During a time when the banking industry has undergone consolidations, failures and the disappearance of such major brands as National City, one Akron-based bank has grown and prospered.
FirstMerit Corp. has had 55 consecutive quarters of profitability.
And on Friday afternoon, it doubled in size with branches in Wisconsin and Michigan joining operations in Ohio, Pennsylvania and Illinois.
While FirstMerit has become a larger bank, its leader says its commitment to being a “super community bank” with local decision-makers is what will help it succeed.
The anticipated merger between FirstMerit and Citizens Republic Bancorp became official at the close of business Friday. The new FirstMerit now has almost $24 billion in assets, 5,000 employees, 415 branches and more than 440 ATM locations.
The deal makes FirstMerit the sixth-largest bank headquartered in the Midwest, bank officials said.
The $912 million purchase, using stock, is the Akron-based bank’s largest acquisition. It’s also the first since the bank’s push outside Northeast Ohio with purchases in the Chicago market in 2010.
The largest of the three Chicago-area deals was the $90 million acquisition of Midwest Bank in Chicago from the FDIC in 2010.
As part of the deal that closed Friday, FirstMerit repaid Citizens Republic’s approximately $300 million of TARP preferred stock and approximately $50 million of past and accrued dividends.
The bank will operate as FirstMerit. System changes and signage changes will occur by the fourth quarter.
The bank also added two new directors to its now 15-member board: Citizens members Lizabeth Ardisana and Robert S. Cubbin.
For longtime customers of FirstMerit — founded in Akron in 1845 and known as First National Bank — or of Citizens — founded in 1871 — nothing will change this morning, Paul Greig, FirstMerit’s president and chief executive officer, said in a telephone interview.
“We’re going to continue to operate under our new footprint with the same commitment to local that we do today,” Greig, 57, said. “Our size and scale are going to allow us to continue to embrace the platform that has kept us strong. We’ve hired leaders in Michigan and Wisconsin with whom I have a long history. They approach banking the same way as FirstMerit.
“We’re going to do our utmost to be the bank of choice, not just in Ohio, but through the Midwest,” said Greig, who remains the head of FirstMerit.
Citizens President and CEO Cathleen Nash stayed through the acquisition.
FirstMerit in recent months has hired three executives to shepherd its new territories: Michigan native Sandra “Sandy” E. Pierce as vice chair of FirstMerit Corp. and chairman and CEO of FirstMerit Michigan; lifelong Wisconsin resident Kevin M. Leissring as president and CEO of FirstMerit Wisconsin; and David J. Lochner as president of FirstMerit Michigan.
Senior bank analyst Terry J. McEvoy with Oppenheimer & Co. in Portland, Maine, who has followed both FirstMerit and Citizens for 10 years, said the merger makes sense. Citizens had been experiencing some deep losses, and the company was working hard to stabilize its return to profitability, he said.
Holding assets just under $10 billion put Citizens at a size where it was difficult to grow with federal regulations that hit revenue streams, he said.
For FirstMerit, the growth beyond Northeast Ohio began with the 2010 Chicago acquisitions by Greig, who took over leading the bank about seven years ago with a history in Chicago and other parts of the Midwest, McEvoy said. The bank has been studying the Michigan economy and its bounce back from the recession and felt the time was right to grow there and in Wisconsin, “to connect the dots and benefit from the recovery in Michigan,” McEvoy said.
The size of the new FirstMerit is “almost a sweet spot in banking,” he said. “It’s not too big to fail ... but at the same time, it’s not too small where it can’t offset and absorb the higher costs to run a bank today after financial reform.”
New products, services
Greig said Citizens and FirstMerit customers will see some new products and services as a result of the merger.
For FirstMerit customers, Citizens brings financing business for marine and recreational vehicles, mostly towable vehicles — two product categories that were not previously emphasized within FirstMerit, Greig said.
For Citizens’ customers, the bank will maintain its third-party credit card, but new customers will be able to open FirstMerit credit-card accounts. The bank also will be expanding its used-car financing business and its mortgage company to cover both Michigan and Wisconsin.
“We have a very solid mortgage company that has not strayed from its mission into subprime lending and operated profitably through the whole economic downturn,” Greig said.
Greig said Akron will remain FirstMerit’s headquarters. The former Flint, Mich., headquarters of Citizens will continue to be used for some operations.
“It’s likely there will be a fairly considerable number of new jobs in Akron once the consolidation is complete,” Greig said.
He said it is too early to discuss any consolidations of branches or redundancies in jobs throughout the company. In the Akron area, Greig said, the bank closed some branches in 2012 and does not anticipate any major changes.
There are a few areas in the Akron area where FirstMerit and Citizens branches operate in close proximity, including Court Street in Medina.
McEvoy said FirstMerit has indicated a goal of 22 percent cost savings through the merger, so branch consolidations and closures and some job cuts are probable.
When asked whether FirstMerit would be out of the hunt for more acquisitions during its transition, both Greig and McEvoy said the next year would be focused on the transition.
Asked whether Indiana could be the next target to complete the FirstMerit footprint, Greig called it a good state that has fared well in the economic downturn, but the population density is in Indianapolis, which isn’t necessarily contiguous to FirstMerit’s existing network.
When asked if there was a ceiling where FirstMerit could be too large, Greig said that at $25 billion in assets, the bank is far from being identified as too big to fail.
“The key for us is to be able to deliver the high customer service, high-touch service, that we’ve been delivering to all of our customers,” he said.