Wintrust Financial Corp. is the fourth-largest bank holding company based in Illinois, but many of its customers wouldn't know it.
The Lake Forest's company's 15 subsidiary banks in Illinois and Wisconsin have generally downplayed the affiliation with their $9.5 billion-asset parent and sought to position themselves as hometown banks.
The problem with that approach - and Wintrust president and chief executive Edward J. Wehmer said recent surveys bear this out - is that many commercial customers do not realize that the banks are backed by a large holding company that can offer larger loans and sophisticated products and services, such as cash management and trust services.
Mr. Wehmer wants to change that. For the past month Wintrust has been sending letters to the top clients of its subsidiaries to tell them what Wintrust is capable of. So far it has sent out about 200 letters and gotten 25 to 30 clients to sign on for more products and services, Mr. Wehmer said
"On the commercial side, we are going out and letting people know that we are a $10 billion bank," he said.
Mr. Wehmer said he is counting on the initiative to generate more commercial and industrial loans, as well as fee income.
"As the real estate market dies down, we've got to diversify a little bit," he said.
Kevin K. Reevey, an analyst with BankAtlantic Bancorp Inc.'s Ryan Beck & Co. Inc., agreed. He said Wintrust's earnings over the past four quarters have been "disappointing," supported largely by one-time gains.
"They tried to supplement core earnings with securities gains and asset-sale gains and other nonrecurring items," Mr. Reevey said.
For example, Wintrust's first-quarter earnings rose 19%, to 76 cents a share, but its sale of the Wayne Hummer Growth Fund and the increase in the value of interest rate swaps - both one-time events - added 15 cents.
In the third quarter, Wintrust's earnings fell 25%, to $14.7 million. Diluted earnings per share fell 30%, to 56 cents. The company attributed the decline to a balance sheet repositioning.
Mr. Reevey said investors have treated the stock accordingly. In mid-April it hit a 52-week of $59.64, but late Thursday it was trading at $47.76, near its 52-week low of $45.08.
Wintrust is taking the right approach by emphasizing its capabilities only to its commercial customers, Mr. Reevey said.
"On the commercial side, when the commercial client realizes they are part of bigger bank, they feel more comfortable about the bank being able to do more for them," he said. "The retail customer for the most part is frustrated with the M&A activity that is happening in the industry. By keeping the name the same, the retail customer feels this is truly their local neighborhood bank."
Mr. Wehmer said that at some point Wintrust might add the tag line "A Wintrust Bank" to the names of its banks, but it has no plans to consolidate the banks under a single brand.
As long as he is running the company, he said, "we'll always have the separate banks."
