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Press Release July 15, 2004 |
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| | WACHOVIA’S 2nd QUARTER 2004 GAAP EARNINGS UP 23% TO 95 CENTS PER SHARE Net income of $1.25 billion fueled by continued momentum in core businesses
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2nd QUARTER 2004 COMPARED WITH 2nd QUARTER 2003
| • | Revenue of $5.5 billion driven by outstanding deposit growth and strength in fee and other income, as well as from the impact of the Wachovia Securities retail brokerage transaction. |
| • | Sales momentum continued to build, with record results in the General Bank and Wealth Management. |
| • | Strong balance sheet growth with average core deposits up 25 percent and average loans up 4 percent. |
| • | Exceptional credit quality with net charge-offs of 0.17 percent of average loans; nonperforming assets declined 42 percent and were 0.55 percent of loans and loans held for sale. |
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Earnings Highlights | | | | | | | | | | | | | |
| | Three Months Ended
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| | June 30,
| | March 31,
| | June 30,
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(In millions, except per share data)
| | Amount
| | | 2004 EPS
| | Amount
| | 2004 EPS
| | Amount
| | 2003 EPS
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Earnings | | | | | | | | | | | | | | |
Net income available to common stockholders (GAAP) | | $ | 1,252 | | | 0.95 | | 1,251 | | 0.94 | | 1,031 | | 0.77 |
Net merger-related expenses and other items (a) | | | 47 | | | 0.03 | | 48 | | 0.04 | | 61 | | 0.04 |
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Earnings excluding net merger-related expenses and other items (a) | | $ | 1,299 | | | 0.98 | | 1,299 | | 0.98 | | 1,092 | | 0.81 |
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Financial ratios | | | | | | | | | | | | | | |
Return on average common stockholders’ equity | | | 15.49 | % | | | | 15.37 | | | | 12.78 | | |
Net interest margin | | | 3.37 | | | | | 3.55 | | | | 3.81 | | |
Fee and other income as % of total revenue | | | 47.24 | % | | | | 48.53 | | | | 45.34 | | |
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Capital adequacy (b) | | | | | | | | | | | | | | |
Tier 1 capital ratio | | | 8.35 | % | | | | 8.54 | | | | 8.33 | | |
Total capital ratio | | | 11.31 | | | | | 11.67 | | | | 11.92 | | |
Leverage ratio | | | 6.23 | % | | | | 6.33 | | | | 6.78 | | |
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Asset quality | | | | | | | | | | | | | | |
Allowance for loan losses as % of nonaccrual and restructured loans (c) | | | 270 | % | | | | 242 | | | | 167 | | |
Allowance for loan losses as % of loans, net (c) | | | 1.35 | | | | | 1.40 | | | | 1.54 | | |
Allowance for credit losses as % of loans, net (c) | | | 1.43 | | | | | 1.49 | | | | 1.66 | | |
Net charge-offs as % of average loans, net | | | 0.17 | | | | | 0.13 | | | | 0.43 | | |
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale | | | 0.55 | % | | | | 0.63 | | | | 1.04 | | |
(a) | Net merger-related expenses and other items include merger-related and restructuring expenses in each period and dividends on preferred stock in the second quarter of 2003. |
(b) | The second quarter of 2004 is based on estimates. |
(c) | As of June 30, 2004, the reserve for unfunded lending commitments has been reclassified from the allowance for loan losses to other liabilities. The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004. |
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WACHOVIA’S 2nd QUARTER 2004 EARNINGS UP 23%/page 2
CHARLOTTE, N.C.—Wachovia Corp. (NYSE:WB) today reported record second quarter 2004 net income available to common stockholders of $1.25 billion, or 95 cents per share, compared with $1.03 billion, or 77 cents per share, in the second quarter of 2003.
Excluding after-tax net merger-related expenses and other items of 3 cents per share in the second quarter of 2004 and 4 cents per share in the second quarter of 2003, second quarter 2004 earnings were $1.30 billion, or 98 cents per share, compared with $1.09 billion, or 81 cents per share, in the second quarter of 2003.
“Our record second quarter earnings continued to reflect the benefit of our balanced business model and we believe we remain positioned to outperform as we approach our fourth quarter merger with SouthTrust,” said Ken Thompson, Wachovia chairman and chief executive officer. “We continue to win new business from our customers as we provide industry leading sales and service. We had good loan growth, outstanding deposit growth and exceptional credit quality. Expense growth was disciplined, and we are on track to achieve all projected savings from our retail brokerage transaction. In our core businesses, both our General Bank and Wealth Management again had record quarters. Capital Management results were dampened by subdued retail brokerage investor activity, but equity mutual fund sales continued to be positive. We continued to gain market share in our Corporate and Investment Bank.”
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Wachovia Corporation | | | | | | |
| | Three Months Ended
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(In millions)
| | June 30, 2004
| | March 31, 2004
| | June 30, 2003
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Total revenue (Tax-equivalent) | | $ | 5,502 | | 5,680 | | 4,761 |
Provision for credit losses | | | 61 | | 44 | | 195 |
Noninterest expense | | | 3,487 | | 3,656 | | 3,001 |
Net income available to common stockholders | | | 1,252 | | 1,251 | | 1,031 |
Average loans, net | | | 163,642 | | 159,181 | | 157,735 |
Average core deposits | | $ | 223,809 | | 208,673 | | 179,417 |
Provision expense declined from the second quarter a year ago to $61 million in the second quarter this year, reflecting continued improvement in asset quality, particularly in the Corporate and Investment Bank. Second quarter 2004 net charge-offs declined 60 percent from the second quarter of 2003 to $68 million, or an annualized 0.17 percent of average net loans, reflecting a lower absolute level of charge-offs at a beneficial point in the credit cycle. Total nonperforming assets including loans held for sale declined 42 percent from the second quarter of 2003 to $1.0 billion in the second quarter of 2004.
Noninterest expense increased 16 percent from the second 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 second quarter of 2004 were $163.6 billion, a 4 percent increase from the second quarter of 2003. Consumer loan growth, largely from consumer real estate-secured and student loans, outpaced commercial loan growth. In commercial, growth in General Bank middle market and small business loans was offset by low corporate loan demand in the Corporate and Investment Bank.
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WACHOVIA’S 2nd QUARTER 2004 EARNINGS UP 23%/page 3
Average core deposits increased 25 percent from the second quarter of 2003 to $223.8 billion, while average low-cost core deposits increased 34 percent from the second quarter a year ago to $184.1 billion. The increase included an average $23.0 billion of core 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 13 and 14 include a reconciliation of segment results to Wachovia’s consolidated results of operations in accordance with GAAP.
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General Bank | | | | | | |
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General Bank Highlights | | | | | | | |
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| | Three Months Ended
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(In millions)
| | June 30, 2004
| | March 31, 2004
| | June 30, 2003
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Total revenue (Tax-equivalent) | | $ | 2,543 | | 2,462 | | 2,425 |
Provision for credit losses | | | 65 | | 68 | | 100 |
Noninterest expense | | | 1,297 | | 1,314 | | 1,307 |
Segment earnings | | | 751 | | 689 | | 646 |
Average loans, net | | | 122,028 | | 118,123 | | 113,267 |
Average core deposits | | | 166,628 | | 160,845 | | 151,409 |
Economic capital, average | | $ | 5,247 | | 5,366 | | 5,713 |
The General Bank includes retail and small business, and commercial customers. The General Bank produced record quarterly segment earnings of $751 million, up 16 percent from the prior year’s second quarter. Revenue increased 5 percent from the second quarter a year ago, driven by outstanding core deposit and loan growth, primarily in commercial, small business, consumer real estate-secured and student loans. Fee and other income increased 5 percent from the second quarter a year ago on strong service charge growth, offset by declines in mortgage banking income. Non-mortgage-related fees rose 21 percent from the second quarter a year ago. Noninterest expense decreased modestly.
Average core deposits increased 10 percent from the prior year quarter, including 20 percent year over year growth in average low-cost core deposits. Average loans increased 8 percent year over year, despite a decline in commercial real estate loan growth. However, compared with the first quarter of 2004, wholesale loans grew across-the-board, including a modest increase in commercial real estate. Provision expense declined 35 percent from the second quarter of 2003, primarily reflecting risk reduction strategies implemented in 2003, as well as solid improvements in both commercial and consumer loan losses.
Retail sales momentum continued to be strong, with an increase of 148,000 in net new retail checking accounts in the second quarter of 2004, compared with an increase of 95,000 in the same quarter a year ago—a 56 percent improvement.
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WACHOVIA’S 2nd QUARTER 2004 EARNINGS UP 23%/page 4
Capital Management
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Capital Management Highlights | | | | | | |
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| | Three Months Ended
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(In millions)
| | June 30, 2004
| | March 31, 2004
| | June 30, 2003
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Total revenue (Tax-equivalent) | | $ | 1,364 | | 1,455 | | 835 |
Provision for credit losses | | | — | | — | | — |
Noninterest expense | | | 1,147 | | 1,226 | | 683 |
Segment earnings | | | 138 | | 146 | | 96 |
Average loans, net | | | 254 | | 139 | | 137 |
Average core deposits | | | 24,732 | | 18,360 | | 1,226 |
Economic capital, average | | $ | 1,336 | | 1,403 | | 712 |
Capital Management includes asset management and retail brokerage services. The weak retail brokerage environment in the second quarter of 2004 dampened Capital Management’s results, which included a net benefit of $17 million on the sale of two nonstrategic businesses. Year over year, earnings increased 44 percent and revenue increased 63 percent, while noninterest expense grew 68 percent from the second quarter of 2003, primarily related to the retail brokerage transaction, which closed on July 1, 2003.
Sales momentum continued, with positive net sales of equity mutual funds. Deposit balances related to the FDIC-insured money market sweep product grew to $25.0 billion, compared with $11.8 billion at year-end 2003, contributing to net interest income growth. The asset shift to the FDIC product resulted in a 10 percent decline in mutual fund assets from the second quarter of 2003 to $104.2 billion. Despite the decline in mutual fund assets, total assets under management at June 30, 2004, increased 4 percent from June 30, 2003, to $247.6 billion. Total assets under management and securities lending grew 15 percent from year-end 2003 to $284.1 billion, largely attributable to $38.2 billion from the January 1, 2004, acquisition of a securities lending firm. Investment performance continued to be solid, with 68 percent of Wachovia’s Evergreen Funds rated 4 or 5 stars by Morningstar, up from 52 percent at June 30, 2003, and 69 percent of Evergreen taxable fluctuating funds ranked in the top two three-year Lipper quartiles, up from 65 percent in the year ago quarter.
Wealth Management
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Wealth Management Highlights | | | | | | |
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| | Three Months Ended
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(In millions)
| | June 30, 2004
| | March 31, 2004
| | June 30, 2003
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Total revenue (Tax-equivalent) | | $ | 269 | | 258 | | 239 |
Provision for credit losses | | | — | | — | | 5 |
Noninterest expense | | | 187 | | 185 | | 179 |
Segment earnings | | | 52 | | 47 | | 35 |
Average loans, net | | | 10,534 | | 10,309 | | 9,558 |
Average core deposits | | | 12,032 | | 11,488 | | 10,754 |
Economic capital, average | | $ | 369 | | 379 | | 368 |
Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Wealth Management revenue rose 13 percent from the second quarter of 2003 and segment
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WACHOVIA’S 2nd QUARTER 2004 EARNINGS UP 23%/page 5
earnings were a record $52 million. Net interest income grew 13 percent on average loan growth of 10 percent and average core deposit growth of 12 percent year over year. Fee and other income increased 11 percent from improved trust and investment management fees related to pricing and market improvements. Insurance brokerage commissions and commercial service charges exhibited solid growth.
Noninterest expense increased 4 percent year over year largely due to higher incentives related to improved revenues. Provision expense declined due to improved credit quality and recoveries. The increase in average loans from the second quarter a year ago reflected growth in both consumer and commercial lending activity. Average core deposit increases were led by higher money market and demand deposit account balances.
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Corporate and Investment Bank | | | | | | | | |
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Corporate and Investment Bank Highlights | | | | | | | | | |
| | Three Months Ended
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(In millions)
| | June 30, 2004
| | | March 31, 2004
| | | June 30, 2003
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Total revenue (Tax-equivalent) | | $ | 1,296 | | | 1,310 | | | 1,097 |
Provision for credit losses | | | (4 | ) | | (26 | ) | | 95 |
Noninterest expense | | | 616 | | | 617 | | | 559 |
Segment earnings | | | 431 | | | 456 | | | 277 |
Average loans, net | | | 29,850 | | | 29,755 | | | 34,393 |
Average core deposits | | | 18,772 | | | 16,748 | | | 14,744 |
Economic capital, average | | $ | 4,735 | | | 4,794 | | | 5,974 |
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 second quarter of 2003 and segment earnings were $431 million, up 56 percent year over year. The year over year revenue increase was fueled by strength in fixed income driven by strong real estate capital markets and asset-based securitization results as well as higher securities gains. Modest principal investing net gains compared favorably with net losses in the second quarter of 2003. Strength in asset-based loans and international correspondent banking loans was offset by a continued decline in corporate loan balances due to low demand and a strong loan syndication market. Provision expense and capital usage continued to decline due to improving credit quality and low loan outstandings compared with the second quarter a year ago. Noninterest expense rose 10 percent due to increased personnel and higher incentives related to improved revenues and earnings. Average core deposits grew 27 percent primarily from higher commercial mortgage servicing and trade finance.
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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 $418.4 billion, market capitalization of $58.3 billion and stockholders’ equity of $32.6 billion at June 30, 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
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WACHOVIA’S 2nd QUARTER 2004 EARNINGS UP 23%/page 6
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 July 15, 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 10 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 21 and 22. 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 ongoing 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.
Additional Information
The proposed merger between Wachovia Corporation and SouthTrust Corporation will be submitted to Wachovia’s and SouthTrust’s shareholders for their consideration, and, on July 9, 2004, Wachovia filed a registration statement on Form S 4 with the SEC containing a preliminary proxy statement/prospectus of Wachovia and SouthTrust and other relevant documents concerning the proposed transaction. Shareholders are urged to read the definitive joint proxy statement/prospectus regarding the proposed transaction when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. Shareholders may obtain a free copy of the registration statement and the joint proxy statement/prospectus, as well as other filings containing information about Wachovia and SouthTrust, at the SEC’s Internet site (http://www.sec.gov). These documents also are available, free of charge, at www.wachovia.com under the tab “Inside Wachovia-Investor Relations” and then under the heading “Financial Reports—SEC Filings”. These documents also may be obtained, free of charge, at www.southtrust.com under the tab “About SouthTrust”, then under “Investor Relations” and then under “SEC Documents”. Copies of the joint proxy statement/prospectus and the SEC filings that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, NC 28288-0206, (704)-374-6782, or to SouthTrust Corporation, P. O. Box 2554, Birmingham, AL 35290, (205)-254-5187.
Wachovia and SouthTrust, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of Wachovia and SouthTrust in connection with the merger. Information about the directors and executive officers of Wachovia and their ownership of Wachovia common stock is
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WACHOVIA’S 2nd QUARTER 2004 EARNINGS UP 23%/page 7
set forth in the proxy statement, dated March 15, 2004, for Wachovia’s 2004 annual meeting of shareholders, as filed with the SEC on a Schedule 14A. Information about the directors and executive officers of SouthTrust and their ownership of SouthTrust common stock is set forth in the proxy statement, dated March 8, 2004, for SouthTrust’s 2004 annual meeting of shareholders, as filed with the SEC on a Schedule 14A. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the definitive joint proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of these documents may be obtained as described above.
Earnings Conference Call and Supplemental Materials
Wachovia CEO Ken Thompson and CFO Bob Kelly will review Wachovia’s second quarter 2004 results in a conference call and audio webcast beginning at 11 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 1-888-357-9787 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: Thursday, July 15 at 1:00 p.m. Eastern Time through 11 p.m. Eastern Time on Friday, August 13. Replay telephone number is 1-706-645-9291; access code 8036256.
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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.
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PAGE 8
Wachovia Corporation and Subsidiaries
Financial Tables
Table of Contents
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Financial Highlights—Five Quarters Ended June 30, 2004 | | 9 |
Other Financial Data—Five Quarters Ended June 30, 2004 | | 10 |
Consolidated Statements of Income—Five Quarters Ended June 30, 2004 | | 11 |
Consolidated Statements of Income—Six Months Ended June 30, 2004 and 2003 | | 12 |
Business Segments—Three Months Ended June 30, and March 31, 2004 | | 13 |
Business Segments—Three Months Ended June 30, 2003 | | 14 |
Loans—On-Balance Sheet, and Managed and Servicing Portfolios—Five Quarters Ended June 30, 2004 | | 15 |
Allowance for Loan Losses and Nonperforming Assets—Five Quarters Ended June 30, 2004 | | 16 |
Consolidated Balance Sheets—Five Quarters Ended June 30, 2004 | | 17 |
Net Interest Income Summaries—Five Quarters Ended June 30, 2004 | | 18-19 |
Net Interest Income Summaries—Six Months Ended June 30, 2004 and 2003 | | 20 |
Reconciliation of Certain Non-GAAP Financial Measures—Five Quarters Ended June 30, 2004 | | 21-22 |
PAGE 9
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
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| | 2004
| | 2003
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(Dollars in millions, except per share data)
| | Second Quarter
| | | First Quarter
| | Fourth Quarter
| | Third Quarter
| | Second Quarter
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EARNINGS SUMMARY | | | | | | | | | | | | | |
Net interest income (GAAP) | | $ | 2,838 | | | 2,861 | | 2,877 | | 2,653 | | 2,540 | |
Tax-equivalent adjustment | | | 65 | | | 62 | | 65 | | 64 | | 63 | |
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Net interest income (Tax-equivalent) | | | 2,903 | | | 2,923 | | 2,942 | | 2,717 | | 2,603 | |
Fee and other income | | | 2,599 | | | 2,757 | | 2,604 | | 2,616 | | 2,158 | |
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Total revenue (Tax-equivalent) | | | 5,502 | | | 5,680 | | 5,546 | | 5,333 | | 4,761 | |
Provision for credit losses | | | 61 | | | 44 | | 86 | | 81 | | 195 | |
Other noninterest expense | | | 3,278 | | | 3,445 | | 3,511 | | 3,295 | | 2,774 | |
Merger-related and restructuring expenses | | | 102 | | | 99 | | 135 | | 148 | | 96 | |
Other intangible amortization | | | 107 | | | 112 | | 120 | | 127 | | 131 | |
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Total noninterest expense | | | 3,487 | | | 3,656 | | 3,766 | | 3,570 | | 3,001 | |
Minority interest in income of consolidated subsidiaries | | | 45 | | | 57 | | 63 | | 55 | | 16 | |
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Income before income taxes and cumulative effect of a change in accounting principle (Tax-equivalent) | | | 1,909 | | | 1,923 | | 1,631 | | 1,627 | | 1,549 | |
Tax-equivalent adjustment | | | 65 | | | 62 | | 65 | | 64 | | 63 | |
Income taxes | | | 592 | | | 610 | | 466 | | 475 | | 454 | |
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Income before cumulative effect of a change in accounting principle | | | 1,252 | | | 1,251 | | 1,100 | | 1,088 | | 1,032 | |
Cumulative effect of a change in accounting principle, net of income taxes | | | — | | | — | | — | | 17 | | — | |
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Net income | | | 1,252 | | | 1,251 | | 1,100 | | 1,105 | | 1,032 | |
Dividends on preferred stock | | | — | | | — | | — | | — | | 1 | |
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Net income available to common stockholders | | $ | 1,252 | | | 1,251 | | 1,100 | | 1,105 | | 1,031 | |
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Diluted earnings per common share | | $ | 0.95 | | | 0.94 | | 0.83 | | 0.83 | | 0.77 | |
Return on average common stockholders’ equity | | | 15.49 | % | | 15.37 | | 13.58 | | 13.71 | | 12.78 | |
Return on average assets | | | 1.22 | | | 1.26 | | 1.12 | | 1.16 | | 1.21 | |
Overhead efficiency ratio | | | 63.40 | % | | 64.36 | | 67.90 | | 66.95 | | 63.03 | |
Operating leverage | | $ | (11 | ) | | 244 | | 18 | | 2 | | (1 | ) |
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ASSET QUALITY | | | | | | | | | | | | | |
Allowance for loan losses as % of loans, net (a) | | | 1.35 | % | | 1.40 | | 1.42 | | 1.49 | | 1.54 | |
Allowance for loan losses as % of nonperforming assets (a) | | | 241 | | | 218 | | 205 | | 164 | | 154 | |
Allowance for credit losses as % of loans, net (a) | | | 1.43 | | | 1.49 | | 1.51 | | 1.59 | | 1.66 | |
