Wachovia Historical Financial Press Releases

April 16, 2007
Wachovia Earns $2.30 Billion, EPS up 10% to $1.20 in 1st Quarter 2007
Growth reflects strong retail brokerage and traditional banking market expansion

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1st QUARTER 2007 COMPARED WITH 1st QUARTER 2006

Double-digit earnings growth despite difficult interest rate environment. Results include acquisitions and divestitures.
Record earnings in retail brokerage and asset management.
Average core deposits up 27 percent. Outstanding checking account growth throughout footprint, with excellent results in expanded markets.
Average loans up 59 percent, including acquisitions, with particular strength in commercial and small business lending. Expanded consumer franchise including auto lending and credit cards generating results ahead of expectations.
Solid credit quality; increased provision reflects growth in credit card, commercial and auto lending.
Customer loyalty scores reach high of 52.1%; organic customer acquisition grew 13.4% annualized.

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

CHARLOTTE, N.C. – Wachovia Corp. (NYSE:WB) today reported net income of $2.30 billion, or $1.20 per share, in the first quarter of 2007 compared with $1.73 billion, or $1.09 per share, in the first quarter of 2006.

After-tax net merger-related expenses did not affect earnings per share in the first quarter of 2007 and amounted to 3 cents per share in the first quarter of 2006. Excluding these expenses, earnings were $2.31 billion, or $1.20 per share, in the first quarter of 2007 and $1.77 billion, or $1.12 per share, in the first quarter of 2006. Results also included a lower effective tax rate of 30.99 percent compared with 35.06 percent in the first quarter of 2006.

"Once again our team delivered double-digit earnings growth," said Ken Thompson, Wachovia chairman and chief executive officer. "Our focus on cost control and risk management continues to provide flexibility in the face of the challenging interest rate environment. Most of all, our team’s dedication to serving our customers has a direct impact on our results as we provide industry-leading customer service and grow our base of loyal customers. In addition, we’re seeing very promising results as our cross-business partnerships serve customer needs and generate incremental revenues. The integration of Golden West is on track, and we’re pleased with the cross-sell potential of our expanded mortgage platform, as well as our initial success in cross-selling existing World Savings banking customers."

Results in the first quarter of 2007 included the full quarter impact of the purchase accounting acquisitions of Golden West on October 1, 2006, and Westcorp on March 1, 2006. Results in the first quarter of 2006 included one month of results related to Westcorp and a $100 million termination payment received in relation to the Bank of America/MBNA merger.

In the first quarter of 2007 compared with the first quarter of 2006, Wachovia:

Grew revenue 17 percent on higher loans and deposits primarily due to the addition of Golden West and Westcorp, while higher fee and other income largely reflected strong brokerage managed account fees, growth in fiduciary and asset management fees related to acquisitions and organic growth, and strength in advisory and underwriting fees.
Increased net interest income 27 percent, reflecting higher average commercial loans, up 10 percent, and increased average consumer loans, largely reflecting the impact of acquisitions.
- Commercial loan growth was led by middle-market commercial, business banking and large corporate lending. Consumer loan growth was led by higher real estate-secured loans including the addition of Golden West, increased auto lending, including the addition of Westcorp, and growth in credit card.
- Average core deposits rose 27 percent, including the impact of acquisitions, and average low-cost core deposits were up 4 percent. Growth in lower spread loans, a shift in deposit mix, the impact of acquisitions, and the effects of the inverted yield curve resulted in 20 basis points of margin compression.
Generated 6 percent growth in fee and other income, reflecting continued growth in retail brokerage managed account fees, strong retail brokerage transaction activity and collaboration between Capital Management and the Corporate and Investment Bank to originate and distribute new investment products. Service charges also contributed to solid growth.
Increased noninterest expense 8 percent largely reflecting the acquisition impact, and included higher commissions on revenue growth in Capital Management.
Recorded a provision for credit losses of $177 million largely reflecting growth in auto lending, commercial and credit cards. Net charge-offs were $155 million, or an annualized 0.15 percent of average net loans. Total nonperforming assets including loans held for sale were $1.8 billion, or 0.40 percent of loans, foreclosed properties and loans held for sale.

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 Wachovia manages and allocates capital to its business segments. Pages 12 and 13 include a reconciliation of segment results to Wachovia's consolidated results of operations in accordance with GAAP.

