SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 1998.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number:
0000906420
BANK UNITED CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3528556
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3200 SOUTHWEST FREEWAY, SUITE 1600
HOUSTON, TEXAS 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area co (713) 543-6500
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 [ ]
Number of shares outstanding of the registrant's $0.01 par value common
stock as of February 10, 1999 were as follows:
TITLE OF EACH CLASS NUMBER OF SHARES
------------------------- --------------------
Class A 28,321,576
Class B 3,241,320
<PAGE>
BANK UNITED CORP.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements....................................1
Consolidated Statements of Financial Condition -
December 31, 1998 and September 30, 1998..........................1
Consolidated Statements of Operations -
For the Three Months Ended December 31, 1998 and 1997.............2
Consolidated Statements of Stockholders' Equity -
For the Three Months Ended December 31, 1998 and 1997.............3
Consolidated Statements of Cash Flows -
For the Three Months Ended December 31, 1998 and 1997.............4
Notes to Consolidated Financial Statements........................5
Independent Accountants' Report.................................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................... 15
Item 2. Changes in Securities and Use of Proceeds........................15
Item 3. Defaults Upon Senior Securities..................................15
Item 4. Submission of Matters to a Vote of Security Holders..............15
Item 5. Other Information................................................15
Item 6. Exhibits and Reports on Form 8-K.................................15
Signatures...............................................................16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents .......................... $ 321,989 $ 228,674
Securities purchased under agreements to resell and
federal funds sold ............................... 185,850 474,483
Securities and other investments ................... 89,163 91,350
Mortgage-backed securities
Held to maturity, at amortized cost (fair value
of $404.4 million in 1999 and $438.7
million in 1998) ............................ 408,302 443,886
Available for sale, at fair value ............. 763,768 488,172
Loans
Held for investment (net of allowances for
credit losses of $52.2 million in 1999
and $47.0 million in 1998) .................. 9,875,703 8,566,712
Held for sale ................................. 1,924,766 2,237,032
Federal Home Loan Bank stock ....................... 298,893 242,883
Mortgage servicing rights .......................... 417,235 410,868
Deferred tax asset ................................. 103,350 113,581
Premises and equipment ............................. 67,675 59,889
Intangible assets .................................. 58,253 59,591
Real estate owned .................................. 26,669 18,790
Other assets ....................................... 281,945 229,081
------------ ------------
TOTAL ASSETS ....................................... $ 14,823,561 $ 13,664,992
============ ============
LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits ........................................... $ 6,304,183 $ 6,320,476
Federal Home Loan Bank advances .................... 5,888,294 4,783,294
Securities sold under agreements to repurchase and
federal funds purchased .......................... 752,356 811,742
Notes payable ...................................... 219,726 219,720
Mortgage loan principal and interest due investors . 359,618 207,626
Advances from borrowers for taxes and insurance ... 207,459 270,135
Other liabilities .................................. 200,312 182,087
------------ ------------
Total liabilities ........................ 13,931,948 12,795,080
------------ ------------
MINORITY INTEREST
Preferred stock issued by consolidated subsidiary .. 185,500 185,500
------------ ------------
STOCKHOLDERS' EQUITY
Common stock ....................................... 316 316
Paid-in capital .................................... 129,343 129,343
Retained earnings .................................. 579,028 556,708
Accumulated other comprehensive income - unrealized
gains (losses) on securities available
for sale, net of tax ............................. (1,511) (1,454)
Treasury stock, at cost ............................ (1,063) (501)
------------ ------------
706,113 684,412
------------ ------------
TOTAL LIABILITIES, MINORITY INTEREST, AND
STOCKHOLDERS' EQUITY ............................ $ 14,823,561 $ 13,664,992
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
1
<PAGE>
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS
ENDED DECEMBER 31,
--------------------------
1998 1997
--------- ----------
(UNAUDITED)
INTEREST INCOME
Short-term interest-earning assets .............. $ 4,950 $ 5,556
Securities and other investments ................ 1,627 2,139
Mortgage-backed securities ...................... 17,967 24,385
Loans ........................................... 209,765 184,128
Federal Home Loan Bank stock .................... 3,823 3,157
--------- ---------
Total interest income ................. 238,132 219,365
--------- ---------
INTEREST EXPENSE
Deposits ........................................ 74,376 67,638
Federal Home Loan Bank advances ................. 70,530 60,204
Securities sold under agreements to
repurchase and federal funds purchased ........ 10,122 18,606
Notes payable ................................... 4,887 4,896
--------- ---------
Total interest expense ................ 159,915 151,344
--------- ---------
Net interest income ................... 78,217 68,021
PROVISION FOR CREDIT LOSSES ..................... 6,486 3,439
--------- ---------
Net interest income after provision
for credit losses .................... 71,731 64,582
--------- ---------
NON-INTEREST INCOME
Loan servicing, net of related amortization ..... 14,723 9,338
Net gains (losses)
Sales of single family loans ............... 8,513 (174)
Securities and mortgage-backed securities .. 180 915
Other loans ................................ 1,065 --
Other ........................................... 8,682 6,520
--------- ---------
Total non-interest income ............. 33,163 16,599
--------- ---------
NON-INTEREST EXPENSE
Compensation and benefits ....................... 22,233 18,710
Occupancy ....................................... 4,728 3,678
Data processing ................................. 4,351 3,823
Forbearance litigation .......................... 2,761 450
Advertising and marketing ....................... 2,190 2,874
Other ........................................... 17,608 11,655
--------- ---------
Total non-interest expense .............. 53,871 41,190
--------- ---------
Income before income taxes and
minority interest .................... 51,023 39,991
