Regions Sued by Ex-Heads of Ga. Banks It Acquired
Gillam, Carey, American Banker
Regions Financial Corp. is facing a mounting pile of lawsuits from disgruntled ex-presidents of banks it acquired last year.
The suits claim mistreatment and denial of severance pay after the Birmingham, Ala., holding company's takeover of First National Bancorp, Gainesville, Ga.
With the filing in federal court this month of a suit by William DeVane and David C. King, who were presidents of former First National affiliates in Clayton and Winder, Ga., a total of six aggrieved executives are seeking at least $120,000 each in damages.
Though it is unusual for such disputes to erupt into lawsuits, they are indicative of the tension that occurs when independent-and independent minded-bankers must adjust after mergers to the ways of larger organizations.
Regions chairman J. Stanley Mackin called the complaints groundless.
Each of the former presidents claims he had a "change of control" agreement with the prior owner that Regions refused to honor. The agreements reportedly stipulated that the presidents would be entitled to compensation if their duties or positions changed after the sale, according to documents filed in U.S. District Court in Atlanta.
The ex-presidents accused Regions of reducing their authority to approve loans, negotiate contracts, and make personnel decisions. They also said they lost authority over pricing, loan-loss reserves, and investment portfolios.
They allegedly retained their lofty titles as a "facade for the customers and communities" where the banks' offices were located, and thereby Regions could avoid paying millions of dollars in severance to First National's 18 local bank presidents.
"They call them presidents but basically they act as branch managers," said Richard L. Robbins, an attorney representing five of the six plaintiffs, who believe they should get severance because "there was a significant change of duties."
Mr. Mackin denied that Regions engaged in any subterfuge. …