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What changed in BankUnited, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BankUnited, Inc.'s 2023 and 2024 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 2024 report.

+411 added−450 removedSource: 10-K (2025-02-28) vs 10-K (2023-12-31)

Top changes in BankUnited, Inc.'s 2024 10-K

411 paragraphs added · 450 removed · 328 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

62 edited+10 added−14 removed81 unchanged
Biggest changePinnacle offers a full array of financing structures including essential use equipment lease purchase and loan agreements and direct (private placement) bond refundings. Bridge, headquartered in Baltimore, Maryland, offers large corporate and middle-market businesses equipment loans and leases including finance lease and operating lease structures through its equipment finance division.
Biggest changeThe Bank has two commercial lending subsidiaries, Pinnacle, headquartered in Scottsdale, Arizona and Bridge, headquartered in Baltimore, Maryland. Pinnacle provides financing to state and local governmental entities directly and through vendor programs and alliances. Pinnacle offers a full array of financing structures including essential use equipment lease purchase and loan agreements and direct (private placement) bond refundings.
Deposit and Treasury Solutions Products We offer traditional deposit products including commercial and consumer checking accounts, money market deposit accounts, savings accounts and certificates of deposit with a variety of terms and rates, as well as a robust suite of treasury, commercial payments and cash management services.
Deposit and Treasury Solutions Products We offer traditional deposit products including commercial and consumer checking accounts, money market deposit accounts, savings accounts and certificates of deposit with a variety of terms and rates, as well as a robust suite of treasury, payments and cash management services.
These 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.
These community programs include BankUnited's "Adopt A Neighborhood" in Florida focused on providing support to under-served 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.
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.
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 3 organization's operations are less than satisfactory, or that the banking organization is operating in an unsafe or unsound manner.
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.
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 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.
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.
In Florida, our focus is on urban markets including the Miami-Dade, Broward, Palm Beach, Tampa, Orlando and Jacksonville markets. 2 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.
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.
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.
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.
Section 23B of the Federal Reserve Act requires that most types of transactions by an insured 6 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.
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 CFPB has rulemaking authority over many of the statutes governing products and services offered to bank and thrift consumers.
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 CFPB has rulemaking 8 authority over many of the statutes governing products and services offered to bank and thrift consumers.
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.
To date, BankUnited has hired seven 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.
The information posted on our website is not incorporated into this Annual Report. In addition, the SEC maintains a website that contains reports and other information filed with the SEC. The website can be accessed at http://www.sec.gov.
The information posted on our website is not incorporated into this Annual Report. In addition, the SEC maintains a website that contains reports and other information filed with the SEC. The website can be accessed at http://www.sec.gov. 11
To that end, the banking regulators have broad regulatory, examination and enforcement 3 authority. The regulators regularly examine the operations of banking organizations. In addition, banking organizations are subject to periodic reporting requirements.
To that end, the banking regulators have broad regulatory, examination and enforcement authority. The regulators regularly examine the operations of banking organizations. In addition, banking organizations are subject to periodic reporting requirements.
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.
For banking organizations with assets of $10 billion or more, such as 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.
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.
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, 2024, BankUnited, Inc. and BankUnited were well-capitalized.
We believe that our employees are our greatest asset and vital to our success. As such, we seek to hire and retain the best candidate for each position, without regard to age, gender, ethnicity, or other protected trait, but with an appreciation for a diversity of perspectives and experience.
We believe that our employees are our greatest asset and vital to our success. As such, we seek to hire and retain the best candidate for each position, without regard to age, gender, ethnicity, or other specific trait, but with an appreciation for a diversity of perspectives and experience.
In addition, we compete with financial intermediaries, such as FinTech companies, consumer finance companies, 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 private credit funds, FinTech companies, consumer finance companies, 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.
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.
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 the FDIC's risk-based assessment system.
Other important competitive factors include convenience, quality of customer service, availability and quality of digital offerings, community reputation, continuity of personnel and services, and, in the case of larger commercial customers, relative lending limits and ability to offer sophisticated cash management and other commercial banking services.
Other important competitive factors include convenience, quality of customer service, quality and variety of product offerings, availability and quality of digital offerings, community reputation, continuity of personnel and services, and, in the case of larger commercial customers, relative lending limits and ability to offer sophisticated cash management and other commercial banking services.
The Basel III Capital Rules require institutions to retain a capital conservation buffer of 2.5% above these required minimum capital ratio levels. A minimum leverage ratio (tier 1 capital as a percentage of average total assets) of 4.0% is also required under the Basel III Capital Rules.
The Basel III Capital Rules require institutions to retain a capital conservation buffer of 2.5% above these required minimum capital ratio levels. A minimum leverage ratio (tier 1 capital as a percentage of average total assets) of 3.0% is also required under the Basel III Capital Rules.
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 areas when considering an application by a bank to establish or relocate a branch or to conduct certain mergers or acquisitions.
We compete with other state, national and international banks as well as savings associations, savings banks and credit unions with physical presence in our market areas or targeting our market areas digitally for deposits and loans.
We compete with other state, national and foreign banks as well as savings associations, savings banks and credit unions with physical presence in our market areas or targeting our market areas digitally for deposits and loans.
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.
Since the inception of these initiatives in 2020, 154 college and high school students have participated and 46 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.
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.
The Community Reinvestment Act The CRA is intended to encourage financial institutions 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.
Financial institutions must take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report any suspicious transactions, and law enforcement authorities have been granted increased access to financial information maintained by financial institutions.
Financial institutions must take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report any suspicious transactions, and law enforcement authorities have been granted 7 access to certain financial information maintained by financial institutions.
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.
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, 61 students have completed the program and 20 new students have been selected for the 2024-2025 cohort.
The GLB Act expanded the scope of permissible activities for a BHC that qualifies as a financial holding company. Under the regulations implementing the GLB Act, a financial holding company may engage in additional activities that are financial in nature or incidental or complementary to a financial activity. BankUnited, Inc. is not a financial holding company.
The GLB Act expanded the scope of permissible activities for a BHC that qualifies as a financial holding company. Under the regulations implementing the GLB Act, a financial holding company may engage in additional activities that are financial in nature or incidental or complementary to a financial activity. BankUnited, Inc. has not elected to become a financial holding company.
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.
The Company schedules regular CEO update video calls, town hall meetings and other engagement programs such as 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.
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.
Item 1. Business Overview BankUnited, Inc., with total consolidated assets of $35.2 billion at December 31, 2024, is a bank holding company with one direct wholly-owned subsidiary, BankUnited, collectively, the Company.
Specifically, as a BHC, BankUnited, Inc. must obtain prior approval of the Federal Reserve in connection with any acquisition that would result in BankUnited, Inc. acquiring substantially all the assets, or owning or controlling 5% or more of any class of voting securities, of a bank or another BHC.
Notice and Approval Requirements Related to Control As a BHC, BankUnited, Inc. must obtain prior approval of the Federal Reserve in connection with any acquisition that would result in BankUnited, Inc. acquiring substantially all the assets, or owning or controlling 5% or more of any class of voting securities, of a bank or another BHC.
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.
Our iCARE™ Council, consisting of 13 employees with a variety of backgrounds and perspectives across different divisions in our organization oversees the continued evolution of iCARE™ and 22 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 community volunteer opportunities.
Our future strategy may include organic expansion into other markets, but no specific additional markets have been identified at this time. 2 Pinnacle and Bridge offer lending products and the Bank provides mortgage warehouse financing on a national basis. We also offer a suite of commercial deposit, treasury solutions and cash management products nationally, primarily focused on select industry verticals.
Our future strategy may include organic expansion into other markets, but no specific additional markets have been identified at this time. Pinnacle offers municipal financing and the Bank provides mortgage warehouse financing on a national basis. We also offer a suite of commercial deposit, treasury solutions and cash management products nationally.
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.
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 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%.
The Company solicits employee feedback through periodic employee engagement surveys conducted by an outside firm. 87% of employees participated in our last engagement survey and 82% of participants responded favorably to questions designed to gauge the level of overall engagement.
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.
We believe mentoring is key to career growth and development. I n 2024 280 employees enrolled in our mentoring programs and a total of 1,102 mentoring hours were reported. Our employees rated their overall mentorship program satisfaction with a score of 4.8 stars out of 5 stars. Communication & Engagement Employee engagement is a key contributor to our success.
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.
We do not charge consumer overdraft or NSF fees. Our Markets Our largest 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.
Career Growth and Development Our Go for More ™ Academy provides an extensive menu of training and resources that enable employees to develop their skills and that promote collaboration and career development. Our Rising Leaders, Situational Leadership and EXCELerate programs provide our employees with career development opportunities .
Career Growth and Development Our Go for More ™ Academy provides an extensive menu of training and resources that enable employees to develop their skills and that promote collaboration and career development. The School of Leadership, which includes the Rising Leaders Program, EXCELerate and Situational Leadership coursework, provides our employees with career development opportunities at all levels .
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.
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. This reserve requirement may be met by holding cash in banking offices or on deposit at a Federal Reserve Bank.
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.
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.
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.
In 2024, our employees reported a total of 4,112 volunteer hours, up 17% from 2023, serving 209 community organizations. Our employees are given paid time to participate in community volunteer opportunities. BankUnited has partnered with nine universities in our local markets to provide scholarships, internships, and other educational programs for high school and college students.
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.
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.
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.
U.S. depository institutions are assigned one of five capital categories: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized," and are subject to differential regulation corresponding to the capital category within which the institution falls.
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.
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.
Through our Discover Coaching program, we offer a personalized approach where employees meet one-on-one with an internal coach to promote individual growth, skill development, leadership development, and problem solving. A total of 204 employees participated and completed these programs in 2023. We believe mentoring is key to career growth and development.
Through our Discover Coaching program, we offer a personalized approach where employees meet one-on-one with an internal coach to promote individual growth, skill development, leadership development, and problem solving. BankUnited's extensive list of professional development opportunities earned us the 2025 Training Apex Award through Training Magazine. A total of 382 employees completed these programs in 2024.
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.
Our Products and Services Lending 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.
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.
Bank and Bank Holding Company Regulation As a national bank, BankUnited is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC. BankUnited, Inc., which controls BankUnited, is a BHC and, as such, is subject to regulation, inspection, supervision and enforcement by the Federal Reserve Board under the BHC Act.
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 Federal Reserve Board's jurisdiction also extends to any company that is directly or indirectly controlled by BankUnited, Inc.. 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.
Generally, the proposed rules would increase capital requirements and risk-weighted assets for Category I - IV banking organizations (generally banking organizations with $100 billion or more in total assets).
Generally, the proposed rules would increase capital requirements and risk-weighted assets for Category I - IV banking organizations (generally banking organizations with $100 billion or more in total assets). It is uncertain if and when a final rule will be adopted, and if so, whether and to what extent it will differ from the proposed rule.
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.
The Bridge portfolio consists of (i) businesses equipment loans and leases, including finance lease and operating lease structures, and (ii) franchise equipment, acquisition and expansion financing facilities. The Bridge lines of business have been de-emphasized due to their risk/return and liquidity profiles. We expect that related loan balances will continue to decline.
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.
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.
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.
Residential mortgages —We do not originate residential mortgages, but do invest in residential loans originated through established 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.
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.
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.
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.
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.
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.
For our consumers, we offer competitive money market and time deposit products through our online channel as well as through our retail branch network.
