Exhibit 99(a)
[Wachovia Logo]
News Announcement
January 23, 2002
Media Contact: Investor Contacts:
Mary Eshet, 704-383-7777 Alice Lehman, 704-374-4139
Ellen Taylor, 704-383-1381
WACHOVIA REPORTS CASH OPERATING EARNINGS OF $980 MILLION,
OR 71 CENTS PER SHARE IN 4TH QUARTER OF 2001
Full Year 2001 Cash Operating Results Were $2.8
Billion, Or $2.50 Per Share
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4th QUARTER 2001 HIGHLIGHTS
o Cash operating earnings of 71 cents per share, exceeding market
expectations of 70 cents.
o Record customer service levels resulted in good growth in
low-cost core deposits, and annuity sales and mutual fund
balances reached record levels.
o Lowest cash overhead efficiency ratio since 1999 reflects strong
revenue growth and an unwavering focus on expenses.
o Nonperforming assets rose only 2 percent from the third quarter of
2001.
o Tier 1 capital ratio grew 28 basis points in the quarter to 7.03 percent.
o Merger integration on track and progressing well.
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Earnings Highlights: Prior periods not restated
---
Three Months Ended
December 31, September 30, December 31,
---------------------------------------------------------
(In millions, except per share data) 2001 2001 2000
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Earnings
Operating earnings(a) $ 799 298 681
Diluted earnings per common share (Operating earnings) 0.58 0.27 0.69
Net income (loss) applicable to common
stockholders (As reported) 730 (334) 599
Diluted earnings per common share (As reported) $ 0.54 (0.31) 0.60
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Financial ratios (Operating earnings)
Return on average common stockholders' equity 10.77 % 5.77 15.36
Overhead efficiency ratio 64.74 76.74 63.85
Net interest margin 3.81 3.58 3.46
Fee and other income as % of total revenue 45.33 % 34.42 47.38
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Cash operating earnings
Net income $ 980 395 753
Diluted earnings per common share $ 0.71 0.36 0.76
Return on average tangible common stockholders' equity 23.56 % 11.36 21.55
Dividend payout ratio (b) 33.80 66.67 63.16
Overhead efficiency ratio 59.22 % 72.86 61.46
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Asset quality
Allowance as % of nonaccrual and restructured loans 195 % 202 146
Allowance as % of loans, net 1.83 1.79 1.39
Net charge-offs as % of average loans, net 0.93 0.73 0.64
Nonperforming assets as % of loans, net,
foreclosed properties and loans held for sale 1.13 % 1.08 1.22
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(a) Operating earnings are reported net income excluding after-tax net merger-related, restructuring and other charges and gains.
(b) Based on common shares.
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The merger of First Union and the former Wachovia closed on September 1, 2001;
therefore fourth quarter 2001 results reflect the first full quarter of combined
results. The third quarter of 2001 reflects only one month of financial results
from the former Wachovia. Because this merger was accounted for as a purchase,
previous periods have not been restated.
WACHOVIA REPORTS 2001 EARNINGS/Page 2
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CHARLOTTE, N.C. - Wachovia Corp. (NYSE:WB) today reported fourth quarter 2001
cash operating earnings of $980 million, or 71 cents per share; operating
earnings of $799 million, or 58 cents per share; and net income applicable to
common stockholders of $730 million, or 54 cents per share. Cash operating
earnings in the fourth quarter of 2001 exclude $63 million after tax in
merger-related, restructuring and other charges described below as well as
intangibles amortization.
"Strong revenue growth in the fourth quarter of 2001 enabled all four
of Wachovia's core businesses to produce solid results for our shareholders.
We're seeing the power of the incredible franchise that we have created through
the merger of First Union and the former Wachovia as we focus our combined
resources on serving our customers," said Ken Thompson, Wachovia president and
CEO. "The actions that we took in previous quarters have served us well in a
weak economy. We met our earnings goals even with an increase in net charge-offs
related to a large credit in the energy services sector. Our merger integration
is progressing very well and we believe we are in excellent position to continue
to grow core earnings as we work diligently to smoothly combine our two
companies."
In 2001, cash operating earnings were $2.8 billion, or $2.50 per share, before
$737 million in net after-tax merger-related, restructuring and other charges.
After these charges, 2001 earnings were $1.6 billion ($1.45 per share). This
compares with $92 million (7 cents per share) in 2000, which included
$2.8 billion in net after-tax merger-related, restructuring and other charges.
Lines of Business
General Bank
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General Bank Highlights: Prior periods not restated
---
Three Months Ended
December 31, September 30, December 31,
---------------------------------------------------------
(In millions) 2001 2001 2000
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Total revenue (Tax-equivalent) $ 2,269 1,757 1,484
Provision for loan losses 129 98 74
Noninterest expense 1,243 1,025 977
Operating earnings 570 411 286
Average loans, net 97,212 76,618 61,735
Average core deposits 135,426 110,771 98,184
Economic capital, average $ 5,913 4,468 3,689
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General Bank financial results continued their very strong momentum, with
excellent total revenue growth aided by balance sheet and fee income growth
(particularly in mortgage banking) and excellent expense control. Low-cost core
deposit growth also was strong. Consumer real estate loan production
set a record in the quarter, although commercial loan demand continued to be low
in the weak economy. The focus in the General Bank is on providing excellent
service to customers throughout the merger integration process, on growing
low-cost core deposits, on improving loan spreads and on becoming more
efficient.
