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, 2023
Commission File Number: 001-35039
BankUnited, Inc.
(Exact name of registrant as specified in its charter)
Delaware
27-0162450
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
14817 Oak Lane
Miami Lakes
FL
(Address of principal executive offices)
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 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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to Section 240.10D-1(b). ☐
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, 2023 was $1,582,728,768.
The number of outstanding shares of the registrant common stock, $0.01 par value, as of February 16, 2024 was 74,371,130.
Portions of the registrant's definitive proxy statement for the 2024 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.
DOCUMENTS INCORPORATED BY REFERENCE:
BANKUNITED, INC.
Form 10-K
For the Year Ended December 31, 2023
TABLE OF CONTENTS
Item 1.
Item 1A.
Item 1B.
Item 1C.
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
Cybersecurity
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
25
25
26
26
26
27
29
29
73
73
136
136
136
136
137
137
137
137
137
138
142
i
The following acronyms and terms may be used throughout this Form 10-K, including the consolidated financial statements
GLOSSARY OF DEFINED TERMS
and related notes.
ACL
AFS
ALCO
ALM
AOCI
APY
ARM
ASC
ASU
Basel Committee
BHC Act
BHC
BKU
BOLI
BankUnited
The Bank
Bridge
Buyout loans
CAO
CARES Act
CCA
CCAR
CDARS
CD
CECL
CET1
CFPB
C&I
CFO
CIO
CISO
CLO
CMBS
CME
CMOs
COVID-19
CRA
CRE
CRO
CVA
DIF
DSCR
ESG
Allowance for credit losses
Available for sale
Asset Liability Committee
Asset Liability Management
Accumulated other comprehensive income
Annual Percentage Yield
Adjustable rate mortgage
Accounting Standards Codification
Accounting Standards Update
International Basel Committee on Banking Supervision
Bank Holding Company Act of 1956
Bank Holding company
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
Chief Accounting Officer
Coronavirus Aid, Relief, and Economic Security Act
Cloud Computing Arrangements
Comprehensive Capital Analysis and Review
Certificate of Deposit Account Registry Service
Certificate of Deposit
Current expected credit losses
Common Equity Tier 1 capital
Consumer Financial Protection Bureau
Commercial and Industrial loans, including owner-occupied commercial real estate
Chief Financial Officer
Chief Information Officer
Chief Information Security Officer
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
Chief Risk Officer
Credit Valuation Adjustment
Deposit insurance fund
Debt Service Coverage Ratio
Environmental, social and governance
ii
EVE
FASB
FCA
FDIA
FDIC
FHA
FHFA
FHLB
FICO
FinTech
FRB
GAAP
GDP
GLB Act
GNMA
HPI
HTM
ISDA
LGD
LIBOR
LIHTC
LTV
MAT
MBS
MSA
MWL
NRSRO
NSF
NYSE
OCC
OFAC
OREO
PCAOB
PCD
PD
Pinnacle
Proxy Statement
PSU
REIT
ROU Asset
RPA
RSA
RSU
RWA
SAR
SBA
SEC
SOFR
S&P 500
Economic value of equity
Financial Accounting Standards Board
The Financial Conduct Authority
Federal Deposit Insurance Act
Federal Deposit Insurance Corporation
Federal Housing Administration
Federal Housing Finance Agency
Federal Home Loan Bank
Fair Isaac Corporation (credit score)
Financial Technology
Federal Reserve Bank
U.S. generally accepted accounting principles
Gross Domestic Product
The Gramm-Leach-Bliley Financial Modernization Act of 1999
Government National Mortgage Association
Home price indices
Held to maturity
International Swaps and Derivatives Association
Loss Given Default
London InterBank Offered Rate
Low Income Housing Tax Credits
Loan-to-value
Materiality Assessment Team
Mortgage-backed securities
Metropolitan Statistical Area
Mortgage warehouse lending
Nationally recognized statistical rating organization
Non-sufficient funds
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.
Definitive proxy statement for the Company's 2023 annual meeting of stockholders
Performance Share Unit
Real Estate Investment Trust
Right-of-use Asset
Risk Participation Agreement
Restricted Share Award
Restricted Share Unit
Risk-weighted Assets
Share Appreciation Right
U.S. Small Business Administration
Securities and Exchange Commission
Secured Overnight Financing Rate
Standard & Poor's 500 Index
iii
TDR
Tri-State
UPB
USDA
VA loan
VIEs
WARM
2010 Plan
2014 Plan
401(k) Plan
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
iv
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:
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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:
◦
◦
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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:
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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;
v
•
•
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.
vi
Item 1. Business
Overview
PART I
BankUnited, Inc., with total consolidated assets of $35.8 billion at December 31, 2023, 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, and a
comprehensive suite of wholesale products to customers through an Atlanta office focused on the Southeast region. The Bank
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, and 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 most likely continue to do so.
Our Products and Services
Lending and Leasing
General—Our primary lending focus is to serve small and 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, subscription
finance facilities, 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. These lines of business have been de-
emphasized due to their risk/return and liquidity profiles in the current environment. We expect that related balances will
continue to decline in the near term.
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 lesser extent, acquisition,
development and construction loan facilities and construction financing. In the current environment, we have de-emphasized
lending in the office sector and been more focused on warehouse/industrial, multi-family and selectively, the retail sectors.
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.
1
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.
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 and 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. We
offer the CDARS program, providing additional FDIC insurance to our customers. We also offer other insured cash sweep
programs allowing customers the ability to insure deposits above standard FDIC deposit insurance limits by distributing funds
among banks that participate in the network while providing competitive rates and easy access to funds. For our consumers, we
offer competitive money market and time deposit products through our online channel as well as through our retail branch
network. 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. We do not charge consumer overdraft or
NSF fees.
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. We have more
recently entered the Atlanta and Dallas markets, in Atlanta with a wholesale banking office focused on the Southeastern United
States, and in Dallas with a retail branch as well as full-service wholesale banking capabilities. Our future strategy may include
organic expansion into other markets, but no specific additional markets have been identified at this time.
2
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.
Competition
Our primary 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 Florida and the Southeast 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 above, Capital One, 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 monetary fines and
other penalties for violations of laws and regulations or engaging in unsafe and unsound banking practices. 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 national 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
3
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, sensitivity to market risk, 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 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;
refer significant compliance violations to the U.S. Justice Department;
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 CRA, 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.
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 non-control
4
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 non-control. 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.
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.
The Federal Reserve, OCC and FDIC have issued a proposed rule to implement wide-ranging and significant changes to
the current U.S. Basel III capital rules. Generally, the proposed rules would increase capital requirements and risk-weighted
assets for Category I - IV banking organizations (generally banking organizations with $100 billion or more in total assets). The
proposed rules include, among other provisions, changes to the calculation of RWA that would replace the current Advanced
Approaches with an Expanded Risk-based Approach with respect to credit, market, operational and CVA risk, apply a new
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Output Floor, and extend the countercyclical capital buffer and Supplementary Leverage Ratio to Category IV banking
organizations. The proposed rules would also lower the threshold for recognition of AOCI in CET1 capital, lower limits on
recognition of minority interests and lower capital deduction thresholds for Category III and IV banking organizations.
Generally, these rules, if enacted as proposed, are not expected to apply directly to the Company, whose total assets are less
than $100 billion; however, the impact of the proposed rules, if enacted, on the banking system and regulatory environment
more broadly could indirectly impact the Company.
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. A depository institution is deemed
to be "well capitalized" if the banking institution has 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 is 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,
2023, 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. Currently, the Company has no
material activities, assets or affiliates other than those attributable to its ownership of the Bank.
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.
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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
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 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 deposit
insurance fund. 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 November 2023, in the aftermath of certain bank failures earlier in 2023, the FDIC approved a final rule to implement a
special assessment based on the amount of uninsured deposits reported in the banks' December 31, 2022 Call Reports. The
special assessment will be collected for an anticipated eight quarterly assessment periods beginning in 2024. During the fourth
quarter of 2023, the Bank recorded the entire special assessment levied of $35.4 million. There is a risk that BankUnited’s
deposit insurance premiums will further increase if additional failures of insured depository institutions further 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 BankUnited, 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.
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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
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. The 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 an affirmative match to one 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.
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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.
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, 2023, we had 1,588 full-time employees and 28 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 for some positions.
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, 2023, 40% of the
members of our Board of Directors were female and 40% were of diverse nationality or ethnicity. Approximately 56% of our
workforce was female. We offer diversity and inclusion training to all of our employees.
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The following chart illustrates the diversity of our workforce at December 31, 2023:
Diverse Workforce
iCARE™
Under the umbrella of our iCARE™ ("Inclusive Community of Advocacy, Respect and Equality") initiative, we have a
number of programs intended to foster a culture that promotes employee engagement in social justice, equal access, community
development and opportunity. Our iCARE™ Council, consisting of 15 employees with diverse backgrounds and perspectives
across different divisions in our organization, oversees the continued evolution of iCARE™ and 17 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
2023, our employees reported a total of 3,501 volunteer hours, up 32% from 2022, serving 128 community organizations. Our
employees are given paid time to participate in community volunteer opportunities.
BankUnited has partnered with six universities in our local markets to provide scholarships, internship, and other
educational programs, with a primary focus on minority high school and college students. Since the inception of these
initiatives in 2020, 109 college and high school students have participated and 36 of them have been hired for full time roles at
the Bank. Through BankUnited's exclusive partnership with Florida International University, the ATOM Pink Tank program, a
six-month leadership, mentorship, and research development program was created to empower female students pursuing STEM
careers. The 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, 46 students have completed the program and 20 new students have been selected for the
2023-2024 cohort. To date, BankUnited has hired seven female students and garnered participation of over 55 BankUnited
employees representing 20 departments across the Bank.
Through iCARE™ we engage and encourage our employees to participate in various Bank sponsored community programs
and events. These community programs include BankUnited's "Adopt A Neighborhood" in Florida focused on providing
support to under-served predominantly minority communities, the "Entrepreneurship Program" in New York where we provide
workforce development in partnership with a local university, and the "Heir’s Program" where we brought together a
consortium of expertise to provide legal services and education to predominantly minority families seeking to maintain property
in family lineage. The Bank also launched the iCARE™ Ventures program to support, promote and strengthen local
entrepreneurship and small business growth to minority owned businesses in our community.
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37.0%6.8%9.8%42.0%2.4%2.0%White AsianBlack or AfricanAmerican Hispanic or LatinoTwo or More Races Other (incl. not specified) Health, Wellness and Safety
Our award-winning 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.
In recognition of our employee wellness programs, BankUnited received the Healthiest Employer Award from the South
Florida Business Journal in 2021 and 2022. In 2023, BankUnited was listed as number one 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. Through our Discover Coaching program, we offer a
personalized approach where employees meet one-on-one with an internal coach to promote individual growth, skill
development, leadership development, and problem solving. A total of 204 employees participated and completed these
programs in 2023. We believe mentoring is key to career growth and development. In 2023 280 employees enrolled in our
mentoring programs and a total of 1,247 mentoring hours were reported. Our employees rated their overall mentorship program
satisfaction with a score of 4.7 stars out of 5 stars.
Communication & Engagement
Employee engagement is a key contributor to our success. The Company solicits employee feedback through periodic
employee engagement surveys conducted by an outside firm. 81% of employees participated in our last engagement survey and
81% of participants responded favorably to questions designed to gauge the level of overall engagement. The 81% overall
engagement score favorably compared to an industry benchmark of 76%. The Company schedules regular CEO update video
calls, town hall meetings and other engagement programs. In 2023, we launched the Leadership Chat Series, a live and
interactive webinar with BankUnited executives and our employees. Our Kudos Employee Recognition platform encourages
employees to recognize one another's contributions and accomplishments.
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, results of operations and the value of our
securities could be materially and adversely affected.
Strategic Risk
We may not realize the expected benefits of our business strategy.
Our fundamental business strategy is centered on building a leading regional commercial and small business bank, focused
on relationship-based granular and diversified business on both sides of the balance sheet. Our near-term strategic priorities
include (i) improving the funding mix, primarily by growing core deposits, while maintaining ample liquidity; (ii) improving
risk adjusted returns by re-positioning the balance sheet away from typically lower yielding transactional business such as
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residential mortgages and securities and organically growing core commercial loans, which are generally higher-yielding, as a
percentage of the portfolio; (iii) managing credit quality; (iv) managing the rate of increase in expenses; and (v) maintaining
robust capital levels. Our ability to execute on these strategic priorities depends on a number of factors, many of which are
outside of our direct control. Some of the factors that will impact our ability to execute on our strategic priorities are (i) our
ability to attract and retain talent; (ii) competition in our markets; (iii) fiscal and monetary policy and the macro-economic
environment; (iv) the health of our primary markets; and (v) the availability and cost of capital. There is no guarantee that we
will be able to successfully execute our strategic plans and 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, the availability of capital and the successful integration of a
consummated acquisition and realization of the expected benefits.
We face significant competition from other financial institutions and financial services providers, which may adversely
impact our ability to execute on strategic objectives, our growth or profitability.
Although our geographic presence is expanding, our business is currently concentrated in Florida and the New York tri-
state 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
our markets 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 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. 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
financial services providers to compete in our markets without a physical footprint and enabled non-bank providers 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 but not limited to (i) the ability to develop,
maintain and build upon long-term customer relationships; (ii) our ability to pro-actively and quickly respond to technological
change and emerging or unanticipated innovations in financial services; (iii) our ability to attract and retain talent; (iv) our
ability to expand our market position or successfully enter new markets; (v) the scope, relevance and pricing of our products
and services and our ability to respond quickly to changing customer preferences; (vi) the rate at which we introduce new
products and services relative to our competitors; (vii) customer satisfaction with our level of service; and (viii) 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 ability to achieve strategic objectives, our growth and profitability, which, in turn, could harm our business,
financial condition and results of operations.
Hurricanes and other weather-related events, social or health-care crises such as pandemics, political or social unrest,
geopolitical conflict, terrorist activity, or other natural or man-made disasters could cause a disruption in our operations or
otherwise have an adverse impact on our customers, our business and results of operations.
Our geographic markets in Florida and other coastal areas are particularly susceptible to severe weather, including
hurricanes, flooding and damaging winds. The occurrence of a hurricane or other natural disaster, a man-made catastrophe such
as terrorist activity, pandemic outbreaks and other global health emergencies, political or social unrest, government shutdowns,
geopolitical conflicts such as those currently occurring in the middle east or Ukraine or other man-made or natural disasters
could disrupt our operations or those of our clients 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.
Both physical and transitional risks related to climate change or societal and governmental 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. In particular, our clients' operations may be adversely impacted by the rising cost of property and casualty
insurance related to physical risks brought on by climate change. Our efforts to take these risks into account in making lending
and other decisions, including by increasing our business with climate-friendly companies and reducing our exposure to the
fossil fuel sector, 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 other key personnel to execute our long-term business strategy and could be
harmed by the loss of their services or the inability to attract new talent.
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 that could be challenging to replicate. The composition of our senior management team and our other key
personnel may change over time. Although our Chairman, President and Chief Executive Officer has entered into an
employment agreement with us, he may not complete the term of his employment agreement or renew upon expiration. Other
members of our senior management team are not subject to employment agreements. Our Board of Directors and senior
management team are actively engaged in ongoing succession planning, however, our succession planning efforts may not be
adequate to ensure continuity of qualified senior management. 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.
Evolving expectations of investors, customers, regulators and employees with respect to our ESG practices and those of
our customers may impose additional costs on us, impact our reputation in the market or expose us to emerging risks.
There is an evolving focus, including from some governmental organizations and agencies, 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, adopt and report on policies
and practices that we believe will improve execution of our evolving ESG objectives, and compliance with third party imposed
ESG-related requirements and expectations, including potential new SEC disclosure requirements. If our ESG practices do not
meet evolving rules and regulations or investor or other stakeholder expectations, then our reputation or our ability to attract or
retain employees, customers and investors could be negatively impacted. Similarly, our failure or perceived failure to pursue or
fulfill our current or future objectives or to satisfy various reporting standards within acceptable timelines, or at all, could 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; if the Company were to receive
unfavorable ratings, negative investor sentiment, stock price fluctuations and the diversion of investment to other companies
could result.
The high profile 2023 failures of several regional banks and attendant events impacting the banking industry along with
resulting media coverage eroded customer confidence in the banking system, particularly in regional and mid-size banks.
We are subject to the risk of similar future events adversely impacting the banking industry broadly, and our Company.
The bank failures of 2023, surrounding events and related media coverage created significant market volatility and
adversely impacted stock prices among publicly traded bank holding companies and, in particular, regional institutions like the
Company. These developments negatively impacted customer confidence in the safety and soundness of regional banks and led
some depositors to transfer deposits to the largest financial institutions. Many regional banks, including BankUnited,
experienced higher than normal deposit outflows immediately following the first regional bank failures in March 2023. Future
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unanticipated deposit outflows or erosion of customer or investor confidence brought on by external events could materially
adversely impact the Company’s liquidity, net interest margin, business strategy, market valuation, capital and results of
operations.
Future material adverse events, not necessarily limited to the circumstances leading to the 2023 bank failures, that impact
other financial institutions could, as a result of rapid and broad public exposure, have a direct and material adverse impact on
the Company's business, market valuation and results of operations.
A downgrade of our credit rating could increase our cost of capital or place limitations on business activities.
The major ratings agencies regularly evaluate us, and their ratings are based on a number of factors, including our financial
strength and conditions affecting the financial services industry generally. In general, ratings agencies base their ratings on
many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix and level and quality
of earnings, and we may not be able to maintain our current credit ratings. The ratings assigned to the Bank and the Company
remain subject to change at any time, and it is possible that any ratings agency will take action to downgrade the Bank and the
Company in the future. Additionally, ratings agencies may also make substantial changes to their ratings policies and practices,
which may affect our credit ratings. A downgrade of our credit rating, particularly to a level below investment grade, could
adversely impact the liquidity or value of our rated securities, our ability to access the capital or certain short-term funding
markets, and our cost of capital. Additionally, certain commercial customers could be prohibited from placing deposits with us,
impacting our liquidity position.
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 or forecast 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
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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 or in real estate
market dynamics. 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 impact of the ongoing shift to online shopping on retail properties or the
trend toward remote and hybrid work on office properties. The value of commercial real estate and ability of commercial real
estate borrowers to service debt is also sensitive to occupancy rates, the level of rents, regulatory changes, interest rates, other
operating costs 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 loans or
vacancies may arise during the terms of the loans. 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 or demographic and market trends 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. In particular, the office segment continues to
be impacted by the evolving trend toward remote or hybrid work. The ultimate outcome of this trend and, as a result, the level
of future demand for office space, remains uncertain. Lease turnover may increase, and tenants may reduce the amount of space
leased when existing leases expire. Lower occupancy rates may lead to lower rents and lower valuations of office buildings.
These factors could lead to deterioration in fundamentals underlying some of our commercial real estate loans. Recent increases
in interest rates as well as rising property and casualty insurance and other operating costs have negatively impacted and may
continue to negatively impact operating cash flows for some borrowers and the ability of those borrowers to service or
refinance outstanding debt. 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 or the underlying collateral and ultimately to higher loan
losses.
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. 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 and projected real estate values, the current conditions of
borrowers, properties or projects and our expectations for the future. If real estate values or fundamentals underlying
commercial or residential real estate 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, we may be forced to foreclose on the collateral property and thereby
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: (i) general or local economic conditions; (ii) sub-market property values and
supply/demand dynamics; (iii) interest rates; (iv) costs of ownership such as real estate taxes, insurance, maintenance; (v)
governmental rules and regulations such as but not limited to zoning laws; (vi) natural or man-made disasters such as hurricanes
or healthcare crises; (vii) political or social unrest, crime levels and other conditions in sub-markets or neighborhoods where
property is located; and (viii) the ability to maintain occupancy particularly of commercial properties. Additionally, bank-
owned properties obtained in foreclosure often sell at a discount to the price that might otherwise be obtained in the market.
The geographic concentration of our markets in Florida and the New York Tri-State area makes our business highly
susceptible to local economic conditions in those markets.
While we are expanding our geographic footprint, our operations remain 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
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real estate markets. Disruption or deterioration in those economic conditions or real estate markets could result in increased
delinquencies, problem assets or foreclosures, a decline in demand for our loan products, deterioration in the ability of
borrowers to repay their debt, lower collateral values and ultimately higher credit losses.
Our portfolio of operating lease equipment is exposed to fluctuations in the demand for and valuation of the underlying
assets. Many of these assets are in service to the fossil fuel industry, and subject to transition risks related to climate change.
Although we have been reducing our exposure to this business, 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, which could lead to impairment charges or operating losses. A significant portion of our equipment under
operating lease consists of railcars and other equipment used directly or indirectly by the fossil fuel industry. Demand for this
equipment, rental rates and its valuation are heavily influenced by conditions in the energy industry and the impact of transition
to a lower-carbon economy including related regulation and societal norms.
Interest Rate Risk
Our business is inherently highly susceptible to interest rate risk.
Our business and financial performance are materially 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. Changes in the values of assets and liabilities brought about by changes in interest rates, even those that do not
directly impact reported GAAP or regulatory capital levels, may impact investors' perceptions of the value of the Company,
rating agency opinions, or customers' perceptions of the stability of the Company leading to unanticipated deposit outflows.
Interest rates are highly sensitive to many factors over which we have no control and which we may not be able to anticipate,
including general economic conditions and the monetary and fiscal policies of various governmental bodies, particularly the
Federal Reserve Board. The impact of changes in interest rates on our business and financial performance may be exacerbated
if the extent or pace of those changes are beyond historical norms.
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 reduce the spread between rates paid on deposits and
those earned on interest-earning assets, placing downward pressure on our net interest margin and net interest income. Our
deposit costs tend to be correlated with short-term rates; increases in short-term interest rates or generally tightening liquidity
conditions 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. If interest bearing liabilities mature or reprice more quickly than interest earning assets in a period of rising rates, net
interest income will be reduced. If 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 also 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 higher-
yielding fixed rate loans and mortgage-backed securities. 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 loans and deposits and
our net interest income. Our ability to manage interest rate risk could be negatively impacted 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.
We attempt to manage interest rate risk by monitoring and managing 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.
The modeling techniques we use to manage interest rate risk are based on a wide variety of assumptions generally derived from
historical data and patterns, and may fail to accurately predict the impact of future movements in interest rates on our financial
performance. Assumptions about depositor behavior are integral to interest rate risk modeling and management; technological
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advances enabling depositors to move money more quickly and to do business with a wide variety of financial services
providers not in physical proximity to those depositors as well as the evolving landscape of the financial services industry has
made predictive modeling of depositor behavior increasingly difficult.
Liquidity Risk
A failure to maintain adequate liquidity could adversely affect our ability to sustain normal operations, 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. Our access to funding sources in amounts adequate to
finance our activities on terms that are acceptable to us could be impaired by factors or events that affect us specifically or the
financial services industry or economy generally. Factors that could detrimentally impact our access to liquidity at an
acceptable price, or at all include, but are not limited to: (i) national, to a lesser extent global, and regional economic and market
conditions; (ii) interest rates; (iii) competition for depositor funds from banks and other investment alternatives; (iv) the
availability of sufficient collateral that is acceptable to the FHLB and the Federal Reserve Bank, both of which are significant
sources of contingent liquidity for us; (v) fiscal and monetary policy including the continuing restrictive monetary policy of the
Federal Reserve which is negatively impacting systemic liquidity; (vi) public and market perception of BankUnited specifically
and the banking sector more broadly; (vii) our ability to access the capital markets as a potential liquidity source; and (viii)
regulatory requirements or changes. Our access to liquidity in the form of deposits may also be affected by the liquidity needs
of our depositors. 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 ability to
sustain business operations, our financial condition or results of operations.
We may be subject to material unanticipated outflows of deposits, jeopardizing our ability to maintain sufficient liquidity
to conduct normal business operations.
