By Binyamin Appelbaum
Washington Post Staff Writer
Thursday, January 29, 2009
Wells Fargo, which became the largest bank in the Washington area with its deal for Wachovia at the end of the year, said yesterday that it lost $2.55 billion in the fourth quarter even before buying the troubled company.
Wells Fargo said Wachovia lost an additional $11.2 billion during its final three months.
The numbers completed a dismal series of fourth-quarter reports from the nation's largest banks. And like its peers, Wells Fargo said the worst might still lie ahead as the economy sours.
Wells Fargo's $12.7 billion deal for Wachovia created a national banking franchise to rival the reach of Bank of America and J.P. Morgan Chase. Wells Fargo now has more than $1.3 trillion in loans and other assets and holds about 11 percent of all banking deposits in the United States.
Banking analysts have concluded this scope holds great profit potential in better times. But first there will be losses. Wells Fargo said revenue for the quarter fell 4 percent from the same period last year. The company set aside $8.4 billion to cover mounting defaults on consumer and business loans. The resulting loss equaled 79 cents a share, compared to a profit of $1.36 billion, or 41 cents a share, in the last quarter of 2007.
For the year, Wells Fargo made $2.84 billion, or 75 cents a share, compared with $8.06 billion, or $2.38 cents a share, in 2007.
Wells Fargo executives said yesterday that the company's financial condition remains better than that of other large banks. The company, which has already received a $25 billion taxpayer investment and a tax break in connection with the Wachovia deal, said yesterday it does not need more government money. And it announced that it will continue to pay a quarterly dividend of 34 cents a share.