Stocks are looking a bit weaker today thanks to Wachovia's terrible earnings report that kicked off a host of bad news at regional banks.
The bank's operating loss of $1.27 a share is far larger than the 78 cents expected by Wall Street. The bank is battening hatches all around: Loan loss provisions tripled, defaults rose, and uncollectible losses increased. Quarterly losses included $6 billion in write-downs (total losses hit $8.9 billion), and the bank cut its dividend by 87 percent to 5 cents a share. That's the second time it has slashed the dividend this year.
Wachovia's chairman, Lanty Smith, called the quarter "disappointing and unacceptable."
Analysts called the gush of bad news a kitchen-sink quarter. Investors, hoping this will as bad as it gets, sent shares up nearly 7 percent by midday (though the stock is still off more than 60 percent this year).
Other bad bank news:
Wall Street has been watching regional banks carefully of late. They're the latest domino in the mortgage mess with heftier exposure to mortgage and commercial loans. Fifth Third blamed part of its poor results on a poor lending environment in Florida and Michigan. Plus, regional institutions are a barometer of where local economies are headed. Fifth Third and KeyCorp are two of Ohio's largest banks.