Fitch Takes Various Rating Actions on BankUnited; Outlook Stable

Business Wire, Sept 10, 2007

NEW YORK -- Fitch Ratings has affirmed the following ratings of BankUnited Financial Corporation (BKUNA) and its banking subsidiary, BankUnited FSB:

BankUnited Financial

-- Long-Term Issuer Default Rating (IDR) at 'BB ';

-- Short-Term Issuer Default Rating (IDR) at 'B';

-- Senior unsecured at 'BB ';

-- Individual Rating at 'C';

-- Support Rating at '5';

-- Support Floor at 'NF'.

BankUnited FSB

-- Long-term IDR 'BB ';

-- Short-term IDR 'B';

-- Long-term deposits 'BBB-';

-- Short-term deposits 'F3'

-- Individual 'C';

-- Support '5'.

-- Support Floor at 'NF'.

Fitch has also assigned the following ratings to BankUnited Statutory Trust VIII, IX, XI, XII and BUFC Statutory Trust VII, X:

-- Preferred stock 'BB-'.

The Rating Outlook on all of the ratings is Stable.

The rating affirmation reflects BKUNA's solid capital position, stable funding and liquidity sources and historically sound asset quality. Limited revenue diversity, loan product and geographic concentration, and a significant level of parental debt are rating constraints.

Fitch believes BKUNA's seasoned management team and underwriting practices should help to endure profitability pressures and a decline in asset quality. Nonetheless, Fitch will monitor the degree of credit deterioration and its pressure on earnings performance. Credit quality could be impacted by the health of the Florida real estate market and risks associated with its option ARM portfolio.

Asset quality remains sound, as the company's option ARMs and ALT-A loan portfolios have performed solidly to date; however, this track record has been achieved during a prolonged period of economic expansion and within a robust housing boom. Fitch considers option ARMs comparatively riskier than conventional mortgages. BankUnited's weighted average LTV is approximately 73% including mortgage insurance, although this measure is vulnerable to deteriorating home values and, to lesser extent, negative amortization.

Over the past two years, profitability measures reached record levels driven by strong residential loan growth. Record earnings were boosted by the real estate boom and customer demand for the option ARM product. Results also benefited from a rise in non-interest income due to gains on loans sold in the secondary market. Fitch believes profitability measures will deteriorate a bit over the intermediate term as the mortgage business adjusts to changing conditions.

The company's footprint remains concentrated in the South Florida region, however, its national loan production offices and broker relationships is enhancing geographic diversity within its loan portfolio. At June 30, 2007, 37% of loans were secured by properties outside of Florida versus only 5% in 2003. De novo branching added 29 branches over the past two years and aided the expanded levels of core deposits in this highly competitive banking region. Going forward, management expects more moderate growth as it absorbs its recent expansion.

In April 2007, BKUNA issued mandatory convertible debt (final issuance amount $184 million), which Fitch considers Class C hybrid equity (50% equity); these securities will convert to common equity in May 2010.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.