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Robert Trigaux

Feds tell BankUnited: Fix thyself by May or else



Bankunitedlogo Wake up and good morning. The clock is ticking on struggling Coral Gables-based BankUnited, the largest banking institution ($14 billion in assets) still headquartered in Florida. Federal regulators are giving BankUnited until the first week of May to merge or find a buyer to raise its depleted capital to acceptable levels.

The federal savings bank operates branches in many parts of Florida including Tampa/Carrollwood, Sun City Center and Clearwater/Countryside. The order by the Office of Thrift Supervisionset the clock ticking this week, according to published reports, and puts BankUnited at imminent risk of government takeover.

BankUnited's weak financial condition has been heavily reported. Its stock trades under the symbol BKUNA at a paltry 39 cents a share. That's a market value for the bank of less than $14 million... supporting $14 billion in assets. Yikes.

Becoming the biggest bank based in Florida is kind of like getting on the cover of Sports Illustrated. Either way you're cursed, it seems. When I got to Florida in 1991, Southeast Bank in Miami was the state's biggest bank. It ran out of steam and was bought by North Carolina's First Union (which became Wachovia and was in turn taken over by Wells Fargo.) That left Barnett Banks as Florida's biggest bank. It, too, gave up and agreed to sell itself to North Carolina's NationsBank, now known as Bank of America.

BankUnited is no Southeast Bank or Barnett Bank, but it's the biggest still standing in the state, for now.  It's been hurt by the crippled Florida real estate market and suffered major losses by offering option adjustable rate mortgages -- called options ARMs -- which allowed borrowers to choose their repayment plan. And its pile of troubled loans seems to have scared away any takers. BankUnited earned a "zero" star rating -- check out the financial health of all Florida banks here -- which indicates the weakest condition.

Under a previous regulatory order, BankUnited submitted a capital plan to the Office of Thrift Supervision on Feb. 25. On April 10, the OTS notified BankUnited of its intent to file an April 14 prompt corrective action order, and rejected the thrift's capital plan, reports. The first part of the order requires BankUnited to be "recapitalized by (a) merging with or being acquired by another financial institution, financial holding company, or other entity, or (b) the sale of all or substantially all of the Institution's assets and liabilities to another financial institution, financial institution holding company, or other entity, within twenty (20) days."

The second part of the order requires the institution to achieve and maintain Tier 1 leverage and total-risk-based capital ratios of 4 percent and 8 percent within 20 days -- there's that ticking clock that stops in the first week of May.

When financial institutions grow this weak, interested buyers often wait until a bank is seized by regulators and then make their move with the additional federal guarantees behind the sale.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 11:24am]


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