Northpointes Has Nonconforming Niche

November 18, 2006
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GRAND RAPIDS — Northpointe Bank prides itself on offering top-of-the-market rates of return on deposit accounts and on serving both standard and "unique" residential and commercial lending needs. 

The bank specializes in difficult-to-finance properties that constitute the nonconforming real estate segment, such as log homes, hunting properties, bare land, odd-sized properties, mobile homes, modular homes, rental units, berm and dome homes, vacation properties and hobby farms.

Scott Patchin, assistant vice president for planning and people development, said a nonconforming loan can't be sold in the secondary market, and since a lot of banks pass their loans on to the secondary market, they can't finance the nonconforming properties.

"When you and I get a loan on a property, we go to a bank, but the bank doesn't physically hold on to the loan; it instead sells the loan on the secondary market," Patchin explained. "As a result, they have to lend based on somebody else's criteria. We keep all those loans; we don't sell them. So we're able to finance those difficult-to-finance properties."

Patchin said a large portion of Northpointe Bank's $336 million in assets is made up of its loan portfolio. Sometimes borrowers call Northpointe directly about nonconforming loans, but in many cases the bank works through mortgage brokers.

"Mortgage brokers have people walking into their offices on a day-to-day basis and they might see one of these a week or one of these a month. They usually can't handle them. By advertising to brokers, we let them know there is an opportunity to help those customers. Just call Northpointe."

Northpointe President and CEO Chuck Williams had previously worked for a family-owned financial institution that didn't offer him an equity ownership opportunity. He decided to build a bank that employees could own a piece of through an ESOP plan.

"I thought there was a need in Michigan for Northpointe Bank and built it from the ground up so everybody could participate in its ownership," Williams said.

The bank started with 16 employees in May 1999 and has since grown to 85 employees, of which 75 work at headquarters and 10 work in lending offices in Indianapolis, Columbus and Nashville

"Although we might not have a branch on every street corner, the tradeoff is that when you come here, you can always count on, if not the best rate, the top-of-the-market rate of any place in town," Williams said.

Northpointe's strategy is bringing higher value to customers, and it does that through one bank location, Williams said. Northpointe delivers its products and services via the Internet; that's its focus for growth. The bank is currently upgrading its Internet banking for enhanced functionality and security, Williams noted.

"If customers choose to come see us at our location, that's great, but if they'd rather not, they can handle all their banking operations with us remotely," he said. "Everybody says they have great personalized service," he said. "Great service is great in and of itself. But it's not going to drive a thriving business; you need to bring value to customers, as well. We really treat people like we would like to be treated; we really try to listen to their needs and deliver the products and services that they're after in a personal bank setting. From the retail perspective, that's what we think we really excel in."

Earlier this month, Northpointe dedicated its new 65,000-square-foot headquarters at I-96 and the East Beltline. It recently moved its staff from a leased facility on

Kenmoor Avenue
in Grand RapidsTownship to the new three-story building in Grand Rapids. The new facility is built to LEED standards and is in the process of being certified. The company's former headquarters and banking center on Kenmoor will offer limited hours and gradually close over the next few months. Williams expects the new, very visible site on the East Beltline will enhance Northpointe's market penetration through awareness.

"We really encourage people to come to our location and see for themselves. We think our service and product mix speaks for itself."

Williams envisions the bank growing to $1.5 billion in assets over the next 10 years, with very sophisticated Web banking operations and loan production over a wide geographic area. Northpointe's current lending operations encompass Michigan, Indiana, Ohio and Tennessee, and it has fully-staffed loan production offices in each state.    

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