Wachovia 4th-quarter earnings tumble to $51 million due to write-downs and loss provisions
Written on January 23, 2008
Wachovia Corp., the nation’s fourth-largest bank, on Tuesday said its profit fell 98 percent to the lowest since 2001 on writedowns for bad loans and mortgage-backed securities.
But profit at the unit that includes Wachovia’s St. Louis-based operations gained 42 percent to $350 million as managed assets expanded 52 percent to $203.5 billion at year-end. Wachovia bought A.G. Edwards Inc. for about $6.6 billion in October.
Wachovia’s overall net income in the fourth quarter declined to $51 million, or 3 cents a share, from $2.3 billion, or $1.20 a share, a year earlier, the Charlotte, N.C.-based company said. Revenue fell 17 percent to $7.2 billion.
Wachovia recorded $1.7 billion of writedowns companywide. The company’s corporate and investment bank had a loss of $596 million, driven by $1.6 billion of writedowns. Falling prices for securities backed by subprime mortgages cut the value of Wachovia’s holdings by $1 billion, compared with $350 million in the third quarter.
The company’s nonperforming assets, including loans and foreclosed properties, surged more than threefold to $5.1 billion credit scores. The provision for losses from bad loans rose to $1.5 billion from $206 million a year earlier.
Still, Wachovia said its capital levels were adequate to pay a dividend this year. The dividend has been yielding about 8 percent annually.
BANK OF AMERICA
Bank of America Corp. said its fourth-quarter earnings fell sharply, hurt by mounting credit losses and weak investment banking results.
Net income at the Charlotte, N.C.-based bank declined to $268 million, or 5 cents per share, in the three months ended Dec. 31 from $5.26 billion, or $1.16 per share, a year ago.
The bank’s revenue fell 32 percent to $12.67 billion from $18.49 billion last year.
The quarter included results from LaSalle Bank, which Bank of America purchased on Oct. 1.