Thoughts & Comments
Wachovia: Rattling The Cup In Philly
The company is paying up for CDs. What's the deal with its L.A. plans?

Vernon Hill  ( about me )
Posted 08/25/2008
bankstocks.com
vhill@bankstocks.com

Someone please explain to me the wisdom of Wachovia’s decision to open it first full-service branch in Los Angeles. It’s not as if the company has perfected the art of running branches in markets where it’s already tried to establish itself. If you want to spend a few moments of quiet solitude in New York, for instance, all you have to do is walk into just about any Wachovia branch there. The company’s Manhattan locations are well-designed, sparklingly new—and almost all bereft of customers.

In Philadelphia, meanwhile, supposedly one of the company’s strongest markets Wachovia is lately advertising five-year CD yields of a whopping 5.85%. For reference, Bankrate.com says the average five-year CD in Philly yields just 3.63%.

Does Wachovia funding problem we don’t know about? Companies that routinely top customer satisfaction surveys aren’t supposed to have to pay up for deposits. But Wachovia’s value proposition was never as compelling as its high survey numbers implied. Now that the company is bleeding capital and is scrambling to fix the mortgage mess it created for itself, it’s having to scramble for funding any way it can find it. Bob Steel has his work cut out for him.

What do you think? Let me know!


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jamesa40 Posted On 8/26/2008 1:08:24 PM

What's cheaper? 5.85% CDs or paying 400-500 bps over the ten year treasury (currently at 3.79%). CDs get you short-term funding that WB is hoping will allow them to avoid taking on the long-term debt until their credit crisis has passed.

mopedman Posted On 8/27/2008 12:39:33 AM

I read where WaMu was paying rates above 24% for bonds due in January so it makes a lot of sense comparitively. As far as not doing business with banks in trouble there's no problem if you keep it under FDIC limits. My son was with Netbank when it went down. It went down for the weekend then came back as Ing. People are nuts if they stand in line for this or don't send it out to the best rates...as long as it's under the limit.

mopedman Posted On 8/27/2008 12:42:00 AM

PS..I wouldn't even stand in line if I were over FDIC limits..I'd go find an altar instead.

Vegasjoe57 Posted On 8/29/2008 4:17:33 PM

Wachovia just sold 39 retail branches this week to a REIT on a triple net lease back. They are doing everything they can to live another day. What's next? Selling off Wachovia Securities? Or, Wells Fargo or JP Morgan getting a government assisted loan to take them out? In this new world of DC socialism, it is not easy to figure out.

Drshapr Posted On 3/3/2009 10:09:45 AM

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