UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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 June 30, 20202021
Commission File Number: 001-35039 

BankUnited, Inc.
(Exact name of registrant as specified in its charter)

Delaware27-0162450
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
14817 Oak LaneMiami LakesFL33016
(Address of principal executive offices)(Zip Code)
 
Registrant’s telephone number, including area code: ((305) 569-2000305) 569-2000
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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  ☐  No  ☒ 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 
ClassTrading SymbolName of Exchange on Which Registered
Common Stock, $0.01 Par ValueBKUNew York Stock Exchange

The number of outstanding shares of the registrant common stock, $0.01 par value, as of August 5, 20202, 2021 was 92,401,950.

92,820,882.







BANKUNITED, INC.
Form 10-Q
For the Quarter Ended June 30, 20202021
TABLE OF CONTENTS

Page
Page
ii
PART I.
ITEM 1.
Consolidated Balance Sheets
1
Consolidated Statements of Income
2
Consolidated Statements of Comprehensive Income
3
Consolidated Statements of Cash Flows
4
Consolidated Statements of Stockholders’ Equity
6
Notes to Consolidated Financial Statements
7
ITEM 2.
4134
ITEM 3.
7969
ITEM 4.
8069
PART II.
ITEM 1.
8070
ITEM 1A.
8070
ITEM 2.
8170
ITEM 6.
8271
8372


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.
ACILoans acquired with evidence of deterioration in credit quality since origination (Acquired Credit Impaired)
ACLAllowance for credit losses
AFSAvailable for sale
ALCOAsset/Liability Committee
ALLLAllowance for loan and lease losses
AOCIAccumulated other comprehensive income
APYAnnual Percentage Yield
ASCARMAdjustable rate mortgage
ASCAccounting Standards Codification
ASUAccounting Standards Update
BKUBankUnited, Inc.
BankUnited
BKUBankUnited, Inc.
BankUnitedBankUnited, National Association
The BankBankUnited, National Association
BridgeBridge Funding Group, Inc.
Buyout loansFHA and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA securitizations
CARES ActCoronavirus Aid, Relief, and Economic Security Act
CDOCollateralized debt obligation
CECLCurrent expected credit losses
CET1Common Equity Tier 1 capital
CFPBConsumer Financial Protection Bureau
CLOCollateralized loan obligations
CMBSCommercial mortgage-backed securities
CMEChicago Mercantile Exchange
CMOsCollateralized mortgage obligations
COVID-19Coronavirus disease of 2019
CPRConstant prepayment rate
CUSIPCommittee on Uniform Securities Identification Procedures
DIFDeposit insurance fund
DSCRDebt Service Coverage Ratio
EPSEarnings per common share
EVEEconomic value of equity
FASBFinancial Accounting Standards Board
FDIAFederal Deposit Insurance Act
FDICFederal Deposit Insurance Corporation
FHA loanLoan guaranteed by the Federal Housing Administration
FHLBFederal Home Loan Bank
FICOFair Isaac Corporation (credit score)
FRBFederal Reserve Bank
GAAPU.S. generally accepted accounting principles
GDPGross Domestic Product
GNMAGovernment National Mortgage Association
HTMHeld to maturity

ii

IPOCECLCurrent expected credit losses
CET1Common Equity Tier 1 capital
C&ICommercial and Industrial
CLOCollateralized loan obligations
CMBSCommercial mortgage-backed securities
CMEChicago Mercantile Exchange
CMOsCollateralized mortgage obligations
COVID-19Coronavirus disease of 2019
CRECommercial real estate
DFASTDodd-Frank Act Stress Test
DSCRDebt Service Coverage Ratio
EPSEarnings per common share
EVEEconomic value of equity
FASBFinancial Accounting Standards Board
FDIAFederal Deposit Insurance Act
FHAFederal Housing Administration
FHLBFederal Home Loan Bank
FICOFair Isaac Corporation (credit score)
FRBFederal Reserve Bank
GAAPU.S. generally accepted accounting principles
GDPGross Domestic Product
GLB ActThe Gramm-Leach-Bliley Financial Modernization Act of 1999
GNMAGovernment National Mortgage Association
HPIHome price indices
HTMHeld to maturity
IPOInitial public offering
IRSInternal Revenue Service
ISDAInternational Swaps and Derivatives Association
LGD
ii

LGDLoss Given Default
LIBORLondon InterBank Offered Rate
LIHTCLow Income Housing Tax Credits
LTVLoan-to-value
MBSLTVMortgage-backed securitiesLoan-to-value
MSAMBSMortgage-backed securities
MSAMetropolitan Statistical Area
NRSROMSLFFederal Reserve Main Street Lending Facility
MWLMortgage warehouse lending
Non-OOCRENon-owner occupied commercial real estate
NRSRONationally recognized statistical rating organization
NYSENew York Stock Exchange
OCCOffice of the Comptroller of the Currency
OCI
OCIOther comprehensive income
OREO
OOCREOwner occupied commercial real estate
OREOOther real estate owned
PCDPurchased credit-deteriorated
PDPCDPurchased credit-deteriorated
PDProbability of default
PinnaclePinnacle Public Finance, Inc.
PPNRPre-tax, pre-provision net revenue
PPPSmall Business Administration’s Paycheck Protection Program
PPPLFFRB Paycheck Protection Program Liquidity Facility
Proxy StatementDefinitive proxy statement for the Company's 2019 annual meeting of stockholders
PSUPerformance Share Unit
QRMsQualified residential mortgages
REITReal Estate Investment Trust
ROU AssetRight-of-use Asset
RSU
RSURestricted Share Unit
SBA
SBAU.S. Small Business Administration
SBFSmall Business Finance Unit
SECSecurities and Exchange Commission
SOFRSecured Overnight Financing Rate
TDRTroubled-debt restructuring
Tri-State
S&P 500Standard & Poor's 500 Index
TDRTroubled-debt restructuring
Tri-StateNew York, New Jersey and Connecticut
UPBUnpaid principal balance
USDAU.S. Department of Agriculture
VA loanLoan guaranteed by the U.S. Department of Veterans Affairs
WARM
VIXCBOE Volatility Index
WARMWeighted-average remaining maturity


iii


PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements and Supplementary Data
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except share and per share data)
 June 30,
2020		 December 31,
2019
ASSETS 
  
Cash and due from banks: 
  
Non-interest bearing$10,599
 $7,704
Interest bearing391,632
 206,969
Cash and cash equivalents402,231
 214,673
Investment securities (including securities recorded at fair value of $8,683,628 and $7,759,237)8,693,628
 7,769,237
Non-marketable equity securities233,051
 253,664
Loans held for sale2,623
 37,926
Loans23,834,889
 23,154,988
Allowance for credit losses(266,123) (108,671)
Loans, net23,568,766
 23,046,317
Bank owned life insurance292,012
 282,151
Operating lease equipment, net689,965
 698,153
Goodwill and other intangible assets77,652
 77,674
Other assets785,971
 491,498
Total assets$34,745,899
 $32,871,293
    
LIABILITIES AND STOCKHOLDERS’ EQUITY 
  
Liabilities: 
  
Demand deposits: 
  
Non-interest bearing$5,883,362
 $4,294,824
Interest bearing2,865,944
 2,130,976
Savings and money market10,590,315
 10,621,544
Time6,730,803
 7,347,247
Total deposits26,070,424
 24,394,591
Federal funds purchased100,000
 100,000
FHLB and PPPLF borrowings4,650,599
 4,480,501
Notes and other borrowings722,332
 429,338
Other liabilities447,491
 486,084
Total liabilities31,990,846
 29,890,514
    
Commitments and contingencies


 


    
Stockholders' equity: 
  
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 92,420,278 and 95,128,231 shares issued and outstanding924
 951
Paid-in capital991,509
 1,083,920
Retained earnings1,905,639
 1,927,735
Accumulated other comprehensive loss(143,019) (31,827)
Total stockholders' equity2,755,053
 2,980,779
Total liabilities and stockholders' equity$34,745,899
 $32,871,293

June 30,
2021		December 31,
2020
ASSETS  
Cash and due from banks:  
Non-interest bearing$17,902 $20,233 
Interest bearing877,446 377,483 
Cash and cash equivalents895,348 397,716 
Investment securities (including securities recorded at fair value of $10,222,035 and $9,166,683)10,232,035 9,176,683 
Non-marketable equity securities164,959 195,865 
Loans held for sale0 24,676 
Loans22,885,074 23,866,042 
Allowance for credit losses(175,642)(257,323)
Loans, net22,709,432 23,608,719 
Bank owned life insurance303,519 294,629 
Operating lease equipment, net667,935 663,517 
Goodwill77,637 77,637 
Other assets649,422 571,051 
Total assets$35,700,287 $35,010,493 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Liabilities:  
Demand deposits:  
Non-interest bearing$8,834,228 $7,008,838 
Interest bearing3,218,441 3,020,039 
Savings and money market13,578,526 12,659,740 
Time2,978,074 4,807,199 
Total deposits28,609,269 27,495,816 
Federal funds purchased0 180,000 
FHLB advances2,681,505 3,122,999 
Notes and other borrowings721,639 722,495 
Other liabilities526,331 506,171 
Total liabilities32,538,744 32,027,481 
Commitments and contingencies00
Stockholders' equity:  
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 93,238,553 and 93,067,500 shares issued and outstanding932 931 
Paid-in capital1,011,786 1,017,518 
Retained earnings2,173,698 2,013,715 
Accumulated other comprehensive loss(24,873)(49,152)
Total stockholders' equity3,161,543 2,983,012 
Total liabilities and stockholders' equity$35,700,287 $35,010,493 
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 June 30,Six Months Ended June 30,
 2021202020212020
Interest income:  
Loans$202,520 $213,938 $407,855 $448,297 
Investment securities37,674 50,932 76,175 106,992 
Other1,607 2,908 3,200 6,628 
Total interest income241,801 267,778 487,230 561,917 
Interest expense:
Deposits17,316 50,187 39,692 133,009 
Borrowings26,174 27,254 52,987 57,995 
Total interest expense43,490 77,441 92,679 191,004 
Net interest income before provision for credit losses198,311 190,337 394,551 370,913 
Provision for (recovery of) credit losses(27,534)25,414 (55,523)150,842 
Net interest income after provision for credit losses225,845 164,923 450,074 220,071 
Non-interest income:
Deposit service charges and fees5,417 3,701 10,317 7,887 
Gain on sale of loans, net2,234 4,326 3,988 7,792 
Gain on investment securities, net4,155 6,836 6,520 3,383 
Lease financing13,522 16,150 26,010 31,631 
Other non-interest income7,429 7,338 16,218 10,956 
Total non-interest income32,757 38,351 63,053 61,649 
Non-interest expense:
Employee compensation and benefits56,459 48,877 115,747 107,764 
Occupancy and equipment11,492 11,901 23,367 24,270 
Deposit insurance expense4,222 4,806 11,672 9,209 
Professional fees2,139 3,131 4,051 6,335 
Technology and telecommunications16,851 14,025 32,592 26,621 
Depreciation of operating lease equipment12,834 12,219 25,051 24,822 
Other non-interest expense14,455 11,411 29,193 26,217 
Total non-interest expense118,452 106,370 241,673 225,238 
Income before income taxes140,150 96,904 271,454 56,482 
Provision for income taxes36,176 20,396 68,666 10,925 
Net income$103,974 $76,508 $202,788 $45,557 
Earnings per common share, basic$1.12 $0.80 $2.18 $0.47 
Earnings per common share, diluted$1.11 $0.80 $2.17 $0.47 
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Interest income:     
  
Loans$213,938
 $249,364
 $448,297
 $489,996
Investment securities50,932
 72,796
 106,992
 149,141
Other2,908
 5,069
 6,628
 9,921
Total interest income267,778
 327,229
 561,917
 649,058
Interest expense:       
Deposits50,187
 99,987
 133,009
 197,408
Borrowings27,254
 36,359
 57,995
 69,866
Total interest expense77,441
 136,346
 191,004
 267,274
Net interest income before provision for credit losses190,337
 190,883
 370,913
 381,784
Provision for (recovery of) credit losses25,414
 (2,747) 150,842
 7,534
Net interest income after provision for credit losses164,923
 193,630
 220,071
 374,250
Non-interest income:       
Deposit service charges and fees3,701
 4,290
 7,887
 8,120
Gain on sale of loans, net4,326
 2,121
 7,792
 5,057
Gain on investment securities, net6,836
 4,116
 3,383
 9,901
Lease financing16,150
 17,005
 31,631
 34,191
Other non-interest income7,338
 7,805
 10,956
 14,323
Total non-interest income38,351
 35,337
 61,649
 71,592
Non-interest expense:       
Employee compensation and benefits48,877
 57,251
 107,764
 122,484
Occupancy and equipment11,901
 13,991
 24,270
 27,157
Deposit insurance expense4,806
 5,027
 9,209
 9,068
Professional fees3,131
 6,937
 6,335
 14,808
Technology and telecommunications14,025
 12,013
 26,621
 23,181
Depreciation of operating lease equipment12,219
 11,489
 24,822
 23,301
Other non-interest expense11,411
 13,377
 26,217
 26,776
Total non-interest expense106,370
 120,085
 225,238
 246,775
Income before income taxes96,904
 108,882
 56,482
 199,067
Provision for income taxes20,396
 27,431
 10,925
 51,644
Net income$76,508
 $81,451
 $45,557
 $147,423
Earnings per common share, basic$0.80
 $0.81
 $0.47
 $1.46
Earnings per common share, diluted$0.80
 $0.81
 $0.47
 $1.45

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 June 30,Six Months Ended June 30,
 2021202020212020
Net income$103,974 $76,508 $202,788 $45,557 
Other comprehensive income (loss), net of tax: 
Unrealized gains (losses) on investment securities available for sale: 
Net unrealized holding gain (loss) arising during the period13,926 188,405 (8,559)(24,755)
Reclassification adjustment for net securities gains realized in income(2,118)(4,264)(5,073)(5,404)
Net change in unrealized gains (losses) on securities available for sale11,808 184,141 (13,632)(30,159)
Unrealized losses on derivative instruments: 
Net unrealized holding gain (loss) arising during the period(8,944)(11,070)15,667 (91,884)
Reclassification adjustment for net losses realized in income11,088 7,502 22,244 10,851 
Net change in unrealized losses on derivative instruments2,144 (3,568)37,911 (81,033)
Other comprehensive income (loss)13,952 180,573 24,279 (111,192)
Comprehensive income (loss)$117,926 $257,081 $227,067 $(65,635)
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
        
Net income$76,508
 $81,451
 $45,557
 $147,423
Other comprehensive income (loss), net of tax:  

    
Unrealized gains (losses) on investment securities available for sale:  

    
Net unrealized holding gain (loss) arising during the period188,405
 23,326
 (24,755) 44,943
Reclassification adjustment for net securities gains realized in income(4,264) (2,877) (5,404) (6,050)
Net change in unrealized gain (loss) on securities available for sale184,141
 20,449
 (30,159) 38,893
Unrealized losses on derivative instruments:  

    
Net unrealized holding loss arising during the period(11,070) (37,218) (91,884) (57,893)
Reclassification adjustment for net (gains) losses realized in income7,502
 (1,241) 10,851
 (3,242)
Net change in unrealized losses on derivative instruments(3,568) (38,459) (81,033) (61,135)
Other comprehensive income (loss)180,573
 (18,010) (111,192) (22,242)
Comprehensive income (loss)$257,081
 $63,441
 $(65,635) $125,181



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)


 Six Months Ended June 30,
 20212020
Cash flows from operating activities:  
Net income$202,788 $45,557 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization and accretion, net(15,124)(11,590)
Provision for (recovery of) credit losses(55,523)150,842 
Gain on sale of loans, net(3,988)(7,792)
Gain on investment securities, net(6,520)(3,383)
Equity based compensation12,414 7,351 
Depreciation and amortization37,089 35,691 
Deferred income taxes1,218 (769)
Proceeds from sale of loans held for sale455,996 369,807 
Loans originated for sale, net of repayments0 (17,681)
Other:
Increase in other assets(132,384)(23,101)
(Decrease) increase in other liabilities81,833 (224,093)
Net cash provided by operating activities577,799 320,839 
Cash flows from investing activities:  
Purchase of investment securities(3,145,279)(2,263,847)
Proceeds from repayments and calls of investment securities1,265,922 587,139 
Proceeds from sale of investment securities800,056 547,337 
Purchase of non-marketable equity securities(1,200)(128,562)
Proceeds from redemption of non-marketable equity securities32,106 149,175 
Purchases of loans(2,271,081)(1,085,437)
Loan originations and repayments, net2,638,153 68,012 
Proceeds from sale of loans, net183,263 11,604 
Acquisition of operating lease equipment(38,875)(19,118)
Other investing activities(5,183)(10,663)
Net cash used in investing activities(542,118)(2,144,360)
 Six Months Ended June 30,
 2020 2019
Cash flows from operating activities: 
  
Net income$45,557
 $147,423
Adjustments to reconcile net income to net cash provided by operating activities:   
Amortization and accretion, net(11,590) (22,452)
Provision for credit losses150,842
 7,534
Gain on sale of loans, net(7,792) (5,057)
Gain on investment securities, net(3,383) (9,901)
Equity based compensation7,351
 11,251
Depreciation and amortization35,691
 35,555
Deferred income taxes(769) 10,813
Proceeds from sale of loans held for sale369,807
 209,854
Loans originated for sale, net of repayments(17,681) (51,024)
Other:   
(Increase) decrease in other assets(23,101) 31,897
Decrease in other liabilities(224,093) (128,097)
Net cash provided by operating activities320,839
 237,796
    
Cash flows from investing activities: 
  
Purchase of investment securities(2,263,847) (2,160,715)
Proceeds from repayments and calls of investment securities587,139
 647,214
Proceeds from sale of investment securities547,337
 1,626,250
Purchase of non-marketable equity securities(128,562) (196,137)
Proceeds from redemption of non-marketable equity securities149,175
 173,400
Purchases of loans(1,085,437) (894,235)
Loan originations, repayments and resolutions, net68,012
 (51,014)
Proceeds from sale of loans, net11,604
 9,560
Proceeds from sale of operating lease equipment—
 8,986
Acquisition of operating lease equipment(19,118) (37,122)
Other investing activities(10,663) (24,950)
Net cash used in investing activities(2,144,360) (898,763)
   (Continued)
    
    
    
    
    
    
    
    
    

4
The accompanying notes are an integral part of these consolidated financial statements


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




 Six Months Ended June 30,
 20212020
Cash flows from financing activities:  
Net increase in deposits1,113,453 1,675,833 
Net decrease in federal funds purchased(180,000)0 
Additions to FHLB and PPPLF borrowings1,106,000 3,762,336 
Repayments of FHLB and PPPLF borrowings(1,545,999)(3,596,310)
Proceeds from issuance of notes, net0 293,858 
Dividends paid(43,714)(42,702)
Repurchase of common stock(7,263)(100,972)
Other financing activities19,474 19,036 
Net cash provided by financing activities461,951 2,011,079 
Net increase in cash and cash equivalents497,632 187,558 
Cash and cash equivalents, beginning of period397,716 214,673 
Cash and cash equivalents, end of period$895,348 $402,231 
Supplemental disclosure of cash flow information:
Interest paid$94,782 $209,233 
Income taxes paid, net$236,491 $4,883 
Supplemental schedule of non-cash investing and financing activities:
Unsettled sale of loans$0 $11,058 
Transfers from loans to loans held for sale$611,568 $329,308 
Dividends declared, not paid$21,400 $21,909 
Unsettled investment securities trades, net$0 $174,788 

 Six Months Ended June 30,
 2020 2019
Cash flows from financing activities:   
Net increase in deposits1,675,833
 448,177
Net decrease in federal funds purchased—
 (76,000)
Additions to FHLB and PPPLF borrowings3,762,336
 2,456,000
Repayments of FHLB and PPPLF borrowings(3,596,310) (1,921,000)
Proceeds from issuance of notes, net293,858
 —
Dividends paid(42,702) (42,937)
Repurchase of common stock(100,972) (142,065)
Other financing activities19,036
 (448)
Net cash provided by financing activities2,011,079
 721,727
Net increase in cash and cash equivalents187,558
 60,760
Cash and cash equivalents, beginning of period214,673
 382,073
Cash and cash equivalents, end of period$402,231
 $442,833
    
Supplemental disclosure of cash flow information:   
Interest paid$209,233
 $258,561
Income taxes refunded (paid), net$4,883
 $(4,350)
    
Supplemental schedule of non-cash investing and financing activities:   
Unsettled sale of loans$11,058
 $—
Transfers from loans to other real estate owned and other repossessed assets$4,161
 $2,817
Transfers from loans to loans held for sale$329,308
 $342,310
Transfers from loans held for sale to loans$9,055
 $—
Dividends declared, not paid$21,909
 $20,621
Unsettled sales of investment securities$177,546
 $—
Unsettled purchases of investment securities$2,758
 $21,396





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
Income (Loss)
 
Total
Stockholders’
Equity
Balance at March 31, 202092,406,294
 $924
 $987,757
 $1,851,040
 $(323,592) $2,516,129
Comprehensive income—
 —
 —
 76,508
 180,573
 257,081
Dividends ($0.23 per common share)—
 —
 —
 (21,909) —
 (21,909)
Equity based compensation56,688
 1
 3,762
 —
 —
 3,763
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(42,704) (1) (10) —
 —
 (11)
Balance at June 30, 202092,420,278
 $924
 $991,509
 $1,905,639
 $(143,019) $2,755,053
            
Balance at March 31, 201998,404,303
 $984
 $1,179,235
 $1,742,530
 $641
 $2,923,390
Comprehensive income—
 —
 —
 81,451
 (18,010) 63,441
Dividends ($0.21 per common share)—
 —
 —
 (20,621) —
 (20,621)
Equity based compensation18,383
 —
 3,967
 —
 —
 3,967
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(95,061) (1) (175) —
 —
 (176)
Repurchase of common stock(3,011,992) (30) (102,061) —
 —
 (102,091)
Balance at June 30, 201995,315,633
 $953
 $1,080,966
 $1,803,360
 $(17,369) $2,867,910
 
Common
Shares
Outstanding
 
Common
Stock
 
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders’
Equity
Balance at December 31, 201995,128,231
 $951
 $1,083,920
 $1,927,735
 $(31,827) $2,980,779
Impact of adoption of ASU 2016-13—
 —
 —
 (23,817) —
 (23,817)
Comprehensive loss—
 —
 —
 45,557
 (111,192) (65,635)
Dividends ($0.46 per common share)—
 —
 —
 (43,836) —
 (43,836)
Equity based compensation743,696
 8
 11,428
 —
 —
 11,436
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(186,072) (3) (4,428) —
 —
 (4,431)
Exercise of stock options60,000
 1
 1,528
 —
 —
 1,529
Repurchase of common stock(3,325,577) (33) (100,939) —
 —
 (100,972)
Balance at June 30, 202092,420,278
 $924
 $991,509
 $1,905,639
 $(143,019) $2,755,053
            
Balance at December 31, 201899,141,374
 $991
 $1,220,147
 $1,697,822
 $4,873
 $2,923,833
Comprehensive income—
 —
 —
 147,423
 (22,242) 125,181
Dividends ($0.42 per common share)—
 —
 —
 (41,885) —
 (41,885)
Equity based compensation582,353
 6
 9,050
 —
 —
 9,056
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(286,927) (3) (6,251) —
 —
 (6,254)
Exercise of stock options3,910
 —
 44
 —
 —
 44
Repurchase of common stock(4,125,077) (41) (142,024) —
 —
 (142,065)
Balance at June 30, 201995,315,633
 $953
 $1,080,966
 $1,803,360
 $(17,369) $2,867,910


 Common
Shares
Outstanding		Common
Stock		Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity
Balance at March 31, 202193,263,632 $933 $1,008,603 $2,091,124 $(38,825)$3,061,835 
Comprehensive income— — — 103,974 13,952 117,926 
Dividends ($0.23 per common share)— — — (21,400)— (21,400)
Equity based compensation19,469 0 3,211 — — 3,211 
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(44,548)(1)(28)— — (29)
Balance at June 30, 202193,238,553 $932 $1,011,786 $2,173,698 $(24,873)$3,161,543 
Balance at March 31, 202092,406,294 $924 $987,757 $1,851,040 $(323,592)$2,516,129 
Comprehensive income— — — 76,508 180,573 257,081 
Dividends ($0.23 per common share)— — — (21,909)— (21,909)
Equity based compensation56,688 1 3,762 — — 3,763 
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(42,704)(1)(10)— — (11)
Balance at June 30, 202092,420,278 $924 $991,509 $1,905,639 $(143,019)$2,755,053 

 Common
Shares
Outstanding		Common
Stock		Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
Stockholders’
Equity
Balance at December 31, 202093,067,500 $931 $1,017,518 $2,013,715 $(49,152)$2,983,012 
Comprehensive income— — — 202,788 24,279 227,067 
Dividends ($0.46 per common share)— — — (42,805)— (42,805)
Equity based compensation559,180 5 7,218 — — 7,223 
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(184,632)(2)(5,714)— — (5,716)
Exercise of stock options1,569 — 25 — — 25 
Repurchase of common stock(205,064)(2)(7,261)— — (7,263)
Balance at June 30, 202193,238,553 $932 $1,011,786 $2,173,698 $(24,873)$3,161,543 
Balance at December 31, 201995,128,231 $951 $1,083,920 $1,927,735 $(31,827)$2,980,779 
Impact of adoption of ASU 2016-13— — — (23,817)— (23,817)
Balance at January 1, 202095,128,231 951 1,083,920 1,903,918 (31,827)2,956,962 
Comprehensive loss— — — 45,557 (111,192)(65,635)
Dividends ($0.46 per common share)— — — (43,836)— (43,836)
Equity based compensation743,696 8 11,428 — — 11,436 
Forfeiture of unvested shares and shares surrendered for tax withholding obligations(186,072)(3)(4,428)— — (4,431)
Exercise of stock options60,000 1 1,528 — — 1,529 
Repurchase of common stock(3,325,577)(33)(100,939)— — (100,972)
Balance at June 30, 202092,420,278 $924 $991,509 $1,905,639 $(143,019)$2,755,053 
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
June 30, 20202021




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 and related services to individual and corporate customers through 7465 banking centers located in 1413 Florida counties and 54 banking centers located in the New York metropolitan area at June 30, 2020.2021. The Bank also offers certain commercial lending and deposit products through national platforms.
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 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, 20192020 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 six months ended June 30, 20202021 are not necessarily indicative of the results that may be expected in future periods. 
Certain amounts presented for prior periods have been reclassified to conform to the current period presentation.
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.
Significant estimates includeThe most significant estimate impacting the allowance for credit losses andCompany's consolidated financial statements is the fair values of investment securities and other financial instruments.ACL.
New Accounting Pronouncements Adopted During the Six Months Ended June 30, 2020
ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments. The ASU, along with subsequent ASUs issued to clarify certain of its provisions, introduced new guidance which made substantive changes to the accounting for credit losses. The ASU introduced the CECL model which applies to financial assets subject to credit losses and measured at amortized cost, as well as certain off-balance sheet credit exposures. This includes loans, loan commitments, standby letters of credit, net investments in leases recognized by a lessor and HTM debt securities. The CECL model requires an entity to estimate credit losses expected over the life of an exposure, considering information about historical events, current conditions and reasonable and supportable forecasts, and is generally expected to result in earlier recognition of credit losses. The ASU also modified certain provisions of the previous OTTI model for AFS debt securities. Credit losses on AFS debt securities are now limited to the difference between the security's amortized cost basis and its fair value, and should be recognized through an allowance for credit losses rather than as a direct reduction in amortized cost basis. The Company adopted this ASU in the first quarter of 2020 using the modified retrospective transition method for the CECL model and a prospective approach for the AFS debt security model. The Company recorded a cumulative-effect adjustment to retained earnings of $23.8 million, which included $4.8 million related to off -balance sheet credit exposures, on January 1, 2020. No cumulative-effect adjustment was recorded related to AFS debt securities upon adoption. The Company has elected to phase-in the initial impact of the adoption of ASC 326 for regulatory capital purposes, allowing the impact of adoption on regulatory capital to be delayed for two years, followed by a three-year transition period. 


7
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional relief for a limited period of time to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. Under this ASU, companies are provided with optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contract modifications and hedging relationships that currently utilize LIBOR as their benchmark rate, subject to certain criteria being met. The amendments in the ASU also apply to contemporaneous modifications of other contract terms related to the replacement of LIBOR. The amendments in the ASU are effective for all entities as of March 12, 2020 and will only be in effect through December 31, 2022. To date, the impact of adoption of this ASU on the Company's consolidated financial position, results of operations, and cash flows has not been material.
Accounting Pronouncements Not Yet Adopted2021
ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU simplifies the accounting for income taxes by removing certain exceptions stipulated in ASC 740 and making some other targeted changes to the accounting for income taxes. The Company adopted this ASU on January 1, 2021 with no material impact on the Company’s consolidated financial position, results of operations, and cash flows.
ASU No. 2021-01, Reference Rate Reform (Topic 848). This ASU clarifies that certain optional expedients and exceptions provided for in ASU No. 2020-04 for applying GAAP to contract modifications and hedging relationships apply to derivatives that are affected by the discounting transition. The amendments in this ASU are elective and apply to all entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The Company elected to adopt this ASU on a retrospective basis. The impact of adoption of this ASU on the Company's consolidated financial position, results of operations, and cash flows was not material.
Accounting Pronouncements Not Yet Adopted
ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU simplifies the accounting for convertible debt and convertible preferred stock by reducing the number of accounting models for these instruments, resulting in fewer embedded conversion features being separately recognized from the host contract. Additionally, this ASU revises the criteria for determining whether contracts in an entity's own equity meet the scope exception from derivative accounting, which will change the population of contracts that are recognized as assets or liabilities. The amendments in this ASU also revise certain aspects of the guidance on calculating earnings per share with respect to convertible instruments and instruments that may be settled in the entity's own shares. This ASU is effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2020.2021. The Company has not finalized its evaluation of the impact of adoption on its consolidated financial position, results of operations, and cash flows, but the impact is not currently expected to be material.
Updates to the Company's Significant Accounting Policies
7
Loans
The Company's loan portfolio contains 1-4 single family residential first mortgages, government insured residential mortgages, an insignificant amount of home equity loans and lines of credit and other consumer loans; multi-family, non-owner occupied commercial real estate, construction and land, owner-occupied commercial real estate and commercial and industrial loans, PPP loans, mortgage warehouse lines of credit and sales-type and direct financing leases. Loans are reported at amortized cost basis, net of the ACL.
Interest income is accrued based on the principal amount outstanding. Non-refundable loan origination fees, net of direct costs of originating or acquiring loans, as well as purchase premiums and discounts, are deferred and recognized as adjustments to yield over the contractual lives of the related loans using the level yield method.
Non-accrual loans
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 and other consumer loans, other than government insured residential loans, are generally placed on non-accrual status when they are 90 days past due. When a loan is placed on non-accrual status, uncollected interest accrued is reversed and charged to interest income. Payments received on nonaccrual commercial loans are applied as a reduction of principal. Interest payments are recognized as income on a cash basis on nonaccrual residential loans. 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 and consumer loans are generally returned to accrual status when less than 90 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.
Contractually delinquent government insured residential loans are not classified as non-accrual due to the nature of the guarantee. Contractually delinquent PCD loans are not classified as non-accrual as long as the Company has a reasonable expectation about amounts expected to be collected.
Troubled Debt Restructurings
In certain situations, due to economic or legal reasons related to a borrower's financial difficulties, the Company may grant a concession to the borrower for other than an insignificant period of time that it would not otherwise consider. At that time, the related loan is classified as a TDR. The concessions granted may include rate reductions, principal forgiveness, payment forbearance, extensions of maturity at rates of interest below that commensurate with the risk profile of the loans, modification of payment terms and other actions intended to minimize economic loss. A TDR is generally placed on non-accrual status at the time of the modification unless the borrower was performing prior to the restructuring.

8
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 20202021



Under recently issued inter-agency and authoritative guidance and consistent with the CARES Act, short-term (generally periods of six months or less) deferrals or modifications related to COVID-19 will typically not be categorized as TDRs.
Purchased Credit Deteriorated ("PCD") assets
PCD assets are acquired financial assets that, as of the date of acquisition, have experienced a more than insignificant deterioration in credit quality since origination. An assessment is conducted at acquisition to determine whether acquired financial assets meet the criteria to be classified as PCD assets. That assessment may be conducted at the individual asset level, or for a group of assets acquired together that have similar risk characteristics. At acquisition, the ACL related to PCD assets, representing the estimated amount of the UPB of the assets not expected to be collected, is added to the purchase price to determine the amortized cost basis and any non-credit related discount or premium is allocated to the individual assets acquired. The non-credit related discount or premium is accreted or amortized to interest income over the life of the related assets using the level yield method, as long as there is a reasonable expectation about amounts expected to be collected. Subsequent changes in the amount of expected credit losses are recognized immediately by adjusting the ACL and reflecting the periodic changes as credit loss expense or reversal of credit loss expense.
Loans previously categorized as ACI loans were categorized as PCD loans on initial adoption of ASC 326. At adoption, an ACL was recognized and a corresponding adjustment was made to the assets' amortized cost basis. Prior to the adoption of ASC 326, ACI loans were accounted for on a pool basis. These pools were not maintained on adoption. The Company did not re-assess whether modifications to individual PCD loans previously accounted for in pools were TDRs at adoption.
Allowance for Credit Losses ("ACL")
AFS Debt Securities
The Company reviews its AFS debt securities for credit loss impairment at the individual security level on at least a quarterly basis. A security is impaired if its fair value is less than its amortized cost basis. A decline in fair value below amortized cost basis represents a credit loss impairment to the extent the Company does not expect to recover the amortized cost basis of the security. Impairment related to credit losses is recorded through the ACL to the extent fair value is less than the amortized cost basis. Declines in fair value that have not been recorded through the ACL are recorded through other comprehensive income, net of applicable taxes.
In assessing whether an impairment is credit loss related, the Company compares the present value of cash flows expected to be collected to the security's amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, a credit loss exists and an ACL is recorded. The Company discounts expected cash flows at the effective interest rate implicit in the security at the purchase date, adjusted for expected prepayments. For floating rate securities, the Company uses the floating rate as it changes over the life of the security. In developing estimates about cash flows expected to be collected and determining whether a credit loss exists, the Company considers information about past events, current conditions and reasonable and supportable forecasts. Factors and information that the Company uses in making its assessments include, but are not necessarily limited to, the following:
The extent to which fair value is less than amortized cost;
Adverse conditions specifically related to the security, 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 credit ratings;
Relevant market data;
Estimated prepayments, defaults, and the value and performance of underlying collateral at the individual security level.

9
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


The relative importance assigned to each of these factors varies depending on the facts and circumstances pertinent to the individual security being evaluated.
Timely payment of principal and interest on securities issued by the U.S. Government, U.S. government agencies and U.S. government sponsored entities is explicitly or implicitly guaranteed by the U. S. government. Therefore, the Company expects to recover the amortized cost basis of these securities.
If the Company intends to sell a security in an unrealized loss position, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, any allowance for credit losses will be written off and the amortized cost basis will be written down to the debt security’s fair value at the reporting date with any incremental impairment reported in earnings.
Historically, the Company has not experienced credit losses related to AFS securities or uncollectible interest on its AFS securities. However, AFS securities would be charged off to the extent that there was no reasonable expectation of recovery of amortized cost basis. AFS securities would be placed on non-accrual status if the Company did not reasonably expect to receive interest payments in the future and interest accrued would be reversed against interest income. Securities would be returned to accrual status only when collection of interest was reasonably assured.
Loans
The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The ACL is adjusted through the provision for credit losses to the amount of amortized cost basis not expected to be collected, or in the case of PCD loans, the amount of UPB not expected to be collected, at the balance sheet date. Amortized cost basis includes UPB, unamortized premiums or discounts and deferred fees and costs, net of amounts previously charged off.
The measurement of expected credit losses encompasses information about historical events, current conditions and reasonable and supportable forecasts. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Re-evaluation of the ACL estimate in future periods, in light of changes in composition and characteristics of the loan portfolio, changes in the reasonable and supportable forecast and other factors then prevailing may result in material changes in the amount of the ACL and credit loss expense in those future periods.
Loans are charged off against the ACL in the period in which they are deemed uncollectible and recoveries are credited to the ACL when received. Expected recoveries on loans previously charged off, not to exceed the aggregate of amounts previously charged-off and expected to be charged-off, are included in the ACL estimate. For loans secured by residential real estate, an assessment of collateral value is made at no later than 120 days delinquency; any outstanding loan balance in excess of fair value less cost to sell is charged off at no later than 180 days delinquency. Additionally, any outstanding balance in excess of fair value of collateral less cost to sell is charged off (i) within 60 days of receipt of notification of filing from the bankruptcy court, (ii) within 60 days of determination of loss if all borrowers are deceased or (iii) within 90 days of discovery of fraudulent activity. Other consumer loans are typically charged off at 120 days delinquency. Commercial loans are charged off when, in management's judgment, they are considered to be uncollectible.
Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. Factors that may be considered in aggregating loans for this purpose include but are not necessarily limited to, product or collateral type, industry, geography, internal risk rating, credit characteristics such as credit scores or collateral values, and historical or expected credit loss patterns. For loans that do not share similar risk characteristics with other loans such as collateral dependent loans and TDRs, 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. Expected prepayments for commercial loans are generally estimated based on the Company's historical experience. For residential loans, expected prepayments are estimated using a model that incorporates industry prepayment data, calibrated to reflect the Company's experience. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a TDR will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
The length of the reasonable and supportable forecast is evaluated at each reporting period and adjusted if deemed necessary. At June 30, 2020, the Company changed from a 5-year to a 2-year reasonable and supportable forecast period in estimating the ACL.

