Use these links to rapidly review the documentTABLE OF CONTENTS Item 8. Financial Statements and Supplementary Data



Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K



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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
Commission File Number: 001-35039



BankUnited, Inc.(Exact name of registrant as specified in its charter)



Delaware(State or other jurisdiction of
incorporation or organization)

27-0162450(I.R.S. Employer Identification No.)14817 Oak Lane, Miami Lakes, FL(Address of principal executive offices)

33016(Zip Code)


(305) 569-2000(Registrant's telephone number, including area code)

Securities
registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registeredCommon Stock, $0.01 par value

New York Stock Exchange


Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No ý

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 o    No ý

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a "smaller reporting
company."

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a
smaller reporting company)

Smaller reporting company o


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

The registrant closed the initial public offering of its common stock on February 2, 2011. Accordingly, as of June 30, 2010, there was no public
trading market for the registrant's common stock.

The
number of outstanding shares of the registrant's common stock, $0.01 par value, as of March 23, 2011, was 97,238,307.

DOCUMENTS INCORPORATED BY REFERENCE: None



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BANKUNITED, INC.
Form 10-K
For the Year Ended December 31, 2010

TABLE OF CONTENTS



PagePART IItem 1.

Business

1Item 1A.

Risk Factors

21Item 1B.

Unresolved Staff Comments

30Item 2.

Properties

30Item 3.

Legal Proceedings

30Item 4.

Removed and Reserved

30PART IIItem 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

31Item 6.

Selected Consolidated Financial Data

32Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

35Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

93Item 8.

Financial Statements and Supplementary Data

F-1Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

94Item 9A.

Controls and Procedures

94Item 9B.

Other Information

94PART IIIItem 10.

Directors, Executive Officers and Corporate Governance

96Item 11.

Executive Compensation

101Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

123Item 13.

Certain Relationships and Related Transactions, and Director Independence

127Item 14.

Principal Accountant Fees and Services

130PART IVItem 15.

Exhibits and Financial Statement Schedules

131Signatures

134


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Forward-Looking Statements

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

These
forward-looking statements are based on management's current views with respect to future results, and are subject to risks and uncertainties. Forward-looking statements are based
on beliefs and assumptions made by management using currently-available information, such as market and industry materials, experts' reports and opinions, and current financial trends. These
statements are only predictions and are not guarantees of future performance. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially
from those contemplated by a forward-looking statement. These risks and uncertainties include, without limitation:



Additional
factors are set forth in the Company's filings with the Securities and Exchange Commission (the "SEC"), including this Annual Report on Form 10-K.

Forward-looking
statements speak only as of the date on which they are made. The Company expressly disclaims any obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise.

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PART I

Item 1.    Business

Summary

BankUnited, Inc. is a savings and loan holding company with two wholly-owned subsidiaries: BankUnited, which we refer to as the
Bank, which is one of the largest independent depository institutions headquartered in Florida by assets, and BankUnited Investment Services, Inc., which we refer to as BankUnited Investment
Services, a Florida insurance agency which provides comprehensive wealth management products and financial planning services. BankUnited is a federally-chartered, federally-insured savings association
headquartered in Miami Lakes, Florida, with $10.9 billion of assets, more than 1,200 professionals and 81 branches in 13 counties at December 31, 2010. The Company's goal is to build a
premier, large regional bank with a low-risk, long-term value-oriented business model focused on small and medium sized businesses and consumers. We endeavor to provide
personalized customer service and offer a full range of traditional banking products and financial services to both our commercial and consumer customers, who are predominantly located in Florida.

BankUnited, Inc.
was organized by a management team led by our Chairman, President and Chief Executive Officer, John A. Kanas, on April 28, 2009 and was initially
capitalized with $945.0 million by a group of investors. On May 21, 2009, BankUnited was granted a savings association charter and the newly formed bank acquired substantially all of the
assets and assumed all of the non-brokered deposits and substantially all other liabilities of BankUnited, FSB, or the Failed Bank, from the Federal Deposit Insurance Corporation, or the
FDIC, in a transaction which we refer to as the Acquisition. Concurrently with the Acquisition, we entered into two loss sharing agreements, or the Loss Sharing Agreements, which cover certain legacy
assets, including the entire legacy loan portfolio and other real estate owned, or OREO, and certain purchased investment securities, including private-label mortgage-backed securities and
non-investment grade securities. We refer to assets covered by the Loss Sharing Agreements as Covered Assets (or, in certain cases, Covered Loans or Covered Securities).

Since
the Bank's establishment in May 2009, we have pursued our new strategy and as part of this strategy we have recruited a new executive management team, substantially enhanced our
middle management team, redesigned the Bank's underwriting functions, and have begun the process of improving the Bank's information technology systems and optimizing our existing branch network. For
the year ended December 31, 2010, the Company was one of the most profitable and well-capitalized bank holding companies in the United States, having earned 1.7% on its average
assets and 15.4% on its average common stockholder's equity, and achieved a 47.0% efficiency ratio. BankUnited's tier 1 leverage ratio was 10.3% and its tier 1 risk-based
capital ratio was 41.3% at December 31, 2010. We intend to invest our excess capital to grow opportunistically both organically and through acquisitions.

Our
management team is led by Mr. Kanas, a veteran of the banking industry who built North Fork Bancorporation, or North Fork, into a leading regional bank based in New York.

On
February 2, 2011, we completed the initial public offering of 33,350,000 shares of our common stock for which we received proceeds, after deducting underwriting discounts and
estimated offering expenses, of approximately $97.6 million. We refer to this transaction as the IPO. Prior to the IPO we were a direct, wholly owned subsidiary of BU Financial
Holdings LLC, or the LLC, a Delaware limited liability company, and whose common equity interests are referred to herein as units. Immediately prior to the consummation of the IPO,
the LLC was liquidated and all interests in us were distributed to the members of the LLC in accordance with its amended and restated limited liability company agreement dated as of
May 21, 2009, or the LLC Agreement. All of the transactions necessary to effect the liquidation are collectively referred to herein as the "Reorganization."

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The Acquisition



On May 21, 2009, BankUnited entered into a purchase and assumption agreement, or the Purchase and Assumption Agreement, with the
FDIC, Receiver of the Failed Bank, to acquire substantially all of the assets and assume all of the non-brokered deposits and substantially all other liabilities of the Failed Bank.
Excluding the effects of acquisition accounting adjustments, BankUnited acquired $13.6 billion of assets and assumed $12.8 billion of liabilities. The fair value of the assets acquired
was $10.9 billion and the fair value of the liabilities assumed was $13.1 billion. BankUnited received a net cash consideration from the FDIC in the amount of $2.2 billion.

The
Acquisition consisted of assets with a fair value of $10.9 billion, including $5.0 billion of loans (with a corresponding unpaid principal balance, or UPB, of
$11.2 billion), a $3.4 billion FDIC indemnification asset, $538.9 million of investment securities, $1.2 billion of cash and cash equivalents, $177.7 million of
foreclosed assets, $243.3 million of Federal Home Loan Bank, or FHLB, stock and $347.4 million of other assets. Liabilities with a fair value of $13.1 billion were also assumed,
including $8.3 billion of non-brokered deposits, $4.6 billion of FHLB advances, and $112.2 million of other liabilities.

Concurrently
with the Acquisition, the Bank entered into the Loss Sharing Agreements with the FDIC that cover certain legacy assets, including the entire loan portfolio and OREO, and
certain purchased investment securities, including private-label mortgage-backed securities and non-investment grade securities. The Bank acquired other BankUnited, FSB assets that are not
covered by the Loss Sharing Agreements with the FDIC including cash, certain investment securities purchased at fair market value and other tangible assets. The Loss Sharing Agreements do not apply to
subsequently acquired, purchased or originated assets. At December 31, 2010, the Covered Assets consisted of assets with a book value of $3.8 billion. The total UPB (or, for investment
securities, unamortized cost basis) of the Covered Assets at December 31, 2010 was $8.2 billion.

Pursuant
to the terms of the Loss Sharing Agreements, the Covered Assets are subject to a stated loss threshold whereby the FDIC will reimburse the Bank for 80% of losses up to the
$4.0 billion stated threshold and 95% of losses in excess of the $4.0 billion stated threshold, calculated, in each case, based on UPB (or, for investment securities, unamortized cost
basis) plus certain interest and expenses. The carrying value of the FDIC indemnification asset at December 31, 2010 was $2.7 billion. The Bank will reimburse the FDIC for its share of
recoveries with respect to losses for which the FDIC paid the Bank a reimbursement under the Loss Sharing Agreements. The FDIC's obligation to reimburse the Company for losses with respect to the
Covered Assets began with the first dollar of loss incurred. We have received $1.3 billion from the FDIC in reimbursements under the Loss Sharing Agreements for claims filed for losses incurred
as of December 31, 2010. See Item 1 "BusinessThe AcquisitionLoss Sharing Agreements."

Several
elements of our Acquisition are favorable relative to other FDIC-assisted transactions and position the Company to generate significant value. At the time of the
Acquisition, bank failures were on the rise and the U.S. Treasury's unprecedented Supervisory Capital Assessment Program for the largest U.S. bank holding companies was underway. Due in part to the
distress in the banking system, economic uncertainty and poor capital markets conditions, the Covered Loans and OREO were purchased by the Bank in a bidding process for 76.5% of their
$11.4 billion in UPB as of the Acquisition date, which represented the fair market value for those assets at that time. The discount was one of the largest relative to other
FDIC-assisted transactions and reflected, in addition to the abovementioned factors, the poor quality of the assets acquired as noted by the ratio of non-performing assets to
total assets of 23.5% at May 21, 2009. In addition, our bid included the granting of a warrant to the FDIC, allowing the FDIC to participate in the economic upside of the transaction if certain

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performance
levels are achieved. Along with the pricing terms, the Loss Sharing Agreements and the size of the transaction enable the Company to generate significant capital even in severe loss
scenarios. For example, in the worst case scenario of a 100% credit loss on all Covered Loans and OREO, we would recover no less than 89.7% of the UPB as of the Acquisition date, assuming compliance
with the terms of the Loss Sharing Agreements.

Furthermore,
the Loss Sharing Agreements include attractive provisions that optimize our flexibility and reduce our risk associated with the Covered Assets, including the
following:



We
view our relationship with the FDIC as a long-term partnership in which both parties are economically aligned to minimize credit losses on the Covered Assets.



Concurrently with the Acquisition, the Bank entered into the Loss Sharing Agreements with the FDIC that cover certain legacy assets,
including the entire loan portfolio and OREO, and certain purchased investment securities, including private-label mortgage-backed securities
and non-investment grade securities. At December 31, 2010, the Covered Assets consisted of assets with a book value of $3.8 billion. The total UPB (or, for investment
securities, unamortized cost basis) of the Covered Assets at December 31, 2010 was $8.2 billion. The Bank acquired other BankUnited, FSB assets that are not covered by the Loss Sharing
Agreements with the FDIC including cash, certain investment securities purchased at fair market value and other tangible assets. The Loss Sharing Agreements do not apply to subsequently acquired,
purchased or originated assets.

Pursuant
to the terms of the Loss Sharing Agreements, the Covered Assets are subject to a stated loss threshold whereby the FDIC will reimburse the Bank for 80% of losses up to the
$4.0 billion stated threshold and 95% of losses in excess of the $4.0 billion stated threshold, calculated, in each case, based on UPB (or, for investment securities, unamortized cost
basis) plus certain interest and expenses. The carrying value of the FDIC indemnification asset at December 31, 2010 was $2.7 billion. The Bank will reimburse the FDIC for its share of
recoveries with respect to losses for which the FDIC paid the Bank a reimbursement under the Loss Sharing Agreements. The FDIC's obligation to reimburse the Company for losses with respect to the
Covered Assets began with the first dollar of loss incurred.

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The
Covered Securities acquired in connection with the Acquisition include certain private-label mortgage-backed securities and non-investment grade securities. The Covered
Loans acquired in connection with the Acquisition include all:



The
Loss Sharing Agreements consist of a single family shared-loss agreement or the Single Family Shared-Loss Agreement, and a commercial and other loans
shared-loss agreement, or the Commercial Shared-Loss Agreement. The Single Family Shared-Loss Agreement provides for FDIC loss sharing and the Bank's reimbursement
for recoveries to the FDIC for ten years from May 21, 2009 for single family residential loans. The Commercial Shared-Loss Agreement provides for FDIC loss sharing for five years
from May 21, 2009 and the Bank's reimbursement for recoveries to the FDIC for eight years from May 21, 2009 for all other Covered Assets.

Under
the Purchase and Assumption Agreement, the Bank may sell up to 2.5% of the Covered Loans based on the UPB at Acquisition, or approximately $280.0 million, on an annual basis
without prior consent of the FDIC. Any losses incurred from such loan sale are covered under the Loss Sharing Agreements. Any loan sale in excess of the annual 2.5% of the Covered Loans requires
approval from the FDIC to be eligible for loss share coverage. However, if the Bank seeks to sell residential or non-residential loans in excess of the agreed 2.5% threshold in the nine
months prior to the tenth anniversary or the fifth anniversary, respectively, and the FDIC refuses to consent, then the Single Family Shared-Loss Agreement and the Commercial
Shared-Loss Agreement will be extended for two years after their respective anniversaries. The terms of the Loss Sharing Agreements are extended only with respect to the loans to be
included in such sales. The Bank will have the right to sell all or any portion of such loans without FDIC consent at any time within the nine months prior to the respective extended termination
dates, and any losses incurred will be covered under the Loss Sharing Agreements. If exercised, this final sale mechanism ensures no residual credit risk in our Covered Loan portfolio that would
otherwise arise from credit losses occurring after the five- and ten-year periods, respectively.

The
Loss Sharing Agreements require us to follow specific servicing procedures and to undertake loss mitigation efforts. Additionally, the FDIC has information rights with respect to our
performance under the Loss Sharing Agreements, requiring us to maintain detailed compliance records.

We
have received $1.3 billion from the FDIC in reimbursements under the Loss Sharing Agreements for claims filed for losses incurred as of December 31, 2010.

Our Market Area

We view our market as the southeast region of the United States with a current focus on Florida, and in particular the Miami
metropolitan statistical area, or MSA. We believe Florida represents a long-term attractive banking market.

Florida's
economy and banking industry continue to face significant challenges. Since 2007, many Florida banks have experienced capital constraints and liquidity challenges as a result
of significant losses from loans with poor credit quality and investments that have had sizeable decreases in value or realized losses. The undercapitalization and increased regulation of the banking
sector have caused

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many
banks to reduce lending to new and existing clients and focus primarily on improving their balance sheets, putting pressure on commercial borrowers to look for new banking relationships. As of
December 31, 2010, 45 banks with $32.8 billion in assets have failed since 2008 in Florida. Given our competitive strengths, including an experienced management team, robust capital
position and scalable platform, we believe these challenges present significant acquisition and organic growth opportunities for us.

Over
time, we will look to expand our branch network outside of Florida in selected markets such as New York, where our management team has had significant experience and has the
competitive advantage of having managed one of the most successful regional banks in that market. However, for a limited period of time, certain of our executive officers are subject to
non-compete agreements which may restrict them from operating in New York, New Jersey and Connecticut.

Products and Services



General.Our primary lending focus is to serve consumers, commercial and middle-market businesses and their executives with a variety
of financial
products and services, while maintaining a strong and disciplined credit policy and procedures.

We
offer a full array of lending products that cater to our customers' needs including small business loans, residential mortgage loans, commercial real estate loans, equipment loans,
term loans, asset-backed loans, letters of credit and commercial lines of credit. Our lending products, policies and practices are not the same as that of the BankUnited, FSB. In particular, we do not
originate or purchase negatively amortizing residential loans. As part of our loan activities, we also purchase performing residential loans on a national basis.

Concurrently
with the Acquisition, nearly all lending was stopped until we developed a new lending policy which we implemented in October 2009. As of December 31, 2010, the loan
portfolio includes $548.9 million in loans originated or purchased since the Acquisition. This includes $266.6 million in commercial loans, $163.6 million in commercial real
estate loans and $118.8 million in residential and consumer loans. In addition, we have undrawn commitments of $149.4 million, primarily on commercial loans.

Commercial loans.At December 31, 2010, $213.6 million, or 38.9%, of our total new bank loan portfolio consisted of
commercial loans.
Our commercial loans, which are generally made to small and middle-market businesses primarily in Florida, include equipment loans, lines of credit, acquisition finance credit facilities and an array
of Small Business Administration product offerings, and typically have maturities of 5 years or less.

Commercial real estate loans.At December 31, 2010, $163.6 million, or 29.8%, of our new bank loan portfolio consisted of
commercial
real estate loans. We offer term financing for the acquisition or refinancing of properties, primarily rental apartments, industrial properties, retail shopping centers and free-standing
buildings, office buildings and hotels located primarily in Florida. Other products that we provide include secured lines of credit, acquisition, development and construction loan facilities and
construction financing.

Residential real estate loans.At December 31, 2010, $113.4 million, or 20.7%, of our new bank loan portfolio consisted of
both
purchased ($84.5 million) and originated ($28.9 million) residential real estate loans. We have decided to purchase loans to supplement our nascent mortgage origination platform and to
geographically diversify our loan portfolio given the current credit market environment of the non-agency mortgage market in Florida. While the credit parameters we use for purchased loans
are substantially similar to the underwriting guidelines we use for originated loans, differences include:

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(i) loans
are purchased on a nationwide basis, while originated loans are currently limited to Florida; (ii) purchased loans, on average, have a higher principal balance than originated
loans; and (iii) we consider payment history in selecting which seasoned loans to purchase, while such information is not available for originated loans. We provide
one-to-four family residential real estate loans with terms ranging from 10 to 40 years, with either fixed or adjustable interest rates. Loans are currently offered to
customers primarily in Florida through BankUnited branches and loan officers. We do not originate subprime loans or option ARM loans. Loans are typically closed-end first lien loans for
purposes of property purchased, or for refinancing existing loans with or without cashout. The majority of our loans are owner occupied, full documentation loans.

Consumer loans.At December 31, 2010, $5.3 million, or 1.0%, of our total new bank loan portfolio consisted of consumer
loans. We offer
consumer loans to our customers primarily in Florida for personal, family and household purposes, including home equity loans, auto, boat and personal installment loans.

Lease financing.In the fourth quarter of 2010, we acquired two leasing businesses. We now provide secured loan and lease programs for
small and
medium sized businesses on a national basis through United Capital Business Lending. These loans and leases are typically used for equipment purchases and upgrades, business expansion and acquisition
purposes. Through Pinnacle Public Finance, we also offer tax-exempt leasing to municipalities and governmental entities nationwide for the financing of essential-use assets.



The fundamental principles of the Bank's credit policy and procedures are to maintain high quality credit standards, which enhance the
long term value of the Bank to its
customers, employees, stockholders and communities. Credit quality is a key corporate objective that is managed in concert with other key objectives including volume growth, earnings and expense
management. We recognize that our credit policy and procedures are dynamic and responsive to the market place. It is the foundation of our credit culture.

The
Board of Directors of the Bank is responsible for the safety and soundness of the Bank. As such, they are charged to monitor the efforts of the Bank's management activities. Since
lending represents risk exposure, our Board and its duly appointed committees seek to ensure that the Bank maintains high credit quality standards.

The
Bank has established asset oversight committees to administer the loan portfolio. These committees include: (i) the Enterprise Risk Management Committee; (ii) the
Credit Risk Management Committee; (iii) the Asset Recovery Committee; and (iv) the Criticized Asset Committee. These committees meet at least quarterly to review and approve the lending
activities of the Bank.

The
credit approval process at the Bank provides for the prompt and thorough underwriting and approval or decline of loan requests. The approval method used is a hierarchy of individual
lending authorities for new credits and renewals. The Credit Risk Management Committee approves loan authorities for lending and credit personnel, which are ultimately submitted to our Board for
ratification. Lending authorities are based on position, capability and experience of the individuals filling these positions. Authorities are periodically reviewed and updated.

The
Bank has established in-house borrower lending limits which are significantly lower than its legal lending limit of approximately $169.1 million, at
December 31, 2010. The present in-house lending limit is set at $25.0 million based on total credit exposure of a borrower. However, exceptions to this limit may be made up
to $40.0 million of total credit exposure if approved by the Chief Lending

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Officer
and Chief Executive Officer of the Bank. These limits are reviewed periodically by the Credit Risk Management Committee and approved annually by our Board.



We offer traditional depository products including checking accounts, money market deposit accounts, savings accounts and certificates
of deposit with a variety of rates. Our deposits are insured by the FDIC up to statutory limits. At December 31, 2010, the balance of our
interest bearing deposits was $6.7 billion, representing 93.1% of our total deposits, and the balance of our non-interest bearing deposits was $494.5 million, representing
6.9% of our total deposits. Our strategy is to increase our mix of core deposits and reduce our time deposits portfolio. We have a service fee schedule, which is competitive with other financial
institutions in our market, covering such matters as maintenance fees on checking accounts, per item processing fees on checking accounts, returned check charges and similar fees.



Through dedicated financial consultants and licensed bankers, BankUnited Investment Services provides a comprehensive wealth management
product offering that includes mutual funds, annuities, life insurance, and individual securities. We also provide comprehensive succession planning, estate planning, and financial planning to
individuals and business owners. We use a third-party financial services company to provide our trading platform, administrative and back office support, and provide our customers with
24-hour access to account balances and summaries, positions and portfolio views, transaction detail, customized portfolio view, and online statements.

Investments

The primary objectives of our investment policy are to provide liquidity necessary for the day-to-day
operations of the Company, provide a suitable balance of high credit and diversified quality assets to the consolidated balance sheet, manage interest rate risk exposure, and generate acceptable
returns given the Company's established risk parameters.

The
investment policy is reviewed annually by our Board of Directors. Overall investment goals are established by our Board, Chief Executive Officer, Chief Financial Officer, and members
of ALCO. The Board has delegated the responsibility of monitoring our investment activities to ALCO. Day-to-day activities pertaining to the investment portfolio are conducted
within the Company's Treasury Division under the supervision of the Chief Financial Officer.

As
part of the Acquisition, we acquired an investment portfolio with a fair value of $538.9 million. Of these assets, $252.9 million consisted of private-label
mortgage-backed securities and corporate securities which are covered by the Commercial Shared-Loss Agreement. The remaining $286.0 million consisted of Treasury securities,
municipal securities and mortgage-backed securities issued by the U.S. Government agency and sponsored enterprises, and are not covered by the Loss Sharing Agreements.

Our
strategy for investment security purchases since the Acquisition has been to achieve the objectives noted above, with an emphasis on managing interest rate risk exposure and
maintaining liquidity in the portfolio.

Marketing and Distribution

We conduct our banking business through 81 branches located in 13 coastal counties throughout Florida as of December 31, 2010.
Our distribution network also includes 75 ATMs, fully integrated on-line banking, and a telephone banking service. We target growing companies and commercial and middle-market businesses,
as well as individual consumers throughout Florida.

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In
order to market our deposit products, we use local print advertising and direct mail and provide sales incentives for our employees.

Competition

The primary market we serve is Florida. Our market is highly competitive. Our market contains not only a large number
of community and regional banks, but also a significant presence of the country's largest commercial banks. We compete with other state and national financial institutions located in Florida and
adjoining states as well as savings associations, savings banks and credit unions for deposits and loans. In addition, we compete with financial intermediaries, such as consumer finance companies,
mortgage banking companies, insurance companies, securities firms, mutual funds and several government agencies as well as major retailers, all actively engaged in providing various types of loans and
other financial services. Our largest banking competitors in our market include Bank of America, BankAtlantic, BB&T, JPMorgan Chase, Regions Bank, SunTrust Banks, TD Bank and Wells Fargo.

Interest
rates, both on loans and deposits, and prices of fee-based services are significant competitive factors among financial institutions generally. Other important
competitive factors include office location, office hours, quality of customer service, community reputation, continuity of personnel and services, and, in the case of larger commercial customers,
relative lending limits and ability to offer sophisticated cash management and other commercial banking services. While we continue to provide competitive interest rates on both depository and lending
products, we believe that we can compete most successfully by focusing on the financial needs of growing companies and their executives, consumers and commercial and middle-market businesses, and
offering them a broad range of personalized services and sophisticated cash management tools tailored to their businesses. We also believe that further volatility and consolidation in the banking
industry would create additional opportunities for us to enhance our competitive position.

Information Technology Systems



We have recently made and continue to make significant investments in our information technology systems for our
banking and lending operations and cash management activities. We believe this is a necessary investment in order to enhance our capabilities to offer new products and overall customer experience, and
to provide scale for future growth and acquisitions. Critical enhancements include the consolidation of all residential servicing to a leading servicing platform, upgrading our general ledger system,
selecting an automated anti-money laundering software solution and enhancing other ancillary systems. We are also in the process of converting our core deposit banking system to more
effectively automate bank transactions for our branches, improve our commercial and consumer loan origination, electronic banking and direct response marketing processes, as well as enhance cash
management, streamlined reporting, reconciliation support, and sales support.

The
majority of our systems including our EFT, transaction processing and our online banking services are hosted by third-party service providers. Additionally, we rely on a leading
third-party provider to provide a comprehensive, fully integrated solution that gives us the ability to automate areas of our residential loan servicing, including loan set-up and
maintenance, customer service, cashiering, escrow administration, investor accounting, default management, corporate accounting and federal regulatory reporting. The scalability of this new
infrastructure will support our growth strategy. In addition, the capability of these vendors to automatically switch over to standby systems allows us to recover our systems and provide business
continuity very quickly in case of a disaster.

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Substantially all of our loans are serviced by us. Since the Acquisition, we have invested heavily in our loan
servicing platform to ensure we are taking best efforts in minimizing losses on the Covered Loans. Additionally, we have been an active participant in HAMP since 2009, which focuses on helping
at-risk homeowners avoid foreclosure by reducing payments through interest rate reduction, term extension, principal forbearance and principal forgiveness. As of December 31, 2010,
8,373 borrowers have been counseled regarding their participation in HAMP, resulting in 2,234 permanent loan modifications and 198 active trial modifications.

Regulation and Supervision

The U.S. banking industry is highly regulated under federal and state law. These regulations affect the operations of
the Company and its subsidiaries.

Statutes,
regulations and policies limit the activities in which we may engage and the conduct of our permitted activities. Further, the regulatory system imposes reporting and
information collection obligations. We incur significant costs relating to compliance with these laws and regulations. Banking statutes, regulations and policies are continually under review by
federal and state legislatures and regulatory agencies, and a change in them, including changes in how they are interpreted or implemented, could have a material adverse effect on our business.

The
material statutory and regulatory requirements that are applicable to us are summarized below. The description below is not intended to summarize all laws and regulations applicable
to us.



BankUnited is a federal savings association organized under the federal Home Owners' Loan Act, or HOLA. A federal
savings association is commonly referred to as a federal thrift. As a federal thrift, BankUnited is currently subject to ongoing and comprehensive supervision, regulation, examination and enforcement
by the Office of Thrift Supervision, or OTS. Recent changes in the law will, in the future, shift principal regulatory jurisdiction over BankUnited from the OTS to the Office of the Comptroller of the
Currency, or the OCC. We are in the process of evaluating the potential practical implications of this shift in regulatory jurisdiction, such as possible changes in how the Bank's regulators will
examine it and what new or different standards they may apply to the Bank. To date, the Bank's regulators have not announced any details about their plans for the shift in regulatory jurisdiction,
except a statement indicated that federal thrifts will be subject to reporting requirements traditionally applicable to banks and consequently, we are not in a position at this time to know or
ascertain what the actual practical implications of the shift will be for the Bank, because BankUnited does not have plans to convert to a national bank, the existing OTS regulations will continue to
apply to BankUnited, although the OCC may decide to modify these regulations.



Any entity that acquires direct or indirect control of a thrift must obtain prior approval of the OTS to become a
savings and loan holding company, or SLHC. The Company, which controls BankUnited, received OTS approval on May 21, 2009, to become a SLHC. As a SLHC, the Company is currently subject to
ongoing and comprehensive supervision, regulation, examination and enforcement by the OTS. This OTS jurisdiction also extends to any company that is directly or indirectly controlled by us. Recent
changes in the law will, in the future, shift principal regulatory jurisdiction over the Company to the Federal Reserve. We are in the process of evaluating the potential practical implications of
this shift in regulatory jurisdiction, such as possible changes in how the Company's regulators will examine

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it
and what new or different standards they may apply to the Company; however, as a result of this shift, we expect that BankUnited, Inc. will be subject to specific minimum capital ratios for
the first time as well as being required to serve as a source of strength for the Bank. To date, the Company's regulators have not announced any details about their plans for the shift in regulatory
jurisdiction, except a statement indicating that SLHC's will be subject to reporting requirements traditionally applicable to bank holding companies and, consequently, we are not in a position at this
time to know or ascertain what the actual practical implications of the shift will be.



The FDIC is an independent federal agency that insures the deposits of federally insured depository institutions up to
applicable limits. The FDIC also has certain regulatory, examination and enforcement powers with respect to FDIC-insured institutions. The deposits of BankUnited are insured by the FDIC up
to applicable limits. As a general matter, the maximum deposit insurance amount is $250,000 per depositor.



A principal objective of the U.S. bank regulatory system is to protect depositors by ensuring the financial safety and
soundness of banks. To that end, the banking regulators have broad regulatory, examination, and enforcement authority. The regulators regularly examine the operations of federal thrifts and SLHCs. In
addition, federal thrifts and SLHCs are subject to periodic reporting requirements.

The
regulators have various remedies available if they determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other
aspects of a banking organization's operations are unsatisfactory. The regulators may also take action if they determine that the banking organization or its management is violating or has violated
any law or regulation. The regulators have the power to, among other things:



The
FDIC may terminate a depository institution's deposit insurance upon a finding that the institution's financial condition is unsafe or unsound or that the institution has engaged in
unsafe or unsound practices or has violated any applicable rule, regulation, order or condition enacted or imposed by the institution's regulatory agency. Engaging in unsafe or unsound practices or
failing to comply with applicable laws, regulations and supervisory agreements could subject the Company, and

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subsidiaries
of the Company, or their officers, directors, and institution-affiliated parties to the remedies described above and other sanctions.



On May 21, 2009, we received approvals from the OTS and FDIC for the organization of BankUnited as a federal
thrift, for the Company to become a SLHC, and for BankUnited to obtain federal deposit insurance. Those approval orders contained conditions related to the conduct of our business. Those conditions
include, among other things, the following requirements:





On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010, or the Dodd-Frank Act, into law. The Dodd-Frank Act will have a broad impact on the financial services industry, imposing significant regulatory and compliance
changes, including the designation of certain financial companies as systemically significant, the imposition of increased capital, leverage, and liquidity requirements, and numerous other provisions
designed to improve supervision and oversight of, and strengthen safety and soundness within, the financial services sector. Additionally, the Dodd-Frank Act establishes a new framework of
authority to conduct systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, or
Council, the Federal Reserve, the OCC, and the FDIC. Of particular relevance to the Company, the Dodd-Frank Act makes fundamental changes to the federal supervisory oversight structure for
federal thrifts and SLHCs.

The
following items provide a brief description of certain provisions of the Dodd-Frank Act.



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Many
of the requirements of the Dodd-Frank Act will be implemented over time and most will be subject to regulations implemented over the course of several years. Given the
uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies and through regulations, the full extent of the
impact such requirements will have on our operations is unclear. The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to
certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest
significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements.

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Failure
to comply with the new requirements may negatively impact our results of operations and financial condition.



Banking laws impose notice, approval, and ongoing regulatory requirements on any stockholder or other party that seeks
to acquire direct or indirect "control" of an FDIC-insured depository institution. These laws include the Savings and Loan Holding Company Act, the Bank Holding Company Act of 1956 and the
Change in Bank Control Act. Among other things, these laws require regulatory filings by a stockholder or other party that seeks to acquire direct or indirect "control" of an FDIC-insured
depository institution. The determination whether an investor "controls" a depository institution is based on all of the facts and circumstances surrounding the investment. As a general matter, a
party is deemed to control a depository institution or other company if the party owns or controls 25% or more of any class of voting stock. Subject to rebuttal, a party may be presumed to control a
depository institution or other company if the investor owns or controls 10% or more of any class of voting stock. Ownership by affiliated parties, or parties acting in concert, is typically
aggregated for these purposes. If a party's ownership of the Company were to exceed certain thresholds, the investor could be deemed to "control" the Company for regulatory purposes. This could
subject the investor to regulatory filings or other regulatory consequences.



Banking laws generally restrict the ability of the Company and its subsidiaries from engaging in activities other than
those determined by the Federal Reserve to be so closely related to banking as to be a proper incident thereto. The Gramm-Leach-Bliley Financial Modernization Act of 1999, or GLB Act, expanded the
scope of permissible activities for a bank holding company that qualifies as a financial holding company. Under the regulations implementing the GLB Act, a financial holding company may engage in
additional activities that are financial in nature or incidental or complementary to a financial activity. Those activities include, among other activities, certain insurance and securities
activities. Qualifications for becoming a financial holding company include, among other things, meeting certain specified capital standards and achieving certain management ratings in examinations.
Under the Dodd-Frank Act, SLHCs like the Company must be well-capitalized and well managed in the same manner as bank holding companies in order to engage in the expanded
financial activities permissible only for a financial holding company.

In
addition, as a general matter, the establishment or acquisition by the Company of a depository institution or, in certain cases, a non-banking financing entity, requires
prior regulatory approval.



The regulators view capital levels as important indicators of an institution's financial soundness. As a general
matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital relative to the amount and types of assets they hold. The final
supervisory judgment on an institution's capital adequacy is based on the regulator's individualized assessment of numerous factors.

BankUnited
is subject to various regulatory capital adequacy requirements. The Federal Deposit Insurance Corporation Improvement Act, or FDICIA, requires that the federal regulatory
agencies adopt regulations defining five capital tiers for depository institutions: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that could have a direct material
adverse effect on our financial condition.

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The regulators have established quantitative measures that require that an FDIC-insured depository institution (such as BankUnited) to maintain
minimum ratios of capital to risk-weighted assets. There are two main categories of capital under the guidelines. Tier 1 capital includes common equity holders' equity, qualifying
preferred stock and trust preferred securities, less goodwill and certain other deductions (including a portion of servicing assets and the unrealized net gains and losses, after taxes, on securities
available for sale). Tier 2 capital includes preferred stock not qualifying as tier 1 capital, subordinated debt, the allowance for credit losses and net unrealized gains on marketable
equity securities, subject to limitations by the guidelines. Tier 2 capital is limited to the amount of tier 1 capital (i.e., at least half of the total capital must be in the
form of tier 1 capital). Under the risk-based guidelines, capital is compared with the relative risk related to the balance sheet. To derive the risk included in the balance sheet,
a risk weighting is applied to each balance sheet asset and off-balance sheet item, primarily based on the relative credit risk of the counterparty. For example, claims guaranteed by the
U.S. government or one of its agencies are risk-weighted at 0% and certain real-estate related loans risk-weighted at 50%. Off-balance sheet items, such
as loan commitments and derivatives, are also applied a risk weight after calculating balance sheet equivalent amounts.

In
order to be deemed well-capitalized, FDIC-insured depository institutions (such as BankUnited) currently are required to (i) maintain a total
risk-based capital ratio of 10% or greater, a tier 1 risk-based capital ratio of 6% or greater and a tier 1 leverage ratio of 5% or greater (measured as
tier 1 capital to adjusted total assets) and (ii) not be subject to any written agreement, order, capital directive or prompt corrective action issued by its banking regulator(s) to meet
and maintain a specific capital level for any capital measure. The regulators may set higher capital requirements for an individual institution when particular
circumstances warrant. The OTS requires BankUnited to maintain a tier 1 capital to adjusted total assets leverage ratio of not less than 8% for the first three years of its operation. At
December 31, 2010, the Bank's tier 1 leverage ratio was equal to 10.3%.

By
January 2012, the OCC will assume the OTS' powers with respect to federal savings associations (like BankUnited), as well as rulemaking authority over all savings associations (except
for the limited rulemaking authority transferred to the Federal Reserve). Although the federal banking agencies have substantially similar capital adequacy standards and utilize the same accounting
standards, some differences in capital standards exist, such as the regulatory treatment of noncumulative perpetual preferred stock and the risk-weightings assigned to certain assets. The
OCC also limits the amount of subordinated debt and intermediate-term preferred stock that may be treated as part of tier 2 capital to 50% of tier 1 capital, whereas the OTS
does not prescribe such a restriction. Finally, the OCC recognizes an additional category, "tier 3 capital," consisting of forms of unsecured, subordinated debt that can be allocated for market
risk and is included in the total risk-based capital ratio numerator.

At
this time the bank regulatory agencies are more inclined to impose higher capital requirements in order to meet well-capitalized standards, and future regulatory change
could impose higher capital standards as a routine matter. The regulators may also set higher capital requirements for holding companies whose circumstances warrant it. For example, holding companies
experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible
assets.

As
an additional means to identify problems in the financial management of depository institutions, the FDI Act requires federal bank regulatory agencies to establish certain
non-capital safety and soundness standards for institutions for which they are the primary federal regulator. The standards relate generally to operations and management, asset quality,
interest rate exposure and executive compensation. The agencies are authorized to take action against institutions that fail to meet such standards.

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OTS
regulations do not require savings and loan holding companies, such as the Company, to maintain specific minimum capital ratios. As a result of the Dodd-Frank Act, the
risk-based and leverage capital standards currently applicable to U.S. insured depository institutions and U.S. bank holding companies will in the future become applicable to savings and
loan holding companies (such as the Company). The Dodd-Frank Act generally authorizes the Federal Reserve to promulgate capital requirements for savings and loan holding companies.

The
Federal Reserve requires bank holding companies to maintain a minimum tier 1 leverage ratio, tier 1 risk-based capital ratio and total
risk-based capital ratio. In addition, the Federal Reserve requires bank holding companies that engage in trading activities to adjust their risk-based capital ratios to take
into consideration market risks that may result from movements in market prices of covered trading positions in trading accounts, or from foreign exchange or commodity positions, whether or not in
trading accounts, including changes in interest rates, equity prices, foreign exchange rates or commodity prices. Any capital required to be maintained under these provisions may consist of
tier 3 capital. Also, the Federal Reserve considers a "tangible tier 1 leverage ratio" (deducting all intangibles) and other indications of capital strength in evaluating proposals for
expansion or engaging in new activities.

In
addition, the Dodd-Frank Act further requires the federal banking agencies to adopt capital requirements which address the risks that the activities of an institution
poses to the institution and the public and private stakeholders, including risks arising from certain enumerated activities. The federal banking agencies will likely change existing capital
guidelines or adopt new capital guidelines in the future pursuant to the Dodd-Frank Act, the implementation of Basel III (described below) or other regulatory or supervisory changes.

The
FDI Act requires federal bank regulatory agencies to take "prompt corrective action" with respect to FDIC-insured depository institutions that do not meet minimum capital
requirements. A depository institution's treatment for purposes of the prompt corrective action provisions will depend upon how its capital levels compare to various capital measures and certain other
factors, as established by regulation. Under this system, the federal banking regulators have established five capital categories, well-capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically undercapitalized, in which all institutions are placed. The federal banking regulators have also specified by regulation the relevant
capital levels for each of the other categories. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with
respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow
exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized.



The current risk-based capital guidelines that apply to the Bank are based on the 1988 capital accord of the International
Basel Committee on Banking Supervision, a committee of central banks and bank supervisors, as implemented by the OTS. In 2008, the OTS began to phase-in capital standards based on a second
capital accord, referred to as Basel II, for large or "core" international banks (total assets of $250 billion or more or consolidated foreign exposures of $10 billion or more). Basel II
emphasizes internal assessment of credit, market and operational risk, as well as supervisory assessment and market discipline in determining minimum capital requirements.

On
September 12, 2010, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee, announced agreement on the calibration and phase-in
arrangements for a strengthened set of capital requirements, known as Basel III. Basel III increases the minimum tier 1 common equity ratio to 4.5%, net of regulatory deductions, and introduces
a capital conservation buffer

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of
an additional 2.5% of common equity to risk-weighted assets, raising the target minimum common equity ratio to 7%. Basel III increases the minimum tier 1 capital ratio to 8.5%
inclusive of the capital conservation buffer, increases the minimum total capital ratio to 10.5% inclusive of the capital buffer and introduces a countercyclical capital buffer of up to 2.5% of common
equity or other fully loss absorbing capital for periods of excess credit growth. Basel III also introduces a non-risk adjusted tier 1 leverage ratio of 3%, based on a measure of
total exposure rather than total assets, and new liquidity standards. The Basel III capital and liquidity standards will be phased in over a multi-year period. The final package of Basel
III reforms was submitted to and endorsed by the Seoul G20 Leaders Summit in November, 2010. On December 16, 2010, the Basel Committee issued the text of the Basel III rules, which are now
subject to individual adoption by member nations, including the United States. The federal banking agencies will likely implement changes to the capital adequacy standards applicable to the insured
depository institutions and their holding companies in light of Basel III.



Federal banking laws require a thrift to meet the QTL test by maintaining at least 65% of its "portfolio assets" in certain "qualified
thrift investments," such as residential housing related loans, certain consumer and small business loans and residential mortgage-backed securities, on a monthly average basis in at least nine months
out of every twelve months. A thrift that fails the QTL test must either operate under certain restrictions on its activities or convert to a bank charter. The Dodd-Frank Act imposes
additional restrictions on the ability of any thrift that fails to become or remain a QTL to pay dividends. Specifically, the thrift is not only subject to the general dividend restrictions as would
apply to a national bank (as under prior law), but also is prohibited from paying dividends at all (regardless of its financial condition) unless required to meet the obligations of a company that
controls the thrift, permissible for a national bank and specifically approved by the OCC and the Federal Reserve. In addition, violations of the QTL test now are treated as violations of federal
banking laws subject to remedial enforcement action. At December 31, 2010, BankUnited was in compliance with the QTL test.

HOLA
limits the amount of non-residential mortgage loans a federal savings association, such as BankUnited, may make. Separate from the QTL test, the law limits a federal
savings association to a maximum of 20% of its total assets in commercial loans not secured by real estate, however, only 10% can be large commercial loans not secured by real estate (defined as loans
in excess of $2 million). Commercial loans secured by real estate can be made in an amount up to four times an
institution's total capital. An institution can also have leases, in addition to the above items, up to 10% of its assets. Commercial paper, corporate bonds, and consumer loans taken together cannot
exceed 35% of a savings association's assets. For this purpose, however, residential mortgage loans and credit card loans are not considered consumer loans, and are both unlimited in amount. The
foregoing limitations are established by statute, and cannot be waived by the OTS. At December 31, 2010, BankUnited was in compliance with all these limits.



Federal law currently imposes limitations upon certain capital distributions by thrifts, such as certain cash dividends, payments to
repurchase or otherwise acquire its shares, payments to stockholders of another institution in a cash-out merger and other distributions charged against capital. The OTS regulates all
capital distributions by BankUnited directly or indirectly to us, including dividend payments. BankUnited currently must file an application to receive the approval of the OTS for any proposed capital
distribution.

BankUnited
may not pay dividends to us if, after paying those dividends, it would fail to meet the required minimum levels under risk-based capital guidelines and the minimum
leverage and tangible capital ratio requirements, or in the event the OTS notified BankUnited that it was in need of more

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than
normal supervision. Under the FDI Act, an insured depository institution such as BankUnited is prohibited from making capital distributions, including the payment of dividends, if, after making
such distribution, the institution would become "undercapitalized." Payment of dividends by BankUnited also may be restricted at any time at the discretion of the appropriate regulator if it deems the
payment to constitute an unsafe and unsound banking practice. Additionally, the Dodd-Frank Act imposes additional restrictions on the ability of any thrift that fails to become or remain a
QTL to pay dividends.



Pursuant to regulations of the Federal Reserve, all banks and thrifts are required to maintain average daily reserves at mandated
ratios against their transaction accounts. In addition, reserves must be maintained on certain non-personal time deposits. These reserves must be maintained in the form of vault cash or in
an account at a Federal Reserve Bank.



Banks and thrifts are subject to restrictions on their ability to conduct transactions with affiliates and other related parties.
Section 23A of the Federal Reserve Act imposes quantitative limits, qualitative requirements, and collateral requirements on certain transactions by a bank or thrift with, or for the benefit
of, its affiliates. Transactions covered by Section 23A include loans, extensions of credit, investment in securities issued by an affiliate, and acquisitions of assets from an affiliate.
Section 23B of the Federal Reserve Act requires that most types of transactions by a bank or thrift with, or for the benefit or, an affiliate be on terms at least as favorable to the bank or
thrift as if the transaction were conducted with an unaffiliated third party.

The
Dodd-Frank Act generally enhances the restrictions on transactions with affiliates under Section 23A and 23B of the Federal Reserve Act, including an expansion of
the definition of "covered transactions" and an increase in the amount of time for which collateral requirements regarding covered credit transactions must be satisfied. The ability of the Federal
Reserve to grant exemptions from these restrictions is also narrowed by the Dodd-Frank Act, including by requiring coordination with other bank regulators.

The
Federal Reserve's Regulation O and OTS regulations impose restrictions and procedural requirements in connection with the extension of credit by a bank or thrift to directors,
executive officers, principal stockholders, and their related interests.



The OTS currently charges fees to recover the costs of examining federal thrifts and their affiliates, processing applications and
other filings, and covering direct and indirect expenses in regulating thrifts and their affiliates. The Dodd-Frank Act provides various agencies with the authority to assess additional
supervision fees.



FDIC-insured depository institutions are required to pay deposit insurance assessments to the FDIC. The amount of a
particular institution's deposit insurance
assessment is based on that institution's risk classification under an FDIC risk-based assessment system. An institution's risk classification is assigned based on its capital levels and
the level of supervisory concern the institution poses to the regulators. Deposit insurance assessments fund the DIF, which is currently under-funded. The FDIC recently raised assessment rates to
increase funding for the DIF.

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The
Dodd-Frank Act changes the way an insured depository institution's deposit insurance premiums are calculated. The assessment base will no longer be the institution's
deposit base, but rather its average consolidated total assets less its average tangible equity. The Dodd-Frank Act also makes changes to the minimum designated reserve ratio of the DIF,
increasing the minimum from 1.15 percent to 1.35 percent of the estimated amount of total insured deposits, eliminating the upper limit for the reserve ratio designated by the FDIC each
year, and eliminating the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds.

Continued
action by the FDIC to replenish the DIF as well as the changes contained in the Dodd-Frank Act may result in higher assessment rates, which could reduce our
profitability or otherwise negatively impact our operations.



The FDI Act provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of
depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over
other general unsecured claims against the institution. If we invest in or acquire an insured depository institution that fails, insured and uninsured depositors, along with the FDIC, will have
priority in payment ahead of unsecured, non-deposit creditors, including us, with respect to any extensions of credit they have made to such insured depository institution.



BankUnited is a member of the Federal Home Loan Bank of Atlanta, which is one of the twelve regional FHLB's composing the FHLB system.
Each FHLB provides a central credit facility primarily for its member institutions as well as other entities involved in home mortgage lending. Any advances from a FHLB must be secured by specified
types of collateral, and all long-term advances may be obtained only for the purpose of providing funds for residential housing finance. As a member of the FHLB of Atlanta, BankUnited is
required to acquire and hold shares of capital stock in the FHLB of Atlanta. BankUnited has always been in compliance with this requirement with an investment in FHLB of Atlanta stock.



Under federal law, financial institutions must maintain anti-money laundering programs that include established internal
policies, procedures and controls; a designated compliance officer; an ongoing employee training program; and testing of the program by an independent audit function. Financial institutions are also
prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for due diligence and customer identification in their dealings with foreign
financial institutions and foreign customers. Financial institutions must take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report
any suspicious transactions, and law enforcement authorities have been granted increased access to financial information maintained by financial institutions. Bank regulators routinely examine
institutions for compliance with these obligations and they must consider an institution's compliance in connection with the regulatory review of applications, including applications for banking
mergers and acquisitions. The regulatory authorities have imposed "cease and desist" orders and civil money penalty sanctions against institutions found to be violating these obligations.

The
Office of Foreign Assets Control, or OFAC, is responsible for helping to insure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by
various Executive Orders and Acts of Congress. OFAC sends bank regulatory agencies lists of persons and organizations suspected of aiding, harboring or engaging in terrorist acts, known as Specially
Designated Nationals

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and
Blocked Persons. If the Company or BankUnited find a name on any transaction, account or wire transfer that is on an OFAC list, the Company or BankUnited must freeze such account, file a
suspicious activity report and notify the appropriate authorities.



Thrifts and other financial institutions are subject to numerous laws and regulations intended to protect consumers. These laws
include, among others:



Many
states and local jurisdictions have consumer protection laws analogous, and in addition, to those listed above. These federal, state and local laws regulate the manner in which
financial institutions deal with customers when taking deposits, making loans, or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to
regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability. The creation of the CFPB by the Dodd-Frank Act is likely to
lead to enhanced and strengthened enforcement of consumer financial protection laws.



The Community Reinvestment Act, or CRA, is intended to encourage banks to help meet the credit needs of their service areas, including
low and moderate-income neighborhoods, consistent with safe and sound operations. The bank regulators examine and assign each bank a public CRA rating. The CRA then requires bank regulators to take
into account the federal banking bank's record in meeting the needs of its service area when considering an application by a bank to establish or relocate a branch or to conduct certain mergers or
acquisitions. The Federal Reserve is required to consider the CRA records of a bank holding company's (BHC) controlled banks when considering an application by the BHC to acquire a bank or thrift or
to merge with another BHC. When the Company or BankUnited applies for regulatory approval to make certain investments, the regulators will consider

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the
CRA record of target institutions and the Company's depository institution subsidiaries. An unsatisfactory CRA record could substantially delay approval or result in denial of an application. The
regulatory agency's assessment of the institution's record is made available to the public. Since the Acquisition, bank regulators have not conducted a CRA exam of BankUnited.



Federal, state and local legislators and regulators regularly introduce measures or take actions that would modify the regulatory
requirements applicable to banks, thrifts, their holding companies and other financial institutions. Changes in laws, regulations or regulatory policies could adversely affect the operating
environment for the Company in substantial and unpredictable ways, increase our cost of doing business, impose new restrictions on the way in which we conduct our operations or add significant
operational constraints that might impair our profitability. We cannot predict whether new legislation will be enacted and, if enacted, the effect that it, or any implementing regulations, would have
on our business, financial condition or results of operations. The Dodd-Frank Act imposes substantial changes to the regulatory framework applicable to us and our subsidiaries. The
majority of these changes will be implemented over time by various regulatory agencies. The full effect that these changes will have on us remains uncertain at this time and may have a material
adverse effect on our business and results of operations.

Employees

At December 31, 2010, we employed 1,237 full-time employees and 26 part-time employees. None of our
employees are parties to a collective bargaining agreement. We believe that our relations with our employees are good.

Available Information

Our Website address is www.bankunited.com. Our electronic filings with the SEC (including all Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports) are available free of
charge on the Website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information posted on our Website is not incorporated into this Annual
Report. In addition, the SEC maintains a Website that contains reports and other information filed with the SEC. The Website can be accessed at http://www.sec.gov.

Item 1A.    Risk Factors

Risks Related to Our Business

Failure to comply with the terms of our Loss Sharing Agreements with the FDIC may result in significant losses.

In May 2009, we purchased substantially all of the assets and assumed all of the non-brokered deposits and substantially
all other liabilities of the Failed Bank in an FDIC-assisted transaction, and presently a substantial portion of BankUnited's revenue is derived from such assets. The purchased loans,
commitments, foreclosed assets and certain securities are covered by the Loss Sharing Agreements with the FDIC, which provide that a significant portion of the losses related to the Covered Assets
will be borne by the FDIC. Under the Loss Sharing Agreements, we are obligated to comply with certain loan servicing standards, including requirements to participate in government-sponsored loan
modification programs. As these standards evolve, we may experience difficulties in complying with the requirements of the Loss Sharing Agreements, which could result in Covered Assets losing some or
all of their coverage. BankUnited is subject to audits with the terms of the Loss Sharing

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Agreements
by the FDIC through its designated agent. The required terms of the agreements are extensive and failure to comply with any of the guidelines could result in a specific asset or group of
assets losing their loss sharing coverage. See Item 1 "BusinessThe AcquisitionLoss Sharing Agreements."

The geographic concentration of our markets in the coastal regions of Florida makes our business highly susceptible to local economic conditions and natural disasters.

Unlike larger financial institutions that are more geographically diversified, our branch offices are primarily concentrated in the
coastal regions of Florida. Additionally, a significant portion of our loans secured by real estate are secured by commercial and residential properties in Florida. The Florida economy and our market
in particular have been affected by the downturn in commercial and residential property values, and the decline in real estate values in Florida during the downturn has been higher than the national
average. Additionally, the Florida economy relies heavily on tourism and seasonal residents, which have also been affected by recent market disruptions. Continued deterioration in economic conditions
in the markets we serve or the occurrence of a natural disaster, such as a hurricane, or a man-made catastrophe, such as the Gulf of Mexico oil spill, could result in one or more of the
following:



Hurricanes
and other catastrophes to which our markets in the coastal regions of Florida are susceptible also can disrupt our operations, result in damage to our properties, reduce or
destroy the value of collateral and negatively affect the local economies in which we operate, which could have a material adverse effect on our results of operations.

A
decline in existing and new real estate sales decreases lending opportunities, may delay the collection of our cash flow from the Loss Sharing Agreements, and negatively affects our
income. We do not anticipate that the real estate market will improve in the near-term and, accordingly, this could lead to additional valuation adjustments on our loan portfolios.

Delinquencies and defaults in residential mortgages have recently increased, creating a backlog in courts and an increase in the amount of legislative action that might
restrict or delay our ability to foreclose and hence delay the collection of payments for single family residential loans under the Loss Sharing Agreements.

For the single family residential loans covered by the Loss Sharing Agreements, we cannot collect loss share payments until we
liquidate the properties securing those loans. These loss share payments could be delayed by an extended foreclosure process, including delays resulting from a court backlog, local or national
foreclosure moratoriums or other delays, and these delays could have a material adverse effect on our results of operations. Homeowner protection laws may also delay the initiation or completion of
foreclosure proceedings on specified types of residential mortgage loans. Any such limitations are likely to cause delayed or reduced collections from mortgagors. Any restriction on our ability to
foreclose on a loan, any requirement that we forgo a portion of the amount otherwise due on a loan or any requirement that we modify any original loan terms could negatively impact our business,
financial condition, liquidity and results of operations.

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Our loan portfolio has and will continue to be affected by the ongoing correction in residential and commercial real estate prices and reduced levels of residential and
commercial real estate sales.

Soft residential and commercial real estate markets, higher delinquency and default rates, and increasingly volatile and constrained
secondary credit markets have affected the mortgage industry generally, and Florida in particular, which is where our business is currently most heavily concentrated. Our financial results may be
adversely affected by changes in real estate values. We make credit and reserve decisions based on the current conditions of borrowers or projects combined with our expectations for the future. If the
slowdown in the real estate market continues, we could experience higher charge-offs and delinquencies beyond that which is provided in the allowance for loan losses. Although we have the
Loss Sharing Agreements with the FDIC, these agreements do not cover 100% of the losses attributable to Covered Assets. In addition, the Loss Sharing Agreements will not mitigate any losses on our
non-Covered Assets and our earnings could be adversely affected through a higher than anticipated provision for loan losses on such assets.

Our business is highly susceptible to credit risk on our non-Covered Assets.

As a lender, we are exposed to the risk that our customers will be unable to repay their loans according to their terms and that the
collateral securing the payment of their loans (if any) may not be sufficient to assure repayment. Similarly, we have credit risk embedded in our securities portfolio. Our credit standards, procedures
and policies may not prevent us from incurring substantial credit losses, particularly in light of market developments in recent years. Recent economic and market developments and the potential for
continued economic disruption present considerable risks to us and it is difficult to determine the depth and duration of the economic and financial market problems and the many ways in which they may
impact our business in general. The Loss Sharing Agreements only cover certain legacy assets, and credit losses on assets not covered by the Loss Sharing Agreements could have a material adverse
effect on our operating results.

Changes in interest rates could have an adverse impact on our results of operations and financial condition.

Our earnings and cash flows depend to a great extent upon the level of our net interest income. Changes in interest rates can increase
or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes. Net interest income is the
difference between the interest income we earn on loans, investments and other interest earning assets, and the interest we pay on interest bearing liabilities, such as deposits and borrowings. When
interest bearing liabilities mature or reprice more quickly than interest earning assets in a period, an increase in interest rates could reduce net interest income. Similarly, when interest earning
assets mature or reprice more quickly than interest bearing liabilities, falling interest rates could reduce net interest income. Additionally, an increase in interest rates may, among other things,
reduce the demand for loans and our ability to originate loans and decrease loan repayment rates. A decrease in the general level of interest rates may affect us through, among other things, increased
prepayments on our loan and mortgage-backed securities portfolios and increased competition for deposits. Accordingly, changes in the level of market interest rates affect our net yield on interest
earning assets, loan origination volume, loan and mortgage-backed securities portfolios, and our overall results. Interest rates are highly sensitive to many factors beyond our control, including
general economic conditions and policies of various governmental and regulatory agencies, particularly the Federal Reserve.

We
attempt to manage our risk from changes in market interest rates by adjusting the rates, maturity, repricing, and balances of the different types of interest-earning assets and
interest bearing liabilities; however, interest rate risk management techniques are not precise, and we may not be able to successfully manage our interest rate risk. As a result, a rapid increase or
decrease in interest rates could have an adverse effect on our net interest margin and results of operations.

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We depend on our executive officers and key personnel to continue the implementation of our long-term business strategy and could be harmed by the loss of their
services.

We believe that our continued growth and future success will depend in large part on the skills of our senior management team. We
believe our senior management team possesses valuable knowledge about and experience in the banking industry and that their knowledge and relationships would be very difficult to replicate. Although
our senior management team has entered into employment agreements with us, they may not complete the term of their employment agreements or renew them upon expiration. Our success also depends on the
experience of our branch managers and lending officers and on their relationships with the customers and communities they serve. The loss of service of one or more of our executive officers or key
personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, financial condition or operating results and the value of our common
stock.

Our allowance for credit losses may not be adequate to cover actual credit losses.

We maintain an allowance for loan losses that represents management's estimate of probable losses inherent in our credit portfolio.
This estimate requires management to make certain assumptions and involves a high degree of judgment, particularly as our originated loan portfolio is not yet seasoned and has not yet developed an
observable loss trend and Covered Loans that did not exhibit evidence of deterioration in credit quality at acquisition, or non-ACI loans, have limited delinquency statistics. Management
considers numerous factors, including, but not limited to, internal risk ratings, loss forecasts, collateral values, geographic location, borrower FICO scores, delinquency rates, the proportion of
non-performing and restructured loans in the loan portfolio, origination channels, product mix, underwriting practices, industry conditions, economic trends and net charge-off
trends.

If
management's assumptions and judgments prove to be incorrect, our current allowance may be insufficient and we may be required to increase our allowance for loan losses. In addition,
federal and
state regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs, based on judgments
different than those of our management. Continued adverse economic conditions could make management's estimate even more complex and difficult to determine. Any increase in our allowance for loan
losses will result in a decrease in net income and capital and could have a material adverse effect on our financial condition and results of operations. See Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of OperationsAnalysis of the Allowance for Loan Losses" and "Management's Discussion and Analysis of Financial Condition and Results of
OperationsCritical Accounting Policies and EstimatesAccounting for Covered Loans."

We may not be able to find suitable acquisition candidates and may be unable to manage our growth due to acquisitions.

A key component of our growth strategy is to pursue acquisitions of complementary businesses. As consolidation of the banking industry
continues, the competition for suitable acquisition candidates may increase. We compete with other banking companies for acquisition opportunities and there are a limited number of candidates that
meet our acquisition criteria. Consequently, we may not be able to identify suitable candidates for acquisitions. If we are unable to locate suitable acquisition candidates willing to sell on terms
acceptable to us, our net income could decline and we would be required to find other methods to grow our business.

Even
if suitable candidates are identified and we succeed in consummating future acquisitions, acquisitions involve risks that the acquired business may not achieve anticipated revenue,
earnings or cash flows. There may also be unforeseen liabilities relating to the acquired institution or arising out of the acquisition, asset quality problems of the acquired entity, difficulty
operating in markets in which

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we
have had no or only limited experience and other conditions not within our control, such as adverse personnel relations, loss of customers because of change in identity, and deterioration in local
economic conditions.

In
addition, the process of integrating acquired entities will divert significant management time and resources. We may not be able to integrate successfully or operate profitably any
financial institutions we may acquire. We may experience disruption and incur unexpected expenses in integrating acquisitions. Any acquisitions we do make may not enhance our cash flows, business,
financial condition, results of operations or prospects and may have an adverse effect on our results of operations, particularly during periods in which the acquisitions are being integrated into our
operations.

We face significant competition from other financial institutions and financial services providers, which may decrease our growth or profits.

The primary market we serve is Florida. Consumer and commercial banking in Florida is highly competitive. Our market contains not only
a large number of community and regional banks, but also a significant presence of the country's largest commercial banks. We compete with other state and national financial institutions located in
Florida and adjoining states as well as savings and loan associations, savings banks and credit unions for deposits and loans. In addition, we compete with financial intermediaries, such as consumer
finance companies, mortgage banking companies, insurance companies, securities firms, mutual funds and several government agencies as well as major retailers, all actively engaged in providing various
types of loans and other financial services.

The
financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms
and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance
(both agency and underwriting) and merchant banking. Increased competition among financial services companies due to the recent consolidation of certain competing financial institutions may adversely
affect our ability to market our products and services. Also, technology has lowered barriers to entry and made it possible for banks to compete in our market without a retail footprint by offering
competitive rates, as well as non-banks to offer products and services traditionally provided by banks. Many of our competitors have fewer regulatory constraints and may have lower cost
structures. Additionally, due to their size, many competitors may offer a broader range of products and services as well as better pricing for certain products and services than we can.

Our
ability to compete successfully depends on a number of factors, including:



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Failure
to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could harm our
business, financial condition and results of operations.

Since we engage in lending secured by real estate and may be forced to foreclose on the collateral property and own the underlying real estate, we may be subject to the
increased costs and risks associated with the ownership of real property, which could have an adverse effect on our business or results of operations.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on
and take title to properties securing certain loans, in which case, we are exposed to the risks inherent in the ownership of real estate. The amount that we, as a mortgagee, may realize after a
default is dependent upon factors outside of our control, including:



Certain
expenditures associated with the ownership of real estate, principally real estate taxes and maintenance costs, may also adversely affect our operating expenses.

We are dependent on our information technology and telecommunications systems and third-party servicers, and systems failures, interruptions or breaches of security could
have an adverse effect on our financial condition and results of operations.

Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications
systems and third-party servicers. We outsource our major systems including our electronic funds transfer, or EFT, transaction processing, cash management and online banking services. We rely on these
systems to process new and renewal loans, gather deposits, provide customer service, facilitate collections and share data across our organization. The failure of these systems, or the termination of
a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface
with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If sustained or
repeated, a system failure or service denial could result in a deterioration of our ability to process new and renewal loans, gather deposits and provide customer service, compromise our ability to
operate effectively, damage our reputation, result in a loss of customer business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a
material adverse effect on our financial condition and results of operations.

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We
are currently in the process of implementing substantial changes to our core deposit platform. We may not be able to successfully implement this new core system in an effective
manner. In addition, we may incur significant increases in costs and encounter extensive delays in the implementation and rollout of our new operating system. If there are technological impediments,
unforeseen complications, errors or breakdowns in implementing this new core operating system or if this new core operating system does not meet the requirements of our customers, our business,
financial condition, results of operations or customer perceptions may be adversely affected.

In
addition, we provide our customers the ability to bank remotely, including online and over the telephone. The secure transmission of confidential information over the Internet and
other remote channels is a critical element of remote banking. Our network could be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches. We may be
required to spend significant capital and other resources to protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or viruses. To
the extent that our activities or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, litigation
and other possible liabilities. Any inability to prevent security breaches or computer viruses could also cause existing customers to lose confidence in our systems and could adversely affect our
reputation and our ability to generate business.

BankUnited is a de novo bank, which could be mistaken for the Failed Bank, and this and other reputational risks could affect our results.

BankUnited was established as ade novofederal savings association in order to
participate in the FDIC-assisted acquisition of the Failed Bank. There is a reputational risk in being incorrectly associated with the Failed Bank. Our ability to originate and maintain
accounts is highly dependent upon consumer and other external perceptions of our business practices and/or our financial health. Adverse perceptions regarding our business practices and/or our
financial health could damage our reputation in both the customer and funding markets, leading to difficulties in generating and maintaining accounts as well as in financing them. Adverse developments
with respect to the consumer or other external perceptions regarding the practices of our competitors, or our industry as a whole, may also adversely impact our reputation. In addition, adverse
reputational impacts on third parties with whom we have important relationships may also adversely impact our reputation. Adverse reputational impacts or events may also increase our litigation risk.
We carefully monitor internal and external developments for areas of potential reputational risk and have established governance structures to assist in evaluating such risks in our business practices
and decisions.

BankUnited Investment Services offers third-party products including mutual funds, annuities, life insurance, individual securities and other wealth management services
which could experience significant declines in value subjecting us to reputational damage and litigation risk.

Through our subsidiary BankUnited Investment Services, we offer third-party products including mutual funds, annuities, life insurance,
individual securities and other wealth management products and services. If these products do not generate competitive risk-adjusted returns that satisfy clients in a variety of asset
classes, we will have difficulty maintaining existing business and attracting new business. Additionally, our investment services businesses involve the risk that clients or others may sue us,
claiming that we have failed to perform under a contract or otherwise failed to carry out a duty owed to them. Our investment services businesses are particularly subject to this risk and this risk
may be heightened during periods when credit, equity or other financial markets are deteriorating in value or are particularly volatile, or when
clients or investors are experiencing losses. Significant declines in the performance of these third-party products could subject us to reputational damage and litigation risk.

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Risks Relating to the Regulation of Our Industry

The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may have a material effect on our operations.

On July 21, 2010, President Obama signed into law the Dodd-Frank Act, which imposes significant regulatory and
compliance changes. The key effects of the Dodd-Frank Act on our business are:



The
changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us
more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to
evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements or with any future changes in laws or regulations may
negatively impact our results of operations and financial condition. For a more detailed description of the Dodd-Frank Act, see Item 1 "BusinessRegulation and
SupervisionThe Dodd-Frank Act."

We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles,
or changes in them, or our failure to comply with them, may adversely affect us.

We are subject to extensive regulation, supervision, and legislation that govern almost all aspects of our operations. Intended to
protect customers, depositors and deposit insurance funds, these laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in
which we can engage, limit the dividend or distributions that BankUnited can pay to us, restrict the ability of institutions to guarantee our debt, and impose certain specific accounting requirements
on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than generally accepted accounting principles. Compliance with laws and
regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. Our failure to comply with these laws and regulations, even if the failure
follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other penalties, any of which could adversely affect our
results of operations, capital base and the price of our securities. Further, any new laws, rules and regulations could make compliance more difficult or expensive or otherwise adversely affect our
business and financial condition.

The FDIC's restoration plan and the related increased assessment rate could adversely affect our earnings.

Market developments have significantly depleted the DIF and reduced the ratio of reserves to insured deposits. As a result of recent
economic conditions and the enactment of the Dodd-Frank Act, the FDIC has increased the deposit insurance assessment rates and thus raised deposit premiums for insured depository
institutions. If these increases are insufficient for the DIF to meet its funding requirements, further special assessments or increases in deposit insurance premiums may be required. We are generally
unable to control the amount of premiums that we are required to pay for FDIC

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insurance.
If there are additional bank or financial institution failures, we may be required to pay even higher FDIC premiums than the recently increased levels. Any future additional assessments,
increases or required prepayments in FDIC insurance premiums may materially adversely affect results of operations.

Federal banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory
actions to which we are or become subject as a result of such examinations may adversely affect us.

Federal banking agencies, including the OTS, periodically conduct examinations of our business, including compliance with laws and
regulations. If, as a result of an examination, a federal banking agency were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or
other aspects of any of our operations had become unsatisfactory, or that the Company or its management was in violation of any law or regulation, it may take a number of different remedial actions as
it deems appropriate. These actions include the power to enjoin "unsafe or unsound" practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to
issue an administrative order that can be judicially enforced, to direct an increase in BankUnited's capital, to restrict our growth, to assess civil monetary penalties against our officers or
directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate BankUnited's deposit
insurance. If we become subject to such regulatory actions, our business, results of operations and reputation may be negatively impacted.

Many of our new activities and expansion plans require regulatory approvals, and failure to obtain them may restrict our growth.

We intend to complement and expand our business by pursuing strategic acquisitions of banks and other financial institutions. We must
generally receive federal regulatory approval before we can acquire an institution or business. In determining whether to approve a proposed acquisition, federal bank regulators will consider, among
other factors, the effect of the acquisition on the competition, our financial condition, and our future prospects. The regulators also review current and projected capital ratios and levels, the
competence, experience, and integrity of management and its record of compliance with laws and regulations, the convenience and needs of the communities to be served (including the acquiring
institution's record of compliance under the CRA) and the effectiveness of the acquiring institution in combating money laundering activities. Such regulatory approvals may not be granted on terms
that are acceptable to us, or at all. We may also be required to sell branches as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may
reduce the benefit of any acquisition.

In
addition to the acquisition of existing financial institutions, as opportunities arise, we plan to continuede novobranching as a part
of our internal growth strategy and possibly enter into new markets throughde novobranching.De novobranching and any acquisition carries with it numerous risks, including the inability to obtain all required regulatory approvals. The failure to obtain these regulatory approvals for potential future
strategic acquisitions andde novobranches may impact our business plans and restrict our growth.

