GRAND RAPIDS — Horizon Bank’s move into the West Michigan market provided an opportunity to launch a private banking service based in Grand Rapids that will eventually extend across the corporation.
The Michigan City, Ind.-based Horizon Bank decided to use the new full-service office that opened in May on Pearl Street in downtown Grand Rapids to pilot private banking services in its new market. If successful with the service locally, Horizon Bank plans to offer private banking to business and high-end clients in other markets across its footprint in Indiana and Michigan.
Running the private banking division is Nancy Miller, a seasoned banker who joined Horizon Bank last November at the same time as David Quade, the bank’s Grand Rapids market president. Quade, Miller and a number of staff at the Pearl Street office previously worked together at Chemical Bank.
As he discussed the position of market president with Horizon Bank last year, Quade introduced the idea of starting a private banking division in Grand Rapids. Private banking is a staple at many financial institutions to serve busy business owners, professionals such as attorneys and physicians, executives and other high-net worth individuals.
“We wanted to be able to completely serve our clients,” Quade said.
The division will enable Horizon Bank — as it works to build business in Grand Rapids — to offer a value-added service to attract and retain clients “who are quite wealthy and require some special handling and special services,” said Tom Edwards, Horizon’s president and chief credit officer.
Additionally, Miller’s interest in moving when Horizon Bank hired Quade as the local market president led executives to decide to base the private banking division in Grand Rapids, Edwards said.
“Nancy became available for us to hire. She has a really good track record of success running private banking,” he said. “We thought it was a good idea, and with Nancy available and Grand Rapids being such a dynamic market, it seemed to be a good place to start it out.
“We have a lot of good areas we can offer it in our footprint.”
Horizon Bank (Nasdaq: HBNC) has 44 offices in Indiana and 12 in Michigan with total assets of $3.24 billion. In Michigan, the bank has offices in Kalamazoo, Lansing, St. Joseph and Grand Rapids and will extend into the Midland area with the pending $88.2 million acquisition of Wolverine Bancorp Inc.
Working out of the bank’s new downtown location, Miller is calling on prospective clients to build a book of business for the private banking division. Her goal is to add two or three clients a month.
Horizon Bank has what Miller describes as a lower threshold for private banking: Clients must have $200,000 in annual income and at least $300,000 in liquid, investable assets. That’s lower than the bar typically set by many competitors with a private banking service, Miller said.
The bank also has an entry-level program for people who are not yet at that threshold “but they have great potential for growth,” Miller said. For example, she cites new lawyers and doctors that have heavy college debt but are employed and have a potential for high future earnings.
The bank’s goal was to offer the service at a point when younger professionals and entrepreneurs early in their careers could access private banking, Miller said. By bringing in clients at an earlier age, Horizon Bank hopes to retain them as they advance in their careers or grow their businesses and build personal wealth, she said.
“They have great potential for growth both in terms of position and earnings,” Miller said. “People are very reluctant to change banks and move their wealth when they get into those later years of their career, so we wanted to just set up a program that was generous enough to get people early in their careers so that in 20 years when someone is cold calling and knocking on their doors, they say, ‘No. I bank with Horizon Bank and have been with them for 20 years.’”
Horizon Bank presently has no specific timeframe for expanding private banking into other markets such as Indianapolis, Kalamazoo or Lansing. The bank wants to build a book of business in Grand Rapids first and refine the service before expanding, Edwards said.
“We want to assure that Nancy has success and that we have the processes down so we’re delivering the type of service that these customers will demand,” he said.