HNB Herald National Bank Common Stock

Herald National Bank (NYSE AMEX: HNB), a full-service commercial bank, today reported results for the second quarter of 2011, ended June 30. It was the fourth consecutive quarter of sustained profitability for Herald, which opened as a de novo bank in November 2008.

“Herald National Bank successfully achieved a full 12 months of uninterrupted profitability in less than three years of operation. This was the direct outcome of the bank’s consistent focus on superior asset quality as we continued to pursue our unique relationship-based business banking model serving small and middle-market customers across the greater New York metropolitan area,” said Chairman and Chief Executive Officer Raymond A. Nielsen.

Key highlights for the quarter included the following:

• Net income for the quarter was $76,000, versus a loss of $3.9 million in the same period a year ago. Second quarter results reflected expenses of $280,000 related to the bank’s previously disclosed pending merger with BankUnited, Inc. (NYSE:BKU). For the first six months of the year, 2011 net income was $282,000 as compared to a loss of $5.8 million in 2010.
• Total assets as of June 30 were $486.6 million, down 2.9% from $501.1 million in the first quarter. As compared to the second quarter of 2010, assets increased 4.8 % from $464.1 million.
• Deposits as of June 30, 2011 were $431.0 million, of which 90.4% were core deposits and 30.8% were checking accounts. This represents an increase of 5.6% from $408.0 million a year ago and a slight decline of 1.4% from $437.1 million at March 31, 2011.
• Net interest margin in the second quarter improved to 4.02% from 3.87% in the first quarter of 2011. This compares to 4.10% in the same period of 2010.
• Reflecting the continuing tight credit market, total loans declined to $319.6 million at March 31, 2011 from $322.0 million the prior quarter and $343.2 million at June 30, 2010.
• Tier 1 leverage ratio was 10.58% at June 30, 2011, compared to 10.61% in the prior period and 10.73% in the second quarter last year. This level continues to exceed the minimum regulatory capital ratios applicable to the bank.
• Nonperforming loans totaled $1.4 million at June 30, 2011. The bank did not set aside a provision for loan and lease losses as its nonperforming asset ratio to total assets is 0.30% and its nonperforming assets to loans is 0.45%. The Bank believes it is adequately reserved with a loan loss allowance to loan ratio of 1.91%

“The second quarter of 2011 produced our highest operating profit to date and, excepting the expenses associated with our pending merger transaction, would have been our most profitable reporting period on record. Our anticipated merger with BankUnited later this year will further enhance stockholder value by bringing additional resources that will strengthen Herald’s ability to expand its market reach and support the continued delivery of top-quality relationship banking services to small and mid-sized customers,” Mr. Nielsen said.

About Herald National Bank

Herald National Bank is a relationship-based banking institution dedicated to serving the commercial and private banking needs of small to mid-size businesses, their owners, executives and senior managers, as well as high-net-worth individuals in the New York metropolitan area. Herald National Bank presently has three offices located in Manhattan (623 Fifth Avenue), Brooklyn (1333 60th Street), and Melville, Long Island (58 South Service Road). For more information, visit www.heraldnb.com.

FORWARD-LOOKING STATEMENTS

This Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of Herald National Bank with respect to, among other things, future events and financial performance. Herald National Bank generally identifies forward-looking statements by terminology such as “outlook”, “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this Press Release are based on the current plans, estimates and expectations of Herald National Bank. The inclusion of this forward-looking information should not be regarded as a representation by Herald National Bank that the future plans, estimates or expectations contemplated herein will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to Herald National Bank’s respective operations, financial results, financial condition, business prospects, ability to complete the merger, growth, strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. Herald National Bank undertakes no 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. Information on these factors can be found in the 2010 Annual Reports on Form 10-K Herald National Bank, and in the Quarterly Reports on Form 10-Q Herald National Bank, filed with the Office of the Comptroller of the Currency and available at Herald National’s website (www.heraldnb.com).

