Actions Include Quarterly Common Stock Dividend Reduction to 5 Cents per
Share
$8.9 Billion Net Loss Includes $6.1 Billion Noncash Goodwill Impairment and
$4.2 Billion Credit Reserve Build; Strength Apparent in Underlying Results
CHARLOTTE, N.C., July 22 /PRNewswire-FirstCall/ -- Consistent with
previously announced expectations, Wachovia today reported a net loss in
the second quarter of 2008 of $8.9 billion, or a net loss of $4.20 per
share, including a $6.1 billion noncash goodwill impairment charge in
commercial-related subsegments reflecting declining market valuations and
asset values. The goodwill impairment charge has no impact on Wachovia's
tangible capital levels, regulatory capital ratios or on liquidity.
Wachovia added $5.6 billion to its loan loss reserve to cover net
charge-offs and increase the reserve by $4.2 billion.
Excluding goodwill impairment and other notable items that drove the
quarter's loss, Wachovia generated solid underlying growth on $7.5 billion
in revenue. Revenue was driven by higher loans and deposits and strength in
traditional banking fees, while strong fiduciary and asset management fees
and brokerage commissions largely reflected the A.G. Edwards acquisition.
"These bottom-line results are disappointing and unacceptable," said
Lanty L. Smith, Wachovia's board chairman, who served as interim chief
executive officer beginning June 1. "While to some degree they reflect
industry headwinds and weaker macroeconomic conditions, they also reflect
performance for which we at Wachovia accept responsibility. Our company is
facing up to these issues, is addressing the challenges head-on and has
redirected near-term strategic priorities."
Two immediate actions were announced: First, reducing the quarterly
common stock dividend to five cents per share, which will conserve
approximately $700 million of capital per quarter. The dividend is payable
on September 15, 2008, to shareholders of record on August 29, 2008. The
second immediate action is exiting the General Bank wholesale mortgage
origination channel. Earlier the company ceased offering the negative
amortization option for the Pick-a-Pay mortgage product and committed to
work with customers to refinance existing Pick-a-Pay mortgages into
conventional mortgage products. Approximately 1,000 Wachovia mortgage
origination personnel are being redeployed in the company's efforts to
assist customers to refinance and restructure Pick-a-Pay mortgages. The
objective is to assist customers in avoiding foreclosures and meaningfully
reduce the company's risks in the mortgage area.
Robert K. Steel, CEO and president said, "In the short term, the entire
organization is focused on protecting, preserving and generating capital;
reinforcing Wachovia's strong liquidity position; and reducing risk."
Steel, who was named to his new post on July 9, further commented that,
even as the company focuses on and addresses its credit-related challenges,
Wachovia's underlying businesses are performing well: "Wachovia has an
exceptionally attractive franchise, footprint and set of businesses.
Revenue in our general banking business grew 8 percent over last year and
we maintained industry-leading customer satisfaction. The securities
brokerage business continues its excellent performance, with increases in
both the number and quality of brokers and with industry-leading margins.
Our corporate and investment bank has reduced its exposure to further
market disruption charges. We had a record quarter in our Wealth Management
business."
Wachovia outlined additional initiatives that are already under way,
ranging from reducing expense growth and capital expenditures, reducing
earning assets, repositioning the certificate of deposit book and
generating further growth in low-cost core deposits and other deposits.
Also, the company is taking actions to reduce the number of credit-only
commercial borrowers and to sell selected noncore assets.
Steel summarized by saying: "Our balance sheet and liquidity position
are strong, and we are committed to keeping them that way. The actions
taken and initiatives under way are expected to generate or preserve more
than $5 billion of capital. We ended the quarter with approximately $50
billion in regulatory capital and a tier 1 ratio of 8 percent, and we will
be intensely focused on improving that level between now and the end of
2009."
Steel said, "As we consider the company's position, it is clearly
prudent and necessary to further reduce our common dividend. While this is
a difficult decision, it is the best course for our shareholders over the
long term. I am confident of the commitment of the Wachovia team to manage
successfully through this period as we continue to diligently serve our
customers and communities. I am impressed by the work the Wachovia
leadership group has undertaken, the clarity around the issues we face and
the direction Wachovia is headed as we focus on being good stewards of the
company."
The second quarter 2008 net loss compared with earnings of $2.34
billion or $1.22 per share in the second quarter of 2007. Excluding
goodwill impairment of $6.1 billion and net merger-related and
restructuring expense of $128 million, results in the second quarter of
2008 were a net loss available to common stockholders of $2.67 billion, or
a net loss of $1.27 per share. Results included the A.G. Edwards, Inc.,
acquisition from October 1, 2007.
Earnings Highlights
Three Months Ended
June 30, March 31, June 30,
2008 2008 2007
(In millions, except per
share data) Amount EPS Amount EPS Amount EPS
Earnings
Net income (loss) $(8,662) (4.11) (664) (0.34) 2,341 1.22
Dividends on preferred stock (193) (0.09) (43) (0.02) - -
Net income (loss) available
to common stockholders $(8,855) (4.20) (707) (0.36) 2,341 1.22
Net goodwill impairment 6,056 2.87 - - - -
Net merger-related and
restructuring expenses 128 0.06 123 0.06 20 0.01
Earnings (loss) excluding
goodwill impairment,
and merger-related and
restructuring expenses $(2,671) (1.27) (584) (0.30) 2,361 1.23
Financial ratios
Return on average common
stockholders' equity (49.07)% (3.81) 13.54
Net interest margin (a) 2.58(d) 2.92 2.96
Fee and other income as % of
total revenue (a) 42.15 36.62 48.58
Overhead efficiency ratio (a) 163.58% 71.76 56.02
Capital adequacy (b)
Tier 1 capital ratio 8.0% 7.4 7.5
Total capital ratio 12.7 12.1 11.5
Leverage ratio 6.6% 6.2 6.2
Asset quality
Allowance for loan losses as
% of nonaccrual and
restructured loans 95% 84 174
Allowance for loan losses as
% of loans, net 2.20 1.37 0.79
Allowance for credit losses
as % of loans, net (c) 2.24 1.41 0.83
Net charge-offs as % of
average loans, net 1.10 0.66 0.14
Nonperforming assets as % of
loans, net, foreclosed
properties and loans held
for sale 2.41% 1.70 0.49
(a) Tax-equivalent.
