Exhibit (99)(a)
| | | | |
 | | Press Release April 15, 2005 | |  |
WACHOVIA EARNS $1.01 PER SHARE IN 1st QUARTER 2005, UP 7%
Net income rises to record $1.62 billion on strong execution of strategic initiatives
1st QUARTER 2005 COMPARED WITH 1st QUARTER 2004
| | • | | Record net income up 30 percent and record results in all four major businesses. Results include the impact of the November 1, 2004, acquisition of SouthTrust Corporation. |
| | • | | Revenue growth of 14 percent more than double expense growth of 6 percent. |
| | • | | Merger savings and expense discipline drove a 456 basis point improvement in the overhead efficiency ratio to 59.86 percent. |
| | • | | Sales momentum continued in all four major businesses, although retail brokerage activity remained challenging in line with industry trends. |
| | • | | Exceptional credit quality with annualized net charge-offs of 0.08 percent of average loans and total nonperforming assets at 0.50 percent of loans, foreclosed properties and loans held for sale. |
| | • | | Customer satisfaction and loyalty scores continue to set records. |
| | | | | | | | | | | | | | |
| Earnings Highlights | | Three Months Ended
|
| | | March 31, 2005
| | December 31, 2004
| | March 31, 2004
|
(In millions, except per share data)
| | Amount
| | | EPS
| | Amount
| | EPS
| | Amount
| | EPS
|
Earnings | | | | | | | | | | | | | | |
Net income (GAAP) | | $ | 1,621 | | | 1.01 | | 1,448 | | 0.95 | | 1,251 | | 0.94 |
Net merger-related expenses | | | 31 | | | 0.02 | | 53 | | 0.04 | | 48 | | 0.04 |
Earnings excluding net merger-related expenses | | $ | 1,652 | | | 1.03 | | 1,501 | | 0.99 | | 1,299 | | 0.98 |
Financial ratios | | | | | | | | | | | | | | |
Return on average common stockholders’ equity | | | 13.92 | % | | | | 13.50 | | | | 15.37 | | |
Net interest margin(a) | | | 3.31 | | | | | 3.37 | | | | 3.55 | | |
Fee and other income as % of total revenue(a) | | | 46.30 | | | | | 45.50 | | | | 48.62 | | |
Overhead efficiency ratio(a) | | | 59.86 | % | | | | 62.23 | | | | 64.42 | | |
Capital adequacy(b) | | | | | | | | | | | | | | |
Tier 1 capital ratio | | | 7.93 | % | | | | 8.01 | | | | 8.54 | | |
Total capital ratio | | | 11.43 | | | | | 11.11 | | | | 11.37 | | |
Leverage ratio | | | 6.00 | % | | | | 6.38 | | | | 6.33 | | |
Asset quality | | | | | | | | | | | | | | |
Allowance for loan losses as % of nonaccrual and restructured loans | | | 300 | % | | | | 289 | | | | 242 | | |
Allowance for loan losses as % of loans, net | | | 1.20 | | | | | 1.23 | | | | 1.40 | | |
Allowance for credit losses as % of loans, net(c) | | | 1.27 | | | | | 1.30 | | | | 1.49 | | |
Net charge-offs as % of average loans, net | | | 0.08 | | | | | 0.23 | | | | 0.13 | | |
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale | | | 0.50 | % | | | | 0.53 | | | | 0.63 | | |
| (b) | The first quarter of 2005 is based on estimates. |
| (c) | The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. |
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WACHOVIA EARNS $1.01 PER SHARE IN 1st QUARTER 2005, UP 7%/page 2
CHARLOTTE, N.C. – Wachovia Corp. (NYSE:WB) today reported record net income of $1.62 billion, or $1.01 per share, in the first quarter of 2005 compared with $1.25 billion, or 94 cents per share, in the first quarter of 2004.
Excluding after-tax net merger-related expenses of 2 cents per share in the first quarter of 2005 and 4 cents per share in the first quarter of 2004, first quarter 2005 earnings were $1.65 billion, or $1.03 cents per share, compared with $1.30 billion, or 98 cents per share, in the first quarter of 2004.
“We’re pleased with our record net income in the first quarter this year despite the headwinds of challenging retail brokerage markets,” said Ken Thompson, Wachovia chairman and chief executive officer. “Great execution on our revenue strategies and expense initiatives produced positive operating leverage and a much improved overhead efficiency ratio. Credit quality continued to be stellar across-the-board. Our merger integration with SouthTrust is proceeding on track and on budget. Our four major businesses generated record earnings, with good sales momentum and market share gains bolstered by industry-leading customer service and loyalty ratings that continue to set records. I’m confident these positive trends will give us great momentum for the rest of this year and beyond.”
| | | | | | | |
| Wachovia Corporation | | Three Months Ended
|
(In millions)
| | March 31,
2005
| | December 31,
2004
| | March 31,
2004
|
Total revenue(Tax-equivalent) | | $ | 6,469 | | 6,161 | | 5,690 |
Provision for credit losses | | | 36 | | 109 | | 44 |
Noninterest expense | | | 3,872 | | 3,834 | | 3,666 |
Net income | | | 1,621 | | 1,448 | | 1,251 |
Average loans, net | | | 221,175 | | 196,527 | | 159,181 |
Average core deposits | | $ | 271,095 | | 260,627 | | 208,673 |
In the first quarter of 2005 compared with the first quarter of 2004, 14 percent revenue growth reflected balance sheet momentum, which boosted net interest income 19 percent. In addition to the SouthTrust impact, fee and other income growth of 8 percent included a gain on the sale of equity securities received in settlement of loans as well as improved capital markets revenues, partially offset by lower retail brokerage commissions in challenging markets. Expense efficiencies held noninterest expense growth to 6 percent, despite the impact of the SouthTrust acquisition. Provision expense declined $8 million. Net charge-offs declined 12 percent to $46 million, or an annualized 0.08 percent of average net loans. Total nonperforming assets including loans held for sale were $1.20 billion, or 0.50 percent of loans, foreclosed properties and loans held for sale at March 31, 2005.
The increase in average net loans, in addition to SouthTrust, included the effect of loans transferred in the fourth quarter of 2004 from loans held for sale. Consumer loan growth was largely in consumer real-estate secured lending. Higher middle market commercial, small business and commercial real estate loans also reflected the addition of SouthTrust. Including SouthTrust, average core deposits increased 30 percent. Average low-cost core deposits grew 34 percent from the first quarter of 2004, including SouthTrust, to $224.0 billion. Low-cost core deposits are those in demand deposit, interest checking, savings and money market accounts, and exclude CAP accounts and CDs.
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WACHOVIA EARNS $1.01 PER SHARE IN 1st QUARTER 2005, UP 7%/page 3
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 on which Wachovia manages and allocates capital to its business segments. Pages 18 and 19 include a reconciliation of segment results to Wachovia’s consolidated results of operations in accordance with GAAP.
General Bank
| | | | | | | | |
| General Bank Highlights | | Three Months Ended
|
(In millions)
| | March 31,
2005
| | | December 31,
2004
| | March 31,
2004
|
Total revenue(Tax-equivalent) | | $ | 3,100 | | | 3,004 | | 2,468 |
Provision for credit losses | | | 57 | | | 107 | | 68 |
Noninterest expense | | | 1,547 | | | 1,528 | | 1,325 |
Segment earnings | | $ | 947 | | | 872 | | 685 |
Cash overhead efficiency ratio(Tax-equivalent) | | | 49.91 | % | | 50.86 | | 53.71 |
Average loans, net | | $ | 159,328 | | | 146,878 | | 118,198 |
Average core deposits | | | 203,316 | | | 192,922 | | 161,781 |
Economic capital, average | | $ | 7,046 | | | 6,433 | | 5,272 |
The General Bank includes retail and small business, and commercial customers. The General Bank produced record quarterly segment earnings of $947 million, up 38 percent from the prior year’s first quarter. In addition to the impact of SouthTrust, the 26 percent increase in total revenue from the first quarter a year ago was driven by continued strength in low-cost core deposit growth and consumer real estate-secured loans. Fee and other income increased 20 percent from the first quarter a year ago. In addition to the impact from SouthTrust, there was strength in debit card interchange income and gains on sales of loans. This growth offset a decline in commercial service charges that reflected higher earnings credit rates on commercial customer balances. Noninterest expense increased 17 percent from the first quarter a year ago primarily due to SouthTrust. Strong expense management resulted in an improved overhead efficiency ratio of 49.91 percent, down from 53.71 percent a year earlier.
Average core deposits increased 26 percent from the prior year quarter, including 27 percent year over year growth in average low-cost core deposits. Average loans increased 35 percent year over year. This growth included average core deposits and average loans from SouthTrust. In addition, certificates of deposit and individual retirement account deposits grew 31 percent year over year.
Provision expense declined 16 percent from the first quarter of 2004, primarily reflecting risk reduction strategies implemented in prior years, as well as solid improvements in both commercial and consumer loan losses and a strengthening economy.
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WACHOVIA EARNS $1.01 PER SHARE IN 1st QUARTER 2005, UP 7%/page 4
Capital Management
| | | | | | | | |
| Capital Management Highlights | | Three Months Ended
|
(In millions)
| | March 31,
2005
| | | December 31,
2004
| | March 31,
2004
|
Total revenue(Tax-equivalent) | | $ | 1,332 | | | 1,359 | | 1,449 |
Provision for credit losses | | | — | | | — | | — |
Noninterest expense | | | 1,086 | | | 1,140 | | 1,219 |
Segment earnings | | $ | 156 | | | 139 | | 147 |
Cash overhead efficiency ratio(Tax-equivalent) | | | 81.55 | % | | 83.92 | | 84.07 |
Average loans, net | | $ | 624 | | | 656 | | 340 |
Average core deposits | | | 31,666 | | | 31,523 | | 18,348 |
Economic capital, average | | $ | 1,408 | | | 1,421 | | 1,447 |
Capital Management includes retail brokerage services and asset management. Earnings increased 6 percent from the first quarter of 2004 to a record $156 million despite a revenue decline of 8 percent, as noninterest expense declined 11 percent largely due to the benefit of the retail brokerage integration and lower revenue-based compensation expense. Revenues declined on lower brokerage transactional activity, which offset growth in net interest income. Deposit growth from the first quarter of 2004 reflected growth in an FDIC-insured sweep product that was introduced in late 2003. The addition of SouthTrust had an insignificant impact on this segment’s first quarter 2005 results.
