-- Plans to Raise Capital through Public Offering
-- Reduces Quarterly Dividend to $0.375 Per Common Share, Preserving $2.0
Billion of Capital Annually
-- Increases Credit Reserves; Provision $2.1 Billion Above Net Charge-offs
-- Net Loss of $350 Million or $393 Million (20 Cents) after Preferred
Dividend
-- Strong Sales Momentum and Solid Underlying Expense Control Cushions
Impact of Rising Credit Costs and Market Disruption Losses
CHARLOTTE, N.C., April 14 /PRNewswire-FirstCall/ -- Wachovia today
announced a series of actions to further enhance its capital base and
operational flexibility, and updated its credit reserve modeling to reflect
greater emphasis on forecasted changes in customer behavior assuming
continued house price depreciation. These actions include:
-- Plans to raise capital through a public offering of common stock and
perpetual convertible preferred stock;
-- Lowering the quarterly common stock dividend, which preserves $2.0
billion of capital annually, to build capital ratios and provide more
operational flexibility. The board of directors declared a quarterly
common stock dividend of $0.375 cents per common share, payable on
June 16, 2008, to stockholders of record on May 30, 2008. This
dividend level is consistent with Wachovia's capital needs and growth
opportunities for each of its business segments, and with an
anticipated 40 percent to 50 percent cash payout ratio over the
intermediate horizon; and
-- The update in the credit reserve modeling in response to the current
and forecasted market environment and its effect on consumer
behavior, particularly in stressed markets, resulting in a
significant increase in the first quarter 2008 provision for credit
losses. In addition, the scope of credit disclosures was increased to
provide enhanced insight into the payment option consumer real estate
portfolio.
In addition, Wachovia reported a first quarter 2008 net loss of $350
million before preferred dividends, or a net loss available to common
stockholders of $393 million, (20 cents per common share). These results,
which reflect higher credit costs and the continued disruption in the
capital markets, compared with earnings of $2.30 billion, or $1.20 per
share, in the first quarter of 2007.
While solid underlying performance was overshadowed by market
disruption- related valuation losses of $2.0 billion, Wachovia generated
total revenue of $7.9 billion on higher loans and deposits and strength in
fiduciary and asset management fees, brokerage commissions and traditional
banking fees, including the impact of the A.G. Edwards acquisition.
"I'm deeply disappointed with our first quarter results, but I am
confident we're taking prudent and appropriate actions in this challenging
period to restore Wachovia to a more profitable path. 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. As a result, we have
substantially increased our reserves," said Ken Thompson, Wachovia's chief
executive officer. "The most painful decision was to reduce the dividend
because it adversely affects our shareholders. But we believe the long-term
benefit to shareholder value outweighs the disadvantage of the dividend
reduction as we fortify our balance sheet against continued instability in
the housing and capital markets.
"It's important to note that in early 2007 in advance of the market
dislocation, we took steps to bolster our liquidity and reduce
market-related exposures in products originally intended for distribution,"
Thompson added. "We have generally been a provider of liquidity to the
market during this period of market disruption, and we also continue to
reduce our market-related exposures. The actions we announced today will
further enhance and ensure our ongoing financial flexibility to invest and
drive future earnings growth. With strengthened reserves and capital, and
our strong deposit base, we believe we're well-positioned to continue to
successfully weather this uniquely challenging period."
Earnings Highlights
Three Months Ended
March 31, December 31, March 31,
2008 2007 2007
(In millions, except per
share data) Amount EPS Amount EPS Amount EPS
Earnings
Net income (loss) $(350) - 193 0.10 2,302 1.20
Discontinued operations, net
of income taxes - - (142) (0.07) - -
Dividends on preferred stock (43) - - - - -
Net income (loss) available
to common stockholders $(393) (0.20) 51 0.03 2,302 1.20
Discontinued operations, net
of income taxes - - 142 0.07 - -
Income (loss) from continuing
operations (393) (0.20) 193 0.10 2,302 1.20
Net merger-related and
restructuring expenses 123 0.06 108 0.05 6 -
Earnings (loss) excluding
merger-related and
restructuring expenses,
and discontinued operations $(270) (0.14) 301 0.15 2,308 1.20
Financial ratios
Return on average common
stockholders' equity (2.11)% 0.28 13.47
Net interest margin (a) 2.92 2.88 3.06
Fee and other income as % of
total revenue (a) 39.15 36.99 45.15
Overhead efficiency ratio (a) 68.91 % 78.00 55.88
Capital adequacy (b)
Tier 1 capital ratio 7.5 % 7.4 7.4
Total capital ratio 12.1 11.8 11.4
Leverage ratio 6.2 % 6.1 6.1
Asset quality
Allowance for loan losses as
% of nonaccrual and
restructured loans 84 % 90 207
Allowance for loan losses as
% of loans, net 1.37 0.98 0.80
Allowance for credit losses
as % of loans, net (c) 1.41 1.02 0.84
Net charge-offs as % of
average loans, net 0.66 0.41 0.15
Nonperforming assets as % of
loans, net, foreclosed
properties and loans held
for sale 1.70 % 1.14 0.42
(a) Tax-equivalent.
(b) The first quarter of 2008 is based on estimates.
(c) The allowance for credit losses is the sum of the allowance for
loan losses and the reserve for unfunded lending commitments.
Results include after-tax net merger-related expenses of 6 cents per
share in the first quarter of 2008; these expenses did not affect earnings
per share in the first quarter of 2007. Excluding the merger-related
expenses, results were a net loss available to common stockholders of $270
million, or 14 cents per share, in the first quarter of 2008. Results also
include the impact of the A.G. Edwards, Inc., acquisition from October 1,
2007.
Wachovia Corporation
Three Months Ended
March 31, December 31, March 31,
(In millions) 2008 2007 2007
Net interest income (Tax-equivalent) $4,805 4,674 4,537
Fee and other income 3,091 2,744 3,734
Total revenue (Tax-equivalent) 7,896 7,418 8,271
Provision for credit losses 2,831 1,497 177
Noninterest expense 5,441 5,786 4,621
Income (loss) from continuing
operations before income taxes
(benefits) (Tax-equivalent) (531) 28 3,337
Income taxes (benefits) (Tax-
equivalent) (181) (165) 1,035
Net income (loss) available to
common stockholders (393) 51 2,302
Average loans, net 465,936 449,805 415,261
Average core deposits $394,513 390,043 369,270
Other key trends in the first quarter of 2008 compared with the first
quarter of 2007 included:
-- Revenue of $7.9 billion on higher loan and deposit balances, while fee
and other income declined due to net market disruption-related
valuation losses of $2.0 billion and significantly reduced fee income
related to the disruption in the capital markets. Otherwise, strong
momentum continued in fiduciary and asset management fees and
brokerage commissions reflecting the A.G. Edwards acquisition and
organic growth. Results included $445 million in net gains related to
adoption of new fair value accounting standards and a $225 million
gain related to the Visa initial public offering.
-- Net interest margin compression of 14 basis points year over year,
although the margin rose 4 basis points from the fourth quarter of
2007. Net interest income rose modestly, reflecting growth in average
commercial loans, up 26 percent, and average consumer loans, up 4
percent, as well as solid core deposit growth, up 7 percent. Average
loan growth included the impact of $7.3 billion of transfers to the
loan portfolio from held-for-sale as well as strength in commercial,
commercial real estate and traditional conforming mortgage loans.
Deposit growth was led by strength in IRAs and money market accounts.
-- An 18 percent increase in noninterest expense largely reflecting the
impact of A.G. Edwards, as well as growth in credit-related sundry
expense.
-- Provision for credit losses of $2.8 billion, which exceeded net
charge-offs by $2.1 billion. The provision largely reflected more
severe deterioration in the residential housing market, particularly
in specific markets in California and Florida, as well as the result
of the refinements made to the credit reserve model for the payment
option product. These refinements incorporate multiple and more
granular factors regarding unprecedented consumer behavior, housing
price deterioration and increased foreclosures. Net charge-offs were
$765 million, or an annualized 0.66 percent of average net loans.
Total nonperforming assets including loans held for sale were $8.4
billion, or 1.70 percent of loans, foreclosed properties and loans
held for sale, largely reflecting increases in consumer real estate-
related nonperforming assets due to the effects of the weakened
housing industry.
Lines of Business
The following discussion covers the results for Wachovia's four core
business segments and is on a segment earnings basis, which excludes net
merger-related and restructuring expenses, other intangible amortization
and discontinued operations. Segment earnings are the basis on which
Wachovia manages and allocates capital to its business segments. In
accordance with Wachovia's business segment methodology, provision expense
in excess of charge-offs, which amounted to $2.1 billion in the first
quarter of 2008, is not allocated to business segments.
Pages 13 and 14 include a reconciliation of segment results to
Wachovia's consolidated results of operations in accordance with GAAP.
General Bank Highlights
Three Months Ended
March 31, December 31, March 31,
(In millions) 2008 2007 2007
Net interest income (Tax-equivalent) $3,455 3,402 3,398
Fee and other income 990 929 845
Total revenue (Tax-equivalent) 4,500 4,389 4,290
Provision for credit losses 569 320 147
Noninterest expense 2,050 2,041 1,869
Segment earnings $1,195 1,287 1,444
Cash overhead efficiency ratio (Tax-
equivalent) 45.55 % 46.50 43.56
Average loans, net $311,447 303,269 288,229
Average core deposits 297,680 296,568 284,046
Economic capital, average $12,695 11,179 10,662
General Bank
The General Bank includes retail, small business and commercial
customers. The first quarter of 2008 compared with the first quarter of
2007 included:
-- Earnings of $1.2 billion, down $249 million, driven by rapidly rising
credit costs and related expenses, which overshadowed continued strong
sales momentum reflected in total revenue of $4.5 billion, up 5
percent.
-- Average loan growth of 8 percent, with double digit growth in
wholesale businesses and 4 percent growth in mortgage lending as a
decline in prepayments offset lower volumes on the payment option
mortgage product.
- Significant efforts in the mortgage business included a
restructuring of the operating model, extensive loss mitigation
efforts and initiatives to increase the volume of marketable
mortgages.
- A home equity lending decline of 41 percent, reflecting
implementation of tightened credit standards. Over 95 percent of
our home equity loans are originated through our branch network
and other direct channels.
- A 26 percent increase in auto loan originations
-- Average core deposit growth of 5 percent, largely reflecting strength
in wholesale deposits, which were up 10 percent, and an increase of 4
percent in retail deposits.
- Growth in net new retail checking accounts slowed to a still
strong increase of 174,000 in the first quarter of 2008 compared
with an increase of 268,000 in the first quarter of 2007.
- Net new checking accounts include 139,000 linked to the new
Way2Save accounts, which launched in mid-January 2008.
-- 17 percent growth in fee and other income, with strength in service
charges, interchange income and mortgage banking fee income. Strong
interchange income reflected an 18 percent increase in debit/credit
card volume from the first quarter of 2007.
-- Noninterest expense up 10 percent due to growth in credit-related
sundry expense, as well as on continued strategic investment in de
novo branch activity, Western expansion and buildup in credit card
operations. During the first quarter of 2008, 23 de novo branches were
opened and 58 branches were consolidated. As a result of performance
initiatives, operating leverage continued to improve, which enabled
the continued strategic investment.
-- A $422 million increase in the provision for credit losses largely
reflecting rapid deterioration in consumer real estate in certain
housing markets and higher losses on auto loans.