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WACHOVIA REPORTS 2001 EARNINGS/Page 3
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Capital Management
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Capital Management Highlights: Prior periods not restated
--- Three Months Ended
December 31, September 30, December 31,
-------------------------------------------------------
(In millions) 2001 2001 2000
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Total revenue (Tax-equivalent) $ 810 675 720
Provision for loan losses - - -
Noninterest expense 669 573 574
Operating earnings 87 66 97
Average loans, net 337 269 104
Average core deposits 1,505 1,535 2,142
Economic capital, average $ 947 846 836
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The Capital Management Group (CMG) includes asset management and retail
brokerage services. CMG's balanced business model of multiple distribution
channels and a broad product array generated solid earnings recovery from a
difficult third quarter of 2001. Record product sales and increased brokerage
production drove the increase in revenues and expenses in the quarter. Annuity
sales reached record levels for the third consecutive quarter, and gross
fluctuating mutual fund sales also set a record. For the year, combined annuity
and mutual fund sales reached $15 billion. Assets under management at December
31, 2001, remained steady with the third quarter of 2001 at $226 billion.
Included in assets under management are mutual fund assets, which increased 2
percent from the third quarter of 2001 to $104 billion.
Wealth Management
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Wealth Management Highlights: Prior periods not restated
---
Three Months Ended
December 31, September 30, December 31,
---------------------------------------------------------
(In millions) 2001 2001 2000
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Total revenue (Tax-equivalent) $ 228 161 131
Provision for loan losses 4 2 -
Noninterest expense 161 114 84
Operating earnings 42 30 31
Average loans, net 8,148 5,680 4,319
Average core deposits 9,431 7,313 5,737
Economic capital, average $ 358 237 164
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Wealth Management, which includes private banking, personal trust, investment
advisory services, charitable services, financial planning and insurance
brokerage, generated strong revenue growth in the quarter with solid increases
in loans and deposits combined with a modest margin improvement. The fee-based
businesses also performed well. Expense control efforts continued, as did the
planning and implementation of the affluent and ultra-high net worth business
models. Wealth Management assets under management (included in the Capital
Management Group total) were $78 billion at quarter end.
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WACHOVIA REPORTS 2001 EARNINGS/Page 4
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Corporate and Investment Bank
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Corporate and Investment Bank Highlights: Prior periods not restated Three Months Ended
---
December 31, September 30, December 31,
---------------------------------------------------------
(In millions) 2001 2001 2000
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Total revenue (Tax-equivalent) $ 975 231 695
Provision for loan losses 254 126 124
Noninterest expense 552 480 411
Operating earnings 156 (206) 187
Average loans, net 46,265 42,074 41,770
Average core deposits 12,710 10,512 9,232
Economic capital, average $ 7,512 6,267 6,162
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The Corporate and Investment Bank experienced strong revenue growth in equity
capital markets, loan syndication and high yield debt, but growth was offset by
weaker trading results and increased provision expense related to an
energy-related credit. Principal investing write-downs amounted to $21 million
in the fourth quarter of 2001 compared with $585 million in the previous
quarter. In 2001, as part of previously disclosed portfolio management actions,
less profitable loan outstandings were reduced by $3 billion. Lower
commercial loan demand and transfers to loans held for sale also moderated
growth.
Asset Quality
Net charge-offs were 0.93 percent of average net loans in the fourth quarter of
2001 compared with 0.73 percent in the third quarter of 2001, bringing full year
net charge-offs to 0.70 percent. The increase in net charge-offs from the third
quarter of 2001 was primarily the result of a $97 million charge-off related to
an energy services company that filed for bankruptcy in the fourth quarter of
2001. The provision of $381 million exceeded net charge-offs of $378 million by
$3 million related to write-downs recorded on loans transferred to loans held
for sale. Total nonperforming assets including loans held for sale increased $36
million in the fourth quarter of 2001 to $1.9 billion. The increase included
nonperforming assets of $200 million associated with the energy services company
and Argentine exposure.
Merger-Related Items
After-tax merger-related, restructuring and other charges in the fourth quarter
of 2001 were $63 million and for the full year 2001, $737 million. In addition,
earnings in the fourth quarter of 2001 were affected by increased deposit base
intangible amortization resulting from finalizing the valuation, as well as
other intangibles amortization related to legacy Wachovia customer
relationships. The deposit base amortization was $114 million after tax, or 8
cents per share in the fourth quarter of 2001, and $176 million after tax, or 16
cents per share, for full year 2001. Average diluted shares increased by 258
million in the fourth quarter of 2001, which included shares issued for the
merger for the full quarter while the third quarter of 2001 included only one
month of those shares.
