News Column

BANKUNITED, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

August 8, 2014

The following discussion and analysis is intended to focus on significant changes in the financial condition and results of operations of the Company during the three and six months ended June 30, 2014 and should be read in conjunction with the consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and BKU's 2013 Annual Report on Form 10-K for the year ended December 31, 2013 (the Annual Report on Form 10-K").

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to, among other things, future events and financial performance. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and similar expressions identify forward-looking statements. These forward-looking statements are based on the historical performance of the Company or on the Company's current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations so contemplated will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to the Company's operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, the Company's actual results may vary materially from those indicated in these statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, the risk factors described in Part I, Item 1A of the 2013 Annual Report on Form 10-K. The Company does not undertake any obligation to publicly update or review any forward looking statement, whether as a result of new information, future developments or otherwise. Quarterly Highlights



Net income for the quarter ended June 30, 2014 was $48.5 million, or $0.46

per diluted share as compared to $54.0 million, or $0.52 per diluted share, for the quarter ended June 30, 2013. New loans grew by $971 million during the second quarter of 2014,



excluding the impact of the sale of $303 million of indirect auto loans.

Net of the resolution of loans acquired in the FSB Acquisition and sale of

the indirect auto portfolio, loans grew $604 million during the quarter to

$10.6 billion at June 30, 2014.



Total deposits increased by $913 million for the quarter ended June 30,

2014 to $12.0 billion, reflecting growth across all deposit categories.

Net interest income increased by $1.8 million to $165.9 million for the

quarter ended June 30, 2014 from $164.1 million for the quarter ended June 30, 2013. Interest income increased by $5.6 million primarily as a result of an increase in the average balance of loans outstanding, partially offset by a decline in the tax-equivalent yield on loans to 6.48% from 10.28%. Interest expense increased by $3.8 million due primarily to an increase in average interest bearing liabilities,



partially offset by a decline in the cost of interest bearing liabilities

to 0.87% from 0.95%. The net interest margin, calculated on a tax-equivalent basis, was 4.67%



for the quarter ended June 30, 2014 compared to 6.14% for the quarter

ended June 30, 2013. The net interest margin continues to be impacted by

the origination of new loans at current market yields significantly lower than those on the loan portfolio acquired in the FSB Acquisition.



Loss sharing under the terms of BankUnited, N.A.'s Commercial Shared-Loss

Agreement with the FDIC terminated on May 21, 2014. At June 30, 2014, the

Company's loan portfolio included commercial and consumer ACI loans with a

carrying value of $102 million and the investment portfolio included

securities with a carrying value of $204 million that no longer have loss

sharing coverage under the terms of the Commercial Shared-Loss Agreement.

The Company terminated its indirect auto lending activities and sold substantially all of its indirect auto loan portfolio in the second quarter of 2014.



Asset quality remained strong, with a ratio of non-performing, non-covered

assets to total assets of 0.12% and a ratio of non-performing, non-covered

loans to total non-covered loans of 0.21% at June 30, 2014. The ratio of

non- 43

--------------------------------------------------------------------------------



Table of Contents

performing assets to total assets was 0.29% and the ratio of non-performing loans to total loans was 0.27% at June 30, 2014.

The Company's capital ratios exceeded all regulatory "well capitalized"

guidelines, with a Tier 1 leverage ratio of 11.6%, a Tier 1 risk-based

capital ratio of 17.7% and a Total risk-based capital ratio of 18.5% at June 30, 2014. Book value and tangible book value per common share grew to $19.82 and $19.14, respectively, at June 30, 2014 Results of Operations Net Interest Income Net interest income is the difference between interest earned on interest earning assets and interest incurred on interest bearing liabilities and is the primary driver of core earnings. Net interest income is impacted by the relative mix of interest earning assets and interest bearing liabilities, the ratio of interest earning assets to total assets and of interest bearing liabilities to total funding sources, movements in market interest rates, levels of non-performing assets and pricing pressure from competitors. The mix of interest earning assets is influenced by loan demand, market and competitive conditions in our primary lending markets and by management's continual assessment of the rate of return and relative risk associated with various classes of earning assets. The mix of interest bearing liabilities is influenced by management's assessment of the need for lower cost funding sources weighed against relationships with customers and growth requirements and is impacted by competition for deposits in the Company's markets and the availability and pricing of other sources of funds. Net interest income is also impacted by the accounting for ACI loans and to a declining extent, the accretion of fair value adjustments made to other interest earning assets and interest bearing liabilities in conjunction with the FSB Acquisition. ACI loans were initially recorded at fair value, measured based on the present value of expected cash flows. The excess of expected cash flows over recorded investment, known as accretable yield, is recognized as interest income over the lives of the underlying loans. The positive impact of accretion related to ACI loans on the net interest margin and the interest rate spread is expected to continue to decline as ACI loans comprise a declining percentage of total loans. The proportion of total loans represented by ACI loans is declining as the ACI loans are resolved and new loans are added to the portfolio. ACI loans represented 10.4% and 14.4% of total loans, net of premiums, discounts and deferred fees and costs, at June 30, 2014 and December 31, 2013, respectively. As this trend continues, we expect our net interest margin and interest rate spread to decrease. Consideration received earlier than expected or in excess of expected cash flows may result in a pool of ACI residential loans becoming fully amortized and its carrying value reduced to zero even though outstanding contractual balances and expected cash flows remain related to loans in the pool. Once the carrying value of a pool is reduced to zero, any future proceeds from the remaining loans, representing further realization of accretable yield, are recognized as interest income upon receipt. The carrying value of one pool has been reduced to zero. The UPB of loans remaining in this pool was $26.5 million at June 30, 2014. Fair value adjustments of interest earning assets and interest bearing liabilities recorded at the time of the FSB Acquisition are accreted to interest income or expense over the lives of the related assets or liabilities. Generally, accretion of these fair value adjustments increases interest income and decreases interest expense, and thus has a positive impact on our net interest income, net interest margin and interest rate spread. The impact of accretion of fair value adjustments on interest income and interest expense will continue to decline as these assets and liabilities mature or are repaid and constitute a smaller portion of total interest earning assets and interest bearing liabilities. The impact of accretion and ACI loan accounting on net interest income makes it difficult to compare our net interest margin and interest rate spread to those reported by other financial institutions. 44

--------------------------------------------------------------------------------



Table of Contents

The following tables present, for the periods indicated, information about (i) average balances, the total dollar amount of taxable equivalent interest income from earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Non-accrual and restructured loans are included in the average balances presented in this table; however, interest income foregone on non-accrual loans is not included. Interest income, yields, spread and margin have been calculated on a tax-equivalent basis (dollars in thousands): Three Months Ended June 30, 2014 2013 Yield / Yield / Average Balance Interest (1) Rate (2) Average Balance Interest (1) Rate (2) Assets: Interest earning assets: Loans $ 10,292,794$ 166,679



6.48 % $ 6,090,890$ 156,338 10.28 % Investment securities available for sale (3)

3,710,042 26,407 2.85 % 4,378,894 30,904 2.82 % Other interest earning assets 485,044 1,808 1.49 % 370,874 1,142 1.23 % Total interest earning assets 14,487,880 194,894 5.39 % 10,840,658 188,384 6.96 % Allowance for loan and lease losses (72,586 ) (64,051 ) Non-interest earning assets 1,917,988 2,057,070 Total assets $ 16,333,282$ 12,833,677 Liabilities and Stockholders' Equity: Interest bearing liabilities: Interest bearing demand deposits $ 715,340 747 0.42 % $ 570,147 638 0.45 % Savings and money market deposits 4,917,009 6,007 0.49 % 4,135,375 4,820 0.47 % Time deposits 3,642,130 10,713 1.18 % 2,636,693 8,700 1.32 % Total interest bearing deposits 9,274,479 17,467 0.76 % 7,342,215 14,158 0.77 % FHLB advances and other borrowings 2,586,878 8,388 1.30 % 1,990,479 7,890 1.59 % Total interest bearing liabilities 11,861,357 25,855 0.87 % 9,332,694 22,048 0.95 % Non-interest bearing demand deposits 2,222,894 1,473,085 Other non-interest bearing liabilities 241,154 163,201 Total liabilities 14,325,405 10,968,980 Stockholders' equity 2,007,877 1,864,697 Total liabilities and stockholders' equity $ 16,333,282$ 12,833,677 Net interest income $ 169,039$ 166,336 Interest rate spread 4.52 % 6.01 % Net interest margin 4.67 % 6.14 % (1) On a tax-equivalent basis where applicable (2) Annualized (3) At fair value 45

--------------------------------------------------------------------------------

Table of Contents Six Months Ended June 30, 2014 2013 Yield / Yield / Average Balance Interest (1) Rate (2) Average Balance Interest (1) Rate (2) Assets: Interest earning assets: Loans $ 9,892,430$ 332,805



6.75 % $ 5,841,813$ 302,887 10.40 % Investment securities available for sale (3)

3,666,457 51,859 2.83 % 4,354,538 61,657 2.83 % Other interest earning assets 421,642 3,761 1.80 % 499,805 2,421 0.97 % Total interest earning assets 13,980,529 388,425 5.57 % 10,696,156 366,965 6.88 % Allowance for loan and lease losses (72,576 ) (62,517 ) Non-interest earning assets 1,951,276 2,086,104 Total assets $ 15,859,229$ 12,719,743 Liabilities and Stockholders' Equity: Interest bearing liabilities: Interest bearing demand deposits $ 701,248 1,455 0.42 % $ 557,427 1,309 0.47 % Savings and money market deposits 4,786,799 11,383 0.48 % 4,140,073 9,984 0.49 % Time deposits 3,495,546 20,724 1.20 % 2,635,927 17,747 1.36 % Total interest bearing deposits 8,983,593 33,562 0.75 % 7,333,427 29,040 0.80 % FHLB advances and other borrowings 2,506,938 16,391 1.32 % 1,947,959 15,596 1.61 % Total interest bearing liabilities 11,490,531 49,953 0.88 % 9,281,386 44,636 0.97 % Non-interest bearing demand deposits 2,181,384 1,403,161 Other non-interest bearing liabilities 200,856 186,630 Total liabilities 13,872,771 10,871,177 Stockholders' equity 1,986,458 1,848,566 Total liabilities and stockholders' equity $ 15,859,229$ 12,719,743 Net interest income $ 338,472$ 322,329 Interest rate spread 4.69 % 5.91 % Net interest margin 4.85 % 6.04 % (1) On a tax-equivalent basis where applicable (2) Annualized (3) At fair value



Three months ended June 30, 2014 compared to three months ended June 30, 2013

Net interest income, calculated on a tax-equivalent basis, was $169.0 million for the three months ended June 30, 2014 compared to $166.3 million for the three months ended June 30, 2013, an increase of $2.7 million. The increase in net interest income was comprised of an increase in interest income of $6.5 million, partially offset by an increase in interest expense of $3.8 million. The increase in tax-equivalent interest income resulted primarily from a $10.3 million increase in interest income from loans, partially offset by a $4.5 million decrease in interest income from investment securities available for sale. Increased interest income from loans was attributable to a $4.2 billion increase in the average balance outstanding, partially offset by a decrease of 380 basis points in the tax-equivalent yield to 6.48% for the three months ended June 30, 2014 from 10.28% for the three months ended June 30, 2013. Offsetting factors contributing to the overall decline in the yield on loans included:



New loans originated at lower market rates of interest comprised a

greater percentage of the portfolio for the three months ended June 30,

2014 than for the comparable period in 2013. New loans represented

87.3% of the average balance of loans outstanding for the three months ended June 30, 2014 as compared to 72.1% for the three months ended



June 30, 2013. We expect the impact of growth of the new loan portfolio

to lead to further declines in the overall yield on loans. 46

--------------------------------------------------------------------------------



Table of Contents

The tax equivalent yield on new loans declined to 3.55% for the three

months ended June 30, 2014 from 3.87% for the three months ended June

30, 2013, primarily reflecting the impact of lower interest rates on

new production over the last year.

The yield on loans acquired in the FSB Acquisition decreased to 26.62%

for the three months ended June 30, 2014 from 26.86% for the three

months ended June 30, 2013. This decrease in yield reflects a reduction

in the amount of income recognized from resolutions of covered commercial loans and the sale of loans from the pool of ACI loans carried at zero, substantially offset by improvements in expected cash flows and corresponding transfers from non-accretable difference to accretable yield. Interest income on loans acquired in the FSB



Acquisition for the quarters ended June 30, 2014 and 2013 included

proceeds of $7.1 million and $15.5 million, respectively, from the sale

of loans from a pool of ACI loans carried at zero. The impact of sales of loans from this pool is expected to continue to decrease in the future. The average balance of investment securities available for sale decreased by $669 million for the three months ended June 30, 2014 from the three months ended June 30, 2013 while the tax-equivalent yield increased to 2.85% for the three months ended June 30, 2014 from 2.82% for the same period in 2013. The decline in average balance resulted from the use of proceeds from sales and repayments of investment securities to fund new loan production throughout 2013 and the first quarter of 2014. The increase in interest expense for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 was comprised of a $3.3 million increase in interest expense on deposits and a $0.5 million increase in interest expense on FHLB advances and other borrowings. The most significant factor contributing to the increase in interest expense on deposits was an increase in average interest bearing deposits of $1.9 billion for the three months ended June 30, 2014 from the three months ended June 30, 2013. The average balance of FHLB advances and other borrowings increased by $596 million for the quarter ended June 30, 2014 from the quarter ended June 30, 2013. The average rate paid on FHLB advances and other borrowings, inclusive of the impact of cash flow hedges and amortization of modification costs, declined by 0.29% to 1.30% for the three months ended June 30, 2014 from 1.59% for the three months ended June 30, 2013. This decline reflected the impact of the maturity of higher rate advances in 2013 and the addition of new advances at lower market interest rates. The net interest margin, calculated on a tax-equivalent basis, for the three months ended June 30, 2014 was 4.67% as compared to 6.14% for the three months ended June 30, 2013, a decrease of 147 basis points. The interest rate spread decreased to 4.52% for the three months ended June 30, 2014 from 6.01% for the three months ended June 30, 2013. The declines in net interest margin and interest rate spread resulted primarily from lower yields on loans partially offset by a lower cost of deposits and borrowings, as discussed above. We expect the net interest margin and interest rate spread to decrease in future periods as new loans are added to the portfolio at lower current rates and higher yielding assets acquired in the FSB Acquisition continue to decline. The net interest margin was positively impacted by the increase in the ratio of the average balances of non-interest bearing demand deposits to total deposits, an increase in the ratio of the averages balances of loans to total interest-earning assets and an increase in the ratio of the average balances of interest-earning assets to total assets.



Six months ended June 30, 2014 compared to six months ended June 30, 2013

Net interest income, calculated on a tax-equivalent basis, was $338.5 million for the six months ended June 30, 2014 compared to $322.3 million for the six months ended June 30, 2013, an increase of $16.1 million. The increase in net interest income was comprised of an increase in interest income of $21.5 million, partially offset by an increase in interest expense of $5.3 million. The increase in tax-equivalent interest income resulted primarily from a $29.9 million increase in interest income from loans, partially offset by a $9.8 million decrease in interest income from investment securities available for sale. Increased interest income from loans was attributable to a $4.1 billion increase in the average balance outstanding, partially offset by a decrease of 365 basis points in the tax-equivalent yield to 6.75% for the six months ended June 30, 2014 from 10.40% for the six months ended June 30, 2013. Factors contributing to the decline in yield are the growth of new loans at lower market rates of interest as discussed above, partially offset by an increase in yield on loans acquired in the FSB Acquisition. The yield on loans acquired in the FSB Acquisition increased to 26.33% for the six months ended June 30, 2014 from 25.47% for the six months ended June 30, 2013. This increase in yield primarily reflected improvements in expected cash flows and corresponding transfers from non-accretable difference to accretable yield, offset in part by a decrease in income from commercial resolutions and sales of loans from the pool of ACI loans carried at zero. Interest income on loans acquired in the 47

--------------------------------------------------------------------------------



Table of Contents

FSB Acquisition for the six months ended June 30, 2014 and 2013 included proceeds of $15.6 million and $25.8 million, respectively, from the sale of loans from a pool of ACI loans carried at zero.

