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What changed in BankUnited, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BankUnited, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+531 added−452 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in BankUnited, Inc.'s 2023 10-K

531 paragraphs added · 452 removed · 337 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

69 edited+22 added−9 removed66 unchanged
Biggest changeThrough the "Heir’s Program" we have brought together a consortium of expertise to provide legal services and education to predominantly minority families seeking to maintain property in family lineage. Health, Wellness and Safety The safety and wellness of our employees is fundamental to the success of our Company.
Biggest changeThese community programs include BankUnited's "Adopt A Neighborhood" in Florida focused on providing support to under-served predominantly minority communities, the "Entrepreneurship Program" in New York where we provide workforce development in partnership with a local university, and the "Heir’s Program" where we brought together a consortium of expertise to provide legal services and education to predominantly minority families seeking to maintain property in family lineage.
Our core business strategy is to build a leading regional commercial and small business bank, with a distinctive value proposition based on strong service-oriented relationships, robust digital enabled customer experiences and operational excellence, with an entrepreneurial work environment that empowers employees to deliver their best.
Our core business strategy is to build a leading regional commercial and small business bank with a distinctive value proposition based on strong service-oriented relationships, robust digital enabled customer experiences and operational excellence, and with an entrepreneurial work environment that empowers employees to deliver their best.
Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability. Privacy and Information Security Banking organizations are subject to many federal and state laws and regulations governing the collection, use and protection of customer information.
Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability. 8 Privacy and Information Security Banking organizations are subject to many federal and state laws and regulations governing the collection, use and protection of customer information.
Section 23B of the Federal Reserve Act requires that most types of transactions by an insured depository institution with, or for the benefit of, an affiliate be on terms at least as favorable to the insured depository institution 6 as if the transaction were conducted with an unaffiliated third party.
Section 23B of the Federal Reserve Act requires that most types of transactions by an insured depository institution with, or for the benefit of, an affiliate be on terms at least as favorable to the insured depository institution as if the transaction were conducted with an unaffiliated third party.
As a general matter, the maximum deposit insurance amount is $250,000 per depositor. Additionally, FDIC-insured depository institutions are required to pay deposit insurance assessments to the FDIC. The amount of a particular institution's deposit insurance assessment is based on that institution's risk classification under an FDIC risk-based assessment system.
As a general matter, the maximum deposit insurance amount is $250,000 per depositor. Additionally, FDIC-insured depository institutions are required to pay deposit insurance assessments to the FDIC deposit insurance fund. The amount of a particular institution's deposit insurance assessment is based on that institution's risk classification under an FDIC risk-based assessment system.
There is a risk that BankUnited’s deposit insurance premiums will further increase if failures of insured depository institutions deplete the DIF or if the FDIC changes its view of the risk BankUnited poses to the DIF or otherwise increases the assessment rate adjustment applicable to BankUnited’s deposits.
There is a risk that BankUnited’s deposit insurance premiums will further increase if additional failures of insured depository institutions further deplete the DIF or if the FDIC changes its view of the risk BankUnited poses to the DIF or otherwise increases the assessment rate adjustment applicable to BankUnited’s deposits.
Financial institutions are also prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for 7 due diligence, customer identification, and recordkeeping, including in their dealings with non-U.S. financial institutions and non-U.S. customers.
Financial institutions are also prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for due diligence, customer identification and recordkeeping, including in their dealings with non-U.S. financial institutions and non-U.S. customers.
Examination Fees The OCC currently charges fees to recover the costs of examining national banks, processing applications and other filings, and covering direct and indirect expenses in regulating national banks. Various regulatory agencies have the authority to assess additional supervision fees.
Examination Fees The OCC charges fees to recover the costs of examining national banks, processing applications and other filings, and covering direct and indirect expenses in regulating national banks. Various regulatory agencies have the authority to assess additional supervision fees.
OFAC publishes lists of persons, organizations, and countries suspected of money laundering or aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons.
The OFAC publishes lists of persons, organizations, and countries suspected of money laundering or aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons.
The regulators may also take 3 action if they determine that the banking organization or its management is violating or has violated any law or regulation.
The regulators may also take action if they determine that the banking organization or its management is violating or has violated any law or regulation.
To date, we have executed our strategy primarily through organic growth and anticipate that we will continue to do so. Our Products and Services Lending and Leasing General —Our primary lending focus is to serve small, middle-market and larger corporate businesses with a variety of financial products and services, while maintaining a disciplined credit culture.
To date, we have executed our strategy primarily through organic growth and anticipate that we will most likely continue to do so. Our Products and Services Lending and Leasing General —Our primary lending focus is to serve small and middle-market and larger corporate businesses with a variety of financial products and services, while maintaining a disciplined credit culture.
Failure to meet capital guidelines could subject the institution to a variety of enforcement remedies by federal bank regulatory agencies, including: termination of deposit insurance by the FDIC, restrictions on certain business activities, and appointment of the FDIC as conservator or receiver. As of December 31, 2022, BankUnited, Inc. and BankUnited were well-capitalized.
Failure to meet capital guidelines could subject the institution to a variety of enforcement remedies by federal bank regulatory agencies, including termination of deposit insurance by the FDIC, restrictions on certain business activities, and appointment of the FDIC as conservator or receiver. As of December 31, 2023, BankUnited, Inc. and BankUnited were well-capitalized.
Commercial loans —Our commercial loans, which are generally made to growing small business, middle-market and larger corporate entities and non-profit organizations, include secured and unsecured lines of credit, formula-based lines of credit, equipment loans, owner-occupied commercial real estate term loans and lines of credit, mortgage warehouse lines, capital call lines, letters of credit, commercial credit cards, SBA and USDA product offerings, Export-Import Bank financing products, trade finance and business acquisition finance credit facilities.
Commercial loans —Our commercial loans, which are generally made to growing small business, middle-market and larger corporate entities and non-profit organizations, include secured and unsecured lines of credit, formula-based lines of credit, equipment loans, owner-occupied commercial real estate term loans and lines of credit, mortgage warehouse lines, subscription finance facilities, letters of credit, commercial credit cards, SBA and USDA product offerings, Export-Import Bank financing products, trade finance and business acquisition finance credit facilities.
The statutory factors that the Federal Reserve is required to consider in considering an application include the financial and managerial resources of the parties and the future prospects of the combined organization, the effects of the transaction on competition, the convenience and needs of the community, including the record of performance of the parties under the Community Reinvestment Act, the effectiveness of the acquiring company in combating money-laundering activities and the impact of the transaction on the financial stability of the U.S. banking or financial system.
The statutory factors that the Federal Reserve is required to consider in considering an application include the financial and managerial resources of the parties and the future prospects of the combined organization, the effects of the transaction on competition, the convenience and needs of the community, including the record of performance of the parties under the CRA, the effectiveness of the acquiring company in combating money-laundering activities and the impact of the transaction on the financial stability of the U.S. banking or financial system.
The Federal Reserve has rule-based standards for determining whether one company has control over another. These rules established four categories of tiered presumptions of noncontrol that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control.
The Federal Reserve has rule-based standards for determining whether one company has control over another. These rules established four categories of tiered presumptions of non-control 4 that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control.
As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of noncontrol. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationships and restrictive contractual covenants.
As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of non-control. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationships and restrictive contractual covenants.
Our largest banking competitors in the Florida market include Truist, JPMorgan Chase, PNC, Regions Bank, TD Bank, Wells Fargo, Bank of America, First Horizon, Synovus and a number of community banks.
Our largest banking competitors in Florida and the Southeast include Truist, JPMorgan Chase, PNC, Regions Bank, TD Bank, Wells Fargo, Bank of America, First Horizon, Synovus, and a number of community banks.
In the Tri-State market, we also compete with, in addition to the national and international financial institutions listed, Capital One, Signature Bank, New York Community Bank, Valley National Bank, M&T Bank and numerous community banks. Interest rates on both loans and deposits and prices of fee-based services are significant competitive factors among financial institutions generally.
In the Tri-State market, we also compete with, in addition to the national and international financial institutions listed above, Capital One, Valley National Bank, M&T Bank and numerous community banks. Interest rates on both loans and deposits and prices of fee-based services are significant competitive factors among financial institutions generally.
Our iCARE™ Council, consisting of 14 employees with diverse backgrounds and perspectives across different divisions in our organization, oversees the continued evolution of iCARE™ and 16 employees serving as iCARE™ ambassadors promote engagement in iCARE™ programs across the organization. Employees are encouraged to participate in interactive events, cultural celebrations, an enterprise-wide mentorship program and volunteer opportunities.
Our iCARE™ Council, consisting of 15 employees with diverse backgrounds and perspectives across different divisions in our organization, oversees the continued evolution of iCARE™ and 17 employees serving as iCARE™ ambassadors promote engagement in iCARE™ programs across the organization. Employees are encouraged to participate in interactive events, cultural celebrations, an enterprise-wide mentorship program and volunteer opportunities.
Other products that we provide include real estate secured lines of credit, lending to REITs and institutional asset owners, subscription lines of credit to real estate funds, and, to a more limited extent, acquisition, development and construction loan facilities and construction financing.
Other products that we provide include real estate secured lines of credit, lending to REITs and institutional asset owners, subscription lines of credit to real estate funds, and, to a lesser extent, acquisition, development and construction loan facilities and construction financing.
Diversity, Equity and Inclusion Our goal is to create a safe, diverse and inclusive workplace where individuals are valued, feel free to express themselves, are empowered to succeed and are able to grow both personally and professionally. At December 31, 2022, 33% of the members of our Board of Directors were female and 44% were of diverse nationality or ethnicity.
Diversity, Equity and Inclusion Our goal is to create a safe, diverse and inclusive workplace where individuals are valued, feel free to express themselves, are empowered to succeed and are able to grow both personally and professionally. At December 31, 2023, 40% of the members of our Board of Directors were female and 40% were of diverse nationality or ethnicity.
The regulatory agency's assessment of the institution's CRA performance is made available to the public. Following its most recent CRA performance evaluation in October 2021, BankUnited received an overall rating of "Satisfactory." Human Capital Resources At December 31, 2022, we had 1,598 full-time employees and 38 part-time employees. None of our employees are parties to a collective bargaining agreement.
The regulatory agency's assessment of the institution's CRA performance is made available to the public. Following its most recent CRA performance evaluation in October 2021, BankUnited received an overall rating of "Satisfactory." Human Capital Resources At December 31, 2023, we had 1,588 full-time employees and 28 part-time employees. None of our employees are parties to a collective bargaining agreement.
In 2022, BankUnited was listed as number three among America's Top 100 Healthiest Employers by Springbuk HR Technology and was awarded the Worksite Wellness Award by the Florida Department of Health in 2021.
In 2023, BankUnited was listed as number one among America's Top 100 Healthiest Employers by Springbuk HR Technology, and was awarded the Worksite Wellness Award by the Florida Department of Health in 2021.
Pink Tank participants receive weekly guidance and mentorship by BankUnited employees throughout the ten-week research and competition stage. The students connect with BankUnited professionals of all levels and disciplines. Since the inception of this initiative in 2020, 28 students have completed the program and 20 new students have been selected for the 2022-2023 cohort.
The Pink Tank participants receive weekly guidance and mentorship by BankUnited employees throughout the ten-week research and competition stage. The students connect with BankUnited professionals of all levels and disciplines. Since the inception of this initiative, 46 students have completed the program and 20 new students have been selected for the 2023-2024 cohort.
Our In-house Lending Limits ranging from $125 million to $150 million, are based upon loan type and are further limited by risk-based Hold Limits that incorporate our assessment of the borrower’s financial condition and industry exposure. These limits are significantly below our legal lending limit.
Our In-house Lending Limits, ranging from $125 million to $150 million, are based upon loan type and are further limited by risk-based Hold Limits that incorporate our assessment of the borrower’s financial condition and industry exposure.
As of December 31, 2022, a depository institution was deemed to be "well capitalized" if the banking institution had a total risk-based capital ratio of 10.0% or greater, a tier 1 risk-based capital ratio of 8.0% or greater, a CET1 risk-based capital ratio of 6.5% and a leverage ratio of 5.0% or greater, and the institution was not subject to an order, written agreement, capital directive, or prompt corrective action directive to meet and maintain a specific level for any capital measure.
A depository institution is deemed to be "well capitalized" if the banking institution has a total risk-based capital ratio of 10.0% or greater, a tier 1 risk-based capital ratio of 8.0% or greater, a CET1 risk-based capital ratio of 6.5% and a leverage ratio of 5.0% or greater, and the institution is not subject to an order, written agreement, capital directive or prompt corrective action directive to meet and maintain a specific level for any capital measure.
The federal bank regulators examine and assign each bank a public CRA rating. The CRA requires federal bank regulators to take into account the bank's record in meeting the needs of its service area when considering an application by a bank to establish or relocate a branch or to conduct certain mergers or acquisitions.
The CRA requires federal bank regulators to take into account the bank's record in meeting the needs of its service area when considering an application by a bank to establish or relocate a branch or to conduct certain mergers or acquisitions.
BankUnited offers paid time off, paid parental leave for male and female employees, paid holidays, flexible work schedules and hybrid and remote job opportunities, where possible.
BankUnited offers paid time off, paid parental leave for male and female employees, paid holidays, flexible work schedules and hybrid and remote job opportunities for some positions.
In addition, banking organizations are subject to periodic reporting requirements. The regulators have various remedies available if they determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, compliance or other aspects of a banking organization's operations are less than satisfactory, or that the banking organization is operating in an unsafe or unsound manner.
The regulators have various remedies available if they determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, sensitivity to market risk, compliance or other aspects of a banking organization's operations are less than satisfactory, or that the banking organization is operating in an unsafe or unsound manner.
Item 1. Business Overview BankUnited, Inc., with total consolidated assets of $37.0 billion at December 31, 2022, is a bank holding company with one direct wholly-owned subsidiary, BankUnited, collectively, the Company.
Item 1. Business Overview BankUnited, Inc., with total consolidated assets of $35.8 billion at December 31, 2023, is a bank holding company with one direct wholly-owned subsidiary, BankUnited, collectively, the Company.
For participation in our Wellness Program, we offer our employees a reduced premium rate for medical insurance coverage. 10 In recognition of our employee wellness programs, BankUnited received the Healthiest Employer Award from the South Florida Business Journal in 2020, 2021 and 2022.
We offer safety programs including first aid and CPR courses. For participation in our Wellness Program, we offer our employees a reduced premium rate for medical insurance coverage. In recognition of our employee wellness programs, BankUnited received the Healthiest Employer Award from the South Florida Business Journal in 2021 and 2022.
Bridge offers franchise equipment, acquisition and expansion financing through its franchise finance division. Commercial real estate loans —We offer term financing for the acquisition or refinancing of properties, primarily rental apartments, mixed-use commercial properties, industrial properties, warehouses, retail shopping centers, free-standing single-tenant buildings, office buildings and hotels.
Commercial real estate loans —We offer term financing for the acquisition or refinancing of properties, primarily rental apartments, mixed-use commercial properties, industrial properties, warehouses, retail shopping centers, free-standing single-tenant buildings, office buildings and hotels.