10
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


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 are applied to estimated exposure at default, considering the term and payment structure of the loan, to generate estimates of expected loss at the loan level. For criticized or classified loans, PDs may be adjusted to benchmark PDs appropriate to the current risk rating if the most current financial information available is deemed not to be reflective of the borrowers' current financial condition. These loan level estimates are aggregated to generate a collective estimate for groups of loans that share common risk characteristics.
For certain less material portfolios including loans and leases to state and local government entities originated by Pinnacle, small balance commercial loans and consumer loans, the WARM method is used to estimate expected credit losses. For the Pinnacle portfolio, historical loss information is based on municipal historical default and recovery data, segmented by credit rating. For small balance commercial loans, historical loss information is based on the Company's historical loss experience over a five year period. For consumer loans, historical loss information is based on peer data; this portfolio subsegment is not significant. All loss estimates are conditioned as applicable on changes in current conditions and the reasonable and supportable economic forecast. Expected credit losses for mortgage warehouse lines of credit are estimated based primarily on the Company's historical loss experience, conditioned as applicable on changes in current conditions and the reasonable and supportable economic forecast. Generally, given the nature of these loans, losses would be expected to manifest within a very short time period after origination.
The Company expects to collect the amortized cost basis of government insured residential loans and PPP loans due to the nature of the government guarantee, so the quantitative ACL is zero for these loans.
Qualitative factors
Qualitative adjustments are made to the ACL when, based on management’s judgment, there are factors impacting expected credit losses not taken into account by the quantitative calculations. Potential qualitative adjustments are categorized as follows:
Economic factors, including material trends and developments that, in management's judgment, may not have been considered in the reasonable and supportable economic forecast;
Credit policy and staffing, including the nature and level of policy and procedural exceptions or changes in credit policy not reflected in quantitative results, changes in the quality of underwriting and portfolio management and staff and issues identified by credit review, internal audit or regulators that may not be reflected in quantitative results;
Concentrations, considering whether the quantitative estimate adequately accounts for concentration risk in the portfolio;
Model imprecision and model validation findings; and
Other factors not adequately considered in the quantitative estimate or other qualitative categories identified by management that may materially impact the amount of expected credit losses.
Collateral dependent loans
Collateral dependent loans are those for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. These loans do not typically share similar risk characteristics with other loans and expected credit losses are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. Estimates of expected credit losses for collateral dependent loans, whether or not foreclosure is probable, are based on the fair value of the collateral adjusted for selling costs when repayment depends on sale of the collateral.

11
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


Troubled debt restructurings
For TDRs, or loans for which there is a reasonable expectation that a TDR will be executed, that are not collateral dependent, the credit loss estimate is determined by comparing the net present value of expected cash flows, discounted at the loan’s original effective interest rate, to the amortized cost basis of the loan.
Off-balance sheet credit exposures
Expected credit losses related to off-balance sheet credit exposures are estimated over the contractual period for which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Expected credit losses are estimated using essentially the same methodologies employed to estimate expected credit losses on the amortized cost basis of loans, taking into consideration the likelihood and amount of additional amounts expected to be funded over the terms of the commitments. The liability for credit losses on off-balance sheet credit exposures is presented within other liabilities on the consolidated balance sheets, distinct from the ACL. Adjustments to the liability are included in the provision for credit losses.
Accrued Interest Receivable
The Company has elected to present accrued interest receivable separate from the amortized cost basis of financial assets carried at amortized cost. The Company is applying the practical expedient provided in ASC 326 to exclude accrued interest receivable balances from tabular disclosures about financial assets carried at amortized cost. The Company has elected not to estimate an ACL on accrued interest receivable balances since uncollectible accrued interest is timely written off in accordance with the Company's accounting policies for non-accrual loans.

12
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


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 June 30,Six Months Ended June 30,
c2021202020212020
Basic earnings per common share: 
Numerator: 
Net income$103,974 $76,508 $202,788 $45,557 
Distributed and undistributed earnings allocated to participating securities(1,338)(3,353)(2,589)(1,939)
Income allocated to common stockholders for basic earnings per common share$102,636 $73,155 $200,199 $43,618 
Denominator:
Weighted average common shares outstanding93,245,282 92,409,949 93,160,962 93,177,243 
Less average unvested stock awards(1,241,381)(1,207,798)(1,223,555)(1,154,589)
Weighted average shares for basic earnings per common share92,003,901 91,202,151 91,937,407 92,022,654 
Basic earnings per common share$1.12 $0.80 $2.18 $0.47 
Diluted earnings per common share:
Numerator:
Income allocated to common stockholders for basic earnings per common share$102,636 $73,155 $200,199 $43,618 
Adjustment for earnings reallocated from participating securities2 0 3 0 
Income used in calculating diluted earnings per common share$102,638 $73,155 $200,202 $43,618 
Denominator:
Weighted average shares for basic earnings per common share92,003,901 91,202,151 91,937,407 92,022,654 
Dilutive effect of stock options and certain shared-based awards181,061 705 137,542 126,858 
Weighted average shares for diluted earnings per common share92,184,962 91,202,856 92,074,949 92,149,512 
Diluted earnings per common share$1.11 $0.80 $2.17 $0.47 
 Three Months Ended June 30, Six Months Ended June 30,
c2020 2019 2020
2019
Basic earnings per common share:     
  
Numerator:     
  
Net income$76,508
 $81,451
 $45,557
 $147,423
Distributed and undistributed earnings allocated to participating securities(3,353) (3,382) (1,939) (6,074)
Income allocated to common stockholders for basic earnings per common share$73,155
 $78,069
 $43,618
 $141,349
Denominator:       
Weighted average common shares outstanding92,409,949
 97,451,019
 93,177,243
 98,150,014
Less average unvested stock awards(1,207,798) (1,174,339) (1,154,589) (1,173,137)
Weighted average shares for basic earnings per common share91,202,151
 96,276,680
 92,022,654
 96,976,877
Basic earnings per common share$0.80
 $0.81
 $0.47
 $1.46
Diluted earnings per common share:       
Numerator:       
Income allocated to common stockholders for basic earnings per common share$73,155
 $78,069
 $43,618
 $141,349
Adjustment for earnings reallocated from participating securities—
 9
 —
 13
Income used in calculating diluted earnings per common share$73,155
 $78,078
 $43,618
 $141,362
Denominator:  

    
Weighted average shares for basic earnings per common share91,202,151
 96,276,680
 92,022,654
 96,976,877
Dilutive effect of stock options and certain shared-based awards705
 345,899
 126,858
 312,821
Weighted average shares for diluted earnings per common share91,202,856
 96,622,579
 92,149,512
 97,289,698
Diluted earnings per common share$0.80
 $0.81
 $0.47
 $1.45

Potentially dilutive unvested shares and share units totaling 1,212,062 and 1,743,403 were outstanding at June 30, 2021 and 2020, respectively, but excluded from the calculation of diluted earnings per common share because their inclusion would have been anti-dilutive.
Participating securities for the three and six months ended June 30, 2020 include unvested shares and 3,023,314 dividend equivalent rights that were issued in conjunction with the IPO of the Company's common stock. These dividend equivalent rights expireexpired in February 2021 and, participatewhile outstanding, participated in dividends on a one-for-one basis.
Potentially dilutive unvested shares and share units totaling 1,743,403 and 1,119,641 were outstanding at June 30, 2020 and 2019, respectively, but excluded from the calculation of diluted earnings per common share because their inclusion would have been anti-dilutive.
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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):
 June 30, 2020
 Amortized Cost Gross Unrealized 
Carrying Value (1)
  Gains Losses 
Investment securities available for sale:       
U.S. Treasury securities$75,217
 $1,963
 $—
 $77,180
U.S. Government agency and sponsored enterprise residential MBS2,371,729
 13,309
 (5,198) 2,379,840
U.S. Government agency and sponsored enterprise commercial MBS455,344
 9,859
 (926) 464,277
Private label residential MBS and CMOs1,101,390
 16,670
 (1,974) 1,116,086
Private label commercial MBS2,075,683
 16,735
 (48,798) 2,043,620
Single family rental real estate-backed securities608,019
 11,381
 (1,193) 618,207
Collateralized loan obligations1,166,929
 —
 (38,176) 1,128,753
Non-mortgage asset-backed securities255,854
 6,251
 (574) 261,531
State and municipal obligations239,502
 19,993
 —
 259,495
SBA securities247,914
 2,286
 (4,258) 245,942
 8,597,581
 $98,447
 $(101,097) 8,594,931
Investment securities held to maturity10,000
     10,000
 $8,607,581
     8,604,931
Marketable equity securities      88,697
       $8,693,628

June 30, 2021
 Amortized CostGross Unrealized
Carrying Value (1)
 GainsLosses
Investment securities available for sale:
U.S. Treasury securities$158,977 $469 $(2,809)$156,637 
U.S. Government agency and sponsored enterprise residential MBS2,197,562 22,257 (4,379)2,215,440 
U.S. Government agency and sponsored enterprise commercial MBS831,726 8,564 (4,702)835,588 
Private label residential MBS and CMOs2,104,579 9,475 (2,327)2,111,727 
Private label commercial MBS2,579,963 18,530 (4,469)2,594,024 
Single family rental real estate-backed securities608,269 9,961 (785)617,445 
Collateralized loan obligations986,214 269 (4,216)982,267 
Non-mortgage asset-backed securities172,791 3,715 0 176,506 
State and municipal obligations209,791 18,834 0 228,625 
SBA securities216,682 2,244 (3,292)215,634 
10,066,554 $94,318 $(26,979)10,133,893 
Investment securities held to maturity10,000 10,000 
$10,076,554 10,143,893 
Marketable equity securities88,142 
$10,232,035 
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 December 31, 2019
 Amortized Cost Gross Unrealized 
Carrying Value (1)
  Gains Losses 
Investment securities available for sale:       
U.S. Treasury securities$70,243
 $219
 $(137) $70,325
U.S. Government agency and sponsored enterprise residential MBS2,018,853
 9,835
 (6,513) 2,022,175
U.S. Government agency and sponsored enterprise commercial MBS366,787
 4,920
 (731) 370,976
Private label residential MBS and CMOs1,001,337
 11,851
 (1,011) 1,012,177
Private label commercial MBS1,719,228
 6,650
 (1,194) 1,724,684
Single family rental real estate-backed securities467,459
 4,016
 (1,450) 470,025
Collateralized loan obligations1,204,905
 322
 (7,861) 1,197,366
Non-mortgage asset-backed securities194,171
 1,780
 (1,047) 194,904
State and municipal obligations257,528
 15,774
 —
 273,302
SBA securities359,808
 4,587
 (1,664) 362,731
 7,660,319
 $59,954
 $(21,608) 7,698,665
Investment securities held to maturity10,000
 

 

 10,000
 $7,670,319
     7,708,665
Marketable equity securities

     60,572
   

 

 $7,769,237
December 31, 2020
 Amortized CostGross Unrealized
Carrying Value (1)
 GainsLosses
Investment securities available for sale:
U.S. Treasury securities$79,919 $1,307 $(375)$80,851 
U.S. Government agency and sponsored enterprise residential MBS2,389,450 19,148 (3,028)2,405,570 
U.S. Government agency and sponsored enterprise commercial MBS531,724 9,297 (1,667)539,354 
Private label residential MBS and CMOs982,890 16,274 (561)998,603 
Private label commercial MBS(2)
2,514,271 24,931 (12,848)2,526,354 
Single family rental real estate-backed securities636,069 14,877 (58)650,888 
Collateralized loan obligations1,148,724 285 (8,735)1,140,274 
Non-mortgage asset-backed securities246,597 6,898 (234)253,261 
State and municipal obligations213,743 21,966 0 235,709 
SBA securities233,387 2,093 (3,935)231,545 
 8,976,774 $117,076 $(31,441)9,062,409 
Investment securities held to maturity10,000 10,000 
$8,986,774 9,072,409 
Marketable equity securities104,274 
$9,176,683 
(1)At fair value except for securities held to maturity.
(1)At fair value except for securities held to maturity.
(2)Amortized cost is net of ACL totaling $0.4 million at December 31, 2020.
Investment securities held to maturity at June 30, 20202021 and December 31, 20192020 consisted of 1 State of Israel bond maturing in 2024. At June 30, 2020 and December 31, 2019, accruedAccrued interest receivable on investments totaled $23$17 million at both June 30, 2021 and $28 million, respectively,December 31, 2020, and is included in other assets in the accompanying consolidated balance sheets.
At June 30, 2020,2021, contractual maturities of investment securities available for sale, adjusted for anticipated prepayments when applicable, were as follows (in thousands):
Amortized Cost Fair ValueAmortized CostFair Value
Due in one year or less$908,180
 $914,970
Due in one year or less$1,463,157 $1,468,146 
Due after one year through five years4,875,569
 4,830,499
Due after one year through five years6,199,918 6,245,085 
Due after five years through ten years2,304,114
 2,332,121
Due after five years through ten years1,971,729 1,984,142 
Due after ten years509,718
 517,341
Due after ten years431,750 436,520 
$8,597,581
 $8,594,931
 $10,066,554 $10,133,893 
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 $4.8 billion and $2.4$4.1 billion at both June 30, 20202021 and December 31, 2019, respectively.

2020.
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The following table provides information about gains and losses on investment securities for the periods indicated (in thousands):
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Proceeds from sale of investment securities available for sale$240,805

$850,527
 $547,337
 $1,626,250
        
Gross realized gains:  

    
Investment securities available for sale$5,723
 $4,631
 $7,255
 $8,956
Gross realized losses:  

    
Investment securities available for sale—
 (716) (2) (724)
Net realized gain5,723
 3,915
 7,253
 8,232
        
Net unrealized gains (losses) on marketable equity securities recognized in earnings1,113
 201
 (3,870) 1,669
        
Gain on investment securities, net$6,836
 $4,116
 $3,383
 $9,901

Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Proceeds from sale of investment securities AFS$389,814 $240,805 $800,056 $547,337 
Gross realized gains on investment securities AFS$2,870 $5,723 $6,862 $7,255 
Gross realized losses on investment securities AFS(29)0 (54)(2)
Net realized gain2,841 5,723 6,808 7,253 
Net unrealized gains (losses) on marketable equity securities recognized in earnings1,314 1,113 (288)(3,870)
Gain on investment securities, net$4,155 $6,836 $6,520 $3,383 
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). No ACL was recorded for any investment securities available for sale in an unrealized loss position at June 30, 2020.:
 June 30, 2021
 Less than 12 Months12 Months or GreaterTotal
 Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
U.S. Treasury securities$121,096 $(2,809)$0 $0 $121,096 $(2,809)
U.S. Government agency and sponsored enterprise residential MBS287,258 (1,161)367,303 (3,218)654,561 (4,379)
U.S. Government agency and sponsored enterprise commercial MBS234,214 (4,369)84,177 (333)318,391 (4,702)
Private label residential MBS and CMOs597,907 (2,327)0 0 597,907 (2,327)
Private label commercial MBS400,800 (3,019)278,005 (1,450)678,805 (4,469)
Single family rental real estate-backed securities122,180 (785)0 0 122,180 (785)
Collateralized loan obligations0 0 565,872 (4,216)565,872 (4,216)
SBA securities0 0 120,630 (3,292)120,630 (3,292)
 $1,763,455 $(14,470)$1,415,987 $(12,509)$3,179,442 $(26,979)
11
 June 30, 2020
 Less than 12 Months 12 Months or Greater Total
 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. Government agency and sponsored enterprise residential MBS$604,143
 $(895) $517,239
 $(4,303) $1,121,382
 $(5,198)
U.S. Government agency and sponsored enterprise commercial MBS39,892
 (108) 73,856
 (818) 113,748
 (926)
Private label residential MBS and CMOs205,524
 (1,974) —
 —
 205,524
 (1,974)
Private label commercial MBS1,302,037
 (45,341) 56,875
 (3,457) 1,358,912
 (48,798)
Single family rental real estate-backed securities184,785
 (1,193) —
 —
 184,785
 (1,193)
Collateralized loan obligations591,422
 (15,873) 537,331
 (22,303) 1,128,753
 (38,176)
Non-mortgage asset-backed securities13,857
 (45) 13,472
 (529) 27,329
 (574)
SBA securities35,136
 (326) 109,837
 (3,932) 144,973
 (4,258)
 $2,976,796
 $(65,755) $1,308,610
 $(35,342) $4,285,406
 $(101,097)

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December 31, 2020
December 31, 2019
Less than 12 Months 12 Months or Greater Total Less than 12 Months12 Months or GreaterTotal
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
U.S. Treasury securities$20,056
 $(137) $—
 $—
 $20,056
 $(137)U.S. Treasury securities$24,369 $(375)$0 $0 $24,369 $(375)
U.S. Government agency and sponsored enterprise residential MBS579,076
 (3,862) 243,839
 (2,651) 822,915
 (6,513)U.S. Government agency and sponsored enterprise residential MBS220,179 (320)370,727 (2,708)590,906 (3,028)
U.S. Government agency and sponsored enterprise commercial MBS99,610
 (696) 6,477
 (35) 106,087
 (731)U.S. Government agency and sponsored enterprise commercial MBS152,233 (1,412)44,255 (255)196,488 (1,667)
Private label residential MBS and CMOs180,398
 (838) 41,636
 (173) 222,034
 (1,011)Private label residential MBS and CMOs141,407 (561)0 0 141,407 (561)
Private label commercial MBS648,761
 (1,060) 76,302
 (134) 725,063
 (1,194)Private label commercial MBS1,268,381 (12,771)37,783 (77)1,306,164 (12,848)
Single family rental real estate-backed securities241,915
 (1,445) 5,460
 (5) 247,375
 (1,450)Single family rental real estate-backed securities28,758 (58)0 0 28,758 (58)
Collateralized loan obligations63,310
 (846) 682,076
 (7,015) 745,386
 (7,861)Collateralized loan obligations304,051 (1,171)588,463 (7,564)892,514 (8,735)
Non-mortgage asset-backed securities78,964
 (962) 7,883
 (85) 86,847
 (1,047)Non-mortgage asset-backed securities0 0 12,327 (234)12,327 (234)
SBA securities10,236
 (2) 142,204
 (1,662) 152,440
 (1,664)SBA securities26,240 (298)104,598 (3,637)130,838 (3,935)
$1,922,326
 $(9,848) $1,205,877
 $(11,760) $3,128,203
 $(21,608)
$2,165,618 $(16,966)$1,158,153 $(14,475)$3,323,771 $(31,441)
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 six months ended June 30, 2020 or other than temporarily impaired during the three2021 and six months ended2020. At June 30, 2019. The2021, the Company doesdid not intendhave an intent to sell securities that arewere in significant unrealized loss positions at June 30, 2020 and it iswas not more likely than not that the Company willwould 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, its investment policy as to permissible holdings and concentration limits, regulatory requirements and other relevant factors.
At June 30, 2020, 2242021, 158 securities available for sale were in unrealized loss positions. The unrealized losses are primarily attributable to changes in interest rates and, in some cases, volatility in the financial markets since their purchase. The amount of impairment related to 6451 of these securities was considered insignificant both individually and in the aggregate, totaling approximately $398 thousand$0.4 million and no further analysis with respect to these securities was considered necessary.
Unrealized losses at June 30, 2020, particularly in the private label CMBS and CLO asset classes, were primarily attributable to widening spreads, resulting in large part from market response to, and dislocation in the wake of, the COVID-19 pandemic.
The basis for concluding that AFS securities were not credit loss impaired and no ACL was considered necessary at June 30, 2020 is further discussed below.
For U.S. Government, Agency and Government Sponsored Enterprise Securities
At June 30, 2020, NaN U.S. Governmentgovernment agency and U.S. government sponsored enterprise residential MBS, 5 U.S. Government agency and sponsored enterprise commercial MBS and 11 SBA securities, were in unrealized loss positions. Thethe 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 entire amortized cost basis of these securities.

 For all other AFS securities in a significant unrealized loss position, the Company performed an analysis by first determining the present value of cash flows expected to be collected, based on stressed economic scenarios more severe than our reasonable and supportable economic forecast. The present value was then compared to the amortized cost basis to identify possible impairment. The economic forecast scenario used for evaluation of impaired securities incorporates assumptions about voluntary prepayment rates, collateral defaults, delinquencies, severity, recovery lag and other relevant factors.
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Private Label Securities:
None of the impaired securities had missed principal or interest payments or had been downgraded by a NRSRO at June 30, 2020. 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 severe than our reasonable and supportable economic forecast at June 30, 2020, 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. Based on the results of this analysis, the Company expects to recover the entire amortized cost basis of its impaired AFS securities at June 30, 2020. No ACL was considered necessary at June 30, 2020.
Private label residential MBS and CMOs
At June 30, 2020,7 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 and prepay trends as well as other economic data which would indicate further stress in the sector. Our June 30, 2020 analysis projected weighted average collateral losses for this category of 4% compared to weighted average credit support of 17%. As of June 30, 2020, 88% of the impaired securities in this category, based on carrying value, were externally rated AAA, and one security representing 12% of impaired securities in this category was not externally rated; this security was internally rated investment grade.
Private label commercial MBS
At June 30, 2020, 70 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 watchlists, bankruptcy data, special servicing trends, delinquency and other economic data which would indicate further stress in the sector. Our June 30, 2020 analysis projected weighted average collateral losses for this category of 13% compared to weighted average credit support of 42%. As of June 30, 2020, 83% of impaired securities in this category, based on carrying value were externally rated AAA, 12% were rated AA and 5% were rated A.
Single family rental real estate-backed securities
At June 30, 2020, 10 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 which would indicate further stress in the sector. Our June 30, 2020 analysis projected weighted average collateral losses for this category of 13% compared to weighted average credit support of 49%. As of June 30, 2020, 87% of the impaired securities in this category, based on carrying value, were externally rated AAA and 13% were rated AA.
Collateralized loan obligations
At June 30, 2020, NaN collateralized loan obligations were in unrealized loss positions. Leveraged loans underlying these securities have seen pricing pressure as the market looks to evaluate ability of borrowers to maintain payments. Uncertainties surrounding the broad economy and how they may translate into rating downgrades and defaults as the COVID-19 crisis plays out have negatively impacted pricing in the leveraged loan market. 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. Our June 30, 2020 analysis projected weighted average collateral losses for this category of 21% compared to weighted average credit support of 41%. As of June 30, 2020, 84% of

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the impaired securities in this category, based on carrying value, were externally rated AAA, 13% were rated AA and 3% were rated A.
Non-mortgage asset-backed securities
At June 30, 2020, 3 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 those assumptions, we took into account collateral type, delineated by whether collateral consisted of loans to borrowers in school, refinancing, or a mixture. Our June 30, 2020 analysis projected weighted average collateral losses for this category of 14% compared to weighted average credit support of 25%. As of June 30, 2020, 50% of the impaired securities in this category, based on carrying value, were externally rated AAA and 50% were rated AA.
Note 4    Loans and Allowance for Credit Losses
Loans consisted of the following at the dates indicated (dollars in thousands):
 June 30, 2020 December 31, 2019
 Total Percent of Total Total Percent of Total
Residential and other consumer: 
  
  
  
1-4 single family residential$4,743,866
 19.9% $4,953,936
 21.4%
Government insured residential826,238
 3.5% 698,644
 3.0%
Other consumer loans7,703
 0.1% 8,539
 0.1%
 5,577,807
 23.5% 5,661,119
 24.5%
Commercial:       
Multi-family1,893,753
 7.9% 2,217,705
 9.6%
Non-owner occupied commercial real estate4,940,531
 20.7% 5,030,904
 21.7%
Construction and land246,609
 1.0% 243,925
 1.1%
Owner occupied commercial real estate2,041,346
 8.6% 2,062,808
 8.9%
Commercial and industrial4,691,326
 19.7% 4,655,349
 20.1%
PPP827,359
 3.5% —
 —%
Pinnacle1,242,506
 5.1% 1,202,430
 5.2%
Bridge - franchise finance623,139
 2.6% 627,482
 2.6%
Bridge - equipment finance589,785
 2.5% 684,794
 3.0%
Mortgage warehouse lending1,160,728
 4.9% 768,472
 3.3%
 18,257,082
 76.5% 17,493,869
 75.5%
Total loans23,834,889
 100.0% 23,154,988
 100.0%
Allowance for credit losses(266,123)   (108,671)  
Loans, net$23,568,766
   $23,046,317
  
 June 30, 2021December 31, 2020
 TotalPercent of TotalTotalPercent of Total
Residential and other consumer:    
1-4 single family residential$5,206,766 22.8 %$4,922,836 20.6 %
Government insured residential1,863,723 8.1 %1,419,074 5.9 %
Other consumer loans5,785 0 %6,312 0.1 %
 7,076,274 30.9 %6,348,222 26.6 %
Commercial:
Multi-family1,256,711 5.5 %1,639,201 6.9 %
Non-owner occupied commercial real estate4,724,183 20.7 %4,963,273 20.8 %
Construction and land218,634 1.0 %293,307 1.2 %
Owner occupied commercial real estate1,960,900 8.6 %2,000,770 8.4 %
Commercial and industrial4,205,795 18.4 %4,447,383 18.6 %
PPP491,960 2.1 %781,811 3.3 %
Pinnacle1,046,537 4.6 %1,107,386 4.6 %
Bridge - franchise finance463,874 2.0 %549,733 2.3 %
Bridge - equipment finance421,939 1.8 %475,548 2.0 %
Mortgage warehouse lending1,018,267 4.4 %1,259,408 5.3 %
 15,808,800 69.1 %17,517,820 73.4 %
Total loans22,885,074 100.0 %23,866,042 100.0 %
Allowance for credit losses(175,642)(257,323)
Loans, net$22,709,432 $23,608,719 
Premiums, discounts and deferred fees and costs, excluding the non-credit related discount on PCD loans, totaled $25$46 million and $50$39 million at June 30, 20202021 and December 31, 2019,2020, respectively. The amortized cost basis of residential PCD loans was $134 million and the related amount of non-credit discount was $135$100 million and $95 million, respectively at June 30, 2021 and $118 million and $115 million, respectively at December 31, 2020. The ACL related to PCD residential loans was $1.1$1.2 million and $1.7$2.8 million at June 30, 20202021 and January 1,December 31, 2020, the date of initial adoption of ASU 2016-13, respectively.
Included in the table above are direct or sales type finance leases totaling $757$665 million and $733$670 million at June 30, 20202021 and December 31, 2019,2020, respectively. The amount of income recognized from direct or sales type finance leases for the three and six months ended June 30, 2021 and 2020 and 2019 totaled $4.5 million, $9.9 million, $5.3 million $10.7 million, $5.5 million and $10.8$10.7 million, respectively and is recorded as interest income on loans in the consolidated statements of income.

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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


During the three and six months ended June 30, 20202021 and 2019,2020, the Company purchased 1-4 single family residential loans totaling $1.3 billion, $2.3 billion, $582 million and $1.1 billion, $589 million and $894 million, respectively. Purchases for the three and six months ended June 30, 2021 and 2020 and 2019 included $578 million, $973 million, $243 million $529 million, $151 million and $284$529 million, respectively, of government insured residential loans.
At June 30, 20202021 and December 31, 2019,2020, the Company had pledged loans with a carrying value of approximately $11.0$9.5 billion and $10.2$9.6 billion, respectively, as security for FHLB advances and Federal Reserve discount window capacity and PPPLF borrowings.capacity.
At June 30, 20202021 and December 31, 2019,2020, accrued interest receivable on loans, net of related ACL at December 31, 2020, totaled $108$97 million and $83$99 million, 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 six months ended June 30, 2021 and 2020.
Allowance for credit losses 
Activity in the allowance for credit losses is summarized below. The balance at December 31, 2019 and amounts presented for the three and six months ended June 30, 2019 represent the allowance for loan and leases losses, estimated using an incurred loss methodology. The ACL at June 30, 2020 and activity for the three and six months then ended were determined using the CECL methodology (in thousands):
13
 Three Months Ended June 30,
 2020 2019
 Residential and Other Consumer Commercial Total Residential and Other Consumer Commercial Total
Beginning balance$12,576
 $238,003
 $250,579
 $10,952
 $103,751
 $114,703
Provision (recovery)(1,924) 33,508
 31,584
 131
 (2,878) (2,747)
Charge-offs—
 (19,178) (19,178) —
 (1,711) (1,711)
Recoveries43
 3,095
 3,138
 153
 1,743
 1,896
Ending balance$10,695
 $255,428
 $266,123
 $11,236
 $100,905
 $112,141
 Six Months Ended June 30,
 2020 2019
 Residential and Other Consumer Commercial Total Residential and Other Consumer Commercial Total
Beginning balance$11,154
 $97,517
 $108,671
 $10,788
 $99,143
 $109,931
Impact of adoption of ASU 2016-138,098
 19,207
 27,305
 —
 —
 —
Provision (recovery)(8,572) 162,021
 153,449
 281
 7,253
 7,534
Charge-offs(31) (26,953) (26,984) —
 (7,844) (7,844)
Recoveries46
 3,636
 3,682
 167
 2,353
 2,520
Ending balance$10,695
 $255,428
 $266,123
 $11,236
 $100,905
 $112,141


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 20202021



The following table presents the components of the provisionAllowance for credit losses
The ACL was determined utilizing a 2-year reasonable and supportable forecast period based on a single economic scenario. Activity in the ACL is summarized below for the periods indicated (in thousands):
 Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
Amount related to funded portion of loans$31,584
 $153,449
Amount related to off-balance sheet credit exposures(6,170) (2,607)
Provision for credit losses$25,414
 $150,842

Three Months Ended June 30,
 20212020
 Residential and Other ConsumerCommercialTotalResidential and Other ConsumerCommercialTotal
Beginning balance$15,844 $205,090 $220,934 $12,576 $238,003 $250,579 
Provision (recovery)(3,938)(23,725)(27,663)(1,924)33,508 31,584 
Charge-offs0 (18,402)(18,402)0 (19,178)(19,178)
Recoveries3 770 773 43 3,095 3,138 
Ending balance$11,909 $163,733 $175,642 $10,695 $255,428 $266,123 
Credit quality information
Six Months Ended June 30,
 20212020
 Residential and Other ConsumerCommercialTotalResidential and Other ConsumerCommercialTotal
Beginning balance$18,719 $238,604 $257,323 $11,154 $97,517 $108,671 
Impact of adoption of ASU 2016-130 0 0 8,098 19,207 27,305 
Balance after adoption of ASU 2016-1318,719 238,604 257,323 19,252 116,724 135,976 
Provision (recovery)(6,802)(47,167)(53,969)(8,572)162,021 153,449 
Charge-offs(14)(30,380)(30,394)(31)(26,953)(26,984)
Recoveries6 2,676 2,682 46 3,636 3,682 
Ending balance$11,909 $163,733 $175,642 $10,695 $255,428 $266,123 
The decrease in the ACL from December 31, 2020 to June 30, 2021 related primarily to the recovery of credit losses recorded during the six months ended June 30, 2021. The most significant factor contributing to the recovery of provision was an improving economic forecast. The increase in the ACL from January 1, 2020, the date of initial adoption of ASU 2016-13, to June 30, 2020 was reflective of the estimated impact of the emerging COVID-19 pandemic on current economic conditions, the trajectory of the economyeconomic forecast and on individual borrowers and portfolio sub-segments.
The following table presents the components of the provision for credit losses for the periods indicated (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Amount related to funded portion of loans$(27,663)$31,584 $(53,969)$153,449 
Amount related to off-balance sheet credit exposures129 (6,170)(919)(2,607)
Amount related to accrued interest receivable0 0 (271)0 
Amount related to AFS debt securities0 0 (364)0 
Total provision for (recovery of) credit losses$(27,534)$25,414 $(55,523)$150,842 
Credit quality information
The credit quality of the loan portfolio has been and is likely tomay continue to be impacted by the developing COVID-19 crisis, its impact on the economy broadly and more specifically on the Company's individual borrowers. SignificantWhile economic conditions continue to improve, some level of uncertainty currently existscontinues to exist about the full extent of this impact and the trajectory of recovery. The ultimate impact is likelymay not be fully reflected in some of the credit quality indicators disclosed below asbelow. Delinquency statistics may not be fully reflective of June 30, 2020, due to the ongoing impact of the pandemic.COVID-19 crisis due to deferral and modification programs offered to affected borrowers.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


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 residential loans
Management considers delinquency status to be the most meaningful indicator of the credit quality of residential and other consumer loans, other than government insured residential loans. Delinquency statistics are 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 at least annually, and were most recently updated in the fourthfirst quarter of 2019.2021. 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 and wages, as well as residential property values.
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on delinquency status: 
June 30, 2021
Amortized Cost By Origination Year
20212020201920182017PriorTotal
Current$1,083,253 $1,189,810 $473,427 $279,499 $441,586 $1,660,924 $5,128,499 
30 - 59 Days Past Due15,148 7,150 9,631 3,635 3,848 6,086 45,498 
60 - 89 Days Past Due0 922 3,229 812 1,082 3,300 9,345 
90 Days or More Past Due0 0 1,702 5,144 851 15,727 23,424 
$1,098,401 $1,197,882 $487,989 $289,090 $447,367 $1,686,037 $5,206,766 
June 30, 2020December 31, 2020
Amortized Cost By Origination Year  Amortized Cost By Origination Year
2020 2019 2018 2017 2016 Prior Total20202019201820172016PriorTotal
Current$249,912
 $807,365
 $488,280
 $753,109
 $776,895
 $1,604,423
 $4,679,984
Current$1,092,183 $645,993 $374,838 $611,377 $740,749 $1,392,192 $4,857,332 
30 - 59 Days Past Due5,703
 11,477
 3,372
 2,701
 7,417
 18,605
 49,275
30 - 59 Days Past Due17,826 5,741 2,564 927 2,913 18,880 48,851 
60 - 89 Days Past Due—
 720
 75
 53
 103
 1,882
 2,833
60 - 89 Days Past Due111 145 435 0 2,825 3,973 7,489 
90 Days or More Past Due—
 807
 2,293
 —
 484
 8,190
 11,774
90 Days or More Past Due0 807 1,762 53 1,027 5,515 9,164 
$255,615
 $820,369
 $494,020
 $755,863
 $784,899
 $1,633,100
 $4,743,866
$1,110,120 $652,686 $379,599 $612,357 $747,514 $1,420,560 $4,922,836 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


 December 31, 2019
 Amortized Cost By Origination Year  
 2019 2018 2017 2016 2015 Prior Total
Current$804,913
 $609,814
 $830,710
 $783,318
 $633,833
 $1,225,030
 $4,887,618
30 - 59 Days Past Due13,915
 3,003
 3,751
 8,419
 4,308
 12,238
 45,634
60 - 89 Days Past Due1,785
 442
 137
 486
 1,766
 4,962
 9,578
90 Days or More Past Due—
 1,762
 914
 —
 5,030
 3,400
 11,106
 $820,613
 $615,021
 $835,512
 $792,223
 $644,937
 $1,245,630
 $4,953,936
1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on LTV: 
June 30, 2021
Amortized Cost By Origination Year
LTV20212020201920182017PriorTotal
Less than 61%$419,732 $437,986 $108,821 $68,019 $138,073 $588,791 $1,761,422 
61% - 70%296,621 317,275 114,771 71,726 88,144 425,875 1,314,412 
71% - 80%381,806 441,154 255,015 135,047 185,034 637,249 2,035,305 
More than 80%242 1,467 9,382 14,298 36,116 34,122 95,627 
$1,098,401 $1,197,882 $487,989 $289,090 $447,367 $1,686,037 $5,206,766 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


June 30, 2020December 31, 2020
Amortized Cost By Origination Year  Amortized Cost By Origination Year
LTV2020 2019 2018 2017 2016 Prior TotalLTV20202019201820172016PriorTotal
Less than 61%$99,728
 $180,025
 $106,359
 $202,355
 $276,035
 $519,410
 $1,383,912
Less than 61%$395,977 $143,273 $82,199 $174,223 $286,092 $487,487 $1,569,251 
61% - 70%62,031
 192,880
 110,546
 136,212
 184,600
 394,279
 1,080,548
61% - 70 %61% - 70 %298,941 151,633 92,928 119,381 184,119 341,159 1,188,161 
71% - 80%92,387
 433,542
 245,829
 349,993
 300,153
 689,223
 2,111,127
71% - 80%413,003 344,998 181,852 271,605 258,931 565,781 2,036,170 
More than 80%1,469
 13,922
 31,286
 67,303
 24,111
 30,188
 168,279
More than 80%2,199 12,782 22,620 47,148 18,372 26,133 129,254 
$255,615
 $820,369
 $494,020
 $755,863
 $784,899
 $1,633,100
 $4,743,866
$1,110,120 $652,686 $379,599 $612,357 $747,514 $1,420,560 $4,922,836 
 December 31, 2019
 Amortized Cost By Origination Year  
LTV2019 2018 2017 2016 2015 Prior Total
Less than 61%$171,069
 $134,978
 $183,807
 $228,868
 $197,039
 $372,221
 $1,287,982
61% - 70 %195,572
 128,766
 152,502
 188,856
 154,307
 316,031
 1,136,034
71% - 80%442,311
 313,779
 404,743
 338,000
 283,202
 531,377
 2,313,412
More than 80%11,661
 37,498
 94,460
 36,499
 10,389
 26,001
 216,508
 $820,613
 $615,021
 $835,512
 $792,223
 $644,937
 $1,245,630
 $4,953,936

