Wachovia Corp. will slash its dividend and raise $7 billion in a share sale after reporting a surprise first-quarter loss on Monday of $393 million. The company's shares fell more than 10 percent.The nation's No. 4 bank, whose results were tainted by exposure to the troubled credit markets, also said it plans to cut 500 jobs in its corporate and investment bank. "I'm deeply disappointed with our first-quarter results," Chief Executive Ken Thompson told analysts on a conference call. "I know these actions aren't without cost. I wish they weren't necessary, but they are."

The Charlotte-based bank's loss works out to 20 cents a share. That compared with profit of $2.3 billion, or $1.20 a share, a year earlier. Excluding merger-related and restructuring charges, the bank lost $270 million, or 14 cents a share.



Revenue fell 4.5 percent to $7.89 billion from $8.27 billion last year.

Analysts surveyed by Thomson Financial had expected Wachovia to earn 40 cents per share on revenue of $7.98 billion. The earnings estimates typically exclude one-time items.

Wachovia said it will cut its dividend by 41 percent to 37.5 cents per share from 64 cents per share. The move is expected to save $2 billion annually in order "to build capital ratios and provide more operational flexibility," it said.

The bank also said it plans to cut more jobs within its corporate and investment bank, an area that has been hit by a drop in issuance of complex securities. Since October, Wachovia has cut more than 260 jobs in corporate and investment banking, which had about 6,100 employees as of Dec. 31.

Wachovia shares fell $2.96, or more than 10 percent, to $24.85 on Monday.

The company is part of a long list of companies that have raised capital in the wake of problems in the mortgage market, including Countrywide Financial Corp., Thornburg Mortgage Inc., Merrill Lynch & Co., Morgan Stanley and Citigroup Inc.

Its share sale will involve 145.8 million shares of common stock at $24 each, raising roughly $3.5 billion. Wachovia also expects net proceeds from a convertible preferred stock offering of about $3.4 billion. The bank said it intends to use the money it raises from the sale for general corporate purposes.

The cash infusion would be Wachovia's second of the year. In January and early February, Wachovia added $8.3 billion in capital by issuing preferred stock and other securities to investors.

Wachovia's troubles with the housing slump have been compounded by its 2006 acquisition of California-based Golden West Financial Corp., a $25.5 billion deal whose timing, Thompson has acknowledged, "was not the best."

"With the benefit of hindsight, it is clear that the timing was poor for this expansion in the mortgage business," Thompson wrote in a letter to shareholders in February.

Golden West's loans were concentrated in California, one of the hardest-hit housing markets in the United States. Wachovia said this month that it was considering halting the making of loans, including its signature Pick-A-Payment mortgage loans, in 17 California counties heavily affected by falling home prices and rising foreclosures.

Last week, it announced a new set of lending guidelines that appeared to be a broader step to help manage losses at the bank.

Wachovia said Monday it took write-downs of $2 billion during the quarter. The bank also set aside $2.8 billion to cover problem loans, up from $1.5 billion in the fourth quarter.

"The precipitous decline in housing market conditions and unprecedented changes in consumer behavior prompted us to update our credit reserve modeling and rely less heavily on historical trends to forecast losses," Thompson said.

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