Wachovia Corp (WB)

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Provides a wide range of commercial and retail banking and trust services through full-service banking offices located in states throughout the Southeast. The company provides various other financial services, including mortgage and investment banking.

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Avatar NetscribeBanking (97.28) Submitted: 12/28/06 1:15 AM : Start Price: $52.68 WB Score: -55.57

Wachovia is the fourth-largest bank in the US, with more than $555 billion in assets. Based in Charlotte, N.C., Wachovia offers retail and business banking, brokerage, asset-management and investment banking products. Wachovia was formed in 2001 by the merger of First Union Corporation and Wachovia Corporation.

The recent quarters double-digit growth earnings of the bank have proved it to be a growth company in a mature industry. The acquisition of Golden West has helped it serve the most sought Western markets without affecting credit quality. The non-performing assets were 0.26% of the loans. Increased charge-off and provision for credit losses reflects the increased loan volume on auto lending business. Moreover, the bank has balanced revenue mix coupled with a healthy fee based income. The capital management group contributes around 12% of the earnings and representing one of the leading brokerage and fund houses. The reorganized investment banking operations contributed 21% and has a good deal of structured products. The major portion of income about 65% is generated from the General Bank due to cross-selling, good service, customer loyalty, strong and efficient sales management. The banks distribution has had a major overhaul with consolidation of financial centres and integration of various channels.

The bank is on an expansion mode opening new branches, recruiting financial advisors for selling and had maintained a low employee attrition rate. Though the bank is operating in a tough environment with unfavourable interest rates coupled with exposure in housing market and mortgage business its fundamentals look good and heading for a good show.

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Avatar NetscribeBanking (97.28) Submitted: 4/16/07 6:16 AM

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Despite unfavorable economic environment Wachovia’s net income in 2006 was up 17% at $7.8 billion. Credit quality remained among the best in the banking industry with a net charge-off ratio of 0.12% and a ratio of non-performing assets to loans at 0.32%. Uncertainties regarding acquisition of Golden West Financial might have resulted in the stocks price taking a hit in the past four months, but now seems to be on a recovery path. However, the management is still positive with hopes of benefiting from its presence in California, Texas and Florida region. Its excellent customer service along with wide product offerings and distribution franchisee has helped the company become the dominant player in the south-east region.

The year 2007 would see healthy double-digit growth from fee income supported by its capital market operations and capitalize on the 2006 expenses incurred with the introduction of the new open architecture investment platform. Apart from this it is beefing up its retail brokerage operations with the opening of 130 financial centers and gain out of the prudential joint venture. Huge potential is seen in the emerging affluent market those who have investable assets between $500,000 and $2 million. On the general banking front it hopes to cross sell the expanded consumer credit product lines.

The management remains open to financially attractive, shareholder friendly acquisitions apart from putting the excess capital to work in the form of share repurchases for 2007. Opportunities for expense reduction have been spotted that would result in incremental cost savings of approximately $200 million in 2007. Summarizing the above mentioned facts, the stock seems to stimulate bullish sentiments.

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Wachovia Corp (WB)

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