Koning Banks On Community

September 25, 2006
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HOLLAND — Phil Koning, president and CEO of Macatawa Bank, originally had his sights set on becoming a CPA. He took on a co-op job at Old Kent Bank while he was earning a B.S. degree in accounting at GrandValleyStateUniversity, and after graduation, that job led to a full-time position as a credit analyst for Old Kent. He's been in banking ever since.

Koning has spent most of his 32 years in the business in commercial lending, half of them working in Grand Rapids and half working on the lakeshore.

He joined First Michigan Bank as a commercial lender in 1980. That's where he met up with Benjamin Smith, who would later become founder and chairman of Macatawa Bank. In 1986 Koning served briefly as president at First of America Bank in Holland. He left there to join Smith's investment firm, Smith & Associates.

"Ben was responsible for the birth of Macatawa Bank. It was his idea. It was his vision," Koning said. "When FMB sold to Huntington, Ben immediately said, 'We've lost our local community bank.' He thought we could start a new one."

Smith called 30 to 40 people he knew to see what they thought about establishing a new community bank, and whether they'd be willing to invest in it, Koning recalled. Smith received "very, very positive responses" within a very short period of time, so he began putting an application together for a new bank.

At that point in time, Koning was not looking to get back into the banking business; he wanted to stay in the investment business with Smith. But for purposes of applications to the state regulatory agencies and for the application to the FDIC, the bank needed to identify management so the regulatory organizations would know who was going to be running the bank. Koning's name was put on the applications as interim president, so he could get the business up and running. It was not anticipated that he would stay on.

Koning said part of the difficulty was finding a bank president who was willing to work with a start-up. Within three or four months of its opening, Macatawa's success "exploded," he said. During its second year of operation, Macatawa opened seven new offices. He started becoming intensely involved in the bank and was doing all the hiring. Six months into it, he agreed to stay on as president.

"Here was this fledging organization with almost no employees. Can you imagine the amount of work involved in opening seven offices that next year — finding locations, finding people?

"Thankfully, at the very beginning we were able to get some very top-notch people to join the bank and help build it. It was just one of those things where everybody was excited, everybody got together and pitched in, and everybody worked hard."

Koning is especially proud of the quality of the employees the bank has been able to attract.

He said he was confident in the move because of the success Macatawa experienced so early on. Smith had raised $8 million to start the bank, and six months later took it public, raising another $12 million. The bank had the capital to grow, it had the employees and the customers, and it had the support of the directors and shareholders, he recalled.

Macatawa was not intimidated by the large regional banks; it was having tremendous success competing against them, Koning said. Everybody on the management team had gained their industry experience at larger banks. As Koning put it: "Everybody comes to the game with the same plays. It's the team that executes that is successful."

While Macatawa was opening lots of branches and hiring lots of people, it was also introducing lots of new products and services to compete with similar products and services offered by the large regionals. In those early years, Macatawa probably had 75 percent to 80 percent of the same products and services as the large banks, he noted, and today it's closer to 99 percent.

How has Macatawa distinguished itself in its markets?

"I believe it's the values and principles of our organization and the culture that we have created," Koning said. "It's something that's hard to create and hard to really put your finger on."

Macatawa bankers look at customer relationships from a long-term perspective, he said. One of the bank's principles is to drive decision-making as close to the customer as possible, which means empowering employees on the front line to make decisions. An employee doesn't have to call a manager to pay a little extra rate or to waive a fee, or to treat a customer the way they should be treated, he explained.

"We always try to keep the customer's best interest in mind. We only sell based upon what we perceive customers need, and if they don't need it, we don't push it on them."

Macatawa calls itself a community bank because it serves the entire community; that's why it put branches all over the place, Koning said. He believes a true community bank should be owned by the community, as well. Eighty percent of Macatawa's stock is owned by shareholders here in West Michigan, he pointed out.

As Koning sees it, one of the highlights of the bank's history was Macatawa's acquisition of Grand Bank in 2001 and its entrance into the Grand Rapids market. It's an extremely good market that will be extremely good for Macatawa, he said. Macatawa doesn't want to be viewed as just a Holland bank or an OttawaCounty bank; it wants to be viewed as a West Michigan bank.

"Because of that, we've made a tremendous commitment to buildings and people in KentCounty," he noted. "Almost all of our building in the last few years has been in KentCounty."

Koning said he gets calls from Cadillac, Kalamazoo, Ludington, Battle Creek and Lansing from people who want Macatawa to establish a presence in their communities.

"They look at what we've done, and they like our style," he said. "I'm proud of the fact that customers love us and that they appreciate the fact that we exist."

Macatawa is putting in a branch at

Burton Street
and
Breton Road
and another at
28th Street
and
Cascade Road
, and is eyeing Caledonia, Walker's Standale business district and other areas in Grand Rapids for potential branch locations. Koning said the bank expects to begin expanding its market into MuskegonCounty, as well.

In his spare time, Koning rides Harley Davidson motorcycles. He has two Harleys and has taken road trips all over the United States and Canada — trips he describes as "the most enjoyable time of the year."    

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