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 BankUnited Corporate Center has an on-site fitness facility, and we provide our employees with on-site health screenings, skin cancer screenings, on-site mobile physicals, eye exams, dental exams, mammograms, and vaccine clinics.
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.
Approximately 56% of our workforce was female. 9 The following chart presents additional information about the composition of our workforce at December 31, 2024: iCARE™ Under the umbrella of our iCARE™ initiative, we have a number of programs intended to foster a culture that promotes employee engagement and community involvement.
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.
In the current environment, we have de-emphasized lending in the office sector and been more focused on warehouse/industrial, multi-family and the retail sectors. While we have a small amount of New York rent regulated multi-family loans, we are not actively engaged in lending in this sub-sector.
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.
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.
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.
Interest rates on both loans and deposits and prices of fee-based services are significant competitive factors among financial institutions generally.
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.
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 was listed in the top ten among America's Top 100 Healthiest Employers by Springbuk HR Technology in both 2023 and 2024.
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.
BankUnited offers paid time off, paid parental leave, paid holidays, flexible work schedules and hybrid and remote job opportunities for some positions. Our goal is to create a safe 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.
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.
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 2024, BankUnited received an overall rating of "Satisfactory." A new interagency CRA rule was published in February 2024 imposing additional data collection and reporting requirements on financial institutions.
The Bank also launched the iCARE™ Ventures program to support, promote and strengthen local entrepreneurship and small business growth to minority owned businesses in our community. 10 Health, Wellness and Safety Our award-winning Wellness Program incorporates initiatives that address the mental, physical, intellectual, occupational, social, emotional, financial and spiritual components of wellness.
In 2024, the Back to School and Holiday Toy drive collected over 2,000 items for children, and the Thanksgiving drive provided over 140,000 meals to individuals and families in need. Health, Wellness and Safety Our award-winning Wellness Program incorporates initiatives that address the mental, physical, intellectual, occupational, social, emotional, financial and spiritual components of wellness.
Removed
Through the Bank's two commercial lending subsidiaries, Pinnacle and Bridge, we provide municipal, equipment and franchise financing on a national basis. Pinnacle, headquartered in Scottsdale, Arizona, provides financing to state and local governmental entities directly and through vendor programs and alliances.
Added
To date, we have executed our strategy primarily through organic growth and anticipate that we will most likely continue to do so, although we will evaluate and consider opportunities to engage in merger and acquisition activity when they arise.
Removed
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.
Added
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.
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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.
Added
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 such as the title services and HOA industry segments. Our service fee schedule and rates are competitive with other financial institutions in our markets.
Removed
Notice and Approval Requirements Related to Control BankUnited, Inc. must generally receive bank regulatory approval before it can acquire a financial institution.
Added
As a result, the timing and content of any final rule, and the potential effects of any final rule on BankUnited, Inc. and BankUnited remain uncertain. 5 Prompt Corrective Action Under the FDIA, the federal bank regulatory agencies must take "prompt corrective action" against undercapitalized U.S. depository institutions.
Removed
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.
Added
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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The proposed rules include, among other provisions, changes to the calculation of RWA that would replace the current Advanced Approaches with an Expanded Risk-based Approach with respect to credit, market, operational and CVA risk, apply a new 5 Output Floor, and extend the countercyclical capital buffer and Supplementary Leverage Ratio to Category IV banking organizations.
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A preliminary injunction against the final rule was issued in March 2024; the ultimate resolution of this matter remains uncertain. Human Capital Resources At December 31, 2024, we had 1,662 full-time employees and 18 part-time employees. None of our employees are parties to a collective bargaining agreement.
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The proposed rules would also lower the threshold for recognition of AOCI in CET1 capital, lower limits on recognition of minority interests and lower capital deduction thresholds for Category III and IV banking organizations.
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At December 31, 2024, 33% of the members of our Board of Directors were female and 44% were of diverse nationality or ethnicity.
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Generally, these rules, if enacted as proposed, are not expected to apply directly to the Company, whose total assets are less than $100 billion; however, the impact of the proposed rules, if enacted, on the banking system and regulatory environment more broadly could indirectly impact the Company.
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The iCARE™ Ventures program, working with local partners, endeavors to support, promote and strengthen local entrepreneurship and small business growth in our communities. Our employees also participate in a variety of community and collection drives throughout the year.
Removed
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. 6 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.
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Employees can choose to participate in nutrition counseling, music 10 and art therapy, live and streaming fitness classes, meditation sessions, live and virtual learning opportunities with local hospitals providing subject matter experts with a variety of specialties. We offer safety programs including adult, child and pet first aid and CPR courses.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeProposed rules increasing capital requirements for banks with more than $100 billion in assets have been issued; if these or similar rules are enacted, there may be indirect effects on our company. We also expect additional laws or regulations to be issued related to liquidity and bank mergers and acquisitions.
Biggest changeInability 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. 22 A number of new or modified rules or policies related to capital requirements for banks with more than $100 billion in assets, liquidity, and bank mergers and acquisitions have been proposed; if these or similar rules are enacted, there could be a material direct or indirect impact on our business including but not limited to our financial position, results of operations and capital.
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.
The occurrence of a hurricane or other natural disaster, a man-made catastrophe such as terrorist activity, pandemic outbreaks and other 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.
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.
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 affect our ability to deliver products and services to our customers and otherwise conduct our business.
In determining whether to approve a proposed acquisition, federal banking regulators will consider, among a number of other qualitative and quantitative factors, the effect of the acquisition on competition, the impact on communities served by the acquiring and target institution, the impact on compliance with the CRA and BSA/AML laws and regulations, our financial 21 condition, our future prospects, and the impact of the proposal on U.S. financial stability.
In determining whether to approve a proposed acquisition, federal banking regulators will consider, among a number of other qualitative and quantitative factors, the effect of the acquisition on competition, the impact on communities served by the acquiring and target institution, the impact on compliance with the CRA and BSA/AML laws and regulations, our financial condition, our future prospects, and the impact of the proposal on U.S. financial stability.
Assumptions about depositor behavior are integral to interest rate risk modeling and management; technological 16 advances enabling depositors to move money more quickly and to do business with a wide variety of financial services providers not in physical proximity to those depositors as well as the evolving landscape of the financial services industry has made predictive modeling of depositor behavior increasingly difficult.
Assumptions about depositor behavior are integral to interest rate risk modeling and management; technological advances enabling depositors to move money more quickly and to do business with a wide variety of financial services providers not in physical proximity to those depositors as well as the evolving landscape of the financial services industry has made predictive modeling of depositor behavior increasingly difficult.
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.
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 offer programs and products to our commercial customers that allow them to increase the amount of their deposits that are insured, not all depositors choose to take advantage of these programs and products. Uninsured deposits may be more subject than insured deposits to unanticipated outflows, particularly during times of systemic or institution-specific stress.
While we offer programs and products to our commercial customers that allow them to increase the amount of their deposits that are insured, not all depositors choose to take 18 advantage of these programs and products. Uninsured deposits may be more subject to unanticipated outflows than insured deposits, particularly during times of systemic or institution-specific stress.
If these tools prove to be inadequate or inaccurate, our strategic planning processes, risk management and monitoring framework, earnings and capital may be adversely impacted. New lines of business, new products and services or strategic project initiatives may subject us to additional operational risks, and the failure to successfully implement these initiatives could affect our results of operations.
If these tools prove to be inadequate or inaccurate, our strategic planning processes, risk management and monitoring framework, earnings and capital may be adversely impacted. New lines of business, new products and services or strategic project initiatives may subject us to additional operational risks, and the failure to successfully implement these initiatives could affect our reputation and results of operations.
Our Board of Directors and senior management team are actively engaged in ongoing succession planning, however, our succession planning efforts may not be adequate to ensure continuity of qualified senior management. Our success also depends on the experience of other key personnel and on their relationships with the customers and communities they serve.
Our Board of Directors and senior management team are actively engaged in ongoing succession planning, however, our succession planning efforts may not be adequate to ensure continuity of qualified senior management. Our success also depends on the experience and skills of other key personnel and on their relationships with the customers and communities they serve.
These events may lead to a decline in loan originations, an increase in deposit outflows, strain our liquidity position, reduce or destroy the value of collateral for our loans, particularly real estate, negatively impact the business 12 operations of our customers, and cause an increase in delinquencies, foreclosures and loan losses.
These events may lead to a decline in loan originations, an increase in deposit outflows, strain our liquidity position, reduce or destroy the value of collateral for our loans, particularly real estate, negatively impact the business operations of our customers, and cause an increase in delinquencies, foreclosures and loan losses.
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.
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 16 or a lower sale value, which could lead to impairment charges or operating losses.
Additionally, bank-owned properties obtained in foreclosure often sell at a discount to the price that might otherwise be obtained in the market. The geographic concentration of our markets in Florida and the New York Tri-State area makes our business highly susceptible to local economic conditions in those markets.
Additionally, bank-owned properties obtained in foreclosure often sell at a discount to the price that might otherwise be obtained in the market. The geographic concentration of our markets in Florida and the New York Tri-State area makes our business highly susceptible to local conditions in those markets.
New products and services may require startup and ongoing marketing costs and operational changes. The inability to successfully roll out new products and services may result in unmet profitability targets, increased costs, loss of customers or competitive advantage or other adverse impacts on our results of operations.
New products and services may require startup and ongoing marketing costs and operational changes. The inability to successfully roll out new products and services may result in unmet profitability targets, increased costs, loss of customers or competitive advantage or other adverse impacts on our business and results of operations.
There is also 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.
There is also a risk that BankUnited’s deposit insurance premiums will further increase if 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.
In general, ratings agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix and level and quality of earnings, and we may not be able to maintain our current credit ratings.
In general, ratings agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix and level and quality of earnings and management, and we may not be able to maintain our current credit ratings.
Failure of our system of controls and procedures could have a material adverse effect on our financial condition and results of operations. We are dependent on our information technology and telecommunications systems. System failures or interruptions could have an adverse effect on our business, financial condition and results of operations.
Failure of our system of controls and procedures could have a material adverse effect on our financial condition and results of operations. We are dependent on our information technology and telecommunications systems. System failures or interruptions could have an adverse effect on our business, reputation, financial condition and results of operations.
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.
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.
These factors could result in further deterioration in the fundamentals underlying the commercial real estate market and the deterioration in value of some of our loans or the underlying collateral and ultimately to higher loan losses.
These factors could result in further deterioration in the fundamentals underlying the 15 commercial real estate market and the deterioration in value of some of our loans or the underlying collateral and ultimately to higher loan losses.
The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including: (i) general or local economic conditions; (ii) sub-market property values and supply/demand dynamics; (iii) interest rates; (iv) costs of ownership such as real estate taxes, insurance, maintenance; (v) governmental rules and regulations such as but not limited to zoning laws; (vi) natural or man-made disasters such as hurricanes or healthcare crises; (vii) political or social unrest, crime levels and other conditions in sub-markets or neighborhoods where property is located; and (viii) the ability to maintain occupancy particularly of commercial properties.
The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including: (i) general or local economic conditions; (ii) sub-market property values and supply/demand dynamics; (iii) interest rates; (iv) costs of ownership such as real estate taxes, insurance, maintenance; (v) governmental rules and regulations such as but not limited to zoning laws; (vi) natural or man-made disasters; (vii) political or social unrest, crime levels and other conditions in sub-markets or neighborhoods where property is located; and (viii) the ability to maintain occupancy particularly of commercial properties.
