BY MATTHEW MOGUL Of The Post and Courier Staff
Today’s banking world is chock-full of corporate castaways tossed aside by their old bosses as mega- mergers have led to industry-wide consolidation and mass layoffs.
In the latest big deal, Karl Zerbst wasn’t about to hang around to see whether he would play the role of Gilligan.
Soon after Wachovia Corp. announced in June its plan to buy SouthTrust Bank for $14.3 billion, the seasoned commercial banker left his company of 13 years to take a new job with an upstart.
“The merger had a large impact on me,” said Zerbst, who now heads operations for First Reliance Bank, a 5-year-old Florence-based bank that plans to open its first Lowcountry branch next year. “I don’t have a problem with Wachovia. These are good people. But I believe in the inherent need for a smaller, community banking concept. I think a lot of customers do, too.”
Jim Pease also decided to get out while the getting was good.
“I wasn’t so much worried about my job. We were producing well,” said Pease, who up to a few months ago was the Charleston market manager for SouthTrust Mortgage. “But then the headhunters started calling when they heard about the merger, and that precipitated me thinking about other opportunities.”
Pease left SouthTrust after eight years to lead a newly-formed regional office for Southern Trust Mortgage, a Norfolk, Va.-based mortgage bank with an office on Church Street in downtown Charleston.
With the merger of Charlotte-based Wachovia and Birmingham, Ala.-based SouthTrust finalized earlier this month, the real work of consolidating the two companies’ operations, including eliminating unneeded branches and overlapping functions, is just getting started.
So, while the prospect of branch closings and layoffs undoubtedly is creating anxiety among the companies’ workers, smaller banks are looking to snap up talent they need to expand or gain a toehold in the fast-growing Charleston market.
“We were already talking with Karl (Zerbst) before the merger, as we looked for bankers in markets that we identified for growth,” said Rick Saunders, First Reliance’s president and CEO. “It became more obvious after the merger announcement that he was our man.”
“Wachovia has shown itself quite capable at mergers,” Saunders added. “But almost always there are customers and bankers that aren’t going to like it. That’s what aggressive banks like ours look for when we recruit.”
Some of that new talent will be on the market soon, as employees at the newly expanded Wachovia tussle for spots in the merged corporation.
Of the roughly 490 area employees of both banks, the only staff members guaranteed their jobs are those who have “face-to-face” dealings with bank customers, people like tellers and commercial lenders. Decisions on who stays and who goes will probably be made in the first few months of the new year, Wachovia officials say, but no definitive timeline has been announced.
“Obviously, this is good recruiting ground,” said Tripp Castell, managing director for Management Advisors International, a headhunting firm in Hickory, N.C., that works with professionals in the financial service sector. Castell helped place Pease in his current job.
“More times than not it is those in the bank being acquired (in this case SouthTrust) that are looking to make a change. The acquirer, in most cases, goes with its own people a lot of the time.”
Case in point: Wachovia stuck with Len Hutchison as its top Charleston executive. His counterpart at SouthTrust, Charlie Rivers, is weighing his options, bank officials say.
On the other hand, Bill Duke, area executive for South Carolina Bank and Trust, said a number of former colleagues from his days at Wachovia have called to let him know they are being “displaced” and are looking for work.
Duke left Wachovia last year after 18 years, saying the bank’s previous merger with First Union changed the corporate culture he was used to. First Union bought Wachovia in 2001 and took on its name.
Officials at South Carolina Bank and Trust say they had been hoping to strengthen their presence in the Lowcountry but were waiting for the right person to lead the operations.
Duke turned out to be their guy after that merger.
“The overall direction of the bank (Wachovia) changed after the merger, and in a way its personality changed. That brought to light other opportunities for me,” said Duke.
The Columbia-based bank, owned by holding company SCBT Financial Corp., has a branch in Moncks Corner, recently opened another in Summerville and is eyeing locations in downtown Charleston and elsewhere in the area for further growth.
That’s why the possible sale of some Wachovia or SouthTrust branches has Duke and other bankers interested.
“While I’m not privy to the real estate business, I know we and a lot of people are talking to them about any possible branch divestitures,” he said.
The new Wachovia now has 28 Charleston area branches, 22 from Wachovia and six from SouthTrust. Chances are good a few might be closed.
“It’s no secret that we have three branches downtown and probably only need two,” said Wachovia’s Hutchison.
The likeliest one to close is in the former First Union building at the corner of Meeting and Market streets, where Wachovia leases space, according to industry observers.
Wachovia entered the merger owning its Broad Street branch, while SouthTrust owns its regional headquarters on Meeting Street.
Sarah Green, a Wachovia spokeswoman, says the methodical merger process the bank followed with First Union in 2001 is a good gauge of things to come.
“We went about the merger in a very slow and deliberate way … there were some situations in which we didn’t consolidate two branches that were very close together,” Green said. “We are going about this integration in the same fashion.”
Only one branch in Charleston was closed following that merger and no employees were laid off, she said.
However, in most consolidations, some employees leave on their own, and some vacant positions may go unfilled.
Jefferson Harralson, a bank analyst with Atlanta-based Keefe Bruyette & Woods, thinks that Wachovia did a good job at “executing the merger with First Union,” and said he expects a smooth transition this time around as well.
Still, he does expect more fallout from this merger than the one in 2001.
“First Union paid a really good price for Wachovia back then,” he said. “This time Wachovia paid a bit of a premium for SouthTrust, and that means it will be looking to make significant cost cuts. It will keep all its producers it can — tellers, lenders, mortgage bankers — but where there’s overlap, it will have to cut it out.”
SOUTHTRUST CORP. AT A GLANCE
CHARLESTON AREA Branches: 6 Employees: 89 Deposits: $262 million (as of June 30) Market share: 4.3 percent of total deposits in Charleston
COMPANY-WIDE Headquarters: Birmingham, Ala. Footprint: 9 southern states Assets: $53.8 billion Branches: 741 ATMs: 913 Employees: 12,500
WACHOVIA CORP. AT A GLANCE
CHARLESTON AREA Branches: 22 Employees: 400 Deposits: $1.3 billion (as of June 30) Market share: 21.8 percent of total deposits in Charleston
COMPANY-WIDE Headquarters: Charlotte Footprint: 11 eastern states Assets: $410 billion Branches: 2,500 ATMs: 4,400 Employees: 85,500
