Charlotte, N.C., a gold mining capital in the early 19th century, is at the center of another gold rush as the 21st century approaches.
NationsBank Corp. and First Union Corp., whose explosive growth helped transform their hometown into a commercial banking hub in the 1980s, are now staging massive buildups in investment banking.
And as the banking titans woo droves of capital markets pros from New York, Charlotte is changing again. The buildup has earned the city the monicker "Wall Street South."
In recent years, more than 1,000 professionals have been lured from New York to the two banks. Now the city is awash in a second wave of talent, as law firms and consultants with financial practices build a presence there.
Mark B. Mahoney, who left Citicorp's Capital Markets Group in 1992 to head investment banking at First Union, says Wall Street's frenzied atmosphere has been transplanted intact.
"It's the same 120-hour workweek," Mr. Mahoney said. Still, he allowed, there are some noticeable differences: "I can get to the airport in my car in 15 minutes."
The advent of a Wall Street-style culture and competence has enhanced the credibility of the banks and the city in the international capital markets.
In the short term, that has meant more high-paying employment, with office jobs increasing to more than 194,000, from 162,600 since 1990. In the same period, Charlotte's office vacancy rate has dropped to 8.5%, from nearly 15%.
NationsBank has focused on developing research and capabilities to do mortgage-backed, high-yield, and high-grade bond underwriting. First Union is building expertise in private placement, mergers and acquisitions advising, investment grade and high yield debt, trading and distribution, and asset securitization.
Tony Crumbley, vice president of research at Charlotte's Chamber of Commerce, said that having two banks with international capital markets businesses enhances the city's status as a financial services center, potentially attracting foreign banks.
Even before foreign banks arrive, however, some foreign companies have relocated to Charlotte.
Last year, for example Compass Group PLC, a food-services company based in England, moved the headquarters of newly acquired Canteen Corp. to town from Spartanburg, S.C.
Compass said the move was direct result of working with NationsBank. "Charlotte is a city with a lot of support services, including bankers, lawyers, and accountants," said Roger Matthews, the chief financial officer at Compass.
Indeed, Mr. Matthews has become something of a fan of the bank's capital markets team, which provided a $150 million private placement in the $450 million purchase. He said the catering and restaurant company may use NationsBank's one-stop-shopping approach as a model for dealing with its own clients.
The capital markets efforts have also lured companies that provide services for banks.
Cadwalader, Wickersham & Taft, a New York-based law firm, recently opened a Charlotte office, only the fourth such satellite branch in the firm's more than 200-year history.
James P. Carroll, a partner in real estate finance who heads the law firm's Charlotte office, said the city is already a major financial marketplace. "It's not emerging," he said. "It's arrived."
Mr. Carroll said that 14 attorneys have joined the Charlotte office, a number he expects to grow to 25 by the end of the year, and perhaps even 50 by the end of 1997. At that size, the office would dwarf Cadwalader's Los Angeles site.
To the banks, the arrival of a Wall Street law firm in Charlotte is testimony to their growing reputations.
"There is a recognition by a lot of others that we are willing to commit resources," said Dick Downen, the chief operating officer of NationsBanc Capital Markets Inc. "People understand how serious we are about this business."
To be sure the banks face some obstacles in trying to emulate their New York City brethren.
Recently, First Union discovered that a $300 million credit card securitization it underwrote violated statutes of the Employee Retirement Income Security Act that apply to certain pension funds. First Union was forced to buy back some of the bonds. Afterward, the bank dismissed three traders connected with the deal.
And in the past, commercial banks have a poor track record in in building these businesses.
"As far as I can make out, only one for sure has done well: J.P. Morgan & Co.," said John Mason, a banking analyst at Interstate Johnson Lane.
Nonetheless, Mr. Mason said the two Charlotte banks have a good chance for success. "The southeast contains about 16% of the national population, but has created 25% of the new jobs in the last year or so," he said. "The southeast is where German, Japanese, and French companies are building their factories."
The only other likely area for successful underwriting is San Francisco, Mr. Mason said.
"San Francisco has the two West Coast giants," Mr. Mason said, referring to Wells Fargo and BankAmerica. "For something like underwriting to develop, you need a sizable bank or more than one bank, and a strong commercial loan orientation."