With its latest acquisition of a failed bank, Wintrust Financial Corp. appears to have solidified itself as the company to watch in the Chicago area.

The $14 billion-asset Wintrust struck a deal with the Federal Deposit Insurance Corp. on Friday for the assets and deposits of First Chicago Bank and Trust, its third FDIC transaction this year.

"They are really coming out of the recession in a lot more offensive position than a lot of their peers," said Terry McEvoy, an analyst at Oppenheimer & Co., who initiated coverage on Wintrust earlier this week with an "outperform" rating. "They just have a level of energy that their competitors do not have, because a lot of them are still internally focused to a degree."

That situation is by design. Wintrust's chief executive, Edward Wehmer, often describes the company's intentional pullback from the market starting in 2006 — when it felt that the market was becoming irrational — as its "rope-a-dope strategy." Like Muhammad Ali allowing his boxing opponents to tire before launching a counterattack, Wintrust wanted to put itself in a position of strength in case of a downturn.

"It was obvious to us that a cycle was coming. Of course, I was called Chicken Little," Wehmer said. "We spent that time putting in the plumbing, so that we could be in a position to slingshot ourselves out of it. This is nothing more than a fulfillment of that strategy."

The Lake Forest, Ill., company was not immune to credit problems, but has managed to stay profitable except for two quarters since 2008. In December, it raised nearly $330 million of capital, which it used to redeem the $250 million of preferred stock owned by the Treasury Department, making it the only major Chicago-area community bank to have exited the Troubled Asset Relief Program.

"Getting out of Tarp really put them in a great place to separate from the pack and pull ahead," said Peyton Green, an analyst at Sterne Agee & Leach Inc.

Since the capital raise, the company has acquired the assets of two mortgage companies and an asset manager. It also picked up two small failed banks earlier this year. Analysts, however, said the First Chicago deal, which adds roughly $960 million of assets, will transform Wintrust.

The deal brings the company seven branches, with analysts expecting Wintrust to shutter a couple because of overlap. It adds new locations in the suburbs of Itasca, Norridge and Park Ridge, and beefs up Wintrust's city of Chicago count to 12. At the beginning of 2010, Wintrust had no branches in the city limits.

Additionally, analysts are expecting the company to book a bargain purchase gain — which occurs when a loss-share agreement exceeds the fair-market value of the portfolio — of somewhere between $15 million and $30 million in the third quarter. Wehmer declined to give the exact amount. The deal should bring Wintrust 15 to 20 cents of earnings per share annually over the next couple of years, Green said.

First Chicago is the failed experiment of the California private-equity firm Castle Creek Capital LLC. The firm is known for its track record of turning around banks and selling them for a big premium. In 2006, it bought an 89% stake in the $528 million-asset LDF Inc. Later that year, it announced its plans to buy BB&T Bancshares in Bloomingdale, Ill. In 2007, it adopted the First Chicago moniker and had high hopes of becoming the premier Chicago commercial lender, but that effort never gained traction. Credit problems intensified, and it appears from call reports that Castle Creek, which did not return a call for comment, infused the bank with $70 million of capital in attempts to keep it solvent. (Separately, NBC Holding Co., a $1.6 billion-asset company in New Orleans, announced late last week that Castle Creek has invested $27 million.)

Wehmer said the First Chicago deal is a real boost to Wintrust.

"It was a $550 million bank in a $1 billion suit. There were two good franchises that were put together here," Wehmer said. "Once we skinny it down to size, it is going to be a franchise that really helps us."

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