Nevertheless, the coming consolidation predicted for Chicago seems likely to pass through the Big Four. The question is, when will it happen?
The chief holdup is pricing. Acquirers are stepping cautiously, afraid of getting snared by someone else's credit issues. They'd just as soon wait for a troubled bank to fail, and get guarantees from the Federal Deposit Insurance Corp. on the loans.
Wehmer says most Chicago banks looking to sell nowadays aren't worth buying. "We get at least one inbound call a week," he says. "The problem is, there's too much stress in their portfolios. Once we apply our marks, then either the pricing isn't good enough or we don't want them."
In one of Chicago's few recent, non-FDIC deals, Wintrust bought $390 million-asset HPK Financial in the city's Hyde Park neighborhood last September for 1.01 times book value. (Nationally, the average premium for bank deals in 2012 was just 1.13 times book value.)
"If you're a healthy bank, why would you merge now?" asks Todd Grayson, executive vice president of Chicago's $225 million-asset South Central Bank and a member of the Community Bankers Association of Illinois audit committee. "The premiums aren't there."
Still, the case for consolidating Chicago is strong. The metropolitan statistical area boasted $314 billion in deposits at the end of last June, fourth most in the country, according to the FDIC. But its 249 banks were the most of any MSA-including New York, which has four times the deposits.
The market share held by the top10 players, at 68 percent, is the lowest among the 10 largest markets in the country, according to a KBW analysis.
Competition at that level is fierce, and includes many of the industry's biggest names. JPMorgan Chase (JPM), BMO Harris Bank (owned by Canada's BMO Financial Group) and Bank of America, with their extensive local branch and ATM networks, are the top three banks, with a combined 40 percent of the area's deposits.
Competition from the next tier is equally daunting: Citigroup (NYSE:C), Fifth Third Bancorp (FITB), PNC Financial Services Group (PNC), Wells Fargo (WFC) and U.S. Bancorp (USB) each has between 1.5 percent and 4 percent of the market, and each wants more.
"We think we can be one of the top three banks in the market," says Joe Gregoire, chairman of Illinois banking for PNC, which has $11.7 billion in deposits and 152 Chicagoland branches. "Every line of business, whether it's wealth management, retail or corporate banking, is growing."
A cadre of slightly smaller out-of-towners, including Akron, Ohio-based FirstMerit (FMER), Associated Banc-Corp (ASBC) of Green Bay, Wis., and Minneapolis-based TCF Financial (TCB), is here, too.
"If you're a Midwest regional bank and can get just a small piece of Chicago, it can meaningfully change your growth trajectory," says Brad Milsaps, an analyst with Sandler O'Neill & Partners.
"It's not very profitable growth. It's expensive to operate there, and there's tons of competition," Milsaps adds. "But it's a huge market."
Chicagoland plays host to more than 9 million people, 30 Fortune 500 companies and 171,000 small businesses. The median household income, at $57,400, is nearly 15 percent higher than the national average.
While the secrets to success here are much the same as elsewhere-strong core-deposit relationships, prudent capital management, solid underwriting and the like-the sheer number of banks makes everything more intense.
"What works in another market will work here," MB Financial's Feiger says. "But you have to do everything faster, cheaper and better, because there's so much competition."