HUDSONVILLE — The $8 million in capital West Michigan Community Bank just raised will go to support further growth and perhaps develop another branch location in the Grand Rapids area.
The Hudsonville-based West Michigan Community Bank raised $6 million from existing owners, plus $2 million from 24 new individual investors locally who put money into the bank for the first time.
The capital raised through the private placement expanded the community bank’s local shareholder base, which President and CEO Phil Koning considers an important aspect of doing business in the region.
“As we grow into the community, the community really should have an ownership in the bank,” Koning said. “If you’re going to be a community bank, I know one of the things I’ve always felt you have to do is be owned by the community to some extent. When you sell someone stock, they become an advocate and help us in growing the bank.”
Interest in the capital raise was high, he said. The privately-held bank “could have sold significantly more” shares, had they been available, according to Koning.
Several of the new shareholders actually had come forward in the past wanting to invest if the bank ever sold additional shares, and others “we identified that we wanted them to be owners, so we offered them the opportunity,” he said.
West Michigan Community Bank last raised capital in 2014 with a $15 million capital infusion from its owners.
The bank has six offices in Ottawa and Kent counties: two in Holland and one each in Zeeland, Hudsonville, Jenison and downtown Grand Rapids. The bank’s directors have been considering a seventh location with a new branch in Kent County, Koning said.
The decision on whether to proceed with another office has not yet been finalized. Koning expects that decision could occur by the end of January. If the project does go forward, the opening of a new branch could come in late 2019 or early 2020, he said.
The bank has grown quickly in recent years and had $523.2 million in total assets as of Sept. 30, 2018, up by nearly $100 million from the start of the year and more than double the $246.3 million it had at the end of 2014, according to quarterly financial reports filed with the FDIC.
Almost half of the asset growth has come through the downtown Grand Rapids location that opened six years ago, Koning said.
“We have a very successful operation in Grand Rapids,” he said. “But really the bank’s growing in every market.”
The additional capital the bank raised also will go to support loan growth. About 85 percent of West Michigan Community Bank’s loans are to commercial borrowers, “and we think that that will continue to be that way.”
Net loans as of Sept. 30 totaled $427.4 million, nearly double the volume at the end of 2014.
Recent loan growth could have been higher. Because of a “little nervousness” about the economy and an inability to find the talent they need, some commercial borrowers lately have preferred to pay down debt, rather than pursue expansion, Koning said.
“In general, our borrowers have never been stronger. They’re paying down debt like crazy,” he said. “From a loan volume, it creates additional challenges to meet loan goals because we have so many companies that are paying their debt down so significantly, but it puts them in a strong position to make it through any (future) downturn and gives them additional strength when there is a recovery.”
The bank had total deposits of $437.6 million at the end of the third quarter, also double from about four years earlier.
West Michigan Community Bank reported almost $2.4 million in net income through three quarters of 2018, exceeding the $2.1 million for all of 2017, according to FDIC financial reports.