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.
Any future additional assessments or increases in FDIC insurance premiums may adversely affect our financial condition or results of operations. 23 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.
We face significant competition from other financial institutions and financial services providers, which may adversely impact our ability to execute on strategic objectives, our growth or profitability. Although our geographic presence is expanding, our business is currently concentrated in Florida and the New York tri-state area. Commercial and consumer banking in these markets is highly competitive.
We face significant competition from other financial institutions and financial services providers, which may adversely impact our ability to execute on strategic objectives, our growth or profitability. Although our geographic footprint is expanding, our business is currently concentrated in Florida and the New York tri-state area. Commercial and consumer banking in these markets is highly competitive.
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.
These tools and models reflect assumptions that may prove inaccurate, particularly in times of market stress, volatility 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.
In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans. In particular, our clients' operations may be adversely impacted by the rising cost of property and casualty insurance related to physical risks brought on by climate change.
In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans. In particular, our clients' operations may be adversely impacted by the rising cost of property and casualty insurance related to physical risks brought on by weather events or climate change.
We are dependent on third-party service providers for significant aspects of our business infrastructure, information technology, and telecommunications systems.
We are highly dependent on third-party service providers for significant aspects of our business infrastructure, information technology, and telecommunications systems.
Some of the factors that will impact our ability to execute on our strategic priorities are (i) our ability to attract and retain talent; (ii) competition in our markets; (iii) fiscal and monetary policy and the macro-economic environment; (iv) the health of our primary markets; and (v) the availability and cost of capital.
Some of the factors that impact our ability to execute on our strategic priorities are (i) our ability to attract and retain talent; (ii) competition in our markets; (iii) fiscal, monetary and regulatory policy and the macro-economic environment; (iv) the health of our primary markets; and (v) the availability and cost of capital.
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.
In addition, we compete with financial intermediaries, such as private credit funds, 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.
Our necessary dependence upon automated systems to record and process transactions and our large transaction volume may further increase the risk that technical flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect.
Our necessary dependence on automated systems to record and process transactions and our large transaction volume may further increase the risk that technical flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect.
The value of commercial real estate and ability of commercial real estate borrowers to service debt is also sensitive to occupancy rates, the level of rents, regulatory changes, interest rates, other operating costs and, in many cases, the results of operations of businesses and other occupants of the real property.
The value of commercial real estate and ability of commercial real estate borrowers to service debt is also sensitive to occupancy rates, the level of rents, regulatory and tax law changes, interest rates, other operating costs and, in many cases, the results of operations of businesses and other occupants of the real property.
While we are expanding our geographic footprint, our operations remain concentrated in Florida and the New York Tri-State area. Additionally, a significant portion of our loans secured by real estate are secured by commercial and residential properties in these geographic regions.
While we are expanding our geographic footprint, our operations remain concentrated in Florida and the New York Tri-State area. Additionally, a significant portion of our loans secured by real estate are secured by properties in these geographic regions.
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 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, other financial institutions, or the financial services industry or economy generally.
In addition, regulatory authorities periodically review our ACL and may require us to increase our provision for credit losses or recognize further loan charge-offs, based on judgments different from those of our management. Adverse economic conditions could make management's estimate even more complex and difficult to determine.
In addition, regulatory authorities periodically review our ACL and may require us to increase our provision for credit losses or recognize further loan charge-offs, based on judgments different from those of our management. Adverse or volatile actual or forecasted economic conditions could make management's estimate even more complex and difficult to determine.
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.
We depend on our executive officers and other key and skilled personnel to execute our 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.
Weak economic conditions or demographic and market trends may impair a borrower's business operations, lead to elevated vacancy rates or lease turnover, slow the execution of new leases or result in falling rents. In particular, the office segment continues to be impacted by the evolving trend toward remote or hybrid work.
Weak economic conditions or demographic and market trends may impair a borrower's business operations, lead to elevated vacancy rates or lease turnover, slow the execution of new leases or result in falling rents. In particular, the office segment continues to be impacted by evolving trends around remote or hybrid work.
We provide our customers the ability to bank remotely, including online, via mobile devices and over the telephone. The secure transmission of confidential information over the internet and other remote channels is a critical element of remote banking. Our network could be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches.
We provide our customers the ability to bank remotely, including online, via mobile devices and over the telephone. The secure transmission of confidential information over the internet and other remote channels is a critical element of remote banking. Our network could be vulnerable to unauthorized access, computer viruses, social engineering schemes and other security breaches.
From time to time, we may launch new lines of business, expand into new geographies or offer new banking products and services, which offerings may significantly increase operational, credit or reputational risks.
From time to time, we may launch new verticals or lines of business, expand into new geographies or offer new or modified banking products and services, which offerings may significantly increase operational, credit or reputational risks.
Such valuations can be significantly affected over relatively short periods of time by changes in business climate, economic conditions, demographic and market trends such as the impact of the ongoing shift to online shopping on retail properties or the trend toward remote and hybrid work on office properties.
Such valuations can be significantly affected over relatively short periods of time by changes in business climate, economic conditions, demographic and market trends such as the impact of the ongoing shift to online shopping on retail properties or the evolution of remote and hybrid work on office properties.
A flat or inverted yield curve or tightening credit spreads may limit our ability to add higher yielding assets to the balance sheet and reduce the spread between rates paid on deposits and those earned on interest-earning assets, placing downward pressure on our net interest margin and net interest income.
A flat or inverted yield curve or tightening credit spreads may limit our ability to add higher yielding assets to the balance sheet and reduce the spread between rates paid on interest bearing liabilities and those earned on interest earning assets, placing downward pressure on our net interest margin and net interest income.
Depositors increasingly have the ability to move funds quickly and easily. If a significant portion of our deposits were to be withdrawn within a short period of time, the Company’s liquidity, financial condition, results of operations and ability to sustain normal operations could be materially, adversely affected.
Depositors increasingly have the ability to move funds quickly and easily using digital channels. If a significant portion of our deposits were to be withdrawn within a short period of time, the Company’s liquidity, financial condition, results of operations and ability to sustain normal operations could be materially, adversely affected.
Factors that could detrimentally impact our access to liquidity at an acceptable price, or at all include, but are not limited to: (i) national, to a lesser extent global, and regional economic and market conditions; (ii) interest rates; (iii) competition for depositor funds from banks and other investment alternatives; (iv) the availability of sufficient collateral that is acceptable to the FHLB and the Federal Reserve Bank, both of which are significant sources of contingent liquidity for us; (v) fiscal and monetary policy including the continuing restrictive monetary policy of the Federal Reserve which is negatively impacting systemic liquidity; (vi) public and market perception of BankUnited specifically and the banking sector more broadly; (vii) our ability to access the capital markets as a potential liquidity source; and (viii) regulatory requirements or changes.
Factors that could detrimentally impact our access to liquidity at an acceptable price, or at all include, but are not limited to: (i) national, to a lesser extent global, and regional economic and market conditions; (ii) interest rates; (iii) competition for depositor funds from banks and other investment alternatives; (iv) the availability of sufficient collateral that is acceptable to the FHLB and the Federal Reserve Bank, both of which are significant sources of contingent liquidity for us; (v) fiscal and monetary policy; (vi) public and market perception of BankUnited specifically, peer banks and the banking sector more broadly; (vii) our ability to access the capital markets as a potential liquidity source; and (viii) regulatory requirements or changes.
Our failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines, remedial actions, administrative orders and other penalties, any of which could adversely affect our reputation, results of operations and capital base.
Our failure to comply with these laws and regulations, and to effectively navigate this complex regulatory landscape, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines, remedial actions, administrative orders and other penalties, any of which could adversely affect our reputation, results of operations and capital base.
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 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.
Evolving expectations of investors, customers, regulators and employees with respect to our ESG practices and those of our customers may impose additional costs on us, impact our reputation in the market or expose us to emerging risks.
Evolving expectations of stakeholders including investors, customers, regulators, employees and ratings agencies with respect to our ESG practices and those of our customers may impose additional costs on us, impact our reputation in the market or expose us to emerging risks.
Our ability to access funds in a timely basis from the Federal Reserve Bank and FHLB also depends on our operational readiness; while we test operational readiness 17 regularly and believe our processes and procedures are adequate in this regard, a failure of those processes and procedures could compromise our ability to access needed liquidity.
Our ability to access funds on a timely basis from the FRB and FHLB also depends on our operational readiness; while we test operational readiness regularly and believe our processes and procedures are adequate in this regard, a failure of those processes and procedures could compromise our ability to access needed liquidity.
The Bank Secrecy Act, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. Financial institutions are also required to comply with sanctions and programs administered by the Office of Foreign Assets Control.
The Bank Secrecy Act, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. Financial institutions are also required to comply with sanctions and programs administered by OFAC.
The availability of liquidity from these sources is also dependent on the nature and value, which could be negatively impacted by changes in interest rates, of collateral BankUnited is able to provide and on their evaluation of the Bank's creditworthiness.
The availability of liquidity from these sources is also dependent on the nature and value, which could be negatively impacted by changes in interest rates or general economic and market conditions, of collateral BankUnited is able to provide and on their evaluation of the Bank's creditworthiness.
The credit quality of our loan portfolio and results of operations are affected by residential and commercial real estate values and the level of residential and commercial real estate sales and rental activity. A material portion of our loans are secured by residential or commercial real estate.
The credit quality of a substantial portion of our assets and our results of operations are affected by residential and commercial real estate values and the level of residential and commercial real estate sales and rental activity. A material portion of our loans are secured by residential or commercial real estate.
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.
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. We operate in a highly regulated environment, and are subject to comprehensive statutory, legal and regulatory regimes.
Similarly, residential real estate valuations can be impacted by housing trends, demographic trends, the availability of financing at reasonable interest rates, the level of supply of available housing, governmental policy regarding housing and housing finance and general economic conditions affecting consumers.
Similarly, residential real estate valuations can be impacted by housing trends, demographic trends, the availability of financing and property and casualty insurance at reasonable rates, the supply of available housing, governmental policy regarding housing and housing finance and general economic conditions affecting consumers.
In some cases, we could be required to apply a new or revised standard retrospectively, resulting in a restatement of prior period financial statements. See Note 1 to the consolidated financial statements for more information about recent accounting pronouncements that may have a material impact on our reported financial results. Changes in taxes and other assessments may adversely affect us.
In some cases, we could be required to apply a new or revised standard retrospectively, resulting in a restatement of prior period financial statements. See Note 1 to the consolidated financial statements for more information about our accounting policies and recent accounting pronouncements that may have a material impact on our reported financial results.
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.
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 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.
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 and reporting requirements on us.
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.
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 14 in the business of making loans.
Our ability to compete successfully depends on a number of factors, including but not limited to (i) the ability to develop, maintain and build upon long-term customer relationships; (ii) our ability to pro-actively and quickly respond to technological change and emerging or unanticipated innovations in financial services; (iii) our ability to attract and retain talent; (iv) our ability to expand our market position or successfully enter new markets; (v) the scope, relevance and pricing of our products and services and our ability to respond quickly to changing customer preferences; (vi) the rate at which we introduce new products and services relative to our competitors; (vii) customer satisfaction with our level of service; and (viii) industry and general economic trends.
