Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2011

 

OR

 

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

 

For the transition period from              to             

 

Commission File Number: 001-35039

 

BankUnited, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

27-0162450

(State or other jurisdiction
of incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

14817 Oak Lane, Miami Lakes, FL

 

33016

(Address of principal executive offices)

 

(Zip Code)

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer o

 

 

 

Non-accelerated filer x

 

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

November 10, 2011

Common Stock, $0.01 Par Value

 

97,283,922 Shares

 

 

 



Table of Contents

 

BankUnited, Inc.

 

Form 10-Q

 

For the Quarter Ended September 30, 2011

 

TABLE OF CONTENTS

 

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

 

 

 

 

ITEM 1.

Financial Statements (Unaudited)

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

3

 

Consolidated Statements of Income

 

4

 

Consolidated Statements of Cash Flows

 

5

 

Consolidated Statements of Stockholders’ Equity and Comprehensive Income

 

7

 

Notes to Consolidated Financial Statements

 

8

 

 

 

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

41

 

 

 

 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

 

71

 

 

 

 

ITEM 4.

Controls and Procedures

 

71

 

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

 

 

ITEM 1.

Legal Proceedings

 

71

 

 

 

 

ITEM 1A.

Risk Factors

 

71

 

 

 

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

71

 

 

 

 

ITEM 3.

Defaults Upon Senior Securities

 

71

 

 

 

 

ITEM 4.

(Removed and Reserved)

 

71

 

 

 

 

ITEM 5.

Other Information

 

72

 

 

 

 

ITEM 6.

Exhibits

 

72

 

 

 

 

SIGNATURES

 

 

73

 

2



Table of Contents

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in thousands, except per share data)

 

 

 

September 30,

 

December 31,

 

 

 

2011

 

2010

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks:

 

 

 

 

 

Non-interest bearing

 

$

31,950

 

$

44,860

 

Interest bearing

 

12,990

 

12,523

 

Due from Federal Reserve Bank

 

336,700

 

502,828

 

Federal funds sold

 

3,446

 

4,563

 

Cash and cash equivalents

 

385,086

 

564,774

 

Investment securities available for sale, at fair value (including covered securities of $242,292 and $263,568)

 

3,893,076

 

2,926,602

 

Federal Home Loan Bank stock

 

165,547

 

217,408

 

Loans held for sale

 

2,142

 

2,659

 

Loans (including covered loans of $2,743,887 and $3,396,047)

 

4,015,074

 

3,934,217

 

Allowance for loan losses

 

(55,058

)

(58,360

)

Loans, net

 

3,960,016

 

3,875,857

 

 

 

 

 

 

 

FDIC indemnification asset

 

2,107,605

 

2,667,401

 

Bank owned life insurance

 

175,089

 

207,061

 

Other real estate owned, covered by loss sharing agreements

 

124,990

 

206,680

 

Income tax receivable

 

6,296

 

10,862

 

Goodwill and other intangible assets

 

68,751

 

69,011

 

Other assets

 

125,422

 

121,245

 

 

 

 

 

 

 

Total assets

 

$

11,014,020

 

$

10,869,560

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Demand deposits:

 

 

 

 

 

Non-interest bearing

 

$

645,695

 

$

494,499

 

Interest bearing

 

394,502

 

349,985

 

Savings and money market

 

3,487,959

 

3,134,884

 

Time

 

2,420,256

 

3,184,360

 

Total deposits

 

6,948,412

 

7,163,728

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

284

 

492

 

Federal Home Loan Bank advances

 

2,240,937

 

2,255,200

 

Deferred tax liability, net

 

31,245

 

4,618

 

Advance payments by borrowers for taxes and insurance

 

47,732

 

22,563

 

Other liabilities

 

244,504

 

169,451

 

 

 

 

 

 

 

Total liabilities

 

9,513,114

 

9,616,052

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common Stock, par value $0.01 per share
400,000,000 and 110,000,000 shares authorized; 97,282,905 and 92,971,850 shares issued and outstanding

 

973

 

930

 

Paid-in capital

 

1,230,819

 

950,831

 

Retained earnings

 

249,124

 

269,781

 

Accumulated other comprehensive income

 

19,990

 

31,966

 

Total stockholders’ equity

 

1,500,906

 

1,253,508

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

11,014,020

 

$

10,869,560

 

 

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

 

3



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(Dollars in thousands, except per share data)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

133,649

 

$

108,422

 

$

370,543

 

$

320,092

 

Interest and dividends on investment securities available for sale

 

28,984

 

32,255

 

90,770

 

93,382

 

Other

 

522

 

697

 

2,145

 

1,485

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

163,155

 

141,374

 

463,458

 

414,959

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on deposits

 

18,437

 

26,717

 

57,767

 

83,631

 

Interest on borrowings

 

15,920

 

15,869

 

47,244

 

43,864

 

 

 

 

 

 

 

 

 

 

 

Total interest expense

 

34,357

 

42,586

 

105,011

 

127,495

 

 

 

 

 

 

