The past year or so has been a busy one for BMO Harris Bank in the Milwaukee-area market.
The Chicago-based company — the No. 2 market share leader in Wisconsin — has certainly made news, revealing plans in December 2016 to build a 25-story class A office tower in downtown Milwaukee, a development that will notably alter the city's skyline.
The tower, which will be built next door to BMO's current office building at 770 N. Water St., is expected to be completed by 2019 and is just one of several projects the firm has under its belt for the region.
During the Milwaukee Business Journal's Power Breakfast on Sept. 22, BMO Harris CEO and president David Casper talked about that new building and how the company sees its future in Wisconsin. He also discussed the continuously consolidating banking industry, why BMO decided to rebuild in Sherman Park after its original branch was damaged in the August 2016 civil unrest, as well as the bank's new role as a foundational sponsor at the new Milwaukee Bucks arena — a piece of news he announced during the Power Breakfast.
Q: You’ve been a longtime supporter and a sponsor of the BMO Harris Bradley Center for the past number of years. Are you going to acquire the naming rights for the new arena and if not, we hear you have an announcement to make?
"For starters, we’re a huge fan of the Bucks, we are. I’m a huge fan of the Bucks. It’s a fantastic franchise and we’ve been a supporter for a long time. We are not going to have our name on the top of this building, but our name is going to be everywhere in the building.
"We are going to be announcing later on (Sept. 22) that we are going to be one of the founding sponsors, or founding partners, of the Bucks. We were very impressed with Sen. (Herb) Kohl and how he moved the team and brought it here, kept it here and then divested in a way that allowed for Milwaukee to have a great future. We’ve been a partner all the way through that and we can’t wait to be more of partner…"
Q: Why did you make this choice? Why not the naming rights?
"Well, we had the naming rights and I think some of you remember when we partnered with M&I, there was an opportunity to be, in essence, a bridge for the Bucks. They were still trying to figure out how to stay in Milwaukee, what they were going to do, how to sell them and who was going to buy it. It was critical that that option be available. And as a long-term partner of the Bucks, we were happy to help out and provide some capital on a bridge basis. We knew there would be a new arena at some points, so we said ‘Hey we can do this. This will help the community, it will help us, it will just help stabilize the Bucks.’"
Q: Recently Green Bay-based Associated Bank announced its intention to buy Brown Deer's Bank Mutual for $482 million, essentially bringing together the largest Wisconsin-based bank with the third largest. How do you expect this transaction to alter the banking market in the region?
"I think it’s always a good thing when banks get together and it makes sense. I don’t know if it’s going to alter the state of banking in southeast Wisconsin. And as you reported, there's going to be some (branch) consolidation. But, we’ve got a lot of competitors — and they are all good competitors — we like doing business here and we wish them every success — except in the case that it’s against us. That’s all I can say. It’s a fine bank."
Q: Is consolidation something that you’re looking at? How do you see your future over the next few years?
"Bank of Montreal bought Harris Bank in 1984 and about 30 seconds after they signed the deal, they really set their sights a little bit north to Milwaukee. Jim Wigdale (former CEO of Marshall & Ilsley Bank) tells this story better than anybody — he said, ‘Basically every year they would either come down from Toronto or they would come up from Chicago.' There would be a group and they would meet with Jim and his predecessor or successor and they would (talk) through and say ‘It would be fantastic if we could get together with M&I. It would be a great powerhouse in the Midwest.’ And Jim would listen and then he’d say, ‘You know you’re right, it is a fantastic combination.’ Then he would get everybody really excited and then he said, ‘We’ll buy you.’
"Finally, we got our prize. And we think we’ve gotten lucky. We always look at combinations, we always do. We would be crazy not to. Wisconsin is a great market. That’s the only news I’m going to make today."
Q: Do you expect banking regulations to change during the Trump administration? What are your thoughts on the future of the Dodd-Frank Act of 2010 under the new president?
"The bank stocks, as you all know, got a huge bump after the election and I don’t think most banks even thought Trump had a chance. But when it did, then all of the sudden, the fact there would be the possibility of lower taxes, less regulation, and perhaps a little higher rates, got all banks a little frothy in terms of their stocks. A lot of that really hasn’t happened.
"People pound on Dodd-Frank all the time and say it’s terrible and lot of things. And there are issues with Dodd-Frank, but one of the really good things (about it) is that it forced the banking system to have more capital and that has worked. The banks have more capital. Big or small. And that’s good, that’s good for the economy.
"It allows for the constant and continuous — although they go in cycles — bumps that go against the economy. So there’s a lot of things about Dodd-Frank that should and could be fixed. Less regulation is critical. We have a number of directors in the audience today from Milwaukee and they would say — and I would agree — that the focus the regulators put on the board, it was almost like they were running the banks for a while. And that doesn’t make sense. Management has to run banks. The board has to oversee.
"Things that can get us back to business, back to growth, are all positive and I think there are some good things on the horizon. Whether they get through or not, we’re not sure. It’s a big bureaucracy so even if somebody at the top says we need to change some things, there’s a (few) people in the bureaucracy that would push back. So I think it’s going to be positive, I think having a strong banking system, whatever bank you’re in, is really positive for the economy and I think, while we have more capital, there has been certain parts of the regulations that have absolutely restricted banks from making loans they should have made, whether it was a mortgage or a small business. And that’s not good. Banks can fail, it’s OK if they fail. You just don’t want the government to bail them out."
