Wachovia Bank of South Carolina, N.A. History

Company History:

Wachovia Bank of South Carolina, N.A. is one of the three banks that constitute Wachovia Corporation, along with Wachovia Bank of North Carolina and Wachovia Bank of Georgia. Each of these three banks has a distinguished history, but the South Carolina Bank subsidiary's heritage goes back the furthest. Wachovia Bank of South Carolina has been at the forefront of the state's financial community since its inception, and offers customers the entire range of financial services, including conveniently located automated teller machines (ATMs), mortgage services, real estate advice, and insurance programs to fit every need.

Early History

Wachovia Bank of South Carolina was chartered by the state as the Bank of Charleston in 1834, but its roots go back to the very beginning of banking in the United States. Following the ratification of the U.S. Constitution in 1789, the newly established First United States Bank opened a branch in Charleston in 1792. When the charter for the First United States Bank lapsed in 1811, the Second Bank of the United States was chartered in 1816. Yet there was intense disagreement among those people in the new capitol of Washington, D.C., over the issue of whether state chartered banks were preferable to national banks. This disagreement finally resulted in a veto of the bill to recharter the federal bank in 1832. Consequently, the branch office of the Second United States Bank in Charleston was forced to close, and the city was left without any financial institution.

Realizing that their city was in need of a bank, and determined to maintain control of its operations, the city fathers convinced the South Carolina state legislature to charter the Bank of Charleston on December 17, 1834. Located in the same office as the national bank, and operating with almost the same staff, the Bank of Charleston was capitalized at $2 million and reported its first dividend only six months after it had opened for business. During the 1830s and 1840s, the bank was involved in highly successful domestic and international currency exchange. One of the methods that the bank used to increase its profitability was to issue and circulate its own notes. By exchanging its own bank notes for drafts on banks located in the North, and subsequently "discounting" that commercial paper, the Bank of Charleston reaped large profits. By 1845, the bank had also established an agency network that extended the length of the eastern seaboard and into some western states. The bank had initiated and established close working relations with 123 banks and agencies in states such as Georgia, Florida, Louisiana, and Kentucky to help the wholesale merchants in Charleston fill the orders of store owners in such budding American towns as Apalachicola, Florida, and Macon, Georgia.

The Civil War and Reconstruction

The Bank of Charleston had over $6 million in assets at the start of the Civil War in 1861, reported profits of $275,000, and had paid semi-annual dividends for 25 consecutive years. At the forefront in asserting the issue of states' rights against the U.S. Federal Government, South Carolina was one of the leaders in forming the Confederacy and seceding from the Union. In late 1860, the Bank of Charleston loaned the state legislature $100,000 to carry out the beginning of its secession policy. In early 1861, the bank made loans and donations to help supply and equip the Beauregard Light Infantry and the Charleston Riflemen. Just before the fall of Fort Sumter, situated in the city's thriving international harbor, the Bank of Charleston provided a $200,000 loan to the Confederate Treasury.

In 1862, under the threat of advancing Union troops, the bank was forced to relocate all its records and currency to Columbia, South Carolina, the state's capitol. In 1863, the bank donated its old ledgers to be made into cartridge paper by the Charleston Arsenal. A short time later, the bank donated $2,000 in silver coins, a valuable currency in the Confederacy during the Civil War, to make silver nitrate, a chemical used as an antiseptic to treat wounded soldiers.

Robert E. Lee, the general in charge of the Confederate forces fighting the Union Army, was unable to stave off defeat. Charleston harbor had been isolated due to a successful Union blockade, and business had all but come to a standstill. When Sherman marched through Georgia and South Carolina, cutting the Confederacy in two with a large Union Army, the days of secession were all but numbered. As the Union Army advanced on Columbia, the Bank of Charleston transferred its records and assets to Greenville, South Carolina, for the remainder of the war. When the war formally ended with Lee's surrender to General Grant, head of all the Union forces, at Appomattox, Virginia, the south was in ruins. The Bank of Charleston, with almost all of its assets, notes, and securities in worthless Confederate currency, found itself insolvent.

