Two Large Southern Banks Agree to Merge

NCNB Corporation and C&S/Sovran Corporation - two Southern powerhouses trying to beat back industrywide weakness - said Monday they would merge in a $4.3 billion deal that will create the nation's No. 3 bank.It was the second big bank merger announced in a week. The new company, to be called NationsBank, will have $118 billion in assets and 1,900 branches spanning nine states. The deal backs predictions by analysts of a new era of bank consolidation, as institutions weakened by regional downturns and bad loans hope bigger means stronger. Last Monday, Chemical Banking Corporation and Manufacturers Hanover Corporation - mammoths once considered immune to trouble - announced the biggest-ever industry merger with plans to create the nation's second-largest bank. That is the only bank deal larger than the NCNB-C&S/Sovran merger, which will create the biggest regional bank at a time when money-center banks - traditionally dominant in the industry - are stacked with problem loans. "NationsBank is precisely the company that is needed in our industry today," NCNB chairman Hugh McColl said in a statement. "The strength of diverse but compatible traditions and markets has come together in NationsBank, a name that makes it perfectly clear what the company is." Mr. McColl told a news conference that the planned merger would mean 9,000 job cuts, mostly through attrition. That would represent 15 percent of the combined payroll of 60,000 workers. The firms did not say how many branches they expected to be eliminated in the merger. NCNB - the nation's No. 8 bank - is headquartered in Charlotte, N.C., while C&S/Sovran - the 12th-largest US bank - is based in Atlanta and Norfolk, Va. The companies say they hope NationsBank, to be based in Charlotte, will open its doors in December. A key attraction of the NCNB-C&S/Sovran deal is geography. NCNB would win entry to several states where it has almost no presence, including Maryland, Tennessee, and Georgia. The two banks overlap in Florida and South Carolina. C&S is strong in Virginia and Florida, while NCNB is strong in North Carolina, Florida and certain Southeastern cities. The firms said the merger should cut costs by about $350 million annually over three years, reduce overcapacity, and create a stronger institution that can compete globally. Its client base will be widely spread, with a combined loan portfolio of 37 percent consumer loans, 45 percent commercial loans, and 18 percent commercial real estate loans.