First Union Corporation
Encyclopedia
First Union Corporation was a banking company providing commercial
and retail banking
services in eleven states in the eastern U.S. First Union also provided various other financial services, including mortgage banking, credit card, investment banking (First Union Securities), investment advisory, home equity lending, asset-based lending, leasing, insurance, international and securities brokerage services and private equity (First Union Capital Partners), through other subsidiaries.
In September 2001, First Union completed a merger with Wachovia National Bank to become Wachovia Corporation, one of the largest financial holding companies in the US. As of the end of 2000, First Union had over $170 billion of total assets, over 70,000 employees and nearly 2,200 branches.
The bank merged with First National Bank and Trust Company of Asheville in 1958 to become First Union National Bank of North Carolina. In 1964, the bank added Cameron-Brown company, a mortgage banking and insurance firm.
First Union Corporation was incorporated in 1967. As part of a corporate reorganization in 1968, a predecessor of First Union National Bank and First Union Mortgage Corporation, the mortgage banking firm acquired in 1964 became subsidiaries of First Union Corp creating the structure the bank utilized until the 2001 merger.
Starting in 1985, with the Supreme Court decision upholding regional interstate banking legislation, First Union focused on an aggressive growth strategy and from 1985 through the merger with Wachovia in 2001, First Union completed over 90 banking-related acquisitions, 50 of which were completed between 1985 and 1995. Atlantic National Bank
of Jacksonville, Florida
merged with First Union in 1985.
In February 1987, Cameron-Brown Co., a $10 billion mortgage banker created in 1955 from the merger of Fidelity Bond & Mortgage Co. (started in 1946 in Raleigh
) and Brown-Hamel Mortgage Co. of Greensboro
, changed its name to First Union Mortgage Corp. to match its parent company.
In a deal announced in June 1992, First Union acquired South Carolina Federal Corp., making First Union the third largest bank in South Carolina by deposits, but also giving North Carolina-based banks the majority of financial institution assets in South Carolina, something that had never happened in any state since regional banking began in 1986.
, headquartered in Philadelphia
. At the time, this was the largest merger in US banking history.
CoreStates traced its history to 1781 and the Bank of North America
, the first bank chartered in the United States. Once the merger was accomplished, First Union began to claim 1781 as its founding date. Wachovia still operates The Bank of North America's first branch, opened in 1782, which is now the longest continuously operated branch in America.
The acquisition of CoreStates brought problems with it. Many of these problems arose when First Union attempted a too rapid integration of CoreStates' systems into First Union's. Initially, CoreStates’ tellers received insufficient training with the new systems and the two systems were unable to communicate with each other. This led to problems with account access and with payments not being correctly applied to loans.
on April 30, 1998 adding to its merger and acquisition, high yield, leveraged finance, equity underwriting, private placement
, loan syndication, risk management
, and public finance
capabilities.
. Two years later, it closed the unit, writing off $1.7 billion.
As an important part of the deal, First Union would shed its name and assumed the Wachovia identity and stock ticker. Analysts said this move was most likely to help First Union acquire a new identity, as Wachovia's reputation was far better with consumers than First Union. At the same time, Wachovia's name and corporate identity would survive.
The deal met with skepticism and criticism. Analysts, remembering the problems with the CoreStates acquisition, were concerned First Union's ability to merge with another large company. Winston-Salem's citizens and politicians suffered a blow to their civic pride because Wachovia's corporate headquarters would move to Charlotte, a larger city than Winston-Salem. The city of Winston-Salem was concerned both by job losses and the loss of stature from losing a major corporate headquarters. First Union was concerned by the potential deposit attrition and customer loss in the city. First Union responded to these concerns by placing the wealth management and Carolinas-region headquarters in Winston-Salem.
On May 14, 2001, Atlanta-based SunTrust announced a rival takeover bid for Wachovia, the first hostile takeover attempt in the banking sector in many years. In its effort to make the deal appeal to investors, SunTrust argued that it would provide a smoother transition than First Union and offered a higher cash price for Wachovia stock than First Union.
Wachovia's board of directors rejected SunTrust's offer and supported the merger with First Union. SunTrust continued its hostile takeover attempt, leading to a bitter battle over the summer between SunTrust and First Union. Both banks increased their offers for Wachovia, took out newspaper ads, mailed letters to shareholders, and initiated court battles to challenge each other's takeover bids. On August 3, 2001, Wachovia shareholders approved the First Union deal, rejecting SunTrust's attempts to elect a new board of directors for Wachovia and ending SunTrust's hostile takeover attempt.
