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 June 30, 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 August 6, 1997 was 8,593,782 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 28 pages.
The Index to Exhibits appears on page 25.
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
Form 10-Q Report for the Quarter Ended June 30, 1997
INDEX
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition as of
June 30, 1997 (unaudited) and September 30, 1996 3
Consolidated Statements of Operations (unaudited)
for the Three and Nine Months ended June 30, 1997
and June 30, 1996 4-5
Consolidated Statements of Cash Flows (unaudited)
for the Nine Months Ended June 30, 1997 and
June 30, 1996 6
Condensed Notes to Consolidated Financial
Statements (unaudited) 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10-21
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE 22
Item 5. OTHER INFORMATION 23
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 23
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JUNE 30, SEPTEMBER 30,
1997 1996
- ---------------------------------------------------------------------------------------------------------
(Unaudited)
(Dollars in thousands, except per share amounts)
<S> <C> <C>
ASSETS
Cash and due from banks $ 9,486 $ 5,483
Federal funds sold and Federal Home Loan Bank overnight deposits 2,403 28,653
Tax certificates (net of reserves of $661 at June 30, 1997
and $614 at September 30, 1996) 63,497 40,088
Investments, held to maturity (market value of approximately $14,540 at
June 30, 1997 and $11 at September 30, 1996) 14,491 11
Investments, available for sale, at market 12,522 6,685
Mortgage-backed securities, held to maturity (market
value of approximately $12,006 at June 30, 1997
and $14,274 at September 30, 1996) 12,177 14,698
Mortgage-backed securities available for sale, at market 121,384 55,467
Loans receivable, net 1,453,563 646,385
Loans available for sale 32,781 --
Other interest earning assets 22,349 12,225
Office properties and equipment, net 9,631 2,608
Accrued interest receivable 15,031 7,023
Mortgage servicing rights 4,536 --
Goodwill 12,805 2,457
Prepaid expenses and other assets 20,536 2,577
----------- -----------
Total assets $ 1,807,192 $ 824,360
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 1,100,923 $ 506,106
Advances from Federal Home Loan Bank 446,484 237,000
Subordinated notes 775 775
Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Deferrable Interest
Debentures of the Company 116,000 --
Accrued expenses and other liabilities 41,595 11,368
----------- -----------
Total liabilities 1,705,777 755,249
----------- -----------
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 June 30, 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 - 8,593,356
at June 30, 1997 and 5,454,201 at September 30, 1996 86 54
Class B Common Stock, $.01 par value. Authorized shares
3,000,000; issued and outstanding shares - 275,685 at
June 30, 1997 and 251,515 at September 30, 1996 3 3
Additional paid-in capital 90,780 62,055
Retained earnings 10,546 7,279
Net unrealized losses on securities available for sale, net of tax (30) (307)
----------- -----------
Total stockholders' equity 101,415 69,111
----------- -----------
Total liabilities and stockholders' equity $ 1,807,192 $ 824,360
=========== ===========
</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED JUNE 30,
---------------------------
1997 1996
---- ----
(In thousands, except earnings per share)
<S> <C> <C>
Interest income:
Interest and fees on loans $26,727 $10,937
Interest on mortgage-backed securities 1,984 1,236
Interest on short-term investments 185 520
Interest and dividends on long-term investments
and other earning assets 1,341 934
------- -------
Total interest income 30,237 13,627
------- -------
Interest expense:
Interest on deposits 14,054 5,524
Interest on borrowings 5,193 3,380
Preferred dividends of Trust Subsidiary 2,148 --
------- -------
Total interest expense 21,395 8,904
------- -------
Net interest income before provision for loan losses 8,842 4,723
Provision for loan losses 280 75
------- -------
Net interest income after provision for loan losses 8,562 4,648
------- -------
Non-interest income:
Service fees, net 850 151
Other 66 47
------- -------
Total non-interest income 916 198
------- -------
Non-interest expenses:
Employee compensation and benefits 2,310 1,138
Occupancy and equipment 978 445
Insurance 230 279
Professional fees - legal and accounting 522 210
Other operating expenses 2,118 934
------- -------
Total non-interest expenses 6,158 3,006
------- -------
Income before income taxes and preferred stock dividends 3,320 1,840
Income taxes 1,329 706
------- -------
Net income before preferred stock dividends 1,991 1,134
Preferred stock dividends of the Company 718 537
------- -------
Net income after preferred stock dividends $ 1,273 $ 597
======= =======
Earnings Per Share
Primary $ 0.14 $ 0.10
======= =======
Fully-diluted $ 0.14 $ 0.10
======= =======
Weighted average number of common share equivalents
assumed outstanding during the period:
Primary 9,315 5,947
======= =======
Fully diluted 9,345 5,947
======= =======
</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
NINE MONTHS ENDED JUNE 30,
--------------------------
1997 1996
---- ----
(In thousands, except earnings per share)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 64,405 $ 29,135
Interest on mortgage-backed securities 4,844 3,023
