Its previous major rivals PrivateBancorp, MB Financial and First Midwest have been sold to out-of-town rivals in the past five years. PrivateBancorp is now CIBC US, a Toronto-based unit of CIBC. MB Financial is now part of Cincinnati-based Fifth Third. First Midwest is now Old National Bank, headquartered in Evansville, Indiana.
Wehmer took advantage of the gap to brand Wintrust as “the bank of Chicago.” He leaves with that nickname intact and a desire to keep it that way. Chicago’s future as America’s banking center, a legacy that was much stronger before the spate of local bank sales kicked off in earnest with Jamie Dimon’s 2004 sale of Chicago’s Bank One to JPMorgan Chase, based in New York.
Despite his conservative views, which may cause him to complain about local politicians, Wehmer is unequivocal. “I love this town. I love this state,” he says in an interview.
“We’ve never been for sale,” Wehmer says, adding that as a public company, Wintrust should always be open to looking at offers. He credits the bank’s unusual setup (it’s made up of more than a dozen separately chartered banks that serve specific parts of the metropolitan area, as well as southern Wisconsin) and tight-knit culture.
But he understands what will really preserve Wintrust’s independence: a healthy share price. “Our stocks are going to do very well,” he predicts. “No one will be able to pay us.”
Wintrust will pay Wehmer $12 million in equal monthly installments over the next three years as he assumes the role of chief executive and then senior advisor and founder. He would likely earn more by selling the bank, which is the traditional way Chicago bankers have built generational wealth for their families after decades of serving clients.
He will be based in Lake Forest in his new role. That will remove any temptation to look over the shoulder of Crane, who will be in Rosemont.
“I got my old office back,” he jokes.
In a letter to Wintrust staff today, Wehmer wrote: “While some of you may have wondered if I would ever leave, my time as CEO was always finite. Those who know me know that I always call it as I see it. This is the right time and Tim is the right leader.”
It was in Lake Forest that Wehmer, an accountant by trade, co-founded Wintrust in 1991 with Howard Adams, his partner for most of the 1990s until the two “divorced” in a battle over the future of the bank. Wehmer won over the board and employees, and Adams left.
Wehmer, 68, still remembers the separation as the most challenging moment of her time at Wintrust. Although he was the victor, it also meant that he had sole responsibility for steering the bank in the right direction.
“Fear is a great motivator,” he says.
During the 1990s and well into the 2000s, Wintrust was essentially a suburban bank located primarily in affluent suburbs. But that all changed for Wintrust, and its place within the Chicago market, with the sales of Bank One and LaSalle Bank in 2004 and 2007 to out-of-town giants, and then the Great Recession.
Wintrust was much better prepared to weather the housing meltdown than most banks, as Wehmer had withdrawn business loans a year or two before the 2008 financial crisis. That left far fewer bad loans to resolve and write off. Wintrust’s credit losses finished well below most Chicago commercial banks, and it was equipped to actively lend earlier than most of its competitors.
He called it his “rope-a-dope” strategy, after Muhammad Ali’s famous strategy of dodging his opponent’s punches and tiring him out before going on the offensive.
Wintrust hired some of the city’s best-known commercial bankers, such as John McKinnon, who had run middle-market banking at Bank One and, before that, American National Bank & Trust, and landed clients from JPMorgan Chase and Bank of America, the acquirers. from Bank One and LaSalle Bank.
He also bought dozens of small banks, some after regulators closed them, others in trouble, expanding Wintrust to communities throughout the area, as well as the city itself. Wehmer points out that Wintrust has never bought a bank with more than $1 billion in assets.
Some in the industry scratched their heads, especially as Wintrust grew, wondering why Wehmer would bother with acquisition targets that wouldn’t move the earnings needle. Wehmer saw them as easy to integrate, without the cultural challenges that often plague large-scale businesses, and as an efficient way to expand.
His insistence on maintaining separate chartered banks under their own names, such as Lake Forest Bank & Trust and Hinsdale Bank & Trust, among many others, also runs counter to conventional banking wisdom. Most bankers wanted a single brand and bank charter, a more profitable way to go to market and deal with regulators. Wehmer enjoyed provoking veiled criticism, pointing to the organic market share gains his banks were making.
“It is validated every time we record earnings,” he says.
In communities where Wehmer wanted Wintrust to be and the incumbent community banks chose to sell to another bank, such as Evanston and Oak Park, he simply planted the Wintrust flag there and lured retail and business customers with attractive deposit rates.
“We have always been very opportunistic,” he says.
After officially handing over the cane to Crane in late April, Wehmer will play an ambassadorial role for Wintrust, appearing at events and meeting with clients. “I’m going to stay active,” he says. For now, he is dealing with the side effects of back surgery four months ago that stopped him, but hopes to make a full recovery.
Wintrust shares were down 1.2% today at $89.43, but that was in line with a soft day on Wall Street and general weakness in bank shares. Investors seemed to take the transition in stride.
Analysts will surely lose Wehmer’s way with words on the quarterly earnings calls. In a place that can be, and often is, extraordinarily dry, he would make his questioners laugh with creative metaphors about the banking landscape, some of which might even veer into bawdy tone.
Asked if he planned to create some memorable moments on his last earnings call, which would be in April, he said: “You never know. You’ll have to dial and watch, honey.