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Caleb Cox
Caleb Cox

Amsouth*banks


AmSouth Bancorporation is one of the largest bank holding companies in the southern United States. AmSouth is based in Alabama and is primarily active in that state and Florida, but it also operates some of its more than 300 banking offices in Tennessee and Georgia. AmSouth continued to grow rapidly going into the mid-1990s by acquiring other banks.




amsouth*banks


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AmSouth Bancorporation was incorporated in 1972 to take advantage of new state and federal laws related to the banking industry. Indeed, during the early 1970s Alabama began to deregulate its banking sector, making it easier for holding companies to merge with or acquire other banks. Similarly, during the mid-1960s and early 1970s, Congress had eliminated several federal banking industry restrictions and created a variety of favorable tax incentives for specific banking activities. By moving to a holding company format, companies like the newly formed AmSouth Bancorporation were able to take advantage of deregulation and to participate in a number of non-banking-related financial markets.


Because of regulatory changes, several holding companies were formed in Alabama during the 1970s. The owners and managers of most of those holding companies hoped to establish regional or state-wide dominance by adding new banks to their portfolios. Specifically, many of them hoped to improve the performance of the institutions that they acquired and also benefit from various economies of scale. AmSouth Bancorporation, like other holding companies formed at the time, was structured as a corporation with its founding bank (Birmingham-based AmSouth) as its major subsidiary. Throughout the 1970s, AmSouth engaged in an aggressive growth and acquisition campaign that would make it the largest bank in Alabama by the end of the decade.


Although AmSouth also ventured into Tennessee in the late 1980s and considered other investment opportunities in Florida and Georgia, the company slowed its growth plans and focused on weathering a severe banking industry downturn. Indeed, in the late 1980s, the U.S. banking industry was trounced by the collapse of real estate and construction markets, as well as general U.S. economic malaise. As the number of nonperforming bank loans soared, many banks and thrifts were forced into bankruptcy. Although AmSouth was pressured, its tradition of sound management and making high quality loans paid off, allowing it to sustain meager profit growth during the late 1980s and early 1990s.


Although AmSouth also ventured into Tennessee in the late 1980s and considered other investment opportunities in Florida and Georgia, the company slowed its growth plans and focused on weathering a severe banking industry downturn. Indeed, in the late 1980s, the U.S. banking industry was trounced by the collapse of real estate and construction markets, as well as a general economic malaise in the United States during that time. As the number of nonperforming bank loans soared, many banks and thrifts were forced into bankruptcy. Although AmSouth was pressured, its tradition of sound management and making high quality loans paid off, allowing it to sustain meager profit growth during the late 1980s and early 1990s.


The man chosen to direct AmSouth's rampant expansion during the 1970s, and into the 1990s, was John W. Woods. Woods was born in 1931 into a military family, and in the 1950s he tried to join the Marines but was rejected because he was color blind. He did, however, pass the entrance test for the Air Force, where he served as a pilot for two years. Woods credited his military experience with giving him the confidence and personal strength that later helped him to build one of the most successful banks in the United States. "There are tough moments in everybody's career," Woods related in the November 13, 1991 American Banker, "and every time there's been a tough moment, I think about that Air Force training and think, by golly, I can whip this, too."


Immediately after leaving the service, Woods accepted an entry level position at New York-based Chemical Bank, where he had a successful career and eventually earned the title of vice-president in charge of Chemical's southern division. Woods spent several years traveling to banks throughout the Southeast, selling correspondent banking and loan syndication services. AmSouth hired Woods away from Chemical in 1969, and although he had only 12 years in the banking industry, he was named president of AmSouth's lead Birmingham bank. Three years later Woods was chosen to lead the newly formed holding company, AmSouth Bancorporation.


Under Woods's direction, AmSouth expanded rapidly during the 1970s and early 1980s by purchasing competitors and integrating their assets and branches into the AmSouth banking chain. By the early 1980s, AmSouth had become the largest banking chain in Alabama with nearly 20 percent of all state bank deposits. Besides simply increasing AmSouth's asset base, Woods and his fellow executives achieved success by improving the financial performance of their acquisitions. Not only did the banks that they purchased benefit from improved management, they profited from having AmSouth's well-known and respected name attached to their branches. In fact, an integral aspect of Woods strategy was to focus on expanding into areas where the AmSouth name was already established. Finally, the bought-out banks enjoyed access to a larger base of lending capital, as well as centralized, efficient administrative operations.


As AmSouth continued to purchase Alabama banks and to increase its existing operations, the holding company flourished. Although Woods was at the helm of the swelling operation, the company's success was also attributable to savvy AmSouth executives like William L. Marks. Marks joined AmSouth's acquisition and turn-around team in 1977. The 33-year-old Marks was hired away from Wachovia Bank and Trust Co. and named president of AmSouth's new American National Bank subsidiary. Similar to other AmSouth acquisitions, the bank suffered from a troubled loan portfolio, poor marketing strategy, and generally weak management. But it had a lot of potential.


Marks went to work revitalizing the bank and integrating it into the AmSouth empire. Within three years, the subsidiary made more money than it had in its entire 16-year history. "We decided what needed to be done and turned it around," recalled Marks in the March 12, 1990 New Orleans City Business. During the next 13 years, Marks would be moved around to several other new AmSouth banks. He consistently boosted productivity and profits at his posts, and, like his fellow regional managers, contributed significantly to the holding company's success. Marks was hired away in the early 1990s by Whitney National Bank, a struggling New Orleans institution. Interestingly, the 107-year-old Whitney had hired its first out-of-state chief executive from AmSouth Bancorporation's predecessor in 1930.


AmSouth's growth during the early 1990s was representative of a dynamic trend of consolidation within the U.S. banking industry that had been occurring since interstate banking began in the 1980s. Indeed, as smaller banks continued to face greater competitive pressures from less-regulated, non-bank financial institutions, the percentage of U.S. assets held by commercial banks had dropped from about 37 percent in the late 1970s to 25 percent by the early 1990s. To combat competitive threats, banks began merging to achieve economies of scale. The number of independent banking entities in the United States plunged from about 13,000 in 1983 to less than 10,000 by 1990. Meanwhile, the number of multi-bank holding companies grew from about 300 to around 1,000. Augmenting the consolidation trend was the fact that computers and electronic banking devices were increasingly making it easier for banks to operate across broad regions.


As a result of its acquisition activity, AmSouth's assets and income surged in 1993 to a $12.5 billion and $147 million, respectively. Furthermore, it was acquiring new banks and expanding existing subsidiaries at a rapid pace. Importantly, in 1993, AmSouth announced an agreement to purchase Fortune Bancorp. of Clearwater Florida. With 46 offices, Fortune was a major-league financial institution and gave AmSouth a commanding presence in central Florida.


The FDIC publishes regular updates on news and activities. Keep up with FDIC announcements, read speeches and testimony on the latest banking issues, learn about policy changes for banks, and get the details on upcoming conferences and events. 041b061a72


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