 

 

 

 

 

Net interest income before provision for loan losses

 

128,798

 

98,788

 

358,447

 

287,464

 

Provision for loan losses

 

1,252

 

19,066

 

9,816

 

45,157

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

127,546

 

79,722

 

348,631

 

242,307

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Accretion of discount on FDIC indemnification asset

 

10,804

 

25,755

 

45,247

 

116,915

 

Income from resolution of covered assets, net

 

4,702

 

17,787

 

7,068

 

112,777

 

Net gain (loss) on indemnification asset

 

(777

)

5,053

 

36,857

 

(44,932

)

FDIC reimbursement of costs of resolution of covered assets

 

5,859

 

8,078

 

24,600

 

22,393

 

Service charges

 

2,730

 

2,674

 

8,062

 

7,894

 

Gain (loss) on sale or exchange of investment securities available for sale

 

1,112

 

518

 

1,215

 

(2,292

)

Mortgage insurance income

 

4,143

 

7,040

 

12,228

 

12,097

 

Investment services income

 

1,645

 

1,717

 

6,160

 

4,421

 

Other non-interest income

 

2,537

 

2,693

 

8,438

 

8,247

 

 

 

 

 

 

 

 

 

 

 

Total non-interest income

 

32,755

 

71,315

 

149,875

 

237,520

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

41,350

 

36,830

 

232,020

 

100,334

 

Occupancy and equipment

 

9,879

 

6,502

 

26,275

 

20,144

 

Impairment of other real estate owned

 

4,037

 

6,263

 

21,823

 

12,164

 

Foreclosure expense

 

3,859

 

7,616

 

14,386

 

26,991

 

(Gain) loss on sale of other real estate owned

 

2,865

 

897

 

27,339

 

(2,270

)

Other real estate owned expense

 

2,188

 

4,287

 

9,120

 

13,173

 

Change in value of FDIC warrant

 

 

1,297

 

 

4,502

 

Deposit insurance expense

 

134

 

3,469

 

6,652

 

10,420

 

Professional fees

 

5,468

 

4,407

 

12,204

 

9,069

 

Telecommunications and data processing

 

2,951

 

3,036

 

9,817

 

8,772

 

Other non-interest expense

 

7,021

 

5,309

 

20,344

 

16,749

 

 

 

 

 

 

 

 

 

 

 

Total non-interest expense

 

79,752

 

79,913

 

379,980

 

220,048

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

80,549

 

71,124

 

118,526

 

259,779

 

Provision for income taxes

 

34,996

 

26,085

 

96,638

 

102,857

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

45,553

 

$

45,039

 

$

21,888

 

$

156,922

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, basic (see Note 13)

 

$

0.45

 

$

0.48

 

$

0.21

 

$

1.69

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, diluted (see Note 13)

 

$

0.45

 

$

0.48

 

$

0.20

 

$

1.69

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.14

 

$

0.15

 

$

0.42

 

$

0.15

 

 

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

 

4



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2011

 

2010

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

21,888

 

$

156,922

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

Accretion of fair values of assets acquired and liabilities assumed

 

(351,509

)

(336,219

)

Amortization of fees, discounts and premiums, net

 

(3,116

)

(24,591

)

Provision for loan losses

 

9,816

 

45,157

 

Accretion of discount on FDIC indemnification asset

 

(45,247

)

(116,915

)

Income from resolution of covered assets

 

(7,068

)

(112,777

)

Net (gain) loss on indemnification asset

 

(36,857

)

44,932

 

Net gain on sale of loans

 

(403

)

 

Increase in cash surrender value of bank owned life insurance

 

(2,887

)

(3,836

)

Income from life insurance proceeds

 

 

(544

)

(Gain) loss on sale or exchange of investment securities available for sale

 

(1,215

)

2,292

 

(Gain) loss on sale of other real estate owned

 

27,339

 

(2,270

)

Loss on disposal of premises and equipment

 

11

 

316

 

Stock-based compensation

 

135,744

 

873

 

Change in fair value of equity instruments classified as liabilities

 

 

24,490

 

Depreciation and amortization

 

5,333

 

1,765

 

Impairment of other real estate owned

 

21,823

 

12,164

 

Deferred income taxes

 

34,368

 

38,884

 

Proceeds from sale of loans held for sale

 

22,095

 

 

Loans originated for sale, net of repayments

 

(21,175

)

(534

)

Realized tax benefits from equity based compensation

 

(433

)

 

Other:

 

 

 

 

 

(Increase) decrease in other assets

 

991

 

(46,811

)

Increase (decrease) in other liabilities

 

7,369

 

(76,845

)

Net cash used in operating activities

 

(183,133

)

(393,547

)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Decrease in due to FDIC

 

 

(2,950

)

Purchase of investment securities available for sale

 

(1,452,980

)

(1,331,883

)

Proceeds from repayments of investment securities available for sale

 

407,595

 

494,324

 

Proceeds from sale of investment securities available for sale

 

199,843

 

67,867

 

