##### Table of Contents

---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-Q



(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended December 31, 2005



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



Commission File No. 1-13921



BankUnited Financial Corporation

(Exact name of registrant as specified in its charter)



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Florida                                                        |  | 65-0377773                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



255 Alhambra Circle,
Coral Gables, Florida 33134

(Address of principal executive offices) (Zip Code)



(305) 569-2000

(Registrants telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x  No ̈



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



Large accelerated filer x     Accelerated filer ̈Non-accelerated filer ̈



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No x



The number of shares outstanding of the registrants common stock at the
close of business on February 1, 2006 was 35,796,865 shares of Class A Common Stock, $.01 par value, and 431,562 shares of Class B Common Stock, $.01 par value.



This Form 10-Q contains 42 pages.

The Index to Exhibits appears on page 42.



---



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



FORM 10-Q REPORT FOR THE QUARTER ENDED DECEMBER 31, 2005



TABLE OF CONTENTS



|                             |  |                                                                                                                   |  |         
|---------------------------- |  | ----------------------------------------------------------------------------------------------------------------- |  | --------
|                             |  |                                                                                                                   |  | Page No.
|PART IFINANCIAL INFORMATION |  |                                                                                                                  
|                             |  |                                                                                                                  
|Item 1.                      |  | Financial Statements                                                                                              |  |         
|                             |  |                                                                                                                  
|                             |  | Consolidated Statements of Financial Condition as of December 31, 2005 (unaudited) and September 30, 2005         |  | 3       
|                             |  |                                                                                                                  
|                             |  | Consolidated Statements of Income for the Three Months Ended December 31, 2005 and 2004 (unaudited)               |  | 4       
|                             |  |                                                                                                                  
|                             |  | Consolidated Statements of Stockholders Equity for the Three Months Ended December 31, 2005 and 2004 (unaudited) |  | 5       
|                             |  |                                                                                                                  
|                             |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2005 and 2004 (unaudited) |  | 6       
|                             |  |                                                                                                                  
|                             |  | Condensed Notes to Consolidated Financial Statements (unaudited)                                                  |  | 7       
|                             |  |                                                                                                                  
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                             |  | 19      
|                             |  |                                                                                                                  
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                                                        |  | 31      
|                             |  |                                                                                                                  
|Item 4.                      |  | Controls and Procedures                                                                                           |  | 32      
|                             | 
|PART IIOTHER INFORMATION    |  |                                                                                                                  
|                             |  |                                                                                                                  
|Item 1A.                     |  | Risk Factors                                                                                                      |  | 33      
|                             |  |                                                                                                                  
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                               |  | 39      
|                             |  |                                                                                                                  
|Item 6.                      |  | Exhibits                                                                                                          |  | 40      



2



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                                                                                                  |  | December 31,2005                         |            |   | September 30,2005 |  
|                                                                                                                                  |  | (Dollars in thousands, exceptshare data) |           
|ASSETS                                                                                                                            |  |                                          |            |   |                   |   |            |  
|Cash                                                                                                                              |  | $                                        | 55,051     |   |                   | $ | 60,870     |  
|Federal Home Loan Bank overnight deposits                                                                                         |  |                                          | 32,505     |   |                   |   | 175,249    |  
|Federal funds sold                                                                                                                |  |                                          | 4,041      |   |                   |   | 1,932      |  
|Investments securities available for sale, at fair value                                                                          |  |                                          | 289,818    |   |                   |   | 289,932    |  
|Mortgage-backed securities available for sale, at fair value (including assets pledged of $1,358,312 and $1,223,261,
respectively |  |                                          | 1,495,576  |   |                   |   | 1,626,005  |  
|Mortgage loans held for sale at fair value                                                                                        |  |                                          | 13,136     |   |                   |   | 12,196     |  
|Loans held in portfolio                                                                                                           |  |                                          | 8,766,939  |   |                   |   | 7,933,759  |  
|Add: Unearned discounts, premiums and deferred costs, net                                                                         |  |                                          | 138,102    |   |                   |   | 119,588    |  
|Less: Allowance for loan losses                                                                                                   |  |                                          | (28,646    | ) |                   |   | (25,755    | )
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Loans held in portfolio, net                                                                                                      |  |                                          | 8,876,395  |   |                   |   | 8,027,592  |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Federal Home Loan Bank stock and other earning assets                                                                             |  |                                          | 201,291    |   |                   |   | 190,043    |  
|Office properties and equipment, net                                                                                              |  |                                          | 43,089     |   |                   |   | 41,072     |  
|Real estate owned                                                                                                                 |  |                                          | 224        |   |                   |   | 542        |  
|Interest receivable                                                                                                               |  |                                          | 51,033     |   |                   |   | 41,621     |  
|Mortgage servicing rights                                                                                                         |  |                                          | 22,117     |   |                   |   | 22,101     |  
|Goodwill                                                                                                                          |  |                                          | 28,353     |   |                   |   | 28,353     |  
|Bank-owned life insurance                                                                                                         |  |                                          | 113,583    |   |                   |   | 112,383    |  
|Prepaid expenses and other assets                                                                                                 |  |                                          | 33,088     |   |                   |   | 37,814     |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Total assets                                                                                                                      |  | $                                        | 11,259,300 |   |                   | $ | 10,667,705 |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                              |  |                                          |            |   |                   |   |            |  
|Liabilities                                                                                                                       |  |                                          |            |   |                   |   |            |  
|Interest bearing deposits                                                                                                         |  | $                                        | 4,648,317  |   |                   | $ | 4,361,820  |  
|Non-interest bearing deposits                                                                                                     |  |                                          | 359,040    |   |                   |   | 371,535    |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Total deposits                                                                                                                    |  |                                          | 5,007,357  |   |                   |   | 4,733,355  |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Securities sold under agreements to repurchase                                                                                    |  |                                          | 1,215,561  |   |                   |   | 1,161,348  |  
|Advances from Federal Home Loan Bank                                                                                              |  |                                          | 4,070,350  |   |                   |   | 3,820,385  |  
|Convertible senior notes                                                                                                          |  |                                          | 120,000    |   |                   |   | 120,000    |  
|Trust preferred securities and subordinated debentures                                                                            |  |                                          | 195,108    |   |                   |   | 195,500    |  
|Federal funds purchased                                                                                                           |  |                                          | 40,000     |   |                   |   |           |  
|Interest payable                                                                                                                  |  |                                          | 19,840     |   |                   |   | 15,291     |  
|Advance payments by borrowers for taxes and insurance                                                                             |  |                                          | 26,507     |   |                   |   | 74,998     |  
|Accrued expenses and other liabilities                                                                                            |  |                                          | 42,216     |   |                   |   | 39,212     |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Total liabilities                                                                                                                 |  |                                          | 10,736,939 |   |                   |   | 10,160,089 |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Commitments and Contingencies (See notes 8 and 10)                                                                                |  |                                          |            |   |                   |   |            |  
|Stockholders Equity                                                                                                              |  |                                          |            |   |                   |   |            |  
|Preferred Stock, $0.01 par value                                                                                                  |  |                                          | 10         |   |                   |   | 9          |  
|Authorized shares10,000,000                                                                                                      |  |                                          |            |   |                   |   |            |  
|Issued shares984,713 and 889,139 Outstanding shares957,993 and 862,419 Treasury shares26,720                                   |  |                                          | (528       | ) |                   |   | (528       | )
|Class A common stock, $0.01 par value                                                                                             |  |                                          | 304        |   |                   |   | 302        |  
|Authorized shares60,000,000                                                                                                      |  |                                          |            |   |                   |   |            |  
|Issued shares30,448,400 and 30,202,220 Outstanding shares30,014,971 and 29,768,791 Treasury shares433,429                      |  |                                          | (5,223     | ) |                   |   | (5,223     | )
|Class B common stock, $0.01 par value                                                                                             |  |                                          | 6          |   |                   |   | 6          |  
|Authorized shares3,000,000                                                                                                       |  |                                          |            |   |                   |   |            |  
|Issued shares612,762 Outstanding shares431,562 Treasury shares181,200                                                          |  |                                          | (1,977     | ) |                   |   | (1,977     | )
|Additional paid-in capital                                                                                                        |  |                                          | 344,900    |   |                   |   | 342,859    |  
|Retained earnings                                                                                                                 |  |                                          | 209,279    |   |                   |   | 193,372    |  
|Deferred compensation                                                                                                             |  |                                          | 1,695      |   |                   |   | 1,695      |  
|Accumulated other comprehensive loss                                                                                              |  |                                          | (26,105    | ) |                   |   | (22,899    | )
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Total stockholders equity                                                                                                        |  |                                          | 522,361    |   |                   |   | 507,616    |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  
|Total liabilities and stockholders equity                                                                                        |  | $                                        | 11,259,300 |   |                   | $ | 10,667,705 |  
|                                                                                                                                  |  |                                          |            |   |                   |   |            |  



See accompanying
condensed notes to consolidated financial statements



3



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME



|                                                                                 |  |                                                        |         |   |      |   |        |  
|-------------------------------------------------------------------------------- |  | ------------------------------------------------------ | ------- | - | ---- | - | ------ | -
|                                                                                 |  | For the Three Months EndedDecember 31,                 |        
|                                                                                 |  | 2005                                                   |         |   | 2004 |  
|                                                                                 |  | (Dollars and shares inthousands,except per share data) |        
|Interest income:                                                                 |  |                                                        |         |   |      |   |        |  
|Interest and fees on loans                                                       |  | $                                                      | 121,009 |   |      | $ | 70,699 |  
|Interest on mortgage-backed securities                                           |  |                                                        | 16,630  |   |      |   | 18,236 |  
|Interest and dividends on investments and other interest-earning assets          |  |                                                        | 6,054   |   |      |   | 5,343  |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Total interest income                                                            |  |                                                        | 143,693 |   |      |   | 94,278 |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Interest expense:                                                                |  |                                                        |         |   |      |   |        |  
|Interest on deposits                                                             |  |                                                        | 39,172  |   |      |   | 19,096 |  
|Interest on borrowings                                                           |  |                                                        | 49,280  |   |      |   | 33,516 |  
|Interest on subordinated debentures and preferred dividends of subsidiary trusts |  |                                                        | 3,763   |   |      |   | 2,789  |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Total interest expense                                                           |  |                                                        | 92,215  |   |      |   | 55,401 |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Net interest income before provision for loan losses                             |  |                                                        | 51,478  |   |      |   | 38,877 |  
|Provision for loan losses                                                        |  |                                                        | 2,300   |   |      |   | 1,150  |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Net interest income after provision for loan losses                              |  |                                                        | 49,178  |   |      |   | 37,727 |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Non-interest income:                                                             |  |                                                        |         |   |      |   |        |  
|Loan servicing fees                                                              |  |                                                        | 1,453   |   |      |   | 870    |  
|Amortization of mortgage servicing rights                                        |  |                                                        | (886    | ) |      |   | (782   | )
|Loan fees                                                                        |  |                                                        | 709     |   |      |   | 558    |  
|Deposit fees                                                                     |  |                                                        | 1,317   |   |      |   | 1,106  |  
|Other fees                                                                       |  |                                                        | 640     |   |      |   | 518    |  
|Net gain on sale of investments and mortgage-backed securities                   |  |                                                        |        |   |      |   | 1,609  |  
|Net gain on sale of loans and other assets                                       |  |                                                        | 1,890   |   |      |   | 394    |  
|Insurance and investment services income                                         |  |                                                        | 895     |   |      |   | 963    |  
|Other                                                                            |  |                                                        | 1,489   |   |      |   | 1,115  |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Total non-interest income                                                        |  |                                                        | 7,507   |   |      |   | 6,351  |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Non-interest expenses:                                                           |  |                                                        |         |   |      |   |        |  
|Employee compensation and benefits                                               |  |                                                        | 16,761  |   |      |   | 11,196 |  
|Occupancy and equipment                                                          |  |                                                        | 6,943   |   |      |   | 5,001  |  
|Telecommunications and data processing                                           |  |                                                        | 2,125   |   |      |   | 1,619  |  
|Advertising and promotion expense                                                |  |                                                        | 1,398   |   |      |   | 1,444  |  
|Professional fees                                                                |  |                                                        | 1,496   |   |      |   | 569    |  
|Other                                                                            |  |                                                        | 3,709   |   |      |   | 2,893  |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Total non-interest expenses                                                      |  |                                                        | 32,432  |   |      |   | 22,722 |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Income before income taxes                                                       |  |                                                        | 24,253  |   |      |   | 21,356 |  
|Provision for income taxes                                                       |  |                                                        | 8,078   |   |      |   | 6,831  |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Net income                                                                       |  | $                                                      | 16,175  |   |      | $ | 14,525 |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Earnings Per Share:                                                              |  |                                                        |         |   |      |   |        |  
|Basic                                                                            |  | $                                                      | 0.53    |   |      | $ | 0.48   |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Diluted                                                                          |  | $                                                      | 0.50    |   |      | $ | 0.45   |  
|                                                                                 |  |                                                        |         |   |      |   |        |  
|Weighted average number of common shares outstanding:                            |  |                                                        |         |   |      |   |        |  
|Basic                                                                            |  |                                                        | 30,169  |   |      |   | 30,023 |  
|Diluted                                                                          |  |                                                        | 32,231  |   |      |   | 32,381 |  



See accompanying
condensed notes to consolidated financial statements



4



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONSO
LIDATED STATEMENTS OF STOCKHOLDERS EQUITY



|                                                        |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|------------------------------------------------------- |  | ----------------------------------------------------- | -- | ----------- | - | -------------- |  | ---------------- | ------- |  | ------------- | ------- | - | -------------------- | - | -------------------------------------------- | - |  | ------------------------ | ----- |  | - | ------- | - |  | - | ------- | -
|                                                        |  | For the Three Months Ended December 31, 2005 and 2004 |   
|                                                        |  | PreferredStock                                        |    | CommonStock |   | Paid-inCapital |  | RetainedEarnings |         |  | TreasuryStock |         |   | DeferredCompensation |   | AccumulatedOtherComprehensiveLoss Net of Tax |   |  | TotalStockholdersEquity |      
|                                                        |  | (In thousands)                                        |   
|Balance at September 30, 2005                           |  | $                                                     | 9  |             | $ | 308            |  | $                | 342,859 |  | $             | 193,372 |   |                      | $ | (7,728                                       | ) |  | $                        | 1,695 |  | $ | (22,899 | ) |  | $ | 507,616 |  
|Comprehensive income:                                   |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|Net income for the three months ended December 31, 2005 |  |                                                       |   |             |   |               |  |                  |        |  |               | 16,175  |   |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | 16,175  |  
|Other comprehensive loss, net of tax                    |  |                                                       |   |             |   |               |  |                  |        |  |               |        |   |                      |   |                                             |   |  |                          |      |  |   | (3,206  | ) |  |   | (3,206  | )
|                                                        |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|Total comprehensive income                              |  |                                                       |   |             |   |               |  |                  |        |  |               |        |   |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | 12,969  |  
|Payment of dividends                                    |  |                                                       |   |             |   |               |  |                  |        |  |               | (268    | ) |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | (268    | )
|Stock option exercises and restricted stock awards      |  |                                                       | 1  |             |   | 2              |  |                  | 2,041   |  |               |        |   |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | 2,044   |  
|                                                        |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|Balance at December 31, 2005                            |  | $                                                     | 10 |             | $ | 310            |  | $                | 344,900 |  | $             | 209,279 |   |                      | $ | (7,728                                       | ) |  | $                        | 1,695 |  | $ | (26,105 | ) |  | $ | 522,361 |  
|                                                        |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|                                                        |  |                                                       |    |             |   |                |  |                 
|Balance at September 30, 2004                           |  | $                                                     | 8  |             | $ | 305            |  | $                | 336,258 |  | $             | 166,713 |   |                      | $ | (4,547                                       | ) |  | $                        | 1,216 |  | $ | (7,296  | ) |  | $ | 492,657 |  
|Comprehensive income:                                   |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|Net income for the three months ended December 31, 2004 |  |                                                       |   |             |   |               |  |                  |        |  |               | 14,525  |   |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | 14,525  |  
|Other comprehensive loss, net of tax                    |  |                                                       |   |             |   |               |  |                  |        |  |               |        |   |                      |   |                                             |   |  |                          |      |  |   | (6,430  | ) |  |   | (6,430  | )
|                                                        |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|Total comprehensive income                              |  |                                                       |   |             |   |               |  |                  |        |  |               |        |   |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | 8,095   |  
|Payment of dividends                                    |  |                                                       |   |             |   |               |  |                  |        |  |               | (103    | ) |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | (103    | )
|Deferral of compensation                                |  |                                                       |   |             |   |               |  |                  |        |  |               |        |   |                      |   |                                             |   |  |                          | 14    |  |   |        |   |  |   | 14      |  
|Stock option exercises and restricted stock awards      |  |                                                       | 1  |             |   | 2              |  |                  | 1,341   |  |               |        |   |                      |   |                                             |   |  |                          |      |  |   |        |   |  |   | 1,344   |  
|                                                        |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  
|Balance at December 31, 2004                            |  | $                                                     | 9  |             | $ | 307            |  | $                | 337,599 |  | $             | 181,135 |   |                      | $ | (4,547                                       | ) |  | $                        | 1,230 |  | $ | (13,726 | ) |  | $ | 502,007 |  
|                                                        |  |                                                       |    |             |   |                |  |                  |         |  |               |         |   |                      |   |                                              |   |  |                          |       |  |   |         |   |  |   |         |  