Total assets under management at March 31, 2005, declined modestly from December 31, 2004, to $252.5 billion. Mutual fund assets declined 6 percent to $100.4 billion from year-end 2004 primarily due to institutional money market fund outflows, offsetting positive net equity fund sales.
Wealth Management
| | | | | | | | |
| Wealth Management Highlights | | Three Months Ended
|
(In millions)
| | March 31,
2005
| | | December 31,
2004
| | March 31,
2004
|
Total revenue(Tax-equivalent) | | $ | 284 | | | 284 | | 259 |
Provision for credit losses | | | (1 | ) | | — | | — |
Noninterest expense | | | 190 | | | 200 | | 187 |
Segment earnings | | $ | 60 | | | 55 | | 45 |
Cash overhead efficiency ratio(Tax-equivalent) | | | 67.01 | % | | 70.11 | | 72.55 |
Average loans, net | | $ | 12,824 | | | 12,055 | | 10,205 |
Average core deposits | | | 12,433 | | | 12,135 | | 10,620 |
Economic capital, average | | $ | 478 | | | 489 | | 459 |
Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Wealth Management’s record segment earnings of $60 million increased 33 percent and revenues increased 10 percent from the first quarter of 2004. A modest decline in fee income was offset by 24 percent growth in net interest income. Balance sheet momentum continued with average loan growth of 26 percent from both consumer and commercial lending and average core deposit growth of 17 percent year over year, primarily in money market balances. Lower insurance commissions primarily resulted from the late first quarter 2004 sale of an insurance brokerage business, which offset growth in trust and investment management fees on higher assets under management. Expense discipline was apparent in modest noninterest expense growth relative to revenue growth, and a 554 basis point improvement in the
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WACHOVIA EARNS $1.01 PER SHARE IN 1st QUARTER 2005, UP 7%/page 5
overhead efficiency ratio. The increase in noninterest expense was due to higher revenue-based incentives and higher personnel expense related to acquisitions. The proposed acquisition of Savannah, Ga.-based Palmer & Cay, Inc., which would place Wachovia Insurance Services among the 10 largest insurance brokerage businesses in the nation, was announced in early April and is expected to close in the second quarter of this year.
Corporate and Investment Bank
| | | | | | | | | |
| Corporate and Investment Bank Highlights | | Three Months Ended
| |
(In millions)
| | March 31,
2005
| | | December 31,
2004
| | March 31,
2004
| |
Total revenue(Tax-equivalent) | | $ | 1,534 | | | 1,265 | | 1,297 | |
Provision for credit losses | | | (3 | ) | | 4 | | (26 | ) |
Noninterest expense | | | 733 | | | 659 | | 619 | |
Segment earnings | | $ | 505 | | | 380 | | 446 | |
Cash overhead efficiency ratio(Tax-equivalent) | | | 47.80 | % | | 52.12 | | 47.71 | |
Average loans, net | | $ | 36,919 | | | 35,315 | | 29,392 | |
Average core deposits | | | 20,577 | | | 20,834 | | 15,987 | |
Economic capital, average | | $ | 5,135 | | | 4,807 | | 4,521 | |
The Corporate and Investment Bank includes corporate lending, investment banking, and treasury and international trade finance. Corporate and Investment Bank segment earnings were up 13 percent from the first quarter of 2004 to a record $505 million, reflecting revenue growth of 18 percent. Net interest income grew modestly due to strong core deposit growth and growth in structured products assets. Fee and other income grew 32 percent due to gains on the sale of equity securities received in settlement of loans, as well as strength in advisory and underwriting fees, strong commercial real estate activity and stronger principal investing results. Provision expense was a net recovery of $3 million. Noninterest expense increased 18 percent due to increased revenue-based variable pay and higher other personnel expense, coupled with investment in growth initiatives. Average core deposits grew 29 percent primarily from higher commercial mortgage servicing, international correspondent banking and treasury services. The 26 percent increase in loans reflected higher leasing balances due to the previously reported income tax settlement and the inclusion of SouthTrust, as well as increases in real estate capital markets, international and large corporate loans. Economic capital usage increased due to higher loan balances and an increased expense base.
***
Wachovia Corporation (NYSE:WB) is one of the largest providers of financial services to retail, brokerage and corporate customers, with retail operations from Connecticut to Florida and west to Texas, and retail brokerage operations nationwide. Wachovia had assets of $506.8 billion, market capitalization of $80.3 billion and stockholders’ equity of $46.5 billion at March 31, 2005. Its four core businesses, the General Bank, Capital Management, Wealth Management, and the Corporate and Investment Bank, serve 13 million household and business relationships primarily through 3,277 offices in 15 states and Washington, D.C. Its full-service retail brokerage firm, Wachovia Securities, LLC, also serves clients through 693 offices in 49 states and five Latin American countries. Our Corporate and Investment Bank serves clients primarily in 10 key industry sectors nationwide. Global services are offered through 33 international offices. Online banking and brokerage products and services also are available through Wachovia.com.
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WACHOVIA EARNS $1.01 PER SHARE IN 1st QUARTER 2005, UP 7%/page 6
Forward-Looking Statements
This news release contains various forward-looking statements. A discussion of various factors that could cause Wachovia Corporation’s actual results to differ materially from those expressed in such forward-looking statements is included in Wachovia’s filings with the Securities and Exchange Commission, including its Current Report on Form 8-K dated April 15, 2005.
Explanation of Wachovia’s Use of Certain Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this news release includes certain non-GAAP financial measures, including those presented on page 1 and on page 9 under the captions “Earnings Excluding Merger-Related and Restructuring Expenses” and “Earnings Excluding Merger-Related and Restructuring Expenses, and Other Intangible Amortization”, and which are reconciled to GAAP financial measures on pages 18 and 19. In addition, in this news release certain designated net interest income amounts are presented on a tax-equivalent basis, including the calculation of the overhead efficiency ratio.
Wachovia believes these non-GAAP financial measures provide information useful to investors in understanding the underlying operational performance of the company, its business and performance trends and facilitates comparisons with the performance of others in the financial services industry. Specifically, Wachovia believes the exclusion of merger-related and restructuring expenses and the cumulative effect of a change in accounting principle permits evaluation and a comparison of results for on-going business operations, and it is on this basis that Wachovia’s management internally assesses the company’s performance. Those non-operating items are excluded from Wachovia’s segment measures used internally to evaluate segment performance in accordance with GAAP because management does not consider them particularly relevant or useful in evaluating the operating performance of our business segments. In addition, because of the significant amount of deposit base intangible amortization, Wachovia believes the exclusion of this expense provides investors with consistent and meaningful comparisons to other financial services firms. Wachovia’s management makes recommendations to its board of directors about dividend payments based on reported earnings excluding merger-related and restructuring expenses, other intangible amortization and the cumulative effect of a change in accounting principle, and has communicated certain dividend payout ratio goals to investors on this basis. Management believes this payout ratio is useful to investors because it provides investors with a better understanding of and permits investors to monitor Wachovia’s dividend payout policy. Wachovia also believes the presentation of net interest income on a tax-equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry standards. Wachovia operates one of the largest retail brokerage businesses in our industry, and we have presented an overhead efficiency ratio excluding these brokerage services, which management believes is useful to investors in comparing the performance of our banking business with other banking companies.
Although Wachovia believes the above non-GAAP financial measures enhance investors’ understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP basis financial measures.
Earnings Conference Call and Supplemental Materials
Wachovia CEO Ken Thompson and CFO Bob Kelly will review Wachovia’s first quarter 2005 results in a conference call and audio webcast beginning at 10 a.m. Eastern Daylight Savings Time today. This review may include a discussion of certain non-GAAP financial measures. Supplemental materials relating to first quarter results, which also include a reconciliation of any non-GAAP measures to Wachovia’s reported financials, are available on the Internet at Wachovia.com/investor, and investors are encouraged to access these materials in advance of the conference call.
Webcast Instructions: To gain access to the webcast, which will be “listen-only,” go to Wachovia.com/investor and click on the link “Wachovia First Quarter Earnings Audio Webcast.” In order to listen to the webcast, you will need to download either Real Player or Media Player.
Teleconference Instructions: The telephone number for the conference call is 1-888-357-9787 for U.S. callers or 1-706-679-7342 for international callers. You will be asked to tell the answering coordinator your name and the name of your firm. Mention the conference Access Code: Wachovia.
Replay: Friday, April 15, at 12 p.m. EDT and continuing through 5 p.m. EDT Friday, May 13. Replay telephone number is 1-706-645-9291; access code 4081193.
