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 December 31, 1996
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 5-43936
BANKUNITED FINANCIAL CORPORATION
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(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
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(Address of principal executive offices) (Zip Code)
(305) 569-2000
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(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 February 11, 1997 was 7,703,477 shares of Class A Common Stock,
$.01 par value, and 275,685 shares of Class B Common Stock, $.01 par value.
This Form 10-Q contains 19 pages.
The Index to Exhibits appears on page 17.
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
Form 10-Q Report for the Quarter Ended December 31, 1996
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition as of
December 31, 1996 (unaudited) and September 30, 1996 3
Consolidated Statements of Operations (unaudited)
for the Three Months Ended December 31, 1996
and December 31, 1995 4
Consolidated Statements of Cash Flows (unaudited)
for the Three Months Ended December 31, 1996 and
December 31, 1995 5
Condensed Notes to Consolidated Financial
Statements (unaudited) 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES 15
Item 5. OTHER INFORMATION 15
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 15
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
December 31, September 30,
1996 1996
- --------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C>
ASSETS
Cash and due from banks $ 15,095 $ 5,483
Federal funds sold and Federal Home Loan Bank overnight deposits 69,323 28,653
Tax certificates (net of reserves of $631 at December 31, 1996
and $614 at September 30, 1996) 33,789 40,088
Investments, available for sale, net at market 6,702 6,685
Mortgage-backed securities, held to maturity, net (market
value of approximately $13,728 at December 31, 1996
and $14,274 at September 30, 1996) 13,906 14,698
Mortgage-backed securities available for sale, net at market 72,206 55,467
Loans receivable, net 1,046,770 646,385
Other interest earning assets 15,136 12,236
Office properties and equipment, net 9,857 2,608
Accrued interest receivable 11,073 7,023
Mortgage servicing rights 8,883 --
Goodwill 11,934 2,457
Prepaid expenses and other assets 14,370 2,577
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Total assets $1,329,044 $824,360
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 878,166 $506,106
Advances from Federal Home Loan Bank 288,484 237,000
Subordinated notes 775 775
Accrued expenses and other liabilities 13,464 11,368
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Total liabilities 1,180,889 755,249
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Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Deferrable Interest
Debentures of the Company 50,000 --
---------- --------
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 - 3,584,547
at December 31, 1996 and 2,664,547 at September 30, 1996 36 27
Class A Common Stock, $.01 par value. Authorized shares
30,000,000; issued and outstanding shares - 7,656,953
at December 31, 1996 and 5,454,201 at September 30, 1996 76 54
Class B Common Stock, $.01 par value. Authorized shares
3,000,000; issued and outstanding shares - 251,515 at
December 31, 1996 and 251,515 at September 30, 1996 3 3
Additional paid-in capital 89,860 62,055
Retained earnings 8,206 7,279
Net unrealized losses on securities available for sale, net of tax (26) (307)
---------- --------
Total stockholders' equity 98,155 69,111
---------- --------
Total liabilities and stockholders' equity $1,329,044 $824,360
========== ========
</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
(Unaudited)
1996 1995
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(In thousands, except earnings per share)
<S> <C> <C>
Interest income:
Interest and fees on loans $16,616 $ 8,766
Interest on mortgage-backed securities 1,309 889
Interest on short-term investments 467 603
Interest and dividends on long-term investments
and other earning assets 1,099 1,066
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Total interest income 19,491 11,324
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Interest expense:
Interest on deposits 8,882 4,223
Interest on borrowings 3,505 3,563
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Total interest expense 12,387 7,786
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Net interest income before provision (credit) for loan losses 7,104 3,538
Provision (credit) for loan losses 250 (300)
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Net interest income after provision (credit) for loan losses 6,854 3,838
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Non-interest income:
Service fees, net 575 151
Other 25 7
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Total non-interest income 600 158
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Non-interest expenses:
Employee compensation and benefits 1,915 967
Occupancy and equipment 886 363
Insurance 361 226
Professional fees - legal and accounting 222 246
Other operating expenses 1,449 726
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Total non-interest expenses 4,833 2,528
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Income before income taxes and preferred stock dividends 2,621 1,468
Income taxes 1,022 557
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Net income before preferred stock dividends 1,599 911
Preferred stock dividends 672 536
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Net income after preferred stock dividends $ 927 $ 375
======= =======
Earnings Per Share
Primary $ 0.13 $ 0.16
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Fully-diluted $ 0.13 $ 0.15
