Bank of Maumee purchased by Princeton CapitalWritten by Jay Hathaway | | email@example.com
A Maumee bank has landed a new backer, freeing it from the confines of a previously dismal situation, its president says.
The Bank of Maumee, 3425 Briarfield Blvd., has turned its majority ownership over to Princeton Capital, a holding company based in Princeton, N.J. The majority share was previously held by the now bankrupt Capitol Bancorp of Lansing, Mich.
The shift officially took place Nov. 18. The Bank of Maumee’s president, Kevin Rahe, said the change was welcome.
“As Capitol Bancorp’s financial condition continued to deteriorate, we started looking to exit. We had tried twice previously, and then last year, they actually declared bankruptcy,” Rahe said.
Capitol fell on hard times during the housing market crash, but still managed to continue operating some of its banks over the past three years. Inversely, the Bank of Maumee, founded in 2006, had enjoyed a fair amount of growth throughout the years. Despite that growth, Rahe said the association with Capitol had become restrictive.
“Capitol always stated that they would be able to provide additional capital, as needed. If we continued to grow, we expected them to provide additional capital. Well, we grew, and that was the same time they started to have their difficulties, and they were not able to provide the capital necessary to meet our growth.”
While Capitol Bancorp struggled to keep its problematic bank holdings afloat, the Bank of Maumee continued to be hamstrung by the diminished support.
“Those [other banks] became a real source of difficulty for our balance sheet,” Rahe said.
Incidentally, it was Capitol’s relationship with the Bank of Maumee that brought Princeton into the mix, though indirectly.
Gary Hoyer, CEO and managing member of Princeton, said that his group was initially looking for investment opportunities through Capitol. When the investors declined, Princeton looked at Capitol’s federal bank holdings and took an interest in the Bank of Maumee.
“We had been looking for a federal savings bank for a period of time,” Hoyer said. “A bank is not something you can just go into a store and pick off the shelf. You’ve got to look around for one that may meet some of your criteria, and one that you may be able to negotiate for acquisition.”
“While we knew generally where the bank was, we had never visited [the area], and actually had no idea where Maumee was,” he added.
At first, Capitol did not want to sell the Bank of Maumee. However, after considering their need for cash they eventually reconsidered. Hoyer said he was initially skeptical about acquiring a bank in Northwest Ohio, due to the recent economic struggles of Detroit and the Rust Belt. However, after visiting the area, he realized that Maumee has much to offer.
“We were very pleasantly surprised,” Hoyer said. “It is a fantastic community that obviously really supports community banks, which was really important to us. There is a tremendous amount of small-business activity and a diversified economy. We kind of did a ‘180’ in our thought process.”
One of the first things that Hoyer and his colleagues from Princeton did before purchasing the Bank of Maumee was review the bank’s loan portfolio. They then went out to meet some of the bank’s customers.
“We think there’s a lot of value in smaller institutions, and we very much like the idea of a community bank supporting vibrant communities like Maumee,” Hoyer said. “I tip my hat to everybody there in the area. They’ve done a great job struggling through what was a tough economy.”
Both Hoyer and Rahe agreed the new relationship between Princeton and the Bank of Maumee will provide great benefits for both entities, as well as the community.
“The people that have been here, the customers we have here, everyone we have dealt with for the last seven years remains the same,” Rahe said. “What Princeton brings to the table is a business model for residential mortgages and commercial lending that fits perfectly into our thrift charter. We have that source of revenue to grow, based on their business model, yet maintaining the community banking flavor that we’ve had for the last seven years.”
“We bring some additional capital, and the bank needs [that] for purposes of strength and opportunity growth, [and] we bring some new products and services to the bank,” Hoyer added.
With Princeton’s backing, the Bank of Maumee will now be free to take advantage of its federal lender status, and seeks to increase its local presence in mortgage loans.
“A federal thrift is typically focused on providing a lot of consumer and residential mortgage loans, but [under Capitol Bancorp] Bank of Maumee never did any of that,” Hoyer said.
“That will change.”
The bank of Maumee will continue to provide small business loans in the area and throughout the Great Lakes region as well.
Though Princeton now owns a 51 percent majority share of the Bank of Maumee, Rahe emphasized that there are still a significant number of local investors, and additional investment prospects.
“Because of the opportunity we have available, there still is an opportunity for qualified — and I emphasize ‘qualified’ — investors to invest in the holding company, Princeton Capital.”