株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
☒
QUARTERLY 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 quarterly period ended September 30, 2024
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 33016
(Address of principal executive offices)   (Zip Code)
 
Registrant’s telephone number, including area code: (305) 569-2000 
Securities registered pursuant to Section 12(b) of the Act:
Class Trading Symbol Name of Exchange on Which Registered
Common Stock, $0.01 Par Value BKU New York Stock Exchange

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  ý  No  o 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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  ý  No  o 
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
☒
 Accelerated filer
 ☐
 Emerging growth company
☐
Non-accelerated filer
☐
 Smaller reporting 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  ☒ 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 
The number of outstanding shares of the registrant common stock, $0.01 par value, as of October 31, 2024 was 74,749,012.









BANKUNITED, INC.
Form 10-Q
For the Quarter Ended September 30, 2024
TABLE OF CONTENTS
    Page
PART I.  
     
ITEM 1.  
 
 
 
 
 
 
     
ITEM 2.
     
ITEM 3.
     
ITEM 4.
     
PART II.  
     
ITEM 1.
     
ITEM 1A.
ITEM 2.
ITEM 5.
     
ITEM 6.
     

i

GLOSSARY OF DEFINED TERMS

The following acronyms and terms may be used throughout this Form 10-Q, including the consolidated financial statements and related notes.
ACL Allowance for credit losses
AFS Available for sale
ALCO
Asset Liability Committee
ALM Asset Liability Management
AOCI Accumulated other comprehensive income
APY Annual Percentage Yield
ARM Adjustable rate mortgage
ASU Accounting Standards Update
BKU BankUnited, Inc.
BOLI Bank Owned Life Insurance
BankUnited BankUnited, National Association
The Bank BankUnited, National Association
Bridge Bridge Funding Group, Inc.
Buyout loans FHA and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA securitizations
CCAR Comprehensive Capital Analysis and Review
CD Certificate of Deposit
CECL Current expected credit losses
CET1 Common Equity Tier 1 capital
C&I Commercial and Industrial loans, including owner-occupied commercial real estate
CLO Collateralized loan obligations
CMBS Commercial mortgage-backed securities
CMOs Collateralized mortgage obligations
CPR
Constant prepayment rate
CRE Commercial real estate loans, including non-owner occupied commercial real estate and construction and land
DSCR Debt Service Coverage Ratio
EVE Economic value of equity
FDIA Federal Deposit Insurance Act
FDIC Federal Deposit Insurance Corporation
FHA Federal Housing Administration
FHLB Federal Home Loan Bank
FICO Fair Isaac Corporation (credit score)
FRB Federal Reserve Bank
GAAP U.S. generally accepted accounting principles
GDP Gross Domestic Product
GNMA Government National Mortgage Association
HTM Held to maturity
ISDA International Swaps and Derivatives Association
LGD Loss Given Default
LIHTC Low Income Housing Tax Credits
LTV Loan-to-value
MBS Mortgage-backed securities
MSA Metropolitan Statistical Area
MWL Mortgage warehouse lending
ii


NIDDA
Non-interest bearing demand deposits
NPA
Non-performing asset
NRSRO Nationally recognized statistical rating organization
OREO Other real estate owned
PCD Purchased credit-deteriorated
PD Probability of default
Pinnacle Pinnacle Public Finance, Inc.
REIT Real Estate Investment Trust
RPA
Risk Participation Agreement
SBA U.S. Small Business Administration
SEC Securities and Exchange Commission
SOFR Secured Overnight Financing Rate
Tri-State New York, New Jersey and Connecticut
UPB Unpaid principal balance
VA loan Loan guaranteed by the U.S. Department of Veterans Affairs

iii


PART I
Item 1.  Financial Statements and Supplementary Data

BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except share and per share data)
September 30,
2024		 December 31,
2023
ASSETS    
Cash and due from banks:    
Non-interest bearing $ 14,746  $ 14,945 
Interest bearing 875,122  573,338 
Cash and cash equivalents 889,868  588,283 
Investment securities (including securities reported at fair value of $9,109,860 and $8,867,354)
 9,119,860  8,877,354 
Non-marketable equity securities 237,172  310,084 
Loans 24,398,703  24,633,684 
Allowance for credit losses (228,249) (202,689)
Loans, net 24,170,454  24,430,995 
Bank owned life insurance 306,313  318,459 
Operating lease equipment, net 241,625  371,909 
Goodwill 77,637  77,637 
Other assets 741,816  786,886 
Total assets $ 35,784,745  $ 35,761,607 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Liabilities:    
Demand deposits:    
Non-interest bearing $ 7,635,427  $ 6,835,236 
Interest bearing 5,171,865  3,403,539 
Savings and money market 10,324,697  11,135,708 
Time 4,724,236  5,163,995 
Total deposits 27,856,225  26,538,478 
FHLB advances 3,580,000  5,115,000 
Notes and other borrowings 708,694  708,973 
Other liabilities 832,022  821,235 
Total liabilities 32,976,941  33,183,686 
Commitments and contingencies
Stockholders' equity:    
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 74,749,012 and 74,372,505 shares issued and outstanding
 747  744 
Paid-in capital 296,107  283,642 
Retained earnings 2,749,314  2,650,956 
Accumulated other comprehensive loss (238,364) (357,421)
Total stockholders' equity 2,807,804  2,577,921 
Total liabilities and stockholders' equity $ 35,784,745  $ 35,761,607 
 
1
The accompanying notes are an integral part of these consolidated financial statements




BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
  Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
Interest income:    
Loans $ 355,220  $ 337,014  $ 1,053,081  $ 971,962 
Investment securities 127,907  122,857  375,794  362,219 
Other 9,229  10,668  28,253  40,195 
Total interest income 492,356  470,539  1,457,128  1,374,376 
Interest expense:
Deposits 208,630  176,974  626,719  467,472 
Borrowings 49,598  78,723  155,402  250,310 
Total interest expense 258,228  255,697  782,121  717,782 
Net interest income before provision for credit losses 234,128  214,842  675,007  656,594 
Provision for credit losses
9,248  33,049  44,071  68,354 
Net interest income after provision for credit losses 224,880  181,793  630,936  588,240 
Non-interest income:
Deposit service charges and fees 5,016  5,189  15,238  15,705 
Gain (loss) on investment securities, net
 127  887  1,323  (10,669)
Lease financing 6,368  16,531  23,448  42,159 
Other non-interest income 11,377  5,117  33,941  22,551 
Total non-interest income 22,888  27,724  73,950  69,746 
Non-interest expense:
Employee compensation and benefits 81,781  68,825  233,289  207,290 
Occupancy and equipment 12,242  10,890  33,784  32,735 
Deposit insurance expense 7,421  7,790  29,481  23,294 
Professional fees 4,953  2,696  11,960  9,132 
Technology 21,094  19,193  61,976  61,356 
Depreciation of operating lease equipment
 4,666  11,217  21,775  33,970 
Other non-interest expense 32,425  26,479  89,263  77,311 
Total non-interest expense 164,582  147,090  481,528  445,088 
Income before income taxes
 83,186  62,427  223,358  212,898 
Provision for income taxes 21,734  15,446  60,193  55,039 
Net income
 $ 61,452  $ 46,981  $ 163,165  $ 157,859 
Earnings per common share, basic $ 0.82  $ 0.63  $ 2.19  $ 2.12 
Earnings per common share, diluted $ 0.81  $ 0.63  $ 2.17  $ 2.11 
2
The accompanying notes are an integral part of these consolidated financial statements




BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED
(In thousands)
Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
Net income
 $ 61,452  $ 46,981  $ 163,165  $ 157,859 
Other comprehensive income (loss), net of tax:
  
Unrealized gains (losses) on investment securities available for sale:  
Net unrealized holding gains (losses) arising during the period
 92,165  (32,854) 145,881  23,717 
Reclassification adjustment for net securities gains realized in income
 (7) (159) (245) (1,342)
Net change in unrealized gains (losses) on securities available for sale
 92,158  (33,013) 145,636  22,375 
Unrealized gains (losses) on derivative instruments:
Net unrealized holding gains (losses) arising during the period
 (17,398) 12,410  11,351  42,598 
Reclassification adjustment for net gains realized in income
 (11,502) (14,031) (37,930) (34,264)
Net change in unrealized gains (losses) on derivative instruments (28,900) (1,621) (26,579) 8,334 
Other comprehensive income (loss)
 63,258  (34,634) 119,057  30,709 
Comprehensive income
 $ 124,710  $ 12,347  $ 282,222  $ 188,568 

3
The accompanying notes are an integral part of these consolidated financial statements


BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)

  Nine Months Ended September 30,
  2024 2023
Cash flows from operating activities:    
Net income
 $ 163,165  $ 157,859 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion, net (12,001) (8,002)
Provision for credit losses
44,071  68,354 
(Gain) loss on investment securities, net
 (1,323) 10,669 
Share based compensation
 15,993  15,647 
Depreciation and amortization 46,320  57,040 
Deferred income taxes (37,171) (18,098)
Proceeds from sale of loans held for sale, net 100,338  254,642 
Other:
Increase in other assets
 (42,983) (17,351)
(Decrease) increase in other liabilities
 (28,164) 72,956 
Net cash provided by operating activities
248,245  593,716 
Cash flows from investing activities:    
Purchases of investment securities (1,594,168) (247,620)
Proceeds from repayments and calls of investment securities 1,350,161  790,032 
Proceeds from sale of investment securities 198,197  341,990 
Purchases of non-marketable equity securities (306,850) (400,900)
Proceeds from redemption of non-marketable equity securities 379,762  382,913 
Purchases of loans (290,242) (418,244)
Loan originations and repayments, net 346,473  635,953 
Proceeds from sale of loans
 70,597  38,765 
Proceeds from surrender of BOLI
 32,144  — 
Disposition of operating lease equipment
 132,409  49,837 
Other investing activities (38,115) (23,539)
Net cash provided by investing activities
280,368  1,149,187 
4
The accompanying notes are an integral part of these consolidated financial statements


BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Continued)
(In thousands)



  Nine Months Ended September 30,
  2024 2023
Cash flows from financing activities:    
Net increase (decrease) in deposits
1,317,747  (1,396,668)
Net decrease in federal funds purchased
 —  (190,000)
Additions to FHLB borrowings 590,000  2,380,000 
Repayments of FHLB borrowings (2,125,000) (2,635,000)
Dividends paid (63,872) (59,034)
Repurchase of common stock —  (55,154)
Other financing activities 54,097  32,191 
Net cash used in financing activities
(227,028) (1,923,665)
Net increase (decrease) in cash and cash equivalents
301,585  (180,762)
Cash and cash equivalents, beginning of period 588,283  572,647 
Cash and cash equivalents, end of period $ 889,868  $ 391,885 
Supplemental disclosure of cash flow information:
Interest paid $ 794,043  $ 676,388 
Income taxes paid
 $ 71,979  $ 22,127 
Supplemental schedule of non-cash investing and financing activities:
Transfers from loans to loans held for sale $ 171,292  $ 308,854 
Dividends declared, not paid $ 21,641  $ 20,057 




5
The accompanying notes are an integral part of these consolidated financial statements




BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED
(In thousands, except share data)

  Common
Shares
Outstanding		 Common
Stock		 Paid-in
Capital		 Retained
Earnings		 Accumulated
Other
Comprehensive
Loss		 Total
Stockholders’
Equity
Balance at June 30, 2024
 74,758,609  $ 748  $ 290,719  $ 2,709,503  $ (301,622) $ 2,699,348 
Comprehensive income —  —  —  61,452  63,258  124,710 
Dividends ($0.29 per common share)
 —  —  —  (21,641) —  (21,641)
Equity based compensation, net of shares forfeited and surrendered
 (9,597) (1) 5,388  —  —  5,387 
Balance at September 30, 2024 74,749,012  $ 747  $ 296,107  $ 2,749,314  $ (238,364) $ 2,807,804 
Balance at June 30, 2023
 74,429,948  $ 744  $ 274,202  $ 2,623,926  $ (372,562) $ 2,526,310 
Comprehensive income —  —  —  46,981  (34,634) 12,347 
Dividends ($0.27 per common share)
 —  —  —  (20,057) —  (20,057)
Equity based compensation, net of shares forfeited and surrendered
(16,889) —  5,470  —  —  5,470 
Balance at September 30, 2023 74,413,059  $ 744  $ 279,672  $ 2,650,850  $ (407,196) $ 2,524,070 
  Common
Shares
Outstanding		 Common
Stock		 Paid-in
Capital		 Retained
Earnings		 Accumulated
Other
Comprehensive
Loss		 Total
Stockholders’
Equity
Balance at December 31, 2023 74,372,505  $ 744  $ 283,642  $ 2,650,956  $ (357,421) $ 2,577,921 
Comprehensive income —  —  —  163,165  119,057  282,222 
Dividends ($0.87 per common share)
 —  —  —  (64,807) —  (64,807)
Equity based compensation, net of shares forfeited and surrendered
 376,507  3  12,465  —  —  12,468 
Balance at September 30, 2024 74,749,012  $ 747  $ 296,107  $ 2,749,314  $ (238,364) $ 2,807,804 
Balance at December 31, 2022 75,674,587  $ 757  $ 321,729  $ 2,551,400  $ (437,905) $ 2,435,981 
Impact of adoption of ASU 2022-02 —  —  —  1,336  —  1,336 
Balance at January 1, 2023
 75,674,587  757  321,729  2,552,736  (437,905) 2,437,317 
Comprehensive income —  —  —  157,859  30,709  188,568 
Dividends ($0.81 per common share)
 —  —  —  (59,745) —  (59,745)
Equity based compensation, net of shares forfeited and surrendered
 372,717  3  13,081  —  —  13,084 
Repurchase of common stock (1,634,245) (16) (55,138) —  —  (55,154)
Balance at September 30, 2023 74,413,059  $ 744  $ 279,672  $ 2,650,850  $ (407,196) $ 2,524,070 

6
The accompanying notes are an integral part of these consolidated financial statements
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024



Note 1    Basis of Presentation and Summary of Significant Accounting Policies
BankUnited, Inc. is a national 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 banking services to individual and corporate customers through banking centers in Florida, the New York metropolitan area and Dallas, Texas. The Bank also offers certain commercial lending and deposit products through national platforms and regional wholesale banking offices.
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, these financial statements do not include all of the information and footnotes required for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP and should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing in BKU’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected in future periods.
The Company has a single operating segment and thus a single reportable segment. While management monitors the revenue streams of its various business units, the business units serve a similar base of primarily commercial clients, providing a similar range of products and services, managed through similar processes and platforms. The Company’s chief operating decision maker makes company-wide resource allocation decisions and assessments of performance based on a collective assessment of the Company’s operations.
Accounting Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and disclosures of contingent assets and liabilities. Actual results could differ significantly from these estimates.
The most significant estimate impacting the Company's consolidated financial statements is the ACL.
New Accounting Pronouncements Adopted During the Nine Months Ended September 30, 2024
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 the use of the proportional amortization method of accounting for 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. The Company adopted this ASU in the first quarter of 2024. There was no impact upon adoption. Currently, all of the Company's equity investments in tax credit programs are in LIHTC programs already accounted for using the proportional amortization method.
Accounting Pronouncements Not Yet Adopted
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 contain 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 is not expected to have an impact on the Company's consolidated financial position, results of operations and cash flows. Adoption will result in additional disclosures beginning with the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
7
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


