BankUnited, Inc. Reports 2024 Results

BankUnited, Inc. (the "Company") (NYSE:BKU) today announced financial results for the quarter and year ended December 31, 2024.

"We are very excited about the momentum we've generated and the improvement we've seen in the funding base and profitability profile of the Company over the course of 2024," said Rajinder Singh, Chairman, President and Chief Executive Officer.

For the quarter ended December 31, 2024, the Company reported net income of $69.3 million, or $0.91 per diluted share, compared to $61.5 million, or $0.81 per diluted share, for the immediately preceding quarter ended September 30, 2024 and $20.8 million, or $0.27 per diluted share, for the quarter ended December 31, 2023. For the year ended December 31, 2024, the Company reported net income of $232.5 million, or $3.08 per diluted share, compared to $178.7 million, or $2.38 per diluted share, for the year ended December 31, 2023. Results for the quarter and year ended December 31, 2023 were negatively impacted by a $35.4 million FDIC special assessment, pre-tax. This item reduced net income by $26.2 million and EPS by $0.35 for the quarter and year ended December 31, 2023.

Quarterly Highlights

We continue to execute on strategic priorities focused on improving core profitability. EPS, the net interest margin, ROAA and ROAE have improved notably since the fourth quarter of 2023, as well as for the year ended December 31, 2024 compared to the year ended December 31, 2023.

• The net interest margin, calculated on a tax-equivalent basis, expanded by 0.06% to 2.84% for the quarter ended December 31, 2024 from 2.78% for the immediately preceding quarter and by 0.24% from 2.60% for the comparable quarter of the prior year. Average non-interest bearing demand deposits ("NIDDA") for the quarter ended December 31, 2024 exceeded our expectations and we made outstanding progress reducing the cost of interest bearing deposits. For the year ended December 31, 2024, the net interest margin improved to 2.73% from 2.56% for the year ended December 31, 2023.

• The average cost of total deposits declined by 0.34% to 2.72% for the quarter ended December 31, 2024 from 3.06% for the immediately preceding quarter ended September 30, 2024, while the average cost of interest bearing deposits declined by 0.45% to 3.75% from 4.20% for those same comparable periods. The spot APY of total deposits declined to 2.63% at December 31, 2024 from 2.93% at September 30, 2024 while the spot APY of interest bearing deposits declined to 3.58% at December 31, 2024 from 4.01% at September 30, 2024.

• Average NIDDA grew by $173 million for the quarter ended December 31, 2024 compared to the immediately preceding quarter and by $648 million compared to the fourth quarter of 2023. On a point-to-point basis, NIDDA grew by $781 million for the year ended December 31, 2024 and was relatively flat, declining by only $19 million in spite of seasonal headwinds, for the fourth quarter of 2024. At December 31, 2024, NIDDA was 27% of total deposits.

• Wholesale funding, including FHLB advances and brokered deposits, declined by $346 million for the quarter ended December 31, 2024. For the year ended December 31, 2024, wholesale funding declined by $2.3 billion.

• Total deposits was relatively flat quarter over quarter, growing by $9.5 million for the quarter ended December 31, 2024. For the year ended December 31, 2024, total deposits grew by $1.3 billion; non-brokered deposits grew by $1.4 billion.

• Total loans declined by $101 million for the quarter ended December 31, 2024. The core CRE and C&I segments grew by $185 million and mortgage warehouse grew by $14 million. Consistent with our balance sheet strategy, the residential, franchise, equipment and municipal finance portfolios declined by a combined $299 million. For the year ended December 31, 2024, the core CRE and C&I segments grew by $470 million, mortgage warehouse grew by $153 million and the residential, franchise, equipment and municipal finance portfolios declined by a combined $959 million. The pace of C&I growth over the course of 2024 was impacted by an increased level of payoffs and rationalization of non-relationship credits.

• The loan to deposit ratio declined to 87.2% at December 31, 2024, from 87.6% at September 30, 2024 and 92.8% at December 31, 2023.

