Wachovia restates Q1 earnings, nearly doubles loss

Wachovia Corp. has increased its first-quarter net loss 80 percent from the total the company reported three weeks ago, citing a $315 million writedown on three contracts in its life-insurance portfolio.

According to a filing with the Securities and Exchange Commission, Charlotte, N.C.-based Wachovia is now reporting a net loss of $708 million, or 36 cents per share, for the first quarter. On April 14, the company reported a net loss of $393 million, or 20 cents a share, for the quarter. In the latest quarter, Wachovia incurred writedowns of $2 billion related to the ongoing credit crisis. The bank also set aside $2.8 billion in the latest quarter to cover problem loans. The provision largely reflects severe deterioration in the residential housing market, particularly in California and Florida.

The company also recently cut its dividend to 37.5 cents per share from 64 cents per share while raising $8 billion in new common and preferred stock, which diluted the value of existing shareholders' stock.

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According to Wachovia's filing Tuesday with the SEC, the company increased its first-quarter loss after reviewing information regarding $360 million in agreements with a third-party guarantor.

Wachovia said it may realize benefits from the agreements in the future.

The company previously said it expects to incur a second-quarter charge of $800 million to $1 billion stemming from a federal appeals court ruling related to the tax treatment of leveraged lease transactions. The anticipated charge is based on its analysis of a recent court ruling in BB&T Corp. v. the United States.

Wachovia (NYSE: WB) is the second-largest bank in Birmingham.