Wachovia
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Template:Infobox Company Wachovia Corporation Template:Nyse, based in Charlotte, North Carolina is one of the largest banking chains in the United States.
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Origin of word
"Wachovia", pronounced wah-KO-vee-yah, has one of the most unusual corporate names in the United States. The origin of the name is the Latin form of the German name Wachau. When Moravian settlers arrived in Bethabara, North Carolina in 1753, they gave this name to the land they acquired, because it resembled a valley along the Danube River called Der Wachau. The area formerly known as Bethabara is now inside the city limits of Winston-Salem.
Corporate History
Today's Wachovia Corporation was created by the merger of the legacy Wachovia Corporation and First Union Corporation. While the transaction was billed as a merger of equals, the transaction was actually a purchase of the legacy Wachovia by Charlotte-based First Union Corporation. First Union then took the Wachovia name.
First Union
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First Union logo
First Union Corporation was a large banking chain based in Charlotte, North Carolina. It merged with Wachovia Corporation in 2001, and the combined company kept Wachovia's name.
First Union National Bank of North Carolina was originally formed in 1958 with the merger of Union National Bank and First National Bank and Trust Company of Asheville. Over the decades, First Union purchased over 80 other banks before purchasing Wachovia.
CoreStates Financial Purchase
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CoreStates logo
CoreStates Financial Corporation, headquartered in Philadelphia, Pennsylvania, was acquired by First Union in April 1998.
The purchase was a fiasco, and created lots of problems for First Union. First Union attempted to integrate CoreStates' systems into First Union as quickly as possible. This quick integration led to employee training issues, as CoreStates tellers were not familiar with the new systems. In addition, the old CoreStates systems had trouble communicating with the new First Union systems, which led to such problems as account access issues and payments not being correctly applied to loans. Customers left the bank in droves because of poor customer service and the account issues. In fact, First Union experienced a 19 percent customer attrition rate because of the merger.
The CoreStates Financial purchase led to years of lower earnings and lower stock dividends. First Union had to restructure and lay off thousands of employees in 1999, partly as a result of the purchase of Core States.
Legacy Wachovia
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Legacy Wachovia logo
Wachovia Bank and Trust was formed in 1911 by the merger of Wachovia National Bank (founded 1879) and Wachovia Loan and Trust (founded 1893), and was located in Winston-Salem, North Carolina. On December 12, 1986 Wachovia took over First Atlanta. Founded as Atlanta National Bank on September 14, 1865, and later renamed to First National Bank of Atlanta, this institution was the oldest national bank in Atlanta. In 1998, legacy Wachovia acquired two Virginia-based banks, Jefferson National Bank and Central Fidelity Bank. In 2000, legacy Wachovia made its final purchase, which was Republic Security Bank, giving legacy Wachovia its first entry into Florida.
Merger of First Union and Wachovia
On April 16, 2001, Charlotte-based First Union Corporation announced it would merge with Winston-Salem-based Wachovia Corporation. Technically, the deal was a purchase of Wachovia by First Union. Some analysts speculated that Wachovia had been seeking a white knight buyer in order to keep it from being purchased by a bank not located in North Carolina. The former chairman of Wachovia, Bud Baker, later said that he and First Union's chairman, Ken Thompson met at interstate motels to keep their talks of merger as secret as possible.
As part of the deal, First Union decided to shed its name and assume the Wachovia name. Analysts said this move was most likely to help First Union acquire a new identity in order to help recover from the CoreStates purchase.
The deal was met with criticism and doubt by several groups.
Analysts were concerned of First Union's ability to merge with another large company because of the CoreStates deal.
Citizens and policitians of Winston-Salem suffered from a hurt of their civic pride because the city would lose Wachovia's corporate headquarters to Charlotte, partly because Winston-Salem is a much smaller city than Charlotte. The city of Winston-Salem was concerned both by job losses by the move and the loss of stature from losing a corporation. First Union helped to ease these concerns by placing the wealth management and Carolinas-region headquarters in Winston-Salem.
