Community banks, like teenagers, reach an awkward stage.
They can become too big to claim small-bank status, though still too small to join the ranks of major regional institutions.
With the proliferation of mergers, acquisitions, and consolidations, the number of banks in the middle rank is growing. Some are coalescing in a new class of holding company-much like the super community banks that have emerged in recent years-and face unaccustomed cultural transformations and internal conflicts over missions and goals.
"They are outgrowing their origins, and that has left many institutions in no-man's-land," said Gray Medlin, managing director of Carson Medlin Co., Raleigh, N.C. "They are neither fish nor fowl."
Triangle Bancorp in Raleigh is one such company.
Founded in 1988 by a group of ex-bankers who believed Raleigh deserved a hometown bank, Triangle is spreading throughout the eastern part of the Tar Heel state. With acquisitions, its asset base has grown from $58.5 million in 1993 to more than $1 billion.
"They are now in the position where they are having to think about being a statewide organization and how they are going to work that," said Mr. Medlin, an investment banker.
Triangle's pending acquisition of Bank of Mecklenberg will bring it into the western part of the state, environs dominated by Charlotte.
Michael Patterson, Triangle's chairman and chief executive officer, said he doesn't see the rapid expansion as problematic. He said six acquisitions in four years have enhanced the company's product line and strengthened its ability to serve new, larger customers. The spree has also added employees and viewpoints to the corporate culture.
"All of our deals have been done to expand our market," Mr. Patterson said. "The timing has been good."
With 61 branches and another six slated for opening this year in Winn- Dixie supermarkets, Triangle considers itself a super community bank emphasizing small businesses.
The super community formula is an attempt to strike a balance between locally based, personalized service and the efficiencies that size and scale can bring, especially in administration and back offices. But those goals can come into conflict, particularly when banks grow through acquisition.
"Banks don't like to change," said Anat Bird, senior executive vice president and chief operating officer at Roosevelt Financial Group in Chesterfield, Mo. "When you join a bigger institution, all of the things that used to work and that made you feel like a family, you can't do anymore."
Ms. Bird, who as a consultant coined the term "super community" eight years ago, said the words describe institutions that "try to out-local the nationals and out-national the locals."
The approach works when managements are willing to cede at least some authority to their holding company, she said. "They are trading independence for liquidity, a better product line, and a better asset base."
Vince Berta, president and chief executive officer of $2 billion-asset Trans Financial Inc., Bowling Green, Ky., is a super community proponent but said no one has found an organizational "magic bullet."
"It's very difficult," said Mr. Berta, whose company has made 13 acquisitions in five years. "A company that started out in one community now has to realize it is a part of 20 or 25 communities. It can be especially hard on the board of the bank, which still sees itself as part of that original community."
"There's a conflict of objectives," said Mr. Medlin. "The whole idea was to give a level of service that the large organizations could not afford to do. But as these (community) banks grow, it becomes increasingly difficult to do that."
One way to stay true to one's roots is to maintain separate boards of directors and retain local management.
"Our philosophy is that it's a partnership," said John Lippert, chairman of National City Bancshares in Evansville, Ind. "We have to be selective in the banks we buy. The folks on Wall Street are going to scrutinize us."
National City-no relation to its superregional namesake in Cleveland-has acquired 19 banks in the last 10 years. Those banks have retained autonomy within the $1.2 billion-asset holding company. "We find the boards know a lot more about what they do than we do," said Mr. Lippert.
Some of those banks have been merged, reducing the number of subsidiaries to 12: eight in Indiana, two in Illinois, and two in Kentucky.
Triangle, which will leave Bank of Mecklenberg as a separate unit, customarily retains the managers of banks it acquires and stresses delegation of authority.
"We have kept the local advisory boards, and we've kept the decision- making as decentralized as possible," said Mr. Patterson, the CEO. "If anything, it has enhanced our culture."