(b) The second 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.
(d) Includes the SILO charge of $975 million pre-tax; without that
charge, the net interest margin would have been 3.15%.
The pre-tax loss stemmed from:
-- The $6.1 billion in noncash goodwill impairment reflecting declining
market valuations and the resulting effect on commercial, corporate
lending and investment banking subsegments. The goodwill impairment
charge has no impact on Wachovia's tangible capital levels or
regulatory capital ratios, because goodwill is deducted when computing
those ratios.
-- A $5.6 billion loan loss provision, which increased reserves by $4.2
billion, including $3.3 billion for the payment option mortgage
portfolio;
-- A $975 million noncash charge announced previously related to the tax
treatment of certain leasing transactions widely referred to as "sale
in, lease out" or SILO transactions;
-- $936 million in market disruption-related losses;
-- $590 million in legal reserves primarily related to previously
disclosed matters; and
-- $391 million in losses related to planned discretionary securities
sales.
Wachovia Corporation
Three Months Ended
June 30, March 31, June 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $4,344 4,805 4,487
Fee and other income 3,165 2,777 4,240
Total revenue (Tax-equivalent) 7,509 7,582 8,727
Provision for credit losses 5,567 2,831 179
Noninterest expense 12,284 5,441 4,890
Income (loss) from continuing
operations before income taxes
(benefits) (Tax-equivalent) (10,439) (845) 3,519
Income taxes (benefits)
(Tax-equivalent) (1,777) (181) 1,178
Net income (loss) available to
common stockholders (8,855) (707) 2,341
Average loans, net 476,734 465,936 421,257
Average core deposits $390,670 394,513 378,496
Other key trends in the second quarter of 2008 compared with the second
quarter of 2007 included:
-- A decline in fee and other income due to net market disruption-related
valuation losses, which overshadowed strength in traditional banking.
Fiduciary and asset management fees and brokerage commissions reflected
the A.G. Edwards acquisition.
-- A net interest margin of 2.58 percent, or 3.15 percent excluding the
effect of the SILO charge. The SILO charge diminished net interest
income, offset by growth in average commercial loans, up 25 percent,
and average consumer loans, up 6 percent, as well as solid core deposit
growth, up 3 percent. Average loan growth included the impact of the
first quarter 2008 transfer of $6.9 billion of commercial and consumer
loans 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 increase in noninterest expense largely reflecting the impact of
A.G. Edwards, as well as growth in credit-related sundry expense and
legal reserves. A renewed expense reduction initiative is under way
throughout the company.
-- Provision for credit losses of $5.6 billion, which included a reserve
build of $4.2 billion. The provision largely reflected current and
anticipated severe deterioration in the residential housing market,
particularly in specific markets in California and Florida. Net
charge-offs were $1.3 billion, or an annualized 1.10 percent of average
net loans. Total nonperforming assets including loans held for sale
were $12.0 billion, or 2.41 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, goodwill impairment charges,
other intangible amortization, excess provision 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, goodwill impairment of $6.1 billion and
provision expense in excess of charge-offs and other credit losses, which
amounted to $4.2 billion in the second quarter of 2008, are not allocated
to business segments.
Pages 14 and 15 include a reconciliation of segment results to
Wachovia's consolidated results of operations in accordance with GAAP.
General Bank Highlights
Three Months Ended
June 30, March 31, June 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $3,671 3,445 3,372
Fee and other income 1,000 980 935
Total revenue (Tax-equivalent) 4,728 4,480 4,363
Provision for credit losses 919 569 154
Noninterest expense 2,050 2,038 1,922
Segment earnings $1,117 1,189 1,453
Cash overhead efficiency ratio
(Tax-equivalent) 43.35% 45.50 44.05
Average loans, net $319,574 311,556 291,607
Average core deposits 290,381 297,171 290,455
Economic capital, average $16,786 12,693 10,821
General Bank
The General Bank includes retail, small business and commercial
customers. The second quarter of 2008 compared with the second quarter of
2007 included:
-- Earnings of $1.1 billion, down $336 million, driven by rising credit
costs and related expenses, primarily in the mortgage business, which
overshadowed continued strong sales momentum elsewhere as reflected in
total revenue of $4.7 billion, up 8 percent.
-- Average loan growth of 10 percent, with double digit growth in
wholesale and retail businesses. Mortgage lending through our largely
branch-originated mortgage and home equity channels was up 6 percent,
primarily reflecting a decline in prepayments, and home equity lending
was up 5 percent. Auto loan originations rose 12 percent.
-- Relatively stable average core deposits.
* Growth in net new retail checking accounts slowed, but still
increased by 263,000 in the second quarter of 2008 compared with an
increase of 314,000 in the second quarter of 2007.
* 305,000 new retail checking accounts were tied to the Way2Save
campaign; this product launched in mid-January 2008.
-- 7 percent growth in fee and other income, with strength in service
charges, interchange income and mortgage banking fee income. Strong
interchange income reflected a 14 percent increase in debit/credit
card volume from the second quarter of 2007.
-- Noninterest expense up 7 percent due to growth in credit-related sundry
expense and severance expense, as well as continued strategic
investment in de novo branch activity and Western expansion. During the
second quarter of 2008, 23 de novo branches were opened and 38 branches
were consolidated. As a result of performance initiatives, operating
leverage continued to improve, which enabled continued strategic
investment.
-- A $765 million increase in the provision for credit losses to $919
million, largely reflecting higher net charge-offs in the Pick-a-Pay
portfolio.