The decline in interest income on investment securities is a result of the same factors discussed above.

The increase in interest expense for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 was comprised of a $4.5 million increase in interest expense on deposits and a $0.8 million increase in interest expense on FHLB advances and other borrowings. The most significant factor contributing to the increase in interest expense on deposits was an increase in average interest bearing deposits of $1.7 billion for the six months ended June 30, 2014 from the six months ended June 30, 2013. This increase was partially offset by a decrease of 0.05% in the average rate paid on interest bearing deposits . The average balance of FHLB advances and other borrowings increased by $559 million for the six months ended June 30, 2014 from the comparable period ended June 30, 2013. The average rate paid on FHLB advances and other borrowings, inclusive of the impact of cash flow hedges and amortization of modification costs, declined by 0.29% to 1.32% for the six months ended June 30, 2014 from 1.61% for the six months ended June 30, 2013. This decline reflected the impact of the maturity of higher rate advances in 2013 and the addition of new advances at lower market interest rates. The net interest margin, calculated on a tax-equivalent basis, for the six months ended June 30, 2014 was 4.85% as compared to 6.04% for the six months ended June 30, 2013, a decrease of 119 basis points. The interest rate spread decreased to 4.69% for the six months ended June 30, 2014 from 5.91% for the six months ended June 30, 2014. The declines in net interest margin and interest rate spread resulted primarily from lower yields on loans partially offset by a lower cost of deposits and borrowings, as discussed above. The net interest margin was positively impacted by the increase in the ratio of the average balances of non-interest bearing demand deposits to total deposits, an increase in the ratio of the average balances of loans to total interest-earning assets and an increase in the ratio of the average balances of interest-earning assets to total assets. Provision for Loan Losses The provision for loan losses is the amount of expense that, based on our judgment, is required to maintain the ALLL at an adequate level to absorb probable losses inherent in the loan portfolio at the balance sheet date and that, in management's judgment, is appropriate under U.S. generally accepted accounting principles. The determination of the amount of the ALLL is complex and involves a high degree of judgment and subjectivity. Our determination of the amount of the allowance and corresponding provision for loan losses considers ongoing evaluations of the credit quality of and level of credit risk inherent in various segments of the loan portfolio and of individually significant credits, levels of non-performing loans and charge-offs, statistical trends and economic and other relevant factors. See "Analysis of the Allowance for Loan and Lease Losses" below for more information about how we determine the appropriate level of the allowance. An ALLL is established related to ACI loans when quarterly evaluations of expected cash flows indicate it is probable that the Company will be unable to collect all of the cash flows expected at acquisition plus any additional cash flows expected to be collected arising from changes in estimate after acquisition. An allowance for non-ACI loans is established if factors considered relevant by management indicate that additional losses have arisen on non-ACI loans subsequent to the FSB Acquisition. Since the recognition of a provision for (recovery of) loan losses on covered loans represents an increase (reduction) in the amount of reimbursement we ultimately expect to receive from the FDIC, we also record an increase (decrease) in the FDIC indemnification asset for the present value of the projected increase (reduction) in reimbursement, with a corresponding increase (decrease) in non-interest income, recorded in "Net loss on indemnification asset" as discussed below in the section entitled "Non-interest income." Therefore, the impact on our results of operations of any provision for (recovery of) loan losses on covered loans is significantly mitigated by the corresponding impact on non-interest income. For the three months ended June 30, 2014 and 2013, we recorded provisions for (recoveries of) losses on covered loans of $0.9 million and $(3.0) million, respectively, and increases (decreases) in related non-interest income of $1.0 million and $(2.3) million, respectively. For the six months ended June 30, 2014 and 2013, we recorded provisions for losses on covered loans of $1.7 million and $1.8 million, respectively, and increases in related non-interest income of $1.6 million and $1.4 million, respectively. Also see the section below entitled "Termination of the Commercial Shared-Loss Agreement." For the three months ended June 30, 2014 and 2013, we recorded provisions for loan losses of $6.3 million and $7.8 million, respectively, related to new loans. For the six months ended June 30, 2014 and 2013, we recorded provision for loan losses of $13.9 million and $15.0 million, respectively, related to new loans. These loans are not protected by the Loss Sharing Agreements and as such, these provisions are not offset by increases in non-interest income. The provision for losses on new loans for the three and six months ended June 30, 2014 related primarily to growth in the new loan portfolio, after consideration of a reduction in the allowance of $2.3 million related to the sale of the indirect auto loan portfolio. The provision for losses on 48

--------------------------------------------------------------------------------



Table of Contents

new loans for the three months ended June 30, 2013 related primarily to growth in the new loan portfolio. The provision for losses on new loans for the six months ended June 30, 2013 was impacted by growth of the new loan portfolio and a loss of $12.3 million recognized on one commercial loan relationship, partially offset by lower loss factors applied in determining the ALLL, particularly for the new residential portfolio. See the section entitled "Analysis of the Allowance for Loan and Lease Losses" below for further discussion.



Non-Interest Income

The Company reported non-interest income of $20.5 million and $13.2 million for the three months ended June 30, 2014 and 2013, respectively. Non-interest income was $50.7 million and $33.4 million for the six months ended June 30, 2014 and 2013, respectively. The following table presents a comparison of the categories of non-interest income for the periods indicated (in thousands): Three Months Ended June 30,



Six Months Ended June 30,

2014 2013 2014 2013 Income from resolution of covered assets, net $ 12,170$ 20,580$ 25,231$ 39,770 Net loss on indemnification asset (5,896 ) (17,683 ) (22,800 ) (29,370 ) FDIC reimbursement of costs of resolution of covered assets 1,112 2,261 2,240 5,125 Gain (loss) on sale of covered loans (366 ) (4,311 ) 18,928 (5,082 ) OTTI on covered investment securities available for sale - (963 ) - (963 ) Non-interest income (loss) from covered assets 7,020 (116 ) 23,599 9,480 Service charges and fees 4,186 3,379 8,191 6,721 Gain on sale of non-covered loans 357 196 395 381 Gain on sale of non-covered investment securities available for sale, net - 4,499 361 6,185 Other non-interest income 8,915 5,272 18,122 10,586 $ 20,478$ 13,230$ 50,668$ 33,353



Non-interest income related to transactions in the covered assets

Historically, a significant portion of our non-interest income has resulted from transactions related to the resolution of assets covered by our Loss Sharing Agreements with the FDIC. As covered assets continue to decline, we expect the impact of these transactions on results of operations to decrease. The balance of the FDIC indemnification asset is reduced or increased as a result of decreases or increases in cash flows expected to be received from the FDIC related to the gains or losses recorded in our consolidated financial statements from transactions in the covered assets. When these transaction gains or losses are recorded, we also record an offsetting amount in the consolidated statement of income line item "Net loss on indemnification asset." This line item includes the significantly mitigating impact of FDIC indemnification related to the following types of transactions in covered assets:



gains or losses from the resolution of covered assets;

provisions for (recoveries of) losses on covered loans;

gains or losses on the sale of covered loans;

gains or losses on covered investment securities; and

gains or losses on covered OREO.

Each of these types of transactions is discussed further below.

Covered loans may be resolved through prepayment, short sale of the underlying collateral, foreclosure, sale of the loans or charge-off. For loans resolved through prepayment, short sale or foreclosure, the difference between consideration received in resolution of the loans and the carrying value of the loans is recorded in the consolidated statement of income line 49

--------------------------------------------------------------------------------



Table of Contents

item "Income from resolution of covered assets, net." Both gains and losses on individual resolutions are included in this line item. Losses from the resolution of covered loans increase the amount recoverable from the FDIC under the Loss Sharing Agreements. Gains from the resolution of covered loans reduce the amount recoverable from the FDIC under the Loss Sharing Agreements. These additions to or reductions in amounts recoverable from the FDIC related to the resolution of covered loans are recorded in non-interest income in the line item "Net loss on indemnification asset" and reflected as corresponding increases or decreases in the FDIC indemnification asset. The amount of income or loss recorded in any period will be impacted by the amount of covered loans resolved, the amount of consideration received, and our ability to accurately project cash flows from ACI loans in future periods.



The following table provides further detail of the components of income from resolution of covered assets, net for the periods indicated (in thousands):

Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013 Payments in full $ 12,082$ 16,988$ 23,437$ 33,978 Foreclosures 67 (172 ) (633 ) (2,512 ) Short sales (43 ) (232 ) (281 ) (1,933 ) Charge-offs (672 ) (111 ) (803 ) (694 ) Recoveries 736 4,107 3,511 10,931



Income from resolution of covered assets, net $ 12,170$ 20,580$ 25,231$ 39,770

Income from resolution of covered assets, net was $12.2 million and $25.2 million, respectively, for the quarter and six months ended June 30, 2014 compared to $20.6 million and $39.8 million for the quarter and six months ended June 30, 2013. The decrease in reported income generally reflects reductions in the level of activity related to covered assets. The reduced level of activity is consistent with the overall reduction in the number of covered assets due to sales and resolutions, and to improvement in the quality of remaining covered assets. The substantial majority of income from resolution of covered assets has resulted from transactions covered under the Single Family Shared-Loss Agreement. Income from payments in full for the three and six months ended June 30, 2014 decreased by $4.9 million and $10.5 million, respectively, compared to the three and six months ended June 30, 2013. This decrease resulted from a reduction in the number of paid in full resolutions and a decrease in average income per resolution. Average income per resolution declined in part due to updated cash flow forecasts, reflecting additional history with the performance of covered loans. Recoveries decreased for the three and six months ended June 30, 2014 as compared to the three and six months ended June 30, 2013 primarily due to a small number of large commercial loan recoveries totaling approximately $3.4 million and $7.5 million, respectively, during the three and six months ended June 30, 2013. Under the terms of the Purchase and Assumption Agreement with the FDIC, the Bank may sell up to 2.5% of the covered loans based on UPB at the date of the FSB Acquisition, or approximately $280 million, on an annual basis without prior consent of the FDIC. Any losses incurred from such loan sales are covered under the Loss Sharing Agreements. Any loan sale in excess of this stipulated annual threshold requires approval from the FDIC to be eligible for loss share coverage. However, if the Bank seeks to sell residential or non-residential loans in excess of the 2.5% threshold in the nine months prior to the stated termination date of loss share coverage (May 21, 2014 for non-residential loans and May 21, 2019 for residential loans) and the FDIC refuses to consent, the Single Family Shared-Loss Agreement and the Commercial Shared-Loss Agreement will be extended for two additional years with respect to the loans requested to be included in such sales. The Bank will then have the right to sell all or any portion of such loans without FDIC consent at any time within the nine months prior to the extended termination dates, and any losses incurred will be covered under the Loss Sharing Agreements. This final sale mechanism, if exercised, ensures no residual credit risk in our covered loan portfolio that would otherwise arise from credit losses occurring after the termination dates of the Loss Sharing Agreements. We recognized gains (losses) on the sale of covered residential loans of $(0.4) million and $1.0 million for the quarter and six months ended June 30, 2014, respectively, and recognized gains on the sale of covered commercial and consumer loans of $18.0 million during the six month period ended June 30, 2014. For the quarter and six months ended June 30, 2013, we recognized losses of $(4.3) million and $(5.1) million, respectively, on the sale of covered residential loans. The improvement in results of the residential loan sales resulted from better pricing. See Note 4 to the consolidated financial statements for further information about the sales of covered residential loans. We anticipate that we will continue to exercise our right to sell covered residential loans on a quarterly basis in the future. 50

--------------------------------------------------------------------------------



Table of Contents

In accordance with the terms of the Commercial Shared-Loss Agreement, the Bank requested and received approval from the FDIC to sell certain covered commercial and consumer loans and commercial OREO in the first quarter of 2014. Commercial and consumer loans with a carrying value of $86.5 million were transferred to loans held for sale at the lower of carrying value or fair value, determined at the individual loan level, upon receipt of FDIC approval. A provision for loan losses in the amount of $3.5 million, representing the excess of carrying value over the fair value of specific loans, was recognized upon the transfer to loans held for sale. The Company sold these covered loans during the three months ended March 31, 2014 receiving cash proceeds, net of transaction costs, in the amount of $101.0 million. The Company also sold commercial OREO properties with a carrying value of $1.3 million for cash proceeds of $0.8 million. The following table summarizes the impact of these transactions on pre-tax income, as reflected in the consolidated statements of income, for the six months ended June 30, 2014 (in thousands): Gain on sale of covered loans $ 17,971



Provision for loan losses on transfer to loans held for sale (3,469 ) Loss on sale of OREO

(524 ) Loss on indemnification asset (1,737 ) $ 12,241 Additional impairment arising since the FSB Acquisition related to covered loans is recorded in earnings through the provision for losses on covered loans. Under the terms of the Loss Sharing Agreements, the Company is entitled to recover from the FDIC a portion of losses on these loans; therefore, the discounted amount of additional expected cash flows from the FDIC related to these losses is recorded in non-interest income in the line item "Net loss on indemnification asset" and reflected as a corresponding increase in the FDIC indemnification asset. Alternatively, a recovery of the provision for loan losses related to covered loans results in a reduction in the amounts the Company expects to recover from the FDIC and a corresponding reduction in the FDIC indemnification asset and in non-interest income, reflected in the line item "Net loss on indemnification asset." The Company records impairment charges related to declines in the net realizable value of OREO properties subject to the Loss Sharing Agreements and recognizes additional gains or losses upon the eventual sale of such OREO properties. These amounts are included in non-interest expense in the consolidated financial statements. The estimated increase or reduction in amounts recoverable from the FDIC with respect to these gains and losses is reflected as an increase or decrease in the FDIC indemnification asset and in non-interest income in the line item "Net loss on indemnification asset."



The net loss on indemnification asset for the three and six months ended June 30, 2013 was also impacted by an OTTI loss recognized on one covered security.

