Filed Pursuant to Rule 433
Registration No. 333-150225
Press Release April 14, 2008 |
WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES INITIATIVES
TO FURTHER ENHANCE CAPITAL BASE AND FLEXIBILITY
Plans to Raise Capital through Public Offering
Reduces Quarterly Dividend to $0.375 Per Common Share, Preserving $2.0 Billion of
Capital Annually
Increases Credit Reserves; Provision $2.1 Billion Above Net Charge-offs
Net Loss of $350 Million or $393 Million (20 Cents) after Preferred Dividend
Strong Sales Momentum and Solid Underlying Expense Control Cushions Impact of
Rising Credit Costs and Market Disruption Losses
CHARLOTTE, N.C. Wachovia today announced a series of actions to further enhance its capital base and operational flexibility, and updated its credit reserve modeling to reflect greater emphasis on forecasted changes in customer behavior assuming continued house price depreciation. These actions include:
| Plans to raise capital through a public offering of common stock and perpetual convertible preferred stock; |
| Lowering the quarterly common stock dividend, which preserves $2.0 billion of capital annually, to build capital ratios and provide more operational flexibility. The board of directors declared a quarterly common stock dividend of $0.375 cents per common share, payable on June 16, 2008, to stockholders of record on May 30, 2008. This dividend level is consistent with Wachovias capital needs and growth opportunities for each of its business segments, and with an anticipated 40 percent to 50 percent cash payout ratio over the intermediate horizon; and |
| The update in the credit reserve modeling in response to the current and forecasted market environment and its effect on consumer behavior, particularly in stressed markets, resulting in a significant increase in the first quarter 2008 provision for credit losses. In addition, the scope of credit disclosures was increased to provide enhanced insight into the payment option consumer real estate portfolio. |
In addition, Wachovia reported a first quarter 2008 net loss of $350 million before preferred dividends, or a net loss available to common stockholders of $393 million, (20 cents per common share). These results, which reflect higher credit costs and the continued disruption in the capital markets, compared with earnings of $2.30 billion, or $1.20 per share, in the first quarter of 2007.
While solid underlying performance was overshadowed by market disruption-related valuation losses of $2.0 billion, Wachovia generated total revenue of $7.9 billion on higher loans and deposits and strength in fiduciary and asset management fees, brokerage commissions and traditional banking fees, including the impact of the A.G. Edwards acquisition.
Im deeply disappointed with our first quarter results, but I am confident were taking prudent and appropriate actions in this challenging period to restore Wachovia to a more profitable path. The precipitous decline in housing market conditions and unprecedented changes in consumer behavior prompted us to update our credit reserve modeling and rely less heavily on historical trends to forecast losses. As a result, we have substantially increased our reserves, said Ken Thompson, Wachovias chief executive officer. The most painful decision was to reduce the dividend because it adversely affects our shareholders. But we believe the long-term benefit to
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WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 2
shareholder value outweighs the disadvantage of the dividend reduction as we fortify our balance sheet against continued instability in the housing and capital markets.
Its important to note that in early 2007 in advance of the market dislocation, we took steps to bolster our liquidity and reduce market-related exposures in products originally intended for distribution, Thompson added. We have generally been a provider of liquidity to the market during this period of market disruption, and we also continue to reduce our market-related exposures. The actions we announced today will further enhance and ensure our ongoing financial flexibility to invest and drive future earnings growth. With strengthened reserves and capital, and our strong deposit base, we believe were well-positioned to continue to successfully weather this uniquely challenging period.
Earnings Highlights
Three Months Ended | |||||||||||||||||
March 31, 2008 |
December 31, 2007 |
March 31, 2007 | |||||||||||||||
(In millions, except per share data) |
Amount |
EPS |
Amount |
EPS |
Amount |
EPS | |||||||||||
Earnings |
|||||||||||||||||
Net income (loss) |
$ | (350 | ) | | 193 | 0.10 | 2,302 | 1.20 | |||||||||
Discontinued operations, net of income taxes |
| | (142 | ) | (0.07 | ) | | | |||||||||
Dividends on preferred stock |
(43 | ) | | | | | | ||||||||||
Net income (loss) available to common stockholders |
$ | (393 | ) | (0.20 | ) | 51 | 0.03 | 2,302 | 1.20 | ||||||||
Discontinued operations, net of income taxes |
| | 142 | 0.07 | | | |||||||||||
Income (loss) from continuing operations |
(393 | ) | (0.20 | ) | 193 | 0.10 | 2,302 | 1.20 | |||||||||
Net merger-related and restructuring expenses |
123 | 0.06 | 108 | 0.05 | 6 | | |||||||||||
Earnings (loss) excluding merger-related and restructuring expenses, and discontinued operations |
$ | (270 | ) | (0.14 | ) | 301 | 0.15 | 2,308 | 1.20 | ||||||||
Financial ratios |
|||||||||||||||||
Return on average common stockholders equity |
(2.11 | )% | 0.28 | 13.47 | |||||||||||||
Net interest margin (a) |
2.92 | 2.88 | 3.06 | ||||||||||||||
Fee and other income as % of total revenue (a) |
39.15 | 36.99 | 45.15 | ||||||||||||||
Overhead efficiency ratio (a) |
68.91 | % | 78.00 | 55.88 | |||||||||||||
Capital adequacy (b) |
|||||||||||||||||
Tier 1 capital ratio |
7.5 | % | 7.4 | 7.4 | |||||||||||||
Total capital ratio |
12.1 | 11.8 | 11.4 | ||||||||||||||
Leverage ratio |
6.2 | % | 6.1 | 6.1 | |||||||||||||
Asset quality |
|||||||||||||||||
Allowance for loan losses as % of nonaccrual and restructured loans |
84 | % | 90 | 207 | |||||||||||||
Allowance for loan losses as % of loans, net |
1.37 | 0.98 | 0.80 | ||||||||||||||
Allowance for credit losses as % of loans, net (c) |
1.41 | 1.02 | 0.84 | ||||||||||||||
Net charge-offs as % of average loans, net |
0.66 | 0.41 | 0.15 | ||||||||||||||
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale |
1.70 | % | 1.14 | 0.42 |
(a) | Tax-equivalent. |
(b) | The first quarter of 2008 is based on estimates. |
(c) | The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. |
Results include after-tax net merger-related expenses of 6 cents per share in the first quarter of 2008; these expenses did not affect earnings per share in the first quarter of 2007. Excluding the merger-related expenses, results were a net loss available to common stockholders of $270 million, or 14 cents per share, in the first quarter of 2008. Results also include the impact of the A.G. Edwards, Inc., acquisition from October 1, 2007.
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Wachovia Corporation
Three Months Ended | |||||||||
(In millions) |
March 31, 2008 |
December 31, 2007 |
March 31, 2007 | ||||||
Net interest income (Tax-equivalent) |
$ | 4,805 | 4,674 | 4,537 | |||||
Fee and other income |
3,091 | 2,744 | 3,734 | ||||||
Total revenue (Tax-equivalent) |
7,896 | 7,418 | 8,271 | ||||||
Provision for credit losses |
2,831 | 1,497 | 177 | ||||||
Noninterest expense |
5,441 | 5,786 | 4,621 | ||||||
Income (loss) from continuing operations before income taxes (benefits) (Tax-equivalent) |
(531 | ) | 28 | 3,337 | |||||
Income taxes (benefits) (Tax-equivalent) |
(181 | ) | (165 | ) | 1,035 | ||||
Net income (loss) available to common stockholders |
(393 | ) | 51 | 2,302 | |||||
Average loans, net |
465,936 | 449,805 | 415,261 | ||||||
Average core deposits |
$ | 394,513 | 390,043 | 369,270 |
Other key trends in the first quarter of 2008 compared with the first quarter of 2007 included:
| Revenue of $7.9 billion on higher loan and deposit balances, while fee and other income declined due to net market disruption-related valuation losses of $2.0 billion and significantly reduced fee income related to the disruption in the capital markets. Otherwise, strong momentum continued in fiduciary and asset management fees and brokerage commissions reflecting the A.G. Edwards acquisition and organic growth. Results included $445 million in net gains related to adoption of new fair value accounting standards and a $225 million gain related to the Visa initial public offering. |
| Net interest margin compression of 14 basis points year over year, although the margin rose 4 basis points from the fourth quarter of 2007. Net interest income rose modestly, reflecting growth in average commercial loans, up 26 percent, and average consumer loans, up 4 percent, as well as solid core deposit growth, up 7 percent. Average loan growth included the impact of $7.3 billion of transfers to the loan portfolio from held-for-sale as well as strength in commercial, commercial real estate and traditional conforming mortgage loans. Deposit growth was led by strength in IRAs and money market accounts. |
| An 18 percent increase in noninterest expense largely reflecting the impact of A.G. Edwards, as well as growth in credit-related sundry expense. |
| Provision for credit losses of $2.8 billion, which exceeded net charge-offs by $2.1 billion. The provision largely reflected more severe deterioration in the residential housing market, particularly in specific markets in California and Florida, as well as the result of the refinements made to the credit reserve model for the payment option product. These refinements incorporate multiple and more granular factors regarding unprecedented consumer behavior, housing price deterioration and increased foreclosures. Net charge-offs were $765 million, or an annualized 0.66 percent of average net loans. Total nonperforming assets including loans held for sale were $8.4 billion, or 1.70 percent of loans, foreclosed properties and loans held for sale, largely reflecting increases in consumer real estate-related nonperforming assets due to the effects of the weakened housing industry. |
Lines of Business
The following discussion covers the results for Wachovias four core business segments and is on a segment earnings basis, which excludes net merger-related and restructuring expenses, other intangible amortization and discontinued operations. Segment earnings are the basis on which
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WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 4
Wachovia manages and allocates capital to its business segments. In accordance with Wachovias business segment methodology, provision expense in excess of charge-offs, which amounted to $2.1 billion in the first quarter of 2008, is not allocated to business segments.
