A year after the much ballyhooed blending of MBNA and Bank of America, life is looking pretty good for Richard K. Struthers and many of the other folks who survived.
Bank of America is one of the world’s largest financial institutions, and it continues to grow worldwide.
Ric Struthers, you’ll recall, was one of the folks who helped establish MBNA in, as the famous story goes, a strip shopping center in Ogletown in 1982. He’s now an executive with Bank of America.
The announcement of the $35 billion merger in late June 2005 ignited a tumultuous period for Delaware’s business community. A promised $850 million in saved costs to shareholders included a projected 6,000 jobs being slashed across the country—many in Delaware.
With a local workforce of more than 10,000 at the time, MBNA was the state’s largest private employer. For months, dozens of newspaper stories speculated about when the cuts would come and how many would fall. Other concerns included what the state and its many non-profits would do without the millions of dollars the credit card giant handed out each year.
The buyout was completed in January 2006. Nearly a year later, in mid-November, Struthers and Betsy Weinberger, of Bank of America’s corporate communications, chatted with DT over lunch at Deep Blue Bar and Grill in Wilmington.
Struthers, who lives in Greenville and is building a second home in St. Michael’s, Maryland, tackled the crab cake entrée and sipped iced tea during the one-hour interview. As one might expect, he focused on how the merger created opportunities for both customers and employees. Struthers shied from discussion of job cuts.
DT: Let’s get this one out of the way. How many job cuts have been made in Delaware and overall since the merger?
RS: We don’t disclose how many people are working in any of the states. That’s not something we talk about. What we would talk about, we’re actually out hiring again. We’re running advertisements. We’re recruiting at the university and we feel good about where we are here in Delaware now.
DT: What types of jobs are you recruiting for?
RS: A variety of customer contact jobs, support jobs, production operations, a lot of frontline representatives along with some staff people, also.
DT: It was widely reported that with the merger, 6,000 jobs were going to be trimmed. According to the state Department of Labor, from December to March, there were 800 jobs cut in Delaware. So, the word was that 6,000 jobs were on the table when we started. Is that still true, and if so, when will the other shoe drop?
(Weinberger steps in.) BW: Actually, I can help out with that. The 3Q earnings came out in October. We were at about 5,000. And half of that was attrition and half of that dealt with severance. So that was a good thing too, that many of the jobs that are gone have elected to go. That’s worldwide.
DT: You can’t talk about the Delaware numbers?
(Weinberger again.) BW: No. I’ll go back and reexamine with some folks because we did tend, in some other areas, to give statistics on that. But we have decided not to in Delaware.
DT: When the merger was announced, the company said the cost savings was to be $850 million. Has that been met?
RS: Yes. I also think, if you pulled out the quarterly report, that we’re on track to exceed that by the end of the year.
BW: That number was for two years, if I’m not mistaken.
DT: When the merger was announced, there was much panic and fear. Along with job cuts, there was concern that Delaware was losing a top corporate donor. How does Bank of America’s approach to philanthropy compare?
RS: I can tell you Bank of America this year, its foundation, will donate $200 million to communities that we all live and work in. It probably makes them one of the top donors in the country, if not the world. They have the same kind of philosophy on associates. They want the associates to participate in the community to the point that, if you recall with MBNA, we allowed our associates to take four hours a month to participate in a community activity, and we would pay them. Bank of America has a policy of eight hours a month. So directionally, we’re both on the same page. We really encourage our associates to become engaged, to participate on boards. There are so many things we’ve done this year. The MS Bike to the Bay—we were a big contributor to that. We had our own team that participated in that and raised $40,000 or $50,000. The Boys & Girls Club down on the riverfront. A little later in the summer we were one of the lead sponsors with one of our affinity partners, AAA, on that. Habitat for Humanity—we’re in the process right now, down in Dover, of building a house. We’re involved in the Latin American Community Center in Wilmington. During our sign unveiling at Bank of America this summer, we made a donation to Habitat for Humanity for $50,000. Food Bank. I mean, I could go on and on about the things.
DT: Now that a year has almost passed, how is morale for employees here in Delaware?
RS: Initially there was uncertainty. Naturally, you have the pyramid. What do you think about? You think about your family, and you have to eat, and you have to pay your mortgage, and you have to do all of those things. So I’m not naïve. The first few months of the year, that’s what people thought about. As we’ve gone through the summer and gotten into the fall, a couple terrific things have been happening. The company’s performance has been outstanding. The corporation’s performance, our performance as a card business, has been terrific. One of the unique things that we talked a lot about initially was this merger allows a lot of the legacy MBNA associates to have tremendous opportunity in many more business lines that MBNA didn’t have. An example would be Michelle Shepherd, who was one of our key marketing people. She has assumed responsibility for Bank of America’s retail network from Delaware to Maine, which was about 1,500 banking centers. It’s a very big job. A fellow worked for us overseeing our Spain operations. He’s moved out to Los Angeles and he’s in a major sales role there. Those are two major things, but there are a lot of associates who have gone to work in the deposit business, the home equity business, the mortgage business, and the private banking business up in Boston. People are now seeing the opportunities to get into other business lines because we were somewhat a consumer lending company where we did credit cards and consumer loans. There’s now a whole breadth of products and opportunities for these people to branch out. Part of it is, over time, people have to see it happening to make it real. So, you and I work at the company and all of the sudden I see that you moved onto this new opportunity and that gets back. We talk a lot about, at our staff meetings and our leadership meetings, examples of that at all levels of the company.