Financial institutions, such as BankUnited, face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering
statutes and regulations.

The federal Bank Secrecy Act, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties,
to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement
Network, established by the U.S. Treasury Department to administer the

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Bank
Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements, and has recently engaged in coordinated enforcement efforts with the individual
federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. There is also increased scrutiny of compliance with the rules
enforced by the Office of Foreign Assets Control.

In
order to comply with regulations, guidelines and examination procedures in this area, we have enhanced our anti-money laundering program by adopting new policies and
procedures and selecting a new, robust automated anti-money laundering software solution that is scheduled to be implemented in early 2011. If our policies, procedures and systems are
deemed deficient or the policies, procedures and systems of the financial institutions that we have already acquired or may acquire in the future are deficient, we would be subject to liability,
including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan,
including our acquisition plans.

We are subject to the CRA and fair lending laws, and failure to comply with these laws could lead to material penalties.

The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory
lending requirements on financial institutions. The Department of Justice and other federal agencies are responsible for enforcing these laws and regulations. A successful challenge to an
institution's performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties,
injunctive relief, imposition of restrictions on mergers and acquisitions activity, and restrictions on expansion activity. Private parties may also have the ability to challenge an institution's
performance under fair lending laws in private class action litigation.

Item 1B.    Unresolved Staff Comments

None.

Item 2.    Properties

At December 31, 2010, we leased 120,672 square feet of office and operations space in Miami Lakes, Florida. This space includes
our principal executive offices, operations center and a retail branch. At December 31, 2010, we provided banking services at 81 branch locations in 13 Florida counties. Of the 81 branch
properties, we leased 76 locations and owned 5 locations.

At
December 31, 2010, we also dedicated approximately 2,100 square feet of office and operations space in Miami Lakes, Florida to house BankUnited Investment Services, 10,619
square feet of office and operations space in Hunt Valley, Maryland to house United Business Capital Lending, and 5,488 square feet of office and operations space in Scottsdale, Arizona to house
Pinnacle Public Finance.

We
believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.

Item 3.    Legal Proceedings

From time to time we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to
any legal proceedings the resolution of which we believe would have a material adverse effect on our business, operating results, financial condition or cash flow.

Item 4.    Removed and Reserved

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information and Holders of Record

Shares of our common stock began trading on the NYSE under the symbol "BKU" on January 28, 2011. As a result, we have not set
forth quarterly information with respect to the high and low prices for our common stock and the dividends declared on our common stock for the two most recent fiscal years. Prior to that time there
was no public market for our common stock. As of March 23, 2011, there were 39 stockholders of record of our common stock.

Equity Compensation Plan Information

Our equity compensation plan information required by this item is incorporated by reference to the information in Part III,
Item 12 "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersEquity Compensation Plan Information" of this Annual Report on
Form 10-K.

Dividend Policy

We anticipate paying a quarterly dividend of $0.14 per share on our common stock, subject to the discretion of our Board and dependent
on, among other things, our financial condition, results of operations, capital requirements, restrictions contained in future financing instruments and other factors that our Board may deem relevant.
Dividends from the Bank are the principal source of funds for the payment of dividends on our common stock. The Bank is subject to certain restrictions that may limit its ability to pay dividends to
us. See Item 1 "BusinessRegulation and SupervisionRegulatory Limits on Dividends and Distributions." During the period ended December 31, 2009, we did not pay a
cash dividend to the holder of our common stock. On October 28, 2010, we paid a quarterly dividend of $14.0 million, with a record date of October 15, 2010. On October 28,
2010, we also paid a one-time special dividend of $6.0 million, with a record date of October 19, 2010. On January 18, 2011, we paid another quarterly dividend of
$14.0 million, with a record date of January 3, 2011.

Use of Proceeds

Our registration statement on Form S-1 (File No. 333-170203) was declared effective on
January 27, 2011, pursuant to which we registered the offering and sale of 33,350,000 shares of common stock at an initial public offering price of $27.00 per share. Our initial public offering
included 4,000,000 newly issued shares of common stock sold by us (the primary offering) and 29,350,000 existing shares of common stock sold by selling stockholders (the secondary offering). The
29,350,000 shares of common stock sold by the selling stockholders in the secondary offering included 4,350,000 shares covered by an over-allotment option granted to the underwriters. On
January 27, 2011, we sold 4,000,000 shares of common stock for gross proceeds of $108 million, before underwriters' discounts and offering expenses, and the selling stockholders sold
29,350,000 shares (including 4,350,000 shares pursuant to their over-allotment option) for gross proceeds of $792.5 million, before underwriters' discounts.

Morgan
Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as joint book-running managers for the offering and as
representatives of the underwriters. In connection with the initial public offering and underwriters' exercise of the overallotment option, we paid $5.4 million in underwriting discounts to the
underwriters and the selling stockholders paid $39.6 million in underwriters' discounts to the underwriters.

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In
connection with the initial public offering including the underwriters' exercise of the overallotment option, we received net proceeds of $97.6 million, after deducting
underwriters' discounts of $5.4 million and additional estimated offering expenses of approximately $5.0 million. The offering expenses include SEC registration fees, FINRA filing fees,
NYSE listing fees and expenses, legal fees and expenses, printing expenses, transfer agent and registrar fees and expenses, accounting fees and expenses as well as other miscellaneous expenses. The
selling stockholders received net proceeds of approximately $752.3 million, after deducting underwriters' discounts of approximately $39.6 million. We did not receive any proceeds from
the sale of shares by the selling stockholders in the secondary offering.

During
the period from the closing of the offering on February 2, 2011 through the filing of this report, we have used the net proceeds from the offering for general corporate
purposes.

Recent Sales of Unregistered Securities

In the last three fiscal years, BankUnited, Inc. has issued the following securities:

On
April 28, 2009, in connection with its incorporation and initial capitalization, BankUnited, Inc. issued 1,000 shares of its common stock to BU Financial
Holdings LLC for $10, which shares were subsequently canceled at the time of the Acquisition.

Since
the Acquisition on May 21, 2009, BankUnited, Inc. issued an aggregate of 92,971,850 shares of its common stock to BU Financial Holdings LLC for consideration
of $950.3 million in capital investment transactions.

The
issuances of securities described in the preceding paragraphs were made in reliance upon the exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended, for transactions by an issuer not involving a public offering. BankUnited, Inc. did not offer or sell the securities by any form of general solicitation or general advertising,
informed the purchaser that the securities had not been registered under the Securities Act and were subject to restrictions on transfer, and made offers only to the purchaser, whom
BankUnited, Inc. believed had the knowledge and experience in financial and business matters to evaluate the merits and risks of an investment in the securities.

BankUnited, Inc.
granted certain of its employees (none of whom are named executive officers other than Mr. Melby, the "Management Members") 1,031,700 options to purchase
an aggregate of 1,031,700 shares of our common stock under our 2009 Stock Option Plan. 49,990 of these options were forfeited subsequent to grant. These grants were exempt from the registration
requirements of the Securities Act pursuant to Rule 701 promulgated thereunder inasmuch as they were offered and sold under written compensatory benefit plans and otherwise in compliance with
the provisions of Rule 701.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 6.    Selected Consolidated Financial Data

You should read the selected consolidated financial data set forth below in conjunction with "Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations," and the audited consolidated financial statements and the related notes thereto included elsewhere in this Form 10-K.
The selected consolidated financial data set forth below at December 31, 2010 and for the year then ended and at December 31, 2009 and for the period then ended is derived from our
audited consolidated financial statements included elsewhere in this Form 10-K. The selected consolidated financial data set forth below at September 30, 2008, 2007, and
2006, for the period from

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October 1,
2008 to May 21, 2009 and for the fiscal years ended September 30, 2008, 2007 and 2006 has been derived from the consolidated financial statements of the Failed Bank.

Although
we were incorporated on April 28, 2009, neither we nor the Bank had any substantive operations prior to the Acquisition on May 21, 2009. Results of operations of
the Company for the post-Acquisition periods are not comparable to the results of operations of the Failed Bank for the pre-Acquisition periods. Results of operations for the
post-Acquisition periods reflect, among other things, the acquisition method of accounting. See "Management's Discussion and Analysis of Financial Condition and Results of
OperationsPeriods Presented and Factors Affecting Comparability."

BankUnited, Inc.

Failed BankAt December 31,

At September 30,2010

2009

2008

2007

2006(unaudited)(dollars in thousands, except per share data)Consolidated Balance Sheet Data:Cash and cash equivalents

$
564,774

$
356,215

$
1,223,346

$
512,885

$
66,600Investment securities available for sale, at fair value


2,926,602


2,243,143


755,225


1,098,665


1,520,294Loans, net


3,875,857


4,588,898


11,249,367


12,561,693


11,400,706FDIC indemnification asset


2,667,401


3,279,165








Goodwill and other intangible assets


69,011


60,981


28,353


28,353


28,353Total assets


10,869,560


11,129,961


14,088,591


15,107,310


13,543,992Deposits


7,163,728


7,666,775


8,176,817


7,305,788


6,110,855Federal Home Loan Bank advances


2,255,200


2,079,051


5,279,350


6,234,360


5,174,350Total liabilities


9,616,052


10,035,701


13,689,821


13,904,508


12,538,156


33

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Table of Contents



BankUnited, Inc.

Failed BankPeriod from
April 28,
2009 to
December 31,
2009(1)

Period from
October 1,
2008 to
May 21,
2009(1)September 30,Year Ended
December 31,
20102008

2007

2006(unaudited)(dollars in thousands, except share data)Consolidated Income Statement Data:Interest income

$
557,688

$
335,524

$
339,068

$
834,460

$
957,897

$
712,807Interest expense


168,200


83,856


333,392


555,594


604,558


442,333Net interest income


389,488


251,668


5,676


278,866


353,339


270,474Provision for loan losses


51,407


22,621


919,139


856,374


31,500


10,400Net interest income (loss) after provision for loan losses


338,081


229,047


(913,463
)

(577,508
)

321,839


260,074Non-interest income (loss)


297,779


253,636


(81,431
)

(128,859
)

28,367


32,598Non-interest expense


323,320


283,262


238,403


246,480


185,634


136,668Income (loss) before income taxes


312,540


199,421


(1,233,297
)

(952,847
)

164,572


156,004Provision (benefit) for income before taxes


127,805


80,375





(94,462
)

55,067


51,794Net income (loss)

$
184,735

$
119,046

$
(1,233,297
)
$
(858,385
)
$
109,505

$
104,210Share Data:Earnings (loss) per common share, basic and diluted

$
1.99

$
1.29

$
(12,332,970
)
$
(8,583,850
)
$
1,095,054

$
1,042,100Weighted average common shares outstanding


92,950,735


92,664,910


100


100


100


100Other Data (unaudited):Financial ratiosReturn on average assets(2)


1.65
%

1.69
%

(14.26
)%

(5.94
)%

0.78
%

0.86
%Return on average common stockholder's equity(2)


15.43
%

18.98
%

(2041.04
)%

(75.43
)%

10.04
%

12.04
%Yield on earning assets(2)


7.23
%

7.42
%

3.91
%

5.91
%

6.96
%

6.06
%Cost of interest bearing liabilities(2)


1.81
%

1.39
%

3.94
%

4.36
%

4.91
%

4.16
%Equity to assets ratio


11.53
%

9.83
%

(7.25
)%

2.83
%

7.96
%

7.43
%Interest rate spread(2)


5.42
%

6.03
%

(0.03
)%

1.55
%

2.05
%

1.90
%Net interest margin(2)


5.05
%

5.58
%

0.06
%

1.98
%

2.57
%

2.30
%Loan to deposit ratio(5)


54.92
%

60.15
%

128.73
%

146.33
%

172.74
%

189.21
%Asset quality ratiosNon-performing loans to total loans(3)(5)


0.66
%

0.38
%

24.58
%

11.98
%

1.59
%

0.18
%Non-performing assets to total assets(4)


2.14
%

1.24
%

23.53
%

11.13
%

1.51
%

0.16
%Allowance for loan losses to total loans


1.48
%

0.49
%

11.14
%

5.98
%

0.46
%

0.32
%Allowance for loan losses to non- performing loans(3)


226.35
%

130.22
%

45.33
%

49.96
%

29.15
%

175.40
%Net charge-offs to average loans(2)


0.37
%

0.00
%

5.51
%

1.58
%

0.08
%

0.00
%


34

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Table of Contents



BankUnited, Inc.

Failed BankAt December 31,

At September 30,2010

2009(1)

2008

2007

2006(unaudited)Capital ratios(6)Tier 1 common capital to total risk weighted assets


41.30
%

40.42
%

4.90
%

14.64
%

13.79
%Tier 1 risk-based capital


41.30
%

40.42
%

4.90
%

14.64
%

13.79
%Total risk-based capital


42.04
%

40.55
%

6.21
%

15.37
%

14.28
%Tier 1 leverage


10.34
%

8.78
%

2.89
%

7.84
%

7.31
%


(1)The
Company was incorporated on April 28, 2009, but neither the Company nor the Bank had any substantive operations prior to the Acquisition on
May 21, 2009. The period from May 22, 2009 to December 31, 2009 contained 224 days. The period from October 1, 2008 to May 21, 2009 contained 233 days.(2)Ratio
is annualized for the period from October 1, 2008 to May 21, 2009 and for the period from May 22, 2009 to December 31,
2009. See note 1 above.(3)Non-performing
loans include nonaccrual loans, loans past due 90 days or more and still accruing and, for the pre-Acquisition
periods, certain other impaired loans still accruing interest. For the pre-Acquisition periods, restructured 1-4 single family residential loans in compliance with modified
terms are excluded from non-performing loans. For the post-Acquisition periods, contractually delinquent ACI loans on which interest continues to be accreted are excluded from
non-performing loans. These ratios may therefore not be compatible to similar ratios of our peers. The carrying value of ACI loans contractually delinquent by more than 90 days but
still accruing was $0.7 billion and $1.2 billion at December 31, 2010 and December 31, 2009, respectively.(4)Non-performing
assets include non-performing loans and OREO.(5)Total
loans is net of unearned discounts and deferred fees and costs.(6)All
capital ratios presented are ratios of the Bank.


Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to assist readers in understanding the consolidated financial
condition and results of operations of BankUnited, Inc. and should be read in conjunction with the consolidated financial statements, accompanying footnotes and supplemental financial data
included herein. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ
materially from management's expectations. Factors that could cause such differences are discussed in the sections entitled "Forward-Looking Statements" and "Risk Factors." We assume no obligation to
update any of these forward-looking statements.

Overview

BankUnited, Inc. is a savings and loan holding company with two wholly-owned subsidiaries: BankUnited, which is one of the
largest independent depository institutions headquartered in Florida by assets, and BankUnited Investment Services, a Florida insurance agency. As of the close of business on May 21, 2009,
BankUnited entered into the Purchase and Assumption Agreement including the Loss Sharing Agreements with the FDIC to acquire substantially all of the assets and assume all of the
non-brokered deposits and substantially all other liabilities of the Failed Bank. The Failed Bank was closed by the OTS and placed into receivership with the FDIC on May 21, 2009.
Neither the Company nor the Bank had any substantive operations prior to the Acquisition.

35

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Table of Contents

BankUnited has a network of 81 branches in 13 Florida counties as of December 31, 2010. Since the Acquisition, we have focused on providing a full range of
commercial and consumer banking services to growing companies and their executives, commercial and middle-market businesses and consumers in Florida's coastal regions. Through BankUnited, we deliver a
comprehensive range of traditional depository and lending products, online banking services and cash management tools to our customers. Through its non-bank subsidiary, BankUnited
Investment Services, the Company offers wealth management products as well as succession planning, estate planning and financial planning services.

In
the fourth quarter of 2010, we acquired two leasing companies for total cash consideration of approximately $50.5 million to facilitate establishing a leasing platform on a
national basis. Through United Capital Business Lending we offer equipment financing services and through Pinnacle Public Finance we offer municipal leasing services. In conjunction with those
acquisitions, we recorded lease receivables valued at $42.7 million, goodwill of $7.9 million, customer relationship intangible assets of $0.4 million, premises and equipment of
$0.6 million and liabilities of $1.1 million.

Periods Presented and Factors Affecting Comparability

Financial information presented throughout this "Management's Discussion and Analysis of Financial Condition and Results of Operations"
for the year ended December 31, 2010 and the period from May 22, 2009 through December 31, 2009 (which we refer to as the post-Acquisition periods) is that of the
Company. Historical financial information for the period from October 1, 2008 through May 21, 2009 and the fiscal year ended September 30, 2008 (which we refer to as the
pre-Acquisition periods) is that of the Failed Bank. Results of operations of the Company for the post-Acquisition periods are not comparable to the results of operations of
the Failed Bank for the pre-Acquisition periods. Results of operations for the post-Acquisition periods reflect, among other things, the acquisition method of accounting.

Under
the acquisition method of accounting, all of the assets acquired and liabilities assumed were initially recorded on the consolidated balance sheet of the Company at their estimated
fair values as of May 21, 2009. These estimated fair values differed substantially from the carrying amounts of the assets acquired and liabilities assumed as reflected in the financial
statements of the Failed Bank immediately prior to the Acquisition. The most significant reasons for the non-comparability of the consolidated financial statements
include:



36

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Table of Contents



A
summary comparison of the pre-Acquisition carrying amounts and estimated fair values of assets acquired and liabilities assumed as of the Acquisition date follows (dollars in thousands):

As Recorded by
the Failed Bank

Fair Value
Adjustments

Net Cash
Received From
the FDIC

As Recorded by
the CompanyAssetsCash and cash equivalents

$
1,160,321

$


$
2,156,393

$
3,316,714Investment securities, at fair value


608,388


(69,444
)




538,944FHLB stock


243,334








243,334Loans


11,174,232


(6,163,904
)




5,010,328FDIC receivable





69,444





69,444FDIC indemnification asset





3,442,890





3,442,890Bank owned life insurance


129,111








129,111Other real estate owned


199,819


(22,140
)




177,679Deferred tax asset, net





37,269





37,269Goodwill and other intangible assets





61,150





61,150Other assets


95,171


(44,696
)




50,475Total assets


13,610,376


(2,689,431
)

2,156,393


13,077,338LiabilitiesDeposits


8,225,916


108,566





8,334,482Securities sold under agreements to repurchase


1,310








1,310Federal Home Loan Bank advances


4,429,350


201,264





4,630,614Advance payments by borrowers for taxes and insurance


52,362








52,362Other liabilities


59,137


(567
)




58,570Total liabilities


12,768,075


309,263





13,077,338Net Assets

$
842,301

$
(2,998,694
)
$
2,156,393

$



Primary Factors Used to Evaluate Our Business

We manage and evaluate various aspects of our results of operations and our financial condition. We evaluate the levels and trends of
the line items included in our balance sheet and income statement, as well as various financial ratios that are commonly used in our industry. We analyze these

37

---



Table of Contents

ratios
and financial trends against our own historical performance, our budgeted performance and the financial condition and performance of comparable financial institutions in our region and
nationally.

Subsequent
to the Acquisition, comparison of our financial performance to that of other financial institutions is impacted by the application of the acquisition method of accounting and
the accounting for loans acquired with evidence of deterioration in credit quality, which we refer to as ACI loans, as discussed below.



The primary line items we use to manage and evaluate our results of operations include net interest income, the provision for loan
losses, non-interest income, non-interest expense and net income.



Net interest income is the difference between interest earned on interest earning assets and interest incurred on interest bearing
liabilities and is the primary driver of core earnings. Net interest income is impacted by the relative mix of interest earning assets and interest bearing liabilities, the ratio of interest earning
assets to total assets and of interest bearing liabilities to total funding sources, movements in market interest rates, levels of non-performing assets and pricing pressure from
competitors. Due to the revaluation of Covered Assets in conjunction with the application of acquisition accounting and the resultant accretion, generally Covered Assets have higher yields than do
assets purchased or originated since May 21, 2009. Net interest income will be impacted in future periods as Covered Assets are repaid or mature and these assets comprise a
lower percentage of total interest earning assets. The mix of interest earning assets is influenced by loan demand and by management's continual assessment of the rate of return and relative risk
associated with various classes of earning assets.

The
mix of interest bearing liabilities is influenced by management's assessment of the need for lower cost funding sources weighed against relationships with customers and growth
requirements and is impacted by competition for deposits in the Bank's market and the availability and pricing of other sources of funds.

Key
measures that we use to evaluate our net interest income are the level and stability of the net interest margin and the interest rate spread. Net interest margin is calculated by
dividing net interest income for the period by average interest earning assets. The interest rate spread is the difference between the yield earned on average interest earning assets and the rate paid
on average interest bearing liabilities for the period.

For
the post-Acquisition periods, net interest income is also impacted by accretion of fair value adjustments recorded in conjunction with the Acquisition and the accounting
for ACI loans. Fair value adjustments of interest earning assets and interest bearing liabilities recorded at Acquisition are accreted to interest income or expense over the lives of the related
assets or liabilities. Generally, accretion of fair value adjustments increases interest income and decreases interest expense, and thus has a positive impact on our net interest income, net interest
margin and interest rate spread.

At
Acquisition, ACI loans were recorded at fair value, measured based on the present value of expected cash flows. The excess of expected cash flows over the recorded fair value at
Acquisition, known as accretable yield, is being recognized as interest income over the lives of the underlying loans. Since the post-Acquisition carrying value of ACI loans is based on
the amount expected to be collected, and due to the resultant accretion, these loans are not classified as nonaccrual, although they may be contractually delinquent. Accretion related to ACI loans has
a positive impact on our net interest income, net interest margin and interest rate spread. The impact of accretion and ACI loan accounting

38

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Table of Contents

on
net interest income makes it difficult to compare our net interest margin and interest rate spread to those reported by other financial institutions.

The
accretion of fair value adjustments will continue to have a significant impact on our net interest income as long as Covered Assets represent a significant portion of our interest
earning assets as opposed to assets originated or purchased after May 21, 2009. At December 31, 2010, Covered Loans represented 86.3% of our loan portfolio (based on book value) and
Covered Securities represented 9.0% of our investment portfolio. In total, covered interest earning assets represented 47.8% of our interest earning assets at December 31, 2010.

Interest
expense incurred on our interest bearing liabilities is impacted by the accretion of fair value adjustments on our time deposits and our advances from the FHLB recorded in
connection with the Acquisition. However, the impact on interest expense has decreased significantly in 2010 and will continue to decrease in 2011. Accretion of fair value adjustments on time deposits
totaled $21.4 million for the year ended December 31, 2010 as compared to $79.9 million for the period ended December 31, 2009. Accretion of fair value adjustments on FHLB
advances totaled $23.9 million for the year ended December 31, 2010 as compared to $25.1 million for the period ended December 31, 2009. For 2011, accretion of fair value
adjustments on time deposits is projected to be $7.0 million, and accretion of fair value adjustments on FHLB advances is projected to be $19.1 million.



The provision for loan losses is the amount of expense that, based on our judgment, is required to maintain the allowance for loan
losses at an adequate level to absorb probable losses inherent in the loan portfolio at the balance sheet date and that, in management's judgment, is appropriate under U.S. generally accepted
accounting principles. The determination of the amount of the allowance is complex and involves a high degree of judgment and subjectivity.

The
risk of loss associated with Covered Loans differs significantly from the risk of loss associated with non-Covered Loans. The Loss Sharing Agreements significantly limit
the Company's exposure to credit losses on Covered Loans. Recognition of future losses on Covered Loans is also mitigated by the fair market value of loans established in the application of
acquisition accounting. Because the determination of fair value at which the loans acquired from the Failed Bank were initially recorded as of May 21, 2009 encompassed assumptions about
expected future cash flows and credit risk, no allowance for loan losses was recorded at the date of acquisition. Fair value adjustments to the carrying amount of acquired loans totaled
$6.2 billion.

Covered
Loans may be further broken out into two broad categories: (i) ACI loans and (ii) loans that did not exhibit evidence of deterioration in credit quality at
acquisition, or non-ACI loans. Subsequent to the Acquisition, an allowance for loan losses related to the ACI loans is recorded only when estimates of future cash flows related to these
loans are revised downward, indicating further deterioration in credit quality. An allowance for loan losses for non-ACI loans may be established if factors considered relevant by
management indicate that the credit quality of the non-ACI loans has deteriorated.

Since
the recording of a provision for loan losses on Covered Loans represents an increase in the amount of reimbursement we expect to receive from the FDIC, we also record an increase
in the FDIC indemnification asset for the present value of the projected increase in reimbursement, with a corresponding increase in non-interest income, recorded in "Net gain (loss) on
indemnification asset resulting from net recoveries" as discussed below in the section entitled "Non-interest income." Therefore, the impact on our results of operations of any provision
for loan losses on Covered Loans is significantly mitigated by an increase in non-interest income. For the year ended December 31, 2010 and the period ended December 31,
2009, we recorded provisions for loan losses on Covered Loans of $46.5 million and $21.3 million, respectively. For the year ended December 31, 2010 and the period

39

---



Table of Contents

ended
December 31, 2009, the impact to earnings from these provisions was significantly mitigated by recording non-interest income of $29.3 million and $14.4 million,
respectively.

For
the year ended December 31, 2010 and the period ended December 31, 2009, we recorded provisions for loan losses of $4.9 million and $1.3 million,
respectively, for loans we originated or purchased subsequent to the Acquisition. These loans are not protected by the Loss Sharing Agreements and as such, these provisions are not offset by an
increase in non-interest income.



For the year ended December 31, 2010 and the period ended December 31, 2009, the majority of our non-interest
income resulted from the resolution of assets covered by our Loss Sharing Agreements with the FDIC and accretion of discount on the FDIC indemnification asset. Typically, the primary components of
non-interest income of financial institutions are service charges and fees and gains or losses related to the sale or valuation of investment securities, loans and other assets. Thus, it
is difficult to compare the amount and composition of our non-interest income with that of other financial institutions of our size both regionally and nationally.

The
FDIC indemnification asset was initially recorded at its estimated fair value of $3.4 billion, represented by the present value of estimated future cash payments from the FDIC
for probable losses on Covered Assets, up to 90 days of past due interest, excluding interest related to loans on nonaccrual at Acquisition, and reimbursement of certain expenses. The discount
rate of 7.10% used in the initial calculation of fair value was determined using a risk-free yield curve plus a premium reflecting the uncertainty related to the collection, amount and
timing of the cash flows and other liquidity concerns. Accretion is a result of discounting and may also increase or decrease from period to period due to changes in expected cash flows from the
Covered Loans.

If
projected cash flows from the ACI loans increase, the yield on the loans will increase and the discount rate of accretion on the FDIC indemnification asset will decrease as less cash
flow is expected to be recovered from the indemnification asset. For the year ended December 31, 2010 and the period ended December 31, 2009, the average rate at which income was
accreted on the FDIC indemnification asset was 4.69% and 7.10%, respectively.

A
rollforward of the FDIC indemnification asset from May 21, 2009 to December 31, 2010 follows(dollars in thousands):

Balance, May 21, 2009

$
3,442,890Accretion


149,544Reduction for claims filed


(291,508
)Net gain (loss) on indemnification asset resulting from net recoveries


(21,761
)Balance, December 31, 2009


3,279,165Accretion


134,703Reduction for claims filed


(764,203
)Net gain (loss) on indemnification asset resulting from net recoveries


17,736Balance, December 31, 2010

$
2,667,401


Accretion
of the discount on the FDIC indemnification asset results in an increase to the balance of the FDIC indemnification asset with a corresponding increase in
non-interest income. We project the amount of accretion will decline in future periods, because our projected cash flows from ACI loans have been increasing, and as a result we expect to
collect less cash flow from the indemnification asset as discussed above.

40

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Table of Contents

The
balance of the FDIC indemnification asset is reduced as claims for reimbursement are filed with the FDIC. The receipt of payments from the FDIC results in an increase to cash.

The
balance of the FDIC indemnification asset is also reduced or increased as a result of decreases or increases in estimated cash flows to be received from the FDIC related to the
ultimate resolution of Covered Assets. We record an offsetting entry in the income statement line item "Net gain (loss) on indemnification asset resulting from net recoveries." This line item includes
the significantly mitigating impact related to loan loss provisions on Covered Loans, the impact of lower projected FDIC reimbursement resulting from the favorable resolution of Covered Loans as
described below, and the offsetting impact related to gains or losses on the sale of Covered Loans and OREO and impairment of OREO. The table below shows the various components of this income
statement line item for the year ended December 31, 2010 and the period ended December 31, 2009.

Income
from resolution of Covered Loans is included in the income statement line item "Income from resolution of Covered Assets, net" and represents the difference in the projected
losses from ACI loans and consideration received in satisfaction of such loans that were resolved, either by prepayment, sale, foreclosure, short sale or, for the non-residential
portfolio, charge-offs, as well as losses from permanent modification of ACI loans accounted for in pools during the period. Gains and losses from the resolution or permanent modification
of Covered Loans are included in this line item. The amount of income recorded in any period will be impacted by the number and unpaid principal balance ("UPB") of ACI loans resolved and our ability
to accurately project cash flows from ACI loans in future periods. In general, we expect the amount of this income to decrease in future periods as we gain additional history in terms of the
performance of the loans we acquired, which we will reflect in the update of our projected cash flows from ACI loans each quarter. Income from the resolution of non-ACI loans is not
significant.

Under
the Purchase and Assumption Agreement, we are permitted to sell on an annual basis up to 2.5% of the Covered Loans, based upon the UPB at Acquisition, or approximately
$280.0 million, without prior consent of the FDIC. Any losses incurred from such loan sales are covered under the Loss Sharing Agreements. A loss of $76.4 million was recognized during
the year ended December 31, 2010 on non-recourse sales of ACI loans with UPB of $272.2 million to third parties. During the period ended December 31, 2009, a loss of
$47.1 million was recognized on non-recourse sales of ACI loans with UPB of $275.0 million to third parties. The losses for the year ended December 31, 2010 and the
period ended December 31, 2009 were significantly mitigated by income of approximately $57.7 million and $37.6 million, respectively, included in the income statement line item
"Net gain (loss) on indemnification asset resulting from net recoveries." We may continue to exercise our right to sell Covered Loans in future periods.

The
following table summarizes the pre-tax components of the gains and losses associated with the resolution of Covered Assets as described above, plus the provision for loan
losses on non-Covered

41

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Table of Contents

Loans,
for the year ended December 31, 2010 and period ended December 31, 2009(dollars in thousands):

Year Ended December 31, 2010

Period Ended December 31, 2009Transaction
Income
(Loss)

Net Gain
(Loss) on
Indemnifi-
cation Asset
Resulting From
Net Recoveries

Net Impact
on Earnings

Transaction
Income
(Loss)

Net Gain
(Loss) on
Indemnifi-
cation Asset
Resulting From
Net Recoveries

Net Impact
on EarningsProvision for losses on Covered Loans

$
(46,481
)
$
29,291

$
(17,190
)
$
(21,287
)
$
14,433

$
(6,854
)Provision for losses on non-Covered Loans


(4,926
)




(4,926
)

(1,334
)




(1,334
)Total provision for loan losses


(51,407
)

29,291


(22,116
)

(22,621
)

14,433


(8,188
)Income from resolution of Covered Assets, net


121,462


(84,138
)

37,324


120,954


(88,801
)

32,153Net loss on sale of Covered Loans


(76,360
)

57,747


(18,613
)

(47,078
)

37,600


(9,478
)45,102


(26,391
)

18,711


73,876


(51,201
)

22,675Loss on sale of OREO


(2,174
)

1,932


(242
)

(807
)Impairment of OREO


(16,131
)

12,904


(3,227
)

(21,055
)(18,305
)

14,836


(3,469
)

(21,862
)

15,007


(6,855
)Total

$
(24,610
)
$
17,736

$
(6,874
)
$
29,393

$
(21,761
)
$
7,632


In addition to the loss on covered loans reflected in the table above, the income statement line item "Loss on sale of loans, net" for the year
ended December 31, 2010 includes approximately $50 thousand of gains on the sale of loans held for sale. These transactions are not subject to the loss sharing agreements.

The
following table provides further detail of the components of income from resolution of Covered Assets, net(dollars in thousands):

Year Ended
December 31,
2010

Period Ended
December 31,
2009Payments in full

$
142,172

$
76,428Foreclosures


(15,691
)

30,489Short sales


7,801


28,610Modifications


(2,424
)

Charge-offs


(14,303
)

(14,573
)Recoveries


3,907


Income from resolution of Covered Assets, net

$
121,462

$
120,954


The
volume of loan resolutions resulting from repayments, modifications and recoveries increased for the year ended December 31, 2010 compared to the period ended
December 31, 2009 as we augmented and enhanced our mortgage servicing and workout and recovery departments and were increasingly able to work with borrowers to effect resolution of outstanding
loans. The impact of modifications on income from resolution of Covered Assets reflects increased participation by borrowers in the HAMP program during 2010. Net gains from foreclosures and short
sales declined for the year ended December 31, 2010 due to continuing home price deterioration in our primary market areas. The impact
of additional historical experience on our ability to estimate future cash flows from these types of resolutions has also reduced the effect of these resolutions on current period earnings.

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Certain OREO related expenses, including attorney's fees, foreclosure costs, property preservation costs, maintenance and repair costs, advances for taxes and
insurance, appraisal costs and inspection costs are also reimbursed under the terms of the Loss Sharing Agreements with the FDIC. Such expenses are recorded in non-interest expense when
incurred, and the reimbursement is recorded as "FDIC reimbursement of costs of resolution of covered assets" in non-interest income when submitted to the FDIC, generally upon ultimate
resolution of the underlying Covered Asset. This may result in the expense and the related income from reimbursements being recorded in different periods. For the year ended December 31, 2010
and the period ended December 31, 2009 non-interest expense includes approximately $49.7 million and $26.1 million, respectively, of disbursements subject to
reimbursement under the loss sharing agreements. For those same periods, claims of $29.8 million and $8.1 million, respectively, were submitted to the FDIC for reimbursement. As of
December 31, 2010, $28.5 million of disbursements remain to be submitted for reimbursement from the FDIC in future periods.



Non-interest expense includes employee compensation and benefits, occupancy and equipment, impairment of OREO, foreclosure
expense, OREO expense, deposit insurance expense, professional fees, telecommunications and data processing and other expense. For the period ended December 31, 2009, non-interest
expense included two
significant non-recurring items. The first of these was the write-off of a receivable from the FDIC in the amount of $69.4 million, which was established at the date of
the Acquisition and related to the disputed valuation of certain acquired investment securities. Given that the disagreement over the valuation extended past December 31, 2009 with the
likelihood that no additional consideration would be paid, the receivable was written off in 2009. Subsequently, the Company reached a settlement with the FDIC regarding this dispute. Under the
settlement, the Company received $24.1 million, which was reflected in non-interest income in the fourth quarter of 2010. The second of these non-recurring items was
$39.8 million in direct costs associated with the Acquisition, consisting primarily of legal and investment banking advisory fees.

Our
employee compensation and benefits expense includes expense related to Profits Interest Units ("PIUs") issued to certain members of executive management. The PIUs are divided into
two equal types of profits interests. Half of the PIUs, which we refer to as time-based PIUs, are time-based and vest with the passage of time following the grant date. The
remaining half of the PIUs, which we refer to as IRR-based PIUs, vested immediately prior to the consummation of the initial public offering ("IPO") of our common stock in January, 2011.
Fair value of PIUs is estimated using a Black-Scholes option pricing model including assumptions as to expected volatility, dividends, terms, and risk-free rates. Beginning with the third
quarter of 2009, the fair value is updated quarterly. The fair value of the PIUs has increased since the third quarter of 2009 through December 31, 2010, driven by a reduction in
risk-free rates, an increase in expected volatility and an increase in the value of our common shares. The estimated fair value per unit of the Company's PIUs from September 30,
2009 to December 31, 2010 is as follows(dollars in thousands):

September 30, 2009

$
707.30December 31, 2009

$
850.30March 31, 2010

$
843.70June 30, 2010

$
1,029.85September 30, 2010

$
1,238.25December 31, 2010

$
1,627.01


For
additional information, see "Compensation Discussion and AnalysisExecutive Officer CompensationEquity-Based Compensation."

Compensation
expense for the time-based PIUs is recorded over the vesting period based on their fair value. For the year ended December 31, 2010 and the period ended
December 31, 2009, we

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recorded
compensation expense related to time-based PIUs of $36.2 million and $8.8 million, respectively.

In
January 2011, in conjunction with the IPO, we recorded additional compensation expense of approximately $110.4 million related to the vesting of the IRR-based PIUs
and the exchange of PIUs for a combination of common stock and options.

OREO
expense and foreclosure expense is comprised of net gains or losses on the sale of OREO properties, expenses of holding and maintaining OREO properties such as real estate taxes and
insurance, and legal fees and other foreclosure expenses. Impairment of OREO represents further deterioration in the fair value of properties that were initially recorded at fair value at the time of
foreclosure. OREO expense, foreclosure expense and impairment of OREO have remained at high
levels since the Acquisition due to continuing deterioration in home prices coupled with the high volume of foreclosures.

At
December 31, 2010, all OREO properties were covered by the Loss Sharing Agreements with the FDIC. For the post-Acquisition periods, OREO losses are substantially
offset by non-interest income related to indemnification by the FDIC. Generally, OREO related expenses are also reimbursed under the terms of the Loss Sharing Agreements with the FDIC.

Other
non-interest expense includes the increase in value of the warrant issued to the FDIC in conjunction with the Acquisition. Based on its initial terms, the value of the
warrant equals 10% of the value the Company realizes in an IPO or exit event in excess of the valuation that would be implied if the Company was valued at the average
price-to-tangible book value multiple for the top quartile of publicly traded U.S. banks and thrifts in excess of $10 billion in assets. We utilized information provided
by third party valuation specialists to assist in the determination of the fair value of the warrant at the Acquisition and at each quarter end beginning with September 30, 2009 through
September 30, 2010. The warrant was initially recorded with a fair value of $1.5 million at May 21, 2009. In October 2010, the Company and the FDIC amended the warrant to
guarantee a minimum value to the FDIC in the amount of $25.0 million. During year ended December 31, 2010 and the period ended December 31, 2009, we recorded $21.8 million
and $1.7 million, respectively, of non-interest expense reflecting the increase in the value of the warrant which, at December 31, 2010, was adjusted to the guaranteed
minimum value. In February, 2011, the Company redeemed the FDIC warrant for its agreed upon value of $25.0 million in cash.

We
evaluate our non-interest expense based on measures including our efficiency ratio and trends in the individual categories of non-interest expense, after
giving consideration to the planned growth of our business.



We evaluate our net income based on measures including return on average assets and return on average common stockholder's equity.

Financial Condition

Our balance sheets for the post-Acquisition periods reflect the impact of the application of acquisition accounting and the
resulting adjustment of assets acquired
and liabilities assumed to their fair values, and are therefore not comparable in many respects to balance sheets of the Failed Bank for the pre-Acquisition periods. In particular, the
carrying amount of investment securities, loans, the FDIC indemnification asset, goodwill and other intangible assets, net deferred tax assets, deposit liabilities, and FHLB advances were materially
impacted by these adjustments.

Loans,
OREO and certain investment securities, including certain private-label mortgage-backed and non-investment grade securities acquired from the Failed Bank are covered
by the Loss Sharing

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Agreements
with the FDIC. The Loss Sharing Agreements afford the Company significant protection against future credit losses related to these assets. Under the Loss Sharing Agreements, the FDIC will
cover 80% of losses and certain expenses related to the Covered Assets up to the $4.0 billion stated threshold and 95% of losses and certain expenses that exceed the $4.0 billion stated
threshold. The Loss Sharing Agreements last for ten years for single family residential loans and for five years (with recoveries for eight years) for other loan types and investment securities. The
Loss Sharing Agreements' coverage may be extended for two additional years under certain circumstances.

Of
the securities acquired in the Acquisition, $263.6 million at fair value of private label mortgage-backed securities and mortgage-backed security mutual funds, trust preferred
collateralized debt obligations, Agency preferred stocks, and corporate securities are covered under the non-residential Loss Sharing Agreement. BankUnited will be reimbursed 80% (95% if
cumulative losses have exceeded the $4.0 billion stated threshold) of realized losses, other-than-temporary impairments and any reimbursable expenses. BankUnited must
pay the FDIC 80% (95% if cumulative losses are greater than the stated threshold) of realized gains and other-than-temporary impairment recoveries. Unrealized
mark-to-market changes from the application of fair value accounting do not qualify for loss sharing. BankUnited cannot sell securities covered under the Loss Sharing
Agreements without prior approval of the FDIC. To date, we have not submitted any claims for reimbursement for the investment securities covered under the Loss Sharing Agreements.

The
portfolio of available for sale securities has grown to $2.9 billion at December 31, 2010 from $2.2 billion at December 31, 2009 and $0.5 billion
immediately following the Acquisition. Growth of the investment portfolio since the Acquisition has been driven primarily by the deployment of cash acquired and cash generated from loan resolution
activity into higher yielding assets during a period of diminished loan demand. Our investment strategy has focused on providing liquidity necessary for day-to-day operations,
adding a suitable balance of high credit quality, diversifying assets to the consolidated balance sheet, managing interest rate risk, and generating acceptable returns given our established risk
parameters. We have sought to maintain liquidity and manage interest rate risk by investing a significant portion of the portfolio in high quality liquid securities consisting primarily of U.S.
Government agency floating rate residential mortgage-backed securities. We have also invested in highly rated structured products including private label residential mortgage-backed securities and
Re-securitized Real Estate Mortgage Investment Conduits, or "Re-REMICS", bank preferred stocks and asset-backed securities
collateralized primarily by auto loans, credit card receivables, student loans and floor plan loans that, while somewhat less liquid, provide us with higher yields. A relatively short effective
portfolio duration helps mitigate interest rate risk arising from the currently low level of market interest rates and the longer duration of the loan portfolio acquired from the Failed Bank.

Loans
acquired in the Acquisition were recorded at their estimated fair values at Acquisition, which were substantially less than the UPB of the loans. Additionally, the allowance for
loan losses, discounts, premiums, and deferred origination fees and costs related to the acquired loans were eliminated in the application of the acquisition method of accounting. Net loans decreased
to $3.9 billion at December 31, 2010 from $4.6 billion at December 31, 2009 and $5.0 billion immediately following the Acquisition, primarily due to the resolution
of ACI loans.

Residential
loan demand in our primary market areas remains depressed, limiting the volume of new residential originations, but there has been growth in the commercial loan portfolio
commensurate with a shift in our lending strategy to an emphasis on commercial and commercial real estate lending.

Asset Quality

In discussing asset quality, a distinction must be made between Covered Loans and loans originated or purchased by us since the
Acquisition, or the non-Covered Loans. Non-Covered Loans were underwritten under significantly different and generally more conservative standards than the

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Covered
Loans. In particular, credit approval policies have been strengthened, wholesale mortgage origination channels have been eliminated, "no-doc" and option adjustable rate mortgage,
or ARM, loan products have been eliminated, and real estate appraisal policies have been improved. Although the risk profile of Covered Loans is higher than that of the non-Covered Loans,
our exposure to loss related to the Covered Loans is significantly mitigated by the Loss Sharing Agreements and by the fair value basis recorded in these loans resulting from the application of
acquisition accounting.

In
monitoring asset quality, we consider the results of our internal credit risk rating process and certain key ratios including the ratio of non-performing loans to total
loans, non-performing assets to total assets, portfolio delinquency and charge-off trends, among other factors. Comparison of these metrics to those reported by other financial
institutions and to historical metrics of the Failed Bank is difficult because of the impact of the revaluation of the acquired loans and of ACI loan accounting. Our non-performing asset
ratios as well as the ratio of the allowance for loan losses to total
loans are lower and the ratio of the allowance for loan losses to non-performing loans is higher as a result of acquisition accounting and ACI loan accounting. ACI loans are not reflected
as nonaccrual loans even though they may be contractually delinquent due to continuing discount accretion. Discount accretion continues to be recorded as there continues to be an expectation of future
cash flows from these loans in excess of their carrying amounts.

As
of December 31, 2010, substantially all of our non-performing assets are Covered Assets.

Funding Sources

Deposits are our primary funding source, supplemented by FHLB advances. Since the Acquisition, we have worked towards optimizing our
deposit mix and lowering our cost of deposits by reducing rate sensitive time deposits. In the future, we expect commercial core deposits will drive core deposit growth. At Acquisition, approximately
74.8% of total deposits were concentrated in time deposits, with consumer core deposits accounting for 21.7% of total deposits and commercial core deposits accounting for 3.5% of total deposits. At
December 31, 2010, time deposits accounted for 44.5% of total deposits while consumer core deposits represented 43.0% of the total and commercial core deposits represented 12.5% of total
deposits.

The
Bank's liquidity needs are primarily met by its cash position, growth in core deposits, cash flow from its amortizing investment and loan portfolios, and reimbursements under the
Loss Sharing Agreements. If necessary, the Bank currently has the ability to raise additional liquidity through collateralized borrowings, FHLB advances or the sale of available for sale investment
securities. We regularly monitor several measures of liquidity, including liquid assets, defined as cash and cash equivalents, and pledgeable securities, to total assets.

Strengths, Opportunities and Challenges

Management believes that our Company has several key strengths, including:



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Management
has identified significant opportunities for our Company, including:



We
have also identified significant challenges confronting the industry and our Company:



Recent Regulatory Actions Impacting the Financial Services Industry

Regulatory policy and actions have become increasingly subject to change and difficult to predict, both in general and as they may be
applied specifically to the Company.

On
July 21, 2010, the Dodd-Frank Act was signed into law. The Dodd-Frank Act implements far-reaching changes across the financial regulatory
landscape, including provisions that, among other things, will:



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Many
aspects of the Dodd-Frank Act are subject to rulemaking and will take effect over several years, making it difficult to anticipate the overall financial impact on the
Company and the financial services industry more generally. Provisions in the legislation that affect deposit insurance assessments and payment of interest on demand deposits could increase the costs
associated with deposits. Provisions in the legislation that will impose new capital requirements on the Company could require the Company to seek additional sources of capital in the future.

In
addition, other proposals have been offered by the current administration, by members of Congress and international regulatory forums that, if enacted, may have significant and
potentially adverse effects
on the Company, the full impact of which is difficult to predict at this time. For additional discussion, see "Regulation and Supervision."

Results of Operations for the Post-Acquisition Periods

The Company reported net income of $184.7 million for the year ended December 31, 2010 and $119.0 million for the
period from April 28, 2009 (date of inception) through December 31, 2009.



The following table presents, for the periods indicated, information about (i) average balances, the total dollar amount of
interest income from earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest bearing liabilities and the resultant
average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Nonaccrual and restructured loans are included in the average balances
presented in this table;

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however,
interest income foregone on nonaccrual loans is not included. Yields have been calculated on a pre-tax basis(dollars in
thousands):

Year Ended
December 31, 2010

Period From May 22, 2009 to
December 31, 2009Average
Balance

Interest

Yield/
Rate

Average
Balance

Interest

Yield/
Rate(1)Assets:Interest earning assets:Investment securities available for sale

$
472,033

$
12,073


2.56
%
$
69,778

$
1,999


4.71
%Mortgage-backed securities


2,419,460


112,189


4.64
%

889,776


43,143


7.97
%Total investment securities available for sale


2,891,493


124,262


4.30
%

959,554


45,142


7.73
%Other interest earning assets


640,506


1,958


0.31
%

1,719,417


2,922


0.28
%Loans receivable


4,181,062


431,468


10.32
%

4,754,739


287,460


9.92
%Total interest earning assets


7,713,061


557,688


7.23
%

7,433,710


335,524


7.42
%Allowance for loan losses


(38,236
)







(1,031
)Noninterest earning assets


3,513,839








4,026,356Total assets

$
11,188,664







$
11,459,035Liabilities and Equity:Interest bearing liabilities:Interest bearing deposits:Interest bearing demand

$
273,897

$
1,981


0.72
%
$
183,416

$
891


0.79
%Savings and money market


2,870,768


34,243


1.19
%

2,153,446


25,578


1.94
%Time deposits


3,889,961


72,120


1.85
%

5,506,320


31,360


0.93
%Total interest bearing deposits


7,034,626


108,344


1.54
%

7,843,182


57,829


1.20
%Borrowings:FHLB advances


2,244,601


59,784


2.66
%

1,974,755


26,026


2.15
%Short term borrowings


7,812


72


0.92
%

2,091


1


0.02
%Total interest bearing liabilities


9,287,039


168,200


1.81
%

9,820,028


83,856


1.39
%Non interest bearing demand deposits


440,673








303,810Other non-interest bearing liabilities


263,789








313,399Total liabilities


9,991,501








10,437,237Equity


1,197,163








1,021,798Total liabilities and equity

$
11,188,664







$
11,459,035Net interest income




$
389,488







$
251,668Interest rate spread








5.42
%







6.03
%Net interest margin








5.05
%







5.58
%


(1)Annualized.


Increases
and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and liabilities, as well as changes in average
interest rates, which are impacted by accretion of fair value adjustments recorded in conjunction with the Acquisition.

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The
comparison of total interest income and total interest expense for the year ended December 31, 2010 to the period ended December 31, 2009 is also impacted by the different number of
days in the comparative periods. The following table shows the effect that these factors had on the interest earned on our interest earning assets and the interest incurred on our interest bearing
liabilities for the periods indicated. The effect of changes in volume is determined by multiplying the change in volume by the previous period's average rate. Similarly, the effect of rate changes is
calculated by multiplying the change in average rate by the previous period's volume. Changes applicable to both volume and rate have been allocated to volume(dollars in
thousands):

Year Ended December 31, 2010
Compared to Period Ended December 31, 2009Changes
in Volume

Changes
in Rate

Change due
to Number
of Days

Total
Increase
(Decrease)Interest Income Attributable toInvestment securities available for sale

$
6,846

$
(1,501
)
$
4,729

$
10,074Mortgage-backed securities


54,767


(29,662
)

43,941


69,046Total investment securities available for sale


61,613


(31,163
)

48,670


79,120Other interest earning assets


(2,215
)

495


756


(964
)Loans


(43,983
)

18,999


168,992


144,008Total interest income


15,415


(11,669
)

218,418


222,164Interest Expense Attributable toInterest bearing demand deposits

$
450

$
(125
)
$
765

$
1,090Savings and money market deposit accounts


11,429


(15,992
)

13,228


8,665Time deposits


(38,087
)

50,987


27,860


40,760Total interest bearing deposits


(26,208
)

34,870


41,853


50,515FHLB advances


475


10,188


23,095


33,758Short term borrowings


24


19


28


71Total interest expense


(25,709
)

45,077


64,976


84,344Increase (decrease) in net interest income

$
41,124

$
(56,746
)
$
153,442

$
137,820


Year ended December 31, 2010 compared to period from May 22, 2009 to December 31, 2009

Net interest income was $389.5 million for the year ended December 31, 2010 and $251.7 million for the period
ended December 31, 2009, for an increase of $137.8 million. The increase in net interest income was comprised of an increase in interest income of $222.1 million partially offset
by an increase in interest expense of $84.3 million.

On
an annualized basis, net interest income was $389.5 million and $414.9 million for the year ended December 31, 2010 and period ended December 31, 2009,
respectively. The decline of $25.4 million, or 6.1%, in annualized net interest income was comprised of an increase of $31.6 million in interest expense partly offset by an increase of
$6.2 million in interest income.

The
increase in interest income on an annualized basis reflects increased interest income from investment securities partially offset by a decline in interest income from loans. The
increase in interest income from investment securities resulted from an increase in average volume significantly mitigated by a decline in the average yield. The average yield on investment securities
declined to 4.30% for the year ended December 31, 2010 from 7.73% for the period ended December 31, 2009. The decrease in average yield resulted primarily from new purchases reflecting
lower general market rates of interest as well as the continued impact of a shift since the Acquisition in the type of securities purchased, including $1.2 billion of U.S. Government agency
floating rate securities and $0.4 billion of

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non-mortgage
asset-backed securities purchased as of December 31, 2010. The decline in interest income from loans is indicative of a decline in average volume resulting from
pay-downs and resolutions, partially offset by an increase in the average yield to 10.32% for the year ended December 31, 2010 as compared to 9.92% for the period ended
December 31, 2009. The increased yield reflects an increased yield on Covered Loans partially offset by the origination and purchase of new loans at lower prevailing market rates of interest..
The average yield on loans originated and purchased since the Acquisition was 5.46% and 6.35% for the year ended December 31, 2010 and period ended December 31, 2009, respectively. The
yield on Covered Loans increased to 10.66% for the year ended December 31, 2010 from 9.93% for the period ending December 31, 2009 due to an increase in projected cash flows from the
Covered ACI Loans.

Interest
expense on deposits increased on an annualized basis by $14.1 million for the year ended December 31, 2010 due to lower accretion of fair market value adjustments
on time deposits, partially mitigated by a shift in deposit mix toward lower rate products and a decline in market rates. Accretion of fair value adjustments on time deposits totaled
$21.4 million for the year ended December 31, 2010 as compared to $79.9 million for the period ended December 31, 2009. The decline in accretion of fair value adjustments
on time deposits is attributable to the maturity and continued run-off of acquired time deposits. The average rate paid on time deposits excluding the impact of accretion was 2.41% for the
year ended December 31, 2010 and 3.32% for the period ended December 31, 2009. The decline in the adjusted average rate is attributable to lower prevailing rates. Interest expense on
FHLB advances and other borrowings increased by $17.4 million on an annualized basis as a result of lower accretion of fair value adjustments, as well as increased volume of outstanding FHLB
advances. Accretion of fair value adjustments on FHLB advances totaled $23.9 million for the year ended December 31, 2010 as compared to $25.1 million for the period ended
December 31, 2009. Accretion decreased the average rate paid on FHLB advances by 115 and 228 basis points for the year ended December 31, 2010 and period ended December 31, 2009,
respectively. The decline in accretion is due to the maturity and repayment of a portion of the advances outstanding at the Acquisition date, along with the difference in the number of days in the
comparative periods.

The
net interest margin for the year ended December 31, 2010 was 5.05% as compared to 5.58% for the period ending December 31, 2009, a decline of 53 basis points. The
average yield on interest earning assets declined by 19 basis points for the year ended December 31, 2010 as compared to the period ended December 31, 2009 while the average rate paid on
interest bearing liabilities increased by 42 basis points, for a decline in the interest rate spread of 61 basis points. The decline in both net interest margin and interest rate spread resulted
primarily from lower accretion of fair value adjustments, particularly on interest bearing liabilities, the origination and purchase of loans and investment
securities at lower prevailing market rates of interest, and a shift in the composition of interest earning assets from loans to investment securities as discussed above.



Our determination of the amount of the allowance and corresponding provision for loan losses considers ongoing evaluations of the
various segments of the Company's loan portfolio and of individually significant credits, levels of non-performing loans and charge-offs, statistical trends and economic and
other relevant factors. See "Analysis of the Allowance for Loan Losses" below for more information about how we determine the appropriate level of the allowance.



The Company reported non-interest income of $297.8 million for the year ended December 31, 2010 and
$253.6 million for the period from May 22, 2009 to December 31, 2009. The following table

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presents
a comparison of the categories of non-interest income for the periods indicated(dollars in thousands):

Year Ended
December 31, 2010

Period From
May 22, 2009 to
December 31, 2009Accretion of discount on FDIC indemnification asset

$
134,703

$
149,544Income from resolution of covered assets, net


121,462


120,954Net gain (loss) on indemnification asset resulting from net recoveries


17,736


(21,761
)FDIC reimbursement of costs of resolution of covered assets


29,762


8,095Loss on sale of loans, net


(76,310
)

(47,078
)Non-interest income from Covered Assets


227,353


209,754Service charges on deposits and other fee income


8,606


4,923Service charges on loans


1,961


1,840Net loss on sale or exchange of investment securities available for sale


(998
)

(337
)Mortgage insurance income


18,441


1,338Settlement with the FDIC


24,055


Gain on extinguishment of debt





31,303Other non-interest income


18,361


4,815Total non-interest income

$
297,779

$
253,636


The
following table summarizes the pre-tax components of the gains and losses associated with the resolution of Covered Assets, plus the provision for loan losses on
non-Covered Loans, for the year ended December 31, 2010 and period ended December 31, 2009(dollars in thousands):

Year Ended December 31, 2010

Period Ended December 31, 2009Transaction
Income (Loss)

Net Gain
(Loss) on
Indemnifi-
cation Asset
Resulting From
Net Recoveries

Net Impact
on Earnings

Transaction
Income (Loss)

Net Gain
(Loss) on
Indemnifi-
cation Asset
Resulting From
Net Recoveries

Net Impact
on EarningsProvision for losses on Covered Loans

$
(46,481
)
$
29,291

$
(17,190
)
$
(21,287
)
$
14,433

$
(6,854
)Provision for losses on non-Covered Loans


(4,926
)




(4,926
)

(1,334
)




(1,334
)Total provision for loan losses


(51,407
)

29,291


(22,116
)

(22,621
)

14,433


(8,188
)Income from resolution of Covered Assets, net


121,462


(84,138
)

37,324


120,954


(88,801
)

32,153Net loss on sale of Covered Loans


(76,360
)

57,747


(18,613
)

(47,078
)

37,600


(9,478
)45,102


(26,391
)

18,711


73,876


(51,201
)

22,675Loss on sale of OREO


(2,174
)

1,932


(242
)

(807
)Impairment of OREO


(16,131
)

12,904


(3,227
)

(21,055
)(18,305
)

14,836


(3,469
)

(21,862
)

15,007


(6,855
)Total

$
(24,610
)
$
17,736

$
(6,874
)
$
29,393

$
(21,761
)
$
7,632


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Year ended December 31, 2010 compared to period from May 22, 2009 to December 31, 2009

For the year ended December 31, 2010 and the period from May 22, 2009 to December 31, 2009,
non-interest income was significantly impacted by the effect of the Acquisition and the related Loss Sharing Agreements with the FDIC. Accretion of discount on the FDIC indemnification
asset totaled $134.7 million for the year ended December 31, 2010 and $149.5 million for the period ended December 31, 2009. The decrease in accretion for the year ended
December 31, 2010 as compared to the period ended December 31, 2009 was related to the decrease in the average balance of the indemnification asset as well as a decrease in the average
discount rate during the period to 4.69% from 7.10%.

When
the Company recognizes gains or losses related to Covered Assets in its consolidated financial statements, changes in the estimated amount recoverable from the FDIC under the Loss
Sharing Agreements with respect to those gains or losses are also reflected in the consolidated financial statements. The net impact on earnings before taxes of transactions related to Covered Assets,
plus the provision for loan losses on non-Covered Loans, for the year ended December 31, 2010 and period ended December 31, 2009 was $(6.9) million and $7.6 million,
respectively, as detailed in the table above.

Additional
impairment arising since the Acquisition related to Covered Loans is recorded in earnings through the provision for losses on Covered Loans. Under the terms of the Loss
Sharing Agreements, the Company is entitled to recover from the FDIC a portion of losses on these loans; therefore, the discounted amount of additional expected cash flows from the FDIC related to
these losses is recorded in non-interest income in the line item "Net gain (loss) on indemnification asset resulting from net recoveries" and reflected as a corresponding increase in the
FDIC indemnification asset.

Covered
Loans may be resolved through repayment, foreclosure, short sale of the underlying collateral or, for the non-residential portfolio, charge-offs, or sale
of the loans. The difference between consideration received in resolution of Covered Loans and the amount of projected losses from resolution of those loans as well as losses from permanent
modifications of ACI loans accounted for in pools, is recorded in the income statement line item "Income from resolution of covered assets, net." Losses from the resolution or permanent modification
of Covered Loans increase the amount recoverable from the FDIC under the Loss Sharing Agreements. Gains from the resolution of Covered Loans reduce the amount recoverable from the FDIC under the Loss
Sharing Agreements. These additions to or reductions in amounts recoverable from the FDIC related to the resolution of Covered Loans are recorded in non-interest income in the line item
"Net gain (loss) on indemnification asset resulting from net recoveries" and reflected as corresponding increases or decreases in the FDIC indemnification asset. For the year ended December 31,
2010 and the period ended December 31, 2009, ACI loans with a UPB of $1.9 billion and $1.4 billion were resolved, resulting in income of $121.5 million and
$121.0 million, respectively.

During
the year ended December 31, 2010, Covered Loans with an UPB of $272.2 million and a carrying value of $143.5 million were sold on a non-recourse
basis to third parties. During the period ended December 31, 2009, Covered Loans with an UPB of $275.0 million and a carrying value of $129.8 million were sold on a
non-recourse basis to third parties. Losses on sale of $76.4 million and $47.1 million were recognized during the year ended December 31, 2010 and the period ending
December 31, 2009, respectively. The amounts recoverable from the FDIC related to these losses were recorded as increases in the FDIC indemnification asset and corresponding increases in the
non-interest income line item "Net gain (loss) on indemnification asset resulting from net recoveries" for the respective periods.

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The
Company records impairment charges related to declines in the net realizable value of OREO properties subject to the Loss Sharing Agreements and recognizes additional gains or losses
upon the eventual sale of such OREO properties. The estimated increase or reduction in amounts recoverable from the FDIC with respect to these gains and losses is reflected as an increase or decrease
in the
FDIC indemnification asset and in non-interest income in the line item "Net loss on indemnification asset resulting from net recoveries."

Net
gain (loss) on indemnification asset resulting from net recoveries of $17.7 million and $(21.8) million was recorded for the year ended December 31, 2010 and period
ended December 31, 2009, respectively, representing the net change in the FDIC indemnification asset resulting from increases or decreases in cash flows estimated to be received from the FDIC
related to the ultimate resolution of Covered Assets as discussed in the preceding paragraphs.

For
the year ended December 31, 2010 and the period ended December 31, 2009, non-interest income includes $29.8 million and $8.1 million,
respectively, related to claims that were submitted to the FDIC for reimbursement of certain disbursements made by the Company with respect to resolution of Covered Assets.

The
Company prepaid FHLB advances with a principal balance of $2.7 billion during the period ended December 31, 2009. These advances had a carrying amount of
$2.8 billion at the time of repayment. The Company recognized a gain of $31.3 million on this transaction.

During
the year ended December 31, 2010, the Company incurred net losses of $1.0 million on the sale or exchange of investment securities available for sale. The net loss
included a loss related to an exchange of certain non-covered trust preferred securities for preferred stock of the same issuer to achieve higher returns and more favorable tax treatment.
Based on the market value of the trust preferred securities at the time of the exchange, the Company recognized a gross realized loss of $2.8 million on the transaction.

Mortgage
insurance income represents mortgage insurance proceeds received with respect to Covered Loans in excess of the portion of losses on those loans that is recoverable from the
FDIC. Mortgage insurance proceeds up to the amount of losses on Covered Loans reimbursable by the FDIC offsets amounts otherwise recoverable from the FDIC. The increase in mortgage insurance income
for the year ended December 31, 2010 as compared to the period ended December 31, 2009 is a result of increased efforts by the Company to file and collect insurance claims.

Non-interest
income for the year ended December 31, 2010 includes approximately $24.1 million representing the settlement of a dispute with the FDIC associated
with the valuation established on certain investment securities at Acquisition. The increase in other non-interest income for the year ended December 31, 2010 as compared to the
period ended December 31, 2009 related primarily to an increase in fees earned by BankUnited Investment Services and an increase in loan modification incentives received under the U.S. Treasury
HAMP program.

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The following table presents the components of non-interest expense for the periods indicated (dollars in thousands):

Year Ended
December 31, 2010

Period From
May 22, 2009 to
December 31, 2009Employee compensation and benefits

$
144,486

$
62,648Occupancy and equipment


28,692


20,121Impairment of OREO


16,131


21,055Foreclosure expense


30,669


18,042Other real estate owned related expense


21,177


8,384Change in value of FDIC warrant


21,832


1,704Deposit insurance expense


13,899


11,850Professional fees


14,677


14,854Telecommunications and data processing


12,321


6,440Other non-interest expense


19,436


8,920323,320


174,018Loss on FDIC receivable





69,444Acquisition related costs





39,800Acquisition related expense





109,244Total non-interest expense

$
323,320

$
283,262


Year ended December 31, 2010 compared to period from May 22, 2009 to December 31, 2009

On an annualized basis, non-interest expense as a percentage of average assets was 2.9% for the year ended
December 31, 2010 as compared to 4.0% for the period ended December 31, 2009. The decline was primarily attributable to non-recurring expenses related to the Acquisition that
were incurred during the period ended December 31, 2009, reduced professional fees, lower occupancy costs, and lower deposit insurance assessments, partially offset by increased employee
compensation and benefits cost, OREO and foreclosure expense and the change in value of the FDIC warrant.

As
is typical for financial institutions, employee compensation and benefits represents the single largest component of recurring non-interest expense. On an annualized
basis, employee compensation and benefits increased by approximately $42.4 million, or 41.5%, for the year ended December 31, 2010 as compared to the period ended December 31,
2009. This increase resulted in part from continued enhancement of our management team and other personnel subsequent to the Acquisition. Employee compensation and benefits also included
$36.2 million and $8.8 million for the
year ended December 31, 2010 and period ended December 31, 2009, respectively, related to Time-based PIUs.

On
an annualized basis, occupancy and equipment expense decreased by approximately $4.1million, or 12.5%, for the year ended December 31, 2010 as compared to the period ended
December 31, 2009. The decline in occupancy and equipment expense for the year ended December 31, 2010 resulted primarily from renegotiation of leases.

Professional
fees for the period ended December 31, 2009 included non-recurring legal and accounting fees related to certain litigation matters and formation of the
Company.

OREO
expense, foreclosure expense and impairment of OREO remained at high levels during the year ended December 31, 2010 and the period ended December 31, 2009 due to
continuing deterioration in home prices and the high volume of foreclosures. The rate of home price deterioration moderated to some extent during 2010, contributing to reduced impairment charges for
the year ended

55

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December 31,
2010 as compared to the period ended December 31, 2009. At December 31, 2010, approximately 4,700 units were in the foreclosure process, down from a peak of
approximately 7,300 units in November of 2009.

OREO
losses and OREO related expenses for the post-Acquisition periods are substantially offset by non-interest income related to indemnification by the FDIC.
During the year ended December 31, 2010 and the period ended December 31, 2009, non-interest expense includes approximately $49.7 million and $26.1 million,
respectively, of disbursements subject to reimbursement under the loss sharing agreements. For those same periods, claims of $29.8 million and $8.1 million, respectively, were submitted
to the FDIC for reimbursement. As of December 31, 2010, $28.5 million of disbursements remain to be submitted for reimbursement from the FDIC in future periods.

The
change in value of the FDIC warrant related to the adjustment of the warrant liability to the guaranteed value negotiated with the FDIC.

The
primary components of other non-interest expense are promotion and advertising, the cost of regulatory examinations, and general office expense.



The provision for income taxes for the year ended December 31, 2010 and period ended December 31, 2009 was
$127.8 million and $80.4 million, respectively. The Company's effective tax rate was 40.9% and 40.3% for the year ended December 31, 2010 and period ended December 31,
2009. The Company's effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to the effect of state income taxes and compensation expense related to PIUs. At
December 31, 2010 and December 31, 2009, the Company had net deferred tax liabilities of $4.6 million and net deferred tax assets of $22.5 million, respectively. Based on
an evaluation of the ultimate realization of deferred tax assets considering the availability of tax loss carry-backs, future taxable income that will result from reversal of existing taxable
temporary differences, including negative goodwill recognized for tax purposes, and taxable income expected to be generated from future operations in light of the Company's current level of
profitability, we have concluded it is more likely than not that the deferred tax assets will be realized.

Balance Sheet Analysis for the Post-Acquisition Periods

Average interest earning assets increased $279.4 million to $7.7 billion for the year ended December 31, 2010 from
$7.4 billion for the period ended December 31, 2009. This increase was driven primarily by an increase in the average balance of investment securities resulting from continued deployment
of cash acquired in the Acquisition as well as cash generated from loan resolutions and from reimbursements under the Loss Sharing Agreements. Average non-interest earning assets declined
by $512.5 million, largely attributable to the decrease in the FDIC indemnification asset.

Average
interest bearing liabilities decreased by $533.0 million to $9.3 billion for the year ended December 31, 2010 from $9.8 billion for the period ended
December 31, 2009, reflecting a decrease in average interest-bearing deposits partially offset by an increase in outstanding FHLB advances. The reduction in outstanding interest-bearing
deposits resulted from a reduction in rates offered and a shift in emphasis away from rate sensitive time deposits. Average non-interest bearing liabilities increased by
$87.3 million, primarily as a result of an increase in non-interest bearing demand deposits. Average equity increased by $175.4 million, primarily due to earnings.

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The following table shows the amortized cost and fair value of our investment securities as of the dates indicated. All of our
investment securities are classified available for sale(dollars in thousands):

At December 31, 2010

At December 31, 2009Amortized
Cost

Fair
Value

Amortized
Cost

Fair
ValueU.S. Treasury securities

$


$


$
10,066

$
10,072U.S. Government agency and sponsored enterprise residential mortgage-backed securities


1,282,757


1,290,910


1,288,277


1,288,643Resecuritized real estate mortgage investment conduits ("Re-Remics")


599,682


612,631


478,731


475,003Private label residential mortgage backed securities and CMO's


320,096


382,920


319,765


366,508Non mortgage asset-backed securities


407,158


408,994


30,000


30,000Mutual funds and preferred stocks


136,489


138,535


43,344


43,523State and municipal obligations


22,898


22,960


22,964


23,106Small Business Administration securities


62,831


62,891





Other debt securities


3,695


6,761


3,581


6,288Total investment securities available for sale

$
2,835,606

$
2,926,602

$
2,196,728

$
2,243,143


Our
available for sale securities portfolio consists of the securities acquired in the Acquisition (the "acquired securities") and those purchased by us subsequent to the Acquisition.
Investment securities increased by $1.7 billion, from $0.5 billion at May 21, 2009, to $2.2 billion at December 31, 2009 and by an additional $0.7 billion, to
$2.9 billion, at December 31, 2010. Purchases of investment securities totaled $1.5 billion and $1.8 billion for the year ended December 31, 2010 and period ended
December 31, 2009, respectively, offset by pay-downs, maturities and sales of $0.9 billion and $0.2 billion, respectively.

