Banking on downtown

As downtown Milwaukee’s population of affluent condominium residents grows, so to is the roster of financial service companies eager to serve them.
Several banks have opened new offices in downtown Milwaukee in recent years, and two banks new to the Milwaukee market will open their downtown offices this year.
The new banks, Irwin Union Bank and The PrivateBank, and Ozaukee Bank’s Business Center, are targeting the increasing number of affluent citizens inhabiting the city’s new condominiums, as well as the high-end commercial banking market downtown.
The leaders of those three banks are former U.S. Bank executives, all of whom had worked together. All three say the downtown banking market is strong enough for them to operate in 2005 and beyond.
In fact, they’re banking on it.
Ozaukee Bank opened its downtown Business Center at 225 E. Mason St. in 2003. William Werner, president of the downtown division of the Ozaukee County-based bank, said the bank wanted to reach out to the high-end business community – offering personal banking, commercial banking and business lending to those with annual household incomes of $150,000 or more.
The Business Center offers those services in an office setting, unlike a typical retail bank environment, Werner said.
The second goal was for Ozaukee Bank to establish a presence in Milwaukee’s financial center.
"We were interested in locating in the financial district, to be able to participate in this community," Werner said. "We wanted to say that Ozaukee Bank has a presence in the business district of Milwaukee."
Ozaukee Bank also believes in the long-term sustainability of the downtown Milwaukee market, Werner said.
"We think downtown is a good place to be," he said. "We’ve got to commit to where we believe the future lies."
Chicago-based PrivateBank will open an office on the first floor of 743 N. Water St. in downtown Milwaukee late this summer. The bank will have temporary offices open in mid-March to do business while remodeling work is being completed in its permanent facility.
The office will be PrivateBank’s first foray into the Wisconsin banking market. PrivateBank is targeting the narrowest market of the banking community, going after entrepreneurs and families with high net worth, according to Jay Williams, president of the PrivateBank Wisconsin.
"It’s the economic center for the state of Wisconsin," he said. "It’s where you find the headquarters for the major law firms and a lot of the key businesses in the state. You also find that people like working downtown. It’s a place that everyone can get to."
Williams said the downtown market will only continue to get stronger for his bank due to the increase in residential development – which will bring in more wealthy potential customers.
"Downtown will continue to get stronger," he said. "There is a lot of development, and an influx of high net worth people. The University Club and Kilbourn towers are being built, and with the Riverwalk on the river at night in summer, it’s a happening place."
Once completed, PrivateBank will be similar to Ozaukee Bank’s Business Center, which conducts the bulk of its business outside its offices.
Later this month, Irwin Union Bank will open its new downtown office in the former Gimbel’s parking garage, 555 N. Plankinton Ave.
Steve Corbisier, senior vice president of the Columbus, Ind.-based bank and president of the Milwaukee branch, said that while the new Irwin Union bank will be open for light retail operations, its goal is to tap into the commercial market and private banking business.
Downtown was the best choice for his bank to open its main operations, although it had operated from offices in Brookfield for about one year.
"It’s where we wanted to be," Corbisier said. "If we’re going to come into the market, we have to show a commitment to that market. And we have to be where the decision makers are."
Corbisier said the Plankinton Avenue location is beneficial because of its close proximity to Interstate 794 and thousands of drivers that will pass the bank every day.
Corbisier, like Williams and Werner, pointed to the increasing residential development in downtown as a key attraction for his bank.
They will find plenty of company.
In 2003, State Financial Bank moved its headquarters from Hales Corners to Water Street in downtown Milwaukee .
Robert Cera, president and chief operating officer of State Financial, said the firm’s executives wanted to make a statement by moving the administrative offices across the street from Milwaukee’s City Hall.
"We believe, being publicly traded, that to the investor world, there is a greater familiarity with being Milwaukee-based. Hales Corners is more difficult to identify with," Cera said.
As the bank has grown to more than 30 locations in Wisconsin and northern Illinois, Cera said it wanted to increase its commercial accounts and commercial lending.
"The significance is in a deal when you’re downtown – the prestige that comes with it," Cera said. "We want (clients) to know this is a serious office to us. As we’ve grown, we continue to have opportunities to deal with larger transactions."
Jamie Reeve, wealth strategist with Northern Trust, which opened its location at 526 E. Wisconsin Ave., in August 2000, said he’s not surprised that banks such as The PrivateBank and Ozaukee Bank’s Business Center have looked to downtown. Like The PrivateBank, Northern Trust targets high net worth families and individuals.
"Downtown is where most of the businesses are located, and the majority of our clients have operations here, as well the other client service like accountants and attorneys," Reeve said. "And Northern Trust would like to be located where the wealth is located."
Brookfield-based North Shore Bank has looked at several locations in downtown Milwaukee for a branch location, but it hasn’t found the right one yet, said Steve Steiner, senior vice president of marketing and retail banking for North Shore Bank.
"It’s on our radar screen," Steiner said. "If we saw the right situation, we would be willing to look at it again."
In addition to downtown Milwaukee, other sub-markets in southeastern Wisconsin are becoming attractive to bankers.
The north shore and the Franklin and Oak Creek markets are growing, Cera said.
He also said the bank is keeping a close eye on the eastern side of West Allis, where real estate redevelopment continues to focus on office and condominium development.
"There is a real opportunity for a bank to go in there, to be a major player in that market," Cera said. "We’ve spent some time looking at it."
After opening a new branch in Oak Creek last year, North Shore Bank is planning to open another new branch on South 76th Street in Franklin this year, and Steiner said the bank continues to examine Fox Point, Mequon, Sussex and Kenosha for future branch locations.
He said the bank is also examining Oconomowoc’s Pabst Farms development.
State Financial will open a new 5,000-square-foot branch inside a new office building which will be built on George Towne Drive in Pewaukee, Cera said. Cera, who lives nearby, also will have an office at the Pewaukee site, where he will work one or two days per week, he said.
While Irwin Union is focusing its attention on its new downtown office now, it will eventually consider other parts of the metro area for expansion, Corbisier said.
"When the time is right, we will look at all sides and make the best business decision for our shareholders," he said.
Although local banking officials are not predicting record earnings for their companies in 2005, they say this will not be a disappointing year.
Corbisier said interest rates will rise a bit during 2005, and the real estate market will continue to be strong – both locally and nationally.
"Interest rates are forecast to go up, but it’s nothing to prevent (the economy) from continuing to grow," he said. "I’m positive on the economy. The election is behind us, and nationally we’ll look at protecting the U.S. and commerce associated with it. And barring any unforeseen national disaster, I’m positive on the whole thing."
"There will not be extraordinary growth, but it will be solid," Williams said. "The value of the dollar is falling, which helps a lot of Wisconsin exports, which helps our manufacturing base."
Mark Furlong, president of Milwaukee-based M&I Marshall & Ilsley Bank, said the implementation of Check 21, a federally mandated rule that requires banks to be able to electronically transmit digital images of checks, will continue to be something to watch in the banking world this year.
"It will be an equivalent of when ATMs came in," Furlong said. "There will be a dramatic slowdown of business in the branches themselves and an increased efficiency and flow."
January 21, 2005, Small Business Times, Milwaukee, WI