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| Bank United Corp. Achieves 26% Earnings Per Share Growth for Third Quarter Fiscal 2000 |
HOUSTON, July 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 third fiscal quarter ended June 30, 2000. Net income for the quarter increased to $33.7 million or $.97 per diluted share compared to the year ago quarter's results of $25.4 million or $.77 per diluted share. Net income increased 33% and diluted earnings per share increased $.20 per share or 26% over the year ago quarter. Total assets were $18.2 billion at June 30, 2000, up $2.7 billion or 17% from June 30, 1999. On a year to date basis, net income totaled $98.3 million or $2.77 per diluted share compared to $78.2 million or $2.37 per diluted share in the prior year, for a 17% per share increase. "This quarter's outstanding results, including a 26% earnings per share increase, came from quarter to quarter earnings growth in our commercial banking, mortgage banking and community banking groups," said Bank United Corp. President and CEO Barry C. Burkholder. "Significantly, we also maintained our targeted efficiency ratio and increased our loan loss reserves." "Total revenue increased primarily due to a 22% increase in net interest income, higher servicing fee revenue, and strong growth in banking fee income. Loans outstanding were up 20% year over year. The quarter's results also reflect the growing success of our community banking franchise's small business lending expansion, growing portfolio of consumer loans, and the expansion of our customer base through the 7-Day Banking Centers. Transaction fee income increased over 50% versus the same quarter last year." Mr. Burkholder continued, "Our earnings during the quarter included three items of special mention: a special Federal Home Loan Bank dividend of $5.4 million before tax ($.11 per diluted share), the recognition of a $3 million ($.09 per diluted share) income tax benefit, and an increased loan loss provision over the previous quarter of $11 million before tax ($.21 per diluted share), due primarily to a large nonperforming commercial credit. These items are discussed further within the text of this press release." Mr. Burkholder added, "Total nonperforming assets as a percentage of total assets remained unchanged at .70% from the quarter ended March 31, 2000, despite the addition of the aforementioned large credit during the current quarter. We believe that our prudent underwriting standards and the fact that the majority of our loans are secured should allow us to maintain our historically high asset quality." "We successfully managed through another Federal Reserve interest rate hike during the quarter by maintaining our net interest yield and increasing our single family loan origination volumes by 70% over last quarter," concluded Mr. Burkholder. "All in all, we are pleased with this quarter's results, particularly our ROCE of 15.8%, up from 13.8% last 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 155-branch community banking network in Texas, including 66 branches in the greater Houston area, 77 in Dallas/Ft. Worth, five in Midland, four in Austin, and three in San Antonio; operates 19 SBA lending offices in 13 states; is a national middle market commercial bank with 23 regional offices in 16 states; originates mortgage loans through 11 wholesale offices in 11 states; operates a national mortgage servicing business serving approximately 312,000 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 during the quarter, increasing 22% to $109.2 million, compared to the year ago quarter. This increase was achieved through the continued growth in average interest-earning assets, primarily commercial loans, which reached $16.7 billion during the current quarter, up 20% over the year ago quarter. The net yield on interest-earning assets was 2.63% for the current quarter compared to 2.58% for the year ago quarter, and 2.53% for the March 2000 quarter. Exclusive of the special FHLB dividend received in the quarter, the net yield remained essentially unchanged from the March 2000 quarter to the June 2000 quarter at 2.52% despite tightening market spreads triggered by recent rate hikes by the Federal Reserve. The Company's overall net interest income and gross yields continued an upward trend during the quarter, benefiting from rate resets on the substantial portfolio of LIBOR and prime based commercial loans. NON-INTEREST INCOME Non-interest income totaled $39.3 million for the quarter, up $11.8 million or 43% from the year ago 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. Loan Servicing Fees The largest component of non-interest income is loan servicing fees, which totaled $18.6 million for the quarter, for an increase of $6.3 million or 51% over the year ago quarter. This increase reflects a larger average servicing portfolio, as well as an increase in the average servicing fees earned. Increasing mortgage interest rates over the last year caused prepayments in the portfolio to decline, thereby increasing the average life and the overall value of the servicing portfolio. Transaction Fees and Charges A substantial increase in the deposit customer base and a 25% increase in the number of checking accounts resulted in a 56% increase in transaction fees and charges over the year ago quarter. Transaction fees and charges reached a record $9.2 million during the quarter for a $3.3 million increase compared to the year ago quarter. The increase in the customer base and number of accounts came primarily from the 7-Day Banking Centers. Net Gains Sales of mortgage loans, mortgage servicing rights and SBA banking loans contributed $6.3 million in gains for the quarter, up $1.5 million, or 31% over the year ago quarter. The "natural hedge" provided by the Company's servicing portfolio created the opportunity to take advantage of higher values in the servicing portfolio through the sale of $676 million of servicing rights during the quarter for a $2.4 million gain, thus offsetting the effect of lower levels of fixed rate single family loan originations and the related sales. SBA banking gains were $3.4 million during the quarter, consistent with an almost three-fold increase in quarterly originations, demonstrating the continued growth and success of this line of business. NON-INTEREST EXPENSE Non-interest expense for the quarter totaled $73.8 million compared to $63.7 million for the year ago quarter, reflecting growth and expansion in all business lines of the Company. To complement the success of the business units, the Company's efficiency ratio also improved to 48.6% (50.4% excluding the special FHLB dividend) during the quarter compared to 53.0% in the year ago quarter and 50.8% in the March 2000 quarter. INCOME TAXES During the quarter, the Company finalized the calculation of its net operating loss carryforwards to future years in conjunction with the filing of its 1999 federal income tax return. As a result, it recorded a $3.0 million income tax benefit. LOAN ACTIVITY The Company's loan portfolio totaled approximately $15.0 billion at June 30, 2000, up $2.5 billion or 20% over the prior year and $515.0 million or 4% over March 31, 2000. Total loan fundings were $2.5 billion in the current quarter compared to $1.9 billion in the year ago quarter and $2.1 billion for the March 2000 quarter. Growth in the commercial loan portfolio was the most significant change in these periods. 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 $6.9 billion at June 30, 2000, up $1.7 billion or 33% from the year ago period and $385.0 million or 6% over March 31, 2000. Commercial loan fundings were $1.6 billion for the current quarter compared to $1.1 billion for the year ago quarter, and $1.5 billion for the March 2000 quarter. Small Business and SBA Small business and SBA loans, which are included in the commercial loan portfolio, totaled $542.2 million ($215 million of small business and $327 million of SBA) at June 30, 2000, up 89% from June 30, 1999. Small business and SBA fundings for the quarter achieved another record high of $165 million, up over 158% from the year ago quarter and 4% from the March 2000 quarter. Bank United is the top SBA lender in Texas and now ranks number four in the nation. Single Family The single family loan portfolio totaled $7.3 billion at June 30, 2000 as compared to $6.6 billion at June 30, 1999. Single family loan fundings for the current quarter totaled $780.9 million compared to $707.0 million for the year ago quarter and $462.1 million for the March 2000 quarter. Single family loan funding levels were higher during the current quarter compared to the March 2000 quarter due to a seasonal increase in home purchases. Refinancings represented 30% of total fundings for the quarter compared to 61% for the year ago quarter and 35% for the March 2000 quarter. Consumer Consumer loans totaled $825.9 million at June 30, 2000, up $200.7 million or 32% from the prior year and $83.4 million or 11% from March 31, 2000. Consumer loan fundings were $140.2 million for the quarter compared to $92.6 million for the year ago quarter and $90.9 million for the March 2000 quarter. Home improvement loans accounted for the majority of this growth, both in terms of the portfolio balance and originations. Loan Composition At June 30, 2000, the composition of the loan portfolio was single family 48%, commercial 46%, and consumer 6%. The composition at June 30, 1999 was single family 53%, commercial 42%, and consumer 5%. ASSET QUALITY The Company's nonperforming assets were $127.5 million at June 30, 2000, compared to $121.3 million at March 31, 2000, and continue to be principally comprised of past due single family loans. The nonperforming asset ratio was .70% at both June 30, 2000 and March 31, 2000. During the current quarter, a partially secured $23 million loan to a Houston based department store chain became nonperforming when the borrower filed for Chapter 11 reorganization under the Bankruptcy Code. The Company believes that it is adequately reserved against losses, if any, that may be realized in connection with this loan. The Company bolstered its loan loss reserves through a provision for credit losses of $19.9 million in the quarter, compared to $5.6 million for the year ago quarter and $8.9 million for the March 2000 quarter to reflect the higher level of commercial loans and the effect of the new nonperforming loan. The Company closed the quarter with an allowance for credit losses of $112.0 million, or .74% of total loans compared to $94.7 million or .65% at March 31, 2000. At June 30, 2000, the allowance for credit losses to total loans, by type, was: .25% for the single family portfolio, 1.38% for the commercial portfolio and .29% for the consumer portfolio. Net charge-offs totaled $2.7 million or .07% (annualized) of average loans for the quarter compared to $919 thousand or .03% for the June 1999 quarter and $2.0 million or .06% for the March 2000 quarter. DEPOSITS The $1.5 billion increase in deposits from the year ago period to $8.8 billion at June 30, 2000 was primarily due to an increase in both community banking and commercial banking deposits. Community banking deposits increased 8% and commercial banking deposits increased 8% year over year. The Company's 7-Day Banking Center initiative is largely responsible for the increase in community banking deposits. At June 30, 2000, 7-Day Banking Centers held $516.8 million in deposits and 93,800 accounts. Approximately 80% of the 7- Day Banking Centers' accounts are from new customers. The growth in the commercial banking deposit base is consistent with the Company's overall strategy of providing a full range of loan and deposit products and services to its commercial customers. BANK UNITED The Company also announced net income of $41.3 million for the quarter for its subsidiary, Bank United, compared to $33.3 million for the year ago quarter. Capital levels of the Bank at June 30, 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. CONFERENCE CALL The Company will conduct a conference call to review announcements made in this press release on July 26, 2000 at 11 a.m. EDT (10 a.m. CDT). Interested parties should call 1-800-521-5439. A recorded playback of the conference call will be available by calling 1-800-625-5288 after 2:00 p.m. EDT July 26, 2000 through August 10, 2000. The passcode for this playback is 753254. A replay of the conference call will also be available on the Company's website at http://www.BankUnited.com after 2:00 p.m. EDT July 26, 2000.SOURCE Bank United Corp.
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media relations, Vern Stockton, 713-543-6920,
or investor relations, Debbie Kemple, 713-543-6926, both of Bank
United Corp.
