UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

Commission File Number: 001-35039

BankUnited, Inc.

(Exact name of registrant as specified in its charter)


Delaware						27-0162450
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


14817 Oak Lane	Miami Lakes	FL	33016
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (305) 569-2000

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.

Class

Trading Symbol

Name of Exchange on Which Registered

Common Stock, $0.01 Par Value

BKU

New York Stock Exchange

The number of outstanding shares of the registrant common stock, $0.01 par value, as of ~~October 31, 2022~~April 28, 2023 was ~~77,270,109.~~74,406,617.

BANKUNITED, INC.

Form 10-Q

For the Quarter Ended ~~September 30, 2022~~March 31, 2023

TABLE OF CONTENTS

GLOSSARY OF DEFINED TERMS

The following acronyms and terms may be used throughout this Form 10-Q, including the consolidated financial statements and related notes.



ACL						Allowance for credit losses
AFS						Available for sale
ALCO						Asset/Liability Committee

ALM						Asset Liability Management
AOCI						Accumulated other comprehensive income

~~ARM~~						~~Adjustable rate mortgage~~
ASC						Accounting Standards Codification
ASU						Accounting Standards Update





BFG						Bridge Funding Group, Inc.
BKU						BankUnited, Inc.
~~BOLI~~						~~Bank Owned Life Insurance~~
BankUnited						BankUnited, National Association
The Bank						BankUnited, National Association
Bridge						Bridge Funding Group, Inc.
BTFP						Bank Term Funding Program
Buyout loans						FHA and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA securitizations
~~CARES Act~~						~~Coronavirus Aid, Relief, and Economic Security Act~~

CCAR						Comprehensive Capital Analysis and Review


CECL						Current expected credit losses
CET1						Common Equity Tier 1 capital

C&I						Commercial and Industrial loans, including owner-occupied commercial real estate
CLO						Collateralized loan obligations
CMBS						Commercial mortgage-backed securities
~~CME~~						~~Chicago Mercantile Exchange~~
CMOs						Collateralized mortgage obligations
~~COVID-19~~COLI						~~Coronavirus disease of 2019~~Company Owned Life Insurance


CRE						Commercial real estate loans, including ~~multi-family;~~ non-owner occupied commercial real ~~estate;~~estate and construction and land




DSCR						Debt Service Coverage Ratio


EVE						Economic value of equity

FASB						Financial Accounting Standards Board


FDIA						Federal Deposit Insurance Act
FDIC						Federal Deposit Insurance Corporation

FHA						Federal Housing Administration
FHLB						Federal Home Loan Bank
FICO						Fair Isaac Corporation (credit score)

FRB						Federal Reserve Bank
GAAP						U.S. generally accepted accounting principles
GDP						Gross Domestic Product

GNMA						Government National Mortgage Association

HPI						Home price indices
HTM						Held to maturity

ICS						Insured Cash Sweep


ISDA						International Swaps and Derivatives Association


LGD						Loss Given Default
LIBOR						London InterBank Offered Rate
LIHTC						Low Income Housing Tax Credits
LTV						Loan-to-value


MBS						Mortgage-backed securities
MSA						Metropolitan Statistical Area


MWL						Mortgage warehouse lending
~~Non-OOCRE~~						~~Non-owner occupied commercial real estate~~
NRSRO						Nationally recognized statistical rating organization






~~OOCRE~~						~~Owner occupied commercial real estate~~
OREO						Other real estate owned


PCD						Purchased credit-deteriorated
PD						Probability of default
Pinnacle						Pinnacle Public Finance, Inc.
~~PPNR~~						~~Pre-tax, pre-provision net revenue~~
~~PPP~~						~~Small Business Administration’s Paycheck Protection Program~~




REIT						Real Estate Investment Trust





SBA						U.S. Small Business Administration

SEC						Securities and Exchange Commission

SOFR						Secured Overnight Financing Rate
S&P 500						Standard & Poor's 500 Index

TDR						Troubled-debt restructuring
Tri-State						New York, New Jersey and Connecticut
UPB						Unpaid principal balance

VA loan						Loan guaranteed by the U.S. Department of Veterans Affairs


~~WARM~~						~~Weighted-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)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Cash and due from banks:	Cash and due from banks:					Cash and due from banks:
Non-interest bearing	Non-interest bearing	$	18,380	$	19,143	Non-interest bearing	$	15,740	$	16,068
Interest bearing	Interest bearing	707,758		295,714		Interest bearing	888,258		556,579
Cash and cash equivalents	Cash and cash equivalents	726,138		314,857		Cash and cash equivalents	903,998		572,647
Investment securities (including securities recorded at fair value of $9,787,427 and $10,054,198)		9,797,427		10,064,198
Investment securities (including securities reported at fair value of $9,523,599 and $9,745,327)						Investment securities (including securities reported at fair value of $9,523,599 and $9,745,327)	9,533,599		9,755,327
Non-marketable equity securities	Non-marketable equity securities	261,784		135,859		Non-marketable equity securities	384,697		294,172

Loans	Loans	24,266,732		23,765,053		Loans	24,892,894		24,885,988
Allowance for credit losses	Allowance for credit losses	(130,671)		(126,457)		Allowance for credit losses	(158,792)		(147,946)
Loans, net	Loans, net	24,136,061		23,638,596		Loans, net	24,734,102		24,738,042
Bank owned life insurance	Bank owned life insurance	308,176		309,477		Bank owned life insurance	318,305		308,212
Operating lease equipment, net	Operating lease equipment, net	579,693		640,726		Operating lease equipment, net	526,311		539,799

Goodwill	Goodwill	77,637		77,637		Goodwill	77,637		77,637
Other assets	Other assets	707,978		634,046		Other assets	710,554		740,876
Total assets	Total assets	$	36,594,894	$	35,815,396	Total assets	$	37,189,203	$	37,026,712

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:	Liabilities:					Liabilities:
Demand deposits:	Demand deposits:					Demand deposits:
Non-interest bearing	Non-interest bearing	$	8,794,109	$	8,975,621	Non-interest bearing	$	7,366,642	$	8,037,848
Interest bearing	Interest bearing	2,341,342		3,709,493		Interest bearing	2,505,150		2,142,067
Savings and money market	Savings and money market	12,513,398		13,368,745		Savings and money market	10,601,129		13,061,341
Time	Time	3,700,226		3,384,243		Time	5,249,977		4,268,078
Total deposits	Total deposits	27,349,075		29,438,102		Total deposits	25,722,898		27,509,334
Federal funds purchased	Federal funds purchased	—		199,000		Federal funds purchased	—		190,000
FHLB advances	FHLB advances	5,295,000		1,905,000		FHLB advances	7,550,000		5,420,000
Notes and other borrowings	Notes and other borrowings	721,045		721,416		Notes and other borrowings	720,787		720,923
Other liabilities	Other liabilities	748,789		514,117		Other liabilities	714,124		750,474
Total liabilities	Total liabilities	34,113,909		32,777,635		Total liabilities	34,707,809		34,590,731

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 77,599,408 and 85,647,986 shares issued and outstanding		776		856
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 74,423,365 and 75,674,587 shares issued and outstanding						Common stock, par value $0.01 per share, 400,000,000 shares authorized; 74,423,365 and 75,674,587 shares issued and outstanding	744		757
Paid-in capital	Paid-in capital	381,411		707,503		Paid-in capital	269,353		321,729
Retained earnings	Retained earnings	2,506,539		2,345,342		Retained earnings	2,585,981		2,551,400
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(407,741)		(15,940)		Accumulated other comprehensive loss	(374,684)		(437,905)
Total stockholders' equity	Total stockholders' equity	2,480,985		3,037,761		Total stockholders' equity	2,481,394		2,435,981
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	36,594,894	$	35,815,396	Total liabilities and stockholders' equity	$	37,189,203	$	37,026,712

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

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Interest income:	Interest income:										Interest income:
Loans	Loans	$	244,884	$	194,689	$	645,669	$	602,544		Loans	$	308,795	$	191,562
Investment securities	Investment securities	77,109		38,243		174,928		114,418			Investment securities	118,758		43,048
Other	Other	4,031		1,413		8,364		4,613			Other	12,863		1,354
Total interest income	Total interest income	326,024		234,345		828,961		721,575			Total interest income	440,416		235,964
Interest expense:	Interest expense:										Interest expense:
Deposits	Deposits	53,206		14,273		85,569		53,965			Deposits	133,630		11,857
Borrowings	Borrowings	36,982		24,950		73,498		77,937			Borrowings	78,912		15,465
Total interest expense	Total interest expense	90,188		39,223		159,067		131,902			Total interest expense	212,542		27,322
Net interest income before provision for credit losses	Net interest income before provision for credit losses	235,836		195,122		669,894		589,673			Net interest income before provision for credit losses	227,874		208,642
Provision for (recovery of) credit losses		3,720		(11,842)		35,546		(67,365)
Provision for credit losses											Provision for credit losses	19,788		7,830
Net interest income after provision for credit losses	Net interest income after provision for credit losses	232,116		206,964		634,348		657,038			Net interest income after provision for credit losses	208,086		200,812
Non-interest income:	Non-interest income:										Non-interest income:
Deposit service charges and fees	Deposit service charges and fees	6,064		5,553		17,920		15,870			Deposit service charges and fees	5,545		5,960

Gain (loss) on investment securities, net		135		(664)		(16,125)		5,856
Loss on investment securities, net											Loss on investment securities, net	(12,549)		(7,868)
Lease financing	Lease financing	13,180		13,212		39,958		39,222			Lease financing	13,109		13,415
Other non-interest income	Other non-interest income	3,693		7,377		9,070		27,583			Other non-interest income	10,430		2,794
Total non-interest income	Total non-interest income	23,072		25,478		50,823		88,531			Total non-interest income	16,535		14,301
Non-interest expense:	Non-interest expense:										Non-interest expense:
Employee compensation and benefits	Employee compensation and benefits	66,097		57,224		195,646		172,971			Employee compensation and benefits	71,051		67,088
Occupancy and equipment	Occupancy and equipment	11,719		11,760		34,630		35,127			Occupancy and equipment	10,802		11,512
Deposit insurance expense	Deposit insurance expense	4,398		3,552		11,794		15,224			Deposit insurance expense	7,907		3,403
Professional fees	Professional fees	3,184		2,312		8,702		6,363			Professional fees	2,918		2,262
Technology	Technology	19,813		16,687		54,715		49,279			Technology	21,726		17,004

Depreciation of operating lease equipment		12,646		12,944		37,841		37,995
Depreciation and impairment of operating lease equipment											Depreciation and impairment of operating lease equipment	11,521		12,610

Other non-interest expense	Other non-interest expense	20,248		13,563		48,503		42,756			Other non-interest expense	26,855		12,445
Total non-interest expense	Total non-interest expense	138,105		118,042		391,831		359,715			Total non-interest expense	152,780		126,324
Income before income taxes	Income before income taxes	117,083		114,400		293,340		385,854			Income before income taxes	71,841		88,789
Provision for income taxes	Provision for income taxes	29,233		27,459		72,576		96,125			Provision for income taxes	18,959		21,639
Net income	Net income	$	87,850	$	86,941	$	220,764	$	289,729		Net income	$	52,882	$	67,150
Earnings per common share, basic	Earnings per common share, basic	$	1.13	$	0.94	$	2.73	$	3.12		Earnings per common share, basic	$	0.71	$	0.79
Earnings per common share, diluted	Earnings per common share, diluted	$	1.12	$	0.94	$	2.71	$	3.12		Earnings per common share, diluted	$	0.70	$	0.79

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

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED

(In thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,
@										@	Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022

Net income	Net income	$	87,850	$	86,941	$	220,764	$	289,729	Net income	$	52,882	$	67,150
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on investment securities available for sale:	Unrealized gains (losses) on investment securities available for sale:									Unrealized gains (losses) on investment securities available for sale:
Net unrealized holding gain (loss) arising during the period	Net unrealized holding gain (loss) arising during the period	(117,300)		(16,205)		(470,249)		(24,764)		Net unrealized holding gain (loss) arising during the period	74,936		(174,980)
Reclassification adjustment for net securities gains realized in income	Reclassification adjustment for net securities gains realized in income	(258)		(606)		(2,906)		(5,679)		Reclassification adjustment for net securities gains realized in income	(556)		(1,978)
Net change in unrealized gains (losses) on securities available for sale	Net change in unrealized gains (losses) on securities available for sale	(117,558)		(16,811)		(473,155)		(30,443)		Net change in unrealized gains (losses) on securities available for sale	74,380		(176,958)
Unrealized gains (losses) on derivative instruments:	Unrealized gains (losses) on derivative instruments:									Unrealized gains (losses) on derivative instruments:
Net unrealized holding gain (loss) arising during the period		30,495		1,263		74,540		16,930
Net unrealized holding gains (losses) arising during the period										Net unrealized holding gains (losses) arising during the period	(2,165)		31,179
Reclassification adjustment for net (gains) losses realized in income	Reclassification adjustment for net (gains) losses realized in income	(283)		10,359		6,814		32,603		Reclassification adjustment for net (gains) losses realized in income	(8,994)		4,020

Net change in unrealized gains (losses) on derivative instruments	Net change in unrealized gains (losses) on derivative instruments	30,212		11,622		81,354		49,533		Net change in unrealized gains (losses) on derivative instruments	(11,159)		35,199
Other comprehensive income (loss)	Other comprehensive income (loss)	(87,346)		(5,189)		(391,801)		19,090		Other comprehensive income (loss)	63,221		(141,759)
Comprehensive income (loss)	Comprehensive income (loss)	$	504	$	81,752	$	(171,037)	$	308,819	Comprehensive income (loss)	$	116,103	$	(74,609)

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

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)


		Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021				2023		2022
Cash flows from operating activities:	Cash flows from operating activities:						Cash flows from operating activities:
Net income	Net income	$	220,764	$	289,729		Net income	$	52,882	$	67,150
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion, net	Amortization and accretion, net	(5,444)		(16,294)			Amortization and accretion, net	(2,078)		(3,382)
Provision for (recovery of) credit losses		35,546		(67,365)
Provision for credit losses							Provision for credit losses	19,788		7,830

(Gain) loss on investment securities, net		16,125		(5,856)
Loss on investment securities, net							Loss on investment securities, net	12,549		7,868
Equity based compensation	Equity based compensation	18,178		17,510			Equity based compensation	5,280		4,112
Depreciation and amortization	Depreciation and amortization	57,737		56,122			Depreciation and amortization	19,430		18,947
Deferred income taxes	Deferred income taxes	13,647		7,835			Deferred income taxes	9,391		12,924

Proceeds from sale of loans held for sale		589,681		651,840
Proceeds from sale of loans held for sale, net							Proceeds from sale of loans held for sale, net	103,679		248,843

Other:							Other:
(Increase) decrease in other assets	(Increase) decrease in other assets	259,044		(128,937)			(Increase) decrease in other assets	(53,771)		57,729
Increase in other liabilities		111,863		148,437
(Decrease) increase in other liabilities							(Decrease) increase in other liabilities	(25,782)		35,269
Net cash provided by operating activities	Net cash provided by operating activities	1,317,141		953,021			Net cash provided by operating activities	141,368		457,290

Cash flows from investing activities:	Cash flows from investing activities:						Cash flows from investing activities:

Purchases of investment securities	Purchases of investment securities	(2,713,761)		(4,378,200)			Purchases of investment securities	(74,185)		(1,698,615)
Proceeds from repayments and calls of investment securities	Proceeds from repayments and calls of investment securities	1,514,500		1,980,551			Proceeds from repayments and calls of investment securities	251,512		559,785
Proceeds from sale of investment securities	Proceeds from sale of investment securities	798,205		1,348,346			Proceeds from sale of investment securities	131,879		482,307
Purchases of non-marketable equity securities	Purchases of non-marketable equity securities	(336,375)		(16,199)			Purchases of non-marketable equity securities	(263,500)		(106,875)
Proceeds from redemption of non-marketable equity securities	Proceeds from redemption of non-marketable equity securities	210,450		56,480			Proceeds from redemption of non-marketable equity securities	172,975		52,200
Purchases of loans	Purchases of loans	(2,000,568)		(3,681,706)			Purchases of loans	(186,792)		(862,163)
Loan originations and repayments, net	Loan originations and repayments, net	872,339		3,907,957			Loan originations and repayments, net	73,367		1,000,544
Proceeds from sale of loans, net		21,327		210,525

(Acquisition) disposition of operating lease equipment, net		23,256		(44,179)

Other investing activities	Other investing activities	(34,639)		(13,270)			Other investing activities	(9,032)		(6,805)
Net cash used in investing activities		(1,645,266)		(629,695)
Net cash provided by (used in) investing activities							Net cash provided by (used in) investing activities	96,224		(579,622)

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

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)


		Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021				2023		2022
Cash flows from financing activities:	Cash flows from financing activities:						Cash flows from financing activities:
Net increase (decrease) in deposits		(2,089,027)		620,457
Net increase (decrease) in federal funds purchased		(199,000)		19,000
Net decrease in deposits							Net decrease in deposits	(1,786,436)		(896,827)
Net decrease in federal funds purchased							Net decrease in federal funds purchased	(190,000)		—
Additions to FHLB borrowings	Additions to FHLB borrowings	4,075,000		1,231,001			Additions to FHLB borrowings	2,455,000		1,810,000
Repayments of FHLB borrowings	Repayments of FHLB borrowings	(685,000)		(1,921,000)			Repayments of FHLB borrowings	(325,000)		(320,000)

Dividends paid	Dividends paid	(60,082)		(65,114)			Dividends paid	(19,346)		(19,876)

Repurchase of common stock	Repurchase of common stock	(336,533)		(136,686)			Repurchase of common stock	(55,022)		(82,103)
Other financing activities	Other financing activities	34,048		38,322			Other financing activities	14,563		13,773
Net cash provided by (used in) financing activities		739,406		(214,020)
Net cash provided by financing activities							Net cash provided by financing activities	93,759		504,967
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	411,281		109,306			Net increase in cash and cash equivalents	331,351		382,635
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	314,857		397,716			Cash and cash equivalents, beginning of period	572,647		314,857
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	726,138	$	507,022		Cash and cash equivalents, end of period	$	903,998	$	697,492

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:						Supplemental disclosure of cash flow information:
Interest paid	Interest paid	$	138,143	$	125,834		Interest paid	$	184,657	$	17,616
Income taxes (refunded) paid, net		$	(117,145)	$	247,798
Income taxes paid (refunded), net							Income taxes paid (refunded), net	$	8,947	$	(13,092)

Supplemental schedule of non-cash investing and financing activities:	Supplemental schedule of non-cash investing and financing activities:						Supplemental schedule of non-cash investing and financing activities:

Transfers from loans to loans held for sale	Transfers from loans to loans held for sale	$	613,243	$	832,903		Transfers from loans to loans held for sale	$	103,398	$	254,826

Dividends declared, not paid	Dividends declared, not paid	$	19,361	$	20,676		Dividends declared, not paid	$	19,637	$	20,966
Unsettled securities trades, net		$	—	$	154,285

Obligations incurred in acquisition of affordable housing limited partnerships		$	65,000	$	—

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

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED

(In thousands, except share data)

Common
Shares
Outstanding Common
Stock Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders’
Equity
Balance at June 30, 2022 77,944,216 $ 779 $ 387,583 $ 2,438,050 $ (320,395) $ 2,506,017
Comprehensive income — — — 87,850 (87,346) 504
Dividends ($0.25 per common share) — — — (19,361) — (19,361)
Equity based compensation 4,300 — 4,647 — — 4,647
Forfeiture of unvested shares and shares surrendered for tax withholding obligations (34,999) — (30) — — (30)
Repurchase of common stock (314,109) (3) (10,789) — — (10,792)
Balance at September 30, 2022 77,599,408 $ 776 $ 381,411 $ 2,506,539 $ (407,741) $ 2,480,985
Balance at June 30, 2021 93,238,553 $ 932 $ 1,011,786 $ 2,173,698 $ (24,873) $ 3,161,543
Comprehensive income — — — 86,941 (5,189) 81,752
Dividends ($0.23 per common share) — — — (20,676) — (20,676)
Equity based compensation 9,756 1 3,554 — — 3,555
Forfeiture of unvested shares and shares surrendered for tax withholding obligations (13,007) (1) (76) — — (77)
Repurchase of common stock (3,185,976) (32) (129,391) — — (129,423)
Balance at September 30, 2021 90,049,326 $ 900 $ 885,873 $ 2,239,963 $ (30,062) $ 3,096,674


		Common Shares Outstanding	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity			Common Shares Outstanding	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity

Balance at December 31, 2021		85,647,986	$	856	$	707,503	$	2,345,342	$	(15,940)	$	3,037,761
Comprehensive loss		—	—		—		220,764		(391,801)		(171,037)
Dividends ($0.75 per common share)		—	—		—		(59,567)		—		(59,567)
Balance at December 31, 2022													Balance at December 31, 2022	75,674,587	$	757	$	321,729	$	2,551,400	$	(437,905)	$	2,435,981
Impact of adoption of ASU 2022-02													Impact of adoption of ASU 2022-02	—	—		—		1,336		—		1,336
Balance at January 1, 2023													Balance at January 1, 2023	75,674,587	757		321,729		2,552,736		(437,905)		2,437,317
Comprehensive income													Comprehensive income	—	—		—		52,882		63,221		116,103
Dividends ($0.27 per common share)													Dividends ($0.27 per common share)	—	—		—		(19,637)		—		(19,637)
Equity based compensation	Equity based compensation	496,361	5		15,592		—		—		15,597		Equity based compensation	596,979	5		9,584		—		—		9,589
Forfeiture of unvested shares and shares surrendered for tax withholding obligations	Forfeiture of unvested shares and shares surrendered for tax withholding obligations	(199,339)	(2)		(5,234)		—		—		(5,236)		Forfeiture of unvested shares and shares surrendered for tax withholding obligations	(213,956)	(2)		(6,954)		—		—		(6,956)

Repurchase of common stock	Repurchase of common stock	(8,345,600)	(83)		(336,450)		—		—		(336,533)		Repurchase of common stock	(1,634,245)	(16)		(55,006)		—		—		(55,022)
Balance at September 30, 2022		77,599,408	$	776	$	381,411	$	2,506,539	$	(407,741)	$	2,480,985
Balance at March 31, 2023													Balance at March 31, 2023	74,423,365	$	744	$	269,353	$	2,585,981	$	(374,684)	$	2,481,394

Balance at December 31, 2020		93,067,500	$	931	$	1,017,518	$	2,013,715	$	(49,152)	$	2,983,012
Comprehensive income		—	—		—		289,729		19,090		308,819
Dividends ($0.69 per common share)		—	—		—		(63,481)		—		(63,481)
Balance at December 31, 2021													Balance at December 31, 2021	85,647,986	$	856	$	707,503	$	2,345,342	$	(15,940)	$	3,037,761
Comprehensive loss													Comprehensive loss	—	—		—		67,150		(141,759)		(74,609)
Dividends ($0.25 per common share)													Dividends ($0.25 per common share)	—	—		—		(20,966)		—		(20,966)
Equity based compensation	Equity based compensation	568,936	6		10,772		—		—		10,778		Equity based compensation	468,050	5		6,326		—		—		6,331
Forfeiture of unvested shares and shares surrendered for tax withholding obligations	Forfeiture of unvested shares and shares surrendered for tax withholding obligations	(197,639)	(3)		(5,790)		—		—		(5,793)		Forfeiture of unvested shares and shares surrendered for tax withholding obligations	(132,112)	(1)		(5,181)		—		—		(5,182)
Exercise of stock options		1,569	—		25		—		—		25

Repurchase of common stock	Repurchase of common stock	(3,391,040)	(34)		(136,652)		—		—		(136,686)		Repurchase of common stock	(1,931,903)	(19)		(82,084)		—		—		(82,103)
Balance at September 30, 2021		90,049,326	$	900	$	885,873	$	2,239,963	$	(30,062)	$	3,096,674
Balance at March 31, 2022													Balance at March 31, 2022	84,052,021	$	841	$	626,564	$	2,391,526	$	(157,699)	$	2,861,232

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

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

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 58 banking centers ~~located~~ in 12 Florida, ~~counties, 4 banking centers located in~~ the New York metropolitan area and ~~1 banking center located in~~ Dallas, Texas at ~~September 30, 2022.~~March 31, 2023. The Bank also offers certain commercial lending and deposit products through national platforms and regional wholesale banking offices.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, these 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, ~~2021~~2022 filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results that may be expected in future periods.

The Company has a single operating segment and thus a single reportable segment. While management monitors the revenue streams of its various business units, the business units serve a similar base of primarily commercial clients, providing a similar range of products and services, managed through similar processes and platforms. The Company’s chief operating decision maker makes company-wide resource allocation decisions and assessments of performance based on a collective assessment of the Company’s operations.

Accounting Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and disclosures of contingent assets and liabilities. Actual results could differ significantly from these estimates.

The most significant estimate impacting the Company's consolidated financial statements is the ACL.

New Accounting Pronouncements Adopted During the ~~Nine~~Three Months Ended ~~September 30, 2022~~March 31, 2023

~~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. The Company adopted this ASU on January 1, 2022, with no material impact on the Company's consolidated financial position, results of operations, and cash flows.

~~ASU No. 2022-01,~~ ~~Fair Value Hedging—Portfolio Layer Method(Topic 815)~~. This ASU expands the portfolio layer method of hedge accounting prescribed in ASU No. 2017-12 to allow multiple hedged layers of a single closed portfolio and to include portfolios of both prepayable and non-prepayable financial assets. This scope expansion is consistent with the FASB’s efforts to simplify hedge accounting and allows entities to apply the same accounting method to similar hedging strategies. The ASU also specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on accounting and disclosure of hedge basis adjustments and specifies how hedge basis adjustments should be considered in determining credit losses for assets in the designated closed portfolio. This ASU is effective for public business entities for interim and annual periods in fiscal years beginning after December 15, 2022. The Company adopted this ASU upon its release in March 2022 with no material impact on the Company's consolidated financial position, results of operations, and cash flows.

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

~~Accounting Pronouncements Not Yet Adopted~~

ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326). This ASU ~~eliminates~~eliminated the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors. The ASU ~~enhances~~enhanced disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty, ~~updates~~updated certain requirements related to accounting for credit losses under ASC 326 and ~~requires~~required disclosure of current-period gross ~~write offs~~charge-offs of financing receivables by year of origination. The Company adopted this ASU in the first quarter of 2023, prospectively, except with respect to the recognition and measurement of TDRs, for which the modified retrospective transition method was applied. The Company recorded a reduction to the ACL of $1.8 million and a cumulative-effect adjustment, net of tax, to retained earnings of $1.3 million on January 1, 2023.

Accounting Pronouncements Not Yet Adopted

ASU No. 2023-02—Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures using the Proportional Amortization Method (A Consensus of the Emerging Issues Task Force). This ASU was issued to expand use of the proportional amortization method of accounting to equity investments in tax credit programs beyond those in LIHTC programs. The ASU allows entities to elect the proportional amortization method, on a tax-credit-program-by-tax-credit-program basis, for all equity investments in tax credit programs meeting the eligibility criteria established. This ASU is effective for the Company for interim and annual periods in fiscal years beginning after December 15, ~~2022. The Company is currently completing its evaluation~~2023. Currently, all of the ~~impact~~Company's equity investments in tax credit programs are in LIHTC programs accounted for using the proportional amortization method.

