BankUnited(US:BKU)2025-08-05 20:33PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents BankUnited, Inc.'s unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and equity, along with detailed notes on accounting policies and financial accounts Consolidated Balance Sheets Total assets increased to $35.46 billion as of June 30, 2025, from $35.24 billion at December 31, 2024, driven by higher cash and cash equivalents and a rise in total deposits to $28.65 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $801,294 | $491,116 | | Loans, net | $23,710,797 | $24,074,827 | | Investment securities | $9,401,071 | $9,130,244 | | Total Assets | $35,459,707 | $35,241,742 | | Liabilities & Equity | | | | Total deposits | $28,645,941 | $27,865,703 | | FHLB advances | $2,255,000 | $2,930,000 | | Total Liabilities | $32,506,690 | $32,427,424 | | Total Stockholders' Equity | $2,953,017 | $2,814,318 | Consolidated Statements of Income Net income for Q2 2025 was $68.8 million, an increase from $53.7 million in Q2 2024, driven by higher net interest income due to a larger decrease in interest expense Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $246,119 | $226,022 | $479,258 | $440,879 | | Provision for Credit Losses | $15,698 | $19,538 | $30,809 | $34,823 | | Net Income | $68,766 | $53,733 | $127,242 | $101,713 | | Diluted EPS | $0.91 | $0.72 | $1.68 | $1.36 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $134.0 million, investing activities provided $85.5 million, and financing activities provided $90.7 million, resulting in a net increase in cash and cash equivalents of $310.2 million Six Months Ended June 30 Cash Flow Summary (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $133,982 | $202,180 | | Net cash provided by investing activities | $85,463 | $261,026 | | Net cash provided by (used in) financing activities | $90,733 | $(618,037) | | Net increase (decrease) in cash | $310,178 | $(154,831) | Notes to Consolidated Financial Statements The notes provide detailed disclosures on the company's accounting policies, investment securities, loan composition, allowance for credit losses, derivatives, and capital structure - The company operates as a single reportable segment, with the CEO acting as the Chief Operating Decision Maker (CODM)31 - The most significant accounting estimate is the Allowance for Credit Losses (ACL)32 - In July 2025, the Board authorized a new share repurchase program of up to $100 million and the redemption of its 4.875% senior notes due November 2025122123 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for Q2 2025, highlighting an 18% sequential increase in net income to $68.8 million, driven by an expanded net interest margin and improved funding profile Quarterly Performance Highlights (Q2 2025) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income (millions) | $68.8 | $58.5 | $53.7 | | Diluted EPS | $0.91 | $0.78 | $0.72 | | Return on Average Equity | 9.4% | 8.2% | 8.0% | | Net Interest Margin (tax-equiv.) | 2.93% | 2.81% | 2.72% | - The company's funding profile improved, with non-interest bearing demand deposits (NIDDA) growing by $1.0 billion in Q2 2025 to represent 32% of total deposits127 - The loan-to-deposit ratio declined to 83.6% at June 30, 2025, from 87.2% at year-end 2024, indicating improved liquidity129 - Tangible book value per common share increased 9% year-over-year to $38.23 at June 30, 2025129 Results of Operations Net interest income on a tax-equivalent basis increased by $12.9 million sequentially to $249.5 million in Q2 2025, driven by higher loan yields and a lower cost of funds - The net interest margin (tax-equivalent) expanded by 12 basis points to 2.93% in Q2 2025 from Q1 2025, benefiting from growth in NIDDA and a decline in the average rate paid on interest-bearing deposits135 - The provision for credit losses of $15.7 million in Q2 2025 was primarily driven by increases in specific reserves142 - Non-interest expense increased YoY, mainly due to higher employee compensation from increased headcount and routine salary increases147 Analysis of Financial Condition The company continued its balance sheet transformation in H1 2025, growing non-interest bearing deposits by $1.5 billion while reducing wholesale funding by $1.8 billion - The investment securities AFS portfolio had a net unrealized loss of $330.0 million at June 30, 2025, an improvement from a $405.6 million loss at year-end 2024, primarily due to changes in interest rates151 Loan Portfolio Composition (June 30, 2025) | Loan Category | Amortized Cost (billions) | Percent of Total | | :--- | :--- | :--- | | Core C&I and CRE | $15.16 | 63.4% | | Residential | $7.30 | 30.5% | | Other Commercial | $1.47 | 6.1% | | Total Loans | $23.93 | 100.0% | - The Commercial Real Estate (CRE) portfolio is concentrated in Office (26%), Warehouse/Industrial (21%), and Retail (20%), with modest exposure compared to peer banks164166 Asset Quality Asset quality showed mixed trends in Q2 2025, with total criticized and classified loans declining but non-accrual loans increasing, primarily from office CRE exposure Non-Performing Assets (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total non-performing loans | $376,341 | $250,707 | | Total non-performing assets | $383,039 | $256,189 | | NPA to Total Assets Ratio | 1.08% | 0.73% | | NPL to Total Loans Ratio | 1.57% | 1.03% | - Total criticized and classified commercial loans declined to $1.23 billion at June 30, 2025, from $1.38 billion at year-end 202470 - Non-performing CRE loans totaled $142 million, of which $124 million was office exposure174 Analysis of the Allowance for Credit Losses The Allowance for Credit Losses (ACL) was $222.7 million, or 0.93% of total loans, at June 30, 2025, driven by an increase in specific reserves ACL as a Percentage of Loans | Portfolio Segment | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Commercial | 1.36% | 1.37% | | Residential and MWL | 0.18% | 0.15% | | Total Loans | 0.93% | 0.92% | | ACL to CRE office loans | 1.92% | 2.30% | - The most significant factor impacting the ACL during Q2 2025 was an increase in specific reserves, net of overall positive risk rating migration232 - The quantitative ACL estimate was based on a weighted combination of economic scenarios, with the baseline forecast including national unemployment peaking at 4.8% and GDP growth troughing at 0.6%227234237 Liquidity and Capital Resources The company maintained a strong liquidity and capital position, with robust same-day available liquidity and all capital ratios exceeding well-capitalized guidelines - Same-day available liquidity totaled $16.4 billion at June 30, 2025254255 Regulatory Capital Ratios (Company) - June 30, 2025 | Ratio | Actual | Required for Well-Capitalized | | :--- | :--- | :--- | | CET1 Risk-Based Capital | 12.22% | 6.50% | | Tier 1 Risk-Based Capital | 12.22% | 8.00% | | Total Risk-Based Capital | 14.31% | 10.00% | | Tier 1 Leverage | 8.75% | N/A | - In July 2025, the Board authorized a new $100 million share repurchase program262 Interest Rate Risk The company manages interest rate risk through its Asset/Liability Committee (ALCO), using simulation models for Net Interest Income (NII) and Economic Value of Equity (EVE) Net Interest Income Sensitivity (Year 1) - June 30, 2025 | Rate Shock | % Change in NII | | :--- | :--- | | +200 bps | +3.4% | | +100 bps | +1.8% | | -100 bps | -2.1% | | -200 bps | -5.3% | Economic Value of Equity (EVE) Sensitivity - June 30, 2025 | Rate Shock | % Change in EVE | | :--- | :--- | | +200 bps | -10.8% | | +100 bps | -5.3% | | -100 bps | +7.9% | | -200 bps | +12.3% | - The company had $3.63 billion in notional value of derivatives designated as cash flow hedges at June 30, 2025, primarily interest rate swaps to manage cash flow variability on borrowings and loans271 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers the reader to the 'Interest Rate Risk' discussion within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, for quantitative and qualitative disclosures about market risk - The company's disclosures about market risk are contained within the MD&A section, specifically under the heading 'Interest Rate Risk'275 Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report275 - No material changes were identified in the company's internal control over financial reporting during the quarter ended June 30, 2025276 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal actions arising from the normal course of business, with management believing the outcome is unlikely to have a material adverse impact on financial condition - Management opines that the likelihood of any material adverse impact from ongoing legal proceedings is remote277 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Form 10-K have occurred278 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities to report for the quarter279 Item 5. Other Information During the second quarter of 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025280 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and XBRL data files