Wachovia was last down 3.6% to $38.85 in pre-market trading, following the company's SEC regulatory filing detailing the value of its collateralized debt obligations [CDOs] fell by $1.1 billion (to now total $676M) in October and warned that it expects Q4 loan loss provisions of $500M to $600M. Wachovia says the CDO losses in October will require a writedown of $1.11/share, compared to a $0.35/share writedown in Q3. (See Q3 earnings summary). The loan loss provisions are in excess of charge-offs. Wachovia cited "anticipated loan growth and the impact of continuing credit deterioration in our loan portfolio." In its SEC filing, Wachovia described the current market as "extraordinarily volatile." Wachovia's $2.1B subprime residential mortgage-backed securities [RMBS] portfolio value was unchanged. However, Wachovia said the subprime RMBS and asset-backed CDOs markets have experienced "further deterioration" since the company reported Q3 earnings on Oct. 19. Shares of Wachovia lost 0.3% to $40.30 on Thursday.
Commentary: Thursday's Options Report: XLF, Wachovia, Citi, BID, Gap, Cisco • Financial Sector Credit Default Swaps Surge on Writedown Fears • Financial Sector Now Officially in Bear Mode
Stocks to watch: WB. Competitors: C, BAC, JPM. ETFs: KBE, XLF, IYF
Earnings call transcript: Wachovia Q3 2007 Earnings Call Transcript
Related: Wachovia SEC Form 8-K [pdf]