Table of adoption of this ASU, however, the impact of adoption on the Company's consolidated financial position, results of operations, and cash flows is not expected to be material. Adoption will lead to additional and revised disclosures in the Company's financial statements.Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Note 2 Earnings Per Common Share

The computation of basic and diluted earnings per common share is presented below for the periods indicated (in thousands, except share and per share data):


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
c	c	2022		2021		2022		2021			c	2023		2022
Basic earnings per common share:	Basic earnings per common share:										Basic earnings per common share:
Numerator:	Numerator:										Numerator:
Net income	Net income	$	87,850	$	86,941	$	220,764	$	289,729		Net income	$	52,882	$	67,150
Distributed and undistributed earnings allocated to participating securities	Distributed and undistributed earnings allocated to participating securities	(1,343)		(1,112)		(3,258)		(3,701)			Distributed and undistributed earnings allocated to participating securities	(798)		(929)
Income allocated to common stockholders for basic earnings per common share	Income allocated to common stockholders for basic earnings per common share	$	86,507	$	85,829	$	217,506	$	286,028		Income allocated to common stockholders for basic earnings per common share	$	52,084	$	66,221
Denominator:	Denominator:										Denominator:
Weighted average common shares outstanding	Weighted average common shares outstanding	77,912,320		92,053,714		81,039,561		92,787,824			Weighted average common shares outstanding	74,755,002		84,983,873
Less average unvested stock awards	Less average unvested stock awards	(1,221,971)		(1,208,304)		(1,230,396)		(1,218,416)			Less average unvested stock awards	(1,193,881)		(1,211,807)
Weighted average shares for basic earnings per common share	Weighted average shares for basic earnings per common share	76,690,349		90,845,410		79,809,165		91,569,408			Weighted average shares for basic earnings per common share	73,561,121		83,772,066
Basic earnings per common share	Basic earnings per common share	$	1.13	$	0.94	$	2.73	$	3.12		Basic earnings per common share	$	0.71	$	0.79
Diluted earnings per common share:	Diluted earnings per common share:										Diluted earnings per common share:
Numerator:	Numerator:										Numerator:
Income allocated to common stockholders for basic earnings per common share	Income allocated to common stockholders for basic earnings per common share	$	86,507	$	85,829	$	217,506	$	286,028		Income allocated to common stockholders for basic earnings per common share	$	52,084	$	66,221
Adjustment for earnings reallocated from participating securities	Adjustment for earnings reallocated from participating securities	6		2		9		5			Adjustment for earnings reallocated from participating securities	3		1
Income used in calculating diluted earnings per common share	Income used in calculating diluted earnings per common share	$	86,513	$	85,831	$	217,515	$	286,033		Income used in calculating diluted earnings per common share	$	52,087	$	66,222
Denominator:	Denominator:										Denominator:
Weighted average shares for basic earnings per common share	Weighted average shares for basic earnings per common share	76,690,349		90,845,410		79,809,165		91,569,408			Weighted average shares for basic earnings per common share	73,561,121		83,772,066
Dilutive effect of certain share-based awards	Dilutive effect of certain share-based awards	433,472		182,448		308,608		152,675			Dilutive effect of certain share-based awards	447,581		137,704
Weighted average shares for diluted earnings per common share	Weighted average shares for diluted earnings per common share	77,123,821		91,027,858		80,117,773		91,722,083			Weighted average shares for diluted earnings per common share	74,008,702		83,909,770
Diluted earnings per common share	Diluted earnings per common share	$	1.12	$	0.94	$	2.71	$	3.12		Diluted earnings per common share	$	0.70	$	0.79

Potentially dilutive unvested shares totaling ~~1,213,029~~1,190,511 and ~~1,205,136~~1,267,676 were outstanding at ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, but excluded from the calculation of diluted earnings per common share because their inclusion would have been anti-dilutive.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

Note 3 Investment Securities

Investment securities include investment securities available for sale, marketable equity securities, and investment securities held to maturity. The investment securities portfolio consisted of the following at the dates indicated (in thousands):


		September 30, 2022									March 31, 2023
		Amortized Cost		Gross Unrealized				Carrying Value (1)			Amortized Cost		Gross Unrealized				Carrying Value (1)
				Gains		Losses							Gains		Losses
Investment securities available for sale:	Investment securities available for sale:									Investment securities available for sale:
U.S. Treasury securities	U.S. Treasury securities	$	109,441	$	—	$	(13,509)	$	95,932	U.S. Treasury securities	$	129,140	$	290	$	(11,047)	$	118,383
U.S. Government agency and sponsored enterprise residential MBS	U.S. Government agency and sponsored enterprise residential MBS	2,049,680		432		(48,813)		2,001,299		U.S. Government agency and sponsored enterprise residential MBS	2,028,070		1,528		(49,065)		1,980,533
U.S. Government agency and sponsored enterprise commercial MBS	U.S. Government agency and sponsored enterprise commercial MBS	612,022		57		(76,813)		535,266		U.S. Government agency and sponsored enterprise commercial MBS	584,464		140		(66,222)		518,382

Private label residential MBS and CMOs	Private label residential MBS and CMOs	2,893,779		562		(306,755)		2,587,586		Private label residential MBS and CMOs	2,825,107		807		(300,432)		2,525,482
Private label commercial MBS	Private label commercial MBS	2,693,231		124		(109,467)		2,583,888		Private label commercial MBS	2,533,319		887		(99,387)		2,434,819
Single family real estate-backed securities	Single family real estate-backed securities	505,288		14		(27,247)		478,055		Single family real estate-backed securities	468,225		—		(19,724)		448,501
Collateralized loan obligations	Collateralized loan obligations	1,094,064		208		(34,749)		1,059,523		Collateralized loan obligations	1,126,532		416		(20,870)		1,106,078
Non-mortgage asset-backed securities	Non-mortgage asset-backed securities	106,672		1		(6,550)		100,123		Non-mortgage asset-backed securities	98,812		—		(4,713)		94,099
State and municipal obligations	State and municipal obligations	122,966		1		(9,443)		113,524		State and municipal obligations	106,897		926		(3,873)		103,950
SBA securities	SBA securities	145,216		545		(4,135)		141,626		SBA securities	127,959		310		(3,666)		124,603

		10,332,359		$	1,944	$	(637,481)	9,696,822			10,028,525		$	5,304	$	(578,999)	9,454,830
Investment securities held to maturity	Investment securities held to maturity	10,000						10,000		Investment securities held to maturity	10,000						10,000
		$	10,342,359					9,706,822			$	10,038,525					9,464,830
Marketable equity securities	Marketable equity securities							90,605		Marketable equity securities							68,769
								$	9,797,427								$	9,533,599

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023


		December 31, 2021									December 31, 2022
		Amortized Cost		Gross Unrealized				Carrying Value (1)			Amortized Cost		Gross Unrealized				Carrying Value (1)
				Gains		Losses							Gains		Losses
Investment securities available for sale:	Investment securities available for sale:									Investment securities available for sale:
U.S. Treasury securities	U.S. Treasury securities	$	114,385	$	173	$	(2,898)	$	111,660	U.S. Treasury securities	$	148,956	$	63	$	(13,178)	$	135,841
U.S. Government agency and sponsored enterprise residential MBS	U.S. Government agency and sponsored enterprise residential MBS	2,093,283		12,934		(8,421)		2,097,796		U.S. Government agency and sponsored enterprise residential MBS	2,036,693		1,334		(54,859)		1,983,168
U.S. Government agency and sponsored enterprise commercial MBS	U.S. Government agency and sponsored enterprise commercial MBS	861,925		5,287		(10,313)		856,899		U.S. Government agency and sponsored enterprise commercial MBS	600,517		—		(75,423)		525,094

Private label residential MBS and CMOs	Private label residential MBS and CMOs	2,160,136		3,575		(14,291)		2,149,420		Private label residential MBS and CMOs	2,864,589		54		(333,980)		2,530,663
Private label commercial MBS	Private label commercial MBS	2,604,690		7,843		(8,523)		2,604,010		Private label commercial MBS	2,645,168		176		(120,990)		2,524,354
Single family real estate-backed securities	Single family real estate-backed securities	474,845		5,031		(2,908)		476,968		Single family real estate-backed securities	502,194		—		(31,753)		470,441
Collateralized loan obligations	Collateralized loan obligations	1,079,217		598		(1,529)		1,078,286		Collateralized loan obligations	1,166,838		151		(30,526)		1,136,463
Non-mortgage asset-backed securities	Non-mortgage asset-backed securities	151,091		1,419		—		152,510		Non-mortgage asset-backed securities	102,194		—		(6,218)		95,976
State and municipal obligations	State and municipal obligations	205,718		16,559		—		222,277		State and municipal obligations	122,181		695		(6,215)		116,661
SBA securities	SBA securities	184,296		2,027		(2,728)		183,595		SBA securities	139,320		381		(3,919)		135,782
		9,929,586		$	55,446	$	(51,611)	9,933,421			10,328,650		$	2,854	$	(677,061)	9,654,443
Investment securities held to maturity	Investment securities held to maturity	10,000						10,000		Investment securities held to maturity	10,000						10,000
		$	9,939,586					9,943,421			$	10,338,650					9,664,443
Marketable equity securities	Marketable equity securities							120,777		Marketable equity securities							90,884
								$	10,064,198								$	9,755,327

(1)At fair value except for securities held to maturity.

Investment securities held to maturity at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 consisted of one State of Israel bond maturing in 2024. Accrued interest receivable on investments totaled ~~$26~~$36 million and ~~$16~~$34 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, and is included in other assets in the accompanying consolidated balance sheets.

At ~~September 30, 2022,~~March 31, 2023, contractual maturities of investment securities available for sale, adjusted for anticipated prepayments when applicable, were as follows (in thousands):


		Amortized Cost		Fair Value			Amortized Cost		Fair Value
Due in one year or less	Due in one year or less	$	1,500,564	$	1,423,985	Due in one year or less	$	1,399,602	$	1,345,012
Due after one year through five years	Due after one year through five years	6,082,491		5,801,161		Due after one year through five years	5,563,191		5,343,463
Due after five years through ten years	Due after five years through ten years	1,911,964		1,725,139		Due after five years through ten years	1,811,023		1,648,170
Due after ten years	Due after ten years	837,340		746,537		Due after ten years	1,254,709		1,118,185
		$	10,332,359	$	9,696,822		$	10,028,525	$	9,454,830

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 ~~$3.9~~$8.4 billion and ~~$4.0~~$4.1 billion at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

The following table provides information about gains and losses on investment securities for the periods indicated (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Proceeds from sale of investment securities AFS		$	87,436	$	548,290	$	798,205	$	1,348,346
											Three Months Ended March 31,
											2023		2022

Gross realized gains on investment securities AFS	Gross realized gains on investment securities AFS	$	352	$	821	$	4,058	$	7,683	Gross realized gains on investment securities AFS	$	772	$	2,750

Gross realized losses on investment securities AFS	Gross realized losses on investment securities AFS	(3)		(6)		(131)		(60)		Gross realized losses on investment securities AFS	(20)		(77)

Net realized gain	Net realized gain	349		815		3,927		7,623		Net realized gain	752		2,673

Net unrealized losses on marketable equity securities recognized in earnings		(214)		(1,479)		(20,052)		(1,767)

Gain (loss) on investment securities, net		$	135	$	(664)	$	(16,125)	$	5,856
Net losses on marketable equity securities recognized in earnings										Net losses on marketable equity securities recognized in earnings	(13,301)		(10,541)

Loss on investment securities, net										Loss on investment securities, net	$	(12,549)	$	(7,868)

The following tables present the aggregate fair value and the aggregate amount by which amortized cost exceeded fair value for investment securities available for sale in unrealized loss positions aggregated by investment category and length of time that individual securities had been in continuous unrealized loss positions at the dates indicated (in thousands):


		September 30, 2022													March 31, 2023

		Less than 12 Months				12 Months or Greater				Total					Less than 12 Months				12 Months or Greater				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities	$	9,559	$	(480)	$	86,373	$	(13,029)	$	95,932	$	(13,509)	U.S. Treasury securities	$	—	$	—	$	98,433	$	(11,047)	$	98,433	$	(11,047)
U.S. Government agency and sponsored enterprise residential MBS	U.S. Government agency and sponsored enterprise residential MBS	1,351,890		(23,657)		515,107		(25,156)		1,866,997		(48,813)		U.S. Government agency and sponsored enterprise residential MBS	450,166		(4,814)		1,426,663		(44,251)		1,876,829		(49,065)
U.S. Government agency and sponsored enterprise commercial MBS	U.S. Government agency and sponsored enterprise commercial MBS	321,279		(19,599)		193,727		(57,214)		515,006		(76,813)		U.S. Government agency and sponsored enterprise commercial MBS	85,834		(2,507)		418,940		(63,715)		504,774		(66,222)

Private label residential MBS and CMOs	Private label residential MBS and CMOs	1,530,765		(134,382)		1,004,759		(172,373)		2,535,524		(306,755)		Private label residential MBS and CMOs	132,246		(4,089)		2,283,623		(296,343)		2,415,869		(300,432)
Private label commercial MBS	Private label commercial MBS	1,831,435		(61,419)		657,575		(48,048)		2,489,010		(109,467)		Private label commercial MBS	292,200		(5,388)		1,967,412		(93,999)		2,259,612		(99,387)
Single family real estate-backed securities	Single family real estate-backed securities	339,472		(18,424)		80,875		(8,823)		420,347		(27,247)		Single family real estate-backed securities	69,334		(117)		379,167		(19,607)		448,501		(19,724)
Collateralized loan obligations	Collateralized loan obligations	706,698		(26,217)		314,073		(8,532)		1,020,771		(34,749)		Collateralized loan obligations	191,045		(1,455)		862,512		(19,415)		1,053,557		(20,870)
Non-mortgage asset-backed securities	Non-mortgage asset-backed securities	99,227		(6,550)		—		—		99,227		(6,550)		Non-mortgage asset-backed securities	8,184		(54)		85,915		(4,659)		94,099		(4,713)
State and municipal obligations	State and municipal obligations	87,329		(9,443)		—		—		87,329		(9,443)		State and municipal obligations	6,352		(74)		27,842		(3,799)		34,194		(3,873)
SBA securities	SBA securities	37,304		(328)		78,622		(3,807)		115,926		(4,135)		SBA securities	41,923		(567)		66,337		(3,099)		108,260		(3,666)

		$	6,314,958	$	(300,499)	$	2,931,111	$	(336,982)	$	9,246,069	$	(637,481)		$	1,277,284	$	(19,065)	$	7,616,844	$	(559,934)	$	8,894,128	$	(578,999)

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023


		December 31, 2021													December 31, 2022
		Less than 12 Months				12 Months or Greater				Total					Less than 12 Months				12 Months or Greater				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities	$	49,328	$	(591)	$	47,102	$	(2,307)	$	96,430	$	(2,898)	U.S. Treasury securities	$	29,198	$	(495)	$	86,744	$	(12,683)	$	115,942	$	(13,178)
U.S. Government agency and sponsored enterprise residential MBS	U.S. Government agency and sponsored enterprise residential MBS	436,744		(4,549)		401,022		(3,872)		837,766		(8,421)		U.S. Government agency and sponsored enterprise residential MBS	1,243,286		(26,789)		672,322		(28,070)		1,915,608		(54,859)
U.S. Government agency and sponsored enterprise commercial MBS	U.S. Government agency and sponsored enterprise commercial MBS	247,323		(4,084)		163,380		(6,229)		410,703		(10,313)		U.S. Government agency and sponsored enterprise commercial MBS	236,102		(5,736)		288,992		(69,687)		525,094		(75,423)

Private label residential MBS and CMOs	Private label residential MBS and CMOs	1,552,946		(13,933)		23,355		(358)		1,576,301		(14,291)		Private label residential MBS and CMOs	1,103,578		(93,480)		1,413,642		(240,500)		2,517,220		(333,980)
Private label commercial MBS	Private label commercial MBS	1,338,288		(6,085)		171,490		(2,438)		1,509,778		(8,523)		Private label commercial MBS	1,191,969		(39,729)		1,223,223		(81,261)		2,415,192		(120,990)
Single family real estate-backed securities	Single family real estate-backed securities	154,552		(2,908)		—		—		154,552		(2,908)		Single family real estate-backed securities	391,421		(22,293)		79,020		(9,460)		470,441		(31,753)
Collateralized loan obligations	Collateralized loan obligations	318,555		(445)		319,192		(1,084)		637,747		(1,529)		Collateralized loan obligations	596,803		(14,020)		494,945		(16,506)		1,091,748		(30,526)

Non-mortgage asset-backed securities														Non-mortgage asset-backed securities	95,976		(6,218)		—		—		95,976		(6,218)
State and municipal obligations														State and municipal obligations	67,444		(6,154)		1,114		(61)		68,558		(6,215)
SBA securities	SBA securities	496		—		99,599		(2,728)		100,095		(2,728)		SBA securities	42,900		(553)		74,291		(3,366)		117,191		(3,919)

		$	4,098,232	$	(32,595)	$	1,225,140	$	(19,016)	$	5,323,372	$	(51,611)		$	4,998,677	$	(215,467)	$	4,334,293	$	(461,594)	$	9,332,970	$	(677,061)

The Company monitors its investment securities available for sale for credit loss impairment on an individual security basis. No securities were determined to be credit loss impaired during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. At ~~September 30, 2022,~~March 31, 2023, the Company did not have an intent to sell securities that were in unrealized loss positions and it was not more likely than not that the Company would be required to sell these securities before recovery of the amortized cost basis, which may be at maturity. In making this determination, the Company considered its current and projected liquidity position, its investment policy as to permissible holdings and concentration limits, regulatory requirements and other relevant factors. While recent events impacting the banking sector have impacted the liquidity profile of many banks, including BankUnited, the substantial majority of our investment securities are pledgeable at either the FHLB or FRB. We have not sold, and do not anticipate the need to sell, securities in unrealized loss positions to generate liquidity.

At ~~September 30, 2022, 579~~March 31, 2023, 569 securities available for sale were in unrealized loss positions. The amount of impairment related to 96102 of these securities was considered insignificant both individually and in the aggregate, totaling approximately $0.9 million and no further analysis with respect to these securities was considered necessary.

The basis for concluding that AFS securities were not credit loss impaired and no ACL was considered necessary at ~~September 30, 2022~~March 31, 2023 is further discussed below.

Unrealized losses were generally attributable to rising interest rates and widening spreads related to the Federal Reserve's quantitative tightening and benchmark interest rate increases. Continuing uncertainty with respect to the trajectory of the economy ~~and geopolitical events have~~has also led to market uncertainty, producing some yield curve dislocations. The investment securities AFS portfolio was in a net unrealized loss position of $573.7 million at March 31, 2023, compared to $674.2 million at December 31, 2022, improving by $100 million during the three months ended March 31, 2023.

U.S. Government, U.S. Government Agency and Government Sponsored Enterprise Securities

At ~~September 30, 2022,~~March 31, 2023, five U.S. treasury, ~~149~~150 U.S. Government agency and sponsored enterprise residential MBS, 2726 U.S. Government agency and sponsored enterprise commercial MBS, and 1518 SBA securities were in unrealized loss positions. The timely payment of principal and interest on these securities is explicitly or implicitly guaranteed by the U.S. Government. As such, there is an assumption of zero credit loss and the Company expects to recover the amortized cost basis of these securities.

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Private Label Securities:

None of the impaired private label securities had missed principal or interest payments or had been downgraded by a NRSRO at ~~September 30, 2022.~~March 31, 2023. The Company performed an analysis comparing the present value of cash flows expected to be collected to the amortized cost basis of impaired securities. This analysis was based on a scenario that we believe to be generally more conservative than our reasonable and supportable economic forecast at ~~September 30, 2022,~~March 31, 2023, 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.

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

Private label residential MBS and CMOs

At ~~September 30, 2022, 115~~March 31, 2023, 114 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 that could be indicative of stress in the sector. Our ~~September 30, 2022~~March 31, 2023 analysis projected weighted average collateral losses for impaired securities in this category of 3%2% compared to weighted average credit support of 18%. As of ~~September 30, 2022, 94%~~March 31, 2023, 95% of impaired securities in this category, based on carrying value, were externally rated AAA, 1% were rated AA and 5%4% were rated A.

Private label commercial MBS

At ~~September 30, 2022, 109~~March 31, 2023, 104 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 watch lists, bankruptcy data, defeasance data, special servicing trends, delinquency and other economic data that could be indicative of stress in the sector. Our ~~September 30, 2022~~March 31, 2023 analysis projected weighted average collateral losses for impaired securities in this category of 7% compared to weighted average credit support of 43%. As of ~~September 30, 2022, 84%~~March 31, 2023, 85% of impaired securities in this category, based on carrying value, were externally rated AAA, ~~12%~~11% were rated AA and 4% were rated A.

Single family real estate-backed securities

At ~~September 30, 2022, 16~~March 31, 2023, 15 single family rental real estate-backed securities were in unrealized loss positions. Our analysis of cash flows expected to be collected on these securities incorporated assumptions about collateral default rates, loss severity, delinquencies and recovery lag. We regularly monitor sector data including home price appreciation, forbearance, delinquency and prepay trends as well as other economic data that could be indicative of stress in the sector. Our ~~September 30, 2022~~March 31, 2023 analysis projected weighted average collateral losses for this category of 8%7% compared to weighted average credit support of ~~50%~~51%. As of ~~September 30, 2022, 63%~~March 31, 2023, 62% of impaired securities in this category, based on carrying value, were externally rated AAA, ~~14%~~15% were rated AA and one security was not externally rated.

Collateralized loan obligations

At ~~September 30, 2022,~~March 31, 2023, 26 collateralized loan obligations 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, 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 ~~September 30, 2022~~March 31, 2023 analysis projected weighted average collateral losses for impaired securities in this category of 9%10% compared to weighted average credit support of ~~42%~~44%. As of ~~September 30, 2022, 77%~~March 31, 2023, 80% of the impaired securities in this category, based on carrying value, were externally rated AAA, ~~19%~~16% were rated AA and 4% were rated A.

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Non-mortgage asset-backed securities

At ~~September 30, 2022,~~March 31, 2023, seven non-mortgage asset-backed securities were in unrealized loss positions. These securities are backed by student loan collateral. Our analysis of cash flows expected to be collected on these securities incorporated assumptions about collateral default rates, loss severity, delinquencies, voluntary prepayment rates and recovery lag. In developing assumptions, we took into account collateral type, delineated by whether collateral consisted of loans to borrowers in school, refinancing, or a mixture. Our ~~September 30, 2022~~March 31, 2023 analysis projected weighted average collateral losses for impaired securities in this category of 4% compared to weighted average credit support of ~~23%~~24%. As of ~~September 30, 2022, 51%~~March 31, 2023, 47% of the impaired securities in this category, based on carrying value, were externally rated AAA, and ~~49%~~53% were rated AA.

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

State and Municipal Obligations

At ~~September 30, 2022, 14~~March 31, 2023, two state and municipal obligations were in unrealized loss positions. Our analysis of potential credit loss impairment for these securities incorporates a quantitative measure of the underlying obligor's credit worthiness provided by a third-party vendor as well as other relevant qualitative considerations. As of ~~September 30, 2022, 61%~~March 31, 2023, all of the impaired securities in this category, based on carrying value, were externally rated ~~AAA, 16% were rated AA, and 23% were rated A.~~AAA.

Note 4 Loans and Allowance for Credit Losses

Loans consisted of the following at the dates indicated (dollars in thousands):


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022

		Total		Percent of Total		Total		Percent of Total			Total		Percent of Total		Total		Percent of Total
Residential and other consumer:
Residential:										Residential:
1-4 single family residential	1-4 single family residential	$	6,999,868	28.8	%	$	6,338,225	26.7	%	1-4 single family residential	$	7,133,615	28.6	%	$	7,128,834	28.6	%
Government insured residential	Government insured residential	1,849,343		7.6	%	2,023,221		8.5	%	Government insured residential	1,656,129		6.7	%	1,771,880		7.1	%
Other consumer loans		4,673		—	%	6,934		—	%

		8,853,884		36.4	%	8,368,380		35.2	%		$	8,789,744	35.3	%	$	8,900,714	35.7	%
Commercial:	Commercial:									Commercial:
Multi-family		962,546		4.0	%	1,154,738		4.9	%

Non-owner occupied commercial real estate	Non-owner occupied commercial real estate	4,368,686		18.1	%	4,381,610		18.4	%	Non-owner occupied commercial real estate	5,346,895		21.5	%	5,405,597		21.7	%
Construction and land	Construction and land	246,202		1.0	%	165,390		0.7	%	Construction and land	324,805		1.3	%	294,360		1.2	%
Owner occupied commercial real estate	Owner occupied commercial real estate	1,919,074		7.9	%	1,944,658		8.2	%	Owner occupied commercial real estate	1,863,333		7.5	%	1,890,813		7.6	%
Commercial and industrial	Commercial and industrial	5,786,907		23.9	%	4,790,275		20.2	%	Commercial and industrial	6,617,716		26.5	%	6,417,721		25.9	%
PPP		10,191		—	%	248,505		1.0	%

Pinnacle	Pinnacle	932,187		3.8	%	919,641		3.9	%	Pinnacle	919,584		3.7	%	912,122		3.7	%
Bridge - franchise finance	Bridge - franchise finance	254,137		1.0	%	342,124		1.4	%	Bridge - franchise finance	239,205		1.0	%	253,774		1.0	%
Bridge - equipment finance	Bridge - equipment finance	310,035		1.3	%	357,599		1.5	%	Bridge - equipment finance	266,715		1.1	%	286,147		1.1	%
Mortgage warehouse lending	Mortgage warehouse lending	622,883		2.6	%	1,092,133		4.6	%	Mortgage warehouse lending	524,897		2.1	%	524,740		2.1	%
		15,412,848		63.6	%	15,396,673		64.8	%		16,103,150		64.7	%	15,985,274		64.3	%
Total loans	Total loans	24,266,732		100.0	%	23,765,053		100.0	%	Total loans	24,892,894		100.0	%	24,885,988		100.0	%
Allowance for credit losses	Allowance for credit losses	(130,671)				(126,457)				Allowance for credit losses	(158,792)				(147,946)
Loans, net	Loans, net	$	24,136,061			$	23,638,596			Loans, net	$	24,734,102			$	24,738,042

Premiums, discounts and deferred fees and costs, excluding the non-credit related discount on PCD loans, totaled ~~$65~~$56 million and ~~$67~~$61 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

The following table presents the amortized cost basis of residential PCD loans and the related amount of non-credit discount, net of the related ACL, at the dates indicated (in thousands):

September 30, 2022 December 31, 2021
UPB $ 101,396 $ 124,963
Non-credit discount (47,122) (59,759)
Total amortized cost of PCD loans 54,274 65,204
ACL related to PCD loans (441) (476)
PCD loans, net $ 53,833 $ 64,728

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~


	March 31, 2023		December 31, 2022
UPB	$	93,051	$	96,437
Non-credit discount	(42,357)		(44,354)
Total amortized cost of PCD loans	50,694		52,083
ACL related to PCD loans	(381)		(409)
PCD loans, net	$	50,313	$	51,674

Included in loans, net are direct or sales type finance leases totaling ~~$663~~$641 million and ~~$652~~$634 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The amount of income recognized from direct or sales type finance leases for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ totaled ~~$4.6 million, $13.6 million, $4.4~~$4.3 million and ~~$14.2~~$4.6 million, respectively and is included in interest income on loans in the consolidated statements of income.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company purchased residential loans totaling ~~$425~~$187 million ~~$2.0 billion, $1.4 billion~~ and ~~$3.7 billion,~~$862 million, respectively.

At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had pledged loans with a carrying value of approximately ~~$11.1~~$13.2 billion and ~~$10.6~~$12.4 billion, respectively, as security for FHLB advances and Federal Reserve discount window capacity.

At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, accrued interest receivable on loans totaled ~~$115~~$132 million and ~~$98~~$129 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 nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Allowance for credit losses

The ACL was determined utilizing a 2-year reasonable and supportable forecast period. The quantitative portion of the ACL was determined using a single third-party provided economic scenario. The qualitative component was informed by alternate scenarios. Activity in the ACL is summarized below for the periods indicated (in thousands):

Three Months Ended September 30,
2022 2021
Residential and Other Consumer Commercial Total Residential and Other Consumer Commercial Total
Beginning balance $ 9,010 $ 121,229 $ 130,239 $ 11,909 $ 163,733 $ 175,642
Provision (recovery) 2,384 369 2,753 (2,127) (9,427) (11,554)
Charge-offs — (4,280) (4,280) (290) (4,528) (4,818)
Recoveries 1 1,958 1,959 4 341 345
Ending balance $ 11,395 $ 119,276 $ 130,671 $ 9,496 $ 150,119 $ 159,615


		Nine Months Ended September 30,												Three Months Ended March 31,
		2022						2021							2023				2022
		Residential and Other Consumer		Commercial		Total		Residential and Other Consumer		Commercial		Total					Residential		Commercial		Total		Residential		Commercial		Total
Beginning balance	Beginning balance	$	9,187	$	117,270	$	126,457	$	18,719	$	238,604	$	257,323			Beginning balance	$	11,741	$	136,205	$	147,946	$	9,187	$	117,270	$	126,457

Impact of adoption of ASU 2022-02																Impact of adoption of ASU 2022-02	(117)		(1,677)		(1,794)		N/A		N/A		N/A
Balance after adoption of ASU 2022-02																Balance after adoption of ASU 2022-02	11,624		134,528		146,152		9,187		117,270		126,457
Provision (recovery)	Provision (recovery)	2,576		30,830		33,406		(8,929)		(56,594)		(65,523)				Provision (recovery)	170		17,425		17,595		(256)		7,702		7,446
Charge-offs	Charge-offs	(412)		(35,518)		(35,930)		(304)		(34,908)		(35,212)				Charge-offs	—		(7,899)		(7,899)		—		(10,671)		(10,671)
Recoveries	Recoveries	44		6,694		6,738		10		3,017		3,027				Recoveries	3		2,941		2,944		26		2,185		2,211
Ending balance	Ending balance	$	11,395	$	119,276	$	130,671	$	9,496	$	150,119	$	159,615			Ending balance	$	11,797	$	146,995	$	158,792	$	8,957	$	116,486	$	125,443

The ACL increased by ~~$4.2~~$10.8 million, from 0.59% to 0.64% of total loans, at ~~September 30, 2022~~March 31, 2023 compared to December 31, ~~2021, remaining largely consistent as a percentage of total loans. The provision for credit losses for the nine months ended September 30, 2022 was largely offset by net charge-offs.~~2022. The more significant factors impacting the provision for credit losses for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023 included ~~increases in specific reserves~~a deteriorating economic forecast and ~~qualitative loss factors, loan growth, the decline in criticized and classified assets, and changes~~an increase in certain ~~assumptions including prepayment speeds.~~specific reserves.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

The following table presents gross charge-offs during the three months ended March 31, 2023, by year of origination (in thousands):


	2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Total

CRE	$	—	$	—	$	—	$	—	$	—	$	35	$	—	$	35
C&I	—		64		24		—		265		935		309		1,597



Bridge - franchise finance	—		—		—		33		2,409		3,825		—		6,267

	$	—	$	64	$	24	$	33	$	2,674	$	4,795	$	309	$	7,899

The following table presents the components of the provision for ~~(recovery of)~~ credit losses for the periods indicated (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Amount related to funded portion of loans $ 2,753 $ (11,554) $ 33,406 $ (65,523)
Amount related to off-balance sheet credit exposures 967 280 2,267 (640)
Amount related to accrued interest receivable — (568) (127) (838)
Amount related to AFS debt securities — — — (364)
Total provision for (recovery of) credit losses $ 3,720 $ (11,842) $ 35,546 $ (67,365)


	Three Months Ended March 31,
	2023		2022
Amount related to funded portion of loans	$	17,595	$	7,446
Amount related to off-balance sheet credit exposures	2,193		384


Total provision for credit losses	$	19,788	$	7,830

Credit quality information

Credit quality of loans held for investment is continuously monitored by dedicated residential credit risk management and commercial portfolio management functions. The Company also has a workout and recovery department that monitors the credit quality of criticized and classified loans and an independent internal credit review function.

Credit quality indicators for 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,~~semi-annually, and were most recently updated in the ~~third~~first quarter of ~~2022.~~2023. LTVs are typically at origination since we do not routinely update residential appraisals. Substantially all of the government insured residential loans are government insured buyout loans, which the Company buys out of GNMA securitizations upon default. For these loans, traditional measures of credit quality are not particularly relevant considering the guaranteed nature of the loans and the underlying business model. Factors that impact risk inherent in the residential portfolio segment include national and regional economic conditions such as levels of unemployment, wages and ~~wages,~~interest rates, as well as residential property values.

