FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-21850
BANKUNITED FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0377773
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
255 ALHAMBRA CIRCLE, CORAL GABLES 33134
(Address of principal executive offices) (Zip Code)
(305) 569-2000
(Registrant's telephone number, including area code)
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 ___
The number of shares outstanding of the registrant's common stock at the close
of business on May 12, 1997 was 8,565,704 shares of Class A Common Stock, $.01
par value, and 275,685 shares of Class B Common Stock, $.01 par value.
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
Form 10-Q Report for the Quarter Ended March 31, 1997
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition as of
March 31, 1997 (unaudited) and September 30, 1996 3
Consolidated Statements of Operations (unaudited) 4-5
for the Three and Six Months ended March 31, 1997 and
March 31, 1996
Consolidated Statements of Cash Flows (unaudited)
for the Six Months Ended March 31, 1997 and
March 31, 1996 6
Condensed Notes to Consolidated Financial
Statements (unaudited) 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES 22
Item 4. SOLICITATION OF CONSENTS 22
Item 5. OTHER INFORMATION 22
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 23
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2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, September 30,
1997 1996
- -------------------------------------------------------------------------------------------------------------------
(Unaudited)
(Dollars in thousands, except per share amounts)
<S> <C> <C>
ASSETS
Cash and due from banks $ 20,598 $ 5,483
Federal funds sold and Federal Home Loan Bank overnight deposits 5,980 28,653
Tax certificates (net of reserves of $658 at March 31,1997
and $614 at September 30, 1996) 26,799 40,088
Investments held to maturity (market value of approximately $5,011 at
March 31, 1997 and $11 at September 30, 1996) 5,011 11
Investments, available for sale, at market 6,881 6,685
Mortgage-backed securities, held to maturity, (market
value of approximately $12,904 at March 31, 1997
and $14,274 at September 30, 1996) 13,155 14,698
Mortgage-backed securities available for sale, at market 100,219 55,467
Loans receivable, net 1,205,807 646,385
Other interest earning assets 11,246 12,225
Office properties and equipment, net 9,554 2,608
Accrued interest receivable 12,200 7,023
Mortgage servicing rights 4,397 --
Goodwill 12,727 2,457
Prepaid expenses and other assets 18,587 2,577
--------- ---------
Total assets $1,453,161 $824,360
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $1,011,475 $506,106
Advances from Federal Home Loan Bank 251,484 237,000
Subordinated notes 775 775
Accrued expenses and other liabilities 20,524 11,368
--------- ---------
Total liabilities 1,284,258 755,249
--------- ---------
Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Deferrable Interest
Debentures of the Company 70,000 --
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, Series B,C,C-II, 1993, 1996 and 9%, $.01 par value. Authorized
shares - 10,000,000; issued and outstanding shares - 2,998,688 at March 31,
1997 and 2,664,547 at September 30, 1996 30 27
Class A Common Stock, $.01 par value. Authorized shares
30,000,000; issued and outstanding shares - 8,571,246
at March 31, 1997 and 5,454,201 at September 30, 1996 85 54
Class B Common Stock, $.01 par value. Authorized shares
3,000,000; issued and outstanding shares - 275,938 at
March 31, 1997 and 251,515 at September 30, 1996 3 3
Additional paid-in capital 90,608 62,055
Retained earnings 9,272 7,279
Net unrealized losses on securities available for sale, net of tax (1,095) (307)
---------- ----------
Total stockholders' equity 98,903 69,111
--------- ---------
Total liabilities and stockholders' equity $1,453,161 $824,360
=========== =========
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
1997 1996
(In thousands, except earnings per share)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 21,062 $ 9,432
Interest on mortgage-backed securities 1,551 898
Interest on short-term investments 667 846
Interest and dividends on long-term investments
and other earning assets 925 826
-------- --------
Total interest income 24,205 12,002
-------- --------
Interest expense:
Interest on deposits 11,887 4,809
Interest on borrowings 2,967 3,435
-------- --------
Total interest expense 14,854 8,244
-------- --------
Net interest income before provision for loan losses 9,351 3,758
Provision for loan losses 165 --
-------- --------
Net interest income after provision for loan losses 9,186 3,758
-------- --------
Non-interest income:
Service fees, net 874 130
Other 127 (1)
-------- --------
Total non-interest income 1,001 129
-------- --------
Non-interest expenses:
Employee compensation and benefits 2,521 1,056
Occupancy and equipment 729 423
Insurance 110 243
Professional fees - legal and accounting 320 231
Preferred dividends of Trust Subsidiary 1,327 --
Other operating expenses 2,094 811
-------- --------
Total non-interest expenses 7,101 2,764
-------- --------
Income before income taxes and preferred stock dividends 3,086 1,123
Income taxes 1,243 430
-------- --------
Net income before preferred stock dividends 1,843 693
Preferred stock dividends of the Company 777 536
-------- --------
Net income after preferred stock dividends $ 1,066 $ 157
======== ========
Earnings Per Share
Primary $ 0.12 $ 0.04
======== ========
Fully-diluted $ 0.12 $ 0.04
======== ========
Weighted average number of common share equivalents assumed outstanding during
the period:
Primary 8,869 3,676
======== ========
Fully diluted 8,901 3,717
======== ========
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
SIX MONTHS ENDED MARCH 31,
1997 1996
(In thousands, except earnings per share)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 37,678 $ 18,198
Interest on mortgage-backed securities 2,860 1,787
Interest on short-term investments 1,134 1,449
Interest and dividends on long-term investments
and other earning assets 2,024 1,892
-------- --------
Total interest income 43,696 23,326
-------- --------
Interest expense:
Interest on deposits 20,769 9,032
Interest on borrowings 6,472 6,998
-------- --------
Total interest expense 27,241 16,030
-------- --------
Net interest income before provision (credit) for loan losses 16,455 7,296
Provision (credit) for loan losses 415 (300)
-------- --------
Net interest income after provision (credit) for loan losses 16,040 7,596
-------- --------
Non-interest income:
Service fees, net 1,449 281
Other 152 6
-------- --------
Total non-interest income 1,601 287
-------- --------
Non-interest expenses:
Employee compensation and benefits 4,436 2,023
Occupancy and equipment 1,615 786
Insurance 471 469
Professional fees - legal and accounting 542 477
