Long Island native John Kanas spent nearly 40 years building North Fork Bank into a well-known institution around New York City before selling the operation to Capital One in 2008.
Like many New Yorkers in their 60s, his next stop was Florida. Except he didn't come here to retire. He came to build some more.
Kanas led a group of private equity investors that bought BankUnited in May 2009 after it failed. At the time, the Coral Gables institution was the largest bank based in Florida, and its failure eventually cost the Federal Deposit Insurance Corp. nearly $6 billion, a tab in this economic crisis second only to the implosion of California's IndyMac.
Thanks to the FDIC assist, Kanas' management team is whittling down problem loans, and the bank is now considered among the best-capitalized in Florida.
Those familiar with the old BankUnited wouldn't recognize its reincarnation. Gone is an institution almost entirely dependent on residential mortgages.
The new bank is pushing aggressively into commercial banking and expanding in the Tampa Bay area, adding two branches to its current two locations.
"I get a kick out of building, and the people who have become my partners down here were my partners before, and they all get a kick out of building," Kanas said during a recent visit to Tampa. "We have no intentions of slowing down."
On the eve of his 65th birthday this month, Kanas talked about BankUnited's next steps. Here are some excerpts:
Here you are, some 21/2 years after buying BankUnited. Is the grand experiment on track?
We're actually ahead. We had expected it to take over three years to be able to do a public offering, and we did that about 19 months after we took over. So we were very pleased after that. It was the largest bank IPO (initial public offering) ever done in the United States (raising $783 million) and it was very successful.
Some predicted you and other out-of-state investors would cash out quickly after the IPO.
No, no … some of the private equity investors sold down. All of them sold down some of their shares and management sold down some as well. But we in management still have massive personal investments.
A few of us together own almost 81/2 percent of the company. So we're very committed to BankUnited.
How fast is the bank growing?
The overall balance sheet is about the same size as it was when we got there. But remember, we are reducing certain of our (problem) assets at a high velocity. In the second quarter of this year, we grew loans at about $320 million for the quarter. In the third quarter, we grew loans at $380 or $390 million. So we are growing loans at (a rate of) about 180 percent a year.
When we came, their commercial deposits were around $200 million. They're now $1.1 billion, $1.2 billion. … A lot of that, frankly, we wish was because the Florida economy is booming. It's not so much that as it is we're lifting market share from our competitors that have not done as well.
Is small-business lending picking up?
When we stepped into BankUnited, we were doing less than a million dollars a month in small-business lending. For the last three months, we've averaged about $27 million a month.
While it's popular to go around saying banks aren't lending, banks would really like to be lending. But frankly … there are so many companies whose credit standings have been so badly damaged by the economic downturn that it's going to take a while for those people to rebuild their relationships.
What about companies with solid credit?
Those that have good credit don't have much growth in their businesses.
But … I just made three major business calls in Orlando. We probably discussed today — between the three calls — business that we think we'll get on the books in BankUnited in the next three months: $100 million worth of loans and $50 (million) or $60 million of deposits. So we are able to find these opportunities, but we're working hard to do it.
Are you pushing into private banking?
We do not compete in private banking as some people define private banking. We do not focus on wealthy people … and managing their estates and walking their dogs and hiding their jewelry for them. It's not what we do. Private banking to us is a department of 20 people who really concentrate on attending to the banking needs of entrepreneurs and business owners.
Where's your biggest opportunity?
Clearly, the small-business to middle-market companies. It defines who we are. Take the three major banks that compete with us in that category: BB&T, SunTrust and Regions. … That segment is probably $60 billion or so between those three banks. If we could steal — bad word — if we could earn our way to convince 15 or 20 percent of those people to come to us, it's enormous.
Did you reap any benefits from Bank Transfer Day and other activities objecting to fees at the megabanks?
I don't think anything in particular connected to Bank Transfer Day, but we have seen an increase of accounts moving out of large institutions and coming over to us the last couple of months.
We're a community bank and very much a Main Street institution. It's called Occupy Wall Street, not Occupy Main Street.
Where do you want to be five years from now?
To be frank with you, we are mercilessly opportunistic. But I would be making it up if I said to you we had a certain number of branches that we wanted to open. … We just take one opportunity at a time, and we see multiple opportunities ahead of us in Tampa.
Any pending acquisitions?
We've spoken with lots of banks since we've been in Florida, but we've actually only made one or two bids. We continue to expect that the banking industry in Florida and the United States in general will soon move to massive consolidation, but it always takes longer than one thinks.
Are you targeting failing banks with FDIC assistance or healthy banks?
We started out thinking we would focus almost exclusively on FDIC-failed institutions. Now, I would say 75 percent of our time is spent having conversations with "well" institutions, not FDIC takeovers. The terms and conditions of (buying) FDIC failures have changed dramatically since we've been here. And we don't think the economics are particularly attractive anymore.
What are your plans to expand out of state?
We actually are acquiring a bank in Manhattan, which we hope to close before the holidays. It's a small bank, about $500 million, called Herald National Bank. After my noncompete (from selling North Fork Bank) expires, which is next August, we expect to open half a dozen branches in Manhattan to augment Herald, and we expect a steep trajectory of growth in Manhattan starting late next year.
Are you heading into any states beyond New York and Florida?
No, no plans.
And the brand equity for BankUnited was strong enough to keep the name?
Actually, the brand equity was not bad. Despite the fact that BankUnited failed — and it was a hideous failure — it didn't spoil its name on the street. People still liked it. People were still rooting for it up until the end. They liked the management; they were nice guys. I always wanted to keep the name. I knew we'd eventually take it to New York, and I like the way the name works in both places.
You're about to turn 65. Any talk of succession?
I don't really think about that. I've always believed that age is a state of mind. And health, of course. Obviously, we have lots of young, very talented people in the bank. We've taken people from all over the United States.
I only ask because 65 is a natural retirement age at many companies.
Well, we've never thought of ourselves as natural.