Wachovia is on a tear again, growing its deposits.
By Jeff Harrington
Altogether, Wachovia says it has 9-million residential customers and 900,000 business customers.
In our third quarter, year over year, we've had (deposit) growth of about 22 percent. "If you take our five biggest competitors and average them together, they're in the 11 to 12 to 13 percent range."
It is the fifth largest bank in the country with $389-billion in assets.
A few years ago, Wachovia predecessor First Union had a chilly relationship with Wall Street after a series of missed earnings estimates and the drain of its money-losing Money Store mortgage unit. The situation has been much improved by a major restructuring under Ken Thompson, the closing of the Money Store and a smooth, slow integration of the old Wachovia and First Union.
Since July, four analysts have upgraded Wachovia's stock. According to Thomson/First Call, 13 analysts now recommend the stock as a "buy" or "strong buy" and nine have a "hold." There are no longer any sell ratings.
Chris Blum, bank analyst with Edward Jones & Co. in St. Louis who has a "buy" rating on Wachovia, gave the bank kudos for stability, strong management and a healthy market share in attractive states like Florida.
Looking ahead, Wachovia's toughest challenge probably lies in the changing economy.
"But something else will grow to make up for it." "I think our model is pretty sound that we can deal with the customer in most any kind of environment."
Richard Bove, a longtime bank analyst with Hoefer & Arnett in St. Petersburg, agrees that Wachovia is well-positioned for the economic shift.
Bove recommends that his clients drop 80 percent of their bank stocks, but not stocks such as Wachovia, Bank One and Bank of America. That's because those three are strong in industries that will do well as the economy improves: commercial and industrial loans, investment management and brokerage.