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Commercial banks

First Union's "Fast Eddie" Crutchfield Scoping Out New Buyouts

Strategic Insights

— 2 min read

Edward E. Crutchfield, the former chief executive of First Union Corp., earned the nickname "Fast Eddie" for his aggressive approach to buying banks, building the company into the country's sixth largest bank with 2,600 branches along the Eastern seaboard. Despite being absent from recent blockbuster deals in the financial industry, Crutchfield indicated that First Union is scouting the country for new acquisitions.

As the number of U.S. banks has declined by 37% since 1986, some analysts predict that the number could drop by another 50% within the next 10 years. Crutchfield envisions a future where a dozen or so large institutions will remain, offering a wide range of financial services. First Union, with its existing model, is well-positioned to compete with overseas rivals, reduce costs, and invest in technology.

The rivalry between First Union and NationsBank Corp. has been a long-standing one, with both companies building banking empires through strategic acquisitions. However, Crutchfield downplayed the significance of NationsBank's recent deal to merge with BankAmerica Corp., citing the complexity and uncertainty of such large transactions.

Key Takeaways:

  • First Union is expanding its banking presence through acquisitions, with a focus on the Eastern seaboard, where it will have around $220 billion in assets after completing recent deals.
  • The company is looking for opportunities to strengthen its product offerings, including brokerage, insurance, and mortgage banking, to become a comprehensive financial-services provider.
  • Crutchfield emphasizes the importance of scale, product diversity, and cost management in the banking industry, rather than just having a presence in every state.
  • The federal law limiting banks to 10% of the country's deposits may eventually restrict First Union's growth.
  • First Union has prioritized domestic markets over international expansion, recognizing the dominance of large companies in Europe and Asia.
  • The company is intensifying its focus on brokerage services and investment banking, hiring over 300 investment bankers from Wall Street in the past three years.

Statistics:

  • 70+ banks acquired by First Union in 13 years
  • 2,600 branches along the Eastern seaboard
  • 14,000 to 9,100 U.S. banks since 1986 (37% decline)
  • Predicted 50% decline in U.S. banks within the next 10 years
  • 12 billion ( assets of First Union after completing recent deals)
  • 4,800 branches in the U.S. after NationsBank and BankAmerica merge
  • $697 billion in assets in Citicorp and Travelers Group merger
  • 2,000 First Union offices offering brokerage and mutual-fund services
  • 300 investment bankers hired by First Union from Wall Street in the past three years
  • 21 3/4 to 62 1/8 increase in First Union's stock price since 1992

Sources:

  • [1] "Fast Eddie Crutchfield's Next Move," Charlotte Observer, March 24, 1997.
  • [2] "First Union's Crutchfield Scouting Buyouts," Business Week, March 23, 1997.
  • [3] "US Bank Mergers Boom in '96," Bankers Digest, February 1997.

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