Wachovia Plans 25% Reduction in Va. Presence

Wachovia Corp. said Thursday it would close, sell, or shrink 85 Virginia branches after its deals to acquire two banks in the state are completed this quarter.

The moves are expected to affect 300 employees and reduce the combined banks' Virginia presence by 25%, Wachovia said. The branch shutterings and sales would also create $97 million in cost savings that Wachovia said it needs to make the transactions work financially and would help eliminate antitrust concerns in some markets.

In June, Winston-Salem, N.C.-based Wachovia said it would acquire $2.1 billion-asset Jefferson Bankshares of Charlottesville and $10.6 billion- asset Central Fidelity Banks Inc. of Richmond.

In all, Wachovia plans to close 62 branches, sell 16, and convert seven to either drive-through and ATM centers or teller-only branches. Twenty of the branches to be shuttered are in Richmond. Other markets that will see closings include Alexandria, Virginia Beach, Chesapeake, and Williamsburg.

Anthony Davis, an analyst with Dillon, Read Inc., said that although cutting the combined banks' Virginia branch presence by 25% seems aggressive, it is in line with industry trends.

"It sounds like a lot, but I'm not surprised that 25% is the number," he said. In other recent bank mergers, companies are reducing branch operations by 20% to 40% on average, he said. "It doesn't make sense to have full on-the-ground operations in all markets," he added.

Employees of the affected branches were notified of the planned changes Thursday. The 210 employees of the branches slated for closure will be offered severance packages and can apply for other jobs within Wachovia, said spokesman Paul Mason. About 90 employees work for branches to be sold.

The closings will take place in phases. In late January and February, 26 branches will be shuttered and their deposits shifted to nearby branches. In March, the other 36 will be closed and their deposits shifted. Wachovia will reflag all the remaining branches with its name and logo on March 23.

Charleston, W.Va.-based One Valley Bancorp said it would buy 16 of the Virginia branches - 10 Jefferson locations and six Central Fidelity ones. Seven of those banking offices are located in Charlottesville; two are in Emporia; and the rest are in Buchanan, Culpeper, Cumberland, Dumfries, Lovingston, Purcellville, and Scottsville.

The branches have a total of $319 million of deposits. Terms of the deal were not disclosed. The sale is expected to be completed by February.

Mr. Mason said the decisions about which branches to consolidate and which to close were made after a team of executives from Wachovia, Jefferson, and Central Fidelity analyzed branch configurations and determined where branches overlapped and customer use was highest. The new configuration is expected to offer convenience for customers as well as cost savings for Wachovia, he said.

The acquisitions would put $47.5 billion-asset Wachovia in a strong position in Virginia, with the second-largest statewide deposit market share. First Union Corp. would have the No. 1 slot after it completes a pending acquisition of Signet Banking Corp. of Richmond.

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