Christmas Finds Home

December 19, 2005
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GRAND RAPIDS — Chuck Christmas had a hand in shaping Mercantile Bank of Michigan’s business strategy, and he’s seen that strategy reap impressive earnings and asset growth since the bank’s founding seven years ago.

Christmas, CFO and senior vice president of Mercantile Bank of Michigan, earned a bachelor’s of science degree in accounting from FerrisStateUniversity and actually started his career as a bank examiner in the Federal Deposit Insurance Corp.’s Grand Rapids field office. The office covered about 65 banks across the western half of the Lower Peninsula and all of the Upper Peninsula. At the FDIC his job was to take a qualitative look at the banks within his purview to ensure they had sound policies and were making good loans. One of the more interesting aspects of that job, he said, was having to “put out fires” in different areas of the country.

“The first ‘fire’ I was involved in was the S&L bailout, which started in 1989,” Christmas recalled. “The S&Ls were doing a lot of funky accounting trying to keep themselves solvent. During the spring of 1989 the FDIC actually took over 225 S&Ls and tried to run them until legislation passed that allowed them to be sold off. I spent three and a half months running an S&L outside of Houston.”

Christmas said his 10 years of experience with the FDIC carries over to his job today as CFO and senior vice president of Mercantile because a bank examiner gets to see firsthand how all the different banking functions operate, has to be on top of all the banking laws and regulations, and has to have a general knowledge of everything in the industry. His later FDIC training as a capital markets specialist lent itself well to his current job, too.

During his last five years with the FDIC, banks were evolving and delving more deeply into financial services, so the agency decided to provide specialty training to field officers in different areas of the business, specialties such as IT and lending regulation.

“What I decided to do at that time was get into the capital markets, by which I mean investment portfolio, liquidity analysis, cash flow analysis and interest risk management,” Christmas said.

During the 1990s the investment world grew much more complex because a lot of different types of products were coming out, Wall Street was getting “very, very creative,” and banks began to see more competition from other entities like credit unions, S&Ls and finance companies, so the interest risk management training was particularly helpful, he said.   

One of the banks he examined for the FDIC was the former First

Michigan Bank Corp., and that’s where he made the acquaintance of the trio that would later form Mercantile Bank.

Like a number of other community banks, Mercantile grew out of a fertile market created in the 1990s as the result of massive bank consolidation. The most notable catalyst for new bank formation in Michigan was Huntington Bancshare’s 1997 acquisition of FMB. Former FMB employees established four new banks on the heels of that deal, Mercantile included. A few years later, Mercantile also leveraged off of Fifth Third bank’s acquisition of Old Kent Bank.

Mercantile has had a good track record of “stealing” customers from other banks, as well as luring top talent away from its competitors, Christmas said.

“We have been successful in getting business from other banks. A competing bank knows what it means when Mercantile comes calling on one of its customers,” he said. “We’ve always prided ourselves on being opportunists.”

When Mercantile opened in December 1997, its management, namely chairman and CEO Gerald Johnson, President Michael Price, and Executive Vice President Robert Kaminski, brought a lot of their former customers with them. Christmas joined the fledging Mercantile as CFO in April 1998, when there were only a dozen people on staff. He said he made the move with complete confidence in the young bank’s future — confidence that Johnson, Price and Kaminski knew how to run a large-scale operation and had the sophistication to handle significant growth. They were a known quantity, in his estimation.

“Knowing these folks and knowing the primary lenders they were bringing on, I knew it was kind of a no-brainer,” Christmas said. “I saw what they were able to do at FMB in Grand Rapids, and I knew they would be very, very successful. I didn’t hesitate at all, and I was able to see from December to April when I joined them just how fast the bank was growing right out of the gate.”

Within five and a half years of opening, Mercantile had achieved $1 billion in assets. This September the bank surpassed $1.8 billion in assets. The company now employs more than 300 and has eight full service banking offices.

Christmas said Mercantile has built a “tremendous pool of talented people” that really push the customer service aspect.

“That’s really where we’ve been successful,” he said. “You’ve got to have great people to really be successful.”

Following on that “service first” strategy, as Mercantile started to branch out to Holland, Ann Arbor and Lansing, it staffed the new branches with people who had spent most of their banking careers within those individual communities. Each branch has its own president and is run like a separate organization, as well, he added.

“Every day Mercantile is here, and it doesn’t change its strategy or its culture or its focus,” Christmas said. “But it’s an ongoing challenge because the competition gets stiffer and the competition changes.”

As a publicly-traded company, there’s also a lot of pressure on short-term earnings performance because every quarter the company has to release its financial information for public scrutiny, he said. Eight companies do research on Mercantile.

Christmas said Mercantile just wants to build on what it has created.

“We think we can continue to grow with the community. We still fully believe in our strategy and think we’ll be able to continue to garner additional market share. As long as we maintain that high level of service and make sure we deliver our products efficiently and at a proper price, we can continue to expand our Mercantile franchise.”    

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