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By Nathan Peck | MiBiz
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GRAND RAPIDS — In the banking world, it is sometimes better to be the tortoise and not the hare.

A conservative growth strategy has paid off for Founders Bank & Trust, which has boasted profits that would be the envy of many in the banking industry — 62 consecutive profitable quarters. While other banks took risks on real estate and chased fees in risky ventures, Founders played it conservatively, looking at long-term growth.

Viewed through the lens of the volatility of the last two years, the strategy seems especially prescient and has allowed the bank and trust to grow its assets to $420 million on $312 million in deposits. Now employing nearly 100 people, the 19-year old bank has experienced significant growth in its commercial loans — which are up 15 percent over a year ago — and deposits are up 25 percent over a year ago.

Founders Bank & Trust President and CEO Laurie Beard recently sat down with MiBiz in the bank’s Cascade headquarters to talk about how taking the long view has served the banks customers and shareholders well.

MiBiz: Founders Bank & Trust seems to have avoided many of the problems (troubled assets, rising numbers of nonperforming loans) that have hurt other banks since the recession. How did you avoid those pitfalls?

Beard: We’re privately held and that has allowed us to focus on our business model. I am comfortable and pleased with the way we’ve weathered this storm. We’re based in Grand Rapids, we’ve always been in Grand Rapids. We’ve not been distracted by what has gone on in the rest of the country. At some point in the past, in the frenzy (of the last five years) we would have been criticized for being too conservative.

We are focused on building our relationship with the customer, getting to know them and their business and their needs. (Our growth) is coming from all over — our marketing efforts are paying off. We don’t sell ourselves against others; we sell what we can offer.

We have focused on steady, manageable growth. We are very disciplined in our lending culture — we certainly are not perfect. We are trying to see how we are doing against our peer group. …We are number one in our peer group in nonperforming assets. We’re at 1 percent when the average is around 4 percent. There is no such thing as no risk in lending — that 1 percent requires us to be right 99 times out of 100. Now the challenge is to keep that up and not take our eye off of the ball — even for a second.

We are exceeding our projections — our returns on equity are at 13.2 percent when we had expected to see something more like 8 percent. Our earnings per share (of $1.05 per share) are records in our 19-year history.

MiBiz: What has contributed to your growth over the last year?

Beard: Big banks that have needed to shed their commercial loans have sometimes yielded really good customers for us, sometimes not. The demand across the board has slowed. The real driver for us is the mortgage industry. We are seeing a record volume of mortgages. The trust and investment management group is contributing as well.

People are saving more even with interest rates as low as they are; we are over budget projections with respect to deposits.

MiBiz: What is your growth strategy going forward?

Beard: I am very proud of our financial strength and that is going to factor into our growth. We have worked very hard to be as strong as we are. We have to fight hard to keep that going. We are growing our market share. We’ve created seven jobs in the last year, (and) there have been no layoffs in this period, no cuts in benefits. We’ve always been a frugal company.

Nearly all our business comes from referrals, so we’re looking to a combination of our lenders getting out there and finding the deals, and (having) our existing customers refer us to their friends. Something, we hear increasingly is that it is unusual to hear good things about a bank. The momentum is building in a positive way for us.

When we founded the bank, we tried to get back to the basics of growing our customer base one at a time — of treating others like we’d like to be treated. The Golden Rule has served us well.
We have to stay close to our customers and continue to get to know them really well. To me banking is very personal.

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• finance
• founders bank & trust
• grand rapids
• laurie beard
• money marshalls