UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
Commission File Number: 001-35039
BankUnited, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
27-0162450
(I.R.S. Employer Identification No.)
14817 Oak Lane
(Address of principal executive offices)
Miami Lakes
FL
33016
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code: (305) 569-2000
Class
Common Stock, $0.01 Par Value
Trading Symbol
BKU
Name of Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
☐
☐
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 o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant on June 30, 2022 was $2,742,608,124.
The number of outstanding shares of the registrant common stock, $0.01 par value, as of February 17, 2023 was 74,736,586.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's definitive proxy statement for the 2023 annual meeting of stockholders are incorporated by reference in this Annual Report on Form 10-K in
response to Part II. Item 5 and Part III. Items 10, 11, 12, 13 and 14.
BANKUNITED, INC.
Form 10-K
For the Year Ended December 31, 2022
TABLE OF CONTENTS
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART I
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Reserved
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits, Financial Statement Schedules
Signatures
Page
1
11
24
24
24
25
26
29
29
65
66
130
130
130
130
131
131
131
131
131
132
136
i
GLOSSARY OF DEFINED TERMS
The following acronyms and terms may be used throughout this Form 10-K, including the consolidated financial statements
and related notes.
ARRC
ACL
AFS
ALCO
ALM
AOCI
ARM
ASC
ASU
BHC Act
BHC
BFG
BKU
BOLI
BankUnited
The Bank
Bridge
Buyout loans
CARES Act
CCA
CCAR
CECL
CET1
CFPB
C&I
CLO
CMBS
CME
CMOs
COVID-19
CRA
CRE
DIF
DSCR
ESG
FASB
FCA
FDIA
FDIC
FHA
FHLB
FICO
FRB
GAAP
Alternative Reference Rates Committee
Allowance for credit losses
Available for sale
Asset/Liability Committee
Asset Liability Management
Accumulated other comprehensive income
Adjustable rate mortgage
Accounting Standards Codification
Accounting Standards Update
Bank Holding Company Act of 1956
Bank Holding company
Bridge Funding Group, Inc.
BankUnited, Inc.
Bank Owned Life Insurance
BankUnited, National Association
BankUnited, National Association
Bridge Funding Group, Inc.
FHA and VA insured mortgages from third party servicers who have exercised their
right to purchase these loans out of GNMA securitizations
Coronavirus Aid, Relief, and Economic Security Act
Cloud Computing Arrangements
Comprehensive Capital Analysis and Review
Current expected credit losses
Common Equity Tier 1 capital
Consumer Financial Protection Bureau
Commercial and Industrial loans, including owner-occupied commercial real estate
Collateralized loan obligations
Commercial mortgage-backed securities
Chicago Mercantile Exchange
Collateralized mortgage obligations
Coronavirus disease of 2019
Community Reinvestment Act
Commercial real estate loans, including non-owner occupied commercial real estate and
construction and land
Deposit insurance fund
Debt Service Coverage Ratio
Environmental, social and governance
Financial Accounting Standards Board
The Financial Conduct Authority
Federal Deposit Insurance Act
Federal Deposit Insurance Corporation
Federal Housing Administration
Federal Home Loan Bank
Fair Isaac Corporation (credit score)
Federal Reserve Bank
U.S. generally accepted accounting principles
ii
GDP
GLB Act
GNMA
HPI
IBOR
IPO
ISDA
LGD
LIBOR
LTV
MBS
MSA
MWL
NRSRO
NYSE
OCC
OFAC
OREO
PCAOB
PCD
PD
Pinnacle
PPNR
PPP
Proxy Statement
PSU
REIT
ROU Asset
RSA
RSU
SBA
SEC
SOFR
S&P 500
TDR
Tri-State
UPB
USDA
VA loan
VIEs
WARM
2010 Plan
2014 Plan
401(k) Plan
Gross Domestic Product
The Gramm-Leach-Bliley Financial Modernization Act of 1999
Government National Mortgage Association
Home price indices
InterBank Offered Rate
Initial public offering
International Swaps and Derivatives Association
Loss Given Default
London InterBank Offered Rate
Loan-to-value
Mortgage-backed securities
Metropolitan Statistical Area
Mortgage warehouse lending
Nationally recognized statistical rating organization
New York Stock Exchange
Office of the Comptroller of the Currency
U.S. Department of the Treasury's Office of Foreign Assets Control
Other real estate owned
Public Company Accounting Oversight Board
Purchased credit-deteriorated
Probability of default
Pinnacle Public Finance, Inc.
Pre-tax, pre-provision net revenue
Small Business Administration’s Paycheck Protection Program
Definitive proxy statement for the Company's 2023 annual meeting of stockholders
Performance Share Unit
Real Estate Investment Trust
Right-of-use Asset
Restricted Share Award
Restricted Share Unit
U.S. Small Business Administration
Securities and Exchange Commission
Secured Overnight Financing Rate
Standard & Poor's 500 Index
Troubled-debt restructuring
New York, New Jersey and Connecticut
Unpaid principal balance
U.S. Department of Agriculture
Loan guaranteed by the U.S. Department of Veterans Affairs
Variable interest entities
Weighted-average remaining maturity
2010 Omnibus Equity Incentive Plan
2014 Omnibus Equity Incentive Plan
BankUnited 401(k) Plan
iii
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate," "project,"
"predict," "will" and similar expressions identify forward-looking statements.
These forward-looking statements are based on management's current views with respect to future results, and are subject
to risks and uncertainties. Forward-looking statements are based on beliefs and assumptions made by management using
currently available information, such as market and industry data, historical performance and current financial trends. These
statements are only predictions and are not guarantees of future performance. The inclusion of forward-looking statements
should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by a
forward-looking statement will be achieved. Forward-looking statements are subject to various risks and uncertainties and
assumptions, including those 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 could differ materially from those contemplated by a forward-
looking statement. These risks and uncertainties include, without limitation:
•
strategic risk:
◦
◦
◦
◦
◦
an inability to successfully execute our core business strategy;
competition;
natural or man-made disasters, social or health care crises or political unrest;
loss of executive officers or key personnel;
climate change or societal responses thereto;
•
credit risk inherent in the business of making loans and embedded in our securities portfolio:
◦
◦
◦
◦
◦
inadequate allowance for credit losses:
the accuracy and completeness of information about counterparties and borrowers;
real estate market conditions, real estate valuations and other risks related to holding loans secured by real
estate or real estate received in satisfaction of loans;
geographic concentration of the Company's markets in Florida and the New York Tri-State area;
fluctuations in demand for and valuation of operating lease equipment;
•
•
•
•
•
•
•
interest rate risk, including risks related to reference rate reform;
liquidity risk;
◦
◦
an inability to maintain adequate liquidity;
restrictions on the ability of BankUnited, N.A. to pay dividends to BankUnited, Inc.;
risks related to the regulation of our industry;
operational risk:
◦
◦
◦
◦
inadequate or inaccurate forecasting tools and models;
inability to successfully launch new products, services, or business initiatives;
susceptibility to fraud, risk or errors;
dependence on information technology and third party service providers and the risk of systems failures,
interruptions or breaches of security or inability to keep pace with technological change;
reputational risk;
a variety of regulatory, legal and compliance;
the impact of conditions in the financial markets and economic conditions generally;
iv
•
•
ineffective risk management or internal controls; and
the selection and application of accounting policies and methods and related assumptions and estimates.
Additional factors are set forth in the Company's filings with the SEC, including this Annual Report on Form 10-K.
Forward-looking statements speak only as of the date on which they are made. The Company expressly disclaims any
obligation to update or revise any forward-looking statement, whether as a result of new information, future events or
otherwise, except as required by law.
As used herein, the terms the "Company," "we," "us," and "our" refer to BankUnited, Inc. and its subsidiaries unless the
context otherwise requires.
v
Item 1. Business
Overview
PART I
BankUnited, Inc., with total consolidated assets of $37.0 billion at December 31, 2022, is a bank holding company with
one direct wholly-owned subsidiary, BankUnited, collectively, the Company. BankUnited, a national banking association
headquartered in Miami Lakes, Florida, provides a full range of commercial lending and both commercial and consumer
deposit services through banking centers located in Florida, the New York metropolitan area and Dallas, Texas. The Bank
provides commercial lending and deposit services in the Southeast U.S through our wholesale banking office in Atlanta,
Georgia, and provides certain commercial lending and deposit products through national platforms and certain consumer
deposit products through an online channel. Our core business strategy is to build a leading regional commercial and small
business bank, with a distinctive value proposition based on strong service-oriented relationships, robust digital enabled
customer experiences and operational excellence, with an entrepreneurial work environment that empowers employees to
deliver their best. To date, we have executed our strategy primarily through organic growth and anticipate that we will continue
to do so.
Our Products and Services
Lending and Leasing
General—Our primary lending focus is to serve small, middle-market and larger corporate businesses with a variety of
financial products and services, while maintaining a disciplined credit culture. We offer a full array of lending products that
cater to our customers' needs and have attracted and invested in experienced relationship management teams in our primary
lending markets.
Commercial loans—Our commercial loans, which are generally made to growing small business, middle-market and larger
corporate entities and non-profit organizations, include secured and unsecured lines of credit, formula-based lines of credit,
equipment loans, owner-occupied commercial real estate term loans and lines of credit, mortgage warehouse lines, capital call
lines, letters of credit, commercial credit cards, SBA and USDA product offerings, Export-Import Bank financing products,
trade finance and business acquisition finance credit facilities.
Through the Bank's two commercial lending subsidiaries, Pinnacle and Bridge, we provide municipal, equipment and
franchise financing on a national basis. Pinnacle, headquartered in Scottsdale, Arizona, provides financing to state and local
governmental entities directly and through vendor programs and alliances. Pinnacle offers a full array of financing structures
including essential use equipment lease purchase and loan agreements and direct (private placement) bond refundings. Bridge,
headquartered in Baltimore, Maryland, offers large corporate and middle-market businesses equipment loans and leases
including finance lease and operating lease structures through its equipment finance division. Bridge offers franchise
equipment, acquisition and expansion financing through its franchise finance division.
Commercial real estate loans—We offer term financing for the acquisition or refinancing of properties, primarily rental
apartments, mixed-use commercial properties, industrial properties, warehouses, retail shopping centers, free-standing single-
tenant buildings, office buildings and hotels. Other products that we provide include real estate secured lines of credit, lending
to REITs and institutional asset owners, subscription lines of credit to real estate funds, and, to a more limited extent,
acquisition, development and construction loan facilities and construction financing.
Residential mortgages—We do not originate residential mortgages, but do invest in residential loans originated through
correspondent channels and community partners. Our residential loan portfolio is primarily comprised of loans purchased on a
national basis through select correspondent channels. This national purchase program allows us to diversify our loan portfolio,
both by product type and geography. Residential loans purchased are primarily closed-end, first lien jumbo mortgages for the
purchase or re-finance of owner-occupied property. A limited portion of the portfolio is secured by investor-owned properties.
We do not originate or purchase negatively amortizing or sub-prime residential loans. We also acquire non-performing FHA
and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA
securitizations. Such loans that re-perform, either through modification or self-cure, may be eligible for re-securitization. The
Company and the servicer share in the economics of the sale of these loans into new securitizations.
Other consumer loans— We do not originate, or currently intend to originate a significant amount of consumer loans.
Home equity loans and lines of credit and other consumer loans are not significant components of our loan portfolio or of our
lending strategy.
1
Credit risk management - Credit is managed through our three lines of defense framework as prescribed in our credit
policies and procedures.
•
•
•
First Line of Defense - Credit opportunities are sourced, analyzed, recommended and managed by our lines of business
in accordance with established credit procedures.
Second Line of Defense - Our credit administration division, reporting to the Chief Risk Officer, is responsible for the
evaluation and approval of recommended credit opportunities. Approval of credit and confirmation of risk ratings is
performed within a risk-based delegated credit approval framework. The credit administration division also provides
governance and oversight of our credit policies and procedures.
Third Line of Defense - Credit Review, reporting directly to the Risk Committee of the Board of Directors, provides an
independent assessment of credit risk and the effectiveness of credit risk management processes across the
organization. Credit Review performs risk-based testing through both examinations and ongoing monitoring.
Asset oversight committees meet at least quarterly and provide oversight of key credit governance, transactional, and credit
management functions. These committees include:
•
•
•
•
Credit Risk Management Committee with responsibilities including credit governance policies and procedures and
changes thereto and establishing and maintaining the delegated credit approval framework;
Executive Credit Committee with responsibilities including transactional credit approval for large and/or complex
credit exposures as well as the approval of periodic asset monitoring reports for large and/or complex credit exposures;
Criticized Asset Committee with responsibilities including the evaluation and oversight of higher risk assets and
oversight of workout and recovery functions; and
Residential Credit Risk Management Committee with responsibilities including residential portfolio performance
monitoring and certain bulk purchase transactional authorities.
Our In-house Lending Limits ranging from $125 million to $150 million, are based upon loan type and are further limited
by risk-based Hold Limits that incorporate our assessment of the borrower’s financial condition and industry exposure. These
limits are significantly below our legal lending limit. These limits are reviewed periodically by the Credit Risk Management
Committee and approved annually by the Board of Directors.
Deposit and Treasury Solutions Products
We offer traditional deposit products including commercial and consumer checking accounts, money market deposit
accounts, savings accounts and certificates of deposit with a variety of terms and rates as well as a robust suite of treasury,
commercial payments and cash management services. We offer commercial and retail deposit products across our primary
geographic footprint and certain commercial deposit, payments and treasury management products and services nationally. For
our consumers, we also offer competitive money market and time deposit products through our online channel. Demand deposit
balances are concentrated in commercial and small business accounts and our deposit growth strategy is focused on small
business and middle market companies generally, as well as select industry verticals. Our service fee schedule and rates are
competitive with other financial institutions in our markets.
Our Markets
Our primary banking markets are Florida and the Tri-State market of New York, New Jersey and Connecticut, concentrated
in the New York Metropolitan area. We believe both represent long-term attractive banking markets. In Florida, our focus is on
urban markets including the Miami-Dade, Broward, Palm Beach, Tampa, Orlando and Jacksonville markets. In 2022, we
launched a wholesale banking office in Atlanta serving the Southeastern United States and opened a full service branch in
Dallas, Texas. While the Atlanta and Dallas markets are not currently material to our business operations, they represent future
growth opportunities. We expect to launch a wholesale banking office in Dallas in 2023.
Pinnacle and Bridge offer lending products and the Bank provides mortgage warehouse financing on a national basis. We
also offer a suite of commercial deposit, treasury solutions and cash management products nationally, primarily focused on
select industry verticals.
2
Competition
Our markets are highly competitive, containing not only a large number of community and regional banks, but also a
significant presence of the country's largest commercial banks. We compete with other state, national and international banks as
well as savings associations, savings banks and credit unions with physical presence in our market areas or targeting our market
areas digitally for deposits and loans. In addition, we compete with financial intermediaries such as FinTech companies,
consumer finance companies, mortgage banking companies, insurance companies, securities firms, mutual funds and several
government agencies as well as major retailers, all actively engaged in providing various types of loans and other financial
services. Our largest banking competitors in the Florida market include Truist, JPMorgan Chase, PNC, Regions Bank,
TD Bank, Wells Fargo, Bank of America, First Horizon, Synovus and a number of community banks. In the Tri-State market,
we also compete with, in addition to the national and international financial institutions listed, Capital One, Signature Bank,
New York Community Bank, Valley National Bank, M&T Bank and numerous community banks.
Interest rates on both loans and deposits and prices of fee-based services are significant competitive factors among
financial institutions generally. Other important competitive factors include convenience, quality of customer service,
availability and quality of digital offerings, community reputation, continuity of personnel and services, and, in the case of
larger commercial customers, relative lending limits and ability to offer sophisticated cash management and other commercial
banking services. While we continue to provide competitive interest rates on both depository and lending products, we believe
that we can compete most successfully by focusing on the financial needs of growing companies and small and middle-market
businesses, offering them a broad range of personalized services, digital platforms and sophisticated cash management tools
tailored to their businesses.
Regulation and Supervision
The U.S. banking industry is highly regulated under federal and state law. These regulations have a material effect on the
operations of BankUnited, Inc. and its direct and indirect subsidiaries.
Statutes, regulations and policies limit the activities in which we may engage and the conduct of our permitted activities
and establish capital requirements with which we must comply. The regulatory framework is intended primarily for the
protection of depositors, borrowers, customers and clients, the FDIC deposit insurance fund and the banking system as a whole,
and not for the protection of our stockholders or creditors. In many cases, the applicable regulatory authorities have broad
enforcement power over BHCs, banks and their subsidiaries, including the power to impose substantial fines and other penalties
for violations of laws and regulations. Further, the regulatory system imposes reporting and information collection obligations.
We incur significant costs related to compliance with these laws and regulations.
The material statutory and regulatory requirements that are applicable to us are summarized below. The description below
is not intended to summarize all laws and regulations applicable to us and is qualified in its entirety by reference to the full text
of the statutes, regulations, policies and other written guidance that are described.
Bank and Bank Holding Company Regulation
BankUnited is a national bank. As a national bank organized under the National Bank Act, BankUnited is subject to
ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC.
Any entity that directly or indirectly controls a bank must be approved by the Federal Reserve Board under the BHC Act to
become a BHC. BHCs are subject to regulation, inspection, supervision and enforcement by the Federal Reserve Board under
the BHC Act. The Federal Reserve Board's jurisdiction also extends to any company that is directly or indirectly controlled by a
BHC.
BankUnited, Inc., which controls BankUnited, is a BHC and, as such, is subject to ongoing and comprehensive
supervision, regulation, inspection and enforcement by the Federal Reserve Board.
Broad Supervision, Examination and Enforcement Powers
A principal objective of the U.S. bank regulatory system is to protect depositors by ensuring the financial safety and
soundness of banking organizations. To that end, the banking regulators have broad regulatory, examination and enforcement
authority. The regulators regularly examine the operations of banking organizations. In addition, banking organizations are
subject to periodic reporting requirements.
The regulators have various remedies available if they determine that the financial condition, capital resources, asset
quality, earnings prospects, management, liquidity, compliance or other aspects of a banking organization's operations are less
than satisfactory, or that the banking organization is operating in an unsafe or unsound manner. The regulators may also take
3
action if they determine that the banking organization or its management is violating or has violated any law or regulation. The
regulators have the power to, among other things:
•
•
•
•
•
•
•
•
•
•
•
enjoin "unsafe or unsound" practices;
require affirmative actions to correct any violation or practice;
issue administrative orders that can be judicially enforced;
direct increases in capital;
direct the sale of subsidiaries or other assets;
limit dividends and distributions;
restrict growth;
assess civil monetary penalties;
remove officers and directors;
terminate deposit insurance; and
appoint a conservator or receiver.
Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements
could subject BankUnited, Inc., the Bank and their subsidiaries or their officers, directors and institution-affiliated parties to the
remedies described above and other sanctions. In addition, the FDIC may terminate a depository institution's deposit insurance
upon a finding that the institution's financial condition is unsafe or unsound or that the institution has engaged in unsafe or
unsound practices or has violated any applicable rule, regulation, order or condition enacted or imposed by the institution's
regulatory agency.
Notice and Approval Requirements Related to Control
BankUnited, Inc. must generally receive bank regulatory approval before it can acquire a financial institution. Specifically,
as a BHC, BankUnited, Inc. must obtain prior approval of the Federal Reserve in connection with any acquisition that would
result in BankUnited, Inc. acquiring substantially all the assets, or owning or controlling 5% or more of any class of voting
securities, of a bank or another BHC. The statutory factors that the Federal Reserve is required to consider in considering an
application include the financial and managerial resources of the parties and the future prospects of the combined organization,
the effects of the transaction on competition, the convenience and needs of the community, including the record of performance
of the parties under the Community Reinvestment Act, the effectiveness of the acquiring company in combating money-
laundering activities and the impact of the transaction on the financial stability of the U.S. banking or financial system.
In addition, federal and state banking laws impose notice, approval, and ongoing regulatory requirements on any
stockholder or other party that seeks to acquire direct or indirect "control" of an FDIC-insured depository institution or BHC.
These laws include the BHC Act and the Change in Bank Control Act. Among other things, these laws require regulatory
filings by individuals or companies that seek to acquire direct or indirect "control" of an FDIC-insured depository institution.
The determination of whether an investor "controls" a depository institution is based on all of the facts and circumstances
surrounding the investment. As a general matter, a party is deemed to control a depository institution or other company if the
party owns or controls 25% or more of any class of voting stock. Subject to rebuttal, a party may be presumed to control a
depository institution or other company if the investor owns or controls 10% or more of any class of voting stock.
Subject to rebuttal, a party may be presumed to control a depository institution or other company for purposes of the BHC
Act and the Change in Bank Control Act if the investor owns or controls 10% or more of any class of voting stock.
The BHC Act prohibits any entity from acquiring 25% (as noted above, the BHC Act has a lower limit for acquirers that
are existing BHCs) or more of a BHC’s or bank’s voting securities, or otherwise obtaining control or a controlling influence
over a BHC or bank without the approval of the Federal Reserve. The Federal Reserve has rule-based standards for determining
whether one company has control over another. These rules established four categories of tiered presumptions of noncontrol
that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the
presence of other indicia of control. As the percentage of ownership increases, fewer indicia of control are permitted without
falling outside of the presumption of noncontrol. These indicia of control include nonvoting equity ownership, director
representation, management interlocks, business relationships and restrictive contractual covenants. Investors can hold up to
24.9% of the voting securities and 33% of the total equity of a company without necessarily having a controlling influence.
4
Permissible Activities and Investments
Banking laws generally restrict the ability of BankUnited, Inc. to engage in activities other than those determined by the
Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
The GLB Act expanded the scope of permissible activities for a BHC that qualifies as a financial holding company. Under the
regulations implementing the GLB Act, a financial holding company may engage in additional activities that are financial in
nature or incidental or complementary to a financial activity. BankUnited, Inc. is not a financial holding company.
In addition, as a general matter, the establishment or acquisition by BankUnited, Inc. of a non-bank entity, or the initiation
of a non-banking activity, requires prior regulatory approval. In approving acquisitions or the addition of activities, the Federal
Reserve Board considers, among other things, whether the acquisition or the additional activities can reasonably be expected to
produce benefits to the public, such as greater convenience, increased competition or gains in efficiency, that outweigh such
possible adverse effects as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound
banking practices.
Regulatory Capital Requirements and Capital Adequacy
The federal bank regulators view capital levels as important indicators of an institution's financial soundness. As a general
matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital relative to
the amount and types of assets they hold. The final supervisory determination on an institution's capital adequacy is based on
the regulator's assessment of numerous factors. Both BankUnited, Inc. and BankUnited are subject to regulatory capital
requirements.
The Federal Reserve Board has established risk-based and leverage capital guidelines for BHCs, including BankUnited,
Inc. The OCC has established substantially similar risk-based and leverage capital guidelines applicable to national banks,
including BankUnited. BankUnited, Inc. and BankUnited are subject to capital rules implemented under the framework
promulgated by the International Basel Committee on Banking Supervision (the "Basel III Capital Rules"). While some
provisions of the rules are tailored to larger institutions, the Basel III Capital Rules generally apply to all U.S. banking
organizations, including BankUnited, Inc. and BankUnited.
The Basel III Capital Rules provide for the following minimum capital to risk-weighted assets ratios to be considered
adequately capitalized:
(i) 4.5% based upon CET1;
(ii) 6.0% based upon tier 1 capital; and
(iii) 8.0% based upon total regulatory capital.
The Basel III Capital Rules require institutions to retain a capital conservation buffer of 2.5% above these required
minimum capital ratio levels. A minimum leverage ratio (tier 1 capital as a percentage of average total assets) of 4.0% is also
required under the Basel III Capital Rules.
Banking organizations that fail to maintain the minimum required capital conservation buffer could face restrictions on
capital distributions or discretionary bonus payments to executive officers, with distributions and discretionary bonus payments
being completely prohibited if no capital conservation buffer exists, or in the event of the following: (i) the banking
organization's capital conservation buffer was below 2.5% at the beginning of a quarter; and (ii) its cumulative net income for
the most recent quarterly period plus the preceding four calendar quarters is less than its cumulative capital distributions (as
well as associated tax effects not already reflected in net income) during the same measurement period. Further, the federal
bank regulatory agencies may set higher capital requirements for an individual BHC or bank when circumstances warrant it.
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Prompt Corrective Action
Under the FDIA, the federal bank regulatory agencies must take "prompt corrective action" against undercapitalized U.S.
depository institutions. U.S. depository institutions are assigned one of five capital categories: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized," and are subjected to
differential regulation corresponding to the capital category within which the institution falls. As of December 31, 2022, a
depository institution was deemed to be "well capitalized" if the banking institution had a total risk-based capital ratio of 10.0%
or greater, a tier 1 risk-based capital ratio of 8.0% or greater, a CET1 risk-based capital ratio of 6.5% and a leverage ratio of
5.0% or greater, and the institution was not subject to an order, written agreement, capital directive, or prompt corrective action
directive to meet and maintain a specific level for any capital measure. Under certain circumstances, a well-capitalized,
adequately capitalized or undercapitalized institution may be treated as if the institution were in the next lower capital category.
A banking institution that is undercapitalized is required to submit a capital restoration plan. Failure to meet capital guidelines
could subject the institution to a variety of enforcement remedies by federal bank regulatory agencies, including: termination of
deposit insurance by the FDIC, restrictions on certain business activities, and appointment of the FDIC as conservator or
receiver. As of December 31, 2022, BankUnited, Inc. and BankUnited were well-capitalized.
Source of strength
All companies, including BHCs, that directly or indirectly control an insured depository institution, are required to serve as
a source of financial and managerial strength for the depository institution. Under this requirement, BankUnited, Inc. in the
future could be required to provide financial assistance to BankUnited should it experience financial distress. Such support may
be required at times when, absent this statutory and Federal Reserve requirement, a BHC may not be inclined to provide it.
Under the prompt corrective action provisions, if a controlled bank is undercapitalized, then the regulators could require its
BHC to guarantee a capital restoration plan. In addition, if the Federal Reserve believes that a BHC’s activities, assets or
affiliates represent a significant risk to the financial safety, soundness or stability of a controlled bank, then the Federal Reserve
could require the BHC to terminate the activities, liquidate the assets or divest the affiliates.
Regulatory Limits on Dividends and Distributions
Federal law currently imposes limitations upon certain capital distributions by national banks, such as certain cash
dividends, payments to repurchase or otherwise acquire its shares, payments to stockholders of another institution in a cash-out
merger and other distributions charged against capital. The Federal Reserve Board and OCC regulate all capital distributions by
BankUnited directly or indirectly to BankUnited, Inc., including dividend payments.
BankUnited may not pay dividends to BankUnited, Inc. if, after paying those dividends, it would fail to meet the required
minimum levels under risk-based capital guidelines and the minimum leverage capital ratio requirements, or in the event the
OCC notified BankUnited that it was in need of more than normal supervision. Under the FDIA, an insured depository
institution such as BankUnited is prohibited from making capital distributions, including the payment of dividends, if, after
making such distribution, the institution would become "undercapitalized." Payment of dividends by BankUnited also may be
restricted at any time at the discretion of the appropriate regulator if it deems the payment to constitute an unsafe and unsound
banking practice.
BankUnited is subject to supervisory limits on its ability to declare or pay a dividend or reduce its capital unless certain
conditions are satisfied.
In addition, it is the policy of the Federal Reserve Board that BHCs should pay cash dividends on common stock only out
of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected
future needs and financial condition. The policy provides that BHCs should not maintain a level of cash dividends that
undermines the BHC’s ability to serve as a source of strength to its banking subsidiaries. As a Delaware corporation,
BankUnited, Inc. is also subject to certain limitations and restrictions under Delaware corporate law with respect to payment of
dividends and other distributions.
Limits on Transactions with Affiliates and Insiders
Insured depository institutions are subject to restrictions on their ability to conduct transactions with affiliates and other
related parties. Section 23A of the Federal Reserve Act imposes quantitative limits, qualitative requirements, and collateral
requirements on certain transactions by an insured depository institution with, or for the benefit of, its affiliates. Transactions
covered by Section 23A include loans, extensions of credit, investment in securities issued by an affiliate, and acquisitions of
assets from an affiliate. Section 23B of the Federal Reserve Act requires that most types of transactions by an insured
depository institution with, or for the benefit of, an affiliate be on terms at least as favorable to the insured depository institution
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as if the transaction were conducted with an unaffiliated third party. The Dodd-Frank Act generally enhances the restrictions on
transactions with affiliates, including an expansion of what types of transactions are covered to include credit exposures related
to derivatives, repurchase agreements and securities lending arrangements.
The Federal Reserve Board's Regulation O and OCC regulations impose restrictions and procedural requirements in
connection with the extension of credit by an insured depository institution to directors, executive officers, principal
stockholders and their related interests.
Examination Fees
The OCC currently charges fees to recover the costs of examining national banks, processing applications and other filings,
and covering direct and indirect expenses in regulating national banks. Various regulatory agencies have the authority to assess
additional supervision fees.
FDIC Deposit Insurance
The FDIC is an independent federal agency that insures the deposits of federally insured depository institutions up to
applicable limits. The FDIC also has certain regulatory, examination and enforcement powers with respect to FDIC-insured
institutions. The deposits of BankUnited are insured by the FDIC up to applicable limits. As a general matter, the maximum
deposit insurance amount is $250,000 per depositor.
Additionally, FDIC-insured depository institutions are required to pay deposit insurance assessments to the FDIC. The
amount of a particular institution's deposit insurance assessment is based on that institution's risk classification under an FDIC
risk-based assessment system. An institution's risk classification is assigned based on its capital levels and the level of
supervisory concern the institution poses to the regulators.
The FDIC has authority to raise or lower assessment rates on insured deposits in order to achieve statutorily required
reserve ratios in the DIF and to impose special additional assessments. In October 2022, the FDIC adopted a final rule to
increase initial base deposit insurance assessment rate schedules for all FDIC-insured institutions by two basis points, beginning
the first quarterly assessment period of 2023. There is a risk that BankUnited’s deposit insurance premiums will further increase
if failures of insured depository institutions deplete the DIF or if the FDIC changes its view of the risk BankUnited poses to the
DIF or otherwise increases the assessment rate adjustment applicable to BankUnited’s deposits.
Depositor Preference
The FDIA provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims
of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for
administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution.
Insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit
creditors, including BankUnited, Inc., with respect to any extensions of credit they have made to such insured depository
institution.
Federal Reserve System and Federal Home Loan Bank System
As a national bank, BankUnited is required to hold shares of capital stock in a Federal Reserve Bank. BankUnited holds
capital stock in the Federal Reserve Bank of Atlanta. As a member of the Federal Reserve System, BankUnited has access to
the Federal Reserve discount window lending and payment clearing systems. Pursuant to the regulations of the Federal Reserve,
all banks, including Bank United, are required to maintain average daily reserves at mandated ratios against their transaction
accounts. In addition, reserves must be maintained on certain non-personal time deposits. This reserve requirement may be met
by holding cash in banking offices or on deposit at a Federal Reserve Bank.
BankUnited is a member of the Federal Home Loan Bank of Atlanta. Each FHLB provides a central credit facility
primarily for its member institutions as well as other entities involved in home mortgage lending. Any advances from an FHLB
must be secured by specified types of collateral. As a member of the FHLB, BankUnited is required to acquire and hold shares
of capital stock in the FHLB of Atlanta. BankUnited is in compliance with this requirement.
Anti-Money Laundering and OFAC
Under federal law, financial institutions must maintain anti-money laundering programs that include established internal
policies, procedures, and controls; a designated compliance officer; an ongoing employee training program; a risk-based
customer due diligence program; and testing of the program by an independent audit function. Financial institutions are also
prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for
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due diligence, customer identification, and recordkeeping, including in their dealings with non-U.S. financial institutions and
non-U.S. customers. Financial institutions must take reasonable steps to conduct enhanced scrutiny of account relationships to
guard against money laundering and to report any suspicious transactions, and law enforcement authorities have been granted
increased access to financial information maintained by financial institutions. Bank regulators routinely examine institutions for
compliance with these obligations and they must consider an institution's compliance in connection with the regulatory review
of applications, including applications for banking mergers and acquisitions. The regulatory authorities have imposed "cease
and desist" orders and civil money penalty sanctions against institutions found to be violating these obligations.
The U.S. Department of the Treasury's OFAC is responsible for helping to ensure that U.S. entities do not engage in
transactions with certain prohibited parties, as defined by various Executive Orders and Acts of Congress. OFAC publishes lists
of persons, organizations, and countries suspected of money laundering or aiding, harboring or engaging in terrorist acts, known
as Specially Designated Nationals and Blocked Persons. If BankUnited, Inc. or BankUnited finds a name on any transaction,
account or wire transfer that is on an OFAC list, BankUnited, Inc. or BankUnited must freeze or block such account or
transaction, file a suspicious activity report and notify the appropriate authorities.
Consumer Laws and Regulations
Banking organizations are subject to numerous laws and regulations intended to protect consumers. These laws include,
among others:
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Truth in Lending Act;
Truth in Savings Act;
Electronic Funds Transfer Act;
Expedited Funds Availability Act;
Equal Credit Opportunity Act;
Fair and Accurate Credit Transactions Act;
Fair Housing Act;
Fair Credit Reporting Act;
Gramm-Leach-Bliley Act;
Home Mortgage Disclosure Act;
Right to Financial Privacy Act;
Real Estate Settlement Procedures Act;
laws regarding unfair and deceptive acts and practices; and
usury laws.
Many states and local jurisdictions have consumer protection laws analogous to, and in addition to, those listed above.
These federal, state and local laws regulate the manner in which financial institutions deal with customers when taking deposits,
making loans, or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to
regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability.
Privacy and Information Security
Banking organizations are subject to many federal and state laws and regulations governing the collection, use and
protection of customer information. For example, the Gramm-Leach-Bliley Act requires BankUnited to disclose its privacy
policies and practices relating to sharing nonpublic customer information and enables retail customers to opt out of our ability
to share information with unaffiliated third parties under certain circumstances. Other federal and state laws and regulations
impact our ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or
to contact customers with marketing offers. The Gramm-Leach-Bliley Act also requires BankUnited to implement a
comprehensive information security program that includes administrative, technical and physical safeguards to ensure the
security and confidentiality of customer records and information.
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CFPB
The CFPB is tasked with establishing and implementing rules and regulations under certain federal consumer protection
laws with respect to the conduct of providers of certain consumer financial products and services. The CFPB has rulemaking
authority over many of the statutes governing products and services offered to bank and thrift consumers. For banking
organizations with assets of $10 billion or more, such as BankUnited, Inc. and the Bank, the CFPB has exclusive rule making
and examination, and primary enforcement authority under certain federal consumer protection financial laws. In addition,
states are permitted to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by
the CFPB.
The Community Reinvestment Act
The CRA is intended to encourage banks to help meet the credit needs of their service areas, including low and moderate-
income neighborhoods, consistent with safe and sound operations. The federal bank regulators examine and assign each bank a
public CRA rating.
The CRA requires federal bank regulators to take into account the bank's record in meeting the needs of its service area
when considering an application by a bank to establish or relocate a branch or to conduct certain mergers or acquisitions. The
Federal Reserve Board is required to consider the CRA performance of a BHC's controlled banks when considering an
application by the BHC to acquire a banking organization or to merge with another BHC. If BankUnited, Inc. or BankUnited
applies for regulatory approval to make certain investments, the regulators will consider the CRA record of target institutions
and BankUnited, Inc.'s depository institution subsidiaries. A less than satisfactory CRA rating could substantially delay
approval or result in denial of an application. The regulatory agency's assessment of the institution's CRA performance is made
available to the public. Following its most recent CRA performance evaluation in October 2021, BankUnited received an
overall rating of "Satisfactory."
Human Capital Resources
At December 31, 2022, we had 1,598 full-time employees and 38 part-time employees. None of our employees are parties
to a collective bargaining agreement. We believe that our employees are our greatest asset and vital to our success. As such, we
seek to hire and retain the best candidate for each position, without regard to age, gender, ethnicity, or other protected trait, but
with an appreciation for a diversity of perspectives and experience. We have designed a compensation structure including an
array of benefit plans and programs that we believe is attractive to our current and prospective employees. We have a Company
sponsored 401(k) Retirement Savings Program, a tuition reimbursement program, flexible spending accounts and health savings
accounts with Company contributions. BankUnited offers paid time off, paid parental leave for male and female employees,
paid holidays, flexible work schedules and hybrid and remote job opportunities, where possible.
Diversity, Equity and Inclusion
Our goal is to create a safe, diverse and inclusive workplace where individuals are valued, feel free to express themselves,
are empowered to succeed and are able to grow both personally and professionally. At December 31, 2022, 33% of the
members of our Board of Directors were female and 44% were of diverse nationality or ethnicity. Approximately 57% of our
workforce was female.
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The following chart further illustrates the diversity of our workforce at December 31, 2022:
We offer diversity and inclusion training to all of our employees.
iCARE™
Through our iCARE™ ("Inclusive Community of Advocacy, Respect and Equality") initiative, we have launched a number
of programs intended to foster a culture that promotes social justice, equal access, community development and opportunity.
Our iCARE™ Council, consisting of 14 employees with diverse backgrounds and perspectives across different divisions in our
organization, oversees the continued evolution of iCARE™ and 16 employees serving as iCARE™ ambassadors promote
engagement in iCARE™ programs across the organization. Employees are encouraged to participate in interactive events,
cultural celebrations, an enterprise-wide mentorship program and volunteer opportunities. In 2022, our employees reported a
total of 2,650 volunteer hours serving 110 community organizations. Our employees are given paid time to participate in
community volunteer opportunities.
BankUnited has partnered with five universities in our local markets to provide scholarships and internship programs, with
a primary focus on minority high school and college students. Since the inception of this initiative in 2020, 63 college and high
school students have participated; 23 of them have been hired for full time roles at the Bank. We launched the ATOM Pink
Tank program in partnership with Florida International University - a six-month leadership, mentorship, and research
development program to empower female students pursuing STEM careers. Pink Tank participants receive weekly guidance
and mentorship by BankUnited employees throughout the ten-week research and competition stage. The students connect with
BankUnited professionals of all levels and disciplines. Since the inception of this initiative in 2020, 28 students have completed
the program and 20 new students have been selected for the 2022-2023 cohort. To date, BankUnited has hired six female
students and garnered participation of over 40 BankUnited employees representing 20 departments across the Bank.
Through iCARE™ we established and encouraged our employees to participate in the "Adopt A Neighborhood" program
in Florida focused on an under-served predominantly minority community and the "Entrepreneurship Initiative" in New York in
partnership with a local university and community organizations. Through the "Heir’s Program" we have brought together a
consortium of expertise to provide legal services and education to predominantly minority families seeking to maintain property
in family lineage.
Health, Wellness and Safety
The safety and wellness of our employees is fundamental to the success of our Company. Our Wellness Program
incorporates initiatives that address the mental, physical, intellectual, occupational, social, emotional, financial and spiritual
components of wellness. The BankUnited Corporate Center has an on-site fitness facility and we provide our employees with
on-site health screenings, eye exams, dental exams, mammograms, and vaccine clinics. Employees can choose to participate in
nutrition counseling, music and art therapy, live and streaming fitness classes, meditation sessions, live and virtual learning
opportunities with area wellness experts. We offer safety programs including first aid and CPR courses. For participation in our
Wellness Program, we offer our employees a reduced premium rate for medical insurance coverage.
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In recognition of our employee wellness programs, BankUnited received the Healthiest Employer Award from the South
Florida Business Journal in 2020, 2021 and 2022. In 2022, BankUnited was listed as number three among America's Top 100
Healthiest Employers by Springbuk HR Technology and was awarded the Worksite Wellness Award by the Florida Department
of Health in 2021.
Career Growth and Development
Our Go for More™ Academy provides an extensive menu of training and resources that enable employees to develop their
skills and that promote collaboration and career development. Our Rising Leaders, Situational Leadership and EXCELerate
programs provide our employees with career development opportunities. In 2022, 373 employees enrolled in mentoring
programs and a total of 3,066 mentoring hours were reported.
Communication & Engagement
Employee engagement is a key contributor to our success. In September 2022, 81% of our employees participated in an
engagement survey conducted by an outside firm. Survey results reported an increase in overall engagement, defined as
employees who responded favorably, from 73% in 2020 to 81% in 2022. The 81% overall engagement score in 2022 favorably
compared to an industry benchmark of 76%. Our Kudos Employee Recognition platform encourages employees to recognize
one another's contributions and accomplishments. The Company schedules regular CEO update video calls, town hall meetings
and other engagement programs.
Available Information
Our website address is www.bankunited.com. Our electronic filings with the SEC (including all Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports)
are available free of charge on the website as soon as reasonably practicable after they are electronically filed with, or furnished
to, the SEC. The information posted on our website is not incorporated into this Annual Report. In addition, the SEC maintains
a website that contains reports and other information filed with the SEC. The website can be accessed at http://www.sec.gov.
Item 1A. Risk Factors
An investment in our common stock is subject to risks inherent in our business. The material risks and uncertainties that
management believes affect us are described below. Before making an investment decision, you should carefully consider the
risks and uncertainties described below, together with all of the other information included or incorporated by reference herein.
The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that management
is not aware of or focused on or that management currently deems immaterial may also impair our business operations.
If any of the events described in the risk factors should actually occur, our financial condition and results of operations
could be materially and adversely affected. If this were to happen, the value of our securities could decline significantly, and
you could lose all or part of your investment.
Strategic Risk
We may not be successful in executing our fundamental business strategy.
Optimizing risk adjusted returns, continued organic, diversified growth of our loan and deposit customer base, and
improving the deposit mix are essential components of our business strategy. Commercial and consumer banking, for both loan
and deposit products, in our primary markets is highly competitive. Our ability to achieve profitable organic growth is also
dependent on economic conditions, on the interest rate environment, which is in turn dependent to a large degree on fiscal and
monetary policy, and on depositor behavior and preferences. There is no guarantee that we will be able to successfully or
profitably execute our fundamental business strategy.