Wealth Management Highlights
Three Months Ended
March 31, December 31, March 31,
(In millions) 2008 2007 2007
Net interest income (Tax-equivalent) $181 183 181
Fee and other income 211 214 196
Total revenue (Tax-equivalent) 397 400 380
Provision for credit losses 5 7 1
Noninterest expense 246 249 247
Segment earnings $92 91 84
Cash overhead efficiency ratio
(Tax-equivalent) 62.08 % 62.27 65.12
Average loans, net $22,413 21,791 20,394
Average core deposits 17,397 16,773 17,267
Economic capital, average $705 616 592
Wealth Management
Wealth Management includes private banking, personal trust, investment
advisory services, charitable services, financial planning and insurance
brokerage. The first quarter of 2008 compared with the first quarter of
2007 included:
-- Earnings of $92 million on 4 percent revenue growth in challenging
markets.
-- Strong fiduciary and asset management fees as a pricing initiative
implemented in the third quarter of 2007 and new sales offset declines
in equity valuations. Insurance commissions declined largely due to a
soft market for insurance premiums and nonstrategic insurance account
dispositions.
-- Relatively flat net interest income as solid loan growth offset
deposit spread compression.
-- A slight decline in expense driven by efficiency initiatives, which
offset the impact of private banking and Western expansion investment.
-- 5 percent growth in assets under management to $79.8 billion as asset
gathering overcame market depreciation.
Corporate and Investment Bank Highlights
Three Months Ended
March 31, December 31, March 31,
(In millions) 2008 2007 2007
Net interest income (Tax-equivalent) $1,032 988 716
Fee and other income (159) (555) 1,109
Total revenue (Tax-equivalent) 823 383 1,782
Provision for credit losses 197 112 6
Noninterest expense 747 952 911
Segment earnings (loss) $(77) (431) 550
Cash overhead efficiency ratio
(Tax-equivalent) 90.76 % 247.83 51.10
Average loans, net $101,024 91,702 73,385
Average core deposits 33,623 36,200 34,227
Economic capital, average $13,242 11,293 8,329
Corporate and Investment Bank
The Corporate and Investment Bank includes corporate lending,
investment banking, and treasury and international trade finance. First
quarter 2008 results compared with the first quarter of 2007 included:
-- A segment loss of $77 million driven by $1.6 billion in net valuation
losses reflecting continued disruption in the capital markets and
reduced origination volume in most market-related businesses.
-- Market valuation losses, net of applicable hedges, of:
- $339 million in subprime residential asset-backed collateralized
debt obligations and other related exposures, compared with $818
million in fourth quarter 2007, excluding discontinued operations;
- $521 million in commercial mortgage structured products, compared
with $600 million in fourth quarter 2007;
- $251 million in consumer mortgage structured products, compared
with $123 million in fourth quarter 2007;
- $309 million in leveraged finance net of fees, compared with a net
$93 million gain in fourth quarter 2007; and
- $144 million in non-subprime collateralized debt obligations and
other structured products, compared with a $59 million net gain in
fourth quarter 2007.
-- A 44 percent increase in net interest income, which reflected 38
percent growth in average loans including the transfer into the loan
portfolio at fair value of certain loans originally slated for
disposition, as well as loan growth in the corporate lending and
global financial institutions business.
-- Principal investing revenue of $414 million, largely due to a net $486
million of gains related to the adoption of new fair value accounting
standards in January 2008, offset by mark-to-market losses in the
direct investment portfolio.
-- An 18 percent decline in noninterest expense primarily due to lower
variable compensation and reduced headcount in investment banking.
-- Provision of $197 million largely reflecting residential-related
commercial real estate losses.
Capital Management Highlights
Three Months Ended
March 31, December 31, March 31,
(In millions) 2008 2007 2007
Net interest income (Tax-equivalent) $274 318 259
Fee and other income 2,191 2,211 1,477
Total revenue (Tax-equivalent) 2,455 2,518 1,728
Provision for credit losses - - -
Noninterest expense 1,855 1,938 1,237
Segment earnings $381 368 312
Cash overhead efficiency ratio
(Tax-equivalent) 75.54 % 76.96 71.59
Average loans, net $2,562 2,295 1,554
Average core deposits 43,084 38,019 31,683
Economic capital, average $2,143 2,120 1,334
Capital Management
Capital Management includes retail brokerage services and asset
management. The first quarter of 2008 compared with the first quarter of
2007 included:
-- Earnings of $381 million on 42 percent revenue growth, which primarily
reflected the A.G. Edwards acquisition. In addition, solid growth in
retail brokerage managed account and other asset-based fees despite
declining equity markets offset lower transactional revenue and equity
syndicate distribution fees. The impact of FDIC sweep deposit growth
of $11.0 billion partially offset spread compression in the declining
interest rate environment.
-- Record annuity sales of $2.7 billion, including $1.5 billion in the
General Bank financial centers.
-- 50 percent growth in noninterest expense largely due to the effect of
A.G. Edwards, as well as higher legal expense and revenue-based
commissions.
Total assets under management of $258.7 billion at March 31, 2008,
decreased 6 percent from December 31, 2007, primarily due to declining
market valuations.
Wachovia Corporation (NYSE: WB) is one of the nation's largest
diversified financial services companies, with assets of $808.9 billion and
market capitalization of $53.8 billion at March 31, 2008. Wachovia provides
a broad range of retail banking and brokerage, asset and wealth management,
and corporate and investment banking products and services to customers
through 3,300 retail financial centers in 21 states from Connecticut to
Florida and west to Texas and California, and nationwide retail brokerage,
mortgage lending and auto finance businesses. Globally, clients are served
in selected corporate and institutional sectors and through more than 40
international offices. Our retail brokerage operations under the Wachovia
Securities brand name manage more than $1.1 trillion in client assets
through 18,600 registered representatives in 1,500 offices nationwide.
Online banking is available at wachovia.com; online brokerage products and
services at wachoviasec.com; and investment products and services at
evergreeninvestments.com.
Forward-Looking Statements
This news release contains various forward-looking statements. A
discussion of various factors that could cause Wachovia Corporation's
actual results to differ materially from those expressed in such
forward-looking statements is included in Wachovia's filings with the
Securities and Exchange Commission, including its Current Report on Form
8-K dated April 14, 2008.
Explanation of Wachovia's Use of Certain Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this news
release includes certain non-GAAP financial measures, including those
presented on page 2 and on page 11 under the captions "Earnings Excluding
Merger-Related and Restructuring Expenses, and Discontinued Operations" and
"Earnings Excluding Merger-Related and Restructuring Expenses, Other
Intangible Amortization and Discontinued Operations", and which are
reconciled to GAAP financial measures on pages 21 and 22. In addition, in
this news release certain designated net interest income amounts are
presented on a tax- equivalent basis, including the calculation of the
overhead efficiency ratio.
Wachovia believes these non-GAAP financial measures provide information
useful to investors in understanding the underlying operational performance
of the company, its business and performance trends and facilitates
comparisons with the performance of others in the financial services
industry. Specifically, Wachovia believes the exclusion of merger-related
and restructuring expenses, discontinued operations and the cumulative
effect of a change in accounting principle permits evaluation and a
comparison of results for on-going business operations, and it is on this
basis that Wachovia's management internally assesses the company's
performance. Those non-operating items are excluded from Wachovia's segment
measures used internally to evaluate segment performance in accordance with
GAAP because management does not consider them particularly relevant or
useful in evaluating the operating performance of our business segments. In
addition, because of the significant amount of deposit base intangible
amortization, Wachovia believes the exclusion of this expense provides
investors with consistent and meaningful comparisons to other financial
services firms. Wachovia's management makes recommendations to its board of
directors about dividend payments based on reported earnings excluding
merger-related and restructuring expenses, other intangible amortization,
discontinued operations and the cumulative effect of a change in accounting
principle, and has communicated certain dividend payout ratio goals to
investors on this basis. Management believes this payout ratio is useful to
investors because it provides investors with a better understanding of and
permits investors to monitor Wachovia's dividend payout policy. Wachovia
also believes the presentation of net interest income on a tax-equivalent
basis ensures comparability of net interest income arising from both
taxable and tax-exempt sources and is consistent with industry standards.
Wachovia operates one of the largest retail brokerage businesses in our
industry, and we have presented an overhead efficiency ratio excluding
these brokerage services, which management believes is useful to investors
in comparing the performance of our banking business with other banking
companies.
Although Wachovia believes the above non-GAAP financial measures
enhance investors' understanding of its business and performance, these
non-GAAP financial measures should not be considered an alternative to GAAP
basis financial measures.
Earnings Conference Call and Supplemental Materials
Wachovia CEO Ken Thompson and CFO Tom Wurtz will review Wachovia's
first quarter 2008 results in a conference call and audio web cast
beginning at 8:00 a.m. Eastern Daylight Saving Time today. This review may
include a discussion of certain non-GAAP financial measures. Supplemental
materials relating to first quarter results, which also include a
reconciliation of any non-GAAP measures to Wachovia's reported financials,
are available on the Internet at Wachovia.com/investor, and investors are
encouraged to access these materials in advance of the conference call.
Web cast Instructions: To gain access to the web cast, which will be
"listen-only," go to Wachovia.com/investor and click on the link "Wachovia
First Quarter Earnings Audio Web cast." In order to listen to the web cast,
you will need to download either Real Player or Media Player.
Teleconference Instructions: The telephone number for the conference
call is 888-357-9787 for U.S. callers or 706-679-7342 for international
callers. You will be asked to tell the answering coordinator your name and
the name of your firm. Mention the conference Access Code: WB Investor.
Replay: Monday, April 14, by 12:00 Noon EST and continuing through 5
p.m. EST Friday, July 11. Replay telephone number is 706-645-9291; access
code: 43662109.
Wachovia may file a registration statement (including prospectus) with
the SEC for the offering to which this communication relates. Investors
should read the prospectus in that registration statement, the preliminary
prospectus supplement and other documents that Wachovia has filed with the
SEC for more complete information about Wachovia and this offering.
Documents may be obtained for free by visiting EDGAR on the SEC Web site at
http://www.sec.gov. Alternatively, investors may call toll-free 1-800-326-5897 to
request that the prospectus be mailed after filing.
