Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 24, 1994 TAG: 9408010009
SECTION: BUSINESS PAGE: C1 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
Ben Jenkins, president of First Union National Bank of Virginia, said his company is prepared to fold its multistate banks into a single legal entity.
Even so, he reiterated, First Union remains committed to Roanoke as an important part of its banking operation. It has 2,200 employees in the valley.
Jenkins expects all states in the Southeast Compact, except possibly Maryland, to drop the restrictions, allowing banks from other states to enter Virginia.
He expects the federal law to come out of the conference committee in late July or early August.
When it does pass, he said, most banks will move to consolidate across state lines and "obviously, we're studying the issue." First Union, he said, will "move to one bank at some point in time."
First Union's employment level in Roanoke should rise, he said, as the Washington and Maryland banks are consolidated into Virginia.
And, he pointed out, some functions in Roanoke - credit card servicing, mortgage loan servicing, consumer loan servicing and printing - are performed for the entire multistate system. As First Union grows, these departments should expand as well. "Roanoke will benefit."
Even though separate state banks would be abolished, Jenkins said, First Union may well remain organized along geographical lines - as it is within Virginia, with in-state regional executives. The bank, he said, wants decision-making authority as close to the customer as possible.
"Roanoke is important to our company" and strategic in its location, Jenkins said. He thinks some sort of headquarters will remain here, regardless of what form the bank takes.
He suspects this restructured organization will fall along state lines, incorporating Bristol, Tenn., Maryland and Washington into Virginia - if Maryland permits. He thinks Maryland may opt out of the federal legislation - as it would have the right to do.
"It's important to be organized in the field at line level to be convenient for customers," he said. As First Union becomes a single bank, it will be even more important to be close to customers. "Customers care little how big we are," he said, as long as they get responsive service and deal with a banker on a personal basis.
Jenkins said First Union is "well positioned" to take advantage of interstate branching, because all areas already share common systems. The move, he said, will reduce paperwork and regulatory reporting, thus reducing costs.
"We don't see huge cost savings for us," Jenkins said, but the bank will benefit in its ability to grow and serve customers.
"I think you'll see more mergers, more consolidation in the industry," he said. He pointed out that the number of banks nationwide has fallen in recent years from nearly 15,000 to fewer than 11,000. Most of them are small community banks that will survive.
First Union, he said, is "always interested in exploring opportunities and possibilities" for mergers, but it is "not talking to anyone right now. I think everything is quiet."
The federal law, he said, will cause a new wave of interstate mergers, but "the timing of that is more difficult to predict." Jenkins thinks it will occur more slowly than most people predict.
At NationsBank, said Roanoke regional executive officer Douglas Waters, the banking bills will be "a total nonevent" in the valley.
Some NationsBank functions in Richmond, such as a separate board of directors, will be abolished. But for the most part, headquarters functions already are substantially centralized in Charlotte, N.C., or in other places.
Interstate branching, Waters said, would save NationsBank $50 million a year by elimination of duplicate regulatory examinations, boards of directors, corporations and the like. He said it costs money to massage actual management entities back into legal entities, such as a separate Virginia bank, for federal reporting purposes. Management of NationsBank, he said, was designed in anticipation of interstate branching.
The legislation, he said, will enlarge the pool of potential buyers of banks in Virginia. The more potential buyers, Waters pointed out, the higher the purchase price that Virginia banks should bring their stockholders.
F. Edward Harris, president of Crestar Bank's Western Region, said his bank has supported the changes in the law because Crestar favors free competition.
It will save some costs by allowing consolidation of Crestar's Maryland and Washington, D.C., banks into the Virginia bank at Richmond, Harris said. It will especially simplify banking in the Washington metropolitan region by allowing banking and deposits across state lines as residents travel through the district and its suburbs.
As far as Crestar is concerned, Harris said, the consolidation will be "little noticed in Roanoke."
J. Carson Quarles, president of the Southwestern Region for Central Fidelity Bank, said the Virginia bill "opens the doors of amalgamations, mergers and acquisitions between out-of-state and Virginia banks."
The big change will come with expected passage of the congressional bill, Quarles said.
"When that passes," Quarles said, "First Union and NationsBank will centralize in Charlotte. Banks will surely merge across state lines."
by CNB