Interest on short-term investments 1,318 1,969
Interest and dividends on long-term investments
and other earning assets 3,365 2,826
-------- --------
Total interest income 73,932 36,953
-------- --------
Interest expense:
Interest on deposits 34,823 14,555
Interest on borrowings 11,665 10,379
Preferred dividends of Trust Subsidiary 3,525 --
-------- --------
Total interest expense 50,013 24,934
-------- --------
Net interest income before provision (credit) for loan losses 23,919 12,019
Provision (credit) for loan losses 695 (225)
-------- --------
Net interest income after provision (credit) for loan losses 23,224 12,244
-------- --------
Non-interest income:
Service fees, net 2,298 432
Other 219 53
-------- --------
Total non-interest income 2,517 485
-------- --------
Non-interest expenses:
Employee compensation and benefits 6,745 3,161
Occupancy and equipment 2,594 1,232
Insurance 701 748
Professional fees - legal and accounting 1,063 687
Other operating expenses 5,611 2,470
-------- --------
Total non-interest expenses 16,714 8,298
-------- --------
Income before income taxes and preferred stock dividends 9,027 4,431
Income taxes 3,594 1,693
-------- --------
Net income before preferred stock dividends 5,433 2,738
Preferred stock dividends of the Company 2,167 1,609
-------- --------
Net income after preferred stock dividends $ 3,266 $ 1,129
======== ========
Earnings Per Share
Primary $ 0.39 $ 0.28
======== ========
Fully-diluted $ 0.38 $ 0.28
======== ========
Weighted average number of common share equivalents
assumed outstanding during the period:
Primary 8,377 3,997
======== ========
Fully diluted 9,304 3,997
======== ========
</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED JUNE 30,
--------------------------
1997 1996
---- ----
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,433 $ 2,738
Adjustments to reconcile net income to net cash used in
operating activities:
Provision (credit) for loan losses 695 (225)
Provision for losses on tax certificates 48 107
Depreciation and amortization 858 432
Amortization of discounts and premiums on investments 41 11
Amortization of discounts and premiums on mortgage-backed securities 131 114
Amortization of discounts and premiums on loans (278) (2,147)
Loans originated for sale (8,635) (4,067)
(Increase) decrease in accrued interest receivable (5,055) (750)
(Decrease) increase in interest payable on deposits and FHLB advances (397) 198
Increase in accrued expenses 3,372 129
Increase (decrease) in accrued taxes 683 (2,642)
Decrease in deferred taxes (623) (469)
Decrease in other liabilities (8,449) 9,348
Decrease (increase) in prepaid expenses and other assets 2,610 427
Proceeds from sale of loans 7,531 4,292
Recovery on loans 64 941
Loss (gain) on sales of loans 11 (9)
Loss (gain) on sales of real estate owned 451 (148)
Loss on sale of other assets 7
--------- ---------
Net cash used in operating activities (1,509) 8,287
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (500,027) (168,073)
Proceeds from sale of real estate owned 1,260 1,790
Purchase of other earning assets (19,650) (650)
Purchase of investment securities (22,144) (3,510)
Purchase of mortgage-backed securities (56,499) (19,228)
Proceeds from repayments of mortgage-backed securities 12,039 7,588
Proceeds from repayments of other earning assets 12,776 750
Proceeds from repayments of investment securities 1,851 4,675
Proceeds from sale of investment securities -- 2,097
Purchases of premises and equipment (1,124) (874)
Net increase (decrease) in tax certificates (23,457) (10,083)
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 (562,172) (183,997)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 271,080 132,875
Net increase (decrease) in other borrowings 157,984 3,000
Net proceeds from issuance of preferred stock 3 --
Net proceeds from issuance of common stock 944 23,246
Net proceeds from issuance of trust preferred securities 111,545 --
Dividends paid on the Company's preferred stock (2,166) (1,609)
Increase (decrease) in advances from borrowers for taxes and insurance 2,044 (777)
--------- ---------
Net cash provided by financing activities 541,434 156,735
--------- ---------
(Decrease) increase in cash and cash equivalents (22,247) (18,975)
Cash and cash equivalents at beginning of period 34,136 34,730
--------- ---------
Cash and cash equivalents at end of period $ 11,889 $ 15,755
========= =========
SUPPLEMENTAL DISCLOSURES:
Transfer from loans to real estate owned $ 2,074 $ 849
========= =========
Transfers from real estate owned to loans $ -- $ 184
========= =========
Transfers of mortgage-backed securities from held-to-maturity to
available for sale $ -- $ 31,780
========= =========
</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
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 nine month
periods ended June 30, 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 June 30,
1997 were as follows:
<TABLE>
<CAPTION>
REQUIRED ACTUAL EXCESS
------------------ ------------------ ------------------
% OF % OF % OF
AMOUNT ASSETS AMOUNT ASSETS AMOUNT ASSETS
------ ------ ------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $26,414 1.5% $ 142,300 8.1% $ 115,886 6.6%
Core Capital $52,828 3.0% $ 142,300 8.1% $ 89,472 5.1%
Risk-Based Capital $83,515 8.0% $ 146,569 14.0% $ 63,054 6.0%
</TABLE>
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 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 10 1/4% Trust Preferred Securities, Series
A.
