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

1st QUARTER 2004 COMPARED WITH 1st QUARTER 2003

• All four major businesses delivered record earnings, with double-digit growth.
• Record revenue of $5.7 billion rose 22 percent, driven by strong fee and other income, primarily in the Corporate and Investment Bank, and from the impact of the Wachovia Securities retail brokerage transaction.
• Record General Bank customer acquisition/retention and customer satisfaction scores.
• Robust average core deposit growth of 21 percent while average loans grew modestly.
• Exceptional credit quality with net charge-offs down to 0.13 percent of average loans; nonperforming assets declined 39 percent and were 0.63 percent of loans and loans held for sale.
• Balance sheet fortified with rise in tier 1 capital to 8.59 percent.

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

CHARLOTTE, N.C. - Wachovia Corp. (NYSE:WB) today reported record first quarter 2004 net income available to common stockholders of $1.25 billion, or 94 cents per share, compared with $1.02 billion, or 76 cents per share, in the first quarter of 2003. Excluding after-tax net merger-related expenses and other items of 4 cents per share in the first quarter of 2004 and 3 cents per share in the first quarter of 2003, first quarter 2004 earnings were $1.30 billion, or 98 cents per share, compared with $1.07 billion, or 79 cents per share, in the first quarter of 2003.

This was a superb quarter, with record results in each of our four major businesses. These results demonstrate the power of our balanced business model, which we believe provides us with exceptional stability in core earnings and great upside potential in improving markets. Our General Bank continued to be an outstanding performer, both our Corporate and Investment Bank and Wealth Management generated excellent market-related revenue, and momentum grew in our larger brokerage firm in Capital Management,” said Ken Thompson, Wachovia chairman and chief executive officer. “On top of these results, credit quality continued to be exceptional, and operational performance and sales were very strong. As our employees continue to raise the bar on customer service, more new customers are coming to Wachovia, we’re keeping more existing customers, and they’re giving us more of their business.”

[IMAGE: "Wachovia Corporation"]

Provision expense declined to $44 million, reflecting continued improvement in asset quality, particularly in the Corporate and Investment Bank. First quarter 2004 net charge-offs declined 73 percent from the first quarter of 2003 to $52 million, or an annualized 0.13 percent of average net loans, reflecting both a lower absolute level of charge-offs and higher than expected recoveries. Total nonperforming assets including loans held for sale declined 39 percent from the first quarter of 2003 to $1.1 billion in the first quarter of 2004.

Noninterest expense increased 26 percent from the first quarter of 2003, largely due to the addition of the Prudential Financial retail brokerage business to Wachovia Securities Financial Holdings, LLC.

Average loans in the first quarter of 2004 were $159.2 billion, a $1.2 billion increase from the first quarter of 2003, primarily reflecting higher consumer loan balances, dampened by continued lower corporate loan demand.

Average core deposits increased 21 percent from the first quarter of 2003 to $208.7 billion, while average low-cost core deposits increased 30 percent from the first quarter a year ago to $167.8 billion. This increase includes an average $17.0 billion of deposits associated with the FDIC-insured money market sweep product. Low-cost core deposits are those in demand deposit, interest checking, savings and money market accounts, and exclude CAP accounts and certificates of deposit.

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 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 $686 million. Revenue increased 5 percent from the first quarter a year ago, driven by outstanding core deposit growth and commercial, small business and consumer real estate-secured loan growth. Fee income increased 2 percent from the first quarter a year ago on strong service charge growth, offset by a 63 percent decline in mortgage-related income amid a weaker environment for mortgage banking revenues. Non-mortgage-related fees rose 15 percent from the first quarter a year ago.

Average core deposits increased 10 percent from the prior year quarter, including 21 percent year over year growth in average low-cost core deposits. Average loans increased 6 percent year over year, despite a decline in commercial real estate. Provision expense declined 36 percent from the first quarter of 2003, primarily reflecting risk reduction strategies implemented in 2003, as well as solid improvements in both commercial and consumer loan losses.

Noninterest expense increased 3 percent from the first quarter of 2003, reflecting increased investment spending and higher marketing costs. Retail sales momentum continued to be strong, with an increase of 181,000 in net new retail checking accounts in the first quarter of 2004, compared with an increase of 85,000 in the same quarter a year ago - a 113 percent improvement.