1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on FICO score:
June 30, 2021
Amortized Cost By Origination Year
FICO20212020201920182017PriorTotal
760 or greater$876,798 $885,583 $314,923 $167,341 $314,717 $1,140,630 $3,699,992 
720 - 759185,830 227,976 99,444 59,330 80,474 304,170 957,224 
719 or less35,773 84,323 73,622 62,419 52,176 241,237 549,550 
$1,098,401 $1,197,882 $487,989 $289,090 $447,367 $1,686,037 $5,206,766 
June 30, 2020December 31, 2020
Amortized Cost By Origination Year  Amortized Cost By Origination Year
FICO2020 2019 2018 2017 2016 Prior TotalFICO20202019201820172016PriorTotal
760 or greater$168,920
 $482,818
 $298,650
 $521,199
 $573,011
 $1,093,732
 $3,138,330
760 or greater$843,199 $435,582 $225,292 $451,304 $549,119 $956,254 $3,460,750 
720 - 75970,279
 224,961
 112,407
 138,897
 131,205
 304,460
 982,209
720 - 759223,831 128,875 84,602 102,859 130,592 256,703 927,462 
719 or less16,416
 112,590
 82,963
 95,767
 80,683
 234,908
 623,327
719 or less43,090 88,229 69,705 58,194 67,803 207,603 534,624 
$255,615
 $820,369
 $494,020
 $755,863
 $784,899
 $1,633,100
 $4,743,866
$1,110,120 $652,686 $379,599 $612,357 $747,514 $1,420,560 $4,922,836 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


 December 31, 2019
 Amortized Cost By Origination Year  
FICO2019 2018 2017 2016 2015 Prior Total
760 or greater$470,057
 $340,716
 $534,017
 $533,804
 $430,706
 $763,807
 $3,073,107
720 - 759242,806
 185,939
 200,623
 178,139
 141,748
 307,195
 1,256,450
719 or less107,750
 88,366
 100,872
 80,280
 72,483
 174,628
 624,379
 $820,613
 $615,021
 $835,512
 $792,223
 $644,937
 $1,245,630
 $4,953,936
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, health of the national and regional economy, industry trends, patterns of and trends in customer behavior that influence demand for our borrowers' products and services, and commercial real estate values. Internal risk ratings are considered the most meaningful indicator of credit quality for commercial loans. Internal risk ratings are generally indicative 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 $1 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. DuringSince the second quarteronset of 2020,the COVID-19 pandemic, risk ratings werehave been re-evaluated for a substantial portion of the commercial portfolio, with a focus on portfolio segments we identified for enhanced monitoring and loans that have been modified or for which we granted temporary payment deferrals in light of the COVID-19 pandemic.deferrals. Loans exhibiting potential credit weaknesses that deserve management’s close attention and that could result in deterioration of repayment prospects at some future date if not checked or corrected are categorized as special mention. Loans with well-defined credit weaknesses, including payment defaults, declining collateral values, frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash flow from current operations, project cost overruns, unreasonable construction delays, past due real estate taxes or exhausted interest reserves, are assigned an internal risk rating of substandard. A loan with a weakness so severe that collection in full is highly questionable or improbable, but because of certain reasonably specific pending factors has not been charged off, will be assigned an internal risk rating of doubtful. 
Commercial credit exposure based on internal risk rating:
June 30, 2021
Amortized Cost By Origination YearRevolving Loans
20212020201920182017PriorTotal
Multi-Family
Pass$31,965 $147,499 $245,838 $153,168 $145,093 $274,242 $40,238 $1,038,043 
Special mention0 0 0 4,258 0 1,827 0 6,085 
Substandard0 5,002 42,938 9,599 32,186 122,858 0 212,583 
Total Multi-Family$31,965 $152,501 $288,776 $167,025 $177,279 $398,927 $40,238 $1,256,711 
Non-owner occupied commercial real estate
Pass$213,043 $526,381 $1,057,193 $631,119 $424,389 $1,016,555 $79,761 $3,948,441 
Special mention0 0 24,604 15,662 0 7,641 0 47,907 
Substandard0 26,021 146,339 73,142 84,622 397,711 0 727,835 
Total non-owner occupied commercial real estate$213,043 $552,402 $1,228,136 $719,923 $509,011 $1,421,907 $79,761 $4,724,183 
Construction and Land
Pass$3,919 $34,832 $136,272 $10,611 $8,605 $268 $4,840 $199,347 
Special mention0 0 5,184 0 0 0 0 5,184 
Substandard0 1,167 2,539 1,328 0 9,069 0 14,103 
Total Construction and Land$3,919 $35,999 $143,995 $11,939 $8,605 $9,337 $4,840 $218,634 
Owner occupied commercial real estate
Pass$51,923 $228,037 $285,963 $236,599 $246,368 $596,121 $28,222 $1,673,233 
Special mention0 1,796 2,388 3,908 13,628 19,409 794 41,923 
Substandard0 6,902 29,021 37,616 46,835 125,370 0 245,744 
Total owner occupied commercial real estate$51,923 $236,735 $317,372 $278,123 $306,831 $740,900 $29,016 $1,960,900 
Commercial and industrial
Pass$363,731 $506,653 $647,392 $184,745 $197,346 $194,549 $1,676,514 $3,770,930 
Special mention0 937 11,257 16,640 1,611 2,481 438 33,364 
Substandard480 19,291 144,079 42,028 14,278 35,315 129,176 384,647 
Doubtful0 0 0 8 0 0 16,846 16,854 
Total commercial and industrial$364,211 $526,881 $802,728 $243,421 $213,235 $232,345 $1,822,974 $4,205,795 
PPP
Pass$282,746 $209,214 $0 $0 $0 $0 $0 $491,960 
Total PPP$282,746 $209,214 $0 $0 $0 $0 $0 $491,960 
Pinnacle
Pass$67,425 $141,124 $106,430 $61,798 $202,771 $466,989 $0 $1,046,537 
Total Pinnacle$67,425 $141,124 $106,430 $61,798 $202,771 $466,989 $0 $1,046,537 
Bridge - Franchise Finance
Pass$9,078 $51,732 $114,668 $16,475 $7,861 $10,133 $0 $209,947 
Special mention0 0 1,857 0 0 0 0 1,857 
Substandard0 29,679 95,935 78,404 27,192 20,382 0 251,592 
Doubtful0 0 0 0 0 478 0 478 
Total Bridge - Franchise Finance$9,078 $81,411 $212,460 $94,879 $35,053 $30,993 $0 $463,874 
Bridge - Equipment Finance
Pass$36,740 $19,892 $132,856 $55,875 $33,371 $63,653 $0 $342,387 
Special mention0 0 0 0 1,744 0 0 1,744 
Substandard0 0 14,948 22,404 40,456 0 0 77,808 
Total Bridge - Equipment Finance$36,740 $19,892 $147,804 $78,279 $75,571 $63,653 $0 $421,939 
Mortgage Warehouse Lending
Pass$0 $0 $0 $0 $0 $0 $1,018,267 $1,018,267 
Total Mortgage Warehouse Lending$0 $0 $0 $0 $0 $0 $1,018,267 $1,018,267 
December 31, 2020
Amortized Cost By Origination YearRevolving Loans
20202019201820172016PriorTotal
Multi-Family
Pass$184,287 $264,254 $149,188 $206,768 $203,481 $313,758 $38,509 $1,360,245 
Special mention0 390 10,985 11,260 8,400 5,300 0 36,335 
Substandard8,393 25,239 9,645 15,125 43,920 140,299 0 242,621 
Total Multi-Family$192,680 $289,883 $169,818 $233,153 $255,801 $459,357 $38,509 $1,639,201 
Non-owner occupied commercial real estate
Pass$532,567 $1,070,940 $706,730 $442,599 $462,201 $607,922 $99,627 $3,922,586 
Special mention2,687 56,533 16,271 34,283 43,699 66,370 0 219,843 
Substandard30,401 132,814 69,507 56,219 288,998 242,905 0 820,844 
Total non-owner occupied commercial real estate$565,655 $1,260,287 $792,508 $533,101 $794,898 $917,197 $99,627 $4,963,273 
Construction and Land
Pass$20,860 $158,413 $9,003 $48,657 $26,845 $904 $297 $264,979 
Special mention0 0 8,010 8,604 4,284 0 0 20,898 
Substandard23 1,366 1,287 0 4,408 346 0 7,430 
Total Construction and Land$20,883 $159,779 $18,300 $57,261 $35,537 $1,250 $297 $293,307 
Owner occupied commercial real estate
Pass$229,670 $263,138 $251,413 $232,171 $288,403 $361,130 $17,281 $1,643,206 
Special mention2,593 42,485 11,789 41,799 19,839 20,347 17,985 156,837 
Substandard2,615 24,673 21,114 36,411 26,997 79,860 9,057 200,727 
Total owner occupied commercial real estate$234,878 $330,296 $284,316 $310,381 $335,239 $461,337 $44,323 $2,000,770 
Commercial and industrial
Pass$574,601 $759,384 $257,451 $250,787 $165,105 $47,086 $1,882,856 $3,937,270 
Special mention10,387 49,471 17,096 2,451 20,838 2,977 66,385 169,605 
Substandard21,122 120,275 34,045 14,073 29,907 31,478 89,436 340,336 
Doubtful0 0 0 0 0 172 0 172 
Total commercial and industrial$606,110 $929,130 $308,592 $267,311 $215,850 $81,713 $2,038,677 $4,447,383 
PPP
Pass$781,811 $0 $0 $0 $0 $0 $0 $781,811 
Total PPP$781,811 $0 $0 $0 $0 $0 $0 $781,811 
Pinnacle
Pass$165,218 $118,139 $70,498 $208,568 $203,990 $340,973 $0 $1,107,386 
Total Pinnacle$165,218 $118,139 $70,498 $208,568 $203,990 $340,973 $0 $1,107,386 
Bridge - Franchise Finance
Pass$48,741 $91,509 $23,650 $8,745 $11,817 $6,416 $0 $190,878 
Special mention2,693 54,271 5,175 4,699 2,088 2,667 0 71,593 
Substandard36,515 101,772 84,064 33,213 16,706 3,297 0 275,567 
Doubtful0 0 10,771 0 924 0 0 11,695 
Total Bridge - Franchise Finance$87,949 $247,552 $123,660 $46,657 $31,535 $12,380 $0 $549,733 
Bridge - Equipment Finance
Pass$23,684 $137,730 $66,004 $50,000 $36,963 $49,875 $0 $364,256 
Special mention0 0 19,542 16,863 0 0 0 36,405 
Substandard0 30,762 9,894 34,231 0 0 0 74,887 
Total Bridge - Equipment Finance$23,684 $168,492 $95,440 $101,094 $36,963 $49,875 $0 $475,548 
Mortgage Warehouse Lending
Pass$0 $0 $0 $0 $0 $0 $1,259,408 $1,259,408 
Total Mortgage Warehouse Lending$0 $0 $0 $0 $0 $0 $1,259,408 $1,259,408 

23
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 20202021



Commercial credit exposure based on internal risk rating:
 June 30, 2020
 Amortized Cost By Origination Year Revolving Loans  
 2020 2019 2018 2017 2016 Prior  Total
Multi-Family               
Pass$42,877
 $316,733
 $190,227
 $210,681
 $347,973
 $633,791
 $39,607
 $1,781,889
Special mention—
 8,149
 15,767
 19,512
 6,209
 7,587
 —
 57,224
Substandard—
 —
 —
 2,845
 9,801
 41,994
 —
 54,640
Total Multi-Family$42,877
 $324,882
 $205,994
 $233,038
 $363,983
 $683,372
 $39,607
 $1,893,753
                
Non-owner occupied commercial real estate               
Pass$238,451
 $1,202,138
 $736,973
 $509,446
 $590,992
 $814,514
 $107,772
 $4,200,286
Special mention—
 46,971
 96,563
 47,930
 166,139
 112,887
 —
 470,490
Substandard4,568
 32,746
 5,029
 437
 100,748
 126,227
 —
 269,755
Total non-owner occupied commercial real estate$243,019
 $1,281,855
 $838,565
 $557,813
 $857,879
 $1,053,628
 $107,772
 $4,940,531
                
Construction and Land               
Pass$7,208
 $125,429
 $13,619
 $50,020
 $27,336
 $917
 $243
 $224,772
Special mention—
 1,393
 2,965
 8,604
 4,284
 —
 —
 17,246
Substandard—
 —
 888
 —
 3,357
 346
 —
 4,591
Total Construction and Land$7,208
 $126,822
 $17,472
 $58,624
 $34,977
 $1,263
 $243
 $246,609
                
Owner occupied commercial real estate               
Pass$128,795
 $303,522
 $276,367
 $267,267
 $311,485
 $466,194
 $39,586
 $1,793,216
Special mention2,635
 26,410
 15,528
 57,102
 41,321
 34,201
 2,108
 179,305
Substandard—
 8,691
 17,520
 12,203
 2,863
 18,327
 9,221
 68,825
Total owner occupied commercial real estate$131,430
 $338,623
 $309,415
 $336,572
 $355,669
 $518,722
 $50,915
 $2,041,346
                
Commercial and industrial               
Pass$356,049
 $940,865
 $344,774
 $295,769
 $204,049
 $64,485
 $1,989,034
 $4,195,025
Special mention611
 81,305
 33,987
 2,252
 28,507
 6,818
 89,918
 243,398
Substandard600
 46,973
 43,472
 33,272
 18,949
 53,470
 56,167
 252,903
Total commercial and industrial$357,260
 $1,069,143
 $422,233
 $331,293
 $251,505
 $124,773
 $2,135,119
 $4,691,326
                
PPP               
Pass$827,359
 $—
 $—
 $—
 $—
 $—
 $—
 $827,359
PPP$827,359
 $—
 $—
 $—
 $—
 $—
 $—
 $827,359
                
Pinnacle               
Pass$125,882
 $134,838
 $92,537
 $232,269
 $227,317
 $429,663
 $—
 $1,242,506
Total Pinnacle$125,882
 $134,838
 $92,537
 $232,269
 $227,317
 $429,663
 $—
 $1,242,506
                
Bridge - Franchise Finance               
Pass$42,004
 $97,036
 $27,760
 $12,666
 $14,456
 $12,357
 $—
 $206,279
Special mention42,611
 154,808
 73,602
 37,731
 11,255
 7,368
 —
 327,375
Substandard549
 15,494
 45,185
 5,173
 17,778
 4,357
 —
 88,536
Doubtful—
 —
 —
 —
 949
 —
 —
 949
Total Bridge - Franchise Finance$85,164
 $267,338
 $146,547
 $55,570
 $44,438
 $24,082
 $—
 $623,139
                
Bridge - Equipment Finance               
Pass$24,349
 $193,227
 $103,434
 $94,667
 $54,544
 $67,486
 $—
 $537,707
Special mention—
 6,634
 9,510
 27,050
 —
 —
 —
 43,194
Substandard—
 3,608
 4,128
 —
 1,005
 143
 —
 8,884
Total Bridge - Equipment Finance$24,349
 $203,469
 $117,072
 $121,717
 $55,549
 $67,629
 $—
 $589,785
                
Mortgage Warehouse Lending               
Pass$—
 $—
 $—
 $—
 $—
 $—
 $1,160,728
 $1,160,728
Total Mortgage Warehouse Lending$—
 $—
 $—
 $—
 $—
 $—
 $1,160,728
 $1,160,728

24
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


At June 30, 2020,2021, the balance of revolving loans converted to term loans was immaterial.
The following tables summarize the Company's commercial credit exposure based on internal risk rating, in aggregate, at the dates indicated (in thousands):
 June 30, 2021
 Multi-FamilyNon-Owner Occupied Commercial Real EstateConstruction
and Land		Owner Occupied Commercial Real EstateCommercial and IndustrialPPPPinnacleBridge - Franchise FinanceBridge - Equipment FinanceMortgage Warehouse LendingTotal
Pass$1,038,043 $3,948,441 $199,347 $1,673,233 $3,770,930 $491,960 $1,046,537 $209,947 $342,387 $1,018,267 $13,739,092 
Special mention6,085 47,907 5,184 41,923 33,364 0 0 1,857 1,744 0 138,064 
Substandard - accruing205,514 676,515 9,319 219,162 277,683 0 0 218,665 77,808 0 1,684,666 
Substandard non-accruing7,069 51,320 4,784 26,582 106,964 0 0 32,927 0 0 229,646 
Doubtful0 0 0 0 16,854 0 0 478 0 0 17,332 
 $1,256,711 $4,724,183 $218,634 $1,960,900 $4,205,795 $491,960 $1,046,537 $463,874 $421,939 $1,018,267 $15,808,800 
 June 30, 2020
 Multi-Family Non-Owner Occupied Commercial Real Estate Construction
and Land		 Owner Occupied Commercial Real Estate Commercial and Industrial PPP Pinnacle Bridge - Franchise Finance Bridge - Equipment Finance Mortgage Warehouse Lending Total
Pass$1,781,889
 $4,200,286
 $224,772
 $1,793,216
 $4,195,025
 $827,359
 $1,242,506
 $206,279
 $537,707
 $1,160,728
 $16,169,767
Special mention57,224
 470,490
 17,246
 179,305
 243,398
 —
 —
 327,375
 43,194
 —
 1,338,232
Substandard(1)
54,640
 269,755
 4,591
 68,825
 252,903
 —
 —
 88,536
 8,884
 —
 748,134
Doubtful—
 —
 —
 —
 —
 —
 —
 949
 —
 —
 949
 $1,893,753
 $4,940,531
 $246,609
 $2,041,346
 $4,691,326
 $827,359
 $1,242,506
 $623,139
 $589,785
 $1,160,728
 $18,257,082
(1)Includes $561 million of substandard accruing loans at June 30, 2020.
 December 31, 2019
 Multi-Family Non-Owner Occupied Commercial Real Estate Construction
and Land		 Owner Occupied Commercial Real Estate Commercial and Industrial Pinnacle Bridge - Franchise Finance Bridge - Equipment Finance Mortgage Warehouse Lending Total
Pass$2,184,771
 $4,932,279
 $240,734
 $1,991,556
 $4,508,563
 $1,202,430
 $562,042
 $663,855
 $768,472
 $17,054,702
Special mention—
 5,831
 —
 27,870
 28,498
 —
 10,682
 —
 —
 72,881
Substandard (1)
32,934
 92,794
 3,191
 43,382
 118,288
 —
 54,758
 20,939
 —
 366,286
 $2,217,705
 $5,030,904
 $243,925
 $2,062,808
 $4,655,349
 $1,202,430
 $627,482
 $684,794
 $768,472
 $17,493,869
(1)Includes $180 million of substandard accruing loans at December 31, 2019.

25
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


 December 31, 2020
 Multi-FamilyNon-Owner Occupied Commercial Real EstateConstruction
and Land		Owner Occupied Commercial Real EstateCommercial and IndustrialPPPPinnacleBridge - Franchise FinanceBridge - Equipment FinanceMortgage Warehouse LendingTotal
Pass$1,360,245 $3,922,586 $264,979 $1,643,206 $3,937,270 $781,811 $1,107,386 $190,878 $364,256 $1,259,408 14,832,025 
Special mention36,335 219,843 20,898 156,837 169,605 0 0 71,593 36,405 0 711,516 
Substandard -accruing218,532 756,825 2,676 177,575 285,925 0 0 242,234 74,887 0 1,758,654 
Substandard non-accruing24,089 64,019 4,754 23,152 54,411 0 0 33,333 0 0 203,758 
Doubtful0 0 0 0 172 0 0 11,695 0 0 11,867 
 $1,639,201 $4,963,273 $293,307 $2,000,770 $4,447,383 $781,811 $1,107,386 $549,733 $475,548 $1,259,408 $17,517,820 
Past Due and Non-Accrual Loans:
The following table presents an aging of loans at the dates indicated (in thousands):
 June 30, 2021December 31, 2020
 Current30 - 59
Days Past
Due		60 - 89
Days Past
Due		90 Days or
More Past
Due		TotalCurrent30 - 59
Days Past
Due		60 - 89
Days Past
Due		90 Days or
More Past
Due		Total
1-4 single family residential$5,128,499 $45,498 $9,345 $23,424 $5,206,766 $4,857,332 $48,851 $7,489 $9,164 $4,922,836 
Government insured residential951,561 103,054 77,401 731,707 1,863,723 722,367 77,883 56,495 562,329 1,419,074 
Other consumer loans5,742 21 0 22 5,785 6,022 37 22 231 6,312 
Multi-family1,235,529 0 14,113 7,069 1,256,711 1,602,990 17,842 0 18,369 1,639,201 
Non-owner occupied commercial real estate4,677,789 14,113 206 32,075 4,724,183 4,876,823 34,117 20,291 32,042 4,963,273 
Construction and land217,400 888 0 346 218,634 288,032 4,530 399 346 293,307 
Owner occupied commercial real estate1,943,777 924 1,083 15,116 1,960,900 1,971,475 10,756 3,203 15,336 2,000,770 
Commercial and industrial4,173,584 78 2,066 30,067 4,205,795 4,366,009 52,117 552 28,705 4,447,383 
PPP491,960 0 0 0 491,960 781,811 0 0 0 781,811 
Pinnacle1,046,537 0 0 0 1,046,537 1,107,386 0 0 0 1,107,386 
Bridge - franchise finance441,124 0 9,948 12,802 463,874 498,831 16,423 8,664 25,815 549,733 
Bridge - equipment finance421,939 0 0 0 421,939 475,548 0 0 0 475,548 
Mortgage warehouse lending1,018,267 0 0 0 1,018,267 1,259,408 0 0 0 1,259,408 
 $21,753,708 $164,576 $114,162 $852,628 $22,885,074 $22,814,034 $262,556 $97,115 $692,337 $23,866,042 
 June 30, 2020 December 31, 2019
 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
1-4 single family residential$4,679,984
 $49,275
 $2,833
 $11,774
 $4,743,866
 $4,887,618
 $45,634
 $9,578
 $11,106
 $4,953,936
Government insured residential51,276
 53,017
 52,620
 669,325
 826,238
 93,560
 45,347
 30,426
 529,311
 698,644
Home equity loans and lines of credit1,478
 69
 —
 —
 1,547
 1,320
 —
 —
 —
 1,320
Other consumer loans6,156
 —
 —
 —
 6,156
 7,219
 —
 —
 —
 7,219
Multi-family1,858,695
 29,047
 6,011
 —
 1,893,753
 2,217,705
 —
 —
 —
 2,217,705
Non-owner occupied commercial real estate4,859,344
 52,937
 7,979
 20,271
 4,940,531
 5,015,458
 —
 928
 14,518
 5,030,904
Construction and land246,263
 —
 —
 346
 246,609
 240,647
 2,396
 —
 882
 243,925
Owner occupied commercial real estate2,020,077
 1,081
 3,376
 16,812
 2,041,346
 2,041,352
 1,336
 4,420
 15,700
 2,062,808
Commercial and industrial4,593,422
 20,855
 22,601
 54,448
 4,691,326
 4,595,847
 2,313
 4,301
 52,888
 4,655,349
PPP827,359
 —
 —
 —
 827,359
 —
 —
 —
 —
 —
Pinnacle1,242,506
 —
 —
 —
 1,242,506
 1,202,430
 —
 —
 —
 1,202,430
Bridge - franchise finance596,136
 —
 625
 26,378
 623,139
 610,315
 3,840
 2,501
 10,826
 627,482
Bridge - equipment finance589,785
 —
 —
 —
 589,785
 677,089
 7,705
 —
 —
 684,794
Mortgage warehouse lending1,160,728
 —
 —
 —
 1,160,728
 768,472
 —
 —
 —
 768,472
 $22,733,209
 $206,281
 $96,045
 $799,354
 $23,834,889
 $22,359,032
 $108,571
 $52,154
 $635,231
 $23,154,988
17
Table of Contents
BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


Included in the table above is the guaranteed portion of SBA loans past due by 90 days or more totaling $37.3$33.6 million and $36.3$40.3 million at June 30, 20202021 and December 31, 2019,2020, respectively.
Loans contractually delinquent by 90 days or more and still accruing totaled $673$732 million and $562 million at June 30, 2021 and December 31, 2020, respectively, substantially all of which were government insured residential loans at June 30, 2020 and $531 million, of which $529 million were government insured residential loans at December 31, 2019. Substantially all of theseloans. 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):
 June 30, 2020 December 31, 2019
 Amortized Cost Amortized Cost With No Related Allowance Amortized Cost
Residential and other consumer$13,183
 $2,622
 $18,894
Commercial:     
Multi-family6,011
 6,011
 6,138
Non-owner occupied commercial real estate46,545
 28,598
 40,097
Construction and land3,703
 3,357
 3,191
Owner occupied commercial real estate30,493
 8,765
 27,141
Commercial and industrial67,702
 7,386
 74,757
Bridge - franchise finance32,857
 1,848
 13,631
Bridge - equipment finance1,148
 537
 20,939
 $201,642
 $59,124
 $204,788


26
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


June 30, 2021December 31, 2020
Amortized CostAmortized Cost With No Related AllowanceAmortized CostAmortized Cost With No Related Allowance
Residential and other consumer$45,553 $1,643 $28,828 $1,755 
Commercial:
Multi-family7,069 7,069 24,090 24,090 
Non-owner occupied commercial real estate51,320 30,182 64,017 32,843 
Construction and land4,784 4,439 4,754 4,408 
Owner occupied commercial real estate26,582 7,545 23,152 2,110 
Commercial and industrial123,818 9,760 54,584 9,235 
Bridge - franchise finance33,405 4,010 45,028 9,754 
$292,531 $64,648 $244,453 $84,195 
Included in the table above is the guaranteed portion of non-accrual SBA loans totaling $45.7$47.7 million and $51.3 million at both June 30, 20202021 and December 31, 2019,2020, respectively. The amount of interest income recognized on non-accrual loans was insignificant for the three and six months ended June 30, 2021 and 2020. 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 $3.4 million and $5.9 million for the three and six months ended June 30, 2021, respectively and $3.0 million and $5.7 million for the three and six months ended June 30, 2020, respectively and $2.5 million and $4.3 million for the three and six months ended June 30, 2019, respectively.
Collateral dependent loans:
The following table presents the amortized cost basis of collateral dependent loans at June 30, 2020the dates indicated (in thousands):
June 30, 2021December 31, 2020
Amortized CostExtent to Which Secured by CollateralAmortized CostExtent to Which Secured by Collateral
Residential and other consumer$2,405 $2,377 $2,528 $2,513 
Commercial:
Multi-family7,069 7,069 24,090 24,090 
Non-owner occupied commercial real estate40,965 40,724 52,813 52,435 
Construction and land4,784 4,784 4,754 4,754 
Owner occupied commercial real estate20,228 20,228 14,814 14,777 
Commercial and industrial99,405 61,286 28,112 18,093 
Bridge - franchise finance7,541 5,818 28,986 12,832 
Total commercial179,992 139,909 153,569 126,981 
 $182,397 $142,286 $156,097 $129,494 
 Amortized Cost Extent to Which Secured by Collateral
Residential and other consumer$3,283
 $3,273
Commercial:   
Multi-family6,011
 6,011
Non-owner occupied commercial real estate30,980
 30,980
Construction and land3,703
 3,703
Owner occupied commercial real estate21,025
 21,025
Commercial and industrial54,232
 29,468
Bridge - franchise finance24,353
 21,178
Bridge - equipment finance1,148
 1,078
Total commercial141,452
 113,443
 $144,735
 $116,716

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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


Collateral for the multi-family, non-owner occupied commercial real estate and owner-occupied commercial real estate loan classes generally consists of commercial real estate. Collateral for construction and land loans is typically residential or commercial real estate. Collateral for commercial and industrial loans generally consists of equipment, accounts receivable, inventory and other business assets; owner-occupied commercial real estate loans may also be collateralized by these types of assets. Bridge franchise finance loans may be collateralized by franchise value or by equipment. Bridge equipment finance loans are secured by the financed equipment. Residential loans are collateralized by residential real estate. There have been no significant changes to the extent to which collateral secures collateral dependent loans during the six months ended June 30, 2020.2021.
Foreclosure of residential real estate
The recorded investment in residential loans in the process of foreclosure was $323$200 million, of which $315$192 million was government insured, at June 30, 20202021 and $257$217 million, of which $248$209 million was government insured, at December 31, 2019.2020. The carrying amount of foreclosed residential real estate included in "Other assets"other assets in the accompanying consolidated balance sheet was insignificant at June 30, 20202021 and $6 million at December 31, 2019. In response to the COVID-19 pandemic, new foreclosure actions on residential loans have been temporarily suspended.

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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


2020.
Troubled debt restructurings
The following table summarizes loans that were modified in TDRs during the periods indicated, as well as loans modified during the twelve months preceding June 30, 20202021 and 20192020 that experienced payment defaults during thethose periods indicated (dollars in thousands):
 Three Months Ended June 30,
 20212020
 Loans Modified in TDRs 
During the Period		TDRs Experiencing Payment Defaults During the PeriodLoans Modified in TDRs 
During the Period		TDRs Experiencing Payment
Defaults During the Period
 Number of
TDRs		Amortized CostNumber of
TDRs		Amortized CostNumber of
TDRs		Amortized CostNumber of
TDRs		Amortized Cost
Government insured residential116$21,758 54$9,878 52 $7,291 121 $19,512 
Non-owner occupied commercial real estate1 2,853 0 0 0 0 1 4,249 
Commercial and industrial0 0 0 0 2 1,3480 0 
Bridge - franchise finance0 0 0 0 1 9195 18,718 
 117 $24,611 54 $9,878 55 $9,558 127 $42,479 
Six Months Ended June 30,
Three Months Ended June 30, 20212020
2020 2019 Loans Modified in TDRs 
During the Period		TDRs Experiencing Payment
Defaults During the Period		Loans Modified in TDRs 
During the Period		TDRs Experiencing Payment
Defaults During the Period
Loans Modified in TDRs 
During the Period		 TDRs Experiencing Payment Defaults During the Period Loans Modified in TDRs 
During the Period		 TDRs Experiencing Payment
Defaults During the Period		 Number of
TDRs		Amortized CostNumber of
TDRs		Amortized CostNumber of
TDRs		Amortized CostNumber of
TDRs		Amortized Cost
1-4 single family residential1-4 single family residential0 $0 0 $0 1 $203 0 $0 
Government insured residentialGovernment insured residential143 27,235 63 10,997 86 12,183 150 23,994 
Number of
TDRs		 Amortized Cost Number of
TDRs		 Amortized Cost Number of
TDRs		 Amortized Cost Number of
TDRs		 Amortized Cost
Government insured residential52
 $7,291
 121
 $19,512
 34
 $5,164
 31
 $4,355
Non-owner occupied commercial real estate—
 —
 1
 4,249
 1
 12,085
 1
 2,772
Non-owner occupied commercial real estate1 2,853 0 0 1 4,249 1 4,249 
Owner occupied commercial real estate—
 —
 —
 —
 —
 —
 3
 1,878
Commercial and industrial2
 1,348
 —
 —
 4
 7,354
 1
 1,233
Commercial and industrial0 0 0 0 2 1,348 3 5,448 
Bridge - franchise finance1
 919
 5
 18,718
 1
 2,073
 —
 —
Bridge - franchise finance0 0 0 0 9 14,666 8 23,358 
55
 $9,558
 127
 $42,479
 40
 $26,676
 36
 $10,238
144 $30,088 63 $10,997 99$32,649 $162 $57,049 
 Six Months Ended June 30,
 2020 2019
 Loans Modified in TDRs 
During the Period		 TDRs Experiencing Payment
Defaults During the Period		 Loans Modified in TDRs 
During the Period		 TDRs Experiencing Payment
Defaults During the Period
 Number of
TDRs		 Amortized Cost Number of
TDRs		 Amortized Cost Number of
TDRs		 Amortized Cost Number of
TDRs		 Amortized Cost
1-4 single family residential1
 $203
 —
 $—
 2
 $563
 —
 $—
Government insured residential86
 12,183
 150
 23,994
 46
 6,782
 32
 4,517
Non-owner occupied commercial real estate1
 4,249
 1
 4,249
 1
 12,085
 1
 2,772
Owner occupied commercial real estate—
 —
 —
 —
 1
 849
 3
 1,878
Commercial and industrial2
 1,348
 3
 5,448
 6
 17,994
 1
 1,233
Bridge - franchise finance9
 14,666
 8
 23,358
 3
 3,238
 —
 —
Bridge - equipment finance—
 —
 —
 —
 1
 847
 —
 —
 99
 $32,649
 162
 $57,049
 60
 $42,358
 37
 $10,400

ModificationsTDRs during the three and six months ended June 30, 2021 and 2020 and 2019generally included interest rate reductions restructuring of the amount and timing of required periodic payments, extensions of maturity and covenant waivers.maturity. Included in TDRs are residential loans to borrowers who have not reaffirmed their debt discharged in Chapter 7 bankruptcy. The total amount of such loans is not material.
Under recently issued inter-agency The majority of loan modifications or deferrals that took place after the onset of the COVID-19 pandemic have not been categorized as TDRs, in accordance with interagency and authoritative guidance and consistent withthe provisions of the CARES Act, short-term (generally periods of six months or less) deferrals or modifications related to COVID-19 will typically not be categorized as TDRs.

