8-K
BankUnited, Inc. (BKU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):July 25, 2023 (July 25, 2023)
BankUnited, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35039 | 27-0162450 | |||||
|---|---|---|---|---|---|---|---|
| (State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | 14817 Oak Lane, | Miami Lakes, | FL | 33016 | |
| --- | --- | --- | --- | ||||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code): (305) 569-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Class | Trading Symbol | Name of Exchange on Which Registered |
|---|---|---|
| Common Stock, $0.01 Par Value | BKU | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 2.02 Results of Operations and Financial Condition.
On July 25, 2023, BankUnited, Inc. (the “Company”) reported its results for the quarter ended June 30, 2023. A copy of the Company’s press release containing this information and slides containing supplemental information related to this release are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br>Number | Description | |
|---|---|---|
| 99.1 | Press release dated | July 25, 2023 |
| 99.2 | Supplemental information relating to the press release dated | July 25, 2023 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: | July 25, 2023 | BANKUNITED, INC. | |
|---|---|---|---|
| /s/ Leslie N. Lunak | |||
| Name: | Leslie N. Lunak | ||
| Title: | Chief Financial Officer |
EXHIBIT INDEX
| Exhibit<br>Number | Description | |
|---|---|---|
| 99.1 | Press release dated | July 25, 2023 |
| 99.2 | Supplemental information relating to the press release dated | July 25, 2023 |
4
Document
Exhibit 99.1
BANKUNITED, INC. REPORTS SECOND QUARTER 2023 RESULTS
Miami Lakes, Fla. — July 25, 2023 — BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter ended June 30, 2023.
"As volatility in the capital markets recedes and the economy remains resilient, we have returned our focus to executing on our long term strategy of building a relationship oriented bank." said Rajinder Singh, Chairman, President and Chief Executive Officer.
For the quarter ended June 30, 2023, the Company reported net income of $58.0 million, or $0.78 per diluted share, compared to $52.9 million, or $0.70 per diluted share for the immediately preceding quarter ended March 31, 2023 and $65.8 million, or $0.82 per diluted share, for the quarter ended June 30, 2022. For the six months ended June 30, 2023, the Company reported net income of $110.9 million or $1.48 per diluted share compared to $132.9 million or $1.60 per diluted share for the six months ended June 30, 2022.
Quarterly Highlights
•Total deposits grew by $116 million during the quarter ended June 30, 2023. Non-interest bearing deposits remained largely consistent as a percentage of deposits, representing 28.3% of total deposits at June 30, 2023 compared to 28.6% at March 31, 2023, declining by $62 million for the quarter.
•Our liquidity position remains strong, and improved over the course of the second quarter. At June 30, 2023, total same day available liquidity had increased to $14.7 billion from $9.4 billion at March 31, 2023. The available liquidity to uninsured, uncollateralized deposits ratio improved to 167% at June 30, 2023 from 95% at March 31, 2023 while the portion of our deposits that were insured or collateralized grew to 66% at June 30, 2023 from 62% at March 31, 2023.
•We made progress in reducing wholesale funding as outstanding FHLB advances were down $1.6 billion quarter-over-quarter.
•Net interest income and the net interest margin for the quarter ended June 30, 2023 were impacted by an increase in the cost of funds which more than offset the increased yield on interest-earning assets. A challenging deposit growth environment and a higher level of on-balance sheet liquidity for much of the quarter led to increased reliance on higher cost deposits and wholesale funding. The net interest margin, calculated on a tax-equivalent basis, was 2.47% for the quarter ended June 30, 2023, compared to 2.62% for the immediately preceding quarter ended March 31, 2023 and 2.63% for the quarter ended June 30, 2022. Net interest income decreased by $14.0 million, compared to the immediately preceding quarter ended March 31, 2023 and by $11.5 million compared to the quarter ended June 30, 2022.
•Consistent with industry trends, rising interest rates and tighter liquidity conditions contributed to an increase in the average cost of total deposits to 2.46% for the quarter ended June 30, 2023 from 2.05% for the immediately preceding quarter. This increase of 0.41% was smaller than the 0.63% increase in the cost of deposits for the quarter ended March 31, 2023. The yield on average interest earning assets increased to 5.30% for the quarter ended June 30, 2023 from 5.05% for the immediately preceding quarter.
•Total loans declined by $263 million quarter-over-quarter. Most of the decline was attributable to residential which was down by $184 million. Consistent with our strategy to re-position the composition of the balance sheet, cash flows from the residential portfolio were used to pay down wholesale funding.
•Credit remains favorable. The NPA ratio at June 30, 2023 was 0.34%, including 0.10% related to the guaranteed portion of non-performing SBA loans compared to 0.32%, including 0.10% related to the guaranteed portion of non-performing SBA loans at March 31, 2023. The annualized net charge-off ratio for the six months ended June 30, 2023 was 0.09%.
•Reflecting management's concentration risk management strategy, commercial real estate exposure is modest. Commercial real estate loans totaled 23% of loans at June 30, 2023, representing 169% of the Bank's total risk based capital. At June 30, 2023, the weighted average LTV of the CRE portfolio was 57.1% and the weighted average DSCR was 1.88. 60% of the portfolio was secured by collateral properties located in Florida and 25% was secured by properties in the New York tri-state area.
•For the quarter ended June 30, 2023, the provision for credit losses was $15.5 million compared to provisions of $19.8 million and $24.0 million for the quarters ended March 31, 2023 and June 30, 2022, respectively. The ratio of the ACL to total loans increased to 0.68%, at June 30, 2023 from 0.64% at March 31, 2023, reflecting the impact on modeling expected credit losses of a less favorable Moody's baseline economic forecast and heavier weighting of a downside scenario in calculating the ACL.
•We remain committed to keeping the duration of our securities portfolio short; the duration of the available for sale securities portfolio was 1.94 at June 30, 2023. Held to maturity securities were not significant.
•Our capital position is robust. CET1 was 11.2% at the holding company and 13.0% at the Bank at June 30, 2023. Pro-forma CET1 at the holding company and the Bank, including accumulated other comprehensive income, were 9.7% and 11.5%, respectively.
•Book value and tangible book value per common share improved to $33.94 and $32.90, respectively, at June 30, 2023, from $33.34 and $32.30, respectively at March 31, 2023.
Deposits and Funding
Total deposits grew by $116 million during the quarter ended June 30, 2023. Non-interest bearing demand deposits declined by $62 million, interest-bearing non-maturity deposits declined by $92 million and time deposits grew by $270 million. Account level deposit flows throughout the quarter generally appeared to be within the range of what we consider normal operating activity.
Consistent with the current interest rate environment and monetary policy stance, the cost of total deposits increased to 2.46% from 2.05% for the immediately preceding quarter, while the cost of interest bearing deposits increased to 3.39% for the quarter ended June 30, 2023 from 2.86% for the preceding quarter.
FHLB advances declined by $1.6 billion for the quarter, as we used cash flows generated by the residential and securities portfolios to reduce wholesale funding levels and allow for future re-deployment of capital into higher yielding assets.