1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on delinquency status:

September 30, 2022
Amortized Cost By Origination Year
2022 2021 2020 2019 2018 Prior Total
Current $ 940,289 $ 3,195,017 $ 932,886 $ 327,797 $ 182,832 $ 1,365,697 $ 6,944,518
30 - 59 Days Past Due 12,277 15,401 3,502 785 201 3,805 35,971
60 - 89 Days Past Due 2,546 2,280 144 256 165 — 5,391
90 Days or More Past Due — — 2,194 2,688 2,673 6,433 13,988
$ 955,112 $ 3,212,698 $ 938,726 $ 331,526 $ 185,871 $ 1,375,935 $ 6,999,868


		December 31, 2021															March 31, 2023
		Amortized Cost By Origination Year															Amortized Cost By Origination Year
		2021		2020		2019		2018		2017		Prior		Total			2023		2022		2021		2020		2019		Prior		Total
Current	Current	$	2,884,761	$	1,062,348	$	395,453	$	224,175	$	342,414	$	1,352,844	$	6,261,995	Current	$	117,258	$	1,179,778	$	3,111,081	$	900,912	$	312,977	$	1,447,072	$	7,069,078
30 - 59 Days Past Due	30 - 59 Days Past Due	32,307		2,705		5,482		1,942		5,831		4,825		53,092		30 - 59 Days Past Due	—		16,570		16,841		3,801		1,363		5,764		44,339
60 - 89 Days Past Due	60 - 89 Days Past Due	605		—		1,750		1,988		—		1,307		5,650		60 - 89 Days Past Due	—		732		418		—		—		3,611		4,761
90 Days or More Past Due	90 Days or More Past Due	1,407		—		609		5,100		1,064		9,308		17,488		90 Days or More Past Due	—		2,765		2,158		2,029		2,000		6,485		15,437
		$	2,919,080	$	1,065,053	$	403,294	$	233,205	$	349,309	$	1,368,284	$	6,338,225		$	117,258	$	1,199,845	$	3,130,498	$	906,742	$	316,340	$	1,462,932	$	7,133,615

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023


	December 31, 2022
	Amortized Cost By Origination Year
	2022		2021		2020		2019		2018		Prior		Total
Current	$	1,185,611	$	3,149,299	$	916,923	$	316,023	$	177,891	$	1,321,011	$	7,066,758
30 - 59 Days Past Due	12,752		16,432		3,266		2,953		1,854		5,759		43,016
60 - 89 Days Past Due	252		1,196		229		1,347		—		1,052		4,076
90 Days or More Past Due	2,589		2,158		2,173		360		3,069		4,635		14,984
	$	1,201,204	$	3,169,085	$	922,591	$	320,683	$	182,814	$	1,332,457	$	7,128,834

1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on LTV:


		September 30, 2022															March 31, 2023
		Amortized Cost By Origination Year															Amortized Cost By Origination Year
LTV	LTV	2022		2021		2020		2019		2018		Prior		Total		LTV	2023		2022		2021		2020		2019		Prior		Total
Less than 61%	Less than 61%	$	240,569	$	1,318,562	$	361,529	$	78,834	$	43,294	$	478,325	$	2,521,113	Less than 61%	$	12,750	$	280,999	$	1,282,249	$	344,679	$	75,652	$	491,970	$	2,488,299
61% - 70%	61% - 70%	241,581		868,908		234,386		81,008		49,465		327,164		1,802,512		61% - 70%	23,708		296,695		848,469		228,400		78,531		348,041		1,823,844
71% - 80%	71% - 80%	470,272		989,789		342,737		166,165		88,649		526,731		2,584,343		71% - 80%	80,800		619,158		964,695		333,590		156,693		580,755		2,735,691
More than 80%	More than 80%	2,690		35,439		74		5,519		4,463		43,715		91,900		More than 80%	—		2,993		35,085		73		5,464		42,166		85,781
		$	955,112	$	3,212,698	$	938,726	$	331,526	$	185,871	$	1,375,935	$	6,999,868		$	117,258	$	1,199,845	$	3,130,498	$	906,742	$	316,340	$	1,462,932	$	7,133,615


		December 31, 2021															December 31, 2022
		Amortized Cost By Origination Year															Amortized Cost By Origination Year
LTV	LTV	2021		2020		2019		2018		2017		Prior		Total		LTV	2022		2021		2020		2019		2018		Prior		Total
Less than 61%	Less than 61%	$	1,222,510	$	399,512	$	89,078	$	54,301	$	111,540	$	476,170	$	2,353,111	Less than 61%	$	282,940	$	1,301,279	$	354,720	$	76,404	$	42,864	$	472,090	$	2,530,297
61% - 70%	61% - 70%	791,935		269,739		92,282		59,425		66,641		343,654		1,623,676		61% - 70%	295,206		857,008		231,732		80,383		49,047		310,649		1,824,025
71% - 80%	71% - 80%	899,400		395,726		212,649		111,276		145,413		518,817		2,283,281		71% - 80%	620,049		975,542		336,066		158,406		86,463		510,633		2,687,159
More than 80%	More than 80%	5,235		76		9,285		8,203		25,715		29,643		78,157		More than 80%	3,009		35,256		73		5,490		4,440		39,085		87,353
		$	2,919,080	$	1,065,053	$	403,294	$	233,205	$	349,309	$	1,368,284	$	6,338,225		$	1,201,204	$	3,169,085	$	922,591	$	320,683	$	182,814	$	1,332,457	$	7,128,834

1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on FICO score:


		September 30, 2022															March 31, 2023
		Amortized Cost By Origination Year															Amortized Cost By Origination Year
FICO	FICO	2022		2021		2020		2019		2018		Prior		Total		FICO	2023		2022		2021		2020		2019		Prior		Total
760 or greater	760 or greater	$	640,164	$	2,546,333	$	733,174	$	216,297	$	98,803	$	981,367	$	5,216,138	760 or greater	$	74,066	$	809,442	$	2,488,061	$	712,689	$	221,056	$	995,139	$	5,300,453
720 - 759	720 - 759	225,564		492,806		137,272		64,058		46,719		224,357		1,190,776		720 - 759	35,448		245,748		429,084		122,827		52,140		244,446		1,129,693
719 or less	719 or less	89,384		173,559		68,280		51,171		40,349		170,211		592,954		719 or less	7,744		144,655		213,353		71,226		43,144		223,347		703,469
		$	955,112	$	3,212,698	$	938,726	$	331,526	$	185,871	$	1,375,935	$	6,999,868		$	117,258	$	1,199,845	$	3,130,498	$	906,742	$	316,340	$	1,462,932	$	7,133,615


		December 31, 2021															December 31, 2022
		Amortized Cost By Origination Year															Amortized Cost By Origination Year
FICO	FICO	2021		2020		2019		2018		2017		Prior		Total		FICO	2022		2021		2020		2019		2018		Prior		Total
760 or greater	760 or greater	$	2,230,259	$	803,026	$	245,942	$	125,713	$	254,750	$	937,285	$	4,596,975	760 or greater	$	805,125	$	2,513,045	$	721,982	$	212,574	$	97,076	$	944,783	$	5,294,585
720 - 759	720 - 759	562,763		194,068		91,276		53,576		54,080		219,561		1,175,324		720 - 759	285,507		485,528		132,928		62,301		45,857		216,047		1,228,168
719 or less	719 or less	126,058		67,959		66,076		53,916		40,479		211,438		565,926		719 or less	110,572		170,512		67,681		45,808		39,881		171,627		606,081
		$	2,919,080	$	1,065,053	$	403,294	$	233,205	$	349,309	$	1,368,284	$	6,338,225		$	1,201,204	$	3,169,085	$	922,591	$	320,683	$	182,814	$	1,332,457	$	7,128,834

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

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, interest rates, 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. ~~Loans~~The special mention rating is considered a transitional rating for 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.~~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 ~~including~~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, ~~declining collateral values, frequent overdrafts,~~inadequate cash flows from current operations, operating losses, increasing balance sheet leverage, ~~inadequate cash flow from current~~

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

~~operations,~~ project cost overruns, unreasonable construction delays, exhausted interest reserves, declining collateral values, frequent overdrafts or past due real estate ~~taxes or exhausted interest reserves, are assigned an internal risk rating of substandard. A loan~~taxes. Loans with ~~a weakness~~weaknesses so severe that collection in full is highly questionable or improbable, but because of certain reasonably specific pending factors ~~has~~have not been charged off, ~~will be~~are assigned an internal risk rating of doubtful.

Commercial credit exposure based on internal risk rating:


		September 30, 2022																			March 31, 2023
		Amortized Cost By Origination Year												Revolving Loans							Amortized Cost By Origination Year																	Revolving Loans
		2022		2021		2020		2019		2018		Prior				Total			2023				2022			2021			2020			2019			Prior					Total
CRE	CRE																					CRE
Pass	Pass	$	948,372	$	849,293	$	548,136	$	1,171,466	$	519,138	$	1,026,487	$	105,404		$	5,168,296		Pass	$	66,399		$	1,248,325		$	732,160		$	546,742		$	1,106,358		$	1,363,097	$	197,073		$	5,260,154
Special mention	Special mention	—		—		—		1,775		—		1,089		—			2,864			Special mention	—			42,950			2,150			—			17,913			411		—			63,424
Substandard	Substandard	12,435		17,660		25,249		125,454		57,301		168,175		—			406,274			Substandard	—			12,263			1,355			19,008			119,227			196,269		—			348,122

Total CRE	Total CRE	$	960,807	$	866,953	$	573,385	$	1,298,695	$	576,439	$	1,195,751	$	105,404		$	5,577,434		Total CRE	$	66,399		$	1,303,538		$	735,665		$	565,750		$	1,243,498		$	1,559,777	$	197,073		$	5,671,700
C&I ~~(1)~~	C&I ~~(1)~~																			C&I ~~(1)~~
Pass	Pass	$	1,438,322	$	845,448	$	490,571	$	724,835	$	428,081	$	906,089	$	2,527,448		$	7,360,794		Pass	$	320,398		$	1,768,713		$	762,133		$	428,383		$	605,736		$	1,203,423	$	3,071,337		$	8,160,123
Special mention	Special mention	47		2,349		212		3,968		414		1,699		15,386			24,075			Special mention	38			2,955			433			—			2,534			2,330		22,864			31,154
Substandard	Substandard	1,248		13,212		27,708		109,133		24,240		111,475		18,809			305,825			Substandard	9			54,757			11,705			18,988			53,187			114,667		28,760			282,073
Doubtful	Doubtful	—		21,958		—		—		—		—		3,520			25,478			Doubtful	—			—			—			—			6,985			714		—			7,699
Total C&I	Total C&I	$	1,439,617	$	882,967	$	518,491	$	837,936	$	452,735	$	1,019,263	$	2,565,163		$	7,716,172		Total C&I	$	320,445		$	1,826,425		$	774,271		$	447,371		$	668,442		$	1,321,134	$	3,122,961		$	8,481,049
Pinnacle	Pinnacle																			Pinnacle
Pass	Pass	$	166,488	$	116,573	$	71,996	$	68,115	$	30,613	$	478,402	$	—		$	932,187		Pass	$	42,815		$	170,252		$	107,137		$	62,406		$	62,354		$	474,620	$	—		$	919,584

Total Pinnacle	Total Pinnacle	$	166,488	$	116,573	$	71,996	$	68,115	$	30,613	$	478,402	$	—		$	932,187		Total Pinnacle	$	42,815		$	170,252		$	107,137		$	62,406		$	62,354		$	474,620	$	—		$	919,584
Bridge - Franchise Finance																				Bridge - Franchise Finance
Pass																				Pass	$	2,389		$	28,106		$	38,134		$	36,376		$	26,549		$	52,902	$	—		$	184,456
Special mention																				Special mention	—			—			—			—			5,120			2,083		—			7,203
Substandard																				Substandard	—			281			1,499			1,936			21,548			22,282		—			47,546

Total Bridge - Franchise Finance																				Total Bridge - Franchise Finance	$	2,389		$	28,387		$	39,633		$	38,312		$	53,217		$	77,267	$	—		$	239,205
Bridge - Equipment Finance	Bridge - Equipment Finance																			Bridge - Equipment Finance
Pass	Pass	$	24,384	$	62,829	$	17,029	$	96,994	$	37,263	$	69,981	$	—		$	308,480		Pass	$	—		$	26,280		$	51,539		$	15,922		$	83,887		$	87,934	$	—		$	265,562

Substandard	Substandard	—		—		—		1,555		—		—		—			1,555			Substandard	—			—			—			—			1,153			—		—			1,153

Total Bridge - Equipment Finance	Total Bridge - Equipment Finance	$	24,384	$	62,829	$	17,029	$	98,549	$	37,263	$	69,981	$	—		$	310,035		Total Bridge - Equipment Finance	$	—		$	26,280		$	51,539		$	15,922		$	85,040		$	87,934	$	—		$	266,715
Bridge - Franchise Finance
Pass		$	40,586	$	33,743	$	39,793	$	60,311	$	11,320	$	7,713	$	—		$	193,466
Substandard		—		1,771		2,561		22,564		17,714		9,446		—			54,056
Doubtful		—		—		—		2,557		4,058		—		—			6,615
Total Bridge - Franchise Finance		$	40,586	$	35,514	$	42,354	$	85,432	$	33,092	$	17,159	$	—		$	254,137
Mortgage Warehouse Lending	Mortgage Warehouse Lending																			Mortgage Warehouse Lending
Pass	Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	622,883		$	622,883		Pass	$	—		$	—		$	—		$	—		$	—		$	—	$	524,897		$	524,897

Total Mortgage Warehouse Lending	Total Mortgage Warehouse Lending	$	—	$	—	$	—	$	—	$	—	$	—	$	622,883		$	622,883		Total Mortgage Warehouse Lending	$	—		$	—		$	—		$	—		$	—		$	—	$	524,897		$	524,897

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

December 31, 2021
Amortized Cost By Origination Year Revolving Loans
2021 2020 2019 2018 2017 Prior Total
CRE
Pass $ 869,852 $ 619,056 $ 1,283,401 $ 676,151 $ 455,965 $ 986,427 $ 119,308 $ 5,010,160
Special mention 985 — 29,573 — — 1,704 — 32,262
Substandard — 14,227 187,284 55,944 115,944 285,917 — 659,316
Total CRE $ 870,837 $ 633,283 $ 1,500,258 $ 732,095 $ 571,909 $ 1,274,048 $ 119,308 $ 5,701,738
C&I (1)
Pass $ 1,280,160 $ 666,437 $ 870,797 $ 406,145 $ 353,590 $ 669,308 $ 2,120,693 $ 6,367,130
Special mention 6,051 19,861 39,647 17,185 1,854 11,640 20,093 116,331
Substandard 365 22,106 167,496 59,349 51,117 122,663 49,119 472,215
Doubtful — — 900 — — — 26,862 27,762
Total C&I $ 1,286,576 $ 708,404 $ 1,078,840 $ 482,679 $ 406,561 $ 803,611 $ 2,216,767 $ 6,983,438
Pinnacle
Pass $ 143,063 $ 113,785 $ 88,206 $ 36,761 $ 177,258 $ 360,568 $ — $ 919,641
Total Pinnacle $ 143,063 $ 113,785 $ 88,206 $ 36,761 $ 177,258 $ 360,568 $ — $ 919,641
Bridge - Equipment Finance
Pass $ 73,190 $ 18,763 $ 108,990 $ 43,826 $ 23,684 $ 48,471 $ — $ 316,924
Substandard — — 12,875 4,775 23,025 — — 40,675
Total Bridge - Equipment Finance $ 73,190 $ 18,763 $ 121,865 $ 48,601 $ 46,709 $ 48,471 $ — $ 357,599
Bridge - Franchise Finance
Pass $ 49,949 $ 51,057 $ 104,299 $ 10,199 $ 7,039 $ 5,838 $ — $ 228,381
Substandard — 7,351 39,588 30,134 8,660 8,018 — 93,751
Doubtful — — 7,718 12,274 — — — 19,992
Total Bridge - Franchise Finance $ 49,949 $ 58,408 $ 151,605 $ 52,607 $ 15,699 $ 13,856 $ — $ 342,124
Mortgage Warehouse Lending
Pass $ — $ — $ — $ — $ — $ — $ 1,092,133 $ 1,092,133
Total Mortgage Warehouse Lending $ — $ — $ — $ — $ — $ — $ 1,092,133 $ 1,092,133


	December 31, 2022
	Amortized Cost By Origination Year												Revolving Loans
	2022		2021		2020		2019		2018		Prior				Total
CRE
Pass	$	1,256,300	$	758,025	$	550,133	$	1,138,113	$	512,125	$	932,030	$	196,963	$	5,343,689
Special mention	—		—		—		18,006		—		709		—		18,715
Substandard	12,332		1,355		20,103		98,438		56,974		148,351		—		337,553

Total CRE	$	1,268,632	$	759,380	$	570,236	$	1,254,557	$	569,099	$	1,081,090	$	196,963	$	5,699,957
C&I
Pass	$	1,880,853	$	825,410	$	445,988	$	689,003	$	416,287	$	832,952	$	2,900,336	$	7,990,829
Special mention	63		—		208		3,880		—		20,657		310		25,118
Substandard	25,898		13,916		3,319		103,625		19,715		104,190		21,277		291,940
Doubtful	—		—		—		—		647		—		—		647
Total C&I	$	1,906,814	$	839,326	$	449,515	$	796,508	$	436,649	$	957,799	$	2,921,923	$	8,308,534
Pinnacle
Pass	$	179,223	$	110,510	$	66,592	$	66,514	$	29,783	$	459,500	$	—	$	912,122



Total Pinnacle	$	179,223	$	110,510	$	66,592	$	66,514	$	29,783	$	459,500	$	—	$	912,122
Bridge - Franchise Finance
Pass	$	81,146	$	19,251	$	38,293	$	34,483	$	8,617	$	6,799	$	—	$	188,589
Special mention	—		—		—		5,432		2,168		—		—		7,600
Substandard	—		1,617		1,295		22,058		17,148		8,124		—		50,242
Doubtful	—		—		1,013		2,447		3,883		—		—		7,343
Total Bridge - Franchise Finance	$	81,146	$	20,868	$	40,601	$	64,420	$	31,816	$	14,923	$	—	$	253,774
Bridge - Equipment Finance
Pass	$	27,386	$	55,015	$	16,488	$	90,286	$	33,264	$	62,353	$	—	$	284,792

Substandard	—		—		—		1,355		—		—		—		1,355

Total Bridge - Equipment Finance	$	27,386	$	55,015	$	16,488	$	91,641	$	33,264	$	62,353	$	—	$	286,147
Mortgage Warehouse Lending
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	524,740	$	524,740



Total Mortgage Warehouse Lending	$	—	$	—	$	—	$	—	$	—	$	—	$	524,740	$	524,740

~~(1)Includes PPP loans~~

At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the balance of revolving loans converted to term loans was immaterial.

The following ~~tables summarize the Company's~~table presents criticized and classified commercial ~~credit exposure based on internal risk rating, in aggregate,~~loans at the dates indicated (in thousands):
September 30, 2022
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 $ 807,537 $ 4,131,403 $ 229,356 $ 1,791,869 $ 5,558,734 $ 10,191 $ 932,187 $ 193,466 $ 308,480 $ 622,883 $ 14,586,106
Special mention — 1,089 1,775 7,379 16,696 — — — — — 26,939
Substandard - accruing 152,871 219,370 9,544 99,635 133,641 — — 46,100 1,555 — 662,716
Substandard non-accruing 2,138 16,824 5,527 20,191 52,358 — — 7,956 — — 104,994
Doubtful — — — — 25,478 — — 6,615 — — 32,093
$ 962,546 $ 4,368,686 $ 246,202 $ 1,919,074 $ 5,786,907 $ 10,191 $ 932,187 $ 254,137 $ 310,035 $ 622,883 $ 15,412,848


	March 31, 2023		December 31, 2022
Special mention	$	101,781	$	51,433
Substandard - accruing	596,054		605,965
Substandard - non-accruing	82,840		75,125
Doubtful	7,699		7,990
Total	$	788,374	$	740,513

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

December 31, 2021
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 $ 970,337 $ 3,892,353 $ 147,470 $ 1,750,035 $ 4,368,590 $ 248,505 $ 919,641 $ 228,381 $ 316,924 $ 1,092,133 $ 13,934,369
Special mention — 26,088 6,174 14,010 102,321 — — — — — 148,593
Substandard -accruing 173,536 423,918 6,582 160,159 250,644 — — 80,864 40,675 — 1,136,378
Substandard non-accruing 10,865 39,251 5,164 20,454 40,958 — — 12,887 — — 129,579
Doubtful — — — — 27,762 — — 19,992 — — 47,754
$ 1,154,738 $ 4,381,610 $ 165,390 $ 1,944,658 $ 4,790,275 $ 248,505 $ 919,641 $ 342,124 $ 357,599 $ 1,092,133 $ 15,396,673

The COVID 19 pandemic led to an increase in the level of criticized and classified commercial loans compared to pre-pandemic levels; while criticized and classified assets are evidencing a declining trend, those levels remain elevated.

Past Due and Non-Accrual Loans:

The following table presents an aging of loans at the dates indicated (in thousands):

September 30, 2022 December 31, 2021
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 $ 6,944,518 $ 35,971 $ 5,391 $ 13,988 $ 6,999,868 $ 6,261,995 $ 53,092 $ 5,650 $ 17,488 $ 6,338,225
Government insured residential 1,019,859 157,285 93,548 578,651 1,849,343 1,034,686 143,672 115,028 729,835 2,023,221
Other consumer loans 4,644 29 — — 4,673 6,919 15 — — 6,934
Multi-family 960,408 — — 2,138 962,546 1,135,363 6,017 11,220 2,138 1,154,738
Non-owner occupied commercial real estate 4,350,062 7,640 2,222 8,762 4,368,686 4,359,671 2,727 29 19,183 4,381,610
Construction and land 232,322 — 12,868 1,012 246,202 160,183 492 4,369 346 165,390
Owner occupied commercial real estate 1,904,731 — 120 14,223 1,919,074 1,930,932 — 1,402 12,324 1,944,658
Commercial and industrial 5,744,035 22,520 649 19,703 5,786,907 4,763,976 2,114 11,016 13,169 4,790,275
PPP 8,628 — 970 593 10,191 247,740 765 — — 248,505
Pinnacle 932,187 — — — 932,187 919,641 — — — 919,641
Bridge - franchise finance 243,280 1,031 — 9,826 254,137 331,397 — 6,735 3,992 342,124
Bridge - equipment finance 310,035 — — — 310,035 357,599 — — — 357,599
Mortgage warehouse lending 622,883 — — — 622,883 1,092,133 — — — 1,092,133
$ 23,277,592 $ 224,476 $ 115,768 $ 648,896 $ 24,266,732 $ 22,602,235 $ 208,894 $ 155,449 $ 798,475 $ 23,765,053


	March 31, 2023										December 31, 2022

	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	$	7,069,078	$	44,339	$	4,761	$	15,437	$	7,133,615	$	7,066,758	$	43,016	$	4,076	$	14,984	$	7,128,834
Government insured residential	969,134		167,880		81,457		437,658		1,656,129		1,025,523		159,461		94,294		492,602		1,771,880



CRE	5,657,401		2,723		—		11,576		5,671,700		5,680,829		4,328		4,773		10,027		5,699,957

C&I	8,433,706		19,573		2,570		25,200		8,481,049		8,280,321		2,508		1,028		24,677		8,308,534


Pinnacle	919,584		—		—		—		919,584		912,122		—		—		—		912,122
Bridge - franchise finance	236,063		1,094		—		2,048		239,205		243,574		1,321		—		8,879		253,774
Bridge - equipment finance	266,715		—		—		—		266,715		286,147		—		—		—		286,147
Mortgage warehouse lending	524,897		—		—		—		524,897		524,740		—		—		—		524,740
	$	24,076,578	$	235,609	$	88,788	$	491,919	$	24,892,894	$	24,020,014	$	210,634	$	104,171	$	551,169	$	24,885,988

Included in the table above is the guaranteed portion of SBA loans past due by 90 days or more totaling ~~$32.2~~$32.9 million and ~~$31.3~~$30.8 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Loans contractually delinquent by 90 days or more and still accruing totaled ~~$580~~$439 million and ~~$730~~$494 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, substantially all of which were government insured residential loans. These loans are government insured pool buyout loans, which the Company buys out of GNMA securitizations upon default.

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

The following table presents information about loans on non-accrual status at the dates indicated (in thousands):

September 30, 2022 December 31, 2021
Amortized Cost Amortized Cost With No Related Allowance Amortized Cost Amortized Cost With No Related Allowance
Residential and other consumer $ 18,660 $ 118 $ 28,553 $ 1,684
Commercial:
Multi-family 2,138 2,138 10,865 10,865
Non-owner occupied commercial real estate 16,824 2,725 39,251 20,929
Construction and land 5,527 4,087 5,164 4,369
Owner occupied commercial real estate 20,191 7,615 20,453 4,457
Commercial and industrial 77,906 12,424 68,720 10,083
Bridge - franchise finance 14,571 1,868 32,879 16,808
$ 155,817 $ 30,975 $ 205,885 $ 69,195


	March 31, 2023				December 31, 2022

	Amortized Cost		Amortized Cost With No Related Allowance		Amortized Cost		Amortized Cost With No Related Allowance

1-4 single family residential	$	23,102	$	—	$	21,311	$	—
CRE	17,137		2,860		22,352		6,911

C&I	67,245		14,652		47,473		15,642


Bridge - franchise finance	6,157		2,479		13,290		1,668

	$	113,641	$	19,991	$	104,426	$	24,221

Included in the table above is the guaranteed portion of non-accrual SBA loans totaling ~~$41.8~~$36.9 million and ~~$46.1~~$40.3 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The amount of interest income recognized on non-accrual loans was insignificant for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. The amount of additional interest income that would have been recognized on non-accrual loans had they performed in accordance with their contractual terms was approximately ~~$2.1~~$1.9 million and ~~$5.2~~$1.3 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively and $2.7 million and $8.0 million for the three and nine months ended September 30, 2021,~~ respectively.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Collateral dependent loans:

The following table presents the amortized cost basis of collateral dependent loans at the dates indicated (in thousands):

September 30, 2022 December 31, 2021
Amortized Cost Extent to Which Secured by Collateral Amortized Cost Extent to Which Secured by Collateral
Residential and other consumer $ 736 $ 736 $ 2,317 $ 2,295
Commercial:
Multi-family 2,138 2,138 10,865 10,865
Non-owner occupied commercial real estate 15,274 14,142 29,001 28,486
Construction and land 4,433 4,433 4,715 4,715
Owner occupied commercial real estate 15,998 15,998 15,198 15,155
Commercial and industrial 59,365 43,874 45,015 37,020
Bridge - franchise finance 11,022 6,545 26,055 18,740
Total commercial 108,230 87,130 130,849 114,981
$ 108,966 $ 87,866 $ 133,166 $ 117,276


	March 31, 2023				December 31, 2022
	Amortized Cost		Extent to Which Secured by Collateral		Amortized Cost		Extent to Which Secured by Collateral
1-4 single family residential	$	—	$	—	$	730	$	730
Commercial:
CRE	14,990		14,527		19,486		18,353
C&I	22,184		21,470		26,404		25,344

Bridge - franchise finance	4,808		3,560		11,445		3,729

Total commercial	41,982		39,557		57,335		47,426
	$	41,982	$	39,557	$	58,065	$	48,156

Collateral for the ~~multi-family, non-owner occupied commercial real estate and owner-occupied commercial real estate~~CRE loan ~~classes~~class generally consists of commercial real ~~estate. Collateral~~estate, or for certain construction ~~and land~~ loans, ~~is typically~~ residential ~~or commercial~~ real estate. Collateral for ~~commercial and industrial~~C&I 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~~were no significant changes to the extent to which collateral secures collateral dependent loans during the ~~nine~~three months ended ~~September 30,~~March 31, 2023.

Foreclosure of residential real estate

The recorded investment in residential loans in the process of foreclosure was $382 million, of which $369 million was government insured, at March 31, 2023 and $413 million, of which $400 million was government insured, at December 31, 2022. The carrying amount of foreclosed residential real estate included in other assets in the accompanying consolidated balance sheet was insignificant at March 31, 2023 and December 31, 2022.

Loan Modifications

The following table summarizes loans that were modified for borrowers experiencing financial difficulty, by type of modification, during the period indicated (dollars in thousands):


	Three Months Ended March 31, 2023
	Interest Rate Reduction				Term Extension				Combination - Interest Rate Reduction and Term Extension
	Total		% (1)		Total		% (1)			Total		% (1)		Total
1-4 single family residential	$	766	—	%	$	—	—	%		$	—	—	%	$	766
Government insured residential	109		—	%	36,920		2	%		2,312		—	%	39,341

C&I	—		—	%	4,918		—	%		—		—	%	4,918


	$	875			$	41,838				$	2,312			$	45,025

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

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

~~Foreclosure~~The following table summarizes the financial effect of ~~residential real estate~~the modifications made to borrowers experiencing difficulty, during the periods indicated:

Financial Effect

Interest Rate Reduction:

1-4 single family residential

Reduced weighted average contractual interest rate from 3.8% to 3.1%.

Government insured residential

Reduced weighted average contractual interest rate from 4.8% to 3.8%.

Term Extension:

Residential

Added a weighted average 9.6 years to the term of the modified loans.

C&I

Added a weighted average 0.7 years to the term of the modified loans.

Combination - Interest Rate Reduction and Term Extension:

Government insured residential

Reduced weighted average contractual interest rate from 5.8% to 4.9% and added a weighted average 6.9 years to the term of the modified loans.

The ~~recorded investment in residential~~following table presents the aging at March 31, 2023, of loans inthat were modified since January 1, 2023, the ~~process~~date of ~~foreclosure was $451 million,~~adoption of ~~which $443 million was government insured, at September 30, 2022~~ASU 2022-02 (in thousands):


	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total
1-4 single family residential	$	766	$	—	$	—	$	—	$	766
Government insured residential	22,346		11,083		4,683		1,229		39,341

C&I	4,918		—		—		—		4,918


	$	28,030	$	11,083	$	4,683	$	1,229	$	45,025

The following table summarizes loans that were modified since January 1, 2023, the date of adoption of ASU 2022-02 and ~~$208 million, of which $202 million was government insured, at December 31, 2021. The carrying amount of foreclosed residential real estate included in other assets in~~subsequently defaulted, during the ~~accompanying consolidated balance sheet was insignificant at September 30, 2022 and December 31, 2021.~~period indicated (in thousands):


	Three Months Ended March 31, 2023
	Interest Rate Reduction		Term Extension		Combination - Interest Rate Reduction and Term Extension		Total

Government insured residential	$	109	$	5,070	$	733	$	5,912

~~Troubled debt restructurings~~Disclosures Prescribed by Legacy GAAP (Before Adoption of ASU 2022-02) for Prior Periods

The following table summarizes loans that were modified in TDRs during the periods indicated, as well as loans modified during the twelve months preceding ~~September 30,~~March 31, 2022 ~~and 2021~~ that experienced payment defaults during ~~those~~the periods indicated (dollars in thousands):
Three Months Ended September 30,
2022 2021
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 residential 1 $ 96 — $ — — $ — — $ —
Government insured residential 559 85,200 730 113,330 134 23,394 63 12,435
Owner occupied commercial real estate 1 417 — — — — — —
Commercial and industrial 3 7,194 1 1,199 — — — —
Bridge - franchise finance 4 6,615 4 6,615 — — — —
568 $ 99,522 735 $ 121,144 134 $ 23,394 63 $ 12,435

Nine Months Ended September 30,
2022 2021
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 residential 10 $ 5,385 — $ — — $ — — $ —
Government insured residential 2,094 327,635 825 128,169 218 39,900 70 13,491
Non-owner occupied commercial real estate — — — — 1 2,810 — —
Owner occupied commercial real estate 1 417 — — — — — —
Commercial and industrial 17 41,222 1 1,199 — — — —
Bridge - franchise finance 4 6,615 4 6,615 — — — —
2,126 $ 381,274 830 $ 135,983 219 $ 42,710 70 $ 13,491


			Three Months Ended March 31,
	2022
		Loans Modified in TDRs During the Period	TDRs Experiencing Payment Defaults During the Period
			Number of TDRs	Amortized Cost		Number of TDRs	Amortized Cost
1-4 single family residential			4	$	1,992	—	$	—
Government insured residential			390	63,539		125	21,391
C&I			8	15,219		—	—



			402	$	80,750	125	$	21,391

TDRs during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 ~~and 2021~~ generally included interest rate reductions and extensions of 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.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Note 5 Income Taxes

The Company’s effective income tax rate was ~~25.0%~~26.4% and ~~24.7%~~24.4% for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and 24.0% and 24.9% for the three and nine months ended September 30, 2021,~~ respectively. The effective income tax rates differed from the statutory federal income tax rate of 21% due primarily to the impact of state income taxes, partially offset by the benefit of income not subject to federal tax.

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

Note 6 Derivative Financial Instruments

Derivatives ~~and Hedging Activities~~designated as hedging instruments

The Company has entered into interest rate swaps, caps and collars designated as cash flow hedges with the objective of limiting the variability of interest payment cash flows. The Company has also entered into interest rate swaps designated as fair value hedges designed to hedge changes in the fair value of outstanding fixed rate instruments caused by fluctuations in the benchmark interest rate. Changes in fair value of derivative instruments designated as cash flow hedges are reported in accumulated other comprehensive income. Changes in the fair value of derivative instruments designated as fair value hedges are recognized in earnings, as is the offsetting gain or loss on the hedged item.

