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• Record net income up 30 percent and record results in all four major businesses. Results include the impact of the November 1, 2004, acquisition of SouthTrust Corporation.
• Revenue growth of 14 percent more than double expense growth of 6 percent.
• Merger savings and expense discipline drove a 456 basis point improvement in the overhead efficiency ratio to 59.86 percent.
• Sales momentum continued in all four major businesses, although retail brokerage activity remained challenging in line with industry trends.
• Exceptional credit quality with annualized net charge-offs of 0.08 percent of average loans and total nonperforming assets at 0.50 percent of loans, foreclosed properties and loans held for sale.
• Customer satisfaction and loyalty scores continue to set records.

Lines of Business Highlights: General Bank, Capital Management, Wealth Management, Corporate and Investment Banking

CHARLOTTE, N.C. - Wachovia Corp. (NYSE:WB) today reported record net income of $1.62 billion, or $1.01 per share, in the first quarter of 2005 compared with $1.25 billion, or 94 cents per share, in the first quarter of 2004.

Excluding after-tax net merger-related expenses of 2 cents per share in the first quarter of 2005 and 4 cents per share in the first quarter of 2004, first quarter 2005 earnings were $1.65 billion, or $1.03 cents per share, compared with $1.30 billion, or 98 cents per share, in the first quarter of 2004.

"We're pleased with our record net income in the first quarter this year despite the headwinds of challenging retail brokerage markets," said Ken Thompson, Wachovia chairman and chief executive officer. "Great execution on our revenue strategies and expense initiatives produced positive operating leverage and a much improved overhead efficiency ratio. Credit quality continued to be stellar across-the-board. Our merger integration with SouthTrust is proceeding on track and on budget. Our four major businesses generated record earnings, with good sales momentum and market share gains bolstered by industry-leading customer service and loyalty ratings that continue to set records. I'm confident these positive trends will give us great momentum for the rest of this year and beyond."

In the first quarter of 2005 compared with the first quarter of 2004, 14 percent revenue growth reflected balance sheet momentum, which boosted net interest income 19 percent. In addition to the SouthTrust impact, fee and other income growth of 8 percent included a gain on the sale of equity securities received in settlement of loans as well as improved capital markets revenues, partially offset by lower retail brokerage commissions in challenging markets. Expense efficiencies held noninterest expense growth to 6 percent, despite the impact of the SouthTrust acquisition. Provision expense declined $8 million. Net charge-offs declined 12 percent to $46 million, or an annualized 0.08 percent of average net loans. Total nonperforming assets including loans held for sale were $1.20 billion, or 0.50 percent of loans, foreclosed properties and loans held for sale at March 31, 2005.

The increase in average net loans, in addition to SouthTrust, included the effect of loans transferred in the fourth quarter of 2004 from loans held for sale. Consumer loan growth was largely in consumer real-estate secured lending. Higher middle market commercial, small business and commercial real estate loans also reflected the addition of SouthTrust. Including SouthTrust, average core deposits increased 30 percent. Average low-cost core deposits grew 34 percent from the first quarter of 2004, including SouthTrust, to $224.0 billion. Low-cost core deposits are those in demand deposit, interest checking, savings and money market accounts, and exclude CAP accounts and CDs.

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 and other intangible amortization. Segment earnings are the basis on which Wachovia manages and allocates capital to its business segments. Pages 18 and 19 include a reconciliation of segment results to Wachovia's consolidated results of operations in accordance with GAAP.

General Bank

The General Bank includes retail and small business, and commercial customers. The General Bank produced record quarterly segment earnings of $947 million, up 38 percent from the prior year's first quarter. In addition to the impact of SouthTrust, the 26 percent increase in total revenue from the first quarter a year ago was driven by continued strength in low-cost core deposit growth and consumer real estate-secured loans. Fee and other income increased 20 percent from the first quarter a year ago. In addition to the impact from SouthTrust, there was strength in debit card interchange income and gains on sales of loans. This growth offset a decline in commercial service charges that reflected higher earnings credit rates on commercial customer balances. Noninterest expense increased 17 percent from the first quarter a year ago primarily due to SouthTrust. Strong expense management resulted in an improved overhead efficiency ratio of 49.91 percent, down from 53.71 percent a year earlier.

Average core deposits increased 26 percent from the prior year quarter, including 27 percent year over year growth in average low-cost core deposits. Average loans increased 35 percent year over year. This growth included average core deposits and average loans from SouthTrust. In addition, certificates of deposit and individual retirement account deposits grew 31 percent year over year.

Provision expense declined 16 percent from the first quarter of 2004, primarily reflecting risk reduction strategies implemented in prior years, as well as solid improvements in both commercial and consumer loan losses and a strengthening economy.

