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Originally published July 10, 2011 in Crain’s Detroit Business by Tom Henderson

With the rollout of four new bank branches in Southeast Michigan by the end of October and an additional six or so planned across the state over the next year and a half, Hantz Bank is about to become a much better-known member of the Southfield-based Hantz Group Inc.

The statewide expansion calls for branches in Grand Rapids, Lansing and the area of Flint, Saginaw and Bay City in 2012 and at least one branch in the Upper Peninsula, in either Marquette or Sault Ste. Marie, in 2013.

Hantz Bank came into existence in April 2010 as a single branch when Davison State Bank was bought from the struggling Fentura Financial Inc. of Fenton. The Davison bank was bought for $2.8 million, with an additional capitalization of $7 million to put the bank on a healthy footing.

At the time, Hantz Group President John Hantz said the acquisition was the first step in a 10-year plan to make the bank a major regional player.

In March, the bank opened its second branch in Clinton Township, a former branch of Citizens State Bank of New Baltimore that it bought from the Federal Deposit Insurance Corp. The branch had sat empty after state and federal regulators shut down Citizens State in 2009.

Over the next three months come branch openings in Ann Arbor, Romeo and Taylor in buildings the bank has already bought.

By the end of the year, the bank hopes to move its headquarters from Davison to Southfield, at one of several locations under consideration near I-696 and American Drive. It also plans a Tecumseh branch by the end of the year.

“And we’re pretty close on a Detroit location,” Hantz said.

“Clearly, the first thing we had to do was get the Davison bank financially stable, and we did that. Our ratios there are better than 98 percent of the banks out there.”

The bank’s ratio of assets to equity, a key metric for regulators known as a Tier 1 ratio, was 13.28 percent for the reporting period that ended March 31. A bank needs a ratio of 6 percent to be considered well-capitalized; the state average was 9.35 percent.

As of March 31, Troy-based Talmer Bank and Trust had the best ratio of the 20 banks headquartered in Southeast Michigan, 17 percent. Troy-based Crestmark Bank was No. 2, at 10.65 percent. Michigan Commerce Bank of Ann Arbor was last at 2.05 percent.

“The next part was, how do we expand?” Hantz said.

The answer was twofold, he said, both internally, through the addition of a trust department, and externally, in the form of bricks and mortar. The addition of a trust department requires approval, expected to be a formality, from state and federal regulators.

David Lamb, the bank’s CEO and president who previously headed small-business and middle-market banking for Southfield-based Fifth Third Bank, Eastern Michigan, said he is hiring a five-person trust department. He said the bank employs 25 but plans to add 30 employees this year and 50 next year.

“I’m always excited that people are willing to invest in Michigan and very happy to see it,” said David Provost, chairman, president and CEO of Talmer Bank and Trust, another fast-growing, former one-branch bank.

In April 2010, Talmer, then known as First Michigan Bank, had a single branch in Troy. Today, as a result of asset acquisitions from troubled banks shut down by regulators, Talmer has 54 branches in Michigan and Wisconsin.

“They’ve hired a good team,” Provost said. “If they have customers in financial services and insurance, and see this as an opportunity to take better care of their existing customers, that’s great for the state and great for the industry.”

While Talmer grew through acquiring assets of troubled banks, and Hantz Bank began that way, most of Hantz’s expansion will come through internal growth, buying office buildings where Hantz Group already has a strong presence so it can offer banking and trust services to its current customers.

The Hantz Group offers a wide range of financial and insurance services through various subsidiaries, including property and casualty insurance, estate planning, asset and wealth management and tax planning. (See accompanying box.) The group employs 600 in 14 offices around the state and claims 30,000 clients.

“We want to offer one-stop shopping. It’s a holistic approach, where we can offer every financial service a business or individual would need,” said Hantz.

Cathy Nash, the president and CEO of Flint-based Citizens Republic Bancorp Inc., praised the Hantz Bank model of combining banking services with existing customer offerings. And, as head of a bank that also grew its footprint out of Genesee County into Southeast Michigan, she praised Hantz Bank’s geographical diversification.

“De novo banking is difficult. Ground-up banking is tough,” she said, “de novo” being the industry term for new banks. “But to the extent they’re going to be able to have existing customers that they can provide more services to will make it easier.

“It’s fantastic that people see an opportunity in the state to grow,” she said. “As for another entry into the market, any banker will tell you, a good competitor is good. Banks with capital means they have money to lend and services to offer that only help a community.

“Can a community be over-banked? Certainly,” she said, “but I don’t think we have to worry about that in Southeast Michigan.”

“I know David really well, and I’ve got a lot of respect for him and the people he’s hired,” said John Donnelly, managing director of the Grosse Pointe-based investment banking firm of DPP & Partners, which helps community banks raise money. Hantz Bank is not a client.

As for the Hantz model of melding banking services with other financial and insurance services, Donnelly said: “It’s an out-of-the-box approach. There’s no reason to think they can’t make it work.”

As for John Hantz, Donnelly said: “He’s got a strong franchise. He’s like Dan Gilbert. He knows how to sell. And he knows how to train young people and let them rip.”

Hantz said he has no plans to expand beyond Michigan. “We want to go deep in one place and do it right,” he said.

He joked that with the rollout of Hantz Bank branches in metro Detroit he can get back to being better known for his financial activities than for his so-far-thwarted plans to turn some of the pastures in the city of Detroit into a large urban farm.

“As successful as I’ve been in my day job, it gets overshadowed by the farming,” he said.