The following table summarizes the Company's derivatives designated as hedging instruments as of the dates indicated (in thousands):


	March 31, 2023						December 31, 2022

	Notional Amount		Fair Value(1)				Notional Amount		Fair Value(1)
			Asset		Liability				Asset		Liability
Derivatives designated as cash flow hedges:
Interest rate swaps	$	1,750,000	$	152	$	—	$	1,970,000	$	941	$	(1,514)
Interest rate caps purchased, indexed to Fed Funds effective rate	200,000		13,583		—		200,000		15,673		—
Interest rate collar, indexed to 1-month SOFR(2)	125,000		90		—		125,000		—		(203)
Derivatives designated as fair value hedges:
Pay-fixed interest rate swaps	100,000		—		—		100,000		—		—
	$	2,175,000	$	13,825	$	—	$	2,395,000	$	16,614	$	(1,717)

(1) The fair values of derivatives are included in other assets or other liabilities in the consolidated balance sheets.

(2)The interest rate collar consists of a combination of zero-premium interest rate options. The Company sold a pay-variable cap with a strike price of 5.58%; sold a 0% floor; and purchased a receive-variable floor with a strike price of 1.50%.

Derivatives designated as cash flow hedges

The following table provides information about the amount of gain (loss) related to derivatives designated as cash flow hedges reclassified from AOCI into interest expense for the periods indicated (in thousands):


	Three Months Ended March 31,
		2023		2022
Location of gain (loss) reclassified from AOCI into income:
Interest expense on borrowings		$	7,497	$	(4,710)
Interest expense on deposits		5,049		(722)
Interest income on loans		(392)		—
		$	12,154	$	(5,432)

During the three months ended March 31, 2023 and 2022, 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 March 31, 2023, the amount of net gain expected to be reclassified from AOCI into earnings during the next twelve months was $37.1 million. See Note 7 to the consolidated financial statements for additional information about the reclassification adjustments from AOCI into earnings.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Derivatives designated as fair value hedges

The amount of gain (loss) related to derivatives designated as fair value hedges recognized in earnings was insignificant for the three months ended March 31, 2023 and 2022. The following table provides information about the hedged items related to derivatives designated as fair value hedges at the date indicated (in thousands):


	March 31, 2023		Location in Consolidated Balance Sheets
Contractual balance outstanding of hedged item (1)	$	100,000	Loans
Cumulative fair value hedging adjustments	$	(3,114)	Loans

(1)This amount is included in the amortized cost basis of a closed portfolio of loans used to designate hedging relationships in a portfolio layer method hedge in which the hedged item is anticipated to be outstanding for the designated hedge period. At March 31, 2023, the amortized cost basis of the closed portfolio used in this hedging relationship was $1.0 billion.

Derivatives not designated as hedging instruments

The Company enters into interest rate derivative contracts with certain of its commercial borrowers to enable those borrowers to manage their exposure to interest rate fluctuations. To mitigate interest rate risk associated with these derivative contracts, the Company enters into offsetting derivative contract positions with primary dealers. 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 nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the impact on earnings 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 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 zero at both September 30, 2022 and December 31, 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):

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~obligations

September 30, 2022
Weighted
Average Pay Rate / Strike Price Weighted
Average Receive Rate / Strike Price 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 swaps Variability of interest cash flows on variable rate borrowings 2.36% 3-Month LIBOR 2.3 $ 745,000 Other assets $ 1,263 $ —
Pay-fixed interest rate swaps Variability of interest cash flows on variable rate borrowings 2.31% SOFR 2.0 675,000 — —
Pay-fixed interest rate swaps Variability of interest cash flows on variable rate liabilities 1.22% Fed Funds Effective Rate 1.9 400,000 — —
Interest rate caps purchased, indexed to Fed Funds effective rate Variability of interest cash flows on variable rate liabilities 0.88% 2.7 200,000 Other assets 16,119 —
Interest rate collar, indexed to 1-month SOFR(1)
Variability of interest cash flows on variable rate loans 5.58% 1.50% 3.9 125,000 Other liabilities — (886)
Derivatives designated as fair value hedges:
Pay-fixed interest rate swaps Variability of fair value of fixed rate loans 1.94% SOFR 1.8 100,000 — —
Derivatives not designated as hedges:
Pay-fixed interest rate swaps 3.57% 1-Month LIBOR 4.2 1,401,769 Other assets / Other liabilities 25,608 (520)
Pay-variable interest rate swaps 1-Month LIBOR 3.57% 4.2 1,401,769 Other assets / Other liabilities 520 (102,423)
Pay-fixed interest rate swaps 4.20% SOFR 6.2 495,554 Other assets / Other liabilities 27,771 (629)
Pay-variable interest rate swaps SOFR 4.20% 6.2 495,554 Other assets / Other liabilities 630 (27,774)
Interest rate caps purchased, indexed to 1-month LIBOR 2.25% 3.0 42,920 Other assets 2,078 —
Interest rate caps sold, indexed to 1-month LIBOR 2.25% 3.0 42,920 Other liabilities — (2,075)
$ 6,125,486 $ 73,989 $ (134,307)

~~(1)~~The interest rate collar consists of a combination of zero-premium interest rate options. The Company sold a pay-variable cap with a strike price of 5.58%; sold a 0% floor; and purchased a receive-variable floor with a strike price of 1.50%.

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

December 31, 2021
Weighted
Average Pay Rate / Strike Price Weighted
Average Receive Rate / Strike Price 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 swaps Variability of interest cash flows on variable rate borrowings 2.35% 3-Month LIBOR 2.6 $ 905,000 Other liabilities $ — $ (2,687)
Pay-fixed forward-starting interest rate swaps Variability of interest cash flows on variable rate liabilities 0.87% Fed Funds Effective Rate 2.5 200,000 Other liabilities — —
Interest rate caps purchased, indexed to Fed Funds effective rate Variability of interest cash flows on variable rate liabilities 1.00% 3.5 200,000 Other assets 3,260 —
Derivatives not designated as hedges:
Pay-fixed interest rate swaps 3.57% Indexed to 1-month LIBOR or SOFR 5.0 1,668,517 Other assets / Other liabilities 3,369 (15,347)
Pay-variable interest rate swaps Indexed to 1-month LIBOR or SOFR 3.57% 5.0 1,668,517 Other assets / Other liabilities 51,947 (6,837)
Interest rate caps purchased, indexed to 1-month LIBOR 1.00% 4.0 25,000 Other assets 443 —
Interest rate caps sold, indexed to 1-month LIBOR 1.00% 4.0 25,000 Other liabilities — (443)
$ 4,692,034 $ 59,019 $ (25,314)

The following table ~~provides information about~~summarizes the ~~amount of loss related to~~Company's derivatives not designated as ~~cash flow hedges reclassified from AOCI into interest expense for the periods indicated (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Location of loss reclassified from AOCI into income:
Interest expense on borrowings $ (590) $ (13,905) $ (9,003) $ (43,762)
Interest expense on deposits 972 — (205) —
$ 382 $ (13,905) $ (9,208) $ (43,762)

~~During the three and nine months ended September 30, 2022 and 2021, no derivative positions designated~~hedging instruments as ~~cash flow hedges were discontinued and none~~ of the gains and losses reported in AOCI were reclassified into earnings as a result of the discontinuance of cash flow hedges or because of the early extinguishment of debt. As of September 30, 2022, the amount of net gain expected to be reclassified from AOCI into earnings during the next twelve months was $35.6 million. See Note 7 to the consolidated financial statements for additional information about the reclassification adjustments from AOCI into earnings.

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

~~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 September 30, Nine Months Ended September 30, Location of Gain (Loss) in Consolidated Statements of Income
2022 2021 2022 2021
Variability of fair value of fixed rate loans:
Fair value adjustment on derivatives $ 1,929 $ — $ 3,826 $ — Interest income on loans
Fair value adjustment on hedged items (1,985) — (3,970) — Interest income on loans
Loss recognized on fair value hedges (ineffective portion) $ (56) $ — $ (144) $ —
Variability of fair value of fixed rate borrowings:
Fair value adjustment on derivatives $ — $ (491) $ — $ (1,987) Interest expense on borrowings
Fair value adjustment on hedged items — 491 — 1,986 Interest expense on borrowings
Loss recognized on fair value hedges (ineffective portion) $ — $ — $ — $ (1)

~~Included in the table above are fair value hedges on fixed rate borrowings which matured during the year ended December 31, 2021.~~

~~The following table provides information about the hedged items related to derivatives designated as fair value hedges at~~ the dates indicated (in thousands):

~~September 30, 2022~~

~~December 31, 2021~~

~~Location in Consolidated Balance Sheets~~

~~Contractual balance outstanding of hedged item~~ ~~(1)~~

~~100,000~~

—

~~Loans~~

~~Cumulative fair value hedging adjustments~~

~~(3,970)~~

—

~~Loans~~


	March 31, 2023						December 31, 2022

	Notional Amount		Fair Value(1)				Notional Amount		Fair Value(1)
			Asset		Liability				Asset		Liability
Derivatives not designated as hedges:
Pay-fixed interest rate swaps	$	1,857,402	$	62,302	$	(5,155)	$	1,916,719	$	67,942	$	(2,195)
Pay-variable interest rate swaps	1,857,402		5,249		(92,488)		1,916,719		2,195		(120,320)
Interest rate caps purchased	42,920		1,830		—		42,920		1,988		—
Interest rate caps sold	42,920		—		(1,830)		42,920		—		(1,988)
	$	3,800,644	$	69,381	$	(99,473)	$	3,919,278	$	72,125	$	(124,503)

(1)~~This amount is~~ Fair value asset and liability derivatives are included in other assets and other liabilities, respectively in the amortized cost basis of a closed portfolio of loans used to designate hedging relationships in a portfolio layer method hedge in which the hedged item is anticipated to be outstanding for the designated hedge period. At September 30, 2022, the amortized cost basis of the closed portfolio used in this hedging relationship was $1.1 billion.consolidation balance sheets.

Some of the Company’s ISDA master agreements with financial institution counterparties contain provisions that permit either counterparty to terminate the agreements and require settlement in the event that regulatory capital ratios fall below certain designated thresholds, upon the initiation of other defined regulatory actions or upon suspension or withdrawal of the Bank’s credit rating. Currently, there are no circumstances that would trigger these provisions of the agreements.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Master netting agreements

The Company does not offset assets and liabilities under master netting agreements for financial reporting purposes. Information on interest rate swaps and caps subject to these agreements is as follows at the dates indicated (in thousands):


		September 30, 2022																							March 31, 2023

				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	Derivative assets	$	72,839			$	—			$	72,839			$	(2,035)			$	(67,982)				$	2,822		Derivative assets	$	77,957				$	—	$	77,957	$	(5,155)	$	(72,032)	$	770
Derivative liabilities	Derivative liabilities	(2,035)		��				(2,035)				2,035				—				—			Derivative liabilities		(5,155)				—			(5,155)		5,155		—		—
		$	70,804	$	—			$	70,804			$	—			$	(67,982)			$	2,822				$	72,802			$	—		$	72,802	$	—	$	(72,032)	$	770

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~


		December 31, 2021																							December 31, 2022

				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	Derivative assets	$	7,072			$	—			$	7,072			$	(3,104)			$	(3,915)				$	53		Derivative assets	$	86,544				$	—	$	86,544	$	(3,912)	$	(79,447)	$	3,185
Derivative liabilities	Derivative liabilities	(18,034)		—				(18,034)				3,104				14,557				(373)			Derivative liabilities		(3,912)				—			(3,912)		3,912		—		—
		$	(10,962)	$	—			$	(10,962)			$	—			$	10,642			$	(320)				$	82,632			$	—		$	82,632	$	—	$	(79,447)	$	3,185

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.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Note 7 Stockholders’ Equity

Accumulated Other Comprehensive Income

Changes in other comprehensive income are summarized as follows for the periods indicated (in thousands):

Three Months Ended September 30,
2022 2021
Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized gains (losses) on investment securities available for sale:
Net unrealized holding gains (losses) arising during the period $ (158,514) $ 41,214 $ (117,300) $ (21,751) $ 5,546 $ (16,205)
Amounts reclassified to gain on investment securities available for sale, net (349) 91 (258) (814) 208 (606)
Net change in unrealized gains (losses) on investment securities available for sale (158,863) 41,305 (117,558) (22,565) 5,754 (16,811)
Unrealized gains (losses) on derivative instruments:
Net unrealized holding gains (losses) arising during the period 41,209 (10,714) 30,495 1,695 (432) 1,263
Amounts reclassified to interest expense on deposits (972) 253 (719) — — —
Amounts reclassified to interest expense on borrowings 590 (154) 436 13,905 (3,546) 10,359
Net change in unrealized gains (losses) on derivative instruments 40,827 (10,615) 30,212 15,600 (3,978) 11,622
Other comprehensive loss $ (118,036) $ 30,690 $ (87,346) $ (6,965) $ 1,776 $ (5,189)

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~


	Three Months Ended March 31,
	2023						2022
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Unrealized gains (losses) on investment securities available for sale:
Net unrealized holding gains (losses) arising during the period	$	101,265	$	(26,329)	$	74,936	$	(236,434)	$	61,454	$	(174,980)
Amounts reclassified to gain on investment securities available for sale, net	(752)		196		(556)		(2,673)		695		(1,978)
Net change in unrealized gains (losses) on investment securities available for sale	100,513		(26,133)		74,380		(239,107)		62,149		(176,958)
Unrealized gains (losses) on derivative instruments:
Net unrealized holding gains (losses) arising during the period	(2,926)		761		(2,165)		41,963		(10,784)		31,179
Amounts reclassified to interest expense on deposits	(5,049)		1,313		(3,736)		722		(188)		534
Amounts reclassified to interest expense on borrowings	(7,497)		1,949		(5,548)		4,710		(1,224)		3,486
Amounts reclassified to interest income on loans	392		(102)		290		—		—		—

Net change in unrealized gains (losses) on derivative instruments	(15,080)		3,921		(11,159)		47,395		(12,196)		35,199
Other comprehensive income (loss)	$	85,433	$	(22,212)	$	63,221	$	(191,712)	$	49,953	$	(141,759)

Nine Months Ended September 30,
2022 2021
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 losses arising during the period $ (635,446) $ 165,197 $ (470,249) $ (33,240) $ 8,476 $ (24,764)
Amounts reclassified to gain on investment securities available for sale, net (3,927) 1,021 (2,906) (7,623) 1,944 (5,679)
Net change in unrealized gains (losses) on investment securities available for sale (639,373) 166,218 (473,155) (40,863) 10,420 (30,443)
Unrealized gains (losses) on derivative instruments:
Net unrealized holding gains arising during the period 100,559 (26,019) 74,540 22,725 (5,795) 16,930
Amounts reclassified to interest expense on deposits 205 (53) 152 — — —
Amounts reclassified to interest expense on borrowings 9,003 (2,341) 6,662 43,762 (11,159) 32,603
Net change in unrealized gains (losses) on derivative instruments 109,767 (28,413) 81,354 66,487 (16,954) 49,533
Other comprehensive income (loss) $ (529,606) $ 137,805 $ (391,801) $ 25,624 $ (6,534) $ 19,090

The categories of AOCI and changes therein are presented below for the periods indicated (in thousands):

Three Months Ended September 30,
Unrealized Gain (Loss) on
Investment Securities
Available for Sale Unrealized Gain (Loss)
on Derivative
Instruments Total
Balance at June 30, 2022 $ (352,738) $ 32,343 $ (320,395)
Other comprehensive income (loss) (117,558) 30,212 (87,346)
Balance at September 30, 2022 $ (470,296) $ 62,555 $ (407,741)
Balance at June 30, 2021 $ 50,167 $ (75,040) $ (24,873)
Other comprehensive income (loss) (16,811) 11,622 (5,189)
Balance at September 30, 2021 $ 33,356 $ (63,418) $ (30,062)

Nine Months Ended September 30,
Unrealized Gain (Loss) on
Investment Securities
Available for Sale Unrealized Gain (Loss)
on Derivative
Instruments Total
Balance at December 31, 2021 $ 2,859 $ (18,799) $ (15,940)
Other comprehensive income (loss) (473,155) 81,354 (391,801)
Balance at September 30, 2022 $ (470,296) $ 62,555 $ (407,741)
Balance at December 31, 2020 $ 63,799 $ (112,951) $ (49,152)
Other comprehensive income (loss) (30,443) 49,533 19,090
Balance at September 30, 2021 $ 33,356 $ (63,418) $ (30,062)


	Unrealized Gain (Loss) on Investment Securities Available for Sale		Unrealized Gain (Loss) on Derivative Instruments		Total





Balance at December 31, 2022	$	(498,911)	$	61,006	$	(437,905)
Other comprehensive income (loss)	74,380		(11,159)		63,221
Balance at March 31, 2023	$	(424,531)	$	49,847	$	(374,684)

Balance at December 31, 2021	$	2,859	$	(18,799)	$	(15,940)
Other comprehensive income (loss)	(176,958)		35,199		(141,759)
Balance at March 31, 2022	$	(174,099)	$	16,400	$	(157,699)

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

Note 8 Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis

The following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which those measurements are typically classified.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Investment securities available for sale and marketable equity securities—Fair value measurements are based on quoted prices in active markets when available; these measurements are classified within level 1 of the fair value hierarchy. These securities typically include U.S. Treasury securities and certain preferred stocks. If quoted prices in active markets are not available, fair values are estimated using quoted prices of securities with similar characteristics, quoted prices of identical securities in less active markets, discounted cash flow techniques, or matrix pricing models. These securities are generally classified within level 2 of the fair value hierarchy and include U.S. Government agency securities, U.S. Government agency and sponsored enterprise MBS, preferred stock investments for which level 1 valuations are not available, non-mortgage asset-backed securities, single family real estate-backed securities, private label residential MBS and CMOs, private label commercial MBS, collateralized loan obligations and state and municipal obligations. Pricing of these securities is generally primarily spread driven. Observable inputs that may impact the valuation of these securities include benchmark yield curves, credit spreads, reported trades, dealer quotes, bids, issuer spreads, current rating, historical constant prepayment rates, historical voluntary prepayment rates, structural and waterfall features of individual securities, published collateral data, and for certain securities, historical constant default rates and default severities.

The Company uses third-party pricing services in determining fair value measurements for investment securities. To obtain an understanding of the methodologies and assumptions used, management reviews written documentation provided by the pricing services, conducts interviews with valuation desk personnel and reviews model results and detailed assumptions used to value selected securities as considered necessary. Management has established a robust price challenge process that includes a review by the treasury front office of all prices provided on a 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. Any price discrepancies are resolved based on careful consideration of the assumptions and inputs employed by each of the pricing sources.

Derivative financial instruments—Fair values of interest rate swaps, caps and collars are determined using widely accepted discounted cash flow modeling techniques. These discounted cash flow models use projections of future cash payments and receipts that are discounted at mid-market rates. Observable inputs that may impact the valuation of these instruments include benchmark swap rates and benchmark forward yield curves. These fair value measurements are generally classified within level 2 of the fair value hierarchy.

2927

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~September 30, 2022~~March 31, 2023

The following tables present assets and liabilities measured at fair value on a recurring basis at the dates indicated (in thousands):


		September 30, 2022							March 31, 2023

		Level 1		Level 2		Total			Level 1		Level 2		Total
Investment securities available for sale:	Investment securities available for sale:							Investment securities available for sale:
U.S. Treasury securities	U.S. Treasury securities	$	95,932	$	—	$	95,932	U.S. Treasury securities	$	118,383	$	—	$	118,383
U.S. Government agency and sponsored enterprise residential MBS	U.S. Government agency and sponsored enterprise residential MBS	—		2,001,299		2,001,299		U.S. Government agency and sponsored enterprise residential MBS	—		1,980,533		1,980,533
U.S. Government agency and sponsored enterprise commercial MBS	U.S. Government agency and sponsored enterprise commercial MBS	—		535,266		535,266		U.S. Government agency and sponsored enterprise commercial MBS	—		518,382		518,382

Private label residential MBS and CMOs	Private label residential MBS and CMOs	—		2,587,586		2,587,586		Private label residential MBS and CMOs	—		2,525,482		2,525,482
Private label commercial MBS	Private label commercial MBS	—		2,583,888		2,583,888		Private label commercial MBS	—		2,434,819		2,434,819
Single family real estate-backed securities	Single family real estate-backed securities	—		478,055		478,055		Single family real estate-backed securities	—		448,501		448,501
Collateralized loan obligations	Collateralized loan obligations	—		1,059,523		1,059,523		Collateralized loan obligations	—		1,106,078		1,106,078
Non-mortgage asset-backed securities	Non-mortgage asset-backed securities	—		100,123		100,123		Non-mortgage asset-backed securities	—		94,099		94,099
State and municipal obligations	State and municipal obligations	—		113,524		113,524		State and municipal obligations	—		103,950		103,950
SBA securities	SBA securities	—		141,626		141,626		SBA securities	—		124,603		124,603

Marketable equity securities	Marketable equity securities	90,605		—		90,605		Marketable equity securities	68,769		—		68,769

Derivative assets	Derivative assets	—		73,989		73,989		Derivative assets	—		83,206		83,206
Total assets at fair value	Total assets at fair value	$	186,537	$	9,674,879	$	9,861,416	Total assets at fair value	$	187,152	$	9,419,653	$	9,606,805
Derivative liabilities	Derivative liabilities	$	—	$	(134,307)	$	(134,307)	Derivative liabilities	$	—	$	(99,473)	$	(99,473)
Total liabilities at fair value	Total liabilities at fair value	$	—	$	(134,307)	$	(134,307)	Total liabilities at fair value	$	—	$	(99,473)	$	(99,473)

December 31, 2021
Level 1 Level 2 Total
Investment securities available for sale:
U.S. Treasury securities $ 111,660 $ — $ 111,660
U.S. Government agency and sponsored enterprise residential MBS — 2,097,796 2,097,796
U.S. Government agency and sponsored enterprise commercial MBS — 856,899 856,899
Private label residential MBS and CMOs — 2,149,420 2,149,420
Private label commercial MBS — 2,604,010 2,604,010
Single family real estate-backed securities — 476,968 476,968
Collateralized loan obligations — 1,078,286 1,078,286
Non-mortgage asset-backed securities — 152,510 152,510
State and municipal obligations — 222,277 222,277
SBA securities — 183,595 183,595
Marketable equity securities 120,777 — 120,777
Servicing rights — 5,152 5,152
Derivative assets — 59,019 59,019
Total assets at fair value $ 232,437 $ 9,885,932 $ 10,118,369
Derivative liabilities $ — $ (25,314) $ (25,314)
Total liabilities at fair value $ — $ (25,314) $ (25,314)

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~


	December 31, 2022

	Level 1		Level 2		Total
Investment securities available for sale:
U.S. Treasury securities	$	135,841	$	—	$	135,841
U.S. Government agency and sponsored enterprise residential MBS	—		1,983,168		1,983,168
U.S. Government agency and sponsored enterprise commercial MBS	—		525,094		525,094

Private label residential MBS and CMOs	—		2,530,663		2,530,663
Private label commercial MBS	—		2,524,354		2,524,354
Single family real estate-backed securities	—		470,441		470,441
Collateralized loan obligations	—		1,136,463		1,136,463
Non-mortgage asset-backed securities	—		95,976		95,976
State and municipal obligations	—		116,661		116,661
SBA securities	—		135,782		135,782

Marketable equity securities	90,884		—		90,884

Derivative assets	—		88,739		88,739
Total assets at fair value	$	226,725	$	9,607,341	$	9,834,066
Derivative liabilities	$	—	$	(126,220)	$	(126,220)
Total liabilities at fair value	$	—	$	(126,220)	$	(126,220)

Assets and liabilities measured at fair value on a non-recurring basis

Following is a description of the methodologies used to estimate the fair values of assets and liabilities that may be measured at fair value on a non-recurring basis, and the level within the fair value hierarchy in which those measurements are typically classified.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Collateral dependent loans and OREO—The carrying amount of collateral dependent loans is typically based on the fair value of the underlying collateral, which may be real estate, enterprise value or other business assets, less estimated costs to sell when repayment is expected to come from the sale of the collateral. The carrying value of OREO is initially measured based on the fair value of the real estate acquired in foreclosure and subsequently adjusted to the lower of cost or estimated fair value, less estimated cost to sell. Fair values of real estate collateral and OREO are typically based on third-party real estate appraisals which utilize market and income approaches to valuation incorporating both observable and unobservable inputs.

Fair value measurements related to collateral dependent loans and OREO are generally classified within level 3 of the fair value hierarchy.

~~Operating lease equipment~~—Fair values of impaired operating lease equipment are typically based upon discounted cash flow analyses, considering expected lease rates and estimated end of life residual values, typically obtained from independent appraisals. These fair value measurements are classified within level 3 of the fair value hierarchy.

The following table presents the net carrying value of assets classified within level 3 of the fair value hierarchy at the dates indicated, for which non-recurring changes in fair value were recorded during the period then ended (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022

Collateral dependent loans	Collateral dependent loans	$	37,390	$	70,433	Collateral dependent loans	$	25,320	$	31,789

OREO	OREO	693		2,788		OREO	—		693
Operating lease equipment		—		11,429
		$	38,083	$	84,650
							$	25,320	$	32,482

The following table presents the carrying value and fair value of financial instruments and the level within the fair value hierarchy in which those measurements are classified at the dates indicated (dollars in thousands):

September 30, 2022 December 31, 2021
Level Carrying Value Fair Value Carrying Value Fair Value
Assets:
Cash and cash equivalents 1 $ 726,138 $ 726,138 $ 314,857 $ 314,857
Investment securities 1/2 $ 9,797,427 $ 9,797,467 $ 10,064,198 $ 10,064,887
Non-marketable equity securities 2 $ 261,784 $ 261,784 $ 135,859 $ 135,859
Loans, net 3 $ 24,136,061 $ 22,779,267 $ 23,638,596 $ 24,088,190
Derivative assets 2 $ 73,989 $ 73,989 $ 59,019 $ 59,019
Liabilities:
Demand, savings and money market deposits 2 $ 23,648,849 $ 23,648,849 $ 26,053,859 $ 26,053,859
Time deposits 2 $ 3,700,226 $ 3,666,917 $ 3,384,243 $ 3,388,435
Federal funds purchased 2 $ — $ — $ 199,000 $ 199,000
FHLB advances 2 $ 5,295,000 $ 5,293,836 $ 1,905,000 $ 1,905,629
Notes and other borrowings 2 $ 721,045 $ 691,841 $ 721,416 $ 813,095
Derivative liabilities 2 $ 134,307 $ 134,307 $ 25,314 $ 25,314


		March 31, 2023				December 31, 2022

	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash and cash equivalents	1	$	903,998	$	903,998	$	572,647	$	572,647
Investment securities	1/2	$	9,533,599	$	9,533,448	$	9,755,327	$	9,755,190
Non-marketable equity securities	2	$	384,697	$	384,697	$	294,172	$	294,172

Loans, net	3	$	24,734,102	$	23,595,163	$	24,738,042	$	23,342,950
Derivative assets	2	$	83,206	$	83,206	$	88,739	$	88,739
Liabilities:
Demand, savings and money market deposits	2	$	20,472,921	$	20,472,921	$	23,241,256	$	23,241,256
Time deposits	2	$	5,249,977	$	5,198,220	$	4,268,078	$	4,231,167
Federal funds purchased	2	$	—	$	—	$	190,000	$	190,000
FHLB advances	2	$	7,550,000	$	7,545,355	$	5,420,000	$	5,419,588
Notes and other borrowings	2	$	720,787	$	642,239	$	720,923	$	698,359
Derivative liabilities	2	$	99,473	$	99,473	$	126,220	$	126,220

~~Table of Contents~~

~~BANKUNITED, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~September 30, 2022~~

Note 9 Commitments and Contingencies

The Company issues off-balance sheet financial instruments to meet the financing needs of its customers. These financial instruments include commitments to fund loans, unfunded commitments under existing lines of credit, and commercial and standby letters of credit. These commitments expose the Company to varying degrees of credit and market risk which are essentially the same as those involved in extending loans to customers, and are subject to the same credit policies used in underwriting loans. Collateral may be obtained based on the Company’s credit evaluation of the counterparty. The Company’s maximum exposure to credit loss is represented by the contractual amount of these commitments.

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.

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Unfunded commitments under lines of credit

Unfunded commitments under lines of credit include commercial, commercial real estate and an insignificant amount of 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, so may not necessarily represent future liquidity requirements.

Commercial and standby letters of credit

Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These letters of credit are primarily issued to support trade transactions or guarantee arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Total lending related commitments outstanding at ~~September 30, 2022~~March 31, 2023 were as follows (in thousands):


Commitments to fund loans	$	~~618,765~~478,149

Unfunded commitments under lines of credit	~~5,386,312~~5,928,956
Commercial and standby letters of credit	~~113,730~~161,092
	$	~~6,118,807~~6,568,197

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.

3230

Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

March 31, 2023

Note 10 Deposits

The following table presents average balances and weighted average rates paid on deposits for the periods indicated (dollars in thousands):


	Three Months Ended March 31,
	2023				2022
	Average Balance		Average Rate Paid		Average Balance		Average Rate Paid
Demand deposits:
Non-interest bearing	$	7,458,221	—	%	$	9,047,864	—	%
Interest bearing	2,283,505		1.87	%	3,078,037		0.18	%
Savings and money market	12,145,922		3.06	%	13,401,332		0.21	%
Time	4,526,480		2.81	%	3,319,585		0.44	%
	$	26,414,128	2.05	%	$	28,846,818	0.17	%

Time deposit accounts with balances greater than $250,000 totaled $819 million and $730 million at March 31, 2023 and December 31, 2022, respectively.

The following table presents maturities of time deposits as of March 31, 2023 (in thousands):


Maturing in:
2023	$	3,534,369
2024	1,306,729
2025	97,271
2026	310,548
2027	1,032
Thereafter	28
	$	5,249,977

Included in deposits at March 31, 2023 are public funds deposits of $3.6 billion and brokered deposits of $5.2 billion.

Interest expense on deposits for the periods indicated was as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Interest bearing demand	$	10,545	$	1,364
Savings and money market	91,724		6,931
Time	31,361		3,562
	$	133,630	$	11,857

Certain of our non-interest bearing demand deposit accounts participate in various customer rebate programs. During the three months ended March 31, 2023 and 2022, costs related to these programs totaled $8.5 million and $1.6 million, respectively. These expenses are included in "other non-interest expense" in the accompanying consolidated statements of income.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to focus on significant matters impacting and changes in the financial condition and results of operations of the Company during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 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 ~~2021~~2022 Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~"2021~~"2022 Annual Report on Form 10-K").

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” "future" and similar expressions identify forward-looking statements. These forward-looking statements are based on the historical performance of the Company or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations so contemplated will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside the Company's direct ~~control.~~control, such as adverse events impacting the financial services industry. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, the risk factors described in Part I, Item 1A of the ~~2021~~2022 Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K. The Company does not undertake any obligation to publicly update or review any forward looking statement, whether as a result of new information, future developments or otherwise.

