Bank Mergers And Its Effect On The Banking Industry

1470 Words6 Pages
Bank mergers often occur to diminish costs and increase efficiency across the banking industry. In Finance 412, we have expressed the importance of regulatory burdens and the stress and challenges banks face with enforcing these regulations. According to Kersha Cartwright, a bank official that I spoke with, ProBank (PB), formerly located in Tallahassee, Florida, was under a regulatory order to raise more capital. Since 2009, regulators have been concerned with banks holding greater capital buffers and to keep larger reserves of liquid assets to prevent from becoming insolvent. ProBank’s regulatory order precluded it from lending new money within the Tallahassee market place until more capital was raised. Bremen, Georgia’s American…show more content…
ProBank was established September 5th, 2007. Originally beginning with 21 employees, their personnel peaked in 2009, reaching as many as 30 employees. From March 31st 2013, to March 31st, 2015, their personnel was cut by nearly 50%. On the other hand, ACB had an average of 25-27 employees between March 31st, 2013 and March 31st, 2015. From March 31st, 2015 to June 30th, 2015, which was a month after acquiring ProBank, American Commerce Bank’s employee number increased by 56% to 39 employees. According to Kersha Cartwright, the merger between the two banks did not involve a lot of layoffs. Another important part of a merger and acquisition, in addition to layoffs and employment information, is how well the two companies blend in terms of company culture. Stephen R. Winn, Interim President of ProBank stated that: partnering with a bank that has a similar culture and commitment to service is very exciting. [He is] looking forward to expanding [their] ability to serve [their] customers through the strength, resources and expanded product offerings provided by American Commerce Bank. Lodorfos and Boateng state in their article The Role of Culture in the Merger and Acquisition Process that the “magnitude of cultural differences can effectively impede a successful integration…resulting in poor overall performance” and “cultural heterogeneity creates tensions and affects financial and managerial
Open Document