Shares of FirstMerit Corp. tumbled more than 3% on Wednesday as investors reacted to a major stock transaction by a company executive on the eve of her departure.
Carrie Tolstedt, executive vice president overseeing strategic planning and marketing, exercised options for 25,800 shares, worth $731,000, according to a filing with the Securities and Exchange Commission. The sale allowed her to buy 6,000 of the company's shares under a discounted stock plan that expires when she leaves.
The transaction was recorded as a large block sale and gave some institutional holders the jitters. They apparently lightened their own positions fearing signs of a pullback, traders said. The stock closed Wednesday at $28.75, off 62.5 cents, after falling as much as $1 during the day. Shares have been coming down incrementally since hitting a high of $32 a month ago.
Ms. Tolstedt said her departure was not prompted by any difficulties at the Akron, Ohio, company. She is leaving, she said, to become a regional manager for Norwest Corp., where she worked before joining FirstMerit three years ago.
Ms. Tolstedt played a major role during her three years at FirstMerit, observers say.
She was crucial to helping the company transform itself from a quiet community institution to an organization focused on selling, said Douglas J. Walouke, a banking analyst at Ohio Co.
Salary incentives and backed by a strong product line enabled the bank to increase daily sales, improve cross-selling, "and gain a bigger share of customers' wallet," Mr. Walouke said.
Employees now average over six product or service sales per day, up from four in 1996.
At issue now is how that program will fare with one of its main spark plugs departing.
The program will be in good hands under FirstMerit chairman John Cochran who "has a clear vision" for the banking company and its efforts to strengthen its sales culture, Ms. Tolstedt said.
Mr. Cochran is also a former executive at Norwest, one of the first banking companies to launch incentive-based sales efforts.
For the day, the Standard & Poor's bank index dipped 0.51%, and the Dow Jones industrial average gained 0.55%. The Nasdaq bank index rose 0.08%, and the S&P 500 was up 0.27%.
First American Corp. was up 25 cents, to $48.625, gaining a following as an independent institution with solid growth prospects.
The Nashville banking company is systematically analyzing customers and targeting appropriate products at them, said David B. Hilder, a banking analyst at Morgan Stanley, Dean Witter.
That approach, along with other efforts to enhance operations, is positioning First American to be a "highly successful" independent financial services provider, Mr. Hilder said.
The banking company has set a course to, by the year-2000, achieve a return on common equity in excess of 19.5%, a return on assets of 1.60%, and an efficiency ratio below 50%, Mr. Hilder said.
Among the day's biggest gainers, BankBoston Corp. rose $1.1875, to $107.50; Bank of New York increased $1.50, to $59.50; and Wells Fargo & Co.was up $4.8125, to $378.50.
But many of the biggest banks fell lower on continued concerns about a hike in interest rates because the economy continues to surge.
BankAmerica Corp. shed $1.1875, to $83.8125; Chase Manhattan Corp. dipped $1, to $139.50; and Citicorp was off $1.625, to $150.50.