Wealth Management Highlights
Three Months Ended
June 30, March 31, June 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $202 182 182
Fee and other income 207 211 202
Total revenue (Tax-equivalent) 412 398 387
Provision for credit losses 8 5 2
Noninterest expense 253 246 244
Segment earnings $98 92 90
Cash overhead efficiency ratio
(Tax-equivalent) 61.05% 61.98 62.80
Average loans, net $23,151 22,365 21,056
Average core deposits 17,559 17,906 17,466
Economic capital, average $731 699 612
Wealth Management
Wealth Management includes private banking, personal trust, investment
advisory services, charitable services, financial planning and insurance
brokerage. The second quarter of 2008 compared with the second quarter of
2007 included:
-- 9 percent earnings growth to $98 million on 6 percent revenue growth in
challenging markets.
-- 11 percent growth in net interest income on 10 percent loan growth and
improved deposit spreads.
-- 16 percent growth in fiduciary and asset management fees as a pricing
initiative implemented in the third quarter of 2007 and other growth
offset declines in equity valuations. Insurance commissions declined
largely due to a soft market for insurance premiums and nonstrategic
insurance account dispositions.
-- A 4 percent increase in noninterest expense driven by continued
investment in private banking and Western expansion.
-- A 3 percent decline in assets under management to $77.3 billion largely
due to market depreciation.
Corporate and Investment Bank Highlights
Three Months Ended
June 30, March 31, June 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $1,124 1,028 773
Fee and other income 657 (158) 1,522
Total revenue (Tax-equivalent) 1,729 820 2,245
Provision for credit losses 438 197 (2)
Noninterest expense 960 747 1,020
Segment earnings (loss) $209 (78) 779
Cash overhead efficiency ratio
(Tax-equivalent) 55.60% 91.00 45.43
Average loans, net $106,642 101,046 76,744
Average core deposits 31,682 33,623 36,713
Economic capital, average $13,816 13,233 8,850
Corporate and Investment Bank
The Corporate and Investment Bank includes corporate lending,
investment banking, and treasury and international trade finance. Unless
otherwise noted, second quarter 2008 results are compared with the second
quarter of 2007. These results included:
-- Earnings of $209 million, down $570 million, due to continued net
valuation losses related to disruption in the capital markets, and
increased provision for credit losses.
* Investment bank origination fees down 4 percent year over year,
although these fees rose 16 percent from the first quarter of 2008.
* Market share of 4.3 percent at June 30, 2008, up from 3.8 percent at
June 30, 2007.
-- Market valuation losses of $565 million, including a recovery on
certain losses on leveraged finance commitments, compared with market
valuation losses of $1.6 billion in the first quarter of 2008. Market
valuation losses, net of applicable hedges, were:
* $238 million in subprime residential asset-backed collateralized
debt obligations and other related exposures, compared with $339
million in first quarter 2008;
* $209 million in commercial mortgage structured products, compared
with $521 million in first quarter 2008;
* $68 million in consumer mortgage structured products, compared with
$251 million in first quarter 2008;
* $102 million gain in leveraged finance net of fees, compared with a
net $309 million loss in first quarter 2008; and
* $152 million in non-subprime collateralized debt obligations and
other structured products, compared with $144 million in first
quarter 2008.
-- A 45 percent increase in net interest income, which reflected 39
percent growth in average loans including the first quarter 2008
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 businesses.
-- Principal investing revenue of $115 million, down from $300 million in
the second quarter of 2007 on lower gains in the public and private
direct investment portfolios.
-- A 6 percent decline in noninterest expense primarily due to lower
variable compensation and reduced headcount in investment banking.
-- Provision of $438 million largely reflecting residential-related
commercial real estate and other corporate lending losses.
Capital Management Highlights
Three Months Ended
June 30, March 31, June 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $308 281 260
Fee and other income 1,995 2,191 1,536
Total revenue (Tax-equivalent) 2,295 2,462 1,785
Provision for credit losses - - -
Noninterest expense 1,827 1,855 1,294
Segment earnings $297 386 312
Cash overhead efficiency ratio
(Tax-equivalent) 79.61% 75.34 72.47
Average loans, net $2,881 2,562 1,663
Average core deposits 48,647 43,084 31,221
Economic capital, average $2,105 2,144 1,348
Capital Management
Capital Management includes retail brokerage services and asset
management. The second quarter of 2008 compared with the second quarter of
2007 included:
-- Earnings of $297 million on 29 percent revenue growth, with net market
disruption-related losses of $118 million, including $89 million of
securities impairments relating to the liquidation of an Evergreen
fund.
-- An 18 percent increase in net interest income driven by retail
brokerage deposit growth of $17.5 billion primarily due to the A.G.
Edwards acquisition as well as solid growth since the acquisition,
partially offset by spread compression.
-- Continued solid momentum in retail brokerage managed account fees and
the impact of the A.G. Edwards acquisition.
-- 41 percent growth in noninterest expense largely due to the effect of
A.G. Edwards, as well as higher legal expense.
Total assets under management of $245.9 billion at June 30, 2008,
decreased 10 percent from December 31, 2007, driven by net outflows of
$17.6 billion as well as $11.2 billion in lower market valuations.
Wachovia Corporation (NYSE: WB) is one of the nation's largest
diversified financial services companies, with assets of $812.4 billion and
market capitalization of $33.5 billion at June 30, 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 14,600 financial advisors 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 July 22, 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, Goodwill Impairment and
Discontinued Operations" and "Earnings Excluding Merger-Related and
Restructuring Expenses, Goodwill Impairment, Other Intangible Amortization
and Discontinued Operations", and which are reconciled to GAAP financial
measures on pages 23 through 25. 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, goodwill impairment and discontinued operations
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 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 Bob Steel and CFO Tom Wurtz will review Wachovia's second
quarter 2008 results in a conference call and audio web cast beginning at
10:00 a.m. Eastern Daylight Saving Time today. This review may include a
discussion of certain non-GAAP financial measures. Supplemental materials
relating to second 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
Second 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: Tuesday, July 22, by 1:00 p.m. EDT and continuing through 5
p.m. EDT Friday, October 17. Replay telephone number is 706-645-9291;
access code: 49418191.
