While a group of investors is trying to acquire a controlling share of their company’s stock, officials at Brookfield-based RidgeStone Bank have introduced several new products in an attempt to attract new customers during the firm’s turbulent times.
In February, a group of investors launched an unsolicited takeover bid for RidgeStone Financial Services Inc., the parent company of RidgeStone Bank. The group filed documents late last year saying they intend to purchase controlling shares of stock. The group has not yet acquired enough shares to control the company.
In June, the bank hired New York-based Keefe, Bruyette & Woods Inc., an investment banking firm, to explore its options, said Paul Menzel, chairman of RidgeStone. The firm has been asked to determine the best course of action for the bank to avoid a hostile takeover.
Because of the potential for a takeover, Menzel said there isn’t much he can say about the bank’s long-term plans.
"It’s difficult to talk about this now," he said. "It’s in a tender, difficult position."
The bank asked Keefe, Bruyete & Woods to evaluate its options, he said.
"All of the alternatives are out there," Menzel said. "That includes buying (another bank), selling or finding a ‘White Knight.’ There are a wide range of alternatives we are looking at."
Menzel would not specify the timeline that Keefe, Bruyette & Woods are operating under to come with a plan, but he said it was relatively short.
Doug Kratz, one of the bank’s investors who has taken some steps toward a potential takeover, said he is glad to hear Ridgestone is working on a potential sale or purchase.
"That’s good news," he said. "My patience is starting to wear thin. If something doesn’t occur in the near future, I, like many other significant shareholders, will decide there is a need for action. We all have limits of our patience. But hopefully they’re moving in the right direction. We just want what is best as shareholders, and many other shareholders have the same feelings that I do."
RidgeStone was founded in 1995 and has about $115 million in assets. Its offices are at 13925 W. North Ave., Brookfield, and it has a small drive-through location a short distance away.
The bank has no plans to expand its operations now, because of the potential takeover, he said.
While the bank and its holding company resist the potential takeover and explore options, the bank has taken several steps to attract new customers. The bulk of the bank’s business has traditionally been in business loans, but its three new initiatives are aimed at attracting more traditional retail customers.
Earlier this spring, the bank introduced new debit cards that have customers’ photos on the front, aimed at protecting against identity theft. Chris Lake, the bank’s president, said RidgeStone found that no local banks were offering photo debit cards in the Milwaukee area. Adding another protection for customers seemed like a good idea, because of the rising number of identity thefts, she said.
"It’s a growing threat across the country," Lake said. "And as a small financial institution, we are able to stay in close contact with our customers, and this is something they’ve been thinking about. We thought this would be one more way to help protect them."
The bank takes photos of customers in its offices. Each photo is sent with the customer’s information to the debit card supplier. Having the photo put on the card adds about one day to the waiting period, making it a little more than one week.
The photo debit cards also display the card owner’s signature on the front of the card, making it even more difficult to use if stolen.
So far, customer response has been good to the photo debit cards, Lake said.
"Most people that have signed up for new debit cards will opt for the photos," she said.
On June 1, the bank also started offering identity theft insurance, at no extra charge, for all customers who have an active checking account with a debit card at the bank. The bank selected the St. Paul Insurance Company to carry the policy for its customers. The policy provides up to $10,000 in identity theft coverage, which covers more than just stolen money.
The insurance policy can cover lost wages when a customer needs to appear at a police department or meet with insurance agents or lawyers and isn’t able to make it to work, Lake said. Many of the people who become victims to identity theft are hourly workers, who suffer the most when they miss work, Menzel said.
"There are many expenses that you can have (after identity theft) that you didn’t think you could have," he said. "And if you’re an hourly person, you’re the last person who wants to have lost wages."
The service also includes an 800 number for the insurance company, which helps guide victims of identity theft through the process of recovering their identity and restoring their credit, Lake said.
"Most people don’t know where to start," she said.
The bank also introduced a mortgage promotion on June 1, in which it offers new mortgage customers who take out a mortgage of more than $150,000 a $600 gift certificate to either Merry Maids or David Frank Landscaping Services. Executives were looking for a promotion to help set RidgeStone Bank apart from its competitors and to emphasize the personal style of service that the bank offers, Menzel said.
"We were looking for something a little different, something a little more personal than you would get at a large institution," he said. "We tried to think of things for our customers that they thought they couldn’t afford or they hadn’t thought about. And for those that are in the process or in the throes of buying a house, this is something that we could do to differentiate ourselves. We’ve got competitive rates and fees, but we wanted that extra little kick to make us different."
The initiative is typical of RidgeStone’s approach to doing business, because of the amount of time the bank and its employees are willing to spend with customers, Menzel said.
"We’re a personal, hand-holding bank," he said. "We take a personal approach to handling mortgage and making sure you get the right product. We would rather have you in the right product and make less money off of you than take advantage of you."
RidgeStone’s difference has been in the service department, because many large banks make concessions to customers in the form of commodities, Lake said.
"We distinguish ourselves in the service area," she said. "We have experienced people and we respond to our customers quickly. We don’t have to constantly compete on price then."
August 19, 2005, Small Business Times, Milwaukee, WI
