BankUnited FSB Biggest Bank Collapse So Far, Another Big Failure Looming

BankUnited FSB, the 34th bank to have been put under FDIC receivership for 2009, is also the biggest bank failure for this year, and the second costliest for the FDIC. This closure would hit the FDIC’s pockets some $4.9 billion, next only to giant Indy Mac’s $10.7 billion costs last year.

Touting itself as the largest Florida banking institution, the Coral Gables, Florida-based bank was taken over May 21, 2009 after it was deemed by the FDIC to be “critically undercapitalized and in an unsafe condition to conduct business.” As of May 2, BankUnited FSB’s assets totaled $12.8 billion and its deposits amounted to $8.6 billion. However as loan defaults piled up, so did the bank’s troubles and it reported a loss of $1.2 billion last year.

BankUnited FSB’s assets were acquired by BankUnited, a newly chartered savings bank owned by a group of investors led by John Kanas, former head of North Fork Bank. The new BankUnited is slated to assume the failed bank’s $12.8 billion assets and $8.3 billion deposits. Further, BankUnited also went into a loss-share transaction with the FDIC, agreeing to shoulder part of the losses of $10.7 billion worth of assets.

Deposits of the new bank will continue to be insured by the FDIC while customers can continue using their BankUnited FSB checks, ATM cards and debit cards.

In a related development, another bank collapse which could prove to be an additional costly strain on the FDIC fund is seemingly imminent. Chicago-based Corus Bankshares Inc. has been placed under management restrictions by federal regulators and is currently facing pressure to come up with additional capital. The bank has been warned that it could face receivership if it fails to meet the capital requirements.

Almost half of Corus Bank’s more than $4 billion in commercial real estate loans have turned sour and the bank does not have enough capital to absorb these losses. In its first quarter report, the bank disclosed that it lost $285 million owing to $2.09 billion in nonperforming loans – 49% of Corus’ total loan portfolio.

The bank submitted a 3-year capital plan to The Office of the Comptroller of the Currency last April 24 in compliance with OCC’s demand. The Federal Reserve Board of Chicago also ordered Corus Bank to submit a capital restoration plan and gave a June 18 deadline to the bank to raise its capital level.

As part of the several restrictions imposed on the bank, it is also limited to offering interest rates of not more than 0.75 of a percent above the national average. This could further compound Corus Bank’s woes, as it is currently giving some of the highest CD interest rates in the country today.

About the banks

 

Bankunited

BankUnited Financial Corp. is the holding company for BankUnited FSB, the largest banking institution headquartered in Florida. Serving customers through 85 branches in 13 coastal counties, BankUnited offers a full spectrum of consumer and commercial banking products and services, including online products that can be accessed through http://www.bankunited.com.

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Corus Bank

Corus Bankshares, Inc., a part of the NASDAQ Financial-100 Index and the KBW Regional Banking Index, was incorporated in Minnesota in 1958 and is headquartered in Chicago, Illinois. Corus provides consumer and corporate banking products and services throu

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