Edgar Filing: WACHOVIA CORP NEW

Wachovia Corporation

Filed Pursuant to Rule 433

Registration No. 333-150225

LOGO


		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 Wachovia’s capital needs and growth opportunities for each of its business segments, and with an anticipated 40 percent to 50 percent cash payout ratio over the intermediate horizon; and

•

The update in the credit reserve modeling in response to the current and forecasted market environment and its effect on consumer behavior, particularly in stressed markets, resulting in a significant increase in the first quarter 2008 provision for credit losses. In addition, the scope of credit disclosures was increased to provide enhanced insight into the payment option consumer real estate portfolio.

In addition, Wachovia reported a first quarter 2008 net loss of $350 million before preferred dividends, or a net loss available to common stockholders of $393 million, (20 cents per common share). These results, which reflect higher credit costs and the continued disruption in the capital markets, compared with earnings of $2.30 billion, or $1.20 per share, in the first quarter of 2007.

While solid underlying performance was overshadowed by market disruption-related valuation losses of $2.0 billion, Wachovia generated total revenue of $7.9 billion on higher loans and deposits and strength in fiduciary and asset management fees, brokerage commissions and traditional banking fees, including the impact of the A.G. Edwards acquisition.

“I’m deeply disappointed with our first quarter results, but I am confident we’re taking prudent and appropriate actions in this challenging period to restore Wachovia to a more profitable path. The precipitous decline in housing market conditions and unprecedented changes in consumer behavior prompted us to update our credit reserve modeling and rely less heavily on historical trends to forecast losses. As a result, we have substantially increased our reserves,” said Ken Thompson, Wachovia’s chief executive officer. “The most painful decision was to reduce the dividend because it adversely affects our shareholders. But we believe the long-term benefit to

— more —

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.

“It’s important to note that in early 2007 in advance of the market dislocation, we took steps to bolster our liquidity and reduce market-related exposures in products originally intended for distribution,” Thompson added. “We have generally been a provider of liquidity to the market during this period of market disruption, and we also continue to reduce our market-related exposures. The actions we announced today will further enhance and ensure our ongoing financial flexibility to invest and drive future earnings growth. With strengthened reserves and capital, and our strong deposit base, we believe we’re well-positioned to continue to successfully weather this uniquely challenging period.”

Earnings Highlights


	Three Months Ended
	March 31, 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.

— more —

WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 3

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 Wachovia’s four core business segments and is on a segment earnings basis, which excludes net merger-related and restructuring expenses, other intangible amortization and discontinued operations. Segment earnings are the basis on which

— more —

WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 4

Wachovia manages and allocates capital to its business segments. In accordance with Wachovia’s business segment methodology, provision expense in excess of charge-offs, which amounted to $2.1 billion in the first quarter of 2008, is not allocated to business segments.

Pages 13 and 14 include a reconciliation of segment results to Wachovia’s consolidated results of operations in accordance with GAAP.

General Bank Highlights


	Three Months Ended
(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.

— more —

WACHOVIA REPORTS 1ST QUARTER RESULTS; ANNOUNCES CAPITAL INITIATIVES/page 5

•

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.

— more —

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.

— more —

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 nation’s largest diversified financial services companies, with assets of $808.9 billion and market capitalization of $53.8 billion at March 31, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Our retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 18,600 registered representatives in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com.

— more —

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 Corporation’s actual results to differ materially from those expressed in such forward-looking statements is included in Wachovia’s filings with the Securities and Exchange Commission, including its Current Report on Form 8-K dated April 14, 2008.

Explanation of Wachovia’s Use of Certain Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this news release includes certain non-GAAP financial measures, including those presented on page 2 and on page 11 under the captions “Earnings Excluding Merger-Related and Restructuring Expenses, and Discontinued Operations” and “Earnings Excluding Merger-Related and Restructuring Expenses, Other Intangible Amortization and Discontinued Operations”, and which are reconciled to GAAP financial measures on pages 21 and 22. In addition, in this news release certain designated net interest income amounts are presented on a tax-equivalent basis, including the calculation of the overhead efficiency ratio.

Wachovia believes these non-GAAP financial measures provide information useful to investors in understanding the underlying operational performance of the company, its business and performance trends and facilitates comparisons with the performance of others in the financial services industry. Specifically, Wachovia believes the exclusion of merger-related and restructuring expenses, discontinued operations and the cumulative effect of a change in accounting principle permits evaluation and a comparison of results for on-going business operations, and it is on this basis that Wachovia’s management internally assesses the company’s performance. Those non-operating items are excluded from Wachovia’s segment measures used internally to evaluate segment performance in accordance with GAAP because management does not consider them particularly relevant or useful in evaluating the operating performance of our business segments. In addition, because of the significant amount of deposit base intangible amortization, Wachovia believes the exclusion of this expense provides investors with consistent and meaningful comparisons to other financial services firms. Wachovia’s management makes recommendations to its board of directors about dividend payments based on reported earnings excluding merger-related and restructuring expenses, other intangible amortization, discontinued operations and the cumulative effect of a change in accounting principle, and has communicated certain dividend payout ratio goals to investors on this basis. Management believes this payout ratio is useful to investors because it provides investors with a better understanding of and permits investors to monitor Wachovia’s dividend payout policy. Wachovia also believes the presentation of net interest income on a tax-equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry standards. Wachovia operates one of the largest retail brokerage businesses in our industry, and we have presented an overhead efficiency ratio excluding these brokerage services, which management believes is useful to investors in comparing the performance of our banking business with other banking companies.