Act.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 20202021


Disclosures Prescribed by Legacy GAAP (Before Adoption of ASU 2016-13) for Prior Periods
The following table presents information about the balance of the ALLL and related loans as of December 31, 2019 (in thousands):
 Residential and Other Consumer Commercial Total
Allowance for loan and lease losses:     
Ending balance$11,154
 $97,517
 $108,671
Ending balance: loans individually evaluated for impairment$9
 $20,481
 $20,490
Ending balance: loans collectively evaluated for impairment$11,145
 $77,036
 $88,181
Ending balance: ACI loans$—
 $—
 $—
Loans:     
Ending balance$5,661,119
 $17,493,869
 $23,154,988
Ending balance: loans individually evaluated for impairment$57,117
 $187,788
 $244,905
Ending balance: loans collectively evaluated for impairment$5,454,422
 $17,288,901
 $22,743,323
Ending balance: ACI loans$149,580
 $17,180
 $166,760
The table below presents information about loans identified as impaired as of December 31, 2019 (in thousands):
 
Recorded
Investment
 UPB 
Related
Specific
Allowance
With no specific allowance recorded: 
  
  
1-4 single family residential$992
 $989
 $—
Government insured residential53,428
 53,350
 —
Multi-family6,138
 6,169
 —
Non-owner occupied commercial real estate38,345
 38,450
 —
Construction and land3,191
 3,155
 —
Owner occupied commercial real estate17,419
 17,488
 —
Commercial and industrial 
10,585
 10,574
 —
Bridge - franchise finance4,115
 4,117
 —
Bridge - equipment finance6,807
 6,793
 —
With a specific allowance recorded:     
1-4 single family residential2,697
 2,652
 9
Owner occupied commercial real estate2,522
 2,509
 401
Commercial and industrial63,531
 63,709
 13,992
Bridge - franchise finance21,011
 21,050
 2,953
Bridge - equipment finance14,124
 14,024
 3,135
Total:     
Residential and other consumer$57,117
 $56,991
 $9
Commercial187,788
 188,038
 20,481
 $244,905
 $245,029
 $20,490

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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


The following table presents the average recorded investment in impaired loans for the period indicated (in thousands):
 Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Residential and other consumer:   
1-4 single family residential$12,732
 $11,011
Commercial:   
Multi-family25,066
 25,248
Non-owner occupied commercial real estate24,599
 21,563
Construction and land9,604
 9,730
Owner occupied commercial real estate12,741
 12,124
Commercial and industrial32,690
 30,564
Commercial lending subsidiaries18,082
 19,982
 122,782
 119,211
 $135,514
 $130,222


Note 5     Subordinated Notes
On June 11, 2020, the Company issued $300 million of 5.125% subordinated notes. The notes mature on June 11, 2030 with interest payable semiannually. The notes have an effective interest rate of 5.39% after consideration of issuance discount and costs. The notes may be redeemed by the Company, in whole or in part, on or after March 11, 2030 at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest, subject to the approval of the Federal Reserve. The notes qualify as Tier 2 capital for regulatory capital purposes, subject to applicable limitations.
Note 6    Income Taxes
The Company’s effective income tax rate was 25.8% and 25.3% for the three and six months ended June 30, 2021, respectively and 21.0% and 19.3% for the three and six months ended June 30, 2020, respectively, and 25.2% and 25.9% for the three and six months ended June 30, 2019, respectively. The effective income tax rates differed from the statutory federal income tax rate of 21% for the 2019 periodsthree and six months ended June 30, 2021 due primarily to the impact of state income taxes, partially offset by the benefit of income not subject to federal tax. These factors were largely offsetting for the 2020 periods, when the effective income tax rate did not differ materially from the Federal statutory rate of 21%. During the three and six months ended June 30, 2020, income not subject to tax was a larger percentage of pre-tax income.income when compared to the same periods in 2021.
Note 76    Derivatives and Hedging Activities
The Company entershas entered into LIBOR-based interest rate swaps that areand caps designated as cash flow hedges with the objective of limiting the variability of interest payment cash flows resulting from changes in the benchmark interest rate LIBOR.flows. The Company has also entersentered into LIBOR-based interest rate swaps designated as fair value hedges designed to hedge changes in the fair value of outstanding fixed rate borrowings caused by fluctuations in the benchmark interest rate.
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. These interest rate derivative contracts are not designated as hedging instruments; therefore, changes in the fair value of these derivatives are recognized immediately in earnings. For the three and six months ended June 30, 20202021 and 2019,2020, the impact on earnings included in "other non-interest income" in the accompanying consolidated statements of income, related to changes in fair value of these derivatives was not material.
The Company may be exposed to credit risk in the event of non-performance by the counterparties to its interest rate 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2020


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 CME legally characterizes variation margin payments for centrally cleared derivatives as settlements of the derivatives' exposures rather than collateral. As a result, the variation margin payment and the related derivative instruments are considered a single unit of account for accounting and financial reporting purposes. The Company's clearing agent for interest rate derivative contracts centrally cleared through the CME settles the variation margin daily with the CME; therefore, those interest rate derivative contracts the Company clears through the CME are reported at a fair value of approximately 0 at both June 30, 20202021 and December 31, 2019.2020.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


The following tables set forth certain information concerning the Company’s interest rate contract derivative financial instruments and related hedged items at the dates indicated (dollars in thousands):
 June 30, 2020
   
Weighted
Average Pay Rate
 
Weighted
Average Receive Rate
 
Weighted
Average
Remaining
Life in Years
      
      Notional Amount Balance Sheet Location Fair Value
 Hedged Item      Asset Liability
Derivatives designated as cash flow hedges:         
    
  
Pay-fixed interest rate swapsVariability of interest cash flows on variable rate borrowings 2.40%  3-Month LIBOR 2.8 $3,021,000
 Other liabilities $—
 $(7,156)
Derivatives designated as fair value hedges:               
Receive-fixed interest rate swaps Variability of fair value of fixed rate borrowings  3-Month LIBOR 1.55% 1.1 250,000
 Other liabilities —
 —
Derivatives not designated as hedges:               
Pay-fixed interest rate swaps  3.69% Indexed to 1-month LIBOR 5.9 1,488,928
 Other assets / Other liabilities —
 (44,857)
Pay-variable interest rate swaps  Indexed to 1-month LIBOR 3.69% 5.9 1,488,928
 Other assets 145,802
 —
Interest rate caps purchased, indexed to 1-month LIBOR    3.71% 0.9 25,989
 Other assets —
 —
Interest rate caps sold, indexed to 1-month LIBOR  3.71%   0.9 25,989
 Other liabilities —
 —
         $6,300,834
   $145,802
 $(52,013)

 June 30, 2021
Weighted
Average Pay Rate		Weighted
Average Receive Rate		Weighted
Average
Remaining
Life in Years
  Notional AmountBalance Sheet LocationFair Value
 Hedged ItemAssetLiability
Derivatives designated as cash flow hedges:        
Pay-fixed interest rate swapsVariability of interest cash flows on variable rate borrowings2.53% 3-Month LIBOR2.3$2,381,000 Other liabilities$0 $(4,544)
Interest rate caps purchased, indexed to Fed Funds effective rateVariability of interest cash flows on variable rate borrowings0%—%4.4100,000 Other assets1,259 0 
Derivatives designated as fair value hedges:
Receive-fixed interest rate swaps Variability of fair value of fixed rate borrowings 3-Month LIBOR1.54%0.2200,000 Other liabilities0 0 
Derivatives not designated as hedges: 
Pay-fixed interest rate swaps 3.57%Indexed to 1-month LIBOR5.41,679,754 Other assets / Other liabilities1,067 (25,087)
Pay-variable interest rate swaps Indexed to 1-month LIBOR3.57%5.41,679,754 Other assets77,014 (2,154)
Interest rate caps purchased, indexed to 1-month LIBOR2.36%2.643,000 Other assets346 0 
Interest rate caps sold, indexed to 1-month LIBOR2.36%2.643,000 Other liabilities0 (346)
  $6,126,508 $79,686 $(32,131)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 20202021



 December 31, 2019
   
Weighted
Average Pay Rate
 
Weighted
Average Receive Rate
 
Weighted
Average
Remaining
Life in Years
      
      Notional Amount Balance Sheet Location Fair Value
 Hedged Item      Asset Liability
Derivatives designated as cash flow hedges:         
    
  
Pay-fixed interest rate swapsVariability of interest cash flows on variable rate borrowings 2.37%  3-Month LIBOR 3.2 $3,131,000
 Other liabilities $—
 $(1,607)
Derivatives not designated as hedges:  
 
 
 

   

  
Receive-fixed interest rate swapsVariability of interest cash flows on fixed rate borrowings  3-Month LIBOR 1.55% 1.6 250,000
 Other liabilities —
 —
Derivatives not designated as hedges               
Pay-fixed interest rate swaps  3.72% Indexed to 1-month LIBOR 6.4 1,460,355
 Other assets / Other liabilities 876
 (15,307)
Pay-variable interest rate swaps  Indexed to 1-month LIBOR 3.72% 6.4 1,460,355
 Other assets / Other liabilities 42,810
 (2,115)
Interest rate caps purchased, indexed to 1-month LIBOR  
 3.30% 0.6 61,004
 Other assets —
 —
Interest rate caps sold, indexed to 1-month LIBOR  3.30%   0.6 61,004
 Other liabilities —
 —
         $6,423,718
   $43,686
 $(19,029)

 December 31, 2020
Weighted
Average Pay Rate		Weighted
Average Receive Rate		Weighted
Average
Remaining
Life in Years
  Notional AmountBalance Sheet LocationFair Value
 Hedged ItemAssetLiability
Derivatives designated as cash flow hedges:        
Pay-fixed interest rate swapsVariability of interest cash flows on variable rate borrowings2.41% 3-Month LIBOR2.5$2,771,000 Other liabilities$0 $(5,971)
Interest rate caps purchased, indexed to Fed Funds effective rateVariability of interest cash flows on variable rate borrowings0%—%4.9100,000 Other assets485 0 
Derivatives designated as fair value hedges: 
Receive-fixed interest rate swapsVariability of fair value of fixed rate borrowings 3-Month LIBOR1.55%0.6250,000 Other liabilities0 0 
Derivatives not designated as hedges:
Pay-fixed interest rate swaps 3.61%Indexed to 1-month LIBOR5.31,626,152 Other assets / Other liabilities0 (38,519)
Pay-variable interest rate swaps Indexed to 1-month LIBOR3.61%5.31,626,152 Other assets / Other liabilities123,345 0 
Interest rate caps purchased, indexed to 1-month LIBOR3.72%0.425,921 Other assets0 0 
Interest rate caps sold, indexed to 1-month LIBOR3.72%0.425,921 Other liabilities0 0 
  $6,425,146 $123,830 $(44,490)
The following table provides information about the amount of gain (loss) related to derivatives designated as cash flow hedges reclassified from AOCI into interest expense for the periods indicated (in thousands):
 Three Months Ended June 30, Six Months Ended June 30, Location of Gain (Loss) Reclassified from AOCI into Income
 2020 2019 2020 2019 
Interest rate contracts$(10,009) $1,688
 $(14,565) $4,411
 Interest expense on borrowings

Three Months Ended June 30,Six Months Ended June 30,Location of Loss Reclassified from AOCI into Income
2021202020212020
Interest rate contracts$(14,882)$(10,009)$(29,857)$(14,565)Interest expense on borrowings
During the three and six months ended June 30, 20202021 and 2019,2020, 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 June 30, 2020,2021, the amount of net loss expected to be reclassified from AOCI into earnings during the next twelve months was $60.7$38.9 million.
The following table provides information about the amount of gain (loss) related to derivatives designated as fair value hedges recognized in earnings for the periods indicated (in thousands):
 Three Months Ended June 30, Six Months Ended June 30, Location of Gain (Loss) in Consolidated Statements of Income
 2020 2019 2020 2019 
Fair value adjustment on derivatives$8
 $—
 $4,028
 $—
 Interest expense on borrowings
Fair value adjustment on hedged items(164) —
 (4,072) —
 Interest expense on borrowings
Gain recognized on fair value hedges (ineffective portion)$(156) $—
 $(44) $—
  

Three Months Ended June 30,Six Months Ended June 30,Location of Gain (Loss) in Consolidated Statements of Income
2021202020212020
Fair value adjustment on derivatives$(669)$8 $(1,496)$4,028 Interest expense on borrowings
Fair value adjustment on hedged items670 (164)1,495 (4,072)Interest expense on borrowings
Gain (loss) recognized on fair value hedges (ineffective portion)$1 $(156)$(1)$(44)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 20202021


The following table provides information about the hedged items related to derivatives designated as fair value hedges at the dates indicated (in thousands):
 June 30, 2020 December 31, 2019 Location in Consolidated Balance Sheets
Contractual balance outstanding
of hedged item
$250,000
 $250,000
 FHLB and PPPLF borrowings
Cumulative fair value hedging adjustments$3,573
 $(499) FHLB and PPPLF borrowings

June 30, 2021December 31, 2020Location in Consolidated Balance Sheets
Contractual balance outstanding of hedged item$200,000 $250,000 FHLB advances
Cumulative fair value hedging adjustments$505 $1,999 FHLB advances
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.
The Company does not offset assets and liabilities under master netting agreements for financial reporting purposes. Information on interest rate swaps subject to these agreements is as follows at the dates indicated (dollars in(in thousands):
 June 30, 2021
  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$1,413 $0 $1,413 $(1,363)$0 $50 
Derivative liabilities(29,631)0 (29,631)1,363 28,220 (48)
 $(28,218)$0 $(28,218)$0 $28,220 $2 
 June 30, 2020
  
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$—
 $—
 $—
 $—
 $—
 $—
Derivative liabilities(52,013) —
 (52,013) —
 51,887
 (126)
 $(52,013) $—
 $(52,013) $—
 $51,887
 $(126)
December 31, 2020
December 31, 2019
  Gross Amounts Offset in Balance
Sheet		 Net Amounts Presented in
Balance Sheet		 
Gross Amounts Not Offset in
Balance Sheet
    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 Gross Amounts
Recognized		Derivative
Instruments		Collateral
Pledged		Net Amount
Derivative assets$876
 $—
 $876
 $(876) $—
 $—
Derivative assets$0 $0 $0 $0 $0 $0 
Derivative liabilities(16,914) —
 (16,914) 876
 16,038
 —
Derivative liabilities(44,490)0 (44,490)0 44,332 (158)
$(16,038) $—
 $(16,038) $—
 $16,038
 $—
$(44,490)$0 $(44,490)$0 $44,332 $(158)
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.
At June 30, 2020,2021, the Company had pledged net financial collateral of $56.0$31.5 million as collateral for interest rate swaps in a liability position that are not centrally cleared. The amount of collateral required to be posted varies based on the settlement value of outstanding swaps and in some cases may include initial margin requirements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 20202021



Note 87    Stockholders’ Equity
Accumulated Other Comprehensive Income
Changes in other comprehensive income are summarized as follows for the periods indicated (in thousands):
Three Months Ended June 30,
 20212020
 Before TaxTax EffectNet of TaxBefore TaxTax EffectNet of Tax
Unrealized gains (losses) on investment securities available for sale:   
Net unrealized holding gain arising during the period$18,692 $(4,766)$13,926 $252,893 $(64,488)$188,405 
Amounts reclassified to gain on investment securities available for sale, net(2,842)724 (2,118)(5,723)1,459 (4,264)
Net change in unrealized gains (losses) on investment securities available for sale15,850 (4,042)11,808 247,170 (63,029)184,141 
Unrealized losses on derivative instruments:
Net unrealized holding gain (loss) arising during the period(12,005)3,061 (8,944)(12,288)1,218 (11,070)
Amounts reclassified to interest expense on borrowings14,882 (3,794)11,088 10,009 (2,507)7,502 
Net change in unrealized losses on derivative instruments2,877 (733)2,144 (2,279)(1,289)(3,568)
Other comprehensive income (loss)$18,727 $(4,775)$13,952 $244,891 $(64,318)$180,573 
Three Months Ended June 30,Six Months Ended June 30,
2020 2019 20212020
Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax Before TaxTax EffectNet of TaxBefore TaxTax EffectNet of Tax
Unrealized gains (losses) on investment securities available for sale: 
  
  
      Unrealized gains (losses) on investment securities available for sale:   
Net unrealized holding gain arising during the period$252,893
 $(64,488) $188,405
 $31,736
 $(8,410) $23,326
Net unrealized holding loss arising during the periodNet unrealized holding loss arising during the period$(11,489)$2,930 $(8,559)$(33,743)$8,988 $(24,755)
Amounts reclassified to gain on investment securities available for sale, net(5,723) 1,459
 (4,264) (3,914) 1,037
 (2,877)Amounts reclassified to gain on investment securities available for sale, net(6,809)1,736 (5,073)(7,253)1,849 (5,404)
Net change in unrealized gains (losses) on investment securities available for sale247,170
 (63,029) 184,141
 27,822
 (7,373) 20,449
Net change in unrealized gains (losses) on investment securities available for sale(18,298)4,666 (13,632)(40,996)10,837 (30,159)
Unrealized losses on derivative instruments:           Unrealized losses on derivative instruments:
Net unrealized holding loss arising during the period(12,288) 1,218
 (11,070) (50,637) 13,419
 (37,218)
Net unrealized holding gain (loss) arising during the periodNet unrealized holding gain (loss) arising during the period21,030 (5,363)15,667 (122,239)30,355 (91,884)
Amounts reclassified to interest expense on borrowings10,009
 (2,507) 7,502
 (1,688) 447
 (1,241)Amounts reclassified to interest expense on borrowings29,857 (7,613)22,244 14,565 (3,714)10,851 
Net change in unrealized losses on derivative instruments(2,279) (1,289) (3,568) (52,325) 13,866
 (38,459)Net change in unrealized losses on derivative instruments50,887 (12,976)37,911 (107,674)26,641 (81,033)
Other comprehensive income (loss)$244,891
 $(64,318) $180,573
 $(24,503) $6,493
 $(18,010)Other comprehensive income (loss)$32,589 $(8,310)$24,279 $(148,670)$37,478 $(111,192)
 Six Months Ended June 30,
 2020 2019
 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 gain (loss) arising during the period$(33,743) $8,988
 $(24,755) $61,147
 $(16,204) $44,943
Amounts reclassified to gain on investment securities available for sale, net(7,253) 1,849
 (5,404) (8,231) 2,181
 (6,050)
Net change in unrealized gains (losses) on investment securities available for sale(40,996) 10,837
 (30,159) 52,916
 (14,023) 38,893
Unrealized losses on derivative instruments:           
Net unrealized holding loss arising during the period(122,239) 30,355
 (91,884) (78,766) 20,873
 (57,893)
Amounts reclassified to interest expense on borrowings14,565
 (3,714) 10,851
 (4,411) 1,169
 (3,242)
Net change in unrealized losses on derivative instruments(107,674) 26,641
 (81,033) (83,177) 22,042
 (61,135)
Other comprehensive loss$(148,670) $37,478
 $(111,192) $(30,261) $8,019
 $(22,242)
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The categories of AOCI and changes therein are presented below for the periods indicated (in thousands):
Three Months Ended June 30,
Unrealized Gain (Loss) on
Investment Securities
Available for Sale		Unrealized Gain (Loss)
on Derivative
Instruments		Total
Balance at March 31, 2021$38,359 $(77,184)$(38,825)
Other comprehensive income11,808 2,144 13,952 
Balance at June 30, 2021$50,167 $(75,040)$(24,873)
Balance at March 31, 2020$(186,115)$(137,477)$(323,592)
Other comprehensive income (loss)184,141 (3,568)$180,573 
Balance at June 30, 2020$(1,974)$(141,045)$(143,019)
Six Months Ended June 30,
Unrealized Gain (Loss) on
Investment Securities
Available for Sale		Unrealized Gain (Loss)
on Derivative
Instruments		Total
Balance at December 31, 2020Balance at December 31, 2020$63,799 $(112,951)$(49,152)
Other comprehensive income (loss)Other comprehensive income (loss)(13,632)37,911 24,279 
Balance at June 30, 2021Balance at June 30, 2021$50,167 $(75,040)$(24,873)
Unrealized Gain (Loss) on
Investment Securities
Available for Sale
 
Unrealized Gain (Loss)
on Derivative
Instruments
 Total
Balance at December 31, 2019$28,185
 (60,012) $(31,827)Balance at December 31, 2019$28,185 $(60,012)$(31,827)
Other comprehensive loss(30,159) (81,033) (111,192)Other comprehensive loss(30,159)(81,033)(111,192)
Balance at June 30, 2020$(1,974) $(141,045) $(143,019)Balance at June 30, 2020$(1,974)$(141,045)$(143,019)
     
Balance at December 31, 2018$4,194
 $679
 $4,873
Other comprehensive loss38,893
 (61,135) (22,242)
Balance at June 30, 2019$43,087
 $(60,456) $(17,369)
 Capital Actions
In July 2021, the Company's Board of Directors authorized the repurchase of up to $150 million in shares of its outstanding common stock. This authorization is in addition to $37.7 million in remaining authorization under a previously announced share repurchase program. Any repurchases under the program will be made in accordance with applicable securities laws from time to time in open market or private transactions. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued without prior notice at any time.
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Note 98    Equity Based and Other Compensation Plans
Share Awards
Unvested share awards
A summary of activity related to unvested share awards follows for the periods indicated:
Number of Share AwardsWeighted Average Grant Date Fair Value
Unvested share awards outstanding, December 31, 2020Unvested share awards outstanding, December 31, 20201,161,835 $33.32 
GrantedGranted559,180 42.17 
VestedVested(460,269)34.01 
Canceled or forfeitedCanceled or forfeited(48,684)35.19 
Unvested share awards outstanding, June 30, 2021Unvested share awards outstanding, June 30, 20211,212,062 $37.07 
Number of Share Awards Weighted Average Grant Date Fair Value
Unvested share awards outstanding, December 31, 20191,050,455
 $38.24
Unvested share awards outstanding, December 31, 20191,050,455 $38.24 
Granted644,300
 29.73
Granted644,300 29.73 
Vested(455,260) 39.15
Vested(455,260)39.15 
Canceled or forfeited(33,137) 36.21
Canceled or forfeited(33,137)36.21 
Unvested share awards outstanding, June 30, 20201,206,358
 $33.41
Unvested share awards outstanding, June 30, 20201,206,358 $33.41 
   
Unvested share awards outstanding, December 31, 20181,186,238
 $38.86
Granted582,353
 36.57
Vested(533,125) 37.67
Canceled or forfeited(115,825) 39.11
Unvested share awards outstanding, June 30, 20191,119,641
 $38.21
Unvested share awards are generally valued at the closing price of the Company's common stock on the date of grant. All shares granted prior to 2019 vest in equal annual installments over a period of three years from the date of grant. All shares granted in 2019 and 2020later to Company employees vest in equal annual installments over a period of four years from the date of grant. Shares granted to the Company's Board of Directors vest over a period of one year.

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The following table summarizes the closing price of the Company's stock on the date of grant for shares granted and the aggregate grant date fair value of shares vesting for the periods indicated (in thousands, except per share data):
Six Months Ended June 30,
Six Months Ended June 30,20212020
2020 2019
Closing price on date of grant (1)
$13.99 - $30.90
 $34.23 - $36.65
Closing price on date of grantClosing price on date of grant$42.01 - $47.52$13.99 - $30.90
Aggregate grant date fair value of shares vesting$17,824
 $20,083
Aggregate grant date fair value of shares vesting$15,652 $17,824 
(1)During the six months ended June 30, 2020, the Company granted 599,766 and 44,534 shares with a closing price on date of grant of $30.90 and $13.99, respectively.
The total unrecognized compensation cost of $29.5$34.5 million for all unvested share awards outstanding at June 30, 20202021 will be recognized over a weighted average remaining period of 2.752.94 years.
Executive share-based awards
Certain of the Company's executives are eligible to receive annual awards of RSUs and PSUs (collectively, the "share units"). Annual awards of RSUs represent a fixed number of shares and generally vest on December 31st in equal tranches over three years for grants prior to 2019, and over four years for awards issued in 2019 and 2020.after. PSUs are initially granted based on a target value. The number of PSUs that ultimately vest at the end of the performance measurement period will be based on the achievement of performance criteria pre-established by the Compensation Committee of the Board of Directors. Upon vesting, the share units will be converted to common stock on a one-for-one basis, or may be settled in cash at the Company's option. The share units will accumulate dividends declared on the Company's common stock from the date of grant to be paid subsequent to vesting.
As a result of the majority of previous settlements being in cash, all RSUs and PSUs have been determined to be liability instruments and are remeasured at fair value each reporting period until the awards are settled. The RSUs are valued based on the closing price of the Company's common stock at the reporting date. The PSUs are valued based on the closing price of the Company's common stock at the reporting date net of a discount related to any applicable market conditions, considering the
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probability of meeting the defined performance conditions. Compensation cost related to PSUs is recognized during the performance period based on the probable outcome of the respective performance conditions.
A summary of activity related to executive share-based awards for the periodperiods indicated follows:
RSUPSU
Unvested executive share-based awards outstanding, December 31, 2020Unvested executive share-based awards outstanding, December 31, 2020156,555 179,793 
GrantedGranted63,814 63,814 
Unvested executive share-based awards outstanding, June 30, 2021Unvested executive share-based awards outstanding, June 30, 2021220,369 243,607 
RSU PSU
Unvested executive share-based awards outstanding, December 31, 2019112,116
 125,088
Unvested executive share-based awards outstanding, December 31, 2019112,116 125,088 
Granted106,731
 106,731
Granted106,731 106,731 
Unvested executive share-based awards outstanding, June 30, 2020218,847
 231,819
Unvested executive share-based awards outstanding, June 30, 2020218,847 231,819 
   
Unvested executive share-based awards outstanding, December 31, 201890,612
 99,874
Granted73,062
 73,062
Unvested executive share-based awards outstanding, June 30, 2019163,674
 172,936
The total liability for the share units was $2.9$6.8 million at June 30, 2020.2021. The total unrecognized compensation cost of $6.2$13.0 million for these share units at June 30, 20202021 will be recognized over a weighted average remaining period of 2.452.22 years.
Incentive awards
The Company's annual incentive compensation arrangements for employees other than those eligible for the executive share-based awards discussed above provide for settlement through a combination of cash payments and unvested share awards following the end of the annual performance period. The dollar value of share awards to be granted is based on the achievement of performance criteria established in the incentive arrangements. The number of shares of common stock to be awarded is variable based on the closing price of the Company's stock on the date of grant; therefore, these awards are initially classified as

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liability instruments, with compensation cost recognized from the beginning of the performance period. Awards related to performance periods prior to 2019 vest over three years and awards related to the 2019 and 2020subsequent performance periods vest in equal installments over a period of four years from the date of grant. No common stock was awarded pursuant to these incentive arrangements for the 2020 performance period. These awards are included in the summary of activity related to unvested share awards above. The total liability and unrecognized compensation cost for incentive share awards for the 2020 performance period was not material. The accrued liability and unrecognized compensation cost are based on management's current estimate of the likely outcome of the performance criteria established in the incentive arrangements and may differ from actual results.
The 644,300 unvested share awards granted during the six months ended June 30, 2020, as discussed above, included 114,936 unvested share awards granted under the Company's annual incentive compensation arrangements based on the achievement of established performance criteria for the year ended December 31, 2019.
Option Awards
A summary of activity related to stock option awards for the six months ended June 30, 20202021 and 20192020 follows:
 
Number of
Option
Awards
 
Weighted
Average
Exercise Price
Option awards outstanding, December 31, 2019737,753
 $26.64
Exercised(60,000) 25.48
Option awards outstanding and exercisable, June 30, 2020677,753
 $26.74
    
Option awards outstanding, December 31, 2018964,840
 $26.53
Exercised(3,910) 11.14
Canceled or forfeited(1,960) 63.74
Option awards outstanding, June 30, 2019958,970
 $26.52
Number of
Option
Awards		Weighted
Average
Exercise Price
Option awards outstanding, December 31, 20201,569 $15.94 
Exercised(1,569)15.94 
Option awards outstanding and exercisable, June 30, 20210 $0 
Option awards outstanding, December 31, 2019737,753 $26.64 
Exercised(60,000)25.48 
Option awards outstanding, June 30, 2020677,753 $26.74 
The intrinsic value of options exercised and related tax benefits was immaterial for the six months ended June 30, 20202021 and 2019.2020.
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Note 109    Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis
FollowingThe 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 rental real estate-backed securities, certain 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

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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 monthly basis. Any price evidencing unexpected month over month fluctuations or deviations from expectations is challenged. 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. The Company has also established a quarterly process whereby prices provided by its primary pricing service for a sample of securities are validated. Any price discrepancies are resolved based on careful consideration of the assumptions and inputs employed by each of the pricing sources.
Servicing rights—Commercial servicing rights are valued using a discounted cash flow methodology incorporating contractually specified servicing fees and market based assumptions about prepayments, discount rates, default rates and costs of servicing. Prepayment and default assumptions are based on historical industry data for loans with similar characteristics. Assumptions about costs of servicing are based on market convention. Discount rates are based on rates of return implied by observed trades of underlying loans in the secondary market. These instruments are classified within level 2 of the fair value hierarchy.
Derivative financial instruments—Fair values of interest rate swaps and caps 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 LIBOR swap rates and LIBOR forward yield curves. These fair value measurements are generally classified within level 2 of the fair value hierarchy.
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The following tables present assets and liabilities measured at fair value on a recurring basis at the dates indicated (in thousands):
 June 30, 2021
 Level 1Level 2Total
Investment securities available for sale:   
U.S. Treasury securities$156,637 $0 $156,637 
U.S. Government agency and sponsored enterprise residential MBS0 2,215,440 2,215,440 
U.S. Government agency and sponsored enterprise commercial MBS0 835,588 835,588 
Private label residential MBS and CMOs0 2,111,727 2,111,727 
Private label commercial MBS0 2,594,024 2,594,024 
Single family rental real estate-backed securities0 617,445 617,445 
Collateralized loan obligations0 982,267 982,267 
Non-mortgage asset-backed securities0 176,506 176,506 
State and municipal obligations0 228,625 228,625 
SBA securities0 215,634 215,634 
Marketable equity securities88,142 0 88,142 
Servicing rights0 6,950 6,950 
Derivative assets0 79,686 79,686 
Total assets at fair value$244,779 $10,063,892 $10,308,671 
Derivative liabilities$0 $(32,131)$(32,131)
Total liabilities at fair value$0 $(32,131)$(32,131)
 June 30, 2020
 Level 1 Level 2 Total
Investment securities available for sale: 
  
  
U.S. Treasury securities$77,180
 $—
 $77,180
U.S. Government agency and sponsored enterprise residential MBS—
 2,379,840
 2,379,840
U.S. Government agency and sponsored enterprise commercial MBS—
 464,277
 464,277
Private label residential MBS and CMOs—
 1,116,086
 1,116,086
Private label commercial MBS—
 2,043,620
 2,043,620
Single family rental real estate-backed securities—
 618,207
 618,207
Collateralized loan obligations—
 1,128,753
 1,128,753
Non-mortgage asset-backed securities—
 261,531
 261,531
State and municipal obligations—
 259,495
 259,495
SBA securities—
 245,942
 245,942
Marketable equity securities88,697
 —
 88,697
Servicing rights—
 7,291
 7,291
Derivative assets—
 145,802
 145,802
Total assets at fair value$165,877
 $8,670,844
 $8,836,721
Derivative liabilities$—
 $(52,013) $(52,013)
Total liabilities at fair value$—
 $(52,013) $(52,013)

 December 31, 2020
 Level 1Level 2Total
Investment securities available for sale:   
U.S. Treasury securities$80,851 $0 $80,851 
U.S. Government agency and sponsored enterprise residential MBS0 2,405,570 2,405,570 
U.S. Government agency and sponsored enterprise commercial MBS0 539,354 539,354 
Private label residential MBS and CMOs0 998,603 998,603 
Private label commercial MBS0 2,526,354 2,526,354 
Single family rental real estate-backed securities0 650,888 650,888 
Collateralized loan obligations0 1,140,274 1,140,274 
Non-mortgage asset-backed securities0 253,261 253,261 
State and municipal obligations0 235,709 235,709 
SBA securities0 231,545 231,545 
Marketable equity securities104,274 0 104,274 
Servicing rights0 7,073 7,073 
Derivative assets0 123,830 123,830 
Total assets at fair value$185,125 $9,112,461 $9,297,586 
Derivative liabilities$0 $(44,490)$(44,490)
Total liabilities at fair value$0 $(44,490)$(44,490)
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 December 31, 2019
 Level 1 Level 2 Total
Investment securities available for sale: 
  
  
U.S. Treasury securities$70,325
 $—
 $70,325
U.S. Government agency and sponsored enterprise residential MBS—
 2,022,175
 2,022,175
U.S. Government agency and sponsored enterprise commercial MBS—
 370,976
 370,976
Private label residential MBS and CMOs—
 1,012,177
 1,012,177
Private label commercial MBS—
 1,724,684
 1,724,684
Single family rental real estate-backed securities—
 470,025
 470,025
Collateralized loan obligations—
 1,197,366
 1,197,366
Non-mortgage asset-backed securities—
 194,904
 194,904
State and municipal obligations—
 273,302
 273,302
SBA securities—
 362,731
 362,731
Marketable equity securities60,572
 —
 60,572
Servicing rights—
 7,977
 7,977
Derivative assets—
 43,686
 43,686
Total assets at fair value$130,897
 $7,680,003
 $7,810,900
Derivative liabilities$—
 $(19,029) $(19,029)
Total liabilities at fair value$—
 $(19,029) $(19,029)


Assets and liabilities measured at fair value on a non-recurring basisbasis
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. 
ImpairedCollateral dependent loans, OREO and other repossessed assets—The carrying amount of collateral dependent impaired loans is typically based on the fair value of the underlying collateral, which may be real estate 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. When current appraisals are not available, the Company may use brokers’ price opinions, home price indices or other available information about changes in real estate market conditions to adjust the latest appraised value available. These adjustments to appraised values may be subjective and involve significant management judgment. The fair value of repossessed assets or collateral consisting of other business assets may be based on third-party appraisals or internal analyses that use market approaches to valuation incorporating a combination of observable and unobservable inputs.
Fair value measurements related to collateral dependent impaired loans, OREO and other repossessed assets are generally classified within level 3 of the fair value hierarchy.
Operating lease equipmentLoans held for sale—Fair valuesLoans not originated or otherwise acquired with the intent to sell are transferred into the held for sale classification at the lower of impaired operating lease equipment arecarrying amount or fair value, typically determined based upon discounted
cash flow analyses, considering expected lease rates andon the estimated endselling price of life residual values, typically obtained from independent appraisals.the loans. These fair value measurements are typically classified within level 3 of the fair value hierarchy.

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The following tables presenttable 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 have been recorded for the periods indicated (in thousands):
June 30, 2021December 31, 2020
Collateral dependent loans$92,410 $73,803 
Loans held for sale0 20,500 
OREO and repossessed assets2,061 2,786 
$94,471 $97,089 
 June 30, 2020 Losses from Fair Value Changes
 Level 1 Level 2 Level 3 Total Three Months Ended  
 June 30, 2020		 Six Months Ended June 30, 2020
OREO and repossessed assets$—
 $—
 $4,401
 $4,401
 $(243) $(360)
Impaired loans$—
 $—
 $101,353
 $101,353
 $(23,545) $(42,221)
Operating lease equipment$—
 $—
 $839
 $839
 $—
 $(691)
 June 30, 2019 Losses from Fair Value Changes
 Level 1 Level 2 Level 3 Total Three Months Ended  
 June 30, 2019		 Six Months Ended  
 June 30, 2019
OREO and repossessed assets$—
 $—
 $1,557
 $1,557
 $(203) $(221)
Impaired loans$—
 $—
 $15,385
 $15,385
 $(529) $(279)
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):
 June 30, 2021December 31, 2020
 LevelCarrying ValueFair ValueCarrying ValueFair Value
Assets:     
Cash and cash equivalents1$895,348 $895,348 $397,716 $397,716 
Investment securities1/2$10,232,035 $10,232,907 $9,176,683 $9,177,870 
Non-marketable equity securities2$164,959 $164,959 $195,865 $195,865 
Loans held for sale2$0 $0 $24,676 $25,057 
Loans, net3$22,885,074 $23,190,143 $23,608,719 $24,205,016 
Derivative assets2$79,686 $79,686 $123,830 $123,830 
Liabilities:
Demand, savings and money market deposits2$25,631,195 $25,631,195 $22,688,617 $22,688,617 
Time deposits2$2,978,074 $2,979,040 $4,807,199 $4,814,862 
Federal funds purchased2$0 $0 $180,000 $180,000 
FHLB advances2$2,681,505 $2,683,248 $3,122,999 $3,127,190 
Notes and other borrowings2$721,639 $838,205 $722,495 $849,120 
Derivative liabilities2$32,131 $32,131 $44,490 $44,490 
   June 30, 2020 December 31, 2019
 Level Carrying Value Fair Value Carrying Value Fair Value
Assets:   
  
  
  
Cash and cash equivalents1 $402,231
 $402,231
 $214,673
 $214,673
Investment securities1/2 $8,693,628
 $8,694,622
 $7,769,237
 $7,769,949
Non-marketable equity securities2 $233,051
 $233,051
 $253,664
 $253,664
Loans held for sale2 $2,623
 $2,802
 $37,926
 $39,731
Loans, net3 $23,568,766
 $24,024,615
 $23,046,317
 $23,350,684
Derivative assets2 $145,802
 $145,802
 $43,686
 $43,686
Liabilities:         
Demand, savings and money market deposits2 $19,339,621
 $19,339,621
 $17,047,344
 $17,047,344
Time deposits2 $6,730,803
 $6,762,832
 $7,347,247
 $7,377,301
Federal funds purchased2 $100,000
 $100,000
 $100,000
 $100,000
FHLB and PPPLF borrowings2 $4,650,599
 $4,648,739
 $4,480,501
 $4,500,969
Notes and other borrowings2 $722,332
 $779,966
 $429,338
 $473,327
Derivative liabilities2 $52,013
 $52,013
 $19,029
 $19,029
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


Note 1110    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
June 30, 2020


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, commercial real estate home equity and consumer 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. 
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 June 30, 20202021 were as follows (in thousands):
Commitments to fund loans$770,860
Commitments to purchase loans733,451
Unfunded commitments under lines of credit3,145,104
Commercial and standby letters of credit88,438
 $4,737,853

Commitments to fund loans$622,579 
Unfunded commitments under lines of credit3,747,497 
Commercial and standby letters of credit95,034 
$4,465,110 
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 advice of legal counsel, the likelihood is remote that the 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.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


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 six months ended June 30, 20202021 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 20192020 Annual Report on Form 10-K for the year ended December 31, 20192020 (the "2019"2020 Annual Report on Form 10-K”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 the COVID-19 pandemic. 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 20192020 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.
Impact of the COVID-19 Pandemic and Our Response
In March 2020, the World Health Organization declared COVID-19 as a global pandemic. The initial response to the pandemic by governmentalGovernmental authorities included implementationimplemented a number of numerous measures attempting to contain the spread and impact of COVID-19 such as travel bans and restrictions, quarantines, shelter in place orders, and limitations on business activities, including in major markets in which the Company and its clients are located or do business.activities. While manymost of these restrictions are beginninghave been lifted or moderated and we believe economic indicators currently point to ease and economic activity has started to resume,a strong recovery, the COVID-19 pandemic and these necessary precautionary measures have negatively impacted the global economy, disrupted global supply chains, created significant volatility and disruptiondomestic economies, including in financial marketsthe Company's primary market areas. Certain sectors to which the Company has credit exposure, such as travel and led to sharp declines in GDPhospitality and increases in unemployment levels.retail were particularly impacted. The response of the U.S. Government to the economic impact of the crisis was swift and broad-based. The government has takentook a series of actions to support individuals, households and businesses that have beenwere negatively impacted by the economic disruption caused by the pandemic including enactment and subsequent extension of the CARES Act. The Federal Reserve also enacted a suite of facilities using its emergency lending powers designed to support liquidity and the flow of credit. Banking regulators reduced reserve requirements and enacted rules designed to support financial institutions in their efforts to work with customers during this time. The situation continues to evolve,Development and theredeployment of vaccines and improvements in treatments for the virus are positive signs and the economy is recovering, however, uncertainty remains a high level of uncertainty about the future trajectory of that recovery and the virus and itsby extension, the ultimate impact on the economy.our financial condition and results of operations.
A summary of the effects the COVID-19 pandemic has had on our Company is discussed in the "Impact of the COVID-19 Pandemic and Our Response" section in the MD&A of our expectations aboutthe Company's 2020 Annual report on Form 10-K. A discussion of how our Company continues to be and may be impacted in the future follows. These matters are discussed in further detail throughout this Form 10-Q.
Our results of operations and financial condition at and for the three and six months ended June 30, 2020 were impacted by the COVID-19 pandemic.
Deteriorating•The COVID-19 pandemic and its effect on the economy and our borrowers has impacted the provision for credit losses and the ACL. The provision for credit losses has been more volatile since the onset of the pandemic; deterioration in economic conditions and a worsening forward looking economic forecast led to a higher provision for credit losses and ACL during the year ended December 31, 2020, while improvement in economic conditions and our reasonable and supportable economic forecast contributed to a recovery of provision for credit losses of $(27.5) million and $(55.5) million for the quarter and six months ended June 30, 2020. There2021. While key economic indicators and our economic forecast have improved significantly, there continues to be significant uncertainty as to the ultimate impact of the COVID-19 crisis on future credit loss expense and future levels of the ACL, but theyACL. The provision for credit losses may continue to be more 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 the economic outlook and by the evolving impact of the pandemic and related events on individual borrowers in the portfolio.
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BANKUNITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021