On May 14, 2001, Atlanta-based SunTrust Bank announced a rival takeover bid for Wachovia. SunTrust stated that it would be able to provide a smoother transition than First Union, and it would be able to provide a better return for shareholders than First Union. SunTrust also alleged that Wachovia had been in merger talks with it during the fall and winter of 2000, but Wachovia walked away from those talks. Wachovia's Board of Directors rejected SunTrust's offer and pledged to continue its merger with First Union. SunTrust continued its hostile takeover attempted, and a bitter battle between SunTrust and First Union took place over the summer. Both banks increased their offers for Wachovia, took out newspaper ads, mailed letters to shareholders, and initated court battles to challenge each other's takeover bids. First Union even used its lobby power to have the North Carolina General Assembly change a corporate goverance law in order to make it more difficult for SunTrust to purchase Wachovia.
On August 3, 2001, Wachovia shareholders approved the First Union deal. They rejected SunTrust's attempts to elect a new Board of Directors for Wachovia, and thus, ended SunTrust's hostile takeover.
On September 4, 2001, First Union and Wachovia officially merged to form the new Wachovia Corporation.
In order to prevent a repeat of the CoreStates fiasco, the new Wachovia took a deliberately long period of time to combine the banking operations of the new company. Over a period of several years, legacy Wachovia computer systems were converted to First Union systems. The company first began converting systems in the Southeast United States (where both banks had branches) before moving to the Northeast, where First Union branches only had to change their signs to reflect the new company name and logo. This process officially ended on August 18, 2003, almost 2 years after the merger took place.
In comparison the CoreStates purchase, the merger of First Union and Wachovia has been a huge success. The company's slow strategy to combine seems to have prevented large customer attrition rates. In fact, Wachovia has been ranked number one in customer satisfaction every year since the merger. In addition, the company's stock price has remained strong, and provided a good return to legacy Wachovia shareholders, in contrast to SunTrust's claims during the takeover attempt. The company has also been reporting record revenues since the merger.
When Wachovia and First Union merged, the multiple skyscrapers with First Union's name came under Wachovia's name. Charlotte, North Carolina's One, Two, Three, and Four First Union buildings became One, Two, Three, and Four, Wachovia Center (respectively), and the 55-story First Union Tower in downtown Miami became the Wachovia Tower. The merger also affected the names of the indoor professional sports arenas in Philadelphia and Wilkes-Barre, Pennsylvania. Formerly known as the First Union Center and the First Union Spectrum (both Philadelphia) and First Union Arena (Wilkes-Barre), they are now known as the Wachovia Center, Wachovia Spectrum, and Wachovia Arena.
Wachovia Today
Wachovia is currently ranked number 23 on the Forbes 500 list for 2003, and is the fourth largest bank holding company in the US. It has banking centers in 15 East coast states and Washington, DC. It also operates Wachovia Securities, its brokerage services subsidiary.
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SouthTrust
On November 1, 2004, Wachovia completed the acquisition of banking competitor SouthTrust Corporation, a transaction valued at $14.3 billion. The merger created the largest bank in the southeast, the fourth largest bank in the United States in terms of holdings, and the second largest in terms of number of branches.
Diversity
Wachovia is one of the top 10 companies for working mothers in 2004 (http://www.workingwoman.com/top10.html) according to Working Mother Media.
External links
- Wachovia Corporate Website (http://www.wachovia.com/)
- CoreStates website that is still bears CoreStates name and is managed by Wachovia (http://www.corestates.com/)
- One of the SunTrust letters to legacy Wachovia shareholders (http://www.shareholder.com/suntrust/releaseDetail.cfm?ReleaseID=45542)
Data
- Yahoo! - Wachovia Corporation Company Profile (http://biz.yahoo.com/ic/103/103806.html)