The Parsons Group

Michigan law puts tight controls around the expansion of banks. There is an absolute ban on the bank holding companies that are familiar throughout the rest of the country; no bank can open a branch farther than 25 miles from its home office, or in a town where another bank is already established. The rules are so strict that the recent acquisitions made by a crew of young businessmen known as "the Parsons Group" seem a blatant invitation to the bank examiners. In the past three years, Donald H. Parsons, 37, and his 15 associates, have bought control of seven Michigan banks. Last week the syndicate took over an eighth.

Everything they have done, however, has been cautiously legal. With one basic tactic, Parsons and his partners have escaped the onus of becoming a bank holding company and evaded the restrictions of branch banking. They have simply set up a new and separate partnership to take over each bank. And Michigan has more than its share ready for takeover. In the Depression days of the early '30s many small Michigan banks were bought up by Reconstruction Finance Corporation examiners who had worked over their books and recognized their long-term potential. Those ex-examiners have now reached retirement age, and are ready to sell out. The Parsons group and its partnerships are attractive buyers, partly because they pay a premium on bank stocks, partly because they make a point of leaving local people in control of the banks they take over--at least at first.

Methodical Man. A stocky, serious six-footer who graduated from Yale ('52) and earned both law and business degrees at the University of Michigan, Parsons is such a methodical type that he draws up a written budget of time to be allotted to his wife, his three children and his business. It was only natural that just before leaving school, he drew up a list of cities in which he might like to practice corporate law. Detroit was low on the list because its "environment" was poor. But its law firms were first-rate, and eventually Parsons managed to convince himself that Detroit was his city. He joined a firm there that put him to work on the affairs of its biggest client, the Detroit Bank & Trust Co.

In 1960, when Parsons set out to establish his own law firm in Birmingham, he had already seen enough of Detroit banking to decide that it was too conservative. By drawing on his own inheritance from a grandfather and tapping friends, Parsons got together $650,000 and mounted a challenge to Detroit bankers within their own 25mile limit. In a small Birmingham office building, he founded the Birmingham-Bloomfield Bank. It may not have looked like much, but it had Saturday banking for suburbanites, lower charges on checking accounts, and it paid 3% on savings rather than the general 1%. As a result, the Birmingham-Bloomfield Bank blossomed from $3,000,000 in assets to $100 million. Parsons decided to get into the banking business in a bigger way.

No Quarrel. When Atlas Credit Corp., a Philadelphia-based investment company, offered $77.50 a share to gain control of Detroit's fourth-largest Commonwealth Bank, Parsons cancelled a business trip to Chicago, huddled for 24 hours with his partners. It would have been ambitious enough just to try for a slice of the bank, but the young partners decided that nothing could be quite so satisfying as complete control. They bettered Atlas' offer by fifty cents a share, organized a public relations campaign that stressed the advantages of hometown ownership. Within three days, after tender offers were counted, Parsons was Detroit's fourth largest banker.

Since then, the group has not only formed new partnerships to take over other banks, but it has also reached into other businesses. Group leaders include Thomas H. Wagner, 51, a successful auto-parts manufacturer, Frederick C. Matthaei Jr., 42, son of the founder of American Metal Products Co., George B. Kilborne, 37, a Yale classmate of Parsons', and George W. Miller, 43, whom the group tapped to become president of Commonwealth after its takeover. Their acquisitions include banks in Lansing, Royal Oak, Kalamazoo and Coopersville, as well as office buildings in Detroit and Ann Arbor and interests in small business corporations in Detroit and New York. The more they expand, the more irritated Detroit bankers become. But Group Leader Parsons, already a millionaire, says he has no quarrel with anyone. "There is plenty there for everyone," he insists.

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