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Weighted average number of common share equivalents assumed outstanding
during the period:
Primary 7,155 2,369
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Fully diluted 8,045 3,172
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</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
(Unaudited)
1996 1995
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(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,599 $ 911
Adjustments to reconcile net income to net cash used in
operating activities:
Provision (credit) for loan losses 250 (300)
Provision for losses on tax certificates 18 38
Depreciation and amortization 313 126
Amortization of discounts and premiums on investments 8 --
Amortization of discounts and premiums on mortgage-backed securities 30 34
Amortization of discounts and premiums on loans (23) (353)
Loans originated for sale (5,193) (3,057)
Increase in accrued interest receivable (1,097) (653)
(Decrease) increase in interest payable on deposits and FHLB advances (845) 53
Increase in accrued expenses 2,347 4
Decrease in accrued taxes (937) (2,589)
Increase (decrease) in deferred taxes 17 (469)
(Decrease) increase in other liabilities (27,320) 835
Decrease in prepaid expenses and other assets 2,039 972
Proceeds from sale of loans 3,657 1,521
Recovery on loans 11 941
Loss (gain) on sales of loans 11 (4)
Loss (gain) on sales of real estate owned 23 (52)
-------- --------
Net cash used in operating activities (25,092) (2,042)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (58,864) (34,126)
Proceeds from sale of real estate owned 488 650
Purchase of other earning assets (2,650) --
Proceeds from repayments of mortgage-backed securities 3,136 1,555
Proceeds from repayments of other earning assets 3,000 750
Proceeds from sale of investment securities -- 3,000
Purchases of premises and equipment (338) (159)
Net decrease in tax certificates 6,281 8,060
Purchase of Suncoast's cash equivalents 32,803 --
-------- --------
Net cash used in investing activities (16,144) (20,270)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 48,323 42,970
Net decrease in other borrowings (16) (10,000)
Net proceeds from issuance of preferred stock 9 --
Net proceeds from issuance of common stock 14 88
Net proceeds from issuance of trust guaranteed preferred
beneficial interest in the Company's debenture 48,350 --
Dividends paid on the Company's preferred stock (672) (536)
Decrease in advances from borrowers for taxes and insurance (4,490) (2,661)
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Net cash provided by financing activities 91,518 29,861
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Increase in cash and cash equivalents 50,282 7,549
Cash and cash equivalents at beginning of period 34,136 34,730
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Cash and cash equivalents at end of period $ 84,418 $ 42,279
======== ========
SUPPLEMENTAL DISCLOSURES:
Transfer from loans to real estate owned $ 1,160 $ --
======== ========
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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</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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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 month period
ended December 31, 1996 are not necessarily indicative of the results which may
be expected for the year ended 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 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 December
31, 1996 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 $ 19,786 1.5% $ 102,841 7.7% $ 83,055 6.2%
Core Capital $ 39,573 3.0% $ 102,841 7.7% $ 63,268 4.7%
Risk-Based Capital $ 58,464 8.0% $ 106,758 14.6% $ 48,294 6.6%
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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, which 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.
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, including costs, expenses and liabilities of BankUnited
Capital.
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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% non-cumulative convertible preferred stock, Series
1996 for each share of Suncoast preferred stock of which 920,000 shares were
outstanding. The newly created 8% non-cumulative convertible preferred stock,
Series 1996 has substantially the same terms and conditions as the Suncoast
preferred stock. The cost of the acquisition, which will be 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 option
and warrant 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 $9.6
million) and liabilities assumed totaled approximately $436 million and $408
million, respectively.
The unaudited proforma combined condensed statements of operations for the three
month periods ended December 31, 1996, and 1995 assumes the acquisition 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):
Three Months Ended December 31,
(Unaudited)
1996 1995
--------- --------
Interest Income $ 23,359 $ 18,228
Interest expense 14,695 11,971
Provision (credit) for loan losses 356 (179)
Non-interest income 1,254 1,592
Non-interest expense 6,641 6,446
Income tax provision 1,155 617
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Net income before preferred stock dividends 1,766 965
Preferred stock dividends 810 812
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Net income after preferred stock dividends $ 956 $ 153
======== ========
Earnings per share
Primary $ 0.12 $ 0.03
Fully-diluted $ 0.11 $ 0.03
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5. 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 month
periods ended December 31, 1996 and 1995. 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
DECEMBER 31, 1996.
