Street Talk

Street Talk: Mercantile, Alma bank merger is under protest

November 29, 2013
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A protest filed by an attorney/activist in New York has Mercantile Bank in Grand Rapids worried about its plans to merge with another Michigan bank by Dec. 31.

Matthew R. Lee of the Bronx, founder of “watchdog organization” Inner City Press/Fair Finance Watch, filed an Oct. 21 protest with the Federal Reserve System under the Community Reinvestment Act, claiming Mercantile only makes loans to whites, not to African-Americans or Latinos.

The Federal Reserve Board, which must approve the merger between Mercantile and Firstbank Corp. of Alma, mailed a letter to Mercantile’s attorney Nov. 6 requesting answers to 11 detailed questions.

Mercantile responded with answers Nov. 12, and its attorney followed up with another letter Nov. 20 requesting the board “be mindful that there is some urgency to the approval of the application” because the merger is supposed to be finalized Jan. 1.

The Community Reinvestment Act, established by Congress in 1977, is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate.

Among other things, the Federal Reserve Board asked Mercantile to elaborate on its plans for administering the CRA program for the combined organization. Mercantile replied it “intends to bring the same intensity and commitment to the CRA program of the consolidated bank that has earned Mercantile Bank an ‘Outstanding’ CRA rating in its last two CRA examinations” by the FDIC.

An email to the Business Journal from Mercantile chairman/CEO Michael H. Price states: “Since its founding, Mercantile Bank has maintained a solid record of compliance with the Community Reinvestment Act.” In its most recent CRA evaluation by the FDIC, it concluded the bank “has an outstanding record of helping to meet the credit needs of its assessment area, particularly low- and moderate-income individuals and small businesses in a manner consistent with its resources and capabilities,” according to Price.

He also noted that “Mercantile Bank’s primary focus is on commercial rather than consumer lending,” and “as a commercial bank, Mercantile Bank is a leader in the Grand Rapids/Wyoming MSA in small business lending,” with supporting statistics.

As to whether its application before the Federal Reserve Board will be delayed, Mercantile had no comment.

The Business Journal put that same question to the FRB directly. Its response, from Susan Stawick, was: “I’m afraid I’m not able to speak specifically about the status of the timetable for this application. But I can tell you that Federal Reserve staff is performing due diligence regarding the concerns that have been expressed about the merger.”

The American Dream

New societal trends are beginning to show up when it comes to building to suit population needs

The University of Michigan/Urban Land Institute’s annual forum, held in Lansing just prior to Thanksgiving week, provided detailed approaches from commercial and industrial real estate professionals across the state.

The millennial generation that previously tracked into downtown environments is slowly moving out as they marry and have children, but only as far as the “edge” cities, not the suburbs.

Price points are quite different from the previous generation: The millennial “price range” is $150,000 to $200,000. Analysts told the assembled group just 25 percent of the population is currently “traditional” (married with children); 75 percent are single, single-parent households, married without children or co-habitants. The demand is for walkable neighborhoods and access to public transportation.

Brad Rottschaffer of Mosaic Properties was among the statewide panel members to also note a strong interest in “green building” structures and in properties close to downtown. He took it a step further: The “greenfield” development is now becoming inclusive of senior housing, where New Urban principles such as walkability or “pedestrian environments” are applied. He noted “empty nesters” are healthier than their predecessors. Younger baby boomers are more active and freer thinking. At the same time, other Michigan developers indicated Midwest boomers are “really not interested” in moving into cities, but millennials “feel they’ve been deprived of an urban lifestyle.”

As a group, developers bemoaned the ability of communities to keep up with these “drivers of development” with reflective changes in zoning rules and ordinances, and in providing continuity across local boundary lines. But that is almost secondary to people who do not like change.

Developers in eastern Michigan suggested employees in the downtown environment (most likely Detroit) “hate it,” and it has been the source of low morale. Rottschaffer came back with, “Grand Rapids is a very vibrant community” and that such grousing is generally not typical. He did agree with others in regard to the higher costs of developing housing in infill areas compared to undeveloped areas.

The agreement among developers is that the cost is notably higher because, as Rottschaffer said, “(It) often needs more density to work and then you need more parking.” The project then escalates beyond the “millennial price point.”

Going to WAR

Local businesses are partnering with Women At Risk, International, to fight human trafficking during the holiday season.

Those businesses are selling Women At Risk’s hand-blown glass ornaments to combat modern day slavery here and abroad, according to Kristen Parks, a spokesperson for the Wyoming-based chapter.

The U.S. government estimates 300,000 American children are currently at risk of being sold into sexual slavery, and the Center for Missing and Exploited Children reports that Michigan ranks 13th in the U.S. for the number of sex-trafficking victims.

About a year ago, Thomas M. Cooley Law School hosted a human trafficking symposium that drew statewide attention. It asked businesses whether they were unwitting partners in the sex trade.

It was a question Chris Johnson, director of Cooley’s graduate program in corporate law and finance, wanted on minds and hearts when he hosted the Cooley Law Review Symposium and Michigan Abolitionist Project Conference on Corporate Responsibility and Human Trafficking.

That message apparently reached Lansing. On Nov. 6, Michigan Attorney General Bill Schuette announced an “agenda for action” to combat human trafficking in Michigan, calling for harsher penalties for “johns,” safe harbor provisions for underage victims and a crackdown on Internet sites facilitating trafficking.

To support local anti-trafficking efforts, 150 Michigan businesses are partnering with Women At Risk, International, a Michigan-based nonprofit dedicated to ending trafficking locally and around the world. These businesses are hosting Christmas trees adorned with one-of-a-kind, hand-blown glass ornaments from the Middle East. Proceeds from ornament sales go toward providing scholarships to at-risk women in the Middle East, as well as safe havens, counseling, education and vocational training for survivors of sexual slavery in America and abroad.

WAR’s ornament campaign began in 2009 and has reached more than 500 local businesses in the West Michigan and Chicago areas. Last year, more than $40,000 was raised through the ornament sales, according to Parks. The ornaments are available for purchase at participating businesses for $15. A list of participating businesses is available via email at info@warinternational.org.

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