
DATE: Tuesday, June 17, 1997                TAG: 9706170288

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:  135 lines

WHAT TO EXPEECT FROM WACHOVIA STATEWIDE GROWTH AT A MEASURED PACE AND ATTENTION TO LOAN QUALITY

No one ever accused Wachovia Corp. of expanding too rapidly.

When interstate banking got under way in the Southeast in 1985, the Winston-Salem, N.C., company immediately joined forces with First Atlanta Corp.

Wachovia spent six years assimilating First Atlanta before changing the Georgia banking company's name in 1991.

When Wachovia announced an agreement last week to buy Charlottesville-based Jefferson Bankshares Inc., the management didn't hide its intention of expanding throughout Virginia.

But bankers, analysts and consultants say they expect Wachovia's growth in Virginia to be measured. With its fierce attention to loan quality, Wachovia isn't likely to compromise its credit standards in the pursuit of rapid growth, said G. Robert Aston Jr., president of BB&T of Virginia, the Virginia Beach-based unit of BB&T Corp., a Wachovia rival.

``They are very disciplined, and they've never been aggressive at making loans,'' said Betsy Duke, president of Bank of Tidewater, a Virginia Beach-based community bank.

Still, the competition in banking is likely to intensify because of Wachovia's size and level of service, bankers said.

When smaller banks in the region have been acquired by much larger out-of-state banks, customers dissatisfied with the changes often departed for a community bank. That's less likely to happen when Wachovia arrives, said Bank of Tidewater's Duke.

While describing its plans for Jefferson last week, Wachovia said it expected to generate higher revenues by selling additional services to the Jefferson's customers.

In contrast to some larger banks that have been willing to have a certain percentage of customers leave after a merger, ``Wachovia tends to work a little harder to make a banking relationship work,'' said Darren Short, an analyst with the securities firm Robinson-Humphrey Co. in Atlanta.

Employees, too, are likely to fare better than many of their counterparts who have been caught up in a bank merger.

``Most people feel that this is the bank you want to be bought by if you have to be bought,'' said Arnold G. Danielson, head of a bank consulting firm in Rockville, Md.

Without putting a number on the cutbacks, Wachovia CEO L.M. Baker Jr. said last week that certain types of jobs at Jefferson will be eliminated after the merger. The transaction is scheduled to close by the end of October.

Throughout the financial world, Wachovia has enjoyed a reputation for stressing careful analysis and attention to detail. Year after year, those skills have paid off in earnings growth and negligible losses from troubled assets.

In May, the magazine U.S. Banker chose Wachovia as having the best financial performance last year among 30 American banking companies with assets of more than $25 billion.

The magazine said it arrived at its rankings by using a combination of measures, including return on equity, non-performing assets ratio, and efficiency ratio.

In a speech to Virginia bankers in Norfolk last September, Wachovia's Baker downplayed the emphasis that many banks have placed on asset size. The application of more sophisticated technology to banking and holding down costs were much more important, said Baker, who joined Wachovia in 1969.

He touched on the same topic last week when asked what plans Wachovia might have for acquiring other banks in Virginia.

``We don't tend to focus as much on size as some of our competitors do,'' Baker said in a thinly veiled reference to NationsBank Corp. and First Union Corp., two Charlotte-based rivals.

Still, the efficiencies that giants like NationsBank and First Union are able to achieve make them formidable competitors. That, in turn, has put pressure on Wachovia to expand in Virginia and elsewhere if it expects to survive, said Danielson, the consultant.

``How many more big banks can there be in Virginia? There's a shakeout coming, and we know who isn't going to be shaken out - NationsBank and First Union,'' he said.

Wachovia's pending acquisition of Jefferson Bankshares will provide a hefty share of the bank-deposit market in Charlottesville, its headquarters city, but only a negligible share of deposits statewide.

For banks hoping to attract deposits, a branching system is still important, said Aston of BB&T. ``There is quite a lot of development (Wachovia) will have to do,'' he said.

Wachovia, however, isn't a stranger to Virginia. For decades, it has been lending to large companies in the state, and last year, it opened its first branch in Virginia in Norfolk. That office handles corporate lending, municipal finance, auto-dealer finance and other financial services in the region.

In addition, Wachovia's chief executive has strong ties to Virginia. The 54-year-old Baker was raised in Lovettsville, in the northernmost part of the state, and graduated from the University of Richmond. He also earned a master's degree in business administration from the University of Virginia's Darden Graduate School of Business Administration.

Last week Baker joked that one reason for broadening Wachovia's presence in the state might be to serve his father, who lives in Leesburg and banks with another institution. ILLUSTRATION: Color photo

Wachovia president and CEO L.M. Baker Jr.

Graphic

Wachovia Corp.

Headquarters: Winston-Salem, N.C., and Atlanta

Principal subsidiary: Wachovia Bank N.A.

Market area: North Carolina, South Carolina, Georgia, Virginia

Branches: 473, including 1 in Norfolk

Employees: 16,500, including 22 in Norfolk

Assets: $47.5 billion

Shareholders' equity: $3.7 billion

Number of common shares: 161.6 million

Jefferson Bankshares Inc.