Net charge-offs as % of average loans, net | | | 0.17 | | | 0.13 | | 0.39 | | 0.33 | | 0.43 | |
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale | | | 0.55 | % | | 0.63 | | 0.69 | | 0.95 | | 1.04 | |
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CAPITAL ADEQUACY(b) | | | | | | | | | | | | | |
Tier I capital ratio | | | 8.35 | % | | 8.54 | | 8.52 | | 8.67 | | 8.33 | |
Total capital ratio | | | 11.31 | | | 11.67 | | 11.82 | | 12.21 | | 11.92 | |
Leverage ratio | | | 6.23 | % | | 6.33 | | 6.36 | | 6.56 | | 6.78 | |
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OTHER DATA | | | | | | | | | | | | | |
Average diluted common shares (In millions) | | | 1,320 | | | 1,326 | | 1,332 | | 1,338 | | 1,346 | |
Actual common shares (In millions) | | | 1,309 | | | 1,312 | | 1,312 | | 1,328 | | 1,332 | |
Dividends paid per common share | | $ | 0.40 | | | 0.40 | | 0.35 | | 0.35 | | 0.29 | |
Dividends paid per preferred share | | $ | — | | | — | | — | | — | | 0.01 | |
Dividend payout ratio on common shares | | | 42.11 | % | | 42.55 | | 42.17 | | 42.17 | | 37.66 | |
Book value per common share | | $ | 24.93 | | | 25.42 | | 24.71 | | 24.71 | | 24.37 | |
Common stock price | | | 44.50 | | | 47.00 | | 46.59 | | 41.19 | | 39.96 | |
Market capitalization | | $ | 58,268 | | | 61,650 | | 61,139 | | 54,701 | | 53,228 | |
Common stock price to book | | | 178 | % | | 185 | | 189 | | 167 | | 164 | |
FTE employees | | | 85,042 | | | 85,460 | | 86,114 | | 86,635 | | 78,965 | |
Total financial centers/brokerage offices | | | 3,272 | | | 3,305 | | 3,360 | | 3,399 | | 3,176 | |
ATMs | | | 4,396 | | | 4,404 | | 4,408 | | 4,420 | | 4,479 | |
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(a) | As of June 30, 2004, the reserve for unfunded lending commitments has been reclassified from the allowance for loan losses to other liabilities. The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004. |
(b) | The second quarter of 2004 is based on estimates. |
PAGE 10
WACHOVIA CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
| | | | | | | | | | | | | |
| | 2004
| | 2003
|
(In millions)
| | Second Quarter
| | | First Quarter
| | Fourth Quarter
| | | Third Quarter
| | Second Quarter
|
EARNINGS EXCLUDING MERGER-RELATED AND RESTRUCTURING EXPENSES AND CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE(a)(b) | | | | | | | | | | | | | |
Return on average common stockholders’ equity | | | 16.04 | % | | 15.95 | | 14.41 | | | 14.46 | | 13.49 |
Return on average assets | | | 1.27 | | | 1.31 | | 1.20 | | | 1.23 | | 1.28 |
Overhead efficiency ratio | | | 61.54 | | | 62.61 | | 65.45 | | | 64.18 | | 61.02 |
Overhead efficiency ratio excluding brokerage | | | 55.34 | % | | 56.53 | | 60.00 | | | 58.23 | | 57.93 |
Operating leverage | | $ | (8 | ) | | 208 | | 6 | | | 54 | | 30 |
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EARNINGS EXCLUDING MERGER-RELATED AND RESTRUCTURING EXPENSES, OTHER INTANGIBLE AMORTIZATION AND CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE(a)(b)(c) | | | | | | | | | | | | | |
Dividend payout ratio on common shares | | | 38.83 | % | | 38.83 | | 37.23 | | | 37.63 | | 33.33 |
Return on average tangible common stockholders’ equity | | | 27.15 | | | 26.97 | | 24.83 | | | 24.97 | | 23.32 |
Return on average tangible assets | | | 1.38 | | | 1.42 | | 1.32 | | | 1.36 | | 1.43 |
Overhead efficiency ratio | | | 59.60 | | | 60.64 | | 63.28 | | | 61.79 | | 58.27 |
Overhead efficiency ratio excluding brokerage | | | 52.95 | % | | 54.06 | | 57.30 | | | 55.24 | | 54.81 |
Operating leverage | | $ | (13 | ) | | 200 | | (1 | ) | | 50 | | 21 |
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OTHER FINANCIAL DATA | | | | | | | | | | | | | |
Net interest margin | | | 3.37 | % | | 3.55 | | 3.64 | | | 3.57 | | 3.81 |
Fee and other income as % of total revenue | | | 47.24 | | | 48.53 | | 46.95 | | | 49.05 | | 45.34 |
Effective income tax rate | | | 32.19 | | | 32.73 | | 29.76 | | | 30.41 | | 30.54 |
Tax rate (Tax-equivalent) (d) | | | 34.44 | % | | 34.93 | | 32.57 | | | 33.10 | | 33.37 |
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AVERAGE BALANCE SHEET DATA | | | | | | | | | | | | | |
Commercial loans, net | | $ | 92,107 | | | 90,368 | | 90,628 | | | 90,912 | | 92,464 |
Consumer loans, net | | | 71,535 | | | 68,813 | | 68,972 | | | 67,082 | | 65,271 |
Loans, net | | | 163,642 | | | 159,181 | | 159,600 | | | 157,994 | | 157,735 |
Earning assets | | | 344,847 | | | 330,320 | | 322,274 | | | 303,503 | | 273,875 |
Total assets (e) | | | 411,074 | | | 398,688 | | 388,987 | | | 376,894 | | 341,912 |
Core deposits | | | 223,809 | | | 208,673 | | 194,109 | | | 185,715 | | 179,417 |
Total deposits | | | 238,692 | | | 224,022 | | 212,277 | | | 200,395 | | 193,800 |
Interest-bearing liabilities | | | 301,652 | | | 289,741 | | 284,005 | | | 266,351 | | 239,011 |
Stockholders’ equity | | $ | 32,496 | | | 32,737 | | 32,141 | | | 31,985 | | 32,362 |
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PERIOD-END BALANCE SHEET DATA | | | | | | | | | | | | | |
Commercial loans, net | | $ | 101,581 | | | 97,742 | | 97,030 | | | 96,705 | | 97,303 |
Consumer loans, net | | | 71,336 | | | 69,561 | | 68,541 | | | 69,220 | | 65,530 |
Loans, net | | | 172,917 | | | 167,303 | | 165,571 | | | 165,925 | | 162,833 |
Goodwill and other intangible assets | | | | | | | | | | | | | |
Goodwill | | | 11,481 | | | 11,233 | | 11,149 | | | 11,094 | | 10,907 |
Deposit base | | | 568 | | | 659 | | 757 | | | 863 | | 977 |
Customer relationships | | | 387 | | | 401 | | 396 | | | 400 | | 254 |
Tradename | | | 90 | | | 90 | | 90 | | | 90 | | 90 |
Total assets (e) | | | 418,441 | | | 411,140 | | 401,188 | | | 388,924 | | 364,479 |
Core deposits | | | 228,204 | | | 217,954 | | 204,660 | | | 187,516 | | 187,393 |
Total deposits | | | 243,380 | | | 232,338 | | 221,225 | | | 203,495 | | 201,292 |
Stockholders’ equity | | $ | 32,646 | | | 33,337 | | 32,428 | | | 32,813 | | 32,464 |
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(a) | These financial measures are calculated by excluding from GAAP computed net income presented on page 9, $47 million, $48 million, $75 million, $83 million and $60 million in the second and first quarters of 2004, and in the fourth, third and second quarters of 2003, respectively, of after-tax net merger-related and restructuring expenses, and $17 million after tax in the third quarter of 2003 related to the change in accounting principle. |
(b) | See page 9 for the most directly comparable GAAP financial measure and pages 21 and 22 for a more detailed reconciliation. |
(c) | These financial measures are calculated by excluding from GAAP computed net income presented on page 9, $67 million, $69 million, $74 million, $79 million and $81 million in the second and first quarters of 2004, and in the fourth, third and second quarters of 2003, respectively, of deposit base and other intangible amortization. |
(d) | The tax-equivalent tax rate applies to fully tax-equivalized revenues. |
(e) | Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004. |
PAGE 11
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | | | | | | | | | | | |
| | 2004
| | 2003
| |
(In millions, except per share data)
| | Second Quarter
| | First Quarter
| | Fourth Quarter
| | | Third Quarter
| | | Second Quarter
| |
INTEREST INCOME | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 2,316 | | 2,335 | | 2,357 | | | 2,352 | | | 2,391 | |
Interest and dividends on securities | | | 1,110 | | 1,141 | | 1,104 | | | 885 | | | 900 | |
Trading account interest | | | 237 | | 197 | | 189 | | | 174 | | | 182 | |
Other interest income | | | 356 | | 326 | | 301 | | | 301 | | | 223 | |
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Total interest income | | | 4,019 | | 3,999 | | 3,951 | | | 3,712 | | | 3,696 | |
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INTEREST EXPENSE | | | | | | | | | | | | | | |
Interest on deposits | | | 654 | | 648 | | 568 | | | 534 | | | 619 | |
Interest on short-term borrowings | | | 316 | | 299 | | 311 | | | 317 | | | 303 | |
Interest on long-term debt | | | 211 | | 191 | | 195 | | | 208 | | | 234 | |
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Total interest expense | | | 1,181 | | 1,138 | | 1,074 | | | 1,059 | | | 1,156 | |
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Net interest income | | | 2,838 | | 2,861 | | 2,877 | | | 2,653 | | | 2,540 | |
Provision for credit losses | | | 61 | | 44 | | 86 | | | 81 | | | 195 | |
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Net interest income after provision for credit losses | | | 2,777 | | 2,817 | | 2,791 | | | 2,572 | | | 2,345 | |
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FEE AND OTHER INCOME | | | | | | | | | | | | | | |
Service charges | | | 489 | | 471 | | 436 | | | 439 | | | 426 | |
Other banking fees | | | 293 | | 259 | | 241 | | | 257 | | | 248 | |
Commissions | | | 682 | | 792 | | 778 | | | 765 | | | 468 | |
Fiduciary and asset management fees | | | 675 | | 679 | | 672 | | | 662 | | | 474 | |
Advisory, underwriting and other investment banking fees | | | 197 | | 192 | | 213 | | | 191 | | | 220 | |
Trading account profits (losses) | | | 39 | | 74 | | 5 | | | (46 | ) | | 49 | |
Principal investing | | | 15 | | 38 | | (13 | ) | | (25 | ) | | (57 | ) |
Securities gains (losses) | | | 36 | | 2 | | (24 | ) | | 22 | | | 10 | |
Other income | | | 173 | | 250 | | 296 | | | 351 | | | 320 | |
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Total fee and other income | | | 2,599 | | 2,757 | | 2,604 | | | 2,616 | | | 2,158 | |
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NONINTEREST EXPENSE | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 2,164 | | 2,182 | | 2,152 | | | 2,109 | | | 1,748 | |
Occupancy | | | 224 | | 229 | | 244 | | | 220 | | | 190 | |
Equipment | | | 253 | | 259 | | 285 | | | 264 | | | 238 | |
Advertising | | | 48 | | 48 | | 56 | | | 38 | | | 34 | |
Communications and supplies | | | 157 | | 151 | | 156 | | | 159 | | | 140 | |
Professional and consulting fees | | | 126 | | 109 | | 146 | | | 109 | | | 105 | |
Other intangible amortization | | | 107 | | 112 | | 120 | | | 127 | | | 131 | |
Merger-related and restructuring expenses | | | 102 | | 99 | | 135 | | | 148 | | | 96 | |
Sundry expense | | | 306 | | 467 | | 472 | | | 396 | | | 319 | |
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Total noninterest expense | | | 3,487 | | 3,656 | | 3,766 | | | 3,570 | | | 3,001 | |
