Four months after acquiring First American Corp., Amsouth Bancorp. is taking steps to integrate the two companies' investment operations.
This month, Birmingham, Ala.-based Amsouth and Nashville-based First American begin a four-month, state-by-state conversion, including their trust, brokerage, and asset management operations.
Some of the most arduous work was done last summer, as Amsouth set out to integrate the companies' trust departments after announcing the deal June 1.
"What we got was not a pretty sight," said Ted D. Arnau, a senior vice president of capital markets at Amsouth who headed the integration effort. Reporting and record keeping errors at First American had produced an unusually high number of "cash exceptions," the equivalent of making a deposit in a bank account but forgetting to note it in the check register, he said.
After four months of housecleaning, the trust operations will be combined Feb. 18, adding First American's $12 billion of trust assets to Amsouth's $15 billion.
Brokerage operations were easier to combine, Mr. Arnau said, because the companies used the same clearing firm. That integration is slated for Friday.
Industry conjecture has surrounded IFC Holdings Inc., a former subsidiary of First American that offers investment products to banking companies - including First American - through Invest Financial Corp. and Investment Centers of America.
Some observers have speculated that Amsouth will sell Tampa-based IFC, whose revenues fell last year and which has faced regulatory scrutiny for its sales practices.
"With revenues down, they may try to unload it rather than have another unit they need to fix," said Jeff Davis, an analyst at J.C. Bradford in Nashville.
But Mr. Arnau said he knows of no plan to sell IFC. Amsouth's in-house brokerage will sell investment services through Amsouth and First American branch offices, he said, and IFC's subsidiaries will remain third-party marketers.
Meanwhile on March 10, subject to shareholder approval, First American's ISG Funds, with $3.6 billion of assets, are to be merged with the Amsouth Mutual Funds, which have $3.5 billion of assets.
Eight overlapping funds are to be merged, leaving 29 portfolios. Where funds are being consolidated, the surviving fund manager has been chosen based on the funds' track records, but no portfolio manager is being laid off, said John F. Calvano, president of Amsouth Funds.
Amsouth is also merging its regional equity fund into its value fund, a move prompted by diminishing opportunities in the Southeast - where the regional fund invested - rather than the fund families' merger, Mr. Calvano said.
In October, Amsouth and First American began selling each other's funds in their branches and through their trust departments, which is expected to boost retail sales. About 80% of the combined fund assets are in institutional share classes, Mr. Calvano said.