ASSETS
Total assets increased by $505 million, or 61.2%, from $824 million at September
30, 1996, to $1.3 billion at December 31, 1996, principally due to the
acquisition of Suncoast Savings and Loan Association, FSA ("Suncoast") on
November 15, 1996. On the date of the acquisition, Suncoast had total assets of
$435.7 million.
Cash and due from banks increased $9.6 million from $5.5 million as of September
30, 1996 to $15.1 million at December 31, 1996. 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, increased by $40.7 million,
or 141.9%, to $69.3 million at December 31, 1996, from $28.6 million at
September 30, 1996. This increase is due primarily to investing the proceeds
from the sale of $50 million of Company Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated
Deferrable Interest Debentures of the Company (See Note 3 of Condensed Notes to
Consolidated Financial Statements.)
Mortgage-backed securities available for sale increased $16.7 million or 30.1%
from $55.5 million at September 30, 1996 to $72.2 million at December 31, 1996,
due primarily to the $18.7 million of mortgage-backed securities acquired with
Suncoast.
The Company's net loan portfolio increased by $400.4 million, or 61.9%, to $1.05
billion at December 31, 1996, 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 $68.0 million of residential loans.
The increase in mortgage servicing rights, goodwill and prepaid expenses and
other assets of $8.9 million, $9.6 million and $11.8 million, respectively,
relate to the acquisition of Suncoast.
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Non-performing assets as of December 31, 1996 were $9.4 million which represents
an increase of $1.5 million or 19.7% from $7.8 million as of September 30, 1996.
Non-performing assets as a percentage of total assets declined 25 basis points
from .95% as of September 30, 1996 to .70% as of December 31, 1996. $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 December 31, 1996. The increase was
attributable primarily to the growth of the loan portfolio including loans
acquired with Suncoast. On the date of acquisition, Suncoast's loan loss
allowance was $775,000.
The following table sets forth information concerning the Company's
non-performing assets for the periods indicated.
December 31, September 30,
1996 1996
------------ -------------
(Dollars in thousands)
Non-accrual loans (1) $5,558 $4,939
Restructured loans 1,691 1,457
Loans past due 90 days and still accruing 52 --
------ ------
Total non-performing loans 7,301 6,396
Non-accrual tax certificates 610 800
REO 1,457 632
------ ------
Total non-performing assets $9,368 $7,828
====== ======
Allowance for tax certificates $ 631 $ 614
Allowance for loan losses 2,891 2,158
------ ------
Total allowance $3,522 $2,772
====== ======
Non-performing assets as a percentage of
total assets .70% .95%
Non-performing loans as a percentage of
total loans .70% .99%
Allowance for loan losses as a percentage of
total loans .28% .34%
Allowance for loan losses as a percentage of
non-performing loans 39.60% 33.74%
- -----------
(1) In addition to the above, management had concerns as to the borrower's
ability to comply with present repayment terms on $540,000 and $109,000
of accruing loans as of December 31, 1996 and September 30, 1996,
respectively.
LIABILITIES
Deposits increased by $372.1 million, or 73.5%, to $878.2 million at December
31, 1996 from $506.1 million at September 30, 1996. $323.7 million of the
increase in deposits represents accounts acquired with Suncoast. Additionally,
$26.2 million of the increase represents growth in branches opened in the last
year. The
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Company intends to open 3 or more branches in the next 12 months. Management
believes the remaining increase is attributable to the Company offering
competitive interest rates and personalized service.
FHLB advances were $288.5 million at December 31, 1996, up $51.5 million from
$237.0 million at September 30, 1996. This increase was the result of the $51.5
million of FHLB advances assumed by BankUnited in connection with the
acquisition of Suncoast.
CAPITAL
The Company's total stockholders' equity was $98.2 million at December 31, 1996,
an increase of $29.1 million, or 42.1%, from $69.1 million at September 30,
1996. The increase is due primarily to the issuance of 2,199,930 shares of
Series A Common Stock and 920,000 shares of 8% Non-cumulative 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.