ADD: /FIRST ADD -- CLM055 -- Wachovia Corporation Earnings/
PAGE 9
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL TABLES
TABLE OF CONTENTS PAGE
Financial Highlights - Five Quarters Ended March 31, 2008 10
Other Financial Data - Five Quarters Ended March 31, 2008 11
Consolidated Statements of Income
- Five Quarters Ended March 31, 2008 12
Business Segments
- Three Months Ended March 31, 2008 and December 31, 2007 13
Business Segments - Three Months Ended March 31, 2007 14
Loans - On-Balance Sheet, and Managed and Servicing Portfolios
- Five Quarters Ended March 31, 2008 15
Allowance for Credit Losses
- Five Quarters Ended March 31, 2008 16
Nonperforming Assets
- Five Quarters Ended March 31, 2008 17
Consolidated Balance Sheets - Five Quarters Ended March 31,
2008 18
Net Interest Income Summaries
- Five Quarters Ended March 31, 2008 19 - 20
Reconciliation of Certain Non-GAAP Financial Measures
- Five Quarters Ended March 31, 2008 21 - 22
PAGE 10
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
2008 2007
(Dollars in millions, First Fourth Third
except per share data) Quarter Quarter Quarter
EARNINGS SUMMARY
Net interest income (GAAP) $4,752 4,630 4,551
Tax-equivalent adjustment 53 44 33
Net interest income
(Tax-equivalent) 4,805 4,674 4,584
Fee and other income 3,091 2,744 2,933
Total revenue (Tax-equivalent) 7,896 7,418 7,517
Provision for credit losses 2,831 1,497 408
Other noninterest expense 5,097 5,488 4,397
Merger-related and restructuring
expenses 241 187 36
Other intangible amortization 103 111 92
Total noninterest expense 5,441 5,786 4,525
Minority interest in income
of consolidated subsidiaries 155 107 189
Income (loss) from continuing
operations before income taxes
(benefits) (Tax-equivalent) (531) 28 2,395
Income taxes (benefits) (234) (209) 656
Tax-equivalent adjustment 53 44 33
Income (loss) from continuing
operations (350) 193 1,706
Discontinued operations, net of
income taxes - (142) (88)
Net income (loss) (350) 51 1,618
Dividends on preferred stock 43 - -
Net income (loss) available
to common stockholders $(393) 51 1,618
Diluted earnings per common
share (a) $(0.20) 0.03 0.85
Return on average common
stockholders' equity (2.11)% 0.28 9.19
Return on average assets (0.18) 0.03 0.88
Overhead efficiency ratio 68.91% 78.00 60.20
Operating leverage $823 (1,359) (847)
ASSET QUALITY
Allowance for loan losses as %
of loans, net 1.37% 0.98 0.78
Allowance for loan losses as %
of nonperforming assets 78 84 115
Allowance for credit losses as %
of loans, net 1.41 1.02 0.82
Net charge-offs as % of average
loans, net 0.66 0.41 0.19
Nonperforming assets as % of
loans, net, foreclosed properties
and loans held for sale 1.70% 1.14 0.66
CAPITAL ADEQUACY (b)
Tier I capital ratio 7.5% 7.4 7.1
Total capital ratio 12.1 11.8 10.8
Leverage ratio 6.2% 6.1 6.1
OTHER DATA
Average basic common shares
(In millions) 1,963 1,959 1,885
Average diluted common shares
(In millions) 1,977 1,983 1,910
Actual common shares
(In millions) (c) 1,992 1,980 1,901
Dividends paid per common share $0.64 0.64 0.64
Dividend payout ratio on
common shares (320.00)% 2,133.33 75.29
Book value per common share (c) $36.40 37.66 36.90
Common stock price 27.00 38.03 50.15
Market capitalization (c) $53,782 75,302 95,326
Common stock price to book
value (c) 74% 101 136
FTE employees 120,378 121,890 109,724
Total financial centers/
brokerage offices 4,850 4,894 4,167
ATMs 5,308 5,139 5,123
(a) Calculated using average basic common shares in the first quarter of
2008.
(b) The first quarter of 2008 is based on estimates.
(c) Includes restricted stock for which the holder receives dividends and
has full voting rights.
PAGE 10
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
2007
(Dollars in millions, Second First
except per share data) Quarter Quarter
EARNINGS SUMMARY
Net interest income (GAAP) $4,449 4,500
Tax-equivalent adjustment 38 37
Net interest income
(Tax-equivalent) 4,487 4,537
Fee and other income 4,240 3,734
Total revenue (Tax-equivalent) 8,727 8,271
Provision for credit losses 179 177
Other noninterest expense 4,755 4,493
Merger-related and restructuring
expenses 32 10
Other intangible amortization 103 118
Total noninterest expense 4,890 4,621
Minority interest in income
of consolidated subsidiaries 139 136
Income (loss) from continuing
operations before income taxes
(benefits) (Tax-equivalent) 3,519 3,337
Income taxes (benefits) 1,140 998
Tax-equivalent adjustment 38 37
Income (loss) from continuing
operations 2,341 2,302
Discontinued operations, net of
income taxes - -
Net income (loss) 2,341 2,302
Dividends on preferred stock - -
Net income (loss) available
to common stockholders $2,341 2,302
Diluted earnings per common
share (a) $1.22 1.20
Return on average common
stockholders' equity 13.54% 13.47
Return on average assets 1.33 1.35
Overhead efficiency ratio 56.02% 55.88
Operating leverage $189 (13)
ASSET QUALITY
Allowance for loan losses as %
of loans, net 0.79% 0.80
Allowance for loan losses as %
of nonperforming assets 157 189
Allowance for credit losses as
% of loans, net 0.83 0.84
Net charge-offs as %
of average loans, net 0.14 0.15
Nonperforming assets as % of
loans, net, foreclosed properties
and loans held for sale 0.49% 0.42
CAPITAL ADEQUACY (b)
Tier I capital ratio 7.5% 7.4
Total capital ratio 11.5 11.4
Leverage ratio 6.2% 6.1
OTHER DATA
Average basic common shares
(In millions) 1,891 1,894
Average diluted common shares
(In millions) 1,919 1,925
Actual common shares
(In millions) (c) 1,903 1,913
Dividends paid per common share $0.56 0.56
Dividend payout ratio on
common shares 45.90% 46.67
Book value per common share (c) $36.40 36.47
Common stock price 51.25 55.05
Market capitalization (c) $97,530 105,330
Common stock price to book value (c) 141% 151
FTE employees 110,493 110,369
Total financial centers/
brokerage offices 4,135 4,167
ATMs 5,099 5,146
(a) Calculated using average basic common shares in the first quarter of
2008.
(b) The first quarter of 2008 is based on estimates.
(c) Includes restricted stock for which the holder receives dividends
and has full voting rights.
PAGE 11
WACHOVIA CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
2008 2007
First Fourth Third
(In millions) Quarter Quarter Quarter
EARNINGS EXCLUDING MERGER-
RELATED AND RESTRUCTURING
EXPENSES, AND DISCONTINUED
OPERATIONS (a) (b)
Return on average common
stockholders' equity (1.45)% 1.62 9.81
Return on average assets (0.12) 0.16 0.94
Overhead efficiency ratio 65.85 75.48 59.73
Overhead efficiency ratio
excluding brokerage 61.92% 74.54 56.82
Operating leverage $877 (1,208) (843)
EARNINGS EXCLUDING MERGER-
RELATED AND RESTRUCTURING
EXPENSES, OTHER INTANGIBLE
AMORTIZATION AND DISCONTINUED
OPERATIONS (a) (b) (c)
Dividend payout ratio on common
shares (640.00)% 355.56 68.09
Return on average tangible
common stockholders' equity (2.80) 5.05 23.88
Return on average tangible
assets (0.09) 0.20 1.03
Overhead efficiency ratio 64.55 73.97 58.51
Overhead efficiency ratio
excluding brokerage 60.14% 72.40 55.32
Operating leverage $869 (1,187) (855)
OTHER FINANCIAL DATA
Net interest margin 2.92% 2.88 2.92
Fee and other income
as % of total revenue 39.15 36.99 39.02
Effective income tax rate (d) 40.04 122.05 27.33
Effective tax rate (Tax-
equivalent) (d) (e) 34.06% 127.17 28.38
AVERAGE BALANCE SHEET DATA
Commercial loans, net $198,578 188,164 174,672
Consumer loans, net 267,358 261,641 255,129
Loans, net 465,936 449,805 429,801
Earning assets 659,033 650,140 628,773
Total assets 783,593 763,487 729,004
Core deposits 394,513 390,043 379,009
Total deposits 443,353 437,566 416,107
Interest-bearing liabilities 611,099 599,130 574,399
Stockholders' equity $78,747 73,986 69,857
PERIOD-END BALANCE SHEET DATA
Commercial loans, net $211,700 198,566 189,545
Consumer loans, net 268,782 263,388 259,661
Loans, net 480,482 461,954 449,206
Goodwill and other intangible
assets
Goodwill 43,068 43,122 38,848
Deposit base 573 619 670
Customer relationships 1,375 1,410 620
Tradename 90 90 90
Total assets 808,890 782,896 754,168
Core deposits 398,562 397,405 377,865
Total deposits 444,964 449,129 421,937
Stockholders' equity $78,307 76,872 70,140
(a) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 10, $123 million, $108 million, $22
million, $20 million and $6 million in the first quarter of 2008, and
in the fourth, third, second and first quarters of 2007,
respectively, of after-tax net merger-related and restructuring
expenses and $142 million and $88 million after tax in the fourth and
third quarters of 2007, respectively, of discontinued operations.
(b) See page 10 for the most directly comparable GAAP financial measure
and pages 21 and 22 for a more detailed reconciliation.
(c) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 10, $64 million, $65 million, $59
million, $66 million and $76 million in the first quarter of 2008,
and in the fourth, third, second and first quarters of 2007,
respectively, of deposit base and other intangible amortization.
(d) The fourth and third quarters of 2007 includes taxes on discontinued
operations.
(e) The tax-equivalent tax rate applies to fully tax-equivalized
revenues.
PAGE 11
WACHOVIA CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
2007
Second First
(In millions) Quarter Quarter
EARNINGS EXCLUDING MERGER-
RELATED AND RESTRUCTURING
EXPENSES, AND DISCONTINUED
OPERATIONS (a) (b)
Return on average common
stockholders' equity 13.66% 13.50
Return on average assets 1.34 1.35
Overhead efficiency ratio 55.65 55.75
Overhead efficiency ratio
excluding brokerage 52.04% 52.60
Operating leverage $210 (51)
EARNINGS EXCLUDING MERGER-RELATED
AND RESTRUCTURING EXPENSES, OTHER
INTANGIBLE AMORTIZATION AND
DISCONTINUED OPERATIONS (a) (b) (c)
Dividend payout ratio on common
shares 44.09% 45.16
Return on average tangible common
stockholders' equity 33.57 33.27
Return on average tangible assets 1.47 1.49
Overhead efficiency ratio 54.47 54.33
Overhead efficiency ratio excluding
brokerage 50.61% 50.88
Operating leverage $197 (75)
OTHER FINANCIAL DATA
Net interest margin 2.96% 3.06
Fee and other income as % of
total revenue 48.58 45.15
Effective income tax rate (d) 32.78 30.22
Effective tax rate
(Tax-equivalent) (d) (e) 33.51% 30.99
AVERAGE BALANCE SHEET DATA
Commercial loans, net $165,512 157,288
Consumer loans, net 255,745 257,973
Loans, net 421,257 415,261
Earning assets 605,978 593,663
Total assets 704,773 691,029
Core deposits 378,496 369,270
Total deposits 408,418 399,106
Interest-bearing liabilities 547,669 535,778
Stockholders' equity $69,317 69,320
PERIOD-END BALANCE SHEET DATA
Commercial loans, net $175,369 167,039
Consumer loans, net 253,751 254,624
Loans, net 429,120 421,663
Goodwill and other intangible assets
Goodwill 38,766 38,838
Deposit base 727 796
Customer relationships 651 684
Tradename 90 90
Total assets 715,428 702,669
Core deposits 378,188 377,358
Total deposits 410,030 405,270
Stockholders' equity $69,266 69,786
(a) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 10, $123 million, $108 million, $22
million, $20 million and $6 million in the first quarter of 2008, and
in the fourth, third, second and first quarters of 2007,
respectively, of after-tax net merger-related and restructuring
expenses and $142 million and $88 million after tax in the fourth and
third quarters of 2007, respectively, of discontinued operations .
(b) See page 10 for the most directly comparable GAAP financial measure
and pages 21 and 22 for a more detailed reconciliation.
(c) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 10, $64 million, $65 million, $59
million, $66 million and $76 million in the first quarter of 2008,
and in the fourth, third, second and first quarters of 2007,
respectively, of deposit base and other intangible amortization.
(d) The fourth and third quarters of 2007 includes taxes on discontinued
operations.
(e) The tax-equivalent tax rate applies to fully tax-equivalized
revenues.
