Bank and Fidelity
MEMORANDUM
Date: November 16, 2004
To: Professor Truex
From: Ben Crist
Subject: Case Analysis: ‘First Fidelity Bancorporation’
Introduction
In the ever changing banking industry, First Fidelity Bancorp had grown to be one of the largest holding companies of eight financial institutions and over 500 branches. Their growth has been through the acquisitions of other smaller institutions and internal growth generated by strong relationships with customers. This growth has come at a cost and First Fidelity has been left with a complicated mix of systems, operations, and organizational culture. First Fidelity allowed the eight financial institutions to operate totally independent of each other and the corporate office solely managed the integration of the financial reporting responsibilities. The non-integration of systems and operations has also left First Fidelity with higher costs and the need to make changes which will allow them to be competitive in the future. By the early 1990’s First Fidelity had begun to integrate some of the operational functions, but had yet to connect them further.
Due to changes in banking regulation, the US government had begun cracking down on new rules on financial reporting, asset quality, and capital requirements for the banks. The government wanted better controls from upper management and the only way First Fidelity could accomplish this was to integrate systems, management, and combine all eight financial institutions into a more consolidated with less autonomous feel. Management made this their highest priority and put a strict deadline of 18 months on this task.
This deadline put two major decisions directly ahead of First Fidelity, organizational structure and method of achieving the full integration. In order to evaluate the full impact of their decision on organizational structure changes, First Fidelity looked at the following criteria: • Cost Effectiveness • Responsiveness to Business Needs
Date: November 16, 2004
To: Professor Truex
From: Ben Crist
Subject: Case Analysis: ‘First Fidelity Bancorporation’
Introduction
In the ever changing banking industry, First Fidelity Bancorp had grown to be one of the largest holding companies of eight financial institutions and over 500 branches. Their growth has been through the acquisitions of other smaller institutions and internal growth generated by strong relationships with customers. This growth has come at a cost and First Fidelity has been left with a complicated mix of systems, operations, and organizational culture. First Fidelity allowed the eight financial institutions to operate totally independent of each other and the corporate office solely managed the integration of the financial reporting responsibilities. The non-integration of systems and operations has also left First Fidelity with higher costs and the need to make changes which will allow them to be competitive in the future. By the early 1990’s First Fidelity had begun to integrate some of the operational functions, but had yet to connect them further.
Due to changes in banking regulation, the US government had begun cracking down on new rules on financial reporting, asset quality, and capital requirements for the banks. The government wanted better controls from upper management and the only way First Fidelity could accomplish this was to integrate systems, management, and combine all eight financial institutions into a more consolidated with less autonomous feel. Management made this their highest priority and put a strict deadline of 18 months on this task.
This deadline put two major decisions directly ahead of First Fidelity, organizational structure and method of achieving the full integration. In order to evaluate the full impact of their decision on organizational structure changes, First Fidelity looked at the following criteria: • Cost Effectiveness • Responsiveness to Business Needs