The failure of several regional banks during 2023, characterized by unprecedented levels of deposit outflows, led to an
erosion of confidence in the regional banking sector among deposit customers, investors, and other counterparties. In these
cases, deposit outflows were exacerbated by the ability of customers to move money quickly and easily using digital channels
as well as widespread media coverage and social media exposure. Following the bank failures, many regional banks, including
BankUnited, experienced higher than normal deposit outflows. Across the industry, a significant amount of deposits migrated
from regional banks to the nation's largest banks. While deposit flows at BankUnited appear to have stabilized since the 2023
bank failures, we remain susceptible to internal or external circumstances, perceptions or events, some of which we may be
unable to anticipate or control or may be of an unprecedented nature, that could lead to material unexpected deposit outflows.
Depositors increasingly have the ability to move funds quickly and easily. If a significant portion of our deposits were to be
withdrawn within a short period of time, the Company’s liquidity, financial condition, results of operations and ability to
sustain normal operations could be materially, adversely affected.
The Federal Reserve Bank and the FHLB are important sources of both operating and contingent liquidity. If the
availability of those liquidity sources were compromised, our business, financial condition or results of operations could be
materially adversely affected.
The Federal Reserve Bank and FHLB provide important sources of stable, reliable and specifically with respect to the
Federal Reserve Bank, emergency liquidity to banks including BankUnited. Should the availability, nature, design or provisions
of the various liquidity facilities provided by these entities change materially, BankUnited's ability to access operating or
contingent liquidity as needed could be adversely impacted. The availability of liquidity from these sources is also dependent on
the nature and value, which could be negatively impacted by changes in interest rates, of collateral BankUnited is able to
provide and on their evaluation of the Bank's creditworthiness. In 2023, the FHFA, the primary regulator of the FHLB system,
completed a comprehensive review of the FHLB system which may result in future changes in the regulatory or statutory
framework governing the FHLB system. Such changes, if and when enacted, could impact the future amount, terms and
availability of liquidity provided by the FHLBs to their members, including BankUnited. Our ability to access funds in a timely
basis from the Federal Reserve Bank and FHLB also depends on our operational readiness; while we test operational readiness
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regularly and believe our processes and procedures are adequate in this regard, a failure of those processes and procedures
could compromise our ability to access needed liquidity.
A significant percentage of our deposits are commercial deposits, many of which are uninsured.
Our business strategy is heavily focused on commercial customers, and as such, a large percentage of our deposits are
commercial deposits. Inherently, due to the design and purpose of FDIC deposit insurance, across the U.S. banking system and
at BankUnited a significant portion of commercial deposits are uninsured. While we offer programs and products to our
commercial customers that allow them to increase the amount of their deposits that are insured, not all depositors choose to take
advantage of these programs and products. Uninsured deposits may be more subject than insured deposits to unanticipated
outflows, particularly during times of systemic or institution-specific stress.
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
service providers for customer funds; as a result, we could lose deposits in the future, 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. 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. Particularly in a high or rising interest rate environment, the level of residential
real estate activity would be expected to decline, which has led and may in the future lead to reduced deposit balances in this
vertical, considerably.
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
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, including in hypothetical periods
of stress, 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 or unprecedented 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, risk assessment, 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
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assurance can be given that any new offerings will be successfully developed, implemented, launched or scaled. New products
and services may require startup and ongoing marketing costs and operational changes. The inability to successfully roll out
new products and services may result in unmet profitability targets, increased costs, loss of customers or competitive advantage
or other adverse impacts on our results of operations.
We are subject to the risk of fraud, theft or errors by employees or outsiders and to the impact of ineffective processes
and controls, which may adversely affect our business, financial condition and results of operations.
We are exposed to the risk of fraud or theft by employees or outsiders and to operational errors, including clerical or
record-keeping errors, the impact of ineffective processes and controls or faulty or disabled technology. Events such as these
could cause us to suffer financial loss, the loss of customers, regulatory action and 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.
While we regularly monitor, evaluate and update our internal control framework including controls over financial reporting
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. Failure of our system of controls and
procedures could have a material adverse effect on our financial condition and results of operations.
We are dependent on our information technology and telecommunications systems. System failures or interruptions
could have an adverse effect on our business, 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
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, ERP systems 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 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, reputation, 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 third party, failure of a third party to handle
current or higher volumes, failure of a third party 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
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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 service provider could adversely affect our operations if those difficulties
interfere with the service provider's ability to serve us effectively or at all. Replacing these third-party service providers could
create significant delays and expense. Accordingly, use of such third party service providers creates an unavoidable material
inherent risk to our business operations.
A cybersecurity incident, which is any unauthorized occurrence, or series of related unauthorized occurrences, on or
conducted through our information systems, including those of third-party service providers that we rely on, that jeopardizes
the confidentiality, integrity or availability of those information systems or information residing therein.
In the normal course of business, we collect, process, and retain sensitive and confidential client and customer information.
Despite the security measures we and our third party service providers have in place, information systems may be vulnerable to
cybersecurity incidents. Cybersecurity incidents can take many forms including 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 may not be recognized until launched,
and cyber-attacks can originate from a wide variety of sources.
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 cybersecurity incidents 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 cybersecurity incidents, or to alleviate problems caused by cybersecurity incidents. Any cybersecurity incident
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-party service providers, as discussed above. Each of these third parties may be targets
of the same types of cybersecurity incidents described above. The 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 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 cybersecurity incident, information breach or loss, or technology 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 and thereby reduce our revenues. If another
financial institution experiences a material cybersecurity incident, even if we are not directly impacted in any way, negative
publicity about the incident could impact confidence in the banking system generally, including in BankUnited.
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
cybersecurity program, supported by written policies and procedures and a dedicated Chief Information Security Officer and
information security division. The Risk Committee of the Board of Directors has oversight responsibility for our cybersecurity
program. Also see "Item 1C - Cybersecurity."
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 relevant 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.
20
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 directly
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 apply to us,
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 capital and liquidity
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 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
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 time frames. 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.
We expect the failures of several regional banks in 2023 and related events to lead to changes in laws or regulations
governing financial institutions or in the imposition of restrictions through supervisory or enforcement activities. Proposed rules
increasing capital requirements for banks with more than $100 billion in assets have been issued; if these or similar rules are
enacted, there may be indirect effects on our company. We also expect additional laws or regulations to be issued related to
liquidity and bank mergers and acquisitions. These new laws and regulations, if enacted, could have a material impact on our
business including but not limited to increased costs and lower profitability.
Our ability to expand through acquisition or de novo branching requires regulatory approvals, and failure to obtain
them may restrict our growth.
Although acquisitions have not historically been a material part of our growth strategy, 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 a number of other
qualitative and quantitative factors, the effect of the acquisition on competition, the impact on communities served by the
acquiring and target institution, the impact on compliance with the CRA and BSA/AML laws and regulations, our financial
21
condition, our future prospects, and the impact of the proposal on U.S. financial stability. 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. We may continue de novo branching as a part of our organic growth strategy and possibly
enter into new markets through de novo branching. The failure to obtain regulatory approvals for potential future strategic
acquisitions and de novo branches may impact our business plans and restrict our growth.
In January 2024, the OCC published for public comment a proposal to amend its rules for business combinations involving
national banks and federal savings associations and add, as an appendix, a policy statement that summarizes the principles the
OCC uses when it reviews proposed bank merger transactions under the BMA. The proposed policy statement provides, among
other things, that a bank merger where the resulting institution would have more than $50 billion in assets or where the
acquiring institution was not at least twice as large as the target institution would receive enhanced regulatory scrutiny.
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. Financial institutions are also required to comply with sanctions and programs administered
by the Office of Foreign Assets Control. Numerous regulatory agencies and other governmental departments are involved in
enforcement and administration of these provisions.
We dedicate significant resources to ongoing compliance with these laws and regulations, continuously monitor and
enhance as necessary related policies and procedures and maintain a robust automated anti-money laundering software solution.
If our policies, procedures and systems are deemed deficient, we could be subject to liability, including significant civil
monetary fines and to various regulatory actions such as restrictions on our ability to pay dividends, the inability to obtain
approval of any contemplated acquisitions and restrictions on our ability to execute certain aspects of our business and
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
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.
In November 2023, in the aftermath of certain bank failures earlier in 2023, the FDIC approved a final rule to implement a
special assessment based on the amount of uninsured deposits reported in the banks' December 31, 2022 Call Reports. The
special assessment will be collected for an anticipated eight quarterly assessment periods beginning in 2024. During the fourth
quarter of 2023, the Bank recorded the entire special assessment levied of $35.4 million.
We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. There is also a
risk that BankUnited’s deposit insurance premiums will further increase if additional failures of insured depository institutions
further 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. Any future additional assessments or increases in FDIC
insurance premiums may adversely affect our financial condition or results of operations.
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.
22
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, lead to monetary settlements or penalties 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 party service providers. 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. Laws and regulations in this
area are evolving, and there is a reasonable possibility that additional or modified laws or regulations applicable to us will be
enacted. We may incur significant costs to comply with any such new or modified laws or regulations, or our efforts to do so
may not be effective. 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, or those of other
regional banks, 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.
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, measure, mitigate and manage 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.
23
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, or the onset of a recession could have adverse effects on our business, financial condition and results of operations
including but not necessarily limited to: (i) a decrease in demand for our products and services; (ii) an increase in delinquencies
and defaults by borrowers or counterparties leading to increased credit losses; (iii) a decline in the value of our assets; (iv) a
decrease in earnings; (v) a decline in liquidity and (vi) a decrease in our ability to access the capital markets. Inflationary trends
and higher interest rates may lead to an increase in our operating expenses or those of our clients in turn impacting their 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 our reported
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.
The price of our common stock may be volatile or may decline.
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 external events outside of management's control. In addition, the stock market is subject
to broad or systemic 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: (i) actual or
anticipated changes in the Company's operating results or financial condition; (ii) performance of the regional banking sector;
(iii) failure to meet analysts' estimates; (iv) actual or forecasted macro-economic conditions; (v) rating agency actions; (vi)
changes in the competitive or regulatory environment; (vii) actions by large institutional shareholders or other market
participants; (viii) events, circumstances or perceptions impacting the financial services sector broadly and (ix) negative
publicity about us or other regional banks.
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 or
retaining qualified personnel. The unexpected loss of the services of one or more of our key personnel could have an adverse
impact on our business.
24
Further downgrades of the U.S. credit rating or a government shutdown could negatively impact economic conditions
generally and as a result, our business, results of operation and financial condition.
The U.S. Government's sovereign credit rating was recently downgraded by a NRSRO. The impact of future downgrades
of the U.S. sovereign credit rating or deterioration in its perceived creditworthiness could adversely affect the U.S. and global
financial markets and economic conditions. In addition, disagreement over the federal budget has caused and may cause the
U.S. federal government to essentially shut down for periods of time. Future events of this nature could have an adverse effect
on our business, results of operations and financial condition.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
We are committed to maintaining robust governance, oversight and management of cybersecurity risks. We have
established and implemented processes, supported by written policies and procedures, to detect, assess, classify, respond to,
report, track, and resolve cybersecurity threats or incidents. We have implemented systems and controls to address the
information technology risks to our organization, our business partners and our customers. We employ a layered security
approach leveraging diverse strategies including data loss prevention, access and identity management, network security,
vulnerability management, end-point security and information security education and awareness, among others. As a federally
regulated institution, the Company strongly supports an environment that facilitates and abides by the Confidentiality, Integrity,
and Availability security principles.
Our risk-based policies, procedures, and practices are integrated into our overall risk management program and have been
implemented across the organization to manage and mitigate risks from cybersecurity threats. We continuously assess risks
from cybersecurity threats and monitor our information systems for potential vulnerabilities. We conduct regular reviews and
tests of our information security program including penetration and vulnerability testing, and other exercises to evaluate the
effectiveness of our program and improve our cybersecurity posture. These evaluations provide the Company with an unbiased
view of its environment and controls. All identified cybersecurity incidents or technology outages or failures and vulnerabilities
identified during these assessments are inventoried in a centralized tracking system and reported to impacted users and to
management on a regular basis. A multi-step approach is applied to identify, prioritize, report, and remediate these
vulnerabilities. SLAs are established for remediation of any incidents or outages detected, depending on their nature and
potential impact. Our cybersecurity policies, procedures and practices are integrated with our overall risk management program
by inclusion of cybersecurity and information systems KRIs in our enterprise-wide comprehensive risk assessment process and
risk appetite statement, the involvement of our Chief Risk Officer in the MAT and oversight of cybersecurity risk by our
Enterprise Risk Management Committee and the Risk Committee of the Board of Directors.
We have engaged cybersecurity service provider experts and maintain an industry-leading incident response retainer to
further enhance our cybersecurity safeguards and support our processes for assessing, identifying, and managing material risks
from cybersecurity threats. Our third-party experts perform assessments that aid us in effectively detecting and responding to
evolving cybersecurity attacks and, in the event of a cybersecurity incident, our experts will assist us with incident response
support, digital forensics and incident remediation.
The Company’s third-party risk management framework and processes have been aligned with regulatory requirements
and we believe with industry best practices to oversee and identify risks from cybersecurity threats associated with use of third-
party service providers. We take a risk-based approach in performing cybersecurity assessments of third-party service providers
at the time of onboarding, as part of regular ongoing monitoring, at the time of contract renewal, and upon detection of any
increase in risk profile. Our information security division collaborates with our third-party risk management unit to evaluate the
information technology and security programs of significant third party service providers. As applicable, these reviews evaluate
the design and operational effectiveness of information technology and security related controls employed by service providers.
In addition, the third party’s information technology and security policies and procedures are evaluated to form an overall
opinion of the third party service provider's technology and information security posture.
The Company has developed a training program to educate employees about its cybersecurity policies and standards, best
practices, and potential threats to instill a culture of cybersecurity awareness and compliance throughout the organization. The
training program includes, but is not limited to, ongoing and targeted training on topics such as social engineering, mobile
security, data handling and protection, password security and incident reporting. All employees are required to participate in the
training.
25
In 2022, Clarium Managed Services, LLC (“Clarium”) conducted a Cybersecurity Assessment for the Bank. The
assessment gauged the overall Cybersecurity Risk Posture of the Bank and resulted in a score of 4.8 on a scale of 0 to 5. In the
last three fiscal years, the Company has not experienced any material cybersecurity incidents. No specific cybersecurity threats
or incidents, including those resulting from any previous cybersecurity incidents, have materially affected, or are reasonably
likely to materially affect, the Company, including its business strategy, results of operations or financial condition. See Item
1A "Risk Factors" for a discussion of our cybersecurity risks.
Cybersecurity Governance
The Risk Committee of the Board of Directors is ultimately responsible for oversight of risks from cybersecurity threats,
the Company's information risk management function, and the effective implementation of its cybersecurity program. The
CISO reports routinely, typically at each of its regularly scheduled meetings, to the Risk Committee on matters including the
Company's cybersecurity program, cybersecurity threats and the cybersecurity threat environment. The Risk Committee
formally approves the Company's cybersecurity policy and program annually, and more frequently if material changes are
adopted.
At the management level, the CISO leads the ongoing technical and business functions that include cybersecurity,
information assurance, network security, systems engineering, and information security management. A dedicated information
security division reports to the CISO. The CISO has over 30 years of experience in information systems security including
physical, cyber, and IT, disaster recovery, business continuity planning, secure software development, and cloud services and
security, among others. The CISO holds multiple designations from the International Information System Security Certification
Consortium, including Certified Information Systems Security Professional and has been a member of various boards including
IT, Cybersecurity and Enterprise Risk Committees. Organizationally, the CISO reports to the CIO, but also provides reporting
directly to and has access to the Risk Committee of the Board of Directors. The CIO has over 30 years of experience in
financial services information technology.
The Company has designated the MAT to assess and oversee the management and reporting of identified potentially
material cybersecurity threats or incidents. The MAT convenes when a qualifying cybersecurity threat is identified by the CIO,
the CISO, or their designees in accordance with established processes and procedures. The MAT has the responsibility to
determine whether a cybersecurity threat or incident is material and oversee appropriate reporting. The MAT is also responsible
for communicating to the Risk Committee any material cybersecurity threats or incidents.
The CISO, CIO, CRO, CFO, CAO, and General Counsel comprise the MAT. Other SMEs or technical experts may advise,
consult with and provide information to the MAT as needed. In addition to the specific subject matter expertise and experience
of the CISO and CIO, these executives have broad financial, legal, risk management, industry, regulatory and SEC compliance,
and general leadership experience, which enable the MAT to effectively carry out its responsibilities.
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, certain other areas in Florida and Atlanta. Our subsidiaries lease office space in Baltimore, Maryland and
Scottsdale, Arizona. At December 31, 2023, we provided banking services at 53 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,
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.
26
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 16, 2024 was $27.27 per share. As of February 16, 2024, there were 573 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 2024 annual meeting of stockholders (the "Proxy Statement") is incorporated herein by reference.
Dividend Policy
The Company declared a quarterly dividend of $0.27 and $0.25 per share on its common stock for each of the four quarters
in the years ended December 31, 2023 and 2022, respectively, resulting in total dividends for the years ended December 31,
2023 and 2022, of $80.5 million and $78.9 million, or $1.08 and $1.00 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.
27
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, 2018 and December 31, 2023, 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
12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023
100.00
125.24
124.10
154.37
127.06
126.65
100.00
100.00
131.49
123.57
155.68
111.56
200.37
151.82
164.08
140.82
207.21
139.66
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
28
Index ValueCOMPARISON OF CUMULATIVE TOTAL RETURNBankUnited, Inc.S&P 500 IndexKBW Nasdaq Regional Banking Index12/31/201812/31/201912/31/202012/31/202112/31/202212/31/202360.0080.00100.00120.00140.00160.00180.00200.00220.00240.00
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.
Management's discussion and analysis presents the more significant factors that affected our financial condition as of
December 31, 2023, and results of operations for the year then ended, including in comparison to the prior year ended
December 31, 2022. 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 22, 2023, for a discussion and
analysis of the more significant factors that affected the year ended December 31, 2022, including in comparison to the year
ended December 31, 2021.
Our Vision and Long term- 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. Our strategic priorities include:
•
•
•
•
•
•
•
Growing core customer relationships on both sides of the balance sheet, building a scalable small business and middle-
market franchise for the long-term;
Transitioning the left side of the balance sheet to a mix of assets with higher risk-adjusted returns;
Deposit growth is paramount, with particular emphasis on new non-interest bearing deposit relationships;
Playing where we can win - focusing on sectors where our delivery model is a differentiator;
Investing in organic growth capabilities - people, processes, products and technology;
Using technology to enable success by investing in digital capabilities, nimble technology architecture and data;
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.
Impact of Macro-Environmental Factors and Near-term Strategic Priorities
Macro-Environmental Factors:
During early 2023, three highly publicized regional bank closures created a crisis of confidence in the banking system,
specifically with respect to regional and mid-size banks. This led to outflows of deposits from regional and mid-size banks,
including BankUnited, to the largest money-center banks and to volatility in bank valuations. Deposit flows, liquidity and
market perceptions have stabilized considerably since those events, however, pressure on bank margins and valuations, in part
influenced by those events remains, as does a level of market uncertainty. The FRB has maintained its restrictive monetary
policy stance, and a level of uncertainty remains about the overall trajectory of the economy. Despite these circumstances, loan
and deposit pipelines are healthy, deposit flows are generally stable, our margin expanded during the second half of 2023, and
non-performing asset and net charge-off ratios remain at what we consider to be low levels. We believe our liquidity position is
strong and our capital levels robust.
To provide context, over the course of 2020 and 2021, the COVID-19 pandemic, along with the response of the Federal
government in the form of quantitative easing, low interest rates and fiscal stimulus had material, lingering impacts on the U.S.
economy, the banking system and our Company. Systemic liquidity and levels of deposits in the banking system increased
significantly while a high level of uncertainty remained about the overall trajectory of the U.S. economy, leading to muted
demand and risk appetite for commercial lending. Subsequently, as the social health impacts of the pandemic waned, 2022
29
brought rising inflation; monetary policy response included quantitative tightening and an unprecedented and rapid rise in the
Fed's benchmark interest rate, leading to an outflow of deposits and liquidity from the banking system.
In summary, for BankUnited, the impact of the pandemic, accompanying economic uncertainty and the government
response led to a balance sheet with a high level of lower-rate assets, particularly in the form of residential mortgages and
securities. The subsequent rapid increase in interest rates and quantitative tightening led to deposit outflows, consistent with
systemic trends, and an elevated level of more expensive wholesale funding. The events of early 2023 served to exacerbate the
impact of deposit outflows and the increase in wholesale funding. A heightened level of focus on liquidity at regional and mid-
size banks, while lessening considerably since the events of early 2023, remains.
Near-Term Strategic Priorities:
In response to the factors discussed above, we have established the following near-term strategic priorities:
•
•
•
Improve the Bank's funding profile by maintaining or growing non-interest bearing and other core deposits and paying
down higher cost wholesale funding;
Improve the asset mix by re-positioning the balance sheet away from typically lower yielding transactional business
such as residential mortgages and organically growing core commercial loans, which are generally higher-yielding, as
a percent of total earning assets;
Improve the net interest margin, largely a function of improved balance sheet composition;
• Maintain robust liquidity and capital;
•
Continue to manage credit;
• Manage the rate of growth in operating expenses.
We have made progress executing on these near term strategic priorities:
•
•
•
•
•
•
Since March 31, 2023, following the market reaction to the high profile closures of Silicon Valley Bank and Signature
Bank, total non-brokered deposits have grown by $703 million and we have paid down FHLB advances by
$2.4 billion.
Since December 31, 2022, core commercial loan portfolio sub-segments have grown by $719 million while residential
loans declined by $692 million and the amortized cost of investment securities declined by $959 million.
The net interest margin, after declining from 2.62% for the first quarter of 2023 to 2.47% for the quarter ended June
30, 2023, increased to 2.56% for the quarter ended September 30, 2023, and again to 2.60% for the quarter ended
December 31, 2023.
Total same day available liquidity was $13.6 billion, the available liquidity to uninsured, uncollateralized deposits ratio
was 152% and an estimated 66% of our deposits were insured or collateralized at December 31, 2023.
Consolidated CET1 capital was 11.4% and pro-forma CET1, including accumulated other comprehensive income, was
10.0% at December 31, 2023.
The ratio of non-performing assets to total assets was 0.37% at December 31, 2023, well below pre-pandemic levels.
The net charge-off ratio for the year ended December 31, 2023, was 0.09%.
Some of the challenges we face in executing on both our near-term and longer-term strategic priorities, some of which may
impact the banking industry more broadly, include:
•
•
Execution of our strategic objectives is highly dependent on our ability to grow core client relationships. Competition
for deposits and loans in our markets is intense with respect to the variety and quality of products and services offered,
delivery channels, service levels and pricing. The economic health of our primary markets, monetary and fiscal policy,
our ability to attract and retain talent and our ability to deliver technology and product solutions will impact execution
of these objectives.
The future trajectories of the macro-economy, interest rates, and monetary and fiscal policy are uncertain. The impact
of these macro factors on our customers and prospective customers also impacts us. If macro conditions are less
supportive than we currently anticipate, we may be less successful in executing our strategic priorities.
30
• We anticipate there will be changes to the regulatory framework governing the banking industry, in part in response to
the events of early 2023. Some proposed rules have been issued, and more may be forthcoming. It is difficult to predict
the nature or impact of future regulatory changes on our ability to achieve our strategic priorities.
See "Item 1A - Risk Factors" for additional discussion of risks to the execution of our strategic priorities.
2023 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, trends in 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 the composition of earning assets and the funding mix, the composition and level of available liquidity and our interest
rate risk profile. We analyze these ratios and trends against our own historical performance, our expected performance, our risk
appetite and the financial condition and performance of comparable financial institutions.
Highlights include:
•
•
•
•
Net income for the year ended December 31, 2023, was $178.7 million, or $2.38 per diluted share, compared to $285.0
million, or $3.54 per diluted share for the year ended December 31, 2022. For the year ended December 31, 2023, the
return on average stockholders' equity was 7.01% and the return on average assets was 0.49%. Income before income
taxes for the year ended December 31, 2023, was negatively impacted by margin pressure and an FDIC special
assessment of $35.4 million.
