Wachovia Faces $3 Billion Fourth Quarter Writedown
Posted by admin under: Main Dec 08
Wachovia Corp. could write down $3 billion worth of debt-related securities in the fourth quarter, cutting profit to a mere $3 million, according to analysts at Sanford C. Bernstein & Co.
“This will wipe out fourth-quarter earnings,” New York-based analysts Howard Mason and Michael Howard wrote in a note to investors Thursday.
The Charlotte-based bank earned $2.3 billion in the fourth quarter last year, but recent mortgage-related losses have put a dent in earnings, with third quarter profit falling 10 percent from year-ago levels after a $1.3 billion writedown.
On November 9th, Wachovia also said it wrote down the value of its collateralized debt obligations by $1.1 billion in October and set aside $600 million for fourth quarter loan losses.
In late January, Wachovia closed its subprime mortgage division, Equibanc, after “an intensive strategic review of its mortgage business,” but still run its wholesale mortgage unit Vertice.
Wachovia, the fourth largest bank in the U.S., bought World Savings, which was the nation’s second-largest savings and loan association, for $25.5 billion in October of 2006.
Shares of Wachovia were down 89 cents, or 2.02%, to $43.18 in late trading Friday, well below their 52-week high of $58.80.
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Source: Wachovia Faces $3 Billion Fourth Quarter Writedown
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