CHARLOTTE, N.C. - Though First Union Corp. and SunTrust Banks Inc. have monopolized headlines with their competing offers for Wachovia Corp., at least two dozen other deals have been announced across the Southeast since January.
Nearly 75% have followed First Union's April announcement of its bid to buy Wachovia. Analysts say the flurry is driven by the buyers' healthy stock prices and a desire for a strategic edge in anticipation that the two North Carolina companies will clinch their deal.
Many analysts now believe Wachovia shareholders will consent to the Winston-Salem company's merger with Charlotte-based First Union in voting scheduled to finish Aug. 3. One recent convert is Mike Mayo, a bank analyst at Prudential Securities who had a neutral stance and now supports a First Union-Wachovia merger.
The combination, currently valued at about $14 billion, already appears to be transforming the region's banking landscape, said Jason Goldberg, an analyst with Lehman Brothers.
"I think you're going to see a continuation of consolidation in the banking industry," Mr. Goldberg said. "In the Southeast, there are 1,400 banks alone, and it's a more competitive environment than it was, say, five years ago, and a lot of institutions are not positioned to compete effectively."
At Atlanta's SunTrust, the prospect of a giant new Wachovia with 2,887 branches and $329 billion of assets has prompted a blitz of moves aimed at halting the merger. SunTrust executives have even gone as far as to tell Wachovia shareholders that if they do not like SunTrust's $15 billion offer, they should dump the First Union deal so Wachovia can seek a better offer - if not SunTrust's, then another.
Some analysts are now speculating that SunTrust itself could become the target of a large bank wishing to expand into the Southeast. Others suggest that the Atlanta company could pursue a marriage partner other than Wachovia within the region.
Meanwhile, analysts say, other banks in the Southeast will try to strengthen their hands. "I think you're going to see still more action in the smaller banks and thrifts selling out to larger institutions," said Christopher Marinac, an analyst with the Robinson-Humphrey Co. in Atlanta.
Mr. Marinac and Mr. Goldberg cited a number of recent deals that already appear to fit this pattern, including National Commerce Financial Corp.'s acquisition of SouthBanc Shares Inc. in Anderson, S.C.; Winston-Salem-based BB&T Corp.'s deal for Community First Banking Co. of Carrollton, Ga.; and Columbus, Ga.-based Synovus Financial Corp.'s plans to buy FABP Bancshares in Pensacola, Fla. Besides buying smaller banks, the regional banks may also get to acquire some of the dozens of Southeast branches coming onto the market from two sources: divestitures required in the Wachovia-First Union merger, and the planned sale, announced July 13, of Huntington Bancshares' Florida offices.
Size, of course, brings no guarantee of success. But with so many properties likely to become available in the coming months, there are numerous opportunities for banking companies looking to build scale or extend their reach.
First Union and Wachovia have said they expect to sell $1.5 billion to $2 billion of deposits at 50 to 60 branches in North and South Carolina and Georgia. Huntington, of Columbus, Ohio, is offering up its entire Florida banking network - 139 branches and 458 automated teller machines - after it decided it was unwilling to spend more money in a state with fierce competition from both national and community banks.
Huntington's Florida branch system is probably the largest banking network that has ever gone up for sale there, said Mr. Goldberg. He and other analysts believe the most likely buyers are the same regional banks and thrifts that have been the biggest acquirers in recent years. These include SouthTrust and AmSouth Bancorp. of Birmingham, both of which would like to get bigger in Florida; BB&T, which has long sought a way to enter the state; Washington Mutual, which has been expanding nationally; or even Royal Bank of Canada, which has said it plans to use newly acquired Centura Banks Inc. of Rocky Mount, N.C., as a springboard to more U.S. acquisitions.
A number of Southeast banks already are laying plans to grab customers looking for a change. National Commerce Financial in Memphis, for example, will soon begin offering free checking accounts, Mr. Goldberg said.
Others already have begun billing themselves as alternatives to a merged Wachovia ("Small Banks Find Ad Mileage in Wachovia Fight," June 8, 2001).