•Levels of criticized and classified assets and non-performing assets increased at June 30,in 2020, largely as a result of the COVID-19 pandemic.pandemic and its impact or potential impact on our borrowers and certain portfolio sub-segments. Additionally, a significant number of borrowers have requested and were granted relief in the form of temporary payment deferrals. Beginning late indeferrals or modifications. Although levels of criticized and classified loans remain elevated compared to historical levels, as COVID-19 related restrictions on economic activity were lifted and the economic recovery gained momentum, criticized and classified loans declined by a total of $616 million and loans on short-term deferral or subject to modification under the CARES Act declined by $297 million over the first quartersix months of 20202021. See the section entitled "Asset Quality" for further discussion. If the economic recovery continues on the path of our current reasonable and continuing throughsupportable forecast, we would expect to see the second quarter, risk ratings were re-evaluated for a substantial portionpositive impact of that recovery on the operations of borrowers, and would expect the level of criticized and classified loans to decline further over the remainder of 2021. However, since uncertainty remains about the trajectory of the commercial portfolio, withvirus and the economic recovery and the specific impact on our borrowers, there is a particular focus on portfolio segments we identified for enhanced monitoringpossibility that the level of criticized and loans for which we granted temporary payment deferrals in light of the COVID-19 pandemic. At June 30, 2020, we hadclassified assets may not experienced an increase indecline. Similarly, non-performing assets, as a result of the pandemic. It is difficult to predict when, if, or to what extent levels of non-performing assetscharge-offs and delinquencies willcould increase from current levels, particularly as a result of the pandemic, although they may do so. Similarly, charge-offs may increase. These impacts may manifest in a delayed fashion dueloans currently subject to the impact of temporary payment deferrals and various formsmodifications reach the end of government assistance that our borrowers may receive.those deferral or modification periods.
•The level of commercial loan origination activity, outside of our participation in the PPP, was lower in the second quarter2020 as a result of the pandemic.pandemic, and commercial loan demand remained below pre-pandemic levels through the first half of 2021. Line utilization has also remained below pre-pandemic levels.
Our share price has•Levels of liquidity in the banking system and on our balance sheet have been negatively impacted by the COVID-19 crisis. We temporarily suspended our share repurchase program, utilizing our capital to provide support to customers through lending and other services.
We raised $300 million in subordinated debt to strengthen our capital position during this challenging economic environment.
Although we took significant measures to prepare for possible disruptions in liquidity, we have not experienced such disruptions to date and continue to have sufficientelevated, likely as a result of fiscal stimulus. Elevated levels of available liquidity.liquidity and the related persistent low interest rate environment have contributed to deposit growth, but have also had a negative impact on our net interest margin. It is difficult to predict the long-term impact on liquidity of future changes in fiscal or monetary policy.
The pandemic has impacted our operations. Currently, the substantial majority of our non-branch employees continue to work remotely, although we expect most of these employees to return to the office under a hybrid arrangement in the near term. 97% of our branch locations are working remotely.open and have resumed normal operations. We did not experience any significant operational difficulties, technology failures or outages, or customer service disruptions in ouras a result of the transition to a remote work environment. 76% of our branches remain openWe continue to serve customers via drive-through or lobby appointments, operating with reduced hours. Generally, branch locations without drive-through facilities are temporarily closed. We have focusedfocus on insuringensuring that our technology systems and internal controls continue to operate effectively in a remote or hybrid work environment. We have put mechanisms in place to allow us to evaluate all significant modifications to processes and procedures to insure continued effectiveness of our controls.control environment. We have not identified any instances in which our control environment has failed to operate effectively.
Customer demand for our products and services, particularly lending products has been and may continue to be impactednegatively affected by the impact of the pandemic on their businesses or by social distancing measures.and on the overall level of economic activity. Potential borrowers impacted by the pandemic may no longer meet our underwriting criteria. WeLoan production in most portfolio segments has not yet returned to pre-pandemic levels. While we currently expect loan production in many portfolio segments to be muted inincrease over the near term as a resultsecond half of 2021, our ability to increase production will depend at least to some extent on the future trajectory of the pandemic.


pandemic and on the pace and timing of economic recovery.
In response to the pandemic, we have prioritized risk management and implemented a number of measures to support our customers, employees and employees. Specifically, we have:communities. Those measures included, but were not limited to:
•Activated and continue to operate under our business continuity plan under the leadership of executive management.
Enhanced liquidity monitoringmanagement and management protocols.
Maintainedmaintained a regular cadence of Board of Directors update calls.
•Enhanced liquidity monitoring and management protocols, although we have not experienced constraints on liquidity since the onset of the pandemic; in fact, liquidity levels have been elevated.
•Focused on portfolio management activities, including segregating certain segments of the loan portfolio for additional monitoring, increasing the level and frequency of pro-active outreach to borrowers, and our portfolio management activities.
Segregated certain segments of the loan portfolio for enhanced monitoring.
Enhanced ourenhancing workout and recovery staffing and processes.
Enhancedprocesses and enhancing our stress testing framework. Results of internal stress testing indicate that we have sufficient capital to withstand an increase in credit losses materially beyond levels currently expected, and to withstand a severe downturn.
Proactively reached out to•Monitoring our critical third party service providers and evaluatedto insure their ability to continue to provide support in the current environment. We have experienced no significant service disruptions.
•Expanded certain employee benefits and launched a number of programs and protocols to keep our employees healthy and engaged.
Enhanced personal protective measures for employees working at our corporate locations and begun planning for the eventual return to office of a larger percentage of our workforce, when conditions permit. We have not yet set a definite date to begin a phased return to office.
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•Supported our clients through participating in the Small Business Administration’s PPP, andthe Federal Reserve's MSLF, granting payment deferrals, loan modifications and fee waivers on a case-by-case basis.
Temporarily halted new residential foreclosure actions.•Disbursed over 150 grants to nonprofit organizations across our footprint and helped to meet the needs of our community partners through employee volunteer efforts, including "virtual" volunteer hours.
We remain confident in our long-term underlying strength and stability, and our ability to navigate these challenging conditions.
Overview
Quarterly Highlights
In evaluating our financial performance, we consider the level of and trends in net interest income, the net interest margin, the cost of deposits, levels and composition of 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 growth in earning assets and deposits, particularly non-interest bearing deposits, trends in funding mix and cost of funds. We analyze these ratios and trends against our own historical performance, our budgeted performance and the financial condition and performance of comparable financial institutions.
Quarterly highlights include:
•Net income for the three months ended June 30, 20202021 was $76.5$104.0 million, or $0.80$1.11 per diluted share, compared to $81.5$76.5 million, or $0.81$0.80 per diluted share, for the three months ended June 30, 2019. For2020 and net income of $98.8 million or $1.06 per diluted share for the immediately preceding quarter ended March 31, 2021. Net income for the six months ended June 30, 2020, net income2021 was $45.6$202.8 million, or $0.47$2.17 per diluted share, compared to $147.4$45.6 million, or $1.45$0.47 per diluted share, for the six months ended June 30, 2019. Results2020. On an annualized basis, earnings for the six months ended June 30, 2020 were negatively impacted by the application2021 generated a return on average stockholders' equity of the CECL accounting methodology, including the expected impact13.2% and a return on average assets of COVID-19 on the provision for credit losses.1.15%.
•PPNR improved by $37.3 million, or 44%, to $122.3was $112.6 million for the three months ended June 30, 20202021 compared to $85.0$103.3 million for the immediately preceding three months ended March 31, 20202021 and by $16.2 million, compared to $106.1$122.3 million for the three months ended June 30, 2019.2020. For the six months ended June 30, 20202021 and 2019,2020, PPNR was $215.9 million and $207.3 million, respectively.
•Net interest income increased by $2.1 million compared to the immediately preceding quarter ended March 31, 2021 and $206.6by $8.0 million respectively.
compared to the quarter ended June 30, 2020. The net interest margin, calculated on a tax-equivalent basis, increaseddecreased to 2.39%2.37% for the three months ended June 30, 20202021 from 2.35%2.39% for both the immediately preceding quarter. three months ended March 31, 2021 and the three months ended June 30, 2020.
•The net interest margin was 2.52%average cost of total deposits continued to decline, dropping by 0.08% to 0.25% for the three months ended June 30, 2019. The yield on interest earnings assets declined by 0.44% while2021 from 0.33% for the cost of interest bearing liabilities declined by 0.60%immediately preceding three months ended March 31, 2021, and 0.80% for the three months ended June 30, 2020 compared to the three months ended March 31, 2020.


The average cost of total deposits declined to 0.80% for the quarter ended June 30, 2020 compared to 1.70% for the quarter ended June 30, 2019. On a spot basis, the APY on total deposits declineddeclined to 0.65%0.22% at June 30, 2021 from 0.27% at March 31, 2021 and 0.36% at December 31, 2020.
The•For the three months ended June 30, 2021, the Company recorded a recovery of credit losses of $(27.5) million compared to a recovery of $(28.0) million for the immediately preceding three months ended March 31, 2021 and a provision for credit losses totaledof $25.4 million for the three months ended June 30, 2020. The provision for credit losses was $150.8 million forFor the six months ended June 30, 2020. For2021 and 2020, the threeprovision for (recovery of) credit losses was $(55.5) million and six$150.8 million, respectively.
•As expected, the Company's levels of criticized and classified loans, which had increased as a result of the COVID-19 pandemic, have started to decline. During the three months ended June 30, 2019, the Company recorded a provision for (recovery of) loan losses,2021, total criticized and classified loans declined by $541 million or 21%, to $2.1 billion at June 30, 2021 from $2.6 billion at March 31, 2021.
•Loans currently under short-term deferral totaled $41 million and loans modified under the incurred loss model,CARES Act totaled $456 million for a total of $(2.7)$497 million and $7.5at June 30, 2021, down from a total of $762 million respectively.at March 31, 2021.
•Non-interest bearing demand deposits grew by $1.3 billion, or 28%, for the three months ended June 30, 2020, to 23% of total deposits compared to 18% of total deposits at March 31, 2020. Total deposits increased by $1.1 billion during the three months ended June 30, 2020. Growth in non-interest bearing demand deposits for the three months ended June 30, 2020 was positively impacted by proceeds from PPP loans.
•
Loans and leases, including operating lease equipment, grew by $656 million for the three months ended June 30, 2020. Loan and lease growth for the three months ended June 30, 2020 included growth of $827 million in PPP loans and $308 million in mortgage warehouse outstandings, partially offset by expected declines in certain other portfolio segments. We funded over 3,500 PPP loans totaling $876 million during the three months ended June 30, 2020.
The net unrealized loss on investment securities available for sale improved to $2.6 million at June 30, 2020 from $249.8 million at March 31, 2020, in response to both declines in market rates and tightening spreads.
Stockholders' equity increased by $238.9$869 million during the three months ended June 30, 2020 to $2.8 billion. The increase was driven2021 while total deposits grew by $877 million. Average non-interest bearing demand deposits grew by $673 million for the recovery of $180.6 million in accumulated other comprehensive income relatedthree months ended June 30, 2021 compared to the reduction in unrealized losses on investment securities available for saleimmediately preceding quarter and by $2.9 billion compared to the
34




second quarter of the retention of earnings.prior year. At June 30, 2020, book2021, non-interest bearing demand deposits represented 31% of total deposits, compared to 25% of total deposits at December 31, 2020.
•Investment securities grew by $987 million for the three months ended June 30, 2021, while loans and operating leases, excluding PPP loans, declined by $69 million. Excess liquidity was deployed into the investment portfolio during the quarter as loan growth continued to lag growth in deposits.
•Book value per common share and tangible book value per common share were $29.81 and $28.97, respectively.
During the three months endedat June 30, 2020,2021 increased to $33.91 and $33.08, respectively, from $32.05 and $31.22, respectively at December 31, 2020.
•On July 21, 2021, the Company's Board of Directors authorized the repurchase of up to $150 million in shares of its outstanding common stock. This authorization is in addition to $37.7 million in remaining authorization under a previously announced share repurchase program. Any repurchases under the program will be made in accordance with applicable securities laws from time to time in open market or private transactions. The extent to which the Company completed an underwritten public offeringrepurchases shares, and the timing of $300 million aggregate principalsuch repurchases, will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of its 5.125% subordinated notes, augmenting Tier 2 capital.retained earnings, regulatory requirements and other considerations. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued without prior notice at any time.
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, 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 interest bearing liabilities is influenced by the Company's liquidity profile, management's assessment of the desire for lower cost funding sources weighed against relationships with customers and growth expectations, 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.

35




The following tables present,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 and restructured 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 June 30, Three Months Ended March 31, Three Months Ended June 30,
 2020 2020 2019
 Average
Balance		 
Interest (1)(2)
 
Yield/
Rate (1)(2)
 Average
Balance		 
Interest (1)(2)
 
Yield/
Rate (1)(2)
 Average
Balance		 
Interest (1)(2)
 
Yield/
Rate (1)(2)
Assets:                 
Interest earning assets: 
  
  
        
  
  
Loans$23,534,684
 $217,691
 3.71% $22,850,065
 238,108
 4.18% $22,505,138
 $253,766
 4.52%
Investment securities (3)
8,325,217
 51,684
 2.48% 8,107,649
 56,951
 2.81% 8,187,518
 73,867
 3.61%
Other interest earning assets765,848
 2,908
 1.53% 646,628
 3,720
 2.31% 525,563
 5,069
 3.87%
Total interest earning assets32,625,749
 272,283
 3.35% 31,604,342
 298,779
 3.79% 31,218,219
 332,702
 4.27%
Allowance for credit losses(254,396)     (138,842)     (117,206)    
Non-interest earning assets1,976,398
     1,749,752
     1,589,286
    
Total assets$34,347,751
     $33,215,252
     $32,690,299
    
Liabilities and Stockholders' Equity:                 
Interest bearing liabilities:                 
Interest bearing demand deposits$2,448,545
 4,722
 0.78% $2,173,628
 6,959
 1.29% $1,773,912
 6,225
 1.41%
Savings and money market deposits10,450,310
 17,447
 0.67% 10,412,202
 37,756
 1.46% 10,924,580
 52,191
 1.92%
Time deposits7,096,097
 28,018
 1.59% 7,510,070
 38,107
 2.04% 6,944,862
 41,571
 2.40%
Total interest bearing deposits19,994,952
 50,187
 1.01% 20,095,900
 82,822
 1.66% 19,643,354
 99,987
 2.04%
Short term borrowings119,835
 32
 0.11% 94,066
 367
 1.57% 127,242
 771
 2.42%
FHLB and PPPLF borrowings4,961,376
 21,054
 1.71% 4,414,830
 25,084
 2.29% 5,028,418
 30,263
 2.41%
Notes and other borrowings493,278
 6,168
 5.00% 429,099
 5,290
 4.93% 405,726
 5,325
 5.25%
Total interest bearing liabilities25,569,441
 77,441
 1.22% 25,033,895
 113,563
 1.82% 25,204,740
 136,346
 2.17%
Non-interest bearing demand deposits5,313,009
     4,368,553
     3,932,716
    
Other non-interest bearing liabilities820,439
     749,100
     601,703
    
Total liabilities31,702,889
     30,151,548
     29,739,159
    
Stockholders' equity2,644,862
     3,063,704
     2,951,140
    
Total liabilities and stockholders' equity$34,347,751
     $33,215,252
     $32,690,299
    
Net interest income  $194,842
     $185,216
     $196,356
  
Interest rate spread    2.13%     1.97%     2.10%
Net interest margin    2.39%     2.35%     2.52%
Three Months Ended June 30,Three Months Ended March 31,Three Months Ended June 30,
 202120212020
 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$22,996,564 $205,940 3.59 %$23,549,309 $208,821 3.58 %$23,534,684 $217,691 3.71 %
Investment securities (3)
9,839,422 38,338 1.56 %9,070,185 39,188 1.73 %8,325,217 51,684 2.48 %
Other interest earning assets1,380,317 1,607 0.47 %1,062,840 1,593 0.61 %765,848 2,908 1.53 %
Total interest earning assets34,216,303 245,885 2.88 %33,682,334 249,602 2.98 %32,625,749 272,283 3.35 %
Allowance for credit losses(215,151)(254,438)(254,396)
Non-interest earning assets1,732,676 1,724,176 1,976,398 
Total assets$35,733,828 $35,152,072 $34,347,751 
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits$3,069,945 $2,594 0.34 %$2,942,874 $2,774 0.38 %$2,448,545 $4,722 0.78 %
Savings and money market deposits13,541,237 11,307 0.33 %12,793,019 12,127 0.38 %10,450,310 17,447 0.67 %
Time deposits3,380,582 3,415 0.41 %4,330,781 7,475 0.70 %7,096,097 28,018 1.59 %
Total interest bearing deposits19,991,764 17,316 0.35 %20,066,674 22,376 0.45 %19,994,952 50,187 1.01 %
Federal funds purchased— — — %8,000 3 0.15 %119,835 32 0.11 %
FHLB and PPPLF borrowings2,873,922 16,922 2.36 %3,072,717 17,558 2.32 %4,961,376 21,054 1.71 %
Notes and other borrowings721,753 9,252 5.13 %722,305 9,252 5.12 %493,278 6,168 5.00 %
Total interest bearing liabilities23,587,439 43,490 0.74 %23,869,696 49,189 0.83 %25,569,441 77,441 1.22 %
Non-interest bearing demand deposits8,163,879 7,491,249 5,313,009 
Other non-interest bearing liabilities851,044 746,973 820,439 
Total liabilities32,602,362 32,107,918 31,702,889 
Stockholders' equity3,131,466 3,044,154 2,644,862 
Total liabilities and stockholders' equity$35,733,828 $35,152,072 $34,347,751 
Net interest income$202,395 $200,413 $194,842 
Interest rate spread2.14 %2.15 %2.13 %
Net interest margin2.37 %2.39 %2.39 %
(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $3.4 million, $3.5 million and $3.8 million for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $0.7 million for both the three months ended June 30, 2021 and March 31, 2021 and $0.8 million for the three months ended June 30, 2020.
(2)Annualized.
(3)     At fair value except for securities held to maturity.    
36




Six Months Ended June 30,
 20212020
 Average
Balance
Interest (1)
Yield/
Rate (1)(2)
Average
Balance
Interest (1)
Yield/
Rate (1)(2)
Assets:
Interest earning assets:      
Loans$23,271,410 $414,761 3.58 %$23,192,374 $455,799 3.94 %
Investment securities (3)
9,456,929 77,525 1.64 %8,216,433 108,635 2.64 %
Other interest earning assets1,222,456 3,200 0.53 %706,238 6,628 1.89 %
Total interest earning assets33,950,795 495,486 2.93 %32,115,045 571,062 3.57 %
Allowance for credit losses(234,686)(196,619)
Non-interest earning assets1,728,449 1,863,074 
Total assets$35,444,558 $33,781,500 
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits$3,006,760 $5,368 0.36 %$2,311,086 $11,681 1.02 %
Savings and money market deposits13,169,195 23,434 0.36 %10,431,256 55,203 1.06 %
Time deposits3,853,057 10,890 0.57 %7,303,083 66,125 1.82 %
Total interest bearing deposits20,029,012 39,692 0.40 %20,045,425 133,009 1.33 %
Federal funds purchased3,978 2 0.10 %106,951 399 0.75 %
FHLB and PPPLF borrowings2,972,770 34,480 2.34 %4,688,102 46,138 1.98 %
Notes and other borrowings722,028 18,505 5.13 %461,188 11,458 4.97 %
Total interest bearing liabilities23,727,788 92,679 0.79 %25,301,666 191,004 1.52 %
Non-interest bearing demand deposits7,829,422 4,840,781 
Other non-interest bearing liabilities799,297 784,770 
Total liabilities32,356,507 30,927,217 
Stockholders' equity3,088,051 2,854,283 
Total liabilities and stockholders' equity$35,444,558 $33,781,500 
Net interest income$402,807 $380,058 
Interest rate spread2.14 %2.05 %
Net interest margin2.38 %2.37 %
(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $3.8 million and $4.4 million, and the tax-equivalent adjustment for tax-exempt investment securities was $0.8 million and $1.1 million for the three months ended June 30, 2020 and 2019, respectively.
(2)Annualized.
(3)At fair value except for securities held to maturity.


 Six Months Ended June 30,
 2020 2019
 Average
Balance		 
Interest (1)(2)
 
Yield/
Rate (1)(2)
 Average
Balance		 
Interest (1)(2)
 
Yield/
Rate (1)(2)
Assets:           
Interest earning assets: 
  
  
  
  
  
Loans$23,192,374
 $455,799
 3.94% $22,241,262
 $498,776
 4.51%
Investment securities (3)
8,216,433
 108,635
 2.64% 8,353,116
 151,474
 3.63%
Other interest earning assets706,238
 6,628
 1.89% 510,933
 9,921
 3.91%
Total interest earning assets32,115,045
 571,062
 3.57% 31,105,311
 660,171
 4.26%
Allowance for credit losses(196,619)     (114,157)    
Non-interest earning assets1,863,074
     1,596,565
    
Total assets$33,781,500
     $32,587,719
    
Liabilities and Stockholders' Equity:           
Interest bearing liabilities:           
Interest bearing demand deposits$2,311,086
 11,681
 1.02% $1,738,393
 11,864
 1.38%
Savings and money market deposits10,431,256
 55,203
 1.06% 11,187,818
 105,008
 1.89%
Time deposits7,303,083
 66,125
 1.82% 6,926,041
 80,536
 2.34%
Total interest bearing deposits20,045,425
 133,009
 1.33% 19,852,252
 197,408
 2.01%
Short term borrowings106,951
 399
 0.75% 132,282
 1,596
 2.41%
FHLB and PPPLF borrowings4,688,102
 46,138
 1.98% 4,845,337
 57,637
 2.40%
Notes and other borrowings461,188
 11,458
 4.97% 405,547
 10,633
 5.24%
Total interest bearing liabilities25,301,666
 191,004
 1.52% 25,235,418
 267,274
 2.13%
Non-interest bearing demand deposits4,840,781
     3,769,828
    
Other non-interest bearing liabilities784,770
     629,123
    
Total liabilities30,927,217
     29,634,369
    
Stockholders' equity2,854,283
     2,953,350
    
Total liabilities and stockholders' equity$33,781,500
     $32,587,719
    
Net interest income  $380,058
     $392,897
  
Interest rate spread    2.05%     2.13%
Net interest margin    2.37%     2.53%
(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $7.5 million and $8.8 million, and the tax-equivalent adjustment for tax-exempt investment securities was $1.6 million and $2.3 million for the six months ended June 30, 2020 and 2019, respectively.
(2)Annualized.
(3)At fair value except for securities held to maturity.
(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $6.9 million and $7.5 million for the six months ended June 30, 2021 and 2020, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $1.4 million and $1.6 million for the six months ended June 30, 2021 and 2020, respectively.
(2)Annualized.
(3)     At fair value except for securities held to maturity.    
The amount of tax-equivalent net interest income has exhibited an increasing trend over the three and six month periods presented above. Both average yields on interest earning assets and average rates paid on interest bearing liabilities have been declining, reflecting the macro interest rate environment and ongoing initiatives to reduce deposit costs and improve the mix of deposits. Notably, average interest earning assets have consistently increased, while average interest bearing liabilities have declined, contributing to the increasing trend in net interest income.
Three months ended June 30, 20202021 compared to the immediately preceding three months ended March 31, 20202021
Net interest income, calculated on a tax-equivalent basis, was $194.8$202.4 million for the three months ended June 30, 20202021 compared to $185.2$200.4 million for the three months ended March 31, 2020,2021, an increase of $9.6 million, comprised of decreases in tax-equivalent$2.0 million. Tax-equivalent interest income and interest expense of $26.5decreased by $3.7 million and $36.1$5.7 million, respectively.respectively. The decrease in interest income resulted primarily from declines in average loans and in the yield on investment securities. Declines in interest expense reflected decreases in both tax-equivalentthe rate paid on interest incomebearing deposits and interest expense resulted from decreases in market interest rates, partially offset by the impact of increases in average interest earnings assets andbearing liabilities, as average interestnon-interest bearing liabilities.demand deposits continued to grow.
The net interest margin, calculated on a tax-equivalent basis, waswas 2.37% for the three months ended June 30, 2021, compared to 2.39% for the three months ended March 31, 2021. The net interest margin for the three months ended June 30, 2020, compared to 2.35% for2021 was negatively impacted by elevated levels of liquidity, reflected in higher levels of cash as well as deployment of liquidity into the three months ended March 31, 2020. The interest rate spread increased to 2.13% for the quarter ended June 30, 2020 from 1.97% for the three months ended March 31, 2020investment portfolio as declines in the cost of interest bearing liabilities outpaced declines in the yield on interest earning assets.


loan production lagged deposit growth.
Offsetting factors contributing to the increase inimpacting the net interest margin for the three months ended June 30, 20202021 compared to the three monthsimmediately preceding quarter ended March 31, 20202021 included:
The most significant factor leading to the increase in the net interest margin for the quarter ended June 30, 2020 compared to the three months ended March 31, 2020 was the decline in the cost of deposits.
37




•The average rate paid on interest bearing deposits decreased to 1.01% for 0.35% for the three months ended June 30, 2020,2021, from 1.66%0.45% for the three months ended March 31, 2020, reflecting2021. This decline reflected continued initiatives taken to lower rates paid on deposits following actions byincluding the Fed in the fourth quarterre-pricing of 2019 and first quarter of 2020. We expect the cost of interest bearing depositsterm deposits.
•The tax-equivalent yield on investment securities decreased to continue to decline.
For 1.56% for the three months ended June 30, 2020,2021 from 1.73% for the increasethree months ended March 31, 2021. This decrease resulted from the impact of purchases of lower-yielding securities in average non-interest bearing demand deposits asthe current rate environment, coupled with amortization, maturities and prepayment of securities purchased in a percentagehigher rate environment. Accounting adjustments related to faster prepayment speeds of average total deposits also positivelysecurities purchased at a premium negatively impacted the costyield on investment securities for the quarter ended June 30, 2021 by approximately 0.10%.
•The tax-equivalent yield on loans increased to 3.59% for the three months ended June 30, 2021, from 3.58% for the three months ended March 31, 2021. Accelerated amortization of deposits andorigination fees on PPP loans that were partially or fully forgiven during the net interest margin.
The average rate paidquarter impacted the yield on borrowings declined to 1.97%loans by approximately 0.11% for the three months ended June 30, 2020, from 2.51%2021, compared to 0.06% for the three months ended March 31, 2020, reflecting declines in rates on overnight and short-term FHLB advances as well as2021. Factoring out the impact of PPPLF borrowings priced at rates lower thanaccelerated amortization of PPP origination fees, the average rate paid by the Company on its borrowings.
The tax-equivalent yield on loans decreased to 3.71% for the three months ended June 30, 2020, from 4.18% for the three months ended March 31, 2020. The most significant factor contributing to this decrease was the decline in benchmark interest rates, which impacted the level of prepayments of higher rate loans as well as rates earned on both existing floating rate assets and new production. The addition of lower yielding PPP loans2021 decreased by 0.04% compared to the balance sheet also contributed toimmediately preceding quarter.
•Average interest bearing liabilities declined by $282 million quarter-over-quarter and average non-interest bearing demand deposits increased by $673 million, positively impacting the decline in the yield on loans.
The tax-equivalent yield on investment securities decreased to 2.48% for the three months ended June 30, 2020 from 2.81% for the three months ended March 31, 2020. The most significant factor contributing to this decrease was the impact of decreases in benchmarknet interest rates on both existing floating rate assets and new securities added to the portfolio.margin.
Three and six months ended June 30, 20202021 compared to the three and six months ended June 30, 20192020
Net interest income, calculated on a tax-equivalent basis, was $202.4 million for the three months ended June 30, 2021, compared to $194.8 million for the three months ended June 30, 2020, compared to $196.4 million for the three months ended June 30, 2019, a decreasean increase of $1.5$7.6 million. Net interest income, calculated on a tax-equivalent basis, was $402.8 million for the six months ended June 30, 2021, compared to $380.1 million for the six months ended June 30, 2020, compared to $392.9 million for the six months ended June 30, 2019, a decrease of $12.8an increase $22.7 million. The decreaseschanges in net interest income were comprised of decreases in tax-equivalent interest income and interest expense of $60.4$26.4 million and $89.1$75.6 million and decreases in interest expense of $58.9$34.0 million and $76.3$98.3 million for the three and six months ended June 30, 2020,2021, respectively, compared to the three and six months ended June 30, 2019.2020.
The decreasesDecreases in tax-equivalent interest income for the three and tax-equivalentsix months ended June 30, 2021 compared to the three and six months ended June 30, 2020 resulted from the impact on asset portfolio yields of declines in market interest rates in early 2020, leading to runoff of assets originated in a higher rate environment and origination of assets at lower prevailing rates. These declines in yields were partially offset by increases in the average balance of investment securities. Average loans increased marginally for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, but declined for the comparative three month periods. Declines in interest expense resulted fromalso reflected the impact of decreases in market interest rates, partially offset byour strategy focused on lowering the impactcost of increasesdeposits and improving the deposit mix and declines in average interest earning assets and average interest bearing liabilities.
The net interest margin, calculated on a tax-equivalenttax-equivalent basis, was 2.37%for the three months ended June 30, 2021, compared to 2.39% for the three months ended June 30, 2020, compared to 2.52% 2020. The net interest margin, calculated on a tax-equivalent basis, was 2.38%for the threesix months ended June 30, 2019. The interest rate spread increased2021, compared to 2.13%2.37% for the quarter ended June 30, 2020 from 2.10% for the threesix months ended June 30, 2019 as declines2020. The reduction in the cost of interest bearing liabilities outpaced declinesthe decline in the yield on interest earning assets.assets for both the three and six months ended June 30, 2021 compared to the comparable periods in 2020.
Offsetting factors contributing to the decrease inimpacting the net interest margin for the three and six months ended June 30, 20202021 compared to comparable periods of the prior yearthree and six months ended June 30, 2020 included:
•The average ratetax-equivalent yield on interest bearing depositsloans decreased to 1.01%3.59% and 1.33%3.58% for the three and six months ended June 30, 2020,2021, from 2.04% and 2.01% for the three and six months ended June 30, 2019, reflecting initiatives taken to decrease the rate paid on deposits.
The average rate on borrowings declined to 1.97% and 2.22%% for the three and six months ended June 30, 2020, from 2.62% and 2.61%% for the three and six months ended June 30, 2019.
The tax-equivalent yield on loans decreased to 3.71% and 3.94% for the three and six months ended June 30, 2020, from 4.52%2020. Accelerated amortization of origination fees on PPP loans that were partially or fully forgiven positively impacted the yield on loans by approximately 0.11% and 4.51%0.10% for the three and six months ended June 30, 2019, due primarily to declines in benchmark interest rates.2021, respectively.
The•The tax-equivalent yield on investment securities decreaseddeclined to 1.56% and 1.64% from 2.48% and 2.64% for the three and six months ended June 30, 2021 and the three and six months ended June 30, 2020, from 3.61%respectively. Accounting adjustments related to faster prepayment speeds of securities purchased at a premium negatively impacted the yield on investment securities for the quarter ended June 30, 2021 by approximately 0.07% when compared to the three months ended June 30, 2020.
•The average rate paid on interest bearing deposits decreased to 0.35% and 3.63%0.40% for the three and six months ended June 30, 2019. The most significant factors2021, from 1.01% and 1.33% for the three and six months ended June 30, 2020. This decrease reflected

38


contributing to this decrease were decreases

declines in benchmarkmarket interest rates impacting new purchasesand continued execution of investments andinitiatives taken to lower rates paid on deposits, including the re-pricing of variable rate securities,term deposits.
•Average interest bearing liabilities declined by $2.0 billion and $1.6 billion, respectively for the three and six months ended June 30, 2021, compared to a lesser extent,the three and six months ended June 30, 2020. Average non-interest bearing demand deposits increased prepayment speeds.by $2.9 billion and $3.0 billion for those same comparative periods. These changes positively impacted the net interest margin.
Provision for Credit Losses
The provision for credit losses is a charge to earnings required to maintain the ACL at a level consistent with management’s estimate of expected credit losses on financial assets carried at amortized cost at the balance sheet date. The amount of the provision is impacted by changes in current economic conditions as well as in management's reasonable and supportable economic forecast, loan originations and runoff, changes in portfolio mix, risk rating migration and portfolio seasoning, the level of charge-offs, changes in specific reserves, changes in expected prepayment speeds and other assumptions. The provision for credit losses also includes an amountamounts related to off-balance sheet credit exposures. exposures and may include amounts related to accrued interest receivable and AFS debt securities.
The following table presents the components of the provision for credit losses for the periods indicated (in thousands):
Three Months Ended June 30, 2021Six Months Ended June 30, 2021
Amount related to funded portion of loans$(27,663)$(53,969)
Amount related to off-balance sheet credit exposures129 (919)
Amount related to accrued interest receivable— (271)
Amount related to AFS debt securities— (364)
Total recovery of credit losses$(27,534)$(55,523)
The recovery of credit losses for the three and six months ended June 30, 2021 was largely driven by improvements in current and forecasted economic conditions. For the three and six months ended June 30, 2020, the Company recorded a provision for credit losses of $25.4 million and $150.8 million, respectively. The provision for credit losses for the three and six months ended June 30, 2020 was impacted by deteriorating current and forecasted economic conditions related to the onset of the COVID-19 pandemic.
The evolving COVID-19 situation and its actual and forecasted impact on economic conditions have led and may continue to lead to volatility in the provision for credit losses.
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.
For the three and six months ended June 30, 2020, the provision for (recovery of) credit losses totaled $25.4 million and $150.8 million, respectively, which included $(6.2) million and $2.6 million, respectively, related to off-balance sheet credit exposures. The provision for credit losses for the three and six months ended June 30, 2020 was determined using the CECL methodology and reflected management's estimate of the expected negative economic impact of the COVID-19 pandemic.
39

For the three and six months ended June 30, 2019, the Company recorded a provision for (recovery of) loan losses, under the incurred loss methodology, of $(2.7) million and $7.5 million, respectively.
The evolving COVID-19 situation may lead to increased volatility in the provision for credit losses and if economic forecasts deteriorate further as a result of COVID-19, the provision for credit losses and the ACL will likely increase.

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 June 30,Six Months Ended June 30,
 2021202020212020
Deposit service charges and fees$5,417 $3,701 $10,317 $7,887 
Gain on sale of loans:
Guaranteed portions of SBA loans96375 541 1,569 
GNMA early buyout loans2,138 3,951 3,447 6,206 
Other— — — 17 
Gain on sale of loans, net2,234 4,326 3,988 7,792 
Gain on investment securities:
Net realized gains on sale of securities AFS2,841 5,723 6,808 7,253 
Net unrealized gains (losses) on marketable equity securities1,314 1,113 (288)(3,870)
Gain on investment securities, net4,155 6,836 6,520 3,383 
Lease financing13,522 16,150 26,010 31,631 
Other non-interest income7,429 7,338 16,218 10,956 
$32,757 $38,351 $63,053 $61,649 
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Deposit service charges and fees$3,701
 $4,290
 $7,887
 $8,120
Gain on sale of loans:       
Guaranteed portions of SBA loans375
 848
 1,569
 2,635
GNMA early buyout loans3,951
 1,273
 6,206
 2,192
Other—
 —
 17
 230
Gain on sale of loans, net4,326
 2,121
 7,792
 5,057
Gain on investment securities:       
Net realized gains on sale of AFS5,723
 3,915
 7,253
 8,232
Net unrealized gains (losses) on marketable equity securities1,113
 201
 (3,870) 1,669
Gain on investment securities, net6,836
 4,116
 3,383
 9,901
Lease financing16,150
 17,005
 31,631
 34,191
Other non-interest income7,338
 7,805
 10,956
 14,323
Non-interest income$38,351
 $35,337
 $61,649
 $71,592
DepositThe increase in deposit service charges for the quarterthree and six months ended June 30,31, 2021 compared to 2020 were impacted byresulted primarily from higher treasury management fee waiversincome, related to COVID-19 and to lower levels of activity, also related to COVID-19.our BankUnited 2.0 initiatives.
The increasedecline in gain on sale of GNMA early buyout loans for the three and six months ended June 30, 20202021 compared to the comparable periodsperiod of 2019 resulted from an increase in the volumeprior year related to lower levels of re-pooling activity.
The decrease in gains on the sale of guaranteed portions of SBA loans period over period isfor the three and six months ended June 30, 2021 compared to 2020 was a result of declining origination volume of SBA loans impacted by our focus on PPP lending duringas resources were re-directed to the second quarter of 2020.
The net unrealized loss on marketable equity securities for the six months ended June 30, 2020 was primarily due to a $5.0 million unrealized loss recorded during the first quarter, resulting from the impact on markets of the COVID-19 crisis; this improved to a gain of $1.1 million for the quarter ended June 30, 2020.