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Minority interest in income of consolidated subsidiaries | | | 45 | | 57 | | 63 | | | 55 | | | 16 | |
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Income before income taxes and cumulative effect of a change in accounting principle | | | 1,844 | | 1,861 | | 1,566 | | | 1,563 | | | 1,486 | |
Income taxes | | | 592 | | 610 | | 466 | | | 475 | | | 454 | |
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Income before cumulative effect of a change in accounting principle | | | 1,252 | | 1,251 | | 1,100 | | | 1,088 | | | 1,032 | |
Cumulative effect of a change in accounting principle, net of income taxes | | | — | | — | | — | | | 17 | | | — | |
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Net income | | | 1,252 | | 1,251 | | 1,100 | | | 1,105 | | | 1,032 | |
Dividends on preferred stock | | | — | | — | | — | | | — | | | 1 | |
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Net income available to common stockholders | | $ | 1,252 | | 1,251 | | 1,100 | | | 1,105 | | | 1,031 | |
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PER COMMON SHARE DATA | | | | | | | | | | | | | | |
Basic | | | | | | | | | | | | | | |
Income before change in accounting principle | | $ | 0.96 | | 0.96 | | 0.84 | | | 0.83 | | | 0.77 | |
Net income | | | 0.96 | | 0.96 | | 0.84 | | | 0.84 | | | 0.77 | |
Diluted | | | | | | | | | | | | | | |
Income before change in accounting principle | | | 0.95 | | 0.94 | | 0.83 | | | 0.82 | | | 0.77 | |
Net income | | | 0.95 | | 0.94 | | 0.83 | | | 0.83 | | | 0.77 | |
Cash dividends | | $ | 0.40 | | 0.40 | | 0.35 | | | 0.35 | | | 0.29 | |
AVERAGE COMMON SHARES | | | | | | | | | | | | | | |
Basic | | | 1,300 | | 1,302 | | 1,311 | | | 1,321 | | | 1,333 | |
Diluted | | | 1,320 | | 1,326 | | 1,332 | | | 1,338 | | | 1,346 | |
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PAGE 12
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited)
| | | | | | |
| | Six Months Ended June 30,
| |
(In millions, except per share data)
| | 2004
| | 2003
| |
INTEREST INCOME | | | | | | |
Interest and fees on loans | | $ | 4,651 | | 4,798 | |
Interest and dividends on securities | | | 2,251 | | 1,839 | |
Trading account interest | | | 434 | | 361 | |
Other interest income | | | 682 | | 419 | |
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|
Total interest income | | | 8,018 | | 7,417 | |
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|
INTEREST EXPENSE | | | | | | |
Interest on deposits | | | 1,302 | | 1,258 | |
Interest on short-term borrowings | | | 615 | | 591 | |
Interest on long-term debt | | | 402 | | 491 | |
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|
Total interest expense | | | 2,319 | | 2,340 | |
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Net interest income | | | 5,699 | | 5,077 | |
Provision for credit losses | | | 105 | | 419 | |
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Net interest income after provision for credit losses | | | 5,594 | | 4,658 | |
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FEE AND OTHER INCOME | | | | | | |
Service charges | | | 960 | | 856 | |
Other banking fees | | | 552 | | 481 | |
Commissions | | | 1,474 | | 886 | |
Fiduciary and asset management fees | | | 1,354 | | 943 | |
Advisory, underwriting and other investment banking fees | | | 389 | | 365 | |
Trading account profits | | | 113 | | 126 | |
Principal investing | | | 53 | | (101 | ) |
Securities gains | | | 38 | | 47 | |
Other income | | | 423 | | 621 | |
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Total fee and other income | | | 5,356 | | 4,224 | |
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|
NONINTEREST EXPENSE | | | | | | |
Salaries and employee benefits | | | 4,346 | | 3,447 | |
Occupancy | | | 453 | | 387 | |
Equipment | | | 512 | | 472 | |
Advertising | | | 96 | | 66 | |
Communications and supplies | | | 308 | | 283 | |
Professional and consulting fees | | | 235 | | 205 | |
Other intangible amortization | | | 219 | | 271 | |
Merger-related and restructuring expenses | | | 201 | | 160 | |
Sundry expense | | | 773 | | 615 | |
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Total noninterest expense | | | 7,143 | | 5,906 | |
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Minority interest in income of consolidated subsidiaries | | | 102 | | 25 | |
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Income before income taxes | | | 3,705 | | 2,951 | |
Income taxes | | | 1,202 | | 892 | |
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Net income | | | 2,503 | | 2,059 | |
Dividends on preferred stock | | | — | | 5 | |
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Net income available to common stockholders | | $ | 2,503 | | 2,054 | |
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PER COMMON SHARE DATA | | | | | | |
Basic earnings | | $ | 1.92 | | 1.54 | |
Diluted earnings | | | 1.89 | | 1.53 | |
Cash dividends | | $ | 0.80 | | 0.55 | |
AVERAGE COMMON SHARES | | | | | | |
Basic | | | 1,301 | | 1,334 | |
Diluted | | | 1,323 | | 1,346 | |
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(a) | Amounts presented in the six months ended June 30, 2003, have been reclassified to conform to the presentation in the six months ended June 30, 2004. |
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2004
|
(In millions)
| | General Bank
| | Capital Management
| | | Wealth Management
| | Corporate and Investment Bank
| | | Parent
| | | Net Merger- Related and Restructuring Expenses (b)
| | | Total
|
CONSOLIDATED | | | | | | | | | | | | | | | | | | | |
Net interest income (a) | | $ | 1,902 | | 131 | | | 119 | | 610 | | | 141 | | | (65 | ) | | 2,838 |
Fee and other income | | | 601 | | 1,245 | | | 147 | | 716 | | | (110 | ) | | — | | | 2,599 |
Intersegment revenue | | | 40 | | (12 | ) | | 3 | | (30 | ) | | (1 | ) | | — | | | — |
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Total revenue (a) | | | 2,543 | | 1,364 | | | 269 | | 1,296 | | | 30 | | | (65 | ) | | 5,437 |
Provision for credit losses | | | 65 | | — | | | — | | (4 | ) | | — | | | — | | | 61 |
Noninterest expense | | | 1,297 | | 1,147 | | | 187 | | 616 | | | 138 | | | 102 | | | 3,487 |
Minority interest | | | — | | — | | | — | | — | | | 70 | | | (25 | ) | | 45 |
Income taxes (benefits) | | | 419 | | 79 | | | 30 | | 222 | | | (128 | ) | | (30 | ) | | 592 |
Tax-equivalent adjustment | | | 11 | | — | | | — | | 31 | | | 23 | | | (65 | ) | | — |
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Net income (loss) | | $ | 751 | | 138 | | | 52 | | 431 | | | (73 | ) | | (47 | ) | | 1,252 |
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|
| |
|
| |
| | Three Months Ended March 31, 2004
|
(In millions)
| | General Bank
| | Capital Management
| | | Wealth Management
| | Corporate and Investment Bank
| | | Parent
| | | Net Merger- Related and Restructuring Expenses (b)
| | | Total
|
CONSOLIDATED | | | | | | | | | | | | | | | | | | | |
Net interest income (a) | | $ | 1,856 | | 118 | | | 114 | | 594 | | | 241 | | | (62 | ) | | 2,861 |
Fee and other income | | | 568 | | 1,350 | | | 143 | | 743 | | | (47 | ) | | — | | | 2,757 |
Intersegment revenue | | | 38 | | (13 | ) | | 1 | | (27 | ) | | 1 | | | — | | | — |
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Total revenue (a) | | | 2,462 | | 1,455 | | | 258 | | 1,310 | | | 195 | | | (62 | ) | | 5,618 |
Provision for credit losses | | | 68 | | — | | | — | | (26 | ) | | 2 | | | — | | | 44 |
Noninterest expense | | | 1,314 | | 1,226 | | | 185 | | 617 | | | 215 | | | 99 | | | 3,656 |
Minority interest | | | — | | — | | | — | | — | | | 79 | | | (22 | ) | | 57 |
Income taxes (benefits) | | | 381 | | 83 | | | 26 | | 231 | | | (82 | ) | | (29 | ) | | 610 |
Tax-equivalent adjustment | | | 10 | | — | | | — | | 32 | | | 20 | | | (62 | ) | | — |
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|
Net income (loss) | | $ | 689 | | 146 | | | 47 | | 456 | | | (39 | ) | | (48 | ) | | 1,251 |
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PAGE 14
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2003
|
(In millions)
| | General Bank
| | Capital Management
| | | Wealth Management
| | Corporate and Investment Bank
| | | Parent
| | | Net Merger- Related and Restructuring Expenses (b)
| | | Total
|
CONSOLIDATED | | | | | | | | | | | | | | | | | | | |
Net interest income (a) | | $ | 1,811 | | 37 | | | 105 | | 568 | | | 82 | | | (63 | ) | | 2,540 |
Fee and other income | | | 572 | | 814 | | | 132 | | 556 | | | 84 | | | — | | | 2,158 |
Intersegment revenue | | | 42 | | (16 | ) | | 2 | | (27 | ) | | (1 | ) | | — | | | — |
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Total revenue (a) | | | 2,425 | | 835 | | | 239 | | 1,097 | | | 165 | | | (63 | ) | | 4,698 |
Provision for credit losses | | | 100 | | — | | | 5 | | 95 | | | (5 | ) | | — | | | 195 |
Noninterest expense | | | 1,307 | | 683 | | | 179 | | 559 | | | 177 | | | 96 | | | 3,001 |
Minority interest | | | — | | — | | | — | | — | | | 16 | | | — | | | 16 |
Income taxes (benefits) | | | 362 | | 56 | | | 20 | | 135 | | | (83 | ) | | (36 | ) | | 454 |
Tax-equivalent adjustment | | | 10 | | — | | | — | | 31 | | | 22 | | | (63 | ) | | — |
| |
|
| |
|
| |
| |
|
| |
|
| |
|
| |
|
Net income | | | 646 | | 96 | | | 35 | | 277 | | | 38 | | | (60 | ) | | 1,032 |
Dividends on preferred stock | | | — | | — | | | — | | — | | | 1 | | | — | | | 1 |
| |
|
| |
|
| |
| |
|
| |
|
| |
|
| |
|
Net income available to common stockholders | | $ | 646 | | 96 | | | 35 | | 277 | | | 37 | | | (60 | ) | | 1,031 |
| |
|
| |
|
| |
| |
|
| |
|
| |
|
| |
|
(b) | The tax-equivalent amounts are eliminated herein in order for “Total” amounts to agree with amounts appearing in theConsolidated Statements of Income. |
PAGE 15
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANS—ON-BALANCE SHEET, AND MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
| | | | | | | | | | | |
| | 2004
| | 2003
|
(In millions)
| | Second Quarter
| | First Quarter
| | Fourth Quarter
| | Third Quarter
| | Second Quarter
|
ON-BALANCE SHEET LOAN PORTFOLIO | | | | | | | | | | | |
COMMERCIAL | | | | | | | | | | | |
Commercial, financial and agricultural | | $ | 58,340 | | 55,999 | | 55,453 | | 55,181 | | 56,070 |
Real estate—construction and other | | | 6,433 | | 6,120 | | 5,969 | | 5,741 | | 5,442 |
Real estate—mortgage | | | 14,927 | | 15,099 | | 15,186 | | 15,746 | | 16,325 |