51

--------------------------------------------------------------------------------



Table of Contents

Net loss on indemnification asset of $5.9 million and $22.8 million, respectively, was recorded for the three and six months ended June 30, 2014, compared to $17.7 million and $29.4 million, respectively, for the three and six months ended June 30, 2013, representing the net changes in the FDIC indemnification asset from increases or decreases in cash flows estimated to be received from the FDIC related to gains and losses from covered assets as discussed in the preceding paragraphs. The net impact on earnings before taxes of these transactions related to covered assets for the three months and six months ended June 30, 2014 was $4.8 million and $22.3 million, respectively, as compared with $6.2 million and $7.9 million, respectively, for the three and six months ended June 30, 2013, as detailed in the following tables (in thousands): Three Months Ended June 30, 2014 Three Months Ended June 30, 2013 Net Gain Net Gain (Loss) on Net Impact (Loss) on Net Impact Transaction Indemnification on Pre-tax Transaction Indemnification on Pre-tax Income (Loss) Asset Earnings Income (Loss) Asset Earnings Recovery of (provision for) losses on covered loans $ (897 ) $ 1,031 $



134 $ 2,951 $ (2,349 ) $ 602 Income from resolution of covered assets, net

12,170 (8,907 ) 3,263 20,580 (16,714 ) 3,866 Loss on sale of covered loans (366 ) 1,565 1,199 (4,311 ) 4,952 641 OTTI on covered investment securities available for sale - - - (963 ) 770 (193 ) Gain (loss) on covered OREO (218 ) 415 197 5,672 (4,342 ) 1,330 $ 10,689 $ (5,896 ) $ 4,793$ 23,929$ (17,683 )$ 6,246 Six Months Ended June 30, 2014 Six Months Ended June 30, 2013 Net Gain Net Gain (Loss) on Net Impact (Loss) on Net Impact Transaction Indemnification on Pre-tax Transaction Indemnification on Pre-tax Income (Loss) Asset Earnings Income (Loss) Asset Earnings Provision for losses on covered loans $ (1,693 ) $ 1,624 $



(69 ) $ (1,849 ) $ 1,394 $ (455 ) Income from resolution of covered assets, net

25,231 (19,397 ) 5,834 39,770 (33,558 ) 6,212 Gain (loss) on sale of covered loans 18,928 (3,284 ) 15,644 (5,082 ) 6,168 1,086 OTTI on covered investment securities available for sale - - - (963 ) 770 (193 ) Gain on covered OREO 2,589 (1,743 ) 846 5,423 (4,144 ) 1,279 $ 45,055$ (22,800 )$ 22,255$ 37,299$ (29,370 )$ 7,929 Certain OREO and foreclosure related expenses associated with covered assets, including fees paid to attorneys and other service providers, property preservation costs, maintenance and repair costs, advances for taxes and insurance, appraisal costs and inspection costs are also reimbursed under the terms of the Loss Sharing Agreements. Such expenses are recorded in non-interest expense when incurred, and the reimbursement is recorded as "FDIC reimbursement of costs of resolution of covered assets" in non-interest income when submitted to the FDIC, generally upon ultimate resolution of the underlying covered assets. This may result in the expense and the related income from reimbursements being recorded in different periods. For the three months ended June 30, 2014 and 2013, non-interest expense included $1.3 million and $2.6 million, respectively, of expenses subject to reimbursement at the 80% level under the Loss Sharing Agreements. For the six months ended June 30, 2014 and 2013, non-interest expense included $2.0 million and $4.0 million, respectively, of such expenses. During the three months ended June 30, 2014 and 2013, claims of $1.1 million and $2.3 million, respectively, were submitted to the FDIC for reimbursement and for the six months ended June 30, 2014 and 2013 claims of $2.2 million and $5.1 million, respectively, were submitted. The declines in costs and related FDIC reimbursements for the three and six months ended June 30, 2014, compared to the same periods in 2013 reflect the lower volume of covered loan foreclosure resolution activity. 52

--------------------------------------------------------------------------------



Table of Contents

Other components of non-interest income

Gain on sale of non-covered loans includes the gain on sale of substantially all of our indirect auto loans. The Company sold these loans, with a recorded investment of $302.8 million, in June 2014 receiving cash proceeds, net of transaction costs, in the amount of $303.0 million. The total impact of this transaction on pre-tax earnings was a net increase of $1.8 million, inclusive of the gain on sale of $0.2 million, exit costs of $(0.7) million, and elimination of the related allowance for loan losses of $2.3 million. Gain on investment securities available for sale for the quarter ended June 30, 2013 related primarily to sales of securities to fund loan originations. Securities gains for the six months ended June 30, 2013 also included gains from the sale of securities in conjunction with the merger of Herald National Bank into BankUnited. Other non-interest income increased to $8.9 million and $18.1 million, respectively, for the quarter and six months ended June 30, 2014 from $5.3 million and $10.6 million for the quarter and six months ended June 30, 2013. The most significant factor impacting the trend in other non-interest income was increases of $2.6 million and $5.5 million in rental income on operating leases for the quarter and six months ended June 30, 2014.



Non-Interest Expense

The Company reported non-interest expense of $106.6 million and $209.1 million, respectively, for the quarter and six months ended June 30, 2014 as compared with $85.5 million and $168.3 million for the quarter and six months ended June 30, 2013. The following table presents the components of non-interest expense for the periods indicated (in thousands): Three Months Ended June 30,



Six Months Ended June 30,

2014 2013 2014 2013



Employee compensation and benefits $ 49,556$ 43,027 $

99,005 $ 86,102 Occupancy and equipment 17,496 15,381 34,463 30,423 Amortization of FDIC indemnification asset 15,194 7,150 30,935 9,430 (Gain) loss on other real estate owned, net (including (gain) loss related to covered OREO of $218, $(5,672), $(2,589) and $(5,423)) 218 (5,672 ) (2,459 ) (5,423 ) Foreclosure and other real estate owned expense 1,508 3,256 2,488 4,629 Deposit insurance expense 2,311 1,724 4,563 3,661 Professional fees 3,127 6,959 6,557 12,381 Telecommunications and data processing 3,266 3,484 6,573 6,852 Other non-interest expense 13,944 10,188 26,956 20,231 $ 106,620$ 85,497$ 209,081$ 168,286



Employee compensation and benefits and occupancy and equipment

Employee compensation and benefits for the three and six months ended June 30, 2014 increased by $6.5 million and $12.9 million, respectively, as compared to the comparable periods in 2013 while occupancy and equipment expense increased by $2.1 million and $4.0 million, respectively, for the three and six months ended June 30, 2014 as compared to the three and six months ended June 30, 2013. These increases related to the Company's overall growth and its expansion into New York.



Amortization of FDIC indemnification asset

Amortization of the FDIC indemnification asset totaled $15.2 million and $30.9 million, respectively, for the three and six months ended June 30, 2014 as compared to $7.2 million and $9.4 million, respectively, during the comparable periods in 2013. The FDIC indemnification asset was initially recorded at its estimated fair value of $3.4 billion, representing the present value of estimated future cash payments from the FDIC for probable losses on covered assets. As projected cash flows from the ACI loans have increased, the yield on the loans has increased accordingly and the estimated future cash payments from the FDIC have decreased. This change in estimated cash flows is recognized prospectively, consistent with the recognition of the increased cash flows from the ACI loans. As a result, the FDIC indemnification asset is being amortized to 53

--------------------------------------------------------------------------------



Table of Contents

the amount of the estimated future cash flows. For the three and six months ended June 30, 2014 the average rate at which the FDIC indemnification asset was amortized was 5.50% and 5.48%, respectively, as compared with 2.08% and 1.35%, respectively, for the three and six months ended June 30, 2013. The rate of amortization will increase if estimated future cash payments from the FDIC decrease. The amount of amortization is impacted by both the change in the amortization rate and the decrease in the average balance of the indemnification asset. As we continue to submit claims under the Loss Sharing Agreements and recognize periodic amortization, the balance of the indemnification asset will continue to decline.



A rollforward of the FDIC indemnification asset for the year ended December 31, 2013 and the six months ended June 30, 2014 follows (in thousands):

Balance at December 31, 2012$ 1,457,570 Amortization (36,943 ) Reduction for claims filed (164,872 ) Net loss on indemnification asset (50,638 ) Balance at December 31, 2013 1,205,117 Amortization (30,935 ) Reduction for claims filed (66,704 ) Net loss on indemnification asset (22,800 ) Balance at June 30, 2014$ 1,084,678



The following table presents the details of the FDIC indemnification asset at the dates indicated (in thousands):

June 30, 2014 December 31, 2013 Amounts attributable to: Assets covered under the Single Family Shared-Loss Agreement $ 1,083,812 $



1,202,066

Assets covered under the Commercial Shared-Loss Agreement 866 3,051 FDIC indemnification asset 1,084,678 1,205,117 Less expected amortization (260,467 ) (240,773 ) Amount expected to be collected from the FDIC $ 824,211 $



964,344

The amount of expected amortization reflects the impact of improvements in cash flows expected to be collected from the covered loans, as well as the impact of time value resulting from the discounting of the asset when it was initially established. This amount will be amortized to non-interest expense using the effective interest method over the period during which cash flows from the FDIC are expected to be collected, which is limited to the lesser of the contractual term of the Loss Sharing Agreements and the expected remaining life of the indemnified assets. The amounts attributable to assets covered under the Commercial Shared-Loss Agreement at June 30, 2014 represent amounts receivable from the FDIC for transactions occurring prior to the termination of loss sharing under the Commercial Shared-Loss Agreement.



OREO and foreclosure related components of non-interest expense

During the three and six months ended June 30, 2014 and 2013, a substantial majority of the gains or losses recognized on the sale or impairment of OREO related to properties covered by the Loss Sharing Agreements. Therefore, gains or losses from sale or impairment of OREO were substantially offset by gains or losses related to indemnification by the FDIC recognized in non-interest income. The majority of OREO and foreclosure related expenses for the three months and six months ended June 30, 2014 and all of OREO and foreclosure related expenses for three months and six months ended June 30, 2013 were incurred on covered assets. Net (gain) loss on OREO totaled $218 thousand, including gains on sales of OREO of $(643) thousand and OREO impairment of $860 thousand, for the three months ended June 30, 2014; and $(5.7) million, including gains on sales of OREO of $(6.1) million and OREO impairment of $0.4 million, for the three months ended June 30, 2013. For the six months ended June 30, 2014, net gains totaled $(2.5) million, including gains on sales of OREO of $(3.3) million and OREO impairment of 54

--------------------------------------------------------------------------------



Table of Contents

$0.8 million; as compared with $(5.4) million, including gains on sales of OREO of $(7.1) million and OREO impairment of $1.7 million for the comparable period in 2013. The decrease in net gains reflects continuing trends of lower levels of OREO and foreclosure activity. The following tables summarize OREO sale activity for the periods indicated (dollars in thousands): Three Months Ended June 30, 2014 2013 Percent of Percent of Total Total Units sold Units Total Gain Units sold Units Total Gain Residential OREO sales 68 100.0 % $ 643 191 91.8 % $ 2,622 Commercial OREO sales - - - 17 8.2 % 3,469 68 100.0 % $ 643 208 100.0 % $ 6,091 Six Months Ended June 30, 2014 2013 Percent of Percent of Total Total Units sold Units Total Gain Units sold Units Total Gain Residential OREO sales 130 93.5 % $ 1,158 369 94.1 % $ 3,900 Commercial OREO sales 9 6.5 % 2,098 23 5.9 % 3,222 139 100.0 % $ 3,256 392 100.0 % $ 7,122 Three Months Ended June 30, 2014 2013 Percent of Average Percent of Average Total Gain or Total Gain or Units sold Units (Loss) Units sold Units (Loss) Residential OREO sales: Units sold at a gain 32 47.1 % $ 35 115 60.2 % $ 31 Units sold at a loss 36 52.9 % $ (14 ) 76 39.8 % $ (13 ) 68 100.0 % $ 9 191 100.0 % $ 14 Six Months Ended June 30, 2014 2013 Percent of Average Percent of Average Total Gain or Total Gain or Units sold Units (Loss) Units sold Units (Loss) Residential OREO sales: Units sold at a gain 56 43.1 % $ 41 217 58.8 % $ 28 Units sold at a loss 74 56.9 % $ (16 ) 152 41.2 % $ (14 ) 130 100.0 % $ 9 369 100.0 % $ 11



There were 114 and 640 residential units in the foreclosure pipeline and 103 and 229 residential units in OREO inventory at June 30, 2014 and 2013, respectively.

55

--------------------------------------------------------------------------------



Table of Contents

Other components of non-interest expense

Professional fees decreased by $3.8 million and $5.8 million, respectively, for the three and six months ended June 30, 2014 as compared to the three and six months ended June 30, 2013 primarily due to consulting and advisory fees incurred in 2013 related to regulatory compliance. The most significant components of other non-interest expense are advertising and promotion, depreciation of equipment under operating lease, insurance, travel and general office expense. Period over period increases in other non-interest expense related primarily to general organic growth of our business. In addition, depreciation on equipment under operating lease of $1.9 million and $3.9 million, respectively, was recognized for the three and six months ended June 30, 2014 compared to $0.7 million and $1.3 million, respectively, for the three and six months ended June 30, 2013.



Income Taxes

The effective income tax rate decreased to 33.1% and 34.4% for the quarter and six months ended June 30, 2014, respectively, from 37.9% and 38.4% for the quarter and six months ended June 30, 2013, respectively. These decreases primarily reflect the impact of increases in tax-exempt income, reductions in liabilities for uncertain state tax positions and benefits resulting from state tax law changes in the first quarter of 2014.



Termination of the Commercial Shared-Loss Agreement

Loss sharing under the terms of BankUnited, N.A.'s Commercial Shared-Loss Agreement with the FDIC terminated on May 21, 2014. At June 30, 2014, the Company's loan portfolio included commercial and consumer ACI loans with a carrying value of $102 million and the investment portfolio included securities with a carrying value of $204 million that no longer have loss sharing coverage under the terms of the Commercial Shared-Loss Agreement. As of June 30, 2014 we bear all credit risk with respect to these assets. The Commercial Shared-Loss Agreement provides for the Bank's continued reimbursement for recoveries, as defined, to the FDIC through May 21, 2017.



Analysis of Financial Condition

Average interest-earning assets increased $3.3 billion to $14.0 billion for the six months ended June 30, 2014 from $10.7 billion for the six months ended June 30, 2013. This increase was driven by a $4.1 billion increase in the average balance of outstanding loans, partially offset by a $688 million decrease in the average balance of investment securities available for sale. The increase in average loans reflected growth of $4.4 billion in average new loans outstanding, partially offset by a $373 million decrease in the average balance of loans acquired in the FSB Acquisition. Average non-interest earning assets declined by $135 million. The most significant component of this decline was the decrease in the FDIC indemnification asset. Growth of the new loan portfolio, resolution of covered loans and declines in the amount of the FDIC indemnification asset are trends that are expected to continue. Average interest bearing liabilities increased by $2.2 billion to $11.5 billion for the six months ended June 30, 2014 from $9.3 billion for the six months ended June 30, 2013, due to an increase of $1.7 billion in average interest bearing deposits and a $559 million increase in average FHLB advances and other borrowings. Average non-interest bearing deposits increased by $778 million.



Average stockholders' equity increased by $138 million, due largely to the retention of earnings.

