Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.bonus,americast.usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Wed, Oct 14 1992 Date: Wed, 14 Oct 92 04:48:25 EDT Message-ID: 10-14 0000 BONUS: Banks growing in North Carolina USA TODAY Update Oct. 14, 1992 Source: USA TODAY:Gannett National Information Network Charlotte, N.C., linked more closely in the public mind to stock-car racing than high finance, is fast becoming a leading banking center. With a skyline framed by two bank towers, it has muscled aside archrival Atlanta to become the finance capital of the South. And it is quickly joining the ranks of the USA's leading money centers: New York, San Francisco and Chicago. WHAT DOES CHARLOTTE HAVE TO BOAST? That point was driven home last month when Charlotte's First Union agreed to buy Roanoke, Va.'s Dominion Bankshares. When the deal is completed early next year, this city of 400,000 will be home to two of the USA's 10 largest banks. First Union will move up to No. 9 from No. 11, based on assets. Charlotte-based NationsBank, swelled by its $4 billion acquisition of C&S:Sovran Jan. 2, already is No. 4. Only New York, with five, will have more banks in the top 10 than Charlotte. Not bad for the USA's 35th-largest city. IS THIS TRANSITION A SURPRISE? Even Charlotte's bankers are sometimes a little stunned by what's happened. "It's pretty unusual to have two banks this big in a city this small," says First Union Chairman Edward Crutchfield. And just 80 miles away, in Winston-Salem, is another national banking power: Wachovia, one of the nation's most conservative and respected bank companies - now 21st largest in the country. HAS THE GROWTH BEEN QUICK? The growth of North Carolina's Big Three has been stunning. Ten years ago, NationsBank, then NCNB, was ranked 26th nationally; Wachovia was 39; and First Union 46, according to trade publication American Banker. How did North Carolina suddenly find itself in banking's big leagues? Banks here were helped by a steady, diversified economy, which has avoided the boom-and-bust cycles that destroyed banks in Texas and New England. HOW DID THE STATE ASSIST? Even more important are the state's unusually liberal banking laws. North Carolina in 1804 became the last of the original 13 states to charter banks. It made up for its tardiness by giving its banks unusual freedom. North Carolina banks were allowed to open branches wherever they liked in the state. HOW DID LIBERAL LAWS HELP? So North Carolina banks could get bigger, faster than banks elsewhere. They started taking advantage of that freedom in the 1950s and 1960s, and got a head start negotiating out-of-town mergers and running far-flung branch networks within a large and diverse state. The long head start came in handy when banks across the country started looking outside their own state borders in the 1980s. "When interstate banking became a reality, North Carolina banks were set to pounce," says First Union spokesman Jeep Bryant. WHERE DID THE GROWTH COMMENCE? Until the late 1950s, only Wachovia had a statewide network of bank branches. Former First Union Vice Chairman C.C. Hope remembers the day his bank realized it would have to grow. "One bright morning in October 1957, the Charlotte Observer carried a headline that put me into shock." Two rival banks - Commercial National and American Trust had announced a merger, forming the bank that later became NCNB, and then NationsBank. WHEN DID FIRST UNION JOIN THE TREND? First Union, stunned to see two cross-town rivals suddenly combining into one big competitor, sprang into action. First Union decided it, too, would have to grow to keep up with its competitors. And the race was on. WHAT WAS FIRST UNION'S STRATEGY? As head of mergers for First Union, Hope, now a director of the Federal Deposit Insurance Corp., spent much of the next 15 years crisscrossing North Carolina, courting bankers in towns such as Shelby, Lenoir and Gastonia. Rivals from NCNB and Wachovia were doing the same thing. "At that time, if there was a big, black car in any little town in North Carolina, everyone in town would know it was a banker" there to make a deal. Hope, who canvassed the state in a black Cadillac, tried to maintain some secrecy by removing his Charlotte license plate with pliers he carried. WHEN AND WHERE DID THE BOOM BEGIN? The stakes got higher in the 1980s, when barriers to interstate banking came down. NationsBank was first to expand outside North Carolina. It moved into Florida in 1982. Two years later, 13 Southeastern states and Washington D.C. agreed to allow interstate banking within their region. The following year, the U.S. Supreme Court upheld such regional banking compacts, fending off challenges from big New York banks that didn't want to be shut out. WHY WERE OUT-OF-STATE BANKS DESIRED? NationsBank and First Union snapped up out-of-state banks, convinced that bigger is better in an industry facing fierce competition from financial giants such as General Electric Capital and Wall Street brokerages. Wachovia was more cautious. "For us, there is no great sense of urgency" about getting bigger, says Wachovia Chairman John Medlin. WHY WAS IT A GOAL TO PASS WACHOVIA? So the two Charlotte banks have eclipsed Wachovia in size, though not in profitability. For NationsBank, then NCNB, becoming bigger than Wachovia was a particularly desirable goal. "We got tired of seeing this sign outside the window saying Wachovia was the biggest bank between Philadelphia and Dallas," recalls William Dougherty, a former executive at NationsBank when it was NCNB, now chief financial officer at KeyCorp in Albany, N.Y. WHAT ELSE HELPED THE EXPANDING BANKS? Giving NationsBank and First Union a big boost: deals with the federal government. In 1988, NationsBank bought Texas' failed First RepublicBank from the FDIC. The terms included a tax break that made the deal wildly profitable for NationsBank. Last year, First Union won the bidding for Miami's failed Southeast Banks. That deal with the FDIC strengthens First Union's presence in Florida, considered a banking gold mine. WHAT HAVE THE BANKS ACHIEVED? First Union and NationsBank are emerging as big players in nationwide banking. Their sudden prominence has added to a long-standing rivalry, reflected in their fight to dominate Charlotte's skyline. In 1988, First Union completed its 42-story headquarters in Charlotte's downtown, called uptown by boosterish locals. Not to be outdone, NationsBank quickly built a 60-story skyscraper, which it says is the tallest building south of Philadelphia. WHY THE EMPHASIS ON BIG BUILDINGS? Charlotte's banks have a history of flexing their muscle by building ever-bigger office towers. And the city seems to view its budding skyline as a symbol of its arrival as a financial center. In Charlotte, people "don't care about yesterday's skyscraper. They care about tomorrow's," says historian Dan Morrill of the University of North Carolina, Charlotte. Bonus Editor: Kate Coughlin. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM