Were a new kid in town
A family-owned and managed bank in East Lansing has added two branch locations for the first time in its 56-year history, including one in Grandville, and its primary focus will be on commercial loans.
First National Bank of America, located at 241 E. Saginaw in East Lansing, assumed the lease April 1 of the former First Financial Bank branch at 4250 Chicago Drive in Grandville, which was an Irwin Union bank branch until it failed and was taken over by the FDIC in September 2009.
Ken Foote, CEO of First National and a son of the founder, jokes that up to now, his privately held bank has had what basically amounted to “a 1950’s savings-and-loan balance sheet.”
First National, with about $475 million in assets, is strongly capitalized, said Foote, and had been holding roughly $300 million in residential loans and $30 million in commercial loans from the East Lansing area. He said it has a rating of 281 from the IDC Financial Publishing company, out of a possible score of 300.
“The IDC says that a rating in the 200-300 range is ‘superior.’ We have been in that range for every quarter over the last 15 years,” said Foote.
Foote said First Financial, a Cincinnati bank, had decided to solidify its position in Ohio and Indiana by disposing of its Michigan locations. It offered to sell its performing loans at the Grandville branch as well as three other branches in Kalamazoo, Lansing and Traverse City. The Ohio bank also invited other banks to take over its leases at the four locations, although it did not sell its accounts business at those branches.
First National acquired some of those commercial loans, which now brings its total commercial loan portfolio to about $80 million, and assumed the leases in Grandville and Traverse City.
Foote said First Financial advised its account holders in Grandville and Traverse City that they would have to move their accounts to one of the other branches out of state, or they could consider transferring their accounts to First National after it took over.
“We were very pleased with the number of people who did. Now it’s our job to take care of those existing customers,” he said.
The commercial loans First National acquired “have weathered the storm” during the recession, noted Foote, and added that he and the other directors had decided there was great opportunity in commercial loans, mainly because they have heard a lot of people — particularly at “larger institutions” — claim that Michigan is not a good state for making commercial loans because of the economy here.
“We really have a lot of confidence in Michigan,” said Foote. “Sure, there is a lot to not be happy about, but there are a lot of fine people, a lot of fine businesses. We thought it was a great time to get into it.”
“I grew up in East Lansing,” said Foote, adding that they have a staff of 180.
“We’re a Michigan bank and we’re not pulling up stakes. We’re here to stay,” he said.
First National’s first location, under its original First National Bank of East Lansing name, was on Grand River Avenue in East Lansing next to the Student Book Store, and right across the street from the Michigan State University campus. When ATMs were first introduced, First National installed one and it was “the busiest ATM machine in the country,” he said, because so many of the bank’s customers were MSU students who were quick to make use of the new technology.
Foote said he does not think Michigan is clear of the recession yet. One economic driver is population, he said, and Michigan’s is decreasing.
The 2010 census revealed that Michigan was the only state to decline in population since 2000, losing nearly 55,000 people. That 0.6 percent decline is in contrast to the national average: an increase of about 9.7 percent. The Michigan population peaked in 2006 and then began shrinking.
Foote said there is an example of that population decline within his own company. First National employees have an average of 12 years on the job there, but last year, six left the company. “Every single one of them left because their spouse got a job” elsewhere, he said, and at least four of those families moved out of Michigan.
Michigan government has not been “very friendly, in my opinion,” said Foote. “It’s a tough place to want to start a business.”
Recently, First National wanted to re-do its sign in front of the East Lansing location, and just the process of getting the required permits and approvals “was brutal,” he said.
The economy has put a “lot of pressure” on some Michigan banks, and “it’s also true in the west side of the state,” he said. He believes that, by and large, people in West Michigan are “savers, prudent,” but many have run into the same financial stress that people across the nation suffered, which in turn caused problems for some banks in this area.
“If you owned a piece of real estate in 2005 for $100,000, today it might be $50,000,” he said.
People in West Michigan “don’t know us, so we’ll have to do a good job on that,” he said. “We’ve got a lot of work to do; we’re a new kid in town for Grand Rapids,” said Foote.