Consistent with previously announced expectations, Charlotte, N.C.-based Wachovia Corp. has reported a net loss in the second quarter of 2008 of $8.9 billion, or a net loss of $4.20 per share, including a $6.1 billion noncash goodwill impairment charge in commercial-related subsegments, reflecting declining market valuations and asset values.
Wachovia added $5.6 billion to its loan loss reserve to cover net charge-offs and increase the reserve by $4.2 billion.
In addition to reducing the quarterly common stock dividend to $0.05 per share, which will conserve approximately $700 million of capital per quarter, the company will immediately exit the general bank wholesale mortgage origination channel.
Wachovia had previously ceased offering the negative amortization option for its Pick-a-Pay mortgage product and says it is committed to working with customers to refinance existing Pick-a-Pay mortgages into conventional mortgage products. Approximately 1,000 Wachovia mortgage origination personnel are being redeployed in the company's efforts to assist customers to refinance and restructure Pick-a-Pay mortgages. The objective is to assist customers in avoiding foreclosures and meaningfully reduce the company's risks in the mortgage area, Wachovia says.
Source: Wachovia