ASU No. 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires entities to provide additional 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 among others. This ASU is effective for the Company for fiscal years beginning after December 15, 2024. The adoption of this ASU is not expected to have an impact on the Company's consolidated financial position, results of operations and cash flows. Adoption will lead to revised disclosures about income taxes in the Company's financial statements.
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):
Three Months Ended September 30, Nine Months Ended September 30,
c 2024 2023 2024 2023
Basic earnings per common share:  
Numerator:  
Net income
 $ 61,452  $ 46,981  $ 163,165  $ 157,859 
Distributed and undistributed earnings allocated to participating securities
 (850) (700) (2,282) (2,378)
Income allocated to common stockholders for basic earnings per common share $ 60,602  $ 46,281  $ 160,883  $ 155,481 
Denominator:
Weighted average common shares outstanding 74,753,372  74,416,698  74,675,279  74,530,871 
Less average unvested stock awards (1,079,182) (1,165,105) (1,105,654) (1,180,570)
Weighted average shares for basic earnings per common share 73,674,190  73,251,593  73,569,625  73,350,301 
Basic earnings per common share $ 0.82  $ 0.63  $ 2.19  $ 2.12 
Diluted earnings per common share:
Numerator:
Income allocated to common stockholders for basic earnings per common share $ 60,602  $ 46,281  $ 160,883  $ 155,481 
Adjustment for earnings reallocated from participating securities
 6  3  9  8 
Income used in calculating diluted earnings per common share $ 60,608  $ 46,284  $ 160,892  $ 155,489 
Denominator:
Weighted average shares for basic earnings per common share 73,674,190  73,251,593  73,569,625  73,350,301 
Dilutive effect of certain share-based awards 817,866  537,230  481,126  388,372 
Weighted average shares for diluted earnings per common share
 74,492,056  73,788,823  74,050,751  73,738,673 
Diluted earnings per common share $ 0.81  $ 0.63  $ 2.17  $ 2.11 
Potentially dilutive unvested shares totaling 1,074,053 and 1,160,047 were outstanding at September 30, 2024 and 2023, respectively, but excluded from the calculation of diluted earnings per common share because their inclusion would have been anti-dilutive.
8
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


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):
September 30, 2024
  Amortized Cost Gross Unrealized
Carrying Value (1)
  Gains Losses
Investment securities available for sale:
U.S. Treasury securities $ 194,852  $ 2,298  $ (7,315) $ 189,835 
U.S. Government agency and sponsored enterprise residential MBS
 2,401,069  10,472  (20,514) 2,391,027 
U.S. Government agency and sponsored enterprise commercial MBS
 550,738  795  (51,219) 500,314 
Private label residential MBS and CMOs
 2,512,471  1,446  (217,672) 2,296,245 
Private label commercial MBS
 2,045,819  1,294  (43,443) 2,003,670 
Single family real estate-backed securities 352,086  —  (6,300) 345,786 
Collateralized loan obligations 1,068,109  2,353  (140) 1,070,322 
Non-mortgage asset-backed securities 98,982  167  (2,636) 96,513 
State and municipal obligations 111,181  362  (5,459) 106,084 
SBA securities 83,775  37  (2,516) 81,296 
9,419,082  $ 19,224  $ (357,214) 9,081,092 
Investment securities held to maturity 10,000  10,000 
$ 9,429,082  9,091,092 
Marketable equity securities 28,768 
$ 9,119,860 
9
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024



December 31, 2023
  Amortized Cost Gross Unrealized
Carrying Value (1)
  Gains Losses
Investment securities available for sale:
U.S. Treasury securities $ 139,858  $ 532  $ (9,798) $ 130,592 
U.S. Government agency and sponsored enterprise residential MBS
 1,962,658  1,810  (40,261) 1,924,207 
U.S. Government agency and sponsored enterprise commercial MBS
 561,557  107  (63,805) 497,859 
Private label residential MBS and CMOs
 2,596,231  268  (300,769) 2,295,730 
Private label commercial MBS
 2,282,833  678  (84,768) 2,198,743 
Single family real estate-backed securities 383,984  —  (17,729) 366,255 
Collateralized loan obligations 1,122,799  735  (10,710) 1,112,824 
Non-mortgage asset-backed securities 106,095  156  (3,471) 102,780 
State and municipal obligations 107,176  715  (5,273) 102,618 
SBA securities 106,237  41  (3,254) 103,024 
9,369,428  $ 5,042  $ (539,838) 8,834,632 
Investment securities held to maturity 10,000  10,000 
$ 9,379,428  8,844,632 
Marketable equity securities 32,722 
$ 8,877,354 
(1)At fair value except for securities held to maturity.
Investment securities held to maturity at September 30, 2024 and December 31, 2023, consisted of one State of Israel bond, which matured in October 2024. Accrued interest receivable on investments totaled $33 million and $37 million at September 30, 2024 and December 31, 2023, respectively, and is included in other assets in the accompanying consolidated balance sheets.
At September 30, 2024, contractual maturities of investment securities available for sale, adjusted for anticipated prepayments when applicable, were as follows (in thousands):
Amortized Cost Fair Value
Due in one year or less $ 1,133,013  $ 1,111,336 
Due after one year through five years 4,772,683  4,689,303 
Due after five years through ten years 2,343,958  2,211,818 
Due after ten years 1,169,428  1,068,635 
  $ 9,419,082  $ 9,081,092 
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 $7.8 billion and $7.7 billion at September 30, 2024 and December 31, 2023, respectively.
10
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


The following table provides information about gains (losses) on investment securities for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
Gross realized gains on investment securities AFS $ 76  $ 242  $ 501  $ 1,861 
Gross realized losses on investment securities AFS (67) (27) (170) (47)
Net realized gain
 9  215  331  1,814 
Net gain (loss) on marketable equity securities recognized in earnings
 118  672  992  (12,483)
Gain (loss) on investment securities, net $ 127  $ 887  $ 1,323  $ (10,669)
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):
  September 30, 2024
  Less than 12 Months 12 Months or Greater Total
  Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. Treasury securities
 $ 25,182  $ (78) $ 52,341  $ (7,237) $ 77,523  $ (7,315)
U.S. Government agency and sponsored enterprise residential MBS
 6,972  (5) 1,000,170  (20,509) 1,007,142  (20,514)
U.S. Government agency and sponsored enterprise commercial MBS
 —  —  422,627  (51,219) 422,627  (51,219)
Private label residential MBS and CMOs
 33,769  (227) 2,126,772  (217,445) 2,160,541  (217,672)
Private label commercial MBS
 21,250  (178) 1,643,558  (43,265) 1,664,808  (43,443)
Single family real estate-backed securities —  —  320,786  (6,300) 320,786  (6,300)
Collateralized loan obligations 233,704  (135) 11,957  (5) 245,661  (140)
Non-mortgage asset-backed securities
 —  —  73,825  (2,636) 73,825  (2,636)
State and municipal obligations 4,102  (26) 52,165  (5,433) 56,267  (5,459)
SBA securities 3,322  (29) 73,094  (2,487) 76,416  (2,516)
  $ 328,301  $ (678) $ 5,777,295  $ (356,536) $ 6,105,596  $ (357,214)
11
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


  December 31, 2023
  Less than 12 Months 12 Months or Greater Total
  Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. Treasury securities
 $ 9,941  $ (27) $ 99,769  $ (9,771) $ 109,710  $ (9,798)
U.S. Government agency and sponsored enterprise residential MBS
 82,382  (430) 1,646,081  (39,831) 1,728,463  (40,261)
U.S. Government agency and sponsored enterprise commercial MBS
 3,332  (6) 481,651  (63,799) 484,983  (63,805)
Private label residential MBS and CMOs
 —  —  2,255,461  (300,769) 2,255,461  (300,769)
Private label commercial MBS
 51,434  (323) 2,054,378  (84,445) 2,105,812  (84,768)
Single family real estate-backed securities —  —  366,255  (17,729) 366,255  (17,729)
Collateralized loan obligations 184,652  (348) 880,609  (10,362) 1,065,261  (10,710)
Non-mortgage asset-backed securities
 —  —  79,697  (3,471) 79,697  (3,471)
State and municipal obligations 24,765  (1,049) 32,380  (4,224) 57,145  (5,273)
SBA securities 8,194  (46) 89,763  (3,208) 97,957  (3,254)
  $ 364,700  $ (2,229) $ 7,986,044  $ (537,609) $ 8,350,744  $ (539,838)
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 three and nine months ended September 30, 2024 and 2023. At September 30, 2024, the Company did not have an intent to sell securities that were in significant 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. We have not sold, and do not anticipate the need to sell, securities in unrealized loss positions to generate liquidity.
At September 30, 2024, 421 securities available for sale were in unrealized loss positions. The amount of impairment related to 109 of these securities was considered insignificant both individually and in the aggregate, totaling approximately $0.9 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 September 30, 2024, is further discussed below.
Unrealized losses were primarily attributable to a sustained higher interest rate environment and in some cases, wider spreads compared to levels at which securities were purchased. The investment securities AFS portfolio was in a net unrealized loss position of $338.0 million at September 30, 2024, compared to $534.8 million at December 31, 2023, improving by $196.8 million during the nine months ended September 30, 2024. While the majority of securities in the portfolio were floating rate at September 30, 2024, fixed rate securities accounted for the majority of unrealized losses.
U.S. Government, U.S. Government Agency and Government Sponsored Enterprise Securities
At September 30, 2024, four U.S. treasury, 58 U.S. Government agency and sponsored enterprise residential MBS, 22 U.S. Government agency and sponsored enterprise commercial MBS, and 20 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.
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September 30, 2024


