Wachovia Corp., the holding company for Wachovia Bank, reported a net loss of $23.9 billion for the third quarter Oct. 22, possibly the largest quarterly loss of any U.S. public company in history, caused mainly by a $19 billion write-down of goodwill on assets. Most of the devalued assets derive from mortgages it got in the acquisition of Golden West Financial, an Oakland-based savings and loan it bought in 2006 for $25 billion.
The Charlotte, N.C.-based bank that agreed to be acquired by Wells Fargo earlier this month also set aside $6.6 billion in loan loss provisions, including net charge-offs of $1.87 billion.
Fortunately for Wells Fargo, the huge write-down doesn’t affect its capital ratios. However, the San Francisco bank can’t be too happy about Wachovia’s portfolio of problem assets which stood at $15 billion or 3.05 percent of total loans as of Sept. 30.
Wells agreed to pay $15 billion at the outset, but because of the decline in its stock price, that price has dropped to about $13 billion. The deal is slated to close in the fourth quarter.
No word yet on how many of Wachovia’s 11 branches in the county will remain open. It has about 3,300 branches in 21 states, one of the key reasons Wells coveted it.
Wells management didn’t seem too worried. “We’re more encouraged than ever by what we’ve seen in their franchise, and we’re pleased that Wachovia’s team continues to focus on serving customers,” said CEO John Stumpf.
, Mike Allen