While acquisitions have not historically been a primary component of our business strategy, we may opportunistically
consider potential acquisitions of financial institutions and complementary non-bank businesses. There are risks that may
inhibit our ability to successfully execute such acquisitions, such as competition with other potential acquirers, the ability to
obtain the required regulatory approvals in a timely matter or at all, and the successful integration of a consummated acquisition
and realization of the expected benefits.
Growth, whether organic or through acquisition, is dependent on the availability of capital and funding. Our ability to raise
capital through the sale of stock or debt securities and our ability to secure funding to support earning asset growth may be
affected by market conditions, economic conditions or regulatory changes. There is no assurance that sufficient capital or
funding to enable growth will be available in the future, upon acceptable terms or at all.
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We face significant competition from other financial institutions and financial services providers, which may adversely
impact our growth or profitability.
The primary markets we currently serve are Florida and the New York metropolitan area. Commercial and consumer
banking in these markets is highly competitive. Our markets contain not only a large number of community and regional banks,
but also a significant presence of the country's largest commercial banks. We compete with other state and national banks as
well as savings and loan associations, savings banks and credit unions located in Florida, New York and adjoining states as well
as those targeting our markets digitally for deposits and loans. In addition, we compete with financial intermediaries, such as
FinTech companies, consumer finance companies, marketplace lenders, mortgage banking companies, insurance companies,
securities firms, mutual funds and several government agencies as well as major retailers, all actively engaged in providing
various types of loans and other financial services. The variety of entities providing financial services to businesses and
consumers, as well as the technologies and delivery channels through which those services are provided are rapidly evolving.
The financial services industry is likely to become even more competitive as a result of legislative, regulatory and
technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the
umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities
underwriting, insurance (both agency and underwriting) and merchant banking. Increased competition among financial services
companies may adversely affect our ability to market our products and services. Technology has lowered barriers to entry and
made it possible for banks to compete in our markets without a retail footprint by offering competitive rates, as well as non-
banks, including online providers and a growing number of FinTech companies, to offer products and services traditionally
provided by banks. Many of our competitors have fewer regulatory constraints and may have lower cost structures.
Additionally, due to their size or particular technology capabilities, many competitors may offer a broader range of products
and services or may be able to offer better pricing for certain products and services than we can.
Our ability to compete successfully depends on a number of factors, including:
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the ability to develop, maintain and build upon long-term customer relationships based on quality service, high ethical
standards and safe and sound banking practices;
our ability to pro-actively and quickly respond to technological change;
the ability to attract and retain qualified employees to operate our business effectively;
the ability to expand our market position;
the scope, relevance and pricing of products and services offered to meet customer needs and demands;
the rate at which we introduce new products and services relative to our competitors;
customer satisfaction with our level of service; and
industry and general economic trends.
Failure to perform well in any of these areas or in general to successfully respond to the competitive pressures we face
could make it harder for us to attract and retain customers and significantly weaken our competitive position, which could
adversely affect our growth and profitability, which, in turn, could harm our business, financial condition and results of
operations.
Crypto-currencies and blockchain technology continue to be explored as vehicles to enhance transactional security
throughout the financial services industry and could eventually reduce or alter the need for banks as financial deposit-keepers
and intermediaries.
Hurricanes and other weather-related events, social or health-care crises such as pandemics or political unrest, terrorist
activity, or other natural or man-made disasters could cause a disruption in our operations or otherwise have an adverse
impact on our business and results of operations.
Our geographic markets in Florida and other coastal areas are susceptible to severe weather, including hurricanes, flooding
and damaging winds. The occurrence of a hurricane or other natural disaster to which our markets are susceptible, a man-made
catastrophe such as terrorist activity, pandemic outbreaks and other global health emergencies, political unrest or other man-
made or natural disasters could disrupt our operations or our work-force, result in damage to our facilities, jeopardize our ability
to continue to provide essential services to our customers and negatively affect our customers and the local economies in which
we operate. These events may lead to a decline in loan originations, an increase in deposit outflows, strain our liquidity
position, reduce or destroy the value of collateral for our loans, particularly real estate, negatively impact the business
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operations of our customers, and cause an increase in delinquencies, foreclosures and loan losses. Our business, financial
condition and results of operations may be materially, adversely impacted by these and other negative effects of such events.
Climate change or societal responses to climate change could adversely affect our business and performance, including
indirectly through impacts on our customers.
Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts to
mitigate those impacts. Consumers and businesses may change their behavior as a result of these concerns. We and our
customers may need to respond to new laws and regulations as well as consumer and business preferences resulting from
climate change concerns. We and our customers may face cost increases, asset value reductions and operating process changes.
The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon
intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain
sectors. In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets
securing loans. Our efforts to take these risks into account in making lending and other decisions, including by increasing our
business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and
regulations or changes in consumer or business behavior. One of our primary market areas is the state of Florida, particularly in
coastal areas; as such, we may have an increased vulnerability to the ultimate impacts of climate change as compared to some
of our competitors.
We depend on our executive officers and key personnel to execute our long-term business strategy and could be harmed
by the loss of their services.
We believe that our continued growth and future success will depend in large part on the skills of our senior management
team and other key personnel. We believe our senior management team possesses valuable knowledge about and experience in
the banking industry and that their knowledge and relationships could be difficult to replicate. The composition of our senior
management team and our other key personnel may change over time. While we are currently finalizing and expect to
successfully enter into a new contract with our Chairman, President and Chief Executive Officer, the term of the existing
employment contract expired on December 31, 2022 and a result is currently an at-will employment relationship. Other
members of our senior management team are not subject to employment agreements. Our success also depends on the
experience of other key personnel and on their relationships with the customers and communities they serve. The loss of service
of one or more of our executive officers or key personnel, or the inability to recruit and retain qualified personnel in the future,
could have an adverse effect on our business, financial condition or operating results.
Increasing scrutiny and changing expectations from investors and customers with respect to our ESG practices and
those of our customers may impose additional costs on us or expose us to new or additional risks.
There is increased focus, including from governmental organizations, investors, customers and employees on ESG issues
such as environmental stewardship, climate change, diversity and inclusion, racial justice and workplace culture and conduct.
We have expended and may further expend resources to monitor, report and adopt policies and practices that we believe will
improve compliance with our evolving ESG goals and plans, as well as third party imposed ESG-related standards and
expectations. If our ESG practices do not meet evolving rules and regulations or investor or other stakeholder expectations and
standards, then our reputation, our ability to attract or retain leading experts, employees and other professionals, and our ability
to attract new customers and investors could be negatively impacted. Similarly, our failure or perceived failure to pursue or
fulfill our current or future goals, targets and objectives or to satisfy various reporting standards within the timelines we
announce, or at all, could also have similar negative impacts.
In addition, organizations that provide information to investors on corporate governance and related matters have
developed ratings processes for evaluating companies on their approach to ESG matters, and unfavorable ratings of the
Company may lead to negative investor sentiment, stock price fluctuations and the diversion of investment to other companies.
The COVID-19 pandemic
The COVID-19 pandemic caused substantial disruption to the global and domestic economies and impacted the Company’s
business, financial condition and results of operations. Vaccines and treatments have evolved, the impact of the pandemic on
public health has lessened and the U.S. and global economies have in many respects recovered from the COVID-19 pandemic.
However, certain adverse consequences of the pandemic, such as labor market and supply chain disruptions, continue to have
an impact on the macroeconomic environment and uncertainty remains around the future impact.
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Credit Risk
As a lender, our business is highly susceptible to credit risk.
As a lender, we are exposed to the risk that our customers will be unable to repay their loans according to their terms and
that the collateral securing the payment of their loans, if any, may be insufficient to ensure repayment. Credit losses are inherent
in the business of making loans. We are also subject to credit risk that is embedded in our securities portfolio. Our credit risk
management framework inclusive of our underwriting standards, procedures and policies may not prevent us from incurring
substantial credit losses, particularly if economic or market conditions deteriorate. It is difficult to determine the many ways in
which a decline in economic or market conditions may impact the credit quality of our assets.
Our ACL may not be adequate to cover actual credit losses.
We maintain an ACL that represents management's estimate of current expected credit losses, or the amount of amortized
cost basis not expected to be collected, on our loan portfolio and the amount of credit loss impairment on our available for sale
securities portfolio. Determining the amount of the ACL is complex and requires extensive judgment by management about
matters that are inherently subjective and uncertain. The measurement of expected credit losses encompasses information about
historical events, current conditions and reasonable and supportable economic forecasts. Factors that may be considered in
determining the amount of the ACL include but are not necessarily limited to, product or collateral type, industry, geography,
internal risk rating, credit characteristics such as credit scores or collateral values, delinquency rates, historical or expected
credit loss patterns and other quantitative and qualitative factors considered by management to have an impact on the adequacy
of the ACL and the ability of borrowers to repay their loans. The adequacy of the ACL is also dependent on the effectiveness of
the underlying models used in determining the estimate.
If management's assumptions and judgments prove to be incorrect, our credit loss models prove to be inaccurate or our
processes and controls governing the determination of the amount of the ACL prove ineffective, our ACL may be insufficient
and we may be required to increase our ACL. In addition, regulatory authorities periodically review our ACL and may require
us to increase our provision for credit losses or recognize further loan charge-offs, based on judgments different from those of
our management. Adverse economic conditions could make management's estimate even more complex and difficult to
determine. Any increase in our ACL will result in a decrease in net income and capital and could have a material adverse effect
on our financial condition and results of operations. See Item 7 "Management's Discussion and Analysis of Financial Condition
and Results of Operations—Analysis of the Allowance for Credit Losses" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Allowance for Credit Losses."
We depend on the accuracy and completeness of information about clients and counterparties in making credit
decisions.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on
information furnished by or on behalf of clients and counterparties, including financial statements and other financial
information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that
information and, with respect to financial statements, on reports of independent auditors.
The credit quality of our loan portfolio and results of operations are affected by residential and commercial real estate
values and the level of residential and commercial real estate sales and rental activity.
A material portion of our loans are secured by residential or commercial real estate. The ability of our borrowers to repay
their obligations and our financial results may therefore be adversely affected by changes in real estate values. Commercial real
estate valuations in particular are highly subjective, as they are based on many assumptions. Such valuations can be
significantly affected over relatively short periods of time by changes in business climate, economic conditions, demographic
and market trends such as the potential impact of the ongoing shift to online shopping on retail properties or the trend toward
remote and hybrid work on office properties, occupancy rates, the level of rents, regulatory changes such as recent changes to
New York rent regulation, interest rates and, in many cases, the results of operations of businesses and other occupants of the
real property. The properties securing income-producing investor real estate loans may not be fully leased at the origination of
the loan. A borrower's ability to repay these loans is dependent upon stabilization of the properties and additional leasing
through the life of the loan or the borrower's successful operation of a business. Weak economic conditions may impair a
borrower's business operations, lead to elevated vacancy rates or lease turnover, slow the execution of new leases or result in
falling rents. These factors could result in further deterioration in the fundamentals underlying the commercial real estate
market and the deterioration in value of some of our loans. Similarly, residential real estate valuations can be impacted by
housing trends, demographic trends, the availability of financing at reasonable interest rates, the level of supply of available
housing, governmental policy regarding housing and housing finance and general economic conditions affecting consumers.
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Real estate values may also be impacted by weather-related events and other man-made or natural disasters, or ultimately, by
the impact of climate change.
We make credit and reserve decisions based on current real estate values, the current conditions of borrowers, properties or
projects and our expectations for the future. If real estate values or fundamentals underlying the commercial and residential real
estate markets decline, we could experience higher delinquencies and charge-offs beyond that provided for in the ACL.
Since we engage in lending secured by real estate and may be forced to foreclose on the collateral property, we may be
subject to risks associated with the ownership of commercial or residential real property, which could have an adverse effect
on our business, financial condition or results of operations.
A significant portion of our loan portfolio is secured by residential or commercial real property. During the ordinary course
of business, we may foreclose on and take title to properties securing certain loans, in which case, we are exposed to the risks
and costs inherent in the ownership of real estate. The amount that we, as a mortgagee, may realize after a default is dependent
upon factors outside of our control, including:
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general or local economic conditions;
environmental cleanup liability;
neighborhood values;
interest rates;
commercial real estate rental and vacancy rates;
real estate tax rates;
operating expenses of the mortgaged properties;
supply of and demand for properties;
ability to obtain and maintain adequate occupancy of the properties;
zoning laws;
governmental rules, regulations and fiscal policies;
hurricanes or other natural or man-made disasters; and
the impact of social or healthcare crises or political unrest.
These same factors may impact the ability of borrowers to repay their obligations that are secured by real property.
The geographic concentration of our markets in Florida and the New York Tri-State area makes our business highly
susceptible to local economic conditions.
Unlike some larger financial institutions that are more geographically diversified, our operations are concentrated in
Florida and the New York Tri-State area. Additionally, a significant portion of our loans secured by real estate are secured by
commercial and residential properties in these geographic regions. Accordingly, the ability of our borrowers to repay their
loans, and the value of the collateral securing such loans, may be significantly affected by economic conditions in these regions
or by changes in the local real estate markets. Disruption or deterioration in economic conditions in the markets we serve could
result in one or more of the following:
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an increase in loan delinquencies;
an increase in problem assets and foreclosures;
a decrease in the demand for our products and services; or
a decrease in the value of collateral for loans, especially real estate, in turn reducing customers' borrowing power, the
value of assets associated with problem loans and collateral coverage.
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Our portfolio of operating lease equipment is exposed to fluctuations in the demand for and valuation of the underlying
assets.
Our equipment leasing business is exposed to asset risk resulting from ownership of the equipment on operating lease.
Asset risk arises from fluctuations in supply and demand for the underlying leased equipment. We are exposed to the risk that,
at the end of the lease term or in the event of early termination, the value of the asset will be lower than expected, resulting in
reduced future lease income over the remaining life of the asset or a lower sale value. Demand for and the valuation of the
leased equipment is sensitive to shifts in general and industry-specific economic and market trends, governmental regulations
and changes in trade flows from specific events such as natural or man-made disasters. A significant portion of our equipment
under operating lease consists of railcars and other equipment used directly or indirectly in oil and gas drilling activities; future
lease rates, the demand for this equipment and its valuation are heavily influenced by conditions in the energy industry.
Although we regularly monitor the value of the underlying assets and the potential impact of declines in oil and natural gas
prices on the value of equipment on operating lease, there is no assurance that the value of these assets will not be adversely
impacted by conditions in the energy industry. The value of these assets may also be more susceptible to adverse effects caused
by climate change or measures, including regulatory actions, taken to mitigate it, or by ESG considerations.
Interest Rate Risk
Our business is inherently highly susceptible to interest rate risk.
Our business and financial performance are impacted by market interest rates and movements in those rates. Since a high
percentage of our assets and liabilities are interest bearing or otherwise sensitive in value to changes in interest rates, changes in
rates, in the shape of the yield curve or in spreads between different types of rates can have a material impact on our financial
condition and results of operations and the values of our assets and liabilities. Changes in the value of investment securities
available for sale and certain derivatives directly impact equity through adjustments of accumulated other comprehensive
income and changes in the values of certain other assets and liabilities may directly or indirectly impact earnings. Interest rates
are highly sensitive to many factors over which we have no control and which we may not be able to anticipate adequately,
including general economic conditions and the monetary and fiscal policies of various governmental bodies, particularly the
Federal Reserve Board.
Our earnings and cash flows depend to a great extent upon the level of our net interest income. Net interest income is the
difference between the interest income we earn on loans, investments and other interest earning assets, and the interest we pay
on interest bearing liabilities, such as deposits and borrowings. A flat or inverted yield curve or tightening credit spreads may
limit our ability to add higher yielding assets to the balance sheet and place downward pressure on our net interest margin,
negatively impacting our net interest income in the future. Our deposit costs tend to be correlated with short-term rates;
increases in short-term interest rates may exert upward pressure on our cost of deposits. Changes in interest rates can increase or
decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to
market interest rate changes. When interest bearing liabilities mature or reprice more quickly than interest earning assets in a
period of rising rates, an increase in interest rates could reduce net interest income. When interest earning assets mature or
reprice more quickly than interest bearing liabilities, falling interest rates could reduce net interest income. An increase in
interest rates may, among other things, reduce the demand for loans and lower-priced deposit products, decrease loan
repayment rates and negatively affect borrowers' ability to meet their obligations. A decrease in the general level of interest
rates may affect us through, among other things, increased prepayments on our loan and mortgage-backed securities portfolios.
Competitive conditions may also impact the interest rates we are able to earn on new loans or are required to pay on deposits,
negatively impacting both our ability to grow deposits and interest earning assets and our net interest income.
We attempt to manage interest rate risk by adjusting the rates, maturity, repricing, mix and balances of the different types
of interest-earning assets and interest bearing liabilities and through the use of hedging instruments; however, interest rate risk
management techniques are not precise, and we may not be able to successfully manage our interest rate risk. Our ability to
manage interest rate risk could be negatively impacted by longer fixed rate terms on loans being added to our portfolio or by
unpredictable behavior of depositors in various interest rate environments. A rapid or unanticipated increase or decrease in
interest rates, changes in the shape of the yield curve or in spreads between rates could have an adverse effect on our net interest
margin and results of operations.
The recent and rapid rise in interest rates by the Federal Reserve, volatility in rate markets and/or changes in our customers'
behavior in response to those dynamics could have an adverse impact on BankUnited's interest rate risk profile or make interest
rate risk more challenging to manage.
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The discontinuance of the LIBOR benchmark interest rate may have an impact on our business, financial condition
and results of operations.
The FCA, which regulates LIBOR, discontinued the one-week and two-month LIBOR tenors effective December 31, 2021.
The remaining tenors will be discontinued effective June 30, 2023. The Company has implemented SOFR as its preferred
alternative to LIBOR and has ceased originating LIBOR based loans, although financial instruments indexed to LIBOR remain
in the loan, securities and derivatives portfolios. While we have performed an extensive evaluation of the fallback provisions of
all LIBOR indexed instruments and continue to execute a comprehensive reference rate reform roadmap, execution risk related
to the transition remains. Reference rate transition may have an adverse impact on the value of, return on and trading markets
more globally for a broad array of financial products, including any LIBOR-based securities, loans, borrowings and derivatives
that are included in our financial assets and liabilities. The discontinuation of LIBOR may create uncertainty or differences in
the calculation of the applicable interest rate or payment amount depending on the terms of the governing instruments, which
may also impact our net interest income. In addition, LIBOR may perform differently during the phase-out period than in the
past which could result in lower interest earned on certain assets and a reduction in the value of certain assets. As we are
required to implement substitute indices for the calculation of interest rates under our loan agreements with our borrowers, we
may incur additional expenses in effecting the transition, and may be subject to disputes or litigation with customers over the
appropriateness or comparability to LIBOR of the substitute indices, which could have an adverse effect on our financial
condition and results of operations.
Liquidity Risk
A failure to maintain adequate liquidity could adversely affect our financial condition and results of operations.
Effective liquidity management is essential for the operation of our business. We require sufficient liquidity to meet
customer loan requests, customer deposit maturities and withdrawals and other cash commitments under both normal operating
conditions and under extraordinary or unpredictable circumstances causing industry or general financial market stress. Our
access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us could be impaired by
factors that affect us specifically or the financial services industry or economy generally. Factors that could detrimentally
impact our access to liquidity sources at an acceptable price, or at all include, but are not limited to: a downturn in economic
conditions in the geographic markets in which our operations are concentrated or in the financial or credit markets in general;
increases in interest rates; the availability of sufficient collateral that is acceptable to the FHLB and the Federal Reserve Bank,
both of whom provide us with contingent sources of liquidity; fiscal and monetary policy including the current quantitative
tightening posture of the Federal Reserve which is negatively impacting systemic liquidity; and regulatory changes. Our access
to liquidity in the form of deposits may also be affected by the liquidity needs of our depositors and by competition for deposits
in our primary markets. A substantial portion of our liabilities consist of deposit accounts that are payable on demand or upon
several days' notice, while by comparison, the majority of our assets are loans, which cannot be called or sold in the same time
frame. Although we have historically been able to replace maturing deposits and borrowings as necessary, we might not be able
to replace such funds in the future. A failure to maintain adequate liquidity could materially and adversely affect our business,
financial condition or results of operations.
Loss of deposits or a change in deposit mix could increase our funding costs.
Deposits are typically a relatively low cost and stable source of funding. We compete with banks and other financial
institutions for deposits. The current quantitative tightening posture of the Federal Reserve has had the effect of reducing the
amount of deposits in the banking system overall and BankUnited experienced net deposit outflows in 2022. A portion of our
deposit base consists of companies serving the residential real estate eco-system and is exposed to the overall health and level
of activity in that eco-system; in the current interest rate environment, the level of mortgage origination activity has declined
considerably. As a result of these factors, we could lose deposits in the future or see an increase in costs associated with
maintaining deposits. Clients may shift their deposits into higher cost products, or we may need to raise interest rates to avoid
deposit attrition. Funding costs may also increase if deposits are replaced with wholesale funding. Higher funding costs reduce
our net interest margin, net interest income, and net income.
The inability of BankUnited, Inc. to receive dividends from its subsidiary bank could have a material adverse effect on
the ability of BankUnited, Inc. to make payments on its debt, pay cash dividends to its shareholders or execute share
repurchases.
BankUnited, Inc. is a separate and distinct legal entity from the Bank, and the substantial majority of its revenue consists of
dividends from the Bank. These dividends are the primary funding source for the dividends paid by BankUnited, Inc. on its
common stock, the interest and principal payments on its debt and any repurchases of outstanding common stock. Various
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federal and state laws and regulations limit the amount of dividends that a bank may pay to its parent company. In addition, our
right to participate in a distribution of assets upon the liquidation or reorganization of a subsidiary may be subject to the prior
claims of the subsidiary’s depositors and other creditors. If the Bank is unable to pay dividends, BankUnited, Inc. might not be
able to service its debt, pay its obligations, pay dividends on its common stock or make share repurchases.
Operational Risk
We rely on analytical and forecasting models and tools that may prove to be inadequate or inaccurate, which could
adversely impact the effectiveness of our strategic planning, the quality of certain accounting estimates including the ACL,
the effectiveness of our risk management framework including but not limited to credit, interest rate and liquidity risk
monitoring and management and thereby our results of operations.
The processes we use to forecast future performance and estimate expected credit losses, the effects of changing interest
rates, sources and uses of liquidity, real estate values, and economic trends and indicators on our financial condition and results
of operations depend upon the use of analytical and forecasting tools and models. These tools and models reflect assumptions
that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Furthermore, even if our
assumptions are accurate predictors of future performance, the tools and models that utilize them may prove to be inadequate or
inaccurate because of other flaws in their design or implementation. If these tools prove to be inadequate or inaccurate, our
strategic planning processes, risk management and monitoring framework, earnings and capital may be adversely impacted.
New lines of business, new products and services or strategic project initiatives may subject us to additional operational
risks, and the failure to successfully implement these initiatives could affect our results of operations.
From time to time, we may launch new lines of business, expand into new geographies or offer new banking products and
services, which offerings may significantly increase operational, credit or reputational risks. Significant effort and resources
may be required to manage and oversee the successful development, implementation, launch or scaling of new initiatives,
which effort and resources may be diverted from other of our products or services. While we invest significant time and
resources in developing, marketing and managing new products and services, there are material uncertainties that could
adversely impact estimated implementation and operational costs or projected adoption, sales, revenues or profits, and no
assurance can be given that any new offerings will be successfully developed, implemented, launched or scaled. New products
and services may require startup costs and operational changes, as well as continued marketing campaigns to bring in new
customers and retain existing ones. These new products and services take time to develop and grow and if not successfully
implemented may result in unmet profitability targets, increased costs or other adverse impacts on our results of operations.
We are subject to the risk of fraud, theft or errors by employees or outsiders, which may adversely affect our business,
financial condition and results of operations.
We are exposed to many types of operational risks, including the risk of fraud or theft by employees or outsiders and
operational errors, including clerical or record-keeping errors or those resulting from ineffective processes and controls or
faulty or disabled technology. The occurrence of any of these events could cause us to suffer financial loss, face regulatory
action and suffer damage to our reputation.
Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated
or compounded before they are discovered and successfully rectified. Our necessary dependence upon automated systems to
record and process transactions and our large transaction volume may further increase the risk that technical flaws or employee
tampering or manipulation of those systems will result in losses that are difficult to detect. The occurrence of any of these
events could result in a diminished ability to operate our business as well as potential liability to customers and counterparties,
reputational damage and regulatory intervention, which could adversely affect our business, financial condition or results of
operations.
We are dependent on our information technology and telecommunications systems. System failures or interruptions
could have an adverse effect on our financial condition and results of operations.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology, internet
and network connectivity and telecommunications systems. We rely on these systems and connectivity to process new and
renewed loans, gather deposits, process customer and other transactions, provide customer service, facilitate collections,
facilitate remote work and share data across our organization. The failure of these systems and technologies could interrupt our
operations. We may be subject to disruptions of our information technology and telecommunications systems arising from
events that are wholly or partially beyond our control which may give rise to disruption of service to customers and of our
employees' ability to perform their jobs. Because our information technology and telecommunications systems interface with
and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such
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third-party systems fail or experience interruptions. If sustained or repeated, a system failure or service denial could result in a
deterioration of our ability to process new and renewed loans, gather deposits, process customer transactions, provide customer
service, compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and/or
subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on
our financial condition and results of operations.
We are dependent on third-party service providers for significant aspects of our business infrastructure, information
technology, and telecommunications systems.
We rely on third parties to provide key components of our business infrastructure and major systems including, but not
limited to, core banking systems such as loan servicing and deposit transaction processing systems, cloud-based data storage,
our electronic funds transfer transaction processing, cash management, online banking services, and computer and networking
infrastructure. We have migrated a significant portion of our core information technology systems, data storage and customer-
facing applications to private and public cloud infrastructure platforms. If we fail to administer these new environments in a
well-managed, secure and effective manner, or if these platforms become unavailable or do not meet their service level
agreements for any reason, we may experience unplanned service disruption or unforeseen costs which could result in material
harm to our business, financial condition and results of operations. We must successfully develop and maintain information,
financial reporting, disclosure, data-protection and other controls adapted to our reliance on outside platforms and providers. In
addition, service providers could experience system breakdowns or failures, outages, downtime, cyber-attacks, adverse changes
to financial condition, bankruptcy, or other adverse conditions, which could have a material adverse effect on our business and
reputation. While we have an established third-party risk management framework and select and monitor the performance of
third-party vendors carefully, we do not control their actions. Any problems caused by these third parties, including those
resulting from disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher
volumes, failure of a vendor to provide services for any reason or poor performance of services, or the termination of a third-
party software license or service agreement on which any of these systems is based, could adversely affect our ability to deliver
products and services to our customers and otherwise conduct our business. In many cases, our operations rely heavily on the
secure processing, storage and transmission of information and the monitoring of a large number of transactions on a minute-
by-minute basis, and even a short interruption in service could have significant consequences. Financial or operational
difficulties of a third-party vendor could also adversely affect our operations if those difficulties interfere with the vendor's
ability to serve us effectively or at all. Replacing these third-party vendors could also create significant delays and expense.
Accordingly, use of such third parties creates an unavoidable inherent risk to our business operations.
Failure by us or third parties to detect or prevent a breach in information security or to protect customer information
and privacy could have an adverse effect on our business.
In the normal course of our business, we collect, process, and retain sensitive and confidential client and customer
information. Despite the security measures we have in place, our facilities and systems may be vulnerable to cyber-attacks,
security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other
similar events, especially because, in the case of any intentional breaches, the techniques used change frequently or are not
recognized until launched, and cyber-attacks can originate from a wide variety of sources, including third parties.
We provide our customers the ability to bank remotely, including online, via mobile devices and over the telephone. The
secure transmission of confidential information over the internet and other remote channels is a critical element of remote
banking. Our network could be vulnerable to unauthorized access, computer viruses, phishing schemes and other security
breaches. In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information,
hackers have engaged in attacks against financial institutions, particularly denial of service attacks, designed to disrupt key
business services such as customer-facing websites. We may be required to spend significant capital and other resources to
protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or
viruses. Any cyber-attack or other security breach involving the misappropriation, loss or other unauthorized disclosure of
confidential customer information could severely damage our reputation, erode confidence in the security of our systems,
products and services, expose us to the risk of litigation and liability, disrupt our operations and have a material adverse effect
on our business.
In addition, we interact with and rely on financial counterparties for whom we process transactions and who process
transactions for us and rely on other third parties, as discussed above. Each of these third parties may be targets of the same
types of fraudulent activity, computer break-ins, and other cybersecurity breaches described above. The cybersecurity measures
that they maintain to mitigate the risk of such activity may be different from our own and, in many cases, we do not have any
control over the types of security measures they may choose to implement. We may also incur costs as a result of data or
security breaches of third parties with whom we do not have a significant direct relationship. As a result of financial entities and
technology systems becoming more interdependent and complex, a cyber-incident, information breach or loss, or technology
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failure that compromises the systems or data of one or more financial entities could have a material impact on counterparties or
other market participants, including us.
Concerns regarding the effectiveness of our measures to safeguard personal information, or even the perception that such
measures are inadequate, could cause us to lose customers or potential customers for our products and services and thereby
reduce our revenues.
We have taken measures to implement safeguards to support our operations, but our ability to conduct business may be
adversely affected by any significant disruptions to us or to third parties with whom we interact. We have a comprehensive set
of information security policies and protocols and a dedicated information security division that reports to the Chief
Information Officer, with a direct reporting line to and oversight by the Risk Committee of the Board of Directors. The Risk
Committee receives regular reporting related to information security risks and the monitoring and management of those risks.
Failure to keep pace with technological changes could have a material adverse impact on our ability to compete for
loans and deposits, and therefore on our financial condition and results of operations.
Financial products and services have become increasingly technology driven. Our ability to meet the needs of our
customers competitively, and in a cost-efficient manner, is dependent on our ability to keep pace with and pro-actively and
quickly respond to technological advances and to invest in new technology as it becomes available. Many of our larger
competitors have greater resources to invest in technology than we do and may be better equipped to market new technology-
driven products and services. The widespread adoption of new technologies, including, but not limited to, digitally enabled
products and delivery channels and payment systems, could require us to incur substantial expenditures to modify or adapt our
existing products and services. Our failure to respond to the impact of technological change could have a material adverse
impact on our business, financial condition and results of operations.
The soundness of other financial institutions, particularly our financial institution counterparties, could adversely
affect us.
Our ability to engage in routine funding and other transactions could be adversely affected by the stability and actions of
other financial services institutions. Financial services institutions are interrelated as a result of trading, clearing, servicing,
counterparty, and other relationships. We have exposure to an increasing number of financial institutions and counterparties.
These counterparties include institutions that may be exposed to various risks over which we have little or no control.
Adverse developments affecting the overall strength and soundness of the financial services industry as a whole and third
parties with whom we have important relationships could have a negative impact on our business even if we are not subject to
the same adverse developments.
Regulatory, Legal and Compliance Risk
As a BHC, we and BankUnited operate in a highly regulated environment and the laws and regulations that govern our
operations, corporate governance, executive compensation and other matters, or changes in them, or our failure to comply
with them, may adversely affect us.
We operate in a highly regulated environment, and are subject to comprehensive statutory, legal and regulatory regimes,
see Item 1 "Business—Regulation and Supervision." Intended to protect customers, depositors, the DIF, and the overall
financial stability of the United States, these laws and regulations, among other matters, prescribe minimum capital
requirements, impose limitations on the business activities in which we can engage, limit the dividend or distributions that
BankUnited can pay to BankUnited, Inc., restrict the ability of institutions to guarantee our debt, and impose specific
accounting requirements on us. Banking regulators may also from time to time focus on issues that may impact the pace of
growth of our business, our ability to execute our business strategy and our operations. Compliance with laws and regulations
can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. In addition, federal
banking agencies, including the OCC, Federal Reserve Board and CFPB, periodically conduct examinations of our business,
including compliance with laws and regulations. Our failure to comply with these laws and regulations, even if the failure
follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities,
fines, remedial actions, administrative orders and other penalties, any of which could adversely affect our reputation, results of
operations and capital base.
Further, federal, state and local legislators and regulators regularly introduce measures or take actions that would modify
the regulatory requirements applicable to banks, their holding companies and other financial institutions. Changes in laws,
regulations or regulatory policies could adversely affect the operating environment for the Company in substantial and
unpredictable ways, increase our cost of doing business, impose new restrictions on the way in which we conduct our
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operations or add significant operational constraints that might impair our profitability. We cannot predict whether new
legislation will be enacted and, if enacted, the effect that it, or any implementing regulations, would have on our business,
financial condition or results of operations.
Changes in political administrations are likely to introduce new or modified regulations and related regulatory guidance
and supervisory oversight. Newly enacted laws may significantly impact the regulatory framework in which we operate and
may require material changes to our business processes in short timeframes. Inability to meet new statutory requirements within
the prescribed periods could adversely affect our business, financial condition and results of operations, as well as impact our
reputation.
The Inflation Reduction Act of 2022 generally imposes a 1% excise tax on share repurchases executed by the Company.
While we do not currently expect the excise tax to materially impact the level of share repurchase activity we would otherwise
contemplate, it will add an element to our analysis of whether and to what extent to engage in share repurchases, and may lead
to an increase in operating expenses.
Our ability to expand through acquisition or de novo branching requires regulatory approvals, and failure to obtain
them may restrict our growth.
We may identify opportunities to complement and expand our business by pursuing strategic acquisitions of financial
institutions and other complementary businesses. We must generally receive federal regulatory approval before we can acquire
an institution or business. In determining whether to approve a proposed acquisition, federal banking regulators will consider,
among other factors, the effect of the acquisition on competition, our financial condition, our future prospects, and the impact of
the proposal on U.S. financial stability. The regulators also review current and projected capital ratios and levels, the
competence, experience, and integrity of management and its record of compliance with laws and regulations, the convenience
and needs of the communities to be served (including the acquiring institution's record of compliance under the CRA) and the
effectiveness of the acquiring institution in combating money laundering activities. Such regulatory approvals may not be
granted on terms that are acceptable to us, or at all. We may also be required to sell or close branches, or precluded from doing
so, as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may
reduce the benefit of any acquisition.
In addition to the acquisition of existing financial institutions, as opportunities arise, we may continue de novo branching as
a part of our organic growth strategy and possibly enter into new markets through de novo branching. De novo branching and
any acquisition carries with it numerous risks, including the inability to obtain all required regulatory approvals. The failure to
obtain these regulatory approvals for potential future strategic acquisitions and de novo branches may impact our business plans
and restrict our growth.
Financial institutions, such as BankUnited, face a risk of noncompliance and enforcement action with the Bank
Secrecy Act and other anti-money laundering statutes and regulations.
The Bank Secrecy Act, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other
duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency
transaction reports as appropriate. The Financial Crimes Enforcement Network, established by the U.S. Treasury Department to
administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements,
and has engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S.
Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. There is also increased scrutiny of
compliance with the sanctions programs and rules administered and enforced by the U.S. Treasury Department's Office of
Foreign Assets Control.
In order to comply with regulations, guidelines and examination procedures in this area, we dedicate significant resources
to the ongoing execution of our anti-money laundering program, continuously monitor and enhance as necessary our policies
and procedures and maintain a robust automated anti-money laundering software solution. If our policies, procedures and
systems are deemed deficient or the policies, procedures and systems of financial institutions that we may acquire in the future
are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to
pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including
our expansion plans.
We are subject to the CRA and fair lending laws, and failure to comply with these laws could lead to material penalties.
The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose
nondiscriminatory lending requirements on financial institutions. The Department of Justice and other federal agencies are
responsible for enforcing these laws and regulations. A successful challenge to an institution's performance under the CRA or
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fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and
civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity, and restrictions on
expansion activity. Private parties may also have the ability to challenge an institution's performance under fair lending laws in
private class action litigation.
The FDIC's restoration plan and any future related increased assessments could adversely affect our earnings.
Insured depository institutions such as BankUnited are required to pay deposit insurance premiums to the FDIC, which
maintains a DIF. If the current level of deposit premiums is insufficient for the DIF to meet its funding requirements in the
future, special assessments or increases in deposit insurance premiums may be required. A change in BankUnited's risk
classification within the FDIC's risk-based assessment framework could also result in increased deposit insurance premiums.
We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If there are
additional bank or financial institution failures in the future, we may be required to pay FDIC premiums higher than current
levels. Any future additional assessments or increases in FDIC insurance premiums may adversely affect our financial
condition or results of operations.
We are subject to laws regarding the privacy, information security and protection of personal information and any
violation of these laws or another incident involving personal, confidential or proprietary information of individuals could
damage our reputation and otherwise adversely affect our operations and financial condition.
Our business requires the collection and retention of large volumes of customer data, including personally identifiable
information in various information systems that we maintain and in those maintained by third parties with whom we contract to
provide data services. We are subject to complex and evolving laws and regulations governing the privacy and protection of
personal information of individuals (including customers, employees, suppliers and other third parties). For example, our
business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to
share nonpublic personal information about our customers with non-affiliated third parties; (ii) requires that we provide certain
disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt
out” of any information sharing by us with non-affiliated third parties (with certain exceptions); and (iii) requires that we
develop, implement and maintain a written comprehensive information security program containing appropriate safeguards
based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process,
as well as plans for responding to data security breaches. Various state and federal banking regulators and states have also
enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law
enforcement notification in certain circumstances in the event of a security breach. Ensuring that our collection, use, transfer
and storage of personal information complies with all applicable laws and regulations increases our costs. Furthermore, we may
not be able to ensure that all of our customers, suppliers, counterparties and other third parties have appropriate controls in
place to protect the confidentiality of the information that they exchange with us, particularly where such information is
transmitted by electronic means. If personal, confidential or proprietary information of customers or others were to be
mishandled or misused, we could be exposed to litigation or regulatory sanctions under personal information laws and
regulations. Any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may
subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations
or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise adversely affect our
operations and financial condition.
General Risk Factors
Damage to our reputation could adversely affect our operating results.
Our ability to originate new business and maintain existing customer relationships is highly dependent upon customer and
other external perceptions of our business practices. Adverse perceptions regarding our business practices could damage our
reputation in the customer, funding and capital markets, leading to difficulties in generating and maintaining business as well as
obtaining financing. Negative public opinion can result from our actual or alleged conduct in any number of activities,
including lending practices, employee relations, corporate governance and acquisitions and from actions taken by government
regulators and community organizations in response to those activities. Adverse developments with respect to external
perceptions regarding the practices of our competitors, or our industry as a whole, or the general economic climate may also
adversely impact our reputation. These perceptions about us could cause our business to be negatively affected and exacerbate
the other risks that we face. In addition, adverse reputational impacts on third parties with whom we have important
relationships may adversely impact our reputation. Adverse reputational impacts or events may also increase our litigation risk.
22
Our enterprise risk management framework may not be effective in mitigating the risks to which we are subject, or in
reducing the potential for losses in connection with such risks.
Our enterprise risk management framework is designed to identify and minimize or mitigate the risks to which we are
subject, as well as any losses stemming from such risks. Although we seek to identify, measure, monitor, report, and control our
exposure to such risks, and employ a broad and diversified set of risk monitoring and mitigation techniques in the process, those
techniques are inherently limited in their ability to anticipate the existence or development of risks that are currently unknown
and unanticipated. The ineffectiveness of our enterprise risk management framework in mitigating the impact of known risks or
the emergence of previously unknown or unanticipated risks may result in our incurring losses in the future that could adversely
impact our financial condition and results of operations.
Our business may be adversely affected by conditions in the financial markets and economic conditions generally.
Deterioration in business or economic conditions generally, or more specifically in the principal markets in which we do
business, could have one or more of the following adverse effects on our business, financial condition and results of operations:
•
•
•
•
•
•
A decrease in demand for our loan and deposit products;
An increase in delinquencies and defaults by borrowers or counterparties;
A decrease in the value of our assets;
A decrease in our earnings;
A decrease in liquidity; and
A decrease in our ability to access the capital markets.
Current inflationary trends may lead to an increase in our operating expenses, or those of our clients which may in turn impact
their operating results and ability to repay their obligations to us.
Our reported financial results depend on management's selection and application of accounting policies and methods
and related assumptions and estimates.
Our accounting policies and estimates are fundamental to our reported financial condition and results of operations.
Management is required to make difficult, complex or subjective judgments in selecting and applying many of these accounting
policies. In some cases, management must select an accounting policy or method from two or more alternatives, any of which
may be reasonable under the circumstances, yet may result in us reporting materially different results than would have been
reported under a different alternative.
From time to time, the FASB and SEC may change the financial accounting and reporting standards that govern the
preparation of our financial statements. These changes can be difficult to predict and can materially impact how we record and
report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard
retrospectively, resulting in a restatement of prior period financial statements. See Note 1 to the consolidated financial
statements for more information about recent accounting pronouncements that may have a material impact on our reported
financial results.
Changes in taxes and other assessments may adversely affect us.
The legislatures and taxing authorities in the tax jurisdictions in which we operate regularly enact reforms to the tax and
other assessment regimes to which we and our customers are subject. The effects of these changes and any other changes that
result from interpreting and implementing regulations or enactment of additional tax reforms cannot be quantified and there can
be no assurance that any such reforms would not have an adverse effect upon our business.
Tax laws are complex and subject to different interpretations by the taxpayer and relevant governmental taxing authorities,
which are sometimes subject to prolonged evaluation periods until a final resolution is reached. In establishing a provision for
income tax expense, filing returns and establishing the value of deferred tax assets and liabilities for purposes of its financial
statements, the Company must make judgments and interpretations about the application of these inherently complex tax laws.
If the judgments, estimates and assumptions the Company uses in establishing provisions, preparing its tax returns or
establishing the value of deferred tax assets and liabilities for purposes of its financial statements are subsequently found to be
incorrect, there could be a material effect on our financial condition and results of operations.
