Analysts raise concern on BankUnited's capital position

Mon Aug 11, 2008 2:51pm EDT

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(Reuters) - At least two brokerages raised concerns about BankUnited Financial Corp's BKUNA.O capital position, after the company on Friday posted a wider-than-expected quarterly loss, and shares of the bank holding company fell as much as 17 percent.

BankUnited's shares could trade lower if its efforts to raise capital failed, in which case the bank holding company may be forced to sell at a distressed price, Paul Miller of Friedman Billings Ramsey said.

RBC Capital Markets analyst Gerard Cassidy said a large dilutive equity-type offering is needed and is likely over the near term.

"We continue to believe BankUnited's problems are very serious and drastic action by management is needed to turn the company around," Cassidy said in a research note titled "For Shareholders, The Ship Has Run Aground."

FBR's Miller widened his loss estimate for the current financial year on the company to $9.00 a share from $4.70. He reiterated an "underperform" rating on the stock.

RBC's Cassidy, who also maintained an "underperform" rating on the stock, widened his 2008 loss view for BankUnited by about 74 percent to $6.95 a share.

The Coral Gables, Florida-based parent of BankUnited FSB posted a wider-than-expected third-quarter loss, as it set aside more money for bad loans, and said it was shrinking its residential mortgage loan portfolio.

Shares of the bank holding company were down 13 percent at $1.26 in afternoon trade on Nasdaq. They hit a low of $1.20 earlier in the session. The stock has lost more than 90 percent of its value in the last 12 months.

(Reporting by Santosh Nadgir in Bangalore; Editing by Himani Sarkar)

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