When the Lubar family recapitalized Ixonia Bank in 2012, the United States was still wading through the aftermath of a historic economic downturn.
The financial crisis, closely tied to the collapse of the housing market, left several banks, especially small banks, on the hunt for equity capital as they fought to recoup incomplete land and real estate development loans.
Sheldon Lubar, the founder and chairman of Milwaukee-based private investment firm Lubar & Co., was searching for investment opportunities in the small- to mid-size banking space. To aid the search, Lubar hired Lorrie Heinemann, who was secretary of the Wisconsin Department of Financial Institutions under former Gov. Jim Doyle.
Heinemann identified Ixonia Bank, based in the Jefferson County town of the same name, as needing capital, or as Lubar describes it, “financially troubled.” He bought Ixonia Bank, which at the time had six branches and roughly $270 million in assets.
“I talked to my colleagues and they thought I was a little crazy because nobody was doing it,” Lubar said. “And I said, well, that makes it even more of an opportunity.”
Lubar spent the first 13 years of his career working for Marine National Exchange Bank and Marine Corp. In addition to Lubar’s background in banking and private investment, he liked what he saw in Ixonia Bank’s staff and believed there was a lot of upside to the purchase.
“I felt very strongly that we could build this up,” Lubar said. “(Lubar & Co.) was taking small companies and building them into larger, more profitable and more successful companies. I felt we would be very capable of financing small- and mid-sized companies that would come to a bank like that.”
Eight years later, Lubar wants to capitalize on what he sees as another big opportunity for Ixonia Bank: the renaissance of downtown Milwaukee.
In 2017, Ixonia Bank revealed plans to open its first Milwaukee County branch in the heart of downtown. Those plans will take shape in January 2020 when Ixonia Bank opens its seventh branch in Foxconn Technology Group’s North American headquarters building at 611 E. Wisconsin Ave. in downtown Milwaukee.
The 4,000 square-foot, full-service location will focus on commercial banking and will be led by senior vice president and Milwaukee market manager Doug Ortyn, assistant vice president and client experience manager Karla Lauersdorf and commercial banking officer Patrick Lubar.
Founded in 1918, Ixonia Bank has branches in Ixonia, Dousman, Oconomowoc and Watertown.
Lubar is president and CEO of Ixonia Bancshares Inc., the bank’s holding company. According to its most recent filings with the Federal Deposit Insurance Corporation (FDIC), Ixonia Bank had 78 employees, $371 million in total assets and $1.8 million in net income at the end of 2018.
Milwaukee County now has 235 bank branches, which is 36 fewer than it had five years ago, according to the FDIC. The decline in branches is not surprising given new technologies, like mobile banking, that are driving changes in bank branch strategy. The advent of mobile banking has reduced branch traffic volume nationwide, which shows the ongoing evolution of the industry as bankers listen and react to the needs of their customers.
Bank mergers and acquisitions also play a role in some branch consolidations. Too many physical branches serving the same customers in a small geographic area can lead to branch closure.
Wisconsin Bankers Association president and chief executive officer Rose Oswald Poels said Ixonia Bank’s move to Milwaukee is not unusual given its footprint in southeastern Wisconsin. Even with several consolidations and mergers in Milwaukee County and competition from larger banks, Oswald Poels said there’s still a rich market for community banks to operate.
Other banks are noticing growth in southeastern Wisconsin and have doubled down on their presence. Town Bank is one example, Oswald Poels said. For financial institutions, an influx of businesses only adds to the allure of Milwaukee and Milwaukee County, she added.
“I think what it really demonstrates is that Milwaukee has really become over the last years a growth part of our state’s economy,” Oswald Poels said. “I think all of southeastern Wisconsin is a growing market opportunity for the financial institutions to take advantage of.”
Ixonia’s entrance into the Milwaukee-area market is a strategic move to not only capitalize on downtown’s growth spurt, but also to leverage the Lubar name and the family’s deep roots in the city.
“They have a network here that is second to none as far as business relationships are concerned,” said Dan Westrope, Ixonia Bank chairman and chief executive officer.
A look at Ixonia Bancshare’s board of directors reveals the extent of the family’s Milwaukee connections. In addition to Lubar and Westrope, the board consists of Fiserv president and CEO Jeffrey Yabuki, Major League Baseball commissioner emeritus Bud Selig, Lubar & Co. chief investment officer David Bauer, TMI Holdings vice chairman Kenneth Krei, Growing Minds founder and president Susan Lubar Solvang and Wag-Aero Group owner and CEO William Read.
Ixonia Bank hasn’t yet established a physical presence in Milwaukee, but the bank is already involved in several large projects, including The Huron Building, The Avenue and the Reed Street Yards apartments, Westrope said.
These visible projects, Lubar said, are a sign that changes occurring in Milwaukee have attracted people and companies to downtown.
“To have residential downtown, it’s a game changer,” Lubar said. “When you have people who work downtown and live downtown, that’s a sign of vitality in a community.”
The bank’s proximity to Foxconn’s Milwaukee office was a calculated decision and the result of a connection with the Foxconn team through David Lubar, president and CEO of Lubar & Co., Sheldon Lubar said.
“A major employer in this town … is going to be in the news,” Westrope said. “And whenever the TV camera takes a picture of the Foxconn building, they’re not going to be able to do it without taking a picture of the sign of Ixonia Bank.”
Westrope said the branch will use its location to engage small commercial businesses and manufacturers primarily, although he expects the branch to serve some consumers too. And while Ixonia Bank will be among plenty of competition in Milwaukee, Lubar and Westrope plan to use the bank’s size and local connections to their advantage.
“We have a local team of really good bankers that have been in this market their whole careers,” Westrope said. “We have the Lubar family that has been here their whole lives.”
Westrope said Ixonia Bank will sell “local decision-making,” while Lubar’s trademarked “professional ownership,” a philosophy applied to Lubar & Co., will be replicated with clients of the bank.
“Sheldon doesn’t make a living out of the businesses that he buys,” Westrope said. “He doesn’t drain them of capital and doesn’t look to them to provide him with his lifestyle.”
Lubar said most businesses don’t have professional ownership, which he described as business management with the sole purpose of improving the company.
“In the world of private equity, the idea is to build the earnings and sell it,” Lubar said. “That’s understandable, but that’s not our objective. Our objective is to build a bigger, better business that we’re proud of.”
