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Bank Capital Journal

Bank Capital JournalRecent earnings and corporate activity

October 21, 2008


Most of the latest corporate activity centered around bank capital, though a public offering was successfully completed, a class action was filed and an acquisition was approved.

BankUnited Financial Corp. Chairman and Chief Executive Officer Alfred R. Camner has stepped down, an announcement yesterday said. The company’s president, Ramiro A. Ortiz, has been named CEO while Vice Chairman Lawrence H. Blum was named chairman. Blum noted in the statement that it was time for a new generation of leadership.

BankUnited disclosed last month that it was notified by the Office of Thrift Supervision that it had lost its well-capitalized classification.

The Mortgage Bankers Association announced yesterday at its annual conference in San Francisco that David G. Kittle has been elected and sworn in as 2009 chairman of the trade group. Kittle is executive vice president of Vision Mortgage Capital. In addition, Robert E. Story Jr., president of Seattle Financial Group, was named MBA’s chairman-elect, while Michael D. Berman, president of CWCapital, was named vice chairman.

Among Kittle’s first moves was to assemble a task force of MBA members to examine policy options and issue recommendations for the future of the secondary mortgage market. The group will operate as the Council on Ensuring Mortgage Liquidity.

On Monday, U.S. Treasury Secretary Henry M. Paulson Jr. issued a statement indicating that the $250 billion capital injection for U.S. banks announced as part of the Troubled Asset Relief Program is an investment and not an expenditure. He noted a broad group of banks of all sizes have expressed interest in the program, which already includes the participation of nine major banks. A streamlined application has been created for interested banks.

Astoria Financial Corp. reported in its third-quarter earnings report last week that it took a $58 million cash charge on its holdings of Freddie Mac preferred stock.

Beacon Federal Bancorp Inc. reported Friday that it expects to take a $5 million charge on its holdings of Freddie and Fannie Mae perpetual preferred stock — $2 million more than it previously announced. In addition, Beacon expects $5 million in charges on a collateralized-debt obligation and $3 million in increases to loan-loss provisions. However, its well-capitalized status will not be impaired.

Banking regulators issued a joint statement indicating that institutions which have been hit with losses on their preferred Fannie and Freddie holdings can recognize the losses as ordinary income in the third quarter for regulatory capital purposes.

Bankrupt Washington Mutual Inc. disclosed in a Securities and Exchange Commission filing last week that the U.S. Attorney’s Office for the Western District of Washington, the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, the SEC and the Internal Revenue Service Criminal Investigations are examining the activities of Washington Mutual Bank, its leaders and others to determine if any federal laws were violated in connection with the failure of Washington Mutual Bank.

Alliance Bancshares California has entered into an agreement with the Federal Reserve Bank of San Francisco to conserve capital, comply with laws and regulations and shore up operations.

AmericasBank entered into an agreement with the Federal Reserve Bank of Richmond and the Maryland Division of Financial Regulation to conserve capital and reduce credit risk.

Customers of Bear Stearns & Co. and JPMorgan Securities Inc. who held large, concentrated positions in Fannie’s preferred stock are being solicited by the securities law firm of Klayman & Toskes, P.A., to join a class action lawsuit. The complaint alleges the underwriters knew or recklessly disregarded that Fannie was massively undercapitalized because of its over-concentration in subprime investments and Alt-A mortgages.

MetLife Inc. announced last week that it closed on a $2.3 billion public offering. The proceeds will be used for general corporate purposes and potential strategic initiatives.

The Federal Reserve Board approved last Thursday a proposal by Caja de Ahorros y Monte de Piedad de Madrid and Caja Madrid Cibeles S.A. — both of Madrid, Spain — and CM Florida Holdings Inc. of Coral Gables, Fla., to acquire 83 percent of the voting securities of City National Bancshares Inc. The move will result in the three companies acquiring control of subsidiary bank City National Bank of Florida.

Purchasers of Fannie Mae Preferred Stock, Series S, plaintiffs, v. Bear Stearns & Co. and JPMorgan Securities Inc.
Case No. 08-cv-08609

Written Agreement by and between Alliance Bancshares California, Culver City, California, and Federal Reserve Bank of San Francisco, San Francisco, California.
Docket No. 08-040-WA/RB-HCcial Group, Oct. 16, 2008 (Board of Governors of the Federal Reserve System Washington
, D.C.)

Written Agreement by and among AmericasBank, Towson, Maryland, Federal Reserve Bank of Richmond, Richmond, Va., and Maryland Division of Financial Regulation, Baltimore, Maryland.
Docket No. 08-026-WA/RB-SMcial Group, Oct. 16, 2008 (Board of Governors of the Federal Reserve System Washington, D.C.)

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of


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