Loans
A comparison of loan portfolio composition at the dates indicated follows (dollars in thousands):
| June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Residential | $ | 8,605,838 | 34.9 | % | $ | 8,789,744 | 35.3 | % | $ | 8,900,714 | 35.7 | % | |
| Non-owner occupied commercial real estate | 5,302,523 | 21.5 | % | 5,346,895 | 21.5 | % | 5,405,597 | 21.7 | % | ||||
| Construction and land | 393,464 | 1.6 | % | 324,805 | 1.3 | % | 294,360 | 1.2 | % | ||||
| Owner occupied commercial real estate | 1,832,586 | 7.4 | % | 1,863,333 | 7.5 | % | 1,890,813 | 7.6 | % | ||||
| Commercial and industrial | 6,575,368 | 26.8 | % | 6,617,716 | 26.5 | % | 6,417,721 | 25.9 | % | ||||
| Pinnacle - municipal finance | 951,529 | 3.9 | % | 919,584 | 3.7 | % | 912,122 | 3.7 | % | ||||
| Franchise finance | 207,783 | 0.8 | % | 239,205 | 1.0 | % | 253,774 | 1.0 | % | ||||
| Equipment finance | 237,816 | 1.0 | % | 266,715 | 1.1 | % | 286,147 | 1.1 | % | ||||
| Mortgage warehouse lending ("MWL") | 523,083 | 2.1 | % | 524,897 | 2.1 | % | 524,740 | 2.1 | % | ||||
| $ | 24,629,990 | 100.0 | % | $ | 24,892,894 | 100.0 | % | $ | 24,885,988 | 100.0 | % |
For the quarter ended June 30, 2023, residential declined by $184 million, C&I and CRE declined by $49 million in total, franchise and equipment finance declined by $60 million in aggregate and municipal finance grew by $32 million.
Asset Quality and the Allowance for Credit Losses ("ACL")
Non-performing loans totaled $118.7 million or 0.48% of total loans at June 30, 2023, compared to $114.2 million or 0.46% of total loans at March 31, 2023. Non-performing loans included $35.9 million and $36.9 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.15% of total loans at both June 30, 2023 and March 31, 2023.
The following table presents criticized and classified commercial loans at the dates indicated (in thousands):
| June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||
|---|---|---|---|---|---|---|
| Special mention | $ | 233,004 | $ | 101,781 | $ | 51,433 |
| Substandard - accruing | 525,643 | 596,054 | 605,965 | |||
| Substandard - non-accruing | 80,642 | 82,840 | 75,125 | |||
| Doubtful | 14,954 | 7,699 | 7,990 | |||
| Total | $ | 854,243 | $ | 788,374 | $ | 740,513 |
One $22 million loan that was moved to special mention during the quarter paid off shortly after quarter-end.
The following table presents the ACL and related ACL coverage ratios at the dates indicated and net charge-off rates for the periods ended June 30, 2023, March 31, 2023 and December 31, 2022 (dollars in thousands):
| ACL | ACL to Total Loans | ACL to Non-Performing Loans | Net Charge-offs to Average Loans (1) | |||||
|---|---|---|---|---|---|---|---|---|
| December 31, 2022 | $ | 147,946 | 0.59 | % | 140.88 | % | 0.22 | % |
| March 31, 2023 | $ | 158,792 | 0.64 | % | 139.01 | % | 0.08 | % |
| June 30, 2023 | $ | 166,833 | 0.68 | % | 140.52 | % | 0.09 | % |
(1) Annualized for the three months ended March 31, 2023 and the six months ended June 30, 2023.
The ACL at June 30, 2023 represents management's estimate of lifetime expected credit losses given an assessment of historical data, current conditions, and a reasonable and supportable economic forecast as of the balance sheet date. For the quarter ended June 30, 2023, the provision for credit losses was $15.5 million, including $14.2 million related to funded loans. The more significant factors impacting the provision for credit losses and increase in the ACL for the quarter ended June 30, 2023 were a less favorable Moody's baseline economic forecast and heavier weighting of a downside scenario.
The following table summarizes the activity in the ACL for the periods indicated (in thousands):
| Three Months Ended | Six Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 | March 31, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||
| Beginning balance | $ | 158,792 | $ | 147,946 | $ | 125,443 | $ | 147,946 | $ | 126,457 | |
| Impact of adoption of new accounting pronouncement (ASU 2022-02) | N/A | (1,794) | N/A | (1,794) | N/A | ||||||
| Balance after impact of adoption of new accounting pronouncement (ASU 2022-02) | 158,792 | 146,152 | 125,443 | 146,152 | 126,457 | ||||||
| Provision | 14,195 | 17,595 | 23,207 | 31,790 | 30,653 | ||||||
| Net charge-offs | (6,154) | (4,955) | (18,411) | (11,109) | (26,871) | ||||||
| Ending balance | $ | 166,833 | $ | 158,792 | $ | 130,239 | $ | 166,833 | $ | 130,239 |
Net Interest Income
Net interest income for the quarter ended June 30, 2023 was $213.9 million, compared to $227.9 million for the immediately preceding quarter ended March 31, 2023 and $225.4 million for the quarter ended June 30, 2022. Interest income increased by $23.0 million for the quarter ended June 30, 2023 compared to the immediately preceding quarter while interest expense increased by $37.0 million.
The Company’s net interest margin, calculated on a tax-equivalent basis, decreased by 0.15% to 2.47% for the quarter ended June 30, 2023, from 2.62% for the immediately preceding quarter ended March 31, 2023. Overall, the net interest margin was negatively impacted by an increase in the cost of interest-bearing deposits and FHLB advances, more than offsetting the
increased yield on interest earning assets. A decline in average non-interest bearing deposits and an increase in on-balance sheet liquidity contributed to an increase in higher-cost funding.
More detail about certain factors impacting the net interest margin for the quarter ended June 30, 2023 follows:
•The tax-equivalent yield on investment securities increased to 5.19% for the quarter ended June 30, 2023, from 4.95% for the quarter ended March 31, 2023. This increase resulted primarily from the reset of coupon rates on variable rate securities.
•The tax-equivalent yield on loans increased to 5.35% for the quarter ended June 30, 2023, from 5.10% for the quarter ended March 31, 2023. The resetting of variable rate loans to higher coupon rates and origination of new loans at higher rates contributed to the increase.
•The average cost on interest bearing deposits increased to 3.39% for the quarter ended June 30, 2023 from 2.86% for the quarter ended March 31, 2023, as a result of the rising interest rate environment, tightening liquidity conditions and the shift from non-interest bearing deposits to deposits priced at current, higher market rates.
•The average rate paid on FHLB advances increased to 4.59% for the quarter ended June 30, 2023, from 4.27% for the quarter ended March 31, 2023, primarily due to higher prevailing rates, partially offset by the impact of cash flow hedges.
Non-interest income and Non-interest expense
Non-interest income totaled $25.5 million for the quarter ended June 30, 2023, compared to $16.5 million for the quarter ended March 31, 2023 and $13.5 million for the quarter ended June 30, 2022. This increase over the comparable quarters was primarily attributable to losses on certain preferred equity investments of $13.3 million and $9.3 million during the quarters ended March 31, 2023 and June 30, 2022, respectively.