On December 30, 1996, the Company's subsidiary, BankUnited Capital, issued $50
million of Trust Preferred Securities (see Note 3 of the condensed notes to
consolidated financial statements). The net proceeds from the sale of the Trust
Preferred Securities was $48 million. These funds may be used to provide
additional capital to the Bank and enables the Bank to continue its rapid
expansion. As of December 31, 1996, BankUnited Financial Corporation had
contributed $25 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 1.45 shares of Class A common stock for each share
of Series C preferred stock and 1.32 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 December 31, 1996 the Bank
had liquid assets and short term liquid assets of 16.9% and 12.10%,
respectively, which was in compliance with these requirements.
The Company is considering several allternative public and/or private financings
that would provide the Bank with a significant increase in liquidity and Tier 1
capital to permit additional growth.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND
1995.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $927,000 for the
three months ended December 31, 1996, compared to net income after preferred
stock dividends of $375,000 for the three months ended December 31, 1995. All
major categories of income and expense increased significantly in the three
months ended December 31, 1996 as compared to the three months ended December
31, 1995 and reflect the significant growth the Company has experienced in the
last year. A significant factor in such growth was the
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acquisition of Suncoast, which was completed on November 15, 1996. The Company's
Consolidated Statement of Operations for the three months ended December 31,
1996 reflects the Suncoast operations from the date of acquisition forward.
Below is a more detailed discussion of each major category of income and
expenses.
NET INTEREST INCOME
Net interest income increased $3.6 million, or 100.8%, to $7.1 million for the
three months ended December 31, 1996 from $3.5 million for the three months
ended December 31, 1995. This increase is attributable to an expansion of the
net interest rate spread of 56 basis points, to 2.60% for the three months ended
December 31, 1996 from 2.04% for the three months ended December 31, 1995 and an
increase in average interest-earning assets of $396.0 million, or 65.7%, to
$998.3 million for the three months ended December 31, 1996 from $602.3 million
for the three months ended December 31, 1995, offset by an increase in average
interest-bearing liabilities of $384.6 million, or 68.7%, to $944.6 million for
the three months ended December 31, 1996 from $560.0 million for the three
months ended December 31, 1995. Approximately $200 million of the increase in
average earning assets for the three months ended December 31, 1996 is a result
of the acquisition of Suncoast. The remaining increase in average earning assets
is due primarily to loan purchases. The average yield on interest-earning assets
increased 27 basis points to 7.78% for the three months ended December 31, 1996
from 7.51% for the three months ended December 31, 1995. 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 $8.2 million, or 72.1%, to $19.5 million for
the three months ended December 31, 1996 from $11.3 million for the three months
ended December 31, 1995, reflects increases in interest and fees on loans of
$7.9 million. The average yield on loans receivable increased to 7.97% for the
three months ended December 31, 1996 from 7.66% for the three months ended
December 31, 1995 and the average balance of loans receivable increased $372.7
million, or 81.5%, to $830.2 million for the three months ended December 31,
1996. Approximately $180 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 $4.6 million, or 59.1%, to $12.4 million for
the three months ended December 31, 1996 from $7.8 million for the three months
ended December 31, 1995 primarily reflects an increase in interest expense on
interest bearing deposits of $4.7 million, or 110%, from $4.2 million for the
three months ended December 31, 1995, to $8.9 million for the three months ended
December 31, 1996. This increase is due to an increase in average interest
bearing deposits of $376 million, or 116%, from $323 million for the three
months ended December 31, 1995 to $699 million for the three months ended
December 31, 1996. Approximately $150 million of this increase represents
deposits acquired with Suncoast. The average rate paid on interest bearing
deposits declined 13 basis points from 5.17% for the three months ended December
31, 1995 to 5.04% for the three months ended December 31, 1996. The decline in
the average rate paid on interest bearing deposits is due to a decline in the
average rate paid on certificates of deposits from 5.69% to 5.51%.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended December 31, 1996 was
$250,000 as compared with a credit for loan losses of $300,000 for the three
months ended December 31, 1995. The credit in 1995 was due to a recovery of
approximately $1 million as a result of a legal settlement relating to certain
loans previously purchased. The provision (credit) for loan losses represents
management's estimate of the charge
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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 December 31, 1996 was $600,000
compared with $158,000 for the three months ended December 31, 1995, an increase
of $442,000. Of this increase, $262,000 represents loan servicing fees (net of
amortization of capitalized servicing rights) acquired with Suncoast. The
remaining increase is primarily attributable to service fees on deposits
reflecting the increase in the amount of deposits outstanding.