On March 24, 1997, BankUnited Capital issued an additional $20 million of 10
1/4% Trust Preferred Securities, Series A 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
<PAGE>
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 10 1/4% Trust
Preferred Securities, Series A subject to certain limitations.
On June 5, 1997, BankUnited Capital II, a newly formed trust subsidiary created
under the laws of Delaware, issued $46 million of 9.60% Cumulative Trust
Preferred Securities and $1.84 million of common securities. The common
securities are wholly owned by the Company. In connection with this transaction,
BankUnited Capital II simultaneously purchased $47.84 million of 9.60% Junior
Subordinated Deferrable Interest Debentures issued by BankUnited Financial
Corporation with terms similar to the 9.60% Cumulative Trust Preferred
Securities. These Securities mature June 30, 2027 and pay a preferential
cumulative cash distribution at an annual rate of 9.60%. The Company and
BankUnited Capital II have the right to defer payment of interest for up to five
years. BankUnited Financial Corporation has guaranteed all the obligations of
the 9.60% Cumulative Trust Preferred Securities, subject to certain limitations.
The 9.60% Junior Subordinated Deferrable Interest Debentures rank PARI PASU with
the 10 1/4% Junior Subordinated Deferrable Interest Debentures.
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 $10.6 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 nine month periods ended June 30, 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:
8
<PAGE>
Proforma combined condensed Statement of Operations (in thousands except per
share data):
<TABLE>
<CAPTION>
Three Months Ended June 30, Nine Months Ended June 30,
(Unaudited) (Unaudited)
1997 1996 1997 1996
--------- -------- --------- ------
<S> <C> <C> <C> <C>
Interest Income $ 30,237 $ 21,708 $77,800 $58,981
Interest expense 21,395 13,675 52,321 38,291
Provision (credit) for loan losses 280 37 801 (72)
Non-interest income 916 2,428 3,171 5,807
Non-interest expense 6,158 7,238 18,526 20,492
Income tax provision 1,329 1,270 3,727 2,411
Net income before preferred
stock dividends 1,991 1,916 5,596 3,666
Preferred stock dividends 718 813 2,305 2,437
------------ ------------ --------- ---------
Net income after preferred
stock dividends $ 1,273 $ 1,103 $ 3,291 $ 1,229
============ ============ ========= =========
Earnings per share
Primary $ 0.14 $ 0.14 $ 0.38 $ 0.20
Fully-diluted $ 0.14 $ 0.13 $ 0.37 $ 0.20
</TABLE>
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.
9
<PAGE>
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 nine
month periods ended June 30, 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.
This Quarterly Report on Form 10-Q contains forward looking statements.
Additional written or oral forward looking statements may be made by the Company
from time to time in fillings with the Securities and Exchange Commission or
otherwise. Such forward looking statements are within the meaning of that term
in Section 27A of the Securities Act of 1933, as amended, (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the"Exchange
Act"). Such statements may include, but not be limited to, projections of
income, borrowing costs, prepayment rates, and plans for future operations or
acquisitions, as well as assumptions relating to the foregoing. The words
"believe," "except," "anticipate," "estimate" "project," "intend," and similar
expressions identify forward looking statements that are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified. Future
events and actual results could differ materially from those set forth in,
comtemplated by, or underlying the forward looking statements.
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM SEPTEMBER 30, 1996 TO JUNE 30,
1997.