Lease financing | | | 23,894 | | 23,688 | | 23,978 | | 23,598 | | 23,204 |
Foreign | | | 8,075 | | 7,054 | | 6,880 | | 6,815 | | 6,622 |
| |
|
| |
| |
| |
| |
|
Total commercial | | | 111,669 | | 107,960 | | 107,466 | | 107,081 | | 107,663 |
| |
|
| |
| |
| |
| |
|
CONSUMER | | | | | | | | | | | |
Real estate secured | | | 53,759 | | 51,207 | | 50,726 | | 51,516 | | 47,853 |
Student loans | | | 9,838 | | 8,876 | | 8,435 | | 8,160 | | 7,657 |
Installment loans | | | 7,330 | | 9,054 | | 8,965 | | 9,110 | | 9,644 |
| |
|
| |
| |
| |
| |
|
Total consumer | | | 70,927 | | 69,137 | | 68,126 | | 68,786 | | 65,154 |
| |
|
| |
| |
| |
| |
|
Total loans | | | 182,596 | | 177,097 | | 175,592 | | 175,867 | | 172,817 |
Unearned income | | | 9,679 | | 9,794 | | 10,021 | | 9,942 | | 9,984 |
| |
|
| |
| |
| |
| |
|
Loans, net (On-balance sheet) | | $ | 172,917 | | 167,303 | | 165,571 | | 165,925 | | 162,833 |
| |
|
| |
| |
| |
| |
|
MANAGED PORTFOLIO (a) | | | | | | | | | | | |
COMMERCIAL | | | | | | | | | | | |
On-balance sheet loan portfolio | | $ | 111,669 | | 107,960 | | 107,466 | | 107,081 | | 107,663 |
Securitized loans—off-balance sheet | | | 1,868 | | 1,927 | | 2,001 | | 2,071 | | 2,126 |
Loans held for sale included in other assets | | | 1,887 | | 2,242 | | 2,574 | | 1,347 | | 1,282 |
| |
|
| |
| |
| |
| |
|
Total commercial | | | 115,424 | | 112,129 | | 112,041 | | 110,499 | | 111,071 |
| |
|
| |
| |
| |
| |
|
CONSUMER | | | | | | | | | | | |
Real estate secured | | | | | | | | | | | |
On-balance sheet loan portfolio | | | 53,759 | | 51,207 | | 50,726 | | 51,516 | | 47,853 |
Securitized loans—off-balance sheet | | | 7,194 | | 8,218 | | 8,897 | | 10,192 | | 9,944 |
Securitized loans included in securities | | | 9,506 | | 10,261 | | 10,905 | | 11,809 | | 13,015 |
Loans held for sale included in other assets | | | 14,003 | | 11,607 | | 9,618 | | 8,368 | | 8,223 |
| |
|
| |
| |
| |
| |
|
Total real estate secured | | | 84,462 | | 81,293 | | 80,146 | | 81,885 | | 79,035 |
| |
|
| |
| |
| |
| |
|
Student | | | | | | | | | | | |
On-balance sheet loan portfolio | | | 9,838 | | 8,876 | | 8,435 | | 8,160 | | 7,657 |
Securitized loans—off-balance sheet | | | 612 | | 1,532 | | 1,658 | | 1,786 | | 1,947 |
Loans held for sale included in other assets | | | 367 | | 433 | | 433 | | 458 | | 583 |
| |
|
| |
| |
| |
| |
|
Total student | | | 10,817 | | 10,841 | | 10,526 | | 10,404 | | 10,187 |
| |
|
| |
| |
| |
| |
|
Installment | | | | | | | | | | | |
On-balance sheet loan portfolio | | | 7,330 | | 9,054 | | 8,965 | | 9,110 | | 9,644 |
Securitized loans—off-balance sheet | | | 1,794 | | — | | — | | — | | — |
Securitized loans included in securities | | | 130 | | — | | — | | — | | — |
| |
|
| |
| |
| |
| |
|
Total installment | | | 9,254 | | 9,054 | | 8,965 | | 9,110 | | 9,644 |
| |
|
| |
| |
| |
| |
|
Total consumer | | | 104,533 | | 101,188 | | 99,637 | | 101,399 | | 98,866 |
| |
|
| |
| |
| |
| |
|
Total managed portfolio | | $ | 219,957 | | 213,317 | | 211,678 | | 211,898 | | 209,937 |
| |
|
| |
| |
| |
| |
|
SERVICING PORTFOLIO (b) | | | | | | | | | | | |
Commercial | | $ | 108,207 | | 99,601 | | 85,693 | | 80,207 | | 73,128 |
Consumer | | $ | 24,475 | | 16,240 | | 13,279 | | 8,465 | | 6,581 |
| |
|
| |
| |
| |
| |
|
(a) | The managed portfolio includes the on-balance sheet loan portfolio, loans securitized for which the assets are classified in securities on-balance sheet, loans held for sale that are classified in other assets on-balance sheet and the off-balance sheet portfolio of securitized loans sold, where we service the loans. |
(b) | The servicing portfolio consists of third party commercial and consumer loans for which our sole function is that of servicing the loans for the third parties. |
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | 2004
| | | 2003
| |
(In millions)
| | Second Quarter
| | | First Quarter
| | | Fourth Quarter
| | | Third Quarter
| | | Second Quarter
| |
ALLOWANCE FOR LOAN LOSSES (a) | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 2,338 | | | 2,348 | | | 2,474 | | | 2,510 | | | 2,553 | |
Provision for credit losses | | | 73 | | | 59 | | | 63 | | | 118 | | | 169 | |
Provision for credit losses relating to loans transferred to other assets or sold | | | (9 | ) | | (8 | ) | | 24 | | | — | | | 26 | |
Allowance relating to loans acquired, transferred to other assets or sold | | | (3 | ) | | (9 | ) | | (57 | ) | | (22 | ) | | (69 | ) |
Net charge-offs | | | (68 | ) | | (52 | ) | | (156 | ) | | (132 | ) | | (169 | ) |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Balance, end of period | | $ | 2,331 | | | 2,338 | | | 2,348 | | | 2,474 | | | 2,510 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of loans, net | | | 1.35 | % | | 1.40 | | | 1.42 | | | 1.49 | | | 1.54 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of nonaccrual and restructured loans (b) | | | 270 | % | | 242 | | | 227 | | | 178 | | | 167 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of nonperforming assets (b) | | | 241 | % | | 218 | | | 205 | | | 164 | | | 154 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
LOAN LOSSES | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | $ | 41 | | | 48 | | | 105 | | | 88 | | | 128 | |
Commercial real estate—construction and mortgage | | | 1 | | | 1 | | | 4 | | | 5 | | | 7 | |
Consumer | | | 66 | | | 86 | | | 106 | | | 106 | | | 91 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total loan losses | | | 108 | | | 135 | | | 215 | | | 199 | | | 226 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
LOAN RECOVERIES | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | | 23 | | | 57 | | | 37 | | | 45 | | | 37 | |
Commercial real estate—construction and mortgage | | | — | | | 2 | | | 2 | | | 1 | | | 1 | |
Consumer | | | 17 | | | 24 | | | 20 | | | 21 | | | 19 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total loan recoveries | | | 40 | | | 83 | | | 59 | | | 67 | | | 57 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Net charge-offs | | $ | 68 | | | 52 | | | 156 | | | 132 | | | 169 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Commercial loans net charge-offs as % of average commercial loans, net (c) | | | 0.08 | % | | (0.05 | ) | | 0.31 | | | 0.21 | | | 0.42 | |
Consumer loans net charge-offs as % of average consumer loans, net (c) | | | 0.28 | | | 0.36 | | | 0.50 | | | 0.51 | | | 0.44 | |
Total net charge-offs as % of average loans, net (c) | | | 0.17 | % | | 0.13 | | | 0.39 | | | 0.33 | | | 0.43 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
NONPERFORMING ASSETS | | | | | | | | | | | | | | | | |
Nonaccrual loans | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | $ | 610 | | | 700 | | | 765 | | | 1,072 | | | 1,153 | |
Commercial real estate—construction and mortgage | | | 33 | | | 47 | | | 54 | | | 76 | | | 96 | |
Consumer real estate secured | | | 207 | | | 199 | | | 192 | | | 215 | | | 221 | |
Installment loans | | | 13 | | | 22 | | | 24 | | | 28 | | | 31 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total nonaccrual loans | | | 863 | | | 968 | | | 1,035 | | | 1,391 | | | 1,501 | |
Foreclosed properties (d) | | | 104 | | | 103 | | | 111 | | | 116 | | | 130 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total nonperforming assets | | $ | 967 | | | 1,071 | | | 1,146 | | | 1,507 | | | 1,631 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Nonperforming loans included in loans held for sale (e) | | $ | 68 | | | 67 | | | 82 | | | 160 | | | 167 | |
Nonperforming assets included in loans and in loans held for sale | | $ | 1,035 | | | 1,138 | | | 1,228 | | | 1,667 | | | 1,798 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of loans, net, and foreclosed properties (b) | | | 0.56 | % | | 0.64 | | | 0.69 | | | 0.91 | | | 1.00 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of loans, net, foreclosed properties and loans in other assets as held for sale (e) | | | 0.55 | % | | 0.63 | | | 0.69 | | | 0.95 | | | 1.04 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Accruing loans past due 90 days | | $ | 419 | | | 328 | | | 341 | | | 291 | | | 293 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
(a) | As of June 30, 2004, the reserve for unfunded lending commitments has been reclassified from the allowance for loan losses to other liabilities. Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004. At June 30, 2004, the reserve for unfunded lending commitments was $146 million. |
(b) | These ratios do not include nonperforming loans included in loans held for sale. |
(d) | Restructured loans are not significant. |
(e) | These ratios reflect nonperforming loans included in loans held for sale. Loans held for sale, which are included in other assets, are recorded at the lower of cost or market value, and accordingly, the amounts shown and included in the ratios are net of the transferred allowance for loan losses and the lower of cost or market value adjustments. |
PAGE 17
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | 2004
| | | 2003
| |
(In millions, except per share data)
| | Second Quarter
| | | First Quarter
| | | Fourth Quarter
| | | Third Quarter
| | | Second Quarter
| |
ASSETS | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 10,701 | | | 10,564 | | | 11,479 | | | 11,178 | | | 13,088 | |
Interest-bearing bank balances | | | 2,059 | | | 5,881 | | | 2,308 | | | 3,664 | | | 7,539 | |
Federal funds sold and securities purchased under resale agreements | | | 21,970 | | | 23,845 | | | 24,725 | | | 22,491 | | | 13,854 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total cash and cash equivalents | | | 34,730 | | | 40,290 | | | 38,512 | | | 37,333 | | | 34,481 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Trading account assets | | | 39,659 | | | 36,893 | | | 34,714 | | | 36,392 | | | 40,436 | |
Securities | | | 102,934 | | | 104,203 | | | 100,445 | | | 87,176 | | | 73,764 | |
Loans, net of unearned income | | | 172,917 | | | 167,303 | | | 165,571 | | | 165,925 | | | 162,833 | |
Allowance for loan losses (a) | | | (2,331 | ) | | (2,338 | ) | | (2,348 | ) | | (2,474 | ) | | (2,510 | ) |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Loans, net (a) | | | 170,586 | | | 164,965 | | | 163,223 | | | 163,451 | | | 160,323 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Premises and equipment | | | 4,522 | | | 4,620 | | | 4,619 | | | 4,746 | | | 4,635 | |
Due from customers on acceptances | | | 703 | | | 605 | | | 854 | | | 732 | | | 1,074 | |