INCOME TAX EXPENSE .............................. 19,084 14,998
--------- ---------
Income before minority interest ....... 31,939 24,993
MINORITY INTEREST
Subsidiary preferred stock dividends ............ 4,563 4,563
--------- ---------
NET INCOME .......................... $ 27,376 $ 20,430
========= =========
EARNINGS PER COMMON SHARE
Basic ........................................ $ 0.87 $ 0.65
Diluted ...................................... 0.85 0.63
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------
CLASS A CLASS B
----------------------- ---------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT
SEPTEMBER 30, 1997 ................. 28,354,276 $ 284 3,241,320 $ 32 $ 129,286 $ 462,551
Net income ........................ -- -- -- -- -- 20,430
Change in unrealized gains (losses) -- -- -- -- -- --
----------
Total comprehensive income ..... -- -- -- -- -- 20,430
----------
Dividends declared: common
stock ($0.16 per share) ........ -- -- -- -- -- (5,055)
---------- ---------- --------- ---------- ---------- ----------
BALANCE AT
DECEMBER 31, 1997 .................. 28,354,276 $ 284 3,241,320 $ 32 $ 129,286 $ 477,926
========== ========== ========= ========== ========== ==========
BALANCE AT
SEPTEMBER 30, 1998 ................. 28,355,776 $ 284 3,241,320 $ 32 $ 129,343 $ 556,708
Net income ........................ -- -- -- -- -- 27,376
Change in unrealized gains (losses) -- -- -- -- -- --
----------
Total comprehensive income ..... -- -- -- -- -- 27,376
----------
Dividends declared: common
stock ($0.16 per share) ........ -- -- -- -- -- (5,056)
Stock repurchased ................. -- -- -- -- -- --
---------- ---------- --------- ---------- ---------- ----------
BALANCE AT
DECEMBER 31, 1998 .................. 28,355,776 $ 284 3,241,320 $ 32 $ 129,343 $ 579,028
========== ========== ========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME -
UNREALIZED TREASURY STOCK TOTAL
GAINS ----------------------- STOCKHOLDER'S
(LOSSES) SHARES AMOUNT EQUITY
------------- -------- -------- --------------
<S> <C> <C> <C>
BALANCE AT
SEPTEMBER 30, 1997 ................. $ 6,326 -- $ -- $ 598,479
Net income ........................ -- -- -- 20,430
Change in unrealized gains (losses) (1,338) -- -- (1,338)
-------- ----------
Total comprehensive income ..... (1,338) -- -- 19,092
-------- ----------
Dividends declared: common
stock ($0.16 per share) ........ -- -- -- (5,055)
-------- ---------- ----------- ----------
BALANCE AT
DECEMBER 31, 1997 .................. $ 4,988 -- $ -- $ 612,516
======== ======= ========== ==========
BALANCE AT
SEPTEMBER 30, 1998 ................. $ (1,454) (14,200) $ (501) $ 684,412
Net income ........................ -- -- -- 27,376
Change in unrealized gains (losses) (57) -- -- (57)
-------- ----------
Total comprehensive income ..... (57) -- -- 27,319
-------- ----------
Dividends declared: common
stock ($0.16 per share) ........ -- -- -- (5,056)
Stock repurchased ................. -- (20,000) (562) (562)
-------- ---------- ----------- ----------
BALANCE AT
DECEMBER 31, 1998 .................. $ (1,511) (34,200) $ (1,063) $ 706,113
======== ======= ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED DECEMBER 31,
---------------------------
1998 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided (used) operating activities ....... $ 28,170 $ (502,967)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase price of acquisitions ...................... -- (2,825)
Net change in securities purchased under
agreements to resell and federal funds sold ....... 288,633 129,570
Fundings of loans held for investment ............... (1,241,743) (712,866)
Proceeds from principal repayments and
maturities of
Loans held for investment ...................... 1,241,179 836,591
Securities held to maturity .................... 2,267 --
Securities available for sale .................. 199 63,562
Mortgage-backed securities held to maturity .... 35,413 20,439
Mortgage-backed securities available for sale .. 59,313 138,015
Proceeds from the sale of
Securities available for sale .................. 105,619 134,587
Real estate owned acquired through foreclosure . 5,679 12,307
Purchases of
Loans held for investment ...................... (870,949) (139,071)
Securities held to maturity .................... (2,271) --
Securities available for sale .................. (18) (141,093)
Mortgage-backed securities available for sale .. (333,460) (2,178)
Mortgage servicing rights ...................... (17,972) (16,051)
Federal Home Loan Bank stock ................... (52,187) (22,745)
Other changes in loans held for investment ............ (99,319) (175,005)
Other changes in mortgage servicing rights ............ (6,015) (454)
Net purchases of premises and equipment ............... (10,250) (5,444)
----------- -----------
Net cash (used) provided by investing activities (895,882) 117,339
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits .............................. (16,293) (19,618)
Proceeds from deposits purchased .................... -- 61,575
Proceeds from Federal Home Loan Bank advances ....... 1,835,000 1,045,745
Repayment of Federal Home Loan Bank advances ........ (730,000) (533,835)
Net change in securities sold under agreements
to repurchase and federal funds purchased ......... (59,386) (98,463)
Net change in advances from borrowers for taxes
and insurance ..................................... (62,676) (21,560)
Payment of common stock dividends ................... (5,056) (5,055)
Stock repurchased ................................... (562) --
----------- -----------
Net cash provided by financing activities ........ 961,027 428,789
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..... 93,315 43,161
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ......... 228,674 121,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............... $ 321,989 $ 164,161
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest .............................. $ 159,639 $ 149,922
Cash paid (received) for income taxes ............... 1,818 (192)
NONCASH INVESTING ACTIVITIES
Real estate owned acquired through foreclosure ...... 14,659 9,901
Sales of real estate owned financed by the Bank ..... -- 553
Securitization of loans ............................. 109,234 116,934
Net transfer of loans (to) from held for investment . (360,497) 64,739
Change in unrealized gains (losses) on
securities available for sale, net of tax ......... (57) (1,338)
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPLES OF CONSOLIDATION
The accompanying unaudited Consolidated Financial Statements include the
accounts of Bank United Corp. (the "Parent Company"), Bank United, a federal
savings bank (the "Bank"), and subsidiaries of both the Parent Company and the
Bank (collectively known as the "Company"). All significant intercompany
accounts have been eliminated in consolidation. A majority of the Company's
assets and operations are derived from the Bank.
