The merger process is an art and a science. A strategic business union requires blending company cultures, core values and key leaders — the “soft”
part of a business that defines its personality and makes an impression on customers.
But a merger also must make financial
sense. Mergers should allow two parties to
combine operations, leverage one another’s strengths and, ultimately, produce a
stronger balance sheet and greater profit
potential.
A merger is a mutual decision between
two companies, as was the case with
Huntington Bancshares Incorporated and
Sky Financial Group. “We think we are better together than separate,” says Rick Hull,
president, Greater Akron/Canton Region,
with Huntington Bank.
On Sept. 21, Sky and Huntington will
have completed all conversions.
“The same philosophy is still in place,”
Hull adds. “We are a local bank with national resources, and we can deliver the same
local decision-making that we always
have.”
The difference is that combined resources mean a wide range of products for
customers, enhanced technology and more
convenient locations.
Smart Business asked Hull to discuss
why organizations merge and how these
unions affect customers, employees and
shareholders.
Why would a financial institution make the
decision to merge?
Banking has become a more difficult,
competitive environment. There are
greater demands for technology, and customers want more services. All this
requires a lot of capital, which is why larger, regional financial institutions can
accommodate these demands and smaller
community banks face challenges when
trying to compete in the same market.
First, technology is expensive, and banks
must be able to afford upgraded services to
compete. And second, regulatory compliance involves investing in processes that
are costly for banks. Businesses decide to
merge so they can leverage strengths and
provide the best services, technology and
products, while at the same time compete
effectively in today’s market.
How does a financial institution decide
whether to partner with another organization?
Any acquisition must be accretive to
earnings. The two organizations must gain
operational synergies that benefit the
‘whole’ from a cost-savings perspective.
Prior to a merger, the two companies
should take stock of their resources: people, locations, customers, technology, etc.
Next, each business should consider its
future. How will a merger provide better
value for customers and shareholders?
Then, the companies should evaluate
whether they share core values and
philosophies so the merger transition is as
seamless as possible.
Huntington and Sky shared the same
vision and had similar organizational configurations. Both banks were driven by a
community bank philosophy, albeit on a
large scale. Having the same bank model in
place provides the best continuity for
employees and customers. For us, the
operational capability was obvious. Huntington had invested heavily in technology
and systems and, as an example, created
one of the best online banking systems in
the business. Sky had used its capital primarily to expand its footprint both organically and through acquisitions.
How do business customers benefit from a
bank merger?
A greater distribution network translates
into convenience for business customers
— more locations that are closer to their
own offices. Customers can appreciate a
more sophisticated system. And because
the merged banks’ capacity is greater, business owners can access programs that may
not have been available to them in the past.
In our case, despite the ‘mass’ that will
allow the new Huntington to give customers more, branches will retain their autonomy and 99 percent of decisions will still
be made locally.
What should a business customer experience
during the integration phase of a merger?
Transition in a merger should be as seamless as possible. By ensuring that the two
companies share values before merging,
the new combined company will not ‘surprise’ customers. They can conduct business as usual. For our customers, signage
will change to Huntington Bank and customers will get new debit cards, but little
else will change. Bankers will walk customers through the process. Communication during transition is critical, so customers can expect to receive multiple notices explaining the merger. Many of these
mailers are required by the FDIC for regulatory purposes, so while the flurry of mail
may seem excessive, it is necessary. Bank
representatives will also explain the merger in person or call customers at home.
How can a business leverage the benefits of
a bank merger?
A merger is an excellent opportunity for
bankers to interact and catch up with customers to see what’s going on in their lives.
Many time-pressed clients are busy running their businesses, and it’s a bank’s job
to suggest the best products and financial
strategies to meet their needs. At the same
time, business customers can review new
products and access other markets and
products that were not available before.
RICK HULL is president, Greater Akron/Canton Region for
Huntington Bank. Reach him at [email protected] or
(330) 438-1196.