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The
following tables show, as of December 31, 2010 and December 31, 2009, the breakdown of Covered and non-Covered Securities in the Company's investment
portfolio(dollars in thousands):

December 31, 2010Covered Securities

Non-Covered SecuritiesGross Unrealized





Gross UnrealizedAmortized
Cost

Fair
Value

Amortized
Cost

Fair
ValueGains

Losses

Gains

LossesU.S. Government agency and sponsored enterprise residential mortgage-backed securities

$


$


$


$


$
1,282,757

$
11,411

$
(3,258
)
$
1,290,910Resecuritized real estate mortgage investment conduits ("Re-Remics")














599,682


14,054


(1,105
)

612,631Private label residential mortgage backed securities and CMO's


181,337


61,679


(1,726
)

241,290


138,759


2,906


(35
)

141,630Non mortgage asset-backed securities














407,158


1,908


(72
)

408,994Mutual funds and preferred stocks


16,382


57


(922
)

15,517


120,107


3,402


(491
)

123,018State and municipal obligations














22,898


101


(39
)

22,960Small Business Administration securities














62,831


191


(131
)

62,891Other debt securities


3,695


3,066





6,761











Total

$
201,414

$
64,802

$
(2,648
)
$
263,568

$
2,634,192

$
33,973

$
(5,131
)
$
2,663,034




December 31, 2009Covered Securities

Non-Covered SecuritiesGross Unrealized





Gross UnrealizedAmortized
Cost

Fair
Value

Amortized
Cost

Fair
ValueGains

Losses

Gains

LossesU.S. Treasury securities

$


$


$


$


$
10,066

$
6

$


$
10,072U.S. Government agency and sponsored enterprise residential mortgage-backed securities














1,288,277


3,581


(3,215
)

1,288,643Resecuritized real estate mortgage investment conduits ("Re-Remics")














478,731


1,007


(4,735
)

475,003Private label residential mortgage backed securities and CMO's


201,149


51,285


(480
)

251,954


118,616





(4,062
)

114,554Non mortgage asset-backed securities














30,000








30,000Mutual funds and preferred stocks


18,094


338


(698
)

17,734


25,250


661


(122
)

25,789State and municipal obligations














22,964


143


(1
)

23,106Other debt securities


3,331


2,707





6,038


250








250Total

$
222,574

$
54,330

$
(1,178
)
$
275,726

$
1,974,154

$
5,398

$
(12,135
)
$
1,967,417


Covered securities include private label mortgage-backed securities and mortgage-backed security mutual funds, trust preferred collateralized debt
obligations, Agency preferred stocks, and corporate securities covered under the non-residential Loss Sharing Agreement. BankUnited will be reimbursed 80%, or 95% if cumulative losses
exceed the $4.0 billion stated threshold, of realized losses, other than temporary impairments, and reimbursable expenses associated with the covered securities. BankUnited must pay the FDIC
80%, or 95% if cumulative losses are greater than the stated threshold, of realized gains and other-than-temporary impairment recoveries. To date, the Company has not submitted
any claims for reimbursement related to the covered securities.

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The
following table shows the composition, as of December 31, 2010, of securities added to the portfolio since the Acquisition(dollars in
millions):

Fair ValueU.S. Government agency and sponsored enterprise residential mortgage-backed securities

$
1,175,016Resecuritized real estate mortgage investment conduits ("Re-Remics")


612,631Private label residential mortgage backed securities and CMO's


141,630Non mortgage asset-backed securities


408,994Mutual funds and preferred stocks


123,018State and municipal obligations


18,861Small business administration securities


62,891Total

$
2,543,041


The
following table shows the scheduled maturities adjusted for anticipated prepayments of mortgage-backed and other pass through securities, carrying values and current yields for our
investment portfolio as of December 31, 2010. Yields on tax-exempt securities have been calculated on a pre-tax basis(dollars in
thousands):

Within One Year

After One Year
Through Five Years

After Five Years
Through Ten Years

After Ten Years

TotalCarrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
YieldU.S. Government agency and sponsored enterprise residential mortgage-backed securities

$
270,174


1.74
%
$
607,571


1.62
%
$
291,397


1.63
%
$
121,768


1.62
%
$
1,290,910


1.65
%Resecuritized real estate mortgage investment conduits ("Re-Remics")


206,020


4.96
%

370,232


4.39
%

36,379


4.51
%







612,631


4.59
%Private label residential mortgage backed securities and CMO's


106,837


6.30
%

174,534


7.63
%

60,952


10.16
%

40,597


10.68
%

382,920


7.99
%Non mortgage asset-backed securities


195,042


2.04
%

174,414


2.26
%

18,176


2.80
%

21,362


2.36
%

408,994


2.18
%State and municipal obligations


6,858


0.20
%

15,512


2.15
%

274


6.96
%

316


3.82
%

22,960


1.65
%Small Business Administration securities


6,290


2.81
%

19,465


2.91
%

22,751


2.96
%

14,385


3.10
%

62,891


2.96
%Other debt securities




















6,761


15.75
%

6,761


15.75
%$
791,221


3.26
%
$
1,361,728


3.25
%
$
429,929


3.20
%
$
205,189


4.06
%
$
2,788,067


3.31
%Mutual funds and preferred stocks with no scheduled maturity


























138,535


7.58
%Total investment securities available for sale

























$
2,926,602


3.39
%


The effective duration of the mortgage-backed securities portfolio as of December 31, 2010 is 1.0 years.

We
evaluate the credit quality of individual securities in the portfolio quarterly to determine whether any of the investments in unrealized loss positions are
other-than-temporarily impaired. This evaluation considers the duration and severity of impairment; collateral values and levels of subordination or
over-collateralization; collateral performance; the credit rating, earnings performance and business prospects of the issuer and other relevant factors. We may consider factors that raise

59

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significant
concerns about an issuer's ability to continue as a going concern such as negative cash flows from operations, working capital deficiencies, or non-compliance with statutory
capital requirements or debt covenants. We may also consider adverse changes in the regulatory or economic environment as well as significant adverse changes in general market conditions of the
geographic area or the industry in which individual issuers operate. We consider both our intent to sell investment securities and whether it is more likely than not that we will be required to sell
the securities prior to recovery of amortized cost basis, which might be until maturity for debt securities or for a reasonable forecasted period of recovery for equity securities.

No
securities were determined to be other-than-temporarily impaired during the year ended December 31, 2010 or the period ended December 31, 2009.
Approximately 91.4% of the securities purchased since the Acquisition are agency-backed or currently rated AAA. At December 31, 2010, securities in unrealized loss positions included U.S.
Government agency and sponsored enterprise mortgage-backed securities with total unrealized losses of $3.3 million, private label residential mortgage backed securities and CMO's with total
unrealized losses of $1.8 million, Re-Remics with total unrealized losses of $1.1 million, mutual funds and preferred stocks with total unrealized losses of
$1.4 million and other securities in unrealized loss positions totaling $0.2 million. At December 31, 2009, securities in significant unrealized loss positions included U.S.
Government agency mortgage-backed securities with total unrealized losses of $3.2 million , Re-Remics with total unrealized losses of $4.7 million, private label residential
mortgage backed securities and CMO's with total unrealized losses of $4.5 million and mutual funds and preferred stocks with total unrealized losses of $0.8 million. All of these
securities had been in unrealized loss positions for less than twelve months at December 31, 2010 and at December 31, 2009.

The
timely repayment of principal and interest on the U.S. Government agency and sponsored enterprise mortgage-backed securities is either explicitly or implicitly guaranteed by the full
faith and credit of the U.S. Government. Management engaged a third party to perform projected cash flow analyses of the private-label mortgage-backed securities and Re-Remics,
incorporating CUSIP level collateral default rate, voluntary prepayment rate, severity and delinquency assumptions. Based on the results of this analysis, no credit losses were projected. We do not
intend to sell these securities and it is not more likely than not that we will be required to sell them before recovery of their amortized cost basis. Given the expectation of timely repayment of
principal and the limited duration and severity of impairment, we concluded that none of the debt securities were other-than-temporarily impaired. Given the results of our
analysis of the underlying issuers and the limited duration and severity of impairment, we considered the impairment of the equity securities to be temporary.

As
a member institution of the Federal Home Loan Bank of Atlanta, BankUnited is required to own capital stock in the FHLB. No market exists for this stock, and the Bank's investment can
be liquidated only through repurchase by the FHLB. During the year ended December 31, 2010, $25.9 million of FHLB stock was redeemed at par. The Company monitors its investment in FHLB
stock for impairment through review of recent financial results, dividend payment history and information from credit agencies. As of December 31, 2010, management had not identified any
indicators of impairment of FHLB stock.



The loan portfolio comprises the Company's primary interest-earning asset. At December 31, 2010 and December 31, 2009,
respectively, 92.3% and 98.4% of real estate loans and 86.3% and 97.3% of total loans were Covered Loans. The following table shows the composition of the Company's loan

60

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portfolio
and the breakdown of the portfolio between Covered ACI Loans, Covered non-ACI Loans and non-Covered Loans at the dates indicated(dollars in
thousands):

December 31, 2010

December 31, 2009Covered Loans







Covered LoansNon-
Covered
Loans



% of
Total

Non-
Covered
Loans



% of
TotalACI

Non-ACI

Total Loans

ACI

Non-ACI

Total LoansReal Estate Loans:1-4 single family residential

$
2,421,016

$
151,945

$
113,439

$
2,686,400


67.5
%
$
3,306,306

$
184,669

$
43,110

$
3,534,085


76.0
%Home equity loans and lines of credit


98,599


206,797


2,255


307,651


7.7
%

113,578


215,591


1,615


330,784


7.1
%Multi-family


73,015


5,548


34,271


112,834


2.8
%

71,321


4,971


700


76,992


1.7
%Commercial real estate


299,068


33,938


118,857


451,863


11.4
%

363,965


39,733


24,460


428,158


9.2
%Construction


8,267





8,582


16,849


0.4
%

44,812


377





45,189


1.0
%Land


48,251


170


1,873


50,294


1.3
%

43,903


173





44,076


0.9
%Total


2,948,216


398,398


279,277


3,625,891


91.1
%

3,943,885


445,514


69,885


4,459,284


95.9
%Other Loans:Commercial and industrial


49,731


30,139


213,626


293,496


7.4
%

81,765


48,635


51,565


181,965


3.9
%Lease financing








52,960


52,960


1.3
%













0.0
%Consumer


4,403





3,056


7,459


0.2
%

7,065





3,151


10,216


0.2
%Total


54,134


30,139


269,642


353,915


8.9
%

88,830


48,635


54,716


192,181


4.1
%Total loans


3,002,350


428,537


548,919


3,979,806


100.0
%

4,032,715


494,149


124,601


4,651,465


100.0
%Unearned discount and deferred fees and costs, net





(34,840
)

(10,749
)

(45,589
)







(39,986
)

40


(39,946
)Loans net of discount and deferred fees and costs


3,002,350


393,697


538,170


3,934,217





4,032,715


454,163


124,641


4,611,519Allowance for loan losses


(39,925
)

(12,284
)

(6,151
)

(58,360
)




(20,021
)

(1,266
)

(1,334
)

(22,621
)Loans, net

$
2,962,425

$
381,413

$
532,019

$
3,875,857




$
4,012,694

$
452,897

$
123,307

$
4,588,898




The portfolio contains option ARM, "no-doc" or "reduced-doc" and wholesale production loans originated by the
Failed Bank prior to the Acquisition. All of these loans are Covered Loans; therefore, the Company's exposure to future losses on these mortgage loans is mitigated by the Loss Sharing Agreements as
well as by the fair value basis recorded in these loans resulting from the application of acquisition accounting. Loans secured by residential real estate have consistently represented the majority of
the total loan portfolio. The Covered Loan portfolio includes Covered Loans which have been modified by us under the U.S. Treasury Department's Home Affordable Modification Program, or HAMP, or other
loan modification programs.

The
non-covered residential loan portfolio includes loans originated and purchased post-Acquisition. Subsequent to the Acquisition, we shut down the broker
origination channel of the Failed Bank and we launched our retail-focused origination platform at the end of 2009. We currently originate residential mortgage loans with terms ranging from 10 to
40 years, with either fixed or adjustable interest rates, primarily to customers in the state of Florida. Newly originated residential mortgage loans are primarily closed-end first
lien loans for the purchase or re-finance of owner occupied property. At December 31, 2010, $28.9 million, or 25.6%, of our non-Covered
one-to-four single family residential loan portfolio were originated loans. Significantly all of our newly originated residential mortgage loans are not refinancings of Covered
Loans.

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We
have decided to purchase loans to supplement our nascent mortgage origination platform and to geographically diversify our loan portfolio given the current credit environment of the
non-agency mortgage market in Florida. At December 31, 2010, $84.5 million, or 74.4%, of our non-Covered residential loan portfolio were purchased loans.

One-to-four
single family residential mortgages totaled $2.7 billion, or 67.5%, of the portfolio and $3.5 billion, or 76.0%, of the portfolio at
December 31, 2010 and December 31, 2009, respectively. The decline in this portfolio segment subsequent to the Acquisition, both in total and as a percentage of loans, is primarily a
result of the resolution of Covered Loans and transfers to OREO.

The
following table presents a breakdown of the 1-4 single family residential mortgage portfolio categorized between fixed rate and adjustable rate mortgages at the dates
indicated(dollars in thousands):

December 31, 2010

December 31, 2009Covered Loans

Non-Covered Loans

Total

% of Total

Covered Loans

Non-Covered Loans

Total

% of Total1-4 Fixed rate loans

$
653,814

$
72,067

$
725,881


27.0
%
$
645,871

$
42,577

$
688,448


19.5
%ARM Loans


1,919,147


41,372


1,960,519


73.0
%

2,845,104


533


2,845,637


80.5
%Total(1)

$
2,572,961

$
113,439

$
2,686,400


100.0
%
$
3,490,975

$
43,110

$
3,534,085


100.0
%


---

Included in ARM loans above are payment option ARMs representing 32.1% and 46.8% of total one-to-four single family
residential loans outstanding as of December 31, 2010 and 2009, respectively. All of the option ARMs are covered loans.

At
December 31, 2010 and 2009, based on unpaid principal balance, the majority of the 1 - 4 single family residential loans outstanding were to customers
domiciled in the following states(dollars in thousands):

December 31, 2010

December 31, 2009Amount

%

Amount

%Florida

$
3,772,764


57.9
%
$
4,663,822


56.8
%California


451,578


6.9
%

667,672


8.1
%New Jersey


381,198


5.8
%

466,007


5.7
%Illinois


377,975


5.8
%

459,755


5.6
%Arizona


256,979


3.9
%

400,096


4.9
%Others


1,280,379


19.7
%

1,547,180


18.9
%$
6,520,873


100.0
%
$
8,204,532


100.0
%


No
other state represented borrowers with more than 4% of 1-4 single family residential loans outstanding at December 31, 2010.



Other loans include commercial real estate, commercial and consumer loans.

Commercial
real estate loans include term loans secured by income producing properties including rental apartments, industrial properties, retail shopping centers, office buildings and
hotels as well as real estate secured lines of credit and acquisition, development and construction loans. Commercial real estate loans typically have shorter repayment periods and reprice more
frequently than 1-4 single family residential loans. The Company's underwriting standards generally provide for loan terms of five years, with amortization schedules of no more than
twenty-five years. Loan to value, or LTV, ratios are typically limited to no more than 80%. In addition, the Company usually obtains personal guarantees of the principals as additional
security for most commercial real estate loans.

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Commercial loans are typically made to growing companies and middle market businesses and include equipment loans, working capital lines of credit, asset-backed
loans, acquisition finance credit facilities, lease financing and Small Business Administration product offerings. These loans may be structured as term loans, typically with maturities of five years
or less, or revolving lines of credit which typically mature annually.

Since
the Acquisition, management's loan origination strategy has been more heavily focused on the commercial and commercial real estate portfolio segments, which collectively comprise
78.4% of loans originated or purchased since the Acquisition as of December 31, 2010. In addition, significantly all of our newly originated loans are not refinancings of Covered Loans.

Consumer
loans include loans secured by certificates of deposit, auto loans, demand deposit account overdrafts and unsecured personal lines of credit.

The
following table sets forth, as of December 31, 2010, the anticipated repayments of our loan portfolio by category, based on UPB. Anticipated repayments are based on
contractual maturities adjusted for an estimated rate of prepayments and defaults based on historical trends, current interest rates, types of loans and refinance patterns (dollars in thousands):

Due inOne Year or
Less

After One
Through Five
Years

After Five
Years

TotalReal Estate Loans:1-4 single family residential

$
953,036

$
3,520,737

$
2,047,100

$
6,520,873Home equity loans and lines of credit


68,718


185,407


168,574


422,699Multi-family


24,467


119,750


4,308


148,525Commercial real estate


83,619


475,614


45,878


605,111Construction


10,825


16,208


6,732


33,765Land


35,785


45,095


241


81,121Total real estate loans


1,176,450


4,362,811


2,272,833


7,812,094Other LoansCommercial


82,255


180,315


36,850


299,420Consumer


3,655


4,007


1,076


8,738Lease financing


15,528


35,386


2,046


52,960Total other loans


101,438


219,708


39,972


361,118Total loans

$
1,277,888

$
4,582,519

$
2,312,805

$
8,173,212


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The
following table shows the distribution of UPB of those loans that mature in more than one year between fixed and adjustable interest rate loans as of December 31, 2010 (dollars in thousands):

Interest Rate TypeFixed

Adjustable

TotalReal Estate Loans1-4 single family residential

$
1,254,886

$
4,312,951

$
5,567,837Home equity loans and lines of credit


40,331


313,650


353,981Multi-family


49,788


74,270


124,058Commercial real estate


261,863


259,629


521,492Construction


669


22,271


22,940Land


6,466


38,870


45,336Total real estate loans


1,614,003


5,021,641


6,635,644Other LoansCommercial


39,049


178,116


217,165Lease financing


37,432





37,432Consumer


3,579


1,504


5,083Total other loans


80,060


179,620


259,680Total loans

$
1,694,063

$
5,201,261

$
6,895,324


Asset Quality

We recognize that developing and maintaining a strong credit culture is paramount to the success of the Company. We have established a
credit risk management framework and put in place an experienced team to lead the workout and recovery process for the commercial and commercial real estate portfolios. We have also implemented a
dedicated internal loan review function that reports directly to our Audit Committee. We have an experienced resolution team in place for covered residential mortgage loans, and have implemented
outsourcing arrangements with industry leading firms in certain areas such as OREO resolution.

Loan
performance is monitored by our credit, workout and recovery and loan review departments. Commercial and commercial real estate loans are regularly reviewed by our internal loan
review
department. The Company utilizes an asset risk classification system as part of its efforts to monitor and improve commercial asset quality. Borrowers with credit weaknesses that may jeopardize
collectability will likely demonstrate one or more of the following: payment defaults, frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash flow, project cost
over-runs, unreasonable construction delays, exhausted interest reserves, past due real estate taxes or declining collateral values. Generally, a loan with one or more of these identified
weaknesses will be classified substandard. Loans that have credit weaknesses that render collection or liquidation in full highly questionable or improbable based on current circumstances are
classified doubtful. Loans exhibiting potential credit weaknesses that deserve management's close attention and that if left uncorrected may result in deterioration of the repayment capacity of the
borrower are categorized as special mention.



At December 31, 2010, twenty non-Covered commercial loans aggregating $9.0 million were rated special mention and twelve
non-Covered commercial loans aggregating $5.9 million were classified substandard. At December 31, 2009, no non-Covered commercial loans were rated special
mention and none were adversely classified.

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There
were no delinquencies in the non-covered residential mortgage or home equity loan portfolios as of December 31, 2010 or December 31, 2009.

The
majority of our non-covered residential mortgage portfolio consists of purchased loans. The credit parameters for purchasing loans are similar to the underwriting
guidelines in place for our mortgage origination platform. For purchasing seasoned loans, good payment history is needed. In general, we purchase performing jumbo mortgage pools which have average
FICO scores above 700, primarily are owner-occupied and full documentation, and have a current LTV less than 80%. We perform due diligence on the purchased loans for credit, compliance, counterparty,
payment history and property valuation.

At
December 31, 2010, the purchased loan portfolio had the following characteristics: 56.9% were fixed rate loans, 90.7% were full documentation and had an average FICO score of
754 and average LTV of 71.8%. The majority of this portfolio was owner-occupied, with 88.5% primary residence and 11.5%
second homes. In terms of vintage, 14.0% of the portfolio was originated pre 2007, 5.4% in 2007, 48.9% in 2008, 19.2% in 2009 and 12.6% in 2010.

Similarly,
the originated loan portfolio had the following characteristics at December 31, 2010: 83.9% were fixed rate loans, 100% were full documentation and had an average FICO
score of 780 and average LTV of 62.1%. The majority of this portfolio was owner-occupied, with 94.2% primary residence and 5.8% second home. In terms of vintage, 18.4% of the portfolio was originated
in 2009 and 81.6% in 2010.

Delinquent
consumer loans in the originated portfolio were insignificant as of December 31, 2010 and December 31, 2009.



Covered Loans consist of both ACI loans and non-ACI loans. At December 31, 2010, ACI loans totaled
$3.0 billion and non-ACI loans totaled $0.4 billion. Covered 1-4 single family residential loans were placed into homogenous pools at Acquisition and the ongoing
credit quality and performance of these loans is monitored on a pool basis. At Acquisition, the fair value of the pools was measured based on the expected cash flows to be derived from each pool.
Initial cash flow expectations incorporated significant assumptions regarding prepayment rates, frequency of default and loss severity. For ACI pools, the difference between total contractual payments
due and the cash flows expected to be received at Acquisition was recognized as non-accretable difference. The excess of expected cash flows over the recorded fair value of each ACI pool
at Acquisition, known as the accretable yield, is being recognized as interest income over the life of each pool. We monitor the pools quarterly to determine whether any material changes have occurred
in expected cash flows that would be indicative of impairment or necessitate reclassification between non-accretable difference and accretable yield. Generally, improvements in expected
cash flows less than 1% of the expected cash flows from a pool are not recorded. This threshold may be revised as we gain greater experience. Generally, commercial and commercial real estate loans are
monitored individually due to their size and other unique characteristics.

Residential
mortgage loans, including home equity loans, comprised 87.8% of the UPB of the acquired loan portfolio at the Acquisition date. We performed a detailed analysis of the
portfolio to determine the key loan characteristics influencing performance. Key characteristics influencing the performance of the residential mortgage portfolio, including home equity loans, were
determined to be delinquency status; product type, in particular, amortizing as opposed to option ARM products; current indexed LTV ratio; and original FICO score. The ACI loans in the residential
mortgage portfolio were grouped into ten homogenous static pools based on these characteristics, and the non-ACI residential loans were grouped into two homogenous static pools. There were
other variables which we initially expected to have a significant influence on performance and which were considered in our analysis;

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however,
the results of our analysis demonstrated that their impact was less significant after controlling for current indexed LTV, product type, and FICO score. Therefore, these additional factors
were not used in grouping the covered residential loans into pools and are not used in monitoring ongoing asset quality of the pools. The factors we considered but determined not to be significant
included the level and type of documentation required at origination, i.e., whether a loan was originated under full documentation, reduced documentation, or no documentation programs;
occupancy, defined as owner occupied vs. non-owner occupied collateral properties; geography; and vintage, i.e., year of origination.

1-4
single family residential non-ACI loans had an aggregate UPB of $212.8 million as of May 21, 2009. As of December 31, 2010, 28.6% of the UPB had been
repaid, demonstrating the intent and ability of borrowers in this group to satisfy their mortgage obligations.

At
December 31, 2010, 27.2% of the total UPB of the covered 1-4 single family residential loans was contractually delinquent by 60 days or more. However, future losses to
the Company related to these loans are significantly mitigated by the Loss Sharing Agreements with the FDIC.

Covered
home equity loans and lines of credit had a carrying amount of $305.4 million at December 31, 2010, including ACI loans of $98.6 million and
non-ACI loans of $206.8 million. At December 31, 2010, 12.3% of covered home equity loans and lines of credit were 60 days or more contractually delinquent. Of the ACI
home equity portfolio, 19.0% was 60 days or more contractually delinquent while 5.7% of the non-ACI portfolio was 60 days or more delinquent. Losses related to these loans
are significantly mitigated by the Loss Sharing Agreements.

Commercial
and other Covered Loans were stratified at Acquisition based primarily on product/collateral type and delinquency status. Ongoing asset quality of significant commercial and
commercial real estate loans is monitored on an individual basis through the Company's regular credit review and risk rating process. Homogenous groups of smaller balance commercial and consumer loans
are monitored collectively.

At
December 31, 2010, non-ACI commercial and other loans had an aggregate UPB of $30.1 million and a carrying value, net of discounts of $28.5 million.
Non-ACI commercial and other loans had an aggregate UPB of $48.6 million at December 31, 2009. The majority of these loans were rated "pass" or "good" at December 31,
2010 and December 31, 2009 and the portfolio segment has limited delinquency history. At December 31, 2010, 31 loans with a carrying value totaling $12.7 million were rated
special mention and 47 loans with a carrying value totaling $8.7 million were rated substandard.



Non-performing assets consist of (i) non-accrual loans, including loans that have been restructured and
placed on nonaccrual status because of deterioration in the financial condition of the borrower, (ii) accruing loans that are more than 90 days contractually past due as to interest or
principal, excluding ACI loans, and (iii) OREO. Impaired loans also include ACI loans for which expected cash flows have been revised downward since Acquisition. Because of discount accretion,
these loans have not been classified as nonaccrual loans and we do not consider them to be non-performing assets. As of December 31, 2010 and December 31, 2009, substantially
all of the nonaccrual loans and all of the OREO are Covered Assets. Five commercial loans originated since the Acquisition with a balance of approximately $3.2 million were on nonaccrual status
at December 31, 2010. There are no other loans originated since the Acquisition that fall within these categories. The Company's exposure to loss related to Covered Assets is significantly
mitigated by the Loss Sharing Agreements with the FDIC and by the fair value basis recorded in these loans resulting from the application of acquisition accounting.

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

December 31,
2010

December 31,
2009Nonaccrual loansReal Estate Loans1-4 single family residential

$
9,585

$
14,495Home equity loans and lines of credit


10,817


2,726Multi-family


200


Commercial real estate


75


Construction





Land





Total real estate loans


20,677


17,221Other loansCommercial


5,106


150Consumer





Total commercial and consumer loans


5,106


150Total nonaccrual loans


25,783


17,371Non-Covered and non-ACI loans 90 days or more past due still accruing





Total non-performing loans


25,783


17,371OREO


206,680


120,110Total non-performing assets


232,463


137,481Impaired ACI loans on accrual status


262,130


567,253Total impaired loans and non-performing assets

$
494,593

$
704,734Non-performing loans to total loans(1)


0.66
%

0.38
%Nonperforming assets to total assets


2.14
%

1.24
%Allowance for loan losses to total loans(1)


1.48
%

0.49
%Allowance for loan losses to non-performing loans


226.35
%

130.22
%Net charge-offs to average loans


0.37
%

0.00
%


(1)Total
loans for purposes of calculating these ratios is net of unearned discounts and deferred fees and costs.


At
December 31, 2010 and December 31, 2009, substantially all of the nonaccrual loans consist of non-ACI loans that have been placed on nonaccrual status.
Contractually delinquent ACI loans are not reflected as nonaccrual loans because the discount continues to be accreted. Discount accretion continues to be recorded as there continues to be an
expectation of future cash flows in excess of carrying amount from these loans. The carrying value of ACI loans contractually delinquent by more than 90 days but still accruing was
$0.7 billion and $1.2 billion at December 31, 2010 and December 31, 2009, respectively.

Non-performing
assets reported for the post-Acquisition periods are substantially lower than non-performing assets for the pre-Acquisition
periods primarily due to the recording of these assets at their fair value in conjunction with the application of acquisition accounting and the fact that ACI loans are no longer reflected as
nonaccrual loans as discussed above. The lower ratio of the allowance for loan losses to total loans at dates subsequent to the Acquisition is a direct result of the fact that no allowance was
initially recorded with respect to the acquired loans. Rather, the estimated fair value at which these loans were initially recorded incorporated significant assumptions related to credit quality

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and
default probabilities. Due to the foregoing factors, the ratios presented in the table above may lack comparability to those of our peers.

Except
for ACI loans, loans are placed on nonaccrual status when (i) management has determined that full payment of all contractual principal and interest is in doubt, or
(ii) the loan is past due 90 days or more as to principal and/or interest, unless the loan is well-secured and in the process of collection. Residential and consumer loans
not accounted for in pools are returned to accrual status as of the date the loan is no longer delinquent in excess of 90 days and ultimate collectability is assured. Commercial real estate and
commercial loans are returned to accruing status only after all past due principal and interest have been collected. Except for ACI loans accounted for in pools, loans that are the subject of troubled
debt restructurings are placed on nonaccrual status at the time of the modification unless the borrower has no history of missed payments for six months prior to the restructuring. If borrowers
perform pursuant to the modified loan terms for at least six months and the remaining loan balances are considered collectable, the loans are returned to accrual status. Interest income foregone on
nonaccrual loans amounted to $0.6 million for the year ended December 31, 2010 and to $0.6 million for period ended December 31, 2009. Interest income reversed due to loans
being placed on nonaccrual status amounted to $175.6 thousand and $77.0 thousand for the year ended December 31, 2010 and period ending December 31, 2009, respectively.

A
loan modification is considered a troubled debt restructuring if the Company, for economic or legal reasons related to the borrower's financial difficulties, grants a concession to the
borrower that the Company would not otherwise grant. These concessions may take the form of temporarily or permanently reduced interest rates, payment abatement periods, extensions of maturity, or in
some cases, partial forgiveness of principal. Under generally accepted accounting principles, modified ACI loans accounted for in pools are not considered troubled debt restructurings and are not
separated from their respective pools when modified. As of December 31, 2010, there were three commercial ACI relationships with a total carrying value of $2.4 million that were the
subject of troubled debt restructurings. There were no non-ACI loans or non-Covered Loans that were the subject of troubled debt restructurings.

Commercial
and commercial real estate loans are charged off when, in management's judgment, the carrying amount of the loan is not collectible. Residential real estate loans and secured
consumer loans are typically charged off when they become 120 to 180 days past due, depending on the collateral type. Secured loans may be written down to the fair value of the collateral less
estimated disposition costs. Unsecured consumer loans are generally charged off when they become 90 days past due. Home equity
loans and lines of credit are fully reserved for when they become 120 days past due, and generally fully charged off at or before reaching 270 days delinquency.



Although our exposure to loss on Covered Assets is mitigated by the Loss Sharing Agreements, we have implemented strategies designed to
minimize losses on these assets. We have increased the quality and experience level of our workout and recovery and mortgage servicing departments. We evaluate each ACI loan to determine the most
effective loss mitigation strategy, which may be modification, short sale, or foreclosure. In 2009, we began loan modifications under HAMP for eligible borrowers in the residential ACI portfolio. HAMP
is a uniform loan modification process that provides eligible borrowers with sustainable monthly mortgage payments equal to a target 31% of their gross monthly income. As of December 31, 2010,
8,373 borrowers had been counseled regarding their participation in HAMP; 5,987 of those borrowers were initially determined to be potentially eligible for loan modifications under the program. As of
December 31, 2010, 1,608 borrowers who did not elect to participate in the program had been sent termination letters and 1,276 borrowers had been denied due to ineligibility. At
December 31, 2010, there were 2,234 permanent loan modifications and 198 active trial modifications.

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Other Real Estate Owned

All of the OREO properties owned by the Company are Covered Assets. The following table presents the changes in OREO for the year ended
December 31, 2010 and period ending December 31, 2009(dollars in thousands):

December 31,
2010

December 31,
2009Balance, beginning of period

$
120,110

$
177,679Transfers from loan portfolio


401,763


115,192(Decrease) increase from resolution of covered loans


(9,530
)

25,702Sales


(289,532
)

(177,408
)Impairment


(16,131
)

(21,055
)Balance, end of period

$
206,680

$
120,110


The
majority of our OREO properties are located in the state of Florida. At December 31, 2010, 50.9% of properties were located in Florida, 12.5% in California, 7.2% in Illinois,
6.8% in Arizona and 4.2% in New Jersey.

Analysis of the Allowance for Loan Losses

The allowance for loan losses at dates subsequent to the Acquisition relates to (i) loans originated or purchased since the
Acquisition, (ii) estimated additional losses arising on non-ACI loans subsequent to the Acquisition, and (iii) additional impairment recognized as a result of decreases in
expected cash flows on ACI loans due to further credit deterioration. The impact of any additional provision for losses on Covered Loans is significantly mitigated by an increase in the FDIC
indemnification asset.



Based on an analysis of historical performance of the non-ACI residential mortgage and home equity portfolio, OREO and
short sale losses and recent trending data, we have concluded that changes in LTV ratios and FICO scores are the leading indicators of performance for this portfolio. The non-ACI
residential mortgage portfolio has therefore been divided into homogenous pools based on LTV and FICO score for purposes of calculating the allowance for loan losses. Calculated frequency of roll to
loss and severity percentages are applied to the dollar value of loans in each pool to calculate an overall loss allowance. FICO scores are refreshed quarterly and LTV ratios are updated using the
Case-Shiller quarterly MSA Home Price Index to adjust the original appraised value of the underlying collateral. Frequency is calculated for each pool using a four month roll to loss
percentage, based on the assumption that if an event has occurred with a borrower that will ultimately result in a loss, this will manifest itself as a loan in default and in process of foreclosure
within four months. Loss severity given default is estimated based on internal data about OREO sales and short sales from the portfolio.

Due
to the lack of similarity between the risk characteristics of non-Covered Loans and Covered Loans in the residential and home equity loan portfolios, management does not
believe it is appropriate to use the historical performance of the Failed Bank's residential mortgage portfolio as a basis for calculating the allowance for loan losses applicable to
non-Covered Loans. The portfolio of loans originated and purchased since the Acquisition is not seasoned and has not yet developed an observable loss trend. Therefore, the allowance for
loan losses for non-covered residential loans is based primarily on management's assessment of the risk of default and on the OTS "Thrift Industry Charge-Off Rates by Asset
Type, annualized Net Charge-Off RatesTwelve Quarter Average" for the southeast region (the "OTS Charge-Off Rates"). We believe use of the twelve quarter average to
be appropriate for this portfolio since it takes into account periods of both economic growth and serious economic contraction.

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The allowance for non-covered and non-ACI commercial loans is based primarily on the Bank's internal credit risk rating system, the OTS
Charge-Off Rates, and management's assessment of portfolio risk characteristics. The allowance is comprised of specific reserves for significant and classified loans that are individually
evaluated and determined to be impaired as well as general reserves for individually evaluated loans determined not to be impaired and smaller balance, non-classified loans. For all
commercial and commercial real estate exposures graded substandard or doubtful with committed credit facilities greater than or equal to $1,000,000, a quarterly net realizable value analysis is
prepared by the credit, workout and recovery and loan review departments. This analysis forms the basis for specific reserves. Since the originated portfolio is not yet seasoned enough to
exhibit a loss trend and the non-ACI portfolio has limited delinquency statistics, we currently use the OTS Charge-Off Rates and management's assessment of risk
characteristics by portfolio segment in determining the appropriate general reserve percentages. We believe that loans rated special mention or substandard that are not determined to be individually
impaired exhibit characteristics indicative of a heightened level of credit risk. Management may therefore augment general reserve percentages for loans in these categories.

Since
the non-covered portfolio is not yet seasoned enough to exhibit a loss trend, the allowance for non-covered and non-ACI consumer loans is
based primarily on the OTS Charge-Off Rates and management's assessment of portfolio risk characteristics. We provide a 100% reserve for consumer loans more than 120 days past due
and charge them off at or before reaching 270 days delinquency.

In
addition to the quantitative calculations described above, a dollar value adjustment is made to the allowance for relevant qualitative factors when there is a material observable
trend in those factors not already taken into account in the quantitative calculations. Qualitative factors that may result in an adjustment to the allowance include: levels of and trends in
delinquencies and impaired loans; levels of and trends in recoveries of prior charge-offs; trends in volume, type and terms of loans; effects of changes in lending policies and procedures;
experience, ability and depth of lending management, loan review and workout and recovery staff; credit concentrations; national, regional and local economic trends; housing and banking industry
conditions and trends; emerging trends for particular loan types; and strategic initiatives of the Company that may impact loan performance.

For
non-ACI loans, the allowance is calculated based on UPB. The total of UPB, less the calculated allowance, is then compared to the carrying amount of the loans. If the
calculated balance net of the allowance is less than the carrying amount, an additional allowance is established. Any such increase in the allowance for non-ACI loans will result in a
corresponding increase in the FDIC indemnification asset. For the year ended December 31, 2010 and the period ended December 31, 2009, we recorded a provision for non-ACI
loans of $12.6 million and $1.3 million, respectively.



For ACI loans, a valuation allowance is established when periodic evaluations of expected cash flows reflect a decrease from the level
of cash flows that were estimated to be collected at Acquisition plus any additional expected cash flows arising from revisions in those estimates. We perform a quarterly analysis of expected cash
flows for ACI loans.

The
analysis of expected cash flows for residential ACI pools incorporates updated pool level expected prepayment rates, default rates, and delinquency levels, and loan level loss
severity given default assumptions. Prepayment, delinquency and default curves used for this purpose are derived from roll rates generated from the historical performance of the ACI residential loan
portfolio observed over the immediately preceding four quarters. Given the static nature of the pools and unique characteristics of the loans, we believe that regularly updated historical information
from the Company's own portfolio is the best available indicator of future performance. Estimates of default probability and severity of loss given default also incorporate updated LTV ratios.
Historic and

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projected
values for the Case-Shiller Home Price Index for the relevant MSA are utilized at the individual loan level to project current and future property values. Costs and fees
represent an additional component of loss on default, and are projected using the "Making Home Affordable" cost factors provided by the Federal government.

Our
analysis at December 31, 2009 indicated a decrease in expected cash flows due to credit related assumptions related to two ACI residential mortgage pools; therefore, a
provision for loan losses of $20.0 million was recorded, along with a corresponding increase in the FDIC indemnification asset of $14.4 million. As of December 31, 2010, our
analysis evidenced a significant improvement in expected cash flows related to these two ACI residential pools and an offsetting decrease in expected cash flows due to credit related assumptions
related to the ACI home equity loan pool. As a result, the $20.0 million allowance established at December 31, 2009 related to ACI residential pools, along with the increase in the FDIC
indemnification asset of $14.4 million, was reversed, and a provision for loan losses of $18.5 million, along with a corresponding increase in the FDIC indemnification asset of
$14.0 million, was recorded related to the pooled home equity ACI loans during the year ended December 31, 2010.

The
primary assumptions underlying estimates of expected cash flows for commercial and other loans are default probability and severity of loss given default. Updated assumptions for
large balance and delinquent loans in the commercial and commercial real estate ACI portfolios are based on net realizable value analyses prepared at the individual loan level by the Company's workout
and recovery department. Updated assumptions for smaller balance commercial loans are based on a combination of the Company's own historical delinquency data and industry level delinquency data.
Delinquency data is used as a proxy for defaults as the Company's experience has been that few of these loans return to performing status after being delinquent greater than 60 days. An
additional multiplier is also applied in developing assumptions for loans rated special mention, substandard, or doubtful based on the Company's historical loss experience with classified loans. Cash
flow estimates for consumer loan pools are based primarily on regularly updated historical performance information.

For
the period ended December 31, 2009, there were no decreases in expected cash flows for commercial and other ACI loans; therefore, no allowance for loan losses was provided
related to these loans. For the year ended December 31, 2010, our analysis indicated a decrease in expected cash flows from certain ACI commercial and commercial real estate loans evaluated
individually for credit impairment, resulting in a provision for loan losses of $35.5 million related to these ACI loans. An increase in the FDIC indemnification asset of $19.9 million
was recorded related to this provision.

In
the aggregate, the provision for losses related to ACI loans was $33.9 million for the year ended December 31, 2010, comprised of the $20.0 million reversal and
the provisions of $18.5 million and $35.5 million discussed above.

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The
following table provides an analysis of the allowance for loan losses, provision for loan losses, and net charge-offs for the periods indicated (dollars in thousands):

Year Ended
December 31,
2010

Period from
May 22, 2009 to
December 31,
2009Allowance for loan losses, beginning of period

$
22,621

$
Provision for loan losses:Provision for losses on Covered ACI Loans


33,928


20,021Provision for losses on Covered non-ACI Loans


12,553


1,266Provision for losses on non-Covered Loans


4,926


1,334Total provision for loan losses


51,407


22,621Charge-offs:1-4 single family residential





Home equity loans and lines of credit


(1,125
)

Multi-family


(1,580
)

Commercial real estate


(3,274
)

Construction


(4,957
)

Land


(3,441
)

Commercial


(1,076
)

Lease financing


Consumer


(215
)

Total charge-offs


(15,668
)

Total recoveries





Net charge-offs


(15,668
)

Allowance for loan losses, end of period

$
58,360

$
22,621Increase in the indemnification asset related to the provision for loan losses on Covered Loans

$
29,291

$
14,433Ratio of net charge-offs to average loans receivable outstanding during the period(1)


0.37
%

0.00
%


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Table of Contents

The
following table shows the distribution of the allowance for loan losses, broken out between Covered and non-Covered Loans, as of December 31, 2010 and
December 31, 2009(dollars in thousands):

At December 31, 2010

At December 31, 2009Covered







CoveredNon-
Covered





Non-
CoveredACI

Non-ACI

Total

%(1)

ACI

Non-ACI

Total

%(1)1-4 single family residential

$


$
761

$
168

$
929


67.5
%
$
20,021

$
119

$
65

$
20,205


76.0
%Home equity loans and lines of credit


18,488


9,229


3


27,720


7.7
%




11


4


15


7.1
%Multi-family


5,701


633


772


7,106


2.8
%




60


11


71


1.7
%Commercial real estate


5,795


418


1,189


7,402


11.4
%




465


303


768


9.2
%Construction


1,017


1


118


1,136


0.4
%




5





5


1.0
%Land


3,874


26


102


4,002


1.3
%




2





2


0.9
%Commercial


5,050


1,216


3,676


9,942


7.4
%




604


905


1,509


3.9
%Lease financing








68


68


1.3
%













0.0
%Consumer








55


55


0.2
%







46


46


0.2
%Total allowance for loan losses

$
39,925

$
12,284

$
6,151

$
58,360


100.00
%
$
20,021

$
1,266

$
1,334

$
22,621


100.00
%


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


Goodwill and Other Intangible Assets

In conjunction with the Acquisition, the Company recognized approximately $59.4 million of goodwill and a $1.8 million
core deposit intangible. Goodwill was assigned to BankUnited. The Company performs goodwill impairment testing in the third quarter of each fiscal year or more frequently if events or circumstances
indicate that impairment may exist. As of the 2010 impairment testing date, the estimated fair value of the reporting unit exceeded its carrying amount; therefore, no impairment was indicated.

In
conjunction with the acquisition of two leasing companies in the fourth quarter of 2010, we recorded customer relationship intangible assets of $0.4 million and additional
goodwill of $7.9 million.



The increase in other assets at December 31, 2010 as compared to December 31, 2009 resulted primarily from an increase in
our investment in bank owned life insurance as well as additions to premises and equipment of approximately $27.9 million related to improvements to new and existing branch facilities and
increased investment in our technology platforms.

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Table of Contents

Deposits

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

At December 31, 2010

At December 31, 2009Average
Balance

Average
Rate Paid

Average
Balance

Average
Rate PaidDemand deposits:Non-interest bearing

$
440,673


0.00
%
$
303,810


0.00
%Interest bearing


273,897


0.72
%

183,416


0.79
%Money market


1,667,277


1.20
%

1,205,446


1.93
%Savings


1,203,491


1.18
%

948,000


1.94
%Time


3,889,961


1.85
%

5,506,320


0.93
%Total

$
7,475,299


1.45
%
$
8,146,992


1.16
%


Excluding
the impact of accretion from fair value adjustments due to acquisition accounting, the average rate paid on interest bearing deposits for the year ended December 31,
2010 and period ended December 31, 2009 was 1.85% and 2.77%, respectively.

The
following table shows scheduled maturities of certificates of deposit with denominations greater than or equal to $100,000 as of December 31, 2010 and December 31, 2009 (dollars in thousands):

December 31,
2010

December 31,
2009Three months or less

$
331,660

$
415,049Over three through six months


163,520


394,805Over six through twelve months


472,199


684,966Over twelve months


339,044


411,347Total

$
1,306,423

$
1,906,167


Borrowed Funds

The following table sets forth information regarding our short-term borrowings, consisting of securities sold under
agreements to repurchase, as of December 31, 2010 and 2009 and for the year ended December 31, 2010 and the period ended December 31, 2009(dollars in
thousands):

December 31,
2010

December 31,
2009Maximum outstanding at any month-end

$
17,459

$
2,972Balance outstanding at end of year


492


2,972Average outstanding during the year


7,812


2,091Average interest rate during the year


0.92
%

0.02
%Average interest rate at end of year


0.43
%

0.01
%


The
Company also utilizes FHLB advances to finance its operations. FHLB advances are secured by stock in the FHLB required to be purchased in proportion to outstanding advances and
qualifying first mortgage, commercial real estate, and home equity loans and mortgage-backed securities. The contractual balance of FHLB advances at December 31, 2010 totaled
$2.2 billion, with $1.1 billion, $565.0 million, $505.0 million and $0.4 million maturing in 2012, 2013, 2014 and 2015, respectively. The book value of outstanding
FHLB advances decreased from $4.6 billion at Acquisition to $2.1 billion at

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December 31,
2009 and $2.3 billion at December 31, 2010 primarily due to repayment of outstanding advances with cash received in the Acquisition.

Results of Operations for the Pre-Acquisition Periods

The Failed Bank reported net losses of $(1.2) billion and $(858.4) million for the period from October 1, 2008 through
May 21, 2009 and for the fiscal year ending September 30, 2008, or fiscal 2008, respectively. The net losses for the period ending May 21, 2009 and the fiscal year ending
September 30, 2008 resulted primarily from severe deterioration in the Failed Bank's asset quality and the resultant reduction in net interest income, increase in the provision for loan losses,
and impairment charges related to investment securities, OREO and mortgage servicing rights.



The following table presents, for the periods indicated, information about: (i) average balances, the total dollar amount of
interest income from earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest bearing liabilities and the resultant
average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Average balance information is based on daily average balances for the
periods indicated. Nonaccrual and restructured loans are included in the average balances presented in this table; however, interest

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income
foregone on nonaccrual loans is not included. Yields have been calculated on a pre-tax basis(dollars in thousands):

Period from October 1, 2008
to May 21, 2009

Fiscal Year Ended September 30, 2008Average
Balance

Interest

Yield/
Rate(1)

Average
Balance

Interest

Yield/
RateAssets:Interest earning assets:Investment securities available for sale

$
88,655

$
1,685


2.97
%
$
141,935

$
7,417


5.23
%Mortgage-backed securities


576,131


20,722


5.63
%

780,279


43,017


5.51
%Total investment securities available for sale


664,786


22,407


5.28
%

922,214


50,434


5.47
%Other interest earning assets


1,325,075


3,667


0.43
%

630,204


21,856


3.47
%Loans receivable


11,596,788


312,994


4.22
%

12,564,903


762,170


6.07
%Total interest earning assets


13,586,649


339,068


3.91
%

14,117,321


834,460


5.91
%Allowance for loan losses


(905,440
)







(184,884
)Noninterest earning assets


869,381








510,000Total assets

$
13,550,590







$
14,442,437Liabilities and Equity:Interest bearing liabilities:Interest bearing deposits:Interest bearing demand

$
164,669

$
895


0.85
%
$
199,942

$
2,145


1.07
%Savings and money market accounts


1,485,455


28,009


2.95
%

1,873,728


67,600


3.61
%Time deposits


6,611,919


170,666


4.04
%

4,929,198


223,110


4.53
%Total interest bearing deposits


8,262,043


199,570


3.78
%

7,002,868


292,855


4.18
%Borrowings:FHLB advances


4,965,251


133,764


4.22
%

5,605,211


259,000


4.62
%Repurchase agreements


22,732


58


0.40
%

124,564


3,739


3.00
%Total interest bearing liabilities


13,250,026


333,392


3.94
%

12,732,643


555,594


4.36
%Non-interest bearing demand deposits


282,215








441,570Other non-interest bearing liabilities


113,006








130,225Total liabilities


13,645,247








13,304,438Equity


(94,657
)







1,137,999Total liabilities and equity

$
13,550,590







$
14,442,437Net interest income




$
5,676







$
278,866Interest rate spread








(0.03
)%







1.55
%Net interest margin








0.06
%







1.98
%


(1)Annualized.


Increases
and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and liabilities, as well as changes in average
interest rates. The comparison of total interest income and total interest expense for the period ending May 21, 2009 to the fiscal year ending September 30, 2008 is also impacted by the
different number of days in the

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comparative
periods. The following table shows the effect that these factors had on the interest earned on the interest earning assets and the interest incurred on the interest bearing liabilities for
the periods indicated. The effect of changes in volume is determined by multiplying the change in volume by the previous period's average rate. Similarly, the effect of rate changes is calculated by
multiplying the change in average rate by the previous period's volume. Changes applicable to both volume and rate have been allocated to volume(dollars in
thousands):

Period from October 1, 2008
to May 21, 2009
Compared to the Fiscal Year Ended
September 30, 2008
Increase (Decrease) Due ToChanges
in
Volume

Changes
in
Rate

Change
due to
Number
of Days

Total
Increase
(Decrease)Interest Income Attributable toInvestment securities available for sale

$
(1,002
)
$
(2,049
)
$
(2,681
)
$
(5,732
)Mortgage-backed securities


(7,368
)

598


(15,525
)

(22,295
)Total investment securities available for sale


(8,370
)

(1,451
)

(18,206
)

(28,027
)Other interest earning assets


1,949


(12,230
)

(7,908
)

(18,189
)Loans receivable


(25,250
)

(148,510
)

(275,416
)

(449,176
)Total interest earning assets


(31,671
)

(162,191
)

(301,530
)

(495,392
)Interest Expense Attributable toInterest bearing demand deposits

$
(196
)
$
(281
)
$
(773
)
$
(1,250
)Savings and money market deposit accounts


(7,235
)

(7,894
)

(24,462
)

(39,591
)Time deposits


43,727


(15,418
)

(80,753
)

(52,444
)Total interest bearing deposits


36,296


(23,593
)

(105,988
)

(93,285
)FHLB advances


(17,272
)

(14,312
)

(93,652
)

(125,236
)Repurchase agreements


(262
)

(2,067
)

(1,352
)

(3,681
)Total interest bearing liabilities


18,762


(39,972
)

(200,992
)

(222,202
)Decrease in net interest income

$
(50,433
)
$
(122,219
)
$
(100,538
)
$
(273,190
)


Period from October 1, 2008 through May 21, 2009 compared to the fiscal year ending September 30, 2008

Net interest income was $5.7 million for the period ended May 21, 2009 as compared to $278.9 million for the
fiscal year ended September 30, 2008, for a decline of $273.2 million. The decline in net interest income was comprised of a decline in interest income of $495.4 million and a
decline in interest expense of $222.2 million. On an annualized basis, net interest income for the period from October 1, 2008 through May 21, 2009 decreased by
$270.0 million or 96.8% as compared with the year ending September 30, 2008. The decrease in net interest income was comprised of a decline in annualized interest income of
$303.3 million partially offset by a decline in annualized interest expense of $33.3 million.

The
decrease in interest income resulted primarily from an increase in non-performing assets, evidenced by a decrease in the average yield on loans of 185 basis points from
6.07% for the year ending September 30, 2008 to 4.22% for the period ending May 21, 2009. Nonaccrual loans grew from $1.2 billion at September 30, 2008 to
$2.4 billion at May 21, 2009. Decreases in the average volume of both investment securities and loans outstanding and a decline in market rates on variable rate investment securities
also contributed to the decline in interest income. The decline in average volume of loans and investment securities resulted from the reduction in the scope of the Failed Bank's

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residential
mortgage business and the size of the balance sheet in response to capital requirements and growth restrictions imposed by the OTS.

The
decline in interest expense resulted from lower rates paid on both deposits and FHLB advances, reflective of continued repricing of liabilities at lower market rates, partly offset
by an increase in the average volume of outstanding interest bearing liabilities.

The
net interest margin decreased by 192 basis points from 1.98% for the fiscal year ending September 30, 2008 to 0.06% for the period ending May 21, 2009 while the
interest rate spread declined by 158 basis points from 1.55% to (0.03)%. The primary driver of the decline in net interest margin and interest rate spread was the increase in
non-performing assets.



The provision for loan losses recorded by the Failed Bank was $919.1 million and $856.4 million for the period from
October 1, 2008 through May 21, 2009 and the fiscal year ending September 30, 2008, respectively. The increases in the provision for the period ending May 21, 2009 and the
fiscal year ending September 30, 2008 largely reflected severe deterioration in the residential housing market, particularly in Florida and California. Total non-performing loans
were $2.7 billion, or 24.6%, of total loans at May 21, 2009. Net charge-offs totaled $407.9 million for the period from October 1, 2008 to May 21, 2009
and $199.1 million for the fiscal year ending September 30, 2008. The majority of charge-offs were concentrated in the 1-4 single family residential portfolio.



The Failed Bank reported a non-interest loss of $81.4 million for the period from October 1, 2008 to
May 21, 2009 and a non-interest loss of $128.9 million for the fiscal year ending September 30, 2008.

The
following table presents a comparison of the categories of non-interest income (loss) for the periods indicated(dollars in
thousands):

Period from
October 1, 2008
to May 21, 2009

Fiscal Year Ended
September 30,
2008Service charges on deposits and other fee income

$
5,357

$
9,712Service charges on loans


2,072


4,630Loan servicing fees


2,543


5,601Impairment and amortization of mortgage servicing rights


(26,595
)

(8,434
)Net gain (loss) on sale of investment securities


39


(1,465
)Net gain (loss) on sale and writedown of loans held for sale


196


(9,784
)Other-than-temporary impairment of securities available for sale


(68,609
)

(142,035
)Fees received from BankUnited Financial Corporation


1,824


5,193Other non-interest income


1,742


7,723Total non-interest income (loss)

$
(81,431
)
$
(128,859
)


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Table of Contents

Period from October 1, 2008 to May 21, 2009 compared to the fiscal year ending September 30, 2008

The non-interest loss for the period from October 1, 2008 to May 21, 2009 was largely driven by additional
impairment charges on securities available for sale and mortgage servicing rights. See the section entitled "Investment Securities Available for Sale" below for further discussion of
impairment charges related to investment securities. The impairment of mortgage servicing assets resulted primarily from termination of the Failed Bank's rights to service loans for the Federal
National Mortgage Association (Fannie Mae), or FNMA, and the Federal Home Loan Mortgage Corporation (Freddie Mac), or FHLMC, during the period ending May 21, 2009. A continued decline in
secondary market mortgage activity led to a reduced gain (loss) on sale of loans for the period ending May 21, 2009. The reduction in other non-interest income resulted primarily
from an adjustment to outstanding mortgage insurance claims receivable.



The following table presents the components of non-interest expense for the periods indicated (dollars in thousands):

Period from
October 1, 2008
to May 21, 2009

Fiscal Year Ended
September 30,
2008Employee compensation and benefits

$
51,695

$
88,893Occupancy and equipment


25,247


46,743OREO expense


34,697


17,901Impairment of OREO


38,742


22,749Professional fees


10,062


8,910Foreclosure expense


4,907


6,007Deposit insurance expense


38,299


6,147Telecommunications and data processing


9,573


13,536Other non-interest expense


25,181


35,594Total non-interest expense

$
238,403

$
246,480


Non-interest
expense as a percentage of average assets increased to 2.8% (annualized) for the period ended May 21, 2009 from 1.7% for the fiscal year ending
September 30, 2008. The primary drivers of increasing non-interest expense over this period were increased impairment of OREO, higher OREO expense, foreclosure expense and the
deposit insurance expense.

Period from October 1, 2008 to May 21, 2009 compared to the fiscal year ending September 30, 2008

On an annualized basis, employee compensation and benefits as a percentage of average assets remained consistent over the period ending
May 21, 2009 and the fiscal year ending September 30, 2008. The total decline in employee compensation and benefits expense of $7.9 million or approximately 9% on an annualized
basis was primarily a result of an approximate 70% reduction in the Failed Bank's wholesale residential lending staff and other reductions in the workforce.

OREO
expense, foreclosure expense and impairment of OREO continued to increase during the period ending May 21, 2009 due to further deterioration in home prices and the increasing
volume of foreclosures. As of May 21, 2009, there were slightly over 6,000 units in the foreclosure process as compared to approximately 3,000 units at September 30, 2008.

Deposit
insurance expense was significantly impacted by additional assessments by the FDIC during the period ending May 21, 2009.

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For the period ending May 21, 2009 and the fiscal year ending September 30, 2008, the Failed Bank recorded an income tax
provision (benefit) of $0.0 and $(94.5) million, respectively. The Failed Bank's effective tax rate for the period ending May 21, 2009 and the fiscal year ending September 30, 2008 was
0.1% and 9.9%, respectively. The effective tax rate varied from the federal statutory tax rate of 35.0% primarily due to state income taxes and the valuation allowance established related to deferred
tax assets. The Failed Bank had net deferred tax assets, prior to any valuation allowance, of $730.0 million at May 21, 2009.

Balance Sheet Analysis for the Pre-Acquisition Periods

Average total assets of the Failed Bank declined by $891.8 million to $13.6 billion for the period ending May 21,
2009 from $14.4 billion for the fiscal year ended September 30, 2008. This decline related primarily to the decline in average loans, which was fueled by increased impairments and
foreclosures during the period combined with normal paydowns and a curtailment in lending activity. Average total liabilities increased by $340.8 million to $13.6 billion for the period
ending May 21, 2009 from $13.3 billion for the fiscal year ending September 30, 2008. Average deposits increased by $1.1 billion, offset by a $741.8 million decline
in average outstanding borrowings.



The following table shows the amortized cost and fair value of the investment securities as of the dates indicated. All of the
investment securities were classified available for sale(dollars in thousands):

At May 21, 2009Amortized
Cost

Fair
ValueU.S. Treasury securities

$
35,167

$
35,423U.S. Government agency and sponsored enterprise residential mortgage-backed securities


224,587


227,879Other residential collateralized mortgage obligations


3,371


1,785Residential mortgage pass-through certificates


323,829


230,091Mutual funds and preferred stocks


18,241


18,094State and Municipal obligations


22,671


22,696Other debt securities


4,317


2,976Total investment securities available for sale

$
632,183

$
538,944


Investment
securities decreased by $216.3 million from September 30, 2008 to May 21, 2009 primarily due to impairment charges of $68.6 million coupled with
paydowns and sales of $106.3 million, offset by purchases of $10.4 million.

During
the period from October 1, 2008 through May 21, 2009, the Failed Bank recognized other-than-temporary impairment charges of
$68.6 million, consisting of $39.4 million related to subordinate tranches of the Failed Bank's 2005 mortgage securitization (the "2005 securities"), $16.1 million related to
private-label collateralized mortgage obligations ("CMOs"), $6.4 million related to trust preferred securities, $1.5 million related to FNMA and FHLMC preferred stock and
$5.2 million related to a mutual fund. The majority of the impairment charges recorded during the period ending May 21, 2009 represented further deterioration in value of securities for
which other-than-temporary impairment charges were initially recorded in fiscal 2008 as discussed below. Additional impairment of the 2005 securities and private-label CMOs was
reflective of further deterioration in projected cash flows from the underlying collateral resulting from increasing frequency and severity of defaults. Recognition of
other-than-temporary impairment of pooled trust preferred

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securities
was based on a third party discounted cash flow analysis incorporating proprietary collateral default rate assumptions that indicated less than full recovery of principal, as well as
consideration of the severity and duration of impairment. Other-than-temporary impairment of FNMA and FHLMC preferred stock was based on further deterioration in the market
price of these securities coupled with lack of evidence of improvement in the financial condition of the issuers. Cash flow analysis incorporating updated underlying collateral default assumptions led
to further other-than-temporary impairment of the mutual fund investment.

During
the fiscal year ending September 30, 2008, the Failed Bank recorded other-than-temporary impairment charges totaling $142.0 million,
including $89.3 million relating to the 2005 securities, $5.8 million relating to private-label CMOs, $37.8 million relating to FNMA and FHLMC preferred stocks,
$8.1 million relating to a mutual fund, and $1.0 million relating to other debt securities. The determination that unrealized losses on the 2005 securities were
other-than-temporary was based on an analysis of discounted expected future cash flows using third party developed models that incorporated proprietary behavioral assumptions
about collateral default rates, loss severity levels and voluntary annual prepayment rates. Cash flow projections for the underlying mortgages, given current loss trends, indicated that projected
losses could completely erode the value of certain subordinate classes and significantly erode the value of several other subordinate classes of the 2005 securitization, leading to the determination
that these securities were other-than-temporarily impaired. Management's determination that certain other private-label CMOs were other-than-temporarily
impaired was also based on the analysis of discounted expected future cash flows. The magnitude and duration of unrealized losses was considered in these determinations as well. As a result of
significant declines in value of FNMA and FHLMC preferred stock after these entities were placed into conservatorship on September 7, 2008, the cost basis of these investments was well in
excess of the market price of the stock at September 30, 2008. The determination that impairment of these securities was other-than-temporary was based on the severity
of impairment and uncertainty about the potential for market recovery of the issuers. The mutual fund determined to be other-than-temporarily impaired was a fund that invested
primarily in mortgage related investments, the majority of which were subordinate securities with increasing levels of underlying collateral delinquencies and defaults. The severity of impairment
combined with the high probability of significant principal loss of the underlying collateral led to the conclusion that the
security was other-than-temporarily impaired. The other debt securities consisted of pooled trust preferred securities, collateralized by subordinated debt issued by financial
institutions. Management's determination that these securities were other-than-temporarily impaired was based on an analysis of projected collateral cash flows.

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The following table presents the composition of the loan portfolio as of the dates indicated(dollars in
thousands):

At September 30,At May 21,
20092008

2007

2006Balance

%

Balance

%

Balance

%

Balance

%Real estate loans:1-4 single family residential

$
8,993,077


83.1
%
$
9,916,696


84.4
%
$
10,693,832


86.3
%
$
9,661,913


85.9
%Home equity loans and lines of credit


505,642


4.7
%

486,467


4.1
%

420,386


3.4
%

355,822


3.2
%Multi-family


129,481


1.2
%

144,324


1.2
%

120,058


1.0
%

85,544


0.8
%Commercial real estate


594,877


5.5
%

600,261


5.1
%

496,556


4.0
%

413,637


3.7
%Construction


187,333


1.7
%

171,213


1.5
%

146,557


1.2
%

174,466


1.5
%Land


219,736


2.0
%

224,723


1.9
%

303,294


2.5
%

337,023


3.0
%Total real estate loans


10,630,146


98.2
%

11,543,684


98.2
%

12,180,683


98.4
%

11,028,405


98.1
%Other loans:Commercial


181,484


1.7
%

197,985


1.7
%

187,951


1.5
%

194,269


1.7
%Consumer


12,179


0.1
%

12,740


0.1
%

16,228


0.1
%

17,809


0.2
%Total other loans


193,663


1.8
%

210,725


1.8
%

204,179


1.6
%

212,078


1.9
%Total loans


10,823,809


100.0
%

11,754,409


100.0
%

12,384,862


100.0
%

11,240,483


100.0
%Unearned discount, premiums and deferred costs, net


190,406





210,875





235,454





196,601Loans held in portfolio, net of discount premiums and deferred costs


11,014,215





11,965,284





12,620,316





11,437,084Allowance for loan losses


(1,227,173
)




(715,917
)




(58,623
)




(36,378
)Total loans held in portfolio, net

$
9,787,042




$
11,249,367




$
12,561,693




$
11,400,706Loans held for sale

$
788




$
10,050




$
174,868




$
9,542


Net loans held in portfolio decreased to $9.8 billion at May 21, 2009 from $11.2 billion at September 30, 2008 and
$12.6 billion at September 30, 2007. This decrease was driven by the decline in the Failed Bank's 1-4 single family residential portfolio as discussed below.



1-4 single family residential loans amounted to $9.0 billion or 83.1% of total loans at May 21, 2009. Beginning in fiscal
2008, the Failed Bank curtailed growth of the 1-4 single family residential portfolio. Total originations of residential loans were $22.8 million for the period ending May 21, 2009.

The
Failed Bank also terminated its option ARM and reduced documentation loan programs during fiscal 2008. Originations of option ARM loans totaled $187.0 million for fiscal 2008
and $3.1 billion for fiscal 2007, representing 11.9% and 77.5%, respectively, of total residential loan originations. Option ARM loans generally started with a below market incentive interest
rate that adjusted to an applicable index rate plus a defined margin after a specified period of time. Each month, the borrower had the option to make one of several payments, including a minimum
payment that may not have covered the interest accrued on the loan for the month, resulting in the deferred interest being added to the loan balance. The contractual terms of Option ARM loans limited
the amount of the increase in the loan balance to 115% of the original balance. At the earlier of 5 years from origination or reaching the 115% cap, the loan was contractually reset to be
repaid on a fully amortizing basis over its remaining term. Some residential mortgage loans were also originated under "reduced-doc" and
"no-doc" programs requiring reduced or no verification of the borrowers' income, employment and assets.

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The
following table presents a breakdown of the 1-4 single family residential mortgage portfolio categorized between fixed rate, option adjustable rate mortgages and
non-option adjustable rate mortgages at the dates indicated(dollars in thousands):

At May 21, 2009Total
Loans

% of
Total1-4 single family residential loansFixed rate loans

$
1,774,598


19.7
%Adjustable rate loansOption adjustable rate mortgages(1)


4,685,090


52.1
%Non-option adjustable rate mortgages


2,533,389


28.2
%Total

$
8,993,077


100.0
%


(1)Payment
option loans with balances of $3.8 billion representing 78.9% of the payment option portfolio were negatively amortizing at May 21,
2009. As of May 21, 2009, negative amortization included in the payment option portfolio totaled $265.3 million or 5.6% of the portfolio.


A
breakdown of 1-4 single family residential loans by state as of the dates indicated follows(dollars in millions):

At May 21, 2009Amount

%Florida

$
5,076


56.4
%California


721


8.0
%Illinois


501


5.6
%Arizona


500


5.6
%New Jersey


480


5.3
%Virginia


348


3.9
%States with less than 4%


1,367


15.2
%Total

$
8,993


100.0
%


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Impaired Loans and Non-performing Assets

The following table summarizes the Company's impaired loans, including troubled debt restructurings, and other
non-performing assets as of the dates indicated(dollars in thousands):

At September 30,At May 21,
20092008

2007

2006Nonaccrual loansReal estate loans:1-4 single family residentialPayment option

$
1,674,325

$
968,647

$
149,749

$
11,757Non-payment option


453,743


153,125


22,894


5,826Total 1-4 single family residential


2,128,068


1,121,772


172,643


17,583Home equity loans and lines of credit


27,263


8,866


2,251


58Multi-family


21,544


10,028





Commercial real estate


2,888





5,593


Construction


78,403


58,549





Land


94,493


38,465





Total real estate loans


2,352,659


1,237,680


180,487


17,641Other loans:Commercial


763


65


232


3,073Consumer


23


30


91


26Total other loans


786


95


323


3,099Total nonaccrual loans


2,353,445


1,237,775


180,810


20,740Accruing loans 90 days or more past due





71


493


Other impaired loans still accruing


353,903


195,073


19,771


Total non-performing loans


2,707,348


1,432,919


201,074


20,740OREO


177,679


135,324


27,732


729Total non-performing assets


2,885,027


1,568,243


228,806


21,469Troubled debt restructurings in compliance with modified terms(1)


651,236


68,033





Total impaired loans and non-performing assets

$
3,536,263

$
1,636,276

$
228,806

$
21,469Non-performing loans to total loans


24.58
%

11.98
%

1.59
%

0.18
%Non-performing assets to total assets


23.53
%

11.13
%

1.51
%

0.16
%Non-performing loans and troubled debt restructurings to total loans


30.49
%

12.54
%

1.59
%

0.18
%Allowance for loan losses to total loans


11.14
%

5.98
%

0.46
%

0.32
%Allowance for loan losses to non-performing loans


45.33
%

49.96
%

29.15
%

175.40
%


(1)Consists
of only 1-4 single family residential loans.


The
increase in total non-performing assets to$2.9 billion at May 21, 2009 resulted directly from the economic downturn, both nationally and in the Failed
Bank's primary geographic markets, particularly the precipitous decline in housing prices. Non-performing loans were concentrated in the option ARM portfolio, and a significant percentage
of the non-performing loans were those with higher LTV ratios, originated during periods of historically high housing prices.

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Interest
income foregone on nonaccrual loans amounted to $88.9 million for the period ending May 21, 2009. Interest income reversed due to loans being placed on nonaccrual
status amounted to $20.1 million for the period ending May 21, 2009.