See accompanying
condensed notes to consolidated financial statements



5



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                |  |                                        |          |   |      |   |          |  
|----------------------------------------------------------------------------------------------- |  | -------------------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                                |  | For the Three Months EndedDecember 31, |         
|                                                                                                |  | 2005                                   |          |   | 2004 |  
|                                                                                                |  | (In thousands)                         |         
|Cash flows used in operating activities                                                         |  | $                                      | (26,214  | ) |      | $ | (13,014  | )
|Cash flows from investing activities:                                                           |  |                                        |          |   |      |   |          |  
|Net increase in loans held in portfolio                                                         |  |                                        | (855,509 | ) |      |   | (572,635 | )
|Purchase of investment securities available for sale                                            |  |                                        | (10,723  | ) |      |   | (49,880  | )
|Purchase of other earning assets                                                                |  |                                        | (45,313  | ) |      |   | (17,673  | )
|Purchase of office properties and equipment                                                     |  |                                        | (3,968   | ) |      |   | (5,051   | )
|Proceeds from repayments of investment securities available for sale                            |  |                                        | 9,654    |   |      |   | 2        |  
|Proceeds from repayments of mortgage-backed securities available for sale                       |  |                                        | 124,565  |   |      |   | 179,866  |  
|Proceeds from repayments of other earning assets                                                |  |                                        | 34,065   |   |      |   | 20,780   |  
|Proceeds from sale of investment securities available for sale                                  |  |                                        | 3,780    |   |      |   | 33,720   |  
|Proceeds from sale of mortgage-backed securities available for sale                             |  |                                        | 52,530   |   |      |   | 86,114   |  
|Proceeds from sale of real estate owned and other assets                                        |  |                                        | 478      |   |      |   | 1,017    |  
|                                                                                                |  |                                        |          |   |      |   |          |  
|Net cash used in investing activities                                                           |  |                                        | (690,441 | ) |      |   | (323,740 | )
|                                                                                                |  |                                        |          |   |      |   |          |  
|Cash flows from financing activities:                                                           |  |                                        |          |   |      |   |          |  
|Net increase in deposits                                                                        |  |                                        | 274,002  |   |      |   | 198,521  |  
|Additions to long-term Federal Home Loan Bank advances                                          |  |                                        | 400,000  |   |      |   |         |  
|Repayments of long-term Federal Home Loan Bank advances                                         |  |                                        | (76,035  | ) |      |   | (100,034 | )
|Net (decrease) increase in short-term Federal Home Loan Bank advances                           |  |                                        | (74,000  | ) |      |   | 56,002   |  
|Net increase in other borrowings                                                                |  |                                        | 94,213   |   |      |   | 49,332   |  
|Net proceeds from issuance of Subordinated Debentures                                           |  |                                        |         |   |      |   | 30,928   |  
|Net proceeds from issuance of stock                                                             |  |                                        | 781      |   |      |   | 737      |  
|Dividends paid on common stock                                                                  |  |                                        | (150     | ) |      |   |         |  
|Dividends paid on preferred stock                                                               |  |                                        | (118     | ) |      |   | (103     | )
|Decrease in advances from borrowers for taxes and insurance                                     |  |                                        | (48,491  | ) |      |   | (35,757  | )
|                                                                                                |  |                                        |          |   |      |   |          |  
|Net cash provided by financing activities                                                       |  |                                        | 570,202  |   |      |   | 199,626  |  
|                                                                                                |  |                                        |          |   |      |   |          |  
|Decrease in cash and cash equivalents                                                           |  |                                        | (146,454 | ) |      |   | (137,128 | )
|Cash and cash equivalents at beginning of period                                                |  |                                        | 238,051  |   |      |   | 181,894  |  
|                                                                                                |  |                                        |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                                      |  | $                                      | 91,597   |   |      | $ | 44,766   |  
|                                                                                                |  |                                        |          |   |      |   |          |  
|Supplemental disclosure of non-cash activities:                                                 |  |                                        |          |   |      |   |          |  
|Exchange of loans for mortgage-backed securities in loan sales transactions with FNMA and FHLMC |  | $                                      | 52,530   |   |      | $ | 31,534   |  



See accompanying
condensed notes to consolidated financial statements



6



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.    Principles of Consolidation and Basis of Presentation



The accompanying unaudited consolidated financial statements include the accounts of BankUnited Financial Corporation (BankUnited) and its
consolidated subsidiaries, including BankUnited, FSB (the Bank). All significant intercompany transactions and balances associated with consolidated subsidiaries have been eliminated.



The unaudited consolidated financial statements have been prepared in
conformity with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission and therefore do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. However, all adjustments (consisting of normal recurring accruals), which, in the opinion of management, are necessary for a fair presentation of the financial statements, have been included.
Operating results for the three-month period ended December 31, 2005 are not necessarily indicative of the results that may be expected for the year ending September 30, 2006. These condensed notes should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included in BankUniteds Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended September 30, 2005.



Certain prior period amounts have been reclassified to conform to the December 31, 2005 consolidated financial
statements presentation.



2.    Impact of Certain
Accounting Pronouncements



SFAS No. 123R



In March 2004, the FASB issued a statement to revise Statement of Financial
Accounting Standards (SFAS) No. 123 and SFAS No. 95, Share-Based Payment, that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for
(a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprises equity instruments or that may be settled by the issuance of such equity instruments. The Statement eliminates the
ability to account for share-based compensation transactions using APB Opinion No. 25, Accounting for Stock Issued to Employees, and requires instead that such transactions be accounted for using a fair-value-based method. The
Securities and Exchange Commission requires companies to implement SFAS No. 123R by the beginning of the next fiscal year that begins after June 15, 2005. On October 1, 2005, BankUnited implemented SFAS No. 123R using the modified
prospective method of transition. By implementing SFAS No. 123R, BankUnited recorded $256 thousand of additional compensation expense during the three months ended December 31, 2005, resulting from the application of fair-value based accounting to
its stock-based compensation programs. See Note 9, Stock Based Compensation, for more information about BankUniteds stock-based compensation programs.



SFAS No. 154



In May 2005, the FASB issued SFAS No. 154 Accounting Changes and Error Corrections. This statement replaces Accounting Principles Board
Opinion No. 20 Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements and changes the requirements for the accounting for and reporting of a change in accounting principle.
SFAS No. 154 shall be effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Therefore, BankUnited will adopt this statement, as applicable, in its fiscal year beginning October 1, 2006.



7



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



3.    Investment and Mortgage-backed Securities Available for Sale



Investment Securities Available for Sale



Presented below is an analysis of investments designated as available for
sale.



|                                                          |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|--------------------------------------------------------- |  | ------------------ | ------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | -------
|                                                          |  | December 31, 2005 
|                                                          |  | AmortizedCost      |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|                                                          |  | (In thousands)    
|U.S. government sponsored entity debt securities          |  | $                  | 72,625  |                      | $ |                      |  | $ | (1,324     | ) |  | $ | 71,301 
|Preferred stock of U.S. government sponsored entities (1) |  |                    | 96,085  |                      |   |                      |  |   | (4,676     | ) |  |   | 91,409 
|Trust preferred securities of other issuers               |  |                    | 23,104  |                      |   | 351                   |  |   | (73        | ) |  |   | 23,382 
|Mutual funds and other bonds (2)                          |  |                    | 106,623 |                      |   | 27                    |  |   | (4,020     | ) |  |   | 102,630
|Other equity securities                                   |  |                    | 1,011   |                      |   | 85                    |  |   |           |   |  |   | 1,096  
|                                                          |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Total                                                     |  | $                  | 299,448 |                      | $ | 463                   |  | $ | (10,093    | ) |  | $ | 289,818
|                                                          |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|                                                          | 
|                                                          |  | September 30, 2005
|                                                          |  | AmortizedCost      |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|                                                          |  | (In thousands)    
|U.S. government sponsored entity debt securities          |  | $                  | 72,637  |                      | $ |                      |  | $ | (1,203     | ) |  | $ | 71,434 
|Preferred stock of U.S. government sponsored entities (1) |  |                    | 96,085  |                      |   | 15                    |  |   | (4,523     | ) |  |   | 91,577 
|Trust preferred securities of other issuers               |  |                    | 23,120  |                      |   | 379                   |  |   | (72        | ) |  |   | 23,427 
|Mutual funds and other bonds (2)                          |  |                    | 105,628 |                      |   | 29                    |  |   | (3,225     | ) |  |   | 102,432
|Other equity securities                                   |  |                    | 1,011   |                      |   | 51                    |  |   |           |   |  |   | 1,062  
|                                                          |  |                    |         |                      |   |                       |  |   |            |   |  |   |        
|Total                                                     |  | $                  | 298,481 |                      | $ | 474                   |  | $ | (9,023     | ) |  | $ | 289,932
|                                                          |  |                    |         |                      |   |                       |  |   |            |   |  |   |        

---

|(1) | U.S. Government sponsored entities include Federal National Mortgage Association, (FNMA) and Federal Home Loan Mortgage Corporation, (FHLMC)
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Underlying assets of mutual funds consist primarily of mortgage-backed securities.
|--- | ----------------------------------------------------------------------------------

|
|

Investment securities available for sale as of December 31, 2005 by contractual
maturity, are shown below.



|                                       |  |                   |         |            |   |        
|-------------------------------------- |  | ----------------- | ------- | ---------- | - | -------
|                                       |  | December 31, 2005
|                                       |  | AmortizedCost     |         | Fair Value
|                                       |  | (In thousands)   
|Due in one year or less                |  | $                 | 35,583  |            | $ | 35,204 
|Due after one year through five years  |  |                   | 51,318  |            |   | 50,284 
|Due after five years through ten years |  |                   | 1,358   |            |   | 1,347  
|Due after ten years                    |  |                   | 45,371  |            |   | 45,009 
|Mutual funds and equity securities     |  |                   | 165,818 |            |   | 157,974
|                                       |  |                   |         |            |   |        
|Total                                  |  | $                 | 299,448 |            | $ | 289,818
|                                       |  |                   |         |            |   |        



8



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



Mortgage-Backed Securities Available for Sale



Presented below is an analysis of mortgage-backed securities designated as
available for sale.



|                                    |  |                    |           |                      |   |                       |  |   |            |   |  |   |          
|----------------------------------- |  | ------------------ | --------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | ---------
|                                    |  | December 31, 2005 
|                                    |  | AmortizedCost      |           | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|                                    |  | (In thousands)    
|FNMA mortgage-backed securities     |  | $                  | 250,226   |                      | $ | 128                   |  | $ | (8,851     | ) |  | $ | 241,503  
|FHLMC mortgage-backed securities    |  |                    | 74,556    |                      |   | 34                    |  |   | (1,674     | ) |  |   | 72,916   
|Collateralized mortgage obligations |  |                    | 8,482     |                      |   | 957                   |  |   | (27        | ) |  |   | 9,412    
|Mortgage pass-through certificates  |  |                    | 1,193,821 |                      |   | 97                    |  |   | (22,173    | ) |  |   | 1,171,745
|                                    |  |                    |           |                      |   |                       |  |   |            |   |  |   |          
|Total(1)                            |  | $                  | 1,527,085 |                      | $ | 1,216                 |  | $ | (32,725    | ) |  | $ | 1,495,576
|                                    |  |                    |           |                      |   |                       |  |   |            |   |  |   |          
|                                    | 
|                                    |  | September 30, 2005
|                                    |  | AmortizedCost      |           | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|                                    |  | (In thousands)    
|FNMA mortgage-backed securities     |  | $                  | 266,564   |                      | $ | 168                   |  | $ | (7,624     | ) |  | $ | 259,108  
|FHLMC mortgage-backed securities    |  |                    | 80,659    |                      |   | 53                    |  |   | (1,248     | ) |  |   | 79,464   
|Collateralized mortgage obligations |  |                    | 9,065     |                      |   | 1,308                 |  |   | (29        | ) |  |   | 10,344   
|Mortgage pass-through certificates  |  |                    | 1,296,773 |                      |   | 376                   |  |   | (20,060    | ) |  |   | 1,277,089
|                                    |  |                    |           |                      |   |                       |  |   |            |   |  |   |          
|Total(1)                            |  | $                  | 1,653,061 |                      | $ | 1,905                 |  | $ | (28,961    | ) |  | $ | 1,626,005
|                                    |  |                    |           |                      |   |                       |  |   |            |   |  |   |          

---

|(1) | Included in BankUniteds portfolio of mortgage-backed securities as of December 31, 2005 and September 30, 2005, were securities with a fair value of $271 million and $279
million, respectively, retained from BankUniteds securitization of mortgage loans.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Mortgage-backed securities available for sale as of December 31, 2005, by contractual maturity and adjusted for anticipated prepayments, are shown
below.



|                                       |  |                   |           |            |   |          
|-------------------------------------- |  | ----------------- | --------- | ---------- | - | ---------
|                                       |  | December 31, 2005
|                                       |  | Amortized Cost    |           | Fair Value
|                                       |  | (In thousands)   
|Due in one year or less                |  | $                 | 359,839   |            | $ | 352,414  
|Due after one year through five years  |  |                   | 994,711   |            |   | 974,187  
|Due after five years through ten years |  |                   | 139,020   |            |   | 136,151  
|Due after ten years                    |  |                   | 33,516    |            |   | 32,824   
|                                       |  |                   |           |            |   |          
|Total                                  |  | $                 | 1,527,085 |            | $ | 1,495,576
|                                       |  |                   |           |            |   |          



Based on the internal
model used by BankUnited, estimated average duration of the mortgage-backed securities portfolio as of December 31, 2005 was 2.00 years. This duration extends to 2.40 years in a hypothetical scenario which adds 100 basis points to market
interest rates. The model used by BankUnited is based on assumptions which may differ from the eventual outcome.



9



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



The following tables provide information for investments and mortgage-backed securities available for
sale with unrealized losses as of December 31, 2005 and September 30, 2005, segregated between investments and mortgaged-backed securities sustaining unrealized losses for periods less than twelve months, and twelve months or greater.



|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|--------------------------------------------------------- |  | ------------------------ | ------- | -------------------- | -------------------- | ------ | ---------- | ----- | --------------------- | ------- |  | ---------- | ------- | --------------------- |  | - | --------- |  | - | ------- | -
|                                                          |  | As of December 31, 2005  |         |                      |                      |        |            |      
|                                                          |  | Less than 12 Months      |         |                      | 12 Months or Greater |        |            | Total |                      
|                                                          |  | Fair Value               |         | UnrealizedLosses (1) |                      |        | Fair Value |       | Unrealized Losses (1) |         |  | Fair Value |         | Unrealized Losses (1) | 
|                                                          |  | (In thousands)           |        
|Available for sale securities                             |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Investment securities:                                    |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Trust preferred securities of other issuers               |  | $                        | 1,995   |                      | $                    | (5     | )          |       | $                     | 1,932   |  | $          | (68     | )                     |  | $ | 3,927     |  | $ | (73     | )
|U.S. government sponsored entity debt securities (2)      |  |                          |        |                      |                      |       |            |       |                       | 71,301  |  |            | (1,324  | )                     |  |   | 71,301    |  |   | (1,324  | )
|Preferred stock of U.S. government sponsored entities (2) |  |                          | 49,220  |                      |                      | (686   | )          |       |                       | 42,189  |  |            | (3,990  | )                     |  |   | 91,409    |  |   | (4,676  | )
|Mutual funds and other bonds (3)                          |  |                          | 21,100  |                      |                      | (312   | )          |       |                       | 79,261  |  |            | (3,708  | )                     |  |   | 100,361   |  |   | (4,020  | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Total investment securities                               |  | $                        | 72,315  |                      | $                    | (1,003 | )          |       | $                     | 194,683 |  | $          | (9,090  | )                     |  | $ | 266,998   |  | $ | (10,093 | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Mortgage-backed securities:                               |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|FNMA mortgage-backed securities                           |  | $                        | 18,539  |                      | $                    | (433   | )          |       | $                     | 216,409 |  | $          | (8,418  | )                     |  | $ | 234,948   |  | $ | (8,851  | )
|FHLMC mortgage-backed securities                          |  |                          | 1,210   |                      |                      | (17    | )          |       |                       | 68,654  |  |            | (1,657  | )                     |  |   | 69,864    |  |   | (1,674  | )
|Collateralized mortgage obligations                       |  |                          |        |                      |                      |       |            |       |                       | 1,736   |  |            | (27     | )                     |  |   | 1,736     |  |   | (27     | )
|Mortgage pass-through certificates                        |  |                          | 429,187 |                      |                      | (4,791 | )          |       |                       | 690,976 |  |            | (17,382 | )                     |  |   | 1,120,163 |  |   | (22,173 | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Total mortgage-backed securities                          |  | $                        | 448,936 |                      | $                    | (5,241 | )          |       | $                     | 977,775 |  | $          | (27,484 | )                     |  | $ | 1,426,711 |  | $ | (32,725 | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|                                                          |  |                          |        
|                                                          |  | As of September 30, 2005 |         |                      |                      |        |            |      
|                                                          |  | Less than 12 Months      |         |                      | 12 Months or Greater |        |            | Total |                      
|                                                          |  | Fair Value               |         | UnrealizedLosses (1) |                      |        | Fair Value |       | Unrealized Losses (1) |         |  | Fair Value |         | Unrealized Losses (1) | 
|                                                          |  | (In thousands)           |        
|Available for sale securities                             |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Investment securities:                                    |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Trust preferred securities of other issuers               |  | $                        |        |                      | $                    |       |            |       | $                     | 1,929   |  | $          | (72     | )                     |  | $ | 1,929     |  | $ | (72     | )
|U.S. government sponsored entity debt securities (2)      |  |                          | 71,434  |                      |                      | (1,203 | )          |       |                       |        |  |            |        |                       |  |   | 71,434    |  |   | (1,203  | )
|Preferred stock of U.S. government sponsored entities (2) |  |                          | 56,816  |                      |                      | (3,172 | )          |       |                       | 29,821  |  |            | (1,351  | )                     |  |   | 86,637    |  |   | (4,523  | )
|Mutual funds and other bonds (3)                          |  |                          | 8,000   |                      |                      | (30    | )          |       |                       | 80,193  |  |            | (3,195  | )                     |  |   | 88,193    |  |   | (3,225  | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Total investment securities                               |  | $                        | 136,250 |                      | $                    | (4,405 | )          |       | $                     | 111,943 |  | $          | (4,618  | )                     |  | $ | 248,193   |  | $ | (9,023  | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Mortgage-backed securities:                               |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|FNMA mortgage-backed securities                           |  | $                        | 35,627  |                      | $                    | (666   | )          |       | $                     | 214,523 |  | $          | (6,958  | )                     |  | $ | 250,150   |  | $ | (7,624  | )
|FHLMC mortgage-backed securities                          |  |                          | 1,268   |                      |                      | (8     | )          |       |                       | 74,379  |  |            | (1,240  | )                     |  |   | 75,647    |  |   | (1,248  | )
|Collateralized mortgage obligations                       |  |                          |        |                      |                      |       |            |       |                       | 2,047   |  |            | (29     | )                     |  |   | 2,047     |  |   | (29     | )
|Mortgage pass-through certificates                        |  |                          | 580,892 |                      |                      | (4,666 | )          |       |                       | 647,519 |  |            | (15,394 | )                     |  |   | 1,228,411 |  |   | (20,060 | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  
|Total mortgage-backed securities                          |  | $                        | 617,787 |                      | $                    | (5,340 | )          |       | $                     | 938,468 |  | $          | (23,621 | )                     |  | $ | 1,556,255 |  | $ | (28,961 | )
|                                                          |  |                          |         |                      |                      |        |            |       |                       |         |  |            |         |                       |  |   |           |  |   |         |  