Private Label Securities:
None of the impaired private label securities had missed principal or interest payments or had been downgraded by a NRSRO at September 30, 2024. 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 September 30, 2024, 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 September 30, 2024, 112 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 September 30, 2024 analysis projected weighted average collateral losses for impaired securities in this category of 2% compared to weighted average credit support of 18%. As of September 30, 2024, 96% of impaired securities in this category, based on carrying value, were externally rated AAA and 4% were rated AA.
Private label commercial MBS
At September 30, 2024, 75 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 sector, 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 September 30, 2024 analysis projected weighted average collateral losses for impaired securities in this category of 7% compared to weighted average credit support of 46%. As of September 30, 2024, 82% of impaired securities in this category, based on carrying value, were externally rated AAA, 14% were rated AA and 4% were rated A. There is no single-asset, single-borrower exposure.
Single family real estate-backed securities
At September 30, 2024, nine 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 September 30, 2024 analysis projected weighted average collateral losses for this category of 7% compared to weighted average credit support of 53%. As of September 30, 2024, 53% of impaired securities in this category, based on carrying value, were externally rated AAA, 20% were rated AA and one security was not externally rated.
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Collateralized loan obligations
At September 30, 2024, two collateralized loan obligations were in unrealized loss positions. Unrealized losses totaled less than 1% of total amortized cost of this segment at September 30, 2024. Our analysis of cash flows expected to be collected on these securities incorporated assumptions about collateral default rates, loss severity, and delinquencies, calibrated to take into account idiosyncratic risks associated with the underlying collateral. In developing those assumptions, we took into account each sector’s performance pre-, during and post the 2008 financial crisis. We regularly engage with bond managers to monitor trends in underlying collateral including potential downgrades and subsequent cash flow diversions, liquidity, ratings migration, and any other relevant developments. 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 September 30, 2024 analysis projected weighted average collateral losses for impaired securities in this category of 22% compared to weighted average credit support of 42%. As of September 30, 2024, 100% of the impaired securities in this category, based on carrying value, were externally rated AAA.
Non-mortgage asset-backed securities
At September 30, 2024, five 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 September 30, 2024 analysis projected weighted average collateral losses for impaired securities in this category of 4% compared to weighted average credit support of 26%. As of September 30, 2024, 30% of the impaired securities in this category, based on carrying value, were externally rated AAA, and 70% were rated AA.
State and Municipal Obligations
At September 30, 2024, five 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 September 30, 2024, 93% of the impaired securities in this category, based on carrying value, were externally rated AAA and 7% were rated AA.
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Note 4    Loans and Allowance for Credit Losses
Loans consisted of the following at the dates indicated (dollars in thousands):
  September 30, 2024 December 31, 2023
  Total Percent of Total Total Percent of Total
Commercial:
Non-owner occupied commercial real estate $ 5,488,884  22.5  % $ 5,323,241  21.6  %
Construction and land 497,928  2.0  % 495,992  2.0  %
Owner occupied commercial real estate 1,999,515  8.2  % 1,935,743  7.9  %
Commercial and industrial 7,026,412  28.9  % 6,971,981  28.3  %
Pinnacle - municipal finance 749,035  3.1  % 884,690  3.6  %
Franchise and equipment finance
 277,704  1.1  % 380,347  1.5  %
Mortgage warehouse lending 571,783  2.3  % 432,663  1.8  %
  16,611,261  68.1  % 16,424,657  66.7  %
Residential:
1-4 single family residential 6,663,300  27.3  % 6,903,013  28.0  %
Government insured residential 1,124,142  4.6  % 1,306,014  5.3  %
7,787,442  31.9  % 8,209,027  33.3  %
Total loans 24,398,703  100.0  % 24,633,684  100.0  %
Allowance for credit losses (228,249) (202,689)
Loans, net $ 24,170,454  $ 24,430,995 
Premiums, discounts and deferred fees and costs, excluding the non-credit related discount on PCD loans, totaled $36 million and $45 million at September 30, 2024 and December 31, 2023, respectively.
The following table presents the amortized cost basis of residential PCD loans and the related amount of non-credit discount, net of the related ACL, at the dates indicated (in thousands):
September 30, 2024 December 31, 2023
UPB $ 68,154  $ 80,123 
Non-credit discount (28,853) (35,249)
Total amortized cost of PCD loans 39,301  44,874 
ACL related to PCD loans (202) (161)
PCD loans, net $ 39,099  $ 44,713 
Included in loans, net are direct or sales type finance leases totaling $501 million and $602 million at September 30, 2024 and December 31, 2023, respectively. The amount of income recognized from direct or sales type finance leases for the three and nine months ended September 30, 2024 and 2023, totaled $3.5 million, $11.4 million, $4.3 million and $13.0 million, respectively, and is included in interest income on loans in the consolidated statements of income.
During the three and nine months ended September 30, 2024 and 2023, the Company purchased residential loans totaling $163 million, $290 million, $78 million, and $418 million, respectively.
At September 30, 2024 and December 31, 2023, the Company had pledged loans with a carrying value of approximately $15.9 billion and $16.5 billion, respectively, as security for FHLB advances and Federal Reserve discount window capacity.
Accrued interest receivable on loans totaled $128 million and $138 million at September 30, 2024 and December 31, 2023, 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 three and nine months ended September 30, 2024 and 2023.
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Allowance for credit losses
Activity in the ACL is summarized below for the periods indicated (in thousands):
Three Months Ended September 30,
  2024 2023
  Commercial Residential Total Commercial Residential Total
Beginning balance $ 219,472  $ 6,226  $ 225,698  $ 157,946  $ 8,887  $ 166,833 
Provision (recovery) 3,495  5,596  9,091  31,737  (860) 30,877 
Charge-offs (9,679) (92) (9,771) (5,155) —  (5,155)
Recoveries 3,231  —  3,231  3,504  4  3,508 
Ending balance $ 216,519  $ 11,730  $ 228,249  $ 188,032  $ 8,031  $ 196,063 
Nine Months Ended September 30,
  2024 2023
  Commercial Residential Total Commercial Residential Total
Beginning balance $ 195,058  $ 7,631  $ 202,689  $ 136,205  $ 11,741  $ 147,946 
Impact of adoption of ASU 2022-02
 N/A N/A N/A (1,677) (117) (1,794)
Balance after adoption of ASU 2022-02
 195,058  7,631  202,689  134,528  11,624  146,152 
Provision (recovery) 42,498  4,221  46,719  66,269  (3,602) 62,667 
Charge-offs (31,131) (126) (31,257) (22,190) —  (22,190)
Recoveries 10,094  4  10,098  9,425  9  9,434 
Ending balance $ 216,519  $ 11,730  $ 228,249  $ 188,032  $ 8,031  $ 196,063 
The ACL was determined utilizing a 2-year reasonable and supportable forecast period. The quantitative portion of the ACL was determined using three weighted third-party provided economic scenarios.
The ACL increased by $25.6 million, to 0.94% of total loans at September 30, 2024 from 0.82% of total loans at December 31, 2023. The more significant factors increasing the ACL for the nine months ended September 30, 2024 were an increase in specific reserves and risk rating migration, an increase in qualitative reserves, and changes in portfolio composition and characteristics. These factors increasing the ACL were partially offset by an improved economic forecast and net charge-offs.
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The following table presents the components of the provision for credit losses for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Amount related to funded portion of loans $ 9,091  $ 30,877  $ 46,719  $ 62,667 
Amount related to off-balance sheet credit exposures 157  2,172  (2,648) 5,687 
Total provision for credit losses $ 9,248  $ 33,049  $ 44,071  $ 68,354 
The following table presents gross charge-offs during the nine months ended September 30, 2024 by year of origination (in thousands):
  2024
2023
 2022 2021 2020
Prior to 2020
 Revolving Loans Total
CRE $ —  $ —  $ 4,369  $ —  $ —  $ 1,833  $ —  $ 6,202 
C&I —  239  17,226  34  52  1,260  409  19,220 
Franchise and equipment finance
 —  —  —  765  —  4,944  —  5,709 
Residential
 —  —  —  —  —  126  —  126 
$ —  $ 239  $ 21,595  $ 799  $ 52  $ 8,163  $ 409  $ 31,257 
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 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 one indicator 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 $2 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. 
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Commercial credit exposure based on internal risk rating (in thousands):
September 30, 2024
Amortized Cost By Origination Year Revolving Loans
2024 2023 2022 2021 2020 Prior Total
CRE
Pass $ 574,481  $ 727,258  $ 1,123,747  $ 643,131  $ 418,964  $ 1,578,060  $ 117,876  $ 5,183,517 
Special mention —  —  —  28,431  32,653  84,254  —  145,338 
Substandard 24,588  49,260  129,941  91,592  68,682  293,894  —  657,957 
Total CRE $ 599,069  $ 776,518  $ 1,253,688  $ 763,154  $ 520,299  $ 1,956,208  $ 117,876  $ 5,986,812 
C&I
Pass $ 1,254,524  $ 1,257,646  $ 1,144,623  $ 512,700  $ 329,102  $ 1,169,477  $ 2,745,894  $ 8,413,966 
Special mention 45,767  10,378  46,341  36,335  —  1,268  37,899  177,988 
Substandard 291  47,449  115,647  45,206  9,925  105,822  93,848  418,188 
Doubtful —  —  —  —  —  15,785  —  15,785 
Total C&I $ 1,300,582  $ 1,315,473  $ 1,306,611  $ 594,241  $ 339,027  $ 1,292,352  $ 2,877,641  $ 9,025,927 
Pinnacle - municipal finance
Pass $ 59,925  $ 113,010  $ 96,140  $ 56,000  $ 25,474  $ 398,486  $ —  $ 749,035 
Total Pinnacle - municipal finance $ 59,925  $ 113,010  $ 96,140  $ 56,000  $ 25,474  $ 398,486  $ —  $ 749,035 
Franchise and equipment finance
Pass $ —  $ 2,071  $ 42,534  $ 61,630  $ 28,804  $ 98,944  $ 75  $ 234,058 
Substandard —  —  —  1,728  2,796  38,642  —  43,166 
Doubtful —  —  —  —  —  480  —  480 
Total Franchise and equipment finance
 $ —  $ 2,071  $ 42,534  $ 63,358  $ 31,600  $ 138,066  $ 75  $ 277,704 
Mortgage warehouse lending
Pass $ —  $ —  $ —  $ —  $ —  $ —  $ 571,783  $ 571,783 
Total Mortgage warehouse lending $ —  $ —  $ —  $ —  $ —  $ —  $ 571,783  $ 571,783 
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December 31, 2023
Amortized Cost By Origination Year Revolving Loans
2023 2022 2021 2020 2019 Prior Total
CRE
Pass $ 668,669  $ 1,268,313  $ 662,340  $ 493,675  $ 878,048  $ 1,064,601  $ 281,584  $ 5,317,230 
Special mention 19,127  13,377  —  —  57,984  4,912  2,152  97,552 
Substandard —  42,997  2,103  29,180  186,368  142,049  1,754  404,451 
Total CRE $ 687,796  $ 1,324,687  $ 664,443  $ 522,855  $ 1,122,400  $ 1,211,562  $ 285,490  $ 5,819,233 
C&I
Pass $ 1,382,939  $ 1,423,581  $ 653,730  $ 337,322  $ 431,257  $ 1,040,101  $ 3,069,295  $ 8,338,225 
Special mention —  85,306  1,215  13,949  49,526  22,398  47,680  220,074 
Substandard 3,841  70,731  86,747  16,063  20,757  91,844  44,633  334,616 
Doubtful —  10,580  —  —  4,229  —  —  14,809 
Total C&I $ 1,386,780  $ 1,590,198  $ 741,692  $ 367,334  $ 505,769  $ 1,154,343  $ 3,161,608  $ 8,907,724 
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 and equipment finance
Pass $ 6,569  $ 32,656  $ 74,170  $ 44,698  $ 76,144  $ 80,302  $ 201  $ 314,740 
Special mention —  —  —  2,279  —  —  —  2,279 
Substandard —  14,959  3,019  1,003  23,574  16,547  —  59,102 
Doubtful —  —  —  —  4,226  —  —  4,226 
Total franchise finance $ 6,569  $ 47,615  $ 77,189  $ 47,980  $ 103,944  $ 96,849  $ 201  $ 380,347 
Mortgage warehouse lending
Pass $ —  $ —  $ —  $ —  $ —  $ —  $ 432,663  $ 432,663 
Total Mortgage warehouse lending $ —  $ —  $ —  $ —  $ —  $ —  $ 432,663  $ 432,663 
At September 30, 2024 and December 31, 2023, 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):
September 30, 2024 December 31, 2023
Special mention $ 323,326  $ 319,905 
Substandard - accruing 932,746  711,266 
Substandard - non-accruing 186,565  86,903 
Doubtful 16,265  19,035 
Total $ 1,458,902  $ 1,137,109 
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 status is 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 2024. 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.
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1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on delinquency status (in thousands):
September 30, 2024
Amortized Cost By Origination Year
2024 2023 2022 2021 2020 Prior Total
Current $ 195,138  $ 371,193  $ 1,046,301  $ 2,805,102  $ 810,787  $ 1,392,795  $ 6,621,316 
30 - 59 Days Past Due 2,021  1,615  2,706  6,200  2,690  5,577  20,809 
60 - 89 Days Past Due —  —  684  3,633  —  1,933  6,250 
90 Days or More Past Due —  155  2,592  1,654  —  10,524  14,925 
$ 197,159  $ 372,963  $ 1,052,283  $ 2,816,589  $ 813,477  $ 1,410,829  $ 6,663,300 
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 2,200  1,785  7,201  5,745  —  14,527  31,458 
60 - 89 Days Past Due —  2,116  1,465  —  143  2,728  6,452 
90 Days or More Past Due —  5,872  —  —  1,439  5,580  12,891 
$ 365,323  $ 1,126,812  $ 2,974,506  $ 860,121  $ 297,728  $ 1,278,523  $ 6,903,013 
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on LTV (in thousands): 
September 30, 2024
Amortized Cost By Origination Year
LTV 2024 2023 2022 2021 2020 Prior Total
Less than 61% $ 24,938  $ 58,905  $ 244,394  $ 1,142,103  $ 310,728  $ 442,834  $ 2,223,902 
61% - 70% 25,042  58,002  268,625  771,630  207,506  319,259  1,650,064 
71% - 80% 118,463  216,378  535,734  869,534  295,173  610,197  2,645,479 
More than 80% 28,716  39,678  3,530  33,322  70  38,539  143,855 
$ 197,159  $ 372,963  $ 1,052,283  $ 2,816,589  $ 813,477  $ 1,410,829  $ 6,663,300 
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% 67,146  280,602  813,682  221,091  71,652  293,784  1,747,957 
71% - 80% 235,060  583,724  915,166  312,188  148,483  519,699  2,714,320 
More than 80% —  2,083  34,557  71  5,374  36,589  78,674 
$ 365,323  $ 1,126,812  $ 2,974,506  $ 860,121  $ 297,728  $ 1,278,523  $ 6,903,013 
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on FICO score (in thousands):
September 30, 2024
Amortized Cost By Origination Year
FICO 2024 2023 2022 2021 2020 Prior Total
760 or greater $ 137,593  $ 273,415  $ 751,253  $ 2,240,365  $ 654,142  $ 988,644  $ 5,045,412 
720 - 759 47,010  65,950  176,634  371,705  98,081  199,019  958,399 
719 or less or not available
 12,556  33,598  124,396  204,519  61,254  223,166  659,489 
$ 197,159  $ 372,963  $ 1,052,283  $ 2,816,589  $ 813,477  $ 1,410,829  $ 6,663,300 
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December 31, 2023
Amortized Cost By Origination Year
FICO 2023 2022 2021 2020 2019 Prior Total
760 or greater $ 253,774  $ 810,150  $ 2,378,572  $ 696,363  $ 203,966  $ 893,290  $ 5,236,115 
720 - 759 78,882  194,135  392,179  99,412  50,984  210,663  1,026,255 
719 or less or not available
 32,667  122,527  203,755  64,346  42,778  174,570  640,643 
$ 365,323  $ 1,126,812  $ 2,974,506  $ 860,121  $ 297,728  $ 1,278,523  $ 6,903,013 
Past Due and Non-Accrual Loans:
The following table presents an aging of loans at the dates indicated (in thousands):
  September 30, 2024 December 31, 2023
  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
CRE $ 5,913,340  $ 36,000  $ 3,509  $ 33,963  $ 5,986,812  $ 5,779,309  $ 27,918  $ 1,947  $ 10,059  $ 5,819,233 
C&I 8,979,444  1,886  16,324  28,273  9,025,927  8,851,585  16,228  5,536  34,375  8,907,724 
Pinnacle - municipal finance 749,035  —  —  —  749,035  884,690  —  —  —  884,690 
Franchise and equipment finance
 277,704  —  —  —  277,704  380,347  —  —  —  380,347 
Mortgage warehouse lending 571,783  —  —  —  571,783  432,663  —  —  —  432,663 
1-4 single family residential 6,621,316  20,809  6,250  14,925  6,663,300  6,852,212  31,458  6,452  12,891  6,903,013 
Government insured residential 739,838  109,012  46,621  228,671  1,124,142  835,282  131,652  61,942  277,138  1,306,014 
  $ 23,852,460  $ 167,707  $ 72,704  $ 305,832  $ 24,398,703  $ 24,016,088  $ 207,256  $ 75,877  $ 334,463  $ 24,633,684 
Included in the table above is the guaranteed portion of SBA loans past due by 90 days or more totaling $33.4 million ($25.9 million of C&I and $7.5 million of CRE) and $39.7 million at September 30, 2024 and December 31, 2023, respectively.
Loans contractually delinquent by 90 days or more and still accruing totaled $229 million and $278 million at September 30, 2024 and December 31, 2023, 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):
September 30, 2024 December 31, 2023
Amortized Cost Amortized Cost With No Related Allowance Amortized Cost Amortized Cost With No Related Allowance
CRE $ 70,860  $ 65,320  $ 13,727  $ 1,947 
C&I 116,583  21,288  68,533  14,078 
Franchise and equipment finance
 15,387  13,687  23,678  7,796 
1-4 single family residential 21,061  —  20,513  — 
$ 223,891  $ 100,295  $ 126,451  $ 23,821 
Included in the table above is the guaranteed portion of non-accrual SBA loans totaling $35.1 million and $41.8 million at September 30, 2024 and December 31, 2023, respectively. The amount of interest income recognized on non-accrual loans was insignificant for the three and nine months ended September 30, 2024 and 2023. 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 $2.2 million and $5.5 million for the three and nine months ended September 30, 2024, respectively and $2.2 million and $5.6 million for the three and nine months ended September 30, 2023, respectively.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


Collateral dependent loans:
The following table presents the amortized cost basis of collateral dependent loans at the dates indicated (in thousands):
September 30, 2024 December 31, 2023
Amortized Cost Extent to Which Secured by Collateral Amortized Cost Extent to Which Secured by Collateral
CRE $ 69,708  $ 69,708  $ 11,574  $ 11,574 
C&I 77,565  61,989  36,401  25,821 
Franchise and equipment finance
15,387  14,907  23,488  18,678 
  $ 162,660  $ 146,604  $ 71,463  $ 56,073 
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 and equipment 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 nine months ended September 30, 2024.
Foreclosure of residential real estate
The recorded investment in residential loans in the process of foreclosure was $180 million, of which $168 million was government insured at September 30, 2024, and $262 million, of which $250 million was government insured at December 31, 2023. The carrying amount of foreclosed residential real estate included in other assets in the accompanying consolidated balance sheet was insignificant at September 30, 2024 and December 31, 2023.
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):
Three Months Ended September 30, 2024
Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension
Amortized Cost
% (1)
Amortized Cost
% (1)
Amortized Cost
% (1)
 Total
C&I $ —  —  % $ 8  —  % $ 11  —  % $ 19 
Franchise and equipment finance —  —  % 1,700  1  % —  —  % 1,700 
Government insured residential —  —  % 8,810  1  % 2,927  —  % 11,737 
$ —  $ 10,518  $ 2,938  $ 13,456 
Nine Months Ended September 30, 2024
Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension
Amortized Cost
% (1)
Amortized Cost
% (1)
Amortized Cost
% (1)
 Total
CRE $ —  —  % $ 1,277  —  % $ —  —  % $ 1,277 
C&I —  —  % 84,618  1  % 39  —  % 84,657 
Franchise and equipment finance —  —  % 1,700  1  % —  —  % 1,700 
Government insured residential —  —  % 23,712  2  % 4,783  —  % 28,495 
$ —  $ 111,307  $ 4,822  $ 116,129 
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


Three Months Ended September 30, 2023
Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension
Amortized Cost
% (1)
Amortized Cost
% (1)
Amortized Cost
% (1)
 Total
C&I $ —  —  % $ 1,475  —  % $ —  —  % $ 1,475 
Franchise and equipment finance —  —  % 11,085  3  % —  —  % 11,085 
Government insured residential —  —  % 27,710  2  % 687  —  % 28,397 
$ —  $ 40,270  $ 687  $ 40,957 
Nine Months Ended September 30, 2023
Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension
Amortized Cost
% (1)
Amortized Cost
% (1)
Amortized Cost
% (1)
 Total
C&I $ —  —  % $ 5,786  —  % $ —  —  % $ 5,786 
Franchise and equipment finance
—  —  % 14,470  3  % —  —  % 14,470 
1-4 single family residential 759  —  % —  —  % —  —  % 759 
Government insured residential 106  —  % 64,520  5  % 2,549  —  % 67,175 
$ 865  $ 84,776  $ 2,549  $ 88,190 
(1)Represents percentage of loans receivable in each category.
The following tables summarize the financial effect of the modifications made to borrowers experiencing difficulty, during the periods indicated:
Three Months Ended September 30, 2024
Financial Effect
Term Extension:
C&I
Added a weighted average 1.0 year to the term of the modified loans.
Franchise and equipment finance
Added a weighted average 3.0 years to the term of the modified loans.
Government insured residential
Added a weighted average 10.0 years to the term of the modified loans.
Combination - Interest Rate Reduction and Term Extension:
C&I
Reduced weighted average contractual interest rate from 22.0% to 8.5% and added a weighted average 2.1 years to the term of the modified loans.
Government insured residential
Reduced weighted average contractual interest rate from 7.5% to 7.0% and added a weighted average 2.2 years to the term of the modified loans.
Nine Months Ended September 30, 2024
Financial Effect
Term Extension:
CRE
Added a weighted average 1.0 year to the term of the modified loans.
C&I
Added a weighted average 1.5 years to the term of the modified loans.
Franchise and equipment finance
Added a weighted average 3.0 years to the term of the modified loans.
Government insured residential
Added a weighted average 10.1 years to the term of the modified loans.
Combination - Interest Rate Reduction and Term Extension:
C&I
Reduced weighted average contractual interest rate from 21.5% to 6.0% and added a weighted average 2.2 years to the term of the modified loans.
Government insured residential
Reduced weighted average contractual interest rate from 7.2% to 6.7% and added a weighted average 5.1 years to the term of the modified loans.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


Three Months Ended September 30, 2023
Financial Effect
Term Extension:
C&I
Added a weighted average 0.5 years to the term of the modified loans.
Franchise and equipment finance
Added a weighted average 2.1 years to the term of the modified loans.
Government insured residential
Added a weighted average 9.2 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 5.5% to 4.2% and added a weighted average 12.0 years to the term of the modified loans.
Nine Months Ended September 30, 2023
Financial Effect
Interest Rate Reduction:
1-4 single family residential
Reduced weighted average contractual interest rate from 3.8% to 3.1%.
Government insured residential
Reduced weighted average contractual interest rate from 4.8% to 3.8%.
Term Extension:
C&I
Added a weighted average 0.6 years to the term of the modified loans.
Franchise and equipment finance
Added a weighted average 1.8 years to the term of the modified loans.
Government insured residential
Added a weighted average 8.4 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 tables present the aging at September 30, 2024, of loans that were modified within the previous 12 months, and at September 30, 2023, of loans that were modified since January 1, 2023, the date of adoption of ASU 2022-02 (in thousands):
September 30, 2024
Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total
CRE $ 1,277  $ —  $ —  $ —  $ 1,277 
C&I 87,655  28  —  —  87,683 
Franchise and equipment finance 10,913  —  —  —  10,913 
1-4 single family residential 72  —  —  —  72 
Government insured residential 12,818  6,699  3,973  14,385  37,875 
$ 112,735  $ 6,727  $ 3,973  $ 14,385  $ 137,820 
September 30, 2023
Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total
C&I $ 5,786  $ —  $ —  $ —  $ 5,786 
Franchise and equipment finance 14,470  —  —  —  14,470 
1-4 single family residential —  759  —  —  759 
Government insured residential 29,177  13,286  8,465  16,247  67,175 
$ 49,433  $ 14,045  $ 8,465  $ 16,247  $ 88,190 
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


The following tables summarize loans that were modified within the previous 12 months and defaulted during the periods indicated (in thousands):
Three Months Ended September 30,
2024 2023
Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension Total Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension Total
Government insured residential $ —  $ 5,664  $ 279  $ 5,943  $ —  $ 14,699  $ 548  $ 15,247 
Nine Months Ended September 30,
2024 2023
Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension Total Interest Rate Reduction Term Extension Combination - Interest Rate Reduction and Term Extension Total
Government insured residential $ —  $ 16,474  $ 4,305  $ 20,779  $ 106  $ 28,432  $ 860  $ 29,398 
Note 5    Income Taxes
The Company’s effective income tax rate was 26.1% and 26.9% for the three and nine months ended September 30, 2024 and 24.7% and 25.9% for the three and nine months ended September 30, 2023, respectively. The effective income tax rates differed from the statutory federal income tax rate of 21% for the three and nine months ended September 30, 2024 and 2023 primarily due to the impact of state income taxes and interest on certain unrecognized tax benefits, partially offset by the benefit of income not subject to federal tax.
Note 6    Derivative Financial Instruments
Derivatives designated as hedging instruments
The Company has entered into interest rate derivatives designated as (i) cash flow hedges with the objective of limiting the variability of interest payment cash flows and (ii) 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.