***
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 7
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL TABLES
TABLE OF CONTENTS
| | |
| | | PAGE
|
Financial Highlights - Five Quarters Ended March 31, 2005 | | 8 |
| |
Other Financial Data - Five Quarters Ended March 31, 2005 | | 9 |
| |
Consolidated Statements of Income - Five Quarters Ended March 31, 2005 | | 10 |
| |
Business Segments - Three Months Ended March 31, 2005 and December 31, 2004 | | 11 |
| |
Business Segments - Three Months Ended March 31, 2004 | | 12 |
| |
Loans - On-Balance Sheet, and Managed and Servicing Portfolios - Five Quarters Ended March 31, 2005 | | 13 |
| |
Allowance for Loan Losses and Nonperforming Assets - Five Quarters Ended March 31, 2005 | | 14 |
| |
Consolidated Balance Sheets - Five Quarters Ended March 31, 2005 | | 15 |
| |
Net Interest Income Summaries - Five Quarters Ended March 31, 2005 | | 16 -17 |
| |
Reconciliation of Certain Non-GAAP Financial Measures - Five Quarters Ended March 31, 2005 | | 18 -19 |
PAGE 8
WACHOVIA CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | |
| | | 2005
| | | 2004
|
(Dollars in millions, except per share data)
| | First
Quarter
| | | Fourth
Quarter
| | Third
Quarter
| | | Second
Quarter
| | | First
Quarter
|
EARNINGS SUMMARY | | | | | | | | | | | | | | |
Net interest income(GAAP) | | $ | 3,413 | | | 3,297 | | 2,965 | | | 2,838 | | | 2,861 |
Tax-equivalent adjustment | | | 61 | | | 60 | | 63 | | | 65 | | | 62 |
| | |
|
|
| |
| |
|
| |
|
| |
|
Net interest income(Tax-equivalent) | | | 3,474 | | | 3,357 | | 3,028 | | | 2,903 | | | 2,923 |
Fee and other income | | | 2,995 | | | 2,804 | | 2,601 | | | 2,607 | | | 2,767 |
| | |
|
|
| |
| |
|
| |
|
| |
|
Total revenue(Tax-equivalent) | | | 6,469 | | | 6,161 | | 5,629 | | | 5,510 | | | 5,690 |
Provision for credit losses | | | 36 | | | 109 | | 43 | | | 61 | | | 44 |
Other noninterest expense | | | 3,696 | | | 3,605 | | 3,445 | | | 3,286 | | | 3,455 |
Merger-related and restructuring expenses | | | 61 | | | 116 | | 127 | | | 102 | | | 99 |
Other intangible amortization | | | 115 | | | 113 | | 99 | | | 107 | | | 112 |
| | |
|
|
| |
| |
|
| |
|
| |
|
Total noninterest expense | | | 3,872 | | | 3,834 | | 3,671 | | | 3,495 | | | 3,666 |
Minority interest in income of consolidated subsidiaries | | | 64 | | | 54 | | 28 | | | 45 | | | 57 |
| | |
|
|
| |
| |
|
| |
|
| |
|
Income before income taxes(Tax-equivalent) | | | 2,497 | | | 2,164 | | 1,887 | | | 1,909 | | | 1,923 |
Tax-equivalent adjustment | | | 61 | | | 60 | | 63 | | | 65 | | | 62 |
Income taxes | | | 815 | | | 656 | | 561 | | | 592 | | | 610 |
| | |
|
|
| |
| |
|
| |
|
| |
|
Net income | | $ | 1,621 | | | 1,448 | | 1,263 | | | 1,252 | | | 1,251 |
| | |
|
|
| |
| |
|
| |
|
| |
|
Diluted earnings per common share | | $ | 1.01 | | | 0.95 | | 0.96 | | | 0.95 | | | 0.94 |
Return on average common stockholders’ equity | | | 13.92 | % | | 13.50 | | 15.12 | | | 15.49 | | | 15.37 |
Return on average assets | | | 1.31 | | | 1.22 | | 1.18 | | | 1.22 | | | 1.26 |
Overhead efficiency ratio | | | 59.86 | % | | 62.23 | | 65.20 | | | 63.46 | | | 64.42 |
Operating leverage | | $ | 269 | | | 368 | | (55 | ) | | (11 | ) | | 244 |
| | |
|
|
| |
| |
|
| |
|
| |
|
ASSET QUALITY | | | | | | | | | | | | | | |
Allowance for loan losses as % of loans, net | | | 1.20 | % | | 1.23 | | 1.33 | | | 1.35 | | | 1.40 |
Allowance for loan losses as % of nonperforming assets | | | 262 | | | 251 | | 258 | | | 241 | | | 218 |
Allowance for credit losses as % of loans, net | | | 1.27 | | | 1.30 | | 1.41 | | | 1.43 | | | 1.49 |
Net charge-offs as % of average loans, net | | | 0.08 | | | 0.23 | | 0.15 | | | 0.17 | | | 0.13 |
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale | | | 0.50 | % | | 0.53 | | 0.50 | | | 0.55 | | | 0.63 |
| | |
|
|
| |
| |
|
| |
|
| |
|
CAPITAL ADEQUACY(a) | | | | | | | | | | | | | | |
Tier I capital ratio | | | 7.93 | % | | 8.01 | | 8.34 | | | 8.36 | | | 8.54 |
Total capital ratio | | | 11.43 | | | 11.11 | | 11.22 | | | 11.02 | | | 11.37 |
Leverage ratio | | | 6.00 | % | | 6.38 | | 6.21 | | | 6.23 | | | 6.33 |
| | |
|
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| |
| |
|
| |
|
| |
|
OTHER DATA | | | | | | | | | | | | | | |
Average diluted common shares(In millions) | | | 1,603 | | | 1,518 | | 1,316 | | | 1,320 | | | 1,326 |
Actual common shares(In millions) | | | 1,576 | | | 1,588 | | 1,308 | | | 1,309 | | | 1,312 |
Dividends paid per common share | | $ | 0.46 | | | 0.46 | | 0.40 | | | 0.40 | | | 0.40 |
Dividend payout ratio on common shares | | | 45.54 | % | | 48.42 | | 41.67 | | | 42.11 | | | 42.55 |
Book value per common share | | $ | 29.48 | | | 29.79 | | 25.92 | | | 24.93 | | | 25.42 |
Common stock price | | | 50.91 | | | 52.60 | | 46.95 | | | 44.50 | | | 47.00 |
Market capitalization | | $ | 80,256 | | | 83,537 | | 61,395 | | | 58,268 | | | 61,650 |
Common stock price to book value | | | 173 | % | | 177 | | 181 | | | 178 | | | 185 |
FTE employees | | | 93,669 | | | 96,030 | | 84,503 | | | 85,042 | | | 85,460 |
Total financial centers/brokerage offices | | | 4,003 | | | 4,004 | | 3,247 | | | 3,271 | | | 3,305 |
ATMs | | | 5,234 | | | 5,321 | | 4,395 | | | 4,396 | | | 4,404 |
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| |
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| |
|
| |
|
| (a) | The first quarter of 2005 is based on estimates. |
PAGE 9
WACHOVIA CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
| | | | | | | | | | | | | | |
| | | 2005
| | | 2004
|
(In millions)
| | First
Quarter
| | | Fourth
Quarter
| | Third
Quarter
| | | Second
Quarter
| | | First
Quarter
|
EARNINGS EXCLUDING MERGER-RELATED AND RESTRUCTURING EXPENSES(a) (b) | | | | | | | | | | | | | | |
Return on average common stockholders’ equity | | | 14.19 | % | | 13.95 | | 15.72 | | | 16.04 | | | 15.95 |
Return on average assets | | | 1.34 | | | 1.26 | | 1.24 | | | 1.27 | | | 1.31 |
Overhead efficiency ratio | | | 58.92 | | | 60.34 | | 62.96 | | | 61.60 | | | 62.67 |
Overhead efficiency ratio excluding brokerage | | | 54.21 | % | | 55.01 | | 57.56 | | | 55.50 | | | 56.69 |
Operating leverage | | $ | 214 | | | 358 | | (30 | ) | | (8 | ) | | 208 |
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|
|
| |
| |
|
| |
|
| |
|
EARNINGS EXCLUDING MERGER-RELATED AND RESTRUCTURING EXPENSES, AND OTHER INTANGIBLE AMORTIZATION(a) (b) (c) | | | | | | | | | | | | | | |
Dividend payout ratio on common shares | | | 42.59 | % | | 44.23 | | 38.10 | | | 38.83 | | | 38.83 |
Return on average tangible common stockholders’ equity | | | 28.86 | | | 26.59 | | 26.28 | | | 27.15 | | | 26.97 |
Return on average tangible assets | | | 1.46 | | | 1.38 | | 1.33 | | | 1.38 | | | 1.42 |
Overhead efficiency ratio | | | 57.15 | | | 58.50 | | 61.20 | | | 59.66 | | | 60.70 |
Overhead efficiency ratio excluding brokerage | | | 52.10 | % | | 52.79 | | 55.44 | | | 53.12 | | | 54.23 |
Operating leverage | | $ | 215 | | | 373 | | (38 | ) | | (13 | ) | | 200 |
| | |
|
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| |
| |
|
| |
|
| |
|
OTHER FINANCIAL DATA | | | | | | | | | | | | | | |
Net interest margin | | | 3.31 | % | | 3.37 | | 3.36 | | | 3.37 | | | 3.55 |
Fee and other income as % of total revenue | | | 46.30 | | | 45.50 | | 46.21 | | | 47.33 | | | 48.62 |
Effective income tax rate | | | 33.42 | | | 31.20 | | 30.71 | | | 32.19 | | | 32.73 |
Tax rate(Tax-equivalent)(d) | | | 35.05 | % | | 33.14 | | 33.04 | | | 34.44 | | | 34.93 |
| | |
|
|
| |
| |
|
| |
|
| |
|
AVERAGE BALANCE SHEET DATA | | | | | | | | | | | | | | |
Commercial loans, net | | $ | 127,703 | | | 116,599 | | 96,860 | | | 92,107 | | | 90,368 |
Consumer loans, net | | | 93,472 | | | 79,928 | | 71,692 | | | 71,535 | | | 68,813 |
Loans, net | | | 221,175 | | | 196,527 | | 168,552 | | | 163,642 | | | 159,181 |
Earning assets | | | 421,047 | | | 397,490 | | 359,909 | | | 344,847 | | | 330,320 |
Total assets | | | 500,486 | | | 472,431 | | 424,399 | | | 411,074 | | | 398,688 |
Core deposits | | | 271,095 | | | 260,627 | | 232,989 | | | 223,809 | | | 208,673 |
Total deposits | | | 294,674 | | | 280,051 | | 248,245 | | | 238,692 | | | 224,022 |
Interest-bearing liabilities | | | 365,516 | | | 343,489 | | 314,310 | | | 301,652 | | | 289,741 |
Stockholders’ equity | | $ | 47,231 | | | 42,644 | | 33,246 | | | 32,496 | | | 32,737 |
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|
|
| |
| |
|
| |
|
| |
|
PERIOD-END BALANCE SHEET DATA | | | | | | | | | | | | | | |
Commercial loans, net | | $ | 134,696 | | | 131,196 | | 102,524 | | | 101,581 | | | 97,742 |
Consumer loans, net | | | 92,570 | | | 92,644 | | 71,980 | | | 71,336 | | | 69,561 |
Loans, net | | | 227,266 | | | 223,840 | | 174,504 | | | 172,917 | | | 167,303 |
