Bank Mergers: 3-Step Clarity is Key to Keeping Your Customers

When the announcement for the definitive agreement signing is made, you can only estimate when the closing will be because things like the regulatory approval timing are not in your control.

So, your communication of the closing is typically within a range of a business quarter.

Because of this, your comments on closing need to be very general, such as “We anticipate closing in the (first, second, third, or fourth) quarter.”

Following the announcement, the buyer will be having team meetings on various topics surrounding the integration of the merger.

It is very likely that your management will begin being a part of meetings that impact on their departments.

You may or may not be involved in these meetings.

This is the buyer’s call.

You have plenty to do, continuing to push towards closing.

The process of gathering the information called for in the definitive agreement is called “confirmatory due diligence” as you are confirming the items the due diligence produced.

Confirmatory due diligence, combined with the shareholder approval and preparing for the distribution of the merger consideration will require a great deal of your time.

In days past, when a bank merger was announced at closing, the signs changed, systems were converted and nearly everything was done over the period of a very long weekend.

Today, there are usually three steps in the process that allow for the process to be much smoother.

Everybody would like a roadmap to help them get oriented to their surroundings, so communicating these steps to your employees following the announcement is important.

This does need to be done with the buyer so there is no miscommunication, confusion, or chaos adding to the already large challenge of integrating the two banks.

The communication would likely flow as a three-step plan and could look something like this:

Step 1 – From now until closing:

We continue to run the same way we always have.

Our customers have the same products and services, they deal with the same people at the bank, our name doesn’t change, and the logos are the same because the deal is not closed yet.

We can’t provide an exact date because we are awaiting regulatory approval along with shareholder approval, but we anticipate it will be in the next quarter.

Once we have approvals and have a date planned, we will communicate the closing date with you, our employees, and our customers. We will also be communicating that closing date with the shareholders.

Employees will be set up on the new payroll system and taken through an orientation on the new benefit plans you will be eligible to be a part of. The orientation will take place prior to closing, so that everything is effective on the first day as a (new bank) employee.

Step 2 – From closing until conversion:

Once closing takes place—it typically will occur on a Friday—the employees leave the bank at the end of the day under our brand and return to the bank on Monday under the new brand.

The website, the building, our emails, etc. will all be changed to reflect the new brand, BUT other than brand, nothing will change for the customer. Our customers will still login to online services and mobile banking as they have in the past and they will work with the same people they always have.

They don’t need to change debit cards or checks; they all still work as they had prior to the closing.

We will communicate when and how things are changing, systems, products, etc., and will be communicating those changes to the customers throughout Step 2. This period, from closing to conversion, is expected to last approximately six months (you will likely know when conversion will be at this point, as the buyer must reserve the date with the core provider).

During Step 2, the employees will be interacting with their new counterparts, and that interaction will gain momentum as we make our way to the conversion date (Step 3).

This will allow our employees to learn more about the new bank and its opportunities.

It also allows the buyer to learn more about our employees, their goals, and their ambitions along the way.

Our employees and customers will begin to experience the opportunity that lies ahead of being part of a much larger organization with more opportunities, more locations, and more resources.

Step 3 – Conversion date:

Once the conversion date occurs, all systems migrate from the seller’s bank to the buyer’s bank. Debit cards will have been reissued with the new brand; new check stock ordered will carry the buyer’s branding as well.

There is only one website now, the buyer’s.

Online banking and treasury services logins are now on one system, the buyer’s.

Any trace of the legacy logos that couldn’t be transitioned earlier, like online banking and treasury services because the transition was too costly to do twice (one changing the logo to the buyer’s logo on the seller’s system, and then the second time when the seller’s system converts to the buyer’s system), are now gone.

Continued calling efforts to this point have really made this last change a non-event for customers and employees.

There will be some rough spots that will need to be corrected where the conversion of the information didn’t make it over to the correct location in the database.

Those will get corrected as they are discovered.

And again, all employees will have time during Step 2 to become familiar with the new bank and will have time to make the transition by the time we get to Step 3.

As you can see, our primary responsibility for crafting communication was to get the customers and employees to and through closing.

The buyer was responsible for crafting the message from closing forward.

We still needed to craft the communication to our shareholders post-closing, as ours was an all-cash transaction, and they needed to be shepherded through to receipt of their merger consideration.

Action Plan:

• Imagine yourself going through these three steps.
• Get a feel for the pacing and activities associated with the three steps. Doing so will likely reduce the feeling of stress and will bring some order and a timeline to the process.
• Any opportunity you have to understand “what comes next” in the process will reduce uncertainty and allow for you to plan with confidence. That confidence will provide assurance to your customers, employees, and shareholders.

Your path will:

• Inform your strategic plan.
• Guide your annual business plan and budget.
• Clarify priorities.
• Define your message so it can be communicated with confidence.

This is how savvy bankers navigate.

They build smart and valuable banks and choose the best time to sell – serving the needs of the shareholders and the board.

I hope you found this short lesson helpful.

What are your thoughts?

I’ll see you next week.