2. BASIS OF PRESENTATION
The accompanying unaudited Consolidated Financial Statements were prepared in
accordance with the instructions for Form 10-Q and, therefore, do not include
all disclosures necessary for a complete presentation of financial condition,
results of operations, and cash flows in conformity with generally accepted
accounting principles. All adjustments (consisting of only normal recurring
adjustments) that are necessary, in the opinion of management, for a fair
presentation of the interim financial statements have been included. The results
of operations for the three months ended December 31, 1998 are not necessarily
indicative of the results that may be expected for the entire fiscal year or any
other interim period. The interim financial information should be read in
conjunction with the Consolidated Financial Statements and Notes included in the
Company's 1998 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Certain amounts within the accompanying Consolidated Financial Statements and
the related Notes have been reclassified for comparative purposes to conform to
the current presentation. Such reclassifications had no effect on previously
presented net income or retained earnings.
3. EARNINGS PER COMMON SHARE
Basic earnings per share ("EPS") is computed by dividing net income available
to common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted EPS is computed by dividing net income
available to common stockholders by the weighted-average number of common shares
and potential dilutive common shares outstanding during the period. Potential
dilutive common shares are computed using the treasury stock method.
FOR THE THREE MONTHS
ENDED DECEMBER 31,
------------------------
1998 1997
------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME
Net income applicable to common shares ......... $27,376 $20,430
======= =======
SHARES
Weighted-average common shares outstanding ..... 31,567 31,596
Potential dilutive common shares from options .. 574 729
------- -------
Weighted-average common shares and
potential dilutive common shares .......... 32,141 32,325
======= =======
BASIC EPS ...................................... $ 0.87 $ 0.65
DILUTED EPS .................................... $ 0.85 $ 0.63
Options to purchase 852,950 shares of common stock at a weighted-average
price of $42.26 were outstanding at December 31, 1998, but were excluded from
the computation of diluted EPS because the options' exercise price was greater
than the average market price of the common shares. There were no options
excluded from the computation of diluted EPS for the quarter ended December 31,
1997.
5
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. SUMMARY OF STOCK-BASED COMPENSATION
The Company has granted stock options to certain employees and members of its
Board of Directors under incentive and compensation plans. See the Company's
1998 Annual Report on Form 10-K for additional disclosures regarding these
options.
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------
1998 1997
--------------------------- ---------------------------
NUMBER OF WEIGHTED-AVERAGE NUMBER OF WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
--------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Outstanding at end of period ..... 2,157,970 $ 29.38 1,658,220 $ 24.50
Vested at end of period .......... 826,596 20.64 427,319 20.43
Exercisable at end of period ..... 32,500 32.16 15,000 26.54
</TABLE>
5. RECENT ACCOUNTING STANDARDS
As of October 1, 1998, the Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 131, "Disclosure about Segments of an Enterprise and
Related Information," which requires public companies to report certain
information about their operating segments in their annual financial statements
and quarterly reports issued to stockholders. It also requires public companies
to report certain information about their products and services, the geographic
areas in which they operate, and their major customers. Disclosures under SFAS
No. 131 are not required for interim financial statements in the initial year of
application.
As of October 1, 1998, the Company adopted SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise, " which requires that any
mortgage-backed security ("MBS") retained after securitization of a mortgage
loan held for sale be classified based on the Company's intentions. Any retained
MBS that are committed to be sold before or during the securitization process
must be classified as trading.
SFAS No. 133, "Accounting for Derivative Instruments and for Hedging
Activities," requires companies to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS No. 133 requires that changes in fair value of a derivative
be recognized currently in earnings unless specific hedge accounting criteria
are met. Upon implementation of SFAS No. 133, hedging relationships may be
redesignated and securities held to maturity may be transferred to available for
sale or trading. This statement is effective for fiscal years beginning after
June 15, 1999. The Company is evaluating the impact, if any, this statement may
have on its future Consolidated Financial Statements.
6. SUBSEQUENT EVENTS
On January 28, 1999, the Bank filed a registration statement with the Office
of Thrift Supervision ("OTS") to establish a $500 million medium term note
program. The program provides for the issuance of notes on a continuous basis.
The specific terms of any issue of the notes will be determined at the time they
are offered for sale. The notes may be issued with either fixed or floating rate
interest and may be either senior unsecured indebtedness or subordinated
unsecured indebtedness. Proceeds from the offering will be used for general
business purposes, which may include lending and investment activity, extensions
of credit, and repayment of borrowings or other obligations.
On January 21, 1999, the Company and Kroger Food Stores signed a letter of
intent giving Bank United the right to open 50 in-store branch bank locations in
the Houston and Dallas/Ft. Worth areas. The Company estimates the cost of this
initiative will approximate $2.6 million, net of tax, during fiscal 1999.