PAGE 12
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
2008 2007
(In millions, First Fourth Third
except per share data) Quarter Quarter Quarter
INTEREST INCOME
Interest and fees on loans $7,577 7,980 7,937
Interest and dividends on
securities 1,496 1,616 1,529
Trading account interest 571 557 566
Other interest income 535 757 799
Total interest income 10,179 10,910 10,831
INTEREST EXPENSE
Interest on deposits 2,941 3,433 3,334
Interest on short-term borrowings 523 673 801
Interest on long-term debt 1,963 2,174 2,145
Total interest expense 5,427 6,280 6,280
Net interest income 4,752 4,630 4,551
Provision for credit losses 2,831 1,497 408
Net interest income after
provision for credit losses 1,921 3,133 4,143
FEE AND OTHER INCOME
Service charges 676 716 689
Other banking fees 498 497 471
Commissions 914 970 600
Fiduciary and asset management
fees 1,439 1,436 1,029
Advisory, underwriting and other
investment banking fees 261 249 393
Trading account profits (losses) (308) (524) (301)
Principal investing 446 41 372
Securities gains (losses) (205) (320) (34)
Other income (630) (321) (286)
Total fee and other income 3,091 2,744 2,933
NONINTEREST EXPENSE
Salaries and employee benefits 3,260 3,468 2,628
Occupancy 379 375 325
Equipment 323 334 283
Marketing 97 80 74
Communications and supplies 186 191 176
Professional and consulting fees 196 271 194
Other intangible amortization 103 111 92
Merger-related and restructuring
expenses 241 187 36
Sundry expense 656 769 717
Total noninterest expense 5,441 5,786 4,525
Minority interest in income of
consolidated subsidiaries 155 107 189
Income (loss) from continuing
operations before income taxes
(benefits) (584) (16) 2,362
Income taxes (benefits) (234) (209) 656
Income (loss) from continuing
operations (350) 193 1,706
Discontinued operations,
net of income taxes - (142) (88)
Net income (loss) (350) 51 1,618
Dividends on preferred stock 43 - -
Net income (loss) available to
common stockholders $(393) 51 1,618
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Income (loss) from continuing
operations $(0.20) 0.10 0.91
Net income (loss) available
to common stockholders (0.20) 0.03 0.86
Diluted earnings (a)
Income (loss) from continuing
operations (0.20) 0.10 0.90
Net income (loss) available
to common stockholders (0.20) 0.03 0.85
Cash dividends $0.64 0.64 0.64
AVERAGE COMMON SHARES
Basic 1,963 1,959 1,885
Diluted 1,977 1,983 1,910
(a) Calculated using average basic common shares in the first quarter of
2008
PAGE 12
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
2007
(In millions, Second First
except per share data) Quarter Quarter
INTEREST INCOME
Interest and fees on loans $7,723 7,618
Interest and dividends on
securities 1,474 1,478
Trading account interest 506 433
Other interest income 647 611
Total interest income 10,350 10,140
INTEREST EXPENSE
Interest on deposits 3,180 3,014
Interest on short-term
borrowings 706 669
Interest on long-term debt 2,015 1,957
Total interest expense 5,901 5,640
Net interest income 4,449 4,500
Provision for credit losses 179 177
Net interest income after
provision for credit losses 4,270 4,323
FEE AND OTHER INCOME
Service charges 667 614
Other banking fees 449 416
Commissions 649 659
Fiduciary and asset management fees 1,015 953
Advisory, underwriting and
other investment banking fees 454 407
Trading account profits (losses) 195 128
Principal investing 298 48
Securities gains (losses) 23 53
Other income 490 456
Total fee and other income 4,240 3,734
NONINTEREST EXPENSE
Salaries and employee benefits 3,122 2,972
Occupancy 331 312
Equipment 309 307
Marketing 78 62
Communications and supplies 178 173
Professional and consulting fees 205 177
Other intangible amortization 103 118
Merger-related and restructuring
expenses 32 10
Sundry expense 532 490
Total noninterest expense 4,890 4,621
Minority interest in income
of consolidated subsidiaries 139 136
Income (loss) from continuing
operations before income taxes
(benefits) 3,481 3,300
Income taxes (benefits) 1,140 998
Income (loss) from continuing
operations 2,341 2,302
Discontinued operations,
net of income taxes - -
Net income (loss) 2,341 2,302
Dividends on preferred stock - -
Net income (loss) available to
common stockholders $2,341 2,302
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Income (loss) from continuing
operations $1.24 1.22
Net income (loss) available
to common stockholders 1.24 1.22
Diluted earnings (a)
Income (loss) from
continuing operations 1.22 1.20
Net income (loss) available
to common stockholders 1.22 1.20
Cash dividends $0.56 0.56
AVERAGE COMMON SHARES
Basic 1,891 1,894
Diluted 1,919 1,925
(a) Calculated using average basic common shares in the first quarter of
2008
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2008
Corporate
Wealth and
General Manage- Investment
(In millions) Bank ment Bank
CONSOLIDATED
Net interest income (a) $3,455 181 1,032
Fee and other income 990 211 (159)
Intersegment revenue 55 5 (50)
Total revenue (a) 4,500 397 823
Provision for credit losses 569 5 197
Noninterest expense 2,050 246 747
Minority interest - - -
Income taxes (benefits) 675 54 (65)
Tax-equivalent adjustment 11 - 21
Net income (loss) 1,195 92 (77)
Dividends on preferred stock - - -
Net income (loss) available
to common stockholders $1,195 92 (77)
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2008
Capital
Management Parent
(In millions)
CONSOLIDATED
Net interest income (a) $274 (137)
Fee and other income 2,191 (142)
Intersegment revenue (10) -
Total revenue (a) 2,455 (279)
Provision for credit losses - 2,060
Noninterest expense 1,855 302
Minority interest - 198
Income taxes (benefits) 218 (1,041)
Tax-equivalent adjustment 1 20
Net income (loss) 381 (1,818)
Dividends on preferred stock - 43
Net income (loss) available
to common stockholders $381 (1,861)
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2008
Net Merger-
Related and
Restructuring
(In millions) Expenses (b) Total
CONSOLIDATED
Net interest income (a) $(53) 4,752
Fee and other income - 3,091
Intersegment revenue - -
Total revenue (a) (53) 7,843
Provision for credit losses - 2,831
Noninterest expense 241 5,441
Minority interest (43) 155
Income taxes (benefits) (75) (234)
Tax-equivalent adjustment (53) -
Net income (loss) (123) (350)
Dividends on preferred stock - 43
Net income (loss) available
to common stockholders $(123) (393)
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended December 31, 2007
Corporate
Wealth and
General Manage- Investment
(In millions) Bank ment Bank
CONSOLIDATED
Net interest income (a) $3,402 183 988
Fee and other income 929 214 (555)
Intersegment revenue 58 3 (50)
Total revenue (a) 4,389 400 383
Provision for credit losses 320 7 112
Noninterest expense 2,041 249 952
Minority interest - - -
Income taxes (benefits) 730 53 (269)
Tax-equivalent adjustment 11 - 19
Income (loss) from continuing
operations 1,287 91 (431)
Discontinued operations,
net of income taxes - - -
Net income (loss) $1,287 91 (431)
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended December 31, 2007
Capital
Management Parent
(In millions)
CONSOLIDATED
Net interest income (a) $318 (217)
Fee and other income 2,211 (55)
Intersegment revenue (11) -
Total revenue (a) 2,518 (272)
Provision for credit losses - 1,058
Noninterest expense 1,938 419
Minority interest - 118
Income taxes (benefits) 211 (866)
Tax-equivalent adjustment 1 13
Income (loss) from continuing
operations 368 (1,014)
Discontinued operations,
net of income taxes - (142)
Net income (loss) $368 (1,156)
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended December 31, 2007
Net Merger-
Related and
Restructuring
(In millions) Expenses (b) Total
CONSOLIDATED
Net interest income (a) $(44) 4,630
Fee and other income - 2,744
Intersegment revenue - -
Total revenue (a) (44) 7,374
Provision for credit losses - 1,497
Noninterest expense 187 5,786
Minority interest (11) 107
Income taxes (benefits) (68) (209)
Tax-equivalent adjustment (44) -
Income (loss) from continuing
operations (108) 193
Discontinued operations,
net of income taxes - (142)
Net income (loss) $(108) 51
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2007
Corporate
Wealth and
General Manage- Investment
(In millions) Bank ment Bank
CONSOLIDATED
Net interest income (a) $3,398 181 716
Fee and other income 845 196 1,109
Intersegment revenue 47 3 (43)
Total revenue (a) 4,290 380 1,782
Provision for credit losses 147 1 6
Noninterest expense 1,869 247 911
Minority interest - - -
Income taxes (benefits) 819 48 305
Tax-equivalent adjustment 11 - 10
Net income (loss) $1,444 84 550
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2007
Capital
(In millions) Management Parent
CONSOLIDATED
Net interest income (a) $259 (17)
Fee and other income 1,477 107
Intersegment revenue (8) 1
Total revenue (a) 1,728 91
Provision for credit losses - 23
Noninterest expense 1,237 347
Minority interest - 136
Income taxes (benefits) 179 (349)
Tax-equivalent adjustment - 16
Net income (loss) $312 (82)
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2007
Net Merger-
Related and
Restructuring
(In millions) Expenses (b) Total
CONSOLIDATED
Net interest income (a) $(37) 4,500
Fee and other income - 3,734
Intersegment revenue - -
Total revenue (a) (37) 8,234
Provision for credit losses - 177
Noninterest expense 10 4,621
Minority interest - 136
Income taxes (benefits) (4) 998
Tax-equivalent adjustment (37) -
Net income (loss) $(6) 2,302
(a) Tax-equivalent.
(b) The tax-equivalent amounts are eliminated herein in order for "Total"
amounts to agree with amounts appearing in the Consolidated
Statements of Income.
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANS - ON-BALANCE SHEET, AND
MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
2008 2007
First Fourth Third
(In millions) Quarter Quarter Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and
agricultural $119,193 112,509 109,269
Real estate - construction and
other 18,597 18,543 18,167
Real estate - mortgage 26,370 23,846 21,514
Lease financing 23,637 23,913 23,966
Foreign 33,616 29,540 26,471
Total commercial 221,413 208,351 199,387
CONSUMER
Real estate secured 230,197 227,719 225,355
Student loans 9,324 8,149 7,742
Installment loans 27,437 25,635 24,763
Total consumer 266,958 261,503 257,860
Total loans 488,371 469,854 457,247
Unearned income (7,889) (7,900) (8,041)
Loans, net (On-balance
sheet) $480,482 461,954 449,206
MANAGED PORTFOLIO (a)
COMMERCIAL
On-balance sheet loan portfolio $221,413 208,351 199,387
Securitized loans - off-balance
sheet 120 131 142
Loans held for sale 3,342 9,414 13,905
Total commercial 224,875 217,896 213,434
CONSUMER
Real estate secured
On-balance sheet loan
portfolio 230,197 227,719 225,355
Securitized loans -
off-balance sheet 6,845 7,230 7,625
Securitized loans included
in securities 11,683 10,755 5,963
Loans held for sale 5,960 4,816 3,583
Total real estate secured 254,685 250,520 242,526
Student
On-balance sheet loan portfolio 9,324 8,149 7,742
Securitized loans -
off-balance sheet 2,586 2,811 2,856
Securitized loans included
in securities 52 52 52
Loans held for sale - - 1,968
Total student 11,962 11,012 12,618
Installment
On-balance sheet loan
portfolio 27,437 25,635 24,763
Securitized loans -
off-balance sheet 1,968 2,263 2,572
Securitized loans included
in securities 39 47 55
Loans held for sale 2,127 2,542 1,975
Total installment 31,571 30,487 29,365
Total consumer 298,218 292,019 284,509
Total managed portfolio $523,093 509,915 497,943
SERVICING PORTFOLIO (b)
Commercial $354,624 353,464 337,721
Consumer $27,415 27,967 28,474
(a) The managed portfolio includes the on-balance sheet loan portfolio,
loans securitized for which the retained interests are classified in
securities on-balance sheet, loans held for sale on-balance sheet and
the off-balance sheet portfolio of securitized loans sold, where we
service the loans.
