Company also Agrees to Regulatory Consent Orders and Defers
Interest Payments on Trust Preferred Debentures
BankUnited Financial Corporation (NASDAQ:BKUNA), parent company of
BankUnited FSB (the Bank) today announced that the Company, as part of
its strategic plan, is reducing the headcount of the Bank by
approximately 160 persons, or 12% of the Bank’s
current workforce. The reductions will come primarily from the Bank’s
residential lending support and operations. The Company expects this
action to result in estimated annualized cost savings of approximately
$11 million.
“We have done everything to avoid cutting
staff and it is painful to get to this point,”
said Alfred R. Camner, BankUnited’s chairman
and chief executive officer. “Unfortunately in
this unprecedented economic environment, it has become a necessary step.”
Regulatory Consent Orders
The Company and the Bank have reached agreement with the Office of
Thrift Supervision (OTS) on regulatory consent orders that require the
Company and the Bank to take various actions and impose certain
restrictions designed to improve their financial strength. The Company
has previously disclosed most of the actions and restrictions set forth
in the new Orders which the OTS and the Company and Bank agreed to
today. BankUnited and the Bank have therefore, already taken action on,
and in certain situations, completed or made substantial progress
towards completion of a number of the required actions.
The Orders acknowledge that BankUnited has previously submitted a
capital augmentation plan and an alternative capital strategy to the OTS
to preserve and enhance its capital and the Bank’s
capital. Upon receipt of the OTS’s written
non-objection, BankUnited must adopt and implement the capital plan. The
Orders require the Bank, on and after December 31, 2008, to meet and
maintain a minimum Tier One Core Capital Ratio of 7% and a minimum Total
Risk-Based Capital ratio of 14%. The Bank’s
core and risk-based capital ratios were 7.6% and 13.8%, respectively, at
June 30, 2008. The Orders prohibit the Bank from paying, and BankUnited
from accepting or requesting from the Bank, dividends or capital
distributions without receiving the prior written approval of the OTS.
The Orders also require, among other things, that BankUnited and the
Bank notify the OTS prior to adding directors or senior executive
officers; limit certain kinds of severance and indemnification payments;
and obtain OTS approval before entering into, renewing, extending, or
revising any compensatory or benefits arrangements with any director or
officer.
The Orders also require that the Bank enhance its policies and
procedures regarding its allowance for loan losses, limit its asset
growth and develop strategies to strengthen its liquidity position.
In addition, the Orders preclude the Bank from originating any loans
that provide for or may result in negative amortization, including
payment option adjustable rate mortgages (option ARM loans).
Additionally, the Orders preclude the Bank from originating any loans
under reduced documentation and no documentation loan programs; require
the Bank to reduce the portfolio of negative option ARM loans; and
enhance monitoring and internal reporting on the option ARM loan
reduction efforts and on unpaid mortgage insurance claims. The Bank must
report regularly to the OTS on such efforts.