ADD: /FIRST ADD -- CLTU036 -- Wachovia Corporation Earnings/
PAGE 9
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL TABLES
TABLE OF CONTENTS PAGE
Financial Highlights -- Five Quarters Ended June 30, 2008 10
Other Financial Data -- Five Quarters Ended June 30, 2008 11
Consolidated Statements of Income
-- Five Quarters Ended June 30, 2008 12
Consolidated Statements of Income
-- Six Months Ended June 30, 2008 and 2007 13
Business Segments -- Three Months Ended June 30, 2008 and
March 31, 2008 14
Business Segments -- Three Months Ended June 30, 2007 15
Loans -- On-Balance Sheet, and Managed and Servicing Portfolios
-- Five Quarters Ended June 30, 2008 16
Allowance for Credit Losses
-- Five Quarters Ended June 30, 2008 17
Nonperforming Assets
-- Five Quarters Ended June 30, 2008 18
Consolidated Balance Sheets
-- Five Quarters Ended June 30, 2008 19
Net Interest Income Summaries
- Five Quarters Ended June 30, 2008 20 - 21
Net Interest Income Summaries
-- Six Months Ended June 30, 2008 and 2007 22
Reconciliation of Certain Non-GAAP Financial Measures
-- Five Quarters Ended June 30, 2008 23 - 25
PAGE 10
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
2008 2007
(Dollars in millions, Second First Fourth
except per share data) Quarter Quarter Quarter
EARNINGS SUMMARY
Net interest income (GAAP) $4,290 4,752 4,630
Tax-equivalent adjustment 54 53 44
Net interest income
(Tax-equivalent) 4,344 4,805 4,674
Fee and other income 3,165 2,777 2,744
Total revenue (Tax-equivalent) 7,509 7,582 7,418
Provision for credit losses 5,567 2,831 1,497
Other noninterest expense 5,876 5,097 5,488
Merger-related and
restructuring expenses 251 241 187
Goodwill impairment 6,060 - -
Other intangible amortization 97 103 111
Total noninterest expense 12,284 5,441 5,786
Minority interest in income
of consolidated subsidiaries 97 155 107
Income (loss) from continuing
operations before income taxes
(benefits) (Tax-equivalent) (10,439) (845) 28
Income taxes (benefits) (1,831) (234) (209)
Tax-equivalent adjustment 54 53 44
Income (loss) from continuing
operations (8,662) (664) 193
Discontinued operations,
net of income taxes - - (142)
Net income (loss) (8,662) (664) 51
Dividends on preferred stock 193 43 -
Net income (loss) available
to common stockholders $(8,855) (707) 51
Diluted earnings per common
share (a) $(4.20) (0.36) 0.03
Return on average common
stockholders' equity (49.07)% (3.81) 0.28
Return on average assets (4.37) (0.34) 0.03
Overhead efficiency ratio 163.58% 71.76 78.00
Operating leverage $(6,916) 509 (1,359)
ASSET QUALITY
Allowance for loan losses as %
of loans, net 2.20% 1.37 0.98
Allowance for loan losses as %
of nonperforming assets 90 78 84
Allowance for credit losses as %
of loans, net 2.24 1.41 1.02
Net charge-offs as %
of average loans, net 1.10 0.66 0.41
Nonperforming assets as % of
loans, net, foreclosed properties
and loans held for sale 2.41% 1.70 1.14
CAPITAL ADEQUACY (b)
Tier I capital ratio 8.0% 7.4 7.4
Total capital ratio 12.7 12.1 11.8
Leverage ratio 6.6% 6.2 6.1
OTHER DATA
Average basic common
shares (In millions) 2,111 1,963 1,959
Average diluted common
shares (In millions) 2,119 1,977 1,983
Actual common
shares (In millions) (c) 2,159 1,992 1,980
Dividends paid per common share $0.38 0.64 0.64
Dividend payout ratio on
common shares (8.93)% (177.78) 2,133.33
Book value per common share (c) $30.37 36.24 37.66
Common stock price 15.53 27.00 38.03
Market capitalization (c) $33,527 53,782 75,302
Common stock price to book
value (c) 51% 75 101
FTE employees 119,952 120,378 121,890
Total financial centers/
brokerage offices 4,820 4,850 4,894
ATMs 5,277 5,308 5,139
(a) Calculated using average basic common shares in 2008.
(b) The second 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, Third Second
except per share data) Quarter Quarter
EARNINGS SUMMARY
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 2,933 4,240
Total revenue (Tax-equivalent) 7,517 8,727
Provision for credit losses 408 179
Other noninterest expense 4,397 4,755
Merger-related and restructuring
expenses 36 32
Goodwill impairment - -
Other intangible amortization 92 103
Total noninterest expense 4,525 4,890
Minority interest in income
of consolidated subsidiaries 189 139
Income (loss) from continuing
operations before income taxes
(benefits) (Tax-equivalent) 2,395 3,519
Income taxes (benefits) 656 1,140
Tax-equivalent adjustment 33 38
Income (loss) from continuing
operations 1,706 2,341
Discontinued operations,
net of income taxes (88) -
Net income (loss) 1,618 2,341
Dividends on preferred stock - -
Net income (loss) available
to common stockholders $1,618 2,341
Diluted earnings per common
share (a) $0.85 1.22
Return on average common
stockholders' equity 9.19% 13.54
Return on average assets 0.88 1.33
Overhead efficiency ratio 60.20% 56.02
Operating leverage $(847) 189
ASSET QUALITY
Allowance for loan losses as %
of loans, net 0.78% 0.79
Allowance for loan losses as %
of nonperforming assets 115 157
Allowance for credit losses as %
of loans, net 0.82 0.83
Net charge-offs as %
of average loans, net 0.19 0.14
Nonperforming assets as % of
loans, net, foreclosed properties
and loans held for sale 0.66% 0.49
CAPITAL ADEQUACY (b)
Tier I capital ratio 7.1% 7.5
Total capital ratio 10.8 11.5
Leverage ratio 6.1% 6.2
OTHER DATA
Average basic common
shares (In millions) 1,885 1,891
Average diluted common
shares (In millions) 1,910 1,919
Actual common
shares (In millions) (c) 1,901 1,903
Dividends paid per common share $0.64 0.56
Dividend payout ratio on common
shares 75.29% 45.90
Book value per common share (c) $36.90 36.40
Common stock price 50.15 51.25
Market capitalization (c) $95,326 97,530
Common stock price to book
value (c) 136% 141
FTE employees 109,724 110,493
Total financial centers/
brokerage offices 4,167 4,135
ATMs 5,123 5,099
(a) Calculated using average basic common shares in 2008.
