MarketWatch: Gloom over Sunshine State

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Miami's vise: Florida banks face possible seizure
Sunshine State's long-term allure may have delayed closure

By Alistair Barr, MarketWatch


SAN FRANCISCO (MarketWatch) -- BankUnited Financial, the largest lender based in Florida, warned earlier this week that it could be seized by regulators. Many smaller banks might face a similar gloomy fate as the real-estate crisis lingers in the Sunshine State -- but there is a ray of hope.

When Florida's real-estate slump finally ends, the state could still be a very attractive place for banks to do business. Indeed, some experts say the long-term allure of the state may be the main reason so few Florida banks have failed so far -- and why a bidding war for BankUnited /quotes/comstock/15*!bkuna/quotes/nls/bkuna (BKUNA 0.79, +0.02, +2.60%) may still be brewing.

"We have many problem banks, and we may be losing our biggest," said Kenneth Thomas, a banking expert and economist based in Miami. "But when things get better, Florida will come back strong, and those who are positioned well in the banking sector will benefit."

A Florida recovery seems a long way off, though.

In Miami, homes are staying on the market for nearly 250 days on average, by far the slowest inventory turnover along the 10 major U.S. cities tracked by Altos Research. Miami has experienced the slowest market turnover every month since September 2007.

Bauer Financial, which tracks the health of U.S. banks, rated 58 Florida-based banks "problematic" or worse at the end of 2008. ........(more)

The complete piece is at: http://www.marketwatch.com/story/miami-ice-florida-banks-face-possible-seizure