Wachovia Posts Big Loss Ahead of Merger

Wachovia ( WB) on Wednesday reported a net loss of $23.9 billion in the third quarter, as the Charlotte, N.C., bank took an $18.8 billion goodwill impairment charge ahead of its planned merger with Wells Fargo ( WFC).

Wachovia lost $23.9 billion, or $11.18 a share, vs. a loss of $9.1 billion, or $4.31 a share, in the second quarter and a profit of $1.6 billion, or 85 cents a share in the third quarter last year. Excluding an $18.7 billion after-tax charge for goodwill impairment, $414 million in net merger-related and restructuring expenses, Wachovia posted a net loss of $4.76 billion, or $2.23 a share.

"Although this has been a challenging quarter, Wachovia's underlying businesses remain solid and our franchise exceptionally attractive," CEO and President Robert Steel said in a company statement. "We look forward to the opportunities that lie ahead as we join forces with Wells Fargo."

Wells Fargo CEO and President John Stumpf, whose San Francisco-based bank won a legal tussle with Citigroup ( C) for control of Wachovia earlier this month, said Wachovia's results "were very much in line with our expectations."

"We're more encouraged than ever by what we've seen in their franchise, and we're pleased that Wachovia's team continues to focus on serving customers," Stumpf said in a statement.

Wachovia's losses also were impacted by the $6.6 billion it added to its provision for credit losses, including $4.8 billion to build reserves; $2.5 billion in market disruption losses, including $1.2 billion in securities impairments and $310 million in principal investing losses.

The bank reported net charge-offs of $1.9 billion, or an annualized 1.57% of average net loans, due mainly to deteriorating housing markets in Florida and California. It posted total nonperforming assets including loans held for sale were $15 billion, or 3.05% of loans, foreclosed properties and loans held for sale.

Wachovia shares were falling 1.5% to $6 in recent premarket trading.

This article was written by a staff member of TheStreet.com.

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