(b) The servicing portfolio consists of third party commercial and
consumer loans for which our sole function is that of servicing the
loans for the third parties.
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANS - ON-BALANCE SHEET, AND
MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
2007
Second First
(In millions) Quarter Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and
agricultural $102,397 99,687
Real estate - construction
and other 17,449 16,965
Real estate - mortgage 20,448 20,130
Lease financing 24,083 24,053
Foreign 20,959 16,240
Total commercial 185,336 177,075
CONSUMER
Real estate secured 220,293 220,682
Student loans 6,757 8,479
Installment loans 25,017 23,665
Total consumer 252,067 252,826
Total loans 437,403 429,901
Unearned income (8,283) (8,238)
Loans, net (On-balance
sheet) $429,120 421,663
MANAGED PORTFOLIO (a)
COMMERCIAL
On-balance sheet loan portfolio $185,336 177,075
Securitized loans -
off-balance sheet 170 181
Loans held for sale 11,573 10,467
Total commercial 197,079 187,723
CONSUMER
Real estate secured
On-balance sheet loan
portfolio 220,293 220,682
Securitized loans -
off-balance sheet 8,112 6,595
Securitized loans included
in securities 6,091 5,629
Loans held for sale 4,079 4,089
Total real estate secured 238,575 236,995
Student
On-balance sheet loan
portfolio 6,757 8,479
Securitized loans -
off-balance sheet 2,905 3,045
Securitized loans included
in securities 52 52
Loans held for sale 2,046 -
Total student 11,760 11,576
Installment
On-balance sheet loan
portfolio 25,017 23,665
Securitized loans -
off-balance sheet 3,105 2,851
Securitized loans included
in securities 116 126
Loans held for sale 35 476
Total installment 28,273 27,118
Total consumer 278,608 275,689
Total managed portfolio $475,687 463,412
SERVICING PORTFOLIO (b)
Commercial $298,374 271,038
Consumer $26,789 25,952
(a) The managed portfolio includes the on-balance sheet loan portfolio,
loans securitized for which the retained interests are classified in
securities on-balance sheet, loans held for sale on-balance sheet and
the off-balance sheet portfolio of securitized loans sold, where we
service the loans.
(b) The servicing portfolio consists of third party commercial and
consumer loans for which our sole function is that of servicing the
loans for the third parties.
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES
(Unaudited)
2008 2007
First Fourth Third
(In millions) Quarter Quarter Quarter
ALLOWANCE FOR CREDIT LOSSES (a)
Balance, beginning of period $4,717 3,691 3,552
Provision for credit losses 2,834 1,467 381
Provision for credit losses
relating to loans transferred
to loans held for sale or sold 7 6 3
Provision for credit losses for
unfunded lending commitments (10) 24 24
LOAN LOSSES
Commercial, financial and
agricultural (171) (67) (41)
Commercial real estate -
construction and mortgage (81) (117) (5)
Total commercial (252) (184) (46)
Real estate secured (351) (156) (59)
Student loans (3) (4) (5)
Installment and other loans (b) (242) (225) (168)
Total consumer (596) (385) (232)
Total loan losses (848) (569) (278)
LOAN RECOVERIES
Commercial, financial and
agricultural 14 22 9
Commercial real estate -
construction and mortgage 1 - 3
Total commercial 15 22 12
Real estate secured 10 9 12
Student loans 1 2 3
Installment and other loans (b) 57 75 45
Total consumer 68 86 60
Total loan recoveries 83 108 72
Net charge-offs (765) (461) (206)
Allowance relating to loans
acquired, transferred to
loans held for sale or sold (16) (10) (63)
Balance, end of period $6,767 4,717 3,691
ALLOWANCE FOR CREDIT LOSSES
Allowance for loan losses $6,567 4,507 3,505
Reserve for unfunded lending
commitments 200 210 186
Total allowance for credit
losses $6,767 4,717 3,691
ALLOWANCE FOR LOAN LOSSES
as % of loans, net 1.37% 0.98 0.78
as % of nonaccrual and
restructured loans (c) 84 90 129
as % of nonperforming assets (c) 78 84 115
ALLOWANCE FOR CREDIT LOSSES
as % of loans, net 1.41% 1.02 0.82
NET CHARGE-OFFS AS % OF
AVERAGE LOANS, NET (d)
Commercial, financial and
agricultural 0.41% 0.12 0.10
Commercial real estate -
construction and mortgage 0.73 1.12 0.02
Total commercial 0.48 0.34 0.08
Real estate secured 0.59 0.26 0.08
Student loans 0.08 0.10 0.14
Installment and other loans (b) 2.76 2.35 1.99
Total consumer 0.79 0.46 0.27
Total as %
of average loans, net 0.66% 0.41 0.19
CONSUMER REAL ESTATE SECURED
NET CHARGE-OFFS
First lien (291) (122) (32)
Second lien (50) (25) (15)
Total consumer real estate
secured net charge-offs (341) (147) (47)
(a) The allowance for credit losses is the sum of the allowance for
loan losses and the reserve for unfunded lending commitments.
(b) Principally auto loans.
(c) These ratios do not include nonperforming assets included in
loans held for sale.
(d) Annualized.
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES
(Unaudited)
2007
Second First
(In millions) Quarter Quarter
ALLOWANCE FOR CREDIT LOSSES (a)
Balance, beginning of period $3,533 3,514
Provision for credit losses 168 175
Provision for credit losses relating
to loans transferred to loans held
for sale or sold 4 1
Provision for credit losses for
unfunded lending commitments 7 1
LOAN LOSSES
Commercial, financial and agricultural (39) (34)
Commercial real estate -
construction and mortgage (4) (6)
Total commercial (43) (40)
Real estate secured (40) (33)
Student loans (2) (3)
Installment and other loans (b) (138) (142)
Total consumer (180) (178)
Total loan losses (223) (218)
LOAN RECOVERIES
Commercial, financial and
agricultural 15 9
Commercial real estate -
construction and mortgage - 3
Total commercial 15 12
Real estate secured 11 6
Student loans - 1
Installment and other loans (b) 47 44
Total consumer 58 51
Total loan recoveries 73 63
Net charge-offs (150) (155)
Allowance relating to loans
acquired, transferred to loans
held for sale or sold (10) (3)
Balance, end of period $3,552 3,533
ALLOWANCE FOR CREDIT LOSSES
Allowance for loan losses $3,390 3,378
Reserve for unfunded lending commitments 162 155
Total allowance for credit losses $3,552 3,533
ALLOWANCE FOR LOAN LOSSES
as % of loans, net 0.79% 0.80
as % of nonaccrual and restructured loans (c) 174 207
as % of nonperforming assets (c) 157 189
ALLOWANCE FOR CREDIT LOSSES
as % of loans, net 0.83% 0.84
NET CHARGE-OFFS AS % OF
AVERAGE LOANS, NET (d)
Commercial, financial and agricultural 0.07% 0.08
Commercial real estate -
construction and mortgage 0.04 0.04
Total commercial 0.07 0.07
Real estate secured 0.05 0.05
Student loans 0.07 0.10
Installment and other loans (b) 1.47 1.67
Total consumer 0.19 0.20
Total as %
of average loans, net 0.14% 0.15
CONSUMER REAL ESTATE SECURED
NET CHARGE-OFFS
First lien (17) (15)
Second lien (12) (12)
Total consumer real estate secured
net charge-offs (29) (27)
(a) The allowance for credit losses is the sum of the allowance for loan
losses and the reserve for unfunded lending commitments.
(b) Principally auto loans.
(c) These ratios do not include nonperforming assets included in loans
held for sale.
(d) Annualized.
ADD: /SECOND AND FINAL ADD -- CLM055 -- Wachovia Corporation Earnings/
PAGE 17
WACHOVIA CORPORATION AND SUBSIDIARIES
NONPERFORMING ASSETS
(Unaudited)
2008 2007
First Fourth Third
(In millions) Quarter Quarter Quarter
NONPERFORMING ASSETS
Nonaccrual loans
Commercial
Commercial, financial and
agricultural $908 602 354
Commercial real estate -
construction and mortgage 1,750 1,059 289
Total commercial 2,658 1,661 643
Consumer
Real estate secured
First lien 5,015 3,234 1,986
Second lien 75 58 41
Installment and other loans (a) 40 42 45
Total consumer 5,130 3,334 2,072
Total nonaccrual loans 7,788 4,995 2,715
Troubled debt restructurings (b) 56 - -
Foreclosed properties 530 389 334
Total nonperforming assets $8,374 5,384 3,049
as % of loans, net, and foreclosed
properties (c) 1.74% 1.16 0.68
Nonperforming loans included
in loans held for sale
Commercial $- - -
Consumer 5 62 59
Total nonperforming assets included
in loans held for sale 5 62 59
Nonperforming assets included in
loans and in loans held for sale $8,379 5,446 3,108
as % of loans, net, foreclosed
properties and loans held for
sale (d) 1.70% 1.14 0.66
PAST DUE LOANS 90 DAYS AND OVER,
AND NONACCRUAL LOANS (c)
Accruing loans past due 90
days and over $1,047 708 590
Nonaccrual loans 7,788 4,995 2,715
Total past due loans 90 days
and over, and nonaccrual loans $8,835 5,703 3,305
Commercial as % of loans, net 1.31% 0.89 0.38
Consumer as % of loans, net 2.26% 1.49 1.00
(a) Principally auto loans; nonaccrual status does not apply to student
loans.
(b) Troubled debt restructurings were not significant prior to the first
quarter of 2008.
(c) These ratios do not include nonperforming assets included in loans
held for sale.
(d) These ratios reflect nonperforming loans included in loans held for
sale. Loans held for sale are recorded at the lower of cost or market
value, and accordingly, the amounts shown and included in the ratios
are net of the transferred allowance for loan losses and the lower of
cost or market value adjustments.
PAGE 17
WACHOVIA CORPORATION AND SUBSIDIARIES
NONPERFORMING ASSETS
(Unaudited)
2007
Second First
(In millions) Quarter Quarter
NONPERFORMING ASSETS
Nonaccrual loans
Commercial
Commercial, financial and agricultural $318 303
Commercial real estate -
construction and mortgage 161 117
Total commercial 479 420
Consumer
Real estate secured
First lien 1,380 1,124
Second lien 44 37
Installment and other loans (a) 42 51
Total consumer 1,466 1,212
Total nonaccrual loans 1,945 1,632
Troubled debt restructurings (b) - -
Foreclosed properties 207 155
Total nonperforming assets $2,152 1,787
as % of loans, net, and foreclosed
properties (c) 0.50% 0.42
Nonperforming loans included
in loans held for sale
Commercial $- 1
Consumer 42 25
Total nonperforming assets included
in loans held for sale 42 26
Nonperforming assets included in
loans and in loans held for sale $2,194 1,813
as % of loans, net, foreclosed
properties and loans held for
sale (d) 0.49% 0.42
PAST DUE LOANS 90 DAYS AND OVER,
AND NONACCRUAL LOANS (c)
Accruing loans past due 90 $562 555
days and over
Nonaccrual loans 1,945 1,632
Total past due loans 90 days
and over, and nonaccrual loans $2,507 2,187
Commercial as % of loans, net 0.31% 0.28
Consumer as % of loans, net 0.78% 0.68
(a) Principally auto loans; nonaccrual status does not apply to student
loans.
