Customers of World Savings Bank, a long-established thrift with 35 branches in Colorado, could soon be doing business with Wachovia Corp.
Wachovia, based in Charlotte, N.C., on Sunday made a bid valued at $24.2 billion for Oakland-based Golden West Financial Corp., parent of World Savings.
World Savings ranks as the state’s largest savings bank with $5 billion in deposits. It controls 7.12 percent of the state’s deposits, making it the fourth-largest banking institution in Colorado, according to SNL Financial in Charlottesville, Va.
The mega-merger could boost competition for consumer loans in Colorado while reducing competition for deposits, analysts said Monday.
World Savings offers some of the state’s highest interest rates on certificates of deposits, making it popular with seniors and other cautious investors.
“They have a strong deposit base, a lot of older people,” said Larry Martin, an independent banking consultant based in Denver. He predicts that Wachovia will reshape its newly acquired branches to compete less on interest rates and more on loan products and services.
That would put Wachovia, which will rank as the nation’s fourth-largest bank after the acquisition, head-to-head with banks such as FirstBank and TCF.
Wachovia will probably need to upgrade World Savings’ locations, which lack drive-through lanes and aren’t equipped to handle large numbers of customers, said Martin.
World Savings’ mortgage-lending operations were a major draw of the acquisition, as were the bank’s retail locations in California, Arizona and Texas, said Mike Scott, a senior industry analyst with SNL Financial.
“This deal extends Wachovia coast to coast and sets the stage for Wachovia to do more national banking,” he said.
World Savings hasn’t been as focused on mortgage lending in Colorado as in other states, Martin said.
Wachovia’s stock price fell 6.7 percent Monday to $55.42 on fears that the company was taking on too much risk by acquiring Golden West’s large portfolio of adjustable-rate mortgages, which could face higher defaults if the housing market cools.
The decline shaved $1.3 billion in value off the deal, which was originally valued at $25.5 billion.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
