Pandemic Challenges, Strengthens Bank’s Deal Integration

One bank found that the Covid-19 pandemic actually accelerated its deal integration, creating a stronger pro-forma institution to serve clients after overcoming a number of unexpected hurdles.

The coronavirus crisis has thrown a wrench in bank mergers and acquisitions, challenging everything from due diligence to pricing to regulatory and shareholder approvals. Only two bank deals were announced in May, according to S&P Global Market Intelligence; potential buyers and sellers seem to be focusing on assisting customers while they wait for a normalized environment. But Sandy Spring Bancorp found itself with no choice but to adapt its deal integration with Rockville, Maryland-based Revere Bank, even as both banks shifted to a remote work environment.

For us, it’s very important to understand that not just the successful integration, but a successful acquisition is centered around finding the right partner to begin with,” says Sandy Spring President and CEO Daniel Schrider. “And it’s really important … to find an organization that either complements what we do or provides access to a different market that maybe we’re not in, but has a shared vision around client relationships.”

The Revere team was well-known to Sandy Spring, with executives serving on their state bank association as well as competing against each other for local deals. After talking for about 18 months, they announced their merger agreement in September 2019; the deal pushed the Olney, Maryland-based bank above $10 billion in assets.

For months, deal integration proceeded as expected. The banks kicked off internal communication campaigns to keep both groups informed of the timeline, process and upcoming changes, and increase comradery before merger close. They formed 20 cross-functional teams of employees from both companies that tackled specific integration-related tasks or objectives, which met through mid-February.

“Both companies had tremendous first quarters. We were very excited about bringing the two organizations in a new structure and pulling the trigger on a number of things, based upon our ability to be together,” he says. “Then obviously, things came to a screeching halt.”

Once the pandemic closed physical offices, Sandy Spring used video and electronic communication to continue integration work. The pro-forma executive team created welcome videos featuring Schrider, along with digital and virtual orientations, instead of the usual face-to-face interactions.

But the integration encountered yet another unexpected challenge: the Paycheck Protection Program. The Small Business Administration loan program began accepting applications on April 3, two days after the Revere acquisition closed.

All of a sudden, two companies were faced with trying to solve the problems that many of their clients are having,” Schrider says. “That actually accelerated our integration.”

The newly combined teams, which pride themselves on being relationship focused, worked together to fulfill the unsolicited loan demand. They hosted daily PPP calls and involved more than 200 employees to process applications from customers at both banks. The undertaking combatted any inertia they may have felt about actually combining and functioning as one company.

“In a strange way, we’re probably in a better place today than we would have been, absent a pandemic, from the standpoint of being together,” he says. “Even though we’re not physically together.”

Sandy Spring believes picking a bank partner with similar values and staying focused on its strategy helped the pro-forma institution navigate deal-specific challenges. For instance, the all-stock deal for Revere originally carried a price tag of $460.7 million when it was announced in September; at close, it was valued at $287 million based on Sandy Spring’s quarter-end stock price, according to S&P Global Market Intelligence. Schrider says potential buyers and sellers should avoid fixating on absolute deal price, and instead consider the relative value and potential upside of the combined entity’s shares.

So far, the only integration activities that the pandemic has paused are reorganization efforts the bank believes are best done in person, including the planned appointment of Revere co-CEO Ken Cook as executive vice president. The systems conversion and branch consolidation are still on track for the third quarter. Until then, the pro-forma institution will continue to integrate while serving clients during the pandemic.

“It’s been a wild ride but a good one,” Schrider says.

Building a Stronger Bank



Following an acquisition or merger, many banks struggle to build and strengthen their brand. The branch channel is an important part of the franchise for most institutions, so determining which locations to keep, and which to close, is a key strategic decision post-merger. In this video, Anthony Burnett of Level 5 explains how to approach these decisions. He also shares how banks can position themselves for future growth by evaluating opportunities and staffing, and developing a long-term growth plan for the back office.