The net interest margin, calculated on a tax-equivalent basis was 2.56% for the year ended December 31, 2023,
compared to 2.68% for the year ended December 31, 2022. An unfavorable shift in funding mix was the primary driver
of a lower net interest margin. A sustained higher rate environment and quantitative tightening as well as events
impacting the regional banking sector in early 2023 contributed to this shift. While lower year-over-year, the net
interest margin expanded over the second half of 2023. 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, 2023 and 2022 (on a tax equivalent basis):
The yield on average interest earning assets increased to 5.39% for the year ended December 31, 2023, from 3.59% for
the year ended December 31, 2022, due to re-pricing of floating rate assets and the addition of new assets at higher
rates and wider spreads.
Consistent with industry trends, higher interest rates and restrictive monetary policy, the average cost of total deposits
increased to 2.55% for the year ended December 31, 2023, from 0.65% for the year ended December 31, 2022,
although the rate of increase declined over the latter half of the year.
31
2.68%2.27%3.59%1.32%2.56%1.59%5.39%3.80%December 31, 2022December 31, 2023Net Interest Margin Interest Rate SpreadAverage Yield on Interest Earning AssetsAverage Rate Paid on Interest Bearing Liabilities —%1.00%2.00%3.00%4.00%5.00%6.00% •
•
•
•
•
Loan portfolio composition shifted from residential to core commercial categories during the year ended December 31,
2023. Residential loans declined from 36% to 33% of the loan portfolio, while the core C&I and CRE categories grew
from 56% to 60% of the portfolio.
The following charts illustrate the composition of deposits at the dates indicated:
December 31, 2023
December 31, 2022
Total deposits declined by $971 million during the year ended December 31, 2023, consistent with industry trends
brought on by tighter liquidity conditions and the liquidity events of early 2023. Non-interest bearing demand deposits
declined by $1.2 billion; this decline reflected the impact of higher interest rates on title industry balances and
depositors generally seeking yield in a sustained higher rate environment. The shift from money market deposits to
time deposits reflected deposit outflows immediately following the bank closures in March 2023 and our response.
The ratio of the ACL to total loans increased to 0.82% at December 31, 2023, from 0.59% at December 31, 2022. For
the year ended December 31, 2023, the provision for credit losses was $87.6 million compared to a provision of $75.2
million for the year ended December 31, 2022. The most significant factors affecting the provision for credit losses
and increase in the ACL for the year ended December 31, 2023 were changes in the economic forecast, risk rating
migration, and increases in certain specific reserves. The increase in the ACL coverage ratio is consistent with the
increase in criticized and classified assets, evolving commercial real estate market dynamics and shifts in portfolio
composition.
The net charge-off ratio for the year ended December 31, 2023 was 0.09% compared to 0.22% for the year ended
December 31, 2022. NPAs remained low, totaling $130.6 million at December 31, 2023, compared to $107.0 million
at December 31, 2022. The NPA ratio at December 31, 2023 was 0.37%, including 0.12% related to the guaranteed
portion of non-performing SBA loans. At December 31, 2022, the NPA ratio was 0.29%, including 0.11% related to
the guaranteed portion of non-performing SBA loans.
Commercial real estate exposure is modest. Commercial real estate loans totaled 23.6% of loans at December 31,
2023, representing 169% of the Bank's total risk-based capital. At December 31, 2023, the weighted average LTV of
the CRE portfolio was 56.0% and the weighted average DSCR was 1.80. 58% of the portfolio was secured by
collateral properties located in Florida and 25% was secured by properties located in the New York tri-state area.
32
12.7%25.8%42.0%19.5%7.8%29.2%47.5%15.5%Demand depositinterest bearing Demand deposit non-interest bearingSavings and moneymarketTime
•
Our capital position is robust. At December 31, 2023, CET1 was 11.4% at a consolidated level and pro-forma CET1,
including accumulated other comprehensive income, was 10.0%. The ratio of tangible common equity/tangible assets
had increased to 7.0%. The charts below present the Company's and the Bank's regulatory capital ratios at the dates
indicated:
BankUnited, Inc.
December 31, 2023
December 31, 2022
BankUnited, N.A
December 31, 2023
December 31, 2022
•
•
•
The net unrealized pre-tax loss on the securities portfolio improved by $141 million for the year ended December 31,
2023, now representing 6% of amortized cost. AOCI, net of tax, improved by $50 million. The duration of our AFS
securities portfolio is short at 1.96 at December 31, 2023, HTM securities are not significant.
Book value and tangible book value per common share grew to $34.66 and $33.62, respectively, at December 31,
2023, from $32.19 and $31.16, respectively, at December 31, 2022.
In the first quarter of 2023, the Company increased its quarterly cash dividend by $0.02, to $0.27 per share, reflecting
an 8% increase from the previous quarterly cash dividend of $0.25 per share and maintained that quarterly dividend
level through 2023.
33
11.4%13.4%7.9%4.5%8.0%4.0%6.5%10.0%7.0%10.5%ActualRequired to be Considered Adequately CapitalizedCET1 risk-based capitalTotal risk-based capitalTier 1 leveragecapital11.0%12.7%7.5%4.5%8.0%4.0%6.5%10.0%7.0%10.5%Required to be Considered Well CapitalizedRequired to be considered Adequately CapitalizedIncluding Capital Conservation BufferCET1 risk-based capitalTotal risk-based capitalTier 1 leveragecapital13.1%13.9%9.1%4.5%8.0%4.0%6.5%10.0%5.0%7.0%10.5%ActualRequired to be Considered Adequately CapitalizedCET1 risk-based capitalTotal risk-based capitalTier 1 leveragecapital12.4%12.9%8.4%4.5%8.0%4.0%6.5%10.0%5.0%7.0%10.5%Required to be Considered Well CapitalizedRequired to be considered Adequately CapitalizedIncluding Capital Conservation BufferCET1 risk-based capitalTotal risk-based capitalTier 1 leveragecapital
•
•
During the year ended December 31, 2023, the Company repurchased approximately 1.6 million shares of its common
stock for an aggregate purchase price of $55.0 million.
Liquidity is ample. Total same day available liquidity was $13.6 billion, the available liquidity to uninsured,
uncollateralized deposits ratio was 152% and an estimated 66% of our deposits were insured or collateralized at
December 31, 2023.
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.
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 or weighting of various forecast paths and
selection of the reasonable and supportable forecast period;
our evaluation of historical loss experience and selection of historical loss data used in formulating our ACL estimate;
since we have limited company specific historical loss data, our modeling techniques also leverage broad external data
sets for this purpose;
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; in the current environment, especially with respect to certain commercial
real estate sectors like office, current and projected collateral values may be particularly challenging to estimate;
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.
34
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 and monetary policy, 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 funding sources 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. For the year ended December 31, 2023, the funding mix and net interest
margin were negatively impacted by the higher interest rate environment and restrictive monetary policy stance of the FRB
which have led to a decline in deposit levels across the banking system, increased competition for deposits and higher deposit
costs. Deposit outflows related to events that impacted the banking sector in March 2023 also negatively impacted the cost of
funds and net interest margin. These factors contributed to declines in average non-interest bearing demand deposits and to an
increase in higher cost funding sources, including higher cost time deposits and wholesale funding such as FHLB advances.
Over the latter half of 2023, however, we have seen margin expansion as wholesale funding levels have declined and yields on
interest earning assets have increased.
35
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):
Years Ended December 31,
2023
2022
2021
Average
Balance
Interest (1)
$ 24,558,430 $ 1,331,578
Yield/
Interest (1)
Rate (1)
5.42 % $ 23,937,857 $ 947,386
Average
Balance
Yield/
Interest (1)
Rate (1)
3.96% $ 23,083,973 $ 814,101
Average
Balance
9,228,718
491,851
5.33 % 10,081,701
283,081
2.81%
9,873,178
155,353
986,186
51,152
5.19 %
675,068
15,709
2.33%
1,093,869
6,010
Yield/
Rate (1)
3.53 %
1.57 %
0.55 %
34,773,334
1,874,581
5.39 % 34,694,626
1,246,176
3.59% 34,051,020
975,464
2.86 %
Loans
Investment securities (2)
Other interest earning assets
Total interest earning
assets
Allowance for credit losses
Non-interest earning assets
(171,618)
1,749,981
Total assets
$ 36,351,697
(132,033)
1,721,570
$ 36,284,163
(197,212)
1,770,685
$ 35,624,493
Liabilities and
Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand
deposits
Savings and money market
deposits
Time deposits
Total interest bearing
deposits
$ 2,905,968 $
86,759
2.99 % $ 2,538,906 $
13,919
0.55 % $ 3,027,649 $
8,550
0.28 %
10,704,470
5,169,458
382,432
191,114
3.57 % 12,874,240
130,705
1.02 % 13,339,651
3.70 %
3,338,671
35,348
1.06 %
3,490,082
43,082
15,964
0.32 %
0.46 %
18,779,896
660,305
3.52 % 18,751,817
179,972
0.96 % 19,857,382
67,596
Federal funds purchased
35,403
1,611
4.55 %
157,979
2,723
1.72 %
33,945
FHLB advances
6,331,685
285,026
4.50 %
4,383,507
Notes and other borrowings
716,633
36,835
5.14 %
721,223
97,763
37,033
2.23 %
2,622,723
5.13 %
721,803
30
59,116
37,018
0.34 %
0.09 %
2.25 %
5.13 %
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
25,863,617
983,777
3.80 % 24,014,526
317,491
1.32 % 23,235,853
163,760
0.70 %
7,091,029
848,023
33,802,669
2,549,028
$ 36,351,697
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
$ 890,804
$ 928,685
$ 811,704
1.59 %
2.56 %
2.27 %
2.68 %
2.16 %
2.38 %
(1) On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $13.4 million, $12.7 million and $13.3 million for
the years ended December 31, 2023, 2022 and 2021, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $3.6 million,
$3.0 million and $2.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
(2) At fair value except for securities held to maturity.
36
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):
2023 Compared to 2022
2022 Compared to 2021
Change Due to
Volume
Change Due to
Rate
Increase
(Decrease)
Change Due to
Volume
Change Due to
Rate
Increase
(Decrease)
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 tax-equivalent
net interest income
$
34,699 $ 349,493 $ 384,192 $
(45,289)
16,136
5,546
254,059
19,307
622,859
208,770
35,443
628,405
34,024 $
5,301
(9,772)
29,553
99,261 $ 133,285
127,728
9,699
270,712
122,427
19,471
241,159
10,891
(76,566)
67,625
1,950
(5,583)
87,757
(270)
83,854
61,949
328,293
88,141
478,383
4,471
99,506
72
582,432
72,840
251,727
155,766
480,333
(1,112)
187,263
(198)
666,286
(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
$
(78,308) $
40,427 $
(37,881) $
(1,657) $ 118,638 $ 116,981
Net interest income, calculated on a tax-equivalent basis, was $890.8 million for the year ended December 31, 2023,
compared to $928.7 million for the year ended December 31, 2022, a decrease of $37.9 million, comprised of increases in tax-
equivalent interest income and interest expense of $628.4 million and $666.3 million, respectively.
The increase in interest income for the year ended December 31, 2023, compared to the year ended December 31, 2022,
reflected (i) an increase in both the average balances of and yields on loans; (ii) rising yields on investment securities that more
than offset declines in average balances; and (iii) to a lesser extent, higher yields on and average balances of other interest
earning assets. Increased yields on average interest earning assets were mainly reflective of the increase in market interest rates,
which impacted both coupon rate resets on existing floating rate assets and the rates on new assets added to the balance sheet.
The increase in interest expense for the year ended December 31, 2023, compared to the year ended December 31, 2022,
reflected primarily (i) an increase in the cost of interest-bearing deposits and (ii) increases in both the cost and average balance
of FHLB advances.
The net interest margin, calculated on a tax-equivalent basis, was 2.56% for the year ended December 31, 2023, compared
to 2.68% for the year ended December 31, 2022. Offsetting factors impacting the net interest margin for the year ended
December 31, 2023, compared to the year ended December 31, 2022, included:
•
•
The most significant factor leading to the year-over-year decline in the net interest margin was an unfavorable shift in
the funding mix for the year ended December 31, 2023, as compared to the year ended December 31, 2022. Average
non-interest bearing demand deposits declined, both in absolute terms and as a percentage of average total liabilities,
while FHLB advances grew, both in absolute terms and as a percentage of average total liabilities. Within interest-
bearing deposits, there was a shift toward higher cost time deposits, largely in response to the events of March 2023.
Two significant factors impacting the decline in average non-interest bearing deposits were (i) the impact of rising
residential mortgage rates on levels of activity in the residential real estate sector leading to a decline in balances in the
title insurance industry vertical and (ii) depositors seeking yield in a higher rate environment. In part, the increase in
average FHLB advances reflected the impact of deposit outflows immediately following the events of March 2023.
The tax-equivalent yield on loans expanded to 5.42% for the year ended December 31, 2023, from 3.96% for the year
ended December 31, 2022. Factors contributing to this increase were the resetting of variable rate loans at higher
coupon rates and originations of new loans at higher prevailing rates and wider spreads.
37
•
•
•
The tax-equivalent yield on investment securities increased to 5.33% for the year ended December 31, 2023, from
2.81% for the year ended December 31, 2022. This increase resulted primarily from the reset of coupon rates on
variable rate securities and to a lesser extent, purchases of higher-yielding securities, and paydowns and sales of lower-
yielding securities.
The average rate paid on interest bearing deposits increased to 3.52% for the year ended December 31, 2023, from
0.96% for the year ended December 31, 2022, in response to the higher rate environment, tighter liquidity conditions
and resulting competition for deposits.
The average rate paid on FHLB advances increased to 4.50% for the year ended December 31, 2023, from 2.23% for
the year ended December 31, 2022, primarily due to rising rates.
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):
Amount related to funded portion of loans
Amount related to off-balance sheet credit exposures
Other
Total provision for (recovery of) credit losses
Years Ended December 31,
2023
2022
2021
$
$
78,924 $
8,683
—
87,607 $
73,814 $
1,467
(127)
75,154 $
(64,456)
(1,235)
(1,428)
(67,119)
The most significant factors impacting the provision for credit losses for the year ended December 31, 2023, included
changes in the economic forecast, new commercial loan production, risk rating migration and an increase in certain specific
reserves.
The provision for credit losses may 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, but not limited to,
economic conditions or the economic outlook, the composition of the loan portfolio, 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.
38
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 (loss) on sale of loans, net
Gain (loss) on investment securities:
Net realized gain on sale of securities AFS
Net loss on marketable equity securities recognized in earnings
Gain (loss) on investment securities, net
Lease financing
Other non-interest income
Years Ended December 31,
2023
2022
2021
$
21,682 $
(3,711)
23,402 $
(2,570)
1,815
(11,867)
(10,052)
45,882
33,037
86,838 $
3,927
(19,732)
(15,805)
54,111
18,498
77,636 $
$
21,685
24,394
9,010
(2,564)
6,446
53,263
28,365
134,153
The losses on marketable equity securities during the years ended December 31, 2023 and 2022, were attributable to losses
related to certain preferred equity investments.
The decrease in lease financing revenue for the year ended December 31, 2023, compared to the year ended December 31,
2022, was attributable to (i) a net loss of $2.0 million on sale of operating lease equipment recognized during the year ended
December 31, 2023, compared to a net gain of $2.3 million recognized during the year ended December 31, 2022, a variance of
$4.3 million; and (ii) the impact of the sale of some operating lease equipment, reducing the size of the portfolio.
The most significant factors leading to the increase in other non-interest income for the year ended December 31, 2023,
compared to the year ended December 31, 2022, were increases in BOLI income, particularly as related to the BOLI assets
supporting our deferred compensation plan, lending related fees and revenue from our customer derivative program.
Non-Interest Expense
The following table presents the components of non-interest expense for the periods indicated (in thousands):
Employee compensation and benefits
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
Years Ended December 31,
2023
2022
2021
$
$
280,744 $
43,345
66,747
14,184
79,984
—
44,446
106,501
635,951 $
265,548 $
45,400
17,999
11,730
77,103
—
50,388
72,142
540,310 $
243,532
47,944
18,695
14,386
67,500
44,833
53,764
56,921
547,575
Year-over-year increases in employee compensation and benefits reflected labor market dynamics.
Increases in deposit insurance expense were primarily attributable to an increase in the assessment rate and a $35.4 million
special assessment during the year ended December 31, 2023.
The decline in depreciation and impairment of operating lease equipment for the year ended December 31, 2023, compared
to the year ended December 31, 2022, is primarily attributed to the decline in operating lease equipment.
The most significant factor impacting the increase in other non-interest expense for the year ended December 31, 2023,
compared to the year ended December 31, 2022, was costs related to certain depositor rebate and commission programs, some
of which are correlated with changes in interest rates. See Note 6 to the consolidated financial statements for more information
about these costs.
39
Income Taxes
The provision for income taxes for the years ended December 31, 2023, 2022 and 2021 was $58.4 million, $90.2 million
and $34.4 million, respectively. The Company's effective income tax rate was 24.64%, 24.03% and 7.66% for the years ended
2023, 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 more information about income taxes including a reconciliation of
the Company's effective income tax rate to the statutory federal rate.
Analysis of Financial Condition
For the year ended December 31, 2023, compared to the year ended December 31, 2022, average non-interest bearing
demand deposits declined by $1.8 billion, while average interest bearing deposits remained relatively flat, increasing by $28
million. Correspondingly, average FHLB advances grew by $1.9 billion. The year-over-year decline in average non-interest
bearing demand deposits reflected the impact on the title insurance industry vertical of lower levels of activity in the residential
mortgage sector brought on by rising mortgage rates, and was consistent with broader industry deposit trends evidencing
restrictive monetary policy as customers sought higher yields on their cash balances. Within the interest-bearing categories,
average interest bearing non-maturity deposits declined by $1.8 billion, while average time deposits increased by $1.8 billion.
This shift reflected deposit outflows from a relatively small number of larger money-market relationships immediately after the
initial regional bank closures in March 2023, followed by a strategic shift toward less volatile time deposits in a challenging
liquidity environment. While average interest-earning assets remained relatively flat, increasing by $79 million for the year
ended December 31, 2023, compared to the year ended December 31, 2022, average loans grew by $621 million and average
investment securities declined by $853 million. This shift reflected our near-term strategic priorities with respect to improving
the asset mix. The increase of $311 million in other interest earning assets was due to higher levels of cash held at the FRB in
response to the events of March 2023.
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, 2023
December 31, 2022
U.S. Treasury securities
U.S. Government agency and sponsored enterprise residential MBS 1,962,658
U.S. Government agency and sponsored enterprise commercial
$
Amortized
Cost
139,858 $ 130,592 $
Carrying
Value
1,924,207
Carrying
Value
Amortized
Cost
148,956 $ 135,841
1,983,168
2,036,693
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
561,557
2,596,231
2,282,833
383,984
1,122,799
106,095
107,176
106,237
10,000
$ 9,379,428
497,859
2,295,730
2,198,743
366,255
1,112,824
102,780
102,618
103,024
10,000
600,517
2,864,589
2,645,168
502,194
1,166,838
102,194
122,181
139,320
10,000
8,844,632 $ 10,338,650
32,722
$ 8,877,354
525,094
2,530,663
2,524,354
470,441
1,136,463
95,976
116,661
135,782
10,000
9,664,443
90,884
$ 9,755,327
40
Our investment strategy is focused on ensuring 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, are generally pledgeable at either the FHLB or the FRB and provide us
with attractive yields. We remain committed to keeping the duration of our securities portfolio short; 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, 2023 was 5.6 years and the effective duration of the investment portfolio was 1.97
years.
The investment securities AFS portfolio was in a net unrealized loss position of $534.8 million at December 31, 2023,
compared to a net unrealized loss position of $674.2 million at December 31, 2022, improving by $139.4 million during the
year ended December 31, 2023. Net unrealized losses at December 31, 2023 included $5.0 million of gross unrealized gains and
$539.8 million of gross unrealized losses. Investment securities available for sale in unrealized loss positions at December 31,
2023 had an aggregate fair value of $8.4 billion. The unrealized losses resulted primarily from a sustained period of higher
interest rates, and in some cases, wider spreads compared to the levels at which securities were purchased. Market volatility and
yield curve dislocations have also contributed to unrealized losses. None of the unrealized losses were attributable to credit loss
impairments.
The ratings distribution of our AFS securities portfolio at the dates indicated are depicted in the charts below:
December 31, 2023
December 31, 2022
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, a sector, an industry or geographic area;
•
•
41
US Government & Agency30%AAA60%AA7%A2%NR1%US Government & Agency28%AAA61%AA7%A3%NR1%
•
•
•
•
•
•
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; and
Estimated prepayments, defaults, and the value and performance of underlying collateral at the individual security
level.
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.
We do not intend to sell securities in significant unrealized loss positions at December 31, 2023. 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. While the events of early 2023 impacting the banking sector have impacted the liquidity
profile of many banks, including BankUnited, the substantial majority of our investment securities are pledgeable at either the
FHLB or FRB. We have not sold, and do not anticipate the need to sell, securities in unrealized loss positions to generate
liquidity.
We have implemented a robust credit stress testing framework with respect to our non-agency securities. The following
table presents subordination levels and average internal stress scenario losses for select non-agency portfolio segments at
December 31, 2023:
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 CMOs AAA
AA
A
Weighted average
85.8 %
10.6 %
3.6 %
100.0 %
80.2 %
16.2 %
3.6 %
100.0 %
94.0 %
4.2 %
1.8 %
100.0 %
30.2
29.5
25.1
29.9
40.2
30.8
31.5
38.4
3.0
20.2
27.3
4.2
99.9
74.4
51.5
95.5
74.2
47.0
33.2
68.3
92.0
34.2
28.2
88.4
43.9
37.0
37.3
43.0
47.1
37.3
32.2
45.0
17.7
24.8
27.7
18.2
7.1
7.7
9.1
7.2
15.7
13.0
14.4
15.2
2.2
5.3
5.7
2.4
While for certain portfolio segments, we have seen an increase in stress scenario losses over the last year, the level of
subordination continues to provide more than sufficient coverage of stress scenario collateral losses, further supporting our
determination that none of our securities are credit loss impaired. The scenario used to project stress scenario losses is generally
calibrated to the level of stress experienced in the Great Financial Crisis. 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
42
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 quarterly basis. Any price
evidencing unexpected quarter over quarter 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 disclosure related to the fair values of investment securities, see Note 14 to the consolidated financial
statements.
