'There were relatively few title changes for an acquisition of this size'

Franklin Synergy's Richard Herrington discusses merger with MidSouth Bank

Earlier this week, the parent company of Franklin Synergy Bank announced it had finalized its acquisition of Murfreesboro-based MidSouth Bank.

The merged entity (read more here) will have more than $1 billion in assets and deposits of about $760 million, which ranks it 11th in the Nashville area and between fellow community banks CapStar and Avenue. It will operate as Franklin Synergy Bank with 11 locations. The five MidSouth branches give Franklin-based Franklin Synergy access to the Smyrna and Murfreesboro markets.

Following the announcement, Post Managing Editor William Williams briefly chatted with Richard E. Herrington, the merged entity’s chairman and CEO and the chairman, president and CEO of parent company Franklin Financial Network, Inc.

 

What will be the first order of business?

Our focus will be on people — both our employees and our customers. Taking care of our new customers in Rutherford County while maintaining the same level of service and attention we have always provided to our Williamson County customers is a critical ingredient in managing the change that comes with this merger.

Change will be more visible for our Rutherford County customers as we undergo a data conversion to bring them onto our systems. The challenge is doing that with as little disruption as possible. We understand that change is hard but we also know that we are bringing our Rutherford County customers new tools and products that will enhance their banking experience.

At the same time, we are taking care of our team members because we know that their own experience colors how they interact with customers.


Where will Franklin Synergy be in, say, five years? I understand you would like to go public.

We cherish our role as a vibrant community bank in the two fastest growing counties in Tennessee. Our plan is to continue to grow Franklin Synergy Bank; we anticipate growing 25 percent a year by focusing on serving our communities.

For us, this is not the beginning of Franklin Synergy taking on the role of a consolidator and acquiring multiple banks. In 25 years of community banking, this is our first bank acquisition and we have no plans to acquire another bank, nor do we have any plans to be acquired. Our goal has always been to create a legacy bank in our community. If the right opportunity presents itself, as MidSouth did, we would certainly look at it, but our goal now is to focus on growing the franchise.

We do anticipate an IPO. We told our shareholders in 2007 that we would eventually have a liquidity event, and that remains the plan. To this end, we anticipate being listed on NASDAQ.


The acquisition resulted in some major personnel title and duties changes. How will this all unfold over time?

There were relatively few title changes for an acquisition of this size and the majority of them were in the top ranks. Our goal is to create an environment where people can succeed. We’ve been successful in creating such an environment at Franklin Synergy for the last six years. The challenge in starting a new bank has always been that people have to wear too many hats as there is simply too much to be done and you cannot hire the right people quickly enough to exactly match talent with job title. With the critical mass we have now achieved, we can better focus job descriptions around individual capabilities; it’s one of the luxuries of being a bigger bank.

We do not anticipate any major changes as we continue to grow, particularly in our most visible customer service positions. We know that customers expect to see the same people they have depended on for many years in the bank. Continuity is very important to us; there is a reason that customers bank where they bank. It’s not rocket science. It’s the people.

 

In 2011, MidSouth was under federal regulatory oversight that called for the bank to raise extra capital and improve operations. How healthy was MidSouth upon this merger?

Upon our merger, MidSouth Bank was a healthy bank. There were no significant regulatory issues and their problem asset level was very manageable. In addition, it was well capitalized bank by regulatory standards. The approval process for a merger is very intense. Had there been any significant issues at MidSouth Bank, the merger would not have been approved by the Federal Reserve, the Tennessee Department of Financial Institutions and the Securities and Exchange Commission.