Remember Lewis Ranieri?

In the 1980s, Lewie was king of the mortgage-backed securities market. He headed the mortgage-backed department at

Salomon Brothers

back in the era when Solly was

the

trading gorilla of Wall Street.

In 1987, Ranieri was the first of many young turks at Solly to be chucked out by then-CEO John Gutfreund -- who, of course, got the boot himself several years later when the firm was caught manipulating U.S. Treasury bond auctions and then trying to cover it up.

Having joined Solly in 1968 at age 21 to work in the firm's mailroom, Ranieri was stunned to be shown the door by the firm where he had always been a boy wonder. But wealthy from his years at Solly and blessed with a sunny temperament, he picked himself up and went on.

His path since Solly has had ups and a few downs.

Perhaps the biggest downer came in the 1990s. He sponsored several private partnerships that raised $1.8 billion from small investors and placed the money in mortgage-backed securities. The aim was to deliver a low-risk return better than what investors could get in the Treasury market. It was a bust. The partnerships, like many others trying the same thing, guessed wrong more than once on the direction of interest rates. Investors lost hundreds of millions of dollars.

Ranieri, only 53, now focuses his attention primarily on

Bank United

(BNKU) - Get Report

, the holding company for a federally chartered savings bank based in Houston. (He also owns privately held

American Marine Holdings

, maker of Donzi speedboats and Pro-Line fishing boats. In his spare time, he serves as the campaign finance chairman for Rep.

Rick Lazio

(R., N.Y.) in his run for the

Senate

against First Lady

Hillary Rodham Clinton

.)

In 1988, in the midst of the savings-and-loan crisis, Ranieri and a small group of institutional investors took control of the then-ailing thrift through a private partnership called

Hyperion Partners

. They bought the savings bank for $90 million. In 1996, they took the thrift public in an IPO that allowed Hyperion to recover its $90 million and raised $182 million. The partnership currently owns about a third of the now-prosperous Bank United, which has a market capitalization of about $1.3 billion. Ranieri is chairman of the thrift, which he says is the largest in Texas with assets of nearly $18 billion.

Ranieri is rightfully proud of Bank United's turnaround. The bank has boosted earnings consistently in the 10% range and has moved aggressively to offer online banking and other financial services to customers. Bank United will launch a co-branded stock trading Internet site with

National Discount Brokers

(NDB)

this summer. Analysts at

Lehman Brothers

and

Friedman Billings Ramsey

have buy recommendations on the stock.

A Suffering Stock Price

None of this seems to have helped the stock price. It peaked at 56 1/2 in 1998 on takeover rumors but has been chopped recently by investors fearful of higher interest rates and increased loan defaults.

Clearly, this bugs Ranieri. "The overwhelming number of our commercial loans are secured, and most of our loans are for single family houses," he says. "We are one of the biggest consumer depositaries in Houston and we are a powerhouse loan production machine."

So why the lousy stock price? "The entire banking sector is undervalued," he says. "It's not glamorous. The problem is that value investors have not performed that well in recent years, and as a result there is less investor money going into bank and thrift stocks. So the stock price movement has been disproportionate to the basic business. I think the earnings multiple assigned to the whole group is too low." Bank United's P/E is about 9.

What about a sale to someone who wants to get into Texas in a big way? It can't be getting easier for smallish institutions to compete in a banking industry where to hold your primary account relationships they must provide banking, brokerage and insurance services.

In the past, Ranieri has said that as long as the bank could boost earnings at a healthy clip, he remained confident that the stock price would follow. When asked whether it wouldn't make more sense in this day and age to sell out, Ranieri said he couldn't comment on that kind of speculation.

But a friend of Ranieri's confirmed that Lewie definitely could have sold the thrift back in '98. Lewie decided not to, says the pal, because he saw a still-bright future for the S&L.

That was then, and this is now. Given the market's unwillingness to reward Bank United's superior earnings growth, one has to wonder whether Ranieri might not think seriously about selling his thrift if he got another offer.

It would appear that some professional investors have considered that possibility. Institutional investors held 83% of the stock at the end of March.

Bank United stock closed today at 31 3/16.