BankUnited(BKU) - 2025 Q2 - Quarterly Results

Financial Performance Overview This section provides an overview of BankUnited's financial results and strategic initiatives for the second quarter of 2025 Q2 2025 Financial Highlights BankUnited reported strong financial results for the second quarter of 2025, with net income of $68.8 million, or $0.91 per diluted share, driven by significant growth in non-interest bearing demand deposits and a 12 basis point expansion in the net interest margin Financial Performance Summary | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $68.8 million | $58.5 million | $53.7 million | | Diluted EPS | $0.91 | $0.78 | $0.72 | Net Interest Margin and Income | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Net Interest Margin (tax-equivalent) | 2.93% | 2.81% | +0.12% | | Net Interest Income | $246.1 million | $233.1 million | +5.6% | - Non-interest bearing demand deposits (NIDDA) grew by $1.0 billion, or 13% quarter-over-quarter, reaching 32% of total deposits[4] - The funding profile improved as the average cost of total deposits decreased by 11 basis points to 2.47% compared to the prior quarter, and wholesale funding declined by $749 million[4] Key Operational and Strategic Developments The company announced a new $100 million share repurchase program, the redemption of senior notes, and expansion of its wholesale banking presence - The Board of Directors authorized a new share repurchase program for up to $100 million of its outstanding common stock[7] - The company authorized the redemption of all outstanding 4.875% senior notes due November 2025[7] - BankUnited launched new wholesale banking offices in Morristown, NJ, and Charlotte, NC to expand its footprint[7] Detailed Financial Analysis This section provides an in-depth analysis of the company's loan portfolio, asset quality, and net interest income performance Loan Portfolio Analysis Total loans experienced a slight decline to $23.9 billion in Q2 2025, with shifts in portfolio composition including growth in Commercial Real Estate and reductions in Commercial and Industrial and residential loans Loan Portfolio Composition | Loan Category | June 30, 2025 ($ thousands) | % of Total | | :--- | :--- | :--- | | Non-owner occupied CRE | $5,829,835 | 24.4% | | Commercial and industrial | $6,743,739 | 28.2% | | Residential | $7,303,997 | 30.5% | | Other | $4,056,456 | 16.9% | | Total Loans | $23,933,527 | 100.0% | - The bank's commercial real estate exposure was 27% of total loans and 185% of total risk-based capital, which is below the peer median of 35% and 217%, respectively[6] CRE Portfolio Metrics | CRE Portfolio Metrics (as of June 30, 2025) | All CRE | Office Sub-segment | | :--- | :--- | :--- | | Weighted Average LTV | 54.2% | 63.3% | | Weighted Average DSCR | 1.76x | 1.52x | Asset Quality and Allowance for Credit Losses (ACL) Asset quality showed a mixed picture with a decline in criticized loans but an increase in non-accrual loans, primarily office-related, while the ACL to total loans ratio remained stable Asset Quality Ratios | Metric | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | :--- | | ACL to Total Loans | 0.93% | 0.92% | 0.92% | | ACL to Non-Performing Loans | 59.18% | 84.58% | 89.01% | | Net Charge-offs to Avg. Loans (annualized) | 0.27% (YTD) | 0.33% | 0.16% (Annual) | - Total criticized and classified commercial loans decreased by $156 million to $1.23 billion in Q2 2025[10] - Non-accrual loans increased by a net $117 million during the quarter, with $86 million of the increase related to office CRE exposure, though 75% of non-accrual loans were current on payments[10] - The provision for credit losses was $15.7 million for Q2 2025, a slight increase from $15.1 million in the prior quarter but down from $19.5 million in Q2 2024[9] Net Interest Income and Margin Net interest income increased by 5.6% sequentially to $246.1 million, driven by a 12 basis point expansion in the tax-equivalent net interest margin to 2.93% - Net interest income grew 5.6% quarter-over-quarter and 8.9% year-over-year[11] - The net interest margin (tax-equivalent) expanded by 0.12% to 2.93% from 2.81% in the prior quarter[12] - Key drivers for margin expansion included: - Growth in average NIDDA by $581 million[15] - Decline in the average rate on interest-bearing deposits to 3.48% from 3.54%[15] - Increase in the tax-equivalent yield on loans to 5.55% from 5.48%[15] Financial Statements and Key Ratios This section presents the consolidated financial statements, key performance ratios, and capital adequacy, along with non-GAAP financial measures Consolidated Financial Statements This section provides a summary of the company's balance sheets and statements of income for the reported periods Consolidated Balance Sheets As of June 30, 2025, total assets stood at $35.5 billion, with total deposits increasing to $28.6 billion, driven by a significant rise in non-interest bearing deposits, and total stockholders' equity growing to $2.95 billion | Balance Sheet Item ($ thousands) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $35,459,707 | $34,831,997 | | Loans, net | $23,710,797 | $23,770,152 | | Total Deposits | $28,645,941 | $28,057,825 | | Non-interest bearing deposits | $9,112,888 | $8,069,275 | | FHLB advances | $2,255,000 | $2,405,000 | | Total Stockholders' Equity | $2,953,017 | $2,897,582 | Consolidated Statements of Income For the three months ended June 30, 2025, the company generated net interest income of $246.1 million and non-interest income of $27.8 million, resulting in a net income of $68.8 million after provisions and expenses | Income Statement Item ($ thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $246,119 | $233,139 | $226,022 | | Provision for Credit Losses | $15,698 | $15,111 | $19,538 | | Total Non-interest Income | $27,810 | $22,270 | $24,185 | | Total Non-interest Expense | $164,327 | $160,226 | $157,706 | | Net Income | $68,766 | $58,476 | $53,733 | Key Performance Ratios and Capital Adequacy Profitability metrics improved in Q2 2025, with strong capital ratios maintained well above regulatory requirements, and tangible book value per share showing significant year-over-year growth Performance Ratios | Performance Ratios | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Return on average assets | 0.78% | 0.68% | 0.61% | | Return on average stockholders' equity | 9.4% | 8.2% | 8.0% | | Loans to deposits | 83.6% | 85.5% | 88.7% | | Tangible book value per common share | $38.23 | $37.48 | $35.07 | Capital Ratios (BankUnited, Inc.) | Capital Ratios (BankUnited, Inc.) | June 30, 2025 | Required to be Well Capitalized | | :--- | :--- | :--- | | CET1 risk based capital | 12.2% | 6.5% | | Total risk-based capital | 14.3% | 10.0% | | Tier 1 leverage | 8.8% | 5.0% | Non-GAAP Financial Measures This section reconciles GAAP book value per common share to the non-GAAP measure of tangible book value per common share by excluding goodwill and other intangible assets Reconciliation of Book Value to Tangible Book Value | Reconciliation ($ thousands, except per share) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total stockholders' equity (GAAP) | $2,953,017 | $2,897,582 | $2,699,348 | | Less: goodwill and other intangible assets | $77,637 | $77,637 | $77,637 | | Tangible stockholders' equity (Non-GAAP) | $2,875,380 | $2,819,945 | $2,621,711 | | Book value per common share (GAAP) | $39.26 | $38.51 | $36.11 | | Tangible book value per common share (Non-GAAP) | $38.23 | $37.48 | $35.07 |