Michigan Banker Likes Arizona So Much He Plans to Open Another New Bank

A Michigan banker plans to open his second new bank in Arizona in the coming months, signaling a resurgence in community banking in the state.

"The Arizona banking industry has really taken it on the chin," said Joseph D. Reid, chairman of Capitol Bancorp of Lansing, Mich., who is leading the start-up effort. "Normally when an industry drops that far it's only a matter of time before it revives. We're hitting this at precisely the right time."

Mr. Reid's application with the state's banking department, filed last week, is one of four new bank charter applications under review.

Last spring, Mr. Reid started Valley Commerce Bank, the first new bank in Phoenix in 10 years. Before that effort, there had been no start-ups anywhere in Arizona since 1992, when there was one.

"As the saying goes, imitation is the finest form of flattery," said Mr. Reid, whose second bank would be in Tucson. "Now it's become a good idea, but this is a big market and there is certainly enough room for all of us."

Mr. Reid, whose Michigan holding company has six banks and $365 million of assets, said he and his Michigan investors scoured the country for the market that they thought had the most promise and need for community banks. The decision to move into Arizona was not necessarily related to the booming tourism industry there, he added.

As a result of thrift and bank failures and a thorough picking-over by out-of-state banks, the number of institutions based in the state has been cut in half in the past five years, to about 30. The result, Mr. Reid believes, is an enormous need for healthy local banks.

He will probably apply to open a third start-up in the coming months, on top of his plans to open another one in Michigan, he said.

All of the banks, in both states, would share back-office tasks and could collaborate on loans, enabling the infant institutions to cater to bigger customers, he said. None of the banks would have branches because he wants a president in every location, he said.

If regulators approve, the bank would attempt to raise $4 million in capital this fall and open by the first quarter of 1996 as Tucson Commerce Bank.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER