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Pro Bowler

Posts : 1582
: April 19, 2009, 12:57:38 AM

Just in case you bank there...

Coral Gables-based BankUnited seeks buyer



BankUnited Financial Corp., the largest Florida-based financial institution, says its equity is completely wiped out.

The Coral Gables-based thrift holding company reiterated in a Securities and Exchange Commission filing Friday that it is at risk of being put in federal receivership at any time unless it can fix its monumental financial woes.

The Office of Thrift Supervision issued a ''prompt corrective action directive'' Tuesday giving the bank 20 days to merge or find a buyer.

The parent of BankUnited, a $14 billion-asset thrift, made the SEC filing to inform its investors of the extraordinary regulatory action taken three days earlier. Bank officials said they were preparing the filing when the OTS publicly disclosed the corrective action on its website Thursday, beating the thrift to the punch.

In an interview, bank executives stressed that the institution has plenty of liquidity -- more than $1 billion -- to meet its obligations.

''We all take comfort in the bank's liquidity and the increased levels of FDIC insurance coverage, which helps individual depositors,'' said Ramiro Ortiz, chief executive officer.

In its SEC filing, BankUnited reported a $13 million deficit of equity and that a key regulatory measure of financial strength called Tier 1 capital is negative 0.2 percent instead of the 7 percent minimum level required by regulators under a cease and desist order last September.

The bank's equity has been wiped out in part because it has set aside a loan-loss allowance of $927 million as of Dec. 31, 2008 to cover troubled loans.

On April 10, the company completed a financial review of its cushion against bad loans and decided to add $154 million to the reserve, wiping out the little bit of capital it still had.

In its filing, BankUnited said: ``We continue negotiations with various parties to raise capital and restructure our balance sheet, but we cannot assure you that in the current financial environment these negotiations will be successful and will result in a capital infusion prior to any potential actions that bank regulators might take.''

The bank also disclosed significant weaknesses in its accounting controls and procedures as of Sept. 30, 2008.

BankUnited, which has 86 branches, has been hammered by the downturn in the Florida real estate market. It suffered major losses from a big foray into option adjustable rate mortgages, which allowed borrowers to choose their repayment plans.

The bank often made such loans based on the ''stated income'' of borrowers, according to the OTS, which slapped the bank with a cease and desist order in September. The result has been rising delinquencies and defaults.

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