Subprime Mess Hits Wachovia

Shares of Wachovia (WB Quote) fell 4% early Friday after the Charlotte-based bank said the downturn in subprime mortgages would require it to record an added $1.1 billion pretax writedown for October.

Wachovia also plans to increase its fourth-quarter allowance for loan losses by $500 million to $600 million because of the weakenss in the housing market.

After the company announced its third-quarter results, "certain financial markets experienced further deterioration, particularly the markets for subprime residential mortgage-backed securities and for collateralized debt obligations collateralized by [residential mortgage-backed securities]," Wachovia said.

Shares were down $1.56 at $38.74.