In the pin-striped, wing-tipped world of banking, there arent many surprises.
This, however, was a surprise.
Just weeks before Evansville-based Old National Bancorp is expected to close on its acquisition of Fort Wayne-based Tower Financial Corp., a third player emerged to lure away almost 10 percent of Towers workforce.
Cincinnati-based First Financial Bank is building on its new staffs client relationships to charge into the market as a full-fledged competitor with temporary downtown offices and plans to start building branches.
The strategy, insiders say, isnt uncommon. But how it unfolded offers lessons for anyone considering a bold business move.
As Tower Bank prepares to make its exit, Old National and First Financial are fighting for Towers share of the local marketplace.
But they arent battling just with each other. They have to contend with out-of-state competitors with a local presence: JPMorgan Chase, Wells Fargo, Fifth Third and PNC banks. Indiana-based 1st Source, Lake City and Salin banks will also be in the hunt for new customers.
And dont forget STAR and iAB Financial banks – both are based in Fort Wayne. That hometown tie was Towers strongest selling point.
But First Financial and Old National officials insist the advantage wont be lost entirely. Local borrowers, they said, will still be meeting directly with decision-makers.
Bankers boring? Dont bet your savings on it.
Old National and Tower on Sept. 10 announced plans to form what they described as a partnership.
Old National is about 15 times larger than Tower, based on total assets. Or 25 times larger, based on number of branches. So, of course, the Tower name is destined to fade away while the Old National banner remains.
Officials stressed at the time that all Tower locations will remain open and staffed with the same executives, loan officers and tellers that customers are used to.
Any jobs destined to be cut in the consolidation would be from behind the scenes – workers whom customers never see. Old National still hasnt announced how many of the original 165 Tower employees will be dismissed.
At least one executive search firm saw a window of opportunity.
Eggers Consulting Co. Inc. specializes in placing banking and finance executives.
The Omaha, Neb.-based firms recruiter assigned to Fort Wayne, Ryan Terry, contacted some Tower employees to find out if theyd be willing to consider offers from other banks.
Randy Lyons, Eggers vice president, said his firms recruiters study markets nationwide and maintain contact with prospects in assigned areas.
Most of the individuals we work with dont have to make a (job) change, he said. Theyre doing very, very well.
But previously content executives can have their loyalty tested when an acquisition is in progress because theyll suddenly be working for a company they never chose.
That, Lyons said, can be a game-changer.
A foot in the door
Rob Slusser, formerly Towers director of lending and senior vice president, received one of those calls from Eggers Consulting.
Slusser wasnt itching to leave Tower. But he was willing to listen.
Al Roszczyk, First Financials Indiana regional president, also received a call from the Eggers recruiter. Would be he interested in talking to experienced employees in the Fort Wayne market? Indeed, he would.
First Financial had been looking for a foothold in Fort Wayne for about five years, said Claude Davis, president and CEO.
Indiana accounts for 40 percent to 45 percent of First Financials business, depending on whether you measure by number of branches or money on deposit, he said.
Indiana, as a state, is a critical market for us, he said.
The banks branches are in North Manchester; Van Wert, Ohio; and other locations surrounding Fort Wayne. Those smaller communities look to Fort Wayne as their regional hub for shopping, health care and other needs, Davis said. It makes sense to build on that, he added.
What we needed was the right entry point – a catalyst, of sorts, he said.
Bank officials had considered various acquisitions to gain a foothold in the local market but didnt find the right opportunity. Davis said he knows Mike Cahill, Tower Banks president and CEO, but he declined to say whether First Financial pursued Tower before Old Nationals offer was accepted by Towers board.
Towers stockholders still have to approve the sale, initially estimated at $108 million. A shareholder meeting has been scheduled for 9:30 a.m. Feb. 7 at the Landmark Centre. The sale is expected to close about a week later.
Hiring an established team of commercial and mortgage lenders – the employees who generate much of any banks income – made the most sense to First Financials leaders.
In November, Roszczyk drove up from Columbus, Ind., to meet with some Tower employees individually. In the end, 15 accepted his offer to work for First Financial: six commercial lenders, five mortgage lenders, two mortgage underwriters and two mortgage processors.
If Tower hadnt been sold, Slusser said, Wed probably still be there. We were happy there.
Building a bank
Slusser, now First Financials Fort Wayne market president, always had a positive impression of his new employer. He liked managements commitment to customer service and the community. Slusser believes First Financials culture meshes perfectly with the one he experienced during his 10 years with Tower.
The recruited bankers will continue numerous volunteer commitments, including serving on the boards of Science Central, Big Brothers Big Sisters and the Fort Wayne Civic Theatre.
Banks are expected to be active in community groups. Old National has also stated its commitment to supporting local nonprofits with donations of money and staff time.
The two newest competitors in Fort Waynes already crowded banking community choose not to disparage each other, but officials are eager to explain why their operations can offer more to customers than Tower Bank could.
First Financial and Old National are both able to make larger loans than Tower. And they can provide products and services beyond Towers limited scope. For example, Old National offers insurance policies and First Financial offers deposits by cellphone photo.
Such comparisons are intriguing, but it was the interest expressed by his co-workers that persuaded Slusser to seriously consider First Financials offer.
Although the Tower bankers were recruited separately, they compared notes and coordinated their exit. The commercial lending team told Slusser, their leader, of their plans. He tendered his resignation the day after those five subordinates did.
They made it very clear they wanted me to come with them, he said. Its very flattering, humbling.
Theres certainly a camaraderie amongst us. Some of us have worked together for years, he said. Had they not come over (to First Financial), my decision would have been a lot tougher. But because they came over, my decision was a lot easier.
Slusser, who declined to say whether Old National made a counteroffer, sees his career move as an exciting new chapter.
This was an opportunity, he said, for me and this team to do something wed never done before – which is build a bank in this market.
Meanwhile, Old National will also be building its name in Fort Wayne. But that wont happen without a bit of soul-searching.
Peyton Green and Nathan Race, analysts with Alabama-based Sterne Agee, this month cited the defection of Towers commercial lending core when they cut in half the amount they predict the Tower acquisition will add to Old Nationals earnings per share after the deal closes.
The revised projection is 4 cents a share.
Bob Jones, Old Nationals president and CEO, plans to review how his bank deals with prospective employees during takeovers in the wake of the Tower experience.
On Jan. 8, Jones talked to bank analysts during a conference call about Old Nationals newest acquisition target: United Bancorp Inc.
During the question-and-answer session, he fielded more than one question about the loss of valued Tower employees, including Cahill, who had been offered the Fort Wayne region president position.
Weve got a lot of résumés and a lot of opportunities to replace that team, Jones said during the conference call, adding that Old Nationals management learned its lessons.
Obviously, you do things a little bit differently every time maybe we needed a little kick in the butt, too. That said, dont take yourself so complacent and dont think youre better than you are. And make sure you keep these revenue drivers and keep them happy, he said. I dont want to go through this again.