Maturities and calls of investment securities available for sale

 

162

 

10,000

 

Purchases of loans

 

(254,732

)

(23,718

)

Loan repayments and resolutions, net of originations

 

251,691

 

618,061

 

Proceeds from redemption of Federal Home Loan Bank stock

 

51,861

 

17,432

 

Decrease in FDIC indemnification asset for claims filed

 

641,900

 

628,089

 

Purchase of bank owned life insurance

 

(22,016

)

 

Bank owned life insurance proceeds

 

77,721

 

717

 

Purchase of office properties and equipment, net

 

(26,651

)

(20,979

)

Proceeds from sale of other real estate owned

 

282,836

 

197,173

 

Net cash provided by investing activities

 

157,230

 

654,133

 

 

(Continued)

 

5



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2011

 

2010

 

Cash flows from financing activities:

 

 

 

 

 

Net decrease in deposits

 

(208,941

)

(347,989

)

Additions to Federal Home Loan Bank advances

 

 

605,000

 

Repayments of Federal Home Loan Bank advances

 

 

(405,000

)

Net decrease in securities sold under agreements to repurchase

 

(208

)

(2,586

)

Settlement of FDIC warrant liability

 

(25,000

)

 

Increase in advances from borrowers for taxes and insurance

 

22,955

 

25,860

 

Issuance of common stock

 

98,620

 

2,500

 

Dividends paid

 

(41,914

)

 

Realized tax benefits from equity based compensation

 

433

 

 

Exercise of stock options

 

270

 

 

Net cash used in financing activities

 

(153,785

)

(122,215

)

Increase (decrease) in cash and cash equivalents

 

(179,688

)

138,371

 

Cash and cash equivalents, beginning of period

 

564,774

 

356,215

 

Cash and cash equivalents, end of period

 

$

385,086

 

$

494,586

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Interest paid on deposits and borrowings

 

$

125,461

 

$

168,200

 

Income taxes paid

 

$

30,626

 

$

197,166

 

 

 

 

 

 

 

Supplemental schedule of non-cash investing and financing activities:

 

 

 

 

 

Transfers from loans to other real estate owned

 

$

273,345

 

$

283,220

 

Dividends declared

 

$

14,631

 

$

14,000

 

Unsettled securities trades

 

$

112,731

 

$

 

Reclassification of PIU liability to equity

 

$

44,964

 

$

 

Rescission of surrender of bank owned life insurance

 

$

20,846

 

$

 

 

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

 

6



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY AND COMPREHENSIVE INCOME -UNAUDITED

(Dollars in thousands)

 

 

 

Common stock

 

Paid-in
capital

 

Retained
earnings

 

Accumulated
other
comprehensive
income

 

Total stockholders’
equity

 

Balance at December 31, 2010

 

$

930

 

$

950,831

 

$

269,781

 

$

31,966

 

$

1,253,508

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

21,888

 

 

21,888

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on investment securities available for sale arising during the period, net of taxes of $(2,303)

 

 

 

 

3,688

 

3,688

 

Reclassification adjustment for realized gains on investment securities available for sale, net of taxes of $468

 

 

 

 

(747

)

(747

)

Unrealized losses on cash flow hedges, net of taxes of $(9,368)

 

 

 

 

(14,917

)

(14,917

)

Total comprehensive income

 

 

 

 

 

21,888

 

(11,976

)

9,912

 

Proceeds from issuance of common stock, net of direct costs of $3,979

 

42

 

98,578

 

 

 

98,620

 

Dividends

 

 

 

(42,545

)

 

(42,545

)

Reclassification of PIU liability to equity

 

 

44,964

 

 

 

44,964

 

Stock based compensation

 

1

 

135,743

 

 

 

135,744

 

Proceeds from exercise of stock options

 

 

270

 

 

 

270

 

Tax benefits from dividend equivalents and stock options

 

––

 

433

 

––

 

––

 

433

 

Balance at September 30, 2011

 

$

973

 

$

1,230,819

 

$

249,124

 

$

19,990

 

$

1,500,906

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2009

 

$

928

 

$

947,032

 

$

119,046

 

$

27,254

 

$

1,094,260

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

156,922

 

 

156,922

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on investment securities available for sale arising during the period, net of taxes of $23,511

 

 

 

 

37,437

 

37,437

 

Reclassification adjustment for realized losses on investment securities available for sale, net of taxes of $884

 

 

 

 

1,408

 

1,408

 

Unrealized losses on cash flow hedges, net of taxes of $22,964

 

 

 

 

(36,561

)

(36,561

)

Total comprehensive income

 

 

 

 

 

156,922

 

2,284

 

159,206

 

Capital contribution

 

2

 

2,498

 

 

 

2,500

 

Dividends

 

 

 

(14,000

)

 

(14,000

)

Stock based compensation

 

 

873

 

 

 

873

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2010

 

$

930

 

$

950,403

 

$

261,968

 

$

29,538

 

$

1,242,839

 

 

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

 

7



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

Note 1   Basis of Presentation

 