Preferred dividends of Trust Subsidiary 1,355 --
Other operating expenses 3,515 1,537
-------- --------
Total non-interest expenses 11,934 5,292
-------- --------
Income before income taxes and preferred stock dividends 5,707 2,591
Income taxes 2,265 987
-------- --------
Net income before preferred stock dividends 3,442 1,604
Preferred stock dividends of the Company 1,449 1,072
-------- --------
Net income after preferred stock dividends $ 1,993 $ 532
======== ========
Earnings Per Share
Primary $ 0.25 $ 0.18
======== ========
Fully-diluted $ 0.25 $ 0.18
======== ========
Weighted average number of common share equivalents
assumed outstanding during the period:
Primary 7,952 3,022
======== ========
Fully diluted 8,674 3,035
======== ========
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED MARCH 31,
1997 1996
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,442 $1,604
Adjustments to reconcile net income to net cash used in
operating activities:
Provision (credit) for loan losses 415 (300)
Provision for losses on tax certificates 45 76
Depreciation and amortization 546 265
Amortization of discounts and premiums on investments 14 4
Amortization of discounts and premiums on mortgage-backed securities 95 64
Amortization of discounts and premiums on loans (46) (1,909)
Loans originated for sale (5,193) (3,213)
Increase in accrued interest receivable (2,224) (1,096)
(Decrease) increase in interest payable on deposits and FHLB advances (1,345) 142
Increase in accrued expenses 1,662 612
Increase (decrease) in accrued taxes 231 (3,350)
Decrease in deferred taxes (632) (469)
Decrease in other liabilities (23,033) (553)
Decrease (increase) in prepaid expenses and other assets 2,588 (975)
Proceeds from sale of loans 5,971 3,432
Recovery on loans 19 941
Loss (gain) on sales of loans 11 (3)
Loss (gain) on sales of real estate owned 373 (57)
Loss on sale of other assets -- 7
------- --------
Net cash used in operating activities (17,061) (4,778)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (220,838) (98,847)
Proceeds from sale of real estate owned 1,252 1,114
Purchase of other earning assets (4,947) (400)
Purchase of investment securities (5,844) (1,511)
Purchase of mortgage-backed securities (33,768) (12,087)
Proceeds from repayments of mortgage-backed securities 7,861 4,046
Proceeds from repayments of other earning assets 9,176 750
Proceeds from repayments of investment securities 651 4,675
Purchases of premises and equipment (725) (340)
Net decrease in tax certificates 13,245 13,983
Purchase of Bank of Florida, net of acquired cash equivalents -- 1,521
Purchase of Suncoast's cash equivalents 32,803 --
------- ----------
Net cash used in investing activities (201,134) (87,096)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 181,632 86,206
Net decrease in other borrowings (37,016) (2,000)
Net proceeds from issuance of preferred stock 3 --
Net proceeds from issuance of common stock 771 23,187
Net proceeds from issuance of trust preferred securities 67,426 --
Dividends paid on the Company's preferred stock (1,449) (1,072)
Decrease in advances from borrowers for taxes and insurance (730) (2,060)
-------- ----------
Net cash provided by financing activities 210,637 104,261
-------- -------
Increase in cash and cash equivalents (7,558) 12,387
Cash and cash equivalents at beginning of period 34,136 34,730
------- --------
Cash and cash equivalents at end of period $26,578 $ 47,117
======= ========
SUPPLEMENTAL DISCLOSURES:
Transfer from loans to real estate owned $ 1,633 $ 610
======= ========
Transfers from real estate owned to loans $ -- $ 184
======= ========
Transfers of mortgage-backed securities from held-to-maturity to
available for sale $ -- $ 31,780
======= ========
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements have been prepared
in conformity with Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and therefore do not include information or footnotes necessary for a
complete presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles ("GAAP").
However, all adjustments (consisting of normal recurring accruals) which, in the
opinion of management, are necessary for a fair presentation of the financial
statements of BankUnited Financial Corporation and its subsidiaries (the
"Company") have been included. Operating results for the three and six month
periods ended March 31, 1997 are not necessarily indicative of the results which
may be expected for the year ending September 30, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K/A for the fiscal year ended September
30, 1996.
2. REGULATORY CAPITAL
The Office of Thrift Supervision ("OTS") requires that BankUnited, FSB (the
"Bank") meet minimum regulatory tangible, core and risk-based capital
requirements. Currently, the Bank exceeds all regulatory capital requirements.
The Bank's required, actual and excess regulatory capital levels as of March 31,
1997 were as follows:
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REQUIRED ACTUAL EXCESS
----------------- ---------------------- ---------------------
% OF % OF % OF
AMOUNT ASSETS AMOUNT ASSETS AMOUNT ASSETS
------ ------ ------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $ 21,377 1.5% $ 119,618 8.4% $ 98,241 6.9%
Core Capital $ 42,755 3.0% $ 119,618 8.4% $ 76,863 5.4%
Risk-Based Capital $ 74,130 8.0% $ 123,601 13.3% $ 49,471 5.3%
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3. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES OF THE COMPANY
On December 30, 1996, a newly formed trust subsidiary created under the laws of
Delaware, BankUnited Capital, issued $50 million of 10 1/4% Trust Preferred
Securities, Series A (the "Trust Preferred Securities") and $2 million of common
securities. The common securities are wholly owned by the Company. In connection
with this transaction, BankUnited Capital simultaneously purchased $52 million
of 10-1/4% Junior Subordinated Deferrable Interest Debentures, Series A issued
by BankUnited Financial Corporation with terms similar to the Trust Preferred
Securities.
On March 24, 1997, BankUnited Capital issued an additional $20 million of Trust
Preferred Securities and $800,000 of common securities, which common securities
are also wholly owned by the Company. BankUnited Capital simultaneously
purchased an additional $20.8 million of 10 1/4% Junior Subordinated Deferrable
Interest Debentures, Series A issued by BankUnited Financial Corporation.
7
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These securities mature December 31, 2026 and pay a preferential cumulative cash
distribution at an annual rate of 10 1/4%. The Company and BankUnited Capital
have the right to defer payment of interest for up to 5 years. BankUnited
Financial Corporation has guaranteed all of the obligations of the Trust
Preferred Securities subject to certain limitations.