(b) The second 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
Second First Fourth
(In millions) Quarter Quarter Quarter
EARNINGS EXCLUDING
MERGER-RELATED AND
RESTRUCTURING EXPENSES,
GOODWILL IMPAIRMENT
AND DISCONTINUED
OPERATIONS (a) (b)
Return on average common
stockholders' equity (14.56)% (3.14) 1.62
Return on average assets (1.25) (0.28) 0.16
Overhead efficiency ratio 79.55 68.58 75.48
Overhead efficiency ratio
excluding brokerage 80.33% 65.48 74.54
Operating leverage $(847) 563 (1,208)
EARNINGS EXCLUDING
MERGER-RELATED AND
RESTRUCTURING EXPENSES,
GOODWILL IMPAIRMENT, OTHER
INTANGIBLE AMORTIZATION
AND DISCONTINUED
OPERATIONS (a) (b) (c)
Dividend payout ratio on
common shares (30.49)% (246.15) 355.56
Return on average tangible
common stockholders' equity (36.42) (7.07) 5.05
Return on average tangible
assets (1.29) (0.26) 0.20
Overhead efficiency ratio 78.26 67.22 73.97
Overhead efficiency ratio
excluding brokerage 78.55% 63.59 72.43
Operating leverage $(853) 554 (1,187)
OTHER FINANCIAL DATA
Net interest margin 2.58% 2.92 2.88
Fee and other income
as % of total revenue 42.15 36.62 36.99
Effective income tax rate (d) 17.46 26.02 122.05
Effective tax rate
(Tax-equivalent) (d) (e) 17.03% 21.38 127.17
AVERAGE BALANCE SHEET DATA
Commercial loans, net $206,204 198,578 188,164
Consumer loans, net 270,530 267,358 261,641
Loans, net 476,734 465,936 449,805
Earning assets 675,089 659,033 650,140
Total assets 796,437 783,593 763,487
Core deposits 390,670 394,513 390,043
Total deposits 435,548 443,353 437,566
Interest-bearing liabilities 619,044 611,099 599,130
Stockholders' equity $81,740 78,747 73,986
PERIOD-END BALANCE SHEET DATA
Commercial loans, net $216,620 211,700 198,566
Consumer loans, net 271,578 268,782 263,388
Loans, net 488,198 480,482 461,954
Goodwill and other intangible
assets
Goodwill 36,993 43,068 43,122
Deposit base 531 573 619
Customer relationships 1,321 1,375 1,410
Tradename 90 90 90
Total assets 812,433 808,575 782,896
Core deposits 400,387 398,562 397,405
Total deposits 447,790 444,964 449,129
Stockholders' equity $75,379 77,992 76,872
(a) These financial measures are calculated by excluding from GAAP
net income (loss) presented on page 10, $128 million, $123 million,
$108 million, $22 million and $20 million in the second and first
quarters of 2008, and in the fourth, third and second quarters of
2007, respectively, of after-tax net merger-related and restructuring
expenses, $6.1 billion in the second quarter of 2008 of after-tax
goodwill impairment, 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 23 and 25 for a more detailed reconciliation.
(c) These financial measures are calculated by excluding from GAAP
net income (loss) presented on page 10, $66 million, $64 million, $65
million, $59 million and $66 million in the second and first quarters
of 2008, and in the fourth, third and second 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
Third Second
(In millions) Quarter Quarter
EARNINGS EXCLUDING
MERGER-RELATED AND
RESTRUCTURING EXPENSES,
GOODWILL IMPAIRMENT
AND DISCONTINUED
OPERATIONS (a) (b)
Return on average common
stockholders' equity 9.81% 13.66
Return on average assets 0.94 1.34
Overhead efficiency ratio 59.73 55.65
Overhead efficiency ratio
excluding brokerage 56.82% 52.04
Operating leverage $(843) 210
EARNINGS EXCLUDING
MERGER-RELATED AND
RESTRUCTURING EXPENSES,
GOODWILL IMPAIRMENT, OTHER
INTANGIBLE AMORTIZATION
AND DISCONTINUED
OPERATIONS (a) (b) (c)
Dividend payout ratio on
common shares 68.09% 44.09
Return on average tangible
common stockholders' equity 23.88 33.57
Return on average tangible
assets 1.03 1.47
Overhead efficiency ratio 58.51 54.47
Overhead efficiency ratio
excluding brokerage 55.32% 50.61
Operating leverage $(855) 197
OTHER FINANCIAL DATA
Net interest margin 2.92% 2.96
Fee and other income
as % of total revenue 39.02 48.58
Effective income tax rate (d) 27.33 32.78
Effective tax rate
(Tax-equivalent) (d) (e) 28.38% 33.51
AVERAGE BALANCE SHEET DATA
Commercial loans, net $174,672 165,512
Consumer loans, net 255,129 255,745
Loans, net 429,801 421,257
Earning assets 628,773 605,978
Total assets 729,004 704,773
Core deposits 379,009 378,496
Total deposits 416,107 408,418
Interest-bearing liabilities 574,399 547,669
Stockholders' equity $69,857 69,317
PERIOD-END BALANCE SHEET DATA
Commercial loans, net $189,545 175,369
Consumer loans, net 259,661 253,751
Loans, net 449,206 429,120
Goodwill and other intangible
assets
Goodwill 38,848 38,766
Deposit base 670 727
Customer relationships 620 651
Tradename 90 90
Total assets 754,168 715,428
Core deposits 377,865 378,188
Total deposits 421,937 410,030
Stockholders' equity $70,140 69,266
(a) These financial measures are calculated by excluding from GAAP
net income (loss) presented on page 10, $128 million, $123 million,
$108 million, $22 million and $20 million in the second and first
quarters of 2008, and in the fourth, third and second quarters of
2007, respectively, of after-tax net merger-related and restructuring
expenses, $6.1 billion in the second quarter of 2008 of after-tax
goodwill impairment, 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 23 and 25 for a more detailed reconciliation.