In September 1998, the Company signed an agreement to purchase Midland
American Bank, a commercial bank with five branches in Midland, Texas, having
assets of $227 million and deposits of $203 million. In January 1999, the
Company received regulatory approval for this purchase. Closing is expected in
the second quarter of fiscal 1999.
6
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Bank United Corp.:
We have reviewed the accompanying condensed consolidated statement of financial
condition of Bank United Corp. and its subsidiaries (collectively known as the
"Company") as of December 31, 1998, and the related condensed consolidated
statements of operations, stockholders' equity, and cash flows for the
three-month periods ended December 31, 1998 and 1997. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition of Bank United
Corp. and its subsidiaries as of September 30, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated October 21,
1998, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated statement of financial condition as of September 30, 1998
is fairly stated, in all material respects, in relation to the consolidated
statement of financial condition from which it has been derived.
DELOITTE & TOUCHE LLP
Houston, Texas
January 22, 1999
7
<PAGE>
BANK UNITED CORP.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
DISCUSSION OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1997
GENERAL
Net income was $27.4 million ($0.85 per diluted share) for the quarter ended
December 31, 1998, compared to $20.4 million ($0.63 per diluted share) for the
quarter ended December 31, 1997. The increase in net income was due primarily to
increased net interest income, higher gains on sales of single family loans, and
increased loan servicing, community banking and commercial banking related fees.
These increases were partially offset by higher provisions for credit losses and
higher non-interest expenses.
NET INTEREST INCOME
Net interest income was $78.2 million for the quarter ended December 31,
1998, compared to $68.0 million for the quarter ended December 31, 1997,
resulting in a $10.2 million, or 15%, increase. This increase was due to a $1.7
billion, or 15%, increase in average interest-earning assets, partially offset
by a 3 basis point decrease in the net yield on interest-earning assets ("net
yield").
AVERAGE BALANCE SHEET, INTEREST INCOME/EXPENSE, AND AVERAGE YIELD/RATE
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1998 1997
-------------------------------------- ------------------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE(1) BALANCE INTEREST RATE(1)
----------- ----------- -------- ----------- ----------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Short-term interest-earning assets ............... $ 353,664 $ 4,950 5.48% $ 297,943 $ 5,556 7.30%
Securities and other investments ................. 117,684 1,627 5.48 119,137 2,139 7.12
Mortgage-backed securities ....................... 1,115,325 17,967 6.44 1,454,163 24,385 6.71
Loans:
Single family ................................. 6,889,440 123,669 7.18 6,642,154 126,856 7.64
Commercial .................................... 3,765,216 76,099 8.02 2,318,735 49,953 8.62
Consumer ...................................... 503,035 9,997 7.88 304,763 7,319 9.53
----------- ----------- ---- ----------- ----------- ----
Total loans ................................ 11,157,691 209,765 7.49 9,265,652 184,128 7.95
FHLB stock ......................................... 264,691 3,823 5.73 209,062 3,157 5.99
----------- ----------- ---- ----------- ----------- ----
Total interest-earning assets ................. 13,009,055 238,132 7.29 11,345,957 219,365 7.73
Non-interest-earning assets ........................ 1,056,787 707,741
----------- ----------- ---- ----------- ----------- ----
Total assets................................... $14,065,842 $12,053,698
=========== ===========
Interest-bearing liabilities
Deposits ......................................... $ 6,270,927 74,376 4.71 $ 5,246,880 67,638 5.11
FHLB advances .................................... 5,211,120 70,530 5.30 4,099,667 60,204 5.75
Securities sold under agreements to repurchase
and federal funds purchased ..................... 745,726 10,122 5.31 1,256,110 18,606 5.80
Notes payable .................................... 219,723 4,887 8.90 220,201 4,896 8.89
----------- ----------- ---- ----------- ----------- ----
Total interest-bearing liabilities ............ 12,447,496 159,915 5.07 10,822,858 151,344 5.51
Non-interest-bearing liabilities, minority interest,
and stockholders' equity ........................ 1,618,346 1,230,840
----------- ----------- ---- ----------- ----------- ----
Total liabilities, minority interest, and
stockholders' equity ....................... $14,065,842 $12,053,698
=========== ===========
Net interest income/interest rate spread ........... $ 78,217 2.22% $ 68,021 2.22%
=========== ==== =========== ====
Net yield on interest-earning assets ............... 2.44% 2.47%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities ............. 1.05 1.05
=========== ===========
</TABLE>
(1) Annualized.
8
<PAGE>
BANK UNITED CORP.
The increase in average interest-earning assets came from growth in the
Company's commercial and consumer loan portfolios. Average commercial and
consumer loans increased $1.6 billion, or 63%, during the quarter ended December
31, 1998, as compared to the quarter ended December 31, 1997, due to purchases
and originations. Average deposits increased $1.0 billion, or 20%, during the
quarter ended December 31, 1998, as compared to the year ago quarter. This
increase was due to the acquisition of 21 branches with deposits, primarily
certificates of deposit ("CDs"), totalling $1.5 billion during the second
quarter of fiscal 1998 and due to an increase in the number of transaction
accounts. The increase in average deposits and Federal Home Loan Bank ("FHLB")
advances funded the growth in assets and the reduction in higher cost securities
sold under agreements to repurchase and federal funds purchased ("reverse
repurchase agreements").
The net yield was 2.44% for the quarter ended December 31, 1998, compared to
2.47% for the quarter ended December 31, 1997. During the current quarter,
market interest rates declined, resulting in a decline in both the gross yield
on interest-earning assets as well as the cost of funds. The Company's net yield
remained relatively stable due to an increase in the proportion of higher
yielding commercial and consumer loans in its portfolio compared to lower
yielding single family loans. During the quarter ended December 31, 1998,
commercial and consumer loans comprised 33% of average interest-earning assets
and single family loans comprised 53%, compared to 23% and 59%, respectively,
during the quarter ended December 31, 1997. The decline in the deposit cost of
funds resulted from the drop in market interest rates as well as new volumes
obtained through branch acquisitions during fiscal 1998.
PROVISION FOR CREDIT LOSSES
The provision for credit losses increased $3.0 million to $6.5 million for
the quarter ended December 31, 1998. Increased commercial and single family loan
provisions were partially offset by a decrease in the provision for consumer
loans during the period.
The increase in the commercial loan provision and related allowance resulted
from a $1.5 billion, or 56%, increase in the commercial loan portfolio from
December 1997 to December 1998 and an overall increase in this portfolio's
allowance levels to approximately one percent during the second quarter of
fiscal 1998. The commercial loan allowance to total commercial loans was 0.92%
and 0.39% at December 31, 1998 and 1997. The provision for single family loans
held for investment increased primarily due to a $667.6 million increase in this
portfolio during the quarter ended December 31, 1998. The allowance for single
family loans was lower at December 1998 compared to December 1997. Based on the
single family portfolio's historical loss experience, the allowance levels were
reduced during the second quarter of fiscal 1998.
The consumer loan provision was higher during the quarter ended December 31,
1997, primarily due to provisions recorded during that quarter related to the
consumer line of credit portfolio. The consumer line of credit portfolio
totalled $37.6 million and was sold during the second quarter of fiscal 1998.
Charge-offs of $4.9 million related to this sale were recorded in the quarter
ended December 31, 1997.
ALLOWANCE FOR CREDIT LOSSES
SINGLE
FAMILY COMMERCIAL CONSUMER TOTAL
-------- ---------- -------- --------
(IN THOUSANDS)
Balance at September 30, 1997 $ 24,538 $ 8,766 $ 5,870 $ 39,174
Provision ................. (116) 1,357 2,198 3,439
Net charge-offs ........... (1,101) -- (6,303) (7,404)
-------- -------- -------- --------
Balance at December 31, 1997 $ 23,321 $ 10,123 $ 1,765 $ 35,209
======== ======== ======== ========
Balance at September 30, 1998 $ 12,503 $ 32,269 $ 2,255 $ 47,027
Provision ................. 1,318 5,097 71 6,486
Net charge-offs ........... (635) (299) (362) (1,296)
-------- -------- -------- --------
Balance at December 31, 1998 $ 13,186 $ 37,067 $ 1,964 $ 52,217
======== ======== ======== ========
9
<PAGE>
BANK UNITED CORP.
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
1998 1998 1997
------------- --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual loans
Single family ........................... $ 52,666 $ 55,800 $ 59,639
Commercial .............................. 9,908 5,344 6,980
Consumer ................................ 712 688 691
-------- -------- --------
63,286 61,832 67,310
Premium (discounts) ....................... 87 116 (1,235)
-------- -------- --------
Net nonaccrual loans ................... 63,373 61,948 66,075
REO, primarily single family properties ... 27,221 19,357 17,056
-------- -------- --------
Total nonperforming assets ........... $ 90,594 $ 81,305 $ 83,131
======== ======== ========
</TABLE>
Nonperforming assets increased $9.3 million from September 30, 1998 to
December 31, 1998 due to a $1.5 million increase in nonaccrual loans and a $7.9
million increase in real estate owned ("REO"). The increase in commercial
nonaccrual loans was primarily due to one multi-family loan located in Athens,
Georgia. This loan was purchased as part of a bulk purchase of loans early in
fiscal 1998. This increase in commercial nonaccrual loans was partially offset
by a $3.1 million decrease in single family nonaccrual loans. The increase in
REO was primarily due to the foreclosure of one single family construction loan
located in Washington, D.C. The Company is completing construction on the
underlying homes and expects to have all related sales completed by the end of
the fiscal year.
SELECTED ASSET QUALITY RATIOS
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR AT OR FOR THE
THREE MONTHS ENDED THE YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1997
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Allowance for credit losses to net nonaccrual loans
Single family ................................... 24.98% 22.36% 39.40%
Total ........................................... 82.40 75.91 53.29
Allowance for credit losses to total loans ........ 0.44 0.44 0.36
Nonperforming assets to total assets .............. 0.61 0.59 0.66
Net nonaccrual loans to total loans ............... 0.53 0.57 0.68
Nonperforming assets to total loans and REO ....... 0.76 0.75 0.86
Net loan charge-offs to average loans - annualized
Single family ................................... 0.04 0.06 0.07
Total ........................................... 0.05 0.13 0.32(1)
</TABLE>
(1) Excluding charge-offs in December 1997 totalling $4.9 million related to the
January 1998 sale of the consumer line of credit portfolio, the total
charge-off ratio would have been 0.11% for the quarter ended December 31,
1997 and 0.08% for fiscal 1998.
NON-INTEREST INCOME
Non-interest income increased $16.6 million, or 100%, during the quarter
ended December 31, 1998, as compared to the quarter ended December 31, 1997.
