Wachovia posts $24 billion loss for 3rd quarter

Associated Press

NEW YORK — Wachovia Corp. on Wednesday reported a staggering $24 billion loss as it took a goodwill impairment charge of nearly $19 billion ahead of its acquisition by Wells Fargo & Co. The bank reported a loss, after paying preferred dividends of $23.89 billion, or $11.18 per share, in the period ended Sept. 30. That compares with earnings of $1.62 billion, or 85 cents per share, a year earlier.

Excluding goodwill impairment of $18.7 billion and merger-related and restructuring expense of $414 million, the bank lost $4.76 billion, or $2.23 per share.

Analysts polled by Thomson Reuters, on average, had expected earnings of 2 cents per share. Analyst estimates typically exclude one-time items.

The bank said its acquisition by Wells Fargo, in an all-stock deal currently valued at about $14 billion, is on track to close in the fourth quarter.

"Wachovia's third-quarter results were very much in line with our expectations," said Wells Fargo President and Chief Executive John Stumpf 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."

A majority of the $18.7 billion writedown relates to the bank's retail and small-business unit, which includes Wachovia's troubled Pick-a-Pay mortgage portfolio that let borrowers skip some payments. The current Pick-a-Pay mortgage loan balance totals $118.7 billion. Wachovia expects total cumulative losses of $26.1 billion on this portfolio.

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