'These bottom-line results are disappointing and unacceptable,' said Lanty L. Smith, Wachovia's chairman.

'While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility.""

Capital Management Segment Lags

Average loan growth in the general banking was 10%. Net new retail checking accounts growth slowed, but still increased by 263,000 compared with an increase of 314,000 in the second quarter of 2007.

In the quarter, general banking earnings fell by $336 million to $1.1 billion dragged by rising credit costs and related expenses, primarily in the mortgage business. Revenue rose 8% to $4.7 billion, however.

Wealth management earnings gained 9% to $98 million in the quarter while revenue lifted up 6%. Net interest income rose 11% on 10% loan growth and improved deposits.

Corporate and investment bank earnings of $209 million were down $570 million on prior year due to continued net valuation losses related to disruption in the capital markets, and increased provision for credit losses.

Earnings fell 29% to $297 million in capital management group with net market disruption-related losses of $118 million, including $89 million of securities impairments relating to the liquidation of an Evergreen fund.

Wachovia Shares Plunge 70%

Shares of Wachovia rose as much as 9.3% to $14.27 in afternoon New York trading. Over the past 52 weeks, the stock has traded in the range $7.80 and $53.10. Wachovia Corporation has lost more than 70% of its value in the last nine months of trading.