Johnson Grows With United

January 13, 2003
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GRAND RAPIDS — Banking is in Arthur Johnson’s blood.

Banking has long been and continues to be a bit of a family affair to the chairman and CEO of United Bank of Michigan.

“I’ve been around this industry and this company my whole life,” he said. “It’s changed a great deal; it’s gotten ever more fascinating. I have never grown bored with it.”

United Bank got its start as the Wayland Exchange Bank in 1887. The bank’s name was changed to the Wayland State Bank in 1904 following its incorporation.

Johnson’s father, Arthur H. Johnson, joined the bank as a cashier in 1940 when the bank’s assets stood at about $500,000. He later became president and oversaw the bank’s expansion into other communities.

His son and namesake started working summers at the bank when he was 14.

In 1972, with the ink still wet on his bachelor’s degree in finance from Michigan State University, the younger Arthur Johnson promptly asked his dad for a job.

He got a job making loans at the Wayland branch. His sister, Bonnie K. Miller, joined their dad in the business the same year.

By 1977 the bank had grown to $34 million in assets. Shortly thereafter Johnson began running the bank’s Alto branch, spending his evenings pursuing a master’s degree in business administration from Western Michigan University.

“I got a lot of exposure to the retail as well as agricultural side of the business while running a branch,” he recalled.

In the 1980s he got more involved in the financial and administrative side of the business. When the bank opened a Gun Lake branch in 1980, officials changed its name to United Community Bank and formed a holding company called United Community Financial Corp.

After being promoted to president in 1983 at age 33, Johnson ushered in a decade of growth and a succession of changes at the bank.

“That’s probably the time when we made the biggest evolutionary changes in the company.”

Up until that time the bank had been heavily oriented toward farming and agribusiness, and a very high percentage of its business was loans to farmers and agribusinesses. Its branches were located in small rural towns such as Clarksville, Alto, Dorr, Freeport and Hopkins. Wayland was the largest town in which it operated.

“They were relatively small acreage farms and we had a lot of concern about whether they could be viable economic units going forward.

“We wanted to diversify our customer and asset bases. We essentially wanted to come into Grand Rapids and start to do business with the small business community that we felt was underserved.”

Statewide branching wasn’t permitted in the late 1980s, so United formed a bank holding company, formed a new bank in Grand Rapids and changed its name to its current moniker. Grand Rapids became its new headquarters.

“We shifted the focus of the bank to small business lending and became a very active SBA lender. In fact, from the mid-1980s to the mid-1990s, we were the largest originator of SBA guaranteed loans in Michigan for nine years in a row.”

The bank now boasts assets of some $300 million and operates 10 branches throughout West Michigan, the most recent of which opened in Rockford last fall. United also operates insurance and investment centers in Wayland.

Though the 115-year-old bank has come a long way, it hasn’t strayed from its roots as a community bank.

“It wasn’t that long ago that a lot of people in the financial services industry were predicting dramatic decreases in the number of banks in this country. It was predicted the very large banks would gobble up everybody. They haven’t.”

A lot of bank consolidation did take place in the 1990s, but it tended to be large companies snatching up other large companies, he said, adding that not all those acquisitions turned out to be wonderful.

“We’re still growing at double digit rates, which is very satisfactory for us and also allows us to continue to be able to deliver the kind of service that our customers have come to expect from us.

“We know if we were growing twice as fast, it would be that much more difficult for us to maintain that level of service. One of the things about being a private company is that you can take a very long view of financial performance. That allows us to focus on our customer.”

The constant evolution of technology has made it possible for all small banks to compete with larger banks wherever they choose to compete, he observed.

For most households and small businesses, he said, any financial product or service the large banks offer, United Bank can offer, too — “and offer it more economically and with more personal service,” he added.

The exceptions are the specialized services that a global company or extremely wealthy individual might require.

Johnson said United Bank is different from the community banks, particularly in the wake of Old Kent Bank’s acquisition by Fifth Third.

A lot of community banks talk about being “the” local bank without talking about what that means, Johnson said. As he sees it, it’s not just about local investment, it’s about local ownership, too.

“There’s a very easy way to determine whether a bank is ‘local.’ Ask what their stock symbol is. If they have one, they’re not a ‘local’ bank.

“We think ‘local’ also means local ownership. We think the best way to run the company is to run it ourselves.”

Johnson said the bank expects to remain independent. That will require success, and he’s confident United Bank has the right tools. A customer focus and long-term profitability focus will be the underpinning of whatever path it pursues in the future, he said.

“Our mission is to provide a level of service that is noticeably different from what you will receive at our competitors. We work very hard at monitoring to determine whether we’re doing that.”

He expects United will establish more branches but there are no concrete expansion plans at the moment.

There has been a Johnson working at United Bank for more than 62 years, and it doesn’t look like that family run is going to end anytime soon.

Johnson’s son, Erik, is branch manager at United Bank’s Gaslight Village location. His daughter, a recent U-M grad, is now eyeing a career in banking as well.    

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