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Wachovia stock up under Steel

In his introductory conference call with analysts, new Wachovia Corp. chief executive Bob Steel said the company's stock price was the benchmark to judge his tenure.

So far, so good.

The Charlotte bank's stock price is up 15 percent since July 8, the day his appointment was announced, and up 97 percent since a low on July 15. The shares climbed nearly 5 percent on Friday to $17.93 on a positive day for bank stocks and the markets.

Still, shareholders won't be celebrating that much. The stock is down 53 percent this year, and the bank's outlook remains cloudy.

Steel, 57, has been helped by an overall upsurge in bank stocks. But he also appears to be sending the right signals to investors still reeling from the company's ill-timed expansion into the mortgage business in 2006.

The stock shot up 27 percent on July 22 after he detailed initial steps to fix the company following an $8.9 billion second-quarter loss. And on Monday, Wall Street analysts were receptive to a by-the-numbers, back-to-basics message he delivered during a meet-and-greet luncheon in New York.

Steel “brings a set of fresh eyes and an objective view to the problems confronting company,” RBC Capital Markets analyst Gerard Cassidy said in a research note. Steel likely has until the end of the year to lay out his turnaround plan, Cassidy said.

To be sure, the company still faces major obstacles, including a souring $122 billion Pick-A-Payment loan portfolio. Andrew Marquardt, analyst with Fox-Pitt Kelton Cochran Caronia Waller, said it will take some time for investors to gain confidence in the company's loan-loss estimates and its possible capital needs. Steel also has to shore up a management team losing its chief financial officer and chief risk officer.

The former U.S. Treasury Department official and investment banker has emphasized the importance of restoring value for shareholders. But he also can help himself by reviving Wachovia.

His compensation package is stacked with stock and option grants that benefit him if the stock eclipses $20 per share or higher. Steel also bought 1 million Wachovia shares on July 22, giving him a paper gain as of Friday of about $1.8 million.