It would be easy to assume that, after 45 years in banking, John Kanas is preparing to ease into a quiet retirement. But that's not part of the plan.
Kanas made that clear in an interview at BankUnited's corporate offices on Long Island.
He was telling the story of his crisis-era recapitalization of the company, which is based in the Miami area, when his longtime assistant, Kathy, opened his office door. An interior designer named Vinny had arrived to see him, she said.
"Vinny, where are ya?" Kanas shouted, jovially.
The designer walked in carrying samples of flooring trim, a catalog of office chairs and renderings of an unfinished office space. He began discussing the finishing touches on what will soon be Kanas' personal office, where he will spend time working on his next act in finance.
The new digs are in a 200-year-old sawmill near Westhampton Beach in New York that Kanas bought and renovated. His face lit up as he discussed the details, particularly the installation of a glass floor, offering a view of the stream that flows beneath the mill and out to the neighboring bay. "You can actually see the fish swimming through," Kanas said.
Kanas wants to do "one more thing" before he fully calls it quits, though he has not yet decided what that will be. Among his options: working with a private-equity firm — and potentially alongside a "very large, very substantial" fund — to invest in distressed assets. Taking a more active stake in his investments is also on the table.
After relinquishing the chief executive title at BankUnited late last year, Kanas remains chairman, a role he intends to keep for the foreseeable future. Under a consulting agreement, which expires at the end of 2018, Kanas devotes half of his time to meeting with clients, employees and his longtime deputy Raj Singh, who succeeded him as CEO.
"Instead of yanking me out, it's about extracting myself slowly, and getting people used to it," Kanas said.
When he does exit, he will have made an indelible mark not just at his current company but on the industry — first as an ambitious, acquisition-savvy regional bank CEO who built a bank with industry-leading profitability; and later as one of the central characters in the story of banking's post-crisis recovery.
For his accomplishments in building strong companies, and for his well-deserved reputation as a first mover in an industry filled with followers, American Banker is honoring Kanas with its lifetime achievement award for 2017.
Looking back at Kanas' career, it's hard not to be struck, most of all, by his keen sense of timing.
Kanas sold his first company — North Fork Bank, where he was CEO for 30 years — to Capital One in December 2006, when bank valuations were at a peak. He commanded a price of about $15 billion for the roughly $60 billion-asset North Fork, just months before the stock market tanked as the mortgage crisis unfolded.
After a brief stint working for Capital One, Kanas returned to the industry as a bank investor. As one of only a few willing buyers of failed banks early in the crisis, in late 2008 and early 2009, he used his leverage to negotiate a highly lucrative loss-sharing deal with the Federal Deposit Insurance Corp.
That deal allowed Kanas and a group of investors to recapitalize BankUnited and grow it into what is now a high-performing regional bank.
Those who know Kanas attribute his good fortune, in part, to his independent streak. He often moves quickly and confidently, before others would dare. "He is good at seeing through the BS that can permeate the industry," said Mark Fitzgibbon, an analyst with Sandler O'Neill. "He zigs when everyone else zags."
Kanas, for his part, points to the large amount of time he spends listening — to colleagues, employees and competitors — and simply studying the business. Good luck and health, of course, are also factors.
Perhaps most important, though, when it came time for Kanas to make the biggest decisions of his career, such as selling his company, he had decades of experience under his belt — and wisdom that comes from having previously made mistakes.
Consider that in the early 1990s, North Fork — widely regarded as a marquee brand — almost failed. Kanas had built up a booming business in making speculative commercial real estate loans on Long Island, as development in the area was ramping up. When the market overheated and prices collapsed, North Fork almost went under.
"I was a kid," Kanas said. "It's hard for you to believe that what you've been doing so well for so long isn't going to work anymore."
The experience helped him get through the next big bubble: the subprime mortgage meltdown. Having been stung by bad loans the first time around, Kanas moved swiftly to sell his company after he grew worried about North Fork's exposure to shoddy mortgages.
"Hey listen, there's a big benefit to being 70 years old," Kanas said. "Most of the reason I stay out of trouble now is that I've made all of those mistakes earlier in my life, and I don't do them twice."
North Fork on the brink
A distinguishing feature of the companies Kanas has built is their impressive returns.
In the late 1990s and early 2000s, North Fork's return on equity consistently hovered around 20% — well above the 10% mark that analysts estimate as the industry's average cost of capital. Its return on assets was around 2% during the time. Returns began to slide in the mid-2000s, however, shortly before the sale.
BankUnited also has produced top marks. The once-failed bank has more than held its own during the recent period of relatively slow growth. As of mid-2017, its return on equity was 10%, in line with the industry's top-performing companies.
For Kanas, learning how to build a highly profitable bank involved some tough life lessons.
Asked about his biggest failure as a CEO, Kanas spoke in candid detail about the near-failure of North Fork.
Thinking back to that period, he remembers regularly waking up at night in a panic, covered in sweat. It was a "tough time, mentally," he said, as he realized he had made bad loans across his local community.
