After operating for years in rural communities to the north, ChoiceOne Bank wants to carve out a position in downtown Grand Rapids.
The community bank, owned by Sparta-based ChoiceOne Financial Services Inc. (OTCQX: COFS) just opened a lending office on West Fulton Avenue in downtown for residential mortgages and small business loans. If the loan office generates enough volume, ChoiceOne Bank will likely follow up with its first full-service branch in Grand Rapids within the next two years, said President Kelly Potes.
ChoiceOne Bank is “studying the market to see where that would make sense,” Potes said.
“Grand Rapids is a vibrant community and is growing, and we want to be part of that,” Potes said. “We just see an opportunity we have to come in and play a bigger role.”
ChoiceOne Bank, with total assets of $567.7 million at the end of 2015, primarily serves rural markets with 13 offices in northern Kent, northeastern Ottawa, and southern Muskegon and Newaygo counties.
The community bank has company in moving to raise its position in the Grand Rapids area and tap what’s seen as an opportunity to grow, brought on by a vibrant marketplace and consolidation.
Commercial Bank, based in Ithaca, Mich., north of Lansing, opened a downtown lending office for residential mortgages and small business loans. In Jenison, a suburban bedroom community in eastern Ottawa County, United Bank of Michigan broke ground last week on a new branch office, its 12th location in the region.
The move by each bank comes as the Grand Rapids-area economy performs well and follows recent deals involving two local community banks that merged into much-larger institutions. Those deals include the acquisition of Founders Financial Corp. by Evansville, Ind.-based Old National Bancorp at the start of 2015 and the mid-year merger of Holland-based Lake Michigan Financial Corp. — the parent company of The Bank of Holland — into Chemical Financial Corp.
Whenever a market experiences consolidation where a community bank merges into a much-larger institution, competitors will quite often make strategic moves to position themselves to serve small businesses that may decide to shop around after their bank was sold, said Rob Bondy, a partner at Plante Moran PLLC in Grand Rapids.
“A lot of folks, when they see a transaction, they try to seize the moment of the uncertainty,” Bondy said. “You’ll see the community banks try to capitalize on the underserved market.”
Grand Rapids-based United Bank of Michigan sought to move on that opportunity quickly.
Soon after the Founders/Chemical deal, executives at United Bank of Michigan began thinking that “this is going to create opportunity. What are we going to do about it?” said Chairman and CEO Arthur Johnson. United subsequently mounted a marketing campaign to build its brand as a locally-owned community bank that has been “happily refusing takeovers since 1887.”
“We viewed that very much as an opportunity,” said Johnson, a longtime community banker who describes the Grand Rapids-area market right now as a “very, very target-rich environment.”
“For a community bank, Grand Rapids is not a bad place to be right now,” he said. “It’s a great place to do business. And if it’s a great place to do business, it’s a great place to be a bank.”
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 Dec. 31, 2015, according to a quarterly financial report filed with the FDIC.
The site in Jenison is a “very logical market” for United Bank to build a new branch and pursue new retail and small business customers.
At Commercial Bank, which has seven branches and a loan office in Mt. Pleasant, the new Grand Rapids location in the CWD Building on Louis Street fills a gap between existing offices in Hastings and Greenville.
“It’s kind of a natural fit for both of those offices,” said CEO Kevin Collison. “It’s another area we can service our customers with and look for new customers at the same time.”
Commercial Bank was already considering a move into Grand Rapids. The recent mergers in the Grand Rapids market “helped our decision to come that way,” Collision said.
Commercial Bank’s parent company, Commercial National Financial Corp. (Pink Sheets: CEFC), had $385.1 million in total assets of as of Dec. 31, $287.6 million in total loans and $307.1 million in deposits. The corporation recorded 2015 net income of $2.6 million.
As with ChoiceOne Bank, Commercial Bank will consider opening a full-service branch in the Grand Rapids area in the future.
“That’s potentially down the road as we build some stability there and customer base,” Collison said.