Newspaper article The Florida Times Union

InFront; Banks in Middle Getting Squeezed

Newspaper article The Florida Times Union

InFront; Banks in Middle Getting Squeezed

Article excerpt

Byline: TIMOTHY J. GIBBONS, The Times-Union

Wachovia's announcement last week that it was purchasing SouthTrust Bank was the latest move in an ongoing consolidation of the banking industry and a sign, some analysts said, that such consolidation might be heating up.

"It's more of the barbell effect," said Hickory Fant, chairman and president of First Guaranty Bank & Trust Co. of Jacksonville, the city's oldest bank. "You have very, very large institutions on the one end and locally owned banks on the other end. The middle is being squeezed."

Buying SouthTrust will give Wachovia entree into the booming Texas market, as well as strengthening its foothold in the South in general, particularly Florida and Georgia. Perhaps more importantly, it will position the Charlotte, N.C.-based Wachovia to better compete with Bank of America and J.P. Morgan Chase & Co., both of which have made recent large acquisitions.

The banking industry has been changing for decades, beginning with state laws prohibiting multi-bank holding companies that were abolished in the 1970s, and accelerating to new heights by national changes that ushered in country-wide banks in the '90s.

Over that time, mid-sized regional banks have been snapped up by bigger players, said Ben Bishop, chairman of the board of Jacksonville-based Allen C. Ewing & Co., an investment banking firm that advises merging banks.

Virginia used to have six banks headquartered in the state, Bishop said; now there are none. Tennessee started with a similar number, and is now down to one.

"We're slowly merging ourselves out of customers," Bishop said with a laugh.

Birmingham, Ala., where SouthTrust is based, has three other big banks -- AmSouth Bancorp, Compass Bancshares Inc. and Regions Financial Corp. -- that have remained independent for years, the Wall Street Journal reported Monday. But now, because of their positions in Florida, Georgia and Texas, they might be seen as good acquisition candidates. …

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