Q: In August of 2016, your branch in Milwaukee's Sherman Park neighborhood was damaged in the civil unrest. Was there ever a thought of not opening a new office in Sherman Park?
"Yes. I mean when I first heard about — and I knew where it was on Fond du Lac (Avenue) — I was so surprised. This is a great community. How can this happen in Sherman Park, right next to a police station? But I don’t think we ever seriously thought about it. You know you have, to as a bank, you have to look at the return on investment and you know people question branches all the time. But there were a couple minutes of 'maybe we should not be in it,' but I think our local leadership immediately said, ‘Of course we're going to do it.’ And everybody agreed. it made sense. So we said ‘We're going to go.'
"I remember going with (Milwaukee BMO Harris executive) Jud Snyder about a week afterward and we set up this (temporary) branch. It was great to do it so quickly. We had this drive-through that all of a sudden became a branch. People crowded in a very small room. But that made me feel like 'This is good.' People in the community needed it, they needed a place to go get money; not everybody uses their tablet or their phone to get money or move money."
Q: Why was it important for you to be there?
"Well, you’re as good as the communities you serve. I guarantee you there were some financial people in the company that said ‘Hey, the ROI is terrible – take the insurance money and get out of town,’ but nobody at the senior level, because it's just not the right thing to do. If you’ve been around for 200 years – and as I said, we’ve made every mistake possible in those 200 years – we're probably not going to make those mistakes twice. It would have been a mistake to leave Sherman Park."
Q: The new Sherman Park branch is smaller than the old one, and obviously bank branches are changing and mobile banking is becoming more prevalent. How do you see the rise of online banking and mobile banking affecting your branch footprint in the future and in Wisconsin?
"Well our equilibrium is always moving. I think we are in a stage now where we’re in a pretty good spot. Some of the branches we own and some of the branches we lease. What’s clear is that we don’t need as much space as we used to. Not as many people come in and many people that come in, they’re just using the ATM. But we still need them. People make important decisions in life and actually want to see a human being. Some do. Some don’t care. Some would prefer not to see anyone. But we have really good branches. We try to have them compact. We have what they call a ‘smart branch,’ where there is really not much human interaction at all.
"But when you’re buying a house, you want to talk to somebody. With wealth management clients, you actually want to talk about your financial plan or you want to say, ‘Here’s where I am today and here’s where I want to go.’ We think having a physical presence where people can go is a good thing. So I think we’re at the right spot. I think, if anything, they’ll be smaller, but not a lot fewer."
Q: As you looked at building your office tower in Milwaukee, did you have any thoughts of not being in downtown? And how did you end up being where you are?
"It was getting point to a point where we knew we would have to do something at some point and, as we were thinking, we were seeing all the buildings going up in Milwaukee. I give great credit to our developer Mark Irgens. Mark had just done a building down by the lakefront and we thought 'Well that would be nice.' We looked at a bunch of different locations. We wanted to be close (to our current tower.) We can’t leave the building we’re in and have it just go down and have it be taken care of somebody who wasn’t going to take care of it. We like the location we’re in, although we went and looked others.
"And a lot of people gave us a lot of ideas, but Mark’s idea of ‘Hey, stay here, take the parking lot down and build the tower there’ that really solved everything and it solved the really important part of what do we do with our old building? A lot of our employees worked there their entire careers. And that building is going to get repurposed. Mark’s doing a great job. We are watching, too, because we all have a vested interest in making sure that that building and our new building are top-notch.
"So, there was never any consideration of not having our main headquarters in Milwaukee. We have 3,000 employees in southeastern Wisconsin, who are not all going to be there by the way. But I think that it’s going to be an important place, we’ll have a nice new tower. When we did get together with M&I, we put a sign at the top of our building —if you’re standing on the 20th floor, you can actually see ‘BMO’ — but it’s not very big and we didn’t want it to be big.
"(At the new building) we’ll have a bigger sign and people will know it will be the BMO tower and there’s also room for other people and we have a lot of interest from other tenants. It’s going to be a neat building and I think people will be proud of it. It will fit in very well with the skyline of Milwaukee."
Q: As you add that new building, and talk about growth, is there any plan to add more employees here?
"Sure, we’re always adding. If I look around at a lot of my colleagues here and I add up all the people that they want to hire, we would fill this building. We’re always going to grow, we’re growing throughout the United States. Wisconsin, as I’ve already said, is a huge part of our market, so it would be inconceivable to think that we were not going to continue to grow. But what we’re not doing is consolidating all of our Milwaukee offices into this office."
What Casper said:
On whether BMO Harris considered not rebuilding its Sherman Park branch: "I guarantee you there were some financial people in the company that said ‘Hey, the ROI is terrible – take the insurance money and get out of town,’ but nobody at the senior level, because it's just not the right thing to do."
On becoming a foundational sponsor at the new Milwaukee Bucks arena rather than buying the naming rights: "We are not going to have our name on the top of this building, but our name is going to be everywhere in the building."
On whether there is still a need for bank branches: "People make important decisions in life and actually want to see a human being. Some do. Some don’t care. Some would prefer not to see anyone."
On BMO's new downtown Milwaukee office building: "There was never any consideration of not having our main headquarters in Milwaukee."
This article was originally published in the Milwaukee Business Journal.