Baptism by Fire
Bob Steel barely had time to settle into the executive suite at Wachovia Corp. before it was time to face Wall Street and present some particularly ugly second-quarter results.Battered by exposure to deteriorating credit, the Charlotte company reported a $8.7 billion loss Tuesday and outlined how it plans to dig its way back to profitability.
Mr. Steel, a former Treasury Department under secretary and Goldman Sachs Group Inc. executive, became Wachovia's president and chief executive July 10 to help it get back in the black. During a conference call, he had no problem engaging with analysts, but on several occasions he politely maneuvered through some intense questioning, as if he were sitting before a congressional panel.
He admitted to being "a bit evasive" to a round of questions from Nancy Bush of NAB Research LLC, thanking her for being patient.
The CEO asked Matt O'Connor at UBS AG's securities unit to "beg off a bit" on the topic of deleveraging assets, saying he needed a "better understanding to give a more complete answer."
Later in the call Mr. Steel sought to "push pause and buy a bit more time" when Morgan Stanley's Betsy Graseck asked about the capital requirements for a scaled-back loan portfolio.
Despite the losses, Wachovia's shares soared more than 27% Tuesday; Mr. Steel himself bought 1 million shares for roughly $16 million that day.
"We'll have more to report in the months ahead," he said.
Ken Lewis seems to have recovered some of his bravado.When reporting second-quarter earnings Monday, the Bank of America Corp. chairman, chief executive, and president told analysts that with its profit of $3.41 billion, B of A was the nation's most-profitable financial services company this earnings season.
"The fact that we can absorb $3.6 billion in credit losses, take $1.2 billion in additional writedowns, add $2.2 billion to our reserve for credit losses, and still earn $3.4 billion should tell investors something about the extent and consistency of our earnings power," he said.
Wall Street remains wary about the July 1 acquisition of Countrywide Financial Corp., but Mr. Lewis said the integration "is on track and adding to the profits at Bank of America as we speak."
He also was quick to respond to a question from Mike Mayo, a Deutsche Bank Securities analyst, who pressed him over his confidence about maintaining the Charlotte company's dividend.
"Earnings tripled" from the first quarter, Mr. Lewis said quickly. "That is the reason." (B of A affirmed its dividend of 64 cents a share Wednesday and announced a stock buyback program.)