  • Strategies that Strengthen Your Bank’s Brand
  • Making Decisions About Branch Redundancies
  • Addressing the Back Office
  • Positioning the Bank for Future Growth

Integration: Keeping The Best



Bank leadership teams that approach an acquisition with an open mind will have the best odds for successfully integrating the target, says Kim Snyder of KBS Results. In this video, she shares the three most common misconceptions held by acquirers. She also outlines how banks should communicate to employees and customers about an acquisition, and explains how to approach technology integration—so acquirers can ensure the target’s customers stay with the merged institution.

  • Common Misconceptions
  • Communicating to Employees
  • Explaining Benefits to Customers
  • Getting Technology Integration Right

 

Advice for Buyers & Sellers in 2019



The need for stable, low-cost deposits is driving deals today, and the increasing use of technology is changing how banks should approach integrating an acquisition. In this video, Bill Zumvorde of Profit Resources shares what prospective buyers and sellers need to know about the operating environment. He also explains how bank leaders can better integrate an acquisition and how potential sellers can get the best price for their bank.

  • Today’s M&A Environment
  • Common Integration Mistakes
  • Maximizing Acquisition Success
  • Tips for Prospective Sellers

The Story Behind 2018’s Most Transformative Deal


acquisition-2-8-19.pngMalcolm Holland, the CEO of Veritex Holdings in Dallas, Texas, wanted to expand in the Houston market in 2017 and was looking for a deal. He pursued three targets, but they were all snapped up by competing buyers.

Just as Holland was resigning himself to expand more slowly through de novo branch expansion, his phone rang. It was Geoffrey Greenwade, the president of Green Bancorp, a Houston-based bank with $4.4 billion in assets.

Would Holland be interested in meeting with Greenwade and Manuel Mehos, Green’s CEO and chairman? Greenwade asked.

Holland thought the executives were courting him. Instead, they asked if Veritex wanted to acquire Green.

It’s a unique story, as the now-$8 billion Veritex was smaller than Green when the deal was announced—Green’s balance sheet was 40 percent larger than Veritex’s.

The acquisition of Green—which closed on Jan. 1, 2019—has more than doubled the size of Veritex, and significantly increased its share in a second Texas market. It’s for these reasons that Bank Director identified this deal as the most transformative of 2018.

A deal as transformative as this—in which the seller is bigger than the buyer—is rare. With good reason: Most banks prefer bite-sized deals to minimize integration risk.

But this kind of deal can work well for the right buyer—expanding its capabilities and markets in one fell swoop.

To measure which of the deals announced in 2018 were the most transformative, Bank Director calculated seller assets as a percentage of buyer assets, using data from S&P Global Market Intelligence. The larger the seller compared to the buyer, the greater the opportunity and the more complicated the integration. We also examined seller size as an absolute value, to represent the deal’s transformative impact in its market.

You’ll find a list of the top ten deals at the end of this story.

Because the list does not award deal size alone, the two largest deals announced last year—Fifth Third Bancorp’s acquisition of $20 billion asset MB Financial and Synovus Financial Corp.’s acquisition of $12 billion asset FCB Financial Holdings—did not make the list. MB represented just 14 percent of Fifth Third’s assets and FCB 38 percent of Synovus.

Despite the difference in size, the deal between Veritex and Green made sense. “What we provided for them [was] a really clean credit history, and our stock had a higher value,” says Holland.

Just as importantly, says Holland, “I needed to mark their balance sheet. If they were going to be the accounting acquirer …. The deal would not have penciled out. So, I needed to acquire them, from an accounting standpoint, and mark their balance sheet down where it was appropriate.”

“Investors viewed the Veritex franchise maybe a little better than Green,” says Brett Rabatin, a senior research analyst at Piper Jaffray who covers Veritex. In 2015, a troubled energy sector resulted in a higher level of charge-offs in Green’s loan portfolio, raising concerns among investors that there could be further credit problems down the road.

