First Union National Bank
By Paul Kurzeja

Charlotte, a landlocked, mid-sized southern city, is an unlikely candidate for a world-class financial center.  However, despite these hurdles, Charlotte is the second largest banking center in the United States, largely because of the First Union National Bank.

First Union’s history goes back over 100 years to the founding of Union National Bank.  In 1908, H.M. Victor raised funds by selling 1,000 Union National shares at $100 each.  The first branch was a large roll top desk set in the lobby of the Buford Hotel on South Tryon Street. As a hub for railroads and textile industries, Charlotte’s economy was thriving. Union National benefitted from the booming local economy and despite the 1929 stock market crash, survived the Great Depression.

By 1958, Union National was primed for expansion and acquired the First National Bank of Ashville. The named was changed to First Union National Bank and quickly became one of the largest banks in North Carolina. However, further expansion was difficult. Until the late 1980s, state laws throughout the country prevented banks from purchasing branches in more than one state. Fortunately, this interstate banking prohibition did not last forever.

In 1985, with lobbying from First Union and state local banks, the state legislature passed the Southeastern Regional Banking Compact, a law allowing North Carolina banks to open branches in other states, while forbidding other banks from entering North Carolina.  This legislation, while clearly protectionist, allowed First Union to expand while minimizing the risk of being acquired by a large out of state bank.

First Union CEO, Ed Crutchfield, immediately took advantage of this new law by purchasing Atlantic Bancorp of Jacksonville, Florida. Over the following years, the bank continued expanding through acquisitions in various states, making First Union one of the largest banks in the Southeast.

Early entries into interstate banking gave First Union an important competitive advantage over other national banks prohibited from expanding across state lines. Over time, as interstate banking restrictions were dropped throughout the country, other banks began crossing state lines only to find First Union.

By the late 1990s, the bank’s acquisitions were larger, bolder and riskier.  In 1998, First Union acquired CoreStates Financial, a large Philadelphia based institution and the Money Store, an aggressive, northeastern finance company specializing in home equity loans.  These purchases gave First Union a huge northern footprint, but neither merger went smoothly.  The integration of CoreStates’ operations went poorly and its customer base became deeply unhappy, while the Money Store brought unanticipated loan losses and legal liabilities.

Despite these problems, in 2001 First Union made another seminal purchase by acquiring Winston-Salem based Wachovia National Bank.  Wachovia was a highly respected institution and allowed First Union to rebrand after the CoreStates and Money Store disasters.  First Union adopted the Wachovia name and became the sixth largest bank in the U.S.

Unfortunately, the recent recession hit Wachovia hard. In 2008, during the heart of the financial crises, Wells Fargo, a strong California based bank, purchased Wachovia officially ending Wachovia’s one hundred year run as an independent bank. However, Charlotte remains the east coast headquarters for Wells Fargo and is integral to the management of its $1.52 trillion in assets. By employing over 20,000 people, Wells Fargo is an important and vital fixture for Charlotte and Mecklenburg County.

Rick Rothacker, Banktown, (Winston-Salem, 2010).

Greg Farrell, Crash of the Titans, (New York, 2010).

First Union National Bank