---

|(1) | These unrealized losses are caused by changes in interest rates and are considered to be temporary.
|--- | ---------------------------------------------------------------------------------------------------

|(2) | U.S. Government sponsored entities include Federal National Mortgage Association, (FNMA) and Federal Home Loan Mortgage Corporation, (FHLMC).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Underlying assets of mutual funds consist primarily of mortgage-backed securities.
|--- | ----------------------------------------------------------------------------------



10



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



4.    Loans Receivable



Loans receivable consist of the following:



|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|--------------------------------------------------- |  | ---------------------- | --------- | - | ----------------------- | ----- | - | ------ | - | --------- | --------------- |  | ----- | -
|                                                    |  | As of December 31,2005 |           |   | As of September 30,2005 |      
|                                                    |  | Amount                 |           |   | Percent ofTotal         |       |   | Amount |   |           | Percent ofTotal | 
|                                                    |  | (Dollars in thousands) |          
|Real estate loans:                                  |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|One-to-four family residential:                     |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Residential mortgages                               |  | $                      | 6,734,886 |   |                         | 75.9  | % |        | $ | 5,999,713 |                 |  | 74.7  | %
|Specialty consumer mortgages                        |  |                        | 681,573   |   |                         | 7.7   |   |        |   | 678,609   |                 |  | 8.5   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total one-to-four family residential                |  |                        | 7,416,459 |   |                         | 83.6  |   |        |   | 6,678,322 |                 |  | 83.2  |  
|Home equity loans and lines of credit               |  |                        | 285,665   |   |                         | 3.2   |   |        |   | 257,789   |                 |  | 3.2   |  
|Multi-family                                        |  |                        | 122,595   |   |                         | 1.4   |   |        |   | 111,444   |                 |  | 1.4   |  
|Commercial real estate                              |  |                        | 365,128   |   |                         | 4.1   |   |        |   | 344,503   |                 |  | 4.3   |  
|Construction                                        |  |                        | 100,995   |   |                         | 1.1   |   |        |   | 87,113    |                 |  | 1.1   |  
|Land                                                |  |                        | 260,815   |   |                         | 2.9   |   |        |   | 235,829   |                 |  | 2.9   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total real estate loans                             |  |                        | 8,551,657 |   |                         | 96.3  |   |        |   | 7,715,000 |                 |  | 96.1  |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Other loans:                                        |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Commercial                                          |  |                        | 196,013   |   |                         | 2.2   |   |        |   | 199,344   |                 |  | 2.5   |  
|Consumer                                            |  |                        | 19,269    |   |                         | 0.2   |   |        |   | 19,415    |                 |  | 0.2   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total other loans                                   |  |                        | 215,282   |   |                         | 2.4   |   |        |   | 218,759   |                 |  | 2.7   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total loans held in portfolio                       |  |                        | 8,766,939 |   |                         | 98.7  |   |        |   | 9,933,759 |                 |  | 98.8  |  
|Unearned discounts, premiums and deferred fees, net |  |                        | 138,102   |   |                         | 1.6   |   |        |   | 119,588   |                 |  | 1.5   |  
|Allowance for loan losses                           |  |                        | (28,646   | ) |                         | (0.3  | ) |        |   | (25,755   | )               |  | (0.3  | )
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total loans held in portfolio, net                  |  |                        | 8,876,395 |   |                         | 100.0 | % |        |   | 8,027,592 |                 |  | 100.0 | %
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Mortgage loans held for sale                        |  |                        | 13,136    |   |                         |       |   |        |   | 12,196    |                 |  |       |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total loans, net                                    |  | $                      | 8,889,531 |   |                         |       |   |        | $ | 8,039,788 |                 |  |       |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  



The following table
provides the composition of BankUniteds one-four family loans as of December 31, 2005 and September 30, 2005, including loans held for sale.



|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|------------------------------------------------------------------------- |  | ----------------------- | --------- | ---------------- | ------------------------ | - | ------ | - | ---------------- |  | ----- | -
|                                                                          |  | As of December 31, 2005 |           |                  | As of September 30, 2005 |  
|                                                                          |  | Amount                  |           | Percent of Total |                          |   | Amount |   | Percent of Total | 
|                                                                          |  | (Dollars in thousands)  |          
|One-to-four family residential loans:                                     |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Fixed rate loans                                                          |  | $                       | 1,108,391 |                  | 14.9                     | % |        | $ | 996,455          |  | 14.9  | %
|Adjustable rate loans (ARM):                                              |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Traditional ARM                                                           |  |                         | 1,802,897 |                  | 24.3                     |   |        |   | 1,835,337        |  | 27.4  |  
|Option ARM                                                                |  |                         | 4,518,307 |                  | 60.8                     |   |        |   | 3,858,726        |  | 57.7  |  
|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Total ARM loans                                                           |  |                         | 6,321,204 |                  | 85.1                     |   |        |   | 5,694,063        |  | 85.1  |  
|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Total one-to-four family residential loans, including loans held for sale |  | $                       | 7,429,595 |                  | 100.0                    | % |        |   | 6,690,518        |  | 100.0 | %
|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  

---

Option ARM loans are adjustable-rate
mortgages which provide borrowers flexible payment options and have the potential for negative amortization. Option ARM loans represent 50.8% and 48.0% of BankUniteds



11



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



total loans outstanding as of December 31, 2005 and September 30, 2005, respectively. As of December 31, 2005, option ARM loans with a balance
of $2.4 billion were negatively amortizing with approximately $21.1 million of their principal balances resulting from negative amortization. As of September 30, 2005, option ARM loans with a balance of $2.0 billion were negatively amortizing
with approximately $12.4 million of their principal balances resulting from negative amortization. These loans are subject to interest rate caps.



5.    Earnings Per Share



The following tables reconcile basic and diluted earnings per share for the three months ended December 31, 2005 and 2004.



|                                                    |  |                                                        |        |      |   |       
|--------------------------------------------------- |  | ------------------------------------------------------ | ------ | ---- | - | ------
|                                                    |  | For the Three MonthsEnded December 31,                
|                                                    |  | 2005                                                   |        | 2004
|                                                    |  | (Dollars and sharesin thousands,except per share data)
|Basic earnings per share:                           |  |                                                        |        |      |   |       
|Numerator:                                          |  |                                                        |        |      |   |       
|Net income                                          |  | $                                                      | 16,175 |      | $ | 14,525
|Preferred stock dividends                           |  |                                                        | 118    |      |   | 103   
|                                                    |  |                                                        |        |      |   |       
|Net income available to common stockholders         |  | $                                                      | 16,057 |      | $ | 14,422
|                                                    |  |                                                        |        |      |   |       
|Denominator:                                        |  |                                                        |        |      |   |       
|Weighted average common shares outstanding          |  |                                                        | 30,169 |      |   | 30,023
|                                                    |  |                                                        |        |      |   |       
|Basic earnings per share                            |  | $                                                      | 0.53   |      | $ | 0.48  
|                                                    |  |                                                        |        |      |   |       
|Diluted earnings per share:                         |  |                                                        |        |      |   |       
|Numerator:                                          |  |                                                        |        |      |   |       
|Net income available to common stockholders         |  | $                                                      | 16,057 |      | $ | 14,422
|Plus:                                               |  |                                                        |        |      |   |       
|Convertible preferred stock dividends               |  |                                                        | 118    |      |   | 103   
|                                                    |  |                                                        |        |      |   |       
|Diluted net income available to common stockholders |  | $                                                      | 16,175 |      | $ | 14,525
|                                                    |  |                                                        |        |      |   |       
|Denominator:                                        |  |                                                        |        |      |   |       
|Weighted average common shares outstanding          |  |                                                        | 30,169 |      |   | 30,023
|Plus:                                               |  |                                                        |        |      |   |       
|Stock options and restricted stock                  |  |                                                        | 1,154  |      |   | 1,558 
|Convertible preferred stock                         |  |                                                        | 908    |      |   | 800   
|                                                    |  |                                                        |        |      |   |       
|Diluted weighted average shares outstanding         |  |                                                        | 32,231 |      |   | 32,381
|                                                    |  |                                                        |        |      |   |       
|Diluted earnings per share(1)                       |  | $                                                      | 0.50   |      | $ | 0.45  
|                                                    |  |                                                        |        |      |   |       

---

|(1) | For the three months ended December 31, 2005 and 2004, BankUnited did not consider potential common shares of 937,576, and 270,826, respectively, in the computation of diluted
earnings per share as they would have been antidilutive.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



12



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



6.    Regulatory Capital



The Banks regulatory capital levels as of December 31, 2005 and September 30, 2005 was as follows:



|                                        |  |                        |         |   |                         |   |         |  
|--------------------------------------- |  | ---------------------- | ------- | - | ----------------------- | - | ------- | -
|                                        |  | As of December 31,2005 |         |   | As of September 30,2005 |  
|                                        |  | (Dollars in thousands) |        
|Tier 1 Leverage Capital                 |  |                        |         |   |                         |   |         |  
|Amount                                  |  | $                      | 791,942 |   |                         | $ | 756,810 |  
|Actual Ratio                            |  |                        | 7.0     | % |                         |   | 7.1     | %
|Well-Capitalized Minimum Ratio(1)       |  |                        | 5.0     | % |                         |   | 5.0     | %
|Adequately Capitalized Minimum Ratio(1) |  |                        | 4.0     | % |                         |   | 4.0     | %
|                                        |  |                       
|Tier 1 Risk-Based Capital               |  |                        |         |   |                         |   |         |  
|Amount                                  |  | $                      | 791,942 |   |                         | $ | 756,810 |  
|Actual Ratio                            |  |                        | 13.6    | % |                         |   | 14.0    | %
|Well-Capitalized Minimum Ratio(1)       |  |                        | 6.0     | % |                         |   | 6.0     | %
|Adequately Capitalized Minimum Ratio(1) |  |                        | 4.0     | % |                         |   | 4.0     | %
|                                        |  |                       
|Total Risk-Based Capital                |  |                        |         |   |                         |   |         |  
|Amount                                  |  | $                      | 812,605 |   |                         | $ | 774,390 |  
|Actual Ratio                            |  |                        | 14.0    | % |                         |   | 14.5    | %
|Well-Capitalized Minimum Ratio(1)       |  |                        | 10.0    | % |                         |   | 10.0    | %
|Adequately Capitalized Minimum Ratio(1) |  |                        | 8.0     | % |                         |   | 8.0     | %

---

|(1) | Based on Office of Thrift Supervision regulations.
|--- | --------------------------------------------------



In December 2005, BankUnited Financial Corporation contributed $15 million in additional capital to the Bank.



7.    Comprehensive Income



BankUniteds comprehensive income includes all items which comprise net
income, plus other comprehensive loss. For the three months ended December 31, 2005 and 2004 BankUniteds comprehensive income was as follows:



|                                                                                                                                                                     |  |                                         |        |   |      |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                                                                     |  | For the Three Months Ended December 31, |       
|                                                                                                                                                                     |  | 2005                                    |        |   | 2004 |  
|                                                                                                                                                                     |  | (In thousands)                          |       
|Net income                                                                                                                                                           |  | $                                       | 16,175 |   |      | $ | 14,525 |  
|Other comprehensive loss, net of tax:                                                                                                                                |  |                                         |        |   |      |   |        |  
|Unrealized loss arising during the period on securities, net of tax benefit of $1,662 and $3,024 for the three months ended December 31,
2005 and 2004, respectively |  |                                         | (3,087 | ) |      |   | (5,615 | )
|Unrealized gain on cash flow hedges, net of tax of $31 and $66 for the three months ended December 31, 2005 and 2004,
respectively                                   |  |                                         | 58     |   |      |   | 123    |  
|Less reclassification adjustment for:                                                                                                                                |  |                                         |        |   |      |   |        |  
|Realized gain on securities sold included in net income, net of tax of $ 563 for the three months ended December 31, 2004                                            |  |                                         |       |   |      |   | 1,046  |  
|Realized loss on cash flow hedges, net of tax benefit of $14 and $58 for the three months ended December 31, 2005 and 2004,
respectively                             |  |                                         | (26    | ) |      |   | (108   | )
|Other                                                                                                                                                                |  |                                         | 203    |   |      |   |       |  
|                                                                                                                                                                     |  |                                         |        |   |      |   |        |  
|Total other comprehensive loss, net of tax                                                                                                                           |  |                                         | (3,206 | ) |      |   | (6,430 | )
|                                                                                                                                                                     |  |                                         |        |   |      |   |        |  
|Comprehensive income                                                                                                                                                 |  | $                                       | 12,969 |   |      | $ | 8,095  |  
|                                                                                                                                                                     |  |                                         |        |   |      |   |        |  



13



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



8.    Accounting For Derivatives and Hedging Activities



Loan Commitments



BankUnited commits to originate one-to-four family residential mortgage loans with potential borrowers at specified interest
rates for short periods of time, usually thirty days. If potential borrowers meet underwriting standards, these loan commitments obligate BankUnited to fund the loans, but do not obligate the potential borrowers to accept the loans. If the borrowers
do not allow the commitments to expire, the loans are funded, and either placed into BankUniteds loan portfolio or held for sale. Based on historical experience, the interest rate environment, and the underlying loan characteristics,
BankUnited estimates the amount of commitments that will ultimately become loans held for sale and accounts for those as derivatives during the commitment period. As derivatives, the changes in the fair value of the commitments are recorded in
current earnings under other non-interest expense with an offset to the consolidated statement of financial condition in other liabilities. Fair values are based solely on the relationship of observable market interest rates and are prepared by
third parties.



Forward Sales Contracts



BankUnited enters into forward sales contracts in order to economically
hedge fair value exposure of loan commitments to a change in interest rates. Since both the loan commitments and forward sales contracts are derivatives, this hedging relationship does not qualify for hedge accounting under SFAS No. 133. Fair
value changes of forward sales contracts, related to loan commitments, are recorded in earnings under non-interest expense with an offset in other liabilities.



These forward contracts extend beyond the loan commitment period and are also used to offset fair value exposure of loans held for sale to a change in
interest rates. This relationship exists until either the loan is sold or until the forward contract expires. These forward contracts may be allocated to loans held for sale in a relationship that qualifies for hedge accounting, in which case any
ineffectiveness is charged to earnings under non-interest expense with an offset in other liabilities. They may also be allocated to loans held for sale that are accounted for under the lower of cost or market method, in which case their changes in
fair value are recorded in earnings under non-interest expense with an offset in other liabilities.