Non-interest expense totaled $145.2 million for the quarter ended June 30, 2023, compared to $152.8 million for the immediately preceding quarter ended March 31, 2023 and $127.4 million for the quarter ended June 30, 2022. The quarter over quarter decline in compensation and benefits reflected expected seasonal fluctuations in payroll taxes and benefits. The quarter over quarter decline in other non-interest expense was impacted by $4.4 million in certain operational losses recognized during the quarter ended March 31, 2023. Costs related to deposit rebate and commission programs increased by $7.2 million for the quarter ended June 30, 2023 compared to the second quarter of the prior year.
Earnings Conference Call and Presentation
A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Tuesday, July 25, 2023 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, Chief Financial Officer, Leslie N. Lunak and Chief Operating Officer, Thomas M. Cornish.
The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at https://ir.bankunited.com. To participate by telephone, participants will receive dial-in information and a unique PIN number upon completion of registration at https://register.vevent.com/register/BIe6f3323769d343d48b39c8774b18f417. For those unable to join the live event, an archived webcast will be available in the Investor Relations page at https://ir.bankunited.com approximately two hours following the live webcast.
About BankUnited, Inc.
BankUnited, Inc., with total assets of $35.9 billion at June 30, 2023, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida that provides a full range of banking and related services to individual and corporate customers through banking centers located in the state of Florida, New York metropolitan area and Dallas, Texas, and a comprehensive suite of wholesale products to customers through an Atlanta office focused on the Southeast region. BankUnited also offers certain commercial lending and deposit products through national platforms. For additional information, call (877) 779-2265 or visit www.BankUnited.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance.
The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitations) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside the Company's direct control, such as adverse events impacting the financial services industry. 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, 2022 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.
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except share and per share data)
| June 30,<br>2023 | December 31,<br>2022 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and due from banks: | ||||
| Non-interest bearing | $ | 18,355 | $ | 16,068 |
| Interest bearing | 282,814 | 556,579 | ||
| Cash and cash equivalents | 301,169 | 572,647 | ||
| Investment securities (including securities reported at fair value of $9,133,937 and $9,745,327) | 9,143,937 | 9,755,327 | ||
| Non-marketable equity securities | 317,759 | 294,172 | ||
| Loans | 24,629,990 | 24,885,988 | ||
| Allowance for credit losses | (166,833) | (147,946) | ||
| Loans, net | 24,463,157 | 24,738,042 | ||
| Bank owned life insurance | 318,935 | 308,212 | ||
| Operating lease equipment, net | 514,734 | 539,799 | ||
| Goodwill | 77,637 | 77,637 | ||
| Other assets | 734,151 | 740,876 | ||
| Total assets | $ | 35,871,479 | $ | 37,026,712 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Liabilities: | ||||
| Demand deposits: | ||||
| Non-interest bearing | $ | 7,304,735 | $ | 8,037,848 |
| Interest bearing | 2,929,870 | 2,142,067 | ||
| Savings and money market | 10,084,276 | 13,061,341 | ||
| Time | 5,519,771 | 4,268,078 | ||
| Total deposits | 25,838,652 | 27,509,334 | ||
| Federal funds purchased | — | 190,000 | ||
| FHLB advances | 5,975,000 | 5,420,000 | ||
| Notes and other borrowings | 715,302 | 720,923 | ||
| Other liabilities | 816,215 | 750,474 | ||
| Total liabilities | 33,345,169 | 34,590,731 | ||
| Commitments and contingencies | ||||
| Stockholders' equity: | ||||
| Common stock, par value $0.01 per share, 400,000,000 shares authorized; 74,429,948 and 75,674,587 shares issued and outstanding | 744 | 757 | ||
| Paid-in capital | 274,202 | 321,729 | ||
| Retained earnings | 2,623,926 | 2,551,400 | ||
| Accumulated other comprehensive loss | (372,562) | (437,905) | ||
| Total stockholders' equity | 2,526,310 | 2,435,981 | ||
| Total liabilities and stockholders' equity | $ | 35,871,479 | $ | 37,026,712 |
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||
| Interest income: | ||||||||||
| Loans | $ | 326,153 | $ | 308,795 | $ | 209,223 | $ | 634,948 | $ | 400,785 |
| Investment securities | 120,604 | 118,758 | 54,771 | 239,362 | 97,819 | |||||
| Other | 16,664 | 12,863 | 2,979 | 29,527 | 4,333 | |||||
| Total interest income | 463,421 | 440,416 | 266,973 | 903,837 | 502,937 | |||||
| Interest expense: | ||||||||||
| Deposits | 156,868 | 133,630 | 20,501 | 290,498 | 32,363 | |||||
| Borrowings | 92,675 | 78,912 | 21,056 | 171,587 | 36,516 | |||||
| Total interest expense | 249,543 | 212,542 | 41,557 | 462,085 | 68,879 | |||||
| Net interest income before provision for credit losses | 213,878 | 227,874 | 225,416 | 441,752 | 434,058 | |||||
| Provision for credit losses | 15,517 | 19,788 | 23,996 | 35,305 | 31,826 | |||||
| Net interest income after provision for credit losses | 198,361 | 208,086 | 201,420 | 406,447 | 402,232 | |||||
| Non-interest income: | ||||||||||
| Deposit service charges and fees | 5,349 | 5,545 | 5,896 | 10,894 | 11,856 | |||||
| Gain (loss) on investment securities, net | 993 | (12,549) | (8,392) | (11,556) | (16,260) | |||||
| Lease financing | 12,519 | 13,109 | 13,363 | 25,628 | 26,778 | |||||
| Other non-interest income | 6,626 | 10,430 | 2,583 | 17,056 | 5,377 | |||||
| Total non-interest income | 25,487 | 16,535 | 13,450 | 42,022 | 27,751 | |||||
| Non-interest expense: | ||||||||||
| Employee compensation and benefits | 67,414 | 71,051 | 62,461 | 138,465 | 129,549 | |||||
| Occupancy and equipment | 11,043 | 10,802 | 11,399 | 21,845 | 22,911 | |||||
