Wells Fargo reported a fourth quarter loss of $2.55 billion dollars. In the same quarter a year ago, the San Francisco-based bank reported earnings of $1.36 billion. "Our fourth quarter results were impacted by the economy and dysfunctional markets," said Wells Fargo Chief Financial Officer Howard Atkins. In a recorded statement, he explained that Wells Fargo managed to keep its mortgage portfolio stable, while other big banks reel from home-loan related losses. But Wachovia's mortgage portfolio has been battered. Atkins said the bank had to buffer itself against losses it was anticipating related to its buyout of Wachovia. "We took numerous actions in the fourth quarter to reduce the risk- or as we like to say 'de-risk'- the combined new balance sheet in preparation for the Wachovia acquisition. While some of these actions adversely impacted fourth quarter earnings, this de-risking will reduce the likelihood of losses in the future," he said. When the deal closed on December 31st, Wells Fargo says it wrote off more than $37 billion in high risk-loans that Wachovia made. Wells Fargo also ate $1.2 billion from Wachovia's losing "pick-a-pay" portfolio which has been the source of numerous defaulted home loans. Both banks created a credit reserve of $21.7 billion dollars. Analyst Bart Narter is with the banking consulting firm Celent in Boston. He says Wells Fargo is traditionally more conservative than the other big banks, but he also wasn't surprised by the loss. "They chose to take a whole bunch of write-downs this quarter and kind of clean house. I still think the economy can go down some more," says Narter. Still, Wells Fargo says it doesn't plan to take anymore federal bailout money. In the fall, the Treasury Department gave the bank a $25 billion infusion. The Wells Fargo board of directors also approved a 34-cents a share dividend for the quarter, which is consistent with the prior quarter's dividend. This is a good sign, according to UNC Charlotte Banking Professor Tony Plath. "Because if they did anticipate more losses down the road, they would have probably cut their dividend. And that was the worst case scenario because that could accelerate the rate at which they lay people off. Or they could have gone deeper into the Wachovia candidate pool, when they're laying people off," he says. Plath explains a cut in a dividend signals a company is conserving every dime it has. And staff become an early casualty as companies slash costs. Other factors that contributed to the loss: a $74 million dollar expense of integrating the merged company, plus a write-off of $294 million in an investment tied to former fund manager Bernie Madoff. Madoff faces federal charges for an alleged ponzi scheme to take billions from major investors.