Wachovia suffers nearly $24 billion loss

Wachovia suffers nearly $24 billion loss
Massive loss driven by charge related to planned merger with Wells Fargo and ongoing issues related to credit.

NEW YORK (CNNMoney.com) -- Wachovia reported a massive loss of nearly $24 billion Wednesday, in what could have been the bank's last time reporting results before it becomes part of Wells Fargo.

The struggling Charlotte, N.C.-based bank, which agreed to be acquired by Wells Fargo earlier this month, reported a net loss of $23.9 billion, or $11.18 a share, which included a whopping $18.8 billion impairment charge partly related to the planned merger.

Not including the charge, Wachovia would have reported a loss of $4.76 billion, or $2.23 a share.

Just a year ago, the company reported a profit of $1.62 billion, or 85 cents a share.

Despite the recent turmoil in financial markets, analysts were actually expecting the company to report a profit during the quarter of $547 million, or 2 cents a share.

Wachovia (WB, Fortune 500) shares fell 3% in pre-market trading on the news.

Wells Fargo execs, including its chief executive officer John Stumpf, said Wachovia's results were about as dreary as they had expected after poring over the company's books and agreeing to buy the bank earlier this month.

"Wachovia's third-quarter results were very much in line with our expectations," Stumpf said in a statement.

(Big customers flee)

Like many of its peers this quarter, Wachovia was hit hard by issues of credit. Rising loan losses and efforts by the company to set aside more cash for bad loans weighed on its results.

During the quarter, the company said it set aside $6.6 billion for loan losses, as the economy showed increasing signs of weakness and as the housing market continued to deteriorate in already hard-hit parts of the country such as California and Florida.

Non-performing assets, or loans that are not collecting interest or principal payments, increased five-fold from a year earlier to just over 3% of all loans.

Assuming the company's anticipated merger with Wells Fargo (WFC, Fortune 500) comes off without a hitch, Wachovia's latest quarterly numbers will prove largely moot.

Still, the results offer a glimpse into just how badly the company was faring when investors seemed all but certain that Wachovia was destined to collapse.

Fears about Wachovia's ultimate demise first took hold in mid-September following the collapse of Lehman Brothers and shortly after Lehman rival Merrill Lynch was forced into the arms of Bank of America (BAC, Fortune 500).

Speculation continued to swirl about the 129-year-old bank in the days that followed, including rumors of a possible merger with with investment bank Morgan Stanley (MS, Fortune 500).

After the collapse of savings and loan Washington Mutual, regulators finally interceded on Wachovia's behalf, helping broker a $2.2 billion purchase of Wachovia's banking assets by Citigroup (C, Fortune 500).

Wachovia had a change of heart just days later, as it agreed to a sweetened offer from San Francisco-based Wells Fargo for all of Wachovia's operations.

After some legal wrangling, Citigroup eventually walked away, leaving Wells Fargo in control of Wachovia in a deal worth $11.7 billion.

Wachovia shareholders have yet to approve the deal, although they are widely expected to do so by year's end.

Like many of its peers, Wachovia bet big on the U.S. mortgage market, which prompted it to suffer painful losses earlier this year. Some analysts have blamed the company's ill-timed 2006 acquisition of the California mortgage lender Golden West Financial Corp. for the company's woes.

CNN