Home equity loans and lines of credit and other consumer loans are not significant components of our loan portfolio or of our lending strategy. 1 Credit risk management - Credit is managed through our three lines of defense framework as prescribed in our credit policies and procedures. • First Line of Defense - Credit opportunities are sourced, analyzed, recommended and managed by our lines of business in accordance with established credit procedures. • Second Line of Defense - Our credit administration division, reporting to the Chief Risk Officer, is responsible for the evaluation and approval of recommended credit opportunities.
Credit risk management —Credit is managed through our three lines of defense framework as prescribed in our credit policies and procedures. • First Line of Defense - Credit opportunities are sourced, analyzed, recommended and managed by our lines of business in accordance with established credit procedures. • Second Line of Defense - Our credit administration division, reporting to the Chief Risk Officer, is responsible for the evaluation and approval of recommended credit opportunities.
Since the inception of this initiative in 2020, 63 college and high school students have participated; 23 of them have been hired for full time roles at the Bank. We launched the ATOM Pink Tank program in partnership with Florida International University - a six-month leadership, mentorship, and research development program to empower female students pursuing STEM careers.
Since the inception of these initiatives in 2020, 109 college and high school students have participated and 36 of them have been hired for full time roles at the Bank. Through BankUnited's exclusive partnership with Florida International University, the ATOM Pink Tank program, a six-month leadership, mentorship, and research development program was created to empower female students pursuing STEM careers.
In 2022, our employees reported a total of 2,650 volunteer hours serving 110 community organizations. Our employees are given paid time to participate in community volunteer opportunities. BankUnited has partnered with five universities in our local markets to provide scholarships and internship programs, with a primary focus on minority high school and college students.
In 2023, our employees reported a total of 3,501 volunteer hours, up 32% from 2022, serving 128 community organizations. Our employees are given paid time to participate in community volunteer opportunities. BankUnited has partnered with six universities in our local markets to provide scholarships, internship, and other educational programs, with a primary focus on minority high school and college students.
These limits are reviewed periodically by the Credit Risk Management Committee and approved annually by the Board of Directors.
These limits are significantly below our legal lending limit and are reviewed periodically by the Credit Risk Management Committee and approved annually by the Board of Directors.
Approximately 57% of our workforce was female. 9 The following chart further illustrates the diversity of our workforce at December 31, 2022: We offer diversity and inclusion training to all of our employees. iCARE™ Through our iCARE™ ("Inclusive Community of Advocacy, Respect and Equality") initiative, we have launched a number of programs intended to foster a culture that promotes social justice, equal access, community development and opportunity.
We offer diversity and inclusion training to all of our employees. 9 The following chart illustrates the diversity of our workforce at December 31, 2023: Diverse Workforce iCARE™ Under the umbrella of our iCARE™ ("Inclusive Community of Advocacy, Respect and Equality") initiative, we have a number of programs intended to foster a culture that promotes employee engagement in social justice, equal access, community development and opportunity.
The material statutory and regulatory requirements that are applicable to us are summarized below. The description below is not intended to summarize all laws and regulations applicable to us and is qualified in its entirety by reference to the full text of the statutes, regulations, policies and other written guidance that are described.
The description below is not intended to summarize all laws and regulations applicable to us and is qualified in its entirety by reference to the full text of the statutes, regulations, policies and other written guidance that are described. Bank and Bank Holding Company Regulation BankUnited is a national bank.
U.S. depository institutions are assigned one of five capital categories: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized," and are subjected to differential regulation corresponding to the capital category within which the institution falls.
Prompt Corrective Action Under the FDIA, the federal bank regulatory agencies must take "prompt corrective action" against undercapitalized U.S. depository institutions. U.S. depository institutions are assigned one of five capital categories: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized," and are subjected to differential regulation corresponding to the capital category within which the institution falls.
In many cases, the applicable regulatory authorities have broad enforcement power over BHCs, banks and their subsidiaries, including the power to impose substantial fines and other penalties for violations of laws and regulations. Further, the regulatory system imposes reporting and information collection obligations. We incur significant costs related to compliance with these laws and regulations.
In many cases, the applicable regulatory authorities have broad enforcement power over BHCs, banks and their subsidiaries, including the power to impose substantial monetary fines and other penalties for violations of laws and regulations or engaging in unsafe and unsound banking practices. Further, the regulatory system imposes reporting and information collection obligations.
BankUnited, a national banking association headquartered in Miami Lakes, Florida, provides a full range of commercial lending and both commercial and consumer deposit services through banking centers located in Florida, the New York metropolitan area and Dallas, Texas.
BankUnited, a national banking association headquartered in Miami Lakes, Florida, provides a full range of commercial lending and both commercial and consumer deposit services through banking centers located in Florida, the New York metropolitan area and Dallas, Texas, and a comprehensive suite of wholesale products to customers through an Atlanta office focused on the Southeast region.
If BankUnited, Inc. or BankUnited finds a name on any transaction, account or wire transfer that is on an OFAC list, BankUnited, Inc. or BankUnited must freeze or block such account or transaction, file a suspicious activity report and notify the appropriate authorities. Consumer Laws and Regulations Banking organizations are subject to numerous laws and regulations intended to protect consumers.
If BankUnited, Inc. or BankUnited finds a name on any transaction, account or wire transfer that is an affirmative match to one on an OFAC list, BankUnited, Inc. or BankUnited must freeze or block such account or transaction, file a suspicious activity report and notify the appropriate authorities.
Pursuant to the regulations of the Federal Reserve, all banks, including Bank United, are required to maintain average daily reserves at mandated ratios against their transaction accounts. In addition, reserves must be maintained on certain non-personal time deposits. This reserve requirement may be met by holding cash in banking offices or on deposit at a Federal Reserve Bank.
Pursuant to the regulations of the Federal Reserve, all banks, including BankUnited, are required to maintain average daily reserves at mandated ratios against their transaction accounts. In addition, reserves must be maintained on certain non-personal time deposits.
Any entity that directly or indirectly controls a bank must be approved by the Federal Reserve Board under the BHC Act to become a BHC. BHCs are subject to regulation, inspection, supervision and enforcement by the Federal Reserve Board under the BHC Act.
As a national bank organized under the National Bank Act, BankUnited is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC. Any entity that directly or indirectly controls a national bank must be approved by the Federal Reserve Board under the BHC Act to become a BHC.
Investors can hold up to 24.9% of the voting securities and 33% of the total equity of a company without necessarily having a controlling influence. 4 Permissible Activities and Investments Banking laws generally restrict the ability of BankUnited, Inc. to engage in activities other than those determined by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
Permissible Activities and Investments Banking laws generally restrict the ability of BankUnited, Inc. to engage in activities other than those determined by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
The Federal Reserve Board's jurisdiction also extends to any company that is directly or indirectly controlled by a BHC. BankUnited, Inc., which controls BankUnited, is a BHC and, as such, is subject to ongoing and comprehensive supervision, regulation, inspection and enforcement by the Federal Reserve Board.
BHCs are subject to regulation, inspection, supervision and enforcement by the Federal Reserve Board under the BHC Act. The Federal Reserve Board's jurisdiction also extends to any company that is directly or indirectly controlled by a BHC.
As a member of the FHLB, BankUnited is required to acquire and hold shares of capital stock in the FHLB of Atlanta. BankUnited is in compliance with this requirement.
Any advances from an FHLB must be secured by specified types of collateral. As a member of the FHLB, BankUnited is required to acquire and hold shares of capital stock in the FHLB of Atlanta. BankUnited is in compliance with this requirement.
The CFPB has rulemaking authority over many of the statutes governing products and services offered to bank and thrift consumers. For banking organizations with assets of $10 billion or more, such as BankUnited, Inc. and the Bank, the CFPB has exclusive rule making and examination, and primary enforcement authority under certain federal consumer protection financial laws.
For banking organizations with assets of $10 billion or more, such as BankUnited, Inc. and the Bank, the CFPB has exclusive rule making and examination, and primary enforcement authority under certain federal consumer protection financial laws. In addition, states are permitted to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB.
The Bank provides commercial lending and deposit services in the Southeast U.S through our wholesale banking office in Atlanta, Georgia, and provides certain commercial lending and deposit products through national platforms and certain consumer deposit products through an online channel.
The Bank provides certain commercial lending and deposit products through national platforms and certain consumer deposit products through an online channel.
We also offer a suite of commercial deposit, treasury solutions and cash management products nationally, primarily focused on select industry verticals. 2 Competition Our markets are highly competitive, containing not only a large number of community and regional banks, but also a significant presence of the country's largest commercial banks.
Competition Our primary markets are highly competitive, containing not only a large number of community and regional banks, but also a significant presence of the country's largest commercial banks.
BankUnited is a member of the Federal Home Loan Bank of Atlanta. Each FHLB provides a central credit facility primarily for its member institutions as well as other entities involved in home mortgage lending. Any advances from an FHLB must be secured by specified types of collateral.
This reserve requirement may be met by holding cash in banking offices or on deposit at a Federal Reserve Bank. 7 BankUnited is a member of the Federal Home Loan Bank of Atlanta. Each FHLB provides a central credit facility primarily for its member institutions, as well as other entities involved in home mortgage lending.
Residential mortgages —We do not originate residential mortgages, but do invest in residential loans originated through correspondent channels and community partners. Our residential loan portfolio is primarily comprised of loans purchased on a national basis through select correspondent channels. This national purchase program allows us to diversify our loan portfolio, both by product type and geography.
Our residential loan portfolio is primarily comprised of loans purchased on a national basis through select correspondent channels. This national purchase program allows us to diversify our loan portfolio, both by product type and geography. Residential loans purchased are primarily closed-end, first lien jumbo mortgages for the purchase or re-finance of owner-occupied property.
The Gramm-Leach-Bliley Act also requires BankUnited to implement a comprehensive information security program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information. 8 CFPB The CFPB is tasked with establishing and implementing rules and regulations under certain federal consumer protection laws with respect to the conduct of providers of certain consumer financial products and services.
The Gramm-Leach-Bliley Act also requires BankUnited to implement a comprehensive information security program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information.
The policy provides that BHCs should not maintain a level of cash dividends that undermines the BHC’s ability to serve as a source of strength to its banking subsidiaries. As a Delaware corporation, BankUnited, Inc. is also subject to certain limitations and restrictions under Delaware corporate law with respect to payment of dividends and other distributions.
The policy provides that BHCs should not maintain a level of cash dividends that undermines the BHC’s ability to serve as a source of strength to its banking subsidiaries.
Demand deposit balances are concentrated in commercial and small business accounts and our deposit growth strategy is focused on small business and middle market companies generally, as well as select industry verticals. Our service fee schedule and rates are competitive with other financial institutions in our markets.
For our consumers, we offer competitive money market and time deposit products through our online channel as well as through our retail branch network. Demand deposit balances are concentrated in commercial and small business accounts and our deposit growth strategy is focused on small business and middle market companies generally, as well as select industry verticals.
Broad Supervision, Examination and Enforcement Powers A principal objective of the U.S. bank regulatory system is to protect depositors by ensuring the financial safety and soundness of banking organizations. To that end, the banking regulators have broad regulatory, examination and enforcement authority. The regulators regularly examine the operations of banking organizations.
BankUnited, Inc., which controls BankUnited, is a BHC and, as such, is subject to ongoing and comprehensive supervision, regulation, inspection and enforcement by the Federal Reserve Board. Broad Supervision, Examination and Enforcement Powers A principal objective of the U.S. bank regulatory system is to protect depositors by ensuring the financial safety and soundness of banking organizations.
The regulators have the power to, among other things: • enjoin "unsafe or unsound" practices; • require affirmative actions to correct any violation or practice; • issue administrative orders that can be judicially enforced; • direct increases in capital; • direct the sale of subsidiaries or other assets; • limit dividends and distributions; • restrict growth; • assess civil monetary penalties; • remove officers and directors; • terminate deposit insurance; and • appoint a conservator or receiver.
Justice Department; • direct increases in capital; • direct the sale of subsidiaries or other assets; • limit dividends and distributions; • restrict growth; • assess civil monetary penalties; • remove officers and directors; • terminate deposit insurance; and • appoint a conservator or receiver.
Limits on Transactions with Affiliates and Insiders Insured depository institutions are subject to restrictions on their ability to conduct transactions with affiliates and other related parties. Section 23A of the Federal Reserve Act imposes quantitative limits, qualitative requirements, and collateral requirements on certain transactions by an insured depository institution with, or for the benefit of, its affiliates.
Section 23A of the Federal Reserve Act imposes quantitative limits, qualitative requirements, and collateral requirements on certain transactions by an insured depository institution with, or for the benefit of, its affiliates. Transactions covered by Section 23A include loans, extensions of credit, investment in securities issued by an affiliate, and acquisitions of assets from an affiliate.
To date, BankUnited has hired six female students and garnered participation of over 40 BankUnited employees representing 20 departments across the Bank.
To date, BankUnited has hired seven female students and garnered participation of over 55 BankUnited employees representing 20 departments across the Bank. Through iCARE™ we engage and encourage our employees to participate in various Bank sponsored community programs and events.
In addition, states are permitted to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB. The Community Reinvestment Act The CRA is intended to encourage banks to help meet the credit needs of their service areas, including low and moderate-income neighborhoods, consistent with safe and sound operations.
The Community Reinvestment Act The CRA is intended to encourage banks to help meet the credit needs of their service areas, including low and moderate-income neighborhoods, consistent with safe and sound operations. The federal bank regulators examine and assign each bank a public CRA rating.
We also acquire non-performing FHA and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA securitizations. Such 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.
Such 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. 1 Other consumer loans —We do not originate, or currently intend to originate a significant amount of consumer loans.
Employees can choose to participate in nutrition counseling, music and art therapy, live and streaming fitness classes, meditation sessions, live and virtual learning opportunities with area wellness experts. We offer safety programs including first aid and CPR courses.
The BankUnited Corporate Center has an on-site fitness facility and we provide our employees with on-site health screenings, eye exams, dental exams, mammograms, and vaccine clinics. Employees can choose to participate in nutrition counseling, music and art therapy, live and streaming fitness classes, meditation sessions, live and virtual learning opportunities with area wellness experts.
The Company schedules regular CEO update video calls, town hall meetings and other engagement programs. Available Information Our website address is www.bankunited.com.
The Company schedules regular CEO update video calls, town hall meetings and other engagement programs. In 2023, we launched the Leadership Chat Series, a live and interactive webinar with BankUnited executives and our employees. Our Kudos Employee Recognition platform encourages employees to recognize one another's contributions and accomplishments. Available Information Our website address is www.bankunited.com.
We offer commercial and retail deposit products across our primary geographic footprint and certain commercial deposit, payments and treasury management products and services nationally. For our consumers, we also offer competitive money market and time deposit products through our online channel.
We offer commercial and retail deposit products across our primary geographic footprint and certain commercial deposit, payments and treasury management products and services nationally. We offer the CDARS program, providing additional FDIC insurance to our customers.
Our Markets Our primary banking markets are Florida and the Tri-State market of New York, New Jersey and Connecticut, concentrated in the New York Metropolitan area. We believe both represent long-term attractive banking markets. In Florida, our focus is on urban markets including the Miami-Dade, Broward, Palm Beach, Tampa, Orlando and Jacksonville markets.
