For years, Wachovia stock provided a reliable return, and investors bought and held it with confidence.
But the bank's swift fall is hitting shareholders firmly and painfully in the pocketbook, sparking disillusionment and leaving those with a stake in the company's fortunes wondering what went so wrong, so quickly.
Shares of Wachovia closed at $1.84 Monday, down from $10 Friday and about $50 a year ago – a 96 percent decline.
Large institutional investors such as pension plans and mutual funds hold much of the company's stock.
Major individual shareholders include CEO Bob Steel, with nearly 3 million shares, and former CEO Ken Thompson, who has about 821,000 shares, according to securities filings. Based on the company's stock price, Steel's holdings were worth about $44 million less Monday than they were a week ago.
The bank's tumble is also pummeling employees and smaller investors, many of whom have owned the stock for decades, often starting in the small regional banks that Wachovia and its predecessors swallowed over the years.
Susan Hankins, 51, of Richmond, Va., inherited 11 shares of the People's Bank of Stafford (Va.) from her grandmother in 1966. As of Monday, that had grown into 475 shares of Wachovia, plus a car – a Mini – she bought after cashing in additional Wachovia stock in 2002. Those 475 shares were worth about $874 Monday, $16,658 less than they were when she bought the car six years ago.
Hankins said she felt numb and angry at the company's management for the events leading up to Monday but also took it as a reminder of the importance of diversifying her portfolio. “Is this what it comes to after 40 years of holding onto this stock?” she said. “I feel like I've learned a very expensive lesson.”
Although Citigroup is buying Wachovia's retail bank and other assets, Wachovia shareholders will not get shares of Citi. Instead, they will continue to own shares in a slimmed-down company called Wachovia that will house the company's brokerage and asset management arms.
The deal is subject to shareholder approval. And, noted Steven Mann, a finance professor at the University of South Carolina, shareholders have little choice but to say yes, given that other outcomes could be even worse.
But some said they would not vote for it.
“They gave away the bank,” said Marc Newell, 61, of Kings Mountain, a retired pilot who with his wife has held stock in what is now Wachovia for about 30 years. “They gave it to Citi for nothing. … I don't understand how you can give away a bank, but that's what they did.”
Because of Wachovia's problems, he said, the couple's roughly $400,000 retirement fund has largely vanished, taking their plans to eventually move to the coast with it.
Shareholder Chuck Johnson of Charlotte said he had hoped the federal bailout would help save the company. Monday, he wouldn't say how he'd vote on the Citi deal.
“It's irrelevant whether the deal goes through or not,” he said. “We've gotten crushed. The shareholders have gotten crushed.”
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