Though BankUnited has failed, its name lives on.
The consortium of private-equity firms that bought the $13 billion-asset Coral Gables, Fla., thrift from the Federal Deposit Insurance Corp. last week has decided to keep the BankUnited handle. Experts said that was a smart call because the brand, though perhaps somewhat tarnished, carries significant weight in the Florida market — one of the country's busiest.
The state contributed 5% of the nation's deposits in mid-2008, according to the FDIC. South Florida — BankUnited's primary market, consisting of Broward, Miami-Dade and Palm Beach counties — alone contributed 2%.
Despite its widely reported problems in recent months, BankUnited never experienced a major faltering of its deposit base.
At the time of its failure, according to FDIC data, BankUnited had $8.6 billion in deposits, up 21% from the year earlier. Brokered deposits made up 4% of its deposit total.
"I spoke to people who were making deposits there earlier this week," Ken Thomas, a Miami banking consultant, said Friday.
"There were no lines to withdraw money, there were no runs. Everything has been calm."
Thomas said that South Florida's large senior citizen population is savvy; they understood that the FDIC covered their deposits up to $250,000 and knew their money was safe. They also knew BankUnited was paying higher rates on deposits.
"My mom and I were talking about her getting a CD through BankUnited just a few days before it failed," Thomas said.
One thing that helped make BankUnited popular among Floridians, however, does not bode well for the new owners.
Steven Reider, the president of Bancography, a consulting firm in Birmingham, Ala., said that at Dec. 31 BankUnited was paying among the highest rates on deposits in the country. This is probably something the new owners will focus on changing immediately, he said.
Such a change would probably prompt an exodus of customers who care mainly about rates, which makes the name continuity more crucial to preserving the brand equity BankUnited has developed through its 86 branches, Reider said.
"They are going to run off some of the pure rate-driven customers immediately," he said. "That makes it more important to not scare off your core customers by making changes. It is important to keep the things that you can consistent."
BankUnited marketed itself as Florida's local bank, with a palm tree logo and the slogan, "It's a local thing."
"Bank of America couldn't sell themselves that way," Thomas said.
Also, building a new brand would be expensive, experts said.
"They certainly have some repair work to do, but that is less challenging than building a new brand in an already crowded market," said Mark Hall, the president of the marketing firm Egoeast Inc., which has an office in Miami. "If you are Citibank, you'd slap Citibank's name on it, and you have 100 more branches in your network. That makes sense. It doesn't make sense if you have no brand and set out to create XYZ Bank."
Reider said that starting with "a clean slate" has many advantages but that BankUnited "is a big organization. That would be like 86 de novos all striving to get name recognition. The sheer physical cost of that is an impediment."
Besides, he said, this way the new owners can recast the story of BankUnited to play down its failure.
"They did fail, but they can play it as a rebirth," Reider said. "The name staying the same sends the signal that we are the same institution, we have some capital and new owners, but it is business as usual and consumers will take that cue."