- change ups
Entrepreneurial path leads back to banking
Unbeknownst to Dwortz, the boss was planning to offer him a promotion. Unbeknownst to the boss, Dwortz was planning to resign.
The boss, an executive at National City Bank in Birmingham, began the conversation that day in 2006. “He asked if I would consider moving o take on additional responsibilities,” recalls Dwortz. “I said, ‘I’m flattered. I really appreciate it, but I came in here to resign.’”
He explained that he wanted to try “something entrepreneurial.” That “something,” he explained, was based on his career in banking, which up to that point had been finding entrepreneurial activities within big banks. He had a lot of experience in real estate investment. “This is an opportunity for me to start my own business,” he explained, and his erstwhile employer was supportive.
As a senior vice president in corporate and community development, Dwortz, then 36, was the baby of the senior management team, and had a wife and four children.
Today, he has come full circle. Since November he has been head of The Bank of Holland, an organization with more than $630 million in assets, about 70 employees as of December, and two locations in Holland plus one in Grand Rapids. The Bank of Holland is owned by Lake Michigan Financial Corp., a bank holding company based in Holland.
Dwortz grew up in the Canadian Lakes community in Mecosta County, attending Chippewa High School in Remus. He received a Bachelor of Arts degree from the University of Michigan in literature, science and the arts, with a concentration in economics.
His first career job was with the Northern Trust Co. in Chicago from 1992 to 1996, where he was a corporate banking officer. He started in trust work but soon was moved into the bank’s lending training program and spent most of his time at Northern thereafter as a commercial lender. His loan work had “a heavy focus on business development,” he added.
Dwortz was involved in the arrangement of more than $1 billion in financing and capital services for manufacturers, distributors and service companies in the Chicago area, across a wide range of industries including capital goods, consumer products, food, automotive, education, retail, media, health care and transportation.
After four years at Bank of America, Dwortz decided to move back to Michigan for family reasons. He accepted a position at National City in Birmingham, noting “that’s where my career in Michigan started to progress rapidly.” He started as a lender but then was asked to play the role of the capital markets generalist for the entire state. He was directly involved in working with the bank’s largest customers to develop capital markets.
“In that capacity, I was introduced to the world of urban development and tax credits,” said Dwortz. In fact, he developed a tax credit syndication for National City, and its success led to running the bank’s community development corporation for the state of Michigan.
That’s when the idea of starting his own business began to germinate. In 2006, Dwortz and others founded Strength Property Partners LLC, based in Birmingham. Actually, it was two businesses, one a private equity firm and the other a real estate advisory firm, both specializing in the development of urban areas in the upper Midwest.
Was he nervous leaving a secure job to start his own business? “Absolutely,” replied Dwortz.
Of course, the timing turned out to be somewhat unfortunate. In late 2007, small cracks in the economy suddenly began widening, leading to the Great Recession.
Strength Property Partners “was a tale of two businesses,” said Dwortz. Eventually, the private equity business suffered from some of the same issues in the declining economy that hurt other private equity firms, “although we fared better than most,” he said. “We made investments and we had some trouble in our portfolio, which has taken us extra time and care and money,” he said. He still owns an interest in Strength Property Partners.
The flip side of the story is the advisory business, which grew beyond the partners’ expectations because of the economic turmoil.
“As traditional forms of capital dried up in the marketplace, our job was to find alternative forms of capital in the form of public/private partnerships, tax credits and other forms of incentives, which became more relevant in a recession. So we did well on that side of the business, and we had to take extra care in the investment side of the business,” said Dwortz.
Strength Property Partners was involved with several noteworthy projects in Grand Rapids, including Hopson Flats at 212-216 Grandville Ave. and The Fitzgerald at 27 Library St.
The conversion of a vacant building into the 42 new Hopson Flats apartments plus renovated office and retail space was financed using brownfield TIF and tax credits, as well as the federal historic investment credit, according to Dwortz. He said his company invested in Hopson Flats as a partner. The Fitzgerald, formerly the downtown YMCA, was turned into upscale condos. Dwortz said Strength Property Partners invested preferred equity in that development.
Now he reports to work each day at The Bank of Holland’s Grand Rapids office at 51 Ionia Ave. SW in downtown.
Dwortz describes The Bank of Holland as primarily a business bank focused on commercial lending, although it also offers retail bank services for individuals. Its newest facility is a commercial lending office opened last fall in Grand Haven, and the bank is one of the major SBA lenders in the state. In 2010, it was named both SBA Lender of the Year and USDA Business & Industry Lender of the Year. In December, the bank announced it was the only U.S. Department of Agriculture rural development-certified lender in the state.
“I’m very proud of this institution, having just arrived,” said Dwortz. “It goes back to how the bank performed in the downturn and remained healthy and financially strong throughout that period, because it was managed very well.”
He said the staff is constantly on the alert for the next dangerous bubble in the economy and managing the bank’s business to avoid it. “They were able to do that in the real estate market that burst, in and around the ’07-‘08 time period, so that’s really why we remain healthy today,” said Dwortz. “We are also a locally managed institution, which makes us a good partner for local business.”
Dwortz said the biggest challenges he sees facing West Michigan banks now “are related to the unstructured lending that took place leading into the recession. Many businesses and real estate developments were offered easy credit that led to unhealthy leverage and over-built property markets. When the recession hit, many local businesses and developments experienced significant decline in volumes and viability. Certain markets, like residential development, seemingly disappeared.
“The banks that supported these activities at an unhealthy level have suffered material losses, sapping liquidity and forcing them to turn away good customers while they work through the remaining trouble in their portfolios,” added Dwortz. “This situation continues today and will for the foreseeable future. Those, like The Bank of Holland, that have maintained healthy balance sheets and lending practices leading into and through the recession, remain well capitalized and positioned to grow.”