RALEIGH, N.C. – Wachovia Corp. (WB) won't be pressured to keep up with merging banking rivals by acquiring a company itself, chairman and chief executive Ken Thompson said Thursday after the nation's fifth-largest bank announced profits rose 23 percent in the fourth quarter.
"We are willing to make acquisitions, but we are only willing to make them if they are attractive to our shareholders," Thompson said in a conference call with analysts. "We don't need to do a deal."
Thompson said Charlotte-based Wachovia remained interested in buying banks, asset managers or insurance brokers either within or outside its 11-state East Coast range. He said previously that Wachovia isn't interested in investment-banking firms.
In his most recent acquisitions, Thompson paid a low premium to merge First Union Corp. with the old Wachovia in 2001, and formed a joint brokerage venture with Prudential Financial Inc. in a cashless transaction last year.
The company was willing to stand pat in the face of J.P. Morgan Chase & Co.'s (JPM) planned acquisition of Bank One Corp. (ONE) announced Wednesday, as well as the pairing of Charlotte-based Bank of America (BAC) with FleetBoston (FBF) announced last fall, because Wachovia has delivered double-digit earnings growth for each of the past three years including 19 percent in 2003, Thompson said.
The banking company said Thursday it earned $1.1 billion, or 83 cents per share, for the last three months of 2003 compared with $891 million, or 66 cents per share, in the fourth quarter of 2002.
Excluding after-tax expenses for mergers and other items, Wachovia's earnings of 88 cents per share for the quarter met the expectations of analysts surveyed by Thomson First Call.
"We're generating significant excess capital. I think our business model is working very well," Thompson said.
For all of 2003, Wachovia's profit rose to $4.3 billion, or $3.18 a share, from $3.6 billion, or $2.60 a share, in 2002.
Wachovia is churning out $2.5 billion in excess capital annually, and Thompson has said the company would use that cash for dividends, reinvestment in the company, share repurchases and acquisitions. Wachovia announced Thursday it was increasing its quarterly stock dividend from 35 cents a share to 40 cents a share. The bank's board also authorized a stock buyback of another 60 million shares.
Shares in Wachovia were down 44 cents to $46.86 in afternoon trading on the New York Stock Exchange.
Wachovia said it cut its provision for bad loans by $222 million to $86 million in the quarter ended Dec. 31 from $308 million during the same quarter the previous year. Wachovia's write-offs for bad loans declined 22 percent to $156 million from the fourth quarter of 2002.
Wachovia's general bank division — which includes accounts for individuals and small businesses — saw quarterly earnings fall by $2 million to $564 million.
That drop was offset by large increases in Wachovia's brokerage, wealth management, and investment banking segments.
The brokerage business saw an 80 percent revenue increase from the previous year's fourth quarter due largely to the addition of the Prudential Financial, which was merged into Wachovia Securities in July.