Florida has a new No. 1 bank … again. Maybe.
A battle broke out Friday for control of Wachovia Corp., as Wells Fargo agreed to pay $14.8-billion for the struggling bank, while Citigroup and federal regulators insisted that Citi's earlier and lower-priced takeover offer go forward.
The dueling acquisition deals left Wachovia officials unsure of the status of its Florida operations. Arguably, owing to Wells Fargo's absence in Florida, fewer Wachovia branches would close if that deal moved forward.
"We have no way to know what the impact will be, if any, in the Florida market," Wachovia spokeswoman Kathy Harrison said Friday.
The surprise announcement that Wachovia agreed to be acquired by San Francisco-based Wells Fargo & Co. in the all-stock deal — without government assistance — upended what had appeared to be a carefully examined arrangement and caught regulators off guard.
Wells' original offer totaled about $15.1-billion, but since the value of its shares closed down 60 cents Friday, the deal is now valued at about $14.8-billion.
Only four days earlier, Citigroup Inc. agreed to pay $2.1-billion for Wachovia's banking operations in a deal that would have the help of the Federal Deposit Insurance Corp.
The head of the FDIC said the agency is standing behind the Citigroup agreement, but that it is reviewing all proposals and will work with the banks' regulators "to pursue a resolution that serves the public interest."
Citigroup, which demanded that Wachovia call off its deal with Wells Fargo, said its agreement with Wachovia provides that the bank will not enter into any transaction with any party other than Citi or negotiate with anyone else.
Wachovia holds more than 20 percent of the state's deposits, valued at more than $71.3-billion, and has 720 offices and 15,000 employees around the state. In the Tampa Bay area, Wachovia has 86 financial centers, 1,500 employees and deposits of $7.7-billion.
Wells Fargo has 3,200 locations and 6,900 ATMs, mostly in the West and Midwest, but operates no retail banking branches in Florida.
For some Tampa Bay area residents, the name has associations with Wells Fargo's origins as a stage coach company.
"Wells Fargo? I thought they just drove those armored cars. They're a bank?" said Tami Meyers, who had just finished cashing a check Friday at Wachovia's downtown Tampa branch.
Nevertheless, Wells Fargo runs several mortgage offices in the bay area. It holds thousands of mortgages in the bay area, and hundreds have recently fallen into foreclosure.
Barring legal action, the future of Wachovia will be determined by the bank's shareholders and regulators, which both have to approve a final deal.
It was clear which they preferred Friday, as Wachovia shares climbed as high as 80 percent.
The FDIC is talking out of both sides of its mouth, said Roger Cominsky, partner in law firm Hiscock & Barclay's financial institutions and lending practice. The agency says it stands behind the deal with Citigroup because it hasn't been nixed yet, he said.
"But at the same time, they are saying they are reviewing all proposals."
By law, he said the FDIC is required to find the least-costly resolution for taxpayers. The Wells Fargo deal would not rely on any assistance from the government.
The Federal Reserve, which has regulatory oversight of the three big banks, said it hasn't had time to review the proposed sale of Wachovia to Wells Fargo but will work to ensure that all creditors and depositors of Wachovia are protected.
The Fed said regulators will be working with Wachovia and Wells Fargo "to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability."
Under Wells Fargo's deal, Wachovia shareholders would receive 0.1991 shares of Wells Fargo for every share of Wachovia stock they own, valuing Wachovia at about $7 per share. This is a nearly 80 percent premium over the stock's Thursday closing price of $3.91. Shares closed at $10 on Sept. 26, the last trading session before the deal with Citigroup was announced.
"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," Robert Steel, Wachovia's president and chief executive, said in a statement.
Charlotte would be the headquarters for the combined company's East Coast retail and commercial and corporate banking business. St. Louis would remain the headquarters of Wachovia Securities.
The combined company would have total deposits of $713-billion and more than 6,500 locations — more than any other bank in the United States.
While there is some overlap in states like California and Texas, the deal essentially opens up the entire East Coast to Wells Fargo, giving it a footprint in new markets such as New York and Miami.
In terms of total assets, a combined Wells Fargo-Wachovia would have $1.37-trillion in estimated pro forma assets as of the end of this year. As of June 30, Bank of America Corp. had $2.72-trillion in assets including those of Merrill Lynch & Co., which it is acquiring. Citigroup had $2.10-trillion and J.P. Morgan Chase & Co. had about $1.78-trillion, including WaMu's assets.
Wachovia shares rose $2.30, or 58.8 percent, to close Friday at $6.21. Wells shares slipped 60 cents to $34.56, and Citigroup shares dropped $4.15, or 18.4 percent, to $18.35.
Times staff writers James Thorner and Asjylyn Loder contributed to this report, which uses information from the Associated Press.