History

• Wachovia Corp. started in 1879 as Wachovia National Bank in Winston-Salem, N.C., where it was headquartered for most of its history. The Moravians, who founded Winston-Salem, called the land Wachovia because it looked like the Austrian valley of Wachau. Wachovia Corp. grew to become a leading bank in the Southeast. First Union Corp. purchased Wachovia in September 2001, and the headquarters moved to Charlotte, N.C. The combined entity kept the Wachovia name.
  
  

Golden West Purchase

• Wachovia, which had mostly been an East Coast operation, broke into the booming California market in October 2006 when it purchased Oakland-based Golden West Financial Corp. for $24 billion. At the time, Wachovia was the fourth-largest bank in the U.S. by assets, trailing only Citigroup, Bank of America and JP Morgan Chase. Wachovia CEO Ken Thompson called Golden West a "crown jewel" and said the deal was "transformative" for Wachovia, according to an Associated Press report on May 6, 2006.
  
  

Troubles Arise

• Thompson was right about the deal being transformative but not in the way he had hoped. The key to Golden West's operation was adjustable-rate home mortgages in California and the rest of its Western territory. Loose lending standards allowed millions of people--who otherwise would have been unable to do so--to buy homes. When home prices started falling and interest rates rose shortly after Wachovia bought Golden West, foreclosure rates began to sore, particularly on the bank's subprime loan portfolio.
  
  

FDIC Takeover

• Wachovia, which earned $2.3 billion in the first quarter of 2007, lost a stunning $8.9 billion in the second quarter of 2008 and $23.9 billion the next quarter. Thompson was forced out as CEO. In late September 2008, just days after Washington Mutual failed, the FDIC stepped in to broker a sale of Wachovia rather than let it collapse. The plan was for the bank to be sold to Citigroup, another financial institution struggling from bad loans during the real estate boom, for $2.2 billion in stock.
  
  

Wells Steps In

• The partnership with Citi didn't last long. A few days after it was announced that Citi would buy Wachovia, Wells Fargo announced that it had agreed to buy the bank without FDIC involvement for a deal valued at the time at $15 billion. Citi promptly took legal action against Wells for interfering, but the Wells deal went through on Dec. 31, 2008. Wachovia ceased to exist on that day as an independent bank, and Wells said it would gradually integrate the Wachovia brand name.