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| Bank United Corp. Announces 21% Increase in Second Quarter 2000 Earnings Per Share |
HOUSTON, April 25 /PRNewswire/ -- Bank United Corp. (Nasdaq: BNKU; NYSE: BKP) (the "Company"), parent of Bank United (NYSE: BKU PrA and BKU PrB) (the "Bank"), today announced earnings for its second quarter ended March 31, 2000. Net income for the quarter increased to $32.8 million or $.93 per diluted share compared to the year ago quarter's results of $25.5 million or $.77 per diluted share. Net income increased 29% and diluted earnings per share increased $.16 per share or 21% over the year ago quarter. Total assets were $17.4 billion at March 31, 2000, up $2.4 billion or 16% from March 31, 1999. Barry C. Burkholder, President and CEO, stated, "The Company's 21% increase in net earnings per share for the quarter reflected strong growth in net interest income primarily from continuing increases in commercial and consumer loans, a significant increase in loan servicing fees and higher levels of community banking fee income. The net yield for the quarter was 2.53%, up from 2.41% in the year ago quarter, reflecting the benefit received from adjustable rate assets repricing more quickly than liabilities in a rising rate environment. The 'natural hedge' value provided by the Company's large servicing portfolio of $32 billion more than offset lower single family mortgage originations during the second quarter." Mr. Burkholder continued, "Our results benefited from a 25% increase in total net revenue over last year while maintaining our targeted expense efficiency ratio. During the quarter we also bolstered our commercial loan reserves by over $4 million, bringing the commercial loan reserve ratio to 1.16%." On a year to date basis, net income totaled $64.6 million or $1.80 per diluted share compared to $52.8 million or $1.60 per diluted share for the prior year. Additional comments and supplemental financial data are attached. Bank United Corp. is the largest publicly-traded depository institution headquartered in Texas. Through Bank United, the Company operates a 154-branch community banking network in Texas, including 64 branches in the greater Houston area, 79 in Dallas/Ft. Worth, five in Midland, and three each in Austin and San Antonio; operates 23 SBA lending offices in 16 states; is a national middle market commercial bank with 23 regional offices in 16 states; originates mortgage loans through 11 wholesale offices in 10 states; operates a national mortgage servicing business serving approximately 330,000 customers, and manages an investment portfolio. The Company's website can be found at http://www.bankunited.com. Bank United is FDIC insured and an equal housing lender. NET INTEREST INCOME Net interest income reached record levels, increasing 22% to $101 million for the current quarter as compared to the year ago quarter. The continued growth in the Company's net interest income reflects higher levels of average interest-earning assets, which reached $16 billion during the current quarter, an increase of 17% over the year ago quarter. The principal reason for this growth came from the commercial loan portfolio which increased $2 billion since the year ago quarter. The net yield on interest-earning assets was 2.53% for the quarter, compared to 2.41% for the year ago quarter, and 2.60% for the December 1999 quarter. The Company's net interest income and gross yields continued an upward trend during the quarter, benefiting from rate resets on the substantial portfolio of adjustable rate commercial loans. As a result of more assets repricing than liabilities, higher gross yields offset a rise in the cost of funds, resulting in a 12 basis point increase in the net yield during the current quarter as compared to the year ago quarter. However, due to an abrupt drop in short-term market interest rates from the artificially high levels caused by "Y2K" fears, more of the Company's adjustable rate assets repriced than liabilities, causing the net yield to narrow 7 basis points during the current quarter as compared to the December 1999 quarter. The net yield bounced back to 2.59% in March 2000, a level the Company expects to approximate in the third quarter of 2000. NON-INTEREST INCOME Non-interest income totaled $38.7 million for the quarter, up $10.3 million or 36% from the year ago quarter and up $5.3 million or 16% from the December 1999 quarter. Non-interest income is primarily comprised of loan servicing fees, community banking transaction fees, commercial banking fees, gains from sales of mortgage loans and mortgage servicing rights, and gains from sales of SBA loans. Non-interest income benefited during the quarter from the "natural hedge" provided by the Company's servicing portfolio. In periods of rising interest rates, prepayments slow and loan servicing fees (net