Trust Company of Georgia Steps out of Character with Sun Banks Merger; Can Low-Profile, High-Performance Approach Mix with High-Profile Giant?

American Banker, August 2, 1984 | Go to article overview

Trust Company of Georgia Steps out of Character with Sun Banks Merger; Can Low-Profile, High-Performance Approach Mix with High-Profile Giant?


The only written copy of the formula for making Coca-Cola is nestled in a safe-deposit box in the Trust Company of Georgia's cavernous vault in downtown Atlanta.

The stock it received as a commission for underwriting Coca-Cola's first public offering in 1919 has become one of the prize jewels of banking. It is now valued at $110 million, although it is still carried on the books at its initial value of $110,000.

And when bank results flow in from all over the nation at the end of the year like batting averages at season's end, it is the $5.4 billion-asset Trust Company that historically leads the way not only in the Southeast but across the nation. Last year, it had the highest return on assets and return on equity ratios among the nation's 100 largest banks. Return on assets was 1.58%, return on equity a whopping 24.4%. Although ranked 73d in asset size among American banks in 1983, it was 32d in profits.

"Year in, year out, they far outstrip their competition in Georgia," notes Bill Norton, a bank analyst with Blackstock & Co. in Jacksonville, Fla. "It's a remarkable bank."

And yet for all its success and its reputation as being the premier corporate bank in the state, the 92-year-old Trust Company, the third largest bank in Georgia, keeps a remarkably low profile. Or at least, it did.

Then, on July 2, it pulled off the first mega-merger in the South by announcing plans to merge with younger, bigger, more acquisitive Sun Banks Inc. of Florida. Out of Character

The move surprised nearly everyone in Atlanta.

"For them to be first in the regional arena was a shock," says one banker there. "They have always been the type of people who did everything in a very conservative, very private, and very efficient way. They're great bankers, don't get me wrong. But they always had the attitude that if they got attention from their efforts, fine. If they didn't, well, that was fine too."

Trust Company chairman and chief executive officer Robert Strickland concedes as much. "The personality of the bank is one of quiet strength and solidarity," he says. "We employ conservative accounting and build extremely solid assets. But we are very aggressive about marketing our services."

That aggressiveness spurred Mr. Strickland, 57, to begin serious discussions of a merger with the $9.1 billion-asset Sun in January. Around that time, it was becoming apparent that both states would be making an effort to pass regional legislation in 1984. Both have now passed reciprocal regional bills, but neither law becomes effective until July 1, 1985.

"We have always had a good relationship with Sun," recalls Mr. Strickland, whose father was president of Trust Company between 1938 and 1945 before dying of cancer in 1946. "We both had the same philosophies about regional banking as far back as four years ago. We also share a common philosophy of decentralized management and a belief in being market-driven." 'The Logical Place'

Mr. Strickland says he and Sun chief executive officer Joel R. Wells Jr. had little trouble agreeing that the new bank, to be called Sun Trust Banks Inc., would be headquartered in Atlanta. Nor was there any dispute of the allocation of titles. Mr. Strickland, the career banker, will be chairman and chief executive of SunTrust. Mr. Wells, 55, an attorney who became a banker only in 1976, will be president.

Mr. Strickland believes the merger lays the foundation for Atlanta's emergence as the regional banking center of the Southeast, a view not as strongly embraced by Mr. Wells.

"I see Atlanta as the regional center," Mr. Strickland says. "Geographically, it's the logical place to locate if you're thinking about building a regional franchise. I'm not saying everyone will, but it is the logical spot."

Although the banking giants have almost a year before they consolidate their holdings, analysts and banking observers are intrigued by the diversity and disparity between the banks. …

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