The following table summarizes the Company's derivatives designated as hedging instruments as of the dates indicated (in thousands):
  September 30, 2024 December 31, 2023
  Notional Amount
Fair Value(1)
 Notional Amount
Fair Value(1)
  Asset Liability Asset Liability
Derivatives designated as cash flow hedges:      
Interest rate swaps $ 3,030,000  $ 354  $ (49) $ 3,215,000  $ —  $ (1,048)
Interest rate caps purchased 200,000  4,669  —  200,000  10,157  — 
Interest rate collar 125,000  72  —  125,000  84  — 
Derivatives designated as fair value hedges:
Interest rate swaps 50,000  —  —  100,000  —  — 
  $ 3,405,000  $ 5,095  $ (49) $ 3,640,000  $ 10,241  $ (1,048)
(1)The fair values of derivatives are included in other assets or other liabilities in the consolidated balance sheets.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


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):
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Location of gain (loss) reclassified from AOCI into income:
Interest expense on deposits $ 4,661  $ 6,300  $ 14,270  $ 17,162 
Interest expense on borrowings 11,686  13,442  39,416  30,935 
Interest income on loans (804) (781) (2,430) (1,795)
$ 15,543  $ 18,961  $ 51,256  $ 46,302 
During the three and nine months ended September 30, 2024 and 2023, no derivative positions designated as cash flow hedges were discontinued and none of the gains and losses reported in AOCI were reclassified into earnings as a result of the discontinuance of cash flow hedges or because of the early extinguishment of debt.
As of September 30, 2024, the amount of net gain expected to be reclassified from AOCI into earnings during the next twelve months was $8.8 million, based on the forward curve. See Note 7 to the consolidated financial statements for additional information about the reclassification adjustments from AOCI into earnings.
Derivatives designated as fair value hedges
No net gain (loss) related to derivatives designated as fair value hedges was recognized in earnings for any of the 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):
September 30, 2024 December 31, 2023 Location in Consolidated Balance Sheets
Contractual balance outstanding of hedged item (1)
 $ 50,000  $ 100,000  Loans
Cumulative fair value hedging adjustments $ (233) $ (1,656) 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 $944 million and $992 million at September 30, 2024 and December 31, 2023, respectively.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


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. 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. The Company also enters into foreign currency forward derivative contracts with commercial borrowers to enable borrowers to manage their exposure to foreign currency fluctuations. The Company enters into offsetting forward contracts with primary dealers to mitigate the foreign currency risk associated with these contracts. These 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 not material for the three and nine months ended September 30, 2024 and 2023.
The Company may be exposed to credit risk in the event of non-performance by the counterparties to its commercial customer 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):
  September 30, 2024 December 31, 2023
  Notional Amount
Fair Value(1)
 Notional Amount
Fair Value(1)
  Asset Liability Asset Liability
Pay-fixed interest rate swaps $ 2,501,070  $ 48,695  $ (41,105) $ 2,166,813  $ 76,793  $ (16,702)
Pay-variable interest rate swaps 2,501,070  41,105  (48,695) 2,166,813  16,702  (77,257)
Interest rate caps purchased 158,373  1,299  —  65,610  1,922  — 
Interest rate caps sold 158,373  —  (1,299) 65,610  —  (1,922)
RPAs purchased 111,839  284  —  77,846  20  — 
RPAs sold 433,824  —  (432) 284,910  —  (237)
  $ 5,864,549  $ 91,383  $ (91,531) $ 4,827,602  $ 95,437  $ (96,118)
(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.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


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):
  September 30, 2024
    Gross Amounts Offset in Balance
Sheet		 Net Amounts Presented in
Balance Sheet		 Gross Amounts Not Offset in
Balance Sheet		  
  Gross Amounts
Recognized		 Derivative
Instruments		 Collateral
Pledged		 Net Amount
Derivative assets $ 55,089  $ —  $ 55,089  $ (25,099) $ (26,273) $ 3,717 
Derivative liabilities (41,154) —  (41,154) 25,099  16,055  — 
  $ 13,935  $ —  $ 13,935  $ —  $ (10,218) $ 3,717 
  December 31, 2023
    Gross Amounts Offset in Balance
Sheet		 Net Amounts Presented in
Balance Sheet		 Gross Amounts Not Offset in
Balance Sheet		  
  Gross Amounts
Recognized		 Derivative
Instruments		 Collateral
Pledged		 Net Amount
Derivative assets $ 88,956  $ —  $ 88,956  $ (15,154) $ (73,730) $ 72 
Derivative liabilities (17,750) —  (17,750) 15,154  2,596  — 
$ 71,206  $ —  $ 71,206  $ —  $ (71,134) $ 72 
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.
Note 7    Stockholders’ Equity
Accumulated Other Comprehensive Income
Changes in other comprehensive income (loss) are summarized as follows for the periods indicated (in thousands):
Three Months Ended September 30,
  2024 2023
  Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized gains (losses) on investment securities available for sale:
      
Net unrealized holding gains (losses) arising during the period
 $ 124,548  $ (32,383) $ 92,165  $ (44,397) $ 11,543  $ (32,854)
Amounts reclassified to gain on investment securities available for sale, net
 (9) 2  (7) (215) 56  (159)
Net change in unrealized gains (losses) on investment securities available for sale
 124,539  (32,381) 92,158  (44,612) 11,599  (33,013)
Unrealized gains (losses) on derivative instruments:
Net unrealized holding gains (losses) arising during the period
 (23,511) 6,113  (17,398) 16,771  (4,361) 12,410 
Amounts reclassified to interest expense on deposits (4,661) 1,212  (3,449) (6,300) 1,638  (4,662)
Amounts reclassified to interest expense on borrowings
 (11,686) 3,038  (8,648) (13,442) 3,495  (9,947)
Amounts reclassified to interest income on loans 804  (209) 595  781  (203) 578 
Net change in unrealized gains (losses) on derivative instruments (39,054) 10,154  (28,900) (2,190) 569  (1,621)
Other comprehensive income (loss)
 $ 85,485  $ (22,227) $ 63,258  $ (46,802) $ 12,168  $ (34,634)
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


Nine Months Ended September 30,
  2024 2023
  Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized gains (losses) on investment securities available for sale:
      
Net unrealized holding gains arising during the period
 $ 197,137  $ (51,256) $ 145,881  $ 32,050  $ (8,333) $ 23,717 
Amounts reclassified to gain on investment securities available for sale, net
 (331) 86  (245) (1,814) 472  (1,342)
Net change in unrealized gains (losses) on investment securities available for sale
 196,806  (51,170) 145,636  30,236  (7,861) 22,375 
Unrealized gains (losses) on derivative instruments:
Net unrealized holding gains arising during the period 15,339  (3,988) 11,351  57,565  (14,967) 42,598 
Amounts reclassified to interest expense on deposits (14,270) 3,710  (10,560) (17,162) 4,462  (12,700)
Amounts reclassified to interest expense on borrowings
 (39,416) 10,248  (29,168) (30,935) 8,043  (22,892)
Amounts reclassified to interest income on loans 2,430  (632) 1,798  1,795  (467) 1,328 
Net change in unrealized gains (losses) on derivative instruments (35,917) 9,338  (26,579) 11,263  (2,929) 8,334 
Other comprehensive income
 $ 160,889  $ (41,832) $ 119,057  $ 41,499  $ (10,790) $ 30,709 
The categories of AOCI and changes therein are presented below for the periods indicated (in thousands):
Unrealized Loss on
Investment Securities
Available for Sale
Unrealized Gain
on Derivative
Instruments
 Total
Balance at June 30, 2024
 $ (342,268) $ 40,646  $ (301,622)
Other comprehensive income (loss)
 92,158  (28,900) 63,258 
Balance at September 30, 2024 $ (250,110) $ 11,746  $ (238,364)
Balance at June 30, 2023
 $ (443,523) $ 70,961  $ (372,562)
Other comprehensive loss
 (33,013) (1,621) (34,634)
Balance at September 30, 2023 $ (476,536) $ 69,340  $ (407,196)
Unrealized Loss on
Investment Securities
Available for Sale
Unrealized Gain on Derivative
Instruments
 Total
Balance at December 31, 2023 $ (395,746) $ 38,325  $ (357,421)
Other comprehensive income
 145,636  (26,579) 119,057 
Balance at September 30, 2024 $ (250,110) $ 11,746  $ (238,364)
Balance at December 31, 2022
 $ (498,911) $ 61,006  $ (437,905)
Other comprehensive income
 22,375  8,334  30,709 
Balance at September 30, 2023 $ (476,536) $ 69,340  $ (407,196)
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


Note 8    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 significant unexpected quarter over quarter fluctuations or deviations from expectations is challenged. The Company has also established a quarterly process whereby prices provided by its primary pricing service are validated by obtaining a price from a second external source for most securities in the portfolio. 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.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


The following tables present assets and liabilities measured at fair value on a recurring basis at the dates indicated (in thousands):
  September 30, 2024
  Level 1 Level 2 Total
Investment securities available for sale:      
U.S. Treasury securities $ 189,835  $ —  $ 189,835 
U.S. Government agency and sponsored enterprise residential MBS —  2,391,027  2,391,027 
U.S. Government agency and sponsored enterprise commercial MBS —  500,314  500,314 
Private label residential MBS and CMOs —  2,296,245  2,296,245 
Private label commercial MBS —  2,003,670  2,003,670 
Single family real estate-backed securities —  345,786  345,786 
Collateralized loan obligations —  1,070,322  1,070,322 
Non-mortgage asset-backed securities —  96,513  96,513 
State and municipal obligations —  106,084  106,084 
SBA securities —  81,296  81,296 
Marketable equity securities 28,768  —  28,768 
Derivative assets —  96,478  96,478 
Total assets at fair value $ 218,603  $ 8,987,735  $ 9,206,338 
Derivative liabilities $ —  $ (91,580) $ (91,580)
Total liabilities at fair value $ —  $ (91,580) $ (91,580)
  December 31, 2023
  Level 1 Level 2 Total
Investment securities available for sale:      
U.S. Treasury securities
 $ 130,592  $ —  $ 130,592 
U.S. Government agency and sponsored enterprise residential MBS —  1,924,207  1,924,207 
U.S. Government agency and sponsored enterprise commercial MBS —  497,859  497,859 
Private label residential MBS and CMOs —  2,295,730  2,295,730 
Private label commercial MBS —  2,198,743  2,198,743 
Single family real estate-backed securities —  366,255  366,255 
Collateralized loan obligations —  1,112,824  1,112,824 
Non-mortgage asset-backed securities —  102,780  102,780 
State and municipal obligations —  102,618  102,618 
SBA securities —  103,024  103,024 
Marketable equity securities
 32,722  —  32,722 
Derivative assets —  105,678  105,678 
Total assets at fair value $ 163,314  $ 8,809,718  $ 8,973,032 
Derivative liabilities $ —  $ (97,166) $ (97,166)
Total liabilities at fair value $ —  $ (97,166) $ (97,166)
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


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):
September 30, 2024 December 31, 2023
Collateral dependent loans $ 133,344  $ 50,885 
OREO 2,254  29 
$ 135,598  $ 50,914 
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):
  September 30, 2024 December 31, 2023
  Level Carrying Value Fair Value Carrying Value Fair Value
Assets:          
Cash and cash equivalents 1 $ 889,868  $ 889,868  $ 588,283  $ 588,283 
Investment securities 1/2 $ 9,119,860  $ 9,119,860  $ 8,877,354  $ 8,877,281 
Non-marketable equity securities 2 $ 237,172  $ 237,172  $ 310,084  $ 310,084 
Loans, net 3 $ 24,170,454  $ 23,155,229  $ 24,430,995  $ 23,075,192 
Derivative assets 2 $ 96,478  $ 96,478  $ 105,678  $ 105,678 
Liabilities:
Demand, savings and money market deposits 2 $ 23,131,989  $ 23,131,989  $ 21,374,483  $ 21,374,483 
Time deposits 2 $ 4,724,236  $ 4,702,971  $ 5,163,995  $ 5,133,119 
FHLB advances 2 $ 3,580,000  $ 3,580,092  $ 5,115,000  $ 5,115,637 
Notes and other borrowings 2 $ 708,694  $ 701,632  $ 708,973  $ 676,077 
Derivative liabilities 2 $ 91,580  $ 91,580  $ 97,166  $ 97,166 
Note 9    Commitments and Contingencies 
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.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


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 September 30, 2024 were as follows (in thousands):
Commitments to fund loans $ 100,769 
Unfunded commitments under lines of credit 4,705,518 
Commercial and standby letters of credit 150,351 
$ 4,956,638 
Legal Proceedings
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 10    Deposits
The following table presents average balances and weighted average rates paid on deposits for the periods indicated (dollars in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
  Average
Balance
Average
Rate Paid(1)
 Average
Balance
Average
Rate Paid(1)
 Average
Balance
Average
Rate Paid(1)
 Average
Balance
Average
Rate Paid(1)
Demand deposits:            
Non-interest bearing $ 7,384,721  —  % $ 6,937,537  —  % $ 7,132,351  —  % $ 7,152,362  —  %
Interest bearing 3,930,101  3.78  % 3,038,870  3.33  % 3,752,828  3.77  % 2,728,287  2.68  %
Savings and money market 11,304,999  4.22  % 10,205,765  3.81  % 11,238,662  4.25  % 10,844,838  3.43  %
Time 4,524,215  4.53  % 5,420,522  3.92  % 4,834,209  4.51  % 5,150,486  3.49  %
$ 27,144,036  3.06  % $ 25,602,694  2.74  % $ 26,958,050  3.11  % $ 25,875,973  2.41  %
(1)Annualized.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
September 30, 2024


The following table presents maturities of time deposits as of September 30, 2024 (in thousands):
Maturing in:
2024
 $ 2,645,594 
2025
 1,754,972 
2026
 322,508 
2027
 763 
2028
 282 
Thereafter 117 
$ 4,724,236 
Included in deposits are public funds deposits of $2.6 billion and $3.1 billion and brokered deposits of $4.9 billion and $5.3 billion at September 30, 2024 and December 31, 2023, respectively.
Interest expense on deposits for the periods indicated was as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
Interest bearing demand $ 37,294  $ 25,491  $ 106,050  $ 54,781 
Savings and money market 119,856  97,956  357,440  278,243 
Time 51,480  53,527  163,229  134,448 
$ 208,630  $ 176,974  $ 626,719  $ 467,472 
Certain of our depositors participate in various customer rebate programs. During the three and nine months ended September 30, 2024 and 2023, costs related to those programs totaled $16.9 million, $46.7 million, $12.0 million, and $30.0 million, respectively. These expenses are included in "other non-interest expense" in the accompanying consolidated statements of income.
34




Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations 
The following discussion and analysis is intended to focus on significant matters impacting and changes in the financial condition and results of operations of the Company during the nine months ended September 30, 2024 and should be read in conjunction with the consolidated financial statements and notes hereto included in this Quarterly Report on Form 10-Q and BKU's 2023 Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report on Form 10-K").
Forward-Looking Statements
This Quarterly Report on Form 10-Q 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. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” "future" and similar expressions identify forward-looking statements. These forward-looking statements are based on the historical performance of the Company 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 so contemplated will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions 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 adverse events 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. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, the risk factors described in Part I, Item 1A of the 2023 Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K. 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.
Overview
Net income for the three months ended September 30, 2024, was $61.5 million, or $0.81 per diluted share, compared to $47.0 million, or $0.63 per diluted share, for the three months ended September 30, 2023. Net income for the nine months ended September 30, 2024, was $163.2 million, or $2.17 per diluted share, compared to $157.9 million, or $2.11 per diluted share for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, the annualized return on average stockholders' equity was 8.1% and the annualized return on average assets was 0.62%.
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.
We are focused on improving the Company's core profitability by emphasizing the following near-term strategic priorities:
•Improve the Bank's funding profile by growing 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;
•Improve the net interest margin, largely a function of more profitable balance sheet composition;
•Maintain robust liquidity and capital;
•Continue to manage credit;
•Manage the rate of growth in operating expenses.
35




To date, we have made notable progress executing on these near-team strategic priorities:
◦The net interest margin, calculated on a tax-equivalent basis, expanded by 0.06%, to 2.78% for the three months ended September 30, 2024 from 2.72% for the immediately preceding three months ended June 30, 2024. The net interest margin was 2.56% for the three months ended September 30, 2023. For the nine months ended September 30, 2024 the net interest margin improved to 2.69% from 2.55% for the nine months ended September 30, 2023.
◦The average cost of total deposits declined by 0.03% to 3.06% for the three months ended September 30, 2024, from 3.09% for the immediately preceding three months ended June 30, 2024. The spot APY of total deposits declined to 2.93% at September 30, 2024 from 3.09% at June 30, 2024. The average cost of interest bearing deposits declined by 0.06% to 4.20% for the three months ended September 30, 2024 from 4.26% for the immediately preceding three months ended June 30, 2024 while the spot APY of interest bearing deposits declined to 4.01% at September 30, 2024 from 4.29% at June 30, 2024.
◦The Company's funding profile has improved significantly over the course of 2024. For the nine months ended September 30, 2024, wholesale funding, including FHLB advances and brokered deposits, declined by $1.9 billion, while non-brokered deposits grew by $1.7 billion, including an increase of $800 million in NIDDA.
◦Average NIDDA remained relatively stable, declining by $64 million for the three months ended September 30, 2024, consistent with the prior three months ended June 30, 2024 at 27% of average total deposits. Total deposits grew by $93 million for the three months ended September 30, 2024. In part due to expected seasonal trends, for the three months ended September 30, 2024, NIDDA declined by $430 million and represented 27% of total deposits at September 30, 2024.
◦FHLB advances increased by $295 million for the three months ended September 30, 2024; this increase was related to intraday cash management activity and is also reflected in temporarily elevated cash balances. Brokered deposits grew by $303 million for the three months ended September 30, 2024 as we took advantage of favorable pricing in the brokered deposit market.
◦For the nine months ended September 30, 2024, our CRE and C&I loan portfolios grew by $286 million while residential loans declined by $422 million and franchise, equipment and municipal finance declined by a combined $238 million, all reflective of our balance sheet repositioning strategy.
◦Total loans declined by $230 million for the three months ended September 30, 2024. The commercial real estate segment grew by $34 million while the C&I segment declined by $112 million, impacted by some unanticipated payoffs and strategic exits. Mortgage warehouse grew by $33 million. Consistent with our balance sheet strategy, the residential, franchise, equipment and municipal finance declined by a combined $185 million.
◦The loan to deposit ratio declined to 87.6% at September 30, 2024, from 88.7% at June 30, 2024 and 92.8% at December 31, 2023.
◦Net charge-offs remained low and were $6.5 million for the three months ended September 30, 2024. The annualized net charge-off ratio for the nine months ended September 30, 2024, was 0.12%. The NPA ratio at September 30, 2024 was 0.64%, including 0.10% related to the guaranteed portion of non-performing SBA loans, compared to 0.50%, including 0.11% related to the guaranteed portion of non-performing SBA loans at June 30, 2024.
◦The ratio of the ACL to total loans increased to 0.94% at September 30, 2024; the ratio of the ACL to non-performing loans was 101.68%. The ACL to loans ratio for commercial portfolio sub-segments including C&I, CRE, franchise finance and equipment finance was 1.41% at September 30, 2024 and the ACL to loans ratio for CRE office loans was 2.20%.
◦Commercial real estate exposure is modest totaling 25% of loans and 164% of the Bank's total risk-based capital at September 30, 2024. By comparison, based on call report data as of June 30, 2024 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 220%.
◦Total same day available liquidity was $15.0 billion, the available liquidity to uninsured, uncollateralized deposits ratio was 147% and an estimated 63% of our deposits were insured or collateralized at September 30, 2024.
36




◦At September 30, 2024, CET1 was 11.8% and pro-forma CET1, including accumulated other comprehensive income, was 10.9%. The ratio of tangible common equity/tangible assets increased to 7.6%.
◦The net unrealized pre-tax loss on the AFS securities portfolio continued to improve, declining by $125 million for the three months ended September 30, 2024, representing 4% of amortized cost. The duration of our AFS securities portfolio remained short at 1.73 at September 30, 2024. HTM securities were not significant.
◦Book value and tangible book value per common share grew to $37.56 and $36.52, respectively, at September 30, 2024, from $36.11 and $35.07, respectively, at June 30, 2024.
Hurricanes Helene and Milton
Hurricane Helene made landfall along Florida's "Big Bend" coast in September 2024, ultimately impacting parts of the Southeastern United States. The impact of Hurricane Helene on BankUnited's operations was not significant, and is not expected to be significant to our financial condition or results of operations.
Hurricane Milton made landfall near Siesta Key, Florida in October 2024, bringing heavy rain, hurricane or tropical storm force winds, storm surge and power outages to portions of the Florida peninsula. All of our branches and office locations have re-opened for business, and damage to our facilities from the storm was negligible. There were no significant impacts to banking operations. The Company had approximately $3.7 billion UPB, based on September 30, 2024 balances, of loans within a 34 county assessment area incorporating the direct path of Hurricane Milton and adjacent counties. Included in the $3.7 billion UPB of loans are approximately $200 million of residential loans, the substantial majority of which are government-insured and thus have zero expectation of credit losses. As of November 1, 2024, we have contacted the majority of borrowers with potential exposure in the commercial loan portfolio. No borrowers reported severe impact from the storm. In the commercial portfolio, borrowers representing approximately $122 million in UPB reported some impact on their properties or businesses. Of this, approximately $50 million reported mild or moderate impact, with the remaining $72 million reporting no damage. As of November 1, 2024, the Company had not received any requests for payment deferrals or other accommodations resulting from the storm. Although we are still in the process of finalizing our assessment, based on information collected to date, we do not expect the impact of the storm to be material to our financial condition, results of operations or to the ACL.
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, 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.
37




