Move to Greensboro Expected to End Northwestern Financial's Split Image

American Banker, August 22, 1984 | Go to article overview

Move to Greensboro Expected to End Northwestern Financial's Split Image


WILKESBORO, N.C. -- Northwestern Financial Corp. cleared up "a slight case of schizophrenia" this week by announcing that its corporate banking, credit administration, and management training departments will move 80 miles east to Greensboro.

Ever since April 1983, when Northwestern sidled into Greensboro by moving its legal residence and a handful of employees there, apprehensive employees of Northwestern Bank, its lead institution, and the townspeople here have wondered what was next.

Northwestern grew up here, becoming (with deposits of $2.1 billion) the fourth largest bank in the state. It now has 185 branches, and it employs 5% of the work force in Wilkes County, an area of 60,000 people. Thus its presence is wide and deep and is closely watched by a broad range of citizens.

A trickle of employees (a total of "15 or 20," according to bank spokesmen) have gradually and quietly moved their offices to Greensboro in the past year, leaving uncertainty and anxiety in their wake. The coming moves, scheduled to be completed by mid-1985, will transfer another 44 jobs, effectively moving the corporate headquarters to the larger city and ending the exodus.

Ben T. Craig, chairman and chief executive officer, and corporation president B.D. Allen will have offices in both cities. For Wilkes County, the bank sweetened the move by announcing plans to refurbish many of its facilities in Wilkes and by projecting increases in its employment, already up 25% in four years.

But while this cleared up some uncertainties in recruiting at the bank and in Wilkes' employment picture, many in the county are now asking, "What's next? Atlanta? Orlando?" Some Wilkes businessmen see the move to Greensboro as running up a flag -- a signal to big regional banks in other states that might be looking for acquisitions under the new southeastern regional reciprocal banking laws.

Northwestern officials try to blunt such thinking.

"That's not our thinking," says Mr. Allen. He has heard, he says, that some bank managements are seeking a merger with a Georgia or Florida bank on the theory that they will be allowed to run the North Carolina franchise. That's naive, he says, and Northwestern is adopting a two-pronged -- defensive and offensive -- merger strategy.

"You do not need to be a $20 billion bank to survive," asserts Mr. Allen, "and it is easier to run a $3 billion bank." The defensive strategy he describes is to make the 46 western North Carolina counties, in which the bank now has a dominant position, "our whole world" and to perform so well that shareholders will get the top dollar from either a sale or from a payout.

The Greensboro move is part of this strategy. It is designed to use the surplus deposits from the retail side in the 46-county world to build up the corporate side of the business. The present 60/40 retail/corporate mix is expected to become 50/50 over the next three to five years.

The target corporations are in the $10 million to $100 million range. Greensboro, Charlotte, and Winston-Salem are well situated for such a strategy, but so is the competition: Wachovia Corp. is headquartered in Winston-Salem, and NCNB Corp. and First Union Corp. are headquartered in Charlotte.

Greensboro, the lead city in a metropolitan area of 850,000 people, has been looking for a flagship bank and has wooed Northwestern since at least 1981. The area is sometimes called overbanked, and Mr. Allen admits the competition is stiff, "but we're not going head to head" against the bigger banks on the retail side, he says. …

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