Goodwill | | | 11,481 | | | 11,233 | | | 11,149 | | | 11,094 | | | 10,907 | |
Other intangible assets | | | 1,045 | | | 1,150 | | | 1,243 | | | 1,353 | | | 1,321 | |
Other assets | | | 52,781 | | | 47,181 | | | 46,429 | | | 46,647 | | | 37,538 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total assets (a) | | $ | 418,441 | | | 411,140 | | | 401,188 | | | 388,924 | | | 364,479 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | | 51,613 | | | 49,018 | | | 48,683 | | | 45,493 | | | 48,081 | |
Interest-bearing deposits | | | 191,767 | | | 183,320 | | | 172,542 | | | 158,002 | | | 153,211 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total deposits | | | 243,380 | | | 232,338 | | | 221,225 | | | 203,495 | | | 201,292 | |
Short-term borrowings | | | 66,360 | | | 65,452 | | | 71,290 | | | 65,474 | | | 49,123 | |
Bank acceptances outstanding | | | 708 | | | 613 | | | 876 | | | 743 | | | 1,078 | |
Trading account liabilities | | | 20,327 | | | 21,956 | | | 19,184 | | | 23,959 | | | 25,141 | |
Other liabilities (a) | | | 15,321 | | | 15,564 | | | 16,945 | | | 22,800 | | | 17,481 | |
Long-term debt | | | 37,022 | | | 39,352 | | | 36,730 | | | 37,541 | | | 37,051 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total liabilities (a) | | | 383,118 | | | 375,275 | | | 366,250 | | | 354,012 | | | 331,166 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Minority interest in net assets of consolidated subsidiaries | | | 2,677 | | | 2,528 | | | 2,510 | | | 2,099 | | | 849 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at June 30, 2004 | | | — | | | — | | | — | | | — | | | — | |
Common stock, $3.33 1/3 par value; authorized 3 billion shares, outstanding 1.309 billion shares at June 30, 2004 | | | 4,365 | | | 4,372 | | | 4,374 | | | 4,427 | | | 4,440 | |
Paid-in capital | | | 17,920 | | | 17,869 | | | 17,811 | | | 17,882 | | | 17,784 | |
Retained earnings | | | 9,890 | | | 9,382 | | | 8,904 | | | 8,829 | | | 8,106 | |
Accumulated other comprehensive income, net | | | 471 | | | 1,714 | | | 1,339 | | | 1,675 | | | 2,134 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total stockholders’ equity | | | 32,646 | | | 33,337 | | | 32,428 | | | 32,813 | | | 32,464 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total liabilities and stockholders’ equity (a) | | $ | 418,441 | | | 411,140 | | | 401,188 | | | 388,924 | | | 364,479 | |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
(a) | As of June 30, 2004, the reserve for unfunded lending commitments has been reclassified from the allowance for loan losses to other liabilities. Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004. |
PAGE 18
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | SECOND QUARTER 2004
| | | FIRST QUARTER 2004
| |
(In millions)
| | Average Balances
| | Interest Income/ Expense
| | Average Rates Earned/ Paid
| | | Average Balances
| | Interest Income/ Expense
| | Average Rates Earned/ Paid
| |
ASSETS | | | | | | | | | | | | | | | | | | |
Interest-bearing bank balances | | $ | 4,015 | | | 11 | | 1.13 | % | | $ | 3,237 | | | 10 | | 1.18 | % |
Federal funds sold and securities purchased under resale agreements | | | 23,800 | | | 62 | | 1.05 | | | | 24,806 | | | 61 | | 0.99 | |
Trading account assets | | | 26,135 | | | 260 | | 3.98 | | | | 20,956 | | | 220 | | 4.21 | |
Securities | | | 100,209 | | | 1,196 | | 4.77 | | | | 98,222 | | | 1,221 | | 4.97 | |
Loans | | | | | | | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | | 56,648 | | | 599 | | 4.25 | | | | 55,476 | | | 576 | | 4.18 | |
Real estate—construction and other | | | 6,309 | | | 56 | | 3.56 | | | | 6,022 | | | 53 | | 3.52 | |
Real estate—mortgage | | | 15,029 | | | 158 | | 4.21 | | | | 15,241 | | | 160 | | 4.23 | |
Lease financing | | | 7,011 | | | 180 | | 10.28 | | | | 6,945 | | | 183 | | 10.52 | |
Foreign | | | 7,110 | | | 41 | | 2.32 | | | | 6,684 | | | 41 | | 2.49 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total commercial | | | 92,107 | | | 1,034 | | 4.51 | | | | 90,368 | | | 1,013 | | 4.50 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Consumer | | | | | | | | | | | | | | | | | | |
Real estate secured | | | 52,389 | | | 691 | | 5.29 | | | | 50,879 | | | 705 | | 5.55 | |
Student loans | | | 9,941 | | | 90 | | 3.63 | | | | 8,908 | | | 78 | | 3.53 | |
Installment loans | | | 9,205 | | | 126 | | 5.48 | | | | 9,026 | | | 130 | | 5.80 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total consumer | | | 71,535 | | | 907 | | 5.08 | | | | 68,813 | | | 913 | | 5.32 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total loans | | | 163,642 | | | 1,941 | | 4.76 | | | | 159,181 | | | 1,926 | | 4.86 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Loans held for sale (a) | | | 15,603 | | | 161 | | 4.12 | | | | 12,759 | | | 131 | | 4.12 | |
Other earning assets (a) | | | 11,443 | | | 82 | | 2.91 | | | | 11,159 | | | 84 | | 3.02 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total earning assets excluding derivatives | | | 344,847 | | | 3,713 | | 4.32 | | | | 330,320 | | | 3,653 | | 4.43 | |
Risk management derivatives (b) | | | — | | | 371 | | 0.43 | | | | — | | | 408 | | 0.50 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total earning assets including derivatives | | | 344,847 | | | 4,084 | | 4.75 | | | | 330,320 | | | 4,061 | | 4.93 | |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
Cash and due from banks | | | 11,254 | | | | | | | | | 10,957 | | | | | | |
Other assets (a) | | | 54,973 | | | | | | | | | 57,411 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
Total assets (a) | | $ | 411,074 | | | | | | | | $ | 398,688 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits | | | | | | | | | | | | | | | | | | |
Savings and NOW accounts | | | 70,205 | | | 78 | | 0.45 | | | | 65,366 | | | 70 | | 0.43 | |
Money market accounts | | | 76,850 | | | 172 | | 0.90 | | | | 69,208 | | | 154 | | 0.90 | |
Other consumer time | | | 26,288 | | | 176 | | 2.69 | | | | 27,496 | | | 189 | | 2.76 | |
Foreign | | | 7,110 | | | 20 | | 1.14 | | | | 7,673 | | | 22 | | 1.17 | |
Other time | | | 7,773 | | | 34 | | 1.76 | | | | 7,676 | | | 34 | | 1.75 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing deposits | | | 188,226 | | | 480 | | 1.03 | | | | 177,419 | | | 469 | | 1.06 | |
Federal funds purchased and securities sold under repurchase agreements | | | 46,620 | | | 116 | | 1.00 | | | | 48,353 | | | 124 | | 1.03 | |
Commercial paper | | | 12,382 | | | 32 | | 1.04 | | | | 11,852 | | | 30 | | 1.01 | |
Securities sold short | | | 10,571 | | | 73 | | 2.78 | | | | 8,412 | | | 47 | | 2.25 | |
Other short-term borrowings | | | 6,013 | | | 11 | | 0.80 | | | | 6,436 | | | 10 | | 0.59 | |
Long-term debt | | | 37,840 | | | 378 | | 3.99 | | | | 37,269 | | | 364 | | 3.91 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing liabilities excluding derivatives | | | 301,652 | | | 1,090 | | 1.45 | | | | 289,741 | | | 1,044 | | 1.45 | |
Risk management derivatives (b) | | | — | | | 91 | | 0.12 | | | | — | | | 94 | | 0.13 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing liabilities including derivatives | | | 301,652 | | | 1,181 | | 1.57 | | | | 289,741 | | | 1,138 | | 1.58 | |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
Noninterest-bearing deposits | | | 50,466 | | | | | | | | | 46,603 | | | | | | |
Other liabilities (a) | | | 26,460 | | | | | | | | | 29,607 | | | | | | |
Stockholders’ equity | | | 32,496 | | | | | | | | | 32,737 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
Total liabilities and stockholders’ equity (a) | | $ | 411,074 | | | | | | | | $ | 398,688 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
Interest income and rate earned—including derivatives | | | | | $ | 4,084 | | 4.75 | % | | | | | $ | 4,061 | | 4.93 | % |
Interest expense and equivalent rate paid—including derivatives | | | | | | 1,181 | | 1.38 | | | | | | | 1,138 | | 1.38 | |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
Net interest income and margin—including derivatives | | | | | $ | 2,903 | | 3.37 | % | | | | | $ | 2,923 | | 3.55 | % |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
(a) | Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004. |
(b) | The rates earned and the rates paid on risk management derivatives are based on off-balance sheet notional amounts. The fair value of these instruments is included in other assets and other liabilities. |
PAGE 19
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
FOURTH QUARTER 2003
| | | THIRD QUARTER 2003
| | | SECOND QUARTER 2003
| |
Average Balances
| | Interest Income/ Expense
| | Average Rates Earned/ Paid
| | | Average Balances
| | Interest Income/ Expense
| | Average Rates Earned/ Paid
| | | Average Balances
| | Interest Income/ Expense
| | Average Rates Earned/ Paid
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
$ | 2,569 | | | 7 | | 1.17 | % | | $ | 4,342 | | | 14 | | 1.27 | % | | $ | 4,751 | | | 16 | | 1.34 | % |
| 23,591 | | | 60 | | 1.00 | | | | 22,080 | | | 48 | | 0.88 | | | | 12,282 | | | 35 | | 1.10 | |
| 20,038 | | | 213 | | 4.24 | | | | 18,941 | | | 197 | | 4.15 | | | | 18,254 | | | 203 | | 4.46 | |
| 94,584 | | | 1,184 | | 5.00 | | | | 78,436 | | | 962 | | 4.90 | | | | 68,994 | | | 977 | | 5.67 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 55,439 | | | 593 | | 4.25 | | | | 55,596 | | | 588 | | 4.19 | | | | 56,928 | | | 599 | | 4.22 | |
| 5,789 | | | 52 | | 3.53 | | | | 5,574 | | | 48 | | 3.47 | | | | 5,516 | | | 49 | | 3.54 | |
| 15,555 | | | 166 | | 4.23 | | | | 16,075 | | | 174 | | 4.31 | | | | 16,508 | | | 186 | | 4.52 | |
| 7,084 | | | 185 | | 10.45 | | | | 6,911 | | | 183 | | 10.61 | | | | 6,885 | | | 187 | | 10.87 | |
| 6,761 | | | 45 | | 2.66 | | | | 6,756 | | | 47 | | 2.73 | | | | 6,627 | | | 47 | | 2.89 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 90,628 | | | 1,041 | | 4.56 | | | | 90,912 | | | 1,040 | | 4.55 | | | | 92,464 | | | 1,068 | | 4.63 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 51,380 | | | 718 | | 5.58 | | | | 49,438 | | | 707 | | 5.70 | | | | 47,558 | | | 691 | | 5.82 | |
| 8,502 | | | 78 | | 3.62 | | | | 7,962 | | | 74 | | 3.70 | | | | 7,710 | | | 78 | | 4.04 | |
| 9,090 | | | 137 | | 5.99 | | | | 9,682 | | | 152 | | 6.18 | | | | 10,003 | | | 166 | | 6.63 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 68,972 | | | 933 | | 5.39 | | | | 67,082 | | | 933 | | 5.54 | | | | 65,271 | | | 935 | | 5.73 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 159,600 | | | 1,974 | | 4.92 | | | | 157,994 | | | 1,973 | | 4.97 | | | | 157,735 | | | 2,003 | | 5.09 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 10,627 | | | 109 | | 4.10 | | | | 10,244 | | | 111 | | 4.34 | | | | 8,917 | | | 99 | | 4.45 | |
