Philly’s biggest banks have been around for generations. That includes Girard and Fidelity, Provident and PSFS, especially the largest and most difficult, PNB and First Pennsylvania, whose combination as CoreStates was designed to keep Philadelphia in business as a center of old public finance.
These big banks financed factories, transportation, and trade, they taught school children to save, to guard wealth, to decide who in a divided village could buy goods and what who should hire, get involved in social problems, and hire the labor force, the majority of them. low paid women with less power but more responsibility.
These banks all but disappeared during the consolidation of the 1980s and 1990s, among the mass layoffs that tore down Center City’s office towers. The biggest bank that remains in the metro area is WSFS of Delaware, which bought the space left by the passing of the lenders after enduring their own near-death experiences.
As it happens, Charles Coltman III, the 2nd manager of CoreStates when it disappeared in 1997 of 20 billion dollars, and Marvin “Skip” Schoenhals, the man who saved WSFS from close to closing, in the time that was threatened to be taken. published memoirs that give their first-hand accounts of the events of more than a quarter of a century ago. What can we learn?
To Bank Trip (Outskirts Press), Coltman portrays his adventures as a young PNB agent between Asian dictators and traders; his rise though a deceptively simple meritocracy but high pressure; and a strict but strict credit culture that he says has been eroded, leaving promising businesses without hope of healthy financing, by tough regulators who are closing in on the big Wall Street banks.
Coltman also aims to correct what he sees as an unfair myth that blames his former boss, CoreStates CEO Terrence Larsen, for putting together a deal to acquire Maryland National, which would have made CoreState a be too big to be found; for allowing himself to be intimidated by Wall Street investors, who wanted the bank to be sold for an early payday; and for selecting North Carolina-based First Union National Bank as a buyer, over a potentially lucrative offer from Pennsylvania-based Mellon.
In fact, Coltman writes, Maryland National’s late manager, Cleveland Browns owner Alfred Lerner, refused to sell Maryland National’s most valuable asset — the future credit card giant MBNA — and wanted only to offload its mortgage business.. The New York sales analysts, led by Nancy Bush, were actually influential people whose disapproval hurt CoreState and forced it to take possession. And First Union’s offer was actually the highest available – six times the bank’s book value, a good price for shareholders who want to take the money and run. , ignoring the damage to workers, customers and the city..
Coltman also called Larsen ahead of his time for his long and comprehensive campaign to push lieutenants to hire and promote women and people of color to the command, at a time when disparities when there is no fashion in regional banks – although there has been limited success.
And he shows how the sale of the bank proved to be a disaster. Not only did Ed Crutchfield, the boss of First Union, insist that he could almost halve CoreStates costs (axing 10,000 jobs), while increasing profits by 20% (he couldn’t ). It was also how the new management showed contempt for the winner by ignoring the warnings of CoreState veterans, who made costly and avoidable mistakes (like betting big on the Cash Store, CoreStates unstable had refused), and to expel important people. First Union, a rebranded Wachovia, collapsed in the 2008 financial crisis and is now part of Wells Fargo & Co.
Beyond the scope of the book is the larger question of why Philadelphia bankers, so powerful for so long, have lost their social influence, their sense of personal responsibility, and moral determination. those who excel, leave a hole in the leadership of the city..
Coltman notes, without elaborating, how the three bankers who were given the top job at CoreStates – Richard Ravenscroft, Rosemarie Greco, and Coltman himself – refused that responsibility. Another would-be winner, playing card pioneer Bipin Shah, was forced out, in one of Coltman’s power struggles. Shah left a sinking Philadelphia commercial bank and made a fortune in digital payments. He died in September.
Schoenhals’ is a weaker but more interesting story. Home printed memory, From Failure to Phenomenaldiscusses the failure and rescue of the Wilmington Savings Fund Society (WSFS) from the savings and loan crisis of the early 1990s.
Schoenhals’ book, written with Brittany Kriegstein, is like Coltman’s, a biography. It goes on to recount the bailout takeover of the former Wilmington Savings Fund that was badly over-extended by investors who installed a well-connected, straight-laced manager. And it shows how he avoided their plan to sell the bank again for a quick profit, bought time to rebuild its employees and its credit culture, and boosted its stock to remain independent. .
When WSFS recovered when Philly’s banks disappeared in the 90s, there is a recent study in ethics, the blackout of WSFS of the once-dominant Wilmington Trust Co of Delaware. At a reception held in Wilmington on December 12, Schoenhals recalled how he had less than just producer debt. 10% of his bank’s portfolio on the eve of the Great Recession – versus Wilmington Trust’s 40%, enough to sink a larger company when land values fell. But that story is not in this book; he plans to follow.