Gains on sales of single family loans increased $8.7 million primarily due to an
increase in volume sold ($1.3 billion for the quarter ended December 31, 1998,
compared to $121.8 million for the quarter ended December 31, 1997). Changes in
the mix of product sold, as well as favorable market conditions during the
current period, also contributed to higher gains. Loan servicing income
increased $5.4 million, or 58%, during the quarter ended December 31, 1998, as
compared to the year ago quarter. Gross servicing fee revenue increased $9.6
million, and was partially offset by a $4.2 million increase in the amortization
of mortgage servicing rights ("MSRs"). These increases resulted from a larger
portfolio of single family loans serviced for others, which averaged $22.7
billion for the quarter ended December 31, 1998, compared to $17.6 billion for
the quarter ended December 31, 1997. Other non-interest income increased $2.2
million, or 33%, during the quarter ended December 31, 1998 as compared to the
year ago quarter. This increase includes higher checking account and other
10
<PAGE>
BANK UNITED CORP.
deposit related fees due to growth in the number of checking accounts from
168,000 at December 31, 1997, to 182,000 at December 31, 1998. Commissions
earned on sales of third party mutual funds, annuities, and other investment
products also contributed to this increase as a result of a 15% increase in
sales volume during the current quarter compared to the year ago quarter.
NON-INTEREST EXPENSE
Non-interest expense was $53.9 million and $41.2 million for the quarters
ended December 31, 1998 and 1997. Included in these amounts are legal expenses
of $2.8 million and $450,000, respectively, related to the Company's lawsuit
against the federal government concerning forbearance matters. See "Legal
Proceedings". Excluding the forbearance litigation expenses, non-interest
expense for the quarters ended December 31, 1998 and 1997 was $51.1 million and
$40.7 million, for an increase of 25% during the current period. The efficiency
ratio for these periods remained relatively unchanged at approximately 47%. The
expense increase during the current quarter was principally the result of higher
levels of loan activity and branch acquisitions. The number of corporate
branches (including wholesale loan origination, commercial and community banking
branches) increased 34%, while the number of employees increased 22% during the
current quarter compared to the year ago quarter.
DISCUSSION OF CHANGES IN FINANCIAL CONDITION FROM SEPTEMBER 30, 1998 TO
DECEMBER 31, 1998
GENERAL
Total assets increased during the quarter ended December 31, 1998 by $1.2
billion, or 8%, to $14.8 billion. This increase occurred in the loan portfolio,
which was funded primarily with FHLB advances.
Securities purchased under agreements to resell and federal funds sold
decreased $288.6 million during the quarter ended December 31, 1998 as these
funds were reinvested in assets with higher yields.
MBS increased $240.0 million, or 26%, during the quarter ended December 31,
1998. During this period, $333.5 million of MBS, primarily AAA and AA rated
commercial MBS, were purchased.
ORIGINATION, PURCHASE, AND SALE OF LOANS
FOR THE THREE MONTHS
ENDED DECEMBER 31,
-----------------------------
1998 1997
------------ -------------
(IN THOUSANDS)
Beginning balance, September 30 ................ $ 10,803,744 $ 8,995,229
Fundings
Single family ........................... 1,625,949 846,941
Commercial .............................. 1,041,932 528,620
Consumer ................................ 64,527 36,565
Purchases
Single family ........................... 732,167 30,281
Commercial .............................. 306,273 236,941
Consumer ................................ -- 172
Net change in mortgage banker finance lines
of credit ................................. 134,587 172,919
Repayments
Single family ........................... (738,895) (521,755)
Commercial .............................. (681,821) (356,907)
Consumer ................................ (40,426) (35,574)
Securitized loans sold or transferred ....... (175,650) (239,690)
Sales ....................................... (1,240,157) (13,322)
Other ....................................... (31,761) (9,845)
------------ ------------
Ending balance, December 31 .................... $ 11,800,469 $ 9,670,575
============ ============
11
<PAGE>
BANK UNITED CORP.
LOAN PORTFOLIO
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
1998 1998 1997
----------- ------------- ------------
(IN THOUSANDS)
Single family
Held for investment ...... $ 5,354,154 $ 4,686,600 $ 5,469,280
Held for sale ............ 1,783,143 2,149,009 1,242,031
Commercial .................. 4,144,105 3,472,579 2,659,695
Consumer .................... 519,067 495,556 299,569
----------- ----------- -----------
$11,800,469 $10,803,744 $ 9,670,575
=========== =========== ===========
The commercial loan portfolio increased $671.5 million, or 19%, since
September 1998, primarily due to originations and purchases. Commercial loan
originations, which primarily related to single family construction loans,
totalled $1.0 billion for the quarter ended December 31, 1998, compared to
$528.6 million for the year ago quarter. During the quarter ended December 31,
1998, the Company purchased $160.1 million of small business administration
("SBA") loans, and $107.6 million were securitized and sold. All commercial loan
categories increased during the current quarter: single family construction
($121.5 million, or 16%), multi-family ($38.2 million, or 4%), commercial real
estate ($168.1 million, or 25%), healthcare ($139.6 million, or 53%), mortgage
banker finance lines of credit ($134.6 million, or 17%), and SBA ($69.5 million,
or 58%).
Single family loan originations totalled $1.6 billion for the quarter ended
December 31, 1998, compared to $846.9 million for the year ago quarter. The
increase in originations, as well as higher levels of principal repayments, was
due to increased refinancing activity resulting from lower long-term market
interest rates during the current period. Refinancings approximated $1.3 billion
and $567.5 million, or 81% and 67%, of total single family loan originations
during the quarters ended December 31, 1998 and 1997, respectively. A large
portion of these originations were designated as held for sale, thereby
contributing to the increased sales volume during the current quarter as
compared to the prior year quarter. Single family loan purchases totalled $732.2
million for the quarter ended December 31, 1998, compared to $30.3 million for
the quarter ended December 31, 1997. The volatility in the secondary mortgage
market enabled the Company to obtain these loans at favorable spreads.
