When he founded Lake Forest Bank and Trust in 1991 and then Wintrust in 1998, Ed Wehmer solidified himself as a true Leader With Courage. Much of Wintrust’s growth can be tied back to Wehmer’s efforts in overseeing its day-to-day operations and strategic initiatives. In a recent conversation, Wehmer was able to share a variety of insights with us regarding his approach to leadership and leaving a mark on the financial industry.
Value Drivers: Early on your career, you were told by a mentor to figure out how to merge banks and quickly found yourself doing just that all around the country, correct?
Ed Wehmer: Yes. But while I was finding a lot of success in bank acquisitions, it wasn’t a fun time for me personally. We had six kids at home. I was doing so much flying around the country that I was leaving Sunday night and coming home Saturday morning. It just wasn’t where I wanted to be.
Still, you had a love for banking.
I did. So after leaving that job, I moved to a position where I was a CFO for a couple of years, then hired away by an old client to help acquire ten banks. We built those banks up to be very profitable and I became President of the biggest one.
Sounds like a good place to be. So why leave?
At the time, we saw an opportunity in which many community banks had been bought up and again, I was never home and our family was growing. So every decision I made was based on quality of life. Life's too short and you've got to balance it well.
After doing some research, we found that people really missed their community banks. You see this cycle in bank acquisitions all the time: The big banks come in, change the culture, alter how the previous bank does things, commoditizes it, takes away personal service and essentially says, “That was nice but we're going to do it our way now.”
So you identified a need in that people still wanted a small bank delivery system – but how quickly did things come together after that point?
Quicker than you’d expect. My Chief Operating Officer and our Senior Lender helped me write a business plan in one night over a few beers and cigars – we joke today that one of the two or both might’ve forced us into this thing.
Soon after, I quit my job and around Labor Day in 1991, we opened up in 1100 square feet using a card table my wife brought over. By the end of the year, we had 11 people working in that tiny space.
Wow. Talk about your humble beginnings.
Absolutely. We really had no delusions of grandeur. It’s certainly scary when you have a house full of kids and you quit your job. Still, I figured I always could go do something else if it didn’t work out.
That's the biggest issue as I see it in that people will not want to take the risk or the challenge to go out and do something they’ve been thinking about for quite some time. People can say they're entrepreneurial but they really may not be able to handle it. You've got to be at least a bit of a risk taker.
How does one start a bank from scratch like that?
As Lake Forest Bank and Trust, we raised money and it took a significant amount to get the bank open. You’re also building a culture from scratch, which is nice because you really get to map out how you want to do that. We’ve stuck to the original plan for our business and culture.
I think we found something special in identifying good prospective customers who had been dislocated as a result of their banks being bought up by the bigger banks. They knew their communities well, so put together local boards and raised money from that. It became a repeatable process in Hinsdale in 1993, Wilmette in 1994, Libertyville in 1995 and Barrington in 1996. We were growing so fast. That’s when we took all of these various unit banks and merged them under one holding company.
Which is when Wintrust came into existence. But were you ever afraid that you were going to become the kind of big bank you’d strived to avoid?
Internally, we weren’t afraid. However, we knew we had to confront that perception in our customers because suddenly their local bank was now going to be part of a holding company. So we took great pains to assure them that we weren’t going to change and lose the local flavor to what we were doing.
Was that really the genesis, then, of why you maintained all the local charters and the names?
Partially, yes. We did a good job of positioning ourselves as a local alternative to big banks. Keeping the local names and the local boards in place was a very big part of that. We were trying to build up a culture and we wanted to ensure the management running each bank could feel empowered to make their own decisions too.
Speaking of culture, whenever we talk to CEOs about change, the first thing they consistently mention is that a new leader has to respect the culture and get in touch with it very quickly. You built a unique culture here at Wintrust but you’ve also brought in a number of people who didn’t know your culture right away. So how did you acclimate them to it? What did you tell them was allowed or not tolerated here?
Well, often times when you’re building a culture like this one, you look at all the things from your past life that you would and wouldn’t do. But then you’ve also got to start developing a culture of its own that you can stick with and people can buy into. I think you’ve heard my mantra in regard to culture, right?
Take the blame. Share the fame. Avoid the shame. Enjoy the game.
That’s what you’ve got to do. Most of the people we brought into our organization early on got that concept because they came from a community bank culture, which we were replicating in our own way. I think that feeling remains even as we've gotten bigger and bigger because we never thought that we'd be where we are right now. We just take it a day at a time and take whatever the market gives us without getting too far ahead of ourselves.
It’s a very entrepreneurial feel here. I’ve always hated bosses. I often say, “ Let’s agree on a plan at the beginning of the year and you go do it. And if you've got an idea you want to pursue, present us with a plan. Go for it. If it makes sense, we’ll tell you and if it doesn't, we'll tell you that too."
For a lot of people who haven't been able to be that entrepreneur elsewhere, it’s a terrific feeling. They get to actually do the things that they want to do and live that life. If someone coming into our environment expects that everything has to be structured for them, they’ll find it’s not a good fit because that’s not how we work. We’re a little more free form and it’s served us very well.
How does an entrepreneurial culture like Wintrust’s maintain its integrity in the face of new regulations? In the second part of our conversation with Ed Wehmer, we’ll dive into some of the biggest challenges our Leader With Courage has overcome, including what’s changed (and what hasn’t) as his company that started with 11 people has become a company of 4,400 people.
If you’re in a place where Ed was many years ago and building a new kind of company culture (or aiming to evolve an existing one), it’s smart to take our Leaders With Courage Self-Assessment. You’ll see where you stand on 26 attributes of leadership that can convey your strengths and weaknesses as you prepare to influence others to adopt new behaviors.