Additional Information for Stockholders

In connection with the proposed merger, BankUnited has filed with the SEC a Registration Statement on Form S-4 that will include a Proxy Statement of Herald National Bank and a Prospectus of BankUnited, as well as other relevant documents concerning the proposed transaction. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY BANKUNITED WITH THE SEC AND BY HNB WITH THE OCC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Investors will be able to obtain a free copy of the Proxy Statement/Prospectus, as well as other filings containing information about BankUnited and Herald National Bank at the SEC’s website (http://www.sec.gov), and with respect to Herald National Bank, its website (www.Heraldnb.com). You will also be able to obtain these documents, free of charge, at http://www.bankunited.com under the tab “About Us” and then under the heading “Investor Relations” and then under “SEC Filings.” Copies of the Proxy Statement/Prospectus and the SEC and OCC filings that will be incorporated by reference in the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Douglas J. Pauls, 14817 Oak Lane, Miami Lakes, FL 33016, (305) 461-6841.

BankUnited and Herald National Bank and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Herald National Bank in connection with the proposed merger. Information about the directors and executive officers of BankUnited is set forth in the Annual Report on Form 10-K of BankUnited for the year ended December 31, 2010, as filed with the SEC on March 31, 2011. Information about the directors and executive officers of Herald National Bank is set forth in the proxy statement for Herald National Bank’s 2011 annual meeting of stockholders, as filed with the OCC and posted on Herald National Bank’s website and dated April 22, 2011. Additional information regarding the interests of those persons and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. You may obtain free copies of this document as described in the preceding paragraph.

Herald National Bank

Financial Highlights (unaudited)

(dollars in thousands, except per share data)

                  Three months ended         Six months ended     June 30, June 30,

Statement of Operations

2011

   

2010

2011

   

2010

Interest income $ 5,490 $ 5,708 $ 11,000 $ 11,172 Interest expense   944   1,166   1,932   2,454 Net interest income 4,546 4,542 9,068 8,718 Provision for loan losses - 3,053 100 3,740 Noninterest income 392 116 734 223 Noninterest expense   4,834   5,504   9,360   10,974 Pretax income (loss) 104 (3,899 ) 342 (5,773 ) Tax expense   28   27   60   51 Net income (loss) $ 76 $ (3,926 ) $ 282 $ (5,824 )   Basic earnings (loss) per share $ 0.01 $ (0.32 ) $ 0.02 $ (0.62 ) Weighted average shares - basic 12,218 12,185 12,218 9,412   Selected Financial Highlights

Data at End of Period

6/30/2011 3/31/2011 12/31/2010 9/30/2010 6/30/2010 Total loans $ 319,570 $ 321,990 $ 332,909 $ 349,555 $ 343,162 Allowance for loan losses 6,112 6,265 6,404 5,554 6,837 Nonperforming assets 1,442 1,666 433 494 2,166 Securities available for sale 107,397 108,200 132,076 59,334 69,080 Securities held to maturity 16,203 16,347 16,657 10,215 23,449 Total assets 486,551 501,114 504,690 439,265 464,104 Total deposits 430,974 437,145 430,569 375,672 407,950 Stockholders' equity 52,313 51,066 50,679 52,300 52,288 Net interest margin 4.02 % 3.87 % 4.10 % 4.10 % 4.10 % Cost of funds 1.22 % 1.25 % 1.14 % 1.26 % 1.49 %  

Capital Ratios

Equity to Assets 10.75 % 10.19 % 10.04 % 11.91 % 11.27 % Tier 1 Leverage Ratio 10.58 % 10.61 % 10.97 % 10.98 % 10.73 % Tier 1 Risk-based Capital Ratio 15.86 % 15.53 % 15.10 % 14.96 % 14.25 % Total Risk-based Capital Ratio 17.11 % 16.78 % 16.36 % 16.21 % 15.51 %