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Grand River Bank completes $14.4M raise to fund continued growth

BY Sunday, May 14, 2017 01:08pm

GRANDVILLE — Grand River Bank’s parent company has raised $14.4 million in new investor capital to support the firm’s continued growth, MiBiz has learned.

The community bank, which has a single office on Wilson Avenue in Grandville, recorded double-digit growth rates in the past year. Expecting strong growth to continue, Grand River Commerce Inc. decided to return to the market this year to raise additional capital.

“This capital raise was really an effort to continue what we’ve been doing the last few years without interruption,” Chairman and CEO Bob Bilotti told MiBiz. “We were ascertaining the loan demand and the continued expansion of the economy and made the determination that it would be better to absorb the capital now and then redeploy it into the market because the demand seems sufficient.”

The additional capital came from 87 investors, many of whom previously invested in the eight-year-old bank. About one-third of the $14.4 million raised came from institutional investors, Bilotti said.

The funding marks the second time that Grand River Commerce raised additional capital since netting an initial $17 million to form the bank in 2009. In February 2015, the corporation subsequently raised another $10.6 million from investors to support growth. 

As Grand River Bank’s lending volumes continue to rise, the company’s improved profitability should provide it the ability to fund growth internally, Bilotti said.

“We think over the next three years or so that our profitability will begin to marry up with the capital requirements necessary to satisfy that loan demand,” he said. 

Grand River Commerce ended 2016 with assets of $196.1 million, an increase of 22.7 percent from a year earlier. Total loans grew 23.7 percent on the year to $177.1 million, and deposits increased 26.8 percent to $168.6 million.

The strong loan growth led the corporation to record its most profitable year ever with net income of $2.5 million, which compares to $360,000 the year before and just $51,000 in 2014, when Grand River Commerce reached sustained profitability. The 2016 bottom line includes a $1.6 million income tax benefit.

The bank started 2017 with net income of $177,000 in the first quarter, according to a quarterly financial report filed with the FDIC. Loans grew further to $179.1 million and assets increased to $208.4 million by the end of the quarter. Deposits increased to $185.4 million.

Bilotti attributes the strong growth rates in part to consolidation in the Grand Rapids market over the last few years, namely the January 2015 acquisition of the former Founders Bank & Trust by Evansville, Ind.-based Old National Bancorp Inc. That deal was followed six months later by the sale of Holland-based Lake Michigan Financial Corp., the parent company of The Bank of Holland, to Chemical Financial Corp.

Founders Bank & Trust and The Bank of Holland had similar banking styles to Grand River Bank. After both mergers, Grand River Bank picked off business from commercial clients who wanted to bank with a smaller institution, Bilotti said.

“That’s created additional space,” he said. “We’ve been able to fit that bill.”

Grand River Bank presently has no plans to open additional offices, Bilotti said. That holds with the company’s original premise that market growth provides enough opportunity for a community bank with a personal banking style to thrive without developing a broader branch network.

“We don’t need a huge piece of the market in order to be successful,” Bilotti said.

Deposits in the Grand Rapids-area market have grown to $20.5 billion as of June 2016, up from $15.2 billion in June 2009, according to the FDIC’s annual Summary of Deposits. 

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