• Total criticized and classified commercial loans declined by $75.1 million for the quarter ended December 31, 2024, however, non-performing loans increased by $26.2 million, primarily related to one CRE office loan. The NPA ratio was 0.73%, including 0.10% related to the guaranteed portion of non-accrual SBA loans, at December 31, 2024 compared to 0.64%, including 0.10% related to the guaranteed portion of non-accrual SBA loans at September 30, 2024. The net charge-off ratio for the year ended December 31, 2024 was 0.16%.

• The ratio of the ACL to total loans was 0.92% at December 31, 2024; the ratio of the ACL to non-performing loans was 89.01%. The ACL to loans ratio for commercial portfolio sub-segments including C&I, CRE, franchise finance and equipment finance was 1.37% at December 31, 2024 and the ACL to loans ratio for CRE office loans was 2.30%.

• Our commercial real estate exposure totaled 26% of loans and 169% of the Bank's total risk based capital at December 31, 2024. By comparison, based on call report data as of September 30, 2024 (the most recent date available) for banks with between $10 billion and $100 billion in assets, the median level of CRE to total loans was 35% and the median level of CRE to total risk based capital was 222%.

• At December 31, 2024, the weighted average LTV of the CRE portfolio was 55.0%, the weighted average DSCR was 1.76, 54% of the portfolio was collateralized by properties located in Florida and 25% was collateralized by properties located in the New York tri-state area. For the office sub-segment, the weighted average LTV was 65.2%, the weighted average DSCR was 1.57, 57% was collateralized by properties in Florida, substantially all of which was suburban, and 23% was collateralized by properties located in the New York tri-state area.

• Our capital position is robust. At December 31, 2024, CET1 was 12.0% at a consolidated level. Pro-forma CET1, including accumulated other comprehensive income, was 10.9% at December 31, 2024. The ratio of tangible common equity to tangible assets increased to 7.8% at December 31, 2024.

• Book value and tangible book value per common share continued to grow, to $37.65 and $36.61, respectively, at December 31, 2024, compared to $37.56 and $36.52, respectively, at September 30, 2024, and $34.66 and $33.62, respectively at December 31, 2023.

   

Loans

Loan portfolio composition at the dates indicated follows (dollars in thousands):

For the quarter ended December 31, 2024, total loans declined by $101 million. The CRE portfolio grew by $227 million and MWL grew by $14 million while the C&I portfolio declined by $43 million. Consistent with our balance sheet strategy, residential loans declined by $207 million; the franchise, equipment, and municipal finance portfolios declined by an aggregate $93 million.

Asset Quality and the ACL

The following table presents information about the ACL at the dates indicated as well as net charge-off rates for the periods ended December 31, 2024, September 30, 2024 and December 31, 2023 (dollars in thousands):

The decline in the ACL coverage ratios at December 31, 2024 as compared to the prior quarter-end is related to C&I charge-offs during the quarter, the majority of which were previously reserved for.

The ACL at December 31, 2024 represents management's estimate of lifetime expected credit losses given an assessment of historical data, current conditions, and a reasonable and supportable economic forecast as of the balance sheet date. For the quarter ended December 31, 2024, the provision for credit losses, including both funded and unfunded loan commitments, was $11.0 million, compared to $9.2 million for the immediately preceding quarter ended September 30, 2024 and $19.3 million for the quarter ended December 31, 2023. The most significant factor leading to the decrease in ACL for the quarter was net charge offs; this reduction was partially offset by increases in specific reserves, the impact of the economic forecast and an increase in qualitative overlays. Three C&I loans accounted for substantially all of the charge-offs for the quarter.

The following table summarizes the activity in the ACL for the periods indicated (in thousands):

As detailed in the following table, criticized and classified commercial loans declined by $75.1 million for the quarter ended December 31, 2024 (in thousands):

Non-performing loans totaled $250.7 million or 1.03% of total loans at December 31, 2024, compared to $224.5 million or 0.92% of total loans at September 30, 2024. The increase in non-performing loans for the quarter ended December 31, 2024 related primarily to one CRE office loan. Non-performing loans included $34.3 million and $35.1 million of the guaranteed portion of SBA loans on non-accrual status, representing 0.14% of total loans at both December 31, 2024 and September 30, 2024.

