination of the hedge. Securities gains for 2012 also included approximately $6.4 million of aggregate realized gains from the sale of certain preferred stock positions.

Declines in FDIC reimbursement of costs of resolution of covered assets and mortgage insurance income from 2012 to 2013 reflect the lower volume of covered loan foreclosure resolution activity.

Non-interest expense

Non-interest expense totaled $84.2 million and $327.4 million, respectively, for the quarter and year ended December 31, 2013 as compared to $78.7 million and $323.1 million for the quarter and year ended December 31, 2012.

Employee compensation and benefits for the year ended December 31, 2013 as compared to the year ended December 31, 2012 reflected a decrease of $10.0 million in equity-based compensation resulting primarily from the vesting in 2012 of instruments issued in conjunction with the Company’s initial public offering of common stock in 2011. Increased compensation costs related to the Company’s growth and expansion into New York offset this decrease in equity-based compensation and drove an increase in employee compensation and benefits of $2.8 million for the quarter ended December 31, 2013 as compared to the quarter ended December 31, 2012.

Occupancy and equipment expense increased to $16.8 million and $63.8 million, respectively, for the quarter and year ended December 31, 2013 from $15.7 million and $54.5 million for the quarter and year ended December 31, 2012 due primarily to our expansion into New York and the growth and refurbishment of our branch network in Florida.

For the quarter and year ended December 31, 2013, foreclosure and OREO expense was $3.0 million and $10.4 million, respectively, as compared to $5.4 million and $20.3 million for the quarter and year ended December 31, 2012. For the quarter and year ended December 31, 2013, the net amount of (gain) loss on sale of OREO and impairment of OREO was $(0.5) million and $(7.6) million, respectively, as compared to $(0.7) million and $5.8 million for the quarter and year ended December 31, 2012. These changes reflect continuing trends of lower levels of OREO and foreclosure activity and an improving real estate market.

Provision for income taxes

The effective income tax rate decreased to 29% and 34%, respectively, for the quarter and year ended December 31, 2013 from 38% and 39% for the quarter and year ended December 31, 2012. These decreases reflect the impact of changes in certain state tax positions and apportionment factors in the fourth quarter of 2013 and the release of reserves for uncertain state income tax positions as a result of the lapse in the statute of limitations related thereto in the third quarter of 2013.

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Thursday, January 23, 2014 with Chairman, President and Chief Executive Officer, John A. Kanas and Chief Financial Officer, Leslie N. Lunak.

The earnings release will be available on the Investor Relations page under About Us on  www.bankunited.com prior to the call. The call may be accessed via a live Internet webcast at  www.bankunited.com or through a dial in telephone number at (888) 713-4217 (domestic) or (617) 213-4869 (international). The name of the call is BankUnited, Inc. and the confirmation number for the call is 41595423. Participants may pre-register for the call on the Investor Relations page on  www.bankunited.com. A replay of the call will be available from 1:00 p.m. ET on January 23, 2014 through 11:59 p.m. ET on January 30, 2014 by calling (888) 286-8010 (domestic) or (617) 801-6888 (international). The pass code for the replay is 87858573. An archived webcast will also be available on the Investor Relations page of  www.bankunited.com.

About BankUnited, Inc. and the FSB Acquisition

BankUnited, Inc. is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with $14.9 billion of assets, 99 branches in 15 Florida counties and 6 banking centers in the New York metropolitan area at December 31, 2013.

The Company was organized by a management team led by its Chairman, President and Chief Executive Officer, John A. Kanas in 2009. On May 21, 2009, BankUnited acquired substantially all of the assets and assumed all of the non-brokered deposits and substantially all other liabilities of BankUnited, FSB from the FDIC, in a transaction referred to as the FSB Acquisition. Concurrently with the FSB Acquisition, BankUnited entered into two loss sharing agreements, or the Loss Sharing Agreements, which covered certain legacy assets, including the entire legacy loan portfolio and OREO, and certain purchased investment securities. Assets covered by the Loss Sharing Agreements are referred to as “covered assets” (or, in certain cases, “covered loans”). The Loss Sharing Agreements do not apply to subsequently purchased or originated loans (“new loans”) or other assets. Pursuant to the terms of the Loss Sharing Agreements, the covered assets are subject to a stated loss threshold whereby the FDIC will reimburse BankUnited for 80% of losses, including certain interest and expenses, up to the $4.0 billion stated threshold and 95% of losses in excess of the $4.0 billion stated threshold. The Company’s current estimate of cumulative losses on the covered assets is approximately $4.3 billion. The Company has received $2.5 billion from the FDIC in reimbursements under the Loss Sharing Agreements for claims filed for incurred losses as of December 31, 2013.