Interest Rate Swaps and Caps



BankUnited enters into interest rate swap and cap contracts as fair value and cash flow hedges (hedge) for the purpose of hedging long-term fixed and variable rate debt (hedged item), respectively. All terms of the
hedge contracts, with the exception of the right to defer interest payments, are the same as those of the hedged item. BankUnited expects these hedge contracts to be highly effective in offsetting fair value changes for fair value hedges and cash
flow changes for cash flow hedges of its long-term debt, and therefore applies hedge accounting treatment. Hedges designated by BankUnited to change the fixed interest rate to variable on fixed long-term debt are treated as qualifying fair value
hedges. The accounting treatment for fair value hedges is to record the change in fair value during the period of both the hedge instrument and the hedged item into current earnings. Hedges designated by BankUnited to change the variable interest
rate to fixed on variable long-term debt are treated as qualifying cash flow hedges. The accounting treatment for cash flow hedges is to record the effective portion of the gain or loss on the hedge instrument as a component of other comprehensive
income, net of tax, with an offsetting amount recorded in either other assets or other liabilities. The amounts recorded in other accumulated comprehensive income will be reclassified into current earnings in the same period in which the hedged item
affects earnings.



14



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



The following table summarizes certain information with respect to the use of derivatives and their
impact on BankUniteds consolidated statements of income during the three months ended December 31, 2005 and 2004.



|                                                              |  |                                      |      |   |      |   |     |  
|------------------------------------------------------------- |  | ------------------------------------ | ---- | - | ---- | - | --- | -
|                                                              |  | For theThree MonthsEndedDecember 31, |     
|                                                              |  | 2005                                 |      |   | 2004 |  
|                                                              |  | (In thousands)                       |     
|Fair Value Hedges                                             |  |                                      |      |   |      |   |     |  
|Net gain recorded in earnings due to ineffectiveness          |  | $                                    |     |   |      | $ | 37  |  
|                                                              |  |                                     
|Other Derivatives (1)                                         |  |                                      |      |   |      |   |     |  
|Net loss recorded in earnings                                 |  |                                      | (103 | ) |      |   | (36 | )
|                                                              |  |                                      |      |   |      |   |     |  
|Total net (loss) gain recorded in earnings due to derivatives |  | $                                    | (103 | ) |      | $ | 1   |  
|                                                              |  |                                      |      |   |      |   |     |  

---

|Note: | There was no ineffectiveness related to cash flow hedges during the three months ended December 31, 2005 and 2004. Within the next 12 months, BankUnited estimates that $488
thousand will be reclassified out of comprehensive income as a charge to earnings.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | These derivatives are used by BankUnited to hedge interest rate risk, but do not qualify for hedge accounting treatment.
|--- | ------------------------------------------------------------------------------------------------------------------------



9.    Stock-Based Compensation



At December 31, 2005, BankUnited had certain stock-based compensation plans
(the Plans) under which incentives may be awarded to officers, directors and employees of BankUnited and its subsidiaries. Under the Plans, BankUnited may award stock options, stock appreciation rights, restricted stock, deferred stock,
bonus stock and awards in lieu of obligations, dividend equivalents, other stock-based awards and performance awards in each of its classes of stocks.



Shares issued in connection with stock-based compensation are registered under the Plans. At December 31, 2005 there were 288,118 shares of all classes
available under the Plans. Subsequent to December 31, 2005, BankUnited issued 5,750,000 shares of its Class A Common Stock, which increased the shares of all classes available under the Plans by 460,000.



Effective October 1, 2005, BankUnited adopted SFAS No.123R Share Based
Payments using the modified prospective transition method. SFAS No. 123R requires companies to calculate compensation expense arising from stock-based compensation based on the respective fair values of awards at grant date. During the quarter
ended December 31, 2005, BankUnited recorded $256 thousand of compensation expense beyond what would have been recorded if it had not adopted SFAS No. 123R. During the quarter ended December 31, 2005, total stock-based compensation expense recorded
by BankUnited, and the related tax benefit, was $1.3 million, and $326 thousand, respectively. As of December 31, 2005, there was $23.0 million of unrecognized compensation cost related to unvested stock-based awards. That cost is expected to be
recognized over a weighted average period of 4.3 years.



Although the Plans allow for other types of awards, BankUnited has in the past generally awarded stock-based compensation in the form of stock options, and unvested (restricted) stock. Restricted stock awards are based on service and in
some instances performance. The requisite service period for all awards is equal to the vesting period and the performance period, if applicable. Vesting periods range from zero to nine years for options and three to fourteen for restricted stock.
Any unvested awards are forfeited upon termination of employment, unless otherwise provided by the award agreement, employment agreement, or action of the Compensation Committee.



15



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



Options  BankUnited may award both incentive stock options and non-qualified stock
options. Options granted under BankUniteds Plans generally expire ten years after the date of grant and are granted at or above the fair market value of the stock on the date of grant. Option terms are determined by the Compensation Committee
of BankUniteds Board of Directors at the time of the grant. An option may vest immediately or over a period years. BankUnited incorporates the Black Scholes Merton model to calculate fair values of options awarded. This model requires
assumptions as to expected volatility, dividends, terms, and risk free rates. Assumptions used for the periods covered herein, are outlined in the table below:



|                      |  |                                  
|--------------------- |  | ---------------------------------
|                      |  | Three MonthsEndedDecember 31,2005
|Expected volatility   |  | 26.0%                            
|Expected dividend     |  | .007% - 1.32%                    
|Expected term (years) |  | 3.9 - 7.0                        
|Risk free rate        |  | 4.45% - 4.45%                    



Expected volatilities
are based on historical volatility trends of BankUniteds Class A Common Stock and other factors. Expected dividends reflect a range from actual dividends paid on BankUniteds Class A Common Stock and Series B Preferred Stock. Expected
terms represent the period of time that options granted are expected to be outstanding; the range above results from certain categories of recipients exhibiting different exercise behavior. The risk free rate is based on the U.S Treasury yield curve
in effect at the time of grant for the appropriate life of each option.



A summary of option activity under the Plans as of December 31, 2005, and changes during the quarter then ended is presented below:



|                                   |  |                         |   |  |                              |       |                                         |     |                                 |   |       
|---------------------------------- |  | ----------------------- | - |  | ---------------------------- | ----- | --------------------------------------- | --- | ------------------------------- | - | ------
|Options                            |  | Number ofShares (000s) |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualTerm |     | AggregateIntrinsicValue (000s)
|Outstanding, October 1, 2005 (1)   |  | 3,660                   |   |  | $                            | 17.84 |                                         |     |                                 |   |       
|Granted                            |  | 3                       |   |  |                              | 25.62 |                                         |     |                                 |   |       
|Exercised                          |  | (69                     | ) |  |                              | 11.22 |                                         |     |                                 |   |       
|Expired                            |  | (29                     | ) |  |                              | 19.12 |                                         |     |                                 |   |       
|Forfeited                          |  | (6                      | ) |  |                              | 24.58 |                                         |     |                                 |   |       
|Outstanding, December 31, 2005 (2) |  | 3,559                   |   |  | $                            | 17.92 |                                         | 5.7 |                                 | $ | 30,655
|                                   |  |                         |   | 
|Exercisable, December 31, 2005 (3) |  | 2,760                   |   |  | $                            | 16.73 |                                         | 6.9 |                                 | $ | 27,167

---

|(1) | Outstanding number of shares as of October 1, 2005 included 2,337 shares of Class A Common Stock, 493 shares of Class B Common Stock, and 830 shares of Series B Preferred.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Outstanding number of shares as of December 31, 2005 included 2,245 shares of Class A Common Stock, 493 shares of Class B Common Stock, and 821 shares of Series B Preferred.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Exercisable number of shares as of December 31, 2005 included 1,614 shares of Class A Common Stock, 493 shares of Class B Common Stock, and 653 shares of Series B Preferred.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The weighted-average grant date fair value of
options granted during the three months ended December 31, 2005 was $7.63 per share. The total intrinsic value of options exercised during the three months December 31,



16



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



2005 was $966 thousand. Cash received from option exercises during the three months ended December 31, 2005 was $776 thousand. The actual tax benefit
realized for the tax deductions from option exercises totaled $227 thousand for three months ended December 31, 2005. This tax benefit is reflected in financing activities of BankUniteds condensed consolidated statement of cash flows.



Restricted Stock  The restricted stock awards
reflect BankUniteds intent of rewarding the officers, directors and employees for BankUniteds performance, reinforcing commitment to BankUnited and responding to increased competitive pressures for talented personnel in BankUniteds
market area. Some of the awards granted to BankUniteds most senior executives are subject to being earned by the achievement of specified performance goals. If the performance goals are met the shares are subject to predetermined vesting over
a period of years commencing on the first anniversary of the end of the performance period over which the shares were earned. Performance goals are measured each quarter with adjustments made to the amortization schedule as a result of a change in
managements estimate. If performance goals are not met, any recognized compensation expense is reversed.



Other restricted awards are granted without performance based restrictions and vest in annual installments over periods ranging from five to eight years
commencing on the first anniversary of the date of grant. Except in certain circumstances, shares of restricted stock subject to vesting are forfeited as to the portion remaining unvested at the date of termination if service with BankUnited
terminates prior to completion of the vesting schedule. The vesting schedules are intended to encourage officers, directors and employees to make long-term commitments to BankUnited. However, shares of restricted stock that have not yet vested or
become exercisable may vest and become exercisable before the end of the scheduled vesting term, in the event of the employees death, disability, and in some cases, change in control of BankUnited. Restricted stock awards granted to the CEO,
COO and CFO will immediately vest if there is a change in control of BankUnited. Such awards will vest and become exercisable for all other employees in the event that any successor company does not assume the restricted stock or the employee is
involuntarily terminated within twenty-four (24) months following the effective date of the change in control.



A summary of the status of BankUniteds restricted stock as of December 31, 2005, and changes during the quarter then ended, is presented below.



|                               |  |                       |   |  |                                        |      
|------------------------------ |  | --------------------- | - |  | -------------------------------------- | -----
|Restricted Stock               |  | Number ofShares       |   |  | Weighted Average Grant-Date Fair Value
|                               |  | (Shares in thousands)
|Outstanding, October 1, 2005   |  | 507                   |   |  | $                                      | 32.03
|Granted                        |  | 272                   |   |  |                                        | 26.98
|Vested                         |  | (24                   | ) |  |                                        | 24.39
|Outstanding, December 31, 2005 |  | 755                   |   |  | $                                      | 27.17



The total fair value
of restricted shares that vested during the three months ended December 31, 2005 was $567 thousand.



17



---

##### Table of Contents

BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONTINUED



The following table provides pro-forma net income and earnings per share for periods covered under
this report, during which the fair value based method was not used to account for stock-based compensation.



|                                                                                                                                                             |  |                                     |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------- | ------ | -
|                                                                                                                                                             |  | Three Months EndedDecember 31, 2004 |       
|                                                                                                                                                             |  | (Dollars in thousands)              |       
|Net income, as reported                                                                                                                                      |  | $                                   | 14,525 |  
|Add: Total stock-based employee and director compensation expense included in net income, net of related tax effects                                         |  |                                     | 403    |  
|Deduct: Total stock-based employee and director compensation expense determined under the fair value based method for all awards, net of
related tax effects |  |                                     | (905   | )
|                                                                                                                                                             |  |                                     |        |  
|Pro forma net income                                                                                                                                         |  | $                                   | 14,023 |  
|                                                                                                                                                             |  |                                     |        |  
|Earnings per share:                                                                                                                                          |  |                                     |        |  
|Basic  as reported                                                                                                                                          |  | $                                   | 0.48   |  
|                                                                                                                                                             |  |                                     |        |  
|Basic  pro forma                                                                                                                                            |  | $                                   | 0.46   |  
|                                                                                                                                                             |  |                                     |        |  
|Diluted  as reported                                                                                                                                        |  | $                                   | 0.45   |  
|                                                                                                                                                             |  |                                     |        |  
|Diluted  pro forma                                                                                                                                          |  | $                                   | 0.43   |  
|                                                                                                                                                             |  |                                     |        |  
|Assumptions for weighted average grant-date fair value of options using the Black Scholes option pricing model are as
follows:                               |  |                                     |        |  
|Dividend yield                                                                                                                                               |  |                                     |       |  
|Expected volatility                                                                                                                                          |  |                                     | 28.0   | %
|Risk free rate                                                                                                                                               |  |                                     | 3.35   | %
|Expected term (years)                                                                                                                                        |  |                                     | 4.8    |  



10.    Commitments and Contingencies



Commercial and standby letters of credit are off balance sheet instruments which represent conditional commitments issued by BankUnited to guarantee the performance of a customer to a third party. BankUnited had
outstanding commercial and standby letters of credit in the amount of $46.3 million and $38.8 million as of December 31, 2005 and September 30, 2005, respectively. Fees collected on standby letters of credit represent the fair value of
these commitments and are deferred and amortized over their term, which is typically one year or less.



BankUnited is a party to certain claims and litigation arising in the ordinary course of business. In the opinion of management, the resolution of such
claims and litigation will not materially affect BankUniteds consolidated financial position or results of operations.



11.    Subsequent Events



Stock Issuance



On January 25, 2006, BankUnited issued 5,750,000 shares of its Class A Common Stock at a price of $26.25 per share, in a sale to Keefe, Bruyette &
Woods, Inc., for gross proceeds of $150.9 million. Subsequent to this issuance, BankUnited had 35,774,435 shares of its Class A Common Stock outstanding. The shares were registered under the Securities Act of 1933, as amended, pursuant to the
registrants shelf registration statement on Form S-3.



BankUnited intends to use the proceeds from this issuance for general corporate purposes. This may include the continued expansion of BankUniteds operations through new branch offices and operations centers, possible acquisitions,
acquisition of debt and equity securities if available on favorable terms, redemption of outstanding debt, and investment in loans and mortgage-backed or other securities.



18



---

##### Table of Contents

|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



As used in this Form 10-Q, BankUnited, we, us and our refers to BankUnited
and its subsidiaries on a consolidated basis. The following discussion and analysis and the related financial data present a review of BankUniteds consolidated operating results for the three month periods ended December 31, 2005 and 2004
and consolidated financial condition as of December 31, 2005. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in BankUniteds Annual Report on Form 10-K and
10-K/A (10-K) for the year ended September 30, 2005.



This Quarterly Report on Form 10-Q contains forward-looking statements. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended (the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Words and phrases such as: will likely result, expect, will continue, anticipate,
estimate, project, believe, intend, will, should, would, could, may, can, plan, target and similar
expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, discussions concerning:



| |  |  | Projections of revenues, expenses, income, earnings per share, margin, asset growth, loan production, deposit growth, and other performance measures;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expansion of operations, including branch openings, entrance into new markets, development of products and services; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Discussions on the outlook of the economy, competition, regulation, taxation, company strategies, subsidiaries, investment risk, and policies.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



Actual results or performance could differ from those implied or contemplated
by forward-looking statements. BankUnited Financial Corporation, a Florida corporation, and its subsidiaries (BankUnited), wish to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the
date made, and are not historical facts or guarantees of future performance. Forward-looking statements are subject to certain risks and uncertainties, including, among others: general business, economic and market conditions, fiscal and monetary
policies, war and terrorism, natural disasters, changes in interest rates, deposit flows, loan demand and real estate values; a deterioration in credit quality and/or a reduced demand for credit, competition with other providers of financial
products and services; the issuance or redemption of additional company equity or debt; volatility in the market price of our common stock; changes in accounting principles, policies or guidelines, changes in laws or regulation; reliance on other
companies for products and services; operational or systems risks; and other economic, competitive, servicing capacity, governmental, regulatory and technological factors affecting the companys operations, pricing, products and delivery of
services. Information in this Quarterly Report on Form 10-Q is as of the dates, and for the periods, indicated. BankUnited does not undertake, and specifically disclaims any obligation, to publicly update or revise any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, whether as the result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in or incorporated by reference into this report might not occur.



Overview



BankUniteds results of operations are dependent primarily on its net interest income, which is the difference between the interest earned on its assets, primarily its loan and securities portfolios, and its cost of funds, which
consists of the interest paid on its deposits and borrowings. BankUniteds results of operations are also affected by its provision for loan losses as well as non-interest income, non-interest expenses and income tax expense. Non-interest
expenses consist of employee compensation and benefits, occupancy and equipment, insurance, professional fees, telecommunications and data processing, loan servicing expense, and other operating expenses. Results of operations are also dependent on
the dollar volume and asset quality of BankUniteds loans and investments.



In addition to the foregoing, results of BankUniteds operations, like those of other financial institution holding companies, are affected by BankUniteds asset and liability management policies, as well as
factors



19



---

##### Table of Contents

beyond BankUniteds control, such as general economic conditions and the monetary and fiscal policies of the federal government. Lending activities are
affected by the demand for mortgage financing and other types of loans, and are thus influenced by interest rates and other factors affecting the supply of housing and the availability of funds. Deposit flows and costs of funds are influenced by
yields available on competing investments and by general market rates of interest.