Pages 13 and 14 include a reconciliation of segment results to Wachovias consolidated results of operations in accordance with GAAP.
General Bank Highlights
Three Months Ended | ||||||||
(In millions) |
March 31, 2008 |
December 31, 2007 |
March 31, 2007 | |||||
Net interest income (Tax-equivalent) |
$ | 3,455 | 3,402 | 3,398 | ||||
Fee and other income |
990 | 929 | 845 | |||||
Total revenue (Tax-equivalent) |
4,500 | 4,389 | 4,290 | |||||
Provision for credit losses |
569 | 320 | 147 | |||||
Noninterest expense |
2,050 | 2,041 | 1,869 | |||||
Segment earnings |
$ | 1,195 | 1,287 | 1,444 | ||||
Cash overhead efficiency ratio (Tax-equivalent) |
45.55 | % | 46.50 | 43.56 | ||||
Average loans, net |
$ | 311,447 | 303,269 | 288,229 | ||||
Average core deposits |
297,680 | 296,568 | 284,046 | |||||
Economic capital, average |
$ | 12,695 | 11,179 | 10,662 |
General Bank
The General Bank includes retail, small business and commercial customers. The first quarter of 2008 compared with the first quarter of 2007 included:
| Earnings of $1.2 billion, down $249 million, driven by rapidly rising credit costs and related expenses, which overshadowed continued strong sales momentum reflected in total revenue of $4.5 billion, up 5 percent. |
| Average loan growth of 8 percent, with double digit growth in wholesale businesses and 4 percent growth in mortgage lending as a decline in prepayments offset lower volumes on the payment option mortgage product. |
| Significant efforts in the mortgage business included a restructuring of the operating model, extensive loss mitigation efforts and initiatives to increase the volume of marketable mortgages. |
| A home equity lending decline of 41 percent, reflecting implementation of tightened credit standards. Over 95 percent of our home equity loans are originated through our branch network and other direct channels. |
| A 26 percent increase in auto loan originations |
| Average core deposit growth of 5 percent, largely reflecting strength in wholesale deposits, which were up 10 percent, and an increase of 4 percent in retail deposits. |
| Growth in net new retail checking accounts slowed to a still strong increase of 174,000 in the first quarter of 2008 compared with an increase of 268,000 in the first quarter of 2007. |
| Net new checking accounts include 139,000 linked to the new Way2Save accounts, which launched in mid-January 2008. |
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| 17 percent growth in fee and other income, with strength in service charges, interchange income and mortgage banking fee income. Strong interchange income reflected an 18 percent increase in debit/credit card volume from the first quarter of 2007. |
| Noninterest expense up 10 percent due to growth in credit-related sundry expense, as well as on continued strategic investment in de novo branch activity, Western expansion and buildup in credit card operations. During the first quarter of 2008, 23 de novo branches were opened and 58 branches were consolidated. As a result of performance initiatives, operating leverage continued to improve, which enabled the continued strategic investment. |
| A $422 million increase in the provision for credit losses largely reflecting rapid deterioration in consumer real estate in certain housing markets and higher losses on auto loans. |
Wealth Management Highlights
Three Months Ended | ||||||||
(In millions) |
March 31, 2008 |
December 31, 2007 |
March 31, 2007 | |||||
Net interest income (Tax-equivalent) |
$ | 181 | 183 | 181 | ||||
Fee and other income |
211 | 214 | 196 | |||||
Total revenue (Tax-equivalent) |
397 | 400 | 380 | |||||
Provision for credit losses |
5 | 7 | 1 | |||||
Noninterest expense |
246 | 249 | 247 | |||||
Segment earnings |
$ | 92 | 91 | 84 | ||||
Cash overhead efficiency ratio (Tax-equivalent) |
62.08 | % | 62.27 | 65.12 | ||||
Average loans, net |
$ | 22,413 | 21,791 | 20,394 | ||||
Average core deposits |
17,397 | 16,773 | 17,267 | |||||
Economic capital, average |
$ | 705 | 616 | 592 |
Wealth Management
Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. The first quarter of 2008 compared with the first quarter of 2007 included:
| Earnings of $92 million on 4 percent revenue growth in challenging markets. |
| Strong fiduciary and asset management fees as a pricing initiative implemented in the third quarter of 2007 and new sales offset declines in equity valuations. Insurance commissions declined largely due to a soft market for insurance premiums and nonstrategic insurance account dispositions. |
| Relatively flat net interest income as solid loan growth offset deposit spread compression. |
| A slight decline in expense driven by efficiency initiatives, which offset the impact of private banking and Western expansion investment. |
| 5 percent growth in assets under management to $79.8 billion as asset gathering overcame market depreciation. |
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WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 6
Corporate and Investment Bank Highlights
Three Months Ended | |||||||||
(In millions) |
March 31, 2008 |
December 31, 2007 |
March 31, 2007 | ||||||
Net interest income (Tax-equivalent) |
$ | 1,032 | 988 | 716 | |||||
Fee and other income |
(159 | ) | (555 | ) | 1,109 | ||||
Total revenue (Tax-equivalent) |
823 | 383 | 1,782 | ||||||
Provision for credit losses |
197 | 112 | 6 | ||||||
Noninterest expense |
747 | 952 | 911 | ||||||
Segment earnings (loss) |
$ | (77 | ) | (431 | ) | 550 | |||
Cash overhead efficiency ratio (Tax-equivalent) |
90.76 | % | 247.83 | 51.10 | |||||
Average loans, net |
$ | 101,024 | 91,702 | 73,385 | |||||
Average core deposits |
33,623 | 36,200 | 34,227 | ||||||
Economic capital, average |
$ | 13,242 | 11,293 | 8,329 |
Corporate and Investment Bank
The Corporate and Investment Bank includes corporate lending, investment banking, and treasury and international trade finance. First quarter 2008 results compared with the first quarter of 2007 included:
| A segment loss of $77 million driven by $1.6 billion in net valuation losses reflecting continued disruption in the capital markets and reduced origination volume in most market-related businesses. |
| Market valuation losses, net of applicable hedges, of: |
| $339 million in subprime residential asset-backed collateralized debt obligations and other related exposures, compared with $818 million in fourth quarter 2007, excluding discontinued operations; |
| $521 million in commercial mortgage structured products, compared with $600 million in fourth quarter 2007; |
| $251 million in consumer mortgage structured products, compared with $123 million in fourth quarter 2007; |
| $309 million in leveraged finance net of fees, compared with a net $93 million gain in fourth quarter 2007; and |
| $144 million in non-subprime collateralized debt obligations and other structured products, compared with a $59 million net gain in fourth quarter 2007. |
| A 44 percent increase in net interest income, which reflected 38 percent growth in average loans including the transfer into the loan portfolio at fair value of certain loans originally slated for disposition, as well as loan growth in the corporate lending and global financial institutions business. |
| Principal investing revenue of $414 million, largely due to a net $486 million of gains related to the adoption of new fair value accounting standards in January 2008, offset by mark-to-market losses in the direct investment portfolio. |
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WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 7
| An 18 percent decline in noninterest expense primarily due to lower variable compensation and reduced headcount in investment banking. |
| Provision of $197 million largely reflecting residential-related commercial real estate losses. |
Capital Management Highlights
Three Months Ended | ||||||||
(In millions) |
March 31, 2008 |
December 31, 2007 |
March 31, 2007 | |||||
Net interest income (Tax-equivalent) |
$ | 274 | 318 | 259 | ||||
Fee and other income |
2,191 | 2,211 | 1,477 | |||||
Total revenue (Tax-equivalent) |
2,455 | 2,518 | 1,728 | |||||
Provision for credit losses |
| | | |||||
Noninterest expense |
1,855 | 1,938 | 1,237 | |||||
Segment earnings |
$ | 381 | 368 | 312 | ||||
Cash overhead efficiency ratio (Tax-equivalent) |
75.54 | % | 76.96 | 71.59 | ||||
Average loans, net |
$ | 2,562 | 2,295 | 1,554 | ||||
Average core deposits |
43,084 | 38,019 | 31,683 | |||||
Economic capital, average |
$ | 2,143 | 2,120 | 1,334 |
Capital Management
Capital Management includes retail brokerage services and asset management. The first quarter of 2008 compared with the first quarter of 2007 included:
| Earnings of $381 million on 42 percent revenue growth, which primarily reflected the A.G. Edwards acquisition. In addition, solid growth in retail brokerage managed account and other asset-based fees despite declining equity markets offset lower transactional revenue and equity syndicate distribution fees. The impact of FDIC sweep deposit growth of $11.0 billion partially offset spread compression in the declining interest rate environment. |
| Record annuity sales of $2.7 billion, including $1.5 billion in the General Bank financial centers. |
| 50 percent growth in noninterest expense largely due to the effect of A.G. Edwards, as well as higher legal expense and revenue-based commissions. |
Total assets under management of $258.7 billion at March 31, 2008, decreased 6 percent from December 31, 2007, primarily due to declining market valuations.
***
Wachovia Corporation (NYSE:WB) is one of the nations largest diversified financial services companies, with assets of $808.9 billion and market capitalization of $53.8 billion at March 31, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Our retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 18,600 registered representatives in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com.
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WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 8
Forward-Looking Statements
This news release contains various forward-looking statements. A discussion of various factors that could cause Wachovia Corporations actual results to differ materially from those expressed in such forward-looking statements is included in Wachovias filings with the Securities and Exchange Commission, including its Current Report on Form 8-K dated April 14, 2008.
Explanation of Wachovias Use of Certain Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this news release includes certain non-GAAP financial measures, including those presented on page 2 and on page 11 under the captions Earnings Excluding Merger-Related and Restructuring Expenses, and Discontinued Operations and Earnings Excluding Merger-Related and Restructuring Expenses, Other Intangible Amortization and Discontinued Operations, and which are reconciled to GAAP financial measures on pages 21 and 22. In addition, in this news release certain designated net interest income amounts are presented on a tax-equivalent basis, including the calculation of the overhead efficiency ratio.