Overview

Recent Industry Developments

During March and April of 2023, three highly publicized regional bank closures led to industry-wide concerns and volatility related to bank valuations, liquidity, deposit outflows, unrealized securities losses and eroding customer confidence in the banking system. Despite these recent developments, our business is stable, our liquidity position is strong and our capital base remains robust. The Company took the following actions in response to these industry-wide developments:

•Activated our contingency funding plan, enhancing daily monitoring and reporting of liquidity trends and deposit flows, and optimized same day available liquidity by increasing cash levels and pledging additional assets to the FHLB and FRB;

•Equipped our relationship managers and branch personnel with information they could use in their outreach to customers;

•Supported our customers by offering our pre-existing ICS reciprocal insured deposit program to those with concerns about deposit insurance;

•Held regular company-wide calls to provide timely information to our employees;

•Maintained a regular cadence of communication with funding sources, counterparties and regulators;

•Made senior management available to customers as needed; and

•Are re-evaluating the Bank's concentration limits around certain types of larger deposits.

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 and the composition of earning assets and deposits, the composition and level of available liquidity, our interest rate risk profile, trends in funding mix and cost of funds. We analyze these ratios and trends against our own historical performance, our budgeted performance, our risk appetite and the financial condition and performance of comparable financial institutions.

Quarterly highlights include:

•Net income for the three months ended ~~September 30, 2022~~March 31, 2023 was ~~$87.9~~$52.9 million, or ~~$1.12~~$0.70 per diluted share, compared to ~~$65.8~~$64.2 million or $0.82 per diluted share for the immediately preceding three months ended ~~June 30,~~December 31, 2022 and ~~$86.9~~$67.2 million, or ~~$0.94~~$0.79 per diluted share, for the three months ended September 30, 2021. Net income for the nine months ended September 30, 2022 was $220.8 million, or $2.71 per diluted share, compared to $289.7 million, or $3.12 per diluted share, for the nine months ended September 30, 2021. Earnings for the nine months ended September 30, 2021 were favorably impacted by a $67.4 million recovery of the provision for credit losses.March 31, 2022.

•~~PPNR~~CET1 was ~~$120.8 million~~10.8% at the holding company and 12.5% at the Bank at March 31, 2023. Pro-forma CET1 at the holding company, including accumulated other comprehensive income, was 9.4% at March 31, 2023.

•Our liquidity position is strong. At March 31, 2023, the Bank had total same day available liquidity of approximately $9.4 billion. As of April 21, 2023, available liquidity had increased to approximately $12.3 billion. At March 31, 2023, the Bank's ratio of estimated insured and collateralized deposits to total deposits was 62% and its available liquidity to estimated uninsured, uncollateralized deposits ratio was 95%. The ratio of available liquidity to estimated uninsured, uncollateralized deposits improved to 128% at April 21, 2023.

•During the week immediately following the onset of recent events impacting the banking sector, the Bank experienced elevated deposit outflows; deposit flows stabilized thereafter. Total deposits declined by $1.79 billion during the three months ended March 31, 2023, while non-interest bearing demand deposits declined by $671 million. Net deposit outflows the week of March 13, 2023 totaled $1.75 billion. Outflows totaling $1.9 billion that week were attributable to a small number of larger institutional customers. For the weeks of March 20 and March 27, 2023, there were net deposit inflows totaling $245 million.

•Non-interest bearing demand deposits were 29% of total deposits at both March 31, 2023 and December 31, 2022.

•Net interest income and the net interest margin for the three months ended ~~September 30, 2022 compared~~March 31, 2023 were negatively impacted by an increase in the cost of funds which more than offset the increased yield on interest-earning assets. A greater than anticipated decline in average non-interest bearing deposits and an increase in on-balance sheet liquidity led to ~~$111.5 million for the immediately preceding three months ended June 30, 2022~~an increase in higher cost deposits and ~~$102.6 million for the three months ended September 30, 2021.~~

•FHLB advances. The net interest margin, calculated on a tax-equivalent basis, ~~expanded to 2.76%~~was 2.62% for the three months ended ~~September 30, 2022 from 2.63% for the immediately preceding quarter and 2.33%~~March 31, 2023, compared to 2.81% for the three months ended ~~September 30, 2021.~~December 31, 2022 and 2.50% for the three months ended March 31, 2022. Net interest income ~~increased~~decreased by ~~$10.4 million compared to the immediately preceding three months ended June 30, 2022 and by $40.7~~$15.2 million, compared to the three months ended ~~September 30, 2021.~~December 31, 2022 and increased by $19.2 million compared to the three months ended March 31, 2022.

•In response to the rising interest rate environment, tightening liquidity conditions and recent events impacting the banking sector, the average cost of total deposits ~~increased~~rose to ~~0.78%~~2.05% for the three months ended ~~September 30, 2022,~~March 31, 2023, from ~~0.30%~~1.42% for the immediately preceding three months ended ~~June 30,~~December 31, 2022 ~~and~~ ~~0.20% for the three months~~ ~~ended September 30, 2021.~~. The yield on average interest earning assets increased to ~~3.80%~~5.05% for the three months ended ~~September 30, 2022~~March 31, 2023, from ~~3.11%~~4.60% for the immediately preceding ~~quarter~~three months.

•For the three months ended March 31, 2023, the provision for credit losses was $19.8 million compared to provisions of $39.6 million and ~~2.79%~~$7.8 million for the three months ended ~~September 30, 2021.~~December 31, 2022 and March 31, 2022, respectively. The ratio of the ACL to total loans increased to 0.64%, at March 31, 2023 from 0.59% at December 31, 2022.

•Non-interest income for the three months ended March 31, 2023 included a $13.3 million net loss on certain preferred equity investments.

•Total loans was flat quarter-over-quarter, with a $111 million decline in residential offsetting net growth in the commercial segments of $118 million. The core C&I and CRE portfolio segments grew by $144 million.

•The pre-tax net unrealized loss on investment securities AFS improved by $100 million during the three months ended March 31, 2023 to $574 million from $674 million at December 31, 2022. The duration of the AFS portfolio was 1.95 at March 31, 2023. Securities held to maturity totaled only $10 million at March 31, 2023.

•The Company announced an increase of $0.02 per share in its common stock dividend for the three months ended March 31, 2023, to $0.27 per common share, reflecting an 8% increase from the previous level of $0.25 per share.

•During the three months ended March 31, 2023, the Company repurchased approximately 1.6 million shares of its common stock for an aggregate purchase price of $55.0 million, at a weighted average price of $33.41 per share. In light of the current macro-environment, we have suspended share repurchase activity.

•For the three months ended September 30, 2022, the Company recorded a provision for credit losses of $3.7 million compared to a provision of $24.0 million for the immediately preceding three months ended June 30, 2022 and a recovery of the provision for credit losses of $(11.8) million for the three months ended September 30, 2021. The ratio of the ACL to total loans was consistent with the prior quarter-end at 0.54%.

•Loans, excluding the runoff of PPP loans, grew by $186 million for the three months ended September 30, 2022. The C&I and commercial real estate portfolio segments grew by a total of $444 million. As expected given the market-wide decline in mortgage origination activity, mortgage warehouse loans declined by $194 million.

•Total deposits declined by $1.1 billion during the three months ended September 30, 2022. Non-interest bearing demand deposits declined by $851 million to 32% of total deposits, from 34% of total deposits at June 30, 2022. Year to date, non-interest bearing demand deposits declined by $182 million. Time deposits grew by $976 million during the three months ended September 30, 2022, reflecting a strategy to extend the term of deposits.

•The positive trend in levels of criticized and classified loans continued during the three months ended September 30, 2022, declining by $175 million; the annualized net charge-off ratio was 0.16% compared to 0.29% for the year ended December 31, 2021. The ratio of non-performing loans to total loans was 0.64% at September 30, 2022. The guaranteed portion of SBA loans on non-accrual status represented 0.17% of total loans and 27% of non-performing loans at September 30, 2022.

•Book value ~~per common share~~ and tangible book value per common share ~~were $31.97~~improved to $33.34 and ~~$30.97,~~$32.30, respectively, at ~~September 30,~~March 31, 2023, from $32.19 and $31.16, respectively at December 31, 2022.

•In September 2022, the Company's Board of Directors authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock. During the three months ended September 30, 2022, the Company repurchased approximately 0.3 million shares of its common stock for an aggregate purchase price of $10.8 million, at a weighted average price of $34.36 per share.

~~Hurricane Ian~~

In September 2022, Hurricane Ian made landfall on the southwest Florida coast. The Company did not sustain significant damage or disruption to facilities or operations. The Company had approximately $2.3 billion UPB, based on September 30, 2022 balances, of loans within a 20 county assessment area most impacted by the storm. As of October 25, 2022, we have contacted borrowers representing approximately 75% of this exposure. No borrowers reported severe impact from the storm; borrowers representing approximately $159 million in UPB reported mild or moderate impact on their properties or businesses. Based on information collected to date, we do not expect the impact of the storm to be material to our financial condition or results of operations.

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. For the quarter ended March 31, 2023, the mix of interest bearing liabilities was negatively impacted by a higher rate environment, the quantitative tightening policy stance of the FRB which has led to a decline in deposit levels across the banking industry and deposit outflows related to events that impacted the banking sector in March, 2023. These factors contributed to a decline in average non-interest bearing demand deposits and to an increase in higher cost funding sources, including wholesale funding such as FHLB advances.

The following table presents, for the periods indicated, information about (i) average balances, the total dollar amount of taxable equivalent interest income from earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Non-accrual loans are included in the average balances presented in this table; however, interest income foregone on non-accrual loans is not included. Interest income, yields, spread and margin have been calculated on a tax-equivalent basis for loans and investment securities that are exempt from federal income taxes, at a federal tax rate of 21% (dollars in thousands):


		Three Months Ended September 30, 2022						Three Months Ended June 30, 2022										Three Months Ended September 30, 2021							Three Months Ended March 31,
																	March 31, 2023									December 31, 2022							March 31, 2022
		Average Balance		Interest (1)		Yield/ Rate (1)(2)				Average Balance			Interest (1)			Yield/ Rate (1)(2)									Average Balance		Interest (1)		Yield/ Rate (1)(2)		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:	Assets:																							Assets:
Interest earning assets:	Interest earning assets:																							Interest earning assets:

Loans	Loans	$	24,053,742	$	248,168	4.11	%	$	23,709,190		$	212,395		3.59	%			$	22,879,654	$	197,995	3.45	%	Loans	$	24,724,296	$	312,125	5.10	%		$	24,624,062		$	292,272		4.72	%		$	23,349,143		$	194,551		3.36	%
Investment securities (3)	Investment securities (3)	9,981,486		77,840		3.12	%	10,477,600			55,488			2.12	%			10,452,255		38,939		1.49	%	Investment securities (3)	9,672,514		119,666		4.95	%		9,788,969			106,034			4.33	%		10,083,083			43,719			1.73	%
Other interest earning assets	Other interest earning assets	596,879		4,031		2.68	%	718,904			2,979			1.66	%			750,700		1,413		0.75	%	Other interest earning assets	1,039,563		12,863		5.02	%		710,315			7,345			4.10	%		674,640			1,354			0.81	%
Total interest earning assets	Total interest earning assets	34,632,107		330,039		3.80	%	34,905,694			270,862			3.11	%			34,082,609		238,347		2.79	%	Total interest earning assets	35,436,373		444,654		5.05	%		35,123,346			405,651			4.60	%		34,106,866			239,624			2.83	%
Allowance for credit losses	Allowance for credit losses	(133,828)						(127,864)										(171,381)						Allowance for credit losses	(151,071)							(137,300)									(129,028)
Non-interest earning assets	Non-interest earning assets	1,703,371						1,669,689										1,856,608						Non-interest earning assets	1,793,000							1,837,156									1,674,476
Total assets	Total assets	$	36,201,650					$	36,447,519									$	35,767,836					Total assets	$	37,078,302						$	36,823,202								$	35,652,314
Liabilities and Stockholders' Equity:	Liabilities and Stockholders' Equity:																							Liabilities and Stockholders' Equity:
Interest bearing liabilities:	Interest bearing liabilities:																							Interest bearing liabilities:
Interest bearing demand deposits	Interest bearing demand deposits	$	2,306,906	$	4,104	0.71	%	$	2,576,257		$	1,742		0.27	%			$	3,038,038	$	1,701	0.22	%	Interest bearing demand deposits	$	2,283,505	10,545		1.87	%		$	2,183,854		6,704			1.22	%		$	3,078,037		1,364			0.18	%
Savings and money market deposits	Savings and money market deposits	13,001,566		39,838		1.22	%	13,052,566			15,213			0.47	%			13,554,572		10,029		0.29	%	Savings and money market deposits	12,145,922		91,724		3.06	%		12,054,892			68,001			2.24	%		13,401,332			6,931			0.21	%
Time deposits	Time deposits	3,255,869		9,264		1.13	%	2,812,988			3,546			0.51	%			2,866,746		2,543		0.35	%	Time deposits	4,526,480		31,361		2.81	%		3,960,111			19,698			1.97	%		3,319,585			3,562			0.44	%
Total interest bearing deposits	Total interest bearing deposits	18,564,341		53,206		1.14	%	18,441,811			20,501			0.45	%			19,459,356		14,273		0.29	%	Total interest bearing deposits	18,955,907		133,630		2.86	%		18,198,857			94,403			2.06	%		19,798,954			11,857			0.24	%
Federal funds purchased	Federal funds purchased	153,905		833		2.12	%	115,146			155			0.53	%			70,054		15		0.08	%	Federal funds purchased	143,580		1,611		4.49	%		175,637			1,677			3.74	%		187,539			58			0.12	%
FHLB advances	FHLB advances	4,739,457		26,890		2.25	%	4,373,736			11,644			1.07	%			2,647,314		15,678		2.35	%	FHLB advances	6,465,000		68,039		4.27	%		6,125,435			53,084			3.44	%		2,248,889			6,146			1.11	%
Notes and other borrowings	Notes and other borrowings	721,164		9,259		5.14	%	721,284			9,257			5.13	%			721,638		9,257		5.13	%	Notes and other borrowings	720,906		9,262		5.14	%		721,044			9,260			5.14	%		721,405			9,261			5.13	%
Total interest bearing liabilities	Total interest bearing liabilities	24,178,867		90,188		1.48	%	23,651,977			41,557			0.70	%			22,898,362		39,223		0.68	%	Total interest bearing liabilities	26,285,393		212,542		3.28	%		25,220,973			158,424			2.49	%		22,956,787			27,322			0.48	%
Non-interest bearing demand deposits	Non-interest bearing demand deposits	8,749,794						9,419,025										8,912,960						Non-interest bearing demand deposits	7,458,221							8,237,885									9,047,864
Other non-interest bearing liabilities	Other non-interest bearing liabilities	697,440						654,162										752,774						Other non-interest bearing liabilities	821,419							879,207									623,200
Total liabilities	Total liabilities	33,626,101						33,725,164										32,564,096						Total liabilities	34,565,033							34,338,065									32,627,851
Stockholders' equity	Stockholders' equity	2,575,549						2,722,355										3,203,740						Stockholders' equity	2,513,269							2,485,137									3,024,463
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	36,201,650					$	36,447,519									$	35,767,836					Total liabilities and stockholders' equity	$	37,078,302						$	36,823,202								$	35,652,314
Net interest income	Net interest income			$	239,851						$	229,305								$	199,124			Net interest income			$	232,112							$	247,227								$	212,302
Interest rate spread	Interest rate spread					2.32	%							2.41	%							2.11	%	Interest rate spread					1.77	%								2.11	%								2.35	%
Net interest margin	Net interest margin					2.76	%							2.63	%							2.33	%	Net interest margin					2.62	%								2.81	%								2.50	%

(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $3.3 million ~~$3.2 million and $3.3 million~~ for the three months ended ~~September 30, 2022, June 30,~~March 31, 2023 and $3.0 million for both the three months ended December 31, 2022 and ~~September 30, 2021, respectively.~~March 31, 2022. The tax-equivalent adjustment for tax-exempt investment securities was $0.9 million for both the three months ended March 31, 2023 and December 31, 2022, and $0.7 million for ~~all periods presented.~~the three months ended March 31, 2022.

(2)~~Annualized.~~Annualized

(3)At fair value except for securities held to maturity.

Nine Months Ended September 30,
2022 2021
Average
Balance
Interest (1)
Yield/
Rate (1)(2)
Average
Balance
Interest (1)
Yield/
Rate (1)(2)
Assets:
Interest earning assets:
Loans $ 23,706,606 $ 655,114 3.69 % $ 23,139,389 $ 612,756 3.54 %
Investment securities (3)
10,180,351 177,047 2.32 % 9,792,350 116,464 1.59 %
Other interest earning assets 663,189 8,364 1.69 % 1,063,476 4,613 0.58 %
Total interest earning assets 34,550,146 840,525 3.25 % 33,995,215 733,833 2.88 %
Allowance for credit losses (130,258) (213,352)
Non-interest earning assets 1,682,618 1,771,639
Total assets $ 36,102,506 $ 35,553,502
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest bearing demand deposits $ 2,658,558 7,215 0.36 % $ 3,017,301 7,069 0.31 %
Savings and money market deposits 13,150,357 62,704 0.64 % 13,299,066 33,463 0.34 %
Time deposits 3,129,247 15,650 0.67 % 3,520,674 13,433 0.51 %
Total interest bearing deposits 18,938,162 85,569 0.60 % 19,837,041 53,965 0.36 %
Federal funds purchased 152,028 1,046 0.92 % 26,245 17 0.09 %
FHLB advances 3,796,484 44,680 1.57 % 2,863,093 50,158 2.34 %
Notes and other borrowings 721,283 27,772 5.13 % 721,897 27,762 5.13 %
Total interest bearing liabilities 23,607,957 159,067 0.90 % 23,448,276 131,902 0.75 %
Non-interest bearing demand deposits 9,071,135 8,194,570
Other non-interest bearing liabilities 650,936 783,618
Total liabilities 33,330,028 32,426,464
Stockholders' equity 2,772,478 3,127,038
Total liabilities and stockholders' equity $ 36,102,506 $ 35,553,502
Net interest income $ 681,458 $ 601,931
Interest rate spread 2.35 % 2.13 %
Net interest margin 2.63 % 2.36 %

~~(1)~~On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $9.4 million and $10.2 million for the nine months ended September 30, 2022 and 2021, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $2.1 million and $2.0 million for the nine months ended September 30, 2022 and 2021, respectively.

~~(2)Annualized.~~

~~(3) At fair value except for securities held to maturity.~~

Three months ended ~~September 30, 2022~~March 31, 2023 compared to the ~~immediately preceding~~ three months ended ~~June 30,~~December 31, 2022

Net interest income, calculated on a tax-equivalent basis, was ~~$239.9~~$232.1 million for the three months ended ~~September 30, 2022~~,March 31, 2023, compared to ~~$229.3~~$247.2 million for the three months ended ~~June 30,~~December 31, 2022, ~~an increase~~a decrease of ~~$10.5~~$15.1 million. The ~~increase~~decrease in net interest income was comprised of ~~an increase~~increases in tax-equivalent interest income and interest expense of $39.0 million and $54.1 million, respectively, for the ~~$59.2 million~~three months ended March 31, 2023 ~~partially offset~~, compared to the three months ended December 31, 2022. Overall, the net interest margin was negatively impacted by an increase in the cost of ~~$48.6 million~~interest-bearing deposits and FHLB advances, more than offsetting the increased yield on interest earnings assets. A decline in ~~interest expense. The~~average non-interest bearing deposits and an increase in ~~interest income reflected higher yields on loans and investment securities. The~~on-balance sheet liquidity contributed to an increase in ~~interest expense reflected a higher cost of interest bearing deposits in response to the rising interest rate environment.~~higher-cost funding.

The net interest margin, calculated on a tax-equivalent basis, was ~~2.76%~~2.62% for the three months ended ~~September 30, 2022,~~March 31, 2023, compared to ~~2.63%~~2.81% for the three months ended ~~June 30,~~December 31, 2022. ~~Offsetting~~More detail about factors impacting the net interest margin for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the ~~immediately preceding~~ three months ended ~~June 30,~~December 31, 2022 included:

•The tax-equivalent yield on investment securities increased to ~~3.12%~~4.95% for the three months ended March 31, 2023, from ~~2.12%.~~4.33% for the three months ended December 31, 2022. This increase resulted primarily from the reset of coupon rates on variable rate ~~securities as well as purchases of securities at higher yields.~~securities.

•The tax-equivalent yield on loans increased to ~~4.11%~~ 5.10% for the three months ended March 31, 2023, from ~~3.59%.~~4.72% for the three months ended December 31, 2022. Factors contributing to this increase were the resetting of variable rate loans at higher coupon rates and originations of new loans at higher rates.

•The average rate paid on interest bearing deposits increased to ~~1.14%~~2.86% for the three months ended March 31, 2023, from 2.06% for the ~~0.45%~~three months ended December 31, 2022, ~~primarily~~ in response to the rising interest rate ~~environment.~~ ~~Growth in time deposits as a percentage of interest~~environment, tightening liquidity conditions and the shift from non-interest bearing deposits to deposits priced at current, higher market rates.

•The average rate paid on FHLB advances increased to 4.27% for the three months ended March 31, 2023, from 3.44% for the three months ended December 31, 2022, primarily due to higher prevailing rates.

•Average non-interest bearing demand deposits declined by $780 million while average cash balances increased by $313 million for the three months ended March 31, 2023. Correspondingly, the increase in average interest-bearing sources of funds added to the balance sheet at higher current rates totaled $1.1 billion for the three months ended March 31, 2023. The estimated impact of this shift on the net interest margin for the three months ended March 31, 2023 was 0.14%.

Three months ended March 31, 2023 compared to the three months ended March 31, 2022

Net interest income, calculated on a tax-equivalent basis, was $232.1 million for the three months ended March 31, 2023, compared to $212.3 million for the three months ended March 31, 2022, an increase of $19.8 million. The increase in net interest income was comprised of increases in tax-equivalent interest income and interest expense of $205.0 million and $185.2 million, respectively, for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The increase in tax equivalent interest income was driven primarily by increases in interest income from loans and investment securities of $117.6 million and $75.9 million, respectively, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The increase in interest expense was driven by increases in interest expense on deposits and borrowings of $121.8 million and $63.4 million, respectively, for the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Increases in interest income for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 reflected increases in both the average balance of and the yields on loans and rising yields on investment securities. Increases in interest expense for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 reflected the increase in the cost of interest-bearing deposits partially offset by a decline in the average balance and an increase in both the cost and average balance of FHLB advances. A decline in average non-interest bearing deposits and an increase in on-balance sheet liquidity also contributed to the increase in interest expense.

The net interest margin, calculated on a tax-equivalent basis, was 2.62% for the three months ended March 31, 2023 compared to 2.50% for thethree months ended March 31, 2022. Offsetting factors impacting the net interest margin for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 included:

•The tax-equivalent yield on loans expanded to 5.10% for the three months ended March 31, 2023, from 3.36% for the three months ended March 31, 2022. Factors contributing to this increase ~~as we implemented a strategy to extend~~were the ~~term~~resetting of ~~interest bearing deposits.~~variable rate loans at higher coupon rates and originations of new loans at higher rates.

•The average rate paid on FHLB advances increased to 2.25% for the three months ended September 30, 2022, from 1.07% for the three months ended June 30, 2022, primarily in response to the rising interest rate environment.

~~Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021~~

~~Net interest income, calculated on a tax-equivalent basis, was~~ ~~$239.9 million for the~~ ~~three months ended September 30, 2022, compared to~~ $199.1 million for the three months ended September 30, 2021, an increase of $40.7 million. Net interest income, calculated on a tax-equivalent basis, was $681.5 million for the nine months ended September 30, 2022, compared to $601.9 million for the nine months ended September 30, 2021, an increase of $79.5 million. The increases in net interest income were comprised ~~of increases in tax-equivalent interest income of~~ ~~$91.7 million and $106.7 million partially offset by increases in~~ ~~interest expense of~~ ~~$51.0 million and $27.2 million for the three and nine months ended September 30, 2022, respectively, compared to the three and nine months ended September 30, 2021, respectively.~~

Increases in interest income for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021, reflected increases in both the average balance of and yields on loans and rising yields on investment securities. Increases in interest expense for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021, reflected the increased cost of interest bearing deposits related to the rising rate environment, partially offset by declines in the related average balances. For the comparative three-month periods, interest expense on FHLB advances increased mainly due to an increase in the average balance, while for the comparative nine-month periods, interest expense on FHLB advances declined due to a decrease in the weighted average rate, partially offset by an increase in the average balance.

~~The net interest margin, calculated on a tax-equivalent basis, was~~ 2.76% for the three months ended September 30, 2022, compared to 2.33% for the three months ended September 30, 2021. The net interest margin, calculated on a tax-equivalent basis, was 2.63% for the nine months ended September 30, 2022, compared to 2.36% for the nine months ended September 30, 2021. Offsetting factors impacting the net interest margin for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021 included:

•~~The tax-equivalent yield on loans expanded to~~ 4.11% and 3.69% for the three and nine months ended September 30, 2022, respectively, from 3.45% and 3.54% for the three and nine months ended September 30, 2021, respectively. Factors contributing to the increases in the tax-equivalent yield on loans for the three and nine months ended September 30, 2022, compared to the comparable periods in 2021 were largely consistent with those discussed above.

•~~The~~ tax-equivalent yield on investment securities increased to ~~3.12% and 2.32%~~4.95% for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 from ~~1.49% and 1.59%~~1.73% for the three ~~and nine~~ months ended ~~September 30, 2021, respectively. The~~March 31, 2022. This increase resulted primarily from the reset of coupon rates on variable rate securities as well as purchases of ~~higher-yielding~~ securities ~~and slowing prepayment speeds on securities purchased~~ at ~~a premium contributed to these increases in~~higher yields.

•The average rate paid on interest bearing deposits increased to ~~1.14% and 0.60%~~2.86% for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 from ~~0.29% and 0.36%~~0.24% for the three ~~and nine~~ months ended ~~September 30, 2021, respectively, reflecting~~March 31, 2022, primarily in response to the ~~increasing trend in the Fed's benchmark rate.~~rising interest rate environment and tightening liquidity conditions.

•The average rate paid on FHLB advances ~~decreased~~increased to 4.27%~~2.25% and 1.57%~~ for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 from ~~2.35% and 2.34%~~ 1.11% for the three ~~and nine~~ months ended ~~September 30, 2021, respectively. The decreases resulted from the maturity of~~March 31, 2022, primarily due to higher ~~rate advances and the termination of certain cash flow hedges in the fourth quarter of 2021, coupled with the addition of FHLB advances at lower~~ prevailing rates.

Provision for Credit Losses

The provision for credit losses is a charge or credit to earnings required to maintain the ACL at a level consistent with management’s estimate of expected credit losses on financial assets carried at amortized cost at the balance sheet date. The amount of the provision is impacted by changes in current economic conditions as well as in management's reasonable and supportable economic forecast, loan originations and runoff, changes in portfolio mix, risk rating migration and portfolio seasoning, changes in specific reserves, changes in expected prepayment speeds and other assumptions. The provision for credit losses also includes amounts related to off-balance sheet credit exposures and may include amounts related to accrued interest receivable and AFS debt securities.

The following table presents the components of the provision for ~~(recovery of)~~ credit losses for the periods indicated (in thousands):


	Three Months Ended March 31,
	2023		2022
Amount related to funded portion of loans	$	17,595	$	7,446
Amount related to off-balance sheet credit exposures	2,193		384


Total provision for credit losses	$	19,788	$	7,830

The most significant factors impacting the provision for credit losses for the three months ended ~~September 30, 2022, included~~March 31, 2023 were a deteriorating economic forecast and an increase ~~related to the updated economic forecast, increases in specific reserves, loan growth and a $5 million provision related to the potential impact of Hurricane Ian, partially offset by decreases~~ in certain ~~qualitative factors and the impact of improving borrower financial results.~~

~~The provision for credit losses for the nine months ended September 30, 2022 was impacted by increases in~~ specific ~~reserves, the $5 million provision related to Hurricane Ian, loan growth, the decline in criticized and classified assets, and changes in certain assumptions, particularly prepayment speeds.~~reserves.

The provision for credit losses may continue to be volatile and the level of the ACL may change materially from current levels. Future levels of the ACL could be significantly impacted, in either direction, by changes in factors such as economic conditions or the economic outlook, in composition of the loan portfolio, in the financial condition of our borrowers and collateral values.

The determination of the amount of the ACL is complex and involves a high degree of judgment and subjectivity. See “Analysis of the Allowance for Credit Losses” below for more information about how we determine the appropriate level of the ACL and about factors that impacted the ACL and provision for ~~the three and nine months ended September 30, 2022.~~credit losses.

Non-Interest Income

The following table presents a comparison of the categories of non-interest income for the periods indicated (in thousands):


		Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended March 31,
			2022		2021		2022			2021			2023		2022
Deposit service charges and fees	Deposit service charges and fees		$	6,064	$	5,553	$	17,920		$	15,870	Deposit service charges and fees	$	5,545	$	5,960

Gain (loss) on investment securities:	Gain (loss) on investment securities:											Gain (loss) on investment securities:
Net realized gain on sale of securities AFS	Net realized gain on sale of securities AFS		349		815		3,927			7,623		Net realized gain on sale of securities AFS	752		2,673
Net unrealized loss on marketable equity securities			(214)		(1,479)		(20,052)			(1,767)
Gain (loss) on investment securities, net			135		(664)		(16,125)			5,856
Net loss on marketable equity securities recognized in earnings												Net loss on marketable equity securities recognized in earnings	(13,301)		(10,541)
Loss on investment securities, net												Loss on investment securities, net	(12,549)		(7,868)
Lease financing	Lease financing		13,180		13,212		39,958			39,222		Lease financing	13,109		13,415
Other non-interest income	Other non-interest income		3,693		7,377		9,070			27,583		Other non-interest income	10,430		2,794
			$	23,072	$	25,478	$	50,823		$	88,531		$	16,535	$	14,301

The ~~unrealized losses~~loss on ~~marketable equity~~investment securities ~~reflected in~~during both the ~~table above were~~three months ended March 31, 2023 and March 31, 2022 was attributable to ~~the decline in the fair value of~~losses related to certain preferred ~~stock investments resulting from rising market interest rates and widening spreads.~~

The most significant factors leading to the decrease in other non-interest income for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021, were declines in BOLI revenue related to the rising interest rate environment and lower gains on sale of loans. Lower gains on sale of loans related to a less favorable environment for the re-pooling of GNMA early buyout loans, again related to the rising interest rate environment.equity investments.

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The most significant factor leading to the increase in other non-interest income for the three months ended March 31, 2023, compared to the three months ended March 31, 2022, was an increase in income related to the COLI assets supporting our deferred compensation plan. Lending related fees and gain on sale of buyout loans also increased comparatively.