23
Our internal controls may be ineffective.
Management regularly monitors, evaluates and updates our internal controls over financial reporting, disclosure controls
and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and
operated, can provide only reasonable, not absolute, assurances that the objectives of the controls are met. Any failure or
circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could
have a material adverse effect on our financial condition and results of operations.
Share Price Volatility
The price of our common stock may be volatile or may decline. The price of our common stock may fluctuate as a result of
a number of factors, many of which are outside of management's control. In addition, the stock market is subject to fluctuations
in share prices and trading volumes that affect the market prices of the shares of many companies, including BankUnited, Inc.
Factors that could affect our stock price include but are not limited to:
•
•
•
•
•
•
•
•
actual or anticipated changes in the Company's operating results and financial condition;
changes in interest rates;
failure to meet analysts' revenue or earnings estimates;
changes in expectations as to our future financial performance, including financial estimates or recommendations by
securities analysts and investors;
actual or forecasted deterioration in economic conditions in our market areas or more generally;
changes in the competitive or regulatory environment;
actions by institutional shareholders; and
stock market volatility caused by other external events.
We may not be able to attract and retain skilled employees
Our success depends, in large part, on our ability to attract and retain key people. Due to competition, general labor market
dynamics, the ongoing transition to more remote and hybrid work and other factors, we may have difficulty recruiting qualified
personnel, including uniquely qualified personnel to ensure the continued growth and successful operation of our business. The
unexpected loss of the services of one or more of our key personnel could have an adverse impact on our business.
Geopolitical factors such as the conflict between Russia and Ukraine or similar events could negatively impact our
business and results of operations.
We are monitoring the impact of the conflict between Russia and Ukraine on our business. While we do not currently
expect that the conflict will have a direct material impact on our business, financial condition or results of operations, collateral
effects of the geopolitical instability, such as the imposition of sanctions against Russia and Russia’s response to such sanctions,
including retaliatory acts like cyber-attacks and sanctions against other countries, or escalation or further spread of the conflict
could adversely affect the global economy or domestic markets, including ours.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
BankUnited's corporate headquarters is located in leased office space in Miami Lakes, Florida. We also lease office space
in New York and Atlanta. Our subsidiaries lease office space in Baltimore, Maryland and Scottsdale, Arizona. At December 31,
2022, we provided banking services at 59 banking centers located in Florida, New York and Texas. We believe that our
facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
Item 3. Legal Proceedings
The Company is involved as plaintiff or defendant in various legal actions arising in the normal course of business. In the
opinion of management, based upon advice of legal counsel, the likelihood is remote that the impact of these proceedings,
24
either individually or in the aggregate, would be material to the Company’s consolidated financial position, results of operations
or cash flows.
Item 4. Mine Safety Disclosures
None.
25
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information and Holders of Record
Shares of our common stock trade on the NYSE under the symbol "BKU". The last sale price of our common stock on the
NYSE on February 17, 2023 was $36.79 per share. As of February 17, 2023, there were 566 stockholders of record of our
common stock.
Equity Compensation Plan Information
The information set forth under the caption "Equity Compensation Plan Information" in our definitive proxy statement for
the Company's 2023 annual meeting of stockholders (the "Proxy Statement") is incorporated herein by reference.
Dividend Policy
The Company declared a quarterly dividend of $0.25 and $0.23 per share on its common stock for each of the four quarters
in the years ended December 31, 2022 and 2021, respectively, resulting in total dividends for the years ended December 31,
2022 and 2021 of $78.9 million and $83.4 million, or $1.00 and $0.92 per common share, respectively. Dividends from the
Bank are the principal source of funds for the payment of dividends on our common stock. The Bank is subject to certain
restrictions that may limit its ability to pay dividends to us. See "Business—Regulation and Supervision—Regulatory Limits on
Dividends and Distributions". The quarterly dividends on our common stock are subject to the discretion of our board of
directors and dependent on, among other things, our financial condition, results of operations, capital requirements and other
factors that our board of directors may deem relevant. The Company expects to continue its policy of paying regular cash
dividends on a quarterly basis.
26
Stock Performance Graph
The graph set forth below compares the cumulative total stockholder return on an initial investment of $100 in our common
stock between December 31, 2017 and December 31, 2022, with the comparative cumulative total return of such amount on the
S&P 500 Index and the KBW Nasdaq Regional Bank Index over the same period. Reinvestment of all dividends is assumed to
have been made in our common stock.
The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown
in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our
common stock.
Index
BankUnited, Inc.
S&P 500 Index
KBW Nasdaq Regional Banking Index
12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022
100.00
100.00
100.00
75.15
95.62
80.63
94.11
93.26
116.01
95.49
125.72
97.07
148.85
85.33
191.58
113.65
156.88
102.90
27
Index ValueCOMPARISON OF CUMULATIVE TOTAL RETURNBankUnited, Inc.S&P 500 IndexKBW Nasdaq Regional Banking Index12/31/201712/31/201812/31/201912/31/202012/31/202112/31/202260.0080.00100.00120.00140.00160.00180.00200.00220.00240.00
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Period
October 1 - October 31, 2022
November 1 - November 30, 2022
December 1 - December 31, 2022
Total
Issuer Purchases of Equity Securities
Total number of
shares
purchased(1)
Average price
paid per share
328,368 $
187,103 $
1,393,708 $
1,909,179 $
34.75
34.74
33.61
33.92
Total number of
shares purchased as
part of publicly
announced plans or
programs
Maximum number (or
approximate dollar
value) of shares that
may yet be purchased
under the plans or
programs
328,368 $
128,555,763
187,103 $
122,055,558
1,393,708 $
75,211,558
1,909,179
(1) The total number of shares purchased during the periods indicated includes shares purchased as part of a publicly announced program.
(2) On September 13, 2022, the Company's Board of Directors authorized the repurchase of up to an additional $150 million in shares of its outstanding
common stock. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued without prior
notice at any time. The authorization does not require the Company to acquire any specified number of common shares.
28
Item 6. Reserved
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to assist readers in understanding the consolidated financial condition
and results of operations of BankUnited, Inc. and its subsidiary (the "Company", "we", "us" and "our") and should be read in
conjunction with the consolidated financial statements, accompanying footnotes and supplemental financial data included
herein. In addition to historical information, this discussion contains forward-looking statements that involve risks,
uncertainties and assumptions that could cause actual results to differ materially from management's expectations. Factors that
could cause such differences are discussed in the sections entitled "Forward-looking Statements" and "Risk Factors." We
assume no obligation to update any of these forward-looking statements.
Overview
The following discussion and analysis presents the more significant factors that affected our financial condition as of
December 31, 2022 and 2021 and results of operations for each of the years then ended. Refer to Item 7 "Management’s
Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K filed
with the SEC on February 24, 2022 for a discussion and analysis of the more significant factors that affected periods prior to
2021.
Performance Highlights
In evaluating our financial performance, we consider the level of and trends in net interest income, the net interest margin,
the cost of deposits, levels and composition of non-interest income and non-interest expense, performance ratios such as the
return on average equity and return on average assets and asset quality ratios, including the ratio of non-performing loans to
total loans, non-performing assets to total assets, trends in criticized and classified assets and portfolio delinquency and charge-
off trends. We consider growth in and the composition of earning assets and deposits, trends in funding mix and cost of funds.
We analyze these ratios and trends against our own historical performance, our budgeted performance and the financial
condition and performance of comparable financial institutions.
Performance highlights include:
•
•
•
Net income for year ended December 31, 2022 was $285.0 million, or $3.54 per diluted share, compared to $415.0
million, or $4.52 per diluted share, for the year ended December 31, 2021. For the year ended December 31, 2022, the
return on average stockholders' equity was 10.6% and the return on average assets was 0.79%.
Pre-tax, pre-provision net revenue ("PPNR") was $450.3 million for the year ended December 31, 2022, compared to
$382.3 million for the year ended December 31, 2021. PPNR for the year ended December 31, 2021 was impacted by
certain notable items, further discussed below in the sections titled "Results of Operations - Non-Interest Income" and
"Results of Operations - Non-Interest Expense".
Loans, excluding the runoff of PPP loans, grew by $1.4 billion for the year ended December 31, 2022. The core C&I
and commercial real estate portfolio segments grew by a total of $1.6 billion, offset by declines in other commercial
segments. Given the market-wide decline in mortgage origination activity, mortgage warehouse loans declined by
$567 million. The residential segment grew by $532 million for the year ended December 31, 2022.
29
•
•
•
•
The net interest margin, calculated on a tax-equivalent basis, expanded to 2.68% for the year ended December 31,
2022, from 2.38% for the year ended December 31, 2021. Net interest income increased by $117.3 million compared
to the year ended December 31, 2021. The following chart provides a comparison of net interest margin, the interest
rate spread, the average yield on interest earning assets and the average rate paid on interest bearing liabilities for the
years ended December 31, 2022 and 2021 (on a tax equivalent basis):
In response to the rising interest rate environment and tightening liquidity, particularly over the latter half of the year,
the average cost of total deposits rose to 0.65% for the year ended December 31, 2022, from 0.24% for the year ended
December 31, 2021. The yield on average interest earning assets increased to 3.59% for the year ended December 31,
2022, from 2.86% for the year ended December 31, 2021.
For the year ended December 31, 2022, the Company recorded a provision for credit losses of $75.2 million, compared
to a recovery of the provision for credit losses of $(67.1) million for the year ended December 31, 2021. The recovery
recorded for the year ended December 31, 2021 was reflective of emergence of the economy from the COVID-19
pandemic while the provision for the year ended December 31, 2022 reflected a heightened level of uncertainty around
the future trajectory of the economy. The ratio of the ACL to total loans increased to 0.59% at December 31, 2022,
from 0.53% at December 31, 2021.
Total deposits declined by $1.9 billion and non-interest bearing demand deposits declined by $938 million during the
year ended December 31, 2022, consistent with the broader outflow of deposits from the banking system as the Federal
Reserve increased its benchmark interest rate and adopted a policy stance of quantitative tightening. Time deposits
grew by $884 million during the year ended December 31, 2022, reflecting a strategy to extend the term of deposits.
The following charts illustrate the composition of deposits at the dates indicated:
30
•
•
•
•
•
•
The positive trend in levels of criticized and classified loans continued during the year ended December 31, 2022,
declining by $722 million; the annualized net charge-off ratio was 0.22% compared to 0.29% for the year ended
December 31, 2021. The ratio of non-performing loans to total loans was 0.42% at December 31, 2022, compared to
0.87% at December 31, 2021. The guaranteed portion of SBA loans on non-accrual status represented 0.16% of total
loans and 38% of non-performing loans at December 31, 2022.
Results for the year ended December 31, 2022 were impacted by declines in the fair value of investment securities.
Accumulated Other Comprehensive Loss increased by $422 million for the year, primarily due to an increase in
unrealized losses on investment securities available for sale. Unrealized losses were generally attributable to rising
interest rates and widening spreads related to the Federal Reserve's quantitative tightening and benchmark interest rate
increases. None of the unrealized losses were attributable to credit loss impairments. Non-interest income was
impacted by a $19.7 million decline in the fair value of certain preferred stock investments.
Book value per common share and tangible book value per common share was $32.19 and $31.16, respectively, at
December 31, 2022, compared to $35.47 and $34.56, respectively at December 31, 2021.
During the year ended December 31, 2022, the Company repurchased approximately 10.3 million shares of its
common stock for an aggregate purchase price of $401.3 million, at a weighted average price of $39.13 per share.
In the first quarter of 2022, the Company increased its quarterly cash dividend by $0.02, to $0.25 per share, reflecting
a 9% increase from the previous quarterly cash dividend of $0.23 per share and maintained that quarterly dividend
level through 2022.
During the year ended December 31, 2022, we opened a new wholesale banking office in Atlanta and a new banking
center in Dallas.
31
•
The Company's and the Bank's capital ratios exceeded all regulatory "well capitalized" guidelines. The charts below
present the Company's and the Bank's regulatory capital ratios compared to regulatory guidelines at the dates
indicated:
BankUnited, Inc.
BankUnited, N.A
Strategic Priorities
Our vision is to build a leading regional commercial and small business bank, with a distinctive value proposition based on
strong service-oriented relationships, robust digital enabled customer experiences, and operational excellence with an
entrepreneurial work environment that empowers employees to deliver their best. Management has identified the following
strategic priorities for our Company:
•
Building a scalable middle market and small business franchise by growing core customer relationships on both sides
of the balance sheet;
• Maximizing risk adjusted returns through a combination of sustainable, diversified and prudently managed organic
growth and capital optimization;
•
•
Transitioning the left side of the balance sheet to a mix of assets with higher risk-adjusted returns;
Growth of depository relationship with an emphasis on new non-interest bearing deposit relationships;
32
•
•
•
•
Playing where we can win - focusing on niche business segments where our delivery model is a differentiator;
Investing in people, processes and technology to support organic growth;
Using technology to enable success by investing in digital capabilities and nimble architecture;
Retaining the ability to pivot nimbly when opportunities arise;
• Maintaining an efficient, effective and scalable support model through operational excellence;
• While our primary growth strategy is organic, we will continue to monitor the M&A landscape.
Some of the challenges confronting our Company, certain of which may impact the banking industry more broadly, include:
•
•
•
•
The ultimate impact of monetary policy on liquidity remains uncertain and competition for deposits is intense. This
may impact our ability to grow deposits and/or lead to increases in the cost of deposits.
Economic conditions may not turn out to be as favorable as current consensus forecasts indicate. A more severe
economic downturn could limit the demand for our products and services or lead to an increase in credit losses.
Achieving planned commercial loan growth may be challenging in an uncertain and competitive environment.
Talent attraction and retention are a focus given current labor market dynamics and trends.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP and follow general practices within the
banking industry. Application of these principles requires management to make complex and subjective estimates and
judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our
estimates on historical experience and on various other assumptions that we believe to be reasonable and appropriate under
current circumstances. These assumptions form the basis for our judgments about the carrying values of assets and liabilities
that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of
alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.
The most significant estimate impacting the Company's financial statements is the ACL.
Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies
is essential when reviewing our reported results of operations and our financial position. We believe that the critical accounting
policies and estimates discussed below involve a heightened level of management judgment due to the complexity, subjectivity
and sensitivity involved in their application.
Note 1 to the consolidated financial statements contains a further discussion of our significant accounting policies.
33
ACL
The ACL represents management's estimate of current expected credit losses, or the amount of amortized cost basis not
expected to be collected, on our loan portfolio and the amount of credit loss impairment on our AFS securities portfolio.
Determining the amount of the ACL is considered a critical accounting estimate because of its complexity and because it
requires extensive judgment and estimation. Estimates that are particularly susceptible to change that may have a material
impact on the amount of the ACL include:
•
•
•
•
•
•
•
•
our evaluation of current conditions;
our determination of a reasonable and supportable economic forecast and selection of the reasonable and supportable
forecast period;
our evaluation of historical loss experience;
our evaluation of changes in composition and characteristics of the loan portfolio, including internal risk ratings;
our estimate of expected prepayments;
the value of underlying collateral, which may impact loss severity and certain cash flow assumptions for collateral-
dependent, criticized and classified loans;
our selection and evaluation of qualitative factors; and
our estimate of expected cash flows on AFS debt securities in unrealized loss positions.
Our selection of models and modeling techniques may also have a material impact on the estimate.
Note 1 to the consolidated financial statements describes the methodology used to determine the ACL.
Recent Accounting Pronouncements
See Note 1 to the consolidated financial statements for a discussion of recent accounting pronouncements.
Results of Operations
Net Interest Income
Net interest income is the difference between interest earned on interest earning assets and interest incurred on interest
bearing liabilities and is the primary driver of core earnings. Net interest income is impacted by the mix of interest earning
assets and interest bearing liabilities, the ratio of interest earning assets to total assets and of interest bearing liabilities to total
funding sources, movements in market interest rates, the shape of the yield curve, levels of non-performing assets and pricing
pressure from competitors.
The mix of interest earning assets is influenced by loan demand, market and competitive conditions in our primary lending
markets, by management's continual assessment of the rate of return and relative risk associated with various classes of earning
assets and liquidity considerations. The mix of interest bearing liabilities is influenced by the Company's liquidity profile,
management's assessment of the desire for lower cost funding sources weighed against relationships with customers and growth
expectations, our ability to attract and retain core deposit relationships, competition for deposits in the Company's markets and
the availability and pricing of other sources of funds.
34
The following table presents, for the periods indicated, information about (i) average balances, the total dollar amount of
taxable equivalent interest income from earning assets and the resultant average yields; (ii) average balances, the total dollar
amount of interest expense on interest bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest
rate spread; and (v) the net interest margin. Non-accrual loans are included in the average balances presented in this table;
however, interest income foregone on non-accrual loans is not included. Interest income, yields, spread and margin have been
calculated on a tax-equivalent basis for loans and investment securities that are exempt from federal income taxes, at a federal
tax rate of 21% (dollars in thousands):
Average
Balance
2022
Interest
(1)
Yield/
Rate (1)
Average
Balance
2021
Interest
(1)
Yield/
Rate (1)
Average
Balance
2020
Interest
(1)
Yield/
Rate (1)
Years Ended December 31,
Assets:
Interest earning assets:
Loans
Investment securities (2)
Other interest earning assets
$ 23,937,857 $ 947,386
3.96 % $ 23,083,973 $ 814,101
3.53 % $ 23,385,832 $ 879,082
10,081,701
283,081
2.81 %
9,873,178
155,353
1.57 %
8,739,023
196,954
675,068
15,709
2.33 %
1,093,869
6,010
0.55 %
672,634
9,578
3.76 %
2.25 %
1.42 %
Total interest earning
assets
34,694,626
1,246,176
3.59 % 34,051,020
975,464
2.86 % 32,797,489
1,085,614
3.31 %
Allowance for credit losses
Non-interest earning assets
(132,033)
1,721,570
Total assets
$ 36,284,163
(197,212)
1,770,685
$ 35,624,493
(236,704)
1,860,322
$ 34,421,107
Liabilities and
Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand
deposits
Savings and money market
deposits
Total interest bearing
deposits
Federal funds purchased
FHLB advances
Notes and other borrowings
Total interest bearing
liabilities
Non-interest bearing
demand deposits
Other non-interest bearing
liabilities
Total liabilities
Stockholders' equity
Total liabilities and
stockholders' equity
Net interest income
Interest rate spread
Net interest margin
$ 2,538,906
13,919
0.55 % $ 3,027,649
8,550
0.28 % $ 2,582,951
19,445
0.75 %
Time deposits
3,338,671
35,348
1.06 %
3,490,082
12,874,240
130,705
1.02 % 13,339,651
43,082
15,964
0.32 % 10,843,894
0.46 %
6,617,939
85,572
94,963
0.79 %
1.43 %
1.00 %
0.58 %
1.99 %
5.06 %
18,751,817
179,972
0.96 % 19,857,382
67,596
0.34 % 20,044,784
199,980
157,979
4,383,507
721,223
2,723
97,763
37,033
1.72 %
33,945
30
0.09 %
71,858
2.23 %
2,622,723
5.13 %
721,803
59,116
37,018
2.25 %
4,295,882
5.13 %
592,521
418
85,491
29,962
24,014,526
317,491
1.32 % 23,235,853
163,760
0.70 % 25,005,045
315,851
1.26 %
8,861,111
708,473
33,584,110
2,700,053
$ 36,284,163
8,480,964
784,031
32,500,848
3,123,645
$ 35,624,493
5,760,309
786,337
31,551,691
2,869,416
$ 34,421,107
$ 928,685
$ 811,704
$ 769,763
2.27 %
2.68 %
2.16 %
2.38 %
2.05 %
2.35 %
(1) On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $12.7 million, $13.3 million and $14.9 million for
the years ended December 31, 2022, 2021 and 2020, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $3.0 million,
$2.7 million and $3.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.
(2) At fair value except for securities held to maturity.
35
Increases and decreases in interest income, calculated on a tax-equivalent basis, and interest expense result from changes in
average balances (volume) of interest earning assets and liabilities, as well as changes in average interest rates. The following
table shows the effect that these factors had on the interest earned on our interest earning assets and the interest incurred on our
interest bearing liabilities for the years indicated. The effect of changes in volume is determined by multiplying the change in
volume by the previous year's average rate. Similarly, the effect of rate changes is calculated by multiplying the change in
average rate by the previous year's volume. Changes applicable to both volume and rate have been allocated to volume (in
thousands):
Interest Income Attributable to:
Loans
Investment securities
Other interest earning assets
Total interest earning assets
Interest Expense Attributable to:
Interest bearing demand deposits
Savings and money market deposits
Time deposits
Total interest bearing deposits
Federal funds purchased
FHLB advances
Notes and other borrowings
Total interest expense
Increase (decrease) in net interest
income
2022 Compared to 2021
2021 Compared to 2020
Change Due to
Volume
Change Due to
Rate
Increase
Change Due to
Volume
Change Due to
Rate
Increase
(Decrease)
$
34,024 $
5,301
(9,772)
29,553
99,261 $ 133,285 $
122,427
19,471
241,159
127,728
9,699
270,712
(11,194) $
17,824
2,284
8,914
(53,787) $
(59,425)
(5,852)
(119,064)
(64,981)
(41,601)
(3,568)
(110,150)
(2,806)
(5,755)
(1,556)
(10,117)
2,140
39,172
15
31,210
8,175
93,378
20,940
122,493
553
(525)
—
122,521
5,369
87,623
19,384
112,376
2,693
38,647
15
153,731
1,245
8,476
(14,805)
(5,084)
(36)
(37,544)
6,641
(36,023)
(12,140)
(50,966)
(64,194)
(127,300)
(352)
11,169
415
(116,068)
(10,895)
(42,490)
(78,999)
(132,384)
(388)
(26,375)
7,056
(152,091)
$
(1,657) $ 118,638 $ 116,981 $
44,937 $
(2,996) $
41,941
Net interest income, calculated on a tax-equivalent basis, was $928.7 million for the year ended December 31, 2022,
compared to $811.7 million for the year ended December 31, 2021, an increase of $117.0 million. The increase in net interest
income was comprised of increases in tax-equivalent interest income and interest expense of $270.7 million and $153.7 million,
respectively, for the year ended December 31, 2022, compared to the year ended December 31, 2021. The increase in tax
equivalent interest income was driven primarily by increases in interest income from loans and investment securities of $133.3
million and $127.7 million, respectively, for the year ended December 31, 2022 compared to the year ended December 31,
2021. These increases reflected increases in both the average balance of and yields on loans and investment securities in a rising
interest rate environment. The increase in interest expense for the year ended December 31, 2022, compared to the year ended
December 31, 2021, reflected the increased cost of interest bearing deposits related to the rising rate environment, partially
offset by declines in the related average balances. Interest expense on FHLB advances also increased mainly due to an increase
in the average balance.
The net interest margin, calculated on a tax-equivalent basis, was 2.68% for the year ended December 31, 2022, compared
to 2.38% for the year ended December 31, 2021. Offsetting factors impacting the net interest margin for the year ended
December 31, 2022 compared to the year ended December 31, 2021 included:
•
•
The tax-equivalent yield on loans expanded to 3.96% for the year ended December 31, 2022, from 3.53% for the year
ended December 31, 2021. Factors contributing to this increase were the resetting of variable rate loans at higher
coupon rates and originations of new loans at higher rates.
The tax-equivalent yield on investment securities increased to 2.81% for the year ended December 31, 2022, from
1.57% for the year ended December 31, 2021. The reset of coupon rates on variable rate securities, purchases of
higher-yielding securities and slowing prepayment speeds on securities purchased at a premium contributed to the
increases in yield.
36
•
•
The average rate paid on interest bearing deposits increased to 0.96% for the year ended December 31, 2022, from
0.34% for the year ended December 31, 2021, primarily in response to the rising interest rate environment.
The average rate paid on FHLB advances decreased to 2.23% for the year ended December 31, 2022, from 2.25% for
the year ended December 31, 2021. The average rate paid decreased as a result of the impact of cash flow hedging on
these borrowings and the impact of higher-cost cash flow hedges discontinued in the fourth quarter of 2021.
Provision for Credit Losses
The provision for credit losses is a charge or credit to earnings required to maintain the ACL at a level consistent with
management’s estimate of expected credit losses on financial assets carried at amortized cost at the balance sheet date. The
amount of the provision is impacted by changes in current economic conditions as well as in management's reasonable and
supportable economic forecast, loan originations and runoff, changes in portfolio mix, risk rating migration and portfolio
seasoning, changes in specific reserves, changes in expected prepayment speeds and other assumptions. The provision for credit
losses also includes amounts related to off-balance sheet credit exposures and may include amounts related to accrued interest
receivable and AFS debt securities.
The following table presents the components of the provision for (recovery of) credit losses for the periods indicated (in
thousands):
2022
Years Ended December 31,
2021
2020
Amount related to funded portion of loans
Amount related to off-balance sheet credit exposures
Amount related to accrued interest receivable
Amount related to AFS debt securities
Total provision for (recovery of) credit losses
$
$
73,814 $
1,467
(127)
—
75,154 $
(64,456) $
(1,235)
(1,064)
(364)
(67,119) $
182,339
(5,572)
1,300
364
178,431
The most significant factors impacting the provision for credit losses for the year ended December 31, 2022 included actual
and forecasted economic conditions, including uncertainty about the trajectory of the economy and increases in certain specific
reserves. Volatility in the provision for credit losses over the periods presented was in part related to the COVID-19 pandemic
and its actual and forecasted impact on economic conditions as reserves were increased in 2020 upon onset of the pandemic,
and then partially released in 2021 as the economy began to recover.
The provision for credit losses may continue to be volatile and the level of the ACL may change materially from current
levels. Future levels of the ACL could be significantly impacted, in either direction, by changes in factors such as economic
conditions or the economic outlook, in composition of the loan portfolio, in the financial condition of our borrowers and
collateral values.
The determination of the amount of the ACL is complex and involves a high degree of judgment and subjectivity. See
“Analysis of the Allowance for Credit Losses” below for more information about how we determine the appropriate level of the
ACL and about factors that impacted the ACL and provision for credit losses.
37
Non-Interest Income
The following table presents a comparison of the categories of non-interest income for the periods indicated (in thousands):
Deposit service charges and fees
Gain on sale of loans:
GNMA early buyout loans
Other
Gain (loss) on sale of loans, net
Gain (loss) on investment securities:
Net realized gain on sale of securities AFS
Net unrealized gain (loss) on marketable equity securities
Gain (loss) on investment securities, net
Lease financing
Other non-interest income
Years Ended December 31,
2022
2021
2020
$
23,402 $
21,685 $
16,496
(2,573)
3
(2,570)
3,927
(19,732)
(15,805)
54,111
18,498
77,636 $
5,636
18,758
24,394
9,010
(2,564)
6,446
53,263
28,365
134,153 $
11,274
1,896
13,170
14,001
3,766
17,767
59,112
26,676
133,221
$
Gain on sale of loans for the year ended December 31, 2021 included a gain of $18.2 million on the sale of a portfolio of
single-family residential loans in the fourth quarter of 2021.
The unrealized losses on marketable equity securities reflected in the table above were attributable to the decline in the fair
value of certain preferred stock investments resulting from rising market interest rates and widening spreads.
The most significant factor leading to the decrease in other non-interest income for the year ended December 31, 2022,
compared to the year ended December 31, 2021, was a decline in BOLI revenue related to the rising interest rate environment.
Non-Interest Expense
The following table presents the components of non-interest expense for the periods indicated (in thousands):
Employee compensation and benefits
$
265,548 $
243,532 $
217,156
Years Ended December 31,
2022
2021
2020
Occupancy and equipment
Deposit insurance expense
Professional fees
Technology
Discontinuance of cash flow hedges
Depreciation and impairment of operating lease equipment
Other non-interest expense
Total non-interest expense
Employee compensation and benefits
45,400
17,999
11,730
77,103
—
50,388
72,142
47,944
18,695
14,386
67,500
44,833
53,764
56,921
48,237
21,854
11,708
58,108
—
49,407
50,719
$
540,310 $
547,575
457,189
Employee compensation and benefits increased by $22.0 million for the year ended December 31, 2022, compared to the
year ended December 31, 2021. The most significant factor leading to this increase was a combination of higher headcount and
salary increases. Higher variable compensation and medical benefits also contributed to the increase.
Professional fees
Professional fees for the year ended December 31, 2021 included $4.2 million related to a tax settlement with the state of
Florida.
38
Technology
The increase in technology expense is reflective of our investment in a variety of technology initiatives in support of future
growth of the franchise, such as cloud migration and digital capabilities.
Discontinuance of cash flow hedges
During the fourth quarter of 2021, we recognized a loss of $44.8 million on discontinuance of derivative positions
designated as cash flow hedges with a notional amount totaling $401 million following the Company's determination that the
hedged forecasted transactions were no longer probable of occurring.
Other non-interest expense
Other non-interest expense increased by $15.2 million for the year ended December 31, 2022, compared to the year ended
December 31, 2021. Contributing to the increase were increases in advertising and public relations, travel, entertainment and
business development corresponding to a return to pre-COVID levels of activity, and the cost of certain customer deposit
rebate programs.
Income Taxes
The provision for income taxes for the years ended December 31, 2022 and 2021 was $90.2 million and $34.4 million,
respectively. The Company's effective income tax rate was 24.03% and 7.66% for the years ended December 31, 2022 and
2021, respectively. The effective income tax rate for the year ended December 31, 2021 was impacted by a settlement with the
Florida Department of Revenue related to certain tax matters for the 2009-2019 tax years and a reduction in the liability for
unrecognized tax benefits arising primarily from expiration of statues of limitations in federal and certain state jurisdictions.
See Note 9 to the consolidated financial statements for information about income taxes.
Analysis of Financial Condition
Total loans, excluding the runoff of PPP loans, grew by $1.4 billion for 2022, with the highest growth in the core C&I and
commercial real estate portfolios. Total deposits declined by $1.9 billion in 2022, while FHLB advances grew by $3.5 billion.
Non-interest bearing demand deposits decreased by $938 million; growth in non-interest bearing demand deposits has been
pressured by the rising interest rate environment and quantitative tightening by the Federal Reserve. Contributing to the decline
in both total deposits and non-interest bearing demand deposits in 2022 was a reduction in deposits held by customers serving
the residential real estate sector, as the level of mortgage loan origination activity declined significantly in light of rapidly rising
interest rates.
Average interest-earning assets increased by $644 million to $34.7 billion for the year ended December 31, 2022, from
$34.1 billion for the year ended December 31, 2021, reflecting increases in average balances of both loans and investment
securities. During the year ended December 31, 2022, average interest bearing liabilities increased by $779 million and average
non-interest bearing demand deposits increased by $380 million.
39
Investment Securities
The following table shows the amortized cost and carrying value, which, with the exception of investment securities held to
maturity, is fair value, of investment securities at the dates indicated (in thousands):
December 31, 2022
December 31, 2021
Amortized
Cost
Carrying
Value
Amortized
Cost
Carrying
Value
U.S. Treasury securities
U.S. Government agency and sponsored enterprise residential MBS
U.S. Government agency and sponsored enterprise commercial MBS
Private label residential MBS and CMOs
Private label commercial MBS
Single family real estate-backed securities
Collateralized loan obligations
Non-mortgage asset-backed securities
State and municipal obligations
SBA securities
Investment securities held to maturity
Marketable equity securities
1,983,168
525,094
2,530,663
2,524,354
470,441
1,136,463
95,976
116,661
135,782
10,000
$ 148,956 $ 135,841 $ 114,385 $ 111,660
2,097,796
2,036,693
856,899
600,517
2,149,420
2,864,589
2,604,010
2,645,168
476,968
502,194
1,078,286
1,166,838
152,510
102,194
222,277
122,181
183,595
139,320
10,000
10,000
9,943,421
$ 10,338,650
120,777
$ 10,064,198
2,093,283
861,925
2,160,136
2,604,690
474,845
1,079,217
151,091
205,718
184,296
10,000
9,664,443 $ 9,939,586
90,884
$ 9,755,327
Our investment strategy has focused on insuring adequate liquidity, maintaining a suitable balance of high credit quality,
diverse assets, managing interest rate risk, and generating acceptable returns given our established risk parameters. We have
sought to maintain liquidity by investing a significant portion of the portfolio in high quality liquid securities including U.S.
Treasury and U.S. Government Agency and sponsored enterprise securities. Investment grade municipal securities provide
liquidity and attractive tax-equivalent yields. We have also invested in highly rated structured products, including private-label
commercial and residential MBS, collateralized loan obligations, single family real estate-backed securities and non-mortgage
asset-backed securities that, while somewhat less liquid, provide us with attractive yields. Relatively short effective portfolio
duration helps mitigate interest rate risk. Based on the Company’s assumptions, the estimated weighted average life of the
investment portfolio as of December 31, 2022 was 4.9 years and the effective duration of the portfolio was 2.0 years.
The investment securities available for sale portfolio was in a net unrealized loss position of $674.2 million at
December 31, 2022, compared to a net unrealized gain position of $3.8 million at December 31, 2021. Net unrealized losses at
December 31, 2022 included $2.9 million of gross unrealized gains and $677.1 million of gross unrealized losses. Investment
securities available for sale in unrealized loss positions at December 31, 2022 had an aggregate fair value of $9.3 billion. The
unrealized losses resulted primarily from rising interest rates and widening spreads related to the Federal Reserve's quantitative
tightening and benchmark interest rate increases. Continuing uncertainty with respect to the trajectory of the economy and
geopolitical events have also led to market uncertainty, producing some yield curve dislocations. None of the unrealized losses
were attributable to credit loss impairments.
40
The ratings distribution of our AFS securities portfolio at December 31, 2022 is depicted in the chart below:
We evaluate the credit quality of individual securities in the portfolio quarterly to determine whether we expect to recover
the amortized cost basis of the investments in unrealized loss positions. This evaluation considers, but is not necessarily limited
to, the following factors, the relative significance of which varies depending on the circumstances pertinent to each individual
security:
• Whether we intend to sell the security prior to recovery of its amortized cost basis;
• Whether it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost
basis;
The extent to which fair value is less than amortized cost;
Adverse conditions specifically related to the security, an industry or geographic area;
Changes in the financial condition of the issuer or underlying loan obligors;
The payment structure and remaining payment terms of the security, including levels of subordination or over-
collateralization;
Failure of the issuer to make scheduled payments;
Changes in credit ratings;
Relevant market data;
Estimated prepayments, defaults, and the value and performance of underlying collateral at the individual security
level.
•
•
•
•
•
•
•
•
We do not intend to sell securities in significant unrealized loss positions at December 31, 2022. Based on an assessment of
our liquidity position and internal and regulatory guidelines for permissible investments and concentrations, it is not more likely
than not that we will be required to sell securities in significant unrealized loss positions prior to recovery of amortized cost
basis, which may be at maturity.
We regularly engage with bond managers to monitor trends in underlying collateral, including potential downgrades and
subsequent cash flow diversions, liquidity, ratings migration, and any other relevant developments.
41
The following table presents subordination levels and average internal stress scenario losses for select non-agency portfolio
segments at December 31, 2022:
Rating
Percent of Total Minimum Maximum
Average
Subordination
Weighted
Average Stress
Scenario Loss
Private label CMBS
CLOs
AAA
AA
A
AAA
AA
A
Weighted average
Weighted average
Private label residential MBS and CMO
AAA
Weighted average
Single family real estate-backed
securities
Weighted average
AA
A
AAA
AA
NR
84.9 %
11.0 %
4.1 %
100.0 %
79.5 %
17.0 %
3.5 %
100.0 %
94.1 %
0.9 %
5.0 %
100.0 %
67.3 %
12.8 %
19.9 %
100.0 %
30.0
29.3
25.1
29.7
41.4
31.0
25.6
39.1
3.0
18.9
22.1
4.1
34.6
51.6
39.8
37.8
98.1
95.8
69.5
96.7
59.4
40.8
29.4
55.2
98.2
33.2
25.5
94.0
72.6
55.4
39.8
63.9
44.3
41.7
38.7
43.8
45.8
34.7
27.1
43.2
17.5
24.0
23.0
17.9
53.2
53.6
39.8
50.6
6.8
7.5
8.8
7.0
9.9
8.7
10.3
9.7
2.3
5.3
5.4
2.5
5.8
9.4
10.6
7.2
For further discussion of our analysis of impaired investment securities AFS for credit loss impairment see Note 3 to the
consolidated financial statements.
We use third-party pricing services to assist us in estimating the fair value of investment securities. We perform a variety of
procedures to ensure that we have a thorough understanding of the methodologies and assumptions used by the pricing services
including obtaining and reviewing written documentation of the methods and assumptions employed, conducting interviews
with valuation desk personnel and reviewing model results and detailed assumptions used to value selected securities as
considered necessary. Our classification of prices within the fair value hierarchy is based on an evaluation of the nature of the
significant assumptions impacting the valuation of each type of security in the portfolio. We have established a robust price
challenge process that includes a review by our treasury front office of all prices provided on a monthly basis. Any price
evidencing unexpected month over month fluctuations or deviations from our expectations based on recent observed trading
activity and other information available in the marketplace that would impact the value of the security is challenged. Responses
to the price challenges, which generally include specific information about inputs and assumptions incorporated in the valuation
and their sources, are reviewed in detail. If considered necessary to resolve any discrepancies, a price will be obtained from
additional independent valuation sources. We do not typically adjust the prices provided, other than through this established
challenge process. Our primary pricing services utilize observable inputs when available, and employ unobservable inputs and
proprietary models only when observable inputs are not available. As a matter of course, the services validate prices by
comparison to recent trading activity whenever such activity exists. Quotes obtained from the pricing services are typically non-
binding.
The majority of our investment securities are classified within level 2 of the fair value hierarchy. U.S. Treasury securities
and marketable equity securities are classified within level 1 of the hierarchy.
For additional discussion of the fair values of investment securities, see Note 14 to the consolidated financial statements.
42
The following table shows the weighted average prospective yields, categorized by scheduled maturity, for AFS investment
securities as of December 31, 2022. Scheduled maturities have been adjusted for anticipated prepayments when applicable.
Yields on tax-exempt securities have been calculated on a tax-equivalent basis, based on a federal income tax rate of 21%:
U.S. Treasury securities
U.S. Government agency and sponsored
enterprise residential MBS
U.S. Government agency and sponsored
enterprise commercial MBS
Private label residential MBS and CMOs
Private label commercial MBS
Single family real estate-backed securities
Collateralized loan obligations
Non-mortgage asset-backed securities
State and municipal obligations
SBA securities
Loans
Within One
Year
After One Year
Through Five
Years
After Five
Years
Through Ten
Years
After Ten
Years
Total
0.59 %
— %
— %
— %
0.59 %
4.61 %
4.67 %
4.72 %
4.29 %
4.65 %
3.22 %
3.65 %
5.54 %
1.36 %
6.25 %
3.36 %
3.17 %
4.23 %
4.45 %
4.70 %
3.67 %
5.95 %
4.07 %
6.57 %
3.58 %
4.12 %
4.14 %
5.14 %
2.99 %
3.67 %
1.93 %
1.36 %
6.77 %
5.30 %
4.49 %
4.02 %
3.94 %
2.53 %
4.09 %
3.30 %
— %
— %
— %
3.99 %
3.86 %
3.88 %
3.23 %
3.79 %
5.66 %
4.07 %
6.54 %
4.49 %
4.18 %
4.13 %
4.70 %
The loan portfolio comprises the Company’s primary interest-earning asset. The following table shows the composition of
the loan portfolio at the dates indicated (dollars in thousands):
Residential and other consumer loans
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
PPP
Pinnacle
Bridge - franchise finance
Bridge - equipment finance
Mortgage warehouse lending
Total loans
Allowance for credit losses
Loans, net
December 31, 2022
December 31, 2021
Total
$ 8,900,714
5,405,597
294,360
1,890,813
6,414,351
3,370
912,122
253,774
286,147
524,740
24,885,988
(147,946)
$ 24,738,042
Total
Percent of
Total
35.7 % $ 8,368,380
5,536,348
21.7 %
165,390
1.2 %
1,944,658
7.6 %
4,790,275
25.9 %
248,505
— %
919,641
3.7 %
342,124
1.0 %
357,599
1.1 %
1,092,133
2.1 %
100.0 % 23,765,053
(126,457)
$ 23,638,596
Percent of
Total
35.2 %
23.3 %
0.7 %
8.2 %
20.2 %
1.0 %
3.9 %
1.4 %
1.5 %
4.6 %
100.0 %
For the year ended December 31, 2022, total loans grew by $1.1 billion, while total loans, excluding PPP loans, grew by
$1.4 billion.
Growth in residential and other consumer loans for the year ended December 31, 2022 totaled $532 million. Commercial
and industrial loans, including owner-occupied commercial real estate, grew by $1.6 billion for the year ended December 31,
2022. Most of the remaining commercial portfolio segments showed declines during the year ended December 31, 2022. MWL
declined by $567 million for this period, as rising rates have led to lower refinancing and mortgage origination activity. PPP
loans declined by $245 million during the year ended December 31, 2022, resulting primarily from full or partial forgiveness
from the SBA.
43
Residential mortgages and other consumer loans
The following table shows the composition of residential and other consumer loans at the dates indicated (in thousands):
1-4 single family residential
Government insured residential
Other consumer loans
December 31, 2022
December 31, 2021
$
$
7,122,837 $
1,771,880
5,997
8,900,714 $
6,338,225
2,023,221
6,934
8,368,380
The 1-4 single family residential loan portfolio, excluding government insured residential loans, is primarily comprised of
loans purchased through established correspondent channels. 1-4 single family residential mortgage loans are primarily closed-
end, first lien jumbo mortgages for the purchase or re-finance of owner occupied property. The loans have terms ranging from
10 to 30 years, with either fixed or adjustable interest rates. At December 31, 2022, $1.1 billion or 16% were secured by
investor-owned properties.
The Company acquires non-performing FHA and VA insured mortgages from third party servicers who have exercised
their right to purchase these loans out of GNMA securitizations (collectively, "government insured pool buyout loans" or
"buyout loans"). Buyout loans that re-perform, either through modification or self-cure, may be eligible for re-securitization.
