Wachovia, Bank of America to Announce Earnings Today

Charlotte’s Bank of America Corp. and Wachovia Corp. today are set to disclose the damage done.

In a one-two punch this morning, the giant financial institutions will report fourth-quarter results, capping a 2007 that fizzled amid a global credit crunch.

Bank of America has already said it expects more than $3 billion in writedowns related to mortgage-related investments. Wachovia has warned of at least a $1.34 billion hit to its profits.

Analysts polled by Thomson Financial expect Bank of America, the nation’s No. 2 bank by assets, to eke out a fourth-quarter profit of 18 cents per share, compared to $1.19 for the same period last year. At Wachovia, the nation’s No. 4 bank by assets, they project earnings of 33 cents per share, compared to $1.19 last year.

After dismal third quarters, both banks could post smaller profits for all of 2007 than in the prior year. That hasn’t happened since the beginning of the decade.

In 2007, banks have taken more than $100 billion in writedowns from mortgage-related investments and other complex securities that have plummeted in value during the U.S. housing meltdown. That led to some horrific quarterly earnings reports last week, including a nearly $10 billion loss at New York’s Citigroup Inc., the No. 1 U.S. bank by assets.

Meanwhile, New York’s JPMorgan Chase & Co., the third-largest U.S. bank, last week said profits fell 34 percent to $2.97 billion, or 86 cents per share. No. 5 Wells Fargo & Co. of San Francisco reported that net income dropped 38 percent to $2.18 billion, or 64 cents per share.

As they examine fourth-quarter results, analysts today will look for clues from the Charlotte banks about where earnings are headed in 2008 and their outlook on the economy. On Friday, the last day of trading before today’s reports, Wachovia shares slumped nearly 5 percent to $30.80, reaching 2002 levels. Bank of America shares fell 2.5 percent to $35.97, hitting 2003 marks.

Bloomberg News contributed