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News just four days earlier that Citigroup had acquired Wachovia still was being digested when word came early yesterday morning that Wachovia had decided to run off with another suitor.
And just like that, the Philadelphia region found itself in the middle of an OK Corral of sorts, its 200 Wachovia bank branches an attractive expansion lure to both San Francisco-based Wells Fargo and New York's Citigroup, neither of which have a significant presence in the region.
Unlike the $2.16 billion Citigroup deal -- considered a steal for Wachovia, based in Charlotte, N.C. and one of the country's largest banks -- the $15.1 billion acquisition by Wells Fargo would require no financial help from the Federal Deposit Insurance Corp. or any government agency.
In the stock-for-stock transaction, Wells Fargo would acquire all outstanding shares of Wachovia common stock and all of Wachovia Corp., its businesses, obligations and banking deposits, according to a joint statement by the companies.
"This deal enables us to keep Wachovia intact and preserve the value of an integrated company without government support," Robert K. Steel, Wachovia's president and chief executive, said in the statement.
The agreement, approved by the banks' boards late Thursday night, requires the approval of Wachovia shareholders. By noon yesterday, trouble was on the horizon.
Citigroup had issued a statement calling Wachovia's agreement with Wells Fargo "in clear breach of an exclusivity agreement between Citi and Wachovia."
"Citi was negotiating in good faith and [had] nearly completed the definitive agreements required to consummate the Citi/Wachovia transaction," the bank said.
Sheila Bair, head of the FDIC, issued a statement saying the agency, which insures deposits at the nation's 8,451 banks and savings associations, "stands behind its previously announced agreement with Citigroup."
It went on to say that the FDIC "will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest."
Representatives for Wachovia and Wells Fargo declined to comment.
Locally, the Wells Fargo deal was getting thumbs-up from business and financial experts who found no downside to a West Coast banking company with $609 billion in assets, a strong balance sheet, and a highly regarded reputation for customer service rolling into town.
"It may well be a remarkably positive outcome in remarkably negative times," said Mark Schweiker, president of the Greater Philadelphia Chamber of Commerce.
Against a national backdrop of the $700 billion federal bailout package, "the fact that taxpayers in no way have to step into a potential bailout here . . . lightens the load by a couple of bricks," said Ed Nelling, associate professor of finance at Drexel University.
Nick Schorsch has built a thriving business out of buying banking offices that banks no longer need. Over the last six years, his American Realty Capital, based in Jenkintown, has bought more than 2,000 buildings in 39 states and 370 markets, mostly to reposition them for future use as a bank branch. He has a contract with Wachovia.
Whether Wachovia is acquired by Wells Fargo or Citigroup, he said, the result will be good for the Philadelphia market because of both banks' virtual absence from the scene. That means that massive branch closings and layoffs of branch employees would not be likely, Schorsch said.
It was the idea of Wells Fargo -- its logo a stagecoach -- emerging as the victor in this banking showdown that had marketing experts here chortling yesterday but predicting no major culture clashes.
"Stagecoach equals rescuing," said Bill Madway, a marketing professor at Villanova University. "It could have positive connotations -- riding into the rescue."
At AgileCat, a branding, advertising and public relations agency in Center City, president Peter Madden's thoughts drifted to an entertainment venue in South Philly that currently bears the Wachovia name.
"Is the Wachovia Center now going to have a giant cowboy hat on top of it?" he asked.
By pure coincidence, the home to the Sixers and Flyers owned by Comcast-Spectacor broke with tradition yesterday and allowed its employees to wear jeans to work.
It was to raise money for charity, not to get into the Western groove, spokesman Ike Richman said. He declined to discuss whether the arena's name would change should Wells Fargo become the owner of Wachovia's banking operations. Should the deal be finalized, Wells Fargo would own the naming rights to the center, he said.
In Narberth, headquarters of Royal Bancshares of Pennsylvania, Marc Sanders, director of marketing, was unrattled by the prospect of Wells Fargo galloping into the market. Why would he be?
Officials of the company's Royal Bank America have been sporting cowboy hats on billboards looming over the region's highways for 25 years. The late founder, Dan Tabas, was big on image and he believed the hats conveyed confidence -- as in Texas oil tycoons, Sanders said.
"We're not worried about stagecoaches," he said.
Contact staff writer Diane Mastrull at 215-854-2466 or dmastrull@phillynews.com.
Inquirer staff writer Brittany Talarico contributed to this article.
To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com. Copyright (c) 2008, The Philadelphia Inquirer Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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