56

--------------------------------------------------------------------------------



Table of Contents

Investment Securities Available for Sale

The following tables show the breakdown of securities in the Company's investment portfolio at the dates indicated (in thousands):

June 30, 2014 Gross Unrealized Amortized Cost Gains Losses Fair Value U.S. Treasury securities $ 104,825$ 186 $ - $ 105,011U.S. Government agency and sponsored enterprise residential mortgage-backed securities 1,466,591 40,542 (6,995 ) 1,500,138 U.S. Government agency and sponsored enterprise commercial mortgage-backed securities 80,079 150 - 80,229 Re-Remics 226,247 4,713 (19 ) 230,941 Private label residential mortgage-backed securities and CMOs 222,542 56,041 (1,082 ) 277,501 Private label commercial mortgage-backed securities 1,031,280 14,665 (3,664 ) 1,042,281 Single family rental real estate-backed securities 146,000 58 - 146,058 Collateralized loan obligations 50,000 - - 50,000 Non-mortgage asset-backed securities 158,963 6,707 (23 ) 165,647 Mutual funds and preferred stocks 110,917 20,082 (35 ) 130,964 State and municipal obligations 15,460 146 (54 ) 15,552 Small Business Administration securities 328,550 10,709 (44 ) 339,215 Other debt securities 3,638 4,372 - 8,010 $ 3,945,092$ 158,371$ (11,916 )$ 4,091,547 December 31, 2013 Covered Securities Non-Covered Securities Total Amortized Gross Unrealized Gross Unrealized Cost Gains Losses Fair Value



Amortized Cost Gains Losses Fair Value Amortized Cost Fair Value

U.S. Government agency and sponsored enterprise residential mortgage-backed securities $ - $ - $ - $ - $ 1,548,671$ 34,191$ (8,559 )$ 1,574,303 $

1,548,671 $ 1,574,303U.S. Government agency and sponsored enterprise commercial mortgage-backed securities - - - - 27,132 - (355 ) 26,777 27,132 26,777 Re-Remics - - - - 267,525 4,261 (1 ) 271,785 267,525 271,785 Private label residential mortgage-backed securities and CMOs 119,434 56,539 (110 ) 175,863 135,750 329 (1,824 ) 134,255 255,184 310,118 Private label commercial mortgage-backed securities - - - - 814,114 7,638 (12,980 ) 808,772 814,114 808,772 Non-mortgage asset-backed securities - - - - 172,329 6,676 (11 ) 178,994 172,329 178,994 Mutual funds and preferred stocks 15,419 6,726 - 22,145 125,387 4,015 (1,870 ) 127,532 140,806 149,677 Small Business Administration securities - - - - 295,892 13,045 - 308,937 295,892 308,937 Other debt securities 3,542 4,219 - 7,761 - - - - 3,542 7,761 $ 138,395$ 67,484$ (110 )$ 205,769



$ 3,386,800$ 70,155$ (25,600 )$ 3,431,355$ 3,525,195$ 3,637,124

Investment securities available for sale totaled $4.1 billion at June 30, 2014 compared to $3.6 billion at December 31, 2013. The increase in the investment portfolio during the six months ended June 30, 2014, reflected the deployment of cash from the sale of the indirect auto loan portfolio and deposit growth. Our investment strategy has focused on providing liquidity necessary for day-to-day operations, adding a suitable balance of high credit quality, diversifying assets to the consolidated balance sheet, managing interest rate risk, and generating acceptable returns given our established risk parameters. We have sought to maintain liquidity and manage interest rate risk by investing a significant portion of the portfolio in high quality 57

--------------------------------------------------------------------------------



Table of Contents

liquid securities consisting primarily of U.S. Treasury securities and U.S. Government agency floating rate mortgage-backed securities. We have also invested in highly rated structured products including private label residential and commercial mortgage-backed securities, Re-Remics, residential real estate lease-backed securities, collateralized loan obligations and non-mortgage asset-backed securities collateralized by small balance commercial loans, auto loans and student loans as well as financial institution preferred stocks, state and municipal obligations and U.S. Small Business Administration securities that, while somewhat less liquid, provide us with higher yields. Relatively short effective portfolio duration helps mitigate interest rate risk arising from the currently low level of market interest rates. The weighted average expected life of the investment portfolio as of June 30, 2014 was 3.8 years and the effective duration was 1.9 years. Regulations implementing the Volcker Rule were approved in December 2013. Among other provisions, the regulations generally will serve to prohibit us from holding an ownership interest, as defined, in a covered fund, also as defined. Although uncertainty remains as to how the regulations will be interpreted and implemented by regulatory authorities, there are Re-Remic securities in our portfolio that we believe may be deemed impermissible investments under the regulations. At June 30, 2014, we held Re-Remics with a carrying value of $231 million. At June 30, 2014, all but one of these securities were in unrealized gain positions; the one security in an unrealized loss position had a de-minimis unrealized loss of $19 thousand. The Re-Remics are an amortizing portfolio and we estimate that their carrying value will be significantly reduced through normal amortization and prepayments prior to the required compliance date. We will continue to evaluate our holdings in light of the newly issued regulations and further interpretations or implementation guidance that may be forthcoming, if any. As currently promulgated, we must be in compliance with the regulations implementing the Volcker Rule by July 2015. As discussed above in the section entitled "Results of Operations - Termination of the Commercial Shared-Loss Agreement", FDIC loss sharing on investment securities acquired in the FSB Acquisition ended in May 2014. The terms of the Commercial Shared-Loss Agreement continue to require sharing with the FDIC of any realized gains and reversal of previously recognized OTTI losses on covered investment securities through May 2017. These securities had an aggregate fair value of $204 million and gross unrealized gains of $73 million at June 30, 2014. Gross unrealized losses on this portfolio segment were de minimis at June 30, 2014. Based on the most recent ratings, $116 million of these securities were rated below investment grade or not rated at June 30, 2014. 58

--------------------------------------------------------------------------------



Table of Contents

The following table shows the scheduled maturities, carrying values and current yields for our investment portfolio as of June 30, 2014. Scheduled maturities have been adjusted for anticipated prepayments of mortgage-backed and other pass through securities. Yields on tax-exempt securities have been calculated on a tax-equivalent basis (dollars in thousands): After One Year After Five Years Within One Year Through Five Years Through Ten Years After Ten Years Total Weighted Weighted Weighted Weighted



Weighted

Carrying Average Carrying Average



Carrying Average Carrying Average Carrying

Average Value Yield Value Yield Value Yield Value Yield Value Yield U.S. Treasury securities $ - - $ 105,011 0.91 % $ - - $ - - $ 105,011 0.91 % U.S. Government agency and sponsored enterprise residential mortgage-backed securities 207,452 2.73 % 946,722 2.75 %



293,578 2.26 % 52,386 2.28 % 1,500,138

2.64 % U.S. Government agency and sponsored enterprise commercial mortgage-backed securities 2,921 2.68 % 8,438 2.68 %



53,659 2.20 % 15,211 2.36 % 80,229

2.30 % Re-Remics 71,011 3.07 % 143,060 3.15 %



16,770 3.44 % 100 2.62 % 230,941

3.15 % Private label residential mortgage-backed securities and CMOs 53,190 6.85 % 109,291 7.58 %



62,813 7.77 % 52,207 7.18 % 277,501

7.41 % Private label commercial mortgage-backed securities 30,826 1.34 % 610,610 2.30 %



399,954 2.39 % 891 3.05 % 1,042,281

2.31 % Single family rental real estate-backed securities 679 1.25 % 145,379 1.24 % - - - - 146,058 1.24 % Collateralized loan obligations 7,499 1.98 % 20,315 1.98 % 12,342 1.98 % 9,844 1.98 % 50,000 1.98 % Non-mortgage asset-backed securities 68,630 2.65 % 79,855 3.60 % 17,143 3.68 % 19 3.77 % 165,647 3.22 % State and municipal obligations - - - - 15,552 3.68 % - - 15,552 3.68 % Small Business Administration securities 61,978 1.68 % 157,791 1.68 % 79,627 1.65 % 39,819 1.61 % 339,215 1.66 % Other debt securities - - - - - - 8,010 7.00 % 8,010 7.00 % $ 504,186 2.90 % $ 2,326,472 2.61 % $ 951,438 2.63 % $ 178,487 3.49 % 3,960,583 2.69 % Mutual funds and preferred stocks with no scheduled maturity 130,964



6.90 %

Total investment securities available for sale $ 4,091,547 2.82 % As of June 30, 2014, 86.3% of the securities were backed by the U.S. Government, U.S. Government agencies or sponsored enterprises or were rated AAA. The investment portfolio was in a net unrealized gain position of $146 million at June 30, 2014 with aggregate fair value equal to 104% of amortized cost. Net unrealized gains included $158 million of gross unrealized gains and $12 million of gross unrealized losses. Securities in unrealized loss positions for 12 months or more had an aggregate fair value of $543 million representing 13.3% of the fair value of the portfolio, with total unrealized losses of $9 million at June 30, 2014. We evaluate the credit quality of individual securities in the portfolio quarterly to determine whether any of the investments in unrealized loss positions are other-than-temporarily impaired. This evaluation considers, but is not necessarily limited to, the following factors, the relative significance of which varies depending on the circumstances pertinent to each individual security:



our intent to hold the security until maturity or for a period of time

sufficient for a recovery in value;



whether it is more likely than not that we will be required to sell the

security prior to recovery of its amortized cost basis; the length of time and extent to which fair value has been less than amortized cost;



adverse changes in expected cash flows;

collateral values and performance;

59

--------------------------------------------------------------------------------



Table of Contents

the payment structure of the security, including levels of subordination or over-collateralization;



changes in the economic or regulatory environment;

the general market condition of the geographic area or industry of the issuer;

the issuer's financial condition, performance and business prospects; and

changes in credit ratings.

No securities were determined to be OTTI at June 30, 2014 or during the six months then ended. During the three months ended June 30, 2013, OTTI of $963 thousand was recognized on an intermediate term mortgage mutual fund investment which had been in a continuous unrealized loss position for 34 months. Due primarily to the length of time the investment had been in a continuous unrealized loss position and an increasing measure of impairment, the Company determined the impairment to be other than temporary. This security was covered under the Commercial Shared-Loss Agreement, therefore, the impact of the impairment was significantly mitigated by an increase of $770 thousand in the FDIC indemnification asset, reflected in the consolidated statement of income line item "Net loss on indemnification asset". We do not intend to sell securities in significant unrealized loss positions. Based on an assessment of our liquidity position and internal and regulatory guidelines for permissible investments and concentrations, it is not more likely than not that we will be required to sell securities in significant unrealized loss positions prior to recovery of amortized cost basis. The severity of impairment of individual securities in the portfolio is generally not material. Unrealized losses in the portfolio at June 30, 2014 were primarily attributable to an increase in medium and long-term market interest rates subsequent to the date the securities were acquired. The timely repayment of principal and interest on U.S. Government agency and sponsored enterprise securities and Small Business Administration securities in unrealized loss positions is explicitly or implicitly guaranteed by the full faith and credit of the U.S. Government. Management either engaged a third party to perform, or performed internally, projected cash flow analyses of the private label residential mortgage-backed securities and private label commercial mortgage-backed securities in unrealized loss positions, incorporating CUSIP level collateral default rate, voluntary prepayment rate, severity and delinquency assumptions. Based on the results of this analysis, no credit losses were projected. Given the expectation of timely repayment of principal and interest and the generally limited severity of impairment, we concluded that none of these debt securities in unrealized loss positions were other-than-temporarily impaired. One equity security and one municipal security were in unrealized loss positions at June 30, 2014; given the limited duration and severity of impairment and the strength of the issuers, we considered the impairment of these securities to be temporary.



For further discussion of our analysis of investment securities for OTTI, see Note 3 to the consolidated financial statements.

We use third-party pricing services to assist us in estimating the fair value of investment securities. We perform a variety of procedures to ensure that we have a thorough understanding of the methodologies and assumptions used by the pricing services including obtaining and reviewing written documentation of the methods and assumptions employed, conducting interviews with valuation desk personnel and reviewing model results and detailed assumptions used to value selected securities as considered necessary. Our classification of prices within the fair value hierarchy is based on an evaluation of the nature of the significant assumptions impacting the valuation of each type of security in the portfolio. We have established a robust price challenge process that includes a review by our treasury front office of all prices provided on a monthly basis. Any price evidencing unexpected month over month fluctuations or deviations from our expectations based on recent observed trading activity and other information available in the marketplace that would impact the value of the security is challenged. Responses to the price challenges, which generally include specific information about inputs and assumptions incorporated in the valuation and their sources, are reviewed in detail. If considered necessary to resolve any discrepancies, a price will be obtained from an additional independent valuation specialist. We do not typically adjust the prices provided, other than through this established challenge process. Our primary pricing services utilize observable inputs when available, and employ unobservable inputs and proprietary models only when observable inputs are not available. As a matter of course, the services validate prices by comparison to recent trading activity whenever such activity exists. Quotes obtained from the pricing services are typically non-binding. We have also established a quarterly price validation process whereby we verify the prices provided by our primary pricing service for a sample of securities in the portfolio. Sample sizes vary based on the type of security being priced, with 60

--------------------------------------------------------------------------------



Table of Contents

higher sample sizes applied to more difficult to value security types. Verification procedures may consist of obtaining prices from an additional outside source or internal modeling, generally based on Intex. We have established acceptable percentage deviations from the price provided by the initial pricing source. If deviations fall outside the established parameters, we will obtain and evaluate more detailed information about the assumptions and inputs used by each pricing source or, if considered necessary, employ an additional valuation specialist to price the security in question. When there are price discrepancies, the final determination of fair value is based on careful consideration of the assumptions and inputs employed by each of the pricing sources given our knowledge of the market for each individual security and may include interviews with the outside pricing sources utilized. Depending on the results of the validation process, sample sizes may be extended for particular classes of securities. Results of the validation process are reviewed by the treasury front office and by senior management. The majority of our investment securities are classified within level 2 of the fair value hierarchy. Certain U.S. Treasury securities and preferred stocks are classified within level 1 of the hierarchy. At June 30, 2014 and December 31, 2013, 4.5% and 5.6%, respectively, of our investment securities were classified within level 3 of the fair value hierarchy. Securities classified within level 3 of the hierarchy at June 30, 2014 included certain private label residential mortgage-backed securities and trust preferred securities. These securities were classified within level 3 of the hierarchy because proprietary assumptions related to voluntary prepayment rates, default probabilities and loss severities were considered significant to the valuation. There were no transfers of investment securities between levels of the fair value hierarchy during the six months ended June 30, 2014.



For additional discussion of the fair values of investment securities, see Note 10 to the consolidated financial statements.