PPP.
The decrease in income from lease financing for the three and six months ended June 30, 20202021 compared to the three and six months ended June 30, 2019, is2020 was primarily attributed to the increase in operating lease equipment off-lease.off-lease and re-leasing of assets at lower rates.
The most significant factor leading to the increase in other non-interest income for the six months ended June 30, 2021 compared to 2020 was increased revenue from our customer derivative program.
40




Non-Interest Expense
The following table presents the components of non-interest expense for the periods indicated (in thousands):
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
2020 2019 2020 2019 2021202020212020
Employee compensation and benefits$48,877
 $57,251
 $107,764
 $122,484
Employee compensation and benefits$56,459 $48,877 $115,747 $107,764 
Occupancy and equipment11,901
 13,991
 24,270
 27,157
Occupancy and equipment11,492 11,901 23,367 24,270 
Deposit insurance expense4,806
 5,027
 9,209
 9,068
Deposit insurance expense4,222 4,806 11,672 9,209 
Professional fees3,131
 6,937
 6,335
 14,808
Professional fees2,139 3,131 4,051 6,335 
Technology and telecommunications14,025
 12,013
 26,621
 23,181
Technology and telecommunications16,851 14,025 32,592 26,621 
Depreciation of operating lease equipment12,219
 11,489
 24,822
 23,301
Depreciation of operating lease equipment12,834 12,219 25,051 24,822 
Other non-interest expense11,411
 13,377
 26,217
 26,776
Other non-interest expense14,455 11,411 29,193 26,217 
Total non-interest expense$106,370
 $120,085
 $225,238
 $246,775
Total non-interest expense$118,452 $106,370 $241,673 $225,238 
Less:       
Depreciation of operating lease equipment(12,219) (11,489) (24,822) (23,301)
Loss on debt extinguishment    —
 —
Costs incurred directly related to implementation of BankUnited 2.0(255) (6,217) (334)
(12,109)
COVID-19 expenses(1,519) —
 (1,519) —
Recurring operating expenses (1)
$92,377
 $102,379
 $198,563
 $211,365
(1)Recurring operating expenses is a non-GAAP measure. See section entitled "Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measurements to their comparable GAAP financial measurements.
Employee compensation and benefits
Employee compensation and benefits declinedincreased by $8.4$7.6 million and $14.7$8.0 million for the three and six months ended June 30, 2020,2021, respectively as compared to the three and six months ended June 30, 2019,comparable periods of 2020, primarily due to a reduction in headcounthigher variable compensation accruals related to our BankUnited 2.0 initiative. Lower variable compensation costs andimproved overall operating results for 2021 as well as the impact of a declininghigher stock price on liability-classified awards also contributed to reduced expense levels.
Professional fees
Professional fees decreased by $3.8 million and $8.5 million for the three and six months ended June 30, 2020, respectively as compared to the three and six months ended June 30, 2019. The decrease was primarily due to the consulting services in 2019 related to our BankUnited 2.0 initiative.liability classified share awards.
Other non-interest expenseTechnology and telecommunications
The most significant components of other non-interest expense are advertising, promotion and business development, costs related to lending activities, loan servicing and deposit generation, insurance, expenses related to workouts and foreclosures, regulatory examination assessments, travel and general office expense.
For both the quarter and six months ended June 30, 2020, non-interest expense included approximately $1.5 million related directly to COVID-19, the most significant of which includeincreases in technology and consulting costs related to our participationtelecommunications are reflective of investments in digital, payments and data analytics capabilities and in the PPP, laptops and other equipmentinfrastructure to facilitate employees working remotely and costs related to cleaning, sanitizing and personal protective equipment.support cloud migration.
Income Taxes
The Company’s effective income tax rate was 21.0% and 19.3% for the three and six months ended June 30, 2020, respectively, and 25.2% and 25.9% for the three and six months ended June 30, 2019, respectively. See Note 65 to the consolidated financial statements for information about income taxes.

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Analysis of Financial Condition
Average interest-earning assets increased $1.0$1.8 billion to $34.0 billion for the six months ended June 30, 2021 from $32.1 billion for the six months ended June 30, 2020 from $31.12020. This increase was driven by a $1.2 billion increase in the average balance of investment securities and a $516 million increase in other interest earning assets, primarily cash and cash equivalents. Average interest bearing liabilities declined by $1.6 billion for the six months ended June 30, 2019. This increase was driven by a $951 million increase in the average balance of outstanding loans, offset by a $137 million decrease in the average balance of investment securities.
Average interest bearing liabilities was consistent for the six months ended June 30, 20202021 compared to the six months ended June 30, 2019. Average2020, while average non-interest bearing deposits increased by $1.1$3.0 billion to $4.8$7.8 billion for the six months ended June 30, 2020.2021.
Cash and cash equivalents increased by $498 million to $895 million at June 30, 2021, compared to $398 million at December 31, 2020 while investment securities grew by $1.1 billion and total loans declined by $981 million. Total deposits increased by $1.1 billion offset by a decrease of $622 million in borrowings.

41




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):indicated:
June 30, 2021December 31, 2020
 Amortized
Cost		Carrying ValueAmortized
Cost		Carrying Value
U.S. Treasury securities$158,977 $156,637 $79,919 $80,851 
U.S. Government agency and sponsored enterprise residential MBS2,197,562 2,215,440 2,389,450 2,405,570 
U.S. Government agency and sponsored enterprise commercial MBS831,726 835,588 531,724 539,354 
Private label residential MBS and CMOs2,104,579 2,111,727 982,890 998,603 
Private label commercial MBS(1)
2,579,963 2,594,024 2,514,271 2,526,354 
Single family rental real estate-backed securities608,269 617,445 636,069 650,888 
Collateralized loan obligations986,214 982,267 1,148,724 1,140,274 
Non-mortgage asset-backed securities172,791 176,506 246,597 253,261 
State and municipal obligations209,791 228,625 213,743 235,709 
SBA securities216,682 215,634 233,387 231,545 
Investment securities held to maturity10,000 10,000 10,000 10,000 
$10,076,554 10,143,893 $8,986,774 9,072,409 
Marketable equity securities88,142 104,274 
$10,232,035 $9,176,683 
 June 30, 2020 December 31, 2019
 
Amortized
Cost
 Carrying Value 
Amortized
Cost
 Carrying Value
U.S. Treasury securities$75,217
 $77,180
 $70,243
 $70,325
U.S. Government agency and sponsored enterprise residential MBS2,371,729
 2,379,840
 2,018,853
 2,022,175
U.S. Government agency and sponsored enterprise commercial MBS455,344
 464,277
 366,787
 370,976
Private label residential MBS and CMOs1,101,390
 1,116,086
 1,001,337
 1,012,177
Private label commercial MBS2,075,683
 2,043,620
 1,719,228
 1,724,684
Single family rental real estate-backed securities608,019
 618,207
 467,459
 470,025
Collateralized loan obligations1,166,929
 1,128,753
 1,204,905
 1,197,366
Non-mortgage asset-backed securities255,854
 261,531
 194,171
 194,904
State and municipal obligations239,502
 259,495
 257,528
 273,302
SBA securities247,914
 245,942
 359,808
 362,731
Investment securities held to maturity10,000
 10,000
 10,000
 10,000
 $8,607,581
 8,604,931
 $7,670,319
 7,708,665
Marketable equity securities  88,697
   60,572
   $8,693,628
   $7,769,237
(1)Amortized cost is net of ACL totaling $0.4 million at December 31, 2020.
Our investment strategy has focused on insuring 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 securities, GNMA securities, SBA securities and U.S. Government Agency MBS.and sponsored enterprise securities. Investment grade municipal securities provide liquidity and attractive tax-equivalent yields. We have also invested in highly rated structured products, including private-label commercial and residential MBS, collateralized loan obligations, single family rental real estate-backed securities and non-mortgage asset-backed securities that, while somewhat less liquid, provide us with attractive yields. Relatively short effective portfolio duration helps mitigate interest rate risk. Based on the Company’s assumptions, the estimated weighted average life of the investment portfolio as of June 30, 20202021 was 4.4 years. The4.2 years and the effective duration of the investment portfolio as of June 30, 20202021 was 1.3 years . The model results are based on assumptions that may differ from actual results.1.6 years.

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The investment securities available for sale portfolio was in a net unrealized lossgain position of $2.6$67.3 million at June 30, 2020, having recovered substantially from a net unrealized loss position2021, with aggregate fair value equal to 101% of $249.8 million at the prior quarter end.amortized cost. Net unrealized lossesgains at June 30, 2021 included $98.4$94.3 million of gross unrealized gains and $101.1$27.0 million of gross unrealized losses. Investment securities available for sale in an unrealized loss positionpositions at June 30, 20202021 had an aggregate fair value of $4.3$3.2 billion. The majority of the unrealized losses at June 30, 2020 related to the private label CMBS and CLO portfolio segments, which were in net unrealized loss positions of $32.1 million and $38.2 million, respectively. Comparatively, at March 31, 2020 the private label CMBS and CLO portfolios were in net unrealized loss positions of $123.8 million and $74.7 million, respectively. Unrealized losses at June 30, 2020 were primarily attributable to widening spreads, resulting in large part from market response to, and dislocation in the wake of, the COVID-19 pandemic. The ratings distribution of our AFS securities portfolio at June 30, 20202021 is depicted in the chart below:
ratingsdistributiona03.jpgbku-20210630_g1.jpg
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•Whether we intend to sell the security prior to recovery of its amortized cost basis;
whether•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, 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 credit ratings;
•Relevant market data;
•Estimated prepayments, defaults, and the value and performance of underlying collateral at the individual security level.
No securities were determined to be credit loss impaired during the six months ended June 30, 2020 or other than temporarily impaired during the six months ended June 30, 2019. We do not intend to sell securities in significant unrealized loss


positions at June 30, 2020.2021. 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.
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U.S. Government, Government Agency and Government Sponsored Enterprise Securities
The timely payment of principal and interest on securities issued by the U.S. government, U.S. government agencies and U.S. government sponsored enterprises 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 entire amortized cost basis of these securities.
Private Label Securities:
None of ourthe impaired private label securities had missed principal or interest payments or had been downgraded by a NRSRO at June 30, 2020.2021. The Company performed an analysis comparing the present value of cash flows expected to be collected to the amortized cost basis of impaired private label securities. This analysis was based on a scenario that we believe to be generally more severe than our reasonable and supportable economic forecast at June 30, 2020,2021, and incorporated assumptions about voluntary prepayment rates, collateral defaults, delinquencies, other collateral quality measures, loss severity, recovery lag and other relevant factors. Our analysis also considered the structural characteristics of each security and the level of credit enhancement provided by that structure. Based on the results of this analysis, we expect to recover the entire amortized cost basisnone of the impaired private label AFS securities. Further information aboutsecurities in unrealized loss positions were projected to sustain credit losses at June 30, 2021.
At June 30, 2021, the private label portfolio segments evidencingwith the largest unrealized losses at June 30, 2020,were the CMBS and CLO portfolio segments, follows.
For private label CMBS, our analysis of cash flows expected to be collected 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 watchlists, bankruptcy data, special servicing trends, delinquency and other economic data which would indicate further stress in the sector. 
For CLOs, our analysis of cash flows expected to be collected 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.
segments. The following table presents the distribution of the third-party ratings and subordination levels compared to average internal stress scenario losses based on our credit loss impairment analysis offor the private label CMBS and CLOs at June 30, 2020:2021:
SubordinationWeighted Average Stress Scenario Loss
RatingPercent of TotalMinimumMaximumAverage
Private label CMBSAAA88.3 %29.4 %49.8 %38.0 %9.1 %
AA4.7 %44.3 %44.3 %44.3 %9.8 %
A7.0 %24.5 %32.4 %30.2 %10.1 %
Weighted average100.0 %29.7 %48.3 %37.7 %9.2 %
CLOsAAA71.8 %42.9 %61.2 %48.0 %15.0 %
AA21.1 %33.1 %40.7 %36.3 %15.2 %
A7.1 %24.7 %29.5 %26.5 %15.2 %
Weighted average100.0 %39.5 %54.6 %44.0 %15.1 %
     Subordination Weighted Average Stress Scenario Loss
 Rating Percent of Total Minimum Maximum Average 
Private label CMBSAAA 83.0% 29.4% 54.5% 43.1% 12.8%
 AA 12.0% 31.1% 81.8% 37.2% 11.4%
 A 5.0% 21.5% 68.7% 28.8% 11.9%
Weighted average  100.0% 29.2% 58.5% 41.6% 12.6%
            
CLOsAAA 84.0% 36.1% 48.2% 43.0% 20.7%
 AA 13.0% 26.9% 40.4% 32.4% 22.0%
 A 3.0% 24.9% 29.5% 26.7% 25.0%
Weighted average  100.0% 34.5% 46.6% 41.1% 21.0%
Our June 30, 2021 analysis projected weighted average collateral losses for impaired securities in the private label residential MBS and CMO category of 2% compared to weighted average credit support of 15%. For impaired single family rental real estate-backed securities, our analysis projected weighted average collateral losses of 19% compared to weighted average credit support of 52%. As of June 30, 2021, all of the impaired securities in these categories were externally rated AAA.
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. We have established a robust price challenge process that includes a review by our treasury front office of all prices provided on a monthly basis. Any price evidencing unexpected month over month fluctuations or 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 is 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. 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
44




comparison to recent trading activity whenever such activity exists. Quotes obtained from the pricing services are typically non-binding.
We also have a quarterly price validation process to assess the propriety of the pricing methodologies utilized by our primary pricing services by independently verifying the prices of a sample of securities in the portfolio. Sample sizes vary based on the type of security being priced, with higher sample sizes applied to more difficult to value security types. Verification procedures may consist of obtaining prices from an additional outside source. We have established acceptable percentage deviations from the price provided by the initial pricing source. If deviations fall outside the established parameters, we will obtain and evaluate more detailed information about the assumptions and inputs used by each pricing source or, if considered necessary, employ an additional valuation source to price the security in question. Pricing issues identified through this evaluation are addressed with the applicable pricing service and methodologies or inputs are revised as determined necessary. Depending on the results of the validation process, sample sizes may be extended for particular classes of securities. Results of the validation process are reviewed by the treasury front office and by senior management.
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. We continue to monitor the impact of the COVID-19 pandemic on markets, and on our ability to price securities in our portfolio.markets. While, particularly at the onset of the pandemic, we observed increased volatility and dislocation, we believe the fiscal and monetary response to the crisis has been effective in supporting liquidity and stabilizing markets. To date, circumstances have not led to a change in the categorization of our fair value estimates within the fair value hierarchy.
For additional discussion of the fair values of investment securities, see Note 109 to the consolidated financial statements.
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The following table shows the scheduled maturities, carrying values andweighted average prospective yields, categorized by scheduled maturity, for AFS investment securities available for sale as of June 30, 2020, as well as the carrying value and yield of marketable equity securities.2021. 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% (dollars in thousands):
 Within One Year 
After One Year
Through Five Years
 
After Five Years
Through Ten Years
 After Ten Years Total
 
Carrying
Value
 
Weighted
Average
Yield
 
Carrying
Value
 
Weighted
Average
Yield
 
Carrying
Value
 
Weighted
Average
Yield
 
Carrying
Value
 
Weighted
Average
Yield
 
Carrying
Value
 
Weighted
Average
Yield
U.S. Treasury securities$77,180
 1.71% $—
 —% $—
 —% $—
 —% $77,180
 1.71%
U.S. Government agency and sponsored enterprise residential MBS229,123
 1.11% 1,051,085
 0.99% 865,614
 0.96% 234,018
 0.89% 2,379,840
 0.98%
U.S. Government agency and sponsored enterprise commercial MBS3,433
 1.88% 49,877
 2.08% 258,846
 1.06% 152,121
 1.48% 464,277
 1.31%
Private label residential MBS and CMOs379,488
 3.27% 579,159
 3.07% 127,964
 2.88% 29,475
 2.50% 1,116,086
 3.10%
Private label commercial MBS75,949
 3.37% 1,587,327
 2.03% 350,148
 2.34% 30,196
 3.03% 2,043,620
 2.15%
Single family rental real estate-backed securities3,788
 2.96% 297,246
 3.10% 317,173
 1.51% —
 —% 618,207
 2.27%
Collateralized loan obligations55,507
 1.76% 962,673
 1.96% 110,573
 2.47% —
 —% 1,128,753
 2.00%
Non-mortgage asset-backed securities32,763
 2.89% 158,375
 2.65% 68,737
 2.27% 1,656
 2.63% 261,531
 2.58%
State and municipal obligations7,219
 2.53% 20,647
 3.77% 180,309
 3.99% 51,320
 4.08% 259,495
 3.95%
SBA securities50,520
 1.28% 124,110
 1.23% 52,757
 1.15% 18,555
 1.06% 245,942
 1.21%
 $914,970
 2.37% $4,830,499
 1.99% $2,332,121
 1.69% $517,341
 1.60% 8,594,931
 1.92%
Marketable equity securities with no scheduled maturity 
  
  
  
  
  
  
  
 88,697
 7.13%
Total investment securities available for sale and marketable equity securities 
  
  
  
  
  
  
  
 $8,683,628
 1.98%
Loans Held for Sale
Loans held for sale at June 30, 2020 included $3 million of the guaranteed portion of SBA loans held for sale in the secondary market. At December 31, 2019, loans held for sale included $28.6 million of the SBA loans held for sale and $9.3 million of other commercial loans transferred to held for sale. SBA loans are generally sold with servicing retained. Because of our focus on PPP lending in the second quarter, the origination volume of traditional SBA loans declined.


 Within One YearAfter One Year
Through Five Years		After Five Years
Through Ten Years		After Ten YearsTotal
U.S. Treasury securities0.89 %— %— %— %0.89 %
U.S. Government agency and sponsored enterprise residential MBS0.82 %0.81 %0.72 %0.67 %0.77 %
U.S. Government agency and sponsored enterprise commercial MBS1.59 %1.79 %1.03 %1.15 %1.12 %
Private label residential MBS and CMOs1.37 %1.22 %1.75 %2.33 %1.29 %
Private label commercial MBS2.20 %1.87 %2.05 %2.49 %1.94 %
Single family rental real estate-backed securities2.85 %2.14 %2.32 %— %2.18 %
Collateralized loan obligations1.59 %1.83 %1.79 %— %1.81 %
Non-mortgage asset-backed securities2.81 %2.61 %2.04 %— %2.66 %
State and municipal obligations2.91 %3.86 %4.61 %4.06 %3.99 %
SBA securities1.31 %1.26 %1.18 %1.07 %1.24 %
1.41 %1.60 %1.30 %1.32 %1.51 %
Loans
The loan portfolio comprises the Company’s primary interest-earning asset. The following tables showtable shows the composition of the loan portfolio at the dates indicated (dollars in thousands):
June 30, 2021December 31, 2020
June 30, 2020 December 31, 2019
Total Percent of Total Total Percent of TotalTotalPercent of TotalTotalPercent of Total
Residential and other consumer loans$5,577,807
 23.5% $5,661,119
 24.5%Residential and other consumer loans$7,076,274 30.9 %$6,348,222 26.6 %
Multi-family1,893,753
 7.9% 2,217,705
 9.6%Multi-family1,256,711 5.5 %1,639,201 6.9 %
Non-owner occupied commercial real estate4,940,531
 20.7% 5,030,904
 21.7%Non-owner occupied commercial real estate4,724,183 20.7 %4,963,273 20.8 %
Construction and land246,609
 1.0% 243,925
 1.1%Construction and land218,634 1.0 %293,307 1.2 %
Owner occupied commercial real estate2,041,346
 8.6% 2,062,808
 8.9%Owner occupied commercial real estate1,960,900 8.6 %2,000,770 8.4 %
Commercial and industrial4,691,326
 19.7% 4,655,349
 20.1%Commercial and industrial4,205,795 18.4 %4,447,383 18.6 %
PPP827,359
 3.5% —
 —%PPP491,960 2.1 %781,811 3.3 %
Pinnacle1,242,506
 5.1% 1,202,430
 5.2%Pinnacle1,046,537 4.6 %1,107,386 4.6 %
Bridge - franchise finance623,139
 2.6% 627,482
 2.6%Bridge - franchise finance463,874 2.0 %549,733 2.3 %
Bridge - equipment finance589,785
 2.5% 684,794
 3.0%Bridge - equipment finance421,939 1.8 %475,548 2.0 %
Mortgage warehouse lending1,160,728
 4.9% 768,472
 3.3%Mortgage warehouse lending1,018,267 4.4 %1,259,408 5.3 %
Total loans23,834,889
 100.0% 23,154,988
 100.0%Total loans22,885,074 100.0 %23,866,042 100.0 %
Allowance for credit losses(266,123)   (108,671)  Allowance for credit losses(175,642)(257,323)
Loans, net$23,568,766
   $23,046,317
  Loans, net$22,709,432 $23,608,719 
For the six months ended June 30, 2020,2021, total loans grewdeclined by $680 million, primarily driven by $827 million in$981 million. Excluding PPP, loans declined by $691 million for the six months.
Growth in residential and a $392 million increase in mortgage warehouse outstandings due to increased utilization. The decline in multi-family balances was driven primarily by continued runoff of the New York portfolio. Residential activityother consumer loans for the six months ended June 30, 2020 included purchases of approximately $5292021 totaled $728 million, including $443 million in GNMA early buyout loans. In the aggregate, excluding PPP, commercial loans offsetdeclined by approximately $400$1.4 billion for the six months ended June 30, 2021 as runoff continued to exceed new production. Line utilization remained below historical levels and accelerated prepayment activity continued. MWL line utilization declined to 52% at June 30, 2021 compared to 62% at December 31, 2020.
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PPP loans declined by $290 million in re-poolingsduring the six months ended June 30, 2021. Loans under the First Draw Program declined by $573 million, resulting primarily from full or partial forgiveness. PPP loans under the Second Draw Program totaling $283 million were originated during the six months ended June 30, 2021.
For the three months ended June 30, 2021 total loans excluding PPP loans declined by $56 million. Residential and paydowns.other consumer loans grew by $494 million and commercial and industrial loans, including owner-occupied commercial real estate, grew by $186 million. The residentialremaining commercial portfolio excluding GNMA early buyout loans, experienced asegments showed net decline of approximately $212 million driven by higher prepayment speeds indeclines for the current rate environment.quarter.
Residential mortgages and other consumer loans
The following table shows the composition of residential and other consumer loans at the dates indicated (in thousands):
June 30, 2021December 31, 2020
June 30, 2020 December 31, 2019
1-4 single family residential$4,743,866
 $4,953,936
1-4 single family residential$5,206,766 $4,922,836 
Government insured residential826,238
 698,644
Government insured residential1,863,723 1,419,074 
Other consumer loans7,703
 8,539
Other consumer loans5,785 6,312 
$5,577,807
 $5,661,119
$7,076,274 $6,348,222 
The 1-4 single family residential loan portfolio, excluding government insured residential loans, is primarily comprised of 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 June 30, 2020, $5072021, $502 million or 11%10% 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 (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 $805 million$1.8 billion at June 30, 2020.2021. The Company is not the servicer of these loans.


The following charts present the distribution of the 1-4 single family residential mortgage portfolio at the dates indicated:
resiportfoliobytype.jpgbku-20210630_g2.jpg

47




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):
June 30, 2021December 31, 2020
June 30, 2020 December 31, 2019
Total Percent of Total Total Percent of TotalTotalPercent of TotalTotalPercent of Total
California$1,333,404
 28.1% $1,280,243
 25.8%California$1,651,551 31.7 %$1,541,779 31.3 %
New York1,072,564
 22.6% 1,057,926
 21.4%New York1,150,212 22.1 %1,084,143 22.0 %
Florida548,488
 11.6% 597,359
 12.1%Florida479,256 9.2 %518,877 10.5 %
Virginia175,221
 3.7% 189,869
 3.8%Virginia235,750 4.5 %196,641 4.0 %
New Jersey172,483
 3.6% 189,018
 3.8%New Jersey172,824 3.3 %160,276 3.3 %
Others1,441,706
 30.4% 1,639,521
 33.1%Others1,517,173 29.2 %1,421,120 28.9 %
$4,743,866
 100.0% $4,953,936
 100.0%$5,206,766 100.0 %$4,922,836 100.0 %
Commercial loans and leases
Commercial loans include commercial and industrial loans and leases, loans secured by owner-occupied commercial real-estate, multi-family properties and other income-producing non-owner occupied commercial real estate, a limited amount of construction and land loans, SBA loans, mortgage warehouse lines of credit, PPP loans, municipal loans and leases originated by Pinnacle and franchise and equipment finance loans and leases originated by Bridge.


The following charts present the distribution of the commercial loan portfolio at the dates indicated (dollars in millions):
commercialloanportfolio.jpgbku-20210630_g3.jpg
Commercial real estate loans include term loans secured by non-owner occupied income producing properties including rental apartments, mixed-use properties, industrial properties, retail shopping centers, free-standing single-tenant buildings, office buildings, warehouse facilities, hotels, real estate secured lines of credit, as well as credit facilities to institutional real estate entities such as REITs and commercial real estate investment funds.
48




The following table presents the distribution of commercial real estate loans by property type along with weighted average DSCRs and LTVs at June 30, 20202021 (dollars in thousands).:
Amortized Cost Percent of Total Weighted Average DSCR Weighted Average LTVAmortized CostPercent of TotalFLNew York Tri StateOtherWeighted Average DSCRWeighted Average LTV
Office$2,079,560
 29.3% 2.17
 59.0%Office$1,985,933 31 %60 %25 %15 %2.3262.6 %
Multifamily2,010,289
 28.4% 1.77
 56.0%Multifamily1,361,226 22 %40 %55 %5 %1.7259.0 %
Retail1,437,681
 20.3% 1.61
 59.3%Retail1,225,933 20 %54 %39 %7 %1.5368.7 %
Warehouse/Industrial783,387
 11.1% 2.52
 55.5%Warehouse/Industrial861,098 14 %64 %23 %13 %2.2756.4 %
Hotel620,673
 8.8% 1.59
 57.1%Hotel593,852 10 %76 %15 %9 %1.1756.7 %
Other149,303
 2.1% 1.66
 48.9%Other171,486 3 %38 %32 %30 %1.9056.2 %
$7,080,893
 100.0% 1.92
 57.4%$6,199,528 100 %56 %35 %9 %1.9061.4 %
DSCRs and LTVs in the table above are based on the most recent information available, which in some cases may not be fully reflective of the ultimate impact of the COVID-19 pandemic on borrowers' financial condition or property values.
The Company’s commercial real estate underwriting standards generally provide for loan terms of five to seven years, with amortization schedules of no more than thirty years. LTV ratios are typically limited to no more than 75%. Construction and land loans, included by property type in the table above, represented only 1%1.0% of the total loan portfolio at June 30, 2020. Construction and land loans2021.
Included in the table above are generally made for projects expected to stabilize within eighteen monthsapproximately $163 million of completionmixed-use properties in sub-markets with strong fundamentals and, to a lesser extent, for-sale residential projects to experienced developers with a strong cushion between market prices and loan basis. 75%New York, consisting of the commercial real estate portfolio, including 79% and 76% of the$86 million categorized as multi-family, $58 million categorized as retail and hotel segments, respectively, had LTVs less than 65% at June 30, 2020.


$19 million categorized as office.
The New York legislature has enacted a number of rent regulation reform measures that generally have the impact of limiting landlords' ability to increase rents on stabilized units and to convert stabilized units to market rate units. The following table presents the amount of loans secured by New York multi-family portfolio included $577 million of loans collateralized by properties in whichwith some or all of the units aresubject to rent regulatedregulation at June 30, 2020 (in thousands):
Loans secured by stabilized properties subject to rent regulation$957,439
Loans secured by non-stabilized properties subject to rent regulation58,333
 $1,015,772
We believe loans secured by non-stabilized properties may present a heightened level2021, substantially all of risk as these loanswhich were underwritten to expected cash flows upon stabilization; those expected cash flows may be impacted by the recent rent regulation reform measures.stabilized properties.
The following tables present the distribution of stabilized rent-regulated multi-family loans, by DSCR and LTV at June 30, 20202021 (in thousands):
DSCR
Less than 1.00$167,370 
1.00 - 1.24176,703 
1.25 - 1.50116,578 
1.51 or greater76,480 
$537,131 
DSCR   
Less than 1.11  $101,129
1.11 - 1.24  284,101
1.25 - 1.50  288,910
1.51 or greater  283,299
   $957,439
LTV
Less than 50%$127,096 
50% - 65%137,475 
66% - 75%90,531 
More than 75%182,029 
$537,131 
LTV   
Less than 50%  $243,997
50% - 65%  610,258
66% - 75%  97,524
More than 75%  5,660
   $957,439

The LTVs in the table above are based on the most recent appraisal obtained, which may not be fully reflective of changes in valuations that may result from the impact of the rent regulation reforms.reforms, or of the COVID-19 pandemic. Loans with DSCR less than 1.111.00 may be those with temporary rent deferments, unit vacancies or those for whichincreases in expenses particularlyexceeding rental receipts, such as real estate taxes, have increased more rapidly than rents. Substantially alltaxes. Certain type of ancillary income are excluded from the loans included in the tables above are current and performing.DSCR calculations.
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, trade finance, SBA product offerings and business acquisition finance credit facilities. 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. The Bank also provides financing to state and local governmental entities generally within our geographic markets. Commercial loans included shared national credits totaling $2.6$2.7 billion at June 30, 2020,2021, the majority of which were relationship based loans to
49




borrowers in Florida and New York. 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 commercial and industrial portfolio by industry, including $2.0 billion of owner-occupied commercial real estate loans, by industry at June 30, 20202021 (in thousands):
Amortized Cost Percent of TotalAmortized CostPercent of Total
Finance and Insurance$1,007,480
 15.1%Finance and Insurance$939,604 15.2 %
Educational ServicesEducational Services695,388 11.3 %
Wholesale Trade719,847
 10.7%Wholesale Trade601,045 9.7 %
Educational Services640,657
 9.5%
Transportation and Warehousing507,305
 7.5%Transportation and Warehousing458,358 7.4 %
Health Care and Social Assistance472,793
 7.0%Health Care and Social Assistance405,748 6.6 %
Manufacturing375,569
 5.6%Manufacturing350,013 5.7 %
InformationInformation388,849 6.3 %
Retail TradeRetail Trade305,077 4.9 %
Accommodation and Food Services358,635
 5.3%Accommodation and Food Services250,342 4.1 %
Retail Trade332,421
 4.9%
Information298,465
 4.4%
Real Estate and Rental and Leasing288,045
 4.3%Real Estate and Rental and Leasing312,119 5.1 %
Public AdministrationPublic Administration231,939 3.8 %
Professional, Scientific, and Technical Services277,081
 4.1%Professional, Scientific, and Technical Services223,364 3.6 %
Other Services (except Public Administration)Other Services (except Public Administration)236,068 3.8 %
Construction273,685
 4.1%Construction208,839 3.4 %
Public Administration244,967
 3.6%
Administrative and Support and Waste Management239,441
 3.5%Administrative and Support and Waste Management165,660 2.7 %
Other Services (except Public Administration)238,933
 3.5%
Arts, Entertainment, and Recreation215,999
 3.2%Arts, Entertainment, and Recreation172,630 2.8 %
Utilities188,808
 2.8%Utilities163,878 2.7 %
Other52,541
 0.9%Other57,774 0.9 %
$6,732,672
 100.0%$6,166,695 100.0 %
Through its commercial lending subsidiaries, Pinnacle and Bridge, the Bank provides equipment and franchise financing on a national basis using both loan and lease structures. Pinnacle provides essential useessential-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 operating divisions. The franchise finance division offers franchise acquisition, expansion and equipment financing, typically to experienced operators in well-established concepts. The franchise finance portfolio is made up primarily of quick service restaurant and fitness concepts comprising 61%58% and 31%35% of the portfolio, respectively. The equipment finance division provides primarily transportation equipment financing through a variety of loan and lease structures.
50




The Bank also engages in mortgage warehouse lending on a national basis.following table presents the franchise portfolio by concept at June 30, 2021:
Amortized CostPercent of Bridge -Franchise Finance
Restaurant concepts:
Burger King$58,559 12.6 %
Popeyes19,616 4.2 %
Dunkin Donuts19,528 4.2 %
Jimmy John's16,834 3.6 %
Domino's8,273 1.8 %
Other147,017 31.7 %
$269,827 58.1 %
Non-restaurant concepts:
Planet Fitness$92,912 20.0 %
Orange Theory Fitness70,129 15.1 %
Other31,006 6.8 %
194,047 41.9 %
$463,874 100.0 %

The Company has originated over 3,500 SBA PPP loans totaling $876 million duringunder both the quarter ended June 30, 2020.First and Second Draw Programs. These loans bear interest at 1% and are guaranteed as to principal and interest by the SBA. TheyPPP loans have terms of 2 and 5 years under the First and Second Draw Programs, respectively, and are eligible for earlier forgiveness under the terms of the PPP in prescribed circumstances. The Company also receivedfollowing table summarizes PPP loan balances at June 30, 2021, and the amount of interest income related to accelerated amortization of origination fees associated with these loans; $21 million of these fees remain to be recognized in income as ofon loans that were partially or fully forgiven, under each program during the three and six months ended June 30, 2020.2021 (in thousands):
June 30, 2021Fees Recognized On Forgiveness
UPBDeferred Origination FeesAmortized CostThree Months Ended June 30, 2021Six Months Ended June 30, 2021
First Draw Program$210,293 $(1,079)$209,214 $4,512 $7,082 
Second Draw Program291,473 (8,727)282,746 — — 
$501,766 $(9,806)$491,960 $4,512 $7,082 
Geographic Concentrations
The Company's commercial and commercial real estate portfolios are concentrated in Florida and the Tri-state area. Excluding loans originated through our national platforms, 47%56% and 44%35% of commercial real estate loans were secured by collateral located in Florida and the Tri-state area, respectively; while 54%37% and 27%22% of all other commercial and industrial and owner-occupied real estate loans were to borrowers in Florida and the Tri-state area, respectively.

51




The following table presents the five states with the largest concentration of commercial loans and leases originated through our national platforms, including Bridge, Pinnacle SBF and our mortgage warehouse finance unit at the dates indicated (dollars in thousands):
June 30, 2020 December 31, 2019June 30, 2021December 31, 2020
Total Percent of Total Total Percent of TotalTotalPercent of TotalTotalPercent of Total
California$650,706
 16.8% $585,222
 16.5%California$500,825 17.0 %$609,419 18.0 %
NY Tri State AreaNY Tri State Area278,194 9.4 %545,458 16.1 %
Florida457,859
 11.8% 465,146
 13.1%Florida285,828 9.7 %330,587 9.7 %
New Jersey339,873
 8.8% 178,514
 5.0%
OhioOhio225,538 7.6 %186,443 5.5 %
North Carolina207,298
 5.3% 146,146
 4.1%North Carolina176,885 6.0 %194,558 5.7 %
Maryland187,639
 4.8% 152,663
 4.3%
All others2,038,326
 52.5% 2,018,704
 57.0%
All OthersAll Others1,483,347 50.3 %1,525,610 45.0 %
$3,881,701
 100.0% $3,546,395
 100.0%$2,950,617 100.0 %$3,392,075 100.0 %
Operating lease equipment, net
Operating lease equipment, net of accumulated depreciation totaled $690$668 million at June 30, 2020,2021, including off-lease equipment, net of accumulated depreciation totaling $89of $128 million. The portfolio consists primarily of railcars, non-commercial aircraft and other transport equipment. Our operating lease customers are North American commercial end users. We have a total of 5,3135,070 railcars with a carrying value of $409$382 million at June 30, 2020,2021, including hoppers, tank cars, boxcars, auto carriers, center beams and gondolas leased to North American commercial end users.gondolas. The largest concentrations of rail cars were 2,4112,402 hopper cars and 1,594 tank cars, primarily used to ship sand and petroleum products, respectively, for the energy industry.
The chart below presents operating lease equipment by type at the dates indicated:
equipmentbycategory.jpgbku-20210630_g4.jpg


At June 30, 2020,2021, the breakdown of carrying values of operating lease equipment, excluding equipment off-lease, by the year current leases are scheduled to expire was as follows (in thousands):
Years Ending December 31:
2021$23,683 
202240,797 
202375,170 
202435,514 
2025100,020 
Thereafter through 2034264,529 
$539,713 
52
Years Ending December 31: 
2020$78,492
202160,237
202270,404
202340,812
202414,553
Thereafter through 2034335,829
 $600,327




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. In response to the COVID-19 pandemic, we have further enhanced our workout and recovery staffing and processes. Loan performance is monitored by our credit administration, portfolio management and workout and recovery departments. 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 $1 million to $3 million. Homogenous groups of smaller balance commercial loans may be monitored collectively. The credit quality and risk rating of commercial loans as well as our underwriting and portfolio management practices are regularly reviewed by our internal credit review department.
We believe internal risk rating is the best indicator of the credit quality of commercial loans. The Company utilizes a 13 grade16-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. Beginning late in the first quarter and throughout the second quarter ofDuring 2020, risk ratings were re-evaluated for a substantial portion of the commercial portfolio, with a particular focus on portfolio segments we identified for enhanced monitoring and loans for which we granted temporary payment deferrals or modifications in light of the COVID-19 pandemic. We continue to closely monitor the risk rating of commercial loans in light of the evolving COVID-19 situation.
The following table summarizes the Company's commercial credit exposure, based on internal risk rating, at the dates indicated (dollars in thousands):
June 30, 2021March 31, 2021December 31, 2020
Amortized CostPercent of Commercial LoansAmortized CostPercent of Commercial LoansAmortized CostPercent of Commercial Loans
Pass$13,739,092 86.8 %$14,167,606 84.5 %$14,832,025 84.6 %
Special mention138,064 0.9 %420,331 2.5 %711,516 4.1 %
Substandard accruing1,684,666 10.7 %1,983,191 11.8 %1,758,654 10.0 %
Substandard non-accruing229,646 1.5 %189,589 1.1 %203,758 1.2 %
Doubtful17,332 0.1 %17,903 0.1 %11,867 0.1 %
$15,808,800 100.0 %$16,778,620 100.0 %$17,517,820 100.0 %
 June 30, 2020 March 31, 2020 December 31, 2019
 Amortized Cost Percent of Commercial Loans Amortized Cost Percent of Commercial Loans Amortized Cost Percent of Commercial Loans
Pass$16,169,767
 88.6% $16,841,243
 96.0% $17,054,702
 97.5%
Special mention1,338,232
 7.3% 288,148
 1.6% 72,881
 0.4%
Substandard accruing560,624
 3.1% 238,786
 1.4% 180,380
 1.0%
Substandard non-accruing187,510
 1.0% 181,278
 1.0% 185,906
 1.1%
Doubtful949
 —% —
 —% —
 —%
 $18,257,082
 100.0% $17,549,455
 100.0% $17,493,869
 100.0%
It is possible, givenOur internal risk ratings at June 30, 2021 continued to be influenced by the uncertainty surroundingimpact of the COVID-19 pandemic and related economic impacts, that the amountmeasures and restrictions employed to contain the spread of criticized and classified assets could increase further in the future.


