BankUnited Financial going concern status in jeopardy; bank terminates Fannie Mae contract

By Caroline Salls

Pittsburgh, March 20 - BankUnited Financial Corp. has limited sources of cash required to make future debt service payment and can provide no assurance about its ability to make required debt payments after existing liquid assets are depleted, leaving substantial doubt about the company's ability to continue as a going concern, according to an 8-K filed Friday with the Securities and Exchange Commission.

In addition, BankUnited said wholly owned subsidiary BankUnited, FSB has voluntarily terminated its mortgage selling and servicing contract with Fannie Mae, effective April 1 as part of its strategy of no longer being active in the wholesale residential lending business.

According to the 8-K, the voluntary termination will require the bank to write off the recorded Fannie Mae servicing asset, which totaled the $15.8 million at Feb. 28.

The bank has also discontinued its mortgage assistance program for loans that are not delinquent in accordance with a verbal directive from banking regulators.

The company said it has experienced significant net losses for the 2008 fiscal year and the first quarter of 2009, and, as a result of these losses, BankUnited Financial has a deficit in stockholders' equity, and the bank's capital is significantly under the level required as of Dec. 31 by the Office of Thrift Supervision.

BankUnited Financial said the bank's inability to comply with various provisions of an Office of Thrift Supervision consent order could lead to further action by the regulators, including placing the bank into receivership.

According to the 8-K, the company has been unable to file its 10-K annual report for the year ended Sept. 30 and 10-Q quarterly report for the quarter ended Dec. 31 because of continuing adverse market conditions and the need for an additional review of its business, according to an 8-K filed with the Securities and Exchange Commission.

The company said the need for the additional review was prompted by the complexity of accounting and disclosure issues, including regulatory issues, liquidity and capital and a material weakness in internal control over financial reporting.

BankUnited said it still cannot predict when it will be able to resume filing periodic financing reports with the SEC, partly because of the "rapid and unpredicted pace of deterioration of market conditions."

BankUnited Financial is the holding company for BankUnited FSB. The company is based in Coral Gables, Fla.

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