ABA Banking Journal - October 2009 - (Page 12)
Community Banking Pass the Aspirin: Employee suggestion programs and reviewing D&O insurance p. 14 COMMUNITY BANK INNOVATIONS “Rope-a-dope” sets up Wintrust for next round Localized strategy coupled with careful jabs pays off for multibank holding company, especially as means of bringing in large stable deposits intrust Financial Corp.’s leaders pride themselves on minimal use of wholesale funding, in the form of Federal Home Loan Bank advances and brokered CDs. What comparatively little the $11.3 billion-assets holding company uses serves asset-liability management purposes. The bulk of the company’s funding comes from what Wintrust’s 15 subsidiary banks in Illinois and Wisconsin can raise in their own markets. As the company’s 2008 annual report stated: “The right side of our balance sheet is the envy of our peers. We are predominantly core funded and do not need to rely as heavily on institutional funding as do a number of our competitors. We believe this equates to a very strong franchise.” This franchise gave Wintrust a leg up when large depositors began to get nervous last year. To understand why, you have to understand Wintrust. W Structure begets strategy Wintrust began with a single bank in 1991 and grew as much by new bank formation as through acquisition. It relies on local market dominance. As President and CEO Edward J. Wehmer explained at an analysts’ conference held in late summer, the company’s game plan has long been to push for the number one or number two market share slot for each of its subsidiary banks. The company’s banks serve the greater Chicago and Milwaukee areas. Analyst Tom Brown of Bankstocks.com likes the company, and, indeed, his investment firm, Second Curve Capital, has a By Steve Cocheo, executive editor position in Wintrust. He says Wintrust has made good choices in structure and strategy. If a bank isn’t going to be one of the five largest banks in the U.S., Brown believes, it is critical to stress local connections and decisionmaking, and also to think out of the box. Brown says Wehmer and David Dykstra, senior executive vice-president and COO, have a knack for finding ways to generate returns, even when it means doing unusual things. In the last year or so, Wintrust has been in conservative mode, determining not to put on weaker assets just to be able to maintain the rate of growth. “We saw opportunities for those who could weather the storm, and keep their powder dry,” said Wehmer. “It’s times like these that money returns to its rightful owners.” In the 2008 annual report the bank ran a table showing the first- or secondplace market status of each bank subsidiary. Wehmer’s statement deals in part with future lending volume, but Wintrust has been biding its time, in what management in 2007 dubbed its “rope-a-dope” strategy. 12 OCTOBER 2009/ABA BANKING JOURNAL Subscribe at www.ababj.com
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