Loans

The loan portfolio comprises the Company's primary interest-earning asset. The following tables show the composition of the loan portfolio and the breakdown of the portfolio among new loans, non-covered ACI loans, covered ACI loans and covered non-ACI loans at the dates indicated (dollars in thousands): June 30, 2014 Non-Covered Loans Covered Loans New Loans ACI ACI Non-ACI Total Percent of Total Residential: 1-4 single family residential $ 2,095,666 $ - $ 963,904$ 64,931$ 3,124,501 29.6 % Home equity loans and lines of credit 1,526 - 33,521 117,387 152,434 1.5 % 2,097,192 - 997,425 182,318 3,276,935 31.1 % Commercial: Multi-family 1,436,944 25,525 - - 1,462,469 13.9 % Commercial real estate Owner occupied 880,228 37,125 - - 917,353 8.7 % Non-owner occupied 1,357,811 37,312 - - 1,395,123 13.2 % Construction and land 184,834 224 - - 185,058 1.7 % Commercial and industrial 2,894,774 1,267 - - 2,896,041 27.5 % Lease financing 392,684 - - - 392,684 3.7 % 7,147,275 101,453 - - 7,248,728 68.7 % Consumer 21,760 140 - - 21,900 0.2 % Total loans 9,266,227 101,593 997,425

182,318 10,547,563 100.0 % Premiums, discounts and deferred fees and costs, net 42,358 - - (11,731 ) 30,627 Loans net of premiums, discounts and deferred fees and costs 9,308,585 101,593 997,425 170,587 10,578,190 Allowance for loan and lease losses (68,184 ) - - (7,287 ) (75,471 ) Loans, net $ 9,240,401$ 101,593$ 997,425$ 163,300$ 10,502,719 61

--------------------------------------------------------------------------------

Table of Contents December 31, 2013 Non-Covered Loans Covered Loans New Loans ACI ACI Non-ACI Total Percent of Total Residential: 1-4 single family residential $ 1,800,332 $ - $ 1,057,012$ 70,378$ 2,927,722 32.4 % Home equity loans and lines of credit 1,535 - 39,602 127,807 168,944 1.9 % 1,801,867 - 1,096,614 198,185 3,096,666 34.3 % Commercial: Multi-family 1,097,872 8,093 33,354 - 1,139,319 12.6 % Commercial real estate Owner occupied 712,844 5,318 49,861 689 768,712 8.5 % Non-owner occupied 946,543 1,449 93,089 52 1,041,133 11.5 % Construction and land 138,091 - 10,600 729 149,420 1.7 % Commercial and industrial 2,266,407 - 6,050 6,234 2,278,691 25.3 % Lease financing 337,382 - - - 337,382 3.7 % 5,499,139 14,860 192,954 7,704 5,714,657 63.3 % Consumer 213,107 - 1,679 - 214,786 2.4 % Total loans 7,514,113 14,860 1,291,247

205,889 9,026,109 100.0 % Premiums, discounts and deferred fees and costs, net 40,748 - - (13,248 ) 27,500 Loans net of premiums, discounts and deferred fees and costs 7,554,861 14,860 1,291,247 192,641 9,053,609 Allowance for loan and lease losses (57,330 ) - (2,893 ) (9,502 ) (69,725 ) Loans, net $ 7,497,531$ 14,860$ 1,288,354$ 183,139$ 8,983,884 Total loans, net of premiums, discounts and deferred fees and costs, increased by $1.5 billion to $10.6 billion at June 30, 2014, from $9.1 billion at December 31, 2013. New loans grew by $1.8 billion while loans acquired in the FSB Acquisition declined by $229 million from December 31, 2013 to June 30, 2014. The increase in total loans and new loans for the six months ended June 30, 2014 is net of the sale of indirect auto loans with a carrying value of $303 million. New residential loans grew by $301 million, new commercial loans grew by $1.7 billion and new consumer loans declined by $198 million during the six months ended June 30, 2014. The decline in new consumer loans is attributed to the sale of substantially all of the indirect auto portfolio. Residential loan growth was attributable primarily to purchases of residential mortgages through established correspondent channels. Growth in new loans, net of premiums, discounts and deferred fees and costs, for the six months ended June 30, 2014 included $672 million for the Florida franchise, $749 million for the New York franchise and $635 million, excluding the impact of the sale of indirect auto loans, for what we refer to as national platforms, consisting of our residential loan purchase program, our mortgage warehouse lending operations, indirect auto lending and the Bank's three commercial lending subsidiaries. Our residential mortgage purchase program and commercial lending subsidiaries contributed $262 million and $266 million, respectively, to growth in new loans for the six months ended June 30, 2014. The remaining growth in the national platforms was related primarily to our indirect auto lending, prior to exiting that business. At June 30, 2014, $3.8 billion or 41.0%, $2.3 billion or 25.1% and $3.2 billion or 33.9% of the new portfolio was attributable to the Florida and New York regions and national platforms, respectively. The percentage of the new portfolio attributable to the New York region is expected to continue to grow. At June 30, 2014 and December 31, 2013 respectively, 11.0% and 16.4% of loans, net of premiums, discounts and deferred fees and costs, were covered loans. Covered loans are declining and new loans increasing as a percentage of the total portfolio as covered loans are repaid, resolved or, in the case of commercial loans, coverage terminates, and new loan originations and purchases increase. This trend is expected to continue. 62

--------------------------------------------------------------------------------



Table of Contents

Residential Mortgages

Residential mortgages totaled $3.3 billion, or 31.1% of total loans and $3.1 billion, or 34.3% of total loans at June 30, 2014 and December 31, 2013, respectively. The decline in this portfolio segment as a percentage of loans is a result of a strategic emphasis on commercial lending and the resolution of covered loans, including transfers to OREO, partially offset by residential loan purchases and to a lesser extent, originations. The new residential loan portfolio includes both originated and purchased loans. At June 30, 2014 and December 31, 2013, $209 million or 10.0% and $170 million or 9.5%, respectively, of our new 1-4 single family residential loans were originated loans; $1.9 billion or 90.0% and $1.6 billion or 90.5%, respectively, of our new 1-4 single family residential loans were purchased loans. We currently originate 1-4 single family residential mortgage loans with terms ranging from 10 to 30 years, with either fixed or adjustable interest rates, primarily to customers in Florida and New York. New residential mortgage loans are primarily closed-end first lien loans for the purchase or re-finance of owner occupied property. We have purchased loans to supplement our mortgage origination platform and to geographically diversify our loan portfolio. The purchased residential portfolio consists primarily of jumbo mortgages on owner-occupied properties. At June 30, 2014, 41.2% of the new residential loan portfolio were fixed rate loans. At June 30, 2014, $240 million or 12.5% of the purchased residential loan portfolio was comprised of interest-only loans, substantially all of which begin amortizing 10 years after origination. The number of newly originated residential mortgage loans that are re-financings of covered loans is not significant.



Home equity loans and lines of credit are not significant to the new loan portfolio.

We do not originate option adjustable rate mortgages ("ARMs"), "no-doc" or "reduced-doc" mortgages and do not utilize wholesale mortgage origination channels although the covered loan portfolio contains loans with these characteristics. The Company's exposure to future losses on these mortgage loans is mitigated by the Single Family Shared-Loss Agreement.

Commercial loans

The commercial portfolio segment includes loans secured by multi-family properties, loans secured by both owner-occupied and non-owner occupied commercial real estate, construction loans, land loans, commercial and industrial loans and direct financing leases.

Commercial real estate loans include term loans secured by owner and non-owner occupied income producing properties including rental apartments, mixed-use properties, industrial properties, retail shopping centers, office buildings, warehouse facilities and hotels as well as real estate secured lines of credit. Loans secured by commercial real estate typically have shorter repayment periods and re-price more frequently than 1-4 single family residential loans but may have longer terms and re-price less frequently than commercial and industrial loans. The Company's underwriting standards generally provide for loan terms of five to ten years, with amortization schedules of no more than thirty years. Loan-to-value ("LTV") ratios are typically limited to no more than 80%. In addition, the Company usually obtains personal guarantees or carve-out guarantees of the principals as an additional enhancement for commercial real estate loans. Owner-occupied commercial real estate loans typically have risk profiles more closely aligned with that of commercial and industrial loans than with other types of commercial real estate loans. Construction and land loans represented less than 2% of the total loan portfolio at June 30, 2014. Construction and land loans are generally made for projects expected to stabilize within twelve months of completion in submarkets with strong fundamentals and, to a lesser extent, for-sale residential projects to experienced developers with a strong cushion between market prices and loan basis. At June 30, 2014, the carrying value of construction loans with available interest reserves totaled $72 million; the amount of available interest reserves totaled $3 million. All of these loans were rated "pass" at June 30, 2014. Commercial loans are typically made to small and middle market businesses and include equipment loans, secured and unsecured working capital facilities, formula-based loans, mortgage warehouse lines, taxi medallion loans, lease financing, Small Business Administration product offerings and, to a lesser extent, acquisition finance credit facilities. These loans may be structured as term loans, typically with maturities of three to seven years, or revolving lines of credit which may have multi-year maturities. Commercial loans also include shared national credits totaling $693 million at June 30, 2014, for borrowers in our geographic footprint. Through three wholly-owned lending subsidiaries, the Company provides small business equipment financing, franchise lending, municipal essential use equipment financing, bond refundings and certain transportation equipment financing to businesses and municipalities throughout the United States. This financing may take the form of term loans or leases. 63

--------------------------------------------------------------------------------



Table of Contents

Management's loan origination strategy is heavily focused on the commercial portfolio segment, which comprised 77.2% and 73.2% of new loans as of June 30, 2014 and December 31, 2013, respectively. New commercial loans that represent re-financings of loans acquired in the FSB Acquisition are not significant.



Consumer Loans

As of December 31, 2013, consumer loans consisted primarily of indirect auto loans. Subsequent to the sale of substantially all of the indirect auto loan portfolio in June 2014, consumer loans are comprised primarily of consumer installment financing, loans secured by certificates of deposit, unsecured personal lines of credit and demand deposit account overdrafts.



Asset Quality

In discussing asset quality, a distinction must be made between new loans and loans acquired in the FSB Acquisition. New loans were underwritten under significantly different and generally more conservative standards than the loans acquired in the FSB Acquisition. In particular, credit approval policies have been strengthened, wholesale mortgage origination channels have been eliminated, "no-doc" and option ARM loan products have been eliminated, and real estate appraisal policies have been improved. Although the risk profile of loans acquired in the FSB Acquisition is higher than that of new loans, our exposure to loss related to the loans acquired in the FSB Acquisition is significantly mitigated by the fair value basis recorded in these loans resulting from the application of acquisition accounting and, for the residential loans, by the Single Family Shared-Loss Agreement. The Commercial Shared-Loss Agreement was terminated on May 21, 2014. At June 30, 2014, covered loans totaled $1.2 billion, all of which were covered under the Single Family Shared-Loss Agreement. We have established a robust credit risk management framework and put in place an experienced team to lead the workout and recovery process for the commercial and commercial real estate portfolios. We have also implemented a dedicated internal loan review function that reports directly to our Audit and Risk Committee. We have an experienced resolution team in place for covered residential mortgage loans, and have implemented outsourcing arrangements with industry leading firms in certain areas such as OREO resolution. Loan performance is monitored by our credit administration, workout and recovery and loan review departments. Commercial loans are regularly reviewed by our internal loan review department. Relationships with committed balances greater than $1 million are reviewed at least annually. The Company utilizes a 13 grade internal asset risk classification system as part of its efforts to monitor and improve commercial asset quality. Loans exhibiting potential credit weaknesses that deserve management's close attention and that if left uncorrected may result in deterioration of the repayment capacity of the borrower are categorized as special mention. These borrowers may exhibit negative financial trends or erratic financial performance, strained liquidity, marginal collateral coverage, declining industry trends or weak management. Loans with well-defined credit weaknesses that may result in a loss if the deficiencies are not corrected are assigned a risk rating of substandard. These borrowers may exhibit payment defaults, insufficient cash flows, operating losses, increasing balance sheet leverage, project cost overruns, unreasonable construction delays, exhausted interest reserves, declining collateral values, frequent overdrafts or past due real estate taxes. Loans with weaknesses so severe that collection in full is highly questionable or improbable, but because of certain reasonably specific pending factors have not been charged off, are assigned risk ratings of doubtful. Residential mortgage loans and consumer loans are not individually risk rated. Delinquency status is the primary measure we use to monitor the credit quality of these loans. We also consider original LTV and FICO score to be significant indicators of credit quality for the new 1-4 single family residential portfolio. New Loans Commercial The ongoing asset quality of significant commercial loans is monitored on an individual basis through our regular credit review and risk rating process. We believe internal risk rating is the best indicator of the credit quality of commercial loans. Homogenous groups of smaller balance commercial loans may be monitored collectively. At June 30, 2014, new commercial loans with aggregate balances of $12 million, $70 million and $6 million were rated special mention, substandard and doubtful, respectively. At December 31, 2013, new commercial loans aggregating $8 million, $26 million and $10 million were rated special mention, substandard and doubtful, respectively. The increase in loans rated substandard is primarily related to one loan with a recorded investment of $45 million that was current and on accrual 64

--------------------------------------------------------------------------------



Table of Contents

status as of June 30, 2014. This loan was paid in full subsequent to June 30, 2014. See Note 4 to the consolidated financial statements for more detailed information about risk rating of new commercial loans.

Residential

At June 30, 2014 and December 31, 2013, new 1-4 single family residential loans totaling $0.1 million and $0.6 million, respectively, were 90 days or more past due. New 1-4 single family residential loans past due less than 90 days totaled $10 million and $3 million at June 30, 2014 and December 31, 2013, respectively. The majority of our new residential mortgage portfolio consists of loans purchased through established correspondent channels. The credit parameters for purchasing loans are similar to the underwriting guidelines in place for our mortgage origination platform. For purchasing seasoned loans, good payment history is required. In general, we purchase performing jumbo mortgage loans which have FICO scores above 700, primarily are owner-occupied and full documentation, and have a current LTV of 80% or less. We perform due diligence on the purchased loans for credit, compliance, counterparty, payment history and property valuation.



The following table shows the distribution of new 1-4 single family residential loans by original FICO and LTV at the dates indicated (in thousands):

June 30, 2014 FICO 761 or LTV 720 or less 721 - 740 741 - 760 greater Total 60% or less $ 54,513$ 74,090$ 103,855$ 523,969$ 756,427 60% - 70% 39,897 53,441 85,796 346,295 525,429 70% - 80% 26,819 76,569 144,490 554,141 802,019 More than 80% 26,617 4,589 3,122 10,431 44,759 $ 147,846$ 208,689$ 337,263$ 1,434,836$ 2,128,634 December 31, 2013 FICO 761 or LTV 720 or less 721 - 740 741 - 760 greater Total 60% or less $ 37,293$ 60,626$ 86,920$ 473,250$ 658,089 60% - 70% 25,861 45,485 77,253 308,242 456,841 70% - 80% 19,610 60,021 116,332 472,279 668,242 More than 80% 26,492 5,487 3,166 9,463 44,608 $ 109,256$ 171,619$ 283,671$ 1,263,234$ 1,827,780



At June 30, 2014, 82.0% of new 1-4 single family residential loans with LTV of more than 80% were insured by the Federal Housing Administration.

At June 30, 2014, the purchased loan portfolio had the following characteristics: substantially all were full documentation with an average FICO score of 768 and average LTV of 64.8%. The majority of this portfolio was owner-occupied, with 93.9% primary residence, 5.5% second homes and 0.6% investment properties. In terms of vintage, 1.1% of the portfolio was originated pre-2010, 11.7% in 2010 and 2011, 20.2% in 2012, 55.1% in 2013 and 11.9% in 2014. Similarly, the originated loan portfolio had the following characteristics at June 30, 2014: 100% were full documentation with an average FICO score of 761 and average LTV of 62.6%. The majority of this portfolio was owner-occupied, with 88.2% primary residence, 10.1% second homes and 1.7% investment properties. In terms of vintage, 11.8% of the portfolio was originated in 2010 and 2011, 16.5% in 2012, 48.5% in 2013 and 23.2% in 2014.



Consumer

At June 30, 2014 and December 31, 2013, delinquent new consumer loans were insignificant.

65

--------------------------------------------------------------------------------



Table of Contents

Loans Acquired in the FSB Acquisition

Loans acquired in the FSB Acquisition consist of both ACI loans and non-ACI loans. At June 30, 2014, ACI loans totaled $1.1 billion and non-ACI loans totaled $171 million, net of premiums, discounts and deferred fees and costs.

