Wachovia Trims Mortgage Lending in 19 U.S. States
By David Mildenberg
Aug. 8 (Bloomberg) -- Wachovia Corp., the fourth-largest U.S. bank, will stop making mortgage loans through its own branch offices in 19 states, continuing the fallout from the 2006 acquisition of Golden West Financial Corp.
The bank will cut 125 jobs as part of the move, spokesman Don Vecchiarello said today in an interview. The Charlotte, North Carolina-based company, which ranked seventh among U.S. home lenders last year, still offers mortgages nationwide through Internet, telephone and direct-mail service.
Chief Executive Officer Robert Steel, a former Treasury official, last month replaced Kennedy Thompson, who led the $24 billion purchase of Golden West. The California-based mortgage lender's portfolio contributed to Wachovia's second-quarter loss of $8.9 billion.
``We want to focus on building customer relationships, especially through our retail offices,'' Vecchiarello said. The bank will still offer mortgages through branches in 18 states, he said.
Wachovia plans to cut 10,750 jobs and $2 billion of expenses by the end of 2009. It is trimming 4,440 positions from the mortgage unit.
Wachovia gained 81 cents, or 4.7 percent, to $17.93 at 4:15 p.m. in New York Stock Exchange composite trading. The stock has dropped 53 percent this year.
Golden West Mortgages
Steel, 57, must decide what to do about $122 billion of remaining Golden West mortgages. Two-thirds are in California and Florida -- two states hit hardest by the U.S. housing slump. The bank last month said it expects home prices will probably tumble another 14 percent in California and 19 percent in Florida over the next 18 months.
Wachovia expects its losses on the Golden West mortgages to reach about 11 percent, or about $14 billion, over the next few years because of declining prices. Deutsche Bank AG analyst Michael Mayo estimated Aug. 5 that the loss will be closer to 20 percent, or $24 billion.
Wachovia is closing mortgage offices in all 19 states, while maintaining its 29 retail bank branches in Illinois, Kansas and Mississippi, Vecchiarello said. The company won't write mortgages through employees in those three states.
The 16 other states are Idaho, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Washington and Wisconsin.
To contact the reporter on this story: David Mildenberg in Charlotte at [email protected]
Last Updated: August 8, 2008 20:00 EDT
By David Mildenberg
Aug. 8 (Bloomberg) -- Wachovia Corp., the fourth-largest U.S. bank, will stop making mortgage loans through its own branch offices in 19 states, continuing the fallout from the 2006 acquisition of Golden West Financial Corp.
The bank will cut 125 jobs as part of the move, spokesman Don Vecchiarello said today in an interview. The Charlotte, North Carolina-based company, which ranked seventh among U.S. home lenders last year, still offers mortgages nationwide through Internet, telephone and direct-mail service.
Chief Executive Officer Robert Steel, a former Treasury official, last month replaced Kennedy Thompson, who led the $24 billion purchase of Golden West. The California-based mortgage lender's portfolio contributed to Wachovia's second-quarter loss of $8.9 billion.
``We want to focus on building customer relationships, especially through our retail offices,'' Vecchiarello said. The bank will still offer mortgages through branches in 18 states, he said.
Wachovia plans to cut 10,750 jobs and $2 billion of expenses by the end of 2009. It is trimming 4,440 positions from the mortgage unit.
Wachovia gained 81 cents, or 4.7 percent, to $17.93 at 4:15 p.m. in New York Stock Exchange composite trading. The stock has dropped 53 percent this year.
Golden West Mortgages
Steel, 57, must decide what to do about $122 billion of remaining Golden West mortgages. Two-thirds are in California and Florida -- two states hit hardest by the U.S. housing slump. The bank last month said it expects home prices will probably tumble another 14 percent in California and 19 percent in Florida over the next 18 months.
Wachovia expects its losses on the Golden West mortgages to reach about 11 percent, or about $14 billion, over the next few years because of declining prices. Deutsche Bank AG analyst Michael Mayo estimated Aug. 5 that the loss will be closer to 20 percent, or $24 billion.
Wachovia is closing mortgage offices in all 19 states, while maintaining its 29 retail bank branches in Illinois, Kansas and Mississippi, Vecchiarello said. The company won't write mortgages through employees in those three states.
The 16 other states are Idaho, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Washington and Wisconsin.
To contact the reporter on this story: David Mildenberg in Charlotte at [email protected]
Last Updated: August 8, 2008 20:00 EDT
