Wells Fargo Merger on Track For 4th Quarter 2008 Close
Businesses Remain Well Positioned and Committed to Serving Customers
CHARLOTTE, N.C., Oct. 22 /PRNewswire-FirstCall/ --
Third Quarter 2008 Compared With Third Quarter 2007:
-- Net loss of $23.9 billion includes the following on a pre-tax basis:
$18.8 billion of goodwill impairment; $4.8 billion credit reserve build
to a 3.24 percent reserve-to-loan ratio; $2.5 billion of market
disruption losses including $1.2 billion of securities impairments;
$310 million principal investing loss
-- Results also reflect costs relating to previous announcements on the
auction rate securities settlement, support of Evergreen money market
fund exposure to Lehman Brothers and losses on government sponsored
entity preferred stock, amounting to $1.1 billion
-- Traditional businesses remained focused on customer service and sales
execution; customer satisfaction rating of 6.62 and customer loyalty at
51 percent remained at top of industry
-- Average core deposits up 4 percent on growth in retail CDs and retail
brokerage deposits
-- Way2Save campaign hits milestone 1.1 million accounts and $439 million
in new account balances
-- A.G. Edwards integration proceeding smoothly; integration over 50
percent complete
Earnings Highlights
Three Months Ended
September 30, June 30, September 30,
2008 2008 2007
(In millions, except per
share data) Amount EPS Amount EPS Amount EPS
Earnings
Net income (loss) $(23,698) (11.09) (8,915) (4.22) 1,706 0.90
Discontinued
operations, net of
income taxes - - - - (88) (0.05)
Dividends on preferred
stock (191) (0.09) (193) (0.09) - -
Net income (loss)
available to common
stockholders $(23,889) (11.18) (9,108) (4.31) 1,618 0.85
Discontinued
operations, net of
income taxes - - - - 88 0.05
Net goodwill impairment 18,715 8.76 6,056 2.87 - -
Net merger-related and
restructuring expenses 414 0.19 128 0.06 22 -
Earnings (loss) excluding
goodwill impairment,
and merger-related and
restructuring expenses $(4,760) (2.23) (2,924) (1.38) 1,728 0.90
Financial ratios
Return on average
common stockholders'
equity (157.43)% (50.47) 9.19
Net interest margin (a) 2.94 2.58 (d) 2.92
Fee and other income
as % of total
revenue (a) 12.70 42.15 39.02
Overhead efficiency
ratio (a) 442.60 % 170.24 60.20
Capital adequacy (b)
Tier 1 capital ratio 7.4 % 8.0 7.1
Total capital ratio 12.2 12.7 10.8
Leverage ratio 5.7 % 6.6 6.1
Asset quality
Allowance for loan losses
as % of nonaccrual
and restructured loans 109 % 95 129
Allowance for loan losses
as % of loans, net 3.18 2.20 0.78
Allowance for credit
losses as % of loans,
net (c) 3.24 2.24 0.82
Net charge-offs as % of
average loans, net 1.57 1.10 0.19
Nonperforming assets as
% of loans, net,
foreclosed properties
and loans held for sale 3.05 % 2.41 0.66
(a) Tax-equivalent.
(b) The third 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) 2Q08 includes the SILO charge of $975 million pre-tax; without that
charge, the net interest margin would have been 3.15%.
Wachovia today reported a net loss in the third quarter of 2008 of
$23.89 billion, representing a net loss per share of $11.18, including a
provision for credit losses of $6.63 billion to cover $1.87 billion in net
charge-offs and to build reserves by $4.76 billion.
Wachovia's core businesses generated higher loans and average core
deposits, as well as strength in traditional banking and insurance fees;
however, market-related businesses and deposit trends reflected market
turmoil. The General Bank grew revenue 8 percent over last year and
maintained industry-leading customer satisfaction. The retail brokerage
business increased in both the number and quality of financial advisors and
generated solid cross-sales with other Wachovia businesses. Sales growth in
the Wealth Management business offset declines in equity valuations. The
Corporate and Investment Bank continued to execute on its transition to a
more customer-centric model.
Robert K. Steel, CEO and president said, "In these unprecedented times,
my colleagues have demonstrated that Wachovia always puts the interests of
our customers and clients first. Although this has been a challenging
quarter, Wachovia's underlying businesses remain solid and our franchise
exceptionally attractive. We look forward to the opportunities that lie
ahead as we join forces with Wells Fargo."
"Wachovia's third quarter results were very much in line with our
expectations," said Wells Fargo's President and CEO John Stumpf. "We're
more encouraged than ever by what we've seen in their franchise, and we're
pleased that Wachovia's team continues to focus on serving customers."
"We believe that it was prudent for Wachovia to put these losses behind
them," said Wells Fargo's Chief Financial Officer Howard Atkins. "The asset
write-downs, reserve build, and other items are consistent with our
acquisition assumptions. The goodwill impairment will have no impact on
tangible capital or our planned capital raise. Monday, Wachovia issued
preferred stock to Wells Fargo as contemplated in our share exchange
agreement, which represents 39.9 percent of Wachovia's voting power, and
we're on track to complete the merger as planned in the fourth quarter."
The third quarter 2008 net loss compared with earnings of $1.62 billion
or 85 cents per share in the third quarter of 2007. Excluding goodwill
impairment of $18.7 billion after tax, net merger-related and restructuring
expense of $414 million, results in the third quarter of 2008 were a net
loss of $4.76 billion, or a net loss per share of $2.23.
The pre-tax loss stemmed from:
-- The $18.8 billion in noncash goodwill impairment reflecting declining
market valuations and the terms of the merger with Wells Fargo; the
recognition of the impairment affected the retail and small business,
commercial, wealth management and asset management 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 $6.6 billion credit loss provision, including $3.4 billion to build
reserves for the Pick-a-Pay mortgage portfolio and $1.4 billion to
build other loan loss reserves;
-- $2.5 billion in market disruption-related losses, including
$619 million in investment portfolio securities impairments;
-- $682 million valuation decline in principal investing;
-- $515 million in non-merger severance charges related to expense
reductions announced in the second quarter of 2008;
-- $497 million of auction rate securities settlement costs ($398 million,
net of minority interest); and
-- $397 million in losses related to planned securities sales, including
$171 million from the sale of government sponsored entity preferred
shares.
Wachovia Corporation
Three Months Ended
September 30, June 30, September 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $5,039 4,344 4,584
Fee and other income 733 3,165 2,933
Total revenue (Tax-equivalent) 5,772 7,509 7,517
Provision for credit losses 6,629 5,567 408
Noninterest expense 25,545 12,784 4,525
Income (loss) from continuing
operations before income taxes
benefits) (Tax-equivalent) (26,297) (10,824) 2,395
Income taxes (benefits) (Tax-
equivalent) (2,599) (1,909) 689
Net income (loss) available to
common stockholders (23,889) (9,108) 1,618
Average loans, net 478,485 476,734 429,801
Average core deposits $392,309 390,670 379,009
Key trends in the third quarter of 2008 compared with the third quarter
of 2007 included:
-- A significant decline in fee and other income largely due to increased
net market disruption-related valuation losses and lower principal
investing results, which overshadowed strength in traditional banking.
A 25 percent rise in fiduciary and asset management fees and 33 percent
higher commissions resulted from the A.G. Edwards acquisition.
-- Net interest income of $5.0 billion, up 10 percent, with a net interest
margin of 2.94 percent on increased average loans. Average commercial
loans were up 20 percent and average consumer loans were up 6 percent.
Average loan growth was driven by strength in commercial, commercial
real estate and traditional mortgage, which more than offset the
$6.8 billion average net decrease effect of sales/securitization and
loan transfer activity. Average core deposit growth of 4 percent was
led by retail CDs and money market accounts. Period end core deposits
decreased 2 percent driven by a significant decline in higher cost
commercial deposits reflecting significant market turmoil at the end of
the third quarter of 2008.
-- An increase in noninterest expense largely reflecting the impact of
A.G. Edwards, as well as growth in credit-related sundry expense and a
planned $497 million ($398 million net of minority interest) in costs
related to the settlement of auction rate securities.
-- Provision for credit losses of $6.6 billion, which included
$4.8 billion to build reserves. The provision largely reflected the
weakening economy and current and anticipated severe deterioration in
the residential housing market, particularly in specific markets in
California and Florida. Net charge-offs were $1.9 billion, or an
annualized 1.57 percent of average net loans. Total nonperforming
assets including loans held for sale were $15.0 billion, or
3.05 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, provision in excess of net charge-offs 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 $18.8
billion and provision expense in excess of charge-offs and other credit
losses, which amounted to $4.8 billion in the third quarter of 2008, are
not allocated to business segments. Pages 15 and 16 include a
reconciliation of segment results to Wachovia's consolidated results of
operations in accordance with GAAP.
General Bank
General Bank Highlights
Three Months Ended
September 30, June 30, September 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $3,763 3,697 3,466
Fee and other income 1,003 1,000 935
Total revenue (Tax-equivalent) 4,816 4,754 4,460
Provision for credit losses 1,340 922 207
Noninterest expense 2,127 2,061 1,898
Segment earnings $857 1,124 1,495
Cash overhead efficiency ratio (Tax-
equivalent) 44.16 % 43.35 42.54
Average loans, net $318,573 317,969 295,188
Average core deposits 292,653 290,313 290,099
Economic capital, average $19,302 16,777 10,904
The General Bank includes retail, small business and commercial
customers. The third quarter of 2008 compared with the third quarter of
2007 included:
-- Earnings of $857 million, down $638 million, driven by rising credit
costs and related expenses, primarily in the mortgage business, which
overshadowed sales momentum elsewhere as reflected in total revenue of
$4.8 billion, up 8 percent.
-- 9 percent higher net interest income on deposit growth and improved
loan spreads despite rising nonperforming assets.
-- Average loan growth of 8 percent, led by consumer real estate secured,
commercial lending and auto. Growth in consumer real estate secured was
driven by mortgage and home equity and included slower prepayments.
Auto loan originations declined 24 percent.
-- Average core deposit growth of $2.6 billion.
-- Growth in net new retail checking accounts of 208,000 in the third
quarter of 2008 compared with an increase of 263,000 in the third
quarter of 2007.
-- 442,000 new retail checking accounts were tied to the Way2Save
campaign. This product, which launched in mid-January 2008, reached
1.1 million accounts in the third quarter and $439 million in
deposits at September 30, 2008.
-- 7 percent growth in fee and other income, with strength in service
charges, interchange income and higher mortgage banking fee income.
Strong interchange income reflected a 14 percent increase in
debit/credit card volume from the third quarter of 2007.
-- A 12 percent increase in noninterest expense due to growth in
credit-related sundry expense, FDIC expense, as well as continued
strategic investment in de novo branch activity and Western expansion.
During the third quarter of 2008, 13 de novo branches were opened and
seven branches were consolidated. As a result of performance
initiatives, operating leverage continued to improve, which enabled
continued strategic investment.
-- A $1.1 billion increase in the provision for credit losses to
$1.3 billion, largely reflecting higher net charge-offs in the
Pick-a-Pay portfolio and auto.
