The deal to buy Barnett Banks Inc. caps a long expansion drive in the Southeast for NationsBank Corp. and may set the stage for more aggressive westward expansion, chief executive Hugh L. McColl Jr. said Tuesday.
"Barnett is the premier franchise in Florida," Mr. McColl said during a telephone interview while en route to Florida. "Have we looked at it longingly? The answer is yes, for perhaps 15 years."
When the moment finally arrived, NationsBank's long-standing interest enabled it very quickly to cut the $15.5 billion deal unveiled last Friday- the largest ever in American banking.
"To be completely candid, we went into Florida in June 1981, and at that time our former chairman, Tom Storrs, talked to them, but nothing came of it," Mr. McColl said.
The Barnett transaction means that NationsBank's franchise in the Southeast is now largely complete, Mr. McColl said.
"This gets us to the point of being the largest bank in Florida and in the Southeast by some margin and it sort of finishes our activities there," he said. "Although, who knows? If somebody wants to offer us something somewhere at a really good price, we might do it.
"But Barnett was the most important acquisition we could have made," he said. "It was certainly our No. 1 preference over any other."
Looking beyond the Southeast, Mr. McColl reiterated his belief that "the best opportunities lie west of the Mississippi."
"One of every eight Americans lives in California. We wish we were in California," he said. "Now, we don't know if we will ever get to California, but that doesn't keep us from wishing."
NationsBank unveiled its last major expansion move exactly one year ago- its purchase of St. Louis-based Boatmen's Bancshares. In reaction, the company's stock endured a heavy six-week battering as nervous investors tried to digest the deal.
Asked if he was worried about a repeat of that experience, Mr. McColl ticked off major reasons why he believes it should not happen.
"First and foremost, the analyst community has followed Barnett closely and would agree that Florida is far and away the No. 1 banking state in the country in terms of growth," he said.
"Second, the market prefers in-market mergers to out-of-market ones," Mr. McColl emphasized. "One of the criticisms of the Boatmen's merger was that we were going into markets growing more slowly than our base market and that we were therefore diluting our growth numbers."
The Barnett acquisition "is the opposite of that," he said. "There are huge differences. Barnett operates in one state that we are already in-a state outgrowing the nation in population, job and income growth, and forecast to keep doing so."
Mr. McColl said serious talks leading to the deal required just a week. They began Aug. 20, and matters were basically sewn up by Aug. 27.
"We're competitors. It wasn't as if we didn't already know a lot about them," he said. Indeed, he added, "we know a lot about everybody in the industry. We study the industry."
Mr. McColl again brushed aside the idea that he and Barnett's managers were compelled to put finishing touches on the deal after word of it leaked to Wall Street and trading in both stocks was halted for hours.
"To the contrary, I'm the type of guy who wants to announce something four and half minutes after it happens," he said.
Mr. McColl said he intends to concentrate for the time being on running his large enterprise, but he remains convinced that banking industry consolidation will continue to accelerate.
"There isn't enough revenue for everyone to keep growing at the numbers at which they have been growing," he said. "Then there is the added factor of technology upgrades. There is going to be every increasing pressure to consolidate, particularly among the top 25" banks.
In fact, banking has not consolidated as quickly as other industries, including airlines, railroads, and investment banking, Mr. McColl pointed out. "There is a long way to go, but I think the consolidation at the top of the industry will proceed rapidly," he said.
Eventually-he offered no timetable-he foresees "a barbell-shaped industry with a dozen or half-dozen very large players on one end and four or five thousand boutiques on the other."