A hardware problem at Wachovia Corp.'s automated clearing house processing center caused several days' delay in the bank's payment processing.
Wachovia officials did not disclose the number of customers affected, but they said normal ACH services were disrupted for nearly six days in Georgia, North Carolina, and South Carolina.
The snafu also indirectly affected automated teller machine services.
"We sincerely regret the inconveniences this delay has created for customers of Wachovia and other financial institutions," said Walter E. Leonard, an executive vice president at Winston-Salem, N.C.-based Wachovia. "This particular problem was an aberration, and we are taking the necessary precautions to prevent this from happening again."
The trouble began Feb. 27 at an operations center in Winston-Salem. A disk-drive controller malfunctioned, corrupting payment information in ACH files.
The bank automatically shifted to a contingency processor, and officials said they thought the situation was under control the next morning.
But the controller trouble had corrupted more files than originally thought, and these created problems for backup processing.
Complicating matters, the bank was at a busy point in the monthly payment cycle, when many recurring electronic payments, including Social Security and monthly and biweekly paychecks, were coming into the system.
Wachovia is one of the industry's leading automated clearing house originators, with annual volume exceeding 107 million transactions.
Although Wachovia was able to complete some ACH processing through Wednesday, Feb. 28, it nevertheless decided to reload the ACH system completely.
"We generally had 75 to 100 people working on this problem around the clock," said bank spokesman Paul E. Mason.
By late last Thursday afternoon, Wachovia had resumed originating files, but its efforts were slowed by the backlog of electronic payments.
The glitch required ATM processing to be moved from on-line into batch mode. As a result, the bank's ATMs were slow to reflect deposits and other account changes.
"Customers in most cases could withdraw cash but in some cases could not," said Mr. Mason.
The bank duly notified other institutions of its problems. It told the National Automated Clearing House Association last Friday of expected delays in disbursing payments and asked that Nacha alert other banks.
Edwin Link, a senior vice president at First Union Corp., Charlotte, N.C., said his bank tried to help by cashing checks for Wachovia customers - sometimes in the absence of proof of backing funds in Wachovia accounts. "We did everything possible on our end to make sure everyone got paid," he said.
By last Sunday, Wachovia's operations had returned to normal. Information on financial losses resulting from the snafu was not immediately available.
Michael Starr, a senior vice president at Wachovia, said the problem was an unfortunate incident that will prompt "an extensive amount of research" into operational changes.
Wachovia said it plans to waive fees to customers whose accounts were wrongly labeled as having insufficient funds.