(c) These financial measures are calculated by excluding from GAAP
net income (loss) presented on page 10, $66 million, $64 million, $65
million, $59 million and $66 million in the second and first quarters
of 2008, and in the fourth, third and second 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, Second First Fourth
except per share data) Quarter Quarter Quarter
INTEREST INCOME
Interest and fees on loans $6,187 7,577 7,980
Interest and dividends on
securities 1,530 1,496 1,616
Trading account interest 522 571 557
Other interest income 407 535 757
Total interest income 8,646 10,179 10,910
INTEREST EXPENSE
Interest on deposits 2,176 2,941 3,433
Interest on short-term
borrowings 418 523 673
Interest on long-term debt 1,762 1,963 2,174
Total interest expense 4,356 5,427 6,280
Net interest income 4,290 4,752 4,630
Provision for credit losses 5,567 2,831 1,497
Net interest income after
provision for credit losses (1,277) 1,921 3,133
FEE AND OTHER INCOME
Service charges 709 676 716
Other banking fees 518 498 497
Commissions 910 914 970
Fiduciary and asset
management fees 1,355 1,439 1,436
Advisory, underwriting and
other investment banking fees 280 261 249
Trading account profits
(losses) (510) (308) (524)
Principal investing 136 446 41
Securities gains (losses) (808) (205) (320)
Other income 575 (944) (321)
Total fee and other income 3,165 2,777 2,744
NONINTEREST EXPENSE
Salaries and employee benefits 3,435 3,260 3,468
Occupancy 377 379 375
Equipment 317 323 334
Marketing 95 97 80
Communications and supplies 184 186 191
Professional and consulting fees 218 196 271
Goodwill impairment 6,060 - -
Other intangible amortization 97 103 111
Merger-related and
restructuring expenses 251 241 187
Sundry expense 1,250 656 769
Total noninterest expense 12,284 5,441 5,786
Minority interest in income
of consolidated subsidiaries 97 155 107
Income (loss) from continuing
operations before income taxes
(benefits) (10,493) (898) (16)
Income taxes (benefits) (1,831) (234) (209)
Income (loss) from continuing
operations (8,662) (664) 193
Discontinued operations,
net of income taxes - - (142)
Net income (loss) (8,662) (664) 51
Dividends on preferred stock 193 43 0
Net income (loss) available to
common stockholders $(8,855) (707) 51
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Income (loss) from continuing
operations $(4.20) (0.36) 0.10
Net income (loss) available
to common stockholders (4.20) (0.36) 0.03
Diluted earnings (a)
Income (loss) from continuing
operations (4.20) (0.36) 0.10
Net income (loss) available
to common stockholders (4.20) (0.36) 0.03
Cash dividends $0.38 0.64 0.64
AVERAGE COMMON SHARES
Basic 2,111 1,963 1,959
Diluted 2,119 1,977 1,983
(a) Calculated using average basic common shares in 2008.
PAGE 12
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
2007
(In millions, Third Second
except per share data) Quarter Quarter
INTEREST INCOME
Interest and fees on loans $7,937 7,723
Interest and dividends on
securities 1,529 1,474
Trading account interest 566 506
Other interest income 799 647
Total interest income 10,831 10,350
INTEREST EXPENSE
Interest on deposits 3,334 3,180
Interest on short-term
borrowings 801 706
Interest on long-term debt 2,145 2,015
Total interest expense 6,280 5,901
Net interest income 4,551 4,449
Provision for credit losses 408 179
Net interest income after
provision for credit losses 4,143 4,270
FEE AND OTHER INCOME
Service charges 689 667
Other banking fees 471 449
Commissions 600 649
Fiduciary and asset management fees 1,029 1,015
Advisory, underwriting and other
investment banking fees 393 454
Trading account profits
(losses) (301) 195
Principal investing 372 298
Securities gains (losses) (34) 23
Other income (286) 490
Total fee and other income 2,933 4,240
NONINTEREST EXPENSE
Salaries and employee benefits 2,628 3,122
Occupancy 325 331
Equipment 283 309
Marketing 74 78
Communications and supplies 176 178
Professional and consulting fees 194 205
Goodwill impairment - -
Other intangible amortization 92 103
Merger-related and restructuring
expenses 36 32
Sundry expense 717 532
Total noninterest expense 4,525 4,890
Minority interest in income
of consolidated subsidiaries 189 139
Income (loss) from continuing
operations before income taxes
(benefits) 2,362 3,481
Income taxes (benefits) 656 1,140
Income (loss) from continuing
operations 1,706 2,341
Discontinued operations,
net of income taxes (88) -
Net income (loss) 1,618 2,341
Dividends on preferred stock - -
Net income (loss) available to
common stockholders $1,618 2,341
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Income (loss) from continuing
operations $0.91 1.24
Net income (loss) available
to common stockholders 0.86 1.24
Diluted earnings (a)
Income (loss) from continuing
operations 0.90 1.22
Net income (loss) available
to common stockholders 0.85 1.22
Cash dividends $0.64 0.56
AVERAGE COMMON SHARES
Basic 1,885 1,891
Diluted 1,910 1,919
(a) Calculated using average basic common shares in 2008.
