Last summer, Verne Istock, chairman and chief executive officer of First Chicago NBD Corp., declared that the merged company's infrastructure was officially in place.

But the job of creating a unified culture at First Chicago NBD is still a work in progress, the 56-year-old executive said in a recent interview.

"Focus" is the word Mr. Istock likes to repeat. Yet analysts, competitors, and sometimes even Mr. Istock himself, are hard-pressed to say just what the focus of the $107 billion-asset company is.

The new entity, born in November 1995 as a result of the marriage between the Chicago and Detroit-based banks that still survive in its name, is suffering from a problem common among banks formed in mergers of equals, analysts said.

When two companies of comparable size come together, the resulting entity often spends much of its time sorting out job titles and who gets company cars. (At First Chicago NBD, this last problem was eliminated by getting rid of all company cars.)

One thing is for certain, Mr. Istock said: He no longer has time to deal with such nit-picky details. Experience has shown, he pointed out, that companies which don't establish a new, well-integrated corporate culture following a merger become takeover candidates themselves.

Take, for example, another large merger of equals in the Midwest. Nearly three years after the combination of Albany, N.Y.-based KeyCorp and Society Corp. of Cleveland, the new KeyCorp is taking drastic action to stay independent, cutting 10% of its work force and closing or selling 280 of its branches.

Likewise, Detroit-based Comerica Inc., which merged with Manufacturers National Corp. in 1991, is laying off hundreds of employees to avoid a takeover. Mr. Istock acknowledged that Comerica, KeyCorp, First Chicago, and other large regional banks are vulnerable to takeover if they don't meet financial expectations.

Even with its heft, First Chicago NBD is not too big to be acquired, Mr. Istock conceded. If the bank is on someone's radar screen, he said, its earnings and stock price are the best measure of his success as chairman.

"Any organization that doesn't perform is subject to takeover, but I do think some organizations that do perform are subject to takeover. It's just how the numbers work out," Mr. Istock said. "Where you ought to start worrying is if you're not a performer."

First Chicago has already gone through major cost cutting, paring 1,700 jobs and reducing expenses by more than $200 million this year.

But there are other concerns.

Some analysts worry that Mr. Istock may be too green for the job he inherited last year. "A couple of years ago he was the No. 2 or No. 3 guy at a bank," said Michael Mayo, an analyst with Lehman Brothers. "He went from that to No. 1 at a bank double the size."

A Michigan native, Mr. Istock spent his entire career at Detroit-based NBD beginning as a credit analyst trainee in 1963. He has a reputation as being argumentative, but unpretentious.

"He's a nice guy; not intimidating," said Thomas D. McCandless, a Natwest Securities analyst. "He's not at all inspired by his lofty perch there. He's a humble guy."

He's also a conservative, old-fashioned banker, who breaks into a passionate speech about bankers' responsibilities. The fireplug-like Mr. Istock makes no apologies for bringing his brand of conservative banking to Chicago.

"I believe bankers should be conservative. We're dealing with other people's money," Mr. Istock said. "There are ways to spread your risks, avoid concentrations, and do your homework so you can reduce the risk in your organization.

"Am I more conservative than some of the go-go bankers of the 1980s? Probably. That's probably why we're still around. There are a lot of banks that got too aggressive."

Regardless of his track record, Mr. Istock still has to build credibility on Wall Street. Recent actions, such as a proposed stock repurchase of 40 million shares over the next three years, have helped boost the bank's stock price, but observers believe experience will help Mr. Istock's cause even more.

"Any new chief executive officer has to build confidence over time," said former First Chicago chairman Richard L. Thomas. "Verne's taken on some very tough issues over the past year."

Among those tough decisions, Mr. Istock reshuffled management, forcing out a number of senior vice presidents in the last couple of months in the corporate bank.

"We all knew it was inevitable," Mr. Thomas said. "Sure it's painful ... but when you put two organizations together, there's not going to be a place at the table for everyone."

Analysts favored the move. "It was good to see they're willing to make some tough decisions," said Joseph Duwan of Keefe, Bruyette & Woods Inc.

The actions were necessary, Mr. Istock said, because the corporate bank was ailing. Its performance had lagged behind the company's other businesses. Earnings have been helped by net interest income and expense reductions related to the merger.

Among the company's core businesses, the retail bank is the fastest growing and credit cards has the best return.

Mr. Istock blamed poor trading results for the upheaval in the corporate bank. And he promised better performance next year.

In some cases, First Chicago will exit businesses in which it deems itself too small a player to invest in the technology needed to be competitive. That was the issue with master trust, a business the company will be completely out of by next year.

Growth will also come from acquisitions. Mr. Istock wants to do deals, but said he's not going to be pushed to act even as big Midwest banks such as Boatmen's Bancshares are gobbled up.

"I think anytime somebody feels compelled to have to do something, they'll probably do something dumb, and I don't feel compelled to do something. I am a believer that consolidation in this industry will continue."

Mr. Istock said he believes acquisitions are the most efficient way to win new market share. The company currently has offices in Illinois, Indiana, and Michigan, but First Chicago wants to be a player in what he defined as the "Greater Midwest," which also includes Indiana, Iowa, Kentucky, Minnesota, Missouri, Ohio, Tennessee, and Wisconsin.

"It takes a willing buyer and a willing seller, and it also takes an agreement on price," he said. "The prices have gone back up again when they were starting to narrow. At some point you have to say they're too expensive. But we'll be in the acquisition game provided it makes sense."

Boatmen's, which signed an agreement in August to sell to NationsBank Corp. of Charlotte, N.C., would have been a good acquisition for First Chicago, Mr. Istock said, but the timing of the deal wasn't right for his bank. "We didn't have the stock price to put us in the game, but more importantly we were going through this merger, which was our primary focus.

"If you tried to run the numbers on our organization versus the price that was paid for Boatmen's, we couldn't do it. The dilution would be too much."

More importantly, Mr. Istock said, going back to his favorite theme, the company has to focus.

"Both (First Chicago and NBD) strayed from what I consider a tight focus," he said.

And that problem is magnified by the challenge of getting through the merger.

"We've had two companies that came here that had different cultures," Mr. Istock said. "It takes time to adapt - to go through that kind of change, and I think that's our biggest challenge."

The surviving culture? "It won't be either one. It won't be the old NBD or the old First Chicago. It will be a new culture.

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