Non-Interest Expense

The following table presents the components of non-interest expense for the periods indicated (in thousands):


		Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended March 31,
			2022		2021		2022			2021			2023		2022
Employee compensation and benefits	Employee compensation and benefits		$	66,097	$	57,224	$	195,646		$	172,971	Employee compensation and benefits	$	71,051	$	67,088
Occupancy and equipment	Occupancy and equipment		11,719		11,760		34,630			35,127		Occupancy and equipment	10,802		11,512
Deposit insurance expense	Deposit insurance expense		4,398		3,552		11,794			15,224		Deposit insurance expense	7,907		3,403
Professional fees	Professional fees		3,184		2,312		8,702			6,363		Professional fees	2,918		2,262
Technology	Technology		19,813		16,687		54,715			49,279		Technology	21,726		17,004

Depreciation of operating lease equipment			12,646		12,944		37,841			37,995
Depreciation and impairment of operating lease equipment												Depreciation and impairment of operating lease equipment	11,521		12,610

Other non-interest expense	Other non-interest expense		20,248		13,563		48,503			42,756		Other non-interest expense	26,855		12,445
Total non-interest expense	Total non-interest expense		$	138,105	$	118,042	$	391,831		$	359,715	Total non-interest expense	$	152,780	$	126,324

Non-interest expense increased by $20.1 million and $32.1 million for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021. As expected, an increasing trend was reflectedIncreases in ~~the~~employee compensation and benefits and technology ~~categories, as we continue to invest~~expenses reflected labor market dynamics and continuing investment in people and technology to support future growth. ~~Compensation~~

Deposit insurance expense ~~also reflects increasing costs related to the competitive labor market and medical benefits. The increase in other non-interest expense includes a $2.3~~increased by $4.5 million ~~write-off of a technology investment during~~for the three months ended ~~September 30,~~March 31, 2023, compared to the three months ended March 31, 2022, reflecting an increase in the assessment rate.

Other non-interest expense for the three months ended March 31, 2023 included $4.4 million related to certain operational and fraud losses. Costs related to deposit rebate and commissions programs increased by $6.9 million for the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Income Taxes

See Note 5 to the consolidated financial statements for information about income taxes.

Analysis of Financial Condition

~~Average interest-earning assets increased~~Influenced by ~~$555 million to $34.6 billion for~~recent events impacting the ~~nine months ended September 30, 2022 from $34.0 billion for~~banking sector, the nine months ended September 30, 2021, reflecting increases in average balances of both loans and investment securities. Average interest bearing liabilities increased by $160 million. Average FHLB advances increased by $933 million. Average interest-bearing deposits declined by $899 million, while average non-interest bearing deposits increased by $877 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021; average total deposits was stable for the comparative nine-month periods. DuringCompany's funding mix shifted during the three months ended ~~September 30, 2022, in response to~~March 31, 2023, as total deposits declined by $1.8 billion, while FHLB advances and Fed Funds purchased grew by a net $1.9 billion. The funding mix was also impacted by the rising ~~interest~~ rate environment, ~~and quantitative tightening by the Fed, average interest bearing liabilities increased by $527 million, while average non-interest~~as customers sought higher yields on their cash balances. Non-interest bearing demand deposits decreased by $671 million, while time deposits grew by $982 million during the quarter ended March 31, 2023.

Cash and cash equivalents grew by $331 million for the quarter to $904 million at March 31, 2023, while investment securities declined by ~~$669 million.~~$222 million, inclusive of a $100 million improvement in the level of net unrealized losses. Total loans was essentially flat to December 31, 2022, growing by $6.9 million for the three months ended March 31, 2023, with a decline in residential being offset by net growth in the commercial segments.

3938

Investment Securities

The following table shows the amortized cost and carrying value, which, with the exception of investment securities held to maturity, is fair value, of investment securities at the dates indicated (in thousands):


		September 30, 2022				December 31, 2021				March 31, 2023				December 31, 2022
		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value				Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
U.S. Treasury securities	U.S. Treasury securities	$	109,441	$	95,932	$	114,385	$	111,660		U.S. Treasury securities	$	129,140	$	118,383	$	148,956	$	135,841
U.S. Government agency and sponsored enterprise residential MBS	U.S. Government agency and sponsored enterprise residential MBS	2,049,680		2,001,299		2,093,283		2,097,796			U.S. Government agency and sponsored enterprise residential MBS	2,028,070		1,980,533		2,036,693		1,983,168
U.S. Government agency and sponsored enterprise commercial MBS	U.S. Government agency and sponsored enterprise commercial MBS	612,022		535,266		861,925		856,899			U.S. Government agency and sponsored enterprise commercial MBS	584,464		518,382		600,517		525,094

Private label residential MBS and CMOs	Private label residential MBS and CMOs	2,893,779		2,587,586		2,160,136		2,149,420			Private label residential MBS and CMOs	2,825,107		2,525,482		2,864,589		2,530,663
Private label commercial MBS	Private label commercial MBS	2,693,231		2,583,888		2,604,690		2,604,010			Private label commercial MBS	2,533,319		2,434,819		2,645,168		2,524,354
Single family real estate-backed securities	Single family real estate-backed securities	505,288		478,055		474,845		476,968			Single family real estate-backed securities	468,225		448,501		502,194		470,441
Collateralized loan obligations	Collateralized loan obligations	1,094,064		1,059,523		1,079,217		1,078,286			Collateralized loan obligations	1,126,532		1,106,078		1,166,838		1,136,463
Non-mortgage asset-backed securities	Non-mortgage asset-backed securities	106,672		100,123		151,091		152,510			Non-mortgage asset-backed securities	98,812		94,099		102,194		95,976
State and municipal obligations	State and municipal obligations	122,966		113,524		205,718		222,277			State and municipal obligations	106,897		103,950		122,181		116,661
SBA securities	SBA securities	145,216		141,626		184,296		183,595			SBA securities	127,959		124,603		139,320		135,782

Investment securities held to maturity	Investment securities held to maturity	10,000		10,000		10,000		10,000			Investment securities held to maturity	10,000		10,000		10,000		10,000
		$	10,342,359	9,706,822		$	9,939,586	9,943,421				$	10,038,525	9,464,830		$	10,338,650	9,664,443
Marketable equity securities	Marketable equity securities			90,605				120,777			Marketable equity securities			68,769				90,884
				$	9,797,427			$	10,064,198					$	9,533,599			$	9,755,327

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 and U.S. Government Agency 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 real estate-backed securities and non-mortgage asset-backed securities that, while somewhat less liquid, although generally pledgeable at either the FHLB or the FRB, 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 ~~September 30, 2022~~March 31, 2023 was ~~4.7~~5.3 years and the effective duration of the portfolio was ~~2.0 years.~~1.95.

The investment securities ~~available for sale~~AFS portfolio was in a net unrealized loss position of ~~$635.5~~$573.7 million at ~~September 30, 2022,~~March 31, 2023, compared to a net unrealized ~~gain~~loss position of ~~$3.8~~$674.2 million at December 31, ~~2021.~~2022, improving by $100 million during the quarter ended March 31, 2023. Net unrealized losses at ~~September 30, 2022~~March 31, 2023 included ~~$1.9~~$5.3 million of gross unrealized gains and ~~$637.5~~$579.0 million of gross unrealized losses. Investment securities available for sale in unrealized loss positions at ~~September 30, 2022~~March 31, 2023 had an aggregate fair value of ~~$9.2~~$8.9 billion. The unrealized losses resulted primarily from rising interest rates and widening spreads related to the Federal Reserve's quantitative tightening and benchmark interest rate increases. Continuing uncertainty with respect to the trajectory of the economy and geopolitical events have also led to market uncertainty, producing some yield curve dislocations. None of the unrealized losses were attributable to credit loss impairments.

The ratings distribution of our AFS securities portfolio at March 31, 2023 is depicted in the chart below:

~~The ratings distribution of our AFS securities portfolio at September 30, 2022 is depicted in the chart below:~~

We evaluate the credit quality of individual securities in the portfolio quarterly to determine whether we expect to recover the amortized cost basis of the investments in unrealized loss positions. This evaluation considers, but is not necessarily limited to, the following factors, the relative significance of which varies depending on the circumstances pertinent to each individual security:

•Whether we intend to sell the security prior to recovery of its amortized cost basis;

•Whether it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis;

•The extent to which fair value is less than amortized cost;

•Adverse conditions specifically related to the security, 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.

We do not intend to sell securities in significant unrealized loss positions at ~~September 30, 2022.~~March 31, 2023. 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. While recent events impacting the banking sector have impacted the liquidity profile of many banks, including BankUnited, the substantial majority of our investment securities are pledgeable at either the FHLB or FRB. We have not sold, and do not anticipate the need to sell, securities in unrealized loss positions to generate liquidity.

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.

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The following table presents subordination levels and average internal stress scenario losses for select non-agency portfolio segments at ~~September 30, 2022:~~March 31, 2023:


					Subordination			Weighted Average Stress Scenario Loss					Subordination			Weighted Average Stress Scenario Loss
		Rating	Percent of Total		Minimum	Maximum	Average			Rating	Percent of Total		Minimum	Maximum	Average
Private label CMBS	Private label CMBS	AAA	83.8	%	30.0	98.8	44.0	7.1	Private label CMBS	AAA	85.3	%	30.0	98.1	44.7	6.4
		AA	12.1	%	29.3	92.9	43.6	7.6		AA	10.4	%	29.3	95.0	39.5	7.3
		A	4.1	%	24.7	69.1	37.0	9.0		A	4.3	%	25.1	69.9	39.4	8.6
Weighted average	Weighted average		100.0	%	29.7	96.9	43.7	7.2	Weighted average		100.0	%	29.7	96.6	43.9	6.6

CLOs	CLOs	AAA	78.1	%	41.3	61.1	44.9	9.0	CLOs	AAA	79.7	%	41.4	60.2	46.5	10.4
		AA	18.2	%	30.9	40.5	34.8	8.4		AA	16.7	%	31.0	38.1	34.8	9.2
		A	3.7	%	24.9	28.2	26.2	8.4		A	3.6	%	27.3	31.5	28.9	9.2
Weighted average	Weighted average		100.0	%	38.8	56.2	42.4	8.9	Weighted average		100.0	%	39.2	55.5	43.9	10.1

Private label residential MBS and CMO	Private label residential MBS and CMO	AAA	94.0	%	2.2	95.6	17.5	2.3	Private label residential MBS and CMO	AAA	93.9	%	3.0	99.8	17.6	2.3
		AA	0.9	%	18.7	32.8	23.7	5.4		AA	0.9	%	19.1	33.5	24.3	5.3
		A	5.1	%	21.4	25.1	22.4	5.4		A	5.2	%	22.9	25.8	23.6	5.4
Weighted average	Weighted average		100.0	%	3.3	91.4	17.8	2.5	Weighted average		100.0	%	4.2	95.4	17.9	2.5

Single family real estate-backed securities	Single family real estate-backed securities	AAA	67.5	%	34.5	72.6	53.0	6.0	Single family real estate-backed securities	AAA	64.9	%	34.8	72.6	54.2	5.6
		AA	12.7	%	51.6	55.3	53.5	9.8		AA	13.7	%	51.6	55.4	53.6	9.0
		NR	19.8	%	39.8	39.8	39.8	10.6		NR	21.4	%	39.8	39.8	39.8	10.6
Weighted average	Weighted average		100.0	%	37.7	63.9	50.5	7.4	Weighted average		100.0	%	38.2	63.3	51.0	7.2

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 comparison to recent trading activity whenever such activity exists. Quotes obtained from the pricing services are typically non-binding.

The majority of our investment securities are classified within level 2 of the fair value hierarchy. U.S. Treasury securities and marketable equity securities are classified within level 1 of the hierarchy.

For additional discussion of the fair values of investment securities, see Note 8 to the consolidated financial statements.

4241

The following table shows the weighted average prospective yields, categorized by scheduled maturity, for AFS investment securities as of ~~September 30, 2022.~~March 31, 2023. Scheduled maturities have been adjusted for anticipated prepayments when applicable. Yields on tax-exempt securities have been calculated on a tax-equivalent basis, based on a federal income tax rate of 21%:


		Within One Year		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total			Within One Year		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total

U.S. Treasury securities	U.S. Treasury securities	0.69	%	—	%	—	%	—	%	0.69	%	U.S. Treasury securities	0.63	%	—	%	—	%	—	%	0.63	%
U.S. Government agency and sponsored enterprise residential MBS	U.S. Government agency and sponsored enterprise residential MBS	3.59	%	3.63	%	3.60	%	3.30	%	3.61	%	U.S. Government agency and sponsored enterprise residential MBS	4.95	%	5.02	%	5.18	%	4.75	%	5.03	%
U.S. Government agency and sponsored enterprise commercial MBS	U.S. Government agency and sponsored enterprise commercial MBS	2.69	%	3.63	%	2.44	%	2.25	%	2.63	%	U.S. Government agency and sponsored enterprise commercial MBS	4.29	%	5.07	%	3.21	%	2.58	%	3.43	%
Private label residential MBS and CMOs	Private label residential MBS and CMOs	3.18	%	3.20	%	3.19	%	3.57	%	3.27	%	Private label residential MBS and CMOs	3.80	%	3.78	%	3.72	%	3.96	%	3.83	%
Private label commercial MBS	Private label commercial MBS	4.47	%	4.71	%	1.99	%	3.29	%	4.52	%	Private label commercial MBS	6.04	%	6.38	%	1.93	%	3.29	%	6.05	%
Single family real estate-backed securities	Single family real estate-backed securities	1.36	%	3.93	%	2.13	%	—	%	3.81	%	Single family real estate-backed securities	1.36	%	4.05	%	1.36	%	—	%	4.04	%
Collateralized loan obligations	Collateralized loan obligations	5.17	%	5.47	%	5.56	%	—	%	5.43	%	Collateralized loan obligations	6.67	%	6.99	%	7.26	%	—	%	6.97	%
Non-mortgage asset-backed securities	Non-mortgage asset-backed securities	3.32	%	3.32	%	4.13	%	—	%	3.74	%	Non-mortgage asset-backed securities	3.26	%	3.50	%	5.67	%	—	%	4.71	%
State and municipal obligations	State and municipal obligations	3.17	%	4.12	%	4.49	%	3.99	%	4.18	%	State and municipal obligations	3.17	%	4.15	%	4.49	%	3.99	%	4.20	%
SBA securities	SBA securities	2.78	%	2.70	%	2.59	%	2.44	%	2.69	%	SBA securities	5.34	%	5.27	%	5.15	%	4.98	%	5.25	%

		3.65	%	4.17	%	3.27	%	3.33	%	3.86	%		4.87	%	5.51	%	4.12	%	3.85	%	4.96	%

Loans

The loan portfolio comprises the Company’s primary interest-earning asset. The following table shows the composition of the loan portfolio at the dates indicated (dollars in thousands):


		September 30, 2022				December 31, 2021							March 31, 2023				December 31, 2022
										Total	Percent of Total		Total		Percent of Total
		Total		Percent of Total		Total		Percent of Total
Residential and other consumer loans		$	8,853,884	36.4	%	$	8,368,380	35.2	%
Multi-family		962,546		4.0	%	1,154,738		4.9	%
1-4 single family residential												1-4 single family residential	$	7,133,615	28.6	%	$	7,128,834	28.6	%
Government insured residential												Government insured residential	1,656,129		6.7	%	1,771,880		7.1	%
Non-owner occupied commercial real estate	Non-owner occupied commercial real estate	4,368,686		18.1	%	4,381,610		18.4	%			Non-owner occupied commercial real estate	5,346,895		21.5	%	5,405,597		21.7	%
Construction and land	Construction and land	246,202		1.0	%	165,390		0.7	%			Construction and land	324,805		1.3	%	294,360		1.2	%
Owner occupied commercial real estate	Owner occupied commercial real estate	1,919,074		7.9	%	1,944,658		8.2	%			Owner occupied commercial real estate	1,863,333		7.5	%	1,890,813		7.6	%
Commercial and industrial	Commercial and industrial	5,786,907		23.9	%	4,790,275		20.2	%			Commercial and industrial	6,617,716		26.5	%	6,417,721		25.9	%
PPP		10,191		—	%	248,505		1.0	%

Pinnacle	Pinnacle	932,187		3.8	%	919,641		3.9	%			Pinnacle	919,584		3.7	%	912,122		3.7	%
Bridge - franchise finance	Bridge - franchise finance	254,137		1.0	%	342,124		1.4	%			Bridge - franchise finance	239,205		1.0	%	253,774		1.0	%
Bridge - equipment finance	Bridge - equipment finance	310,035		1.3	%	357,599		1.5	%			Bridge - equipment finance	266,715		1.1	%	286,147		1.1	%
Mortgage warehouse lending	Mortgage warehouse lending	622,883		2.6	%	1,092,133		4.6	%			Mortgage warehouse lending	524,897		2.1	%	524,740		2.1	%
Total loans	Total loans	24,266,732		100.0	%	23,765,053		100.0	%			Total loans	24,892,894		100.0	%	24,885,988		100.0	%
Allowance for credit losses	Allowance for credit losses	(130,671)				(126,457)						Allowance for credit losses	(158,792)				(147,946)
Loans, net	Loans, net	$	24,136,061			$	23,638,596					Loans, net	$	24,734,102			$	24,738,042

For the ~~nine~~three months ended ~~September 30, 2022, total loans grew by $502~~March 31, 2023, $173 million ~~while total loans, excluding PPP loans, grew by $740 million.~~

~~Growth~~of growth in ~~residential and other consumer loans for~~ the ~~nine months ended September 30, 2022 totaled $486 million. Commercial~~commercial and industrial ~~loans,~~segment, including owner-occupied commercial real estate, ~~grew~~and modest growth in Pinnacle was offset by ~~$971~~declines of $111 million in residential, $28 million in commercial real estate and $34 million for ~~the nine months ended September 30, 2022. Most of the remaining commercial portfolio segments showed declines during the nine months ended September 30, 2022.~~Bridge, while MWL declined by $469 million for this period, with utilization declining to 32% at September 30, 2022, from 56% at December 31, 2021, as rising rates have led to lower refinancing and mortgage origination activity. PPP loans declined by $238 million during the nine months ended September 30, 2022, resulting primarily from full or partial forgiveness from the SBA.balances remained flat.

4342

Residential mortgages ~~and other consumer loans~~

The following table shows the composition of residential ~~and other consumer~~ loans at the dates indicated (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022

1-4 single family residential	1-4 single family residential	$	6,999,868	$	6,338,225	1-4 single family residential	$	7,133,615	$	7,128,834
Government insured residential	Government insured residential	1,849,343		2,023,221		Government insured residential	1,656,129		1,771,880
Other consumer loans		4,673		6,934
		$	8,853,884	$	8,368,380
							$	8,789,744	$	8,900,714

The 1-4 single family residential loan portfolio, excluding government insured residential loans, is primarily comprised of prime jumbo loans purchased through established correspondent channels. 1-4 single family residential mortgage loans are primarily closed-end, first lien jumbo mortgages for the purchase or re-finance of owner occupied property. The loans have terms ranging from 10 to 30 years, with either fixed or adjustable interest rates. At ~~September 30, 2022,~~March 31, 2023, $1.1 billion or ~~15%~~16% 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. ~~During the nine months ended September 30, 2022 and 2021, the Company purchased $475 million and $1.3 billion, respectively, of government insured residential loans.~~ The balance of buyout loans totaled ~~$1.8~~$1.6 billion at ~~September 30, 2022.~~March 31, 2023. 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:

The following table presents the five states with the largest geographic concentrations of 1-4 single family residential loans, excluding government insured residential loans, at the dates indicated (dollars in thousands):

September 30, 2022 December 31, 2021
Total Percent of Total Total Percent of Total
California $ 2,253,304 32.2 % $ 2,056,100 32.4 %
New York 1,413,066 20.2 % 1,293,825 20.4 %
Florida 512,666 7.3 % 494,043 7.8 %
Illinois 352,295 5.0 % 306,388 4.8 %
Virginia 299,953 4.3 % 280,898 4.4 %
Others 2,168,584 31.0 % 1,906,971 30.2 %
$ 6,999,868 100.0 % $ 6,338,225 100.0 %


	March 31, 2023				December 31, 2022

	Total		Percent of Total		Total		Percent of Total
California	$	2,266,711	31.8	%	$	2,274,432	31.9	%
New York	1,404,958		19.7	%	1,417,707		19.9	%
Florida	524,294		7.3	%	521,479		7.3	%
Illinois	361,030		5.1	%	360,529		5.1	%
Virginia	317,653		4.5	%	314,530		4.4	%
Others	2,258,969		31.6	%	2,240,157		31.4	%
	$	7,133,615	100.0	%	$	7,128,834	100.0	%

4443

Commercial loans and leases

Commercial loans include a diverse portfolio of commercial and industrial loans and lines of credit, loans secured by owner-occupied commercial real-estate, ~~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):

(~~1) Included in C&I are $10 million of PPP loans at September 30, 2022.~~ Commercial loans distribution.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, medical and other office buildings, warehouse facilities, hotels and real estate secured lines of credit.

The following ~~table presents~~tables present the distribution of commercial real estate loans by property type, along with weighted average DSCRs and LTVs at ~~September 30, 2022~~March 31, 2023 (dollars in thousands):


		Amortized Cost		Percent of Total		FL		New York Tri State		Other			Amortized Cost		Percent of Total		FL		New York Tri State		Other		Weighted Average DSCR	Weighted Average LTV
Office	Office	$	1,879,047	33	%	58	%	25	%	17	%	Office	$	1,842,797	33	%	58	%	23	%	19	%	1.69	64.2	%
Multi-family		1,102,430		20	%	50	%	49	%	1	%
Warehouse/Industrial	Warehouse/Industrial	1,101,804		20	%	62	%	20	%	18	%	Warehouse/Industrial	1,217,698		21	%	64	%	15	%	21	%	2.00	52.0	%
Multifamily												Multifamily	934,403		16	%	48	%	52	%	—	%	2.20	45.4	%
Retail	Retail	924,673		17	%	62	%	29	%	9	%	Retail	852,777		15	%	64	%	26	%	10	%	1.76	61.6	%
Hotel	Hotel	436,943		8	%	81	%	12	%	7	%	Hotel	403,822		7	%	86	%	1	%	13	%	2.46	53.7	%
Construction and Land												Construction and Land	324,805		6	%	49	%	49	%	2	%	N/A	N/A
Other	Other	132,537		2	%	67	%	24	%	9	%	Other	95,398		2	%	77	%	7	%	16	%	1.81	48.3	%
		$	5,577,434	100	%	60	%	29	%	11	%		$	5,671,700	100	%	60	%	26	%	14	%	1.92	56.8	%


	Florida			NY Tri State
	Weighted Average DSCR	Weighted Average LTV		Weighted Average DSCR	Weighted Average LTV
Office	1.79	65.1	%	1.69	60.1	%
Warehouse/Industrial	2.08	51.2	%	1.40	47.6	%
Multifamily	2.82	43.5	%	1.57	47.3	%
Retail	2.01	59.2	%	1.24	65.3	%
Hotel	2.63	50.0	%	1.04	72.0	%
Other	2.03	45.8	%	1.22	67.6	%
	2.13	55.7	%	1.53	55.2	%

Geographic distribution in the ~~table~~tables above is based on location of the underlying collateral property. LTVs and DSCRs are based on the most recent available information; if current appraisals are not available, LTVs are adjusted by our models based on current and forecasted sub-market dynamics. DSCRs are calculated based on current contractually required payments, which may in some cases may be interest only.

The following table presents the maturity profile of the CRE portfolio over the next 12 months by property type at March 31, 2023 (dollars in thousands):


	Maturing in the Next 12 Months		% Maturing in the Next 12 Months		Fixed Rate		Floating Rate Swapped		Fixed Rate to Borrower as a % of Total Portfolio		Floating Rate Not Swapped
Office	$	344,041	19	%	$	121,595	$	73,608	11	%	$	148,838
Warehouse/Industrial	105,382		9	%	46,441		—		4	%	58,941
Multifamily	158,129		17	%	78,598		—		8	%	79,531
Retail	160,091		19	%	115,170		7,908		14	%	37,013
Hotel	27,722		7	%	2,568		—		1	%	25,154
Construction and Land	37,189		12	%	1,676		—		1	%	35,513
Other	12,874		13	%	—		12,874		13	%	—
	$	845,428	15	%	$	366,048	$	94,390	8	%	$	384,990

The office segment totaled $1.8 billion at March 31, 2023. The largest concentration of loans is in Florida, where we believe market dynamics to be favorable, at 58% of the segment. Over 90% of Florida office loans are suburban, and the majority are Class A or medical offices. The New York Tri-State market encompasses approximately 23% of the segment, with 9% of total office exposure in Manhattan and 14% in Long Island, the boroughs and the neighboring tri-state area. The remaining 19% of office loans are in other markets with no particular geographic concentration, typically made to high quality sponsors in our NY tri-state or FL customer base. Estimated rent rollover of the office portfolio in the next 12 months is approximately 10% of the portfolio. The office segment has de-minimis delinquent or nonperforming loans and five-year cumulative net charge-offs of approximately $2 million.

The Company’s commercial real estate underwriting standards most often provide for loan terms of five to seven years, with amortization schedules of no more than thirty years.Construction and land loans, included by property type in the table above, represented 1.0% of the total loan portfolio at September 30, 2022. The multi-family portfolio includes $398 million of New York loans collateralized by properties with some or all of the units subject to rent regulation at September 30, 2022.years.

Commercial and industrial loans are typically made to small, middle market and larger corporate businesses and not-for-profit entities and include equipment loans, secured and unsecured working capital facilities, formula-based loans, subscription finance lines of credit, trade finance, SBA product offerings, business acquisition finance credit facilities, credit facilities to institutional real estate entities such as REITs and commercial real estate investment funds, and a small amount of commercial credit cards. These loans may be structured as term loans, typically with maturities of five to seven years, or revolving lines of credit which may have multi-year maturities. ~~The~~In addition to financing provided by Pinnacle, the Bank ~~also~~ provides financing to state and local governmental entities generally within our geographic markets. Commercial

loans included loans meeting the regulatory definition of shared national credits totaling ~~$4.1~~$4.8 billion at ~~September 30, 2022,~~March 31, 2023, the majority of which were relationship based loans to borrowers in ~~Florida and the New York tri-state area.~~our primary geographic footprint. The Bank makes loans secured by owner-occupied commercial real estate that typically have risk profiles more closely aligned with that of commercial and industrial loans than with other types of commercial real estate loans.

The following table presents the exposure in the C&I portfolio ~~excluding PPP loans,~~ by industry, at ~~September 30, 2022~~March 31, 2023 (dollars in thousands):


		Amortized Cost		Percent of Total			Amortized Cost		Percent of Total
Finance and Insurance	Finance and Insurance	$	1,470,997	19.1	%	Finance and Insurance	$	1,843,922	21.7	%
Manufacturing						Manufacturing	729,475		8.6	%
Educational Services	Educational Services	781,135		10.1	%	Educational Services	709,580		8.4	%
Information						Information	670,683		7.9	%
Wholesale Trade	Wholesale Trade	653,646		8.5	%	Wholesale Trade	633,591		7.5	%
Manufacturing		631,634		8.2	%
Information		516,127		6.7	%
Utilities						Utilities	568,385		6.7	%
Real Estate and Rental and Leasing	Real Estate and Rental and Leasing	485,462		6.3	%	Real Estate and Rental and Leasing	496,360		5.9	%
Utilities		472,015		6.1	%
Health Care and Social Assistance	Health Care and Social Assistance	409,575		5.3	%	Health Care and Social Assistance	478,032		5.6	%
Transportation and Warehousing	Transportation and Warehousing	396,198		5.1	%	Transportation and Warehousing	375,385		4.4	%
Construction	Construction	313,222		4.1	%	Construction	357,539		4.2	%
Retail Trade	Retail Trade	293,644		3.8	%	Retail Trade	312,993		3.7	%
Professional, Scientific, and Technical Services	Professional, Scientific, and Technical Services	278,014		3.6	%	Professional, Scientific, and Technical Services	277,375		3.3	%
Other Services (except Public Administration)	Other Services (except Public Administration)	234,361		3.0	%	Other Services (except Public Administration)	231,337		2.7	%
Public Administration	Public Administration	224,467		2.9	%	Public Administration	221,384		2.6	%
Arts, Entertainment, and Recreation						Arts, Entertainment, and Recreation	177,214		2.1	%
Administrative and Support and Waste Management	Administrative and Support and Waste Management	176,605		2.3	%	Administrative and Support and Waste Management	169,534		2.0	%
Arts, Entertainment, and Recreation		159,755		2.1	%
Accommodation and Food Services	Accommodation and Food Services	153,235		2.0	%	Accommodation and Food Services	159,888		1.9	%
Other	Other	55,889		0.8	%	Other	68,372		0.8	%
		$	7,705,981	100.0	%		$	8,481,049	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-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 ~~46%~~41% and ~~50%~~54% of the portfolio, respectively. The equipment finance division provides primarily transportation equipment financing through a variety of loan and lease structures.

~~The following table presents the franchise portfolio by concept at September 30, 2022 (dollars in thousands):~~

Amortized Cost Percent of Bridge -Franchise Finance
Restaurant concepts:
Burger King $ 35,134 13.8 %
Dunkin Donuts 13,037 5.1 %
Ram Restaurant and Brewery 12,889 5.1 %
Other 55,942 22.0 %
$ 117,002 46.0 %
Non-restaurant concepts:
Planet Fitness $ 81,757 32.3 %
Other Fitness Concepts 44,069 17.3 %
Other 11,309 4.4 %
137,135 54.0 %
$ 254,137 100.0 %

Geographic Concentrations

The Company's commercial and commercial real estate portfolios are concentrated in Florida and the Tri-state area. 60% and ~~29%~~26% of commercial real estate loans were secured by collateral located in Florida and the Tri-state area, respectively; while ~~34%~~31% and ~~25%~~27% of all other commercial loans, including Pinnacle and Bridge, were to borrowers in Florida and the Tri-state area, respectively.

Operating lease equipment, net

Operating lease equipment, net of accumulated depreciation, totaled ~~$580~~$526 million at ~~September 30, 2022,~~March 31, 2023, including off-lease equipment, net of accumulated depreciation of ~~$72~~$50 million.

The chart below presents operating lease equipment by type at the dates indicated:

At ~~September 30, 2022,~~March 31, 2023, the breakdown of carrying values of operating lease equipment, excluding equipment off-lease, by the year leases are scheduled to expire was as follows (in thousands):


Years Ending December 31:	Years Ending December 31:			Years Ending December 31:
2022		$	63,796
2023	2023	67,813		2023	$	70,969
2024	2024	45,824		2024	51,221
2025	2025	62,625		2025	89,035
2026	2026	79,127		2026	78,662
2027				2027	25,304
Thereafter through 2034	Thereafter through 2034	188,639		Thereafter through 2034	161,232
		$	507,824		$	476,423

Asset Quality

Commercial Loans

We have a robust credit risk management framework, an experienced team to lead the workout and recovery process for the commercial and commercial real estate portfolios and a dedicated internal credit review function. Loan performance is monitored by our credit administration, portfolio management and workout and recovery departments. 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 independent credit review department.