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended
June 30,
(In millions
except per share data) 2008 2007
INTEREST INCOME
Interest and fees on loans $13,764 15,341
Interest and dividends on
securities 3,026 2,952
Trading account interest 1,093 939
Other interest income 942 1,258
Total interest income 18,825 20,490
INTEREST EXPENSE
Interest on deposits 5,117 6,194
Interest on short-term
borrowings 941 1,375
Interest on long-term debt 3,725 3,972
Total interest expense 9,783 11,541
Net interest income 9,042 8,949
Provision for credit losses 8,398 356
Net interest income after
provision for credit losses 644 8,593
FEE AND OTHER INCOME
Service charges 1,385 1,281
Other banking fees 1,016 865
Commissions 1,824 1,308
Fiduciary and asset
management fees 2,794 1,968
Advisory, underwriting and other
investment banking fees 541 861
Trading account profits
(losses) (818) 323
Principal investing 582 346
Securities gains (losses) (1,013) 76
Other income (369) 946
Total fee and other income 5,942 7,974
NONINTEREST EXPENSE
Salaries and employee benefits 6,695 6,094
Occupancy 756 643
Equipment 640 616
Marketing 192 140
Communications and supplies 370 351
Professional and consulting fees 414 382
Goodwill impairment 6,060 -
Other intangible amortization 200 221
Merger-related and restructuring
expenses 492 42
Sundry expense 1,906 1,022
Total noninterest expense 17,725 9,511
Minority interest in income
of consolidated subsidiaries 252 275
Income (loss) before
income taxes (benefits) (11,391) 6,781
Income taxes (benefits) (2,065) 2,138
Net income (loss) (9,326) 4,643
Dividends on preferred stock 236 -
Net income (loss) available to
common stockholders $(9,562) 4,643
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Net income (loss) available
to common stockholders (4.69) 2.45
Diluted earnings (a)
Net income (loss) available
to common stockholders $(4.69) 2.42
Cash dividends $1.02 1.12
AVERAGE COMMON SHARES
Basic 2,037 1,892
Diluted 2,048 1,922
(a) Calculated using average basic common shares in 2008.
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended June 30, 2008
Corporate
Wealth and
General Manage- Investment
(In millions) Bank ment Bank
CONSOLIDATED
Net interest income (a) $3,671 202 1,124
Fee and other income 1,000 207 657
Intersegment revenue 57 3 (52)
Total revenue (a) 4,728 412 1,729
Provision for credit losses 919 8 438
Noninterest expense 2,050 253 960
Minority interest - - -
Income taxes (benefits) 632 53 103
Tax-equivalent adjustment 10 - 19
Net income (loss) 1,117 98 209
Dividends on preferred stock - - -
Net income (loss) available
to common stockholders $1,117 98 209
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended June 30, 2008
Capital
Management Parent
(In millions)
CONSOLIDATED
Net interest income (a) $308 (961)
Fee and other income 1,995 (694)
Intersegment revenue (8) -
Total revenue (a) 2,295 (1,655)
Provision for credit losses - 4,202
Noninterest expense 1,827 883
Minority interest - 141
Income taxes (benefits) 170 (2,706)
Tax-equivalent adjustment 1 24
Net income (loss) 297 (4,199)
Dividends on preferred stock - 193
Net income (loss) available
to common stockholders $297 (4,392)
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended June 30, 2008
Goodwill
Impairment,
Net Merger-
Related
and
Restructuring
(In millions) Expenses (b) Total
CONSOLIDATED
Net interest income (a) $(54) 4,290
Fee and other income - 3,165
Intersegment revenue - -
Total revenue (a) (54) 7,455
Provision for credit losses - 5,567
Noninterest expense 6,311 12,284
Minority interest (44) 97
Income taxes (benefits) (83) (1,831)
Tax-equivalent adjustment (54) -
Net income (loss) (6,184) (8,662)
Dividends on preferred stock - 193
Net income (loss) available
to common stockholders $(6,184) (8,855)
PAGE 14
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) $3,445 182 1,028
Fee and other income 980 211 (158)
Intersegment revenue 55 5 (50)
Total revenue (a) 4,480 398 820
Provision for credit losses 569 5 197
Noninterest expense 2,038 246 747
Minority interest - - -
Income taxes (benefits) 673 55 (67)
Tax-equivalent adjustment 11 - 21
Net Income (loss) 1,189 92 (78)
Dividends on preferred stock - - -
Net income (loss) available
to common stockholders $1,189 92 (78)
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2008
Capital
Manage-
(In millions) ment Parent
CONSOLIDATED
Net interest income (a) $281 (131)
Fee and other income 2,191 (447)
Intersegment revenue (10) -
Total revenue (a) 2,462 (578)
Provision for credit losses - 2,060
Noninterest expense 1,855 314
Minority interest - 198
Income taxes (benefits) 220 (1,083)
Tax-equivalent adjustment 1 20
Net Income (loss) 386 (2,087)
Dividends on preferred stock - 43
Net income (loss) available
to common stockholders $386 (2,130)
PAGE 14
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 - 2,777
Intersegment revenue - -
Total revenue (a) (53) 7,529
Provision for credit losses - 2,831
Noninterest expense 241 5,441
Minority interest (43) 155
Income taxes (benefits) (32) (234)
Tax-equivalent adjustment (53) -
Net Income (loss) (166) (664)
Dividends on preferred stock - 43
Net income (loss) available
to common stockholders $(166) (707)
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended June 30, 2007
Corporate
Wealth and
General Manage- Investment
(In millions) Bank ment Bank
CONSOLIDATED
Net interest income (a) $3,372 182 773
Fee and other income 935 202 1,522
Intersegment revenue 56 3 (50)
Total revenue (a) 4,363 387 2,245
Provision for credit losses 154 2 (2)
Noninterest expense 1,922 244 1,020
Minority interest - - -
Income taxes (benefits) 824 51 437