Goodwill and other intangible assets | | | | | | | | | | | | | | |
Goodwill | | | 21,635 | | | 21,526 | | 11,481 | | | 11,481 | | | 11,233 |
Deposit base | | | 951 | | | 1,048 | | 484 | | | 568 | | | 659 |
Customer relationships | | | 387 | | | 443 | | 372 | | | 387 | | | 401 |
Tradename | | | 90 | | | 90 | | 90 | | | 90 | | | 90 |
Total assets | | | 506,833 | | | 493,324 | | 436,698 | | | 418,441 | | | 411,140 |
Core deposits | | | 273,883 | | | 274,588 | | 237,315 | | | 228,204 | | | 217,954 |
Total deposits | | | 297,657 | | | 295,053 | | 252,981 | | | 243,380 | | | 232,338 |
Stockholders’ equity | | $ | 46,467 | | | 47,317 | | 33,897 | | | 32,646 | | | 33,337 |
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| |
|
| |
|
| |
|
| (a) | These financial measures are calculated by excluding from GAAP computed net income presented on page 8, $31 million, $53 million, $55 million, $47 million and $48 million in the first quarter of 2005, and in the fourth, third, second and first quarters of 2004, respectively, of after-tax net merger-related and restructuring expenses. |
| (b) | See page 8 for the most directly comparable GAAP financial measure and pages 18 and 19 for a more detailed reconciliation. |
| (c) | These financial measures are calculated by excluding from GAAP computed net income presented on page 8, $72 million, $74 million, $62 million, $67 million and $69 million in the first quarter of 2005, and in the fourth, third, second and first quarters of 2004, respectively, of deposit base and other intangible amortization. |
| (d) | The tax-equivalent tax rate applies to fully tax-equivalized revenues. |
PAGE 10
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | | | | | | | | | | | |
| | | 2005
| | | 2004
|
(In millions, except per share data)
| | First
Quarter
| | | Fourth
Quarter
| | | Third
Quarter
| | | Second
Quarter
| | First
Quarter
|
INTEREST INCOME | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 3,174 | | | 2,814 | | | 2,393 | | | 2,316 | | 2,335 |
Interest and dividends on securities | | | 1,426 | | | 1,232 | | | 1,156 | | | 1,110 | | 1,141 |
Trading account interest | | | 378 | | | 388 | | | 325 | | | 237 | | 197 |
Other interest income | | | 475 | | | 535 | | | 427 | | | 356 | | 326 |
| | |
|
|
| |
|
| |
|
| |
| |
|
Total interest income | | | 5,453 | | | 4,969 | | | 4,301 | | | 4,019 | | 3,999 |
| | |
|
|
| |
|
| |
|
| |
| |
|
INTEREST EXPENSE | | | | | | | | | | | | | | |
Interest on deposits | | | 1,050 | | | 860 | | | 691 | | | 654 | | 648 |
Interest on short-term borrowings | | | 601 | | | 492 | | | 396 | | | 316 | | 299 |
Interest on long-term debt | | | 389 | | | 320 | | | 249 | | | 211 | | 191 |
| | |
|
|
| |
|
| |
|
| |
| |
|
Total interest expense | | | 2,040 | | | 1,672 | | | 1,336 | | | 1,181 | | 1,138 |
| | |
|
|
| |
|
| |
|
| |
| |
|
Net interest income | | | 3,413 | | | 3,297 | | | 2,965 | | | 2,838 | | 2,861 |
Provision for credit losses | | | 36 | | | 109 | | | 43 | | | 61 | | 44 |
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|
|
| |
|
| |
|
| |
| |
|
Net interest income after provision for credit losses | | | 3,377 | | | 3,188 | | | 2,922 | | | 2,777 | | 2,817 |
| | |
|
|
| |
|
| |
|
| |
| |
|
FEE AND OTHER INCOME | | | | | | | | | | | | | | |
Service charges | | | 513 | | | 519 | | | 499 | | | 489 | | 471 |
Other banking fees | | | 351 | | | 343 | | | 313 | | | 301 | | 269 |
Commissions | | | 599 | | | 620 | | | 568 | | | 657 | | 756 |
Fiduciary and asset management fees | | | 714 | | | 700 | | | 668 | | | 700 | | 704 |
Advisory, underwriting and other investment banking fees | | | 233 | | | 271 | | | 237 | | | 203 | | 200 |
Trading account profits (losses) | | | 99 | | | (16 | ) | | (60 | ) | | 34 | | 77 |
Principal investing | | | 59 | | | 7 | | | 201 | | | 15 | | 38 |
Securities gains (losses) | | | (2 | ) | | 23 | | | (71 | ) | | 36 | | 2 |
Other income | | | 429 | | | 337 | | | 246 | | | 172 | | 250 |
| | |
|
|
| |
|
| |
|
| |
| |
|
Total fee and other income | | | 2,995 | | | 2,804 | | | 2,601 | | | 2,607 | | 2,767 |
| | |
|
|
| |
|
| |
|
| |
| |
|
NONINTEREST EXPENSE | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 2,401 | | | 2,239 | | | 2,118 | | | 2,164 | | 2,182 |
Occupancy | | | 250 | | | 260 | | | 234 | | | 224 | | 229 |
Equipment | | | 265 | | | 272 | | | 268 | | | 253 | | 259 |
Advertising | | | 44 | | | 51 | | | 46 | | | 48 | | 48 |
Communications and supplies | | | 162 | | | 163 | | | 149 | | | 157 | | 151 |
Professional and consulting fees | | | 127 | | | 179 | | | 134 | | | 126 | | 109 |
Other intangible amortization | | | 115 | | | 113 | | | 99 | | | 107 | | 112 |
Merger-related and restructuring expenses | | | 61 | | | 116 | | | 127 | | | 102 | | 99 |
Sundry expense | | | 447 | | | 441 | | | 496 | | | 314 | | 477 |
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|
|
| |
|
| |
|
| |
| |
|
Total noninterest expense | | | 3,872 | | | 3,834 | | | 3,671 | | | 3,495 | | 3,666 |
| | |
|
|
| |
|
| |
|
| |
| |
|
Minority interest in income of consolidated subsidiaries | | | 64 | | | 54 | | | 28 | | | 45 | | 57 |
| | |
|
|
| |
|
| |
|
| |
| |
|
Income before income taxes | | | 2,436 | | | 2,104 | | | 1,824 | | | 1,844 | | 1,861 |
Income taxes | | | 815 | | | 656 | | | 561 | | | 592 | | 610 |
| | |
|
|
| |
|
| |
|
| |
| |
|
Net income | | $ | 1,621 | | | 1,448 | | | 1,263 | | | 1,252 | | 1,251 |
| | |
|
|
| |
|
| |
|
| |
| |
|
PER COMMON SHARE DATA | | | | | | | | | | | | | | |
Basic earnings | | $ | 1.03 | | | 0.97 | | | 0.97 | | | 0.96 | | 0.96 |
Diluted earnings | | | 1.01 | | | 0.95 | | | 0.96 | | | 0.95 | | 0.94 |
Cash dividends | | $ | 0.46 | | | 0.46 | | | 0.40 | | | 0.40 | | 0.40 |
AVERAGE COMMON SHARES | | | | | | | | | | | | | | |
Basic | | | 1,571 | | | 1,487 | | | 1,296 | | | 1,300 | | 1,302 |
Diluted | | | 1,603 | | | 1,518 | | | 1,316 | | | 1,320 | | 1,326 |
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PAGE 11
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, 2005
|
(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) | | $ | 2,373 | | 155 | | | 136 | | | 589 | | | 221 | | | (61 | ) | | 3,413 |
Fee and other income | | | 684 | | 1,189 | | | 146 | | | 979 | | | (3 | ) | | — | | | 2,995 |
Intersegment revenue | | | 43 | | (12 | ) | | 2 | | | (34 | ) | | 1 | | | — | | | — |
| | |
|
| |
|
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|
| |
|
| |
|
| |
|
| |
|
Total revenue(a) | | | 3,100 | | 1,332 | | | 284 | | | 1,534 | | | 219 | | | (61 | ) | | 6,408 |
Provision for credit losses | | | 57 | | — | | | (1 | ) | | (3 | ) | | (17 | ) | | — | | | 36 |
Noninterest expense | | | 1,547 | | 1,086 | | | 190 | | | 733 | | | 255 | | | 61 | | | 3,872 |
Minority interest | | | — | | — | | | — | | | — | | | 74 | | | (10 | ) | | 64 |
Income taxes (benefits) | | | 539 | | 90 | | | 35 | | | 271 | | | (100 | ) | | (20 | ) | | 815 |
Tax-equivalent adjustment | | | 10 | | — | | | — | | | 28 | | | 23 | | | (61 | ) | | — |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net income (loss) | | $ | 947 | | 156 | | | 60 | | | 505 | | | (16 | ) | | (31 | ) | | 1,621 |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| | | Three Months Ended December 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) | | $ | 2,297 | | 157 | | | 134 | | | 619 | | | 150 | | | (60 | ) | | 3,297 |
Fee and other income | | | 660 | | 1,212 | | | 149 | | | 684 | | | 99 | | | — | | | 2,804 |
Intersegment revenue | | | 47 | | (10 | ) | | 1 | | | (38 | ) | | — | | | — | | | — |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total revenue(a) | | | 3,004 | | 1,359 | | | 284 | | | 1,265 | | | 249 | | | (60 | ) | | 6,101 |
Provision for credit losses | | | 107 | | — | | | — | | | 4 | | | (2 | ) | | — | | | 109 |
Noninterest expense | | | 1,528 | | 1,140 | | | 200 | | | 659 | | | 191 | | | 116 | | | 3,834 |
Minority interest | | | — | | — | | | — | | | — | | | 83 | | | (29 | ) | | 54 |
Income taxes (benefits) | | | 487 | | 79 | | | 29 | | | 192 | | | (97 | ) | | (34 | ) | | 656 |
Tax-equivalent adjustment | | | 10 | | 1 | | | — | | | 30 | | | 19 | | | (60 | ) | | — |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net income | | $ | 872 | | 139 | | | 55 | | | 380 | | | 55 | | | (53 | ) | | 1,448 |
| | |
|
| |
|
| |
|
| |
|
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|
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|
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|
PAGE 12
WACHOVIA CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | |
| | | 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) | | $ | 1,860 | | 119 | | | 110 | | 583 | | | 251 | | | (62 | ) | | 2,861 |
Fee and other income | | | 570 | | 1,343 | | | 148 | | 741 | | | (35 | ) | | — | | | 2,767 |