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WACHOVIA REPORTS 2001 EARNINGS/Page 5
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Wachovia Corporation (NYSE:WB), created through the September 1, 2001, merger of
First Union and Wachovia, had assets of $330 billion at December 31 and
$28 billion in stockholders' equity. Wachovia is a leading provider of financial
services throughout the East Coast and the nation. The company operates
full-service banking offices under the First Union and Wachovia names in 11 East
Coast states and Washington, D.C., and offers full-service brokerage with
offices in 49 states and global services through more than 30 international
offices. Online banking and brokerage products and services are available
through wachovia.com and firstunion.com.
Earnings Conference Call and Supplemental Materials
Wachovia President and CEO Ken Thompson and CFO Bob Kelly will review Wachovia's
fourth quarter results in a conference call and audio webcast beginning at
10 a.m. EST today. Supplemental materials relating to the fourth quarter results
are available on the Internet at https://wachovia.firstunion.com, and investors
are encouraged to access these materials in advance of the conference call.
Webcast Instructions: To gain access to the webcast, which will be
"listen-only," go to https://wachovia.firstunion.com and click on the link
Wachovia Fourth Quarter Earnings Audio Webcast. In order to listen to the
webcast, you will need to download Real Player Basic 8.
Teleconference Instructions: The telephone number for the conference call is
888-790-1803 for U.S. callers or 712-271-0076 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: 33345.
Replay: Wednesday, January 23, from noon until 5 p.m. EST on Friday,
February 15. Replay telephone number is 402-998-1693.
This news release may contain various forward-looking statements. A discussion
of various factors that could cause Wachovia Corporation's actual results to
differ materially from those expressed in such forward-looking statements is
included in Wachovia's filings with the Securities and Exchange Commission,
including its Current Report on Form 8-K dated January 23, 2002.
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PAGE 6
WACHOVIA CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
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2001 2000
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(Dollars in millions, except Fourth Third Second First Fourth
per share data) Quarter Quarter Quarter Quarter Quarter
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FINANCIAL HIGHLIGHTS
Operating Earnings
Net interest income - tax-equivalent $ 2,484 1,974 1,742 1,734 1,757
Fee and other income 2,060 1,036 1,629 1,546 1,582
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Total revenue - tax-equivalent 4,544 3,010 3,371 3,280 3,339
Provision for loan losses 381 244 223 219 192
Noninterest expense, excluding goodwill
and other intangible amortization 2,691 2,193 2,092 2,060 2,052
Goodwill and other intangible amortization 251 117 77 78 80
Income taxes - tax-equivalent 422 158 330 313 334
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Income before merger-related,
restructuring and other charges and
cumulative effect of a change in
accounting principle (Operating earnings) 799 298 649 610 681
After-tax merger-related, restructuring
and other charges (63) (632) (16) (26) (36)
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Income (loss) before cumulative effect
of a change in accounting principle 736 (334) 633 584 645
Cumulative effect of a change in the accounting
for beneficial interests, net of income taxes - - - - (46)
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Net income (loss) 736 (334) 633 584 599
Dividends on preferred stock 6 - - - -
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Net income (loss) applicable to common stockholders $ 730 (334) 633 584 599
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DILUTED EARNINGS PER COMMON SHARE
Income before merger-related,
restructuring and other charges
and cumulative effect of a change
in accounting principle $ 0.58 0.27 0.66 0.62 0.69
Income (loss) before cumulative effect
of a change in accounting principle 0.54 (0.31) 0.64 0.59 0.65
Net income (loss) $ 0.54 (0.31) 0.64 0.59 0.60
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PROFITABILITY (Operating earnings)
Return on average common stockholders' equity 10.77 % 5.77 16.19 15.64 15.36
Net interest margin 3.81 3.58 3.41 3.42 3.46
Fee and other income as % of total revenue 45.33 34.42 48.32 47.13 47.38
Overhead efficiency ratio 64.74 76.74 64.34 65.18 63.85
Effective income tax rate 31.65 % 27.67 31.54 31.54 31.21
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CASH OPERATING EARNINGS
Net income $ 980 395 723 684 753
Diluted earnings per common share $ 0.71 0.36 0.73 0.69 0.76
Return on average tangible common
stockholders' equity 23.56 % 11.36 23.35 22.91 21.55
Return on average common stockholders' equity 13.23 7.66 18.04 17.52 17.00
Overhead efficiency ratio 59.22 % 72.86 62.06 62.80 61.46
Operating leverage $ 1,036 (462) 59 (67) 31
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PAGE 7
WACHOVIA CORPORATION
OTHER FINANCIAL DATA
(Unaudited)
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2001 2000
-----------------------------------------------------------------------
(Dollars in millions, except Fourth Third Second First Fourth
per share data) Quarter Quarter Quarter Quarter Quarter
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CAPITAL ADEQUACY (a)
Tier I capital ratio 7.03 % 6.75 7.37 7.18 7.02
Total capital ratio 11.05 10.84 11.45 11.33 11.19
Leverage ratio 6.19 % 7.22 6.00 5.88 5.92
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ASSET QUALITY
Allowance as % of loans, net 1.83 % 1.79 1.44 1.43 1.39
Allowance as % of nonperforming assets 175 186 133 132 135
Net charge-offs as % of average loans,net 0.93 0.73 0.52 0.53 0.64
Nonperforming assets as % of loans, net,
foreclosed properties and loans held for sale 1.13 % 1.08 1.23 1.30 1.22
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OTHER DATA
Employees 84,046 85,534 67,420 69,362 70,639
Branches 2,846 2,853 2,162 2,164 2,193
ATMs 4,675 4,698 3,419 3,676 3,772
Common shares outstanding (In millions) 1,362 1,361 979 981 980
Common stock price $ 31.36 31.00 34.94 33.00 27.81
Book value per common share $ 20.88 20.94 16.49 16.39 15.66