(b) Troubled debt restructurings were not significant prior to the first
quarter of 2008.
(c) These ratios do not include nonperforming assets included in loans
held for sale.
(d) These ratios reflect nonperforming loans included in loans held for
sale. Loans held for sale are recorded at the lower of cost or market
value, and accordingly, the amounts shown and included in the ratios
are net of the transferred allowance for loan losses and the lower of
cost or market value adjustments.
PAGE 18
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
2008 2007
(In millions, First Fourth Third
except per share data) Quarter Quarter Quarter
ASSETS
Cash and due from banks $14,703 15,124 12,681
Interest-bearing bank balances 3,236 3,057 4,449
Federal funds sold and securities
purchased under resale agreements 10,644 15,449 11,995
Total cash and cash equivalents 28,583 33,630 29,125
Trading account assets 72,592 55,882 54,835
Securities 114,183 115,037 111,827
Loans, net of unearned income 480,482 461,954 449,206
Allowance for loan losses (6,567) (4,507) (3,505)
Loans, net 473,915 457,447 445,701
Loans held for sale 11,429 16,772 21,431
Premises and equipment 6,733 6,605 6,002
Due from customers on acceptances 1,109 1,418 1,295
Goodwill 43,068 43,122 38,848
Other intangible assets 2,038 2,119 1,380
Other assets 55,240 50,864 43,724
Total assets $808,890 782,896 754,168
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits 60,951 60,893 56,825
Interest-bearing deposits 384,013 388,236 365,112
Total deposits 444,964 449,129 421,937
Short-term borrowings 57,857 50,393 62,714
Bank acceptances outstanding 1,118 1,424 1,303
Trading account liabilities 28,887 21,585 17,771
Other liabilities 19,036 19,151 18,424
Long-term debt 175,653 161,007 158,584
Total liabilities 727,515 702,689 680,733
Minority interest in net assets of
consolidated subsidiaries 3,068 3,335 3,295
STOCKHOLDERS' EQUITY
Dividend Equalization Preferred
shares, no par value, 97 million
shares issued and outstanding
at March 31, 2008 - - -
Non-Cumulative Perpetual Class A
Preferred Stock, Series I, $100,000
liquidation preference per share,
25,010 shares authorized - - -
Non-Cumulative Perpetual Class A
Preferred Stock, Series J, $1,000
liquidation preference per share,
92 million depositary shares issued
and outstanding at March 31, 2008 2,300 2,300 -
Non-Cumulative Perpetual Class A
Preferred Stock, Series K, $1,000
liquidation preference per share,
3.5 million shares issued and
outstanding at March 31, 2008 3,500 - -
Common stock, $3.33-1/3 par value;
authorized 3 billion shares,
outstanding 1.965 billion shares
at March 31, 2008 6,551 6,534 6,283
Paid-in capital 56,368 56,149 51,938
Retained earnings 11,763 13,456 14,670
Accumulated other
comprehensive income, net (2,175) (1,567) (2,751)
Total stockholders' equity 78,307 76,872 70,140
Total liabilities and
stockholders' equity $808,890 782,896 754,168
PAGE 18
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
2007
(In millions, Second First
except per share data) Quarter Quarter
ASSETS
Cash and due from banks $12,065 12,593
Interest-bearing bank balances 2,726 2,591
Federal funds sold and
securities purchased under
resale agreements 11,511 10,322
Total cash and
cash equivalents 26,302 25,506
Trading account assets 51,540 44,161
Securities 106,184 106,841
Loans, net of unearned income 429,120 421,663
Allowance for loan losses (3,390) (3,378)
Loans, net 425,730 418,285
Loans held for sale 17,733 15,032
Premises and equipment 6,080 6,058
Due from customers on
acceptances 831 992
Goodwill 38,766 38,838
Other intangible assets 1,468 1,570
Other assets 40,794 45,386
Total assets $715,428 702,669
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits 62,112 63,399
Interest-bearing deposits 347,918 341,871
Total deposits 410,030 405,270
Short-term borrowings 52,715 47,144
Bank acceptances outstanding 840 1,004
Trading account liabilities 19,319 17,291
Other liabilities 18,080 16,741
Long-term debt 142,047 142,334
Total liabilities 643,031 629,784
Minority interest in net assets of
consolidated subsidiaries 3,131 3,099
STOCKHOLDERS' EQUITY
Dividend Equalization Preferred
shares, no par value, 97 million
shares issued and outstanding
at March 31, 2008 - -
Non-Cumulative Perpetual Class A
Preferred Stock, Series I, $100,000
liquidation preference per share,
25,010 shares authorized - -
Non-Cumulative Perpetual Class A
Preferred Stock, Series J, $1,000
liquidation preference per share,
92 million depositary shares issued
and outstanding at March 31, 2008 - -
Non-Cumulative Perpetual Class A
Preferred Stock, Series K, $1,000
liquidation preference per share,
3.5 million shares issued and
outstanding at March 31, 2008 - -
Common stock, $3.33-1/3 par value;
authorized 3 billion shares,
outstanding 1.965 billion shares
at March 31, 2008 6,289 6,316
Paid-in capital 51,905 52,026
Retained earnings 14,335 13,378
Accumulated other
comprehensive income, net (3,263) (1,934)
Total stockholders' equity 69,266 69,786
Total liabilities and
stockholders' equity $715,428 702,669
PAGE 19
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
FIRST QUARTER 2008
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank
balances $4,253 51 4.85%
Federal funds sold and securities
purchased under resale agreements 11,865 103 3.49
Trading account assets 44,655 589 5.28
Securities 110,401 1,545 5.60
Loans
Commercial
Commercial, financial
and agricultural 115,377 1,671 5.82
Real estate - construction
and other 18,634 251 5.42
Real estate - mortgage 25,291 374 5.95
Lease financing 7,167 140 7.79
Foreign 32,109 389 4.86
Total commercial 198,578 2,825 5.72
Consumer
Real estate secured 231,392 3,926 6.79
Student loans 9,155 113 4.96
Installment loans 26,811 659 9.88
Total consumer 267,358 4,698 7.04
Total loans 465,936 7,523 6.48
Loans held for sale 11,592 223 7.71
Other earning assets 10,331 146 5.69
Total earning assets
excluding derivatives 659,033 10,180 6.19
Risk management derivatives (a) - 52 0.04
Total earning assets
including derivatives 659,033 10,232 6.23
Cash and due from banks 11,645
Other assets 112,915
Total assets $783,593
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 86,452 236 1.10
Money market accounts 128,074 747 2.34
Other consumer time 123,655 1,437 4.68
Foreign 26,197 231 3.55
Other time 22,643 265 4.71
Total interest-bearing
deposits 387,021 2,916 3.03
Federal funds purchased and
securities sold under
repurchase agreements 35,956 308 3.45
Commercial paper 5,509 38 2.74
Securities sold short 6,919 62 3.63
Other short-term borrowings 10,154 45 1.77
Long-term debt 165,540 1,961 4.75
Total interest-bearing
liabilities excluding
derivatives 611,099 5,330 3.51
Risk management derivatives (a) - 97 0.06
Total interest-bearing
liabilities including
derivatives 611,099 5,427 3.57
Noninterest-bearing deposits 56,332
Other liabilities 37,415
Stockholders' equity 78,747
Total liabilities and
stockholders' equity $783,593
Interest income and rate earned -
including derivatives $10,232 6.23%
Interest expense and equivalent
rate paid - including derivatives 5,427 3.31
Net interest income and margin -
including derivatives $4,805 2.92%
(a) The rates earned and the rates paid on risk management derivatives
are based on off-balance sheet notional amounts. The fair value of
these instruments is included in other assets and other liabilities.
PAGE 19
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
FOURTH QUARTER 2007
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank
balances $5,083 64 5.05%
Federal funds sold and securities
purchased under resale agreements 12,901 155 4.77
Trading account assets 37,694 569 6.04
Securities 115,436 1,625 5.62
Loans
Commercial
Commercial, financial
and agricultural 111,500 1,908 6.79
Real estate - construction
and other 18,435 318 6.85
Real estate - mortgage 22,973 426 7.36
Lease financing 7,374 145 7.82
Foreign 27,882 380 5.42
Total commercial 188,164 3,177 6.70
Consumer
Real estate secured 227,893 4,042 7.08
Student loans 8,073 126 6.19
Installment loans 25,675 651 10.04
Total consumer 261,641 4,819 7.35
Total loans 449,805 7,996 7.08
Loans held for sale 18,998 360 7.53
Other earning assets 10,223 166 6.48
Total earning assets
excluding derivatives 650,140 10,935 6.70
Risk management derivatives (a) - 19 0.01
Total earning assets
including derivatives 650,140 10,954 6.71
Cash and due from banks 12,028
Other assets 101,319
Total assets $763,487
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 83,370 345 1.64
Money market accounts 121,717 949 3.09
Other consumer time 127,061 1,557 4.86
Foreign 27,354 306 4.44
Other time 20,169 263 5.16
Total interest-bearing
deposits 379,671 3,420 3.57
Federal funds purchased and
securities sold under repurchase
agreements 36,386 413 4.50
Commercial paper 7,272 78 4.27
Securities sold short 6,728 61 3.62
Other short-term borrowings 10,369 58 2.24
Long-term debt 158,704 2,129 5.34
Total interest-bearing
liabilities excluding
derivatives 599,130 6,159 4.08
Risk management derivatives (a) - 121 0.08
Total interest-bearing
liabilities including
derivatives 599,130 6,280 4.16
Noninterest-bearing deposits 57,895
Other liabilities 32,476
Stockholders' equity 73,986
Total liabilities and
stockholders' equity $763,487
Interest income and rate earned -
including derivatives $10,954 6.71%
Interest expense and equivalent
rate paid - including derivatives 6,280 3.83
Net interest income and margin -
including derivatives $4,674 2.88%
(a) The rates earned and the rates paid on risk management derivatives
are based on off-balance sheet notional amounts. The fair value of
these instruments is included in other assets and other liabilities.
PAGE 20
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
THIRD QUARTER 2007
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank
balances $6,459 93 5.68%
Federal funds sold and securities
purchased under resale agreements 14,206 194 5.42
Trading account assets 38,737 575 5.93
Securities 111,424 1,522 5.46
Loans
Commercial
Commercial, financial
and agricultural 106,263 1,927 7.19
Real estate - construction
and other 17,795 344 7.66
Real estate - mortgage 20,883 406 7.71
Lease financing 7,523 146 7.80
Foreign 22,208 308 5.53
Total commercial 174,672 3,131 7.12
Consumer
Real estate secured 223,356 4,070 7.28
Student loans 7,299 122 6.61
Installment loans 24,474 614 9.96
Total consumer 255,129 4,806 7.52
Total loans 429,801 7,937 7.35
Loans held for sale 20,209 363 7.14
Other earning assets 7,937 138 6.91
Total earning assets
excluding derivatives 628,773 10,822 6.86
Risk management derivatives (a) - 42 0.02
Total earning assets
including derivatives 628,773 10,864 6.88
Cash and due from banks 11,134
Other assets 89,097
Total assets $729,004
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 81,851 357 1.73
Money market accounts 116,404 980 3.34
Other consumer time 122,474 1,507 4.88
Foreign 23,322 292 4.97
Other time 13,776 187 5.40
Total interest-bearing
deposits 357,827 3,323 3.68
Federal funds purchased and
securities sold under repurchase
agreements 44,334 556 4.98
Commercial paper 5,799 65 4.42
Securities sold short 7,420 70 3.74
Other short-term borrowings 7,793 55 2.74
Long-term debt 151,226 2,067 5.44
Total interest-bearing
liabilities excluding
derivatives 574,399 6,136 4.24
Risk management derivatives (a) - 144 0.10
Total interest-bearing
liabilities including
derivatives 574,399 6,280 4.34
Noninterest-bearing deposits 58,280
Other liabilities 26,468
Stockholders' equity 69,857
Total liabilities and
stockholders' equity $729,004
Interest income and rate earned -
including derivatives $10,864 6.88%
Interest expense and equivalent
rate paid - including derivatives 6,280 3.96
Net interest income and margin -
including derivatives $4,584 2.92%
(a) The rates earned and the rates paid on risk management derivatives
are based on off-balance sheet notional amounts. The fair value of
these instruments is included in other assets and other liabilities.
