Chemical Bank forms new Government Lending Program for small business


During the darkest days of the recession, there was a bad joke about banking making the rounds among businesses vainly seeking capital: the only time the bank called was when they called your loan.

Things are better now, according to a commercial lending professional at Chemical Bank. With headquarters in Midland, it is a very large savings bank with a community bank approach, and has expanded over the last year by acquiring another bank’s branches in the southwest and northeast corners of the Lower Peninsula.

“I would say now the banking environment has stabilized. It’s gotten quite competitive again among the banks, and businesses, I believe, are more confident in expanding,” said Scott Ellison.

Ellison, who works out of Chemical Bank’s location in Byron Center, is a vice president and manager of the bank’s new Government Lending Program, serving small businesses throughout the state, including West Michigan.

Ellison and his staff work with small businesses that can grow with help from various government programs that encourage commercial lending, such as SBA, USDA and the Michigan Capital Access Program.

Chemical Bank, which is operated by its publicly held holding company, Chemical Financial Corp., has $5.8 billion in assets and is the second largest of the banks based in Michigan. Chemical now has 156 branches in 38 counties, after acquiring 21 branches last year from Independent Bank Corp., based in Ionia. The branches are located in Otsego, Alpena, Presque Isle, Montmorency, Roscommon, Iosco, Ogemaw, Calhoun and Kalamazoo counties, and added to Chemical’s portfolio approximately $420 million in customer deposits and approximately $40 million of loans.

John D. Hatfield, first vice president and director of marketing at Chemical Financial Corp., said Chemical Bank’s commercial loan portfolio is $2.4 billion across all of its locations, and its total loan portfolio is $4.3 billion. The bank’s West Region loan portfolio is approximately $1.2 billion, including commercial loans of approximately $820 million. The bank’s West Region comprises its Grand Rapids community bank and 20 offices in Grand Rapids and surrounding communities.

Hatfield said publicly held Flagstar Bank is the largest bank headquartered in Michigan, “and we believe Talmer out of southeast Michigan is No. 3. I’d guess Independent would be No. 4.”

Flagstar is based in Troy and has $12.7 billion in total assets. The Flagstar website states that it is actually the largest publicly held savings bank headquartered in the Midwest, with 111 locations in Michigan and 40 home lending centers across 17 states. Flagstar is among the nation’s largest originators of residential first mortgages.

Talmer Bancorp, Inc., also headquartered in Troy, is the privately-held holding company for Talmer Bank and Trust and First Place Bank. Talmer has 86 banking and lending offices in Michigan, Ohio, Illinois and Wisconsin. With its acquisition of First Place Bank at the beginning of 2013, Talmer Bancorp now has more than $4.5 billion in total assets.

Publicly held Independent Bank Corp. in Ionia is a Michigan-based bank holding company with total assets of approximately $2.1 billion. It was founded as First National Bank of Ionia in 1864, and its subsidiary, Independent Bank, has locations across Michigan’s Lower Peninsula.

Last year, when Chemical Bank was acquiring the branches from Independent Bank, a bank analyst who works for a Grand Rapids investments consulting firm told the Business Journal that Chemical was “very conservatively managed and, basically, their stock held up very well” during the recession.

Ellison said the economic recovery, from Chemical Bank’s perspective, has not been abrupt: “It’s just kind of a long, slow recovery.”

The historically low interest rates these days “have very much helped,” explained Ellison. “I don’t think there’s anybody on the consumer side who’s not buying a car or a house because of interest rates. They are almost nothing.”

Interest rates “are starting to creep up on the longer horizon,” added Ellison; “we are seeing a little bit of upward pressure, finally — which is a sign that the economy is improving.”

He mentioned there is talk now in financial circles that the federal government may relax its focus on keeping interest rates low, as demonstrated by the government’s support of home mortgages and through the SBA loan guarantees that make banks more inclined to lend.

But talk of interest rates always gets the financial world’s attention.

Interest rates are “a balancing act as the economy improves,” said Ellison. “You don’t want inflation to kick in; inflation hasn’t been an issue for so long now.

“It’s always a balancing act,” he added.

Ellison said the business environment appears “pretty strong right now. I think business owners, because of what we’ve come through, are cautious. But I do see more optimism and I do believe that businesses are willing to hire employees now.”

During the years when the recession was slowly going away, business owners were very cautious about hiring to return their work force to what it once was, “but I do think you’ll see some more employment, and some expansions.”

Ellison said Chemical Bank is in a unique position, almost too big to be called a community bank, “but we’re not like a big regional bank.”

“We definitely operate in the community bank structure, so it’s kind of the best of all worlds,” he said. The organization is big enough to offer the range of services available from a large regional bank, “but we still come to the public in a community bank style. We’re actually made up of 17 community banks, with all local boards.”

“Even though we’re getting large, we’re still trying to operate in our various markets as a community-style bank,” he added.

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