Additionally, due to their size or particular technology capabilities, many competitors may offer a broader range of products and services or may be able to offer better pricing for certain products and services than we can. 12 Our ability to compete successfully depends on a number of factors, including but not limited to (i) the ability to develop, maintain and build upon long-term customer relationships; (ii) our ability to pro-actively and quickly respond to technological change and emerging or unanticipated innovations in financial services; (iii) our ability to attract and retain talent; (iv) our ability to expand our market position or successfully enter new markets; (v) the scope, relevance and pricing of our products and services and our ability to respond quickly to changing customer preferences; (vi) the rate at which we introduce new products and services relative to our competitors; (vii) customer satisfaction with our level of service; and (viii) industry and general economic trends.
Our near-term strategic priorities include (i) improving the funding mix, primarily by growing core deposits, while maintaining ample liquidity; (ii) improving risk adjusted returns by re-positioning the balance sheet away from typically lower yielding transactional business such as 11 residential mortgages and securities and organically growing core commercial loans, which are generally higher-yielding, as a percentage of the portfolio; (iii) managing credit quality; (iv) managing the rate of increase in expenses; and (v) maintaining robust capital levels.
Our near-term strategic priorities include (i) improving the funding mix, primarily by growing core deposits and paying down high cost wholesale funding; (ii) improving risk adjusted returns by re-positioning the balance sheet away from typically lower yielding transactional business such as residential mortgages and organically growing core commercial loans, which are generally higher-yielding; (iii) managing credit quality; (iv) investing in organic growth capabilities while managing the rate of increase in expenses; and (v) maintaining robust capital and liquidity.
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.
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.
Our accounting policies and estimates are fundamental to our reported financial condition and results of operations. Management is required to make difficult, complex or subjective judgments in selecting and applying many of these accounting policies.
Our reported financial results depend on management's selection and application of accounting policies and methods and related assumptions and estimates. Our accounting policies and estimates are fundamental to our reported financial condition and results of operations. Management is required to make difficult, complex or subjective judgments in selecting and applying many of these accounting policies.
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.
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.
For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to share nonpublic personal information about our customers with non-affiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with non-affiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches.
For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to share nonpublic personal information about our customers with non-affiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with non-affiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program.
The legislatures and taxing authorities in the tax jurisdictions in which we operate regularly enact reforms to the tax and other assessment regimes to which we and our customers are subject.
Changes in taxes and other assessments may adversely affect us. The legislatures and taxing authorities in the tax jurisdictions in which we operate regularly enact reforms to the tax and other assessment regimes to which we and our customers are subject.
Although our Chairman, President and Chief Executive Officer has entered into an employment agreement with us, he may not complete the term of his employment agreement or renew upon expiration. Other members of our senior management team are not subject to employment agreements.
Although our Chairman, President and Chief Executive Officer has entered into an employment agreement with us, he may not complete the term of his employment agreement or renew upon expiration.
Particularly in a high or rising interest rate environment, the level of residential real estate activity would be expected to decline, which has led and may in the future lead to reduced deposit balances in this vertical, considerably.
In a sustained high interest rate environment, the level of residential real estate activity would be expected to decline, which may lead to reduced deposit balances in this vertical.
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.
Our ability to originate new business and maintain existing customer relationships is highly dependent upon customer and other external perceptions of our business practices. 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.
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.
Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.
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.
Adverse reputational impacts or events may also increase our litigation risk. 24 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.
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.
Effective liquidity management is essential for the operation of our business. 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.
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.
If our ESG practices do not meet evolving rules and regulations or stakeholder expectations, then our reputation or our ability to attract or retain employees, customers and investors could be negatively impacted. Credit Risk As a lender, our business is highly susceptible to credit risk.
If real estate values or fundamentals underlying commercial or residential real estate decline, we could experience higher delinquencies and charge-offs beyond that provided for in the ACL.
If real estate values or fundamentals underlying commercial or residential real estate decline, we could experience higher delinquencies and charge-offs beyond that provided for in the ACL. The underlying collateral for a significant portion of the securities in our investment portfolio also consists of commercial or residential real estate.
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.
Major disruptive events such as but not limited to hurricanes, fires or other weather-related events, social or health-care crises such as pandemics, political or social unrest, government shutdowns, geopolitical conflict, terrorist activity or other natural or man-made disasters could disrupt our operations or otherwise have adverse impacts on our customers, our business and results of operations.
If another financial institution experiences a material cybersecurity incident, even if we are not directly impacted in any way, negative publicity about the incident could impact confidence in the banking system generally, including in BankUnited.
If another financial institution experiences a material cybersecurity incident, even if we are not directly impacted in any way, negative publicity about the incident could impact confidence in the banking system generally, including in BankUnited. See "Item 1C - Cybersecurity." for further discussion of measures we have taken to implement safeguards with respect to cybersecurity incidents.
The Federal Reserve Bank and the FHLB are important sources of both operating and contingent liquidity. If the availability of those liquidity sources were compromised, our business, financial condition or results of operations could be materially adversely affected.
The FRB and the FHLB are important sources of both operating and contingent liquidity. If the availability of those liquidity sources were compromised, our business, financial condition or results of operations could be materially adversely affected. The FRB and FHLB provide important sources of stable, reliable and specifically with respect to the FRB, emergency liquidity to banks including BankUnited.
The Federal Reserve Bank and FHLB provide important sources of stable, reliable and specifically with respect to the Federal Reserve Bank, emergency liquidity to banks including BankUnited. Should the availability, nature, design or provisions of the various liquidity facilities provided by these entities change materially, BankUnited's ability to access operating or contingent liquidity as needed could be adversely impacted.
Should the availability, nature, design or provisions of the various liquidity facilities provided by these entities change materially, BankUnited's ability to access operating or contingent liquidity as needed could be adversely impacted.
Deterioration in business or economic conditions generally, or more specifically in the principal markets in which we do business, or the onset of a recession could have adverse effects on our business, financial condition and results of operations including but not necessarily limited to: (i) a decrease in demand for our products and services; (ii) an increase in delinquencies and defaults by borrowers or counterparties leading to increased credit losses; (iii) a decline in the value of our assets; (iv) a decrease in earnings; (v) a decline in liquidity and (vi) a decrease in our ability to access the capital markets.
These effects may include but are not necessarily limited to: (i) a decrease in demand for our products and services; (ii) an increase in delinquencies and defaults by borrowers or counterparties leading to increased credit losses; (iii) a decline in the value of our assets; (iv) a decrease in earnings; (v) a decline in liquidity and (vi) a decrease in our ability to access the capital markets.
We are exposed to the risk of fraud or theft by employees or outsiders and to operational errors, including clerical or record-keeping errors, the impact of ineffective processes and controls or faulty or disabled technology. Events such as these could cause us to suffer financial loss, the loss of customers, regulatory action and damage to our reputation.
We are exposed to the risk of fraud or theft by employees or outsiders and to operational errors, including clerical or record-keeping errors, the impact of ineffective processes and controls or faulty or disabled technology.
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.
Our failure to keep pace with technological innovation, to successfully implement enhanced and emerging technologies or to fully realize their benefits 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.
Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts to mitigate those impacts. Consumers and businesses may change their behavior as a result of these concerns. We and our customers may need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns.
Consumers and businesses may change their behavior as a result of their concerns about climate change or in response to governmental efforts to address it. We and our customers may need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns.
A downgrade of our credit rating could increase our cost of capital or place limitations on business activities. The major ratings agencies regularly evaluate us, and their ratings are based on a number of factors, including our financial strength and conditions affecting the financial services industry generally.
NRSROs regularly evaluate us, and their ratings are based on a number of factors, including our financial strength and conditions affecting the financial services industry generally.
Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified.
Events such as these could cause us to suffer financial loss, the loss of customers, regulatory action and damage to our reputation. 19 Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified.
These factors could lead to deterioration in fundamentals underlying some of our commercial real estate loans. Recent increases in interest rates as well as rising property and casualty insurance and other operating costs have negatively impacted and may continue to negatively impact operating cash flows for some borrowers and the ability of those borrowers to service or refinance outstanding debt.
A sustained higher interest rate environment as well as rising property and casualty insurance and other operating costs have negatively impacted and may continue to negatively impact operating cash flows for some borrowers and the ability of those borrowers to service or refinance outstanding debt.
The widespread adoption of new technologies, including, but not limited to, digitally enabled products and delivery channels and payment systems, could require us to incur substantial expenditures to modify or adapt our existing products and services.
The widespread adoption of new technologies, including, but not limited to, digitally enabled products and delivery channels, payment systems and technologies supporting back-office and risk management capabilities could require us to incur substantial cost and effort to acquire new technology platforms, modify or adapt our existing products and services, infrastructure and control environment, to upskill our workforce and to modify related operational processes and procedures.
A cybersecurity incident, which is any unauthorized occurrence, or series of related unauthorized occurrences, on or conducted through our information systems, including those of third-party service providers that we rely on, that jeopardizes the confidentiality, integrity or availability of those information systems or information residing therein.
Accordingly, use of such third party service providers creates an unavoidable material inherent risk to our business operations. 20 We are at risk of cybersecurity incidents, defined as any unauthorized occurrence, or series of related unauthorized occurrences, on or conducted through our information systems, including those of third-party service providers that we rely on, that jeopardizes the confidentiality, integrity or availability of those information systems or information residing therein.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity Governance The Risk Committee of the Board of Directors is ultimately responsible for oversight of risks from cybersecurity threats, the Company's information risk management function, and the effective implementation of its cybersecurity program.
Biggest changeSee Item 1A "Risk Factors" for a further discussion of our cybersecurity risks. 26 Cybersecurity Governance The Risk Committee of the Board of Directors is ultimately responsible for oversight of cybersecurity risk, the Company's information risk management function, and the effective implementation of its cybersecurity program.
We have implemented systems and controls to address the information technology risks to our organization, our business partners and our customers. We employ a layered security approach leveraging diverse strategies including data loss prevention, access and identity management, network security, vulnerability management, end-point security and information security education and awareness, among others.
We have implemented systems and controls to address the information technology risks to our organization, our business partners and our customers. We employ a layered security approach leveraging diverse strategies including data loss prevention, identity and access management, network security, vulnerability management, end-point security and information security education and awareness, among others.
All identified cybersecurity incidents or technology outages or failures and vulnerabilities identified during these assessments are inventoried in a centralized tracking system and reported to impacted users and to management on a regular basis. A multi-step approach is applied to identify, prioritize, report, and remediate these vulnerabilities.
All identified cybersecurity incidents, technology outages or failures and vulnerabilities identified during these assessments are inventoried in a centralized tracking system and reported to impacted users and to management on a regular basis. A multi-step approach is applied to identify, prioritize, report, and remediate these vulnerabilities.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We are committed to maintaining robust governance, oversight and management of cybersecurity risks. We have established and implemented processes, supported by written policies and procedures, to detect, assess, classify, respond to, report, track, and resolve cybersecurity threats or incidents.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We are committed to maintaining robust governance, oversight and management of cybersecurity risk. We have established and implemented processes, supported by written policies and procedures, to detect, assess, classify, respond to, report, track, and resolve cybersecurity threats or incidents.
The CISO has over 30 years of experience in information systems security including physical, cyber, and IT, disaster recovery, business continuity planning, secure software development, and cloud services and security, among others.
The CISO has over 30 years of experience in information security including physical, cyber, IT, disaster recovery, business continuity planning, secure software development, and cloud services and security, among others.