During the quarter ended December 31, 1998, the Company purchased servicing
rights associated with $665.0 million in loans at a cost of $15.8 million. These
servicing rights are expected to be transferred to the Company during the second
and third quarters of fiscal 1999.
The increase in other assets and mortgage loan principal and interest due
investors primarily relates to the growth in the Company's servicing portfolio.
LIQUIDITY
The Bank is required by OTS regulations to maintain a certain level of
liquidity. The Bank's average daily liquidity ratio for the quarter ended
December 31, 1998 was 5.52%, compared to the requirement of 4.0%.
The primary sources of funds are deposits, FHLB advances, reverse repurchase
agreements, principal repayments on loans and MBS, and proceeds from the
issuance of debt and stock. These funds are principally used to meet ongoing
commitments related to deposit withdrawals, repayment of borrowings, funding of
existing and continuing loan commitments, and to maintain liquidity. Management
believes that the Bank has adequate resources to fund all of its commitments.
The Company's ability to pay dividends on its common stock and to meet its
other cash obligations is dependent upon the receipt of dividends from the Bank.
The declaration of dividends by the Bank on all classes of its capital stock is
subject to the discretion of the Board of Directors of the Bank, the terms of
the Bank preferred stock, and applicable regulatory requirements. At December
31, 1998, the Bank had $250.1 million of available capacity for the payment of
dividends under OTS regulations. See "Management's Discussion and Analysis -
Capital Resources and Liquidity" in the Company's 1998 Annual Report on Form
10-K.
12
<PAGE>
BANK UNITED CORP.
REGULATORY MATTERS
The Bank's capital levels at December 31, 1998 and September 30, 1998
qualified it as "well-capitalized", the highest of five tiers under applicable
regulatory definitions. The Bank's capital ratios at December 31, 1998 and
September 30, 1998, and the regulatory capital requirements were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, CAPITAL ADEQUACY WELL-CAPITALIZED
1998 1998 REQUIREMENT REQUIREMENT
------------ ------------- ----------------- ---------------
<S> <C> <C> <C>
Tangible capital ............ 6.52% 6.75% 1.50% --
Core/leverage capital ....... 6.54 6.77 3.00 5.00%
Tier 1 capital .............. 9.85 9.97 -- 6.00
Total risk-based capital .... 10.39 10.48 8.00 10.00
</TABLE>
YEAR 2000
There have been no material changes in the Company's Year 2000 readiness
since it was last reported on in the Company's Annual Report on 10-K filed
December 22, 1998. See "Management Discussion and Analysis Contingencies and
Uncertainties - Year 2000" in the Company's 1998 Annual Report on Form 10-K.
FORWARD-LOOKING INFORMATION
Statements and financial discussion and analysis contained in this report
that are not historical facts are forward- looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements involve a number of risks and uncertainties.
The important factors that could cause actual results to differ materially from
the forward-looking statements include, without limitation:
INTEREST RATES AND ECONOMY
o changes in interest rates and economic conditions;
o changes in the levels of loan prepayments and the resulting effects on the
value of the loan and servicing portfolios and the related hedging
instruments;
o changes in local economic and business conditions adversely affecting the
Company's borrowers and their ability to repay their loans according to their
terms or impacting the value of the related collateral;
o changes in local economic and business conditions adversely affecting the
Company's customers other than borrowers and their ability to transact
profitable business with the Company;
COMPETITION AND PRODUCT AVAILABILITY
o increased competition for deposits and loans adversely affecting rates and
terms;
o changes in availability of loans originated by other financial institutions or
the Company's ability to purchase such loans on favorable terms;
o changes in availability of single family servicing rights in the marketplace
and the Company's ability to purchase such assets on favorable terms;
o the Company's ability to make acquisitions of other depository institutions,
their assets or their liabilities on terms favorable to the Company, and the
Company's successful integration of any such acquisitions;
CHANGE IN COMPANY'S ASSET MIX
o increased credit risk in the Company's assets and increased operating risk
caused by an increase in commercial and consumer loans and a decrease in
single family mortgage loans as a percentage of the total loan portfolio;
LIQUIDITY AND CAPITAL
o changes in availability of funds increasing costs or reducing liquidity;
o changes in the ability of the Company to pay dividends on its common stock;
o increased asset levels and changes in the composition of assets and the
resulting impact on the Bank's capital levels and regulatory capital ratios;
13
<PAGE>
BANK UNITED CORP.
SYSTEMS
o the Company's ability to acquire, operate, and maintain cost effective and
efficient systems;
o the Company's ability to complete its Year 2000 Project on time;
PERSONNEL
o the loss of senior management or operating personnel and the potential
inability to hire qualified personnel at reasonable compensation levels;
REGULATORY, COMPLIANCE, AND LEGAL
o changes in applicable statutes and government regulations or their
interpretations;
o claims of noncompliance by the Company with statutory and regulatory
requirements;
o claims with respect to representations and warranties made by the Company to
purchasers and insurers of mortgage loans and to purchasers of MSRs;
o changes in the status of litigation to which the Company is a party.
For further information regarding these factors, see "Risk Factors" in the
prospectus dated April 29, 1997, relating to the public offering of the
Company's subordinated notes due 2007 filed with the Securities and Exchange
Commission ("SEC") (File No. 333-19861), and in the prospectus dated January 27,
1997, relating to the registration of 10,208,610 shares of the Company's Class A
common stock, filed with the SEC (File No. 333-19237).