| Deposit insurance expense | 7,597 | 7,907 | 3,993 | 15,504 | 7,396 | |||||
| Professional fees | 3,518 | 2,918 | 3,256 | 6,436 | 5,518 | |||||
| Technology | 20,437 | 21,726 | 17,898 | 42,163 | 34,902 | |||||
| Depreciation of operating lease equipment | 11,232 | 11,521 | 12,585 | 22,753 | 25,195 | |||||
| Other non-interest expense | 23,977 | 26,855 | 15,810 | 50,832 | 28,255 | |||||
| Total non-interest expense | 145,218 | 152,780 | 127,402 | 297,998 | 253,726 | |||||
| Income before income taxes | 78,630 | 71,841 | 87,468 | 150,471 | 176,257 | |||||
| Provision for income taxes | 20,634 | 18,959 | 21,704 | 39,593 | 43,343 | |||||
| Net income | $ | 57,996 | $ | 52,882 | $ | 65,764 | $ | 110,878 | $ | 132,914 |
| Earnings per common share, basic | $ | 0.78 | $ | 0.71 | $ | 0.82 | $ | 1.49 | $ | 1.61 |
| Earnings per common share, diluted | $ | 0.78 | $ | 0.70 | $ | 0.82 | $ | 1.48 | $ | 1.60 |
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Three Months Ended June 30, | Three Months Ended March 31, | Three Months Ended June 30, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2023 | 2022 | ||||||||||||||||
| Average<br>Balance | Interest (1) | Yield/<br><br>Rate (1)(2) | Average<br>Balance | Interest (1) | Yield/<br><br>Rate (1)(2) | Average<br>Balance | Interest (1) | Yield/<br><br>Rate (1)(2) | ||||||||||
| Assets: | ||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||
| Loans | $ | 24,680,919 | $ | 329,494 | 5.35 | % | $ | 24,724,296 | $ | 312,125 | 5.10 | % | $ | 23,709,190 | $ | 212,395 | 3.59 | % |
| Investment securities (3) | 9,369,019 | 121,520 | 5.19 | % | 9,672,514 | 119,666 | 4.95 | % | 10,477,600 | 55,488 | 2.12 | % | ||||||
| Other interest earning assets | 1,323,025 | 16,664 | 5.05 | % | 1,039,563 | 12,863 | 5.02 | % | 718,904 | 2,979 | 1.66 | % | ||||||
| Total interest earning assets | 35,372,963 | 467,678 | 5.30 | % | 35,436,373 | 444,654 | 5.05 | % | 34,905,694 | 270,862 | 3.11 | % | ||||||
| Allowance for credit losses | (162,463) | (151,071) | (127,864) | |||||||||||||||
| Non-interest earning assets | 1,744,693 | 1,793,000 | 1,669,689 | |||||||||||||||
| Total assets | $ | 36,955,193 | $ | 37,078,302 | $ | 36,447,519 | ||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||
| Interest bearing demand deposits | $ | 2,772,839 | $ | 18,417 | 2.66 | % | $ | 2,283,505 | $ | 10,545 | 1.87 | % | $ | 2,576,257 | $ | 1,742 | 0.27 | % |
| Savings and money market deposits | 10,285,494 | 88,892 | 3.47 | % | 12,145,922 | 91,724 | 3.06 | % | 13,052,566 | 15,213 | 0.47 | % | ||||||
| Time deposits | 5,494,631 | 49,559 | 3.62 | % | 4,526,480 | 31,361 | 2.81 | % | 2,812,988 | 3,546 | 0.51 | % | ||||||
| Total interest bearing deposits | 18,552,964 | 156,868 | 3.39 | % | 18,955,907 | 133,630 | 2.86 | % | 18,441,811 | 20,501 | 0.45 | % | ||||||
| Federal funds purchased | — | — | — | % | 143,580 | 1,611 | 4.49 | % | 115,146 | 155 | 0.53 | % | ||||||
| FHLB advances | 7,288,187 | 83,429 | 4.59 | % | 6,465,000 | 68,039 | 4.27 | % | 4,373,736 | 11,644 | 1.07 | % | ||||||
| Notes and other borrowings | 719,368 | 9,246 | 5.14 | % | 720,906 | 9,262 | 5.14 | % | 721,284 | 9,257 | 5.13 | % | ||||||
| Total interest bearing liabilities | 26,560,519 | 249,543 | 3.77 | % | 26,285,393 | 212,542 | 3.28 | % | 23,651,977 | 41,557 | 0.70 | % | ||||||
| Non-interest bearing demand deposits | 7,067,053 | 7,458,221 | 9,419,025 | |||||||||||||||
| Other non-interest bearing liabilities | 798,279 | 821,419 | 654,162 | |||||||||||||||
| Total liabilities | 34,425,851 | 34,565,033 | 33,725,164 | |||||||||||||||
| Stockholders' equity | 2,529,342 | 2,513,269 | 2,722,355 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 36,955,193 | $ | 37,078,302 | $ | 36,447,519 | ||||||||||||
| Net interest income | $ | 218,135 | $ | 232,112 | $ | 229,305 | ||||||||||||
| Interest rate spread | 1.53 | % | 1.77 | % | 2.41 | % | ||||||||||||
| Net interest margin | 2.47 | % | 2.62 | % | 2.63 | % |
(1) On a tax-equivalent basis where applicable
(2) Annualized
(3) At fair value except for securities held to maturity
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
| Six Months Ended June 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | ||||||||||||
| Average<br>Balance | Interest (1) | Yield/<br><br>Rate (1)(2) | Average<br>Balance | Interest (1) | Yield/<br><br>Rate (1)(2) | ||||||||
| Assets: | |||||||||||||
| Interest earning assets: | |||||||||||||
| Loans | $ | 24,702,487 | $ | 641,617 | 5.22 | % | $ | 23,530,162 | $ | 406,946 | 3.47 | % | |
| Investment securities (3) | 9,519,928 | 241,187 | 5.07 | % | 10,281,431 | 99,207 | 1.93 | % | |||||
| Other interest earning assets | 1,182,077 | 29,527 | 5.04 | % | 696,894 | 4,333 | 1.25 | % | |||||
| Total interest earning assets | 35,404,492 | 912,331 | 5.18 | % | 34,508,487 | 510,486 | 2.97 | % | |||||
| Allowance for credit losses | (156,798) | (128,443) | |||||||||||
| Non-interest earning assets | 1,768,714 | 1,672,070 | |||||||||||
| Total assets | $ | 37,016,408 | $ | 36,052,114 | |||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||
| Interest bearing liabilities: | |||||||||||||
| Interest bearing demand deposits | $ | 2,570,422 | $ | 29,291 | 2.30 | % | $ | 2,825,830 | $ | 3,111 | 0.22 | % | |
| Savings and money market deposits | 11,169,671 | 180,287 | 3.25 | % | 13,225,986 | 22,866 | 0.35 | % | |||||
| Time deposits | 5,013,230 | 80,920 | 3.26 | % | 3,064,887 | 6,386 | 0.42 | % | |||||
| Total interest bearing deposits | 18,753,323 | 290,498 | 3.12 | % | 19,116,703 | 32,363 | 0.34 | % | |||||
| Federal funds purchased | 71,393 | 1,611 | 4.51 | % | 151,074 | 213 | 0.28 | % | |||||
| FHLB advances | 6,878,867 | 151,467 | 4.44 | % | 3,317,182 | 17,790 | 1.08 | % | |||||
| Notes and other borrowings | 720,133 | 18,509 | 5.14 | % | 721,344 | 18,513 | 5.13 | % | |||||
| Total interest bearing liabilities | 26,423,716 | 462,085 | 3.53 | % | 23,306,303 | 68,879 | 0.59 | % | |||||
| Non-interest bearing demand deposits | 7,261,557 | 9,234,469 | |||||||||||
| Other non-interest bearing liabilities | 809,785 | 638,767 | |||||||||||
| Total liabilities | 34,495,058 | 33,179,539 | |||||||||||
