Now it is Tom Andes' turn.
After three decades at St. Louis-based Magna Group Inc., Mr. Andes assumes the chief executive's post at yearend.
Analysts expect changes, but new ownership at the $4.2 billion-asset bank is unlikely, at least in the short term.
"The company doesn't want to sell anytime soon," said Denis Laplante, banking analyst at Fox Pitt-Kelton. "Tom Andes is a young guy, and it is clear to me that they're doing a number of things that indicate they are not up for sale."
Indeed, Mr. Andes, who turns 52 next week, is said to have rejected preliminary talks earlier this year with crosstown rival Mercantile Bancorp. One source said the deal would have given shareholders at least $25 a share, but the CEO-to-be refused to discuss it.
Mr. Andes has put an early stamp on the company. In a quiet shakeup, he shuffled three insiders and hired two newcomers to create a tier of executive vice presidents to run the bank.
"In the last six months you are starting to see a major change in leadership. Tom is truly taking power," said Joseph Stieven, senior banking analyst at Stifel, Nicolaus & Co.
For his part, Mr. Andes downplays the transition, saying that he and predecessor Bill Badgley, who retains the chairman's title, have been like-minded partners for 30 years. He remains committed to the supercommunity retail banking style that has made Magna the No. 3 bank in St. Louis.
Mr. Andes, currently president and chief operating officer of Magna, says sensible in-market acquisitions won't be overlooked. But he makes it clear the main focus is on changing the bank's image as an underperformer. The company last year broke the 1% return on assets benchmark for the first time, but was still about 20 basis points behind Midwestern peers.
"We want to have an image [with investors] as a growth organization that focuses on retail," he said last week. Mr. Andes realizes that if he doesn't meet that goal, Magna will be ripe for takeover as long-closed Missouri opens to interstate banking next fall.
Q.: The transition has really been underway for about six monthsnow. What will be done differently?
ANDES: Probably not many things in terms of my becoming CEO. Bill Badgley and I have worked together for 30 years as a team. I might have a few things differently, but our philosophy is to continue emphasizing our super-community, retail approach.
Q.: But you have quietly realigned the top management at Magna.
ANDES: I think we have a group of people that are enthusiastic and very capable in doing what has to be done. Lucky Maynard is our CFO. He has been with us since March, and prior to that was with Ernst & Young.
Linda Fabel is our executive vice president in charge of the retail side. She has been with us for about three years on the technology side. Prior to that she was with IBM.
Bob Olson spent 18 years in operations with Security Pacific and the last three years with J.D. Carreker & Associates, which I employed in October of last year. They took a look at our fee income side, and I really became impressed by Bob.
And Dave Harris. He has been with Magna Bank for a number of years, and he has been promoted to be in charge of the credit side.
The fifth individual is Gary Hemmer, who will be in charge of investor relations.
Q.: That sounds like a fairly radical change. Doesn't that say something about how your style will differ?
ANDES: We are going to be a very sales-oriented type organization, and we are trying to position ourselves to do that. We have just announced a test site in our [branch] system as the pilot for our new incentive compensation system.
Q.: What else will change?
ANDES: We are moving toward one bank. That means consolidating Magna Bank Illinois and Magna Bank in Missouri. By Jan. 1 we will have it completed, from an organizational standpoint. We have targeted by later in the year to decide which charter to have, Illinois or Missouri or national.
We have met with the regulators to discuss it, and I have kind of targeted the first of March to decide which way to go. The big thing that will influence it is cost. We're looking at four state banks right now, and there is a lot of cost for that. We are projecting $1.5 million to $2 million a year in savings as a result of consolidation to one unit.
Q.: What will that mean for customers?
ANDES: The big advantage of [consolidating charters] is for the customer. We have 27% to 30% of our customers that live on the east side of the [Mississippi] River in Illinois and yet work in St. Louis, and they have difficulties in handling all their banking needs.
Q.: The biggest shift in style that most expect is that Mr. Badgley was focused on external growth primarily through acquisition and that you will focus on internal growth. Does that mean you are not inclined to acquire?
ANDES: No it doesn't. We are very definitely interested in acquisitions. We've been concentrating right now to make sure we have this new management team in place and we have our systems right. Our primary targets are inmarket. We have really targeted to go into those markets where we are No. 3 or less.
Q.: There has always been a perception that Bill was more interested in selling the bank and that you are more inclined toward independence.
ANDES: You get right to the throat, don't you? Our position is we would like to remain independent, and that is why we brought in new people. We want to concentrate on growth and improvement on earnings. Our board's position, and it's Bill's too, is to remain independent.
Q.: Let me cite a specific. It is said that earlier this year, Mercantile Bancorp. approached Magna with a $25-plus-per-share offer and you killed the deal. Any comment?
ANDES: A lot of that is rumor, and we don't comment on rumors.
Q.: You are not widely known in the market. What kind of name do you expect to make for yourself, and what kind of name do you want Magna to have?
ANDES: We want to have an image as a growth organization that focuses on retail. We want to develop an image that we are profitable and that our efficiency ratio and our earnings per share are in line with organizations of our size.
Q.: You have been viewed as an underperformer against your peers in the Midwest, and your expenses are considered high. What do you expect to do about that?
ANDES: I wouldn't agree with you about our expenses. When we look at comparable organizations, we are actually lower than our peers. We have addressed the expense side and will continue to do so.
As an example, when we complete our operations center in the first quarter of 1995, we see some improvements that will affect us in the last half of the year.
Q.: You are in the mid-60s now on efficiency, and the industry standard is 60 with a target of 55. When can you get there?
ANDES: It's obviously not going to take place this year, but we will continue to head in that direction. The expense side is just one of the three legs of the efficiency ratio. We have attempted to manage all the components there.
Our net interest income we are trying to impact with increasing loan volume. The other area we really need to concentrate on is noninterest income. We really see that as basically three areas of opportunity we must address. The first one is internally, which relates to service charges on accounts. We want to make them uniform. The other two areas are outside the company -- that's our trust company and our brokerage. That is where we have really fallen short.
Q.: What do you expect to do differently?
ANDES: In the brokerage area, the situation is just the general market. In 1995, hopefully we are going to see a better market, but the main thing we are going to be doing is make sure that our offices are located throughout the regions we are in. Right now, we service about 17 of the 110 banking locations, so we want to expand that.
Q.: In 1993, you started to push heavily into the indirect auto business. How has that business been going?
ANDES: In September we put on about $38 million [in new loans]. On average in the prior three months we were at $25 million to $30 million. A year prior to that it was probably under $10 million. We can continue to concentrate in that market.
Q.: Are you sticking to prime credits?
ANDES: We will not sacrifice quality for quantity. Our delinquency ratio is about half the national average, and a lot of the loans have been on the books for nearly two years. We are not cutting the rates to get that business.
Q.: I'm not sure of how you get that business without being pinched on profits if you are holding up the credit side.
ANDES: Certainly, price is somewhat affected. We think we are able to grow because we are able to give service. We still see opportunity. First you saturate the market and then you expand to the outlying dealerships.
Q.: What should investors expect in the way of earnings growth?
ANDES: Part of our five-year strategic plan is to perform at or above our peer group. We are on target for 1994 and expect a good 1995. We want to get there as quickly as we can.
Q.: The question is whether you don't get there quick enough or your investors will find somebody who can. How long do you really have to get there?
ANDES: We approved our plan in June of . We have a couple of years to get there. So say, 1995. We are, in essence, positioned to get to that.