Net Interest Income

Net interest income for the quarter ended December 31, 2024 was $239.3 million, compared to $234.1 million for the immediately preceding quarter ended September 30, 2024, and $217.2 million for the quarter ended December 31, 2023. Interest income decreased by $24.4 million for the quarter ended December 31, 2024, compared to the immediately preceding quarter, while interest expense decreased by $29.5 million.

The Company's net interest margin, calculated on a tax-equivalent basis, increased by 0.06% to 2.84% for the quarter ended December 31, 2024, from 2.78% for the immediately preceding quarter ended September 30, 2024. Factors impacting the net interest margin for the quarter ended December 31, 2024 were:

• The average rate paid on interest bearing deposits declined to 3.75% for the quarter ended December 31, 2024, from 4.20% for the quarter ended September 30, 2024. This decline reflected initiatives taken to lower rates paid on deposits in response to declines in the Fed Funds rate and the re-pricing of term deposits.

• The average rate paid on FHLB advances declined to 3.82% for the quarter ended December 31, 2024, from 4.27% for the quarter ended September 30, 2024, reflecting the repayment or repricing of predominantly shorter term high rate advances.

• The tax-equivalent yield on loans declined to 5.60% for the quarter ended December 31, 2024, from 5.87% for the quarter ended September 30, 2024 reflecting the impact of declining market rates on the predominantly floating rate commercial portfolio.

• The tax-equivalent yield on investments declined to 5.31% for the quarter ended December 31, 2024, from 5.62% for the quarter ended September 30, 2024. This decrease resulted primarily from the reset of coupon rates on variable rate securities.

Overall, the reduction in cost of interest bearing liabilities outpaced the decline in the yield on interest earning assets.

Non-interest income and Non-interest expense

Lease financing: Declines in both lease financing income and depreciation of operating lease equipment for the year ended December 31, 2024 compared to the year ended December 31, 2023 corresponded with the reduction in the portfolio of operating lease equipment. Quarterly fluctuations in lease financing income may be caused by variability in residual income.

Other non-interest income: Year-over-year increases in other non-interest income include increases in loan related and syndication fees, commercial card revenue and income related to bank owned life insurance.

Employee compensation and benefits: Year-over-year increases in compensation relate to investments we are making in people to support future growth of the commercial business, regular merit increases, and increased variable compensation cost, related in part to an increase in the Company's stock price.

As discussed above, non-interest expense for the year and three months ended December 31, 2023 included a $35.4 million FDIC special assessment.

Railcar refurbishment costs of approximately $8 million that we had expected to incur in the fourth quarter of 2024 did not materialize, and are expected instead to occur in 2025.

Earnings Conference Call and Presentation

A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, January 22, 2025 with Chairman, President and Chief Executive Officer Rajinder P. Singh, Chief Financial Officer Leslie N. Lunak and Chief Operating Officer Thomas M. Cornish.

The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. Due to recent demand for conference call services, participants are encouraged to listen to the call via a live Internet webcast at https://ir.bankunited.com. To participate by telephone, participants will receive dial-in information and a unique PIN number upon completion of registration at https://register.vevent.com/register/BI3806d72590724f8daf0fcb6899fb73f4. For those unable to join the live event, an archived webcast will be available on the Investor Relations page at https://ir.bankunited.com approximately two hours following the live webcast.

About BankUnited, Inc.

BankUnited, Inc., with total assets of $35.2 billion at December 31, 2024, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida that provides a full range of banking and related services to individual and corporate customers through banking centers located in the state of Florida, 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. BankUnited also offers certain commercial lending and deposit products through national platforms. For additional information, call (877) 779-2265 or visit www.BankUnited.com. BankUnited can be found on Facebook at facebook.com/BankUnited.official, LinkedIn @BankUnited and on X @BankUnited.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "could," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," "forecasts" or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company's current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitation) those relating to the Company's operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside the Company's direct control, such as but not limited to adverse events or conditions impacting the financial services industry. If one or more of these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, the Company's actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are available at the SEC's website (www.sec.gov).

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):

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BankUnited, Inc.

Investor Relations:

Leslie N. Lunak, 786-313-1698