Terrence Murray is taking a break.
The president and chief executive of Fleet Financial Group, who raised eyebrows and encountered criticism for piling one major acquisition on top of another, swears he won't make any more this year.
"We've got an absolute full plate," he declared in an interview last week, noting that Boston-based Fleet has yet to integrate the recently acquired Shawmut National Corp., even as the purchase of National Westminster Bancorp approaches.
Mr. Murray has made similar vows in the past - once even before the agreement to acquire Natwest. But beneath Mr. Murray's stated cautiousness, observers say, lies one of the industry's foremost opportunists.
As Mr. Murray sees it, he had little choice, even if a breather might have seemed indicated.
"By the turn of the century, 25 large institutions will hold 90% of the banking assets in this country," he predicted. "Between 4,000 and 5,000 community banks will hold the rest."
The ruthless streamlining Fleet has imposed on its acquisitions and a tough decision in 1993 to ax more than 20% of its staff have left Mr. Murray open to negative media coverage and accusations of callousness.
But with the industry's advancing consolidation and reliance on technology, Mr. Murray said, "banks are losing their warm and fuzzy feeling." Few bankers, he added, can afford to remain sentimental.
"You have to take tough judgments about where and how you make money," said the 56-year-old chief executive. "Banking is changing, the same way automobiles replaced the horse and buggy."
Driving Mr. Murray are some hard lessons he learned growing up in the declining Rhode Island mill town of Woonsocket, just south of the Massachusetts border.
"It was horrible work," Mr. Murray said of his experience at a local spinning plant where he worked at age 16. "And those plants were badly mismanaged."
Unwilling to see Fleet meet the same fate as the old textile mills, Mr. Murray has transformed what was once an insular Rhode Island regional bank into a $90 billion superregional with four million retail customers and 265,000 small-business relationships.
But to Mr. Murray, establishing a commanding presence in New England and solidifying Fleet's downstate New York and New Jersey positions through the most recent merger deals are only half the job.
"What we've achieved so far is to extend the franchise," Mr. Murray notes. "We've still got to learn how to manage it."
The acquisitions have left some analysts wondering whether Fleet is going to be able to digest everything and still get on with the business of boosting revenues.
"For anybody who's in this sort of acquisition mode, it's far more difficult to get the organization to focus on cost reduction, on segmenting markets and product differentiation," said one analyst who declined to be quoted by name.
Mr. Murray said he has little quarrel with analysts' concerns, but he responds that Fleet's performance so far has been "better than expected. We don't expect costs to go beyond what we provided for in the fourth quarter."
But he said he expects earnings will probably remain low for the first couple quarters this year.
"We know there's a question mark about how fast we'll be able to reach cost savings over the first and second quarter," he acknowledged. "But earnings will improve as the year goes on and 1996 will be a strong year."
In 1997, he added, profits "will escalate dramatically."
Even if Fleet has no immediate plans for further acquisitions, mergers are still very much in Mr. Murray's thoughts.
Within the next few years, he sees more megamergers as leading superregionals like BankAmerica Corp. build nationwide networks.
"Don't forget Bank of America put in a bid for Bank of New England," he said, recalling the major northeastern failure of the last decade.
Fleet may not be in that same class, Mr. Murray said. "I see Fleet as a powerful regional player. I don't see any need to be a coast-to-coast player."
This doesn't mean its expansion is over. Fleet has a goal of more than doubling its $45 billion of assets under management and boosting fees to half of total revenues from the current one-third.
Fleet also plans to expand national lines of business such as mortgage banking and to develop nontraditional operations like insurance as part of a plan to avoid becoming too dependent on the Northeast regional economy.
"Bankers have to think a little bit in broader terms about banking outside the box," says Mr. Murray.
But he also expressed frustration at the remaining regulatory constraints. "Banks are stuck in a lot of lousy, low-margin businesses like car loans and certain types of transaction accounts. Nonregulated competition has run circles around us for 20 years.
"Why are companies like AT&T and Sears allowed to come in and skim the cream off businesses like credit cards when they don't have to meet any of the requirements that banks do?"
He complained that insurance companies are among the biggest mortgage lenders but don't have to meet the community reinvestment requirements banks have.
Although Fleet's decision to buy Natwest shook the analyst community, analysts are now increasingly voicing support for Mr. Murray's strategy. They commend Fleet for its decision to pay cash for Natwest and spread a portion of the cost out over several years. Fleet also plans to liquidate nearly $20 billion of the combined bank's low-margin assets.
"Fleet has a management team that is well skilled in merger integration," says Thomas Theurkauf, of Keefe, Bruyette & Woods Inc. "I would tend to give them the benefit of the doubt."
Fleet's origins date to 1791, when Providence Bank, its earliest predecessor, was founded. In 1954, Providence Union National Bank merged with Industrial Co. to create Industrial National Bank.
Fleet went on an acquisition spree under Mr. Murray in the 1980s, extending its reach into upstate New York and Long Island most effectively through a 1988 merger with Albany-based Norstar.
Mr. Murray himself had a rapid rise. He joined Industrial National Bank as a teller trainee in 1962 and was named president and chief executive 20 years later.
Since he became president, Fleet has acquired 17 banks or their assets, including Norstar, Bank of New England in 1991, and the recent Shawmut and Natwest deals.
Oddly enough, Mr. Murray became a banker by default. No fewer than 26 brokerage firms turned him down for a job after he got out of Harvard University, prompting him in desperation to turn to banking.
"I still remember the name of every one of them," he recalls ruefully.