Wachovia believes these non-GAAP financial measures provide information useful to investors in understanding the underlying operational performance of the company, its business and performance trends and facilitates comparisons with the performance of others in the financial services industry. Specifically, Wachovia believes the exclusion of merger-related and restructuring expenses, discontinued operations and the cumulative effect of a change in accounting principle permits evaluation and a comparison of results for on-going business operations, and it is on this basis that Wachovias management internally assesses the companys performance. Those non-operating items are excluded from Wachovias 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. Wachovias management makes recommendations to its board of directors about dividend payments based on reported earnings excluding merger-related and restructuring expenses, other intangible amortization, discontinued operations and the cumulative effect of a change in accounting principle, and has communicated certain dividend payout ratio goals to investors on this basis. Management believes this payout ratio is useful to investors because it provides investors with a better understanding of and permits investors to monitor Wachovias dividend payout policy. Wachovia also believes the presentation of net interest income on a tax-equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry standards. Wachovia operates one of the largest retail brokerage businesses in our industry, and we have presented an overhead efficiency ratio excluding these brokerage services, which management believes is useful to investors in comparing the performance of our banking business with other banking companies.
Although Wachovia believes the above non-GAAP financial measures enhance investors understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP basis financial measures.
Earnings Conference Call and Supplemental Materials
Wachovia CEO Ken Thompson and CFO Tom Wurtz will review Wachovias first quarter 2008 results in a conference call and audio web cast beginning at 8:00 a.m. Eastern Daylight Saving Time today. This review may include a discussion of certain non-GAAP financial measures. Supplemental materials relating to first quarter results, which also include a reconciliation of any non-GAAP measures to Wachovias reported financials, are available on the Internet at Wachovia.com/investor, and investors are encouraged to access these materials in advance of the conference call.
Web cast Instructions: To gain access to the web cast, which will be listen-only, go to Wachovia.com/investor and click on the link Wachovia First Quarter Earnings Audio Web cast. In order to listen to the web cast, you will need to download either Real Player or Media Player.
Teleconference Instructions: The telephone number for the conference call is 888-357-9787 for U.S. callers or 706-679-7342 for international callers. You will be asked to tell the answering coordinator your name and the name of your firm. Mention the conference Access Code: WB Investor.
Replay: Monday, April 14, by 12:00 Noon EST and continuing through 5 p.m. EST Friday, July 11. Replay telephone number is 706-645-9291; access code: 43662109.
Investors seeking further information should contact the Investor Relations team: Alice Lehman at 704-374-4139 or Ellen Taylor at 704-383-1381. Media seeking further information should contact the Corporate Media Relations team: Mary Eshet at 704-383-7777 or Christy Phillips at 704-383-8178.
Wachovia may file a registration statement (including prospectus) with the SEC for the offering to which this communication relates. Investors should read the prospectus in that registration statement, the preliminary prospectus supplement and other documents that Wachovia has filed with the SEC for more complete information about Wachovia and this offering. Documents may be obtained for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, investors may call toll-free 1-800-326-5897 to request that the prospectus be mailed after filing.
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PAGE 9
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL TABLES
TABLE OF CONTENTS
PAGE | ||
Financial HighlightsFive Quarters Ended March 31, 2008 |
10 | |
Other Financial DataFive Quarters Ended March 31, 2008 |
11 | |
Consolidated Statements of IncomeFive Quarters Ended March 31, 2008 |
12 | |
Business SegmentsThree Months Ended March 31, 2008 and December 31, 2007 |
13 | |
Business SegmentsThree Months Ended March 31, 2007 |
14 | |
LoansOn-Balance Sheet, and Managed and Servicing PortfoliosFive Quarters Ended March 31, 2008 |
15 | |
Allowance for Credit LossesFive Quarters Ended March 31, 2008 |
16 | |
Nonperforming AssetsFive Quarters Ended March 31, 2008 |
17 | |
Consolidated Balance SheetsFive Quarters Ended March 31, 2008 |
18 | |
Net Interest Income SummariesFive Quarters Ended March 31, 2008 |
19 - 20 | |
Reconciliation of Certain Non-GAAP Financial MeasuresFive Quarters Ended March 31, 2008 |
21 - 22 |
PAGE 10
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
2008 |
2007 |
||||||||||||||
(Dollars in millions, except per share data) |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
||||||||||
EARNINGS SUMMARY |
|||||||||||||||
Net interest income (GAAP) |
$ | 4,752 | 4,630 | 4,551 | 4,449 | 4,500 | |||||||||
Tax-equivalent adjustment |
53 | 44 | 33 | 38 | 37 | ||||||||||
Net interest income (Tax-equivalent) |
4,805 | 4,674 | 4,584 | 4,487 | 4,537 | ||||||||||
Fee and other income |
3,091 | 2,744 | 2,933 | 4,240 | 3,734 | ||||||||||
Total revenue (Tax-equivalent) |
7,896 | 7,418 | 7,517 | 8,727 | 8,271 | ||||||||||
Provision for credit losses |
2,831 | 1,497 | 408 | 179 | 177 | ||||||||||
Other noninterest expense |
5,097 | 5,488 | 4,397 | 4,755 | 4,493 | ||||||||||
Merger-related and restructuring expenses |
241 | 187 | 36 | 32 | 10 | ||||||||||
Other intangible amortization |
103 | 111 | 92 | 103 | 118 | ||||||||||
Total noninterest expense |
5,441 | 5,786 | 4,525 | 4,890 | 4,621 | ||||||||||
Minority interest in income of consolidated subsidiaries |
155 | 107 | 189 | 139 | 136 | ||||||||||
Income (loss) from continuing operations before income taxes (benefits) (Tax-equivalent) |
(531 | ) | 28 | 2,395 | 3,519 | 3,337 | |||||||||
Income taxes (benefits) |
(234 | ) | (209 | ) | 656 | 1,140 | 998 | ||||||||
Tax-equivalent adjustment |
53 | 44 | 33 | 38 | 37 | ||||||||||
Income (loss) from continuing operations |
(350 | ) | 193 | 1,706 | 2,341 | 2,302 | |||||||||
Discontinued operations, net of income taxes |
| (142 | ) | (88 | ) | | | ||||||||
Net income (loss) |
(350 | ) | 51 | 1,618 | 2,341 | 2,302 | |||||||||
Dividends on preferred stock |
43 | | | | | ||||||||||
Net income (loss) available to common stockholders |
$ | (393 | ) | 51 | 1,618 | 2,341 | 2,302 | ||||||||
Diluted earnings per common share (a) |
$ | (0.20 | ) | 0.03 | 0.85 | 1.22 | 1.20 | ||||||||
Return on average common stockholders equity |
(2.11 | )% | 0.28 | 9.19 | 13.54 | 13.47 | |||||||||
Return on average assets |
(0.18 | ) | 0.03 | 0.88 | 1.33 | 1.35 | |||||||||
Overhead efficiency ratio |
68.91 | % | 78.00 | 60.20 | 56.02 | 55.88 | |||||||||
Operating leverage |
$ | 823 | (1,359 | ) | (847 | ) | 189 | (13 | ) | ||||||
ASSET QUALITY |
|||||||||||||||
Allowance for loan losses as % of loans, net |
1.37 | % | 0.98 | 0.78 | 0.79 | 0.80 | |||||||||
Allowance for loan losses as % of nonperforming assets |
78 | 84 | 115 | 157 | 189 | ||||||||||
Allowance for credit losses as % of loans, net |
1.41 | 1.02 | 0.82 | 0.83 | 0.84 | ||||||||||
Net charge-offs as % of average loans, net |
0.66 | 0.41 | 0.19 | 0.14 | 0.15 | ||||||||||
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale |
1.70 | % | 1.14 | 0.66 | 0.49 | 0.42 | |||||||||
CAPITAL ADEQUACY (b) |
|||||||||||||||
Tier I capital ratio |
7.5 | % | 7.4 | 7.1 | 7.5 | 7.4 | |||||||||
Total capital ratio |
12.1 | 11.8 | 10.8 | 11.5 | 11.4 | ||||||||||
Leverage ratio |
6.2 | % | 6.1 | 6.1 | 6.2 | 6.1 | |||||||||
OTHER DATA |
|||||||||||||||
Average basic common shares (In millions) |
1,963 | 1,959 | 1,885 | 1,891 | 1,894 | ||||||||||
Average diluted common shares (In millions) |
1,977 | 1,983 | 1,910 | 1,919 | 1,925 | ||||||||||
Actual common shares (In millions) (c) |
1,992 | 1,980 | 1,901 | 1,903 | 1,913 | ||||||||||
Dividends paid per common share |
$ | 0.64 | 0.64 | 0.64 | 0.56 | 0.56 | |||||||||
Dividend payout ratio on common shares |
(320.00 | )% | 2133.33 | 75.29 | 45.90 | 46.67 | |||||||||
Book value per common share (c) |
$ | 36.40 | 37.66 | 36.90 | 36.40 | 36.47 | |||||||||
Common stock price |
27.00 | 38.03 | 50.15 | 51.25 | 55.05 | ||||||||||
Market capitalization (c) |
$ | 53,782 | 75,302 | 95,326 | 97,530 | 105,330 | |||||||||
Common stock price to book value (c) |
74 | % | 101 | 136 | 141 | 151 | |||||||||
FTE employees |
120,378 | 121,890 | 109,724 | 110,493 | 110,369 | ||||||||||
Total financial centers/brokerage offices |
4,850 | 4,894 | 4,167 | 4,135 | 4,167 | ||||||||||
ATMs |
5,308 | 5,139 | 5,123 | 5,099 | 5,146 | ||||||||||
(a) | Calculated using average basic common shares in the first quarter of 2008. |
(b) | The first quarter of 2008 is based on estimates. |
(c) | Includes restricted stock for which the holder receives dividends and has full voting rights. |
PAGE 11
WACHOVIA CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
2008 |
2007 |
||||||||||||||
(In millions) |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
||||||||||
EARNINGS EXCLUDING MERGER-RELATED |
|||||||||||||||
Return on average common stockholders equity |
(1.45 | )% | 1.62 | 9.81 | 13.66 | 13.50 | |||||||||
Return on average assets |
(0.12 | ) | 0.16 | 0.94 | 1.34 | 1.35 | |||||||||
Overhead efficiency ratio |
65.85 | 75.48 | 59.73 | 55.65 | 55.75 | ||||||||||
Overhead efficiency ratio excluding brokerage |
61.92 | % | 74.54 | 56.82 | 52.04 | 52.60 | |||||||||
Operating leverage |
$ | 877 | (1,208 | ) | (843 | ) | 210 | (51 | ) | ||||||
EARNINGS EXCLUDING MERGER-RELATED AND RESTRUCTURING EXPENSES, OTHER INTANGIBLE AMORTIZATION AND DISCONTINUED OPERATIONS (a) (b) (c) |
|||||||||||||||
Dividend payout ratio on common shares |
(640.00 | )% | 355.56 | 68.09 | 44.09 | 45.16 | |||||||||
Return on average tangible common stockholders equity |
(2.80 | ) | 5.05 | 23.88 | 33.57 | 33.27 | |||||||||
Return on average tangible assets |
(0.09 | ) | 0.20 | 1.03 | 1.47 | 1.49 | |||||||||
Overhead efficiency ratio |
64.55 | 73.97 | 58.51 | 54.47 | 54.33 | ||||||||||
Overhead efficiency ratio excluding brokerage |
60.14 | % | 72.40 | 55.32 | 50.61 | 50.88 | |||||||||
Operating leverage |
$ | 869 | (1,187 | ) | (855 | ) | 197 | (75 | ) | ||||||
OTHER FINANCIAL DATA |
|||||||||||||||
Net interest margin |
2.92 | % | 2.88 | 2.92 | 2.96 | 3.06 | |||||||||
Fee and other income as % of total revenue |
39.15 | 36.99 | 39.02 | 48.58 | 45.15 | ||||||||||
Effective income tax rate (d) |
40.04 | 122.05 | 27.33 | 32.78 | 30.22 | ||||||||||
Effective tax rate (Tax-equivalent) (d) (e) |
34.06 | % | 127.17 | 28.38 | 33.51 | 30.99 | |||||||||
AVERAGE BALANCE SHEET DATA |
|||||||||||||||
Commercial loans, net |
$ | 198,578 | 188,164 | 174,672 | 165,512 | 157,288 | |||||||||
Consumer loans, net |
267,358 | 261,641 | 255,129 | 255,745 | 257,973 | ||||||||||
Loans, net |
465,936 | 449,805 | 429,801 | 421,257 | 415,261 | ||||||||||
Earning assets |
659,033 | 650,140 | 628,773 | 605,978 | 593,663 | ||||||||||
Total assets |
783,593 | 763,487 | 729,004 | 704,773 | 691,029 | ||||||||||
Core deposits |
394,513 | 390,043 | 379,009 | 378,496 | 369,270 | ||||||||||
Total deposits |
443,353 | 437,566 | 416,107 | 408,418 | 399,106 | ||||||||||
Interest-bearing liabilities |
611,099 | 599,130 | 574,399 | 547,669 | 535,778 | ||||||||||
Stockholders equity |
$ | 78,747 | 73,986 | 69,857 | 69,317 | 69,320 | |||||||||
PERIOD-END BALANCE SHEET DATA |
|||||||||||||||
Commercial loans, net |
$ | 211,700 | 198,566 | 189,545 | 175,369 | 167,039 | |||||||||
Consumer loans, net |
268,782 | 263,388 | 259,661 | 253,751 | 254,624 | ||||||||||
Loans, net |
480,482 | 461,954 | 449,206 | 429,120 | 421,663 | ||||||||||
Goodwill and other intangible assets |
|||||||||||||||
Goodwill |
43,068 | 43,122 | 38,848 | 38,766 | 38,838 | ||||||||||
Deposit base |
573 | 619 | 670 | 727 | 796 | ||||||||||
Customer relationships |
1,375 | 1,410 | 620 | 651 | 684 | ||||||||||
Tradename |
90 | 90 | 90 | 90 | 90 | ||||||||||
Total assets |
808,890 | 782,896 | 754,168 | 715,428 | 702,669 | ||||||||||
Core deposits |
398,562 | 397,405 | 377,865 | 378,188 | 377,358 | ||||||||||
Total deposits |
444,964 | 449,129 | 421,937 | 410,030 | 405,270 | ||||||||||
Stockholders equity |
$ | 78,307 | 76,872 | 70,140 | 69,266 | 69,786 | |||||||||
(a) | These financial measures are calculated by excluding from GAAP net income (loss) presented on page 10, $123 million, $108 million, $22 million, $20 million and $6 million in the first quarter of 2008 and the fourth, third, second and first quarters of 2007, respectively, of after-tax net merger-related and restructuring expenses and $142 million and $88 million after tax in the fourth and third quarters of 2007, respectively, of discontinued operations. |
(b) | See page 10 for the most directly comparable GAAP financial measure and pages 21 and 22 for a more detailed reconciliation. |
(c) | These financial measures are calculated by excluding from GAAP net income (loss) presented on page 10, $64 million, $65 million, $59 million, $66 million and $76 million in the first quarter of 2008 and the fourth, third, second and first quarters of 2007, respectively, of deposit base and other intangible amortization. |
(d) | The fourth and third quarters of 2007 include taxes on discontinued operations. |
(e) | The tax-equivalent tax rate applies to fully tax-equivalized revenues. |
PAGE 12
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
2008 |
2007 | |||||||||||||
(In millions, except per share data) |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter | |||||||||
INTEREST INCOME |
||||||||||||||
Interest and fees on loans |
$ | 7,577 | 7,980 | 7,937 | 7,723 | 7,618 | ||||||||
Interest and dividends on securities |
1,496 | 1,616 | 1,529 | 1,474 | 1,478 | |||||||||
Trading account interest |
571 | 557 | 566 | 506 | 433 | |||||||||
Other interest income |
535 | 757 | 799 | 647 | 611 | |||||||||
Total interest income |
10,179 | 10,910 | 10,831 | 10,350 | 10,140 | |||||||||
INTEREST EXPENSE |
||||||||||||||
Interest on deposits |
2,941 | 3,433 | 3,334 | 3,180 | 3,014 | |||||||||
Interest on short-term borrowings |
523 | 673 | 801 | 706 | 669 | |||||||||
Interest on long-term debt |
1,963 | 2,174 | 2,145 | 2,015 | 1,957 | |||||||||
Total interest expense |
5,427 | 6,280 | 6,280 | 5,901 | 5,640 | |||||||||
Net interest income |
4,752 | 4,630 | 4,551 | 4,449 | 4,500 | |||||||||
Provision for credit losses |
2,831 | 1,497 | 408 | 179 | 177 | |||||||||
Net interest income after provision for credit losses |
1,921 | 3,133 | 4,143 | 4,270 | 4,323 | |||||||||
FEE AND OTHER INCOME |
||||||||||||||
Service charges |
676 | 716 | 689 | 667 | 614 | |||||||||
Other banking fees |
498 | 497 | 471 | 449 | 416 | |||||||||
Commissions |
914 | 970 | 600 | 649 | 659 | |||||||||
Fiduciary and asset management fees |
1,439 | 1,436 | 1,029 | 1,015 | 953 | |||||||||
Advisory, underwriting and other investment banking fees |
261 | 249 | 393 | 454 | 407 | |||||||||
Trading account profits (losses) |
(308 | ) | (524 | ) | (301 | ) | 195 | 128 | ||||||
Principal investing |
446 | 41 | 372 | 298 | 48 | |||||||||
