Rivals in Southeast React Warily

Regional bankers in the Southeast awoke Monday morning to find a behemoth in their backyard. Now the question is, what to do about it?

Several bankers plan to stand pat and see what happens. Others will be reviewing their strategic plans, with an eye toward mergers of their own.

One concern: The planned merger of NCNB Corp. and C&S/Sovran Corp. would dwarf such well-regarded rivals as Barnett Banks Inc., Wachovia Corp., First Union Corp., and Sun Trust Banks Inc.

"It's a concern for anyone to have a dominant market share," said Robert Strickland, chairman of the executive committee at Sun Trust Banks in Atlanta. Mr. Strickland added that the proposed merger will cause regional rivals to "stop and take a good hard look."

Chance to Win Customers

To be sure, the merger could present opportunities for rival banks to win away customers who might be confused by the chaos that often accompanies mergers. Mr. Strickland, ever the gentleman, observed: "It will take a lot of time and attention to get things working smoothly, but they've got a lot of talent there. "It's a heck of a challenge, a heck of a challenge. But in time, I'm sure they can work things out."

The difficulty in putting the two banking companies together may keep the new banking giant turned inward for a year or longer, analysts said. "Over the near term, there probably won't be much impact" on Southeast rivals, predicted Michael Starr, an analyst at Duff & Phelps in Chicago.

Still, he said, two years down the road, competitors had better watch out. "The two companies will be much more competitive than they were independently," he said.

Edge from Branch Network

In growing markets like Florida, Mr. Starr said, the new company may be able to undercut competitors in the pursuit of loans and deposits. Furthermore, if banks are allowed to underwrite insurance and mutual funds, the company's huge branch network will enable it to dominate those businesses as well.

Allen L. Lastinger, president and chief operating officer of Barnett Banks in Jacksonville, Fla., pointed out that the merged bank "is going to be in a much stronger position in Florida as a result of this. But what implications that has on loan pricing, loan underwriting, or deposit pricing remains to be seen. They're still going to be only one of four fairly significant players in the market."

No. 2 in Florida

According to Mr. Starr, Barnett Banks controls the Florida market, with 24% of the deposits, while the newly merged company will have 14%, making it the No. 2 player in the state.

Perhaps the first state that NationsBank will target will be Virginia, analysts said. Smaller banks in that state are suffering from nonperforming asset problems and have pulled back from lending. They won't be much competition for a well-capitalized giant.

PHOTO : A Super Superregional

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