Banking & Finance

Ionia-based Independent Bank celebrating its 150th year

CEO says there is a ‘new normal’ in the U.S. banking industry.

June 27, 2014
| By Pete Daly |
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Brad Kessel
President and CEO Brad Kessel said bank employees will exceed nearly 14,000 hours in volunteer commitments.

(As seen on WZZM TV 13) Independent Bank, founded in Ionia in 1864, is marking its 150th anniversary this summer with a series of volunteer service projects across the state.

Independent, with $2.3 billion in total assets and 75 branch offices across the Lower Peninsula, is the fifth largest bank headquartered in Michigan.

The bank is celebrating its milestone with “150 Ways in 150 Days,” one-day community service projects throughout 2014 in the communities where the branches are located. Each branch and loan office will engage in two projects.

“We chose 150 days of giving back locally because we wanted to thank the communities and people who’ve done so much for us,” said Brad Kessel, president/CEO of Independent Bank. “We’ve grown from one branch to more than 70 by investing locally the same way our customers do. The 150 Ways in 150 Days project is simply an extension of our banking philosophy: our business is about serving our communities.”

Projects the bank’s 900 employees will be involved in include food drives, service to local charities, and teaching financial literacy classes for children and adults. The bank expects to exceed its volunteer commitments from past years, which totaled more than 13,900 hours last year. More than 22,000 people have taken a class on financial literacy taught by Independent Bank.

In celebration of its sesquicentennial, the bank also recently launched a new website that features enhanced navigation and the ability to customize the homepage background.

When Independent Bank was chartered in 1864 as First National Bank of Ionia, it had initial assets of $50,000. It was one of the first charters of the National Bank Act signed by President Abraham Lincoln that year. The bank is still headquartered in downtown Ionia, where it was founded.

“Focusing on our customers and communities will always be our foundation, but you don’t make it to 150 years without a willingness to embrace new technology and products,” said Kessel. “Community banking, when done right, isn’t old-fashioned — it’s simply banking that focuses on people above all else.”

Kessel began his career at Independent Bank Corp. in 1994 as vice president of finance. Since then, he has held other executive positions and was named CEO in January 2013.

When asked if the U.S. banking industry has returned to normal after the upheaval of the financial crisis and the challenging years of the recession, he replied that today, there is a “new normal.” The years 2007 through 2009 were “very difficult years for a lot of industries, including ours,” said Kessel, and it was particularly bad in Michigan because the economic downturn hit manufacturing the hardest — the core of the state’s economy.

Kessel also noted that much of the impact of the recession triggered by the financial crisis on Wall Street “happened almost overnight, so it was a shock.”

Like manufacturing, banks were particularly hard hit because of the precipitous drop in real estate values and the spike in mortgage defaults, which left many banks holding devalued real estate assets in a depressed market.

The “new normal” for bankers is a much higher degree of government regulation than before.

The result of the financial crisis and recession was a “large reaction by our legislators to do something about it so it never happens again, and as you know, they issued almost 10,000 pages of legislation” under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

“Probably about 60 percent of that has been implemented, so there is still more to be done,” said Kessel.

“So the new normal has another significant level of regulation associated with it,” he added.

Kessel said that when he started in the banking industry more than 20 years ago, there were about 14,000 banks in the United States. Today, there are about 6,000. He guesses probably three-fourths of the banks that no longer exist were acquired by other banks.

Independent Bank is a major home mortgage lender compared to many other banks in the U.S., but it also has a major commercial business. Its targeted commercial loan base is small to medium-size businesses with annual revenues from $1 million to $100 million. Kessel said Independent Bank management calls its style “relationship banking” because it knows its commercial customers and its commercial customers know Independent well, in return.

Due to job losses and drop in consumer spending and real estate asset values, commercial loans became much more difficult to find during and after the recession.

When asked how it stands today, Kessel said the national economy is “significantly healed, but we are, I think, very much like the rest of the nation: We’re all looking for more growth, a little stronger than what we are experiencing. And I think it is part of the new normal.”

“Coming out of the recession, obviously everybody — whether a business owner or a lender — was very cautious about what their next moves were going to be,” he said.

He noted that the news media and Congress were quick to blame the banks for not lending.

“I’m not sure that was entirely true,” he said. “Had it been scaled back? Probably.” But he quickly added that today, “for good loans, financing is available.” The challenge, he said, “is for those loan opportunities that maybe aren’t as credit worthy.”

“Are the banks lending? Absolutely,” he said, noting that evidence is on all the billboards advertising low mortgage rates.

Kessel earned his undergraduate degree in accounting from Miami University (of Ohio), plus an MBA from Grand Valley State University. He is also a graduate of the American Bankers Association Stonier Graduate School of Banking. Prior to working at Independent Bank, Kessel worked as an accountant and earned a CPA designation.

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