United Bank of Michigan President and CEO Michael Manica believes the economy was already on track for a good year in 2017. But the election of Donald Trump as president and his pro-business policies should boost the U.S. and the West Michigan economies higher, Manica said. A slow-growth economy that continues “without any signs to become considerably more vibrant” would surprise Manica in 2017. The Grand Rapids-based United Bank has 12 offices in West Michigan — six in Kent County, four in Allegan County and one each in Ionia County and Ottawa County, where a Jenison branch opened earlier this year. The bank had total assets of $596.2 million as of Sept. 30, up 15.8 percent from a year earlier, and deposits totaling $444.4 million, a 10-percent increase.
What do you see ahead in 2017 with the incoming presidential administration?
I believe West Michigan is going to thrive. I believed it was going to thrive regardless of the political outcome. And I view these things in nuances of gray, rather than seismic shifts, that the nuance will be from regulation of business and dividing up a smaller economic pie to one that believes more in growth and dividing up a larger pie. By (enacting) tax reform and regulatory reform, at least in the banking industry, while I think ’17 was going to be pretty good, it has a chance of making it a very good year.
What policies would you expect to see change?
We’ll see some, at least, political moves to try to lessen the impact of things like (the Dodd–Frank Wall Street Reform and Consumer Protection Act passed by Congress in 2010 following the 2008 financial crisis) and the CFPB (Consumer Financial Protection Bureau) and a lot of regulatory things in health care. I don’t view these things as ‘it was, and then it wasn’t,’ but there will be a bent toward pro-business, and I think essentially we’re going to put a sign out that the United States and Michigan in general are open for business.
What kind of momentum does your bank have as you close 2016 and prepare for 2017?
We really started ’16 a little on the slow side, as far as growth would go, and then it started to build toward the end of the first quarter. Now our growth is outstanding, and we look for ’17 to continue that. I see no really dark clouds on the horizon.
Even if there are no dark clouds, what are some of the concerns you have?
I suppose a couple of economists that are more astute than I might say is it possible we are running out of quality workers. Do we have enough on the sidelines or can we lower the amount of (people) not being part of the labor force (by getting them) to join in? I don’t think just the growth of our area is going to be enough to fill all of the jobs that are potentially going to be created.
Do you share the view that 2017 is finally the year for higher interest rates?
I believe this slight trend toward more favorability to business has the potential over time — not right away, of course — to get us more up into that 2.5, 3.5 percent area (for GDP growth), and that will be a really good situation for us to be in in West Michigan. However, it will come along with a rising rate environment for sure. We’ve had a very flat environment for the last six years, and I think we will have a modestly increasing rate environment probably for the next couple of years. I really don’t think the Fed is going to go aggressive. They’ll want to see some growth first and see just what the economy’s doing. I don’t think they’re willing to move rates up dramatically just because Trump is going to be inaugurated as president. They’ll want to see the effect of his policies.
How will that impact your bank?
I see a very modest effect in the short run. It depends how much our deposit costs would go up. I don’t think it’s going to slow the momentum, at least the first couple of increases, of the growth that’s out there. There’s still a fair amount of liquidity in banks across West Michigan, so it all is going to depend on when the deposit rates start to go up. That’s a real question mark at this point.
What advice would you have for the incoming president?
I would like to see some movement on fixing some of the most egregious aspects of Dodd-Frank and some of the capital issues. If you want banking to provide the blood to move the engine of growth, you have to loosen some of those restrictions. I think the CFPB has been generally bad for banking across the board, and we need to have something that has reasonable regulatory control there, not one with a czar in charge and answerable to essentially no one. That’s needs to be addressed.
What worries a bank CEO these days?
One of the big ones — and it’s very hard to get your hands around — is cyber-security. It seems that almost regardless of the controls and the money in the technology that you spend there, there are some very, very smart people working 24 hours, seven days a week to try to get inside of our systems and steal. That is a very major concern.
What’s one bold prediction for 2017?
A 3.5-percent growth rate.