Securities gains (losses) |
(205 | ) | (320 | ) | (34 | ) | 23 | 53 | ||||||
Other income |
(630 | ) | (321 | ) | (286 | ) | 490 | 456 | ||||||
Total fee and other income |
3,091 | 2,744 | 2,933 | 4,240 | 3,734 | |||||||||
NONINTEREST EXPENSE |
||||||||||||||
Salaries and employee benefits |
3,260 | 3,468 | 2,628 | 3,122 | 2,972 | |||||||||
Occupancy |
379 | 375 | 325 | 331 | 312 | |||||||||
Equipment |
323 | 334 | 283 | 309 | 307 | |||||||||
Marketing |
97 | 80 | 74 | 78 | 62 | |||||||||
Communications and supplies |
186 | 191 | 176 | 178 | 173 | |||||||||
Professional and consulting fees |
196 | 271 | 194 | 205 | 177 | |||||||||
Other intangible amortization |
103 | 111 | 92 | 103 | 118 | |||||||||
Merger-related and restructuring expenses |
241 | 187 | 36 | 32 | 10 | |||||||||
Sundry expense |
656 | 769 | 717 | 532 | 490 | |||||||||
Total noninterest expense |
5,441 | 5,786 | 4,525 | 4,890 | 4,621 | |||||||||
Minority interest in income of consolidated subsidiaries |
155 | 107 | 189 | 139 | 136 | |||||||||
Income (loss) from continuing operations before income taxes (benefits) |
(584 | ) | (16 | ) | 2,362 | 3,481 | 3,300 | |||||||
Income taxes (benefits) |
(234 | ) | (209 | ) | 656 | 1,140 | 998 | |||||||
Income (loss) from continuing operations |
(350 | ) | 193 | 1,706 | 2,341 | 2,302 | ||||||||
Discontinued operations, net of income taxes |
| (142 | ) | (88 | ) | | | |||||||
Net income (loss) |
(350 | ) | 51 | 1,618 | 2,341 | 2,302 | ||||||||
Dividends on preferred stock |
43 | | | | | |||||||||
Net income (loss) available to common stockholders |
$ | (393 | ) | 51 | 1,618 | 2,341 | 2,302 | |||||||
PER COMMON SHARE DATA (after preferred stock dividends) |
||||||||||||||
Basic earnings |
||||||||||||||
Income (loss) from continuing operations |
$ | (0.20 | ) | 0.10 | 0.91 | 1.24 | 1.22 | |||||||
Net income (loss) available to common stockholders |
(0.20 | ) | 0.03 | 0.86 | 1.24 | 1.22 | ||||||||
Diluted earnings (a) |
||||||||||||||
Income (loss) from continuing operations |
(0.20 | ) | 0.10 | 0.90 | 1.22 | 1.20 | ||||||||
Net income (loss) available to common stockholders |
(0.20 | ) | 0.03 | 0.85 | 1.22 | 1.20 | ||||||||
Cash dividends |
$ | 0.64 | 0.64 | 0.64 | 0.56 | 0.56 | ||||||||
AVERAGE COMMON SHARES |
||||||||||||||
Basic |
1,963 | 1,959 | 1,885 | 1,891 | 1,894 | |||||||||
Diluted |
1,977 | 1,983 | 1,910 | 1,919 | 1,925 | |||||||||
(a) | Calculated using average basic common shares in the first quarter of 2008. |
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2008 |
||||||||||||||||||||
(In millions) |
General Bank |
Wealth Management |
Corporate and Investment Bank |
Capital Management |
Parent |
Net Merger- Related and Restructuring Expenses (b) |
Total |
|||||||||||||
CONSOLIDATED |
||||||||||||||||||||
Net interest income (a) |
$ | 3,455 | 181 | 1,032 | 274 | (137 | ) | (53 | ) | 4,752 | ||||||||||
Fee and other income |
990 | 211 | (159 | ) | 2,191 | (142 | ) | | 3,091 | |||||||||||
Intersegment revenue |
55 | 5 | (50 | ) | (10 | ) | | | | |||||||||||
Total revenue (a) |
4,500 | 397 | 823 | 2,455 | (279 | ) | (53 | ) | 7,843 | |||||||||||
Provision for credit losses |
569 | 5 | 197 | | 2,060 | | 2,831 | |||||||||||||
Noninterest expense |
2,050 | 246 | 747 | 1,855 | 302 | 241 | 5,441 | |||||||||||||
Minority interest |
| | | | 198 | (43 | ) | 155 | ||||||||||||
Income taxes (benefits) |
675 | 54 | (65 | ) | 218 | (1,041 | ) | (75 | ) | (234 | ) | |||||||||
Tax-equivalent adjustment |
11 | | 21 | 1 | 20 | (53 | ) | | ||||||||||||
Net income (loss) |
1,195 | 92 | (77 | ) | 381 | (1,818 | ) | (123 | ) | (350 | ) | |||||||||
Dividends on preferred stock |
| | | | 43 | | 43 | |||||||||||||
Net income (loss) available to common stockholders |
$ | 1,195 | 92 | (77 | ) | 381 | (1,861 | ) | (123 | ) | (393 | ) | ||||||||
Three Months Ended December 31, 2007 |
||||||||||||||||||||
(In millions) |
General Bank |
Wealth Management |
Corporate and Investment Bank |
Capital Management |
Parent |
Net Merger- Related and Restructuring Expenses (b) |
Total |
|||||||||||||
CONSOLIDATED |
||||||||||||||||||||
Net interest income (a) |
$ | 3,402 | 183 | 988 | 318 | (217 | ) | (44 | ) | 4,630 | ||||||||||
Fee and other income |
929 | 214 | (555 | ) | 2,211 | (55 | ) | | 2,744 | |||||||||||
Intersegment revenue |
58 | 3 | (50 | ) | (11 | ) | | | | |||||||||||
Total revenue (a) |
4,389 | 400 | 383 | 2,518 | (272 | ) | (44 | ) | 7,374 | |||||||||||
Provision for credit losses |
320 | 7 | 112 | | 1,058 | | 1,497 | |||||||||||||
Noninterest expense |
2,041 | 249 | 952 | 1,938 | 419 | 187 | 5,786 | |||||||||||||
Minority interest |
| | | | 118 | (11 | ) | 107 | ||||||||||||
Income taxes (benefits) |
730 | 53 | (269 | ) | 211 | (866 | ) | (68 | ) | (209 | ) | |||||||||
Tax-equivalent adjustment |
11 | | 19 | 1 | 13 | (44 | ) | | ||||||||||||
Income (loss) from continuing operations |
1,287 | 91 | (431 | ) | 368 | (1,014 | ) | (108 | ) | 193 | ||||||||||
Discontinued operations, net of income taxes |
| | | | (142 | ) | | (142 | ) | |||||||||||
Net income (loss) |
$ | 1,287 | 91 | (431 | ) | 368 | (1,156 | ) | (108 | ) | 51 | |||||||||
PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended March 31, 2007 | |||||||||||||||||||
(In millions) |
General Bank |
Wealth Management |
Corporate and Investment Bank |
Capital Management |
Parent |
Net Merger- Related and Restructuring Expenses (b) |
Total | ||||||||||||
CONSOLIDATED |
|||||||||||||||||||
Net interest income (a) |
$ | 3,398 | 181 | 716 | 259 | (17 | ) | (37 | ) | 4,500 | |||||||||
Fee and other income |
845 | 196 | 1,109 | 1,477 | 107 | | 3,734 | ||||||||||||
Intersegment revenue |
47 | 3 | (43 | ) | (8 | ) | 1 | | | ||||||||||
Total revenue (a) |
4,290 | 380 | 1,782 | 1,728 | 91 | (37 | ) | 8,234 | |||||||||||
Provision for credit losses |
147 | 1 | 6 | | 23 | | 177 | ||||||||||||
Noninterest expense |
1,869 | 247 | 911 | 1,237 | 347 | 10 | 4,621 | ||||||||||||
Minority interest |
| | | | 136 | | 136 | ||||||||||||
Income taxes (benefits) |
819 | 48 | 305 | 179 | (349 | ) | (4 | ) | 998 | ||||||||||
Tax-equivalent adjustment |
11 | | 10 | | 16 | (37 | ) | | |||||||||||
Net income (loss) |
$ | 1,444 | 84 | 550 | 312 | (82 | ) | (6 | ) | 2,302 | |||||||||
(a) | Tax-equivalent. |
(b) | The tax-equivalent amounts are eliminated herein in order for Total amounts to agree with amounts appearing in the Consolidated Statements of Income. |
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANSON-BALANCE SHEET, AND MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
2008 |
2007 |
|||||||||||||||
(In millions) |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
|||||||||||
ON-BALANCE SHEET LOAN PORTFOLIO COMMERCIAL |
||||||||||||||||
Commercial, financial and agricultural |
$ | 119,193 | 112,509 | 109,269 | 102,397 | 99,687 | ||||||||||
Real estateconstruction and other |
18,597 | 18,543 | 18,167 | 17,449 | 16,965 | |||||||||||
Real estatemortgage |
26,370 | 23,846 | 21,514 | 20,448 | 20,130 | |||||||||||
Lease financing |
23,637 | 23,913 | 23,966 | 24,083 | 24,053 | |||||||||||
Foreign |
33,616 | 29,540 | 26,471 | 20,959 | 16,240 | |||||||||||
Total commercial |
221,413 | 208,351 | 199,387 | 185,336 | 177,075 | |||||||||||
CONSUMER |
||||||||||||||||
Real estate secured |
230,197 | 227,719 | 225,355 | 220,293 | 220,682 | |||||||||||
Student loans |
9,324 | 8,149 | 7,742 | 6,757 | 8,479 | |||||||||||
Installment loans |
27,437 | 25,635 | 24,763 | 25,017 | 23,665 | |||||||||||
Total consumer |
266,958 | 261,503 | 257,860 | 252,067 | 252,826 | |||||||||||
Total loans |
488,371 | 469,854 | 457,247 | 437,403 | 429,901 | |||||||||||
Unearned income |
(7,889 | ) | (7,900 | ) | (8,041 | ) | (8,283 | ) | (8,238 | ) | ||||||
Loans, net (On-balance sheet) |
$ | 480,482 | 461,954 | 449,206 | 429,120 | 421,663 | ||||||||||
MANAGED PORTFOLIO (a) |