ASSETS
Total assets increased by $983 million, or 119.2%, from $824 million at
September 30, 1996, to $1.81 billion at June 30, 1997, due primarily to the
acquisition of Suncoast Savings and Loan Association, FSA ("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 $ 4.0 million from $5.5 million as of
September 30, 1996 to $9.5 million at June 30, 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 $26.2 million,
or 91.6%, to $2.4 million at June 30, 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 $65.9 million or 118.8%
from $55.5 million at September 30, 1996 to $121.4 million at June 30, 1997, due
primarily to $18.7 million of mortgage-backed securities acquired with Suncoast
and the purchase of $56.5 million mortgage backed securities. All mortgage
backed-securities acquired with Suncoast as well as all mortgage
backed-securities purchased in the nine months ended June 30, 1997 have been
classified as available for sale.
The Company's net loan portfolio increased by $840.0 million, or 129.9%, to $1.5
billion at June 30, 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 $545.3 million of residential loans.
Loans available for sale as of June 30, 1997 were $32.8 million as compared with
no loans as of September 30, 1996. Beginning in the Company's fiscal 1997 fourth
quarter, management intends to offer for sale between 50% to 75% of the
Company's internally generated residential loans.
10
<PAGE>
The increase in mortgage servicing rights, goodwill, prepaid expenses and other
assets totaling $25.9 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 June 30, 1997 were $11.9 million which represents an
increase of $4.1 million or 52.2% from $7.8 million as of September 30, 1996.
Non-performing assets as a percentage of total assets declined 29 basis points
from .95% as of September 30, 1996 to .66% as of June 30, 1997. $2.4 million of
non-performing assets were acquired with Suncoast.
The allowance for loan losses increased $963,000 from $2.2 million as of
September 30, 1996 to $3.1 million as of June 30, 1997. The increase was
attributable primarily to the allowance acquired from Suncoast of $775,000. The
following table sets forth information concerning the Company's non-performing
assets for the periods indicated.
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
--------------- --------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans (1) $7,806 $4,939
Restructured loans 1,887 1,457
Loans past due 90 days and still accruing -- --
------------ ----------
Total non-performing loans 9,693 6,396
Non-accrual tax certificates 1,051 800
REO 1,171 632
------------ ----------
Total non-performing assets $11,915 $7,828
============ ==========
Allowance for tax certificates $ 661 $ 614
Allowance for loan losses 3,121 2,158
------------ ----------
Total allowance $3,782 $2,772
============ ==========
Non-performing assets as a percentage of
total assets .66% .95%
Non-performing loans as a percentage of
total loans .65% .99%
Allowance for loan losses as a percentage of
total loans .25% .34%
Allowance for loan losses as a percentage of
non-performing loans 39.02% 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 June 30, 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
<PAGE>
LIABILITIES
Deposits increased by $594.8 million, or 117.5%, to $1.1 billion at June 30,
1997 from $506.1 million at September 30, 1996. Of this growth, $323.7 million
was acquired with Suncoast; $73.8 million of the increase represents growth in
former Suncoast branches since acquisition; $128.1 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 $446.5 million at June 30, 1997, up $209.5 million from
$237.0 million at September 30, 1996. This increase was the result of FHLB
advances used to fund the purchase of residential loans as well as advances
assumed by BankUnited in connection with the acquisition of Suncoast.
In July 1997, the Company notified all outstanding subordinated note holders
that the notes, totaling $774,500 will be called as of August 31, 1997 .
CAPITAL
The Company's total stockholders' equity was $101.4 million at June 30, 1997, an
increase of $32.3 million, or 46.7%, 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; in March 1997, BankUnited Capital issued
an additional $20 million of Trust Preferred Securities; and in June 1997, the
Company's subsidiary, BankUnited Capital II issued $46 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 $112 million. These funds may be used to provide additional
capital to the Bank and enable the Bank to continue its expansion. In the nine
months ended June 30, 1997, BankUnited Financial Corporation contributed $60
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.
In July 1997, the Company began a tender offer to purchase any and all of its
outstanding shares of 9% Noncumulative Perpetual Preferred Stock at $10.25 per
share which represents a $.25 premium to redemption value. The offer expires
August 15, 1997 unless the Company decides to extend it.
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 June 30, 1997, the Bank
had liquid assets and short term liquid assets of 5.9% and 1.9%, respectively,
which was in compliance with these requirements.
The Company periodically has discussions with and reviews financial information
on other financial institutions which may lead to the acquisition of all or part
of that financial institution by the Company.
12
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND
1996.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $1,273,000 for the
three months ended June 30, 1997, compared to net income after preferred stock
dividends of $597,000 for the three months ended June 30, 1996. All major
categories of income and expense increased significantly in the three months
ended June 30, 1997 as compared to the three months ended June 30, 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 June
30, 1997. Below is a more detailed discussion of each major category of income
and expenses.