| 11,265 | | | 83 | | 2.95 | | | | 11,466 | | | 87 | | 2.98 | | | | 2,942 | | | 35 | | 4.74 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 322,274 | | | 3,630 | | 4.49 | | | | 303,503 | | | 3,392 | | 4.45 | | | | 273,875 | | | 3,368 | | 4.92 | |
| — | | | 386 | | 0.47 | | | | — | | | 384 | | 0.50 | | | | — | | | 391 | | 0.58 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 322,274 | | | 4,016 | | 4.96 | | | | 303,503 | | | 3,776 | | 4.95 | | | | 273,875 | | | 3,759 | | 5.50 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
|
| 10,728 | | | | | | | | | 11,092 | | | | | | | | | 10,845 | | | | | | |
| 55,985 | | | | | | | | | 62,299 | | | | | | | | | 57,192 | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | |
$ | 388,987 | | | | | | | | $ | 376,894 | | | | | | | | $ | 341,912 | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 56,755 | | | 58 | | 0.40 | | | | 52,570 | | | 52 | | 0.39 | | | | 52,196 | | | 71 | | 0.55 | |
| 63,202 | | | 141 | | 0.89 | | | | 58,576 | | | 126 | | 0.85 | | | | 53,302 | | | 156 | | 1.18 | |
| 28,456 | | | 200 | | 2.80 | | | | 29,814 | | | 217 | | 2.89 | | | | 31,330 | | | 243 | | 3.09 | |
| 10,648 | | | 31 | | 1.13 | | | | 7,581 | | | 22 | | 1.17 | | | | 6,841 | | | 24 | | 1.44 | |
| 7,520 | | | 33 | | 1.77 | | | | 7,099 | | | 33 | | 1.80 | | | | 7,542 | | | 35 | | 1.88 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 166,581 | | | 463 | | 1.10 | | | | 155,640 | | | 450 | | 1.15 | | | | 151,211 | | | 529 | | 1.40 | |
| 55,378 | | | 133 | | 0.95 | | | | 46,359 | | | 114 | | 0.98 | | | | 37,957 | | | 139 | | 1.47 | |
| 11,670 | | | 31 | | 1.06 | | | | 11,978 | | | 32 | | 1.05 | | | | 2,381 | | | 5 | | 0.80 | |
| 7,970 | | | 50 | | 2.48 | | | | 8,850 | | | 57 | | 2.58 | | | | 8,121 | | | 58 | | 2.84 | |
| 6,551 | | | 9 | | 0.53 | | | | 7,136 | | | 15 | | 0.87 | | | | 3,590 | | | 8 | | 0.88 | |
| 35,855 | | | 357 | | 3.97 | | | | 36,388 | | | 365 | | 4.02 | | | | 35,751 | | | 366 | | 4.10 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 284,005 | | | 1,043 | | 1.46 | | | | 266,351 | | | 1,033 | | 1.54 | | | | 239,011 | | | 1,105 | | 1.85 | |
| — | | | 31 | | 0.04 | | | | — | | | 26 | | 0.04 | | | | — | | | 51 | | 0.09 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| 284,005 | | | 1,074 | | 1.50 | | | | 266,351 | | | 1,059 | | 1.58 | | | | 239,011 | | | 1,156 | | 1.94 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
|
| 45,696 | | | | | | | | | 44,755 | | | | | | | | | 42,589 | | | | | | |
| 27,145 | | | | | | | | | 33,803 | | | | | | | | | 27,950 | | | | | | |
| 32,141 | | | | | | | | | 31,985 | | | | | | | | | 32,362 | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | |
$ | 388,987 | | | | | | | | $ | 376,894 | | | | | | | | $ | 341,912 | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | |
| | | $ | 4,016 | | 4.96 | % | | | | | $ | 3,776 | | 4.95 | % | | | | | $ | 3,759 | | 5.50 | % |
| | | | 1,074 | | 1.32 | | | | | | | 1,059 | | 1.38 | | | | | | | 1,156 | | 1.69 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
|
| | | $ | 2,942 | | 3.64 | % | | | | | $ | 2,717 | | 3.57 | % | | | | | $ | 2,603 | | 3.81 | % |
| | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
|
PAGE 20
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES(a)
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | SIX MONTHS ENDED JUNE 30, 2004
| | | SIX MONTHS ENDED JUNE 30, 2003
| |
(In millions)
| | Average Balances
| | Interest Income/ Expense
| | Average Rates Earned/ Paid
| | | Average Balances
| | Interest Income/ Expense
| | Average Rates Earned/ Paid
| |
ASSETS | | | | | | | | | | | | | | | | | | |
Interest-bearing bank balances | | $ | 3,626 | | | 21 | | 1.15 | % | | $ | 4,222 | | | 29 | | 1.38 | % |
Federal funds sold and securities purchased under resale agreements | | | 24,303 | | | 123 | | 1.02 | | | | 10,624 | | | 64 | | 1.20 | |
Trading account assets | | | 23,546 | | | 480 | | 4.08 | | | | 17,281 | | | 404 | | 4.70 | |
Securities | | | 99,216 | | | 2,417 | | 4.87 | | | | 70,546 | | | 1,997 | | 5.67 | |
Loans | | | | | | | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | | 56,062 | | | 1,175 | | 4.21 | | | | 57,302 | | | 1,209 | | 4.25 | |
Real estate—construction and other | | | 6,166 | | | 109 | | 3.54 | | | | 5,100 | | | 90 | | 3.55 | |
Real estate—mortgage | | | 15,135 | | | 318 | | 4.22 | | | | 16,972 | | | 380 | | 4.51 | |
Lease financing | | | 6,978 | | | 363 | | 10.40 | | | | 6,831 | | | 371 | | 10.87 | |
Foreign | | | 6,897 | | | 82 | | 2.40 | | | | 6,545 | | | 97 | | 3.00 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total commercial | | | 91,238 | | | 2,047 | | 4.51 | | | | 92,750 | | | 2,147 | | 4.66 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Consumer | | | | | | | | | | | | | | | | | | |
Real estate secured | | | 51,634 | | | 1,396 | | 5.42 | | | | 47,354 | | | 1,399 | | 5.92 | |
Student loans | | | 9,425 | | | 168 | | 3.58 | | | | 7,601 | | | 153 | | 4.06 | |
Installment loans | | | 9,115 | | | 256 | | 5.64 | | | | 10,144 | | | 341 | | 6.78 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total consumer | | | 70,174 | | | 1,820 | | 5.20 | | | | 65,099 | | | 1,893 | | 5.84 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total loans | | | 161,412 | | | 3,867 | | 4.81 | | | | 157,849 | | | 4,040 | | 5.15 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Loans held for sale | | | 14,181 | | | 292 | | 4.12 | | | | 7,763 | | | 175 | | 4.51 | |
Other earning assets | | | 11,299 | | | 166 | | 2.96 | | | | 2,965 | | | 73 | | 5.00 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total earning assets excluding derivatives | | | 337,583 | | | 7,366 | | 4.37 | | | | 271,250 | | | 6,782 | | 5.02 | |
Risk management derivatives (b) | | | — | | | 779 | | 0.47 | | | | — | | | 762 | | 0.57 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total earning assets including derivatives | | | 337,583 | | | 8,145 | | 4.84 | | | | 271,250 | | | 7,544 | | 5.59 | |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
Cash and due from banks | | | 11,105 | | | | | | | | | 10,866 | | | | | | |
Other assets | | | 56,193 | | | | | | | | | 57,590 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
Total assets | | $ | 404,881 | | | | | | | | $ | 339,706 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits | | | | | | | | | | | | | | | | | | |
Savings and NOW accounts | | | 67,786 | | | 148 | | 0.44 | | | | 51,545 | | | 150 | | 0.59 | |
Money market accounts | | | 73,029 | | | 326 | | 0.90 | | | | 50,659 | | | 298 | | 1.19 | |
Other consumer time | | | 26,891 | | | 365 | | 2.73 | | | | 31,997 | | | 506 | | 3.18 | |
Foreign | | | 7,392 | | | 42 | | 1.16 | | | | 7,071 | | | 51 | | 1.46 | |
Other time | | | 7,724 | | | 68 | | 1.76 | | | | 8,096 | | | 77 | | 1.93 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing deposits | | | 182,822 | | | 949 | | 1.04 | | | | 149,368 | | | 1,082 | | 1.46 | |
Federal funds purchased and securities sold under repurchase agreements | | | 47,486 | | | 240 | | 1.02 | | | | 37,676 | | | 278 | | 1.49 | |
Commercial paper | | | 12,117 | | | 62 | | 1.03 | | | | 2,492 | | | 9 | | 0.75 | |
Securities sold short | | | 9,491 | | | 120 | | 2.54 | | | | 7,431 | | | 102 | | 2.76 | |
Other short-term borrowings | | | 6,225 | | | 21 | | 0.69 | | | | 3,458 | | | 16 | | 0.89 | |
Long-term debt | | | 37,555 | | | 742 | | 3.95 | | | | 37,240 | | | 754 | | 4.05 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing liabilities excluding derivatives | | | 295,696 | | | 2,134 | | 1.45 | | | | 237,665 | | | 2,241 | | 1.90 | |
Risk management derivatives (b) | | | — | | | 185 | | 0.13 | | | | — | | | 99 | | 0.08 | |
| |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing liabilities including derivatives | | | 295,696 | | | 2,319 | | 1.58 | | | | 237,665 | | | 2,340 | | 1.98 | |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
Noninterest-bearing deposits | | | 48,535 | | | | | | | | | 42,019 | | | | | | |
Other liabilities | | | 28,034 | | | | | | | | | 27,814 | | | | | | |
Stockholders’ equity | | | 32,616 | | | | | | | | | 32,208 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
Total liabilities and stockholders’ equity | | $ | 404,881 | | | | | | | | $ | 339,706 | | | | | | |
| |
|
| | | | | | | |
|
| | | | | | |
Interest income and rate earned—including derivatives | | | | | $ | 8,145 | | 4.84 | % | | | | | $ | 7,544 | | 5.59 | % |
Interest expense and equivalent rate paid—including derivatives | | | | | | 2,319 | | 1.38 | | | | | | | 2,340 | | 1.74 | |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
Net interest income and margin—including derivatives | | | | | $ | 5,826 | | 3.46 | % | | | | | $ | 5,204 | | 3.85 | % |
| | | | |
|
| |
|
| | | | |
|
| |
|
|
(a) | Amounts presented in the six months ended June 30, 2003, have been reclassified to conform to the presentation in the six months ended June 30, 2004. |
(b) | The rates earned and the rates paid on risk management derivatives are based on off-balance sheet notional amounts. The fair value of these instruments is included in other assets and other liabilities. |
PAGE 21
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | | 2004
| | | 2003
| |
(Dollars in millions, except per share data)
| | *
| | Second Quarter
| | | First Quarter
| | | Fourth Quarter
| | | Third Quarter
| | | Second Quarter
| |
INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE | | | | | | | | | | | | | | | | | | |
Net income(GAAP) | | A | | $ | 1,252 | | | 1,251 | | | 1,100 | | | 1,105 | | | 1,032 | |
After tax change in accounting principle(GAAP) | | | | | — | | | — | | | — | | | (17 | ) | | — | |
| |
| |
|
|
| |
|
| |
|
| |
|
| |
|
|
Income before change in accounting principle(GAAP) | | | | | 1,252 | | | 1,251 | | | 1,100 | | | 1,088 | | | 1,032 | |
After tax merger-related and restructuring expenses(GAAP) | | | | | 47 | | | 48 | | | 75 | | | 83 | | | 60 | |
| |
| |
|
|
| |
|
| |
|
| |
|
| |
|
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Income before change in accounting principle, excluding merger-related and restructuring expenses | | B | | | 1,299 | | | 1,299 | | | 1,175 | | | 1,171 | | | 1,092 | |
After tax other intangible amortization(GAAP) | | | | | 67 | | | 69 | | | 74 | | | 79 | | | 81 | |
