Wachovia Doubles Q4 Loan Loss Provision

Wachovia Corp. (WB) submitted a filing with the SEC Wednesday in which it forecast a loan loss provision in Q4 of about $1 billion beyond charge-offs. It had earlier forecast that figure in the $500-600 million range (full story). Wachovia shares dropped 3.4% to $40.53 Wednesday, adding to its 5.7% fall Tuesday -- the shares' worst two-day performance in five years. Writedowns for October and November on securities backed by subprime mortgages already total the $1.34 billion pretax loss posted for the whole quarter. "None of us know what inning we are in," said CEO Kennedy Thompson. "We know that 2008 is going to be challenging for us and the entire industry, but we think that we are prepared for it and we think we will do just fine."

Some analysts believe more writedowns are still to come at Wachovia. "I don't think anyone can say with any confidence that this is it," said Kevin Fitzsimmons of Sandler O'Neill & Partners. "Rarely do companies get it right at the first swipe when it comes to credit." Wachovia still expects to be able to pay its $0.64 per share dividend. In related news, Bank of America (BAC) and PNC Financial Services Group (PNC) said their losses will be greater than anticipated (full story). "You certainly can assume [quarterly] results will again be quite disappointing," said BofA CEO Kenneth Lewis. "The credit markets "have turned down again and will probably remain challenging into next year."

Sources: Wachovia Corp. Form 8-K SEC Filing, Reuters, Bloomberg I, II, Dow Jones

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