Both special mention and substandard accruing loans increased significantly at June 30, 2020 compared to March 31, 2020 and December 31, 2019. We believe the substantial majority of this increase to be directly related to the COVID-19 pandemic, its impactvirus on the economy, generallyour borrowers and on borrowers' businesses specifically. Special mention loans increased by $1.1 billion and $1.3 billion during the three and six months ended June 30, 2020, while substandard accruing loans increased by $322 million and $380 million for those same periods.sectors in which they operate. Management has taken what we believe to be a pro-activeproactive and objective approach to re-riskrisk rating the commercial loan portfolio based on granular outreach to borrowers since the onset of the pandemic. The increase in levels of criticized and classified loans, particularly in the special mention and substandard accruing categories, over the course of 2020 was directly related to the impact of the COVID-19 pandemic. As expected given the trajectory of economic recovery, levels of criticized and classified loans have declined over the first six months of 2021, particularly during the second quarter. During the six months ended June 30, 2021, total criticized and classified loans declined by $616 million. During the quarter ended June 30, 2021 criticized and classified loans declined by $541.3 million or 21%, to $2.1 billion. However, substandard non-accruing loans increased by $40.1 million during the second quarter. This increase was primarily attributable to one $69 million commercial and industrial relationship. If the economic recovery and its impact on individual borrowers evolve in line with our current expectations and economic forecast, we would expect to see the level of criticized and classified loans continue to decline over the remainder of 2021. However, uncertainty remains around the future trajectory of the COVID-19 virus and the economic recovery. In light of that uncertainty, it is possible that criticized and classified loan levels may not decline or that they may increase.
53




The following table provides additional information about special mention and substandard accruing loans, at the dates indicated (in(dollars in thousands):. Non-performing loans are discussed further in the section entitled "Non-performing Assets" below.
June 30, 2021March 31, 2021December 31, 2020
Amortized Cost% of Loan SegmentAmortized Cost% of Loan SegmentAmortized Cost% of Loan Segment
Special mention:
CRE
Hotel$579 0.1 %$34,113 5.5 %$68,413 11.0 %
Retail21,763 1.8 %51,547 4.0 %86,935 6.4 %
Multi-family6,085 0.4 %37,345 2.5 %36,335 2.2 %
Office27,246 1.4 %3,973 0.2 %37,943 1.8 %
Industrial— — %1,047 0.1 %9,440 1.1 %
Other3,503 6.5 %32,704 29.5 %38,010 45.4 %
59,176 160,729 277,076 
Owner occupied commercial real estate41,923 2.1 %68,145 3.5 %156,837 7.8 %
Commercial and industrial33,364 0.8 %178,920 4.4 %169,605 3.8 %
Bridge - franchise finance1,857 0.4 %10,745 2.0 %71,593 13.0 %
Bridge - equipment finance1,744 0.4 %1,792 0.4 %36,405 7.7 %
$138,064 $420,331 $711,516 
Substandard accruing:
CRE
Hotel$290,439 48.9 %$453,289 73.2 %$400,468 64.4 %
Retail220,424 18.0 %275,976 21.6 %276,149 20.4 %
Multi-family205,514 16.4 %292,624 19.4 %218,532 13.3 %
Office140,741 7.1 %105,743 5.1 %40,477 1.9 %
Industrial12,855 1.5 %17,237 2.0 %13,902 1.7 %
Other21,375 12.5 %37,245 33.6 %28,505 1.7 %
891,348 1,182,114 978,033 
Owner occupied commercial real estate219,162 11.2 %198,896 10.3 %177,575 8.9 %
Commercial and industrial277,683 6.6 %256,341 6.3 %285,925 6.4 %
Bridge - franchise finance218,665 47.1 %240,810 45.9 %242,234 44.1 %
Bridge - equipment finance77,808 18.4 %105,030 22.8 %74,887 15.7 %
$1,684,666 $1,983,191 $1,758,654 
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 June 30, 2020 March 31, 2020 December 31, 2019
 Amortized Cost Percent of Loan Segment Amortized Cost Percent of Loan Segment Amortized Cost Percent of Loan Segment
Special mention:           
CRE:           
Hotel$273,877
 44.1% $4,201
 0.7% $4,227
 0.6%
Retail172,364
 12.0% 4,284
 0.3% —
 —%
Multi-family54,623
 2.7% 4,471
 0.2% 115
 —%
Office29,735
 1.4% —
 —% —
 —%
Industrial12,968
 1.7% —
 —% 1,489
 —%
Other1,393
 0.9% —
 —% —
 —%
 544,960
 

 12,956
   5,831
  
Owner occupied commercial real estate179,305
 8.8% 26,170
 1.3% 27,870
 1.4%
Commercial and industrial243,398
 3.6% 67,173
 1.1% 28,498
 0.5%
Bridge - franchise finance327,375
 52.5% 181,049
 28% 10,682
 1.7%
Bridge - equipment finance43,194
 7.3% 800
 0.1% —
 —%
 $1,338,232
   $288,148
   $72,881
  
            
Substandard accruing:           
CRE           
Hotel$92,066
 14.8% $11,296
 1.8% $34,645
 5.3%
Retail63,957
 4.4% 20,049
 1.4% —
 —%
Multi-family67,896
 3.4% 35,691
 1.7% 26,797
 1.7%
Office28,994
 1.4% 6,214
 0.3% 8,299
 0.3%
Industrial19,814
 2.5% 9,675
 1.2% 9,753
 1.2%
Owner occupied commercial real estate38,332
 1.9% 24,520
 1.2% 16,241
 0.8%
Commercial and industrial185,201
 3.9% 77,810
 1.6% 43,518
 0.9%
Bridge - franchise finance56,628
 9.1% 53,531
 8.3% 41,127
 6.6%
Bridge - equipment finance7,736
 1.3% —
 —% —
 —%
 $560,624
   $238,786
   $180,380
  
Payment Deferrals and Modifications
The increases in special mention and substandard accruing loans at June 30, 2020 were concentrated in those categories expected to exhibit additional stressWe believe, in the current environment. Withinenvironment, information about loans that are on temporary payment deferral or have been modified as a result of the commercial real estateCOVID-19 pandemic provides additional insight into segments or sub-segments of the portfolio the most significant increases were in the retail and hotel sub-segments as reflected in the table above. We also saw significant increases in special mention loans in the franchise finance portfolio;that experienced some level of a total increase of $317 million during the six months ended June 30, 2020, $154 millionstress related to restaurant conceptsthe pandemic and $163 million related to fitness concepts. In the C&I categories, the largest increases were in the cruise line, retail trade, food services and airport concession areas.
Potential problem loans have been identified by management asinto how those commercial loans included in the "substandard accruing" risk rating category. These loans are typically performing but possess specifically identified credit weaknesses such


as inadequate debt service coverage or liquidity that, if not remedied, may lead to a downgrade to non-accrual status and identification as impaired in the near-term.
Payment Deferrals
economy recovers. The following table summarizes deferral and modification activity in the commercial portfolio, through July 17, 2020as of June 30, 2021 (dollars in millions).thousands):
Under Short Term Deferral or CARES Act Modification at June 30, 2021% of Portfolio Segment at June 30, 2021Under Short Term Deferral or CARES Act Modification at March 31, 2021Loans That Have Rolled Off of Short-Term Deferral or CARES Act Modification
CRE by Property Type:
Retail$15,871 1 %$36,615 $2,636 
Hotel225,436 42 %343,354 118,119 
Office44,860 2 %56,542 — 
Multifamily13,872 1 %24,014 10,142 
Total CRE300,039 5 %460,525 130,897 
C&I by Industry
Accommodation and Food Services31,073 12 %24,884 — 
Retail Trade32,371 11 %33,644 1,274 
Finance and Insurance16,854 2 %18,244 1,390 
Other31,994 3 %80,168 59,734 
Total C&I112,292 2 %156,940 62,398 
Bridge - franchise finance25,647 6 %38,182 24,813 
Total Commercial$437,978 3 %$655,647 $218,108 
 First Deferral Granted Re-Deferral Requested
 Loan Count UPB % of Portfolio Loan Count UPB % of Portfolio
CRE - Property Type:           
Retail119
 $769,025
 53% 8
 $75,890
 5%
Hotel93
 536,826
 86% 21
 298,388
 48%
Office30
 372,796
 18% 2
 54,243
 3%
Multifamily37
 276,711
 14% 2
 12,083
 1%
Industrial14
 97,776
 13% —
 —
 —%
Other1
 1,060
 1% —
 —
 —%
Total CRE - Property Type294
 $2,054,194
 29% 33
 $440,604
 6%
C&I - Industry           
Accommodation and Food Services89
 $106,288
 30% 21
 $65,729
 18%
Retail Trade221
 68,299
 20% 4
 21,575
 7%
Health Care and Social Assistance126
 59,305
 12% —
 —
 —%
Manufacturing35
 57,026
 15% 1
 9,066
 2%
Other265
 178,512
 3% 1
 4,169
 —%
Total C&I - Industry736
 469,430
 7% 27
 100,539
 1%
BFG - Equipment35
 35,278
 6% —
 —
 —%
BFG - Franchise362
 459,590
 74% 82
 155,321
 25%
Total Commercial1,427
 $3,018,492
 17% 142
 $696,464
 4%
All of the loans that have rolled off of deferral or modification as shown in the table above have paid off or resumed regular payments. For commercial borrowers, initialshort-term payment deferrals were typicallygenerally deferrals of principal and/or interest payments for up to two periods of 90 days. Re-deferrals usually take the form of additional 90 day extensions, granted on a case by case basis.days each. The deferred payments along with interest accrued during the deferral period are generally due and payable on the maturity date.
We believe deferral rates, CARES Act modifications represent longer-term modifications and particularlymost commonly have taken the rate at which borrowers have requested a second deferral, are important indicatorsform of the extent9 to which borrowers' businesses and financial condition have been impacted by the COVID-19 pandemic.12 month interest only periods. The majority of initialloan modifications and deferrals were granted in late March and April, 2020. Mostthat took place after the onset of those loans have reached, or are now reaching, the end of the initial 90 day deferral period. New initial deferral requests received after June 1 were negligible.
The following table presents additional information about loan portfolio sub-segments that, in light of evolving conditions related to the COVID-19 pandemic have not been identified for enhanced monitoringcategorized as of June 30, 2020 (dollarsTDRs, in thousands):
 June 30, 2020
 Amortized Cost Percent of Total Loans Non Performing Special Mention Substandard Accruing
Retail - CRE$1,437,681
 6.0% $10,968
 $172,364
 $63,957
Retail - C&I332,421
 1.4% 4,238
 54,873
 20,894
BFG - franchise finance623,139
 2.6% 32,857
 327,375
 56,628
Hotel620,673
 2.6% 32,827
 273,877
 92,066
Airlines and aviation authorities163,846
 0.7% —
 27,050
 —
Cruise line74,696
 0.3% —
 59,886
 —
Energy56,310
 0.2% —
 —
 —
 $3,308,766
 13.8% $80,890
 $915,425
 $233,545


Retail Exposure inaccordance with interagency and authoritative guidance and the CRE Portfolio
The predominant collateral types supporting this sub-segment include both anchored and unanchored suburban and urban retail properties, some single tenant properties as well as some mixed-use properties with a significant retail component. We have no significant large shopping mall or "big box" exposure. The weighted average LTV for this sub-segment is 59.3% and 79% has LTVs less than 65%, based on the most recently available information.
Retail Exposure in the C&I Portfolio
This is a well-diversified sub-segment by industry. The largest exposure is to gas stations, generally with convenience stores, representing $99 million, or 29%provisions of the sub-segment. 67% of loans in this sub-segment are collateralized by owner-occupied real estate.
BFG - Franchise Finance
The following table presents the franchise portfolio by concept at June 30, 2020:
 Amortized Cost Percent of BFG Franchise Finance
Restaurant concepts:   
Burger King$66,012
 11.0%
Dunkin Donuts44,737
 7.0%
Sonic27,586
 4.0%
Domino's23,370
 4.0%
Jimmy Johns23,359
 4.0%
Other193,958
 31.0%
 379,022
 61.0%
Non-restaurant concepts:   
Planet Fitness107,303
 17.0%
Orange Theory Fitness86,654
 14.0%
Other50,160
 8.0%
 244,117
 39.0%
 $623,139
 100.0%
Restaurant concepts that have established drive-through or delivery models are generally performing well in the current environment. Fitness concepts are beginning to re-open.
Hotel
This sub-segment is experiencing significant disruption in revenue due to social distancing measures arising from the pandemic. The weighted average LTV for this sub-segment is 57% and 76% has LTVs less than 65%, based on the most recent information available. The majority of our hotel exposure is in Florida at 75%, followed by 12% in New York. This sub-segment includes $60 million in SBA loans, of which $14 million is guaranteed. Substantially all hotel collateral properties have now re-opened for business.
Airlines and Aviation Authorities
These borrowers have directly benefited from government relief programs enacted in response to the COVID-19 pandemic.
Energy
Recent declines in oil prices have elevated this sub-segment to a level of enhanced monitoring. The Company's energy exposure in the loan portfolio is not material; approximately 64% of these loans are secured by marine transport equipment.
Bridge also had exposure to the energy industry in the operating lease equipment portfolio totaling $287 million at June 30, 2020, consisting of $229 million in railcars, $39 million in helicopters and $18 million in vessels.


If current conditions persist, further deterioration could occur in this sector.CARES Act.
Operating Lease Equipment, net
TwoSeven operating lease relationshipsleases with a carrying value of assets under lease totaling $35$45 million, all of which were exposures to the energy industry, were internally risk rated substandard at June 30, 2020.2021. 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. At June 30, 2020, there were 22 operating leases for which a triggering event was met. Based on a recoverability analysis performed,During the Company recognized an impairment charge of $0.7 million during thethree and six months ended June 30, 2021 and 2020, impairment charges recognized related to one operating lease relationship; this was not an energy exposure.equipment were insignificant.
The primary risks inherent in the equipment leasing business are asset risk resulting from ownership of the equipment on lease and credit risk. Asset risk arises from fluctuations in supply and demand for the underlying leased equipment. The equipment is leased to commercial end users with original lease terms generally ranging from three to ten years. We are exposed to the risk that, at the end of the lease term, the value of the asset will be lower than expected, potentially resulting in reduced future lease income over the remaining life of the asset or a lower sale value. Asset risk may also lead to changes in depreciation as a result of changes in the residual values of the leased assets or through impairment of asset carrying values.
Asset risk is evaluated and managed by a dedicated internal staff of asset managers, managed by seasoned equipment finance professionals with a broad depth and breadth of experience in the leasing business. Additionally, we have partnered with an industry leading, experienced service provider who provides fleet management and servicing relating to the railcar fleet, including lease administration and reporting, a Regulation Y compliant full service maintenance program and railcar re-marketing. Risk is managed by setting appropriate residual values at inception and systematic reviews of residual values based on independent appraisals, performed at least annually. Additionally, our internal management team and our external service provider closely follow the rail markets, monitoring traffic flows, supply and demand trends and the impact of new technologies and regulatory requirements. Demand for railcars is sensitive to shifts in general and industry specific economic and market
55




trends and shifts in trade flows from specific events such as natural or man-made disasters.disasters, including events such as the COVID-19 pandemic. We seek to mitigate these risks by leasing to a stable end user base, by maintaining a relatively young and diversified fleet of assets that are expected to maintain stronger and more stable utilization rates despite impacts from unexpected events or cyclical trends and by staggering lease maturities. We regularly monitor the impact of oil prices on the estimated residual value of rail cars being used in the petroleum/natural gas extraction sector.
Credit risk in the leased equipment portfolio results from the potential default of lessees, possibly driven by obligor specific or industry-wide conditions, and is economically less significant than asset risk, because in the operating lease business, there is no extension of credit to the obligor. Instead, the lessor deploys a portion of the useful life of the asset. Credit losses, if any, will manifest through reduced rental income due to missed payments, time off lease, or lower rental payments due either to a restructuring or re-leasing of the asset to another obligor. Credit risk in the operating lease portfolio is managed and monitored utilizing credit administration infrastructure, processes and procedures similar to those used to manage and monitor credit risk in the commercial loan portfolio. We also mitigate credit risk in this portfolio by leasing to high credit quality obligors.
Bridge had exposure to the energy industry of $316 million at June 30, 2021. The majority of the energy exposure was in the operating lease equipment portfolio where energy exposure totaled $271 million. The remaining energy exposure, totaling approximately $46 million was comprised of loans and direct or sales type finance leases.
Residential and Other Consumer Loans
Our residential mortgage portfolio, excluding GNMA buyout loans, consists primarily of loans purchased through established correspondent channels. Most of our purchases are of performing jumbo mortgage loans which have FICO scores above 700, primarily are owner-occupied and full documentation, and have a current LTV of 80% or less although 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 and consumer 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 June 30, 2020:2021:


sfrcreditquality.jpgbku-20210630_g5.jpg
FICO scores are generally updated at least annually, and were most recently updated in the first quarter of 2021. LTVs are typically based on valuation at origination.origination since we do not routinely update residential appraisals.
At June 30, 2020,2021, the majority of the 1-4 single family residential loan portfolio, excluding government insured residential loans, was owner-occupied, with 81%83% primary residence, 8%7% second homes and 11%10% investment properties.
1-4 single family residential loans excluding government insured residential loans past due more than 30 days totaled $63.9$78 million and $66.3$66 million at June 30, 20202021 and December 31, 2019,2020, respectively. The amount of these loans 90 days or more past due was $11.8$23.4 million and $11.1$9.2 million at June 30, 20202021 and December 31, 2019,2020, respectively. Delinquency statistics as of June 30, 2021 may not be fully reflective of the impact of the COVID-19 pandemic on residential borrowers due to payment deferral programs. Loans on deferral that are in compliance with the terms of the deferral program are not reported as delinquent.
56




At June 30, 2020 and December 31, 2019 other consumer2021, $59 million or 1% of 1-4 single family residential loans, excluding government insured residential loans, were all current.
under short-term deferral or modified due to the COVID-19 pandemic. Through June 30, 2021, $532 million of residential loans, excluding government insured loans, had been granted at least one short term payment deferral. The following table presents information about residential loans granted payment deferrals as a result of the COVID-19 pandemic as of June 30, 2020,2021, excluding government insured residential loans (dollars in millions)thousands):
Loans That Have Rolled Off of Short-Term Deferral or CARES Act Modification
Loans Still Under Short-Term Deferral or CARES Act ModificationPaid Off or Paying as AgreedNot Resumed Regular Payments
Balance
% of Loans Initially Granted Short-Term Deferral(1)
Balance% of Loans Rolled Off Short-Term DeferralBalance% of Loans Rolled Off Short-Term Deferral
$58,719 1%$438,903 93%$33,959 7%
      
 Balance % of Portfolio Balance % of Initial Deferrals Balance % of Portfolio
Residential$594
 13% $252
 42% $52
 1%
(1)    Includes $20 million of loans modified under the CARES Act that are continuing to make payments
For residential borrowers, relief has typically initially taken the form of 90 day payment deferrals, with deferred payments due at the end of the 90 day period. At the end of the initial 90 day deferral period, residential borrowers may either (i) make all payments due, (ii) be granted an additional deferral period or (iii) enter into a modification or repayment plan. As indicated in the table above, 42% of residential borrowers granted an initial deferral continued to make payments during the deferral period.
Under recently issued regulatory guidance, residential borrowers granted an initial 90 day deferral are automatically granted an additional 90 day deferral period unless they actively "opt out" of the additional deferral.
Note 4 to the consolidated financial statements presents additional information about key credit quality indicators and delinquency status of the loan portfolio.
Non-Performing Assets
Non-performing assets generally consist of (i) non-accrual loans, including loans that have been modified in TDRs or CARES Act modifications and placed on non-accrual status, (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 repossessed assets.
The following table and charts summarize the Company's non-performing loans and non-performing assets at the dates indicated (dollars in thousands):
 June 30, 2020 December 31, 2019
Non-accrual loans   
Residential and other consumer:   
1-4 single family residential$11,234
 $18,877
Other consumer loans1,949
 17
Total residential and other consumer loans13,183
 18,894
Commercial:   
Multi-family6,011
 6,138
Non-owner occupied commercial real estate46,545
 40,097
Construction and land3,703
 3,191
Owner occupied commercial real estate30,493
 27,141
Commercial and industrial67,702
 74,757
Bridge - franchise finance32,857
 13,631
Bridge - equipment finance1,148
 20,939
Total commercial loans188,459
 185,894
Total non-accrual loans201,642
 204,788
Loans past due 90 days and still accruing2,606
 —
Total non-performing loans204,248
 204,788
OREO and repossessed assets4,956
 3,897
Total non-performing assets$209,204
 $208,685
    
Non-performing loans to total loans (1)
0.86% 0.88%
Non-performing assets to total assets (1)
0.60% 0.63%
ACL to total loans1.12% 0.47%
ACL to non-performing loans130.29% 53.07%
Net charge-offs to average loans (2)
0.20% 0.05%
June 30, 2021March 31, 2021December 31, 2020
Non-accrual loans:
Residential and other consumer:
1-4 single family residential$43,646 $23,159 $26,842 
Other consumer loans1,907 1,904 1,986 
Total residential and other consumer loans45,553 25,063 28,828 
Commercial:
Multi-family7,069 12,701 24,090 
Non-owner occupied commercial real estate51,320 63,785 64,017 
Construction and land4,784 4,788 4,754 
Owner occupied commercial real estate26,582 23,451 23,152 
Commercial and industrial123,818 66,491 54,584 
Bridge - franchise finance33,405 36,276 45,028 
Total commercial loans246,978 207,492 215,625 
Total non-accrual loans292,531 232,555 244,453 
Loans past due 90 days and still accruing132 1,077 — 
Total non-performing loans292,663 233,632 244,453 
OREO and repossessed assets3,890 2,726 3,138 
Total non-performing assets$296,553 $236,358 $247,591 
Non-performing loans to total loans (1)
1.28 %1.00 %1.02 %
Non-performing assets to total assets (1)
0.83 %0.67 %0.71 %
ACL to total loans0.77 %0.95 %1.08 %
ACL to non-performing loans60.02 %94.56 %105.26 %
Net charge-offs to average loans (2)
0.24 %0.17 %0.26 %
(1)
(1)    Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $45.7 million or 0.19% of total loans and 0.13% of total assets, at June 30, 2020; compared to $45.7 million or 0.20% of total loans and 0.14% of total assets, at December 31, 2019.
(2)Annualized for June 30, 2020.

The following chart presents trends in non-performing loans and non-performing assets:assets include the guaranteed portion of non-accrual SBA loans totaling $47.7 million or 0.21% of total loans and 0.13% of total assets, at June 30, 2021, $48.2 million or 0.21% of total loans and 0.14% of total assets, at March 31, 2021 and $51.3 million or 0.22% of total loans and 0.15% of total assets, at December 31, 2020.
nplassettrend3.jpg(2)    Annualized for June 30, 2021 and March 31, 2021.
The following chart presents trends in non-performing loans by portfolio sub-segment (in millions):
assetqualitybyportfolio.jpg
The ultimate impact of the recent and evolving COVID-19 pandemic may not be reflected in the level of non-performing assets reported above. The potential effect on non-performing asset levels may be delayed in the near-term due to government assistance and loan deferral programs.
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 more than 90 days was $669$732 million and $529$562 million at June 30, 20202021 and December 31, 2019, respectively. 2020, respectively.
The increase in non-performing loans, non-performing assets and related ratios was primarily attributable to one $69 million commercial and industrial relationship. Decreases in the ratios of the ACL to total loans and the ACL to non-performing loans ratios at June 30, 2020 from2021 compared to December 31, 2019 is2020 are attributable to the adoptionrecovery of CECL effective January 1, 2020 and the impact on the provision for credit losses recorded during the three and six months ended June 30, 2020 resulting2021, which resulted primarily from changes in economic conditions, ouran improving economic forecast, and borrower financial performance asto a resultlesser extent, charge-offs recognized.
The following chart presents trends in non-performing loans and non-performing assets:
bku-20210630_g6.jpg
The following chart presents trends in non-performing loans by portfolio sub-segment (in millions):

bku-20210630_g7.jpg
The ultimate impact of COVID-19.the COVID-19 pandemic on non-performing asset levels and net charge-offs may be delayed due to government assistance and loan deferral programs.
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 and consumer loans, other than government insured pool buyout loans, are generally placed on non-accrual status when they are 90 days past due. Residential loans that have rolled off of short-term deferral and have not caught up on their deferred payments may also be placed on non-accrual; these loans are typically pending modification. 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 90 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.
TDRs
A loan modification is considered a TDR if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise grant. These concessions may take the form of temporarily or permanently reduced interest rates, payment abatement periods, restructuring of payment terms or extensions of maturity at below market terms, or in some cases, partial forgiveness of principal.terms. Included in TDRs are residential loans to borrowers who have not reaffirmed their debt discharged in Chapter 7 bankruptcy.
Under recently issued inter-agency and authoritative guidance and consistent with the CARES Act, short-term deferrals (generally periods of six months or less) deferrals or modifications related to COVID-19 will typically not be categorized as TDRs. AllAdditionally, section 4013 of the CARES Act, as amended by the Consolidated Appropriations Act on December 27, 2020, effectively suspended the guidance related to TDRs codified in ASC 310-40 until the earlier of January 1, 2022 or sixty days after the date of the suspension of the declared state of emergency related to the COVID-19 pandemic. None of the COVID-19 related deferrals the Company has granted to date that fall into this category.under these provisions have been categorized as TDRs. See the sections entitled "Asset Quality - Commercial Loans - Payment Deferrals" and "Asset Quality - Residential and Other Consumer Loans" " for further discussion.
The following table summarizes loans that havehad been modified in TDRs at the dates indicated (dollars in thousands):
 June 30, 2020 December 31, 2019
 Number of TDRs Amortized Cost Related Specific Allowance Number of TDRs Amortized Cost Related Specific Allowance
Residential and other consumer (1)
248
 $38,736
 $35
 361
 $57,117
 $12
Commercial30
 62,100
 5,644
 25
 56,736
 6,311
 278
 $100,836
 $5,679
 386
 $113,853
 $6,323
June 30, 2021December 31, 2020
Number of TDRsAmortized CostRelated Specific AllowanceNumber of TDRsAmortized CostRelated Specific Allowance
Residential and other consumer (1)
399 $69,759 $102 342 $57,017 $94 
Commercial23 43,432 3,953 25 55,515 15,630 
422 $113,191 $4,055 367 $112,532 $15,724 
(1)
Includes 232 government insured residential loans modified in TDRs totaling $34.9 million at June 30, 2020; and 346 government insured residential loans modified in TDRs totaling $53.4 million at December 31, 2019.
(1)    Includes 384 government insured residential loans modified in TDRs totaling $66.3 million at June 30, 2021; and 326 government insured residential loans modified in TDRs totaling $52.8 million at December 31, 2020.
See Note 4 to the consolidated financial statements for additional information about TDRs.
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.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, impaired loans on non-accrual status, loans modified as TDRs or CARES Act modifications 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. In response to the COVID-19 pandemic, we have temporarily suspended new residential foreclosure actions.
In response to the COVID-19 pandemic and its potential economic impact to our customers, we implemented a short-term program that complies with interagency guidance and the CARES Act under which we are providinghave provided temporary relief, and in some cases longer term modifications, on a case by case basis to borrowers directly impacted by COVID-19 who were not more than 30 days past due as of December 31, 2019. See the sections entitled "Asset Quality - Commercial Loans - Payment Deferrals" and "Asset Quality - Residential and Other Consumer Loans" for further details about COVID-19 related payment deferrals.deferrals and modifications. Under recently issuedthe inter-agency guidance and consistent with the CARES Act, deferrals or modifications related to COVID-19 will generally not be categorized as TDRs. Loans subject to these temporary deferrals or modifications, if in compliance with the contractual terms of the deferral or modification agreements, will typically not be reported as past due or classified as non-accrual during the deferral period.non-performing.
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. There is currently a high level of uncertaintyUncertainty remains around the impact the COVID-19 crisis will have on the economy broadly, and on our borrowers specifically. In light of this uncertainty, we believe it is possible that the ACL estimate could change, potentially materially, in future periods.periods, in either direction. Changes in the ACL may result from changes in current economic conditions, our economic forecast, and in loan portfolio composition as well asand circumstances not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.
For the substantial majority of the loan portfolio, expectedExpected credit losses are estimated using econometric models that employ a factor based methodology to estimate PD and LGD. Projected PDs and LGDs are applied to estimated exposure at default to generate estimates of expected loss at the loan level. These loan level estimates are aggregated by portfolio segment and loan class to generateon a collective estimatebasis for groups of loans that share commonsimilar risk characteristics. Qualitative adjustments may also be applied to incorporate factors that management does not believe have been adequately considered in the quantitative estimate. For loans that do not share similar risk characteristics with other loans such as collateral dependent loans and TDRs, expected credit losses are estimated on an individual basis. Expected credit losses are estimated over the contractual termterms 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 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. Variables with the most significant impact on the commercial real estate model include unemployment, the CRE property forecast by property type, 10 year treasury yield, Baa corporate yield and real GDP growth. Those with the most significant impact on the commercial model include a stock market volatility index, the S&P 500 index, unemployment and a variety of interest rates and spreads. Those with the most significant impact on the residential model include HPI, unemployment, real GDP growth, and a 30 year mortgage rate. The length of the reasonable and supportable forecast period is evaluated at each reporting period and adjusted if deemed necessary. Currently, the Company uses a 2-year reasonable and supportable forecast period in estimating the ACL. After the reasonable and supportable forecast period, the models effectively revert to long-term mean losses on a straight-line basis over 12 months.
For certain less material portfolios including loans and leases to state and local government entities originated by Pinnacle, small balance commercial loans and consumer loans, the WARM method is used to estimate expected credit losses. Loss rates are applied to the exposure at default, after factoring in amortization and expected prepayments. Expected credit losses for the funded portion of mortgage warehouse lines of credit are estimated based primarily on the Company's historical loss experience. All loss estimates are conditioned as applicable on changes in current conditions and the reasonable and supportable economic forecast.
The Company expects to collect the amortized cost basis of government insured residential loans and PPP loans due to the nature of the government guarantee, so the ACL is zero for these loans.
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Qualitative factors
Qualitative adjustments are made to the ACL when, based on management’s judgment, there are factors impacting expected credit losses not taken into account by the quantitative calculations. Potential qualitative adjustments are categorized as follows:
•Economic factors;
•Credit policy and staffing;
•Concentrations;
•Model imprecision; and
•Other factors deemed appropriate by management that may materially impact the amount of expected credit losses.
See Note 1 to the consolidated financial statements of the Company's 2020 Annual report on Form 10-K for more detailed information about our ACL methodology and related accounting policies.


methodology.
The following table provides an analysis of the ACL, provision for credit losses related to the funded portion of loans and net charge-offs by loan segment for the periods indicated (in thousands). For the six months ended June 30, 2020, the ACL was estimated using the CECL methodology. For the six months ended June 30, 2019, prior to the adoption of ASU 2016-13, an incurred loss methodology was used.:
 Residential and Other Consumer LoansMulti-familyNon-owner Occupied Commercial Real EstateConstruction and LandOwner Occupied Commercial Real EstateCommercial and IndustrialPinnacleBridge - Franchise FinanceBridge - Equipment FinanceTotal
Balance at December 31, 2020$18,719 $39,827 $61,507 $3,284 $28,797 $62,197 $304 $36,331 $6,357 $257,323 
Provision for (recovery of) credit losses(6,802)(25,813)(25,852)(2,185)(3,609)22,702 (93)(11,157)(1,160)(53,969)
Charge-offs(14)(6,470)(493)— (346)(13,486)— (9,585)— (30,394)
Recoveries6 233 84 — 57 2,302 — — — 2,682 
Balance at June 30, 2021$11,909 $7,777 $35,246 $1,099 $24,899 $73,715 $211 $15,589 $5,197 $175,642 
Balance at December 31, 2019$11,154 $5,024 $23,240 $764 $8,066 $43,485 $720 $9,163 $7,055 $108,671 
Impact of adoption of ASU 2016-138,098 (780)(13,442)1,854 23,240 8,841 (309)(133)(64)27,305 
Balance at January 1, 202019,252 4,244 9,798 2,618 31,306 52,326 411 9,030 6,991 135,976 
Provision for (recovery of) credit losses(8,572)16,803 75,109 766 5,205 31,735 (173)26,527 6,049 153,449 
Charge-offs(31)— (552)— (187)(2,933)— (16,561)(6,720)(26,984)
Recoveries45 2 82 — 92 3,012 — 449 — 3,682 
Balance at June 30, 2020$10,694 $21,049 $84,437 $3,384 $36,416 $84,140 $238 $19,445 $6,320 $266,123 
Net Charge-offs to Average Loans (1)
Six Months Ended June 30, 2021— %0.84 %0.02 %— %0.03 %0.38 %— %3.77 %— %0.24 %
Six Months Ended June 30, 2020— %— %0.02 %— %0.01 %— %— %5.07 %2.09 %0.20 %
(1)    Annualized.
58




 Six Months Ended June 30,
 2020 2019
Balance at beginning of period:$108,671
 $109,931
Impact of adoption of ASU 2016-1327,305
 —
 135,976
 109,931
Provision for (recovery of) loan losses:   
1-4 single family residential(8,538) 397
Home equity loans and lines of credit(40) (150)
Other consumer loans6
 34
Multi-family16,803
 (1,330)
Non-owner occupied commercial real estate75,109
 5,309
Construction and land766
 498
Owner occupied commercial real estate5,205
 (2,611)
Commercial and industrial31,735
 6,481
Pinnacle(173) (116)
Bridge - franchise finance26,527
 1,094
Bridge - equipment finance6,049
 (2,072)
Total Provision153,449
 7,534
Charge-offs:   
1-4 single family residential(31) —
Non-owner occupied commercial real estate(552) (1,703)
Construction and land—
 (76)
Owner occupied commercial real estate(187) (174)
Commercial and industrial(2,933) (4,688)
Bridge - franchise finance(16,561) (1,203)
Bridge - equipment finance(6,720) —
Total Charge-offs(26,984) (7,844)
Recoveries:   
Home equity loans and lines of credit43
 149
Other consumer loans2
 18
Multi-family2
 —
Non-owner occupied commercial real estate82
 41
Owner occupied commercial real estate92
 718
Commercial and industrial3,012
 1,594
Bridge - franchise finance449
 —
Total Recoveries3,682
 2,520
Net Charge-offs(23,302) (5,324)
Balance at end of period$266,123
 $112,141



The following table shows the distribution of the ACL at the dates indicated (dollars in thousands):
 June 30, 2020 March 31, 2020 
January 1, 2020 (1)
 December 31, 2019
 Total 
%(2)
 Total 
%(2)
 Total 
%(2)
 Total 
%(2)
Residential portfolio segment$10,695
 23.5% $12,576
 24.4% $19,252
 24.5% $11,154
 24.5%
                
Multi-family21,049
 7.9% 13,087
 8.5% 4,244
 9.6% 5,024
 9.6%
Non-owner occupied commercial real estate84,436
 20.7% 25,078
 21.5% 9,798
 21.7% 23,240
 21.7%
Construction and land3,384
 1.0% 2,610
 1.0% 2,618
 1.1% 764
 1.1%
CRE portfolio segment108,869
   40,775
   16,660
   29,028
  
                
Owner occupied commercial real estate36,416
 8.6% 50,685
 8.7% 31,306
 8.9% 8,066
 8.9%
Commercial and industrial84,142
 28.1% 106,964
 25.3% 52,326
 23.4% 43,485
 23.4%
Pinnacle238
 5.1% 585
 5.0% 411
 5.2% 720
 5.2%
Bridge - franchise finance19,446
 2.6% 32,910
 2.8% 9,030
 2.6% 9,163
 2.6%
Bridge - equipment finance6,317
 2.5% 6,084
 2.8% 6,991
 3.0% 7,055
 3.0%
Commercial portfolio segment146,559
   197,228
   100,064
   68,489
  
 $266,123
 100.0% $250,579
 100.0% $135,976
 100.0% $108,671
 100.0%
June 30, 2021March 31, 2021December 31, 2020
 Total
%(1)
Total
%(1)
Total
%(1)
Residential and other consumer$11,909 30.9 %$15,843 28.1 %$18,719 26.6 %
Multi-family7,777 5.5 %45,757 6.5 %39,827 6.9 %
Non-owner occupied commercial real estate35,246 20.7 %46,915 20.9 %61,507 20.8 %
Construction and land1,099 1.0 %2,467 1.2 %3,284 1.2 %
CRE44,122 95,139 104,618 
Owner occupied commercial real estate24,899 8.6 %24,445 8.3 %28,797 8.4 %
Commercial and industrial73,715 24.9 %54,151 26.1 %62,197 27.2 %
Pinnacle211 4.6 %213 4.7 %304 4.6 %
Bridge - franchise finance15,589 2.0 %24,411 2.2 %36,331 2.3 %
Bridge - equipment finance5,197 1.8 %6,732 2.0 %6,357 2.0 %
Commercial119,611 109,952 133,986 
$175,642 100.0 %$220,934 100.0 %$257,323 100.0 %
(1)Adoption date of ASU 2016-13.
(2)Represents percentage of loans receivable in each category to total loans receivable.