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):
Three Months Ended September 30, Three Months Ended June 30, Three Months Ended September 30,
2024 2024 2023
Average
Balance
Interest (1)
Yield/
Rate (1)(2)
 Average
Balance
Interest (1)
Yield/
Rate (1)(2)
 Average
Balance
Interest (1)
Yield/
Rate (1)(2)
Assets:
Interest earning assets:
Loans $ 24,299,898  $ 358,259  5.87  % $ 24,290,169  $ 353,707  5.85  % $ 24,417,433  $ 340,357  5.54  %
Investment securities (3)
 9,171,185  128,762  5.62  % 8,894,517  124,572  5.60  % 9,034,116  123,794  5.48  %
Other interest earning assets 722,366  9,229  5.08  % 711,586  8,986  5.08  % 785,146  10,668  5.39  %
Total interest earning assets 34,193,449  496,250  5.79  % 33,896,272  487,265  5.77  % 34,236,695  474,819  5.52  %
Allowance for credit losses (231,383) (225,161) (173,407)
Non-interest earning assets 1,444,410  1,571,649  1,747,310 
Total assets $ 35,406,476  $ 35,242,760  $ 35,810,598 
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits $ 3,930,101  $ 37,294  3.78  % $ 3,742,071  $ 35,249  3.79  % $ 3,038,870  $ 25,491  3.33  %
Savings and money market deposits 11,304,999  119,856  4.22  % 11,176,000  118,945  4.28  % 10,205,765  97,956  3.81  %
Time deposits 4,524,215  51,480  4.53  % 4,750,640  53,897  4.56  % 5,420,522  53,527  3.92  %
Total interest bearing deposits 19,759,315  208,630  4.20  % 19,668,711  208,091  4.26  % 18,665,157  176,974  3.76  %
FHLB advances 3,766,630  40,471  4.27  % 3,764,286  40,032  4.28  % 6,040,870  69,525  4.57  %
Notes and other borrowings 708,829  9,127  5.15  % 711,167  9,153  5.15  % 715,307  9,198  5.14  %
Total interest bearing liabilities 24,234,774  258,228  4.24  % 24,144,164  257,276  4.28  % 25,421,334  255,697  3.99  %
Non-interest bearing demand deposits 7,384,721  7,448,633  6,937,537 
Other non-interest bearing liabilities 1,009,157  960,691  868,178 
Total liabilities 32,628,652  32,553,488  33,227,049 
Stockholders' equity 2,777,824  2,689,272  2,583,549 
Total liabilities and stockholders' equity $ 35,406,476  $ 35,242,760  $ 35,810,598 
Net interest income $ 238,022  $ 229,989  $ 219,122 
Interest rate spread 1.55  % 1.49  % 1.53  %
Net interest margin 2.78  % 2.72  % 2.56  %
(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $3.0 million for the three months ended September 30, 2024, $3.1 million for the three months ended June 30, 2024, and $3.3 million for the three months ended September 30, 2023. The tax-equivalent adjustment for tax-exempt investment securities was $0.9 million for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023.
(2)Annualized.
(3)At fair value except for securities held to maturity.
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Nine Months Ended September 30,
  2024 2023
  Average
Balance
Interest (1)
Yield/
Rate (1)(2)
 Average
Balance
Interest (1)
Yield/
Rate (1)(2)
Assets:
Interest earning assets:
Loans
 $ 24,309,134  $ 1,062,407  5.84  % $ 24,606,425  $ 981,976  5.33  %
Investment securities (3)
 9,006,654  378,358  5.60  % 9,356,211  364,980  5.20  %
Other interest earning assets 732,435  28,253  5.15  % 1,048,313  40,195  5.13  %
Total interest earning assets 34,048,223  1,469,018  5.76  % 35,010,949  1,387,151  5.29  %
Allowance for credit losses (221,135) (162,395)
Non-interest earning assets 1,534,800  1,761,500 
Total assets $ 35,361,888  $ 36,610,054 
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits $ 3,752,828  $ 106,050  3.77  % $ 2,728,287  $ 54,781  2.68  %
Savings and money market deposits 11,238,662  357,440  4.25  % 10,844,838  278,243  3.43  %
Time deposits 4,834,209  163,229  4.51  % 5,150,486  134,448  3.49  %
Total interest bearing deposits 19,825,699  626,719  4.22  % 18,723,611  467,472  3.34  %
Federal funds purchased —  —  —  % 46,510  1,582  4.54  %
FHLB advances
 4,032,737  128,000  4.24  % 6,596,465  220,993  4.48  %
Notes and other borrowings 709,668  27,402  5.15  % 719,331  27,735  5.14  %
Total interest bearing liabilities 24,568,104  782,121  4.25  % 26,085,917  717,782  3.68  %
Non-interest bearing demand deposits 7,132,351  7,152,362 
Other non-interest bearing liabilities 958,888  829,464 
Total liabilities 32,659,343  34,067,743 
Stockholders' equity 2,702,545  2,542,311 
Total liabilities and stockholders' equity $ 35,361,888  $ 36,610,054 
Net interest income $ 686,897  $ 669,369 
Interest rate spread 1.51  % 1.61  %
Net interest margin 2.69  % 2.55  %
(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $9.3 million and $10.0 million for the nine months ended September 30, 2024 and 2023, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $2.6 million and $2.8 million for the nine months ended September 30, 2024 and 2023, respectively.
(2)Annualized
(3)     At fair value except for securities held to maturity.
Three months ended September 30, 2024, compared to the immediately preceding three months ended June 30, 2024
Net interest income, calculated on a tax-equivalent basis, was $238.0 million for the three months ended September 30, 2024, compared to $230.0 million for the three months ended June 30, 2024, an increase of $8.0 million. The increase in net interest income was comprised of increases in tax-equivalent interest income and expense of $9.0 million and $1.0 million, respectively, for the three months ended September 30, 2024, compared to the three months ended June 30, 2024. The net interest margin, calculated on a tax-equivalent basis, was 2.78% for the three months ended September 30, 2024, compared to 2.72% for the three months ended June 30, 2024.
The average cost of total deposits declined to 3.06% from 3.09% for the quarter ended June 30, 2024 and the average cost of interest bearing liabilities declined to 4.24% from 4.28% for the quarter ended June 30, 2024. The yield on average interest earning assets increased to 5.79% for the quarter ended September 30, 2024 from 5.77% for the prior quarter.
Three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023
Net interest income, calculated on a tax-equivalent basis, was $238.0 million for the three months ended September 30, 2024, compared to $219.1 million for the three months ended September 30, 2023, an increase of $18.9 million. The increase was comprised of increases in tax-equivalent interest income and interest expense of $21.4 million and $2.5 million, respectively.
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Net interest income, calculated on a tax-equivalent basis, was $686.9 million for the nine months ended September 30, 2024, compared to $669.4 million for the nine months ended September 30, 2023, an increase of $17.5 million. The increase was comprised of increases in tax-equivalent interest income and interest expense of $81.8 million and $64.3 million, respectively.
Increases in interest income for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, reflected rising yields on interest earning assets that more than offset the decline in average interest earning assets. Similarly, increases in interest expense for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, resulted from increases in the cost of interest bearing liabilities that more than offset the decline in average interest bearing liabilities.
The net interest margin, calculated on a tax-equivalent basis, increased to 2.78% and 2.69% for the three and nine months ended September 30, 2024, respectively, from 2.56% and 2.55% for the three and nine months ended September 30, 2023, respectively. The increase in the net interest margin for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was primarily a result of balance sheet repositioning, particularly an improved funding mix. For the three months ended September 30, 2024 compared to the three months ended September 30, 2023, average NIDDA increased by $447 million while average FHLB advances declined by $2.3 billion. For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, average NIDDA was stable while average FHLB advances declined by $2.6 billion.
Increased yields on average interest earning assets as well as increases in the cost of deposits reflected the impact of a sustained higher rate environment.
Further discussion of factors impacting the net interest margin for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 follows:
•The tax-equivalent yield on loans increased to 5.87% and 5.84% for the three and nine months ended September 30, 2024, from 5.54% and 5.33% for the three and nine months ended September 30, 2023. These increases reflected the origination of new loans at higher rates, coupon resets, paydowns of lower-rate loans and balance sheet repositioning.
•The tax-equivalent yield on investment securities increased to 5.62% and 5.60% for the three and nine months ended September 30, 2024, from 5.48% and 5.20% for the three and nine months ended September 30, 2023. These increases resulted primarily from the reset of coupon rates on variable rate securities, purchases of higher-yielding securities and paydowns and sales of lower-yielding securities.
•The average cost of interest bearing deposits increased to 4.20% and 4.22% for the three and nine months ended September 30, 2024, from 3.76% and 3.34% for the three and nine months ended September 30, 2023. These increases primarily reflected the ongoing impact of higher prevailing market interest rates.
•The average rate paid on FHLB advances decreased to 4.27% and 4.24% for the three and nine months ended September 30, 2024, from 4.57% and 4.48% for the three and nine months ended September 30, 2023, primarily due to repayment of higher rate advances, partially offset by maturities of some cash flow hedges.
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.
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The following table presents the components of the provision for (recovery of) credit losses for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Amount related to funded portion of loans $ 9,091  $ 30,877  $ 46,719  $ 62,667 
Amount related to off-balance sheet credit exposures 157  2,172  (2,648) 5,687 
Total provision for credit losses
 $ 9,248  $ 33,049  $ 44,071  $ 68,354 
For the three and nine months ended September 30, 2024, an increase in qualitative overlays, changes in portfolio composition and characteristics, and updates to certain assumptions had the effect of increasing the provision, while the impact of improvements in the economic forecast partially offset that increase. For the nine month period, risk rating migration and an increase in specific reserve also contributed to the increase in the provision.
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.
Non-Interest Income
The following table presents a comparison of the categories of non-interest income for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
Deposit service charges and fees $ 5,016  $ 5,189  $ 15,238  $ 15,705 
Gain (loss) on investment securities:
Net realized gain on sale of securities AFS
 9  215  331  1,814 
Net gain (loss) on marketable equity securities recognized in earnings
 118  672  992  (12,483)
Gain (loss) on investment securities, net 127  887  1,323  (10,669)
Lease financing 6,368  16,531  23,448  42,159 
Other non-interest income 11,377  5,117  33,941  22,551 
$ 22,888  $ 27,724  $ 73,950  $ 69,746 
The losses on marketable equity securities during the nine months ended September 30, 2023, were attributable to losses related to certain preferred equity investments.
The decrease in lease financing revenue for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, was primarily attributable to a lower level of rental income as we have opportunistically sold some operating lease equipment in a strategic effort to reduce the size of the operating lease equipment portfolio. Expense related to the depreciation of operating lease equipment reflected a corresponding decrease over these comparative periods.
The increase in other non-interest income for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2024, reflected increases in BOLI income, particularly as related to the BOLI assets supporting our deferred compensation plan, higher gains on sale of loans, higher loan-related and syndication fees and particularly for the comparative nine month periods, increased revenue from our customer derivative and commercial card businesses.
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Non-Interest Expense
The following table presents the components of non-interest expense for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
Employee compensation and benefits $ 81,781  $ 68,825  $ 233,289  $ 207,290 
Occupancy and equipment 12,242  10,890  33,784  32,735 
Deposit insurance expense 7,421  7,790  29,481  23,294 
Professional fees 4,953  2,696  11,960  9,132 
Technology 21,094  19,193  61,976  61,356 
Depreciation of operating lease equipment
 4,666  11,217  21,775  33,970 
Other non-interest expense 32,425  26,479  89,263  77,311 
Total non-interest expense $ 164,582  $ 147,090  $ 481,528  $ 445,088 
The most significant factor impacting the increases in employee compensation and benefits was the fluctuation in variable compensation expense, which was driven by an increase in the Company's stock price, impacting the value of liability-classified share-based awards as well as increases in certain other variable compensation accruals. The nine months ended September 30, 2023, also included reversal of expenses in the prior year for awards that did not vest.
The year-over-year increase in deposit insurance expense was primarily attributable to an additional $5.2 million related to an FDIC special assessment recorded during the first quarter of 2024.
The decline in depreciation of operating lease equipment for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, is primarily attributed to a smaller operating lease equipment portfolio, corresponding to the decline in lease financing revenue.
Included in other non-interest expense are costs related to certain deposit customer rebate and commissions programs, which increased by $4.9 million and $16.7 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023.
Income Taxes
See Note 5 to the consolidated financial statements for information about income taxes.
Analysis of Financial Condition
The funding mix improved over the course of the nine months ended September 30, 2024 as we executed on our balance sheet transformation strategy. During the nine months ended September 30, 2024, total deposits grew by $1.3 billion, non-brokered deposits grew by $1.7 billion, including growth of $800 million in NIDDA to 27% of total deposits, while wholesale funding, including FHLB advances and brokered deposits, declined by $1.9 billion .
On the asset side of the balance sheet, while total loans declined by $235 million for the nine months ended September 30, 2024, there was a change in portfolio composition. C&I and CRE loans grew by $286 million and MWL grew by $139 million, while lower yielding residential loans strategically declined by $422 million, and franchise, equipment, and municipal finance declined by a combined $238 million.
During the three months ended September 30, 2024, average non-interest bearing demand deposits remained relatively stable as compared to the three months ended June 30, 2024, declining by $64 million. FHLB advances increased by $295 million due to intraday cash management activities, which is reflected in the temporarily elevated cash balances. Total loans declined by $230 million for the three months ended September 30, 2024; the CRE portfolio grew by $34 million and the MWL portfolio grew $33 million, while the C&I portfolio declined by $112 million due to strategic exits and the timing of some unanticipated payoffs. Franchise, equipment, and municipal finance portfolios declined by $128 million, in aggregate, and residential loans declined by $57 million consistent with our balance sheet strategy.
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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):
September 30, 2024 December 31, 2023
  Amortized
Cost		 Carrying Value Amortized
Cost		 Carrying Value
U.S. Treasury securities $ 194,852  $ 189,835  $ 139,858  $ 130,592 
U.S. Government agency and sponsored enterprise residential MBS 2,401,069  2,391,027  1,962,658  1,924,207 
U.S. Government agency and sponsored enterprise commercial MBS 550,738  500,314  561,557  497,859 
Private label residential MBS and CMOs
 2,512,471  2,296,245  2,596,231  2,295,730 
Private label commercial MBS
 2,045,819  2,003,670  2,282,833  2,198,743 
Single family real estate-backed securities 352,086  345,786  383,984  366,255 
Collateralized loan obligations 1,068,109  1,070,322  1,122,799  1,112,824 
Non-mortgage asset-backed securities 98,982  96,513  106,095  102,780 
State and municipal obligations 111,181  106,084  107,176  102,618 
SBA securities 83,775  81,296  106,237  103,024 
Investment securities held to maturity 10,000  10,000  10,000  10,000 
$ 9,429,082  9,091,092  $ 9,379,428  8,844,632 
Marketable equity securities 28,768  32,722 
$ 9,119,860  $ 8,877,354 
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. 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. Investment grade municipal securities provide liquidity and attractive tax-equivalent yields. We remain committed to keeping the duration of our securities portfolio short; relatively short effective portfolio duration helps mitigate interest rate risk. The estimated effective duration of the investment portfolio was 1.74 years and the estimated weighted average life of the portfolio was 5.4 years as of September 30, 2024.
The investment securities AFS portfolio was in a net unrealized loss position of $338.0 million at September 30, 2024, compared to a net unrealized loss position of $534.8 million at December 31, 2023, improving by $196.8 million during the nine months ended September 30, 2024. Net unrealized losses at September 30, 2024 included $19.2 million of gross unrealized gains and $357.2 million of gross unrealized losses. Investment securities available for sale in unrealized loss positions at September 30, 2024 had an aggregate fair value of $6.1 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. None of the unrealized losses were attributable to credit loss impairments.
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The external ratings distribution of our AFS securities portfolio at the dates indicated is depicted in the charts below:
September 30, 2024 December 31, 2023
32793280
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;
•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 external 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 September 30, 2024. 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. The substantial majority of our investment securities are eligible to be pledged 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.
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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 September 30, 2024:
Subordination Weighted Average Stress Scenario Loss
Rating Percent of Total Minimum Maximum Average
Private label CMBS AAA 84.7  % 30.5 91.7 46.9 7.4
AA 11.7  % 32.1 72.0 42.5 7.8
A 3.6  % 26.7 51.7 38.2 10.0
Weighted average 100.0  % 30.6 87.9 46.1 7.5
CLOs AAA 86.1  % 39.0 72.9 46.7 16.5
AA 12.5  % 30.9 44.9 34.4 15.0
A 1.4  % 35.9 35.9 35.9 23.2
Weighted average 100.0  % 37.9 68.9 45.1 16.4
Private label residential MBS and CMOs
 AAA 95.1  % 2.9 92.0 17.8 2.2
AA 4.9  % 20.9 35.2 28.0 5.3
Weighted average 100.0  % 3.8 89.2 18.3 2.3
While for some securities, 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 significant assumptions impacting the valuation of each type of security in the portfolio. 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.
Quarterly, prices obtained from primary third-party pricing services are validated by obtaining prices from an additional external source for most securities 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. Prices evidencing unexpected quarter over quarter fluctuations, 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 or deviations of primary prices from those provided by secondary sources beyond established parameters are 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.
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 8 to the consolidated financial statements.
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The following table shows the weighted average prospective yields, categorized by scheduled maturity, for AFS investment securities as of September 30, 2024. 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%:
Within One Year After One Year
Through Five Years		 After Five Years
Through Ten Years		 After Ten Years Total
U.S. Treasury securities 4.43  % 4.49  % 2.56  % —  % 3.49  %
U.S. Government agency and sponsored enterprise residential MBS 5.31  % 5.57  % 5.48  % 5.34  % 5.49  %
U.S. Government agency and sponsored enterprise commercial MBS 4.64  % 5.41  % 3.05  % 3.00  % 3.63  %
Private label residential MBS and CMOs 4.08  % 3.97  % 3.81  % 4.02  % 3.96  %
Private label commercial MBS 6.05  % 6.58  % 3.09  % 3.46  % 6.23  %
Single family real estate-backed securities 4.94  % 3.42  % 6.59  % —  % 4.36  %
Collateralized loan obligations 6.47  % 6.79  % 6.48  % —  % 6.67  %
Non-mortgage asset-backed securities 3.06  % 5.75  % 2.70  % —  % 5.47  %
State and municipal obligations 0.76  % 4.20  % 4.29  % —  % 4.23  %
SBA securities 6.22  % 6.21  % 6.14  % 5.93  % 6.19  %
5.23  % 5.75  % 4.45  % 4.13  % 5.21  %
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):
September 30, 2024 December 31, 2023
Total Percent of Total Loans Total Percent of Total Loans
Non-owner occupied commercial real estate $ 5,488,884  22.5  % $ 5,323,241  21.6  %
Construction and land 497,928  2.0  % 495,992  2.0  %
Owner occupied commercial real estate 1,999,515  8.2  % 1,935,743  7.9  %
Commercial and industrial 7,026,412  28.9  % 6,971,981  28.3  %
Total Core C&I and CRE
 15,012,739  61.6  % 14,726,957  59.8  %
Pinnacle - municipal finance 749,035  3.1  % 884,690  3.6  %
Franchise and equipment finance
 277,704  1.1  % 380,347  1.5  %
Mortgage warehouse lending 571,783  2.3  % 432,663  1.8  %
Total commercial 16,611,261  68.1  % 16,424,657  66.7  %
1-4 single family residential 6,663,300  27.3  % 6,903,013  28.0  %
Government insured residential 1,124,142  4.6  % 1,306,014  5.3  %
Total residential
 7,787,442  31.9  % 8,209,027  33.3  %
Total loans 24,398,703  100.0  % 24,633,684  100.0  %
Allowance for credit losses (228,249) (202,689)
Loans, net $ 24,170,454  $ 24,430,995 
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 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.
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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 September 30, 2024 (dollars in thousands):
Amortized Cost
Percent of Total CRE
 FL
New York Tri-State
 Other Weighted Average DSCR Weighted Average LTV
Office $ 1,777,963  30  % 57  % 23  % 20  % 1.56 65.4  %
Warehouse/Industrial 1,341,495  22  % 55  % 9  % 36  % 1.99 48.9  %
Multifamily 869,192  15  % 53  % 47  % —  % 1.88 48.4  %
Retail 925,751  16  % 52  % 30  % 18  % 1.68 57.7  %
Hotel 487,589  8  % 78  % 10  % 12  % 1.84 45.6  %
Construction and Land 497,928  8  % 37  % 50  % 13  % N/A N/A
Other 86,894  1  % 74  % 11  % 15  % 1.91 48.6  %
$ 5,986,812  100  % 56  % 25  % 19  % 1.77 55.3  %

Florida
NY Tri-State
Weighted Average DSCR Weighted Average LTV Weighted Average DSCR Weighted Average LTV
Office 1.54  64.8  % 1.65  58.6  %
Warehouse/Industrial 2.17  47.7  % 1.98  35.8  %
Multifamily 2.31  45.5  % 1.41  51.6  %
Retail 1.91  56.4  % 1.43  58.4  %
Hotel 1.86  45.5  % 1.88  32.8  %
Other 2.08  46.6  % 1.11  64.7  %
1.91  53.8  % 1.55  53.7  %
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 and on current levels of operating cash flows. DSCR calculations do not include pro-forma rental payments on in-place leases that are currently in initial rent abatement periods.
Included in New York tri-state multifamily loans in the tables above is approximately $117 million of rent regulated exposure as of September 30, 2024.
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The following table presents the maturity profile of the CRE portfolio over the next 12 months by property type at September 30, 2024 (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 Maturing in Next 12 Months as a % of Total Portfolio
Office $ 449,257  25  % $ 233,815  13  %
Warehouse/Industrial 131,451  10  % 79,655  6  %
Multifamily 186,226  21  % 64,964  7  %
Retail 124,205  13  % 74,634  8  %
Hotel 9,758  2  % 7,682  2  %
Construction and Land 210,216  42  % 139  —  %
Other 12,951  15  % 6,770  8  %
$ 1,124,064  19  % $ 467,659  8  %
The following table presents scheduled maturities of the CRE portfolio by property type at September 30, 2024 (in thousands):
2024 2025 2026 2027 2028 Thereafter Total
Office $ 196,022  $ 417,123  $ 422,070  $ 277,092  $ 145,759  $ 319,897  $ 1,777,963 
Warehouse/Industrial 51,231  172,836  428,205  309,163  144,851  235,209  1,341,495 
Multifamily 28,949  190,407  163,157  157,524  106,504  222,651  869,192 
Retail 58,332  150,555  258,950  142,638  187,663  127,613  925,751 
Hotel 5,401  43,237  241,545  30,816  55,779  110,811  487,589 
Construction and Land 46,243  201,202  107,754  88,768  —  53,961  497,928 
Other —  12,952  26,711  20,966  1,387  24,878  86,894 
$ 386,178  $ 1,188,312  $ 1,648,392  $ 1,026,967  $ 641,943  $ 1,095,020  $ 5,986,812 
The office segment totaled $1.8 billion at September 30, 2024. Medical office comprised $352 million or 20% of the total office portfolio. The following charts present the sub-market geographic distribution of the Florida and NY tri-state office portfolios at September 30, 2024:
NY Tri-State by Sub-Market Florida by Sub-Market
2366 2374
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The New York tri-state market encompasses approximately 23% of the office segment, with $169 million of exposure in Manhattan. As of September 30, 2024, the Manhattan office portfolio was approximately 95% occupied with 10% rent rollover expected in the next twelve months. The Florida office portfolio is predominantly suburban.
Office loans not secured by properties in Florida or the New York tri-state area comprised 20%, or $354 million of the segment, and exhibited no particular geographic concentration. Estimated rent rollover of the total office portfolio in the next 12 months is approximately 11%.
The construction portfolio includes an additional $85 million in office related exposure, $83 million of which is in New York.
Non-performing loans included $52 million of office exposure, including office exposure of $32 million in the construction portfolio, at September 30, 2024. 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 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 September 30, 2024 (dollars in thousands):
Amortized Cost(1)
 Percent of Total
Finance and Insurance $ 1,506,732  16.7  %
Manufacturing 809,987  9.0  %
Utilities 764,691  8.5  %
Health Care and Social Assistance 702,534  7.8  %
Wholesale Trade 700,962  7.8  %
Educational Services 683,153  7.6  %
Information 682,594  7.5  %
Transportation and Warehousing 493,609  5.5  %
Real Estate and Rental and Leasing 474,326  5.2  %
Construction 449,723  5.0  %
Retail Trade 314,855  3.5  %
Public Administration 304,079  3.4  %
Professional, Scientific, and Technical Services 282,768  3.1  %
Other Services (except Public Administration) 264,263  2.9  %
Arts, Entertainment, and Recreation 195,805  2.2  %
Accommodation and Food Services 169,482  1.9  %
Administrative and Support and Waste Management 150,400  1.7  %
Other 75,964  0.7  %
$ 9,025,927  100.0  %
(1)    Includes $2.0 billion of owner occupied real estate.
49




