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Wachovia Reports Cash Operating Earnings of $1.0 Billion, or 74 Cents Per Share, in 1st Quarter of 2002 1Q 2002 Earnings (Excel)
Periods prior to the September 1, 2001, merger of First Union and the former Wachovia, which was accounted for as a purchase, have not been restated. CHARLOTTE, N.C. - Wachovia Corp. (NYSE:WB) today reported first quarter 2002 cash operating earnings of $1.0 billion, or 74 cents per share; operating earnings of $908 million, or 66 cents per share; and net income available to common stockholders of $907 million, or 66 cents per share. "We continue to make excellent progress in meeting our corporate objectives of producing quality earnings growth, building capital and controlling expenses," said Ken Thompson, Wachovia president and CEO. "The high priority and focus we have on customer service throughout our merger integration is evident in the 12th consecutive quarter of improved customer satisfaction ratings. At the same time, we met integration and merger efficiency milestones. As a result of these successes, shareholders of both legacy companies experienced strong growth in cash earnings per share compared with the first quarter 2001, when the former Wachovia's cash EPS was the equivalent of 66 cents and First Union's cash EPS was 69 cents. I am proud of all that our new Wachovia team has accomplished, and I am excited about the future." Lines of Business General Bank The General Bank includes retail, small business and commercial customers. General Bank financial results were solid in a seasonally weak quarter. As anticipated, mortgage originations declined substantially from record levels in the fourth quarter, which dampened revenue growth. However, sales of deposits and originations of consumer and small business loans continued to set records and sales of investment products were solid. Average core deposits increased 2 percent from the fourth quarter of 2001, and the increase in low-cost core deposits was particularly strong at 6 percent. Solid loan growth of 1 percent, or 4 percent annualized, reflected strength in consumer real estate-secured products and student lending. Expense control was evident. Capital Management The Capital Management Group includes asset management and retail brokerage services. These businesses produced consistent revenues quarter over quarter as sales production through multiple distribution channels offset a flat market. Fluctuating fund flows were positive and annuity sales continued to be strong. Assets under management at March 31, 2002, increased 2 percent from December 31, 2001, to $230 billion. Included in assets under management are mutual fund assets, which also increased 2 percent in that time period to $106 billion. Wealth Management Wealth Management, which includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage, generated revenue growth of 3 percent from the fourth quarter of 2001. Solid increases in loans and deposits, along with stable spreads, contributed to higher net interest income, while strong momentum in insurance brokerage drove an increase in fee income. Wealth Management assets under management (included in the Capital Management Group total) were $76 billion at quarter end. Corporate and Investment Bank Corporate and Investment Bank revenue was dampened by principal investing write-downs of $90 million, largely due to a $43 million mark-to-market loss related to a single publicly traded security. Excluding principal investing, revenue grew 5 percent from the fourth quarter of 2001, due to strength in fixed income. Average loans declined 6 percent due to weak loan demand and continued portfolio management actions. Expenses declined due to merger efficiencies and strong expense control. Asset Quality Net charge-offs were 0.83 percent of average net loans in the first quarter of 2002 compared with 0.93 percent in the fourth quarter of 2001. The provision of $339 million exceeded net charge-offs of $325 million by $14 million related to write-downs recorded on loans either sold or transferred to loans held for sale. Total nonperforming assets including loans held for sale increased $116 million from December 31, 2001, to $2.1 billion in the first quarter of 2002, due largely to the bankruptcy of a large retailer and telecommunications-related loans. Merger-Related Items Gains on the sale of divested branch offices offset charges in the first quarter of 2002, resulting in a net $5 million after-tax gain in merger-related, restructuring and other charges. In the fourth quarter of 2001, after-tax merger-related, restructuring and other charges were $63 million. Under a new accounting standard, goodwill recorded in connection with the merger of First Union and Wachovia and previous mergers is no longer subject to amortization. Additionally, the new accounting standard requires annual testing for impairment of goodwill and other intangible assets. The company's impairment evaluation under the new standard indicated that none of the company's goodwill was impaired. Wachovia Corporation (NYSE:WB), created through the September 1, 2001, merger of First Union and Wachovia, had assets of $320 billion and stockholder's equity of $29 billion at March 31, 2002. Wachovia is a leading provider of financial services to 20 million retail, brokerage and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices under the First Union and Wachovia names in 11 East Coast states and Washington, D.C., and offers full-service brokerage with offices in 49 states and global services through more than 30 international offices. Online banking and brokerage products and services are available through wachovia.com and firstunion.com. Earnings Conference Call and Supplemental Materials Wachovia President and CEO Ken Thompson and CFO Bob Kelly will review Wachovia's 1st quarter results in a conference call and audio webcast beginning at 10 a.m. EDT today. Supplemental materials relating to the first quarter results are available on the Internet at wachovia.firstunion.com, 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.firstunion.com 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 1-888-282-0357 for U.S. callers or 712-271-3620 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, April 18, at 12 p.m. until 5 p.m. Monday, April 22. Replay telephone number is 402-220-5068. This news release may contain 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 18, 2002. |
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