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” 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 relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. 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, 2012 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)
     
 
 
December 31, December 31,
2013 2012
ASSETS
 
Cash and due from banks:
Non-interest bearing $ 45,976 $ 61,088
Interest bearing 14,590 21,507
Interest bearing deposits at Federal Reserve Bank 190,075 408,827
Federal funds sold   2,108   3,931
Cash and cash equivalents 252,749 495,353
Investment securities available for sale, at fair value
(including covered securities of $205,769 and $226,505) 3,637,124 4,172,412
Non-marketable equity securities 152,066 133,060
Loans held for sale 194 2,129
Loans (including covered loans of $1,483,888 and $1,864,375) 9,053,609 5,571,739
Allowance for loan and lease losses   (69,725)   (59,121)
Loans, net 8,983,884 5,512,618
FDIC indemnification asset 1,205,117 1,457,570
Bank owned life insurance 206,759 207,069
Other real estate owned (including covered OREO of $39,672 and $76,022) 40,570 76,022
Deferred tax asset, net 70,626 62,274
Goodwill and other intangible assets 69,067 69,768
Other assets   428,493   187,678
Total assets $ 15,046,649 $ 12,375,953
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Liabilities:
Demand deposits:
Non-interest bearing $ 2,171,335 $ 1,312,779
Interest bearing 676,079 542,561
Savings and money market 4,402,987 4,042,022
Time   3,282,027   2,640,711
Total deposits 10,532,428 8,538,073
Federal Home Loan Bank advances and other borrowings 2,414,313 1,925,094
Other liabilities   171,210   106,106
Total liabilities 13,117,951 10,569,273
 
Commitments and contingencies
 
Stockholders' equity:
Common stock, par value $0.01 per share, 400,000,000 shares authorized;
101,013,014 and 95,006,729 shares issued and outstanding 1,010 950
Preferred stock, par value $0.01 per share, 100,000,000 shares authorized;
5,415,794 shares of Series A issued and outstanding at December 31, 2012 - 54
Paid-in capital 1,334,945 1,308,315
Retained earnings 535,263 413,385
Accumulated other comprehensive income   57,480   83,976
Total stockholders' equity   1,928,698   1,806,680
Total liabilities and stockholders' equity $ 15,046,649 $ 12,375,953

BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
           
 
Three Months Ended December 31, Years Ended December 31,
2013 2012 2013 2012
 
Interest income:
Loans $ 160,761 $ 168,770 $ 618,944 $ 584,727
Investment securities available for sale 26,341 31,951 114,535 131,198
Other   1,562   1,625   5,342   4,931
Total interest income   188,664   202,346   738,821   720,856
Interest expense:
Deposits 16,279 15,712 60,566 66,178
Borrowings   8,130   12,070   32,045   57,091
Total interest expense   24,409   27,782   92,611   123,269
Net interest income before provision for (recovery of) loan losses 164,255 174,564 646,210 597,587
Provision for (recovery of) loan losses (including $(750),
$(1,640), $(1,738) and $(503) for covered loans)   12,512   1,030   31,964   18,896
Net interest income after provision for (recovery of) loan losses   151,743   173,534   614,246   578,691
Non-interest income:
(Amortization) accretion of FDIC indemnification asset (15,159) 793 (36,943) 15,306
Income from resolution of covered assets, net 14,500 11,414 78,862 51,016
Net gain (loss) on indemnification asset (2,891) 20,572 (50,638) (6,030)
FDIC reimbursement of costs of resolution of covered assets 2,232 6,154 9,397 19,569
Service charges and fees 3,914 3,276 14,255 12,716
Loss on sale of loans, net (including loss related to covered
loans of $6,827, $29,333, $16,195 and $29,270) (6,728) (29,355) (15,469) (28,657)
Gain on investment securities available for sale, net (including loss
related to covered securities of $(963) for the year ended December 31, 2013) 2,341 10,108 8,629 17,039
Loss on extinguishment of debt - (14,175) - (14,175)
Loss on termination of interest rate swap - (8,701) - (8,701)
Mortgage insurance income 849 862 2,061 9,772
Other non-interest income   6,792   4,551   20,952   21,392
Total non-interest income   5,850   5,499   31,106   89,247
Non-interest expense:
Employee compensation and benefits 43,544 40,717 173,763 173,261
Occupancy and equipment 16,772 15,689 63,766 54,465
Impairment of other real estate owned 483 1,946 1,939 9,926
Gain on sale of other real estate owned (992) (2,665) (9,568) (4,164)
Foreclosure and other real estate owned expense 3,010 5,404 10,442 20,268
Deposit insurance expense 2,061 2,112 7,648 7,248
Professional fees 4,722 4,016 21,934 15,468
Telecommunications and data processing 3,340 2,732 13,034 12,462
Other non-interest expense   11,264   8,751   44,392   34,139
Total non-interest expense   84,204   78,702   327,350   323,073
Income before income taxes 73,389 100,331 318,002 344,865
Provision for income taxes   20,996   37,829   109,066   133,605
Net income 52,393 62,502 208,936 211,260
Preferred stock dividends   -   1,137   -   3,899
Net income available to common stockholders $ 52,393 $ 61,365 $ 208,936 $ 207,361
Earnings per common share, basic $ 0.50 $ 0.61 $ 2.03 $ 2.05
Earnings per common share, diluted $ 0.50 $ 0.61 $ 2.01 $ 2.05
Cash dividends declared per common share $ 0.21 $ 0.21 $ 0.84 $ 0.72

BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
             
   
Three Months Ended December 31,
2013 2012
Average Yield/ Average Yield/
Balance Interest (1) Rate (2) Balance Interest (1) Rate (2)
Assets:
Interest earning assets:
Loans $ 8,320,870 $ 162,804 7.80% $ 5,334,961 $ 170,114 12.73%
Investment securities available for sale 3,809,501 26,961 2.83% 4,698,454 32,704 2.78%
Other interest earning assets   585,414   1,562   1.06%   481,299   1,625   1.35%
Total interest earning assets 12,715,785 191,327 6.00% 10,514,714 204,443 7.77%
Allowance for loan and lease losses (63,020) (62,189)
Non-interest earning assets   2,050,776   2,323,689
Total assets $ 14,703,541 $ 12,776,214
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits $ 642,935 753 0.46% $ 535,240 749 0.56%
Savings and money market deposits 4,494,773 5,444 0.48% 4,038,706 5,303 0.52%
Time deposits   3,171,318   10,082   1.26%   2,664,771   9,660   1.44%
Total interest bearing deposits 8,309,026 16,279 0.78% 7,238,717 15,712 0.86%
FHLB advances and other borrowings   2,292,375   8,130   1.41%   2,228,117   12,070   2.16%
Total interest bearing liabilities 10,601,401   24,409 0.91% 9,466,834   27,782 1.17%
Non-interest bearing demand deposits 1,963,335 1,276,043
Other non-interest bearing liabilities   221,152   231,276
Total liabilities 12,785,888 10,974,153
Stockholders' equity   1,917,653   1,802,061
Total liabilities and stockholders' equity $ 14,703,541 $ 12,776,214
Net interest income $ 166,918 $ 176,661
Interest rate spread   5.09%   6.60%
Net interest margin   5.24%   6.72%
 
(1) On a tax-equivalent basis where applicable
(2) Annualized

BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
                 
 
Years Ended December 31,
2013 2012
Average Yield/ Average Yield/
Balance Interest (1) Rate Balance Interest (1) Rate
Assets:
Interest earning assets:
Loans $ 6,817,786 $ 625,948 9.18% $ 4,887,209 $ 588,950 12.05%
Investment securities available for sale 4,135,407 117,289 2.84% 4,611,379 135,833 2.95%
Other interest earning assets   500,306   5,342   1.07%   522,184   4,931   0.94%
Total interest earning assets 11,453,499 748,579 6.54% 10,020,772 729,714 7.28%
Allowance for loan and lease losses (62,461) (56,463)
Non-interest earning assets   2,057,923   2,387,719
Total assets $ 13,448,961 $ 12,352,028
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits $ 582,623 2,698 0.46% $ 504,614 3,155 0.63%
Savings and money market deposits 4,280,531 20,620 0.48% 3,912,444 24,093 0.62%
Time deposits   2,844,377   37,248   1.31%   2,632,451   38,930   1.48%
Total interest bearing deposits 7,707,531 60,566 0.79% 7,049,509 66,178 0.94%
FHLB advances and other borrowings   2,098,231   32,045   1.53%   2,240,345   57,091   2.55%
Total interest bearing liabilities 9,805,762   92,611 0.94% 9,289,854   123,269 1.33%
Non-interest bearing demand deposits 1,586,007 1,099,448
Other non-interest bearing liabilities   184,645   265,399
Total liabilities 11,576,414 10,654,701
Stockholders' equity   1,872,547   1,697,327
Total liabilities and stockholders' equity $ 13,448,961 $ 12,352,028
Net interest income $ 655,968 $ 606,445
Interest rate spread   5.60%   5.95%
Net interest margin   5.73%   6.05%
 