DT: How has the merger affected Delaware, in general?
RS: I think it’s a very positive experience for Delaware. I sit on a lot of committees with different business people in Delaware and they’re excited about another major bank being in Delaware. Competition is always good. So it’s been good thus far for our associates. It’s been good for the shareholder. And now the customers are able to have a lot more products out there to take advantage of. At MBNA, we didn’t have the deposit department. We have checking accounts, debit cards, ATMs—we just didn’t have that. So, all of the sudden we can now offer those products to our customers here in Delaware, along with first mortgages, equity… We’re going to be opening a mortgage office outside of Rehoboth early in the spring. We have a branch out in Greenville that is the converted MBNA branch. Right here on Rodney Square we have a banking center—I call it a banking center, you call it a branch—that will open up in December (2006). So I think Delaware is really excited, both the retail customer and the commercial customer.
DT: How did the merger change your life?
RS: I had worked for the same company since I got out of college in 1978. So, we grew up with a company from 100 people to 25,000 people; from $120 million in loans to $120 billion in loans. I had a lot of opportunities as that growth occurred over the years. I did a lot of different things. Ran a lot of different parts of the company. And naturally, when you have change and you’re going into a period of uncertainty, just like any associate would be, I’m thinking, Geez, am I going to fit in? Are they going to like me? Am I going to like them? What I found with a lot of these senior leaders that I interacted with on the first few days of our discussions—Bank of America, they’re just like us. They’re regular people. They like to have a good time. They work hard. Our culture was a lot alike, even though the size of Bank of America was significantly larger than MBNA, directionally, we both believed in the same thing. It may be hard for people to believe, but it was a fairly easy transition for me.
DT: How did you feel as the buildings were transformed from those familiar green awnings to Bank of America’s colors. Were you sad to see the MBNA logo go?
RS: Well, sure. But you’ve got to get over it. It’s tomorrow. It’s not yesterday. Like I said, we’re a group of people that built a company from nothing into something that was pretty special. And that special company joined with another company and you’re going to have change. But you think about the image that Bank of America has out there to the consumer. And the opportunity… I think we have one out of every three households in the United States. The shear size and the brand power of that name is just fabulous.
DT: You were quoted after the merger as saying the Bank of America name would be just as prominent in Delaware, if not more prominent than MBNA, at the end of the year. Well, it’s almost been a year. Were you right?
RS: Well, it’s easy for me to say, ‘Yeah, it held true,’ because I’m the one who said it. (He laughs.) I think you need to ask people in the community, ask folks on the chamber of commerce and philanthropic organizations. I think you would hear that. I think you would hear that from community organizations, and I think you’d hear that from some of our competitors and business partners.
DT: That all said, and considering the microscope that was placed on the potential loss of jobs in Delaware after the merger was announced, how do you think most Delawareans view Bank of America now?
RS: I think it’s positive and I think it’s more positive every day. I am constantly getting questioned: When is the banking center going to be open? You may have noticed in the News Journal, we’ve been running this Zero Dollar Trades, a great program that we have out there and customers in Delaware are coming and signing up for that. That’s a new product that MBNA would never have had here. So I think every day we’re getting more and more interest. On the consumer side, we’re making some real estate and commercial loans. We’ve got some government bond work here in the city. The difference in product availability for people in the community is unlike anything else we’ve ever had in the past.
DT: So, maybe the bad guy thing wears off after you get through the merger and the transition is complete?
RS: I would think that nobody would ever say we were bad guys. I would hope they would say we had some uncertainty, but where we stand today, we feel good about it. Forget that a merger that ever took place. If you read about Bank of America, they are good guys. Take a look at the leadership of their company and how that’s come together. It’s got leaders of different banks that have merged together. You look at their involvement. We announced a $750 billion CRA [community reinvestment act] commitment a couple years ago. Show me another bank in the United States that’s made that commitment. More than $200 million in giving this year. Over 600,000 hours of volunteer work last year (2005) by associates of Bank of America.
DT: We talked about how the merger affected your life. I read somewhere that you were to receive $17 million in retention pay from Bank of America after the merger went through. At the risk of seeming nosy, did they pay up? What did you do with the money?
RS: You’re right. You are nosy. (He laughs) I’m not going to tell you.