Wachovia Sinks on Loss, Plans to Raise $7B

Updated from 2:22 p.m. EDT

Wachovia(WB Quote) shares sank as much as 11% Monday, after the bank said it was raising $7 billion through a stock offering and cutting its dividend, while swinging to a big first-quarter loss.

Wachovia, which has been hobbled in the credit crunch since last summer due to its acquisition of option adjustable rate mortgage specialist Golden West near the height of the housing bubble in 2006, reported a loss of $393 million, or 20 cents a share, vs. a profit of $2.3 billion, or $1.20 a share in the year ago period. Analysts polled by Thomson Financial had expected a profit of 40 cents a share.

The Charlotte-based bank blamed the loss on higher credit costs and "continued disruption in the capital markets." As a result, the bank commenced concurrent offerings of common and preferred stock totaling $7 billion. It also slashed its quarterly dividend by 41% to 38 cents a share, which it said will preserve another $2 billion in capital annually. ...