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Merging egos.

Merging Egos

The $2.6-billion Merger of Worthen And TCB Combines Banking Superstars Renaud, Bradbury In Potentially Explosive Mix

Last week, the state's financial community began buzzing with the news of Worthen Banking Corp.'s proposed $75 million purchase of Twin City Bankshares, creating Arkansas' largest bank holding company.

Successfully merging the two institutions into a $2.6 billion banking giant won't just involve Worthen gobbling up TCB's stock and checking out its loan portfolio. At the helm of both banks are two of the state banking industry's strongest egos, Worthen CEO Curt Bradbury and TCB's T.E. "Terry" Renaud. Blending the two corporations into one company also means merging its leaders and their leadership styles.

Although both men's initial comments about the merger have been public-relations positive, the word is out in the financial community that a power struggle of monumental proportions may be about to take place.

"There are a lot of people telling stories that Bradbury and Renaud are pissing on each other," says one industry contact who sees trouble ahead. "If they're doing it at this stage of the game, it's liable to get incredible."

Tongues are wagging about tales of Bradbury's alleged anger over the size of Renaud's salary request during preliminary merger negotiations. Others are buzzing about TCB assurances to top TCB staff that they will survive any management cuts as Renaud assumes direct leadership of the newly combined $1.2 billion home bank (although Bradbury has final say-so over all Renaud's decision in his role as head of Worthen's holding company). And some Worthen workers even suspect TCB's recent ad campaign about "real bankers" is a deliberate slap in the face at Worthen's popular "I Feel Good" singing ads, using actors in bankers' roles.

At this point, both Bradbury and Renaud's lips are sealed for public comment until the final ink has dried on the merger agreement and currently everything is all public smiles.

"We have conferred with counsel and agreed that the best thing is not to discuss any details other than what's in the press release," Bradbury told the Arkansas Democrat last week. Renaud's comments have followed suit.

But, if Little Rock banking history is any guide, the technical difficulties of merging the bank's financial structures could be mirrored by a massive struggle of wills behind the boardroom doors for control of the state's largest bank.

The last great banking merger in central Arkansas occurred on Aug. 1, 1983, when the state's then-second and third largest banks, First National Bank and Commercial National Bank, combined to form today's $2.1-billion First Commercial Bank Corp.

Within six months of the merger, two of the top three officers of First National resigned for what they would only publicly describe as personal reasons. Edwin C. Kane, chairman of First National, was first to leave within weeks of the consolidation. Then, in January 1984, William L. Cravens, ex-CEO of First National, left. The following year, B. Finley Vinson, the last remaining top exec from First National, would step down and retire.

First Commercial's CEO William H. Bowen's team of Barnett Grace and James R. Cobb emerged as the institutional victors in whatever battle of wills had occurred inside the newly formed bank. At the time, Bowen denied any hint of a struggle to the Arkansas Democrat following Craven's departure.

"This is pure baloney," Bowen said. "We have been friends 30 years."

The departures of Kane and Vinson were also reported as pragmatic businessmen simply moving on to greener pastures. But sources close to the bank describe the management conflicts between the two groups as "terrible" and entirely unexpected when the initial merger was planned.

Regardless of the public and private explanations, the charismatic Bowen has remained to firmly etch his imprint on the new bank with his physically fit, confident demeanor that personifies First Commercial's image today.

Culture Clash

Combining Worthen and TCB in 1990 will mean mixing a world of visible opposites: Bradbury's tight-fisted, conservative Worthen Bank that is dominated by the Stephens family's 30-percent interest vs. Renaud's independent and strong-minded leadership of TCB under the Frank Lyon Co.'s 93-percent ownership. Both men have been instrumental in defining their bank's direction and financial success.

Canadian-born Renaud, 61, is the son of a stern French-Canadian father and an equally strong-willed Irish mother born to an old and respected family. His wealthy grandfather was the first Ford dealer in Ontario.

Renaud came to North Little Rock in 1968 at the request of Frank Lyon Sr. and built the sleepy state-chartered bank from a meager $13.5 million in assets and 25 employees to its current $522 million in assets. Along the way, he established a reputation for aggressive lending, innovative banking practices, and independent intelligence.

"We extended hours, and we opened on Saturday, which does not make us particularly favorite sons among bankers -- We're not 'one of the boys' in the banking community," Ranaud told Arkansas Business in a profile.

With his existing five bank chain, Renaud's intentions to expand the TCB's network have apparently been cut short by the Lyon Co.'s desire to sell all its holdings beginning in 1989. In an ironic twist under the current merger proposal, Renaud is slated to be installed as CEO and catapulted to the head of the new $1.2-billion bank formed from the merger.

However, perched directly above Renaud in seniority and power will be Bradbury as head of Worthen Banking Corp., the holding company that ultimately calls all the shots. Ostensibly, Renaud is the perfect banker for Bradbury's plans to move a now-healthy Worthen into new growth. But one banking observer calls the setup "a recipe for disaster."

It's worth noting that of the last two men who held Renaud's future position, one lasted two and a-half years, and the other left in less than 10 months.

Up From Disaster

Bradbury's move to Worthen from his position as investment banker at Stephens Inc. came on the heels of the bank's spectacular $52-million loss in the Bevill Bresler Schulman collapse in April 1985. By February 1986, Bradbury was president and COO of Worthen Banking Corp. and battling to work out $235 million in troubled loans.

Building a reputation for searching analysis, financial acumen and cost-cutting, Bradbury, 41, has successfully turned the bank holding company around, recording seven consecutive quarters of rising profits and net income of $11.1 million for 1989.

Often to symbolically show his commitment to fiscal frugality, Bradbury clutches a styrofoam cup at annual meetings, a far cry from Renaud's ultra-thin Capri cigarettes.

Bradbury's high-pressure working style has taken its toll on those directly beneath him. Don Hayes was chairman, CEO and president, from November 1985 until leaving for Texas in August 1988. Attorney Tom Prince succeeded Hayes in 1988, but then left unexpectedly in September 1989. Bradbury and Prince signed an agreement not to discuss the terms of his leaving and cite only "philosophical differences."

Problem Loans, Merging Staffs

Some insiders speculate that an attempt by Union Planters Corp. of Memphis to buy TCB fell through because the asking price was too high and the loan portfolio full of construction and land development notes wasn't as airtight as the Tennesse bankers wanted. Will Worthen's due diligence find similar problems and seek a lower price than the proposed 1.5 times book value? No one is talking at this point.

And how will the two home bank staffs be merged? TCB's approximately 300-person office and Worthen's 342 employees will have numerous duplications and cuts are probable. One name bandied about to help Bradbury keep control of Worthen's home bank in the transition period is Jack Fleischauer, CEO at Worthen's $255-million First National Bank in Hot Springs. But Fleischauer discounts such talk.

"I've got a pretty good job here in Hot Springs," he says. "Right now all my energies are focused on Hot Springs."

Regardless, how Bradbury and Renaud will adapt to working with each other on a daily basis -- and how long the pairing of two of banking's largest egos can survive the pressures of running the state's biggest bank -- will be a hot topic of cocktail talk for months to come.

PHOTO : A BILLION DOLLAR BANK: Worthen's proposed merger with Twin City Bank will create the state's biggest bank and bank holding company at $2.6 billion. The merger may also create a collision of egos between superbankers Terry Renaud and Curt Bradbury.
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Title Annotation:Merger of Worthen Banking Corp. and Twin City Bankshares results in Arkansas' largest bank holding company
Author:Walker, Wythe, Jr.
Publication:Arkansas Business
Date:Aug 27, 1990
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