View from Main Street: Interview with Dennis Angner, CEO of Isabella Bank Corp, Michigan

With double-digit unemployment, central Michigan saw today's financial crisis long before much of the rest of the nation. And Dennis Angner has been front and center to see it.

Past chair of the Michigan Bankers Association, Angner is CEO if Isabella Bank Corp., a $1.5 billion community banking institution. In this exclusive interview, Angner discusses:

TOM FIELD: Hi. This is Tom Field, Editorial Director with Information Security Media Group. The topic today, as it has been for so long, is banking confidence, and we're talking with Dennis Angner, CEO at Isabella Bank Corp. Dennis, thanks so much for joining me today.

DENNIS ANGNER: Thanks, Tom. I appreciate the opportunity.

FIELD: Now, first of all, I understand that your company has recently undergone a name change, so why don't you tell us a little bit about the company and your holdings.

ANGNER: Yes, the Isabella Bank started out as the Isabella County State Bank in 1903, and operated under that name until 1972, when it was changed to Isabella Bank and Trust. Recently, just as a part of freshening the logo and freshening the name, we dropped the "and Trust," and so we think it is just easier to market to people without having such a long name.

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FIELD: Now, give us a sense of sort of the size and the scope of Isabella Bank.

ANGNER: Yeah, we're about $1.1 billion. We operate in the mid-Michigan area, covering basically five counties, with a population in the neighborhood of about 200,000. In those counties, we are by far the largest institution operating in those counties. We have about 30% of the market share. So, we are truly a community bank. From our main office, we have no offices further than 45 miles ...

FIELD: So, Dennis, give us a sense of how your institution has been impacted by the recent global economic issues that we are all hearing about every day.

ANGNER: Yeah. You know, certainly, it falls in a couple of areas. While we, like most community banks, did not participate in all the craziness that was going on in the mortgage markets, the drop in real estate values as a result of the meltdown has certainly had an impact on our markets, with the additional caveat of, you know, we're in Michigan, and Michigan has been in a recession for six years. So, when you add the decrease in market value with unemployment well above national averages, it makes for an interesting operating environment for many Michigan banks.

We've been fairly fortunate, in that while we've sustained losses, not nearly as heavy as many of the banks in this state. This year, I think, probably, all told, out of about 6,000 mortgages, I think we have initiated about 50 foreclosures. But what we do see is the losses that we sustain on those have increased dramatically; probably, on average, about 30% of the outstanding loan balance. We were a typical underwriter, in that, you know, you had to have 20% down. So, in some cases, that would indicate anywhere up to a 50% decline in real estate values. That has made us all somewhat nervous. So, I mean, that's the first piece, that you certainly see the strain in our local economy. We have unemployment in this market, a little over 10% right now, in the entire region. So, we see that strain there. We've been working with a lot of customers to keep them in their homes.

We don't need the government's encouragement to do the right thing there. If you want to work with us, we will work with you. That's pretty much our golden rule, and always has been. The other part is, what has been going on industry-wide, and also, like many banks, we were really concerned back, it really started back in early September, we cut back our exposure to our correspondent banks. We were maybe part of the problem that the Federal Reserve was talking about, about banks not being willing to lend to other banks, because we were unwilling to lend to other banks, unsecured, also. It just didn't seem like a very wise thing to do at the time.

FIELD: So, Dennis, how do you gauge the level of customer confidence in your institution, and how have you seen that change in the past year, if at all?

ANGNER: Oh, yeah. Certainly we have seen a change. For one thing, you look back, and you never talked about the safety of the institution. Everybody just knew it was safe, never had a question. We are now marketing to those people.