Intersegment revenue | | | 38 | | (13 | ) | | 1 | | (27 | ) | | 1 | | | — | | | — |
| | |
|
| |
|
| |
| |
|
| |
|
| |
|
| |
|
Total revenue(a) | | | 2,468 | | 1,449 | | | 259 | | 1,297 | | | 217 | | | (62 | ) | | 5,628 |
Provision for credit losses | | | 68 | | — | | | — | | (26 | ) | | 2 | | | — | | | 44 |
Noninterest expense | | | 1,325 | | 1,219 | | | 187 | | 619 | | | 217 | | | 99 | | | 3,666 |
Minority interest | | | — | | — | | | — | | — | | | 79 | | | (22 | ) | | 57 |
Income taxes (benefits) | | | 380 | | 83 | | | 27 | | 226 | | | (77 | ) | | (29 | ) | | 610 |
Tax-equivalent adjustment | | | 10 | | — | | | — | | 32 | | | 20 | | | (62 | ) | | — |
| | |
|
| |
|
| |
| |
|
| |
|
| |
|
| |
|
Net income (loss) | | $ | 685 | | 147 | | | 45 | | 446 | | | (24 | ) | | (48 | ) | | 1,251 |
| | |
|
| |
|
| |
| |
|
| |
|
| |
|
| |
|
| (b) | The tax-equivalent amounts are eliminated herein in order for “Total” amounts to agree with amounts appearing in the Consolidated Statements of Income. |
PAGE 13
WACHOVIA CORPORATION AND SUBSIDIARIES
LOANS - ON-BALANCE SHEET, AND MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
| | | | | | | | | | | |
| | | 2005
| | 2004
|
(In millions)
| | First
Quarter
| | Fourth
Quarter
| | Third
Quarter
| | Second
Quarter
| | First
Quarter
|
ON-BALANCE SHEET LOAN PORTFOLIO | | | | | | | | | | | |
COMMERCIAL | | | | | | | | | | | |
Commercial, financial and agricultural | | $ | 78,669 | | 75,095 | | 59,271 | | 58,340 | | 55,999 |
Real estate - construction and other | | | 12,713 | | 12,673 | | 6,985 | | 6,433 | | 6,120 |
Real estate - mortgage | | | 20,707 | | 20,742 | | 14,771 | | 14,927 | | 15,099 |
Lease financing | | | 25,013 | | 25,000 | | 24,042 | | 23,894 | | 23,688 |
Foreign | | | 7,504 | | 7,716 | | 7,402 | | 8,075 | | 7,054 |
| | |
|
| |
| |
| |
| |
|
Total commercial | | | 144,606 | | 141,226 | | 112,471 | | 111,669 | | 107,960 |
| | |
|
| |
| |
| |
| |
|
CONSUMER | | | | | | | | | | | |
Real estate secured | | | 74,631 | | 74,161 | | 54,965 | | 53,759 | | 51,207 |
Student loans | | | 10,795 | | 10,468 | | 10,207 | | 9,838 | | 8,876 |
Installment loans | | | 6,808 | | 7,684 | | 6,410 | | 7,330 | | 9,054 |
| | |
|
| |
| |
| |
| |
|
Total consumer | | | 92,234 | | 92,313 | | 71,582 | | 70,927 | | 69,137 |
| | |
|
| |
| |
| |
| |
|
Total loans | | | 236,840 | | 233,539 | | 184,053 | | 182,596 | | 177,097 |
Unearned income | | | 9,574 | | 9,699 | | 9,549 | | 9,679 | | 9,794 |
| | |
|
| |
| |
| |
| |
|
Loans, net (On-balance sheet) | | $ | 227,266 | | 223,840 | | 174,504 | | 172,917 | | 167,303 |
| | |
|
| |
| |
| |
| |
|
MANAGED PORTFOLIO(a) | | | | | | | | | | | |
COMMERCIAL | | | | | | | | | | | |
On-balance sheet loan portfolio | | $ | 144,606 | | 141,226 | | 112,471 | | 111,669 | | 107,960 |
Securitized loans - off-balance sheet | | | 1,402 | | 1,734 | | 1,823 | | 1,868 | | 1,927 |
Loans held for sale | | | 1,117 | | 2,112 | | 1,993 | | 1,887 | | 2,242 |
| | |
|
| |
| |
| |
| |
|
Total commercial | | | 147,125 | | 145,072 | | 116,287 | | 115,424 | | 112,129 |
| | |
|
| |
| |
| |
| |
|
CONSUMER | | | | | | | | | | | |
Real estate secured | | | | | | | | | | | |
On-balance sheet loan portfolio | | | 74,631 | | 74,161 | | 54,965 | | 53,759 | | 51,207 |
Securitized loans - off-balance sheet | | | 6,979 | | 7,570 | | 6,567 | | 7,194 | | 8,218 |
Securitized loans included in securities | | | 4,626 | | 4,838 | | 8,909 | | 9,506 | | 10,261 |
Loans held for sale | | | 11,925 | | 10,452 | | 15,602 | | 14,003 | | 11,607 |
| | |
|
| |
| |
| |
| |
|
Total real estate secured | | | 98,161 | | 97,021 | | 86,043 | | 84,462 | | 81,293 |
| | |
|
| |
| |
| |
| |
|
Student | | | | | | | | | | | |
On-balance sheet loan portfolio | | | 10,795 | | 10,468 | | 10,207 | | 9,838 | | 8,876 |
Securitized loans - off-balance sheet | | | 423 | | 463 | | 554 | | 612 | | 1,532 |
Loans held for sale | | | 65 | | 128 | | 160 | | 367 | | 433 |
| | |
|
| |
| |
| |
| |
|
Total student | | | 11,283 | | 11,059 | | 10,921 | | 10,817 | | 10,841 |
| | |
|
| |
| |
| |
| |
|
Installment | | | | | | | | | | | |
On-balance sheet loan portfolio | | | 6,808 | | 7,684 | | 6,410 | | 7,330 | | 9,054 |
Securitized loans - off-balance sheet | | | 1,930 | | 2,184 | | 2,489 | | 1,794 | | — |
Securitized loans included in securities | | | 155 | | 195 | | 195 | | 130 | | — |
Loans held for sale | | | 1,066 | | 296 | | — | | — | | — |
| | |
|
| |
| |
| |
| |
|
Total installment | | | 9,959 | | 10,359 | | 9,094 | | 9,254 | | 9,054 |
| | |
|
| |
| |
| |
| |
|
Total consumer | | | 119,403 | | 118,439 | | 106,058 | | 104,533 | | 101,188 |
| | |
|
| |
| |
| |
| |
|
Total managed portfolio | | $ | 266,528 | | 263,511 | | 222,345 | | 219,957 | | 213,317 |
| | |
|
| |
| |
| |
| |
|
SERVICING PORTFOLIO (b) | | | | | | | | | | | |
Commercial | | $ | 140,493 | | 136,578 | | 130,313 | | 108,207 | | 99,601 |
Consumer | | $ | 46,552 | | 40,053 | | 31,549 | | 24,475 | | 16,240 |
| | |
|
| |
| |
| |
| |
|
| (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 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 14
WACHOVIA CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
(In millions)
| | First
Quarter
| | | Fourth
Quarter
| | | Third
Quarter
| | | Second
Quarter
| | | First
Quarter
| |
ALLOWANCE FOR LOAN LOSSES(a) | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 2,757 | | | 2,324 | | | 2,331 | | | 2,338 | | | 2,348 | |
Provision for credit losses | | | 33 | | | 95 | | | 63 | | | 73 | | | 59 | |
Provision for credit losses relating to loans transferred to loans held for sale or sold | | | 1 | | | (6 | ) | | (8 | ) | | (9 | ) | | (8 | ) |
Balance of acquired entities at purchase date | | | — | | | 510 | | | — | | | — | | | — | |
Allowance relating to loans acquired, transferred to loans held for sale or sold | | | (13 | ) | | (51 | ) | | 3 | | | (3 | ) | | (9 | ) |
Net charge-offs | | | (46 | ) | | (115 | ) | | (65 | ) | | (68 | ) | | (52 | ) |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Balance, end of period | | $ | 2,732 | | | 2,757 | | | 2,324 | | | 2,331 | | | 2,338 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of loans, net | | | 1.20 | % | | 1.23 | | | 1.33 | | | 1.35 | | | 1.40 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of nonaccrual and restructured loans(b) | | | 300 | % | | 289 | | | 291 | | | 270 | | | 242 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of nonperforming assets(b) | | | 262 | % | | 251 | | | 258 | | | 241 | | | 218 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
LOAN LOSSES | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | $ | 26 | | | 82 | | | 50 | | | 41 | | | 48 | |
Commercial real estate - construction and mortgage | | | 1 | | | 4 | | | 3 | | | 1 | | | 1 | |
Consumer | | | 67 | | | 74 | | | 70 | | | 66 | | | 86 | |
Total loan losses | | | 94 | | | 160 | | | 123 | | | 108 | | | 135 | |
LOAN RECOVERIES | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | | 26 | | | 27 | | | 41 | | | 23 | | | 57 | |
Commercial real estate - construction and mortgage | | | — | | | — | | | 1 | | | — | | | 2 | |
Consumer | | | 22 | | | 18 | | | 16 | | | 17 | | | 24 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total loan recoveries | | | 48 | | | 45 | | | 58 | | | 40 | | | 83 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Net charge-offs | | $ | 46 | | | 115 | | | 65 | | | 68 | | | 52 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Commercial loans net charge-offs as % of average commercial loans, net(c) | | | — | % | | 0.20 | | | 0.05 | | | 0.08 | | | (0.05 | ) |
Consumer loans net charge-offs as % of average consumer loans, net(c) | | | 0.19 | | | 0.28 | | | 0.30 | | | 0.28 | | | 0.36 | |
Total net charge-offs as % of average loans, net(c) | | | 0.08 | % | | 0.23 | | | 0.15 | | | 0.17 | | | 0.13 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
NONPERFORMING ASSETS | | | | | | | | | | | | | | | | |
Nonaccrual loans | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | $ | 527 | | | 585 | | | 534 | | | 610 | | | 700 | |
Commercial real estate - construction and mortgage | | | 131 | | | 127 | | | 42 | | | 33 | | | 47 | |
Consumer real estate secured | | | 239 | | | 230 | | | 211 | | | 207 | | | 199 | |
Installment loans | | | 13 | | | 13 | | | 11 | | | 13 | | | 22 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total nonaccrual loans | | | 910 | | | 955 | | | 798 | | | 863 | | | 968 | |
Foreclosed properties(d) | | | 132 | | | 145 | | | 101 | | | 104 | | | 103 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total nonperforming assets | | $ | 1,042 | | | 1,100 | | | 899 | | | 967 | | | 1,071 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Nonperforming loans included in loans held for sale(e) | | $ | 159 | | | 157 | | | 57 | | | 68 | | | 67 | |