The following table shows the weighted average prospective yields, categorized by scheduled maturity, for AFS investment
securities as of December 31, 2023. 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
Within One
Year
After One Year
Through Five
Years
After Five
Years
Through Ten
Years
After Ten
Years
Total
0.52 %
4.45 %
0.89 %
— %
1.57 %
5.53 %
5.73 %
5.94 %
5.79 %
5.77 %
3.64 %
3.93 %
6.41 %
4.46 %
7.19 %
3.04 %
2.59 %
6.19 %
5.10 %
6.03 %
3.88 %
7.01 %
3.36 %
7.49 %
6.01 %
4.18 %
6.18 %
6.16 %
3.38 %
3.77 %
2.17 %
1.36 %
7.86 %
4.96 %
4.29 %
6.13 %
4.36 %
2.59 %
3.95 %
3.30 %
— %
— %
— %
— %
5.94 %
4.06 %
3.87 %
3.88 %
6.67 %
3.72 %
7.48 %
5.70 %
4.21 %
6.16 %
5.45 %
43
Loans
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):
1-4 single family residential
Government insured residential
Total residential
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Total "Core" C&I and CRE
Pinnacle - municipal finance
Franchise finance
Equipment finance
Mortgage warehouse lending
Total commercial
Total loans
Allowance for credit losses
Loans, net
December 31, 2023
December 31, 2022
Total
$ 6,903,013
1,306,014
8,209,027
5,323,241
495,992
1,935,743
6,971,981
14,726,957
884,690
182,408
197,939
432,663
16,424,657
24,633,684
(202,689)
$ 24,430,995
Total
Percent of
Total
28.0 % $ 7,128,834
1,771,880
5.3 %
8,900,714
33.3 %
5,405,597
21.6 %
294,360
2.0 %
1,890,813
7.9 %
28.3 %
6,417,721
59.8 % 14,008,491
912,122
3.6 %
253,774
0.7 %
286,147
0.8 %
1.8 %
524,740
66.7 % 15,985,274
100.0 % 24,885,988
(147,946)
$ 24,738,042
Percent of
Total
28.6 %
7.1 %
35.7 %
21.7 %
1.2 %
7.6 %
25.9 %
56.4 %
3.7 %
1.0 %
1.1 %
2.1 %
64.3 %
100.0 %
Consistent with our near-term strategic objectives related to improving the asset mix, for the year ended December 31,
2023, the core C&I and CRE portfolio segments grew by $719 million, while residential loans declined by $692 million. In the
aggregate, municipal, franchise and equipment finance declined by $187 million; growth in these segments has been de-
emphasized due to their current risk/return profile. These trends are expected to continue over the course of 2024. Mortgage
warehouse balances declined by $92 million over the course of 2023, mainly because of the sustained higher interest rate
environment. If mortgage rates moderate over the course of 2024, we may see growth in this portfolio segment. Overall, we
intend to strategically emphasize the origination of relationship-based loans that are accompanied by deposit business.
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, income-producing non-owner occupied commercial real estate, a smaller amount of
construction and land loans, SBA loans, mortgage warehouse lines of credit, municipal loans and leases originated by Pinnacle
and franchise and equipment finance loans and leases originated by Bridge.
44
The following charts present the distribution of the commercial loan portfolio at the dates indicated (dollars in millions):
December 31, 2023
December 31, 2022
Commercial Real Estate:
Commercial real estate loans include term loans secured by non-owner occupied income producing properties including
rental apartments, industrial properties, retail shopping centers, free-standing single-tenant buildings, medical and other office
buildings, warehouse facilities, hotels and real estate secured lines of credit. 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 following tables present the distribution of commercial real estate loans by property type, along with weighted average
DSCRs and LTVs at December 31, 2023 and 2022 (dollars in thousands):
Office
Warehouse/Industrial
Multifamily
Retail
Hotel
Construction and Land
Other
Office
Warehouse/Industrial
Multifamily
Retail
Hotel
Construction and Land
Other
Amortized
Cost
$ 1,752,801
1,341,229
838,692
818,409
491,853
495,992
80,257
$ 5,819,233
Amortized
Cost
$ 1,874,614
1,216,506
945,404
869,922
407,462
294,360
91,689
$ 5,699,957
December 31, 2023
Percent of
Total
FL
New York
Tri-State
Other
30 %
24 %
14 %
14 %
8 %
9 %
1 %
100 %
60 %
56 %
50 %
54 %
78 %
56 %
71 %
58 %
24 %
8 %
50 %
29 %
3 %
42 %
13 %
25 %
16 %
36 %
— %
17 %
19 %
2 %
16 %
17 %
December 31, 2022
Percent of
Total
FL
New York
Tri-State
Other
22 %
18 %
52 %
27 %
6 %
49 %
9 %
26 %
19 %
20 %
— %
9 %
8 %
2 %
16 %
13 %
33 %
21 %
17 %
15 %
7 %
5 %
2 %
100 %
59 %
62 %
48 %
64 %
86 %
49 %
75 %
61 %
45
Weighted
Average DSCR
1.67
2.04
1.98
1.67
1.89
N/A
1.94
1.80
Weighted
Average DSCR
1.75
2.05
2.13
1.88
2.13
N/A
2.45
1.95
Weighted
Average LTV
65.0 %
52.0 %
45.5 %
58.8 %
49.0 %
N/A
47.4 %
56.0 %
Weighted
Average LTV
64.3 %
52.6 %
45.9 %
61.7 %
55.1 %
N/A
47.7 %
57.0 %
$5,819 36%$8,908 54%$380 2%$885 5%$433 3%$5,700 36%$8,308 52%$540 3%$912 6%$525 3%CREC&IEquipment & franchise financePinnacle -municipal financeMWL
The geographic mix of the portfolio has remained relatively consistent year-over-year, with the majority in Florida. Office
exposure has declined, both in total and as a percentage of the CRE portfolio. Weighted average LTVs have remained largely
consistent year-over-year, while we have seen some decline in weighted average DSCRs, largely due to increasing costs,
including higher interest rates. Both weighted average DSCRs and weighted average LTVs remain favorable.
The following table presents weighted average DSCR and weighted average LTV for the Florida and New York tri-state
CRE portfolios, by property type, at December 31, 2023:
Office
Warehouse/Industrial
Multifamily
Retail
Hotel
Other
Florida
NY Tri-State
Weighted Average
DSCR
Weighted Average
LTV
Weighted Average
DSCR
Weighted Average
LTV
1.68
2.19
2.68
1.86
1.95
2.17
1.96
64.5 %
50.5 %
42.1 %
56.2 %
46.9 %
44.3 %
55.0 %
1.62
1.91
1.36
1.26
1.83
1.24
1.46
62.9 %
37.0 %
48.5 %
63.6 %
20.2 %
66.3 %
54.1 %
Geographic distribution in the tables above is based on location of the underlying collateral property. LTVs and DSCRs are
based on the most recent available information; if current appraisals are not available, LTVs are adjusted by our models based
on current and forecasted sub-market dynamics. DSCRs are calculated based on current contractually required payments, which
in some cases may be interest only.
Included in New York tri-state multifamily loans in the tables above is approximately $121 million of rent regulated
exposure as of December 31, 2023. The office portfolio outside of Florida and the New York tri-state area exhibits no particular
geographic concentration.
The following table presents the maturity profile of the CRE portfolio over the next 12 months by property type at
December 31, 2023 (dollars in thousands):
Maturing in the Next 12
Months
% Maturing in the Next
12 Months
Fixed Rate or Swapped
Maturing Next 12
Months
Fixed Rate to Borrower
as a % of Total Portfolio
Office
Warehouse/Industrial
Multifamily
Retail
Hotel
Construction and Land
Other
$
$
314,485
170,547
111,023
121,309
43,209
179,844
12,765
953,182
18 % $
187,162
13 %
13 %
15 %
9 %
36 %
16 %
16 % $
81,405
64,208
64,066
43,209
503
12,765
453,318
11 %
6 %
8 %
8 %
9 %
— %
16 %
8 %
46
The following table present scheduled maturities of the CRE portfolio by property type at December 31, 2023 (in
thousands):
2024
2025
2026
2027
2028
Thereafter
Total
Office
$ 314,485 $ 400,230 $ 358,476 $ 224,122 $ 145,001 $ 310,487 $ 1,752,801
Warehouse/Industrial
Multifamily
Retail
Hotel
170,547
111,023
121,309
43,209
155,441
79,492
136,037
44,355
Construction and Land
179,844
115,151
Other
12,765
7,052
382,337
165,016
232,272
217,334
66,371
27,188
261,630
133,925
67,381
30,142
33,932
9,595
160,358
128,393
186,864
54,971
—
1,421
210,916
1,341,229
220,843
74,546
101,842
100,694
22,236
838,692
818,409
491,853
495,992
80,257
$ 953,182 $ 937,758 $ 1,448,994 $ 760,727 $ 677,008 $ 1,041,564 $ 5,819,233
The office segment totaled $1.8 billion at December 31, 2023. The following charts present the sub-market geographic
distribution of the Florida and NY tri-state office portfolios at December 31, 2023:
NY Tri-State by Sub-Market
Florida by Sub-Market
The New York tri-state market encompasses approximately 24% of the office segment, with $180 million of exposure in
Manhattan. As of December 31, 2023, the Manhattan office portfolio was approximately 96% occupied with 3% rent rollover
expected in the next twelve months. Substantially all of the Florida office portfolio is suburban.
Office loans not secured by properties in Florida or the New York tri-state area comprised 16% of the segment and exhibit
no particular geographic concentration. Some of these loans were made to high quality sponsors in our FL or NY tri-state
customer base. Estimated rent rollover of the total office portfolio in the next 12 months is approximately 11%. Approximately
18% is secured by medical office buildings. Non-performing office loans were insignificant at December 31, 2023, totaling
approximately $300 thousand. Office loans rated below pass at December 31, 2023, totaled $146 million. Also see the section
entitled "Asset Quality" below.
Commercial and Industrial
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
institutional real estate entities such as REITs and commercial real estate investment funds, and a small amount of 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
47
42%20%21%12%4%1%ManhattanNY Tri-State OtherLong IslandQueensBrooklynBronx28%23%21%11%7%10%TampaOrlandoBoca/Palm BeachBrowardMiami-DadeOther
and local governmental entities generally within our primary geographic markets. 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 by industry, at December 31, 2023 (dollars in thousands):
Finance and Insurance
Manufacturing
Educational Services
Wholesale Trade
Utilities
Health Care and Social Assistance
Information
Real Estate and Rental and Leasing
Transportation and Warehousing
Construction
Retail Trade
Professional, Scientific, and Technical Services
Public Administration
Other Services (except Public Administration)
Administrative and Support and Waste Management
Arts, Entertainment, and Recreation
Accommodation and Food Services
Other
Amortized Cost(1)
Percent of Total
$
1,695,374
19.0 %
874,583
753,427
693,724
653,901
605,445
590,143
538,824
420,411
381,641
319,890
300,201
245,441
230,691
194,089
187,689
155,066
67,184
9.8 %
8.5 %
7.8 %
7.3 %
6.8 %
6.6 %
6.0 %
4.7 %
4.3 %
3.6 %
3.4 %
2.8 %
2.6 %
2.2 %
2.1 %
1.7 %
0.8 %
$
8,907,724
100.0 %
(1)
Includes $1.9 billion of owner occupied real estate.
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 53% of the portfolio, respectively. The equipment finance division
provides primarily transportation equipment financing through a variety of loan and lease structures. Franchise and equipment
finance have been de-emphasized due to their current risk/return profile, including the lack of significant deposit business with
these customers. We do not expect significant new loan originations in these segments. Commercial loans included loans
meeting the regulatory definition of shared national credits totaling $4.8 billion at December 31, 2023.
Residential mortgages
The following table shows the composition of residential loans at the dates indicated (in thousands):
1-4 single family residential
Government insured residential
December 31, 2023
December 31, 2022
$
$
6,903,013 $
1,306,014
8,209,027 $
7,128,834
1,771,880
8,900,714
The 1-4 single family residential loan portfolio, excluding government insured residential loans, is primarily comprised of
prime jumbo 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
48
terms ranging from 10 to 30 years, with either fixed or adjustable interest rates. At December 31, 2023, $1.1 billion or 15%
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 upon default (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. The
balance of buyout loans totaled $1.3 billion at December 31, 2023. The Company is not the servicer of these loans.
The following charts present the distribution of the 1-4 single family residential mortgage portfolio by product type at the
dates indicated:
December 31, 2023
December 31, 2022
See Note 4 to the consolidated financial statements for information about the geographic distribution of 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 (dollars in thousands):
Fixed rate loans
ARM loans
December 31, 2023
December 31, 2022
Total
3,757,442
3,145,571
6,903,013
$
$
Percent of
Total
54 % $
46 %
100 % $
Total
3,995,298
3,133,536
7,128,834
Percent of
Total
56 %
44 %
100 %
49
30 Yr Fixed 32%15 & 20 Year Fixed 13%10/1 ARM 12%5/1 & 7/1 ARM 26%Formerly Covered 1%Govt Insured 16%30 Yr Fixed 31%15 & 20 Year Fixed 13%10/1 ARM 12%5/1 & 7/1 ARM 23%Formerly Covered 1%Govt Insured 20%
Loan Maturities
The following table sets forth, as of December 31, 2023, the maturity distribution of our loan portfolio by category,
excluding government insured residential loans. Commercial 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
Commercial:
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Pinnacle
Franchise finance
Equipment finance
Mortgage warehouse lending
One Year or
Less
After One
Through Five
Years
After Five Years
Through Fifteen
Years
After Fifteen
Years
Total
$ 725,770 $ 2,639,694 $ 2,612,246 $ 925,303 $ 6,903,013
875,526
179,588
231,979
1,725,045
206,588
60,584
13,059
427,521
3,719,890
3,622,376
219,476
768,877
4,539,480
373,175
75,644
173,126
5,142
9,777,296
818,365
94,648
877,384
703,015
295,986
46,180
11,754
—
2,847,332
6,974
2,280
57,503
4,441
8,941
—
—
—
80,139
5,323,241
495,992
1,935,743
6,971,981
884,690
182,408
197,939
432,663
16,424,657
$ 4,445,660 $ 12,416,990 $ 5,459,578 $ 1,005,442 $ 23,327,670
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, 2023 (in thousands):
Residential
Commercial:
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Pinnacle
Franchise finance
Equipment finance
Mortgage warehouse lending
Interest Rate Type
Fixed
Adjustable
Total
$
3,603,716 $
2,573,527 $
6,177,243
1,802,723
16,071
1,026,297
611,771
678,102
40,343
171,585
—
4,346,892
2,644,992
300,333
677,467
4,635,165
—
81,481
13,295
5,142
8,357,875
$
7,950,608 $
10,931,402 $
4,447,715
316,404
1,703,764
5,246,936
678,102
121,824
184,880
5,142
12,704,767
18,882,010
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
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, 2023 December 31, 2022
$
$
582,147 $
(210,238)
371,909 $
772,267
(232,468)
539,799
50
The table above includes off-lease equipment, net of accumulated depreciation, totaling $48 million and $63 million at
December 31, 2023 and 2022, respectively. During the year ended December 31, 2023, $97 million of certain operating lease
equipment was sold and $26 million was transferred into equipment held for sale. We expect the balance of operating lease
equipment to continue to decline as this product offering is no longer considered core to our business strategy.
The chart below presents operating lease equipment by type at the dates indicated:
December 31, 2023
December 31, 2022
Bridge had exposure to the energy industry of $154 million at December 31, 2023. The majority of the energy exposure
was in the operating lease equipment portfolio where energy exposure totaled $146 million, consisting primarily of railcars
serving the petroleum industry.
Asset Quality
Commercial Loans
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. Risk ratings are updated
continuously; 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.
51
Aircraft 31%Tractor/Trailer 2%Construction 3%Marine 9%Rail 55%Aircraft 25%Tractor/Trailer 1%Construction 4%Marine 7%Rail 62%Other 1%
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, 2023
December 31, 2022
Amortized Cost
$ 15,287,548
319,905
711,266
86,903
19,035
$ 16,424,657
Percent of
Commercial
Loans
Amortized Cost
93.2 % $ 15,244,761
51,433
1.9 %
605,965
4.3 %
75,125
0.5 %
7,990
0.1 %
100.0 % $ 15,985,274
Percent of
Commercial
Loans
95.4 %
0.3 %
3.8 %
0.5 %
— %
100.0 %
The increase in criticized and classified assets compared to the prior year-end was driven primarily by higher operating
costs, including insurance and interest, and for some CRE office loans, higher vacancy rates. Evolving dynamics in certain real
estate sectors and markets, particularly the office sector, could lead to future increases in criticized/classified and non-
performing loans.
The following table provides additional information about special mention and substandard accruing loans, at the dates
indicated (dollars in thousands). All of these loans are performing. Non-performing loans are discussed further in the section
entitled "Non-performing Assets" below.
December 31, 2023
December 31, 2022
Amortized
Cost
% of Loan
Segment
Amortized
Cost
% of Loan
Segment
Special mention:
CRE
Hotel
Retail
Office
Owner occupied commercial real estate
Commercial and industrial
Franchise finance
Substandard accruing:
CRE
Hotel
Retail
Multi-family
Office
Construction and land
Other
Owner occupied commercial real estate
Commercial and industrial
Franchise finance
Equipment finance
$ 15,712
36,000
45,840
97,552
22,150
197,924
2,279
$ 319,905
$ 41,805
53,205
115,755
100,307
76,883
2,769
390,724
71,908
208,984
16,864
22,786
$ 711,266
52
3.2 % $
4.4 %
2.6 %
1.1 %
2.8 %
1.2 %
709
—
18,006
18,715
24,101
1,017
7,600
$ 51,433
8.5 % $ 14,538
6.5 %
72,421
13.8 % 146,235
73,042
5.7 %
8,872
15.5 %
93
3.4 %
315,201
73,501
3.7 %
3.0 % 171,613
44,295
9.2 %
1,355
11.5 %
$ 605,965
0.2 %
— %
1.0 %
1.3 %
— %
3.0 %
3.6 %
8.4 %
15.5 %
3.9 %
3.0 %
0.1 %
3.9 %
2.7 %
17.5 %
0.5 %
The following graphs present trends in criticized and classified loans by segment over the periods indicated (in millions):
Commercial Real Estate(1)
Commercial(1)(2)
(1) Excludes SBA
(2)
Includes Pinnacle, franchise finance and equipment finance
The following charts present criticized and classified CRE loans by property type at the dates indicated (in millions):
December 31, 2023
December 31, 2022
53
12/31/1912/31/2012/31/2112/31/2212/31/23$0$100$200$300$400$500$600$700$800$900$1,000Special MentionSubstandard AccruingSubstandard Non-accruing and Doubtful12/31/1912/31/2012/31/2112/31/2212/31/23$0$100$200$300$400$500$600$700$800$900$1,000Multifamily$116Hotel$55Retail$89Office$146Construction & Land$77Other$3SBA$16Multifamily$146Hotel$14Retail$73Office$91Construction & Land$2SBA$30 The following graphs present delinquency trends by segment over the periods indicated (in millions):
Commercial Real Estate
Commercial(1)
(1)
Includes Pinnacle, franchise finance and equipment finance
Operating Lease Equipment, net
Operating leases with a carrying value of assets under lease totaling $24 million were internally risk rated substandard at
December 31, 2023. On a quarterly basis, management performs an impairment analysis on assets with indicators of potential
impairment. Potential impairment indicators include evidence of changes in residual value, macro-economic conditions, an
extended period of time off-lease, criticized or classified status, or management's intention to sell the asset at an amount
potentially below its carrying value. During the years ended December 31, 2023, 2022 and 2021, impairment charges
recognized related to operating lease equipment were immaterial.
Residential Loans
Excluding government insured loans, our residential portfolio consists largely of performing jumbo mortgage loans with
FICO scores above 700, primarily owner-occupied and full documentation, with current LTV's of 80% or less. Loans with
LTVs higher than 80% may be extended to selected credit-worthy borrowers. We perform due diligence on the purchased loans
for credit, compliance, counterparty, payment history and property valuation.
We have a dedicated residential credit risk management function, and the residential portfolio is monitored by our internal
credit review function. Residential mortgage loans are not individually risk rated. Delinquency status is the primary measure we
use to monitor the credit quality of these loans. We also consider original LTV and most recently available FICO score to be
significant indicators of credit quality for the 1-4 single family residential portfolio, excluding government insured residential
loans.
54
12/31/1912/31/2012/31/2112/31/2212/31/23$—$20$40$60$80$10030-59 Days PD60-89 Days PD90 Days+ PD12/31/1912/31/2012/31/2112/31/2212/31/23$—$20$40$60$80$100
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, 2023:
FICO Distribution
LTV Distribution
Vintage
FICO scores are generally updated semi-annually and were most recently updated in the third quarter of 2023. LTVs are
typically based on valuation at origination since we do not routinely update residential appraisals.
At December 31, 2023, the majority of the 1-4 single family residential loan portfolio, excluding government insured
residential loans, was owner-occupied, with 80% primary residence, 5% second homes and 15% investment properties.
The following graph presents trends in residential delinquencies, excluding government insured residential loans, over the
periods indicated (in millions):
1-4 Single Family Residential
Delinquent residential loans, excluding government insured residential loans, are not and have not historically been
material. Delinquency status is not particularly relevant to the credit quality of government insured residential loans considering
the guaranteed nature of the loans and underlying business model.
Note 4 to the consolidated financial statements presents additional information about key credit quality indicators and
delinquency status of the loan portfolio.
Stress Testing Results
The majority of our commercial portfolio is subject to quarterly stress test analysis. We continually re-evaluate our stress
testing framework and adapt it to evolving macro-economic conditions, as necessary. On an annual basis, we also run a rigorous
stress test of our entire balance sheet incorporating the FRB's severely adverse CCAR scenario as well as additional
idiosyncratic scenarios reflective of evolving macro-economic themes. The 2023 stress test incorporating the FRB's CCAR
severely adverse scenario was performed during the second quarter of 2023, based on the December 31, 2022 balance sheet.
55
<720 or NA 9%720-759 15%>759 76%60% or less 34%61% - 70% 26%71% - 80% 39%More than 80% 1%Prior 19%2019 4%2020 13%2021 43%2022 16%2023 5%30-59 Days PD60-89 Days PD90 Days+ PD12/31/1912/31/2012/31/2112/31/2212/31/23$0$20$40$60$80$100
The following charts summarize the results of this stress test. Additionally, we present stress results for the CRE portfolio
based on the Moody's S4 recessionary scenario (dollars in millions):
Total Loan Portfolio Stress Test Results(1)
CRE Portfolio Stress Test Results(2)
(1)
(2)
Excludes Pinnacle municipal finance and mortgage warehouse lending.
Construction loans are included in the chart based on their applicable property type.
Non-Performing Assets
Non-performing assets generally consist of (i) non-accrual loans, (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.
56
The following table present information about the Company's non-performing loans and non-performing assets at the dates
indicated (dollars in thousands):
Non-accrual loans:
Residential
Commercial:
Non-owner occupied commercial real estate
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Franchise finance
Equipment 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, 2023 December 31, 2022
$
20,513
$
21,311
13,727
—
13,626
54,907
16,858
6,820
105,938
126,451
593
127,044
3,536
16,657
5,695
17,751
29,722
13,290
—
83,115
104,426
593
105,019
1,932
$
130,580
$
106,951
0.52 %
0.37 %
0.82 %
159.54 %
0.09 %
0.42 %
0.29 %
0.59 %
140.88 %
0.22 %
(1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $41.8 million or 0.17% of total loans and 0.12% of
total assets, at December 31, 2023, and $40.3 million or 0.16% of total loans and 0.11% of total assets, at December 31, 2022.
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 $277 million and $493 million at December 31, 2023 and 2022, respectively.
57
The following graphs present trends in non-performing loans to total loans and non-performing assets to total assets over
the periods indicated, as well as trends in net charge-offs. Levels of non-performing loans to total loans and non-performing
assets to total assets remain below pre-pandemic levels.
Non-Performing Loans to Total Loans
Non-Performing Assets to Total Assets
Net Charges-Offs to Average Loans
58
0.88%1.02%0.87%0.42%0.52%0.68%0.80%0.68%0.26%0.35%Incl. guaranteed portion of non-accrual SBA loansExcl. guaranteed portion of non-accrual SBA loans12/31/1912/31/2012/31/2112/31/2212/31/23—%0.25%0.50%0.75%1.00%1.25%0.63%0.71%0.58%0.29%0.37%0.49%0.56%0.45%0.18%0.25%Incl. guaranteed portion of non-accrual SBA loansExcl. guaranteed portion of non-accrual SBA loans12/31/1912/31/2012/31/2112/31/2212/31/23—%0.25%0.50%0.75%1.00%1.25%0.05%0.26%0.29%0.22%0.09%12/31/1912/31/2012/31/2112/31/2212/31/23—%0.20%0.40%0.60%
The following graph presents the trend in non-performing loans by portfolio segment over the periods indicated (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 loans, other than government insured pool buyout loans, are
generally placed on non-accrual status when they are 60 days past due. Additionally, certain residential loans not contractually
delinquent but in forbearance may be placed on non-accrual status at management's discretion. 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
interest is reasonably assured. Residential loans are generally returned to accrual status when less than 60 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.
