Word: nationsbank
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...fiery ex-Marine and an avid mountain climber, Hugh McColl Jr. has scaled the Swiss Alps and Tanzania's Mount Kilimanjaro. But his loftiest goal is to lead NationsBank, the Charlotte, N.C., company he has run since 1983, to the summit of American banking. Through more than 50 acquisitions, McColl has turned NationsBank into the third largest U.S. lender (behind Chase Manhattan and Citicorp), with branches in 16 states and $316 billion in assets. And NationsBank stock, which has swelled to $65 billion in total value, makes the bank No. 1 in market capital. "In most of life's endeavors...
McColl's conquests have enriched the shareholders of NationsBank and the banks it has bought--shareholders that include many bank employees, from tellers to vice presidents. But the growing profits of NationsBank and other expansionist lenders have come in part from new and higher fees charged customers, shuttered branch offices and a decrease in traditional services at teller windows and by telephone. How long can any business keep increasing profits if many of its customers feel neglected? One answer can be found in a state that McColl has targeted for expansion: California. There, Wells Fargo, after its hostile 1996 acquisition...
...which account for most mergers) and at small banks and credit unions. "You used to be able to walk in without a deposit slip, and they'd just hand you one," says Skip Shipman, a florist in Woodstock, Ga., whose local bank was acquired by McColl in 1996. "Then NationsBank started charging a dollar for a deposit slip." After a wave of protests, the bank halted the practice last year. But complaints persist about other fees and services...
...NationsBank and its big competitors emphasize new services, offering everything from mortgages to mutual funds via round-the-clock banking. "When we acquire a company in a new neighborhood, then obviously some of the things that customers have been accustomed to will change," says Lynn Drury, a NationsBank spokeswoman. "Some services can be added and some taken away. Some fees may go up and some go down. And because some people are uncomfortable with change, they might choose to go to another bank." Indeed, such refugees are enabling new local banks that stress service to customers to blossom...
...Competition for down-market customers and the profits they generate is intensifying among big mortgage providers like GE Capital, Norwest Financial, KeyCorp, NationsBank and Chase Manhattan, not to mention heavily advertised smaller outfits like the Money Store (Dial 1-800-LOAN-YES). The total for sub-prime mortgages--a figure that is growing at twice the rate of conventional mortgages--is expected to exceed $120 billion this year. Another blistering market: sub-prime cash for new and used cars. Ford Motor Co.'s Associates Corp.; Mercury Finance, based in Lake Forest, Illinois; Credit Acceptance Corp. of Southfield, Michigan; and other...