Wells Fargo said on Wednesday the loan losses increased in the second quarter as borrowers battled to keep their payments up to date. The bank dropped as much as 7.6 percent in New York trading.
Loan losses also came from the continuing cleanup of the loan portfolio acquired along with struggling Wachovia Corp. in December.
The bank forecast further loan losses on the way as more consumers loose jobs and fail to make their payments.
Credit losses rose in the second quarter, as expected, due to the weak economy and higher unemployment in the quarter, said Chief Credit Officer Mike Loughlin in the earnings release.