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, 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
59
$205$244$206$105$127$19$29$29$21$21$24$60$30$65$43$58$22$34$21$7$14$45$33$13$17$46$51$46$40$42$16$16$10$9$6Non-Guaranteed Portion of SBAGuaranteed Portion of SBAFranchiseEquipmentC&ICREResidential and Other Consumer12/31/1912/31/2012/31/2112/31/2212/31/23 complex and requires extensive judgment by management about matters that are inherently uncertain. Given a level of
continued uncertainty about the general economy, evolving dynamics in some segments of the commercial real estate market,
particularly the office sector, 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. If commercial real estate market
dynamics in our primary markets worsen beyond our current expectations, the ACL and the provision for credit losses will
increase in the future. Changes in the ACL may result from changes in current economic conditions including but not limited to
unanticipated increases in interest rates or inflationary pressures, changes in our economic forecast, loan portfolio composition,
commercial and residential real estate market dynamics and other 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, 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, 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.
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. At December 31, 2023, we used a combination of
weighted third-party provided economic scenarios in calculating the quantitative portion of the ACL, and at December 31,
2022, we used a single externally provided baseline scenario, with a downside scenario informing a qualitative overlay. Each of
these externally provided scenarios in fact represent the result of a probability weighting of thousands of individual scenario
paths.
See Note 1 to the consolidated financial statements for more detailed information about our ACL methodology and related
accounting policies.
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):
Non-Owner
Occupied
Commercial
Real Estate
Construction
and Land
Owner
Occupied
Commercial
Real Estate
Commercial
and
Industrial
Pinnacle -
municipal
Finance
Residential
Franchise
Finance
Equipment
Finance
Total
Balance at December 31, 2020
$ 18,719
$ 101,334
$
3,284
$
28,797
$
62,197
$
304
$ 36,331
$ 6,357
$ 257,323
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
Balance at December 31, 2022
11,741
Impact of adoption of ASU
2022-02
Balance at January 1, 2023
Provision for (recovery of) credit
losses
Charge-offs
Recoveries
(117)
11,624
(4,002)
—
9
(65,543)
(9,167)
1,156
27,780
635
(9,188)
3,100
22,327
—
22,327
11,088
(1,228)
623
(2,253)
(6,844)
—
—
(471)
156
1,031
21,638
1,736
(343)
—
2,424
—
2,424
6,104
—
—
952
(2,870)
823
20,543
5
20,548
(5,546)
(447)
3,087
31,180
(50,563)
3,498
46,312
61,337
(36,051)
5,049
76,647
(1,676)
74,971
67,816
(26,092)
8,285
(134)
(8,857)
(2,764)
—
—
(10,745)
17
—
—
(64,456)
(71,250)
4,840
170
16,746
3,593
126,457
3
—
—
7,542
(1,249)
(13,191)
650
—
—
73,814
(62,055)
9,730
173
11,747
2,344
147,946
—
173
70
—
—
(6)
—
(1,794)
11,741
2,344
146,152
2,738
(7,247)
623
656
—
—
78,924
(35,014)
12,627
Balance at December 31, 2023
$
7,631
$
32,810
$
8,528
$
17,642
$ 124,980
$
243
$ 7,855
$ 3,000
$ 202,689
Net Charge-offs to Average
Loans
Years Ended
December 31, 2021
Years Ended
December 31, 2022
Years Ended
December 31, 2023
— %
— %
— %
0.13 %
— %
0.02 %
0.82 %
— %
2.34 %
0.11 %
0.16 %
0.11 %
0.50 %
— %
4.49 %
0.01 %
— %
(0.14) %
0.25 %
— %
3.48 %
— %
— %
— %
0.29 %
0.22 %
0.09 %
60
The following table shows the distribution of the ACL at the dates indicated (dollars in thousands):
Residential
Non-owner occupied commercial real estate
Construction and land
CRE
Owner occupied commercial real estate
Commercial and industrial(2)
Pinnacle - municipal finance
Franchise finance
Equipment finance
December 31, 2023
%(1)
Total
December 31, 2022
%(1)
Total
$
7,631
33.3 % $
11,741
35.7 %
32,810
8,528
41,338
17,642
124,980
243
7,855
3,000
153,720
202,689
$
21.6 %
2.0 %
7.9 %
30.1 %
3.6 %
0.7 %
0.8 %
100.0 % $
22,327
2,424
24,751
20,543
76,647
173
11,747
2,344
111,454
147,946
21.7 %
1.2 %
7.6 %
28.0 %
3.7 %
1.0 %
1.1 %
100.0 %
(1) Represents percentage of loans receivable in each category to total loans receivable.
(2)
Includes mortgage warehouse lending.
The following table presents the allocation of the ACL as a percentage of loans at the dates indicated:
Residential
Commercial:
CRE
Commercial and industrial
Pinnacle - municipal finance
Franchise finance
Equipment finance
Total commercial
December 31, 2023
December 31, 2022
0.09 %
0.71 %
1.53 %
0.03 %
4.31 %
1.52 %
1.19 %
0.82 %
0.13 %
0.43 %
1.10 %
0.02 %
4.63 %
0.82 %
0.85 %
0.59 %
ACL to non-performing loans
159.54 %
140.88 %
61
Factors contributing to the change in the ACL during the year ended December 31, 2023, are depicted in the chart below
(dollars in millions):
Changes in the ACL during the year ended December 31, 2023
As depicted in the chart above, the most significant drivers of the increase in the ACL from December 31, 2022, to
December 31, 2023, were the impact of changes in the economic forecast, risk rating migration and an increase in certain
specific reserves. These factors were partially offset by net charge-offs and a reduction in the qualitative overlay as, in
management's judgment, certain factors previously captured qualitatively are now being addressed in the quantitative modeling.
The ACL as a percentage of loans increased to 0.82% at December 31, 2023, from 0.59% at December 31, 2022. This is
consistent with the increase in criticized and classified assets, evolving commercial real estate market dynamics and shifts in
portfolio composition. Further discussion of changes in the ACL for select portfolio sub-segments follows:
•
•
•
•
The ACL for the residential segment decreased by $4.1 million during the year ended December 31, 2023, from 0.13%
to 0.09% of loans primarily due to reduction in the size of the portfolio and changes in certain assumptions.
The ACL for the CRE portfolio sub-segment, including non-owner occupied CRE and construction and land, increased
by $16.6 million during the year ended December 31, 2023, from 0.43% to 0.71% of loans. The increase in the ACL
for this segment was primarily driven by changes in the economic forecast, including changes in commercial property
forecasts, and risk rating migration. At December 31, 2023, the ACL for the CRE office portfolio totaled
$19.3 million, or 1.10% of loans, an increase from 0.45% of loans at December 31, 2022.
The ACL for the commercial and industrial sub-segment, including owner-occupied commercial real estate, increased
by $45.4 million during the year ended December 31, 2023, from 1.10% to 1.53% of loans. The increase in the ACL
for this segment was primarily driven by (i) changes in the economic forecast; (ii) an increase in certain specific
reserves; (iii) risk rating migration; and (iv) loan growth, partially offset by net charge-offs.
The ACL for the franchise finance portfolio segment decreased by $3.9 million during the year ended December 31,
2023, from 4.63% to 4.31% of loans primarily due to net charge-offs, partially offset by an increase in specific
reserves related to one relationship.
62
•
The ACL for the equipment finance portfolio segment increased by $0.7 million during the year ended December 31,
2023, from 0.82% to 1.52% of loans primarily due to risk rating migration.
The estimate of the ACL at December 31, 2023, was informed by forecasted economic scenarios published in December
2023, a wide variety of additional economic data, information about borrower financial condition and collateral values and
other relevant information. The quantitative portion of the ACL at December 31, 2023, was modeled using a weighting of
baseline, downside and upside third-party economic scenarios, with the highest weighting ascribed to the baseline scenario and
the lowest weighting ascribed to the upside scenario. The economic variables that were most impactful to the increase in the
ACL for the year ended December 31, 2023, included assumptions about interest rates and spreads, commercial property
forecasts and the forecasted trajectory of regional unemployment.
Some of the high level data points informing the scenarios used in estimating the quantitative portion of the ACL at
December 31, 2023, included:
•
•
Labor market assumptions, which reflected national unemployment peaking at 4.1% in the baseline scenario and 7.7%
in the downside scenario; and
Annualized growth in national GDP troughing at 1.1% in the baseline and (3.5)% in the downside scenario.
The above unemployment and GDP growth assumptions are provided to give a high level overview of the nature and
severity of the economic forecast scenarios used in estimating the ACL. Numerous additional variables and assumptions not
explicitly stated, including but not limited to detailed commercial property forecasts, projected stock market volatility indices
and a variety of assumptions about market interest rates and spreads 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,
most of the economic 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:
December 31, 2023
December 31, 2022
The Company has a diverse deposit book by industry sector. Our largest industry vertical at December 31, 2023, was the
title insurance vertical, with approximately $2.5 billion in total deposits. Over 75% of title sector deposits were in operating
accounts. Approximately 61% of our total deposits were commercial or municipal deposits at December 31, 2023.
63
10.0%20.0%35.9%25.1%8.3%0.7%7.5%16.9%37.2%28.2%9.2%1.0%Time Deposits - Non-BrokeredBrokered DepositsCommercial InterestBearingCommercial Non-Interest BearingConsumer InterestBearingConsumer Non-Interest Bearing
The following graph presents trends in the deposit mix and cost of deposits (in millions):
Cost of deposits
Non-interest bearing as a % of
total deposits
1.48%
17.6%
0.43%
25.5%
0.19%
30.5%
1.42%
29.2%
2.96%
25.8%
The events surrounding the bank closures in early 2023, as well as a higher rate environment and tight liquidity conditions
leading to increased competition for deposits, contributed to the shift in deposit mix for the year ended December 31, 2023.
Total deposits declined by $971 million; non-interest bearing demand deposits declined by $1.2 billion. The decline in non-
interest bearing demand deposits reflected the impact of a higher rate environment on the title industry vertical as well as
depositors moving their cash to higher yielding alternatives. We did not experience a material decline in non-interest bearing
demand deposits immediately following the bank closures early in 2023. Non-maturity interest-bearing deposits declined by
$664 million during the year ended December 31, 2023, while time deposits grew by $896 million; these shifts within interest-
bearing deposit categories were in part related to the bank failures of early 2023. Deposit outflows immediately following those
events were concentrated in a few larger money market relationships; our near-term deposit gathering strategy then shifted
toward time deposits.
64
$7,347$4,807$3,384$4,268$5,164$10,622$12,660$13,369$13,061$11,136$2,131$3,020$3,709$2,142$3,403$4,295$7,009$8,976$8,038$6,835$24,395$27,496$29,438$27,509$26,538 Non-interest DemandInterest DemandMoney Market / SavingsTime12/31/1912/31/2012/31/2112/31/2212/31/23 Consistent with industry trends, the cost of deposits increased for the year ended December 31, 2023, as depositors were
seeking yield in a higher rate environment. The following graph presents trends in the spot APY of total deposits compared to
the upper bound of the federal funds target range:
The following table presents information about the Company's insured and collateralized deposits as of December 31, 2023
(dollars in thousands):
Total deposits
Estimated amount of uninsured deposits
Less: collateralized deposits
Less: affiliate deposits
Adjusted uninsured deposits
Estimated insured and collateralized deposits
Insured and collateralized deposits to total deposits
$
$
$
$
26,538,478
12,360,020
(3,047,517)
(317,858)
8,994,645
17,543,833
66 %
The estimated amount of uninsured deposits at December 31, 2023 and 2022, was $12.4 billion and $18.2 billion,
respectively. Collateralized and affiliate deposits are included in these amounts.
Time deposit accounts with balances of $250,000 or more totaled $941 million and $730 million at December 31, 2023 and
2022, respectively. The following table shows scheduled maturities of uninsured time deposits as of December 31, 2023 (in
thousands):
Three months or less
Over three through six months
Over six through twelve months
Over twelve months
$
$
332,424
124,006
383,853
3,985
844,268
For additional information about Deposits, see Note 6 to the consolidated financial statements.
65
1.42%0.36%0.16%1.92%3.18%1.75%0.25%0.25%4.50%5.50%Spot APY - Total DepositsTarget Federal Funds Rate Upper Bound12/31/1912/31/2012/31/2112/31/2212/31/23—%2.00%4.00%6.00%
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, 2023 (dollars in thousands):
Maturing in:
2024 - One month or less
2024 - Over one month
Total contractual balance outstanding
Amount
Weighted Average Rate
$
$
4,220,000
895,000
5,115,000
5.47 %
5.56 %
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, 2023 (dollars in thousands):
Cash flow hedges maturing in:
2024
2025
2026
Thereafter
Notional Amount Weighted Average Rate
$
$
535,000
625,000
1,430,000
25,000
2,615,000
2.40 %
2.74 %
3.50 %
2.50 %
3.08 %
See Note 10 to the consolidated financial statements and "Interest Rate Risk" below for more information about derivative
instruments.
Outstanding notes payable and other borrowings consisted of the following at the dates indicated (in thousands):
Senior notes:
Principal amount of 4.875% senior notes maturing on November 17, 2025
$
388,479 $
400,000
December 31, 2023
December 31, 2022
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
(1,676)
386,803
(2,586)
397,414
300,000
(4,331)
295,669
682,472
26,501
$
708,973 $
300,000
(4,880)
295,120
692,534
28,389
720,923
During the year ended December 31, 2023, the Bank purchased $11.5 million of outstanding senior notes in the open
market at a price of $10.6 million, an implied yield of approximately 9%.
66
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 in both normal operating and stressed environments, 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, its amortizing loan portfolio and FHLB advances. FRB discount window borrowings, repurchase
agreement capacity and a letter of credit with the FHLB provide additional sources of contingent liquidity. For the years ended
December 31, 2023, 2022 and 2021, net cash provided by operating activities was $657 million, $1.3 billion, and $1.2 billion,
respectively. The decline in cash flows from operating activities for the year ended December 31, 2023, was primarily related to
fluctuations in the daily cash settlement of derivative positions centrally cleared through the CME, a lower volume of re-
securitization of early buyout loans and the fluctuation in income taxes paid (refunded).
Available liquidity sources include cash; secured funding, such as borrowing capacity at the Federal Home Loan Bank of
Atlanta and the Federal Reserve; and unencumbered 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.
Systemic events of March 2023 impacted liquidity in the banking system, particularly for mid-size and regional banks,
including BankUnited. Immediately following those events, management took a number of prudent actions to maximize
BankUnited's same day available liquidity levels and enhance liquidity management. We activated our contingency funding
plan, enhanced daily and intra-day deposit monitoring and reporting, pledged additional securities and loan collateral to the
FHLB and FRB, temporarily increased the amount of cash held on balance sheet and enhanced communications with funding
sources, customers, counterparties and other stakeholders. While deposit flows and liquidity conditions stabilized relatively
quickly, we have kept in place enhanced monitoring and reporting of liquidity levels and deposit flows and have maintained
higher levels of assets pledged at the FHLB and FRB. We executed strategies to grow our retail time deposit portfolio and
enhanced monitoring and management at the executive level of our treasury management deposit pipeline.
The following chart presents the components of same day available liquidity at December 31, 2023 and 2022 (in millions):
Same Day Available Liquidity
At December 31, 2023, the Bank had total same day available liquidity of approximately $13.6 billion, consisting of cash
of $573 million, borrowing capacity at the Federal Home Loan Bank of $4.6 billion, borrowing capacity at the FRB of $7.4
billion and unencumbered securities of $1.1 billion. At December 31, 2023, the ratio of estimated insured and collateralized
deposits to total deposits was 66%, up from 55% at December 31, 2022, and the ratio of available liquidity to estimated
uninsured, uncollateralized deposits was 152% compared to 93% at December 31, 2022. As a commercially focused bank, due
67
$11,506$13,644$557$573$3,993$4,587$1,361$7,365$5,595$1,119CashFHLB CapacityCapacity at the FedUnencumbered Securities12/31/2212/31/23 to the inherent nature of commercial deposits, a significant portion of our deposits are uninsured. We have increased marketing
and educational efforts around products that enable customers to obtain FDIC insurance on certain deposits exceeding the
standard single depositor insurance limit, implemented single depositor concentration limits and reduced or eliminated exposure
to sectors or depositors that evidenced higher volatility following the events of early 2023.
The ALM policy establishes limits or operating risk thresholds for a number of measures of liquidity which are monitored
at least monthly by the ALCO and quarterly by the Board of Directors. In the current environment, many of these metrics are
being monitored more frequently. Following the events of March 2023, management re-evaluated and refined these measures,
and continues to evaluate further refinements as new data becomes available. Some of the measures currently used to dimension
liquidity risk and manage liquidity are the ratio of available liquidity to uninsured/non-collateralized deposits, the ratio of
wholesale funding to total assets, the ratio of available operational liquidity (which excludes availability at the FRB) to volatile
liabilities, a liquidity stress test coverage ratio, the loan to deposit ratio, a one-year liquidity ratio a measure of available on-
balance sheet liquidity, the ratio of FHLB advances to total assets, large depositor concentrations 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. We
also have single depositor relationship limits.
The following tables presents some of the Company's liquidity measures, where applicable, their related policy limits and
operating risk thresholds at the dates indicated:
Available liquidity to uninsured/non-collateralized deposits
Wholesale funding/total assets
Available operational liquidity/volatile liabilities
Liquidity stress test coverage ratio
FHLB advances/total assets
One year liquidity ratio
Loan to deposit ratio
Top 20 uninsured depositors to total deposits (excluding brokered &
municipal deposits)
Non interest-bearing demand deposits/total deposits
Available on-balance sheet liquidity
December 31, 2023
Policy Limit
152%
31.7%
<100%
<37.5%
December 31, 2023
1.56x
1.77x
16.8%
1.58x
92.1%
14.1%
25.8%
7.1%
Low or Moderate Risk
Operating Threshold
≥1.30x
≥1.50x
≤20%
≥1.00x
≤100%
≤15%
≥20%
≥5%
Although within policy limits, wholesale funding levels currently remain elevated at December 31, 2023; a near-term
strategic priority of the Company is reducing wholesale funding.
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.
68
The following table presents the Company's material contractual cash requirements for the following twelve months, as of
December 31, 2023 (in thousands):
Term deposits(1)
FHLB advances(1)
Notes and other borrowings(1)
Operating lease obligations
$
$
4,770,722
5,127,959
37,741
19,280
9,955,702
(1)
Includes interest to be paid on the outstanding contractual obligations.
At December 31, 2023, the Company had $4.7 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 $257 million in outstanding commitments to fund loans and $4.7 billion in unfunded commitments
under existing lines of credit at December 31, 2023. Many of these commitments are expected to expire without being fully
funded and, therefore, also do not necessarily represent future cash requirements.
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, 2023 and 2022, 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 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
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. Simulation of changes in EVE in various interest rate environments is also a
meaningful measure of interest rate risk.
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 a consensus forward curve 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
management framework is based on modeling instantaneous rate shocks to a static balance sheet, assuming that maturing
instruments are replaced with like instruments at forward rates, of plus and minus 100, 200, 300 and 400 basis point parallel
shifts. In lower interest rate environments, we may not model more extreme declining rate scenarios and in certain macro-
environments, we may model shocks of more than 400 basis points. Our ALM policy has established limits for the plus and
minus 100 and 200 basis points shock scenarios. We also model a variety of dynamic balance sheet scenarios, various yield
69
curve slopes, non-parallel shifts and alternative depositor behavior, beta and decay assumptions. We continually evaluate the
scenarios being modeled with a view toward adapting them to changing economic conditions, expectations and trends. For
example, following the events of early 2023 we modeled a variety of alternative non-maturity deposit runoff scenarios.
The following table presents the impact on forecasted net interest income compared to a "most likely" scenario, based on
the consensus forward curve, in static balance sheet, parallel rate shock scenarios of plus and minus 100 and 200 basis points at
December 31, 2023 and 2022:
Policy Limits:
In year 1
In year 2
Model Results at December 31, 2023 - increase (decrease)
In year 1
In year 2
Model Results at December 31, 2022 - increase (decrease)
In year 1
In year 2
Down 200 Down 100
Plus 100
Plus 200
(12) %
(15) %
(8) %
(11) %
(8) %
(11) %
(4.7) %
(6.0) %
(1.6) %
(2.3) %
1.0 %
1.5 %
(12) %
(15) %
2.1 %
2.0 %
(5.1) %
(8.4) %
(1.7) %
(3.5) %
0.1 %
1.8 %
(0.6) %
2.3 %
The following table illustrates the modeled change in EVE in the indicated scenarios at December 31, 2023 and 2022:
Policy Limits
Model Results at December 31, 2023 - increase (decrease):
Model Results at December 31, 2022 - increase (decrease):
Plus 100
Down 200 Down 100
(20.0) % (10.0) % (10.0) % (20.0) %
(8.8) % (17.4) %
15.2 %
(5.5) % (11.3) %
4.5 %
9.5 %
3.8 %
Plus 200
All of the modeled results at December 31, 2023, are within ALM policy limits. Modeled results at December 31, 2023,
may not be fully comparable to modeled results at December 31, 2022. While changes in modeled results do reflect shifts in
balance sheet composition, they also incorporate changes made to assumptions about depositor behavior, in response to the
liquidity events of March and April.
Many assumptions were used by the Company to calculate the impact of changes in interest rates on forecasted net interest
income and EVE, 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, unanticipated 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 or changes in balance sheet composition.
As a result of the liquidity events of early 2023, we performed a comprehensive updated deposit decay and beta study and
revised our standard decay and beta assumptions accordingly. Along with this exercise, we benchmarked our weighted average
life and beta assumptions against information provided in the OCC's Fall 2023 Publication of Interest Rate Risk Statistics.
Generally, our assumptions were conservative when compared to peer medians, as we would expect given the commercial
nature and relative immaturity of our deposit base. We regularly run sensitivity analysis on our beta and decay assumptions and
back-test all of the significant assumptions underlying our ALM modeling.
Following the completion of the recent deposit study, we are modeling average betas of 50% for interest bearing checking
and 69% for money market deposits. We are modeling weighted average lives of 5.2 years for non-interest bearing checking,
4.1 years for interest-bearing checking and 4.0 years for money market deposits.
70
Derivative Financial Instruments and Hedging Activities
Management continually evaluates a variety of hedging strategies that are available to manage interest rate risk. In the
current environment, we continue to evaluate potential hedging strategies to mitigate risk from a period of rapid or extreme
declines in rates.
Interest rate derivatives designated as cash flow or fair value hedging instruments are 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 following table provides information about the Company's derivatives designated as hedging instruments as of
December 31, 2023 (dollars in thousands):
Derivatives designated as cash
flow hedges:
Hedged Item
Weighted
Average
Pay Rate /
Strike
Price
Weighted
Average
Receive Rate /
Strike Price
Weighted
Average
Remaining
Life
in Years
Notional
Amount
Pay-fixed interest rate swaps
Variability of interest cash flows on variable rate
borrowings
$ 2,615,000
3.08%
Daily SOFR
Pay-fixed interest rate swaps
Variability of interest cash flows on variable rate liabilities
400,000
1.22%
Fed Funds
Effective Rate
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:
Variability of interest cash flows on variable rate loans
200,000 Term SOFR
3.72%
Variability of interest cash flows on variable rate liabilities
200,000
0.88%
Variability of interest cash flows on variable rate loans
125,000
5.58%
1.50%
1.9
0.7
2.3
1.5
2.7
Pay-fixed interest rate swaps
Variability of fair value of fixed rate loans
100,000
1.94%
Daily SOFR
0.6
$ 3,640,000
(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%.
In addition to derivative instruments, the Company has issued callable CDs to hedge interest rate risk in a falling rate
environment; the amount of such instruments outstanding at December 31, 2023, was $711 million. The short duration of our
AFS investment portfolio (1.96 at December 31, 2023) also provides a natural offset from an interest rate risk perspective to the
longer duration of the residential mortgage portfolio.
See Note 10 to the consolidated financial statements for additional information about derivative financial instruments.
