Federal regulators are forcing BankUnited to raise $400 million. [Photo:Barbara P. Fernandez / The New York Times / Redux]
The recent fortunes of the largest Florida-chartered bank, Coral Gables-based BankUnited, reflect both the stresses roiling the financial industry and a tougher regulatory climate for banks in the wake of the credit crisis.
In August, BankUnited reported a $117.8-million loss for the third quarter. And it disclosed that the Office of Thrift Supervision was requiring it to raise at least $400 million, in large part because of a rise in mortgage delinquencies and defaults. A month later, the OTS changed the bank’s classification to “adequately capitalized” from “well-capitalized” and then handed the bank, which has some $14 billion in assets, a cease-and-desist order, which prevents payments from the bank to the holding company, limits cash dividends and asset growth and imposes other restrictions.
Along with BankUnited’s troubles, other developments related to the credit crisis may reshape the competitive environment for local banks. Before Wells Fargo acquired Wachovia and JPMorgan acquired Washington Mutual, the only megabanks with a presence in Miami-Dade County were Citigroup and Bank of America. The acquisitions, though, bring all four to the area. “If they come with a big marketing blitz, it will prove troublesome for our community banks competing with them,” says banking expert Kenneth H. Thomas.
Meanwhile, BankUnited continues to operate, but Fitch Ratings has downgraded the bank’s debt rating to one of the lowest grades.
BankUnited wouldn’t comment. Executives said in their most recent quarterly report that the company is transitioning gradually to a retail commercial bank. Since the original OTS action, it has cut 12% of its workforce, and BankUnited Financial Corp.’s chairman and CEO, Alfred Camner, has retired.
As of November, the bank was still trying to raise capital through a stock offering or private investment. Thomas believes BankUnited’s position as the largest Florida-based bank and its collection of branches in south Florida could still make it appealing for investment or acquisition. With the region’s concentration of wealth, “Somebody wants to invest in them because of their ... very good franchise value,” he says.