Common stock price to book value 150 % 148 212 201 178
Market capitalization $ 42,701 42,191 34,213 32,382 27,253
Dividends paid per common share $ 0.24 0.24 0.24 0.24 0.48
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AVERAGE BALANCE SHEET DATA
Commercial loans, net $ 102,230 83,633 76,378 77,270 76,253
Consumer loans, net 60,609 49,393 42,834 42,580 43,840
Loans, net 162,839 133,026 119,212 119,850 120,093
Earning assets 259,884 219,672 204,673 203,720 202,606
Total assets 318,722 267,366 247,254 245,469 239,375
Core deposits 161,826 132,203 119,035 118,192 118,944
Total deposits 179,472 150,218 136,979 137,282 138,329
Interest-bearing liabilities 231,763 198,322 185,224 183,995 181,832
Stockholders' equity $ 28,540 20,330 16,026 15,846 14,753
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PERIOD-END BALANCE SHEET DATA
Commercial loans, net $ 106,308 107,673 79,529 80,470 80,240
Consumer loans, net 57,493 62,007 42,963 42,383 43,520
Loans, net 163,801 169,680 122,492 122,853 123,760
Goodwill and other intangible assets
Goodwill subject to amortization
through December 31, 2001 3,366 3,427 3,476 3,524 3,481
New goodwill not subject to
amortization 7,250 7,069 - - -
Deposit base 1,822 2,433 140 157 174
Customer relationships 244 8 9 9 9
Tradename 90 - - - -
Total assets 330,452 325,897 245,941 252,949 254,170
Core deposits 170,498 159,787 121,022 120,786 122,383
Total deposits 187,453 180,549 138,567 140,795 142,668
Stockholders' equity $ 28,455 28,506 16,144 16,081 15,347
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(a)The fourth quarter of 2001 is based on estimates.
PAGE 8
WACHOVIA CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME
(Unaudited)
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Three Months Ended Year Ended
December 31, 2001 December 31, 2001
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Merger- Merger-
Related, Related,
Restructuring Restructuring
and Other and Other
Operating Charges/ As Operating Charges/ As
(In millions, except per share data) Earnings Gains Reported Earnings Gains Reported
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Net interest income $ 2,432 - 2,432 7,775 - 7,775
Provision for loan losses 381 - 381 1,067 880 1,947
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Net interest income after provision
for loan losses 2,051 - 2,051 6,708 (880) 5,828
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Fee and other income
Other income
Asset sales and securitization 138 - 138 303 (21) 282
Gain on sale of branches - - - - 73 73
Other fee and other income 1,922 - 1,922 5,968 (27) 5,941
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Total fee and other income 2,060 - 2,060 6,271 25 6,296
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Noninterest expense
Merger-related and restructuring charges - 88 88 - 106 106
Other noninterest expense 2,942 - 2,942 9,559 166 9,725
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Total noninterest expense 2,942 88 3,030 9,559 272 9,831
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Income before income taxes (benefits) 1,169 (88) 1,081 3,420 (1,127) 2,293
Income taxes (benefits) 370 (25) 345 1,064 (390) 674
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Net income 799 (63) 736 2,356 (737) 1,619
Dividends on preferred stock 6 - 6 6 - 6
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Net income applicable to
common stockholders $ 793 (63) 730 2,350 (737) 1,613
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Diluted earnings per common share $ 0.58 (0.04) 0.54 2.12 (0.67) 1.45
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PAGE 9
WACHOVIA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATING EARNINGS (a)
(Unaudited)
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2001 2000
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Fourth Third Second First Fourth
(In millions, except per share data) Quarter Quarter Quarter Quarter Quarter
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INTEREST INCOME
Interest and fees on loans $ 2,970 2,621 2,420 2,526 2,701
Interest and dividends on securities 876 852 881 925 939
Trading account interest 166 192 198 204 199
Other interest income 299 279 321 370 425
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Total interest income 4,311 3,944 3,820 4,025 4,264
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INTEREST EXPENSE
Interest on deposits 1,116 1,183 1,192 1,253 1,367
Interest on short-term borrowings 372 417 454 493 538
Interest on long-term debt 391 414 463 577 627
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Total interest expense 1,879 2,014 2,109 2,323 2,532
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Net interest income 2,432 1,930 1,711 1,702 1,732
Provision for loan losses 381 244 223 219 192
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Net interest income after provision for loan losses 2,051 1,686 1,488 1,483 1,540
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FEE AND OTHER INCOME
Service charges and fees 672 541 486 468 481
Commissions 448 356 389 375 383
Fiduciary and asset management fees 478 400 384 381 387
Advisory, underwriting and other
investment banking fees 223 177 238 198 187
Principal investing (21) (585) (58) (43) (43)
Other income 260 147 190 167 187
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Total fee and other income 2,060 1,036 1,629 1,546 1,582
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NONINTEREST EXPENSE
Salaries and employee benefits 1,663 1,374 1,363 1,329 1,243
Occupancy 210 176 155 163 150
Equipment 247 214 198 205 221
Advertising 21 15 11 9 16
Communications and supplies 142 117 111 110 123
Professional and consulting fees 113 79 69 73 97
Goodwill and other intangible amortization 251 117 77 78 80
Sundry expense 295 218 185 171 202
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Total noninterest expense 2,942 2,310 2,169 2,138 2,132
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Income before income taxes 1,169 412 948 891 990
Income taxes 370 114 299 281 309
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Net operating earnings $ 799 298 649 610 681
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Diluted earnings per common share $ 0.58 0.27 0.66 0.62 0.69
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(a) Operating earnings exclude merger-related, restructuring and other charges
and gains and cumulative effect of a change in accounting principle.
