How Charlotte, North Carolina, became the banking hub of the American south

Wall Street of the South?
Wall Street of the South?
Image: AP Photo/Chuck Burton
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The US’s sixth-largest bank will have its headquarters in a city unknown to many non-Americans.

The new bank, formed by BB&T’s $28 billion acquisition (paywall) of SunTrust, will not be located in Chicago, or San Francisco; not New York, nor Los Angeles. Instead, according to today’s press release (Feb. 7), its new headquarters will be Charlotte, North Carolina—a city with a population of around 850,000 people and home to world-class barbecue, Nascar racing, and the turquoise-and-purple NBA team, the Charlotte Hornets.

Yet it’s not an unlikely choice at all. Despite being the US’s 17th largest city, Charlotte is the country’s second-largest banking center by assets held, trailing only New York, and with San Francisco hot on its heels. Along with the new, yet-to-be-named bank, the former gold rush town is also home to Bank of America—the nation’s second biggest bank—as well as NewDominion Bank and Carolina Premier Bank.  (BB&T, founded in 1872, was headquartered in Winston-Salem, North Carolina. SunTrust is based in Atlanta).

The explanation, as the Charlotte Business Journal reports, comes down to a “combination of friendly regulations and hard-charging CEOs who wanted to be No. 1,” which together “helped build a city that proudly claims to be No. 2.”

As late as the 1970s, many US states had heavy regulations that made interstate banking—or even having more than one branch within a state—challenging. But in North Carolina, the rules were far more permissive, which made it easier for farmers or other rural folk to get credit where they needed it, and for local banks to thrive. Branches of North Carolina National Bank (NCNB), First Union National Bank, and Branch Banking & Trust (now BB&T), among others, popped up across the state like spotted mushrooms throughout the early 20th century, with branches in towns such as Winston-Salem, Charlotte, and their smaller neighbors.

But though the south prospered, deepening the pockets of Charlotte bankers in the process, its banks were not in the same league as the big-hitters of Wall Street—Chase Manhattan, JP Morgan, and their ilk. By the end of the 1970s, North Carolina’s largest bank was only the country’s 26th biggest, with less than $8 billion in assets, and southern bankers grew weary of being the poor cousin to their northern counterparts. 

In the early 1980s, Tom Storrs, then the swashbuckling CEO of NCNB, put a legal loophole to the test by buying a number of bank branches in Florida. Federal courts upheld his action, leading North Carolina to lift their regulations on interstate banking in 1981.

The arms race had begun: Charlotte’s banks started buying up smaller banks across the country, swelling from local financial institutions to national-level mega-banks, with the mega-bucks to match. NCNB would eventually acquire more than 50 banks across 15 states, with total assets of $285 billion. In 1998, it acquired San Francisco’s BankAmerica to become Bank of America—with its headquarters in Charlotte. Charlotte-based First Union became Wachovia; in 2008, after a government-forced sale, it was absorbed by Wells Fargo, which still has its investment banking division in the city.

Charlotte’s number two ranking as a banking center isn’t a sure thing: In 2017, an analysis by S&P Global Market Intelligence revealed that it had fallen—just!—behind San Francisco into third. In 2018, it pushed back into the second spot. This new merger may make that position a little easier to hold, as well as offering a new afternoon daydream for winter-weary Wall Street bankers considering a shift to the south.