LIBOR Transition
The FCA, which regulated USD LIBOR, discontinued the one-week and two-month LIBOR tenors effective December 31,
2021 and remaining tenors were discontinued effective June 30, 2023. The Company executed a comprehensive roadmap to
amend the terms of LIBOR-based financial instruments, generally replacing LIBOR with SOFR as the preferred alternative
reference rate. As of December 31, 2023, all LIBOR-based instruments have been converted to an alternative reference rate,
generally SOFR, based on their contractual provisions.
71
Non-GAAP Financial Measures
Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to
understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also
provides a meaningful basis for comparison to other financial institutions as it is a metric commonly used in the banking
industry. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the
comparable GAAP financial measurement of book value per common share at the dates indicated (in thousands, except share
and per share data):
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, 2023
December 31, 2022
$
$
$
$
2,577,921 $
77,637
2,500,284 $
2,435,981
77,637
2,358,344
74,372,505
75,674,587
34.66 $
33.62 $
32.19
31.16
72
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.”
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, 2023, 2022 and 2021
Reports of Independent Registered Public Accounting Firm (Deloitte and Touche LLP, Miami, FL. Auditor Firm ID:
34)
Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022
Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021
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)
Page
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73
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, 2023.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2023, has been audited
by Deloitte and Touche LLP, an independent registered public accounting firm, as stated in their report which is included
herein.
74
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, 2023 and 2022, the related consolidated statements of income, comprehensive income, cash flows, and
stockholders' equity for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2023, 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, 2023, 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 20, 2024, 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
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 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 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
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
75
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, 2023 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-pass 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 & Touche LLP
Miami, Florida
February 20, 2024
We have served as the Company's auditor since 2021.
76
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, 2023, 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, 2023, 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, 2023, of the Company and our
report dated February 20, 2024, 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 20, 2024
/s/Deloitte & Touche LLP
77
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31,
2023
December 31,
2022
ASSETS
Cash and due from banks:
Non-interest bearing
Interest bearing
Cash and cash equivalents
Investment securities (including securities reported at fair value of $8,867,354 and $9,745,327)
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:
$
14,945 $
573,338
588,283
8,877,354
310,084
24,633,684
(202,689)
24,430,995
318,459
371,909
77,637
786,886
16,068
556,579
572,647
9,755,327
294,172
24,885,988
(147,946)
24,738,042
308,212
539,799
77,637
740,876
$ 35,761,607 $ 37,026,712
$ 6,835,236 $ 8,037,848
2,142,067
13,061,341
4,268,078
27,509,334
190,000
3,403,539
11,135,708
5,163,995
26,538,478
—
5,115,000
5,420,000
708,973
821,235
33,183,686
720,923
750,474
34,590,731
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 74,372,505 and
75,674,587 shares issued and outstanding
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total stockholders' equity
Total liabilities and stockholders' equity
744
283,642
2,650,956
(357,421)
2,577,921
757
321,729
2,551,400
(437,905)
2,435,981
$ 35,761,607 $ 37,026,712
78
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,
2023
2022
2021
$
1,318,217 $
488,212
51,152
1,857,581
934,642 $
280,100
15,709
1,230,451
660,305
323,472
983,777
873,804
87,607
786,197
21,682
(3,711)
(10,052)
45,882
33,037
86,838
179,972
137,519
317,491
912,960
75,154
837,806
23,402
(2,570)
(15,805)
54,111
18,498
77,636
800,819
152,619
6,010
959,448
67,596
96,164
163,760
795,688
(67,119)
862,807
21,685
24,394
6,446
53,263
28,365
134,153
Employee compensation and benefits
280,744
265,548
243,532
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
43,345
66,747
14,184
79,984
—
44,446
106,501
635,951
237,084
58,413
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
$
$
$
178,671 $
284,971 $
414,984
2.39 $
2.38 $
3.55 $
3.54 $
4.52
4.52
79
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 gains 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,
2023
178,671 $
2022
284,971 $
2021
414,984
$
104,508
(1,343)
103,165
(498,864)
(2,906)
(501,770)
25,966
(48,647)
—
(22,681)
80,484
259,155 $
79,871
(66)
—
79,805
(421,965)
(136,994) $
$
(54,228)
(6,712)
(60,940)
22,207
38,545
33,400
94,152
33,212
448,196
The accompanying notes are an integral part of these consolidated financial statements
80
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 activities:
Amortization and accretion, net
Provision for (recovery of) credit losses
(Gain) loss on sale of loans, net
(Gain) loss on investment securities, net
Share based compensation
Depreciation and amortization
Deferred income taxes
Years Ended December 31,
2023
2022
2021
$
178,671 $
284,971 $
414,984
(13,309)
(7,978)
87,607
3,711
10,052
19,628
74,060
(46,832)
75,154
2,570
15,805
20,940
77,623
1,437
(21,205)
(67,119)
(24,394)
(6,446)
15,891
78,500
(9,015)
Proceeds from sale of loans held for sale, net
317,663
423,893
807,097
Other:
(Increase) decrease in other assets
Increase in other liabilities
Net cash provided by operating activities
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
Proceeds from redemption of non-marketable equity securities
Purchases of loans
Loan originations and repayments, net
Proceeds from sale of loans, net
Disposition (acquisition) of operating lease equipment, net
Other investing activities
(65,003)
91,248
657,496
230,382
169,024
(148,806)
180,688
1,293,821
1,220,175
(405,480)
(2,974,352)
(5,835,143)
1,036,517
1,784,484
371,777
798,205
(544,887)
(471,763)
528,975
313,450
2,586,385
2,286,600
(62,137)
122,143
(493,291)
(2,283,134)
(4,843,231)
613,767
3,856,932
88,103
52,240
305,929
(31,419)
(23,964)
(29,993)
(41,400)
377,863
38,765
100,328
Net cash provided by (used in) investing activities
980,574
(2,120,400)
(1,637,905)
(Continued)
The accompanying notes are an integral part of these consolidated financial statements
81
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
Dividends paid
Repurchase of common stock
Other financing activities
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 disclosure of cash flow information:
Interest paid
Income taxes paid (refunded), net
Supplemental schedule of non-cash investing and financing activities:
Transfers from loans to loans held for sale
Transfers from operating lease equipment to equipment held for sale
Dividends declared, not paid
Unsettled securities trades, net
Obligations incurred in acquisition of affordable housing limited partnerships
Years Ended December 31,
2023
2022
2021
(970,856)
(190,000)
3,425,000
(3,730,000)
(79,091)
(55,154)
(22,333)
(1,622,434)
15,636
572,647
588,283 $
(1,928,768)
(9,000)
4,650,000
(1,135,000)
(79,443)
(401,288)
(12,132)
1,084,369
257,790
314,857
572,647 $
1,942,286
19,000
946,000
(2,162,000)
(85,790)
(318,499)
(6,126)
334,871
(82,859)
397,716
314,857
950,476 $
48,782 $
294,144 $
(109,069) $
169,291
248,473
361,382 $
20,699 $
20,706 $
— $
20,000 $
514,565 $
— $
19,346 $
— $
65,000 $
1,064,090
—
19,876
22,858
—
$
$
$
$
$
$
$
$
82
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, 2020
Comprehensive income
Dividends ($0.92 per common share)
Equity based compensation and exercise of stock
options, net of shares forfeited and surrendered
Repurchase of common stock
Balance at December 31, 2021
Comprehensive loss
Dividends ($1.00 per common share)
Equity based compensation, net of shares forfeited
and surrendered
Repurchase of common stock
Balance at December 31, 2022
Impact of adoption of ASU 2022-02
Balance at January 1, 2023
Comprehensive income
Dividends ($1.08 per common share)
Equity based compensation, net of shares forfeited
and surrendered
Repurchase of common stock
Balance at December 31, 2023
Common
Shares
Outstanding
Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
93,067,500 $
931 $ 1,017,518 $ 2,013,715 $
(49,152) $
2,983,012
—
—
357,410
(7,776,924)
85,647,986
—
—
281,380
(10,254,779)
75,674,587
—
75,674,587
—
—
332,163
(1,634,245)
—
—
4
(79)
856
—
—
—
—
414,984
(83,357)
8,405
(318,420)
—
—
707,503
2,345,342
—
—
284,971
(78,913)
4
15,411
(103)
(401,185)
—
—
33,212
—
—
—
(15,940)
(421,965)
—
—
—
448,196
(83,357)
8,409
(318,499)
3,037,761
(136,994)
(78,913)
15,415
(401,288)
757
—
757
—
—
3
(16)
321,729
2,551,400
(437,905)
2,435,981
—
1,336
—
1,336
321,729
2,552,736
(437,905)
2,437,317
—
—
178,671
(80,451)
17,051
(55,138)
—
—
80,484
—
—
—
259,155
(80,451)
17,054
(55,154)
74,372,505 $
744 $ 283,642 $ 2,650,956 $
(357,421) $
2,577,921
83
The accompanying notes are an integral part of these consolidated financial statements
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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 53 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 offers a comprehensive suite of
commercial lending and deposit products through an Atlanta office focused on the Southeast region, certain commercial lending
and deposit products through national platforms and certain consumer deposit products through an online channel.
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, 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.
84
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
•
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 are carried at the lower of cost or fair value, determined in the
aggregate for buyout loans. 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
85
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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 loans, other than government insured residential loans, are
generally placed on non-accrual status when they are 60 days past due. Additionally, certain residential loans not contractually
delinquent but in forbearance may be placed on non-accrual status at management's discretion. 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 loans are
generally returned to accrual status when less than 60 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
Prior to the adoption of ASU 2022-02 on January 1, 2023, in certain situations, due to economic or legal reasons related to
a borrower's financial difficulties, the Company may have granted a concession to the borrower for other than an insignificant
period of time that it would not otherwise have considered. At that time, the related loan was classified as a TDR. The
concessions granted may have included 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 was 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.
86
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
ACL
AFS Debt Securities
The Company reviews its AFS debt securities for credit loss impairment at the individual security level at least quarterly. A
security is impaired if its fair value is less than its amortized cost basis. A decline in fair value below 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 tax.
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 sector 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.
87
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
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, which are not significant in the
aggregate, 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, 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 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.
88
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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.
Residential Model
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 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 or unprecedented 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
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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.
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.
Prior to the adoption of ASU 2022-02 on January 1, 2023
For TDRs or loans for which there was a reasonable expectation that a TDR would be executed that were not collateral
dependent, the credit loss estimate was determined by comparing the net present value of expected cash flows to the amortized
cost basis of the loans. Expected cash flows were discounted at the loans' original effective interest rate for fixed rate loans and
at the rate as it changed over the life of the loans for variable rate loans.
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.
90
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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. Equipment held for sale is carried at the lower of carrying amount or estimated fair value
less costs to sell and is included in other assets in the accompanying consolidated balance sheets. 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 typically 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 - 3 to 20 years;
aircraft and automobiles - 5 to 15 years;
furniture, fixtures and equipment - 5 to 7 years; and
computer equipment - 3 to 5 years.
91
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Software
Capitalized software, stated at cost less accumulated depreciation and amortization, includes CCA and capitalizable
implementation costs associated with hosting arrangements. Capitalized software is 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.
92
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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 derivatives 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 derivatives 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, 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.
93
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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 2023
ASU No. 2022-02—Financial Instruments—Credit Losses (Topic 326). This ASU eliminated the accounting guidance for
TDRs by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors. The ASU enhanced disclosure
requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty in
the form of an interest rate reduction, an other-than-insignificant payment delay, a term extension, principal forgiveness or a
combination thereof. The ASU also updated certain requirements related to accounting for credit losses under ASC 326 and
required disclosure of current-period gross charge-offs of financing receivables by year of origination. The Company adopted
this ASU in the first quarter of 2023, prospectively, except with respect to the recognition and measurement of TDRs, for which
the modified retrospective transition method was applied. The Company recorded a reduction to the ACL of $1.8 million and a
cumulative-effect adjustment, net of tax, to retained earnings of $1.3 million on January 1, 2023. Additional and modified
disclosures required by this ASU are included in the Notes to these Consolidated Financial Statements.
Accounting Pronouncements Not Yet Adopted
ASU No. 2023-02—Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax
Credit Structures using the Proportional Amortization Method (A Consensus of the Emerging Issues Task Force). This ASU
was issued to expand use of the proportional amortization method of accounting to equity investments in tax credit programs
beyond those in LIHTC programs. The ASU allows entities to elect the proportional amortization method, on a tax-credit-
program-by-tax-credit-program basis, for all equity investments in tax credit programs meeting the eligibility criteria
established. This ASU is effective for the Company for interim and annual periods in fiscal years beginning after December 15,
2023. The Company will adopt this ASU during the first quarter of 2024 and expects no material impact on the Company's
consolidated financial position, results of operations, and cash flows. Currently, all of the Company's equity investments in tax
credit programs are in LIHTC programs accounted for using the proportional amortization method.
ASU No. 2023-07—Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU
augments reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment
expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can
disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single
reportable segment, and contains other disclosure requirements. This ASU is effective for the Company for fiscal years
beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. This ASU will
have no impact on the Company's consolidated financial position, results of operations, and cash flows. Adoption may lead to
additional and revised disclosures in the Company's financial statements starting in the quarter of adoption.
ASU No. 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires entities to
provide more information in the annual and interim income tax disclosures, primarily related to the income tax rate
reconciliation and income taxes paid. The guidance also eliminates certain existing disclosure requirements related to uncertain
tax positions and unrecognized deferred tax liabilities. This ASU is effective for the Company for fiscal years beginning after
December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. The impact of adoption of this
94
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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 quarter of
adoption.
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,
2023
2022
2021
$
178,671 $
284,971 $
414,984
(3,565)
(5,075)
(5,991)
$
175,106 $
279,896 $
408,993
74,493,898
(1,168,004)
73,325,894
80,032,356
(1,224,568)
78,807,788
2.39 $
3.55 $
91,612,243
(1,212,055)
90,400,188
4.52
175,106 $
(275)
174,831 $
279,896 $
(626)
279,270 $
408,993
(585)
408,408
$
$
$
73,325,894
197,441
73,523,335
78,807,788
94
78,807,882
90,400,188
134
90,400,322
4.52
Diluted earnings per common share
$
2.38 $
3.54 $
Potentially dilutive unvested shares totaling 1,738,534, 2,034,960 and 1,804,973 were outstanding at December 31, 2023,
2022 and 2021, respectively, but excluded from the calculation of diluted earnings per common share because their inclusion
would have been anti-dilutive.
95
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2023
Gross Unrealized
Amortized Cost
Gains
Losses
Carrying Value (1)
$
139,858 $
532 $
(9,798) $
130,592
1,962,658
1,810
(40,261)
1,924,207
561,557
2,596,231
2,282,833
383,984
1,122,799
106,095
107,176
106,237
9,369,428 $
10,000
$
9,379,428
107
268
678
—
735
156
715
(63,805)
(300,769)
(84,768)
(17,729)
(10,710)
(3,471)
(5,273)
41
5,042 $
(3,254)
(539,838)
497,859
2,295,730
2,198,743
366,255
1,112,824
102,780
102,618
103,024
8,834,632
10,000
8,844,632
32,722
$
8,877,354
96
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
(1) At fair value except for securities held to maturity.
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
381
2,854 $
(75,423)
(333,980)
(120,990)
(31,753)
(30,526)
(6,218)
(6,215)
(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
Investment securities held to maturity at December 31, 2023 and 2022, consisted of one State of Israel bond maturing in
October 2024. Accrued interest receivable on investments totaled $37 million and $34 million at December 31, 2023 and 2022,
respectively, and is included in other assets in the accompanying consolidated balance sheets.
At December 31, 2023, 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
$
1,005,364 $
967,514
5,121,397
1,940,887
1,301,780
9,369,428 $
$
4,948,460
1,765,738
1,152,920
8,834,632
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 $7.7 billion and $4.1 billion at December 31, 2023 and 2022, respectively.
97
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
The following table provides information about gains and losses on investment securities for the periods indicated (in
thousands):
Gross realized gains on investment securities AFS
Gross realized losses on investment securities AFS
Net realized gain
Years Ended December 31,
2023
2022
2021
$
1,862 $
(47)
1,815
4,058 $
(131)
3,927
10,005
(995)
9,010
Net losses on marketable equity securities recognized in earnings
(11,867)
(19,732)
(2,564)
Gain (loss) on investment securities, net
$
(10,052) $
(15,805) $
6,446
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):
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
December 31, 2023
Less than 12 Months
12 Months or Greater
Total
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
$
9,941 $
(27) $
99,769 $
(9,771) $ 109,710 $
(9,798)
82,382
(430) 1,646,081
(39,831) 1,728,463
(40,261)
3,332
—
51,434
—
184,652
—
24,765
8,194
$ 364,700 $
(6)
481,651
(63,799)
484,983
(63,805)
—
2,255,461
(323) 2,054,378
(300,769) 2,255,461
(84,445) 2,105,812
(300,769)
(84,768)
—
(348)
366,255
880,609
(17,729)
366,255
(10,362) 1,065,261
(17,729)
(10,710)
—
(1,049)
(46)
(3,471)
(3,471)
(5,273)
(4,224)
(3,254)
(3,208)
(2,229) $ 7,986,044 $ (537,609) $ 8,350,744 $ (539,838)
79,697
57,145
97,957
79,697
32,380
89,763
98
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
(9,460)
470,441
(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)
(6,218)
(6,154)
(553)
—
(61)
(3,366)
95,976
68,558
117,191
—
1,114
74,291
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, 2023, 2022 and 2021. At
December 31, 2023, 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
including its ability to pledge securities to generate liquidity, its investment policy as to permissible holdings and concentration
limits, regulatory requirements and other relevant factors. While events of early 2023 impacting the banking sector impacted the
liquidity profile of many banks, including BankUnited, the substantial majority of our investment securities are pledgeable at
either the FHLB or FRB. We have not sold, and do not anticipate the need to sell, securities in unrealized loss positions to
generate liquidity.
At December 31, 2023, 558 securities available for sale were in unrealized loss positions. The amount of impairment
related to 114 of these securities was considered insignificant both individually and in the aggregate, totaling approximately
$1.1 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, 2023, is further discussed below.
Unrealized losses were primarily attributable to a sustained higher interest rate environment. In some cases, wider spreads
compared to levels at which securities were purchased. market volatility and yield curve dislocations also contributed to
unrealized losses, particularly in the CLO segment. The investment securities AFS portfolio was in a net unrealized loss
position of $534.8 million at December 31, 2023, compared to $674.2 million at December 31, 2022, improving by $139.4
million during the year ended December 31, 2023. While the majority of securities in the portfolio were floating rate at
December 31, 2023, fixed rate securities accounted for the majority of unrealized losses.
U.S. Government, U.S. Government Agency and Government Sponsored Enterprise Securities
At December 31, 2023, six U.S. treasury, 130 U.S. Government agency and sponsored enterprise residential MBS, 26 U.S.
Government agency and sponsored enterprise commercial MBS, and 22 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.
99
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2023. 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, 2023, 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.
Private label residential MBS and CMOs
At December 31, 2023, 114 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, special
servicing and prepay trends as well as other economic data that could be indicative of stress in the sector. Underlying
delinquencies in this sector remain low. Our December 31, 2023 analysis projected weighted average collateral losses for
impaired securities in this category of 2% compared to weighted average credit support of 18%. As of December 31, 2023, 95%
of impaired securities in this category, based on carrying value, were externally rated AAA, 4% were rated AA and 1% were
rated A.
Private label commercial MBS
At December 31, 2023, 95 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 concentrations, collateral watch lists,
bankruptcy data, defeasance data, special servicing trends, delinquency and other economic data that could be indicative of
stress in the sector. We consider collateral, deal, sector and tranche level performance as well as maturity and refinance risk.
While we have observed some deterioration in collateral performance in this segment, particularly in the office, retail and
hospitality sectors, the high credit quality of these securities and adequacy of subordination to cover projected collateral losses
supports the conclusion that there is no credit loss impairment. Our December 31, 2023 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, 2023, 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, 2023, 13 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. We consider collateral, deal,
sector and tranche level performance as well as maturity and refinance risk. Our December 31, 2023 analysis projected
weighted average collateral losses for this category of 8% compared to weighted average credit support of 53%. As of
December 31, 2023, 57% of impaired securities in this category, based on carrying value, were externally rated AAA, 17%
were rated AA and one security was not externally rated.
Collateralized loan obligations
At December 31, 2023, 28 collateralized loan obligations were in unrealized loss positions. Unrealized losses totaled less
than 1% of total amortized cost of this segment at December 31, 2023. 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
100
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
trends in underlying collateral including potential downgrades and subsequent cash flow diversions, liquidity, ratings migration,
and any other relevant developments. While we have observed some deterioration in underlying collateral performance due in
large part to rising costs, the high credit quality of these securities and adequacy of subordination to cover projected collateral
losses supports the conclusion that there is no credit loss impairment. Our December 31, 2023 analysis projected weighted
average collateral losses for impaired securities in this category of 15% compared to weighted average credit support of 45%.
As of December 31, 2023, 81% of the impaired securities in this category, based on carrying value, were externally rated AAA,
15% were rated AA and 4% were rated A.
Non-mortgage asset-backed securities
At December 31, 2023, six 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, 2023 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, 2023, 38% of the
impaired securities in this category, based on carrying value, were externally rated AAA, and 62% were rated AA.
State and Municipal Obligations
At December 31, 2023, four 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, 2023, 98% of the
impaired securities in this category, based on carrying value, were externally rated AAA and 2% were rated AA.
Note 4 Loans and Allowance for Credit Losses
Loans consisted of the following at the dates indicated (dollars in thousands):
Residential:
1-4 single family residential
Government insured residential
Commercial:
December 31, 2023
December 31, 2022
Total
Percent of
Total
Total
Percent of
Total
$ 6,903,013
28.0 % $ 7,128,834
1,306,014
8,209,027
5.3 %
1,771,880
33.3 %
8,900,714
28.6 %
7.1 %
35.7 %
Non-owner occupied commercial real estate
5,323,241
21.6 %
5,405,597
21.7 %
Construction and land
Owner occupied commercial real estate
Commercial and industrial
Pinnacle - municipal finance
Franchise finance
Equipment finance
Mortgage warehouse lending
Total loans
Allowance for credit losses
Loans, net
495,992
1,935,743
6,971,981
884,690
182,408
197,939
432,663
2.0 %
294,360
7.9 %
1,890,813
1.2 %
7.6 %
28.3 %
6,417,721
25.9 %
3.6 %
0.7 %
0.8 %
1.8 %
912,122
253,774
286,147
524,740
3.7 %
1.0 %
1.1 %
2.1 %
64.3 %
100.0 %
16,424,657
24,633,684
(202,689)
$ 24,430,995
66.7 % 15,985,274
100.0 % 24,885,988
(147,946)
$ 24,738,042
Premiums, discounts and deferred fees and costs, excluding the non-credit related discount on PCD loans, totaled $45
million and $61 million at December 31, 2023 and 2022, respectively.
101
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2023
December 31, 2022
$
$
80,123 $
(35,249)
44,874
(161)
44,713 $
96,437
(44,354)
52,083
(409)
51,674
During the years ended December 31, 2023, 2022 and 2021, the Company purchased residential loans totaling $493
million, $2.3 billion and $4.8 billion, respectively.
At December 31, 2023 and 2022, the Company had pledged loans with a carrying value of approximately $16.5 billion and
$12.4 billion, respectively, as security for FHLB advances and Federal Reserve discount window capacity.
At December 31, 2023 and 2022, accrued interest receivable on loans totaled $138 million and $129 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, 2023, 2022 and 2021.
Allowance for credit losses
The ACL was determined utilizing a 2-year reasonable and supportable forecast period. The quantitative portion of the
ACL at December 31, 2023, was determined using three weighted third-party provided economic scenarios. The quantitative
portion of the ACL at December 31, 2022 and 2021 was determined using a single third-party provided economic scenario.
