Wachovia's Mortgage Portfolio Booms after GW Deal

Wachovia earned $7.8 billion, or $4.63 per share, in 2006, as strong loan growth helped offset margin pressure.

The company said that average loans rose 74% last year, with strength in commercial lending and consumer real estate-secured lending contributing to the gains.

Much of the company's mortgage loan growth came courtesy of its acquisition of adjustable-mortgage lending giant Golden West in the fourth quarter of last year, which helped to double Wachovia's portfolio of real estate secured consumer loans.

Ken Thompson, Wachovia's chairman and CEO, said in the company's earnings release that 2006 marked the fifth consecutive year of double digit EPS growth.

"In the face of a challenging interest rate environment, we worked hard to control expenses, manage risk appropriately, create revenue synergies between our businesses, and prioritize our investments while continuing to provide industry-leading customer service."

Results for last year include Wachovia's acquisition of Golden West Financial, which officially joined Wachovia in October of last year. Average consumer loans rose 161% in 2006, in part, reflecting the acquisition of Golden West and Westcorp, which joined the company in March.

Wachovia said that it added $123.9 billion in loans from the Golden West acquisition and $15.5 billion from Westcorp.

That helped fuel growth in Wachovia's on-balance-sheet, real estate-secured consumer loan category. Wachovia said real estate-secured loans were $225.8 billion in the fourth quarter of last year, more than double the third-quarter average of $100.1 billion.

Wachovia is one of the nation's largest diversified financial services companies, providing a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services. Wachovia has retail and commercial banking operations in 21 states with 3,375 retail banking offices from Connecticut to Florida and west to Texas and California. In addition, two core businesses operate under the Wachovia Securities brand name: retail brokerage with 742 offices in 49 states and nine service affiliate offices in Latin America, and corporate and investment banking in selected industries nationwide. Other nationwide businesses include mortgage lending in 39 states and auto finance covering 46 states.

Snapshot: Wachovia's Real Estate Secured Portfolio

3rd Qtr. '06 $100.1 Billion

4th Qtr. '06 $225.8 Billion

Source: Wachovia (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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