The training program includes, but is not limited to, ongoing and targeted training on topics such as social engineering, mobile security, data handling and protection, password security and incident reporting. All employees are required to participate in the training. 25 In 2022, Clarium Managed Services, LLC (“Clarium”) conducted a Cybersecurity Assessment for the Bank.
The training program includes, but is not limited to, ongoing and targeted training on topics such as social engineering, mobile security, data handling and protection, password security and incident reporting. All employees are required to participate in the training. In 2022, Clarium Managed Services, LLC conducted a Cybersecurity Assessment for the Bank.
Our cybersecurity policies, procedures and practices are integrated with our overall risk management program by inclusion of cybersecurity and information systems KRIs in our enterprise-wide comprehensive risk assessment process and risk appetite statement, the involvement of our Chief Risk Officer in the MAT and oversight of cybersecurity risk by our Enterprise Risk Management Committee and the Risk Committee of the Board of Directors.
Our cybersecurity policies, procedures and practices are integrated with our overall risk management program by inclusion of cybersecurity and information systems metrics in our enterprise-wide comprehensive risk assessment process and risk appetite statement, the involvement of our Chief Risk Officer in the MAT and oversight of cybersecurity risk by our Enterprise Risk Management Committee and the Risk Committee of the Board of Directors.
Our third-party experts perform assessments that aid us in effectively detecting and responding to evolving cybersecurity attacks and, in the event of a cybersecurity incident, our experts will assist us with incident response support, digital forensics and incident remediation.
Our third-party experts perform assessments that aid us in effectively detecting and responding to evolving cybersecurity threats and, in the event of a cybersecurity incident, our experts will assist us with incident response support, digital forensics and incident remediation.
The Company’s third-party risk management framework and processes have been aligned with regulatory requirements and we believe with industry best practices to oversee and identify risks from cybersecurity threats associated with use of third-party service providers.
The Company’s third-party risk management framework and processes have been aligned with regulatory requirements and with industry best practices to oversee and identify risks from cybersecurity threats associated with use of third-party service providers.
The CISO holds multiple designations from the International Information System Security Certification Consortium, including Certified Information Systems Security Professional and has been a member of various boards including IT, Cybersecurity and Enterprise Risk Committees. Organizationally, the CISO reports to the CIO, but also provides reporting directly to and has access to the Risk Committee of the Board of Directors.
The CISO holds multiple designations from the International Information System Security Certification Consortium, including Certified Information Systems Security Professional and has been a member of various boards including IT, Cybersecurity and Enterprise Risk Committees. Organizationally, the CISO reports to the CRO and provides reporting directly to the Risk Committee of the Board of Directors.
The CIO has over 30 years of experience in financial services information technology. The Company has designated the MAT to assess and oversee the management and reporting of identified potentially material cybersecurity threats or incidents. The MAT convenes when a qualifying cybersecurity threat is identified by the CIO, the CISO, or their designees in accordance with established processes and procedures.
The Company has designated the MAT to assess and oversee the management and reporting of identified potentially material cybersecurity threats or incidents. The MAT convenes when a qualifying cybersecurity threat is identified by the CIO, the CISO, or their designees in accordance with established processes and procedures.
The assessment gauged the overall Cybersecurity Risk Posture of the Bank and resulted in a score of 4.8 on a scale of 0 to 5. In the last three fiscal years, the Company has not experienced any material cybersecurity incidents.
The assessment gauged the overall Cybersecurity Risk Posture of the Bank and resulted in a score of 4.8 on a scale of 0 to 5. The next independent evaluation is planned for 2025. In the last three fiscal years, the Company has not identified any material cybersecurity incidents.
SLAs are established for remediation of any incidents or outages detected, depending on their nature and potential impact.
Response and resolution times (commonly known as SLAs) are established for remediation of any incidents or outages detected, depending on their nature and potential impact.
No specific cybersecurity threats or incidents, including those resulting from any previous cybersecurity incidents, have materially affected, or are reasonably likely to materially affect, the Company, including its business strategy, results of operations or financial condition. See Item 1A "Risk Factors" for a discussion of our cybersecurity risks.
No specific identified cybersecurity threats or incidents, including those resulting from any previous cybersecurity incidents, have materially affected, or are reasonably likely to materially affect, the Company, including its business strategy, results of operations or financial condition.

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, certain other areas in Florida and Atlanta. Our subsidiaries lease office space in Baltimore, Maryland and Scottsdale, Arizona.
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, New Jersey, certain other areas in Florida, Dallas and Atlanta. Our subsidiaries lease office space in Baltimore, Maryland and Scottsdale, Arizona.
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.
At December 31, 2024, we provided banking services at 55 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, 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
Biggest changeIn the opinion of management, based upon advice of legal counsel, the likelihood is remote that the adverse impact of these proceedings, either individually or in the aggregate, would be material to the Company’s consolidated financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures None. 27 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIndex 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
Biggest changeIndex 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 BankUnited, Inc. 100.00 99.09 123.26 101.46 101.13 123.54 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 KBW Nasdaq Regional Banking Index 100.00 90.28 122.86 113.96 113.02 127.43 Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 29 Item 6. Reserved
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.
The Company expects to continue its policy of paying regular cash dividends on a quarterly basis. 28 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, 2019 and December 31, 2024, 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 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.
As of February 26, 2025, there were 574 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 2025 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 16, 2024 was $27.27 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 26, 2025 was $37.18 per share.
Dividend 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.
Dividend Policy The Company declared a quarterly dividend of $0.29 and $0.27 per share on its common stock for each of the four quarters in the years ended December 31, 2024 and 2023, respectively, resulting in total dividends for the years ended December 31, 2024 and 2023, of $87.0 million and $80.5 million, or $1.16 and 1.08 per common share, respectively.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe following table shows the composition of the loan portfolio at the dates indicated (dollars in thousands): December 31, 2023 December 31, 2022 Total Percent of Total Total Percent of Total 1-4 single family residential $ 6,903,013 28.0 % $ 7,128,834 28.6 % Government insured residential 1,306,014 5.3 % 1,771,880 7.1 % Total residential 8,209,027 33.3 % 8,900,714 35.7 % Non-owner occupied commercial real estate 5,323,241 21.6 % 5,405,597 21.7 % Construction and land 495,992 2.0 % 294,360 1.2 % Owner occupied commercial real estate 1,935,743 7.9 % 1,890,813 7.6 % Commercial and industrial 6,971,981 28.3 % 6,417,721 25.9 % Total "Core" C&I and CRE 14,726,957 59.8 % 14,008,491 56.4 % Pinnacle - municipal finance 884,690 3.6 % 912,122 3.7 % Franchise finance 182,408 0.7 % 253,774 1.0 % Equipment finance 197,939 0.8 % 286,147 1.1 % Mortgage warehouse lending 432,663 1.8 % 524,740 2.1 % Total commercial 16,424,657 66.7 % 15,985,274 64.3 % Total loans 24,633,684 100.0 % 24,885,988 100.0 % Allowance for credit losses (202,689) (147,946) Loans, net $ 24,430,995 $ 24,738,042 Consistent with our near-term strategic objectives related to improving the asset mix, for the year ended December 31, 2023, the core C&I and CRE portfolio segments grew by $719 million, while residential loans declined by $692 million.
Biggest changeGovernment agency and sponsored enterprise commercial MBS 4.54 % 4.92 % 2.95 % 2.06 % 3.50 % Private label residential MBS and CMOs 4.00 % 4.23 % 3.76 % 4.01 % 4.02 % Private label commercial MBS 5.68 % 6.14 % 2.35 % 3.29 % 5.80 % Single family real estate-backed securities 4.90 % 3.84 % — % — % 4.33 % Collateralized loan obligations 6.33 % 6.45 % 6.17 % — % 6.33 % Non-mortgage asset-backed securities 3.09 % 5.39 % 2.69 % — % 5.16 % State and municipal obligations 2.26 % 4.34 % 4.07 % — % 4.24 % SBA securities 5.76 % 5.75 % 5.67 % 5.44 % 5.73 % 5.02 % 5.44 % 4.44 % 4.30 % 5.03 % Loans The following table shows the composition of the loan portfolio at the dates indicated (dollars in thousands): December 31, 2024 December 31, 2023 Amortized Cost Percent of Total Loans Amortized Cost Percent of Total Loans Non-owner occupied commercial real estate $ 5,652,203 23.3 % $ 5,323,241 21.6 % Construction and land 561,989 2.3 % 495,992 2.0 % Owner occupied commercial real estate 1,941,004 8.0 % 1,935,743 7.9 % Commercial and industrial 7,042,222 28.9 % 6,971,981 28.3 % Total Core C&I and CRE 15,197,418 62.5 % 14,726,957 59.8 % Pinnacle - municipal finance 720,661 3.0 % 884,690 3.6 % Franchise and equipment finance 213,477 0.9 % 380,347 1.5 % Mortgage warehouse lending 585,610 2.4 % 432,663 1.8 % Total commercial 16,717,166 68.8 % 16,424,657 66.7 % 1-4 single family residential 6,508,922 26.8 % 6,903,013 28.0 % Government insured residential 1,071,892 4.4 % 1,306,014 5.3 % Total residential 7,580,814 31.2 % 8,209,027 33.3 % Total loans 24,297,980 100.0 % 24,633,684 100.0 % Allowance for credit losses (223,153) (202,689) Loans, net $ 24,074,827 $ 24,430,995 Commercial loans and leases Commercial loans include a diverse portfolio of commercial and industrial loans and lines of credit, loans secured by owner-occupied commercial real-estate, income-producing non-owner occupied commercial real estate, a smaller amount of construction loans, SBA loans, mortgage warehouse lines of credit, municipal loans and leases originated by Pinnacle and franchise and equipment finance loans and leases originated by Bridge. 43 The following charts present the distribution of the commercial loan portfolio at the dates indicated (dollars in millions): December 31, 2024 December 31, 2023 Commercial Real Estate: Commercial real estate loans include term loans secured by non-owner occupied income producing properties including rental apartments, industrial properties, retail shopping centers, free-standing single-tenant buildings, medical and other office buildings, warehouse facilities, hotels, and real estate secured lines of credit.
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.
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; 34 • 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.
Changes in the ACL may result from changes in current economic conditions including but not limited to unanticipated increases in interest rates or inflationary pressures, changes in our economic forecast, loan portfolio composition, commercial and residential real estate market dynamics and other circumstances not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.
Changes in the ACL may result from changes in current economic conditions including but not limited to unanticipated changes in interest rates or inflationary pressures, changes in our economic forecast, loan portfolio composition, commercial and residential real estate market dynamics and other circumstances not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.
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.
This evaluation considers, but is not necessarily limited to, the following factors, the relative significance of which varies depending on the circumstances pertinent to each individual security: • Whether we intend to sell the security prior to recovery of its amortized cost basis; • Whether it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis; • The extent to which fair value is less than amortized cost; • Adverse conditions specifically related to the security, a sector, an industry or geographic area; • Changes in the financial condition of the issuer or underlying loan obligors; • The payment structure and remaining payment terms of the security, including levels of subordination or over-collateralization; • Failure of the issuer to make scheduled payments; • Changes in external credit ratings; • Relevant market data; and • Estimated prepayments, defaults, and the value and performance of underlying collateral at the individual security level.
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.
These loans may be structured as term loans, typically with maturities of five to seven years, or revolving lines of credit which may have multi-year maturities. In addition to financing provided by Pinnacle, the Bank provides financing to state and local governmental entities generally within our primary geographic markets.
