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Look Inside Wachovia's Deposit and CD Growth

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Wachovia Bank
Wachovia announced its second quarter results today. As described by this CNN article, Wachovia lost almost $9 billion in the second quarter which was worst than Wall Street's expectations. But analysts said Wachovia is making the necessary changes to contain these losses.

In Wachovia's press release I found this presentation (pdf) which included on page 5 some interesting stats regarding their consumer CD balance growth. It mentions the launch of the new CD campaign on June 22nd with the following results:
  • $4.7 billion/week in new CDs vs. approximately $800 million/week in new CDs during 7 weeks prior to launch
  • 52% of CDs sold to checking account customers
  • 36% sold to new customers
  • Average rate paid on CD portfolio continued to decline from 3/31/08
A chart shows that consumer CD balances have increased by $11.4 billion for the first 3 weeks in July. What's strange about the chart is that it shows the average rate paid on CDs has declined since 3/31/08 from 4.38% to 3.74%. I wonder how this can be when all of their Featured CDs have rates of 3.92% (4% APY) and higher. I suppose many of the old CDs that were paying over 4% are maturing and many people may be letting their old CDs renew into low paying new CDs. Wachovia's regular CD rates are currently under 2%.

For the latest information on this Wachovia CD campaign and the Featured CD rates, please refer to this Friday post. CD yields range from 4% APY for a 7-month term to 5.25% APY for a 60-month term. The latest word I received from the banking rep is that these rates are scheduled to remain until August 5th. But as we learned, these scheduled end-dates are often inaccurate.

To see all the latest CD rates and promotions including ones from Bank of America and WaMu, please refer to my weekly summary.

  Tags: Wachovia Bank, CD rates

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Comments
12 Comments.
Comment #1 by scott (anonymous) posted on
scott
9 Billion loss and stock goes up 28%, Go figure

1
Comment #2 by Anonymous posted on
Anonymous
Probably insider trading.
Knowing the Feds will bail them out.
At tax payers' expense, of course.

1
Comment #3 by Anonymous posted on
Anonymous
"52% of CDs sold to checking account customers"

I was FORCED to open a checking account when I open the 12 month 4.25%.

I am shocked that it is only 52%, I would have expected it to be near 100%.

1
Comment #4 by Paul "MR. CD" (anonymous) posted on
Paul
I was not forced to open a checking account when buying a 5 yr CD. No problems, hope the FDIC
doesn't run out of money

1
Comment #5 by Mortimer Snerd (anonymous) posted on
Mortimer Snerd
The FDIC cannot run out of money.

Once their fund runs out, they will take money from taxpayers.

The government will go deeper into debt.

Or, the government will print more money and the value of the dollar will continue to decline.

Inflation will increase.

1
Comment #6 by Anonymous posted on
Anonymous
According to inside sources,
CDs that are currently opened are most from brokerage companies. When the stock market picks up, all of these CDs will be cashed out and Wachovia will go to the FEDs to borrow at 2% to pay all of CDs that are closed with prepayment penalties stocked on top of the 2% and make a big profit.
It is a gamble that Wachovia is pursuing that might pay out for the $9 Billion loss.

1
Comment #7 by Anonymous posted on
Anonymous
That's why we have to invest in deversified ways.

1
Comment #8 by Anonymous posted on
Anonymous
"Wachovia is too big to fail"
Does this statement make a sense?

1
Comment #9 by Anonymous posted on
Anonymous
i opened a cd here in florida branch no problem and no checking account required,,the bank was so busy the computer was running slow!!

1
Comment #10 by Anonymous posted on
Anonymous
WAMU is going under and Wachovia will be next.

They said WAMU was too big to fail as well. Yet it will and it is. They don't have enough capital on hand.

1
Comment #11 by Anonymous posted on
Anonymous
Hi, please reply...
I opened a 8 months CD with WAMU last night for $98,000. Any risk or any stupidity? Is this bank going down? I now see very bad review online for this bank. Am I at anykind of risk? Thanks

1
Comment #12 by Banking Guy (anonymous) posted on
Banking Guy
Please refer to my WaMu post. I don't know the likelihood of any bank failing, but if you keep all deposits (both principal and interest) under the FDIC limits, your money should be safe. More FDIC info and links are in this post.

1