Wealth Management
Wealth Management Highlights
Three Months Ended
September 30, June 30, September 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $194 201 184
Fee and other income 192 208 184
Total revenue (Tax-equivalent) 388 412 372
Provision for credit losses 8 5 6
Noninterest expense 246 252 240
Segment earnings $84 98 80
Cash overhead efficiency ratio (Tax-
equivalent) 63.55 % 61.24 64.71
Average loans, net $22,765 22,557 20,996
Average core deposits 14,690 17,609 17,180
Economic capital, average $729 720 609
Wealth Management includes private banking, personal trust, investment
advisory services, charitable services, financial planning and insurance
brokerage. The third quarter of 2008 compared with the third quarter of
2007 included:
-- 5 percent earnings growth to $84 million on 4 percent revenue growth in
challenging markets.
-- 5 percent growth in net interest income on 8 percent loan growth and
wider deposit spreads despite a 14 percent decline in average core
deposits, which reflected the market turmoil.
-- 4 percent growth in fiduciary and asset management fees as the benefits
of a pricing initiative implemented in the third quarter of 2007 and
sales growth overcame declines in equity valuations and in assets under
management. Insurance commissions rose 5 percent compared with a weak
2007 third quarter.
-- A 3 percent increase in noninterest expense driven by investments in
private banking and Western expansion, offset by efficiency
initiatives.
-- A 13 percent decline in assets under management from year-end 2007 to
$73.2 billion largely due to market depreciation as well as net
outflows.
Corporate and Investment Bank
Corporate and Investment Bank Highlights
Three Months Ended
September 30, June 30, September 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $1,043 1,132 838
Fee and other income (416) 656 176
Total revenue (Tax-equivalent) 570 1,736 962
Provision for credit losses 525 438 1
Noninterest expense 1,154 963 626
Segment earnings (loss) $(703) 212 212
Cash overhead efficiency ratio (Tax-
equivalent) 202.09 % 55.50 65.12
Average loans, net $109,323 106,680 82,979
Average core deposits 27,497 31,686 37,208
Economic capital, average $14,732 13,821 9,791
The Corporate and Investment Bank includes corporate lending,
investment banking, and treasury and international trade finance. Unless
otherwise noted, third quarter 2008 results are compared with the third
quarter of 2007. These results included:
-- A loss of $703 million due to continued net valuation losses related to
disruption in the capital markets, and increased provision for credit
losses.
-- A 24 percent increase in net interest income, which reflected
32 percent growth in average loans including fourth quarter 2007 and
first quarter 2008 transfer into the loan portfolio at fair value of
certain loans originally slated for distribution, as well as loan
growth in the commercial lending businesses.
-- A decline in fee and other income due to significantly lower principal
investing results from lower valuations and a decrease in advisory and
underwriting fees despite lower market disruption-related losses from
the third quarter a year ago.
-- Market disruption-related losses of $940 million compared with
$565 million in the second quarter of 2008 and $1.2 billion in the
third quarter of 2007. Market disruption-related valuation losses, net
of applicable hedges, were:
-- $235 million in subprime residential asset-backed collateralized
debt obligations and other related exposures, compared with
$238 million in the second quarter and $230 million in the third
quarter of 2007;
-- $347 million in commercial mortgage structured products, compared
with $209 million in the second quarter and $488 million in the
third quarter of 2007;
-- $146 million in consumer mortgage structured products, compared with
$68 million in the second quarter and $82 million in the third
quarter of 2007;
-- $22 million gain in leveraged finance net of fees, compared with a
net $102 million gain in the second quarter and a net $272 million
loss in the third quarter of 2007; and
-- $234 million in non-subprime collateralized debt obligations and
other structured products, compared with $152 million in the second
quarter and $109 million in the third quarter of 2007.
-- A loss of $317 million in principal investing revenue, down from net
gains of $361 million in the third quarter of 2007 due to lower
valuations on both the direct and fund investment portfolios.
-- An 84 percent increase in noninterest expense primarily due to higher
variable compensation and $65 million of auction rate securities
settlement costs.
-- A provision of $525 million largely reflecting residential-related
commercial real estate and other corporate lending losses.
Capital Management
Capital Management Highlights
Three Months Ended
September 30, June 30, September 30,
(In millions) 2008 2008 2007
Net interest income (Tax-equivalent) $388 308 268
Fee and other income 968 1,995 1,444
Total revenue (Tax-equivalent) 1,360 2,295 1,704
Provision for credit losses 1 - -
Noninterest expense 2,145 2,328 1,241
Segment earnings (loss) $(499) (21) 294
Cash overhead efficiency ratio (Tax-
equivalent) 157.72 % 101.39 72.82
Average loans, net $3,223 2,878 2,142
Average core deposits 54,734 48,647 31,489
Economic capital, average $2,033 2,118 1,310
Capital Management includes retail brokerage services and asset
management. The third quarter of 2008 compared with the third quarter of
2007 included:
-- A loss of $499 million due to auction rate securities settlement costs
and continued market disruption-related losses;
-- A 45 percent increase in net interest income driven by retail brokerage
deposit growth of $23.3 billion primarily due to the A.G. Edwards
acquisition, as well as organic growth since the acquisition, partially
offset by spread compression;
-- A 33 percent decline in fee and other income driven by $931 million in
market disruption-related losses compared with $118 million in the
second quarter of 2008 and $40 million in the third quarter of 2007;
-- $737 million in valuation losses relating to the support of
Evergreen money market funds, compared with $24 million in the
second quarter of 2008 and $40 million in the third quarter of 2007;
-- $83 million in valuation losses relating to the liquidation of an
Evergreen fund compared with $89 million in the second quarter of
2008;
-- $80 million in valuation losses relating to auction rate securities
held on the balance sheet, compared with $5 million in the second
quarter of 2008;
-- $31 million relating to other securities impairment.
-- 73 percent growth in noninterest expense largely due to the effect of
the auction rate securities settlement and the A.G. Edwards merger.
Total assets under management were $209.1 billion at September 30,
2008, down 24 percent from December 31, 2007, driven by net outflows of
$40.6 billion as well as $25.0 billion in lower market valuations.
Wachovia Corporation (NYSE: WB) is one of the nation's largest
diversified financial services companies, with assets of $764.4 billion and
market capitalization of $7.6 billion at September 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 $1.0 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 October 22, 2008.
Additional Information
The proposed merger between Wachovia and Wells Fargo (the Merger) will
be submitted to Wachovia's shareholders for their consideration. Wells
Fargo will file a registration statement with the SEC, which will include a
proxy statement/prospectus, and each of Wachovia and Wells Fargo may file
other relevant documents concerning the proposed Merger. Shareholders and
other investors are urged to read the registration statement and the proxy
statement/prospectus when they become available, as well as any other
relevant documents concerning the proposed Merger filed with the SEC (and
any amendments or supplements to those documents), because they will
contain important information. You will be able to obtain a free copy of
the registration statement and the proxy statement/prospectus, as well as
other filings containing information about Wachovia and Wells Fargo, at the
SEC's website (http://www.sec.gov) and at the companies' respective
websites, wachovia.com and wellsfargo.com. Copies of the proxy
statement/prospectus and the SEC filings that will be incorporated by
reference in the proxy statement/prospectus can also be obtained, free of
charge, by directing a request to Wachovia Corporation, Investor Relations,
One Wachovia Center, Charlotte, NC 28288-0206, (704) 383-0798; or to Wells
Fargo & Company, Investor Relations, MAC A0101-025, 420 Montgomery Street,
2nd Floor, San Francisco, California 94104-1207, (415) 396-3668.
Wachovia and Wells Fargo and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies
from the shareholders of Wachovia in connection with the proposed Merger.
Information about the directors and executive officers of Wachovia is set
forth in the proxy statement for Wachovia's 2008 annual meeting of
shareholders, as filed with the SEC on a Schedule 14A on March 10, 2008.
Information about the directors and executive officers of Wells Fargo is
set forth in the proxy statement for Wells Fargo's 2008 annual meeting of
shareholders, as filed with the SEC on a Schedule 14A on March 17, 2008.
Additional information regarding the interests of those participants and
other persons who may be deemed participants in the Merger may be obtained
by reading the proxy statement/prospectus regarding the proposed Merger
when it becomes available. You may obtain free copies of these documents as
described in the preceding paragraph.
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 1 and on page 12 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 24 through 26. 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.
Recorded Message and Supplemental Materials
A recorded message reviewing Wachovia's third quarter 2008 results is
available today at 7:00 a.m. Eastern Daylight Saving Time through January
18, 2009, at 800-642-1687 for U.S. callers and 706-645-9291 for
international callers. Conference ID: 69710892. The call is also available
on the Internet at Wachovia.com/investor.
This review may include a discussion of certain non-GAAP financial
measures. Supplemental materials relating to third 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 listening to the recorded message.
ADD: /FIRST ADD -- CLW004 -- Wachovia Corporation/
PAGE 10
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL TABLES
TABLE OF CONTENTS PAGE
Financial Highlights - Five Quarters Ended September 30, 2008 11
Other Financial Data - Five Quarters Ended September 30, 2008 12
Consolidated Statements of Income
- Five Quarters Ended September 30, 2008 13
Consolidated Statements of Income
- Nine Months Ended September 30, 2008 and 2007 14
Business Segments
- Three Months Ended September 30, 2008 and June 30, 2008 15
Business Segments - Three Months Ended September 30, 2007 16
Loans - On-Balance Sheet, and Managed and Servicing Portfolios
- Five Quarters Ended September 30, 2008 17
Allowance for Credit Losses
- Five Quarters Ended September 30, 2008 18
Nonperforming Assets
- Five Quarters Ended September 30, 2008 19
Consolidated Balance Sheets - Five Quarters Ended
September 30, 2008 20
Net Interest Income Summaries
- Five Quarters Ended September 30, 2008 21 - 22
Net Interest Income Summaries
- Nine Months Ended September 30, 2008 and 2007 23
Reconciliation of Certain Non-GAAP Financial Measures
- Five Quarters Ended September 30, 2008 24 - 26
PAGE 11
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
2008
(Dollars in millions, Third Second First
except per share data) Quarter Quarter Quarter
EARNINGS SUMMARY
Net interest income (GAAP) $4,991 4,290 4,752
Tax-equivalent adjustment 48 54 53
Net interest income
(Tax-equivalent) 5,039 4,344 4,805
Fee and other income 733 3,165 2,777
Total revenue (Tax-equivalent) 5,772 7,509 7,582
Provision for credit losses 6,629 5,567 2,831
Other noninterest expense 5,966 6,376 5,097
Merger-related and restructuring
expenses 697 251 241
Goodwill impairment 18,786 6,060 -
Other intangible amortization 96 97 103
Total noninterest expense 25,545 12,784 5,441
Minority interest in income of
consolidated subsidiaries (105) (18) 155
Income (loss) from continuing
operations before income taxes
(benefits) (Tax-equivalent) (26,297) (10,824) (845)
Income taxes (benefits) (2,647) (1,963) (234)
Tax-equivalent adjustment 48 54 53
Income (loss) from continuing
operations (23,698) (8,915) (664)
Discontinued operations,
net of income taxes - - -
Net income (loss) (23,698) (8,915) (664)
Dividends on preferred stock 191 193 43
Net income (loss) available to
common stockholders $(23,889) (9,108) (707)
Diluted earnings per common
share (a) $(11.18) (4.31) (0.36)
Return on average common
stockholders' equity (157.43)% (50.47) (3.81)
Return on average assets (11.91) (4.50) (0.34)
Overhead efficiency ratio 442.60 % 170.24 71.76
Operating leverage $(14,498) (7,416) 509
ASSET QUALITY
Allowance for loan losses as %
of loans, net 3.18 % 2.20 1.37
Allowance for loan losses as %
of nonperforming assets 102 90 78
Allowance for credit losses as %
of loans, net 3.24 2.24 1.41
Net charge-offs as % of
average loans, net 1.57 1.10 0.66
Nonperforming assets as % of loans,
net, foreclosed properties and
loans held for sale 3.05 % 2.41 1.70
CAPITAL ADEQUACY (b)
Tier I capital ratio 7.4 % 8.0 7.4
Total capital ratio 12.2 12.7 12.1
Leverage ratio 5.7 % 6.6 6.2
OTHER DATA
Average basic common shares
(In millions) 2,137 2,111 1,963
Average diluted common shares
(In millions) 2,143 2,119 1,977
Actual common shares
(In millions) (c) 2,161 2,159 1,992
Dividends paid per common share $0.05 0.38 0.64
Dividend payout ratio on
common shares (0.45)% (8.70) (177.78)
Book value per common share (c) $18.59 30.25 36.24
Common stock price 3.50 15.53 27.00
Market capitalization (c) $7,563 33,527 53,782
Common stock price to book value (c) 19 % 51 75
FTE employees 117,227 119,952 120,378
Total financial centers/brokerage
offices 4,820 4,820 4,850
ATMs 5,303 5,277 5,308
(a) Calculated using average basic common shares in 2008.
