Wachovia’s Wobbly Third Quarter

Wachovia Corp. reported third quarter net earnings of $1.7 billion, down from nearly $1.9 billion in the third quarter of 2006. The bank recorded total revenue of $7.3 billion, compared with $7.0 billion a year ago.

Wachovia nearly quadrupled its provision for credit losses to $408 million from $108 million a year ago. Net charge offs were $206 million, up from $108 million. The bank said the increase reflects deterioration in credit quality, and uncertain credit environment and loan growth. Net charge offs rose three basis points to an annualized 0.19 percent of average net loans.

The third quarter represents a full year since the acquisition of real estate lender Golden West Financial Corp. Chief Risk Officer Donald Truslow said during an investor conference call today that Wachovia expects the U.S. housing market to remain soft well into 2008, according to the Reuters news service.

The Corporate and Investment Bank division wrote off $1.3 billion in losses in various product sets including $488 million on commercial mortgages; $103 million in consumer mortgages; $438 million in collateralized debt obligations and collateralized loan obligations; and $272 million in its leveraged finance sector.

Charlotte, N.C.-based Wachovia has assets of $754.2 billion.