| Stockholders' equity | 2,521,350 | 2,872,575 | |||||||||||
| Total liabilities and stockholders' equity | $ | 37,016,408 | $ | 36,052,114 | |||||||||
| Net interest income | $ | 450,246 | $ | 441,607 | |||||||||
| Interest rate spread | 1.65 | % | 2.38 | % | |||||||||
| Net interest margin | 2.55 | % | 2.57 | % |
(1) On a tax-equivalent basis where applicable
(2) Annualized
(3) At fair value except for securities held to maturity
BANKUNITED, INC. AND SUBSIDIARIES
EARNINGS PER COMMON SHARE
(In thousands except share and per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| c | 2023 | 2022 | 2023 | 2022 | ||||
| Basic earnings per common share: | ||||||||
| Numerator: | ||||||||
| Net income | $ | 57,996 | $ | 65,764 | $ | 110,878 | $ | 132,914 |
| Distributed and undistributed earnings allocated to participating securities | (881) | (999) | (1,679) | (1,927) | ||||
| Income allocated to common stockholders for basic earnings per common share | $ | 57,115 | $ | 64,765 | $ | 109,199 | $ | 130,987 |
| Denominator: | ||||||||
| Weighted average common shares outstanding | 74,424,631 | 80,300,069 | 74,588,904 | 82,629,098 | ||||
| Less average unvested stock awards | (1,183,039) | (1,257,258) | (1,188,430) | (1,234,678) | ||||
| Weighted average shares for basic earnings per common share | 73,241,592 | 79,042,811 | 73,400,474 | 81,394,420 | ||||
| Basic earnings per common share | $ | 0.78 | $ | 0.82 | $ | 1.49 | $ | 1.61 |
| Diluted earnings per common share: | ||||||||
| Numerator: | ||||||||
| Income allocated to common stockholders for basic earnings per common share | $ | 57,115 | $ | 64,765 | $ | 109,199 | $ | 130,987 |
| Adjustment for earnings reallocated from participating securities | 1 | 3 | 5 | 4 | ||||
| Income used in calculating diluted earnings per common share | $ | 57,116 | $ | 64,768 | $ | 109,204 | $ | 130,991 |
| Denominator: | ||||||||
| Weighted average shares for basic earnings per common share | 73,241,592 | 79,042,811 | 73,400,474 | 81,394,420 | ||||
| Dilutive effect of certain share-based awards | 179,318 | 350,734 | 312,708 | 244,808 | ||||
| Weighted average shares for diluted earnings per common share | 73,420,910 | 79,393,545 | 73,713,182 | 81,639,228 | ||||
| Diluted earnings per common share | $ | 0.78 | $ | 0.82 | $ | 1.48 | $ | 1.60 |
BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
| At or for the Three Months Ended | Six Months Ended June 30, | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 | March 31, 2023 | June 30, 2022 | 2023 | 2022 | ||||||||||||||||
| Financial ratios (4) | ||||||||||||||||||||
| Return on average assets | 0.63 | % | 0.58 | % | 0.72 | % | 0.60 | % | 0.74 | % | ||||||||||
| Return on average stockholders’ equity | 9.2 | % | 8.5 | % | 9.7 | % | 8.9 | % | 9.3 | % | ||||||||||
| Net interest margin (3) | 2.47 | % | 2.62 | % | 2.63 | % | 2.55 | % | 2.57 | % | ||||||||||
| Loans to deposits | 95.3 | % | 96.8 | % | 84.7 | % | ||||||||||||||
| Tangible book value per common share | $ | 32.90 | $ | 32.30 | $ | 31.16 | June 30, 2023 | December 31, 2022 | ||||||||||||
| --- | --- | --- | --- | --- | ||||||||||||||||
| Asset quality ratios | ||||||||||||||||||||
| Non-performing loans to total loans (1)(5) | 0.48 | % | 0.42 | % | ||||||||||||||||
| Non-performing assets to total assets (2)(5) | 0.34 | % | 0.29 | % | ||||||||||||||||
| Allowance for credit losses to total loans | 0.68 | % | 0.59 | % | ||||||||||||||||
| Allowance for credit losses to non-performing loans (1)(5) | 140.52 | % | 140.88 | % | ||||||||||||||||
| Net charge-offs to average loans (4) | 0.09 | % | 0.22 | % |
(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 as applicable.
(5) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $35.9 million or 0.15% of total loans and 0.10% of total assets at June 30, 2023 and $40.3 million or 0.16% of total loans and 0.11% of total assets at December 31, 2022.
| June 30, 2023 | March 31, 2023 | December 31, 2022 | Required to be Considered Well Capitalized | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BankUnited, Inc. | BankUnited, N.A. | BankUnited, Inc. | BankUnited, N.A. | BankUnited, Inc. | BankUnited, N.A. | |||||||||
| Capital ratios | ||||||||||||||
| Tier 1 leverage | 7.6 | % | 8.8 | % | 7.4 | % | 8.6 | % | 7.5 | % | 8.4 | % | 5.0 | % |
| Common Equity Tier 1 ("CET1") risk-based capital | 11.2 | % | 13.0 | % | 10.8 | % | 12.5 | % | 11.0 | % | 12.4 | % | 6.5 | % |
| Total risk-based capital | 13.0 | % | 13.6 | % | 12.6 | % | 13.1 | % | 12.7 | % | 12.9 | % | 10.0 | % |
| Tangible Common Equity/Tangible Assets | 6.8 | % | N/A | 6.5 | % | N/A | 6.4 | % | N/A | N/A |
Non-GAAP Financial Measures
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, 2023 | March 31, 2023 | June 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Total stockholders’ equity | $ | 2,526,310 | $ | 2,481,394 | $ | 2,506,017 |
| Less: goodwill and other intangible assets | 77,637 | 77,637 | 77,637 | |||
| Tangible stockholders’ equity | $ | 2,448,673 | $ | 2,403,757 | $ | 2,428,380 |
| Common shares issued and outstanding | 74,429,948 | 74,423,365 | 77,944,216 | |||
| Book value per common share | $ | 33.94 | $ | 33.34 | $ | 32.15 |
| Tangible book value per common share | $ | 32.90 | $ | 32.30 | $ | 31.16 |
12
exhibit99206302023
July 25, 2023 Q2 2023 – Supplemental Information 1 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 limitations) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside the Company's direct control, such as adverse events impacting the financial services industry. 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, 2022 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
Quarterly Highlights 3