Tax-equivalent adjustment 10 - 11
Net income (loss) $1,453 90 779
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended June 30, 2007
Capital
Manage-
(In millions) ment Parent
CONSOLIDATED
Net interest income (a) $260 (100)
Fee and other income 1,536 45
Intersegment revenue (11) 2
Total revenue (a) 1,785 (53)
Provision for credit losses - 25
Noninterest expense 1,294 378
Minority interest - 139
Income taxes (benefits) 179 (339)
Tax-equivalent adjustment - 17
Net income (loss) $312 (273)
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended June 30, 2007
Net Merger-
Related
and
Restructuring
(In millions) Expenses (b) Total
CONSOLIDATED
Net interest income (a) $(38) 4,449
Fee and other income - 4,240
Intersegment revenue - -
Total revenue (a) (38) 8,689
Provision for credit losses - 179
Noninterest expense 32 4,890
Minority interest - 139
Income taxes (benefits) (12) 1,140
Tax-equivalent adjustment (38) -
Net income (loss) $(20) 2,341
(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 16
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANS - ON-BALANCE SHEET, AND
MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
2008 2007
Second First Fourth
(In millions) Quarter Quarter Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and
agricultural $122,628 119,193 112,509
Real estate - construction and
other 18,629 18,597 18,543
Real estate - mortgage 27,191 26,370 23,846
Lease financing 24,605 23,637 23,913
Foreign 35,168 33,616 29,540
Total commercial 228,221 221,413 208,351
CONSUMER
Real estate secured 230,520 230,197 227,719
Student loans 9,945 9,324 8,149
Installment loans 29,261 27,437 25,635
Total consumer 269,726 266,958 261,503
Total loans 497,947 488,371 469,854
Unearned income (9,749) (7,889) (7,900)
Loans, net (On-balance
sheet) $488,198 480,482 461,954
MANAGED PORTFOLIO (a) (b)
COMMERCIAL
On-balance sheet loan portfolio $228,221 221,413 208,351
Securitized loans -
off-balance sheet 105 120 131
Loans held for sale 2,224 3,342 9,414
Total commercial 230,550 224,875 217,896
CONSUMER
Real estate secured
On-balance sheet loan
portfolio 230,520 230,197 227,719
Securitized loans -
off-balance sheet 6,337 6,845 7,230
Securitized loans included
in securities 14,918 11,683 10,755
Loans held for sale 3,415 5,960 4,816
Total real estate secured 255,190 254,685 250,520
Student
On-balance sheet loan
portfolio 9,945 9,324 8,149
Securitized loans -
off-balance sheet 2,721 2,772 2,811
Securitized loans included
in securities 52 52 52
Loans held for sale - - -
Total student 12,718 12,148 11,012
Installment
On-balance sheet loan
portfolio 29,261 27,437 25,635
Securitized loans -
off-balance sheet 1,630 1,968 2,263
Securitized loans included
in securities 28 39 47
Loans held for sale 2,791 2,127 2,542
Total installment 33,710 31,571 30,487
Total consumer 301,618 298,404 292,019
Total managed portfolio $532,168 523,279 509,915
SERVICING PORTFOLIO (b) (c)
Commercial $351,277 354,624 353,464
Consumer $29,100 27,415 27,523
(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) Certain amounts presented in periods prior to the second quarter of
2008 have been reclassified to conform to the presentation in the
second quarter of 2008.
(c) 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
LOANS - ON-BALANCE SHEET, AND
MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
2007
Third Second
(In millions) Quarter Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and
agricultural $109,269 102,397
Real estate - construction and
other 18,167 17,449
Real estate - mortgage 21,514 20,448
Lease financing 23,966 24,083
Foreign 26,471 20,959
Total commercial 199,387 185,336
CONSUMER
Real estate secured 225,355 220,293
Student loans 7,742 6,757
Installment loans 24,763 25,017
Total consumer 257,860 252,067
Total loans 457,247 437,403
Unearned income (8,041) (8,283)
Loans, net (On-balance sheet) $449,206 429,120
MANAGED PORTFOLIO (a) (b)
COMMERCIAL
On-balance sheet loan portfolio $199,387 185,336
Securitized loans -
off-balance sheet 142 170
Loans held for sale 13,905 11,573
Total commercial 213,434 197,079
CONSUMER
Real estate secured
On-balance sheet loan portfolio 225,355 220,293
Securitized loans -
off-balance sheet 7,625 8,112
Securitized loans included
in securities 5,963 6,091
Loans held for sale 3,583 4,079
Total real estate secured 242,526 238,575
Student
On-balance sheet loan portfolio 7,742 6,757
Securitized loans -
off-balance sheet 2,856 2,905
Securitized loans included
in securities 52 52
Loans held for sale 1,968 2,046
Total student 12,618 11,760
Installment
On-balance sheet loan portfolio 24,763 25,017
Securitized loans -
off-balance sheet 2,572 3,105
Securitized loans included
in securities 55 116
Loans held for sale 1,975 35
Total installment 29,365 28,273
Total consumer 284,509 278,608
Total managed portfolio $497,943 475,687
SERVICING PORTFOLIO (b) (c)
Commercial $337,721 298,374
Consumer $28,015 26,341
(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) Certain amounts presented in periods prior to the second quarter of
2008 have been reclassified to conform to the presentation in the
second quarter of 2008.
(c) 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.
SOURCE Wachovia Corporation
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Related links:
http://www.wachovia.com
CONTACT:
Investors, Alice Lehman, +1-704-374-4139,
Ellen Taylor, +1-704-383-1381, or Media, Mary Eshet,
+1-704-383-7777, Christy Phillips- Brown, +1-704-383-8178, all of
Wachovia Corporation/ /FIRST ADD -- TABULAR MATERIAL -- TO FOLLOW
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