In evaluating BankUniteds financial condition and operating performance, management focuses on increasing loan originations to residential mortgage, commercial and commercial real estate customers, increasing
total and core deposit balances, improving BankUniteds net interest margin, maintaining high credit standards, low levels of non-performing assets and adequate loan loss reserves, managing interest rate risk, controlling expenses, and ensuring
adequate funding for ongoing growth. Based on these factors, highlights of BankUniteds performance for the first quarter of fiscal 2006 include:



| |  |  | Loan production for the first quarter of fiscal 2006 improved by 32.7% compared to the same quarter of fiscal 2005, to reach $1.4 billion.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Total loans increased to $8.9 billion, up 10.6% compared to September 30, 2005.
| | - |  | -------------------------------------------------------------------------------



| |  |  | Total assets reached $11.3 billion, up 5.5% compared to September30, 2005.
| | - |  | --------------------------------------------------------------------------



| |  |  | Total deposits of $5.0 billion, up by 5.8% compared to $4.7 billion at September 30, 2005.
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | Record net income of $16.2 million for the first quarter of fiscal 2006.
| | - |  | ------------------------------------------------------------------------



| |  |  | Margin increased by 13 basis points compared to the same quarter in fiscal 2005, to reach 1.97%.
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | Gain of $1.9 million from the sale of $248 million in residential mortgage loans.
| | - |  | ---------------------------------------------------------------------------------



See discussion in RESULTS OF OPERATIONS and FINANCIAL CONDITION for more information on BankUniteds
operating performance during the quarter ended December 31, 2005 compared to the same period in 2004, and changes in financial condition from September 30, 2005.



Fiscal 2006 Developments



On January 25, 2006, BankUnited issued 5,750,000 shares of its Class A Common Stock at a price of $26.25 per share, in a sale to Keefe, Bruyette &
Woods, Inc., for gross proceeds of $150.9 million. Subsequent to this issuance, BankUnited had 35,774,435 shares of its Class A Common Stock outstanding. The shares were registered under the Securities Act of 1933, as amended, pursuant to the
registrants shelf registration statement on Form S-3. BankUnited intends to use the proceeds from this issuance for general corporate purposes. This may include the continued expansion of BankUniteds operations through new branch offices
and operations centers, possible acquisitions, acquisition of debt and equity securities if available on favorable terms, redemption of outstanding debt, and investment in loans and mortgage-backed or other securities.



We sold $248 million of residential loans in the first quarter of fiscal
2006. In order to manage our balance sheet growth, while taking full advantage of our strong asset origination capabilities, we expect to continue to sell or securitize loans in the well developed and highly liquid secondary market, as favorable
market conditions permit. Such transactions provide increased liquidity, flexibility and positive exposure in the secondary market, and also facilitate future growth.



BankUnited opened four new offices and entered the growing Charlotte County area in southwest Florida during the quarter
ended December 31, 2005 increasing the total number of banking offices to 66 as of December 31, 2005. As of February 1, 2006, BankUnited had 68 banking offices, in nine Florida counties.



Critical Accounting Policies



BankUniteds financial position and results of operations are impacted
by managements application of accounting policies involving judgments made to arrive at the carrying value of certain assets. In implementing its policies, management must make estimates and assumptions about the effect of matters that are
inherently less



20



---

##### Table of Contents

than certain. Actual results could differ significantly from these estimates which could materially affect the amounts of our assets, liabilities, income and
expenses. Critical accounting policies applied by BankUnited include those that relate to the allowance for loan losses, the carrying amount of loans held for sale, the carrying amount of mortgage servicing rights, and stock-based compensation.
Estimates of the amount of the allowance for portfolio loan losses, and the valuation of loans held for sale both affect the carrying amount of loans.



For a more detailed discussion on these critical accounting policies, see Critical Accounting Policies on page 28 of BankUniteds Annual
Report on Form 10-K for the year ended September 30, 2005. For information on stock-based compensation see note 9 Stock-Based Compensation to the accompanying notes to condensed consolidated financial statements.



Accounting Pronouncements Issued and Not Yet Adopted



See Note(2) Impact of Certain Accounting Pronouncementsto the accompanying
condensed notes to consolidated financial statements.



RESULTS OF
OPERATIONS



For the Three Months Ended December 31, 2005 Compared
to the Same Period in 2004



General



Net income for the three months ended December 31, 2005 was $16.2
million, up 11.4% from $14.5 million for the same quarter last year. Basic and diluted earnings were $0.53 and $0.50 per share, respectively, for the quarter, up from $0.48 and $0.45 per share, respectively, for the same quarter last year.



The following table is a condensed version of BankUnited's
Consolidated Statement of Operations for the periods presented.



|                           |  |                                          |        |        |   |        |  |   |        |  |       |  
|-------------------------- |  | ---------------------------------------- | ------ | ------ | - | ------ |  | - | ------ |  | ----- | -
|                           |  | For the three monthsended December 31,   |        | Change |  
|                           |  | 2005                                     |        | 2004   |   | $      |  | % |       
|                           |  | (In thousands, except per share amounts) |       
|Net interest income        |  | $                                        | 51,478 |        | $ | 38,877 |  | $ | 12,601 |  | 32.4  | %
|Provision for loan losses  |  |                                          | 2,300  |        |   | 1,150  |  |   | 1,150  |  | 100.0 | %
|Non-interest income        |  |                                          | 7,507  |        |   | 6,351  |  |   | 1,156  |  | 18.2  | %
|Non-interest expense       |  |                                          | 32,432 |        |   | 22,722 |  |   | 9,710  |  | 42.7  | %
|                           |  |                                          |        |        |   |        |  |   |        |  |       |  
|Income before taxes        |  |                                          | 24,253 |        |   | 21,356 |  |   | 2,897  |  | 13.6  | %
|                           |  |                                          |        |        |   |        |  |   |        |  |       |  
|Income taxes               |  |                                          | 8,078  |        |   | 6,831  |  |   | 1,247  |  | 18.3  | %
|                           |  |                                          |        |        |   |        |  |   |        |  |       |  
|Net income                 |  | $                                        | 16,175 |        | $ | 14,525 |  | $ | 1,650  |  | 11.4  | %
|                           |  |                                          |        |        |   |        |  |   |        |  |       |  
|Basic earnings per share   |  | $                                        | 0.53   |        | $ | 0.48   |  | $ | 0.05   |  | 10.4  | %
|Diluted earnings per share |  | $                                        | 0.50   |        | $ | 0.45   |  | $ | 0.05   |  | 11.1  | %



21



---

##### Table of Contents

Analysis of Net Interest Income



Yields Earned and Rates Paid



The following table sets forth certain information relating to the categories of BankUniteds interest-earning assets
and interest-bearing liabilities for the periods indicated. All yield and rate information is calculated on an annualized basis by dividing the income or expense item for the period by the average balances during the period for the appropriate
balance sheet item. Net interest margin is calculated by dividing net interest income by average interest-earning assets. Net interest spread is the difference between the yield earned on average interest earning assets and the rate paid on average
interest bearing liabilities. Non-accrual loans are included for the appropriate periods, whereas recognition of interest on such loans is discontinued and any remaining accrued interest receivable is reversed, in conformity with generally accepted
accounting principles and federal regulations. The yields and net interest margins appearing in the following table have been calculated on a pre-tax basis.



|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|------------------------------------------------------------------- |  | --------------------------------------- | ---------- | - | -------- | - | ---------- |  | ---- | -------------- |  | - | --------- | - | ---------- | - | ------ |  | ---- | -
|                                                                    |  | For the Three Months Ended December 31, |           
|                                                                    |  | 2005                                    |            |   | 2004     |  
|                                                                    |  | AverageBalance                          |            |   | Interest |   | Yield/Rate |  |      | AverageBalance |  |   | Interest  |   | Yield/Rate |  
|                                                                    |  | (Dollars in thousands)                  |           
|Interest-earning assets:                                            |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Loans, net(1)                                                       |  | $                                       | 8,462,466  |   |          | $ | 121,009    |  | 5.71 | %              |  | $ | 6,025,554 |   |            | $ | 70,699 |  | 4.68 | %
|Mortgage-backed securities                                          |  |                                         | 1,573,344  |   |          |   | 16,630     |  | 4.23 | %              |  |   | 1,955,160 |   |            |   | 18,236 |  | 3.73 | %
|Short-term investments(2)                                           |  |                                         | 32,760     |   |          |   | 463        |  | 5.60 | %              |  |   | 18,478    |   |            |   | 162    |  | 3.49 | %
|Investment securities and FHLB stock                                |  |                                         | 479,908    |   |          |   | 5,591      |  | 4.64 | %              |  |   | 490,855   |   |            |   | 5,181  |  | 4.21 | %
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Total interest-earning assets                                       |  |                                         | 10,548,478 |   |          |   | 143,693    |  | 5.44 | %              |  |   | 8,490,047 |   |            |   | 94,278 |  | 4.43 | %
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Interest-bearing liabilities:                                       |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Transaction and money market                                        |  |                                         | 386,872    |   |          |   | 1,787      |  | 1.83 | %              |  |   | 397,869   |   |            |   | 1,198  |  | 1.20 | %
|Savings                                                             |  |                                         | 1,199,320  |   |          |   | 9,744      |  | 3.22 | %              |  |   | 972,368   |   |            |   | 4,398  |  | 1.79 | %
|Certificates of deposits                                            |  |                                         | 2,931,900  |   |          |   | 27,641     |  | 3.74 | %              |  |   | 1,956,489 |   |            |   | 13,500 |  | 2.74 | %
|Trust preferred securities and subordinated debentures(3)           |  |                                         | 195,459    |   |          |   | 3,763      |  | 7.70 | %              |  |   | 175,702   |   |            |   | 2,789  |  | 6.35 | %
|Senior notes                                                        |  |                                         | 120,000    |   |          |   | 1,070      |  | 3.57 | %              |  |   | 120,000   |   |            |   | 1,070  |  | 3.57 | %
|FHLB advances and other borrowings(3)                               |  |                                         | 5,057,572  |   |          |   | 48,210     |  | 3.78 | %              |  |   | 4,263,078 |   |            |   | 32,446 |  | 3.02 | %
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Total interest-bearing liabilities                                  |  | $                                       | 9,891,123  |   |          | $ | 92,215     |  | 3.70 | %              |  | $ | 7,885,506 |   |            | $ | 55,401 |  | 2.79 | %
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Excess of interest-earning assets over interest-bearing liabilities |  | $                                       | 657,355    |   |          |   |            |  |      |                |  | $ | 604,541   |   |            |   |        |  |      |  
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Net interest income                                                 |  |                                         |            |   |          | $ | 51,478     |  |      |                |  |   |           |   |            | $ | 38,877 |  |      |  
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Interest rate spread                                                |  |                                         |            |   |          |   |            |  | 1.74 | %              |  |   |           |   |            |   |        |  | 1.64 | %
|Effect of non-interest bearing sources                              |  |                                         |            |   |          |   |            |  | 0.23 | %              |  |   |           |   |            |   |        |  | 0.20 | %
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Net interest margin                                                 |  |                                         |            |   |          |   |            |  | 1.97 | %              |  |   |           |   |            |   |        |  | 1.84 | %
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  
|Ratio of interest-earning assets to interest-bearing liabilities    |  |                                         | 106.65     | % |          |   |            |  |      |                |  |   | 107.67    | % |            |   |        |  |      |  
|                                                                    |  |                                         |            |   |          |   |            |  |      |                |  |   |           |   |            |   |        |  |      |  

---

|Note: | The yields and rates along with the corresponding interest rate spread and net interest margin represent the yields earned and rates paid on BankUniteds interest-earning
assets and interest-bearing liabilities, respectively, for the periods presented, and do not include any estimates of the effect accelerated amortization of premiums, loans costs, and discounts would have on the yields earned. The yields are
annualized and are not calculated on a tax equivalent basis.
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | Includes average balances of loans held for sale of $14.1 million and $23.6 million for the three months ended December 31, 2005 and 2004, respectively. Also includes average
non-accruing loans of $10.0 million and $16.3 million for the three months ended December 31, 2005 and 2004, respectively. Prepayment fees collected by BankUnited from borrowers in the amount of $0.6 million for the three months ended
December 31, 2004, previously reported in non-interest income, have been reclassified into interest income.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Short-term investments include FHLB overnight deposits, federal funds sold, and certificates of deposit.
|--- | --------------------------------------------------------------------------------------------------------

|(3) | Average balances include adjustments related to fair value hedges with interest rate swaps. For more information on interest rate swaps see note 8 Accounting for Derivatives and
Hedging Activities of the accompanying condensed notes to consolidated financial statements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



---

##### Table of Contents

Rate/Volume Analysis



The following table presents, for the periods indicated, the changes in
interest income and the changes in interest expense attributable to the changes in interest rates and the changes in the volume of interest-earning assets and interest-bearing liabilities. Changes attributable to: (i) changes in volume (change
in volume multiplied by prior year rate); (ii) changes in rate (change in rate multiplied by prior year volume); and (iii) changes in rate/volume (change in rate multiplied by change in volume, which were allocated to the changes in rate),
were as follows:



|                                                          |  |                                                            |        |   |                |   |                          |  |   |        |  
|--------------------------------------------------------- |  | ---------------------------------------------------------- | ------ | - | -------------- | - | ------------------------ |  | - | ------ | -
|                                                          |  | For the Three Month Period EndedDecember 31, 2005 vs. 2004 |       
|                                                          |  | Increase (Decrease)Due to                                  |        |   |               
|                                                          |  | Changes inVolume                                           |        |   | Changesin Rate |   | TotalIncrease/(Decrease) | 
|                                                          |  | (Dollars in thousands)                                     |       
|Interest income attributable to:                          |  |                                                            |        |   |                |   |                          |  |   |        |  
|Loans, net(1)                                             |  | $                                                          | 27,932 |   |                | $ | 22,378                   |  | $ | 50,310 |  
|Mortgage-backed securities                                |  |                                                            | (3,561 | ) |                |   | 1,955                    |  |   | (1,606 | )
|Short-term investments(2)                                 |  |                                                            | 126    |   |                |   | 175                      |  |   | 301    |  
|Investment securities and FHLB stock                      |  |                                                            | (187   | ) |                |   | 597                      |  |   | 410    |  
|                                                          |  |                                                            |        |   |                |   |                          |  |   |        |  
|Total interest-earning assets                             |  |                                                            | 24,310 |   |                |   | 25,105                   |  |   | 49,415 |  
|                                                          |  |                                                            |        |   |                |   |                          |  |   |        |  
|Interest expense attributable to:                         |  |                                                            |        |   |                |   |                          |  |   |        |  
|Transaction and money market                              |  |                                                            | (33    | ) |                |   | 622                      |  |   | 589    |  
|Savings                                                   |  |                                                            | 1,026  |   |                |   | 4,320                    |  |   | 5,346  |  
|Certificates of deposit                                   |  |                                                            | 6,730  |   |                |   | 7,411                    |  |   | 14,141 |  
|Trust Preferred Securities and subordinated debentures(3) |  |                                                            | 314    |   |                |   | 660                      |  |   | 974    |  
|Senior notes                                              |  |                                                            |       |   |                |   |                         |  |   |       |  
|FHLB advances and other borrowings                        |  |                                                            | 6,047  |   |                |   | 9,717                    |  |   | 15,764 |  
|                                                          |  |                                                            |        |   |                |   |                          |  |   |        |  
|Total interest-bearing liabilities                        |  |                                                            | 14,084 |   |                |   | 22,730                   |  |   | 36,814 |  
|                                                          |  |                                                            |        |   |                |   |                          |  |   |        |  
|Increase in net interest income                           |  | $                                                          | 10,226 |   |                | $ | 2,375                    |  | $ | 12,601 |  
|                                                          |  |                                                            |        |   |                |   |                          |  |   |        |  

---

|(1) | Includes interest earned on loans held for sale.
|--- | ------------------------------------------------

|(2) | Short-term investments include FHLB overnight deposits, federal funds sold, securities purchased under agreements to resell, and certificates of deposit.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes the effect of using interest rate swaps in a fair value hedge. See note 8 Accounting for Derivatives and Hedge Accounting of the accompanying condensed notes to
consolidated financial statements for more information on interest rate swaps.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net Interest Income.    Net interest income, which is the difference between the interest and dividends earned on earning assets and the interest paid on customer deposits and borrowings is
the most significant component of our revenues. Our ability to grow net interest income is contingent on our ability to produce high quality loans. Movements in short-term interest rates can have a significant impact on net interest income by
driving up the cost of short-term and adjustable borrowings and placing competitive pressures on BankUnited when pricing deposits.



Net interest income before provision for loan losses was $51.5 million for the quarter ended December 31, 2005, a $12.6 million, or 32.4% increase
over $38.9 million for the same period in 2004.



The overall
yield on interest earning assets increased by 101 basis points, while the overall rates paid in interest bearing liabilities increased by 91 basis points, resulting in an improvement in the interest rate spread of 10 basis points or $2.4 million for
the three months ended December 31, 2005 compared to the same period in 2004. An increase in the yield earned on loans of 103 basis points for the three months ended December 31, 2005



23



---

##### Table of Contents

over the same period in 2004, more than offset the impact that short-term rates hikes had on the cost of borrowings and the pricing of deposits. BankUnited
took measures in the latter part of fiscal 2005 to reduce the cost of borrowings by prepaying higher rate long-term FHLB advances. BankUnited also took measures during the first quarter of fiscal 2006 to reduce the impact that future rate increases
may have by lengthening maturities of its time deposits.



An
increase in the amounts of loans produced by BankUnited generated an additional $27.9 million of interest income for the three months ended December 31, 2005, compared to the same period in 2004. BankUnited allowed mortgage-backed securities to
run-off from repayments reducing the average amounts outstanding during the three months ended December 31, 2005 compared to the same period in 2004; this reduction lowered interest income by $3.6 million. The growth in deposits and borrowings,
which was used to fund the growth in loans, resulted in additional interest expense of $14.1 million.