Our service fee schedule and rates are competitive with other financial institutions in our markets. We do not charge consumer overdraft or NSF fees. Our Markets Our primary banking markets are Florida and the Tri-State market of New York, New Jersey and Connecticut, concentrated in the New York Metropolitan area. We believe both represent long-term attractive banking markets.
Further, the federal bank regulatory agencies may set higher capital requirements for an individual BHC or bank when circumstances warrant it. 5 Prompt Corrective Action Under the FDIA, the federal bank regulatory agencies must take "prompt corrective action" against undercapitalized U.S. depository institutions.
Further, the federal bank regulatory agencies may set higher capital requirements for an individual BHC or bank when circumstances warrant it. The Federal Reserve, OCC and FDIC have issued a proposed rule to implement wide-ranging and significant changes to the current U.S. Basel III capital rules.
Residential loans purchased are primarily closed-end, first lien jumbo mortgages for the purchase or re-finance of owner-occupied property. A limited portion of the portfolio is secured by investor-owned properties. We do not originate or purchase negatively amortizing or sub-prime residential loans.
A limited portion of the portfolio is secured by investor-owned properties. We do not originate or purchase negatively amortizing or sub-prime residential loans. We also acquire non-performing FHA and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA securitizations.
In 2022, 373 employees enrolled in mentoring programs and a total of 3,066 mentoring hours were reported. Communication & Engagement Employee engagement is a key contributor to our success. In September 2022, 81% of our employees participated in an engagement survey conducted by an outside firm.
I n 2023 280 employees enrolled in our mentoring programs and a total of 1,247 mentoring hours were reported. Our employees rated their overall mentorship program satisfaction with a score of 4.7 stars out of 5 stars. Communication & Engagement Employee engagement is a key contributor to our success.
Survey results reported an increase in overall engagement, defined as employees who responded favorably, from 73% in 2020 to 81% in 2022. The 81% overall engagement score in 2022 favorably compared to an industry benchmark of 76%. Our Kudos Employee Recognition platform encourages employees to recognize one another's contributions and accomplishments.
The Company solicits employee feedback through periodic employee engagement surveys conducted by an outside firm. 81% of employees participated in our last engagement survey and 81% of participants responded favorably to questions designed to gauge the level of overall engagement. The 81% overall engagement score favorably compared to an industry benchmark of 76%.
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Other consumer loans — We do not originate, or currently intend to originate a significant amount of consumer loans.
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Bridge offers franchise equipment, acquisition and expansion financing through its franchise finance division. These lines of business have been de-emphasized due to their risk/return and liquidity profiles in the current environment. We expect that related balances will continue to decline in the near term.
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In 2022, we launched a wholesale banking office in Atlanta serving the Southeastern United States and opened a full service branch in Dallas, Texas. While the Atlanta and Dallas markets are not currently material to our business operations, they represent future growth opportunities. We expect to launch a wholesale banking office in Dallas in 2023.
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In the current environment, we have de-emphasized lending in the office sector and been more focused on warehouse/industrial, multi-family and selectively, the retail sectors. Residential mortgages —We do not originate residential mortgages, but do invest in residential loans originated through correspondent channels and community partners.
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Pinnacle and Bridge offer lending products and the Bank provides mortgage warehouse financing on a national basis.
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Home equity loans and lines of credit and other consumer loans are not significant components of our loan portfolio or of our lending strategy.
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Bank and Bank Holding Company Regulation BankUnited is a national bank. As a national bank organized under the National Bank Act, BankUnited is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC.
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We also offer other insured cash sweep programs allowing customers the ability to insure deposits above standard FDIC deposit insurance limits by distributing funds among banks that participate in the network while providing competitive rates and easy access to funds.
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Subject to rebuttal, a party may be presumed to control a depository institution or other company for purposes of the BHC Act and the Change in Bank Control Act if the investor owns or controls 10% or more of any class of voting stock.
Added
In Florida, our focus is on urban markets including the Miami-Dade, Broward, Palm Beach, Tampa, Orlando and Jacksonville markets. We have more recently entered the Atlanta and Dallas markets, in Atlanta with a wholesale banking office focused on the Southeastern United States, and in Dallas with a retail branch as well as full-service wholesale banking capabilities.
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Transactions covered by Section 23A include loans, extensions of credit, investment in securities issued by an affiliate, and acquisitions of assets from an affiliate.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDisruption or deterioration in economic conditions in the markets we serve could result in one or more of the following: • an increase in loan delinquencies; • an increase in problem assets and foreclosures; • a decrease in the demand for our products and services; or • a decrease in the value of collateral for loans, especially real estate, in turn reducing customers' borrowing power, the value of assets associated with problem loans and collateral coverage. 15 Our portfolio of operating lease equipment is exposed to fluctuations in the demand for and valuation of the underlying assets.
Biggest changeDisruption or deterioration in those economic conditions or real estate markets could result in increased delinquencies, problem assets or foreclosures, a decline in demand for our loan products, deterioration in the ability of borrowers to repay their debt, lower collateral values and ultimately higher credit losses.
Banking regulators may also from time to time focus on issues that may impact the pace of growth of our business, our ability to execute our business strategy and our operations. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs.
Banking regulators may also from time to time focus on issues that may impact the pace of growth of our business, our ability to execute our business strategy and our operations. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional costs.
While we invest significant time and resources in developing, marketing and managing new products and services, there are material uncertainties that could adversely impact estimated implementation and operational costs or projected adoption, sales, revenues or profits, and no assurance can be given that any new offerings will be successfully developed, implemented, launched or scaled.
While we invest significant time and resources in developing, marketing and managing new products and services, there are material uncertainties that could adversely impact estimated implementation and operational costs or projected adoption, sales, revenues or profits, and no 18 assurance can be given that any new offerings will be successfully developed, implemented, launched or scaled.
We rely on third parties to provide key components of our business infrastructure and major systems including, but not limited to, core banking systems such as loan servicing and deposit transaction processing systems, cloud-based data storage, our electronic funds transfer transaction processing, cash management, online banking services, and computer and networking infrastructure.
We rely on third parties to provide key components of our business infrastructure and major systems including, but not limited to, core banking systems such as loan servicing and deposit transaction processing systems, cloud-based data storage, our electronic funds transfer transaction processing, cash management, online banking services, ERP systems and computer and networking infrastructure.
Changes in laws, regulations or regulatory policies could adversely affect the operating environment for the Company in substantial and unpredictable ways, increase our cost of doing business, impose new restrictions on the way in which we conduct our 20 operations or add significant operational constraints that might impair our profitability.
Changes in laws, regulations or regulatory policies could adversely affect the operating environment for the Company in substantial and unpredictable ways, increase our cost of doing business, impose new restrictions on the way in which we conduct our operations or add significant operational constraints that might impair our profitability.
These tools and models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Furthermore, even if our assumptions are accurate predictors of future performance, the tools and models that utilize them may prove to be inadequate or inaccurate because of other flaws in their design or implementation.
These tools and models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen or unprecedented circumstances. Furthermore, even if our assumptions are accurate predictors of future performance, the tools and models that utilize them may prove to be inadequate or inaccurate because of other flaws in their design or implementation.
Since we engage in lending secured by real estate and may be forced to foreclose on the collateral property, we may be subject to risks associated with the ownership of commercial or residential real property, which could have an adverse effect on our business, financial condition or results of operations.
Since we engage in lending secured by real estate, we may be forced to foreclose on the collateral property and thereby be subject to risks associated with the ownership of commercial or residential real property, which could have an adverse effect on our business, financial condition or results of operations.
Various 17 federal and state laws and regulations limit the amount of dividends that a bank may pay to its parent company. In addition, our right to participate in a distribution of assets upon the liquidation or reorganization of a subsidiary may be subject to the prior claims of the subsidiary’s depositors and other creditors.
Various federal and state laws and regulations limit the amount of dividends that a bank may pay to its parent company. In addition, our right to participate in a distribution of assets upon the liquidation or reorganization of a subsidiary may be subject to the prior claims of the subsidiary’s depositors and other creditors.
Such regulatory approvals may not be granted on terms that are acceptable to us, or at all. We may also be required to sell or close branches, or precluded from doing so, as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce the benefit of any acquisition.
Regulatory approvals may not be granted on terms that are acceptable to us, or at all. We may also be required to sell or close branches, or precluded from doing so, as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce the benefit of any acquisition.
A successful challenge to an institution's performance under the CRA or 21 fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity, and restrictions on expansion activity.
A successful challenge to an institution's performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity, and restrictions on expansion activity.
The ineffectiveness of our enterprise risk management framework in mitigating the impact of known risks or the emergence of previously unknown or unanticipated risks may result in our incurring losses in the future that could adversely impact our financial condition and results of operations. Our business may be adversely affected by conditions in the financial markets and economic conditions generally.
The ineffectiveness of our enterprise risk management framework in mitigating the impact of known risks or the emergence of previously unknown or unanticipated risks may result in our incurring losses in the future that could adversely impact our financial condition and results of operations. 23 Our business may be adversely affected by conditions in the financial markets and economic conditions generally.
Interest rates are highly sensitive to many factors over which we have no control and which we may not be able to anticipate adequately, including general economic conditions and the monetary and fiscal policies of various governmental bodies, particularly the Federal Reserve Board.
Interest rates are highly sensitive to many factors over which we have no control and which we may not be able to anticipate, including general economic conditions and the monetary and fiscal policies of various governmental bodies, particularly the Federal Reserve Board.
Adverse developments affecting the overall strength and soundness of the financial services industry as a whole and third parties with whom we have important relationships could have a negative impact on our business even if we are not subject to the same adverse developments.
Adverse developments affecting the overall strength and soundness of the financial services industry as a whole and third parties with whom we have important relationships could have a negative impact on our business even if we are not directly subject to the same adverse developments.
We operate in a highly regulated environment, and are subject to comprehensive statutory, legal and regulatory regimes, see Item 1 "Business—Regulation and Supervision." Intended to protect customers, depositors, the DIF, and the overall financial stability of the United States, these laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, limit the dividend or distributions that BankUnited can pay to BankUnited, Inc., restrict the ability of institutions to guarantee our debt, and impose specific accounting requirements on us.
We operate in a highly regulated environment, and are subject to comprehensive statutory, legal and regulatory regimes, see Item 1 "Business—Regulation and Supervision." Intended to protect customers, depositors, the DIF, and the overall financial stability of the United States, these laws and regulations, among other matters, prescribe capital and liquidity requirements, impose limitations on the business activities in which we can engage, limit the dividend or distributions that BankUnited can pay to BankUnited, Inc., restrict the ability of institutions to guarantee our debt, and impose specific accounting requirements on us.
The cybersecurity measures that they maintain to mitigate the risk of such activity may be different from our own and, in many cases, we do not have any control over the types of security measures they may choose to implement.
The measures that they maintain to mitigate the risk of such activity may be different from our own and, in many cases, we do not have any control over the types of security measures they may choose to implement.
Accordingly, the ability of our borrowers to repay their loans, and the value of the collateral securing such loans, may be significantly affected by economic conditions in these regions or by changes in the local real estate markets.
Accordingly, the ability of our borrowers to repay their loans, and the value of the collateral securing such loans, may be significantly affected by economic conditions in these regions or by changes in the local 15 real estate markets.
It is difficult to determine the many ways in which a decline in economic or market conditions may impact the credit quality of our assets. Our ACL may not be adequate to cover actual credit losses.
It is difficult to determine or forecast the many ways in which a decline in economic or market conditions may impact the credit quality of our assets. Our ACL may not be adequate to cover actual credit losses.
Our access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy generally.
Our access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us could be impaired by factors or events that affect us specifically or the financial services industry or economy generally.
Our failure to respond to the impact of technological change could have a material adverse impact on our business, financial condition and results of operations. The soundness of other financial institutions, particularly our financial institution counterparties, could adversely affect us.
Our failure to respond to the impact of technological change could have a material adverse impact on our business, financial condition and results of operations. 20 The soundness of other financial institutions, particularly our financial institution counterparties, could adversely affect us.
Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such 18 third-party systems fail or experience interruptions.
Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished by or on behalf of clients and counterparties, including financial statements and other financial information.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished by or on behalf of clients and counterparties, including financial statements and other financial 14 information.
Any problems caused by these third parties, including those resulting from disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, failure of a vendor to provide services for any reason or poor performance of services, or the termination of a third-party software license or service agreement on which any of these systems is based, could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business.
Any problems caused by these third parties, including those resulting from disruptions in communication services provided by a third party, failure of a third party to handle current or higher volumes, failure of a third party to provide services for any reason or poor performance of services, or the termination of a third-party software license or service agreement on which any of these systems is based, could adversely 19 affect our ability to deliver products and services to our customers and otherwise conduct our business.
If we fail to administer these new environments in a well-managed, secure and effective manner, or if these platforms become unavailable or do not meet their service level agreements for any reason, we may experience unplanned service disruption or unforeseen costs which could result in material harm to our business, financial condition and results of operations.
If we fail to administer these environments in a well-managed, secure and effective manner, or if these platforms become unavailable or do not meet their service level agreements for any reason, we may experience unplanned service disruption or unforeseen costs which could result in material harm to our business, reputation, financial condition and results of operations.
We may also incur costs as a result of data or security breaches of third parties with whom we do not have a significant direct relationship.
We may incur costs as a result of data or security breaches of third parties with whom we do not have a significant direct relationship.
There are risks that may inhibit our ability to successfully execute such acquisitions, such as competition with other potential acquirers, the ability to obtain the required regulatory approvals in a timely matter or at all, and the successful integration of a consummated acquisition and realization of the expected benefits.
There are risks that may inhibit our ability to successfully execute such acquisitions, such as competition with other potential acquirers, the ability to obtain the required regulatory approvals in a timely matter or at all, the availability of capital and the successful integration of a consummated acquisition and realization of the expected benefits.
Our geographic markets in Florida and other coastal areas are susceptible to severe weather, including hurricanes, flooding and damaging winds.
Our geographic markets in Florida and other coastal areas are particularly susceptible to severe weather, including hurricanes, flooding and damaging winds.
In addition, we compete with financial intermediaries, such as FinTech companies, consumer finance companies, marketplace lenders, mortgage banking companies, insurance companies, securities firms, mutual funds and several government agencies as well as major retailers, all actively engaged in providing various types of loans and other financial services.
In addition, we compete with financial intermediaries, such as FinTech companies, consumer finance companies, marketplace lenders, mortgage banking companies, insurance companies, securities firms, mutual funds and several government agencies as well as major retailers, all actively engaged in providing various types of financial services.
Newly enacted laws may significantly impact the regulatory framework in which we operate and may require material changes to our business processes in short timeframes. Inability to meet new statutory requirements within the prescribed periods could adversely affect our business, financial condition and results of operations, as well as impact our reputation.
Newly enacted laws may significantly impact the regulatory framework in which we operate and may require material changes to our business processes in short time frames. Inability to meet new statutory requirements within the prescribed periods could adversely affect our business, financial condition and results of operations, as well as impact our reputation.
Significant effort and resources may be required to manage and oversee the successful development, implementation, launch or scaling of new initiatives, which effort and resources may be diverted from other of our products or services.
