Eyes on the enterprise: Susquehanna Bancshares, Inc

RMA Journal, The,  Feb, 2003  by Beverly J. Foster

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RMAJ: How would you describe the credit culture at your banks?

WJR: The community-bank model we've used since 1982 allows for pricing and credit decisions up to each bank's internal limit to be made in the local markets. You know a lot more about credits in your local market than you would through some centralized loan approval process. Each bank can meet with customers, analyze a credit, and make a timely decision.

DDK: While the community banks loan money in their own areas, we have set limits on each bank based on its capital position. So we do know what's happening on a centralized basis beyond certain dollar amounts. We also have internal participations on larger deals among our banks, but they, too, are managed from the corporate office.

We deal in relationships. We're not involved in bidding on large credits or pieces of shared national credits out of our market area. Our long-term relationship philosophy is fundamental to our entire operation.

WJR: The proof is in our results. Our average net charge-off position since 1982, in good economies and bad economies, has been about 21 basis points. This is significantly below that of our peers.

RMAJ: You've mentioned numerous acquisitions. Are there any lessons you've learned or information you can share about successful acquisitions and cultural integration?

WJR: As we pursue an acquisition candidate, we make sure we understand the unique products and services being offered in that marketplace. We don't pretend to know what's right all the time and we seek to maintain the flexibility to adopt, when necessary, new ways to deliver new products and services to our entire market base. If we see some product and service that we think will work well throughout all the banks, we're more than happy to adopt that throughout our affiliates.

Customers' most pressing concerns during an acquisition often are whether their branch will close, whether they'll be dealing with new people, whether their account numbers will be changed. That's one reason why focus groups are so important. If we developed our products and services based solely on the way banks think, we wouldn't be nearly as successful as we've been. We train our staff to do side-by-side comparisons of products and services when we make an acquisition.

We accentuate the positives of a merger to employees and customers alike by communicating the value added that will result. It could be added convenience, free checking, more competitive minimum-balance levels, and so forth. Our conversion team always has significant input from the company we're acquiring. It's very important to listen carefully every step of the way to bank management, staff, and the customers to minimize any adverse customer impact.

Analyzing the numbers is the easy part of acquisitions. Under-managing the people part is what can get institutions in trouble. Compatibility with management of the bank we're acquiring and a good job of communicating our vision can go a long way in helping the integration. You can't overtrain staff, and you must be very cognizant of jobs and skill sets being acquired. We've been big believers of personality profile testing to assure us that we have the right people in the right places.