We believe internal risk rating is the best indicator of the credit quality of commercial loans. The Company utilizes a 16-grade internal asset risk classification system as part of its efforts to monitor and maintain commercial asset quality. The special mention rating is considered a transitional rating for loans exhibiting potential credit weaknesses that could result in deterioration of repayment prospects at some future date if not checked or corrected and that deserve management’s close attention. These borrowers may exhibit declining cash flows or revenues or increasing leverage. Loans with well-defined credit weaknesses that may result in a loss if the deficiencies are not corrected are assigned a risk rating of substandard. These borrowers may exhibit payment defaults, inadequate cash flows from current operations, operating losses, increasing balance sheet leverage, project cost overruns, unreasonable construction delays, exhausted interest reserves, declining collateral values, frequent overdrafts or past due real estate taxes. Loans with weaknesses so severe that collection in full is highly questionable

or improbable, but because of certain reasonably specific pending factors have not been charged off, are assigned an internal risk rating of doubtful.

The following table summarizes the Company's commercial credit exposure, based on internal risk rating, at the dates indicated (dollars in thousands):


		September 30, 2022				June 30, 2022	December 31, 2021			March 31, 2023					December 31, 2022

		Amortized Cost		Percent of Commercial Loans				Amortized Cost			Percent of Commercial Loans		Amortized Cost			Percent of Commercial Loans			Amortized Cost		Percent of Commercial Loans		Amortized Cost		Percent of Commercial Loans
Pass	Pass	$	14,586,106	94.6	%			$	14,257,586		93.3	%	$	13,934,369		90.5	%	Pass	$	15,314,776	95.2	%	$	15,244,761	95.4	%
Special mention	Special mention	26,939		0.2	%			89,153			0.6	%	148,593			1.0	%	Special mention	101,781		0.6	%	51,433		0.3	%
Substandard accruing	Substandard accruing	662,716		4.3	%			787,399			5.2	%	1,136,378			7.4	%	Substandard accruing	596,054		3.7	%	605,965		3.8	%
Substandard non-accruing	Substandard non-accruing	104,994		0.7	%			117,518			0.8	%	129,579			0.8	%	Substandard non-accruing	82,840		0.5	%	75,125		0.5	%
Doubtful	Doubtful	32,093		0.2	%			7,971			0.1	%	47,754			0.3	%	Doubtful	7,699		—	%	7,990		—	%
		$	15,412,848	100.0	%			$	15,259,627		100.0	%	$	15,396,673		100.0	%		$	16,103,150	100.0	%	$	15,985,274	100.0	%

Our internal risk ratings at September 30, 2022 continued to be influenced by the impact of the COVID-19 pandemic as sustained operating cash flows of some borrowers has yet to fully recover, although that impact continues to decline. Management took what it believed to be a proactive and objective approach to risk rating the commercial loan portfolio at the onset of the pandemic. Levels of criticized and classified loans, particularlyThe increase in ~~the~~ special mention loans at March 31, 2023 compared to December 31, 2022 relates primarily to one multi-family loan that migrated to special mention during the quarter and substandard accruing categories, increased over the course of 2020 as a direct result of the impact of the COVID-19 pandemic. Throughout 2021 and the nine months ended September 30, 2022, levels of criticized and classified loans declinedpaid off in ~~response to the trajectory of the economic recovery and lessening impact of the pandemic.~~

April.

The following table provides additional information about special mention and substandard accruing loans, at the dates indicated (dollars in thousands). Non-performing loans are discussed further in the section entitled "Non-performing Assets" below.


		September 30, 2022				June 30, 2022	December 31, 2021			March 31, 2023															December 31, 2022
		Amortized Cost		% of Loan Segment				Amortized Cost			% of Loan Segment		Amortized Cost				% of Loan Segment				Amortized Cost		% of Loan Segment					Amortized Cost		% of Loan Segment
Special mention:	Special mention:																		Special mention:
CRE	CRE																		CRE
Hotel	Hotel	$	1,088	0.2	%			$	2,045		0.4	%	$	760			0.1	%	Hotel		$	412	0.1	%				$	709	0.2	%
Retail															Retail	2,150				0.3		%				—	—		%
Multi-family															Multi-family	42,950				4.6		%				—	—		%
Office															Office	17,912				1.0		%				18,006	1.0		%

Office		1,654		0.1	%			1,660			0.1	%	27,001				1.5	%

Other		122		0.2	%			129			0.1	%	4,501				3.7	%
		2,864						3,834					32,262								63,424							18,715
Owner occupied commercial real estate	Owner occupied commercial real estate	7,379		0.4	%			9,065			0.5	%	14,010				0.7	%	Owner occupied commercial real estate		7,111		0.4	%				24,101		1.3	%
Commercial and industrial	Commercial and industrial	16,696		0.3	%			76,254			1.4	%	102,321				2.1	%	Commercial and industrial		24,043		0.4	%				1,017		—	%

Bridge - franchise finance															Bridge - franchise finance	7,203				3.0		%				7,600	3.0		%

		$	26,939					$	89,153				$	148,593							$	101,781						$	51,433

Substandard accruing:	Substandard accruing:																		Substandard accruing:
CRE	CRE																		CRE
Hotel	Hotel	$	45,877	10.5	%			$	50,169		10.9	%	$	200,486			36.7	%	Hotel		$	40,012	9.9	%				$	14,538	3.6	%
Retail	Retail	99,893		10.8	%			83,539			9.3	%	140,081				13.0	%	Retail		76,798		9.0	%				72,421		8.4	%
Multi-family	Multi-family	152,871		15.9	%			188,032			18.5	%	173,536				15.0	%	Multi-family		136,863		14.6	%				146,235		15.5	%
Office	Office	73,506		3.9	%			60,675			3.3	%	83,121				4.6	%	Office		72,570		3.8	%				73,042		3.9	%
Industrial	Industrial	980		0.1	%			983			0.1	%	1,009				0.1	%	Industrial		—		—	%				976		0.1	%
Other	Other	8,658		6.5	%			8,630			5.6	%	5,803				2.2	%	Other		4,742		1.1	%				7,989		2.6	%
		381,785						392,028					604,036								330,985							315,201
Owner occupied commercial real estate	Owner occupied commercial real estate	99,635		5.2	%			111,082			5.8	%	160,159				8.2	%	Owner occupied commercial real estate		94,226		5.1	%				73,501		3.9	%
Commercial and industrial	Commercial and industrial	133,641		2.3	%			207,272			3.8	%	250,644				5.2	%	Commercial and industrial		128,301		1.9	%				171,613		2.7	%

Bridge - franchise finance	Bridge - franchise finance	46,100		18.1	%			53,633			20.4	%	80,864				23.6	%	Bridge - franchise finance		41,389		17.3	%				44,295		17.5	%
Bridge - equipment finance	Bridge - equipment finance	1,555		0.5	%			23,384			7.0	%	40,675				11.4	%	Bridge - equipment finance		1,153		0.4	%				1,355		0.5	%

		$	662,716					$	787,399				$	1,136,378							$	596,054						$	605,965

Operating Lease Equipment, net

Operating leases with a carrying value of assets under lease totaling ~~$18~~$17 million were internally risk rated substandard at ~~September 30, 2022.~~March 31, 2023. On a quarterly basis, management performs an impairment analysis on assets with indicators of potential impairment. Potential impairment indicators include evidence of changes in residual value, macro-economic conditions, an extended period of time off-lease, criticized or classified status, or management's intention to sell the asset at an amount potentially below its carrying value. There were no impairment charges recognized during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Bridge had exposure to the energy industry of ~~$259~~$244 million at ~~September 30, 2022.~~March 31, 2023. The majority of the energy exposure was in the operating lease equipment portfolio where energy exposure totaled ~~$226 million.~~$215 million, consisting primarily of railcars serving the petroleum industry.

Residential Loans

Our residential mortgage portfolio, excluding GNMA buyout loans, consists primarily of prime jumbo 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 are not individually risk rated. Delinquency status is the primary measure we use to monitor the credit quality of these loans. We also consider original LTV and most recently available FICO score to be

significant indicators of credit quality for the 1-4 single family residential portfolio, excluding government insured residential loans.

The following charts present information about the 1-4 single family residential portfolio, excluding government insured loans, by FICO distribution, LTV distribution and vintage at ~~September 30, 2022:~~March 31, 2023:

FICO scores are generally updated ~~at least annually,~~semi-annually and were most recently updated in the ~~third~~first quarter of ~~2022.~~2023. LTVs are typically based on valuation at origination since we do not routinely update residential appraisals.

At ~~September 30, 2022,~~March 31, 2023, the majority of the 1-4 single family residential loan portfolio, excluding government insured residential loans, was owner-occupied, with ~~80%~~79% primary residence, 5% second homes and ~~15%~~16% investment properties.

1-4 single family residential loans excluding government insured residential loans past due more than 30 days totaled ~~$55~~$65 million and ~~$76~~$62 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The amount of these loans 90 days or more past due was ~~$14 million and $17~~$15 million at ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021, respectively.~~2022.

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 other non-performing assets.

The following table and charts summarize the Company's non-performing loans and non-performing assets at the dates indicated (dollars in thousands):


		September 30, 2022			December 31, 2021				March 31, 2023			December 31, 2022

Non-accrual loans:	Non-accrual loans:							Non-accrual loans:
Residential and other consumer:
1-4 single family residential		$	18,660		$	26,988
Other consumer loans		—			1,565
Total residential and other consumer loans		18,660			28,553

Residential								Residential	$	23,102		$	21,311
Commercial:	Commercial:							Commercial:
Multi-family		2,138			10,865
Non-owner occupied commercial real estate	Non-owner occupied commercial real estate	16,824			39,251			Non-owner occupied commercial real estate	16,461			16,657
Construction and land	Construction and land	5,527			5,164			Construction and land	676			5,695
Owner occupied commercial real estate	Owner occupied commercial real estate	20,191			20,453			Owner occupied commercial real estate	15,357			17,751
Commercial and industrial	Commercial and industrial	77,906			68,720			Commercial and industrial	51,888			29,722

Bridge - franchise finance	Bridge - franchise finance	14,571			32,879			Bridge - franchise finance	6,157			13,290

Total commercial loans	Total commercial loans	137,157			177,332			Total commercial loans	90,539			83,115
Total non-accrual loans	Total non-accrual loans	155,817			205,885			Total non-accrual loans	113,641			104,426
Loans past due 90 days and still accruing	Loans past due 90 days and still accruing	593			24			Loans past due 90 days and still accruing	593			593
Total non-performing loans	Total non-performing loans	156,410			205,909			Total non-performing loans	114,234			105,019
OREO and other non-performing assets	OREO and other non-performing assets	923			2,275			OREO and other non-performing assets	3,237			1,932
Total non-performing assets	Total non-performing assets	$	157,333		$	208,184		Total non-performing assets	$	117,471		$	106,951

Non-performing loans to total loans (1)	Non-performing loans to total loans (1)	0.64		%	0.87		%	Non-performing loans to total loans (1)	0.46		%	0.42		%
Non-performing assets to total assets (1)	Non-performing assets to total assets (1)	0.43		%	0.58		%	Non-performing assets to total assets (1)	0.32		%	0.29		%
ACL to total loans	ACL to total loans	0.54		%	0.53		%	ACL to total loans	0.64		%	0.59		%
ACL to non-performing loans	ACL to non-performing loans	83.54		%	61.41		%	ACL to non-performing loans	139.01		%	140.88		%
Net charge-offs to average loans (2)	Net charge-offs to average loans (2)	0.16		%	0.29		%	Net charge-offs to average loans (2)	0.08		%	0.22		%

(1)(1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling ~~$41.8~~$36.9 million or ~~0.17%~~0.15% of total loans and 0.10% of total assets, at March 31, 2023, and $40.3 million or 0.16% of total loans and 0.11% of total assets, at ~~September 30, 2022, and $46.1 million or 0.19% of total loans and 0.13% of total assets, at~~ December 31, ~~2021.~~2022.

(2) Annualized for ~~September 30,~~the three months ended March 31, 2023; ratio presented for December 31, 2022 is for the full year ended December 31, 2022.

Contractually delinquent government insured residential loans are typically GNMA early buyout loans and are excluded from non-performing loans as defined in the table above due to their government guarantee. The carrying value of such loans contractually delinquent by 90 days or more was ~~$579~~$438 million and ~~$730~~$493 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

See "Results of Operations - Provision for Credit Losses" above and “Analysis of the Allowance for Credit Losses” below for further discussion of ~~trends in~~ the Provision for Credit Losses and the ACL.

The following chart presents trends in non-performing loans ~~and non-performing assets. Levels of non-performing loans and non-performing assets have returned to below pre-pandemic levels.~~

~~The following chart presents trends in non-performing loans~~ by portfolio sub-segment (in millions):

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. 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. Included in TDRs are residential loans to borrowers who have not reaffirmed their debt discharged in Chapter 7 bankruptcy.

Under inter-agency and authoritative guidance and consistent with the CARES Act, short-term deferrals or modifications related to COVID-19 were typically not categorized as TDRs. Additionally, section 4013 of the CARES Act, as amended by the Consolidated Appropriations Act, effectively suspended the guidance related to TDRs codified in ASC 310-40 until January 1, 2022, the date the CARES Act expired.

~~The following table summarizes loans that had been modified in TDRs at the dates indicated (dollars in thousands):~~

September 30, 2022 December 31, 2021
Number of TDRs Amortized Cost Related Specific Allowance Number of TDRs Amortized Cost Related Specific Allowance
Residential and other consumer (1)
2,421 $ 388,437 $ 136 449 $ 79,524 $ 87
Commercial 35 61,543 6,862 16 29,309 1,377
2,456 $ 449,980 $ 6,998 465 $ 108,833 $ 1,464

(1) Includes 2,397 government insured residential loans modified in TDRs totaling $380.1 million at September 30, 2022, and 435 government insured residential loans modified in TDRs totaling $76.4 million at December 31, 2021.

~~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 and considers the appropriate risk rating for these loans. Criticized asset reports for each relationship are presented by the assigned relationship manager and credit officer to the Criticized Asset Committee until such time as the relationships are returned to a satisfactory credit risk rating or otherwise resolved. The Criticized Asset Committee may require the transfer of a loan to our workout and recovery department, which is tasked to effectively manage the loan with the goal of minimizing losses and expenses associated with restructure, collection and/or liquidation of collateral. Commercial loans with a risk rating of substandard, loans on non-accrual status, ~~loans modified as TDRs~~ 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 and its potential economic impact to our customers, we implemented a short-term program that complied with interagency guidance and the CARES Act under which we 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. The CARES Act expired effective January 1, 2022. ~~At September 30, 2022, the amount of loans remaining under CARES Act modification was not significant.~~

Analysis of the Allowance for Credit Losses

The ACL is management's estimate of the amount of expected credit losses over the life of the loan portfolio, or the amount of amortized cost basis not expected to be collected, at the balance sheet date. This estimate encompasses information about historical events, current conditions and reasonable and supportable economic forecasts. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Given the current ~~emerging~~ level of economic uncertainty, the complexity of the ACL estimate and level of management judgment required, we believe it is possible that the ACL estimate could change, potentially materially, in future periods. Changes in the ACL may result from changes in current economic conditions, our economic forecast, loan portfolio composition, commercial real estate market

dynamics in our geographic footprint and circumstances not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.

Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. For loans that do not share similar risk characteristics with other loans such as collateral dependent loans, ~~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, 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.

At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we used a single externally provided baseline scenario in calculating the quantitative portion of the ACL. These externally provided scenarios in fact, represent the result of a probability weighting of thousands of individual scenario paths. At ~~September 30,~~December 31, 2022, we incorporated a downside scenario to inform the amount of qualitative ~~reserves.~~

~~Commercial Real Estate Model~~

~~Variables with~~reserves, which effectively equated the ACL for most ~~significant impact on the commercial real estate model include~~portfolio segments to that determined using a 100% weighted downside scenario. The downside scenario reflected peak unemployment at ~~both national~~6.4% and ~~regional levels, the CRE property forecast by property type and sub-market, 10-year treasury yield, Baa corporate yield and real~~a trough of negative GDP growth at the national level. Increases in unemployment and yields within the commercial real estate model generally result in increases in the ACL. Increases in real GDP growth and improvements in the CRE property forecasts reduce the reserve.

~~Commercial Model~~

~~Variables with the most significant impact on the commercial model include a stock market volatility index, the S&P 500 index, unemployment at both national and regional levels, and a variety~~ of interest rates and spreads. Increases in the unemployment rate, the stock market volatility index, and the Baa corporate yield increase the reserve, while increases in real GDP growth and the steepening3.7%. The substantial majority of the ~~yield curve reduce the reserve.~~

~~Residential Model~~

~~Variables with the most significant impact on the residential model include HPI and unemployment~~qualitative adjustment related to economic uncertainty determined at ~~regional levels, real GDP growth, and a 30-year mortgage rate. Increases~~December 31, 2022 remained in ~~the unemployment rate and the 30-year mortgage rate increase the reserve, while increases in real GDP growth and HPI reduce the reserve.~~

~~The length of the reasonable and supportable forecast period is evaluated~~place at each reporting period and adjusted if deemed necessary. Currently, the Company uses a 2-year reasonable and supportable forecast period in estimating the quantitative portion of 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.~~

~~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.~~March 31, 2023.

See Note 1 to the consolidated financial statements of the Company's ~~2021~~2022 Annual Report on Form 10-K for more detailed information about our ACL methodology.

The following table provides an analysis of the ACL, provision for (recovery of) credit losses related to the funded portion of loans and net charge-offs by loan segment for the periods indicated (dollars in thousands):

Residential and Other Consumer Loans 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 Total
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 (8,929) (28,940) (34,063) (2,210) (3,601) 27,718 (125) (13,166) (2,207) (65,523)
Charge-offs (304) (6,470) (2,697) — (453) (15,703) — (9,585) — (35,212)
Recoveries 10 233 155 — 91 2,538 — — — 3,027
Balance at September 30, 2021 $ 9,496 $ 4,650 $ 24,902 $ 1,074 $ 24,834 $ 76,750 $ 179 $ 13,580 $ 4,150 $ 159,615
Balance at December 31, 2021 $ 9,187 $ 1,512 $ 26,268 $ 1,031 $ 21,638 $ 46,312 $ 170 $ 16,746 $ 3,593 $ 126,457
Provision for (recovery of) credit losses 2,576 54 1,374 512 (2,882) 29,621 (32) 3,791 (1,608) 33,406
Charge-offs (412) — (9,179) (233) (2,870) (10,248) — (12,988) — (35,930)
Recoveries 44 — 3,014 — 617 2,438 — 625 — 6,738
Balance at September 30, 2022 $ 11,395 $ 1,566 $ 21,477 $ 1,310 $ 16,503 $ 68,123 $ 138 $ 8,174 $ 1,985 $ 130,671
Net Charge-offs to Average Loans (1)
Nine Months Ended
September 30, 2021 0.01 % 0.60 % 0.07 % — % 0.02 % 0.30 % — % 2.63 % — % 0.19 %
Nine Months Ended
September 30, 2022 0.01 % — % 0.19 % 0.16 % 0.16 % 0.17 % — % 5.74 % — % 0.16 %

~~(1) Annualized.~~


	Residential			Non-owner Occupied Commercial Real Estate			Construction and Land			Owner Occupied Commercial Real Estate			Commercial and Industrial			Pinnacle			Bridge - Franchise Finance			Bridge - Equipment Finance			Total
















Balance at December 31, 2021	$	9,187		$	27,780		$	1,031		$	21,638		$	46,312		$	170		$	16,746		$	3,593		$	126,457
Provision for (recovery of) credit losses	(256)			12,887			358			(2,145)			376			(30)			(2,801)			(943)			7,446
Charge-offs	—			(9,180)			—			(35)			(1,360)			—			(96)			—			(10,671)
Recoveries	26			620			—			319			661			—			585			—			2,211
Balance at March 31, 2022	$	8,957		$	32,107		$	1,389		$	19,777		$	45,989		$	140		$	14,434		$	2,650		$	125,443

Balance at December 31, 2022	$	11,741		$	22,327		$	2,424		$	20,543		$	76,647		$	173		$	11,747		$	2,344		$	147,946
Impact of adoption of ASU 2022-02	(117)			—			—			5			(1,676)			—			(6)			—			(1,794)
Balance at January 1, 2023	11,624			22,327			2,424			20,548			74,971			173			11,741			2,344			146,152
Provision for (recovery of) credit losses	170			2,004			(706)			(1,528)			17,702			5			70			(122)			17,595
Charge-offs	—			(35)			—			—			(1,597)			—			(6,267)			—			(7,899)
Recoveries	3			31			—			346			2,540			—			24			—			2,944
Balance at March 31, 2023	$	11,797		$	24,327		$	1,718		$	19,366		$	93,616		$	178		$	5,568		$	2,222		$	158,792

Net Charge-offs to Average Loans

Three Months Ended March 31, 2022	—		%	0.64		%	—		%	(0.06)		%	0.05		%	—		%	(0.61)		%	—		%	0.15		%
Three Months Ended March 31, 2023	—		%	—		%	—		%	(0.08)		%	(0.05)		%	—		%	15.83		%	—		%	0.08		%

5250

The following table shows the distribution of the ACL at the dates indicated (dollars in thousands):


		September 30, 2022				June 30, 2022				December 31, 2021					March 31, 2023						December 31, 2022
		Total		%(1)		Total		%(1)			Total		%(1)				Total		%(1)			Total		%(1)
Residential and other consumer		$	11,395	36.4	%	$	9,010	36.7	%		$	9,187	35.2	%
Residential																Residential	$	11,797	35.3	%		$	11,741	35.7	%

Multi-family		1,566		4.0	%	2,831		4.2	%		1,512		4.9	%

Non-owner occupied commercial real estate	Non-owner occupied commercial real estate	21,477		18.1	%	26,856		17.7	%		26,268		18.4	%		Non-owner occupied commercial real estate	24,327		21.5	%		22,327		21.7	%
Construction and land	Construction and land	1,310		1.0	%	1,507		0.9	%		1,031		0.7	%		Construction and land	1,718		1.3	%		2,424		1.2	%
CRE	CRE	24,353				31,194					28,811					CRE	26,045					24,751

Owner occupied commercial real estate	Owner occupied commercial real estate	16,503		7.9	%	20,309		7.9	%		21,638		8.2	%		Owner occupied commercial real estate	19,366		7.5	%		20,543		7.6	%
Commercial and industrial	Commercial and industrial	68,123		26.5	%	60,530		26.0	%		46,312		25.8	%		Commercial and industrial	93,616		28.6	%		76,647		28.0	%
Pinnacle	Pinnacle	138		3.8	%	142		4.1	%		170		3.9	%		Pinnacle	178		3.7	%		173		3.7	%
Bridge - franchise finance	Bridge - franchise finance	8,174		1.0	%	6,259		1.1	%		16,746		1.4	%		Bridge - franchise finance	5,568		1.0	%		11,747		1.0	%
Bridge - equipment finance	Bridge - equipment finance	1,985		1.3	%	2,795		1.4	%		3,593		1.5	%		Bridge - equipment finance	2,222		1.1	%		2,344		1.1	%
		94,923				90,035					88,459						120,950					111,454
		$	130,671	100.0	%	$	130,239	100.0	%		$	126,457	100.0	%			$	158,792	100.0	%		$	147,946	100.0	%

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

The following table presents the ACL as a percentage of loans at the dates indicated:


		September 30, 2022		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022

Residential and other consumer		0.13	%	0.10	%	0.11	%
Residential								Residential	0.13	%	0.13	%
Commercial:	Commercial:							Commercial:
Commercial real estate		0.44	%	0.57	%	0.51	%
CRE								CRE	0.46	%	0.43	%
Commercial and industrial	Commercial and industrial	1.01	%	0.99	%	0.84	%	Commercial and industrial	1.25	%	1.10	%
Pinnacle	Pinnacle	0.01	%	0.01	%	0.02	%	Pinnacle	0.02	%	0.02	%
Bridge - franchise finance	Bridge - franchise finance	3.22	%	2.38	%	4.90	%	Bridge - franchise finance	2.33	%	4.63	%
Bridge - equipment finance	Bridge - equipment finance	0.64	%	0.84	%	1.00	%	Bridge - equipment finance	0.83	%	0.82	%
Total commercial	Total commercial	0.77	%	0.79	%	0.76	%	Total commercial	0.91	%	0.85	%
		0.54	%	0.54	%	0.53	%		0.64	%	0.59	%

5351

Significant offsetting factors contributing to the change in the ACL during the three months ended ~~September 30, 2022~~March 31, 2023 are depicted in the chart below ~~(in~~(dollars in millions):

Changes in the ACL during the three months ended ~~September 30,~~March 31, 2023

As depicted in the chart above, the primary drivers of the increase in the ACL from December 31, 2022

~~Overall,~~ to March 31, 2023 were increases in specific reserves, changes in the economic forecast and new production, partially offset by net charge-offs and a decrease in certain qualitative loss factors. The ACL as a percentage of loans ~~remained consistent~~was 0.64% at ~~0.54% at September 30, 2022,~~March 31, 2023, compared to ~~June 30,~~0.59% at December 31, 2022. The qualitative portion of the ACL declined for the quarter ended September 30, 2022, as in management's judgment, the economic forecast underlying the quantitative estimate better captured the expected future trajectory of the economy; additionally, higher qualitative loss factors applied to certain portions of the portfolio more susceptible to the impact of the COVID -19 pandemic were reduced. These reductions in qualitative components were partially offset by a $5 million increase related to the potential impact of Hurricane Ian.

The ACL for residential and other consumer segment increased by $2.4 million during the three months ended September 30, 2022, from 0.10% to 0.13% of loans. The increase in the ACL for this segment was primarily driven by the economic forecast, particularly a decline in the HPI and increases in forecasted mortgage and unemployment rates.

The ACL for the CRE portfolio sub-segment, including multi-family, non-owner occupied CRE and construction and land, decreased by $6.8 million during the three months ended September 30, 2022, from 0.57% to 0.44% of loans. The decrease in the ACL for CRE was driven mainly by a decrease in qualitative loss factors, and to a lesser extent, improved borrower financial performance, partially offset by an increase in quantitative loss factors. The increase in quantitative loss factors resulted from a decline in forecasted GDP, and increases in forecasted unemployment and interest rates, offset by improved rental and vacancy rates across asset classes.

The ACL for the commercial and industrial sub-segment, including owner-occupied commercial real estate, increased by ~~$3.8~~$15.8 million during the three months ended ~~September 30, 2022,~~March 31, 2023, from ~~0.99%~~1.10% to ~~1.01%~~1.25% of loans. The ~~increase~~most significant contributing factor was ~~primarily attributable to~~ an increase in certain specific ~~reserves and a deteriorating~~reserves. Changes in the economic forecast ~~partially offset by a decrease in qualitative loss factors~~also contributed to this increase.

The ACL for the BFG franchise finance portfolio segment ~~increased~~decreased by ~~$1.9~~$6.2 million during the three months ended ~~September 30, 2022,~~March 31, 2023, from ~~2.38%~~4.63% to ~~3.22%~~2.33% of ~~loans primarily~~loans. Substantially all of this decrease was due to ~~an increase in specific reserves.~~

~~The ACL~~the charge-off of a loan that had been fully reserved for ~~the BFG equipment finance portfolio segment decreased $0.8 million during the three months ended September 30, 2022, from 0.84% to 0.64% of loans, primarily due to risk rating updates.~~

at December 31, 2022.

The estimate of the ACL at ~~September 30, 2022~~March 31, 2023 was informed by forecasted economic scenarios published in ~~September 2022,~~March 2023, a wide variety of additional economic ~~information provided by additional sources,~~data, information about borrower financial condition and collateral values and other relevant information. The economic forecast used in modeling the quantitative portion of the ACL as of ~~September 30, 2022,~~March 31, 2023, was a third-party provided baseline forecast. Also, see the preceding discussion related to incorporation of economic forecasts in the ACL estimate. Some of the ~~assumptions and~~ data points informing the reasonable and supportable economic forecast used in estimating the quantitative portion of the ACL at ~~September 30, 2022~~March 31, 2023 included:

•Labor market assumptions, which reflected national unemployment at ~~3.7%~~3.5% for the ~~fourth~~second quarter of ~~2022,~~2023, increasing to 4.0% by the end of 2023 through 2024;

•Annualized growth in GDP at 1.0% for the second quarter of 2023, declining to 1%, averaging 1.9% for 2023 and ~~4.1%~~2024;

•S&P 500 flat in the second quarter of 2023 with gains of 11.5% and ~~3.8%~~2.4% by the end of 2023 and 2024, respectively;

•~~Annualized growth in GDP at 0.6% for the fourth quarter of 2022, and 1.4% and 2.6% for 2023 and 2024, respectively;~~

•

~~S&P 500 bottoming out in the fourth quarter of 2022 with a decline of 14.3%, and forecasting gains of 5% and 1.6% by end of 2023 and 2024, respectively.~~

•HPI ~~growth~~decline of ~~5.7%~~5.2% in ~~2022, and~~the second quarter of 2023, with further declines of ~~3.3%~~3.6% and ~~1.7%~~3.5% by the end of 2023 and 2024, respectively.

Additional variables and assumptions not explicitly stated, including but not limited to ~~residential and~~ commercial property forecasts, projected stock market volatility indices and a variety of assumptions about market interest rates and spreads also contributed to the overall impact economic conditions and the economic forecast had on the ACL estimate. Furthermore, while the variables presented above are at the national level, many of the variables are regionalized at the market and submarket level in the models.

For additional information about the ACL, see Note 4 to the consolidated financial statements.

Deposits

~~Average balances~~The Company has a diverse deposit book by industry sector, with no deposits from venture capital or cryptocurrency-related businesses. Our largest deposit industry sector was title solutions, with approximately $2.0 billion in total deposits, spread across over 8,000 accounts and ~~rates paid on~~over 950 relationships at March 31, 2023; no other sectors exceeded $1.0 billion at March 31, 2023. Over 85% of title sector deposits were in operating accounts. Approximately 61% of our deposits are commercial or municipal in nature, with over 80% of commercial deposits considered relationship-based.

The following table presents information about the Company's insured and collateralized deposits as ~~follows for the periods indicated~~of March 31, 2023 (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
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 $ 8,749,794 — % $ 8,912,960 — % $ 9,071,135 — % $ 8,194,570 — %
Interest bearing 2,306,906 0.71 % 3,038,038 0.22 % 2,658,558 0.36 % 3,017,301 0.31 %
Savings and money market 13,001,566 1.22 % 13,554,572 0.29 % 13,150,357 0.64 % 13,299,066 0.34 %
Time 3,255,869 1.13 % 2,866,746 0.35 % 3,129,247 0.67 % 3,520,674 0.51 %
$ 27,314,135 0.78 % $ 28,372,316 0.20 % $ 28,009,297 0.41 % $ 28,031,611 0.26 %


Total deposits	$	25,722,898

Estimated amount of uninsured deposits	$	12,961,274
Less: collateralized deposits	(2,866,453)
Less: affiliate deposits	(231,159)
Adjusted uninsured deposits	$	9,863,662
Estimated insured and collateralized deposits	$	15,859,236

Insured and collateralized deposits to total deposits	62		%

~~The estimated amount~~In response to the recent events impacting the banking sector, we increased deposits in the insured ICS program by $164 million during the three months ended March 31, 2023 to $282 million.

See the section entitled "Liquidity" below for a further discussion of ~~uninsured deposits at September 30, 2022 and December 31, 2021 was $18.9 billion and $20.2 billion, respectively.~~ the impact of March, 2023 events impacting the banking sector on the Bank's deposits.