Nonaccrual
loans include troubled debt restructured loans of $177.3 million at May 21, 2009. Additional interest income that would have been recognized on troubled debt
restructured loans not on nonaccrual status if they had been current based on their original contractual terms was $3.3 million and $0.5 million for the period ended May 21, 2009
and the fiscal year ending September 30, 2008, respectively. Interest income recognized on these loans for the period ended May 21, 2009 and the fiscal year ended September 30,
2008 was $14.6 million and $2.9 million, respectively.

Analysis of the Allowance for Loan Losses

The following table provides an analysis of the allowance for loan losses and net charge-offs for the periods indicated (dollars in thousands):

Period
from
October 1,
2008
to May 21,
2009Fiscal Years Ended September 30,2008

2007

2006Allowance for loan losses, beginning of period

$
715,917

$
58,623

$
36,378

$
25,755Provision for loan losses


919,139


856,374


31,500


10,400Charge-offs:1-4 single family residential


(434,391
)

(211,323
)

(5,347
)

(130
)Home equity loans and lines of credit


(12,676
)

(9,396
)

(620
)

(241
)Multi-family











Commercial real estate











Construction





(1,218
)




Land





(6,647
)

(2,651
)

Commercial


(879
)

(1,468
)

(2,425
)

(902
)Consumer


(1,064
)

(257
)

(7
)

Total charge-offs


(449,010
)

(230,309
)

(11,050
)

(1,273
)Recoveries:1-4 single family residential


40,825


31,079


1,407


Home equity loans and lines of credit


111


34


73


Multi-family











Commercial real estate











Construction











Land











Commercial


189


115


306


1,482Consumer


2


1


9


14Total recoveries


41,127


31,229


1,795


1,496Net charge-offs


(407,883
)

(199,080
)

(9,255
)

223Allowance for loan losses, end of period

$
1,227,173

$
715,917

$
58,623

$
36,378Ratio of net charge-offs to average loans receivable outstanding during the period


5.51
%(1)

1.58
%

0.08
%

0.00
%


(1)Annualized.


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Table of Contents

The following table allocates the allowance for loan losses by loan category as of the dates indicated(dollars in
thousands):

At September 30,At May 21, 2009

2008

2007

2006Amount

%(1)

Amount

%(1)

Amount

%(1)

Amount

%(1)14 single family residential

$
890,551


83.1
%
$
616,486


84.4
%
$
33,911


86.3
%
$
12,917


85.9
%Home equity loans and lines of credit


41,638


4.7
%

16,055


4.1
%

6,850


3.4
%

3,971


3.2
%Multi-family


1,461


1.2
%

836


1.2
%

960


1.0
%

684


0.8
%Commercial real estate


186,130


5.5
%

891


5.1
%

8,092


4.0
%

6,316


3.7
%Construction


53,452


1.7
%

47,495


1.5
%

1,173


1.2
%

1,396


1.5
%Land


47,986


2.0
%

30,699


1.9
%

2,426


2.5
%

2,696


3.0
%Commercial


5,102


1.7
%

2,860


1.7
%

4,331


1.5
%

7,613


1.7
%Consumer


853


0.1
%

595


0.1
%

880


0.1
%

785


0.2
%Total allowance for loan losses

$
1,227,173


100.0
%
$
715,917


100.0
%
$
58,623


100.0
%
$
36,378


100.0
%


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


Other Assets



Goodwill of $28.4 million at May 21, 2009 arose from previous business combinations entered into by the Failed Bank.
Goodwill impairment tests were performed as of May 21, 2009. As of May 21, 2009, the carrying value of the reporting unit to which goodwill was assigned was negative, therefore, the
first phase of the goodwill impairment test was passed and no impairment of goodwill was recorded. Based on this comparison, the implied fair value of goodwill exceeded its carrying amount; therefore,
no impairment was indicated.



Other assets totaled $212.3 million at May 21, 2009. The most significant components of the decrease in other assets from
September 30, 2008 to May 21, 2009 were a $25.9 million decline in mortgage servicing rights arising from impairment charges, and a $18.5 million decline in accrued
interest receivable attributable primarily to the decline in total loans outstanding and the increase in non-performing loans.

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Deposits

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

Period from
October 1, 2008 to
May 21, 2009

Fiscal Years Ended
September 30, 2008Average
Balance

Average
Rate Paid

Average
Balance

Average
Rate PaidDemand deposits:Non-interest bearing

$
282,215



%
$
441,570



%Interest bearing


164,669


0.85
%

199,942


1.07
%Savings and money market accounts


1,485,455


2.95
%

1,873,728


3.61
%Time deposits


6,611,919


4.04
%

4,929,198


4.53
%Total deposits

$
8,544,258


3.66
%
$
7,444,438


3.93
%


Borrowed Funds

The following table sets forth information regarding the short-term borrowings, consisting of securities sold under
agreements to repurchase and federal funds purchased, as of the dates, and for the periods, indicated(dollars in thousands):

Yearly Weighted AveragesEnding
Balance

Weighted-
Average
Rate

Maximum
Amount
At Month-EndBalance

RateFor the period from October 1, 2008 to May 21, 2009:

$
1,310


0.00
%
$
48,114

$
22,732


0.40
%For the fiscal year ended September 30, 2008:

$
56,930


0.99
%
$
227,218

$
124,564


3.00
%


Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles and follow general
practices within the industry in which we operate. Application of these principles requires management to make complex and subjective estimates and judgments that affect the amounts reported in the
consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances.
These assumptions form the basis for our
judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative
assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.

Accounting
policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations
and our financial position. We believe that the critical accounting policies and estimates discussed below involve additional management judgment due to the complexity and sensitivity of the methods
and assumptions used.



The allowance for loan losses represents management's estimate of probable loan losses inherent in the Company's loan portfolio.
Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing
of expected future cash flows on impaired loans, estimated losses based on

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risk
characteristics of loans, and consideration of other qualitative factors, all of which may be susceptible to significant change. "Note 1Summary of Significant Accounting
Policies" of the notes to our audited consolidated financial statements describes the methodology used to determine the allowance for loan losses.



A significant portion of the Company's loans acquired on May 21, 2009 and covered by Loss Sharing Agreements demonstrated
evidence of deterioration of credit quality since origination. We refer to these loans as ACI Loans. The accounting for these loans and the related FDIC indemnification asset requires the Company to
estimate the timing and amount of cash flow to be collected from these loans and to continually update estimates of the cash flows expected to be collected over the life of the loans. These estimates
are considered to be critical accounting estimates because they involve significant judgment and assumptions as to the amount and timing of cash flows to be collected.

Covered
14 single family residential loans were placed into homogenous pools at Acquisition and the ongoing credit quality and performance of these loans is monitored on a
pool basis. We performed a detailed analysis of the acquired loan portfolio to determine the key loan characteristics influencing performance. We determined key characteristics to include delinquency
status, product type, in particular, amortizing as opposed to option ARM products, current indexed LTV ratio and original FICO score. At Acquisition, the fair value of the pools was measured based on
the expected cash flows to be derived from each pool. Initial cash flow expectations incorporated significant assumptions regarding prepayment rates, frequency of default and loss severity. For ACI
pools, the difference between total contractual payments due and the cash flows expected to be received at Acquisition was recognized as non-accretable difference. The excess of expected
cash flows over the recorded fair value of each ACI pool at Acquisition is referred to as the accretable yield and is being recognized as interest income over the life of each pool.

We
monitor the pools quarterly by updating our expected cash flows to determine whether any material changes have occurred in expected cash flows that would be indicative of impairment
or necessitate reclassification between non-accretable difference and accretable yield. The analysis of expected cash flows for residential ACI pools incorporates updated pool level
expected prepayment rates, default rates, and delinquency levels, and loan level loss severity given default assumptions. Prepayment, delinquency and default curves used for this purpose are derived
from roll rates generated from the historical performance of the ACI residential loan portfolio observed over the immediately preceding four quarters. Generally, improvements in expected cash flows
less than 1% of the expected cash flows from a pool are not recorded. This threshold may be revised as we gain greater experience. Generally, commercial and commercial real estate loans are monitored
individually due to their size and other unique characteristics. The expected cash flows are estimated based on factors which include loan grades established in the Bank's ongoing credit review
program, likelihood of default based on observations of specific loans during the credit review process as well as applicable industry data, loss severity based on updated evaluation of cash flow from
available collateral, and the contractual terms of the underlying loan agreement.



Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the fair value of the
collateral at the date of foreclosure based on estimates, including some obtained from third parties, less estimated costs to sell, establishing a new cost basis. Subsequent to foreclosure, valuations
are periodically performed by management, and the assets are carried at the lower of cost or fair value, less estimated costs to sell. Significant property improvements that enhance the salability of
the property are capitalized to the extent that the carrying value does not exceed estimated realizable

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value.
Legal fees, maintenance and other direct costs of foreclosed properties are expensed as incurred. Given the large number of properties included in OREO, and the judgment involved in estimating
fair value of the properties, accounting for OREO is regarded as a critical accounting policy.



The LLC has issued equity awards in the form of PIUs to certain members of management. Compensation expense related to PIU
awards is based on the fair value of the underlying units on the date of the consolidated financial statements. Fair value of PIUs are estimated using a Black-Scholes option pricing model, which
requires assumptions as to expected volatility, dividends, terms, and risk free rates. Determining the fair value of the PIUs is considered a critical accounting estimate because it requires
significant judgments and the determination of fair value may be material to our consolidated financial statements. See "Note 1, Summary of Significant Accounting Policies" and "Note 14,
Equity Based Compensation and Other Benefit Plans" of the notes to our audited consolidated financial statements for a description of PIUs.



Deferred income tax assets and liabilities result from temporary differences between assets and liabilities measured for financial
reporting purposes and for income tax return purposes. Realization of tax benefits for deductible temporary differences depends on having sufficient taxable income of an appropriate character within
the carryforward periods. Management must evaluate the probability of realizing the deferred tax asset and determine the need for a valuation reserve as of the date of the consolidated financial
statements. Given the judgment involved and the
amount of the Company's deferred tax asset, this is considered a critical accounting estimate. See "Note 12Income Taxes" in the notes to our audited consolidated financial
statements for a discussion of the Company's deferred taxes.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") issued guidance modifying the accounting for transfers and servicing of
financial assets and removing the concept of a Qualifying Special Purpose Entity. This guidance was effective for transfers of financial assets occurring after December 31, 2009 and was adopted
by the Company as of January 1, 2010. The adoption of this guidance did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In
June 2009, the FASB issued guidance impacting the determination of whether an entity is a variable interest entity ("VIE") and identification of the primary beneficiary of a VIE. The
objective of this guidance was to improve financial reporting by enterprises involved with VIE's. This guidance was adopted by the Company as of January 1, 2010. Adoption did not have a
material impact on the Company's consolidatedfinancial position, results of operations, or cash flows.

In
January 2010, the FASB issued new guidance to improve disclosures about fair value measurements. Disclosure requirements were enhanced to require additional information regarding
transfers to and from Levels 1 and 2 of the fair value hierarchy and the reasons for the transfers, and a gross presentation of activity within the rollforward of Level 3 fair value
measurements. The guidance clarifies existing disclosure requirements as to the level of disaggregation of classes of assets and liabilities. In addition, enhanced disclosure is required concerning
inputs and valuation techniques used to determine Level 2 and Level 3 fair value measurements. This guidance is generally effective for interim and annual reporting periods beginning
after December 15, 2009; however, requirements to disclose separately purchases, sales, issuances, and settlements in the Level 3 rollforward are effective for interim and annual
reporting periods beginning after December 15, 2010. The adoption of this

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guidance
did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In
March 2010, the FASB issued new guidance clarifying that a modification of a loan that is part of a pool of loans acquired with deteriorated credit quality should not result in the
removal of the loan from the pool. This guidance was effective for any modifications of loans accounted for within a pool in the first interim or annual reporting period ending after July 15,
2010. The adoption of this guidance
did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In
July 2010, the FASB issued new guidance requiring expanded disclosures about the credit quality of financing receivables and the allowance for loan losses. Disclosures must be
disaggregated by portfolio segment and class and include, among other things, a rollforward of the allowance for loan losses, credit quality indicators, expanded information about past due and
impaired loans and the related allowance, an aging of past due loans, and information about troubled debt restructurings. The required disclosures of information as of the end of a reporting period
were effective for the Company in its annual financial statements for the year ending December 31, 2010. Required disclosures about activity that occurs during a reporting period will be
effective for the Company in the quarter ending March 31, 2011. In January, 2011, the FASB deferred the effective date of the guidance related to disclosures about troubled debt restructurings.
This guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The adoption of this guidance impacts financial statement disclosures but will not have
an effect on the Company's consolidated financial condition, results of operations or cash flows.

In
December 2010, the FASB issued guidance requiring that Step 2 of the goodwill impairment test be performed for reporting units with zero or negative carrying amounts if it is more
likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse
qualitative factors indicating that an impairment may exist. This guidance is effective for interim and annual reporting periods beginning after December 15, 2010. The adoption of this guidance
is not expected to have a significant impact on the Company's consolidated financial condition, results of operations or cash flows.

In
2010, the FASB published the following proposed accounting standards updates that, if adopted in their proposed form, could potentially have a significant impact on the Company's
financial position, results of operations or cash flows:



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The
Company has not completed its assessment of the impact of these proposed standards on its consolidated financial position, results of operations or cash flows.

Liquidity and Capital Resources

To date, stockholder's equity has been influenced primarily by earnings, and to a lesser extent, changes in the unrealized gains, net
of taxes, on investment securities available for sale, changes in unrealized losses, net of taxes on cash flow hedges and the payment of dividends. Stockholder's equity increased
$149.3 million, or 15.8%, from $945.0 million at inception, to $1.1 billion at December 31, 2009, due to the retention of earnings and increase in unrealized gains on
available for sale investment securities. Stockholder's equity increased $159.2 million, or 14.6%, to $1.3 billion at December 31, 2010, primarily due to the retention of
earnings.

BankUnited
must get approval by the OTS to pay dividends to its parent. Applications were filed with the OTS in August 2010 and November 2010 requesting approval to pay a quarterly
dividend from BankUnited to BankUnited, Inc. Approval of the OTS was obtained via letters dated August 31, 2010 and December 3, 2010. A dividend was paid in October 2010 with
another declared in December 2010.

Pursuant
to FDICIA, the OTS and FDIC have adopted regulations setting forth a five-tier system for measuring the capital adequacy of the financial institutions they
supervise. At December 31, 2010 and December 31, 2009, BankUnited had capital levels that exceeded the well-capitalized guidelines. In addition, a condition of approval of
BankUnited's application for Federal Deposit Insurance requires BankUnited to maintain a tier 1 leverage ratio at no less than eight percent throughout the first three years of operation. To
date, BankUnited has exceeded that requirement.

Liquidity
involves the Company's ability to raise funds to support asset growth or reduce assets to meet deposit withdrawals and other borrowing needs, to maintain reserve requirements
and to otherwise operate the Company on an ongoing basis. The Company's liquidity needs are primarily met by growth in core deposits, its cash position and cash flow from its amortizing investment and
loan portfolios and reimbursements under the Shared Loss Agreements. If necessary, the Bank has the ability to raise liquidity through collateralized borrowings, FHLB advances, or the sale of its
available for sale investment portfolio. The Company's ALCO policy has established several measures of

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liquidity,
including liquid assets (defined as cash and cash equivalents, and pledgeable securities) to total assets. The Company's liquidity is considered acceptable if liquid assets divided by total
assets exceeds 2.5%. At December 31, 2010, the Company's liquid assets divided by total assets was 14.7%.

As
a holding company, BankUnited, Inc. is a corporation separate and apart from our subsidiary BankUnited, and therefore, provides for its own liquidity. BankUnited, Inc.'s
main sources of funding include management fees and dividends paid by its subsidiaries, and access to capital markets. There
are regulatory limitations that affect the ability of BankUnited to pay dividends to BankUnited, Inc. Management believes that such limitations will not impact our ability to meet our
on-going short-term cash obligations.

We
expect that our cash and liquidity requirements will continue to be generated by operations, including reimbursements under the Loss Sharing Agreements, and we intend to satisfy our
capital requirements over the next 12 months through these sources of liquidity.

Interest Rate Sensitivity

The principal component of the Company's risk of loss arising from adverse changes in the fair value of financial instruments, or
market risk, is interest rate risk, including the risk that assets and liabilities with similar repricing characteristics may not reprice at the same time or to the same degree. The primary objective
of the Company's asset/liability management activities is to maximize net interest income, while maintaining acceptable levels of interest rate risk. The Company's Asset/Liability Committee (ALCO) is
responsible for establishing policies to limit exposure to interest rate risk, and to ensure procedures are established to monitor compliance with these policies. The guidelines established by ALCO
are reviewed and approved by the Company's Board of Directors.

Management
believes that the simulation of net interest income in different interest rate environments provides the most meaningful measure of the Company's interest rate risk. Income
simulation analysis is designed to capture not only the potential of all assets and liabilities to mature or reprice, but also the probability that they will do so. Income simulation also attends to
the relative interest rate sensitivities of these items, and projects their behavior over an extended period of time. Finally, income simulation permits management to assess the probable effects on
the balance sheet not only of changes in interest rates, but also of proposed strategies for responding to them.

The
Company's income simulation model analyzes interest rate sensitivity by projecting net interest income over the next twenty four months in a most likely rate scenario based on
forward interest rate curves versus net interest income in alternative rate scenarios. Management continually reviews and refines its interest rate risk management process in response to the changing
economic climate. Currently, the Company's model projects a plus 100, plus 200, and plus 300 basis point change (with rates increasing 25 basis points per month until the applicable limit is reached)
as well as a modified flat scenario incorporating a flattened yield curve. We did not simulate a decrease in interest rates at December 31, 2010 due to the extremely low rate environment.

The
Company's ALCO policy has established that interest income sensitivity will be considered acceptable if net interest income in the plus 200 basis point scenario is within 10% of
forecasted net interest income in the most likely rate scenario over the next twelve months and within 12% in the
second year. At December 31, 2010, the impact on projected net interest income in a plus 200 basis point scenario is 1.8% in the first twelve months and 9.0% in the second year.

These
forecasts are within an acceptable level of interest rate risk per the policies established by ALCO. In the event the model indicates an unacceptable level of risk, the Company
could undertake a number of actions that would reduce this risk, including the sale of a portion of its available for sale investment portfolio or the use of risk management strategies such as
interest rate swaps and caps.

Many
assumptions were used by the Company to calculate the impact of changes in interest rates, including the change in rates. Actual results may not be similar to the Company's
projections due to

92

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several
factors including the timing and frequency of rate changes, market conditions and the shape of the yield curve. Actual results may also differ due to the Company's actions, if any, in response
to the changing rates.

Off-Balance Sheet Arrangements



We routinely enter into commitments to extend credit to our customers, including commitments to fund loans or lines of credit and
commercial and standby letters of credit. The credit risk associated with these commitments is essentially the same as that involved in extending loans to customers and they are subject to our normal
credit policies and approval processes. While these commitments represent contractual cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. The
following table details our outstanding commitments to extend credit as of December 31, 2010(dollars in thousands):

CommitmentsCovered

Not Covered

TotalCommitments to fund loans

$


$
270,461

$
270,461Unfunded commitments under lines of credit


170,380


149,361


319,741Commercial and standby letters of credit


1,153


11,060


12,213Total

$
171,533

$
430,882

$
602,415




Interest rate swaps are one of the tools we use to manage interest rate risk. These derivative instruments are used to mitigate
exposure to changes in interest rates on FHLB advances and time deposits. These interest rate swaps are designated as cash flow hedging instruments.
The fair value of these instruments is included in other assets or other liabilities in our consolidated balance sheets and changes in fair value are reported in accumulated other comprehensive
income. At December 31, 2010, outstanding interest rate swaps designated as cash flow hedges had an aggregate notional amount of $630.0 million. The aggregate fair value of interest rate
swaps designated as cash flow hedges included in other liabilities at December 31, 2010 was $42.5 million.

Contractual Obligations

The following table contains supplemental information regarding our outstanding contractual obligations as of December 31, 2010 (dollars in thousands):

Total

Less than
1 year

13 years

35 years

More than
5 yearsLong-term debt obligations

$
2,372,586

$
67,470

$
1,795,162

$
509,954

$
Operating lease obligations


65,247


10,916


19,791


12,103


22,437Service contracts and purchase obligations


5,100


5,100








Certificates of deposits


3,267,916


2,471,423


461,609


334,884


Other long-term liabilities reflected on the balance sheet














Total

$
5,710,849

$
2,554,909

$
2,276,562

$
856,941

$
22,437


Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

See the section entitled "Interest Rate Sensitivity" included in Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations".

93

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Table of Contents

Item 8.    Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



PageBankUnited, Inc. Consolidated Financial Statements for the Year ended December 31, 2010 and the Period from April 28, 2009
(date of inception) through December 31, 2009Report of Independent Registered Certified Public Accounting Firm

F-2Consolidated Balance Sheets as of December 31, 2010 and December 31, 2009

F-3Consolidated Statements of Income for the year ended December 31, 2010 and the period from April 28, 2009 (date
of inception) through December 31, 2009

F-4Consolidated Statements of Cash Flows for the year ended December 31, 2010 and the period from April 28, 2009
(date of inception) through December 31, 2009

F-5F-6Consolidated Statements of Stockholder's Equity and Comprehensive Income for the year ended December 31, 2010 and the
period from April 28, 2009 (date of inception) through December 31, 2009

F-7Notes to Consolidated Financial Statements

F-8BankUnited, FSB and Subsidiaries (a wholly-owned subsidiary of BankUnited Financial Corporation)Consolidated
Financial Statements for the Period from October 1, 2008 through May 21, 2009, and the Fiscal Year Ended September 30, 2008Report of Independent Registered Certified Public Accounting Firm

F-75Consolidated Balance Sheet as of May 21, 2009

F-76Consolidated Statements of Operations for the period from October 1, 2008 through May 21, 2009, and the
fiscal year ended September 30, 2008

F-77Consolidated Statements of Cash Flows for the period from October 1, 2008 through May 21, 2009, and the fiscal
year ended September 30, 2008

F-78F-79Consolidated Statements of Stockholder's Equity (Deficit) for the period from October 1, 2008 through May 21,
2009, and the fiscal year ended September 30, 2008

F-80Consolidated Statements of Other Comprehensive Income (Loss) for the period from October 1, 2008 through
May 21, 2009, and the fiscal year ended September 30, 2008

F-81Notes to Consolidated Financial Statements

F-82


F-1

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Table of Contents

Report of Independent Registered Public Accounting Firm

The
Board of Directors and Stockholder
BankUnited, Inc.:

We
have audited the accompanying consolidated balance sheets of BankUnited, Inc. and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related
consolidated statements of income, stockholder's equity and comprehensive income, and cash flows for the year ended December 31, 2010 and for the period from April 28, 2009 (date of
inception) through December 31, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BankUnited, Inc. and subsidiaries as of
December 31, 2010 and 2009, and the results of their operations and their cash flows for the year ended December 31, 2010 and for the period from April 28, 2009 (date of
inception) through December 31, 2009, in conformity with U.S. generally accepted accounting principles.

/s/
KPMG LLP

Miami, Florida
March 31, 2011
Certified Public Accountants

F-2

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Table of Contents



BANKUNITED, INC. AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (Dollars in thousands, except per share data)

December 31,
2010

December 31,
2009ASSETSCash and due from banks:Non-interest bearing

$
44,860

$
57,788Interest bearing


12,523


2,805Due from Federal Reserve Bank


502,828


290,192Federal funds sold


4,563


5,430Cash and cash equivalents


564,774


356,215Investment securities available for sale, at fair value (including covered securities of $263,568 and $275,726)


2,926,602


2,243,143Federal Home Loan Bank stock


217,408


243,334Loans held for sale


2,659


Loans (including covered loans of $3,396,047 and $4,486,878)


3,934,217


4,611,519Allowance for loan losses


(58,360
)

(22,621
)Loans, net


3,875,857


4,588,898FDIC indemnification asset


2,667,401


3,279,165Bank owned life insurance


207,061


132,330Other real estate owned, covered by loss sharing agreements


206,680


120,110Deferred tax asset, net





22,533Income tax receivable


10,862


Goodwill and other intangible assets


69,011


60,981Other assets


121,245


83,252Total assets

$
10,869,560

$
11,129,961LIABILITIES AND STOCKHOLDER'S EQUITYLiabilities:Demand deposits:Non-interest bearing

$
494,499

$
332,941Interest bearing


349,985


222,052Savings and money market


3,134,884


2,592,642Time


3,184,360


4,519,140Total deposits


7,163,728


7,666,775Securities sold under agreements to repurchase


492


2,972Federal Home Loan Bank advances


2,255,200


2,079,051Due to FDIC





114,006Income taxes payable





82,701Deferred tax liability, net


4,618


Advance payments by borrowers for taxes and insurance


22,563


31,237Other liabilities


169,451


58,959Total liabilities


9,616,052


10,035,701Commitments and contingenciesStockholder's equity:Common Stock, par value $0.01 per share
110,000,000 shares authorized; 92,971,850 and 92,767,310 shares issued and outstanding


930


928Paid-in capital


950,831


947,032Retained earnings


269,781


119,046Accumulated other comprehensive income


31,966


27,254Total stockholder's equity


1,253,508


1,094,260Total liabilities and stockholder's equity

$
10,869,560

$
11,129,961


The accompanying notes are an integral part of these consolidated financial statements

F-3

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Table of Contents



BANKUNITED, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME        (Dollars In thousands, except per share data)        (In thousands,
except per share data)

Year Ended
December 31,
2010

Period from
April 28,
2009 Through
December 31,
2009Interest income:Interest and fees on loans

$
431,468

$
287,460Interest and dividends on investment securities available for sale


124,262


45,142Other


1,958


2,922Total interest income


557,688


335,524Interest expense:Interest on deposits


108,344


57,829Interest on borrowings


59,856


26,027Total interest expense


168,200


83,856Net interest income before provision for loan losses


389,488


251,668Provision for loan losses


51,407


22,621Net interest income after provision for loan losses


338,081


229,047Non-interest income:Accretion of discount on FDIC indemnification asset


134,703


149,544Income from resolution of covered assets, net


121,462


120,954Net gain (loss) on indemnification asset resulting from net recoveries


17,736


(21,761
)FDIC reimbursement of costs of resolution of covered assets


29,762


8,095Service charges


10,567


6,763Loss on sale of loans, net


(76,310
)

(47,078
)Net loss on sale or exchange of investment securities available for sale


(998
)

(337
)Mortgage insurance income


18,441


1,338Settlement with the FDIC


24,055


Gain on extinguishment of debt





31,303Other non-interest income


18,361


4,815Total non-interest income


297,779


253,636Non-interest expense:Employee compensation and benefits


144,486


62,648Occupancy and equipment


28,692


20,121Impairment of other real estate owned


16,131


21,055Foreclosure expense


30,669


18,042Other real estate owned related expense


21,177


8,384Change in value of FDIC warrant


21,832


1,704Deposit insurance expense


13,899


11,850Professional fees


14,677


14,854Telecommunications and data processing


12,321


6,440Other non-interest expense


19,436


8,920Loss on FDIC receivable





69,444Acquisition related costs





39,800Total non-interest expense


323,320


283,262Income before income taxes


312,540


199,421Provision for income taxes


127,805


80,375Net income

$
184,735

$
119,046Earnings per common share, basic and diluted

$
1.99

$
1.29Weighted average number of common shares outstanding


92,950,735


92,664,910


The accompanying notes are an integral part of these consolidated financial statements

F-4

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Table of Contents



BANKUNITED, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (Dollars in thousands)

Year Ended
December 31,
2010

Period from
April 28,
2009 Through
December 31,
2009Cash flows from operating activities:Net income

$
184,735

$
119,046Adjustments to reconcile net income to net cash used in operating activities:Accretion of fair values of assets acquired and liabilities assumed


(443,012
)

(378,533
)Amortization of fees, discounts and premiums, net


(31,611
)

(19,107
)Provision for loan losses


51,407


22,621Accretion of discount on FDIC indemnification asset


(134,703
)

(149,544
)Income from resolution of covered assets


(121,462
)

(120,954
)Net (gain) loss on indemnification asset resulting from net recoveries


(17,736
)

21,761Net loss on sale of loans


76,310


47,078Settlement with the FDIC


(24,055
)

Increase in cash surrender value of bank owned life insurance


(5,259
)

(3,219
)Loss on sale or exchange of investment securities available for sale


998


337Income from life insurance proceeds


(544
)

Loss on sale of other real estate owned


2,174


807Loss on disposal of premises and equipment


316


Stock-based compensation


1,301


210Change in fair value of equity instruments classified as liabilities


58,002


10,497Depreciation and amortization


3,399


1,201Impairment of other real estate owned


16,131


21,055Deferred income taxes


24,088


(2,325
)Gain on extinguishment of debt





(31,303
)Loss on FDIC receivable





69,444Proceeds from sale of loans held for sale


3,849


Loans originated for sale, net of repayments


(6,459
)

Other:Increase in other assets


(3,523
)

(20,675
)(Decrease) increase in other liabilities


(82,087
)

67,111Net cash used in operating activities


(447,741
)

(344,492
)Cash flows from investing activities:Net cash (paid) acquired in business combinations


(50,489
)

1,160,321Cash received from FDIC related to business combination





2,274,206Decrease in due to FDIC


(89,951
)

(9,447
)Purchase of investment securities available for sale


(1,496,002
)

(1,824,870
)Proceeds from repayments of investment securities available for sale


655,517


177,074Proceeds from sale of investment securities available for sale


222,014


9,271Maturities and calls of investment securities available for sale


10,250


Purchases of loans


(74,970
)

(37,082
)Loan repayments and resolutions, net of originations


762,085


563,016Proceeds from sale of loans, net


67,166


79,635Proceeds from redemption of FHLB stock


25,926


Decrease in FDIC indemnification asset for claims filed


764,203


291,508Purchase of bank owned life insurance


(150,000
)

Bank owned life insurance proceeds


60,226


Purchase of office properties and equipment, net


(27,856
)

(4,890
)Proceeds from sale of other real estate owned


287,358


176,601Net cash provided by investing activities


965,477


2,855,343


F-5

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in thousands)

Year Ended
December 31,
2010

Period from
April 28,
2009 Through
December 31,
2009Cash flows from financing activities:Net decrease in deposits


(481,696
)

(587,811
)Additions to Federal Home Loan Bank advances


605,000


300,000Repayments of Federal Home Loan Bank advances


(405,000
)

(2,795,112
)(Decrease) increase in securities sold under agreements to repurchase


(2,480
)

1,662Decrease in advances from borrowers for taxes and insurance


(7,501
)

(21,125
)Capital contributions


2,500


947,750Dividends paid


(20,000
)

Net cash used in financing activities


(309,177
)

(2,154,636
)Net increase in cash and cash equivalents


208,559


356,215Cash and cash equivalents, beginning of period


356,215


Cash and cash equivalents, end of period

$
564,774

$
356,215Supplemental disclosure of cash flow information:Interest paid on deposits and borrowings

$
217,947

$
227,421Income taxes paid

$
197,224

$
Supplemental schedule of non-cash investing and financing activities:Transfers from loans to other real estate owned

$
401,763

$
115,192Dividends declared

$
14,000

$
Restructuring of Federal Home Loan Bank Advances

$


$
505,000


The accompanying notes are an integral part of these consolidated financial statements.

F-6

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Table of Contents



BANKUNITED, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY AND COMPREHENSIVE INCOME        (Dollars In thousands)

Common
stock

Paid-in
capital

Retained
earnings

Accumulated
other
comprehensive
income

Total
stockholder's
equityBalance at April 28, 2009 (date of inception)

$


$


$


$


$
Initial capital contribution


925


924,075








925,000Additional capital contribution


3


22,747








22,750Comprehensive income:Net income








119,046





119,046Other comprehensive income:Unrealized gains on investment securities available for sale arising during the period, net of taxes of $17,870











28,546


28,546Unrealized losses on cash flow hedges, net of tax benefit of $809











(1,292
)

(1,292
)Total comprehensive income














146,300Stock based compensation





210








210Balance at December 31, 2009


928


947,032


119,046


27,254


1,094,260Comprehensive income:Net income








184,735





184,735Other comprehensive income:Unrealized gains on investment securities available for sale arising during the period, net of taxes of $16,791











26,738


26,738Reclassification adjustment for:Realized losses on investment securities available for sale, net of tax benefit of $385











613


613Unrealized losses on cash flowhedges, net of tax benefit of $14,218











(22,639
)

(22,639
)Total comprehensive income














189,447Capital contribution


2


2,498








2,500Dividends ($0.37 per share)








(34,000
)




(34,000
)Stock based compensation





1,301








1,301Balance at December 31, 2010

$
930

$
950,831

$
269,781

$
31,966

$
1,253,508


The
accompanying notes are an integral part of these consolidated financial statements

F-7

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Table of Contents



BANKUNITED, INC. AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        December 31, 2010

Note 1 Summary of Significant Accounting Policies

BankUnited, Inc. was organized on April 28, 2009 as the holding company for BankUnited ("BankUnited" or the "Bank") a federally-chartered, federally-insured savings
association headquartered in Miami Lakes, Florida. On May 21, 2009, BankUnited was granted a savings association charter and the newly formed bank acquired substantially all of the assets and
assumed all of the non-brokered deposits and substantially all of the other liabilities of BankUnited, FSB from the Federal Deposit Insurance Corporation ("FDIC"), a transaction referred
to as the "Acquisition". Business operations commenced on May 22, 2009. BankUnited, Inc.'s wholly-owned subsidiaries include BankUnited and BankUnited Investment Services, Inc.,
collectively the "Company". BankUnited provides a full range of banking and related services to individual and corporate customers through 81 branch offices located in 13 Florida counties. At
December 31, 2010, BankUnited, Inc. was a wholly-owned subsidiary of BU Financial Holdings LLC ("BUFH"), formed on April 27, 2009 as a limited liability company under the
laws of the State of Delaware. As further described in Note 21, "Subsequent Events", BUFH was liquidated in January, 2011 in conjunction with an initial public offering ("IPO") of outstanding
common stock of BankUnited, Inc.

The
consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and prevailing practices in the banking industry.

The
Company has a single reportable segment, community banking.



In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues, and expenses and disclosures of contingent assets and liabilities. Management has made significant estimates in certain areas including the allowance for loan
losses, the amount and timing of expected cash flows from covered assets and the FDIC indemnification asset, the valuation of other real estate owned, the valuation of Profits Interest Units and the
warrant issued to the FDIC, the valuation of deferred tax assets, the evaluation of investment securities for other-than-temporary impairment, the evaluation of goodwill for
impairment and the fair values of financial instruments. Management has used information provided by third parties to assist in the determination of estimates of the fair values of investment
securities, other real estate owned, stock options, Profits Interest Units and the warrant issued to the FDIC.

Significant
estimates were also made in the determination of the fair values of assets acquired and liabilities assumed in the BankUnited FSB acquisition, including loans acquired with
evidence of deterioration in credit quality since origination, the FDIC indemnification asset, goodwill and other intangible assets. Actual results could differ from these estimates. The current
economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.



The consolidated financial statements include the accounts of BankUnited, Inc., and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in consolidation.

F-8

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)



Certain of the Company's assets and liabilities are reflected in the financial statements at fair value on either a recurring or
non-recurring basis. Securities available for sale, derivative instruments and certain equity awards are measured at fair value on a recurring basis. Assets measured at fair value on a
non-recurring basis may include collateral dependent impaired loans, other real estate owned, loans held for sale, goodwill and other intangible assets. These nonrecurring fair value
measurements typically involve acquisition accounting, the application of lower-of-cost-or-market accounting or the measurement of impairment of certain
assets.

Fair
value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in
an orderly transaction between market participants at the measurement date. GAAP establishes a hierarchy that prioritizes inputs used to determine fair value measurements into three levels based on
the observability and transparency of the inputs:

Level 1Unadjusted
quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; estimated fair values of U.S.
Treasury securities and certain preferred stock and mutual fund investments are generally based on level 1 inputs.

Level 2Observable
inputs other than Level 1 inputs, including quoted prices for similar assets and liabilities, quoted prices for identical assets and
liabilities in less active markets and other inputs that can be corroborated by observable market data; estimated fair values of U. S. Government agency securities, certain non-mortgage
asset backed securities, certain preferred stocks, state and municipal obligations and most derivatives are generally based on level 2 inputs.

Level 3Unobservable
inputs supported by little or no market activity or data and inputs requiring significant management judgment or estimation; estimated fair values
of private label mortgage-backed securities and certain non-mortgage asset backed securities are generally based on level 3 inputs. Valuation techniques utilizing level 3
inputs include option pricing models, discounted cash flow models and similar techniques.

The
fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs in estimating fair value. Unobservable inputs are
utilized in determining fair value measurements only to the extent that observable inputs are unavailable. The need to use unobservable inputs generally results from a lack of market liquidity and
diminished observability of actual trades or assumptions that would otherwise be available to value a particular asset or liability.



Cash and cash equivalents include cash and due from banks, both interest bearing and non-interest bearing, amounts on
deposit at the Federal Reserve Bank and federal funds sold. Cash equivalents have original maturities of three months or less.

The
Bank must comply with Federal Reserve Board regulations requiring the maintenance of reserves against its net transaction accounts. As of December 31, 2010, cash reserves
maintained by the

F-9

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

Bank
at the Federal Reserve Bank for this purpose exceeded this requirement. At December 31, 2010, $10.3 million in interest bearing deposits were pledged as collateral for interest rate
swaps.



Debt securities that the Company may not have the intent or ability to hold to maturity and marketable equity securities are classified
as available for sale at the time of acquisition and carried at fair value with unrealized gains and losses, net of tax, excluded from earnings and reported in accumulated other comprehensive income,
a separate component of stockholder's equity. Securities classified as available for sale may be used as part of the Company's asset/liability management strategy and may be sold in response to
changes in interest rates, prepayment risk or other market factors. Purchase premiums and discounts on debt securities are amortized as adjustments to yield over the expected lives of the securities
using the level yield method. Realized gains and losses from sales of securities are recorded on the trade date and are determined using the specific identification method.

The
Company reviews securities available for sale for impairment on a quarterly basis or more frequently if events and circumstances indicate that a potential impairment may have
occurred. An investment security is impaired if its fair value is lower than its amortized cost basis. The Company considers many factors in determining whether a decline in fair value below amortized
cost represents other-than-temporary impairment ("OTTI"), including, but not limited to, the Company's intent to hold the security until maturity or for a period of time
sufficient for a recovery in value, whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, the length of time and
extent to which fair value has been less than amortized cost, adverse changes in expected cash flows, collateral values and levels of subordination or over-collateralization, collateral
performance, changes in the economic
or regulatory environment, the general market condition of the geographic area or industry of the issuer and other issuer specific factors such as the issuer's financial condition and performance,
compliance with statutory capital requirements or debt covenants, business prospects and credit rating. The Company recognizes OTTI of a debt security for which there has been a decline in fair value
below amortized cost if (i) management intends to sell the security, (ii) it is more likely than not that the Company will be required to sell the security before recovery of its
amortized cost basis, or (iii) the Company does not expect to recover the entire amortized cost basis of the security. The amount by which amortized cost exceeds the fair value of a debt
security that is considered to be other-than-temporarily impaired is separated into a component representing the credit loss, which is recognized in earnings, and a component
related to all other factors, which is recognized in other comprehensive income. The measurement of the credit loss component is equal to the difference between the debt security's amortized cost
basis and the present value of its expected future cash flows discounted at the security's effective yield. If the Company intends to sell the security, or if it is more likely than not it will be
required to sell the security before recovery, an OTTI write-down is recognized in earnings equal to the entire difference between the amortized cost basis and fair value of the security.
The evaluation of OTTI of marketable equity securities focuses on whether evidence supports recovery of the unrealized loss within a timeframe consistent with temporary impairment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)



The Bank, as a member of the Federal Home Loan Bank of Atlanta ("FHLB") system, is required to maintain an investment in the stock of
the FHLB. No market exists for this stock, and the Bank's investment can be liquidated only through redemption by the FHLB, at the discretion of and subject to conditions imposed by the FHLB. The
stock has no readily determinable market value and is carried at cost. Historically, FHLB stock redemptions have been at par value, which equals the Company's carrying value. The Company monitors its
investment in FHLB stock for impairment through review of recent financial results of the FHLB including capital adequacy and liquidity position, dividend payment history, redemption history and
information from credit agencies. During the year ended December 31, 2010 and the period ended December 31, 2009, the Company did not identify any indicators of impairment of FHLB stock.



Loans originated with the intent to sell in the secondary market are carried at the lower of cost or fair value, determined in the
aggregate. These loans are generally sold on a non-recourse basis with servicing released. Gains and losses on the sale of loans recognized in earnings are measured based on the difference
between proceeds received and the carrying amount of the loans, inclusive of deferred origination fees and costs, if any.

As
a result of changes in events and circumstances or developments regarding management's view of the foreseeable future, loans not originated or acquired with the intent to sell may
subsequently be designated as held for sale. These loans are transferred to the held for sale portfolio at the lower of amortized cost or fair value.



The Company's loan portfolio consists of one-to-four single family residential first mortgages, home equity
loans and lines of credit, multi-family, commercial real estate, construction, land, commercial and consumer loans. A significant portion of the Company's loan portfolio consists of loans acquired on
May 21, 2009 from the FDIC. These loans are covered under BankUnited's loss sharing agreements with the FDIC (the "covered loans"). The Company segregates its loan portfolio between covered and
non-covered loans. Non-covered loans are those originated or purchased since the Acquisition. Covered loans are further segregated between those acquired with evidence of
deterioration in credit quality since origination (Acquired Credit Impaired or "ACI" loans) and those acquired without evidence of deterioration in credit quality since origination
("non-ACI" loans).



ACI loans are those for which, at acquisition, management determined it probable that the Company would be unable to collect all
contractual payments due. These loans were recorded at estimated fair value at the time of acquisition, measured as the present value of all cash flows expected to be received, including estimated
prepayments, discounted at an appropriately risk-weighted discount rate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

The
difference between total contractually required payments on ACI loans and the cash flows expected to be received is recorded as non-accretable difference. The excess of
all cash flows expected to be received over the Company's recorded investment in the loans is recorded as accretable yield and is recognized as interest income on a level-yield basis over the expected
life of the loans.

The
Company aggregated ACI one-to-four single family residential mortgage loans and home equity loans and lines of credit with similar risk characteristics into
homogenous pools at acquisition, and uses a composite interest rate and composite expectations of future cash flows in accounting for each pool. Loans were aggregated into pools based on delinquency
status; product type, in particular, amortizing as opposed to option ARM products; loan-to-value ratio; and borrower FICO score. Loans that do not have similar risk
characteristics, primarily commercial and commercial real estate loans, are accounted for on an individual loan basis based on interest rates and expectations of cash flows for each loan.

The
Company is required to develop reasonable expectations about the timing and amount of cash flows to be collected related to ACI loans and to continue to update estimates of cash
flows expected to be collected over the lives of the loans. ACI loans are reviewed quarterly to determine whether any significant changes have occurred in expected cash flows. If it is probable that
the Company will be unable to collect all the cash flows expected from a loan or pool at acquisition plus additional cash flows expected to be collected arising from changes in estimates after
acquisition, the loan or pool is considered impaired and a valuation allowance is established by a charge to the provision for loan losses. If, based on current information, there is a significant
increase in cash flows expected to be collected with respect to a loan or pool or if actual cash flows significantly exceed cash flows previously expected, the Company first reduces any valuation
allowance previously established by the increase in the present value of cash flows expected to be collected, then recalculates the amount of accretable yield for the loan. The adjustment of
accretable yield due to an increase in expected cash flows is accounted for as a change in estimate. The additional cash flows expected to be collected are transferred from non-accretable
discount to accretable yield and the amount of periodic accretion is adjusted accordingly over the remaining life of the loan or pool.

The
Company may resolve an ACI loan either through a sale of the loan, by working with the customer and obtaining partial or full pre-payment, by short sale of the
collateral, or by foreclosure. In the event of a sale of the loan, the Company recognizes a gain or loss on sale based on the difference between the sales proceeds and the carrying value of the loan.
For loans resolved through agreed pre-payments or short sale of the collateral, the Company recognizes the difference between the amount of the payment received and the carrying amount of
the loan in the income statement line item "Income from resolution of covered assets, net". For loans resolved through foreclosure, the difference between the fair value of the underlying collateral
less cost to sell and the carrying amount of the loan is recognized in the income statement line item "Income from
resolution of covered assets, net". The accretable discount related to loans resolved that are not accounted for in pools is recognized in earnings immediately as interest income.



Loans acquired without evidence of deterioration in credit quality since origination were initially recorded at estimated fair value on
the acquisition date and are subsequently carried at the principal

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

amount
outstanding, adjusted for unamortized acquisition date fair value adjustments and the allowance for loan losses. Interest income is accrued based on the unpaid principal balance and acquisition
date fair value adjustments are amortized using the level-yield method over the expected lives of the related loans. Non-ACI one-to-four single family residential
mortgage loans and home equity loans and lines of credit with similar risk characteristics were aggregated into pools for accounting purposes at acquisition. Loans that do not have similar risk
characteristics, primarily commercial and commercial real estate loans, are accounted for on an individual loan basis.



Loans originated or purchased by the Company subsequent to the Acquisition, or "non-covered loans", are carried at the
principal amount outstanding, net of premiums, discounts, unearned income, deferred loan origination fees and costs, and the allowance for loan losses.

Interest
income on non-covered loans is accrued based on the principal amount outstanding. Non-refundable loan origination fees, net of direct costs of
originating or acquiring loans, as well as premiums and discounts, are deferred and recognized as an adjustment to yield over the expected lives of the related loans using the level yield method.



Non-ACI loans and non-covered loans are placed on non-accrual status when (i) management has
determined that full repayment of all contractual principal and interest is in doubt, or (ii) the loan is past due 90 days or more as to principal or interest unless the loan is well
secured and in the process of collection. When a loan is placed on non-accrual status, uncollected interest accrued is reversed and charged to interest income. Subsequent payments of
interest are recognized as income on a cash basis, or if collection of principal is doubtful, they are applied to principal on a cost recovery basis. Residential mortgage loans, home equity loans and
lines of credit and consumer loans are returned to accrual status and interest accrued at the date the loan was placed on non-accrual status along with interest foregone during the
non-accrual period are recorded as interest income when the loan is no longer delinquent in excess of 90 days. Commercial and commercial real estate loans are returned to accrual
status only after all past due principal and interest have been collected. Past due status of loans is determined based on the contractual next payment due date.

Contractually
delinquent ACI loans are not classified as non-accrual as long as discount continues to be accreted on these loans.



An ACI pool or loan is considered to be impaired when it is probable that the Company will be unable to collect all the cash flows
expected at acquisition, plus additional cash flows expected to be collected arising from changes in estimates after acquisition. One-to-four single family residential and home
equity ACI loans accounted for in pools are evaluated collectively for impairment on a pool by pool basis based on expected pool cash flows. Commercial and commercial real estate ACI loans are
individually evaluated for impairment based on expected cash flows from the individual loans. Discount continues to be accreted on ACI loans or pools as long as there are expected future cash flows in
excess of the current carrying amount of the loan or pool.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

Non-ACI
and non-covered loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the
scheduled
payments of principal or interest when due, according to the contractual terms of the loan agreements. Commercial and commercial real estate relationships with internal risk ratings of substandard or
doubtful or on non-accrual status and with committed balances greater than or equal to $1,000,000 are individually evaluated for impairment. Loans with well defined credit weaknesses
including payment defaults, declining collateral values, frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash flow, project cost overruns, unreasonable
construction delays, past due real estate taxes or exhausted interest reserves are assigned an internal risk rating of substandard. A loan with a weakness so severe that collection in full is highly
questionable or improbable will be assigned an internal risk rating of doubtful. The likelihood of loss related to loans assigned internal risk ratings of substandard or doubtful is considered
elevated due to their identified credit weaknesses. Factors considered by management in evaluating impairment include payment status, financial condition of the borrower, collateral value, and the
probability of collecting expected or scheduled principal and interest payments when due. Generally, non-ACI and non-covered loans identified as impaired have been placed on
non-accrual status.

In
certain situations due to economic or legal reasons related to a borrower's financial difficulties, the Company may grant a concession to the borrower for other than an insignificant
period of time that it would not otherwise consider. At that time, except for ACI loans accounted for in pools, the related loan is classified as a troubled-debt restructuring ("TDR") and
considered impaired. The concessions granted may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize economic loss and to avoid foreclosure or
repossession of the collateral. Troubled-debt restructured loans are placed on non-accrual status at the time of the modifications unless the borrower has no history of missed
payments for six months prior to the restructuring. If borrowers perform pursuant to the modified loan terms for at least six months and the remaining loan balances are considered collectible, the
loans are returned to accrual status. Modified ACI loans accounted for in pools are not considered TDRs, are not separated from the pools and are not classified as impaired loans. All of the Company's
TDRs are covered loans.



The allowance for loan losses ("ALL") represents the amount considered adequate by management to absorb probable losses
inherent in the loan portfolio at the balance sheet date. The ALL relates to (i) loans originated or purchased since the Acquisition, or non-covered loans, (ii) estimated
additional losses arising on non-ACI loans subsequent to the Acquisition and (iii) additional impairment recognized as a result of decreases in expected cash flows on ACI loans due
to further credit deterioration since the Acquisition. The ALL consists of both specific and general components. The ALL is established as losses are estimated to have occurred through a provision
charged to earnings. Individual loans are charged off against the ALL when management determines them to be uncollectible. Residential real estate loans and secured consumer loans are typically
charged off when they become 120 to 180 days past due. Unsecured consumer loans are generally charged off when they become 90 days past due. Home equity loans and lines of credit are
fully reserved for when they are 120 days past due and are generally charged off at or before reaching 270 days delinquency. Subsequent recoveries are credited to the ALL.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)



For ACI loans, a specific valuation allowance related to a loan or pool is established when quarterly evaluations of expected cash
flows indicate it is probable that the Company will be unable to collect all of the cash flows expected at acquisition plus any additional cash flows expected to be collected arising from changes in
estimate after acquisition. Alternatively, an improvement in the expected cash flows related to ACI loans results in a reduction of any previously established specific allowance with a corresponding
credit to the provision.

Expected
cash flows are estimated on a pool basis for ACI one-to-four single family residential and home equity loans accounted for in pools. The analysis of
expected pool cash flows incorporates updated pool level expected prepayment rates, default rates, delinquency levels and loss severity given default assumptions. Prepayment, delinquency and default
curves are derived primarily from roll rates generated from historical performance of the portfolio over the immediately preceding four quarters. Estimates of default probability and loss severity
given default also incorporate updated loan-to-value ("LTV") ratios, at the loan level, based on Case-Shiller Home Price Indices for the relevant Metropolitan
Statistical Area ("MSA"). Costs and fees represent an additional component of loss on default, and are projected using the "Making Home Affordable" cost factors provided by the Federal government.

The
primary assumptions underlying estimates of expected cash flows for commercial, commercial real estate and other ACI loans are default probability and severity of loss given default.
For commercial and commercial real estate relationships with committed balances greater than or equal to $1,000,000, updated cash flow assumptions are based primarily on net realizable value analyses
prepared at the individual loan level. These analyses incorporate information about loan performance, collateral values, the financial condition of the borrower and other available information that
may impact sources of repayment. Updated assumptions for smaller balance commercial and commercial real estate loans are based on a combination of internal risk ratings, the Company's own historical
delinquency data and industry level delinquency data. Cash flow estimates for consumer loans are based primarily on regularly updated historical performance information.



Non-ACI one-to-four single family residential mortgages and home equity loans and lines of credit
are grouped into homogenous pools based on loan type for purposes of determining the amount of the ALL. Calculated loss frequency and severity percentages are applied to the dollar value of loans in
each pool to calculate the ALL. Based on an analysis of historical portfolio performance, OREO and short sale data and other internal and external factors, management has determined that the change in
LTV is the leading predictive indicator of loan performance. LTV ratios are updated quarterly at the loan level using Case-Shiller Home Price Indices for the relevant MSA. Home price index
data used in updating LTV's is that for the preceding calendar quarter, the most recent data available. The loans in each pool are further disaggregated based on LTV ratios for purposes of calculating
loss frequency and severity. Frequency is calculated using a four month roll to loss percentage. Loss severity given default is estimated based on internal data about short sales and OREO sales for
the most recent quarter.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

The
non-covered residential and home equity portfolio segments have not developed an observable loss trend and delinquencies in these portfolio segments have been nominal to
date. Home equity loans in the non-covered portfolio are first liens with maximum LTV ratios of 70%; therefore, the risk characteristics of these loans are considered similar to those of
the one-to-four family single family residential loans. Due to several factors, there is a lack of similarity between the risk characteristics of non-covered loans
and covered loans in the residential and home equity portfolios. Those factors include elimination of wholesale origination channels, elimination of Alt-A and no document loans,
enhancements to real estate appraisal policies, elimination of Option ARM loans and tightening of underwriting policies. Therefore, management does not believe it is appropriate to use the historical
performance of the covered loans as a basis for calculating the ALL applicable to the non-covered loans. The ALL for non-covered residential and home equity loans is based on
management's internal assessment of the risk of default. That judgment is influenced by a variety of factors with the most significant being loan performance and LTV ratios.

The
ALL calculation provides a 100% reserve for home equity loans and lines of credit and consumer loans that are more than 120 days delinquent.

The
non-covered and non-ACI commercial and commercial real estate loan portfolios have limited delinquency history and have not yet exhibited an observable loss
trend. For loans evaluated individually for impairment and determined to be impaired, a specific allowance is established based on the present value of expected cash flows discounted at the loan's
effective interest rate, the estimated fair value of the loan, or for collateral dependent loans, the estimated fair value of collateral less costs to sell. Loans not individually determined to be
impaired are grouped based on common risk characteristics. The ALL for these portfolio segments is based primarily on the Bank's internal credit risk rating system and the OTS "Thrift Industry
Charge-Off Rates by Asset Type, annualized Net Charge-Off RatesTwelve Quarter Average" for the southeast region (the "OTS Charge-Off Rates").

The
ALL for lease receivables is based on historical loss experience.

Qualitative
adjustments may be made to the ALL when, based on management's judgment and experience, there are internal or external factors impacting loss frequency and severity not taken
into account by the quantitative calculations. Those factors may include levels of and trends in delinquencies and impaired loans; levels of and trends in recoveries and charge-offs;
trends in volume, type and term of loans; changes in lending policies and procedures; experience, ability and depth of lending management and staff; credit concentrations; national, regional and local
economic trends and conditions; housing and banking industry conditions and trends; emerging trends for particular loan types and pools; and strategic initiatives of the Company that may impact loan
performance.



The FDIC indemnification asset was initially recognized at the time of the Acquisition and represents the present value of estimated
future payments to be received from the FDIC under the terms of BankUnited's loss sharing agreements with the FDIC.

The
FDIC indemnification asset was initially recorded at fair value, measured as the present value of the estimated cash payments expected from the FDIC for probable losses on covered
assets, past

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

due
interest and reimbursement of certain expenses related to the covered assets. Covered assets consist of loans, other real estate owned and certain investment securities acquired from the FDIC. The
FDIC indemnification asset is measured separately from the related covered assets. It is not contractually embedded in the covered assets and it is not transferrable with the covered assets should the
Company choose to dispose of them. The discount rate used to estimate the initial fair value of the FDIC indemnification asset was determined using a risk-free yield curve adjusted for a
premium reflecting the uncertainty related to the collection, amount and timing of the cash flows as well as illiquidity of the asset.

The
discount resulting from recording the FDIC indemnification asset at present value is accreted to non-interest income using the effective interest method over the period
during which cash flows from the FDIC are expected to be collected. Increases in expected cash flows from covered assets result in decreases in cash flows expected to be collected from the FDIC. These
decreases in expected cash flows from the FDIC are generally recognized prospectively through an adjustment of the rate of accretion on the FDIC indemnification asset, consistent with the approach
taken to recognize increases in expected cash flows on the covered assets. Impairment of expected cash flows from covered assets results in an increase in cash flows expected to be collected from the
FDIC. These increased expected cash flows from the FDIC are recognized as increases in the FDIC indemnification asset and as non-interest income in the same period that the impairment of
the covered assets is recognized in earnings.

Gains
and losses from resolution of ACI loans are included in the income statement line item "Income from resolution of covered assets, net", representing the difference between the
projected losses from ACI loans and payment actually received in satisfaction of such loans that were resolved, either by payment in full, foreclosure, short sale or, for the
non-residential portfolio, charge-offs as well as losses from permanent modifications of ACI loans accounted for in pools during the period. When the Company recognizes gains
or losses related to the resolution of covered assets in earnings, corresponding changes in the estimated amount recoverable from the FDIC under the loss sharing agreements are reflected in the
consolidated financial statements as increases or decreases in the FDIC indemnification asset and in the income statement line item "Net gain (loss) on indemnification asset resulting from net
recoveries".

The
ultimate realization of the FDIC indemnification asset is dependent upon the performance of the underlying covered assets and payment of claims by the FDIC.



Bank owned life insurance is carried at the amount that could be realized under the contract at the balance sheet date, which is
typically cash surrender value. Changes in cash surrender value are recorded in non-interest income.



Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the estimated fair value of
the collateral less costs to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, periodic valuations are performed and the assets are carried

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

at
the lower of the carrying amount at the date of foreclosure or estimated fair value less cost to sell. Significant property improvements that enhance the salability of the property are capitalized
to the extent that the resulting carrying value does not exceed fair value less cost to sell. Legal fees, maintenance, taxes, insurance and other direct costs of holding and maintaining foreclosed
properties are expensed as incurred.



Goodwill represents the excess of consideration transferred in business combinations over the fair value of net tangible and
identifiable intangible assets acquired. Goodwill is not amortized, but is tested for impairment annually or more frequently if events or circumstances indicate that impairment may have occurred. The
Company performs its annual goodwill impairment test in the third fiscal quarter. The Company has a single reporting unit. The impairment test compares the fair value of the reporting unit to its
carrying amount. If the fair value of the reporting unit exceeds
its carrying amount, no impairment is indicated. If the fair value of the reporting unit is less than its carrying amount, impairment of goodwill is measured as the excess of the carrying amount of
goodwill over its implied fair value. Management has used third party valuation specialists to estimate the fair value of the reporting unit using a discounted cash flow valuation technique. For 2010
and 2009, the estimated fair value of the reporting unit at the impairment testing date substantially exceeded its carrying amount; therefore, no impairment of goodwill was indicated.

Intangible
assets with determinable lives include core deposit intangible assets, other customer relationship intangible assets and covenants not to compete and are amortized on a
straight-line basis over their estimated useful lives. Intangible assets with determinable lives are evaluated for impairment when events or changes in circumstances indicate the carrying
amount of the assets may not be recoverable.



Premises and equipment are carried at cost less accumulated depreciation and amortization and are included in other assets in the
accompanying consolidated balance sheets. Depreciation is calculated using the straight line method over the estimated useful lives of the assets. The lives of improvements to existing buildings are
based on the lesser of the estimated remaining lives of the buildings or the estimated useful lives of the improvements. Leasehold improvements are amortized over the shorter of the expected terms of
the leases at inception, considering options to extend that are reasonably assured, or their useful lives. The estimated useful life for branch buildings is 30 years, for furniture, fixtures
and equipment is 5-7 years, and for computer equipment is 3 years. Repair and maintenance costs are charged to operations as incurred, and improvements are capitalized.
External direct costs of materials and services associated with developing or obtaining and implementing internal use computer software are capitalized and amortized over the estimated useful lives of
the software, which range from 3 to 5 years.



The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

assets
and liabilities using enacted tax rates in effect for periods in which the differences are expected to reverse. The effect of changes in tax rates on deferred tax assets and liabilities are
recognized in
income in the period that includes the enactment date. A valuation allowance is established for deferred tax assets when management determines that it is more likely than not that some portion or all
of a deferred tax asset will not be realized. In making such determinations, the Company considers all available positive and negative evidence, including future reversals of existing temporary
differences, prior and projected future taxable income and tax planning strategies.

The
Company recognizes tax benefits from uncertain tax positions when it is more likely than not that the related tax positions will be sustained upon examination, including resolutions
of any related appeals or litigation processes, based on the technical merits of the tax positions. An uncertain tax position is a position taken in a previously filed tax return or a position
expected to be taken in a future tax return that is not based on clear and unambiguous tax law. The Company measures tax benefits related to uncertain tax positions based on the largest benefit that
has a greater than 50% likelihood of being realized upon settlement. If the initial assessment fails to result in recognition of a tax benefit, the Company subsequently recognizes a tax benefit if
(i) there are changes in tax law or case law that raise the likelihood of prevailing on the technical merits of the position to more-likely-than-not,
(ii) the statute of limitations expires, or (iii) there is a completion of an examination resulting in a settlement of that tax year or position with the appropriate agency. The Company
recognizes interest and penalties related to unrecognized tax positions in the provision for income taxes. Accrued interest and penalties are included in other liabilities.

The
Company, inclusive of its subsidiaries other than BU REIT, Inc., an indirect wholly-owned subsidiary of BankUnited, files a consolidated federal corporate income tax
return, as well as combined state corporate income tax returns where applicable. BU REIT, Inc. files a separate federal income tax return.



The Company may periodically grant nonqualified stock options or unvested shares of common stock to key employees. Nonqualified stock
options are granted at an exercise price at or above the estimated fair market value of the underlying stock on the date of the grant.

Compensation
cost is measured based on the estimated fair value of the awards at the grant date and is recognized in earnings on a straight-line basis over the requisite
service period. The fair value of unvested shares is based on the market price of the Company's common stock at the date of grant. The fair value of stock options is estimated at the date of grant
using a Black-Scholes option pricing model. This model requires assumptions as to expected volatility, expected term, dividend yield, and risk free interest rates. Since the Company's common stock has
not historically traded on an exchange, expected volatility is measured based on the volatility of the common stock of peer companies. The expected term represents the period of time that options are
expected to be outstanding from the grant date and is based on the contractual term of the options and employees'
anticipated exercise behavior. The risk free interest rate is based on the U.S. Treasury constant maturity rate corresponding to the expected term of the options at the date of grant. The expected
dividend yield is determined based on historical dividend rates and dividends expected to be declared in the foreseeable future.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)



BUFH has a class of authorized non-voting membership interests identified as Profits Interest Units ("PIUs"). PIUs were
issued by BUFH to management members of the Company who own common units of BUFH and entitle the holders to share in distributions from BUFH after investors in BUFH receive certain returns on their
investment. PIUs consist of both time-based awards, which vest based on fulfillment of a service condition and IRR-based awards, which vest upon the earlier of
(i) common unit holders of BUFH having received a specified return on their original investment or (ii) the completion of an initial public offering of the Company's stock ("IPO") or a
change in control liquidity event, as defined. Compensation expense related to PIUs is based on the fair value of the underlying units and is reflected in earnings of the Company. Based on their
settlement provisions, the PIUs have been classified as liabilities, and are adjusted to estimated fair value at each financial statement date. Fair value is estimated using a Black-Scholes option
pricing model. Compensation expense related to time-based PIUs is recognized over the requisite service period on a straight-line basis. Compensation expense related to
IRR-based PIUs is recognized upon vesting, which is contingent on the satisfaction of performance conditions.

As
further described in Note 21,Subsequent Events, and Note 14,Equity Based Compensation and Other
Benefit Plans, the Company completed an IPO in January, 2011, resulting in vesting of the IRR-based PIUs, the liquidation of BUFH, and the exchange of outstanding
PIUs for a combination of non-qualified stock options and common shares in the Company.



In conjunction with the Acquisition, the Company issued a warrant to the FDIC. Based on its settlement provisions, the warrant was
classified as a liability and is recorded at the
greater of fair value or guaranteed minimum value, with changes in value reflected in earnings. As further described in Note 21,Subsequent
Events, the warrant was settled for cash in February, 2011.



A derivative is a financial instrument that derives its cash flows and therefore, its value, by reference to an underlying instrument,
index or referenced interest rate. Derivatives are recognized as assets and liabilities in the consolidated balance sheets and measured at fair value.



Interest rate swaps are contracts in which a series of interest cash flows are exchanged over a prescribed period. Interest rate swaps
are used as a risk management tool to hedge the Company's exposure to changes in interest rates. The effective portion of the gain or loss on an interest rate swap designated and qualifying as a cash
flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period in which the hedged transaction affects
earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. The gain or loss on an interest rate swap designated and qualifying as
a fair value hedging instrument, as well as the offsetting gain or loss on the hedged item attributable to the risk being hedged, is recognized currently in earnings.

F-20

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

Hedge
effectiveness may be assessed using (i) statistical regression analysis, and (ii) comparison of the critical terms of the hedged item and the hedging derivative or
(iii) the hypothetical derivative method. Assessments of hedge effectiveness and measurements of hedge ineffectiveness are performed at least quarterly.

The
Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the
hedged item, the derivative expires or is sold, terminated, or exercised, or management determines that the designation of the derivative as a hedging instrument is no longer appropriate. When hedge
accounting is
discontinued because a derivative no longer qualifies as an effective hedge, any subsequent changes in fair value are recognized in earnings.

Changes
in the fair value of interest rate swaps not designated as, or not qualifying as, hedging instruments are recognized currently in earnings.

Cash
flows resulting from derivative financial instruments that are accounted for as hedges of assets and liabilities are classified in the cash flow statement in the same category as
the cash flows from the hedged items.



Loan commitments that relate to the origination of mortgage loans to be held for sale upon funding are recognized in the consolidated
balance sheet at fair value with changes in fair value reflected in earnings. The measurement of fair value incorporates assumptions about the probability that a commitment will ultimately be funded,
based on the Company's historical experience.



Mandatory delivery forward loan sale commitments are derivative instruments that are accounted for at fair value with changes in fair
value reflected in earnings.



Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. A gain or loss is
recognized in earnings upon completion of the sale based on the difference between the sales proceeds and the carrying value of the assets. Control over the transferred assets is deemed to have been
surrendered when: (i) the assets have been legally isolated from the Company, (ii) the transferee obtains the right (free of conditions that constrain it from taking advantage of that
right) to pledge or exchange the transferred assets, and (iii) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their
maturity or the ability to unilaterally cause the holder to return specific assets.



Advertising costs are expensed as incurred.

F-21

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)



Basic earnings per common share is calculated by dividing income available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted earnings per common share reflects the effect of potentially dilutive securities or other contracts to issue common shares ("common stock
equivalents"), as well as any adjustment to income that would result from the assumed issuance. Common stock equivalents are excluded from the computation of earnings per common share in periods in
which the effect is anti-dilutive. Contingently issuable shares, such as shares that the Company may be obligated to issue pursuant to BUFH's PIUs and the FDIC warrant, are included in the
calculation of earnings per share when the conditions necessary to issuance of the shares have been satisfied. Those conditions had not been satisfied as of December 31, 2010. There were
981,710 and 384,690 outstanding stock options at December 31, 2010 and 2009, respectively that were not included in the calculation of diluted earnings per common share because to do so would
have been anti-dilutive.



Certain amounts presented for the prior period have been reclassified to conform to the current period presentation.



In June 2009, the Financial Accounting Standards Board ("FASB") issued guidance modifying the accounting for transfers and servicing of
financial assets and removing the concept of a Qualifying Special Purpose Entity. This guidance was effective for transfers of financial assets occurring after December 31, 2009 and was adopted
by the Company as of January 1, 2010. The adoption of this guidance did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In
June 2009, the FASB issued guidance impacting the determination of whether an entity is a variable interest entity ("VIE") and identification of the primary beneficiary of a VIE. The
objective of this guidance was to improve financial reporting by enterprises involved with VIE's. This guidance was adopted by the Company as of January 1, 2010. The adoption of this guidance
did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In
January 2010, the FASB issued new guidance to improve disclosures about fair value measurements. Disclosure requirements were enhanced to require additional information regarding
transfers to and from Levels 1 and 2 of the fair value hierarchy and the reasons for the transfers, and a gross presentation of activity within the rollforward of Level 3 fair value
measurements. The guidance clarifies existing disclosure requirements as to the level of disaggregation of classes of assets and liabilities. In addition, enhanced disclosure is required concerning
inputs and valuation techniques used to determine Level 2 and Level 3 fair value measurements. This guidance is generally effective for interim and annual reporting periods beginning
after December 15, 2009; however, requirements to disclose separately purchases, sales, issuances, and settlements in the Level 3 rollforward are effective for interim and annual
reporting periods beginning after December 15, 2010. The adoption of this

F-22

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)

guidance
did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In
March 2010, the FASB issued new guidance clarifying that a modification of a loan that is part of a pool of loans acquired with deteriorated credit quality should not result in the
removal of the loan from the pool. This guidance was effective for any modifications of loans accounted for within a pool in the first interim or annual reporting period ending after July 15,
2010. The adoption of this guidance did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In
July 2010, the FASB issued new guidance requiring expanded disclosures about the credit quality of financing receivables and the allowance for loan losses. Disclosures must be
disaggregated by portfolio
segment and class and include, among other things, a rollforward of the allowance for loan losses, credit quality indicators, expanded information about past due and impaired loans and the related
allowance, an aging of past due loans, and information about troubled debt restructurings. The required disclosures of information as of the end of a reporting period were effective for the Company in
its annual financial statements for the year ending December 31, 2010. Required disclosures about activity that occurs during a reporting period will be effective for the Company in the quarter
ending March 31, 2011. In January, 2011, the FASB deferred the effective date of the guidance related to disclosures about troubled debt restructurings. This guidance is anticipated to be
effective for interim and annual periods ending after June 15, 2011. The new guidance impacts financial statement disclosures but will not have an effect on the Company's consolidated financial
condition, results of operations or cash flows.