Activity in the ACL is summarized below for the periods indicated (in thousands):
2023
2022
2021
Residential Commercial
Total
Residential Commercial
Total
Residential Commercial
Total
Years Ended December 31,
$ 11,741 $ 136,205 $ 147,946 $ 9,187 $ 117,270 $ 126,457 $ 18,719 $ 238,604 $ 257,323
(117)
(1,677)
(1,794)
N/A
N/A
N/A
N/A
N/A
N/A
11,624
134,528
146,152
9,187
117,270
126,457
18,719
238,604
257,323
(55,215) (64,456)
2,858
(70,946) (71,250)
(412)
4,840
108
Ending balance $ 7,631 $ 195,058 $ 202,689 $ 11,741 $ 136,205 $ 147,946 $ 9,187 $ 117,270 $ 126,457
82,926
(35,014) (35,014)
12,618
70,956
(61,643) (62,055)
(4,002)
—
9
(9,241)
(304)
13
73,814
78,924
12,627
4,827
9,730
9,622
Beginning
balance
Impact of
adoption of
ASU 2022-02
Balance after
adoption of
ASU 2022-02
Provision
(recovery)
Charge-offs
Recoveries
102
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
The ACL increased by $54.7 million, from 0.59% to 0.82% of total loans, at December 31, 2023, compared to
December 31, 2022. The more significant factors impacting the provision for credit losses and increase in the ACL for the year
ended December 31, 2023, included changes in the economic forecast, new commercial loan production, risk rating migration
and an increase in certain specific reserves.
The following table presents gross charge-offs during the year ended December 31, 2023, by year of origination (in
thousands):
CRE
C&I
Franchise finance
2023
2022
2021
2020
2019
— $
$ — $
2,632
—
12,883
—
$ 2,632 $ 12,883 $
— $
316
1,013
— $
43
—
43 $ 1,329 $ 9,758 $ 7,372 $
2,319
3,825
7,349
2,409
Total
— $ 1,228
997
26,539
7,247
—
997 $ 35,014
Prior to
2019
— $ 1,228 $
Revolving
Loans
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
$
78,924 $
73,814 $
(64,456)
Amount related to off-balance sheet credit exposures
Other
8,683
—
1,467
(127)
(1,235)
(1,428)
Total provision for (recovery of) credit losses
$
87,607 $
75,154 $
(67,119)
Years Ended December 31,
2023
2022
2021
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.
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 2023. 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.
103
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on delinquency
status (in thousands):
December 31, 2023
Amortized Cost By Origination Year
2023
2022
2021
2020
2019
Prior
Total
Current
$
363,123 $ 1,117,039 $ 2,965,840 $
854,376 $
296,146 $ 1,255,688 $ 6,852,212
30 - 59 Days Past Due
60 - 89 Days Past Due
90 Days or More Past Due
2,200
—
—
1,785
2,116
5,872
7,201
1,465
—
5,745
—
—
—
143
1,439
14,527
2,728
5,580
31,458
6,452
12,891
$
365,323 $ 1,126,812 $ 2,974,506 $
860,121 $
297,728 $ 1,278,523 $ 6,903,013
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 $ 1,321,011 $ 7,066,758
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
5,759
1,052
4,635
43,016
4,076
14,984
$ 1,201,204 $ 3,169,085 $
922,591 $
320,683 $
182,814 $ 1,332,457 $ 7,128,834
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on LTV (in
thousands):
December 31, 2023
Amortized Cost By Origination Year
LTV
2023
2022
2021
2020
2019
Prior
Total
Less than 61%
$
63,117 $
260,403 $ 1,211,101 $
326,771 $
72,219 $
428,451 $ 2,362,062
61% - 70%
71% - 80%
More than 80%
67,146
235,060
—
280,602
583,724
2,083
813,682
915,166
34,557
221,091
312,188
71
71,652
148,483
5,374
293,784
1,747,957
519,699
2,714,320
36,589
78,674
$
365,323 $ 1,126,812 $ 2,974,506 $
860,121 $
297,728 $ 1,278,523 $ 6,903,013
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 $
472,090 $ 2,530,297
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
310,649
1,824,025
510,633
2,687,159
39,085
87,353
$ 1,201,204 $ 3,169,085 $
922,591 $
320,683 $
182,814 $ 1,332,457 $ 7,128,834
104
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on FICO score
(in thousands):
December 31, 2023
Amortized Cost By Origination Year
FICO
760 or greater
720 - 759
719 or less or not available
2023
2022
2021
2020
2019
Prior
Total
$
253,774 $
810,150 $ 2,378,572 $
696,363 $
203,966 $
893,290 $ 5,236,115
78,882
32,667
194,135
122,527
392,179
203,755
99,412
64,346
50,984
42,778
210,663
1,026,255
174,570
640,643
$
365,323 $ 1,126,812 $ 2,974,506 $
860,121 $
297,728 $ 1,278,523 $ 6,903,013
December 31, 2022
Amortized Cost By Origination Year
FICO
760 or greater
720 - 759
719 or less or not available
2022
2021
2020
2019
2018
Prior
Total
$
805,125 $ 2,513,045 $
721,982 $
212,574 $
97,076 $
944,783 $ 5,294,585
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
171,627
606,081
$ 1,201,204 $ 3,169,085 $
922,591 $
320,683 $
182,814 $ 1,332,457 $ 7,128,834
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
or potential disruptions in economic activity, health of the national, regional and to a lesser extent global economy, interest
rates, industry trends, demographic trends, inflationary trends, including particularly for commercial real estate loans the cost of
insurance, patterns of and trends in customer behavior that influence demand for our borrowers' products and services, and
commercial real estate values and related market dynamics. Particularly for the office sector, the evolving impact of hybrid and
remote work on vacancies and valuations is a factor. 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. 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.
105
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Commercial credit exposure based on internal risk rating (in thousands):
December 31, 2023
Amortized Cost By Origination Year
2023
2022
2021
2020
2019
Prior
Revolving
Loans
Total
$ 668,669 $ 1,268,313 $ 662,340 $ 493,675 $ 878,048 $ 1,064,601 $ 281,584 $ 5,317,230
19,127
—
13,377
42,997
—
2,103
—
29,180
57,984
186,368
4,912
142,049
2,152
1,754
97,552
404,451
$ 687,796 $ 1,324,687 $ 664,443 $ 522,855 $ 1,122,400 $ 1,211,562 $ 285,490 $ 5,819,233
$ 1,382,939 $ 1,423,581 $ 653,730 $ 337,322 $ 431,257 $ 1,040,101 $ 3,069,295 $ 8,338,225
—
3,841
—
85,306
70,731
10,580
1,215
86,747
—
13,949
16,063
—
49,526
20,757
4,229
22,398
91,844
—
47,680
44,633
—
220,074
334,616
14,809
$ 1,386,780 $ 1,590,198 $ 741,692 $ 367,334 $ 505,769 $ 1,154,343 $ 3,161,608 $ 8,907,724
CRE
Pass
Special mention
Substandard
Total CRE
C&I
Pass
Special mention
Substandard
Doubtful
Total C&I
Pinnacle - municipal finance
Pass
$ 170,919 $ 133,988 $
74,895 $
31,771 $
55,338 $ 417,779 $
— $ 884,690
Total Pinnacle - municipal finance
$ 170,919 $ 133,988 $
74,895 $
31,771 $
55,338 $ 417,779 $
— $ 884,690
Franchise finance
Pass
Special mention
Substandard
Doubtful
Total Franchise finance
Equipment Finance
Pass
Substandard
Total Equipment finance
Mortgage warehouse lending
Pass
Total Mortgage warehouse lending
$
5,488 $
26,342 $
33,556 $
30,542 $
24,953 $
25,325 $
201 $ 146,407
—
—
—
—
191
—
—
976
—
2,279
806
—
—
17,797
4,226
—
9,726
—
—
—
—
2,279
29,496
4,226
5,488 $
26,533 $
34,532 $
33,627 $
46,976 $
35,051 $
201 $ 182,408
1,081 $
6,314 $
40,614 $
14,156 $
51,191 $
54,977 $
— $ 168,333
—
14,768
2,043
197
5,777
6,821
—
29,606
1,081 $
21,082 $
42,657 $
14,353 $
56,968 $
61,798 $
— $ 197,939
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $ 432,663 $ 432,663
— $ 432,663 $ 432,663
$
$
$
$
$
106
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
CRE
Pass
Special mention
Substandard
Total CRE
C&I
Pass
Special mention
Substandard
Doubtful
Total C&I
Pinnacle - municipal finance
Pass
$ 179,223 $ 110,510 $
66,592 $
66,514 $
29,783 $ 459,500 $
— $ 912,122
Total Pinnacle - municipal finance
$ 179,223 $ 110,510 $
66,592 $
66,514 $
29,783 $ 459,500 $
— $ 912,122
Franchise finance
Pass
Special mention
Substandard
Doubtful
$
81,146 $
19,251 $
38,293 $
34,483 $
8,617 $
6,799 $
— $ 188,589
—
—
—
—
1,617
—
—
1,295
1,013
5,432
22,058
2,447
2,168
17,148
3,883
—
8,124
—
—
—
—
7,600
50,242
7,343
Total franchise finance
$
81,146 $
20,868 $
40,601 $
64,420 $
31,816 $
14,923 $
— $ 253,774
Equipment finance
Pass
Substandard
$
27,386 $
55,015 $
16,488 $
90,286 $
33,264 $
62,353 $
— $ 284,792
—
—
—
1,355
—
—
—
1,355
Equipment finance
$
27,386 $
55,015 $
16,488 $
91,641 $
33,264 $
62,353 $
— $ 286,147
Mortgage warehouse lending
Pass
Total Mortgage warehouse lending
$
$
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $ 524,740 $ 524,740
— $ 524,740 $ 524,740
At December 31, 2023 and 2022, the balance of revolving loans converted to term loans was immaterial.
The following table presents criticized and classified commercial loans, in aggregate by risk rating category, at the dates
indicated (in thousands):
Special mention
Substandard - accruing
Substandard - non-accruing
Doubtful
Total
December 31, 2023
$
319,905 $
711,266
86,903
19,035
1,137,109 $
December 31, 2022
51,433
605,965
75,125
7,990
740,513
$
107
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Past Due and Non-Accrual Loans:
The following table presents an aging of loans at the dates indicated (in thousands):
December 31, 2023
December 31, 2022
Current
30 - 59
Days Past
Due
60 - 89
Days Past
Due
90 Days or
More Past
Due
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
$ 6,852,212 $ 31,458 $ 6,452 $ 12,891 $ 6,903,013 $ 7,066,758 $ 43,016 $ 4,076 $ 14,984 $ 7,128,834
835,282
131,652
61,942
277,138
1,306,014
1,025,523
159,461
94,294
492,602
1,771,880
CRE
C&I
5,779,309
27,918
8,851,585
16,228
1,947
5,536
10,059
5,819,233
5,680,829
34,375
8,907,724
8,280,321
Pinnacle -
municipal finance
Franchise finance
Equipment finance
Mortgage
warehouse lending
884,690
182,408
197,939
432,663
—
—
—
—
—
—
—
—
—
—
—
—
884,690
182,408
197,939
912,122
243,574
286,147
432,663
524,740
4,328
2,508
—
1,321
—
—
4,773
1,028
10,027
5,699,957
24,677
8,308,534
—
—
—
—
—
8,879
—
—
912,122
253,774
286,147
524,740
$ 24,016,088 $ 207,256 $ 75,877 $ 334,463 $ 24,633,684 $ 24,020,014 $ 210,634 $ 104,171 $ 551,169 $ 24,885,988
Included in the table above is the guaranteed portion of SBA loans past due by 90 days or more totaling $39.7 million and
$30.8 million at December 31, 2023 and 2022, respectively.
Loans contractually delinquent by 90 days or more and still accruing totaled $278 million and $494 million at
December 31, 2023 and 2022, 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.
The following table presents information about loans on non-accrual status at the dates indicated (in thousands):
December 31, 2023
December 31, 2022
1-4 single family residential
CRE
C&I
Franchise finance
Equipment finance
Amortized Cost
$
20,513 $
Amortized Cost
With No Related
Allowance
Amortized Cost
Amortized Cost
With No Related
Allowance
— $
21,311 $
13,727
68,533
16,858
1,947
14,078
976
22,352
47,473
13,290
6,820
126,451 $
$
6,820
23,821 $
—
104,426 $
—
6,911
15,642
1,668
—
24,221
Included in the table above is the guaranteed portion of non-accrual SBA loans totaling $41.8 million and $40.3 million at
December 31, 2023 and 2022, respectively. The amount of interest income recognized on non-accrual loans was insignificant
for the years ended December 31, 2023, 2022 and 2021. 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 $7.7 million,
$5.9 million and $8.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
108
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Collateral dependent loans:
The following table presents the amortized cost basis of collateral dependent loans at the dates indicated (in thousands):
December 31, 2023
December 31, 2022
1-4 single family residential
Commercial:
CRE
C&I
Franchise finance
Equipment finance
Total commercial
Amortized Cost
Extent to Which
Secured by Collateral
Amortized Cost
$
— $
— $
730 $
Extent to Which
Secured by Collateral
730
11,574
36,401
16,668
6,820
71,463
71,463 $
$
11,574
25,821
11,858
6,820
56,073
56,073 $
19,486
26,404
11,445
—
57,335
58,065 $
18,353
25,344
3,729
—
47,426
48,156
Collateral for the CRE loan class generally consists of commercial real estate, or for certain construction loans, residential
real estate. Collateral for C&I loans generally consists of equipment, accounts receivable, inventory and other business assets
and for owner-occupied commercial real estate loans, may also include commercial real estate. 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 secured collateral dependent loans during the years ended December 31,
2023 and 2022.
Foreclosure of residential real estate
The recorded investment in residential loans in the process of foreclosure was $262 million, of which $250 million was
government insured at December 31, 2023, and $413 million, of which $400 million was government insured at December 31,
2022. The carrying amount of foreclosed residential real estate included in other assets in the accompanying consolidated
balance sheet was insignificant at December 31, 2023 and 2022.
Loan Modifications
The following tables summarize loans that were modified for borrowers experiencing financial difficulty, by type of
modification, during the periods indicated (dollars in thousands):
1-4 single family residential
Government insured residential
C&I
Franchise finance
Year Ended December 31, 2023
Interest Rate Reduction
Term Extension
Total
% (1)
Total
% (1)
Combination - Interest
Rate Reduction and
Term Extension
% (1)
Total
Total
$
$
835
105
—
—
940
— % $
—
— % 62,402
— %
8,532
— % 10,748
$ 81,682
— % $
5 %
— %
6 %
—
2,442
—
—
$ 2,442
— % $
835
— % 64,949
— %
8,532
— % 10,748
$ 85,064
(1) Represents percentage of loans receivable in each category.
109
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
The following tables summarize the financial effect of the modifications made to borrowers experiencing difficulty, during
the periods indicated:
Interest Rate Reduction:
1-4 single family residential
Government insured residential
Term Extension:
Year Ended December 31, 2023
Financial Effect
Reduced weighted average contractual interest rate from 4.3% to 3.4%.
Reduced weighted average contractual interest rate from 4.8% to 3.8%.
Government insured residential
Added a weighted average 9.1 years to the term of the modified loans.
C&I
Franchise finance
Added a weighted average 1.4 years to the term of the modified loans.
Added a weighted average 2.1 years to the term of the modified loans.
Combination - Interest Rate Reduction and Term
Extension:
Government insured residential
Reduced weighted average contractual interest rate from 5.7% to 4.7% and
added a weighted average 7.8 years to the term of the modified loans.
The following table presents the aging at December 31, 2023, of loans that were modified since January 1, 2023, the date
of adoption of ASU 2022-02 (in thousands):
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
C&I
Franchise finance
$
76 $
— $
24,091
8,532
10,748
12,335
—
—
$ 43,447 $ 12,335 $
— $
759 $
835
64,949
8,532
10,748
7,677 $ 21,605 $ 85,064
20,846
—
—
7,677
—
—
The following tables summarizes loans that were modified since January 1, 2023, the date of adoption of ASU 2022-02,
and subsequently defaulted, during the periods indicated (in thousands):
1-4 single family residential
Government insured residential
Year Ended December 31, 2023
Interest Rate
Reduction
Term Extension
Combination -
Interest Rate
Reduction and
Term Extension
$
$
759 $
105
864 $
— $
32,994
32,994 $
— $
960
960 $
Total
759
34,059
34,818
110
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Geographic Concentrations
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, 2023
December 31, 2022
Total
Percent of
Total
Total
Percent of
Total
$
2,171,802
31.5 % $
2,274,431
1,344,205
19.5 %
1,417,707
501,744
358,512
312,384
7.3 %
5.2 %
4.5 %
521,479
360,529
314,530
2,214,366
32.0 %
2,240,158
$
6,903,013
100.0 % $
7,128,834
31.9 %
19.9 %
7.3 %
5.1 %
4.4 %
31.4 %
100.0 %
The following table presents the largest geographic concentrations of commercial loans at the dates indicated. Commercial
real estate loans are categorized based on the location of the underlying collateral, while all other commercial loans are
generally categorized based on the location of the borrowers' businesses (dollars in thousands):
Florida
New York Tri-
state
California
Other
December 31, 2023
December 31, 2022
Commercial
Real Estate
$ 3,381,394
Percent of
Total
58.1 % $ 3,321,102
All Other
Commercial
Percent of
Total
31.3 % $ 3,432,109
Commercial
Real Estate
Percent of
Total
60.2 % $ 3,353,314
All Other
Commercial
Percent of
Total
32.6 %
1,430,728
1,007,111
$ 5,819,233
24.6 % 2,901,958
891,049
17.3 % 3,491,315
100.0 % $ 10,605,424
27.4 % 1,535,095
8.4 %
732,753
32.9 %
100.0 % $ 5,699,957
26.9 % 2,781,928
933,334
12.9 % 3,216,741
100.0 % $ 10,285,317
27.0 %
9.1 %
31.3 %
100.0 %
No state other than those detailed in the table represented more than 5% of either commercial real estate or other
commercial loans at either date presented.
Disclosures Prescribed by Legacy GAAP (Before Adoption of ASU 2022-02) for Prior Periods
The following table summarizes loans that were modified in TDRs during the periods indicated, as well as loans modified
during the twelve months preceding December 31, 2022 and 2021 that experienced payment defaults during the periods
indicated (dollars in thousands):
Year Ended December 31, 2022
Year Ended December 31, 2021
Loans Modified in TDRs
During the Period
TDRs Experiencing Payment
Defaults During the Period
Loans Modified in TDRs
During the Period
TDRs Experiencing Payment
Defaults During the Period
Number of
TDRs
Amortized
Cost
Number of
TDRs
Amortized
Cost
Number of
TDRs
Amortized
Cost
Number of
TDRs
Amortized
Cost
10 $ 5,359
— $
—
— $
—
— $
—
2,589
—
21
4
405,096
—
39,052
6,329
2,624 $ 455,836
1,190
—
4
4
187,708
—
3,703
6,329
1,198 $ 197,740
239
1
—
—
45,143
2,767
—
—
240 $ 47,910
84
—
—
—
84 $
14,317
—
—
—
14,317
1-4 single family
residential
Government insured
residential
CRE
C&I
Franchise finance
111
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
TDRs during the years ended December 31, 2022 and 2021 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 year ended December 31, 2021, 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.
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 12 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, 2023
December 31, 2022
$
$
$
$
64,536 $
21,638
86,174 $
72,391 $
26,501
98,892 $
72,211
23,866
96,077
80,909
28,389
109,298
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, 2023
December 31, 2022
5.9 years
10.0 years
6.6 years
11.0 years
3.2 %
2.9 %
3.1 %
2.9 %
112
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
Years Ended December 31,
2023
2022
2021
$
$
$
$
$
16,761 $
18,364 $
76
134
16,837 $
18,498 $
2,228 $
778
3,006 $
2,350 $
823
3,173 $
19,646
183
19,829
2,903
866
3,769
3,440 $
3,589 $
4,147
Short-term lease costs were immaterial for the years ended December 31, 2023, 2022 and 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
Years Ended December 31,
2023
2022
2021
778 $
17,680
2,666
21,124 $
823 $
18,473
2,652
21,948 $
866
20,056
3,215
24,137
6,896 $
9,086 $
13,325
$
$
$
Future lease payment obligations under leases with terms in excess of one year and a reconciliation to lease liabilities as of
December 31, 2023 were as follows (in thousands):
Years ending December 31:
2024
2025
2026
2027
2028
Thereafter
Total future minimum lease payments
Less: interest component
Lease liabilities
Operating Leases
Finance Leases
Total
$
17,261 $
2,701 $
14,870
13,530
10,809
8,256
14,843
79,569
(7,178)
72,391 $
2,774
2,849
2,926
3,016
16,431
30,697
(4,196)
26,501 $
$
19,962
17,644
16,379
13,735
11,272
31,274
110,266
(11,374)
98,892
113
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Leases under which the Company is the lessor
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
December 31, 2023
December 31, 2022
$
644,614 $
3,938
648,552
(48,403)
1,556
$
601,705 $
684,847
4,024
688,871
(57,622)
2,384
633,633
At December 31, 2023, future minimum lease payments to be received under direct or sales type financing leases were as
follows (in thousands):
Years Ending December 31:
2024
2025
2026
2027
2028
Thereafter
Operating Lease Equipment
$
$
183,861
155,587
100,775
47,973
32,552
123,866
644,614
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 fifteen 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, 2023 December 31, 2022
$
$
582,147 $
772,267
(210,238)
(232,468)
371,909 $
539,799
The Company did not recognize any impairment during the years ended December 31, 2023 and 2022. Impairment was
recognized in the amount of $2.8 million during the year ended December 31, 2021. These impairment charges are included in
"depreciation and impairment of operating lease equipment" in the accompanying consolidated statements of income.
114
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
At December 31, 2023, scheduled minimum rental payments under operating leases were as follows (in thousands):
Years Ending December 31:
2024
2025
2026
2027
2028
Thereafter
$
31,873
26,854
18,764
15,932
13,825
19,896
$
127,144
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,
2023
47,868 $
15,643
63,511 $
2022
54,111 $
17,881
71,992 $
$
$
Operating leases
Direct or sales type finance leases
Note 6 Deposits
Location of Lease Income on Consolidated
Statements of Income
2021
53,263 Non-interest income from lease financing
18,329
71,592
Interest income on loans
The following table presents average balances and weighted average rates paid on deposits for the periods indicated
(dollars in thousands):
Years Ended December 31,
2023
2022
2021
Average
Balance
Average
Rate Paid
Average
Balance
Average
Rate Paid
Average
Balance
Average
Rate Paid
Demand deposits:
Non-interest bearing
$
7,091,029
— % $
8,861,111
— % $
8,480,964
Interest bearing
2,905,968
2.99 %
2,538,906
0.55 %
3,027,649
Savings and money market
Time
10,704,470
5,169,458
3.57 %
3.70 %
12,874,240
3,338,671
1.02 %
1.06 %
13,339,651
3,490,082
$ 25,870,925
2.55 % $ 27,612,928
0.65 % $ 28,338,346
— %
0.28 %
0.32 %
0.46 %
0.24 %
Time deposit accounts with balances greater than $250,000 totaled $941 million and $730 million at December 31, 2023
and 2022, respectively.
115
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
The following table presents maturities of time deposits as of December 31, 2023 (in thousands):
Maturing in:
2024
2025
2026
2027
2028
$
4,693,323
147,364
322,677
446
185
$
5,163,995
Included in deposits at December 31, 2023, are public funds deposits of $3.1 billion and brokered deposits of $5.3 billion.
Investment securities AFS with a carrying value of $794 million and a FHLB letter of credit in the amount of $900 million,
were pledged as security for public funds deposits at December 31, 2023.