NON-INTEREST EXPENSES
Operating expenses increased $2.3 million, or 91.2%, to $4.8 million for the
three months ended December 31, 1996 compared to $2.5 million for the three
months ended December 31, 1995. The increase in expenses is attributable to the
growth the Company has experienced and includes the expenses of Suncoast after
November 15, 1996.
INCOME TAXES
The income tax provision was $1.0 million for the three months ended December
31, 1996, compared to $557,000 for the three months ended December 31, 1995. The
increase in income taxes is the result of the Company's higher pre-tax earnings
during the three months ended December 31, 1996, compared to the three months
ended December 31, 1995.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the three months ended December 31, 1996 were
$672,000 an increase of $136,000, or 25.4%, as compared to $536,000 for the
three months ended December 31, 1995. 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.
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.
12
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
------------------------------------------------------------------------
1996 1995
--------------------------------- ---------------------------------
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 $830,157 $16,616 7.97% $457,493 $ 8,766 7.66%
Mortgage-backed securities 78,721 1,309 6.65 52,344 889 6.79
Short-term investments (1) 33,021 467 5.53 39,719 603 5.94
Tax certificates 36,681 756 8.24 35,876 762 8.49
Long-term investments and
FHLB stock, net 19,736 343 6.89 16,907 304 7.08
-------- ------- ---- -------- -------- ----
Total interest-earning assets 998,316 19,491 7.78 602,339 11,324 7.51
-------- ------- ---- -------- -------- ----
Interest-bearing liabilities:
NOW/money market 73,103 413 2.24 25,086 126 1.99
Savings 106,209 1,254 4.68 52,450 575 4.35
Certificates of deposit 519,785 7,215 5.51 245,711 3,522 5.69
FHLB advances and other
borrowings 245,520 3,505 5.59 236.775 3,563 5.86
-------- ------- ---- -------- -------- ----
Total interest-bearing
liabilities 944,617 12,387 5.18 560,022 7,786 5.47
-------- ------- ---- -------- -------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 53,699 $ 42.317
======== ========
Net interest income $ 7,104 $ 3,538
======= ========
Interest rate spread 2.60% 2.04%
===== =====
Net interest margin 2.87% 2.41%
===== =====
Ratio of interest-earning assets to
interest-bearing liabilities 105.68% 107.56%
======== ========
<FN>
- --------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and certificates
of deposit.
</FN>
</TABLE>
13
<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 DECEMBER 31,
--------------------------------------------------------------
1996 VS. 1995
--------------------------------------------------------------
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 $ 7,673 $ 143 $ 34 $ 7,850
Mortgage-backed securities 448 (19) (9) 420
Short-term investments (1) (102) (41) 7 (136)
Tax certificates 17 (22) (1) (6)
Long-term investments and FHLB
stock 48 (6) (3) 39
------- ----- ------ -------
Total interest-earning assets 8,084 55 28 8,167
------- ----- ------ -------
Interest expense attributable to:
NOW/money market 241 16 30 287
Savings 590 44 45 679
Certificates of deposit 3,928 (111) (124) 3,693
FHLB advances and other
borrowings 131 (182) (7) (58)
------- ----- ------ -------
Total interest-bearing liabilities 4,890 (233) (56) 4,601
------- ----- ------ -------
Increase in net interest income $ 3,194 $ 288 $ 84 $ 3,566
======= ===== ====== =======
<FN>
- ------------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and certificates
of deposit.
