Great Lakes Bancorp is pulling out of Ohio as it launches a major expansion on its home turf in Michigan.
The Ann Arbor-based company has agreed to sell its eight Ohio branches, along with $130 million of deposits, to Cincinnati-based Fifth Third Bank for $11 million.
The $2.5 billion-asset Great Lakes, which has 20 branches in Detroit, plans to open five more traditional branches and five supermarket branches in Kroger Co. groceries in the Detroit area by yearend.
"We need to concentrate our expansion and marketing dollars in Michigan, where we already have a brand name," said Great Lakes president Barry Winslow. "We are a very small player in a very large market in Ohio."
The bank considers its core market to be central Michigan, where it operates 55 branches. But Great Lakes, which is a subsidiary of Minneapolis-based TCF Financial Corp., entered the Ohio market eight years ago with the $12.4 million purchase of a Cincinnati thrift with five branches. It opened another three branches in grocery stores in Columbus, Ohio.
The sale to Fifth Third, which has the largest market share in its hometown, will give it 22 offices in one of the fastest-growing counties in the region. The deal is expected to close in September.
Great Lakes isn't concerned about giving up its toehold in the lucrative Ohio market, especially since it will gain a stronger foothold at home.
The branches in Kroger stores, which have a large market share in Detroit, give Great Lakes the ability to expand rapidly without the cost of building traditional branches, Mr. Winslow said.
"We already have a major investment in Detroit, but we need to have more branch density," he said. "Those stores have a very high traffic volume."
The bank's first move will be into Southfield, a western suburb of Detroit, where it plans to open a traditional branch by August, Mr. Winslow said.
Jeff Kopelman, president of $923 million-asset Sterling Bank and Trust in Southfield, said the local economy is healthy enough to support another bank.
"There is room for other institutions," he said. "The economy here is robust, and the market is strong."