(b) The third 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
FINANCIAL HIGHLIGHTS
(Unaudited)
2007
(Dollars in millions, Fourth Third
except per share data) Quarter Quarter
EARNINGS SUMMARY
Net interest income (GAAP) $4,630 4,551
Tax-equivalent adjustment 44 33
Net interest income (Tax-equivalent) 4,674 4,584
Fee and other income 2,744 2,933
Total revenue (Tax-equivalent) 7,418 7,517
Provision for credit losses 1,497 408
Other noninterest expense 5,488 4,397
Merger-related and restructuring
expenses 187 36
Goodwill impairment - -
Other intangible amortization 111 92
Total noninterest expense 5,786 4,525
Minority interest in income of
consolidated subsidiaries 107 189
Income (loss) from continuing operations
before income taxes (benefits)
(Tax-equivalent) 28 2,395
Income taxes (benefits) (209) 656
Tax-equivalent adjustment 44 33
Income (loss) from continuing operations 193 1,706
Discontinued operations, net of
income taxes (142) (88)
Net income (loss) 51 1,618
Dividends on preferred stock - -
Net income (loss) available to
common stockholders $51 1,618
Diluted earnings per common share (a) $0.03 0.85
Return on average common stockholders'
equity 0.28 % 9.19
Return on average assets 0.03 0.88
Overhead efficiency ratio 78.00 % 60.20
Operating leverage $(1,359) (847)
ASSET QUALITY
Allowance for loan losses as % of
loans, net 0.98 % 0.78
Allowance for loan losses as % of
nonperforming assets 84 115
Allowance for credit losses as %
of loans, net 1.02 0.82
Net charge-offs as % of average
loans, net 0.41 0.19
Nonperforming assets as % of loans,
net, foreclosed properties and
loans held for sale 1.14 % 0.66
CAPITAL ADEQUACY (b)
Tier I capital ratio 7.4 % 7.1
Total capital ratio 11.8 10.8
Leverage ratio 6.1 % 6.1
OTHER DATA
Average basic common shares (In millions) 1,959 1,885
Average diluted common shares
(In millions) 1,983 1,910
Actual common shares (In millions) (c) 1,980 1,901
Dividends paid per common share $0.64 0.64
Dividend payout ratio on common shares 2,133.33 % 75.29
Book value per common share (c) $37.66 36.90
Common stock price 38.03 50.15
Market capitalization (c) $75,302 95,326
Common stock price to book value (c) 101 % 136
FTE employees 121,890 109,724
Total financial centers/brokerage offices 4,894 4,167
ATMs 5,139 5,123
(a) Calculated using average basic common shares in 2008.
(b) The third quarter of 2008 is based on estimates.
(c) Includes restricted stock for which the holder receives dividends
and has full voting rights.
PAGE 12
WACHOVIA CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
2008
Third Second First
(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 (27.11)% (15.94) (3.14)
Return on average assets (2.27) (1.38) (0.28)
Overhead efficiency ratio 105.01 86.21 68.58
Overhead efficiency ratio
excluding brokerage 107.32 % 80.64 65.47
Operating leverage $(1,325) (1,347) 563
EARNINGS EXCLUDING
MERGER-RELATED AND
RESTRUCTURING EXPENSES,
GOODWILL IMPAIRMENT, OTHER
INTANGIBLE AMORTIZATION
AND DISCONTINUED
OPERATIONS (a) (b) (c)
Dividend payout ratio on
common shares (2.27)% (27.78) (246.15)
Return on average tangible common
stockholders' equity (59.94) (39.94) (7.07)
Return on average tangible assets (2.35) (1.42) (0.26)
Overhead efficiency ratio 103.34 84.92 67.22
Overhead efficiency ratio
excluding brokerage 104.82 % 78.84 63.59
Operating leverage $(1,326) (1,353) 554
OTHER FINANCIAL DATA
Net interest margin 2.94 % 2.58 2.92
Fee and other income as %
of total revenue 12.70 42.15 36.62
Effective income tax rate (d) 10.04 18.06 26.02
Effective tax rate (Tax-equivalent)
(d) (e) 9.88 % 17.65 21.38
AVERAGE BALANCE SHEET DATA
Commercial loans, net $208,906 206,204 198,578
Consumer loans, net 269,579 270,530 267,358
Loans, net 478,485 476,734 465,936
Earning assets 685,944 675,089 659,033
Total assets 791,907 796,437 783,593
Core deposits 392,309 390,670 394,513
Total deposits 446,992 435,548 443,353
Interest-bearing liabilities 631,034 619,044 611,099
Stockholders' equity $70,195 81,740 78,747
PERIOD-END BALANCE SHEET DATA
Commercial loans, net $218,918 216,620 211,700
Consumer loans, net 263,455 271,578 268,782
Loans, net 482,373 488,198 480,482
Goodwill and other intangible assets
Goodwill 18,353 36,993 43,068
Deposit base 492 531 573
Customer relationships 1,276 1,321 1,375
Tradename 90 90 90
Total assets 764,378 812,433 808,575
Core deposits 370,054 400,387 398,562
Total deposits 418,840 447,790 444,964
Stockholders' equity $50,003 75,127 77,992
(a) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 11, $414 million, $128 million, $123
million, $108 million and $22 million in the third, second and first
quarters of 2008, and in the fourth and third quarters of 2007,
respectively, of after-tax net merger-related and restructuring
expenses, $18.7 billion and $6.1 billion in the third and second
quarters of 2008, respectively, 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 11 for the most directly comparable GAAP financial measure
and pages 24 through 26 for a more detailed reconciliation.
(c) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 11, $62 million, $66 million, $64
million, $64 million and $60 million in the third, second and first
quarters of 2008, and in the fourth and third 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
OTHER FINANCIAL DATA
(Unaudited)
2007
Fourth Third
(In millions) Quarter Quarter
EARNINGS EXCLUDING
MERGER-RELATED AND
RESTRUCTURING EXPENSES,
GOODWILL IMPAIRMENT
AND DISCONTINUED
OPERATIONS (a) (b)
Return on average common
stockholders' equity 1.62 % 9.81
Return on average assets 0.16 0.94
Overhead efficiency ratio 75.48 59.73
Overhead efficiency ratio
excluding brokerage 74.54 % 56.82
Operating leverage $(1,208) (843)
EARNINGS EXCLUDING
MERGER-RELATED AND
RESTRUCTURING EXPENSES,
GOODWILL IMPAIRMENT, OTHER
INTANGIBLE AMORTIZATION
AND DISCONTINUED
OPERATIONS (a) (b) (c)
Dividend payout ratio on
common shares 355.56 % 68.09
Return on average tangible common
stockholders' equity 5.05 23.88
Return on average tangible assets 0.20 1.03
Overhead efficiency ratio 73.97 58.51
Overhead efficiency ratio
excluding brokerage 72.43 % 55.32
Operating leverage $(1,187) (855)
OTHER FINANCIAL DATA
Net interest margin 2.88 % 2.92
Fee and other income as % of total revenue 36.99 39.02
Effective income tax rate (d) 122.05 27.33
Effective tax rate (Tax-equivalent) (d) (e) 127.17 % 28.38
AVERAGE BALANCE SHEET DATA
Commercial loans, net $188,164 174,672
Consumer loans, net 261,641 255,129
Loans, net 449,805 429,801
Earning assets 650,140 628,773
Total assets 763,487 729,004
Core deposits 390,043 379,009
Total deposits 437,566 416,107
Interest-bearing liabilities 599,130 574,399
Stockholders' equity $73,986 69,857
PERIOD-END BALANCE SHEET DATA
Commercial loans, net $198,566 189,545
Consumer loans, net 263,388 259,661
Loans, net 461,954 449,206
Goodwill and other intangible assets
Goodwill 43,122 38,848
Deposit base 619 670
Customer relationships 1,410 620
Tradename 90 90
Total assets 782,896 754,168
Core deposits 397,405 377,865
Total deposits 449,129 421,937
Stockholders' equity $76,872 70,140
(a) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 11, $414 million, $128 million, $123
million, $108 million and $22 million in the third, second and first
quarters of 2008, and in the fourth and third quarters of 2007,
respectively, of after-tax net merger-related and restructuring
expenses, $18.7 billion and $6.1 billion in the third and second
quarters of 2008, respectively, 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 11 for the most directly comparable GAAP financial measure
and pages 24 through 26 for a more detailed reconciliation.