Another issue concerned each bank's credit card division. In April 2001, Wachovia agreed to sell its $8 billion credit card portfolio to Bank One. The cards, which would have still been branded as Wachovia, would have been issued through Bank One's First USA division. First Union had sold its credit card portfolio to MBNA
in August 2000. After entering into negotiations, the new Wachovia agreed to buy back its portfolio from Bank One in September 2001 and resell it to MBNA. Wachovia paid Bank One a $350 million termination fee
.
On September 4, 2001, First Union and Wachovia formally merged to form the new Wachovia Corporation. In order to prevent a repeat of the CoreStates problems, the new Wachovia took its time phasing-in the conversion of legacy Wachovia computer systems to First Union systems. The company first began converting systems in the southeast United States (where both banks had branches), before moving to the Northeast, where First Union branches only had to change their signs to reflect the new company name and logo. This process ended on August 18, 2003, almost two years after the merger took place.
When Wachovia and First Union merged, Charlotte, North Carolina's One, Two, Three, and Four First Union buildings became One, Two, Three, and Four, Wachovia Center (respectively), and the 55-story First Union Financial Center in downtown Miami became the Wachovia Financial Center. The merger also affected the names of the indoor professional sports arenas in Philadelphia and Wilkes-Barre, Pennsylvania
. Formerly known as the First Union Center and the First Union Spectrum (both Philadelphia) and First Union Arena (Wilkes-Barre), they became the Wachovia Center
, Wachovia Spectrum
, and Wachovia Arena at Casey Plaza
, respectively. In 2010, following Wachovia's merger into Wells Fargo
, the Spectrum was demolished and the other venues became the Wells Fargo Center and the Mohegan Sun Arena at Casey Plaza.
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
and retail banking
Retail banking
Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.-Types of...
services in eleven states in the eastern U.S. First Union also provided various other financial services, including mortgage banking, credit card, investment banking (First Union Securities), investment advisory, home equity lending, asset-based lending, leasing, insurance, international and securities brokerage services and private equity (First Union Capital Partners), through other subsidiaries.
In September 2001, First Union completed a merger with Wachovia National Bank to become Wachovia Corporation, one of the largest financial holding companies in the US. As of the end of 2000, First Union had over $170 billion of total assets, over 70,000 employees and nearly 2,200 branches.
History
First Union Corporation was founded as Union National Bank on June 2, 1908, a small banking desk in the lobby of a Charlotte hotel. by H.M. Victor.The bank merged with First National Bank and Trust Company of Asheville in 1958 to become First Union National Bank of North Carolina. In 1964, the bank added Cameron-Brown company, a mortgage banking and insurance firm.
First Union Corporation was incorporated in 1967. As part of a corporate reorganization in 1968, a predecessor of First Union National Bank and First Union Mortgage Corporation, the mortgage banking firm acquired in 1964 became subsidiaries of First Union Corp creating the structure the bank utilized until the 2001 merger.
Starting in 1985, with the Supreme Court decision upholding regional interstate banking legislation, First Union focused on an aggressive growth strategy and from 1985 through the merger with Wachovia in 2001, First Union completed over 90 banking-related acquisitions, 50 of which were completed between 1985 and 1995. Atlantic National Bank
Atlantic National Bank
The Atlantic National Bank was an American bank based in Jacksonville, Florida. It existed from 1903 until 1985, when it merged into First Union The company constructed two significant buildings in Downtown Jacksonville: 121 Atlantic Place and the Schultz Building The Atlantic National Bank was...
of Jacksonville, Florida
Jacksonville, Florida
Jacksonville is the largest city in the U.S. state of Florida in terms of both population and land area, and the largest city by area in the contiguous United States. It is the county seat of Duval County, with which the city government consolidated in 1968...
merged with First Union in 1985.
In February 1987, Cameron-Brown Co., a $10 billion mortgage banker created in 1955 from the merger of Fidelity Bond & Mortgage Co. (started in 1946 in Raleigh
Raleigh, North Carolina
Raleigh is the capital and the second largest city in the state of North Carolina as well as the seat of Wake County. Raleigh is known as the "City of Oaks" for its many oak trees. According to the U.S. Census Bureau, the city's 2010 population was 403,892, over an area of , making Raleigh...
