Call it dueling CDs.

Wachovia Corp. and SunTrust Banks Inc. have started a mini rate war in Atlanta by offering high-yield certificates of deposit at their Georgia subsidiaries. Wachovia Bank of Georgia led off with a one-day sale last Saturday on 36-month and 10-month CDs, the former yielding an 8% annual percentage rate, the latter 7%.

Trust Company Bank, the Georgia subsidiary of Atlanta-based SunTrust, responded with a one-week sale of a 12-month tax-deferred savings certificate yielding 7.1%.

Both banks are also promoting money market accounts on a continuous basis. Wachovia's new product offers a 6% yield with a $10,000 minimum deposit.

Trust Co.'s comparable product is now at 6.1%, up from 3.45% just a week ago.

W. Doug King, executive vice president for consumer services at Wachovia Corp. in Winston-Salem, N.C., said the bank ran its Saturday CD sale in 220 branches across the three states in which it does business: Georgia and the Carolinas. Atlanta was the only place where a competitor responded with a similar campaign.

"I was a little bit surprised by how quickly Trust Co. was able to do it," Mr. King said.

Hugh Suhr, a Trust Co. spokesman, said the bank had already been in the market for several weeks with its one-year tax-deferred savings certificate. "Due to Wachovia's one-day sale, to stay competitive with that rate, we took a look and raised our rate," he said.

Mr. King described Wachovia's three-state campaign as a success, but declined to release specific numbers. Mr. Suhr couldn't provide sales figures for Trust Co.

Wachovia particularly has felt a need to increase its core deposit funding. It actually reported a 1% drop in total deposits last year, to $23 billion from $23.4 billion at the end of 1993.

As a result, Wachovia turned to wholesale funding, relying on its status as the South's only double-A rated bank. By yearend, it had funded 39% of its earning assets from wholesale sources.

Chief financial officer Robert S. McCoy Jr. recently told analysts that deposit pricing was his number one concern and that Wachovia's net interest margin, 4.37% at yearend, was not sustainable, in part because of deposit pricing pressures.

The deposit problem seems to be less visible at SunTrust, which reported a 6% jump in deposits at yearend, to $32.2 billion.

Mr. Suhr said Trust Co. was motivated primarily by a need to protect market share. Wachovia had offered its high-yield accounts only to new customers who transferred funds from another bank.

"When you look at the short-term instruments, particularly the money market, the money basically can walk out the door by virtue of somebody writing a check," he said.

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