"We do believe this is a moment of truth for our company: We must execute superbly, manage risk and just plain out-compete in this environment"

Wachovia Corp. expects to set aside more money in the first half of 2008 to cover troubled mortgage loans, according to its annual report filed today.

Citing 'rapidly changing conditions in the housing markets,' the Charlotte bank said its expense for bad loans will likely be more than .75 percent of average net loans in the first half of the year. It had previously estimated an expense below this level.

After taking big writedowns in the second half of 2007 because of the falling value of subprime-related investments, the bank did not provide estimates for any potential first-quarter writedowns. Read more