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Earnings Roundup

Wachovia net income drops 10%

October 20, 2007|From Times Wire Services

Wachovia Corp. posted a 10% decline in third-quarter profit Friday, missing forecasts, as it suffered $1.3 billion of write-downs resulting from credit market turmoil.

The drop was the first in six years for the fourth-largest U.S. bank. It concluded a dismal week for earnings at large U.S. banks, which have been battered by mounting consumer loan losses as the housing market slumps, and sinking investor demand for mortgages and other debt.

Profit fell 57% at Citigroup Inc. and 32% at Bank of America Corp. It rose 2% at JPMorgan Chase & Co. and 4% at Wells Fargo & Co. All but JPMorgan disappointed investors.

Charlotte, N.C.-based Wachovia's net income fell to $1.69 billion, or 89 cents a share, from $1.88 billion, or $1.17, last year. Excluding merger costs, profit was 90 cents a share, 14 cents below the average analyst forecast, according to Reuters Estimates.

Revenue rose 4% to $7.35 billion, short of the average $7.77-billion forecast.

Chief Executive Ken Thompson on a conference call said he was "deeply disappointed" with results. "It's clear that we are in an environment of building reserves [for loan losses]," he said.

Wachovia shares dropped $1.77, or 3.7%, to $46.37.

The company set aside $408 million for bad loans, up from $108 million a year earlier, and net charge-offs rose 78% to $206 million from $116 million.

Nonperforming assets have risen $881 million since June to $2.99 billion. Chief Financial Officer Tom Wurtz said $550 million of the increase came from the former Golden West Financial Corp., a California lender that Wachovia bought last October for $24.2 billion.

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