Significant effort and resources may be required to manage and oversee the successful development, implementation, risk assessment, launch or scaling of new initiatives, which effort and resources may be diverted from other of our products or services.
Hurricanes and other weather-related events, social or health-care crises such as pandemics or political unrest, terrorist activity, or other natural or man-made disasters could cause a disruption in our operations or otherwise have an adverse impact on our business and results of operations.
Hurricanes and other weather-related events, social or health-care crises such as pandemics, political or social unrest, geopolitical conflict, terrorist activity, or other natural or man-made disasters could cause a disruption in our operations or otherwise have an adverse impact on our customers, our business and results of operations.
We attempt to manage interest rate risk by adjusting the rates, maturity, repricing, mix and balances of the different types of interest-earning assets and interest bearing liabilities and through the use of hedging instruments; however, interest rate risk management techniques are not precise, and we may not be able to successfully manage our interest rate risk.
We attempt to manage interest rate risk by monitoring and managing the rates, maturity, repricing, mix and balances of the different types of interest-earning assets and interest bearing liabilities and through the use of hedging instruments; however, interest rate risk management techniques are not precise, and we may not be able to successfully manage our interest rate risk.
The ability of our borrowers to repay their obligations and our financial results may therefore be adversely affected by changes in real estate values. Commercial real estate valuations in particular are highly subjective, as they are based on many assumptions.
The ability of our borrowers to repay their obligations and our financial results may therefore be adversely affected by changes in real estate values or in real estate market dynamics. Commercial real estate valuations in particular are highly subjective, as they are based on many assumptions.
As a result of financial entities and technology systems becoming more interdependent and complex, a cyber-incident, information breach or loss, or technology 19 failure that compromises the systems or data of one or more financial entities could have a material impact on counterparties or other market participants, including us.
As a result of financial entities and technology systems becoming more interdependent and complex, a cybersecurity incident, information breach or loss, or technology failure that compromises the systems or data of one or more financial entities could have a material impact on counterparties or other market participants, including us.
Failure to perform well in any of these areas or in general to successfully respond to the competitive pressures we face could make it harder for us to attract and retain customers and significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could harm our business, financial condition and results of operations.
Failure to perform well in any of these areas or in general to successfully respond to the competitive pressures we face could make it harder for us to attract and retain customers and significantly weaken our competitive position, which could adversely affect our ability to achieve strategic objectives, our growth and profitability, which, in turn, could harm our business, financial condition and results of operations.
Our deposit costs tend to be correlated with short-term rates; increases in short-term interest rates may exert upward pressure on our cost of deposits. Changes in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes.
Our deposit costs tend to be correlated with short-term rates; increases in short-term interest rates or generally tightening liquidity conditions may exert upward pressure on our cost of deposits. Changes in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes.
Concerns regarding the effectiveness of our measures to safeguard personal information, or even the perception that such measures are inadequate, could cause us to lose customers or potential customers for our products and services and thereby reduce our revenues.
Concerns regarding the effectiveness of our measures to safeguard personal information, or even the perception that such measures are inadequate, could cause us to lose customers or potential customers and thereby reduce our revenues.
The properties securing income-producing investor real estate loans may not be fully leased at the origination of the loan. A borrower's ability to repay these loans is dependent upon stabilization of the properties and additional leasing through the life of the loan or the borrower's successful operation of a business.
The properties securing income-producing investor real estate loans may not be fully leased at the origination of the loans or vacancies may arise during the terms of the loans. A borrower's ability to repay these loans is dependent upon stabilization of the properties and additional leasing through the life of the loan or the borrower's successful operation of a business.
Liquidity Risk A failure to maintain adequate liquidity could adversely affect our financial condition and results of operations. Effective liquidity management is essential for the operation of our business.
Liquidity Risk A failure to maintain adequate liquidity could adversely affect our ability to sustain normal operations, our financial condition and results of operations. Effective liquidity management is essential for the operation of our business.
Any cyber-attack or other security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information could severely damage our reputation, erode confidence in the security of our systems, products and services, expose us to the risk of litigation and liability, disrupt our operations and have a material adverse effect on our business.
Any cybersecurity incident involving the misappropriation, loss or other unauthorized disclosure of confidential customer information could severely damage our reputation, erode confidence in the security of our systems, products and services, expose us to the risk of litigation and liability, disrupt our operations and have a material adverse effect on our business.
If the judgments, estimates and assumptions the Company uses in establishing provisions, preparing its tax returns or establishing the value of deferred tax assets and liabilities for purposes of its financial statements are subsequently found to be incorrect, there could be a material effect on our financial condition and results of operations. 23 Our internal controls may be ineffective.
If the judgments, estimates and assumptions the Company uses in establishing provisions, preparing its tax returns or establishing the value of deferred tax assets and liabilities for purposes of its financial statements are subsequently found to be incorrect, there could be a material effect on our financial condition and results of operations.
Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.
Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies and reducing our exposure to the fossil fuel sector, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.
We depend on our executive officers and key personnel to execute our long-term business strategy and could be harmed by the loss of their services. We believe that our continued growth and future success will depend in large part on the skills of our senior management team and other key personnel.
We depend on our executive officers and other key personnel to execute our long-term business strategy and could be harmed by the loss of their services or the inability to attract new talent. We believe that our continued growth and future success will depend in large part on the skills of our senior management team and other key personnel.
The processes we use to forecast future performance and estimate expected credit losses, the effects of changing interest rates, sources and uses of liquidity, real estate values, and economic trends and indicators on our financial condition and results of operations depend upon the use of analytical and forecasting tools and models.
The processes we use to forecast future performance and estimate expected credit losses, including in hypothetical periods of stress, the effects of changing interest rates, sources and uses of liquidity, real estate values, and economic trends and indicators on our financial condition and results of operations depend upon the use of analytical and forecasting tools and models.
We are also subject to credit risk that is embedded in our securities portfolio. Our credit risk management framework inclusive of our underwriting standards, procedures and policies may not prevent us from incurring substantial credit losses, particularly if economic or market conditions deteriorate.
Credit losses are inherent in the business of making loans. We are also subject to credit risk that is embedded in our securities portfolio. Our credit risk management framework inclusive of our underwriting standards, procedures and policies may not prevent us from incurring substantial credit losses, particularly if economic or market conditions deteriorate.
We believe our senior management team possesses valuable knowledge about and experience in the banking industry and that their knowledge and relationships could be difficult to replicate. The composition of our senior management team and our other key personnel may change over time.
We believe our senior management team possesses valuable knowledge about and experience in the banking industry that could be challenging to replicate. The composition of our senior management team and our other key personnel may change over time.
We are subject to the risk of fraud, theft or errors by employees or outsiders, which may adversely affect our business, financial condition and results of operations.
We are subject to the risk of fraud, theft or errors by employees or outsiders and to the impact of ineffective processes and controls, which may adversely affect our business, financial condition and results of operations.
An increase in interest rates may, among other things, reduce the demand for loans and lower-priced deposit products, decrease loan repayment rates and negatively affect borrowers' ability to meet their obligations. A decrease in the general level of interest rates may affect us through, among other things, increased prepayments on our loan and mortgage-backed securities portfolios.
An increase in interest rates may also reduce the demand for loans and lower-priced deposit products, decrease loan repayment rates and negatively affect borrowers' ability to meet their obligations. A decrease in the general level of interest rates may affect us through, among other things, increased prepayments on higher-yielding fixed rate loans and mortgage-backed securities.
Our enterprise risk management framework is designed to identify and minimize or mitigate the risks to which we are subject, as well as any losses stemming from such risks.
Our enterprise risk management framework is designed to identify, measure, mitigate and manage the risks to which we are subject, as well as any losses stemming from such risks.
From time to time, the FASB and SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.
From time to time, the FASB and SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be difficult to predict and can materially impact our reported financial condition and results of operations.
Our business, financial condition and results of operations may be materially, adversely impacted by these and other negative effects of such events. Climate change or societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.
Our business, financial condition and results of operations may be materially, adversely impacted by these and other negative effects of such events. Both physical and transitional risks related to climate change or societal and governmental responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.
If our ESG practices do not meet evolving rules and regulations or investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain leading experts, employees and other professionals, and our ability to attract new customers and investors could be negatively impacted.
If our ESG practices do not meet evolving rules and regulations or investor or other stakeholder expectations, then our reputation or our ability to attract or retain employees, customers and investors could be negatively impacted.
There is increased focus, including from governmental organizations, investors, customers and employees on ESG issues such as environmental stewardship, climate change, diversity and inclusion, racial justice and workplace culture and conduct.
There is an evolving focus, including from some governmental organizations and agencies, investors, customers and employees on ESG issues such as environmental stewardship, climate change, diversity and inclusion, racial justice and workplace culture and conduct.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters, and unfavorable ratings of the Company may lead to negative investor sentiment, stock price fluctuations and the diversion of investment to other companies.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters; if the Company were to receive unfavorable ratings, negative investor sentiment, stock price fluctuations and the diversion of investment to other companies could result.
Current inflationary trends may lead to an increase in our operating expenses, or those of our clients which may in turn impact their operating results and ability to repay their obligations to us. Our reported financial results depend on management's selection and application of accounting policies and methods and related assumptions and estimates.
Inflationary trends and higher interest rates may lead to an increase in our operating expenses or those of our clients in turn impacting their ability to repay their obligations to us. Our reported financial results depend on management's selection and application of accounting policies and methods and related assumptions and estimates.
We may be subject to disruptions of our information technology and telecommunications systems arising from events that are wholly or partially beyond our control which may give rise to disruption of service to customers and of our employees' ability to perform their jobs.
The failure of these systems and technologies could interrupt our operations. We may be subject to disruptions of our information technology and telecommunications systems arising from events that are wholly or partially beyond our control which may give rise to disruption of service to customers and of our employees' ability to perform their jobs.
As a lender, we are exposed to the risk that our customers will be unable to repay their loans according to their terms and that the collateral securing the payment of their loans, if any, may be insufficient to ensure repayment. Credit losses are inherent in the business of making loans.
Credit Risk As a lender, our business is highly susceptible to credit risk. As a lender, we are exposed to the risk that our customers will be unable to repay their loans according to their terms and that the collateral securing the payment of their loans, if any, may be insufficient to ensure repayment.
We are exposed to the risk that, at the end of the lease term or in the event of early termination, the value of the asset will be lower than expected, resulting in reduced future lease income over the remaining life of the asset or a lower sale value.
We are exposed to the risk that, at the end of the lease term or in the event of early termination, the value of the asset will be lower than expected, resulting in reduced future lease income over the remaining life of the asset or a lower sale value, which could lead to impairment charges or operating losses.
In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers have engaged in attacks against financial institutions, particularly denial of service attacks, designed to disrupt key business services such as customer-facing websites.
In addition to cybersecurity incidents involving the theft of sensitive and confidential information, hackers have engaged in attacks against financial institutions, particularly denial of service attacks, designed to disrupt key business services such as customer-facing websites.
The occurrence of any of these events could result in a diminished ability to operate our business as well as potential liability to customers and counterparties, reputational damage and regulatory intervention, which could adversely affect our business, financial condition or results of operations. We are dependent on our information technology and telecommunications systems.
The occurrence of any of these events could result in a diminished ability to operate our business as well as potential liability to customers and counterparties, reputational damage and regulatory intervention, which could adversely affect our business, financial condition or results of operations.
Although we have historically been able to replace maturing deposits and borrowings as necessary, we might not be able to replace such funds in the future. A failure to maintain adequate liquidity could materially and adversely affect our business, financial condition or results of operations. Loss of deposits or a change in deposit mix could increase our funding costs.
Although we have historically been able to replace maturing deposits and borrowings as necessary, we might not be able to replace such funds in the future. A failure to maintain adequate liquidity could materially and adversely affect our ability to sustain business operations, our financial condition or results of operations.
Our ability to meet the needs of our customers competitively, and in a cost-efficient manner, is dependent on our ability to keep pace with and pro-actively and quickly respond to technological advances and to invest in new technology as it becomes available.
Financial products and services have become increasingly technology driven. Our ability to meet the needs of our customers competitively, and in a cost-efficient manner, is dependent on our ability to keep pace with and pro-actively and quickly respond to technological advances and to invest in relevant new technology as it becomes available.
We require sufficient liquidity to meet customer loan requests, customer deposit maturities and withdrawals and other cash commitments under both normal operating conditions and under extraordinary or unpredictable circumstances causing industry or general financial market stress.
We require sufficient liquidity to meet customer loan requests, customer deposit maturities and withdrawals and other cash commitments under both normal operating conditions and under extraordinary or unpredictable circumstances.
Adverse perceptions regarding our business practices could damage our reputation in the customer, funding and capital markets, leading to difficulties in generating and maintaining business as well as obtaining financing.
Adverse perceptions regarding our business practices, or those of other regional banks, could damage our reputation in the customer, funding and capital markets, leading to difficulties in generating and maintaining business as well as obtaining financing.
Financial or operational difficulties of a third-party vendor could also adversely affect our operations if those difficulties interfere with the vendor's ability to serve us effectively or at all. Replacing these third-party vendors could also create significant delays and expense. Accordingly, use of such third parties creates an unavoidable inherent risk to our business operations.
Financial or operational difficulties of a third-party service provider could adversely affect our operations if those difficulties interfere with the service provider's ability to serve us effectively or at all. Replacing these third-party service providers could create significant delays and expense. Accordingly, use of such third party service providers creates an unavoidable material inherent risk to our business operations.
Our equipment leasing business is exposed to asset risk resulting from ownership of the equipment on operating lease. Asset risk arises from fluctuations in supply and demand for the underlying leased equipment.
Although we have been reducing our exposure to this business, our equipment leasing business is exposed to asset risk resulting from ownership of the equipment on operating lease. Asset risk arises from fluctuations in supply and demand for the underlying leased equipment.
We may be required to spend significant capital and other resources to protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or viruses.
We may be required to spend significant capital and other resources to protect against the threat of cybersecurity incidents, or to alleviate problems caused by cybersecurity incidents.
Regulatory, Legal and Compliance Risk As a BHC, we and BankUnited operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and other matters, or changes in them, or our failure to comply with them, may adversely affect us.
Regulatory, Legal and Compliance Risk As a BHC, we and BankUnited operate in a highly regulated environment and the laws and regulations that apply to us, changes in them, or our failure to comply with them, may adversely affect us.
The occurrence of a hurricane or other natural disaster to which our markets are susceptible, a man-made catastrophe such as terrorist activity, pandemic outbreaks and other global health emergencies, political unrest or other man-made or natural disasters could disrupt our operations or our work-force, result in damage to our facilities, jeopardize our ability to continue to provide essential services to our customers and negatively affect our customers and the local economies in which we operate.
The occurrence of a hurricane or other natural disaster, a man-made catastrophe such as terrorist activity, pandemic outbreaks and other global health emergencies, political or social unrest, government shutdowns, geopolitical conflicts such as those currently occurring in the middle east or Ukraine or other man-made or natural disasters could disrupt our operations or those of our clients or our work-force, result in damage to our facilities, jeopardize our ability to continue to provide essential services to our customers and negatively affect our customers and the local economies in which we operate.
