How well can a long-distance relationship work?
Montgomery Securities is headquartered in San Francisco. NationsBank Corp., which is about to buy it, is based in Charlotte, N.C.
None of the other pairs of banks and securities firms that have recently merged, or said they will, have headquarters so far apart.
But NationsBank and Montgomery say geography won't be an issue.
"Montgomery is not a California company by any means. They do business across the country," said Edward J. Brown, president of NationsBank Global Finance. "If you take a look at where our clients are, they are across the country."
"Both of our businesses are national," agreed Thomas W. Weisel, chairman and chief executive officer of Montgomery Securities.
BankAmerica Corp.'s integration of Robertson Stephens & Co. will take place in the BankAmerica building, where Robertson Stephens has its main offices. Though Bankers Trust New York Corp. plans to keep Alex. Brown & Sons headquartered in Baltimore, the joining of those two firms will take place on the same coast.
In NationsBank's case, observers say an overlap in industries could substitute for an overlap in geography. Both NationsBank and Montgomery specialize in the technology, health care, media/telecommunications, and financial services industries.
Most banking analysts agree the distance should not be a problem, and they view NationsBank's management of Montgomery as similar to the way that other, nonbanking corporations manage their subsidiaries throughout the country.
"It's Montgomery's reputation that really will make these deals connect, to earn the mandate to do it," George M. Salem, a banking analyst with Gerard, Klauer Mattison & Co., said in assessing clients' perceptions. "Montgomery delivers a capability. Where they're located doesn't matter."
In fact, distance could prove to be an advantage.
NationsBank has stressed that it plans to keep Montgomery autonomous to keep the Montgomery reputation intact. The geographic separation will help to maintain the autonomy and avoid culture clash.
Banking industry sources have quoted Hugh McColl, chief executive officer at NationsBank, as saying it's a plus because "we'll leave them alone."
Another positive is that NationsBank wants to be more of a California- based banking operation, said Moshe A. Orenbuch, banking analyst at Sanford C. Bernstein. The merger will help the bank get a foot in the door. NationsBank has a loan office in Los Angeles and a small capital-markets presence in California.
Overall, analysts say that both Montgomery and NationsBank are looking to expand their businesses geographically. NationsBank may look to other securities firms to expand the San Francisco-based equities business.
"I wouldn't be surprised if Hugh McColl did another acquisition in the East and married it with Montgomery," Mr. Salem said. He mentioned Baltimore-based Legg Mason Wood Walker Inc. and St. Petersburg, Fla.-based Raymond James & Associates Inc. as candidates.