Capital Management

Capital Management includes asset management and retail brokerage services. Capital Management's segment earnings also were a record, and revenue increased 90 percent, matched by noninterest expense growth of 90 percent from the first quarter of 2003, both primarily related to the retail brokerage transaction, which closed on July 1, 2003. Sales momentum continued to be strong, with higher brokerage activity and growth in equity assets in the first quarter of 2004. Brokerage client assets rose to $615 billion, up 2 percent from year-end 2003, driven by improving equity markets. In addition, deposit balances related to the FDIC-insured money market sweep product grew to $20 billion, compared with $12 billion at year-end 2003, contributing to growth in net interest income. The shift to the FDIC product resulted in a 5 percent decline in mutual fund assets from year-end 2003 to $104 billion. Despite the decline in money market mutual fund assets, assets under management at March 31, 2004, rose 2 percent from December 31, 2003, to $251 billion. Total assets under management and securities lending grew 16 percent from year-end 2003 to $287 billion, largely attributable to $38 billion from the January 1, 2004, acquisition of a securities lending firm. Investment performance continued to be solid, with 69 percent of the Wachovia-advised Evergreen Funds rated 4 or 5 stars by Morningstar, up from 49 percent at March 31, 2003, and 67 percent of Evergreen taxable fluctuating funds ranked in the top two three-year Lipper quartiles, up from 63 percent in the year ago quarter.

Wealth Management

Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Wealth Management revenue rose 9 percent from the first quarter of 2003 and segment earnings were a quarterly record $48 million. Net interest income grew 12 percent on increased loans and core deposits. Fee and other income increased 8 percent due to solid growth in trust and insurance fees. Noninterest expense increased 6 percent year over year largely due to higher incentives related to improved revenues and earnings. Provision expense declined due to improved credit quality and recoveries. Average loans grew 10 percent from the first quarter a year ago, reflecting increased consumer lending activity. Average core deposits rose 8 percent, led by higher money market and checking account balances.

Corporate and Investment Bank

The Corporate and Investment Bank includes corporate lending, investment banking, global treasury and trade finance, and principal investing. Corporate and Investment Bank revenue grew 18 percent from the first quarter of 2003 and segment earnings were a quarterly record $454 million. The revenue increase was fueled by strength in fixed income driven by strong commercial mortgage-backed results and other trading activity. Strong originations in equity capital markets and loan syndications, coupled with gains in principal investing, compared with principal investing losses in the prior periods, also drove the record results. Net interest income rose only modestly as corporate loan balances continued to decline due to low demand and a strong loan syndication market. Provision expense and capital usage continued to decline due to improving credit quality and lower loan outstandings. Noninterest expense rose 12 percent due to increased incentives related to improved revenues and earnings, coupled with increased investment in growth initiatives. Average core deposits grew 19 percent primarily from higher commercial mortgage servicing and 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 $411.0 billion, market capitalization of $61.7 billion and stockholders’ equity of $33.3 billion at March 31, 2004. Its four core businesses, the General Bank, Capital Management, Wealth Management, and the Corporate and Investment Bank, serve 12 million client relationships (including households and businesses), primarily in 11 East Coast states and Washington, D.C. Its full-service retail brokerage firm, Wachovia Securities, LLC, serves clients in 49 states. Global services are provided through 32 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 19, 2004.

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 8 under the captions “Earnings Excluding Merger-Related and Restructuring Expenses and Cumulative Effect of a Change in Accounting Principle” and “Earnings Excluding Merger-Related and Restructuring Expenses, Other Intangible Amortization and Cumulative Effect of a Change in Accounting Principle”, and which are reconciled to GAAP financial measures on pages 17 and 18. 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, 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 that 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 (cash earnings), and has communicated certain cash dividend payout ratio goals to investors. Management believes the cash dividend 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 2004 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 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: Monday, April 19 at 12:00 Noon Eastern Time through 11 p.m. Eastern Time on Friday, May 14. Replay telephone number is 1-706-645-9291; access code 6401196.