Michigan 'super' community bank plays merger game, one customer at a time

Northwestern Financial Review, Mar 15-Mar 31, 2003 by Hilgert, Jackie

When Midland, Mich.-based Chemical Bank announced its intent to acquire Bank West in the summer of 2001, the citizens of Grand Rapids prepared for the worst. The area was still reeling from Old Kent's announcement that it expected 1,400 jobs to be eliminated as a result of its merger into Cincinnati-based Fifth Third Bank. Citizens could only speculate how Michigan's second-largest city would fare after this merger. A year later, it appears the Chemical Bank/Bank West marriage has been a happy one - for employees and community alike.

Instrumental in maintaining a healthy relationship between bank and community is Chemical Bank West's self-effacing president and CEO, Tom Kohn, who had been president of the $140 million Chemical Bank Montcalm for 10 years when he was tapped to oversee the integration of Bank West in January 2002.

Kohn made an immediate impression on Bank West staff, including Walker office Branch Manager Elly Berghoef. "He was so concerned for our customers during the conversion that he actually visited some customers at their home to assure them that Chemical Bank had the same values and integrity as Bank West," Berghoef recalled. Kohn instructed staff to bring unhappy customers right to his door; he'd handle the worst of it himself.

That's not always easy, Kohn admitted. "It's tough times when you have customers barking at you," he said. Then Kohn may be more accustomed to hostility than most, seeing he also officiates high school football games.

Getting into the trenches gave him perspective as a manager. It also helped him communicate the Chemical Bank ethic to customers not familiar with him or the bank. Bank employees took notice of Kohn's leadership and personal work ethic. He put in 60 to 70 hours a week during the conversion. According to Berghoef, Kohn was the reason many stayed with the new bank.

Kohn downplayed his efforts. "I do what I do," he said. "Maybe I helped somebody that day that I might not have been able to help earlier, and that's kind of what makes it fun."

With Kohn at the helm, Chemical Bank West relied on early retirements, relocation and reorganization to retain almost all of Bank West's employees upon completion of the merger. "We did it gradually," he said of the transition. While he admitted creating efficiencies is one objective after a merger, he described this transition as amiable.

No stranger to bank mergers, the 49-year-- old Kohn began his banking career at Montcalm Community Bank in 1977. Chemical Bank acquired that bank in 1981 and Kohn recalled how difficult that transition was for some customers. "The bank became more conservative and that's a tough transition for a bank to make," he recalled. Looking back with a quarter century of industry experience, Kohn readily acknowledged the conservatism that was thrust upon them in 1981 was exactly the recipe that was needed for the bank to survive.

Shortly before the Bank West merger was announced, Chemical Financial Corporation, Chemical's $3.5 billion holding company, went through a restructuring of its own, Three regional affiliate banks were formed: Chemical Bank & Trust, Chemical Bank Shoreline and Chemical Bank West. Chemical Financial Corporation comprises 129 offices; Kohn's charge, Chemical Bank West, comprises 29 offices with combined assets of $730 million. Kohn has four regional presidents to help him manage 24 of those offices. The other five, in the Grand Rapids area, are where Kohn marches alongside the troops in dayto-day operations.

The structure helps the banks of Chemical Financial Corp serve customers as would a smaller community bank. "We have traditional values as far as customer service and integrity," Kohn said. "Because we're part of a $3.5 billion holding company, it's hard to disguise.ourselves as a community bank."

Kohn may find it difficult to convince William Minch of that. During last spring's conversion, Minch stopped by the bank during his lunch hour to withdraw some money from an ATM. When his transaction failed, Minch became so frustrated he threatened to close all his accounts. Kohn telephoned Minch's home to talk things through. Within minutes, the conversation switched from cash withdrawals to NASCAR racing and Minch learned a lesson about Chemical Bank West.

"All a customer wants is to know somebody cares," Berghoef said.

"We work at it one customer at a time," Kohn added. "If we help some people and they mention it to other people then pretty soon you've got a pretty good business going."

Chemical Financial Corp just completed its 28th consecutive year of increased operating earnings. Clearly an integral part of that success, Kohn also acknowledges that in this business, there are no shortcuts.