In addition, we interact with and rely on financial counterparties for whom we process transactions and who process transactions for us and rely on other third parties, as discussed above. Each of these third parties may be targets of the same types of fraudulent activity, computer break-ins, and other cybersecurity breaches described above.
In addition, we interact with and rely on financial counterparties for whom we process transactions and who process transactions for us and rely on other third-party service providers, as discussed above. Each of these third parties may be targets of the same types of cybersecurity incidents described above.
Our access to liquidity in the form of deposits may also be affected by the liquidity needs of our depositors and by competition for deposits in our primary markets.
Our access to liquidity in the form of deposits may also be affected by the liquidity needs of our depositors.
When interest bearing liabilities mature or reprice more quickly than interest earning assets in a period of rising rates, an increase in interest rates could reduce net interest income. When interest earning assets mature or reprice more quickly than interest bearing liabilities, falling interest rates could reduce net interest income.
If interest bearing liabilities mature or reprice more quickly than interest earning assets in a period of rising rates, net interest income will be reduced. If interest earning assets mature or reprice more quickly than interest bearing liabilities, falling interest rates could reduce net interest income.
Similarly, our failure or perceived failure to pursue or fulfill our current or future goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts.
Similarly, our failure or perceived failure to pursue or fulfill our current or future objectives or to satisfy various reporting standards within acceptable timelines, or at all, could have similar negative impacts.
Higher funding costs reduce our net interest margin, net interest income, and net income. The inability of BankUnited, Inc. to receive dividends from its subsidiary bank could have a material adverse effect on the ability of BankUnited, Inc. to make payments on its debt, pay cash dividends to its shareholders or execute share repurchases.
The inability of BankUnited, Inc. to receive dividends from its subsidiary bank could have a material adverse effect on the ability of BankUnited, Inc. to make payments on its debt, pay cash dividends to its shareholders or execute share repurchases.
We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If there are additional bank or financial institution failures in the future, we may be required to pay FDIC premiums higher than current levels.
If there are additional bank or financial institution failures in the future, we may be required to pay FDIC premiums higher than current levels.
Adverse reputational impacts or events may also increase our litigation risk. 22 Our enterprise risk management framework may not be effective in mitigating the risks to which we are subject, or in reducing the potential for losses in connection with such risks.
In addition, adverse reputational impacts on third parties with whom we have important relationships may adversely impact our reputation. Adverse reputational impacts or events may also increase our litigation risk. Our enterprise risk management framework may not be effective in mitigating the risks to which we are subject, or in reducing the potential for losses in connection with such risks.
Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services.
Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third party service providers.
Despite the security measures we have in place, our facilities and systems may be vulnerable to cyber-attacks, security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events, especially because, in the case of any intentional breaches, the techniques used change frequently or are not recognized until launched, and cyber-attacks can originate from a wide variety of sources, including third parties.
Cybersecurity incidents can take many forms including cyber-attacks, security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events, especially because, in the case of any intentional breaches, the techniques used change frequently or may not be recognized until launched, and cyber-attacks can originate from a wide variety of sources.
Management regularly monitors, evaluates and updates our internal controls over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, can provide only reasonable, not absolute, assurances that the objectives of the controls are met.
While we regularly monitor, evaluate and update our internal control framework including controls over financial reporting and corporate governance policies and procedures, any system of controls, however well designed and operated, can provide only reasonable, not absolute, assurances that the objectives of the controls are met.
We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential or proprietary information of individuals could damage our reputation and otherwise adversely affect our operations and financial condition.
Any future additional assessments or increases in FDIC insurance premiums may adversely affect our financial condition or results of operations. 22 We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential or proprietary information of individuals could damage our reputation, lead to monetary settlements or penalties and otherwise adversely affect our operations and financial condition.
As a result of these factors, we could lose deposits in the future or see an increase in costs associated with maintaining deposits. Clients may shift their deposits into higher cost products, or we may need to raise interest rates to avoid deposit attrition. Funding costs may also increase if deposits are replaced with wholesale funding.
We compete with banks and other financial service providers for customer funds; as a result, we could lose deposits in the future, clients may shift their deposits into higher cost products, or we may need to raise interest rates to avoid deposit attrition. Funding costs may also increase if deposits are replaced with wholesale funding.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties BankUnited's corporate headquarters is located in leased office space in Miami Lakes, Florida. We also lease office space in New York and Atlanta. Our subsidiaries lease office space in Baltimore, Maryland and Scottsdale, Arizona. At December 31, 2022, we provided banking services at 59 banking centers located in Florida, New York and Texas.
Biggest changeItem 2. Properties BankUnited's corporate headquarters is located in leased office space in Miami Lakes, Florida. We also lease office space in New York, certain other areas in Florida and Atlanta. Our subsidiaries lease office space in Baltimore, Maryland and Scottsdale, Arizona.
We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
At December 31, 2023, we provided banking services at 53 banking centers located in Florida, New York and Texas. We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the opinion of management, based upon advice of legal counsel, the likelihood is remote that the impact of these proceedings, 24 either individually or in the aggregate, would be material to the Company’s consolidated financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures None. 25 PART II
Biggest changeIn 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. Item 4. Mine Safety Disclosures None. 26 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−4 removed3 unchanged
Biggest changeDividend Policy The Company declared a quarterly dividend of $0.25 and $0.23 per share on its common stock for each of the four quarters in the years ended December 31, 2022 and 2021, respectively, resulting in total dividends for the years ended December 31, 2022 and 2021 of $78.9 million and $83.4 million, or $1.00 and $0.92 per common share, respectively.
Biggest changeDividend Policy The Company declared a quarterly dividend of $0.27 and $0.25 per share on its common stock for each of the four quarters in the years ended December 31, 2023 and 2022, respectively, resulting in total dividends for the years ended December 31, 2023 and 2022, of $80.5 million and $78.9 million, or $1.08 and $1.00 per common share, respectively.
The Company expects to continue its policy of paying regular cash dividends on a quarterly basis. 26 Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on an initial investment of $100 in our common stock between December 31, 2017 and December 31, 2022, with the comparative cumulative total return of such amount on the S&P 500 Index and the KBW Nasdaq Regional Bank Index over the same period.
The Company expects to continue its policy of paying regular cash dividends on a quarterly basis. 27 Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on an initial investment of $100 in our common stock between December 31, 2018 and December 31, 2023, with the comparative cumulative total return of such amount on the S&P 500 Index and the KBW Nasdaq Regional Bank Index over the same period.
As of February 17, 2023, there were 566 stockholders of record of our common stock. Equity Compensation Plan Information The information set forth under the caption "Equity Compensation Plan Information" in our definitive proxy statement for the Company's 2023 annual meeting of stockholders (the "Proxy Statement") is incorporated herein by reference.
As of February 16, 2024, there were 573 stockholders of record of our common stock. Equity Compensation Plan Information The information set forth under the caption "Equity Compensation Plan Information" in our definitive proxy statement for the Company's 2024 annual meeting of stockholders (the "Proxy Statement") is incorporated herein by reference.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Shares of our common stock trade on the NYSE under the symbol "BKU". The last sale price of our common stock on the NYSE on February 17, 2023 was $36.79 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Shares of our common stock trade on the NYSE under the symbol "BKU". The last sale price of our common stock on the NYSE on February 16, 2024 was $27.27 per share.
Removed
Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 BankUnited, Inc. 100.00 75.15 94.11 93.26 116.01 95.49 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 KBW Nasdaq Regional Banking Index 100.00 80.63 97.07 85.33 113.65 102.90 27 Recent Sales of Unregistered Securities None.
Added
Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 BankUnited, Inc. 100.00 125.24 124.10 154.37 127.06 126.65 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 KBW Nasdaq Regional Banking Index 100.00 123.57 111.56 151.82 140.82 139.66 Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 28 Item 6. Reserved
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers 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 October 1 - October 31, 2022 328,368 $ 34.75 328,368 $ 128,555,763 November 1 - November 30, 2022 187,103 $ 34.74 187,103 $ 122,055,558 December 1 - December 31, 2022 1,393,708 $ 33.61 1,393,708 $ 75,211,558 Total 1,909,179 $ 33.92 1,909,179 (1) The total number of shares purchased during the periods indicated includes shares purchased as part of a publicly announced program.
Removed
(2) 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.
Removed
The authorization does not require the Company to acquire any specified number of common shares. 28 Item 6. Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe 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 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, 2019 $ 11,154 $ 28,264 $ 764 $ 8,066 $ 43,485 $ 720 $ 9,163 $ 7,055 $ 108,671 Impact of adoption of ASU 2016-13 8,098 (14,222) 1,854 23,240 8,841 (309) (133) (64) 27,305 Balance at January 1, 2020 19,252 14,042 2,618 31,306 52,326 411 9,030 6,991 135,976 Provision for (recovery of) credit losses (556) 97,424 666 (1,463) 35,390 (107) 44,976 6,009 182,339 Charge-offs (31) (10,324) — (1,178) (33,188) — (18,125) (6,756) (69,602) Recoveries 54 192 — 132 7,669 — 450 113 8,610 Balance at December 31, 2020 18,719 101,334 3,284 28,797 62,197 304 36,331 6,357 257,323 Provision for (recovery of) credit losses (9,241) (65,543) (2,253) (6,844) 31,180 (134) (8,857) (2,764) (64,456) Charge-offs (304) (9,167) — (471) (50,563) — (10,745) — (71,250) Recoveries 13 1,156 — 156 3,498 — 17 — 4,840 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 2,858 635 1,736 952 61,337 3 7,542 (1,249) 73,814 Charge-offs (412) (9,188) (343) (2,870) (36,051) — (13,191) — (62,055) Recoveries 108 3,100 — 823 5,049 — 650 — 9,730 Balance at December 31, 2022 $ 11,741 $ 22,327 $ 2,424 $ 20,543 $ 76,647 $ 173 $ 11,747 $ 2,344 $ 147,946 Net Charge-offs to Average Loans Year Ended December 31, 2020 — % 0.15 % — % 0.05 % 0.42 % — % 2.86 % 1.13 % 0.26 % Years Ended December 31, 2021 — % 0.13 % — % 0.02 % 0.82 % — % 2.34 % — % 0.29 % Years Ended December 31, 2022 — % 0.11 % 0.16 % 0.11 % 0.50 % — % 4.49 % — % 0.22 % 52 The following table shows the distribution of the ACL at the dates indicated (dollars in thousands): December 31, 2022 December 31, 2021 December 31, 2020 Total % (1) Total % (1) Total % (1) Residential and other consumer $ 11,741 35.7 % $ 9,187 35.2 % $ 18,719 26.6 % Non-owner occupied commercial real estate 22,327 21.7 % 27,780 23.3 % 101,334 27.7 % Construction and land 2,424 1.2 % 1,031 0.7 % 3,284 1.2 % CRE 24,751 28,811 104,618 Owner occupied commercial real estate 20,543 7.6 % 21,638 8.2 % 28,797 8.4 % Commercial and industrial 76,647 28.0 % 46,312 25.8 % 62,197 27.2 % Pinnacle 173 3.7 % 170 3.9 % 304 4.6 % Bridge - franchise finance 11,747 1.0 % 16,746 1.4 % 36,331 2.3 % Bridge - equipment finance 2,344 1.1 % 3,593 1.5 % 6,357 2.0 % 111,454 88,459 133,986 $ 147,946 100.0 % $ 126,457 100.0 % $ 257,323 100.0 % (1) Represents percentage of loans receivable in each category to total loans receivable.
Biggest changeThe 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 Non-Owner Occupied Commercial Real Estate Construction and Land Owner Occupied Commercial Real Estate Commercial and Industrial Pinnacle - municipal Finance Franchise Finance Equipment Finance Total Balance at December 31, 2020 $ 18,719 $ 101,334 $ 3,284 $ 28,797 $ 62,197 $ 304 $ 36,331 $ 6,357 $ 257,323 Provision for (recovery of) credit losses (9,241) (65,543) (2,253) (6,844) 31,180 (134) (8,857) (2,764) (64,456) Charge-offs (304) (9,167) — (471) (50,563) — (10,745) — (71,250) Recoveries 13 1,156 — 156 3,498 — 17 — 4,840 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 2,858 635 1,736 952 61,337 3 7,542 (1,249) 73,814 Charge-offs (412) (9,188) (343) (2,870) (36,051) — (13,191) — (62,055) Recoveries 108 3,100 — 823 5,049 — 650 — 9,730 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 (4,002) 11,088 6,104 (5,546) 67,816 70 2,738 656 78,924 Charge-offs — (1,228) — (447) (26,092) — (7,247) — (35,014) Recoveries 9 623 — 3,087 8,285 — 623 — 12,627 Balance at December 31, 2023 $ 7,631 $ 32,810 $ 8,528 $ 17,642 $ 124,980 $ 243 $ 7,855 $ 3,000 $ 202,689 Net Charge-offs to Average Loans Years Ended December 31, 2021 — % 0.13 % — % 0.02 % 0.82 % — % 2.34 % — % 0.29 % Years Ended December 31, 2022 — % 0.11 % 0.16 % 0.11 % 0.50 % — % 4.49 % — % 0.22 % Years Ended December 31, 2023 — % 0.01 % — % (0.14) % 0.25 % — % 3.48 % — % 0.09 % 57 The following table shows the distribution of the ACL at the dates indicated (dollars in thousands): December 31, 2023 December 31, 2022 Total % (1) Total % (1) Residential $ 7,631 33.3 % $ 11,741 35.7 % Non-owner occupied commercial real estate 32,810 21.6 % 22,327 21.7 % Construction and land 8,528 2.0 % 2,424 1.2 % CRE 41,338 24,751 Owner occupied commercial real estate 17,642 7.9 % 20,543 7.6 % Commercial and industrial (2) 124,980 30.1 % 76,647 28.0 % Pinnacle - municipal finance 243 3.6 % 173 3.7 % Franchise finance 7,855 0.7 % 11,747 1.0 % Equipment finance 3,000 0.8 % 2,344 1.1 % 153,720 111,454 $ 202,689 100.0 % $ 147,946 100.0 % (1) Represents percentage of loans receivable in each category to total loans receivable.
The shelf registration provides us with flexibility in issuing capital instruments and enables us to more readily access 57 the capital markets as needed to pursue future growth opportunities and to ensure continued compliance with regulatory capital requirements. Our ability to issue securities pursuant to the shelf registration is subject to market conditions.
The 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.
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.
This evaluation considers, but is not necessarily limited to, the following factors, the relative significance of which varies depending on the circumstances pertinent to each individual security: • Whether we intend to sell the security prior to recovery of its amortized cost basis; • Whether it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis; • The extent to which fair value is less than amortized cost; • Adverse conditions specifically related to the security, a sector, an industry or geographic area; 41 • 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; and • Estimated prepayments, defaults, and the value and performance of underlying collateral at the individual security level.
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 acquires non-performing FHA and VA insured mortgages from third party servicers who have exercised their right to purchase these loans out of GNMA securitizations upon default (collectively, "government insured pool buyout loans" or "buyout loans"). Buyout loans that re-perform, either through modification or self-cure, may be eligible for re-securitization.