Residential

At June 30, 2014, residential ACI loans totaled $997 million and residential non-ACI loans totaled $171 million, net of premiums, discounts and deferred fees and costs. All of these loans are covered under the Single Family Shared-Loss Agreement. Covered residential loans were placed into homogenous pools at the time of the FSB Acquisition and the ongoing credit quality and performance of these loans is monitored on a pool basis. The fair value of the pools was initially measured based on the expected cash flows from each pool. Initial cash flow expectations incorporated significant assumptions regarding prepayment rates, frequency of default and loss severity. For ACI pools, the difference between total contractual payments due and the cash flows expected to be received at acquisition was recognized as non-accretable difference. The excess of expected cash flows over the recorded fair value of each ACI pool at acquisition, known as the accretable yield, is being recognized as interest income over the life of each pool. We monitor the pools quarterly to determine whether any significant changes have occurred in expected cash flows that would be indicative of impairment or necessitate reclassification between non-accretable difference and accretable yield. Generally, improvements in expected cash flows less than 1% of the expected cash flows from a pool are not recorded. This materiality threshold may be revised in the future based on management's judgment. At June 30, 2014, accretable yield on both residential and commercial ACI loans totaled $1.1 billion and non-accretable difference related to those loans totaled $1.2 billion. Residential mortgage loans, including home equity loans, comprised 87.8% of the UPB of the acquired loan portfolio at the FSB Acquisition date. We performed a detailed analysis of the portfolio to determine the key loan characteristics influencing performance. Key characteristics influencing the performance of the residential mortgage portfolio, including home equity loans, were determined to be delinquency status; product type, in particular, amortizing as opposed to option ARM products; current indexed LTV ratio; and original FICO score. The ACI loans in the residential mortgage portfolio were grouped into ten homogenous static pools based on these characteristics, and the non-ACI residential loans were grouped into two homogenous static pools. There were other variables which we initially expected to have a significant influence on performance and which were considered in our analysis; however, the results of our analysis demonstrated that their impact was less significant after controlling for current indexed LTV, product type, and FICO score. Therefore, these additional factors were not used in grouping the covered residential loans into pools and are not used in monitoring ongoing asset quality of the pools. The factors we considered but determined not to be significant included the level and type of documentation required at origination, i.e., whether a loan was originated under full documentation, reduced documentation, or no documentation programs; occupancy, defined as owner occupied vs. non-owner occupied collateral properties; geography; and vintage, i.e., year of origination. At June 30, 2014, the recorded investment in 1-4 single family residential non-ACI loans was $55 million; $2 million or 4.4% of these loans were 30 days or more past due and $223 thousand were 90 days or more past due. At June 30, 2014, ACI 1-4 single family residential loans totaled $964 million; $63 million or 6.5% of these loans were delinquent by 30 days or more and $29 million or 3.0% were delinquent by 90 days or more. At June 30, 2014, non-ACI home equity loans and lines of credit had an aggregate carrying value of $115 million; $8 million or 7.0% of these loans were 30 days or more past due and $5 million or 4.5% were 90 days or more past due. ACI home equity loans and lines of credit had a carrying amount of $34 million at June 30, 2014; $4 million or 10.6% of ACI home equity loans and lines of credit were 30 days or more contractually delinquent and $3 million or 8.5% were delinquent by 90 days or more. 66

--------------------------------------------------------------------------------



Table of Contents

Additional information regarding ACI and non-ACI home equity loans and lines of credit at June 30, 2014 is summarized as follows:

ACI Non-ACI Lien position: First liens 8.6 % 9.7 %



Second or third liens 91.4 % 90.3 %

100.0 % 100.0 % Expected loss severity given default is significantly higher for home equity loans that are not first liens. Although delinquencies in the covered residential portfolio are high, potential future losses to the Company related to these loans are significantly mitigated by the Single Family Shared-Loss Agreement.



Commercial

Loss sharing coverage under the Commercial Shared-Loss Agreement was terminated on May 21, 2014. For further discussion, see the section entitled "Results of Operations - Termination of the Commercial Shared-Loss Agreement." In the first quarter of 2014, we requested and received approval from the FDIC to sell, and completed the sale of, certain covered commercial and consumer loans. See further discussion of the sale above in the section entitled "Results of Operations - Non-Interest Income". The majority of the covered commercial and consumer loans exhibiting credit weaknesses were included in the sale. Loans not included in the sale represent performing relationships that management has made a business decision to retain or loans that are expected to resolve with no loss. At June 30, 2014, ACI commercial loans had a carrying value of $101 million. At June 30, 2014, loans with aggregate carrying values of $432 thousand were 90 days or more past due and $3 million and $96 thousand were internally risk rated substandard and doubtful, respectively. At June 30, 2014, there were no ACI commercial loans rated special mention.



Impaired Loans and Non-Performing Assets

Non-performing assets generally consist of (i) non-accrual loans, (ii) loans that have been modified in troubled debt restructurings ("TDRs") that have not yet exhibited a consistent six month payment history or are loans to consumer borrowers who have not reaffirmed their debt discharged in Chapter 7 bankruptcy, (iii) accruing loans that are more than 90 days contractually past due as to interest or principal, excluding ACI loans, and (iv) OREO. Impaired loans also typically include loans modified in TDRs that are performing according to their modified terms and ACI loans or pools for which expected cash flows have been revised downward since acquisition (as adjusted for any additional cash flows expected to be collected arising from changes in estimates after acquisition). Impaired ACI loans or pools with remaining accretable yield have not been classified as non-accrual loans and we do not consider them to be non-performing assets. Historically and as of June 30, 2014, the majority of impaired loans and non-performing assets were covered assets. The Company's exposure to loss related to covered assets is significantly mitigated by the Single Family Shared-Loss Agreement and by the fair value basis recorded in these assets resulting from the application of acquisition accounting. 67

--------------------------------------------------------------------------------



Table of Contents

The following table summarizes the Company's impaired loans and non-performing assets at the dates indicated (in thousands):

June 30, 2014 December 31, 2013 Non- Non- Covered Covered Covered Covered Assets Assets Total Assets Assets Total Non-accrual loans Residential: 1-4 single family residential $ 1,359$ 84$ 1,443$ 293$ 194$ 487 Home equity loans and lines of credit 5,199 - 5,199 6,559 - 6,559 Total residential loans 6,558 84 6,642 6,852 194 7,046 Commercial (1): Commercial real estate - 5,573 5,573 1,042 4,229 5,271 Construction and land - 226 226 - 244 244 Commercial and industrial - 12,169 12,169 2,767 16,612 19,379 Lease financing - 1,194 1,194 - 1,370 1,370 Total commercial loans - 19,162 19,162 3,809 22,455 26,264 Consumer: - 51 51 - 75 75 Total non-accrual loans 6,558 19,297 25,855 10,661 22,724 33,385 Non-ACI and new loans past due 90 days and still accruing - - - - 512 512 TDRs 2,196 - 2,196 1,765 - 1,765



Total non-performing loans 8,754 19,297 28,051 12,426 23,236 35,662 Other real estate owned

20,700 315 21,015 39,672 898 40,570 Total non-performing assets 29,454 19,612 49,066 52,098 24,134 76,232 Impaired ACI loans on accrual status (2) - - - 44,286 - 44,286 Non-ACI and new TDRs in compliance with their modified terms 2,762 1,297 4,059 3,588 1,400 4,988 Total impaired loans and non-performing assets $ 32,216$ 20,909$ 53,125 $



99,972 $ 25,534$ 125,506

Non-performing loans to total loans (3) 0.21 % 0.27 % 0.31 % 0.39 % Non-performing assets to total assets (4) 0.12 % 0.29 % 0.16 % 0.51 % ALLL to total loans (3) 0.72 % 0.71 % 0.76 % 0.77 % ALLL to non-performing loans 353.34 % 269.05 % 246.73 % 195.52 % Net charge-offs to average loans (5) 0.07 % 0.20 % 0.34 % 0.31 % (1) Includes ACI loans for which discount is no longer being accreted at December 31, 2013. (2) Includes TDRs on accrual status at December 31, 2013. (3) Total loans for purposes of calculating these ratios are net of premiums, discounts and deferred fees and costs. (4) Ratio for non-covered assets is calculated as non-performing non-covered assets to total assets. (5) Annualized. Contractually delinquent ACI loans with remaining accretable yield are not reflected as non-accrual loans because accretable yield continues to be accreted into income. Accretion continues to be recorded as long as there is an expectation of future cash flows in excess of carrying amount from these loans. The carrying value of ACI loans contractually delinquent by more than 90 days but on which income was still being recognized was $33 million and $78 million at June 30, 2014 and December 31, 2013, respectively. The decline in the ratio of the ALLL to total loans for non-covered loans at June 30, 2014 as compared to December 31, 2013 is primarily a result of a decrease in the amount of specific reserves for impaired loans. The additional decline in the ratio of the ALLL to total loans is primarily related to the sale in the first quarter of 2014 of a majority of covered 68

--------------------------------------------------------------------------------



Table of Contents

commercial and consumer loans that were impaired at December 31, 2013. See the section entitled "Analysis of the Allowance for Loan and Lease Losses" below for a further discussion of the methodology we use to determine the amount of the ALLL. New and non-ACI commercial loans are placed on non-accrual status when (i) management has determined that full repayment of all contractual principal and interest is in doubt, or (ii) the loan is past due 90 days or more as to principal or interest unless the loan is well secured and in the process of collection. New and non-ACI residential and consumer loans are generally placed on non-accrual status when 90 days of interest is due and unpaid. When a loan is placed on non-accrual status, uncollected interest accrued is reversed and charged to interest income. Commercial loans are returned to accrual status only after all past due principal and interest has been collected and full repayment of remaining contractual principal and interest is reasonably assured. Residential loans are returned to accrual status when less than 90 days of interest is due and unpaid. Past due status of loans is determined based on the contractual next payment due date. Loans less than 30 days past due are reported as current. Except for ACI loans accounted for in pools, loans that are the subject of TDRs are generally placed on non-accrual status at the time of the modification unless the borrower has no history of missed payments for six months prior to the restructuring. If borrowers perform pursuant to the modified loan terms for at least six months and the remaining loan balances are considered collectable, the loans are returned to accrual status. A loan modification is considered a TDR if the Company, for economic or legal reasons related to the borrower's financial difficulties, grants a concession to the borrower that the Company would not otherwise grant. These concessions may take the form of temporarily or permanently reduced interest rates, payment abatement periods, restructuring of payment terms, extensions of maturity at below market terms, or in some cases, partial forgiveness of principal. Under generally accepted accounting principles, modified ACI loans accounted for in pools are not accounted for as TDRs and are not separated from their respective pools when modified. Included in TDRs are residential loans to borrowers who have not reaffirmed their debt discharged in Chapter 7 bankruptcy. The total amount of such loans is not material. To date, TDRs have not had a material impact on our financial condition or results of operations. As of June 30, 2014, 6 commercial loans with an aggregate carrying value of $8 million and 25 residential loans with an aggregate carrying value of $7 million had been modified in TDRs and were included in impaired loans and non-performing assets. Because of the immateriality of the amount of loans modified in TDRs and nature of the modifications, the modifications did not have a material impact on the Company's consolidated financial statements for the six months ended June 30, 2014 or 2013. For additional information about TDRs, see Note 4 to the consolidated financial statements. Additional interest income that would have been recognized on non-accrual loans and TDRs had they performed in accordance with their original contractual terms is not material for any period presented.



Potential Problem Loans

Potential problem loans have been identified by management as those loans included in the "substandard accruing" risk rating category. These loans are typically performing, but possess specifically identified credit weaknesses that, if not remedied, may lead to a downgrade to non-accrual status and identification as impaired in the near-term. Substandard accruing new loans totaled $57 million at June 30, 2014. The majority of these loans were current as to principal and interest at June 30, 2014.



Loss Mitigation Strategies

We evaluate each loan in default to determine the most effective loss mitigation strategy, which may be modification, short sale, or foreclosure. We offer loan modifications under HAMP to eligible borrowers in the residential portfolio. HAMP is a uniform loan modification process that provides eligible borrowers with sustainable monthly mortgage payments equal to a target 31% of their gross monthly income. As of June 30, 2014, 12,413 borrowers had been counseled regarding their participation in HAMP; 9,129 of those borrowers were initially determined to be potentially eligible for loan modifications under the program. As of June 30, 2014, 1,581 borrowers who did not elect to participate in the program had been sent termination letters and 3,356 borrowers had been denied due to ineligibility. There were 4,232 permanent loan modifications and 62 trial loan modifications at June 30, 2014. Substantially all of these modified loans were ACI loans accounted for in pools. 69

--------------------------------------------------------------------------------



Table of Contents

Analysis of the Allowance for Loan and Lease Losses

The ALLL relates to (i) new loans, (ii) estimated additional losses arising on non-ACI loans subsequent to the FSB Acquisition, and (iii) additional impairment recognized as a result of decreases in expected cash flows on ACI loans due to further credit deterioration. The impact of any additional provision for losses on covered loans is significantly mitigated by an increase in the FDIC indemnification asset. The determination of the amount of the ALLL is, by nature, highly complex and subjective. Future events that are inherently uncertain could result in material changes to the level of the ALLL. General economic conditions including but not limited to unemployment rates, real estate values in our primary market areas and the level of interest rates, as well as a variety of other factors that affect the ability of borrowers' businesses to generate cash flows sufficient to service their debts will impact the future performance of the portfolio.



New and non-ACI Loans

Due to the lack of similarity between the risk characteristics of new loans and covered loans in the residential and home equity portfolios, management does not believe it is appropriate to use the historical performance of the covered residential mortgage portfolio as a basis for calculating the ALLL applicable to new loans. The new loan portfolio has not yet developed an observable loss trend. Therefore, the ALLL for new residential loans is based primarily on relevant proxy historical loss rates. The ALLL for new 1-4 single family residential loans is estimated using average annual loss rates on prime residential mortgage securitizations issued between 2003 and 2008 as a proxy. Based on the comparability of FICO scores and LTV ratios between loans included in those securitizations and loans in the Bank's portfolio and the geographic diversity in the new purchased residential portfolio, we determined that prime residential mortgage securitizations provide an appropriate proxy for expected losses in this portfolio class. A peer group twelve quarter average net charge-off rate is used to estimate the ALLL for the new home equity loan class. See further discussion of the use of peer group loss factors below. The new home equity portfolio is not a significant component of the overall loan portfolio. Based on an updated analysis of historical performance, OREO and short sale losses, recent trending data and other internal and external factors, we have concluded that historical performance by portfolio class is the best indicator of incurred loss for the non-ACI 1-4 single family residential and home equity portfolio classes. For each of these portfolio classes, a quarterly roll rate matrix is calculated by delinquency bucket to measure the rate at which loans move from one delinquency bucket to the next during a given quarter. An average four quarter roll rate matrix is used to estimate the amount within each delinquency bucket expected to roll to 120+ days delinquent. We assume no cure for those loans that are currently 120+ days delinquent. A 12 month loss emergence period is being utilized. Loss severity given default is estimated based on internal data about OREO sales and short sales from the portfolio. The ALLL calculation incorporates a 100% loss severity assumption for home equity loans that are projected to roll to default. No adjustment has been made for future payment resets because the impact of payment resets on defaults to date has not been significant. Since the new commercial loan portfolio is not yet seasoned enough to exhibit a loss trend, the ALLL for new commercial loans is based primarily on peer group average annual historical net charge-off rates by loan class and the Company's internal credit risk rating system. The allowance is comprised of specific reserves for loans that are individually evaluated and determined to be impaired as well as general reserves for individually evaluated loans determined not to be impaired and loans that do not meet our established threshold for individual evaluation. Commercial relationships graded substandard or doubtful and on non-accrual status with committed credit facilities greater than or equal to $750,000 are individually evaluated for impairment. For loans evaluated individually for impairment and determined to be impaired, a specific allowance is established based on the present value of expected cash flows discounted at the loan's effective interest rate, the estimated fair value of the loan, or for collateral dependent loans, the estimated fair value of collateral less costs to sell. Loans modified in TDRs are also evaluated individually for impairment. We believe that loans rated substandard or doubtful that are not individually evaluated for impairment exhibit characteristics indicative of a heightened level of credit risk. Loss factors for these loans are determined by using default frequency and severity information applied at the loan level. Estimated default frequencies and severities are based on available industry data. Beginning in the second quarter of 2014, the peer group used to calculate the average annual historical net charge-off rates that form the basis for our general reserve calculations for new commercial, home equity and consumer loans is a group of 34 banks made up of the banks included in the OCC Midsize Bank Group plus two additional banks in the New York region that management believes to be comparable based on size and nature of lending operations. The OCC Midsize Bank Group primarily includes commercial banks with total assets ranging from $10 - $50 billion. Peer bank data is obtained from the Statistics on Depository Institutions Report published by the FDIC for the most recent quarter available. Prior to the second quarter of 2014, the peer groups used were banks with total assets ranging from $3 - $15 billion. We used a peer group of 23 70

--------------------------------------------------------------------------------



Table of Contents

banks in the U.S. Southeast region for loans originated in our Florida market and by our commercial lending subsidiaries, and a peer group of 16 banks in the New York region for loans originated in our New York market. We believe the change in the peer group is preferable because these banks, as a group, are considered by management to be more comparable to BankUnited in size, nature of lending operations and loan portfolio composition. We evaluate the composition of the peer group annually, or more frequently if, in our judgment, a more frequent evaluation is necessary. The general loss factor for municipal lease receivables is based on a cumulative municipal default curve for obligations of credit quality comparable to those in the Company's portfolio. Our internal risk rating system comprises 13 credit grades; grades 1 through 8 are "pass" grades. The risk ratings are driven largely by debt service coverage. Peer group historical loss rates are adjusted upward for loans rated special mention or assigned a lower "pass" rating. Beginning in the second quarter of 2014, we also extended the loss experience period used to calculated an average net charge-off rate from eight quarters to twelve quarters. We believe a twelve-quarter look back period is appropriate as it better captures a range of observations reflecting the performance of loans originated in the current economic cycle and includes sufficient history. We believe the twelve-quarter look back period to be consistent with the range of industry practice.



