A month after announcing that it would take a large charge to

reorganize its business,

First Union

(FTU)

reported earnings Thursday that surpassed Wall Street's significantly lowered earnings expectations.

The Charlotte, N.C.-based company reported a $2.2 billion loss for the second quarter, including a $2.9 billion charge for a restructuring effort that revolves around closing the doors at

The Money Store

. The bank warned investors on June 26 of a $2.8 billion charge.

Shares of First Union, which operates more than 2,300 branches and controls about $258 billion in assets, finished up 3/4, or 3%, at 27 9/16.

Excluding the charges, First Union earned $714 million, or 73 cents a share. In the comparable quarter last year, the company reported net income of $873 million, or 90 cents a share, including a gain of 8 cents a share from the sale of certain assets. Until the company issued its warning last month, analysts polled by

First Call/Thomson Financial

had expected earnings of 85 cents a share. Those estimates fell to 72 cents a share in the intervening weeks, a bar the company was able to clear.

The bank issued warnings in advance of three quarterly earnings reports last year.

Under its new plans, the bank will close The Money Store, a home equity lender that targets people with poor credit histories. It aims to focus on asset management, brokerage, small business banking and e-commerce. The plans, it said, will lower credit and investment risks.

But the bank's provisions for loan losses jumped to $493 million in the quarter, compared to $180 million in the comparable quarter last year. The new amount includes a $265 million provision the bank called supplemental which the company said was affected by the release of reserves attributable to portfolios slated for sale.

First Union also has said it will reduce its interest-rate risk by selling up to $13 billion worth of investment securities that have yields below current market interest rates. The

Federal Reserve

has lifted rates six times since last June, increasing the cost of borrowing and hampering banking companies' efforts to fund new loans.

In the quarter, fee income from capital management operations, including money management, grew to $773 million from $521 million in the comparable quarter. Capital markets revenue, which includes those from investment and corporate banking, rose 12 percent to $852 million from $759 million. Gains on investments rose to $185 million from $60 million in the year-ago quarter.