Topics of Current Interest Robust Capital Position(1) (2) • CET1 ratios of 11.2% at the holding company and 13.0% at the bank • Pro-forma holding company CET1 of 9.7% including AOCI • Book value and tangible book value per share grew to $33.94 and $32.90 • CET 1 ratio trough of 11.8% at the Bank in CCAR severely adverse scenario stress test Ample Liquidity • Same day available liquidity of $14.7 billion at June 30, up from $9.4 billion at March 31 • Available liquidity to uninsured, uncollateralized deposit ratio of 167% at June 30, up from 95% at March 31 • Outstanding FHLB advances reduced by $1.6 billion quarter-over-quarter Stable Core Deposit Base • Total deposits grew by $116 million for the quarter • 66% of our deposits are insured or collateralized • Non-interest bearing DDA 28% of total deposits at June 30 • Total deposit beta through the cycle of 45%; non-maturity interest bearing deposit beta 70% • Cost of total deposits 2.46% for Q2 2023 Asset Quality (2) • NPA ratio of 0.34% at June 30; 0.24% excluding guaranteed portion of non-accrual SBA loans • Annualized net charge-off rate of 0.09% • CCAR severely adverse scenario projected lifetime loan portfolio losses of 2.2% • CCAR severely adverse scenario projected lifetime CRE losses of 3.3% High Quality CRE Portfolio (3) • High quality CRE portfolio; wtd average DSCR 1.88; wtd average LTV 57.1%; 60% Florida • CRE office wtd average DSCR 1.61; wtd average LTV 66.2%; 59% Florida • Substantially all CRE loans are performing • CRE to total loans 23% compared to peer median 34% • CRE to total risk based capital 169% compared to peer median 223% 1. Tangible book value per share is a non-GAAP financial measure. See section entitled “Non-GAAP Financial Measures” on page 32. 2. See page 17 for summary of stress testing results 3. CRE peer information based on latest available Call Report data for banks with total assets between $10 billion and $100 billion 4
Highlights from Second Quarter Earnings Change From ($ in millions, except per share data) Q2’23 Q1’23 Q2’22 Q1’23 Q2’22 Key Highlights Net Interest Income $214 $228 $225 $(14) $(11) Impacted by mix shift in funding sources and higher liquidity Provision for Credit Losses $16 $20 $24 $(4) $(8) Total Non-interest income $25 $17 $13 $8 $12 Q1 2023 includes $13.3 million loss on preferred equity investments Total Non-interest Expense $145 $153 $127 $(8) $18 Net Income $58 $53 $66 $5 $(8) EPS $0.78 $0.70 $0.82 $0.08 $(0.04) Period-end Loans $24,630 $24,893 $24,100 $(263) $530 Strategic runoff in residential and equipment/franchise lending Period-end Non-interest DDA $7,305 $7,367 $9,645 $(62) $(2,340) YoY impacted by cyclicality in residential real estate sector Period-end Deposits $25,839 $25,723 $28,461 $116 $(2,622) CET1 11.2% 10.8% 11.3% 0.4% (0.1)% Total Capital 13.0% 12.6% 13.0% 0.4% —% Yield on Loans 5.35% 5.10% 3.59% 0.25% 1.76% Yield on Securities 5.19% 4.95% 2.12% 0.24% 3.07% Cost of Deposits 2.46% 2.05% 0.30% 0.41% 2.16% Net Interest Margin 2.47% 2.62% 2.63% (0.15)% (0.16)% Non-performing Assets to Total Assets(1) 0.34% 0.32% 0.41% 0.02% (0.07)% Allowance for Credit Losses to Total Loans 0.68% 0.64% 0.54% 0.04% 0.14% Less favorable economic forecast; weighting of downside scenario Net Charge-offs to Average Loans(2) 0.09% 0.08% 0.23% 0.01% (0.14)% 1. Includes guaranteed portion of non-accrual SBA loans. 2. Annualized for the periods ended June 30, 2023 and March 31, 2023. 5
Strong Capital Position Relative to Peers and Regulatory Requirements 6 6.5% 6.5% 13.0% 11.2%11.5% 9.7% 11.9% 11.0% 11.8% Required to be Considered Well Capitalized CET1 CET1 including AOCI CET1 Peer Median(1)(2) CCAR Stress Test Trough BankUnited, N.A BankUnited, Inc —% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 1. Peer information based on March 31 Call Report data for banks with total assets between $20 billion and $100 billion 2. Peer information for comparison to BankUnited, Inc. is based on March 31 data for publicly traded companies between $20 billion and $100 billion. At June 30, 2023
Deposits 7
Deposit Mix and Cost of Deposits Impacted by Current Rate Environment ($ in millions) $23,474 $24,395 $27,496 $29,438 $27,509 $25,723 $25,839 $6,820 $7,347 $4,807 $3,384 $4,268 $5,250 $5,520 $11,262 $10,622 $12,660 $13,369 $13,061 $10,601 $10,084 $1,771 $2,131 $3,020 $3,709 $2,142 $2,505 $2,930 $3,621 $4,295 $7,009 $8,976 $8,038 $7,367 $7,305 Non-interest Demand Interest Demand Money Market / Savings Time 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 03/31/23 06/30/23 Quarterly Cost of Deposits 1.52% 1.48% 0.43% 0.19% 1.42% 2.05% 2.46% Non-interest bearing as a % of Total Deposits 15.4% 17.6% 25.5% 30.5% 29.2% 28.6% 28.3% 8 • 60% of deposits commercial or municipal • Approximately 80% of commercial deposits considered relationship deposits • Diverse deposit book by industry sector; largest segment title solutions at $2.7 billion - no other sectors exceeding $1 billion ◦ Over 80% of deposits in this segment are in operating accounts • Decline in NIDDA and total deposits over 2022 reflects slowdown in residential real estate sector activity • Deposits in the ICS program increased from $286 million at 3/31 to $764 million at 6/30
Cost of Funds Trend 9 1.42% 0.36% 0.16% 1.92% 2.27% 2.60%1.75% 0.25% 0.25% 4.50% 5.00% 5.25% Spot APY - Total Deposits Target Federal Funds Rate Upper Bound 12/31/19 12/31/20 12/31/21 12/31/22 03/31/23 06/30/23 (1.00)% —% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Spot Average Annual Percentage Yield (“APY”) At December 31, 2019 At December 31, 2020 At December 31, 2021 At December 31, 2022 At March 31, 2023 At June 30, 2023 Total non-maturity deposits 1.11% 0.29% 0.14% 1.83% 2.00% 2.30% Total interest-bearing deposits 1.71% 0.48% 0.23% 2.66% 3.11% 3.53% Total deposits 1.42% 0.36% 0.16% 1.92% 2.27% 2.60% Spread Between Fed Funds Upper Bound and Spot APY of Total Deposits
Loans and the Allowance for Credit Losses 10
11 Prudently Underwritten and Well-Diversified Loan Portfolio At June 30, 2023 ($ in millions) Loan Portfolio Over Time $5,661 $6,348 $8,368 $8,901 $8,790 $8,606 $7,493 $6,896 $5,702 $5,700 $5,672 $5,696 $6,718 $6,448 $6,735 $8,305 $8,480 $8,407 $768 $1,259 $1,092 $525 $525 $523 $2,515 $2,915 $1,868 $1,455 $1,426 $1,398$23,155 $23,866 $23,765 $24,886 $24,893 $24,630 Other (1) Mortgage Warehouse Lending C&I CRE Residential 12/31/19 12/31/20 12/31/21 12/31/22 03/31/23 06/30/23 1. Includes Pinnacle municipal finance, franchise and equipment finance, and PPP.
