Lexington, KY - In late February, National City Bank branches in Lexington and all around central Kentucky opened their doors under a new banner: PNC Bank. The sign swap signaled the completion of the first half of a conversion of the regional National City Bank into PNC, the nation's fifth-largest bank. With the merger came a marriage of corporate cultures. While this transition has taken place, Harry Richart has remained at the helm of operations in Lexington and central Kentucky.
In an interview with Business Lexington's Tom Martin, Richart shares his observations about maintaining a leadership role even as change is occurring all around.
TM: Give us, if you would, a brief background on PNC's acquisition.
HR: There will be four waves, actually, of the integration, because it's a significantly sized transition. The first wave happened in November. It went very, very well. This is our second wave, and there will be a number of markets that are going to merge, as well as Lexington, and then there will be others that will merge in April. And then in June 2010, the integration will be complete with National City into PNC.
TM: What is it like to oversee the merger of a corporate culture with which you were comfortable and familiar with that of another entity's culture?
HR: This will be my fourth experience in being acquired. So that, by itself, doesn't hurt. But in the case of PNC and National City, the cultures are, while not identical, not dissimilar at all.
So it has made this conversion as smooth as any that I have ever experienced. You know, there are two different ways of looking at lots and lots of different things, but there's been a lot of cooperation, there's been a lot of conversation. We have taken the best of both of these banks and made a very powerful institution. That's the way mergers are supposed to work.
TM: On the technical side, were there any systems issues in integrating the two?
HR: Along the way there were many, many issues that we had to iron out. But in the final analysis, as we've gotten to this point, we've tested it and retested it and we're ready. So from a compatibility standpoint, we've ironed those out and made the system pretty seamless for our clients.
TM: As a culture, I think we are becoming increasingly more accustomed to change - rapid change. Do you see that as an advantage?
HR: I don't know if we'll ever figure out exactly how to manage change, but I remember a quote from somebody who said, "You either get better or you get worse; you never stay the same." The only way to do that is to be ready to be flexible and to change.
We've experienced an economic calamity that I don't think any of us has ever experienced. I haven't. And so it's required that many of us have to change; we've got to think differently. Ö Is it easy? Well, not always. Do we come out on the other side if we've fought through it very well? We usually do. And so we explained to ourselves - this is what I've told our troops from the very beginning - we will see a different look. This will be a new organization, and if we all embrace it carefully, it will be better. It will just be different.
TM: I mentioned in the introduction that PNC is the fifth-largest bank in the country. How do you anticipate the merger affecting your presence in the community?
HR: Well, the good news for our PNC banner is that it will be more places than we've ever been. The thing that won't change is, where you used to see National City as a pretty prominent name in the community, you'll now see PNC that way. And the way we insure that it stays that way is that we give back, and that's what PNC intends to do. That's what National City did, and PNC has a great history of giving back to the communities it serves.
TM: Is PNC as engaged in the equine economy and equine financing as National City was?
HR: It is not. Ö PNC made a decision a long time ago: The equine industry was not an industry it was comfortable in. And so, as we have analyzed and been very careful about how that would look going forward, it's maintained its position, and so we've elected to, as gracefully as we can, exit that industry.
TM: Let's look at some of differences between those corporate cultures - such as the flow of communications and information. In some (structures), it's hierarchical, while in others it's more free-flowing. What have you found to be the case, where communication is concerned, and are you comfortable with the way it's working out?
HR: Oh, yeah. In the PNC world, the regional presidents - there are some 30 of us in the 13 states and District of Columbia - that's where the information comes and goes. It flows through the regional president, so I've been the receiver and the purveyor of lots and lots of that information, and I think PNC does that about as well as any that I've ever (seen). I've been in this business now almost 35 years, and it's as good as I've ever seen it.
TM: Are there any differences in such areas as risk tolerance, that kind of thing?
HR: Well, we all look at it a little differently these days. Quite frankly, we've always tried to be pretty rigorous in our market here, and I think in the others. But this is a different day. We are very careful. We work real hard to try to qualify our clients where we can, but measuring the risk is probably as important as it ever has been. The cost of the risk, as we have just experienced, could be pretty steep, so we want to be real careful. I think all banks are looking at risks lots more carefully than they ever have been.
TM: Do you think that reregulation, perhaps to the extent of the Glass-Steagall Act that resulted from the Great Depression but was repealed in 1999, is called for in this atmosphere?
HR: Well, I'm not sure I am qualified to give you a long answer. I do believe that careful regulation is important for all of us. Preservation of capital is important for all of us, and I think that the federal government will try to figure out a way to do that. I think we have to have rules. I mean there have to be guidelines to live by to manage our risk. I think the absence of all sorts of rules will lead to problems, and I think that there will be some return to perhaps more rigor around what's right, what works and what shouldn't work, and accountability.
TM: OK. Well let's turn to give you an opportunity to talk to a Lexington, Ky., business owner who is curious about what's going on with this transition. What's your message to that individual?
HR: There's probably never been a better time to bank with PNC. We're blessed to be in a really solid market, as you know. There will be more avenues for people to bank with PNC than there's ever been. The beauty of it is that we've maintained nearly all of our staff. There will be lots and lots of friendly faces in our 21 branches in central Kentucky, with better products that I've seen in my career. Ö My job, along with all my colleagues, is to make sure than we serve our clients and our customers the very best that we can with what I think is a great array of products, in more ways than we ever have.