Nonperforming assets included in loans and in loans held for sale | | $ | 1,201 | | | 1,257 | | | 956 | | | 1,035 | | | 1,138 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of loans, net, and foreclosed properties(b) | | | 0.46 | % | | 0.49 | | | 0.51 | | | 0.56 | | | 0.64 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
as % of loans, net, foreclosed properties and loans held for sale(e) | | | 0.50 | % | | 0.53 | | | 0.50 | | | 0.55 | | | 0.63 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Accruing loans past due 90 days | | $ | 510 | | | 522 | | | 428 | | | 419 | | | 328 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
| (a) | At March 31, 2005, the reserve for unfunded lending commitments was $156 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 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 15
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
(In millions, except per share data)
| | First
Quarter
| | | Fourth
Quarter
| | | Third
Quarter
| | | Second
Quarter
| | | First
Quarter
| |
ASSETS | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 12,043 | | | 11,714 | | | 10,355 | | | 10,701 | | | 10,564 | �� |
Interest-bearing bank balances | | | 1,285 | | | 4,441 | | | 7,664 | | | 2,059 | | | 5,881 | |
Federal funds sold and securities purchased under resale agreements | | | 24,899 | | | 22,436 | | | 30,629 | | | 21,970 | | | 23,845 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total cash and cash equivalents | | | 38,227 | | | 38,591 | | | 48,648 | | | 34,730 | | | 40,290 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Trading account assets | | | 47,149 | | | 45,932 | | | 45,129 | | | 39,659 | | | 36,893 | |
Securities | | | 116,731 | | | 110,597 | | | 102,157 | | | 102,934 | | | 104,203 | |
Loans, net of unearned income | | | 227,266 | | | 223,840 | | | 174,504 | | | 172,917 | | | 167,303 | |
Allowance for loan losses | | | (2,732 | ) | | (2,757 | ) | | (2,324 | ) | | (2,331 | ) | | (2,338 | ) |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Loans, net | | | 224,534 | | | 221,083 | | | 172,180 | | | 170,586 | | | 164,965 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Loans held for sale | | | 14,173 | | | 12,988 | | | 17,755 | | | 16,257 | | | 14,282 | |
Premises and equipment | | | 5,260 | | | 5,268 | | | 4,150 | | | 4,522 | | | 4,620 | |
Due from customers on acceptances | | | 826 | | | 718 | | | 563 | | | 703 | | | 605 | |
Goodwill | | | 21,635 | | | 21,526 | | | 11,481 | | | 11,481 | | | 11,233 | |
Other intangible assets | | | 1,428 | | | 1,581 | | | 946 | | | 1,045 | | | 1,150 | |
Other assets | | | 36,870 | | | 35,040 | | | 33,689 | | | 36,524 | | | 32,899 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total assets | | $ | 506,833 | | | 493,324 | | | 436,698 | | | 418,441 | | | 411,140 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | | 61,626 | | | 64,197 | | | 52,524 | | | 51,613 | | | 49,018 | |
Interest-bearing deposits | | | 236,031 | | | 230,856 | | | 200,457 | | | 191,767 | | | 183,320 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total deposits | | | 297,657 | | | 295,053 | | | 252,981 | | | 243,380 | | | 232,338 | |
Short-term borrowings | | | 73,401 | | | 63,406 | | | 67,589 | | | 66,360 | | | 65,452 | |
Bank acceptances outstanding | | | 866 | | | 755 | | | 570 | | | 708 | | | 613 | |
Trading account liabilities | | | 22,418 | | | 21,709 | | | 22,704 | | | 20,327 | | | 21,956 | |
Other liabilities | | | 15,281 | | | 15,507 | | | 14,838 | | | 15,321 | | | 15,564 | |
Long-term debt | | | 47,932 | | | 46,759 | | | 41,444 | | | 37,022 | | | 39,352 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total liabilities | | | 457,555 | | | 443,189 | | | 400,126 | | | 383,118 | | | 375,275 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Minority interest in net assets of consolidated subsidiaries | | | 2,811 | | | 2,818 | | | 2,675 | | | 2,677 | | | 2,528 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at March 31, 2005 | | | — | | | — | | | — | | | — | | | — | |
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.576 billion shares at March 31, 2005 | | | 5,255 | | | 5,294 | | | 4,359 | | | 4,365 | | | 4,372 | |
Paid-in capital | | | 30,976 | | | 31,120 | | | 18,095 | | | 17,920 | | | 17,869 | |
Retained earnings | | | 10,319 | | | 10,178 | | | 10,449 | | | 9,890 | | | 9,382 | |
Accumulated other comprehensive income, net | | | (83 | ) | | 725 | | | 994 | | | 471 | | | 1,714 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total stockholders’ equity | | | 46,467 | | | 47,317 | | | 33,897 | | | 32,646 | | | 33,337 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Total liabilities and stockholders’ equity | | $ | 506,833 | | | 493,324 | | | 436,698 | | | 418,441 | | | 411,140 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
PAGE 16
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | FIRST QUARTER 2005
| | | FOURTH 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 | | $ | 2,484 | | | 16 | | 2.62 | % | | $ | 3,909 | | | 18 | | 1.85 | % |
Federal funds sold and securities purchased under resale agreements | | | 24,272 | | | 153 | | 2.55 | | | | 24,722 | | | 123 | | 1.99 | |
Trading account assets | | | 35,147 | | | 402 | | 4.59 | | | | 36,517 | | | 411 | | 4.49 | |
Securities | | | 114,961 | | | 1,477 | | 5.15 | | | | 103,879 | | | 1,297 | | 5.00 | |
Loans | | | | | | | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | | 76,651 | | | 960 | | 5.08 | | | | 69,394 | | | 836 | | 4.79 | |
Real estate - construction and other | | | 12,608 | | | 156 | | 5.01 | | | | 10,537 | | | 120 | | 4.53 | |
Real estate - mortgage | | | 20,739 | | | 271 | | 5.31 | | | | 19,035 | | | 237 | | 4.95 | |
Lease financing | | | 10,513 | | | 182 | | 6.94 | | | | 10,185 | | | 180 | | 7.07 | |
Foreign | | | 7,192 | | | 58 | | 3.28 | | | | 7,448 | | | 58 | | 3.10 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total commercial | | | 127,703 | | | 1,627 | | 5.16 | | | | 116,599 | | | 1,431 | | 4.88 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Consumer | | | | | | | | | | | | | | | | | | |
Real estate secured | | | 74,658 | | | 1,037 | | 5.57 | | | | 62,083 | | | 853 | | 5.49 | |
Student loans | | | 11,003 | | | 120 | | 4.41 | | | | 10,560 | | | 107 | | 4.04 | |
Installment loans | | | 7,811 | | | 122 | | 6.31 | | | | 7,285 | | | 111 | | 6.12 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total consumer | | | 93,472 | | | 1,279 | | 5.49 | | | | 79,928 | | | 1,071 | | 5.35 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total loans | | | 221,175 | | | 2,906 | | 5.30 | | | | 196,527 | | | 2,502 | | 5.08 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Loans held for sale | | | 12,869 | | | 166 | | 5.19 | | | | 21,405 | | | 261 | | 4.89 | |
Other earning assets | | | 10,139 | | | 115 | | 4.58 | | | | 10,531 | | | 104 | | 3.89 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total earning assets excluding derivatives | | | 421,047 | | | 5,235 | | 5.00 | | | | 397,490 | | | 4,716 | | 4.74 | |
Risk management derivatives(a) | | | — | | | 279 | | 0.27 | | | | — | | | 313 | | 0.31 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total earning assets including derivatives | | | 421,047 | | | 5,514 | | 5.27 | | | | 397,490 | | | 5,029 | | 5.05 | |
| | | | | |
|
| |
|
| | | | |
|
| |
|
|
Cash and due from banks | | | 12,661 | | | | | | | | | 11,870 | | | | | | |
Other assets | | | 66,778 | | | | | | | | | 63,071 | | | | | | |
| | |
|
| | | | | | | |
|
| | | | | | |
Total assets | | $ | 500,486 | | | | | | | | $ | 472,431 | | | | | | |
| | |
|
| | | | | | | |
|
| | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits | | | | | | | | | | | | | | | | | | |
Savings and NOW accounts | | | 81,071 | | | 161 | | 0.81 | | | | 79,476 | | | 128 | | 0.64 | |
Money market accounts | | | 93,477 | | | 357 | | 1.55 | | | | 90,382 | | | 271 | | 1.19 | |
Other consumer time | | | 36,005 | | | 239 | | 2.70 | | | | 32,540 | | | 212 | | 2.58 | |
Foreign | | | 10,996 | | | 61 | | 2.26 | | | | 9,486 | | | 46 | | 1.92 | |
Other time | | | 12,583 | | | 83 | | 2.67 | | | | 9,938 | | | 56 | | 2.31 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing deposits | | | 234,132 | | | 901 | | 1.56 | | | | 221,822 | | | 713 | | 1.28 | |
Federal funds purchased and securities sold under repurchase agreements | | | 51,395 | | | 312 | | 2.46 | | | | 47,264 | | | 233 | | 1.96 | |
Commercial paper | | | 13,553 | | | 82 | | 2.45 | | | | 11,840 | | | 58 | | 1.94 | |
Securities sold short | | | 12,681 | | | 102 | | 3.25 | | | | 12,694 | | | 102 | | 3.18 | |
Other short-term borrowings | | | 6,370 | | | 26 | | 1.63 | | | | 5,859 | | | 19 | | 1.33 | |