In
December 2010, the FASB issued guidance requiring that Step 2 of the goodwill impairment test be performed for reporting units with zero or negative carrying amounts if it is more
likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse
qualitative factors indicating that an impairment may exist. This guidance is effective for interim and annual reporting periods beginning after December 15, 2010. The adoption of this guidance
is not expected to have a significant impact on the Company's consolidated financial condition, results of operations or cash flows.

In
2010, the FASB published the following proposed accounting standards updates that, if adopted in their proposed form, could potentially have a significant impact on the Company's
financial position, results of operations or cash flows:



F-23

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 1 Summary of Significant Accounting Policies (Continued)



The
Company has not completed its assessment of the impact of these proposed standards on its consolidated financial position, results of operations or cash flows.

Note 2 Acquisitions

On May 21, 2009, BankUnited entered into a purchase and assumption agreement (the "FSB Agreement") with the FDIC, as receiver, pursuant to which BankUnited acquired substantially
all of the assets and assumed substantially all of the non-brokered deposits and other liabilities of BankUnited, FSB.

Prior
to the Acquisition, BankUnited, FSB was a community bank headquartered in Coral Gables, Florida that operated 85 banking branches in 13 counties in Florida. Excluding the effects
of acquisition accounting adjustments, the Bank acquired $13.6 billion in assets and assumed $12.8 billion of the deposits and liabilities of BankUnited, FSB. The Bank received net
consideration in the amount of $2.2 billion, partially offset by liabilities due to the FDIC in the amount of $156.8 million.

F-24

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 2 Acquisitions (Continued)

In
connection with the Acquisition, the Bank entered into loss sharing agreements with the FDIC that cover single family residential mortgage loans, commercial real estate, commercial
and industrial and consumer loans, certain investment securities and other real estate owned ("OREO"), collectively referred to as the "covered assets". The Bank acquired other BankUnited, FSB assets
that are not covered by the loss sharing agreements with the FDIC including cash balances of $1.2 billion, certain investment securities purchased at fair value and other tangible assets.
Pursuant to the terms of the loss sharing agreements, the covered assets are subject to a stated loss threshold whereby the FDIC will reimburse the Bank for 80% of losses of up to $4.0 billion,
and 95% of losses in excess of this amount. The Bank will reimburse the FDIC for its share of recoveries with respect to losses for which the FDIC paid the Bank a reimbursement under the loss sharing
agreements. The FDIC's obligation to reimburse the Company for losses with respect to covered assets begins with the first dollar of loss incurred. The expected reimbursements under the loss sharing
agreements were recorded as an indemnification asset at its estimated fair value of $3.4 billion on the acquisition date. The indemnification asset reflects the present value of the expected
net cash reimbursements under the loss sharing agreements.

The
amounts covered by the loss sharing agreements are the pre-acquisition book values of the underlying covered assets, the contractual balance of unfunded commitments that
were acquired, plus certain interest and expenses. The loss sharing agreements are subject to servicing procedures specified in the agreement with the FDIC. The loss sharing agreement applicable to
single family residential mortgage loans provides for FDIC loss sharing and the Bank's reimbursement of recoveries to the FDIC for ten years. The loss sharing agreements applicable to all other
covered assets provide for FDIC loss sharing for five years and the Bank's reimbursement of recoveries to the FDIC for 8 years. Under the loss sharing agreements, the Bank may sell up to 2.5%
of the acquired residential and commercial loan portfolio, with certain restrictions, based on the unpaid principal balance ("UPB") of the loans on an annual basis without prior consent from the FDIC.
If the Bank seeks to sell residential or non-residential loans in excess of the agreed 2.5% threshold, nine months prior to the tenth anniversary or fifth anniversary, respectively, and
does not receive approval from the FDIC, the loss sharing agreements are extended for a period of two years after the respective anniversaries. The loss sharing term is extended only with respect to
the loans to be included in such sales. The Bank will have the right to sell all or any portion of such loans without FDIC consent, at any time within nine months prior to the respective extended
termination dates.

The
Acquisition was determined to be a business combination; accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition
date. The determination of the initial fair value of loans purchased in the acquisition and the initial fair value of the related FDIC indemnification asset involved a high degree of judgment and
complexity and required management to make subjective assumptions about discount rates, future expected cash flows, market conditions and other future events that are subject to change. The amount the
Company ultimately realizes from these assets could differ materially from the initial estimates.

F-25

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 2 Acquisitions (Continued)

The
following table summarizes the carrying amount and estimated fair values of assets acquired and liabilities assumed as of the acquisition date (in thousands):

As Recorded by
BankUnited FSB

Fair Value
Adjustments

Net Cash
Received From
the FDIC

As Recorded by
the CompanyAssetsCash and cash equivalents

$
1,160,321

$


$
2,156,393

$
3,316,714Investment securities, at fair value


608,388


(69,444
)




538,944FHLB stock


243,334








243,334Loans


11,174,232


(6,163,904
)




5,010,328FDIC receivable





69,444





69,444FDIC indemnification asset





3,442,890





3,442,890Bank owned life insurance


129,111








129,111Other real estate owned


199,819


(22,140
)




177,679Deferred tax asset, net





37,269





37,269Goodwill and other intangible assets





61,150





61,150Other assets


95,171


(44,696
)




50,475Total assets


13,610,376


(2,689,431
)

2,156,393


13,077,338LiabilitiesDeposits


8,225,916


108,566





8,334,482Securities sold under agreements to repurchase


1,310








1,310Federal Home Loan Bank advances


4,429,350


201,264





4,630,614Advance payments by borrowers for taxes and insurance


52,362








52,362Other liabilities


59,137


(567
)




58,570Total liabilities


12,768,075


309,263





13,077,338Net Assets

$
842,301

$
(2,998,694
)
$
2,156,393

$



Goodwill
and other intangible assets recognized in conjunction with the Acquisition include approximately $59.4 million of goodwill and a $1.8 million core
deposit intangible asset.

The
following is a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed.

Cash and cash equivalents, securities sold under agreements to repurchase and advance payments by borrowers for taxes and insurance:The
carrying amount of these assets and liabilities was considered a reasonable estimate of fair value based on the short-term, liquid nature of these assets.



Fair values of investment securities were based on quoted market prices, where available. If quoted market prices were not available,
fair value estimates were based on observable inputs including quoted market prices for similar instruments, quoted market prices in
inactive markets or other inputs observable in the market. In the absence of observable inputs, fair value was estimated based on pricing models and/or discounted cash flow methodologies.

F-26

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 2 Acquisitions (Continued)



Par value was considered a reasonable estimate of fair value based on the redemption provisions of the securities, as these instruments
are restricted securities with no evidence of impairment at the time of acquisition.



Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related
collateral, delinquency and credit classification status, fixed or variable interest rate, term of loan, whether or not the loan was amortizing, and current discount rates. Additional assumptions used
included default rates, loss severity, payment curves, loss curves and prepayment speeds. Certain residential loans were grouped together according to similar characteristics and were treated in the
aggregate when applying various valuation techniques. The discount rates used for loans were based on market rates for new originations of comparable loans at the time of acquisition, and included
adjustments for liquidity concerns.



The $69.4 million FDIC receivable represented a receivable recognized by the Company for an amount due from the FDIC related to
the disputed purchase price of certain investment securities. The FDIC assigned a purchase price to these securities that the Company believed to be higher than the price required by the FSB
Agreement. The FSB Agreement incorporates dispute resolution procedures that describe the process by which disputes regarding interpretation, application, calculation of loss or calculation of
payments regarding the loss share must be resolved. In 2009, the Company recognized an impairment charge on the full amount of the FDIC receivable due to concerns over collectability. See
Note 19,Commitments and Contingencies,for additional discussion of resolution of this dispute.



Fair value was estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements of
losses and the applicable loss sharing percentages. These cash flows were discounted using a risk-free yield curve plus a premium reflecting the uncertainty related to the collection,
amounts and timing of the cash flows and other liquidity concerns.



The fair value of bank owned life insurance was based on the amount that could be realized at the acquisition date from the underlying
insurance contract.



OREO was recorded at estimated fair value, generally based on real estate appraisals or other market based indications of value, net of
estimated costs of disposal.



The deferred tax asset, net represented the tax effects of differences between the book bases and tax bases of certain assets acquired
and liabilities assumed, including investment securities, loans, loss share receivable, time deposits and FHLB advances.

F-27

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 2 Acquisitions (Continued)



Goodwill represented the residual difference in the fair value of tangible and identifiable intangible assets acquired and liabilities
assumed by Company along with the payment from the FDIC for assuming the net liabilities and reflects the market share and related benefits expected to result from the acquisition. Goodwill was
assigned to the Company's single operating segment and reporting unit at the date of the Acquisition, community banking.



The core deposit intangible asset represented the value of relationships with deposit customers. Fair value was estimated based on the
present value of the expected cost savings attributable to core deposit funding relative to an alternative source of funding. In determining fair value, consideration was given to expected customer
attrition rates, cost of the deposit base, reserve requirements and the net maintenance cost attributable to customer deposits.



The fair value of other assets was determined based on management's assessment of the collectability and realizability of such assets
at acquisition date.



Fair values of transaction accounts acquired, including demand, savings and money market deposits, equaled the amount payable on demand
at the acquisition date. The fair values of time deposits were estimated using a discounted cash flow calculation that applied interest rates being offered at the acquisition date to the contractual
cash flows on such deposits.



The fair values of Federal Home Loan Bank advances were estimated using a discounted cash flow calculation that applied interest rates
being offered at the acquisition date for advances with similar terms and remaining maturities to the contractual cash flows on such advances.



The fair value of other liabilities was based primarily on their carrying amounts, which was considered a reasonable estimate based on
the short-term nature of these liabilities. Included in other liabilities was the estimated fair value of the warrant issued to the FDIC in connection with the acquisition, amounting to
$1.5 million.

F-28

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 2 Acquisitions (Continued)

A
summary of the covered loans acquired as of May 21, 2009 and the related discount is as follows (in thousands):

Acquired Credit ImpairedUnpaid
Principal
Balance

Additional
Contractual
Cash Flows

Total Estimated
Contractual
Cash Flows on
Acquired Credit
Impaired Loans

Non-ACI

TotalReal Estate Loans:One-to-four family residential

$
9,114,641

$
4,047,208

$
13,161,849

$
212,847

$
13,374,696Home equity loans and lines of credit


284,222


82,164


366,386


220,434


586,820Multi-family


124,785


48,072


172,857


6,032


178,889Commercial real estate


566,990


245,204


812,194


40,582


852,776Construction


187,025


99,338


286,363


377


286,740Land


220,100


54,636


274,736


173


274,909Total real estate loans


10,497,763


4,576,622


15,074,385


480,445


15,554,830Other LoansCommercial


131,590


21,746


153,336


51,434


204,770Consumer


13,000


348


13,348





13,348Total commercial and consumer loans


144,590


22,094


166,684


51,434


218,118$
10,642,353

$
4,598,716


15,241,069


531,879


15,772,948Less: Non-accretable difference








8,714,344





8,714,344Cash flows expected to be collected








6,526,725Accretable discount








2,004,337


43,939


2,048,276Total







$
4,522,388

$
487,940

$
5,010,328


The estimated contractual cash flows for the acquired non-credit-impaired loans at the acquisition date was $713.0 million.

The
following table presents the components of the FDIC indemnification asset at May 21, 2009 (in thousands):

Loans

OREO

TotalEstimated portion of gross losses subject to FDIC indemnification:Residential

$
4,119,357

$
18,860

$
4,138,217Commercial


411,095





411,095Total


4,530,452


18,860


4,549,312Fair value discount


1,103,681


2,741


1,106,422FDIC indemnification asset at May 21, 2009

$
3,426,771

$
16,119

$
3,442,890


At
the closing of the Acquisition on May 21, 2009, the Company paid transaction fees to related parties totaling $20.0 million and reimbursed those parties
for $2.5 million in certain expenses related to the Acquisition. These fees and costs are included in non-interest expense for the period ended December 31, 2009.

In
October 2010, in two separate transactions, the Company acquired certain assets and assumed certain liabilities of a small business commercial leasing company and a municipal leasing
company for total cash consideration of approximately $50.5 million. These transactions were determined to be

F-29

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 2 Acquisitions (Continued)

business
combinations and were accounted for using the acquisition method of accounting. The acquired businesses are complementary to the Company's commercial lending business strategy. The assets
acquired and liabilities assumed were accounted for at their estimated fair values at the date of acquisition and included primarily lease receivables valued at $42.7 million, customer
relationship intangible assets of $442 thousand, goodwill of $7.9 million, premises and equipment of $570 thousand, and customer deposits and other liabilities of
$1.1 million. Goodwill resulted primarily from the value of an assembled workforce and related industry expertise. The results of operations of the acquired businesses have been included in the
Company's financial statements from the date of acquisition. Pro-forma financial information is not presented due to immateriality of these acquisitions to the Company's overall financial
position and results of operations.

Note 3 Investment Securities Available for Sale

Investment securities available for sale at December 31, 2010 and 2009 consisted of the following (in thousands):

December 31, 2010Covered Securities

Non-Covered SecuritiesGross Unrealized





Gross UnrealizedAmortized
Cost

Fair
Value

Amortized Cost

Fair
ValueGains

Losses

Gains

LossesU.S. Government agency and sponsored enterprise residential mortgage-backed securities

$


$


$


$


$
1,282,757

$
11,411

$
(3,258
)
$
1,290,910Resecuritized real estate mortgage investment conduits ("Re-Remics")














599,682


14,054


(1,105
)

612,631Private label residential mortgage backed securities and CMO's


181,337


61,679


(1,726
)

241,290


138,759


2,906


(35
)

141,630Non mortgage asset-backed securities














407,158


1,908


(72
)

408,994Mutual funds and preferred stocks


16,382


57


(922
)

15,517


120,107


3,402


(491
)

123,018State and municipal obligations














22,898


101


(39
)

22,960Small Business Administration securities














62,831


191


(131
)

62,891Other debt securities


3,695


3,066





6,761











Total

$
201,414

$
64,802

$
(2,648
)
$
263,568

$
2,634,192

$
33,973

$
(5,131
)
$
2,663,034


December 31, 2009Covered Securities

Non-Covered SecuritiesGross Unrealized





Gross UnrealizedAmortized
Cost

Fair
Value

Amortized
Cost

Fair
ValueGains

Losses

Gains

LossesU.S. Treasury securities

$


$


$


$


$
10,066

$
6

$


$
10,072U.S. Government agency and sponsored enterprise residential mortgage-backed securities














1,288,277


3,581


(3,215
)

1,288,643Resecuritized real estate mortgage investment conduits ("Re-Remics")














478,731


1,007


(4,735
)

475,003Private label residential mortgage backed securities and CMO's


201,149


51,285


(480
)

251,954


118,616





(4,062
)

114,554Non mortgage asset-backed securities














30,000








30,000Mutual funds and preferred stocks


18,094


338


(698
)

17,734


25,250


661


(122
)

25,789State and municipal obligations














22,964


143


(1
)

23,106Other debt securities


3,331


2,707





6,038


250








250Total

$
222,574

$
54,330

$
(1,178
)
$
275,726

$
1,974,154

$
5,398

$
(12,135
)
$
1,967,417


F-30

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 3 Investment Securities Available for Sale (Continued)

At December 31, 2010, investment securities available for sale by contractual maturity, adjusted for anticipated prepayments of
mortgage-backed and other pass-through securities, are shown below (in thousands):

Amortized
Cost

Fair ValueDue in one year or less

$
766,730

$
791,221Due after one year through five years


1,320,588


1,361,728Due after five years through ten years


417,215


429,929Due after ten years


194,584


205,189Mutual funds and preferred stocks


136,489


138,535Total

$
2,835,606

$
2,926,602


Based
on the Company's proprietary model and prepayment assumptions, the weighted average life of the mortgage-backed securities portfolio as of December 31, 2010
was 4.02 years. The model results are based on assumptions that may differ from the eventual outcome.

During
the year ended December 31, 2010, the Company exchanged certain non-covered trust preferred securities for preferred stock of the same issuer to achieve higher
returns and more favorable tax treatment. Based on the market value of the trust preferred securities at the time of the exchange, the Company recognized a gross realized loss of $2.8 million.
Proceeds from sale of investment securities available for sale during the year ended December 31, 2010 amounted to $222.0 million, resulting in gross realized losses of
$48.3 thousand and gross realized gains of $1.9 million. Proceeds from sale of investment securities available for sale during the period ended December 31, 2009 amounted to
$9.3 million, resulting in gross realized losses of $381 thousand and gross realized gains of $44 thousand.

The
carrying value of securities pledged as collateral for Federal Home Loan Bank advances, public deposits, interest rate swaps, securities sold under agreements to repurchase and to
secure borrowing capacity at the Federal Reserve Bank, totaled $496.5 million and $618.0 million at December 31, 2010 and December 31, 2009, respectively.

At
December 31, 2010, the portfolio of Re-Remics includes securities issued by a single issuer with a carrying value of $333.6 million.

The
following table presents the aggregate fair value and the aggregate amount by which amortized cost exceeds fair value for investment securities that are in unrealized loss positions
at

F-31

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 3 Investment Securities Available for Sale (Continued)

December 31,
2010 and 2009. All of the securities in unrealized loss positions had been in continuous unrealized loss positions for less than twelve months at December 31, 2010 and 2009
(in thousands):

December 31, 2010

December 31, 2009Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
LossesU.S. Government agency and sponsored enterprise residential mortgage-backed securities

$
486,216

$
(3,258
)
$
812,669

$
(3,215
)Resecuritized real estate mortgage investment conduits ("Re-Remics")


59,408


(1,105
)

340,846


(4,735
)Private label residential mortgage backed securities and CMO's


16,626


(1,761
)

115,872


(4,542
)Non mortgage asset-backed securities


63,802


(72
)




Mutual funds and preferred stocks


61,336


(1,413
)

27,257


(820
)State and municipal obligations


6,144


(39
)

1,109


(1
)Small Business Administration securities


24,108


(131
)




Total

$
717,640

$
(7,779
)
$
1,297,753

$
(13,313
)


The
Company monitors its investment securities available for sale for other than temporary impairment, or OTTI, on an individual security basis considering numerous
factors including the Company's intent to sell securities in an unrealized loss position; the likelihood that the Company will be required to sell these securities before an anticipated recovery in
value; the duration and severity of impairment; the earnings performance, credit rating, asset quality, and business prospects of the issuer; adverse changes in the regulatory, economic or
technological environment; adverse changes in general market conditions in the geographic area or industry in which the issuer operates; and factors that raise concerns about the issuer's ability to
continue as a going concern such as negative cash flows from operations, working capital deficiencies or non-compliance with statutory capital requirements or debt covenants. The relative
significance of each of these factors varies depending on the circumstances related to each security.

None
of the securities in unrealized loss positions at December 31, 2010 or 2009 were determined to be other-than-temporarily impaired. The Company does
not intend to sell securities that are in unrealized loss positions and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost
basis, which may be maturity. At December 31, 2010, sixty-one securities were in unrealized loss positions. The amount of impairment related to twenty-two of these
securities was considered insignificant, totaling approximately $35,000 and no further analysis with respect to these securities was considered necessary. The basis for concluding that impairment of
the remaining securities is not other-than-temporary is further described below:



At December 31, 2010, twenty-one U.S. Government agency and sponsored enterprise mortgage-backed securities and U.S.
Small Business Administration securities were in unrealized loss positions. None of these securities have been in unrealized loss positions for more than twelve months and the amount of impairment of
individual securities is less than 3% of amortized cost. The timely payment of principal and interest on these securities is explicitly or implicitly guaranteed by the U.S. Government.

F-32

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 3 Investment Securities Available for Sale (Continued)

Given
the limited severity and duration of impairment and the expectation of timely payment of principal and interest, the impairments are considered to be temporary.



At December 31, 2010, eight private label mortgage-backed securities and Re-Remic's were in unrealized loss
positions. These securities were assessed for OTTI using third-party developed credit and prepayment behavioral models and CUSIP level constant default rates, voluntary prepayment rates and loss
severity and delinquency assumptions. The results of this evaluation were not indicative of credit losses related to any of these securities as of December 31, 2010. None of these securities
have been in continuous unrealized loss positions for more than 12 months. Given the limited duration of impairment and the expectation of timely recovery of outstanding principal, the
impairments are considered to be temporary.



At December 31, 2010, one non-mortgage asset backed security was in an unrealized loss position. This security had
been in a continuous unrealized loss position for one month at December 31, 2010 and the amount of impairment was less than 1% of its amortized cost basis. This security was assessed for OTTI
using a third-party developed credit and prepayment behavioral model and CUSIP level constant default rates, voluntary prepayment rates and loss severity and delinquency assumptions. The results of
this evaluation were not indicative of credit losses related to this security as of December 31, 2010. Given the limited severity and duration of
impairment and the results of the third party assessment, the impairment is considered to be temporary.



At December 31, 2010, eight mutual fund and preferred stock investments were in unrealized loss positions, including three
positions in mutual funds, four positions in FNMA and FHLMC preferred stock, and one position in preferred stock of a financial institution. All of the underlying holdings of the mutual funds in which
the Company has positions are either explicitly or implicitly guaranteed by the U.S. Government. These investments have been in continuous unrealized loss positions for four months or less at
December 31, 2010 and the severity of impairment is less than 4% of cost basis. All of the FNMA and FHLMC preferred stock positions have been in continuous unrealized loss positions for less
than twelve months and the severity of impairment is less than 2% of cost basis. The financial institution preferred stock had been in an unrealized loss position for three months at
December 31, 2010 and the amount of impairment was less than 1% of the Company's cost basis. The security is investment grade and the issuer is well capitalized and reported positive earnings
as of September 30, 2010. Given the limited duration and severity of impairment, the nature of the assets underlying the mutual fund investments and the rating and assessment of the financial
position of the financial institution issuer, these impairments are considered to be temporary.



At December 31, 2010, one state and municipal obligation was in an unrealized loss position. The security was rated Aa1 by
Moody's and AA+ by Standard & Poors and had been in an unrealized loss position for 3 months. Impairment totaled less than 3% of the Company's amortized cost basis. Given the limited
duration and severity of impairment and the rating of the bond, the impairment is considered temporary.

F-33

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 3 Investment Securities Available for Sale (Continued)

The fair values of the Company's investment securities could decline in the future if the underlying
performance of the collateral for the residential mortgage-backed securities or other securities deteriorates and the Company's credit enhancement levels do not provide sufficient protection for the
Company's contractual principal and interest payments.

Note 4 Loans and Allowance for Loan Losses

At December 31, 2010 and 2009, loans consisted of the following (dollars in thousands):

December 31, 2010Covered LoansAcquired
Credit
Impaired

Non-ACI

Non-Covered
Loans

Total

Percent of
TotalReal Estate Loans:1-4 single family residential

$
2,421,016

$
151,945

$
113,439

$
2,686,400


67.5
%Home equity loans and lines of credit


98,599


206,797


2,255


307,651


7.7
%Multi-family


73,015


5,548


34,271


112,834


2.8
%Commercial real estate


299,068


33,938


118,857


451,863


11.4
%Construction


8,267





8,582


16,849


0.4
%Land


48,251


170


1,873


50,294


1.3
%Total


2,948,216


398,398


279,277


3,625,891


91.1
%Other Loans:Commercial and industrial


49,731


30,139


213,626


293,496


7.4
%Lease financing








52,960


52,960


1.3
%Consumer


4,403





3,056


7,459


0.2
%Total


54,134


30,139


269,642


353,915


8.9
%Total loans


3,002,350


428,537


548,919


3,979,806


100.0
%Unearned discount and deferred fees and costs, net





(34,840
)

(10,749
)

(45,589
)Loans net of discount and deferred fees and costs


3,002,350


393,697


538,170


3,934,217Allowance for loan losses


(39,925
)

(12,284
)

(6,151
)

(58,360
)Loans, net

$
2,962,425

$
381,413

$
532,019

$
3,875,857


F-34

---



Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)



December 31, 2009Covered LoansAcquired
Credit
Impaired

Non-ACI

Non-Covered
Loans

Total

Percent of
TotalReal Estate Loans:1-4 single family residential

$
3,306,306

$
184,669

$
43,110

$
3,534,085


76.0
%Home equity loans and lines of credit


113,578


215,591


1,615


330,784


7.1
%Multi-family


71,321


4,971


700


76,992


1.7
%Commercial real estate


363,965


39,733


24,460


428,158


9.2
%Construction


44,812


377





45,189


1.0
%Land


43,903


173





44,076


0.9
%Total


3,943,885


445,514


69,885


4,459,284


95.9
%Other Loans:Commercial and industrial


81,765


48,635


51,565


181,965


3.9
%Consumer


7,065





3,151


10,216


0.2
%Total


88,830


48,635


54,716


192,181


4.1
%Total loans


4,032,715


494,149


124,601


4,651,465


100.0
%Unearned discount and deferred fees and costs, net





(39,986
)

40


(39,946
)Loans net of discount and deferred fees and costs


4,032,715


454,163


124,641


4,611,519Allowance for loan losses


(20,021
)

(1,266
)

(1,334
)

(22,621
)Loans, net

$
4,012,694

$
452,897

$
123,307

$
4,588,898


As of December 31, 2010 and 2009, the unpaid principal balance of ACI loans was $7.2 billion and $9.3 billion, respectively.

The
accretable yield on ACI loans represents the amount by which undiscounted expected future cash flows exceeds carrying value. Changes in the accretable yield on ACI loans for the year
ended December 31, 2010 and the period from May 22, 2009 through December 31, 2009 were as follows (in thousands):

December 31,
2010

December 31,
2009Balance, beginning of period

$
1,734,233

$
2,004,337Reclassifications from non-accretable difference


487,718


Accretion


(387,977
)

(270,104
)Balance, end of period

$
1,833,974

$
1,734,233


F-35

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

The
following tables present total 1-4 single family residential loans categorized between fixed rate mortgages and adjustable rate mortgages ("ARMs") as of
December 31 2010 and 2009 (in thousands):

December 31, 2010Covered LoansAcquired
Credit
Impaired

Non-ACI

Non-Covered
Loans

Total

Percent of
Total1-4 single family residential loans:Fixed rate loans

$
592,352

$
61,462

$
72,067

$
725,881


27.0
%ARM Loans


1,828,664


90,483


41,372


1,960,519


73.0
%Total(1)

$
2,421,016

$
151,945

$
113,439

$
2,686,400


100.0
%




December 31, 2009Covered LoansAcquired
Credit
Impaired

Non-ACI

Non-Covered
Loans

Total

Percent of
Total1-4 single family residential loans:Fixed rate loans

$
569,529

$
76,342

$
42,577

$
688,448


19.5
%ARM Loans


2,736,777


108,327


533


2,845,637


80.5
%Total(1)

$
3,306,306

$
184,669

$
43,110

$
3,534,085


100.0
%


(1)Before
deferred fees and costs, unearned discounts, premiums and the allowance for loan losses.


Included in ARM loans above are payment option ARMs representing 32.1% and 46.8% of total one-to-four single family
residential loans outstanding as of December 31, 2010 and 2009, respectively. All of the option ARMs are covered loans.

At
December 31, 2010 and 2009, based on unpaid principal balance, the majority of the outstanding loans were to customers domiciled in the following states (dollars in thousands):

December 31, 2010

December 31, 2009Amount

%

Amount

%Florida

$
5,342,748


65.4
%
$
6,253,990


63.8
%California


462,249


5.7
%

667,672


6.8
%New Jersey


382,277


4.7
%

459,755


4.7
%Illinois


378,906


4.6
%

466,007


4.8
%Arizona


258,629


3.2
%

400,096


4.1
%Others


1,348,403


16.4
%

1,562,629


15.8
%$
8,173,212


100.0
%
$
9,810,149


100.0
%


No
other state represented borrowers with more than 4% of loans outstanding at December 31, 2010 or December 31, 2009.

F-36

---



Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

During
the year ended December 31, 2010, the Company sold ACI one-to-four single family residential loans to third parties on a non-recourse
basis with a carrying value of $143.5 million for gross cash proceeds of $68.1 million. The Company incurred transaction costs of $1.0 million and recognized a loss on the sale of
loans of $76.4 million. During the period ended December 31, 2009, the Company sold ACI loans on a non-recourse basis with a carrying value of $129.8 million for gross
cash proceeds of $84.6 million, incurred transaction costs of $1.9 million and recognized a loss on sale of $47.1 million. These losses were partly mitigated by increases in the
FDIC indemnification asset of $57.5 million and $37.6 million for the year ended December 31, 2010 and the period ended December 31, 2009, respectively, included in the
income statement line item "Net loss on indemnification asset resulting from net recoveries".

During
the year ended December 31, 2010 and the period ended December 31, 2009, the Company purchased one-to-four single family residential loans
with unpaid principal balances totaling $75.0 million and $37.1 million, respectively.

As
of December 31, 2010 and December 31, 2009, the Company had pledged real estate loans with unpaid principal balances of approximately $5.2 billion and
$6.1 billion and carrying amounts of approximately $2.9 billion and $2.8 billion, respectively as security for Federal Home Loan Bank advances.

F-37

---



Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

The
following table presents information about the allowance for loan losses and related loans as of and for the year ended December 31, 2010 (in thousands):

1-4 single
family
residential

Home equity
loans and
lines of
credit

Multi-
family

Commercial
real estate

Construction

Land

Commercial

Lease
financing

Consumer

TotalAllowance for loan losses:Beginning balance

$
20,205

$
15

$
71

$
768

$
5

$
2

$
1,509

$


$
46

$
22,621Provision for loan losses:ACI loans


(20,021
)

18,488


7,115


9,069


5,974


7,315


5,988








33,928Non-ACI loans


642


10,343


739


(47
)

(4
)

24


641





215


12,553Non-covered loans


103


(1
)

761


886


118


102


2,880


68


9


4,926Total Provision


(19,276
)

28,830


8,615


9,908


6,088


7,441


9,509


68


224


51,407Charge-offs:ACI loans








(1,414
)

(3,274
)

(4,957
)

(3,441
)

(938
)







(14,024
)Non-ACI loans





(1,125
)

(166
)










(29
)




(215
)

(1,535
)Non-covered loans




















(109
)







(109
)Total charge-offs





(1,125
)

(1,580
)

(3,274
)

(4,957
)

(3,441
)

(1,076
)




(215
)

(15,668
)RecoveriesEnding Balance

$
929

$
27,720

$
7,106

$
7,402

$
1,136

$
4,002

$
9,942

$
68

$
55

$
58,360Ending balance: individually evaluated for impairment

$


$


$


$


$


$


$


$


$


$
Ending balance: collectively evaluated for impairment

$
929

$
9,232

$
1,405

$
1,607

$
119

$
128

$
4,892

$
68

$
55

$
18,435Ending balance: ACI

$


$
18,488

$
5,701

$
5,795

$
1,017

$
3,874

$
5,050

$


$


$
39,925Ending balance: Non-ACI

$
761

$
9,229

$
633

$
418

$
1

$
26

$
1,216

$


$


$
12,284Ending balance: Non-covered

$
168

$
3

$
772

$
1,189

$
118

$
102

$
3,676

$
68

$
55

$
6,151Loans:Ending balance

$
2,686,400

$
307,651

$
112,834

$
451,863

$
16,849

$
50,294

$
293,496

$
52,960

$
7,459

$
3,979,806Ending balance: individually evaluated for impairment(1)

$


$


$


$


$


$


$
2,989

$


$


$
2,989Ending balance: collectively evaluated for impairment(1)

$
265,384

$
209,052

$
39,819

$
152,795

$
8,582

$
2,043

$
240,776

$
52,960

$
3,056

$
974,467Ending balance: ACI loans

$
2,421,016

$
98,599

$
73,015

$
299,068

$
8,267

$
48,251

$
49,731

$


$
4,403

$
3,002,350


(1)Ending
balance of loans is before unearned discount and deferred fees and costs


F-38

---



Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)




The following table summarizes the activity in the allowance for loan losses for the period ended December 31, 2009 (in thousands):

December 31,
2009Balance, beginning of period

$
Provision for loan losses:ACI loans


20,021Non-ACI loans


1,266Non-covered loans


1,334Total


22,621Charge-offs


Recoveries


Balance, end of period

$
22,621


Increases
in the FDIC indemnification asset of $29.3 million and $14.4 million were reflected in non-interest income for the year ended December 31, 2010
and the period ended December 31, 2009 respectively, related to the provision for loan losses on covered loans, including both ACI and non-ACI loans.

The
following tables present information about the Company's investment in impaired loans at and for the year ended December 31, 2010. The table below sets forth the carrying
amount of those ACI loans or pools for which the Company has determined it is probable that it will be unable to collect all the cash flows expected at acquisition plus additional cash flows expected
to be collected to be collected arising from changes in estimates after acquisition, if any, as well as ACI loans not accounted

F-39

---



Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

for
in pools that have been modified in a troubled debt restructuring, and the related allowance amounts (in thousands):

Acquired Credit ImpairedRecorded
investment

Unpaid
Principal
Balance

Related
Allowance

Average
recorded
investmentWith no specific allowance recorded:Construction

$
35

$


$


$
18Land


346








173Commercial and industrial


846








423With a specific allowance recorded:1-4 single family residential











139,871Home equity loans and lines of credit


80,091


165,563


18,488


47,888Commercial real estate


57,116


77,798


5,795


55,459Multi-family


51,932


77,536


5,701


24,997Construction


4,204


3,833


1,017


1,496Land


35,554


46,536


3,874


14,861Commercial and industrial


32,006


33,460


5,050


14,007Total:Residential

$
80,091

$
165,563

$
18,488

$
187,759Commercial


182,039


239,163


21,437


111,434$
262,130

$
404,726

$
39,925

$
299,193


The
tables below include non-covered and non-ACI commercial and commercial real estate relationships with internal risk ratings of substandard or doubtful or on
non-accrual status and with committed balances greater than or equal to $1,000,000 that have been individually evaluated for impairment and determined to be impaired. Also included in
total impaired loans are loans that have been placed on non-accrual status, generally because they are 90 days or more delinquent, for which impairment is measured collectively.
These include homogenous groups of 1 - 4 single family

F-40

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

residential,
home equity and smaller balance commercial and commercial real estate loans (in thousands):

Non-ACIRecorded
investment

Unpaid
Principal
Balance

Related
Allowance

Average
recorded
investment

Non-ACI
loans on
non-accrual
statusWith no specific allowance recorded:1-4 single family residential

$
9,585


11,812

$


$
13,450

$
9,585Home equity loans and lines of credit


10,817


11,056





7,150


10,817Commercial real estate


75


75





561


75Multi-family


200


200





614


200Commercial and industrial


1,886


2,061





1,022


1,886With a specific allowance recorded:














Total:Residential

$
20,402

$
22,868

$


$
20,600

$
20,402Commercial


2,161


2,336





2,197


2,161$
22,563

$
25,204

$


$
22,797

$
22,563


F-41

---



Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

Non-coveredRecorded
investment

Unpaid
Principal
Balance

Related
Allowance

Average
recorded
investment

Non-covered
loans on non-
accrual statusWith no specific allowance recorded:Commercial and industrial

$
3,211

$
3,220

$


$
830

$
3,220With a specific allowance recorded:














$
3,211

$
3,220

$


$
830

$
3,220


Included
in the tables above are three ACI commercial and commercial real estate credit relationships that were the subject of troubled debt restructurings during the year ended
December 31, 2010. These loans had an aggregate carrying amount of $2.4 million at December 31, 2010.

The
following table presents information about the Company's investment in impaired loans as of and for the period ended December 31, 2009 (in thousands):

December 31, 2009Impaired loans in
accrual status(1)

Loans in
non-accrual
status

Specific
allowance
allocated to
impaired
loans

Average
recorded
investment in
impaired
loansCovered loans1 - 4 single family residential

$
567,253

$
14,495

$
20,021

$
13,295Home equity loans and lines of credit





2,726





1,418Commercial





150


30


37Total

$
567,253

$
17,371

$
20,051

$
14,750


(1)Impaired
loans in accrual status are ACI loans that are being accounted for as pools for which impairment is evaluated on a pool basis


ACI
loans or loan pools are considered to be impaired when there has been further deterioration in the cash flows expected at acquisition, plus any additional cash flows expected to be
collected arising from changes in estimates after acquisition. Discount continues to be accreted on ACI loans or pools as long as there are expected future cash flows in excess of the current carrying
amount; therefore, these loans are not classified as non-accrual even though they may be contractually delinquent. ACI 1-4 single family residential and home equity loans
accounted for in pools are evaluated for impairment on a pool basis and the amount of any impairment is measured based on the expected aggregate cash flows of the pools. ACI commercial and commercial
real estate loans are evaluated individually for impairment.

1-4
single family residential and home equity ACI loans that are contractually delinquent by more than 90 days and accounted for in pools that are on accrual status
because discount continues to be accreted totaled $0.7 billion and $1.2 billion at December 31, 2010 and 2009, respectively. The carrying amount of commercial and commercial real
estate ACI loans that are contractually delinquent in excess

F-42

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

of
ninety days but still classified as accruing loans due to discount accretion totaled $54.2 million and $0 at December 31, 2010 and 2009, respectively. There were no
non-ACI or non-covered loans contractually delinquent by more than 90 days and still accruing at December 31, 2010 or 2009.

Interest
income foregone on non-accrual loans, including interest income reversed when loans were placed on non-accrual status, totaled $774.7 thousand and
$636 thousand for the year ended December 31, 2010 and the period ended December 31, 2009, respectively.

The
following tables summarize the Company's loan portfolio by key indicators of credit quality as of December 31, 2010. Amounts are net of unearned discounts (in thousands):



1-4 single
family residential

Home equity
loans and lines
of creditNon-covered loans:Current

$
113,439

$
2,255Past due less than 90 days





Past due 90 days or more





Non-ACI loans:Current


108,224


188,059Past due less than 90 days


4,894


4,756Past due 90 days or more


10,174


9,496ACI loans:Current


1,647,238


76,842Past due less than 90 days


127,155


4,919Past due 90 days or more


646,623


16,838$
2,657,747

$
303,165




Current

$
7,373Past due less than 90 days


47Past due 90 days or more


39$
7,459


F-43

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)



Commercial
real estate

Multi-family

Construction

Land

Commercial
and industrial

Lease
FinancingNon-covered loans:Pass

$
118,449

$
32,730

$
8,582

$
1,537

$
201,534

$
42,944Special mention


408








336


8,140


148Substandard





1,541








3,952


384Doubtful

















6Non-ACI loans:Pass


33,306


789








12,590


Special mention





559








12,139


Substandard


563


4,166





170


3,812


Doubtful

















ACI loans:Pass


190,875


42,749


586


14,862


27,573


Special mention


22,566


1,207


183


6,092


5,423


Substandard


85,623


29,059


7,498


27,250


16,719


Doubtful


4








47


16


$
451,794

$
112,800

$
16,849

$
50,294

$
291,898

$
43,482


Management
considers delinquency status to be the most meaningful indicator of the credit quality of one-to-four single family residential, home equity and
consumer loans. Delinquency statistics are updated at least monthly. Internal risk ratings are considered the most meaningful indicator of credit quality for commercial and commercial real estate
loans. Internal risk ratings are updated on a continuous basis. Relationships with balances in excess of $250 thousand are re-evaluated at least annually and more frequently if
circumstances indicate that a change in risk rating may be warranted. Loans exhibiting potential credit weaknesses that deserve management's close attention and, that if left uncorrected, may result
in deterioration of the repayment capacity of the borrower are categorized as special mention. Loans with well defined credit weaknesses including payment defaults, declining collateral values,
frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash flow, project cost overruns, unreasonable construction delays,
past due real estate taxes or exhausted interest reserves are assigned an internal risk rating of substandard. A loan with a weakness so severe that collection in full is highly questionable or
improbable will be assigned an internal risk rating of doubtful.

F-44

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 4 Loans and Allowance for Loan Losses (Continued)

The
following table presents an aging of the Company's past due loans as of December 31, 2010 (in thousands):

30 - 59 days
past due

60 - 89 days
past due

More than
90 days past due
or in foreclosure

Total
past due loansNon-covered loans:Commercial and industrial

$
136

$


$
95

$
231Lease financing


469








469Consumer





3





3605


3


95


703Non-ACI loans:1-4 single family residential


4,587


307


10,174


15,068Home equity loans and lines of credit


2,677


2,079


9,496


14,252Commercial real estate








75


75Multi-family








200


200Commercial and industrial


538


1,004


578


2,1207,802


3,390


20,523


31,715ACI loans:1-4 single family residential


91,470


35,685


646,623


773,778Home equity loans and lines of credit


3,060


1,859


16,838


21,757Commercial real estate


5,981


2,705


13,724


22,410Multi-family


2,218


2,197


11,008


15,423Construction








6,429


6,429Land


366





16,378


16,744Commercial and industrial


181





6,625


6,806Consumer


29


15


39


83103,305


42,461


717,664


863,430$
111,712

$
45,854

$
738,282

$
895,848


Note 5 FDIC Indemnification Asset

When the Company recognizes gains or losses related to covered assets in its consolidated financial statements, changes in the estimated amount recoverable from the FDIC under the loss
sharing agreements with respect to those gains or losses are also reflected in the consolidated financial statements. Covered loans may be resolved through repayment, short sale of the underlying
collateral, foreclosure or, for the non-residential portfolio, charge-offs, or by sale of the loans. For loans resolved through repayment, short sale or foreclosure, the
difference between consideration received in satisfaction of the loans and the carrying value of the loans is recognized in the income statement line item "Income from resolution of covered assets,
net." Losses from the resolution or permanent modification of covered loans increase the amount recoverable from the FDIC under the loss sharing agreements. Gains from the resolution of covered loans
reduce the amount recoverable from the FDIC under the loss sharing agreements. Similarly, differences in proceeds received on disposition of OREO

F-45

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 5 FDIC Indemnification Asset (Continued)

and
the carrying amount of the OREO result in gains or losses and reduce or increase the amount recoverable from the FDIC under the loss sharing agreements. Increases in valuation allowances related
to covered assets also increase the amount estimated to be recoverable from the FDIC. These additions to or reductions in amounts recoverable from the FDIC related to the resolution of covered assets
are recorded in the income statement line item "Net gain (loss) on indemnification asset resulting from net recoveries" and reflected as corresponding increases or decreases in the FDIC
indemnification asset.

The
following table summarizes the components of the gains and losses associated with covered assets, plus the provision for loan losses on non-covered loans, along with the
related additions to or reductions in the amounts recoverable from the FDIC under the loss sharing agreements, as
reflected in the consolidated statements of income for the year ended December 31, 2010 and the period ended December 31, 2009 (in thousands):

December 31, 2010Transaction
Income (Loss)

Net Gain (Loss) on
Indemnification
Asset From Net
Recoveries

Net Impact on
Pre-tax EarningsProvision for losses on covered loans

$
(46,481
)
$
29,291

$
(17,190
)Provision for losses on non-covered loans


(4,926
)




(4,926
)Total provision for loan losses


(51,407
)

29,291


(22,116
)Income from resolution of covered assets, net


121,462


(84,138
)

37,324Loss on sale of covered loans, net


(76,360
)

57,747


(18,613
)45,102


(26,391
)

18,711Loss on sale of OREO


(2,174
)

1,932


(242
)Impairment of OREO


(16,131
)

12,904


(3,227
)(18,305
)

14,836


(3,469
)Total

$
(24,610
)
$
17,736

$
(6,874
)


In
addition to the loss on covered loans reflected in the table above, the income statement line item "Loss on sale of loans, net" for the year ended December 31, 2010 includes
approximately

F-46

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 5 FDIC Indemnification Asset (Continued)

$50 thousand
of gains on the sale of loans held for sale. These transactions are not subject to the loss sharing agreements.

December 31, 2009Transaction
Income (Loss)

Net Gain (Loss) on
Indemnification
Asset From Net
Recoveries

Net Impact on
Pre-tax EarningsProvision for losses on covered loans

$
(21,287
)
$
14,433

$
(6,854
)Provision for losses on non-covered loans


(1,334
)




(1,334
)Total provision for loan losses


(22,621
)

14,433


(8,188
)Income from resolution of covered assets, net


120,954


(88,801
)

32,153Loss on sale of covered loans, net


(47,078
)

37,600


(9,478
)73,876


(51,201
)

22,675Loss on sale of OREO


(807
)Impairment of OREO


(21,055
)(21,862
)

15,007


(6,855
)Total

$
29,393

$
(21,761
)
$
7,632


Changes
in the FDIC indemnification asset for year ended December 31, 2010 and the period ended December 31, 2009 were as follows (in thousands):

December 31,
2010

December 31,
2009Balance, beginning of period

$
3,279,165

$
3,442,890Accretion


134,703


149,544Reduction for claims filed


(764,203
)

(291,508
)Gain (loss) on indemnification asset resulting from net recoveries


17,736


(21,761
)Balance, end of period

$
2,667,401

$
3,279,165


Under
the terms of the loss sharing agreements, the Company is also entitled to reimbursement from the FDIC for certain expenses related to covered assets upon final resolution of those
assets. For the year ended December 31, 2010 and the period ended December 31, 2009 non-interest expense includes approximately $49.7 million and $26.1 million,
respectively, of disbursements subject to reimbursement under the loss sharing agreements. For those same periods, claims of $29.8 million and $8.1 million, respectively, were submitted
to the FDIC for reimbursement. As of December 31, 2010, $28.5 million of disbursements remain to be submitted for reimbursement from the FDIC in future periods as the related covered
assets are resolved.

F-47

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 6 Other Real Estate Owned

An analysis of OREO for the year ended December 31, 2010 and the period ended December 31, 2009 follows (in thousands):

December 31,
2010

December 31,
2009Balance, beginning of period

$
120,110

$
177,679Transfers from loan portfolio


401,763


115,192(Decrease) increase from resolution of covered loans


(9,530
)

25,702Sales


(289,532
)

(177,408
)Impairment


(16,131
)

(21,055
)Balance, end of period

$
206,680

$
120,110


Increases
or decreases in OREO from resolution of covered loans result when the fair value of OREO less estimated cost to sell at the date of foreclosure exceeds or is less than the
carrying amount of the related ACI loans that are resolved via foreclosure. These amounts are reflected in the line item "Income from resolution of covered assets, net" in the accompanying
consolidated statements of income. As of December 31, 2010 and December 31, 2009, all of the Company's other real estate owned was covered under BankUnited's loss sharing agreements with
the FDIC.

Losses
on sales of OREO totaled $2.2 million and $0.8 million for the year ended December 31, 2010 and the period ended December 31, 2009, respectively and
are included in the line item "Other real estate owned expense" in the accompanying consolidated statements of income.

Note 7 Premises and Equipment and Lease Commitments

Office properties and equipment are included in other assets in the accompanying consolidated balance sheets. At December 31, 2010 and 2009 office properties and equipment are
summarized as follows (in thousands):

December 31,
2010

December 31,
2009Branch buildings and improvements

$
3,540

$
2,130Leasehold improvements


10,762


7Furniture, fixtures and equipment


6,607


6,034Computer equipment


5,302


3,597Software and software licensing rights


13,554


79Total


39,765


11,847Less: accumulated depreciation


(4,117
)

(1,201
)Premises and equipment, net

$
35,648

$
10,646


Depreciation
and amortization expense related to office properties and equipment was $3.1 million and $1.2 million for the year ended December 31, 2010 and the
period ended December 31, 2009, respectively.

F-48

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 7 Premises and Equipment and Lease Commitments (Continued)

The Company leases branch and office facilities under operating leases, most of which contain renewal
options under various terms. Total rent expense under operating leases for the year ended December 31, 2010 and the period ended December 31, 2009, was $12.8 million and
$9.3 million, respectively.

As
of December 31, 2010, future minimum rentals under non-cancelable operating leases with initial or remaining terms in excess of one year were as follows (in
thousands):

Years Ending December 31,2011

$
10,9162012


10,6402013


9,1512014


7,1662015


4,937Thereafter through 2026


22,437Total

$
65,247


Note 8 Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following at December 31, 2010 and 2009 (in thousands):

December 31,
2010

December 31,
2009Indefinite lived intangible assets:Goodwill

$
67,231

$
59,351Intangible assets with determinable useful lives:Core deposit intangible


1,799


1,799Customer relationship intangibles


442


2,241


1,799Accumulated amortization


(461
)

(169
)1,780


1,630Goodwill and other intangible assets

$
69,011

$
60,981


The
core deposit intangible is being amortized over a period of approximately 6 years and the customer relationship intangible is being amortized over a period of approximately
10 years. Future expected amortization of intangible assets with determinable useful lives is approximately $336.1 thousand for each of the years ending December 31, 2011 through
December 31, 2014, $214.5 thousand for the year ending December 31, 2015 and $221.0 thousand for the years thereafter.

F-49

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 9 Deposits

The following table sets forth the average balances and weighted average rates paid on each of BankUnited's deposit categories for the year ended December 31, 2010 and the period
ended December 31, 2009 (dollars in thousands):

December 31, 2010

December 31, 2009Average balance

Rate

Average balance

RateDemand deposits:Non-interest bearing

$
440,673


0.00
%
$
303,810


0.00
%Interest bearing


273,897


0.72
%

183,416


0.79
%Money market


1,667,277


1.20
%

1,205,446


1.93
%Savings


1,203,491


1.18
%

948,000


1.94
%Time


3,889,961


1.85
%

5,506,320


0.93
%Total

$
7,475,299


1.45
%
$
8,146,992


1.16
%


Time
deposits accounts with balances of $100,000 or more totaled approximately $1.3 billion and $1.9 billion at December 31, 2010 and December 31, 2009,
respectively. Time deposits accounts with balances of $250,000 or more totaled $297.3 million and $463.1 million at December 31, 2010 and December 31, 2009, respectively.
The following table sets forth maturities of time deposits equal to or greater than $100,000 as of December 31, 2010 (in thousands):

Three months or less

$
331,660Over 3 months through 6 months


163,520Over 6 months through 12 months


472,199Over 12 months through 24 months


109,632Over 24 months through 36 months


81,429Over 36 months through 48 months


35,709Over 48 months through 60 months


112,274Total

$
1,306,423


Included
in deposits at December 31, 2010 are $54.0 million of time deposits issued to the State of Florida and other public funds deposits totaling $27.1 million.
Investment securities available for sale with a carrying value of $124.3 million were pledged as security for these deposits at December 31, 2010.

F-50

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 9 Deposits (Continued)

Interest
expense on deposits for the year ended December 31, 2010 and the period ended December 31, 2009, is as follows (in thousands):

December 31,
2010

December 31,
2009Interest bearing demand

$
1,981

$
890Money market


19,999


14,283Savings


14,243


11,295Time


72,121


31,361Total

$
108,344

$
57,829


Interest
expense on time deposits has been reduced by amortization of fair value adjustments recorded in connection with the Acquisition of $21.4 million and $79.9 million
for the year ended December 31, 2010 and the period ended December 31, 2009, respectively.

Note 10 Short-Term Borrowings

The following table sets forth information about short-term borrowings, consisting of overnight securities sold under agreements to repurchase, for the year ended
December 31, 2010 and the period ended December 31, 2009 (dollars in thousands):

December 31,
2010

December 31,
2009Maximum outstanding at any month-end

$
17,459

$
2,972Balance outstanding at end of year

$
492

$
2,972Average outstanding during the year

$
7,812

$
2,091Average interest rate during the year


0.92
%

0.02
%Average interest rate at end of year


0.43
%

0.01
%


As
of December 31, 2010 and 2009, the Company had pledged mortgage-backed securities with a carrying value of approximately $25.3 million and $5.1 million,
respectively, as collateral for securities sold under agreements to repurchase.

As
of December 31, 2010, the Bank had unused borrowing capacity at the Federal Reserve Bank of approximately $74.4 million and unused Federal Funds lines of credit with
other financial institutions totaling $85 million.

F-51

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 11 Federal Home Loan Bank Advances

Information about outstanding Federal Home Loan Bank ("FHLB") advances as of December 31, 2010 follows (dollars in thousands):

Amount

Range of
Interest RatesMaturing in:2012

$
1,145,000


0.29
%

4.83
%2013


565,000


2.38
%

4.77
%2014


505,000


3.91
%

4.48
%2015


350


0.00
%

0.00
%Total contractual balance outstanding


2,215,350Acquisition accounting fair value adjustment


39,850Total carrying value

$
2,255,200


The
fair value adjustment recorded in conjunction with the Acquisition is being amortized as a reduction to interest expense over the remaining term of the related advances using the
effective yield method. Amortization of the fair value adjustment totaled $23.9 million and $25.1 million during the year ended December 31, 2010 and the period ended
December 31, 2009, respectively.

The
terms of the Company's security agreement with the FHLB require a specific assignment of collateral consisting of qualifying first mortgage loans, commercial real estate loans, home
equity lines of credit and mortgage-backed securities with unpaid principal amounts discounted at various stipulated percentages at least equal to 100% of outstanding FHLB advances. As of
December 31, 2010 the Company had pledged investment securities and mortgage loans with an aggregate carrying amount of approximately $3.4 billion as collateral for advances from the
FHLB.

During
the period ended December 31, 2009, the Company elected to prepay $2.71 billion of FHLB advances with a carrying value of $2.83 billion for an aggregate cash
payment of $2.80 billion. The Company recognized a gain of $31.3 million on this extinguishment of debt. Also during the period ended December 31, 2009, the Company restructured
$505.0 million in principal amount of FHLB advances. The original advances had a weighted average interest rate and maturity of 3.69% and 1.8 years at the date of restructuring,
respectively, and the new advances have a weighted average interest rate and maturity of 4.22% and 4.8 years, respectively. No gain or loss was recognized on the restructuring transactions.

At
December 31, 2010 the Bank's available borrowing capacity at the Federal Home Loan Bank of Atlanta was approximately $276.8 million.

F-52

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 12 Income Taxes

The components of the provision (benefit) for income taxes for the year ended December 31, 2010 and the period ended December 31, 2009 are as follows (in thousands):

December 31,
2010

December 31,
2009CurrentFederal

$
96,722

$
70,910State


6,995


11,790Total


103,717


82,700DeferredFederal


20,987


(1,994
)State


3,101


(331
)Total


24,088


(2,325
)$
127,805

$
80,375


A
reconciliation of the expected income tax expense at the statutory federal income tax rate of 35% to the Company's actual income tax expense and effective tax rate for the year ended
December 31, 2010 and the period ended December 31, 2009 is as follows (amounts in thousands):

December 31, 2010

December 31, 2009Amount

%

Amount

%Tax expense calculated at the statutory federal income tax rate

$
109,389


35.00
%
$
69,797


35.00
%Increases (decreases) resulting from:State income taxes, net of federal tax benefit


9,065


2.90
%

7,448


3.73
%Compensation expense related to PIUs


12,660


4.05
%

3,078


1.54
%Other, net


(3,309
)

(1.06
)%

52


0.03
%Total

$
127,805


40.89
%
$
80,375


40.30
%


F-53

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 12 Income Taxes (Continued)

The
components of deferred tax assets and liabilities at December 31, 2010 and 2009 were as follows (in thousands):

December 31,
2010

December 31,
2009Deferred tax assets:Excess of tax basis over carrying value of acquired loans

$
444,553

$
524,140Fair value adjustments on FHLB advances and time deposits assumed


18,196


35,632Acquisition costs


12,460


14,756Allowance for loan losses


14,151


3,159Impairment of OREO


2,869


1,624Unrealized losses on derivatives used as cash flow hedges


15,028


1,546Other


16,021


1,234Gross deferred tax assets


523,278


582,091Deferred tax liabilities:Deferred tax gain


359,090


448,863Excess carrying value of investment securities acquired over tax basis


100,764


91,458Net unrealized gains on securities available for sale


35,099


18,607Other


32,943


630Gross deferred tax liabilities


527,896


559,558Net deferred tax asset (liability)

$
(4,618
)
$
22,533


Realization
of tax benefits for deductible temporary differences depends on having sufficient taxable income of an appropriate character within the carryforward periods. Sources of
taxable income that may allow for the realization of these tax benefits include: (1) taxable income for the year ended December 31, 2010 and the period ended December 31, 2009
that would be available through carryback in future years, (2) future taxable income that will result from reversal of existing taxable temporary differences, including the negative tax on
goodwill, and (3) taxable income generated from future operations. Management has evaluated the probability of realization of the deferred tax asset and believes that it is more likely than not
that the deferred tax assets will be realized.

A
reconciliation of the change in the Company's total gross unrecognized tax benefits for the year ended December 31, 2010 follows (in thousands):

Balance, beginning of period

$
Additions for tax positions related to the current year


2,176Additions for tax positions related to prior periods


343Reductions due to settlements with taxing authorities


Reductions due to lapse of the statute of limitations


2,519Interest and penalties


326Balance, end of period

$
2,845


F-54

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 12 Income Taxes (Continued)

The
Company did not have any unrecognized tax benefits for the period ended December 31, 2009.

At
December 31, 2010, the Company had $1.6 million of unrecognized federal and state tax benefits that would have impacted the effective tax rate if recognized. The Company
does not expect the above unrecognized tax benefits to change significantly over the next year, although the Company is evaluating amending its 2009 Federal income tax return. Until its evaluation is
complete, the Company is unable to determine its ultimate position and the related potential adjustments. Total interest, net of the federal benefit, related to unrecognized tax benefits recognized in
the consolidated statements of income was $0.3 million for the year ended December 31, 2010.

The
Company, inclusive of its subsidiaries other than BU REIT, Inc., files a consolidated U.S. federal corporate income tax return as well as combined corporate state
income tax returns in jurisdictions where combined filings are required. The year ended December 31, 2010 and the period ended December 31, 2009 remain subject to examination in the U.S.
federal and various state tax jurisdictions.

Note 13 Derivatives and Hedging Activities

The Company uses interest rate swaps to manage interest rate risk related to certain instruments used to finance its operations, including FHLB advances and certificates of deposit with
maturities of one year, which expose the Company to variability in cash flows due to changes in interest rates. The Company enters into LIBOR-based interest rate swaps that are designated as cash flow
hedges with the objective of limiting the variability of interest payment cash flows resulting from changes in the benchmark interest rate LIBOR. The effective portion of changes in the fair value of
interest rate swaps designated as cash flow hedging instruments are reported in accumulated other comprehensive income ("AOCI") and subsequently reclassified into interest expense in the same period
in which the related interest on the floating-rate debt obligations affects earnings. The Company is exposed to credit risk in the event of nonperformance by the counterparties to its
interest rate swap agreements. The Company manages this risk by entering into interest rate swaps only with primary dealers, the use of ISDA master agreements, credit approvals, counterparty limits
and monitoring procedures and does not expect any counterparties to fail their obligations.

The
Company also enters into interest rate swaps with certain of its borrowers to enable those borrowers to manage their exposure to interest rate fluctuations. To mitigate interest rate
risk associated with these derivative contracts, the Company enters into offsetting derivative contract positions with financial institution counterparties. The Company manages credit risk, or the
risk of default by its borrowers, though its normal loan underwriting and credit monitoring policies and procedures. These interest rate swap contracts are not designated as hedging instruments;
therefore, changes in the fair value of these derivatives are recognized immediately in earnings.

F-55

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 13 Derivatives and Hedging Activities (Continued)

The following tables set forth certain information concerning the Company's interest rate contract
derivative financial instruments and related hedged items at December 31, 2010 and 2009 (dollars in thousands):

December 31, 2010Fair valueHedged Item

Pay Rate

Receive Rate

Remaining
Life in
Years

Notional
Amount

Balance Sheet
Location

Asset

LiabilityDerivatives designated as cash flow hedgesPay-fixed interest rate swaps

Variability of interest cash flows on certificates of deposit

3.11%

12-Month Libor


4.9

$
225,000

Other liabilities

$


$
(10,872
)Purchased interest rate forward-starting swaps

Variability of interest cash flows on FHLB advances

3.42%-3.76%

3-Month Libor


4.4 - 6.3


405,000

Other liabilities





(31,625
)Derivatives not designated as hedgesPay-fixed interest rate swaps



3.68%-5.49%

1-Month Libor less 69% to + 2.25%


4.7 - 5.0


17,304

Other assets


132


Pay-variable interest rate swaps



1-Month Libor less 69% to + 2.25%

3.68%-5.49%


4.7 - 5.0


17,304

Other liabilities





(132
)Total










$
664,608



$
132

$
(42,629
)




December 31, 2009Fair valueHedged Item

Pay Rate

Receive Rate

Remaining
Life in
Years

Notional
Amount

Balance Sheet
Location

Asset

LiabilityDerivatives designated as cash flow hedgesPay-fixed interest rate swaps

Variability of interest cash flows on certificates of deposit

3.11%

12-Month Libor


5.9

$
225,000

Other assets

$
1,517

$
Purchased interest rate forward-starting swaps

Variability of interest cash flows on FHLB advances

3.42%-3.76%

3-Month Libor


5.0 - 7.0


405,000

Other liabilities





(4,016
)Total










$
630,000



$
1,517

$
(4,016
)


The following table provides information about gains and losses, included in interest expense in the accompanying statements of income, related to
interest rate contract derivative instruments designated as cash flow hedges for the year ended December 31, 2010 and the period ended December 31, 2009 (dollars in thousands):

Amount of Gain
(Loss) Recognized
in OCI, Net of Tax
(Effective Portion)

Amount of Gain
(Loss) Reclassified
From AOCI Into
Income (Effective
Portion)

Amount of Gain
(Loss) Recognized
in Income
(Ineffective
Portion)2010

$
(23,931
)
$
(13,519
)
$
(706
)2009

$
(1,292
)
$
(678
)
$
280


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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 13 Derivatives and Hedging Activities (Continued)

Following
is a summary of the changes in the component of other comprehensive income related to these derivatives:

December 31, 2010

December 31, 2009Balance, beginning of period

$
(1,292
)
$
Unrealized loss on cash flow hedges


(36,857
)

(2,101
)Tax effect


14,218


809Net of tax


(22,639
)

(1,292
)Balance, end of period

$
(23,931
)
$
(1,292
)


During
the year ended December 31, 2010 and the period ended December 31, 2009, no derivative positions designated as cash flow hedges were discontinued,
and none of the gains and losses reported in AOCI were reclassified into earnings as a result of the discontinuance of cash flow hedges or because of the early extinguishment of debt.

The
Company enters into commitments to fund residential mortgage loans with the intention that these loans will subsequently be sold into the secondary market. A mortgage loan commitment
binds the Company to lend funds to a potential borrower at a specified interest rate within a specified period of time, generally 30 to 90 days. These commitments are considered derivative
instruments. The notional amount of outstanding mortgage loan commitment derivatives was $6.4 million at December 31, 2010 and the fair value of such commitments was
$55.0 thousand. Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the commitments might decline from inception of the
commitment to funding of the loan. To protect against the price risk inherent in derivative loan commitments, the Company utilizes "best efforts" forward loan sale commitments. Under a "best efforts"
contract, the Company commits to deliver an individual mortgage loan to an investor if the loan to the underlying borrower closes. Generally, the price the investor will pay the Company for a loan is
specified prior to the loan being funded. These commitments are
considered derivative instruments once the underlying loans are funded. The notional amount of forward loan sale commitment derivatives was $2.7 million at December 31, 2010 and their
fair value was $23.1 thousand. All of the Company's loans held for sale at December 31, 2010 were subject to forward sale commitments. The Company did not have any mortgage loan
commitment derivatives or forward loan sale commitments at December 31, 2009.

Note 14 Equity Based Compensation and Other Benefit Plans



On July 9, 2009, the Company adopted the BankUnited, Inc. 2009 Stock Option Plan (the "2009 Plan") pursuant to which the
Company's Board of Directors may grant up to 2,312,500 non-qualified stock options to key employees of the Company and its affiliates. Stock options may be granted with an exercise price
equal to or greater than the stock's fair value at the date of grant. The terms and conditions applicable to options granted under the 2009 Plan are determined by the Company's Board of Directors or a
committee thereof, provided however, that each stock option shall expire on the tenth anniversary of the date of the grant, unless it is earlier exercised or forfeited. Options granted to date under
the 2009 Plan vest over a period of three years. Shares of common stock delivered under the 2009 Plan may be authorized but unsold common stock, or previously issued common stock reacquired

F-57

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 14 Equity Based Compensation and Other Benefit Plans (Continued)

by
the Company. Vesting of stock options may be accelerated in the event of a change in control, as defined.

In
connection with the IPO of the Company's stock in January, 2011, the Company adopted the BankUnited 2010 Omnibus Equity Incentive Plan (the "2010 Plan"). The 2010 Plan will be
administered by the Board of Directors or a committee thereof and provides for the grant of non-qualified stock options, share appreciation rights ("SARs"), restricted shares, deferred
shares, performance shares, unrestricted shares and other share-based awards to selected employees, directors or independent contractors of the Company and its affiliates. The number of shares of
common stock available for issuance under the Plan is 7,500,000. Shares of common stock delivered under the plan may consist of authorized but unissued shares or previously issued shares reacquired by
the Company. The term of a share option issued under the plan may not exceed ten years from the date of grant and the exercise price may not be less than the fair market value of the Company's common
stock at the date of grant. The exercise price of a SAR granted under the 2010 Plan may not be less than the fair market value of a share of common stock on the date of grant and the exercise period
of a SAR may not exceed ten years from the grant date. Unvested awards generally become fully vested in the event of a change in control, as defined.

The
Company will no longer issue new options under the 2009 Plan.

The
grant-date fair value of each option award is determined using a Black-Scholes option pricing model incorporating the following weighted average assumptions:

December 31,
2010

December 31,
2009Expected volatility


35.92
%

27.30
%Expected dividend yield


3.06
%

3.50
%Expected term (years)


8.39


10Risk-free interest rate


2.78
%

3.85
%


The
Company's common stock has not historically been traded on any exchange; therefore the expected volatility is based on the volatility of comparable peer banks. The
Company has no exercise history related to stock option awards. For options granted in February, March and August, 2010 and during the period ended December 31, 2009 the expected life was equal
to the contractual term of the options. For options granted in November, 2010, the simplified method provided for in Staff Accounting Bulletin 14 was used to estimate the expected term. The change in
the expected life assumption was based primarily on the increased probability of completion of an initial public offering of the Company's common stock.

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 14 Equity Based Compensation and Other Benefit Plans (Continued)

A
summary of activity related to stock options for the year ended December 31, 2010 and the period ended December 31, 2009 follows:

Number of
Options

Weighted
Average
Exercise
PriceOptions outstanding, April 28, 2009




$
Granted


384,680


11.32Options outstanding, December 31, 2009


384,680


11.32Granted


647,020


20.01Exercised


Canceled or forfeited


(49,990
)

11.58Options outstanding, December 31, 2010


981,710

$
17.04Exercisable at December 31, 2010


113,451

$
11.34


No
options were exercised, canceled or forfeited during the period ended December 31, 2009.

Additional
information about options outstanding and exercisable at December 31, 2010 is presented in the following table:

Outstanding Options

Exercisable OptionsExercise Price

Number of
Options

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic Value
(in thousands)

Number of
Options

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic Value
(in thousands)$10 - $15


302,270


8.72

$
4,905


101,806


8.72

$
1,652$16 - $20


418,330


9.31

$
3,634


11,645


8.92

$
125$21 - $25


261,110


9.88

$
1,243







$
Total


981,710


9.28

$
9,782


113,451


8.74

$
1,777


The
weighted average grant date fair value of options granted was $6.49 and $6.47 for the year ended December 31, 2010 and the period ended December 31,
2009, respectively.

The
Company recorded $1.3 million and $209.6 thousand of compensation expense related to stock options and corresponding income tax benefits of $501.8 thousand and
$80.8 thousand during the year ended December 31, 2010 and the period ended December 31, 2009, respectively. At December 31, 2010, there was $4.9 million of total
unrecognized compensation cost related to unvested stock options granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.3 years.



During the year ended December 31, 2010 and the period ended December 31, 2009 and prior to the consummation of the IPO
of the Company's common stock in January, 2011 as further discussed in Note 21,Subsequent Events,BUFH had a class of authorized membership
interests identified as Profits Interest Units ("PIUs"). PIUs were awarded to management members of the Company who owned common units of BUFH and entitled the holders to share in distributions from
BUFH after investors in BUFH received certain returns on their investment. Based on their settlement provisions, these

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 14 Equity Based Compensation and Other Benefit Plans (Continued)

awards
were classified as liabilities. Compensation expense related to the PIUs is reflected in the consolidated statement of income of the Company and the related liability is reflected in the
consolidated balance sheet of the Company as a liability to BUFH.

The
PIUs were divided equally into time-based and IRR-based PIUs. Time-based PIUs vest in equal annual installments over a period of three years from
the grant date, with earlier vesting permitted under certain circumstances. Based on their original terms, IRR-based PIUs vest when the common unit holders of BUFH have received aggregate
distributions equal to their original investment of $925.0 million plus an aggregate internal rate of return equal to 15% per annum on their original investment in BUFH (the "IRR hurdle");
following an IPO, the IRR-based PIUs became eligible to vest commencing four months after the IPO, based on the trading price of the Company's common stock after the effective date of the
IPO. In accordance with a resolution approved by the BUFH Board of Directors, immediately prior to consummation of the IPO of the Company's common stock in January, 2011, the IRR-based
PIUs became fully vested. Additionally, in conjunction with the IPO, both the time-based and IRR-based PIUs were exchanged for a combination of vested and unvested stock
options and restricted and unrestricted shares of common stock in the Company, as further described in Note 21.