NET INTEREST INCOME
Net interest income increased $4.1 million, or 87.2%, to $8.8 million for the
three months ended June 30, 1997 from $4.7 million for the three months ended
June 30, 1996. This increase is attributable to an increase in average
interest-earning assets of $843.8 million, or 114.1%, to $1,584 million for the
three months ended June 30, 1997 from $739.7 million for the three months ended
June 30, 1996, offset by an increase in average interest-bearing liabilities of
$838.1 million, or 124.2%, to $1,513 million for the three months ended June 30,
1997 from $675.0 million for the three months ended June 30, 1996. Approximately
$400 million of the increase in average interest earning assets for the three
months ended June 30, 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 26 basis
points to 7.63% for the three months ended June 30, 1997 from 7.37% for the
three months ended June 30, 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 $16.6 million, or 121.9%, to $30.3 million
for the three months ended June 30, 1997 from $13.6 million for the three months
ended June 30, 1996, reflects increases in interest and fees on loans of $15.8
million. The average yield on loans receivable increased to 7.74% for the three
months ended June 30, 1997 from 7.58% for the three months ended June 30, 1996
and the average balance of loans receivable increased $801.7 million, or 138.8%,
to $1,379 million for the three months ended June 30, 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 $12.5 million, or 140.3%, to $21.4 million
for the three months ended June 30, 1997 from $8.9 million for the three months
ended June 30, 1996 primarily reflects an increase in interest expense on
interest bearing deposits of $8.5 million, or 154.5%, from $5.5 million for the
three months ended June 30, 1996, to $14.0 million for the three months ended
June 30, 1997. This increase is due to an increase in average interest bearing
deposits of $633 million, or 143.4%, from $442 million for the three months
ended June 30, 1996 to $1,075 million for the three months ended June 30, 1997.
Approximately $300 million of this increase represents deposits acquired with
Suncoast. The average rate paid on interest bearing deposits increased 22 basis
points from 5.03% for the three months ended June 30, 1996 to 5.25% for the
three months ended June 30, 1997. Interest on the Trust Preferred Securities was
$2.1 million for the three months ended June 30, 1997 compared with no interest
expense in 1996.
13
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended June 30, 1997 was
$280,000 as compared with $75,000 for the three months ended June 30, 1996
reflecting the increase in loans for each of the periods. 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 June 30, 1997 was $916,000
compared with $198,000 for the three months ended June 30, 1996, an increase of
$718,000. Of this increase, $488,000 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.
NON-INTEREST EXPENSES
Operating expenses increased $3.2 million, or 104.9%, to $6.2 million for the
three months ended June 30, 1997 compared to $3.0 million for the three months
ended June 30, 1996. The increase in expenses is attributable to the growth the
Company has experienced including the expenses of Suncoast's operations.
INCOME TAXES
The income tax provision was $1.3 million for the three months ended June 30,
1997 compared to $706,000 for the three months ended June 30, 1996. The increase
in income taxes is the result of the Company's higher pre-tax earnings during
the three months ended June 30, 1997, compared to the three months ended June
30, 1996.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the three months ended June 30, 1997 were
$718,000, an increase of $181,000, or 33.7%, as compared to $537,000 for the
three months ended June 30, 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 C-II in February
1997.
14
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND
1996.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $3.3 million for
the nine months ended June 30, 1997, compared to net income after preferred
stock dividends of $1.1 million for the nine months ended June 30, 1996. All
major categories of income and expense increased significantly in the nine
months ended June 30, 1997 as compared to the nine months ended June 30, 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 nine months ended June 30, 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 $11.9 million, or 99.0%, to $23.9 million for the
nine months ended June 30, 1997 from $12.0 million for the nine months ended
June 30, 1996. This increase is attributable to an increase in average
interest-earning assets of $613.8 million, or 92.4%, to $1,278 million for the
nine months ended June 30, 1997 from $664.5 million for the nine months ended
June 30, 1996. Approximately $300 million of the increase in average
interest-earning assets for the nine months ended June 30, 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 29 basis points to 7.70% for the nine months ended June 30,
1997 from 7.41% for the nine months ended June 30, 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 $37.0 million, or 100.0%, to $74.0 million
for the nine months ended June 30, 1997 from $37.0 million for the nine months
ended June 30, 1996, reflects increases in interest and fees on loans of $35.3
million. The average yield on loans receivable increased to 7.87% for the nine
months ended June 30, 1997 from 7.62% for the nine months ended June 30, 1996
and the average balance of loans receivable increased $579.5 million, or 113.6%,
to $1,090 million for the nine months ended June 30, 1997. Approximately $300
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 $25.1 million, or 100.6%, to $50.0 million
for the nine months ended June 30, 1997 from $24.9 million for the nine months
ended June 30, 1996 primarily reflects an increase in interest expense on
interest bearing deposits of $20.2 million, or 139.2%, from $14.6 million for
the nine months ended June 30, 1996, to $34.8 million for the nine months ended
June 30, 1997 and interest expense of $3.5 million on Trust Preferred Securities
which were issued in fiscal 1997. This increase is due to an increase in average
interest bearing deposits of $525 million, or 138.4%, from $379 million for the
nine months ended June 30, 1996 to $904 million for the nine months ended June
30, 1997. Approximately $250 million of this increase represents deposits
acquired with Suncoast. The average rate paid on interest bearing deposits
increased 2 basis points from 5.13% for the nine months ended June 30, 1996 to
5.15% for the nine months ended June 30, 1997.