(1) On a tax-equivalent basis where applicable

BANKUNITED, INC. AND SUBSIDIARIES
EARNINGS PER COMMON SHARE
(In thousands except share amounts)
         
 
Three Months Ended Years Ended
December 31, December 31,
2013 2012 2013 2012
Basic earnings per common share:
Numerator:
Net income $ 52,393 $ 62,502 $ 208,936 $ 211,260
Preferred stock dividends   -   (1,137)   - (3,899)
Net income available to common stockholders 52,393 61,365 208,936 207,361
Distributed and undistributed earnings allocated to participating securities   (1,957)   (4,608)   (9,380) (15,081)
Income allocated to common stockholders for basic earnings per common share $ 50,436 $ 56,757 $ 199,556 $ 192,280
Denominator:
Weighted average common shares outstanding 100,942,859 94,597,067 99,587,970 94,791,484
Less average unvested stock awards   (1,021,034)   (997,655)   (1,093,930)   (1,137,210)
Weighted average shares for basic earnings per common share   99,921,825   93,599,412   98,494,040   93,654,274
Basic earnings per common share $ 0.50 $ 0.61 $ 2.03 $ 2.05
Diluted earnings per common share:
Numerator:
Income allocated to common stockholders for basic earnings per common share $ 50,436 $ 56,757 $ 199,556 192,280
Adjustment for earnings reallocated from participating securities   3   6   1,265 20
Income used in calculating diluted earnings per common share $ 50,439 $ 56,763 $ 200,821 $ 192,300
Denominator:
Average shares for basic earnings per common share 99,921,825 93,599,412 98,494,040 93,654,274
Dilutive effect of stock options and preferred shares   177,951   162,880   1,257,565   174,509
Weighted average shares for diluted earnings per common share   100,099,776   93,762,292   99,751,605   93,828,783
Diluted earnings per common share $ 0.50 $ 0.61 $ 2.01 $ 2.05

BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
       
 
 
Three Months Ended December 31, Years Ended December 31,
Financial ratios 2013 (4) 2012 (4) 2013 2012
Return on average assets 1.41% 1.95% 1.55% 1.71%
Return on average stockholders' equity 10.84% 13.80% 11.16% 12.45%
Net interest margin (5) 5.24% 6.72% 5.73% 6.05%
 
December 31, December 31,
Capital ratios 2013 2012
Tier 1 leverage 12.42% 13.16%
Tier 1 risk-based capital 21.06% 33.60%
Total risk-based capital 21.93% 34.88%
 
December 31, 2013 December 31, 2012
Asset quality ratios Non-Covered Total Non-Covered Total
Non-performing loans to total loans (1) (3) 0.31% 0.39% 0.43% 0.62%
Non-performing assets to total assets (2) 0.16% 0.51% 0.13% 0.89%
Allowance for loan and lease losses to total loans (3) 0.76% 0.77% 1.11% 1.06%
Allowance for loan and lease losses to non-performing loans (1) 246.73% 195.52% 256.65% 171.21%
Net charge-offs to average loans (4) 0.34% 0.31% 0.09% 0.17%
 
 
(1) We define non-performing loans to include nonaccrual loans, loans, other than ACI loans, that are past due 90 days or more and still accruing and certain loans modified in troubled debt restructurings. Contractually delinquent ACI loans on which interest continues to be accreted are excluded from non-performing loans.
 
(2) Non-performing assets include non-performing loans and other real estate owned.
 
(3) Total loans is net of unearned discounts, premiums and deferred fees and costs.
 
(4) Annualized.
 
(5) On a tax-equivalent basis.

Copyright Business Wire 2010

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