These loans may be structured as term loans, typically with maturities of five to seven years, or revolving lines of credit which may have multi-year maturities. In addition to financing provided by Pinnacle, the Bank provides financing to state and local governmental entities generally within our geographic markets.
These loans may be structured as term loans, typically with maturities of five to seven years, or revolving lines of credit which may have multi-year maturities. In addition to financing provided by Pinnacle, the Bank provides financing to state 47 and local governmental entities generally within our primary geographic markets.
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.
Commercial loans are returned to accrual status only after all past due principal and interest has been collected and full repayment of remaining contractual principal and interest is reasonably assured. Residential loans are generally returned to accrual status when less than 60 days past due. Past due status of loans is determined based on the contractual next payment due date.
(2) At fair value except for securities held to maturity. 35 Increases and decreases in interest income, calculated on a tax-equivalent basis, and interest expense result from changes in average balances (volume) of interest earning assets and liabilities, as well as changes in average interest rates.
(2) At fair value except for securities held to maturity. 36 Increases and decreases in interest income, calculated on a tax-equivalent basis, and interest expense result from changes in average balances (volume) of interest earning assets and liabilities, as well as changes in average interest rates.
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.
Commercial loans with a risk rating of substandard, loans on non-accrual status, and assets classified as OREO or repossessed assets are usually transferred to workout and recovery. Oversight of the workout and recovery department is provided by the Criticized Asset Committee.
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.
Net interest income is impacted by the mix of interest earning assets and interest bearing liabilities, the ratio of interest earning assets to total assets and of interest bearing liabilities to total funding sources, movements in market interest rates and monetary policy, the shape of the yield curve, levels of non-performing assets and pricing pressure from competitors.
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.
Any price evidencing unexpected quarter over quarter 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.
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 45 institutional real estate entities such as REITs and commercial real estate investment funds, and commercial credit cards.
Commercial and Industrial Commercial and industrial loans are typically made to small, middle market and larger corporate businesses and not-for-profit entities and include equipment loans, secured and unsecured working capital facilities, formula-based loans, subscription finance lines of credit, trade finance, SBA product offerings, business acquisition finance credit facilities, credit facilities to institutional real estate entities such as REITs and commercial real estate investment funds, and a small amount of commercial credit cards.
The income simulation model analyzes interest rate sensitivity by projecting net interest income over twelve and twenty-four month periods in a most likely rate scenario based on consensus forward interest rate curves versus net interest income in alternative rate scenarios.
The income simulation model analyzes interest rate sensitivity by projecting net interest income over twelve and twenty-four month periods in a most likely rate scenario based on a consensus forward curve versus net interest income in alternative rate scenarios.
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.
Our classification of prices within the fair value hierarchy is based on an evaluation of the nature of the 42 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 quarterly basis.
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 $493 million and $730 million at December 31, 2022 and 2021, respectively.
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 $277 million and $493 million at December 31, 2023 and 2022, respectively.
BankUnited, N.A Strategic Priorities Our vision is to build a leading regional commercial and small business bank, with a distinctive value proposition based on strong service-oriented relationships, robust digital enabled customer experiences, and operational excellence with an entrepreneurial work environment that empowers employees to deliver their best.
Our Vision and Long term- Strategic Priorities Our vision is to build a leading regional commercial and small business bank, with a distinctive value proposition based on strong service-oriented relationships, robust digital enabled customer experiences, and operational excellence with an entrepreneurial work environment that empowers employees to deliver their best.
At December 31, 2022, the Company had $4.0 billion in term deposits with a contractual maturity of twelve months or less. The majority of term deposits and FHLB advances are expected to roll over into new instruments; this amount therefore does not represent future anticipated cash requirements.
At December 31, 2023, the Company had $4.7 billion in term deposits with a contractual maturity of twelve months or less. The majority of term deposits and FHLB advances are expected to roll over into new instruments; this amount therefore does not represent future anticipated cash requirements.
BankUnited's ongoing liquidity needs have historically been met primarily by cash flows from operations, deposit growth, the investment portfolio and FHLB advances. FRB discount window borrowings, reverse repurchase agreement capacity and a letter of credit with the FHLB provide additional sources of contingent liquidity.
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, repurchase agreement capacity and a letter of credit with the FHLB provide additional sources of contingent liquidity.
The provision for credit losses may continue to be volatile and the level of the ACL may change materially from current levels.
The provision for credit losses may be volatile and the level of the ACL may change materially from current levels.
Additionally, as discussed in Note 15 to the consolidated financial statements, the Bank had $271 million in outstanding commitments to fund loans and $5.7 billion in unfunded commitments under existing lines of credit at December 31, 2022. Many of these commitments are expected to expire without being fully funded and, therefore, also do not necessarily represent future cash requirements.
Additionally, as discussed in Note 15 to the consolidated financial statements, the Bank had $257 million in outstanding commitments to fund loans and $4.7 billion in unfunded commitments under existing lines of credit at December 31, 2023. Many of these commitments are expected to expire without being fully funded and, therefore, also do not necessarily represent future cash requirements.
The loans have terms ranging from 10 to 30 years, with either fixed or adjustable interest rates. At December 31, 2022, $1.1 billion or 16% were secured by investor-owned properties.
The loans have 48 terms ranging from 10 to 30 years, with either fixed or adjustable interest rates. At December 31, 2023, $1.1 billion or 15% were secured by investor-owned properties.
LTVs and DSCRs are based on the most recent available information; if current information is not available, values may be adjusted by our models based on current sub-market conditions. DSCRs are calculated based on current contractually required payments, which may in some cases may be interest only.
LTVs and DSCRs are based on the most recent available information; if current appraisals are not available, LTVs are adjusted by our models based on current and forecasted sub-market dynamics. DSCRs are calculated based on current contractually required payments, which in some cases may be interest only.
The net interest margin, calculated on a tax-equivalent basis, was 2.68% for the year ended December 31, 2022, compared to 2.38% for the year ended December 31, 2021.
The net interest margin, calculated on a tax-equivalent basis, was 2.56% for the year ended December 31, 2023, compared to 2.68% for the year ended December 31, 2022.
Non-Performing Assets Non-performing assets generally consist of (i) non-accrual loans, including loans that have been modified in TDRs 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.
Non-Performing Assets Non-performing assets generally consist of (i) non-accrual loans, (ii) accruing loans that are more than 90 days contractually past due as to interest or principal, excluding PCD loans for which management has a reasonable basis for an expectation about future cash flows and government insured residential loans, and (iii) OREO and other non-performing assets.
The following table presents information about the contractual balance of outstanding FHLB advances, as of December 31, 2022 (dollars in thousands): Amount Weighted Average Rate Maturing in: 2023 - One month or less $ 4,320,000 4.19 % 2023 - Over one month 1,100,000 4.56 % Total contractual balance outstanding $ 5,420,000 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.
The following table presents information about the contractual balance of outstanding FHLB advances, as of December 31, 2023 (dollars in thousands): Amount Weighted Average Rate Maturing in: 2024 - One month or less $ 4,220,000 5.47 % 2024 - Over one month 895,000 5.56 % Total contractual balance outstanding $ 5,115,000 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.
Our selection of models and modeling techniques may also have a material impact on the estimate. Note 1 to the consolidated financial statements describes the methodology used to determine the ACL. Recent Accounting Pronouncements See Note 1 to the consolidated financial statements for a discussion of recent accounting pronouncements.
Our selection of models and modeling techniques may also have a material impact on the estimate. Note 1 to the consolidated financial statements describes the methodology used to determine the ACL.
Yields on tax-exempt securities have been calculated on a tax-equivalent basis, based on a federal income tax rate of 21%: Within One Year After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total U.S. Treasury securities 0.59 % — % — % — % 0.59 % U.S.
Yields on tax-exempt securities have been calculated on a tax-equivalent basis, based on a federal income tax rate of 21%: Within One Year After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total U.S. Treasury securities 0.52 % 4.45 % 0.89 % — % 1.57 % U.S.
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 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 tax-equivalent adjustment for tax-exempt loans was $12.7 million, $13.3 million and $14.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $3.0 million, $2.7 million and $3.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.
The tax-equivalent adjustment for tax-exempt loans was $13.4 million, $12.7 million and $13.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $3.6 million, $3.0 million and $2.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
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 tax-equivalent yield on investment securities increased to 2.81% for the year ended December 31, 2022, from 1.57% for the year ended December 31, 2021.
Factors contributing to this increase were the resetting of variable rate loans at higher coupon rates and originations of new loans at higher prevailing rates and wider spreads. 37 • The tax-equivalent yield on investment securities increased to 5.33% for the year ended December 31, 2023, from 2.81% for the year ended December 31, 2022 .
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.
Non-Performing Loans to Total Loans Non-Performing Assets to Total Assets Net Charges-Offs to Average Loans The following graph presents the trend in non-performing loans by portfolio segment over the periods indicated (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.
Management has identified the following strategic priorities for our Company: • Building a scalable middle market and small business franchise by growing core customer relationships on both sides of the balance sheet; • Maximizing risk adjusted returns through a combination of sustainable, diversified and prudently managed organic growth and capital optimization; • Transitioning the left side of the balance sheet to a mix of assets with higher risk-adjusted returns; • Growth of depository relationship with an emphasis on new non-interest bearing deposit relationships; 32 • Playing where we can win - focusing on niche business segments where our delivery model is a differentiator; • Investing in people, processes and technology to support organic growth; • Using technology to enable success by investing in digital capabilities and nimble architecture; • Retaining the ability to pivot nimbly when opportunities arise; • Maintaining an efficient, effective and scalable support model through operational excellence; • While our primary growth strategy is organic, we will continue to monitor the M&A landscape.
Our strategic priorities include: • Growing core customer relationships on both sides of the balance sheet, building a scalable small business and middle-market franchise for the long-term; • Transitioning the left side of the balance sheet to a mix of assets with higher risk-adjusted returns; • Deposit growth is paramount, with particular emphasis on new non-interest bearing deposit relationships; • Playing where we can win - focusing on sectors where our delivery model is a differentiator; • Investing in organic growth capabilities - people, processes, products and technology; • Using technology to enable success by investing in digital capabilities, nimble technology architecture and data; • Retaining the ability to pivot nimbly when opportunities arise; • Maintaining an efficient, effective and scalable support model through operational excellence. • While our primary growth strategy is organic, we will continue to monitor the M&A landscape.
Refer to Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K filed with the SEC on February 24, 2022 for a discussion and analysis of the more significant factors that affected periods prior to 2021.
Refer to Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K filed with the SEC on February 22, 2023, for a discussion and analysis of the more significant factors that affected the year ended December 31, 2022, including in comparison to the year ended December 31, 2021.
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.
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.
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.
Finally, income simulation permits management to assess the probable effects on the balance sheet not only of changes in interest rates, but also of proposed strategies for responding to them. Simulation of changes in EVE in various interest rate environments is also a meaningful measure of interest rate risk.
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.
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.
Performance 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.
See "Item 1A - Risk Factors" for additional discussion of risks to the execution of our strategic priorities. 2023 Performance 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, trends in non-interest income and non-interest expense, performance ratios such as the return on average equity and return on average assets and asset quality ratios, including the ratio of non-performing loans to total loans, non-performing assets to total assets, trends in criticized and classified assets and portfolio delinquency and charge-off trends.
We believe that the critical accounting policies and estimates discussed below involve a heightened level of management judgment due to the complexity, subjectivity and sensitivity involved in their application.
We believe that the critical accounting policies and estimates discussed below involve a heightened level of management judgment due to the complexity, subjectivity and sensitivity involved in their application. Note 1 to the consolidated financial statements contains a further discussion of our significant accounting policies.
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 not be similar to the Company’s projections due to several factors including the timing and frequency of rate changes, market conditions, unanticipated changes in depositor behavior and loan prepayment speeds and the shape of the yield curve.
None of the unrealized losses were attributable to credit loss impairments. 40 The ratings distribution of our AFS securities portfolio at December 31, 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.
The ratings distribution of our AFS securities portfolio at the dates indicated are depicted in the charts below: December 31, 2023 December 31, 2022 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.
The estimate of the ACL at December 31, 2022 was informed by forecasted economic scenarios published in December 2022, a wide variety of additional economic data, information about borrower financial condition and collateral values and other relevant information. The economic forecast used in modeling the quantitative ACL as of December 31, 2022, was a 54 third-party provided baseline forecast.
The estimate of the ACL at December 31, 2023, was informed by forecasted economic scenarios published in December 2023, a wide variety of additional economic data, information about borrower financial condition and collateral values and other relevant information.
Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates. The most significant estimate impacting the Company's financial statements is the ACL. Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position.
The most significant estimate impacting the Company's financial statements is the ACL. Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position.
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 incorporating the Fed's CCAR scenarios as well as additional idiosyncratic scenarios reflective of evolving macro-economic themes.
On an annual basis, we also run a rigorous stress test of our entire balance sheet incorporating the FRB's severely adverse CCAR scenario as well as additional idiosyncratic scenarios reflective of evolving macro-economic themes.
We also model a variety of yield curve slope 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.
We also model a variety of dynamic balance sheet scenarios, various yield 66 curve slopes, non-parallel shifts and alternative depositor behavior, beta and decay assumptions. We continually evaluate the scenarios being modeled with a view toward adapting them to changing economic conditions, expectations and trends.
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.
Future levels of the ACL could be significantly impacted, in either direction, by changes in factors such as, but not limited to, economic conditions or the economic outlook, the composition of the loan portfolio, the financial condition of our borrowers and collateral values.
Note 1 to the consolidated financial statements contains a further discussion of our significant accounting policies. 33 ACL The ACL represents management's estimate of current expected credit losses, or the amount of amortized cost basis not expected to be collected, on our loan portfolio and the amount of credit loss impairment on our AFS securities portfolio.
ACL The ACL represents management's estimate of current expected credit losses, or the amount of amortized cost basis not expected to be collected, on our loan portfolio and the amount of credit loss impairment on our AFS securities portfolio.
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, provide us with attractive yields. Relatively short effective portfolio duration helps mitigate interest rate risk.
We have also invested in highly-rated structured products, including private-label commercial and residential MBS, collateralized loan obligations, single family real estate-backed securities and non-mortgage asset-backed securities that, while somewhat less liquid, are generally pledgeable at either the FHLB or the FRB and provide us with attractive yields.
For additional discussion of the fair values of investment securities, see Note 14 to the consolidated financial statements. 42 The following table shows the weighted average prospective yields, categorized by scheduled maturity, for AFS investment securities as of December 31, 2022. Scheduled maturities have been adjusted for anticipated prepayments when applicable.
The following table shows the weighted average prospective yields, categorized by scheduled maturity, for AFS investment securities as of December 31, 2023. Scheduled maturities have been adjusted for anticipated prepayments when applicable.
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): December 31, 2022 December 31, 2021 Total stockholders’ equity $ 2,435,981 $ 3,037,761 Less: goodwill and other intangible assets 77,637 77,637 Tangible stockholders’ equity $ 2,358,344 $ 2,960,124 Common shares issued and outstanding 75,674,587 85,647,986 Book value per common share $ 32.19 $ 35.47 Tangible book value per common share $ 31.16 $ 34.56 61
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): December 31, 2023 December 31, 2022 Total stockholders’ equity $ 2,577,921 $ 2,435,981 Less: goodwill and other intangible assets 77,637 77,637 Tangible stockholders’ equity $ 2,500,284 $ 2,358,344 Common shares issued and outstanding 74,372,505 75,674,587 Book value per common share $ 34.66 $ 32.19 Tangible book value per common share $ 33.62 $ 31.16 69 Item 7A.