Through its commercial lending subsidiaries, Pinnacle and Bridge, the Bank provides franchise and equipment 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 divisions. The franchise finance division portfolio includes franchise acquisition, expansion and equipment financing facilities, typically extended to experienced operators in well-established concepts. The franchise finance portfolio is made up primarily of quick service restaurant and fitness concepts comprising 48% and 47% of the portfolio, respectively, at September 30, 2024. The equipment finance division portfolio includes primarily transportation equipment finance facilities utilizing a variety of loan and lease structures. Franchise and equipment finance have been strategically de-emphasized due to their current risk/return profile, including the lack of significant deposit business with these customers. We do not currently expect significant new loan originations in these segments.
Residential mortgages
The following table shows the composition of residential loans at the dates indicated (in thousands):
September 30, 2024 December 31, 2023
1-4 single family residential $ 6,663,300  $ 6,903,013 
Government insured residential 1,124,142  1,306,014 
$ 7,787,442  $ 8,209,027 
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 terms ranging from 10 to 30 years, with either fixed or adjustable interest rates. At September 30, 2024, $984 million 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 $1.1 billion at September 30, 2024. 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:
September 30, 2024 December 31, 2023
1360 1371
50




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):
September 30, 2024 December 31, 2023
Total Percent of Total Total Percent of Total
California $ 2,043,843  30.7  % $ 2,171,802  31.5  %
New York 1,304,907  19.6  % 1,344,205  19.5  %
Florida 476,967  7.2  % 501,744  7.3  %
Illinois 337,989  5.1  % 358,512  5.2  %
Virginia 307,663  4.6  % 312,384  4.5  %
Others 2,191,931  32.8  % 2,214,366  32.0  %
$ 6,663,300  100.0  % $ 6,903,013  100.0  %
Operating lease equipment, net
Operating lease equipment, net declined by $130 million during the nine months ended September 30, 2024 to $242 million as a result of disposals. 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 charts below present operating lease equipment by type at the dates indicated:
September 30, 2024 December 31, 2023
373374
Bridge had exposure to the energy industry of $128 million at September 30, 2024. The majority of the energy exposure was in the operating lease equipment portfolio where energy exposure totaled $122 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 $2 million to $3 million. Homogenous groups of smaller balance commercial loans may be monitored collectively.
51




The credit quality and risk rating of commercial loans as well as our underwriting and portfolio management practices are regularly reviewed by our internal independent credit review department.
We believe internal risk rating is the best indicator of the credit quality of commercial loans. The Company utilizes a 16-grade internal asset risk classification system as part of its efforts to monitor and maintain commercial asset quality. The special mention rating is considered a transitional rating for loans exhibiting potential credit weaknesses that could result in deterioration of repayment prospects at some future date if not checked or corrected and that deserve management’s close attention. These borrowers may exhibit declining cash flows or revenues or increasing leverage. Loans with well-defined credit weaknesses that may result in a loss if the deficiencies are not corrected are assigned a risk rating of substandard. These borrowers may exhibit payment defaults, inadequate cash flows from current operations, operating losses, increasing balance sheet leverage, project cost overruns, unreasonable construction delays, exhausted interest reserves, declining collateral values, frequent overdrafts or past due real estate taxes. Loans with weaknesses so severe that collection in full is highly questionable or improbable, but because of certain reasonably specific pending factors have not been charged off, are assigned an internal risk rating of doubtful.
The following table summarizes the Company's commercial credit exposure, based on internal risk rating, at the dates indicated (dollars in thousands):
September 30, 2024 June 30, 2024 December 31, 2023
CRE
Total Commercial
 Percent of Commercial Loans CRE
Total Commercial
 Percent of Commercial Loans CRE
Total Commercial
 Percent of Commercial Loans
Pass $ 5,183,517  $ 15,152,359  91.3  % $ 5,153,816  $ 15,414,539  91.8  % $ 5,317,230  $ 15,287,548  93.2  %
Special mention 145,338  323,326  1.9  % 138,403  265,940  1.6  % 97,552  319,905  1.9  %
Substandard accruing 587,097  932,746  5.6  % 597,888  946,832  5.6  % 390,724  711,266  4.3  %
Substandard non-accruing 70,860  186,565  1.1  % 54,088  131,193  0.8  % 13,727  86,903  0.5  %
Doubtful —  16,265  0.1  % 8,301  25,258  0.2  % —  19,035  0.1  %
$ 5,986,812  $ 16,611,261  100.0  % $ 5,952,496  $ 16,783,762  100.0  % $ 5,819,233  $ 16,424,657  100.0  %
Total criticized and classified commercial loans increased by $322 million for the nine months ended September 30, 2024. The majority of this increase was in the CRE office category. Criticized and classified CRE loans increased by $301 million for the nine months ended September 30, 2024, $282 million of which was office exposure (including office related construction loans). This trend has moderated over the most recent quarter, with an increase of $6 million of criticized/classified CRE office exposure for the three months ended September 30, 2024. As expected in the current environment, there has been some further risk rating migration within the criticized and classified population, primarily within the CRE office category. Rent abatement periods, delays in completing build-out of leased space and in some cases lower occupancy levels have contributed to risk rating migration in the office portfolio. When office space is leased to new tenants, landlords frequently provide initial rent abatement periods. During these rent abatement periods, we do not include pro-forma rental payments to be made in the future under the terms of new leases in operating cash flows for the purposes of determining risk ratings.
52




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.
September 30, 2024 June 30, 2024 December 31, 2023
Amortized Cost % of Loan Segment Amortized Cost % of Loan Segment Amortized Cost % of Loan Segment
Special mention:
CRE
Hotel $ —  —  % $ 394  0.1  % $ 15,712  3.2  %
Retail 4,449  0.5  % 4,476  0.5  % 36,000  4.4  %
Office 112,458  6.3  % 127,066  7.1  % 45,840  2.6  %
Industrial 28,431  2.1  % —  —  % —  —  %
Other —  —  % 6,467  7.6  % —  —  %
145,338  2.6  % 138,403  2.6  % 97,552  1.8  %
Owner occupied commercial real estate 8,141  0.4  % 2,388  0.1  % 22,150  1.1  %
Commercial and industrial 169,847  2.4  % 125,149  1.7  % 197,924  2.8  %
Franchise and equipment finance
 —  —  % —  —  % 2,279  1.2  %
$ 323,326  $ 265,940  $ 319,905 
Substandard accruing:
CRE
Hotel $ 22,388  4.6  % $ 58,626  11.4  % $ 41,805  8.5  %
Retail 91,586  9.9  % 88,549  10.3  % 53,205  6.5  %
Multi-family 129,114  14.9  % 98,784  12.0  % 115,755  13.8  %
Office 247,161  13.9  % 230,020  12.8  % 100,307  5.7  %
Industrial 725  0.1  % 733  0.1  % —  —  %
Construction and land
 93,421  18.8  % 118,452  20.3  % 76,883  15.5  %
Other 2,702  3.1  % 2,724  3.2  % 2,769  3.4  %
587,097  10.7  % 597,888  11.1  % 390,724  7.3  %
Owner occupied commercial real estate 100,233  5.0  % 90,833  4.6  % 71,908  3.7  %
Commercial and industrial 217,157  3.1  % 228,433  3.2  % 208,984  3.0  %
Franchise and equipment finance
 28,259  10.2  % 29,678  9.7  % 39,650  10.4  %
$ 932,746  $ 946,832  $ 711,266 
53




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)
38243825
(1)Excludes SBA
(2)Includes Pinnacle and franchise and equipment finance
The following charts present criticized and classified CRE loans by property type at the dates indicated (in millions):
September 30, 2024 December 31, 2023

40194020

54




The following graphs present delinquency trends by segment over the periods indicated (in millions):
Commercial Real Estate
Commercial(1)
41274128
(1)Includes Pinnacle and franchise and equipment finance
Residential Loans
Excluding government insured loans, our residential portfolio consists largely of performing jumbo mortgage loans purchased through established correspondent channels with FICO scores above 700, full documentation, current LTVs of 80% or less and are primarily owner-occupied. 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.
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 September 30, 2024:
FICO Distribution LTV Distribution Vintage
534953505351
55




The following graph presents delinquency trends for residential loans, excluding government insured residential loans, over the periods indicated (in millions):
Residential Delinquencies
5516
FICO scores are generally updated semi-annually and were most recently updated in the third quarter of 2024. LTVs are typically based on valuation at origination since we do not routinely update residential appraisals.
At September 30, 2024, 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.
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 most recent stress test incorporating the FRB's CCAR severely adverse scenario was performed during the second quarter of 2024, based on the December 31, 2023 balance sheet.
56




The following charts summarize the results of this stress test, based on the FRB's CCAR severely adverse scenario (dollars in millions):
Total Loan Portfolio Stress Test Results(1)
Total Loan Portfolio Stress Test Results.gif
CRE Portfolio Stress Test Results(2)
CRE Portfolio stress test results.gif
(1)Excludes Pinnacle municipal finance and mortgage warehouse lending.
(2)Construction loans are included in the chart based on their applicable property type.

Operating Lease Equipment, net
There were no operating leases internally risk rated substandard or worse at September 30, 2024. 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. There were no impairment charges recognized during the three and nine months ended September 30, 2024 and 2023.
57




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.
The following table presents information about the Company's non-performing loans and non-performing assets at the dates indicated (dollars in thousands):
September 30, 2024 June 30, 2024 December 31, 2023
Non-accrual loans:
Commercial:
Non-owner occupied commercial real estate $ 29,310  $ 16,721  $ 290 
Construction and land 31,882  33,841  — 
Owner occupied commercial real estate 1,263  —  289 
Commercial and industrial 86,350  43,384  33,941 
Franchise and equipment finance
 15,387  18,983  23,678 
Guaranteed portion of SBA
 35,100  38,968  41,756 
Non-guaranteed portion of SBA
 3,538  4,554  5,984 
Total commercial loans 202,830  156,451  105,938 
Residential 21,061  16,411  20,513 
Total non-accrual loans 223,891  172,862  126,451 
Loans past due 90 days and still accruing 593  593  593 
Total non-performing loans 224,484  173,455  127,044 
OREO and other non-performing assets 5,303  2,513  3,536 
Total non-performing assets $ 229,787  $ 175,968  $ 130,580 
Non-performing loans to total loans
 0.92  % 0.70  % 0.52  %
Non-performing loans, excluding the guaranteed portion of non-accrual SBA loans, to total loans
 0.78  % 0.54  % 0.35  %
Non-performing assets to total assets
 0.64  % 0.50  % 0.37  %
Non-performing assets, excluding the guaranteed portion of non-accrual SBA loans, to total assets
 0.54  % 0.39  % 0.25  %
ACL to total loans 0.94  % 0.92  % 0.82  %
Commercial ACL to commercial loans (1)
 1.41  % 1.42  % 1.29  %
ACL to non-performing loans 101.68  % 130.12  % 159.54  %
Net charge-offs to average loans (2)
 0.12  % 0.12  % 0.09  %

(1)    For purposes of this ratio, commercial loans includes the C&I and CRE sub-segments, as well as franchise and equipment finance. Due to their unique risk profiles, MWL and municipal finance are excluded from this ratio.
(2)    Annualized for the nine months ended September 30, 2024 and the six months ended June 30, 2024.
The increase in non-accrual loans during the three months ended was primarily related to two commercial and industrial loans. 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 $229 million, $225 million, and $277 million at September 30, 2024, June 30, 2024, and December 31, 2023, respectively.
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.
Non-Performing Loans to Total Loans Non-Performing Assets to Total Assets
1731 1735

Net Charges-Offs to Average Loans (1)
1740
(1)    Annualized for the nine months ended September 30, 2024 and the six months ended June 30, 2024.
The following graph presents the trend in non-performing loans by portfolio segment over the periods indicated (in millions):
1908
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.
58




Analysis of the Allowance for Credit Losses
The ACL is management's estimate of the amount of expected credit losses over the life of the loan portfolio, or the amount of amortized cost basis not expected to be collected, at the balance sheet date. This estimate encompasses information about historical events, current conditions and reasonable and supportable economic forecasts. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Given 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 changes 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. 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 and adjusted LTVs. 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. 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. At September 30, 2024 and December 31, 2023, we used a combination of weighted third-party provided economic scenarios in calculating the quantitative portion of the ACL. Each of these externally provided scenarios in fact represents the result of a probability weighting of thousands of individual scenario paths.
See Note 1 to the consolidated financial statements of the Company's 2023 Annual Report on Form 10-K for more detailed information about our ACL methodology and related accounting policies.
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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):
 
CRE
C&I(2)
Pinnacle - Municipal Finance
 Franchise and Equipment Finance Residential Total
Balance at December 31, 2022
 $ 24,751  $ 97,190  $ 173  $ 14,091  $ 11,741  $ 147,946 
Impact of adoption of ASU 2022-02 —  (1,671) —  (6) (117) (1,794)
Balance at January 1, 2023 24,751  95,519  173  14,085  11,624  146,152 
Provision for (recovery of) credit losses 10,843  49,696  59  5,671  (3,602) 62,667 
Charge-offs (972) (13,971) —  (7,247) —  (22,190)
Recoveries 131  9,253  —  41  9  9,434 
Balance at September 30, 2023 $ 34,753  $ 140,497  $ 232  $ 12,550  $ 8,031  $ 196,063 
Balance at December 31, 2023
 $ 41,338  $ 142,622  $ 243  $ 10,855  $ 7,631  $ 202,689 
Provision for (recovery of) credit losses 25,761  18,908  (26) (2,145) 4,221  46,719 
Charge-offs (6,202) (19,220) —  (5,709) (126) (31,257)
Recoveries 376  9,373  —  345  4  10,098 
Balance at September 30, 2024 $ 61,273  $ 151,683  $ 217  $ 3,346  $ 11,730  $ 228,249 
Net Charge-offs to Average Loans (1)
Nine Months Ended September 30, 2023 0.02  % 0.07  % —  % 2.17  % —  % 0.07  %
Nine Months Ended September 30, 2024 0.13  % 0.14  % —  % 2.20  % —  % 0.12  %
(1)Annualized.
(2)Includes mortgage warehouse lending.

The following table shows the distribution of the ACL at the dates indicated (dollars in thousands):
September 30, 2024 June 30, 2024 December 31, 2023
  Total
%(1)
 Total
%(1)
 Total
%(1)
Non-owner occupied commercial real estate $ 47,843  22.5  % $ 45,561  21.8  % $ 32,810  21.6  %
Construction and land 13,430  2.0  % 24,340  2.4  % 8,528  2.0  %
CRE 61,273  69,901  41,338 
Owner occupied commercial real estate 17,938  8.2  % 16,416  8.0  % 17,642  7.9  %
Commercial and industrial(2)
 133,745  31.2  % 127,001  31.3  % 124,980  30.1  %
Pinnacle - municipal finance 217  3.1  % 223  3.4  % 243  3.6  %
Franchise and equipment finance
 3,346  1.1  % 5,931  1.2  % 10,855  1.5  %
155,246  149,571  153,720 
Residential 11,730  31.9  % 6,226  31.9  % 7,631  33.3  %
$ 228,249  100.0  % $ 225,698  100.0  % $ 202,689  100.0  %
(1)Represents percentage of loans receivable in each category to total loans receivable.
(2)Includes mortgage warehouse lending.

