It is no secret that banking is king in Charlotte. As the second largest banking hub in the US behind New York, not only does finance dominate our local economy and our skyline but it also occupies a significant amount of Charlotte’s modern history. I chatted with local historian, Tom Hanchett and Observer reporter Rick Rothacker, author of Banktown: The Rise and Struggles of Charlotte’s Big Banks, to learn more about how Charlotte claimed its position in finance.
The story of “The Golden Rivalry” between Bank of America and Wells Fargo in the 80s and 90s does not depart from the idea that the South and Charlotte specifically are not for the faint of heart. Banking sprouted here for a number of reasons (the cotton industry, winning a branch of the Federal Reserve, etc.), but it wasn’t always a sure thing. Growing from farms to factories to industry has been a long and laborious process.
Banking grew from the cotton industry around the turn of the century when Commercial National Bank was started by a mill owner in 1874. This bank later merged with American Trust, creating NCNB, which would later become Bank of America. Similarly, Union National Bank started in 1908 by a cotton broker and would later become Wachovia, now Wells Fargo.
Our state laws allowed banks the unique luxury to operate anywhere in the state, creating an environment of intense competition within our borders.
“It’s the branch banking laws that built the three big banks in NC: First Union and NCNB in Charlotte, Wachovia in Winston-Salem,” says Charles “Skip” Klapheke, a former executive at First Union. “The laws created a great economic environment. Fighting each other all the time, you get very good at what you do.”
Although the climate for initial growth was favorable, laws dating back to the 1920s restricted banks from crossing our borders and threatened to stunt finance’s Southern growth spurt. As local bankers sought reform, NCNB bought Lake City Bank in Florida in 1982 thanks to a legal loophole.
Let me explain. Years earlier, after purchasing a small trust company in Florida without board approval, PNC in Philadelphia was forced to dump this acquisition. When approached by PNC, NCNB leaders jumped at the chance to own the Florida company. Since they were already business owners in the state of Florida, this decision set the precedent for NCNB’s later purchase of Lake City Bank, the catalyst for interstate banking in the US.
The Southeastern Regional Banking Compact and The Riegle-Neal Interstate Banking and Branching Efficiency Act in the 1980s and 1990s later paved the way for more bank mergers and the rise of big banks like Bank of America and First Union. According to Rothacker, the mentality was that “if you’re not growing, you’re dying.”
From the Lake City Bank acquisition forward, Charlotte banks followed a staggering upward trajectory. In “The Golden Rivalry,” Hugh McColl of NCNC and Ed Crutchfield of First Union competed to buy-up out-of-state financial institutions. McColl later described this period of furious acquisitions as “all-out war.” The two giants often fought for the same companies, fostering a divide between the two institutions that some argue exists to this day.
Looking for more Wells Fargo knowledge nuggets? Stop by the Wells Fargo History Museum at Three Wells Fargo Center where you’ll find a stagecoach you can climb aboard and plenty of banking history.
Bank of America also has a museum in Founders Hall.
If you are interested in learning more about Charlotte’s history in general, I suggest a trip to The Levine Museum of the New South. Not only can you find an area dedicated specifically to the significance of banking in Charlotte, but you can also educate yourself on the history of music, education and more in the Queen City.