The
holders of PIUs were not required to make any capital contribution to BUFH or the Company in exchange for their PIUs and were entitled to receive priority distribution
catch-up payments in respect of time-based PIUs that vested but did not participate in earlier interim distributions of profits. Under certain circumstances, a holder of PIUs
had the right to sell to BUFH and BUFH had the obligation to purchase from the holder of the PIUs, or BUFH had the right to purchase from the holder and the holder had the obligation to sell to BUFH,
the PIUs awarded to the holder at fair value or, under certain circumstances, at the lesser of cost or fair value. In connection with anti-dilution provisions of BUFH, each time additional
common units were issued in respect of additional capital contributions up to $1.2 billion in aggregate capital contributions, BUFH was obligated to issue an additional number of
IRR-based and time-based PIUs in respect of such capital contribution, such that the PIUs retained the same relative economic interest that existed prior to the additional
contribution. Additional PIUs were not required to be issued for capital contributions in excess of $1.2 billion.

Compensation
expense related to PIUs is recognized based on their estimated fair values. With respect to time-based PIUs, compensation expense is recognized over the vesting
period, which represents the requisite service period. Under the original terms of the IRR-based PIUs, related compensation expense would have been recognized when it became probable that
the IRR hurdle would be met or upon consummation of an IPO or change in control liquidity event as defined. The fair value of PIUs is estimated using a Black-Scholes option pricing model. Based on the
terms of the PIUs, the value of an option on the Company's common stock with an exercise price of $10 was determined to be a reasonable estimate of the value of a PIU. The Company uses the same
assumptions to estimate the fair value of stock options, described above, and PIUs.

At
December 31, 2010, the pool of IRR-based PIUs and time-based PIUs each consisted of 51,651 PIUs, for a total of 103,302 PIUs, all of which had been
allocated to management members. Included in employee compensation and benefits expense is approximately $36.2 million and $8.8 million associated with time-based PIUs for
the year ended December 31, 2010 and the period ended December 31, 2009, respectively. No related income tax benefit was recognized. At December 31, 2010,

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 14 Equity Based Compensation and Other Benefit Plans (Continued)

there
is $123.1 million, including $39.1 million related to time-based PIUs and $84.0 million related to IRR-based PIUs, of total unrecognized compensation
cost related to unvested PIUs. In January, 2011, upon consummation of the IPO, compensation expense in the amount of approximately $110.4 million was recognized related to PIUs.

The
following table summarizes information about time-based and IRR-based PIUs at December 31, 2010 and 2009:

December 31,
2010

December 31,
2009Time-based PIUs outstanding


51,651


51,500IRR-based PIUs outstanding


51,651


51,500Total awards


103,302


103,000Number of vested awards, end of period


17,217


Number of non-vested awards, end of period


86,085


103,000Fair value per unit, end of period

$
1,627.01

$
850.30Total fair value (in thousands)

$
168,073

$
87,581




Effective October 1, 2009, the Company established a non-qualified deferred compensation plan (the "Deferred
Compensation Plan") for a select group of highly compensated employees whereby a participant, upon election, may defer a portion of eligible compensation. The Deferred Compensation Plan provided for
Company contributions equal to 4.5% of eligible compensation for the period ended December 31, 2009. For subsequent years, Company contributions are equal to 100% of the first 1%, plus 70% of
the next 5% of eligible compensation deferred. The Company accrued interest on the deferred obligation at an annual rate of 6% for the year ended December 31, 2010 and the period ended
December 31, 2009.
Thereafter, the Company will credit each participant's account at an annual interest rate determined by the Company's Compensation Committee. A participant's elective deferrals and interest thereon
are at all times 100% vested. Company contributions and interest thereon will become 100% vested upon the earlier of a change in control, as defined, or the participant's death, disability, attainment
of normal retirement age or the completion of two years of service. Participant deferrals and any associated earnings shall be paid upon separation from service or the specified distribution year
elected. The specified distribution year can be no earlier than the third calendar year after the calendar year in which the participant deferrals and or Company contributions are made. A participant
may elect to be paid in a lump sum or in five, ten or fifteen annual installments. Deferred compensation expense for this plan was $191.6 thousand and $102.9 thousand for the year ended
December 31, 2010 and the period ended December 31, 2009, respectively.

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 14 Equity Based Compensation and Other Benefit Plans (Continued)



The Company sponsors the BankUnited 401(k) Plan, a tax-qualified, deferred compensation plan, (the "401(k) Plan"). Under
the terms of the 401(k) Plan, eligible employees may contribute a portion of compensation not exceeding the limits set by law. Employees are eligible to participate in the plan after one month of
service. The 401(k) Plan allows a matching employer contribution equal to 100% of elective deferrals that do not exceed 1% of compensation, plus 70% of elective deferrals that exceed 1% but are less
that 6% of compensation. Matching contributions are fully vested after two years of service. For the year ended December 31, 2010 and the period ended December 31, 2009, BankUnited made
matching contributions to the 401(k) Plan of approximately $2.1 million and $788 thousand, respectively.

Note 15 Warrant Issued to the FDIC

In connection with the Acquisition, BUFH issued a warrant to the FDIC. The warrant had an initial contractual term of ten years and becomes exercisable for a sixty day period beginning
on the tenth day after the consummation of a qualifying IPO or exit event from which total tangible equity value arises exceeding the value that would be implied if the Company was valued at the
average price-to-tangible book value multiple for the top quartile of publicly-traded U.S. banks and thrifts with total assets in excess of $10 billion.

In
the event that the warrant becomes exercisable as a result of a qualifying IPO, the FDIC will be entitled to acquire a number of common shares of the registrant at an exercise price
of $0.01 per share equal to the amount obtained by dividing (i) the warrant value, as defined, by (ii) the applicable IPO price minus the exercise price per share. If the exercisability
event is an exit event, the FDIC will be entitled to acquire a number of common shares of the entity acquiring BUFH or the Company, equal to the amount obtained by dividing (i) the warrant
value as defined by (ii) the applicable exit event price minus the exercise price per share, unless the common shares do not meet certain criteria, in which case the FDIC shall receive
substitute securities having an aggregate value of the sum of the warrant
value and the exercise price. The warrant is redeemable by BUFH or the Company for cash after it becomes exercisable at a redemption price equal to the warrant value, as defined.

The
Company has classified this warrant as a liability to BUFH in the accompanying consolidated balance sheets. In October 2010, the Company and the FDIC agreed to amend the warrant to
guarantee a minimum value to the FDIC of $25.0 million. Included in other liabilities is $25.0 million and $3.2 million at December 31, 2010 and 2009, respectively,
representing the greater of fair value or the minimum guaranteed value of this instrument. The Company recognized expense of $21.8 million and $1.7 million related to the increase in
value of this instrument for the year ended December 31, 2010 and the period ended December 31, 2009, respectively. As discussed in Note 21,Subsequent
Events,the Company settled the warrant for $25.0 million in cash in February, 2011.

Note 16 Stockholder's Equity

On November 5, 2009, the Board of Directors authorized a 10-for-1 stock split of the Company's outstanding common shares. Effective January 10,
2011, the Board of Directors authorized an additional 10-for-1 split of the Company's outstanding common shares. Stockholder's equity has been

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 16 Stockholder's Equity (Continued)

retroactively
adjusted to give effect to these stock splits for all periods presented by reclassifying from paid-in capital to common stock the par value of the additional shares issued.
All share and per share data have been retroactively restated for all periods presented to reflect these stock splits.

Note 17 Regulatory Capital

BankUnited's regulatory capital levels as of December 31, 2010 and 2009 were as follows (dollars in thousands):

December 31, 2010Actual

Required to be
Considered Well
Capitalized

Required to be
Considered Adequately
CapitalizedRatio

Amount

Ratio

Amount

Ratio

AmountTier 1 leverage ratio(1)


10.34
%
$
1,107,820


8.00
%
$
857,107


8.00
%
$
857,107Tier 1 risk-based capital ratio


41.30
%
$
1,107,820


6.00
%
$
160,942


4.00
%
$
107,295Total risk based capital ratio


42.04
%
$
1,127,661


10.00
%
$
268,235


8.00
%
$
214,588




December 31, 2009Actual

Required to be
Considered Well
Capitalized

Required to be
Considered Adequately
CapitalizedRatio

Amount

Ratio

Amount

Ratio

AmountTier 1 leverage ratio(1)


8.78
%
$
966,749


8.00
%
$
880,865


8.00
%
$
880,865Tier 1 risk-based capital ratio


40.42
%
$
966,749


6.00
%
$
143,506


4.00
%
$
95,670Total risk based capital ratio


40.55
%
$
969,716


10.00
%
$
239,141


8.00
%
$
191,313


(1)A
condition for approval of the application for Federal Deposit Insurance requires the Bank to maintain a Tier 1 leverage ratio of no less than eight
percent throughout the first three years of operation.


For
purposes of risk based capital computations, the FDIC Indemnification asset and the covered assets are risk-weighted at 20% due to the conditional guarantee represented
by the loss sharing agreements.

Regulations
from the Office of Thrift Supervision ("OTS") require that savings institutions submit notice to the OTS prior to making a capital distribution if (a) they would not
be well capitalized after the distribution, (b) the distribution would result in the retirement of any of the institution's common or preferred stock or debt counted as its regulatory capital,
or (c) like the Bank, the institution is a subsidiary of a holding company. A savings institution must apply to the OTS to pay a capital distribution if (a) the institution would not be
adequately capitalized following the distribution, (b) the institution's total distributions for the calendar year exceeds the institution's net income for the calendar year to date plus its
net income (less distributions) for the preceding two years, or (c) the distribution would otherwise violate applicable law or regulation or an agreement with or condition imposed by the OTS.
If neither the savings institution nor the proposed capital distribution meet any of

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 17 Regulatory Capital (Continued)

the
foregoing criteria, then no notice or application is required to be filed with the OTS before making a capital distribution. The OTS may disapprove or deny a capital distribution if in the view of
the OTS, the capital distribution would constitute an unsafe or unsound practice. Declaration and payment of dividends may be further limited by regulation or by guidelines prescribed in the business
plan submitted to the OTS in connection with the approval order for BankUnited.

Note 18 Fair Value Measurements



Following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a
recurring basis, and the level within the fair value hierarchy in which those measurements are typically classified.

Investment securities available for saleFair value measurements are based on quoted prices in active markets when available and as such, are
classified within Level 1 of the fair value hierarchy. These securities typically include U.S. treasury or certain U.S. government agency securities, preferred stock of U.S. government agencies
and certain mutual funds. If quoted market prices in active markets are not available, fair values are estimated using quoted prices of securities with similar characteristics, quoted prices of
identical securities in inactive markets, discounted cash flow techniques or matrix pricing models. Investment securities available for sale that are generally classified within Level 2 of the
fair value hierarchy include U.S. government agency mortgage-backed securities, preferred stock of issuers other than U.S. government agencies, certain nonmortgage asset backed securities, state and
municipal obligations and small business administration securities. Observable inputs that may impact the valuation of these securities include benchmark yield curves, reported trades, dealer quotes,
issuer spreads, current rating, constant default rates and constant prepayment rates. Investment securities available for sale generally classified within Level 3 of the fair value hierarchy
include private label mortgage backed securities, Re-Remics, certain nonmortgage asset backed securities and other debt securities. The Company typically values these securities using
third party proprietary pricing models, primarily discounted cash flow valuation techniques, which incorporate both observable and unobservable inputs. Unobservable inputs that may impact the
valuation of these securities include risk adjusted discount rates, projected prepayment rates, projected default rates and projected loss severity.

Derivative financial instrumentsInterest rate swaps are predominantly traded in over-the-counter markets and, as such, values
are determined using widely accepted discounted cash flow modeling techniques. These discounted cash flow models use projections of future cash payments and receipts that are discounted at
mid-market rates. Observable inputs that may impact the valuation of these instruments include LIBOR swap rates, LIBOR forward yield curves and counterparty credit risk spreads. These fair
value measurements are generally classified within level 2 in the fair value hierarchy. Loan commitment derivatives are priced based on a bid pricing convention adjusted based on the Company's
historical fallout rates. Fallout rates are a significant unobservable input; therefore, these fair value measurements are classified within level 3 of the fair value hierarchy. The value of
these derivatives is generally not significant.

Profits interest unitsThe fair value of profits interest units is estimated using the Black-Scholes option pricing model. Since the Company's common
stock has not historically been traded on an

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BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 18 Fair Value Measurements (Continued)

exchange,
significant inputs to the model including estimated volatility, equity value per share, estimated dividend yield and expected life are unobservable; therefore this fair value measurement is
classified within level 3 of the fair value hierarchy.

FDIC warrantThe fair value of the FDIC warrant has historically been estimated using binomial and Monte Carlo simulation models that incorporated
significant unobservable inputs as to equity value per share, estimated volatility, expected life, and dividend yield. This fair value estimate is classified within level 3 of the fair value
hierarchy. At December 31, 2010, the value assigned to the FDIC warrant is the value negotiated by the Company and the FDIC at which the instrument was settled in February, 2011.

The
following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 and 2009, (in thousands):

December 31, 2010Level 1

Level 2

Level 3

TotalInvestment Securities Available for Sale:U.S. Government agency and sponsored enterprise residential mortgage-backed securities

$


$
1,290,910

$


$
1,290,910Resecuritized real estate mortgage investment conduits ("Re-Remics")








612,631


612,631Private label residential mortgage backed securities and CMO's








382,920


382,920Non mortgage asset-backed securities





278,384


130,610


408,994Mutual funds and preferred stocks


40,269


98,266





138,535State and municipal obligations





22,960





22,960Small business administration securities





62,891





62,891Other debt securities





2,818


3,943


6,761Derivative assets





132





132Total assets at fair value

$
40,269

$
1,756,361

$
1,130,104

$
2,926,734FDIC warrant

$


$


$
25,000

$
25,000Liability for PIUs








44,964


44,964Derivative liabilities





42,629


78


42,707Total liabilities at fair value

$


$
42,629

$
70,042

$
112,671


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 18 Fair Value Measurements (Continued)



December 31, 2009Level 1

Level 2

Level 3

TotalInvestment Securities Available for Sale:U.S. Treasury securities

$
10,072

$


$


$
10,072U.S. Government agency and sponsored enterprise residential mortgage-backed securities





1,288,643





1,288,643Resecuritized real estate mortgage investment conduits ("Re-Remics")








475,003


475,003Private label residential mortgage backed securities and CMO's








366,508


366,508Non mortgage asset-backed securities








30,000


30,000Mutual funds and preferred stocks


17,646


25,877





43,523State and municipal obligations





23,106





23,106Other debt securities





2,760


3,528


6,288Derivative assets





1,517





1,517Total assets at fair value

$
27,718

$
1,341,903

$
875,039

$
2,244,660FDIC warrant

$


$


$
3,168

$
3,168Liability for PIUs








8,793


8,793Derivative liabilities





4,016





4,016Total liabilities at fair value

$


$
4,016

$
11,961

$
15,977


The
following table reconciles changes in the fair value of assets and liabilities measured at fair value on a recurring basis and classified in level 3 of the fair value
hierarchy for the year ended December 31, 2010 and the period ended December 31, 2009 (in thousands):

December 31, 2010Re-Remics

Private Label
Mortgage
Backed
Securities

Non Mortgage
Asset-Backed
Securities

Other Debt
Securities

FDIC
Warrant

Liability
for PIUs

Derivative
LiabilitiesBalance at December 31, 2009

$
475,003

$
366,508

$
30,000

$
3,528

$
(3,168
)
$
(8,793
)
$
Gains (losses) for the period included in:Net income














(21,832
)

(36,171
)

(78
)Other comprehensive income


16,677


16,081


375


634








Purchases


266,512


61,480


101,812











Sales


(29,969
)
















Settlements


(115,592
)

(61,149
)

(1,577
)

(219
)







Transfers into (out of) Level 3




















Balance at December 31, 2010

$
612,631

$
382,920

$
130,610

$
3,943

$
(25,000
)
$
(44,964
)
$
(78
)


F-66

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 18 Fair Value Measurements (Continued)



December 31, 2009Re-Remics

Private Label
Mortgage
Backed
Securities

Non Mortgage
Asset-Backed
Securities

Other Debt
Securities

FDIC
Warrant

Liability
for PIUsBalance at May 22, 2009

$


$
231,877

$


$
1,926

$
(1,464
)
$
Gains (losses) for the period included in:Net income














(1,704
)

(8,793
)Other comprehensive income


(3,728
)

46,743





1,400





Purchases


503,112


126,767


30,000


275





Sales

















Settlements


(24,381
)

(38,879
)




(73
)




Transfers into (out of) Level 3

















Balance at December 31, 2009

$
475,003

$
366,508

$
30,000

$
3,528

$
(3,168
)
$
(8,793
)


Changes
in the fair value of the FDIC warrant are included in the income statement line item "Change in value of FDIC warrant", changes in the fair value of the liability for PIUs are
included in the income statement line item "Employee compensation and benefits" and changes in the fair value of derivative liabilities are included in "Other non-interest expense".



Following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a
non-recurring basis, and the level within the fair value hierarchy in which those measurements are typically classified.

Collateral dependent impaired loans and OREOThe carrying amount of collateral dependent impaired loans is based on the fair value of the underlying
collateral less estimated costs to sell. The carrying value of OREO is initially measured based on the fair value of the real estate acquired in foreclosure and subsequently adjusted to the lower of
cost or estimated fair value, less estimated cost to sell. Fair values are typically based on real estate appraisals which utilize market and income approaches to valuation incorporating both
observable and unobservable inputs. When current appraisals are not available, the Company may use brokers' price opinions, home price indices, or other available information about changes in real
estate market conditions to adjust the latest appraised value available. These adjustments to appraised values may be subjective and involve significant management judgment. Fair value measurements
related to collateral dependent impaired loans and OREO are classified within level 3 of the fair value hierarchy. The following table presents assets for which nonrecurring changes in fair
value have been recorded for the year ended December 31, 2010 and the period ended December 31, 2009 (in thousands):

December 31, 2010Level 1

Level 2

Level 3

Total

Gain (loss)Other real estate owned

$


$


$
206,680

$
206,680

$
16,131


F-67

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 18 Fair Value Measurements (Continued)



December 31, 2009Level 1

Level 2

Level 3

Total

Gain (loss)Other real estate owned

$


$


$
120,110

$
120,110

$
21,055


The
Company did not have any impaired loans whose carrying amounts were measured based on the fair value of underlying collateral during the year ended December 31, 2010 or the
period ended December 31, 2009..

The
following table presents the carrying value and fair value of financial instruments as of December 31, 2010 and 2009 (in thousands):

December 31, 2010

December 31, 2009Carrying Value

Fair Value

Carrying Value

Fair ValueAssets:Cash and cash equivalents

$
564,774

$
564,774

$
356,215

$
356,215Investment securities available for sale


2,926,602


2,926,602


2,243,143


2,243,143Federal Home Loan Bank stock


217,408


217,408


243,334


243,334Loans held for sale


2,659


2,674





Loans, net:Covered


3,343,838


3,521,204


4,465,591


5,138,549Non-covered


532,019


537,840


123,307


128,778FDIC Indemnification asset


2,667,401


2,632,992


3,279,165


3,279,165Income tax receivable


10,862


10,862





Accrued interest receivable


12,013


12,013


9,591


9,591Derivative assets


132


132


1,517


1,517Liabilities:Deposits

$
7,163,728

$
7,202,975

$
7,666,775

$
7,690,422Securities sold under agreements to repurchase


492


492


2,972


2,972Federal Home Loan Bank advances


2,255,200


2,344,263


2,079,051


2,114,431Due to FDIC








114,006


114,006Accrued interest payable


8,425


8,425


12,561


12,561Income taxes payable








82,701


82,701Advance payments by borrowers for taxes and insurance


22,563


22,563


31,237


31,237FDIC warrant


25,000


25,000


3,168


3,168Liability for PIUs


44,964


44,964


8,793


8,793Derivative liabilities


42,707


42,707


4,016


4,016


The
following methods and assumptions were used to estimate the fair value of each class of financial instruments, other than those described above:

The
carrying amounts of certain financial instruments approximate fair value due to their short-term nature and generally negligible credit risk. These financial instruments
include cash and cash

F-68

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 18 Fair Value Measurements (Continued)

equivalents,
income tax receivable, accrued interest receivable, securities sold under agreements to repurchase, due to FDIC, accrued interest payable and income taxes payable.



There is no market for this stock, which can be liquidated only by redemption by the FHLB. The stock is carried at par, which has
historically represented the redemption price and is therefore considered to approximate fair value. FHLB stock is evaluated quarterly for potential impairment.



The fair value of loans held for sale is based on pricing available in the secondary market for similar loans.



Fair values are estimated based on a discounted cash flow analysis. Estimates of future cash flows incorporate various factors that may
include the type of loan and related collateral, collateral values, estimated default probability and loss severity given default, internal risk rating, whether the interest rate is fixed or variable,
term of loan, whether or not the loan is amortizing and loan specific net realizable value analyses for certain commercial and commercial real estate loans. The fair values of loans accounted for in
pools are estimated on a pool basis. Other loans may be grouped based on risk characteristics and fair value estimated in the aggregate when applying discounted cash flow valuation techniques.
Discount rates are based on current market rates for new originations of comparable loans and include adjustments for liquidity and credit risk premiums that the Company believes would be required by
market participants.



Fair values are estimated using a discounted cash flow analysis with a discount rate based on interest rates currently being offered
for loans with similar terms to borrowers of similar credit quality. The allowance for loan losses is considered a reasonable estimate of the required adjustment to fair value to reflect the impact of
credit risk. This estimate may not represent an exit value as defined in ASC 820.



The fair value of the FDIC indemnification asset has been estimated using a discounted cash flow technique incorporating assumptions
about the timing and amount of future projected cash payments from the FDIC related to the resolution of covered assets. The factors that impact estimates of future cash flows are similar to those
impacting estimated cash flows from covered loans described above. The discount rate is determined by adjusting the risk free rate to incorporate credit risk, uncertainty in the estimate of future
cash flows and illiquidity.

F-69

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Table of Contents



BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 18 Fair Value Measurements (Continued)



The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date.
The fair value of time deposits is estimated using a discounted cash flow analysis based on rates currently offered for deposits of similar remaining maturities.



The fair value of the borrowings is estimated by discounting the future cash flows using the current rate at which borrowings with
similar terms and remaining maturities could be obtained.

Note 19 Commitments and Contingencies

The Company issues off-balance sheet financial instruments in connection with BankUnited's lending activities and to meet the financing needs of its customers. These
financial instruments include commitments to fund loans, unfunded commitments under existing lines of credit, and commercial and standby letters of credit. These commitments expose the Company to
varying degrees of credit and market risk which are essentially the same as those involved in extending loans to customers, and are subject to the same credit policies used in underwriting loans.
Collateral may be obtained based on the Company's credit evaluation of the counterparty. The Company's maximum exposure to credit loss is represented by the contractual amount of these commitments.
Amounts funded under non-cancelable commitments in effect at the date of the Acquisition are covered under the loss sharing agreements if certain conditions are met.



These are agreements to lend funds to customers as long as there is no violation of any condition established in the contract.
Commitments to fund loans generally have fixed expiration dates or other termination clauses and may require payment of a fee. Many of these commitments are expected to expire without being funded
and, therefore, the total commitment amounts do not necessarily represent future liquidity requirements.



Unfunded commitments under lines of credit include consumer, commercial and commercial real estate lines of credit to existing
customers. Many of these commitments have fixed expiration dates or other termination clauses and may require payment of a fee. Some of these commitments may mature without being fully funded.



Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These
letters of credit are primarily issued to support trade transactions or guarantee arrangements. Fees collected on standby letters of credit represent the fair value of those commitments and are
deferred and amortized over their term, which is typically one year

F-70

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 19 Commitments and Contingencies (Continued)

or
less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Total
lending related commitments outstanding at December 31, 2010 were as follows (in thousands):

CommitmentsCovered

Non-Covered

TotalCommitments to fund loans

$


$
270,461

$
270,461Unfunded commitments under lines of credit


170,380


149,361


319,741Commercial and standby letters of credit


1,153


11,060


12,213Total

$
171,533

$
430,882

$
602,415




The Company has employment agreements with certain members of senior management. The employment agreements, which establish the duties
and compensation of the executives, have terms ranging from one year to three years, with provisions for extensions, and include specific provisions for salary, bonus, other benefits and termination
payments in certain circumstances.



The Company is involved as plaintiff or defendant in various legal actions arising in the normal course of business. While the ultimate
outcome of any such proceedings cannot be predicted with certainty, it is the opinion of management, based upon advice of legal counsel, that no proceedings exist, either individually or in the
aggregate, which, if resolved adversely to the Company, would have a material effect on the Company's consolidated financial position, results of operations or cash flows.

In
October 2010, the Company reached a settlement with the FDIC regarding a dispute related to the purchase price assigned to certain investment securities acquired in the Acquisition.
Under the terms of the settlement, the Company received $24.1 million from the FDIC. The amount received in this settlement is included in total non-interest income for the year
ended December 31, 2010.

F-71

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 20 Condensed Financial Statements of the Parent Company

Condensed financial statements of BankUnited, Inc. are presented below (in thousands):



December 31, 2010

December 31, 2009Assets:Cash and cash equivalents

$
83,236

$
27,717Investment in subsidiaries


1,209,661


1,055,196Due from subsidiaries


32,574


7,323Deferred tax asset, net


12,574


13,623Other assets


3,329


3,167Total assets

$
1,341,374

$
1,107,026Liabilities and Stockholder's Equity:Liability for profits interest units of BUFH

$
44,964

$
8,793FDIC warrant liability


25,000


3,168Other liabilities


17,902


805Total liabilities


87,866


12,766Stockholder's equity


1,253,508


1,094,260Total liabilities and stockholder's equity

$
1,341,374

$
1,107,026




Year Ended
December 31,
2010

Period from
April 28, 2009
Through
December 31,
2009Income:Service fees from subsidiaries

$
25,797

$
3,183Equity in earnings of subsidiaries


209,753


152,943Total


235,550


156,126Expense:Employee compensation and benefits


41,817


12,124Acquisition related costs





39,800Other


3,425


1,111Total


45,242


53,035Income before income taxes


190,308


103,091Provision (benefit) for income taxes


5,573


(15,955
)Net income

$
184,735

$
119,046


F-72

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 20 Condensed Financial Statements of the Parent Company (Continued)



Year Ended
December 31,
2010

Period from
April 28, 2009
Through
December 31,
2009Cash flows from operating activities:Net income

$
184,735

$
119,046Adjustments to reconcile net income to net cash provided by (used in) operating activities:Equity in earnings of subsidiaries, net of dividends


(149,753
)

(152,943
)Stock-based compensation


1,301


210Change in fair value of equity instruments classified as liabilities


35,062


10,497Depreciation and amortization


100


Deferred income taxes


1,049


(13,057
)Increase in due from subsidiaries


(25,251
)

(6,424
)Decrease (increase) in other assets


461


(3,167
)Increase in other liabilities


26,038


805Net cash provided by (used in) operating activities


73,742


(45,033
)Cash flows from investing activities:Capital contributions to subsidiary





(875,000
)Purchase of office properties and equipment


(723
)

Net cash used in investing activities


(723
)

(875,000
)Cash flows from financing activities:Capital contribution


2,500


947,750Dividends paid


(20,000
)

Net cash (used in) provided by financing activities


(17,500
)

947,750Net increase in cash and cash equivalents


55,519


27,717Cash and cash equivalents, beginning of period


27,717


Cash and cash equivalents, end of period

$
83,236

$
27,717Supplemental schedule of non-cash investing and financing activities:Dividends declared

$
14,000

$



BankUnited, Inc.'s
investment in the Bank totaled $1,208,706 (in thousands) at December 31, 2010. Dividends received by BankUnited, Inc. from the Bank totaled
$60 million for the year ended December 31, 2010. No dividends were paid by the Bank to BankUnited, Inc. during the period ended December 31, 2009.

F-73

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Table of Contents

BANKUNITED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010

Note 21 Subsequent Events

Subsequent events have been evaluated for potential recognition and disclosure through the date that the consolidated financial statements were filed with the Securities and Exchange
Commission.



As discussed in Note 16, the Board of Directors authorized a 10-for-1 split of the Company's outstanding
common shares effective January 10, 2011.



On February 2, 2011, the Company closed its IPO of 33,350,000 shares of common stock at $27.00 per share. In the offering, the
Company sold 4,000,000 shares and selling stockholders sold 29,350,000 shares. Proceeds received by the Company on the sale of the 4,000,000 shares amounted to $102,600,000, net of underwriting
discounts. Immediately prior to the completion of the offering, a reorganization was effected in accordance with BUFH's LLC agreement, pursuant to which all equity interests in the Company were
distributed to the members of BUFH and BUFH was liquidated.

Immediately
prior to the IPO, all issued and outstanding IRR-based PIUs were vested. The time-based and IRR-based PIUs outstanding were exchanged for
1,931,745 restricted shares and 3,863,491 unrestricted shares of the Company's common stock, 3,023,314
vested stock options and 1,511,656 unvested stock options. In January, 2011, the Company recorded approximately $110.4 million in compensation expense related to the exchange and the vesting of
the IRR-based PIUs. This expense, which is not deductible for tax purposes, resulted in an offsetting increase in paid-in capital.



In February, 2011, the Company redeemed the FDIC warrant for its agreed upon value of $25.0 million in cash.



In March, 2011, the Company's Board of Directors approved the payment of a quarterly dividend on its common stock of $0.14 per share
payable on April 15, 2011 to holders of record as of April 1, 2011.

F-74

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Table of Contents

Report of Independent Registered Certified Public Accounting Firm

To
the Board of Directors and
Stockholders of BankUnited, Inc.:

We
have audited the accompanying consolidated statements of financial condition of BankUnited FSB and its subsidiaries (the "Bank") as of May 21, 2009, and the related
consolidated statements of operations, of comprehensive (loss) income, of stockholder's equity (deficit), and of cash flows for the period from October 1, 2008 through May 21, 2009 and
the fiscal year ended September 30, 2008. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements
based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Bank and its subsidiaries at
May 21, 2009, and the results of their operations and their cash flows for the period from October 1, 2008 through May 21, 2009 and the fiscal year ended September 30, 2008
in conformity with accounting principles generally accepted in the United States of America.

As
discussed in Note 1 to the consolidated financial statements, the Office of Thrift Supervision seized the Bank on May 21, 2009, and named the Federal Deposit Insurance
Corporation ("FDIC") as receiver. Immediately thereafter, substantially all assets and liabilities were acquired by BankUnited, a wholly-owned subsidiary of BankUnited, Inc.

/s/
PricewaterhouseCoopers LLP

Fort
Lauderdale, Florida
October 27, 2010

F-75

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Table of Contents



BANKUNITED, FSB AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEET        As of May 21, 2009        (In thousands)

May 21, 2009ASSETSCash and due from banks

$
215,941Due from Federal Reserve Bank


919,755Federal funds sold


7,584Cash and cash equivalents


1,143,280Investment securities available for sale, at fair value


538,944Federal Home Loan Bank stock


243,334Loans held for sale


788Loans held in portfolio, net of discounts, premiums and deferred costs


11,014,215Allowance for loan losses


(1,227,173
)Loans held in portfolio, net


9,787,042Bank owned life insurance


129,111Other real estate owned


177,679Deferred tax asset, net


Goodwill and other intangible assets


28,353Other assets


212,331Total assets

$
12,260,862LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)Liabilities:Demand deposits:Non-interest bearing

$
247,646Interest bearing


155,906Savings and money market


1,682,937Certificates of deposits


6,469,418Total deposits


8,555,907Securities sold under agreements to repurchase


1,310Advances from Federal Home Loan Bank


4,429,350Deferred tax liability


Income taxes payable


Advance payments by borrowers for taxes and insurance


52,362Other liabilities


110,906Total liabilities


13,149,835Commitments and contingenciesStockholder's Equity (Deficit)Common Stock, $0.01 par value, 100 shares authorized, issued and outstanding


Paid-in capital


793,928Retained earnings (deficit)


(1,589,662
)Accumulated other comprehensive loss, net of tax


(93,239
)Total stockholder's equity (deficit)


(888,973
)Total liabilities and stockholder's equity (deficit)

$
12,260,862


The accompanying notes are an integral part of these consolidated financial statements.

F-76

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Table of Contents



BANKUNITED, FSB AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS        For the Period from October 1, 2008 through May 21, 2009, and the Year
Ended  September 30, 2008        (In thousands, except per share amounts)

Period from
October 1,
2008 through
May 21,
2009

Year Ended
September 30,
2008Interest income:Interest and fees on loans

$
312,994

$
762,170Interest and dividends on investment securities available for sale


22,407


50,434Interest and dividends on other interest-earning assets


3,667


21,856Total interest income


339,068


834,460Interest expense:Interest on deposits


199,570


292,855Interest on borrowings


133,822


262,739Total interest expense


333,392


555,594Net interest income before provision for loan losses


5,676


278,866Provision for loan losses


919,139


856,374Net interest income (loss) after provision for loan losses


(913,463
)

(577,508
)Non-interest income (loss):Other than temporary impairment on investment securities available for sale


(68,609
)

(142,035
)Amortization and impairment of mortgage servicing rights


(26,595
)

(8,434
)Gain (loss) on sale of loans, net


196


(9,784
)Service charges


11,796


25,136Gain (loss) on sale of investments, net


39


(1,465
)Other non-interest income


1,742


7,723Total non-interest income (loss)


(81,431
)

(128,859
)Non-interest expense:Employee compensation and benefits


51,695


88,893Occupancy and equipment


25,247


46,743Impairment and other real estate owned related expense


73,439


40,650Professional fees


10,062


8,910Foreclosure expense


4,907


6,007Deposit insurance expense


38,299


6,147Telecommunications and data processing


9,573


13,536Other non-interest expense


25,181


35,594Total non-interest expense


238,403


246,480Income (loss) before income taxes


(1,233,297
)

(952,847
)Income tax expense (benefit)





(94,462
)Net income (loss)

$
(1,233,297
)
$
(858,385
)Earnings (Loss) Per Share:Basic

$
(12,332,970
)
$
(8,583,850
)Weighted average number of common shares outstanding:Basic


100


100


The accompanying notes are an integral part of these consolidated financial statements.

F-77

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Table of Contents



BANKUNITED, FSB AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        For the Period from October 1, 2008 through May 21, 2009, and the Year
Ended  September 30, 2008        (In thousands)

Period from
October 1,
2008 through
May 21, 2009

Year Ended
September 30,
2008Cash flows from operating activities:Net (loss) income

$
(1,233,297
)
$
(858,385
)Adjustments to reconcile net (loss) income to net cash used for operating activities:Provision for loan losses


919,139


856,374Provision for recourse liability on loans sold





12,400Negative amortization of option adjustable rate mortgage payment loans


(28,198
)

(161,664
)Other-than-temporary impairment on investment securities


68,609


142,035Impairment of other real estate owned


38,742


22,749Depreciation and amortization


7,791


15,330Amortization of fees, discounts and premiums, net


10,886


53,930Amortization of mortgage servicing rights


1,596


5,391Impairment of mortgage servicing rights


24,999


3,043Increase in bank owned life insurance cash surrender value


(2,155
)

(4,856
)Net loss on sale of other real estate owned and other assets


22,211


8,784Net (gain) loss on sale of loans


(113
)

3,857Net gain on sale of loans held for sale


(83
)

(6,473
)Net (gain) loss on sale of investment securities available for sale


(39
)

414Deferred tax expense (benefit)


50,306


(78,486
)Other:Proceeds from sale of loans held for sale, including those sold as mortgage-backed securities


45,140


1,160,121Loans originated for sale, net of repayments


(35,795
)

(999,505
)Increase (decrease) in other assets


510


(117,503
)Increase in other liabilities


25,405


19,505Net cash (used in) provided by operating activities


(84,346
)

77,061Cash flows from investing activities:Purchase of investment securities available for sale


(10,427
)

(213,414
)Proceeds from repayments of investment securities available for sale


96,428


270,345Proceeds from sale of investment securities available for sale


9,847


124,357Proceeds from sale of loans held in portfolio


7,563


Net decrease (increase) in loans held in portfolio


340,767


369,153Purchase of Federal Home Loan Bank stock


(113
)

(43,045
)Proceed from repayments of Federal Home Loan Bank stock


19,350


85,859Purchase of office properties and equipment


(828
)

(7,221
)Proceeds from sale of other real estate owned and other assets


107,089


63,723Net cash provided by (used in) investing activities


569,676


649,757


The
accompanying notes are an integral part of these consolidated financial statements.

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BANKUNITED, FSB AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

For the Period from October 1, 2008 through May 21, 2009, and the Year Ended
September 30, 2008

(In thousands)

Period from
October 1,
2008 through
May 21, 2009

Year Ended
September 30,
2008Cash flows from financing activities:Net increase in deposits


379,090


871,029Additions to Federal Home Loan Bank advances


50,000


3,045,000Repayments of Federal Home Loan Bank advances


(900,000
)

(4,000,010
)Capital contribution from parent





160,000Net decrease in securities sold under repurchase agreements


(55,620
)

(86,142
)(Decrease) increase in advances from borrowers for taxes and insurance


(38,861
)

(6,232
)Dividends paid on stock


(5
)

(2
)Net cash (used in) provided by financing activities


(565,396
)

(16,357
)(Decrease) increase in cash and cash equivalents


(80,066
)

710,461Cash and cash equivalents at beginning of period


1,223,346


512,885Cash and cash equivalents at end of period

$
1,143,280

$
1,223,346Supplemental disclosure of cash flow activity:Interest paid on deposits and borrowings

$
317,614

$
556,783Income taxes (received) paid

$
(45,712
)
$
Supplemental schedule of non-cash investing and financing activities:Transfers from loans to real estate owned

$
209,694

$
202,520Transfers of loans held for sale to portfolio

$


$
19,919Transfer of loans from portfolio to loans held for sale

$
7,459

$
242Capital contribution receivable from parent

$


$
Exchange loans for mortgages backed securities

$


$
776,796


The
accompanying notes are an integral part of these consolidated financial statements.

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BANKUNITED, FSB AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)        For the Period from October 1, 2008 through May 21,
2009, and the Year Ended  September 30, 2008        (In thousands)

Common
Stock

Paid-in
Capital

Retained
Earnings
(Deficit)

Accumulated
Other
Comprehensive
Income (Loss)

Total
Stockholders'
Equity
(Deficit)Balance at September 30, 2007

$


$
713,928

$
502,027

$
(13,153
)
$
1,202,802Capital contribution





80,000








80,000Comprehensive loss:Net loss








(858,385
)




(858,385
)Other comprehensive income











(25,645
)

(25,645
)Total comprehensive loss














(884,030
)Payment of cash dividends








(2
)




(2
)Balance at September 30, 2008





793,928


(356,360
)

(38,798
)

398,770Comprehensive loss:Net loss








(1,233,297
)




(1,233,297
)Other comprehensive income











(54,441
)

(54,441
)Total comprehensive loss














(1,287,738
)Payment of cash dividends








(5
)




(5
)Balance at May 21, 2009

$


$
793,928

$
(1,589,662
)
$
(93,239
)
$
(888,973
)


The
accompanying notes are an integral part of these consolidated financial statements.

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BANKUNITED, FSB AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)        For the Period from October 1, 2008 through
May 21, 2009, and the Year Ended  September 30, 2008        (In thousands)

Period from
October 1, 2008
through
May 21,
2009

Year Ended
September 30,
2008Net income (loss)

$
(1,233,297
)
$
(858,385
)Other comprehensive income (loss), net of tax:Unrealized gains (losses) arising during the period on securities, net of tax expense (benefit)(1)


(65,914
)

(37,303
)Unrealized losses on cash flow hedges, net of tax benefit(1)





Less reclassification adjustment for:Realized losses on securities sold included in net income, net of tax benefit(1)


(22
)

(414
)Other-than-temporary impairment on investment securities included in net income (loss), net of tax benefit(1)


(11,451
)

(11,258
)Realized gains on cash flow hedges, net of tax expense(1)





14Total other comprehensive income (loss), net of tax


(54,441
)

(25,645
)Total comprehensive income (loss)

$
(1,287,738
)
$
(884,030
)
  (1)Tax
benefit related to 2009 and 2008 unrealized net losses on securities was completely reserved for by a valuation allowance and therefore these years do
not show any tax benefit related to investment securities. The following table summarizes the related tax expense (benefit) for the period ended May 21, 2009, and September 30, 2008 (in
thousands):


Period from October 1, 2008
through May 21, 2009

Year Ended
September 30, 2008Deferred Tax
Expense
(Benefit)

Deferred Tax
Asset Valuation
Allowance

Deferred Tax
Expense
(Benefit)

Deferred Tax
Asset Valuation
AllowanceUnrealized gains (losses) arising during the period on securities

$
(35,492
)
$
35,492

$
(20,086
)
$
20,086Unrealized losses on cash flow hedges











Realized losses on securities sold included in net income


(12
)

12


(223
)

223Other-than-temporary impairment on investment securities included in net income (loss)


(6,166
)

6,166


(6,062
)

6,062Realized gains on cash flow hedges











(7
)


The
accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents



BANKUNITED, FSB AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Summary of Significant Accounting Policies

BankUnited, FSB ("BankUnited" or the "Bank") was founded in 1984 and offers a full range of consumer and commercial banking products and services to individual and corporate customers
through its branch network in Florida. The consolidated financial statements include the accounts of the Bank and its wholly-owned subsidiaries Bay Holdings, Inc., CRE Properties Inc.,
T&D Properties of South Florida, Inc. and BU Delaware, Inc. and its wholly- owned subsidiary BU REIT, Inc. BankUnited Financial Corporation ("BKUNA"), the parent company, is a
Florida corporation organized in 1993 as the holding company for the Bank.

At
the close of business on May 21, 2009, the Bank was seized by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation ("FDIC") was appointed as Receiver.
Immediately thereafter, a de novo institution ("New BankUnited") acquired certain assets and assumed certain liabilities of the former BankUnited. The change in control of the Bank may affect the
accounting policies followed by the Bank under its new ownership.



On September 19, 2008, the Bank reached an agreement with the Office of Thrift Supervision (the "OTS") on regulatory consent
orders (the "Orders"). The Orders, among other things, required that BankUnited continue its capital augmentation plan to raise additional capital and to provide an alternative capital strategy to be
implemented in the event the capital raising efforts in
the capital augmentation plan are unsuccessful (together, the "Capital Plan"). The Capital Plan was approved by the OTS, and on November 1, 2008, the Bank's Board of Directors ("Board")
approved and adopted the Capital Plan and began its implementation. Additionally, the Orders required that the Bank's Board prepare and submit to the OTS a comprehensive business plan covering the
last three months of calendar year 2008, all of calendar years 2009 and 2010, and the first three quarters of calendar 2011 ("Business Plan"). The Business Plan includes a detailed description of the
Bank's plans to improve earnings, preserve and enhance capital and franchise value, and strengthen liquidity.

The
Orders required the Bank to meet and maintain a minimum Tier One Core Capital Ratio of 7% and a minimum total Risk-Based Capital Ratio of 14% on and after
December 31, 2008. As of December 31, 2008, due primarily to establishing reserves for loan losses and its inability to raise additional equity, the Bank was not in compliance with the
capital ratios as required by the Orders. As a result, the Bank was subject to enforcement action by federal regulators, including placing the Bank into receivership.

The
Orders prohibit the Bank from paying dividends or capital distributions without receiving the prior written approval of the OTS. The Orders also require, among other things, that
BankUnited notify the OTS prior to adding directors or senior executive officers; limit certain kinds of severance and indemnification payments; and obtain OTS approval before entering into, renewing,
extending, or revising any compensatory or benefits arrangements with any director or officer.

Additionally,
the Orders required the Bank to restrict or prohibit the origination of payment option adjustable rate mortgages ("option ARM loans"), prepare a plan to ensure the Bank
maintains and adheres to its allowance for loan losses policies, procedures, time frames and calculation inputs; restricts assets growth; and appoint a regulatory compliance committee.

Effective
April 14, 2009, the Board entered into a Stipulation and Consent to Prompt Corrective Action Directive ("PCA Directive") with the OTS. The PCA Directive addresses the
Bank's failure to

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

operate
under an accepted capital restoration plan and imposes various corrective measures and operational limitations mandated by statute. As of January 30, 2009, the Bank was critically
undercapitalized for purposes of the Prompt Corrective Action provisions of the Federal Deposit Insurance Act. The PCA Directive was issued when the OTS notified the Bank that its previously filed
capital restoration plan was unacceptable and directs the Bank to be recapitalized by a merger with or an acquisition by another financial institution or another entity, or through the sale of all or
substantially all of the Bank's assets and liabilities to another financial institution or another entity within twenty days pursuant to a written definitive agreement, which the Bank is required to
execute within fifteen days of the effective date of the PCA Directive, unless such timeframes are extended in writing by the OTS.



The accounting and reporting policies of the Bank and the methods of applying those policies that materially affect the accompanying
consolidated financial statements conform with accounting principles generally accepted in the United States ("GAAP") and where applicable to general practices in the banking industry or guidelines
prescribed by regulatory agencies. The consolidated financial statements of the Bank include the accounts of BankUnited, FSB and its wholly-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.

In
preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and
expenses and valuation and disclosures of contingent assets and liabilities. Management has made significant estimates in certain areas, including the determination of the allowance for loan losses,
reserve for recourse liability for loans sold, valuing certain financial instruments and other assets, the valuation of mortgage servicing rights, the determination of
other-than-temporary impairment losses on available-for-sale investment securities, determination of the valuation allowance for deferred tax assets and
goodwill impairment. Actual results could differ from those estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.



Certain prior period amounts have been reclassified to conform to the May 21, 2009 consolidated financial statements
presentation.



In September 2006, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements. The
standard defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. The standard changed key concepts in fair value measures including
the establishment of a fair value hierarchy and the concept of the most advantageous or principal market. This standard did not require any new fair value measurement. The Bank adopted this statement
for its financial assets and liabilities effective October 1, 2008. The adoption of this statement did not have a material effect on the Bank's consolidated financial statements.

The
Bank uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is defined as the price that
would be

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Securities available for sale and derivative instruments are
recorded at fair value on a recurring basis. Additionally, from time to time, the Bank may be required to record other financial assets at fair value on a nonrecurring basis, such as impaired loans.
These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or impairment write-downs of individual
assets.

In
February 2007, the FASB issued a new accounting standard on the fair value option for financial assets and financial liabilities. This standard allows the Bank an irrevocable option
for measurement of eligible financial assets or financial liabilities at fair value on an instrument by instrument basis (the fair value option). Subsequent to the initial adoption of the standard,
which the Bank adopted effective October 1, 2008, the Bank may elect to account for eligible financial assets and financial liabilities at fair value. Such an election may be made at the time
an eligible financial asset, financial liability or firm commitment is recognized or when certain specified reconsideration events occur. The Bank has not elected the fair value option for any
eligible financial instrument during the period ended May 21, 2009.

A
fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a
principal market, the most advantageous market for the asset or liability. The fair value hierarchy distinguishes between assumptions developed based on market data obtained from independent sources
(observable inputs) and assumptions made by the Bank about market participant assumptions (unobservable inputs). It is the Bank's policy to maximize the use of observable inputs and minimize the use
of unobservable inputs when developing fair value measurements. Because no active market exists for a portion of the Bank's financial assets, fair value estimates are subjective in nature.
Additionally, the fair value estimates do not necessarily reflect the price that the Bank might receive if it were to sell at one time its entire holding of a particular financial instrument.

Fair
value is based on quoted prices in an active market when available. In certain cases where a quoted price for an asset or liability is not available, the Bank uses quoted market
prices for comparable or similar securities, and when not available, uses internal valuation models to estimate its fair value. These models incorporate inputs such as forward yield curves, loan
prepayment assumptions, expected loss assumptions, market volatilities and pricing spreads utilizing market-based inputs where readily available. The Bank's estimates of fair value reflect inputs and
assumptions which management believes are comparable to those that would be used by other market participants. As an estimate, the fair value cannot be determined with precision and may not be
realized in an actual sale or transfer of the asset or liability in a current market exchange.



Cash and cash equivalents include cash, Federal Home Loan Bank ("FHLB") overnight deposits, federal funds sold and securities purchased
under agreements to resell with original maturities of three months or less. The collateral held by the Bank for securities purchased under agreements to resell consists of the securities underlying
those agreements.

The
Bank must comply with Federal Reserve Board regulations requiring the maintenance of reserves against its net transaction accounts. As of May 21, 2009, cash reserves
maintained by the Bank at the Federal Reserve Bank for this purpose exceeded this requirement.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)



Investment securities available for sale are carried at fair value, net of unrealized gains and losses, and net of discount accretion
and premium amortization computed using the level yield method. Net unrealized gains and losses are included in other comprehensive income (loss) net of applicable income taxes (benefit). Gains or
losses on sales of investment and mortgage-backed securities available for sale are recognized on the specific identification basis.

The
Bank reviews available for sale securities for impairment on a quarterly basis or more frequently if events and circumstances indicate that a potential loss may have occurred. An
investment security is impaired if its fair value is lower than its amortized cost basis. The Bank considers many factors in determining whether the decline in fair value below amortized cost is an
other-than-temporary impairment ("OTTI"), including, but not limited to, adverse changes in expected cash flows, the length of time and extent to which the fair value has been less than amortized
cost, the Bank's intent and ability to hold the security for a period of time sufficient for a recovery in value and issuer-specific factors such as the issuer's financial condition, external credit
ratings and general market conditions.

The
Bank uses third party sources to assist in the determination of the fair value of its investment securities, which are subject to validation procedures performed by management. The
third-party
pricing sources use proprietary models to determine the fair value of the Bank's collateralized mortgage obligations and mortgage pass-through certificates. Management reviews and
documents all assumptions used by both internal and third party sources to ensure they are market based and reflective of the structural and collateral characteristics of the respective securities.



The Bank's loans held in portfolio consists primarily of real estate loans collateralized by first mortgages and also includes
commercial real estate, commercial land, consumer and home equity loans and lines of credit. Loans held in portfolio are loans which management has the intent and ability to hold for the foreseeable
future, are considered held for investment, and, accordingly, are carried at amortized cost. The length of the foreseeable future is a management judgment which is determined based on the type of
loan, asset/liability strategies, including available investment opportunities and funding sources, expected liquidity demands, long-term business strategies and current economic and
market conditions. Evaluation of these factors requires a significant degree of judgment. Management's view of the foreseeable future may change based on changes in these conditions.



BankUnited originates loans that are held for sale in the secondary market to government-sponsored entities and other investors. Loans
held for sale are recorded at the lower of cost or fair value, determined in the aggregate, or at fair value when they are designated as the hedged item in a hedging relationship. Origination fees and
costs for loans held for sale are capitalized as part of the cost of the loan. Fair value is derived from observable current market prices, when available, and includes loan servicing value. When
market data is not available, the Bank estimates fair value based on third party indications of fair value, which may also include adjustments made for specific loan

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

characteristics.
Management reviews and documents all assumptions used by both internal and third party sources to ensure they are market based and reflective of the structural and collateral
characteristics of the respective assets. Adjustments to reflect unrealized gains and losses resulting from changes in fair value and realized gains and losses upon ultimate sale of the loans are
classified as noninterest income in the consolidated statements of operations.

BankUnited
transfers certain residential mortgage loans to the held for sale classification at the lower of cost or fair value. At the time of transfer, any losses are recorded as a
component of noninterest income, with subsequent losses also recorded as a component of noninterest income in the consolidated statements of operations. BankUnited may also transfer loans from held
for sale to held in portfolio. At the time of transfer, any difference between the carrying amount of the loan and its outstanding principal balance is recorded as a component of noninterest income.
Subsequently the discount on the loan is recognized as an adjustment to yield using the interest method. Triggers for transfer of loans to the held for sale category would include loans for which the
Bank no longer had the intent or ability to hold the loans for the foreseeable future, or to maturity. Triggers for transfers to held in portfolio would include those loans that are no longer saleable
due to credit, performance, or market conditions.



The Bank typically classifies loans as nonaccrual when one of the following events occurs: (i) interest or principal has been in
default, unless the loan is well-secured and in the process of collection; (ii) collection of recorded interest or principal is not anticipated; or (iii) income for the loan
is recognized on a cash basis due to the deterioration in the financial condition of the debtor. Consumer and residential mortgage loans are typically placed on nonaccrual when payments have been in
default more than 150 days. All other loans are typically placed on nonaccrual when the loans become 90 days past due, or the collection of principal or interest is deemed doubtful.

When
a loan is placed on nonaccrual, unpaid interest is reversed against interest income. Interest income on nonaccrual loans, if recognized, is either recorded using the cash basis
method of accounting or recognized at the end of the loan term after the principal has been reduced to zero, depending on the type of loan. If and when borrowers demonstrate the ability to repay a
loan in accordance with the contractual terms of a loan classified as nonaccrual, the loan may be returned to accrual status. If a nonaccrual loan is returned to accruing status, the accrued interest
at the date the loan is placed on nonaccrual status, and foregone interest during the nonaccrual period, are recorded as interest income only after all principal has been collected for commercial real
estate and commercial loans. For residential mortgage loans and consumer loans, the accrued interest at the date the loan is placed on nonaccrual status, and forgone interest during the nonaccrual
period, are recorded as interest income as of the date the loan no longer meets the applicable criteria.

Loans
whose terms have been modified in troubled debt restructurings are placed on nonaccrual status, until the Bank determines that future collection of principal and interest is
reasonably assured. Generally, a nonaccrual loan that is restructured remains on nonaccrual for a period of six months to demonstrate the borrower can meet the restructured terms. Payment performance
immediately prior to the restructuring may be considered when making this determination. Where the borrower of a restructured residential mortgage loan has no history of missed payments for at least
six months prior to the restructuring, the loans remain on accrual status at the time of the modification.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)



Loans are considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the
scheduled payments of principal or interest when due, according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status,
collateral value, and the probability of collecting scheduled principal and interest payments when due. When a loan is deemed impaired, the amount of specific allowance required is measured by a
complete analysis of the most probable source of repayment, including the present value of the loan's expected future cash flows, the fair value of the underlying collateral less costs of disposition,
or the loan's estimated fair value. In these measurements, the Bank uses assumptions and methodologies that are relevant to estimating the level of impairment and unrealized losses in the loan
portfolio. To the extent that the data supporting such assumptions has limitations, management's judgment and experience play a key role in recording the specific allowance estimates. BankUnited
generally applies cash receipts on impaired loans not performing according to contractual terms to reduce the carrying value of the loan, unless the Bank believes it will recover the remaining
principal balance of the loan, in which case the Bank may recognize interest income. The
Bank includes impairment losses in the allowance for loan losses through a charge to provision for loan losses.

The
Bank accounts for loans as troubled debt restructurings, when due to a deterioration in a borrower's financial position, the Bank grants concessions that would not otherwise be
considered. Troubled debt restructured loans are tested for impairment and where the borrower has no history of missed payments for six months prior to the restructuring, the loan remains on accrual
status at the time of the modification. Other troubled debt restructured loans are placed in nonaccrual status at the time of the modifications. If borrowers perform pursuant to the modified loan
terms for at least six months and the remaining loan balances are considered collectible, the loans are returned to accrual status.



The Bank's allowance for loan losses is established for both performing loans and non-performing loans. BankUnited's
allowance for loan losses is established and maintained at a level management deems prudent and adequate to cover probable losses on loans based upon a periodic evaluation of current information
relating to the risks inherent in BankUnited's loan portfolio. In evaluating the allowance for loan losses, management evaluates both quantitative and qualitative elements which may require the
exercise of judgment. When evaluating loan loss allowances, management reviews performing and non-performing loans separately.

Additions
to the allowance are made by provisions charged to current operations. The allowance is decreased by charge-offs due to losses and increased by recoveries.

For
commercial loans and commercial loans secured by real estate, losses are recognized at the time they are identified. For the period ended May 21, 2009 and for the fiscal year
ended September 30, 2008, losses on one-to-four family residential loans were charged-off at the time they become 270 days past due. The amount of the
loss equals the excess of the recorded investment in the loan over estimated the fair value of the collateral, less costs to sell. Previously, the Bank's policy was to recognize
charge-offs as the losses on one-to-four family residential loans were identified at the

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

completion
of the foreclosure process and repossession of the collateral, which could be an undetermined length of time, generally in excess of 270 days.

The
Bank's policy is to fully reserve the entire balance of home equity lines when they reached 91 days delinquent, and recognize charge-offs as the losses were
identified. Subsequent to September 30, 2007, the policy was revised to continue to fully reserve for loans at 91 days past due and require that loans that reach 270 days
delinquent be charged-off.

Recoveries
are reported at the time received, except for balances recoverable under mortgage insurance policies. Recoveries under mortgage insurance policies are recorded at the time
collection of the claim from the mortgage insurance company is deemed probable. Claims are deemed probable of collection at approximately the time of repossession of the property and the filing of the
claim. Recoveries under mortgage insurance policies are reported at the lesser of the amount of the loss for the related loan or the amount recoverable under the mortgage insurance policy, net of a
valuation allowance for potential rejections of mortgage insurance claims.



The Bank has established a reserve for recourse liability for loans sold. The reserve is established and maintained at a level
management deems prudent and adequate to cover probable losses under representations and warranties on loans securitized or sold. The reserve is based upon periodic evaluation of current information
relating to the inherent risks, and takes into account historical experiences and trends, and current and projected market, industry, and economic conditions.



Loan origination fees and certain direct loan origination costs are included in the carrying value of loans, and amortized over the
contractual maturities of the loans as an adjustment to interest income. Prepayments of loans result in acceleration of the amortization of these items. Commitment fees and costs relating to
commitments are recognized over the commitment period. If the commitment is subsequently exercised during the commitment period, the remaining unamortized commitment fee at the time of exercise is
recognized over the life of the loan as an adjustment of yield.



The Bank's investment in the stock of the FHLB Atlanta is carried at cost since these are restricted securities. Periodically and as
conditions warrant, the Bank reviews its investment in FHLB stock for impairment and adjusts the carrying value of the investment if it is determined to be impaired.



Office properties and equipment are carried at cost less accumulated depreciation. Building and leasehold improvements are carried at
amortized cost. The estimated useful life of newly constructed branch office buildings is 30 years. The lives of improvements to existing buildings are based on the lesser of the remaining life
of the original building or the useful life of the improvement. Leasehold improvements are amortized over the shorter of the expected term of the lease at inception, considering options to extend that
are reasonably assured, or their useful lives, whichever is shorter.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

The
estimated useful life for furniture, fixtures and equipment is 7 - 10 years, and for computer equipment and software is
3 - 5 years. Depreciation is calculated based on the straight line method using the estimated service lives of the assets. Repair and maintenance costs are charged to
operations as incurred, and improvements are capitalized.



Property acquired through foreclosure or deed in lieu of foreclosure is initially recorded at estimated fair value, based on
independent appraisal by third parties, less estimated costs to sell the property. Any excess of the loan balance over the fair value less estimated costs to sell the property is charged to the
allowance for loan losses at the time of foreclosure. The carrying value is reviewed periodically and, when necessary, any decline in the value of the real estate less estimated cost to sell is
charged to operations. Significant property improvements, which enhance the salability of the property, are capitalized to the extent that the carrying values do not exceed their estimated realizable
values. Legal fees, maintenance and other direct costs of foreclosed properties are expensed as incurred. The amount the Bank ultimately recovers from foreclosed properties may differ substantially
from the net carrying value of these assets because of future market factors that are beyond its control or because of changes in the Bank's strategy for sale of the properties.



BankUnited recognizes mortgage servicing rights ("MSR") as an asset when it sells loans and retains the right to service those loans.
The value of servicing assets is derived from estimated future revenues from contractually specified servicing fees, late charges, prepayment fees and other ancillary revenues that are expected to be
more than adequate compensation to cover the costs associated with performing the service, and is generally expressed as a percent of the unpaid principal balance of the loans being serviced.
Estimated future revenues are determined using the estimated future balance of the underlying mortgage loan portfolio, which, absent new purchases, declines over time from prepayments and cash flows.
MSR assets are carried at the lower of aggregate cost or market and amortized in proportion to and over the period of estimated net servicing income. BankUnited charges impairment as a direct
write-down of its MSR assets. BankUnited does not currently utilize a valuation allowance for recognizing impairment of its MSR assets. BankUnited assesses the MSR assets for impairment on
a disaggregated basis by strata based on the fair value of those assets.

The
estimated fair value of mortgage servicing rights is estimated using various assumptions including future cash flows, market discount rates, as well as expected prepayment rates,
servicing costs and other factors. Changes in these factors could result in impairment of the servicing asset and a charge against earnings. For purposes of evaluating impairment, the Bank stratifies
its mortgage servicing portfolio on the basis of certain risk characteristics, including loan type. Impairment related to mortgage servicing rights is recorded in other non-interest
income. Contractually specified servicing fees, late fees and other ancillary income related to the servicing of mortgage loans are recorded in other non-interest income.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)



When BankUnited sells (transfers) mortgage loans for securitization it may acquire beneficial interests in the securities created as
well as the rights to service the loans underlying the securities. Gains or losses on these transactions are recognized only for the portion of securities that are not acquired by BankUnited. Expenses
related to the transaction are not deferred but are included in the gain or loss calculation. The book values of securities retained by BankUnited are based on their relative fair values at the date
of transfer. BankUnited classifies retained securities as available for sale in its consolidated balance sheets, which are carried at fair value. BankUnited obtains fair values of its retained
securities, at both the date of securitization and at each reporting date, from independent third parties.



Goodwill represents the excess of purchase price over the fair value of net assets acquired. The excess purchase price, which is
related to banking acquisitions, is tested for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment. Adverse changes in the economic
environment, declining operations, or other factors could result in a decline in the implied fair value.

The
goodwill impairment test is performed in two phases during the fourth quarter of each fiscal year (performed as of May 21, 2009 for the period then ended). The first phase is
used to identify potential impairment by comparing the fair value of the reporting unit with its carrying amount, including goodwill. The fair value of the reporting unit is determined based upon the
present value of estimated future cash flows, using a discount rate that approximates the cost of capital in the industry in which the Bank operates. If the fair value is less than the carrying value,
then the second phase is required to identify the amount of impairment by comparing the carrying amount of goodwill to its implied fair value. If the implied fair value is less than the carrying
amount, a loss would be recognized in other non-interest expense to reduce the carrying amount to the implied fair value.

Performing
an impairment test involves estimating the fair value of a reporting unit, which requires the Bank to make assumptions about future market conditions and its ability to
perform as planned. When available, the Bank uses external data in its assumptions.



Bank owned life insurance is carried at an amount that could be realized under the insurance contract as of the date of the
consolidated balance sheets. The change in contract value is recorded as an adjustment to the premiums paid in determining the expense or income to be recognized under the contract.



BankUnited and its subsidiaries, other than BU REIT, Inc., are part of the consolidated federal income tax return of BKUNA.
BKUNA, BankUnited and its subsidiaries filed separate income tax returns in various state jurisdictions through fiscal year 2006. Beginning with the taxable year ended September 30, 2007,
BKUNA, BankUnited and its subsidiaries filed combined state income tax returns where combined filings are required for companies that are considered to be unitary with related

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

entities.
The Bank and its subsidiaries have a Tax Sharing Agreement with BKUNA, whereby the Bank pays to or receives cash from BKUNA as if the Bank filed separate tax returns. Any amount of current
tax due to or receivable from BKUNA is included in their intercompany balance. Income taxes are accounted for on a separate return basis.

The
Bank accounts for income taxes using the asset and liability method, recording deferred tax assets and liabilities by applying federal and state statutory tax rates currently in
effect to its cumulative temporary differences. Temporary differences are differences between financial statement carrying amounts and the corresponding tax bases of assets and liabilities. Under the
asset and liability method, income tax expense or benefit is comprised of the current and deferred tax provisions (benefit) for the year. The current tax provision (benefit) represents amounts that
are payable to or receivable from taxing authorities based on current year taxable income or loss. The deferred tax provision (benefit) reflects changes in deferred tax assets and liabilities during
the year as a result of current year operations.

Generally
accepted accounting principles require that when determining the need for a valuation allowance against a deferred tax asset, management must assess both positive and negative
evidence with regard to the realization of the deferred tax asset. To the extent available sources of taxable income are insufficient to absorb tax losses, a valuation allowance is necessary. Sources
of taxable income for this analysis include prior years' carry-backs, the expected reversals of taxable temporary
differences between book and tax income, prudent and feasible tax-planning strategies, and future taxable income. A valuation allowance is recognized for a deferred tax asset if, based on
the available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Subsequent changes in the tax laws require adjustment to these assets and
liabilities with the cumulative effect included in income from continuing operations for the period in which the change was enacted. In computing the income tax provision, the Bank evaluates the
technical merits of its income tax positions based on current legislative, judicial, and regulatory guidance.

The
Bank recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a
future tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Bank
must recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The Bank measures the tax benefits recognized based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate resolution. The Bank recognizes interest and penalties related to uncertain tax benefits in its provision for income taxes. At May 21, 2009 and September 30, 2008 there
were no significant uncertain tax positions.



Basic earnings (loss) per share are computed by dividing income available to common stockholders by the weighted-average number of
common shares outstanding during each period. Diluted earnings per share are based on the weighted-average number of common shares outstanding during the period, plus the dilutive effect of securities
or other contracts to issue common stock ("common share equivalents"). Common share equivalents are excluded from the computation of earnings (loss) per share in periods in which they have an
anti-dilutive effect. The Bank does not have securities which

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

qualify
as common share equivalents that could potentially dilute earnings per share; therefore the weighted average number of shares used to compute basic and diluted income (loss) per share is the
same.



Public companies are required to report certain financial information about significant revenue-producing segments of the business for
which such information is available and utilized by the chief operating decision maker. Specific information to be reported for individual operating segments includes a measure of profit and loss,
certain revenue and expense items, and total assets. As a community-oriented financial institution, substantially all of BankUnited's operations involve the delivery of loan and deposit products to
customers. Management makes operating decisions and assesses performance based on an ongoing review of these banking operations, which constitute BankUnited's only operating segment.



BankUnited enters into derivative contracts as a means of reducing its interest rate exposures. No derivatives are held for trading
purposes. At inception these contracts are evaluated in order to determine if they qualify for hedge accounting. The hedging instrument must be highly effective in achieving offsetting changes in the
hedge instrument and hedged item attributable to the risk being hedged. Any ineffectiveness, which arises during the hedging relationship is recognized in non-interest expense in the
period in which it arises. All derivatives are valued at fair value and included in other assets or other liabilities. For cash flow hedges, the unrealized changes in fair value to the extent
effective are recognized in other comprehensive income. The fair value of cash flow hedges related to forecasted transactions is recognized in non-interest expense in the period when the
forecasted transaction occurs. Any ineffectiveness related to cash flow-hedges is recorded in interest expense.

Residential
mortgage loan commitments related to loans to be sold and forward sales contracts for loans to be sold are accounted for as derivatives at fair value. The commitments and
forward sales contracts are recorded as either assets or liabilities in the consolidated balance sheets with the changes in fair value recorded in non-interest expense.



As discussed in Note 1 to the consolidated financial statements, BankUnited was closed by the OTS on May 21, 2009. The
impact of accounting policies pending adoption is dependent upon the method of application of those policies by New BankUnited management.

In
April 2009, the FASB issued new guidance regarding the recognition and presentation of other-than-temporary impairments. This guidance amends the
other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of OTTI on debt and equity
securities in the financial statements. This guidance does not amend existing recognition and measurement guidance related to OTTI of equity securities.

In
May 2009, the FASB issued new guidance regarding subsequent events. The new guidance establishes general standards of accounting for and disclosures of events that occur after the
balance sheet date but before financial statements are issued or are available to be issued.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

In
June 2009, the FASB issued new guidance impacting transfers and servicing of financial assets. The objective of this guidance is to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position,
financial performance, and cash flows; and a transferor's continuing involvement in transferred financial assets. This guidance is effective for financial asset transfers occurring after
December 31, 2009.

In
June 2009, the FASB issued new guidance impacting consolidation of variable interest entities. The objective of this guidance is to improve financial reporting by enterprises involved
with variable interest entities and to provide more relevant and reliable information to users of financial statements. This guidance was effective as of January 1, 2010.

Effective
July 1, 2009, the Financial Accounting Standards Board ("FASB") established the Accounting Standards Codification ("ASC" or "Codification") as the source of
authoritative GAAP for companies to use in the preparation of financial statements. The guidance contained in the Codification supersedes all existing accounting and reporting standards for public and
non-public companies.

In
August 2009, the FASB amended the measurement of liabilities at fair value and related disclosures. The amendment provides additional guidance on how to measure the fair value of a
liability. The amendment clarifies that when estimating the fair value of a liability the entity is not required to include a separate adjustment to other inputs relating to the existence of a
restriction that prevents the transfer of a liability. The amendment also clarifies that the quoted price in an active market at the measurement date of a liability when traded as an asset represents
a Level 1 fair value measurements.

In
September 2009, the FASB issued new guidance that creates a practical expedient to measure the fair value of an alternative investment that does not have a readily determinable fair
value. This guidance also requires certain additional disclosures. This guidance was effective for interim and annual periods ending after December 15, 2009.

In
February 2010, the FASB issued new guidance impacting fair value measurements and disclosures. The new guidance requires a gross presentation of purchases and sales of Level 3
activities and adds a new requirement to disclose transfers in and out of Level 1 and Level 2 measurements. The guidance related to the transfers between Level 1 and
Level 2 measurements is effective for the Bank on January 1, 2010. The guidance that requires increased disaggregation of the Level 3 activities is effective for the Bank on
January 1, 2011.

In
March 2010, the FASB issued new guidance impacting purchased receivables. The new guidance clarifies that a modification to a loan that is part of a pool of loans that was acquired
with deteriorated credit quality should not result in the removal of the loan from the pool. This guidance is effective for any modifications of loans accounted for within a pool in the first interim
or annual reporting period ending after July 15, 2010.