Beginning in the second quarter of 2014, we extended the loss emergence period for municipal lease receivables from four quarters to twelve quarters.

The net impact on the ALLL at June 30, 2014 of the change in the peer group and extension of the look back period related to the new commercial, home equity and consumer loans, and the extension of the loss emergence period for the municipal lease receivables was not material. Qualitative adjustments are made to the ALLL when, based on management's judgment, there are internal or external factors impacting loss frequency and severity not taken into account by the quantitative calculations. Management has grouped potential qualitative adjustments into the following categories: Portfolio performance trends, including levels of delinquencies and non-performing loans;



Portfolio growth rates;

Exceptions to policy and credit guidelines;

Economic factors, including changes in and levels of real estate price indices, unemployment rates and GDP;



Credit concentrations; and

Changes in credit administration management and staff.

At June 30, 2014, qualitative adjustments were made to historical loss percentages related to:

economic factors, specifically changes in and/or levels of unemployment

rates and GDP;



portfolio performance trends, limited to the level of non-performing loans

in New York;



changes in credit administration staff;

credit concentrations for the commercial real estate portfolio;

commercial loan portfolio growth rates; and

the level of policy and procedural exceptions. For non-ACI residential loans, the allowance is initially calculated based on UPB. The total of UPB, less the calculated allowance, is then compared to the carrying amount of the loans, net of unamortized credit related fair value adjustments established at acquisition. If the calculated balance net of the allowance is less than the carrying amount, an additional allowance is established. Any such increase in the allowance for non-ACI loans will result in a corresponding increase in the FDIC indemnification asset. 71

--------------------------------------------------------------------------------

Table of Contents ACI Loans For ACI loans, a valuation allowance is established when periodic evaluations of expected cash flows reflect a decrease resulting from credit related factors from the level of cash flows that were estimated to be collected at acquisition plus any additional expected cash flows arising from revisions in those estimates. We perform a quarterly analysis of expected cash flows for ACI loans. Expected cash flows are estimated on a pool basis for ACI 1-4 single family residential and home equity loans. The analysis of expected pool cash flows incorporates updated pool level expected prepayment rate, default rate, delinquency level and loss severity given default assumptions. Prepayment, delinquency and default curves are derived primarily from roll rates generated from the historical performance of the portfolio over the immediately preceding four quarters. Estimates of default probability and loss severity given default also incorporate updated LTV ratios, at the loan level, based on Case-Shiller Home Price Indices for the relevant MSA. Costs and fees represent an additional component of loss on default and are projected using the "Making Home Affordable" cost factors provided by the Federal government. The ACI home equity roll rates reflect elevated default probabilities as a result of delinquent, related senior liens and loans to borrowers who have not reaffirmed their debt discharged in Chapter 7 bankruptcy.



Based on our projected cash flow analysis, no ALLL related to 1-4 single family residential and home equity ACI pools was recorded at June 30, 2014 or December 31, 2013.

The primary assumptions underlying estimates of expected cash flows for ACI commercial loans are default probability and severity of loss given default. Following the sale of commercial ACI loans in March 2014, assessments of default probability and severity are based on net realizable value analyses prepared at the individual loan level. We recorded provisions for loan losses on ACI commercial loans of $14 thousand and $2.0 million, respectively, for the three and six months ended June 30, 2014. Provisions for loan losses of $2.7 million recorded in connection with the transfer of ACI commercial loans to the held for sale classification in the first quarter were partially offset by net recoveries of loan losses, based on our loan level analysis, during the six months ended June 30, 2014. We recorded recoveries of loan losses on ACI commercial loans of $0.2 million and $1.6 million, respectively, for the three and six months ended June 30, 2013, based on our loan level analysis. Related increases (decreases) in the FDIC indemnification asset of $(27) thousand and $(1.8) million, respectively, were recorded for the three and six months ended June 30, 2014 and $0.1 million and $1.4 million, respectively, were recorded for the three and six months ended June 30, 2013. 72

--------------------------------------------------------------------------------



Table of Contents

The following tables provide an analysis of the ALLL, provision for loan losses and net charge-offs for the periods indicated (in thousands):

Six Months Ended June 30, 2014 New Loans ACI Loans Non-ACI Loans Total Balance at December 31, 2013 $ 57,330$ 2,893$ 9,502$ 69,725 Provision for loan losses: 1-4 single family residential 713 - (33 ) 680 Home equity loans and lines of credit 2 - (618 ) (616 ) Multi-family 5,993 (38 ) (4 ) 5,951 Commercial real estate Owner occupied (166 ) (13 ) (6 ) (185 ) Non-owner occupied 6,082 1,588 (11 ) 7,659 Construction and land 999 443 7 1,449 Commercial and industrial 2,137 8 46 2,191 Lease financing (711 ) - - (711 ) Consumer (1,147 ) 324 - (823 ) Total Provision 13,902 2,312 (619 ) 15,595 Charge-offs: Home equity loans and lines of credit - - (1,144 ) (1,144 ) Multi-family - (285 ) - (285 ) Commercial real estate Owner occupied - (356 ) - (356 ) Non-owner occupied (51 ) (3,032 ) - (3,083 ) Construction and land - (635 ) (13 ) (648 ) Commercial and industrial (2,766 ) (573 ) (477 ) (3,816 ) Consumer (910 ) (324 ) - (1,234 ) Total Charge-offs (3,727 ) (5,205 ) (1,634 ) (10,566 ) Recoveries: Home equity loans and lines of credit - - 12 12 Multi-family - - 4 4 Commercial real estate Non-owner occupied - - 3 3 Commercial and industrial 318 - 19 337 Consumer 361 - - 361 Total Recoveries 679 - 38 717 Balance at June 30, 2014 $ 68,184 $ - $ 7,287$ 75,471 73

--------------------------------------------------------------------------------

Table of Contents Six Months Ended June 30, 2013 New Loans ACI Loans Non-ACI Loans Total Balance at December 31, 2012 $ 41,228$ 8,019$ 9,874$ 59,121 Provision for loan losses: 1-4 single family residential (5,382 ) - 294 (5,088 ) Home equity loans and lines of credit (4 ) - 5,762 5,758 Multi-family 831 (225 ) (8 ) 598 Commercial real estate Owner occupied 415 (162 ) (10 ) 243 Non-owner occupied 1,069 (1,320 ) (107 ) (358 ) Construction and land (84 ) 67 (1 ) (18 ) Commercial and industrial 17,546 42 (2,483 ) 15,105 Lease financing 171 - - 171 Consumer 437 - - 437 Total Provision 14,999 (1,598 ) 3,447 16,848 Charge-offs: 1-4 single family residential - - (357 ) (357 ) Home equity loans and lines of credit - - (1,377 ) (1,377 ) Commercial real estate Non-owner occupied - (1,162 ) - (1,162 ) Construction and land - (77 ) - (77 ) Commercial and industrial (16,170 ) (878 ) (172 ) (17,220 ) Consumer (81 ) - - (81 ) Total Charge-offs (16,251 ) (2,117 ) (1,906 ) (20,274 ) Recoveries: Home equity loans and lines of credit - - 15 15 Multi-family - - 8 8 Commercial real estate Non-owner occupied - - 97 97 Commercial and industrial 211 - 2,373 2,584 Consumer 32 - - 32 Total Recoveries 243 - 2,493 2,736 Balance at June 30, 2013 $ 40,219$ 4,304$ 13,908$ 58,431 74

--------------------------------------------------------------------------------



Table of Contents

The following tables show the distribution of the ALLL, broken out between covered and non-covered loans, at the dates indicated (dollars in thousands): June 30, 2014 Non-ACI New Loans ACI Loans Loans Total % (1) Residential: 1-4 single family residential $ 6,984 $ - $ 794$ 7,778 29.6 % Home equity loans and lines of credit 14 - 6,493 6,507 1.5 % 6,998 - 7,287 14,285 31.1 % Commercial: Multi-family 9,940 - - 9,940 13.9 % Commercial real estate Owner occupied 6,608 - - 6,608 8.7 % Non-owner occupied 10,432 - - 10,432 13.2 % Construction and land 1,802 - - 1,802 1.7 % Commercial and industrial 29,665 - - 29,665 27.5 % Lease financing 2,248 - - 2,248 3.7 % 60,695 - - 60,695 68.7 % Consumer 491 - - 491 0.2 % $ 68,184 $ - $ 7,287$ 75,471 100.0 % December 31, 2013 Non-ACI New Loans ACI Loans Loans Total % (1) Residential: 1-4 single family residential $ 6,271 $ - $ 827$ 7,098 32.4 % Home equity loans and lines of credit 12 - 8,243 8,255 1.9 % 6,283 - 9,070 15,353 34.3 % Commercial: Multi-family 3,947 323 - 4,270 12.6 % Commercial real estate Owner occupied 6,774 369 6 7,149 8.5 % Non-owner occupied 4,401 1,444 8 5,853 11.5 % Construction and land 803 192 6 1,001 1.7 % Commercial and industrial 29,976 565 412 30,953 25.3 % Lease financing 2,959 - - 2,959 3.7 % 48,860 2,893 432 52,185 63.3 % Consumer 2,187 - - 2,187 2.4 % $ 57,330$ 2,893$ 9,502$ 69,725 100.0 %



(1) Represents percentage of loans receivable in each category to total loans receivable.

The increase in the balance of the ALLL for new loans at June 30, 2014 as compared to December 31, 2013 reflects the growth of the new loan portfolio across all significant loan categories. The change in the peer group used to calculate the average annual historical net charge-off rates used in the calculation of the quantitative portion of general reserves, as discussed above, resulted in an increase in net charge-off rates for the commercial real estate loan types other than owner occupied commercial real estate and a decrease in net charge-off rates for most other commercial loan types at June 30, 2014 as compared to December 31, 2013. The extension of the loss experience period used to calculate an average net charge-off rate as discussed above and an increase in the qualitative factor for portfolio growth trends resulted in increases to the ALLL for all 75

--------------------------------------------------------------------------------



Table of Contents

of the commercial and commercial real estate loan types. The elimination of favorable adjustments to peer group net charge-off rates for loans assigned the highest pass ratings implemented in the first quarter of 2014 also increased the ALLL for all of the commercial and commercial real estate loan types at June 30, 2014 as compared to December 31, 2013. Significant components of the change in the ALLL at June 30, 2014 as compared to December 31, 2013, as it relates to specific loan types, include:



Increases of $6.0 million for new multi-family loans and $6.0 million for

new non-owner occupied commercial real estate loans reflect the growth of

these portfolios, increases in net charge-off rates and increases in the qualitative factor for portfolio growth trends;



A small decrease for new owner occupied commercial real estate loans

reflects a decrease in peer group net charge-off rates, substantially

offset by the impact of the growth of the portfolio, extension of the loss

experience period and an increase in the qualitative factor for portfolio

growth trends; An increase of $1.0 million for new construction and land loans is



attributable to an increase in net charge off rates as well as growth of

the portfolio;



A decrease of $2.9 million for ACI commercial loans is primarily a result

of the sale of impaired loans during the three months ended March 31, 2014;



A decrease of $1.8 million for non-ACI home equity loans is attributable

primarily to an improvement in roll rates; A small decrease for new commercial and industrial loans reflects a decrease in peer group net charge-off rates and a net decrease of $2.8 million in specific reserves, substantially offset by the impact of the growth of the portfolio, extension of the loss experience period and an increase in the qualitative factor for portfolio growth trends;



A decrease of $0.7 million for lease financing receivables is primarily

related to a decrease in the quantitative loss factor applied to municipal

leases; and



A decrease of $1.7 million for new consumer loans is primarily a result of

the sale of substantially all of the indirect auto portfolio.

For additional information about the ALLL, see Note 4 to the consolidated financial statements.

Equipment under Operating Lease

Equipment under operating lease consists of railcar equipment we have purchased and leased to North American commercial end-users, predominantly companies in the petroleum/natural gas extraction and railroad line-haul industries. These equipment leases provide additional diversity in asset classes, geography and financing structures, with the potential for attractive after-tax returns. There were no significant changes in the portfolio of equipment under operating lease or in the performance of lessees during the six months ended June 30, 2014. There were no impairments of residuals or asset carrying values, missed payments, time off lease or restructurings related to the operating lease portfolio during the quarter.



Other Real Estate Owned

The following table presents the changes in OREO for the periods indicated (in thousands):

Three Months Ended June 30,



Six Months Ended June 30,

2014 2013 2014 2013 Balance, beginning of period $ 29,569$ 68,893$ 40,570$ 76,022 Transfers from loan portfolio 6,157 16,848 15,311 41,641 Sales (13,850 ) (35,281 ) (34,069 ) (65,923 ) Impairment (861 ) (419 ) (797 ) (1,699 ) Balance, end of period $ 21,015$ 50,041$ 21,015$ 50,041 76

--------------------------------------------------------------------------------



Table of Contents

OREO consisted of the following types of properties at the dates indicated (in thousands):

June 30, 2014 December 31, 2013 Covered Non-Covered Total Covered Non-Covered Total 1-4 single family residential $ 17,039 $ - $ 17,039$ 28,310 $ 83 $ 28,393 Condominium 3,661 - 3,661 4,732 - 4,732 Multi-family - - - 135 - 135 Commercial real estate - - - 5,708 500 6,208 Land - 315 315 787 315 1,102 $ 20,700 $ 315 $ 21,015$ 39,672 $ 898 $ 40,570 The decrease in OREO reflects the sale of covered commercial OREO properties during the first quarter of 2014 in conjunction with the covered commercial loan sale discussed above as well as continued efforts to resolve non-performing covered residential assets and a decline in the volume of residential foreclosures. Residential OREO inventory declined to 103 units at June 30, 2014 from 157 units at December 31, 2013.