) and Brown-Hamel Mortgage Co. of Greensboro
Greensboro, North Carolina
Greensboro is a city in the U.S. state of North Carolina. It is the third-largest city by population in North Carolina and the largest city in Guilford County and the surrounding Piedmont Triad metropolitan region. According to the 2010 U.S...
, changed its name to First Union Mortgage Corp. to match its parent company.
In a deal announced in June 1992, First Union acquired South Carolina Federal Corp., making First Union the third largest bank in South Carolina by deposits, but also giving North Carolina-based banks the majority of financial institution assets in South Carolina, something that had never happened in any state since regional banking began in 1986.
CoreStates
In April 1998, First Union acquired CoreStates Financial CorporationCoreStates
CoreStates Financial Corporation was a United States bank holding company in the Philadelphia, Pennsylvania, metropolitan area.The bank, previously known as PNB , was renamed in the mid-1980s after a series of mergers...
, headquartered in Philadelphia
Philadelphia, Pennsylvania
Philadelphia is the largest city in the Commonwealth of Pennsylvania and the county seat of Philadelphia County, with which it is coterminous. The city is located in the Northeastern United States along the Delaware and Schuylkill rivers. It is the fifth-most-populous city in the United States,...
. At the time, this was the largest merger in US banking history.
CoreStates traced its history to 1781 and the Bank of North America
Bank of North America
The Bank of North America was a private business chartered on December 31, 1781 by the Congress of the Confederation and opened on January 7, 1782, at the prodding of Superintendent of Finance Robert Morris. This was thus the nation's first de facto central bank. It was succeeded in its role as...
, the first bank chartered in the United States. Once the merger was accomplished, First Union began to claim 1781 as its founding date. Wachovia still operates The Bank of North America's first branch, opened in 1782, which is now the longest continuously operated branch in America.
The acquisition of CoreStates brought problems with it. Many of these problems arose when First Union attempted a too rapid integration of CoreStates' systems into First Union's. Initially, CoreStates’ tellers received insufficient training with the new systems and the two systems were unable to communicate with each other. This led to problems with account access and with payments not being correctly applied to loans.
Bowles Hollowell
First Union acquired Bowles Hollowell Connor & Co.Bowles Hollowell Connor & Co.
Bowles Hollowell Connor & Co. was a leading middle market investment banking firm headquartered in Charlotte, North Carolina. The firm was founded in 1975 by Erskine Bowles and Thomas Hollowell.In April 1998, Bowles Hollowell was acquired by First Union...
on April 30, 1998 adding to its merger and acquisition, high yield, leveraged finance, equity underwriting, private placement
Private placement
Private placement is a funding round of securities which are sold without an initial public offering, usually to a small number of chosen private investors...
, loan syndication, risk management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
, and public finance
Public finance
Public finance is the revenue and expenditure of public authoritiesThe purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income, and macroeconomic stabilization.-Overview:The proper role of government provides a...
capabilities.
The Money Store
On June 30, 1998, First Union paid $2.1 billion for The Money Store, a loan outfit known for their commercials featuring Baseball Hall of Fame shortstop Phil Rizutto and pitcher Jim PalmerJim Palmer
James Alvin "Jim" Palmer , nicknamed "Cakes", is a former Major League Baseball right-handed pitcher. He played his entire 20-year baseball career for the Baltimore Orioles . He was elected to the Baseball Hall of Fame in .As of 2008, Palmer and his wife Susan have homes in Palm Beach, Florida, and...
. Two years later, it closed the unit, writing off $1.7 billion.
Acquisition of Wachovia
On April 16, 2001, Charlotte-based First Union Corporation announced it would merge with Winston-Salem based Wachovia Corporation. This was viewed with great surprise by the financial press and security analysts. While Wachovia had been viewed as an acquisition candidate after running into problems with earnings and credit quality in 2000, the suitor shocked analysts as many speculated that Wachovia would be sold to SunTrust.As an important part of the deal, First Union would shed its name and assumed the Wachovia identity and stock ticker. Analysts said this move was most likely to help First Union acquire a new identity, as Wachovia's reputation was far better with consumers than First Union. At the same time, Wachovia's name and corporate identity would survive.