The only antebellum bank in South Carolina to survive the Civil War and the difficult years of the Reconstruction, the Bank of Charleston relocated from Greenville back to Charleston and opened its doors for business in 1872. Under new federal laws, the bank was converted into a national bank. During this time, the officers of the bank worked hard to reduce the bank's liabilities incurred before the war, and re-establish its reputation and credibility. By the end of 1880, the bank was able to declare a divided of three cents on all outstanding shares. As the 19th century drew to a close, the revival of economic activity in Charleston, due largely to the resurgence of the city's harbor facilities and the growth of the phosphate industry, directly affected the financial welfare of the Bank of Charleston.

The 20th Century

By the summer of 1905, the Bank of Charleston had fully recovered and reported assets of approximately $3 million. Yet the bank's growth was severely limited due to the restrictions on national banks. Nationally chartered banks were not allowed to engage in branch banking, so the Bank of Charleston could not expand its services to customers other than at its central office on the corner of Broad and State Streets. At the same time, however, state banks which were not restricted by the legislation expanded throughout the state of South Carolina.

The Bank of Charleston joined the Federal Reserve System in 1914, and profited by borrowing money from the federal reserve district office located in Richmond. Able to establish branch offices under new federal legislation, the bank expanded quickly around Charleston and throughout the state. With America's entry into the First World War in 1917, the Bank of Charleston sold Liberty Bonds to support the country's war effort. The rapid expansion of the nearby United States Navy Yard, which built warships for the Navy and poured $15 million into improving dock facilities, prompted management at the bank to establish the Charleston Trust Company, a state-chartered bank which conducted business almost exclusively with the U.S. Navy and the shipbuilding companies surrounding North Charleston.

During the 1920s, the Bank of Charleston prospered. In one of management's most important decisions involving the future of the bank, the Bank of Charleston consolidated its operations with two other banks, the Carolina National Bank and the Norwood National Bank, in order to form the brand-new South Carolina National Bank. Carolina National Bank, created in 1868, and Norwood National Bank, founded in 1907, were financial institutions located in rural areas of the state. The merger involved a unique diversification: the demand for loans in rural areas served by Carolina National and Norwood National occurred at opposite seasonal times as the demand for loans in the city of Charleston. Thus the creation of South Carolina National Bank would benefit from both urban and rural customers seeking loans. Finalized in 1926, the merger resulted in a bank with resources over $25 million, making South Carolina National Bank the largest in the state.

The Great Depression and World War II

After the stock market crash in the fall of 1929, many banks could not meet their customers' demands to redeem deposits. In 1933, as the financial situation worsened across the country, newly elected president Franklin D. Roosevelt sought to protect banks from bankruptcy and restore credibility to the U.S. banking system by declaring a Bank Holiday. Roosevelt also asked Congress to pass the Emergency Banking Act, which described the conditions under which banks could reopen for business.

The decline in deposits prevented South Carolina National Bank from reopening on an unrestricted basis. When the bank was finally allowed to reopen for business under the Emergency Banking Act, a reorganization of the nationally chartered bank was necessary, along with constant supervision by federal bank examiners. Slowly but certainly, South Carolina National Bank restored its credibility, and gained public confidence with its conservative yet stable financing policy through the remainder of the decade. One of the bank's most impressive efforts involved the use of a plane to assure adequate amounts of currency at all its branch locations across South Carolina.

When World War II began and America entered the global conflict at the end of 1941, South Carolina National Bank again sold War Bonds to support the country's military effort. During the same time, the bank reaped more business through increased activity at the North Charleston Navy Yard. The bank opened a new branch located at Camp Jackson near the Navy Yard, and by the end of 1943 had transacted millions of dollars of business with companies involved in the varied activities of supplying war materials to the United States Navy. At the end of the war in 1945, South Carolina National Bank had established itself as one of the most successful banks in the southeastern part of the nation.

Postwar Prosperity

In 1951, the bank instituted its first drive-in teller window in the back of the Broad Street location in Charleston, initiated an installment loan policy for the purchase of automobiles, and provided customers with long-term credit services by implementing a Sure Credit Plan which gave an approved line of credit for an individual's personal use. As the bank grew in assets during the 1950s, its loan portfolio shifted from the agricultural to the industrial sector.

In 1957, South Carolina National Bank merged with the First National Bank of Greenville. This merger expanded the presence of South Carolina National in many smaller towns within the state, and brought the number of bank offices to a total of 33 in 20 towns and cities across the state. During the same year, the bank installed up-to-date automated bookkeeping equipment, and many other technological innovations during the rest of the decade that would forever change the nature of the banking industry.