(c) These financial measures are calculated by excluding from GAAP net
income (loss) presented on page 11, $62 million, $66 million, $64
million, $64 million and $60 million in the third, second and first
quarters of 2008, and in the fourth and third 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 13
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
2008
(In millions, Third Second First
except per share data) Quarter Quarter Quarter
INTEREST INCOME
Interest and fees on loans $6,972 6,187 7,577
Interest and dividends on securities 1,521 1,530 1,496
Trading account interest 415 522 571
Other interest income 492 407 535
Total interest income 9,400 8,646 10,179
INTEREST EXPENSE
Interest on deposits 2,231 2,176 2,941
Interest on short-term borrowings 389 418 523
Interest on long-term debt 1,789 1,762 1,963
Total interest expense 4,409 4,356 5,427
Net interest income 4,991 4,290 4,752
Provision for credit losses 6,629 5,567 2,831
Net interest income (loss) after
provision for credit losses (1,638) (1,277) 1,921
FEE AND OTHER INCOME
Service charges 717 709 676
Other banking fees 525 518 498
Commissions 799 910 914
Fiduciary and asset management fees 1,291 1,355 1,439
Advisory, underwriting and other
investment banking fees 243 280 261
Trading account profits (losses) (701) (510) (308)
Principal investing (310) 136 446
Securities gains (losses) (1,978) (808) (205)
Other income 147 575 (944)
Total fee and other income 733 3,165 2,777
NONINTEREST EXPENSE
Salaries and employee benefits 3,489 3,435 3,260
Occupancy 381 377 379
Equipment 325 317 323
Marketing 68 95 97
Communications and supplies 173 184 186
Professional and consulting fees 242 218 196
Goodwill impairment 18,786 6,060 -
Other intangible amortization 96 97 103
Merger-related and restructuring
expenses 697 251 241
Sundry expense 1,288 1,750 656
Total noninterest expense 25,545 12,784 5,441
Minority interest in income of
consolidated subsidiaries (105) (18) 155
Income (loss) from continuing
operations before income taxes
(benefits) (26,345) (10,878) (898)
Income taxes (benefits) (2,647) (1,963) (234)
Income (loss) from continuing
operations (23,698) (8,915) (664)
Discontinued operations,
net of income taxes - - -
Net income (loss) (23,698) (8,915) (664)
Dividends on preferred stock 191 193 43
Net income (loss) available to
common stockholders $(23,889) (9,108) (707)
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Income (loss) from continuing
operations $(11.18) (4.31) (0.36)
Net income (loss) available
to common stockholders (11.18) (4.31) (0.36)
Diluted earnings (a)
Income (loss) from continuing
operations (11.18) (4.31) (0.36)
Net income (loss) available to
common stockholders (11.18) (4.31) (0.36)
Cash dividends $0.05 0.38 0.64
AVERAGE COMMON SHARES
Basic 2,137 2,111 1,963
Diluted 2,143 2,119 1,977
(a) Calculated using average basic common shares in 2008.
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
2007
(In millions, Fourth Third
except per share data) Quarter Quarter
INTEREST INCOME
Interest and fees on loans $7,980 7,937
Interest and dividends on securities 1,616 1,529
Trading account interest 557 566
Other interest income 757 799
Total interest income 10,910 10,831
INTEREST EXPENSE
Interest on deposits 3,433 3,334
Interest on short-term borrowings 673 801
Interest on long-term debt 2,174 2,145
Total interest expense 6,280 6,280
Net interest income 4,630 4,551
Provision for credit losses 1,497 408
Net interest income (loss) after
provision for credit losses 3,133 4,143
FEE AND OTHER INCOME
Service charges 716 689
Other banking fees 497 471
Commissions 970 600
Fiduciary and asset management fees 1,436 1,029
Advisory, underwriting and other
investment banking fees 249 393
Trading account profits (losses) (524) (301)
Principal investing 41 372
Securities gains (losses) (320) (34)
Other income (321) (286)
Total fee and other income 2,744 2,933
NONINTEREST EXPENSE
Salaries and employee benefits 3,468 2,628
Occupancy 375 325
Equipment 334 283
Marketing 80 74
Communications and supplies 191 176
Professional and consulting fees 271 194
Goodwill impairment - -
Other intangible amortization 111 92
Merger-related and restructuring
expenses 187 36
Sundry expense 769 717
Total noninterest expense 5,786 4,525
Minority interest in income of
consolidated subsidiaries 107 189
Income (loss) from continuing operations
before income taxes (benefits) (16) 2,362
Income taxes (benefits) (209) 656
Income (loss) from continuing operations 193 1,706
Discontinued operations, net of
income taxes (142) (88)
Net income (loss) 51 1,618
Dividends on preferred stock - -
Net income (loss) available to common
stockholders $51 1,618
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Income (loss) from continuing
operations $0.10 0.91
Net income (loss) available
to common stockholders 0.03 0.86
Diluted earnings (a)
Income (loss) from continuing
operations 0.10 0.90
Net income (loss) available
to common stockholders 0.03 0.85
Cash dividends $0.64 0.64
AVERAGE COMMON SHARES
Basic 1,959 1,885
Diluted 1,983 1,910
(a) Calculated using average basic common shares in 2008.
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended
September 30,
(In millions,
except per share data) 2008 2007
INTEREST INCOME
Interest and fees on loans $20,736 23,278
Interest and dividends on securities 4,547 4,481
Trading account interest 1,508 1,505
Other interest income 1,434 2,057
Total interest income 28,225 31,321
INTEREST EXPENSE
Interest on deposits 7,348 9,528
Interest on short-term borrowings 1,330 2,176
Interest on long-term debt 5,514 6,117
Total interest expense 14,192 17,821
Net interest income 14,033 13,500
Provision for credit losses 15,027 764
Net interest income (loss) after
provision for credit losses (994) 12,736
FEE AND OTHER INCOME
Service charges 2,102 1,970
Other banking fees 1,541 1,336
Commissions 2,623 1,908
Fiduciary and asset management fees 4,085 2,997
Advisory, underwriting and other
investment banking fees 784 1,254
Trading account profits (losses) (1,519) 22
Principal investing 272 718
Securities gains (losses) (2,991) 42
Other income (222) 660
Total fee and other income 6,675 10,907
NONINTEREST EXPENSE
Salaries and employee benefits 10,184 8,722
Occupancy 1,137 968
Equipment 965 899
Marketing 260 214
Communications and supplies 543 527
Professional and consulting fees 656 576
Goodwill impairment 24,846 -
Other intangible amortization 296 313
Merger-related and restructuring expenses 1,189 78
Sundry expense 3,694 1,739
Total noninterest expense 43,770 14,036
Minority interest in income of
consolidated subsidiaries 32 464
Income (loss) before income taxes
(benefits) (38,121) 9,143
Income taxes (benefits) (4,844) 2,794
Income (loss) from continuing operations (33,277) 6,349
Discontinued operations, net of
income taxes - (88)
Net income (loss) (33,277) 6,261
Dividends on preferred stock 427 -
Net income (loss) available to common
stockholders $(33,704) 6,349
PER COMMON SHARE DATA
(after preferred stock dividends)
Basic earnings
Income (loss) from continuing
operations $(16.28) 3.36
Net income (loss) available to common
stockholders (16.28) 3.31
Diluted earnings (a)
Income (loss) from continuing
operations (16.28) 3.31
Net income (loss) available to common
stockholders (16.28) 3.26
Cash dividends $1.07 1.76
AVERAGE COMMON SHARES
Basic 2,070 1,890
Diluted 2,080 1,918
(a) Calculated using average basic common shares in 2008.
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended September 30, 2008
Corporate
Wealth and
General Manage- Investment
(In millions) Bank ment Bank
CONSOLIDATED
Net interest income (a) $3,763 194 1,043
Fee and other income 1,003 192 (416)
Intersegment revenue 50 2 (57)
Total revenue (a) 4,816 388 570
Provision for credit losses 1,340 8 525
Noninterest expense 2,127 246 1,154
Minority interest - - -
Income taxes (benefits) 482 50 (423)
Tax-equivalent adjustment 10 - 17
Net income (loss) 857 84 (703)
Dividends on preferred stock - - -
Net income (loss) available
to common stockholders $857 84 (703)
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended September 30, 2008
Capital
Manage-
(In millions) ment Parent
CONSOLIDATED
Net interest income (a) $388 (349)
Fee and other income 968 (1,014)
Intersegment revenue 4 1
Total revenue (a) 1,360 (1,362)
Provision for credit losses 1 4,755
Noninterest expense 2,145 390
Minority interest - (71)
Income taxes (benefits) (287) (2,149)
Tax-equivalent adjustment - 21
Net income (loss) (499) (4,308)
Dividends on preferred stock - 191
Net income (loss) available
to common stockholders $(499) (4,499)
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended September 30, 2008
Goodwill
Impairment,
Net Merger-
Related
and
Restructuring
(In millions) Expenses (b) Total
CONSOLIDATED
Net interest income (a) $(48) 4,991
Fee and other income - 733
Intersegment revenue - -
Total revenue (a) (48) 5,724
Provision for credit losses - 6,629
Noninterest expense 19,483 25,545
Minority interest (34) (105)
Income taxes (benefits) (320) (2,647)
Tax-equivalent adjustment (48) -
Net income (loss) (19,129) (23,698)
Dividends on preferred stock - 191
Net income (loss) available
to common stockholders $(19,129) (23,889)
PAGE 15
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) $3,697 201 1,132
Fee and other income 1,000 208 656
Intersegment revenue 57 3 (52)
Total revenue (a) 4,754 412 1,736
Provision for credit losses 922 5 438
Noninterest expense 2,061 252 963
Minority interest - - -
Income taxes (benefits) 637 57 104
Tax-equivalent adjustment 10 - 19
Net Income (loss) 1,124 98 212
Dividends on preferred stock - - -
Net income (loss) available
to common stockholders $1,124 98 212
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended June 30, 2008
Capital
Manage-
(In millions) ment Parent
CONSOLIDATED
Net interest income (a) $308 (994)
Fee and other income 1,995 (694)
Intersegment revenue (8) -
Total revenue (a) 2,295 (1,688)
Provision for credit losses - 4,202
Noninterest expense 2,328 869
Minority interest - 26
Income taxes (benefits) (13) (2,666)
Tax-equivalent adjustment 1 24
Net Income (loss) (21) (4,143)
Dividends on preferred stock - 193
Net income (loss) available
to common stockholders $(21) (4,336)
PAGE 15
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 12,784
Minority interest (44) (18)
Income taxes (benefits) (82) (1,963)
Tax-equivalent adjustment (54) -
Net Income (loss) (6,185) (8,915)
Dividends on preferred stock - 193
Net income (loss) available
to common stockholders $(6,185) (9,108)
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended September 30, 2007
Corporate
Wealth and
General Manage- Investment
(In millions) Bank ment Bank
CONSOLIDATED
Net interest income (a) $3,466 184 838
Fee and other income 935 184 176
Intersegment revenue 59 4 (52)
Total revenue (a) 4,460 372 962
Provision for credit losses 207 6 1
Noninterest expense 1,898 240 626
Minority interest - - -
Income taxes (benefits) 849 46 114
Tax-equivalent adjustment 11 - 9
Income (loss) from continuing
operations 1,495 80 212
Discontinued operations, net of
income taxes - - -
Net income (loss) $1,495 80 212
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended September 30, 2007
Capital
Manage-
(In millions) ment Parent
CONSOLIDATED
Net interest income (a) $268 (172)
Fee and other income 1,444 194
Intersegment revenue (8) (3)
Total revenue (a) 1,704 19
Provision for credit losses - 194
Noninterest expense 1,241 484
Minority interest - 189
Income taxes (benefits) 169 (508)
Tax-equivalent adjustment - 13
Income (loss) from continuing
operations 294 (353)
Discontinued operations,
net of income taxes - (88)
Net income (loss) $294 (441)
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended September 30, 2007
Net Merger-
Related
and
Restructuring
(In millions) Expenses (b) Total
CONSOLIDATED
Net interest income (a) $(33) 4,551
Fee and other income - 2,933
Intersegment revenue - -
Total revenue (a) (33) 7,484
Provision for credit losses - 408
Noninterest expense 36 4,525
Minority interest - 189
Income taxes (benefits) (14) 656
Tax-equivalent adjustment (33) -
Income (loss) from continuing
operations (22) 1,706
Discontinued operations,
net of income taxes - (88)
Net income (loss) $(22) 1,618
(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.
