We have always enjoyed the simple precision of the water wheel. It catches water from the top and releases it once the wheel rotates to the bottom. In so doing, water wheels make maximum use of the energy contained in the falling water (plus they are cool to watch). Over the years, M&A activity in the banking industry has been much like the water wheel - consistent, continual and even soothing at times to watch.
We looked back at bank mergers and found ourselves reminiscing about banks whose names have disappeared over the years - such as Hanover, Seafirst, Crocker, Bank of New England, Sovran, First Boston, Irving Bank, Continental Illinois, LaSalle, Compass, AmSouth, SouthTrust, MBNA, Bank One, FleetBoston and many, many others.
In an unscientific study, we found that many acquisitive banks took on the name of a bank they acquired. Consider Norwest, which bought Wells Fargo in 1998 and then changed its name to Wells Fargo. In similar fashion, First Union bought Wachovia in 2001 and then assumed its name. Finally, in 1998 NationsBank bought Bank of America and changed its name.
Speaking of First Union, they were also one of the most prolific acquirers (with nearly 90 acquisitions under their belt). The bank got rolling in earnest on the M&A front back in 1987 and hasn't looked back since. Back then, First Union bought Atlantic National Bank of Florida, before going on a buying spree that has included Florida National Bank (1990), Dominion (1993), First American (1993), First Fidelity (1996), Center Financial (1996), Signet (1997) and CoreStates (1998). In all, First Union made some 80 bank acquisitions throughout its history, before buying Wachovia in 2001 and assuming its name. Since then, the bank has continued to move ahead, acquiring SouthTrust (2004), WFS Financial (2006) and World Savings (2006). In addition, Wachovia has branched out into the broker-dealer scene, with acquisitions of Prudential Securities (2003) and A.G. Edwards (2007). Ranked #4 in assets currently, Wachovia has shown it is not afraid to move aggressively when it comes to acquisitions.
Another interesting story is that of NationsBank. In 1986, Security Pacific bought The Arizona Bank and one year later it acquired Rainier. That was followed by Hibernia in 1988 and Nevada National in 1989, before the bank fell on rough times and was swallowed up by Bank of America in 1992. Bank of America, meanwhile, had already acquired Seattle First (1983) and brokerage firm Charles Schwab (which it subsequently sold). That was followed by Continental Illinois (1994). While Bank of America was focusing its energies on the west coast, NCNB had been in acquisition mode primarily on the east coast. NCNB bought First Republic (1988) and C&S/Sovran (1991) before changing its name to NationsBank in 1991. After the name change, NationsBank bought up Maryland National and American Security (1993), then it moved on to Boatman's (1996), Barnett (1997), and eventually Bank of America in 1998.
While these are but a few reminiscences of times gone by, it is interesting to remember the bank names that have come before us all. While no one knows what the coming years will bring or who will be acquired, one thing is for certain - the wheels of banking industry M&A will continue to turn.