Commerce State Bank completes $11 million capital raise

Potawatomi tribe among latest investors

Commerce State Bank headquarters
Commerce State Bank headquarters in West Bend.

Last updated on July 3rd, 2019 at 07:14 pm

West Bend-based Commerce State Bank has completed an $11 million capital raise from about 100 investors, most of whom were individuals.

Commerce State Bank headquarters
Commerce State Bank headquarters in West Bend.

The bank initially raised $12 million to get started in August 2005, then another $8 million round later and a couple of smaller rounds. It now has about 350 investors.

The proceeds from the latest funding round will be used for general organic growth, to fund potential acquisitions, and to fortify the capital position of the bank, said Joe Fazio, chairman, co-founder and chief executive officer of Commerce State Bank. There are no specific acquisitions on the horizon, he said.

“It’s not something that we go, ‘Hey, we’ve got to acquire a bank of this size and this location,’” Fazio said. “We just know a stronger capital position puts you in a stronger position to do acquisitions because you have the added capital.”

Commerce State Bank recently opened branches in Elm Grove and Sheboygan, and has added about 30 employees in the past year. It now has 73 employees and also has a branch in Cedarburg and a loan office in Saukville.

“We are very excited about the growth opportunities in those markets and really accelerating or focusing on making that happen,” Fazio said. “We just see a long runway in both of those locations. We really want to focus on doing well in those two locations.”

Commercial loan demand and the addition of mortgage originators in key markets is driving the bank’s growth, he said.

Among the investors in this latest round is the Forest County Potawatomi Community, which took a 9.9 percent stake in Commerce State Bank with its undisclosed investment. The tribe described its investment as part of a broader economic development initiative.

This is Potawatomi’s first investment in a financial institution. It was the largest investor in this round of funding, said George Ermert, a spokesman for the tribe.

“We are not disclosing the amount invested by the tribe,” Ermert said. “Out of the $11 million that Commerce State Bank raised during this capital fund that they did, Potawatomi was the largest source of that.”

“The tribe was looking at multiple opportunities and Commerce State Bank fit exactly what they were looking for,” he said. “They didn’t want to dive in the water. They wanted to dip their toe in the water for investing in a financial institution like this.”

The Forest County Potawatomi in 2002 launched the Potawatomi Business Development Corp. as its economic development and income diversification business. It has focused on hospitality, real estate development, technology and federal contracting.

Among the PBDC’s initiatives is Greenfire Management Services LLC, a Milwaukee-based construction management and owner’s representative company. Greenfire developed the Potawatomi Hotel in Milwaukee and the Echelon at Innovation Campus in Wauwatosa.

Another project started by PBDC is Bend, Ore.-based Redhawk Network Security, which offers information security solutions in the financial, health care, government, utilities and Indian gaming industries nationwide.

The tribe’s economic development efforts have also extended to data management, with the Data Holdings data center it opened in 2013 in Milwaukee.

“As we’ve experienced first-hand, gaming revenues can be volatile so it’s important that the Tribe find new ways to diversify our businesses. The Potawatomi will continue to look for sound investments that will benefit both the communities where we operate and the Tribe,” said Gus Frank, chairman of the Forest County Potawatomi.

“This investment from the Potawatomi will allow us to continue executing our strategy to better serve communities and businesses in Wisconsin,” Fazio said. “We are very excited to work with a trusted partner like the Forest County Potawatomi.”

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Molly Dill
Molly Dill, former BizTimes Milwaukee managing editor.