Neal Finnegan seems brimming with confidence these days. Which is good, because he's going to need it.
His Boston bank, UST Corp., is about to more than double in size, to $3.8 billion of assets, as two large acquisitions are completed. Overnight, UST will be able to compete with Fleet and Bank of Boston for retail business in the metropolitan area.
The abilities of the 58-year-old chief executive and his meticulously built staff are about to be tested.
But with a little extra work and a lot of extra training, Mr. Finnegan said, he thinks he can avoid the kind of growing pains that many other rapidly expanding community banks face.
"This isn't strange new territory to me," Mr. Finnegan said. I'm not awed. ... I think we have a management team that is comfortable and familiar with the issues in running a company that is twice the size it was before."
In fact, such tests are becoming more common. Several U.S. banks in recent years have gone from being marginal but scrappy community institutions to regionals in the course of a few opportunistic acquisitions. Having the management resources to deal with such growth has become vital.
Many other midsize community banks have taken on the challenge with only mixed success. Boards of directors and managements often lacked the proper skills or talents for their new role.
At Vallicorp Holdings Inc. in Fresno, Calif., chairman J. Mike McGowan said he'd encourage growing community banks to know their companies well, inside and out, in order to predict where pitfalls might materialize. Vallicorp has more than tripled in size since November 1993.
"Any company that grows rapidly experiences growing pains," Mr. McGowan said. "The better prepared a company is, the more readily resolvable those issues become, and the fewer the challenges along the way."
Chris Hargrove of Professional Bank Services in Louisville, Ky., said two areas in which community banks often outgrow their skills are operations and financial management. But those are also where many larger institutions are laying people off, he noted.
"There's plenty of talent to bring in there from the bigger institutions, from the cutbacks and layoffs," he said.
But while he acknowledges some concern, UST's Mr. Finnegan has a talent bank in his senior executives. Many of them came to UST after years at Fleet, BayBanks, Shawmut National Corp., or, before its 1991 failure, Bank of New England.
Mr. Finnegan himself was a vice chairman of Shawmut and then executive vice president at Bankers Trust in New York before joining UST in April 1993.
"I have a hard time thinking of a management team member who didn't get trained in a much bigger bank," Mr. Finnegan said. "It has essentially worked out that our senior management all come to us from banks that were running larger operations than we currently are."
For the rest of the staff, however, Mr. Finnegan anticipates extensive training, both for current employees and new ones, "to make sure we're all on the same page."
"How much training? The answer is 'lots,'" he said. "Everyone is going to have some degree of change in how they go about their jobs, including the USTrust people. The likelihood that life is the same for any of the constituent groups is low, including our own. We're changing, too."
Since Jan. 1, quiet but competitive UST, holding company for USTrust, has suddenly burst out of its seams.
A bank that has been known more for its aggressive but amusing advertising and for catering to business borrowers is becoming an important retail player in Boston.
That's a lot to ask of a bank that had hardly grown since 1990. But Mr. Finnegan said he believes that his staff can do the job.
UST agreed in mid-June to buy 20 branches divested by Bank of Boston Corp. as part of its merger with BayBanks Inc., a retail powerhouse in the Boston area. With the branches came $860 million of deposits and $510 million of loans.
Just two months later, UST struck again. It announced Aug. 30 that it would buy $1 billion-asset Walden Bancorp, an Acton-based, two-bank holding company with 17 branches. The two deals more than doubled UST's branch network.
Meanwhile, Mr. Finnegan and crew moved swiftly to consolidate their newfound strength and focus on Boston. Two weeks before the Walden deal, UST had agreed to sell its four-branch Connecticut operation, with $112 million of assets, to another active New England buyer, New Jersey's Hubco Inc.
Before the three deals, UST had only 28 branches in the Boston market and $1.8 billion of assets. While very strong in middle-market lending and private business banking, it was far less active in retail. In fact, UST was probably better known for humorous advertising sallies against its regional rivals.
But by the closing of the second acquisition in January, it expects to have the third-largest franchise in the metropolitan market, with 65 branches and $3.8 billion of assets. The branch network would blanket the city and its primary suburbs, including the technology and business corridors that encircle Boston.
"You ask whether we're prepared for it," Mr. Finnegan said. "I think we are, and the proof will come when we've done it."