Bank mergers are becoming increasingly common in Wisconsin these days, and with a merger comes some inevitable changes.
What should a customer expect when his or her bank is acquired?
The bank merger process is a different animal than the usual private business merger. It requires both state and federal regulatory approval, as well as approval from both companies’ boards and shareholders, said Rose Oswald Poels, president and chief executive officer of the Wisconsin Bankers Association.
Regulators examine the impact of the transaction on the community, as well as other factors, such as their troubled loan portfolios.
That process can take between two months and two years, depending on whether both banks are financially healthy and whether regulators have any concerns, said Peter Wilder, an attorney in the banking and financial institutions practice group at Godfrey & Kahn S.C. in Milwaukee.
“From either the business or consumer side, often you’re going to be part of a larger institution that could mean you’re going to have access to different or more products and services,” Wilder said. “Oftentimes it’s … actually a good thing because now these folks have access to treasury management services or now they have mobile banking when they didn’t have it before.”
“Certainly in the last eight years, merger activities are very closely scrutinized to make sure that it is in the best interest of both organizations,” Oswald Poels said.
The branch and ATM network available to a customer may expand, as well.
While banks may complete their legal mergers on one date, it can take longer to integrate their systems and implement bankwide policies, depending on the scale of the transaction, Wilder said. Banking customers should watch for changes—in deposit-side account fees especially—and also be aware of when any new branches or ATMs become available to them through systems integration.
“You always get a notice of what those kinds of changes are and it’s a good idea to, you know, read them,” Wilder said. “The key is, 99 out of 100 cases, the acquiring institution, they want to keep you as a customer so it doesn’t really (benefit) them to jack your rates to an astronomical level because they know they’ll lose a customer if they do something like that.”
Eric Korbitz, CFA, CFP, owner of Korbitz Financial Planning LLC in Glendale, said it’s important to watch bank communications and pay attention to any account fees or minimum balance requirements, particularly in such a low interest rate environment, where fees loom large.
“I’ve seen plenty of cases where a given bank account type was grandfathered into a new institution and some years later, they decide they are going to standardize things and get rid of these certain account types,” Korbitz said.
“Certainly from the companies and the consultants that work with banks, there’s definitely a lot of time and thought put into the messaging of a merger and the announcements of merger transactions,” Oswald Poels said. “I think many customers really see little change when a merger happens, certainly at least in the initial period of time.”
Hartland-based Town Bank and its parent company, Wintrust Financial Corp., in March acquired the parent company of Pewaukee-based Foundations Bank, Generations Bancorp Inc. It recently closed its existing Pewaukee office and moved those operations to Foundations’ Pewaukee branch.
Town Bank and Wintrust also in 2014 acquired Talmer Bancorp.’s 11 Wisconsin Talmer Bank and Trust branches and integrated them into the Town Bank network.
Jay Mack, chief executive officer of Town Bank, has put in place a new employee training program and a detailed communication strategy for new customers. As a result of the Talmer acquisition, he started a concierge banking group in a call center with extended hours to assist customers.
Town Bank sends all new customers a letter which announces the deal, lays out a roadmap for the integration and explains the value proposition for the customer, such as new services available to them.
“No matter how hard you try, there’s naturally going to be a skepticism about now having to be banking with a different financial institution,” he said. “We’re at risk of losing them at that point. We need to work hard not to have that happen.”
One of the largest bank mergers in the Milwaukee market in the past five years was BMO Harris Bank operator Bank of Montreal’s acquisition of Marshall & Ilsley Corp., parent company of M&I Bank.
Chris Winkler, owner of intermodal and logistics firm Aim Transfer & Storage in Oak Creek, was previously getting his business loans through the now-defunct M&I Bank. When Marshall & Illsley was acquired, Winkler noticed some differences.
For one, the lending standards tightened, he said.
“M&I lost what relationships were about,” Winkler said.
Winkler said he didn’t like the larger corporate feel and approval process at BMO.
“They weren’t there to work with you, they weren’t there to take a risk with you and they weren’t there to partner with you like they did in the past,” he said.
Winkler switched to Green Bay-based Associated Bank, where he said he found a lender that took a more personal approach. “This one individual’s comments are not reflective of who we are as an organization and what our company stands for,” said Patrick O’Herlihy, a spokesman for BMO Harris. “Relationships are what we’re all about: relationships with the community, relationships with our customers and relationships with our employees.”