In
July 2010, the FASB issued new guidance impacting the disclosure of financing receivables and the allowance for credit losses. The new guidance requires additional disclosures that
will allow users to understand the nature of credit risk inherent in a company's loan portfolios, how that risk is analyzed and assessed in arriving at the allowance for credit losses, and changes and
reasons for those changes in the allowance for credit losses. The new disclosures that relate to information as of the end of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1 Summary of Significant Accounting Policies (Continued)

reporting
period is effective as of December 31, 2010, whereas the disclosures related to activity that occurred during the reporting periods is effective January 1, 2011.

Note 2 Investment Securities Available for Sale

Investment securities available for sale at May 21, 2009 are summarized as follows (in thousands):

May 21, 2009Gross UnrealizedAmortized Cost

Gains

Losses

Fair ValueU.S. Treasury securities

$
35,167

$
261

$
(5
)
$
35,423U.S. Government agencies and sponsored enterprises mortgage-backed securities


224,587


4,294


(1,002
)

227,879Other collateralized mortgage obligations


3,371





(1,586
)

1,785Mortgage pass-through certificates


323,829





(93,738
)

230,091Mutual funds and preferred stocks


18,241


230


(377
)

18,094State and Municipal obligations


22,671


33


(8
)

22,696Other debt securities


4,317





(1,341
)

2,976Total

$
632,183

$
4,818

$
(98,057
)
$
538,944


Investment
securities available for sale at May 21, 2009 by contractual maturity, and adjusted for anticipated prepayments, are shown below (in thousands):

May 21, 2009Amortized Cost

Fair ValueDue in one year or less

$
159,964

$
139,782Due after one year through five years


272,567


229,362Due after five years through ten years


92,254


77,346Due after ten years


89,157


74,360Mutual funds and preferred stock


18,241


18,094Total

$
632,183

$
538,944


Based
on BankUnited's proprietary model and assumptions, the weighted average life of the mortgage-backed securities portfolio as of May 21, 2009 was 4.87 years. The model
results are based on assumptions that may differ from the eventual outcome.

The
Bank monitors its investment securities available for sale for OTTI. Impairment is evaluated on an individual security basis considering numerous factors, and their relative
significance varies depending on the situation. The following table shows aggregate fair value and the aggregate amount

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2 Investment Securities Available for Sale (Continued)

by
which cost exceeds fair value of investments that are in a loss position at May 21, 2009 (in thousands):

May 21, 2009Less than 12 Months

12 Months or Greater

TotalFair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
LossesAvailable for sale securities:U.S. Treasury securities

$
5,005

$
(5
)
$


$


$
5,005

$
(5
)U.S. Government agencies and sponsored enterprises mortgage-backed securities


26,417


(946
)

3,199


(56
)

29,616


(1,002
)Other collateralized mortgage obligations


1,340


(1,464
)

445


(122
)

1,785


(1,586
)Mortgage pass-through certificates


10,123


(8,481
)

176,440


(85,257
)

186,563


(93,738
)Mutual funds and preferred stocks


17,307


(377
)







17,307


(377
)State and municipal obligations


3,841


(8
)







3,841


(8
)Other debt securities


1,676


(1,341
)







1,676


(1,341
)Total

$
65,709

$
(12,622
)
$
180,084

$
(85,435
)
$
245,793

$
(98,057
)


Management
has completed an assessment of each security with unrealized losses for impairment. The following describes the basis under which the Bank has evaluated OTTI.



The unrealized losses associated with U.S. Government agencies and Sponsored Enterprises MBS are primarily driven by changes in
interest rates and not due to credit losses. These securities do not have any OTTI given the explicit or implicit government guarantee. There was no OTTI as of May 21, 2009, and
September 30, 2008, respectively.



These securities are assessed for impairment using a third party developed model, and proprietary behavioral assumptions using default
and loss severity levels, and Voluntary Annual Prepayment Rates ("VPRs"). Based upon its assessment of the unrealized losses associated with these securities, management concluded that OTTI of
$55.6 million and $95.1 million existed during the period ended May 21, 2009 and the year ended September 30, 2008, respectively. The Bank considers the remaining
unrealized losses in this portfolio as of May 21, 2009 to be temporary.



The Bank evaluates its investment in mutual funds for OTTI based on the quoted market value per share. The preferred stock in the
investment portfolio was issued by U.S. Government sponsored enterprises. Based upon its assessment of the securities, management concluded that OTTI of $6.6 million and $45.9 million
existed during the period ended May 21, 2009, and the year ended

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2 Investment Securities Available for Sale (Continued)

September 30,
2008, respectively. The Bank considers the remaining decline in the value of investment securities classified as available for sale as of May 21, 2009, and
September 30, 2008 to be temporary.



The unrealized losses associated with securities of State and municipal obligations are primarily driven by changes in interest rates
and are not due to the credit quality of the securities. These investments are primarily investment grade. The securities were generally underwritten in accordance with the Bank's own investment
standards prior to the decision to purchase, without relying on a bond issuer's guarantee in making the investment decision. These investments will continue to be monitored as part of the Bank's
ongoing impairment analysis, but are expected to perform in accordance with terms, even if the rating agencies reduce the credit rating of the bond issuers. As a result, the Bank expects to recover
the entire amortized cost basis of these securities.



These securities are assessed for impairment using a third party developed model, and proprietary behavioral assumptions using default
and loss severity levels, and Voluntary Annual Prepayment Rates ("VPRs"). Based upon its assessment of the securities, management concluded that OTTI of $6.4 million and $1.0 million
existed during the period ended May 21, 2009 and the year ended September 30, 2008, respectively.

For
the remaining unrealized losses, the Bank believes that these securities will recover their losses in the foreseeable future and management has the intent and ability to hold the
securities until the price recovers.

The
fair values of the Bank's investment securities could decline in the future if the underlying performance of the collateral for the residential MBS or other securities deteriorate
and the Bank's credit enhancement levels do not provide sufficient protection to the Bank's contractual principal and interest. As a result, there is a risk that OTTI may occur in the future.

Proceeds
from sales of investment securities were $9.8 million and $124.4 million for the period from October 1, 2008 through May 21, 2009, and for the fiscal
year ended September 30, 2008, respectively. Realized gains from these sales were $371.9 thousand for the fiscal year ended September 30, 2008. There were no gains recognized
during the period from October 1, 2008 through May 21, 2009. Realized losses from these sales were $38.9 thousand and $1.8 million for the period from October 1,
2008 through May 21, 2009, and for the fiscal year ended September 30, 2008, respectively.

As
part of the Bank's liquidity management strategy, the Bank pledges securities to secure borrowings from the FHLB. The Bank also pledges securities to collateralize public deposits and
securities sold under agreements to repurchase and due to the Federal Reserve. The carrying value of pledged securities totaled $474.8 million at May 21, 2009.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3 FHLB Stock

BankUnited, as a member institution of the Federal Home Loan Bank of Atlanta, is required to own capital stock in the FHLB. The required stock ownership is based generally on
(i) membership requirement and (ii) activity based requirement related to the levels that BankUnited borrows from the FHLB. In connection therewith, the Bank held stock with the
aggregate carrying value of $243.3 million as of May 21, 2009. The stock is restricted and can only be repurchased by the FHLB. No market exists for this stock and there is no quoted
market price. Redemption of FHLB stock has historically been at par value, which is BankUnited's carrying value. The redemption of any excess stock BankUnited holds is at the discretion of the FHLB.

In
evaluating OTTI of the FHLB stock, the Bank considered the most recent financial results, the resumption of dividends on common stock in the second quarter of 2009 and information
from credit rating agencies. Management believes that there is no OTTI in its investment in FHLB stock as of May 21, 2009.

Note 4 Loans Receivable

At May 21, 2009 loans receivable consisted of the following (amounts in thousands):

May 21, 2009Total

Percent
of TotalReal Estate Loans:1 - 4 single family residential

$
8,993,077


91.9
%Home equity loans and lines of credit


505,642


5.2
%Multi-family


129,481


1.3
%Commercial real estate


594,877


6.1
%Construction


187,333


1.9
%Land


219,736


2.2
%Total real estate loans


10,630,146


108.6
%Other Loans:Commercial


181,484


1.9
%Consumer


12,179


0.1
%Total commercial and consumer loans


193,663


2.0
%Total loans held in portfolio


10,823,809


110.6
%Unearned discounts, premiums and deferred costs, net


190,406


1.9
%Allowance for loan losses


(1,227,173
)

(12.5
)%Total loans held in portfolio, net

$
9,787,042


100.0
%


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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4 Loans Receivable (Continued)

The
following table provides a detail of loans to customers for states with balances of 4.4% of the portfolio and higher (dollars in millions):

May 21, 2009Amount

Percent
of TotalFlorida

$
6,928


63.7
%California


723


6.6
%Arizona


515


4.7
%Illinois


505


4.6
%New Jersey


480


4.4
%


As
part of the Bank's liquidity management strategy, the Bank pledges loans to secure FHLB borrowings. Pledged loans must meet specific requirements of eligibility and the unpaid
principal balance is discounted based on criteria established by the FHLB. As of May 21, 2009, the Bank had pledged real estate loans with an unpaid principal balance of approximately
$7.6 billion ($4.6 billion in lendable collateral value) for advances from the FHLB.

The
following table presents total 1-4 single family residential loans categorized between fixed rate mortgages and adjustable rate mortgages ("ARMs") as of May 21,
2009 (dollars in thousands):

May 21, 2009Amount

Percent
of Total1 - 4 single family residential loans:Fixed rate loans

$
1,774,598


19.7
%Adjustable rate loans (ARM):Monthly payment option(1)


3,876,584


43.1
%Select-My-Payment(1)


808,506


9.0
%Non option ARM


2,533,389


28.2
%Total(2)

$
8,993,077


100.0
%


(1)As
of May 21, 2009, payment option loans with a balance of $3.8 billion, representing 78.9% of the payment option portfolio, were negatively
amortizing and approximately $265.3 million, or 5.6%, of the total payment option portfolio resulted from negative amortization. These loans are subject to interest rate caps.(2)Excluding
deferred costs, unearned discounts and premiums and allowance for loan losses.


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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4 Loans Receivable (Continued)




The
following table summarizes changes in the allowance for loan losses for the period from October 1, 2007 through May 21, 2009 (in thousands):

Balance as of September 30, 2007

$
58,623Provision


856,374Charge-offs


(230,309
)Recoveries


31,229Balance as of September 30, 2008


715,917Provision


919,139Charge-offs


(449,010
)Recoveries


41,127Balance as of May 21, 2009

$
1,227,173


The
total allowance reflects management's estimate of credit losses inherent in the loan portfolio at the balance sheet date. The computation of the allowance for loan losses includes
elements of judgment and high level of subjectivity. The Bank considers the allowance for loan losses to be adequate to cover credit losses inherent in the loan portfolio at May 21, 2009.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4 Loans Receivable (Continued)

Certain
loans have been classified as impaired based on the Bank's inability to collect all amounts due under the contractual terms of the loan. The following table shows the Bank's
investment in impaired and non-accrual loans as of and for the period ended May 21, 2009 (in thousands):

May 21,
2009Impaired loans on non-accrual:Real Estate Loans:1 - 4 single family residential:Payment option

$
1,674,325Non-payment option


453,743Total one-to-four family(1)


2,128,068Home equity loans and lines of credit


27,263Multi-family


21,544Commercial real estate


2,888Construction


78,403Land


94,493Total real estate loans


2,352,659Other Loans:Commercial


763Consumer


23Total commercial and consumer loans


786Total non-accrual loans


2,353,445Impaired Loans and still accruing:Real Estate Loans:1 - 4 single family residential(2)


804,218Commercial real estate


162,937Construction


1,379Land


22,780Total real estate loans


991,314Other Loans:Commercial


13,271Consumer


554Total commercial and consumer loans


13,825Other loans past due 90 days and still accruing


Total non-accrual and impaired loans

$
3,358,584


(1)Included
in non-accrual loans at May 21, 2009 were $154.9 million, of troubled debt restructured loans.(2)The
amount of impaired 1-4 single family residential loans at May 21, 2009 represents troubled debt restructured loans.


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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4 Loans Receivable (Continued)




Had
loans in non-accrual status been in accrual, the Bank would have recognized additional interest income of approximately $88.9 million and $85.9 million for
the period ended May 21, 2009 and September 30, 2008, respectively.

Interest
income recognized on non-accrual loans amounted to $6.0 million and $32.0 million for the period ended May 21, 2009, September 30, 2008,
respectively.

The
following table presents information related to the Bank's impaired loans and allocated reserves as of May 21, 2009 (in thousands):

May 21, 2009Outstanding
Principal

Specific
ReservesImpaired loans with specific reserves:1 - 4 single family residential

$
1,464,788

$
381,014Home equity loans and lines of credit


12,944


12,944Commercial real estate


188,373


133,683Commercial


1,755


1,272Total


1,667,860


528,913Impaired loans without specific reserves:1 - 4 single family residential


1,467,498


Home equity loans and lines of credit


14,319


Commercial real estate


196,051


Commercial


12,279Consumer


577


Loans past due 90 days and still accruing


Total


1,690,724


Total impaired loans

$
3,358,584

$
528,913


Specific
reserves related to troubled debt restructured loans amounted to $56.5 million at May 21, 2009.



Loans held for sale are accounted for under the lower of cost or fair value method. Lower of cost or fair value adjustments are
recorded in earnings under non-interest income. During the period from October 1, 2008 through May 21, 2009, the Bank transferred $7.5 million of loans from loans held
in portfolio to loans held for sale and recorded a loss of $6 thousand, which is included in other non-interest income. During the year ended September 30, 2008 the Bank
transferred $20.0 million of loans from loans held for sale to loans held in portfolio and recorded a loss of $2.3 million which is included in other non-interest income.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5 Servicing and Transfers of Mortgage Loans



As of May 21, 2009 the Bank had mortgage servicing rights ("MSR") with a carrying amount of $1.1 million. MSRs are
included with Other Assets on the consolidated balance sheet. The Bank accounted for MSRs using the amortization method (i.e., lower of cost or fair value) with impairment recognized as a
reduction to non-operating income.

On
November 17, 2008, Freddie Mac notified the Bank that they were terminating the Seller/Servicer Eligibility Contract with the Bank effective as of November 17, 2008. The
Bank had the right to market the servicing rights until April 2009. Since the Bank was unable to sell the servicing rights, the termination of this agreement required the Bank to write-off
the recorded Freddie Mac servicing asset, which totaled $2.3 million, at February 28, 2009. On March 17, 2009, the Bank provided to Fannie Mae a notification whereby it voluntary
terminated the Mortgage Selling and Servicing Contract between the Bank and Fannie Mae, effective as of April 1, 2009. The voluntarily termination required the Bank to write-off the
recorded Fannie Mae servicing asset, which totaled $15.8 million, at February 28, 2009. The termination of these contracts is consistent with the Bank's strategy of no longer being
active in the wholesale residential lending business. At May 21, 2009, the remaining carrying value of the MSR of $1.1 million, which approximates fair value, relates primarily to the
servicing of remaining private label mortgage loans.

The
following table provides activity related to the Bank's MSR assets from October 1, 2007 through May 21, 2009:

MSR From
Loan Sales

MSR
Securitization

Total MSR(in thousands)Balance October 1, 2007

$
17,700

$
2,931

$
20,631New MSR assets from loan sales


14,885





14,885MSR servicing sales


(14
)




(14
)Amortization of MSR assets


(4,026
)

(1,365
)

(5,391
)Impairment of MSR assets


(3,043
)




(3,043
)Balance September 30, 2008

$
25,502

$
1,566

$
27,068Fair Value at September 30, 2008

$
26,646

$
1,973

$
28,619Balance October 1, 2008

$
25,502

$
1,566

$
27,068New MSR assets from loan sales


668





668MSR servicing sales








Amortization of MSR assets


(1,435
)

(161
)

(1,596
)Impairment of MSR assets


(24,449
)

(550
)

(24,999
)Balance May 21, 2009

$
286

$
855

$
1,141




On September 26, 2005, the Bank sold mortgage loans for securitization to a trust ("BUMT 2005-1") in a sale
transaction. The BUMT 2005-1 securities are held in a trust established by a third party for the purpose of issuing securities arising from the securitization of
one-to-four family residential mortgage loans originated by the Bank. The Bank's Trust 2005-1 is not controlled by, or

F-102

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5 Servicing and Transfers of Mortgage Loans (Continued)

affiliated
with the Bank or any of its subsidiaries. The investors and the securitization trust have no recourse to the Bank's assets for failure of debtors to pay when due.

While
the Bank does not retain credit risk on the loans it has securitized, it has potential liability, under representations and warranties it made to the trust purchasing the loans.
Upon securitization of the mortgage loans, the Bank acquired subordinated securities, including an interest only strip (collectively retained securities), and recognized the value of the rights to
servicing the underlying loans (MSRs). The Bank has classified the retained securities as available for sale.

Considerable
judgment is required to determine the fair values of the Bank's retained securities. Unlike government securities and other highly liquid investments, the precise market
value of retained securities cannot be readily determined because these assets are not actively traded in stand-alone markets. Accordingly, the Bank utilizes independent third parties specializing in
secondary market transactions to assist in the determination of the fair values of its retained securities through the use of discounted cash flow models. BankUnited values these securities using
third party proprietary pricing models that incorporate observable and unobservable inputs. Unobservable inputs include BankUnited's expectation of projected prepayment speeds, discount rates and
projected loss severity and default rates. The estimated fair value of the Bank's retained securities amounted to $27.2 million as of May 21, 2009.

At
May 21, 2009, BankUnited was servicing loans for others of approximately $43.7 million.

Note 6 Office Properties and Equipment, net

Included in other assets are office properties and equipment, net. At May 21, 2009 office properties and equipment, net are summarized as follows (in thousands):

May 21,
2009(Dollars in
thousands)Branch buildings

$
3,738Leasehold Improvements


47,481Furniture, fixtures and equipment


31,679Computer equipment and software


38,037Total


120,935Less: accumulated depreciation


(70,344
)Office properties and equipment, net

$
50,591


F-103

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6 Office Properties and Equipment, net (Continued)

Depreciation expense was $7.8 million and $15.3 million, for the period from October 1, 2008 through May 21, 2009, and the fiscal year ended
September 30, 2008, respectively.

Total
rental expense on operating leases for the period from October 1, 2008 through May 21, 2009, and for the fiscal year ended September 30, 2008, was
$10.9 million and $16.2 million, respectively.

The
Bank and its subsidiaries lease premises and equipment under cancelable and non-cancelable leases, some of which contain renewal options under various terms. The leased
properties are used primarily for banking purposes.

As
of May 21, 2009, the Bank had entered into non-cancelable operating leases with approximate minimum future rentals as follows (in thousands):

Periods Ending May 21,2010

$
12,4422011


11,2622012


10,0392013


8,4572014


6,159Thereafter through 2026


9,052Total

$
57,411


Note 7 Other Real Estate Owned

An analysis of other real estate owned for the period from October 1, 2007 through May 21, 2009, as follows (in thousands):

Balance as of September 30, 2007

$
27,732Transfers from loan portfolio, net


202,520Transfers to other assets


(50
)Sales


(72,129
)Impairment


(22,749
)Balance as of September 30, 2008


135,324Transfers from loan portfolio, net


209,694Sales


(128,597
)Impairment


(38,742
)Balance as of May 21, 2009

$
177,679


Note 8 Deposits

At May 21, 2009, the Bank had outstanding non-interest bearing deposits of $247.6 million and interest bearing deposits of $8.3 billion. Deposits as of
May 21, 2009 include brokered time deposits amounting to $348.4 million.

F-104

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8 Deposits (Continued)

The
following table sets forth average amounts and weighted average rates paid on each of the Bank's deposit categories for the period ended May 21, 2009 (amounts in thousands):

May 21, 2009Amount

RateTransaction accounts, demand:Non-interest bearing

$
282,215


0.00
%Interest bearing


164,669


0.85
%Money market accounts


784,043


3.11
%Savings accounts


701,412


2.78
%Certificates of deposit


6,611,919


4.04
%Total average deposits

$
8,544,258


3.66
%


Time
deposit accounts with balances of $100,000 or more totaled approximately $2.8 billion at May 21, 2009, including $865.1 million with balances of $250,000 or
more.

The
following table sets forth maturities of time deposits equal to or greater than $100,000 as of May 21, 2009 (in thousands):

May 21,
2009Three months or less

$
826,504Over 3 through 6 months


593,413Over 6 through 12 months


1,070,345Over 12 through 24 months


195,730Over 24 through 36 months


109,398Over 36 through 48 months


3,427Over 48 through 60 months


526Over 60 months


Total

$
2,799,343


Included
in the table above are $211.9 million of time deposits issued to the State of Florida which are collateralized by a letter of credit of $325 million at
May 21, 2009.

Interest
expense on deposits for the period from October 1, 2008 through May 21, 2009, and the fiscal year ended September 30, 2008, is as follows (in thousands):

May 21,
2009

September 30,
2008Transaction accounts

$
895

$
2,146Money market


15,576


20,017Savings accounts


12,433


47,583Certificates of deposit


170,666


223,109Total

$
199,570

$
292,855


F-105

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8 Deposits (Continued)

On
October 3, 2008, the Emergency Economic Stabilization Act ("EESA") of 2008 became effective. This legislation was passed in response to the financial crisis affecting the
banking system and financial markets and threats to investment banks and other financial institutions. The EESA temporarily raises the basic limit on federal deposit insurance coverage from $100,000
to $250,000 per depositor until
December 31, 2009. The legislation did not increase coverage for retirement accounts and it continues to be $250,000.

On
October 14, 2008, the FDIC announced the Temporary Liquidity Guarantee Program ("TLGP") to strengthen confidence and encourage liquidity in the banking system. The new program
provides full deposit insurance coverage for non-interest bearing deposit transaction accounts in FDIC-insured institutions, regardless of the dollar amount. These are mainly
payment-processing accounts, such as payroll accounts used by businesses, which frequently exceed the maximum limit of $250,000.

Note 9 Securities Sold under Agreements to Repurchase

The following sets forth information concerning repurchase agreements for the period from October 1, 2008 through May 21, 2009, and the fiscal year ended
September 30, 2008 (amounts in thousands):

May 21,
2009

September 30,
2008Maximum amount outstanding at any month end during the period

$
48,114

$
177,218Average amount outstanding during the period

$
22,732

$
114,368Weighted average interest rate for the period


0.40
%

3.00
%


Interest
expense on securities sold under agreements to repurchase aggregated $58 thousand, $3.4 million for the period from October 1, 2008 through May 21,
2009, and the fiscal year ended September 30, 2008, respectively.

As
of May 21, 2009, the Bank had pledged mortgage-backed securities with a fair value of approximately $30.4 million for securities sold under agreements to repurchase. The
agreements are overnight agreements with an average interest rate of 0.00% at May 21, 2009.

F-106

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10 FHLB Advances

Advances from the FHLB outstanding as of May 21, 2009 incur interest and have contractual repayments as follows (amounts in thousands):

Amount

Range of
Interest RatesRepayable During Period Ending May 21,2010

$
2,300,000


2.52
%

5.24
%2011


605,000


2.47
%

4.97
%2012


235,000


2.81
%

4.36
%2013


750,000


3.09
%

4.83
%2014








2015


100


0.00
%

0.00
%2016


364,250


0.00
%

4.79
%2017








2018


175,000


2.76
%

2.95
%Total Carrying Value

$
4,429,350


The
terms of a security agreement with the FHLB include a specific assignment of collateral that requires the maintenance of qualifying first mortgage, commercial real estate loans, home
equity lines of credit and mortgage-backed securities as pledged collateral with unpaid principal amounts at least equal to 100% of the FHLB advances, when discounted at various percentages of their
unpaid principal balance. As of May 21, 2009 the Bank had pledged investment securities and mortgage loans with an aggregate carrying amount of approximately $7.9 billion for advances
from the FHLB.

Interest
expense for FHLB Advances was $133.8 million and $259.0 million, for the period from October 1, 2008 through May 21, 2009, and the fiscal year ended
September 30, 2008, respectively.

Note 11 Derivatives and Hedging Activities

The Bank 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 loan commitments and forward contracts that relate to the pricing of
specific on-balance sheet instruments and forecasted transactions. The Bank recognizes all derivatives as either assets or liabilities on the consolidated balance sheets and reports 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.



The Bank 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 the Bank 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 the Bank's loan portfolio or held for sale.
Based on historical experience, the interest rate environment, and the underlying loan characteristics, the Bank

F-107

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11 Derivatives and Hedging Activities (Continued)

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 balance sheets in other liabilities. Fair values are based solely on
the relationship of observable market interest rates and are calculated with the assistance of third parties.



The Bank enters into forward sales contracts in order to economically hedge fair value exposure of loan commitments and fair value
exposure to a change in interest rates of loans held for sale. Fair value changes of forward sales contracts, not eligible for hedge accounting, are recorded in earnings under non-interest
expense with an offset in other liabilities. Hedge accounting was not applied to these contracts in the period from October 1, 2007 through May 21, 2009. Loans held for sale do not
include any payment option loans.



As of May 21, 2009 the Bank had no interest rate swap agreements outstanding.

The
following table summarizes certain information with respect to the use of derivatives and their impact on the Bank's consolidated statements of operations during the period ended
May 21, 2009 and the year ended September 30, 2008:

May 21,
2009

September 30,
2008(in thousands)Interest Rate SwapsNet gain (loss) recorded in non-interest income related to swaps

$


$
14Other Derivatives(1)Gain (loss) recorded in non-interest expense related to loan commitments

$
183

$
97Loss recorded in non-interest expense related to forward sales contracts

$
(435
)
$
(627
)Total net loss recorded in earnings due to derivatives

$
(252
)
$
(516
)


(1)BankUnited
uses other derivatives to economically hedge interest rate risk, but they do not qualify for hedge accounting treatment. As of
September 30, 2008, $16 thousand were reclassified out of other comprehensive income as a charge to expense from cash flow hedges. There were no such reclassifications for the period
ended May 21, 2009.


F-108

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12 Regulatory Capital

See Note 1 for a discussion of regulatory matters affecting regulatory capital.

On
September 5, 2008, BankUnited received notification that the OTS reclassified the Bank's regulatory capital status from well-capitalized to adequately capitalized
due to the deterioration in the Bank's non-traditional mortgage loan portfolio, the concentration of risk associated with that portfolio, and a resultant need for significant additional
capital. As of May 21, 2009, the Bank
had negative regulatory capital which created significant capital deficiencies in Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios.

No
capital distributions were made by the Bank during the period ended May 21, 2009, and for the fiscal year ended September 30, 2008.

In
the fiscal year ended September 30, 2008, BKUNA, the Bank's sole shareholder at that time, contributed $80 million, in additional capital to the Bank.

Note 13 Benefit Plans



The Bank sponsors a 401(k) profit sharing plan (the "401(k) Plan") for eligible employees. Under the terms of the 401(k) Plan, eligible
employees may contribute up to the limits set by law. Employees are eligible to participate in the plan after one month of service and the Bank's matching contributions begin vesting after two years
of service at the rate of 25% per year up to 100% by the fifth year of service. The Bank makes matching contributions to the 401(k) Plan equal to 75% of the eligible employee pre-tax
contribution up to 6% of salary. The matching contributions are made in the form of cash and allocated to the 401(k) Plan participants' investments. For the period from October 1, 2008 through
May 21, 2009 and for the fiscal year ended September 30, 2008, the Bank made matching contributions of approximately $1.4 million and $2.4 million, respectively.

Note 14 Income Taxes

The components of the provision (benefit) for income taxes for the period from October 1, 2008 through May 21, 2009 and for the fiscal year ended September 30, 2008,
is as follows (in thousands):

May 21,
2009

September 30,
2008Current income tax expense (benefit):Federal

$
(50,306
)
$
(15,976
)State





Total current income tax expense (benefit):


(50,306
)

(15,976
)Deferred income tax expense (benefit):Federal


(382,587
)

(320,645
)State


(19,787
)

(30,890
)Valuation allowance


452,680


273,049Total deferred income tax expense (benefit)


50,306


(78,486
)Total income tax expense (benefit)

$


$
(94,462
)


F-109

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14 Income Taxes (Continued)

A
reconciliation of the expected income tax expense (benefit) at the statutory federal income tax rate of 35% to the Bank's actual income tax expense and effective tax rate for the
period from October 1, 2008 through May 21, 2009 and for the fiscal year ended September 30, 2008, is as follows (amounts in thousands):

May 21, 2009

September 30, 2008Amount

%

Amount

%Tax expense (benefit) at federal income tax rate

$
(431,808
)

35.0
%
$
(334,260
)

35.0
%Increases (decreases) resulting from:State tax, net of federal benefit


(19,787
)

1.6
%

(30,890
)

3.2
%Tax exempt income


(1,184
)

0.2
%

(2,017
)

0.2
%Other


99


0.0
%

(344
)

0.1
%Valuation allowance


452,680


(36.7
)%

273,049


(28.6
)%Total

$



0.1
%
$
(94,462
)

9.9
%


Deferred
income tax assets and liabilities result from temporary differences between assets and liabilities measured for financial reporting purposes and for income tax return purposes.
These assets and liabilities are measured using the enacted tax rates and laws that are currently in effect and are

F-110

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14 Income Taxes (Continued)

reported
net in the accompanying Consolidated Balance Sheets. The significant components of the net deferred tax assets and liabilities at May 21, 2009 were as follows (in thousands):

May 21,
2009Deferred tax assets:Allowance for loan losses and other reserves

$
521,487Impairment losses on available for sale securities


84,822Unrealized losses in other comprehensive income


4,043Non-accrual interest


15,518AMT credit carryover


3,250Impairment on other real estate owned and other expenses


Reserve for recourse liability


4,748NOL carryforward


151,220Other


2,182Gross deferred tax assets


787,270Valuation allowance


(730,041
)Net deferred tax asset

$
57,229Deferred tax liabilities:Deferrals and amortization


186Sale of mortgage servicing rights


Other real estate owned expenses


5,945Deferred REIT income


50,783Other


315Gross deferred liabilities

$
57,229Net deferred tax asset (liability)

$



Realization
of tax benefits for deductible temporary differences depends on having sufficient taxable income of an appropriate character within the carryforward periods. Sources of
taxable income that may allow for the realization of these tax benefits include: (1) taxable income that would be available through carryback in future years, (2) future taxable income
that will result from reversal of existing taxable temporary differences, (3) taxable income generated from future operations, and (4) prudent and feasible tax planning strategies.

At
May 21, 2009, the Bank had deferred tax assets net of deferred tax liabilities, before valuation allowances, of $730.0 million. The Bank's net deferred tax asset before
valuation allowances resulted primarily from an increase in its allowance for loan losses and the recognition of other-than-temporary impairment losses on certain securities
available for sale. At May 21, 2009, after considering all available evidence the Bank determined that it was more likely than not that only a portion of its deferred tax asset in the fiscal
period will not be realized. The determination that a valuation allowance was needed was primarily based on the current level of losses the Bank is experiencing, in addition to the uncertainty with
respect to its future forecasted results. As a result of this determination, the Bank recorded a valuation allowance of $730.0 million against its net deferred tax asset at May 21, 2009.

F-111

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14 Income Taxes (Continued)

The
Bank determined that it is more likely than not that it will realize $50.3 million of its net deferred tax assets as a result of the future carryback of losses generated by
the deferred tax assets that will reverse during fiscal year 2009 and will be carried back to fiscal year 2007. This carryback is expected to result in a refund of $50.3 million of income taxes
paid by the Bank in 2007.

As
of May 21, 2009, the Bank had a net operating loss carryforward for Federal tax purposes of $432.1 million which will expire in 2029. The Bank's state income tax net
operating loss carryforward is approximately $951 million which will begin to expire in 2027. The Federal and State net operating loss deferred tax asset is completely offset by a valuation
allowance.

The
Bank adopted the provisions of FIN 48 effective October 1, 2007. The adoption of FIN 48 did not have a material effect on the Bank's financial condition, as the
Bank recognized no increase in its liability for unrecognized income tax benefits. In addition, the Bank had no liabilities recorded for unrecognized income tax benefits for fiscal year 2008. For the
period ended May 21, 2009, the Bank did not have any material unrecognized income tax benefits and, accordingly, the company continued to have a zero liability balance relating to
FIN 48. The Company has elected to account for any applicable interest and penalties on uncertain tax positions as a component of income tax expense.

BKUNA
federal returns through 2005 have been examined by the Internal Revenue Service ("IRS"), and therefore, it remains subject to examination for its fiscal years ended
September 30, 2006, 2007 and 2008. Generally, the state jurisdictions in which the Bank files income tax returns are subject to examination for a period of up to four years after the returns
are filed.

Note 15 Commitments and Contingencies



BankUnited has sold and securitized loans (hereinafter referred to as loan sales or loans sold) without recourse to government
sponsored entities and private investors. When a loan sold to an investor without recourse contains fraudulent representations, errors, omissions or negligence on the part of the seller or any party
involved in the origination, including the borrower or appraiser, or a breach of other representations and warranties, the Bank may be required to repurchase the loan or indemnify the investor for
losses sustained.

The
estimated losses related to forecasted loan repurchase activity and make whole indemnity claims meet the criteria for accrual of a loss contingency as of September 30, 2008.
Management estimated the amount of potential losses related to the Bank's recourse obligations as of September 30, 2008 based on various sensitivity analyses taking into account historical
experience and trends and current and projected market, industry and economic conditions. These factors are used to develop forecasted repurchase activity and estimated severity of losses. This
analysis resulted in the Bank recording a provision for recourse liability amounting to $12.4 million during the year ended September 30, 2008, which is included in gain (loss) on sale
of loans in the consolidated statement of operations. The reserve for recourse liability on loans sold is included in other liabilities in the consolidated balance sheets as of May 21, 2009.
The Bank accounts for loans repurchased under recourse provisions at fair value on the date of repurchase, and recognizes an adjustment to the reserve for recourse liability for any difference between
the fair value of the loan and the amount due to the investor.

F-112

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15 Commitments and Contingencies (Continued)

A
summary of the activity in the reserve for the period ended May 21, 2009 and the year ended September 30, 2008 is as follows:

For The Period
Ended
May 21,
2009

For The Year
Ended
September 30,
2008Balance at beginning of period

$
8,663

$
Provision for recourse liability





12,400Mark-to-market adjustment for loans repurchased


(1,635
)

(3,689
)Make whole indemnifications


(2,786
)

(48
)Balance at end of period

$
4,242

$
8,663




The Bank issues off-balance sheet financial instruments in connection with BankUnited's lending activities and to meet the
financing needs of its customers. These financial instruments include commitments to fund loans, lines of credit, and commercial and standby letters of credit. These commitments expose the Bank to
varying degrees of credit and market risk which are essentially the same as those involved in extending loans to customers, and are subject to the Bank's credit policies. The Bank follows the same
credit policies in making commitments as it does for instruments recorded on the Bank's consolidated balance sheet. Collateral is obtained based on management's assessment of the customer's credit
risk. The Bank's exposure to credit loss is represented by the contractual amount of these commitments.

Total
commitments at May 21, 2009 were as follows (in thousands):

Commitments to fund loansCommercial and commercial real estate

$
18,438Construction


25,148Unfunded commitments under line of credit


294,748Commercial and standby letters of credit


27,149Total

$
365,483




These are agreements to lend funds to customers as long as there is no violation of any condition established in the contract.
Commitments to fund loans generally have fixed expiration dates or other termination clauses and may require payment of a fee. Many of these commitments are expected to expire without being funded,
and therefore the total commitment amounts do not necessarily represent future liquidity requirements. The Bank evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral required in connection with an extension of credit is based on management's credit evaluation of the counterparty.

F-113

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15 Commitments and Contingencies (Continued)



To accommodate the financial needs of customers, the Bank makes commitments under various terms to lend funds to consumers and
businesses. Unfunded commitments under lines of credit include consumer, commercial and commercial real estate lines of credit to existing customers. Many of these commitments have fixed expiration
dates or other termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being funded, the total commitment amounts do not necessarily
represent future liquidity requirements. The amount of collateral obtained, if it is deemed necessary, is based on management's credit evaluation of the customer.



Letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those
letters of credit are primarily issued to support trade transactions or guarantee arrangements. Fees collected on standby letters of credit represent the fair value of those commitments and are
deferred and amortized over their term, which is typically one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities
to customers. BankUnited generally holds collateral supporting those commitments if deemed necessary.



Employment Agreements.The Bank has employment and change in control agreements with certain members of senior management. The
employment agreements,
which establish the duties and
compensation of the executives, have terms ranging from one year to five years, and include specific provisions for salary, bonus, other benefits and termination payments in certain circumstances. In
addition to other provisions, the change in control agreements provide for severance payments in the event of a change in control.

Operating leases.BankUnited leases premises and equipment under cancelable and non-cancelable operating leases, some of which contain
renewal options under various terms.



BankUnited and its subsidiaries, from time to time, are involved as plaintiff or defendant in other various legal actions arising in
the normal course of their businesses. While the ultimate outcome of any such proceedings cannot be predicted with certainty, it is the opinion of management, based on advice of legal counsel, that no
proceedings exist, either individually or in the aggregate, which, if determined adversely to BankUnited and its subsidiaries, would have a material effect on BankUnited's consolidated financial
condition, results of operations or cash flows.

F-114

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Table of Contents

BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15 Commitments and Contingencies (Continued)

As discussed in note 1 to the consolidated financial statements, the OTS seized the Bank on May 21, 2009 and appointed the FDIC as receiver. Pursuant to the terms of the
Purchase and Assumption Agreement under which the New BankUnited purchased certain assets and assumed certain deposits and other liabilities of the Bank, all defensive litigation liabilities of the
Bank were retained by the FDIC, as receiver, except those defensive litigation liabilities that relate to an asset purchased by New BankUnited and that are subject to a loss sharing agreement, which
such liabilities were assumed by New BankUnited.

Note 16 Related Party Transactions

The Bank has a Management Agreement with BKUNA dated October 1, 2006. The Management Agreement requires that BKUNA reimburse the Bank for management and other services provided to
BKUNA on a monthly basis. BKUNA paid management fees to the Bank in conjunction with the Management Agreement amounting to $0.6 million and $1.1 million for the period ended
May 21, 2009 and for the year ended September 30, 2008, respectively. The management fees paid by BKUNA are included in non-interest incomeservice charges in the
consolidated statements of operations.

The
Bank and BU Financial Services (BUFS), a wholly-owned subsidiary of BKUNA, entered into a Fee Agreement dated October 1, 2007. The Fee Agreement requires that BUFS reimburse
the Bank for management and other services provided to BUFS on a monthly basis. BUFS paid management fees to the Bank in conjunction with the Fee Agreement amounting to $1.2 million and
$4.1 million for the period ended May 21, 2009 and for the year ended September 30, 2008, respectively. The fees received are included in non-interest
incomeservice charges in the consolidated statements of operations.

The
Bank has entered into a Tax Sharing Agreement with BKUNA, whereby the Bank pays to or receives cash from BKUNA as if the Bank filed separate tax returns. Any amount of current tax
due to or receivable from BKUNA is included in the intercompany balance.

The
consolidated balance sheet includes $10.6 million in other assets as of May 21, 2009, related to amounts receivable from BKUNA and BUFS related to the intercompany
agreements discussed above and other intercompany transaction in the ordinary course of business, including amounts related to intercompany settlement of current taxes due or payable. In addition,
included in interest bearing demand deposits in the accompanying consolidated balance sheet as of May 21, 2009 is $18.1 million of deposits from BKUNA and BUFS.

From
time to time, the Bank makes loans in the ordinary course of business as a financial institution to directors, officers and employees of the Bank, as well as to members of their
immediate families and affiliates, to the extent consistent with applicable laws and regulations. As of May 21, 2009 these loans totaled $1.7 million.

For
the period ended May 21, 2009 and the year ended September 30, 2008, the Bank retained the law firm of Camner, Lipsitz and Poller, P.A ("CLP"), as general counsel. The
Bank's and BKUNA's former Chief Executive Officer and Chairman of the Board of Directors, until October 20, 2008 is the senior managing director of CLP and one of two of the shareholders of the
law firm. For the period ended May 21, 2009 and the year ended September 30, 2008, the Bank paid CLP approximately $3.2 million and $7.1 million, respectively, in legal
fees and reimbursable expenses, related to loan closings, foreclosures, litigation, corporate and other matters.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16 Related Party Transactions (Continued)

CLP
subleases approximately 2,223 square feet of office space in Coral Gables, Florida from the Bank. The sublease extends through January 31, 2014 and may be renewed for up to
four additional five-year terms, subject to the Bank exercising its right to renew under the master lease. Under the terms of the sublease the minimum annual rental payments for the
property is $65.7 thousand. Payments from CLP to the Bank during the period from October 1, 2008 to May 21, 2009 and the fiscal year ended September 30, 2008, totaled
$55 thousand and $81 thousand, respectively, which included payments for tenant improvements of $8 thousand and $13 thousand, respectively. The Bank believes that the terms
of the sublease reflect market rates comparable to those prevailing in the area for similar rental properties involving non-affiliated parties at the time the sublease was made.

For
the period ended May 21, 2009 and the fiscal year ended September 30, 2008, BankUnited obtained policies for directors' and officers' liability insurance, banker's
blanket bond insurance, commercial multi-peril insurance, workers' compensation insurance and BankUnited's health and dental insurance through HBA Insurance Group, of which a director of the Bank, is
a member of the Board of Directors and shareholder. For the period ended May 21, 2009 and the year ended September 30, 2008, the Bank paid HBA Insurance Group $490 thousand and
$350 thousand, respectively, in commissions on premiums paid for these policies.

The
Bank paid the firm of Rachlin, LLP $10 thousand and $75 thousand for consulting services for the period ended May 21, 2009 and the year ended
September 30, 2008, respectively. The managing partner of Rachlin, LLP is a member of the Bank's Board of Directors.

Note 17 Fair Value

The Bank groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the
assumptions used to determine fair value. These levels are as follows:



In
instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Bank's own estimates or combination of
such estimates and independent vendor or broker pricing. When determining the fair value measurements for assets and liabilities and the related fair value hierarchy, the Bank considers the principal
or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability (observable inputs). When possible, the Bank
looks to active and observable markets to price identical assets or liabilities and when identical assets and liabilities are not traded in active markets, the Bank looks to market observable data for
similar assets and liabilities. It is the Bank's policy to maximize the use of observable inputs and minimize the use of unobservable inputs. Unobservable inputs are only used to measure fair value to
the extent that

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17 Fair Value (Continued)

observable
inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity, resulting in diminished observability of both actual trades and
assumptions that would otherwise be available to value these instruments, or the value of the underlying collateral is not market observable. Although third party price indications may be available
for a security, limited trading activity would make it difficult to support the observability of these quotations.

The
following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis, as well as the general classification
of each instrument under the valuation hierarchy.



Investment securities available for saleInvestment securities available-for-sale are carried at fair value on a recurring
basis. When available, fair value is based on quoted prices in an active market and as such would be classified as Level 1 (e.g., U.S. Government agencies and sponsored enterprises
securities, preferred stock of U.S. Government agencies and mutual funds). If quoted market prices are not available, fair values are estimated using quoted prices of securities with similar
characteristics, discounted cash flows or other pricing models. Investment securities available for sale that the Bank classifies as Level 2 include U.S. Government agencies mortgage-backed
securities and collateralized mortgage obligations, preferred stock of other issuers and State and municipal obligations. All other investment securities available for sale are classified as
Level 3 and include private label mortgage pass-through certificates, collateralized debt obligations and other debt securities, for which fair value estimation requires the use of
unobservable inputs. The Bank values these securities using third party proprietary pricing models that incorporate observable and unobservable inputs.

The
following table presents the financial instruments measured at fair value on a recurring basis as of May 21, 2009 on the consolidated balance sheet utilizing the hierarchy
discussed above (in thousands):

May 21, 2009Level 1

Level 2

Level 3

TotalInvestment Securities Available for Sale:U.S. Treasury securities

$
35,423

$


$


$
35,423U.S. Government agencies and sponsored enterprises mortgage-backed securities





227,879





227,879Other collateralized mortgage obligations








1,785


1,785Mortgage pass-through certificates








230,091


230,091Mutual funds and preferred stocks


17,981


113





18,094State and municipal obligations





22,446


250


22,696Other debt securities





1,300


1,676


2,976Total assets at fair value

$
53,404

$
251,738

$
233,802

$
538,944


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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17 Fair Value (Continued)

The
following table identifies changes in Level 3 financial instruments that are measured at fair value on a recurring basis as of May 21, 2009. Level 3 financial
instruments typically include unobservable components, but may also include some observable components that may be validated to external sources. The gains or losses in the following table may include
changes to fair value due in part to unobservable factors that may be part of the valuation methodology (in thousands):

Other Collateralized
Mortgages
Obligations

Mortgages
Pass-through
Certificates

State and
Municipal
obligations

Other
Debt
SecuritiesBalance September 30, 2008

$
3,463

$
394,321

$
250

$
6,490Total net gains (losses) for the year included in:Other comprehensive income


(1,554
)

(57,543
)

(0
)

(80
)Purchases, sales or settlements, net


(124
)

(106,687
)

(0
)

(4,734
)Balance May 21, 2009

$
1,785

$
230,091

$
250

$
1,676




Loans are measured for impairment using the fair value of the collateral. Fair value of the loan collateral is primarily determined
using estimates which generally use the market and income approach valuation technique and use observable market data to formulate an opinion of the estimated fair value. When current appraisals are
not available, the Bank uses its judgment regarding changes in market conditions, based on observable market inputs, to adjust the latest appraised value available. As a result, the estimated fair
value is considered Level 3.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17 Fair Value (Continued)



The following table presents the carrying value and fair value of financial instruments as of May 21, 2009:

May 21, 2009Carrying
Value

Fair
ValueFinancial Instruments:Assets:Cash and cash equivalents

$
1,143,280

$
1,143,280Investment securities available for sale, at fair value


538,944


538,944Federal Home Loan Bank stock


243,334


243,334Loans held for sale


788


788Loans held in portfolio, net


9,787,042


5,010,328Bank owned life insurance


129,111


129,111Accrued interest receivable


43,310


43,310Liabilities:Demand deposits, savings, money market and certificates of deposit


8,555,907


8,664,473Securities sold under agreements to repurchase


1,310


1,310Advances from Federal Home Loan Bank


4,429,350


4,630,614Accrued interest payable


52,283


52,283Income taxes payable





Advance payments by borrowers for taxes and insurance


52,362


52,362Other liabilities


58,623


58,623Derivative instruments








The
following methods and assumptions were used to estimate the fair value of each class of financial instruments not carried at fair value on recurring basis:

Certain
financial instruments are carried at amounts that approximate fair value, due to their short-term nature or their generally negligible credit risk. The Bank's
financial instruments for which fair value approximates the carrying amount at May 21, 2009 include cash and cash equivalents, FHLB stock, accrued interest receivable, Bank owned life
insurance, demand deposits, savings and money market accounts, securities sold under agreements to repurchase, income taxes payable, advance payments by borrowers for taxes and insurance and other
liabilities.



Fair values for all performing loans are estimated using a discounted cash flow analysis, utilizing interest rates currently being
offered for loans with similar terms to borrowers of similar credit quality.

Bank Owned Life InsuranceThe estimated fair value of Bank Owned Life Insurance is based on the cash surrender value.

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BANKUNITED, FSB AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17 Fair Value (Continued)



The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date.
The fair value of fixed-maturity certificates of deposit are estimated using discounted cash flow analysis using the rates currently offered for deposits of similar remaining maturities.



The fair value of the borrowings is estimated by discounting the future cash flows using the current rate at which similar borrowings
with similar remaining maturities could be made.

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Table of Contents

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation under the
supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls
and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that our disclosure controls and procedures were effective.

Internal Control over Financial Reporting

This Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over
financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Under
FDICIA, management is required to provide an assessment to the FDIC of the effectiveness of internal control over financial reporting at the BankUnited level. The deadline for
providing that assessment to the FDIC for the year ended December 31, 2010 is April 30, 2011. In that assessment, management will disclose a material weakness related to its
period-end closing process not allowing for the complete, accurate, and timely preparation of its Thrift Financial Reports prior to the deadline for filing such reports (30 days
after quarter end) in accordance with the OTS Instructions for Thrift Financial Reports. This deficiency also resulted in amendments of previously filed Thrift Financial Reports. This material
weakness did not impact financial reporting at the BankUnited, Inc. level.

Changes in Internal Control over Financial Reporting



As previously disclosed, in connection with the audit of our consolidated financial statements for the period ended December 31,
2009, we identified three material weaknesses in our system of internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies in internal controls over
financial reporting, that results in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The
first material weakness identified related to the fact that management did not design effective controls over its loan modeling process in order to account for certain loans in
accordance with the requirements of Accounting Standards Codification, or ASC, Subtopic 310-30,Loans and Debt Securities Acquired with Deteriorated Credit
Quality. A material weakness existed due to the fact that the design of internal control did not provide for an independent review or approval and validation of the loan cash
flow model and related assumptions. In addition, the design of internal control over the loan cash flow model did not provide for adequate access, change management, and end-user computing
controls including spreadsheets. Furthermore, management's controls were not designed to reflect on a timely basis the impact of changes in market conditions on the loan cash flow model and related
assumptions. The second material weakness related to the fact that management did not maintain effective internal controls over the valuation and resulting writedown to fair market value of OREO
properties. Specifically, a material weakness existed due to the fact that the control over the timely recording of

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OREO
values by the Collateral Valuation Department in our sub-ledger system was not operating effectively. The third material weakness related to the fact that BankUnited did not design
effective controls over its financial reporting process in order to ascertain the complete, accurate, and timely preparation of its consolidated financial statements, including the applicable
disclosures and footnotes, or design effective review controls to provide for proper accounting of non-routine transactions. A material weakness existed due to the fact that the design of
internal control did not provide for a comprehensive review of interim financial information and the consolidated financial statements to ensure the completeness and accuracy of information supporting
various financial statement components.

During
the year ended December 31, 2010, we have remediated the above issues so they are no longer considered material weaknesses. Steps we have taken to remediate the above
issues include hiring additional and more experienced personnel, hiring third-party technical resources to help design access, change management, and end-user computing controls over the
loan cash flow model, obtaining independent validation of the loan cash flow model and related assumptions, and directing additional resources and standardizing our valuation methodology to ensure
proper OREO values were reflected in our sub-ledger.

Other
than as noted above, there has been no change in our internal control over financial reporting during the quarter ended December 31, 2010 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.    Other Information

None.

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

Executive Officers and Directors

The following table provides certain information regarding our directors and executive officers as of March 31, 2011. Each
director and officer will hold office until a successor is elected or qualified or until his earlier death, resignation or removal. The term of office for all directors is one year. We have entered
into a director nomination agreement with certain funds affiliated with Blackstone, Carlyle, Centerbridge and WL Ross, whom we refer to as the Sponsors, and Mr. Kanas that provides for the
rights of our Sponsors and Mr. Kanas to nominate individuals to our Board. The Sponsors and Mr. Kanas have the right to nominate individuals to our Board at each meeting of stockholders
where directors are to be elected and, subject to limited exceptions, we will include in the slate of nominees recommended to our stockholders for election as directors individuals designated by the
Sponsors and Mr. Kanas. See Item 13 "Certain Relationships and Related Party TransactionsDirector Nomination Agreement"

Name

Age

PositionJohn A. Kanas

64

Chairman, President and Chief Executive OfficerJohn Bohlsen

68

Vice Chairman, Chief Lending Officer and DirectorDouglas J. Pauls

52

Chief Financial OfficerRajinder P. Singh

40

Chief Operating OfficerRandy R. Melby

54

Senior Executive Vice President, Chief Risk Officer at BankUnitedChinh E. Chu

44

DirectorAmbassador Sue M. Cobb

73

DirectorEugene F. DeMark

63

DirectorRichard S. LeFrak

63

DirectorWilbur L. Ross, Jr.

73

DirectorPierre Olivier Sarkozy

41

DirectorLance N. West

49

Director


John A. Kanashas served on our Board since its inception in May 2009. He has also served as our Chairman, President and Chief Executive
Officer since May 2009. Mr. Kanas serves as the Committee Chairman of our Executive Committee. Prior to joining BankUnited, Mr. Kanas was President and Chief Executive Officer of North
Fork Bancorporation, Inc. from 1977 until its acquisition by Capital One in December 2006, at which time North Fork was one of the top 25 bank holding companies in the United States. He also
served as Chairman of North Fork from 1986 to 2006. In December 2006, he became President of Capital One's banking segment, which included North Fork, the former Hibernia Bank in Louisiana and Texas
and Capital One Direct Bank in Richmond, Virginia. Mr. Kanas retired from that position in August 2007. Between August 2007 and May 2009, Mr. Kanas was an independent consultant.
Mr. Kanas holds a B.A. degree from Long Island University. He is a past president of the New York State Bankers Association. Mr. Kanas was also a member of the NYSE Listed Company
Advisory Committee and is currently a member of the board of trustees of Long Island University and Weill Cornell Medical College. In 2005, Mr. Kanas was recognized by "Institutional Investor"
as the best regional bank CEO in America. In May 2007, Mr. Kanas received

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the
Woodrow Wilson Award for Corporate Citizenship and was also conferred an Honorary Doctorate of Humane Letters by Dowling College. Mr. Kanas' qualifications to serve on our Board include his
29-year career at North Fork, his extensive experience in the banking industry and his long-standing relationships within the business, political and charitable communities.

John Bohlsenhas served on our Board since its inception in May 2009. He is also our Vice Chairman and has served as Chief Lending Officer
since May 2009. From December 2006 until August 2007, Mr. Bohlsen led the Commercial Banking division for Capital One's banking subsidiary, which included North Fork, the former Hibernia Bank
in Louisiana and Texas and Capital One Direct Bank in Richmond, Virginia. Mr. Bohlsen was a part of North Fork's management team when they were acquired by Capital One in December 2006. During
his tenure at North Fork from January 1986 to December 2006, he served on the board of directors, and became Vice Chairman in 1989. Mr. Bohlsen also served as Chairman of several bank
management committees during that time. Between August 2007 and May 2009, Mr. Bohlsen was active in other business activities involving restaurants and other real estate endeavors. He is active
in various outside businesses involving real estate and construction, and is president of a restaurant operating company doing business in the New York metropolitan area. Mr. Bohlsen has a B.S.
and a M.B.A. from Michigan State University. In addition, he is a veteran of the U.S. Navy, having served as an officer during the Vietnam War. Mr. Bohlsen has served on many professional,
academic and community boards and organizations, and he and his family are well known for their philanthropic endeavors. Mr. Bohlsen's qualifications to serve on our Board include his
extensive experience in the banking industry and his previous experience serving as a director on the board of a public company.

Douglas J. Paulshas been our Chief Financial Officer since September 2009. Between March 2009 and August 2009, Mr. Pauls was
self-employed as a consultant. From April 2008 until February 2009, Mr. Pauls served as Executive Vice President of Finance for TD Bank, NA following TD Bank's
acquisition of Commerce Bancorp, Inc. in March 2008. Mr. Pauls served as Chief Financial Officer of Commerce Bancorp from March 2002 up until the acquisition by TD Bank in April
2008. Mr. Pauls was a member of the three person Office of the Chairman, responsible for overall management, policy making and strategic direction of Commerce Bancorp. From October 1995 to
March 2002, Mr. Pauls served as the Chief Accounting Officer of Commerce Bancorp, its Senior Vice President from January 1999 to April 2006 and its Executive Vice President from April 2006 to
April 2008. Earlier in his career, Mr. Pauls was a Senior Manager in the Audit Department of Ernst & Young in Philadelphia and Pittsburgh, Pennsylvania. Mr. Pauls received a B.A.
in Economics magna cum laude from Dickinson College. Mr. Pauls currently serves on the board of trustees of Dickinson College and as a Member of the Committees on Finance, Budget and Audit, and
Student Life.

Rajinder P. Singhis our Chief Operating Officer and has been with us since our inception in May 2009. Prior to joining us,
Mr. Singh led the financial services practice of WL Ross & Co., a private equity firm and investor in BankUnited from April 2008 to May 2009. From December 2006 through April
2008, Mr. Singh served as Executive Vice President for Capital One's banking segment which includes retail, small business and commercial banking businesses in New York, New Jersey,
Connecticut, Louisiana and Texas and a national direct deposit gathering franchise. Mr. Singh was a member of Capital One's Bank Leadership Team and chaired the Deposit Pricing Committee. He
also served on Capital One's ALCO and brand board. Previously, Mr. Singh served as Head of Corporate Development and Strategy for North Fork from February 2005 to December 2006. During his
tenure, North Fork was acquired by Capital One for $13.2 billion. Prior to joining North Fork in February 2005, Mr. Singh spent nine years at FleetBoston Financial Corporation and last
served as Managing Director of Corporate Development and Strategy. Mr. Singh earned his M.B.A. from Carnegie Mellon University in Pittsburgh and his B.S. in chemical engineering from the Indian
Institute of Technology in New Delhi.

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Randy R. Melbyjoined BankUnited in September 2009 as Executive Vice President, Chief Risk Officer at BankUnited and was promoted to
Senior Executive Vice President, Chief Risk Officer in February 2011. Mr. Melby is responsible for enterprise risk oversight, which includes loan review; internal audit; compliance,
including BSA and AML; and overall operations and credit risk management. Prior to joining us, Mr. Melby served as Senior Vice President and General Auditor for Washington Mutual/JP Morgan
Chase in Seattle from December 2004 to January 2009. Before this, he spent 24 years with Norwest Corporation/Wells Fargo. He held a variety of leadership positions in the internal audit, and
commercial loan operations areas. Mr. Melby received a B.S. in accounting and management from the University of North Dakota. Mr. Melby is a member of the Institute of Internal
Auditors, graduated with honors from the Pacific Coast School of Banking and is also a graduate of the BAI Graduate School of Bank Operations & Technology.

Chinh E. Chuhas served on our Board since its inception in May 2009. He is a Senior Managing Director in the Blackstone Private Equity
Group, or Blackstone, one of our principal investors. Since joining Blackstone in 1990, Mr. Chu has led Blackstone's investments in Stiefel Laboratories, ReAble Therapeutics' acquisition of DJ
Orthopedics, Biomet, Catalent Pharma Solutions, Alliant, ReAble Therapeutics, Celanese, Nalco, SunGard Data Systems, Nycomed and LIFFE. He has also been involved in Blackstone's investments in FGIC,
Sirius Satellite Radio, StorageApps, Haynes International, Prime Succession/Rose Hills, Interstate Hotels, HFS and Alco Holdings. Mr. Chu is currently a director of Alliant, Graham Packaging
Company Inc., Healthmarkets, DJO Incorporated, Catalent Pharma Solutions, SunGard Data Systems, Allied Barton and Bayview, and previously served on the board of directors of Celanese
Corporation. Before joining Blackstone, Mr. Chu worked at Salomon Brothers in the Mergers and Acquisitions Department. Mr. Chu received a B.S. in Finance from the University of Buffalo,
where he graduated summa cum laude. Mr. Chu's qualifications to serve on our Board include his significant experience overseeing the business of Blackstone's numerous portfolio companies,
including significant public company experience, and his significant financial, investment and strategic business planning experience.

Sue M. Cobb, Ambassador of the United States of America, ret.,has served on our Board since January 2010. Since February 2007, Ambassador
Cobb has been engaged in private sector business activities with Cobb Partners, Inc., a privately held Florida-based investment firm. From September 2001 to February 2005, she served as the
United States Ambassador to Jamaica. Ambassador Cobb was Secretary of State of Florida from December 2005 to January 2007. From 2002 to 2008, Ambassador Cobb was engaged at the U.S. Department of
State's Leadership and Management School as co-chair of periodic mandatory seminars for newly designated U.S. ambassadors. Ambassador Cobb served seven years as chair of the board of the
Federal Reserve Bank, Miami Branch. She was the founding partner of the Public Finance Department of the Greenberg Traurig law firm where she practiced as a public finance attorney. She currently sits
on the board of directors of the Durango Mountain Resort and Kirkwood Associates Inc., both private resort development companies. Ambassador Cobb is President of the American Friends of
Jamaica, a New York-based charitable institution, and President of Miami-based Cobb Family Foundation. She is an active member of the Center for Strategic and International Studies, The
Council of American Ambassadors, and the Council on Foreign Relations. Ambassador Cobb has also been an officer and director of many civic and charitable organizations and has received numerous awards
including national honors from the nations of Jamaica and Iceland. Previously, she has been the University of Miami Alumnus of the year, the Red Cross Humanitarian of the Year and the Silver Medallion
Awardee from the National Conference of Christians and Jews for contributions to civic causes and humanity. Ambassador Cobb received a B.A. from Stanford University and a J.D. from the University of
Miami School of Law. Ambassador Cobb's qualifications to serve on our Board include her broad and diverse background in leadership and management, including experience with public companies as the
Audit Committee Chair of the LNR Property Corporation, a public real estate investment, finance and management company.

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Eugene F. DeMarkhas served on our Board since September 2010. From June 1969 until his retirement in October 2009, Mr. DeMark
worked for KPMG LLP, a global professional services firm. Mr. DeMark served as the Advisory Northeast Area Managing Partner at KPMG LLP from October 2005 until his retirement.
Since his retirement, Mr. DeMark has been an independent consultant. Starting in January 2010, Mr. DeMark has advised our Audit and Compensation Committees. Between 1988 and 2001,
Mr. DeMark had been the Northeast Area Managing Partner of the Information, Communications and Entertainment Practice and the KPMG's Long Island Office Managing Partner. During his career at
KPMG, Mr. DeMark has had responsibilities to lead a number of specialized practices in Banking, High Technology, Media and Entertainment and Aerospace and Defense. He joined the Firm in 1969
and was elected to its partnership in 1979. On special assignments, he worked on the research staff of the Commission on Auditor's Responsibilities, the predecessor to the Treadway Commission, formed
to assess increases in fraudulent financial reporting. Mr. DeMark also developed the firm's first study guide on SEC reporting. Mr. DeMark holds a B.B.A. degree from Hofstra University
and is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants (AICPA) and the New York State Society of Certified Public Accountants. Mr. DeMark
has served as chairman of the Long Island chapter of multiple sclerosis, president of the Nassau County council of the Boy Scouts of America and Northeast Regional board member of the National
organization, president of the Nassau Chapter of the National Association of Accountants, Treasurer of the New Long Island Partnership and chairman of the Economic Development Task
ForceProject Long Island. Mr. DeMark also was active in the United Way on Long Island and New York and served on its board of directors and chaired the nominating committee.
Mr. DeMark's qualifications to serve on our Board include his 40 years of financial experience at KPMG LLP, including 35 years in various positions in the firm's audit
practice.

Richard S. LeFrakhas served on our Board since its inception in May 2009. He also serves as the Committee Chairman of our Compensation
Committee. Mr. LeFrak is currently the Chairman and CEO of the LeFrak Organization, a privately held real estate and development company. He joined the LeFrak Organization in 1968, was
appointed its President in 1975, and was elected Chairman of its board of directors and CEO in 2003. Mr. LeFrak serves on the board of a number of organizations, including the board of trustees
of Amherst College, and the board of trustees of the Prostate Cancer Foundation. He also has served as a member of the board of trustees of the American Museum of Natural History, the board of
trustees of the Trinity School, and as a Member of the New York State Banking board. Mr. LeFrak also presides over the LeFrak Foundation, a private philanthropy whose mission encompasses a
broad, but focused agenda, including the support of charitable organizations, institutions of higher learning, hospitals, research facilities and cultural programs that sustain and encourage literary,
performing and visual arts. Mr. LeFrak graduated cum laude from Amherst College in 1967, and went on to study law at Columbia University, from which he received his J.D. in 1970. In 1998,
Mr. LeFrak received an Honorary Doctorate Degree from Amherst College. Mr. LeFrak's qualifications to serve on our Board include his 35 years of experience in the development,
rehabilitation and marketing of real estate as well as his long-standing relationships within the business, political and charitable communities.

Wilbur L. Ross, Jr.has served on our Board since its inception in May 2009. Mr. Ross is the Chairman and Chief Executive Officer
of WL Ross & Co. LLC, or WL Ross, a private equity firm and one of our principal investors, a position he has held since April 2000. Mr. Ross is also the managing member of
the general partner of WL Ross Group, L.P., which in turn is the managing member of the general partner of WLR Recovery Fund L.P., WLR Recovery Fund II L.P., WLR Recovery Fund
III L.P., WLR Recovery Fund IV L.P., Asia Recovery Fund L.P., Asia Recovery Co-Investment Fund L.P., Absolute Recovery Hedge Fund L.P., India Asset
Recovery Fund and Japan Real Estate Recovery Fund, the Chairman of the Investment Committee of the Taiyo Fund and the Chairman of Invesco Private Capital. Mr. Ross is also
non-executive Chairman of: International Coal Group, Inc., a leading producer of coal in Northern and Central Appalachia and the Illinois basin; International

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Textile
Group, Inc., a global, diversified textile provider that produces automotive safety, apparel, government uniform, technical and specialty textiles; Nano-Tex, Inc., a
fabric innovations company located in the United States; IPE-Ross Management Ltd., an investment partnership investing in middle market European buyouts; and the International
Automotive Components Group SL, a joint venture company with interests in automotive interior plastics. Mr. Ross is also an executive officer of Invesco Private Equity; American Home Mortgage
Services, Inc. and Plascar Participacoes SA. Mr. Ross is a board member of: Arcelor Mittal N.V.; Compagnie Européenne de Wagons SARL in Luxembourg;
Insuratex, Ltd., an insurance company in Bermuda; Plascar Participacoes SA; Phoenix International Insurance Company; The Greenbrier Companies, a supplier of transportation equipment and
services to the railroad industry; IAC Acquisition Corporation Limited; IAC Group SARL; and Masters Capital Nanotechnology Fund. Mr. Ross is also a member of the Business Roundtable.
Previously, Mr. Ross served as the Executive Managing Director at Rothschild Inc., an investment banking firm, from October 1974 to March 2000. Mr. Ross was previously a director
of Mittal Steel Co. N.V. from April 2005 to June 2006, a director of International Steel Group from February 2002 to April 2005, a director of Montpelier Re Holdings Ltd. from
2006 to March 2010, and a director of Syms Corp. from 2000 through 2007. Mr. Ross was also formerly Chairman of the Smithsonian Institution National board and currently is a board member of
Whitney Museum of American Art, the Japan Society, the Yale University School of Management and Chairman of the Palm Beach Fire Fighters Retirement Fund. He holds an A.B. from Yale University and an
M.B.A., with distinction, from Harvard University. Mr. Ross' qualifications to serve on our Board include his significant experience in finance and his knowledge of the capital markets.

Pierre Olivier Sarkozyhas served on our Board since its inception in May 2009. Since March 2008, Mr. Sarkozy has served as
Managing Director of the Carlyle Group, or Carlyle, one of our principal investors, and head of the Carlyle Global Financial Services Partners fund, one of the Carlyle affiliated funds that has
invested in us. From January 2003 until March 2008, Mr. Sarkozy was Global Co-Head of the Financial Institutions Group at UBS Investment Bank. Prior to joining UBS,
Mr. Sarkozy worked for 11 years at Credit Suisse First Boston, where he was the Managing Director in charge of the Depository Institutions Group. Mr. Sarkozy received his Masters
in Medieval History (with Honors) from St. Andrews University in Scotland. Mr. Sarkozy's qualifications to serve on our Board include his extensive experience working with depository
institutions and his expertise in structuring bank mergers and acquisitions.

Lance N. Westhas served on our Board since its inception in May 2009. Since May 2006, Mr. West has been a Partner and Senior
Managing Director of Centerbridge Partners LP, or Centerbridge, a $10 billion multi-strategy, private investment management company that focuses on distressed debt and private equity
opportunities and one of our principal investors. From January 1999 until May 2006, Mr. West was a Partner and Managing Director at Goldman, Sachs & Co., where he was head of the
firm's Principal Finance Group, a proprietary investment platform focusing on a variety of private and public equity and debt investments in the Americas, with a particular emphasis on real estate and
financial institutions. Mr. West was a member of Goldman's Asian Special Situations Group and was a member of the Investment Committees for Goldman's American Special Situations and Specialty
Lending Groups. From January 1992 until January 1999, Mr. West served as Chairman and CEO of Greenthal Realty Partners LP and GRP Financial in New York, which Mr. West founded as
a Resolution Trust Company Standard Asset Management and Disposition Contracts Asset Manager providing real estate asset management, special servicing and distressed debt investment management. Prior
to founding GRP, Mr. West was an executive vice president with The Charles H. Greenthal Group, Inc., a real estate asset management and investment company, and a member of the technical
staff at AT&T Bell Laboratories from 1982 to 1984. Mr. West earned his M.S. in Electrical Engineering from the California Institute of Technology in 1983 and graduated magna cum laude with a
B.S. in Electrical Engineering from Tufts University in 1982. Mr. West is currently chairman of Green Tree Investment Holdings LLC, a credit focused mortgage loan servicer.
Mr. West is a member of the board

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of
overseers of Tufts University, and a member of the Chair's Council for the Humanities and Social Sciences division at the California Institute of Technology. Mr. West's qualifications to
serve on our Board include his extensive financial and investment experience as well as his real estate experience.



Not applicable.



We have adopted a Code of Ethics for our principal executive and senior financial officers (the "Code of Ethics for Principal Executive
and Senior Financial Officers"). In addition, we have adopted a Code of Conduct (the "Code of Conduct") that applies to all of our directors and employees, including our CEO and CFO. Copies of our
Code of Conduct and Code of Ethics for Principal Executive and Senior Financial Officers are available on our Website at http://www.bankunited.com and may also be obtained upon request without charge
by writing to the Corporate Secretary, BankUnited, Inc., 14817 Oak Lane, Miami Lakes, FL 33016. We will post to our Website any amendments to the Code of Conduct and Code of Ethics for
Principal Executive and
Senior Financial Officers, and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange, or the NYSE.

