An accelerant to growth

When I was George Morgan’s student, the United States had over 15,000 independent banks. Today, that number is about 5,000. This number has been in steady decline since the 1930s.

Changes in the economy, technology, and banking regulation have been punishing to smaller banks. It comes down to having enough scale to be able to afford the investment in technology, talent, and infrastructure to compete with the largest of banks that dominate the industry and, increasingly, non-traditional digital competitors.

It’s challenging for the smaller banks with limited revenue streams to be able to afford these investments and make a reasonable return on their investors’ capital. I know this because I was running one in the Southwest before returning to Virginia. Bank mergers are an accelerant to achieving critically needed economies of scale, to spread cost out over a larger base of customers, to diversify business risk, and to open new growth market opportunities.

People and cultures

A traditional bank is nothing more than a collection of people. We have no proprietary product, and our money is just as green as that of any other bank.

As a collection of people, banks also have unique cultures and personalities. Consequently, the most important issue in a merger is managing the human factor — people and culture. It’s the people of the bank who take care of our customers and will make or break the integration.

It starts at the top, and no one is more accountable for this than me. It largely hinges on building trust and communicating openly.

Technical playbook

The technical aspects of systems integration and conversion are critical. We run this as a portfolio of projects, a highly controlled environment led by an integration management office that I chair.

We have a playbook that we’ve improved upon, based on lessons from our integration of Xenith Bank, which was the most successful integration most of us involved had seen. It demonstrated that this is a core competency for Union.

Read more about Clarke and Asbury on the following pages.

– Sookhan Ho