BankUnited, Inc. (“BankUnited, Inc.” or “BKU”) is the holding company for BankUnited (“BankUnited” or the “Bank”), a federally chartered, federally insured savings association headquartered in Miami Lakes, Florida. On May 21, 2009, BankUnited was granted a savings association charter and the newly formed bank acquired substantially all of the assets and assumed all of the non-brokered deposits and substantially all of the other liabilities of BankUnited, FSB from the Federal Deposit Insurance Corporation (“FDIC”) in a transaction referred to as the “Acquisition”.  In connection with the Acquisition, the Bank entered into Loss Sharing Agreements with the FDIC (“Loss Sharing Agreements”) that cover single family residential mortgage loans, commercial real estate, commercial and industrial and consumer loans, certain investment securities and other real estate owned (“OREO”), collectively referred to as the “covered assets”.  Pursuant to the terms of the Loss Sharing Agreements, the covered assets are subject to a stated loss threshold whereby the FDIC will reimburse the Bank for 80% of losses of up to $4.0 billion, and 95% of losses in excess of this amount, beginning with the first dollar of loss incurred.

 

BankUnited, Inc.’s wholly owned subsidiaries include BankUnited and BankUnited Investment Services, Inc. (collectively the “Company”). BankUnited provides a full range of banking and related services to individual and corporate customers through 85 branch offices located in 13 Florida counties.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”).  Accordingly, they do not include all of the information and footnotes required for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (“GAAP”) and should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included.  Operating results for the nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected in future periods.

 

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and disclosures of contingent assets and liabilities. Management has made significant estimates in certain areas, such as the allowance for loan losses, the amount and timing of expected cash flows from covered assets and the FDIC indemnification asset, the valuation of other real estate owned (“OREO”), the valuation of deferred tax assets, the evaluation of investment securities for other than-temporary impairment and the fair values of financial instruments.  Actual results could differ from these estimates.

 

Certain amounts for the prior period have been reclassified to conform to the current period presentation.

 

Note 2    Recent Accounting Pronouncements

 

In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.”  This update clarifies existing guidance on a creditor’s evaluation of whether a restructuring constitutes a troubled debt restructuring, including clarification of a creditor’s evaluation of whether it has granted a concession and of whether a debtor is experiencing financial difficulties.  The Company adopted this update during the quarter ending September 30, 2011.  Adoption of this update did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

In April 2011, the FASB issued Accounting Standards Update 2011-03, “Reconsideration of Effective Control for Repurchase Agreements.”  This update removes from the assessment of effective control: (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation

 

8



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

guidance related to that criterion. The update is required to be adopted prospectively by the Company for the quarter ending March 31, 2012. Management does not anticipate that adoption will have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

In May 2011, the FASB issued Accounting Standards Update 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). The amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements.  Some of the amendments clarify the FASB’s intent about the application of fair value measurement requirements and others change principles or requirements for measuring fair value or disclosing information about fair value measurements. The Company is required to adopt this update prospectively for the quarter ending March 31, 2012.  This update will result in expanded disclosures in the Company’s financial statements; however, management does not anticipate that adoption will have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

In June 2011, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income.”  This update provides entities with an option of presenting the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The Company is required to adopt this update retrospectively for the quarter ending March 31, 2012.  Adoption of this update will affect the manner of presentation of the components of comprehensive income in the Company’s financial statements, but will not have an impact on the Company’s consolidated financial position, results of operations or cash flows.

 

In September 2011, the FASB issued Accounting Standards Update 2011-08, Testing Goodwill for Impairment. This update simplifies how entities test goodwill for impairment. It permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The Company is required to adopt this update for fiscal years beginning after December 15, 2011.  Management does not anticipate that adoption will have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

Note 3   Acquisition Activity

 

On June 2, 2011, BKU entered into a Merger Agreement with Herald National Bank (“Herald”), a national banking association based in the New York metropolitan area (“Merger Agreement”).  The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, a to-be-formed direct, wholly-owned national bank subsidiary of BKU will merge with and into Herald, with Herald continuing as the surviving entity and a wholly-owned subsidiary of BKU. Upon completion of the merger, holders of Herald common and preferred stock will receive cash or shares of BKU common stock having a value equal to $1.35 plus the value of 0.099 shares of BKU common stock as of the effective time of the Merger. The Merger Agreement provides that the surviving bank will be merged with and into BankUnited, with BankUnited surviving, in August 2012.  Completion of the Merger is subject to various customary conditions, including, among others, (a) ratification and confirmation of the Merger Agreement by Herald shareholders, (b) effectiveness of the registration statement for the BKU common stock to be issued in the Merger and approval of the listing on the New York Stock Exchange of the BKU common stock to be issued in the Merger, (c) the absence of any law or order prohibiting the closing of the Merger and (d) receipt of required regulatory approvals.

