Senior executives of First Fidelity Bancorp will retain significant control over its operations after the company is acquired by First Union Corp. on Jan. 1.
In an internal memo to bank employees obtained by American Banker, First Fidelity chief executive officer Anthony P. Terracciano named 44 senior executives to top posts in the bank's retail operations, to be known as First Union North after the $5.4 billion deal is closed. Only three posts will go to First Union senior executives.
Mr. Terracciano will be chief executive officer of First Union North, as the retail bank will be known. Peter Palmieri, now First Fidelity vice chairman and chief credit officer, will be chief credit officer of First Union North.
Donald Parcells, First Fidelity's senior executive vice president in charge of consumer banking, will be in charge of the general banking group.
And Wolfgang Schoellkopf, First Fidelity's chief financial officer, will head First Union North's finance and administration office.
It is not unusual for local executives to retain some control when a company is bought by an acquirer headquartered elsewhere. But the naming of First Fidelty executives to top jobs in the new organization is noteworthy because First Union is well known for aggressive and at times ruthless cost cutting after its deals.
Some observers said they doubted that many of the First Fidelity executives would stay long and added that the management team named in the memo was merely transitional. In fact, First Union has already sent Byron Hodnett, head of its Florida unit, to New Jersey to direct the integration.
First Union had signaled that First Fidelity would maintain some control when Mr. Terracciano took the title of president of First Union Corp., the new entity after the takeover.
"We have decided to restructure First Fidelity into two parts - one will be a regional bank and the second comprises most support and staff functions," Mr. Terracciano wrote to employees in the memo, dated Sept. 26.
"The regional bank, to be called First Union North, will be organized to deliver services in all of First Fidelity's markets, except Maryland, which will become part of First Union's Maryland, Virginia and Washington region," he added.
"The First Fidelity support, staff and line functions that will become part of the First Union structure include, among others, operations and systems, treasury, capital markets activities and corporate trust."
Reporting to Mr. Parcells will be First Fidelity senior executive vice presidents Leslie Goodman and Roland Bullard, who will be in charge of the North Jersey and Philadelphia areas, respectively.
Michael Gallagher, First Fidelity executive vice president in charge of corporate operations and systems, will oversee systems conversions for the merger and report directly to Mr. Terracciano. Mr. Gallagher will move to another senior job within First Union when the merger is concluded.
The only First Union executives within the upper echelons of First Union North will be Malcolm Murray, Louis Schmitt and Daniel Mathis.
Mr. Murray, now First Union's chief credit officer, will head First Union North's corporate credit administration. He will report directly to Mr. Terracciano, not to Mr. Palmieri.
Mr. Schmitt and Mr. Mathis will run corporate capital markets within First Union North and will also report directly to Mr. Terracciano, who will be in charge of First Union's capital markets unit.
"Tony Terracciano and his team had an excellent track record in putting First Fidelity back together," said David Berry, director of research at Keefe, Bruyette & Woods Inc.
"In this case," he said, "this is such a significant market extention in that it takes First Union to an entirely different part of the country they need the current people already there."
However, an investment banker close to First Union said he would be surprised if First Union people did not begin to move into the new organization.
Mr. Terracciano and his top lieutnents all have signed employment contracts of up to five years valued at $64 million, according to the merger proxy.
These employees include Mr. Terracciano, Mr. Schoellkopf, Mr. Palmieri, Ms. Goodman, Mr. Bullard and Mr. Parcells, in addition to other unidentified executives. However, the bank would not say how many of the other executives assigned jobs in First Union North had employment contracts.
Below the senior level, First Fidelity may be ready to lay off some of it employees despite pledges that it would seek job reductions through attrition.
Mr. Terracciano suggested in his memo to employees that layoffs may be imminent, saying: "We also are aware that restructuring has a very human face and we are committed to trying to find positions for as many employees as we can."
A First Fidelity spokesman said the merger has resulted in no layoffs so far.