Green addressed the energy exposure, and oil and gas represent a small portion of Veritex’s loan portfolio today, says Holland.

The combination roughly doubled Veritex’s branch footprint and has greatly expanded its presence in Houston—from one office to 11, giving Veritex the scale it needs to better compete in that market. The bank also gained expertise in commercial and middle market lending, as well as new treasury management products and services.

Green CFO Terry Earley has stayed on with Veritex in the same role, and Donald Perschbacher, Green’s chief credit officer, also joined the executive team. Greenwade is now president of the Houston market. Six directors from Veritex and three from Green, including Mehos, form the current board.

Holland isn’t afraid to adopt new practices from a seller that will improve his bank. It’s a lesson he’s learned over the years integrating the bank’s six previous acquisitions. “Individually, none of us could probably get where we can get together, and so let’s pick the best of each side, and together we will be better,” says Holland.

He’s also learned that integrating people—not technology and systems—ultimately determines the success of a transformative deal.

“The question is, how do you take that culture, your culture that’s been so successful, and institute it into their culture, yet picking up some of the things they do and putting into yours,” says Holland. The integration team spends time reviewing employee handbooks, for example, picking up new practices from the seller.

Culturally, Holland believes the Green acquisition is the best deal his bank has done. “Everybody pulling in the same direction, everybody working toward the same target. The openness and the collaboration have been unbelievable,” he says.

Veritex is now the 10th largest Texas-based banking franchise as a result of this transformative merger. “We think this bank has the ability to be a Texas powerhouse,” says Holland.

Ten Most Transformative Deals in 2018

Rank Buyer Seller Size of acquired bank (millions) Impact on size of acquirer Score*
1 Veritex Holdings (VBTX) Dallas, TX Green Bancorp (GNBC) Houston, TX $4,392 140% 3.33
2 WSFS Financial Corp. (WSFS) Wilmington, DE Beneficial Bancorp (BNCL) Philadelphia, PA $5,770 81% 8.33
3 Vantage Bancorp San Antonio, TX Inter National Bank McAllen, TX $1,379 250% 9.33
4 North Easton Savings Bank South Easton, MA Mutual Bank Whitman, MA $518 94% 24.7
5 CVB Financial Corp. (CVBF) Ontario, CA Community Bank (CYHT) Pasadena, CA $3,747 45% 27.0
6 Allegiance Bancshares (ABTX) Houston, TX Post Oak Bancshares Houston, TX $1,431 50% 27.7
7 Adam Bank Group College Station, TX Andrews Holding Co. Andrews, TX $639 60% 27.7
8 Ameris Bancorp (ABCB) Moultrie, GA Fidelity Southern Corp. (LION) Atlanta, GA $4,812 42% 28.3
9 Cadence Bancorp. (CADE) Houston, TX State Bank Financial Corp. (STBZ) Atlanta, GA $4,924 42% 28.7
10 Independent Bank Group (IBTX) McKinney, TX Guaranty Bancorp (GBNK) Denver, CO $3,722 42% 29.3

Source: S&P Global Market Intelligence
*The score reflects how each deal ranked in terms of the impact of the seller’s size on that of the acquiring bank and the absolute size of the seller.

The Avoidable Mistakes that Acquirers Make


acquisition-9-17-18.pngFor many bank boards of directors and senior management teams, an acquisition will be the most important deal they ever make. Unfortunately, even experienced acquirers make mistakes that can have a negative—and sometimes even disastrous—impact on the outcome. And they are all avoidable.

Be Able To Say Why
One of the most common missteps is to pull the trigger on a deal without having a clear rationale for why a particular acquisition target—as opposed to other possible candidates—is the best strategic fit. “Some acquirers tend to be more opportunistic and try to assess on the fly whether or not the deal is a good fit, as opposed to knowing before hand that they really want to acquire institutions that have certain parameters,” says Rick Childs, a partner at the consulting firm Crowe LLP. “It may be that they make a certain level of money, or do a certain type of lending, or operate in a desirable geography.”

In almost every instance, doing no deal is better than doing the wrong deal. Says Childs: “My dad used to tell me a long time ago, when I would say that something was on sale, ‘Son, a bargain isn’t a bargain if you don’t need it,’ which is to say if it doesn’t really fit, you’re better to walk away from that and focus on… opportunities that would really advance your cause as an organization and produce the returns you need for your shareholders.”

Cultural Compatibility
Having a well-developed a well-defined set of criteria in advance enables the acquirer to then assess critical elements such as the target’s culture—which is important because misaligned cultures can lead to significant problems after the deal has closed and the banks need to be integrated. “I find that many times buyers don’t take the time to learn whether the organizations are compatible,” says Gary Bronstein, a partner at the law firm Kilpatrick Townsend. “And this is especially important when the seller will become a significant part of the merged organization. Too often, says Bronstein, buyers fail to focus on this issue until the integration process begins. “And it becomes [apparent] that perhaps the cultures of the two organizations in terms of how hard they work, how customers are treated, what the philosophies are in terms of how they operate, might not be compatible and it makes it very difficult to integrate under those circumstances.”

Clear, Consistent Communication
Bronstein also finds that acquirers sometimes fail to place a high enough emphasis on the importance on effective and honest communication with people at the acquired bank. “That is particularly [true] among CEOs of the two organizations,” he says. “I’ve seen many deals fall apart or deteriorate pretty quickly due to bad communication, or lack of thoughtful communication.” Candor is an especially important element of the communication process, Bronstein says. “I’ve seen situations where a buyer CEO will say one thing but then do another thing, and that just alienates people in the process. And it’s critically important to develop a… rapport early, because if things deteriorate early it’s hard to get back,” he cautions.

Consider The People
Many acquirers also tend to wait too long to make critical people decisions that can impact the outcome of a merger. Bronstein divides these important people decisions into three categories. “Category number one is, who do you need long term, and [in] what positions?” he explains. “Who do I need for this larger organization, and what positions can I spot them in? The second category is, who do I need short term to get me through the transition? The common timeline for transition is the technology conversion, which will usually happen somewhere between three and six months after the transaction is closed. And the final thing is, who are the people that are closest to the customers that I really need to lock up with a non-compete so they don’t go next door and compete with me?”

Childs also stresses the importance of communicating these important personnel decisions throughout both organizations. Staffers at either bank who ultimately will not be part of the combined organization once the integration process has been completed should be informed “as quickly and as compassionately as you can,” he says. It’s equally important that employees who will be going forward with the new bank know that their jobs are secure. “Uncertainty breeds angst and anxiety that is going to affect how people treat their day-to-day job, and taking that away and reassuring them is really job number one for the CEO and the management teams.”

Redefining the Meaning of a Customer Relationship


relationship-3-12-18.pngFor most people, brick and mortar branches have become remnants of prior generations of banking. In the digital age of mobile deposits and non-financial, non-regulated companies like PayPal there is little incentive to walk into a local branch—particularly for millennials. This presents an anomaly in the community banking model. Community banks are built upon relationships, so how can the banks survive in an era so acutely inclined towards, and defined by, technology seemingly designed to eliminate “traditional” relationships?

The solution is to redefine the term “traditional” relationship. While customers may not want to walk into a branch to deposit a check, they still want information and advice. Just because a millennial does not want to deposit a check in person does not mean that he or she will not need to sit with a representative for guidance when applying for their first home loan. Using customer segmentation and understanding where there are opportunities to build relationships provides an opportunity to overcome the imminent threat of technology.

If information and advice are the keys to building relationships, it becomes imperative that bank employees are fully trained and knowledgeable. It is crucial that community banks spend time hiring the right people for the right position and then train and promote from within. Employees must fully understand, represent and communicate a brand. That brand must be clearly defined by executive management and communicated down the chain of command. It is incumbent upon the leaders of the organization to first set an example and then ask their employees to follow suit. Some of the most successful community bank CEOs can recognize their customers by name when they walk into a branch. These are not the biggest clients of the bank, but they are probably the most loyal because of the quality of the relationship.

