PrivateBancorp Inc. unveiled its biggest catch so far from a recent hiring spree of executives from LaSalle Bank Corp. by naming Larry D. Richman as its new president and chief executive officer Friday.
Mr. Richman, 55, who resigned as LaSalle's CEO last month, will start his new job today and will succeed Ralph B. Mandell as PrivateBancorp's president and CEO. Mr. Mandell, 66, will remain its chairman.
The hirings are part of PrivateBancorp's bid to increase its commercial banking business and diversify beyond its current focus on wealth management.
Over the past month the $4.5 billion-asset Chicago company has hired 27 commercial banking executives from LaSalle, which the $1.6 trillion-asset Bank of America Corp. acquired Oct. 1 from ABN Amro Holding NV. B of A is eliminating 4,000 jobs in Illinois and Michigan at the $120 billion-asset LaSalle.
During a press conference Friday, Mr. Mandell said many of the hirings have been finalized in recent days. Mr. Richman, who spoke on the same call, and Mr. Mandell said they intend to expand PrivateBancorp's commercial loan portfolio significantly over the next several years, though they repeatedly refused to provide a growth target. It currently has $700 million of commercial loans.
"Our goal is really clear," Mr. Richman said. "We want to build the preeminent private and commercial bank in Chicago."
Other key hirings announced Friday included Karen B. Case, Bruce Hague, and Bruce S. Lubin.
Ms. Case, 49, will head commercial real estate banking. She had been an executive vice president in LaSalle's commercial real estate department.
Mr. Hague, 52, will be in charge of national commercial banking. He held a similar position at LaSalle. Mr. Lubin, 54, will be the president of Illinois commercial banking. He had run a similar division at LaSalle.
On Friday, Mr. Richman said that with B of A's acquisition of LaSalle, "there is an incredible need and opportunity" for PrivateBancorp to bill itself as the leading commercial lender based in Chicago.
Mr. Mandell said that he plans to remain "fully engaged" as the chairman, and that his company would continue its hiring spree, with more recruits likely to come from LaSalle.
PrivateBancorp currently has about 520 employees in Chicago.
Mr. Mandell said that it would specifically look to recruit more middle-market commercial bankers, and that Mr. Richman would help in that effort.
"Larry is uniquely qualified to lead the organization. He is a highly regarded, proven business leader," Mr. Mandell said. "I could not be happier with this plan for succession. … I feel we are making the right investment in talent."
Daniel Cardenas, the director of research at Howe Barnes Hoefer & Arnett Inc. in Chicago, said Mr. Richman's hiring is widely viewed as a big win for PrivateBancorp.
"They got a very well-connected, strong leader," Mr. Cardenas said. "It provides Ralph Mandell the solid management succession that he wanted to see."
Mr. Richman said that he had been offered a role at B of A — though he did not elaborate — and that he had talks with several other companies in Chicago.
"There were many options. Those options included everyone you could imagine," he said. "I looked at an amazing number of opportunities. … But what it came down to was this really felt right."
However, PrivateBancorp's hiring push has a price. The company said it would incur substantial charges this quarter, primarily as a result of more than $15 million of sign-on bonuses paid to the new executives. It also announced the establishment of an equity-award program to bolster its recruiting effort. Under that program, the recent hirings have been given awards valued at about $26 million, assuming full vesting, and another $14 million has gone to current managers.
Income growth will continue to slow going into next year as the company absorbs the costs of the hirings and increases its loan-loss provision to account for growth in its commercial loan portfolio, PrivateBancorp said. For the third quarter it reported a 6.1% decline in net income from a year earlier, to $9.2 million, or 42 cents a share.
