Wachovia's likely swan song: a loss of $24 billion Wachovia's swan song: loss of $24 billion

Wachovia took an $18.8 billion write-down to reflect the company's lower market valuation. Wachovia took an $18.8 billion write-down to reflect the company's lower market valuation. Photo: Chris Hondros, Getty Images Photo: Chris Hondros, Getty Images Image 1 of / 1 Caption Close Wachovia's likely swan song: a loss of $24 billion 1 / 1 Back to Gallery

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.

Mortgage woes also continued to devour Wachovia’s earnings. The Charlotte-based bank set aside $6.6 billion to cover loan losses during the quarter — about two-thirds for Pick-A-Payment mortgage loans inherited in the bank’s 2006 Golden West Financial Corp. acquisition. The bank now expects cumulative losses in the $118.7 billion Pick-A-Pay portfolio of 22 percent, up from an estimate in July of 12 percent, 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.

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 Bob 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.

“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.”