PAGE 20
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
SECOND QUARTER 2007
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank
balances $3,384 50 6.00%
Federal funds sold and securities
purchased under resale agreements 12,110 158 5.25
Trading account assets 35,165 519 5.90
Securities 108,433 1,467 5.41
Loans
Commercial
Commercial, financial
and agricultural 101,012 1,805 7.16
Real estate - construction
and other 17,334 329 7.62
Real estate - mortgage 20,175 378 7.53
Lease financing 7,759 150 7.74
Foreign 19,232 265 5.51
Total commercial 165,512 2,927 7.09
Consumer
Real estate secured 222,096 4,042 7.28
Student loans 8,850 141 6.42
Installment loans 24,799 609 9.84
Total consumer 255,745 4,792 7.50
Total loans 421,257 7,719 7.34
Loans held for sale 17,644 285 6.47
Other earning assets 7,985 144 7.23
Total earning assets
excluding derivatives 605,978 10,342 6.84
Risk management derivatives (a) - 46 0.03
Total earning assets
including derivatives 605,978 10,388 6.87
Cash and due from banks 11,533
Other assets 87,262
Total assets $704,773
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 83,977 367 1.75
Money market accounts 111,562 976 3.51
Other consumer time 120,684 1,455 4.84
Foreign 21,871 270 4.96
Other time 8,051 107 5.30
Total interest-bearing
deposits 346,145 3,175 3.68
Federal funds purchased and
securities sold under repurchase
agreements 38,031 473 4.98
Commercial paper 5,143 60 4.67
Securities sold short 7,158 67 3.75
Other short-term borrowings 7,688 52 2.77
Long-term debt 143,504 1,923 5.37
Total interest-bearing
liabilities excluding
derivatives 547,669 5,750 4.21
Risk management derivatives (a) - 151 0.11
Total interest-bearing
liabilities including
derivatives 547,669 5,901 4.32
Noninterest-bearing deposits 62,273
Other liabilities 25,514
Stockholders' equity 69,317
Total liabilities and
stockholders' equity $704,773
Interest income and rate earned -
including derivatives $10,388 6.87%
Interest expense and equivalent
rate paid - including derivatives 5,901 3.91
Net interest income and margin -
including derivatives $4,487 2.96%
(a) The rates earned and the rates paid on risk management derivatives
are based off-balance sheet notional amounts. The fair value of these
instruments is included in other assets and other liabilities.
PAGE 20
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
FIRST QUARTER 2007
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank
balances $1,523 30 7.80%
Federal funds sold and securities
purchased under resale agreements 14,124 177 5.07
Trading account assets 29,681 442 5.97
Securities 108,071 1,461 5.42
Loans
Commercial
Commercial, financial
and agricultural 98,413 1,736 7.16
Real estate - construction
and other 16,508 313 7.69
Real estate - mortgage 20,231 380 7.61
Lease financing 7,730 150 7.75
Foreign 14,406 196 5.49
Total commercial 157,288 2,775 7.15
Consumer
Real estate secured 225,909 4,148 7.36
Student loans 8,524 136 6.47
Installment loans 23,540 566 9.75
Total consumer 257,973 4,850 7.55
Total loans 415,261 7,625 7.40
Loans held for sale 16,748 255 6.16
Other earning assets 8,255 139 6.82
Total earning assets
excluding derivatives 593,663 10,129 6.87
Risk management derivatives (a) - 48 0.03
Total earning assets
including derivatives 593,663 10,177 6.90
Cash and due from banks 12,260
Other assets 85,106
Total assets $691,029
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 84,247 373 1.80
Money market accounts 107,785 917 3.45
Other consumer time 116,262 1,369 4.77
Foreign 20,802 249 4.85
Other time 9,034 119 5.36
Total interest-bearing
deposits 338,130 3,027 3.63
Federal funds purchased and
securities sold under repurchase
agreements 35,142 430 4.97
Commercial paper 4,920 57 4.72
Securities sold short 8,709 83 3.86
Other short-term borrowings 6,898 44 2.54
Long-term debt 141,979 1,880 5.35
Total interest-bearing
liabilities excluding
derivatives 535,778 5,521 4.17
Risk management derivatives (a) - 119 0.09
Total interest-bearing
liabilities including
derivatives 535,778 5,640 4.26
Noninterest-bearing deposits 60,976
Other liabilities 24,955
Stockholders' equity 69,320
Total liabilities and
stockholders' equity $691,029
Interest income and rate earned -
including derivatives $10,177 6.90%
Interest expense and equivalent
rate paid - including derivatives 5,640 3.84
Net interest income and margin -
including derivatives $4,537 3.06%
(a) The rates earned and the rates paid on risk management derivatives
are based on off-balance sheet notional amounts. The fair value of
these instruments is included in other assets and other liabilities.
PAGE 21
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008 2007
(In millions, except per First Fourth
share data) * Quarter Quarter
INCOME (LOSS) FROM CONTINUING
OPERATIONS
Net income (loss) (GAAP) A $(350) 51
Discontinued operations,
net of income taxes (GAAP) - 142
Income (loss) from continuing
operations (GAAP) (350) 193
Merger-related and
restructuring expenses (GAAP) 123 108
Earnings excluding merger-related
and restructuring expenses, and
discontinued operations B (227) 301
Other intangible amortization (GAAP) 64 65
Earnings excluding merger-related
and restructuring expenses, other
intangible amortization and
discontinued operations C $(163) 366
INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS
Net income (loss) available to
common stockholders (GAAP) D $(393) 51
Discontinued operations,
net of income taxes (GAAP) - 142
Income (loss) from continuing
operations available to common
stockholders (GAAP) (393) 193
Merger-related and restructuring
expenses (GAAP) 123 108
Income (loss) available to common
stockholders excluding merger-
related and restructuring expenses,
and discontinued operations E (270) 301
Other intangible amortization (GAAP) 64 65
Net income (loss) available to
common stockholders excluding merger-
related and restructuring expenses,
other intangible amortization and
discontinued operations F $(206) 366
RETURN ON AVERAGE COMMON
STOCKHOLDERS' EQUITY
Average common
stockholders' equity (GAAP) G $74,697 73,599
Merger-related and
restructuring expenses (GAAP) 110 242
Discontinued operations (GAAP) - (142)
Average common stockholders'
equity, excluding merger-
related and restructuring
expenses, and discontinued
operations H 74,807 73,699
Average intangible
assets (GAAP) I (45,211) (44,941)
Average common stockholders'
equity, excluding merger-related
and restructuring expenses, other
intangible amortization
and discontinued operations J $29,596 28,758
Return on average common
stockholders' equity
GAAP D/G (2.11)% 0.28
Excluding merger-related and
restructuring expenses and
discontinued operations E/H (1.45) 1.62
Return on average tangible
common stockholders' equity
GAAP D/G+I (5.36) 0.71
Excluding merger-related and
restructuring expenses,
other intangible
amortization and
discontinued operations F/J (2.80)% 5.05
RETURN ON AVERAGE ASSETS
Average assets (GAAP) K $783,593 763,487
Average intangible assets (GAAP) (45,211) (44,941)
Average tangible assets
(GAAP) L 738,382 718,546
Average assets (GAAP) 783,593 763,487
Merger-related and
restructuring expenses (GAAP) 110 242
Discontinued operations (GAAP) - (142)
Average assets, excluding merger-
related and restructuring
expenses, and discontinued
operations M 783,703 763,587
Average intangible assets (GAAP) (45,211) (44,941)
Average tangible assets, excluding
merger-related and restructuring
expenses, and discontinued
operations N $738,492 718,646
Return on average assets
GAAP A/K (0.18)% 0.03
Excluding merger-related and
restructuring expenses, and
discontinued operations B/M (0.12) 0.16
Return on average tangible assets
GAAP A/L (0.19) 0.03
Excluding merger-related and
restructuring expenses, other
intangible amortization
and discontinued operations C/N (0.09)% 0.20
PAGE 21
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2007
(In millions, Third Second
except per share data) * Quarter Quarter
INCOME (LOSS) FROM CONTINUING
OPERATIONS
Net income (loss) (GAAP) A $1,618 2,341
Discontinued operations,
net of income taxes (GAAP) 88 -
Income (loss) from continuing
operations (GAAP) 1,706 2,341
Merger-related and
restructuring expenses (GAAP) 22 20
Earnings excluding merger-related
and restructuring expenses, and
discontinued operations B 1,728 2,361
Other intangible amortization (GAAP) 59 66
Earnings excluding merger-related
and restructuring expenses, other
intangible amortization and
discontinued operations C $1,787 2,427
INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS
Net income (loss) available to
common stockholders (GAAP) D $1,618 2,341
Discontinued operations,
net of income taxes (GAAP) 88 -
Income (loss) from continuing
operations available to common
stockholders (GAAP) 1,706 2,341
Merger-related and
restructuring expenses (GAAP) 22 20
Income (loss) available to common
stockholders excluding merger-
related and restructuring
expenses, and discontinued
operations E 1,728 2,361
Other intangible amortization (GAAP) 59 66
Net income (loss) available to
common stockholders excluding merger-
related and restructuring expenses,
other intangible amortization and
discontinued operations F $1,787 2,427
RETURN ON AVERAGE COMMON
STOCKHOLDERS' EQUITY
Average common
stockholders' equity (GAAP) G $69,857 69,317
Merger-related and
restructuring expenses (GAAP) 124 14
Discontinued operations (GAAP) (88) -
Average common stockholders'
equity, excluding merger-related
and restructuring expenses, and
discontinued operations H 69,893 69,331
Average intangible assets (GAAP) I (40,198) (40,328)
Average common stockholders'
equity, excluding merger-related
and restructuring expenses, other
intangible amortization
and discontinued operations J $29,695 29,003
Return on average common
stockholders' equity
GAAP D/G 9.19% 13.54
Excluding merger-related and
restructuring expenses and
discontinued operations E/H 9.81 13.66
Return on average tangible
common stockholders' equity
GAAP D/G+I 21.64 32.38
Excluding merger-related and
restructuring expenses,
other intangible amortization
and discontinued operations F/J 23.88% 33.57
RETURN ON AVERAGE ASSETS
Average assets (GAAP) K $729,004 704,773
Average intangible assets (GAAP) (40,198) (40,328)
Average tangible assets
(GAAP) L 688,806 664,445
Average assets (GAAP) 729,004 704,773
Merger-related and
restructuring expenses (GAAP) 124 14
Discontinued operations (GAAP) (88) -
Average assets, excluding merger-
related and restructuring expenses,
and discontinued operations M 729,040 704,787
Average intangible assets (GAAP) (40,198) (40,328)
Average tangible assets, excluding
merger-related and restructuring
expenses, and discontinued
operations N $688,842 664,459
Return on average assets
GAAP A/K 0.88% 1.33
Excluding merger-related and
restructuring expenses, and
discontinued operations B/M 0.94 1.34
Return on average tangible assets
GAAP A/L 0.93 1.41
Excluding merger-related and
restructuring expenses, other
intangible amortization
and discontinued operations C/N 1.03% 1.47
PAGE 21
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2007
(In millions, First