Deposits

The following table presents information about our deposits for the periods indicated (dollars in thousands):

Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013 Average Average Average Average Average Average Average Average Balance Rate Paid Balance Rate Paid Balance Rate Paid Balance Rate Paid Demand deposits: Non-interest bearing $ 2,222,894 0.00 % $ 1,473,085 0.00 % $ 2,181,384 0.00 % $ 1,403,161 0.00 % Interest bearing 715,340 0.42 % 570,147 0.45 % 701,248 0.42 % 557,427 0.47 % Money market 4,245,282 0.52 % 3,216,620 0.50 % 4,082,058 0.51 % 3,193,082 0.51 % Savings 671,727 0.30 % 918,755 0.37 % 704,741 0.30 % 946,991 0.40 % Time 3,642,130 1.18 % 2,636,693 1.32 % 3,495,546 1.20 % 2,635,927 1.36 % $ 11,497,373 0.61 % $ 8,815,300 0.64 % $ 11,164,977 0.61 % $ 8,736,588 0.67 % Total deposits increased by $1.5 billion to $12.0 billion at June 30, 2014 from $10.5 billion at December 31, 2013. The distribution of deposits reflected in the table above reflects growth in non-interest bearing demand deposits, consistent with management's business strategy. Growth of deposits across all categories is expected to continue.



The following table shows scheduled maturities of certificates of deposit with denominations greater than or equal to $100,000 as of June 30, 2014 (in thousands):

Three months or less $ 600,852 Over three through six months 468,717 Over six through twelve months 883,726 Over twelve months 738,342 $ 2,691,637 77

--------------------------------------------------------------------------------



Table of Contents

Federal Home Loan Bank Advances and Other Borrowings

Outstanding FHLB advances and other borrowings consisted of the following at the dates indicated (dollars in thousands):

June 30, December 31, 2014 2013 FHLB advances $ 2,687,487$ 2,412,050 Securities sold under agreements to repurchase 508 346 Capital lease obligations 10,793 1,917 $ 2,698,788$ 2,414,313 In addition to deposits, we utilize FHLB advances to fund balance sheet growth; the advances provide us with additional flexibility in managing both term and cost of funding. FHLB advances are secured by FHLB stock and qualifying first mortgage, commercial real estate, and home equity loans and mortgage-backed securities. The contractual balance of FHLB advances outstanding at June 30, 2014 is scheduled to mature as follows (in thousands): Maturing in: 2014 $ 855,000 2015 1,330,350 2016 350,000 2017 155,000 Total contractual balance outstanding



2,690,350

Unamortized acquisition accounting fair value adjustment and modification costs (2,863 ) Carrying value $ 2,687,487 Capital Resources Stockholders' equity increased by $86 million for the six months ended June 30, 2014 due primarily to the retention of earnings. Stockholders' equity was impacted to a lesser extent by changes in unrealized gains and losses, net of taxes, on investment securities available for sale and cash flow hedges. Pursuant to the Federal Deposit Insurance Act, the federal banking agencies have adopted regulations setting forth a five-tier system for measuring the capital adequacy of the financial institutions they supervise. At June 30, 2014 and December 31, 2013, BankUnited and the Company had capital levels that exceeded the well-capitalized guidelines.



The following table presents the Company's regulatory capital ratios as of June 30, 2014 (dollars in thousands):

Required to be Required to be Considered Well Considered Adequately Actual Capitalized Capitalized Amount Ratio Amount Ratio Amount Ratio BankUnited, Inc.: Tier 1 leverage $ 1,871,090 11.60 % N/A (1) N/A (1) $ 644,953 4.00 % Tier 1 risk-based capital $ 1,871,090 17.70 % $ 634,286 6.00 % $ 422,857 4.00 % Total risk based capital $ 1,956,989 18.51 % $ 1,057,144 10.00 % $ 845,715 8.00 %



(1) There is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.

On July 2, 2013 the Federal Reserve Board approved a final rule that implements the Basel III changes to the regulatory capital framework for all U.S. banking organizations. The Company is required to implement the final rule on January 1, 2015, with a phase-in period extending through January 1, 2019. The rule will add another risk-based capital category, common equity Tier 1 capital, increase the required Tier 1 capital level, increase risk weights for certain of the Company's investment securities, loans and other assets and add some complexity to the risk-based capital calculations. In 78

--------------------------------------------------------------------------------



Table of Contents

addition, a capital conservation buffer will be phased in beginning in 2016. In order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold this capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements. As of June 30, 2014, the adoption of the rule would not have impacted our capital categories.



Liquidity

Liquidity involves our ability to generate adequate funds to support planned asset growth, particularly growth of the new loan portfolio, meet deposit withdrawal requests and other contractual obligations, maintain reserve requirements, conduct routine operations and pay dividends.

Our consolidated statements of cash flows have historically reflected net cash outflows from operating activities. For the six months ended June 30, 2014 and the year ended December 31, 2013, net cash used in operating activities was $51.5 million and $67.1 million, respectively. The primary driver of cash outflows from operations reflected in the consolidated statements of cash flows is accretion on ACI loans, which is reflected as a non-cash reduction in net income to arrive at operating cash flows. Accretion on ACI loans totaled $175.9 million and $410.4 million for the six months ended June 30, 2014 and the year ended December 31, 2013, respectively. Accretable yield on ACI loans represents the excess of expected future cash flows over the carrying amount of the loans, and is recognized as interest income over the expected lives of the loans. Amounts recorded as accretion are realized in cash as individual loans are paid down or otherwise resolved; however, the timing of cash realization may differ from the timing of income recognition. These cash flows from the repayment or resolution of covered loans, inclusive of amounts that have been accreted through earnings over time, are recognized as cash flows from investing activities in the consolidated statements of cash flows upon receipt. Cash payments from the FDIC in the form of reimbursements of losses related to the covered loans under the Loss Sharing Agreements are also characterized as investing cash flows. These reimbursements from the FDIC totaled $66.7 million and $164.9 million for the six months ended June 30, 2014 and the year ended December 31, 2013, respectively; for both periods, exceeding net operating cash outflows. Both cash generated by the repayment and resolution of covered loans and cash payments received from the FDIC have been and are expected to continue to be consistent and relatively predictable sources of liquidity available to fund operating needs, dividends to BankUnited, Inc. and new loan growth. Cash generated by the repayment and resolution of covered loans totaled $543.8 million and $841.3 million for the six months ended June 30, 2014 and the year ended December 31, 2013, respectively. While we anticipate that the level of accretion on ACI loans will continue to result in reporting cash outflows from operating activities in the near term, the percentage of assets comprised of ACI loans and percentage of interest income comprised of ACI accretion is continuing to decrease. Cash flows from resolution of the covered loans will ultimately be replaced by operating cash flows from new assets originated with those proceeds. In addition to cash provided by the repayment and resolution of covered loans and payments under the Loss Sharing Agreements from the FDIC, BankUnited's liquidity needs, particularly liquidity to fund growth of the new loan portfolio, have been and continue to be met by deposit growth, its amortizing investment portfolio and, to a lesser extent, FHLB advances. BankUnited has access to additional liquidity through FHLB advances, other collateralized borrowings, wholesale deposits or the sale of available for sale securities. At June 30, 2014, unencumbered investment securities available for sale totaled $3.0 billion. At June 30, 2014, BankUnited had available borrowing capacity at the FHLB of $1.6 billion, unused borrowing capacity at the Federal Reserve Bank of $93 million and unused Federal funds and repurchase agreement lines of credit totaling $85 million. The ability to sell or potentially securitize other earning assets, such as the new residential mortgage portfolio, provides a potential source of contingency liquidity, although we do not currently anticipate liquidating any portion of that portfolio. Management also has the ability to exert substantial control over the rate and timing of growth of the new loan portfolio, and resultant requirements for liquidity to fund new loans. Continued runoff of the covered loan portfolio and FDIC indemnification asset and growth of the new loan portfolio are the most significant trends expected to impact the Bank's liquidity in the near term. The asset/liability committee ("ALCO") policy has established several measures of liquidity which are monitored monthly by ALCO and quarterly by the Board of Directors. The primary measure of liquidity monitored by management is liquid assets (defined as cash and cash equivalents and pledgeable securities) to total assets. BankUnited's liquidity is considered acceptable if liquid assets divided by total assets exceeds 5.0%. At June 30, 2014, BankUnited's liquid assets divided by total assets was 8.1%. Management monitors a one year liquidity ratio, defined as cash and cash equivalents, pledgeable securities, unused borrowing capacity at the FHLB, and loans and non-agency securities maturing within one year divided by deposits and borrowings maturing within one year. The maturity of deposits, excluding certificate of deposits, is 79

--------------------------------------------------------------------------------



Table of Contents

based on retention rates derived from the most recent external core deposit analysis obtained by the Company. This ratio allows management to monitor liquidity over a longer time horizon. The acceptable threshold established by ALCO for this liquidity measure is 100%. At June 30, 2014, BankUnited's one year liquidity ratio was 137%. Additional measures of liquidity regularly monitored by ALCO include the ratio of FHLB advances to Tier 1 capital plus the ALLL, the ratio of FHLB advances to total assets and a measure of available liquidity to volatile liabilities. At June 30, 2014, BankUnited was within acceptable limits established by ALCO for each of these measures. As a holding company, BankUnited, Inc. is a corporation separate and apart from its banking subsidiary, and therefore, provides for its own liquidity. BankUnited, Inc.'s main sources of funds include management fees and dividends from the Bank, access to public debt and capital markets and, to a lesser extent, its own available for sale securities portfolio which consists primarily of U. S. government agency floating rate mortgage-backed securities and financial institution preferred stocks. There are regulatory limitations that affect the ability of the Bank to pay dividends to BankUnited, Inc. Management believes that such limitations will not impact our ability to meet our ongoing near-term cash obligations.



We expect that our liquidity requirements will continue to be satisfied over the next 12 months through these sources of funds.

Interest Rate Risk

The principal component of the Company's risk of loss arising from adverse changes in the fair value of financial instruments, or market risk, is interest rate risk, including the risk that assets and liabilities with similar re-pricing characteristics may not reprice at the same time or to the same degree. The primary objective of the Company's asset/liability management activities is to maximize net interest income, while maintaining acceptable levels of interest rate risk. The ALCO is responsible for establishing policies to limit exposure to interest rate risk, and to ensure procedures are established to monitor compliance with these policies. The guidelines established by ALCO are approved at least annually by the Board of Directors. Management believes that the simulation of net interest income in different interest rate environments provides the most meaningful measure of interest rate risk. Income simulation analysis is designed to capture not only the potential of all assets and liabilities to mature or reprice, but also the probability that they will do so. Income simulation also attends to the relative interest rate sensitivities of these items, and projects their behavior over an extended period of time. Finally, income simulation permits management to assess the probable effects on the balance sheet not only of changes in interest rates, but also of proposed strategies for responding to them. The income simulation model analyzes interest rate sensitivity by projecting net interest income over the next twenty-four months in a most likely rate scenario based on forward interest rate curves versus net interest income in alternative rate scenarios. Management continually reviews and refines its interest rate risk management process in response to the changing economic climate. Currently, our model projects a plus 100, plus 200, plus 300, plus 400 and plus 500 basis point change with rates increasing by the magnitude of the rate ramp evenly over the next 12 months as well as a modified flat scenario incorporating a more flattened yield curve. We did not simulate a decrease in interest rates at June 30, 2014 due to the current low rate environment. We continually evaluate the scenarios being modeled with a view toward adapting them to changing economic conditions, expectations and trends. The Company's ALCO policy has established that interest income sensitivity will be considered acceptable if forecast net interest income in the plus 200 basis point scenario is within 5% of forecast net interest income in the most likely rate scenario over the next twelve months and within 10% in the second year. The following table illustrates the impact on forecasted net interest income of plus 100, plus 200 and plus 300 basis point scenarios at June 30, 2014: Plus 100 Plus 200 Plus 300 Twelve Months 0.5 % 1.2 % 1.8 % Twenty Four Months 3.1 % 6.1 % 8.9 % Management also simulates changes in the economic value of equity ("EVE") in various interest rate environments. The ALCO policy has established parameters of acceptable risk that are defined in terms of the percentage change in EVE from a base scenario under six rate scenarios, derived by implementing immediate parallel movements of plus and minus 100, 200 and 300 basis points from current rates. We did not simulate decreases in interest rates at June 30, 2014 due to the current low rate environment. The parameters established by ALCO stipulate that the change in EVE is considered acceptable if the change is less than 6%, 10% and 14% in plus 100, 200 and 300 basis point scenarios, respectively. As of June 30, 2014, our simulation 80

--------------------------------------------------------------------------------



Table of Contents

for BankUnited indicated percentage changes from base EVE of (2.6)%, (5.6)% and (9.6)% in plus 100, 200, and 300 basis point scenarios, respectively.

These measures fall within an acceptable level of interest rate risk per the policies established by ALCO. In the event the models indicate an unacceptable level of risk, the Company could undertake a number of actions that would reduce this risk, including the sale or re-positioning of a portion of its available for sale investment portfolio, restructuring of borrowings, or the use of derivatives such as interest rate swaps and caps. Many assumptions were used by the Company to calculate the impact of changes in interest rates, including the change in rates. Actual results may not be similar to the Company's projections due to several factors including the timing and frequency of rate changes, market conditions, changes in depositor behavior and the shape of the yield curve. Actual results may also differ due to the Company's actions, if any, in response to changing rates and conditions.



Derivative Financial Instruments

Interest rate swaps are one of the tools we use to manage interest rate risk. These derivative instruments are used to mitigate exposure to variability in interest cash flows on FHLB advances and time deposits and to manage duration of liabilities. These interest rate swaps are designated as cash flow hedging instruments. The fair value of these instruments is included in other assets and other liabilities in our consolidated balance sheets and changes in fair value are reported in accumulated other comprehensive income. At June 30, 2014, outstanding interest rate swaps designated as cash flow hedges had an aggregate notional amount of $1.9 billion. The aggregate fair value of interest rate swaps designated as cash flow hedges included in other assets was $7 million and the aggregate fair value included in other liabilities was $39 million. Interest rate swaps not designated as cash flow hedges had an aggregate notional amount of $993 million at June 30, 2014. The aggregate fair value of these interest rate swaps included in other assets was $15 million and the aggregate fair value included in other liabilities was $15 million. These interest rate swaps were entered into as accommodations to certain of our commercial borrowers.



See Note 7 to the consolidated financial statements for more information about our derivative positions.

Off-Balance Sheet Arrangements

Commitments

We routinely enter into commitments to extend credit to our customers, including commitments to fund loans or lines of credit and commercial and standby letters of credit. The credit risk associated with these commitments is essentially the same as that involved in extending loans to customers and they are subject to our normal credit policies and approval processes. While these commitments represent contractual cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. The following table details our outstanding commitments to extend credit as of June 30, 2014 (in thousands): Covered Non-Covered Total Commitments to fund loans $ - $ 572,293$ 572,293 Commitments to purchase loans - 82,518



82,518

Unfunded commitments under lines of credit 31,241 1,073,394 1,104,635 Commercial and standby letters of credit - 42,257 42,257

$ 31,241$ 1,770,462$ 1,801,703



Critical Accounting Policies and Estimates

The Company has made no significant changes in its critical accounting policies and significant estimates from those disclosed in the 2013 Annual Report on Form 10-K.

81

--------------------------------------------------------------------------------



Table of Contents

Non-GAAP Financial Measure

Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful base for comparability to other financial institutions. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share at June 30, 2014 (in thousands except share and per share data): Total stockholders' equity $ 2,014,572



Less: goodwill and other intangible assets 68,737 Tangible stockholders' equity

$ 1,945,835



Common shares issued and outstanding 101,650,857

Book value per common share $ 19.82



Tangible book value per common share $ 19.14

82

--------------------------------------------------------------------------------



Table of Contents


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters