When the competition merges, it creates a unique opportunity to acquire profitable customers. Ironically, most banks fail to capitalize on what may be their best chance to alter market share.

Mergers have become a way of life. In the past 12 months more than 700 banks have merged. The pace may have slowed somewhat in 1999, but it should accelerate again with Y2K technology overhauls well in hand and stock prices at record highs.

There is, perhaps, no greater risk to an institution than executing a merger effectively. By the same measure, there is no greater opportunity than capitalizing on the managerial, customer, and distribution changes that mergers cause.

Too often we become complacent about the "found opportunity" being handed to us. The day a merger is announced there are always some high- balance prospects who move their accounts, saying that they are tired of the changes or don't want their money going out of state.

There is "buzz" in the market about decisions being made away from the community. It is easy to believe that all we have to do is wait for the inevitable changes to drive "merger refugees" across the street. Sometimes it has happened that way, but we can't count on its continuing.

Banks have become more cautious in handling mergers. They court their most profitable customers. Systems conversions are usually done smoothly, and pricing may be only marginally changed.

Making some recent acquisitions in Connecticut, Summit Bancorp of New Jersey apparently went out of its way to minimize changes in product offerings, pricing, and local management. Star Banc Corp.'s acquisition of Firstar went so smoothly that customers wondered if anything had changed.

What used to be inevitable, heavy-handed merger disruptions are no longer sure things.

But there are strategies that can and will work to take advantage of this unique and short-lived gift when your competition is going through wrenching change.

For example:

Understand their strategy-and develop your own. Between published reports and market shopping studies we can ascertain the competition's most likely product, pricing, marketing, and sales management strategies. Know what they'll do, and develop a plan in response.

Identify the profitable customers you want to move. With today's data base information systems, it is usually possible to identify all of a competitor's commercial loan and high-value retail customers. Add credit analysis and indicators of propensity to switch banks, and you will have a well-defined target list.

Develop an action plan, and manage according to it. Strategies and plans are worthless if not managed with precision. Execute the plan with the same diligence that the competition is applying to its merger project.

Be aware of timing. The typical window of opportunity ranges from three months before a systems conversion to four months afterward. Act too early, and nothing has changed. Wait too long, and all the changes have been absorbed, giving customers less motivation to move.

Rarely will one institution hand a competitor a gift. Merger-related changes are always an opportunity to capitalize on disruption, but there is also the possibility that your competition can streamline distribution, improve pricing, do an exciting marketing "relaunch," and emerge stronger than before.

Well-managed, aggressive banks won't give their competition a free ride.

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