Wachovia Corp. reported its third quarter earnings today, and the song-and-dance is pretty much what has become common this earnings season: increasing loan loss reserves and write-downs in the value of mortgage-backed portfolio securities holdings, resulting in earnings below what analysts had expected. Wachovia said it took a $1.3 billion hit on products and leveraged finance warehouse loans and commitments, a loss of $40 million on asset-backed commercial paper investments, and recorded a provision for credit losses of $408 million, up from $179 million one quarter ago. The result was a 10 percent drop in quarterly earnings, with the bank reporting net income of $1.69 billion, or 89 cents per share, during the third quarter versus $1.88 billion in the year-ago period. The Associated Press reports that analysts had been expecting quarterly earnings of $1.03 per share. From the press statement by Wachovia:

“I’m very proud of our ability to provide capital, liquidity and advice to our customers and peers in the face of the disruption in the fixed income markets in the third quarter. These conditions clearly had a disappointing impact on the results of market-oriented businesses, but the strength in our core banking and brokerage businesses continued to serve us very well,â€? said Ken Thompson, Wachovia chairman and chief executive officer. … “While the impact of the market disruption was significant, it’s worth noting that the majority of the lower market valuations in the third quarter largely arose from a repricing of risk in the marketplace and do not reflect deterioration in the underlying credit quality of the assets in our leveraged finance and commercial real estate securitization businesses.”