- The Washington Times - Monday, July 21, 2003

The day after M&T; Bank Corp. announced plans to purchase rival Allfirst in September, M&T; executive Atwood “Woody” Collins III hit the road to check out his company’s latest acquisition.

Mr. Collins, president and chief executive of M&T;’s mid-Atlantic division, estimates that he met with 2,000 Allfirst employees and customers from Sept. 26 to Dec. 22. By Christmas he lost his voice and had to be taken to Mercy Medical Center in Baltimore.

“This was our 12th merger, but no two are ever the same. Your success is always measured by the one you’re doing, not the ones you’ve done,” Mr. Collins said.

Combining two banks is never easy, executives and analysts say. Almost all the work takes place behind the scenes.

Software systems and telephone systems must be converted. Employees must be trained. Letterhead, business cards and signage must be updated. Branch lobbies must be stocked with new brochures. Customers must be given new checks, deposit slips and account numbers.

“You can’t leave anything to chance,” said Kay Jones, a senior vice president who oversees mergers for BB&T; Corp., the fast-growing North Carolina banking company that closed a $3.2 billion deal this month to acquire First Virginia Banks Inc. in Falls Church.

Once a merger is announced, executives usually begin hashing out the details. Often they spend several months deciding how many branches will stay open and how many employees will remain with the combined companies.

M&T; cut 1,132 Allfirst employees and closed 29 branches: three in Maryland and 26 in Pennsylvania. BB&T; plans to close 121 First Virginia branches by mid-October. A BB&T; spokesman said the company does not know how many of First Virginia’s 5,000 employees will be laid off.

In the case of M&T;’s Allfirst acquisition, Mr. Collins hit the road the day after the merger was announced to meet with as many Allfirst employees as he could. In one instance, he encountered a branch employee who was popular with customers but had been reassigned to a behind-the-scenes job. Mr. Collins promptly put the man back on the front line.

“You’re not going to get that by looking at an organizational chart. You’re going to get that by getting out there and asking questions and listening,” Mr. Collins said.

Bank tellers are crucial to mergers because customers want to see a familiar face when they visit a branch, Ms. Jones said. BB&T; has committed to keeping all First Virginia branch employees, she said.

“You want to keep the branch people. It would be insane to ask them to leave,” she said.

All the planning leads up to the conversion of the newly acquired branches to the company, a process that usually takes place during a single weekend.

M&T; converted more than 260 Allfirst branches, including about 160 in Maryland, into M&T; branches during the recent Independence Day holiday weekend.

On July 3 a palate with materials needed to operate an M&T; branch arrived at the Allfirst locations. The palates, which M&T; dubs a “bank in a box,” included such items as the signs for the building and brochures for the lobby.

During the next three days, the bank’s employees worked to transform the Allfirst branches into M&T; branches.

“The key is not in the strategy; it’s in the execution,” said Mr. Collins, who estimated that M&T; experienced $26 million in merger-related costs to acquire Allfirst. The value of the merger is estimated to be $3.1 billion.

BB&T; estimates that it will spend $36 million to $39 million after taxes on expenses related to its First Virginia acquisition. The cost of the deal is estimated at $3.38 billion.

BB&T;’s expenses include the cost of signage, new checks and other forms for customers, severance packages for employees who leave after the merger, training, branch closings and helping laid-off workers find jobs.

Customers should probably get used to bank mergers. More are likely as the economy rebounds, said Greg McBride, senior analyst for Bankrate.com, a personal-finance Web site.

“These things come in cycles. As the economy continues to turn the corner, acquirers will be in a better position to absorb banks,” Mr. McBride said.

The details are at the front of every bank executive’s mind when considering mergers and acquisitions, said Gary N. Geisel, chairman and chief executive of Provident Bankshares Corp., parent of fast-growing Provident Bank in Baltimore.

“Obviously what we look at is whether or not the expenses related to a merger will be less than the revenue. At the end of the day, that is what we focus on,” Mr. Geisel said. Provident has been aggressively pushing its way into the Washington suburbs since 1997 — when it acquired Citizens Savings Bank, which had 15 branches in Montgomery and Frederick counties.


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