The Company and the servicer share in the economics of the sale of these loans into new securitizations. During the years ended
December 31, 2022 and 2021, the Company purchased $480 million and $1.6 billion, respectively, of government insured
residential loans. The balance of buyout loans totaled $1.7 billion at December 31, 2022. The Company is not the servicer of
these loans.
The following charts present the distribution of the 1-4 single family residential mortgage portfolio at the dates indicated:
See Note 4 to the consolidated financial statements for information about geographic concentrations in the 1-4 single
family residential portfolio.
The following table presents a breakdown of the 1-4 single family residential mortgage portfolio, excluding government
insured residential loans, categorized between fixed rate loans and ARMs at the dates indicated below (dollars in thousands):
Fixed rate loans
ARM loans
December 31, 2022
December 31, 2021
Total
Percent of
Total
Total
Percent of
Total
$
3,990,599
56.0 % $
3,298,689
3,132,238
44.0 %
3,039,536
52.0 %
48.0 %
$
7,122,837
100.0 % $
6,338,225
100.0 %
44
Commercial loans and leases
Commercial loans include a diverse portfolio of commercial and industrial loans and lines of credit, loans secured by
owner-occupied commercial real-estate, multi-family properties and other income-producing non-owner occupied commercial
real estate, a limited amount of construction and land loans, SBA loans, mortgage warehouse lines of credit, PPP loans,
municipal loans and leases originated by Pinnacle and franchise and equipment finance loans and leases originated by Bridge.
The following charts present the distribution of the commercial loan portfolio at the dates indicated (dollars in millions):
(1) Included in C&I are $3 million and $249 million of PPP loans at December 31, 2022 and 2021, respectively.
Commercial real estate loans include term loans secured by non-owner occupied income producing properties including
rental apartments, mixed-use properties, industrial properties, retail shopping centers, free-standing single-tenant buildings,
office buildings, warehouse facilities, hotels and real estate secured lines of credit.
The following table presents the distribution of commercial real estate loans by property type, along with weighted average
DSCRs and LTVs at December 31, 2022 (dollars in thousands):
Office
Warehouse/Industrial
Multifamily
Retail
Hotel
Construction and Land
Other
Amortized
Cost
$ 1,874,614
1,216,506
945,404
869,922
407,462
294,360
91,689
$ 5,699,957
Percent of
Total
FL
New York
Tri State
Other
33 %
21 %
17 %
15 %
7 %
5 %
2 %
100 %
59 %
62 %
48 %
64 %
86 %
49 %
75 %
61 %
22 %
18 %
52 %
27 %
6 %
49 %
9 %
26 %
19 %
20 %
— %
9 %
8 %
2 %
16 %
13 %
Weighted
Average DSCR
1.75
2.05
2.13
1.88
2.13
N/A
2.45
1.95
Weighted
Average LTV
64.3 %
52.6 %
45.9 %
61.7 %
55.1 %
N/A
47.7 %
57.0 %
Geographic distribution in the table above is based on location of the underlying collateral property. LTVs and DSCRs are
based on the most recent available information; if current information is not available, values may be adjusted by our models
based on current sub-market conditions. DSCRs are calculated based on current contractually required payments, which may in
some cases may be interest only.
The Company’s commercial real estate underwriting standards most often provide for loan terms of five to seven years,
with amortization schedules of no more than thirty years. The multi-family portfolio includes $419 million of New York loans
collateralized by properties with some or all of the units subject to rent regulation at December 31, 2022.
Commercial and industrial loans are typically made to small, middle market and larger corporate businesses and not-for-
profit entities and include equipment loans, secured and unsecured working capital facilities, formula-based loans, subscription
finance lines of credit, trade finance, SBA product offerings, business acquisition finance credit facilities, credit facilities to
45
institutional real estate entities such as REITs and commercial real estate investment funds, and commercial credit cards. These
loans may be structured as term loans, typically with maturities of five to seven years, or revolving lines of credit which may
have multi-year maturities. In addition to financing provided by Pinnacle, the Bank provides financing to state and local
governmental entities generally within our geographic markets. Commercial loans included loans meeting the regulatory
definition of shared national credits totaling $4.7 billion at December 31, 2022, the majority of which were relationship based
loans to borrowers in our primary geographic footprint. The Bank makes loans secured by owner-occupied commercial real
estate that typically have risk profiles more closely aligned with that of commercial and industrial loans than with other types of
commercial real estate loans.
The following table presents the exposure in the C&I portfolio, excluding PPP loans, by industry, at December 31, 2022
(dollars in thousands):
Finance and Insurance
Educational Services
Manufacturing
Wholesale Trade
Information
Utilities
Real Estate and Rental and Leasing
Health Care and Social Assistance
Transportation and Warehousing
Construction
Retail Trade
Professional, Scientific, and Technical Services
Other Services (except Public Administration)
Public Administration
Administrative and Support and Waste Management
Accommodation and Food Services
Arts, Entertainment, and Recreation
Other
Amortized Cost
Percent of Total
$ 1,792,128
21.6 %
751,264
647,016
644,539
582,590
538,290
509,498
483,709
401,854
337,363
329,949
299,245
234,786
221,387
172,872
154,863
152,267
51,544
9.0 %
7.8 %
7.8 %
7.0 %
6.5 %
6.1 %
5.8 %
4.8 %
4.1 %
4.0 %
3.6 %
2.8 %
2.7 %
2.1 %
1.9 %
1.8 %
0.6 %
$ 8,305,164
100.0 %
Through its commercial lending subsidiaries, Pinnacle and Bridge, the Bank provides equipment and franchise financing
on a national basis using both loan and lease structures. Pinnacle provides essential-use equipment financing to state and local
governmental entities directly and through vendor programs and alliances. Pinnacle offers a full array of financing structures
including equipment lease purchase agreements and direct (private placement) bond re-fundings and loan agreements. Bridge
has two operating divisions. The franchise finance division offers franchise acquisition, expansion and equipment financing,
typically to experienced operators in well-established concepts. The franchise finance portfolio is made up primarily of quick
service restaurant and fitness concepts comprising 43% and 52% of the portfolio, respectively. The equipment finance division
provides primarily transportation equipment financing through a variety of loan and lease structures.
46
The following table presents the franchise portfolio by concept at December 31, 2022 (dollars in thousands):
Restaurant concepts:
Burger King
Ram Restaurant and Brewery
Dunkin Donuts
Other
Non-restaurant concepts:
Planet Fitness
Other Fitness Concepts
Other
Amortized Cost
Percent of Bridge -
Franchise Finance
$
$
$
$
34,034
12,643
12,453
51,049
110,179
89,782
43,161
10,652
143,595
253,774
13.4 %
5.0 %
4.9 %
20.1 %
43.4 %
35.4 %
17.0 %
4.2 %
56.6 %
100.0 %
See Note 4 to the consolidated financial statements for information about the geographic distribution of the loan portfolio.
Loan Maturities
The following table sets forth, as of December 31, 2022, the maturity distribution of our loan portfolio by category,
excluding government insured residential loans. Commercial and other consumer loans are presented by contractual maturity,
including scheduled payments for amortizing loans. Contractual maturities of residential loans have been adjusted for an
estimated rate of voluntary prepayments, based on historical trends, current interest rates, types of loans and refinance patterns
(in thousands):
Residential and other consumer
Commercial:
After One
Through Five
Years
One Year or
Less
798,187 $ 2,867,688 $
After Five Years
Through Fifteen
Years
2,720,638 $ 742,321 $ 7,128,834
After Fifteen
Years
Total
$
Non-owner occupied commercial real estate
725,317
3,425,401
1,224,827
Construction and land
Owner occupied commercial real estate
Commercial and industrial (1)
Pinnacle
Bridge - franchise finance
Bridge - equipment finance
Mortgage warehouse lending
2,968
66,705
231,928
647,659
1,115,125
4,397,116
39,241
35,165
14,644
511,348
299,720
182,762
164,738
13,392
41,326
30,052
18,138
5,405,597
294,360
1,042,902
133,547
1,890,813
836,904
523,582
35,847
106,765
—
68,576
49,579
—
—
—
6,417,721
912,122
253,774
286,147
524,740
2,510,513
9,362,716
3,812,153
299,892
15,985,274
$ 3,308,700 $ 12,230,404 $
6,532,791 $ 1,042,213 $ 23,114,108
(1)
Includes PPP loans.
47
The following table shows the distribution of those loans that mature in more than one year between fixed and adjustable
interest rate loans as of December 31, 2022 (in thousands):
Residential and other consumer
$
3,711,961 $
2,618,686 $
6,330,647
Interest Rate Type
Fixed
Adjustable
Total
Commercial:
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial (1)
Pinnacle
Bridge - franchise finance
Bridge - equipment finance
Mortgage warehouse lending
2,262,373
17,439
1,281,783
761,245
872,881
123,093
240,241
—
2,417,907
273,953
542,325
4,541,351
—
95,516
31,262
13,392
5,559,055
7,915,706
$
9,271,016 $
10,534,392 $
4,680,280
291,392
1,824,108
5,302,596
872,881
218,609
271,503
13,392
13,474,761
19,805,408
(1)
Includes PPP loans
Excluded from the tables above are government insured residential loans. Resolution of these loans is generally
accomplished through the re-securitization and sale of the loans after they re-perform, either through modification or self-cure,
or through pursuit of the applicable guarantee.
Operating lease equipment, net
Operating lease equipment, net of accumulated depreciation, totaled $540 million at December 31, 2022, including off-
lease equipment, net of accumulated depreciation of $63 million.
The chart below presents operating lease equipment by type at the dates indicated:
48
At December 31, 2022, the breakdown of carrying values of operating lease equipment, excluding equipment off-lease, by
the year leases are scheduled to expire was as follows (in thousands):
Years Ending December 31:
2023
2024
2025
2026
2027
Thereafter through 2034
Asset Quality
Commercial Loans
$
107,475
45,053
59,262
70,400
25,746
168,428
476,364
$
We have a robust credit risk management framework, an experienced team to lead the workout and recovery process for the
commercial and commercial real estate portfolios and a dedicated internal credit review function. Loan performance is
monitored by our credit administration, portfolio management and workout and recovery departments. Generally, commercial
relationships with balances in excess of defined thresholds are re-evaluated at least annually and more frequently if
circumstances indicate that a change in risk rating may be warranted. The defined thresholds range from $1 million to $3
million. Homogenous groups of smaller balance commercial loans may be monitored collectively. The credit quality and risk
rating of commercial loans as well as our underwriting and portfolio management practices are regularly reviewed by our
internal independent credit review department.
We believe internal risk rating is the best indicator of the credit quality of commercial loans. The Company utilizes a 16-
grade internal asset risk classification system as part of its efforts to monitor and maintain commercial asset quality. The special
mention rating is considered a transitional rating for loans exhibiting potential credit weaknesses that could result in
deterioration of repayment prospects at some future date if not checked or corrected and that deserve management’s close
attention. These borrowers may exhibit declining cash flows or revenues or increasing leverage. Loans with well-defined credit
weaknesses that may result in a loss if the deficiencies are not corrected are assigned a risk rating of substandard. These
borrowers may exhibit payment defaults, inadequate cash flows from current operations, operating losses, increasing balance
sheet leverage, project cost overruns, unreasonable construction delays, exhausted interest reserves, declining collateral values,
frequent overdrafts or past due real estate taxes. Loans with weaknesses so severe that collection in full is highly questionable
or improbable, but because of certain reasonably specific pending factors have not been charged off, are assigned an internal
risk rating of doubtful.
The following table summarizes the Company's commercial credit exposure, based on internal risk rating, at the dates
indicated (dollars in thousands):
Pass
Special mention
Substandard accruing
Substandard non-accruing
Doubtful
December 31, 2022
December 31, 2021
December 31, 2020
Amortized
Cost
$ 15,244,761
51,433
605,965
75,125
7,990
$ 15,985,274
Percent of
Commercial
Loans
Amortized
Cost
Percent of
Commercial
Loans
Amortized
Cost
Percent of
Commercial
Loans
95.4 % $ 13,934,369
148,593
0.3 %
1,136,378
3.8 %
129,579
0.5 %
47,754
— %
100.0 % $ 15,396,673
90.5 % $ 14,832,025
711,516
1.0 %
1,758,654
7.4 %
203,758
0.8 %
11,867
0.3 %
100.0 % $ 17,517,820
84.6 %
4.1 %
10.0 %
1.2 %
0.1 %
100.0 %
The table above clearly reflects the ongoing trend of improvement in the risk rating profile of the portfolio as the impact of
the COVID-19 pandemic has waned; however, our internal risk ratings at December 31, 2022 continued to be influenced by the
impact of the pandemic as sustained operating cash flows of some borrowers have yet to fully recover. Management took what
it believed to be a proactive and objective approach to risk rating the commercial loan portfolio at the onset of the pandemic.
Levels of criticized and classified loans therefore increased over the course of 2020 and have declined throughout 2021 and
2022.
49
The following table provides additional information about special mention and substandard accruing loans, at the dates
indicated (dollars in thousands). Non-performing loans are discussed further in the section entitled "Non-performing Assets"
below.
Special mention:
CRE
Hotel
Office
Other
Owner occupied commercial real estate
Commercial and industrial
Bridge - franchise finance
Substandard accruing:
CRE
Hotel
Retail
Multi-family
Office
Industrial
Other
Owner occupied commercial real estate
Commercial and industrial
Bridge - franchise finance
Bridge - equipment finance
Operating Lease Equipment, net
December 31, 2022
December 31, 2021
Amortized
Cost
% of Loan
Segment
Amortized
Cost
% of Loan
Segment
$
709
18,006
—
18,715
24,101
1,017
7,600
$ 51,433
$ 14,538
72,421
146,235
73,042
976
7,989
315,201
73,501
171,613
44,295
1,355
$ 605,965
0.2 % $
1.0 %
— %
760
27,001
4,501
32,262
1.3 %
14,010
— % 102,321
—
3.0 %
$ 148,593
3.6 % $ 200,486
8.4 % 140,081
15.5 % 173,536
83,121
3.9 %
1,009
0.1 %
5,803
2.6 %
604,036
3.9 % 160,159
2.7 % 250,644
80,864
17.5 %
40,675
0.5 %
$ 1,136,378
0.1 %
1.5 %
3.7 %
0.7 %
2.1 %
— %
36.7 %
13.0 %
15.0 %
4.6 %
0.1 %
2.2 %
8.2 %
5.2 %
23.6 %
11.4 %
Operating leases with a carrying value of assets under lease totaling $19 million, were internally risk rated substandard at
December 31, 2022. On a quarterly basis, management performs an impairment analysis on assets with indicators of potential
impairment. Potential impairment indicators include evidence of changes in residual value, macro-economic conditions, an
extended period of time off-lease, criticized or classified status, or management's intention to sell the asset at an amount
potentially below its carrying value. During the year ended December 31, 2021, impairment charges recognized related to
operating lease equipment totaled $2.8 million. There were no impairment charges recognized during the year ended December
31, 2022.
Bridge had exposure to the energy industry of $250 million at December 31, 2022. The majority of the energy exposure
was in the operating lease equipment portfolio where energy exposure totaled $219 million.
Residential Loans
Our residential mortgage portfolio, excluding GNMA buyout loans, consists primarily of loans purchased through
established correspondent channels. Most of our purchases are of performing jumbo mortgage loans which have FICO scores
above 700, primarily are owner-occupied and full documentation, and have a current LTV of 80% or less although loans with
LTVs higher than 80% may be extended to selected credit-worthy borrowers. We perform due diligence on the purchased loans
for credit, compliance, counterparty, payment history and property valuation.
We have a dedicated residential credit risk management function, and the residential portfolio is monitored by our internal
credit review function. Residential mortgage loans are not individually risk rated. Delinquency status is the primary measure we
use to monitor the credit quality of these loans. We also consider original LTV and most recently available FICO score to be
50
significant indicators of credit quality for the 1-4 single family residential portfolio, excluding government insured residential
loans.
The following charts present information about the 1-4 single family residential portfolio, excluding government insured
loans, by FICO distribution, LTV distribution and vintage at December 31, 2022:
FICO scores are generally updated semi-annually and were most recently updated in the third quarter of 2022. LTVs are
typically based on valuation at origination since we do not routinely update residential appraisals.
At December 31, 2022, the majority of the 1-4 single family residential loan portfolio, excluding government insured
residential loans, was owner-occupied, with 79% primary residence, 5% second homes and 16% investment properties.
1-4 single family residential loans excluding government insured residential loans past due more than 30 days totaled
$62 million and $76 million at December 31, 2022 and 2021, respectively. The amount of these loans 90 days or more past due
was $15 million and $17 million at December 31, 2022 and 2021, respectively.
Note 4 to the consolidated financial statements presents additional information about key credit quality indicators and
delinquency status of the loan portfolio.
Non-Performing Assets
Non-performing assets generally consist of (i) non-accrual loans, including loans that have been modified in TDRs and
placed on non-accrual status, (ii) accruing loans that are more than 90 days contractually past due as to interest or principal,
excluding PCD loans for which management has a reasonable basis for an expectation about future cash flows and government
insured residential loans, and (iii) OREO and other non-performing assets.
51
The following table and charts summarize the Company's non-performing loans and non-performing assets at the dates
indicated (dollars in thousands):
Non-accrual loans:
Residential and other consumer
Commercial:
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Bridge - franchise finance
Total commercial loans
Total non-accrual loans
Loans past due 90 days and still accruing
Total non-performing loans
OREO and other non-performing assets
Total non-performing assets
Non-performing loans to total loans (1)
Non-performing assets to total assets (1)
ACL to total loans
ACL to non-performing loans
Net charge-offs to average loans
December 31, 2022
December 31, 2021
21,311
28,553
16,657
5,695
17,751
29,722
13,290
83,115
104,426
593
105,019
1,932
$
106,951
$
0.42 %
0.29 %
0.59 %
140.88 %
0.22 %
50,116
5,164
20,453
68,720
32,879
177,332
205,885
24
205,909
2,275
208,184
0.87 %
0.58 %
0.53 %
61.41 %
0.29 %
(1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $40.3 million or 0.16% of total loans and 0.11% of
total assets, at December 31, 2022, and $46.1 million or 0.19% of total loans and 0.13% of total assets, at December 31, 2021.
Contractually delinquent government insured residential loans are typically GNMA early buyout loans and are excluded
from non-performing loans as defined in the table above due to their government guarantee. The carrying value of such loans
contractually delinquent by 90 days or more was $493 million and $730 million at December 31, 2022 and 2021, respectively.
See "Results of Operations - Provision for Credit Losses" above and “Analysis of the Allowance for Credit Losses” below
for further discussion of trends in the Provision for Credit Losses and the ACL.
52
The following chart presents trends in non-performing loans and non-performing assets. Levels of non-performing loans
and non-performing assets have returned to below pre-pandemic levels.
The following chart presents trends in non-performing loans by portfolio sub-segment (in millions):
Commercial loans are placed on non-accrual status when (i) management has determined that full repayment of all
contractual principal and interest is in doubt, or (ii) the loan is past due 90 days or more as to principal or interest unless the
loan is well secured and in the process of collection. Residential and consumer loans, other than government insured pool
buyout loans, are generally placed on non-accrual status when they are 90 days past due. When a loan is placed on non-accrual
status, uncollected interest accrued is reversed and charged to interest income. Commercial loans are returned to accrual status
only after all past due principal and interest has been collected and full repayment of remaining contractual principal and
53
interest is reasonably assured. Residential loans are generally returned to accrual status when less than 90 days past due. Past
due status of loans is determined based on the contractual next payment due date. Loans less than 30 days past due are reported
as current.
TDRs
A loan modification is considered a TDR if the Company, for economic or legal reasons related to the borrower’s financial
difficulties, grants a concession to the borrower that the Company would not otherwise grant. These concessions may take the
form of temporarily or permanently reduced interest rates, payment abatement periods, restructuring of payment terms or
extensions of maturity at below market terms. Included in TDRs are residential loans to borrowers who have not reaffirmed
their debt discharged in Chapter 7 bankruptcy.
Under inter-agency and authoritative guidance and consistent with the CARES Act, short-term deferrals or modifications
related to COVID-19 were typically not categorized as TDRs. Additionally, section 4013 of the CARES Act, as amended by the
Consolidated Appropriations Act, effectively suspended the guidance related to TDRs codified in ASC 310-40 until January 1,
2022, the date the CARES Act expired.
The following table summarizes loans that had been modified in TDRs at the dates indicated (dollars in thousands):
Residential and other consumer (1)
Commercial
December 31, 2022
December 31, 2021
Number of
TDRs
Amortized
Cost
Related
Specific
Allowance
Number of
TDRs
Amortized
Cost
Related
Specific
Allowance
2,907 $ 464,118 $
38
57,832
2,945 $ 521,950 $
137
11,743
11,880
449 $ 79,524 $
16
29,309
465 $ 108,833 $
87
1,377
1,464
(1)
Includes 2,883 government insured residential loans modified in TDRs totaling $456 million at December 31, 2022, and 435 government insured
residential loans modified in TDRs totaling $76 million at December 31, 2021.
See Note 4 to the consolidated financial statements for additional information about TDRs.
Loss Mitigation Strategies
Criticized or classified commercial loans in excess of certain thresholds are reviewed quarterly by the Criticized Asset
Committee, which evaluates the appropriate strategy for collection to mitigate the amount of credit losses and considers the
appropriate risk rating for these loans. Criticized asset reports for each relationship are presented by the assigned relationship
manager and credit officer to the Criticized Asset Committee until such time as the relationships are returned to a satisfactory
credit risk rating or otherwise resolved. The Criticized Asset Committee may require the transfer of a loan to our workout and
recovery department, which is tasked to effectively manage the loan with the goal of minimizing losses and expenses associated
with restructure, collection and/or liquidation of collateral. Commercial loans with a risk rating of substandard, loans on non-
accrual status, loans modified as TDRs and assets classified as OREO or repossessed assets are usually transferred to workout
and recovery. Oversight of the workout and recovery department is provided by the Criticized Asset Committee.
Our servicers evaluate each residential loan in default to determine the most effective loss mitigation strategy, which may
be modification, short sale, or foreclosure, and pursue the alternative most suitable to the consumer and to mitigate losses to the
bank.
Analysis of the Allowance for Credit Losses
The ACL is management's estimate of the amount of expected credit losses over the life of the loan portfolio, or the amount
of amortized cost basis not expected to be collected, at the balance sheet date. This estimate encompasses information about
historical events, current conditions and reasonable and supportable economic forecasts. Determining the amount of the ACL is
complex and requires extensive judgment by management about matters that are inherently uncertain. Given the current level of
economic uncertainty, the complexity of the ACL estimate and level of management judgment required, we believe it is
possible that the ACL estimate could change, potentially materially, in future periods. Changes in the ACL may result from
changes in current economic conditions, our economic forecast, loan portfolio composition and circumstances not currently
known to us that may impact the financial condition and operations of our borrowers, among other factors.
Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. For
loans that do not share similar risk characteristics with other loans such as collateral dependent loans and TDRs, expected credit
54
losses are estimated on an individual basis. Expected credit losses are estimated over the contractual terms of the loans, adjusted
for expected prepayments, generally excluding expected extensions, renewals, and modifications.
For the substantial majority of portfolio segments and subsegments, including residential loans other than government
insured loans, and most commercial and commercial real estate loans, expected losses are estimated using econometric models.
See Note 1 to the consolidated financial statements for more detailed information about our ACL methodology and related
accounting policies.
At December 31, 2022 and 2021, we used a single externally provided baseline scenario in calculating the quantitative
portion of the ACL. At December 31, 2022, we incorporated a downside scenario to inform the amount of qualitative reserves.
The following table provides an analysis of the ACL, provision for (recovery of) credit losses related to the funded portion
of loans and net charge-offs by loan segment for the periods indicated (dollars in thousands):
Residential
and Other
Consumer
Loans
Non-owner
Occupied
Commercial
Real Estate
Construction
and Land
Owner
Occupied
Commercial
Real Estate
Commercial
and
Industrial
Bridge -
Franchise
Finance
Bridge -
Equipment
Finance
Total
Pinnacle
Balance at December 31, 2019
$ 11,154
$
28,264
$
764
$
8,066
$
43,485
$
720
$ 9,163
$ 7,055
$ 108,671
Impact of adoption of ASU
2016-13
Balance at January 1, 2020
Provision for (recovery of) credit
losses
Charge-offs
Recoveries
8,098
19,252
(556)
(31)
54
(14,222)
14,042
97,424
(10,324)
192
Balance at December 31, 2020
18,719
101,334
Provision for (recovery of) credit
losses
Charge-offs
Recoveries
Balance at December 31, 2021
Provision for (recovery of) credit
losses
Charge-offs
Recoveries
(9,241)
(304)
13
9,187
2,858
(412)
108
(65,543)
(9,167)
1,156
27,780
635
(9,188)
3,100
1,854
2,618
666
—
—
3,284
23,240
31,306
(1,463)
(1,178)
132
28,797
(2,253)
(6,844)
—
—
(471)
156
1,031
21,638
1,736
(343)
—
952
(2,870)
823
8,841
52,326
35,390
(33,188)
7,669
62,197
31,180
(50,563)
3,498
46,312
61,337
(36,051)
5,049
(309)
(133)
411
9,030
(107)
44,976
—
—
(18,125)
450
304
36,331
(64)
6,991
6,009
(6,756)
113
6,357
(134)
(8,857)
(2,764)
—
—
(10,745)
17
—
—
170
16,746
3,593
3
—
—
7,542
(13,191)
650
(1,249)
—
—
27,305
135,976
182,339
(69,602)
8,610
257,323
(64,456)
(71,250)
4,840
126,457
73,814
(62,055)
9,730
Balance at December 31, 2022
$ 11,741
$
22,327
$
2,424
$
20,543
$
76,647
$
173
$ 11,747
$ 2,344
$ 147,946
Net Charge-offs to Average
Loans
Year Ended
December 31, 2020
Years Ended
December 31, 2021
Years Ended
December 31, 2022
— %
— %
— %
0.15 %
0.13 %
— %
— %
0.05 %
0.42 %
— %
2.86 %
1.13 %
0.26 %
0.02 %
0.82 %
— %
2.34 %
— %
— %
0.29 %
0.22 %
0.11 %
0.16 %
0.11 %
0.50 %
— %
4.49 %
55
The following table shows the distribution of the ACL at the dates indicated (dollars in thousands):
Residential and other consumer
$
11,741
35.7 % $
9,187
35.2 % $ 18,719
26.6 %
December 31, 2022
%(1)
Total
December 31, 2021
%(1)
Total
December 31, 2020
%(1)
Total
Non-owner occupied commercial real estate
Construction and land
CRE
Owner occupied commercial real estate
Commercial and industrial
Pinnacle
Bridge - franchise finance
Bridge - equipment finance
22,327
2,424
24,751
20,543
76,647
173
11,747
2,344
111,454
21.7 %
27,780
23.3 % 101,334
1.2 %
7.6 %
28.0 %
3.7 %
1.0 %
1.1 %
1,031
28,811
21,638
46,312
170
16,746
3,593
88,459
0.7 %
3,284
104,618
8.2 %
28,797
25.8 %
62,197
3.9 %
304
1.4 %
36,331
1.5 %
6,357
133,986
27.7 %
1.2 %
8.4 %
27.2 %
4.6 %
2.3 %
2.0 %
$
147,946
100.0 % $
126,457
100.0 % $ 257,323
100.0 %
(1) Represents percentage of loans receivable in each category to total loans receivable.
The following table presents the ACL as a percentage of loans at the dates indicated:
Residential and other consumer
Commercial:
CRE
Commercial and industrial
Pinnacle
Bridge - franchise finance
Bridge - equipment finance
Total commercial
December 31, 2022
December 31, 2021
December 31, 2020
0.13 %
0.43 %
1.10 %
0.02 %
4.63 %
0.82 %
0.85 %
0.59 %
0.11 %
0.51 %
0.84 %
0.02 %
4.90 %
1.00 %
0.76 %
0.53 %
0.29 %
1.52 %
1.07 %
0.03 %
6.61 %
1.34 %
1.36 %
1.08 %
56
Significant offsetting factors contributing to the change in the ACL during the year ended December 31, 2022 are depicted
in the chart below (in millions):
Changes in the ACL during the year ended December 31, 2022
As depicted in the chart above, the primary reasons for the increase in the ACL from December 31, 2021 to December 31,
2022 were increases in specific reserves and qualitative overlay related primarily to economic uncertainty, partially offset by
net charge-offs. The ACL as a percentage of loans was 0.59% at December 31, 2022, compared to 0.53% at December 31,
2021.
The ACL for residential and other consumer segment increased by $2.6 million during the year ended December 31, 2022,
from 0.11% to 0.13% of loans. The increase in the ACL for this segment was primarily driven by the economic forecast,
particularly a decline in the HPI and increases in forecasted mortgage and unemployment rates.
The ACL for the CRE portfolio sub-segment, including non-owner occupied CRE and construction and land, decreased by
$4.1 million during the year ended December 31, 2022, from 0.51% to 0.43% of loans. The decrease in the ACL for CRE was
driven mainly by net charge-offs and improvements in the credit quality of existing loans as reflected in the reduction in
criticized and classified loans.
The ACL for the commercial and industrial sub-segment, including owner-occupied commercial real estate, increased by
$29.2 million during the year ended December 31, 2022, from 0.84% to 1.10% of loans. The increase was mainly driven by (i)
increases in specific reserves; (ii) an increase in qualitative loss factors mainly related to economic uncertainty and (iii) loan
growth; partially offset by net charge-offs and the reduction in the levels of criticized and classified loans.
The ACL for the BFG franchise finance portfolio segment decreased by $5.0 million during the year ended December 31,
2022, from 4.90% to 4.63% of loans primarily due to (i) a decline in the amortized cost basis of the portfolio; (ii) net charge-
offs; and to a lesser extent, (iii) a decrease in qualitative loss factors.
The estimate of the ACL at December 31, 2022 was informed by forecasted economic scenarios published in December
2022, a wide variety of additional economic data, information about borrower financial condition and collateral values and
other relevant information. The economic forecast used in modeling the quantitative ACL as of December 31, 2022, was a
57
third-party provided baseline forecast. Some of the assumptions and data points informing the reasonable and supportable
economic forecast used in estimating the quantitative ACL at December 31, 2022 included:
•
•
•
•
Labor market assumptions, which reflected national unemployment at 3.8% for the first quarter of 2023, and 4.2% and
3.9% by the end of 2023 and 2024, respectively;
Annualized growth in GDP at 0.1% for the first quarter of 2023, and averaging 0.9% and 2.0% for 2023 and 2024,
respectively;
S&P 500 declining by 14% in the first quarter of 2023 with gains of 7.9% and 0.3% by the end of 2023 and 2024,
respectively;
HPI decline of 1.1% in the first quarter of 2023, and declines of 3.8% and 3.3% by the end of 2023 and 2024,
respectively.
Additional variables and assumptions not explicitly stated, including but not limited to residential and commercial property
forecasts, also contributed to the overall impact economic conditions and the economic forecast had on the ACL estimate.
Furthermore, while the variables presented above are at the national level, many of the variables are regionalized at the market
and submarket level in the models.
For additional information about the ACL, see Note 4 to the consolidated financial statements.
Deposits
A further breakdown of deposits at the dates indicated is shown below:
The estimated amount of uninsured deposits at December 31, 2022 and 2021 was $19.2 billion and $20.2 billion,
respectively. Time deposit accounts with balances of $250,000 or more totaled $730 million and $603 million at December 31,
2022 and 2021, respectively. The following table shows scheduled maturities of uninsured time deposits as of December 31,
2022 (in thousands):
Three months or less
Over three through six months
Over six through twelve months
Over twelve months
$
$
97,887
75,758
469,681
9,626
652,952
58
Borrowings
In addition to deposits, we utilize FHLB advances as a funding source; the advances provide us with additional flexibility
in managing both term and cost of funding and in managing interest rate risk. FHLB advances are secured by qualifying
residential first mortgage and commercial real estate loans and MBS. The following table presents information about the
contractual balance of outstanding FHLB advances, as of December 31, 2022 (dollars in thousands):
Maturing in:
2023 - One month or less
2023 - Over one month
Total contractual balance outstanding
Amount
Weighted Average Rate
$
$
4,320,000
1,100,000
5,420,000
4.19 %
4.56 %
The table above reflects contractual maturities of outstanding advances and does not incorporate the impact that interest
rate swaps designated as cash flow hedges have on the duration or cost of borrowings.
The table below presents information about outstanding interest rate swaps hedging the variability of interest cash flows on
the FHLB advances included in the table above, as of December 31, 2022 (dollars in thousands):
Cash flow hedges maturing in:
2023
2024
2025
2026
Thereafter
Notional Amount Weighted Average Rate
$
$
255,000
535,000
425,000
130,000
25,000
1,370,000
2.35 %
2.40 %
2.28 %
1.93 %
2.50 %
2.31 %
During the year ended December 31, 2021, derivative positions designated as cash flow hedges with a notional amount
totaling $401 million, at a weighted average pay rate of 3.24%, were discontinued following the Company's determination that
the related forecasted transactions were not probable of occurring.
The Bank utilizes federal funds purchased to manage the daily cash position. See Note 7 to the consolidated financial
statements for more information about the Company's FHLB advances and notes. Additionally, see Note 10 to the consolidated
financial statements for more information about derivative instruments the Company uses to manage risk.
Liquidity and Capital Resources
Liquidity
Liquidity involves our ability to generate adequate funds to support planned interest earning asset growth, meet deposit
withdrawal and credit line usage requests, maintain reserve requirements, conduct routine operations, pay dividends, service
outstanding debt and meet other contractual obligations.
BankUnited's ongoing liquidity needs have historically been met primarily by cash flows from operations, deposit growth,
the investment portfolio and FHLB advances. FRB discount window borrowings, reverse repurchase agreement capacity and a
letter of credit with the FHLB provide additional sources of contingent liquidity. For the years ended December 31, 2022, 2021
and 2020, net cash provided by operating activities was $1.3 billion, $1.2 billion and $864 million, respectively.
Available liquidity includes cash, borrowing capacity at the Federal Home Loan Bank of Atlanta and the Federal Reserve
Discount Window, Federal Funds lines of credit and unpledged agency securities. Additional sources of liquidity include cash
flows from operations, wholesale deposits, cash flow from the Bank's amortizing securities and loan portfolios, and the sale of
investment securities. Management also has the ability to exert substantial control over the rate and timing of loan production,
and resultant requirements for liquidity to fund new loans.
The ALM policy establishes limits or operating thresholds and guidelines for a number of measures of liquidity which are
monitored at least monthly by the ALCO and quarterly by the Board of Directors. The primary measures used to dimension
liquidity risk are the ratio of available liquidity to volatile liabilities and a liquidity stress test coverage ratio. Other measures
employed to monitor and manage liquidity include but are not limited to a 30-day total liquidity ratio, a one-year liquidity ratio,
59
a wholesale funding ratio, concentrations of large deposits, a measure of on-balance sheet available liquidity, the ratio of FHLB
advances to total assets and the ratio of non-interest bearing deposits to total deposits, which is reflective of the quality and cost,
rather than the quantity, of available liquidity. At December 31, 2022, BankUnited was in compliance with the limits prescribed
by the ALM policy.
The ALM policy stipulates that BankUnited’s liquidity is within policy limits if the available liquidity/volatile liabilities
ratio and liquidity stress test ratios exceed 100%. At December 31, 2022, BankUnited’s available liquidity/volatile liabilities
ratio was 176% and the liquidity stress test ratio was 188%. The Company has a comprehensive contingency liquidity funding
plan and conducts a quarterly liquidity stress test, the results of which are reported to the risk committee of the Board of
Directors.
As a holding company, BankUnited, Inc. is a corporation separate and apart from its banking subsidiary, and therefore,
provides for its own liquidity. BankUnited, Inc.’s main sources of funds include management fees and dividends from the Bank,
access to capital markets and, to a lesser extent, its own securities portfolio. There are regulatory limitations that may affect the
ability of the Bank to pay dividends to BankUnited, Inc. Management believes that such limitations will not impact our ability
to meet our ongoing near-term cash obligations.
The following table presents the Company's material cash requirements for the following twelve months, as of December
31, 2022 (in thousands):
Interest on term deposits
FHLB advances(1)
Notes and other borrowings(1)
Operating lease obligations
$
$
61,496
5,435,403
38,318
19,432
5,554,649
(1)
Includes interest to be paid on the outstanding contractual obligations.
At December 31, 2022, the Company had $4.0 billion in term deposits with a contractual maturity of twelve months or less.
The majority of term deposits and FHLB advances are expected to roll over into new instruments; this amount therefore does
not represent future anticipated cash requirements. Additionally, as discussed in Note 15 to the consolidated financial
statements, the Bank had $271 million in outstanding commitments to fund loans and $5.7 billion in unfunded commitments
under existing lines of credit at December 31, 2022. Many of these commitments are expected to expire without being fully
funded and, therefore, also do not necessarily represent future cash requirements.
Macro factors, including the Fed's quantitative tightening policy stance, have led to reduced deposit levels across the
banking system. BankUnited's total deposits declined by $1.9 billion during the year ended December 31, 2022, and there is
uncertainty as to the future impact of monetary policy on deposit levels both system-wide and at BankUnited. We believe that
we have sufficient on-balance sheet and contingent liquidity, through the sources described above, to satisfy our liquidity needs
and cash requirements over the next twelve months.
Capital
Pursuant to the FDIA, the federal banking agencies have adopted regulations setting forth a five-tier system for measuring
the capital adequacy of the financial institutions they supervise. At December 31, 2022 and 2021, the Company and the Bank
had capital levels that exceeded both the regulatory well-capitalized guidelines and all internal capital ratio targets. Upon
adoption of ASU 2016-13 on January 1, 2020, the Company elected the option to temporarily delay the effects of CECL on
regulatory capital for two years, followed by a three-year transition period. See Note 13 to the consolidated financial statements
for more information about the Company's and the Bank's regulatory capital ratios.
We believe we are well positioned, from a capital perspective, to withstand a severe downturn in the economy. We
continue to evolve our stress testing framework and adapt it to evolving macro-economic conditions as necessary. The majority
of our commercial portfolio is subject to quarterly stress test analysis. On an annual basis, we also run a rigorous stress test of
our entire balance sheet incorporating the Fed's CCAR scenarios as well as additional idiosyncratic scenarios reflective of
evolving macro-economic themes.
We have an active shelf registration statement on file with the SEC that allows the Company to periodically offer and sell
in one or more offerings, individually or in any combination, our common stock, preferred stock and other non-equity
securities. The shelf registration provides us with flexibility in issuing capital instruments and enables us to more readily access
60
the capital markets as needed to pursue future growth opportunities and to ensure continued compliance with regulatory capital
requirements. Our ability to issue securities pursuant to the shelf registration is subject to market conditions.
Interest Rate Risk
A principal component of the Company’s risk of loss arising from adverse changes in the fair value of financial
instruments, or market risk, is interest rate risk, including the risk that assets and liabilities with similar re-pricing characteristics
may not reprice at the same time or to the same degree. A primary objective of the Company’s asset/liability management
activities is to maximize net interest income, while maintaining acceptable levels of interest rate risk. The ALCO is responsible
for establishing policies to manage exposure to interest rate risk, and to ensure procedures are established to monitor
compliance with these policies. The policies established by the ALCO are approved at least annually by the Board of Directors
or its Risk Committee.
Management believes that the simulation of net interest income in different interest rate environments provides the most
meaningful measure of interest rate risk. Income simulation analysis is designed to capture not only the potential of all assets
and liabilities to mature or reprice, but also the probability that they will do so. Income simulation also attends to the relative
interest rate sensitivities of these items, and projects their behavior over an extended period of time. Finally, income simulation
permits management to assess the probable effects on the balance sheet not only of changes in interest rates, but also of
proposed strategies for responding to them.
The income simulation model analyzes interest rate sensitivity by projecting net interest income over twelve and twenty-
four month periods in a most likely rate scenario based on consensus forward interest rate curves versus net interest income in
alternative rate scenarios. Management continually reviews and refines its interest rate risk management process in response to
changes in the interest rate environment, the economic climate and observed customer behavior. Currently, our interest rate risk
policy framework is based on modeling instantaneous rate shocks of plus and minus 100, 200, 300 and 400 basis point shifts.
We also model a variety of yield curve slope and dynamic balance sheet scenarios. We continually evaluate the scenarios being
modeled with a view toward adapting them to changing economic conditions, expectations and trends.
The following table presents the impact on forecasted net interest income compared to a "most likely" scenario in parallel
rate shock scenarios of plus 100, 200, 300 and 400 basis points at December 31, 2022 and 2021, as well as minus 100, 200 and
300 basis points scenarios at December 31, 2022. At December 31, 2022, the most likely rate scenario incorporated a bear
flattening yield curve and floored all indices at 0%. We did not apply a falling rate scenario at December 31, 2021 due to the
low prevailing interest rate environment at that time.
Model Results at December 31, 2022 - increase
(decrease)
In year 1
In year 2
Model Results at December 31, 2021 - increase
Down 300 Down 200 Down 100
Plus 100
Plus 200
Plus 300
Plus 400
(10.0) %
(18.3) %
(5.1) %
(8.4) %
(1.7) %
(3.5) %
0.1 %
1.8 %
(0.6) % (1.4) %
1.8 %
2.3 %
(2.6) %
0.7 %
In year 1
In year 2
N/A
N/A
N/A
N/A
N/A
N/A
2.5 %
4.2 %
6.6 % 11.5 % 15.8 % 20.4 %
4.3 %
3.9 %
Management also simulates changes in EVE in various interest rate environments. The following table illustrates the
modeled change in EVE in the indicated scenarios at December 31, 2022 and December 31, 2021:
Model Results at December 31, 2022 - increase
(decrease):
Model Results at December 31, 2021 - increase
(decrease):
(0.9) %
4.5 %
3.8 %
(5.5) % (11.3) % (17.3) % (22.8) %
N/A
N/A
N/A
0.4 %
(1.0) %
(3.2) %
(5.0) %
Down 300 Down 200 Down 100
Plus 100
Plus 200
Plus 300
Plus 400
All of the modeled results presented above fall within designated "low" or "moderate" risk zones as set forth in the
Company's ALM policy. Many assumptions were used by the Company to calculate the impact of changes in interest rates,
including the change in rates. Actual results may not be similar to the Company’s projections due to several factors including
the timing and frequency of rate changes, market conditions, changes in depositor behavior and loan prepayment speeds and the
shape of the yield curve. Actual results may also differ due to the Company’s actions, if any, in response to changing rates and
conditions.