||||||||||||||||
COMMERCIAL |
||||||||||||||||
On-balance sheet loan portfolio |
$ | 221,413 | 208,351 | 199,387 | 185,336 | 177,075 | ||||||||||
Securitized loansoff-balance sheet |
120 | 131 | 142 | 170 | 181 | |||||||||||
Loans held for sale |
3,342 | 9,414 | 13,905 | 11,573 | 10,467 | |||||||||||
Total commercial |
224,875 | 217,896 | 213,434 | 197,079 | 187,723 | |||||||||||
CONSUMER |
||||||||||||||||
Real estate secured |
||||||||||||||||
On-balance sheet loan portfolio |
230,197 | 227,719 | 225,355 | 220,293 | 220,682 | |||||||||||
Securitized loansoff-balance sheet |
6,845 | 7,230 | 7,625 | 8,112 | 6,595 | |||||||||||
Securitized loans included in securities |
11,683 | 10,755 | 5,963 | 6,091 | 5,629 | |||||||||||
Loans held for sale |
5,960 | 4,816 | 3,583 | 4,079 | 4,089 | |||||||||||
Total real estate secured |
254,685 | 250,520 | 242,526 | 238,575 | 236,995 | |||||||||||
Student |
||||||||||||||||
On-balance sheet loan portfolio |
9,324 | 8,149 | 7,742 | 6,757 | 8,479 | |||||||||||
Securitized loansoff-balance sheet |
2,586 | 2,811 | 2,856 | 2,905 | 3,045 | |||||||||||
Securitized loans included in securities |
52 | 52 | 52 | 52 | 52 | |||||||||||
Loans held for sale |
| | 1,968 | 2,046 | | |||||||||||
Total student |
11,962 | 11,012 | 12,618 | 11,760 | 11,576 | |||||||||||
Installment |
||||||||||||||||
On-balance sheet loan portfolio |
27,437 | 25,635 | 24,763 | 25,017 | 23,665 | |||||||||||
Securitized loansoff-balance sheet |
1,968 | 2,263 | 2,572 | 3,105 | 2,851 | |||||||||||
Securitized loans included in securities |
39 | 47 | 55 | 116 | 126 | |||||||||||
Loans held for sale |
2,127 | 2,542 | 1,975 | 35 | 476 | |||||||||||
Total installment |
31,571 | 30,487 | 29,365 | 28,273 | 27,118 | |||||||||||
Total consumer |
298,218 | 292,019 | 284,509 | 278,608 | 275,689 | |||||||||||
Total managed portfolio |
$ | 523,093 | 509,915 | 497,943 | 475,687 | 463,412 | ||||||||||
SERVICING PORTFOLIO (b) |
||||||||||||||||
Commercial |
$ | 354,624 | 353,464 | 337,721 | 298,374 | 271,038 | ||||||||||
Consumer |
$ | 27,415 | 27,967 | 28,474 | 26,789 | 25,952 | ||||||||||
(a) | The managed portfolio includes the on-balance sheet loan portfolio, loans securitized for which the retained interests are classified in securities on-balance sheet, loans held for sale on-balance sheet and the off-balance sheet portfolio of securitized loans sold, where we service the loans. |
(b) | The servicing portfolio consists of third party commercial and consumer loans for which our sole function is that of servicing the loans for the third parties. |
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES
(Unaudited)
2008 |
2007 |
|||||||||||||||
(In millions) |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
|||||||||||
ALLOWANCE FOR CREDIT LOSSES (a) |
||||||||||||||||
Balance, beginning of period |
$ | 4,717 | 3,691 | 3,552 | 3,533 | 3,514 | ||||||||||
Provision for credit losses |
2,834 | 1,467 | 381 | 168 | 175 | |||||||||||
Provision for credit losses relating to loans |
7 | 6 | 3 | 4 | 1 | |||||||||||
Provision for credit losses for unfunded |
(10 | ) | 24 | 24 | 7 | 1 | ||||||||||
LOAN LOSSES |
||||||||||||||||
Commercial, financial and agricultural |
(171 | ) | (67 | ) | (41 | ) | (39 | ) | (34 | ) | ||||||
Commercial real estateconstruction and mortgage |
(81 | ) | (117 | ) | (5 | ) | (4 | ) | (6 | ) | ||||||
Total commercial |
(252 | ) | (184 | ) | (46 | ) | (43 | ) | (40 | ) | ||||||
Real estate secured |
(351 | ) | (156 | ) | (59 | ) | (40 | ) | (33 | ) | ||||||
Student loans |
(3 | ) | (4 | ) | (5 | ) | (2 | ) | (3 | ) | ||||||
Installment and other loans (b) |
(242 | ) | (225 | ) | (168 | ) | (138 | ) | (142 | ) | ||||||
Total consumer |
(596 | ) | (385 | ) | (232 | ) | (180 | ) | (178 | ) | ||||||
Total loan losses |
(848 | ) | (569 | ) | (278 | ) | (223 | ) | (218 | ) | ||||||
LOAN RECOVERIES |
||||||||||||||||
Commercial, financial and agricultural |
14 | 22 | 9 | 15 | 9 | |||||||||||
Commercial real estateconstruction and mortgage |
1 | | 3 | | 3 | |||||||||||
Total commercial |
15 | 22 | 12 | 15 | 12 | |||||||||||
Real estate secured |
10 | 9 | 12 | 11 | 6 | |||||||||||
Student loans |
1 | 2 | 3 | | 1 | |||||||||||
Installment and other loans (b) |
57 | 75 | 45 | 47 | 44 | |||||||||||
Total consumer |
68 | 86 | 60 | 58 | 51 | |||||||||||
Total loan recoveries |
83 | 108 | 72 | 73 | 63 | |||||||||||
Net charge-offs |
(765 | ) | (461 | ) | (206 | ) | (150 | ) | (155 | ) | ||||||
Allowance relating to loans acquired, transferred to loans held for sale or sold |
(16 | ) | (10 | ) | (63 | ) | (10 | ) | (3 | ) | ||||||
Balance, end of period |
$ | 6,767 | 4,717 | 3,691 | 3,552 | 3,533 | ||||||||||
ALLOWANCE FOR CREDIT LOSSES |
||||||||||||||||
Allowance for loan losses |
$ | 6,567 | 4,507 | 3,505 | 3,390 | 3,378 | ||||||||||
Reserve for unfunded lending commitments |
200 | 210 | 186 | 162 | 155 | |||||||||||
Total allowance for credit losses |
$ | 6,767 | 4,717 | 3,691 | 3,552 | 3,533 | ||||||||||
ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||
as % of loans, net |
1.37 | % | 0.98 | 0.78 | 0.79 | 0.80 | ||||||||||
as % of nonaccrual and restructured loans (c) |
84 | 90 | 129 | 174 | 207 | |||||||||||
as % of nonperforming assets (c) |
78 | 84 | 115 | 157 | 189 | |||||||||||
ALLOWANCE FOR CREDIT LOSSES |
||||||||||||||||
as % of loans, net |
1.41 | % | 1.02 | 0.82 | 0.83 | 0.84 | ||||||||||
NET CHARGE-OFFS AS % OF AVERAGE LOANS, NET (d) |
||||||||||||||||
Commercial, financial and agricultural |
0.41 | % | 0.12 | 0.10 | 0.07 | 0.08 | ||||||||||
Commercial real estateconstruction and mortgage |
0.73 | 1.12 | 0.02 | 0.04 | 0.04 | |||||||||||
Total commercial |
0.48 | 0.34 | 0.08 | 0.07 | 0.07 | |||||||||||
Real estate secured |
0.59 | 0.26 | 0.08 | 0.05 | 0.05 | |||||||||||
Student loans |
0.08 | 0.10 | 0.14 | 0.07 | 0.10 | |||||||||||
Installment and other loans (b) |
2.76 | 2.35 | 1.99 | 1.47 | 1.67 | |||||||||||
Total consumer |
0.79 | 0.46 | 0.27 | 0.19 | 0.20 | |||||||||||
Total as % of average loans, net |
0.66 | % | 0.41 | 0.19 | 0.14 | 0.15 | ||||||||||
CONSUMER REAL ESTATE SECURED NET CHARGE-OFFS |
||||||||||||||||
First lien |
$ | (291 | ) | (122 | ) | (32 | ) | (17 | ) | (15 | ) | |||||
Second lien |
(50 | ) | (25 | ) | (15 | ) | (12 | ) | (12 | ) | ||||||
Total consumer real estate secured net charge-offs |
$ | (341 | ) | (147 | ) | (47 | ) | (29 | ) | (27 | ) | |||||
(a) | The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. |
(b) | Principally auto loans. |
(c) | These ratios do not include nonperforming assets included in loans held for sale. |
(d) | Annualized. |
PAGE 17
WACHOVIA CORPORATION AND SUBSIDIARIES
NONPERFORMING ASSETS
(Unaudited)
2008 |
2007 | |||||||||||
(In millions) |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter | |||||||
NONPERFORMING ASSETS |
||||||||||||
Nonaccrual loans |
||||||||||||
Commercial |
||||||||||||
Commercial, financial and agricultural |
$ | 908 | 602 | 354 | 318 | 303 | ||||||
Commercial real estate - construction and mortgage |
1,750 | 1,059 | 289 | 161 | 117 | |||||||
Total commercial |
2,658 | 1,661 | 643 | 479 | 420 | |||||||
Consumer |
||||||||||||
Real estate secured |
||||||||||||
First lien |
5,015 | 3,234 | 1,986 | 1,380 | 1,124 | |||||||
Second lien |
75 | 58 | 41 | 44 | 37 | |||||||
Installment and other loans (a) |
40 | 42 | 45 | 42 | 51 | |||||||
Total consumer |
5,130 | 3,334 | 2,072 | 1,466 | 1,212 | |||||||
Total nonaccrual loans |
7,788 | 4,995 | 2,715 | 1,945 | 1,632 | |||||||
Troubled debt restructurings (b) |
56 | | | | | |||||||
Foreclosed properties |
530 | 389 | 334 | 207 | 155 | |||||||
Total nonperforming assets |
$ | 8,374 | 5,384 | 3,049 | 2,152 | 1,787 | ||||||
as % of loans, net, and foreclosed properties (c) |
1.74 | % | 1.16 | 0.68 | 0.50 | 0.42 | ||||||
Nonperforming assets included in loans held for sale |