(1)Represents percentage of loans receivable in each category to total loans receivable.

Changes in the ACL for the first quarter of 2020:
59




The following chart depicts the changes intable presents the ACL from December 31, 2019 to March 31, 2020 (in millions):
aclwaterfallq12020.jpg
The increase in the ACL from January 1, 2020, the dateas a percentage of initial adoption of ASC 326, to March 31, 2020 was primarily due to changes in our reasonable and supportable economic forecast, in large part resulting from the estimated impact of the emerging COVID-19 pandemic, which added $93.3 million to the ACL. An increase in specific reserves, primarily related to the franchise finance portfolio, contributed an additional $16.1 million to the increase in the ACL for the three months ended March 31, 2020. The ACL for residential and other consumer loans decreased from January 1, 2020 to March 31,2020. This decline was primarily attributable to the introduction of a qualitative loss factor related to model imprecision.
ASU 2016-13 was adopted effective January 1, 2020, increasing the ACL by $27.3 million. In general, the change in methodology resulted in increased reserves due to the transition to a lifetime expected loss model from an incurred loss model. However, as noted in the table above, there are certain CRE portfolios where the reserve decreased. This was mainly driven by the use of quantitative models to estimate the ACL at the loan level, specific to the Company's portfolio, under CECL, instead of the peer group historical losses rates utilized under the prior incurred loss model. Certain qualitative factors were also removed, as their impact was captured in the quantitative estimate under CECL.dates indicated:

June 30, 2021March 31, 2021December 31, 2020
Residential and other consumer0.17 %0.24 %0.29 %
Commercial:
Commercial real estate0.71 %1.43 %1.52 %
Commercial and industrial1.28 %0.98 %1.07 %
Pinnacle0.02 %0.02 %0.03 %
Bridge - franchise finance3.37 %4.65 %6.61 %
Bridge - equipment finance1.23 %1.46 %1.34 %
Total commercial1.04 %1.22 %1.36 %
0.77 %0.95 %1.08 %

Changes in the ACL for the second quarter of 2020
The ACL increased by $15.5 million from March 31, 2020 to June 30, 2020. At a high level, increases in the ACL for CRE portfolio segments offset a decline in the ACL for most other commercial portfolio segments during the quarter, while the ACL for the residential segment did not change materially. Significant offsetting factors contributing to the change in the ACL forduring the second quarterthree months ended June 30, 2021 are depicted in the chart below (in millions):
aclwaterfallq22020.jpg
bku-20210630_g8.jpg

60


The following charts depict the changes

Changes in the ACL by major portfolio segmentduring the three months ended June 30, 2021
The decrease in the ACL from March 31, 20202021 to June 30, 2020 (in millions):2021 for the majority of portfolio sub-segments resulted largely from an improving economic forecast, improvement in borrower financial results as reflected in the reduction in criticized and classified loans, changes in portfolio composition including the decline in commercial loan balances, a reduction in certain qualitative loss factors and charge-offs.
aclwaterfallbysegmenta01.jpg
The ACL for residential and other consumer loans decreased by $3.9 million during the quarter ended June 30, 2021, from 0.24% to 0.17% of loans. This decrease was primarily driven by improvements in the unemployment and HPI forecasts and the impact of loans that rolled off of deferral and resumed regular payments. In the aggregate, the ACL for the CRE portfolio segments,sub-segment, including multi-family, non-owner occupied CRE and construction and land, increaseddecreased by $68.1$51.0 million during the quarter ended June 30, 2020.2021, from 1.43% to 0.71% of loans. The primary factors contributingACL for multi-family loans decreased by $38.0 million. These decreases related primarily to this increase were:
deterioration in current economic conditions andimprovement in the economic forecast, particularly the unemployment levels and commercial property forecasts;forecasts and
a qualitative overlay based on data collected from borrowers reflecting recent deteriorationdecrease in operating results or financial condition.
In the aggregate, thecriticized and classified loans. The ACL for the commercial portfolio segments declined by $50.7 million during the quarter ended June 30, 2020. The largest segments in this group are commercial and industrial and owner-occupied CRE; the Bridge and Pinnacle portfolios are also included. The most significant offsetting factors contributing to this decrease were:
loans was impacted by an increase of $27.2 million in the specific reserve related to deterioration in current economic conditions compared to the prior quarter-end, offset by a decrease related to the forward path of the economic forecast, particularly the path of the volatility index and the S&P 500 index which improved from the prior quarter-end;
a decrease related to changes in assumptions about expected prepayments; and
an increase from a qualitative overlay based on data collected from borrowers that reflected recent deterioration in operating results or financial condition.one $69 million relationship,
The ACL for the Bridge franchise finance portfolio declined in partdecreased by $8.8 million, primarily due to charge-offs takenthe decline in criticized and classified loans and the reduction in certain qualitative loss factors.
Changes in the ACL during the second quarter.




three months ended March, 31, 2021:
The econometric models we usedecrease in the ACL from December 31, 2020 to estimate expected credit losses ingest a wide arrayMarch 31, 2021 for the majority of national, regional and MSA levelportfolio sub-segments resulted largely from an improving economic variables and data points. forecast. The decrease was primarily related to the pass rated portion of the portfolio. The ACL for pass-rate loans, including residential loans, declined to $93 million at March 31, 2021 from $137 million at December 31, 2020. The ACL for non-pass rated loans increased to $128 million at March 31, 2021 from $120 million at December 31, 2020.
Some of the data points informing the reasonable and supportable economic forecast used in estimating the ACL at June 30, 20202021 were:
Unemployment rates starting•National unemployment at 13.4%5.2% for the third quarter of 2021, steadily declining to 4.5% through the end of 2021, and declining to 9%3.5% by the end of 2020, and2022;
•Annualized growth in GDP at 6.7% for the third quarter of 2021, increasing to 7%6.8% by the end of 2021;2021, and 3.1% for 2022;
Annualized growth in GDP starting•VIX trending at negative (27%) with recovery beginning instabilized levels through the third quarter of 2020forecast horizon; and returning to pre-recession levels in 2023;
VIX trailing average starting at 32, remaining elevated through 2020, and then trending downward; and
•S&P 500 starting at 2900averaging near 4,000 through the reasonable and declining moderately through 2020 before increasing.supportable forecast period.
For additional information about the ACL, see Note 4 to the consolidated financial statements.
61




Deposits
Average balances and rates paid on deposits were as follows for the periods indicated (dollars in thousands):
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
 Average
Balance		Average
Rate Paid		Average
Balance		Average
Rate Paid		Average
Balance		Average
Rate Paid		Average
Balance		Average
Rate Paid
Demand deposits:    
Non-interest bearing$8,163,879 — %$5,313,009 — %$7,829,422 — %$4,840,781 — %
Interest bearing3,069,945 0.34 %2,448,545 0.78 %3,006,760 0.36 %2,311,086 1.02 %
Savings and money market13,541,237 0.36 %10,450,310 0.67 %13,169,195 0.36 %10,431,256 1.06 %
Time3,380,582 0.41 %7,096,097 1.59 %3,853,057 0.57 %7,303,083 1.82 %
$28,155,643 0.25 %$25,307,961 0.80 %$27,858,434 0.29 %$24,886,206 1.07 %
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
 Average
Balance		 Average
Rate Paid		 Average
Balance		 Average
Rate Paid		 Average
Balance		 Average
Rate Paid		 Average
Balance		 Average
Rate Paid
Demand deposits:               
Non-interest bearing$5,313,009
 —% $3,932,716
 —% $4,840,781
 —% $3,769,828
 —%
Interest bearing2,448,545
 0.78% 1,773,912
 1.41% 2,311,086
 1.02% 1,738,393
 1.38%
Money market10,270,027
 0.68% 10,710,550
 1.95% 10,251,575
 1.08% 10,964,547
 1.93%
Savings180,283
 0.09% 214,030
 0.28% 179,681
 0.14% 223,271
 0.28%
Time7,096,097
 1.59% 6,944,862
 2.40% 7,303,083
 1.82% 6,926,041
 2.34%
 $25,307,961
 0.80% $23,576,070
 1.70% $24,886,206
 1.07% $23,622,080
 1.68%
The estimated amount of uninsured deposits at June 30, 2021 and December 31, 2020 was $20.4 billion and $17.4 billion, respectively. Time deposit accounts with balances of $250,000 or more totaled $863 million and $1.1 billion at June 30, 2021 and December 31, 2020, respectively. The following table shows scheduled maturities of certificates of deposit with denominations greater than or equal to $100,000uninsured time deposits as of June 30, 20202021 (in thousands):
Three months or less$833,151
Over three through six months967,778
Over six through twelve months1,284,607
Over twelve months166,568
 $3,252,104
Three months or less$226,201 
Over three through six months187,105 
Over six through twelve months476,914 
Over twelve months19,313 
$909,533 
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 FHLB stock, qualifying residential first mortgage and commercial real estate loans, and MBS.
We have utilized The following table presents information about the Federal Reserve's PPPLF to fund PPP loans. These borrowings bear interest at 0.35%, are secured by PPP loans, and mature as the underlying PPP loans are repaid. FHLB and PPPLF borrowings consisted of the following at the dates indicated (in thousands):
 June 30, 2020 December 31, 2019
FHLB advances, net of hedge accounting fair value adjustments$3,999,573
 $4,480,501
PPPLF borrowings651,026
 —
 $4,650,599
 $4,480,501


The contractual balance of outstanding FHLB advances outstanding atas of June 30, 2020 is scheduled to mature as follows (in2021 (dollars in thousands):
Maturing in: 
2020—One month or less$1,470,000
2020—Over one month2,176,000
2021250,000
Thereafter100,000
Total contractual balance outstanding3,996,000
Cumulative fair value hedging adjustments3,573
Carrying value$3,999,573
Amount
Maturing in:
2021 - One month or less$655,000 
2021 - Over one month1,926,000 
2024100,000 
Total contractual balance outstanding2,681,000 
Cumulative fair value hedging adjustments505 
Carrying Value$2,681,505 
The table above reflects contractual maturities of outstanding FHLB advances and does not incorporate the impact that interest rate swaps designated as cash flow and fair value hedges have on the duration of borrowings.
62




The table below presents information about outstanding interest rate swaps hedging the variability of interest cash flows on or the fair value of FHLB advances included in the table above, as of June 30, 2021 (dollars in thousands):
Notional AmountWeighted Average Rate
Cash flow hedges maturing in:
2021$1,075,000 2.41 %
2022210,000 2.48 %
2023255,000 2.35 %
2024110,000 2.54 %
2025175,000 2.39 %
Thereafter556,000 2.90 %
Cash flow hedges2,381,000 2.53 %
Fair value hedges maturing in 2021200,000 
Total interest rate swaps designated as cash flow or fair value hedges$2,581,000 
See Note 76 to the consolidated financial statements for more information about derivative instruments.
Outstanding notes payable and other borrowings consisted of the following at the dates indicated (in thousands):
June 30, 2021December 31, 2020
Senior notes:
Principal amount of 4.875% senior notes maturing on November 17, 2025$400,000 $400,000 
Unamortized discount and debt issuance costs(3,792)(4,174)
396,208 395,826 
Subordinated notes:
Principal amount of 5.125% subordinated notes maturing on June 11, 2030300,000 300,000 
Unamortized discount and debt issuance costs(5,650)(5,894)
294,350 294,106 
Total notes690,558 689,932 
Finance leases31,081 32,563 
Notes and other borrowings$721,639 $722,495 
 June 30, 2020 December 31, 2019
Senior notes:   
Principal amount of 4.875% senior notes maturing on November 17, 2025$400,000
 $400,000
Unamortized discount and debt issuance costs(4,547) (4,910)
 395,453
 395,090
Subordinated notes:   
Principal amount of 5.125% subordinated notes maturing on June 11, 2030300,000
 —
Unamortized discount and debt issuance costs(6,116) —
 293,884
 —
Total outstanding notes payable689,337
 395,090
Finance leases32,995
 34,248
Notes and other borrowings$722,332
 $429,338

Capital Resources
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 June 30, 20202021 and December 31, 2019, BankUnited2020, the Company and the CompanyBank had capital levels that exceeded both the regulatory well-capitalized guidelines and all internal capital ratio targets.

63




The following table provides information regarding regulatory capital for the Company and the Bank as of June 30, 20202021 (dollars in thousands):
Actual 
Required to be
Considered Well
Capitalized
 
Required to be
Considered
Adequately
Capitalized
 Required to be Considered
Adequately
Capitalized Including Capital Conservation Buffer		 ActualRequired 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 AmountRatioAmountRatioAmountRatioAmountRatio
BankUnited, Inc.: 
  
  
  
  
  
    BankUnited, Inc.:      
Tier 1 leverage$2,874,094
 8.46% 
N/A (1)

 
N/A (1)

 $1,359,339
 4.00% 
N/A (1)

 
N/A (1)

Tier 1 leverage$3,139,889 8.81 %
N/A (1)
N/A (1)
$1,425,286 4.00 %
N/A (1)
N/A (1)
CET1 risk-based capital$2,874,094
 12.19% $1,533,087
 6.50% $1,061,368
 4.50% $1,651,017
 7.00%CET1 risk-based capital$3,139,889 13.52 %$1,509,810 6.50 %$1,045,253 4.50 %$1,625,949 7.00 %
Tier 1 risk-based capital$2,874,094
 12.19% $1,886,876
 8.00% $1,415,157
 6.00% $2,004,806
 8.50%Tier 1 risk-based capital$3,139,889 13.52 %$1,858,228 8.00 %$1,393,671 6.00 %$1,974,367 8.50 %
Total risk based capital$3,381,536
 14.34% $2,358,595
 10.00% $1,886,876
 8.00% $2,476,525
 10.50%
Total risk-based capitalTotal risk-based capital$3,576,478 15.40 %$2,322,785 10.00 %$1,858,228 8.00 %$2,438,924 10.50 %
BankUnited: 
  
  
  
  
  
    BankUnited:      
Tier 1 leverage$3,147,423
 9.29% $1,694,528
 5.00% $1,355,622
 4.00% N/A
 N/A
Tier 1 leverage$3,491,270 9.84 %$1,774,797 5.00 %$1,419,838 4.00 %N/AN/A
CET1 risk-based capital$3,147,423
 13.42% $1,524,283
 6.50% $1,055,273
 4.50% $1,641,535
 7.00%CET1 risk-based capital$3,491,270 15.11 %$1,501,907 6.50 %$1,039,782 4.50 %$1,617,438 7.00 %
Tier 1 risk-based capital$3,147,423
 13.42% $1,876,040
 8.00% $1,407,030
 6.00% $1,993,293
 8.50%Tier 1 risk-based capital$3,491,270 15.11 %$1,848,501 8.00 %$1,386,376 6.00 %$1,964,032 8.50 %
Total risk based capital$3,354,864
 14.31% $2,345,050
 10.00% $1,876,040
 8.00% $2,462,303
 10.50%
Total risk-based capitalTotal risk-based capital$3,627,858 15.70 %$2,310,626 10.00 %$1,848,501 8.00 %$2,426,157 10.50 %
(1)    There is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.
TheUpon adoption of ASU 2016-13 on January 1, 2020, the Company initially elected to phase-in the initial impact of adopting CECL for regulatory capital purposes, allowing CECL's regulatory capital effects to be phased in at 25 percent per year, beginning in the first year of adoption. As part of its response to the impact of COVID-19, our banking regulators issued an inter-agency interim final rule providing the option to temporarily delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period. The Company has elected to adopt the provisions of this interim final rule.
Total stockholders' equity decreased by approximately $226 million at June 30, 2020 compared to December 31, 2019. The most significant reason for this decrease was the repurchase of common shares, followed by a comprehensive loss of $66 million for the six months ended June 30, 2020. The comprehensive loss included an increase of $111 million in accumulated other comprehensive loss, attributed to an increase in unrealized losses on AFS securities and derivative instruments. See the section of this Management's Discussion and Analysis entitled "Analysis of Financial Condition; Investment Securities" and Note 3 to the consolidated financial statements for further discussion of unrealized losses on AFS securities. Management expects to recover the entire amortized cost basis of its AFS securities. Unrealized losses on derivative instruments designated as hedging instruments were attributable to reductions in benchmark interest rates. Other factors contributing to the decrease in total stockholders equity were the initial adoption of ASU 2016-13 which impacted retained earnings by $24 million, and dividends in the amount of $44 million.
During the first quarter of 2020, the Company repurchased approximately 3.3 million shares of its common stock for an aggregate purchase price of $101 million, at a weighted average price of $30.36 per share. The Company has temporarily suspended its share repurchase program.
We believe we are well positioned, from a capital perspective, to withstand a severe downturn in the economy. In light of the COVID-19 crisis, uncertainty around its ultimate impact on the economy and, by extension, on our financial condition and results of operations, we have enhanced our stress testing framework. We have increased both the frequency of stress testing, which is performed at least quarterly, and the spectrum of scenarios utilized. One exercise we completed was to stress our MarchDecember 31, 2020 loan portfolio using both the 2018 DFAST severely adverse scenario and the 20202021 DFAST severely adverse scenario. The results of each of thesethis stress teststest projected regulatory capital ratios in excess of all well capitalized thresholds.thresholds in the stress scenario.
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. We successfully accessedThe Company demonstrated its ability to access the capital markets in the second quartera period of stress with its June 2020 augmenting our regulatory Tier 2 capital with a $300 million issuance of subordinated notes.debt issuance.

74





Liquidity
Liquidity involves our ability to generate adequate funds to support planned interest earning asset growth, meet deposit withdrawal and credit line usage requests, maintain reserve requirements, conduct routine operations, pay dividends, service outstanding debt and meet other contractual obligations.
BankUnited's ongoing liquidity needs have been and continue to be met primarily by cash flows from operations, deposit growth, the investment portfolio and FHLB advances. For the six months ended June 30, 20202021 and 20192020 net cash provided by operating activities was $320.8$578 million and $237.8$321 million, respectively.
The onset of the COVID-19 pandemic led to dislocation and volatility in funding and capital markets and evoked widespread concerns about the ongoing functioning of those markets, the availability ofAvailable liquidity and the economy generally. In response, the Federal Reserve reduced its benchmark interest rate to a target level of 0 - 0.25% and has maintained it at that level to date, actively adjusted the size of its overnight and term repurchase agreement operations, reduced reserve requirements and the cost of discount window borrowings, encouraged banks to utilize the discount window and committed to purchasing large amounts of U.S. Treasury securities and MBS. The U.S. government has announced an unprecedented variety of additional stimulus and measures to support markets, the flow of credit, and systemic liquidity. These include the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility, the Term Asset-Backed Securities Loan Facility, the Municipal Liquidity Facility, the Main Street New Loan Facility, the Main Street Expanded Loan Facility, Paycheck Protection Program loans, the Paycheck Protection Program Liquidity Facility (PPPLF), the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Money Market Mutual Fund Liquidity Facility. These actions appear to have been effective in stabilizing market liquidity.
In response to the onset of COVID-19 and potential concerns that might arise about the stability of liquidity, we initially took a number of precautionary measures to ensure adequacy of liquidity. We took steps to optimize available same day liquidity. We increased the level of cash held on balance sheet, to be prepared to meet potential increased demand for deposit withdrawals and line usage, which to date have not materialized. While we took proactive steps to be prepared for disruptions in liquidity, the COVID-19 pandemic has not been a liquidity event; we have not experienced unusual volatility or stress on our liquidity position to date.
At June 30, 2020, available liquidity totaled approximately $9.8 billion, includingincludes cash, borrowing capacity at the Federal Home Loan Bank of Atlanta and the Federal Reserve Discount Window, Federal Funds lines of credit and unpledged agency securities and availability under the PPPLF, as depicted in the following chart:
liquidity.jpg
securities. Additional sources of liquidity include cash flows from operations, wholesale deposits, and cash flow from the Bank's amortizing securities and loan portfolios. Inportfolios, and the near-term, cash flows from the loan portfolio may be reduced as a resultsale of temporary payment deferrals granted to borrowers. This has not to date and we do not currently expect it to materially impact our liquidity position.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. Since the onset of the COVID-19 pandemic, we have not experienced unusual deposit outflows or volatility. Credit line usage, whichvolatility; we have, monitored regularly since the onset of COVID-19, has not deviated materially fromin fact experienced growth in deposits and is currently below our trailing three year average. Our available liquidity may also change as the FHLB and Federal Reserve Bank reprice our collateral in the normal course of business based on June 30, 2020 valuations. Based on our initial analysis, we do not expect the impact to be material to our overall liquidity position.on-balance sheet liquidity.
The ALCO policy has established severalestablishes limits or operating thresholds for a number of measures of liquidity which are typically monitored monthly by the ALCO and quarterly by the Board of Directors. In light ofThese measures include but are not limited to the COVID-19 situation, we have enhanced the frequency and extent of liquidity monitoring and reporting to both executive management and the Board of Directors.
The ALCO policy establishes limits for the
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ratio of available liquidity to volatile liabilities, thea liquidity stress test coverage ratio, of wholesale funding to total assets, the ratio of brokered deposits to total deposits and a government backed securities holding ratio, measured as the ratio of U.S. Government backed securities to total securities. At June 30, 2020 BankUnited was in compliance with all of these ALCO policy limits.
An additional primary measure of liquidity monitored by management is the 30-day total liquidity ratio, defined as (a) the sum of cash and cash equivalents, pledgeable securities and a measure of funds expected to be generated by operations over the next 30 days; divided by (b) the sum of potential deposit runoff, liabilities maturing within the 30 day time frame and a measure of funds expected to be used in operations over the next 30 days. ALCO policy thresholds stipulate that BankUnited’s liquidity is considered acceptable if the 30-day total liquidity ratio exceeds 100%. At June 30, 2020, BankUnited’s 30-day total liquidity ratio was 235%. Management also monitors a one-year liquidity ratio, defined as (a) cash and cash equivalents, pledgeable securities, unused borrowing capacity at the FHLB, and loans and non-agency securities maturing within one year; divided by (b) forecasted deposit outflows and borrowings maturing within one year. Thisa wholesale funding ratio, allows management to monitor liquidity over a longer time horizon. The acceptable threshold established by the ALCO for this liquidity measure is 100%. At June 30, 2020, BankUnited’s one-year liquidity ratio was 207%. Additional measures of liquidity regularly monitored by the ALCO include the ratio of FHLB advances to total funding, concentrations of large deposits, a measure of on balanceon-balance sheet available liquidity 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. At June 30, 2021, BankUnited was operating within acceptable thresholds and limits as prescribed by the ALCO policy.
The ALCO policy stipulates that BankUnited’s liquidity is considered within policy limits or thresholds if the available liquidity/volatile liabilities ratio, 30-day total liquidity ratio and one-year liquidity ratios exceed 100%. At June 30, 2021, BankUnited’s available liquidity/volatile liabilities ratio was 301%, the 30-day total liquidity ratio was 270% .and the one-year liquidity ratio was 424%. The ALCO policy also prescribes that the liquidity stress test coverage ratio exceed 100%; at June 30, 2021, that ratio was 219%. The Company also has a comprehensive contingency liquidity funding plan and conducts a quarterly liquidity stress test, the results of which are reported to the risk committee of the Board of Directors.
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 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.
We expect that our liquidity requirements will continue to be satisfied over the next 12 months through the sources of funds described above.
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 limit exposure to interest rate risk, and to ensure procedures are established to monitor compliance with these policies. The thresholds 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.
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 consensus forward interest rate curves 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 economic climate.observed customer behavior. Currently, we areour interest rate risk policy framework is based on modeling instantaneous rate shocks of plus and minus 100, plus 200, plus 300 and plus 400 basis point shifts as well asshifts. We also model a variety of yield curve slope negative rate and dynamic


balance sheet scenarios. We continually evaluate the scenarios being modeled with a view toward adapting them to changing economic conditions, expectations and trends.
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The Company’s ALCO policy provides that net interest income sensitivity will be considered acceptable if decreases in forecast net interest income in specified parallel rate shock scenarios, generally by policy plus and minus 100, 200, 300 and 400 basis points, are within specified percentages of forecast net interest income in the most likely rate scenario over the next twelve months and in the second year. At June 30, 2020,2021, the most likely rate scenario assumesassumed that all indices are floored at 0%. We did not apply the minusfalling rate scenarios at June 30, 20202021 due to the low level of current interest rates. The following table illustrates the thresholds set forth in the ALCO policy and the impact on forecasted net interest income in the indicated simulated scenarios at June 30, 20202021 and December 31, 2019:2020:
Down 100 Plus 100 Plus 200 Plus 300 Plus 400Down 100Plus 100Plus 200Plus 300Plus 400
Policy Thresholds:         Policy Thresholds:
In year 1(6.0)% (6.0)% (10.0)% (14.0)% (18.0)%In year 1(6.0)%(6.0)%(10.0)%(14.0)%(18.0)%
In year 2(9.0)% (9.0)% (13.0)% (17.0)% (21.0)%In year 2(9.0)%(9.0)%(13.0)%(17.0)%(21.0)%
Model Results at June 30, 2020 - increase (decrease):         
Model Results at June 30, 2021 - increase:Model Results at June 30, 2021 - increase:
In year 1N/A 2.6 % 3.7 % 3.5 % 2.5 %In year 1N/A3.5 %5.5 %6.2 %6.0 %
In year 2N/A 3.0 % 4.9 % 5.3 % 4.7 %In year 2N/A7.8 %13.3 %17.8 %21.5 %
Model Results at December 31, 2019 - increase (decrease):         
Model Results at December 31, 2020 - increase:Model Results at December 31, 2020 - increase:
In year 1(1.1)% 1.0 % 0.1 % (2.1)% (5.1)%In year 1N/A2.9 %3.9 %3.2 %1.9 %
In year 2(4.8)% 4.6 % 7.2 % 8.7 % 9.4 %In year 2N/A5.0 %7.8 %9.0 %9.5 %
Management also simulates changes in EVE in various interest rate environments. The ALCO policy has established parameters of acceptable risk that are defined in terms of the percentage change in EVE from a base scenario under eight rate scenarios, derived by implementing immediate parallel movements of plus and down 100, 200, 300 and 400 basis points from current rates. We did not simulate decreases in interest rates at June 30, 20202021 due to the currently low level of market interest rates. The following table illustrates the acceptable thresholds as established by ALCO and the modeled change in EVE in the indicated scenarios at June 30, 20202021 and December 31, 2019:2020:
 Down 100 Plus 100 Plus 200 Plus 300 Plus 400
Policy Thresholds(9.0)% (9.0)% (18.0)% (27.0)% (36.0)%
Model Results at June 30, 2020 - increase (decrease):N/A 1.4 % (1.2)% (5.1)% (9.3)%
Model Results at December 31, 2019 - increase (decrease):(1.5)% (0.7)% (3.1)% (6.2)% (9.7)%
Down 100Plus 100Plus 200Plus 300Plus 400
Policy Thresholds(9.0)%(9.0)%(18.0)%(27.0)%(36.0)%
Model Results at June 30, 2021 - increase (decrease):N/A2.1 %1.3 %0.1 %(1.5)%
Model Results at December 31, 2020 - increase (decrease):N/A0.8 %(2.0)%(6.1)%(10.0)%
These measures fall within an acceptable level of interest rate risk per the thresholds established in the ALCO policy.
Many assumptions were used by the Company to calculate the impact of changes in interest rates, including the change in rates. Actual results may not be similar to the Company’s projections due to several factors including the timing and frequency of rate changes, market conditions, changes in depositor behavior and loan prepayment speeds and the shape of the yield curve. Actual results may also differ due to the Company’s actions, if any, in response to changing rates and conditions.
Derivative Financial Instruments
Interest rate swaps and caps designated as cash flow or fair value hedging instruments are one of the 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 borrowings and to changes in the fair value of fixed rate borrowings, in each case caused by fluctuations in benchmark interest rates, as well as to manage duration of liabilities. The fair value of derivative instruments designated as hedges is included in other assets and other liabilities in our consolidated balance sheets. 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. At June 30, 2020,2021, outstanding interest rate swaps and caps designated as cash flow hedges had an aggregate notional amount of $3.0$2.5 billion and outstanding interest rate swaps designated as fair value hedges had an aggregate notional amount of $250$200 million. TheAt June 30, 2021, the aggregate fair value of interest rate swaps and caps designated as cash flow hedges included in other assets and other liabilities was $7.2 million.$1.3 million and $4.5 million, respectively.
Interest rate swaps and caps not designated as hedges had an aggregate notional amount of $3.0$3.4 billion at June 30, 2020.2021. The aggregate fair value of these interest rate swaps and caps included in other assets was $145.8$78.4 million and the aggregate fair


value included in other liabilities was $44.9$27.6 million. These interest rate swaps and caps were entered into as accommodations to certain of our commercial borrowers. To mitigate interest rate risk associated with these derivatives, the Company enters into offsetting derivative positions with primary dealers.
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See Note 76 to the consolidated financial statements for additional information about derivative financial instruments.
Off-Balance Sheet Arrangements
For more information on contractual obligations and commitments, see Note 1110 to the consolidated financial statements and the Borrowings section of this MD&AManagement's Discussion and Off-Balance Sheet Arrangements in the MD&A of the Company's 2019 Annual report on Form 10-K.Analysis.
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 and the ability of the Company to generate earnings sufficient to cover estimated credit losses, particularly in view of the adoptionvolatility of the CECL accounting methodology, which may impact comparability of operating results to prior periods.provision for credit losses resulting from the COVID-19 pandemic. This measure also provides a meaningful basis for comparison to other financial institutions since it is commonly employed and is a measure frequently cited by investors.investors and analysts. The following table reconciles the non-GAAP financial measurement of PPNR to the comparable GAAP financial measurement of income before income taxes for the three and six months ended June 30, 2020 and 2019 and the three months ended March 31, 2020 (in thousands):
 Three Months Ended June 30, Three Months Ended March 31, Three Months Ended June 30, Six Months Ended June 30,
 2020 2020 2019 2020 2019
Income (loss) before income taxes (GAAP)$96,904
 $(40,422) $108,882
 $56,482
 $199,067
Plus: Provision for (recovery of) credit losses25,414
 125,428
 (2,747) 150,842
 7,534
PPNR (non-GAAP)$122,318
 $85,006
 $106,135
 $207,324
 $206,601
Recurring operating expenses is a non-GAAP financial measure. Management believes disclosure of this measure provides readers with information that may be useful in comparing current period results to prior periods and in interpreting trends in operational costs, particularly in light of our BankUnited 2.0 initiative. The following table reconciles the non-GAAP financial measurement of recurring operating expenses to the comparable GAAP financial measurement of total non-interest expense for the three and six months ended June 30, 2020 and 2019indicated (in thousands):
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Total non-interest expense (GAAP)$106,370
 $120,085
 $225,238
 $246,775
Less:       
Depreciation of operating lease equipment(12,219) (11,489) (24,822) (23,301)
Costs incurred directly related to implementation of BankUnited 2.0(255) (6,217) (334) (12,109)
COVID-19 expenses(1,519) —
 (1,519) —
Recurring operating expenses (non-GAAP)$92,377
 $102,379
 $198,563
 $211,365


Three Months Ended June 30,Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
20212021202020212020
Income before income taxes (GAAP)$140,150 $131,304 $96,904 $271,454 $56,482 
Plus: Provision for (recovery of) credit losses(27,534)(27,989)25,414 (55,523)150,842 
PPNR (non-GAAP)$112,616 $103,315 $122,318 $215,931 $207,324 
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 basebasis 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 June 30, 2020the dates indicated (in thousands except share and per share data): 
June 30, 2021December 31, 2020
Total stockholders’ equity$3,161,543 $2,983,012
Less: goodwill and other intangible assets77,63777,637
Tangible stockholders’ equity$3,083,906 $2,905,375 
 
Common shares issued and outstanding93,238,553 93,067,500
 
Book value per common share$33.91 $32.05 
 
Tangible book value per common share$33.08 $31.22 
Total stockholders’ equity$2,755,053
Less: goodwill and other intangible assets77,652
Tangible stockholders’ equity$2,677,401
  
Common shares issued and outstanding92,420,278
  
Book value per common share$29.81
  
Tangible book value per common share$28.97
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.”

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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.
Effective January 1, 2020, the Company adopted ASU 2016-13. The Company designed new controls and modified existing controls as part of its adoption. These additional internal controls over financial reporting included controls over model governance, assumptions, the determination of a reasonable and supportable economic forecast, and expanded controls over loan level data.
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During the quarter ended June 30, 2020,2021, 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. We have focused on insuring that our technology systems and internal controls continue to operate effectively in a remote or hybrid work environment and have not identified any instances in which our control environment has failed to operate effectively. We are continually monitoring and assessing any impact of the COVID-19 situation on our internal controls to address impacts to their design, implementation and operating effectiveness.
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 the 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.
We received a subpoena from the United States Department of Justice in October 2019 requesting documentation related to the taxi medallion line of business formerly conducted by the Bank. We are cooperating with this investigation.
Item 1A.   Risk Factors
The COVID-19 pandemic has caused substantial disruption to the global economy which has adversely affected, and is expected to continue to adversely affect, the Company’s business and results of operations. The future impacts of the COVID-19 pandemic on the global economy and the Company’s business, results of operations and financial condition remains uncertain.
In March 2020, the World Health Organization declared novel coronavirus disease 2019 (COVID-19) as a global pandemic. The pandemic has resulted in governmental authorities implementing numerous measures attempting to contain the spread and impact of COVID-19 such as travel bans and restrictions, quarantines, shelter in place orders, and limitations on business activities, including in major markets in which the Company and its clients are located or do business. The COVID-19 pandemic, and governmental responses to the pandemic, have severely negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels.
This macroeconomic environment has had, and could continue to have, an adverse effect on the Company’s business and operations. Should current economic impacts persist or continue to deteriorate, this macroeconomic environment could have a continued adverse effect on our business and operations, including, but not limited to, decreased demand for the Company’s products and services, protracted periods of lower interest rates, loss of income resulting from forbearances, deferrals and fee waivers provided by the Company to its consumer and commercial borrowers, increased credit losses due to deterioration in the financial condition of our consumer and commercial borrowers, including declining asset and collateral values, which may continue to increase our provision for credit losses and net charge-offs and possible constraints on liquidity and capital, whether due to increases in risk-weighted assets related to supporting client activities or to regulatory actions. The business operations of the Company may also be disrupted if significant portions of its workforce or those of vendors or third-party service providers are unable to work effectively, including because of illness, quarantines, government actions, restrictions in connection with the pandemic, and technology limitations and/or disruptions. The Company also faces an increased risk of litigation and governmental and regulatory scrutiny as a result of the effects of the pandemic on market and economic conditions and actions taken by governmental authorities in response to those conditions.


The extent to which the COVID-19 pandemic impacts the Company’s business, results of operations, and financial condition, as well as its regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic. Moreover, the effects of the COVID-19 pandemic may heighten many of the other risks described in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K including, but not limited to, financial market conditions, economic conditions, credit risk, interest rate risk, risk of security breaches and technology changes.
There have been no material changes in the other risk factors disclosed by the Company in its 20192020 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2020.26, 2021.
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
None.

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Item 6. 
Exhibits
Exhibit

Number
DescriptionLocation
Filed herewith
Filed herewith
Filed herewith
Filed herewith
101.INSThe instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL documentFiled herewith
101.SCHXBRL Taxonomy Extension SchemaFiled herewith
101.CALXBRL Taxonomy Extension Calculation LinkbaseFiled herewith
101.DEFXBRL Taxonomy Extension Definition LinkbaseFiled herewith
101.LABXBRL Taxonomy Extension Label LinkbaseFiled herewith
101.PREXBRL Taxonomy Extension Presentation LinkbaseFiled herewith

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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 7th3rd day of August 2020. 
2021. 
/s/ Rajinder P. Singh
Rajinder P. Singh
Chairman, President and Chief Executive Officer
/s/ Leslie N. Lunak
Leslie N. Lunak
Chief Financial Officer

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