Finding Your Niche

Local apartment financer says that’s the key to Merchant’s success

By Mike Corbett

A new arrival to Carmel’s fast-growing Midtown District is Merchants Bank, which is moving north from 116th and Meridian. The bank moved to Carmel from Indianapolis 15 years ago and is the only bank headquartered in Carmel. It grew from a mortgage company founded some 30 years ago by CEO Michael Petrie and partner Randall Rogers. Today it’s a $4 Billion bank, and includes Merchants Capital, which is the tenth largest lender for affordable apartments in the country. This conversation has been edited for space.

Hamilton County Business Magazine: Why did you decide to focus on affordable housing?

Michael Petrie: In 1987 when Congress passed the Tax Reform Act and created the low income housing tax credit, when we were at Merchants, we did the first low income housing tax credit project in Indiana with Pedcor Investments, also located in Carmel, and we’ve pretty much financed every deal they’ve done since. We finance that today all around the country, and because of that we have an expertise that a lot of other lenders don’t have….In addition to that we have another company called Merchants Affordable Housing Corp, which isn’t affiliated with the bank other than by name, but it is a 501c3 that owns 2500 units of affordable housing and the people that are in there also provide consulting services for our clients so if we have a client that’s never done an affordable housing project, we can bring in people from Merchants Affordable to consult with these people, provide them with the expertise to do the applications and get them up and going and we’ve done that with a number of our customers. We taught them how to use these programs, and then we provide the financing that backs up the program.

HCBM: Tell me about changes in banking over the years, and how you are meeting those changes?

Petrie: I think the key to banking today for us is that we have to be a little more entrepreneurial. You have to find your niche in the marketplace for what you do and when you do that you have to execute well. People aren’t going to just walk in the door anymore and say they want to do business with you. You’ve got to go out and get customers and so you’ve got to have a niche and an expertise that will bring people to you.

HCBM: Considering that lot of banking is done on the web these days, has it changed the concept of what a local bank is?

Petrie: I guess the way I look at that is, the internet provides a funding source that you can get to fund your deposits that you might not otherwise have through establishing branches. I think it’s very difficult for smaller companies to maintain branches because they’re expensive and it just dries up your overhead. We can’t compete on a cost basis with the big guys like Chase, Wells and Bank of America. But by not having branches you can pay a higher rate to the consumer so the consumer actually benefits. Now we’ll still have some branches but it depends on your business model….Not everybody can be the community bank.

HCBM: So do you consider yourself a local bank?

I provide a service for a lot of local customers. When we finance people they’re mainly local, so we have a lot of customers that are local so that’s why we consider ourselves to be a local bank because we’ve been doing business for 40 years here. Like Pedcor, we’ve been doing business with them since 1987. Like Buckingham, Barrett and Stokely, they’re local businesses…If you look at the apartment projects in Carmel, we’ve financed City Center, Main Street, Old Town on Main Street, Providence on Old Meridian, so we’ve financed a lot of the apartment projects in Carmel, and throughout the state, so we are local from that respect but our funding could come from a national basis, so we’re providing sources of funding that on a local basis they might not be able to get, but through our expertise, our clients benefit from our ability to generate these funding sources.