Copies
of our Corporate Governance Guidelines and the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on our
Website at http://www.bankunited.com and may also be obtained upon request without charge by writing to the Corporate Secretary, BankUnited, Inc., 14817 Oak Lane, Miami Lakes, FL 33016.



We have a separately-designated standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act.
The members of the committee are Messrs. DeMark (Chairman) and Ross and Ambassador Cobb, each of whom qualifies as an "independent" director as defined under the NYSE rules and
Rule 10A-3 of the Securities Exchange Act of 1934, or the Exchange Act. All of the members of the audit committee are financially literate and have accounting or related financial
management expertise within the meaning of the NYSE rules. The Board also has determined that Mr. DeMark qualifies as an "audit committee financial expert" as defined by the SEC.

Item 11.    Executive Compensation

Compensation Discussion and Analysis

Executive Compensation

The following Compensation Discussion and Analysis provides information regarding the objectives and elements of our compensation
philosophy, policies and practices with respect to the compensation of our executive officers who appear in the "Summary Compensation Table" below (referred to collectively throughout
this section as our "named executive officers" and with respect to our named executive officers other than Mr. Melby, the "Management Members"). Our named executive officers for the fiscal year
ended December 31, 2010 were:



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Objectives of Our Executive Compensation Program

Our executive compensation philosophy is primarily based on pay-for-performance. Accordingly, our executive
compensation programs are designed to achieve the following objectives:



Setting Executive Compensation

Our current executive compensation program is largely based on arrangements that were negotiated at the time that our Company was
founded. BankUnited, Inc. was organized by a management team led by Messrs. Kanas, Singh, Bohlsen and our former Chief Financial Officer on April 28, 2009. At that time, the
founding members of the management team directly negotiated the terms of their compensation with the investors. Mr. Pauls replaced our former Chief Financial Officer, and as a result,
Mr. Pauls' compensation components are similar to those provided to our former Chief Financial Officer prior to his departure. The level of Mr. Pauls' compensation was negotiated by him
and the Company and was ultimately subject to approval by our Board. Mr. Melby, who is not a founding member of our management team, commenced employment with BankUnited on
September 28, 2009 and the terms of his compensation were the product of negotiation between Mr. Melby and BankUnited and was subject to final approval by the Board of BankUnited.

Role of Compensation Committee

Since our inception, our compensation committee has been responsible for such matters as the determination of discretionary bonus
amounts, if any, to be paid to our named executive officers, the implementation of the BankUnited, Inc. 2009 Stock Option Plan, including the determination of grant amounts, vesting terms and
exercise prices and the approval of a new Omnibus Equity Incentive Plan. In addition, our compensation committee was responsible for vetting and approving our 401(k) plan and Nonqualified Deferred
Compensation Plan.

Role of Compensation Consultant

We have not engaged any compensation consultants. However, we may revisit the use of a compensation consultant in the future.

Risk Oversight

The audit committee of our Board, which is comprised of non-employee directors, is currently responsible for risk oversight
within our Company, including with respect to compensation practices. Mr. Melby, the Executive Vice President, Chief Risk Officer at BankUnited, is responsible for

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developing
an Enterprise Risk Management framework to identify, manage and mitigate risks across our Company. This framework, which involves ongoing participation and oversight by our Board, captures
compensation-related risk amongst various other dimensions of risk. In addition, our Company is subject to oversight by the OTS. To date, the OTS has played a role in our executive compensation
practice, including reviewing and commenting on the employment agreements we have entered into with the Management Members, and going forward, we will comply with the rules and regulations developed
by the OTS. We do not believe that our overall compensation policies and practices create risks that are reasonably likely to have a material adverse effect on our Company.

Executive Officer Compensation

Principal Components of Compensation of Our Named Executive Officers

The compensation package offered to our executive officers, including our named executive officers, consists
of:



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Compensation Mix

Our current compensation package is designed to provide a strong link between the compensation of our executives and the success of our
Company and our stockholders generally. The cash componentsbase salary and discretionary cash bonus compensationcollectively represent what we believe is appropriate pay for
expected performance during the year. The equity-based compensation component is designed to encourage high performance by closely aligning an executive's pay with the interests of our stockholders.
The allocation between different elements of compensation with respect to our named executive officers has been a product of individual negotiations to date.

Employment Agreements

We have entered into employment agreements with each of the Management Members. Mr. Melby is not party to an employment
agreement and instead his employment is subject to the terms of an offer letter with BankUnited. The employment agreements and offer letter set forth the compensatory terms of each of our named
executive officers' employment. For additional information regarding each named executive officer's employment agreement or offer letter, see "Employment Agreements with Named Executive Officers."

Base Salary

We provide our executive officers and other employees with base salary to compensate them for services rendered during the year. We
believe that, with respect to our named executive officers, base salary should compensate the executives for their service and performance but that superior contributions and performance should be
rewarded by other forms of compensation, including long-term equity-based compensation. The base salary for each of our named executive officers was set in his employment agreement or
offer letter when the named executive officer commenced employment with us or BankUnited, as applicable. To date, we have not granted any increase in base salary for any of our named executive
officers.

Discretionary Cash Bonuses

Pursuant to their employment agreements, the Management Members are eligible to receive discretionary cash bonuses, as determined in
the sole discretion of our Board. To date, our Board has not awarded bonuses to the Management Members and has not established any performance targets for such awards. To the extent that bonuses are
awarded to the Management Members in the future, the determination of the amounts of such bonuses will be determined in accordance with the BankUnited, Inc. Policy on Incentive Compensation
Arrangements, which provides that bonus amounts are to be based upon the past, present, and expected future contributions of an employee or group of employees to the overall success, safety, and
soundness of the organization. Factors considered in evaluating those contributions will include, among other things: overall individual performance, organizational performance, individual
contribution to organizational performance, business segment performance, and level of individual responsibilities. The BankUnited, Inc. Policy on Incentive Compensation Arrangements is
designed to balance risk and financial results in a manner that does not encourage employees to expose the Company to imprudent risks.

Pursuant
to his offer letter, Mr. Melby is eligible to receive an annual bonus under a bonus plan that is yet to be implemented by BankUnited with a target bonus opportunity equal
to $300,000. Mr. Melby is the only one of our named executive officers with a target bonus opportunity due to his role as the Enterprise Risk Officer of BankUnited and our belief that a lesser
portion of his compensation should be in the form of equity-based compensation and, accordingly, at-risk due to the responsibilities inherent in his role as Enterprise Risk Officer. Given
the limited duration of Mr. Melby's tenure with BankUnited in 2009, BankUnited decided to pay Mr. Melby a pro-rata bonus

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equal
to $75,000 based on the target bonus set forth in his offer letter with BankUnited and the number of months Mr. Melby was employed by BankUnited during 2009
(i.e., SeptemberDecember 2009). For 2010, Mr. Melby received a bonus of $300,000, equal to his target bonus. The Compensation Committee determined the amount of the bonus
after a review of subjective criteria related to Mr. Melby's performance in 2010. No other named executive officer received a discretionary cash bonus for 2010.

Equity-Based Compensation



Pursuant to the LLC Agreement and related award agreements, the Management Members each received equity-based compensation in
the form of profits interest units, or PIUs, in the LLC upon commencement of employment with us. The PIUs represent the right of the holder to share in distributions from the LLC after
our investors have received certain returns on their investment. At the time of the inception of our Company, PIUs representing the right to receive an amount equal to ten percent of the increase in
the value of our Company after returns to our investors have been made were allocated to a pool for grants to the founding members of our management team. Mr. Pauls, who was not employed by us
at the time of our inception, received his PIUs when he commenced employment with us in September 2009.

The
PIUs were divided into two equal types of profits interests units. Half of the PIUs were Time-based PIUs and the remaining half of the PIUs were IRR-based
PIUs. All of the PIUs available for grant under the LLC Agreement were granted to the Management Members.

The
Time-based PIUs generally vested in equal annual installments on each of the first three anniversaries of the date of grant. One-third of the
Time-based PIUs granted to each of the Management Members were vested as of the IPO. With respect to Messrs. Kanas, Bohlsen and Singh, one-third of their
Time-based PIUs were due to vest in accordance with their terms on each of May 21, 2011 and May 21, 2012, if such individuals remain employed by us as of such date. With
respect to Mr. Pauls, one-third of his Time-based PIUs were due to vest in accordance with their terms on each of September 1, 2011 and September 1, 2012,
if he remains employed by us as of such date. The unvested Time-based PIUs were due to vest on an accelerated basis upon the occurrence of certain events, such as change in control.

The
IRR-based PIUs generally were due to vest after our investors have received certain returns on their investment. In addition, pursuant to the terms of the LLC
Agreement, following an initial public offering, the IRR-based PIUs would have become eligible to vest commencing on the date that is four months after the IPO based on the trading price
of our common stock four months after the effective date of the IPO. Based on the offering price and the implied equity value of the Company resulting from such offering price, the Board of Directors
of the LLC determined that the IRR-based PIUs would vest in accordance with their terms on the date that is four months after the consummation of the IPO and as a result no longer
provided a significant retention benefit. As a result, the Board of Directors of the LLC approved the vesting in full of IRR-based PIUs that were issued pursuant to the LLC
Agreement and related award agreements such that, immediately prior to the consummation of the Reorganization, all IRR-based PIUs were vested.



At the time that Mr. Melby commenced employment with BankUnited, the pool of available PIUs had been exhausted. In addition, we
intended that PIUs would be issued only to the Management Members in recognition of their contributions to the formation of our Company. Accordingly, Mr. Melby did not receive a grant of PIUs
and instead received stock options to purchase shares of our common stock under the BankUnited, Inc. 2009 Stock Option Plan. Mr. Melby was granted 14,600

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stock
options on March 29, 2010 with an exercise price of $17.86 per share based on the fair market value per share of common stock. The stock options granted to Mr. Melby in 2010 were
in respect of his commencement of employment and service during 2009 and vest in three substantially equal installments on each of the first three anniversaries of the grant date, subject to
Mr. Melby's continued service through the applicable vesting dates.

The
PIUs and stock options are described further below following "Grants of Plan-Based Awards2010 Grants of Plan-Based Awards."

As
part of the Reorganization, the Management Members received a combination of common stock (both shares not subject to vesting schedules and restricted shares that are subject to
vesting schedules) and options to purchase common stock (both vested and unvested) as well as certain dividend equivalent rights, in each case, in respect of the PIUs held by the Management Members.
Such shares of common stock received by the Management Members did not include newly issued shares that are dilutive to stockholders, but were allocated from the pool of shares then held by
the LLC that would otherwise have been distributed pro rata to the Sponsors, as well as the other unit holders of the LLC in respect of their units as part of the liquidation of
the LLC. Shares later forfeited by the Management Members will be distributed pro rata back to the then-unit holders and not to us. Such shares have not been registered under the
Securities Act and may only be sold pursuant to registration under the Securities Act or an exemption therefrom. The shares issuable upon exercise of options will be newly issued shares that will be
issued under the BankUnited, Inc. 2010 Omnibus Equity Incentive Plan described below, which is covered by a registration statement on Form S-8.

In
addition, the BankUnited, Inc. 2010 Omnibus Equity Incentive Plan was adopted in connection with the IPO and we will no longer issue new options under the
BankUnited, Inc. 2009 Stock Option Plan.

The
Board of Directors of the LLC approved the vesting in full of the IRR-based PIUs that were held by the Management Members such that, immediately prior to the
consummation of the Reorganization, all IRR-based PIUs were vested. In addition, each of the Management Members were permitted to sell the same fractional amount of common stock (including
shares to be received upon the liquidation of the LLC and the corresponding conversion of PIUs to stock and options) as the Sponsors were permitted to sell in connection with the IPO.



Each of (1) Mr. Kanas and certain funds affiliated with Blackstone, Carlyle, Centerbridge and WL Ross have separately
agreed during the 18 months commencing on January 27, 2011 and (2) the other Management Members have separately agreed during the 12 months commencing on January 27,
2011 not to effect any sales pursuant to Rule 144 under the Securities Act of any of our equity securities.



In connection with the IPO the LLC was liquidated in accordance with the terms of the LLC Agreement, which contemplated
the Reorganization. In accordance with the terms of the LLC Agreement, the following transactions occurred immediately prior to the consummation of the IPO in connection with the liquidation of
the LLC (based on the initial offering price of $27.00 per share after deducting underwriting discounts and commissions):



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Pursuant to his offer letter, Mr. Melby is eligible to receive grants of equity-based compensation. After a review of subjective
criteria relative to Mr. Melby's performance and to provide Mr. Melby with continued long-term incentive opportunities, the Compensation Committee granted 11,000 restricted
shares to Mr. Melby on March 11, 2011. The restricted shares vest in substantially equal installments on each of the first three anniversaries of the grant date, subject to
Mr. Melby's continued service through the applicable vesting dates. The closing price of the Company's common stock on March 11, 2011 was $28.05.

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Equity Ownership Requirements

In connection with the formation of our Company, certain of the Management Members were required to invest a portion of their personal
assets in our Company. Mr. Kanas invested $23,500,000, Mr. Bohlsen invested $10,000,000 and Mr. Singh invested $1,000,000. Mr. Pauls invested $1,000,000 in our Company in
connection with the commencement of his employment. The amounts that the Management Members were initially required to invest vary and each executive's investment amount is in relation to his net
worth. Mr. Melby joined BankUnited subsequent to our formation and was not required to invest any of his personal assets in our Company.

In
connection with the IPO and in exchange for the PIUs vesting described above, we adopted a policy to which the Management Members agreed relating to the minimum amount of equity
securities that such Management Members must retain for so long as they are employed by us. This policy, which may be waived from time to time by the Compensation Committee, provides that so long as
Mr. Kanas is CEO, he will not sell equity if, after giving effect to such sale, his retained equity (including vested and unvested equity, including options) has a value that is less than
twelve times his base salary. Additionally, for Messrs. Pauls, Bohlsen and Singh, so long as they are employed and are named executive officers of the Company, they will not sell equity if,
after giving effect to such sale, their respective retained equity (including vested and unvested equity, including options) has a value that is less than five times their respective base salary. We
believe that requiring members of our senior management to invest and maintain ownership in our Company serves to align their interests with the interests of our stockholders generally.

Tax and Accounting Implications

Transition provisions under Section 162(m) may apply for a period of three years following the consummation of the IPO to
certain compensation arrangements that were entered into by a corporation before it was publicly held.

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Summary Compensation Table

The following summary compensation table sets forth the total compensation paid or accrued for the year ended December 31, 2010
to our named executive officers.

Name and Principal Position

Year

Salary
($)

Bonus
($)

Stock
Awards
($)(6)

Change
In Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(7)

All Other
Compensation
($)(8)

Total
($)John A. Kanas,


2010


2,250,000





131,276


7,139


107,283


2,495,698Chairman, President and


2009


1,377,620





35,763,663


238


83,980


37,225,501Chief Executive Officer(1)Douglas J. Pauls,


2010


650,000





10,592


2,044


44,250


706,886Chief Financial Officer(2)


2009


267,941





2,914,076


62


59,521


3,241,600John Bohlsen,


2010


1,250,000





67,338


3,071


62,283


1,382,692Vice Chairman and


2009


765,345





18,279,207


102


50,886


19,095,540Chief Lending Officer(3)Rajinder P. Singh,


2010


1,000,000





58,448


3,071


55,218


1,116,737Chief Operating


2009


612,276





15,894,969


102


23,302


16,530,649Officer(4)Randy R. Melby


2010


325,000


300,000








37,172


662,172Senior Executive Vice


2009


85,281


75,000


73,248





10,444


243,973President, Chief RiskOfficer of BankUnited(5)


(1)Mr. Kanas
receives an annual base salary of $1,125,000 pursuant to the terms of his amended and restated employment agreement with BankUnited and an
annual base salary of $1,125,000 pursuant to the terms of his employment agreement with the LLC and BankUnited, Inc.(2)Mr. Pauls
receives an annual base salary of $552,500 pursuant to the terms of his amended and restated employment agreement with BankUnited and an
annual base salary of $97,500 pursuant to the terms of his employment agreement with the LLC and BankUnited, Inc.(3)Mr. Bohlsen
receives an annual base salary of $1,062,500 pursuant to the terms of his amended and restated employment agreement with BankUnited and
an annual base salary of $187,500 pursuant to the terms of his employment agreement with the LLC and BankUnited, Inc.(4)Mr. Singh
receives an annual base salary of $750,000 pursuant to the terms of his amended and restated employment agreement with BankUnited and an
annual base salary of $250,000 pursuant to the terms of his employment agreement with the LLC and BankUnited, Inc.(5)Mr. Melby
receives an annual base salary of $325,000 pursuant to the terms of his offer letter with BankUnited.(6)Represents
the value of the PIUs granted to the Management Members and the value of the stock options granted to Mr. Melby in accordance with FASB
ASC Topic 718.(7)Represents
the value of above-market earnings on nonqualified deferred compensation amounts credited with respect to each applicable named executive
officer. Pursuant to our Nonqualified Deferred Compensation Plan, amounts deferred thereunder are credited with interest at a rate of


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6%
per annum. According to IRS guidelines, as of December 2010, interest above 2.45% is considered above market. (8)$11,025
and $78,975 represent contributions made by us on Mr. Kanas' behalf to our 401(k) plan and Nonqualified Deferred Compensation Plan,
respectively, $4,283 for an automobile allowance and $13,000 for a driver allowance. $11,025 and $18,225 represent contributions made by us on Mr. Pauls' behalf to our 401(k) plan and
Nonqualified Deferred Compensation Plan, respectively, and $15,000 for an automobile allowance. $11,025 and $33,975 represent contributions made by us on Mr. Bohlsen's behalf to our 401(k) plan
and Nonqualified Deferred Compensation Plan, respectively, $4,283 for an automobile allowance and $13,000 for a driver allowance. $11,025 and $33,975 represent contributions made by us on
Mr. Singh's behalf to our 401(k) plan and Nonqualified Deferred Compensation Plan, respectively, and $10,218 for an automobile allowance. $7,172 represents contributions made by us on
Mr. Melby's behalf to our 401(k) plan, $12,000 for an automobile allowance and $18,000 for a housing allowance.


Grants of Plan-Based Awards

The following table sets forth certain information with respect to the plan-based awards granted to each of our named
executive officers during 2010:

2010 Grants of Plan-Based Awards

Name

Grant Date

All Other
Stock Awards:
Number of
Shares of
Stock or
Units
(#)(1)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(2)

Closing
Price on
Date of
Grant
($/Sh)(3)

Grant Date
Fair Value
of Stock and
Option
Awards
($)(4)Mr. Kanas


3/11/2010


134





850.30


113,9409/30/2010


14





1,238.25


17,336Mr. Pauls


3/11/2010


11





850.30


9,3539/30/2010


1





1,238.25


1,238Mr. Bohlsen


3/11/2010


69





850.30


58,6719/30/2010


7





1,238.25


8,668Mr. Singh


3/11/2010


60





850.30


51,0189/30/2010


6





1,238.25


7,430Mr. Melby


3/29/2010





14,600


17.86


73,248


(1)Represents
grants of PIUs to the Management Members pursuant to the anti-dilution protection described below. Each of these
anti-dilution grants vest in accordance with the same vesting schedule as the original PIU grants described below.(2)Represents
grant of stock options to Mr. Melby under the BankUnited, Inc. 2009 Stock Option Plan in respect of his commencement of employment
and service during 2009. The stock options vest in three substantially equal installments on each of the first three anniversaries of the grant date, subject to Mr. Melby's continued service
through the applicable vesting dates.(3)$850
represents the price per PIU as of December 31, 2009, which was the most recent date the PIUs were valued prior to the March 11, 2010
grants, and $1,238 represents the price per PIU as of September 30, 2010. $17.86 represents the exercise price per share of our common stock


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covered
by the stock options granted to Mr. Melby, which is the fair market value per share as of March 31, 2010. (4)Represents
the value of the PIUs granted to the applicable Management Member on March 11, 2010 based on a PIU valuation as of December 31,
2009, which was the most recent date the PIUs were valued prior to the March 11, 2010 grants, and as of September 30, 2010 with respect to the grants on such date in accordance with FASB
ASC Topic 718. In addition, $73,248 represents the value of the stock options granted to Mr. Melby on March 29, 2010 based on the fair market value of our common stock as of
March 31, 2010 in accordance with FASB ASC Topic 718.




On May 21, 2009, we granted management PIUs to certain of our Management Members. Each PIU represents the right of the holder to
share in distributions from the LLC after certain preferred allocations have been made. Mr. Pauls received his PIUs on September 1, 2009, after commencing employment with us on
August 4, 2009. Half of the PIUs vest with the passage of time and half vest upon attainment of certain investment returns.

With
regard to the Time-based PIUs, in general: one-third vested on May 21, 2010, and one-third will become vested on each of May 21,
2011 and May 21, 2012. With respect to Mr. Pauls' PIUs, one-third vested on September 1, 2010, and one-third will become vested on each of
September 1, 2011 and September 1, 2012.

IRR-based
PIUs will become vested pursuant to the terms of LLC Agreement.

In
the event of a change of control, all of the unvested Time-based PIUs will vest. "Change of control" means either: the sale or disposition of substantially all of our
assets to persons other than our investor members and outside members and their respective affiliates; or the date upon which persons other than our investor members or outside members gain 50% or
more of the voting power of our Company. In the event that a Management Member's (other than Mr. Pauls) employment is terminated without cause or he resigns for good reason, 100% of his
Time-based PIUs will vest as of the termination date.

If
a Management Member's employment with us terminates due to his death or disability and, in the case of Mr. Pauls, due to his termination without cause or resignation for good
reason, he shall become entitled to the number of Time-based PIUs that would have vested over the twelve-month period following the termination date.

Each
Management Member who holds PIUs is subject to certain anti-dilution protection whereby he will receive additional grants of PIUs upon the issuance of additional units
in the LLC. The anti-dilution protection ensures that the economic value of the PIUs granted to the executive remains unaffected by subsequent events.



On March 29, 2010, we granted 14,600 stock options to Mr. Melby with an exercise price per share equal to $17.86, based
on the fair market value per share of common stock. The stock options vest in three substantially equal installments on each of the first three anniversaries of the grant date, subject to
Mr. Melby's continued service through the applicable vesting dates. The stock options were granted under the BankUnited, Inc. 2009 Stock Option Plan, described below.



We maintain the BankUnited, Inc. 2009 Stock Option Plan, pursuant to which awards of stock options have been granted to select
employees, including Mr. Melby. In connection with the IPO and

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the
adoption of the BankUnited, Inc. 2010 Omnibus Equity Incentive Plan, all future grants of stock options will be made under the BankUnited, Inc. 2010 Omnibus Equity Incentive Plan.

A
maximum of 2,312,500 shares of our common stock may be delivered in satisfaction of stock options granted under the BankUnited, Inc. 2009 Stock Option Plan, subject to
adjustment for certain corporate events. We adopted the BankUnited, Inc. 2010 Omnibus Equity Incentive Plan in connection with the IPO and we will no longer issue options under the BankUnited
Inc, 2009 Stock Option Plan beyond the 981,710 options outstanding as of the date of the IPO. The exercise price of a stock option will generally not be less than the fair market value of the common
stock subject to the stock option, determined as of the date of grant. The terms and conditions applicable to stock options granted under the BankUnited, Inc. 2009 Stock Option Plan will be
determined by our Board or a committee of our Board, which will administer the plan. All stock options granted under the BankUnited, Inc. 2009 Stock Option Plan are intended to be
non-qualified stock options, and are not intended to be treated as "incentive stock options" that comply with Section 422 of the Internal Revenue Code of 1986, as amended.

Upon
termination of a participant's employment, unless otherwise provided in his or her award agreement, all stock options (whether or not vested) will be forfeited, except that:
(a) all stock options held by the participant immediately prior to his or her termination for any reason other than cause, death or disability, to the extent then exercisable, will remain
exercisable until the earlier of (i) ninety (90) days following the termination and (ii) the expiration of the term of the stock options, and will thereupon terminate;
(b) all stock options held by a participant immediately prior to the termination of his or her employment as a result of his or her death or disability, to the extent then exercisable, shall
remain exercisable until the earlier of (i) twelve (12) months following the termination and (ii) the expiration of the term of the stock options, and shall thereupon terminate;
and (c) all stock options (whether vested or unvested) held by a participant immediately prior to his or her termination for cause will immediately terminate.

Payment
of the exercise price may be made in such forms as the Administrator may determine, including (a) by cash or check, (b) by means of withholding of shares of common
stock with an aggregate fair market value equal to (i) the aggregate exercise price and (ii) the minimum statutory withholding taxes.

Except
as otherwise provided in an award agreement, in the event of a change of control in which there is an acquiring or surviving entity, the Administrator may provide for the
continuation or assumption of some or all of the outstanding stock options, or for the grant of new stock options in substitution therefor, by the acquiror or survivor, in each case on such terms and
subject to such conditions as preserve the intrinsic value of the stock option in the Administrator's good faith determination. In the event of a Change of Control (as defined below) in which there is
no assumption or substitution as to some or all of the outstanding stock options, the Administrator will preserve the intrinsic value of the stock options, provide for treating as satisfied any
time-based vesting condition on any such stock option or for the accelerated delivery of shares of common stock issuable under each such stock option, or cancel any stock option and, in
connection therewith, pay an amount (in cash or, in the discretion of the Administrator, in the form of consideration paid to shareholders of the Company in connection with such Change of Control)
equal the excess, if any, of the fair market value of the shares of common stock subject to the stock options over the aggregate exercise price of the stock options.

"Change
of Control" means (a) the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets of our company, other than to any
person or group holding an interest in BU Financial Holdings LLC as of May 21, 2009 and/or their respective affiliates (together, the "Investors") or (B) the date upon which any
person or group, other than the Investors, is or becomes the beneficial owner, directly or indirectly, of fifty percent (50%) or more of the total voting

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power
of the voting interests in BU Financial Holdings LLC or the voting stock of our company, including by way of merger, consolidation or otherwise.

Our
Board, in it sole and absolute discretion, may at any time or times amend or alter the BankUnited, Inc. 2009 Stock Option Plan or any outstanding stock option and may at any
time terminate or discontinue the BankUnited, Inc. 2009 Stock Option Plan. Our Board may not, without a participant's consent, amend or terminate the terms of a stock option or the plan if
doing so would adversely affect a participant's rights. Any amendments to the plan will be conditioned upon stockholder approval only to the extent, if any, approval is required by applicable law
(including the Code).

Employment Agreements with Named Executive Officers

On July 10, 2009, Messrs. Kanas, Bohlsen, and Singh entered into employment agreements with the LLC,
BankUnited, Inc. and BankUnited, which set forth the terms of their employment. On September 1, 2009, Mr. Pauls entered into employment agreements with the LLC,
BankUnited, Inc. and BankUnited, which set forth the terms of his employment. On August 18, 2010, we amended and restated the original employment agreements with each of the Management
Members to
remove the LLC and BankUnited, Inc. as parties to the agreement, leaving BankUnited as the sole employer. In addition, on August 18, 2010, each of the Management Members entered
into new employment agreements with the LLC and BankUnited, Inc. The Management Members did not become entitled to new or additional compensation as a result of the amendments and entry
into the new employment agreements; rather the compensation and benefits provided to the Management Members under the original employment agreements was allocated between the amended and restated
employment agreements with BankUnited and the new employment agreements with the LLC and BankUnited, Inc.

In
general, the initial term of employment provided under each Management Member's amended and restated employment agreement with BankUnited and employment agreement with the LLC
and BankUnited, Inc. expires on July 10, 2012 (in the case of Mr. Pauls, who commenced his employment later than our other Management Members, the initial term of employment
expires on September 1, 2012). The Board of BankUnited or the LLC and BankUnited, Inc., as applicable, may elect to extend the term of employment for additional
one-year periods unless either BankUnited, the LLC and BankUnited, Inc., as applicable, or the Management Member gives the other party at least ninety days' notice of intent
not to renew.

In
addition, each Management Member's amended and restated employment agreement with BankUnited contains certain regulatory language required by the OTS, which provides for the
suspension or termination of BankUnited's obligations under the agreement in the event of certain events affecting the executive's ability to work for BankUnited or if BankUnited is in default of
certain of its regulatory obligations.

Each
Management Member's employment agreement with BankUnited, as amended and restated, and new employment agreement with the LLC and BankUnited, Inc. are summarized below.
In addition, Mr. Melby's offer letter with BankUnited is summarized below.



The agreement provides Mr. Kanas an annual base salary of $1,125,000, which may be increased (but not decreased) at the sole
discretion of the board of directors of
BankUnited. During each full fiscal year, Mr. Kanas will be eligible to earn a discretionary bonus as determined by the board of directors of BankUnited.

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Mr. Kanas
is entitled to participate in BankUnited's employee benefit plans (other than annual bonus and incentive plans) on the same basis as those benefits are available to
BankUnited's other senior executives. Those benefits include: participation in group life, hospitalization, medical, dental, health, accident and short and long term disability plans, four weeks
annual paid vacation, and reimbursement for reasonable business expenses. In addition, Mr. Kanas is eligible for payment of professional dues and professional membership fees, participation in
an excess 401(k) plan, an automobile allowance, and a driver (at market cost).



The agreement provides Mr. Kanas an annual base salary of $1,125,000, which may be increased (but not decreased) at the sole
discretion of the board of directors of the LLC and BankUnited, Inc. During each full fiscal year, Mr. Kanas will be eligible to earn a discretionary bonus as determined by the
board of directors of the LLC and BankUnited, Inc.



The agreement provides Mr. Pauls an annual base salary of $552,500, which may be increased (but not decreased) at the sole
discretion of the board of directors of BankUnited. During each full fiscal year, Mr. Pauls will be eligible to earn a discretionary bonus as determined by the board of directors of BankUnited.

Mr. Pauls
is entitled to participate in BankUnited's employee benefit plans (other than annual bonus and incentive plans) on the same basis as those benefits are available to
BankUnited's other senior executives. In addition, Mr. Pauls is eligible to participate in our excess 401(k) plan and to receive an automobile allowance.



The agreement provides Mr. Pauls an annual base salary of $97,500, which may be increased (but not decreased) at the sole
discretion of the board of directors of the LLC and BankUnited, Inc. During each full fiscal year, Mr. Pauls will be eligible to earn a discretionary bonus as determined by the
board of directors of the LLC and BankUnited, Inc.



The agreement provides Mr. Bohlsen an annual base salary of $1,062,500, which may be increased (but not decreased) at the sole
discretion of the board of directors of BankUnited. During each full fiscal year, Mr. Bohlsen will be eligible to earn a discretionary bonus as determined by the board of directors of
BankUnited.

Mr. Bohlsen
will be entitled to participate in BankUnited's employee benefit plans (other than annual bonus and incentive plans) on the same basis as those benefits are available
to BankUnited's other senior executives. In addition, Mr. Bohlsen is eligible for payment of professional dues and professional membership fees, participation in an excess 401(k) plan, an
automobile allowance, and a driver (at market cost).



The agreement provides Mr. Bohlsen an annual base salary of $187,500, which may be increased (but not decreased) at the sole
discretion of the board of directors of the LLC and BankUnited, Inc.

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During
each full fiscal year, Mr. Bohlsen will be eligible to earn a discretionary bonus as determined by the board of directors of the LLC and BankUnited, Inc.



The agreement provides Mr. Singh an annual base salary of $750,000, which may be increased (but not decreased) at the sole
discretion of the board of directors of BankUnited. During each full fiscal year, Mr. Singh will be eligible to earn a discretionary bonus as determined by the board of directors of BankUnited.

Mr. Singh
will be entitled to participate in BankUnited's employee benefit plans (other than annual bonus and incentive plans) on the same basis as those benefits are available to
BankUnited's other senior executives. In addition, Mr. Singh is eligible for payment of professional dues and professional membership fees, participation in an excess 401(k) plan, and an
automobile allowance.



The agreement provides Mr. Singh an annual base salary of $250,000, which may be increased (but not decreased) at the sole
discretion of the board of directors of the LLC and BankUnited, Inc. During each full fiscal year, Mr. Singh will be eligible to earn a discretionary bonus as determined by the
board of directors of the LLC and BankUnited, Inc.

For
a description of severance payments and benefits made available under the employment agreements, see the section below entitled "Potential Payments Upon Termination or
Change-in-Control."



BankUnited entered into an offer letter with Mr. Melby, effective as of September 28, 2009, pursuant to which he serves
as Senior Executive Vice President, Chief Risk Officer of BankUnited. The offer letter provides Mr. Melby an annual base salary of $325,000, a target bonus opportunity equal to $300,000 and
eligibility to receive annual grants of stock options valued at $350,000. The offer letter also entitles Mr. Melby to a rent subsidy of $2,000 per month for a period of twelve months and a
monthly car allowance equal to $1,000. Mr. Melby is an at-will employee and his offer letter does not provide for severance payments or benefits upon termination of employment.

BankUnited, Inc. 2010 Omnibus Equity Incentive Plan

In connection with the IPO, we adopted the BankUnited, Inc. 2010 Omnibus Equity Incentive Plan, or the Plan, which became
effective upon our common stock being
listed and approved for listing upon notice of issuance on the New York Stock Exchange, and will continue in effect until the tenth anniversary of that date.

The
Plan provides for the grant of share options (all share options granted under the Plan are intended to be non-qualified share options and are not intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code")),
share appreciation rights ("SARs"), restricted shares, deferred shares, performance shares, unrestricted shares and other share-based awards.

The
Plan may be administered by our Board or by a committee of directors designated by our Board (the "Administrator"). The Administrator
has broad administrative authority to interpret the Plan and may prescribe, amend and rescind rules and make all other determinations necessary or desirable

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for
the administration of the Plan. Pursuant to its administrative authority, the Administrator may, among other things: select the persons who will receive awards and determine the types of awards to
be granted; determine the terms and conditions of those awards, and amend the terms and conditions of outstanding awards.

The
number of shares of our common stock available for issuance under the Plan is 7,500,000. Once the Plan becomes subject to Section 162(m) of the Internal Revenue Code, the
aggregate awards granted during any single year to a person who is likely to be a "covered employee" (within the meaning of Section 162(m) of the Internal Revenue Code) may not exceed 1,000,000
shares of our common stock.

The
Plan provides that, in the event of a merger, consolidation, recapitalization, share dividend or other change in corporate structure affecting our common stock, the Administrator
will make, in its sole discretion, an equitable substitution or proportional adjustment in (i) the aggregate number of shares of common stock reserved for issuance under the Plan,
(ii) the maximum number of shares of common stock that may be subject to awards granted to a participant in any calendar year, (iii) the kind, number and exercise price subject to
outstanding share options and SARs granted under the Plan, and (iv) the kind, number and purchase price of shares of common stock subject to outstanding awards of restricted shares, deferred
shares, performance shares or other share-based awards granted under the Plan. In addition, in the event of a merger, amalgamation, consolidation, reclassification, spin-off,
spin-out, repurchase, reorganization, recapitalization, share dividend or other change in corporate structure affecting the common stock, the Administrator may, in its discretion,
terminate all awards in exchange for the payment of cash or in-kind consideration.

The
Plan provides that, unless otherwise determined by the Administrator and evidenced in an award agreement, if a change in control occurs, then (i) any unvested or unexercisable
portion of an award
carrying a right to exercise shall become fully vested and exercisable and (ii) the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to any other
award granted under the Plan will lapse and such unvested awards will be deemed fully vested and any performance conditions imposed with respect to such awards will be deemed to be fully achieved.

For
purposes of the Plan a "change in control" means, in general: (i) a person or entity acquires securities representing 50% or more of our voting power; (ii) certain
mergers or amalgamations involving us or any of our subsidiaries and another corporation; (iii) an unapproved change in the majority membership of our Board; (iv) the approval by
stockholders of a plan of complete liquidation or dissolution of our company; or (v) the consummation of an agreement for certain sales or dispositions of all or substantially all of our
assets.

The
fair market value of a share of common stock will be determined by the Administrator in its sole discretion, subject to certain limitations, including if our common stock is admitted
to trading on a national securities exchange, the fair market value of a share of common stock will be the closing sales price per share on the applicable date, or if no sale was reported on that
date, for the last preceding date on which there was a sale of shares of common stock on the exchange.

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Option Exercises and Stock Vested

The following table contains information regarding PIUs held by our Management Members, which vested during fiscal year 2010.
Mr. Melby does not hold PIUs and none of his stock options vested during fiscal year 2010.

2010 Option Exercises and Stock Vested

Stock AwardsName

Number of Shares
Acquired on Vesting
(#)(1)

Value Realized
on Vesting
($)(2)Mr. Kanas


8,444


7,123,821Mr. Pauls


688


708,514Mr. Bohlsen


4,316


3,640,999Mr. Singh


3,753


3,166,190


---

Outstanding Equity Awards at Fiscal Year-End

The following table shows grants of equity awards outstanding on December 31, 2010 for each of our named executive officers:

Outstanding Equity Awards at 2010 Fiscal Year-End

Option Awards

Stock AwardsName

Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

Number of Securities
Underlying
Unexercised Options
Unexercisable
(#)(1)

Option
Exercise Price
($)(2)

Option
Expiration Date

Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(3)

Market Value of Shares or Units of Stock That Have Not Vested ($)(4)Mr. Kanas













42,268


68,770,459Mr. Pauls













3,444


5,603,422Mr. Bohlsen













21,603


35,148,297Mr. Singh













18,786


30,565,010Mr. Melby





14,600


17.86

3/29/2020








(1)Represents
stock options granted to Mr. Melby on March 29, 2010, which vest in three substantially equal installments on each of the first
three anniversaries of the grant date, subject to Mr. Melby's continued service through the applicable vesting dates.(2)The
stock options granted to Mr. Melby have an exercise price of $17.86 per share based on the fair market value per share of common stock as of
March 31, 2010.(3)One-half
of the PIUs granted to each Management Member is comprised of Time-based PIUs and the other half is comprised of
IRR-based PIUs. With regard to the Time-based PIUs, in general: one-third vested on May 21, 2010, and one-third will become vested on each of
May 21, 2011 and May 21, 2012. With respect to Mr. Pauls' PIUs, one-third vested on September 1, 2010, and one-third will become vested on each of
September 1, 2011 and September 1, 2012. IRR-based PIUs will become vested pursuant to the terms of LLC Agreement.(4)Based
on the value of the PIUs at December 31, 2010, the most recent available valuation date.


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Nonqualified Deferred Compensation

The Management Members are eligible to participate in our Nonqualified Deferred Compensation Plan, which allows each executive the
ability to defer compensation in excess of annual IRS limits (for 2009 and 2010, the limit is $16,500) that are applicable to our qualified 401(k) plan. Mr. Melby does not participate in our
Nonqualified Deferred Compensation Plan. Each Management Member is also eligible to receive company matching contributions under the plan. For the 2010 plan year, we contributed an amount equal to
four and one-half percent of each executive's eligible compensation to the plan on his behalf. For subsequent plan years, we will contribute one hundred percent of the first one percent
plus seventy percent of the next five percent of eligible compensation that the executive elects to defer under the plan. Amounts deferred by the executive are vested at all times and amounts that we
contribute on his behalf will become vested upon the earlier to occur of a change in control (as defined in the plan), the executive's death, disability, attainment of "Normal Retirement Age" under
our 401(k) plan or completion of two years of service. Amounts deferred under our Nonqualified Deferred Compensation Plan are distributed upon a date specified by the executive, which may be no
earlier than January 1 of the third plan year following the plan year in which the compensation would have otherwise been paid to the executive, or upon the earliest to occur of the executive's
separation from service, disability or a change in control.

The
table below shows contributions to our Nonqualified Deferred Compensation Plan by the Management Members and by us on behalf of the Management Members during 2010.

Nonqualified Deferred Compensation Table

Name

Executive
Contributions
in Last FY
($)

Registrant
Contributions
in Last FY
($)

Aggregate
Earnings
in Last FY
($)

Aggregate
Withdrawals/
Distributions
($)

Aggregate
Balance at
Last FYE
($)Mr. Kanas


105,300


78,975


12,087





309,619Mr. Pauls


40,500


18,225


3,446





91,498Mr. Bohlsen


45,300


33,975


5,200





133,198Mr. Singh


45,300


33,975


5,200





133,198


Potential Payments upon Termination or Change-in-Control

Each Management Member's amended and restated employment agreement with BankUnited and new employment agreement with the LLC and
BankUnited, Inc. provide for severance payments and benefits, to the extent applicable, in the event of a termination of employment. The following description of the severance payments and
benefits apply generally with respect to each Management Member's amended and restated employment agreement with BankUnited and employment agreement with the LLC and BankUnited, Inc.
except as specifically noted. Mr. Melby's offer letter with BankUnited does not entitle him to severance payments or benefits in the event of a termination of his employment. Pursuant to the
terms of the BankUnited, Inc. 2009 Stock Option Plan, the vesting of the stock options granted to Mr. Melby would have accelerated assuming the occurrence of a change in control as of
December 31, 2010.

A
Management Member's employment may be terminated at any time and for any reason upon at least thirty days' notice. A Management Member's employment may also be terminated for "cause"
(as defined below).

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If
a Management Member's employment is terminated for cause, or if he resigns at a time when grounds for cause exist, or if he resigns without "good reason" (as defined below) he is
entitled to receive:



Together,
(A)-(C) will be referred to as the "accrued rights."

In
the event that a Management Member dies, his employment will automatically terminate. If he becomes disabled, BankUnited or the LLC and BankUnited, Inc., as applicable,
may terminate his employment. For purposes of the employment agreement, "disability" means the failure of a Management Member to perform his duties for six consecutive months, or for an aggregate of
nine months in any consecutive twelve-month period.

In
the event that a Management Member's employment is terminated due to death or disability, his estate is entitled to receive the accrued rights. In addition, the Management Member (to
the extent applicable) and his dependents are generally entitled to receive continued coverage under the group health plans of BankUnited or the LLC and BankUnited, Inc., as applicable,
at the sole expense of BankUnited or the LLC and BankUnited, Inc., as applicable, for twenty-four months following his disability or death. If the continued coverage cannot
be provided for longer than eighteen months, BankUnited or the LLC and BankUnited, Inc., as applicable, shall pay the Management Member or his estate, on the first business day of every
month, an amount equal to the premium we would otherwise have paid. In the case of Mr. Pauls, he (to the extent applicable) and his dependents are entitled to receive continued coverage under
the group health plans of BankUnited or the LLC and BankUnited, Inc., as applicable, at the sole expense of BankUnited or the LLC and BankUnited, Inc., as applicable, for
six months following the disability or death.

A
Management Member's employment may be terminated by BankUnited or the LLC and BankUnited, Inc., as applicable, without cause or voluntarily by him for good reason.

If
Messrs. Kanas' or Bohlsen's employment is terminated without cause or for good reason, he is entitled to receive:



If
Mr. Pauls' employment is terminated without cause or if he resigns for good reason, he is entitled to receive:



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If
Mr. Singh's employment is terminated without cause or if he resigns for good reason, he is entitled to receive:



Payment
of the amounts other than the accrued rights are contingent upon the Management Member executing a general release of claims in favor of BankUnited or the LLC and
BankUnited, Inc., as applicable.

If
any compensation paid to a Management Member becomes subject to the excise tax under Section 4999 of the Internal Revenue Code, BankUnited will pay the Management Member an
amount equal to half of the amount that would be necessary to put him in the same position as he would have been in had he not been subject to the excise tax.

Each
Management Member is subject to non-competition and non-solicitation covenants for eighteen months post-termination. In addition, he is subject
to perpetual non-disparagement and confidentiality covenants.

For
purposes of the employment agreements, "cause" generally means a Management Member's: (A) personal dishonesty, (B) incompetence or willful misconduct,
(C) willful or intentional failure to perform certain duties, (D) willful violation of any law, rule, or regulation or (E) willful and material breach of any material provision of
the employment agreement.

"Good
reason" generally means a material reduction in the Management Member's salary or benefits, a material diminution in his reporting relationship or responsibilities (in the case of
Messrs. Bohlsen or Singh, such a diminution will not constitute good reason so long as Mr. Kanas is the Chief Executive Officer of the Company or Chairman of our Board if the diminution
was approved by Mr. Kanas), the failure of BankUnited or the LLC and BankUnited, Inc., as applicable, to pay compensation, or notice by BankUnited or the LLC and
BankUnited, Inc., as applicable, that it or they will not be extending his term. In the case of Mr. Kanas, "good reason" also includes his removal as Chief Executive Officer or Chairman
of our Board (except, in the case of the latter, for regulatory reasons). In order for any of the above events to constitute "good reason," the Management Member must provide notice of his intention
to resign within sixty days of the occurrence of the event.

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The following tables show the severance payments and benefits that would have become payable to each Management Member assuming the termination of his employment
or a change in control occurred as of December 31, 2010.



Cash
Severance
($)(1)

Continued
Benefits
($)(2)

Value of
Accelerated
Equity
($)(3)

Excise Tax
Gross-Up
($)(4)

Total
($)Death/Disability





30,121


10,467,782





10,497,903For Cause/Without Good Reason














Without Cause/For Good Reason


4,000,000


30,121


20,935,564





24,965,685Change in Control








68,770,459





68,770,489




Cash
Severance
($)(1)

Continued
Benefits
($)(2)

Value of
Accelerated
Equity
($)(3)

Excise Tax
Gross-Up
($)(4)

Total
($)Death/Disability





7,530


852,912





860,442For Cause/Without Good Reason














Without Cause/For Good Reason


650,000


7,530


852,912





1,510,442Change in Control








5,603,422





5,603,422




Cash
Severance
($)(1)

Continued
Benefits
($)(2)

Value of
Accelerated
Equity
($)(3)

Excise Tax
Gross-Up
($)(4)

Total
($)Death/Disability





30,121


5,350,103





5,380,224For Cause/Without Good Reason














Without Cause/For Good Reason


2,000,000


30,121


10,700,207





12,730,328Change in Control








35,148,297





35,148,297




Cash
Severance
($)(1)

Continued
Benefits
($)(2)

Value of
Accelerated
Equity
($)(3)

Excise Tax
Gross-Up
($)(4)

Total
($)Death/Disability





30,121


4,652,416





4,682,537For Cause/Without Good Reason














Without Cause/For Good Reason


2,000,000


30,121


9,304,833





11,334,954Change in Control








30,565,010





30,565,010


(1)The
cash severance provided to each Management Member is described in each of the Management Member's employment agreements.(2)Each
Management Member's employment agreements for continued coverage under the group health plans of BankUnited or the LLC and
BankUnited, Inc., as applicable, at its or their sole expense, as described above.


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(3)For
a description of equity acceleration upon certain terminations and a change in control, see the above section entitled "Grants of
Plan-Based Awards." We have assumed that performance conditions applicable to the vesting of IRR-based PIUs would have been met assuming a change in control occurred as of
December 31, 2010 and that as of such date, the value of each PIU was $1,627.01.(4)Assuming
a termination of employment or a change in control occurred as of December 31, 2010, we would have sought the requisite stockholder approval
such that none of our Management Members would have become liable for payment of any excise tax. Accordingly, we did not include any amount for excise tax gross-up.




The following table shows the value of the accelerated vesting of Mr. Melby's stock options assuming a change in control
occurred as of December 31, 2010.

Value of
Accelerated
Equity
($)(1)Change in Control

$
133,444


(1)Mr. Melby's
stock options were granted under the BankUnited, Inc. 2009 Stock Option Plan. Pursuant to the terms of the plan, the vesting of
all of Mr. Melby's stock options would have accelerated assuming a change in control occurred as of December 31, 2010. The amount included in the chart assumes a price per share of our
common stock equal to $27, the initial public offering price per share.


Director Compensation

The following table shows compensation paid, earned or awarded to each of the non-employee members of our Board for 2010.

Director Compensation Tables

Name

Fees Earned
or
Paid in Cash
($)

Stock
Awards
($)

Option
Awards
($)

Non-Equity
Incentive Plan
Compensation
($)

Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)

All Other
Compensation
($)

Total
($)Chinh E. Chu




















Richard S. LeFrak




















Wilbur L. Ross, Jr.




















P. Olivier Sarkozy




















Lance N. West




















Eugene F. DeMark


32,917

















32,917Ambassador Sue M. Cobb


50,000

















50,000Steven J. Saiontz(1)


45,695

















45,695


(1)Mr. Saiontz
served on our Board from May 21, 2009 until July 20, 2010 when he resigned from our Board for personal reasons. The amount
reported represents apro rataportion of the $75,000


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annual
retainer fee to which Mr. Saiontz was entitled to receive, based on his time served during 2010.


In
general, the members of our Board are either investors or agents of investors in our Company and, other than Mr. DeMark and Ambassador Cobb, they do not receive any
compensation from us for service on our Board. Mr. DeMark is entitled to receive an annual retainer fee equal to $100,000 and Ambassador Cobb is entitled to receive an annual retainer fee equal
to $50,000. Mr. Kanas and Mr. Bohlsen are also members of our Board but do not receive any additional compensation for their services on our Board.

The
following table sets forth the compensation for future services expected to be paid to our non-employee directors.

Name

Retainer FeesChinh E. Chu


Ambassador Sue M. Cobb


50,000Eugene F. DeMark


100,000Richard S. LeFrak


Wilbur L. Ross, Jr.


Pierre Olivier Sarkozy


Lance N. West





Directors
who are also our employees have not received and will not receive any compensation from us for service on our Board or Board committees.

Item 12    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table sets forth the aggregate information of our equity compensation plans in effect as of December 31, 2010.

Plan category

Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights

Weighted-average
exercise price of
outstanding options,
warrants and rights)

Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in first column)Equity compensation plans approved by security holdersEquity compensation plans not approved by security holders


981,710

$
17.04


0Total


981,710

$
17.04


0


Security Ownership and Certain Beneficial Ownership

The following table sets forth certain information with respect to the beneficial ownership of the Company's equity securities as of
March 23, 2011 of: (1) each person or entity who owns of record or beneficially 5% or more of any class of the Company's voting securities; (2) each of the Company's named
executive officers and directors; and (3) all of the Company's directors and named executive officers as a group. Beneficial ownership is determined in accordance with the rules of SEC. To our
knowledge, each shareholder will have sole voting and investment power with respect to the shares indicated as beneficially owned, unless otherwise indicated in a footnote to the following table.
Unless otherwise indicated in a footnote, the business address of each person is our corporate address.

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In
computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to
options or warrants held by that person that are currently exercisable or exercisable within sixty days of March 23, 2011. We, however, did not deem these shares outstanding for the purpose of
computing the percentage ownership of any other person. Beneficial ownership representing less than 1% is denoted with an asterisk (*).

Shares of Common Stock
Beneficially OwnedName of beneficial owner

Number

%Executive Officers and Directors:John A. Kanas(1)


5,555,820


5.7
%John Bohlsen(2)


2,713,011


2.8
%Douglas J. Pauls


364,863


*Rajinder P. Singh(3)


1,874,581


1.9
%Randy R. Melby(4)


15,867


*Chinh E. Chu(5)





Ambassador Sue M. Cobb(6)


113,559


*Eugene F. DeMark


16,067


*Richard S. LeFrak(7)


1,292,125


1.3
%Wilbur L. Ross, Jr.(8)


13,721,131


14.1
%Pierre Olivier Sarkozy(9)





Lance N. West(10)





All executive officers and directors as a group (12 persons)(11)


25,667,024


26.2
%Greater than 5% Stockholders:Investment funds affiliated with WL Ross & Co. LLC(11)


13,721,131


14.1
%Investment funds affiliated with The Carlyle Group:DBD Cayman Holdings, Ltd.(12)


7,568,158


7.8
%TCG Holdings, L.L.C.(13)


6,152,973


6.3
%Investment funds affiliated with Centerbridge Partners, L.P.(14)


10,767,704


11.1
%Investment funds affiliated with The Blackstone Group(15)


13,721,131


14.1
%


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Item 13.    Certain Relationships and Related Transactions, and Director Independence

In addition to the director and executive officer compensation arrangements discussed above under Item 11 "Executive
CompensationCompensation Discussion and AnalysisExecutive Officer Compensation," the following is a summary of material provisions of various transactions we have entered
into with our executive officers, directors (including nominees), 5% or greater stockholders and any of their immediate family members since April 28, 2009, the date BankUnited, Inc. was
incorporated. We believe the terms and conditions set forth in such agreements are reasonable and customary for transactions of this type.

Registration Rights Agreement

The LLC Agreement contained registration rights provisions with respect to sales of shares of the applicable holding company of
BankUnited that is used as the public vehicle in connection with any initial public offering. In accordance with the LLC Agreement and in connection with the IPO, BankUnited, Inc., the
Sponsors, LF Moby LLC (which is beneficially owned by Mr. LeFrak and his sons), Mr. DeMark, Ambassador Cobb, the Management Members, and all other members of the LLC,
entered into a registration rights agreement, dated February 2, 2011, that, among other things, amended and restated these registration rights provisions.

Pursuant
to the registration rights agreement, Blackstone, Carlyle, Centerbridge and WL Ross will be provided with demand registration rights, which will be exercisable after expiration
of certain lockup provisions applicable to them. The demand registration rights require us to register the shares of common stock beneficially owned by the demanding Sponsor with the SEC for sale by
it to the public, provided that the value of the registrable securities proposed to be sold by such demanding Sponsor is at least the lesser of $50.0 million or the value of all registrable
securities held by such Sponsor. The registration rights provisions also provide that we may be required under certain circumstances to file a shelf registration statement for an offering to be
made on a continuous basis pursuant to Rule 415 of the Securities Act. We may postpone the filing of such a registration statement or suspend the effectiveness of any registration statement for
a reasonable "blackout period" not in excess of 90 days if our Board determines that such registration or offering could materially interfere with a bona fide business or financing transaction
of the Company or is reasonably likely to require premature disclosure of material, non-public information, the premature disclosure of which the Board reasonably determines in the
exercise of its good faith judgment would not be in the best interests of the Company; provided that we shall not postpone the filing of a registration statement or suspend the effectiveness of any
registration statement for more than 90 days in the aggregate in any 360-day period.

In
addition, pursuant to the registration rights provisions, in the event that we are registering additional shares of common stock for sale to the public, whether on our own behalf
(except in connection with a registration on Form S-4 or Form S-8 or any successor or similar form or in a registration of securities solely relating to an
offering and sale to employees pursuant to any employee stock plan or other employee benefit plan arrangement) or through a demand registration on behalf of a Sponsor (as described above), we are
required to give notice of such registration to all parties to the registration rights agreement that hold registrable securities (which includes members of our management that hold shares of our
common stock) of the intention to effect such a registration. Such notified persons have piggyback registration rights providing them the right to have us include the shares of common stock owned by
them in any such registration if we have received written requests for inclusion therein within prescribed time limits, subject to other provisions under the registration rights agreement.

Pursuant
to the registration rights agreement, each of (1) Mr. Kanas and certain funds affiliated with Blackstone, Carlyle, Centerbridge and WL Ross have separately agreed
during the 18 months from

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the
date of the Final Prospectus and (2) our other executive officers have separately agreed during the 12 months from the date of the Final Prospectus not to effect any sales pursuant
to Rule 144 under the Securities Act of any of our equity securities.

Transaction Fee Agreement

In connection with the Acquisition, we entered into a Transaction Fee Agreement with each of our Sponsors. In consideration for the
Sponsors conducting financial and structural analysis, due diligence investigations and negotiations related to the Acquisition, the following transaction fees were paid to each of the Sponsors at the
closing of the Acquisition on May 21, 2009:



We
also reimbursed our Sponsors for certain expenses related to the Acquisition in an aggregate amount of $2.5 million.

Director Nomination Agreement

In January 2011, we entered into a director nomination agreement with each of our Sponsors and Mr. Kanas that provides for the
rights of our Sponsors and Mr. Kanas to nominate individuals to our Board. The Sponsors and Mr. Kanas have the right to nominate individuals to our Board at each meeting of stockholders
where directors are to be elected and, subject to limited exceptions, we will include in the slate of nominees recommended to our stockholders for election as directors the number of individuals
designated by the Sponsors and Mr. Kanas as follows:



In
addition, each of Blackstone, Carlyle, WL Ross and Centerbridge has the right to appoint one non-voting observer to attend all meetings of our Board until such time as
such Sponsor ceases to own 5% of our outstanding common stock.

Statement of Policy Regarding Transactions with Related Persons

Transactions by us with related parties are subject to a formal written policy, as well as regulatory requirements and restrictions.
These requirements and restrictions include Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by BankUnited with its affiliates) and the Federal Reserve's
Regulation O (which governs certain loans by BankUnited to its executive officers, directors, and principal stockholders). We have adopted policies to comply with these regulatory

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requirements
and restrictions. In addition, certain of our investors entered into Rebuttal of Control Agreements with the OTS in connection with their initial investments in us. The Rebuttal of
Control Agreements limit the ability of these investors to conduct transactions with us or our affiliates. We have adopted a policy to assist these investors in complying with this aspect of their
respective Rebuttal of Control Agreements.

Our
Board has also adopted a written policy governing the approval of related party transactions that complies with all applicable requirements of the SEC and the NYSE concerning related
party transactions. Related party transactions are transactions in which our Company is a participant, the amount involved exceeds $120,000 and a related party has or will have a direct or indirect
material interest. Related parties of our Company include directors (including nominees for election as directors), executive officers, 5% stockholders of our Company and the immediate family members
of these persons. The General Counsel of BankUnited, in consultation with management and outside counsel, as appropriate, will review potential related party transactions to determine if they are
subject to our Related Party Transactions Policy. If so, the transaction will be referred for approval or ratification to the Nominating and Corporate Governance Committee. In determining whether to
approve a related party transaction, the Corporate Governance Committee will consider, among other factors, the fairness of the proposed transaction, the direct or indirect nature of the director's,
executive officer's or related party's interest in the transaction, the direct or indirect nature of the director's, executive officer's or related party's interest in the transaction, the appearance
of an improper conflict of interests for any director or executive officer of the Company taking into account the size of the transaction and the financial position of the director, executive officer
or related party, whether the transaction would impair an outside director's independence, the acceptability of the transaction to the Company's regulators and the potential violations of other
Company policies. Our Related Party Transactions Policy is available on our Website at www.bankunited.com, as Annex B to our Corporate Governance Guidelines.

Director Independence

The provisions of the Company's Corporate Governance Guidelines regarding Director independence meet the listing standards of the NYSE.
These provisions are included in the Company's Corporate Governance Guidelines, which are available on the Company's Website at www.bankunited.com, as Annex A to our Corporate Governance
Guidelines. Additionally, the Company has regularly scheduled executive sessions of the nonmanagement/independent directors. The procedure by which a presiding director is chosen for each session can
also be found in the Corporate Governance Guidelines found on our Website. All interested parties (not just shareholders) can communicate directly with the presiding director or with the
nonmanagement/independent directors as a group by writing to the Corporate Secretary, BankUnited, Inc., 14817 Oak Lane, Miami Lakes, FL 33016.

The
Board undertook its annual review of Director independence in January 2011. As a result of this review, the Board affirmatively determined that all of the Directors are independent
of the Company and its management under the corporate governance standards of the NYSE, with the exception of John A. Kanas and John Bohlsen. Each are considered inside Directors because of their
employment as a senior executive of the Company.

In
connection with the Acquisition we have paid a fee for conducting financial and structural analysis, due diligence investigations and negotiations to the Sponsors as further described
under Item 13 "Certain Relationships and Related Party TransactionsTransaction Fee Agreement" above. The Board of Directors has determined that these facts do not impair the
independence of those Directors who are also employees of the Sponsors under the foregoing standards.

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Item 14.    Principal Accountant Fees and Services

The following table represents fees for professional audit services rendered by KPMG LLP in connection with the audits of the
consolidated balance sheets of BankUnited, Inc. and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of income, stockholder's equity
and comprehensive income, and cash flows for
the year ended December 31, 2010 and for the period from April 28, 2009 (date of inception) through December 31, 2009, and fees billed for other services rendered by
KPMG LLP during these years.

2010

2009Audit Fees


1,450,000


1,275,000Audit-Related Fees


140,000


161,700All Other Fees


954,000


262,569Total


2,544,000


1,699,269


The
aggregate fees included in audit fees represent estimated fees for 2010 and billed fees for 2009. The aggregate fees included in each of the other categories are fees billed for the
fiscal years.

Audit fees:Includes the aggregate fees billed by KPMG LLP for professional services and expenses rendered for the audit of the
Company's
consolidated financial statements and audit of the Company's internal control over financial reporting pursuant to the reporting requirements of Section 112 of FDICIA.

Audit-Related Fees:Includes the aggregate fees billed by KPMG LLP for assurance and related services
that are reasonably related to the performance of the audit of the Company's financial statements and are not reported under "Audit Fees." These services primarily relate to the audit of the Company's
employee plan and attestation services performed to report on the Company's compliance with certain contractual provisions of the Purchase and Assumption Agreement between the Company and the FDIC.

All Other Fees:Includes the aggregate fees billed by KPMG LLP for professional services performed in connection with the Company's
filing of
certain registration statements and the related issuance of comfort letters and consents in 2010, and advisory services performed related to accounting and financial reporting consultations on various
issues and transactions, as well as regulatory reporting and on-call advisory services provided in 2009.

The
Audit Committee has considered and determined that the services provided by KPMG LLP are compatible with maintaining KPMG LLP's independence.

The
Audit Committee has adopted a policy that requires advance approval of all audit, audit related tax services and other services performed by the independent auditor. The policy
provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved
with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged. The Audit Committee pre-approved all of the audit and
non-audit services provided to the Company by KPMG LLP in fiscal year 2010.

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PART IV

Item 15.    Exhibits and Financial Statement Schedules









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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused the
report to be signed on its behalf by the undersigned, thereunto duly authorized.

BANKUNITED, INC.Date: March 31, 2011

By:

/s/ JOHN A. KANASName:

John A. KanasTitle:

Chairman, President and Chief Executive Officer


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date/s/ JOHN A. KANAS John A. Kanas

Chairman, President and Chief Executive Officer(Principal Executive Officer)

March 31, 2011/s/ DOUGLAS J. PAULS Douglas J. Pauls

Chief Financial Officer(Principal Financial and Accounting Officer)

March 31, 2011/s/ JOHN BOHLSEN John Bohlsen

Vice Chairman, Chief Lending Officer and Director

March 31, 2011/s/ CHINH E. CHU Chinh E. Chu

Director

March 31, 2011/s/ AMBASSADOR SUE M. COBB Ambassador Sue M. Cobb

Director

March 31, 2011/s/ EUGENE F. DEMARK Eugene F. DeMark

Director

March 31, 2011/s/ RICHARD S. LEFRAK Richard S. LeFrak

Director

March 31, 2011


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Signature

Title

Date/s/ WILBUR L. ROSS, JR. Wilbur L. Ross, Jr.

Director

March 31, 2011/s/ PIERRE OLIVIER SARKOZY Pierre Olivier Sarkozy

Director

March 31, 2011/s/ LANCE N. WEST Lance N. West

Director

March 31, 2011


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EXHIBIT INDEX

Exhibit Number

Description

Location2.1a

Purchase and Assumption Agreement, dated as of May 21, 2009, among the Federal Deposit Insurance Corporation, Receiver of BankUnited, FSB, Coral Cables, Florida, the Federal Deposit Insurance Corporation and
BankUnited (Single Family Shared-Loss Agreement and Commercial and Other Shared-Loss Agreement included as Exhibits 4.15A and 4.15B thereto, respectively)

Exhibit 2.1a to the Registration Statement on Form S-1 of the Company filed January 18, 20112.1b

Addendum to Purchase and Assumption Agreement, dated as of May 21, 2009, by and among the Federal Deposit Insurance Corporation, Receiver of BankUnited, FSB, Coral Gables, Florida, BankUnited, and the Federal
Deposit Insurance Corporation

Exhibit 2.1b to the Registration Statement on Form S-1 of the Company filed January 10, 20112.1c

Amendment No. 1 to the BankUnited Single Family Shared-Loss Agreement with the FDIC, dated as of November 2, 2010

Exhibit 2.1c to the Registration Statement on Form S-1 of the Company filed January 18, 20112.1d

Amendment No. 2 the BankUnited Single Family Shared-Loss Agreement with the FDIC, dated as of December 22, 2010

Exhibit 2.1d to the Registration Statement on Form S-1 of the Company filed January 18, 20113.1

Amended and Restated Certificate of Incorporation

Filed herewith3.2

Amended and Restated By-Laws

Filed herewith4.1

Specimen common stock certificate

Exhibit 4.1 to the Registration Statement on Form S-1 of the Company filed January 18, 201110.1a

Amended and Restated Limited Liability Company Agreement of BU Financial Holdings LLC, dated as of May 21, 2009, by and among John A. Kanas, Rajinder P. Singh, John N. DiGiacomo, John Bohlsen and the other
parties listed on Schedule A thereto (Schedule A as of January 15, 2011)

Exhibit 10.1 to the Registration Statement on Form S-1 of the Company dated January 18, 201110.1b

Joinders to the Amended and Restated Limited Liability Company Agreement

Exhibit 10.1b to the Registration Statement on Form S-1 of the Company filed January 24, 201110.2a

Employment Agreement, dated August 18, 2010, among BU Financial Holdings LLC, BankUnited, Inc. (formerly known as BU Financial Corporation) and John A. Kanas

Exhibit 10.2a to the Registration Statement on Form S-1 of the Company filed December 16, 201010.2b

Amended and Restated Employment Agreement, dated August 18, 2010, between BankUnited, a federally chartered thrift institution and John A. Kanas

Exhibit 10.2b to the Registration Statement on Form S-1 of the Company filed December 16, 2010


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Exhibit Number

Description

Location10.3a

Employment Agreement, dated August 18, 2010, among BU Financial Holdings LLC, BankUnited, Inc. (formerly known as BU Financial Corporation) and John Bohlsen

Exhibit 10.3a to the Registration Statement on Form S-1 of the Company filed December 16, 201010.3b

Amended and Restated Employment Agreement, dated August 18, 2010, between BankUnited, a federally chartered thrift institution and John Bohlsen

Exhibit 10.3b to the Registration Statement on Form S-1 of the Company filed December 16, 201010.4a

Employment Agreement, dated August 18, 2010, among BU Financial Holdings LLC, BankUnited, Inc. (formerly known as BU Financial Corporation) and Douglas J. Pauls

Exhibit 10.4a to the Registration Statement on Form S-1 of the Company filed December 16, 201010.4b

Amended and Restated Employment Agreement, dated August 18, 2010, between BankUnited, a federally chartered thrift institution and Douglas J. Pauls

Exhibit 10.4b to the Registration Statement on Form S-1 of the Company filed December 16, 201010.5a

Employment Agreement, dated August 18, 2010, among BU Financial Holdings LLC, BankUnited, Inc. (formerly known as BU Financial Corporation) and Rajinder P. Singh

Exhibit 10.5a to the Registration Statement on Form S-1 of the Company filed December 16, 201010.5b

Amended and Restated Employment Agreement, dated August 18, 2010, between BankUnited, a federally chartered thrift institution and Rajinder P. Singh

Exhibit 10.5b to the Registration Statement on Form S-1 of the Company filed December 16, 201010.6

BankUnited Nonqualified Deferred Compensation Plan

Exhibit 10.6 to the Registration Statement on Form S-1 of the Company filed December 16, 201010.7

BankUnited, Inc. (formerly known as BU Financial Corporation) 2009 Stock Option Plan

Exhibit 10.7 to the Registration Statement on Form S-1 of the Company filed October 29, 201010.8

BankUnited, Inc. 2010 Omnibus Equity Incentive Plan

Exhibit 10.8 to the Registration Statement on Form S-1 of the Company filed January 18, 201110.9

Registration Rights Agreement by and among BankUnited, Inc., John A. Kanas, Rajinder P. Singh, Douglas J. Pauls and John Bohlsen, and each of the other parties thereto

Filed herewith10.10

Director Nomination Agreement by and among BankUnited, Inc., John A. Kanas and the other parties thereto

Filed herewith


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Exhibit Number

Description

Location10.11

Transaction Fee Agreement, dated May 21, 2009, among BU Financial Holdings LLC, Blackstone Management Partners L.L.C., Carlyle Investment Management L.L.C., Centerbridge Advisors, LLC and WL
Ross & Co. LLC

Exhibit 10.11 to the Registration Statement on Form S-1 of the Company filed October 29, 201010.12

BU Financial Holdings LLC Warrant to the Federal Deposit Insurance Corporation dated May 21, 2009

Exhibit 10.12 to the Registration Statement on Form S-1 of the Company filed December 16, 201010.12a

Amendment, dated February 2, 2011, to the Warrant issued by BU Financial Holdings LLC to the Federal Deposit Insurance Corporation on May 21, 2009

Exhibit 10.1 to the Current Report on Form 8-K of the Company filed February 8, 201110.13

Form of indemnification agreement between BankUnited, Inc. and each of its directors and executive officers

Exhibit 10.1 to the Current Report on Form 8-K of the Company filed February 16, 201110.14

BankUnited, Inc. Policy on Incentive Compensation Arrangements

Exhibit 10.14 to the Registration Statement on Form S-1 of the Company filed January 24, 201110.15

Offer Letter to Randy R. Melby dated September 28, 2009

Exhibit 10.15 to the Registration Statement on Form S-1 of the Company filed January 27, 201121.1

Subsidiaries of BankUnited, Inc.

Filed herewith23.1

Consent of KPMG LLP

Filed herewith23.2

Consent of PricewaterhouseCoopers LLP

Filed herewith31.1

Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith31.2

Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith32.1

Section 1350 Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith32.2

Section 1350 Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith


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