Numerous additional variables and assumptions not explicitly stated, including but not limited to detailed commercial property forecasts, projected stock market volatility indices and a variety of assumptions about market interest rates and spreads also contributed to the overall impact economic conditions and the economic forecast had on the ACL estimate.
Numerous additional variables and assumptions not explicitly stated, including but not limited to detailed commercial and residential property forecasts, projected stock market volatility indices and a variety of additional assumptions about market interest rates and spreads also contributed to the overall impact economic conditions and the economic forecast had on the ACL estimate.
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.
BankUnited's ongoing liquidity needs have historically been met primarily by cash flows from operations, deposit growth, the investment portfolio, its amortizing loan portfolio and FHLB advances. FRB discount window capacity, repurchase agreement capacity and a letter of credit with the FHLB provide additional sources of contingent liquidity.
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.
We also model a variety of dynamic balance sheet scenarios, various yield curve slopes, non-parallel shifts and alternative depositor behavior, beta and decay assumptions. We continually evaluate the scenarios being modeled with a view toward adapting them to changing economic conditions, expectations and trends.
We have an active shelf registration statement on file with the SEC that allows the Company to periodically offer and sell in one or more offerings, individually or in any combination, our common stock, preferred stock and other non-equity securities.
Capital We have an active shelf registration statement on file with the SEC that allows the Company to periodically offer and sell in one or more offerings, individually or in any combination, our common stock, preferred stock and other non-equity securities.
LTVs are typically based on valuation at origination since we do not routinely update residential appraisals. At December 31, 2023, the majority of the 1-4 single family residential loan portfolio, excluding government insured residential loans, was owner-occupied, with 80% primary residence, 5% second homes and 15% investment properties.
LTVs are typically based on valuation at origination since we do not routinely update residential appraisals. At December 31, 2024, the majority of the 1-4 single family residential loan portfolio, excluding government insured residential loans, was owner-occupied, with 80% primary residence, 5% second homes and 15% investment properties.
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.
Our Vision and 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.
We regularly engage with bond managers to monitor trends in underlying collateral, including potential downgrades and subsequent cash flow diversions, liquidity, ratings migration, and any other relevant developments. We do not intend to sell securities in significant unrealized loss positions at December 31, 2023.
We regularly engage with bond managers to monitor trends in underlying collateral, including potential downgrades and subsequent cash flow diversions, liquidity, ratings migration, and any other relevant developments. We do not intend to sell securities in significant unrealized loss positions at December 31, 2024.
Each of these externally provided scenarios in fact represent the result of a probability weighting of thousands of individual scenario paths. See Note 1 to the consolidated financial statements for more detailed information about our ACL methodology and related accounting policies.
Each of these externally provided scenarios in fact represents the result of a probability weighting of thousands of individual scenario paths. See Note 1 to the consolidated financial statements for more detailed information about our ACL methodology and related accounting policies.
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.
Management's discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2024, and results of operations for the year then ended, including in comparison to the prior year ended December 31, 2023.
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.
The estimate of the ACL at December 31, 2024, was informed by forecasted economic scenarios published in December 2024, a wide variety of additional economic data, information about borrower financial condition and collateral values, and other relevant information.
Furthermore, while the variables presented above are at the national level, most of the economic variables are regionalized at the market and submarket level in the models. For additional information about the ACL, see Note 4 to the consolidated financial statements.
Furthermore, while the variables presented above are at the national level, many of the economic variables are regionalized at the market and submarket level in the models. For additional information about the ACL, see Note 4 to the consolidated financial statements.
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.
The tax-equivalent adjustment for tax-exempt loans was $12.2 million, $13.4 million and $12.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. The tax-equivalent adjustment for tax-exempt investment securities was $3.3 million, $3.6 million and $3.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.
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.
Additionally, as discussed in Note 15 to the consolidated financial statements, the Bank had $262 million in outstanding commitments to fund loans and $4.7 billion in unfunded commitments under existing lines of credit at December 31, 2024. Many of these commitments are expected to expire without being fully funded and, therefore, also do not necessarily represent future cash requirements.
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.
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 20, 2024, for a discussion and analysis of the more significant factors that affected the year ended December 31, 2023, including in comparison to the year ended December 31, 2022.
The short duration of our AFS investment portfolio (1.96 at December 31, 2023) also provides a natural offset from an interest rate risk perspective to the longer duration of the residential mortgage portfolio. See Note 10 to the consolidated financial statements for additional information about derivative financial instruments.
The short duration of our AFS investment portfolio (1.85 at December 31, 2024) also provides a natural offset from an interest rate risk perspective to the longer duration of the residential mortgage portfolio. See Note 10 to the consolidated financial statements for additional information about derivative financial instruments.
Expected credit losses are estimated over the contractual terms of the loans, adjusted for expected prepayments, generally excluding expected extensions, renewals, and modifications. For the substantial majority of portfolio segments and subsegments, including residential loans other than government insured loans, and most commercial and commercial real estate loans, expected losses are estimated using econometric models.
Expected credit losses are estimated over the contractual terms of the loans, adjusted for expected prepayments, generally excluding expected extensions, renewals, and modifications. For the substantial majority of portfolio segments and subsegments, including residential loans other than government insured loans, and most commercial and commercial real estate loans, expected losses are estimated using a factor based methodology and econometric models.
The above unemployment and GDP growth assumptions are provided to give a high level overview of the nature and severity of the economic forecast scenarios used in estimating the ACL.
The above unemployment and GDP growth assumptions are provided to give a high level overview of the nature and severity of the baseline economic forecast scenario used in estimating the ACL.
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.
See "Item 1A - Risk Factors" for additional discussion of risks to the execution of our strategic priorities. 2024 Performance Highlights: In evaluating our financial performance, we consider improvement in the funding mix and the composition of earning assets, the level of and trends in net interest income and 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 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.
We have also invested in highly-rated structured products, including private-label commercial and residential MBS, collateralized loan obligations, single family real estate-backed securities and non-mortgage asset-backed securities that, while somewhat less liquid, are generally pledgeable at either the FHLB or the FRB and provide us with attractive yields. Investment grade municipal securities provide liquidity and attractive tax-equivalent yields.
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.
LTVs and DSCRs are based on the most recent available information; if current appraisals are not available, LTVs are adjusted by our models based on current and forecasted sub-market dynamics. DSCRs are calculated based on current contractually required payments, which in some cases may be interest only and on current levels of operating cash flows.
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.
At December 31, 2024, the Company had $4.0 billion in term deposits with a contractual maturity of 12 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.
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.
Collateralized and affiliate deposits are included in these amounts. Time deposit accounts with balances of $250,000 or more totaled $779 million and $941 million at December 31, 2024 and 2023, respectively.
Available liquidity sources inc lude cash; secured funding, such as borrowing capacity at the Federal Home Loan Bank of Atlanta and the Federal Reserve; and unencumbered securities. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Bank's amortizing securities and loan portfolios, and the sale of investment securities.
Same day available liquidity inc ludes cash, secured funding such as borrowing capacity at the Federal Home Loan Bank of Atlanta and the Federal Reserve, and unencumbered securities. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Bank's amortizing securities and loan portfolios, repurchase agreements and the sale of investment securities.
The following table presents the impact on forecasted net interest income compared to a "most likely" scenario, based on the consensus forward curve, in static balance sheet, parallel rate shock scenarios of plus and minus 100 and 200 basis points at December 31, 2023 and 2022: Down 200 Down 100 Plus 100 Plus 200 Policy Limits: In year 1 (12) % (8) % (8) % (12) % In year 2 (15) % (11) % (11) % (15) % Model Results at December 31, 2023 - increase (decrease) In year 1 (4.7) % (1.6) % 1.0 % 2.1 % In year 2 (6.0) % (2.3) % 1.5 % 2.0 % Model Results at December 31, 2022 - increase (decrease) In year 1 (5.1) % (1.7) % 0.1 % (0.6) % In year 2 (8.4) % (3.5) % 1.8 % 2.3 % The following table illustrates the modeled change in EVE in the indicated scenarios at December 31, 2023 and 2022: Down 200 Down 100 Plus 100 Plus 200 Policy Limits (20.0) % (10.0) % (10.0) % (20.0) % Model Results at December 31, 2023 - increase (decrease): 15.2 % 9.5 % (8.8) % (17.4) % Model Results at December 31, 2022 - increase (decrease): 4.5 % 3.8 % (5.5) % (11.3) % All of the modeled results at December 31, 2023, are within ALM policy limits.
The following table presents the impact on forecasted net interest income compared to a "most likely" scenario, based on the consensus forward curve, in static balance sheet, parallel rate shock scenarios of plus and minus 100 and 200 basis points at December 31, 2024 and 2023: Down 200 Down 100 Plus 100 Plus 200 Policy Limits: In year 1 (12) % (8) % (8) % (12) % In year 2 (15) % (11) % (11) % (15) % Model Results at December 31, 2024 - increase (decrease) In year 1 (4.2) % (1.7) % 1.5 % 2.7 % In year 2 (3.4) % (1.2) % 0.6 % 1.0 % Model Results at December 31, 2023 - increase (decrease) In year 1 (4.7) % (1.6) % 1.0 % 2.1 % In year 2 (6.0) % (2.3) % 1.5 % 2.0 % EVE Simulation The following table illustrates the modeled change in EVE in the indicated scenarios at December 31, 2024 and 2023: Down 200 Down 100 Plus 100 Plus 200 Policy Limits (20.0) % (10.0) % (10.0) % (20.0) % Model Results at December 31, 2024 - increase (decrease): 16.9 % 10.0 % (7.1) % (14.8) % Model Results at December 31, 2023 - increase (decrease): 15.2 % 9.5 % (8.8) % (17.4) % All of the modeled results at December 31, 2024, are within ALM policy limits. 66 The Company uses many assumptions in estimating the impact of changes in interest rates on forecasted net interest income and EVE.
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.
Net Interest Income Simulation The income simulation model analyzes interest rate sensitivity by projecting net interest income over 12- and 24-month periods in a most likely rate scenario based on a consensus forward curve versus net interest income in alternative rate scenarios.
For the years ended December 31, 2023, 2022 and 2021, net cash provided by operating activities was $657 million, $1.3 billion, and $1.2 billion, respectively.
For the years ended December 31, 2024, 2023 and 2022, net cash provided by operating activities was $434 million, $657 million and $1.3 billion, respectively.
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.
Some of the measures currently used to dimension liquidity risk and manage liquidity are the ratio of available liquidity to uninsured/non-collateralized deposits, a wholesale funding ratio, 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 and large depositor concentrations.
The policies established by the ALCO are approved at least annually by the Board of Directors or its Risk Committee. Management believes that the simulation of net interest income in different interest rate environments provides the most meaningful measure of interest rate risk.
The policies established by the ALCO are approved at least annually by the Board of Directors and its Risk Committee. The Board of Directors or its risk committee monitor compliance with these policies at least quarterly. Management believes that the simulation of net interest income in different interest rate environments provides the most meaningful measure of interest rate risk.
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.
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.
The quantitative portion of the ACL at December 31, 2023, was modeled using a weighting of baseline, downside and upside third-party economic scenarios, with the highest weighting ascribed to the baseline scenario and the lowest weighting ascribed to the upside scenario.
The quantitative portion of the ACL at December 31, 2024, was modeled using a weighting of baseline, downside and upside third-party economic scenarios, with the highest weighting ascribed to the baseline scenario and lower weightings ascribed equally to the downside and upside scenarios.