15
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses for the nine months ended June 30, 1997 was
$695,000 as compared with a credit for loan losses of $225,000 for the nine
months ended June 30, 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 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 nine months ended June 30, 1997 was $2.5 million
compared with $485,000 for the nine months ended June 30, 1996, an increase of
$2.0 million. Of this increase, $1.2 million 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.
NON-INTEREST EXPENSES
Operating expenses increased $8.4 million, or 101.4%, to $16.7 million for the
nine months ended June 30, 1997 compared to $8.3 million for the nine months
ended June 30, 1996. The increase in expenses is attributable to the growth the
Company has experienced including the expenses of Suncoast's operations.
INCOME TAXES
The income tax provision was $3.6 million for the nine months ended June 30,
1997 compared to $1.7 million for the nine months ended June 30, 1996. The
increase in income taxes is the result of the Company's higher pre-tax earnings
during the nine months ended June 30, 1997, compared to the nine months ended
June 30, 1996.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the nine months ended June 30, 1997 were $2.2
million, an increase of $558,000, or 34.7%, as compared to $1.6 million for the
nine months ended June 30, 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 C-II in February
1997.
16
<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>
THREE MONTHS ENDED JUNE 30,
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 $1,379,182 $ 26,727 7.74% $577,486 $ 10,937 7.58%
Mortgage-backed securities 115,444 1,984 6.87 73,618 1,236 6.72
Short-term investments (1) 11,501 185 6.36 38,297 520 5.37
Tax certificates 39,014 669 6.86 30,628 594 7.76
Long-term investments and
FHLB stock, net 38,398 672 7.01 19,671 340 6.94
---------- -------- ---- -------- -------- ----
Total interest-earning assets 1,583,539 30,237 7.63 739,700 13,627 7.37
---------- -------- ---- -------- -------- ----
Interest-bearing liabilities:
NOW/money market 95,796 602 2.52 42,582 272 2.57
Savings 148,689 1,693 4.57 62,285 678 4.38
Certificates of deposit 830,027 11,759 5.68 336,633 4,573 5.46
Trust preferred securities 83,143 2,148 10.33 -- -- --
FHLB advances and other
borrowings 355,527 5,193 5.78 233,511 3,381 5.73
---------- -------- ----- -------- -------- ----
Total interest-bearing
liabilities 1,513,182 21,395 5.65 675,011 8,904 5.27
---------- -------- ----- -------- -------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 70,357 $ 64.689
========== ========
Net interest income $ 8,842 $ 4,723
======== =======
Interest rate spread 1.97% 2.10%
===== =====
Net interest margin 2.23% 2.56%
===== =====
Ratio of interest-earning assets to
interest-bearing liabilities 104.65% 109.58%
========== =======
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
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 $ 1,089,582 $ 64,405 7.87% $510,128 $29,135 7.62%
Mortgage-backed securities 95,671 4,844 6.75 59,643 3,023 6.76
Short-term investments (1) 30,943 1,318 5.62 46,602 1,969 5.55
Tax certificates 35,253 1,966 7.44 31,487 1,941 8.22
Long-term investments and
FHLB stock, net 26,876 1,399 6.95 16,644 885 7.09
----------- ------ ---- -------- -------- ----
Total interest-earning assets 1,278,325 73,932 7.70 664,504 36,953 7.41
----------- ------ ---- -------- -------- ----
Interest-bearing liabilities:
NOW/money market 88,953 1,602 2.41 30,256 511 2.26
Savings 132,438 4,543 4.59 55,981 1,828 4.36
Certificates of deposit 682,330 28,678 5.62 292,812 12,216 5.57
Trust preferred securities 45,150 3,525 10.41 -- -- --
FHLB advances and other
borrowings 272,974 11,665 5.64 234,111 10,379 5.83
