Associated Banc-Corp will do everything it can, its chairman vowed, to stave off customer and revenue losses as it absorbs former rival First Financial Corp. over the next year.
Speaking to analysts last week, H.B. "Nick" Conlon said his $10.7 billion-asset company will focus on customer retention and revenue growth, and will be cautious in cutting costs.
"Many banking industry mergers fail to create shareholder value due to customer defection and loss of earnings momentum," he said.
Buying First Financial, based in Stevens Point, Wis., doubled Associated's size. The Oct. 29. transaction made it the third-largest banking company based in Wisconsin. Green Bay-based Associated now trails only Marshall & Ilsley Corp. and Firstar Corp., both of Milwaukee.
Mr. Conlon said Associated will take a full year to merge computer systems, change signs, and instill its culture at First Financial.
"To protect the strong franchise value of our banks, specialized focus on customer retention efforts are in place," he said.
To help keep operations running smoothly, John C. Seramur, First Financial's chief executive officer, will run its branches over the next year. He is expected to retire sometime after next November.
Mr. Conlon said that the merger will cut costs by $10 million over the next 12 to 18 months, but that revenue growth is the main focus.
Analysts say Associated has a lot of revenue potential.
"Associated had problems funding its strong loan growth," said Wayne Bopp, an analyst with Robert W. Baird & Co. "First Financial had very good funding-they just didn't have strong loan demand."
First Financial is a savings and loan and will remain one until it is officially merged with Associated next year. Associated has been primarily a business lender and trust bank.
The company has been vague about how many branches it plans to close. Seventeen overlap, but none are likely to close within a year.
Associated "didn't pay a big price," Mr. Bopp said, so it needn't "slash and burn."
The price was $1.4 billion, 3.1 times book value and 15.6 times estimated 1998 earnings.
A customer base that includes 500,000 households in Wisconsin and Illinois offers cross-selling opportunities, Mr. Conlon said, particularly for credit cards, investment services, and home equity loans. Associated also wants to tap First Financial's markets for new business loans.
Though melding the companies will take time, he said, acquisitions will remain a priority. He is particularly interested in Illinois.
In addition to banks, Mr. Conlon said, Associated is interested in consumer finance, venture capital, leasing, mutual fund sales, and capital markets.