July 17, 2003
Wachovia Earns Record $1.0 Billion; 2nd Quarter EPS Up 24% to 77 Cents
Strong Performance Results In 3rd Dividend Increase in 11 Months

Supplemental Quarterly Earnings Report (PDF)
Press Release with Financial Tables (PDF)
Financial Tables

2^nd QUARTER 2003 COMPARED WITH 2^nd QUARTER 2002

Quarterly dividend increased 21 percent to 35 cents per common share; increased 46 percent since second quarter 2002.
Total revenue rose 3 percent due to growth in both net interest income and fee income. Growth in fee income was led by record results in retail banking and improved brokerage volume, along with strengthened trading and other corporate and investment banking income.
Credit quality continued to improve. Provision expense declined more than 50 percent and total nonperforming assets declined 13 percent.
Average low-cost core deposits increased 19 percent. Wachovia merger conversions nearing completion, with Carolinas branch and deposit conversion successfully completed. Virginia conversion this month.

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

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CHARLOTTE, N.C. – Wachovia Corp. (NYSE:WB) today reported second quarter 2003 net income available to common stockholders of $1.0 billion, or 77 cents per share, compared with $849 million, or 62 cents per share, in the second quarter of 2002. Earnings in the second quarter of 2003 included after-tax net merger-related and restructuring expenses of $60 million, or 4 cents per share. In the second quarter of 2002, earnings included $89 million, or 6 cents per share, of after-tax net merger-related and restructuring expenses.

“Our second quarter performance this year was outstanding, and in fact we exceeded expectations for the quarter. We are increasingly optimistic about our earnings prospects due to growing revenue momentum and improved credit quality,” said Ken Thompson, chairman and CEO. “The potential of our balanced business model was clear in the recovery in our brokerage and capital markets businesses as the economy slowly improves. Our distribution strength was evident in record sales of consumer and small business loans, mutual funds, checking accounts and low-cost core deposits. On top of that, a continued strong showing in customer service, solid expense control and further merger savings ahead position us well for the future. In addition, we support the recent change in the tax law and are pleased to share the benefits of our improving performance by increasing our common stock dividend for the third time in 11 months.”

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Average loans in the second quarter of 2003 were $158 billion, a 2 percent increase from the second quarter of 2002, reflecting higher residential mortgage and other consumer installment loan balances, dampened by continued lower corporate loan demand. Average core deposits increased 9 percent from the second quarter of 2002 to $179 billion, while average low-cost core deposits increased 19 percent from the second quarter a year ago to $137 billion.

Second quarter 2003 net charge-offs declined 55 percent from the second quarter of 2002 to $169 million, or an annualized 0.43 percent of average net loans. Total nonperforming assets including loans held for sale declined 13 percent from the second quarter of 2002 to $1.8 billion in the second quarter of 2003.

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 upon which Wachovia manages and allocates capital to its business segments. Pages 10 and 11 include a reconciliation of segment results to Wachovia’s consolidated net income in accordance with GAAP.

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General Bank
The General Bank includes retail, small business and commercial customers. General Bank revenue increased 7 percent from the second quarter a year ago, driven by a 5 percent increase in net interest income and 14 percent growth in fee income due to strong balance sheet growth and continued strength in mortgage income. Average core deposit growth continued to be strong, up 8 percent from the second quarter of the prior year. Most significantly, average low-cost core deposits continued to grow rapidly, up 20 percent from the second quarter of 2002. Loans increased 12 percent year over year, reflecting strength in consumer and small business lending. Credit quality continued to be strong, with a modest decline in net charge-offs and a stable provision. The 6 percent increase in expenses from the second quarter of 2002 reflected technology enhancements in the financial centers as well as higher staffing. Retail sales momentum was evident, with strength in net new checking accounts, a fivefold increase from the second quarter of 2002 to 93,500.