4. ACQUISITION
On November 15, 1996, the Company acquired Suncoast Savings & Loan Association,
FSA ("Suncoast"). The Company issued one share of its Class A Common Stock for
each share of Suncoast common stock of which 2,199,930 were outstanding and one
share of newly created 8% noncumulative convertible preferred stock, Series
1996, for each share of Suncoast preferred stock of which 920,000 shares were
outstanding. The newly created 8% noncumulative convertible preferred stock,
Series 1996, has substantially the same terms and conditions as the Suncoast
preferred stock. The cost of the acquisition, which was accounted for as a
purchase, was $27.8 million, representing the fair value of the consideration
given to the Suncoast common and preferred stockholders as well as the holders
of Suncoast's options and warrants holders. In addition, the Company incurred
approximately $1.3 million of costs directly related to the merger. At the date
of the acquisition, the fair value of the assets acquired (including goodwill of
approximately $10.4 million to be amortized over a period of 25 years) and
liabilities assumed totaled approximately $436 million and $408 million,
respectively.
The unaudited proforma combined condensed statements of operations for the three
and six month periods ended March 31, 1997 and 1996 assumes the acquisition had
occurred as of the beginning of the period presented and, after giving effect to
certain proforma adjustments, are as follows:
Proforma combined condensed Statement of Operations (in thousands except per
share data):
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Three Months Ended March 31, Six Months Ended March 31,
(Unaudited) (Unaudited)
1997 1996 1997 1996
--------- ---------- --------- ------
<S> <C> <C> <C> <C>
Interest Income $ 24,205 $ 19,185 $47,564 $37,413
Interest expense 14,854 12,648 29,549 24,619
Provision (credit) for loan losses 165 69 521 (109)
Non-interest income 1,001 1,833 2,255 3,425
Non-interest expense 7,101 6,770 13,746 13,322
Income tax provision 1,243 616 2,398 1,204
Net income before preferred
stock dividends 1,843 915 3,605 1,802
Preferred stock dividends 777 812 1,587 1,624
--------- -------- -------- ------
Net income after preferred
stock dividends $ 1,066 $ 103 $ 2,018 $ 178
======== ======== ======== ======
Earnings per share
Primary $ 0.12 $ 0.02 $ 0.22 $ 0.03
Fully-diluted $ 0.12 $ 0.02 $ 0.22 $ 0.03
</TABLE>
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5. NEW ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 125 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" and in
December 1996, the FASB issued a related Statement of Financial Accounting
Standards No. 127, "Deferral of the Effective Date of Certain Provisions of FASB
No. 125" (collectively "Statement No. 125"). Statement No. 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a financial components
approach that focuses on control. Portions of Statement No. 125 were effective
for transactions entered into after December 31, 1996 with the remaining
portions effective for transactions entered into after December 31, 1997. The
impact of adopting Statement No. 125 has not been nor is it currently expected
to be material to the Company's financial position or the results of operations.
In February 1997, FASB issued Statement of Financial Accounting Standards No.
128 "Earnings per Share" ("Statement No. 128"). Statement No. 128 specifies the
computation, presentation and disclosure requirements for earnings per share. It
replaces primary earnings per share and fully diluted earnings per share with
basic earnings per share and diluted earnings per share and is effective for
reporting periods ending after December 15, 1997. For the Company, the
computation for basic earnings per share is similar to primary earnings per
share except stock options are not considered when computing basic earnings per
share. Also, for the Company, diluted earnings per share and fully diluted
earnings per share are similar.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 129 "Disclosure of Information about Capital Structure" ("Statement No.
129"). Statement No. 129 continues previous requirements to disclose certain
information about an entity's capital structure. The Company currently complies
with the disclosure requirements of Statement No. 129.
6. CONTINGENCIES
The Company is a party to certain claims and litigation arising in the ordinary
course of business. In the opinion of management, the resolution of such claims
and litigation will not materially affect the Company's consolidated financial
position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis presents a review of the consolidated
operating results and financial condition of the Company for the three and six
month periods ended March 31, 1997 and 1996. This discussion and analysis should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto contained in the Company's Annual Report on Form 10-K/A for the year
ended September 30, 1996.
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM SEPTEMBER 30, 1996 TO MARCH 31,
1997.
ASSETS
Total assets increased by $626 million, or 76.0%, from $824 million at September
30, 1996, to $1.45 billion at March 31, 1997, due primarily to the acquisition
of Suncoast Savings and Loan Association, FSA
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("Suncoast") on November 15, 1996 and internally generated growth. On the date
of the acquisition, Suncoast had total assets of $435.7 million.
Cash and due from banks increased $15.1 million from $5.5 million as of
September 30, 1996 to $20.6 million at March 31, 1997. This increase is
primarily due to additional cash requirements as a result of the acquisition of
Suncoast's mortgage loan servicing operations.
The Company's short-term investments, consisting of Federal Home Loan Bank
("FHLB") overnight deposits and federal funds sold, decreased by $22.6 million,
or 79.0%, to $6.0 million at March 31, 1997, from $28.6 million at September 30,
1996. This decrease is due primarily to investing in loans receivable.
Mortgage-backed securities available for sale increased $44.7 million or 80.5%
from $55.5 million at September 30, 1996 to $100.2 million at March 31, 1997,
due primarily to $18.7 million of mortgage-backed securities acquired with
Suncoast and the purchase of $33.8 million mortgage backed securities. All
mortgage backed-securities acquired with Suncoast as well as all mortgage
backed-securities purchased in the six months ended March 31, 1997 have been
classified as available for sale.
The Company's net loan portfolio increased by $553.6 million, or 85.6%, to $1.2
billion at March 31, 1997, from $646.4 million at September 30, 1996, primarily
due to the acquisition of $360.1 million of loans with Suncoast and the purchase
of $242.8 million of residential loans.
The increase in mortgage servicing rights, goodwill, prepaid expenses and other
assets totaling $30.7 million relates to the acquisition of Suncoast. In the
second quarter, the Company sold $292 million of GNMA mortgage servicing rights
for $4.7 million. No gain or loss was recorded on the sale.
Non-performing assets as of March 31, 1997 were $11.5 million which represents
an increase of $3.7 million or 47.4% from $7.8 million as of September 30, 1996.
Non-performing assets as a percentage of total assets declined 16 basis points
from .95% as of September 30, 1996 to .79% as of March 31, 1997. $2.4 million of
non-performing assets were acquired with Suncoast.
The allowance for loan losses increased $733,000 from $2.2 million as of
September 30, 1996 to $2.9 million as of March 31, 1997. The increase was
attributable primarily to the allowance acquired from Suncoast of $775,000.
10
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The following table sets forth information concerning the Company's
non-performing assets for the periods indicated.
