Wachovia CEO: No More Management Changes
After watching a veritable parade of senior execs leave in recent months -- forced out or otherwise -- newly-installed CEO at Wachovia Corp. (WB) Richard Steel said yesterday afternoon that the company had no further plans to make management changes. Steel's remarks came during a luncheon event with analysts in New York City, according to a report in the Wall Street Journal. The CEO also indicated the bank would name a replacement to departing CFO Thomas Wurtz in the next month; chief risk officer Donald Truslow also announced his resignation in the past week. It's been speculated that both were forced out by a new CEO determined to get new thinking in executive positions, although the company has lent no credence to such rumors; press statements announcing both execs' pending resignations gave no details of the reasons behind each's decision to depart the company. Steel reiterated that the bank will not look to equity markets to raise additional capital, although he did acknowledge the fresh capital was needed. Instead, the Journal reported, he said that Wachovia would meet its capital needs through asset sales and cost savings. Wachovia reported a loss of $8.9 billion, or $4.20 per share, during the recently-completed second quarter, and the planned elimination of 10,750 jobs. The bank also became the latest to exit the wholesale mortgage origination channel, as well. The record loss included $5.6 billion in credit costs, including a $4.2 billion loss provision covering expected future losses in the bank’s substantial mortgage holdings; earnings were also affected by a $6.1 billion impairment to goodwill. Wachovia holds $122 billion in option ARMs, a substantial part of the bank’s $488.2 billion in total loans; no other U.S. bank has as much exposure to option ARMs in real-dollar terms. The North Carolina-based bank yanked its option ARM lending program earlier in the year, as mounting losses and continuing home price declines made the product unprofitable. Disclosure: The author held various put option contracts on WB when this story when it was published; indirect holdings may also exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.