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.
Residential mortgages The following table shows the composition of residential loans at the dates indicated (in thousands): December 31, 2024 December 31, 2023 1-4 single family residential $ 6,508,922 $ 6,903,013 Government insured residential 1,071,892 1,306,014 $ 7,580,814 $ 8,209,027 The 1-4 single family residential loan portfolio, excluding government insured residential loans, is primarily comprised of prime jumbo loans purchased through established correspondent channels. 1-4 single family residential mortgage loans are primarily closed-end, first lien jumbo mortgages for the purchase or re-finance of owner occupied property.
Net unrealized losses at December 31, 2023 included $5.0 million of gross unrealized gains and $539.8 million of gross unrealized losses. Investment securities available for sale in unrealized loss positions at December 31, 2023 had an aggregate fair value of $8.4 billion.
Net unrealized losses at December 31, 2024 included $8.4 million of gross unrealized gains and $414.0 million of gross unrealized losses. Investment securities available for sale in unrealized loss positions at December 31, 2024 had an aggregate fair value of $6.7 billion.
On a quarterly basis, management performs an impairment analysis on assets with indicators of potential impairment. Potential impairment indicators include evidence of changes in residual value, macro-economic conditions, an extended period of time off-lease, criticized or classified status, or management's intention to sell the asset at an amount potentially below its carrying value.
Potential impairment indicators include evidence of changes in residual value, macro-economic conditions, an extended period of time off-lease, criticized or classified status, or management's intention to sell the asset at an amount potentially below its carrying value.
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.
The following table presents information about the contractual balance and maturities of outstanding FHLB advances, as of December 31, 2024 (dollars in thousands): Amount Weighted Average Rate Maturing in: 2025 - One month or less $ 2,500,000 4.53 % 2025 - Over one month 430,000 4.60 % Total contractual balance outstanding $ 2,930,000 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 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.
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 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 Company is not the servicer of these loans. 48 The following charts present the distribution of the 1-4 single family residential mortgage portfolio by product type at the dates indicated: December 31, 2024 December 31, 2023 See Note 4 to the consolidated financial statements for information about the geographic distribution of the 1-4 single family residential portfolio.
We have sought to maintain liquidity by investing a significant portion of the portfolio in high quality liquid securities including U.S. Treasury and U.S. Government Agency and sponsored enterprise securities. Investment grade municipal securities provide liquidity and attractive tax-equivalent yields.
We have sought to maintain liquidity by investing a significant portion of the portfolio in high quality liquid securities including U.S. Treasury and U.S. Government Agency and sponsored enterprise securities.
The investment securities AFS portfolio was in a net unrealized loss position of $534.8 million at December 31, 2023, compared to a net unrealized loss position of $674.2 million at December 31, 2022, improving by $139.4 million during the year ended December 31, 2023.
The investment securities AFS portfolio was in a net unrealized loss position of $405.6 million at December 31, 2024, compared to a net unrealized loss position of $534.8 million at December 31, 2023, improving by $129.2 million during the year ended December 31, 2024.
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.
Yields on tax-exempt securities have been calculated on a tax-equivalent basis, based on a federal income tax rate of 21%: Within One Year After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total U.S. Treasury securities — % 4.34 % 2.54 % — % 3.52 % U.S.
The following table presents subordination levels and average internal stress scenario losses for select non-agency portfolio segments at December 31, 2023: Subordination Weighted Average Stress Scenario Loss Rating Percent of Total Minimum Maximum Average Private label CMBS AAA 85.8 % 30.2 99.9 43.9 7.1 AA 10.6 % 29.5 74.4 37.0 7.7 A 3.6 % 25.1 51.5 37.3 9.1 Weighted average 100.0 % 29.9 95.5 43.0 7.2 CLOs AAA 80.2 % 40.2 74.2 47.1 15.7 AA 16.2 % 30.8 47.0 37.3 13.0 A 3.6 % 31.5 33.2 32.2 14.4 Weighted average 100.0 % 38.4 68.3 45.0 15.2 Private label residential MBS and CMOs AAA 94.0 % 3.0 92.0 17.7 2.2 AA 4.2 % 20.2 34.2 24.8 5.3 A 1.8 % 27.3 28.2 27.7 5.7 Weighted average 100.0 % 4.2 88.4 18.2 2.4 While for certain portfolio segments, we have seen an increase in stress scenario losses over the last year, the level of subordination continues to provide more than sufficient coverage of stress scenario collateral losses, further supporting our determination that none of our securities are credit loss impaired.
The following table presents subordination levels and average internal stress scenario losses for select non-agency portfolio segments at December 31, 2024: Subordination Weighted Average Stress Scenario Loss Rating Percent of Total Minimum Maximum Average Private label CMBS AAA 83 % 30.5 98.9 48.5 7.3 AA 13 % 33.1 75.3 45.3 7.6 A 4 % 27.6 60.2 39.2 10.0 Weighted average 100 % 30.8 94.3 47.7 7.4 CLOs AAA 86 % 39.1 80.4 46.8 15.8 AA 12 % 30.9 34.2 32.4 15.5 A 2 % 38.3 38.3 38.3 23.8 Weighted average 100 % 38.1 74.2 44.9 15.9 Private label residential MBS and CMOs AAA 92 % 3.0 92.5 17.9 2.2 AA 5 % 21.0 37.8 28.9 5.4 A 1 % 21.3 21.3 21.3 8.2 NR 2 % 20.0 24.7 21.5 12.7 Weighted average 100 % 4.5 87.4 18.6 2.6 While we have seen an increase in stress scenario losses for some securities over the last year, the level of subordination continues to provide more than sufficient coverage of stress scenario collateral losses, further supporting our determination that none of our securities are credit loss impaired.
The 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.
None of the unrealized losses were attributable to credit loss impairments. 40 The external ratings distribution of our AFS securities portfolio at the dates indicated is depicted in the charts below: December 31, 2024 December 31, 2023 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.
Some of the high level data points informing the scenarios used in estimating the quantitative portion of the ACL at December 31, 2023, included: • Labor market assumptions, which reflected national unemployment peaking at 4.1% in the baseline scenario and 7.7% in the downside scenario; and • Annualized growth in national GDP troughing at 1.1% in the baseline and (3.5)% in the downside scenario.
Some of the high-level data points informing the baseline scenario, which was the scenario most heavily weighted, used in estimating the quantitative portion of the ACL at December 31, 2024, included: • Labor market assumptions, which reflected national unemployment peaking at 4.2% and • Annualized growth in national GDP troughing at 1.5%.
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.
There were no impairment charges recognized during the years ended December 31, 2024, 2023, and 2022. 55 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.
Interest Rate Risk A principal component of the Company’s risk of loss arising from adverse changes in the fair value of financial instruments, or market risk, is interest rate risk, including the risk that assets and liabilities with similar re-pricing characteristics may not reprice at the same time or to the same degree.
See Note 13 to the consolidated financial statements for more information about the Company's and the Bank's regulatory capital ratios. 65 Interest Rate Risk A principal component of the Company’s risk of loss arising from adverse changes in the fair value of financial instruments, or market risk, is interest rate risk, including the risk that assets and liabilities with similar re-pricing characteristics may not reprice at the same time or to the same degree.
At December 31, 2023, the ratio of estimated insured and collateralized deposits to total deposits was 66%, up from 55% at December 31, 2022, and the ratio of available liquidity to estimated uninsured, uncollateralized deposits was 152% compared to 93% at December 31, 2022.
At December 31, 2024, the ratio of estimated insured and collateralized deposits to total deposits was 63%, compared to 66% at December 31, 2023, and the ratio of available liquidity to estimated uninsured, uncollateralized deposits was 150% compared to 152% at December 31, 2023.
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.
Our ALM policy establishes limits or operating risk thresholds for a number of measures of liquidity which are monitored at least monthly by the ALCO and quarterly by the Board of Directors.
The following table presents a breakdown of the 1-4 single family residential mortgage portfolio, excluding government insured residential loans, categorized between fixed rate loans and ARMs at the dates indicated (dollars in thousands): December 31, 2023 December 31, 2022 Total Percent of Total Total Percent of Total Fixed rate loans $ 3,757,442 54 % $ 3,995,298 56 % ARM loans 3,145,571 46 % 3,133,536 44 % $ 6,903,013 100 % $ 7,128,834 100 % 49 Loan Maturities The following table sets forth, as of December 31, 2023, the maturity distribution of our loan portfolio by category, excluding government insured residential loans.
The following table presents a breakdown of the 1-4 single family residential mortgage portfolio, excluding government insured residential loans, categorized between fixed rate loans and ARMs at the dates indicated (dollars in thousands): December 31, 2024 December 31, 2023 Amortized Cost Percent of Total Amortized Cost Percent of Total Fixed rate loans $ 3,557,649 55 % $ 3,757,442 54 % ARM loans 2,951,273 45 % 3,145,571 46 % $ 6,508,922 100 % $ 6,903,013 100 % 49 Loan Maturities The following table sets forth, as of December 31, 2024, the maturity distribution of our loan portfolio by category, excluding government insured residential loans.
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.
Actual results may not be similar to the Company's projections due to many factors including but not limited to the timing and frequency of market rate changes, market conditions, unanticipated changes in depositor behavior and loan prepayment speeds, the shape of the yield curve, changes in balance sheet composition and the Company's actions in response to changing external and balance sheet dynamics.
Commercial loans are presented by contractual maturity, including scheduled payments for amortizing loans.
Commercial loans are presented by contractual maturity, including scheduled payments for amortizing loans but not incorporating estimated prepayments.
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.
The net interest margin, calculated on a tax-equivalent basis, increased to 2.73% for the year ended December 31, 2024, from 2.56% for the year ended December 31, 2023.
We remain committed to keeping the duration of our securities portfolio short; relatively short effective portfolio duration helps mitigate interest rate risk. Based on the Company’s assumptions, the estimated weighted average life of the investment portfolio as of December 31, 2023 was 5.6 years and the effective duration of the investment portfolio was 1.97 years .
We remain committed to keeping the duration of our securities portfolio short; relatively short effective portfolio duration helps mitigate interest rate risk. T he estimated effective duration of the investment portfolio was 1.85 years and the estimated weighted average life of the portfolio was 5.6 years as of December 31, 2024. Approximately 69% of the securities portfolio is floating rate.
As of December 31, 2023, the Manhattan office portfolio was approximately 96% occupied with 3% rent rollover expected in the next twelve months. Substantially all of the Florida office portfolio is suburban. Office loans not secured by properties in Florida or the New York tri-state area comprised 16% of the segment and exhibit no particular geographic concentration.
As of December 31, 2024, the Manhattan office portfolio was approximately 95% occupied with 10% rent rollover expected in the next 12 months. The Florida office portfolio is predominantly suburban. Office loans not secured by properties in Florida or the New York tri-state area comprised 20%, or approximately $351 million of the segment, and exhibited no particular geographic concentration.
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.
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, 2024 December 31, 2023 Total stockholders’ equity $ 2,814,318 $ 2,577,921 Less: goodwill and other intangible assets 77,637 77,637 Tangible stockholders’ equity $ 2,736,681 $ 2,500,284 Common shares issued and outstanding 74,748,370 74,372,505 Book value per common share $ 37.65 $ 34.66 Tangible book value per common share $ 36.61 $ 33.62 68 Item 7A.