Although Wachovia believes the above non-GAAP financial measures enhance investors’ understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP basis financial measures.

Earnings Conference Call and Supplemental Materials

Wachovia CEO Ken Thompson and CFO Tom Wurtz will review Wachovia’s first quarter 2008 results in a conference call and audio web cast beginning at 8:00 a.m. Eastern Daylight Saving Time today. This review may include a discussion of certain non-GAAP financial measures. Supplemental materials relating to first quarter results, which also include a reconciliation of any non-GAAP measures to Wachovia’s reported financials, are available on the Internet at Wachovia.com/investor, and investors are encouraged to access these materials in advance of the conference call.

Web cast Instructions: To gain access to the web cast, which will be “listen-only,” go to Wachovia.com/investor and click on the link “Wachovia First Quarter Earnings Audio Web cast.” In order to listen to the web cast, you will need to download either Real Player or Media Player.

Teleconference Instructions: The telephone number for the conference call is 888-357-9787 for U.S. callers or 706-679-7342 for international callers. You will be asked to tell the answering coordinator your name and the name of your firm. Mention the conference Access Code: WB Investor.

Replay: Monday, April 14, by 12:00 Noon EST and continuing through 5 p.m. EST Friday, July 11. Replay telephone number is 706-645-9291; access code: 43662109.

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.

— more —

PAGE 9

WACHOVIA CORPORATION AND SUBSIDIARIES

FINANCIAL TABLES

TABLE OF CONTENTS


		PAGE
Financial Highlights—Five Quarters Ended March 31, 2008		10
Other Financial Data—Five Quarters Ended March 31, 2008		11
Consolidated Statements of Income—Five Quarters Ended March 31, 2008		12
Business Segments—Three Months Ended March 31, 2008 and December 31, 2007		13
Business Segments—Three Months Ended March 31, 2007		14
Loans—On-Balance Sheet, and Managed and Servicing Portfolios—Five Quarters Ended March 31, 2008		15
Allowance for Credit Losses—Five Quarters Ended March 31, 2008		16
Nonperforming Assets—Five Quarters Ended March 31, 2008		17
Consolidated Balance Sheets—Five Quarters Ended March 31, 2008		18
Net Interest Income Summaries—Five Quarters Ended March 31, 2008		19 - 20
Reconciliation of Certain Non-GAAP Financial Measures—Five Quarters Ended March 31, 2008		21 - 22

PAGE 10

WACHOVIA CORPORATION AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS

(Unaudited)


	2008			2007
(Dollars in millions, 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 AND RESTRUCTURING EXPENSES, AND DISCONTINUED OPERATIONS (a) (b)
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

LOANS—ON-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 estate—construction and other		18,597		18,543		18,167		17,449		16,965
Real estate—mortgage		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 loans—off-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 loans—off-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 loans—off-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 loans—off-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 transferred to loans held for sale or sold		7		6		3		4		1
Provision for credit losses for unfunded lending commitments		(10	)	24		24		7		1
LOAN LOSSES
Commercial, financial and agricultural		(171	)	(67	)	(41	)	(39	)	(34	)
Commercial real estate—construction 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 estate—construction 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 estate—construction 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 estate—construction and other		18,634		251	5.42			18,435		318	6.85
Real estate—mortgage		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 earned—including derivatives			$	10,232	6.23	%			$	10,954	6.71	%
Interest expense and equivalent rate paid—including derivatives				5,427	3.31					6,280	3.83

Net interest income and margin—including 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 estate—construction and other		17,795		344	7.66			17,334		329	7.62			16,508		313	7.69
Real estate—mortgage		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 earned—including derivatives			$	10,864	6.88	%			$	10,388	6.87	%			$	10,177	6.90	%
Interest expense and equivalent rate paid—including derivatives				6,280	3.96					5,901	3.91					5,640	3.84

Net interest income and margin—including derivatives			$	4,584	2.92	%			$	4,487	2.96	%			$	4,537	3.06	%

PAGE 21

WACHOVIA CORPORATION AND SUBSIDIARIES

RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES

(Unaudited)

2008

2007

(In millions, except per share data)

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

First
Quarter

INCOME (LOSS) FROM CONTINUING OPERATIONS

Net income (loss) (GAAP)</

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents