companies into a $74 billion-asset, 13-state business, Firstar Corp. president and chief executive officer Jerry A. Grundhofer appears confident.
In town this week to attend a Banc of America Securities conference, Mr. Grundhofer called Firstar's recent purchase of St. Louis-based Mercantile Bancorp. a low-risk proposition.
"These are two very simple and very predictable companies. Mercantile is not at all different from us," Mr. Grundhofer said. "There's not a lot of pioneering here."
If past performance is any guide, Milwaukee-based Firstar should have little problem integrating Mercantile, analysts said.
"The track record of the Jerry Grundhofer management team shows that they have the ability to integrate acquisitions without much hoopla and without many glitches," said Michael L. Mayo, managing director of bank research at Credit Suisse First Boston.
But with $35.5 billion of assets, Mercantile is a far bigger fish to swallow than anything the well-respected Mr. Grundhofer has tried before. The combined company has 1,200 branches in nine Midwest states and Tennessee, Arkansas, Florida, and Arizona.
When the deal was announced in April, some observers worried that Firstar was growing too fast. In October it expects to put the finishing touches on its integration with Star Banc Corp. of Cincinnati. Star Banc bought the old Firstar of Milwaukee and took its name last November.
"So far, so good, but we're still in the early innings," Mr. Mayo said. "When they finalize Star Banc and start showing success with the Mercantile deal, then they can start claiming victory."
Regardless of how the Mercantile integration progresses, Diana Yates, an analyst at A.G. Edwards & Sons in St. Louis, said the Star Banc integration will boost earnings this quarter. "We should start to see some real growth numbers from the Star Banc/Firstar merger show up in the third and fourth quarters," Ms. Yates said.
Mr. Grundhofer, whose brother, John, is president and chief executive of U.S. Bancorp in Minneapolis, has developed a reputation for being an energetic boss with a knack for acquiring and turning around underperforming banking companies such as Mercantile. He also is known for expecting a lot from his employees.
"I look at all 23 lines of business every month and go through everything with every line manager," Mr. Grundhofer said. "If you can't perform, you can work somewhere else. We hold people accountable for their business."
To ensure that employees' performance translates into good customer service, the company in June extended its "five-star service guarantee" to former Star Banc customers. The program -- which credits $5 to a customer's account if, for example, he or she has to wait more than five minutes in a teller line -- will be extended to former Mercantile customers by the end of March, Mr. Grundhofer said.
"We pay for our service mistakes," he said.
Mr. Grundhofer suggested that Firstar may pull back on looking for banks to buy, at least for the time being.
"Right now we have our plate full, and we are obviously very focused on Mercantile," he said.
