What's in a Name?

>>This spring, customers logging onto Pelican National Bank's Web site were informed that the site would soon be changing, along with the bank's name, as a result of its acquisition by Stark Bank Group of Iowa.

That transition, which occurred in late April, was the culmination of months of preparation to transform Pelican National to First American Bank, N.A. In addition to the new Web site, customers saw new signs, brochures and bank statements.

Through it all, the bank doesn't want customers to slip away. In an age of frequent bank acquisitions and mergers, local bankers involved in consolidations say it's important to communicate with customers and to limit the number of changes, if possible. "The real value of banks is in the customer base," says president and CEO Ken Aschom. "If you lose the customers, you're not going to get the value you had anticipated."

In the weeks leading up to and after the transition, the bank's strategy for retaining customers centered on its employees. Management shared information with staff members about the bank's deposit base and new products, policies and promotions that were planned with the new owners. That daily communication with employees helped combat misunderstandings, confusion and resistance to change, Aschom says.

"You've got to tell people the truth," he says. "You've got to try to provide a context for employees to have confidence in their own personal futures. Then they can do a really good job with customers."

Michael Geml, chairman and chief operating officer of Busey Bank Florida, which acquired Tarpon Coast National Bank in February, says he tried to avoid "all of the negative things" that come with bank mergers.

"The last thing we thought about doing, and didn't do, was change their name. Name changes, sign changes are jokes in the community," he says.

Keeping the Tarpon Coast name allowed the bank to maintain its identity as a community bank in Charlotte and Sarasota counties.

"If we went in there and took their signs down, the customer would have seen a noticeable or unseamless change. It would have given all of the competition in that area ammunition, saying, 'Oh, look, another big corporate company buys them out and they changed their name,'" he says. "In fact, we did something that was so totally contrary to the merger industry that people don't realize that the merger took place."

Keeping the name is critical to making a seamless transition, says Robert Smedley, chairman and CEO of First Florida Bank, which was acquired in March by Columbus, Ga.-based Synovus. "The bank, for all intents and purposes, is the same bank as it was on March 1. Just the ownership changed," Smedley says.

In some cases, one bank buys another and "immediately after the acquisition, they begin changing what they purchased," Smedley says. Depending on the purchase price, banks might push for economies of scale by consolidating and shutting down operations. "That eliminates personnel, which causes customers to begin seeing changes," he says.

There's usually a concern that a community bank will be standardized and centralized by "some out-of-state giant that doesn't have an appreciation for the local market," says Aschom.

How customers are informed about the merger and potential changes varies as well. First Florida sent out a notice in customers' statements announcing the acquisition by Synovus. Shortly after an agreement was reached between Tarpon Coast and Busey, a letter with the announcement was sent out to customers. Then prior to the completion of the merger, a second mailing featured a pamphlet providing questions and answers about checking accounts, payments, interest rates and other details.

Communication with customers must be clear and friendly, says Aschom.

The size of the institution often dictates the direction the transition takes, Geml says. "If you are an interstate bank acquiring another interstate bank, then there's more attention to customer retention and satisfaction. You're trying to increase your market share. The last thing you want is to do something that's going to upset your customers," he says.

Eliminating bank branches during the merger process can upset customers. Busey kept Tarpon Coast's four branches open, but when a big bank is involved in an acquisition, says Geml, "obviously, they can't cater to the local individuality of each one of the banks. It's just economically impossible."

One strategy is to let customers and employees know what to expect in terms of staff reduction, Aschom says. The other is to tell people there will be no changes, which can backfire when customers find out differently and take their business elsewhere. "Lots of banks do that, and then they pay for it later."