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Sunday, 30 August 2015 22:00

United Bank bucks industry trend with a focus on new branch development

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Art Johnson, president and CEO of United Bank of Michigan Art Johnson, president and CEO of United Bank of Michigan COURTESY PHOTO

GRAND RAPIDS — United Bank of Michigan plans to enter the Ottawa County market early next year with a new branch in Jenison, the first step of what could become a broader footprint expansion for the bank over the next few years.

The Jenison branch, planned for what is now an optometrist office on Baldwin Street, stems from a growth strategy by the Grand Rapids-based United Bank to take advantage of a strong local economy and any customer migration resulting from recent bank merger activity in the market.

“All of West Michigan is doing pretty well right now and we are exclusively a West Michigan business, and we need to kind of expand our footprint a little bit,” said United Bank Chairman and CEO Arthur Johnson. “The local economy will support growth, and we certainly want to be able to take advantage of our share of that.”

The bank will renovate the office for the new branch this winter and the location could open in the second quarter of 2016, Johnson said.

The privately-held United Bank has 11 offices in West Michigan — six in Kent County, four in Allegan County and one in Ionia County. The bank had total assets of $506.8 million as of June, according to a quarterly financial report filed with the FDIC.

Johnson believes the bank can sustain 8 percent to 10 percent annual asset growth “for as long as the economy stays kind of the way it’s going right now.” Assets from June 2014 to June 2015 grew nearly 7 percent, according to FDIC financial reports.

United Bank’s deposits totaled $389.0 million at the end of the second quarter, and the bank reported mid-year net income of $1.8 million.

Opening a Jenison location in eastern Ottawa County “kind of completes the circle for us” in the West Michigan market and gives the bank a physical presence in “a very logical location,” Johnson said. The bank had “been looking for a while” for a new branch location in the Jenison-Grandville area.

“It makes a lot of sense for us,” he said. “There are a lot of rooftops in the area. We’re a locally-owned, locally-managed business, and people are paying a lot more attention to local these days.”

Further branch development could come in the future by “filling in the holes in our existing footprint, as well as expanding it,” Johnson said. United may also look to acquire an office from another bank, he added.

“We have all of these tools and resources that we need to embark on a reasonably aggressive growth campaign. There may be other locations in the offing in the years to come. That is certainly something that a lot of thought and discussion will go into,” Johnson said. “If the economy stays reasonably positive, that is something we’re very likely to do.”

United Bank’s move comes in an era when few banks are developing new branches, preferring to focus investments on mobile banking technologies or redesigning existing locations to meet changing consumer habits that have customers doing more of their banking online or through a mobile app.

Banks that are developing new offices generally take much more of a strategic approach today to where they locate, said Rob Bondy, a partner at Plante Moran PC in Grand Rapids who works with community banks. Even in the growing digital age, community banks still need a physical presence to lead their way into a new market, he said.

While launching new branches is an expensive option to drive growth compared to relying on digital offerings, the opening of an office staffed with the right talent shows a long-term commitment to the market, Bondy said. That alone can attract customers, especially small business borrowers “who still like to touch and feel their relationships,” Bondy said.

“I’ve always admire the contrarian thinker,” Bondy said. “Just that attitude alone may drive some growth and opportunities. The herd is going left and you figured out the right way to go the other way.” 

Sidebar: United Bank of Michigan

  • Headquarters: Grand Rapids
  • CEO: Arthur Johnson
  • Branches: 11 total; 6 in Kent County, 4 in Allegan County and 1 in Ionia County
  • Assets: $506.8 million as of June 30, 2015
  • Deposits: $389.0 million
  • Net loans: $416.2 million
  • YTD net income: $1.8 million through June 30, 2015
Read 6086 times Last modified on Sunday, 30 August 2015 22:30

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