There is no need to panic when the word comes down that your bank has merged with another financial institution or was acquired by another bank. But do try to stay in touch with your account officer and sort things out together.
“Every organization has a unique culture,” says Sue Zazon, president and CEO of FirstMerit Bank’s Columbus region.
“If I were a business owner, I’d give myself a chance to see if the new bank is a fit or not. You won’t know right away, unless you had previous experience with that particular bank.”
Smart Business asked Zazon for guidelines on dealing with the sometimes-daunting experience of seeing your favorite financial institution involved in a merger or acquisition.
Are bank mergers/acquisitions different than corporate mergers in other industries?
The motivation for the corporate take-overs you read about in the newspaper is probably the same as the takeover for a bank: increasing market share, lowering expenses, earnings-per-share growth, acquiring specific products or geography. I don’t think the banking industry and other industries are much different from each other in this regard because they all address the same constituents that is, their shareholders.
If I am a commercial customer and I hear or read that my bank is involved in a merger, should I be concerned?
Near and dear to most companies’ hearts especially middle-market companies in an area like Columbus is what’s going to happen to their credit relationships. For small- to mid-sized companies, the bank can be their sole source of financing. Don’t overreact. Most people tend to think the worst: ‘I’m going to lose my line of credit,’ or ‘I’m going to lose my loans.’
Make sure you talk to your relationship manager and his or her boss. You want to know information about the other bank and its reputation. Sure, there are going to be a lot of ‘I don’t know’ answers because they really don’t know.
It takes time for the bank that is being integrated to iron out all the issues. Banks in general need more customers to grow their business. They don’t merge or acquire another bank to kick customers out. That would be counterproductive. You may, however, be in an industry or business like a parts supplier to the auto industry that’s a higher risk in the current economic environment.
So you may need to know how the new bank views your business. It helps if you know multiple people in multiple positions at the bank. Knowing both your relationship manager and the credit person will position you well. Advocacy from both is important especially during changing and difficult economic times.
How important is the relationship between the bank and the customer?
Bank/customer relationships are the most important thing. Merger or no merger, you need to have a relationship with the bank. If you know your relationship manager well and you know the team leader or regional manager, you’ll be as informed as you can be.
Are there advantages to banking with an institution that has gone through a recent merger?
One advantage may be new product and service offerings that the combined bank may have. For instance, if your company needs to do a lot of international business, it’s a benefit to you if your regional bank is acquired by one with international services and foreign offices.
On the other hand, banking with a bigger bank has the potential to be more expensive on some fronts, while product offerings may be more standardized and less customized.
Another concern I often hear is that people feel like a number at a big bank. I think that feeling at any bank comes down to the service you receive from your branch and relationship manager. Even at a big bank, you can feel important. However, it is true that you become a ‘smaller fish in the sea’ as banks increase in size.
Are post-merger changes more likely to be of a systemic or personal nature?
I would ask my account officer how he or she envisions the merger impacting my relationship with the bank. Is your relationship in jeopardy? Will it cost you more? Are the same products and services going to be available?
Chances are you’ll have the same account officer because the new bank needs someone to service your account. Most personnel savings from a merger are in the back office. What may change is the credit approval process and senior managers. Also, there will probably be a different product offering. You may fit well into a product that your new bank has, so you might be able to save money. Or the new bank may have a higher fee schedule.
SUE ZAZON is president and CEO of FirstMerit Bank in Columbus. Reach her at firstname.lastname@example.org or (614) 545-2791.