Wachovia in the wings
Wachovia Corp., a financial powerhouse east of the Mississippi River, is launching a major campaign to capture market share in California, lured like so many other banks by the state’s huge population and growing economy.
The Charlotte, N.C.-based bank isn’t exactly a stranger here. In recent years, it has purchased institutional brokerage Metropolitan West Securities in Brentwood, Irvine-based auto lender Westcorp and San Diego’s AmNet Mortgage Inc.
But with its latest acquisition -- Oakland’s Golden West Financial Corp., the parent of World Savings -- Wachovia plans to reveal its full face to Californians.
Beginning next year, Wachovia will convert World Savings offices into Wachovia Bank branches. The aim will be to create what Chief Executive G. Kennedy “Ken” Thompson likes to call a “universal bank,” with products for every personal and business financial need.
The strategy will put it head-to-head in the state with Bank of America Corp. and Wells Fargo & Co., among a host of others.
In addition to the 120 existing World Savings branches in California, Wachovia is scouring the state for sites to open 30 to 50 branches a year and is looking to buy smaller California banks, Thompson says. And its trainers are preparing World Savings employees to pitch an array of checking-account options, auto loans, mutual funds and financial management services. It’s a much more ambitious menu than World Savings’ bread-and-butter business of mortgages and certificates of deposit.
“I’m giddy about the opportunity to expand in California,” Thompson said at the Jonathan Club in Los Angeles last week during a speech to introduce Wachovia and his vision to business leaders in the region.
In the speech and an interview with The Times, Thompson said he wanted Wachovia to become America’s No. 1 retail and small-business bank. That can be accomplished only by capturing a major share in California, he said, because the Golden State accounts for 12% of the nation’s population, 13% of its gross domestic product, 19% of its foreign trade, and more millionaires and drivers than anywhere else.
Wachovia’s stock has gained modestly this year, rising 2.7% since Jan. 1, compared with the 9.3% advance posted by the Standard & Poor’s 500 index of blue-chip stocks. It fell 9 cents Friday, to $54.30.
Golden West is the latest in a series of takeovers during Thompson’s six years as CEO, a strategy that has helped Wachovia become the nation’s fourth-largest bank. Under Thompson, Wachovia’s assets -- loans, securities and other income-producing holdings -- have swelled from $254 billion to $705 billion.
Bank of America Corp., also based in Charlotte, has about twice that amount of assets, as do New York’s Citigroup Inc. and JPMorgan Chase & Co. San Francisco-based Wells Fargo & Co., No. 5 nationally and the largest bank based in California, had $483 billion in assets at the end of the third quarter.
For Wachovia, the $25-billion Golden West acquisition added branches in 10 states, including about 50 in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.
Wachovia already had acquired 19 California branches, mostly in Los Angeles and Orange counties, this year when it purchased Westcorp Inc., an Irvine auto lender and bank.
Wachovia signs will go up at offices of Westcorp’s Western Financial Bank in February, when Wachovia will be opening additional Southern California branches and will begin marketing itself in the region, a bank spokeswoman said.
World Savings branches are scheduled to be re-branded Wachovia in fall 2007, after technical systems are switched over. At that point, the marketing effort will increase and expand to Northern California, accompanied by branch openings there, the spokeswoman said.
Wachovia’s starting point of about 140 branches pales by comparison with the close to 900 Wells Fargo branches in California and nearly 1,000 for Bank of America.
Citigroup, which muscled into the market in 2002 by buying California Federal Bank, has about 400 California branches.
Still, Thompson said in the interview during his visit to Los Angeles last week, it gives Wachovia a running start.
And he plans a fast-paced race to catch up with the others, setting an eventual goal of about 750 branches.
Few observers would challenge Thompson’s claim of being obsessed with customer service. He says he devotes much of his time to meetings focused on client satisfaction and reviewing weekly surveys of customers at each of Wachovia’s businesses, which include private banking for wealthy individuals, investment banking for major corporations, a major real-estate finance arm and the nation’s third-largest retail stockbrokerage.
In a long-running University of Michigan consumer survey, Wachovia has been the overall customer-satisfaction leader among major banks since 2001, the year after Thompson took over as CEO of what was then First Union Corp. Other surveys, including one by Consumer Reports, have made similar findings.
Richard X. Bove, a Punk, Ziegel & Co. bank analyst who is a Wachovia customer in Florida, said Gallup Organization representatives debriefed him one day outside his branch. Bove said his only gripe was that the branch had no walk-up automated teller machines, only drive-through ATMs.
The next day, Bove said, Wachovia’s branch manager called him to explain apologetically why Wachovia believed customers at that location were generally better served by the drive-through machines.
“Most banks just don’t do that,” Bove said. “The whole point is that first they’re polling you, second they react quickly, and third they’re really trying to resolve any problems. So I’d say their reaction to customer complaints is first-class in the nation.”
In California, Wells Fargo may have the most to lose, Bove said, because its customer-satisfaction ratings tend to be well below Wachovia’s -- perhaps a side effect, he said, of Wells’ sales-driven corporate culture.
At Wells Fargo, “people have been trained to stick you -- ‘Do you need a new mortgage? Do you need a CD today?’ ” Bove said. “They’ve been trained above all else to ask those questions constantly, and that can be annoying.”
Laura Schulte, head of banking for Wells Fargo in the Western states, said the bank’s California market share -- No. 2 in deposits, No. 1 in retail mortgage originations, No. 1 in small-business loans -- showed that customers were satisfied.
Retail customers average 5.1 products with Wells, compared with 3.8 five years ago, she said, and customer surveys -- Wells has Gallup provide “mystery shopper” reports -- show that customer loyalty “is improving.”
Schulte said Wells has always emphasized selling “solutions” to customer problems, not just sales for sales’ sake, and compensates employees based 50-50 on customer satisfaction and sales.
“I’ve never been in a Wachovia branch,” she said, “but I’m sure they’ll be an excellent competitor in California, and that will be good for the consumer because it will make everyone better.”
*
*
Begin text of infobox
Back story
2000: G. Kennedy Thompson named chief executive of Charlotte, N.C.-based First Union Corp. Assets*: $254 billion.
2001: First Union buys Winston-
Salem, N.C.-based Wachovia Corp. and adopts the Wachovia name. Assets: $330 billion.
2003: Wachovia buys New York-based Prudential Securities Inc. Assets: $401 billion.
2004: Wachovia buys Atlanta bank SouthTrust Corp. Assets: $493 billion.
2005: Wachovia buys Irvine-based auto lender Westcorp. Assets: $521 billion.
2006: Wachovia buys Oakland thrift Golden West Financial Corp. Total current assets: $705 billion.
*Assets are for entire corporation at year’s end, except as noted.
Source: Times research
Los Angeles Times
