Thread: Wachovia loses $8.9B, cuts 6,350 workers, dividend

Wachovia loses $8.9B, cuts 6,350 workers, dividend
Tuesday July 22, 11:08 am ET
By Ieva M. Augstums, AP Business Writer

Wachovia slashes dividend, jobs, to shut mortgage unit after $8.86B loss in second quarter

CHARLOTTE, N.C. (AP) -- Wachovia Corp. reported a surprisingly large second-quarter loss Tuesday, deflating Wall Street's hopes that the nation's big banks are weathering the credit crisis well. The nation's fourth-largest bank by assets said it lost $8.86 billion, is slashing its dividend and eliminating 10,750 positions after losses tied to mortgages soared.

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Even excluding one-time items, the results substantially missed Wall Street estimates.

"These bottom-line results are disappointing and unacceptable," Chairman Lanty Smith said in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."

Wachovia said it lost the equivalent of $4.20 per share in the April-June period. In the same timeframe last year, the bank earned $2.34 billion, or $1.22 per share.

Excluding $6.1 billion in write-downs to the value of its intangible assets and merger-related and restructuring charges of $128 million, Wachovia lost $2.67 billion, or $1.27 per share. Second quarter results include the bank's October acquisition of A.G. Edwards Inc.

Analysts on average expected a loss of 78 cents per share on revenue of almost $8.4 billion.

Earlier this month, Wachovia had projected a $2.6 billion to $2.8 billion quarterly loss, equal to $1.23 to $1.33 per share, excluding goodwill items.

The Charlotte-based bank cut its quarterly dividend to 5 cents per share from 37.5 cents, which will conserve approximately $700 million of capital per quarter. In April, Wachovia slashed its dividend 41 percent.

As part of a plan to cut 2009 expenses by $1.5 billion, the bank said it would lay off 6,350 workers and eliminate 4,400 open positions and contractors.

During the quarter, the Wachovia boosted its provision for loan losses to $5.57 billion from $179 million a year ago, and added $4.2 billion to its reserves for bad loans.

Wachovia has been suffering from its 2006 acquisition of Golden West Financial Corp. The bank paid roughly $25 billion for the California mortgage lender known for exotic loans.

The so-called "Pick-a-Payment" loans, which Wachovia inherited from Golden West, have proved a headache for the bank and a lightning rod for shareholders, defaulting at higher rates than other mortgages.

Wachovia recently discontinued offering the "Pick-A-Payment" loan option, which allows customers to pay a less-than-full interest payment on all new home loans. The bank also had hired The Goldman Sachs Group Inc. to conduct an analysis of its loan portfolio and advise it on strategic alternatives.

Late Monday, Wachovia announced plans to leave the wholesale mortgage lending business. And beginning Friday, the company will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector.

Big banks, such as Bank of America Corp. and National City Corp., have stopped making loans through brokers entirely, relying instead on their loan officers. National City said it was forced to do so by a continuing downturn in loan demand, while Bank of America said it saw better "long-term opportunity" in working through its own loan officers.

Wachovia spokesman Don Vecchiarello said in a statement that the company "recognized some opportunities to re-position our business" given the current market conditions.

Earlier this month, Wachovia named former Treasury Undersecretary and Goldman Sachs executive Robert Steel as chief executive, replacing the ousted Ken Thompson. Within a week of being on the job, the bank's shares tumbled to a new 17-year low.

http://biz.yahoo.com/ap/080722/earns_wachovia.html

This bank will be one of the next ones to fall. If you have money in this illegal alien pandering bank, you might want to think twice.


The people at Indymac are not getting their money.

They kept telling them to come back. Then threatened them with arrest when they were angry about not having access to their money.

Those who received checks from FDIC were not able to deposit them in other banks. The banks refused them or if they did accept them, they said the person could nto access the money for 8 weeks.


The cards are going to fall.

I don't feel one bit sorry for this company. They hired a girl w/o GED, she did not say anything about her education, now they don't asked so she has not lied. The crazy girl thinks she is so much smarter than everyone. She is olive due to her dad being from the mid-west and mom is french, so the company thinks they have made out because she understands spanish a bit and speaks english for she went to the 12th grade.

I wouldn't trust this person even looking at my bank account. Believe me

GOOD GO BACK TO MEXICO WALKOVERYA!!!!!

another bank we over taxed Americans will pay to bail out

Late Monday, Wachovia announced plans to leave the wholesale mortgage lending business. And beginning Friday, the company will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector.

GOOD! You deserve it.
I only feel sorry for some of the AMERICANS who will lose their jobs.

Come 2008 December to 2009, all banks will fail anyway. That's when the REAL BUSH Dictatorship will come to light! We all lose our dollar currency anyway

So start collecting coinage

Late Monday, Wachovia announced plans to leave the wholesale mortgage lending business. And beginning Friday, the company will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector.

When we bought our first house in the 70's, we just went to our local bank, filled out the necessary forms, showed proof of income, and put 20% down on the purchase.

I don't know how many mortgage brokers are out there, but I'm happy to see they will be looking for other careers! Between Greenspan, who kept the dollar and interest rates deflated until every last illegal got a house, a credit card, and an auto loan, the lenders, and the mortgage brokers...we ended up with the biggest economic collapse in history. Now the taxpayers are going to get the bill for Fred and Fannie, IndyMac, Bear Stearns, Citi-Group, and all the rest of them.

I don't see how we can avoid a full blown DEPRESSION next year when Obama is coronated! It's going to be much, much worse than ever expected!

Originally Posted by jp_48504

This bank will be one of the next ones to fall. If you have money in this illegal alien pandering bank, you might want to think twice.


The people at Indymac are not getting their money.

They kept telling them to come back. Then threatened them with arrest when they were angry about not having access to their money.

Those who received checks from FDIC were not able to deposit them in other banks. The banks refused them or if they did accept them, they said the person could nto access the money for 8 weeks.


The cards are going to fall.

I was wondering about Indymac because it seems like the story "faded" on all the news channels.

Thats terrible that people are being told to leave and come back like its no big deal. And to refuse access to FDIC deposited checks for 8 weeks before they can get their own money is outrageous!

I am beginning to think its better to buy a safe and keep my money there. At least I'll know where my money is and can take it out when I need it. The banks dont offer any decent interest rates anyway.

The people at Indymac are not getting their money.

They kept telling them to come back. Then threatened them with arrest when they were angry about not having access to their money.

Those who received checks from FDIC were not able to deposit them in other banks. The banks refused them or if they did accept them, they said the person could nto access the money for 8 weeks.

JP, we have an account with WaMu, and have feared with their troubles, that any little bit we have had in there would be swallowed up for at least a few weeks before the feds could verify the amount (if WaMu suddenly closed). some said it would not happen like that, but I felt sure that it could, knowing how inept our federal government has become, and sure enough, look at what is happening to these people.

Some can afford to be without their funds, having other ways to finance their daily lives, but we are the kind who have nothing but our income, and what might be in our account, so it would kill us to lose it for any period of time.