Magazine article American Banker

BankUnited Faces Hurdles in Hunt for More Capital

Magazine article American Banker

BankUnited Faces Hurdles in Hunt for More Capital

Article excerpt


Given its markets, the high level of nonperforming loans on its books, and investors' wariness to throw more money at troubled banks, raising the $400 million BankUnited Financial Corp. says it needs is a tall order.

An early hurdle for the Coral Gables, Fla., company - the management team's insistence on retaining majority ownership - has been cleared. The $14.3 billion-asset thrift's managers, including chairman and chief executive Alfred R. Camner, agreed June 18 to give up control by converting their higher-ratio class B shares to class A common, reducing their stake to roughly 9%.

Matt Olney, an analyst with Stephens Inc., said it was inevitable that management would bend.

"You can't raise that amount of capital when your stock is trading at the valuation it is without giving up the voting power," Mr. Olney said.

Still, the move may not be enough; once burned, investors are twice shy, said Matthew Kelley, an analyst with Sterne Agee & Leach.

"You go down the whole capital-raising list the last couple of months, and everybody lost their shirt," Mr. Kelley said. "So I think it's reasonable to believe that the terms that people are willing to invest in ... are only going to get more difficult."

Indeed, some analysts said BankUnited waited too long to raise capital.

"Investors came to them at the end of the year and said, 'Hey, we'll give you some capital if you'll give up your power.' The stock was at $5 or $6 then. And they said, 'No way.' But now it's at $1 and they're a lot more desperate than a few months ago," Mr. Olney said.

In afternoon trading Wednesday, BankUnited shares were at 81 cents, down from $20 a year ago.

BankUnited declined to comment for this story, but disclosed its intention to raise $400 million in a June 18 Securities and Exchange Commission filing. …

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