Banking World Watches Florida As Signs Of Wachoviafirst Union Merger Appear
By Susan Stabley
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A major merger between two banking networks takes a visible effect this month, as First Union’s green signs disappear and are replaced by the new Wachovia Corp. logo.
Those in the business industries will have their eyes on Florida, the first market Wachovia, a banking and wealth management firm, will tackle during its final stage of integration, according to one expert.
"Florida is the test case," said Tony Plath, University of North Carolina associate professor of finance. "They must do it right. If I were a Florida customer, I’d just look to be treated with kid gloves for the next 18 months."
While the merger was concluded Sept. 1, 2001, the two banks continued to operate separately during the beginning stages of a three-year integration program. Florida is slated for the signage switch next week with regional deposit conversion to be executed at the end of 2002, according to Wachovia spokeswoman Mary Beth Navarro.
The change for Miami is mostly cosmetic, according to Carlos Migoya, Wachovia’s regional president for Miami-Dade and Monroe counties.
Wachovia’s name had only been on seven branches in Miami-Dade since early 2001, when the company took over Republic Savings Bank. No faces will change at the local branches, he said.
"It’s been treated as a merger of equals," Ms. Navarro said. "It’s really been a different way of doing things."
Integration has been taken slowly and in pieces. Wachovia and First Union started selling the same product line to consumers Aug. 5.
Since September, the banks have offered the same checking and savings services but maintained parallel deposit systems.
Mr. Migoya said the merger joined First Union’s strong investment banking and brokerage with Wachovia’s wealth management and treasury services.
"It’s not First Union or Wachovia but a blend of both," Mr. Migoya said.
The combined network operates in 11 states and the District of Columbia with full-service brokerage offices in 49 states and more than 30 international offices. Georgia is the next state scheduled for branch changes in the first quarter of 2003, then North and South Carolina.
At 2 p.m. Nov. 14, the Coral Gables Wachovia branch at 3001 Ponce De Leon Blvd. will shut its doors. Customers will be rerouted to the former First Union branch at 2511 Ponce De Leon and will be able to bank at that location the next morning.
A similar plan will be repeated for 26 other Wachovia branches, including those in Kendall and Miami Lakes. Only two First Union locations – in Cocoa Beach and Tampa – will be shuttered Thursday. Five other branches are under consideration for closure, and some of those branches will be in South Florida, Ms. Navarro confirmed.
The systems will be merged for the first time Nov. 15, a Friday night, Mr. Migoya said.
"We have the weekend to work on the fail-safe," he said. "Beyond that, we will have conference calls every day to make sure everything is done correctly."
Customers began receiving letters in August describing the changes, with about 7 million pieces of direct mail being sent in the past 14 months, Ms. Navarro said. Heavy advertising of the new name in English and Spanish for South Florida clients will roll out Nov. 18. Wachovia will also kick off its new logo through sponsorships at a pair of football games – Dec. 7 between the Miami Hurricanes and Virginia Tech and a Monday night game Dec. 9 between the Miami Dolphins and the Chicago Bears.
Ms. Navarro said decisions on which branches should be closed were based on efficiency. Factors included traffic, volume of transactions and proximity between branches. A survey was made of each site by gathering data including how many customers each drive-through could accommodate and the amount of parking available at each location.
"We really tried too look at it from the customer’s shoes," she said: "which (branch) is more convenient, which is easier to get out of, what’s the best way to operate."
Closing branches that were originally Wachovia and keeping open former First Union locations was the general trend across Florida, though Ms. Navarro said it wasn’t necessarily "a given. "It just worked out that way."
In some cases, the branch needed extensive renovation, like the Miami Lakes First Union location, which will get an added drive-thru lane and teller workstation.
Throughout the company, 250 to 300 branches will be eliminated. Wachovia has an agreement with American Financial Realty Trust to buy or assume the lease of most closed offices on the East Coast.
Ms. Navarro noted that there was "no pressure to cut out a ton of cost very quickly." That translates into "no major layoff" of Florida workers, about 11,000 employees statewide. Displaced employees will be reassigned through a placement process, she said. Some will be lost through "natural turnover."
"South Florida doesn’t have a large back office," Ms. Navarro said. "Most are front-line employees, people in branches who work with people."
While local workers may have been spared, 7,000 jobs were eliminated company-wide, with North Carolina, especially Wachovia’s former hometown Winston-Salem, hardest hit. Combined, Wachovia has more than 80,0000 employees.
During the merger negotiations in 2001, it was decided that the name of the smaller bank – Wachovia – would be taken and the headquarters be based in Charlotte, First Union’s home city.
The name Wachovia is a Latin form of the German word Wachau, a name given to an area of land in North Carolina by Moravian colonists in 1673, according to the First Union Web site. The tract, in the Piedmont region, was reminiscent of valley along the Danube River that bore the same name.
Generally, the Wachovia name "travels well," said Mr. Plath. Before the merger, the company had a good reputation for customer service. The biggest problems, he said, will be north of the Mason-Dixon line, where the bank is more likely to sound "like a sub sandwich."
Still, he said, Wachovia’s name is unique and will stand out better than the "thousands of First National banks across the US."
The name change was also a way to rid First Union of its tarnished image, one that’s gotten a polish over the last 18 months, Mr. Plath said, with current management repairing the acerbic relationship with the press, the adversarial attitude it carried with financial analysts and an improvement of customer service.
"Ironically, as soon as they got rid of the bad image, they got rid of the brand name," Mr. Plath said.
During a hostile takeover attempt of Wachovia, SunTrust claimed that First Union would be unable to handle a smooth integration of the two banks. Mr. Plath argues that First Union has proven otherwise.
"SunTrust was dead wrong," Mr. Plath said. "They do what they say. The market tends to appreciate that."
About 200 employees worked on the integration project, Ms. Navarro said. The targeted number for total integration expenses is $1.5 billion, but Wachovia expects to recover that amount in expense efficiencies. Expected for 2002 is a savings of $490 million. That number should increase to $890 million by 2004, when the merger should be completed.
"I’ve seen the ‘to-do’ list," Mr. Plath said. "It’s been like clockwork for them. They’ve done what they said they would do."
Three vendors are being used to physically change about 22,000 signs across Florida.. That includes everything from parking plaques to stadium signage on 650 branches, and more than 800 automatic teller machines will be emblazoned with the new logo, an "abstract brand mark" incorporating the green colors of First Union woven in a pattern with the Wachovia blue.
And don’t forget the First Union Financial Center in downtown Miami.
Property Manager Tim Keable said the 55-story building at 200 S Biscayne Blvd., the tallest functioning tower in Miami, would be called Wachovia Financial Center and all logo changes should be completed by the end of November by Thomas Signs.