When I was a young business person four major banks were headquartered in Birmingham: First National Bank, Birmingham Trust National Bank, Exchange Security Bank, and Central Bank. These banks eventually morphed into AmSouth, SouthTrust, Regions, and Compass.
Birmingham was a banking powerhouse—and a great source of pride.
Then poof!
Compass was bought by BBA and became BBVA Compass, SouthTrust ultimately became Wells Fargo, and AmSouth and Regions merged into Regions Financial.
Suddenly our four locally headquartered banks became one– Regions–the only Fortune 500 Company based in Alabama.
Regions is critical to Birmingham
If Birmingham had a right hand—it would be Regions Financial.
From Regions Field where our Barons play baseball to the Regions Tradition Golf Tournament, Regions’ fingerprints are all over Birmingham.
Regions is often the major contributor to our nonprofits and most every nonprofit board includes one or more Region employees.
A prominent UAB professor recently told me he that his family would not have been able to move to Birmingham if his wife hadn’t found employment at Regions. Many trailing spouses of UAB doctors, professors, and professionals depend on Regions to provide high level employment.
According to Al.com, Regions had a $7.6 billion impact on the Alabama economy last year–$4.1 in Jefferson and Shelby counties alone. “Regions accounts for nearly $2.2 billion in direct expenditures in payroll and non-payroll expenses, and $1.9 billion in indirect or induced spending.”
More than 36% of Regions employees live in Birmingham metro creating 17,643 jobs, with 5,927 direct employees and 11,716 indirect or induced jobs.
Regions $800 million payroll and benefits average 46% higher than the average Alabama worker and the bank has lent more than $3.3 billion to Alabama consumers and businesses.
Regions’ future
I have been repeatedly warned by banking professionals that sooner or later Regions will be acquired or merged—maybe not this year or the next—but one day.
Banking mergers and acquisitions ebb and flow—but merger/acquisition activities are currently on the rise.
Last year our locally headquartered National Commerce Corporation (National Bank of Commerce) announced it was being acquired by Winter Haven, Florida-based CenterState Bank Corp.
Then BB&T and Sun Trust announced a merger and you’ll soon see BB&T signs and logos updated with a new name—Truist.
The loss of Regions to Birmingham would likely wound our community. Many mid-level jobs would likely remain, but the top executive positions would be eliminated—and local professional firms that support Regions would be impacted.
How we can avoid this economic apocalypse
We can’t stop bank mergers, but we can develop options.
We used to have 30 public companies headquartered in Birmingham. We now have only nine.
Recruiting new public companies likely will not be our salvation.
Our best option is to invest and support small business and startups.
Four years ago I visited Bill Smith, the founder of Shipt, in his newly acquired office in the old AmSouth John Hand building at 1st Avenue and 20th Street North downtown.
I met with Bill to ask him to consider joining a small business owners’ support group which I facilitate. I had reservations about offering the invitation because when I looked around the huge mostly empty floor of the building, I only saw a few scattered employees. Our business owners’ group requires a minimum of 30 employees for membership and Bill told me he had only 15 or 20. But he assured me Shipt was growing.
I was unable to recruit Bill and he’s done just fine. He sold Shipt in 2017 for $550 million.
This year Shipt announced it plans to become the anchor tenant of the city’s tallest building—The Wells Fargo Tower—soon to be called the Shipt Tower. Shipt will continue to house its headquarters at the John Hand Building, where the company says it will remain in Birmingham and add 881 jobs.
The real irony is that Shipt got its start in an old AmSouth bank building and now is expanding into what was the SouthTrust headquarters—two of Birmingham’s historically largest banks.
There are dozens of other potential Shipt-like startups currently being birthed in our region.
Our economic success will be defined by growing baby companies, investing in them; supporting them, and then watching them blossom into economic giants.
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David Sher is Co-Founder of AmSher Compassionate Collections. He’s past Chairman of the Birmingham Regional Chamber of Commerce (BBA), Operation New Birmingham (REV Birmingham), and the City Action Partnership (CAP).
Invite David to speak for free to your group about how we can have a more prosperous metro Birmingham. dsher@amsher.com.
David, are you really that old? Exchange security goes back to 1976. Were you really around back then?
A merger or purchase of large banks no longer makes business sense as the Amsouth Regions didn’t either. It was truly a lake of business acumen that cost the company millions in equity. A huge amount of hubris on the part of the most hated man in mountain brook for years. Luckily other quality leadership prevailed after the Ritterman retired even though he milked regions for every cent he could.
The economy of scale don’t make business sense. Banks cannot merge their way to profitability anymore,
Patti, yes I was around then. Shows how old I am. I hate these mergers and acquisitions, but they are continuing to happen whether they make sense or not.
I think you mean BBVA, not BBA.
Patrick, good catch! Thanks! (corrected)
David, this is my first time to leave a comment but I am a regular reader. Could not agree more with your premise and sobering challenge for the Birmingham community. Working daily to scale one of those hopefully local startups. Keep the encouragement coming!
I spoke to someone in the legal department of a similar bank as Regions and she told me that she would not be surprised to see Regions scooped up and moved whether through a merger or acquisition. The truth is, there’s not much reason to keep it in Birmingham if that happens. It would definitely drop Birmingham down a tier or two when comparing it to other metro areas and it would damage incentives for prospective companies to move here.
Would Birmingham survive? Heck yeah, but it would have to focus on being a great smaller city.
“Our economic success will be defined by growing baby companies…..”
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David, you fight the good fight and I admire you for that, but respectfully you are wrong. Birmingham’s economic success will be defined by the actions of Alabama’s legislature.
It is not possible for Greater Birmingham to flourish (on a national scale) while Alabama legislature is intent on implementing draconian laws onto women. Newsflash…..it’s 2019, women and their interest matter and are essential for regional economic growth.
Women comprise 51 percent of Alabama’s population, they make up just 15 percent of the legislature – among the worst gender ratios in the country, according to the National Conference of State Legislatures. Dismiss and ignore this stat at your own peril – there is a nexus with respect to this stat and Birmingham regional economic growth.
The uncomfortable truth is Alabama’s culture is an impediment on the drivers of start-up culture and that attract start-up culture along with attracting young bright talent . I’m not saying it’s non-existent, I am saying examples are the exception and not the rule, and have no chance of being a harbinger mindful of Alabama culture.
Again, it’s 2019 and you see this, the fact that it’s the year 2019 reflected in the legislatures of many States. If Maine and Michigan decriminalized marijuana, why can’t Alabama? The answer is because in Alabama, where it’s 1958 or so, culturally. This is exactly the way most White people in Alabama want it to stay. Need I remind you less than 2 years ago 68% of White people who voted in Alabama voted for Roy Moore, need I say anymore?
That’s the humorous thing about this site and talk of the alleged problems stunting economic in the region. I see lots of finger pointing in lots of directions, but few fingers pointing at ‘self’ and Alabama culture. It’s a bitter pill to swallow but Alabama culture is just not attractive in 2019, and hasn’t been for a while, as is evident by the economic malaise of the Birmingham region.
Birmingham’s economic prosperity (on a national scale) is in the hands and actions of Alabama’s legislature – and all other finger pointing is futile.
This article is about Regions and what might happen if/when they leave.
It would take an AWFUL LOT, way more than is in the pipeline of new start-up businesses to negate or replace the effect of Regions on the city.
The solution is simple. It is for the owners or Regions Bank to ever sell out.
The solution is for the owners of Regions Bank to refuse to ever sell out.
Solution is to never sell out? Their allegiance is to shareholders, not a city and not employees. Increasing shareholder value is the only thing that matters and rightfully so because the company is owned by it’s shareholders, not the citizens of the city.
Also, don’t expect the leaders to turn a blind eye to millions of dollar incentives to sell out. Most of the leaders do not have Birmingham ties or allegiance. They didn’t grow up here so they don’t really care.
You are overlooking SouthPoint and ServisFirst who are both Birmingham Banks. Also you are missing the other banks who may not be based here but still employ thousands of bankers in the Birmingham area. If Regions get purchased, Birmingham will survive.
Jennifer, thank you so much for your comments. I’m a big fan of Steve Smith at SouthPoint and Tom Broughhton at Service First. They are both good examples of local start-up companies who are producing jobs and prosperity for our region. Please keep in mind, however, that SouthPoint has $3,091 million in assets; ServiceFirst $7.08 billion in assets; and Regions 126 billion in assets. SouthPoint & ServiceFirst are tiny in comparison. We mostly have out of state banks who control banking in Birmingham. They don’t need legal departments, marketing departments,etc. because they are headquartered in other states. Remember when the SouthTrust Tower was filled with SouthTrust employees? Now the building is being taken over by Shipt because the Wells Fargo employees are mostly gone. I have a friend who is a state bank president for a large out of state bank. He told he that he lucky to hire two MBA graduates a year because the top graduates go to bank headquarters in other cities. Birmingham will survive, but if and when it happens, this will be a huge loss for our region