Great Lakes Bancorp
Great Lakes Bancorp
Assets: $2.7 billion
Stock Exchanges: NASDAQ
SICs: 6035 Federal Savings Institutions
Great Lakes Bancorp is the second largest savings bank in Michigan, operating 46 branches statewide and in northern Ohio. Specializing in residential mortgages, Great Lakes also offers its customers loans for construction and commercial business as well as checking services and savings plans.
Great Lakes Bancorp began late in the nineteenth century as a savings and loan association. The concept of a savings and loan had originated in 1831 when a “building club” was formed in Philadelphia for the purpose of helping its members purchase homes through loans made from membership dues. The idea eventually gained popularity nationwide, and the savings and loan, or thrift industry, was founded. By the late 1890s, nearly 5,000 associations were operating in the United States with assets of around $500 million.
Great Lakes traces its origins to the establishment of the Huron Valley Building and Savings Association. The association received its charter from the State of Michigan after generating start–up capital of $50,000, and opened for business in January 1891. Located in two rented rooms in Ann Arbor’s municipal courthouse, Huron Valley Building and Savings initially consisted of one employee, John Miner, who for a salary of $11 per month acted as secretary and teller. The association was supervised and managed by H. H. Herbst.
The association experienced steady growth throughout its first 30 years. During World War I, the economy boomed and resulted in dramatic increases in the average American standard of living and income. As the housing industry experienced gains, so did the thrift industry. By 1920 Huron Valley’s assets had reached $200,000, and five years later the association was able to move from the courthouse into a brand new office building in downtown Ann Arbor. Assets increased to over $1 million in 1926, and by the end of the decade, just before the stock market crash in October 1929, Huron Valley’s assets exceeded $2 million. Also that year, H. H. Herbst died and was succeeded by William L. Walz, Ann Arbor’s mayor since 1909 and the first person to hold the title of president at Huron Valley. During his 12–year term, Walz rose to become one of the most respected bankers in Michigan, serving as a top elected official in the Michigan Banking Association and representing the state at conferences in Washington, D.C.
Like Michigan’s banks, Huron Valley posted losses during the Great Depression. Unlike the banks, however, it was not forced to close during the bank holidays declared in 1932 by Michigan’s Governor Comstock, and early the following year by President Franklin D. Roosevelt. Customers of the building and savings during this time were neither limited as to the amount of money they could withdraw nor forced to do their banking business on certain days. Thus, despite the unstable economic outlook, the association remained solvent, and, in fact, acquired a local competitor, the Ann Arbor Building and Loan Association, in what may have been the first merger in the thrift industry.
After the Depression, legislation was enacted to help the country recover economically and protect financial institutions. In 1935 the Banking Act was passed, creating, among other things, the Federal Savings and Loan Insurance Corporation (FSLIC), which would allow thrifts to insure their depositor’s moneys. As a provision of the Banking Act, savings and loans were able to apply for federal charters, and federal insurance was available to them as long as the majority of the loans they extended to customers were used for mortgages.
In 1939, after receiving its federal charter, the Ann Arbor Building and Loan Association was renamed Ann Arbor Federal Savings, a name that management felt would better represent its services and the community, as well as capitalize on the increasing national recognition of the University of Michigan. Over the next few years, Ann Arbor Federal Savings underwent a period of rapid growth. The country’s housing industry boomed again during and shortly after World War II, and, holding strictly to its business of accepting deposits and extending long-term mortgage loans, the company thrived. In 1940 its assets were around $4 million and a major renovation and expansion of the bank’s building was undertaken. The following year Walz died, and his son, William C. Walz, who had been an employee and member of the board at Ann Arbor Federal Savings, assumed the presidency. He remained in that position for 28 years, as the company continued to prosper.
On April 1, 1978, the company merged with First Federal Savings of Battle Creek to form Great Lakes Federal Savings. The bank regards this merger as one of the most significant, and profitable, in its history, as the combined assets of the two savings institutions amounted to over $678 million.
