South Trust Wins With Autonomy At Local Level

Few banks in the South are as decentralized as South Trust Corp., nor are there many that have grown as fast or earned as much. For Alabama's largest bank holding company, local autonomy clearly works.

South Trust's strategy is to buy small banks in major markets, hire the best talent available, and let those officers grow their portfolios with minimal interference from headquarters in Birmingham.

SouthTrust built its Alabama bank on this formula and has used it to expand into Atlanta, northern Florida, Tennessee, and North and South Carolina.

Local Automony Goes Deep

All loans are carefully analyzed and graded at the holding company level, and back office functions are centralized. The company currently operates a network of 302 offices through 43 separately chartered banks.

Chairman and chief executive Wallace D. Malone Jr. leaves no doubt as to the secret of his success.

"This whole thing is a people game," he said. "With us, you have a full functioning legal board of directors and a live CEO. We've got more talent for our size than our competitors."

For SouthTrust, the decentralized formula is a success. Since the early 1970s, when the current management took over, SouthTrust has increased earnings every year but '79 and '90.

The bank's assets have grown 15-fold since 1972, to the current $9.2 billion. Net income for the first nine months of this year, $66.3 million, is already 32% above 1990 and headed for another record year with annualized return on assets at 0.98%.

Third-quarter nonperforming assets of $150.7 million constituted only 2.53% of total loans, a performance that compares favorably with its peers.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.