 

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Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

Note 4   Investment Securities Available for Sale

 

Investment securities available for sale at September 30, 2011 and December 31, 2010 consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2011

 

 

 

Covered Securities

 

Non-Covered Securities

 

 

 

Amortized

 

Gross Unrealized

 

Fair

 

Amortized

 

Gross Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

Losses

 

Value

 

Cost

 

Gains

 

Losses

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency and sponsored enterprise residential mortgage-backed securities

 

$

 

$

 

$

 

$

 

$

1,822,470

 

$

31,435

 

$

(441

)

$

1,853,464

 

Resecuritized real estate mortgage investment conduits (“Re-Remics”)

 

 

 

 

 

484,928

 

9,022

 

(268

)

493,682

 

Private label residential mortgage backed securities and CMO’s

 

170,951

 

48,324

 

(278

)

218,997

 

185,473

 

1,921

 

(131

)

187,263

 

Private label commercial mortgage backed securities

 

 

 

 

 

157,553

 

1,697

 

 

159,250

 

Non mortgage asset-backed securities

 

 

 

 

 

418,001

 

4,963

 

(1,191

)

421,773

 

Mutual funds and preferred stocks

 

16,382

 

949

 

(461

)

16,870

 

235,689

 

1,408

 

(5,795

)

231,302

 

State and municipal obligations

 

 

 

 

 

24,851

 

259

 

(6

)

25,104

 

Small Business Administration securities

 

 

 

 

 

277,166

 

1,788

 

(8

)

278,946

 

Other debt securities

 

3,860

 

2,565

 

 

6,425

 

 

 

 

 

Total

 

$

191,193

 

$

51,838

 

$

(739

)

$

242,292

 

$

3,606,131

 

$

52,493

 

$

(7,840

)

$

3,650,784

 

 

 

 

December 31, 2010

 

 

 

Covered Securities

 

Non-Covered Securities

 

 

 

Amortized

 

Gross Unrealized

 

Fair

 

Amortized

 

Gross Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

Losses

 

Value

 

Cost

 

Gains

 

Losses

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency and sponsored enterprise residential mortgage-backed securities

 

$

 

$

 

$

 

$

 

$

1,282,757

 

$

11,411

 

$

(3,258

)

$

1,290,910

 

Resecuritized real estate mortgage investment conduits (“Re-Remics”)

 

 

 

 

 

599,682

 

14,054

 

(1,105

)

612,631

 

Private label residential mortgage backed securities and CMO’s

 

181,337

 

61,679

 

(1,726

)

241,290

 

138,759

 

2,906

 

(35

)

141,630

 

Non mortgage asset-backed securities

 

 

 

 

 

407,158

 

1,908

 

(72

)

408,994

 

Mutual funds and preferred stocks

 

16,382

 

57

 

(922

)

15,517

 

120,107

 

3,402

 

(491

)

123,018

 

State and municipal obligations

 

 

 

 

 

22,898

 

101

 

(39

)

22,960

 

Small Business Administration securities

 

 

 

 

 

62,831

 

191

 

(131

)

62,891

 

Other debt securities

 

3,695

 

3,066

 

 

6,761

 

 

 

 

 

Total

 

$

201,414

 

$

64,802

 

$

(2,648

)

$

263,568

 

$

2,634,192

 

$

33,973

 

$

(5,131

)

$

2,663,034

 

 

At September 30, 2011, maturities of investment securities available for sale, adjusted for anticipated prepayments of mortgage-backed and other pass-through securities are shown below (in thousands):

 

 

 

Amortized
Cost

 

Fair Value

 

 

 

 

 

 

 

Due in one year or less

 

$

701,546

 

$

723,524

 

Due after one year through five years

 

1,721,541

 

1,766,155

 

Due after five years through ten years

 

879,137

 

900,132

 

Due after ten years

 

243,029

 

255,093

 

Mutual funds and preferred stocks with no stated maturity

 

252,071

 

248,172

 

 

 

 

 

 

 

Total

 

$

3,797,324

 

$

3,893,076

 

 

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

 

10



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

 

 

Three Months ended September 30,

 

Nine Months ended September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

Proceeds from sale of investment securities available for sale

 

$

130,496

 

$

54,070

 

$

199,843

 

$

67,867

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

1,114

 

$

519

 

$

1,220

 

$

565

 

Gross realized losses

 

(2

)

(1

)

(5

)

(46

)

Loss on exchange of securities

 

 

 

 

(2,811

)

Net realized gain (loss)

 

$

1,112

 

$

518

 

$

1,215

 

$

(2,292

)

 

During the nine months ended September 30, 2010, the Company exchanged certain non-covered trust preferred securities for preferred stock of the same issuer to achieve higher returns and more favorable tax treatment. Based on the market value of the trust preferred securities at the time of the exchange, the Company recognized a gross realized loss of $2.8 million.

 

The carrying value of securities pledged as collateral for Federal Home Loan Bank (“FHLB”) advances, public deposits, interest rate swaps, securities sold under agreements to repurchase and to secure borrowing capacity at the Federal Reserve Bank, totaled $1.0 billion and $496.5 million at September 30, 2011 and December 31, 2010, respectively.

