Clash of Corporate Cultures Sours a Marriage Proposal

By Arndorfer, James B. | American Banker, January 10, 1997 | Go to article overview

Clash of Corporate Cultures Sours a Marriage Proposal


Arndorfer, James B., American Banker


Attempts to slap a bank and a thrift together can lead to culture clash, as one soured merger in Minnesota illustrates.

On Nov. 1, Redwood Financial Inc., a $51.1 million-asset thrift in Redwood Falls, announced its intent to acquire Olivia Bancorp. Two months later the deal was off - but the irritation remained.

Paul W. Pryor, Redwood's chief executive, declined to elaborate in a Jan. 8 interview: "I don't want to make a story of it," he said.

But George Tesch, majority shareholder of Olivia, with a 55% stake, was willing to comment - volubly. He said Redwood's management and board didn't understand how to work a deal or how a bank operates.

"They didn't know what the hell they wanted, or what they were doing," Mr. Tesch said in an interview.

The failed deal is a reminder that though distinctions between the two industries are fading, thrifts might do well to account for cultural issues when pursuing bank acquisitions. That gives an advantage to thrift buyers that are managed by former commercial bankers.

"It would be a difficult marriage if you had traditional thrift managers buying a commercial bank and trying to run it as a thrift," said David B. Barbour, president and chief executive of Ashland, Ky.-based Classic Bancshares, which bought a thrift in September.

"There are still differences," said Joseph A. Stieven, a banking analyst for Stifel, Nicolaus & Co., St. Louis. And "in an acquisition, a lot more than culture can get in the way; the personalities of CEOs can get in the way. …

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