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Wells Fargo, the listed San Francisco, California-based financial group, would like to increase its retail bank presence in the Midwest and Texas, said Bruce Helsel, head of corporate development.
Wells Fargo sees Chicago, Illinois, as a city with good demographics, and whilst not a high priority would like to increase its presence there through acquisitions, Helsel told this news service in an interview.
Two industry sources named Northern Trust, Wintrust Financial, MB Financial, Taylor Capital Group and Bank of Highland Park Financial as potential Chicago area targets for Wells Fargo. Wells Fargo’s interest comes amid increased merger activity in Illinois, with Bank of America agreeing to buy LaSalle Bank from ABN Amro, and National City announcing its acquisition of MAF Bancorp on 1 May.
Helsel said Wells Fargo would have been interested in Chicago-based LaSalle but would have struggled to justify the purchase price. LaSalle would have helped Wells Fargo increase its presence in Michigan, where 35% of LaSalle’s business is, Helsel added. Wells Fargo only has a very low market share in Illinois deposits – about USD 1bn – and would like to increase that, said Helsel.
Wells Fargo may do so with an acquisition in Illinois or in contiguous areas, such as Missouri or Kansas, from where it would manage its Midwest expansion, he said. Wells Fargo will buy where “we can find the right deals,” Helsel said.
Two industry sources said Northern Trust and Wintrust Financial could be two ”meaningful” larger-scale Chicago-area acquisitions for Wells Fargo. Northern Trust, with a market cap of about USD 14.2bn, has asset management and fund operations that could benefit Wells Fargo, the sources said, as well as a presence in the state of Michigan. The NASDAQ-listed, Chicago-based Northern Trust has not indicated that it is for sale. Banking consolidation in the Chicago-area has increased speculation that Northern Trust could be acquired, including a recent media report quoting Bank of America CEO Kenneth Lewis saying it was doubtful Northern would be able to stay independent.
NASDAQ-listed Wintrust, the seventh-largest bank holding company in the Chicago-area, with more than USD 9.5bn in assets, could give Wells Fargo a significant local presence, the sources said. With 45 Chicago-area branches, including a few in Wisconsin, the sources said that Wintrust’s concentration in affluent northern and western Chicago suburbs could be desirable for Wells Fargo. Many of Wintrust’s north suburban locations are largely near or contiguous to those of Wells Fargo, the sources said. Wintrust has a market cap of more than USD 1.1bn.
The sources said that NASDAQ-listed MB Financial, with a market cap of approximately USD 1.25bn, would provide Wells Fargo a substantial number of Chicago and suburban branch locations. With almost USD 8bn in assets, MB has approximately 70 locations, almost all in the Chicago-area.
The sources identified Taylor Capital Group and Bank of Highland Park Financial, parent of First Bank of Highland Park, as potential smaller acquisitions for which Wells Fargo has often shown a preference. One of the sources described the privately-held First Bank as ”in some ways a very mini Wintrust,” due to its strong north suburban roots. It has assets of more than USD 1bn.
Taylor Capital, with a market capitalization of nearly USD 340m, targets privately-held, small businesses with revenues up to USD 50m, according to the company. Its Cole Taylor Bank locations include three in Chicago and others that stretch from Orland Park in Chicago’s south suburbs to northwest suburban Wheeling. Taylor has assets of more than 3.3bn.
Earlier, at an investor presentation in Seattle on Thursday, Helsel said: “The markets in Texas are difficult because it’s so fragmented and the competition is enormous. We’re trying to buy but there’s a lot to buy and there are a lot of sellers and their expectations are higher. It’s somewhat similar in Chicago. It’s very fragmented.”
He said Wells Fargo would continue to look for buying opportunities throughout its footprint although price expectations “are still at a high clip for us.” Deals are being eased because sellers now have additional confidence in Wells Fargo stock, Helsel noted.
Wells Fargo is completing two recently announced Californian bank acquisitions – the USD 645m purchase of Placer Sierra and the USD 1.5bn purchase of Greater Bay Bancorp.
“We continue to look at a number of non-bank acquisitions. Our insurance subsidiary does about one a quarter,” he told investors. Non-bank acquisitions would include commercial real estate brokerages, asset-base lenders, and small investment banks, he said. “We continue to look across all our businesses.”
Wells Fargo feels it has enough opportunity to grow in its current footprint and resists suggestions from analysts that it should make its retail banking network national with an acquisition east of the Mississippi River. Helsel said Illinois was close enough to the Mississippi for it not to be considered the eastern US.
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