High Quality CRE Portfolio At June 30, 2023 ($ in millions) Property Type Balance % of Total CRE FL NY Tri State Other Wtd. Avg. DSCR Wtd. Avg. LTV Office $ 1,852 32 % 59 % 24 % 17 % 1.61 66.2 % Warehouse/Industrial 1,221 21 % 61 % 10 % 29 % 1.99 52.0 % Multifamily 842 15 % 48 % 52 % — % 2.18 45.4 % Retail 893 16 % 60 % 25 % 15 % 1.81 59.9 % Hotel 399 7 % 86 % 1 % 13 % 2.27 51.1 % Construction and Land 393 7 % 52 % 46 % 2 % N/A N/A Other 96 2 % 77 % 8 % 15 % 2.11 48.2 % $ 5,696 100 % 60 % 25 % 15 % 1.88 57.1 % 12 Insignificant amount of non-performing CRE loans (other than non-accrual SBA guaranteed loans of $14 million) Florida NY Tri State Property Type Wtd. Avg. DSCR Wtd. Avg. LTV Wtd. Avg. DSCR Wtd. Avg. LTV Office 1.70 66.5 % 1.54 60.2 % Warehouse/Industrial 2.16 50.9 % 1.72 39.3 % Multifamily 2.95 42.4 % 1.49 48.0 % Retail 2.00 59.2 % 1.22 65.1 % Hotel 2.37 48.0 % 1.29 68.6 % Other 2.34 45.6 % 1.16 70.6 % 2.07 56.1 % 1.56 53.6 %
Manageable CRE Maturity Risk At June 30, 2023 ($ in millions) Property Type Maturing in the Next 12 Months % Maturing in the Next 12 Months Fixed Rate or Swapped Maturing in the Next 12 Months Fixed Rate to Borrower as a % of Total Portfolio Office $ 417 23 % $ 228 12 % Warehouse/Industrial 95 8 % 50 4 % Multifamily 109 13 % 29 3 % Retail 159 18 % 86 10 % Hotel 25 6 % — — % Construction and Land 103 26 % 3 1 % Other 26 27 % 26 27 % $ 934 16 % $ 422 7 % 13 Just 7% of total CRE portfolio fixed and maturing in the next 12 months Property Type 2023 2024 2025 2026 Thereafter Total Office $ 289 $ 230 $ 367 $ 336 $ 630 $ 1,852 Warehouse/Industrial 58 115 157 370 521 1,221 Multifamily 44 78 80 190 450 842 Retail 88 115 135 214 341 893 Hotel 25 18 45 202 109 399 Construction and Land 2 170 88 42 91 393 Other 13 13 7 28 35 96 $ 519 $ 739 $ 879 $ 1,382 $ 2,177 $ 5,696
CRE Peer Benchmarking 14 34% 34% 23% Peer Median (1) Peer Mean (1) BankUnited, N.A —% 5% 10% 15% 20% 25% 30% 35% 40% 223% 216% 169% —% 50% 100% 150% 200% 250% 1. CRE peer median information based on March 31 Call Report data for banks with total assets between $10 billion and $100 billion CRE / Total Loans CRE / Total Risk Based Capital
CRE Office Portfolio - Additional Information At June 30, 2023 15 • Rent rollover in next 12 months approximately 11% of the total office portfolio; 14% for FL and 6% in NY Tri State • Manhattan portfolio has approximately 94% occupancy and rent rollover in the next 12 months of 5% • Substantially all of the Florida portfolio is suburban • 16% of the total office portfolio is medical office 46% 21% 19% 9% 3% 2% Manhattan NY Tri-State Other Long Island Queens Brooklyn Bronx 29% 22%21% 11% 9% 8% Tampa Orlando Boca/Palm Beach Broward Miami-Dade Other NY Tri-State by Sub-Market Florida by Sub-Market
Granular, Diversified Commercial & Industrial Portfolio At June 30, 2023 ($ in millions) Industry Balance(1) % of Portfolio Finance and Insurance $ 1,753 20.9 % Manufacturing 781 9.3 % Educational Services 708 8.4 % Utilities 625 7.4 % Information 589 7.0 % Wholesale Trade 587 7.0 % Real Estate and Rental and Leasing 501 6.0 % Health Care and Social Assistance 495 5.9 % Construction 389 4.6 % Transportation and Warehousing 375 4.5 % Retail Trade 304 3.6 % Professional, Scientific, and Technical Services 267 3.2 % Other Services (except Public Administration) 231 2.7 % Public Administration 219 2.6 % Administrative and Support and Waste Management 196 2.3 % Arts, Entertainment, and Recreation 172 2.0 % Accommodation and Food Services 150 1.8 % Other 66 0.8 % $ 8,408 100.0 % 161. Includes $1.8 billion of owner-occupied real estate Geographic Distribution Florida 35% New York Tri-State 33% Other 32%
Stress Testing Results ($ in millions) 17 2.7% 3.3% 0.7% 2.2% Commercial CRE Residential Total —% 1.0% 2.0% 3.0% 4.0% 4.7% 0.5% 3.1% 2.6% 6.6% 4.8% 3.3% 2.3% 0.2% 1.5% 1.0% 5.3% 1.9% 1.7% CCAR Severely Adverse Scenario Moody’s S4 Office Industrial Multifamily Retail Hotel Other Total —% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% $237 $187 $49 $473 Lifetime expected losses in the CCAR severely adverse scenario $90 $6 $36 $23 $28 $4 $187 Lifetime expected losses in the CCAR severely adverse scenario 1. Excludes Pinnacle municipal finance and mortgage warehouse lending. 2. Construction loans are included in the chart by their applicable property type. • Bank remains well above well capitalized threshold under hypothetical severe stress • CET 1 ratio trough of 11.8% at the Bank level in CCAR severely adverse scenario CRE Portfolio Stress Test Results(2) Loan Portfolio Stress Test Results(1)
Drivers of Change in the ACL - Current Quarter ($ in millions) $158.8 $(3.9) $35.8 $(6.2) $14.6 $(26.6) $(5.7) $166.8 Risk Rating Migration and Specific Reserves Economic Forecast Net Charge- Offs Other Changes in Qualitative Overlay ACL 06/30/23 ACL 03/31/23 0.68%0.64%% of Total Loans 18 • Impact of heavier weighting of downside scenario • Current market adjustment • Changes to forward path of economic forecast • Decreased qualitative overlay for economic uncertainty now captured in quantitative modeling Other Change in Qualitative Reserve Related to Economy • Portfolio and assumption changes • New Loans, net of Runoff • Includes qualitative overlay related to CRE office portfolio
Allocation of the ACL ($ in millions) December 31, 2022 March 31, 2023 June 30, 2023 Balance % of Loans Balance % of Loans Balance % of Loans Residential $ 11.7 0.13 % $ 11.8 0.13 % $ 8.9 0.10 % Commerical: Commercial real estate 24.8 0.43 % 26.0 0.46 % 29.7 0.52 % Commercial and industrial 97.2 1.10 % 113.0 1.25 % 121.0 1.35 % Pinnacle - municipal finance 0.2 0.02 % 0.2 0.02 % 0.2 0.02 % Franchise finance 11.7 4.63 % 5.6 2.33 % 4.3 2.07 % Equipment finance 2.3 0.82 % 2.2 0.83 % 2.7 1.16 % Total commercial 136.2 0.85 % 147.0 0.91 % 157.9 0.99 % Allowance for credit losses $ 147.9 0.59 % $ 158.8 0.64 % $ 166.8 0.68 % Asset Quality Ratios December 31, 2022 March 31, 2023 June 30, 2023 Non-performing loans to total loans(1) 0.42 % 0.46 % 0.48 % Non-performing assets to total assets(1) 0.29 % 0.32 % 0.34 % Allowance for credit losses to non-performing loans(1) 140.88 % 139.01 % 140.52 % Net charge-offs to average loans(2) 0.22 % 0.08 % 0.09 % 19 1. Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $35.9 million, $36.9 million and $40.3 million or 0.15%, 0.15% and 0.16% of total loans and 0.10%, 0.10% and 0.11% of total assets at June 30, 2023, March 31, 2023 and December 31, 2022, respectively. 2. Annualized for the periods ended March 31, 2023 and June 30, 2023. Office Portfolio ACL: 0.83% at June 30, 2023