61
Derivative Financial Instruments
Interest rate derivatives designated as cash flow or fair value hedging instruments are one of the tools we use to manage
interest rate risk. These derivative instruments are used to mitigate exposure to changes in interest cash flows on variable rate
liabilities and to changes in the fair value of fixed rate financial instruments, in each case caused by fluctuations in benchmark
interest rates, as well as to manage duration of liabilities. The fair value of derivative instruments designated as hedges is
included in other assets and other liabilities in our consolidated balance sheets. Changes in fair value of derivative instruments
designated as cash flow hedges are reported in accumulated other comprehensive income. Changes in the fair value of
derivative instruments designated as fair value hedges are recognized in earnings, as is the offsetting gain or loss on the hedged
item. At December 31, 2022, outstanding interest rate swaps, caps and collars designated as cash flow hedges had an aggregate
notional amount of $2.3 billion and outstanding interest rate swaps designated as fair value hedges had an aggregate notional
amount of $100 million.
Interest rate swaps and caps not designated as hedges had an aggregate notional amount of $3.9 billion at December 31,
2022. These interest rate swaps and caps were entered into as accommodations to certain of our commercial borrowers. To
mitigate interest rate risk associated with these derivatives, the Company enters into offsetting derivative positions with primary
dealers.
See Note 10 to the consolidated financial statements for additional information about derivative financial instruments.
LIBOR Transition
The FCA, which regulates LIBOR, discontinued the one-week and two-month LIBOR tenors effective December 31, 2021.
The remaining tenors will be discontinued effective June 30, 2023. The Company has implemented and is in the process of
executing a detailed plan to facilitate the transition from LIBOR to alternative reference rates, with SOFR being the preferred
alternative to LIBOR. We established a cross-functional LIBOR transition working group that (i) continually assesses the
Company's remaining exposure to LIBOR indexed instruments (ii) evaluated the systems, models and processes impacted by
reference rate transition and implemented any necessary modifications to ensure compliance with the new reference rate
framework; (iii) developed and continues to execute under a formal governance structure for the transition; and (iv) continues to
monitor and report on execution under a detailed transition implementation plan. We have taken the following actions, among
others, to facilitate the transition to alternative reference rates by the Bank and our customers:
• Evaluated the fallback language in all financial instruments referencing LIBOR, and effective January 2021, adopted
the ARRC recommended hardwired approach fallback provisions incorporating SOFR pursuant to a waterfall for all
bilateral commercial loans which provide for the determination of replacement rates for LIBOR-linked financial
products;
• Adhered to the 2020 ISDA IBOR Fallbacks Protocol to amend fallback language in all of our existing derivative
counterparty agreements;
• Adopted primarily SOFR based products and pricing for newly originated commercial loans and interest rate swaps for
borrowers, purchases of residential mortgage loans and investment securities and derivative hedging instruments;
• Effective 12/31/2021, ceased originating LIBOR indexed loans and implemented SOFR as the preferred alternative to
LIBOR;
•
•
•
•
Completed testing and implementation of replacement indices in applicable systems and models;
Established detailed operational protocols for the implementation of fallback language in existing LIBOR instruments
maturing after June 30, 2023;
Provided ongoing education to client-facing associates and customers; and
Adopted and continue to execute a detailed remediation plan for bilateral and agent loans maturing after June 30, 2023,
while actively monitoring LIBOR-based loans scheduled to mature prior to June 30, 2023.
62
The following table presents information about the Company's exposure to instruments that reference LIBOR, as of
December 31, 2022 (in thousands):
Investment securities
Loans
Interest rate derivative contracts (1)
(1) Represents notional amount.
Impact of the COVID-19 Pandemic
Maturing
Prior to June 30,
2023
After June 30,
2023
Total
$
$
— $
3,686,709 $
3,686,709
101,871
262,578
4,080,601
2,700,534
4,182,472
2,963,112
364,449 $ 10,467,844 $ 10,832,293
A more detailed discussion of the effects the COVID-19 pandemic had during 2020 and 2021 on our Company appears in
the "Impact of the COVID-19 Pandemic and Our Response" section in the MD&A of the Company's 2021 and 2020 Annual
Reports on Form 10-K.
2021 and 2022 were characterized broadly by recovery of the U.S. economy from the impact of the COVID-19 pandemic.
The actual and expected impact of the pandemic on our financial condition and results of operations continues to decline.
Levels of criticized and classified assets remain elevated at December 31, 2022 when compared to pre-pandemic levels
although they continue to trend downward; levels of non-performing assets have returned to below pre-pandemic levels. The
composition of the balance sheet at December 31, 2022 and corresponding levels of net interest income reflect the opportunity
cost of the decline in commercial loans and the increase in residential loans and securities that occurred over the course of the
pandemic. Historically, commercial loans have generally tended to be higher yielding assets than residential loans and
securities. During the first quarter of 2022, we welcomed our employees back to the office, adopting a hybrid work model for
most non-branch employees. This model will likely continue to evolve over the near to medium term.
63
Non-GAAP Financial Measures
PPNR is a non-GAAP financial measure. Management believes this measure is relevant to understanding the performance
of the Company attributable to elements other than the provision for credit losses and the ability of the Company to generate
earnings sufficient to cover estimated credit losses, particularly in view of the volatility of the provision for credit losses. This
measure also provides a meaningful basis for comparison to other financial institutions since it is commonly employed and is a
measure frequently cited by investors and analysts. The following table reconciles the non-GAAP financial measurement of
PPNR to the comparable GAAP financial measurement of income before income taxes for the periods indicated (in thousands):
Income before income taxes (GAAP)
Plus: Provision for (recovery of) credit losses
PPNR (non-GAAP)
Years Ended December 31,
2022
2021
$
$
375,132
75,154
$
450,286
$
449,385
(67,119)
382,266
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):
Total stockholders’ equity
Less: goodwill and other intangible assets
Tangible stockholders’ equity
Common shares issued and outstanding
Book value per common share
Tangible book value per common share
December 31, 2022
December 31, 2021
$
$
$
$
2,435,981 $
77,637
2,358,344 $
3,037,761
77,637
2,960,124
75,674,587
85,647,986
32.19 $
31.16 $
35.47
34.56
64
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
See the section entitled “Interest Rate Risk” included in Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
65
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Management's Report on Internal Control Over Financial Reporting
BankUnited, Inc. Consolidated Financial Statements for the Years ended December 31, 2022, 2021 and 2020
Reports of Independent Registered Public Accounting Firm (Deloitte and Touche LLP, Miami, FL. Auditor Firm ID:
34)
Report of Independent Registered Public Accounting Firm (KPMG LLP, Charlotte, NC, Auditor Firm ID: 185)
Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021
Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
Note 1 Basis of Presentation and Summary of Significant Accounting Policies
Note 2 Earnings Per Common Share
Note 3 Investment Securities
Note 4 Loans and Allowance for Credit Losses
Note 5 Leases
Note 6 Deposits
Note 7 Borrowings
Note 8 Premises, Equipment and Software
Note 9 Income Taxes
Note 10 Derivatives and Hedging Activities
Note 11 Stockholders’ Equity
Note 12 Equity Based and Other Compensation Plans
Note 13 Regulatory Requirements and Restrictions
Note 14 Fair Value Measurements
Note 15 Commitments and Contingencies
Note 16 Condensed Financial Statements of BankUnited, Inc.
Note 17 Quarterly Financial Information (Unaudited)
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66
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). The Company's internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial
statements.
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted
accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Under the supervision and with the participation of management, including the Company's principal executive officer and
principal financial officer, the Company conducted an evaluation of the effectiveness of the Company's internal control over
financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on the Company's evaluation under the framework in Internal
Control—Integrated Framework, management concluded that the Company's internal control over financial reporting was
effective as of December 31, 2022.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2022 has been audited by
Deloitte and Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.
67
Report of Independent Registered Public Accounting Firm
To the stockholders and Board of Directors of BankUnited, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BankUnited, Inc. and subsidiaries (the "Company") as of
December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, cash flows, and
stockholders' equity for the years ended December 31, 2022 and 2021, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years
ended December 31, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 22, 2023, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Allowance for Credit Losses — Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
The allowance for credit losses (“ACL”) is management's estimate of the current amount of expected credit losses over the life
of the loan portfolio, or the amount of amortized cost basis not expected to be collected, at the balance sheet date. Determining
the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain.
The measurement of expected credit losses encompasses information about historical events, current conditions, and reasonable
and supportable economic forecasts. Factors that may be considered in determining the amount of the ACL include but are not
limited to, product or collateral type, industry, geography, internal risk rating, credit characteristics such as credit scores or
collateral values, delinquency rates, historical or expected credit loss patterns and other quantitative and qualitative factors
considered to have an impact on the adequacy of the ACL and the ability of borrowers to repay their loans. The adequacy of the
ACL is also dependent on the effectiveness of the underlying models used in determining the estimate.
Expected credit losses are estimated over the contractual terms of the loans using econometric models, adjusted for expected
prepayments. The models employ a factor-based methodology, leveraging data sets containing extensive historical loss and
recovery information by industry, geography, product type, collateral type, and obligor characteristics, to estimate probability of
68
default (“PD”) and loss given default (“LGD”). Projected PDs and LGDs, determined based on pool level characteristics, are
applied to estimated exposure at default. Measures of PD incorporate current conditions through market cycle or credit cycle
adjustments. PDs and LGDs are then conditioned on the reasonable and supportable economic forecast. For criticized or
classified loans, PDs are adjusted to benchmark PDs established for each risk rating if the most current financial information
available is deemed not to be reflective of the borrowers' current financial condition. For non-accrual or doubtful rated
distressed loans above a certain threshold, an individual assessment is performed to determine expected credit losses.
Given the complex nature of estimating the ACL, performing audit procedures to evaluate whether the ACL was appropriately
recorded as of December 31, 2022 required a high degree of auditor judgment and an increased extent of effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures to test the ACL for the loan portfolio included the following, among others:
• We tested the effectiveness of controls over the ACL including management’s controls over data transfers into and out
of the models, final quantitative model results, and application of any qualitative adjustments.
• We tested the completeness and accuracy of the data used in the models.
• We evaluated the reasonableness of the qualitative adjustments within the ACL estimate.
We evaluated a sample of non-accrual and doubtful rated loans by assessing the factors utilized during the Bank's assessment of
the reserves associated with the loans, assessed the appropriateness of risk ratings, and evaluated the financial performance of
the borrowers as well as the associated collateral, and the timeliness of the associated reserve.
/s/ Deloitte and Touche LLP
Miami, Florida
February 22, 2023
We have served as the Company's auditor since 2021.
69
Report of Independent Registered Public Accounting Firm
To the stockholders and the Board of Directors of BankUnited, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of BankUnited Inc. and subsidiaries (the “Company”) as of
December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our
report dated February 22, 2023, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Miami, Florida
February 22, 2023
/s/Deloitte and Touche LLP
70
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
BankUnited, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows of
BankUnited, Inc. and subsidiaries (the Company) for the year ended December 31, 2020, and the related notes (collectively,
the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material
respects, the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with U.S.
generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a
reasonable basis for our opinion.
/s/KPMG LLP
We served as the Company’s auditor from 2009 to 2021.
Charlotte, North Carolina
February 26, 2021
71
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31,
2022
December 31,
2021
ASSETS
Cash and due from banks:
Non-interest bearing
Interest bearing
Cash and cash equivalents
Investment securities (including securities recorded at fair value of $9,745,327 and $10,054,198)
Non-marketable equity securities
Loans
Allowance for credit losses
Loans, net
Bank owned life insurance
Operating lease equipment, net
Goodwill
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Demand deposits:
Non-interest bearing
Interest bearing
Savings and money market
Time
Total deposits
Federal funds purchased
FHLB advances
Notes and other borrowings
Other liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 75,674,587 and
85,647,986 shares issued and outstanding
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total stockholders' equity
Total liabilities and stockholders' equity
$
16,068 $
556,579
572,647
9,755,327
294,172
24,885,988
19,143
295,714
314,857
10,064,198
135,859
23,765,053
(126,457)
23,638,596
309,477
640,726
77,637
634,046
$ 37,026,712 $ 35,815,396
24,738,042
308,212
539,799
77,637
740,876
(147,946)
$ 8,037,848 $ 8,975,621
3,709,493
2,142,067
13,368,745
13,061,341
3,384,243
4,268,078
29,438,102
27,509,334
199,000
190,000
5,420,000
1,905,000
720,923
750,474
34,590,731
721,416
514,117
32,777,635
757
321,729
2,551,400
856
707,503
2,345,342
(15,940)
2,435,981
3,037,761
$ 37,026,712 $ 35,815,396
(437,905)
72
The accompanying notes are an integral part of these consolidated financial statements
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Interest income:
Loans
Investment securities
Other
Total interest income
Interest expense:
Deposits
Borrowings
Total interest expense
Net interest income before provision for credit losses
Provision for (recovery of) credit losses
Net interest income after provision for credit losses
Non-interest income:
Deposit service charges and fees
Gain (loss) on sale of loans, net
Gain (loss) on investment securities, net
Lease financing
Other non-interest income
Total non-interest income
Non-interest expense:
Years Ended December 31,
2022
2021
2020
$
934,642 $
280,100
15,709
1,230,451
800,819 $
152,619
6,010
959,448
864,175
193,856
9,578
1,067,609
179,972
137,519
317,491
912,960
75,154
837,806
23,402
(2,570)
(15,805)
54,111
18,498
77,636
67,596
96,164
163,760
795,688
(67,119)
862,807
21,685
24,394
6,446
53,263
28,365
199,980
115,871
315,851
751,758
178,431
573,327
16,496
13,170
17,767
59,112
26,676
134,153
133,221
Employee compensation and benefits
265,548
243,532
217,156
Occupancy and equipment
Deposit insurance expense
Professional fees
Technology
Discontinuance of cash flow hedges
Depreciation and impairment of operating lease equipment
Other non-interest expense
Total non-interest expense
Income before income taxes
Provision for income taxes
Net income
Earnings per common share, basic
Earnings per common share, diluted
45,400
17,999
11,730
77,103
—
50,388
72,142
540,310
375,132
90,161
47,944
18,695
14,386
67,500
44,833
53,764
56,921
547,575
449,385
34,401
48,237
21,854
11,708
58,108
—
49,407
50,719
457,189
249,359
51,506
$
$
$
284,971 $
414,984 $
197,853
3.55 $
3.54 $
4.52 $
4.52 $
2.06
2.06
73
The accompanying notes are an integral part of these consolidated financial statements
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
@
Net income
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on investment securities available for sale:
Net unrealized holding gain (loss) arising during the period
Reclassification adjustment for net securities gains realized in income
Net change in unrealized gains (losses) on securities available for sale
Unrealized gains (losses) on derivative instruments:
Net unrealized holding gain (loss) arising during the period
Reclassification adjustment for net (gains) losses realized in income
Reclassification adjustment for discontinuance of cash flow hedges
Net change in unrealized gains (losses) on derivative instruments
Other comprehensive income (loss)
Comprehensive income (loss)
Years Ended December 31,
2022
2021
2020
$
284,971 $
414,984 $
197,853
(498,864)
(2,906)
(501,770)
(54,228)
(6,712)
(60,940)
79,871
(66)
—
79,805
(421,965)
(136,994) $
22,207
38,545
33,400
94,152
33,212
448,196 $
$
46,045
(10,431)
35,614
(87,402)
34,463
—
(52,939)
(17,325)
180,528
The accompanying notes are an integral part of these consolidated financial statements
74
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
$
284,971 $
414,984 $
197,853
Years Ended December 31,
2022
2021
2020
activities:
Amortization and accretion, net
Provision for (recovery of) credit losses
(Gain) loss on sale of loans, net
(Gain) loss on investment securities, net
Equity based compensation
Depreciation and amortization
Deferred income taxes
(7,978)
75,154
2,570
15,805
25,179
77,623
1,437
(21,205)
(67,119)
(24,394)
(6,446)
23,832
78,500
(9,015)
Proceeds from sale of loans held for sale, net
423,893
807,097
Other:
(Increase) decrease in other assets
(Decrease) increase in other liabilities
Net cash provided by operating activities
230,382
164,785
(148,806)
172,747
1,293,821
1,220,175
(28,246)
178,431
(13,170)
(17,767)
20,367
72,508
(27,586)
584,427
(33,383)
(69,266)
864,168
Cash flows from investing activities:
Purchases of investment securities
Proceeds from repayments and calls of investment securities
Proceeds from sale of investment securities
Purchases of non-marketable equity securities
(2,974,352)
(5,835,143)
(4,208,597)
1,784,484
798,205
2,586,385
2,286,600
1,352,788
1,503,498
(471,763)
(62,137)
(134,938)
Proceeds from redemption of non-marketable equity securities
313,450
122,143
192,737
Purchases of loans
Loan originations and repayments, net
Proceeds from sale of loans, net
(Acquisition) disposition of operating lease equipment, net
Other investing activities
(2,283,134)
(4,843,231)
(3,157,659)
3,856,932
1,819,139
613,767
88,103
52,240
(41,400)
305,929
(44,179)
(11,204)
48,721
(19,597)
(16,807)
(2,620,715)
(Continued)
Net cash used in investing activities
(2,120,400)
(1,637,905)
The accompanying notes are an integral part of these consolidated financial statements
75
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
Cash flows from financing activities:
Net increase (decrease) in deposits
Net increase (decrease) in federal funds purchased
Additions to FHLB borrowings
Repayments of FHLB borrowings
Proceeds from issuance of notes, net
Dividends paid
Exercise of stock options
Repurchase of common stock
Other financing activities
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental disclosure of cash flow information:
Interest paid
Income taxes (refunded) paid, net
Supplemental schedule of non-cash investing and financing activities:
Transfers from loans to loans held for sale
Dividends declared, not paid
Unsettled securities trades, net
Obligations incurred in acquisition of affordable housing limited
partnerships
Years Ended December 31,
2022
2021
2020
(1,928,768)
(9,000)
4,650,000
(1,135,000)
1,942,286
19,000
946,000
(2,162,000)
—
—
(79,443)
(85,790)
—
25
(401,288)
(12,132)
1,084,369
257,790
314,857
572,647 $
(318,499)
(6,151)
334,871
(82,859)
397,716
314,857 $
3,101,225
80,000
3,857,000
(5,217,000)
293,858
(86,522)
19,611
(100,972)
(7,610)
1,939,590
183,043
214,673
397,716
294,144 $
(109,069) $
169,291 $
248,473 $
336,991
8,637
514,565 $
19,346 $
— $
1,064,090 $
19,876 $
22,858 $
602,198
22,309
—
65,000 $
— $
—
$
$
$
$
$
$
$
76
The accompanying notes are an integral part of these consolidated financial statements
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
Balance at December 31, 2019
95,128,231 $
951 $ 1,083,920 $ 1,927,735 $
(31,827) $
2,980,779
Common
Shares
Outstanding
Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Impact of adoption of ASU 2016-13
—
—
—
(23,817)
95,128,231
951
1,083,920
1,903,918
Balance at January 1, 2020
Comprehensive income
Dividends ($0.92 per common share)
Equity based compensation
Forfeiture of unvested shares and shares
surrendered for tax withholding obligations
Exercise of stock options
Repurchase of common stock
Balance at December 31, 2020
Comprehensive income
Dividends ($0.92 per common share)
Equity based compensation
Forfeiture of unvested shares and shares
surrendered for tax withholding obligations
Exercise of stock options
Repurchase of common stock
Balance at December 31, 2021
Comprehensive loss
Dividends ($1.00 per common share)
Equity based compensation
Forfeiture of unvested shares and shares
surrendered for tax withholding obligations
Repurchase of common stock
Balance at December 31, 2022
—
(31,827)
(17,325)
—
—
—
—
—
(49,152)
33,212
—
—
—
—
—
(23,817)
2,956,962
180,528
(88,056)
19,558
(4,619)
19,611
(100,972)
2,983,012
448,196
(83,357)
14,340
(5,956)
25
(318,499)
—
—
759,983
(230,537)
735,400
(3,325,577)
93,067,500
—
—
571,936
(216,095)
1,569
(7,776,924)
85,647,986
—
—
496,361
(33)
(100,939)
931
1,017,518
2,013,715
—
—
197,853
(88,056)
19,550
(4,617)
19,604
—
—
—
—
—
—
14,334
414,984
(83,357)
—
(5,954)
25
(318,420)
—
—
—
—
—
8
(2)
7
—
—
6
(2)
—
(79)
856
—
—
6
707,503
2,345,342
(15,940)
3,037,761
—
—
20,705
284,971
(78,913)
—
—
—
(421,965)
(136,994)
—
—
—
—
(78,913)
20,711
(5,296)
(401,288)
(214,981)
(10,254,779)
(2)
(5,294)
(103)
(401,185)
75,674,587 $
757 $ 321,729 $ 2,551,400 $
(437,905) $
2,435,981
77
The accompanying notes are an integral part of these consolidated financial statements
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
December 31, 2022
Note 1 Basis of Presentation and Summary of Significant Accounting Policies
BankUnited, Inc. is a bank holding company with one wholly-owned subsidiary, BankUnited, collectively, the Company.
BankUnited, a national banking association headquartered in Miami Lakes, Florida, provides a full range of commercial lending
and both commercial and consumer deposit services through 54 banking centers located in 12 Florida counties, four banking
centers in the New York metropolitan area, and one banking center in Dallas, Texas. The Bank also offers certain commercial
lending and deposit products through national platforms and regional wholesale banking offices.
The consolidated financial statements have been prepared in accordance with GAAP and prevailing practices in the
banking industry.
The Company has a single operating segment and thus a single reportable segment. While management monitors the
revenue streams of its various business units, the business units serve a similar base of primarily commercial clients, providing
a similar range of products and services, managed through similar processes and platforms. The Company’s chief operating
decision maker makes company-wide resource allocation decisions and assessments of performance based on a collective
assessment of the Company’s operations.
Accounting Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues, and expenses and disclosures of contingent assets and liabilities. Actual
results could differ significantly from these estimates.
The most significant estimate impacting the Company's consolidated financial statements is the ACL.
Principles of Consolidation
The consolidated financial statements include the accounts of BankUnited, Inc. and its wholly-owned subsidiary. All
significant intercompany balances and transactions have been eliminated in consolidation. VIEs are consolidated if the
Company is the primary beneficiary; i.e., has (i) the power to direct the activities of the VIE that most significantly impact the
VIE's economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be
significant to the VIE. The Company has variable interests in affordable housing limited partnerships that are not required to be
consolidated because the Company is not the primary beneficiary.
Fair Value Measurements
Certain of the Company's assets and liabilities are reflected in the consolidated financial statements at fair value on either a
recurring or non-recurring basis. Investment securities available for sale, marketable equity securities and derivative
instruments are measured at fair value on a recurring basis. Assets measured at fair value or fair value less cost to sell on a non-
recurring basis may include collateral dependent loans, OREO and other repossessed assets, loans held for sale, goodwill and
impaired long-lived assets. These non-recurring fair value measurements typically involve lower-of-cost-or-market accounting
or the measurement of impairment of certain assets.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement
date. GAAP establishes a hierarchy that prioritizes inputs used to determine fair value measurements into three levels based on
the observability and transparency of the inputs:
•
•
Level 1 inputs are unadjusted quoted prices in active markets that are accessible at the measurement date for identical
assets or liabilities.
Level 2 inputs are observable inputs other than level 1 inputs, including quoted prices for similar assets and liabilities,
quoted prices for identical assets and liabilities in less active markets and other inputs that can be corroborated by
observable market data.
78
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
•
Level 3 inputs are unobservable inputs supported by limited or no market activity or data and inputs requiring
significant management judgment or estimation.
The fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of
unobservable inputs in estimating fair value. Unobservable inputs are utilized in determining fair value measurements only to
the extent that observable inputs are unavailable. The need to use unobservable inputs generally results from a lack of market
liquidity and diminished observability of actual trades or assumptions that would otherwise be available to value a particular
asset or liability.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks, both interest bearing and non-interest bearing, including
amounts on deposit at the Federal Reserve Bank. Cash equivalents have original maturities of three months or less. For
purposes of reporting cash flows, cash receipts and payments pertaining to FHLB advances with original maturities of three
months or less are reported net.
Investment Securities
Debt securities that the Company has the positive intent and ability to hold to maturity are classified as held to maturity and
reported at amortized cost. Debt securities that the Company may not have the intent to hold to maturity are classified as
available-for-sale at the time of acquisition and carried at fair value with unrealized gains and losses, net of tax, excluded from
earnings and reported in AOCI, a separate component of stockholders' equity. Securities classified as available-for-sale may be
used as part of the Company's asset/liability management strategy and may be sold in response to liquidity needs, regulatory
changes, changes in interest rates, prepayment risk or other market factors. The Company does not maintain a trading portfolio.
Purchase premiums and discounts on debt securities are amortized as adjustments to yield over the expected lives of the
securities, using the interest method which results in a constant effective yield. Premiums are amortized to the call date for
callable securities. Realized gains and losses from sales of securities are recorded on the trade date and are determined using the
specific identification method. The Company's policy on the ACL related to debt securities is discussed below in the section
entitled "ACL".
Marketable equity securities with readily determinable fair values are reported at fair value with unrealized gains and losses
included in earnings.
Non-marketable Equity Securities
The Bank, as a member of the FRB system and the FHLB, is required to maintain investments in the stock of the FRB and
FHLB. No market exists for this stock, and the investment can be liquidated only through redemption by the respective
institutions, at the discretion of and subject to conditions imposed by those institutions. The stock has no readily determinable
fair value and is carried at cost. Historically, stock redemptions have been at par value, which equals the Company's carrying
value. The Company monitors its investment in FRB and FHLB stock for impairment through review of recent financial results
of the FHLB, including capital adequacy and liquidity position, dividend payment history, redemption history and information
from credit agencies. The Company has not identified any indicators of impairment of the FRB or FHLB stock.
Loans Held for Sale
Loans originated or purchased with the intent to sell in the secondary market are carried at the lower of cost or fair value,
determined in the aggregate. A valuation allowance is established through a charge to earnings if the aggregate fair value of
such loans is lower than their cost. Gains or losses recognized upon sale are determined on the specific identification basis.
Loans not originated or otherwise acquired with the intent to sell, or loans which have been originated by the Company and
subsequently held for sale, are transferred into the held for sale classification at the lower of carrying amount or fair value when
they are specifically identified for sale and a formal plan exists to sell them.
Loans
Loans are reported at amortized cost, net of the ACL. Interest income is accrued based on the principal amount outstanding.
Non-refundable loan origination fees, net of direct costs of originating or acquiring loans, as well as purchase premiums and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
discounts, are deferred and recognized as adjustments to yield over the contractual lives of the related loans using the interest
method which results in a constant effective yield.
Non-accrual loans
Commercial loans are placed on non-accrual status when (i) management has determined that full repayment of all
contractual principal and interest is in doubt, or (ii) the loan is past due 90 days or more as to principal or interest unless the
loan is well secured and in the process of collection. Residential and other consumer loans, other than government insured
residential loans, are generally placed on non-accrual status when they are 90 days past due. When a loan is placed on non-
accrual status, uncollected interest accrued is reversed and charged to interest income. Payments received on non-accrual
commercial loans are applied as a reduction of principal. Interest payments are recognized as income on a cash basis on non-
accrual residential loans. Commercial loans are returned to accrual status only after all past due principal and interest has been
collected and full repayment of remaining contractual principal and interest is reasonably assured. Residential and consumer
loans are generally returned to accrual status when less than 90 days past due. Past due status of loans is determined based on
the contractual next payment due date. Loans less than 30 days past due are reported as current.
Contractually delinquent government insured residential loans are not classified as non-accrual due to the nature of the
guarantee. Contractually delinquent PCD loans are not classified as non-accrual, as long as the Company has a reasonable
expectation about amounts expected to be collected.
Troubled Debt Restructurings
In certain situations, due to economic or legal reasons related to a borrower's financial difficulties, the Company may grant
a concession to the borrower for other than an insignificant period of time that it would not otherwise consider. At that time, the
related loan is classified as a TDR. The concessions granted may include rate reductions, principal forgiveness, payment
forbearance, extensions of maturity at rates of interest below that commensurate with the risk profile of the loans, modification
of payment terms and other actions intended to minimize economic loss. A TDR is generally placed on non-accrual status at the
time of the modification unless the borrower was performing prior to the restructuring.
Section 4013 of the CARES Act, as amended by the Consolidated Appropriations Act on December 27, 2020, effectively
suspended the guidance related to TDRs codified in ASC 310-40 through January 1, 2022. Pursuant to inter-agency and
authoritative guidance and consistent with the CARES Act, short-term deferrals or modifications granted during the period this
guidance was effective and related to COVID-19 typically were not categorized as TDRs.
PCD assets
PCD assets are acquired financial assets that, as of the date of acquisition, have experienced a more than insignificant
deterioration in credit quality since origination. An assessment is conducted at acquisition to determine whether acquired
financial assets meet the criteria to be classified as PCD assets. That assessment may be conducted at the individual asset level,
or for a group of assets acquired together that have similar risk characteristics. At acquisition, the ACL related to PCD assets,
representing the estimated amount of the UPB of the assets not expected to be collected, is added to the purchase price to
determine the amortized cost basis and any non-credit related discount or premium is allocated to the individual assets acquired.
The non-credit related discount or premium is accreted or amortized to interest income over the life of the related assets using
the level yield method, as long as there is a reasonable expectation about amounts expected to be collected. Subsequent changes
in the amount of expected credit losses are recognized immediately by adjusting the ACL and reflecting the periodic changes as
credit loss expense or reversal of credit loss expense.
Sales-type and Direct Financing Leases
Sales-type and direct financing leases are carried at the aggregate of lease payments receivable and estimated residual value
of the leased property, if applicable, less unearned income. Interest income is recognized over the term of the leases to achieve a
constant periodic rate of return on the outstanding investment.
ACL
AFS Debt Securities
The Company reviews its AFS debt securities for credit loss impairment at the individual security level on at least a
quarterly basis. A security is impaired if its fair value is less than its amortized cost basis. A decline in fair value below
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
amortized cost basis represents a credit loss impairment to the extent the Company does not expect to recover the amortized
cost basis of the security. Impairment related to credit losses is recorded through the ACL to the extent fair value is less than the
amortized cost basis. Declines in fair value that have not been recorded through the ACL are recorded through other
comprehensive income, net of applicable taxes.
In assessing whether an impairment is credit loss related, the Company compares the present value of cash flows expected
to be collected to the security's amortized cost basis. If the present value of cash flows expected to be collected is less than the
amortized cost basis of the security, a credit loss exists, and an ACL is recorded. The Company discounts expected cash flows
at the effective interest rate implicit in the security at the purchase date, adjusted for expected prepayments. For floating rate
securities, the Company uses the floating rate as it changes over the life of the security. In developing estimates about cash
flows expected to be collected and determining whether a credit loss exists, the Company considers information about past
events, current conditions and reasonable and supportable forecasts. Factors and information that the Company uses in making
its assessments include, but are not necessarily limited to, the following:
•
•
•
•
•
•
•
•
The extent to which fair value is less than amortized cost;
Adverse conditions specifically related to the security, an industry or geographic area;
Changes in the financial condition of the issuer or underlying loan obligors;
The payment structure and remaining payment terms of the security, including levels of subordination or over-
collateralization;
Failure of the issuer to make scheduled payments;
Changes in credit ratings;
Relevant market data;
Estimated prepayments, defaults, and the value and performance of underlying collateral at the individual security
level.
The relative importance assigned to each of these factors varies depending on the facts and circumstances pertinent to the
individual security being evaluated.
Timely payment of principal and interest on securities issued by the U.S. Government, U.S. government agencies and U.S.
government sponsored entities is explicitly or implicitly guaranteed by the U. S. government. Therefore, the Company expects
to recover the amortized cost basis of these securities.
If the Company intends to sell a security in an unrealized loss position, or it is more likely than not that the Company will
be required to sell the security before recovery of its amortized cost basis, any allowance for credit losses will be written off and
the amortized cost basis will be written down to the debt security’s fair value at the reporting date with any incremental
impairment reported in earnings.
AFS securities will be charged off to the extent that there is no reasonable expectation of recovery of amortized cost basis.
AFS securities will be placed on non-accrual status if the Company does not reasonably expect to receive interest payments in
the future and interest accrued will be reversed against interest income. Securities will be returned to accrual status only when
collection of interest is reasonably assured.
Loans
The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected
to be collected. The ACL is adjusted through the provision for credit losses to the amount of amortized cost basis not expected
to be collected, or in the case of PCD loans, the amount of UPB not expected to be collected, at the balance sheet date.
Amortized cost basis includes UPB, unamortized premiums or discounts and deferred fees and costs, net of amounts previously
charged off.
The measurement of expected credit losses encompasses information about historical events, current conditions and
reasonable and supportable forecasts. Determining the amount of the ACL is complex and requires extensive judgment by
management about matters that are inherently uncertain. Re-evaluation of the ACL estimate in future periods, in light of
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changes in composition and characteristics of the loan portfolio, changes in the reasonable and supportable forecast and other
factors then prevailing may result in material changes in the amount of the ACL and credit loss expense in those future periods.
Loans are charged off against the ACL in the period in which they are deemed uncollectible, and recoveries are credited to
the ACL when received. Expected recoveries on loans previously charged off and expected to be charged-off, not to exceed the
aggregate of amounts previously charged-off and expected to be charged-off, are included in the ACL estimate. For loans
secured by residential real estate, an assessment of collateral value is made at no later than 120 days delinquency; any
outstanding loan balance in excess of fair value less cost to sell is charged off at no later than 180 days delinquency.
Additionally, any outstanding balance in excess of fair value of collateral less cost to sell is charged off (i) within 60 days of
receipt of notification of filing from the bankruptcy court, (ii) within 60 days of determination of loss if all borrowers are
deceased or (iii) within 90 days of discovery of fraudulent activity. Other consumer loans are typically charged off at 120 days
delinquency. Commercial loans are charged off when, in management's judgment, they are considered to be uncollectible.
Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. Factors
that may be considered in aggregating loans for this purpose include but are not necessarily limited to, product or collateral
type, industry, geography, internal risk rating, credit characteristics such as credit scores or collateral values, and historical or
expected credit loss patterns. For loans that do not share similar risk characteristics with other loans such as collateral
dependent loans and TDRs, expected credit losses are estimated on an individual basis.
Expected credit losses are estimated over the contractual terms of the loans, adjusted for expected prepayments. Expected
prepayments for commercial loans are generally estimated based on the Company's historical experience. For residential loans,
expected prepayments are estimated using a model that incorporates industry prepayment data, calibrated to reflect the
Company's experience. The contractual term excludes expected extensions, renewals, and modifications unless either of the
following applies: management has a reasonable expectation at the reporting date that a TDR will be executed with an
individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date
and are not unconditionally cancellable by the Company.
For the substantial majority of portfolio segments and subsegments, including residential loans other than government
insured loans, and most commercial and commercial real estate loans, expected losses are estimated using econometric models.
The models employ a factor based methodology, leveraging data sets containing extensive historical loss and recovery
information by industry, geography, product type, collateral type and obligor characteristics, to estimate PD and LGD.
Measures of PD for commercial loans incorporate current conditions through market cycle or credit cycle adjustments. For
residential loans, the models consider FICO, adjusted LTVs and delinquency rates. PDs and LGDs are then conditioned on the
reasonable and supportable economic forecast. Projected PDs and LGDs, determined based on pool level characteristics, are
applied to estimated exposure at default, considering the contractual term and payment structure of loans, adjusted for expected
prepayments, to generate estimates of expected loss. For criticized or classified loans, PDs are adjusted to benchmark PDs
established for each risk rating given that the most current financial information available is often not reflective of the
borrowers' current financial condition. The ACL estimate incorporates a reasonable and supportable economic forecast through
the use of externally developed macroeconomic scenarios applied in the models.
A single economic scenario or a probability weighted blend of economic scenarios may be used. The models ingest
numerous national, regional and MSA level variables and data points.
Commercial Real Estate Model
Variables with the most significant impact on the commercial real estate model include unemployment at both national and
regional levels, the CRE property forecast by property type and sub-market, 10 year treasury yield, Baa corporate yield and real
GDP growth, at the national level. Increases in unemployment and yields within the commercial real estate model result in
increases in the ACL. Increases in real GDP growth and improvements in the CRE property forecasts reduce the reserve.
Commercial Model
Variables with the most significant impact on the commercial model include a stock market volatility index, the S&P 500
index, unemployment at both national and regional levels, and a variety of interest rates and spreads. Increases in the
unemployment rate, the stock market volatility index, and the Baa corporate yield increase the reserve, while increases in real
GDP growth reduce the reserve.
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Residential Model
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Variables with the most significant impact on the residential model include HPI and unemployment at regional levels, real
GDP growth, and a 30 year mortgage rate. Increases in the unemployment rate and the 30-year mortgage rate increase the
reserve, while increases in real GDP growth and HPI reduce the reserve.
The length of the reasonable and supportable forecast period is evaluated at each reporting period and adjusted if deemed
necessary. Currently, the Company uses a 2-year reasonable and supportable forecast period in estimating the ACL. After the
reasonable and supportable forecast period, the models effectively revert to long-term mean losses on a straight-line basis over
12 months.
For certain less material portfolios including loans and leases to state and local government entities originated by Pinnacle,
small balance commercial loans and consumer loans, the WARM method is used to estimate expected credit losses. Loss rates
are applied to the exposure at default, after factoring in amortization and expected prepayments. For the Pinnacle portfolio,
historical loss information is based on municipal historical default and recovery data, segmented by credit rating. For small
balance commercial loans, historical loss information is based on the Company's historical loss experience over a five year
period. For consumer loans, historical loss information is based on peer data; this portfolio subsegment is not significant. All
loss estimates are conditioned as applicable on changes in current conditions and the reasonable and supportable economic
forecast. Expected credit losses for the funded portion of mortgage warehouse lines of credit are estimated based primarily on
the Company's historical loss experience, conditioned as applicable on changes in current conditions and the reasonable and
supportable economic forecast. Generally, given the nature of these loans, losses would be expected to manifest within a very
short time period after origination.
The Company expects to collect the amortized cost basis of government insured residential loans and PPP loans due to the
nature of the government guarantee, so the ACL is zero for these loans.
Qualitative factors
Quantitative models have certain inherent limitations with respect to estimating expected losses. These limitations may be
more prevalent in times of rapidly changing economic conditions and forecasts. Qualitative adjustments are made to the ACL
when, based on management’s judgment, there are factors impacting expected credit losses not taken into account by the
quantitative calculations. Potential qualitative adjustments are categorized as follows:
•
•
•
Economic factors, including material uncertainties, trends and developments that, in management's judgment, may not
have been considered in the reasonable and supportable economic forecast;
Credit policy and staffing, including the nature and level of policy and procedural exceptions or changes in credit
policy not reflected in quantitative results, changes in the quality of underwriting and portfolio management and staff
and issues identified by credit review, internal audit or regulators that may not be reflected in quantitative results;
Concentrations, considering whether the quantitative estimate adequately accounts for concentration risk in the
portfolio;
• Model imprecision and model validation findings; and
•
Other factors not adequately considered in the quantitative estimate or other qualitative categories identified by
management that may materially impact the amount of expected credit losses.
Collateral dependent loans
Collateral dependent loans are those for which the borrower is experiencing financial difficulty and repayment is expected
to be provided substantially through the operation or sale of the collateral. These loans do not typically share similar risk
characteristics with other loans and expected credit losses are evaluated on an individual basis. Loans evaluated individually are
not included in the collective evaluation. Estimates of expected credit losses for collateral dependent loans, whether or not
foreclosure is probable, are based on the fair value of the collateral, adjusted for selling costs when repayment depends on sale
of the collateral. Due to immateriality, expected credit losses for collateral dependent commercial relationships with committed
balances less than $1.0 million may be estimated collectively.
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December 31, 2022
Troubled debt restructurings
For TDRs or loans for which there is a reasonable expectation that a TDR will be executed that are not collateral
dependent, the credit loss estimate is determined by comparing the net present value of expected cash flows to the amortized
cost of the loans. Expected cash flows are discounted at the loan’s original effective interest rate for fixed rate loans and at the
rate as it changes over the life of the loan for variable rate loans.
Off-balance sheet credit exposures
Expected credit losses related to off-balance sheet credit exposures are estimated over the contractual period for which the
Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally
cancellable by the Company. Expected credit losses are estimated using essentially the same methodologies employed to
estimate expected credit losses on the amortized cost basis of loans, taking into consideration the likelihood and amount of
additional amounts expected to be funded over the terms of the commitments. The liability for credit losses on off-balance sheet
credit exposures is presented within other liabilities on the consolidated balance sheets, distinct from the ACL. Adjustments to
the liability are included in the provision for credit losses.
Accrued Interest Receivable
The Company has elected to present accrued interest receivable separate from the amortized cost basis of financial assets
carried at amortized cost. The Company excludes accrued interest receivable balances from tabular disclosures about financial
assets carried at amortized cost. The Company generally does not estimate an ACL on accrued interest receivable balances
since uncollectible accrued interest is timely written off in accordance with the Company's accounting policies for non-accrual
loans. Under unusual circumstances, the Company evaluates whether its non-accrual policies continue to consistently provide
for timely reversal of accrued interest receivable. If considered necessary, the Company records an allowance for uncollectible
accrued interest receivable, determined using essentially the same methodologies used to estimate the ACL on the amortized
cost basis of the related loans. The allowance is deducted from accrued interest receivable and presented within other assets on
the consolidated balance sheets, distinct from the ACL. Changes in the ACL related to accrued interest receivable are included
in the provision for credit losses.