During the 1960s, South Carolina National Bank experienced its most profitable period to date. By 1962, consumer lending was one of the fastest growing segments of earnings within the bank, and auto loans became an increasingly important factor in its profitability. By the end of 1964, through numerous mergers and branch openings, the total number of offices reached 64. In 1967, the bank organized an international division to deal with the growing commerce in international trade brought into the state through the harbor in Charleston. In 1968, South Carolina National Bank reached an agreement with BankAmericard to become one of its licensees, and a BankAmericard Center was established at the office in Columbia, South Carolina.

Transition and Expansion in the 1970s and 1980s

In 1971, management at the bank decided to centralize its operations and formed a holding company, South Carolina National Corporation. One year later, the company acquired Provident Financial Corporation, a large and highly successful firm which owned numerous finance companies spread across Virginia, South Carolina, and North Carolina. Management at South Carolina National Corporation reorganized these companies into five subsidiaries, including SCNC Advisory Corporation, SCN Services Corporation, SCN Leasing Corporation, August Kohn and Company, and SCNC's mortgage lending subsidiary. The bank also made a commitment to improving its customer services by purchasing 11 automated teller machines, which were soon integrated into the TouchMatic system, providing around the clock access to customer account information and readily available cash.

During 1983, South Carolina National Corporation moved its corporate offices from Charleston to the Palmetto Center, a modern office complex located in Columbia. One year later, the bank made two of its most important acquisitions: First National Bank of South Carolina and First Bankshares Corporation of South Carolina. These two acquisitions significantly increased the assets of South Carolina National, and resulted in an even greater influence within the financial community of the Southeast. By the mid-1980s, South Carolina National Corporation operated more than 160 branch offices in the state, and more than 100 TouchMatic automatic teller machines. By joining Relay and CIRRUS a few years later, the bank was able to offer its customers access to quick cash and account information at over 5,000 automated teller machines across the United States.

The 1990s and Beyond

In order to consolidate its holdings, expand its presence in new markets, and enhance its standards of customer service, management at South Carolina National Corporation decided to merge with Wachovia Corporation of North Carolina. With over $7 billion in assets and a network of 164 offices spread throughout the state, South Carolina National became a wholly owned subsidiary of Wachovia Corporation on December 6, 1991. In May of 1994, the bank assumed the name Wachovia Bank of South Carolina, N.A., and adopted the distinctive blue Wachovia logo for all its operating offices.

The merger of South Carolina National Bank with Wachovia Corporation, along with the additional merger of First Atlanta National Bank in 1993, resulted in combined assets of approximately $36 billion by the end of fiscal 1994. With offices in New York City, Chicago, London, and Tokyo, Wachovia Bank of South Carolina has become part of one of the largest and most respected financial institutions not only in the Southeast but in the world.

Principal Subsidiaries: Wachovia Insurance Services of South Carolina, Inc.: First National Properties, Inc.: South Carolina OREO, Inc.

Further Reading:

• Dillon, Edward, "A Better Gauge of Merger Success: Looking at Net Operating Expenses," American Banker, December 8, 1993, p. 4.
• Fickenscher, Lisa, "Wachovia Says It May Attract $1 Billion in Card Balance Transfers This Year," American Banker, May 11, 1994, p. 16.
  A History of Banking and Wachovia, Winston-Salem, N.C.: Wachovia Corporation, 1994.
• Lindley, James, The South Carolina National Bank, New York: Newcomen Society, 1985.
• Marjanovic, Steven, "Major Investments Expected in New-Product Development," American Banker, September 21, 1994, p. 12.
• Seiberg, Jaret, "Fed Allows Bank Holding Companies to Link Units' Services for Pricing," American Banker, July 28, 1994, p. 2.
• Smith, Franklin, "Wachovia Bank S.C. President Is Now Chief Executive Too," American Banker, August 25, 1995, p. 5.
• "South Carolina Bank to Use Check Imaging," American Banker, July 6, 1993, p. A16.
• "Three Regional Execs Named for Wachovia South Carolina Bank," American Banker, August 4, 1995, p. 5.

Source: International Directory of Company Histories, Vol. 16. St. James Press, 1997.

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