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.
Prices evidencing unexpected quarter over quarter fluctuations, deviations from our expectations based on recent observed trading activity and other information available in the marketplace that would impact the value of the security or deviations of primary prices from those provided by secondary sources beyond established parameters are challenged.
The following charts present the sub-market geographic distribution of the Florida and NY tri-state office portfolios at December 31, 2023: NY Tri-State by Sub-Market Florida by Sub-Market The New York tri-state market encompasses approximately 24% of the office segment, with $180 million of exposure in Manhattan.
Medical office comprised approximately $350 million or 20% of the total office portfolio. The following charts present the sub-market geographic distribution of the Florida and NY tri-state office portfolios at December 31, 2024: NY Tri-State by Sub-Market Florida by Sub-Market 46 The New York tri-state market encompasses approximately 23% of the office segment, with $169 million of exposure in Manhattan.
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 following table presents the components of the provision for credit losses for the periods indicated (in thousands): Years Ended December 31, 2024 2023 2022 Amount related to funded portion of loans $ 58,986 $ 78,924 $ 73,814 Amount related to off-balance sheet credit exposures (3,914) 8,683 1,467 Other — — (127) Total provision for credit losses $ 55,072 $ 87,607 $ 75,154 The most significant factors impacting the provision for credit losses for the year ended December 31, 2024 included (i) risk rating migration and increases in certain specific reserves; and (ii) an increase in qualitative loss factors, partially offset by an improved economic forecast.
The unrealized losses resulted primarily from a sustained period of higher interest rates, and in some cases, wider spreads compared to the levels at which securities were purchased. Market volatility and yield curve dislocations have also contributed to unrealized losses. None of the unrealized losses were attributable to credit loss impairments.
The unrealized losses resulted primarily from a sustained period of higher interest rates, and in some cases, wider spreads compared to the levels at which securities were purchased.
See Note 6 to the consolidated financial statements for more information about these costs. 39 Income Taxes The provision for income taxes for the years ended December 31, 2023, 2022 and 2021 was $58.4 million, $90.2 million and $34.4 million, respectively.
See Note 6 to the consolidated financial statements for more information about these costs. Income Taxes The provision for income taxes for the years ended December 31, 2024, 2023 and 2022 was $83.9 million, $58.4 million and $90.2 million, respectively. The Company's effective income tax rate was 26.52%, 24.64% and 24.03% for the years ended 2024, 2023 and 2022, respectively.
Deposits A further breakdown of deposits at the dates indicated is shown below: December 31, 2023 December 31, 2022 The Company has a diverse deposit book by industry sector. Our largest industry vertical at December 31, 2023, was the title insurance vertical, with approximately $2.5 billion in total deposits. Over 75% of title sector deposits were in operating accounts.
Deposits A breakdown of deposits at the dates indicated is shown below: December 31, 2024 December 31, 2023 The Company has a diverse deposit book by industry sector. At December 31, 2024, our largest industry vertical was title insurance, with approximately $3.6 billion in total deposits. Deposits in the HOA vertical totaled $1.8 billion at December 31, 2024.
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.
Loan performance is monitored by our credit administration, portfolio management and workout and recovery departments. Risk ratings are updated continuously; generally, commercial relationships with balances in excess of defined thresholds are re-evaluated at least annually and more frequently if circumstances indicate that a change in risk rating may be warranted. The defined thresholds range from $2 million to $3 million.
We have increased marketing and educational efforts around products that enable customers to obtain FDIC insurance on certain deposits exceeding the standard single depositor insurance limit, implemented single depositor concentration limits and reduced or eliminated exposure to sectors or depositors that evidenced higher volatility following the events of early 2023.
We continue to market and educate our customers about products that enable them to obtain FDIC insurance on certain deposits exceeding the standard single depositor insurance limit, have implemented single depositor concentration limits and have reduced or eliminated exposure to sectors or depositors that have evidenced higher volatility.
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.
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, 2024 2023 2022 Average Balance Interest (1) Yield/ Rate (1) Average Balance Interest (1) Yield/ Rate (1) Average Balance Interest (1) Yield/ Rate (1) Loans $ 24,269,787 $ 1,402,132 5.78 % $ 24,558,430 $ 1,331,578 5.42% $ 23,937,857 $ 947,386 3.96 % Investment securities (2) 9,064,521 501,006 5.53 % 9,228,718 491,851 5.33% 10,081,701 283,081 2.81 % Other interest earning assets 745,885 37,553 5.03 % 986,186 51,152 5.19% 675,068 15,709 2.33 % Total interest earning assets 34,080,193 1,940,691 5.69 % 34,773,334 1,874,581 5.39% 34,694,626 1,246,176 3.59 % Allowance for credit losses (224,673) (171,618) (132,033) Non-interest earning assets 1,502,205 1,749,981 1,721,570 Total assets $ 35,357,725 $ 36,351,697 $ 36,284,163 Liabilities and Stockholders' Equity: Interest bearing liabilities: Interest bearing demand deposits $ 4,077,852 $ 152,809 3.75 % $ 2,905,968 $ 86,759 2.99 % $ 2,538,906 $ 13,919 0.55 % Savings and money market deposits 11,043,510 451,352 4.09 % 10,704,470 382,432 3.57 % 12,874,240 130,705 1.02 % Time deposits 4,757,675 211,411 4.44 % 5,169,458 191,114 3.70 % 3,338,671 35,348 1.06 % Total interest bearing deposits 19,879,037 815,572 4.10 % 18,779,896 660,305 3.52 % 18,751,817 179,972 0.96 % Short-term borrowings — — — % 35,403 1,611 4.55 % 157,979 2,723 1.72 % FHLB advances 3,823,579 158,750 4.15 % 6,331,685 285,026 4.50 % 4,383,507 97,763 2.23 % Notes and other borrowings 709,422 36,528 5.15 % 716,633 36,835 5.14 % 721,223 37,033 5.13 % Total interest bearing liabilities 24,412,038 1,010,850 4.14 % 25,863,617 983,777 3.80 % 24,014,526 317,491 1.32 % Non-interest bearing demand deposits 7,239,161 7,091,029 8,861,111 Other non-interest bearing liabilities 968,163 848,023 708,473 Total liabilities 32,619,362 33,802,669 33,584,110 Stockholders' equity 2,738,363 2,549,028 2,700,053 Total liabilities and stockholders' equity $ 35,357,725 $ 36,351,697 $ 36,284,163 Net interest income $ 929,841 $ 890,804 $ 928,685 Interest rate spread 1.55 % 1.59 % 2.27 % Net interest margin 2.73 % 2.56 % 2.68 % (1) On a tax-equivalent basis where applicable.
Impact of Macro-Environmental Factors and Near-term Strategic Priorities Macro-Environmental Factors: During early 2023, three highly publicized regional bank closures created a crisis of confidence in the banking system, specifically with respect to regional and mid-size banks. This led to outflows of deposits from regional and mid-size banks, including BankUnited, to the largest money-center banks and to volatility in bank valuations.
Three highly publicized regional bank closures in 2023 eroded confidence in the banking system, specifically with respect to regional and mid-size banks, leading to outflows of deposits from regional and mid-size banks, including BankUnited, to the largest money-center banks and to volatility in bank valuations.
Stress Testing Results The majority of our commercial portfolio is subject to quarterly stress test analysis. We continually re-evaluate our stress testing framework and adapt it to evolving macro-economic conditions, as necessary.
Note 4 to the consolidated financial statements presents additional information about key credit quality indicators and delinquency status of the loan portfolio. Stress Testing Results The majority of our commercial portfolio is subject to quarterly stress test analysis. We continually re-evaluate our stress testing framework and adapt it to evolving macro-economic conditions, as necessary.
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.
Residential loans, other than Buyout Loans, are generally placed on non-accrual status when they are 60 days past due. When a loan is placed on non-accrual status, uncollected interest accrued is reversed and charged to interest income.
These derivative instruments are used to mitigate exposure to changes in interest cash flows on variable rate liabilities and to changes in the fair value of fixed rate financial instruments, in each case caused by fluctuations in benchmark interest rates, as well as to manage duration of liabilities.
Interest rate derivatives designated as cash flow or fair value hedging instruments are tools we may use to manage interest rate risk. These derivative instruments are used to mitigate exposure to changes in interest cash flows or the fair value of financial instruments caused by fluctuations in benchmark interest rates, as well as to manage duration of liabilities.
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 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 following chart provides a comparison of net interest margin, the interest rate spread, the average yield on interest earning assets and the average rate paid on interest bearing liabilities for the years ended December 31, 2023 and 2022 (on a tax equivalent basis): • The yield on average interest earning assets increased to 5.39% for the year ended December 31, 2023, from 3.59% for the year ended December 31, 2022, due to re-pricing of floating rate assets and the addition of new assets at higher rates and wider spreads. • Consistent with industry trends, higher interest rates and restrictive monetary policy, the average cost of total deposits increased to 2.55% for the year ended December 31, 2023, from 0.65% for the year ended December 31, 2022, although the rate of increase declined over the latter half of the year. 31 • Loan portfolio composition shifted from residential to core commercial categories during the year ended December 31, 2023.
The following chart provides a comparison of net interest margin, the average yield on interest earning assets and the average rate paid on interest bearing liabilities for the years ended December 31, 2024 and 2023 (on tax equivalent basis): ◦ Consistent with industry trends, higher prevailing interest rates and restrictive monetary policy, the average cost of total deposits increased by 0.46% to 3.01% for the year ended December 31, 2024, from 2.55% for the year ended December 31, 2023, although the average cost of deposits has declined over the latter half of the year.
The net charge-off ratio for the year ended December 31, 2023, was 0.09%. Some of the challenges we face in executing on both our near-term and longer-term strategic priorities, some of which may impact the banking industry more broadly, include: • Execution of our strategic objectives is highly dependent on our ability to grow core client relationships.
Some of the challenges we face in executing on our strategic priorities, some of which may impact the banking industry more broadly, include: • Execution of our strategic objectives is highly dependent on our ability to grow core client relationships.
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.
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 totaled $224 million and $372 million at December 31, 2024 and 2023, respectively.
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.
Non-GAAP Financial Measures Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful basis for comparison to other financial institutions as it is a metric commonly used in the banking industry.
We consider the composition of earning assets and the funding mix, the composition and level of available liquidity and our interest rate risk profile. We analyze these ratios and trends against our own historical performance, our expected performance, our risk appetite and the financial condition and performance of comparable financial institutions.
We 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.
A single economic scenario or a probability weighted blend of economic scenarios may be used. The models ingest numerous national, regional and MSA level variables and data points.
A single economic scenario or a probability weighted blend of economic scenarios may be used. The models ingest numerous national, regional and MSA level variables and data points. At December 31, 2024 and 2023, we used a combination of weighted third-party provided economic scenarios in calculating the quantitative portion of the ACL.
As a commercially focused bank, due 64 to the inherent nature of commercial deposits, a significant portion of our deposits are uninsured.
As a commercially focused bank, due to the inherent nature of commercial deposits and the fact that deposit insurance is designed primarily to protect consumers, a significant portion of our deposits are uninsured.
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 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, 2024: FICO Distribution LTV Distribution Vintage The following graph presents delinquency trends for residential loans, excluding government insured residential loans, over the periods indicated (in millions): Residential Delinquencies FICO scores are generally updated semi-annually and were most recently updated in the third quarter of 2024.

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