Leases
The Company determines whether a contract is or contains a lease at inception. For leases with terms greater than twelve
months under which the Company is lessee, ROU assets and lease liabilities are recorded at the commencement date. Lease
liabilities are initially recorded based on the present value of future lease payments over the lease term. ROU assets are initially
recorded at the amount of the associated lease liabilities plus prepaid lease payments and initial direct costs, less any lease
incentives received. The cost of short term leases is recognized on a straight line basis over the lease term. The lease term
includes options to extend if the exercise of those options is reasonably certain and includes termination options if there is
reasonable certainty the options will not be exercised. Lease payments are discounted using the Company's FHLB borrowing
rate for borrowings of a similar term unless an implicit rate is defined in the contract or is determinable, which is generally not
the case. Leases are classified as financing or operating leases at commencement; generally, leases are classified as finance
leases when effective control of the underlying asset is transferred. The substantial majority of leases under which the Company
is lessee are classified as operating leases. For operating leases, lease cost is recognized in the consolidated statements of
income on a straight line basis over the lease terms. For finance leases, interest expense on lease liabilities is recognized on the
effective interest method and amortization of ROU assets is recognized on a straight line basis over the lease terms. Variable
lease costs are recognized in the period in which the obligation for those costs is incurred. The Company has elected not to
separate lease from non-lease components of its lease contracts.
Bank Owned Life Insurance
Bank owned life insurance is carried at cash surrender value. Changes in cash surrender value are recorded in non-interest
income.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Operating Lease Equipment
Operating lease equipment is carried at cost less accumulated depreciation and is depreciated to estimated residual value
using the straight-line method over the lease term. Estimated residual values are re-evaluated at least annually, based primarily
on current residual value appraisals. Rental revenue is recognized on a straight-line basis over the contractual term of the lease.
A review for impairment of equipment under operating lease is performed at least annually or when events or changes in
circumstances indicate that the carrying amount of long-lived assets may not be recoverable. Impairment of assets is determined
by comparing the carrying amount to future undiscounted net cash flows expected to be generated. If an asset is impaired, the
measure of impairment is the amount by which the carrying amount exceeds the fair value of the asset.
Goodwill
Goodwill represents the excess of consideration transferred in business combinations over the fair value of net tangible and
identifiable intangible assets acquired. Goodwill is not amortized, but is tested for impairment annually or more frequently if
events or circumstances indicate that impairment may have occurred. The Company performs its annual goodwill impairment
test in the third fiscal quarter. The Company has a single reporting unit.
When assessing goodwill for impairment, the Company may elect to perform a qualitative assessment to determine if a
quantitative impairment test is necessary. If a qualitative assessment is not performed, or if the qualitative assessment indicates
it is likely that the fair value of a reporting unit is less than its carrying amount, a quantitative test is performed. The quantitative
impairment test compares the estimated fair value of the reporting unit to its carrying amount. If the fair value of the reporting
unit exceeds its carrying amount, no impairment is indicated. If the fair value of the reporting unit is less than its carrying
amount, impairment of goodwill is measured as the excess of the carrying amount over fair value.
OREO and Repossessed Assets
OREO and repossessed assets consists of real estate assets acquired through, or in lieu of, loan foreclosure and personal
property acquired through repossession. Such assets are included in other assets in the accompanying consolidated balance
sheets. These assets are held for sale and are initially recorded at estimated fair value less costs to sell, establishing a new cost
basis. Subsequent to acquisition, periodic valuations are performed, and the assets are carried at the lower of the carrying
amount at the date of acquisition or estimated fair value less cost to sell. Significant property improvements are capitalized to
the extent that the resulting carrying value does not exceed fair value less cost to sell. Legal fees, maintenance, taxes, insurance
and other direct costs of holding and maintaining these assets are expensed as incurred.
Premises and Equipment
Premises and equipment are carried at cost less accumulated depreciation and amortization and are included in other assets
in the accompanying consolidated balance sheets. The Company measures assets held for sale at the lower of carrying amount
or estimated fair value. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
The lives of improvements to existing buildings are based on the lesser of the estimated remaining lives of the buildings or the
estimated useful lives of the improvements. Leasehold improvements are amortized over the shorter of the expected terms of
the leases at inception, considering options to extend that are reasonably assured, or their useful lives. The estimated useful
lives of premises and equipment are as follows:
•
•
•
•
buildings and improvements - 10 to 30 years;
leasehold improvements - 5 to 20 years;
furniture, fixtures and equipment - 5 to 7 years; and
computer equipment - 3 to 5 years.
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Software and CCA
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Software and CCA are carried at cost less accumulated depreciation and amortization and are included in other assets in the
accompanying consolidated balance sheets. Depreciation and amortization are calculated using the straight-line method over the
estimated useful lives of the assets, which for CCA is based on the term of the associated hosting arrangements plus any
reasonably certain renewals. Direct costs associated with developing or obtaining and implementing internal use software and
hosting arrangements that are service contracts incurred during the application development stage are capitalized. The estimated
useful lives of software, software licensing rights and CCA implementation costs range from 3 to 5 years.
Investments in Affordable Housing Limited Partnerships
The Company has acquired investments in limited partnerships that manage or invest in qualified affordable housing
projects and provide the Company with low-income housing tax credits and other tax benefits. These investments are included
in other assets in the accompanying consolidated balance sheets. The Company accounts for investments in qualified affordable
housing projects using the proportional amortization method if certain criteria are met. Under the proportional amortization
method, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the
amortization is recognized in the income statement as a component of income tax expense. The investments are evaluated for
impairment when events or changes in circumstances indicate that it may be more likely than not that the carrying amount of
the investment will not be realized.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in
effect for periods in which the differences are expected to reverse. The effect of changes in tax rates on deferred tax assets and
liabilities are recognized in income in the period that includes the enactment date. A valuation allowance is established for
deferred tax assets when management determines that it is more likely than not that some portion or all of a deferred tax asset
will not be realized. In making such determinations, the Company considers all available positive and negative evidence that
may impact the realization of deferred tax assets. These considerations include the amount of taxable income generated in
statutory carryback periods, future reversals of existing taxable temporary differences, projected future taxable income and
available tax planning strategies.
The Company recognizes tax benefits from uncertain tax positions when it is more likely than not that the related tax
positions will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the
technical merits of the tax positions. An uncertain tax position is a position taken in a previously filed tax return or a position
expected to be taken in a future tax return that is not based on clear and unambiguous tax law. The Company measures tax
benefits related to uncertain tax positions based on the largest benefit that has a greater than 50% likelihood of being realized
upon settlement. If the initial assessment fails to result in recognition of a tax benefit, the Company subsequently recognizes a
tax benefit if (i) there are changes in tax law or case law that raise the likelihood of prevailing on the technical merits of the
position to more-likely-than-not, (ii) the statute of limitations expires, or (iii) there is a completion of an examination resulting
in a settlement of that tax year or position with the appropriate agency. The Company recognizes interest and penalties related
to uncertain tax positions, as well as interest income or expense related to tax settlements, in the provision for income taxes.
Equity Based Compensation
The Company periodically grants unvested or restricted shares of common stock and other share-based awards to key
employees. For equity classified awards, compensation cost is measured based on the estimated fair value of the awards at the
grant date and is recognized in earnings on a straight-line basis over the requisite service period for each award. Liability-
classified awards are remeasured each reporting period at fair value until the award is settled, and compensation cost is
recognized in earnings on a straight-line basis over the requisite service period for each award, adjusted for changes in fair
value each reporting period. Compensation cost related to awards that embody performance conditions is recognized when it is
probable that the performance conditions will be achieved. The number of awards expected to vest is estimated in determining
the amount of compensation cost to be recognized related to share-based payment transactions.
The fair value of unvested shares is generally based on the closing market price of the Company's common stock at the date
of grant. Market conditions embedded in awards are reflected in the grant-date fair value of the awards.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Derivative Financial Instruments and Hedging Activities
Interest rate derivative contracts
The Company uses interest rate derivative contracts, such as swaps, caps, floors and collars, in the normal course of
business to meet the financial needs of its customers and to manage exposure to changes in interest rates. Interest rate contracts
are recorded as assets or liabilities in the consolidated balance sheets at fair value. Interest rate derivatives that are used as a risk
management tool to hedge the Company's exposure to changes in interest rates have been designated as cash flow or fair value
hedging instruments. The gain or loss resulting from changes in the fair value of interest rate swaps designated and qualifying
as cash flow hedging instruments is initially reported as a component of other comprehensive income and subsequently
reclassified into earnings in the same period in which the hedged transaction affects earnings. Changes in the fair value of
interest rate swaps designated as fair value hedging instruments as well as the offsetting changes in the fair value of the hedged
items caused by fluctuations in the designated benchmark interest rates are recognized in earnings.
The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective
in offsetting changes in the cash flows or fair value of the hedged item, the derivative expires or is sold, terminated, or
exercised, management determines that the designation of the derivative as a hedging instrument is no longer appropriate or, for
a cash flow hedge, the occurrence of the forecasted transaction is no longer probable. When hedge accounting on a cash flow
hedge is discontinued, any subsequent changes in fair value of the derivative are recognized in earnings. The cumulative
unrealized gain or loss related to a discontinued cash flow hedge continues to be reported in AOCI and is subsequently
reclassified into earnings in the same period in which the hedged transaction affects earnings, unless it is probable that the
forecasted transaction will not occur by the end of the originally specified time period, in which case the cumulative unrealized
gain or loss reported in AOCI is reclassified into earnings immediately. When hedge accounting on a fair value hedge is
discontinued, adjustments to the carrying amount of the hedged item due to changes in fair value are also discontinued.
Cash flows from derivative financial instruments that are accounted for as hedges, including daily settlements of centrally
cleared derivatives with the CME, are classified as operating cash flows.
Changes in the fair value of interest rate contracts not designated as, or not qualifying as, hedging instruments are
recognized currently in earnings.
Transfers of Financial Assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. A gain or loss is
recognized in earnings upon completion of the sale based on the difference between the sales proceeds and the carrying value of
the assets. Control over the transferred assets is deemed to have been surrendered when: (i) the assets have been legally isolated
from the Company, (ii) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right)
to pledge or exchange the transferred assets, and (iii) the Company does not maintain effective control over the transferred
assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return
specific assets.
Earnings per Common Share
Basic earnings per common share is calculated by dividing income allocated to common stockholders for basic earnings
per common share by the weighted average number of common shares outstanding for the period, reduced by average unvested
stock awards. Unvested stock awards with non-forfeitable rights to dividends, whether paid or unpaid, and stand-alone dividend
participation rights are considered participating securities and are included in the computation of basic earnings per common
share using the two class method whereby net income is allocated between common stock and participating securities. In
periods of a net loss, no allocation is made to participating securities as they are not contractually required to fund net losses.
Diluted earnings per common share is computed by dividing income allocated to common stockholders for basic earnings per
common share, adjusted for earnings reallocated from participating securities, by the weighted average number of common
shares outstanding for the period increased for the dilutive effect of unexercised stock options and unvested stock awards using
the treasury stock method. Contingently issuable shares are included in the calculation of earnings per common share beginning
on the date the contingency was resolved.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Revenue From Contracts with Customers
Revenue from contracts with customers within the scope of Topic 606 "Revenue from Contracts with Customers", is
recognized in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those
goods or services as the related performance obligations are satisfied. The majority of our revenues, including revenues from
loans, leases, investment securities, derivative instruments and letters of credit and from transfers and servicing of financial
assets, are excluded from the scope of Topic 606. Deposit service charges and fees is the most significant category of revenue
within the scope of the standard. These service charges and fees consist primarily of monthly maintenance fees and other
transaction based fees. Revenue is recognized when our performance obligations are complete, generally monthly for account
maintenance fees or when a transaction, such as a wire transfer, is completed. Payment is typically received at the time the
performance obligation is satisfied. The aggregate amount of revenue that is within the scope of Topic 606 from sources other
than deposit service charges and fees is not material.
Reclassifications
Certain amounts presented for prior periods have been reclassified to conform to the current period presented.
New Accounting Pronouncements Adopted in 2022
ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging -
Contracts in Entity’s Own Equity(Subtopic 815-40) . This ASU simplifies the accounting for convertible debt and convertible
preferred stock by reducing the number of accounting models for these instruments, resulting in fewer embedded conversion
features being separately recognized from the host contract. Additionally, this ASU revises the criteria for determining whether
contracts in an entity's own equity meet the scope exception from derivative accounting, which will change the population of
contracts that are recognized as assets or liabilities. The amendments in this ASU also revise certain aspects of the guidance on
calculating earnings per share with respect to convertible instruments and instruments that may be settled in the entity's own
shares. The Company adopted this ASU on January 1, 2022,with no material impact on the Company's consolidated financial
position, results of operations, and cash flows.
ASU No. 2022-01, Fair Value Hedging—Portfolio Layer Method (Topic 815) . This ASU expands the portfolio layer
method of hedge accounting prescribed in ASU No. 2017-12 to allow multiple hedged layers of a single closed portfolio and to
include portfolios of both prepayable and non-prepayable financial assets. This scope expansion is consistent with the FASB’s
efforts to simplify hedge accounting and allows entities to apply the same accounting method to similar hedging strategies. The
ASU also specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on accounting and
disclosure of hedge basis adjustments and specifies how hedge basis adjustments should be considered in determining credit
losses for assets in the designated closed portfolio. This ASU is effective for public business entities for interim and annual
periods in fiscal years beginning after December 15, 2022. The Company adopted this ASU upon its release in March 2022
with no material impact on the Company's consolidated financial position, results of operations, and cash flows.
Accounting Pronouncements Not Yet Adopted
ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326). This ASU eliminates the accounting guidance for
TDRs by creditors in Subtopic310-40, Receivables - Troubled Debt Restructurings by Creditors. The ASU enhances disclosure
requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty,
updates certain requirements related to accounting for credit losses under ASC 326 and requires disclosure of current-period
gross write offs of financing receivables by year of origination. The ASU is effective for the Company for interim and annual
periods in fiscal years beginning after December 15, 2022.
The Company will adopt this ASU prospectively in the first quarter of 2023 except with respect to the recognition and
measurement of TDRs, for which the modified retrospective transition method will apply. The impact of adoption of this ASU
on the Company's consolidated financial position, results of operations, and cash flows is not expected to be material. Adoption
will lead to additional and revised disclosures in the Company's financial statements starting in the first quarter of 2023.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Note 2 Earnings Per Common Share
The computation of basic and diluted earnings per common share is presented below for the periods indicated (in
thousands, except share and per share data):
c
Basic earnings per common share:
Numerator:
Net income
Distributed and undistributed earnings allocated to participating
securities
Income allocated to common stockholders for basic earnings per
common share
Denominator:
Weighted average common shares outstanding
Less average unvested stock awards
Weighted average shares for basic earnings per common share
Basic earnings per common share
Diluted earnings per common share:
Numerator:
Income allocated to common stockholders for basic earnings per
common share
Adjustment for earnings reallocated from participating securities
Income used in calculating diluted earnings per common share
Denominator:
Weighted average shares for basic earnings per common share
Dilutive effect of certain share-based awards
Weighted average shares for diluted earnings per common share
Years Ended December 31,
2022
2021
2020
$
284,971 $
414,984 $
197,853
(5,075)
(5,991)
(8,882)
$
279,896 $
408,993 $
188,971
80,032,356
(1,224,568)
78,807,788
91,612,243
(1,212,055)
90,400,188
3.55 $
4.52 $
92,869,736
(1,163,480)
91,706,256
2.06
279,896 $
(626)
279,270 $
408,993 $
(585)
408,408 $
188,971
(123)
188,848
$
$
$
78,807,788
94
78,807,882
90,400,188
134
90,400,322
91,706,256
24,608
91,730,864
2.06
Diluted earnings per common share
$
3.54 $
4.52 $
Potentially dilutive unvested shares totaling 2,034,960, 1,804,973 and 1,638,642 were outstanding at December 31, 2022,
2021 and 2020, respectively, but excluded from the calculation of diluted earnings per common share because their inclusion
would have been anti-dilutive.
Participating securities for the year ended December 31, 2020, included 3,023,314 dividend equivalent rights that were
issued in conjunction with the IPO of the Company's common stock. These dividend equivalent rights expired in February 2021
and, while outstanding, participated in dividends on a one-for-one basis.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Note 3 Investment Securities
Investment securities include investment securities available for sale, marketable equity securities, and investment
securities held to maturity. The investment securities portfolio consisted of the following at the dates indicated (in thousands):
Investment securities available for sale:
U.S. Treasury securities
U.S. Government agency and sponsored enterprise
residential MBS
U.S. Government agency and sponsored enterprise
commercial MBS
Private label residential MBS and CMOs
Private label commercial MBS
Single family real estate-backed securities
Collateralized loan obligations
Non-mortgage asset-backed securities
State and municipal obligations
SBA securities
Investment securities held to maturity
Marketable equity securities
December 31, 2022
Gross Unrealized
Amortized Cost
Gains
Losses
Carrying Value (1)
$
148,956 $
63 $
(13,178) $
135,841
2,036,693
1,334
(54,859)
1,983,168
600,517
2,864,589
2,645,168
502,194
1,166,838
102,194
122,181
139,320
10,328,650 $
10,000
$
10,338,650
—
54
176
—
151
—
695
(75,423)
(333,980)
(120,990)
(31,753)
(30,526)
(6,218)
(6,215)
381
2,854 $
(3,919)
(677,061)
525,094
2,530,663
2,524,354
470,441
1,136,463
95,976
116,661
135,782
9,654,443
10,000
9,664,443
90,884
$
9,755,327
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Investment securities available for sale:
U.S. Treasury securities
U.S. Government agency and sponsored enterprise
residential MBS
U.S. Government agency and sponsored enterprise
commercial MBS
Private label residential MBS and CMOs
Private label commercial MBS
Single family real estate-backed securities
Collateralized loan obligations
Non-mortgage asset-backed securities
State and municipal obligations
SBA securities
Investment securities held to maturity
Marketable equity securities
$
December 31, 2021
Gross Unrealized
Amortized Cost
Gains
Losses
Carrying Value (1)
$
114,385 $
173 $
(2,898) $
111,660
2,093,283
12,934
(8,421)
2,097,796
5,287
3,575
7,843
5,031
598
1,419
16,559
2,027
55,446 $
(10,313)
(14,291)
(8,523)
(2,908)
(1,529)
—
—
(2,728)
(51,611)
861,925
2,160,136
2,604,690
474,845
1,079,217
151,091
205,718
184,296
9,929,586 $
10,000
9,939,586
856,899
2,149,420
2,604,010
476,968
1,078,286
152,510
222,277
183,595
9,933,421
10,000
9,943,421
120,777
$
10,064,198
(1) At fair value except for securities held to maturity.
Investment securities held to maturity at December 31, 2022 and 2021 consisted of one State of Israel bond maturing in
2024. Accrued interest receivable on investments totaled $34 million and $16 million at December 31, 2022 and 2021,
respectively, and is included in other assets in the accompanying consolidated balance sheets.
At December 31, 2022, contractual maturities of investment securities available for sale, adjusted for anticipated
prepayments when applicable, were as follows (in thousands):
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Amortized Cost
Fair Value
$
1,511,041 $
5,927,706
1,838,180
1,051,723
$ 10,328,650 $
1,437,407
5,634,990
1,655,098
926,948
9,654,443
The carrying value of securities pledged as collateral for FHLB advances, public deposits, interest rate swaps and to secure
borrowing capacity at the FRB totaled $4.1 billion and $4.0 billion at December 31, 2022 and 2021, respectively.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The following table provides information about gains and losses on investment securities for the periods indicated (in
thousands):
Years Ended December 31,
Proceeds from sale of investment securities AFS
Gross realized gains on investment securities AFS
Gross realized losses on investment securities AFS
Net realized gain
$
$
2022
798,205 $ 2,286,600 $ 1,503,498
2020
2021
4,058 $
(131)
3,927
10,005 $
(995)
9,010
14,441
(440)
14,001
Net unrealized gains (losses) on marketable equity securities recognized in
earnings
(19,732)
(2,564)
3,766
Gain (loss) on investment securities, net
$
(15,805) $
6,446 $
17,767
The following tables present the aggregate fair value and the aggregate amount by which amortized cost exceeded fair
value for investment securities available for sale in unrealized loss positions aggregated by investment category and length of
time that individual securities had been in continuous unrealized loss positions at the dates indicated (in thousands):
Less than 12 Months
12 Months or Greater
Total
December 31, 2022
U.S. Treasury securities
U.S. Government agency and
sponsored enterprise residential
MBS
U.S. Government agency and
sponsored enterprise commercial
MBS
Private label residential MBS and
CMOs
Private label commercial MBS
Single family real estate-backed
securities
Collateralized loan obligations
Non-mortgage asset-backed
securities
State and municipal obligations
SBA securities
Fair Value
Unrealized
Losses
Fair Value
$
29,198 $
(495) $
86,744 $
Unrealized
Losses
(12,683) $ 115,942 $
Fair Value
Unrealized
Losses
(13,178)
1,243,286
(26,789)
672,322
(28,070) 1,915,608
(54,859)
236,102
(5,736)
288,992
(69,687)
525,094
(75,423)
1,103,578
1,191,969
(93,480) 1,413,642
(39,729) 1,223,223
(240,500) 2,517,220
(81,261) 2,415,192
(333,980)
(120,990)
391,421
596,803
(22,293)
(14,020)
79,020
494,945
470,441
(9,460)
(16,506) 1,091,748
(31,753)
(30,526)
95,976
67,444
42,900
(6,218)
(6,215)
(3,919)
$ 4,998,677 $ (215,467) $ 4,334,293 $ (461,594) $ 9,332,970 $ (677,061)
—
(61)
(3,366)
(6,218)
(6,154)
(553)
95,976
68,558
117,191
—
1,114
74,291
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
U.S. Treasury securities
U.S. Government agency and
sponsored enterprise residential
MBS
U.S. Government agency and
sponsored enterprise commercial
MBS
Private label residential MBS and
CMOs
Private label commercial MBS
Single family real estate-backed
securities
Collateralized loan obligations
SBA securities
December 31, 2021
Less than 12 Months
12 Months or Greater
Total
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
$
49,328 $
(591) $
47,102 $
(2,307) $
96,430 $
(2,898)
436,744
(4,549)
401,022
(3,872)
837,766
(8,421)
247,323
(4,084)
163,380
(6,229)
410,703
(10,313)
1,552,946
1,338,288
(13,933)
(6,085)
23,355
171,490
(358) 1,576,301
(2,438) 1,509,778
154,552
318,555
496
(2,908)
(445)
—
—
319,192
99,599
$ 4,098,232 $
(32,595) $ 1,225,140 $
—
(1,084)
(2,728)
(19,016) $ 5,323,372 $
154,552
637,747
100,095
(14,291)
(8,523)
(2,908)
(1,529)
(2,728)
(51,611)
The Company monitors its investment securities available for sale for credit loss impairment on an individual security
basis. No securities were determined to be credit loss impaired during the years ended December 31, 2022, and 2021. An ACL
was recorded related to one private label commercial MBS security during the year ended December 31, 2020. At
December 31, 2022, the Company did not have an intent to sell securities that were in unrealized loss positions and it was not
more likely than not that the Company would be required to sell these securities before recovery of the amortized cost basis,
which may be at maturity. In making this determination, the Company considered its current and projected liquidity position, its
investment policy as to permissible holdings and concentration limits, regulatory requirements and other relevant factors.
At December 31, 2022, 595 securities available for sale were in unrealized loss positions. The amount of impairment
related to 100 of these securities was considered insignificant both individually and in the aggregate, totaling approximately
$1.0 million and no further analysis with respect to these securities was considered necessary.
The basis for concluding that AFS securities were not credit loss impaired and no ACL was considered necessary at
December 31, 2022 is further discussed below.
Unrealized losses were generally attributable to rising interest rates and widening spreads related to the Federal Reserve's
quantitative tightening and benchmark interest rate increases. Continuing uncertainty with respect to the trajectory of the
economy and geopolitical events have also led to market uncertainty, producing some yield curve dislocations.
U.S. Government, U.S. Government Agency and Government Sponsored Enterprise Securities
At December 31, 2022, five U.S. treasury, 159 U.S. Government agency and sponsored enterprise residential MBS, 27 U.S.
Government agency and sponsored enterprise commercial MBS, and 18 SBA securities were in unrealized loss positions. The
timely payment of principal and interest on these securities is explicitly or implicitly guaranteed by the U.S. Government. As
such, there is an assumption of zero credit loss and the Company expects to recover the amortized cost basis of these securities.
Private Label Securities:
None of the impaired private label securities had missed principal or interest payments or had been downgraded by a
NRSRO at December 31, 2022. The Company performed an analysis comparing the present value of cash flows expected to be
collected to the amortized cost basis of impaired securities. This analysis was based on a scenario that we believe to be
generally more conservative than our reasonable and supportable economic forecast at December 31, 2022, and incorporated
assumptions about voluntary prepayment rates, collateral defaults, delinquencies, severity and other relevant factors as
described further below. Our analysis also considered the structural characteristics of each security and the level of credit
enhancement provided by that structure.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Private label residential MBS and CMOs
At December 31, 2022, 120 private label residential MBS and CMOs were in unrealized loss positions. Our analysis of
cash flows expected to be collected on these securities incorporated assumptions about collateral default rates, voluntary
prepayment rates, loss severity, delinquencies and recovery lag. In developing those assumptions, we took into account
collateral quality measures such as FICO, LTV, documentation, loan type, property type, agency availability criteria and
performing status. We also regularly monitor sector data including home price appreciation, forbearance, delinquency and
prepay trends as well as other economic data that could be indicative of stress in the sector. Our December 31, 2022 analysis
projected weighted average collateral losses for impaired securities in this category of 3% compared to weighted average credit
support of 18%. As of December 31, 2022, 94% of impaired securities in this category, based on carrying value, were
externally rated AAA, 1% were rated AA and 5% were rated A.
Private label commercial MBS
At December 31, 2022, 109 private label commercial MBS were in unrealized loss positions. Our analysis of cash flows
expected to be collected on these securities incorporated assumptions about collateral default rates, voluntary prepayment rates,
loss severity, delinquencies and recovery lag. In developing those assumptions, we took into account collateral quality and type,
loan size, loan purpose and other qualitative factors. We also regularly monitor collateral watch lists, bankruptcy data,
defeasance data, special servicing trends, delinquency and other economic data that could be indicative of stress in the sector.
Our December 31, 2022 analysis projected weighted average collateral losses for impaired securities in this category of 7%
compared to weighted average credit support of 43%. As of December 31, 2022, 85% of impaired securities in this category,
based on carrying value, were externally rated AAA, 11% were rated AA and 4% were rated A.
Single family real estate-backed securities
At December 31, 2022, 17 single family rental real estate-backed securities were in unrealized loss positions. Our analysis
of cash flows expected to be collected on these securities incorporated assumptions about collateral default rates, loss severity,
delinquencies and recovery lag. We regularly monitor sector data including home price appreciation, forbearance, delinquency
and prepay trends as well as other economic data that could be indicative of stress in the sector. Our December 31, 2022
analysis projected weighted average collateral losses for this category of 7% compared to weighted average credit support of
51%. As of December 31, 2022, 67% of impaired securities in this category, based on carrying value, were externally rated
AAA, 13% were rated AA and one security was not externally rated.
Collateralized loan obligations
At December 31, 2022, 26 collateralized loan obligations were in unrealized loss positions. Our analysis of cash flows
expected to be collected on these securities incorporated assumptions about collateral default rates, loss severity, and
delinquencies, calibrated to take into account idiosyncratic risks associated with the underlying collateral. In developing those
assumptions, we took into account each sector’s performance pre-, during and post the 2008 financial crisis. We regularly
engage with bond managers to monitor trends in underlying collateral including potential downgrades and subsequent cash flow
diversions, liquidity, ratings migration, and any other relevant developments. Our December 31, 2022 analysis projected
weighted average collateral losses for impaired securities in this category of 10% compared to weighted average credit support
of 43%. As of December 31, 2022, 79% of the impaired securities in this category, based on carrying value, were externally
rated AAA, 17% were rated AA and 4% were rated A.
Non-mortgage asset-backed securities
At December 31, 2022, seven non-mortgage asset-backed securities were in unrealized loss positions. These securities are
backed by student loan collateral. Our analysis of cash flows expected to be collected on these securities incorporated
assumptions about collateral default rates, loss severity, delinquencies, voluntary prepayment rates and recovery lag. In
developing assumptions, we took into account collateral type, delineated by whether collateral consisted of loans to borrowers
in school, refinancing, or a mixture. Our December 31, 2022 analysis projected weighted average collateral losses for impaired
securities in this category of 4% compared to weighted average credit support of 24%. As of December 31, 2022, 49% of the
impaired securities in this category, based on carrying value, were externally rated AAA, and 51% were rated AA.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
State and Municipal Obligations
At December 31, 2022, seven state and municipal obligations were in unrealized loss positions. Our analysis of potential
credit loss impairment for these securities incorporates a quantitative measure of the underlying obligor's credit worthiness
provided by a third-party vendor as well as other relevant qualitative considerations. As of December 31, 2022, 84% of the
impaired securities in this category, based on carrying value, were externally rated AAA and 16% were rated AA.
Note 4 Loans and Allowance for Credit Losses
Loans consisted of the following at the dates indicated (dollars in thousands):
Residential and other consumer:
1-4 single family residential
Government insured residential
Other consumer loans
Commercial:
December 31, 2022
December 31, 2021
Total
Percent of
Total
Total
Percent of
Total
$ 7,122,837
28.6 % $ 6,338,225
26.7 %
1,771,880
7.1 %
2,023,221
5,997
— %
6,934
8.5 %
— %
8,900,714
35.7 %
8,368,380
35.2 %
Non-owner occupied commercial real estate
5,405,597
21.7 %
5,536,348
23.3 %
Construction and land
Owner occupied commercial real estate
Commercial and industrial
PPP
Pinnacle
Bridge - franchise finance
Bridge - equipment finance
Mortgage warehouse lending
Total loans
Allowance for credit losses
Loans, net
294,360
1,890,813
6,414,351
3,370
912,122
253,774
286,147
524,740
1.2 %
165,390
7.6 %
1,944,658
0.7 %
8.2 %
25.9 %
4,790,275
20.2 %
— %
3.7 %
1.0 %
1.1 %
248,505
919,641
342,124
357,599
2.1 %
1,092,133
1.0 %
3.9 %
1.4 %
1.5 %
4.6 %
15,985,274
64.3 % 15,396,673
64.8 %
24,885,988
100.0 % 23,765,053
100.0 %
(147,946)
$ 24,738,042
(126,457)
$ 23,638,596
Premiums, discounts and deferred fees and costs, excluding the non-credit related discount on PCD loans, totaled $61
million and $67 million at December 31, 2022 and 2021, respectively.
The following table presents the amortized cost basis of residential PCD loans and the related amount of non-credit
discount, net of the related ACL, at the dates indicated (in thousands):
UPB
Non-credit discount
Total amortized cost of PCD loans
ACL related to PCD loans
PCD loans, net
December 31, 2022
December 31, 2021
$
$
96,437 $
(44,354)
52,083
(409)
51,674 $
124,963
(59,759)
65,204
(476)
64,728
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
During the years ended December 31, 2022, 2021 and 2020, the Company purchased residential loans totaling $2.3 billion,
$4.8 billion and $3.2 billion, respectively.
At December 31, 2022 and 2021, the Company had pledged loans with a carrying value of approximately $12.4 billion and
$10.6 billion, respectively, as security for FHLB advances and Federal Reserve discount window capacity.
At December 31, 2022 and 2021, accrued interest receivable on loans totaled $129 million and $98 million, respectively,
and is included in other assets in the accompanying consolidated balance sheets. The amount of interest income reversed on
non-accrual loans was not material for the years ended December 31, 2022, 2021 and 2020.
Allowance for credit losses
The ACL was determined utilizing a 2-year reasonable and supportable forecast period. The quantitative portion of the
ACL was determined using a single third-party provided economic scenario. The qualitative component was informed by
alternate scenarios. Activity in the ACL is summarized below for the periods indicated (in thousands):
Beginning
balance
Impact of
adoption of
ASU 2016-13
Balance after
adoption of
ASU 2016-13
Provision
(recovery)
Charge-offs
Recoveries
2022
2021
2020
Residential Commercial
Total
Residential Commercial
Total
Residential Commercial
Total
Years Ended December 31,
$ 9,187 $ 117,270 $ 126,457 $ 18,719 $ 238,604 $ 257,323 $ 11,154 $ 97,517 $ 108,671
N/A
N/A
N/A
N/A
N/A
N/A
8,098
19,207
27,305
9,187
117,270
126,457
18,719
238,604
257,323
19,252
116,724
135,976
182,339
(9,241)
(69,571) (69,602)
(304)
8,610
13
Ending balance $ 11,741 $ 136,205 $ 147,946 $ 9,187 $ 117,270 $ 126,457 $ 18,719 $ 238,604 $ 257,323
(556) 182,895
(31)
54
(55,215) (64,456)
(70,946) (71,250)
70,956
(61,643) (62,055)
2,858
(412)
108
73,814
8,556
9,730
4,827
4,840
9,622
The ACL increased by $21.5 million at December 31, 2022 compared to December 31, 2021, increasing from 0.53% to
0.59% of total loans. The provision for credit losses for the year ended December 31, 2022 was partially offset by net charge-
offs. The more significant factors impacting the provision for credit losses for the year ended December 31, 2022 included
increases in specific reserves and qualitative loss factors, primarily the qualitative overlay related to economic uncertainty.
The following table presents the components of the provision for (recovery of) credit losses for the periods indicated (in
thousands):
Amount related to funded portion of loans
Amount related to off-balance sheet credit exposures
$
Amount related to accrued interest receivable
Amount related to AFS debt securities
Years Ended December 31,
2022
2021
2020
73,814 $
1,467
(127)
—
(64,456) $
(1,235)
(1,064)
(364)
182,339
(5,572)
1,300
364
Total provision for (recovery of) credit losses
$
75,154 $
(67,119) $
178,431
Credit quality information
Credit quality of loans held for investment is continuously monitored by dedicated residential credit risk management and
commercial portfolio management functions. The Company also has a workout and recovery department that monitors the
credit quality of criticized and classified loans and an independent internal credit review function.
96
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Credit quality indicators for residential loans
Management considers delinquency status to be the most meaningful indicator of the credit quality of residential loans,
other than government insured residential loans. Delinquency statistics are updated at least monthly. LTV and FICO scores are
also important indicators of credit quality for 1-4 single family residential loans other than government insured loans. FICO
scores are generally updated semi-annually, and were most recently updated in the third quarter of 2022. LTVs are typically at
origination since we do not routinely update residential appraisals. Substantially all of the government insured residential loans
are government insured buyout loans, which the Company buys out of GNMA securitizations upon default. For these loans,
traditional measures of credit quality are not particularly relevant considering the guaranteed nature of the loans and the
underlying business model. Factors that impact risk inherent in the residential portfolio segment include national and regional
economic conditions such as levels of unemployment, wages and interest rates, as well as residential property values.
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on delinquency
status:
December 31, 2022
Amortized Cost By Origination Year
2022
2021
2020
2019
2018
Prior
Total
Current
$ 1,185,611 $ 3,149,299 $
916,923 $
316,023 $
177,891 $ 1,315,063 $ 7,060,810
30 - 59 Days Past Due
60 - 89 Days Past Due
90 Days or More Past Due
12,752
252
2,589
16,432
1,196
2,158
3,266
229
2,173
2,953
1,347
360
1,854
—
3,069
5,739
1,052
4,606
42,996
4,076
14,955
$ 1,201,204 $ 3,169,085 $
922,591 $
320,683 $
182,814 $ 1,326,460 $ 7,122,837
December 31, 2021
Amortized Cost By Origination Year
2021
2020
2019
2018
2017
Prior
Total
Current
$ 2,884,761 $ 1,062,348 $
395,453 $
224,175 $
342,414 $ 1,352,844 $ 6,261,995
30 - 59 Days Past Due
60 - 89 Days Past Due
90 Days or More Past Due
32,307
605
1,407
2,705
—
—
5,482
1,750
609
1,942
1,988
5,100
5,831
—
1,064
4,825
1,307
9,308
53,092
5,650
17,488
$ 2,919,080 $ 1,065,053 $
403,294 $
233,205 $
349,309 $ 1,368,284 $ 6,338,225
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on LTV:
December 31, 2022
Amortized Cost By Origination Year
LTV
2022
2021
2020
2019
2018
Prior
Total
Less than 61%
$
282,940 $ 1,301,279 $
354,720 $
76,404 $
42,864 $
466,094 $ 2,524,301
61% - 70%
71% - 80%
More than 80%
295,206
620,049
3,009
857,008
975,542
35,256
231,732
336,066
73
80,383
158,406
5,490
49,047
86,463
4,440
310,648
1,824,024
510,633
2,687,159
39,085
87,353
$ 1,201,204 $ 3,169,085 $
922,591 $
320,683 $
182,814 $ 1,326,460 $ 7,122,837
97
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
December 31, 2021
Amortized Cost By Origination Year
LTV
2021
2020
2019
2018
2017
Prior
Total
Less than 61%
$ 1,222,510 $
399,512 $
89,078 $
54,301 $
111,540 $
476,170 $ 2,353,111
61% - 70%
71% - 80%
More than 80%
791,935
899,400
5,235
269,739
395,726
76
92,282
212,649
9,285
59,425
111,276
8,203
66,641
145,413
25,715
343,654
1,623,676
518,817
2,283,281
29,643
78,157
$ 2,919,080 $ 1,065,053 $
403,294 $
233,205 $
349,309 $ 1,368,284 $ 6,338,225
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on FICO score:
December 31, 2022
Amortized Cost By Origination Year
FICO
2022
2021
2020
2019
2018
Prior
Total
760 or greater
$
805,125 $ 2,513,045 $
721,982 $
212,574 $
97,076 $
944,783 $ 5,294,585
720 - 759
719 or less
285,507
110,572
485,528
170,512
132,928
67,681
62,301
45,808
45,857
39,881
216,047
1,228,168
165,630
600,084
$ 1,201,204 $ 3,169,085 $
922,591 $
320,683 $
182,814 $ 1,326,460 $ 7,122,837
December 31, 2021
Amortized Cost By Origination Year
FICO
2021
2020
2019
2018
2017
Prior
Total
760 or greater
$ 2,230,259 $
803,026 $
245,942 $
125,713 $
254,750 $
937,285 $ 4,596,975
720 - 759
719 or less
562,763
126,058
194,068
67,959
91,276
66,076
53,576
53,916
54,080
40,479
219,561
1,175,324
211,438
565,926
$ 2,919,080 $ 1,065,053 $
403,294 $
233,205 $
349,309 $ 1,368,284 $ 6,338,225
Credit quality indicators for commercial loans
Factors that impact risk inherent in commercial portfolio segments include but are not limited to levels of economic
activity, health of the national and regional economy, interest rates, industry trends, patterns of and trends in customer behavior
that influence demand for our borrowers' products and services, and commercial real estate values. Internal risk ratings are
considered the most meaningful indicator of credit quality for commercial loans. Internal risk ratings are generally indicative of
the likelihood that a borrower will default, are a key factor influencing the level and nature of ongoing monitoring of loans and
may impact the estimation of the ACL. Internal risk ratings are updated on a continuous basis. Generally, relationships with
balances in excess of defined thresholds, ranging from $1 million to $3 million, are re-evaluated at least annually and more
frequently if circumstances indicate that a change in risk rating may be warranted. Loans exhibiting potential credit weaknesses
that deserve management’s close attention and that could result in deterioration of repayment prospects at some future date if
not checked or corrected are categorized as special mention. Loans with well-defined credit weaknesses, including payment
defaults, declining collateral values, frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash
flow from current operations, project cost overruns, unreasonable construction delays, past due real estate taxes or exhausted
interest reserves are assigned an internal risk rating of substandard. A loan with a weakness so severe that collection in full is
highly questionable or improbable, but because of certain reasonably specific pending factors has not been charged off, will be
assigned an internal risk rating of doubtful.
