United Bank: The Growing Pains Of A Community Bank

Jacob Leonard is a Senior Sales and Service Representative with United Bank, based out of the Washington, DC area. During the course of this paper we will dive into the changing culture and organization at United Bank, get a view from the inside of an organizational change, and develop a model on how the bank should move forward.

Bank with United

United Bank’s story started in 1839 when Northwestern Bank of Virginia opened a new branch in what was then Parkersburg, Virginia. Opening on St. Patrick’s Day the bank adopted green as their official color and handing out shamrocks to customers each year. The branch in Parkersburg survived through the Civil War and secession of West Virginia from the confederacy. Throughout the next one hundred and forty years the bank became its own entity a grew to become the largest bank headquartered in West Virginia and the second largest in terms of presence in the state. Their expansion eastward began in 1990 with the acquisition of Bank First N.A. Over the next fourteen years United Bank continued to acquire smaller regional banks throughout Virginia, Maryland, Washington, DC., Ohio, and Pennsylvania. In 2016 and 2017 United Bank was launched into the spotlight with the acquisition of the boutique Bank of Georgetown and Cardinal Bank, a local Virginia bank on the rise.

How the Bank is Changing

Speaking to a group of investors and industry experts at the 2018 Raymond James US Bank Conference in Chicago, W. Mark Tatterson, Chief Financial Officer of United Bank spoke of a bright future for the Bank. Tatterson highlighted “strong expense control” as a key factor in their recorded net income of $66.3 million (W. Tatterson, 2018). When I asked Leonard about this presentation and what it meant for him he let out a laugh and remarked. “I don’t see any of those profits” (J. Leonard, personal communication, 2018). Leonard’s comment is indicative of the change in culture within the Bank over the last few years. “When I first started we cared more about the client, making them feel wanted and appreciated”, he remarked, “now I feel [the Bank] only cares about profits and nothing else” (J. Leonard, personal communication, September 9, 2018).

Having personally worked in banking, Leonard’s feelings are not new to me. What stood out to me was what he said next: “each merger and acquisition has brought wonderful people into the bank, but each new entity that we absorbed, we absorbed part of their culture” (J. Leonard, personal communication, 2018). When pushed further he continued down this path of the new culture versus the old. “It goes beyond how we treat our clients, I have seen how the bank closes offices and lets people go” (J. Leonard, personal communication, September 9, 2018).

The acquisition of Bank of Georgetown and Cardinal Bank was different than past mergers (United Bank, 2015). Until these two events, each acquisition was designed to grow the Bank’s footprint as well as increase deposits and stock value. What changed was these two were designed to increase deposit growth, but not the physical footprint of the bank. While in the past each bank – including their employees and branches- were integrated into United, this time they shuttered approximately 20 branches and laid-off hundreds of people (J. Clabaugh, 2017). Branches from United and the acquired banks closed as well as employees of both banks were laid off. This was a departure from the norms according to Leonard, “we always brought them into the fold… they became part of the United family” (J. Leonard, personal communication, September 9, 2018).

The organization continued to change with how the branches themselves were organized. Previously there would have been Tellers, Personal Bankers, an Assistant Branch Manager, and a Branch Manager. Following the acquisition of these banks, position titles were changed. Tellers became Sales Associates, Personal Bankers became Sales and Service Representatives, and Assistant Branch Managers became Senior Sales and Service Representatives (J. Leonard, personal communication, September 9, 2018). Additionally, more focus was put on the selling of credit cards and loans over the maintenance of current accounts. Leonard understands the changes, but feels something is missing; “I understand why… I just wish we would look at our History” (J. Leonard, personal communication, September 9, 2018).

What happened at United Bank?

Organizational change has the most impact on those who are experiencing the change (M. Sharif & T. Scandura, 2011). For the Bankers at United, there was no subtly to the change. Kazer (2014) argues that being proactive in explaining the change, or in certain circumstances responding to the change, helps change makers foster a sense of acceptance from their organizations. In my conversations with Leonard the issue was fairly obvious: leadership within the organization failed to inform or reach out to their employees to explain what the restructuring would look like. Leonard noted, “By the time they announced the closures, layoffs, and position changes, people were already out the door” (personal communication, September 9, 2018). Organizations who regularly inform their employees of responses to both internal and external changes often solicit more positive responses (Kazer, 2014).

United Bank was going through numerous levels of change, with the most prominent being Institutional Change, “the supplanting of the old model of production with a new one” (S. Loomis & J. Rodriquez, 2009, pp. 478). The acquisition of the two banks in 2016 and 2017 changed not only the internal processes of the Bank but also its physical footprint and employment. In addition to the overarching institutional change, there was a much more prevalent and aggressive cultural change within the organization. This change was aimed at focusing more on how revenue is generated, and the simple pursuit of higher profit levels. Individuals within an organization are more likely to resist cultural change if the changes go against their individual values (Kazer, 2014). However, leaders can, “reshape values through various cultural change strategies” (Kazer, 2014, pp. 47).

Leadership at United Bank could have used the Social Cognition and the Evolutionary theories to better assist their organization adapt and adjust. The Social Cognition approach revolves around the idea that, similar to cultural change, individuals will have resistance to change if it is outside their existing ability to understand or their cognitive schema (Kazer, 2014, pp. 46). Additionally, using evolutionary theories would help them identify who within the organization could be used to assist in the adaption to the change.

Moving Forward

Jacob Leonard is not alone in his experiences, far too many organizations are not equipped to handle today’s climate of seeming constant changes from within and outside the organization. United Bank, who is currently seeking to purchase more Banks, should review how it handled these two acquisitions and adjust their process. Far from a large fortunue-500 company, United Bank should evaluate how the culture of their organizations responds to change, adopt a program that is based on that culture, and take the time to listen to their employees and their clients.