ADD: /SECOND AND FINAL ADD -- CLW004 -- Wachovia Corporation/
PAGE 17
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANS - ON-BALANCE SHEET, AND
MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
2008
Third Second First
(In millions) Quarter Quarter Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and
agricultural $128,411 122,628 119,193
Real estate - construction and other 17,824 18,629 18,597
Real estate - mortgage 27,970 27,191 26,370
Lease financing 23,725 24,605 23,637
Foreign 32,344 35,168 33,616
Total commercial 230,274 228,221 221,413
CONSUMER
Real estate secured 224,842 230,520 230,197
Student loans 10,335 9,945 9,324
Installment loans 26,433 29,261 27,437
Total consumer 261,610 269,726 266,958
Total loans 491,884 497,947 488,371
Unearned income (9,511) (9,749) (7,889)
Loans, net (On-balance sheet) $482,373 488,198 480,482
MANAGED PORTFOLIO (a) (b)
COMMERCIAL
On-balance sheet loan portfolio $230,274 228,221 221,413
Securitized loans - off-balance sheet 100 105 120
Loans held for sale 1,290 2,224 3,342
Total commercial 231,664 230,550 224,875
CONSUMER
Real estate secured
On-balance sheet loan portfolio 224,842 230,520 230,197
Securitized loans - off-balance sheet 5,641 6,337 6,845
Securitized loans included in
securities 13,081 14,918 11,683
Loans held for sale 2,491 3,415 5,960
Total real estate secured 246,055 255,190 254,685
Student
On-balance sheet loan portfolio 10,335 9,945 9,324
Securitized loans - off-balance sheet 2,700 2,721 2,772
Securitized loans included in
securities 52 52 52
Loans held for sale 1,280 - -
Total student 14,367 12,718 12,148
Installment
On-balance sheet loan portfolio 26,433 29,261 27,437
Securitized loans - off-balance sheet 1,410 1,630 1,968
Securitized loans included in
securities 23 28 39
Loans held for sale 4,186 2,791 2,127
Total installment 32,052 33,710 31,571
Total consumer 292,474 301,618 298,404
Total managed portfolio $524,138 532,168 523,279
SERVICING PORTFOLIO (b) (c)
Commercial $339,790 351,277 354,624
Consumer $33,732 29,100 27,415
(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 third quarter of
2008 have been reclassified to conform to the presentation in the
third 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 17
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANS - ON-BALANCE SHEET, AND
MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
2007
Fourth Third
(In millions) Quarter Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and agricultural $112,509 109,269
Real estate - construction and other 18,543 18,167
Real estate - mortgage 23,846 21,514
Lease financing 23,913 23,966
Foreign 29,540 26,471
Total commercial 208,351 199,387
CONSUMER
Real estate secured 227,719 225,355
Student loans 8,149 7,742
Installment loans 25,635 24,763
Total consumer 261,503 257,860
Total loans 469,854 457,247
Unearned income (7,900) (8,041)
Loans, net (On-balance sheet) $461,954 449,206
MANAGED PORTFOLIO (a) (b)
COMMERCIAL
On-balance sheet loan portfolio $208,351 199,387
Securitized loans - off-balance sheet 131 142
Loans held for sale 9,414 13,905
Total commercial 217,896 213,434
CONSUMER
Real estate secured
On-balance sheet loan portfolio 227,719 225,355
Securitized loans - off-balance sheet 7,230 7,625
Securitized loans included in securities 10,755 5,963
Loans held for sale 4,816 3,583
Total real estate secured 250,520 242,526
Student
On-balance sheet loan portfolio 8,149 7,742
Securitized loans - off-balance sheet 2,811 2,856
Securitized loans included in securities 52 52
Loans held for sale - 1,968
Total student 11,012 12,618
Installment
On-balance sheet loan portfolio 25,635 24,763
Securitized loans - off-balance sheet 2,263 2,572
Securitized loans included in securities 47 55
Loans held for sale 2,542 1,975
Total installment 30,487 29,365
Total consumer 292,019 284,509
Total managed portfolio $509,915 497,943
SERVICING PORTFOLIO (b) (c)
Commercial $353,464 337,721
Consumer $27,523 28,015
(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 third quarter of
2008 have been reclassified to conform to the presentation in the
third 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 18
WACHOVIA CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES
(Unaudited)
2008
Third Second First
(In millions) Quarter Quarter Quarter
ALLOWANCE FOR CREDIT LOSSES (a)
Balance, beginning of period $10,956 6,767 4,717
Provision for credit losses 6,570 5,504 2,834
Provision for credit losses relating
to loans transferred to loans held
for sale or sold 17 51 7
Provision for credit losses for
unfunded lending commitments 42 12 (10)
LOAN LOSSES
Commercial, financial and
agricultural (286) (254) (171)
Commercial real estate -
construction and mortgage (279) (216) (81)
Total commercial (565) (470) (252)
Real estate secured (1,087) (700) (351)
Student loans (29) (3) (3)
Installment and other loans (b) (299) (230) (242)
Total consumer (1,415) (933) (596)
Total loan losses (1,980) (1,403) (848)
LOAN RECOVERIES
Commercial, financial and
agricultural 16 15 14
Commercial real estate -
construction and mortgage 2 - 1
Total commercial 18 15 15
Real estate secured 27 18 10
Student loans 1 1 1
Installment and other loans (b) 62 60 57
Total consumer 90 79 68
Total loan recoveries 108 94 83
Net charge-offs (1,872) (1,309) (765)
Allowance relating to loans
acquired, transferred to loans
held for sale or sold (108) (69) (16)
Balance, end of period $15,605 10,956 6,767
ALLOWANCE FOR CREDIT LOSSES
Allowance for loan losses $15,351 10,744 6,567
Reserve for unfunded lending commitments 254 212 200
Total allowance for credit losses $15,605 10,956 6,767
ALLOWANCE FOR LOAN LOSSES
as % of loans, net 3.18 % 2.20 1.37
as % of nonaccrual and
restructured loans (c) 109 95 84
as % of nonperforming assets (c) 102 90 78
ALLOWANCE FOR CREDIT LOSSES
as % of loans, net 3.24 % 2.24 1.41
NET CHARGE-OFFS AS % OF
AVERAGE LOANS, NET (d)
Commercial, financial and
agricultural 0.66 % 0.60 0.41
Commercial real estate -
construction and mortgage 2.41 1.89 0.73
Total commercial 1.05 0.88 0.48
Real estate secured 1.85 1.18 0.59
Student loans 1.03 0.07 0.08
Installment and other loans (b) 3.18 2.36 2.76
Total consumer 1.97 1.26 0.79
Total as % of average loans, net 1.57 % 1.10 0.66
CONSUMER REAL ESTATE SECURED
NET CHARGE-OFFS
First lien (952) (592) (291)
Second lien (108) (90) (50)
Total consumer real estate secured
net charge-offs (1,060) (682) (341)
(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 18
WACHOVIA CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES
(Unaudited)
2007
Fourth Third
(In millions) Quarter Quarter
ALLOWANCE FOR CREDIT LOSSES (a)
Balance, beginning of period $3,691 3,552
Provision for credit losses 1,467 381
Provision for credit losses relating to
loans transferred to loans held for
sale or sold 6 3
Provision for credit losses for
unfunded lending commitments 24 24
LOAN LOSSES
Commercial, financial and agricultural (67) (41)
Commercial real estate -
construction and mortgage (117) (5)
Total commercial (184) (46)
Real estate secured (156) (59)
Student loans (4) (5)
Installment and other loans (b) (225) (168)
Total consumer (385) (232)
Total loan losses (569) (278)
LOAN RECOVERIES
Commercial, financial and agricultural 22 9
Commercial real estate -
construction and mortgage - 3
Total commercial 22 12
Real estate secured 9 12
Student loans 2 3
Installment and other loans (b) 75 45
Total consumer 86 60
Total loan recoveries 108 72
Net charge-offs (461) (206)
Allowance relating to loans acquired,
transferred to loans held for
sale or sold (10) (63)
Balance, end of period $4,717 3,691
ALLOWANCE FOR CREDIT LOSSES
Allowance for loan losses $4,507 3,505
Reserve for unfunded lending commitments 210 186
Total allowance for credit losses $4,717 3,691
ALLOWANCE FOR LOAN LOSSES
as % of loans, net 0.98 % 0.78
as % of nonaccrual and restructured
loans (c) 90 129
as % of nonperforming assets (c) 84 115
ALLOWANCE FOR CREDIT LOSSES
as % of loans, net 1.02 % 0.82
NET CHARGE-OFFS AS % OF
AVERAGE LOANS, NET (d)
Commercial, financial and agricultural 0.12 % 0.10
Commercial real estate -
construction and mortgage 1.12 0.02
Total commercial 0.34 0.08
Real estate secured 0.26 0.08
Student loans 0.10 0.14
Installment and other loans (b) 2.35 1.99
Total consumer 0.46 0.27
Total as % of average loans, net 0.41 % 0.19
CONSUMER REAL ESTATE SECURED
NET CHARGE-OFFS
First lien (122) (32)
Second lien (25) (15)
Total consumer real estate secured
net charge-offs (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 19
WACHOVIA CORPORATION AND SUBSIDIARIES
NONPERFORMING ASSETS
(Unaudited)
2008
Third Second First
(In millions) Quarter Quarter Quarter
NONPERFORMING ASSETS
Nonaccrual loans
Commercial
Commercial, financial and
agricultural $1,298 1,229 908
Commercial real estate -
construction and mortgage 2,836 2,203 1,750
Total commercial 4,134 3,432 2,658
Consumer
Real estate secured
First lien 9,197 7,430 5,015
Second lien 110 147 75
Installment and other loans (a) 35 40 40
Total consumer 9,342 7,617 5,130
Total nonaccrual loans 13,476 11,049 7,788
Troubled debt restructurings (b) 646 248 48
Foreclosed properties 860 631 530
Total nonperforming assets $14,982 11,928 8,366
as % of loans, net, and foreclosed
properties (c) 3.10 % 2.44 1.74
Nonperforming loans included in
loans held for sale
Commercial $21 56 -
Consumer 5 7 5
Total nonaccrual loans 26 63 5
Foreclosed properties - - -
Total nonperforming assets
included in loans held for
sale 26 63 5
Nonperforming assets included in
loans and in loans held for sale $15,008 11,991 8,371
as % of loans, net, foreclosed
properties and loans held
for sale (d) 3.05 % 2.41 1.70
PAST DUE LOANS 90 DAYS AND OVER,
AND NONACCRUAL LOANS (c)
Accruing loans past due 90 days
and over $1,119 1,101 866
Nonaccrual loans 13,476 11,049 7,788
Total past due loans 90 days
and over, and nonaccrual
loans $14,595 12,150 8,654
Commercial as % of loans, net 1.96 % 1.69 1.31
Consumer as % of loans, net 3.91 % 3.12 2.19
(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 19
WACHOVIA CORPORATION AND SUBSIDIARIES
NONPERFORMING ASSETS
(Unaudited)
2007
Fourth Third
(In millions) Quarter Quarter
NONPERFORMING ASSETS
Nonaccrual loans
Commercial
Commercial, financial and
agricultural $602 354
Commercial real estate -
construction and mortgage 1,059 289
Total commercial 1,661 643
Consumer
Real estate secured
First lien 3,234 1,986
Second lien 58 41
Installment and other loans (a) 42 45
Total consumer 3,334 2,072
Total nonaccrual loans 4,995 2,715
Troubled debt restructurings (b) - -
Foreclosed properties 389 334
Total nonperforming assets $5,384 3,049
as % of loans, net, and foreclosed
properties (c) 1.16 % 0.68
Nonperforming loans included in
loans held for sale
Commercial $- -
Consumer 62 50
Total nonaccrual loans 62 50
Foreclosed properties - 9
Total nonperforming assets included
in loans held for sale 62 59
Nonperforming assets included in
loans and in loans held for sale $5,446 3,108
as % of loans, net, foreclosed
properties and loans held
for sale (d) 1.14 % 0.66
PAST DUE LOANS 90 DAYS AND OVER,
AND NONACCRUAL LOANS (c)
Accruing loans past due 90
days and over $708 590
Nonaccrual loans 4,995 2,715
Total past due loans 90 days
and over, and nonaccrual loans $5,703 3,305
Commercial as % of loans, net 0.89 % 0.38
Consumer as % of loans, net 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 20
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
2008
(In millions, Third Second First
except per share data) Quarter Quarter Quarter
ASSETS
Cash and due from banks $22,233 15,127 14,703
Interest-bearing bank balances 2,287 10,289 3,236
Federal funds sold and securities
purchased under resale agreements 9,900 21,923 10,644
Total cash and cash
equivalents 34,420 47,339 28,583
Trading account assets 56,000 62,589 72,592
Securities 107,693 113,461 114,183
Loans, net of unearned income 482,373 488,198 480,482
Allowance for loan losses (15,351) (10,744) (6,567)
Loans, net 467,022 477,454 473,915
Loans held for sale 9,247 8,430 11,429
Premises and equipment 7,031 6,667 6,733
Due from customers on acceptances 664 1,302 1,109
Goodwill 18,353 36,993 43,068
Other intangible assets 1,858 1,942 2,038
Other assets 62,090 56,256 54,925
Total assets $764,378 812,433 808,575
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits 55,752 63,393 60,951
Interest-bearing deposits 363,088 384,397 384,013
Total deposits 418,840 447,790 444,964
Short-term borrowings 67,867 55,448 57,857
Bank acceptances outstanding 673 1,307 1,118
Trading account liabilities 18,388 26,305 28,887
Other liabilities 22,274 19,023 19,036
Long-term debt 183,350 184,401 175,653
Total liabilities 711,392 734,274 727,515
Minority interest in net assets of
consolidated subsidiaries 2,983 3,032 3,068
STOCKHOLDERS' EQUITY
Preferred stock, Class A, 40
million shares, no par value;
10 million shares, no par value;
none issued - - -
Dividend Equalization Preferred
shares, no par value, 97 million
shares issued and outstanding
at September 30, 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
September 30, 2008 2,300 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 September 30, 2008 3,500 3,500 3,500
Non-Cumulative Perpetual Convertible
Class A Preferred Stock, Series L,
$1,000 liquidation preference
per share, 4.025 million shares issued
and outstanding at
September 30, 2008 4,025 4,025 -
Common stock, $3.33-1/3 par value;
authorized 3 billion shares,
outstanding 2.137 billion shares
at September 30, 2008 7,124 7,121 6,551
Paid-in capital 59,883 59,797 56,367
Retained earnings (accumulated
deficit) (22,465) 1,534 11,449
Accumulated other comprehensive
income, net (4,364) (3,150) (2,175)
Total stockholders' equity 50,003 75,127 77,992
Total liabilities and
stockholders' equity $764,378 812,433 808,575
PAGE 20
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
2007
(In millions, Fourth Third
except per share data) Quarter Quarter
ASSETS
Cash and due from banks $15,124 12,681
Interest-bearing bank balances 3,057 4,449
Federal funds sold and securities
purchased under resale agreements 15,449 11,995
Total cash and cash equivalents 33,630 29,125
Trading account assets 55,882 54,835
Securities 115,037 111,827
Loans, net of unearned income 461,954 449,206
Allowance for loan losses (4,507) (3,505)
Loans, net 457,447 445,701
Loans held for sale 16,772 21,431
Premises and equipment 6,605 6,002
Due from customers on acceptances 1,418 1,295
Goodwill 43,122 38,848
Other intangible assets 2,119 1,380
Other assets 50,864 43,724
Total assets $782,896 754,168
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits 60,893 56,825
Interest-bearing deposits 388,236 365,112
Total deposits 449,129 421,937
Short-term borrowings 50,393 62,714
Bank acceptances outstanding 1,424 1,303
Trading account liabilities 21,585 17,771
Other liabilities 19,151 18,424
Long-term debt 161,007 158,584
Total liabilities 702,689 680,733
Minority interest in net assets of
consolidated subsidiaries 3,335 3,295
STOCKHOLDERS' EQUITY
Preferred stock, Class A, 40 million
shares, no par value; 10 million shares,
no par value; none issued - -
Dividend Equalization Preferred shares,
no par value, 97 million shares
issued and outstanding at
September 30, 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 September 30, 2008 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 September 30, 2008 - -
Non-Cumulative Perpetual Convertible
Class A Preferred Stock, Series L,
$1,000 liquidation preference
per share, 4.025 million shares issued
and outstanding at September 30, 2008 - -
Common stock, $3.33-1/3 par value;
authorized 3 billion shares, outstanding
2.137 billion shares at
September 30, 2008 6,534 6,283
Paid-in capital 56,149 51,938
Retained earnings (accumulated deficit) 13,456 14,670
Accumulated other comprehensive income,
net (1,567) (2,751)
Total stockholders' equity 76,872 70,140
Total liabilities and stockholders'
equity $782,896 754,168
PAGE 21
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
THIRD QUARTER 2008
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank balances $12,247 77 2.51 %
Federal funds sold and securities
purchased under resale agreements 18,556 120 2.57
Trading account assets 36,715 431 4.70
Securities 120,481 1,598 5.30
Loans
Commercial
Commercial, financial
and agricultural 122,576 1,525 4.95
Real estate - construction
and other 18,438 189 4.09
Real estate - mortgage 27,577 347 5.00
Lease financing (a) 6,368 108 6.74
Foreign 33,947 351 4.12
Total commercial 208,906 2,520 4.80
Consumer
Real estate secured 228,736 3,479 6.08
Student loans 10,880 106 3.87
Installment loans 29,963 710 9.43
Total consumer 269,579 4,295 6.36
Total loans 478,485 6,815 5.68
Loans held for sale 8,416 152 7.22
Other earning assets 11,044 133 4.78
Total earning assets
excluding derivatives 685,944 9,326 5.43
Risk management derivatives (b) - 122 0.07
Total earning assets
including derivatives 685,944 9,448 5.50
Cash and due from banks 12,250
Other assets 93,713
Total assets $791,907
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 79,077 124 0.63
Money market accounts 127,097 450 1.41
Other consumer time 128,595 1,187 3.67
Foreign 24,654 190 3.06
Other time 30,029 256 3.40
Total interest-bearing
deposits 389,452 2,207 2.25
Federal funds purchased and
securities sold under
repurchase agreements 39,429 245 2.47
Commercial paper 4,421 17 1.46
Securities sold short 6,068 55 3.56
Other short-term borrowings 8,280 32 1.68
Long-term debt 183,384 1,810 3.94
Total interest-bearing
liabilities excluding
derivatives 631,034 4,366 2.76
Risk management derivatives (b) - 43 0.02
Total interest-bearing
liabilities including
derivatives 631,034 4,409 2.78
Noninterest-bearing deposits 57,540
Other liabilities 33,138
Stockholders' equity 70,195
Total liabilities and
stockholders' equity $791,907
Interest income and rate earned -
including derivatives $9,448 5.50 %
Interest expense and equivalent rate
paid - including derivatives 4,409 2.56
Net interest income and margin -
including derivatives $5,039 2.94 %
(a) Includes the effect of the $975 million leverage lease recalculation
in the second quarter of 2008.
(b) 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
NET INTEREST INCOME SUMMARIES
(Unaudited)
SECOND QUARTER 2008
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank balances $4,980 39 3.11 %
Federal funds sold and securities
purchased under resale agreements 13,075 81 2.51
Trading account assets 43,575 541 4.97
Securities 116,504 1,603 5.51
Loans
Commercial
Commercial, financial and
agricultural 120,693 1,493 4.98
Real estate - construction and other 18,849 204 4.35
Real estate - mortgage 26,730 338 5.08
Lease financing (a) 6,713 (857) -51.02
Foreign 33,219 360 4.34
Total commercial 206,204 1,538 3.01
Consumer
Real estate secured 231,754 3,715 6.42
Student loans 9,887 108 4.41
Installment loans 28,889 686 9.55
Total consumer 270,530 4,509 6.68
Total loans 476,734 6,047 5.09
Loans held for sale 9,141 141 6.17
Other earning assets 11,080 136 4.94
Total earning assets
excluding derivatives 675,089 8,588 5.10
Risk management derivatives (b) - 112 0.07
Total earning assets
including derivatives 675,089 8,700 5.17
Cash and due from banks 11,472
Other assets 109,876
Total assets $796,437
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 86,317 137 0.64
Money market accounts 132,792 504 1.53
Other consumer time 113,579 1,145 4.05
Foreign 25,913 191 2.97
Other time 18,965 181 3.83
Total interest-bearing
deposits 377,566 2,158 2.30
Federal funds purchased and
securities sold under
repurchase agreements 43,288 274 2.54
Commercial paper 5,186 20 1.61
Securities sold short 6,243 53 3.42
Other short-term borrowings 9,288 33 1.34
Long-term debt 177,473 1,737 3.93
Total interest-bearing
liabilities excluding
derivatives 619,044 4,275 2.77
Risk management derivatives (b) - 81 0.06
Total interest-bearing
liabilities including
derivatives 619,044 4,356 2.83
Noninterest-bearing deposits 57,982
Other liabilities 37,671
Stockholders' equity 81,740
Total liabilities and
stockholders' equity $796,437
Interest income and rate earned -
including derivatives $8,700 5.17 %
Interest expense and equivalent
rate paid - including derivatives $4,356 2.59
Net interest income and margin -
including derivatives $4,344 2.58 %
(a) Includes the effect of the $975 million leverage lease recalculation
in the second quarter of 2008.