98
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Commercial credit exposure based on internal risk rating:
December 31, 2022
Amortized Cost By Origination Year
2022
2021
2020
2019
2018
Prior
Revolving
Loans
Total
$ 1,256,300
$
758,025
$
550,133
$ 1,138,113
$
512,125
$
932,030
$
196,963
$ 5,343,689
—
12,332
—
1,355
—
20,103
18,006
98,438
—
709
56,974
148,351
—
—
18,715
337,553
$ 1,268,632
$
759,380
$
570,236
$ 1,254,557
$
569,099
$ 1,081,090
$
196,963
$ 5,699,957
$ 1,880,853
$
825,410
$
445,988
$
689,003
$
416,287
$
832,952
$ 2,900,336
$ 7,990,829
63
—
25,898
13,916
—
—
208
3,319
—
3,880
103,625
—
—
19,715
647
20,657
104,190
—
310
21,277
—
25,118
291,940
647
$ 1,906,814
$
839,326
$
449,515
$
796,508
$
436,649
$
957,799
$ 2,921,923
$ 8,308,534
$
$
179,223
179,223
$
$
110,510
110,510
$
$
66,592
66,592
$
$
66,514
66,514
$
$
29,783
29,783
$
$
459,500
459,500
$
$
—
—
$
$
912,122
912,122
CRE
Pass
Special mention
Substandard
Total CRE
C&I (1)
Pass
Special mention
Substandard
Doubtful
Total C&I
Pinnacle
Pass
Total Pinnacle
Bridge - Equipment Finance
Pass
Substandard
$
27,386
$
55,015
$
16,488
$
90,286
$
33,264
$
62,353
$
—
—
—
1,355
—
—
Total Bridge - Equipment Finance
$
27,386
$
55,015
$
16,488
$
91,641
$
33,264
$
62,353
$
Bridge - Franchise Finance
Pass
Special mention
Substandard
Doubtful
$
81,146
$
19,251
$
38,293
$
34,483
$
8,617
$
6,799
$
—
—
—
—
1,617
—
—
1,295
1,013
5,432
22,058
2,447
2,168
17,148
3,883
—
8,124
—
Total Bridge - Franchise Finance
$
81,146
$
20,868
$
40,601
$
64,420
$
31,816
$
14,923
$
—
—
—
—
—
—
—
—
$
284,792
1,355
$
286,147
$
188,589
7,600
50,242
7,343
$
253,774
Mortgage Warehouse Lending
Pass
Total Mortgage Warehouse Lending
$
$
—
—
$
$
—
—
$
$
—
—
$
$
—
—
$
$
—
—
$
$
—
—
$
$
524,740
524,740
$
$
524,740
524,740
99
Table of Contents
CRE
Pass
Special mention
Substandard
Total CRE
C&I (1)
Pass
Special mention
Substandard
Doubtful
Total C&I
Pinnacle
Pass
Total Pinnacle
Bridge - Equipment Finance
Pass
Substandard
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
December 31, 2021
Amortized Cost By Origination Year
2021
2020
2019
2018
2017
Prior
Revolving
Loans
Total
$
869,852
$
619,056
$ 1,283,401
$
676,151
$
455,965
$
986,427
$
119,308
$ 5,010,160
985
—
—
14,227
29,573
187,284
—
—
1,704
55,944
115,944
285,917
—
—
32,262
659,316
$
870,837
$
633,283
$ 1,500,258
$
732,095
$
571,909
$ 1,274,048
$
119,308
$ 5,701,738
$ 1,280,160
$
666,437
$
870,797
$
406,145
$
353,590
$
669,308
$ 2,120,693
$ 6,367,130
6,051
365
—
19,861
22,106
—
39,647
167,496
900
17,185
59,349
—
1,854
51,117
—
11,640
122,663
—
20,093
49,119
26,862
116,331
472,215
27,762
$ 1,286,576
$
708,404
$ 1,078,840
$
482,679
$
406,561
$
803,611
$ 2,216,767
$ 6,983,438
$
$
$
143,063
143,063
$
$
113,785
113,785
$
$
88,206
88,206
$
$
36,761
36,761
$
$
177,258
177,258
$
$
360,568
360,568
$
$
73,190
$
18,763
$
108,990
$
43,826
$
23,684
$
48,471
$
—
—
12,875
4,775
23,025
—
—
—
—
—
—
—
—
—
—
$
$
919,641
919,641
$
316,924
40,675
$
357,599
$
228,381
93,751
19,992
$
342,124
Total Bridge - Equipment Finance
$
73,190
$
18,763
$
121,865
$
48,601
$
46,709
$
48,471
$
Bridge - Franchise Finance
Pass
Substandard
Doubtful
$
49,949
$
51,057
$
104,299
$
10,199
$
7,039
$
5,838
$
—
—
7,351
—
39,588
7,718
30,134
12,274
8,660
—
8,018
—
Total Bridge - Franchise Finance
$
49,949
$
58,408
$
151,605
$
52,607
$
15,699
$
13,856
$
Mortgage Warehouse Lending
Pass
Total Mortgage Warehouse Lending
(1)
Includes PPP loans
$
$
—
—
$
$
—
—
$
$
—
—
$
$
—
—
$
$
—
—
$
$
—
—
$ 1,092,133
$ 1,092,133
$ 1,092,133
$ 1,092,133
At December 31, 2022 and 2021, the balance of revolving loans converted to term loans was immaterial.
The following tables summarize the Company's commercial credit exposure based on internal risk rating, in aggregate, at
the dates indicated (in thousands):
December 31, 2022
$
Pass
Special mention
Substandard-accruing
Substandard non-accruing
Doubtful
CRE
5,343,689 $
18,715
315,201
22,352
—
C&I (1)
7,990,829 $
25,118
245,114
46,826
647
Pinnacle
Bridge -
Franchise
Finance
Bridge -
Equipment
Finance
Mortgage
Warehouse
Lending
912,122 $
—
—
—
—
188,589 $
7,600
44,295
5,947
7,343
284,792 $
—
1,355
—
—
524,740 $
—
—
—
—
Total
15,244,761
51,433
605,965
75,125
7,990
$
5,699,957 $
8,308,534 $
912,122 $
253,774 $
286,147 $
524,740 $
15,985,274
100
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
$
Pass
Special mention
Substandard-accruing
Substandard non-accruing
Doubtful
CRE
5,010,160 $
32,262
604,036
55,280
—
$
5,701,738 $
C&I (1)
6,367,130 $
116,331
410,803
61,412
27,762
6,983,438 $
(1)
Includes PPP loans
December 31, 2021
Pinnacle
Bridge -
Franchise
Finance
Bridge -
Equipment
Finance
Mortgage
Warehouse
Lending
919,641 $
—
—
—
—
919,641 $
228,381 $
—
80,864
12,887
19,992
342,124 $
316,924 $
—
40,675
—
—
357,599 $
1,092,133 $
—
—
—
—
1,092,133 $
Total
13,934,369
148,593
1,136,378
129,579
47,754
15,396,673
The COVID-19 pandemic led to an increase in the level of criticized and classified commercial loans compared to pre-
pandemic levels; while criticized and classified assets are evidencing a declining trend, those levels remain elevated.
Past Due and Non-Accrual Loans:
The following table presents an aging of loans at the dates indicated (in thousands):
December 31, 2022
December 31, 2021
30 - 59
Days Past
Due
60 - 89
Days Past
Due
90 Days or
More Past
Due
Current
Total
Current
30 - 59
Days Past
Due
60 - 89
Days Past
Due
90 Days or
More Past
Due
Total
1-4 single family
residential
Government insured
residential
$ 7,060,810
$ 42,996
$
4,076
$
14,955
$ 7,122,837
$ 6,261,995
$ 53,092
$
5,650
$
17,488
$ 6,338,225
1,025,523
159,461
94,294
492,602
1,771,880
1,034,686
143,672
115,028
729,835
2,023,221
Other consumer loans
5,948
20
—
29
5,997
6,919
15
—
—
6,934
Non-owner occupied
commercial real estate
Construction and land
Owner occupied
5,391,746
289,083
332
3,996
commercial real estate
1,881,115
927
4,773
—
—
8,746
1,281
5,405,597
5,495,034
294,360
160,183
8,744
492
11,249
4,369
21,321
5,536,348
346
165,390
8,771
1,890,813
1,930,932
—
1,402
12,324
1,944,658
Commercial and
industrial
PPP
Pinnacle
Bridge - franchise
finance
Bridge - equipment
finance
Mortgage warehouse
lending
6,396,429
1,581
1,028
15,313
6,414,351
4,763,976
2,114
11,016
13,169
4,790,275
2,777
912,122
—
—
243,574
1,321
286,147
524,740
—
—
—
—
—
—
—
593
—
3,370
912,122
247,740
919,641
8,879
253,774
331,397
—
—
286,147
357,599
524,740
1,092,133
765
—
—
—
—
—
—
—
—
248,505
919,641
6,735
3,992
342,124
—
—
—
—
357,599
1,092,133
$ 24,020,014
$ 210,634
$ 104,171
$ 551,169
$ 24,885,988
$ 22,602,235
$ 208,894
$ 155,449
$ 798,475
$ 23,765,053
Included in the table above is the guaranteed portion of SBA loans past due by 90 days or more totaling $30.8 million and
$31.3 million at December 31, 2022 and 2021, respectively.
Loans contractually delinquent by 90 days or more and still accruing totaled $494 million and $730 million at
December 31, 2022 and 2021, respectively, substantially all of which were government insured residential loans. These loans
are government insured pool buyout loans, which the Company buys out of GNMA securitizations upon default.
101
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The following table presents information about loans on non-accrual status at the dates indicated (in thousands):
Residential and other consumer
$
21,311 $
— $
28,553 $
1,684
December 31, 2022
December 31, 2021
Amortized Cost
Amortized Cost
With No Related
Allowance
Amortized Cost
Amortized Cost
With No Related
Allowance
Commercial:
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Bridge - franchise finance
16,657
5,695
17,751
29,722
2,915
3,996
9,021
6,621
50,116
5,164
20,453
68,720
13,290
104,426 $
$
1,668
24,221 $
32,879
205,885 $
31,794
4,369
4,457
10,083
16,808
69,195
Included in the table above is the guaranteed portion of non-accrual SBA loans totaling $40.3 million and $46.1 million at
December 31, 2022 and 2021, respectively. The amount of interest income recognized on non-accrual loans was insignificant
for the years ended December 31, 2022, 2021 and 2020. The amount of additional interest income that would have been
recognized on non-accrual loans had they performed in accordance with their contractual terms was approximately $5.9 million,
$8.0 million and $10.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Collateral dependent loans:
The following table presents the amortized cost basis of collateral dependent loans at the dates indicated (in thousands):
December 31, 2022
December 31, 2021
Residential and other consumer
Commercial:
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Bridge - franchise finance
Total commercial
Amortized Cost
Extent to Which
Secured by Collateral
Amortized Cost
$
730 $
730 $
2,317 $
Extent to Which
Secured by Collateral
2,295
15,144
4,342
14,906
11,498
11,445
57,335
58,065 $
$
14,011
4,342
14,906
10,438
3,729
47,426
48,156 $
39,866
4,715
15,198
45,015
26,055
130,849
133,166 $
39,351
4,715
15,155
37,020
18,740
114,981
117,276
Collateral for the non-owner occupied commercial real estate and owner-occupied commercial real estate loan classes
generally consists of commercial real estate. Collateral for construction and land loans is typically residential or commercial
real estate. Collateral for commercial and industrial loans generally consists of equipment, accounts receivable, inventory and
other business assets; owner-occupied commercial real estate loans may also be collateralized by these types of assets. Bridge
franchise finance loans may be collateralized by franchise value or by equipment. Residential loans are collateralized by
residential real estate. There were no significant changes to the extent to which collateral secures collateral dependent loans
during the years ended December 31, 2022 and 2021.
Foreclosure of residential real estate
The recorded investment in residential loans in the process of foreclosure was $413 million, of which $400 million was
government insured, at December 31, 2022 and $208 million, of which $202 million was government insured, at December 31,
2021. The carrying amount of foreclosed residential real estate included in other assets in the accompanying consolidated
balance sheet was insignificant at December 31, 2022 and 2021.
102
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Troubled debt restructurings
The following tables summarize loans that were modified in TDRs during the periods indicated, as well as loans modified
during the twelve months preceding December 31, 2022, 2021 and 2020 that experienced payment defaults during those periods
(dollars in thousands):
Year Ended December 31, 2022
Loans Modified in TDRs
During the Period
TDRs Experiencing Payment
Defaults During the Period
Number of
TDRs
Amortized
Cost
Number of
TDRs
Amortized
Cost
1-4 single family residential
Government insured residential
Owner occupied commercial real estate
Commercial and industrial
Bridge - franchise finance
Government insured residential
Non-owner occupied commercial real estate
1-4 single family residential
Government insured residential
Non-owner occupied commercial real estate
Bridge - franchise finance
10 $
5,359
405,096
2,122
36,930
6,329
2,624 $ 455,836
2,589
2
19
4
— $
—
187,708
1,705
1,998
6,329
1,198 $ 197,740
1,190
1
3
4
Year Ended December 31, 2021
Loans Modified in TDRs
During the Period
TDRs Experiencing Payment
Defaults During the Period
Number of
TDRs
Amortized
Cost
Number of
TDRs
Amortized
Cost
239 $ 45,143
2,767
240 $ 47,910
1
84 $
—
84 $
14,317
—
14,317
Year Ended December 31, 2020
Loans Modified in TDRs
During the Period
TDRs Experiencing Payment
Defaults During the Period
Number of
TDRs
Amortized
Cost
Number of
TDRs
Amortized
Cost
1 $
201
34,100
4,122
12,964
211 $ 51,387
201
1
8
— $
86
1
8
95 $
—
14,368
4,122
12,964
31,454
TDRs during the years ended December 31, 2022, 2021 and 2020 generally included interest rate reductions and extensions
of maturity. Included in TDRs are residential loans to borrowers who have not reaffirmed their debt discharged in Chapter 7
bankruptcy. The total amount of such loans is not material.
For the years ended December 31, 2021 and 2020, certain loan modifications that otherwise may have been reported as
TDRs and that were within the scope of the CARES Act and interagency regulatory guidance issued in response to the
COVID-19 pandemic were not reported as TDRs.
103
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Geographic Concentrations
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The following table presents the five states with the largest geographic concentrations of 1-4 single family residential loans,
excluding government insured residential loans, at the dates indicated (dollars in thousands):
California
New York
Florida
Illinois
Virginia
Others
December 31, 2022
December 31, 2021
Total
Percent of
Total
Total
Percent of
Total
$
2,273,548
31.9 % $
2,056,100
1,416,909
19.9 %
1,293,825
518,297
360,389
314,408
7.3 %
5.1 %
4.4 %
494,043
306,388
280,898
2,239,286
31.4 %
1,906,971
$
7,122,837
100.0 % $
6,338,225
32.4 %
20.4 %
7.8 %
4.8 %
4.4 %
30.2 %
100.0 %
The following table presents the largest geographic concentrations of commercial real estate loans and commercial and
industrial loans, including owner occupied commercial real estate, at the dates indicated. Commercial real estate loans are
categorized based on the location of the underlying collateral, while commercial and industrial loans are generally categorized
based on the location of the borrowers' businesses (dollars in thousands):
Florida
New York Tri-
state
Other
December 31, 2022
December 31, 2021
Commercial
Real Estate
$ 3,432,109
Percent of
Total
60.2 % $ 3,117,076
Commercial
Percent of
Total
37.5 % $ 3,309,614
Commercial
Real Estate
Percent of
Total
58.0 % $ 3,369,262
Commercial
Percent of
Total
48.2 %
1,535,095
732,753
$ 5,699,957
26.9 % 2,723,127
12.9 % 2,468,331
100.0 % $ 8,308,534
32.8 % 1,873,055
519,069
29.7 %
100.0 % $ 5,701,738
32.9 % 1,960,474
9.1 % 1,653,702
100.0 % $ 6,983,438
28.1 %
23.7 %
100.0 %
The following table presents the five states with the largest concentration of commercial loans and leases originated
through Bridge and Pinnacle at the dates indicated (dollars in thousands):
Florida
California
Texas
Georgia
Utah
All Others
December 31, 2022
December 31, 2021
Total
Percent of
Total
Total
Percent of
Total
$
222,311
150,928
84,160
64,137
60,156
15.3 % $
10.4 %
5.8 %
4.4 %
4.1 %
870,351
60.0 %
213,620
199,635
110,660
69,415
68,954
957,080
$
1,452,043
100.0 % $
1,619,364
13.2 %
12.3 %
6.8 %
4.3 %
4.3 %
59.1 %
100.0 %
104
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Note 5 Leases
Leases under which the Company is the lessee
The Company leases branches, office space and a small amount of equipment under either operating or finance leases with
remaining terms ranging from one to 14 years, some of which include extension options.
The following table presents ROU assets and lease liabilities at the dates indicated (in thousands):
ROU assets:
Operating leases
Finance leases
Lease liabilities:
Operating leases
Finance leases
December 31, 2022
December 31, 2021
$
$
$
$
72,211 $
23,866
96,077 $
80,909 $
28,389
109,298 $
80,646
26,216
106,862
89,535
30,216
119,751
ROU assets and lease liabilities for operating leases are included in "other assets" and "other liabilities", respectively, in the
accompanying consolidated balance sheets. ROU assets and lease liabilities for finance leases are included in "other assets" and
"notes and other borrowings", respectively.
The weighted average remaining lease term and weighted average discount rate at the dates indicated were:
Weighted average remaining lease term:
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
December 31, 2022
December 31, 2021
6.6 years
11.0 years
6.9 years
11.9 years
3.1 %
2.9 %
2.9 %
2.9 %
The following table presents the components of lease expense for the periods indicated (in thousands):
Operating lease cost:
Fixed costs
Impairment of ROU assets
Total operating lease cost
Finance lease cost:
Amortization of ROU assets
Interest on lease liabilities
Total finance lease cost
Variable lease cost
2022
Years Ended December 31,
2021
2020
$
$
$
$
$
18,364 $
19,646 $
134
183
18,498 $
19,829 $
2,350 $
823
3,173 $
2,903 $
866
3,769 $
20,112
108
20,220
2,841
921
3,762
3,589 $
4,147 $
4,761
Short-term lease costs were immaterial for the years ended December 31, 2022, 2021 and 2020.
105
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
The following table presents additional information related to operating and finance leases for the dates and periods
indicated (in thousands):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
Operating cash flows from operating leases
Financing cash flows from finance leases
Lease liabilities recognized from obtaining ROU assets:
Operating leases
Finance leases
Years Ended December 31,
2022
2021
2020
823 $
18,473
2,652
21,948 $
866 $
20,056
3,215
24,137 $
921
20,589
2,980
24,490
9,086 $
—
9,086 $
13,325 $
—
13,325 $
9,647
373
10,020
$
$
$
$
Future lease payment obligations under leases with terms in excess of one year and a reconciliation to lease liabilities as of
December 31, 2022 were as follows (in thousands):
Years ending December 31:
2023
2024
2025
2026
2027
Thereafter
Total future minimum lease payments
Less: interest component
Lease liabilities
Leases under which the Company is the lessor
Operating Leases
Finance Leases
Total
$
17,292 $
2,666 $
15,684
13,162
11,838
9,573
21,969
89,518
2,701
2,774
2,849
2,926
19,447
33,363
19,958
18,385
15,936
14,687
12,499
41,416
122,881
(8,609)
(4,974)
(13,583)
$
80,909 $
28,389 $
109,298
Through its commercial lending subsidiaries, Pinnacle and Bridge, the Bank provides equipment financing using a variety
of loan and lease structures. Pinnacle provides essential use equipment financing to state and local governmental entities.
Bridge provides primarily transportation equipment financing.
Direct or Sales Type Financing Leases
The following table presents the components of the investment in direct or sales type financing leases, included in loans in
the consolidated balance sheets at the dates indicated (in thousands):
Total minimum lease payments to be received
Estimated unguaranteed residual value of leased assets
Gross investment in direct or sales type financing leases
Unearned income
Initial direct costs
106
December 31, 2022
December 31, 2021
$
684,847 $
4,024
688,871
(57,622)
2,384
$
633,633 $
703,395
5,109
708,504
(59,511)
2,783
651,776
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
At December 31, 2022, future minimum lease payments to be received under direct or sales type financing leases were as
follows (in thousands):
Years Ending December 31:
2023
2024
2025
2026
2027
Thereafter
Operating Lease Equipment
$
$
180,586
144,304
102,300
63,407
43,253
150,997
684,847
Operating lease equipment consists primarily of railcars, non-commercial aircraft and other transportation equipment
leased to commercial end users. Original lease terms generally range from three to ten years. Asset risk is evaluated and
managed by a dedicated internal staff of seasoned equipment finance professionals with a broad depth and breadth of
experience in the leasing business. The Company has partnered with an industry leading, experienced service provider who
provides fleet management and servicing relating to the railcar fleet. Residual risk is managed by setting appropriate residual
values at inception and systematic reviews of residual values based on independent appraisals, performed at least annually.
The following table presents the components of operating lease equipment at the dates indicated (in thousands):
Operating lease equipment
Less: accumulated depreciation
Operating lease equipment, net
December 31, 2022 December 31, 2021
$
$
772,267 $
848,304
(232,468)
(207,578)
539,799 $
640,726
The Company did not recognize any impairment during the year ended December 31, 2022. Impairment was recognized in
the amounts of $2.8 million and $0.7 million during the years ended December 31, 2021 and 2020, respectively. These
impairment charges are included in "depreciation and impairment of operating lease equipment" in the accompanying
consolidated statements of income.
107
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
At December 31, 2022, scheduled minimum rental payments under operating leases were as follows (in thousands):
Years Ending December 31:
2023
2024
2025
2026
2027
Thereafter
$
42,510
37,490
31,585
20,523
16,563
34,156
$
182,827
The following table summarizes income recognized for operating and direct or sales type finance leases for the periods
indicated (in thousands):
Years Ended December 31,
2022
54,111 $
17,881
71,992 $
2021
53,263 $
18,329
71,592 $
$
$
Operating leases
Direct or sales type finance leases
Note 6 Deposits
Location of Lease Income on Consolidated
Statements of Income
2020
59,112 Non-interest income from lease financing
20,995
80,107
Interest income on loans
The following table presents average balances and weighted average rates paid on deposits for the periods indicated
(dollars in thousands):
Demand deposits:
Non-interest bearing
Interest bearing
Savings and money market
Time
Years Ended December 31,
2022
2021
2020
Average
Balance
Average
Rate Paid
Average
Balance
Average
Rate Paid
Average
Balance
Average
Rate Paid
$
8,861,111
2,538,906
12,874,240
3,338,671
— % $
0.55 %
8,480,964
3,027,649
1.02 %
1.06 %
13,339,651
3,490,082
— % $
0.28 %
5,760,309
2,582,951
0.32 %
0.46 %
10,843,894
6,617,939
$ 27,612,928
0.65 % $ 28,338,346
0.24 % $ 25,805,093
— %
0.75 %
0.79 %
1.43 %
0.77 %
Time deposit accounts with balances greater than $250,000 totaled $730 million and $603 million at December 31, 2022
and 2021, respectively.
108
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
The following table presents maturities of time deposits as of December 31, 2022 (in thousands):
Maturing in:
2023
2024
2025
2026
2027
$
3,558,865
304,953
92,526
310,637
1,097
$
4,268,078
Included in deposits at December 31, 2022 are public funds deposits of $3.5 billion and brokered deposits of $4.6 billion.
Investment securities AFS with a carrying value of $947 million and a FHLB letter of credit in the amount of $600 million,
were pledged as security for public funds deposits at December 31, 2022.
Interest expense on deposits for the periods indicated was as follows (in thousands):
Interest bearing demand
Savings and money market
Time
Years Ended December 31,
2022
2021
2020
$
13,919 $
8,550 $
130,705
35,348
43,082
15,964
19,445
85,572
94,963
$
179,972 $
67,596 $
199,980
Certain of our non-interest bearing demand deposit accounts participate in various customer rebate programs. During the
years ended December 31, 2022, 2021 and 2020, deposit costs related to these programs totaled $15.4 million, $8.1 million and
$11.0 million, respectively. These expenses are included in "other non-interest expense" in the accompanying consolidated
statements of income.
Note 7 Borrowings
The following table presents information about outstanding FHLB advances as of December 31, 2022 (dollars in
thousands):
Range of Interest Rates
Amount
Minimum
Maximum
Weighted Average
Rate
Maturing in:
2023 - One month or less
2023 - Over one month
Total contractual balance outstanding
$
$
4,320,000
1,100,000
5,420,000
3.79 %
4.48 %
4.48 %
4.73 %
4.19 %
4.56 %
The table above reflects contractual maturities of outstanding advances and does not incorporate the impact that interest
rate swaps designated as cash flow hedges have on the duration of borrowings.
The terms of the Company's security agreement with the FHLB require a specific assignment of collateral consisting of
qualifying first mortgage loans, commercial real estate loans and mortgage-backed securities with unpaid principal amounts
discounted at various stipulated percentages at least equal to 100% of outstanding FHLB advances. As of December 31, 2022,
the Company had pledged investment securities and real estate loans with an aggregate carrying amount of approximately $13.8
billion as collateral for advances from the FHLB.
109
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Notes and other borrowings consisted of the following at the dates indicated (dollars in thousands):
Senior notes:
Principal amount of 4.875% senior notes maturing on November 17, 2025
$
400,000 $
400,000
December 31, 2022 December 31, 2021
Unamortized discount and debt issuance costs
Subordinated notes:
Principal amount of 5.125% subordinated notes maturing on June 11, 2030
Unamortized discount and debt issuance costs
Total notes
Finance leases
Notes and other borrowings
(2,586)
397,414
(3,400)
396,600
300,000
(4,880)
295,120
692,534
28,389
300,000
(5,400)
294,600
691,200
30,216
$
720,923 $
721,416
The senior notes pay interest semiannually and have an effective interest rate of 5.12%, after consideration of issuance
discount and costs. The notes may be redeemed by the Company, in whole or in part, at any time prior to August 17, 2025 at the
greater of a) 100% of the principal balance or b) the sum of the present values of the remaining scheduled payments of principal
and interest on the securities discounted to the redemption date at i) the rate on a United States Treasury security with a
maturity comparable to the remaining maturity of the senior notes that would be used to price new issues of corporate debt
securities with a maturity comparable to the remaining maturity of the senior notes plus ii) 40 basis points. The senior notes
may be redeemed at any time after August 17, 2025 at 100% of principal plus accrued and unpaid interest.
The subordinated notes pay interest semiannually and have an effective interest rate of 5.39%, after consideration of
issuance discount and costs. The notes may be redeemed by the Company, in whole or in part, on or after March 11, 2030 at a
redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest, subject to the
approval of the Federal Reserve. The notes qualify as Tier 2 capital for regulatory capital purposes, subject to applicable
limitations.
At December 31, 2022, BankUnited had available borrowing capacity at the FHLB of approximately $4.0 billion, unused
borrowing capacity at the FRB of approximately $1.4 billion, unused Federal funds lines of credit with other financial
institutions totaling $50 million, and $600 million unused FHLB letter of credit.
Note 8 Premises, Equipment and Software
Premises and equipment and capitalized software costs are included in other assets in the accompanying consolidated
balance sheets and are summarized as follows at the dates indicated (in thousands):
Buildings and improvements
Leasehold improvements
Furniture, fixtures and equipment
Computer equipment
Software, software licensing rights and capitalized costs of CCA
Aircraft and automobiles
Less: accumulated depreciation
Premises, equipment and software, net
110
December 31, 2022 December 31, 2021
$
1,019 $
74,607
34,835
19,380
95,491
11,645
430
70,228
34,688
19,018
84,386
11,629
236,977
220,379
(170,707)
(163,645)
$
66,270 $
56,734
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Depreciation and amortization expense related to premises, equipment and software was $17.5 million, $16.7 million and
$15.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Note 9 Income Taxes
The components of the provision for income taxes were as follows for the periods indicated (in thousands):
Years Ended December 31,
2022
2021
2020
Current:
Federal
State
Deferred:
Federal
State
$
76,431 $
61,814 $
12,293
88,724
(18,398)
43,416
(7,191)
4,348
63,083
16,009
79,092
(22,387)
(5,199)
8,628
1,437
(13,363)
(9,015)
(27,586)
$
90,161 $
34,401 $
51,506
A reconciliation of expected income tax expense at the statutory federal income tax rate of 21% to the Company's effective
income tax rate for the periods indicated follows (dollars in thousands):
Years Ended December 31,
2022
2021
2020
Amount
Percent
Amount
Percent
Amount
Percent
Tax expense calculated at the statutory federal
income tax rate
$ 78,778
21.00 % $ 94,371
21.00 % $ 52,366
21.00 %
Increases (decreases) resulting from:
Income not subject to tax
(10,577)
(2.82) %
(13,203)
(2.94) %
(15,722)
(6.30) %
State income taxes, net of federal tax benefit
Uncertain tax positions - lapse of statute of
limitations
Discrete income tax benefit
Other, net
22,610
6.03 %
22,197
4.94 %
13,413
5.38 %
(1,093)
—
(0.29) %
— %
(25,633)
(43,949)
(5.70) %
(9.78) %
(3,734)
—
443
$ 90,161
618
0.11 %
24.03 % $ 34,401
5,183
0.14 %
7.66 % $ 51,506
(1.50) %
— %
2.08 %
20.66 %
111
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
During the year ended December 31, 2021, the Bank reached a settlement with the Florida Department of Revenue related
to certain tax matters for the 2009-2019 tax years and recorded a tax benefit of $43.9 million, net of federal impact.
The components of deferred tax assets and liabilities were as follows at the dates indicated (in thousands):
December 31, 2022 December 31, 2021
Deferred tax assets:
Excess of tax basis over carrying value of acquired loans
$
6,243 $
Allowance for credit losses
Net operating loss and tax credit carryforwards
Net unrealized loss on investment securities available for sale and cash flow hedges
Capitalized costs
Lease liability
Deferred compensation
Accrued expenses
Other
Gross deferred tax assets
Deferred tax liabilities:
Lease financing, due to differences in depreciation
ROU asset
Other
Gross deferred tax liabilities
Net deferred tax asset (liability)
38,211
9,692
153,858
18,380
20,655
9,873
11,464
25,104
22,737
33,577
19,466
5,456
26,854
23,137
8,688
11,185
18,958
293,480
170,058
131,018
31,253
7,005
169,276
$
124,204 $
151,978
33,136
7,706
192,820
(22,762)
Based on the evaluation of available evidence, the Company has concluded that it is more likely than not that the existing
deferred tax assets will be realized. The primary factors supporting this conclusion are the Company's history of reported pre-
tax income and the amount of future taxable income that will result from the scheduled reversal of existing deferred tax
liabilities.
At December 31, 2022, remaining net operating loss and tax credit carryforwards included Florida net operating loss
carryforwards in the amount of $111.5 million. Florida net operating loss carryforwards consisted of $95.2 million expiring
from 2030 through 2037 and $16.3 million that can be carried forward indefinitely.
The Company has investments in affordable housing limited partnerships which generate federal Low Income Housing Tax
Credits and other tax benefits. The balance of these investments, included in other assets in the accompanying consolidated
balance sheet, was $100 million and $43 million at December 31, 2022 and 2021, respectively. Unfunded commitments for
affordable housing investments, included in other liabilities in the accompanying consolidated balance sheet, were $62 million
and $3 million at December 31, 2022 and 2021, respectively. The maximum exposure to loss as a result of the Company's
involvement with these limited partnerships at December 31, 2022 was approximately $145 million. While the Company
believes the likelihood of potential losses from these investments is remote, the maximum exposure was determined by
assuming a scenario where the projects completely fail and do not meet certain government compliance requirements resulting
in recapture of the related tax credits and full impairment of the remaining unamortized investment. These investments did not
have a material impact on income tax expense for the years ended December 31, 2022, 2021 and 2020.
112
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The Company has a liability for unrecognized tax benefits relating to uncertain federal and state tax positions in several
jurisdictions. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits at the dates indicated
follows (in thousands):
Balance, beginning of period
Additions for tax positions related to the current year
Additions for tax positions related to prior periods
Reductions due to settlements with taxing authorities
Reductions due to lapse of the statute of limitations
Interest and penalties
Balance, end of period
December 31, 2022 December 31, 2021 December 31, 2020
$
347,809 $
414,203 $
407,126
3,086
12,433
—
(795)
362,533
7,347
2,175
12,887
(43,782)
(30,394)
355,089
(7,280)
2,117
2,456
(3,080)
(520)
408,099
6,104
$
369,880 $
347,809 $
414,203
As of December 31, 2022, 2021 and 2020, the Company had $342.6 million, $329.3 million and $369.1 million of
unrecognized federal and state tax benefits, net of federal tax benefits, that if recognized would have impacted the effective tax
rate. Unrecognized tax benefits related to federal and state income tax contingencies that may decrease during the 12 months
subsequent to December 31, 2022 as a result of settlements with taxing authorities range from zero to $309.0 million.
Interest and penalties related to unrecognized tax benefits are included in the provision for income taxes in the consolidated
statements of income. At December 31, 2022 and 2021, accrued interest and penalties included in the consolidated balance
sheets, net of federal tax benefits, were $16.5 million and $10.6 million, respectively. The total amount of interest and penalties,
net of federal tax benefits, recognized through income tax expense was $5.9 million, $(5.7) million and $4.9 million during the
years ended December 31, 2022, 2021 and 2020, respectively.
The Company and its subsidiaries file a consolidated federal income tax return as well as combined state income tax
returns where combined filings are required. The federal tax returns for years 2018 through 2021 remain subject to examination
in the U.S. Federal jurisdiction. State tax returns for years 2016 through 2021 remain subject to examination by certain states.
Note 10 Derivatives and Hedging Activities
The Company has entered into interest rate swaps, caps and collars designated as cash flow hedges with the objective of
limiting the variability of interest payment cash flows. The Company has also entered into interest rate swaps designated as fair
value hedges designed to hedge changes in the fair value of outstanding fixed rate instruments caused by fluctuations in the
benchmark interest rate.
The Company enters into interest rate derivative contracts with certain of its commercial borrowers to enable those
borrowers to manage their exposure to interest rate fluctuations. To mitigate interest rate risk associated with these derivative
contracts, the Company enters into offsetting derivative contract positions with primary dealers. These interest rate derivative
contracts are not designated as hedging instruments; therefore, changes in the fair value of these derivatives are recognized
immediately in earnings. For the years ended December 31, 2022, 2021 and 2020, the impact on earnings related to changes in
fair value of these derivatives was not material.
The Company may be exposed to credit risk in the event of non-performance by the counterparties to its interest rate
derivative agreements. The Company assesses the credit risk of its financial institution counterparties by monitoring publicly
available credit rating and financial information. The Company manages dealer credit risk by entering into interest rate
derivatives only with primary and highly rated counterparties, the use of ISDA master agreements, central clearing mechanisms
and counterparty limits. The agreements contain bilateral collateral arrangements with the amount of collateral to be posted
generally governed by the settlement value of outstanding swaps. The Company manages the risk of default by its commercial
borrower counterparties through its normal loan underwriting and credit monitoring policies and procedures. The Company
does not currently anticipate any significant losses from failure of interest rate derivative counterparties to honor their
obligations.
The CME legally characterizes variation margin payments for centrally cleared derivatives as settlements of the derivatives'
exposures rather than collateral. As a result, the variation margin payment and the related derivative instruments are considered
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
a single unit of account for accounting and financial reporting purposes. The Company's clearing agent for interest rate
derivative contracts centrally cleared through the CME settles the variation margin daily with the CME; therefore, those interest
rate derivative contracts the Company clears through the CME are reported at a fair value of zero at both December 31, 2022
and 2021.
The following tables set forth certain information concerning the Company’s interest rate contract derivative financial
instruments and related hedged items at the dates indicated (dollars in thousands):
Weighted
Average
Pay Rate
/ Strike
Price
Weighted
Average
Receive Rate
/ Strike
Price
December 31, 2022
Weighted
Average
Remaining
Life
in Years
Notional
Amount
Balance Sheet
Location
Fair Value
Asset
Liability
2.32%
2.31%
1.22%
Term
SOFR
0.88%
3-Month
LIBOR
Daily SOFR
Fed Funds
Effective
Rate
2.2
$ 695,000 Other assets
$
941 $
—
1.7
675,000
1.7
400,000
—
—
—
—
3.72%
3.3
200,000 Other liabilities
—
(1,514)
2.5
200,000 Other assets
15,673
—
5.58%
1.50%
3.7
125,000 Other liabilities
—
(203)
Hedged Item
Variability of interest
cash flows on variable
rate borrowings
Variability of interest
cash flows on variable
rate borrowings
Variability of interest
cash flows on variable
rate liabilities
Variability of interest
cash flows on variable
rate loans
Variability of interest
cash flows on variable
rate liabilities
Variability of interest
cash flows on variable
rate loans
Derivatives designated as
cash flow hedges:
Pay-fixed interest rate
swaps
Pay-fixed interest rate
swaps
Pay-fixed interest rate
swaps
Pay-variable interest
rate swaps
Interest rate caps
purchased, indexed to
Fed Funds effective
rate
Interest rate collar,
indexed to 1-month
SOFR(1)
Derivatives designated as
fair value hedges:
Pay-fixed interest rate
swaps
Variability of fair value
of fixed rate loans
1.94%
Daily SOFR
1.6
100,000
—
—
Derivatives not
designated as hedges:
Pay-fixed interest rate
swaps
Pay-variable interest
rate swaps
Pay-fixed interest rate
swaps
Pay-variable interest
rate swaps
Interest rate caps
purchased, indexed to
1-month LIBOR
Interest rate caps sold,
indexed to 1-month
LIBOR
1-Month
LIBOR
3.55%
Term SOFR
4.17%
2.25%
3.55%
1-Month
LIBOR
4.17%
Term
SOFR
2.25%
3.6
3.6
5.9
5.9
2.7
2.7
1,113,494
1,113,494
803,225
803,225
Other assets /
Other liabilities
Other assets /
Other liabilities
Other assets /
Other liabilities
Other assets /
Other liabilities
20,712
(339)
339
(73,090)
47,230
(1,856)
1,856
(47,230)
42,920 Other assets
1,988
—
42,920 Other liabilities
—
(1,988)
$ 6,314,278
$ 88,739 $ (126,220)
(1) The interest rate collar consists of a combination of zero-premium interest rate options. The Company sold a pay-variable cap with a strike price of
5.58%; sold a 0% floor; and purchased a receive-variable floor with a strike price of 1.50%.
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Derivatives designated as
cash flow hedges:
Pay-fixed interest rate
swaps
Pay-fixed forward-
starting interest rate
swaps
Interest rate caps
purchased, indexed to
Fed Funds effective rate
Derivatives not
designated as hedges:
Pay-fixed interest rate
swaps
Pay-variable interest
rate swaps
Interest rate caps
purchased, indexed
to 1-month LIBOR
Interest rate caps sold,
indexed to 1-month
LIBOR
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
December 31, 2021
Weighted
Average
Pay Rate /
Strike
Price
Weighted
Average
Receive Rate
/ Strike
Price
Weighted
Average
Remaining
Life
in Years
Hedged Item
Notional
Amount
Balance Sheet
Location
Fair Value
Asset
Liability
Variability of interest
cash flows on variable
rate borrowings
Variability of interest
cash flows on variable
rate liabilities
Variability of interest
cash flows on variable
rate liabilities
2.35%
0.87%
1.00%
3-Month
LIBOR
Fed Funds
Effective Rate
2.6
$ 905,000 Other liabilities
$
— $
(2,687)
2.5
3.5
200,000 Other liabilities
—
200,000 Other assets
3,260
—
—
3.57%
Indexed to 1-
month LIBOR
5.0
1,668,517
Other assets /
Other liabilities
3,369
(15,347)
Indexed to
1-month
LIBOR
3.57%
5.0
1,668,517
Other assets /
Other liabilities
51,947
(6,837)
1.00%
4.0
4.0
1.00%
25,000 Other assets
443
—
25,000 Other liabilities
—
(443)
$ 4,692,034
$ 59,019 $ (25,314)
The following table provides information about the amount of loss related to derivatives designated as cash flow hedges
reclassified from AOCI into interest expense for the periods indicated (in thousands):
Location of gain (loss) reclassified from AOCI into income:
Interest expense on borrowings
Interest expense on deposits
Interest income on loans
Years Ended December 31,
2022
2021
2020
$
$
(4,224) $
4,357
(43)
90 $
(51,739) $
—
—
(51,739) $
(46,259)
—
—
(46,259)
During the year ended December 31, 2021, derivative positions designated as cash flow hedges with a notional amount
totaling $401 million were discontinued following the Company's determination that the hedged forecasted transactions were
not probable of occurring. A loss of $33.4 million, net of tax, was reclassified from AOCI into earnings as a result of the
discontinuance of the cash flow hedges. During the years ended December 31, 2022, and 2020, no derivative positions
designated as cash flow hedges were discontinued and none of the gains and losses reported in AOCI were reclassified into
earnings as a result of the discontinuance of cash flow hedges or because of the early extinguishment of debt. As of
December 31, 2022, the amount of net gain expected to be reclassified from AOCI into earnings during the next twelve months
was $41.2 million. See Note 11 to the consolidated financial statements for additional information about the reclassification
adjustments from AOCI into earnings.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The amount of gain (loss) related to derivatives designated as fair value hedges recognized in earnings was insignificant for
the years ended December 31, 2022, 2021 and 2020. The following table provides information about the hedged items related to
derivatives designated as fair value hedges at the date indicated (in thousands):
Contractual balance outstanding of hedged item (1)
Cumulative fair value hedging adjustments
Location in Consolidated Balance
Sheets
December 31, 2022
100,000
$
$
Loans
(3,923) Loans
(1) This amount is included in the amortized cost basis of a closed portfolio of loans used to designate hedging relationships in a portfolio layer method hedge
in which the hedged item is anticipated to be outstanding for the designated hedge period. At December 31, 2022, the amortized cost basis of the closed
portfolio used in this hedging relationship was $1.0 billion.
Some of the Company’s ISDA master agreements with financial institution counterparties contain provisions that permit
either counterparty to terminate the agreements and require settlement in the event that regulatory capital ratios fall below
certain designated thresholds, upon the initiation of other defined regulatory actions or upon suspension or withdrawal of the
Bank’s credit rating. Currently, there are no circumstances that would trigger these provisions of the agreements.
The Company does not offset assets and liabilities under master netting agreements for financial reporting purposes.