The net interest margin increased this quarter to 1.97%, up from 1.84% for the same quarter last year. The improvement in margin is attributable to a
variety of factors, including early repayment of higher cost FHLB advances and certain related swaps in the latter part of fiscal 2005, the upward repricing of residential mortgage loans tied to the Monthly Treasury Average (MTA) index, and a
slowdown in mortgage prepayments. (See Lag Risk in Item 7A. of BankUniteds Annual Report on Form 10-K for the fiscal year ended September 30, 2005). Approximately 54% of BankUniteds loan portfolio as of December 31,
2005, consisted of adjustable rate mortgages indexed to the MTA, compared to 42% as of December 31, 2004.



Prepayments on residential mortgage loans have the greatest impact on margin because of the amount of deferred loan costs and premiums paid on these
loans, which must be charged to interest income upon prepayment. Expressed as a percentage of average residential mortgage loans, prepayments were 4.25% for the three months ended December 31, 2005, compared to 4.56% for the same period in
2004. This reduction in the rate of prepayments on these loans reduced the amount of deferred loans costs and premiums charges to 0.07% of average residential loans for the three months ended December 31, 2005, compared to 0.08% for the same
period in 2004. Changes in the level of prepayments could affect the net interest margin positively or negatively in the future.



Net interest margin is also indirectly impacted by relative changes in the amount of non-interest bearing sources such as non-interest bearing deposits.
An increase in non-interest bearing deposits will improve net-interest margin by allowing BankUnited to use such sources to increase the level of interest earning assets. Average non-interest bearing deposits for the three months ended
December 31, 2005 was $342.8 million, compared to $247.5 million for the same period in 2004. The relative changes in overall non-interest bearing sources for the three months ended December 31, 2005, compared to the same period in 2004,
helped to improve the net interest margin by 3 basis points.



Provision for Loan Losses.    BankUnited records a provision for loan losses as a charge to income in amounts necessary to adjust the allowance for loan losses as determined by management through its overall
review of asset quality. The provision for loan losses of $2.3 million for three months ended December 31, 2005 represents an increase compared to $1.2 million for the same period in 2004. Non-performing loans to total loans increased to 0.11%
as of December 31, 2005, compared to 0.10% as of September 30, 2005. The allowance for loan losses as a percentage of total loans remained at 0.32% as of December 31, 2005 compared to September 30, 2005. See Asset Quality
for more information on BankUniteds measure of its asset quality.



24



---

##### Table of Contents

Analysis of Non-Interest Income and Expenses



|                                                              |  |                                       |       |   |      |   |       |                     |  |   |        |   |  |       |  
|------------------------------------------------------------- |  | ------------------------------------- | ----- | - | ---- | - | ----- | ------------------- |  | - | ------ | - |  | ----- | -
|                                                              |  | For the Three MonthsEndedDecember 31, |       |   |      |   |       |                     | 
|                                                              |  | 2005                                  |       |   | 2004 |   |       | Increase/(Decrease) | 
|                                                              |  | (Dollars in thousands)                |      
|Non-interest income:                                          |  |                                       |       |   |      |   |       |                     |  |   |        |   |  |       |  
|Loan servicing fees                                           |  | $                                     | 1,453 |   |      | $ | 870   |                     |  | $ | 583    |   |  | 67.0  | %
|Amortization of mortgage servicing rights                     |  |                                       | (886  | ) |      |   | (782  | )                   |  |   | (104   | ) |  | 13.3  |  
|Loan fees                                                     |  |                                       | 709   |   |      |   | 558   |                     |  |   | 151    |   |  | 27.1  |  
|Deposit fees                                                  |  |                                       | 1,317 |   |      |   | 1,106 |                     |  |   | 211    |   |  | 19.1  |  
|Other fees                                                    |  |                                       | 640   |   |      |   | 518   |                     |  |   | 122    |   |  | 23.6  |  
|Net gain on sale of investment and mortgage-backed securities |  |                                       |      |   |      |   | 1,609 |                     |  |   | (1,609 | ) |  | NM    |  
|Net gain on sale of loans and other assets                    |  |                                       | 1,890 |   |      |   | 394   |                     |  |   | 1,496  |   |  | 379.7 |  
|Insurance and investment services income                      |  |                                       | 895   |   |      |   | 963   |                     |  |   | (68    | ) |  | (7.1  | )
|Other                                                         |  |                                       | 1,489 |   |      |   | 1,115 |                     |  |   | 374    |   |  | 33.5  |  
|                                                              |  |                                       |       |   |      |   |       |                     |  |   |        |   |  |       |  
|Total non-interest income                                     |  | $                                     | 7,507 |   |      | $ | 6,351 |                     |  | $ | 1,156  |   |  | 18.2  | %
|                                                              |  |                                       |       |   |      |   |       |                     |  |   |        |   |  |       |  



Total non-interest income reached $7.5
million for the quarter ended December 31, 2005, up 18.2% over the same quarter last year.



BankUniteds portfolio of residential loans serviced for others was $1.7 billion at December 31, 2005 compared to $1.2 billion as of
December 31, 2004. This additional volume, plus an increase in ancillary fees earned on loans serviced for others, increased loan servicing fees by $583 thousand. The increase in volume of loans serviced for others also increased amortization
of mortgage servicing rights by $104 thousand for the three months ended December 31, 2005 compared to the same period in 2004.



Fee income, which includes loan fees, deposit fees and other fees (excluding loan servicing fees), was $2.7 million for the first quarter of fiscal
2006, up 22.2% compared to the same quarter last year.



During
the quarter ended December 31, 2005, BankUnited sold $248 million of residential loans resulting in a gain of $1.9 million compared to $394 thousand during the same period in 2004. During the quarter ended December 31, 2004, BankUnited
realized $1.6 million in gains from the sale of investments and mortgage-backed securities; there were no such sales during the same period in 2005.



Other non-interest income increased by $374 thousand for the three months ended December 31, 2005 mostly from an increase in the cash surrender value
of bank-owned life insurance of $200 thousand, and the reversal of $111 thousand in lower of cost or market value adjustments realized during the period.



25



---

##### Table of Contents

|                                       |  |                                       |        |      |   |                     |  |   |       |   |  |       |  
|-------------------------------------- |  | ------------------------------------- | ------ | ---- | - | ------------------- |  | - | ----- | - |  | ----- | -
|                                       |  | For the Three MonthsEndedDecember 31, |        |      |   |                     |  |  
|                                       |  | 2005                                  |        | 2004 |   | Increase/(Decrease) | 
|                                       |  | (Dollars in thousands)                |       
|Non-interest expenses:                 |  |                                       |        |      |   |                     |  |   |       |   |  |       |  
|Employee compensation and benefits     |  | $                                     | 16,761 |      | $ | 11,196              |  | $ | 5,565 |   |  | 49.7  | %
|Occupancy and equipment                |  |                                       | 6,943  |      |   | 5,001               |  |   | 1,942 |   |  | 38.8  |  
|Telecommunications and data processing |  |                                       | 2,125  |      |   | 1,619               |  |   | 506   |   |  | 31.3  |  
|Advertising and promotion expense      |  |                                       | 1,398  |      |   | 1,444               |  |   | (46   | ) |  | (3.2  | )
|Professional fees                      |  |                                       | 1,496  |      |   | 569                 |  |   | 927   |   |  | 162.9 |  
|Other operating expenses               |  |                                       | 3,709  |      |   | 2,893               |  |   | 816   |   |  | 28.2  |  
|                                       |  |                                       |        |      |   |                     |  |   |       |   |  |       |  
|Total non-interest expenses            |  | $                                     | 32,432 |      | $ | 22,722              |  | $ | 9,710 |   |  | 42.7  | %
|                                       |  |                                       |        |      |   |                     |  |   |       |   |  |       |  



Non-interest expense
increased by $9.7 million, or 42.7%, for the three months ended December 31, 2005, compared to the same period in 2004. The principal reason for this increase is BankUniteds aggressive expansion of its branch network, operations, and
support areas. Other factors include: an incremental increase in compensation expense of $256 thousand resulting from the implementation of SFAS No. 123 (Revised) during the quarter ended December 31, 2005; an increase in occupancy and
equipment of $330 thousand from disaster recovery efforts largely as a result of hurricanes Rita, Katrina, and Wilma; and a net increase in professional fees of $927 thousand, including expenses related to Sarbanes Oxley of $228 thousand, and $699
thousand in other professional fees.



LIQUIDITY



Liquidity management is the process of allocating assets and structuring
liabilities to provide sufficient cash or cash equivalents to meet an entitys daily operating needs on an ongoing basis. It is the policy of BankUnited to manage its funds so that there is no need to make unplanned sales of assets or to borrow
funds under emergency conditions. Sources of liquidity include: cash and cash equivalents, retail deposit growth, FHLB advances, loan repayments, investment portfolio run-off, liquidation of investments and mortgage-backed securities, and overnight
and term reverse repurchase agreements.



BankUniteds
objective in managing liquidity is to maintain sufficient resources of available cash to address both short and long-term business funding needs such as loan demand, investment purchases, deposit fluctuations, and debt service requirements. In doing
so, BankUnited maintains an overall liquidity position that has an aggregate amount of readily accessible and marketable assets, cash flow and borrowing capacity to meet unexpected deposit outflows and/or increases in loan demand. Cash levels may
vary but are maintained at levels required by regulation and necessary to meet the projected anticipated needs for business operations. BankUnited is not aware of any events, or uncertainties, which may impede liquidity in the short or long-term.



As of December 31, 2005, BankUnited had securities sold
under agreements to repurchase with an outstanding balance of $1.2 billion, including $127 million which matured overnight, and all but $50 million which will mature within 90 days of that date. These borrowings were secured by mortgage-backed
securities with a market value of approximately $1.4 billion.



As of December 31, 2005, BankUnited had $4.1 billion of FHLB advances outstanding, including approximately $806 million, which matured within 30 days. These advances were secured by loans with a market value of approximately $6.1
billion. As of December 31, 2005, BankUnited had approximately $796 million available on its credit line with the FHLB of Atlanta, $188 million of which was available on a long-term or short-term basis, and $608 million available on a
short-term basis only. In addition, BankUnited had $75 million available as of December 31, 2005 under credit facilities with other financial institutions to purchase overnight Federal Funds on a short-term basis.



BankUnited raised $150.9 million from the issuance of its Class A Common
Stock subsequent to the quarter ended December 31, 2005. Proceeds will be used for general corporate purposes.



26



---

##### Table of Contents

Discussion of Cash Flows



The following discussion provides information with respect to significant sources and uses of funds during the three months ended December 31, 2005
compared to the same period in 2004. For more information on cash flows refer to the Condensed Consolidated Statement of Cash Flows.



Significant Sources of Funds



During the three months ended December 31, 2005 and 2004, BankUnited received $654 million and $689 million, respectively, from loan payments.
Excluding sales of loans in exchange for mortgage-backed securities, BankUnited received $195 million in cash proceeds from the sale of loans during the three months ended December 31, 2005, none during the same period in 2004. BankUnited
received $52.5 million in cash proceeds from the sale of mortgage-backed securities, including those received in exchanged for loans, compared to $86.1 million received during the same period in 2004. Proceeds from the repayment of mortgage-backed
securities for the quarter ended December 31, 2005 was $125 million compared to $180 million for the same period in 2004. During the three months ended December 31, 2005, BankUnited received $33.7 million of proceeds from the sale of
investments securities, compared to $3.7 million during the same period in 2004. BankUnited raised $274 million in additional deposits during the quarter ended December 31, 2005 compared to $199 million during the same in 2004. BankUnited
received funds of $54.2 million and $49.3 million during the three months ended December 31, 2005 and 2004, respectively from additional repurchase agreements. BankUnited received funds of $250 million during the three months ended
December 31, 2005 from additional advances made by the FHLB. During the quarter ended December 31, 2004, BankUnited raised $31 million from the issuance of subordinated debentures to two of its non-consolidated trust subsidiaries, none
during the same period in 2005.



Significant Uses of Funds



During the three months ended December 31, 2005, BankUnited funded
$1.7 billion of loans as compared to $1.3 billion during the same period of 2004. BankUnited purchased $73.4 million of loans during the three months ended December 31, 2005, none during the same period in 2004. In addition, BankUnited purchased
$10.7 million of investment securities during the three months ended December 31, 2005, compared to $49.9 million during the same period in 2004. BankUnited paid down $44 million of FHLB advances during the three months ended December 31,
2004. BankUnited used $48.5 million and $35.8 million, respectively, during the three months ended December 31, 2005 and 2004 to make escrow related payments on behalf of borrowers.



FINANCIAL CONDITION



The following is a discussion of significant changes from September 30, 2005 to December 31, 2005 in the Statement of Financial Condition. For a
discussion of changes in cash and cash equivalents, see LIQUIDITY.



Assets



Mortgage-backed securities available for
sale.    The balance of mortgage-backed securities available for sale was $1.5 billion as of December 31, 2005, which is a net decrease of $130 million, or 8.0% compared to $1.6 billion as of September 30,
2005. The net decrease of $130 million is predominantly the result of repayments of $125 million. There was also a reduction in the balance due to unrealized losses of $4.5 million recorded during the three months ended December 31, 2005. (See
Note 3. of the accompanying condensed notes to consolidated financial statements for additional information on investment securities and mortgage-backed securities).



Loans.    Loans receivable, net (including loans held for sale) increased by $850 million, or
10.6% from $8.0 billion at September 30, 2005 to $8.9 billion at December 31, 2005. The portfolio is centered in first mortgage residential loans which account for 83.6% of the portfolio with an additional 12.7% in other real estate
secured loans. There has not been a significant change in the loan portfolio mix during the quarter ended December 31, 2005.



27



---

##### Table of Contents

Loans receivable consist of the following:



|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|--------------------------------------------------- |  | ---------------------- | --------- | - | ----------------------- | ----- | - | ------ | - | --------- | --------------- |  | ----- | -
|                                                    |  | As of December 31,2005 |           |   | As of September 30,2005 |      
|                                                    |  | Amount                 |           |   | Percent ofTotal         |       |   | Amount |   |           | Percent ofTotal | 
|                                                    |  | (Dollars in thousands) |          
|Real estate loans:                                  |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|One-to-four family residential:                     |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Residential mortgages                               |  | $                      | 6,734,886 |   |                         | 75.9  | % |        | $ | 5,999,713 |                 |  | 74.7  | %
|Specialty consumer mortgages                        |  |                        | 681,573   |   |                         | 7.7   |   |        |   | 678,609   |                 |  | 8.5   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total one-to-four family residential                |  |                        | 7,416,459 |   |                         | 83.6  |   |        |   | 6,678,322 |                 |  | 83.2  |  
|Home equity loans and lines of credit               |  |                        | 285,665   |   |                         | 3.2   |   |        |   | 257,789   |                 |  | 3.2   |  
|Multi-family                                        |  |                        | 122,595   |   |                         | 1.4   |   |        |   | 111,444   |                 |  | 1.4   |  
|Commercial real estate                              |  |                        | 365,128   |   |                         | 4.1   |   |        |   | 344,503   |                 |  | 4.3   |  
|Construction                                        |  |                        | 100,995   |   |                         | 1.1   |   |        |   | 87,113    |                 |  | 1.1   |  
|Land                                                |  |                        | 260,815   |   |                         | 2.9   |   |        |   | 235,829   |                 |  | 2.9   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total real estate loans                             |  |                        | 8,551,657 |   |                         | 96.3  |   |        |   | 7,715,000 |                 |  | 96.1  |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Other loans:                                        |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Commercial                                          |  |                        | 196,013   |   |                         | 2.2   |   |        |   | 199,344   |                 |  | 2.5   |  
|Consumer                                            |  |                        | 19,269    |   |                         | 0.2   |   |        |   | 19,415    |                 |  | 0.2   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total other loans                                   |  |                        | 215,282   |   |                         | 2.4   |   |        |   | 218,759   |                 |  | 2.7   |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total loans held in portfolio                       |  |                        | 8,766,939 |   |                         | 98.7  |   |        |   | 9,933,759 |                 |  | 98.8  |  
|Unearned discounts, premiums and deferred fees, net |  |                        | 138,102   |   |                         | 1.6   |   |        |   | 119,588   |                 |  | 1.5   |  
|Allowance for loan losses                           |  |                        | (28,646   | ) |                         | (0.3  | ) |        |   | (25,755   | )               |  | (0.3  | )
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total loans held in portfolio, net                  |  |                        | 8,876,395 |   |                         | 100.0 | % |        |   | 8,027,592 |                 |  | 100.0 | %
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Mortgage loans held for sale                        |  |                        | 13,136    |   |                         |       |   |        |   | 12,196    |                 |  |       |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  
|Total loans, net                                    |  | $                      | 8,889,531 |   |                         |       |   |        | $ | 8,039,788 |                 |  |       |  
|                                                    |  |                        |           |   |                         |       |   |        |   |           |                 |  |       |  



The following table
provides the composition of BankUniteds one-four family loans as of December 31, 2005 and September 30, 2005, including loans held for sale.



|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|------------------------------------------------------------------------- |  | ----------------------- | --------- | ---------------- | ------------------------ | - | ------ | - | ---------------- |  | ----- | -
|                                                                          |  | As of December 31, 2005 |           |                  | As of September 30, 2005 |  
|                                                                          |  | Amount                  |           | Percent of Total |                          |   | Amount |   | Percent of Total | 
|                                                                          |  | (Dollars in thousands)  |          
|One-to-four family residential loans:                                     |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Fixed rate loans                                                          |  | $                       | 1,108,391 |                  | 14.9                     | % |        | $ | 996,455          |  | 14.9  | %
|Adjustable rate loans (ARM):                                              |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Traditional ARM                                                           |  |                         | 1,802,897 |                  | 24.3                     |   |        |   | 1,835,337        |  | 27.4  |  
|Option ARM                                                                |  |                         | 4,518,307 |                  | 60.8                     |   |        |   | 3,858,726        |  | 57.7  |  
|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Total ARM loans                                                           |  |                         | 6,321,204 |                  | 85.1                     |   |        |   | 5,694,063        |  | 85.1  |  
|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  
|Total one-to-four family residential loans, including loans held for sale |  | $                       | 7,429,595 |                  | 100.0                    | % |        |   | 6,690,518        |  | 100.0 | %
|                                                                          |  |                         |           |                  |                          |   |        |   |                  |  |       |  

---

Option ARM loans are adjustable-rate
mortgages which provide borrowers flexible payment options and have the potential for negative amortization. Option ARM loans represent 50.8% and 48.0% of BankUniteds total loans outstanding as of December 31, 2005 and September 30,
2005, respectively. As of December 31, 2005, option ARM loans with a balance of $2.4 billion were negatively amortizing with approximately $21.1 million of their principal balances resulting from negative amortization. As of September 30,
2005, option ARM loans with a balance of $2.0 billion were negatively amortizing with approximately $12.4 million of their principal balances resulting from negative amortization. These loans are subject to interest rate caps.



28



---

##### Table of Contents

Liabilities



Deposits.    Deposits increased by $274 million, or 5.8%, from $4.7 billion at September 30, 2005 to $5.0 billion at
December 31, 2005. The majority of the growth was from an increase in certificates of deposit of $241 million. BankUnited entered into longer-term time deposits in anticipation of rising interest rates.



Securities sold under agreements to
repurchase.    Securities sold under agreements to repurchase (repos) increased by $54.2 million or 4.7% from September 30, 2005 to $1.2 billion at December 31, 2005.



FHLB advances.    FHLB advances increased by $250
million, or 6.5%, from September 30, 2005 to $4.1 billion at December 31, 2005.



Federal funds purchased.    During the three months ended December 31, 2005, BankUnited borrowed $40 million under credit facilities it has with other financial institutions to
purchase overnight Federal Funds on a short-term basis. Total credit extended to BankUnited under these facilities was $115 million as of December 31, 2005, with $40 million outstanding.



Advance payments by borrowers for taxes and
insurance.    Advance payments by borrowers for taxes and insurance decreased by $48.5 million, or 64.7% during the quarter to $26.5 million as of December 31, 2005. This decrease reflects tax and insurance payments made
by BankUnited on behalf of borrowers during the quarter.



Asset Quality



The following table sets forth additional information
concerning BankUniteds non-performing assets at December 31, 2005 and September 30, 2005.



|                                                                  |  |                        |        |   |                   |   |        |  
|----------------------------------------------------------------- |  | ---------------------- | ------ | - | ----------------- | - | ------ | -
|                                                                  |  | December 31,2005       |        |   | September 30,2005 |  
|                                                                  |  | (Dollars in thousands) |       
|Non-accrual loans                                                 |  | $                      | 9,268  |   |                   | $ | 8,391  |  
|Loans past due 90 days and still accruing                         |  |                        | 308    |   |                   |   |       |  
|                                                                  |  |                        |        |   |                   |   |        |  
|Total non-performing loans                                        |  |                        | 9,576  |   |                   |   | 8,391  |  
|Real estate owned                                                 |  |                        | 224    |   |                   |   | 542    |  
|                                                                  |  |                        |        |   |                   |   |        |  
|Total non-performing assets                                       |  | $                      | 9,800  |   |                   | $ | 8,933  |  
|                                                                  |  |                        |        |   |                   |   |        |  
|Allowance for loan losses                                         |  | $                      | 28,646 |   |                   | $ | 25,755 |  
|                                                                  |  |                        |        |   |                   |   |        |  
|Non-performing assets as a percentage of total assets             |  |                        | 0.09   | % |                   |   | 0.08   | %
|Non-performing loans as a percentage of total loans               |  |                        | 0.11   | % |                   |   | 0.10   | %
|Allowance for loan losses as a percentage of total loans          |  |                        | 0.32   | % |                   |   | 0.32   | %
|Allowance for loan losses as a percentage of non-performing loans |  |                        | 299.14 | % |                   |   | 306.94 | %



Management believes
the current allowance to be appropriate given the composition of its loan portfolio, which as of December 31, 2005 was 96.3% secured by real estate, the historical loss experience and its assessment of current asset quality.



29



---

##### Table of Contents

The following table sets forth the change in BankUniteds allowance for loan losses for the three
months ended December 31, 2005 and 2004.



|                                                            |  |                            |        |                  |   |        |  
|----------------------------------------------------------- |  | -------------------------- | ------ | ---------------- | - | ------ | -
|                                                            |  | For the Three Months Ended |       
|                                                            |  | December 31,2005           |        | December 31,2004 |  
|                                                            |  | (In thousands)             |       
|Allowance for loan losses, balance (at beginning of period) |  | $                          | 25,755 |                  | $ | 24,079 |  
|Provisions for loan losses                                  |  |                            | 2,300  |                  |   | 1,150  |  
|Loans charged off:                                          |  |                            |        |                  |   |        |  
|One-to-four family residential                              |  |                            |       |                  |   | (505   | )
|Home equity loans and lines of credit                       |  |                            |       |                  |   | (131   | )
|Commercial                                                  |  |                            |       |                  |   | (154   | )
|Consumer                                                    |  |                            |       |                  |   | (19    | )
|                                                            |  |                            |        |                  |   |        |  
|Total loans charged off(1)                                  |  |                            |       |                  |   | (809   | )
|                                                            |  |                            |        |                  |   |        |  
|Recoveries:                                                 |  |                            |        |                  |   |        |  
|Commercial                                                  |  |                            | 590    |                  |   | 24     |  
|Consumer                                                    |  |                            | 1      |                  |   | 3      |  
|                                                            |  |                            |        |                  |   |        |  
|Total recoveries(1)                                         |  |                            | 591    |                  |   | 27     |  
|                                                            |  |                            |        |                  |   |        |  
|Allowance for loan losses, balance (at end of period)       |  | $                          | 28,646 |                  | $ | 24,447 |  
|                                                            |  |                            |        |                  |   |        |  

---

|(1) | Net annualized (recoveries) charge-offs as a percentage of average total loans were (0.03%) and 0.05% for three months ended December 31, 2005 and 2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------



There can be no assurance that additional
provisions for loan losses will not be required in future periods.



The following table sets forth BankUniteds allocation of the allowance for loan losses by category as of December 31, 2005 and September 30, 2005.



|                                                |  |                   |        |                   |   |       
|----------------------------------------------- |  | ----------------- | ------ | ----------------- | - | ------
|                                                |  | December 31, 2005 |        | September 30,2005
|                                                |  | (In thousands)   
|Balance at the end of the period applicable to: |  |                   |        |                   |   |       
|One-to-four family residential                  |  | $                 | 7,059  |                   | $ | 6,356 
|Home equity loans and lines of credit           |  |                   | 3,431  |                   |   | 2,909 
|Multi-family                                    |  |                   | 981    |                   |   | 891   
|Commercial real estate                          |  |                   | 3,769  |                   |   | 3,076 
|Construction                                    |  |                   | 808    |                   |   | 697   
|Land                                            |  |                   | 2,086  |                   |   | 1,886 
|Commercial                                      |  |                   | 7,336  |                   |   | 7,161 
|Consumer                                        |  |                   | 1,064  |                   |   | 843   
|Unallocated                                     |  |                   | 2,112  |                   |   | 1,936 
|                                                |  |                   |        |                   |   |       
|Total allowance for loan losses                 |  | $                 | 28,646 |                   | $ | 25,755
|                                                |  |                   |        |                   |   |       



30



---

##### Table of Contents

|Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



The discussion contained in BankUniteds Annual Report on Form 10-K for the year ended September 30, 2005, under Item 7a,
Quantitative and Qualitative Disclosures about Market Risk, provides detailed quantitative and qualitative disclosures about market risk and should be referenced for information thereon.



Risks Associated with Changing Interest
Rates.    As a financial intermediary, BankUnited invests in various types of interest-earning assets (primarily loans, mortgage-backed securities, and investment securities), which are funded largely by interest-bearing
liabilities (primarily deposits, FHLB advances, securities sold under agreements to repurchase, senior notes, and trust preferred securities and subordinated debentures). Such financial instruments have varying levels of sensitivity to changes in
market interest rates, which creates interest rate risk for BankUnited. Accordingly, BankUniteds net interest income, the most significant component of its net income, is subject to substantial volatility due to changes in interest rates or
market yield curves, particularly if there are differences, or gaps, in the re-pricing frequencies of its interest-earning assets and the interest-bearing liabilities which fund them. BankUnited monitors such interest rate gaps and seeks to manage
its interest rate risk by adjusting the re-pricing frequencies of its interest-earning assets and interest-bearing liabilities. Additionally, BankUnited utilizes derivative financial instruments designed to reduce the interest rate risks associated
with its interest-earning assets and interest-bearing liabilities. Based on our current asset/liability model, a moderate or slow rise in interest rates over the next year is not expected to have a significant negative effect on interest rate
margin.



Risks Associated with Investments and
Mortgage-Backed Securities.    BankUnited purchases fixed and adjustable rate mortgage-backed securities and other securities for liquidity, yield and risk management purposes. Changes in market interest rates associated with
BankUniteds investments and mortgage-backed securities could have a material adverse effect on BankUniteds carrying value of its securities. Temporary changes in the carrying value of mortgage-backed securities and other securities
classified as available-for-sale are reflected, net of taxes, as a component of stockholders equity, while other than temporary impairment charges, if any, are recorded in earnings. See Note 3 to the accompanying condensed notes to
consolidated financial statements.



Derivative and Hedging
Activities.    BankUnited uses derivative instruments as part of its interest rate risk management activities to reduce risks associated with its loan origination and borrowing activities. Derivatives used for interest rate
risk management include various interest rate swaps and caps that relate to the pricing of specific on-balance sheet instruments and forecasted transactions. In connection with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities (SFAS 133), we recognize all derivatives as either assets or liabilities on the consolidated balance sheet and report them at fair value with realized and unrealized gains and losses included in either earnings
or in other comprehensive income, depending on the purpose for which the derivative is held and whether the derivative qualifies for hedge accounting.



BankUnited uses interest rate swap and cap agreements that qualify as fair value hedges and cash flow hedges. Fair value hedges are used to hedge fixed
rate debt. BankUnited uses cash flow hedges to hedge interest rate risk associated with variable rate debt.



In connection with its interest rate management activities, BankUnited may use other derivatives as economic hedges of on-balance sheet assets and
liabilities or forecasted transactions which do not qualify for hedge accounting under SFAS 133. Accordingly, these derivatives are reported at fair value on the consolidated balance sheet with realized gains and losses included in earnings.



By using derivative instruments, BankUnited is exposed to
credit and market risk. Credit risk, which is the risk that a counterparty to a derivative instrument will fail to perform, is equal to the extent of the fair value gain in a derivative. Credit risk is created when the fair value of a derivative
contract is positive, since this generally indicates that the counterparty owes us. When the fair value of a derivative is negative, no credit risk exists since



31



---

##### Table of Contents

BankUnited would owe the counterparty. BankUnited minimizes the credit risk in derivative instruments by entering into transactions with high-quality
counterparties as evaluated by management. Market risk is the adverse effect on the value of a financial instrument from a change in interest rates or implied volatility of rates. We manage the market risk associated with interest rate contracts by
establishing and monitoring limits as to the types and degree of risk that may be undertaken. The market risk associated with derivatives used for interest rate risk management activity is fully incorporated into our market risk sensitivity
analysis.



|Item 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



An evaluation of the effectiveness of the design and operation of BankUniteds disclosure controls and procedures was carried out by BankUnited, as
of the end of the period covered by this report, under the supervision and with the participation of BankUniteds management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that BankUniteds disclosure controls and procedures were effective as of December 31, 2005, and provides reasonable assurance that the information required to be disclosed by BankUnited in
reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and that such information is accumulated and communicated to management to
allow timely decisions regarding required disclosures. We may make changes to our disclosure controls and procedures periodically, as we review their design and effectiveness on a continuing basis. No change in internal control over financial
reporting occurred during the quarter ended December 31, 2005, that has materially affected, or is likely to materially affect, such internal control over financial reporting. A controls system, no matter how well designed and operated, cannot
provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.



32



---

##### Table of Contents

PART IIOTHER INFORMATION



|Item 1a. | RISK FACTORS
|-------- | ------------



The following risk factors represent changes and additions to, and should be read in conjunction with, Item 1A. Risk Factors contained in
BankUniteds Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended September 30, 2005.



These are general risk factors affecting BankUnited. They are further described under Item 1. Businessand in Managements Discussion
and Analysis of BankUniteds Annual Report of Form 10-K for the fiscal year ended September 30, 2005.Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and
adversely affect our business operations. Any of these risks could materially and adversely affect our business, financial condition or results of operations. In such cases, you may lose all or part of your investment.



An increase in loan prepayments and on prepayment of loans underlying mortgage backed
securities may adversely affect our profitability.



Prepayment rates are affected by consumer behavior, conditions in the housing and financial markets, general economic conditions and the relative interest rates on fixed-rate and adjustable-rate mortgage loans. Changes in prepayment rates
are therefore difficult for us to predict. Prepayments of our mortgage loans may increase as we continue to expand our mortgage loan originations outside of Florida.



The non-cash portion of our net interest income and repayment risks may grow because of our concentration in option ARM loans.



The majority of the loans we originate have optional
payment characteristics. These loans provide the consumer with several payment options each month and may result in monthly payments being lower than the amount of interest due on the loan. Any unpaid monthly interest is added to the loan balance.
The amount of the negative amortization is a non-cash item that is accrued in net interest income. This amount of net interest income will continue to increase as the negative amortization in our option ARM loans increases.



These loans provide the consumer with the ability to reduce his or her
initial loan payment and limit the amount of annual increase in the required monthly payment. The loans are re-amortized and the loan payments re-calculated at the earlier of (i) five years from inception of the loan; or (ii) a loan
balance that has increased to 115% of the original loan. If a loan negatively amortizes in the initial year the consumer must make the payments up in the later years of the loan. This presents a potential repayment risk if the consumer is unable to
meet the higher payment or to repay the loan through refinancing or sale of the underlying property.



The federal banking regulators have proposed guidance on these loans for public comment that would specify practices that lenders should follow in making
these loans. At this time, the guidance is not final, and we do not know how the final guidance, if any, may affect our option ARM loan production. Any regulatory limitation may affect the mortgage and residential real estate markets and limit our
ability to produce loans at our current pace.



Changes in economic
conditions could cause an increase in delinquencies and non-performing assets, including loan charge-offs, and depress our income and growth.



Our loan portfolios include many real estate secured loans, demand for which may decrease during economic downturns as a result of, among other things, an
increase in unemployment, a decrease in real estate



33



---

##### Table of Contents

values, a slowdown in housing price appreciation or increases in interest rates. These factors could depress our earnings and consequently our financial
condition because:



| |  |  | customers may not want or need our products and services;
| | - |  | ---------------------------------------------------------



| |  |  | borrowers may not be able to repay their loans;
| | - |  | -----------------------------------------------



| |  |  | the value of the collateral securing our loans to borrowers may decline; and
| | - |  | ----------------------------------------------------------------------------



| |  |  | the quality of our loan portfolio may decline.
| | - |  | ----------------------------------------------



Any of the latter three scenarios could cause an increase in delinquencies and non-performing assets or require us to charge-off a percentage of our loans
and/or increase our provisions for loan losses, which would reduce our income.



Competition with other financial institutions could adversely affect our profitability.



The banking and financial services industry is very competitive. Legal and regulatory developments have made it easier for new and sometimes unregulated
competitors to compete with us. Consolidation among financial service providers has resulted in fewer very large national and regional banking and financial institutions holding a large accumulation of assets. These institutions generally have
significantly greater resources, a wider geographic presence or greater accessibility to capital, compared to us. Our competitors sometimes are also able to offer more services, more favorable pricing or greater customer convenience than we do. In
addition, our competition has grown from new banks and other financial services providers that target our existing or potential customers. As consolidation continues among large banks, we expect additional smaller institutions to try to exploit our
market.



We face substantial competition for both deposits and
loans. We compete for deposits with banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds and mutual funds. These competitors may offer higher interest rates
than we do, which could decrease the deposits that we attract or require us to increase our rates to attract new deposits. Increased competition for deposits could increase our cost of funds and adversely affect our ability to generate the funds
necessary for our lending operations.