PAGE 10
WACHOVIA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATING EARNINGS (a)
(Unaudited)
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Year Ended
December 31,
---------------------
(In millions, except per share data) 2001 2000
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INTEREST INCOME
Interest and fees on loans $ 10,537 11,246
Interest and dividends on securities 3,534 3,903
Trading account interest 760 820
Other interest income 1,269 1,565
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Total interest income 16,100 17,534
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INTEREST EXPENSE
Interest on deposits 4,744 5,269
Interest on short-term borrowings 1,736 2,536
Interest on long-term debt 1,845 2,292
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Total interest expense 8,325 10,097
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Net interest income 7,775 7,437
Provision for loan losses 1,067 754
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Net interest income after provision for loan losses 6,708 6,683
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FEE AND OTHER INCOME
Service charges and fees 2,167 1,966
Commissions 1,568 1,591
Fiduciary and asset management fees 1,643 1,511
Advisory, underwriting and other investment banking fees 836 726
Principal investing (707) 395
Other income 764 626
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Total fee and other income 6,271 6,815
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NONINTEREST EXPENSE
Salaries and employee benefits 5,729 5,449
Occupancy 704 619
Equipment 864 858
Advertising 56 91
Communications and supplies 480 487
Professional and consulting fees 334 337
Goodwill and other intangible amortization 523 361
Sundry expense 869 1,011
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Total noninterest expense 9,559 9,213
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Income before income taxes 3,420 4,285
Income taxes 1,064 1,350
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Net operating earnings $ 2,356 2,935
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Diluted earnings per common share $ 2.12 2.97
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(a) Operating earnings exclude merger-related, restructuring and other charges
and gains and cumulative effect of a change in accounting principle.
PAGE 11
WACHOVIA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
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2001 2000
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Fourth Third Second First Fourth
(In millions, except per share data) Quarter Quarter Quarter Quarter Quarter
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INTEREST INCOME
Interest and fees on loans $ 2,970 2,621 2,420 2,526 2,701
Interest and dividends on securities 876 852 881 925 939
Trading account interest 166 192 198 204 199
Other interest income 299 279 321 370 425
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Total interest income 4,311 3,944 3,820 4,025 4,264
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INTEREST EXPENSE
Interest on deposits 1,116 1,183 1,192 1,253 1,367
Interest on short-term borrowings 372 417 454 493 538
Interest on long-term debt 391 414 463 577 627
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Total interest expense 1,879 2,014 2,109 2,323 2,532
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Net interest income 2,432 1,930 1,711 1,702 1,732
Provision for loan losses 381 1,124 223 219 192
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Net interest income after provision for loan losses 2,051 806 1,488 1,483 1,540
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FEE AND OTHER INCOME
Service charges and fees 672 541 486 468 481
Commissions 448 356 389 375 383
Fiduciary and asset management fees 478 400 384 381 387
Advisory, underwriting and other investment banking fees 223 177 238 198 182
Principal investing (21) (585) (58) (43) (43)
Other income 260 143 191 195 363
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Total fee and other income 2,060 1,032 1,630 1,574 1,753
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NONINTEREST EXPENSE
Salaries and employee benefits 1,663 1,374 1,400 1,373 1,407
Occupancy 210 176 180 164 150
Equipment 247 214 207 211 233
Advertising 21 15 16 14 35
Communications and supplies 142 117 111 110 130
Professional and consulting fees 113 79 84 83 104
Goodwill and other intangible amortization 251 117 77 78 80
Merger-related and restructuring charges 88 85 (69) 2 33
Sundry expense 295 218 191 174 205
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Total noninterest expense 3,030 2,395 2,197 2,209 2,377
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Income (loss) before income taxes(benefits) and
cumulative effect of a change in accounting principle 1,081 (557) 921 848 916
Income taxes (benefits) 345 (223) 288 264 271
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Income (loss) before cumulative effect
of a change in accounting principle 736 (334) 633 584 645
Cumulative effect of a change in the accounting
for beneficial interests, net of income taxes - - - - (46)
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Net income (loss) 736 (334) 633 584 599