 

The following tables present the aggregate fair value and the aggregate amount by which amortized cost exceeds fair value for investment securities that are in unrealized loss positions at September 30, 2011 and December 31, 2010, aggregated by investment category and length of time that individual securities had been in continuous unrealized loss positions.  At December 31, 2010, all of the securities in unrealized loss positions had been in continuous unrealized loss positions for less than twelve months (in thousands):

 

 

 

September 30, 2011

 

 

 

Less than 12 Months

 

Greater than 12 Months

 

Total

 

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency and sponsored enterprise residential mortgage backed securities

 

$

127,475

 

$

(354

)

$

62,441

 

$

(87

)

$

189,916

 

$

(441

)

Resecuritized real estate mortgage investment conduits (“Re-Remics”)

 

14,436

 

(43

)

20,325

 

(225

)

34,761

 

(268

)

Private label residential mortgage backed securities and CMO’s

 

76,147

 

(245

)

7,031

 

(164

)

83,178

 

(409

)

Non mortgage asset-backed securities

 

114,782

 

(1,094

)

20,376

 

(97

)

135,158

 

(1,191

)

Mutual funds and preferred stocks

 

168,875

 

(5,795

)

14,982

 

(461

)

183,857

 

(6,256

)

State and municipal obligations

 

2,108

 

(6

)

 

 

2,108

 

(6

)

Small Business Administration securities

 

9,272

 

(8

)

 

 

9,272

 

(8

)

Total

 

$

513,095

 

$

(7,545

)

$

125,155

 

$

(1,034

)

$

638,250

 

$

(8,579

)

 

11



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

 

 

December 31, 2010

 

 

 

Less Than 12 Months

 

 

 

Fair

 

Unrealized

 

 

 

Value

 

Losses

 

 

 

 

 

 

 

U.S. Government agency and sponsored enterprise residential mortgage backed securities

 

$

486,216

 

$

(3,258

)

Resecuritized real estate mortgage investment conduits (“Re-Remics”)

 

59,408

 

(1,105

)

Private label residential mortgage backed securities and CMO’s

 

16,626

 

(1,761

)

Non mortgage asset-backed securities

 

63,802

 

(72

)

Mutual funds and preferred stocks

 

61,336

 

(1,413

)

State and municipal obligations

 

6,144

 

(39

)

Small Business Administration securities

 

24,108

 

(131

)

Total

 

$

717,640

 

$

(7,779

)

 

The Company monitors its investment securities available for sale for other than temporary impairment, or OTTI, on an individual security basis considering numerous factors including the Company’s intent to sell securities in an unrealized loss position; the likelihood that the Company will be required to sell these securities before an anticipated recovery in value; the duration and severity of impairment; the earnings performance, credit rating, asset quality, and business prospects of the issuer; changes in the rating of the security; adverse changes in the regulatory, economic or technological environment; adverse changes in general market conditions in the geographic area or industry in which the issuer operates; and factors that raise concerns about the issuer’s ability to continue as a going concern such as negative cash flows from operations, working capital deficiencies or non-compliance with statutory capital requirements or debt covenants. The relative significance of each of these factors varies depending on the circumstances related to each security.

 

None of the securities in unrealized loss positions at September 30, 2011 and December 31, 2010 were determined to be other-than-temporarily impaired. The Company does not intend to sell securities that are in unrealized loss positions and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis, which may be maturity. At September 30, 2011, fifty-nine securities were in unrealized loss positions. The amount of impairment related to fifteen of these securities was considered insignificant, totaling approximately $57,000 and no further analysis with respect to these securities was considered necessary. The basis for concluding that impairment of the remaining securities is not other-than-temporary is further described below:

 

U.S. Government agency and sponsored enterprise mortgage backed securities:

 

At September 30, 2011, six U.S. Government agency and sponsored enterprise mortgage backed securities were in unrealized loss positions. Two of these securities have been in unrealized loss positions for twelve months. The remaining four securities have been in unrealized loss positions for less than twelve months.  The amount of impairment of each of the individual securities is less than 1% of amortized cost. The timely payment of principal and interest on these securities is explicitly or implicitly guaranteed by the U.S. Government. Given the limited severity and duration of impairment and the expectation of timely payment of principal and interest, the impairments are considered to be temporary.

 

Private label mortgage backed securities and CMO’s and Re-Remics:

 

At September 30, 2011, seven private label mortgage-backed securities and Re-Remics were in unrealized loss positions. These securities were assessed for OTTI using third-party developed credit and prepayment behavioral models and CUSIP level constant default rates, voluntary prepayment rates and loss severity and delinquency assumptions. The results of this evaluation were not indicative of credit losses related to any of these securities as of September 30, 2011. One of these securities has been in an unrealized loss position for sixteen months; the amount of impairment of this security is approximately 1% of amortized cost.  Two securities have been in continuous unrealized loss positions for twelve months, with impairment totaling approximately $164,000.  The

 

12



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

remaining securities have been in unrealized loss positions for three months or less.  Given the generally limited duration of impairment, the limited severity of impairment and the expectation of timely recovery of outstanding principal, the impairments are considered to be temporary.

