Vindication Nears for FNBH Director Who Rescued Michigan Bank

Stanley Dickson Jr. never set out to be an angel investor for FNBH Bancorp in Howell, Mich., though it sure turned out that way.

The Detroit attorney last December sunk $7.1 million into FNBH, the holding company for the 123-year-old First National Bank of Howell. FNBH, which has been operating under a consent order with the Office of the Comptroller of the Currency since September 2009, needed the money to bolster capital ratios.

Dickson, 61, who has served on FNBH's board since 2011, says the infusion represents a significant portion of his personal wealth, though the funds were critical for the company after the last recession hit Michigan harder than many other parts of the country.

FNBH lost more than $40 million from 2007 to 2011, and its recovery has taken a while to materialize. Now, due in part to Dickson, there are some signs that the $311 million-asset company is turning the corner.

The company is "definitely in the recovery room," said John Donnelly, a managing director at Donnelly Penman & Partners in Grosse Pointe, Mich. "They're out of triage and out of the operating room."

FNBH disclosed in a recent regulatory filing that improved credit quality allowed it to release $2.5 million from its loan-loss allowance during the third quarter. Through Sept. 30, FNBH earned nearly $3 million, putting it on pace for its best year since 2006. Nonperforming loans fell 31% at Sept. 30 from a year earlier, to $8 million, and the company is receiving scheduled payments on nearly three-fourths of those loans.

The bank's total risk-based capital ratio of 16.48% at the end of the third quarter was well in excess of the 11% minimum required by a revised version of the 2009 consent order. The bank's Tier 1 leverage ratio also complied with the order, though FNBH said in its recent quarterly filing that it is unclear when the order will be lifted.

Still, Mason Capital Partners in Boston bought more than 500,000 shares of FNBH's stock during the third quarter in a move that could be viewed as an endorsement of the company's progress. A spokesman for the investment firm declined to comment.

For Dickson, who is also licensed as a certified public accountant and a seasoned investor in real estate and Detroit-area restaurants, the improvement serves as validation for a calculated gamble made when FNBH was in need of a lifeline. He stands to profit handsomely if FNBH can rebound to a closer approximation of its pre-recession self.

The investment goes well beyond a desire for a return on investment — Dickson's family has longstanding tied to FNBH. His first bank account was with First National Bank of Howell and his father, grandfather and great-grandfather — all bakers — had accounts with the local institution. His father was also a longtime FNBH shareholder.

"The bank needed a sizable contribution [of capital] and no one else was stepping up," Dickson said.

"It was far from a numbers decision," he added. Dickson & Son Bakery "was three stores from the bank, and one of the people my father would see every day was the president."

That president, Steven Itsell, was a legendary figure in Howell, spending his entire career at First National Bank, beginning as a teller in 1925 and working his way to the top. Dickson said one of his most vivid childhood memories was accompanying his father on a visit to Itsell in his office, not long after he became the bank's president in 1966.

"I've never forgotten when my father introduced me," Dickson said. Itsell occupied "the corner office in the corner building in town. He told me 'Stan, never judge a man by the clothes he wears,' and pointed out the window at a man who was wearing overalls. He said he was the CEO of the National Bank of Detroit who'd come to Howell on a visit."

Ron Long, FNBH's current president and CEO, said the company's status as the last remaining locally operated bank in Michigan's Livingston County gives it a unique growth opportunity as the local economy rebounds. The county's population is growing, and its median household income of $72,400 is significantly higher than the statewide average of $48,500.

"Our competition is almost exclusively super-regional and mega banks," Long said. "We occupy a niche that we can work and be very successful."

Phillip Campbell, the town's mayor, said the community remains very supportive of FNBH.

"They weathered the downturn with Howell and now the economy is picking up they're right here ready to go," Campbell said. "The bank is the first thing people notice when they come downtown. I couldn't imagine Howell without the bank."