(b) 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 22
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 (a) 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 (b) - 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 (b) - 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) Includes the effect of the $975 million leverage lease recalculation
in the second quarter of 2008.
(b) 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 22
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 (a) 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 (b) - 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 (b) - 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) Includes the effect of the $975 million leverage lease recalculation
in the second quarter of 2008.
(b) 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 22
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 (a) 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 (b) - 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 (b) - 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) Includes the effect of the $975 million leverage lease recalculation
in the second quarter of 2008.
(b) 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 23
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
NINE MONTHS ENDED
September 30, 2008
Average
Interest Rates
Average Income/ Earned/
(In millions) Balances Expense Paid
ASSETS
Interest-bearing bank balances $7,179 167 3.11 %
Federal funds sold and securities
purchased under resale agreements 14,514 304 2.80
Trading account assets 41,630 1,561 5.00
Securities 115,812 4,746 5.47
Loans
Commercial
Commercial, financial
and agricultural 119,560 4,689 5.24
Real estate - construction
and other 18,640 644 4.62
Real estate - mortgage 26,536 1,059 5.33
Lease financing (a) 6,748 (609) (12.04)
Foreign 33,095 1,100 4.44
Total commercial 204,579 6,883 4.49
Consumer
Real estate secured 230,620 11,120 6.43
Student loans 9,977 327 4.38
Installment loans 28,560 2,055 9.61
Total consumer 269,157 13,502 6.69
Total loans 473,736 20,385 5.74
Loans held for sale 9,712 516 7.08
Other earning assets 10,818 415 5.12
Total earning assets
excluding derivatives 673,401 28,094 5.57
Risk management derivatives (b) - 286 0.05
Total earning assets
including derivatives 673,401 28,380 5.62
Cash and due from banks 11,791
Other assets 105,458
Total assets $790,650
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 83,931 497 0.79
Money market accounts 129,313 1,701 1.76
Other consumer time 121,967 3,769 4.13
Foreign 25,585 612 3.20
Other time 23,902 702 3.92
Total interest-bearing
deposits 384,698 7,281 2.53
Federal funds purchased and
securities sold under
repurchase agreements 39,557 827 2.79
Commercial paper 5,036 75 1.98
Securities sold short 6,409 170 3.54
Other short-term borrowings 9,236 110 1.60
Long-term debt 175,495 5,508 4.19
Total interest-bearing liabilities
excluding derivatives 620,431 13,971 3.01
Risk management derivatives (b) - 221 0.04
Total interest-bearing liabilities
including derivatives 620,431 14,192 3.05
Noninterest-bearing deposits 57,285
Other liabilities 36,064
Stockholders' equity 76,870
Total liabilities and
stockholders' equity $790,650
Interest income and rate earned -
including derivatives $28,380 5.62 %
Interest expense and equivalent
rate paid - including derivatives 14,192 2.81
Net interest income and margin -
including derivatives $14,188 2.81 %
(a) Includes the effect of the $975 million leverage lease recalculation
in the second quarter of 2008.
(b) 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 24
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008
(In millions, Third Second
except per share data) * Quarter Quarter
INCOME (LOSS) FROM CONTINUING
OPERATIONS
Net income (loss) (GAAP) A $(23,698) (8,915)
Discontinued operations,
net of income taxes (GAAP) - -
Income (loss) from continuing
operations (GAAP) (23,698) (8,915)
Merger-related and
restructuring expenses (GAAP) 414 128
Goodwill impairment (GAAP) 18,715 6,056
Earnings excluding merger-related
and restructuring expenses,
goodwill impairment and
discontinued operations B (4,569) (2,731)
Other intangible amortization
(GAAP) 62 66
Earnings excluding merger-related
and restructuring expenses,
goodwill impairment, other intangible
amortization and discontinued
operations C $(4,507) (2,665)
INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS
Net income (loss) available to
common stockholders (GAAP) D $(23,889) (9,108)
Discontinued operations,
net of income taxes (GAAP) - -
Income (loss) from continuing
operations available to
common stockholders (GAAP) (23,889) (9,108)
Merger-related and
restructuring expenses (GAAP) 414 128
Goodwill impairment (GAAP) 18,715 6,056
Earnings excluding merger-related
and restructuring expenses,
goodwill impairment,
and discontinued operations E (4,760) (2,924)
Other intangible amortization
(GAAP) 62 66
Net income (loss) available to
common stockholders, excluding
merger-related and
restructuring expenses,
goodwill impairment,
other intangible amortization
and discontinued operations F $(4,698) (2,858)
RETURN ON AVERAGE COMMON
STOCKHOLDERS' EQUITY
Average common stockholders'
equity (GAAP) G $60,370 72,579
Merger-related and
restructuring expenses (GAAP) 405 191
Goodwill impairment (GAAP) 9,106 998
Discontinued operations (GAAP) - -
Average common stockholders'
equity, excluding
merger-related and
restructuring expenses,
goodwill impairment and
discontinued operations H 69,881 73,768
Average intangible
assets (GAAP) I (38,694) (44,998)
Average tangible common
stockholders' equity,
excluding merger-related and
restructuring expenses,
goodwill impairment
and discontinued operations J $31,187 28,770
Return on average common
stockholders' equity
GAAP D/G (157.43)% (50.47)
Excluding merger-related and
restructuring expenses,
goodwill impairment and
discontinued operations E/H (27.11) (15.94)
Return on average tangible
common stockholders' equity
GAAP D/G+I (438.45) (132.82)
Excluding merger-related
and restructuring expenses,
goodwill impairment,
other intangible
amortization and
discontinued operations F/J (59.94)% (39.94)
PAGE 24
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008 2007
(In millions, First Fourth
except per share data) * Quarter Quarter
INCOME (LOSS) FROM CONTINUING
OPERATIONS
Net income (loss)
(GAAP) A $(664) 51
Discontinued operations,
net of income taxes (GAAP) - 142
Income (loss) from continuing
operations (GAAP) (664) 193
Merger-related and
restructuring expenses (GAAP) 123 108
Goodwill impairment (GAAP) - -
Earnings excluding merger-related
and restructuring expenses,
goodwill impairment
and discontinued
operations B (541) 301
Other intangible amortization
(GAAP) 64 64
Earnings excluding merger-related
and restructuring expenses,
goodwill impairment, other
intangible amortization and
discontinued operations C $(477) 365
INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS
Net income (loss) available to
common stockholders (GAAP) D $(707) 51
Discontinued operations,
net of income taxes (GAAP) - 142
Income (loss) from continuing
operations available to common
stockholders (GAAP) (707) 193
Merger-related and
restructuring expenses (GAAP) 123 108
Goodwill impairment (GAAP) - -
Earnings excluding merger-related
and restructuring expenses,
goodwill impairment,
and discontinued operations E (584) 301
Other intangible amortization
(GAAP) 64 64
Net income (loss) available to
common stockholders, excluding
merger-related and restructuring
expenses, goodwill impairment,
other intangible amortization
and discontinued operations F $(520) 365
RETURN ON AVERAGE COMMON
STOCKHOLDERS' EQUITY
Average common
stockholders' equity (GAAP) G $74,697 73,599
Merger-related and
restructuring expenses (GAAP) 110 242
Goodwill impairment (GAAP) - -
Discontinued operations (GAAP) - (142)
Average common stockholders'
equity, excluding merger-related
and restructuring expenses,
goodwill impairment and
discontinued operations H 74,807 73,699
Average intangible assets (GAAP) I (45,211) (44,941)
Average tangible common
stockholders' equity, excluding
merger-related and restructuring
expenses, goodwill impairment
and discontinued operations J $29,596 28,758
Return on average common
stockholders' equity
GAAP D/G (3.81)% 0.28
Excluding merger-related
and restructuring expenses,
goodwill impairment and
discontinued operations E/H (3.14) 1.62
Return on average tangible
common stockholders' equity
GAAP D/G+I (9.64) 0.71
Excluding merger-related
and restructuring expenses,
goodwill impairment,
other intangible amortization
and discontinued
operations F/J (7.07)% 5.05
PAGE 24
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2007
(In millions, Third
except per share data) * Quarter
INCOME (LOSS) FROM CONTINUING
OPERATIONS
Net income (loss)
(GAAP) A $1,618
Discontinued operations,
net of income taxes (GAAP) 88
Income (loss) from continuing
operations (GAAP) 1,706
Merger-related and
restructuring expenses (GAAP) 22
Goodwill impairment (GAAP) -
Earnings excluding merger-
related and restructuring
expenses, goodwill impairment
and discontinued operations B 1,728
Other intangible amortization
(GAAP) 60
Earnings excluding merger-
related and restructuring
expenses, goodwill impairment,
other intangible amortization
and discontinued operations C $1,788
INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS
Net income (loss) available to
common stockholders (GAAP) D $1,618
Discontinued operations,
net of income taxes (GAAP) 88
Income (loss) from continuing
operations available to common
stockholders (GAAP) 1,706
Merger-related and
restructuring expenses (GAAP) 22
Goodwill impairment (GAAP) -
Earnings excluding merger-
related and restructuring
expenses, goodwill impairment,
and discontinued operations E 1,728
Other intangible amortization
(GAAP) 60
Net income (loss) available to
common stockholders, excluding
merger-related and restructuring
expenses, goodwill impairment,
other intangible amortization
and discontinued operations F $1,788
RETURN ON AVERAGE COMMON
STOCKHOLDERS' EQUITY
Average common stockholders'
equity (GAAP) G $69,857
Merger-related and
restructuring expenses (GAAP) 124
Goodwill impairment (GAAP) -
Discontinued operations (GAAP) (88)
Average common stockholders'
equity, excluding
merger-related and
restructuring expenses,
goodwill impairment and
discontinued operations H 69,893
Average intangible assets
(GAAP) I (40,198)
Average tangible common
stockholders' equity, excluding
merger-related and restructuring
expenses, goodwill impairment
and discontinued operations J $29,695
Return on average common
stockholders' equity
GAAP D/G 9.19 %
Excluding merger-related
and restructuring expenses,
goodwill impairment and
discontinued operations E/H 9.81
Return on average tangible
common stockholders' equity
GAAP D/G+I 21.64
Excluding merger-related
and restructuring expenses,
goodwill impairment,
other intangible
amortization and
discontinued operations F/J 23.88 %
PAGE 25
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008
(In millions, Third Second
except per share data) * Quarter Quarter
RETURN ON AVERAGE ASSETS
Average assets (GAAP) K $791,907 796,437
Average intangible assets (GAAP) (38,694) (44,998)
Average tangible
assets (GAAP) L 753,213 751,439
Average assets (GAAP) 791,907 796,437
Merger-related and
restructuring expenses (GAAP) 405 191
Goodwill impairment (GAAP) 9,106 998