except per share data) * Quarter
INCOME (LOSS) FROM CONTINUING
OPERATIONS
Net income (loss) (GAAP) A $2,302
Discontinued operations,
net of income taxes (GAAP) -
Income (loss) from continuing
operations (GAAP) 2,302
Merger-related and
restructuring expenses (GAAP) 6
Earnings excluding merger-related
and restructuring expenses, and
discontinued operations B 2,308
Other intangible amortization (GAAP) 76
Earnings excluding merger-related
and restructuring expenses, other
intangible amortization and
discontinued operations C $2,384
INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS
Net income (loss) available to
common stockholders (GAAP) D $2,302
Discontinued operations,
net of income taxes (GAAP) -
Income (loss) from continuing
operations available to common
stockholders (GAAP) 2,302
Merger-related and restructuring
expenses (GAAP) 6
Income (loss) available to common
stockholders excluding merger-
related and restructuring
expenses, and discontinued operations E 2,308
Other intangible amortization (GAAP) 76
Net income (loss) available to
common stockholders excluding merger-
related and restructuring expenses,
other intangible amortization and
discontinued operations F $2,384
RETURN ON AVERAGE COMMON
STOCKHOLDERS' EQUITY
Average common stockholders' equity
(GAAP) G $69,320
Merger-related and
restructuring expenses (GAAP) 1
Discontinued operations (GAAP) -
Average common stockholders'
equity, excluding merger-related and
restructuring expenses, and
discontinued operations H 69,321
Average intangible
assets (GAAP) I (40,263)
Average common stockholders'
equity, excluding merger-related and
restructuring expenses, other
intangible amortization and
discontinued operations J $29,058
Return on average common
stockholders' equity
GAAP D/G 13.47%
Excluding merger-related and
restructuring expenses and
discontinued operations E/H 13.50
Return on average tangible
common stockholders' equity
GAAP D/G+I 32.14
Excluding merger-related and
restructuring expenses,
other intangible amortization
and discontinued operations F/J 33.27%
RETURN ON AVERAGE ASSETS
Average assets (GAAP) K $691,029
Average intangible assets (GAAP) (40,263)
Average tangible assets
(GAAP) L 650,766
Average assets (GAAP) 691,029
Merger-related and
restructuring expenses (GAAP) 1
Discontinued operations (GAAP) -
Average assets, excluding merger-
related and restructuring expenses,
and discontinued operations M 691,030
Average intangible assets (GAAP) (40,263)
Average tangible assets, excluding
merger-related and restructuring
expenses, and discontinued
operations N $650,767
Return on average assets
GAAP A/K 1.35%
Excluding merger-related and
restructuring expenses, and
discontinued operations B/M 1.35
Return on average tangible assets
GAAP A/L 1.43
Excluding merger-related and
restructuring expenses, other
intangible amortization
and discontinued operations C/N 1.49%
PAGE 22
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008 2007
(In millions, First Fourth
except per share data) * Quarter Quarter
OVERHEAD EFFICIENCY RATIOS
Noninterest expense (GAAP) O $5,441 5,786
Merger-related and restructuring
expenses (GAAP) (241) (187)
Noninterest expense, excluding
merger-related and restructuring
expenses P 5,200 5,599
Other intangible amortization (GAAP) (103) (111)
Noninterest expense, excluding
merger-related and restructuring
expenses, and other intangible
amortization Q $5,097 5,488
Net interest income (GAAP) $4,752 4,630
Tax-equivalent adjustment 53 44
Net interest income (Tax-equivalent) 4,805 4,674
Fee and other income (GAAP) 3,091 2,744
Total R $7,896 7,418
Retail Brokerage Services,
excluding insurance
Noninterest expense (GAAP) S $1,628 1,719
Net interest income (GAAP) $261 303
Tax-equivalent adjustment 1 1
Net interest income (Tax-
equivalent) 262 304
Fee and other income (GAAP) 1,866 1,908
Total T $2,128 2,212
Overhead efficiency ratios
GAAP O/R 68.91% 78.00
Excluding merger-related and
restructuring expenses P/R 65.85 75.48
Excluding merger-related and
restructuring expenses, and
brokerage P-S/R-T 61.92 74.54
Excluding merger-related and
restructuring expenses, and
other intangible amortization Q/R 64.55 73.97
Excluding merger-related and
restructuring expenses, other
intangible amortization and
brokerage Q-S/R-T 60.14% 72.40
OPERATING LEVERAGE
Operating leverage (GAAP) $823 (1,359)
Merger-related and
restructuring expenses (GAAP) 54 151
Operating leverage, excluding
merger-related and restructuring
expenses 877 (1,208)
Other intangible amortization (GAAP) (8) 21
Operating leverage, excluding
merger-related and restructuring
expenses, and other intangible
amortization $869 (1,187)
DIVIDEND PAYOUT RATIOS ON
COMMON SHARES
Dividends paid per common share U $0.64 0.64
Diluted earnings per common
share (GAAP) V $(0.20) 0.03
Merger-related and restructuring
expenses (GAAP) 0.06 0.05
Other intangible amortization (GAAP) 0.04 0.03
Discontinued operations (GAAP) - 0.07
Diluted earnings per common share,
excluding merger-related and
restructuring expenses, other
intangible amortization and
discontinued operations W $(0.10) 0.18
Dividend payout ratios
GAAP U/V (320.00)% 2,133.33
Excluding merger-related and
restructuring expenses, other
intangible amortization
and discontinued operations U/W (640.00)% 355.56
* The letters included in the columns are provided to show how the
various ratios presented in the tables on pages 21 and 22 are
calculated. For example, return on average assets on a GAAP basis is
calculated by dividing income (GAAP) by average assets (GAAP) (i.e.,
A/K) and annualized where appropriate.
PAGE 22
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2007
(In millions, except per Third Second
share data) * Quarter Quarter
OVERHEAD EFFICIENCY RATIOS
Noninterest expense (GAAP) O $4,525 4,890
Merger-related and restructuring
expenses (GAAP) (36) (32)
Noninterest expense, excluding
merger-related and restructuring
expenses P 4,489 4,858
Other intangible amortization (GAAP) (92) (103)
Noninterest expense, excluding
merger-related and restructuring
expenses, and other intangible
amortization Q $4,397 4,755
Net interest income (GAAP) $4,551 4,449
Tax-equivalent adjustment 33 38
Net interest income (Tax-equivalent) 4,584 4,487
Fee and other income (GAAP) 2,933 4,240
Total R $7,517 8,727
Retail Brokerage Services,
excluding insurance
Noninterest expense (GAAP) S $1,033 1,070
Net interest income (GAAP) $255 248
Tax-equivalent adjustment - -
Net interest income (Tax-
equivalent) 255 248
Fee and other income (GAAP) 1,180 1,202
Total T $1,435 1,450
Overhead efficiency ratios
GAAP O/R 60.20% 56.02
Excluding merger-related and
restructuring expenses P/R 59.73 55.65
Excluding merger-related and
restructuring expenses, and
brokerage P-S/R-T 56.82 52.04
Excluding merger-related and
restructuring expenses, and
other intangible amortization Q/R 58.51 54.47
Excluding merger-related and
restructuring expenses, other
intangible amortization and
brokerage Q-S/R-T 55.32% 50.61
OPERATING LEVERAGE
Operating leverage (GAAP) $(847) 189
Merger-related and restructuring
expenses (GAAP) 4 21
Operating leverage, excluding
merger-related and restructuring
expenses (843) 210
Other intangible amortization (GAAP) (12) (13)
Operating leverage, excluding
merger-related and restructuring
expenses, and other intangible
amortization $(855) 197
DIVIDEND PAYOUT RATIOS ON
COMMON SHARES
Dividends paid per common share U $0.64 0.56
Diluted earnings per common
share (GAAP) V $0.85 1.22
Merger-related and restructuring
expenses (GAAP) - 0.01
Other intangible amortization (GAAP) 0.04 0.04
Discontinued operations (GAAP) 0.05 -
Diluted earnings per common share,
excluding merger-related and
restructuring expenses, other
intangible amortization and
discontinued operations W $0.94 1.27
Dividend payout ratios
GAAP U/V 75.29% 45.90
Excluding merger-related and
restructuring expenses, other
intangible amortization and
discontinued operations U/W 68.09 % 44.09
* The letters included in the columns are provided to show how the
various ratios presented in the tables on pages 21 and 22 are
calculated. For example, return on average assets on a GAAP basis is
calculated by dividing income (GAAP) by average assets (GAAP) (i.e.,
A/K) and annualized where appropriate.
PAGE 22
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2007
(In millions, except per First
share data) * Quarter
OVERHEAD EFFICIENCY RATIOS
Noninterest expense (GAAP) O $4,621
Merger-related and restructuring
expenses (GAAP) (10)
Noninterest expense, excluding
merger-related and restructuring
expenses P 4,611
Other intangible amortization (GAAP) (118)
Noninterest expense, excluding
merger-related and restructuring
expenses, and other intangible
amortization Q $4,493
Net interest income (GAAP) $4,500
Tax-equivalent adjustment 37
Net interest income (Tax-equivalent) 4,537
Fee and other income (GAAP) 3,734
Total R $8,271
Retail Brokerage Services,
excluding insurance
Noninterest expense
(GAAP) S $1,015
Net interest income (GAAP) $249
Tax-equivalent adjustment -
Net interest income (Tax-
equivalent) 249
Fee and other income (GAAP) 1,185
Total T $1,434
Overhead efficiency ratios
GAAP O/R 55.88%
Excluding merger-related and
restructuring expenses P/R 55.75
Excluding merger-related and
restructuring expenses, and
brokerage P-S/R-T 52.60
Excluding merger-related and
restructuring expenses, and
other intangible amortization Q/R 54.33
Excluding merger-related and
restructuring expenses, other
intangible amortization and
brokerage Q-S/R-T 50.88%
OPERATING LEVERAGE
Operating leverage (GAAP) $(13)
Merger-related and restructuring
expenses (GAAP) (38)
Operating leverage, excluding
merger-related and restructuring
expenses (51)
Other intangible amortization (GAAP) (24)
Operating leverage, excluding
merger-related and restructuring
expenses, and other intangible
amortization $(75)
DIVIDEND PAYOUT RATIOS ON
COMMON SHARES
Dividends paid per common share U $0.56
Diluted earnings per common
share (GAAP) V $1.20
Merger-related and restructuring
expenses (GAAP) -
Other intangible amortization (GAAP) 0.04
Discontinued operations (GAAP) -
Diluted earnings per common share,
excluding merger-related and
restructuring expenses, other
intangible amortization and
discontinued operations W $1.24
Dividend payout ratios
GAAP U/V 46.67%
Excluding merger-related and
restructuring expenses, other
intangible amortization and
discontinued operations U/W 45.16%
* The letters included in the columns are provided to show how the
various ratios presented in the tables on pages 21 and 22 are
calculated. For example, return on average assets on a GAAP basis is
calculated by dividing income (GAAP) by average assets (GAAP) (i.e.,
A/K) and annualized where appropriate.
SOURCE Wachovia Corporation
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Related links:
http://www.wachovia.com/
CONTACT:
Investors, Alice Lehman, +1-704-374-4139, or
Ellen Taylor, +1-704-383-1381; Media, Mary Eshet,
+1-704-383-7777, or Christy Phillips, +1-704-383-8178, all of
Wachovia Corporation/ /FIRST ADD -- TABULAR MATERIAL -- TO FOLLOW
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