"I remember one night, in the middle of the night, my wife saw me changing my shirt because I woke up in a cold sweat and couldn't get back to sleep," Kanas said. "She said, 'Stop feeling sorry for yourself. You're a smart guy. You built this company so far, and you're the only one who can put it back together.' "
At its worst point, North Fork had more in nonperforming commercial real estate loans than it had in equity capital, according to Kanas. Its share price had plummeted to about $2 from $25, he said.
Newspapers were running negative headlines, and the company's shareholders were angry. Kanas was also personally insolvent, having thrown all of his investments into the stock of his company.
"A lot of borrowers — I don't want to say speculators — but they were taking risks, and we went right along with them," said John Bohlsen, who served on North Fork's board at the time and, for decades, was one of Kanas' closet deputies.
"There was nobody to shift the blame to," Kanas said. "I was in charge of the company all that time and supervised that activity."
It was Kanas' first big challenge as a bank CEO, after nearly two decades.
He hired an executive who had made a name for herself cleaning up banks in Texas during the savings and loan crisis of the mid-1980s. Together, they assembled a team of workout specialists.
Kanas handed over the day-to-day responsibilities to Bohlsen and spent the next two years working out loans.
Though the experience proved valuable, his belated recognition of the risk is a regret. "I should have abandoned that strategy long before I did," Kanas said. "It almost cost us our corporate life."
When he talks to young employees, he said he always shares this lesson: "Never, never, never give up. If you're honest and competent, and if you return to work, you can fix just about anything."
'Gentleman bankers don't do these kinds of things'
After getting North Fork back on solid ground, Kanas embarked on a streak of acquisitions and became one of the industry's most well-respected dealmakers.
In the years following the early-1990s recession, Kanas scooped up several small savings banks on Long Island that struggled to recover. Doing so provided him with a big base of cheap deposits — and fuel for North Fork's rapid asset growth at the time.
In total, Kanas completed 12 acquisitions before he sold North Fork in 2006, according to the FDIC. The deals allowed him to grow his company from a tiny community bank to one with nearly $60 billion in assets — what today would be considered a systemically important financial institution.
He created a "regional powerhouse," Fitzgibbon said. "It was really remarkable."
Kanas insisted that building a big bank wasn't one of his primary ambitions. It just happened slowly over time.
"The theory was always, if you just pile on one good acquisition after another, that eventually you'll have a larger, high-performing bank," Kanas said.
In addition to buying whole banks, North Fork developed a side business of investing in banks that it identified as potential sellers.
Kanas made headlines with a particularly aggressive investment in the early 2000s: his hostile and complicated attempt at a takeover of Dime Savings Bank in New York City.
"I was unbridled in those days," Kanas said, laughing. "I got called a lot of names in the business, and would get letters from people that would say, 'Gentleman bankers don't do these kinds of things.' "
North Fork bought a "large piece" of Dime at the time at just under $20 per share, Kanas said. With an additional $250 million in financing from FleetBoston, now part of Bank of America, North Fork made an unsolicited takeover offer.
Dime's board rejected North Fork's bid. Looking to stay independent — and get away from Kanas — the company pursued an acquisition of Hudson United, a small bank in New Jersey.
The Hudson merger agreement was eventually terminated, after Dime shareholders voted it down. Dime's share price, however, which had tumbled amid drama, remained stubbornly low.
"Our investment got cut in half, which we were very unhappy with," Kanas said.
So Kanas mounted a proxy fight against the company, calling on shareholders to vote against several board members.
Tensions between the two companies escalated. In the summer of 2000, Dime held its annual meeting at Chelsea Piers, along the Hudson River in New York. When North Fork executives arrived at the building, they were blocked from entering, according to Kanas.
So he responded with a banker's bravado: by renting a boat and pulling it up to the dock outside of the meeting. Once there, North Fork executives hooked up their computers so that they could keep tabs on the vote results, he said.
Kanas was ultimately allowed to enter the meeting, where he spoke out in favor of his company buying Dime.
North Fork later that year cashed out its shares and dropped its bid, after Dime's stock price climbed on the heels of a $238 million investment from Warburg Pincus, the private-equity firm.
Dime was sold later, in January 2002, to Washington Mutual, the thrift company that collapsed during the crisis and was taken over by JPMorgan Chase.
Asked whether he burned bridges in the industry from the hostile confrontation with Dime, Kanas said: "I'm sure, but not intentionally. It was not something that the banking community thought was particularly acceptable."
North Fork becomes a seller
Kanas' final bank acquisition at North Fork raised alarm bells in its C-suite and ultimately pushed him to sell the company he had spent three decades building.
North Fork in February of 2005 acquired GreenPoint Bank, a move that added branches in New York City, as well as a specialty in residential mortgages.
"We bought it for two reasons — we liked the business at the time, and they had a substantial deposit base," Kanas said.
But Kanas and his team soon grew uncomfortable with risk-taking in GreenPoint's mortgage unit, particularly after sitting down with brokers to learn how the loans were structured. GreenPoint specialized in jumbo loans, as well as Alt-A mortgages, which didn't fully document a borrower's income or assets.
"We saw how they were putting packages together, and became really nervous, and as time went on, we became even more nervous with the business they were doing," Bohlsen said.
Kanas reasoned that if the mortgage market turned, North Fork would be highly exposed to losses. So he told the board that it was time to find a buyer.
He spent most of 2005 meeting with big-bank CEOs who had previously expressed interest in acquiring North Fork. Capital One ultimately prevailed. Like many of its big-bank peers at the time, it was bulking up on home loans.
Several months after the deal closed, in August 2007, Capital One closed down the GreenPoint mortgage unit, as the subprime mortgage meltdown began rippling through the economy.
Fitzgibbon said North Fork's acquisition of GreenPoint was somewhat of a blemish on Kanas' otherwise remarkable streak as a regional bank CEO and dealmaker.
By the same token, though, Kanas' decision to sell North Fork shortly after the GreenPoint acquisition reflects his hard-earned understanding of how suddenly markets can turn — just like they did in the early 1990s.
"Absolutely, having the background of having almost failed" gave Kanas the confidence to pull the trigger on the Capital One sale, Bohlsen said.
After a short stint at Capital One, Kanas became an investor during the financial crisis, partnering with WL Ross — the private-equity firm founded by now-Secretary of Commerce Wilbur Ross — to hunt for failed banks.
But Kanas returned to the banking business in a big way in May 2009, when he and a group of investors won a bid to buy BankUnited, one of the biggest lenders in Florida, after it had collapsed under the weight of bad mortgages.
Kanas said he was grilling hamburgers one evening in his backyard on Long Island when he got a phone call from Sheila Bair, chairman of the FDIC at the time. Bair told him that his investor group — which also included firms such as Blackstone — had won its bid for BankUnited. In order to take it over, Kanas would have to be in Florida by the next morning.
"I got on a plane and flew down in the middle of the night," Kanas said.
The next morning was like nothing he had ever experienced. Kanas recalled showing up at a hotel ballroom that served as the command center for the FDIC, which had spent the previous evening putting "Closed" signs on BankUnited's branches.
The agency walked him through the logistics of where to go and what to do. Within hours, Kanas and two of his deputies, Bohlsen and Singh, arrived at BankUnited's headquarters, where a crowd of protesters and police officers had gathered.
They took the elevator to the executive suite, and the reality of the whirlwind acquisition began to set in.
"We walk in at 8 o'clock in the morning, and take the elevator upstairs and say, Which way is the men's room? How did I get a good cup of coffee in here?" Kanas said, laughing as he recalled the excitement he felt.
He and his team got to work right away, shifting BankUnited's strategy away from residential mortgages and focusing on business lending instead. They also recruited scores of new lenders, including by posting newspaper ads — like one in American Banker — calling on unhappy Florida bankers to quit their jobs and defect to BankUnited.
"That was probably the most exciting thing that I've ever been through in business," Kanas said.
What may have been most crucial was that Kanas had negotiated a loss-sharing agreement, under which the FDIC agreed to share 80% of the first $4 billion in losses, and 95% of any further losses.
The agreement gave Kanas and his team runway to grow. Just over a year later, in early 2011, he took the company public, and the private-equity backers eventually sold their stakes. He then came back to his home turf, expanding to New York in March of 2013, and buying the $490 million-asset Herald National.
So far, the Herald deal has been BankUnited's only bank acquisition since the crisis.
Though Kanas initially intended to grow BankUnited through acquisitions — as he had with North Fork — he was ultimately stymied by a tough market. There were no attractive targets selling for the right prices in Florida.
"It was frustrating to him," said Fitzgibbon. "The regulatory environment changed after the last recession" in a way that stifled bank deals.
Looking ahead to what's next
As Kanas looks toward his next venture, he is leaving BankUnited in solid shape.
The company, now run by Singh, has carved out a commercial niche in its East Coast markets, and expanded its loan book at a time when growth has been hard to come by. At midyear, loans were growing at a double-digit pace from a year earlier.
Still, challenges lurk on the horizon. Regulators have recently raised red flags about commercial real estate concentrations across the industry — a big business for BankUnited. Pressure to curb the portfolio's growth may put a damper on the company's ability to grow loans in years ahead.
BankUnited, along with several New York lenders, has also run into problems with its taxi portfolio, as the rise of car-sharing apps, such as Uber and Lyft, has driven down the value of medallions.
As of June 30, chargeoffs in the company's taxi book climbed by more than fivefold from a year earlier, to about $6 million.
For Kanas, the recent problems with taxi lending only underscore the importance of remaining agile. For years, of course, medallion prices soared, as yellow cabs had a monopoly in the New York City market.
"Nobody had ever heard of Uber, right?" Kanas said, chuckling.
But the world changes quickly — and, to stay successful in banking and finance, you have to keep up.
"You have to keep checking your own pulse once in a while, to make sure it's still beating," Kanas said.