of amortization expense) increase thus offsetting the effect of lower single family mortgage loan originations and lower single family mortgage loan sales. Loan Servicing Fees The largest component of non-interest income is loan servicing fees, which totaled $19.5 million for the quarter, for an increase of $6.6 million or 52% over the year ago quarter. This increase was due to higher servicing fees that resulted from a larger average servicing portfolio and a slow down in the amortization required on the mortgage servicing rights. During the last twelve months, the Company has purchased approximately $8 billion in servicing rights, a large portion of which were GNMAs. Transaction Fees and Charges Transaction fees and charges reached a record $8.1 million during the quarter for a $3.2 million or 64% increase compared to the year ago quarter. A larger number of checking accounts, arising primarily from the 7-Day Banking Center expansion, contributed to this increase. Net Gains Net gains from sales of mortgage loans, mortgage servicing rights and SBA banking loans comprised the majority of the $6.2 million in gains for the current quarter, up $947 thousand, or 18% over the year ago quarter. Gains for the current quarter included $3 million from the sale of $461 million of low loan balance single family mortgage servicing rights. Gains on sales of single family loans declined $4.1 million primarily due to lower sales volume in the current quarter as compared to the year ago quarter ($303 million sold in the current quarter as compared to $804 million sold in the year ago quarter). A significant drop in fixed rate refinancings from the year ago quarter caused a sizeable reduction in sales volumes. SBA banking gains were $2.1 million during the current quarter, up 114% over the year ago quarter, demonstrating the continued build up and success in this business year over year. NON-INTEREST EXPENSE Non-interest expense for the quarter totaled $72.7 million, compared to $56.6 million for the year ago quarter. During the twelve months ended March 31, 2000, the community bank's retail branch network expanded from 94 branch locations to 154. The Midland acquisition, the 7-Day Banking Center initiative, and the expansion of the SBA banking business contributed to this increase. Costs associated with new offices for commercial banking (4 new offices) and mortgage banking (2 new offices) and technology efforts also contributed to this increase. The Company's efficiency ratio, however, remained stable at 50.8% during the quarter compared to the December 1999 quarter. LOAN ACTIVITY The Company's loan portfolio totaled $14.5 billion at March 31, 2000, up $2.8 billion or 24% over the prior year and $458.3 million or 3% over December 31, 1999. Total loan originations were $2.1 billion in the current quarter compared to $1.9 billion in the year ago quarter. Higher levels of commercial loan originations during the quarter offset lower single family loan originations. Accordingly, the most significant change in the current quarter, as compared to both previous quarters, was evident in the growth in the commercial loan portfolio. Commercial The commercial loan portfolio, which is principally comprised of single family construction, multi-family and commercial real estate, healthcare, and mortgage banker finance line of credit loans, totaled $6.5 billion at March 31, 2000, up $2 billion or 44% from the year ago period, and $347.8 million or 6% over December 31, 1999. Commercial loan fundings were $1.5 billion for the current quarter, compared to $1 billion for the year ago quarter, and $1.7 billion for the December 1999 quarter. Small Business and SBA Small business and SBA loans, which are included in the commercial loan portfolio, totaled $469.8 million ($197.4 million of small business and $272.4 million of SBA) at March 31, 2000, up 62% from March 31, 1999. Small business and SBA fundings for the quarter achieved another record high of $158.6 million, up over 300% from the year ago quarter and 68% from the December 1999 quarter. Single Family The single family loan portfolio totaled $7.2 billion at March 31, 2000 as compared to $6.6 billion at March 31, 1999. Single family loan fundings for the current quarter totaled $462.1 million, compared to $773.1 million for the year ago quarter, and $641.7 million for the December 1999 quarter. Lower loan funding levels during the current quarter reflect the continued rise in long-term market interest rates and lower levels of refinancings. Refinancings represented 35% of total fundings for the quarter, compared to 77% for the year ago quarter, and 52% for the December 1999 quarter. Consumer Consumer loans totaled $742.5 million at March 31, 2000, up $158.6 million or 27% from the prior year, and $49.1 million or 7% from December 31, 1999. Consumer loan fundings were $90.9 million for