Estimates that are particularly susceptible to change that may have a material impact on the amount of the ACL include: • our evaluation of current conditions; • our determination of a reasonable and supportable economic forecast and selection of the reasonable and supportable forecast period; • our evaluation of historical loss experience; • our evaluation of changes in composition and characteristics of the loan portfolio, including internal risk ratings; • our estimate of expected prepayments; • the value of underlying collateral, which may impact loss severity and certain cash flow assumptions for collateral-dependent, criticized and classified loans; • our selection and evaluation of qualitative factors; and • our estimate of expected cash flows on AFS debt securities in unrealized loss positions.
Estimates that are particularly susceptible to change that may have a material impact on the amount of the ACL include: • our evaluation of current conditions; • our determination of a reasonable and supportable economic forecast or weighting of various forecast paths and selection of the reasonable and supportable forecast period; • our evaluation of historical loss experience and selection of historical loss data used in formulating our ACL estimate; since we have limited company specific historical loss data, our modeling techniques also leverage broad external data sets for this purpose; • our evaluation of changes in composition and characteristics of the loan portfolio, including internal risk ratings; • our estimate of expected prepayments; • the value of underlying collateral, which may impact loss severity and certain cash flow assumptions for collateral-dependent, criticized and classified loans; in the current environment, especially with respect to certain commercial real estate sectors like office, current and projected collateral values may be particularly challenging to estimate; • our selection and evaluation of qualitative factors; and • our estimate of expected cash flows on AFS debt securities in unrealized loss positions.
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.
Residential loans, other than government insured pool buyout loans, are generally placed on non-accrual status when they are 60 days past due. Additionally, certain residential loans not contractually delinquent but in forbearance may be placed on non-accrual status at management's discretion. When a loan is placed on non-accrual status, uncollected interest accrued is reversed and charged to interest income.
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): Years Ended December 31, 2022 2021 2020 Average Balance Interest (1) Yield/ Rate (1) Average Balance Interest (1) Yield/ Rate (1) Average Balance Interest (1) Yield/ Rate (1) Assets: Interest earning assets: Loans $ 23,937,857 $ 947,386 3.96 % $ 23,083,973 $ 814,101 3.53 % $ 23,385,832 $ 879,082 3.76 % Investment securities (2) 10,081,701 283,081 2.81 % 9,873,178 155,353 1.57 % 8,739,023 196,954 2.25 % Other interest earning assets 675,068 15,709 2.33 % 1,093,869 6,010 0.55 % 672,634 9,578 1.42 % Total interest earning assets 34,694,626 1,246,176 3.59 % 34,051,020 975,464 2.86 % 32,797,489 1,085,614 3.31 % Allowance for credit losses (132,033) (197,212) (236,704) Non-interest earning assets 1,721,570 1,770,685 1,860,322 Total assets $ 36,284,163 $ 35,624,493 $ 34,421,107 Liabilities and Stockholders' Equity: Interest bearing liabilities: Interest bearing demand deposits $ 2,538,906 13,919 0.55 % $ 3,027,649 8,550 0.28 % $ 2,582,951 19,445 0.75 % Savings and money market deposits 12,874,240 130,705 1.02 % 13,339,651 43,082 0.32 % 10,843,894 85,572 0.79 % Time deposits 3,338,671 35,348 1.06 % 3,490,082 15,964 0.46 % 6,617,939 94,963 1.43 % Total interest bearing deposits 18,751,817 179,972 0.96 % 19,857,382 67,596 0.34 % 20,044,784 199,980 1.00 % Federal funds purchased 157,979 2,723 1.72 % 33,945 30 0.09 % 71,858 418 0.58 % FHLB advances 4,383,507 97,763 2.23 % 2,622,723 59,116 2.25 % 4,295,882 85,491 1.99 % Notes and other borrowings 721,223 37,033 5.13 % 721,803 37,018 5.13 % 592,521 29,962 5.06 % Total interest bearing liabilities 24,014,526 317,491 1.32 % 23,235,853 163,760 0.70 % 25,005,045 315,851 1.26 % Non-interest bearing demand deposits 8,861,111 8,480,964 5,760,309 Other non-interest bearing liabilities 708,473 784,031 786,337 Total liabilities 33,584,110 32,500,848 31,551,691 Stockholders' equity 2,700,053 3,123,645 2,869,416 Total liabilities and stockholders' equity $ 36,284,163 $ 35,624,493 $ 34,421,107 Net interest income $ 928,685 $ 811,704 $ 769,763 Interest rate spread 2.27 % 2.16 % 2.05 % Net interest margin 2.68 % 2.38 % 2.35 % (1) On a tax-equivalent basis where applicable.
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): Years Ended December 31, 2023 2022 2021 Average Balance Interest (1) Yield/ Rate (1) Average Balance Interest (1) Yield/ Rate (1) Average Balance Interest (1) Yield/ Rate (1) Loans $ 24,558,430 $ 1,331,578 5.42 % $ 23,937,857 $ 947,386 3.96% $ 23,083,973 $ 814,101 3.53 % Investment securities (2) 9,228,718 491,851 5.33 % 10,081,701 283,081 2.81% 9,873,178 155,353 1.57 % Other interest earning assets 986,186 51,152 5.19 % 675,068 15,709 2.33% 1,093,869 6,010 0.55 % Total interest earning assets 34,773,334 1,874,581 5.39 % 34,694,626 1,246,176 3.59% 34,051,020 975,464 2.86 % Allowance for credit losses (171,618) (132,033) (197,212) Non-interest earning assets 1,749,981 1,721,570 1,770,685 Total assets $ 36,351,697 $ 36,284,163 $ 35,624,493 Liabilities and Stockholders' Equity: Interest bearing liabilities: Interest bearing demand deposits $ 2,905,968 $ 86,759 2.99 % $ 2,538,906 $ 13,919 0.55 % $ 3,027,649 $ 8,550 0.28 % Savings and money market deposits 10,704,470 382,432 3.57 % 12,874,240 130,705 1.02 % 13,339,651 43,082 0.32 % Time deposits 5,169,458 191,114 3.70 % 3,338,671 35,348 1.06 % 3,490,082 15,964 0.46 % Total interest bearing deposits 18,779,896 660,305 3.52 % 18,751,817 179,972 0.96 % 19,857,382 67,596 0.34 % Federal funds purchased 35,403 1,611 4.55 % 157,979 2,723 1.72 % 33,945 30 0.09 % FHLB advances 6,331,685 285,026 4.50 % 4,383,507 97,763 2.23 % 2,622,723 59,116 2.25 % Notes and other borrowings 716,633 36,835 5.14 % 721,223 37,033 5.13 % 721,803 37,018 5.13 % Total interest bearing liabilities 25,863,617 983,777 3.80 % 24,014,526 317,491 1.32 % 23,235,853 163,760 0.70 % Non-interest bearing demand deposits 7,091,029 8,861,111 8,480,964 Other non-interest bearing liabilities 848,023 708,473 784,031 Total liabilities 33,802,669 33,584,110 32,500,848 Stockholders' equity 2,549,028 2,700,053 3,123,645 Total liabilities and stockholders' equity $ 36,351,697 $ 36,284,163 $ 35,624,493 Net interest income $ 890,804 $ 928,685 $ 811,704 Interest rate spread 1.59 % 2.27 % 2.16 % Net interest margin 2.56 % 2.68 % 2.38 % (1) On a tax-equivalent basis where applicable.
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.
Loans less than 30 days past due are reported as current. Loss Mitigation Strategies Criticized or classified commercial loans in excess of certain thresholds are reviewed quarterly by the Criticized Asset Committee, which evaluates the appropriate strategy for collection to mitigate the amount of credit losses and considers the appropriate risk rating for these loans.
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.
Risk ratings are updated continuously; generally, commercial relationships with balances in excess of defined thresholds are re-evaluated at least annually and more frequently if circumstances indicate that a change in risk rating may be warranted. The defined thresholds range from $1 million to $3 million. Homogenous groups of smaller balance commercial loans may be monitored collectively.
Overview The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2022 and 2021 and results of operations for each of the years then ended.
Management's discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2023, and results of operations for the year then ended, including in comparison to the prior year ended December 31, 2022.
Non-Interest Expense The following table presents the components of non-interest expense for the periods indicated (in thousands): Years Ended December 31, 2022 2021 2020 Employee compensation and benefits $ 265,548 $ 243,532 $ 217,156 Occupancy and equipment 45,400 47,944 48,237 Deposit insurance expense 17,999 18,695 21,854 Professional fees 11,730 14,386 11,708 Technology 77,103 67,500 58,108 Discontinuance of cash flow hedges — 44,833 — Depreciation and impairment of operating lease equipment 50,388 53,764 49,407 Other non-interest expense 72,142 56,921 50,719 Total non-interest expense $ 540,310 $ 547,575 457,189 Employee compensation and benefits Employee compensation and benefits increased by $22.0 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Non-Interest Expense The following table presents the components of non-interest expense for the periods indicated (in thousands): Years Ended December 31, 2023 2022 2021 Employee compensation and benefits $ 280,744 $ 265,548 $ 243,532 Occupancy and equipment 43,345 45,400 47,944 Deposit insurance expense 66,747 17,999 18,695 Professional fees 14,184 11,730 14,386 Technology 79,984 77,103 67,500 Discontinuance of cash flow hedges — — 44,833 Depreciation and impairment of operating lease equipment 44,446 50,388 53,764 Other non-interest expense 106,501 72,142 56,921 Total non-interest expense $ 635,951 $ 540,310 $ 547,575 Year-over-year increases in employee compensation and benefits reflected labor market dynamics.
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.
The majority of our investment securities are classified within level 2 of the fair value hierarchy. U.S. Treasury securities and marketable equity securities are classified within level 1 of the hierarchy. For additional disclosure related to the fair values of investment securities, see Note 14 to the consolidated financial statements.
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: See Note 4 to the consolidated financial statements for information about geographic concentrations in the 1-4 single family residential portfolio.
The following charts present the distribution of the 1-4 single family residential mortgage portfolio by product type at the dates indicated: December 31, 2023 December 31, 2022 See Note 4 to the consolidated financial statements for information about the geographic distribution of the 1-4 single family residential portfolio.
The following table presents the distribution of commercial real estate loans by property type, along with weighted average DSCRs and LTVs at December 31, 2022 (dollars in thousands): Amortized Cost Percent of Total FL New York Tri State Other Weighted Average DSCR Weighted Average LTV Office $ 1,874,614 33 % 59 % 22 % 19 % 1.75 64.3 % Warehouse/Industrial 1,216,506 21 % 62 % 18 % 20 % 2.05 52.6 % Multifamily 945,404 17 % 48 % 52 % — % 2.13 45.9 % Retail 869,922 15 % 64 % 27 % 9 % 1.88 61.7 % Hotel 407,462 7 % 86 % 6 % 8 % 2.13 55.1 % Construction and Land 294,360 5 % 49 % 49 % 2 % N/A N/A Other 91,689 2 % 75 % 9 % 16 % 2.45 47.7 % $ 5,699,957 100 % 61 % 26 % 13 % 1.95 57.0 % Geographic distribution in the table above is based on location of the underlying collateral property.
The following tables present the distribution of commercial real estate loans by property type, along with weighted average DSCRs and LTVs at December 31, 2023 and 2022 (dollars in thousands): December 31, 2023 Amortized Cost Percent of Total FL New York Tri-State Other Weighted Average DSCR Weighted Average LTV Office $ 1,752,801 30 % 60 % 24 % 16 % 1.67 65.0 % Warehouse/Industrial 1,341,229 24 % 56 % 8 % 36 % 2.04 52.0 % Multifamily 838,692 14 % 50 % 50 % — % 1.98 45.5 % Retail 818,409 14 % 54 % 29 % 17 % 1.67 58.8 % Hotel 491,853 8 % 78 % 3 % 19 % 1.89 49.0 % Construction and Land 495,992 9 % 56 % 42 % 2 % N/A N/A Other 80,257 1 % 71 % 13 % 16 % 1.94 47.4 % $ 5,819,233 100 % 58 % 25 % 17 % 1.80 56.0 % December 31, 2022 Amortized Cost Percent of Total FL New York Tri-State Other Weighted Average DSCR Weighted Average LTV Office $ 1,874,614 33 % 59 % 22 % 19 % 1.75 64.3 % Warehouse/Industrial 1,216,506 21 % 62 % 18 % 20 % 2.05 52.6 % Multifamily 945,404 17 % 48 % 52 % — % 2.13 45.9 % Retail 869,922 15 % 64 % 27 % 9 % 1.88 61.7 % Hotel 407,462 7 % 86 % 6 % 8 % 2.13 55.1 % Construction and Land 294,360 5 % 49 % 49 % 2 % N/A N/A Other 91,689 2 % 75 % 9 % 16 % 2.45 47.7 % $ 5,699,957 100 % 61 % 26 % 13 % 1.95 57.0 % 45 The geographic mix of the portfolio has remained relatively consistent year-over-year, with the majority in Florida.
The ACL for the commercial and industrial sub-segment, including owner-occupied commercial real estate, increased by $29.2 million during the year ended December 31, 2022, from 0.84% to 1.10% of loans.
At December 31, 2023, the ACL for the CRE office portfolio totaled $19.3 million, or 1.10% of loans, an increase from 0.45% of loans at December 31, 2022. • The ACL for the commercial and industrial sub-segment, including owner-occupied commercial real estate, increased by $45.4 million during the year ended December 31, 2023, from 1.10% to 1.53% of loans.
Income Taxes The provision for income taxes for the years ended December 31, 2022 and 2021 was $90.2 million and $34.4 million, respectively. The Company's effective income tax rate was 24.03% and 7.66% for the years ended December 31, 2022 and 2021, respectively.
The Company's effective income tax rate was 24.64%, 24.03% and 7.66% for the years ended 2023, 2022 and 2021, respectively.
See “Analysis of the Allowance for Credit Losses” below for more information about how we determine the appropriate level of the ACL and about factors that impacted the ACL and provision for credit losses. 37 Non-Interest Income The following table presents a comparison of the categories of non-interest income for the periods indicated (in thousands): Years Ended December 31, 2022 2021 2020 Deposit service charges and fees $ 23,402 $ 21,685 $ 16,496 Gain on sale of loans: GNMA early buyout loans (2,573) 5,636 11,274 Other 3 18,758 1,896 Gain (loss) on sale of loans, net (2,570) 24,394 13,170 Gain (loss) on investment securities: Net realized gain on sale of securities AFS 3,927 9,010 14,001 Net unrealized gain (loss) on marketable equity securities (19,732) (2,564) 3,766 Gain (loss) on investment securities, net (15,805) 6,446 17,767 Lease financing 54,111 53,263 59,112 Other non-interest income 18,498 28,365 26,676 $ 77,636 $ 134,153 $ 133,221 Gain on sale of loans for the year ended December 31, 2021 included a gain of $18.2 million on the sale of a portfolio of single-family residential loans in the fourth quarter of 2021.