||||||||||||
Commercial |
$ | | | | | 1 | ||||||
Consumer |
5 | 62 | 59 | 42 | 25 | |||||||
Total nonperforming assets included in loans held for sale |
5 | 62 | 59 | 42 | 26 | |||||||
Nonperforming assets included in loans and in loans held for sale |
$ | 8,379 | 5,446 | 3,108 | 2,194 | 1,813 | ||||||
as % of loans, net, foreclosed properties and loans held for sale (d) |
1.70 | % | 1.14 | 0.66 | 0.49 | 0.42 | ||||||
PAST DUE LOANS 90 DAYS AND OVER, AND NONACCRUAL LOANS (c) |
||||||||||||
Accruing loans past due 90 days and over |
$ | 1,047 | 708 | 590 | 562 | 555 | ||||||
Nonaccrual loans |
7,788 | 4,995 | 2,715 | 1,945 | 1,632 | |||||||
Total past due loans 90 days and over, and nonaccrual loans |
$ | 8,835 | 5,703 | 3,305 | 2,507 | 2,187 | ||||||
Commercial as % of loans, net |
1.31 | % | 0.89 | 0.38 | 0.31 | 0.28 | ||||||
Consumer as % of loans, net |
2.26 | % | 1.49 | 1.00 | 0.78 | 0.68 | ||||||
(a) | Principally auto loans; nonaccrual status does not apply to student loans. |
(b) | Troubled debt restructurings were not significant prior to the first quarter of 2008. |
(c) | These ratios do not include nonperforming assets included in loans held for sale. |
(d) | These ratios reflect nonperforming loans included in loans held for sale. Loans held for sale are recorded at the lower of cost or market value, and accordingly, the amounts shown and included in the ratios are net of the transferred allowance for loan losses and the lower of cost or market value adjustments. |
PAGE 18
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
2008 |
2007 |
|||||||||||||||
(In millions, except per share data) |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
|||||||||||
ASSETS |
||||||||||||||||
Cash and due from banks |
$ | 14,703 | 15,124 | 12,681 | 12,065 | 12,593 | ||||||||||
Interest-bearing bank balances |
3,236 | 3,057 | 4,449 | 2,726 | 2,591 | |||||||||||
Federal funds sold and securities purchased under resale agreements |
10,644 | 15,449 | 11,995 | 11,511 | 10,322 | |||||||||||
Total cash and cash equivalents |
28,583 | 33,630 | 29,125 | 26,302 | 25,506 | |||||||||||
Trading account assets |
72,592 | 55,882 | 54,835 | 51,540 | 44,161 | |||||||||||
Securities |
114,183 | 115,037 | 111,827 | 106,184 | 106,841 | |||||||||||
Loans, net of unearned income |
480,482 | 461,954 | 449,206 | 429,120 | 421,663 | |||||||||||
Allowance for loan losses |
(6,567 | ) | (4,507 | ) | (3,505 | ) | (3,390 | ) | (3,378 | ) | ||||||
Loans, net |
473,915 | 457,447 | 445,701 | 425,730 | 418,285 | |||||||||||
Loans held for sale |
11,429 | 16,772 | 21,431 | 17,733 | 15,032 | |||||||||||
Premises and equipment |
6,733 | 6,605 | 6,002 | 6,080 | 6,058 | |||||||||||
Due from customers on acceptances |
1,109 | 1,418 | 1,295 | 831 | 992 | |||||||||||
Goodwill |
43,068 | 43,122 | 38,848 | 38,766 | 38,838 | |||||||||||
Other intangible assets |
2,038 | 2,119 | 1,380 | 1,468 | 1,570 | |||||||||||
Other assets |
55,240 | 50,864 | 43,724 | 40,794 | 45,386 | |||||||||||
Total assets |
$ | 808,890 | 782,896 | 754,168 | 715,428 | 702,669 | ||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||
Deposits |
||||||||||||||||
Noninterest-bearing deposits |
60,951 | 60,893 | 56,825 | 62,112 | 63,399 | |||||||||||
Interest-bearing deposits |
384,013 | 388,236 | 365,112 | 347,918 | 341,871 | |||||||||||
Total deposits |
444,964 | 449,129 | 421,937 | 410,030 | 405,270 | |||||||||||
Short-term borrowings |
57,857 | 50,393 | 62,714 | 52,715 | 47,144 | |||||||||||
Bank acceptances outstanding |
1,118 | 1,424 | 1,303 | 840 | 1,004 | |||||||||||
Trading account liabilities |
28,887 | 21,585 | 17,771 | 19,319 | 17,291 | |||||||||||
Other liabilities |
19,036 | 19,151 | 18,424 | 18,080 | 16,741 | |||||||||||
Long-term debt |
175,653 | 161,007 | 158,584 | 142,047 | 142,334 | |||||||||||
Total liabilities |
727,515 | 702,689 | 680,733 | 643,031 | 629,784 | |||||||||||
Minority interest in net assets of consolidated subsidiaries |
3,068 | 3,335 | 3,295 | 3,131 | 3,099 | |||||||||||
STOCKHOLDERS EQUITY |
||||||||||||||||
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at March 31, 2008 |
| | | | | |||||||||||
Non-Cumulative Perpetual Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized |
| | | | | |||||||||||
Non-Cumulative Perpetual Class A Preferred Stock, Series J, $1,000 liquidation preference per share, 92 million depositary shares issued and outstanding at March 31, 2008 |
2,300 | 2,300 | | | | |||||||||||
Non-Cumulative Perpetual Class A Preferred Stock, Series K, $1,000 liquidation preference per share, 3.5 million shares issued and outstanding at March 31, 2008 |
3,500 | | | | | |||||||||||
Common stock, $3.33-1/3 par value, authorized 3 billion shares, outstanding 1.965 billion shares at March 31, 2008 |
6,551 | 6,534 | 6,283 | 6,289 | 6,316 | |||||||||||
Paid-in capital |
56,368 | 56,149 | 51,938 | 51,905 | 52,026 | |||||||||||
Retained earnings |
11,763 | 13,456 | 14,670 | 14,335 | 13,378 | |||||||||||
Accumulated other comprehensive income, net |
(2,175) | (1,567) | (2,751) | (3,263) | (1,934) | |||||||||||
Total stockholders equity |
78,307 | 76,872 | 70,140 | 69,266 | 69,786 | |||||||||||
Total liabilities and stockholders equity |
$ | 808,890 | 782,896 | 754,168 | 715,428 | 702,669 | ||||||||||
PAGE 19
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
FIRST QUARTER 2008 |
FOURTH QUARTER 2007 |
|||||||||||||||||
(In millions) |
Average Balances |
Interest Income/ Expense |
Average Rates Earned/ Paid |
Average Balances |
Interest Income/ Expense |
Average Rates Earned/ Paid |
||||||||||||
ASSETS |
||||||||||||||||||
Interest-bearing bank balances |
$ | 4,253 | 51 | 4.85 | % | $ | 5,083 | 64 | 5.05 | % | ||||||||
Federal funds sold and securities purchased under resale agreements |
11,865 | 103 | 3.49 | 12,901 | 155 | 4.77 | ||||||||||||
Trading account assets |
44,655 | 589 | 5.28 | 37,694 | 569 | 6.04 | ||||||||||||
Securities |
110,401 | 1,545 | 5.60 | 115,436 | 1,625 | 5.62 | ||||||||||||
Loans |
||||||||||||||||||
Commercial |
||||||||||||||||||
Commercial, financial and agricultural |
115,377 | 1,671 | 5.82 | 111,500 | 1,908 | 6.79 | ||||||||||||
Real estateconstruction and other |
18,634 | 251 | 5.42 | 18,435 | 318 | 6.85 | ||||||||||||
Real estatemortgage |
25,291 | 374 | 5.95 | 22,973 | 426 | 7.36 | ||||||||||||
Lease financing |
7,167 | 140 | 7.79 | 7,374 | 145 | 7.82 | ||||||||||||
Foreign |
32,109 | 389 | 4.86 | 27,882 | 380 | 5.42 | ||||||||||||
Total commercial |
198,578 | 2,825 | 5.72 | 188,164 | 3,177 | 6.70 | ||||||||||||
Consumer |
||||||||||||||||||
Real estate secured |
231,392 | 3,926 | 6.79 | 227,893 | 4,042 | 7.08 | ||||||||||||
Student loans |
9,155 | 113 | 4.96 | 8,073 | 126 | 6.19 | ||||||||||||
Installment loans |
26,811 | 659 | 9.88 | 25,675 | 651 | 10.04 | ||||||||||||
Total consumer |
267,358 | 4,698 | 7.04 | 261,641 | 4,819 | 7.35 | ||||||||||||
Total loans |
465,936 | 7,523 | 6.48 | 449,805 | 7,996 | 7.08 | ||||||||||||
Loans held for sale |
11,592 | 223 | 7.71 | 18,998 | 360 | 7.53 | ||||||||||||
Other earning assets |
10,331 | 146 | 5.69 | 10,223 | 166 | 6.48 | ||||||||||||
Total earning assets excluding derivatives |
659,033 | 10,180 | 6.19 | 650,140 | 10,935 | 6.70 | ||||||||||||
Risk management derivatives (a) |
| 52 | 0.04 | | 19 | 0.01 | ||||||||||||
Total earning assets including derivatives |
659,033 | 10,232 | 6.23 | 650,140 | 10,954 | 6.71 | ||||||||||||
Cash and due from banks |
11,645 | 12,028 | ||||||||||||||||
Other assets |
112,915 | 101,319 | ||||||||||||||||
Total assets |
$ | 783,593 | $ | 763,487 | ||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||||
Interest-bearing deposits |
||||||||||||||||||
Savings and NOW accounts |
86,452 | 236 | 1.10 | 83,370 | 345 | 1.64 | ||||||||||||
Money market accounts |
