Wachovia Corp. (WB) announced Wednesday a net loss of $23.9 billion — or $11.18 per share — in the third quarter of 2008. Most of the hefty loss includes $18.8 billion in goodwill write-downs, although some came in the form of mortgages. A $6.6 billion credit loss provision contrasted against $1.87 billion in charge-offs, helping drive a $4.76 billion loss reserve increase; that increase includes $3.4 billion to expand loss coverage tied to Wachovia’s Pick-a-Pay mortgage portfolio, the company said. Non-performing assets totaled $15 billion, or 3.05 percent of all loans, foreclosed properties and loans for sale. “Although this has been a challenging quarter, Wachovia’s underlying businesses remain solid and our franchise exceptionally attractive,” said CEO and president Robert K. Steel in a press statement Wednesday. Wachovia’s data showed an average $2.6 billion growth of core deposits over the same quarter last year. Average loans grew 8 percent, which Wachovia said was led by consumer real estate — primarily due to slower prepayments on mortgages and home equity loans. Despite Wachovia’s significant losses during the quarter, the planned sale of its assets to Wells Fargo & Co. (WFC) in a whole company transaction will continue as planned, officials from both companies said in a press statement. The $18.8 billion in non-cash goodwill write-downs — which reflect declining market valuations and terms of the Wells Fargo merger — might help cushion the blow when Wells Fargo acquires Wachovia’s assets, according to a report Wednesday by MarketWatch. Wachovia’s report of the write-downs during the third quarter 2008 will keep Wells from having to report losses after the acquisition. “The goodwill impairment charge has no impact on Wachovia’s tangible capital levels or regulatory capital ratios, because goodwill is deducted when computing those ratios,” Wachovia officials said in the earnings statement. Wells Fargo will acquire Wachovia’s outstanding shares of common stock in a stock-for-stock transaction that should be complete by the end of the fourth quarter 2008. “We believe that it was prudent for Wachovia to put these losses behind them,” said Wells Fargo CEO Howard Atkins in a media statement Wednesday. “The asset write-downs, reserve build, and other items are consistent with our acquisition assumptions.” Read Wachovia’s complete earnings report >> Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade. Editor’s Note: To contact the reporter on this story, email diana.golobay@housingwire.com.
Diana Golobay was a reporter with HousingWire through mid-2010, providing wide-ranging coverage of the U.S. financial crisis. She has since moved onto other roles as a writer and editor.see full bio
Most Popular Articles
Latest Articles
Test
The story for the housing market over the past three years has been, “Home sales are down, home prices are up.” Because inventory was so restricted after the pandemic, prices pushed higher even as demand weakened. That story may finally be inverting as unsold inventory of homes is now great enough that home prices are […]
-
Freddie Mac’s Donna Spencer on their Servicing Excellence initiative
-
Lower mortgage rates attracting more homebuyers
-
Rocket Pro TPO raises conforming loan limit to $802,650 ahead of FHFA’s decision
-
Show up, don’t show off: Laura O’Connor is redefining success in real estate
-
Between the lines: Understanding the nuances of the NAR settlement
Diana Golobay was a reporter with HousingWire through mid-2010, providing wide-ranging coverage of the U.S. financial crisis. She has since moved onto other roles as a writer and editor.see full bio