Long-term debt | | | 47,385 | | | 493 | | 4.17 | | | | 44,010 | | | 443 | | 4.02 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing liabilities excluding derivatives | | | 365,516 | | | 1,916 | | 2.12 | | | | 343,489 | | | 1,568 | | 1.82 | |
Risk management derivatives(a) | | | — | | | 124 | | 0.14 | | | | — | | | 104 | | 0.12 | |
| | |
|
| |
|
| | | | |
|
| |
|
| | | |
Total interest-bearing liabilities including derivatives | | | 365,516 | | | 2,040 | | 2.26 | | | | 343,489 | | | 1,672 | | 1.94 | |
| | | | | |
|
| |
|
| | | | |
|
| |
|
|
Noninterest-bearing deposits | | | 60,542 | | | | | | | | | 58,229 | | | | | | |
Other liabilities | | | 27,197 | | | | | | | | | 28,069 | | | | | | |
Stockholders’ equity | | | 47,231 | | | | | | | | | 42,644 | | | | | | |
| | |
|
| | | | | | | |
|
| | | | | | |
Total liabilities and stockholders’ equity | | $ | 500,486 | | | | | | | | $ | 472,431 | | | | | | |
| | |
|
| | | | | | | |
|
| | | | | | |
Interest income and rate earned - including derivatives | | | | | $ | 5,514 | | 5.27 | % | | | | | $ | 5,029 | | 5.05 | % |
Interest expense and equivalent rate paid - including derivatives | | | | | | 2,040 | | 1.96 | | | | | | | 1,672 | | 1.68 | |
| | | | | |
|
| |
|
| | | | |
|
| |
|
|
Net interest income and margin - including derivatives | | | | | $ | 3,474 | | 3.31 | % | | | | | $ | 3,357 | | 3.37 | % |
| | | | | |
|
| |
|
| | | | |
|
| |
|
|
| (a) | 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 17
WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
THIRD QUARTER 2004
| | | SECOND QUARTER 2004
| | | FIRST QUARTER 2004
| |
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
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 3,153 | | | 12 | | 1.52 | % | | $ | 4,015 | | | 11 | | 1.13 | % | | $ | 3,237 | | | 10 | | 1.18 | % |
| | 26,419 | | | 96 | | 1.44 | | | | 23,800 | | | 62 | | 1.05 | | | | 24,806 | | | 61 | | 0.99 | |
| | 32,052 | | | 348 | | 4.34 | | | | 26,135 | | | 260 | | 3.98 | | | | 20,956 | | | 220 | | 4.21 | |
| | 101,493 | | | 1,237 | | 4.88 | | | | 100,209 | | | 1,196 | | 4.77 | | | | 98,222 | | | 1,221 | | 4.97 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 58,278 | | | 642 | | 4.40 | | | | 56,648 | | | 599 | | 4.25 | | | | 55,476 | | | 576 | | 4.18 | |
| | 6,683 | | | 67 | | 4.02 | | | | 6,309 | | | 56 | | 3.56 | | | | 6,022 | | | 53 | | 3.52 | |
| | 14,877 | | | 170 | | 4.54 | | | | 15,029 | | | 158 | | 4.21 | | | | 15,241 | | | 160 | | 4.23 | |
| | 9,692 | | | 178 | | 7.33 | | | | 7,011 | | | 180 | | 10.28 | | | | 6,945 | | | 183 | | 10.52 | |
| | 7,330 | | | 47 | | 2.51 | | | | 7,110 | | | 41 | | 2.32 | | | | 6,684 | | | 41 | | 2.49 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| | 96,860 | | | 1,104 | | 4.54 | | | | 92,107 | | | 1,034 | | 4.51 | | | | 90,368 | | | 1,013 | | 4.50 | |
|
| |
|
| | | | |
|
| |
|
| | | | |
|
| |
|
| | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 54,288 | | | 732 | | 5.38 | | | | 52,389 | | | 691 | | 5.29 | | | | 50,879 | | | 705 | | 5.55 | |
| | 10,145 | | | 97 | | 3.80 | | | | 9,941 | | | 90 | | 3.63 | | | | 8,908 | | | 78 | | 3.53 | |
| | 7,259 | | | 107 | | 5.86 | | | | 9,205 | | | 126 | | 5.48 | | | | 9,026 | | | 130 | | 5.80 | |
|
| |
|
| | | | |
|
| |
|
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| | 71,692 | | | 936 | | 5.21 | | | | 71,535 | | | 907 | | 5.08 | | | | 68,813 | | | 913 | | 5.32 | |
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| | | |
| | 168,552 | | | 2,040 | | 4.83 | | | | 163,642 | | | 1,941 | | 4.76 | | | | 159,181 | | | 1,926 | | 4.86 | |
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| | 17,119 | | | 186 | | 4.34 | | | | 15,603 | | | 161 | | 4.12 | | | | 12,759 | | | 131 | | 4.12 | |
| | 11,121 | | | 96 | | 3.43 | | | | 11,443 | | | 82 | | 2.91 | | | | 11,159 | | | 84 | | 3.02 | |
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| | 359,909 | | | 4,015 | | 4.45 | | | | 344,847 | | | 3,713 | | 4.32 | | | | 330,320 | | | 3,653 | | 4.43 | |
| | — | | | 349 | | 0.39 | | | | — | | | 371 | | 0.43 | | | | — | | | 408 | | 0.50 | |
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| | 359,909 | | | 4,364 | | 4.84 | | | | 344,847 | | | 4,084 | | 4.75 | | | | 330,320 | | | 4,061 | | 4.93 | |
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| | 11,159 | | | | | | | | | 11,254 | | | | | | | | | 10,957 | | | | | | |
| | 53,331 | | | | | | | | | 54,973 | | | | | | | | | 57,411 | | | | | | |
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| | | | | | | |
|
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| $ | 424,399 | | | | | | | | $ | 411,074 | | | | | | | | $ | 398,688 | | | | | | |
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| | 73,171 | | | 93 | | 0.51 | | | | 70,205 | | | 78 | | 0.45 | | | | 65,366 | | | 70 | | 0.43 | |
| | 81,525 | | | 197 | | 0.96 | | | | 76,850 | | | 172 | | 0.90 | | | | 69,208 | | | 154 | | 0.90 | |
| | 26,860 | | | 180 | | 2.68 | | | | 26,288 | | | 176 | | 2.69 | | | | 27,496 | | | 189 | | 2.76 | |
| | 7,453 | | | 27 | | 1.42 | | | | 7,110 | | | 20 | | 1.14 | | | | 7,673 | | | 22 | | 1.17 | |
| | 7,803 | | | 39 | | 1.98 | | | | 7,773 | | | 34 | | 1.76 | | | | 7,676 | | | 34 | | 1.75 | |
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| | 196,812 | | | 536 | | 1.08 | | | | 188,226 | | | 480 | | 1.03 | | | | 177,419 | | | 469 | | 1.06 | |
| | 47,052 | | | 164 | | 1.39 | | | | 46,620 | | | 116 | | 1.00 | | | | 48,353 | | | 124 | | 1.03 | |
| | 12,065 | | | 43 | | 1.42 | | | | 12,382 | | | 32 | | 1.04 | | | | 11,852 | | | 30 | | 1.01 | |
| | 12,388 | | | 96 | | 3.09 | | | | 10,571 | | | 73 | | 2.78 | | | | 8,412 | | | 47 | | 2.25 | |
| | 6,042 | | | 15 | | 0.91 | | | | 6,013 | | | 11 | | 0.80 | | | | 6,436 | | | 10 | | 0.59 | |
| | 39,951 | | | 404 | | 4.05 | | | | 37,840 | | | 378 | | 3.99 | | | | 37,269 | | | 364 | | 3.91 | |
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| | 314,310 | | | 1,258 | | 1.60 | | | | 301,652 | | | 1,090 | | 1.45 | | | | 289,741 | | | 1,044 | | 1.45 | |
| | — | | | 78 | | 0.09 | | | | — | | | 91 | | 0.12 | | | | — | | | 94 | | 0.13 | |
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| | 314,310 | | | 1,336 | | 1.69 | | | | 301,652 | | | 1,181 | | 1.57 | | | | 289,741 | | | 1,138 | | 1.58 | |
| | �� | |
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| | 51,433 | | | | | | | | | 50,466 | | | | | | | | | 46,603 | | | | | | |
| | 25,410 | | | | | | | | | 26,460 | | | | | | | | | 29,607 | | | | | | |
| | 33,246 | | | | | | | | | 32,496 | | | | | | | | | 32,737 | | | | | | |
|
| | | | | | | |
|
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| $ | 424,399 | | | | | | | | $ | 411,074 | | | | | | | | $ | 398,688 | | | | | | |
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| | | | $ | 4,364 | | 4.84 | % | | | | | $ | 4,084 | | 4.75 | % | | | | | $ | 4,061 | | 4.93 | % |
| | | | | 1,336 | | 1.48 | | | | | | | 1,181 | | 1.38 | | | | | | | 1,138 | | 1.38 | |
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| | | | $ | 3,028 | | 3.36 | % | | | | | $ | 2,903 | | 3.37 | % | | | | | $ | 2,923 | | 3.55 | % |
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PAGE 18
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | *
| | 2005
| | | 2004
| |
(Dollars in millions, except per share data)
| | | First
Quarter
| | | Fourth Quarter
| | | Third
Quarter
| | | Second
Quarter
| | | First
Quarter
| |
NET INCOME | | | | | | | | | | | | | | | | | | |
Net income(GAAP) | | A | | $ | 1,621 | | | 1,448 | | | 1,263 | | | 1,252 | | | 1,251 | |
After tax merger-related and restructuring expenses(GAAP) | | | | | 31 | | | 53 | | | 55 | | | 47 | | | 48 | |
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Net income, excluding after tax merger-related and restructuring expenses | | B | | | 1,652 | | | 1,501 | | | 1,318 | | | 1,299 | | | 1,299 | |
After tax other intangible amortization(GAAP) | | | | | 72 | | | 74 | | | 62 | | | 67 | | | 69 | |
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Net income, excluding after tax merger-related and restructuring expenses, and other intangible amortization | | C | | $ | 1,724 | | | 1,575 | | | 1,380 | | | 1,366 | | | 1,368 | |
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RETURN ON AVERAGE COMMON STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | |
Average common stockholders’ equity (GAAP) | | D | | $ | 47,231 | | | 42,644 | | | 33,246 | | | 32,496 | | | 32,737 | |
Merger-related and restructuring expenses (GAAP) | | | | | 11 | | | 169 | | | 116 | | | 69 | | | 20 | |
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Average common stockholders’ equity, excluding merger-related and restructuring expenses | | E | | | 47,242 | | | 42,813 | | | 33,362 | | | 32,565 | | | 32,757 | |