the quarter, compared to $78.1 million for the year ago quarter, and $82.7 million for the December 1999 quarter. Loan Composition At March 31, 2000, the composition of the loan portfolio was single family 50%, commercial 45%, and consumer 5%. The composition at March 31, 1999 was single family 56%, commercial 39%, and consumer 5%. ASSET QUALITY The Company continues to maintain high asset quality while growing the loan portfolio approximately 24% over the last twelve months. The nonperforming asset ratio was .70% at March 31, 2000, compared to .62% at March 31, 1999, and .64% at December 31, 1999. Nonperforming assets (80% of which are single family loans and single family real estate owned properties) were $121.3 million at March 31, 2000, compared to $111.9 million at December 31, 1999, reflecting higher levels of single family loans and single family real estate properties obtained from recently acquired loan and servicing portfolios. Net charge-offs totaled $2.0 million or .06% (annualized) of average loans for the quarter, compared to $1.9 million or .07% for the March 31, 1999 quarter, and $2.1 million or .06% for the December 31, 1999 quarter. The provision for credit losses for the quarter totaled $8.9 million, compared to $6.0 million for the year ago quarter and $7.1 million for the December 1999 quarter. The steadily increasing level of reserves established each quarter reflects growth in the loan portfolios and management's assessment of the current economic environment. The allowance for credit losses totaled $94.7 million at March 31, 2000, or .65% of total loans, compared to $87.8 million or .62% at December 31, 1999. At March 31, 2000, the allowance for credit losses to total loans, by type, was: .26% for the single family portfolio, 1.16% for the commercial portfolio and .33% for the consumer portfolio. The commercial reserve ratio at March 31, 2000 of 1.16%, was up from 1.09% at December 31, 1999, as a result of an additional $4 million of reserves established during the current quarter. DEPOSITS Deposits were $8.5 billion at March 31, 2000, up $1.3 billion from the year ago period. Community banking deposits increased $550 million, commercial banking deposits increased $163 million and wholesale deposits increased $694 million from March 1999 to March 2000, offset by a $71 million reduction in escrow deposits. The Company's 7-Day Banking Center initiative is largely responsible for the increase in community banking deposits. At March 31, 2000, 7-Day Banking Centers held $461.2 million in deposits and 80,300 accounts. Approximately 80% of the accounts in the 7-Day Banking Centers are from new customers of Bank United. BANK UNITED The Company also announced net income of $39.9 million for the quarter for its subsidiary, Bank United, compared to $33.4 million for the year ago quarter. Capital levels of the Bank at March 31, 2000 qualify it as "well-capitalized", the highest of five tiers under applicable regulatory guidelines. OTHER CORPORATE MATTERS Court of Claims Litigation On March 19, 1999, United States Court of Federal Claims Chief Judge Loren A. Smith ruled that the United States was liable for claims in the case filed by Bank United Corp. relating to the government's breach of contracts, which were made when the Company acquired a failed savings and loan association in late 1988. The Company's case proceeded to trial on the amount of damages on September 13, 1999, and the taking of evidence by the court concluded on October 21, 1999. The parties have now submitted post-trial briefs and presented final oral arguments. A decision by the court is expected in calendar year 2000. The suit seeks damages of approximately $560 million. FORWARD-LOOKING INFORMATION Statements contained herein concerning Bank United Corp.'s projections, plans, or objectives, and, more particularly, statements concerning the strength of its business, anticipated earnings increases, expected net yield trend, high asset quality, growth in both commercial and consumer loan production levels, net servicing fee revenue, SBA loan gains, or single family construction business or increases in revenues or shareholder value due to branch expansion are forward-looking statements under the Private Securities Reform Act of 1995. Actual results could differ materially from those projected due to changes in interest rates, competition in the industry, changes in economic conditions, and other factors. More information on risk factors affecting the Company is available under the heading Forward-Looking Information in the Company's Annual Report on Form 10-K for the year ended September 30, 1999 on file with the SEC.SOURCE Bank United Corp.
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CONTACT:
Vern Stockton, Media Relations, 713-543-6920,
or Debbie Kemple, Investor Relations, 713-543-6926, both of Bank
United Corp.
