Bankunited, Inc. · NYSE:BKU
Bankunited — Q2 2020 Earnings Presentation
39 slides from Bankunited's earnings presentation, Jul 29, 2020
Slide 1: Q2 2020 – Supplemental Information
Exhibit 99.2 BankUnited, Inc. Q2 2020 – Supplemental Information July 29, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of BankUnited, Inc. (“BankUnited,” “BKU” or the “Company”) with respect to, among other things, future events and
Slide 3: Financial Highlights
Financial Highlights ar
Slide 4: Strong Results in a Challenging Environment
Strong Results in a Challenging Environment • PPNR grew to $122.3 million for Q2 from $85.0 million for the preceding quarter Solid Results with • NIM increased to 2.39% from 2.35% linked quarter • The cost of deposits declined by 0.56% to 0.80% quarter over quarter Improved PPNR • Operating expense
Slide 5: Highlights from Second Quarter Earnings
Highlights from Second Quarter Earnings Change From ($ in millions, except per share data) 2Q20 1Q20 2Q19 1Q20 2Q19 Key Highlights Reduction in funding costs outpaced decline in interest income for the Net Interest Income $190 $181 $191 $9 ($1) quarter Provision for Credit Losses 25 125 (3) (100) 28
Slide 6: Continuing to Transform our Deposit Mix
Continuing to Transform our Deposit Mix Non-interest bearing demand deposits have grown by 62% since December 31, 2018 ($ in millions) $23,474 $23,679 $23,922 $23,956 $24,395 $25,001 $26,070 $4,599 $5,883 Non-interest Demand $3,621 $3,765 $4,099 $4,127 $4,295 Interest Demand $1,771 $1,761 $1,831 $1,
Slide 7: Prudently Underwritten and Well-Diversified Loan Portfolio
Prudently Underwritten and Well-Diversified Loan Portfolio At June 30, 2020 ($ in millions) Loan Portfolio Over Time Commercial Loan Portfolio Residential and Other Consumer Multi-family Non-owner occupied CRE BFG- Construction and Land Franchise Owner Occupied CRE 3% C&I SBA PPP $23,835 BFG- CRE Mo
Slide 8: BankUnited 2.0 Update
BankUnited 2.0 Update • 15 months into implementation, BankUnited 2.0 is currently tracking at 81% of our previously disclosed targets. • Cost savings continue ahead of schedule, while realization of revenue has been delayed as a result of a more challenging than anticipated interest rate environmen
Slide 9: Liquidity and Capital
Liquidity and Capital ar
Slide 10: Strong Capital – Well-Positioned to Withstand Severe Stress
Strong Capital – Well-Positioned to Withstand Severe Stress Stress Testing Results ($ in millions) BankUnited N.A. Regulatory Capital Total Risk Based Capital 14.3% CET1 Capital 13.7% 14.1% Tier 1 Leverage • We stressed our March 31, 2020 portfolio using both the 2018 DFAST 10.0% and 2020 DFAST seve
Slide 11: Robust Liquidity Position
Robust Liquidity Position Key Liquidity Ratios 12/31/19 3/31/20 6/30/20 30 Day Liquidity Ratio • We have not experienced 1.8x 1.4x 2.4x stress on our liquidity Loans to Deposits 95.1% 92.8% 91.4% position through the period of the pandemic Wholesale Funding / Total Assets 25.3% 27.5% 25.8% $9.8BN Ca
Slide 12: Allowance for Credit Losses
Allowance for Credit Losses ar
Slide 13: CECL Methodology
CECL Methodology CECL Methodology Underlying Principles Economic Forecast Key Variables • The ACL under CECL represents • Our ACL estimate was informed by • The models ingest numerous national, management’s best estimate at the Moody’s economic scenarios regional and MSA level economic balance sheet
Slide 14: Drivers of Change in the ACL
Drivers of Change in the ACL ($ in millions) Qualitative Overlay Assumption Portfolio Changes Changes Economic Forecast • New loans • Additional • Primarily • Exits/runoff • Current qualitative updates to • Portfolio market overlay for assumptions seasoning adjustment borrowers about • Risk rating •
Slide 15: Drivers of Change in the ACL by Portfolio Segment
Drivers of Change in the ACL by Portfolio Segment ($ in millions) Assumption Portfolio Economic Qualitative Changes Changes Forecast Overlay • More favorable outlook for volatility Commercial and equity prices ACL ACL 3/31/20 6/30/20 Assumption Portfolio Economic Qualitative Changes Changes Forecast
Slide 16: Allocation of the ACL
Allocation of the ACL ($ in millions) January 1, 2020 March 31, 2020 June 30, 2020 Balance % of Loans Balance % of Loans Balance % of Loans Residential and other consumer $ 19.3 0.34% $ 12.6 0.22% $ 10.7 0.19% Commercial: Commercial real estate 16.7 0.22% 40.8 0.57% 108.9 1.54% Commercial and indust
Slide 17: Loan Portfolio and Credit
Loan Portfolio and Credit ar
Slide 18: Loan Portfolio – Geographic Distribution
Loan Portfolio – Geographic Distribution At June 30, 2020 Commercial (1) Residential NY 16% Other CA FL 38% 40% 28% Other 44% NY 23% FL 11% CRE NY 39% Other 14% FL 47% (1) Includes SBF,MWL, BFG and Pinnacle 18
Slide 19: Loan Portfolio – Granular, Diversified Commercial & Industrial Portfolio
Loan Portfolio – Granular, Diversified Commercial & Industrial Portfolio At June 30, 2020 ($ in millions) • Includes $2.0 billion of First owner-occupied real estate Deferral Re-Deferral • Some key observations: Industry Balance (1) Commitment % of Portfolio Granted Requested • Educational services
Slide 20: Loan Portfolio – Commercial Real Estate by Property Type
Loan Portfolio – Commercial Real Estate by Property Type At June 30, 2020 ($ in millions) First Wtd. Avg. Wtd. Avg. Non- Deferral Re-Deferral Property Type Balance FL NY Other DSCR LTV Performing Granted Requested Office $ 2,080 53% 30% 17% 2.17 59.0% $ - $ 372 $ 54 Multifamily 2,010 24% 65% 11% 1.7
Slide 21: Loan Portfolio – Deferrals Summary
Loan Portfolio – Deferrals Summary ($ in millions) Through July 17, 2020 First Deferral Granted Re-Deferral Requested • We granted initial Count Balance % of Portfolio Count Balance % of Portfolio CRE - Property Type: COVID related Retail 119 $769 53% 8 $76 5% payment deferral Hotel 93 $537 86% 21 $
Slide 22: Loan Portfolio – Segments Identified for Heightened Monitoring
Loan Portfolio – Segments Identified for Heightened Monitoring At June 30, 2020 Moderate exposure to sectors most impacted by the pandemic ($ in millions) % of Total Non- First Deferral Re-Deferral Portfolio Balance Loans Performing Special Mention Classified Granted (2) Requested Retail - CRE $ 1,4
Slide 23: Loan Portfolio – Retail
Loan Portfolio – Retail At June 30, 2020 ($ in millions) Retail - Commercial Real Estate First Deferral Re-Deferral Property Type Balance Granted Requested • No significant mall or “big Retail - Unanchored $ 734 $ 373 $ 48 Retail - Anchored 644 369 28 box” exposure Restaurant 28 18 - Gas station 25
Slide 24: Loan Portfolio – BFG Franchise Finance
Loan Portfolio – BFG Franchise Finance At June 30, 2020 ($ in millions) Portfolio Breakdown by Concept First Deferral Re-Deferral Restaurant Concepts Balance % of BFG Franchise Granted Requested Burger King $ 66 11% $ 19 $ - Dunkin Donuts 45 7% 38 4 Popeyes 28 4% 15 5 Jimmy John's 23 4% 22 13 Domino
Slide 25: Loan Portfolio – Hotel
Loan Portfolio – Hotel At June 30, 2020 ($ in millions) Exposure by Flag • 75% of our exposure is in Florida, followed by 12% in New York Other • Includes $59.7 million in SBA Sheraton $88 Marriott loans of which $13.7 million is $39 14% $171 guaranteed 6% 28% • Substantially all hotel properties ar
Slide 26: BFG Energy Exposure
BFG Energy Exposure At June 30, 2020 ($ in millions) BFG Energy Portfolio • Our energy exposure is modest Balance • Assets in the operating lease Operating leases $ 286.9 portfolio have useful lives that Loan/Finance Lease 56.3 span multiple economic cycles Total $ 343.2 • Railcar fleet is 55% tank
Slide 27: Credit Quality – Residential
Credit Quality – Residential At June 30, 2020 High quality residential portfolio consists FICO Distribution(1) of primarily prime jumbo mortgages with de-minimis charge-offs since <719 or inception as well as fully government NA insured assets 13% 720-759 21% >760 66% Breakdown by LTV(1) Breakdown b
Slide 28: Asset Quality Metrics
Asset Quality Metrics ($ in millions) Non-performing Loans to Total Loans Non-performing Assets to Total Assets Incl. guaranteed portion of non-accrual SBA loans Incl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrual SBA loans Excl. guaranteed portion of non-accrua
Slide 29: Non-Performing Loans by Portfolio Segment
Non-Performing Loans by Portfolio Segment ($ in millions) Residential CRE C&I Equipment Franchise SBF(1) $204,787 $204,248 $198,221 $61,892 $63,713 $63,726 $129,891 $13,631 $32,857 $20,939 $34,108 $37,635 $1,148 $5,308 $11,561 $17,424 $65,296 $65,588 $28,309 $51,130 $24,135 $37,488 $17,213 $27,759 $
Slide 30: Criticized and Classified Loans
Criticized and Classified Loans ($ in millions) Commercial Real Estate Commercial & Industrial $600 $600 $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 12/31/18 12/31/19 3/31/20 6/30/20 Franchise Finance Equipment Finance SBF(1) $600 $600 $600 $500 $500 $50
Slide 31: Criticized and Classified - CRE by Property Type
Criticized and Classified - CRE by Property Type ($ in millions) Office Multifamily Retail $275 $275 $275 $250 $250 $250 $225 $225 $225 $200 $200 $200 $175 $175 $175 $150 $150 $150 $125 $125 $125 $100 $100 $100 $75 $75 $75 $50 $50 $50 $25 $25 $25 $0 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 12/31/18 1
Slide 32: Criticized and Classified – BFG Franchise Finance
Criticized and Classified – BFG Franchise Finance ($ in millions) Restaurant Concepts Fitness Concepts $160 $160 $140 $140 $120 $120 $100 $100 $80 $80 $60 $60 $40 $40 $20 $20 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 12/31/18 12/31/19 3/31/20 6/30/20 Other $160 $140 $120 $100 $80 $60 $40 $20 $0 32 12/
Slide 33: Asset Quality - Delinquencies
Asset Quality - Delinquencies ($ in millions) Commercial CRE $105 $105 $90 $90 $75 $75 $60 $60 $45 $45 $30 $30 $15 $15 $0 $0 12/31/18 12/31/19 3/31/20 6/30/20 12/31/18 12/31/19 3/31/20 6/30/20 Residential (1) (1) $105 $90 $75 $60 $45 $30 $15 $0 (1) Excludes government insured residential loans. 33 1
Slide 34: Investment Portfolio
Investment Portfolio ar
Slide 35: Investment Securities AFS
Investment Securities AFS No credit losses expected on the $8.7 billion portfolio; unrealized losses attributable primarily to widening spreads - valuations have recovered materially during the second quarter. ($ in millions) Portfolio Composition Ratings Distribution State and Other A NR Municipal
Slide 36: Investment Securities – Asset Quality of Select Non-Agency Securities
Investment Securities – Asset Quality of Select Non-Agency Securities At June 30, 2020 Strong credit enhancement levels on CLOs and CMBS A Collateralized Loan Obligations (CLOs) AA 3% 13% Subordination Wtd. Avg. Rating Min Max Avg Stress Scenario Loss AAA 36.1 48.2 43.0 20.7 AA 26.9 40.4 32.4 22.0 A
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures PPNR is a non-GAAP financial measure. Management believes this measure is relevant to understanding the performance of the Company attributable to elements other than the provision for credit losses, particularly in view of the adoption of the CECL accounting methodology,
Slide 39: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) ACL to total loans, excluding government insured residential loans, PPP loans and MWL is a non-GAAP financial measure. Management believes this measure is relevant to understanding the adequacy of the ACL coverage, excluding the impact of loans with a zero-los