Time deposit accounts with balances of $250,000 or more totaled ~~$528~~$819 million and ~~$603~~$730 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The following table shows scheduled maturities of uninsured time deposits as of ~~September 30, 2022~~March 31, 2023 (in thousands):


Three months or less	$	~~156,607~~77,688
Over three through six months	~~95,259~~181,972
Over six through twelve months	~~248,884~~448,020
Over twelve months	~~10,038~~5,593
	$	~~510,788~~713,273

The estimated amount of uninsured deposits at March 31, 2023 and December 31, 2022 was $13.0 billion and $18.2 billion, respectively. Collateralized and affiliate deposits are included in these amounts.

For additional information about Deposits, see Note 10 to the consolidated financial statements.

Borrowings

In addition to deposits, we utilize FHLB advances as a funding source; the advances provide us with additional flexibility in managing both term and cost of funding and in managing interest rate risk. FHLB advances were elevated at March 31, 2023 due to March, 2023 events impacting the banking industry. FHLB advances are secured by qualifying residential first mortgage and commercial real estate loans and MBS. The following table presents information about the contractual balance of outstanding FHLB advances, as of ~~September 30, 2022~~March 31, 2023 (dollars in thousands):

Amount Weighted Average Rate
Maturing in:
2022 - One month or less $ 4,095,000 2.83 %
2022 - Over one month 875,000 3.27 %
2023 325,000 3.15 %
Total contractual balance outstanding $ 5,295,000


	Amount		Weighted Average Rate
Maturing in:
2023 - One month or less	$	3,920,000	4.89	%
2023 - Over one month	3,630,000		5.09	%




Total contractual balance outstanding	$	7,550,000

The table above reflects contractual maturities of outstanding advances and does not incorporate the impact that interest rate swaps designated as cash flow hedges have on the duration or cost of borrowings. FHLB advances drawn down in March, 2023 were typically one month advances to provide for maximum flexibility in managing liquidity during a volatile time. Management is currently evaluating the optimal term structure of the advance portfolio in light of the Bank's current liquidity and interest rate risk profile.

The table below presents information about outstanding interest rate swaps hedging the variability of interest cash flows on the FHLB advances included in the table above, as of ~~September 30, 2022~~March 31, 2023 (dollars in thousands):


		Notional Amount		Weighted Average Rate			Notional Amount		Weighted Average Rate
Cash flow hedges maturing in:	Cash flow hedges maturing in:					Cash flow hedges maturing in:
2022		$	50,000	2.99	%
2023	2023	255,000		2.35	%	2023	$	35,000	2.82	%
2024	2024	535,000		2.40	%	2024	535,000		2.40	%
2025	2025	425,000		2.28	%	2025	425,000		2.28	%
2026	2026	130,000		1.93	%	2026	130,000		1.93	%

Thereafter	Thereafter	25,000		2.50	%	Thereafter	25,000		2.50	%
		$	1,420,000	2.33	%		$	1,150,000	2.32	%

See Note 6 to the consolidated financial statements and "Interest Rate Risk" below for more information about derivative instruments.

Outstanding notes payable and other borrowings consisted of the following at the dates indicated (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Senior notes:	Senior notes:					Senior notes:
Principal amount of 4.875% senior notes maturing on November 17, 2025	Principal amount of 4.875% senior notes maturing on November 17, 2025	$	400,000	$	400,000	Principal amount of 4.875% senior notes maturing on November 17, 2025	$	400,000	$	400,000
Unamortized discount and debt issuance costs	Unamortized discount and debt issuance costs	(2,793)		(3,400)		Unamortized discount and debt issuance costs	(2,376)		(2,586)
		397,207		396,600			397,624		397,414
Subordinated notes:	Subordinated notes:					Subordinated notes:
Principal amount of 5.125% subordinated notes maturing on June 11, 2030	Principal amount of 5.125% subordinated notes maturing on June 11, 2030	300,000		300,000		Principal amount of 5.125% subordinated notes maturing on June 11, 2030	300,000		300,000
Unamortized discount and debt issuance costs	Unamortized discount and debt issuance costs	(5,012)		(5,400)		Unamortized discount and debt issuance costs	(4,745)		(4,880)
		294,988		294,600			295,255		295,120
Total notes	Total notes	692,195		691,200		Total notes	692,879		692,534
Finance leases	Finance leases	28,850		30,216		Finance leases	27,908		28,389
Notes and other borrowings	Notes and other borrowings	$	721,045	$	721,416	Notes and other borrowings	$	720,787	$	720,923

5654

Liquidity and Capital Resources

Liquidity

Liquidity involves our ability to generate adequate funds to support planned interest earning asset growth, meet deposit withdrawal and credit line usage requests, maintain reserve requirements, conduct routine operations, pay dividends, service outstanding debt and meet other contractual obligations.

BankUnited's ongoing liquidity needs have historically been met primarily by cash flows from operations, deposit growth, the investment portfolio, its amortizing loan portfolio and FHLB advances. FRB discount window borrowings, reverse repurchase agreement capacity and a letter of credit with the FHLB provide an additional ~~source~~sources of contingent liquidity. For the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021,~~ net cash provided by operating activities was ~~$1.3 billion~~$141 million and ~~$953~~$457 million, respectively. The decline in cash flows from operating activities for the comparative periods is primarily related to fluctuations in the daily cash settlement of derivative positions centrally cleared through the CME and a lower volume of re-securitization of early buyout loans.

Available liquidity sources inc~~ludes cash,~~lude cash; secured funding, such as borrowing capacity at the Federal Home Loan Bank of Atlanta, ~~and~~ the Federal Reserve Discount Window ~~Federal Funds lines of credit~~ and ~~unpledged agency~~the BTFP; and unencumbered securities. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Bank's amortizing securities and loan portfolios, and the sale of investment securities. Management also has the ability to exert substantial control over the rate and timing of loan production, and resultant requirements for liquidity to fund new loans.

The closures of two regional banks in March, 2023 led to a heightened level of deposit outflows during the week following those events. Deposit flows subsequently stabilized and have since remained within the range of what management considers to be normal operating activity. The following graph depicts aggregate deposit flows for the quarter ended March 31, 2023:

Deposit flows stablized 03132023 - 03312023.jpg

During the week of 3/13/2023, there were deposit outflows totaling $1.9 billion attributable to ten larger institutional customers. We reviewed the activity through March 31, 2023 for the remainder of the 200 largest depositors as of March 10, 2023 and did not see any significant indication of unusual deposit flow activity.

Following recent events impacting the banking system in March, we took prudent actions to maximize same-day available liquidity:

•Monetized securities and loan collateral by pledging to the FHLB and FRB;

•Increased the amount of cash held at the FRB;

•Increased deposits in the insured ICS program by increasing customer awareness of this product; and

•Maintained regular communication with funding sources and counterparties.

At March 31, 2023, the Bank had total same day available liquidity of approximately $9.4 billion, consisting of cash of $0.9 billion, borrowing capacity at the Federal Home Loan Bank of $2.9 billion, borrowing capacity at the FRB of $4.6 billion and unencumbered securities of $1.0 billion. As of April 21, 2023, available liquidity increased to $12.3 billion.

At March 31, 2023, the ratio of estimated insured and collateralized deposits to total deposits was 62% and the ratio of available liquidity to estimated uninsured, uncollateralized deposits was 95%. The ratio of available liquidity to estimated uninsured, uncollateralized deposits improved to 128% during the month of April, 2023.

The ALM policy establishes limits or operating thresholds and guidelines for a number of measures of liquidity which are ~~typically~~ monitored at least monthly by the ALCO and quarterly by the Board of Directors. In the current environment, many of these metrics are being monitored more frequently, at least weekly. The primary measures used to dimension liquidity risk are the ratio of available liquidity (excluding availability at the FRB) to volatile liabilities and a liquidity stress test coverage ratio. Other measures employed to monitor and manage liquidity include but are not limited to a 30-day total liquidity ratio (also excluding availability at the FRB), a one-year liquidity ratio, a wholesale funding ratio, concentrations of large deposits, a measure of on-balance sheet available liquidity, the ratio of FHLB advances to total assets 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 September 30, 2022, BankUnited was in compliance with the limits prescribed by the ALM policy.~~

The ALM policy stipulates that BankUnited’s liquidity is within policy limits if the available liquidity/volatile liabilities ratio and liquidity stress test ratios exceed 100%. At ~~September 30, 2022,~~March 31, 2023, BankUnited’s available liquidity/volatile liabilities ratio was ~~222%~~169% on a trailing average basis and 136% on a spot basis and the liquidity stress test ratio was ~~168%~~150%. Due to the events impacting the banking industry in March and the resultant increase in FHLB advances, the wholesale funding ratio was elevated at March 31, 2023; because additional assets were pledged to the FHLB and FRB, the on-balance sheet available liquidity metric was lower than is typical. The Company 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, to a lesser extent, its own securities portfolio. There are regulatory limitations that may affect the ability of the Bank to pay dividends to BankUnited, Inc. Management believes that such limitations will not impact our ability to meet our ongoing near-term cash obligations.

Macro factors, including the ~~initiation of~~recent events impacting the banking sector and the FRB's quantitative tightening ~~by the Fed,~~policy stance, have ~~recently~~ led to reduced deposit levels across the banking system. As depicted above, BankUnited's total deposits declined by ~~$1.1~~$1.8 billion during the ~~quarter~~three months ended ~~September 30, 2022,~~March 31, 2023, and there is uncertainty as to the future impact of monetary policy on deposit levels both system-wide and at BankUnited. We believe that we have sufficient ~~on-balance sheet and contingent~~sources of liquidity, ~~through the sources~~as described above, to satisfy our liquidity needs and cash requirements over the next twelve months.

Capital

Pursuant to the FDIA, the federal banking agencies have adopted regulations setting forth a five-tier system for measuring the capital adequacy of the financial institutions they supervise. At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company and the Bank had capital levels that exceeded both the regulatory well-capitalized guidelines and all internal capital ratio targets.

~~The following table provides information regarding regulatory capital for the Company and the Bank as of September 30, 2022 (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
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
BankUnited, Inc.:
Tier 1 leverage $ 2,822,240 7.71 % N/A (1) N/A (1) $ 1,464,536 4.00 % N/A (1) N/A (1)
CET1 risk-based capital $ 2,822,240 11.35 % $ 1,616,539 6.50 % $ 1,119,142 4.50 % $ 1,740,888 7.00 %
Tier 1 risk-based capital $ 2,822,240 11.35 % $ 1,989,586 8.00 % $ 1,492,190 6.00 % $ 2,113,935 8.50 %
Total risk-based capital $ 3,235,818 13.01 % $ 2,486,983 10.00 % $ 1,989,586 8.00 % $ 2,611,332 10.50 %
BankUnited:
Tier 1 leverage $ 3,202,664 8.78 % $ 1,824,177 5.00 % $ 1,459,341 4.00 % N/A N/A
CET1 risk-based capital $ 3,202,664 12.94 % $ 1,608,190 6.50 % $ 1,113,362 4.50 % $ 1,731,896 7.00 %
Tier 1 risk-based capital $ 3,202,664 12.94 % $ 1,979,310 8.00 % $ 1,484,483 6.00 % $ 2,103,017 8.50 %
Total risk-based capital $ 3,316,242 13.40 % $ 2,474,138 10.00 % $ 1,979,310 8.00 % $ 2,597,845 10.50 %

~~(1) There is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.~~

Upon adoption of ASU 2016-13 on January 1, 2020, the Company elected the option to temporarily delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.

The following table provides information regarding regulatory capital for the Company and the Bank as of March 31, 2023 (dollars in thousands):


	March 31, 2023
	Actual				Required to be Considered Well Capitalized				Required to be Considered Adequately Capitalized				Required to be Considered Adequately Capitalized Including Capital Conservation Buffer
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
BankUnited, Inc.:
Tier 1 leverage	$	2,785,134	7.40	%	N/A (1)		N/A (1)		$	1,504,788	4.00	%	N/A (1)		N/A (1)
CET1 risk-based capital	$	2,785,134	10.81	%	$	1,675,144	6.50	%	$	1,159,715	4.50	%	$	1,804,002	7.00	%
Tier 1 risk-based capital	$	2,785,134	10.81	%	$	2,061,716	8.00	%	$	1,546,287	6.00	%	$	2,190,574	8.50	%
Total risk-based capital	$	3,235,366	12.55	%	$	2,577,145	10.00	%	$	2,061,716	8.00	%	$	2,706,003	10.50	%
BankUnited:
Tier 1 leverage	$	3,215,157	8.58	%	$	1,874,365	5.00	%	$	1,499,492	4.00	%	N/A		N/A
CET1 risk-based capital	$	3,215,157	12.52	%	$	1,668,717	6.50	%	$	1,155,266	4.50	%	$	1,797,080	7.00	%
Tier 1 risk-based capital	$	3,215,157	12.52	%	$	2,053,806	8.00	%	$	1,540,354	6.00	%	$	2,182,168	8.50	%
Total risk-based capital	$	3,365,388	13.11	%	$	2,567,257	10.00	%	$	2,053,806	8.00	%	$	2,695,620	10.50	%

(1) There is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.

We believe we are well positioned, from a capital perspective, to withstand ~~a severe downturn in the economy.~~an economic downturn. CET1 risk-based capital, including AOCI would be 9.4% at BankUnited, Inc. and 11.1% at BankUnited N.A. as of March 31, 2023. We ~~continue to evolve~~continually re-evaluate our stress testing framework and adapt it to evolving macro-economic conditions as necessary. The majority of our commercial portfolio is subject to quarterly stress test analysis. On an annual basis, we also run a rigorous stress test of our entire balance sheet ~~and, where applicable, we incorporate considerations for~~incorporating the FRB's CCAR scenarios as well as additional idiosyncratic scenarios reflective of evolving macro-economic themes.

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.

Interest Rate Risk

A principal component of the Company’s risk of loss arising from adverse changes in the fair value of financial instruments, or market risk, is interest rate risk, including the risk that assets and liabilities with similar re-pricing characteristics may not reprice at the same time or to the same degree. A primary objective of the Company’s asset/liability management activities is to maximize net interest income, while maintaining acceptable levels of interest rate risk. The ALCO is responsible for establishing policies to manage exposure to interest rate risk, and to ensure procedures are established to monitor compliance with these policies. The policies established by the ALCO are approved at least annually by the Board of Directors or its Risk Committee.

Management believes that the simulation of net interest income in different interest rate environments provides the most meaningful measure of interest rate risk. Income simulation analysis is designed to capture not only the potential of all assets and liabilities to mature or reprice, but also the probability that they will do so. Income simulation also attends to the relative interest rate sensitivities of these items, and projects their behavior over an extended period of time. Finally, income simulation permits management to assess the probable effects on the balance sheet not only of changes in interest rates, but also of proposed strategies for responding to them.

The income simulation model analyzes interest rate sensitivity by projecting net interest income over twelve and twenty-four month periods in a most likely rate scenario based on a consensus forward ~~interest rate curves~~curve versus net interest income in alternative rate scenarios. Management continually reviews and refines its interest rate risk management process in response to changes in the interest rate environment, the economic climate and observed customer behavior. Currently, our interest rate risk policy framework is based on modeling instantaneous rate shocks to a static balance sheet of plus and minus 100, 200, 300 and 400 ~~basis point shifts.~~

5857

basis point shifts. We also model a variety of yield curve slope, depositor behavior assumptions 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.

The following table presents the impact on forecasted net interest income compared to a "most likely" scenario in static balance sheet, parallel rate shock scenarios of plus 100, 200, 300 and 400 basis points at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, as well as minus 100, 200 and ~~200~~300 basis points ~~scenario~~scenarios at ~~September 30,~~March 31, 2023 and December 31, 2022. At ~~September 30, 2022,~~March 31, 2023, the most likely rate scenario ~~incorporated a bear flattening yield~~reflected the consensus forward curve as of April 3, 2023 and floored all indices at 0%. ~~We did not apply~~


	Down 300		Down 200		Down 100		Plus 100		Plus 200		Plus 300		Plus 400



Model Results at March 31, 2023 - increase (decrease)
In year 1	(12)	%	(5)	%	(2)	%	1	%	—	%	(1)	%	(2)	%
In year 2	(20)	%	(9)	%	(3)	%	2	%	2	%	2	%	—	%
Model Results at December 31, 2022 - increase (decrease)
In year 1	(10)	%	(5)	%	(2)	%	—	%	(1)	%	(1)	%	(3)	%
In year 2	(18)	%	(8)	%	(3)	%	2	%	2	%	2	%	1	%

There are a variety of hedging strategies available and currently under evaluation by management to hedge exposure in a falling rate ~~scenario at December 31, 2021 due to the low prevailing interest rate environment at that time.~~

Down 200 Down 100 Plus 100 Plus 200 Plus 300 Plus 400
Model Results at September 30, 2022 - increase (decrease)
In year 1 (8.1) % (4.0) % 1.2 % 1.3 % 1.6 % 1.7 %
In year 2 (11.4) % (4.2) % 3.4 % 5.5 % 7.2 % 7.5 %
Model Results at December 31, 2021 - increase
In year 1 N/A N/A 2.5 % 3.9 % 4.3 % 4.2 %
In year 2 N/A N/A 6.6 % 11.5 % 15.8 % 20.4 %
environment.

Management also simulates changes in EVE in various interest rate environments. The following table illustrates the modeled change in EVE in the indicated scenarios at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:

Down 200 Down 100 Plus 100 Plus 200 Plus 300 Plus 400
Model Results at September 30, 2022 - increase (decrease): 2.9 % 3.0 % (3.0) % (7.2) % (10.9) % (14.2) %
Model Results at December 31, 2021 - increase (decrease): N/A N/A 0.4 % (1.0) % (3.2) % (5.0) %


	Down 300		Down 200		Down 100		Plus 100		Plus 200		Plus 300		Plus 400

Model Results at March 31, 2023 - increase (decrease):	3	%	5	%	4	%	(6)	%	(12)	%	(18)	%	(24)	%
Model Results at December 31, 2022 - increase (decrease):	(1)	%	4	%	4	%	(5)	%	(11)	%	(17)	%	(23)	%

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 and Hedging Activities

Interest rate derivatives 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 liabilities and to changes in the fair value of fixed rate financial instruments, in each case caused by fluctuations in benchmark interest rates, as well as to manage duration of liabilities.

The ~~fair value~~following table provides information about the Company's derivatives designated as hedging instruments as of March 31, 2023 (dollars in thousands):


				Weighted Average Pay Rate / Strike Price	Weighted Average Receive Rate / Strike Price	Weighted Average Remaining Life in Years
		Notional Amount
	Hedged Item
Derivatives designated as cash flow hedges:
Pay-fixed interest rate swaps	Variability of interest cash flows on variable rate borrowings	$	475,000	2.34%	3-Month LIBOR	2.9
Pay-fixed interest rate swaps	Variability of interest cash flows on variable rate borrowings	675,000		2.31%	Daily SOFR	1.5
Pay-fixed interest rate swaps	Variability of interest cash flows on variable rate liabilities	400,000		1.22%	Fed Funds Effective Rate	1.4
Pay-variable interest rate swaps	Variability of interest cash flows on variable rate loans	200,000		Term SOFR	3.72%	3.1
Interest rate caps purchased, indexed to Fed Funds effective rate	Variability of interest cash flows on variable rate liabilities	200,000		0.88%		2.2
Interest rate collar, indexed to 1-month SOFR(1)	Variability of interest cash flows on variable rate loans	125,000		5.58%	1.50%	3.4
Derivatives designated as fair value hedges:
Pay-fixed interest rate swaps	Variability of fair value of fixed rate loans	100,000		1.94%	Daily SOFR	1.3
		$	2,175,000

(1)The interest rate collar consists of a combination of zero-premium interest rate options. The Company sold a pay-variable cap with a strike price of 5.58%; sold a 0% floor; and purchased a receive-variable floor with a strike price of 1.50%.

In addition to derivative instruments, 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 September 30, 2022, outstanding interest rate swaps, caps and collars designated as cash flow hedges had an aggregate notional amount of $2.1 billion and outstanding interest rate swaps designated as fair value hedges had an aggregate notional amount of $100 million.

~~Interest rate swaps and caps not designated as hedges had an aggregate notional amount of $3.9 billion at September 30, 2022. These interest rate swaps and caps were entered into as accommodations~~Company has issued callable CDs to ~~certain of our commercial borrowers. To mitigate~~hedge interest rate risk ~~associated with these derivatives,~~in a falling rate environment; the ~~Company enters into offsetting derivative positions with primary dealers.~~amount of such instruments outstanding at March 31, 2023 was $653 million, The short duration of our AFS portfolio (1.95 at March 31, 2023) also provides a natural offset from an interest rate risk perspective to the longer duration of the residential mortgage portfolio.

See Note 6 to the consolidated financial statements for additional information about derivative financial instruments.

LIBOR Transition

The Company has implemented and is in the process of executing a detailed plan to facilitate the transition from LIBOR to alternative reference rates, with SOFR being the preferred alternative to LIBOR. A discussion of the Company's LIBOR transition plan and activities appears in the "LIBOR Transition" section in the MD&A of the Company's ~~2021~~2022 Annual Report on Form 10-K.

The ~~following~~ table below presents information about the Company's exposure to instruments that reference LIBOR as of ~~September~~March 31, 2023 (in thousands). We believe the fallback provisions of these instruments will provide for a smooth transition to an alternative reference rate prior to or as of the June 30, ~~2022 (in thousands):~~
Maturing
Prior to June 30, 2023 After June 30, 2023 Total
Investment securities $ — $ 3,821,646 $ 3,821,646
Loans 479,767 4,760,961 5,240,728
Interest rate derivative contracts (1)
312,966 3,278,819 3,591,785
$ 792,733 $ 11,861,426 $ 12,654,159
2023 termination date.


	Maturing
	Prior to June 30, 2023		After June 30, 2023		Total
Investment securities	$	—	$	3,551,397	$	3,551,397

Loans	57,395		2,884,759		2,942,154

Interest rate derivative contracts (1)	4,782		1,748,985		1,753,767
	$	62,177	$	8,185,141	$	8,247,318

(1)Represents notional amount.

~~Impact of the COVID-19 Pandemic~~

A detailed discussion of the effects the COVID-19 pandemic had during 2021 on our Company appears in the "Impact of the COVID-19 Pandemic and Our Response" section in the MD&A of the Company's 2021 Annual Report on Form 10-K.

2021 and 2022 were characterized broadly by recovery of the U.S. economy from the impact of the COVID-19 pandemic. The actual and expected impact of the pandemic on our financial condition and results of operations continues to decline. Levels of criticized and classified assets remain elevated at September 30, 2022, when compared to pre-pandemic levels although they continue to trend downward. The composition of the balance sheet at September 30, 2022 and corresponding levels of net interest income reflect the opportunity cost of the decline in commercial loans and the increase in residential loans and securities that occurred over the course of the pandemic. Historically, commercial loans have generally tended to be higher yielding assets than residential loans and securities. During the first quarter of 2022, we welcomed our employees back to the office, adopting a hybrid work model for most non-branch employees. This model will likely continue to evolve over the near to medium term.

6059

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 volatility of the provision for credit losses. 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 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 periods indicated (in thousands):

Three Months Ended
September 30, 2022 Three Months Ended June 30, 2022 Three Months Ended
September 30, 2021
Income before income taxes (GAAP) $ 117,083 $ 87,468 $ 114,400
Plus: Provision for (recovery of) credit losses 3,720 23,996 (11,842)
PPNR (non-GAAP) $ 120,803 $ 111,464 $ 102,558

Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions as it is a metric commonly used in the banking industry. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share at the dates indicated (in thousands except share and per share data):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Total stockholders’ equity	Total stockholders’ equity	$	2,480,985	$	3,037,761	Total stockholders’ equity	$	2,481,394	$	2,435,981
Less: goodwill and other intangible assets	Less: goodwill and other intangible assets	77,637		77,637		Less: goodwill and other intangible assets	77,637		77,637
Tangible stockholders’ equity	Tangible stockholders’ equity	$	2,403,348	$	2,960,124	Tangible stockholders’ equity	$	2,403,757	$	2,358,344

Common shares issued and outstanding	Common shares issued and outstanding	77,599,408		85,647,986		Common shares issued and outstanding	74,423,365		75,674,587

Book value per common share	Book value per common share	$	31.97	$	35.47	Book value per common share	$	33.34	$	32.19

Tangible book value per common share	Tangible book value per common share	$	30.97	$	34.56	Tangible book value per common share	$	32.30	$	31.16

Item 3.7A. Quantitative and Qualitative Disclosures About Market Risk

See the section entitled “Interest Rate Risk” included in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective.

During the quarter ended ~~September 30, 2022,~~March 31, 2023, there were no changes in the Company's internal control over financial reporting, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved as plaintiff or defendant in various legal actions arising in the normal course of business. In the opinion of management, based upon currently available information and the advice of legal counsel, the likelihood is remote

that 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.

Item 1A. Risk Factors

~~Geopolitical~~Except as set forth below there have been no material changes in the risk factors ~~such as~~disclosed by the ~~conflict between Russia~~Company in its 2022 Annual Report on Form 10-K filed with the Securities and ~~Ukraine~~Exchange Commission on February 22, 2023.

Recent events affecting the banking industry predicated by the failure of three regional banks and resulting media coverage may have eroded customer confidence in the banking system and have adversely impacted liquidity, particularly for regional banks like BankUnited.

Recent bank failures have generated significant market volatility and adversely impacted stock prices among publicly traded bank holding companies and, in particular, regional banks like the Company. Many regional banks, including BankUnited, experienced higher than normal deposit outflows immediately following the first regional bank failures in March 2023. These developments have negatively impacted customer confidence in the safety and soundness of regional banks. As a result of these recent events, customers may choose to maintain deposits with larger financial institutions or ~~similar events~~in other higher yielding alternatives, which could ~~negatively~~materially adversely impact ~~our business~~the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.

~~We are monitoring~~ While the ~~impact~~Department of the ~~conflict between Russia~~Treasury, the Federal Reserve, and ~~Ukraine on our business. While we do not currently expect~~the FDIC have made statements regarding the safety and soundness of the banking system and taken actions to ensure that depositors of recently failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in regional banks and the ~~conflict will~~banking system more broadly.

These recent events may result in potentially adverse changes to laws or regulations governing banks and bank holding companies or in the impositions of restrictions through supervisory or enforcement activities, including higher capital or liquidity requirements, which could have a ~~direct~~ material impact on our ~~business, financial condition~~business. The cost of resolving the recent bank failures may prompt the FDIC to increase its deposit insurance premiums or results of operations, collateral effects of the geopolitical instability, such as the imposition of sanctions against Russia and Russia’s response to such sanctions, including retaliatory acts like cyber-attacks and sanctions against other countries, or escalation or further spread of the conflict could adversely affect the global economy or domestic markets, including ours.assessments.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities
Period
Total number of shares purchased(1)
Average price paid per share Total number of shares purchased as part of publicly announced plans or programs
Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (2)(3)
July 1 - July 31, 2022 — $ — — $ 758,337
August 1 - August 31, 2022 — $ — — $ 758,337
September 1 - September 30, 2022 314,109 $ 34.36 314,109 $ 139,965,810
Total 314,109 $ 34.36 314,109


	Issuer Purchases of Equity Securities
Period	Total number of shares purchased(1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (2)
January 1 - January 31, 2023	934,888	$	33.89	934,888	$	43,531,065
February 1 - February 28, 2023	94,920	$	34.97	94,920	$	40,211,428
March 1 - March 31, 2023	604,437	$	32.44	604,437	$	20,603,265
Total	1,634,245	$	33.42	1,634,245

(1) The total number of shares purchased during the periods indicated includes shares purchased as part of a publicly announced program.

(2) On May 2, 2022, the Company's Board of Directors authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock. 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. The authorization does not require the Company to acquire any specified number of common shares. The Company completed its repurchases pursuant to the May 2 authorization in September 2022.

~~(3)~~ On September 13, 2022, the Company's Board of Directors authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock. 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. The authorization does not require the Company to acquire any specified number of common shares.

Item 6.

Exhibits

Exhibit
Number

Description

Location

31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

101.INS

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101.SCH

XBRL Taxonomy Extension Schema

Filed herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

Filed herewith

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XBRL Taxonomy Extension Definition Linkbase

Filed herewith

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XBRL Taxonomy Extension Label Linkbase

Filed herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

Filed herewith

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 ~~1st~~2nd day of ~~November 2022.~~May 2023.


			/s/ Rajinder P. Singh
			Rajinder P. Singh
			Chairman, President and Chief Executive Officer


			/s/ Leslie N. Lunak
			Leslie N. Lunak
			Chief Financial Officer


		Page

	Glossary of Defined Terms	ii

PART I.	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited)
	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.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3332

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	61

ITEM 4.	Controls and Procedures	61

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	61

ITEM 1A.	Risk Factors	6261

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62

ITEM 6.	Exhibits	63

SIGNATURES		64


	September 30, 2022		December 31, 2021
UPB	$	101,396	$	124,963
Non-credit discount	(47,122)		(59,759)
Total amortized cost of PCD loans	54,274		65,204
ACL related to PCD loans	(441)		(476)
PCD loans, net	$	53,833	$	64,728


	Three Months Ended September 30,			Nine Months Ended September 30,						Location of Gain (Loss) in Consolidated Statements of Income
		2022		2021		2022		2021
Variability of fair value of fixed rate loans:
Fair value adjustment on derivatives		$	1,929	$	—	$	3,826	$	—		Interest income on loans
Fair value adjustment on hedged items		(1,985)		—		(3,970)		—			Interest income on loans
Loss recognized on fair value hedges (ineffective portion)		$	(56)	$	—	$	(144)	$	—

Variability of fair value of fixed rate borrowings:
Fair value adjustment on derivatives		$	—	$	(491)	$	—	$	(1,987)		Interest expense on borrowings
Fair value adjustment on hedged items		—		491		—		1,986			Interest expense on borrowings
Loss recognized on fair value hedges (ineffective portion)		$	—	$	—	$	—	$	(1)


	Amortized Cost		Percent of Bridge -Franchise Finance
Restaurant concepts:
Burger King	$	35,134	13.8	%
Dunkin Donuts	13,037		5.1	%
Ram Restaurant and Brewery	12,889		5.1	%
Other	55,942		22.0	%
	$	117,002	46.0	%
Non-restaurant concepts:
Planet Fitness	$	81,757	32.3	%
Other Fitness Concepts	44,069		17.3	%
Other	11,309		4.4	%
	137,135		54.0	%
	$	254,137	100.0	%


	September 30, 2022					December 31, 2021

	Number of TDRs	Amortized Cost		Related Specific Allowance		Number of TDRs	Amortized Cost		Related Specific Allowance
Residential and other consumer (1)	2,421	$	388,437	$	136	449	$	79,524	$	87
Commercial	35	61,543		6,862		16	29,309		1,377
	2,456	$	449,980	$	6,998	465	$	108,833	$	1,464


	Three Months Ended September 30, 2022		Three Months Ended June 30, 2022		Three Months Ended September 30, 2021
Income before income taxes (GAAP)	$	117,083	$	87,468	$	114,400
Plus: Provision for (recovery of) credit losses	3,720		23,996		(11,842)
PPNR (non-GAAP)	$	120,803	$	111,464	$	102,558