 

Non-mortgage asset backed securities:

 

At September 30, 2011, ten non-mortgage asset backed securities were in unrealized loss positions. One of these securities has been in an unrealized loss position for thirteen months. The remaining securities had been in continuous unrealized loss positions for six months or less at September 30, 2011.  The amount of impairment was less than 2% of amortized cost basis for each of the securities. These securities were assessed for OTTI using a third-party developed credit and prepayment behavioral model and CUSIP level constant default rates, voluntary prepayment rates and loss severity and delinquency assumptions. The results of this evaluation were not indicative of credit losses related to these securities as of September 30, 2011. Given the limited severity and duration of impairment and the expectation of timely recovery of outstanding principal, the impairments are considered to be temporary.

 

Mutual funds:

 

At September 30, 2011, one mutual fund investment was in an unrealized loss position and had been in a continuous unrealized loss position for thirteen months. The majority of the underlying holdings of the mutual fund are either explicitly or implicitly guaranteed by the U.S. Government. Impairment has been driven primarily by intermediate term interest rates and lack of liquidity in the market for the security.  The unrealized loss related to this security declined by 27% during the three months ending September 30, 2011 from approximately $629,000 to approximately $461,000, representing approximately 3% of amortized cost.  Given the recent trend toward recovery in value of this security, the limited severity of impairment and the nature of the underlying holding of the fund, impairment is considered to be temporary.

 

Preferred stocks:

 

At September 30, 2011, twenty positions in financial institution preferred stocks were in unrealized loss positions.  These investments have been in continuous unrealized loss positions for five months or less at September 30, 2011.  All of the preferred stock holdings are investment grade; the issuing institutions are well capitalized and reporting positive earnings. Given the limited duration of impairment, management’s evaluation of the financial condition of the preferred stock issuers and the rating of these investments, these impairments are considered to be temporary.

 

Note 5   Loans and Allowance for Loan Losses

 

A significant portion of the Company’s loan portfolio consists of loans acquired in the Acquisition. Substantially all of these loans are covered under BankUnited’s Loss Sharing Agreements (the “covered loans”).  Loans originated or purchased since the Acquisition (“new loans”) are not covered by the Loss Sharing Agreements. Covered loans may be further segregated between those acquired with evidence of deterioration in credit quality since origination (“Acquired Credit Impaired” or “ACI” loans) and those acquired without evidence of deterioration in credit quality since origination (“non-ACI” loans).

 

13



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

At September 30, 2011 and December 31, 2010, loans consisted of the following (dollars in thousands):

 

 

 

September 30, 2011

 

 

 

Covered Loans

 

Non-Covered Loans

 

 

 

 

 

 

 

ACI

 

Non-ACI

 

ACI

 

New Loans

 

Total

 

Percent of
Total

 

Residential:

 

 

 

 

 

 

 

 

 

 

 

 

 

1-4 single family residential

 

$

1,923,584

 

$

131,167

 

$

 

$

363,542

 

$

2,418,293

 

59.4

%

Home equity loans and lines of credit

 

80,964

 

191,010

 

 

2,337

 

274,311

 

6.7

%

Total

 

2,004,548

 

322,177

 

 

365,879

 

2,692,604

 

66.1

%

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

 

62,995

 

4,588

 

 

52,849

 

120,432

 

3.0

%

Commercial real estate

 

247,994

 

33,844

 

3,882

 

225,184

 

510,904

 

12.6

%

Construction

 

5,416

 

 

 

17,316

 

22,732

 

0.6

%

Land

 

33,005

 

165

 

 

3,637

 

36,807

 

0.9

%

Commercial loans and leases

 

28,643

 

28,851

 

 

618,572

 

676,066

 

16.6

%

Total

 

378,053

 

67,448

 

3,882

 

917,558

 

1,366,941

 

33.7

%

Consumer:

 

3,033

 

 

 

4,047

 

7,080

 

0.2

%

Total loans

 

2,385,634

 

389,625

 

3,882

 

1,287,484

 

4,066,625

 

100.0

%

Unearned discount and deferred fees and costs, net

 

 

(31,372

)

 

(20,179

)

(51,551

)

 

 

Loans net of discount and deferred fees and costs

 

2,385,634

 

358,253

 

3,882

 

1,267,305

 

4,015,074

 

 

 

Allowance for loan losses

 

(22,132

)

(14,933

)

 

(17,993

)

(55,058

)

 

 

Loans, net

 

$

2,363,502

 

$

343,320

 

$

3,882

 

$

1,249,312

 

$

3,960,016

 

 

 

 

 

 

December 31, 2010

 

 

 

Covered Loans

 

Non-covered
Loans

 

 

 

 

 

 

 

ACI

 

Non-ACI

 

New Loans

 

Total

 

Percent of
Total

 

Residential:

 

 

 

 

 

 

 

 

 

 

 

1-4 single family residential

 

$

2,421,016

 