Dividends on preferred stock 6 - - - -
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Net income (loss) applicable to common stockholders $ 730 (334) 633 584 599
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PER COMMON SHARE DATA
Basic
Income (loss) before change in accounting principle $ 0.54 (0.31) 0.65 0.60 0.66
Net income (loss) 0.54 (0.31) 0.65 0.60 0.61
Diluted
Income (loss) before change in accounting principle 0.54 (0.31) 0.64 0.59 0.65
Net income (loss) 0.54 (0.31) 0.64 0.59 0.60
Cash dividends $ 0.24 0.24 0.24 0.24 0.48
AVERAGE COMMON SHARES
Basic 1,352 1,094 969 968 969
Diluted 1,363 1,105 978 976 990
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PAGE 12
WACHOVIA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Year Ended
December 31,
--------------------
(In millions, except per share data) 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $ 10,537 11,246
Interest and dividends on securities 3,534 3,903
Trading account interest 760 820
Other interest income 1,269 1,565
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income 16,100 17,534
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 4,744 5,269
Interest on short-term borrowings 1,736 2,536
Interest on long-term debt 1,845 2,292
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest expense 8,325 10,097
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 7,775 7,437
Provision for loan losses 1,947 1,736
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 5,828 5,701
- ------------------------------------------------------------------------------------------------------------------------------------
FEE AND OTHER INCOME
Service charges and fees 2,167 1,920
Commissions 1,568 1,591
Fiduciary and asset management fees 1,643 1,511
Advisory, underwriting and other investment banking fees 836 718
Principal investing (707) 395
Other income 789 577
- ------------------------------------------------------------------------------------------------------------------------------------
Total fee and other income 6,296 6,712
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 5,810 5,659
Occupancy 730 622
Equipment 879 870
Advertising 66 114
Communications and supplies 480 503
Professional and consulting fees 359 348
Goodwill and other intangible amortization 523 361
Merger-related and restructuring charges 106 2,190
Sundry expense 878 1,043
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 9,831 11,710
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative
effect of a change in accounting principle 2,293 703
Income taxes 674 565
- ------------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of a change in accounting principle 1,619 138
Cumulative effect of a change in the accounting
for beneficial interests, net of income taxes - (46)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 1,619 92
Dividends on preferred stock 6 -
- ------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common stockholders $ 1,613 92
- ------------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Basic
Income before change in accounting principle $ 1.47 0.12
Net income 1.47 0.07
Diluted
Income before change in accounting principle 1.45 0.12
Net income 1.45 0.07
Cash dividends $ 0.96 1.92
AVERAGE COMMON SHARES
Basic 1,096 971
Diluted 1,105 974
- ------------------------------------------------------------------------------------------------------------------------------------
PAGE 13
WACHOVIA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000
-------------------------------------------------------
Fourth Third Second First Fourth
(In millions, except per share data) Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 13,917 10,051 8,665 7,857 9,906
Interest-bearing bank balances 6,875 2,128 1,666 2,971 3,239
Federal funds sold and securities purchased under
resale agreements 13,919 9,354 9,161 11,866 11,240
- ------------------------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 34,711 21,533 19,492 22,694 24,385
- ------------------------------------------------------------------------------------------------------------------------------------
Trading account assets 25,386 26,763 23,181 20,431 21,630
Securities 58,467 56,929 48,055 51,528 49,246
Loans, net of unearned income 163,801 169,680 122,492 122,853 123,760
Allowance for loan losses (2,995) (3,039) (1,760) (1,759) (1,722)
- ------------------------------------------------------------------------------------------------------------------------------------
Loans, net 160,806 166,641 120,732 121,094 122,038
- ------------------------------------------------------------------------------------------------------------------------------------
Premises and equipment 5,719 5,775 4,852 4,968 5,024
Due from customers on acceptances 745 796 856 894 874
Goodwill and other intangible assets 12,772 12,937 3,625 3,690 3,664
Other assets 31,846 34,523 25,148 27,650 27,309
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 330,452 325,897 245,941 252,949 254,170
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits 43,464 36,382 29,633 28,582 30,315
Interest-bearing deposits 143,989 144,167 108,934 112,213 112,353
- ------------------------------------------------------------------------------------------------------------------------------------