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The following table presents the ACL as a percentage of loans at the dates indicated, by portfolio sub-segment:
September 30, 2024 June 30, 2024 December 31, 2023
Commercial:
CRE 1.02  % 1.17  % 0.71  %
C&I
 1.68  % 1.57  % 1.60  %
Franchise and equipment finance
 1.20  % 1.93  % 2.85  %
Total commercial (1)
 1.41  % 1.42  % 1.29  %
Pinnacle - municipal finance 0.03  % 0.03  % 0.03  %
Residential and MWL
 0.14  % 0.08  % 0.09  %
0.94  % 0.92  % 0.82  %
ACL to non-performing loans 101.68  % 130.12  % 159.54  %
(1)For purposes of this ratio, commercial loans includes the C&I and CRE sub-segments, as well as franchise and equipment finance. Due to their unique risk profiles, MWL and municipal finance are excluded from this ratio.
Factors contributing to the change in the ACL during the three months ended September 30, 2024, are depicted in the chart below (dollars in millions):
ACL Waterfall Q3 2024.gif
Changes in the ACL during the three months ended September 30, 2024
As depicted in the chart above, the most significant drivers of the increase in the ACL from June 30, 2024 to September 30, 2024, were (i) an increase in qualitative overlays; (ii) updates to certain assumptions; and (iii) changes in portfolio composition and characteristics; partially offset by (i) an improvement in the economic forecast and (ii) net charge-offs. At September 30, 2024, the ratio of the ACL to loans was 0.94% compared to 0.92% at June 30, 2024 and 0.82% at December 31, 2023. The ACL to loans ratio for commercial portfolio sub-segments including C&I, CRE, and franchise and equipment finance was 1.41% and 1.42% at September 30, 2024 and June 30, 2024, respectively, up from 1.29% at December 31, 2023. The ACL to loans ratio for CRE office loans was 2.20% at September 30, 2024 compared to 2.47% and 1.18% at June 30, 2024 and December 31, 2023, respectively. The decline in the ACL to loans ratio for the CRE office category for the three months ended September 30, 2024 was primarily attributable to a decline in the specific reserve for one office loan for which an updated appraisal reflected a more favorable valuation than our previous estimate.
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Further discussion of changes in the ACL for select portfolio sub-segments follows:
•The ACL for the CRE portfolio sub-segment decreased by $8.6 million during the three months ended September 30, 2024, from 1.17% to 1.02% of loans. The most significant reasons for the decrease in the ACL for this segment were decreases in specific reserves, and risk rating migrations, offset by an increase in the qualitative overlay.
•The ACL for the commercial and industrial sub-segment, including owner-occupied commercial real estate, increased by $8.2 million during the three months ended September 30, 2024, from 1.57% to 1.68% of loans. The most significant reasons for the increase in the ACL for this segment were (i) increases in specific reserves; and (ii) an increase in the qualitative overlay; partially offset by (i) an improvement in the economic forecast; and (ii) net charge-offs.
•The ACL for the franchise and equipment finance sub-segment decreased by $2.6 million during the three months ended September 30, 2024, from 1.93% to 1.20% of loans. This decline is primarily due to a charge-off.
•The ACL for the residential segment increased by $5.5 million for the three months ended September 30, 2024, mainly attributable to updated modeling assumptions about minimum levels of loss given default.
The estimate of the ACL at September 30, 2024, was informed by forecasted economic scenarios published in September 2024, 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 September 30, 2024, was modeled using a weighting of baseline, downside and upside third-party economic scenarios, with the highest weighting ascribed to the baseline scenario and lower weightings ascribed equally to the downside and upside scenarios.
Some of the high level data points informing the baseline scenario, which was the scenario most heavily weighted, used in estimating the quantitative portion of the ACL at September 30, 2024, included:
•Labor market assumptions, which reflected national unemployment peaking at 4.3% and
•Annualized growth in national GDP troughing at 1.8% in the baseline.
The above unemployment and GDP growth assumptions are provided to give a high level overview of the nature and severity of the baseline economic forecast scenario used in estimating the ACL. Numerous additional variables and assumptions not explicitly stated, including but not limited to detailed commercial and residential property forecasts, projected stock market volatility indices and a variety of additional 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, many 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.
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Deposits
The Company has a diverse deposit book by industry sector. Approximately 64% of our total deposits were commercial or municipal deposits at September 30, 2024.
The following table presents information about the Company's insured and collateralized deposits as of September 30, 2024 (dollars in thousands):
Total deposits $ 27,856,225 
Estimated amount of uninsured deposits
 $ 13,592,365 
Less: collateralized deposits (3,047,517)
Less: affiliate deposits (304,111)
Adjusted uninsured deposits $ 10,240,737 
Estimated insured and collateralized deposits $ 17,615,488 
Insured and collateralized deposits to total deposits 63  %
The estimated amount of uninsured deposits at September 30, 2024 and December 31, 2023, was $13.6 billion and $12.4 billion, respectively. Collateralized and affiliate deposits are included in these amounts. Time deposit accounts with balances of $250,000 or more totaled $880 million and $941 million at September 30, 2024 and December 31, 2023, respectively. The following table shows scheduled maturities of estimated uninsured time deposits as of September 30, 2024 (in thousands):
Three months or less $ 515,977 
Over three through six months 208,617 
Over six through twelve months 60,713 
Over twelve months 4,162 
$ 789,469 
For additional information about Deposits, see Note 10 to the consolidated financial statements.
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 and maturities of outstanding FHLB advances, as of September 30, 2024 (dollars in thousands):
Amount Weighted Average Rate
Maturing in:
2024 - One month or less
 $ 3,150,000  5.11  %
2024 - Over one month
 330,000  5.08  %
2025
 100,000  5.29  %
Total contractual balance outstanding $ 3,580,000 
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.
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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 September 30, 2024 (dollars in thousands):
Notional Amount Weighted Average Rate
Cash flow hedges maturing in:
2025 $ 1,125,000  3.30  %
2026 1,430,000  3.50  %
Thereafter 25,000  2.50  %
$ 2,580,000  3.40  %
See Note 6 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):
September 30, 2024 December 31, 2023
Senior notes:
Principal amount of 4.875% senior notes maturing on November 17, 2025
 $ 388,479  $ 388,479 
Unamortized discount and debt issuance costs (1,025) (1,676)
387,454  386,803 
Subordinated notes:
Principal amount of 5.125% subordinated notes maturing on June 11, 2030
 300,000  300,000 
Unamortized discount and debt issuance costs (3,900) (4,331)
296,100  295,669 
Total notes 683,554  682,472 
Finance leases 25,140  26,501 
Notes and other borrowings $ 708,694  $ 708,973 
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 capacity, repurchase agreement capacity and a letter of credit with the FHLB provide additional sources of contingent liquidity. For the nine months ended September 30, 2024 and 2023, net cash provided by operating activities was $248 million and $594 million, respectively. The most significant contributor to the period over period decline in net cash provided by operating activities was a decline in cash proceeds from the sale of loans held for sale, due to less loan sale activity.
Same day available liquidity includes 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.

64

The following chart presents the components of same day available liquidity at September 30, 2024 and December 31, 2023 (in millions):
Same Day Available Liquidity
1487
The increase in same day available liquidity as compared to December 31, 2023 reflected the decline in outstanding FHLB advances, increasing FHLB capacity. At September 30, 2024, the ratio of estimated insured and collateralized deposits to total deposits was 63%, compared to 66% at December 31, 2023, and the ratio of available liquidity to estimated uninsured, uncollateralized deposits was 147% compared to 152% at December 31, 2023. The decline in brokered deposits, which are generally insured, as a portion of total deposits contributed to the decline in these ratios. As a commercially focused bank, due to the inherent nature of commercial deposits, a significant portion of our deposits are uninsured. We continue to market and educate our customers about products that enable them to obtain FDIC insurance on certain deposits exceeding the standard single depositor insurance limit, have implemented single depositor concentration limits and reduced or eliminated exposure to sectors or depositors that evidenced higher volatility following the events of early 2023.
Our 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. 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 present some of the Company's liquidity measures, where applicable, their related policy limits and operating risk thresholds at the dates indicated:
September 30, 2024 Policy Limit
Available liquidity to uninsured/non-collateralized deposits
 147% <100%
Wholesale funding/total assets
 26.3% <37.5%
65

September 30, 2024 Operating Threshold
Available operational liquidity/volatile liabilities
2.40x
≥1.30x
Liquidity stress test coverage ratio
1.79x
≥1.50x
FHLB advances/total assets
 12.5%
≤20%
One year liquidity ratio
2.50x
≥1.00x
Loan to deposit ratio
 87.6%
≤100%
Top 20 uninsured depositors to total deposits (excluding brokered & municipal deposits)
 13.9%
≤15%
Non interest-bearing demand deposits/total deposits
 27.4%
≥20%
Available on-balance sheet liquidity
 9.3%
≥5%
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.
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 September 30, 2024 and December 31, 2023, 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.
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.
The following table provides information regarding regulatory capital for the Company and the Bank as of September 30, 2024 (dollars in thousands):
  September 30, 2024
  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 $ 2,971,720  8.31  %
N/A (1)
N/A (1)
 $ 1,430,108  4.00  %
N/A (1)
N/A (1)
CET1 risk-based capital $ 2,971,720  11.82  % $ 1,634,337  6.50  % $ 1,131,464  4.50  % $ 1,760,056  7.00  %
Tier 1 risk-based capital $ 2,971,720  11.82  % $ 2,011,492  8.00  % $ 1,508,619  6.00  % $ 2,137,211  8.50  %
Total risk-based capital $ 3,502,509  13.93  % $ 2,514,365  10.00  % $ 2,011,492  8.00  % $ 2,640,084  10.50  %
BankUnited:
Tier 1 leverage $ 3,424,146  9.59  % $ 1,786,129  5.00  % $ 1,428,903  4.00  % N/A N/A
CET1 risk-based capital $ 3,424,146  13.63  % $ 1,632,353  6.50  % $ 1,130,091  4.50  % $ 1,757,919  7.00  %
Tier 1 risk-based capital $ 3,424,146  13.63  % $ 2,009,050  8.00  % $ 1,506,788  6.00  % $ 2,134,616  8.50  %
Total risk-based capital $ 3,654,935  14.55  % $ 2,511,313  10.00  % $ 2,009,050  8.00  % $ 2,636,878  10.50  %
(1)There is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.
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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.
Net Interest Income Simulation
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 policy 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 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.
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 September 30, 2024 and December 31, 2023:
Down 200 Down 100 Plus 100 Plus 200
Policy Limits:
In year 1 (12) % (8) % (8) % (12) %
In year 2 (15) % (11) % (11) % (15) %
Model Results at September 30, 2024 - increase (decrease)
In year 1 (6.3) % (2.7) % 2.2  % 4.5  %
In year 2 (6.8) % (2.9) % 2.1  % 3.8  %
Model Results at December 31, 2023 - increase (decrease)
In year 1 (4.7) % (1.6) % 1.0  % 2.1  %
In year 2 (6.0) % (2.3) % 1.5  % 2.0  %
EVE Simulation
The following table illustrates the modeled change in EVE in the indicated scenarios at September 30, 2024 and December 31, 2023:
Down 200 Down 100 Plus 100 Plus 200
Policy Limits
 (20.0) % (10.0) % (10.0) % (20.0) %
Model Results at September 30, 2024 - increase (decrease):
 15.0  % 9.7  % (7.6) % (14.9) %
Model Results at December 31, 2023 - increase (decrease):
 15.2  % 9.5  % (8.8) % (17.4) %
All of the modeled results at September 30, 2024, are within ALM policy limits.
67

The Company uses many assumptions in estimating the impact of changes in interest rates on forecasted net interest income and EVE. Actual results may not be similar to the Company's projections due to many factors including but not limited to the timing and frequency of market rate changes, market conditions, unanticipated changes in depositor behavior and loan prepayment speeds, the shape of the yield curve, changes in balance sheet composition and the Company's actions in response to changing external and balance sheet dynamics. Some of the more significant assumptions used by the Company in estimating the impact of changes in interest rates on forecasted net interest income and EVE at September 30, 2024 were:
•Prepayment speeds for loans, with CPRs ranging from 7% to 12% depending on loan characteristics and the magnitude of the modeled rate shock;
•Prepayment speeds for investment securities, with CPRs ranging from 4.5% to 7.5% depending on individual security collateral and characteristics and the magnitude of the modeled rate shock;
•Deposit decay rates ranging between 15% and 20%;
•Overall non-maturity interest bearing deposit beta of 75%;
Derivative Financial Instruments and Hedging Activities
Management continually evaluates a variety of hedging strategies that are available to manage interest rate risk..
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 September 30, 2024 (dollars in thousands):
Weighted
Average Pay Rate / Strike Price		 Weighted
Average Receive Rate / Strike Price		 Weighted
Average
Remaining
Life in Years
    Notional Amount
  Hedged Item
Derivatives designated as cash flow hedges:
Pay-fixed interest rate swaps Variability of interest cash flows on variable rate borrowings $ 2,580,000  3.40% Daily SOFR 1.4
Pay-fixed interest rate swaps Variability of interest cash flows on variable rate liabilities 250,000  1.38% Fed Funds Effective Rate 0.3
Pay-variable interest rate swaps Variability of interest cash flows on variable rate loans 200,000  Term SOFR 3.72% 1.6
Interest rate caps purchased, indexed to Fed Funds effective rate Variability of interest cash flows on variable rate liabilities 200,000  0.88% 0.7
Interest rate collar, indexed to 1-month SOFR(1)
 Variability of interest cash flows on variable rate loans 125,000  5.58% 1.50% 1.9
Derivatives designated as fair value hedges:
Pay-fixed interest rate swaps Variability of fair value of fixed rate loans 50,000  1.98% Daily SOFR 0.2
    $ 3,405,000 
(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 September 30, 2024, was $494 million. The short duration of our AFS investment portfolio (1.73 at September 30, 2024) also provides a natural offset from an interest rate risk perspective to the longer duration of the residential mortgage portfolio.
See Note 6 to the consolidated financial statements for additional information about derivative financial instruments.
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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): 
September 30, 2024 June 30, 2024
Total stockholders’ equity $ 2,807,804  $ 2,699,348 
Less: goodwill and other intangible assets 77,637  77,637 
Tangible stockholders’ equity $ 2,730,167  $ 2,621,711 
 
Common shares issued and outstanding 74,749,012  74,758,609 
 
Book value per common share $ 37.56  $ 36.11 
 
Tangible book value per common share $ 36.52  $ 35.07 
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Item 3.  Quantitative and Qualitative Disclosures About Market Risk
See the section entitled “Interest Rate Risk” included in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Form 10-Q, 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.
During the quarter ended September 30, 2024, there were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II.  OTHER INFORMATION
Item 1.   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 currently available information and the advice of legal counsel, the likelihood is remote that any 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.
Item 1A.   Risk Factors
There have been no material changes in the risk factors disclosed by the Company in its 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 20, 2024.
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 5.   Other Information
During the three months ended September 30, 2024, 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.
70




Item 6. 
Exhibits
Exhibit
Number		   Description   Location
         
Filed herewith
Filed herewith
Filed herewith
Filed herewith
101.INS The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document Filed herewith
101.SCH XBRL Taxonomy Extension Schema Filed herewith
101.CAL XBRL Taxonomy Extension Calculation Linkbase Filed herewith
101.DEF XBRL Taxonomy Extension Definition Linkbase Filed herewith
101.LAB XBRL Taxonomy Extension Label Linkbase Filed herewith
101.PRE XBRL Taxonomy Extension Presentation Linkbase Filed herewith
71




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized this 4th day of November 2024.
/s/ Rajinder P. Singh
Rajinder P. Singh
Chairman, President and Chief Executive Officer
 
 
/s/ Leslie N. Lunak
Leslie N. Lunak
Chief Financial Officer
72
EX-31.1 2 a20240930ex311.htm EX-31.1 Document

Exhibit 31.1
 
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
I, Rajinder P. Singh, certify that:
 
1.    I have reviewed this quarterly report on Form 10-Q of BankUnited, Inc.;
 
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
 
c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Rajinder P. Singh  
Rajinder P. Singh  
Chairman, President and Chief Executive Officer  
Date: November 4, 2024  


EX-31.2 3 a20240930ex312.htm EX-31.2 Document

Exhibit 31.2
 
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
I, Leslie N. Lunak, certify that:
 
1.    I have reviewed this quarterly report on Form 10-Q of BankUnited, Inc.;
 
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
 
c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Leslie N. Lunak  
Leslie N. Lunak  
Chief Financial Officer  
Date: November 4, 2024  


EX-32.1 4 a20240930ex321.htm EX-32.1 Document

Exhibit 32.1
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
In connection with the Quarterly Report of BankUnited, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rajinder P. Singh, as Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
1)    The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
 
2)    the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/ Rajinder P. Singh  
Rajinder P. Singh  
Chairman, President and Chief Executive Officer  
 
Date: November 4, 2024

EX-32.2 5 a20240930ex322.htm EX-32.2 Document

Exhibit 32.2
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
In connection with the Quarterly Report of BankUnited, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leslie N. Lunak, as Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
1)    The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
 
2)    the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/ Leslie N. Lunak  
Leslie N. Lunak  
Chief Financial Officer  
 
 Date: November 4, 2024