$

151,945

 

$

113,439

 

$

2,686,400

 

67.5

%

Home equity loans and lines of credit

 

98,599

 

206,797

 

2,255

 

307,651

 

7.7

%

Total

 

2,519,615

 

358,742

 

115,694

 

2,994,051

 

75.2

%

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Multi-family

 

73,015

 

5,548

 

34,271

 

112,834

 

2.8

%

Commercial real estate

 

299,068

 

33,938

 

118,857

 

451,863

 

11.4

%

Construction

 

8,267

 

 

8,582

 

16,849

 

0.4

%

Land

 

48,251

 

170

 

1,873

 

50,294

 

1.3

%

Commercial loans and leases

 

49,731

 

30,139

 

266,586

 

346,456

 

8.7

%

Total

 

478,332

 

69,795

 

430,169

 

978,296

 

24.6

%

Consumer:

 

4,403

 

 

3,056

 

7,459

 

0.2

%

Total loans

 

3,002,350

 

428,537

 

548,919

 

3,979,806

 

100.0

%

Unearned discount and deferred fees and costs, net

 

 

(34,840

)

(10,749

)

(45,589

)

 

 

Loans net of discount and deferred fees and costs

 

3,002,350

 

393,697

 

538,170

 

3,934,217

 

 

 

Allowance for loan losses

 

(39,925

)

(12,284

)

(6,151

)

(58,360

)

 

 

Loans, net

 

$

2,962,425

 

$

381,413

 

$

532,019

 

$

3,875,857

 

 

 

 

At September 30, 2011 and December 31, 2010, the unpaid principal balance (“UPB”) of ACI loans was $5.9 billion and $7.2 billion, respectively.

 

During the nine months ended September 30, 2011 and 2010, the Company purchased one-to-four single family residential loans with UPB totaling $254.7 million and $23.7 million, respectively.

 

At September 30, 2011, the Company had pledged real estate loans with UPB of approximately $4.8 billion and carrying amounts of approximately $2.2 billion as security for FHLB advances.

 

The following tables present information about the ending balance of the allowance for loan losses and related loans as of September 30, 2011 and summarize the activity in the allowance for loan losses for the three and nine months ended September 30, 2011 (in thousands):

 

14



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

 

 

As of and For the Three Months Ended September 30, 2011

 

 

 

Residential

 

Commercial

 

Consumer

 

Total

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

13,177

 

$

43,422

 

$

40

 

$

56,639

 

Provision for loan losses:

 

 

 

 

 

 

 

 

 

ACI loans

 

(3,689

)

(1,855

)

 

(5,544

)

Non-ACI loans

 

(2,561

)

1,726

 

 

(835

)

New loans

 

2,542

 

4,862

 

227

 

7,631

 

Total provision

 

(3,708

)

4,733

 

227

 

1,252

 

Charge-offs:

 

 

 

 

 

 

 

 

 

ACI loans

 

 

(2,300

)

 

(2,300

)

Non-ACI loans

 

(329

)

(248

)

 

(577

)

New loans

 

 

(179

)

 

(179

)

Total charge-offs

 

(329

)

(2,727

)

 

(3,056

)

Recoveries:

 

 

 

 

 

 

 

 

 

ACI loans

 

 

 

 

 

Non-ACI loans

 

6

 

216

 

 

222

 

New loans

 

 

1

 

 

1

 

Total recoveries

 

6

 

217

 

 

223

 

Ending balance

 

$

9,146

 

$

45,645

 

$

267

 

$

55,058

 

 

15



Table of Contents

 

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

September 30, 2011

 

 

 

As of and For the Nine Months Ended September 30, 2011

 

 

 

Residential

 

Commercial

 

Consumer

 

Total

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

28,649

 

$

29,656

 

$

55

 

$

58,360

 

Provision for loan losses:

 

 

 

 

 

 

 

 

 

ACI loans

 

(18,488

)

10,225

 

 

(8,263

)

Non-ACI loans

 

(1,777

)

7,235

 

 

5,458

 

New loans

 

2,705

 

9,704

 

212

 

12,621

 

Total provision

 

(17,560

)

27,164

 

212

 

9,816

 

Charge-offs:

 

 

 

 

 

 

 

 

 

ACI loans

 

 

(10,742

)

 

(10,742

)

Non-ACI loans

 

(1,963

)

(1,082

)

 

(3,045

)

New loans

 

 

(794

)

 

(794

)

Total charge-offs

 

(1,963

)

(12,618

)

 

(14,581

)

Recoveries:

 

 

 

 

 

 

 

 

 

ACI loans

 

 

1,212

 

 

1,212

 

Non-ACI loans

 

20

 

216

 

 

236

 

New loans

 

 

15

 

 

15

 

Total recoveries

 

20

 

1,443

 

 

1,463

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

9,146

 

$

45,645

 

$

267

 

$

55,058

 

 

 

 

 

 

 

 

 

 

 

Ending balance: non-ACI and new loans individually evaluated for impairment

 

$

 

$

6,506

 

$