Wachovia Loss Nearly Doubles

Wachovia(WB Quote) said Tuesday that its first-quarter earnings loss was 80% higher than originally reported due to additional writedowns related to its bank-owned life insurance portfolio.

The Charlotte-based bank increased its first-quarter loss to $708 million, or 36 cents a share, up from $393 million, or 20 cents a share, as reported in mid-April, according to a filing with the Securities and Exchange Commission.

The bank restated earnings after it reviewed so-called stable value agreements (SVA) totaling $360 million that were provided by a third-party guarantor with respect to three related contracts within Wachovia's bank-owned life insurance portfolio (BOLI). Wachovia concluded that it would record valuation losses of $315 million on the related BOLI assets, it said.

"Although no assurances can be given, Wachovia believes it is possible that certain circumstances may arise that would allow it to realize benefits from these SVAs, which would be recognized as gains in future periods," the filing said.

Wachovia shares are down 20% this year and more than 40% from a year earlier. The downturn in the U.S. economy and housing crisis has taken a toll on the bank's 2006 acquisition of California residential mortgage lender Golden West.

Last month, Wachovia raised $7 billion in capital through common and preferred stock offerings. Other banks including Washington Mutual(WM Quote), National City(NCC Quote), Citigroup(C Quote) and Merrill Lynch(MER Quote) have been forced to raise capital as the credit crisis lingers.

Wachovia has also been saddled with several other black marks in recent weeks.

In late April, it agreed to a $144 million settlement with the Office of the Comptroller of the Currency over its relationship with third-party telemarketers and payment processors.

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