Wider loan losses reported at three banks

CHARLOTTE, N.C. -- More troubling news erupted from the financial services sector Wednesday as Wachovia, PNC and Bank of America warned of bigger-than-expected writedowns and hinted that fourth-quarter results could be a disappointment.

Wachovia Corp. doubled its estimate of loan loss provisions to about $1 billion for the fourth quarter, while the chief executive of crosstown rival Bank of America Corp. pointed to higher writedowns and said he expects current credit market turbulence to extend into 2008.

A third major bank, PNC Financial Services Group Inc., said the money it will set aside to cover bad loans for the last three months of the year will be more than twice as large as in the third quarter.

The disclosures come as a number of the nations' banks have forecast increasing credit losses in the wake of last summer's subprime mortgage crisis.

In a filing with the Securities and Exchange Commission last month, Charlotte-based Wachovia had said it expected to record a loan loss provision in the fourth quarter between $500 million and $600 million.

In a discussion with financial analysts Wednesday in New York, Wachovia's chief executive Ken Thompson said fourth quarter losses from commercial and consumer mortgages, leveraged finance and structured products, including subprime-backed mortgage securities, had reached about $1.4 billion.

All three banks were making presentations at an investment conference in New York hosted by Goldman Sachs.

Bank of America's chief executive Ken Lewis said "the economy is definitely slowing."

"We expect weak fourth and first quarters, but at this point we are not forecasting a recession," Lewis said. "I think you certainly can assume results will again be quite disappointing."

Bank of America, which acquired Chicago-based LaSalle Bank, said it expects to take a provision expense of $3.3 billion in the fourth quarter and warned write-downs on collateralized debt obligations could grow, adding to fears the nation's housing and mortgage-lending slump might exact a greater toll than in the wretched third quarter -- when industrywide write-downs topped $46 billion.

Bank of America is expected to report fourth-quarter earnings on Jan. 22.

PNC said its adjusted provision for credit losses is expected to be about $110 million in the fourth quarter, up $45 million from the previous quarter.