The deal met with skepticism and criticism. Analysts, remembering the problems with the CoreStates acquisition, were concerned First Union's ability to merge with another large company. Winston-Salem's citizens and politicians suffered a blow to their civic pride because Wachovia's corporate headquarters would move to Charlotte, a larger city than Winston-Salem. The city of Winston-Salem was concerned both by job losses and the loss of stature from losing a major corporate headquarters. First Union was concerned by the potential deposit attrition and customer loss in the city. First Union responded to these concerns by placing the wealth management and Carolinas-region headquarters in Winston-Salem.
On May 14, 2001, Atlanta-based SunTrust announced a rival takeover bid for Wachovia, the first hostile takeover attempt in the banking sector in many years. In its effort to make the deal appeal to investors, SunTrust argued that it would provide a smoother transition than First Union and offered a higher cash price for Wachovia stock than First Union.
Wachovia's board of directors rejected SunTrust's offer and supported the merger with First Union. SunTrust continued its hostile takeover attempt, leading to a bitter battle over the summer between SunTrust and First Union. Both banks increased their offers for Wachovia, took out newspaper ads, mailed letters to shareholders, and initiated court battles to challenge each other's takeover bids. On August 3, 2001, Wachovia shareholders approved the First Union deal, rejecting SunTrust's attempts to elect a new board of directors for Wachovia and ending SunTrust's hostile takeover attempt.
Another issue concerned each bank's credit card division. In April 2001, Wachovia agreed to sell its $8 billion credit card portfolio to Bank One. The cards, which would have still been branded as Wachovia, would have been issued through Bank One's First USA division. First Union had sold its credit card portfolio to MBNA
MBNA
MBNA Corporation was a bank holding company and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delaware, prior to being acquired by Bank of America in 2006...
in August 2000. After entering into negotiations, the new Wachovia agreed to buy back its portfolio from Bank One in September 2001 and resell it to MBNA. Wachovia paid Bank One a $350 million termination fee
Termination fee
A termination fee is a charge levied when a party wants to break the term of an agreement or long-term contract. They are stipulated in the contract or agreement itself, and provide an incentive for the party subject to them to abide by the agreement....
.
On September 4, 2001, First Union and Wachovia formally merged to form the new Wachovia Corporation. In order to prevent a repeat of the CoreStates problems, the new Wachovia took its time phasing-in the conversion of legacy Wachovia computer systems to First Union systems. The company first began converting systems in the southeast United States (where both banks had branches), before moving to the Northeast, where First Union branches only had to change their signs to reflect the new company name and logo. This process ended on August 18, 2003, almost two years after the merger took place.
When Wachovia and First Union merged, Charlotte, North Carolina's One, Two, Three, and Four First Union buildings became One, Two, Three, and Four, Wachovia Center (respectively), and the 55-story First Union Financial Center in downtown Miami became the Wachovia Financial Center. The merger also affected the names of the indoor professional sports arenas in Philadelphia and Wilkes-Barre, Pennsylvania
Wilkes-Barre, Pennsylvania
Wilkes-Barre is a city in the U.S. state of Pennsylvania, the county seat of Luzerne County. It is at the center of the Wyoming Valley area and is one of the principal cities in the Scranton/Wilkes-Barre metropolitan area, which had a population of 563,631 as of the 2010 Census...
. Formerly known as the First Union Center and the First Union Spectrum (both Philadelphia) and First Union Arena (Wilkes-Barre), they became the Wachovia Center
Wachovia Center
The Wells Fargo Center is an indoor arena located in Philadelphia, Pennsylvania....
, Wachovia Spectrum
Wachovia Spectrum
The Spectrum, formerly known as the CoreStates Spectrum , First Union Spectrum , and Wachovia Spectrum was an indoor arena in Philadelphia, Pennsylvania...
, and Wachovia Arena at Casey Plaza
Wachovia Arena at Casey Plaza
Mohegan Sun Arena at Casey Plaza is an 8,300-seat multi-purpose arena located in Wilkes-Barre, Pennsylvania, managed by SMG.Built in 1998 due to the instrumental work of Pennsylvania Governor Robert P. Casey, Sr...
, respectively. In 2010, following Wachovia's merger into Wells Fargo
Wells Fargo
Wells Fargo & Company is an American multinational diversified financial services company with operations around the world. Wells Fargo is the fourth largest bank in the U.S. by assets and the largest bank by market capitalization. Wells Fargo is the second largest bank in deposits, home...
, the Spectrum was demolished and the other venues became the Wells Fargo Center and the Mohegan Sun Arena at Casey Plaza.