Capital Management

Capital Management includes retail brokerage services and asset management. Earnings increased 6 percent from the first quarter of 2004 to a record $156 million despite a revenue decline of 8 percent, as noninterest expense declined 11 percent largely due to the benefit of the retail brokerage integration and lower revenue-based compensation expense. Revenues declined on lower brokerage transactional activity, which offset growth in net interest income. Deposit growth from the first quarter of 2004 reflected growth in an FDIC-insured sweep product that was introduced in late 2003. The addition of SouthTrust had an insignificant impact on this segment's first quarter 2005 results.

Total assets under management at March 31, 2005, declined modestly from December 31, 2004, to $252.5 billion. Mutual fund assets declined 6 percent to $100.4 billion from year-end 2004 primarily due to institutional money market fund outflows, offsetting positive net equity fund sales.

Wealth Management

Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Wealth Management's record segment earnings of $60 million increased 33 percent and revenues increased 10 percent from the first quarter of 2004. A modest decline in fee income was offset by 24 percent growth in net interest income. Balance sheet momentum continued with average loan growth of 26 percent from both consumer and commercial lending and average core deposit growth of 17 percent year over year, primarily in money market balances. Lower insurance commissions primarily resulted from the late first quarter 2004 sale of an insurance brokerage business, which offset growth in trust and investment management fees on higher assets under management. Expense discipline was apparent in modest noninterest expense growth relative to revenue growth, and a 554 basis point improvement in the overhead efficiency ratio. The increase in noninterest expense was due to higher revenue-based incentives and higher personnel expense related to acquisitions. The proposed acquisition of Savannah, Ga.-based Palmer & Cay, Inc., which would place Wachovia Insurance Services among the 10 largest insurance brokerage businesses in the nation, was announced in early April and is expected to close in the second quarter of this year.

Corporate and Investment Bank

The Corporate and Investment Bank includes corporate lending, investment banking, and treasury and international trade finance. Corporate and Investment Bank segment earnings were up 13 percent from the first quarter of 2004 to a record $505 million, reflecting revenue growth of 18 percent. Net interest income grew modestly due to strong core deposit growth and growth in structured products assets. Fee and other income grew 32 percent due to gains on the sale of equity securities received in settlement of loans, as well as strength in advisory and underwriting fees, strong commercial real estate activity and stronger principal investing results. Provision expense was a net recovery of $3 million. Noninterest expense increased 18 percent due to increased revenue-based variable pay and higher other personnel expense, coupled with investment in growth initiatives. Average core deposits grew 29 percent primarily from higher commercial mortgage servicing, international correspondent banking and treasury services. The 26 percent increase in loans reflected higher leasing balances due to the previously reported income tax settlement and the inclusion of SouthTrust, as well as increases in real estate capital markets, international and large corporate loans. Economic capital usage increased due to higher loan balances and an increased expense base.

Wachovia Corporation (NYSE:WB) is one of the largest providers of financial services to retail, brokerage and corporate customers, with retail operations from Connecticut to Florida and west to Texas, and retail brokerage operations nationwide. Wachovia had assets of $506.8 billion, market capitalization of $80.3 billion and stockholders' equity of $46.5 billion at March 31, 2005. Its four core businesses, the General Bank, Capital Management, Wealth Management, and the Corporate and Investment Bank, serve 13 million household and business relationships primarily through 3,277 offices in 15 states and Washington, D.C. Its full-service retail brokerage firm, Wachovia Securities, LLC, also serves clients through 693 offices in 49 states and five Latin American countries. Our Corporate and Investment Bank serves clients primarily in 10 key industry sectors nationwide. Global services are offered through 33 international offices. Online banking and brokerage products and services also are available through Wachovia.com.

Forward-Looking Statements
This news release contains various forward-looking statements. A discussion of various factors that could cause Wachovia Corporation's actual results to differ materially from those expressed in such forward-looking statements is included in Wachovia's filings with the Securities and Exchange Commission, including its Current Report on Form 8-K dated April 15, 2005.

Explanation of Wachovia's Use of Certain Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this news release includes certain non-GAAP financial measures, including those presented on page 1 and on page 9 under the captions “Earnings Excluding Merger-Related and Restructuring Expenses” and “Earnings Excluding Merger-Related and Restructuring Expenses, and Other Intangible Amortization”, and which are reconciled to GAAP financial measures on pages 18 and 19. 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 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 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 Bob Kelly will review Wachovia's first quarter 2005 results in a conference call and audio webcast beginning at 10 a.m. Eastern Daylight Savings 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.

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

Teleconference Instructions: The telephone number for the conference call is 1-888-357-9787 for U.S. callers or 1-706-679-7342 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: Wachovia.

Replay: Friday, April 15, at 12 p.m. EDT and continuing through 5 p.m. EDT Friday, May 13. Replay telephone number is 1-706-645-9291; access code 4081193.

Investors seeking further information should contact the Investor Relations team: Alice Lehman at 704-374-4139, Ellen Taylor at 704-383-1381 or Jeff Richardson at 704-383-8250. Media seeking further information should contact the Corporate Media Relations team: Mary Eshet at 704-383-7777 or Christy Phillips at 704-383-8178.