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans (1) $7,673 $4,939
Restructured loans 1,686 1,457
Loans past due 90 days and still accruing 581 --
------- ------
Total non-performing loans 9,910 6,396
Non-accrual tax certificates 761 800
REO 816 632
------- ------
Total non-performing assets $11,487 $7,828
======= ======
Allowance for tax certificates $ 658 $ 614
Allowance for loan losses 2,875 2,158
------- ------
Total allowance $3,533 $2,772
====== ======
Non-performing assets as a percentage of
total assets .79% .95%
Non-performing loans as a percentage of
total loans .82% .99%
Allowance for loan losses as a percentage of
total loans .24% .34%
Allowance for loan losses as a percentage of
non-performing loans 29.01% 33.74%
</TABLE>
- -----------
(1) In addition, management had concerns as to the borrower's ability to
comply with present repayment terms on $1,794,390 and $109,000 of
accruing loans as of March 31, 1997 and September 30, 1996,
respectively. A substantial portion of this increase is due to one
commercial real estate loan with a balance of $1,257,643 which,
although now current, had in the past become 90 days past due. The loan
to value ratio on the loan is approximately 70%.
11
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LIABILITIES
Deposits increased by $505.4 million, or 99.8%, to $1.0 billion at March 31,
1997 from $506.1 million at September 30, 1996. Of this growth, $323.7 million
was acquired with Suncoast; $39.8 million of the increase represents growth in
former Suncoast branches since acquisition; $76.0 million represents growth in
the three branches opened in the 18 last months; and $22.0 million represents
deposits from the State of Florida. Management believes this strong deposit
growth is primarily attributable to the Company offering competitive interest
rates and personalized service. The Company intends to open 6 or more branches
in the next 12 months.
FHLB advances were $251.5 million at March 31, 1997, up $14.5 million from
$237.0 million at September 30, 1996. This increase was the result of FHLB
advances assumed by BankUnited in connection with the acquisition of Suncoast.
CAPITAL
The Company's total stockholders' equity was $98.9 million at March 31, 1997, an
increase of $29.8 million, or 43.1%, from $69.1 million at September 30, 1996.
The increase is due primarily to the issuance of 2,199,930 shares of Class A
Common Stock and 920,000 shares of 8% Noncumulative Convertible Preferred Stock,
Series 1996, issued in connection with the Suncoast acquisition. The estimated
value of the stock issued to acquire Suncoast was $27.8 million.
In December 1996, the Company's subsidiary, BankUnited Capital, issued $50
million of Trust Preferred Securities and in March 1997, BankUnited Capital
issued an additional $20 million of Trust Preferred Securities. (See Note 3 of
the condensed notes to consolidated financial statements). The net proceeds from
the sales of the Trust Preferred Securities were $67.4 million. These funds may
be used to provide additional capital to the Bank and enable the Bank to
continue its expansion. In the six months ended March 31, 1997, BankUnited
Financial Corporation contributed $40 million additional capital to the Bank.
In February 1997, the holder of the Company's Series C and Series C-II classes
of preferred stock exercised the right to convert both classes to Class A common
stock at exchange ratios of 1.45475 shares of Class A common stock for each
share of Series C preferred stock and 1.3225 shares of Class A common stock for
each share of Series C-II preferred stock. The Company had previously exercised
its right to call both classes of preferred stock.
LIQUIDITY AND CAPITAL RESOURCES
OTS regulations require that savings institutions, such as the Bank, maintain
specified levels of liquid investments in cash, United States government
securities and other qualifying investments. Regulations currently in effect
require the Bank to maintain liquid assets of not less than 5.0% of its net
withdrawal deposit accounts plus short term borrowings, of which short term
liquid assets must consist of not less than 1%. As of March 31, 1997, the Bank
had liquid assets and short term liquid assets of 6.2% and 2.4%, respectively,
which was in compliance with these requirements.
The Company is exploring several alternative financings that would provide the
Bank with a significant increase in liquidity and capital to permit additional
growth. There is no assurance that these financings will be available on terms
acceptable to the Company.
12
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COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
1996.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $1,066,000 for the
three months ended March 31, 1997, compared to net income after preferred stock
dividends of $157,000 for the three months ended March 31, 1996. All major
categories of income and expense increased significantly in the three months
ended March 31, 1997 as compared to the three months ended March 31, 1996 and
reflect the significant growth the Company has experienced in the last year. A
significant factor in such growth was the acquisition of Suncoast, which was
completed on November 15, 1996 and the operations of which are included in the
Company's Consolidated Statement of Operations for the three months ended March
31, 1997. Below is a more detailed discussion of each major category of income
and expenses.
NET INTEREST INCOME
Net interest income increased $5.6 million, or 148.8%, to $9.4 million for the
three months ended March 31, 1997 from $3.8 million for the three months ended
March 31, 1996. This increase is attributable to an expansion of the net
interest rate spread of 61 basis points, to 2.52% for the three months ended
March 31, 1997 from 1.91% for the three months ended March 31, 1996 and an
increase in average interest-earning assets of $603.8 million, or 92.6%, to
$1,256 million for the three months ended March 31, 1997 from $652.2 million for
the three months ended March 31, 1996, offset by an increase in average
interest-bearing liabilities of $552.7 million, or 91.4%, to $1,158 million for
the three months ended March 31, 1997 from $605.0 million for the three months
ended March 31, 1996. Approximately $400 million of the increase in average
interest earning assets for the three months ended March 31, 1997 is a result of
the acquisition of Suncoast. The remaining increase in average interest earning
assets is due primarily to loan purchases. The average yield on interest-earning
assets increased 36 basis points to 7.71% for the three months ended March 31,
1997 from 7.35% for the three months ended March 31, 1996. The increase in
average yield is attributable to an increase in the yield on loans receivable
relating primarily to commercial real estate and construction loans acquired
with Suncoast. Suncoast had a greater percentage of higher yielding commercial
real estate and construction loans than BankUnited.
The increase in interest income of $12.2 million, or 101.7%, to $24.2 million
for the three months ended March 31, 1997 from $12.0 million for the three
months ended March 31, 1996, reflects increases in interest and fees on loans of
$11.6 million. The average yield on loans receivable increased to 7.94% for the
three months ended March 31, 1997 from 7.61% for the three months ended March
31, 1996 and the average balance of loans receivable increased $565.9 million,
or 114.1%, to $1,062 million for the three months ended March 31, 1997.
Approximately $360 million of the increase in loans is due to the acquisition of
Suncoast and, as stated above, the increase in the yield on loans is also
attributable to Suncoast.
The increase in interest expense of $6.6 million, or 80.2%, to $14.9 million for
the three months ended March 31, 1997 from $8.2 million for the three months
ended March 31, 1996 primarily reflects an increase in interest expense on
interest bearing deposits of $7.1 million, or 143%, from $4.8 million for the
three months ended March 31, 1996, to $12 million for the three months ended
March 31, 1997. This increase is due to an increase in average interest bearing
deposits of $567 million, or 152%, from $373 million for the three months ended
March 31, 1996 to $940 million for the three months ended March 31, 1997.
Approximately $300 million of this increase represents deposits acquired with
Suncoast. The average rate paid on interest bearing deposits decreased 6 basis
points from 5.19% for the three months ended March 31, 1996 to 5.13 % for the
three months ended March 31, 1997.
13
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended March 31, 1997 was
$165,000 as compared with no provision for loan losses for the three months
ended March 31, 1996. The provision for loan losses represents management's
estimate of the charge to operations after reviewing the nature, volume,
delinquency status, and inherent risk in the loan portfolio in relation to the
allowance for loan losses.
NON-INTEREST INCOME
Non-interest income for the three months ended March 31, 1997 was $1.0 million
compared with $129,000 for the three months ended March 31, 1996, an increase of
$872,000. Of this increase, $481,000 represents loan servicing fees (net of
amortization of capitalized servicing rights) from operations acquired with
Suncoast. The remaining increase is primarily attributable to service fees on
deposits reflecting the increase in the amount of deposits outstanding. The
Company also received a payment of $65,000 in connection with the late delivery
by the seller of purchased residential loans.
NON-INTEREST EXPENSES
Operating expenses increased $4.3 million, or 157%, to $7.1 million for the
three months ended March 31, 1997 compared to $2.8 million for the three months
ended March 31, 1996. The increase in expenses is attributable to the preferred
dividends of the trust subsidiary, and growth the Company has experienced
including the expenses of Suncoast's operations. Preferred dividends of the
trust subsidiary were $1.3 million for the three months ended March 31, 1997.
There was no comparable expense in the three months ended March 31, 1996 since
the preferred securities were issued in December 1996 and March 1997.
INCOME TAXES
The income tax provision was $1.2 million for the three months ended March 31,
1997 compared to $430,000 for the three months ended March 31, 1996. The
increase in income taxes is the result of the Company's higher pre-tax earnings
during the three months ended March 31, 1997, compared to the three months ended
March 31, 1996.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the three months ended March 31, 1997 were
$777,000, an increase of $241,000, or 45.0%, as compared to $536,000 for the
three months ended March 31, 1996. This increase is the result of dividends paid
on the 8% Noncumulative Convertible Preferred Stock, Series 1996, issued in
connection with the acquisition of Suncoast, partially offset by the conversion
of the Noncumulative Convertible Preferred Stock, Series C and CII in February
1997.
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND
1996.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $1,993,000 for the
six months ended March 31, 1997, compared to net income after preferred stock
dividends of $532,000 for the six months ended
14
<PAGE>
March 31, 1996. All major categories of income and expense increased
significantly in the six months ended March 31, 1997 as compared to the six
months ended March 31, 1996 and reflect the significant growth the Company has
experienced in the last year. A significant factor in such growth was the
acquisition of Suncoast, which was completed on November 15, 1996. The Company's
Consolidated Statement of Operations for the six months ended March 31, 1997
reflects Suncoast's operations from the date of acquisition. Below is a more
detailed discussion of each major category of income and expenses.
NET INTEREST INCOME
Net interest income increased $9.2 million, or 120.6%, to $16.5 million for the
six months ended March 31, 1997 from $7.3 million for the six months ended March
31, 1996. This increase is attributable to an expansion of the net interest rate
spread of 60 basis points, to 2.56% for the six months ended March 31, 1997 from
1.96% for the six months ended March 31, 1996 and an increase in average
interest-earning assets of $498.6 million, or 79.5%, to $1,126 million for the
six months ended March 31, 1997 from $627.1 million for the six months ended
March 31, 1996, offset by an increase in average interest-bearing liabilities of
$467.6 million, or 80.3%, to $1,050 million for the six months ended March 31,
1997 from $582.4 million for the six months ended March 31, 1996. Approximately
$300 million of the increase in average interest earning assets for the six
months ended March 31, 1997 is a result of the acquisition of Suncoast. The
remaining increase in average interest earning assets is due primarily to loan
purchases. The average yield on interest-earning assets increased 32 basis
points to 7.75% for the six months ended March 31, 1997 from 7.43% for the six
months ended March 31, 1996. The increase in average yield is attributable to an
increase in the yield on loans receivable relating primarily to commercial real
estate and construction loans acquired with Suncoast. Suncoast had a greater
percentage of higher yielding commercial real estate and construction loans than
BankUnited.
The increase in interest income of $20.4 million, or 87.3%, to $43.7 million for
the six months ended March 31, 1997 from $23.3 million for the six months ended
March 31, 1996, reflects increases in interest and fees on loans of $19.5
million. The average yield on loans receivable increased to 7.96% for the six
months ended March 31, 1997 from 7.64% for the six months ended March 31, 1996
and the average balance of loans receivable increased $468.1 million, or 98.2%,
to $944.8 million for the six months ended March 31, 1997. Approximately $270
million of the increase in loans is due to the acquisition of Suncoast and, as
stated above, the increase in the yield on loans is also attributed to Suncoast.
The increase in interest expense of $11.2 million, or 69.9%, to $27.2 million
for the six months ended March 31, 1997 from $16.0 million for the six months
ended March 31, 1996 primarily reflects an increase in interest expense on
interest bearing deposits of $11.7 million, or 130%, from $9.0 million for the
six months ended March 31, 1996, to $20.8 million for the six months ended March
31, 1997. This increase is due to an increase in average interest bearing
deposits of $470 million, or 135%, from $348 million for the six months ended
March 31, 1996 to $818 million for the six months ended March 31, 1997.
Approximately $275 million of this increase represents deposits acquired with
Suncoast. The average rate paid on interest bearing deposits decreased 10 basis
points from 5.19% for the six months ended March 31, 1996 to 5.09% for the six
months ended March 31, 1997.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the six months ended March 31, 1997 was
$415,000 as compared with a credit for loan losses of $300,000 for the six
months ended March 31, 1996. The credit in 1996 was due to a recovery of
approximately $1 million as a result of a legal settlement relating to certain
loans previously purchased. The provision for loan losses represents
management's estimate of the charge to operations after
15
<PAGE>
reviewing the nature, volume, delinquency status, and inherent risk in the loan
portfolio in relation to the allowance for loan losses.
NON-INTEREST INCOME
Non-interest income for the six months ended March 31, 1997 was $1.6 million
compared with $287,000 for the six months ended March 31, 1996, an increase of
$1.3 million. Of this increase, $742,000 represents loan servicing fees (net of
amortization of capitalized servicing rights) from operations acquired with
Suncoast. The remaining increase is primarily attributable to service fees on
deposits reflecting the increase in the amount of deposits outstanding. The
Company also received a payment of $65,000 for the late delivery of purchased
residential loans.
NON-INTEREST EXPENSES
Operating expenses increased $6.6 million, or 126%, to $11.9 million for the six
months ended March 31, 1997 compared to $5.3 million for the six months ended
March 31, 1996. The increase in expenses is attributable to the preferred
dividends of the trust subsidiary, and the growth the Company has experienced
including the expenses of Suncoast's operations. Preferred dividends of the
trust subsidiary were $1.4 million for the six months ended March 31, 1997
compared with no expense in the six months ended March 31, 1996 since the
preferred securities were issued in December 1996 and March 1997.
INCOME TAXES
The income tax provision was $2.3 million for the six months ended March 31,
1997 compared to $987,000 for the six months ended March 31, 1996. The increase
in income taxes is the result of the Company's higher pre-tax earnings during
the six months ended March 31, 1997, compared to the six months ended March 31,
1996.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the six months ended March 31, 1997 were $1.4
million, an increase of $377,000, or 35.2%, as compared to $1.1 million for the
six months ended March 31, 1996. This increase is the result of dividends paid
on the 8% Noncumulative Convertible Preferred Stock, Series 1996, issued in
connection with the acquisition of Suncoast, partially offset by the conversion
of the Noncumulative Convertible Preferred Stock, Series C and CII in February
1997.
YIELDS EARNED AND RATES PAID
The following tables set forth certain information relating to the categories of
the Company's interest-earning assets and interest-bearing liabilities for the
periods indicated. All yield and rate information is calculated on an annualized
basis. Yield and rate information for a period is average information for the
period calculated by dividing the income or expense item for the period by the
average balances during the period of the appropriate balance sheet item. Net
interest margin is net interest income divided by average interest-earning
assets. Non-accrual loans are included in asset balances for the appropriate
period, whereas recognition of interest on such loans is discontinued and any
remaining accrued interest receivable is reversed, in conformity with federal
regulations. The yields and net interest margins appearing in the following
table have been calculated on a pre-tax basis.
16
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
Average Average
Balance Interest Yield/Rate Balance Interest Yield/Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $1,061,931 $ 21,062 7.94% $495,985 $ 9,432 7.61%
Mortgage-backed securities 93,024 1,551 6.67 53,046 898 6.77
Short-term investments (1) 48,479 667 5.50 61,867 846 5.41
Tax certificates 29,990 541 7.22 27,908 586 8.40
Long-term investments and
FHLB stock, net 22,525 384 6.94 13,349 240 7.12
--------- ------- ---- -------- -------- ----
Total interest-earning assets 1,255,949 24,205 7.71 652,155 12,002 7.35
--------- ------- ---- -------- -------- ----
Interest-bearing liabilities:
NOW/money market 98,236 587 2.42 23,156 113 1.96
Savings 142,819 1,595 4.53 53,246 575 4.34
Certificates of deposit 699,150 9,705 5.63 296,610 4,121 5.59
FHLB advances and other
borrowings 217,570 2,967 5.45 232.017 3,435 5.86
-------- ------- ---- -------- -------- ----
Total interest-bearing
liabilities 1,157,775 14,854 5.19 605,029 8,244 5.44
--------- ------- ---- ------- -------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 98,174 $ 47.126
========== ========
Net interest income $ 9,351 $ 3,758
======= =======
Interest rate spread 2.52% 1.91%
===== =====
Net interest margin 2.93% 2.31%
===== =====
Ratio of interest-earning assets to
interest-bearing liabilities 108.48% 107.79%
======= =======
</TABLE>
- --------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and certificates
of deposit.
17
<PAGE>
YIELDS EARNED AND RATES PAID
The following tables set forth certain information relating to the categories of
the Company's interest-earning assets and interest-bearing liabilities for the
periods indicated. All yield and rate information is calculated on an annualized
basis. Yield and rate information for a period is average information for the
period calculated by dividing the income or expense item for the period by the
average balances during the period of the appropriate balance sheet item. Net
interest margin is net interest income divided by average interest-earning
assets. Non-accrual loans are included in asset balances for the appropriate
period, whereas recognition of interest on such loans is discontinued and any
remaining accrued interest receivable is reversed, in conformity with federal
regulations. The yields and net interest margins appearing in the following
table have been calculated on a pre-tax basis.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
1997 1996
Average Average
Balance Interest Yield/Rate Balance Interest Yield/Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $ 944,782 $ 37,678 7.96% $476,634 $ 18,198 7.64%
Mortgage-backed securities 85,784 2,860 6.67 52,693 1,787 6.78
Short-term investments (1) 40,664 1,134 5.52 50,732 1,449 5.62
Tax certificates 33,373 1,297 7.77 31,914 1,347 8.44
Long-term investments and
FHLB stock, net 21,115 727 6.90 15,139 545 7.09
--------- ------- ---- -------- -------- ----
Total interest-earning assets 1,125,718 43,696 7.75 627,112 23,326 7.43
--------- ------- ---- -------- -------- ----
Interest-bearing liabilities:
NOW/money market 85,531 1,000 2.34 24,127 239 1.98
Savings 124,313 2,850 4.60 52,846 1,150 4.35
Certificates of deposit 608,482 16,919 5.58 271,021 7,643 5.64
FHLB advances and other
borrowings 231,698 6,472 5.53 234,409 6,998 5.87
-------- ------- ---- -------- -------- ----
Total interest-bearing
liabilities 1,050,024 27,241 5.19 582,403 16,030 5.47
--------- ------- ---- ------- -------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 75,694 $ 44.709
======== ========
Net interest income $ 16,455 $ 7,296
======== =======
Interest rate spread 2.56% 1.96%
===== =====
Net interest margin 2.91% 2.35%
===== =====
Ratio of interest-earning assets to
interest-bearing liabilities 107.21% 107.68%
======= =======
</TABLE>
- --------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and certificates
of deposit.
18
<PAGE>
RATE/VOLUME ANALYSIS
The following table presents, for the periods indicated, the change in interest
income and the changes in interest expense attributable to the changes in
interest rates and the changes in the volume of interest-earning assets and
interest-bearing liabilities. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable
to: (i) changes in volume (change in volume multiplied by prior year rate); (ii)
changes in rate (change in rate multiplied by prior year volume); (iii) changes
in rate/volume (change in rate multiplied by change in volume); and (iv) total
changes in rate and volume.
<TABLE>
<CAPTION>
Three Months ended March 31,
1997 vs. 1996
Increase (Decrease) Due to
Changes Changes Changes Total
in in in Increase/
Volume Rate Rate/Volume (Decrease)
(Dollars in thousands)
<S> <C> <C> <C> <C>
Interest income attributable to:
Loans $ 11,058 $ 201 $ 371 $ 11,630
Mortgage-backed securities 677 (14) (10) 653
Short-term investments (1) (181) 14 (12) (179)
Tax certificates 44 (83) (6) (45)
Long-term investments and FHLB
stock 159 (4) (11) 144
------- ------ ------ ------
Total interest-earning assets 11,757 114 332 12,203
------ ------ ------ ------
Interest expense attributable to:
NOW/money market 363 26 85 474
Savings 959 24 37 1,020
Certificates of deposit 5,547 30 7 5,584
FHLB advances and other
borrowings (213) (237) (18) (468)
-------- ------ ------ ------
Total interest-bearing liabilities 6,656 (157) 111 6,610
------ ----- ------ ------
Increase in net interest income $ 5,101 $ 271 $ 221 $ 5,593
======= ====== ===== ======
</TABLE>
- ------------
(1) Short-term investments include FHLB overnight deposits, securities purchased
under agreements to resell, federal funds sold and certificates of deposit.
19
<PAGE>
RATE/VOLUME ANALYSIS
The following table presents, for the periods indicated, the change in interest
income and the changes in interest expense attributable to the changes in
interest rates and the changes in the volume of interest-earning assets and
interest-bearing liabilities. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable
to: (i) changes in volume (change in volume multiplied by prior year rate); (ii)
changes in rate (change in rate multiplied by prior year volume); (iii) changes
in rate/volume (change in rate multiplied by change in volume); and (iv) total
changes in rate and volume.
<TABLE>
<CAPTION>
Six Months ended March 31,
1997 VS. 1996
Increase (Decrease) due to
Changes Changes Changes Total
in in in Increase/
Volume Rate Rate/Volume (Decrease)
(Dollars in thousands)
<S> <C> <C> <C> <C>
Interest income attributable to:
Loans $ 18,651 $ 338 $ 491 $ 19,480
Mortgage-backed securities 1,122 (30) (19) 1,073
Short-term investments (1) (286) (26) (3) (315)
Tax certificates 62 (107) (5) (50)
Long-term investments and FHLB
stock 210 (13) (15) 182
------- ------ ------ ------
Total interest-earning assets 19,759 162 449 20,370
------ ------ ------ ------
Interest expense attributable to:
NOW/money market 607 44 110 761
Savings 1,551 65 84 1,700
Certificates of deposit 9,490 (86) (128) 9,276
FHLB advances and other
borrowings (80) (413) (33) (526)
------- ------ ------ ------
Total interest-bearing liabilities 11,568 (390) 33 11,211
------- ------ ------ ------
Increase in net interest income $ 8,191 $ 552 $ 416 $ 9,159
======= ====== ====== =======
</TABLE>
- ------------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and certificates
of deposit.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 125 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" and in
December 1996, the FASB issued a related Statement of Financial Accounting
Standards No. 127, "Deferral of the Effective Date of Certain Provisions of FASB
No. 125" (collectively "Statement No. 125"). Statement No. 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a financial components
approach that focuses on control. Portions of Statement No. 125 were effective
for transactions entered into after December 31, 1996 with the remaining
portions effective for transactions entered into after December 31, 1997. The
impact of adopting Statement No. 125 has not been nor is it currently expected
to be material to the Company's financial position or the results of operations.
20
<PAGE>
In February 1997, FASB issued Statement of Financial Accounting Standards No.
128 "Earnings per Share" (Statement No. 128). Statement No. 128 specifies the
computation, presentation and disclosure requirements for earnings per share. It
replaces primary earnings per share and fully diluted earnings per share with
basic earnings per share and diluted earnings per share and is effective for
reporting periods ending after December 15, 1997. For the Company, the
computation for basic earnings per share is similar to primary earnings per
share except stock options are not considered when computing basic earnings per
share. Also, for the Company, diluted earnings per share and fully diluted
earnings per share are similar.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 129 "Disclosure of Information about Capital Structure" ("Statement No.
129"). Statement No. 129 continues previous requirements to disclose certain
information about an entity's capital structure. The Company currently complies
with the disclosure requirements of Statement No. 129.
21
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On March 24, 1997, the Company's subsidiary, BankUnited
Capital, a trust created under the laws of the state of
Delaware, sold through private placement $20 million aggregate
amount of redeemable Trust Preferred Securities. The Trust
Preferred Securities were offered by Friedman, Billings, Ramsey
& Co. Inc. As compensation for arranging such sales, aggregate
commissions of $591,000 were paid. The Preferred Securites were
offered and sold only to qualified institutional buyers
("Qualified Institutional Buyers") as defined under Rule 144A
under the Security Act and other "accredited investors" (as
defined in Rule 501 under the Securities Act) ("Accredited
Investors") in a private sale exempt from the registration
requirements of the Securities Act. (See Note 3 of Condensed
Notes to Consolidated Financial Statements).
On March 27, 1997, the Company and BankUnited Capital filed a
Registration Statement on Form S-4 under the Securities Act of
1933, as amended, to register $70 million aggregate liquidation
amount of 10-1/4% Trust Preferred Securities, Series B (the
"New Trust Preferred Securities"), to be issued by BankUnited
Capital, as well as new 10-1/4% Junior Subordinated Deferrable
Interest Debentures to be issued by the Company, and a new
Guarantee by the Company of the obligations of the New Trust
Preferred Securities subject to certain limitations. The
Registration Statement indicated that the New Trust Preferred
Securities would be identical in all material respects to the
respective terms of the outstanding Trust Preferred Securities,
except that (i) the New Trust Preferred Securities would not be
subject to certain restrictions on transfer applicable to the
old Trust Preferred Securities, and (ii) the New Trust
Preferred Securities would not provide for any increase in the
distribution rate thereon. An amendment to the Registration
Statement was filed on April 17, 1997, and the Registration
Statement was declared effective on April 18, 1997. The
exchange offer to existing Trust Preferred Securities holders
was commenced on April 21, 1997.
ITEM 4. SOLICITATION OF CONSENTS
On December 30, 1996, the Company's subsidiary, BankUnited
Capital, sold through private placement $50 million aggregate
amount of redeemable Trust Preferred Securities ("Outstanding
Trust Preferred"). On March 24, 1997, BankUnited Capital sold
an additional $20 million of Trust Preferred Securities. In
order to issue the additional $20 million of Trust Preferred
Securities, the Company and BankUnited Capital solicited the
approval of the holders of the Outstanding Trust Preferred to
amend or supplement, or waive certain provisions of documents
creating and/or pertaining to the Trust Preferred Securities.
As a result of the amendments, the additional $20 million of
Trust Preferred Securities would have the same terms, rights
and conditions as the Outstanding Trust Preferred. The Consent
Solicitation Statements were mailed on February 26, 1997, and,
as of March 21, 1997, consents had been received from 60.82% of
registered securityholders.
ITEM 5. OTHER INFORMATION
None
22
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11 Calculation of Earnings Per Share.
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed a current report on Form 8-K dated
January 9, 1997 reporting that the Company's
subsidiary, BankUnited Capital, a trust created under
the laws of Delaware, sold through private placement,
$50 million of redeemable trust preferred securities.
The Company filed a current report on Form 8-K dated
February 25, 1997 reporting the conversion of two
classes of preferred stock and reporting the Company's
first quarter earnings.
The Company filed a current report on Form 8-K dated
March 24, 1997 reporting a second private placement of
redeemable trust preferred securities for $20 million
by the Company's subsidiary BankUnited Capital.
The Company filed a current report on Form 8-K dated
April 2, 1997 reporting the authorization by the Board
of Directors of the Company to purchase up to 100,000
shares of the Company's Class A common stock in open
market transactions.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
BANKUNITED FINANCIAL CORPORATION
Date: May 15, 1997 By: /S/ SAMUEL A. MILNE
-------------------
Samuel A. Milne
Executive Vice President
and Chief Financial Officer
24
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND
SUBSIDIARIES Form 10-Q for the Quarter Ended
March 31, 1997
INDEX TO EXHIBITS
EXHIBIT NO.
11 Calculation of Earnings Per Share
27.1 Financial Data schedule
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
Calculation of Earnings Per Share
(In thousands, except per share data)
For the Three Months
Ended March 31,
CALCULATION OF PRIMARY EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------ ----------- -------
<S> <C> <C>
Net income before preferred stock dividends $ 1,843 $ 693
Preferred stock dividends (777) (536)
--------- ----------
Net income available to common shares $ 1,066 $ 157
======= =========
Weighted average number of common shares outstanding
during the period 8,389 3,441
Assumed exercise of stock options (Modified Treasury
Stock Method) 480 235
-------- ---------
Weighted average number of common share equivalents
assumed outstanding during the period 8,869 3,676
======== ======
Primary earnings per share $ 0.12 $ 0.04
======== =========
For the Three Months
Ended March 31,
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------------ ----------- -------
Net income before preferred stock dividends $ 1,843 $ 693
Preferred stock dividends (777) (536)
Reduction of interest expense due to assumed
exercise of stock options, net of taxes ----------- -------
Net income available to common shares $ 1,066 $ 157
========= =========
Weighted average number of common shares outstanding
during the period 8,389 3,441
Assumed exercise of stock options (Modified Treasury
Stock Method) 512 276
Conversion of Preferred Stock
Weighted average number of fully diluted common shares
assumed outstanding during the period 8,901 3,717
========= ========
Fully diluted earnings per share $ 0.12 $ 0.04
========= ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
Calculation of Earnings Per Share
(In thousands, except per share data)
For the Six Months
Ended March 31,
CALCULATION OF PRIMARY EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------ ----------- -------
<S> <C> <C>
Net income before preferred stock dividends $ 3,442 $ 1,604
Preferred stock dividends (1,449) (1,072)
Reduction of interest expense due to assumed
exercise of stock options, net of taxes -- 3
---------- ---------
Net income available to common shares $ 1,993 $ 535
======= ==========
Weighted average number of common shares outstanding
during the period 7,554 2,759
Assumed exercise of stock options (Modified Treasury
Stock Method) 398 263
--------- ----------
Weighted average number of common share equivalents
assumed outstanding during the period 7,952 3,022
======== ==========
Primary earnings per share $ 0.25 $ 0.18
======== ==========
For the Six Months
Ended March 31,
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------------ ----------- --------
Net income before preferred stock dividends $ 3,442 $ 1,604
Preferred stock dividends (1,292) (1,072)
--------- ---------
Net income available to common shares $ 2,150 $ 532
======= =========
Weighted average number of common shares outstanding
during the period 7,554 2,759
Assumed exercise of stock options (Modified Treasury
Stock Method) 458 276
Conversion of Preferred Stock 662 --
Weighted average number of fully diluted common shares
assumed outstanding during the period 8,674 3,035
======== ========
Fully diluted earnings per share $ 0.25 $ 0.18
======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BANK UNITED, FSB FOR THE SIX MONTHS ENDED MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 20,598
<INT-BEARING-DEPOSITS> 5,980
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 107,100
<INVESTMENTS-CARRYING> 44,965
<INVESTMENTS-MARKET> 0
<LOANS> 1,208,682
<ALLOWANCE> 2,875
<TOTAL-ASSETS> 1,453,152
<DEPOSITS> 1,011,475
<SHORT-TERM> 251,484
<LIABILITIES-OTHER> 20,515
<LONG-TERM> 0
0
30
<COMMON> 88
<OTHER-SE> 98,785
<TOTAL-LIABILITIES-AND-EQUITY> 1,453,152
<INTEREST-LOAN> 37,678
<INTEREST-INVEST> 6,018
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 43,696
<INTEREST-DEPOSIT> 20,769
<INTEREST-EXPENSE> 27,241
<INTEREST-INCOME-NET> 16,455
<LOAN-LOSSES> 415
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 11,934
<INCOME-PRETAX> 5,707
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,707
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
<YIELD-ACTUAL> 2.91
<LOANS-NON> 7,673
<LOANS-PAST> 581
<LOANS-TROUBLED> 1,686
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,891
<CHARGE-OFFS> 189
<RECOVERIES> 8
<ALLOWANCE-CLOSE> 2,875
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
