If NationsBank Corp. follows through on its option to purchase Maryland's largest banking company, it will mark a homecoming of sorts for a company whose aggressive, expansion-hungry culture was formed by a Baltimore native.
Addison Hardcastle Reese, grandson of the owner of Washington and Baltimore's historic Ford's Theatres, turned a tiny Charlotte, N.C.-based bank into North Carolina's largest bank and the country's 26th-largest.
And when Mr. Reese died in 1973, the young, aggressive bankers he had hired accelerated his strategy of swallowing up troubled competitors, often with government assistance. NationsBank is now the country's fourth-largest bank, with 60,000 employees and 1,800 branches from Delaware to Texas.
But the company has made a few enemies along the way. In recent years, NationsBank has been criticized for clamping down on credit when it takes over a bank and for appearing reluctant to lend to minorities.
Friday, Marylanders were faced with the prospect that NationsBank might eventually dominate banking here.
In a surprise news conference, NationsBank, which has $111 billion in assets, said it would invest $200 million in MNC Financial Inc. As a part of the deal, NationsBank also acquired a five-year option to buy the recession-weary holding company whose $16 billion in assets includes Maryland National Bank.
Officers of NationsBank -- which already has branches in Maryland -- said they would not have any say in MNC's operations, and had not decided yet whether to exercise their purchase option. But officials at MNC, which has been dogged by troubled real estate loans, indicated that they expected ambitious NationsBank to take over eventually.
NationsBank's current president, Hugh L. McColl Jr., who was hired by Mr. Reese, follows in the Baltimore man's tough, innovative and aggressive style, say those who know him. And the bank reflects his personality, they say.
How tough? Mr. McColl has described his stint in the Marines during the early 1960s as his "graduate management school." He is known for his eagle-eyed cost-cutting and his intolerance for anything less than outright enthusiasm.
The bank created a minor stir early this year when it promised -- then withdrew -- a $2,000 campaign contribution to an Alabama congressman who wasn't vigorous enough in his support of a bill the bank backed.
How innovative? Mr. McColl is learning Spanish to enable him to speak to his company's new customers in Florida and Texas. And NationsBank is completing a child-care center at its Charlotte headquarters, something only about 4 percent of large employers across the country provide.
How ambitious? Mr. McColl once hung a sign on his door that read: "NCNB est imperare orbi universo." Roughly translated from the Latin, that means "NCNB will rule the world."
Mr. McColl said yesterday that he wasn't looking to expand beyond the nine states in which his company operates. But NationsBank is one of the prime backers of legislation to allow nationwide interstate banking.
In fact, NationsBank is already one of the most important financial players in the mid-Atlantic and the nation. NCNB Corp., the company that was to become NationsBank, gained footholds in Maryland when it purchased Baltimore-based CentraBank in 1987 and C&S-Sovran Corp. in 1991. After the last merger, a $4.6 billion deal that was one of the biggest bank mergers in history, NCNB changed its name to NationsBank.
Today, NationsBank is one of the prime sponsors of the 1996 summer Olympics, the sponsor of the big-name tennis tournament being held in Washington this weekend and the deep pockets behind rap star M. C. Hammer's bid to buy the Houston Rockets. It also has been behind Charlotte's efforts to win a National Football League franchise -- which Baltimore also covets.
Those familiar with NationsBank say that if it does take control of MNC, it will follow a pattern of taking advantage of other banks' troubles. Predecessor NCNB made some of its biggest leaps by buying failed or nearly failed banks -- sometimes at prices so low the government has been criticized for sweetheart deals.
For example, in 1988, NCNB bought out failed First Republic, Texas' largest bank, with the help of a huge government bailout. The Federal Deposit Insurance Corp. covered $4 billion of the failed bank's bad loans, and the Internal Revenue Service awarded the company tax breaks so NCNB could shelter $2.5 billion in earnings.
Shortly after NCNB won the auction for First Republic, the IRS -- under congressional criticism for the deal -- said it wouldn't grant similar tax breaks to other banks.
Within a year, NCNB's $1 billion-plus investment in the Texas bank was turning a $250 million-a-year profit. And the bank controlled 18 percent of Texas' banking business.
NCNB's handling of deals like First Republic won it wild praise from the investment community. But some community groups charged that the bank's lending standards were too strict -- and possibly discriminatory.