Metro Detroit bank, Traverse Bay winery navigate way to 2012 '50 to Watch' list

It isn’t surprising to see computer software, health care and Internet-based companies on a list of up-and-coming companies in Michigan.

But a community bank?

Wall Street’s meltdown in 2008 wiped out hundreds of banks across the country, including 13 mostly small local banks in Michigan.

The banking climate was so bad in Michigan that the state’s largest financial institution, Comerica Inc., moved its headquarters from Detroit to Dallas in 2008. And the industry still is struggling to regain its footing.

“In today’s marketplace, it’s unusual to think of banking as a growth industry,” said Patrick Fehring, chief executive officer of Level One Bank, based in Farmington Hills.

Nevertheless, Level One is among this year’s Michigan 50 Companies to Watch, small businesses with fewer than 100 employees and the desire to grow.

The companies are being honored at a gala reception in Lansing tonight.

2012 "50 Companies to Watch"

They represent a wide array of industries, including manufacturers, software developers, Internet retailers, food processors and even a Northern Michigan winery.

“I think we’re seeing the economic recovery through these companies,” said Rob Fowler, president of the Small Business Association of Michigan, one of the sponsors of the 50 Companies to Watch competition.

“You can see in their five years’ worth of financials we asked for that they had a tough 2009, a recovering 2010, a good 2011 and are projecting a really good 2012,” said Fowler, one of the competition’s judges. “That is the pattern among all these companies.”

The 50 companies are projecting combined revenues this year of $535 million, up 26 percent from $426 million in 2011. Total employment is expected to jump to 2,325 by the end of the year, from 1,917 jobs in 2011, a 21 percent increase.

“I’ve been preaching optimism about Michigan because of this class,” Fowler said. “They are really optimistic about their own prospects for growth.”

One of those companies, Chateau Chantal, a winery and inn on the Old Mission Peninsula near Traverse City, last year doubled its winemaking capacity and retail sales space. The winery has been producing about 20,000 cases a year of riesling, chardonnay, pinot noir, pinot grigio and other fine wines.

Its bed-and-breakfast inn was expanded from three rooms to 11 small suites and two-bedroom units in 2003.

“I think that has really set the stage for us for the next decade,” said Jim Krupka, Chateau Chantal’s president and chief executive officer.

“One thing that has contributed to our success is that we’ve paid attention to what we’re good at -- providing a top-end hospitality experience and producing outstanding fine wines.”

Chateau Chantal employs about 100 full- and part-time workers. It’s a seasonal operation in which employment fluctuates.

The business isn’t expecting much job growth, but does provide employment opportunities for those looking to learn the wine business and others who want flexible hours they can’t find elsewhere, Krupka said.

Going up a level

Level One Bank is one of the younger companies on the 50 Companies to Watch, having been started in 2007 by Fehring and a group of investors.

The bank had 92 employees when it was named to the 50 Companies to Watch list earlier this year, but already has grown to 110 employees -- and expects to employ about 135 people by next year.

“We see ourselves on a path of hiring about 30 people a year,” Fehring said.

Fehring, the former president of Fifth Third Bank, Eastern Michigan, and several other bankers started Level One because they saw an opportunity to fill a market void.

“There were very few local banks left in the Detroit market,” he said. “We believed there was a better way to bank” than doing business with large banks headquartered outside of Michigan.

Loans officers are allowed to make decisions on whether to approve loans; “kind of the way it used to be,” Fehring said.

Level One started out specializing in serving small businesses. It opened its doors in October 2007 with a dozen employees and $18 million in assets.

It began to grow on its own, but the banking crisis that hit in 2008 gave Level One the opportunity to expand more rapidly into retail banking through several acquisitions of failed banks.

In 2009, it assumed about $151.7 in deposits from the closed Farmington Hills-based Michigan Heritage Bank from the Federal Deposit Insurance Corp. And in 2010 it took over another Farmington Hills institution, Paramount Bank, from the FDIC. The deal included $213.6 million in deposits.

Today, Level One has six locations in Metro Detroit and $465 million in assets.

Fehring said loan growth is returning, although many small businesses still are struggling to achieve the kind of positive cash flow that make them good credit risks.

“The view we’re taking is that Michigan’s economy is definitely getting better,” he said. “Manufacturing is improving substantially.”

Another business on the 50 Companies to Watch list, the Detroit Trading Co. in Southfield, occupies a market niche few probably have heard of.

Operating like an online stock exchange, the company allows car dealers and consumer information companies, such as Autobytel and Edmunds.com, to buy and sell sales leads generated by consumers using those sites.

Millions of those leads every year cannot be fulfilled for a variety of reasons by the companies generating them, but have value to others.

“If a lead generator (such as Autobytel) gets a lead and has no place to send it, we might have a buyer for it,” said Detroit Trading Co. CEO Don Campbell. “It’s very important for companies on the Internet to figure out a way to monetize their traffic.”

The company, started by Campbell in 2004, transacts 5,000 sales leads a day. Detroit Trading generated $10.4 million in sales last year and expects revenue to rise to $12.5 million this year.

Companies that qualified for this year’s 50 Michigan Companies to Watch list employed between 6 and 99 workers, had sales revenues of between $750,000 and $50 million last year and were planning for future growth.

Rick Haglund has had a distinguished career covering Michigan business, economics and government at newspapers throughout the state. Most recently, at Booth Newspapers he wrote a statewide business column and was one of only three such columnists in Michigan. He also covered the auto industry and Michigan’s economy extensively.

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