See “Analysis of the Allowance for Credit Losses” below for more information about how we determine the appropriate level of the ACL and about factors that impacted the ACL and provision for credit losses. 38 Non-Interest Income The following table presents a comparison of the categories of non-interest income for the periods indicated (in thousands): Years Ended December 31, 2023 2022 2021 Deposit service charges and fees $ 21,682 $ 23,402 $ 21,685 Gain (loss) on sale of loans, net (3,711) (2,570) 24,394 Gain (loss) on investment securities: Net realized gain on sale of securities AFS 1,815 3,927 9,010 Net loss on marketable equity securities recognized in earnings (11,867) (19,732) (2,564) Gain (loss) on investment securities, net (10,052) (15,805) 6,446 Lease financing 45,882 54,111 53,263 Other non-interest income 33,037 18,498 28,365 $ 86,838 $ 77,636 $ 134,153 The losses on marketable equity securities during the years ended December 31, 2023 and 2022, were attributable to losses related to certain preferred equity investments.
Time deposit accounts with balances of $250,000 or more totaled $730 million and $603 million at December 31, 2022 and 2021, respectively.
Collateralized and affiliate deposits are included in these amounts. Time deposit accounts with balances of $250,000 or more totaled $941 million and $730 million at December 31, 2023 and 2022, respectively.
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.
Recent Accounting Pronouncements See Note 1 to the consolidated financial statements for a discussion of recent accounting pronouncements. 34 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.
We consider growth in and the composition of earning assets and deposits, trends in funding mix and cost of funds. We analyze these ratios and trends against our own historical performance, our budgeted performance and the financial condition and performance of comparable financial institutions.
We consider the composition of earning assets and the funding mix, the composition and level of available liquidity and our interest rate risk profile. We analyze these ratios and trends against our own historical performance, our expected performance, our risk appetite and the financial condition and performance of comparable financial institutions.
Government agency and sponsored enterprise commercial MBS 3.22 % 4.70 % 2.99 % 2.53 % 3.23 % Private label residential MBS and CMOs 3.65 % 3.67 % 3.67 % 4.09 % 3.79 % Private label commercial MBS 5.54 % 5.95 % 1.93 % 3.30 % 5.66 % Single family real estate-backed securities 1.36 % 4.07 % 1.36 % — % 4.07 % Collateralized loan obligations 6.25 % 6.57 % 6.77 % — % 6.54 % Non-mortgage asset-backed securities 3.36 % 3.58 % 5.30 % — % 4.49 % State and municipal obligations 3.17 % 4.12 % 4.49 % 3.99 % 4.18 % SBA securities 4.23 % 4.14 % 4.02 % 3.86 % 4.13 % 4.45 % 5.14 % 3.94 % 3.88 % 4.70 % Loans The loan portfolio comprises the Company’s primary interest-earning asset.
Government agency and sponsored enterprise commercial MBS 3.64 % 6.03 % 3.38 % 2.59 % 3.87 % Private label residential MBS and CMOs 3.93 % 3.88 % 3.77 % 3.95 % 3.88 % Private label commercial MBS 6.41 % 7.01 % 2.17 % 3.30 % 6.67 % Single family real estate-backed securities 4.46 % 3.36 % 1.36 % — % 3.72 % Collateralized loan obligations 7.19 % 7.49 % 7.86 % — % 7.48 % Non-mortgage asset-backed securities 3.04 % 6.01 % 4.96 % — % 5.70 % State and municipal obligations 2.59 % 4.18 % 4.29 % — % 4.21 % SBA securities 6.19 % 6.18 % 6.13 % 5.94 % 6.16 % 5.10 % 6.16 % 4.36 % 4.06 % 5.45 % 43 Loans The loan portfolio comprises the Company’s primary interest-earning asset.
Resolution of these loans is generally accomplished through the re-securitization and sale of the loans after they re-perform, either through modification or self-cure, or through pursuit of the applicable guarantee. Operating lease equipment, net Operating lease equipment, net of accumulated depreciation, totaled $540 million at December 31, 2022, including off-lease equipment, net of accumulated depreciation of $63 million.
Resolution of these loans is generally accomplished through the re-securitization and sale of the loans after they re-perform, either through modification or self-cure, or through pursuit of the applicable guarantee.
The following table and charts summarize the Company's non-performing loans and non-performing assets at the dates indicated (dollars in thousands): December 31, 2022 December 31, 2021 Non-accrual loans: Residential and other consumer 21,311 28,553 Commercial: Non-owner occupied commercial real estate 16,657 50,116 Construction and land 5,695 5,164 Owner occupied commercial real estate 17,751 20,453 Commercial and industrial 29,722 68,720 Bridge - franchise finance 13,290 32,879 Total commercial loans 83,115 177,332 Total non-accrual loans 104,426 205,885 Loans past due 90 days and still accruing 593 24 Total non-performing loans 105,019 205,909 OREO and other non-performing assets 1,932 2,275 Total non-performing assets $ 106,951 $ 208,184 Non-performing loans to total loans (1) 0.42 % 0.87 % Non-performing assets to total assets (1) 0.29 % 0.58 % ACL to total loans 0.59 % 0.53 % ACL to non-performing loans 140.88 % 61.41 % Net charge-offs to average loans 0.22 % 0.29 % ( 1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $40.3 million or 0.16% of total loans and 0.11% of total assets, at December 31, 2022, and $46.1 million or 0.19% of total loans and 0.13% of total assets, at December 31, 2021.
The following table present information about the Company's non-performing loans and non-performing assets at the dates indicated (dollars in thousands): December 31, 2023 December 31, 2022 Non-accrual loans: Residential $ 20,513 $ 21,311 Commercial: Non-owner occupied commercial real estate 13,727 16,657 Construction and land — 5,695 Owner occupied commercial real estate 13,626 17,751 Commercial and industrial 54,907 29,722 Franchise finance 16,858 13,290 Equipment finance 6,820 — Total commercial loans 105,938 83,115 Total non-accrual loans 126,451 104,426 Loans past due 90 days and still accruing 593 593 Total non-performing loans 127,044 105,019 OREO and other non-performing assets 3,536 1,932 Total non-performing assets $ 130,580 $ 106,951 Non-performing loans to total loans (1) 0.52 % 0.42 % Non-performing assets to total assets (1) 0.37 % 0.29 % ACL to total loans 0.82 % 0.59 % ACL to non-performing loans 159.54 % 140.88 % Net charge-offs to average loans 0.09 % 0.22 % (1) Non-performing loans and assets include the guaranteed portion of non-accrual SBA loans totaling $41.8 million or 0.17% of total loans and 0.12% of total assets, at December 31, 2023, and $40.3 million or 0.16% of total loans and 0.11% of total assets, at December 31, 2022.
For loans that do not share similar risk characteristics with other loans such as collateral dependent loans and TDRs, expected credit 51 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.
Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. For loans that do not share similar risk characteristics with other loans such as collateral dependent loans, expected credit losses are estimated on an individual basis.
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 December 31, 2022: FICO scores are generally updated semi-annually and were most recently updated in the third quarter of 2022. LTVs are typically based on valuation at origination since we do not routinely update residential appraisals.
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. 54 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 December 31, 2023: FICO Distribution LTV Distribution Vintage FICO scores are generally updated semi-annually and were most recently updated in the third quarter of 2023.
The following table shows scheduled maturities of uninsured time deposits as of December 31, 2022 (in thousands): Three months or less $ 97,887 Over three through six months 75,758 Over six through twelve months 469,681 Over twelve months 9,626 $ 652,952 55 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.
The following table shows scheduled maturities of uninsured time deposits as of December 31, 2023 (in thousands): Three months or less $ 332,424 Over three through six months 124,006 Over six through twelve months 383,853 Over twelve months 3,985 $ 844,268 For additional information about Deposits, see Note 6 to the consolidated financial statements. 62 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.
At December 31, 2022 and 2021, we used a single externally provided baseline scenario in calculating the quantitative portion of the ACL. At December 31, 2022, we incorporated a downside scenario to inform the amount of qualitative reserves.
At December 31, 2023, we used a combination of weighted third-party provided economic scenarios in calculating the quantitative portion of the ACL, and at December 31, 2022, we used a single externally provided baseline scenario, with a downside scenario informing a qualitative overlay.
PPP loans declined by $245 million during the year ended December 31, 2022, resulting primarily from full or partial forgiveness from the SBA. 43 Residential mortgages and other consumer loans The following table shows the composition of residential and other consumer loans at the dates indicated (in thousands): December 31, 2022 December 31, 2021 1-4 single family residential $ 7,122,837 $ 6,338,225 Government insured residential 1,771,880 2,023,221 Other consumer loans 5,997 6,934 $ 8,900,714 $ 8,368,380 The 1-4 single family residential loan portfolio, excluding government insured residential loans, is primarily comprised of loans purchased through established correspondent channels. 1-4 single family residential mortgage loans are primarily closed-end, first lien jumbo mortgages for the purchase or re-finance of owner occupied property.
Residential mortgages The following table shows the composition of residential loans at the dates indicated (in thousands): December 31, 2023 December 31, 2022 1-4 single family residential $ 6,903,013 $ 7,128,834 Government insured residential 1,306,014 1,771,880 $ 8,209,027 $ 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.
Government agency and sponsored enterprise commercial MBS 600,517 525,094 861,925 856,899 Private label residential MBS and CMOs 2,864,589 2,530,663 2,160,136 2,149,420 Private label commercial MBS 2,645,168 2,524,354 2,604,690 2,604,010 Single family real estate-backed securities 502,194 470,441 474,845 476,968 Collateralized loan obligations 1,166,838 1,136,463 1,079,217 1,078,286 Non-mortgage asset-backed securities 102,194 95,976 151,091 152,510 State and municipal obligations 122,181 116,661 205,718 222,277 SBA securities 139,320 135,782 184,296 183,595 Investment securities held to maturity 10,000 10,000 10,000 10,000 $ 10,338,650 9,664,443 $ 9,939,586 9,943,421 Marketable equity securities 90,884 120,777 $ 9,755,327 $ 10,064,198 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.
Government agency and sponsored enterprise commercial MBS 561,557 497,859 600,517 525,094 Private label residential MBS and CMOs 2,596,231 2,295,730 2,864,589 2,530,663 Private label commercial MBS 2,282,833 2,198,743 2,645,168 2,524,354 Single family real estate-backed securities 383,984 366,255 502,194 470,441 Collateralized loan obligations 1,122,799 1,112,824 1,166,838 1,136,463 Non-mortgage asset-backed securities 106,095 102,780 102,194 95,976 State and municipal obligations 107,176 102,618 122,181 116,661 SBA securities 106,237 103,024 139,320 135,782 Investment securities held to maturity 10,000 10,000 10,000 10,000 $ 9,379,428 8,844,632 $ 10,338,650 9,664,443 Marketable equity securities 32,722 90,884 $ 8,877,354 $ 9,755,327 40 Our investment strategy is focused on ensuring adequate liquidity, maintaining a suitable balance of high credit quality, diverse assets, managing interest rate risk, and generating acceptable returns given our established risk parameters.
The ACL for the CRE portfolio sub-segment, including non-owner occupied CRE and construction and land, decreased by $4.1 million during the year ended December 31, 2022, from 0.51% to 0.43% of loans.
Further discussion of changes in the ACL for select portfolio sub-segments follows: • The ACL for the residential segment decreased by $4.1 million during the year ended December 31, 2023, from 0.13% to 0.09% of loans primarily due to reduction in the size of the portfolio and changes in certain assumptions. • The ACL for the CRE portfolio sub-segment, including non-owner occupied CRE and construction and land, increased by $16.6 million during the year ended December 31, 2023, from 0.43% to 0.71% of loans.
The ALM policy establishes limits or operating thresholds and guidelines for a number of measures of liquidity which are monitored at least monthly by the ALCO and quarterly by the Board of Directors. The primary measures used to dimension liquidity risk are the ratio of available liquidity to volatile liabilities and a liquidity stress test coverage ratio.
The ALM policy establishes limits or operating risk thresholds for a number of measures of liquidity which are monitored at least monthly by the ALCO and quarterly by the Board of Directors. In the current environment, many of these metrics are being monitored more frequently.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable and appropriate under current circumstances. These assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis.
These assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.
Other measures employed to monitor and manage liquidity include but are not limited to a 30-day total liquidity ratio, a one-year liquidity ratio, 56 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.
Some of the measures currently used to dimension liquidity risk and manage liquidity are the ratio of available liquidity to uninsured/non-collateralized deposits, the ratio of wholesale funding to total assets, the ratio of available operational liquidity (which excludes availability at the FRB) to volatile liabilities, a liquidity stress test coverage ratio, the loan to deposit ratio, a one-year liquidity ratio a measure of available on-balance sheet liquidity, the ratio of FHLB advances to total assets, large depositor concentrations and the ratio of non-interest bearing deposits to total deposits, which is reflective of the quality and cost, rather than the quantity, of available liquidity.
The following table presents the components of the provision for (recovery of) credit losses for the periods indicated (in thousands): Years Ended December 31, 2022 2021 2020 Amount related to funded portion of loans $ 73,814 $ (64,456) $ 182,339 Amount related to off-balance sheet credit exposures 1,467 (1,235) (5,572) Amount related to accrued interest receivable (127) (1,064) 1,300 Amount related to AFS debt securities — (364) 364 Total provision for (recovery of) credit losses $ 75,154 $ (67,119) $ 178,431 The most significant factors impacting the provision for credit losses for the year ended December 31, 2022 included actual and forecasted economic conditions, including uncertainty about the trajectory of the economy and increases in certain specific reserves.
The following table presents the components of the provision for (recovery of) credit losses for the periods indicated (in thousands): Years Ended December 31, 2023 2022 2021 Amount related to funded portion of loans $ 78,924 $ 73,814 $ (64,456) Amount related to off-balance sheet credit exposures 8,683 1,467 (1,235) Other — (127) (1,428) Total provision for (recovery of) credit losses $ 87,607 $ 75,154 $ (67,119) The most significant factors impacting the provision for credit losses for the year ended December 31, 2023, included changes in the economic forecast, new commercial loan production, risk rating migration and an increase in certain specific reserves.
The Company and the servicer share in the economics of the sale of these loans into new securitizations. During the years ended December 31, 2022 and 2021, the Company purchased $480 million and $1.6 billion, respectively, of government insured residential loans. The balance of buyout loans totaled $1.7 billion at December 31, 2022.
The Company and the servicer share in the economics of the sale of these loans into new securitizations. The balance of buyout loans totaled $1.3 billion at December 31, 2023. The Company is not the servicer of these loans.
Performance highlights include: • Net income for year ended December 31, 2022 was $285.0 million, or $3.54 per diluted share, compared to $415.0 million, or $4.52 per diluted share, for the year ended December 31, 2021.
Highlights include: • Net income for the year ended December 31, 2023, was $178.7 million, or $2.38 per diluted share, compared to $285.0 million, or $3.54 per diluted share for the year ended December 31, 2022. For the year ended December 31, 2023, the return on average stockholders' equity was 7.01% and the return on average assets was 0.49%.

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