Gill Enjoys Banking Challenges

March 10, 2003
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BYRON CENTER — Patrick Gill's parents were in the tavern and restaurant business, which influenced young Patrick's "customer service orientation" early on.

The president and CEO of O.A.K Financial Corp., parent company to Byron Center State Bank, started his career as a teller at Inter-City Bank in Benton Harbor while pursuing a degree in history at the University of Notre Dame.

Although Gill's early ambition was to pursue a law degree and he had already been accepted into law school, he decided instead to join Inter-City Bank full time after his graduation in 1972.

Customer contact and interaction seemed a better fit to a kid who grew up in a retail business environment, he recalled.

In his three years with Inter-City, Gill was promoted from teller to manager of the regional banking office. In 1975 he was hired by Union Bank in Grand Rapids as a management trainee and was eventually promoted to head of private banking.

National Bank of Detroit (NBD) later acquired Union Bank, and Gill served as NBD's vice president and regional director of the bank's three-county Lakeshore region from 1988 to 1992.

He joined Pavilion Bancorp Inc. as president and CEO in 1992. Pavilion is parent company of Adrian-based Bank of Lenawee and Ann Arbor-based Bank of Washtenaw. Pavilion Bancorp had $300 million in assets.

Gill has been in his current position at O.A.K Financial Corp. and Byron Center State Bank since last November. The 82-year-old community bank has 11 branches, 223 employees and assets of $537 million. The company's subsidiaries include the Dornbush Insurance Agency and O.A.K. Financial Services.

Gill said he was attracted to the job because he saw "tremendous opportunity" in Byron Center State Bank.

"First of all it's an organization that has been around more than 80 years that has a proud history and great people," he said. "And it was a franchise that was, certainly in the near term, under-performing its potential."

The bank has great markets, great locations, great people and every reason to succeed, he said. Yet as a result of some infrastructure issues, the organization has not been achieving its potential for some 18 months now, he said.

The bank has been working with state regulators on some management, asset quality and credit risk issues identified last year as part of a regularly scheduled examination.

Gill said all issues identified are readily repairable and that's what he and his staff have been focusing on — with some success, he added.

The entire organization doesn't need to be rebuilt, but there are sections of it that need to be repaired, and he likes the challenge of being part of the team that's doing just that.

As Gill put it: "Why would you not want to come at the point in time when the challenges are greatest? Isn't that really what it's all about? Who would want to come and just be a caretaker?"

This is something Gill has done before.

When he took over responsibility for the Bank of Lenawee, it, too, was operating under a memorandum of understanding with the regulators. In relatively short order, working with the team at that institution, he was able to take it from an under-performing bank that had fallen from grace with regulators to one that had consistently superior regulatory ratings and solid performance, he said.

"The good news is that we are well on the road to dealing with the relatively small number of issues identified that caused the regulatory supervision to increase here," he said. "We are making progress. We were never in danger. It was simply a point in our cycle where we needed to pay more attention to the infrastructure in some areas." In fact, about two weeks ago regulators upgraded the bank, which was earlier than anticipated but most welcomed, he noted.

What Gill enjoys most about the financial services industry is the customer and shareholder contact and the opportunity to make a "meaningful difference" to the bank's business and individual personal customers, he said. He said he also likes the challenge of being in an industry that is changing almost every day.

His immediate priority is to complete a strategic plan and learn more about the organization and its people in the process.

"As is the case with any business there are areas where we can improve, and we intend to do that," Gill said. "The planning process is critical and we'll have it done by the end of March."

The diversity of the metro Grand Rapids market and West Michigan market in general adds strength to the bank, he said.

"From both a customer and employee perspective I think the work ethic is strong here and that's positive for us. The growth that's taking place in the market provides ample opportunity for an organization like us. The office locations that we have are really right in the path of progress."

Banking is a fairly homogenous business. Unless you're talking about the difference between a small community bank and a really large super regional bank, there generally aren't many fundamental differences in terms of product offerings, Gill said. With more than 30 banks operating in town, Gill pointed out that the competitive nature of the local market is squeezing bank margins very tightly right now, so pricing is one differentiator.

Service is the way most financial institutions try to distinguish themselves. Gill believes attitude — the willingness and enthusiasm to serve — is a big differentiator, too.

"We have a passion for providing a level of service and a commitment to doing that that certainly equals the best of our competitors, and we think exceeds that."

Gill adds that Byron Center State Bank doesn't harbor any illusions of dominating the West Michigan market.

"We do, however, believe we can successfully operate in the markets that we serve, we can continue to find markets of opportunity, and we can export banking the way we do it to enough of the West Michigan population in order to provide a reasonable rate of return for our shareholders without having to be all things to all people or the biggest bank in the market or the least expensive bank in the market."           

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