2:00PM New York – Wachovia bank suffered a severe profit decline on sub-prime losses and other consumer loan losses.

Wachovia Bank (WB: chart) reported fourth quarter profit of $51 million or 3 cents per share compared to $2.32 billion or $1.20 per share.

Excluding after-tax net A G Edwards brokerage merger-related expenses of 5 cents per share in the fourth quarter of 2007 and 1 cent per share in the fourth quarter of 2006, earnings were $160 million, or 8 cents per share, in the fourth quarter of 2007 compared with $2.33 billion, or $1.21 per share, in the fourth quarter of 2006.

The merger of A G Edwards, Inc was completed on October 1, 2007.

Full year 2007 net income was $6.31 billion, down 19 percent from $7.79 billion in 2006, and earnings per share were down 30 percent from 2006 to $3.26. Excluding after-tax net merger-related expenses of 8 cents in 2007 and 7 cents in 2006, earnings in 2007 were $6.47 billion, or $3.34 per share, compared with $7.91 billion, or $4.70 per share, in 2006.

Wachovia took in the quarter a charge of $1.7 billion and credit losses of $1.5 billion.

Revenue in the quarter declined to $7.2 billion from $8.6 billion from a year ago.

The bank added to the provision for credit losses of $1.5 billion, which exceeded net charge-offs by $1.0 billion. The provision largely reflected the recent significant deterioration in the residential housing market and the related portions of the commercial real estate portfolio, including higher expected loss factors for the consumer real estate and auto loan portfolios, and for the commercial portfolios.

Net charge-offs were $461 million, or an annualized 0.41 percent of average net loans. Total nonperforming assets including loans held for sale were $5.2 billion, or 1.08 percent of loans, foreclosed properties and loans held for sale, largely reflecting increases in consumer due to the effects of the weakened housing industry.

Total assets under management, including the retail brokerage services, were $274.7 billion at December 31, 2007, decreased 1% from December 31, 2006, as the addition of $29.9 billion from acquisitions, net money market fund inflows of $9.3 billion and approximately $4.5 billion in market appreciation were offset by the $34.5 billion change in investment discretion of assets under management now solely managed by wealth management group and other net outflows of $13.3 billion primarily related to the loss of one institutional client with minimal revenue impact.

Total brokerage client assets grew 54 percent from year-end 2006 to $1.2 trillion, including $371.1 billion from A.G. Edwards.


Wachovia (WB: chart) rose $1.00 to $31.80 in the early afternoon trading after the news.