Discontinued operations (GAAP) - -
Average assets, excluding merger-
related and restructuring
expenses, goodwill impairment, and
discontinued operations M 801,418 797,626
Average intangible assets (GAAP) (38,694) (44,998)
Average tangible assets,
excluding merger-related
and restructuring
expenses, goodwill
impairment and discontinued
operations N $762,724 752,628
Return on average assets
GAAP A/K (11.91)% (4.50)
Excluding merger-related and
restructuring expenses,
goodwill impairment and
discontinued operations B/M (2.27) (1.38)
Return on average tangible assets
GAAP A/L (12.52) (4.77)
Excluding merger-related and
restructuring expenses,
goodwill impairment,
other intangible
amortization and
discontinued operations C/N (2.35)% (1.42)
OVERHEAD EFFICIENCY RATIOS
Noninterest expense (GAAP) O $25,545 12,784
Merger-related and restructuring
expenses (GAAP) (697) (251)
Goodwill impairment (GAAP) (18,786) (6,060)
Noninterest expense, excluding
merger-related and restructuring
expenses and goodwill impairment P 6,062 6,473
Other intangible amortization
(GAAP) (96) (97)
Noninterest expense, excluding
merger-related and restructuring
expenses, goodwill impairment
and other intangible
amortization Q $5,966 6,376
Net interest income (GAAP) $4,991 4,290
Tax-equivalent adjustment 48 54
Net interest income
(Tax-equivalent) 5,039 4,344
Fee and other income (GAAP) 733 3,165
Total R $5,772 7,509
Retail Brokerage Services,
excluding insurance
Noninterest expense (GAAP) S $1,919 2,116
Net interest income (GAAP) $365 289
Tax-equivalent adjustment - 1
Net interest income
(Tax-equivalent) 365 290
Fee and other income (GAAP) 1,547 1,814
Total T $1,912 2,104
Overhead efficiency ratios
GAAP O/R 442.60 % 170.24
Excluding merger-related and
restructuring expenses and
goodwill impairment P/R 105.01 86.21
Excluding merger-related and
restructuring expenses,
goodwill impairment and
brokerage P-S/R-T 107.32 80.64
Excluding merger-related and
restructuring expenses,
goodwill impairment and
other intangible
amortization Q/R 103.34 84.92
Excluding merger-related and
restructuring expenses,
goodwill impairment, other
intangible amortization
and brokerage Q-S/R-T 104.82 % 78.84
PAGE 25
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008 2007
(In millions, First Fourth
except per share data) * Quarter Quarter
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
Goodwill impairment (GAAP) - -
Discontinued operations (GAAP) - (142)
Average assets, excluding merger-
related and restructuring
expenses, goodwill impairment,
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, goodwill
impairment and discontinued
operations N $738,492 718,646
Return on average assets
GAAP A/K (0.34)% 0.03
Excluding merger-related and
restructuring expenses,
goodwill impairment and
discontinued operations B/M (0.28) 0.16
Return on average tangible assets
GAAP A/L (0.36) 0.03
Excluding merger-related and
restructuring expenses,
goodwill impairment, other
intangible amortization and
discontinued operations C/N (0.26)% 0.20
OVERHEAD EFFICIENCY RATIOS
Noninterest expense (GAAP) O $5,441 5,786
Merger-related and restructuring
expenses (GAAP) (241) (187)
Goodwill impairment (GAAP) - -
Noninterest expense, excluding
merger-related and restructuring
expenses and goodwill impairment P 5,200 5,599
Other intangible amortization (GAAP) (103) (111)
Noninterest expense, excluding
merger-related and restructuring
expenses, goodwill impairment
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) 2,777 2,744
Total R $7,582 7,418
Retail Brokerage Services,
excluding insurance
Noninterest
expense (GAAP) S $1,628 1,718
Net interest income (GAAP) $260 305
Tax-equivalent adjustment 1 1
Net interest income
(Tax-equivalent) 261 306
Fee and other income (GAAP) 1,867 1,907
Total T $2,128 2,213
Overhead efficiency ratios
GAAP O/R 71.76 % 78.00
Excluding merger-related and
restructuring expenses and
goodwill impairment P/R 68.58 75.48
Excluding merger-related and
restructuring expenses,
goodwill impairment and
brokerage P-S/R-T 65.47 74.54
Excluding merger-related and
restructuring expenses,
goodwill impairment and
other intangible
amortization Q/R 67.22 73.97
Excluding merger-related and
restructuring expenses,
goodwill impairment, other
intangible amortization
and brokerage Q-S/R-T 63.59 % 72.43
PAGE 25
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2007
(In millions, Third
except per share data) * Quarter
RETURN ON AVERAGE ASSETS
Average assets (GAAP) K $729,004
Average intangible assets (GAAP) (40,198)
Average tangible
assets (GAAP) L 688,806
Average assets (GAAP) 729,004
Merger-related and
restructuring expenses (GAAP) 124
Goodwill impairment (GAAP) -
Discontinued operations (GAAP) (88)
Average assets, excluding
merger-related and restructuring
expenses, goodwill impairment, and
discontinued operations M 729,040
Average intangible assets (GAAP) (40,198)
Average tangible assets, excluding
merger-related and restructuring
expenses, goodwill impairment and
discontinued operations N $688,842
Return on average assets
GAAP A/K 0.88 %
Excluding merger-related and
restructuring expenses,
goodwill impairment and
discontinued operations B/M 0.94
Return on average tangible assets
GAAP A/L 0.93
Excluding merger-related and
restructuring expenses,
goodwill impairment, other
intangible amortization and
discontinued operations C/N 1.03 %
OVERHEAD EFFICIENCY RATIOS
Noninterest expense (GAAP) O $4,525
Merger-related and restructuring
expenses (GAAP) (36)
Goodwill impairment (GAAP) -
Noninterest expense, excluding
merger-related and restructuring
expenses and goodwill
impairment P 4,489
Other intangible amortization
(GAAP) (92)
Noninterest expense, excluding
merger-related and restructuring
expenses, goodwill impairment and
other intangible amortization Q $4,397
Net interest income (GAAP) $4,551
Tax-equivalent adjustment 33
Net interest income
(Tax-equivalent) 4,584
Fee and other income (GAAP) 2,933
Total R $7,517
Retail Brokerage Services,
excluding insurance
Noninterest expense (GAAP) S $1,033
Net interest income (GAAP) $255
Tax-equivalent adjustment -
Net interest income
(Tax-equivalent) 255
Fee and other income (GAAP) 1,180
Total T $1,435
Overhead efficiency ratios GAAP O/R 60.20 %
Excluding merger-related and
restructuring expenses and
goodwill impairment P/R 59.73
Excluding merger-related and
restructuring expenses,
goodwill impairment and
brokerage P-S/R-T 56.82
Excluding merger-related and
restructuring expenses, goodwill
impairment and other intangible
amortization Q/R 58.51
Excluding merger-related and
restructuring expenses, goodwill
impairment, other intangible
amortization and brokerage Q-S/R-T 55.32 %
PAGE 26
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008
(In millions, Third Second
except per share data) * Quarter Quarter
OPERATING LEVERAGE
Operating leverage (GAAP) $(14,498) (7,416)
Merger-related and restructuring
expenses (GAAP) (5,613) 9
Goodwill impairment (GAAP) 18,786 6,060
Operating leverage, excluding
merger-related and restructuring
expenses and goodwill impairment (1,325) (1,347)
Other intangible amortization (GAAP) (1) (6)
Operating leverage, excluding
merger-related and restructuring expenses,
goodwill impairment and other intangible
amortization $(1,326) (1,353)
DIVIDEND PAYOUT RATIOS
ON COMMON SHARES
Dividends paid per common share U $0.05 0.38
Diluted earnings per common share
(GAAP) (a) V $(11.18) (4.31)
Merger-related and restructuring
expenses (GAAP) 0.19 0.06
Goodwill impairment (GAAP) 8.76 2.87
Other intangible amortization (GAAP) 0.03 0.03
Discontinued operations (GAAP) - -
Diluted earnings per common share,
excluding merger-related and
restructuring expenses, goodwill
impairment, other intangible
amortization and discontinued
operations (a) W $(2.20) (1.35)
Dividend payout ratios
GAAP U/V (0.45)% (8.70)
Excluding merger-related and
restructuring expenses,
goodwill impairment, other
intangible amortization
and discontinued operations U/W (2.27)% (27.78)
* The letters included in the columns are provided to show how the
various ratios presented in the tables on pages 24 through 26 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.
(a) Calculated using average basic common shares in 2008.
PAGE 26
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008 2007
(In millions, First Fourth
except per share data) * Quarter Quarter
OPERATING LEVERAGE
Operating leverage (GAAP) $509 (1,359)
Merger-related and
restructuring expenses (GAAP) 54 151
Goodwill impairment (GAAP) - -
Operating leverage, excluding
merger-related and restructuring
expenses and goodwill impairment 563 (1,208)
Other intangible amortization
(GAAP) (9) 21
Operating leverage, excluding
merger-related and restructuring expenses,
goodwill impairment and other intangible
amortization $554 (1,187)
DIVIDEND PAYOUT RATIOS ON
COMMON SHARES
Dividends paid per common share U $0.64 0.64
Diluted earnings per common
share (GAAP) (a) V $(0.36) 0.03
Merger-related and restructuring
expenses (GAAP) 0.06 0.05
Goodwill impairment (GAAP) - -
Other intangible amortization (GAAP) 0.04 0.03
Discontinued operations (GAAP) - 0.07
Diluted earnings per common share,
excluding merger-related and
restructuring expenses, goodwill
impairment, other intangible
amortization and discontinued
operations (a) W $(0.26) 0.18
Dividend payout ratios
GAAP U/V (177.78)% 2,133.33
Excluding merger-related and
restructuring expenses, goodwill
impairment, other
intangible amortization
and discontinued
operations U/W (246.15)% 355.56
* The letters included in the columns are provided to show how the
various ratios presented in the tables on pages 24 through 26 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.
(a) Calculated using average basic common shares in 2008.
PAGE 26
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2007
(In millions, Third
except per share data) * Quarter
OPERATING LEVERAGE
Operating leverage (GAAP) $(847)
Merger-related and
restructuring expenses (GAAP) 4
Goodwill impairment (GAAP) -
Operating leverage, excluding
merger-related and restructuring
expenses and goodwill impairment (843)
Other intangible amortization (GAAP) (12)
Operating leverage, excluding
merger-related and
restructuring expenses,
goodwill impairment
and other intangible
amortization $(855)
DIVIDEND PAYOUT RATIOS
ON COMMON SHARES
Dividends paid per
common share U $0.64
Diluted earnings per common
share (GAAP) (a) V $0.85
Merger-related and restructuring
expenses (GAAP) -
Goodwill impairment (GAAP) -
Other intangible amortization (GAAP) 0.04
Discontinued operations (GAAP) 0.05
Diluted earnings per common
share, excluding merger-related
and restructuring expenses,
goodwill impairment, other
intangible amortization and
discontinued operations (a) W $0.94
Dividend payout ratios
GAAP U/V 75.29 %
Excluding merger-related and
restructuring expenses, goodwill
impairment, other intangible
amortization and discontinued
operations U/W 68.09 %
* The letters included in the columns are provided to show how the
various ratios presented in the tables on pages 24 through 26 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.
(a) Calculated using average basic common shares in 2008.
SOURCE Wachovia Corporation
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Ellen Taylor, +1-704-383-1381; or Media, Mary Eshet,
+1-704-383-7777, or Christy Phillips- Brown, +1-704-383-8178, all
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