128,074 | 747 | 2.34 | 121,717 | 949 | 3.09 | ||||||||||||
Other consumer time |
123,655 | 1,437 | 4.68 | 127,061 | 1,557 | 4.86 | ||||||||||||
Foreign |
26,197 | 231 | 3.55 | 27,354 | 306 | 4.44 | ||||||||||||
Other time |
22,643 | 265 | 4.71 | 20,169 | 263 | 5.16 | ||||||||||||
Total interest-bearing deposits |
387,021 | 2,916 | 3.03 | 379,671 | 3,420 | 3.57 | ||||||||||||
Federal funds purchased and securities sold under repurchase agreements |
35,956 | 308 | 3.45 | 36,386 | 413 | 4.50 | ||||||||||||
Commercial paper |
5,509 | 38 | 2.74 | 7,272 | 78 | 4.27 | ||||||||||||
Securities sold short |
6,919 | 62 | 3.63 | 6,728 | 61 | 3.62 | ||||||||||||
Other short-term borrowings |
10,154 | 45 | 1.77 | 10,369 | 58 | 2.24 | ||||||||||||
Long-term debt |
165,540 | 1,961 | 4.75 | 158,704 | 2,129 | 5.34 | ||||||||||||
Total interest-bearing liabilities excluding derivatives |
611,099 | 5,330 | 3.51 | 599,130 | 6,159 | 4.08 | ||||||||||||
Risk management derivatives (a) |
| 97 | 0.06 | | 121 | 0.08 | ||||||||||||
Total interest-bearing liabilities including derivatives |
611,099 | 5,427 | 3.57 | 599,130 | 6,280 | 4.16 | ||||||||||||
Noninterest-bearing deposits |
56,332 | 57,895 | ||||||||||||||||
Other liabilities |
37,415 | 32,476 | ||||||||||||||||
Stockholders equity |
78,747 | 73,986 | ||||||||||||||||
Total liabilities and stockholders equity |
$ | 783,593 | $ | 763,487 | ||||||||||||||
Interest income and rate earnedincluding derivatives |
$ | 10,232 | 6.23 | % | $ | 10,954 | 6.71 | % | ||||||||||
Interest expense and equivalent rate paidincluding derivatives |
5,427 | 3.31 | 6,280 | 3.83 | ||||||||||||||
Net interest income and marginincluding derivatives |
$ | 4,805 | 2.92 | % | $ | 4,674 | 2.88 | % | ||||||||||
(a) | The rates earned and the rates paid on risk management derivatives are based on off-balance sheet notional amounts. The fair value of these instruments is included in other assets and other liabilities. |
PAGE 20
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
THIRD QUARTER 2007 |
SECOND QUARTER 2007 |
FIRST QUARTER 2007 |
|||||||||||||||||||||||||
(In millions) |
Average Balances |
Interest Income/ Expense |
Average Rates Earned/ Paid |
Average Balances |
Interest Income/ Expense |
Average Rates Earned/ Paid |
Average Balances |
Interest Income/ Expense |
Average Rates Earned/ Paid |
||||||||||||||||||
ASSETS |
|||||||||||||||||||||||||||
Interest-bearing bank balances |
$ | 6,459 | 93 | 5.68 | % | $ | 3,384 | 50 | 6.00 | % | $ | 1,523 | 30 | 7.80 | % | ||||||||||||
Federal funds sold and securities purchased under resale agreements |
14,206 | 194 | 5.42 | 12,110 | 158 | 5.25 | 14,124 | 177 | 5.07 | ||||||||||||||||||
Trading account assets |
38,737 | 575 | 5.93 | 35,165 | 519 | 5.90 | 29,681 | 442 | 5.97 | ||||||||||||||||||
Securities |
111,424 | 1,522 | 5.46 | 108,433 | 1,467 | 5.41 | 108,071 | 1,461 | 5.42 | ||||||||||||||||||
Loans |
|||||||||||||||||||||||||||
Commercial |
|||||||||||||||||||||||||||
Commercial, financial and agricultural |
106,263 | 1,927 | 7.19 | 101,012 | 1,805 | 7.16 | 98,413 | 1,736 | 7.16 | ||||||||||||||||||
Real estateconstruction and other |
17,795 | 344 | 7.66 | 17,334 | 329 | 7.62 | 16,508 | 313 | 7.69 | ||||||||||||||||||
Real estatemortgage |
20,883 | 406 | 7.71 | 20,175 | 378 | 7.53 | 20,231 | 380 | 7.61 | ||||||||||||||||||
Lease financing |
7,523 | 146 | 7.80 | 7,759 | 150 | 7.74 | 7,730 | 150 | 7.75 | ||||||||||||||||||
Foreign |
22,208 | 308 | 5.53 | 19,232 | 265 | 5.51 | 14,406 | 196 | 5.49 | ||||||||||||||||||
Total commercial |
174,672 | 3,131 | 7.12 | 165,512 | 2,927 | 7.09 | 157,288 | 2,775 | 7.15 | ||||||||||||||||||
Consumer |
|||||||||||||||||||||||||||
Real estate secured |
223,356 | 4,070 | 7.28 | 222,096 | 4,042 | 7.28 | 225,909 | 4,148 | 7.36 | ||||||||||||||||||
Student loans |
7,299 | 122 | 6.61 | 8,850 | 141 | 6.42 | 8,524 | 136 | 6.47 | ||||||||||||||||||
Installment loans |
24,474 | 614 | 9.96 | 24,799 | 609 | 9.84 | 23,540 | 566 | 9.75 | ||||||||||||||||||
Total consumer |
255,129 | 4,806 | 7.52 | 255,745 | 4,792 | 7.50 | 257,973 | 4,850 | 7.55 | ||||||||||||||||||
Total loans |
429,801 | 7,937 | 7.35 | 421,257 | 7,719 | 7.34 | 415,261 | 7,625 | 7.40 | ||||||||||||||||||
Loans held for sale |
20,209 | 363 | 7.14 | 17,644 | 285 | 6.47 | 16,748 | 255 | 6.16 | ||||||||||||||||||
Other earning assets |
7,937 | 138 | 6.91 | 7,985 | 144 | 7.23 | 8,255 | 139 | 6.82 | ||||||||||||||||||
Total earning assets excluding derivatives |
628,773 | 10,822 | 6.86 | 605,978 | 10,342 | 6.84 | 593,663 | 10,129 | 6.87 | ||||||||||||||||||
Risk management derivatives (a) |
| 42 | 0.02 | | 46 | 0.03 | | 48 | 0.03 | ||||||||||||||||||
Total earning assets including derivatives |
628,773 | 10,864 | 6.88 | 605,978 | 10,388 | 6.87 | 593,663 | 10,177 | 6.90 | ||||||||||||||||||
Cash and due from banks |
11,134 | 11,533 | 12,260 | ||||||||||||||||||||||||
Other assets |
89,097 | 87,262 | 85,106 | ||||||||||||||||||||||||
Total assets |
$ | 729,004 | $ | 704,773 | $ | 691,029 | |||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|||||||||||||||||||||||||||
Interest-bearing deposits |
|||||||||||||||||||||||||||
Savings and NOW accounts |
81,851 | 357 | 1.73 | 83,977 | 367 | 1.75 | 84,247 | 373 | 1.80 | ||||||||||||||||||
Money market accounts |
116,404 | 980 | 3.34 | 111,562 | 976 | 3.51 | 107,785 | 917 | 3.45 | ||||||||||||||||||
Other consumer time |
122,474 | 1,507 | 4.88 | 120,684 | 1,455 | 4.84 | 116,262 | 1,369 | 4.77 | ||||||||||||||||||
Foreign |
23,322 | 292 | 4.97 | 21,871 | 270 | 4.96 | 20,802 | 249 | 4.85 | ||||||||||||||||||
Other time |
13,776 | 187 | 5.40 | 8,051 | 107 | 5.30 | 9,034 | 119 | 5.36 | ||||||||||||||||||
Total interest-bearing deposits |
357,827 | 3,323 | 3.68 | 346,145 | 3,175 | 3.68 | 338,130 | 3,027 | 3.63 | ||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements |
44,334 | 556 | 4.98 | 38,031 | 473 | 4.98 | 35,142 | 430 | 4.97 | ||||||||||||||||||
Commercial paper |
5,799 | 65 | 4.42 | 5,143 | 60 | 4.67 | 4,920 | 57 | 4.72 | ||||||||||||||||||
Securities sold short |
7,420 | 70 | 3.74 | 7,158 | 67 | 3.75 | 8,709 | 83 | 3.86 | ||||||||||||||||||
Other short-term borrowings |
7,793 | 55 | 2.74 | 7,688 | 52 | 2.77 | 6,898 | 44 | 2.54 | ||||||||||||||||||
Long-term debt |
151,226 | 2,067 | 5.44 | 143,504 | 1,923 | 5.37 | 141,979 | 1,880 | 5.35 | ||||||||||||||||||
Total interest-bearing liabilities excluding derivatives |
574,399 | 6,136 | 4.24 | 547,669 | 5,750 | 4.21 | 535,778 | 5,521 | 4.17 | ||||||||||||||||||
Risk management derivatives (a) |
| 144 | 0.10 | | 151 | 0.11 | | 119 | 0.09 | ||||||||||||||||||
Total interest-bearing liabilities including derivatives |
574,399 | 6,280 | 4.34 | 547,669 | 5,901 | 4.32 | 535,778 | 5,640 | 4.26 | ||||||||||||||||||
Noninterest-bearing deposits |
58,280 | 62,273 | 60,976 | ||||||||||||||||||||||||
Other liabilities |
26,468 | 25,514 | 24,955 | ||||||||||||||||||||||||
Stockholders equity |
69,857 | 69,317 | 69,320 | ||||||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 729,004 | $ | 704,773 | $ | 691,029 | |||||||||||||||||||||
Interest income and rate earnedincluding derivatives |
$ | 10,864 | 6.88 | % | $ | 10,388 | 6.87 | % | $ | 10,177 | 6.90 | % | |||||||||||||||
Interest expense and equivalent rate paidincluding derivatives |
6,280 | 3.96 | 5,901 | 3.91 | 5,640 | 3.84 | |||||||||||||||||||||
Net interest income and marginincluding derivatives |
$ | 4,584 | 2.92 | % | $ | 4,487 | 2.96 | % | $ | 4,537 | 3.06 | % | |||||||||||||||
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WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
2008 |
2007 |
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(In millions, except per share data) |
* |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
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Net income (loss) (GAAP) |