Competition for loans
comes principally from other banks, savings institutions, mortgage banking companies and other lenders. In originating mortgage loans, we compete with real estate investment trusts, investment banking firms, savings and loan associations, banks,
mortgage bankers, insurance companies, mutual funds, other lenders, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association and other entities purchasing mortgage loans.
This competition could decrease the number and size of loans that we make and the interest rates and fees that we receive on these loans.



The demand for residential mortgage loans in recent years has made it more difficult and expensive to recruit and retain the services of qualified lending
personnel. Increased competition for loan officers and other personnel could hinder our ability to close loans and to improve our results of operations.



Technological developments have allowed competitors, including some non-depository institutions, to compete more effectively in local markets, and have
expanded the range of financial products, services and capital available to our target customers. If we are unable to implement, maintain and use such technologies effectively, we may not be able to offer products or achieve cost-efficiencies
necessary to compete in our industry. In addition, some of these competitors have fewer regulatory constraints and lower cost structures.



We are dependent upon the services of our management team and qualified personnel.



We are dependent upon the ability and experience of a number of our key management personnel who have substantial experience
with our operations, the financial services industry and the markets in which we offer our



34



---

##### Table of Contents

services. It is possible that the loss of the services of one or more of our senior executives or key managers would have an adverse effect on our
operations.



We depend on our account executives and loan
officers to attract borrowers by, among other things, developing relationships with commercial and consumer clients, mortgage companies, real estate agents, brokers and others. We believe that these relationships lead to repeat and referral
business. The market for skilled account executives and loan officers is highly competitive and historically has experienced a high rate of turnover. In addition, if a manager leaves our company, other members of the managers team may follow.
Competition for qualified account executives and loan officers may lead to increased hiring and retention costs.



Our success also depends on our ability to continue to attract, manage and retain other qualified personnel as we grow. We cannot assure you that we will
continue to attract or retain such personnel.



Adjustments for loans held
for sale may adversely affect our profits.



In our
financial statements we must revalue, on a quarterly basis, loans that we originate and classify as held for sale to the lower of their cost or market value. Depending on market conditions, such adjustments may adversely affect our results of
operations. The amount of total loans held for sale may change if we determine to originate a larger volume of loans with the intent of selling those loans.



If we are unable to maintain or expand our volume of business with independent brokers, our loan origination business may decrease.



We originate a high volume of residential mortgage loans through a network
of mortgage brokers. We follow careful procedures to select the brokers with whom we establish relationships and the brokers are not required to work exclusively with us. Our competitors also have relationships with the brokers in our network and
actively compete with us to obtain loans and increase broker relationships. We cannot assure you that we will be successful in maintaining our existing relationships or expanding our broker networks. Failure to do so could negatively affect the
volume and profitability of our mortgage loan originations, and thus adversely affect our business, financial condition, liquidity and results of operations.



Reduced demand in the secondary market for our loans indexed to the MTA (MTA loans) could adversely affect our financial condition and operating results.



We may periodically sell our MTA loans in the secondary
market. A prolonged period of secondary market illiquidity could have an adverse effect on our earnings and capital levels. Historically, the Company has held ARM loans in its portfolio; however, the industry-wide increase in the origination volume
of adjustable-rate mortgages has facilitated the development of a secondary market for these products and has allowed us to sell a portion of our adjustable-rate mortgage loans into the market. A downturn in customer demand for this product or a
prolonged period of secondary market illiquidity could have an adverse effect on our balance sheet and earnings.



Loan sales or securitizations may be difficult or less profitable to execute if our loans are defective.



In connection with the sale and securitization of our loans, we are required
to make a variety of customary representations and warranties regarding our company and the loans. We are subject to these representations and warranties for the life of the loan and they relate to, among other things:



| |  |  | compliance with applicable laws;
| | - |  | --------------------------------



| |  |  | eligibility for whole-loan sale or securitization;
| | - |  | --------------------------------------------------





35



---

##### Table of Contents

| |  |  | conformance with underwriting standards;
| | - |  | ----------------------------------------



| |  |  | the accuracy of the information in the loan documents and loan file; and
| | - |  | ------------------------------------------------------------------------



| |  |  | the characteristics and enforceability of the loan.
| | - |  | ---------------------------------------------------



We may not be able to sell a loan that does not comply with these representations and warranties, or such sale may require greater effort or expense. If
such loans are sold before we detect non-compliance, we may be obligated to repurchase the loan and bear any associated loss directly, or we may be obligated to indemnify the purchaser against any such losses. These circumstances could adversely
impact the profitability of loan sale or securitization transactions and our financial results.



Failure to pay interest on our debt may adversely impact us.



Deferral or default in making interest payments on debt could affect our ability to fund our operations and pay dividends on our common stock. We have the right to defer interest payments on our trust preferred
securities and junior subordinated debentures for up to 20 consecutive quarters. However, if we elect to defer interest payments, all deferred interest must be paid before we may pay dividends on our capital stock. Deferral of interest payments
could also cause a decline in the market price of our Class A Common Stock.



We also have borrowings from the Federal Home Loan Bank of Atlanta (the FHLB). Such borrowings from the FHLB are secured by a pledge of our residential first mortgage loans and other eligible collateral.
Our total credit line with the FHLB is approximately 40% of the Banks assets at each prior quarters end. Failure to pay interest or principal on this debt could adversely affect our business by causing us to lose our collateral and the
FHLB as a funding source. In addition to our FHLB borrowings, we also have repurchase agreements which are secured by mortgage-backed securities or other investment securities.



We have outstanding $120 million of Convertible Senior Notes that mature in March 2034 and bear interest at an annual rate
of 3.125% payable semiannually. Upon conversion of the notes we will deliver cash for 100% of the principal amount of the notes and may, at our discretion, in lieu of delivering shares of Class A Common Stock, deliver cash or a combination of
cash and shares of Class A Common Stock for the profit shares. We may redeem for cash some or all of the notes at any time on or after March 1, 2011 at 100% of the principal amount of the notes plus any accrued and unpaid interest,
contingent interest and additional amounts, if any. Holders may require us to purchase all or part of the notes for cash at a purchase price of 100% of the principal amount of the notes plus accrued and unpaid interest including contingent interest
and additional amounts, if any, on March 1, 2011, March 1, 2014, March 1, 2019, March 1, 2024 and March 1, 2029 or upon the occurrence of a fundamental change. The notes are senior unsecured obligations,
ranking equally in right of payment with all of our existing and future unsecured senior indebtedness. The notes are effectively subordinated to our entire senior secured indebtedness and all indebtedness and liabilities of its subsidiaries.



If we do not manage our growth effectively, our financial performance could
be harmed.



In recent years, we have experienced rapid
growth that has placed certain pressures on our management, administrative, operational and financial infrastructure. Many of our employees have limited experience with us and a limited understanding of our systems and controls. As we grow, we need
to hire additional associates and management in an intensely competitive hiring environment. Additionally, we must upgrade and expand our operational, managerial and financial systems and controls. Plans for the continued development and growth of
our business in the future will also require numerous resources, systems development and capital. We cannot assure you that we will be able to:



| |  |  | identify and hire qualified employees;
| | - |  | --------------------------------------



| |  |  | expand our systems effectively;
| | - |  | -------------------------------



| |  |  | allocate our human resources optimally; or
| | - |  | ------------------------------------------



36



---

##### Table of Contents

| |  |  | meet our capital needs.
| | - |  | -----------------------



The failure to manage growth effectively could significantly harm our business, financial condition, liquidity and results of operations.



We may not be able to maintain and profit from our growth.



We may use some of the proceeds that we receive from offerings of securities
for expansion activities. These activities may include additional banking offices and facilities, additional employees, new products and distribution channels and marketing strategies and acquisitions (although no specific acquisition is currently
contemplated). Our ability to continue to grow depends, in part, on our ability to hire and retain qualified personnel, open new branch locations, successfully attract deposits to those locations, and identify loan and investment opportunities. We
also depend on maintaining productive relationships with the brokers through whom we generate the majority of our one-to-four family residential mortgage loans that we originate. Our ability to profit from our growth also will depend on whether we
can efficiently fund our growth, control our costs and maintain asset quality, as well as on factors beyond our control, such as economic conditions and interest rate trends. If we are unable to sustain our growth, our earnings could be adversely
affected.



Our future growth is dependent upon our ability to recruit
additional, qualified employees, especially seasoned relationship bankers.



Our market areas are experiencing a period of rapid growth, placing a premium on highly qualified employees in a number of industries, including the financial services industry. Our business plan includes, and is
dependent upon, hiring and retaining highly qualified and motivated executives and employees at every level. In particular, our success has been partly the result of our managements ability to seek and retain highly qualified relationship
bankers who have long-standing relationships in their communities. These professionals bring with them valuable customer relationships, and have been an integral part of our ability to attract deposits and to expand rapidly in our market areas. We
expect to experience substantial competition in our endeavor to identify, hire and retain the top-quality employees that we believe are key to our future success. If we are unable to hire and retain qualified employees, we may not be able to grow
our franchise and successfully execute our business strategy.



We may have
difficulty managing our growth, which may divert resources and limit our ability to successfully expand our operations.



Our rapid growth has placed, and it may continue to place, significant demands on our operations and management. Our future success will depend on the
ability of our officers and other key employees to continue to implement and improve our operational, credit, financial, management and other internal risk controls and processes and our reporting systems and procedures, and to manage a growing
number of client relationships. We may not successfully implement improvements to our management information and control systems and control procedures and processes in an efficient or timely manner and may discover deficiencies in existing systems
and controls. In particular, our controls and procedures must be able to accommodate an increase in expected loan volume and the infrastructure that comes with new branches and banks. Thus, our growth strategy may divert management from our existing
businesses and may require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to manage future expansion in our operations, we may experience compliance and operational problems, have to
slow the pace of growth, or have to incur additional expenditures beyond current projections to support such growth, anyone of which could adversely affect our business.



The residential-mortgage-origination business is a cyclical industry, has recently been at its highest levels ever and may decline, which
could reduce the number of loans we originate and could adversely impact our business.



The residential-mortgage-origination business has historically been a cyclical industry, enjoying periods of strong growth and profitability followed by periods of shrinking volumes and industry-wide losses. The
primary



37



---

##### Table of Contents

influence on our originations is the aggregate demand for loans in the United States, which is affected by prevailing interest rates. A continued rise in
interest rates may adversely affect our results of operations.



We are
subject to extensive regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to receive dividends from the Bank.



The Bank is subject to extensive regulation, supervision and examination by
the Office of Thrift Supervision (OTS) as its primary federal regulator, and by the Federal Deposit Insurance Corporation (FDIC), which insures its deposits. As a member of the FHLB, the Bank must also comply with applicable regulations of the
Federal Housing Finance Board and the FHLB. Regulation by these agencies is intended primarily for the protection of our depositors and the deposit insurance fund and not for the benefit of our stockholders. The Banks activities are also
regulated under consumer protection laws applicable to our lending, deposit and other activities. A sufficient claim against us under these laws could have a material adverse effect on our results.



Among other things, the Banks ability to pay cash dividends to the
holding company is limited by these regulations. The Bank must notify the OTS in advance of any proposed distribution, and may not pay dividends or distribute any capital assets if the distribution is disapproved by the OTS. OTS regulations also
impose certain minimum capital requirements that affect the amount of cash available for the payment of dividends by the Bank. Because income is received by us from the Bank through dividend payments, our ability to service the debt issued by us and
dividends on our capital stock is limited by the financial condition of the Bank.



The Banks ability to make capital distributions is subject to regulatory limitations. Generally the Bank may make a capital distribution if notice of the proposed capital distribution is filed with the OTS at
least 30 days before the board of directors approves the distribution, and the OTS does not disapprove the notice. The OTS may disapprove the notice if it determines that the Bank would be undercapitalized after the proposed distribution, that the
proposed distribution raises safety and soundness concerns or that the proposed distribution would violate a statute, regulation or agreement with the OTS or any condition imposed by the OTS. The Banks ability to make such distribution by
filing a notice, instead of an application for approval, depends on maintaining eligibility for expedited status. The Bank currently qualifies for expedited status, but there can be no assurance that it will maintain its current status.
In addition, the Bank would be required to file an application for approval of the proposed distribution, instead of a notice, if the total amount of all capital distributions for the calendar year, including the proposed distribution, would exceed
the Banks net income for that year plus retained net income for the preceding two years.



FDIC regulations also require all insured depository institutions to remain in a safe and sound condition, as defined in regulations, as a condition of federal deposit insurance.



OTS regulations also restrict our ability to open new banking offices. We
must publish notice of the proposed office in area newspapers and, if objections are made, the new office may be delayed or disapproved.



Our operations could be harmed by a challenging legal climate.



Class action or other litigation against lenders in certain regions or related to particular products, services or practices may arise from time to time,
even if the activities subject to complaint are not unlawful. Such claims may be brought, for example, under state or federal consumer protection laws. The damages and penalties claimed in these types of matters can be substantial. We may also be
adversely affected by the actions of our brokers, or if another company in our industry engages in criticized practices. Negative publicity may result in more regulation and legislative scrutiny of industry practices as well as more litigation,
which may further increase our cost of doing business and adversely affect our profitability by impeding our ability to market our products, requiring us to change them or increasing the regulatory burdens under which we operate.



38



---

##### Table of Contents

Changes in the regulation of financial services companies and housing government-sponsored enterprises could adversely
affect our business.



Proposals for further regulation of
the financial services industry are continually being introduced in Congress. The agencies regulating the financial services industry also periodically adopt changes to their regulations. Proposals that are now receiving a great deal of attention
include regulation of government sponsored-entities, consumer protection initiatives relating to bank overdraft practices, security of customer information, marketing practices, the Real Estate Settlement Procedures Act, predatory lending,
non-traditional mortgage loans and risk management for commercial real estate loans. Currently governmental agencies are reviewing non-traditional mortgage loan products, which they have indicated include option ARM loans. It is possible that one or
more legislative proposals may be adopted or regulatory changes may be made that would have an adverse effect on our business.



Regulatory authorities have extensive discretion in their supervisory activities that could be used to restrict our business. Changes in the laws or
regulations that govern us could further restrict our operations, impose burdensome requirements and increase our expenses which could impair our ability to meet our obligations.



Our REIT subsidiary may fail to qualify as a real estate investment trust, which would adversely affect our future after-tax earnings.



Our REIT subsidiary, BU REIT, is organized and operated
to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the Code). Although it is intended that our REIT subsidiary be owned and organized and operated in such a manner, its continued
qualification as a real estate investment trust for federal income tax purposes is not guaranteed. No assurance can be given that new legislation, Treasury regulations, administrative interpretations or court decisions will not significantly change
the tax laws with respect to qualifications as a real estate investment trust or the federal income tax consequences of such qualification in a way that would adversely affect our REIT subsidiarys ability to qualify as a real estate investment
trust. Any such legislation could cause a tax event that would adversely affect our future consolidated after-tax earnings.



|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



At BankUniteds annual meeting of stockholders held on January 27, 2006, the stockholders voted on the election of four Class I directors to
serve until 2009.



The stockholders voted to elect the nominees
for Class I directors as follows:



|                 |  |           |  |               
|---------------- |  | --------- |  | --------------
|                 |  | Votes For |  | Votes Withheld
|Tod Aronovitz    |  | 5,252,671 |  | 12,211        
|Marc D. Jacobson |  | 4,947,533 |  | 317,349       
|Hardy C. Katz    |  | 4,994,830 |  | 270,052       
|Ramiro A. Ortiz  |  | 4,973,562 |  | 291,320       



39



---

##### Table of Contents

|Item 6. | EXHIBITS
|------- | --------



(a) Exhibits.



|     |  |                                                                                                                                                                                    
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Amendment to Employment Agreement between BankUnited and Alfred R. Camner.*                                                                                                        
|     | 
|10.2 |  | Amendment to Employment Agreement between the Bank and Alfred R. Camner.*                                                                                                          
|     | 
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302, of the Sarbanes-Oxley Act of 2002.                                                                           
|     | 
|31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302, of the Sarbanes-Oxley Act of 2002.                                                                           
|     | 
|32   |  | Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

---

|* | Compensatory plans or arrangements.
|- | -----------------------------------



40



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.



BANKUNITED FINANCIAL CORPORATIONBy:

/S/    HUMBERTO L.
LOPEZHumberto L. Lopez Senior Executive Vice President and Chief Financial Officer




Date: February 9, 2006



By:

/S/    BERNARDO M.
ARGUDINBernardo M. Argudin Executive Vice President and Principal Accounting Officer




41



---

##### Table of Contents

Exhibit Index



|            |  |                                                                                                                                                                                    
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                        
|            | 
|10.1        |  | Amendment to Employment Agreement between BankUnited and Alfred R. Camner.*                                                                                                        
|            | 
|10.2        |  | Amendment to Employment Agreement between the Bank and Alfred R. Camner.*                                                                                                          
|            | 
|31.1        |  | Certification of the Chief Executive Officer pursuant to Section 302, of the Sarbanes-Oxley Act of 2002.                                                                           
|            | 
|31.2        |  | Certification of the Chief Financial Officer pursuant to Section 302, of the Sarbanes-Oxley Act of 2002.                                                                           
|            | 
|32          |  | Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

---

|* | Compensatory plans or arrangements.
|- | -----------------------------------



42