</FN>
</TABLE>
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On November 15, 1996, the Company acquired Suncoast Savings and
Loan Association, FSA which was merged with its wholly owned
bank subsidiary, BankUnited, FSB. In connection with the
acquisition, the Company issued 2,199,930 shares of Class A
Common Stock and 920,000 shares of 8% Non-cumulative
Convertible Preferred Stock, Series 1996. (See Note 4 of
Condensed Notes to Consolidated Financial Statements)
On December 30, 1996, the Company's subsidiary, BankUnited
Capital, a trust created under the laws of the state of
Delaware, sold through private placement, $50 million of
redeemable trust preferred securities. The trust preferred
securities were offered by Friedman, Billings, Ramsey & Co.,
Inc., and Raymond James & Associates, Inc., as compensation for
arranging such sales, an amount of $30.00 per preferred
security ($1.5 million in aggregate) was paid. The preferred
securities were offered and sold only to qualified
institutional buyers ("Qualified Institutional Buyers") as
defined under Rule 144A under the Securities 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)
ITEM 5. OTHER INFORMATION
None
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
December 2, 1996 under item 2 and 7 thereof reporting
BankUnited Financial Corporation's acquisition of
Suncoast Savings and Loan Association, FSA.
The Company filed a current report on Form 8-K dated
January 8, 1997 reporting 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.
15
<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: February 14, 1997 By: /s/ SAMUEL A. MILNE
--------------------------------------
Samuel A. Milne
Executive Vice President
and Chief Financial Officer
16
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
Form 10-Q for the Quarter Ended December 31, 1996
INDEX TO EXHIBITS
EXHIBIT NO.
- -----------
11 Calculation of Earnings Per Share
27.1 Financial Data schedule
17
Calculation of Earnings Per Share
(In thousands, except per share data)
FOR THE THREE MONTHS
ENDED DECEMBER 31,
-----------------------
CALCULATION OF PRIMARY EARNINGS PER COMMON SHARE 1996 1995
- ------------------------------------------------ --------- ---------
Net income before preferred stock dividends $ 1,599 $ 911
Preferred stock dividends (672) (536)
Reduction of interest expense due to assumed
exercise of stock options, net of taxes -- 3
------- -------
Net income available to common shares $ 927 $ 378
======= =======
Weighted average number of common shares outstanding
during the period 6,807 2,078
Assumed exercise of stock options (Modified Treasury
Stock Method) 348 291
------- -------
Weighted average number of common share equivalents
assumed outstanding during the period 7,155 2,369
======= =======
Primary earnings per share $ 0.13 $ 0.16
======= =======
FOR THE THREE MONTHS
ENDED DECEMBER 31,
-----------------------
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE 1996 1995
- ------------------------------------------------------ --------- ---------
Net income before preferred stock dividends $ 1,599 $ 911
Preferred stock dividends (588) (452)
Reduction of interest expense due to assumed
exercise of stock options, net of taxes -- 3
------- -------
Net income available to common shares $ 1,011 $ 462
======= =======
Weighted average number of common shares outstanding
during the period 6,807 2,078
Assumed exercise of stock options (Modified Treasury
Stock Method) 436 291
Conversion of Preferred Stock 803 803
Weighted average number of fully diluted common shares
assumed outstanding during the period 8,046 3,172
======= =======
Fully diluted earnings per share $ 0.13 $ 0.15
======= =======
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BANK UNITED, FSB FOR THE THREE MONTHS ENDED DECEMBER 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 15,095
<INT-BEARING-DEPOSITS> 69,323
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 78,098
<INVESTMENTS-CARRYING> 47,706
<INVESTMENTS-MARKET> 0
<LOANS> 1,049,661
<ALLOWANCE> 2,891
<TOTAL-ASSETS> 1,329,044
<DEPOSITS> 506,106
<SHORT-TERM> 288,484
<LIABILITIES-OTHER> 13,464
<LONG-TERM> 0
0
36
<COMMON> 79
<OTHER-SE> 98,040
<TOTAL-LIABILITIES-AND-EQUITY> 1,329,044
<INTEREST-LOAN> 16,616
<INTEREST-INVEST> 2,875
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 19,491
<INTEREST-DEPOSIT> 8,882
<INTEREST-EXPENSE> 12,387
<INTEREST-INCOME-NET> 7,104
<LOAN-LOSSES> 250
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,833
<INCOME-PRETAX> 2,621
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,621
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
<YIELD-ACTUAL> 2.88
<LOANS-NON> 5,558
<LOANS-PAST> 52
<LOANS-TROUBLED> 1,691
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,158
<CHARGE-OFFS> 303
<RECOVERIES> 12
<ALLOWANCE-CLOSE> 2,891
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