----------- ------- ----- -------- ------- ----
Total interest-bearing
liabilities 1,221,845 50,013 5.46 613,160 24,934 5.40
----------- ------- ----- ------- ------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 56,480 $ 51.344
========= ========
Net interest income $ 23,919 $ 12,019
======== ========
Interest rate spread 2.24% 2.01%
===== =====
Net interest margin 2.48% 2.43%
===== =====
Ratio of interest-earning assets to
interest-bearing liabilities 104.62% 108.37%
======= =======
</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 JUNE 30,
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 $15,408 $ 111 $ 271 $ 15,790
Mortgage-backed securities 702 29 17 748
Short-term investments (1) (360) 95 (70) (335)
Tax certificates 163 (69) (19) 75
Long-term investments and FHLB
stock 313 8 11 332
------- ------ ------- -------
Total interest-earning assets 16,226 174 210 16,610
------- ------ ------- -------
Interest expense attributable to:
NOW/money market 337 (5) (2) 330
Savings 933 29 53 1,015
Certificates of deposit 6,647 182 357 7,186
Trust preferred securities 2,148 -- -- 2,148
FHLB advances and other
borrowings 1,774 37 1 1,812
--------- -------- -------- -------
Total interest-bearing liabilities 11,839 243 409 12,491
--------- -------- -------- -------
Increase in net interest income $ 4,387 $ (69) $ (199) $ 4,119
========= ======== ======== =======
- ------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
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 $ 34,241 $ 368 $ 661 $ 35,270
Mortgage-backed securities 1,826 (3) (2) 1,821
Short-term investments (1) (660) 22 (14) (652)
Tax certificates 232 (185) (22) 25
Long-term investments and FHLB
stock 522 (5) (2) 515
------- ------ ------ --------
Total interest-earning assets 36,161 197 621 36,979
------- ------ ------ --------
Interest expense attributable to:
NOW/money market 990 35 66 1,091
Savings 2,494 96 125 2,715
Certificates of deposit 16,236 103 123 16,462
Trust Preferred Securities 3,525 3,525
FHLB advances and other
borrowings 1,713 (334) (93) 1,286
------- ------- ------- --------
Total interest-bearing liabilities 24,598 (100) 221 25,079
------- ------- ------- --------
Increase in net interest income $ 11,203 $ 297 $ 400 $11,900
======== ======= ======= ========
- ------------
</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.
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
20
<PAGE>
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of stockholders of the Company held on February
26, 1997 the stockholders voted on the election of directors to the Company's
Board of Directors, the approval of the Company's 1996 Incentive Compensation
and Stock Award Plan, and the approval of amendments to the Company's Articles
of Incorporation.
With respect to the election of directors, the stockholders voted in
favor of electing (i) Elia J. Giusti for a term ending in 1998; (ii) Bruce
Friesner, Irving P. Cohen and Norman E. Mains for terms ending in 1999; and
(iii) Marc D. Jacobson, Anne W. Solloway, Neil Messinger, Marc Lipsitz and
Albert J. Finch for terms ending in 2000. Voting on the election of directors
was as follows:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINING
--------- ------------- ----------------
<S> <C> <C> <C>
Elia J. Giusti 869,229 973 0
Bruce Friesner 869,229 973 0
Irving P. Cohen 869,229 973 0
Norman E. Mains 869,229 973 0
Marc D. Jacobson 869,229 973 0
Anne E. Solloway 866,229 973 0
Neil Messinger 869,189 1,013 0
Marc Lipsitz 869,229 973 0
Albert J. Finch 868,884 1,318 0
</TABLE>
The directors not elected at the meeting, whose terms continued after
the meeting, are Lawrence H. Blum, Alfred R. Camner, James A. Dougherty,
Patricia L. Frost, Allen M. Bernkarnt, Earline G. Ford and Christina Cuervo
Migoya.