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Income before change in accounting principle, excluding after tax merger-related and restructuring expenses, and other intangible amortization(Cash basis) | | C | | $ | 1,366 | | | 1,368 | | | 1,249 | | | 1,250 | | | 1,173 | |
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NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | |
Net income available to common stockholders(GAAP) | | D | | $ | 1,252 | | | 1,251 | | | 1,100 | | | 1,105 | | | 1,031 | |
After tax merger-related and restructuring expenses(GAAP) | | | | | 47 | | | 48 | | | 75 | | | 83 | | | 60 | |
After tax change in accounting principle(GAAP) | | | | | — | | | — | | | — | | | (17 | ) | | — | |
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Net income available to common stockholders, excluding merger-related and restructuring expenses | | E | | | 1,299 | | | 1,299 | | | 1,175 | | | 1,171 | | | 1,091 | |
After tax other intangible amortization(GAAP) | | | | | 67 | | | 69 | | | 74 | | | 79 | | | 81 | |
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Net income available to common stockholders, excluding after tax merger-related and restructuring expenses, and other intangible amortization(Cash basis) | | F | | $ | 1,366 | | | 1,368 | | | 1,249 | | | 1,250 | | | 1,172 | |
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RETURN ON AVERAGE COMMON STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | |
Average common stockholders’ equity(GAAP) | | G | | $ | 32,496 | | | 32,737 | | | 32,141 | | | 31,985 | | | 32,362 | |
Merger-related and restructuring expenses(GAAP) | | | | | 69 | | | 20 | | | 199 | | | 138 | | | 63 | |
Change in accounting principle | | | | | — | | | — | | | — | | | (14 | ) | | — | |
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Average common stockholders’ equity, excluding merger-related and restructuring expenses, and change in accounting principle | | H | | | 32,565 | | | 32,757 | | | 32,340 | | | 32,109 | | | 32,425 | |
Average intangible assets(GAAP) | | I | | | (12,326 | ) | | (12,351 | ) | | (12,380 | ) | | (12,250 | ) | | (12,250 | ) |
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Average common stockholders’ equity(Cash basis) | | J | | $ | 20,239 | | | 20,406 | | | 19,960 | | | 19,859 | | | 20,175 | |
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Return on average common stockholders’ equity | | | | | | | | | | | | | | | | | | |
GAAP | | D/G | | | 15.49 | % | | 15.37 | | | 13.58 | | | 13.71 | | | 12.78 | |
Excluding merger-related and restructuring expenses, and change in accounting principle | | E/H | | | 16.04 | | | 15.95 | | | 14.41 | | | 14.46 | | | 13.49 | |
Return on average tangible common stockholders’ equity | | | | | | | | | | | | | | | | | | |
GAAP | | D/G+I | | | 24.96 | | | 24.68 | | | 22.09 | | | 22.22 | | | 20.56 | |
Cash basis | | F/J | | | 27.15 | % | | 26.97 | | | 24.83 | | | 24.97 | | | 23.32 | |
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RETURN ON AVERAGE ASSETS | | | | | | | | | | | | | | | | | | |
Average assets(GAAP) | | K | | $ | 411,074 | | | 398,688 | | | 388,987 | | | 376,894 | | | 341,912 | |
Average intangible assets(GAAP) | | | | | (12,326 | ) | | (12,351 | ) | | (12,380 | ) | | (12,250 | ) | | (12,250 | ) |
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Average tangible assets(GAAP) | | L | | | 398,748 | | | 386,337 | | | 376,607 | | | 364,644 | | | 329,662 | |
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Average assets (GAAP) | | | | | 411,074 | | | 398,688 | | | 388,987 | | | 376,894 | | | 341,912 | |
Merger-related and restructuring expenses(GAAP) | | | | | 69 | | | 20 | | | 199 | | | 138 | | | 63 | |
Change in accounting principle | | | | | — | | | — | | | — | | | (14 | ) | | — | |
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Average assets excluding merger-related and restructuring expenses, and change in accounting principle | | M | | | 411,143 | | | 398,708 | | | 389,186 | | | 377,018 | | | 341,975 | |
Average intangible assets(GAAP) | | | | | (12,326 | ) | | (12,351 | ) | | (12,380 | ) | | (12,250 | ) | | (12,250 | ) |
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Average tangible assets excluding merger-related and restructuring expenses, and change in accounting principle | | N | | $ | 398,817 | | | 386,357 | | | 376,806 | | | 364,768 | | | 329,725 | |
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Return on average assets | | | | | | | | | | | | | | | | | | |
GAAP | | A/K | | | 1.22 | % | | 1.26 | | | 1.12 | | | 1.16 | | | 1.21 | |
Excluding merger-related and restructuring expenses | | B/M | | | 1.27 | | | 1.31 | | | 1.20 | | | 1.23 | | | 1.28 | |
Return on average tangible assets | | | | | | | | | | | | | | | | | | |
GAAP | | A/L | | | 1.26 | | | 1.30 | | | 1.16 | | | 1.20 | | | 1.26 | |
Cash basis | | C/N | | | 1.38 | % | | 1.42 | | | 1.32 | | | 1.36 | | | 1.43 | |
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PAGE 22
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | | 2004
| | | 2003
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(Dollars in millions, except per share data)
| | *
| | Second Quarter
| | | First Quarter
| | | Fourth Quarter
| | | Third Quarter
| | | Second Quarter
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OVERHEAD EFFICIENCY RATIOS | | | | | | | | | | | | | | | | | | |
Noninterest expense (GAAP) | | O | | $ | 3,487 | | | 3,656 | | | 3,766 | | | 3,570 | | | 3,001 | |
Merger-related and restructuring expenses (GAAP) | | | | | (102 | ) | | (99 | ) | | (135 | ) | | (148 | ) | | (96 | ) |
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Noninterest expense, excluding merger-related and restructuring expenses | | P | | | 3,385 | | | 3,557 | | | 3,631 | | | 3,422 | | | 2,905 | |
Other intangible amortization (GAAP) | | | | | (107 | ) | | (112 | ) | | (120 | ) | | (127 | ) | | (131 | ) |
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Noninterest expense (Cash basis) | | Q | | $ | 3,278 | | | 3,445 | | | 3,511 | | | 3,295 | | | 2,774 | |
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Net interest income (GAAP) | | | | $ | 2,838 | | | 2,861 | | | 2,877 | | | 2,653 | | | 2,540 | |
Tax-equivalent adjustment | | | | | 65 | | | 62 | | | 65 | | | 64 | | | 63 | |
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Net interest income (Tax-equivalent) | | | | $ | 2,903 | | | 2,923 | | | 2,942 | | | 2,717 | | | 2,603 | |
Fee and other income (GAAP) | | | | | 2,599 | | | 2,757 | | | 2,604 | | | 2,616 | | | 2,158 | |
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Total | | R | | $ | 5,502 | | | 5,680 | | | 5,546 | | | 5,333 | | | 4,761 | |
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Retail Brokerage Services, excluding insurance | | | | | | | | | | | | | | | | | | |
Noninterest expense (GAAP) | | S | | $ | 908 | | | 989 | | | 957 | | | 941 | | | 472 | |
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Net interest income (GAAP) | | | | $ | 117 | | | 107 | | | 82 | | | 69 | | | 30 | |
Tax-equivalent adjustment | | | | | — | | | — | | | 1 | | | — | | | — | |
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Net interest income (Tax-equivalent) | | | | | 117 | | | 107 | | | 83 | | | 69 | | | 30 | |
Fee and other income (GAAP) | | | | | 907 | | | 1,031 | | | 1,008 | | | 1,001 | | | 532 | |
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Total | | T | | $ | 1,024 | | | 1,138 | | | 1,091 | | | 1,070 | | | 562 | |
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Overhead efficiency ratios | | | | | | | | | | | | | | | | | | |
GAAP | | O/R | | | 63.40 | % | | 64.36 | | | 67.90 | | | 66.95 | | | 63.03 | |
Excluding merger-related and restructuring expenses | | P/R | | | 61.54 | | | 62.61 | | | 65.45 | | | 64.18 | | | 61.02 | |
Excluding merger-related and restructuring expenses, and brokerage | | P-S/R-T | | | 55.34 | | | 56.53 | | | 60.00 | | | 58.23 | | | 57.93 | |
Cash basis | | Q/R | | | 59.60 | | | 60.64 | | | 63.28 | | | 61.79 | | | 58.27 | |
Cash basis excluding brokerage | | Q-S/R-T | | | 52.95 | % | | 54.06 | | | 57.30 | | | 55.24 | | | 54.81 | |
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OPERATING LEVERAGE | | | | | | | | | | | | | | | | | | |
Operating leverage (GAAP) | | | | $ | (11 | ) | | 244 | | | 18 | | | 2 | | | (1 | ) |
After tax merger-related and restructuring expenses (GAAP) | | | | | 3 | | | (36 | ) | | (12 | ) | | 52 | | | 31 | |
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Operating leverage, excluding merger-related and restructuring expenses | | | | | (8 | ) | | 208 | | | 6 | | | 54 | | | 30 | |
After tax other intangible amortization (GAAP) | | | | | (5 | ) | | (8 | ) | | (7 | ) | | (4 | ) | | (9 | ) |
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Operating leverage (Cash basis) | | | | $ | (13 | ) | | 200 | | | (1 | ) | | 50 | | | 21 | |
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DIVIDEND PAYOUT RATIOS ON COMMON SHARES | | | | | | | | | | | | | | | | | | |
Dividends paid per common share | | U | | $ | 0.40 | | | 0.40 | | | 0.35 | | | 0.35 | | | 0.29 | |
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Diluted earnings per common share (GAAP) | | V | | $ | 0.95 | | | 0.94 | | | 0.83 | | | 0.83 | | | 0.77 | |
Merger-related and restructuring expenses (GAAP) | | | | | 0.03 | | | 0.04 | | | 0.05 | | | 0.06 | | | 0.04 | |
Other intangible amortization (GAAP) | | | | | 0.05 | | | 0.05 | | | 0.06 | | | 0.05 | | | 0.06 | |
Change in accounting principle (GAAP) | | | | | — | | | — | | | — | | | (0.01 | ) | | — | |
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Diluted earnings per common share (Cash basis) | | W | | $ | 1.03 | | | 1.03 | | | 0.94 | | | 0.93 | | | 0.87 | |
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Dividend payout ratios (GAAP) | | | | | | | | | | | | | | | | | | |
GAAP | | U/V | | | 42.11 | % | | 42.55 | | | 42.17 | | | 42.17 | | | 37.66 | |
Cash basis | | U/W | | | 38.83 | % | | 38.83 | | | 37.23 | | | 37.63 | | | 33.33 | |
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* | The letter included in the columns are provided to show how the various ratios presented in the tables on pages 21 and 22 are calculated. For example, return on average assets on a GAAP basis is calculated by dividing income before change in accounting principle (GAAP) by average assets (GAAP) (i.e., A/K) and annualized where appropriate. |