The focus needs to switch from products and transactions towards specific relationships with specific customer segments. Customer-centric banking strategies will improve the chances of survival for community banks. Those that are not able to adapt will be eclipsed by the recent revival of de novos or will be acquired by institutions that are embracing this customer-centric approach. A customer-centric approach is critical to drive value whether pursuing organic growth or M&A. For banks evaluating an acquisition, there are additional considerations that need to be addressed prior to entering into a transaction, in order to safeguard the customer relationships that the bank has built and ensure that the deal enhances the bank’s brand and business model, while also building value.

If you are one of the survivors and are engaged in an acquisition, what does all of this mean for you?

  1. FinPro Capital Advisors Inc. advocates having strict M&A principals and parameters when evaluating the metrics of a deal, which will vary from bank to bank. This concept extends to culture and branding as well. A good deal on paper does not necessarily translate to a successful resultant entity. If a transaction will dilute your franchise, disrupt your culture or business model, or in any way undermine the brand and customer base you have built, do not pursue it.
  2. Signing a definitive agreement is not the same thing as closing a transaction. Integration begins as soon as the ink dries on the contract. Planning should have occurred well in advance. Management needs to focus on employee, customer and investor reception of the deal, along with regulatory approvals and strategic planning. A poorly executed integration can provide an inauspicious start culturally and can increase merger costs substantially.
  3. Retain the best talent from each institution and take the time to ensure that the employees are in the right position. Roles are not set in stone and an acquisition provides the perfect opportunity to re-position the bank’s staffing structure. This includes implementing management succession and talent management plans for the new entity. Develop an organizational structure for the future, not just for today.
  4. Communicate effectively throughout the entire process. Be transparent and be honest. Bolster relationships and foster enthusiasm in the new entity from day one. Corporate culture is one of the most difficult attributes to quantify but it is palpable and can either energize every person in the company or rapidly become toxic and disruptive.

For all banks, the brand and culture that you build will directly impact your customer base and define the banking relationships you create. To build meaningful relationships with your customers, banks must first build meaningful relationships within the organization. In so doing, banks will be able to redefine their model by focusing on relationships instead of transactions, customers instead of products, and eliminate isolated divisions to create integrated organizations. The traditional banking model may be dead but banks with strong leadership and corporate culture will recognize the new paradigm and enact change to evolve accordingly.

Well Conceived and Executed Bank Acquisitions Drive Shareholder Value


acquisition-2-21-18.pngRecent takeovers among U.S.-based banks generally have resulted in above-market returns for acquiring banks, compared to their non-acquiring peers, according to KPMG research. This finding held true for all banks analyzed except those with greater than $10 billion in assets, for which findings were not statistically significant.

Our analysis focused on 394 U.S.-domiciled bank transactions announced between January 2012 and October 2016. Our study focused on whole-bank acquisitions and excluded thrifts, acquisitions of failed banks and government-assisted transactions. The analysis yielded the following conclusions:

  • The market rewards banks for conducting successful acquisitions, as evidenced by higher market valuations post-announcement.
  • Acquiring banks’ outperformance, where observable, increased linearly throughout our measurement period, from 90 days post-announcement to two years post-announcement.
  • The positive effect was experienced throughout the date range examined.
  • Banks with less than $10 billion in assets experienced a positive market reaction.
  • Among banks with more than $10 billion in assets, acquirers did not demonstrate statistically significant differences in market returns when compared to banks that did not conduct an acquisition.

Factors Driving Value

Bank size. Acquiring banks with total assets of between $5 billion and $10 billion at the time of announcement performed the strongest in comparison with their peers during the period observed. Acquiring banks in this asset range outperformed their non-acquiring peers by 15 percentage points at two years after the transaction announcement date, representing the best improvement when compared to peers of any asset grouping and at any of the timeframes measured post-announcement.

Performance-chart.png 

Acquisitions by banks in the $5 billion to $10 billion asset range tend to result in customer expansion within the acquirer’s market or a contiguous market, without significant increases in operational costs.

We believe this finding is a significant factor driving the value of these acquisitions. Furthermore, banks that acquire and remain in the $10 billion or less asset category do not bear the expense burden associated with Dodd-Frank Act stress testing (DFAST) compliance.

Conversely, banks with nearly $10 billion in assets may decide to exceed the regulatory threshold “with a bang” in anticipation that the increased scale of a larger acquisition may serve to partially offset the higher DFAST compliance costs.

The smaller acquiring banks in our study—less than $1 billion in assets and $1 billion to $5 billion in assets—also outperformed their peers in all periods post-transaction (where statistically meaningful). Banks in these asset ranges benefited from some of the same advantages mentioned above, although they may not have received the benefits of scale and product diversification of larger banks.

As mentioned earlier, acquirers with greater than $10 billion in assets did not yield statistically meaningful results in terms of performance against peers. We believe acquisitions by larger banks were less accretive due to the relatively smaller target size, resulting in a less significant impact.

Additionally, we find that larger bank transactions can be complicated by a number of other factors. Larger banks typically have a more diverse product set, client base and geography than their smaller peers, requiring greater sophistication during due diligence. There is no substitute for thorough planning, detailed due diligence and an early and organized integration approach to mitigate the risks of a transaction. Furthermore, alignment of overall business strategy with a bank’s M&A strategy is a critical first step to executing a successful acquisition (or divestiture, for that matter).

Time since acquisition. All three acquirer groups that yielded statistically significant results demonstrated a trend of increasing returns as time elapsed from transaction announcement date. The increase in acquirers’ values compared to their peers, from the deal announcement date until two years after announcement, suggests that increases in profitability from income uplift, cost reduction and market expansion become even more accretive with time.

Positive performance pre-deal may preclude future success. Our research revealed a positive correlation between the acquirer’s history of profitability and excess performance against peers post-acquisition. We noted this trend in banks with assets of less than $1 billion, and between $1 billion and $5 billion, at the time of announcement.

This correlation suggests that banks that were more profitable before a deal were increasingly likely to achieve incremental shareholder value through an acquisition.

Bank executives should feel comfortable pursuing deals knowing that the current marketplace rewards M&A in this sector. However, our experience indicates that in order to be successful, acquirers should approach transactions with a thoughtful alignment of M&A strategy with business strategy, an organized and vigilant approach to due diligence and integration, and trusted advisers to complement internal teams and ensure seamless transaction execution.

Bank Director’s Bank Compensation & Talent Conference to Highlight Culture


culture-10-23-17.pngCorporate culture will be on center stage at Bank Director’s 2017 Bank Compensation & Talent Conference, which begins on Monday, October 23, at The Ritz-Carlton Amelia Island in Florida with peer exchanges and a workshop. On Tuesday and Wednesday, October 24-25, the main conference takes place with presentations on incentive compensation, leadership development, business strategy and insights from bank CEOs and directors.

Culture is an important but under-examined topic in banking because of the connection between the culture of a company and its financial performance and regulatory compliance track record. To understand that, look no further than the fraudulent account opening scandal at Wells Fargo & Co. This was clearly a cultural issue, where a large number of people in the retail bank were willing to break the law just to elevate their own compensation, or keep their jobs.

The opening general session on Tuesday, “Culture Eats Compensation for Breakfast,” will examine the importance of culture in a bank’s performance, and how its compensation philosophy and practices can reinforce culture. A second general session on Tuesday, “Creating a Company That Scales,” will look at how bank management teams with experience acquiring other banks are able to take the cultures of two banks and successfully integrate them to get the full value of the acquisition.