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,
2023
2022
2021
$
86,759 $
13,919 $
382,432
191,114
130,705
35,348
$
660,305 $
179,972 $
8,550
43,082
15,964
67,596
Certain of our depositors participate in various customer rebate programs. During the years ended December 31, 2023,
2022 and 2021, deposit costs related to these programs totaled $44.2 million, $15.4 million and $8.1 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, 2023 (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
$
$
4,220,000
895,000
5,115,000
5.44 %
5.52 %
5.60 %
5.60 %
5.47 %
5.56 %
The table above reflects contractual maturities and rates of outstanding advances and does not incorporate the impact that
interest rate derivatives have on the duration or cost 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, 2023,
the Company had pledged investment securities and real estate loans with an aggregate carrying amount of approximately $14.6
billion as collateral for advances and letters of credit from the FHLB.
116
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
$
388,479 $
400,000
December 31, 2023 December 31, 2022
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
(1,676)
386,803
(2,586)
397,414
300,000
(4,331)
295,669
682,472
26,501
300,000
(4,880)
295,120
692,534
28,389
$
708,973 $
720,923
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, 2023, BankUnited had available borrowing capacity at the FHLB of approximately $4.6 billion and
unused borrowing capacity at the FRB of approximately $7.4 billion.
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
Aircraft and automobiles
Less: accumulated depreciation
Premises, equipment and software, net
117
December 31, 2023 December 31, 2022
$
1,019 $
78,811
34,118
16,547
105,593
11,663
1,019
74,607
34,835
19,380
95,491
11,645
247,751
(182,934)
64,817 $
236,977
(170,707)
66,270
$
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Depreciation and amortization expense related to premises, equipment and software was $18.7 million, $17.5 million and
$16.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Note 9 Income Taxes
The components of the provision for income taxes were as follows for the periods indicated (in thousands):
Current:
Federal
State
Deferred:
Federal
State
Years Ended December 31,
2023
2022
2021
$
$
82,789 $
22,456
105,245
76,431 $
12,293
88,724
61,814
(18,398)
43,416
(38,303)
(8,529)
(46,832)
58,413 $
(7,191)
8,628
1,437
90,161 $
4,348
(13,363)
(9,015)
34,401
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,
2023
2022
2021
Amount
Percent
Amount
Percent
Amount
Percent
Tax expense calculated at the statutory federal
income tax rate
$ 49,788
21.00 % $ 78,778
21.00 % $ 94,371
21.00 %
Increases (decreases) resulting from:
Income not subject to tax
(13,404)
(5.65) %
(10,577)
(2.82) %
(13,203)
(2.94) %
State income taxes, net of federal tax benefit
Uncertain tax positions - lapse of statute of
limitations
12,162
5.13 %
17,859
4.76 %
16,425
3.66 %
(2,192)
(0.92) %
(1,093)
(0.29) %
(25,633)
(5.70) %
Uncertain tax positions - interest
10,605
4.47 %
6,348
1.69 %
7,397
Discrete income tax benefit
—
— %
—
— %
(43,950)
Other, net
1,454
$ 58,413
(1,154)
0.61 %
24.64 % $ 90,161
(1,006)
(0.31) %
24.03 % $ 34,401
1.65 %
(9.78) %
(0.23) %
7.66 %
118
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2023 December 31, 2022
Deferred tax assets:
Excess of tax basis over carrying value of loans
$
5,246 $
Allowance for credit losses
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
55,188
125,580
10,805
18,592
11,431
19,301
29,746
6,243
38,211
153,858
18,380
20,655
9,873
11,464
34,796
275,889
293,480
96,225
31,886
5,480
133,591
$
142,298 $
131,018
31,253
7,005
169,276
124,204
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, 2023, remaining net operating loss and tax credit carryforwards included Florida net operating loss
carryforwards in the amount of $108.6 million. Florida net operating loss carryforwards consisted of $90.9 million expiring
from 2030 through 2037 and $17.7 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 $111 million and $100 million at December 31, 2023 and 2022, respectively. Unfunded commitments for
affordable housing investments, included in other liabilities in the accompanying consolidated balance sheet, were $77 million
and $62 million at December 31, 2023 and 2022, respectively. The maximum exposure to loss as a result of the Company's
involvement with these limited partnerships at December 31, 2023, was approximately $164 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, 2023, 2022 and 2021.
119
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2023 December 31, 2022 December 31, 2021
$
369,880 $
347,809 $
414,203
2,802
708
(347)
(1,617)
371,426
12,469
3,086
12,433
—
(795)
362,533
7,347
2,175
12,887
(43,782)
(30,394)
355,089
(7,280)
$
383,895 $
369,880 $
347,809
As of December 31, 2023, 2022 and 2021, the Company had $343.8 million, $342.6 million and $329.3 million,
respectively, 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, 2023, as a result of settlements with taxing authorities range from zero to $334.7
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, 2023 and 2022, accrued interest and penalties included in the consolidated balance
sheets, net of federal tax benefits, were $26.4 million and $16.5 million, respectively. The total amount of interest and penalties,
net of federal tax benefits, recognized through income tax expense was $10.0 million, $5.9 million and $(5.7) million during the
years ended December 31, 2023, 2022 and 2021, 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 2022, remain subject to examination
in the U.S. Federal jurisdiction. State tax returns for years 2018 through 2022, remain subject to examination by certain states.
Note 10 Derivative Financial Instruments
Derivatives designated as hedging instruments
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. 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.
120
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
The following table summarizes the Company's derivatives designated as hedging instruments as of the dates indicated (in
thousands):
Derivatives designated as cash flow hedges:
Interest rate swaps
Interest rate caps purchased
Interest rate collar
Derivatives designated as fair value hedges:
Pay-fixed interest rate swaps
December 31, 2023
December 31, 2022
Notional
Amount
Fair Value(1)
Asset
Liability
Notional
Amount
Fair Value(1)
Asset
Liability
$ 3,215,000 $
— $
(1,048) $ 1,970,000 $
941 $
(1,514)
200,000
125,000
100,000
10,157
84
—
—
—
—
200,000
125,000
100,000
15,673
—
—
—
(203)
—
$ 3,640,000 $
10,241 $
(1,048) $ 2,395,000 $
16,614 $
(1,717)
(1) The fair values of derivatives are included in other assets or other liabilities in the consolidated balance sheets.
Derivatives designated as cash flow hedges
The following table provides information about the amount of gain (loss) related to derivatives designated as cash flow
hedges reclassified from AOCI into interest income or 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,
2023
2022
2021
$
$
44,790 $
23,569
(2,620)
65,739 $
(4,224) $
4,357
(43)
90 $
(51,739)
—
—
(51,739)
During the years ended December 31, 2023 and 2022, 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. 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.
As of December 31, 2023, the amount of net gain expected to be reclassified from AOCI into earnings during the next
twelve months was $38.4 million, based on the forward curve. See Note 11 to the consolidated financial statements for
additional information about the reclassification adjustments from AOCI into earnings.
Derivatives designated as fair value hedges
The amount of gain (loss) related to derivatives designated as fair value hedges recognized in earnings was insignificant for
all applicable periods. 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
December 31, 2023
Location in Consolidated Balance Sheets
100,000 $
(1,656) $
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. The amortized cost basis of the closed portfolio used in this
hedging relationship was $992 million and $1 billion, respectively, at December 31, 2023 and 2022.
121
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Derivatives not designated as hedging instruments
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. The impact on earnings related to changes in fair value of these derivatives was $8.7 million,
$4.7 million, and $6.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
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 following table summarizes the Company's derivatives not designated as hedging instruments as of the dates indicated
(in thousands):
December 31, 2023
December 31, 2022
Notional
Amount
Fair Value(1)
Asset
Liability
Notional
Amount
Fair Value(1)
Asset
Liability
Derivatives not designated as hedges:
Pay-fixed interest rate swaps
$ 2,166,813 $
76,793 $
(16,702) $ 1,916,719 $
67,942 $
(2,195)
Pay-variable interest rate swaps
Interest rate caps purchased
Interest rate caps sold
2,166,813
65,610
65,610
16,702
1,922
—
(77,257)
1,916,719
—
(1,922)
42,920
42,920
2,195
1,988
—
(120,320)
—
(1,988)
$ 4,464,846 $
95,417 $
(95,881) $ 3,919,278 $
72,125 $
(124,503)
(1) Fair values of these derivatives are included in other assets and other liabilities in the consolidated balance sheets.
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.
Master netting 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, 2023
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
$
$
88,956 $
(17,750)
71,206 $
— $
—
— $
88,956 $
(17,750)
71,206 $
(15,154) $
15,154
— $
(73,730) $
2,596
(71,134) $
72
—
72
122
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
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.
Risk Participation Agreements
The Company purchases and sells credit protection under RPAs with the objective of sharing with financial institution
counterparties some of the credit exposure related to interest rate derivative contracts entered into with commercial borrowers
related to participations purchased or sold. The Company will make or receive payments under these agreements if a customer
defaults on an obligation to perform under certain interest rate derivative contracts. At December 31, 2023 and 2022, the
notional amount of the RPAs was $363 million and $202 million, respectively. The fair value of these derivatives was not
material at December 31, 2023 and 2022.
Note 11 Stockholders’ Equity
Accumulated Other Comprehensive Income
Changes in accumulated other comprehensive income are summarized as follows for the periods indicated (in thousands):
Year Ended December 31, 2023
Before Tax
Tax Effect
Net of Tax
$ 141,227 $ (36,719) $ 104,508
(1,343)
(36,247) 103,165
139,412
(1,815)
472
(9,123)
6,128
11,645
35,089
(23,569)
(44,790)
2,620
(30,650)
25,966
(17,441)
(33,145)
1,939
(22,681)
$ 108,762 $ (28,278) $ 80,484
(681)
7,969
Change in net unrealized losses on investment securities available for sale:
Net unrealized holding gain (loss) 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
Change in net unrealized gain on derivative instruments:
Net unrealized holding gain (loss) 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 income
123
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Year Ended December 31, 2022
Before Tax
Tax Effect
Net of Tax
Change in net 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 losses on investment securities available for sale
Change in net unrealized gains on derivative instruments:
Net unrealized holding gain 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
Change in net unrealized gains 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 gains on investment securities available for sale
Change in net unrealized losses on derivative instruments:
Net unrealized holding gain arising during the period
Amounts reclassified to interest expense on borrowings
Reclassification adjustment for discontinuance of cash flow hedges
Net change in unrealized losses on derivative instruments
Other comprehensive income
$ (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
29,808
22,207
51,739
38,545
44,833
33,400
94,152
126,380
$ 44,581 $ (11,369) $ 33,212
(7,601)
(13,194)
(11,433)
(32,228)
The categories of AOCI and changes therein are presented below for the periods indicated (in thousands):
Balance at December 31, 2020
Other comprehensive income
Balance at December 31, 2021
Other comprehensive loss
Balance at December 31, 2022
Other comprehensive income
Balance at December 31, 2023
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
Total
$
63,799 $
(112,951) $
(49,152)
(60,940)
94,152
2,859
(501,770)
(498,911)
103,165
(18,799)
79,805
61,006
(22,681)
33,212
(15,940)
(421,965)
(437,905)
80,484
$
(395,746) $
38,325 $
(357,421)
In 2023, the Board of Directors and the Company's stockholders approved the 2023 Plan. The number of shares initially
authorized for grant under the 2023 Plan was 1,900,000 shares. Shares remaining under the 2014 Plan as of the effective date of
the 2023 Plan were transferred to the 2023 Plan, and are also available for issuance under the 2023 Plan. Previously, awards
were administered under the 2014 Plan or the 2010 Plan. The Plans are administered by the Board of Directors or a committee
124
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2023, no further awards are available for issuance under the 2010 and 2014 plans
although unvested awards issued under these Plans are still outstanding. The number of shares of common stock authorized for
award under the 2023 Plan, including those transferred from the 2014 Plan, is 3,766,764, of which 2,472,999 shares remain
available for issuance as of December 31, 2023. 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):
Compensation cost of equity based awards:
RSAs
Executive share-based awards
Non-executive RSUs
Total compensation cost of equity based awards
Related tax benefits
Years Ended December 31,
2023
2022
2021
$
16,122 $
16,203 $
13,334
3,351
5,081
24,554
4,239
4,886
25,328
(6,384)
(6,585)
7,942
2,707
23,983
(6,116)
17,867
Compensation cost of equity based awards, net of tax
$
18,170 $
18,743 $
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.
Non-executive RSUs
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, typically 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. Non-executive RSUs may be settled in shares or 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.
125
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2020
1,161,835 $
Granted
Vested
Canceled or forfeited
Unvested share awards outstanding, December 31, 2021
Granted
Vested
Canceled or forfeited
Unvested share awards outstanding, December 31, 2022
Granted
Vested
Canceled or forfeited
571,936
(479,790)
(74,297)
1,179,684
496,361
(391,693)
(90,037)
1,194,315
509,139
(542,003)
(145,051)
Unvested share awards outstanding, December 31, 2023
1,016,400 $
33.32
42.17
34.01
35.91
37.17
41.75
36.72
39.38
39.05
33.51
37.81
37.92
37.10
— $
—
—
—
—
294,331
—
(36,355)
257,976
378,609
—
(23,094)
613,491 $
—
—
—
—
—
41.87
—
41.87
41.87
35.39
—
35.39
38.11
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,
2023
2022
2021
Range of the closing price on date of grant
Aggregate grant date fair value of shares vesting
$16.94 - $35.39
$39.39 - $43.67
$42.01 - $47.52
$
20,757 $
14,383 $
16,319
The total unrecognized compensation cost of $36.2 million for all RSAs and non-executive RSUs outstanding at
December 31, 2023, 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 for grant periods prior to 2023, and over three years for awards issued in 2023. 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 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.
126
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
A summary of activity related to executive share-based awards for the periods indicated follows:
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
Granted
Vested
Unvested executive share-based awards outstanding, December 31, 2023
RSU
PSU
156,555
63,814
(100,881)
119,488
66,990
179,793
63,814
—
243,607
66,990
(77,648)
(73,062)
108,830
136,778
237,535
136,778
(104,976)
(106,731)
140,632
267,582
The total liability for these executive share-based awards was $11.0 million at December 31, 2023. The total unrecognized
compensation cost of $9.1 million for unvested executive share-based awards at December 31, 2023 will be recognized over a
weighted average remaining period of 1.7 years.
Option Awards
The Company had no option awards outstanding at December 31, 2021 or subsequent thereto. During the year ended
December 31, 2021, 1,569 option awards with a weighted average exercised price of $15.94, were exercised with immaterial
intrinsic value and related tax benefits.
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
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
$2.9 million, $1.4 million and $2.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. Deferred
compensation liabilities of $43 million and $37 million were included in other liabilities in the accompanying consolidated
balance sheets at December 31, 2023 and 2022, 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, 2023, 2022 and 2021, BankUnited made matching
contributions to the 401(k) Plan of approximately $6.7 million, $6.2 million and $6.1 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
127
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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, 2023 and 2022, 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, 2023
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
$ 2,865,758
$ 2,865,758
7.93 %
N/A (1)
11.39 % $ 1,635,794
N/A (1) $ 1,446,093
6.50 % $ 1,132,472
4.00 %
N/A (1)
4.50 % $ 1,761,624
N/A (1)
7.00 %
Tier 1 risk-based capital
$ 2,865,758
11.39 % $ 2,013,284
8.00 % $ 1,509,963
6.00 % $ 2,139,115
8.50 %
Total risk-based capital
$ 3,366,597
13.38 % $ 2,516,605
10.00 % $ 2,013,284
8.00 % $ 2,642,436
10.50 %
BankUnited:
Tier 1 leverage
$ 3,287,884
9.11 % $ 1,805,277
5.00 % $ 1,444,221
4.00 %
N/A
N/A
CET1 risk-based capital
$ 3,287,884
13.09 % $ 1,632,880
6.50 % $ 1,130,456
4.50 % $ 1,758,486
7.00 %
Tier 1 risk-based capital
$ 3,287,884
13.09 % $ 2,009,699
8.00 % $ 1,507,274
6.00 % $ 2,135,305
8.50 %
Total risk-based capital
$ 3,488,723
13.89 % $ 2,512,124
10.00 % $ 2,009,699
8.00 % $ 2,637,730
10.50 %
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
$ 2,806,713
7.49 %
N/A (1)
N/A (1)
$ 1,498,309
CET1 risk-based capital
$ 2,806,713
11.00 % $ 1,658,842
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 %
(1) There is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.
128
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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 quarterly basis. Any price evidencing unexpected quarter over
quarter fluctuations or deviations from expectations is challenged. If considered necessary to resolve any discrepancies, a price
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 derivatives 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.
129
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
The following tables present assets and liabilities measured at fair value on a recurring basis at the dates indicated (in
thousands):
December 31, 2023
Level 1
Level 2
Total
$
130,592 $
— $
130,592
—
—
—
—
—
—
—
—
—
32,722
1,924,207
1,924,207
497,859
497,859
2,295,730
2,295,730
2,198,743
2,198,743
366,255
366,255
1,112,824
1,112,824
102,780
102,618
103,024
—
102,780
102,618
103,024
32,722
105,658
—
105,658
$
$
$
163,314 $ 8,809,698 $ 8,973,012
— $
(96,929) $
(96,929)
— $
(96,929) $
(96,929)
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
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
130
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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.
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
December 31, 2023
$
50,885 $
29
December 31, 2022
31,789
693
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):
$
50,914 $
32,482
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, 2023
December 31, 2022
Level Carrying Value
Fair Value
Carrying Value
Fair Value
1
$
588,283 $
588,283 $
572,647 $
572,647
1/2
$ 8,877,354 $ 8,877,281 $ 9,755,327 $ 9,755,190
2
3
2
2
2
2
2
2
2
$
310,084 $
310,084 $
294,172 $
294,172
$ 24,430,995 $ 23,075,192 $ 24,738,042 $ 23,342,950
$
105,658 $
105,658 $
88,739 $
88,739
$ 21,374,483 $ 21,374,483 $ 23,241,256 $ 23,241,256
$ 5,163,995 $ 5,133,119 $ 4,268,078 $ 4,231,167
$
— $
— $
190,000 $
190,000
$ 5,115,000 $ 5,115,637 $ 5,420,000 $ 5,419,588
$
$
708,973 $
676,077 $
720,923 $
698,359
96,929 $
96,929 $
126,220 $
126,220
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.
131
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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 and commercial real estate 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.
Total lending related commitments outstanding at December 31, 2023 were as follows (in thousands):
Commitments to fund loans
Unfunded commitments under lines of credit
Commercial and standby letters of credit
Legal Proceedings
$
$
257,398
4,659,184
172,237
5,088,819
The Company is involved 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 adverse 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
132
December 31,
2023
December 31,
2022
$
262,036 $
266,282
32,722
90,884
2,999,190
2,777,082
7,739
39,682
$
3,301,687 $
3,173,930
$
$
682,472 $
41,294
2,577,921
3,301,687 $
692,534
45,415
2,435,981
3,173,930
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Condensed Statements of Income
Years Ended December 31,
2023
2022
2021
Income:
Interest and dividends on investment securities
$
3,751 $
5,047 $
Service fees from subsidiary
Equity in earnings of subsidiary
Loss on investment securities
Gain on extinguishment of debt
Total
Expense:
Interest on borrowings
Employee compensation and benefits
Other
Total
Income before income taxes
Benefit for income taxes
Net income
16,749
225,288
17,185
338,911
(11,555)
(19,732)
904
—
4,958
13,014
455,672
(2,530)
—
235,137
341,411
471,114
36,057
28,271
4,995
69,323
36,210
29,189
3,857
69,256
165,814
272,155
(12,857)
(12,816)
36,143
26,730
3,744
66,617
404,497
(10,487)
$
178,671 $
284,971 $
414,984
133
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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:
Dividends paid
Repurchase of common stock
Repurchase of senior notes
Other
Net cash 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,
2023
2022
2021
$
178,671 $
284,971 $
414,984
(140,288)
266,089
(143,672)
26,315
8,936
73,634
25,179
1,858
578,097
23,832
8,810
303,954
—
—
(35,000)
73,962
(160)
73,802
10,000
—
10,000
15,728
(11)
(19,283)
(79,091)
(79,443)
(85,790)
(55,154)
(401,288)
(318,499)
(10,554)
(6,883)
—
—
(5,296)
(5,931)
(151,682)
(486,027)
(410,220)
(4,246)
266,282
102,070
164,212
262,036 $
266,282 $
(125,549)
289,761
164,212
20,706 $
19,346 $
19,876
$
$
Dividends received by BankUnited, Inc. from the Bank totaled $85 million, $605 million and $312 million for the years
ended December 31, 2023, 2022 and 2021, respectively.
134
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
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
2023
Second
Quarter
First Quarter
Total
$ 483,205 $ 470,539 $ 463,421 $ 440,416 $ 1,857,581
265,995
217,210
19,253
255,697
214,842
33,049
249,543
213,878
15,517
212,542
227,874
19,788
983,777
873,804
87,607
Net interest income after provision for credit losses
197,957
181,793
198,361
208,086
786,197
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
Net interest income before provision for credit losses
Provision for credit losses
17,092
27,724
25,487
16,535
190,863
147,090
145,218
152,780
24,186
3,374
62,427
15,446
78,630
20,634
71,841
18,959
86,838
635,951
237,084
58,413
20,812 $
46,981 $
57,996 $
52,882 $ 178,671
0.27 $
0.27 $
0.63 $
0.63 $
0.78 $
0.78 $
0.71 $
0.70 $
2.39
2.38
$
$
$
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
26,813
148,479
81,792
23,072
138,105
117,083
13,450
14,301
127,402
126,324
87,468
88,789
77,636
540,310
375,132
17,585
64,207 $
29,233
87,850 $
21,704
65,764 $
90,161
21,639
67,150 $ 284,971
0.83 $
0.82 $
1.13 $
1.12 $
0.82 $
0.82 $
0.79 $
0.79 $
3.55
3.54
$
$
$
Non-interest expense in the fourth quarter of 2023 was negatively impacted by a $35.4 million FDIC special assessment.
135
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, 2023.
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, 2023, 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
During the three months ended December 31, 2023, no director or officer (as defined in Exchange Act Rule 16a-1(f)) of the
Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term
is defined in Item 408 of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
136
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 2024 Annual Meeting of Stockholders
(the "2024 Proxy Statement") is hereby incorporated by reference.
Item 11. Executive Compensation
Information appearing under the captions "Director Compensation" and "Compensation of our Named Executive Officers"
in the 2024 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 2024 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 2024 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 2024 Proxy Statement is hereby incorporated by
reference.
137
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, 2023 and 2022
Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021
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.
138
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
10.3b
BankUnited, Inc. 2014 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
Appendix A to the Proxy Statement on
Schedule 14A of the Company filed April
11, 2014
139
Exhibit
Number
10.3c
Description
Amendment No. 1 to the BankUnited, Inc. 2014 Omnibus
Equity Incentive Plan
10.3d
BankUnited, Inc. 2023 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
Location
Appendix A to the Proxy Statement on
Schedule 14A of the Company filed April
10, 2020
Exhibit 10.1to the Current Report on Form
8-K of the Company filed on May 16, 2023
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
10.11e
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
Fourth Amendment, dated May 2, 2023, to Amended and
Restated Employment Agreement, dated February 2,
2016, as amended on May 6, 2016, January 4, 2017 and
December 19, 2019, 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 10.1 to the Current Report on Form
8-K of the Company filed May 2, 2023
Exhibit 10.3 to the Current Report on Form
8-K of the Company filed January 3, 2017
10.14
10.15
BankUnited, Inc. Policy on Compensation Recovery
BankUnited, Inc. Policy on Insider Trading
Filed herewith
Filed herewith
140
Location
Exhibit
Number
21.1
23.1
31.1
31.2
32.1
32.2
Subsidiaries of BankUnited, Inc.
Description
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
† 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.
141
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 20, 2024
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/ GERMAINE SMITH-BAUGH
Germaine Smith-Baugh
/s/ LYNNE WINES
Lynne Wines
Chairman, President and Chief Executive
Officer (Principal Executive Officer)
February 20, 2024
Chief Financial Officer (Principal Financial
and Accounting Officer)
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
Director
Director
Director
Director
Director
Director
Director
Director
Director
142
BR06652K-0424-10K