Wachovia posts loss: $24 billion

CHARLOTTE -- In what was likely its last earnings report as an independent company, Wachovia Corp. on Wednesday said it lost $23.89 billion, or $11.18 per share, in the third quarter as mortgage losses continued to hurt the bank.

The deficit at Charlotte-based Wachovia was the largest for any bank since the financial crisis began and far more than analysts had expected.

Wachovia took an $18.8 billion write-down, an accounting move to reflect the company's lower market valuation and the terms of its sale to Wells Fargo & Co.

The loss compared with a profit of $1.62 billion, or 85 cents per share, in the third quarter of last year, when banks were first hit by a then-developing credit crunch. Excluding the goodwill write-down and other charges, Wachovia lost $4.76 billion, or $2.23 per share, in the period.

The bank set aside $6.6 billion to cover loan losses during the quarter -- about two-thirds for adjustable mortgage loans inherited in the 2006 acquisition of Golden West Financial of California. Mortgage losses are expected to rise as home values continue to fall in markets such as California and Florida.

The report is the third-straight trip into the red for Wachovia, which lost $9.1 billion in the second quarter and $707 million in the first quarter.

Wachovia said its core businesses such as retail banking continued to generate more loans and deposits. Total revenue fell to $5.7 billion from $7.5 billion a year ago. Revenue in the general bank increased 8 percent from last year to $4.8 billion.

"In these unprecedented times, my colleagues have demonstrated that Wachovia always puts the interests of our customers and clients first," chief executive Robert Steel said in a statement. "Although this has been a challenging quarter, Wachovia's underlying businesses remain solid and our franchise exceptionally attractive. We look forward to the opportunities that lie ahead as we join forces with Wells Fargo."

Wells Fargo of San Francisco is buying Wachovia in a deal initially worth $15 billion after Wachovia slipped to the verge of collapse twice during the quarter. Wells' deal prevailed after New York-based Citigroup backed off an earlier offer to buy most of Wachovia's operations for $2.16 billion.

"Wachovia's third-quarter results were very much in line with our expectations," Wells Fargo's CEO John Stumpf said in a statement. "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."

Wachovia ended the quarter with $447 billion in deposits, up from $435 billion at the end of June. Wachovia's consumer deposits increased to $293 billion from $283 billion, buoyed by a 13 percent jump in certificates of deposit, or CDs. So-called "core" deposits in checking, savings and other accounts slipped 3 percent.