General Bank

The General Bank includes retail, small business and commercial customers. The first quarter of 2007 compared with the first quarter of 2006 included:

Earnings of $1.5 billion on a 34 percent increase in revenue to $4.6 billion, driven by increased loans and deposits primarily reflecting the addition of Golden West and Westcorp. The business mix continued to shift, reflecting customer preference for fixed rate instead of variable rate loans and certificates of deposit over demand deposits.
An increase in average loans of $122.3 billion related to the October 2006 acquisition of Golden West. Organic growth was led by middle market commercial and business banking loans.
Deposit growth led by consumer certificates of deposit and money market funds. Net new retail checking accounts increased by 270,000 in the first quarter of 2007, with 14 percent of the increase attributable to World Savings branches. The increase compares with an increase of 188,000 in the year-ago quarter and 555,000 in full year 2006.
Fee and other income down 1 percent, with last year's $100 million MBNA fee overshadowing solid growth in service charges and interchange income.
23 percent growth in noninterest expense including the acquisition impact, de novo branch activity and costs related to reentering the credit card business. Despite the increased expense, the General Bank's overhead efficiency ratio improved 412 basis points to 43.98 percent.
Increased provision as a result of growth in auto lending, commercial and credit card.

Wealth Management

Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. The first quarter of 2007 compared with the first quarter of 2006 included:

14 percent earnings growth to $65 million on modest revenue growth and lower expenses.
A dip in net interest income as margin compression and a decline in average core deposits overcame strong momentum in loans.
Increased fee and other income led by strong growth in fiduciary and asset management fees, offset by lower insurance commissions. Continued strong client response to new investment platform contributed to growth.

Corporate and Investment Bank

The Corporate and Investment Bank includes corporate lending, investment banking, and treasury and international trade finance. First quarter 2007 results compared with the first quarter of 2006 included:

A decline in earnings to $379 million as strong real estate capital markets and high yield origination results were more than offset by lower principal investing, global rate products and equities results compared with the first quarter a year ago, which included a $33 million gain related to the Archipelago/New York Stock Exchange merger.
A 2 percent decline in net interest income reflecting spread compression in asset-based lending and lower trading-related income.
Core deposit growth from global money market deposits and loan growth primarily from real estate capital markets and international.

Capital Management

Capital Management includes retail brokerage services and asset management. The first quarter of 2007 compared with the first quarter of 2006 included:

Record earnings of $304 million on record revenue, which reflected higher brokerage transaction activity and equity syndicate distribution fees, strong brokerage managed account fees and the impact of acquisitions. Retail brokerage managed account assets grew 5 percent from year-end 2006 to $140.6 billion at March 31, 2007.
9 percent growth in noninterest expense primarily due to higher commissions, employee stock compensation expense and the impact of acquisitions. Solid improvement in the overhead efficiency ratio to 72.07 percent was due to revenue growth and expense control.

Total assets under management of $314.6 billion at March 31, 2007, were up 13 percent from December 31, 2006, including $26.2 billion from the European Credit Management acquisition, which closed on January 31, 2007, $8.6 billion in net inflows and modest market appreciation. Equity assets reached $106.3 billion, up 3 percent in the same period. Total brokerage client assets grew 2 percent from year-end 2006 to $773.0 billion.

***

Wachovia Corporation (NYSE:WB) is one of the nation's largest diversified financial services companies, providing a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services. Wachovia has retail and commercial banking operations in 21 states with 3,400 retail banking offices from Connecticut to Florida and west to Texas and California. In addition, two core businesses operate under the Wachovia Securities brand name: retail brokerage with 768 offices in 48 states and service affiliate offices in Latin America, and corporate and investment banking serving clients in selected corporate and institutional sectors globally. Other nationwide businesses include mortgage lending in all 50 states and auto finance covering 46 states. Globally, Wachovia serves clients through more than 40 international offices. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com. At March 31, 2007, Wachovia had assets of $706.4 billion and market capitalization of $105.3 billion.

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 16, 2007.

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 10 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 19 and 20. 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 2007 results in a conference call and audio webcast beginning at 10 a.m. Eastern 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 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: Wachovia.

Replay: Monday, April 16, at 1:30 p.m. and continuing through 5 p.m. Friday, May 18. Replay telephone number is 706-645-9291; access code: 9456215.

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 Carrie Ruddy at 704-383-5392.

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Wachovia common stock trades on the New York Stock Exchange (NYSE) under the ticker symbol WB. Before the September 1, 2001, merger of First Union and the former Wachovia, the common stock traded on the NYSE as FTU.

Information on this site dated after September 1, 2001, is provided under the Wachovia name, while historical information dated before September 1, 2001, is provided under the First Union name. Please note that historical information may have become out of date and should not be considered current. Wachovia does not undertake any obligation to update the information as a result of new information or subsequent developments. In addition, any forward-looking information is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Factors that could cause results to differ from expectations may be found in Wachovia's reports filed with the SEC.

Historical Financial Press Releases

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