Why Does Wachovia Have to Pay Up for CDs?

Someone please explain to me the wisdom of Wachovia’s (WB) 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.

Comments

[Get Real Ve...:]

Vernon- at least Wachovia hasn't had executives imprisoned, and the Chairman wasn't run out on a rail like you. How is the Country Club you built for yourself, and how enriched did your wife and son's become due to your greed?

2008 Aug 26 08:38 AM

[Bankguy:]

Vernon - Steel does have his work cut out for him. At least he'll be working for the shareholders instead of enriching himself like you did by selling land he owns to the Bank for a premium to build branches then paying his wife's architectual firm to design them. Along with getting free Bank IT services for his country club and his wife's firm.

2008 Aug 26 09:10 AM

[Chuck:]

Vernon - Seems that a lot of people don't like the choices you made in life.

Other than that.... how's it going ?

2008 Aug 26 09:27 AM

[WhatsThePoint:]

What's the deal with Wachovia...What's the point of your article?...so the branch wasn't crowded when you visited...thanks

2008 Aug 26 09:32 AM

[hunter:]

Vernon I cant add anything to what others have said. Looks like people know you pretty good.

2008 Aug 26 10:06 AM

[hunter:]

Vernon I cant add anything to what others have said. Looks like they know you pretty good.

2008 Aug 26 10:06 AM

[Snagit:]

Vernon....Mr. Steele had a chance to evaluated the job offer from Wachovia and he made a rational
decision based on his own research, Then, after accepting the position and becoming privy to every
aspect of the company, he went out and bought 16 million dollars in common stock.
What was it again that you did with position of power? You have a lot if nerve old sport.

2008 Aug 26 02:20 PM

[nilogram:]

I live near Philadelphia and they did not offer me anything near 5.85%. Are you sure of that rate?

2008 Aug 26 05:04 PM

[Blizzfan an...:]

Bank retailing footprints are cannot be simplified to location by location decisions. Having a downtown presence says to potential customers that the bank is investing in long term relationships with customers. They may transact face to face in a variety of locations. These retail spots are also client meeting sites for wealth management discussions. Wachovia's strength is it's ability to use it's financial centers (branches) to cross-sell brokerage and loan products. Ken T went overboard on aquisitions, but the retail strategy of the bank has always been its strength.

2008 Aug 26 10:18 PM

[jarco:]

Not being familiar with Commerce, I gather Vernon's antics described here were not enough to get he and his spouse imprisoned. Or was it?

What era are we talking about here? For NJ/Penn events, why didn't Sen. Spector investigate instead of trying to chop up the Kraft family over Patriot-gate. Or did he?

2008 Aug 27 04:50 PM

[User 255265:]

Vernon: I'll have a shake and fries with my Whopper..............

2008 Sep 03 06:07 PM

[User 255265:]

Uh....I'm a Wachovia customer and the reason I'm not in the branch all day is.......(wait for it).........I'M AT WORK MAKING MONEY!. It doesn't take me ALL DAY to make a freaking deposit. Dddddddddoes it y-y-y-y-y-y-ou, Vern?

2008 Sep 03 06:07 PM

[User 255265:]

On June 29, 2007, Vernon Hill was FORCED to resign as Chairman and CEO of Commerce Bancorp after the Office of the Comptroller of the Currency, the Federal Reserve Bank of Philadelphia and the board of directors of Commerce Bancorp established governance to stop doing business with firms controlled by his family. Notable business dealings with insiders included property leases with entities in which Hill was a partner, and the purchase of services from an architectural design business run by his wife, Shirley.

2008 Sep 03 06:09 PM

[Jerbear:]

Thanks User 255265
I just read Vernon's bio (click on it at the top of the page). It doesn't say anything about his forced resignation. Apparently it wasn't important enough to mention.

Conceit is an odd disease - It makes everyone sick except the one who has it.

2008 Sep 06 03:49 PM