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss from adverse changes in market prices and
interest rates. The Company's principal market risk exposure is to changes in
interest rates. The Company is most affected by changes in U. S. Treasury rates
and London InterBank Offered Rates ("LIBOR") because many of the Company's
financial instruments reprice based on these indices. Interest rate risk arises
primarily from differences in the duration or repricing of the Company's assets,
liabilities, and financial instruments with off-balance-sheet risk. The
Company's management actively monitors and manages its interest rate risk
through structuring the balance sheet and off-balance-sheet portfolios by
seeking to maximize net interest income while maintaining an acceptable level of
risk to changes in market interest rates. The achievement of this goal requires
a balance between profitability, liquidity, and interest rate risk. See
discussion in "Business - Market Risk Analysis" in the Company's 1998 Annual
Report on Form 10-K.
The following table represents an analysis of the sensitivity inherent in the
Company's net interest income over a 12 month period and market value of
portfolio equity arising from hypothetical changes in market interest rates
("MVE"). MVE is the market value of assets, less the market value of
liabilities, adjusted for the market value of MSRs and off-balance-sheet
instruments. The interest rate scenarios presented in the table include interest
rates at December 31, 1998 and September 30, 1998 and adjusted by instantaneous
parallel rate changes upward and downward of up to 200 basis points. Each rate
scenario has unique prepayment, repricing, and reinvestment assumptions.
Prepayments are assumed to increase as rates decrease and to slow as rates
increase.
DECEMBER 31, 1998 SEPTEMBER 30, 1998
----------------------- ------------------------
CHANGE IN NET INTEREST NET INTEREST
INTEREST RATES INCOME MVE INCOME MVE
--------------- ------------- -------- -------------- --------
+200 0.42% (9.65)% (2.92)% (4.63)%
+100 0.68 (4.97) (0.48) (2.63)
0 0.00 0.00 0.00 0.00
-100 (1.20) (0.30) 1.13 (3.86)
-200 (1.49) 7.40 2.39 1.68
14
<PAGE>
BANK UNITED CORP.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 25, 1995, the Bank, the Parent Company, and Hyperion Partners L.P.
(collectively, the "Plaintiffs") filed suit against the United States of America
in the United States Court of Federal Claims for breach of contract and other
claims. The action arose because the passage of Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 ("FIRREA") and the regulations adopted by
the OTS pursuant to FIRREA deprived Plaintiffs of their contractual rights.
In December 1998, the Court issued an order setting the case for trial on
May 3, 1999. The Court has not ruled on the various motions pending in the case.
See "Legal Proceedings" in the Company's Annual Report on Form 10-K. The Company
continues to conduct discovery and to prepare for trial.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6A. EXHIBITS
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
*15.1 - Letter in Lieu of Consent of Deloitte & Touche LLP, independent
accountants
*27.1 - Financial Data Schedule, Quarter Ended December 31, 1998
* Filed herewith.
ITEM 6B. REPORTS ON FORM 8-K
The Company did not file a report on Form 8-K during the three months ended
December 31, 1998.
15
<PAGE>
BANK UNITED CORP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANK UNITED CORP.
(Registrant)
Date FEBRUARY 11, 1999 /S/ BARRY C. BURKHOLDER
Barry C. Burkholder
President
Chief Executive Officer
(Duly Authorized Officer)
Date FEBRUARY 11, 1999 /S/ ANTHONY J. NOCELLA
Anthony J. Nocella
Vice Chairman
Chief Financial Officer
16
EXHIBIT 15.1
February 10, 1999
Bank United Corp.
3200 Southwest Freeway
Houston, Texas 77027
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Bank United Corp. and its subsidiaries (collectively known as the
"Company") for the three-month periods ended December 31, 1998 and 1997, as
indicated in our report dated January 22, 1999; because we did not perform an
audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in the
Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1998,
is incorporated by reference in Post-effective Amendment No. 6 to Form S-1
(Registration Statement No. 333-19237) on Form S-3, Post-effective Amendment No.
2 to Form S-1 (Registration Statement No. 333-37645) on Form S-3, and Form S-8
(Registration Statement No. 333-42765).
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Houston, Texas
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 315,396
<INT-BEARING-DEPOSITS> 6,593
<FED-FUNDS-SOLD> 185,850
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 850,488
<INVESTMENTS-CARRYING> 410,745
<INVESTMENTS-MARKET> 406,868
<LOANS> 11,800,469
<ALLOWANCE> 52,217
<TOTAL-ASSETS> 14,823,561
<DEPOSITS> 6,304,183
<SHORT-TERM> 3,455,612
<LIABILITIES-OTHER> 767,389
<LONG-TERM> 3,404,764
0
0
<COMMON> 316
<OTHER-SE> 705,797
<TOTAL-LIABILITIES-AND-EQUITY> 14,823,561
<INTEREST-LOAN> 209,765
<INTEREST-INVEST> 24,544
<INTEREST-OTHER> 3,823
<INTEREST-TOTAL> 238,132
<INTEREST-DEPOSIT> 74,376
<INTEREST-EXPENSE> 159,915
<INTEREST-INCOME-NET> 78,217
<LOAN-LOSSES> 6,486
<SECURITIES-GAINS> 180
<EXPENSE-OTHER> 53,871
<INCOME-PRETAX> 51,023
<INCOME-PRE-EXTRAORDINARY> 27,376
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,376
<EPS-PRIMARY> .87
<EPS-DILUTED> .85
<YIELD-ACTUAL> 2.44
<LOANS-NON> 63,286
<LOANS-PAST> 54
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 47,027
<CHARGE-OFFS> 1,397
<RECOVERIES> 101
<ALLOWANCE-CLOSE> 52,217
<ALLOWANCE-DOMESTIC> 52,217
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