Asset Quality Metrics 20 Non-Performing Loans to Total Loans Non-Performing Assets to Total Assets Net Charge-offs to Average Loans 0.88% 1.02% 0.87% 0.42% 0.46% 0.48% 0.68% 0.80% 0.68% 0.26% 0.31% 0.33% Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 12/31/19 12/31/20 12/31/21 12/31/22 03/31/23 06/30/23 —% 0.25% 0.50% 0.75% 1.00% 1.25% 0.63% 0.71% 0.58% 0.29% 0.32% 0.34% 0.49% 0.56% 0.45% 0.18% 0.22% 0.24% Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans 12/31/19 12/31/20 12/31/21 12/31/22 03/31/23 06/30/23 —% 0.25% 0.50% 0.75% 1.00% 1.25% 0.05% 0.26% 0.29% 0.22% 0.09% 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 —% 0.20% 0.40% 0.60%
Non-Performing Loans by Portfolio Segment ($ in millions) 21 $205 $244 $206 $105 $114 $119 $19 $29 $29 $21 $23 $23 $24 $60 $30 $3 $65 $43 $58 $22 $42 $48 $21 $14 $45 $33 $13 $6 $4 $46 $51 $46 $40 $37 $36 $16 $16 $10 $9 $6 $5 Non-Guaranteed Portion of SBA Guaranteed Portion of SBA Franchise Equipment C&I CRE Residential and Other Consumer 12/31/19 12/31/20 12/31/21 12/31/22 03/31/23 06/30/23
Criticized and Classified Loans ($ in millions) 22 Commercial Real Estate(1) Commercial & Industrial(1) Special Mention Substandard Accruing Substandard Non-accruing and Doubtful 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 $— $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 $— $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Criticized and Classified CRE by Property Type at June 30, 2023 $109 $39 $72 $94 $2 $16 Multifamily Hotel Retail Office Construction & Land SBA 1. Excludes SBA
Asset Quality - Delinquencies ($ in millions) 23 Commercial(1) CRE 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 $— $20 $40 $60 $80 $100 Residential(2) 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 $— $20 $40 $60 $80 $100 30-59 Days PD 60-89 Days PD 90 Days+ PD 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 $— $20 $40 $60 $80 $100 1. Includes Pinnacle, franchise finance and equipment finance 2. Excludes government insured residential loans
Residential Portfolio Overview At June 30, 2023 24 Residential Loan Product Type FICO Distribution(1) Breakdown by LTV 1. Excludes government insured residential loans. FICOs are refreshed routinely. LTVs are typically based on valuation at origination Prior 20% 2019 4% 2020 13%2021 43% 2022 16% 2023 4% >759 74% 720-759 16% <720 or NA 10% Breakdown by Vintage1) 60% or less 35% 61% - 70% 25% 71% - 80% 39% More than 80% 1% 30 Yr Fixed 31% 15 & 20 Year Fixed 13% 10/1 ARM 12% 5/1 & 7/1 ARM 26% Formerly Covered 1% Govt Insured 17%High quality residential portfolio consists primarily of high FICO, low LTV, prime jumbo mortgages with de-minimis charge-offs since inception as well as government insured loans
Investment Portfolio 25
High Quality, Short-Duration Securities Portfolio ($ in millions) December 31, 2022 March 31, 2023 June 30, 2023 Portfolio Net Unrealized Loss Fair Value Net Unrealized Loss Fair Value Net Unrealized Loss Fair Value US Government and Agency $ (146) $ 2,780 $ (128) $ 2,742 $ (132) $ 2,686 Private label RMBS and CMOs (334) 2,531 (300) 2,525 (318) 2,384 Private label CMBS (121) 2,524 (98) 2,435 (98) 2,282 Single family real estate-backed securities (32) 470 (20) 449 (23) 438 CLOs (30) 1,136 (20) 1,106 (19) 1,081 State and Municipal Obligations (5) 117 (3) 104 (5) 104 Other (6) 96 (5) 94 (4) 92 $ (674) $ 9,654 $ (574) $ 9,455 $ (599) $ 9,067 Portfolio Composition US Government and Agency 30% Private label RMBS and CMOs 26% Private label CMBS 25% Single family real estate- backed securities 5% CLOs 12% State and Municipal Obligations 1% Other 1% Rating Distribution GOV 30% AAA 60% AA 7% A 2% NR 1% • No expected credit losses on AFS securities • AFS portfolio duration of 1.94; approximately 68% of the portfolio floating rate • HTM securities totaling $10 million with unrealized loss of $0.1 million 26
High Quality, Short-Duration Securities Portfolio At June 30, 2023 Strong credit enhancement levels Private Label RMBS Subordination Wtd. Avg. Stress Scenario LossRating Min Max Avg. AAA 3.0 88.9 17.6 2.3 AA 19.5 33.7 23.9 5.3 A 24.9 26.6 25.7 5.4 Wtd. Avg. 4.1 85.3 18.0 2.5 Private Label CMBS Subordination Wtd. Avg. Stress Scenario LossRating Min Max Avg. AAA 30.0 97.3 43.9 7.0 AA 29.4 95.1 38.5 7.8 A 25.1 75.2 41.8 9.1 Wtd. Avg. 29.7 96.1 43.2 7.2 CLOs Subordination Wtd. Avg. Stress Scenario LossRating Min Max Avg. AAA 37.6 66.9 46.6 11.4 AA 31.1 42.4 35.6 9.9 A 28.8 31.6 29.9 10.4 Wtd. Avg. 36.3 61.8 44.3 11.2 AAA 94% AA 4% A 2% AAA 85% AA 11% A 4% AAA 81% AA 15% A 4% 27
Liquidity 28
Ample Liquidity Coverage of Uninsured Deposits ($ in millions) 29 Insured Deposits Total Deposits at June 30, 2023 $ 25,839 Estimated Uninsured Deposits $ 11,841 Less: Collateralized deposits (2,830) Less: Affiliate deposits (239) Adjusted Uninsured Deposits $ 8,772 Estimated Insured and Collateralized Deposits $ 17,067 Insured and Collateralized Deposits to Total Deposits at June 30, 2023 66 % March 31, 2023 June 30, 2023 Available Liquidity(1) $ 9,415 $ 14,673 Available Liquidity to Uninsured, Uncollateralized Deposits Ratio 95 % 167 % 1. Cash + Capacity at FHLB + Capacity at FRB + Unencumbered securities
Available Liquidity ($ in millions) 30 Same Day Available Liquidty $9,415 $14,673 $887 $301 $2,919 $4,554 $4,568 $8,947 $1,041 $871 Cash FHLB Capacity Capacity at the Fed Unencumbered Securities 03/31/23 06/30/23
Non-GAAP Financial Measures 31
Non-GAAP Financial Measures 32 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 June 30, 2023 (in thousands except share and per share data): June 30, 2023 Total stockholders’ equity (GAAP) $ 2,526,310 Less: goodwill 77,637 Tangible stockholders’ equity (non-GAAP) $ 2,448,673 Common shares issued and outstanding 74,429,948 Book value per common share (GAAP) $ 33.94 Tangible book value per common share (non-GAAP) $ 32.90