Total deposits 187,453 180,549 138,567 140,795 142,668
Short-term borrowings 44,385 44,303 34,754 39,719 39,446
Bank acceptances outstanding 762 798 859 902 880
Trading account liabilities 11,437 10,084 7,907 8,130 7,475
Other liabilities 16,227 18,424 11,650 11,230 12,545
Long-term debt 41,733 43,233 36,060 36,092 35,809
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 301,997 297,391 229,797 236,868 238,823
- ------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, issued 96 million shares
at December 31, 2001 17 - - - -
Common stock, $3.33-1/3 par value;
authorized 3 billion shares, issued 1.362 billion shares
at December 31, 2001 4,539 4,537 3,264 3,271 3,267
Paid-in capital 17,911 17,835 6,345 6,307 6,272
Retained earnings 5,551 5,139 6,627 6,281 6,021
Accumulated other comprehensive income, net 437 995 (92) 222 (213)
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 28,455 28,506 16,144 16,081 15,347
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 330,452 325,897 245,941 252,949 254,170
- ------------------------------------------------------------------------------------------------------------------------------------
PAGE 14
WACHOVIA CORPORATION
NET INTEREST INCOME SUMMARIES
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
FOURTH QUARTER 2001 THIRD QUARTER 2001
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
(In millions) Balances Expense Paid Balances Expense Paid
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-bearing bank balances $ 3,333 21 2.50 % $ 1,740 17 3.86%
Federal funds sold and securities
purchased under resale agreements 11,784 99 3.32 10,031 107 4.25
Trading account assets 14,552 175 4.81 14,572 199 5.43
Securities 55,708 905 6.49 50,621 877 6.93
Loans
Commercial
Commercial, financial and agricultural 62,220 1,202 7.67 55,490 1,142 8.17
Real estate - construction and other 7,919 101 5.02 4,512 66 5.88
Real estate - mortgage 17,139 263 6.10 10,923 184 6.66
Lease financing 7,578 199 10.51 6,441 168 10.42
Foreign 7,374 81 4.34 6,267 83 5.26
- ------------------------------------------------------------------ -------------------------------------
Total commercial 102,230 1,846 7.17 83,633 1,643 7.80
- ------------------------------------------------------------------ -------------------------------------
Consumer
Real estate - mortgage 24,032 414 6.90 19,816 353 7.12
Installment loans and vehicle leasing 36,577 724 7.87 29,577 637 8.57
- ------------------------------------------------------------------ -------------------------------------
Total consumer 60,609 1,138 7.49 49,393 990 7.99
- ------------------------------------------------------------------ -------------------------------------
Total loans 162,839 2,984 7.29 133,026 2,633 7.87
- ------------------------------------------------------------------ -------------------------------------
Other earning assets 11,668 179 6.11 9,682 155 6.35
- ------------------------------------------------------------------ -------------------------------------
Total earning assets 259,884 4,363 6.68 219,672 3,988 7.23
----------------------------- ------------------------------
Cash and due from banks 9,814 8,357
Other assets 49,024 39,337
- ---------------------------------------------------- --------------------
Total assets $ 318,722 $ 267,366
- ---------------------------------------------------- -------------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 47,527 222 1.85 41,897 259 2.46
Money market accounts 36,306 289 3.16 24,904 269 4.28
Other consumer time 40,951 484 4.69 35,484 474 5.30
Foreign 8,603 56 2.58 7,441 71 3.74
Other time 9,043 65 2.81 10,574 110 4.13
- ------------------------------------------------------------------ -------------------------------------
Total interest-bearing deposits 142,430 1,116 3.11 120,300 1,183 3.90
Federal funds purchased and securities
sold under repurchase agreements 33,028 298 3.59 26,982 332 4.87
Commercial paper 3,709 29 3.07 2,950 25 3.36
Other short-term borrowings 9,617 45 1.86 9,870 60 2.45
Long-term debt 42,979 391 3.64 38,220 414 4.34
- ------------------------------------------------------------------ -------------------------------------
Total interest-bearing liabilities 231,763 1,879 3.22 198,322 2,014 4.04
----------------------------- ------------------------------
Noninterest-bearing deposits 37,042 29,918
Other liabilities 21,377 18,796
Stockholders' equity 28,540 20,330
- ---------------------------------------------------- --------------------
Total liabilities and stockholders'
equity $ 318,722 $ 267,366
- ---------------------------------------------------- --------------------
Interest income and rate earned $ 4,363 6.68% $ 3,988 7.23%
Interest expense and equivalent rate paid 1,879 2.87 2,014 3.65
- --------------------------------------------------------------------------------- --------------------------
Net interest income and margin (a) $ 2,484 3.81 % $ 1,974 3.58%
- --------------------------------------------------------------------------------- --------------------------
(a) The net interest margin includes (in basis points): 27, 18, 13, 14 and 15 in
the fourth, third, second and first quarters of 2001 and in the fourth quarter
of 2000, respectively, in net interest income from hedge-related derivative
transactions.
