Change over

PNC modernizes Mercantile while preserving legacy

September 16, 2007|By Laura Smitherman | Laura Smitherman,Sun reporter

Lucille Ingalls remembers going to work as a teller at an affiliate of Mercantile Bankshares Corp. in Virginia during World War II. She stayed even after the soldiers returned from abroad, rising to the post of senior vice president and watching the banking industry evolve through the dawning of the automated teller machine.

J. Donald Henyon, head of Mercantile's affiliate in Laurel for more than a decade, remembers life as a community pillar, firing up the popcorn machine for customers on Saturdays and making it a point to never be seen gambling at the nearby horse tracks. He is, after all, a banker. He doesn't like to lose money.

The stories of Ingalls and Henyon - normally not considered ones for the history books - are being captured by historians as Mercantile's name is disappearing, not only from bank statements but from Baltimore's skyline and from 240 branches. It will be replaced by PNC Financial Services Group, a Pittsburgh-based bank that acquired Mercantile in its expansion southward and that launched a "legacy project" to preserve its history.

PNC is trying to ingratiate itself with the customers and employees in Mercantile's Mid-Atlantic footprint, and has spent nearly a year working on a smooth integration of the two institutions. The process culminates tomorrow when Mercantile's operational systems will be converted to PNC's platform and the blue-and-orange PNC logos will be unveiled on the branches.

While Pittsburgh executives are taking pains to acknowledge Mercantile's past, which stretches back more than 140 years to the Civil War, they are also promoting what they believe are PNC's far superior technology and services.

PNC's highly orchestrated opening has two aims: show potential customers that there's a new player in town and retain Mercantile customers being wooed by local competitors trying to capitalize on the fact that PNC is run by out-of-towners.

To prepare for the Mercantile conversion, PNC has mailed new checks, debit cards and explanatory materials to more than 500,000 account holders, though Mercantile cards will work until October and checks will be accepted indefinitely. Account numbers will change, but direct deposits and automatic transfers will continue. PNC's online banking system will be available to Mercantile customers starting Monday.

Extensive training

All Mercantile branches closed for the last time Friday and are set to reopen as PNC branches tomorrow. PNC has put Mercantile employees through extensive training, as many as 50 hours for certain jobs, and more than 400 employees from other PNC locations will be on hand to help. PNC, the 11th-largest bank in the United States, has branches in eight states and the District of Columbia.

"We come into the integration at Mercantile with a lot of confidence but without arrogance," said PNC Executive Vice President Joseph E. Rockey, who is overseeing the operation. "On Monday morning, our customers will wake up and see PNC. We're confident everything is working and will be working."

As part of Mercantile's transition to a new owner, PNC has hired historians to not only preserve artifacts dating to the Revolutionary War, including handwritten ledgers and rare currency, but also to capture oral histories of longtime employees and customers. The project is part public relations and part civic duty, PNC Chief Executive Officer James E.Rohr said.

"In every community banks were the key economic development driver," Rohr said. "If you went back and researched the history of an individual bank, you end up learning a heck of a lot about the town, who the people were and what happened there."

Tread carefully

Bank officials must tread carefully in mergers to ensure retention of customers who may be loyal to the old brand. They also are conscious of the famously bungled acquisition of CoreStates Financial in the late 1990s by First Union, now part of Wachovia. At the time, it was the largest banking merger in U.S. history, but problems arising from poor training and computer glitches led to an exodus of customers.

"Badly handled conversions can generate some bad publicity. They tick off customers who leave," said Bert Ely, a banking consultant in Alexandria, Va. "There's been enough experience with these things that we know it never goes perfectly. Basically, it's a damage control exercise."

PNC has moved relatively slowly on the conversion of Mercantile, known for its conservative style and for catering to Baltimore's blue-blooded elite. It has been six months since PNC closed the $6 billion deal. In contrast, PNC closed its $643 million acquisition of Riggs National Bank and converted its branches to the PNC platform over a single weekend in May 2005.

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