The stockholders voted to approve the 1996 Incentive Compensation and
Stock Award Plan as follows:
VOTES FOR VOTES AGAINST VOTES ABSTAINING
--------- ------------- ----------------
807,353 18,216 1,543
The stockholders voted to approve amendments to the Company's Articles
of Incorporation, which amendments eliminated prohibitions against the Company's
purchase or other acquisition of its 8% Noncumulative Convertible Preferred
Stock, Series 1993, and 9% Noncumulative Perpetual Preferred Stock. Voting on
amendments was as follows:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINING
--------- ------------- ----------------
<S> <C> <C> <C> <C>
Class A Common Stock,
Class B Common Stock,
and Series B Preferred
Stock voting together 821,370 4,784 958
8% Preferred Stock and
9% Preferred Stock
voting as a separate class 1,045,337 146,675 83,507
</TABLE>
22
<PAGE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Calculations of Earnings per Share
27.1 Financial Data Schedule
(b) 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: August 7, 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 June 30, 1997
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NO. NUMBERED PAGE
- ----------- ---------------
11 Calculation of Earnings Per Share....................... 26
27.1 Financial Data schedule ................................ 28
25
<TABLE>
<CAPTION>
EXHIBIT 11
Calculation of Earnings Per Share
(In thousands, except per share data)
FOR THE THREE MONTHS
ENDED JUNE 30,
CALCULATION OF PRIMARY EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------ ------- -------
<S> <C> <C>
Net income before preferred stock dividends $ 1,992 $ 1,134
Preferred stock dividends (718) (537)
------- -------
Net income available to common shares $ 1,274 $ 597
======= =======
Weighted average number of common shares outstanding
during the period 8,856 5,698
Assumed exercise of stock options (Modified Treasury
Stock Method) 459 249
------- -------
Weighted average number of common share equivalents
assumed outstanding during the period 9,315 5,947
======= =======
Primary earnings per share $ 0.14 $ 0.10
======= =======
FOR THE THREE MONTHS
ENDED JUNE 30,
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------------ ------- -------
Net income before preferred stock dividends $ 1,992 $ 1,134
Preferred stock dividends (718) (537)
------- -------
Net income available to common shares $ 1,274 $ 597
======= =======
Weighted average number of common shares outstanding
during the period 8,856 5,698
Assumed exercise of stock options (Modified Treasury
Stock Method) 489 249
Weighted average number of fully diluted common shares
assumed outstanding during the period 9,345 5,947
======= =======
Fully diluted earnings per share $ 0.14 $ 0.10
======= =======
</TABLE>
26
<TABLE>
<CAPTION>
EXHIBIT 11
Calculation of Earnings Per Share
(In thousands, except per share data)
FOR THE NINE MONTHS
ENDED JUNE 30,
CALCULATION OF PRIMARY EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------ ------- -------
<S> <C> <C>
Net income before preferred stock dividends $ 5,433 $ 2,738
Preferred stock dividends (2,167) (1,609)
Reduction of interest expense due to assumed
exercise of stock options, net of taxes -- 3
------- -------
Net income available to common shares $ 3,266 $ 1,132
======= =======
Weighted average number of common shares outstanding
during the period 7,945 3,739
Assumed exercise of stock options (Modified Treasury
Stock Method) 432 258
------- -------
Weighted average number of common share equivalents
assumed outstanding during the period 8,377 3,997
======= =======
Primary earnings per share $ 0.39 $ 0.28
======= =======
FOR THE NINE MONTHS
ENDED JUNE 30,
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE 1997 1996
- ------------------------------------------------------ ------- -------
Net income before preferred stock dividends $ 5,433 $ 2,738
Preferred stock dividends (1,910) (1,609)
------- -------
Net income available to common shares $ 3,523 $ 1,129
======= =======
Weighted average number of common shares outstanding
during the period 7,945 3,739
Assumed exercise of stock options (Modified Treasury
Stock Method) 481 258
Conversion of Preferred Stock 878 --
Weighted average number of fully diluted common shares
assumed outstanding during the period 9,304 3,997
======= =======
Fully diluted earnings per share $ 0.38 $ 0.28
======= =======
</TABLE>
27
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BANK UNITED, FSB FOR THE NINE MONTHS ENDED JUNE 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 9,486
<INT-BEARING-DEPOSITS> 2,403
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 133,906
<INVESTMENTS-CARRYING> 90,165
<INVESTMENTS-MARKET> 0
<LOANS> 1,489,465
<ALLOWANCE> 3,121
<TOTAL-ASSETS> 1,807,192
<DEPOSITS> 1,100,923
<SHORT-TERM> 447,259
<LIABILITIES-OTHER> 41,595
<LONG-TERM> 116,000
0
30
<COMMON> 89
<OTHER-SE> 101,299
<TOTAL-LIABILITIES-AND-EQUITY> 1,807,192
<INTEREST-LOAN> 64,405
<INTEREST-INVEST> 9,527
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 73,932
<INTEREST-DEPOSIT> 34,823
<INTEREST-EXPENSE> 50,013
<INTEREST-INCOME-NET> 23,919
<LOAN-LOSSES> 695
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 16,714
<INCOME-PRETAX> 9,027
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,027
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
<YIELD-ACTUAL> 2.48
<LOANS-NON> 7,806
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,887
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,875
<CHARGE-OFFS> 78
<RECOVERIES> 44
<ALLOWANCE-CLOSE> 3,121
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