One of the most important responsibilities of the board is to make sure the bank is doing a good job of managing its talent, from the CEO’s office down to middle management. A session titled “The Board’s Role in Leadership Development” will review some best practices for bringing talented people into the organization and then making sure they have an opportunity to grow and expand. Managing the CEO succession process is especially important given the key role that individual plays in the bank.

Other general sessions scheduled on Tuesday and Wednesday include “All Business Models Are Not Created Equal,” will look at how three factors—the increased use of technology, the continued popularity of online and mobile channels, and the changing demographics of banking’s customer base—are impacting the talent selection process. The impact that disruptive market forces like financial technology is having on how banks interact and attract customers and recruit talent will be explored Wednesday in the general session titled “Managing Disruption & Compensating for Innovation.”

Innovation Spotlight: Howard Bank


innovation-10-3-17.pngScully-Mary-Ann.pngMary Ann Scully, CEO and chairman
As a lifelong banker with over 30 years of varied executive experiences, Mary Ann Scully headed the organizing team for Howard Bank of Baltimore, Maryland, and currently serves as a board member of the Baltimore Federal Reserve and a community advisory board member for the Federal Deposit Insurance Corp. Under her leadership, Howard Bank recently announced its fifth acquisition in five years, which will make it a $2.1 billion asset institution. It has maintained a commitment to high touch service throughout each integration.

When you started at Howard Bank, what did you want to do differently with innovation?
We have always viewed our differentiation as high touch expertise and advice. Therefore, we tried not to be leading edge from an innovation perspective. However, we also recognized that to attract small and medium-sized businesses that we should not and would not ask our customers to make a choice between competitive products and delivery available at larger banks and our high touch advice. So we have always had to be competitive and with a more sophisticated customer base, the bar was set higher.

Over the years, how has your digitization strategy changed?
We opened the doors in 2004 with online banking, online check images, hand scan safe deposit boxes—not your typical start-up community bank mix. Over time, we have become more and more committed to being leading edge in the utilization of information to inform our decisions, optimize our processes and advise our customers. Our recent project with [commercial lending platform] nCino is an example of this commitment. Our commitment to a new universal banker branch model is another.

You were once quoted as saying, “Thriving is different than survival and relevance is more than profitability.” What does it take for a bank to thrive AND stay relevant in this competitive environment?
It requires, first, great clarity of strategy: “What do you want to do, how and when, for whom?” And that requires being able to articulate the more painful, “What do you not want to do or whom are you not targeting?” The second requirement is a long-term vision because relevance requires constant investment in the business—in people and technology. It also requires access to capital, both financial and human, to facilitate those investments.

Finally, it requires flexibility because the world changes at a faster rate than ever before and it is important to be able to reallocate resources to what our customers feel is relevant for them. Our high growth trajectory requires a mindset throughout the organization that acknowledges the need for change. For example, we have attracted five teams from other banks in five years. We’ve done five acquisitions in five years, the most recent and largest just announced in August. We’ve accomplished seven capital raises in 13 years, the most recent and largest in January of this year.

After being involved in several M&A deals, what lessons have you learned about integrating technology platforms to ensure business continuity?
First, we always remember to view integration from a customer’s perspective. There is always disruption involved in a merger, some sense of “I did not ask for this,” and flowery promises do not alleviate the skepticism even when an in-market merger is perceived by a community as being positive. So we plan, plan and plan to ensure that customers never lose functionality and if possible, gain something in the process. This means being willing internally to change the “host” systems as well as the acquired bank systems. It means viewing integrations as an opportunity, not a necessary evil, to take the best of both and occasionally the best-of-breed, not just as a way to save costs and slam things together but as a way to enhance the combined systems. We have a cross-functional team who has worked together on each transaction, some who started on the acquired side who are now sitting as an acquirer and their experience and perspective are invaluable. That team always has representatives from each bank for each function. Conversions are not for amateurs or the faint of heart so constant communication between providers and users is also important for successful platform integration.