Information on interest rate swaps and caps subject to these agreements is as follows at the dates indicated (in thousands):
December 31, 2022
Gross Amounts
Recognized
Gross Amounts
Offset in Balance
Sheet
Net Amounts
Presented in
Balance Sheet
Gross Amounts Not Offset in
Balance Sheet
Derivative
Instruments
Collateral
Pledged
Net Amount
Derivative assets
Derivative liabilities
$
$
86,544 $
(3,912)
82,632 $
— $
86,544 $
(3,912) $
(79,447) $
3,185
—
(3,912)
3,912
—
—
— $
82,632 $
— $
(79,447) $
3,185
December 31, 2021
Gross Amounts
Recognized
Gross Amounts
Offset in Balance
Sheet
Net Amounts
Presented in
Balance Sheet
Gross Amounts Not Offset in
Balance Sheet
Derivative
Instruments
Collateral
Pledged
Net Amount
Derivative assets
Derivative liabilities
$
$
7,072 $
(18,034)
(10,962) $
— $
—
7,072 $
(3,104) $
(3,915) $
(18,034)
3,104
14,557
— $
(10,962) $
— $
10,642 $
53
(373)
(320)
The difference between the amounts reported for interest rate swaps subject to master netting agreements and the total fair
value of interest rate contract derivative financial instruments reported in the consolidated balance sheets is related to interest
rate derivative contracts not subject to master netting agreements.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Note 11 Stockholders’ Equity
Accumulated Other Comprehensive Income
Changes in other comprehensive income are summarized as follows for the periods indicated (in thousands):
Year Ended December 31, 2022
Before Tax
Tax Effect
Net of Tax
Unrealized losses on investment securities available for sale:
Net unrealized holding loss arising during the period
Amounts reclassified to gain on investment securities available for sale, net
Net change in unrealized loss on investment securities available for sale
Unrealized gains on derivative instruments:
Net unrealized holding gains arising during the period
Amounts reclassified to interest expense on deposits
Amounts reclassified to interest expense on borrowings
Amounts reclassified to interest income on loans
Net change in unrealized gains on derivative instruments
Other comprehensive loss
Unrealized losses on investment securities available for sale:
Net unrealized holding losses arising during the period
Amounts reclassified to gain on investment securities available for sale, net
Net change in unrealized losses on investment securities available for sale
Unrealized losses on derivative instruments:
Net unrealized holding gains arising during the period
Amounts reclassified to interest expense on borrowings
Reclassification adjustment for discontinuance of cash flow hedges
Net change in unrealized gains on derivative instruments
Other comprehensive income
Unrealized gains on investment securities available for sale:
Net unrealized holding gain arising during the period
Amounts reclassified to gain on investment securities available for sale, net
Net change in unrealized gains on investment securities available for sale
Unrealized losses on derivative instruments:
Net unrealized holding loss arising during the period
Amounts reclassified to interest expense on borrowings
Net change in unrealized losses on derivative instruments
Other comprehensive loss
117
$ (674,115) $ 175,251 $ (498,864)
(2,906)
(501,770)
1,021
(678,042) 176,272
(3,927)
107,764
79,871
(3,224)
(4,357)
3,126
4,224
32
43
107,674
79,805
$ (570,368) $ 148,403 $ (421,965)
(27,893)
1,133
(1,098)
(11)
(27,869)
Year Ended December 31, 2021
Before Tax
Tax Effect
Net of Tax
$ (72,789) $ 18,561 $ (54,228)
(6,712)
(60,940)
(9,010)
(81,799)
2,298
20,859
22,207
29,808
38,545
51,739
33,400
44,833
126,380
94,152
$ 44,581 $ (11,369) $ 33,212
(7,601)
(13,194)
(11,433)
(32,228)
Year Ended December 31, 2020
Before Tax
Tax Effect
Net of Tax
$ 61,291 $ (15,246) $ 46,045
(10,431)
35,614
3,570
(11,676)
(14,001)
47,290
(116,168)
46,259
(69,909)
$ (22,619) $
(87,402)
28,766
34,463
(11,796)
(52,939)
16,970
5,294 $ (17,325)
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The categories of AOCI and changes therein are presented below for the periods indicated (in thousands):
Balance at December 31, 2019
Other comprehensive loss
Balance at December 31, 2020
Other comprehensive income
Balance at December 31, 2021
Other comprehensive loss
Balance at December 31, 2022
Note 12 Equity Based and Other Compensation Plans
Description of Equity Based Compensation Plans
Unrealized Gain
(Loss) on
Investment Securities
Available for Sale
Unrealized Gain
(Loss)
on Derivative
Instruments
$
28,185 $
(60,012) $
35,614
63,799
(60,940)
2,859
(501,770)
(52,939)
(112,951)
94,152
(18,799)
79,805
Total
(31,827)
(17,325)
(49,152)
33,212
(15,940)
(421,965)
$
(498,911) $
61,006 $
(437,905)
In connection with the IPO of the Company's common stock in 2011, the Company adopted the 2010 Plan. In 2014, the
Board of Directors and the Company's stockholders approved the 2014 Plan. The 2010 and 2014 Plans are administered by the
Board of Directors or a committee thereof and provide for the grant of non-qualified stock options, SARs, restricted shares,
deferred shares, performance shares, unrestricted shares and other share-based awards to selected employees, directors or
independent contractors of the Company and its affiliates. As of December 31, 2022, no further awards are available for
issuance under the 2010 plan.The number of shares of common stock authorized for award under the 2014 Plan is 6,200,000, of
which 1,531,813 shares remain available for issuance as of December 31, 2022. Shares of common stock delivered under the
plans may consist of authorized but unissued shares or previously issued shares reacquired by the Company. Unvested awards
become fully vested in the event of a change in control, subject to a double trigger, as defined.
Compensation Expense Related to Equity Based Awards
The following table summarizes compensation cost related to equity based awards for the periods indicated (in thousands):
Years Ended December 31,
2022
2021
2020
Compensation cost of equity based awards:
RSAs
Executive share-based awards
Non-executive RSUs
Total compensation cost of equity based awards
Related tax benefits
$
16,203 $
4,239
13,334 $
7,942
4,886
25,328
2,707
23,983
(6,585)
(6,116)
Compensation cost of equity based awards, net of tax
$
18,743 $
17,867 $
15,236
3,133
2,145
20,514
(4,854)
15,660
Non-Executive Share-Based Awards
RSAs
RSAs are generally valued at the closing price of the Company's common stock on the date of grant. All awards vest in
equal annual installments over a period of four years from the date of grant except awards granted to the Company's Board of
Directors, which vest over a period of one year.
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Non-executive RSUs
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The Company issues RSUs based on results of the Company's annual incentive compensation arrangements for certain
employees other than those eligible for the executive share-based awards discussed below. These incentive compensation plans
provide for a combination of cash payments and RSUs following the end of each annual performance period. The dollar value
of share awards to be granted is based on the achievement of performance criteria established in the incentive arrangements.
The number of shares of common stock to be awarded is variable based on the closing price of the Company's stock on the date
of grant; therefore, these awards are initially classified as liability instruments, with compensation cost recognized from the
beginning of the performance period. Awards vest in equal installments over a period of four years from the date of grant.
Annual awards of RSUs represent a fixed number of shares and vest on December 31st in equal tranches over four years.
Upon vesting, the non-executive RSUs will be converted to common stock on a one-for-one basis, or may be settled in cash at
the Company's option. To date, all such awards have been settled in shares. The non-executive RSUs do not accumulate
dividends prior to vesting.
A summary of activity related to non-executive share-based awards for the periods indicated follows:
RSA
Non-Executive RSU
Number of Share
Awards
Weighted
Average Grant
Date Fair Value
Number of Share
Awards
Weighted
Average Grant
Date Fair Value
Unvested share awards outstanding, December 31, 2019
1,050,455 $
Granted
Vested
Canceled or forfeited
Unvested share awards outstanding, December 31, 2020
Granted
Vested
Canceled or forfeited
Unvested share awards outstanding, December 31, 2021
Granted
Vested
Canceled or forfeited
660,587
(479,057)
(70,150)
1,161,835
571,936
(479,790)
(74,297)
1,179,684
496,361
(391,693)
(90,037)
Unvested share awards outstanding, December 31, 2022
1,194,315 $
38.24
29.72
38.94
34.78
33.32
42.17
34.01
35.91
37.17
41.75
36.72
39.38
39.05
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
294,331
—
(36,355)
257,976 $
41.87
—
41.87
41.87
The following table summarizes the closing price of the Company's stock on the date of grant for shares granted and the
aggregate grant date fair value of shares vesting for the periods indicated (in thousands, except per share data):
Years Ended December 31,
2022
2021
2020
Range of the closing price on date of grant
$39.39 - $43.67
$42.01 - $47.52
$13.99 - $30.90
Aggregate grant date fair value of shares vesting
$
14,383 $
16,319 $
18,654
The total unrecognized compensation cost of $34.8 million for all RSAs and non-executive RSUs outstanding at
December 31, 2022, will be recognized over a weighted average remaining period of 2.5 years.
Executive share-based awards
Certain of the Company's executives are eligible to receive annual awards of RSUs and PSUs (collectively, the "share
units"). Annual awards of RSUs represent a fixed number of shares and vest on December 31st in equal tranches over four
years. PSUs are initially granted based on a target value. The number of PSUs that ultimately vest at the end of the performance
measurement period will be based on the achievement of performance criteria pre-established by the Compensation Committee
of the Board of Directors. Upon vesting, the share units will be converted to common stock on a one-for-one basis, or may be
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
settled in cash at the Company's option. The share units will accumulate dividends declared on the Company's common stock
from the date of grant to be paid subsequent to vesting.
As a result of the majority of previous settlements being in cash, all executive RSUs and PSUs have been determined to be
liability instruments and are remeasured at fair value each reporting period until the awards are settled. The RSUs are valued
based on the closing price of the Company's common stock at the reporting date. The PSUs are valued based on the closing
price of the Company's common stock at the reporting date net of a discount related to any applicable market conditions,
considering the probability of meeting the defined performance conditions. Compensation cost related to PSUs is recognized
during the performance period based on the probable outcome of the respective performance conditions.
A summary of activity related to executive share-based awards for the periods indicated follows:
Unvested executive share-based awards outstanding, December 31, 2019
Granted
Vested
Unvested executive share-based awards outstanding, December 31, 2020
Granted
Vested
Unvested executive share-based awards outstanding, December 31, 2021
Granted
Vested
Unvested executive share-based awards outstanding, December 31, 2022
RSU
PSU
112,116
106,731
125,088
106,731
(62,292)
(52,026)
156,555
63,814
(100,881)
119,488
66,990
(77,648)
108,830
179,793
63,814
—
243,607
66,990
(73,062)
237,535
The total liability for these executive share-based awards was $9.5 million at December 31, 2022. The total unrecognized
compensation cost of $7.4 million for unvested executive share-based awards at December 31, 2022 will be recognized over a
weighted average remaining period of 1.9 years.
Option Awards
A summary of activity related to stock option awards for the periods indicated follows:
Option awards outstanding, December 31, 2019
Exercised
Canceled or forfeited
Option awards outstanding, December 31, 2020
Exercised
Canceled or forfeited
Option awards outstanding, December 31, 2021
Number of
Option
Awards
Weighted
Average
Exercise Price
737,753 $
(735,400)
(784)
1,569
(1,569)
—
—
26.64
26.67
22.18
15.94
15.94
—
—
The intrinsic value and related tax benefit of the options exercised was immaterial for the years ended December 31, 2021
and 2020.
Deferred Compensation Plan
The Company has a non-qualified deferred compensation plan for a group of key management or highly compensated
employees whereby a participant, upon election, may defer a portion of eligible compensation. The deferred compensation plan
provides for discretionary Company contributions. Generally, the Company has elected not to make contributions. The
Company credits each participant's account with income based on either an annual interest rate determined by the Company's
Compensation Committee or returns of selected investment portfolios, as elected by the participant. A participant's elective
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
deferrals and interest thereon are at all times 100% vested. Company contributions and interest thereon will become 100%
vested upon the earlier of a change in control, as defined, or the participant's death, disability, attainment of normal retirement
age or the completion of two years of service. Participant deferrals and any associated earnings will be paid upon separation
from service or based on a specified distribution schedule, as elected by the participant. Deferred compensation expense was
$1.4 million, $2.2 million and $2.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Deferred
compensation liabilities of $37 million and $33 million were included in other liabilities in the accompanying consolidated
balance sheets at December 31, 2022 and 2021, respectively.
BankUnited 401(k) Plan
Under the terms of the 401(k) Plan sponsored by the Company, eligible employees may contribute a portion of
compensation not exceeding the limits set by law. Employees are eligible to participate in the plan after one month of service.
The 401(k) Plan allows a matching employer contribution equal to 100% of elective deferrals that do not exceed 1% of
compensation, plus 70% of elective deferrals that exceed 1% but are less than 6% of compensation. Matching contributions are
fully vested after two years of service. For the years ended December 31, 2022, 2021 and 2020, BankUnited made matching
contributions to the 401(k) Plan of approximately $6.2 million, $6.1 million and $5.7 million, respectively.
Note 13 Regulatory Requirements and Restrictions
The Company and the Bank are subject to various regulatory capital requirements administered by Federal banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary
actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet
specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated
pursuant to regulation. The capital amounts and classification also are subject to qualitative judgments by the regulators about
components, risk weightings and other factors. Banking regulations identify five capital categories for insured depository
institutions: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized. As of December 31, 2022 and 2021, all capital ratios of the Company and the Bank exceeded the "well
capitalized" levels under the regulatory framework for prompt corrective action. Quantitative measures established by
regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total,
common equity tier 1 and tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of tier 1 capital
to average tangible assets (leverage ratio).
The following tables provide information regarding regulatory capital for the Company at the dates indicated (dollars in
thousands):
December 31, 2022
Actual
Required to be
Considered Well
Capitalized
Required to be
Considered
Adequately
Capitalized
Required to be
Considered
Adequately
Capitalized Including
Capital Conservation
Buffer
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
BankUnited, Inc.:
Tier 1 leverage
CET1 risk-based capital
$ 2,806,713
$ 2,806,713
7.49 %
N/A (1)
11.00 % $ 1,658,842
N/A (1) $ 1,498,309
6.50 % $ 1,148,429
4.00 %
N/A (1)
4.50 % $ 1,786,445
N/A (1)
7.00 %
Tier 1 risk-based capital
$ 2,806,713
11.00 % $ 2,041,652
8.00 % $ 1,531,239
6.00 % $ 2,169,255
8.50 %
Total risk-based capital
$ 3,236,797
12.68 % $ 2,552,065
10.00 % $ 2,041,652
8.00 % $ 2,679,668
10.50 %
BankUnited:
Tier 1 leverage
$ 3,148,656
8.43 % $ 1,866,432
5.00 % $ 1,493,145
4.00 %
N/A
N/A
CET1 risk-based capital
$ 3,148,656
12.40 % $ 1,650,104
6.50 % $ 1,142,380
4.50 % $ 1,777,035
7.00 %
Tier 1 risk-based capital
$ 3,148,656
12.40 % $ 2,030,897
8.00 % $ 1,523,173
6.00 % $ 2,157,828
8.50 %
Total risk-based capital
$ 3,278,740
12.92 % $ 2,538,621
10.00 % $ 2,030,897
8.00 % $ 2,665,552
10.50 %
121
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
December 31, 2021
Actual
Required to be
Considered Well
Capitalized
Required to be
Considered
Adequately
Capitalized
Required to be
Considered
Adequately
Capitalized Including
Capital Conservation
Buffer
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
BankUnited, Inc.:
Tier 1 leverage
CET1 risk-based capital
$ 2,991,085
$ 2,991,085
8.37 %
N/A (1)
12.60 % $ 1,542,833
N/A (1) $ 1,429,955
6.50 % $ 1,068,115
4.00 %
N/A (1)
4.50 % $ 1,661,512
N/A (1)
7.00 %
Tier 1 risk-based capital
$ 2,991,085
12.60 % $ 1,898,871
8.00 % $ 1,424,153
6.00 % $ 2,017,551
8.50 %
Total risk-based capital
$ 3,391,066
14.29 % $ 2,373,589
10.00 % $ 1,898,871
8.00 % $ 2,492,268
10.50 %
BankUnited:
Tier 1 leverage
$ 3,419,728
9.60 % $ 1,781,140
5.00 % $ 1,424,912
4.00 %
N/A
N/A
CET1 risk-based capital
$ 3,419,728
14.49 % $ 1,534,040
6.50 % $ 1,062,028
4.50 % $ 1,652,043
7.00 %
Tier 1 risk-based capital
$ 3,419,728
14.49 % $ 1,888,049
8.00 % $ 1,416,037
6.00 % $ 2,006,052
8.50 %
Total risk-based capital
$ 3,519,709
14.91 % $ 2,360,062
10.00 % $ 1,888,049
8.00 % $ 2,478,065
10.50 %
(1)
There is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.
Upon the adoption of ASU 2016-13 effective January 1, 2020, the Company elected the option to temporarily delay the
effects of CECL on regulatory capital for two years, followed by a three-year transition period.
BankUnited is subject to various regulatory restrictions relating to the payment of dividends, including requirements to
maintain capital at or above certain minimums, and to remain "well-capitalized" under the prompt corrective action regulations.
The Company does not expect that any of these laws, regulations or policies will materially affect the ability of BankUnited to
pay dividends in the foreseeable future.
Note 14 Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis
The following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair
value on a recurring basis and the level within the fair value hierarchy in which those measurements are typically classified.
Investment securities available for sale and marketable equity securities—Fair value measurements are based on quoted
prices in active markets when available; these measurements are classified within level 1 of the fair value hierarchy. These
securities typically include U.S. Treasury securities and certain preferred stocks. If quoted prices in active markets are not
available, fair values are estimated using quoted prices of securities with similar characteristics, quoted prices of identical
securities in less active markets, discounted cash flow techniques, or matrix pricing models. These securities are generally
classified within level 2 of the fair value hierarchy and include U.S. Government agency securities, U.S. Government agency
and sponsored enterprise MBS, preferred stock investments for which level 1 valuations are not available, non-mortgage asset-
backed securities, single family real estate-backed securities, private label residential MBS and CMOs, private label
commercial MBS, collateralized loan obligations and state and municipal obligations. Pricing of these securities is generally
primarily spread driven. Observable inputs that may impact the valuation of these securities include benchmark yield curves,
credit spreads, reported trades, dealer quotes, bids, issuer spreads, current rating, historical constant prepayment rates, historical
voluntary prepayment rates, structural and waterfall features of individual securities, published collateral data, and for certain
securities, historical constant default rates and default severities.
The Company uses third-party pricing services in determining fair value measurements for investment securities. To obtain
an understanding of the methodologies and assumptions used, management reviews written documentation provided by the
pricing services, conducts interviews with valuation desk personnel and reviews model results and detailed assumptions used to
value selected securities as considered necessary. Management has established a robust price challenge process that includes a
review by the treasury front office of all prices provided on a monthly basis. Any price evidencing unexpected month over
month fluctuations or deviations from expectations is challenged. If considered necessary to resolve any discrepancies, a price
122
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
will be obtained from an additional independent valuation source. The Company does not typically adjust the prices provided,
other than through this established challenge process. The results of price challenges are subject to review by executive
management. Any price discrepancies are resolved based on careful consideration of the assumptions and inputs employed by
each of the pricing sources.
Derivative financial instruments—Fair values of interest rate swaps, caps and collars are determined using widely accepted
discounted cash flow modeling techniques. These discounted cash flow models use projections of future cash payments and
receipts that are discounted at mid-market rates. Observable inputs that may impact the valuation of these instruments include
benchmark swap rates and benchmark forward yield curves. These fair value measurements are generally classified within
level 2 of the fair value hierarchy.
The following tables present assets and liabilities measured at fair value on a recurring basis at the dates indicated (in
thousands):
December 31, 2022
Level 1
Level 2
Total
$
135,841 $
— $
135,841
—
—
—
—
—
—
—
—
—
90,884
1,983,168
1,983,168
525,094
525,094
2,530,663
2,530,663
2,524,354
2,524,354
470,441
470,441
1,136,463
1,136,463
95,976
116,661
135,782
—
95,976
116,661
135,782
90,884
88,739
—
88,739
$
$
$
226,725 $ 9,607,341 $ 9,834,066
— $
(126,220) $
(126,220)
— $
(126,220) $
(126,220)
Investment securities available for sale:
U.S. Treasury securities
U.S. Government agency and sponsored enterprise residential MBS
U.S. Government agency and sponsored enterprise commercial MBS
Private label residential MBS and CMOs
Private label commercial MBS
Single family real estate-backed securities
Collateralized loan obligations
Non-mortgage asset-backed securities
State and municipal obligations
SBA securities
Marketable equity securities
Derivative assets
Total assets at fair value
Derivative liabilities
Total liabilities at fair value
123
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Investment securities available for sale:
U.S. Treasury securities
U.S. Government agency and sponsored enterprise residential MBS
U.S. Government agency and sponsored enterprise commercial MBS
Private label residential MBS and CMOs
Private label commercial MBS
Single family real estate-backed securities
Collateralized loan obligations
Non-mortgage asset-backed securities
State and municipal obligations
SBA securities
Marketable equity securities
Servicing rights
Derivative assets
Total assets at fair value
Derivative liabilities
Total liabilities at fair value
December 31, 2021
Level 1
Level 2
Total
$
111,660 $
— $
111,660
—
—
—
—
—
—
—
—
—
120,777
—
—
2,097,796
2,097,796
856,899
856,899
2,149,420
2,149,420
2,604,010
2,604,010
476,968
476,968
1,078,286
1,078,286
152,510
222,277
183,595
—
5,152
59,019
152,510
222,277
183,595
120,777
5,152
59,019
$
$
$
232,437 $ 9,885,932 $ 10,118,369
— $
(25,314) $
(25,314)
— $
(25,314) $
(25,314)
Assets and liabilities measured at fair value on a non-recurring basis
Following is a description of the methodologies used to estimate the fair values of assets and liabilities that may be
measured at fair value on a non-recurring basis, and the level within the fair value hierarchy in which those measurements are
typically classified.
Collateral dependent loans and OREO—The carrying amount of collateral dependent loans is typically based on the fair
value of the underlying collateral, which may be real estate, enterprise value or other business assets, less estimated costs to sell
when repayment is expected to come from the sale of the collateral. The carrying value of OREO is initially measured based on
the fair value of the real estate acquired in foreclosure and subsequently adjusted to the lower of cost or estimated fair value,
less estimated cost to sell. Fair values of real estate collateral and OREO are typically based on third-party real estate appraisals
which utilize market and income approaches to valuation incorporating both observable and unobservable inputs.
Fair value measurements related to collateral dependent loans and OREO are generally classified within level 3 of the fair
value hierarchy.
Operating lease equipment—Fair values of impaired operating lease equipment are typically based upon discounted cash
flow analyses, considering expected lease rates and estimated end of life residual values, typically obtained from independent
appraisals. These fair value measurements are classified within level 3 of the fair value hierarchy.
The following table presents the net carrying value of assets classified within level 3 of the fair value hierarchy at the dates
indicated, for which non-recurring changes in fair value were recorded during the period then ended (in thousands):
Collateral dependent loans
OREO
Operating lease equipment
December 31, 2022
$
31,789 $
693
—
December 31, 2021
70,433
2,788
11,429
$
32,482 $
84,650
124
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
The following table presents the carrying value and fair value of financial instruments and the level within the fair value
hierarchy in which those measurements are classified at the dates indicated (dollars in thousands):
Assets:
Cash and cash equivalents
Investment securities
Non-marketable equity securities
Loans, net
Derivative assets
Liabilities:
Demand, savings and money market deposits
Time deposits
Federal funds purchased
FHLB advances
Notes and other borrowings
Derivative liabilities
Note 15 Commitments and Contingencies
December 31, 2022
December 31, 2021
Level Carrying Value
Fair Value
Carrying Value
Fair Value
1
$
572,647 $
572,647 $
314,857 $
314,857
1/2
$ 9,755,327 $ 9,755,190 $ 10,064,198 $ 10,064,887
2
3
2
2
2
2
2
2
2
$
294,172 $
294,172 $
135,859 $
135,859
$ 24,738,042 $ 23,342,950 $ 23,638,596 $ 24,088,190
$
88,739 $
88,739 $
59,019 $
59,019
$ 23,241,256 $ 23,241,256 $ 26,053,859 $ 26,053,859
$ 4,268,078 $ 4,231,167 $ 3,384,243 $ 3,388,435
$
190,000 $
190,000 $
199,000 $
199,000
$ 5,420,000 $ 5,419,588 $ 1,905,000 $ 1,905,629
$
$
720,923 $
698,359 $
721,416 $
813,095
126,220 $
126,220 $
25,314 $
25,314
The Company issues off-balance sheet financial instruments to meet the financing needs of its customers. These financial
instruments include commitments to fund loans, unfunded commitments under existing lines of credit, and commercial and
standby letters of credit. These commitments expose the Company to varying degrees of credit and market risk which are
essentially the same as those involved in extending loans to customers, and are subject to the same credit policies used in
underwriting loans. Collateral may be obtained based on the Company’s credit evaluation of the counterparty. The Company’s
maximum exposure to credit loss is represented by the contractual amount of these commitments.
Commitments to fund loans
These are agreements to lend funds to customers as long as there is no violation of any condition established in the
contract. Commitments to fund loans generally have fixed expiration dates or other termination clauses and may require
payment of a fee. Many of these commitments are expected to expire without being funded and, therefore, the total commitment
amounts do not necessarily represent future liquidity requirements.
Unfunded commitments under lines of credit
Unfunded commitments under lines of credit include commercial, commercial real estate and an insignificant amount of
consumer lines of credit to existing customers, for many of which additional extensions of credit are subject to borrowing base
requirements. Some of these commitments may mature without being fully funded, so may not necessarily represent future
liquidity requirements.
Commercial and standby letters of credit
Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third
party. These letters of credit are primarily issued to support trade transactions or guarantee arrangements. The credit risk
involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.
125
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Total lending related commitments outstanding at December 31, 2022 were as follows (in thousands):
Commitments to fund loans
Unfunded commitments under lines of credit
Commercial and standby letters of credit
Legal Proceedings
$
$
271,274
5,682,316
130,247
6,083,837
The Company is involved as plaintiff or defendant in various legal actions arising in the normal course of business. In the
opinion of management, based upon advice of legal counsel, the likelihood is remote that the impact of these proceedings,
either individually or in the aggregate, would be material to the Company’s consolidated financial position, results of operations
or cash flows.
Note 16 Condensed Financial Statements of BankUnited, Inc.
Condensed financial statements of BankUnited, Inc. are presented below (in thousands):
Condensed Balance Sheets
Assets:
Cash and cash equivalents
Marketable equity securities, at fair value
Investment in BankUnited, N.A.
Other assets
Total assets
Liabilities and Stockholders' Equity:
Notes payable
Other liabilities
Stockholders' equity
Total liabilities and stockholders' equity
December 31,
2022
December 31,
2021
$
266,282 $
90,884
164,212
120,777
2,777,082
3,465,136
39,682
6,673
$
3,173,930 $
3,756,798
$
692,534 $
691,200
45,415
27,837
2,435,981
3,037,761
$
3,173,930 $
3,756,798
126
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Condensed Statements of Income
Years Ended December 31,
2022
2021
2020
Income:
Interest and dividends on investment securities
$
5,047 $
4,958 $
Service fees from subsidiary
Equity in earnings of subsidiary
Gain (loss) on investment securities
Total
Expense:
Interest on borrowings
Employee compensation and benefits
Other
Total
Income before income taxes
Benefit for income taxes
Net income
17,185
338,911
13,014
455,672
(19,732)
(2,530)
341,411
471,114
36,210
29,189
3,857
69,256
36,143
26,730
3,744
66,617
272,155
404,497
(12,816)
(10,487)
4,214
15,935
224,734
3,822
248,705
29,041
24,867
3,711
57,619
191,086
(6,767)
$
284,971 $
414,984 $
197,853
127
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Condensed Statements of Cash Flows
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Equity in undistributed earnings of subsidiaries
Equity based compensation
Other
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of marketable equity securities
Proceeds from repayments, sale, maturities and calls of investment
securities
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from issuance of notes payable
Dividends paid
Proceeds from exercise of stock options
Repurchase of common stock
Other
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental schedule of non-cash investing and financing activities:
Dividends declared, not paid
Years Ended December 31,
2022
2021
2020
$
284,971 $
414,984 $
197,853
266,089
25,179
1,858
578,097
(143,672)
(224,734)
23,832
8,810
303,954
20,367
10,171
3,657
—
(35,000)
(53,266)
10,000
—
10,000
15,728
(11)
13,426
—
(19,283)
(39,840)
—
—
(79,443)
(85,790)
—
25
293,858
(86,522)
19,611
(401,288)
(318,499)
(100,972)
(5,296)
(5,956)
(4,620)
(486,027)
(410,220)
102,070
164,212
(125,549)
289,761
266,282 $
164,212 $
121,355
85,172
204,589
289,761
19,346 $
19,876 $
22,309
$
$
Dividends received by BankUnited, Inc. from the Bank totaled $605 million and $312 million for the years ended
December 31, 2022, and 2021, respectively. No dividends were received by BankUnited, Inc. from the Bank during the year
ended December 31, 2020.
128
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Note 17 Quarterly Financial Information (Unaudited)
Financial information by quarter for the periods indicated follows (in thousands, except per share data):
Interest income
Interest expense
Net interest income before provision for credit losses
Provision for credit losses
Fourth
Quarter
Third
Quarter
2022
Second
Quarter
First Quarter
Total
$ 401,490 $ 326,024 $ 266,973 $ 235,964 $ 1,230,451
158,424
243,066
39,608
90,188
41,557
27,322
235,836
225,416
208,642
3,720
23,996
7,830
317,491
912,960
75,154
Net interest income after provision for credit losses
203,458
232,116
201,420
200,812
837,806
Non-interest income
Non-interest expense
Income before income taxes
Provision for income taxes
Net income
Earnings per common share, basic
Earnings per common share, diluted
Interest income
Interest expense
Non-interest income
Non-interest expense
Income before income taxes
Provision (benefit) for income taxes
Net income
Earnings per common share, basic
Earnings per common share, diluted
26,813
148,479
81,792
17,585
23,072
138,105
117,083
29,233
13,450
14,301
127,402
126,324
87,468
21,704
88,789
21,639
77,636
540,310
375,132
90,161
64,207 $
87,850 $
65,764 $
67,150 $ 284,971
0.83 $
0.82 $
1.13 $
1.12 $
0.82 $
0.82 $
0.79 $
0.79 $
3.55
3.54
$
$
$
Fourth
Quarter
Third
Quarter
2021
Second
Quarter
First Quarter
Total
$ 237,873 $ 234,345 $ 241,801 $ 245,429 $ 959,448
31,858
39,223
43,490
49,189
163,760
795,688
862,807
134,153
547,575
449,385
45,622
187,860
63,531
25,478
118,042
114,400
32,757
118,452
140,150
30,296
123,221
131,304
(61,724)
$ 125,255 $
27,459
86,941 $ 103,974 $
36,176
34,401
32,490
98,814 $ 414,984
$
$
1.42 $
1.41 $
0.94 $
0.94 $
1.12 $
1.11 $
1.06 $
1.06 $
4.52
4.52
Net interest income before provision for credit losses
206,015
195,122
198,311
196,240
Provision for (recovery of) credit losses
246
(11,842)
(27,534)
(27,989)
(67,119)
Net interest income after provision for credit losses
205,769
206,964
225,845
224,229
During the fourth quarter of 2021, the Bank reached a settlement with the Florida Department of Revenue related to certain
tax matters for the 2009-2019 tax years and recorded a tax benefit of $43.9 million, net of federal impact. Unrelated to the
Florida settlement, the Bank recorded an additional $25.2 million tax benefit related to a reduction in the liability for
unrecognized tax benefits arising from expiration of statutes of limitation in the Federal and certain state jurisdictions. See Note
9 to the consolidated financial statements for information about income taxes.
During the fourth quarter of 2021, derivative positions designated as cash flow hedges were discontinued resulting in a
$(44.8) million loss impacting pre-tax earnings. See Note 10 to the consolidated financial statements for more information
about derivative instruments.
129
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation under the
supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of December 31, 2022.
Changes in Internal Control over Financial Reporting
None.
Management's Report on Internal Control Over Financial Reporting
Management's report, which is included in Part II, Item 8 of this Form 10-K, is incorporated herein by reference.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of the Company's internal control over financial reporting as of December 31, 2022 has been audited by
Deloitte and Touche LLP, an independent registered public accounting firm, as stated in their report, which is included in Part
II, Item 8 of this Form 10-K.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
130
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Information regarding the directors and executive officers of BankUnited, Inc. and information regarding Section 16(a)
compliance, the Audit and Risk Committees, the Company's code of ethics, background of the directors and director
nominations appearing under the captions "Section 16(a) Beneficial Ownership Reporting Compliance," "Committees of the
Board of Directors," "Corporate Governance Guidelines, Code of Conduct and Code of Ethics," "Director Nominating Process
and Diversity" and "Election of Directors" in the Company's Proxy Statement for the 2023 Annual Meeting of Stockholders
(the "2023 Proxy Statement") is hereby incorporated by reference.
Item 11. Executive Compensation
Information appearing under the captions "Director Compensation" and "Executive Compensation" in the 2023 Proxy
Statement (other than the "Compensation Committee Report," which is deemed furnished herein by reference) is hereby
incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information setting forth the security ownership of certain beneficial owners and management appearing under the caption
"Beneficial Ownership of the Company's Common Stock" and information in the "Equity Compensation Plans" table appearing
under the caption "Equity Compensation Plan Information" in the 2023 Proxy Statement is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding certain related transactions appearing under the captions "Certain Related Party Relationships" and
information regarding director independence appearing under the caption "Director Independence" in the 2023 Proxy Statement
is hereby incorporated by reference.
Item 14. Principal Accountant Fees and Services
Information appearing under the captions "Auditor Fees and Services" and "Policy on Audit Committee Pre-Approval of
Audit and Permissible Non-Audit Services of Independent Auditors" in the 2023 Proxy Statement is hereby incorporated by
reference.
131
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) List of documents filed as part of this report:
1) Financial Statements:
Management's Report on Internal Control Over Financial Reporting
Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
2) Financial Statement Schedules:
Financial statement schedules are omitted as not required or not applicable or because the information is included in
the Consolidated Financial Statements or notes thereto.
3) List of Exhibits:
The exhibit list in the Exhibit Index is incorporated herein by reference as the list of exhibits required as part of this
report.
132
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
EXHIBIT INDEX
Exhibit
Number
3.1
Amended and Restated Certificate of Incorporation
Description
Amended and Restated By-Laws
Specimen common stock certificate
Location
Exhibit 3.1 to the Annual Report on Form
10-K of the Company filed February 28,
2018
Exhibit 3.1 to the Current Report on Form
8-K of the Company filed August 15, 2016
Exhibit 4.1 to the Registration Statement on
Form S-1 of the Company filed January 18,
2011
Indenture dated as of November 17, 2015 between
BankUnited, Inc. and U.S. Bank National Association, as
trustee
Exhibit 4.1 to the Current Report on
Form 8-K of the Company filed November
17, 2015
First Supplemental Indenture dated as of November 17,
2015 between BankUnited, Inc. and U.S. Bank National
Association, as trustee
Exhibit 4.2 to the Current Report on
Form 8-K of the Company filed November
17, 2015
Form of 4.875% Senior Note due 2025 (included as part
of Exhibit 4.3 above)
Indenture dated as of June 11, 2020 between BankUnited,
Inc. and U.S. Bank National Association, as trustee
Exhibit 4.3 to the Current Report on
Form 8-K of the Company filed November
17, 2015
Exhibit 4.1 to the Current Report on
Form 8-K of the Company filed June 11,
2020
First Supplemental Indenture dated as of June 11, 2020
between BankUnited, Inc. and U.S. Bank National
Association, as trustee
Exhibit 4.2 to the Current Report on
Form 8-K of the Company filed June 11,
2020
Form of 5.125% Subordinated Notes due 2030
Description of the registrant's securities registered
pursuant to Section 12 of the Securities Exchange Act of
1934
Exhibit 4.3 to the Current Report on Form
8-K of the Company filed, June 11, 2020
Filed herewith
10.1
BankUnited, N.A. Non-Qualified Deferred Compensation
Plan
10.1a
Amendment to the BankUnited, N.A. Non-Qualified
Deferred Compensation Plan
10.2
BankUnited, Inc. (formerly known as BU Financial
Corporation) 2009 Stock Option Plan
10.3a
BankUnited, Inc. 2010 Omnibus Equity Incentive Plan
Exhibit 10.1b to the Annual Report on
Form 10-K of the Company filed February
26, 2015
Exhibit 10.1a to the Annual Report on
Form 10-K of the Company filed February
26, 2016
Exhibit 10.7 to the Registration Statement
on Form S-1 of the Company filed
October 29, 2010
Exhibit 10.8 to the Registration Statement
on Form S-1 of the Company filed
January 18, 2011
133
Exhibit
Number
Description
Location
10.3b
BankUnited, Inc. 2014 Omnibus Equity Incentive Plan
10.3c
Amendment No. 1 to the BankUnited, Inc. 2014 Omnibus
Equity Incentive Plan
10.4a
10.4b
10.5
10.6
Registration Rights Agreement by and among
BankUnited, Inc., John A. Kanas, Rajinder P. Singh,
Douglas J. Pauls and John Bohlsen, and each of the other
parties thereto
Amendment No. 1, dated February 29, 2012, to
Registration Rights Agreement, dated February 2, 2011,
by and among BankUnited, Inc., John A. Kanas,
Rajinder P. Singh, Douglas J. Pauls and John Bohlsen,
and each of the other parties thereto
Form of indemnification agreement between
BankUnited, Inc. and each of its directors and executive
officers
BankUnited, Inc. Policy on Incentive Compensation
Arrangements
10.7
Heritage Bank, N.A. 2008 Stock Incentive Plan
Appendix A to the Proxy Statement on
Schedule 14A of the Company filed April
11, 2014
Appendix A to the Proxy Statement on
Schedule 14A of the Company filed April
10, 2020
Exhibit 10.9 to Annual Report on Form 10-
K of the Company filed March 31, 2011
Exhibit 10.3 to the Current Report on
Form 8-K of the Company filed March 6,
2012
Exhibit 10.1 to the Current Report on
Form 8-K of the Company filed
February 16, 2011
Exhibit 10.6 of the Company's Annual
Report on Form 10-K filed February 26,
2015
Exhibit 10.1 to the Registration Statement
on Form S-8 of the Company filed
February 29, 2012
10.8
10.9
10.11a
10.11b
10.11c
10.11d
10.13
Stock Warrant Agreement, dated as of November 24,
2008, by Heritage Bank, N.A. in favor of the parties listed
on Exhibit A thereto
Exhibit 10.4 to the Current Report on
Form 8-K of the Company filed March 6,
2012
Supplemental Warrant Agreement, dated as of
February 29, 2012, by and between BankUnited, Inc. and
Heritage Bank, N.A.
Exhibit 10.5 to the Current Report on
Form 8-K of the Company filed March 6,
2012
Amended and Restated Employment Agreement, dated
February 2, 2016, by and between BankUnited, Inc. and
Rajinder P. Singh
Exhibit 10.11 to the Annual Report on
Form 10-K of the Company filed February
26, 2016
Amendment, dated May 6, 2016, to Amended and
Restated Employment Agreement, dated February 2,
2016, by and between BankUnited, Inc. and Rajinder P.
Singh
Second Amendment, dated January 4, 2017, to Amended
and Restated Employment Agreement, dated February 2,
2016, as amended on May 6, 2016, by and between
BankUnited, Inc. and Rajinder P. Singh
Third Amendment, dated December 19, 2019, to
Amended and Restated Employment Agreement, dated
February 2, 2016, as amended on May 6, 2016 and
January 4, 2017, by and between BankUnited, Inc. and
Rajinder P. Singh
Restricted Share Unit Agreement, dated December 29,
2016, by and between BankUnited, Inc. and Rajinder P.
Singh
Exhibit 10.2 to the Current Report on Form
8-K of the Company filed May 6, 2016
Exhibit 10.2 to the Current Report on Form
8-K/A of the Company filed January 4,
2017
Exhibit 10.1 to the Current Report on Form
8-K of the Company filed December 19,
2019
Exhibit 10.3 to the Current Report on Form
8-K of the Company filed January 3, 2017
134
Location
Exhibit
Number
21.1
23.1
23.2
31.1
31.2
32.1
32.2
Description
Subsidiaries of BankUnited, Inc.
Consent of KPMG LLP
Consent of Deloitte and Touche LLP
Rule 13a-14(a) Certification of Chief Executive Officer of
the Company in accordance with Section 302 of the
Sarbanes-Oxley Act of 2002
Rule 13a-14(a) Certification of Chief Financial Officer of
the Company in accordance with Section 302 of the
Sarbanes-Oxley Act of 2002
Section 1350 Certification of Chief Executive Officer of
the Company in accordance with Section 906 of the
Sarbanes-Oxley Act of 2002
Section 1350 Certification of Chief Financial Officer of
the Company in accordance with Section 906 of the
Sarbanes-Oxley Act of 2002
101.INS
XBRL Instance Document
101.SCH
101.CAL
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File (embedded within the
Inline XBRL document and included in Exhibit 101)
____________________________________
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
† Schedules and similar attachments to the Purchase and Assumption Agreement have been omitted pursuant to
Item 601(b)(2) of Regulation S-K. The registrant will furnish supplementally a copy of any omitted schedules or similar
attachment to the SEC upon request.
135
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
the report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
BANKUNITED, INC.
Date: February 22, 2023
By:
/s/ RAJINDER P. SINGH
Name:
Rajinder P. Singh
Chairman, President and Chief Executive
Title:
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
Officer
/s/ RAJINDER P. SINGH
Rajinder P. Singh
/s/ LESLIE N. LUNAK
Leslie N. Lunak
/s/ TERE BLANCA
Tere Blanca
/s/ JOHN N. DIGIACOMO
John N. DiGiacomo
/s/ MICHAEL J. DOWLING
Michael J. Dowling
/s/ DOUGLAS J. PAULS
Douglas J. Pauls
/s/ A. GAIL PRUDENTI
A. Gail Prudenti
/s/ WILLIAM S. RUBENSTEIN
William S. Rubenstein
/s/ SANJIV SOBTI
Sanjiv Sobti
/s/ LYNNE WINES
Lynne Wines
Chairman, President and Chief Executive
Officer (Principal Executive Officer)
February 22, 2023
Chief Financial Officer (Principal Financial
and Accounting Officer)
February 22, 2023
February 22, 2023
February 22, 2023
February 22, 2023
February 22, 2023
February 22, 2023
February 22, 2023
February 22, 2023
February 22, 2023
Director
Director
Director
Director
Director
Director
Director
Director
136