The company’s corporate activity over the next ten years consisted primarily of acquisitions and mergers. In 1981 it acquired East Lansing’s First State Savings and Loan Association, and its assets rose to $900 million. The following year, after a merger with United Federal Savings of Saginaw, Great Lakes Federal became Michigan’s third largest savings and loan association, with assets totaling $1.5 billion. It had now expanded its business to include most of Michigan, excepting only the state’s Upper Peninsula and the Detroit area.
The company was restructured in 1983, changing its status from that of a mutual association owned by its depositors to a corporation whose stock was traded publicly. After decades of national regulation, at this time interest rate requirements were lifted by the U. S. Congress, encouraging competition between savings and loans and banks. While banks generally benefitted from the deregulation, the thrift industry was forced to lower interest drastically to compete. In addition to home mortgages and deposits then, Great Lakes Federal, like most other savings and loans, began offering a broader range of products and services to its customers. These included automobile and commercial loans as well as stock and bond mutual funds, annuities, tax-advantaged municipal funds, and three-month certificates of deposit. In 1987, Great Lakes Federal received permission from its shareholders to again rename the company, this time to Great Lakes Bancorp, which was, as Detroit News reporter Eric Stark-man observed, “a name [that] sounds decidedly more like a bank.” A subsidiary, Great Lakes Mortgage Company, was also formed in 1987.
The following year Great Lakes Bancorp made several more acquisitions. In addition to the deposits of Regency Savings Bank, it acquired Security Savings of Indianapolis, which added six Indiana branches to Great Lakes Bancorp’s holdings and represented the company’s first venture outside of Michigan. In March of 1989 Dollar Federal Savings of Hamilton, Ohio, was acquired, and Great Lakes Bancorp became Michigan’s second largest savings bank with assets exceeding $3 billion from its 57 branches.
As the company became larger, Great Lakes management focused on maintaining the quality of service it had offered as a smaller, community financial institution. In an attempt to create more personalized service, five regional presidents were appointed and many of management’s decisions were decentralized. Helping to foster good relations with the bank’s customers, the new presidents were assigned to oversee all aspects of their regions’ retail lending, retail banking, and new business development. In a statement quoted in the Ann Arbor News, Chairperson Roy E. Weber noted that while other banks consolidated, becoming large impersonal institutions, Great Lakes strove to become more “flexible to pursue a successful community banking strategy in [a] competitive environment.”
In 1991 the company purchased First Federal of Michigan’s Ann Arbor branch. Acquisitions slowed, however, when a three-year analysis of its branch system revealed that the company ought to refocus on its primary market areas: Ann Arbor, Saginaw, and Battle Creek. After selling off four of its branches, by the end of the year Great Lakes maintained 53 branches. Its assets for 1991 were recorded at $3.3 billion. Further refining of the bank’s portfolio resulted in 44 branches in four main market areas: Saginaw, Battle Creek, Ann Arbor, and the northern Cincinnati region of Butler County.
Strengthening its links to the communities it served, broadening its product lines, and improving the returns on shareholders’ investments became priorities for the firm. Maintaining high quality service through a personal approach should eventually draw more customers than larger more impersonal banking corporations. Great Lakes Bancorp seemed well positioned to maintain its competitive status in future years.
Great Lakes Mortgage Company; Security First Corporation; GLB Service Corporation II; 401 Service Corporation.
“Great Lakes Bancorp Adds Personal Touch,” Saginaw News (Michigan), October 12, 1988.
“The Great Lakes Centennial Story,” Channels: A Newsletter for the Employees of Great Lakes Bancorp, Vol. 5, No. 1.
Judge, Paul, “Great Lakes Bancorp Moves to Decentralize,” Ann Arbor News (Michigan), October 6, 1988.
Starkman, Eric, “Bank Ability,” Detroit News, March 15, 1987.