Activist Group Flags BankUnited's Lending Practices

A collective of New York neighborhood housing groups is fighting BankUnited's plans to expand in the city over concerns about its lending practices.

The Association for Neighborhood & Housing Development, or ANHD, claimed in a press release Wednesday that the $12.6 billion-asset company has failed to originate an appropriate number of loans for low- and moderate-income borrowers and African-Americans in two counties in Florida. The group also claimed that BankUnited (BKU) was ignoring low- and moderate-income neighborhoods as it plans to expand in the Big Apple.

BankUnited, which plans to start a major push into New York later this quarter, defended itself, though John Kanas, the Miami Lakes, Fla., company's chief executive said he had not yet seen the association's release. "We believe that we do a superior job in that area and we have no idea what this group is talking about," he said in an interview. Kanas, meanwhile, stated that his company had a strong CRA rating.

BankUnited entered New York last year after buying Herald National Bank. Plans to aggressively expand in the city were delayed after Capital One (COF), Kanas' former employer, filed a lawsuit alleging that he had violated a noncompete agreement. Kanas and a top lieutenant at BankUnited settled the litigation in June, though it barred BankUnited from opening new branches until February.

The association's release urged regulators to reject BankUnited's applications to expand, citing the company's Community Reinvestment Act record. The group claimed that BankUnited had not applied to open branches in any of New York's low or moderate income areas. The group "does not believe that banks with a documented history of troubling lending practices should be given regulatory permission to do business in our city," the release said.

ANHD claimed that BankUnited had originated less than 10% of its loans with low- and moderate-income borrowers in Florida's Broward and Miami-Dade counties, even though almost 40% of households in those counties fit the classification. The group also claimed that, in those counties, the bank made no loans to African-Americans in 2011 and just four a year earlier.

Kanas said he didn't have specific data on lending for those counties, though he said that BankUnited "takes its obligation to minorities very seriously" and believes "that our record speaks for itself." He said that several neighborhood groups had written letters to regulators in the past with similar allegations and that those claims were found to be "baseless" after an investigation.

ANHD is a membership group that includes 94 nonprofit neighborhood housing groups serving low- and moderate-income residents in New York. Efforts to reach the association were unsuccessful.