When Banks Compete, W. Michigan Will Win

August 25, 2003
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The tagline on TV ads for a certain online mortgage lender says, "When banks compete, you win."

West Michigan, get ready for competition.

When the economy slid south, most banks were able to keep their earnings power going, resulting in shareholder value.

Now that the economy is heading forward again, those same banks are ready to launch new initiatives in the ever-evolving battle for local market share.

A case in point is this week's story about Macatawa Bank, which enticed the president and entire commercial lending department at Grand Haven Bank (owned by Capitol Bancorp) to switch colors. Is this a case of the large getting larger at the expense of the little guy? Yes. Is it bad for the banking industry as a whole? No.

It's the way competition works in American business, and Grand Haven Bank's response is a laudable one. "It's a little bit of a challenge but nothing has fallen through the cracks, nor do we intend to let it," said Paul Ballard, Grand Haven's interim president. He went on to say that he expects Macatawa, when it moves into the Grand Haven area, to compete with larger banks, like Fifth Third, Bank One, National City and Huntington.

The competition in the banking industry will, in turn, help the rest of West Michigan's economy grow by offering more favorable rates for commercial development, capital equipment purchases, etc. The competition among banks for commercial loans already is healthy, so businesses can expect even better rates and more "value-added" extras to be part of the wooing process.

The banks, for their part, seem up to the challenge.

Fifth Third has long been the market leader, but changes in the local industry have made Fifth Third "earn" every percentage point it gets. Standard Federal is making its presence felt locally with community sponsorships. Macatawa and Mercantile are in the financial version of an arms race. Huntington and National City are putting the emphasis on "local" decision-making and community involvement. And the rest aren't backing down and are fighting for every customer and loan on the market.

Talk just a few years ago emphasized "local" banks vs. those with an out-of-state area code at HQ. Now, however, most West Michigan customers have overcome that stereotype, having gotten used to doing business with the person in front of them rather than the corporation behind that bank.

Indeed, Jim Dunlap, local president of Huntington, put it succinctly: "If a customer asks us a question, we want to have an answer for them right now." The implication, of course, is that there's no need to call headquarters when decisions can be made locally. "If one of our people makes a decision that may be bad for the bank, but good for the customer, then that's a good decision," Dunlap said, adding that he has spent the past two years changing Huntington's business culture on the local front.

Likewise, the new local president at National City, Sean Welsh, said the bank is renewing its commitment to small businesses. Jose Infante at Community Shores Bank in Muskegon has said much the same thing.

Banking is a bottom-line business. For West Michigan businesses, the bottom line is this: When banks compete … you win.

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