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Capital Management
Capital Management includes asset management and retail brokerage services. Capital Management's performance was its best in the past two years of unsettled equity market conditions. Second quarter 2003 revenue rose modestly from the second quarter of 2002 due primarily to growth in assets under management. Sales of fixed income products, including mutual funds and annuities, continued to be strong. The strength of Capital Management's multi-channel distribution model was evidenced by record sales of Evergreen Fund products through both third party broker-dealers as well as our Wachovia Securities brokerage unit. Total annuity sales increased 2 percent to $1.5 billion, including bank annuity sales of $1.1 billion, which represented a 21 percent increase from the second quarter of 2002. Assets under management at June 30, 2003, increased 4 percent from June 30, 2002, to $240 billion, including a 6 percent increase in mutual fund assets to $115 billion at June 30, 2003. Brokerage client assets increased 4 percent from June 30, 2002, to $282 billion. The Wachovia Securities, LLC, and Prudential Securities, Inc. brokerage combination transaction closed on July 1, 2003. Therefore, second quarter results do not reflect this transaction.

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Wealth Management
Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Revenue was the same as the second quarter of 2002, as higher net interest income and increased insurance commissions related to the Cameron M. Harris & Co. acquisition were offset by a decline in investment management fees related to lower equity valuations. Net interest income rose 6 percent from the second quarter of 2002 due to increased loan and deposit balances. Average loans grew 11 percent from the second quarter a year ago, while average core deposits, led by money market and checking account balances, rose 9 percent from the second quarter of 2002. Expenses increased 7 percent year over year largely due to the Cameron M. Harris & Co. acquisition completed in the third quarter of 2002, and to higher benefit costs.

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Corporate and Investment Bank
The Corporate and Investment Bank includes corporate lending, investment banking, treasury services and trade finance, and principal investing. Corporate and Investment Bank revenue grew 4 percent from the second quarter of 2002, driven by strong results in fixed income products that more than offset a decline in interest income due to lower loan balances in corporate lending. Provision expense declined by two-thirds from the second quarter of 2002 due to improved credit quality related to risk reduction strategies. The increase in expense was primarily related to revenue-related incentives and strategic initiative spending. Average loans declined due to weak overall demand, while average core deposits increased primarily due to growth in commercial mortgage servicing and international trade finance.

Wachovia Corporation (NYSE:WB) is one of the largest providers of financial services to retail, brokerage and corporate customers throughout the East Coast and the nation, with assets of $364 billion and stockholders’ equity of $32 billion at June 30, 2003. Its four core businesses, the General Bank, Capital Management, Wealth Management and the Corporate and Investment Bank, serve 9 million households, including 900,000 businesses, primarily in 11 East Coast states and Washington, D.C. Its broker-dealer, currently operating under the names Wachovia Securities, LLC, and Prudential Securities Division of Wachovia Securities, LLC, serves clients through 700 offices in 48 states. Global services are provided through more than 30 international offices. Online banking and brokerage products and services also are available through wachovia.com.

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 July 17, 2003.

Explanation of Wachovia’s Use of Certain Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this news release includes the following non-GAAP financial measures presented on Page 7 under the captions “Earnings Excluding Merger-Related and Restructuring Expenses” and “Earnings Excluding Merger-Related and Restructuring Expenses and Other Intangible Amortization”: Return on average common stockholders’ equity, return on average assets, overhead efficiency ratio, operating leverage and dividend payout ratio on common shares. Each of these items on Page 7 has been adjusted to exclude merger-related and restructuring expenses and other intangible amortization, as noted. Included in the footnotes on Page 7 to these non-GAAP measures are the dollar amounts of these adjustments reconciling to the most directly comparable financial measures on a GAAP basis included on Page 6. 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 that the exclusion of merger-related and restructuring expenses 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 that the exclusion of this expense provides investors with consistent and meaningful comparisons to other financial services firms. Wachovia also believes that 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. Although Wachovia believes the above non-GAAP financial measures enhance investors’ understanding of the company’s business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP.

Earnings Conference Call and Supplemental Materials
Wachovia CEO Ken Thompson and CFO Bob Kelly will review Wachovia's second quarter 2003 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 second 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 Second 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 1-800-857-2613 for U.S. callers or 1-630-395-0022 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: Kelly.

Replay: Thursday, July 17 at 1 p.m. EDT through 4 p.m. EDT on Friday, August 15. Replay telephone number is 1-402-220-3824.

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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.

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