For the first time since the early 1990s, an outsider is at the helm of the family-run Taylor Capital Group.
The Rosemont, Ill., company announced Wednesday that it has named Mark Hoppe its new president, as well as president and chief executive of its $3.5 billion-asset Cole Taylor Bank.
Mr. Hoppe, who had most recently been executive vice president of LaSalle Bank and the chief executive of LaSalle Bank Midwest in Troy, Mich., is succeeding Bruce W. Taylor as president and CEO of Cole Taylor Bank. Mr. Taylor remains the holding company's chairman and CEO.
The management shake-up was announced shortly after Taylor Capital reported a fourth-quarter loss of $29.3 million and a $9.6 million loss for the year.
Much of the loss could be attributed to a $23.2 million goodwill writeoff it took in the quarter relating to the Taylor family's 1997 buyout of the Cole family.
However, like many community banks, Cole Taylor has had significant deterioration in asset quality recently amid weak demand for housing. It took a $31.9 loan-loss provision for the year, more than five times its 2006 provision, because of continued weakness in its residential construction loan book, which makes up more than 25% of its loan portfolio.
Loans to residential developers will remain an important part of Cole Taylor's business, but Mr. Taylor said in a conference call Wednesday that it aims to reduce its construction and commercial real estate exposure while beefing up its commercial and industrial lending.
Much of that responsibility will rest on the shoulders of Mr. Hoppe, a veteran commercial banker.
"Mark will help us to continue to build our commercial banking business," Mr. Taylor said.
Brian Martin, an analyst with Howe Barnes Hoefer & Arnett Inc. in Chicago, said the addition of new blood for a company that has been run by Bruce Taylor and his brother Jeffrey since the early 1990s could only be viewed as a positive.
Mr. Hoppe "will bring a new voice into the equation," Mr. Martin said.
Taylor Capital said Mr. Hoppe was not available for an interview. In a news release Mr. Hoppe said he was "thrilled and honored" to be "joining a company with a distinct brand, a talented team and ownership committed to becoming a leading middle-market commercial bank in Chicago."
Taylor Capital is the second Chicago banking company to hire a former LaSalle executive as CEO since Bank of America Corp. bought LaSalle from ABN Amro Holding NV in October. In November, PrivateBancorp Inc. named Larry Richman president and CEO of the holding company and chairman, president, and CEO of its lead subsidiary, The Private Bank — Chicago.
Mr. Richman had previously been the president and CEO of LaSalle Bank, Chicago.
In all, dozens of former LaSalle bankers let go after the merger have joined rival banks.
"We would have never had the opportunity to attract someone like Mark without the market disruption," Mr. Taylor said in an interview.
Still, Mr. Hoppe takes the reins at a challenging time.
Nonperforming assets stood at $78.3 million on Dec. 31, or 2.2% of total assets, compared with $33.6 million, or 1% of total assets, a year earlier. Much of that increase could be attributed to a single, $19.1 million loan to a residential developer with a project in the western suburbs of Chicago.
Howe Barnes' Mr. Martin said Taylor Capital's fourth-quarter loss — it posted a $12.1 million profit for the year-earlier period — was not a surprise given its widespread exposure to residential construction. In 2008, he said, he expects the company will "aggressively try to manage the exposure they have."
Taylor Capital is well capitalized by regulatory standards, and Mr. Taylor said in a news release Wednesday that he is confident it has "appropriate reserves to and sufficient liquidity to manage our business effectively through the current economic challenges."
Nevertheless, Fitch Ratings on Wednesday cut its rating to a notch below investment-grade, citing its exposure to the commercial real estate and residential construction markets "in a worsening credit environment."
