Fleet Financial Group said Thursday that it has completed the integration of its two most recent acquisitions, Shawmut National Corp. and National Westminster Bancorp, while hitting its cost-reduction target of $600 million.
Officials of the Boston-based holding company also said the 18-month post-merger consolidation process ended with less customer attrition than they expected.
Analysts had criticized Fleet for its sluggishness in absorbing Boston- based Shawmut, which it bought in December 1995 for $3.7 billion, and New Jersey-based Natwest, which it acquired in May 1996 for $3.26 billion.
Some worried that with the two megadeals, Fleet might have bitten off more than it could chew. And many institutions have struggled and not always succeeded at integrating the systems and operations of single acquisitions.
"We are happy to report that we have undertaken the conversion with success," said Eugene M. McQuade, vice chairman and chief financial officer.
Fleet said it retained "nearly 100%" of its corporate customers and more than 95% of retail customers. Consultants said it is common for a merging bank to lose 10% of its customers.
Mr. McQuade also said reductions of operating expenses could go as high as $650 million year as branches and other real estate are sold.
Analysts called Thursday's announcement "justifiable bragging," as Fleet is finally beginning to show positive results from the consolidations.
"We had not been recommending Fleet for some time because we believed their integration was not on schedule and there was a lack of revenue growth," said Michael Mayo, an analyst at Credit Suisse First Boston, who just upgraded his Fleet rating to "buy" from "hold."
But Mr. Mayo said times have changed. "Management has said that the company will now focus on revenue growth and the quality of earnings," he said. "The cloud that had been hanging over Fleet is gone."
Indeed, Mr. McQuade said "we are focusing on making sure the revenue engine is running at full RPM."
Fleet's final major conversion task, the combination of 40 computer systems that handled Natwest's deposit accounts in New Jersey, was completed last weekend.
During the course of the integration, the bank combined 707 different computer systems into one. It combined 564 branches and 1,236 automated teller machines with existing Fleet systems. And it converted 4.4 million deposit accounts and 3.6 million customers.
Fleet will now put its single operating platform to work to improve customer service, speed product development, and enhance revenues, said Michael Zucchini, vice chairman and chief technology officer.
"What we have done is fairly unique," said Mr. Zucchini. "Now you can walk into any one of our 1,200 branches and have the same experience."
A single computer platform will allow Fleet to market its set of products in a consistent way to customers throughout its branch system, he explained.
"It reduces our expense base, makes training easier, and improves efficiency," said Mr. Zucchini.
Consultants agreed, saying a unified computer platform can cut a bank's operating expenses by 15% to 20%.
"The ability to recognize customers systemwide becomes a significant competitive advantage," said Robert Zizka, managing vice president at First Manhattan Consulting Group. "This will position Fleet very well for revenue growth."
As a result of the mergers, Fleet has doubled its asset size, to $81.7 billion, and increased its branch network to 1,200 offices, spread from New England to the New York metropolitan area.
Fleet's stock price was down 81 cents Thursday amid a general banking selloff, to $64.187.
