Corporations Hope Bigger Bank Will Spark Lending

The planned union ofNCNB Corp. and C&S/Sovran Corp. should be good news for the economy of the Southeast, especially if the merged institution is able to make more credit available in the region.

On top of that, it appears the two banking companies will be a good fit in commercial lending, with NCNB relying on its strength with bigger customers and C&S/Sovran offering its solid relationships with many medium-size and small borrowers.

Relief for Some Industries?

Financial executives at several big southeastern companies pointed out that the combination will produce a bigger, better-capitalized institution. And that, in turn, should enhance credit availability.

"We should be the beneficiary," said John McGovern, vice president for finance at Atlanta-based Georgia Pacific Corp., which has strong relationships with both banks. Though the big forest-products concern has not had any difficulty raising funds from banks, many of its customers have.

"Certainly homebuilders have had a hard time" raising funds, Mr. McGovern noted.

A Giant Source of Credit

Similarly, Genuine Parts Co., an Atlanta-based auto parts distributor, has been been affected in recent months because some of its customers have had a hard time getting loans from banks.

Frank Howard, an executive at Genuine Parts, said the tight credit affecting its customers was indirectly impacting Genuine Parts.

Up to now, the company hasn't done much banking business with either C&S/Sovran or NCNB. But if Genuine Parts ever gets into an acquisition mode and needs bank funds, that could change, according to Mr. Howard, the Genuine Parts executive, who deals with commercial banks.

"We would have to get a relationship with a [bank] this big," said Mr. Howard, referring to combined NCNB and C&S/Sovran.

As the nation's third-largest bank, the NCNB-C&S/Sovran union would be a financing source that cannot be ignored, Mr. Howard added.

Blend of Big and Small Clients

In corporate lending, NCNB's activities are skewed toward Fortune 1,000 customers, whereas C&S/Sovran concentrates more on smaller businesses, noted Tom Brown, a regional bank analyst at Donaldson, Lufkin & Jenrette.

"It's a good fit from a business-mix standpoint," he added.

Another example of synergy: C&S/Sovran is one of the nation's biggest factoring concerns for retailers and textile companies, while NCNB is a third-party creditcard processor for these industries, observed Anthony Davis of Wheat, First Securities Inc.

At the same time, though, there is not a lot of overlap in terms of corporate relationships at the two banks, so there is less potential for staff cutbacks among corporate relationship officers.

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