Average intangible assets (GAAP) | | F | | | (23,020 | ) | | (19,257 | ) | | (12,473 | ) | | (12,326 | ) | | (12,351 | ) |
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Average common stockholders’ equity, excluding merger-related and restructuring expenses, and other intangible amortization | | G | | $ | 24,222 | | | 23,556 | | | 20,889 | | | 20,239 | | | 20,406 | |
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Return on average common stockholders’ equity | | | | | | | | | | | | | | | | | | |
GAAP | | A/D | | | 13.92 | % | | 13.50 | | | 15.12 | | | 15.49 | | | 15.37 | |
Excluding merger-related and restructuring expenses | | B/E | | | 14.19 | | | 13.95 | | | 15.72 | | | 16.04 | | | 15.95 | |
Return on average tangible common stockholders’ equity | | | | | | | | | | | | | | | | | | |
GAAP | | A/D+F | | | 27.16 | | | 24.62 | | | 24.20 | | | 24.96 | | | 24.68 | |
Excluding merger-related and restructuring expenses, and other intangible amortization | | C/G | | | 28.86 | % | | 26.59 | | | 26.28 | | | 27.15 | | | 26.97 | |
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RETURN ON AVERAGE ASSETS | | | | | | | | | | | | | | | | | | |
Average assets(GAAP) | | H | | $ | 500,486 | | | 472,431 | | | 424,399 | | | 411,074 | | | 398,688 | |
Average intangible assets(GAAP) | | | | | (23,020 | ) | | (19,257 | ) | | (12,473 | ) | | (12,326 | ) | | (12,351 | ) |
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Average tangible assets (GAAP) | | I | | | 477,466 | | | 453,174 | | | 411,926 | | | 398,748 | | | 386,337 | |
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Average assets(GAAP) | | | | | 500,486 | | | 472,431 | | | 424,399 | | | 411,074 | | | 398,688 | |
Merger-related and restructuring expenses (GAAP) | | | | | 11 | | | 169 | | | 116 | | | 69 | | | 20 | |
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Average assets, excluding merger-related and restructuring expenses | | J | | | 500,497 | | | 472,600 | | | 424,515 | | | 411,143 | | | 398,708 | |
Average intangible assets (GAAP) | | | | | (23,020 | ) | | (19,257 | ) | | (12,473 | ) | | (12,326 | ) | | (12,351 | ) |
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Average tangible assets, excluding merger-related and restructuring expenses | | K | | $ | 477,477 | | | 453,343 | | | 412,042 | | | 398,817 | | | 386,357 | |
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Return on average assets | | | | | | | | | | | | | | | | | | |
GAAP | | A/H | | | 1.31 | % | | 1.22 | | | 1.18 | | | 1.22 | | | 1.26 | |
Excluding merger-related and restructuring expenses | | B/J | | | 1.34 | | | 1.26 | | | 1.24 | | | 1.27 | | | 1.31 | |
Return on average tangible assets | | | | | | | | | | | | | | | | | | |
GAAP | | A/I | | | 1.38 | | | 1.27 | | | 1.22 | | | 1.26 | | | 1.30 | |
Excluding merger-related and restructuring expenses, and other intangible amortization | | C/K | | | 1.46 | % | | 1.38 | | | 1.33 | | | 1.38 | | | 1.42 | |
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PAGE 19
WACHOVIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | *
| | 2005
| | | 2004
| |
(Dollars in millions, except per share data)
| | | First
Quarter
| | | Fourth Quarter
| | | Third
Quarter
| | | Second
Quarter
| | | First
Quarter
| |
OVERHEAD EFFICIENCY RATIOS | | | | | | | | | | | | | | | | | | |
Noninterest expense (GAAP) | | L | | $ | 3,872 | | | 3,834 | | | 3,671 | | | 3,495 | | | 3,666 | |
Merger-related and restructuring expenses (GAAP) | | | | | (61 | ) | | (116 | ) | | (127 | ) | | (102 | ) | | (99 | ) |
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Noninterest expense, excluding merger-related and restructuring expenses | | M | | | 3,811 | | | 3,718 | | | 3,544 | | | 3,393 | | | 3,567 | |
Other intangible amortization(GAAP) | | | | | (115 | ) | | (113 | ) | | (99 | ) | | (107 | ) | | (112 | ) |
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Noninterest expense, excluding merger-related and restructuring expenses, and other intangible amortization | | N | | $ | 3,696 | | | 3,605 | | | 3,445 | | | 3,286 | | | 3,455 | |
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Net interest income (GAAP) | | | | $ | 3,413 | | | 3,297 | | | 2,965 | | | 2,838 | | | 2,861 | |
Tax-equivalent adjustment | | | | | 61 | | | 60 | | | 63 | | | 65 | | | 62 | |
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Net interest income (Tax-equivalent) | | | | | 3,474 | | | 3,357 | | | 3,028 | | | 2,903 | | | 2,923 | |
Fee and other income (GAAP) | | | | | 2,995 | | | 2,804 | | | 2,601 | | | 2,607 | | | 2,767 | |
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Total | | O | | $ | 6,469 | | | 6,161 | | | 5,629 | | | 5,510 | | | 5,690 | |
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Retail Brokerage Services, excluding insurance
Noninterest expense(GAAP) | | P | | $ | 861 | | | 905 | | | 859 | | | 904 | | | 986 | |
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Net interest income (GAAP) | | | | $ | 141 | | | 142 | | | 141 | | | 118 | | | 107 | |
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Tax-equivalent adjustment | | | | | — | | | 1 | | | — | | | — | | | — | |
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Net interest income (Tax-equivalent) | | | | | 141 | | | 143 | | | 141 | | | 118 | | | 107 | |
Fee and other income(GAAP) | | | | | 886 | | | 905 | | | 826 | | | 906 | | | 1,031 | |
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Total | | Q | | $ | 1,027 | | | 1,048 | | | 967 | | | 1,024 | | | 1,138 | |
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Overhead efficiency ratios | | | | | | | | | | | | | | | | | | |
GAAP | | L/O | | | 59.86 | % | | 62.23 | | | 65.20 | | | 63.46 | | | 64.42 | |
Excluding merger-related and restructuring expenses | | M/O | | | 58.92 | | | 60.34 | | | 62.96 | | | 61.60 | | | 62.67 | |
Excluding merger-related and restructuring expenses, and brokerage | | M-P/O-Q | | | 54.21 | | | 55.01 | | | 57.56 | | | 55.50 | | | 56.69 | |
Excluding merger-related and restructuring expenses, and other intangible amortization | | N/O | | | 57.15 | | | 58.50 | | | 61.20 | | | 59.66 | | | 60.70 | |
Excluding merger-related and restructuring expenses, other intangible amortization and brokerage | | N-P/O-Q | | | 52.10 | % | | 52.79 | | | 55.44 | | | 53.12 | | | 54.23 | |
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OPERATING LEVERAGE | | | | | | | | | | | | | | | | | | |
Operating leverage (GAAP) | | | | $ | 269 | | | 368 | | | (55 | ) | | (11 | ) | | 244 | |
Merger-related and restructuring expenses (GAAP) | | | | | (55 | ) | | (10 | ) | | 25 | | | 3 | | | (36 | ) |
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Operating leverage, excluding merger-related and restructuring expenses | | | | | 214 | | | 358 | | | (30 | ) | | (8 | ) | | 208 | |
Other intangible amortization (GAAP) | | | | | 1 | | | 15 | | | (8 | ) | | (5 | ) | | (8 | ) |
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Operating leverage, excluding merger-related and restructuring expenses, and other intangible amortization | | | | $ | 215 | | | 373 | | | (38 | ) | | (13 | ) | | 200 | |
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DIVIDEND PAYOUT RATIOS ON COMMON SHARES | | | | | | | | | | | | | | | | | | |
Dividends paid per common share | | R | | $ | 0.46 | | | 0.46 | | | 0.40 | | | 0.40 | | | 0.40 | |
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Diluted earnings per common share(GAAP) | | S | | $ | 1.01 | | | 0.95 | | | 0.96 | | | 0.95 | | | 0.94 | |
Merger-related and restructuring expenses (GAAP) | | | | | 0.02 | | | 0.04 | | | 0.04 | | | 0.03 | | | 0.04 | |
Other intangible amortization (GAAP) | | | | | 0.05 | | | 0.05 | | | 0.05 | | | 0.05 | | | 0.05 | |
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Diluted earnings per common share, excluding merger-related and restructuring expenses, and other intangible amortization | | T | | $ | 1.08 | | | 1.04 | | | 1.05 | | | 1.03 | | | 1.03 | |
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Dividend payout ratios | | | | | | | | | | | | | | | | | | |
GAAP | | R/S | | | 45.54 | % | | 48.42 | | | 41.67 | | | 42.11 | | | 42.55 | |
Excluding merger-related and restructuring expenses, and other intangible amortization | | R/T | | | 42.59 | % | | 44.23 | | | 38.10 | | | 38.83 | | | 38.83 | |
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| * | The letters included in the columns are provided to show how the various ratios presented in the tables on pages 18 and 19 are calculated. For example, return on average assets on a GAAP basis is calculated by dividing income (GAAP) by average assets(GAAP) (i.e., A/H) and annualized where appropriate. |