PAGE 15
WACHOVIA
CORPORATION
NET INTEREST INCOME SUMMARIES
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------
SECOND QUARTER 2001 FIRST QUARTER 2001 FOURTH QUARTER 2000
- ----------------------------------- ------------------------------------- ----------------------------------
Average Average Average
Interest Rates Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/ Average Income/ Earned/
Balances Expense Paid Balances Expense Paid Balances Expense Paid
- ------------------------------------------------------------------------------------------------------------------------
$2,529 29 4.57% $1,826 25 5.69% $1,266 14 4.34%
8,923 99 4.41 7,036 95 5.49 5,994 89 5.86
13,965 202 5.78 13,315 206 6.24 11,569 201 6.95
49,931 899 7.21 50,417 945 7.50 50,554 952 7.54
53,160 1,098 8.29 53,416 1,130 8.56 53,554 1,233 9.17
3,193 52 6.56 3,231 62 7.76 3,011 65 8.69
8,525 149 7.01 9,195 180 7.95 9,130 198 8.63
6,075 157 10.29 6,084 161 10.62 5,272 150 11.37
5,425 83 6.12 5,344 92 7.01 5,286 97 7.29
- --------------------- -------------------- -------------------
76,378 1,539 8.08 77,270 1,625 8.51 76,253 1,743 9.11
- --------------------- -------------------- -------------------
17,435 318 7.29 17,610 331 7.52 18,805 362 7.70
25,399 572 9.02 24,970 580 9.41 25,035 606 9.63
- --------------------- --------------------- -------------------
42,834 890 8.32 42,580 911 8.63 43,840 968 8.80
- --------------------- --------------------- -------------------
119,212 2,429 8.17 119,850 2,536 8.55 120,093 2,711 8.99
- --------------------- --------------------- --------------------
10,113 193 7.68 11,276 250 8.96 13,130 322 9.76
- --------------------- --------------------- --------------------
204,673 3,851 7.54 203,720 4,057 8.03 202,606 4,289 8.44
--------------------------- --------------------------- -------------------------
7,568 7,749 7,653
35,013 34,000 29,116
- -------- -------- --------
$247,254 $245,469 $239,375
- -------- -------- --------
39,640 267 2.70 38,756 264 2.76 37,640 301 3.17
18,746 225 4.81 17,941 200 4.52 17,008 202 4.74
33,268 477 5.76 34,452 506 5.96 36,421 541 5.91
6,357 73 4.62 6,851 94 5.59 7,483 110 5.85
11,587 150 5.20 12,239 189 6.27 11,902 213 7.13
- --------------------- --------------------- -------------------------------
109,598 1,192 4.36 110,239 1,253 4.61 110,454 1,367 4.92
27,128 356 5.27 25,005 378 6.13 23,686 400 6.72
2,435 25 4.08 2,540 33 5.32 2,639 42 6.19
9,809 73 2.98 9,580 82 3.46 9,345 96 4.09
36,254 463 5.11 36,631 577 6.30 35,708 627 7.03
- --------------------- --------------------- -------------------------------
185,224 2,109 4.57 183,995 2,323 5.10 181,832 2,532 5.55
--------------------------- --------------------------- -------------------------
27,381 27,043 27,875
18,623 18,585 14,915
16,026 15,846 14,753
- -------- -------- ------------------
$247,254 $245,469 $239,375
- -------- -------- ------------------
$3,851 7.54% $4,057 8.03% $4,289 8.44%
2,109 4.13 2,323 4.61 2,532 4.98
--------------------------- --------------------------- -------------------------
$1,742 3.41% $1,734 3.42% $1,757 3.46%
--------------------------- --------------------------- -------------------------
PAGE 16
WACHOVIA CORPORATION
NET INTEREST INCOME SUMMARIES
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED 2001 YEAR ENDED 2000
------------------------------------ -------------------------------------
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
(In millions) Balances Expense Paid Balances Expense Paid
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-bearing bank balances $ 2,359 92 3.92 % $ 1,095 54 4.93 %
Federal funds sold and securities
purchased under resale agreements 9,458 400 4.23 7,800 447 5.73
Trading account assets 14,106 782 5.54 12,011 828 6.90
Securities 51,681 3,626 7.02 53,428 3,953 7.40
Loans
Commercial
Commercial, financial and agricultural 56,094 4,572 8.15 53,518 4,908 9.17
Real estate - construction and other 4,726 281 5.95 2,639 224 8.49
Real estate - mortgage 11,466 776 6.77 9,176 779 8.49
Lease financing 6,548 685 10.46 5,194 611 11.75
Foreign 6,109 339 5.55 4,856 342 7.04
- ------------------------------------------------------------------ ---------------------
Total commercial 84,943 6,653 7.83 75,383 6,864 9.11
- ------------------------------------------------------------------ ----------------------
Consumer
Real estate - mortgage 19,741 1,416 7.17 23,804 1,762 7.40
Installment loans and vehicle leasing 29,164 2,513 8.61 27,701 2,661 9.60
- ------------------------------------------------------------------ -----------------------
Total consumer 48,905 3,929 8.03 51,505 4,423 8.59
- ------------------------------------------------------------------ ------------------------
Total loans 133,848 10,582 7.91 126,888 11,287 8.89
- ------------------------------------------------------------------ ------------------------
Other earning assets 10,683 777 7.28 11,125 1,064 9.56
- ----------------------------------------------------------------- ------------------------
Total earning assets 222,135 16,259 7.32 212,347 17,633 8.30
Cash and due from banks 8,378 ---------------------- 7,751 -----------------------
Other assets 39,384 27,394
- ----------------------------------------------------- ----------
Total assets $269,897 $ 247,492
- ----------------------------------------------------- ----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts 41,979 1,012 2.41 38,518 1,169 3.03
Money market accounts 24,526 983 4.01 15,793 682 4.32
Other consumer time 36,055 1,941 5.38 35,536 1,966 5.53
Foreign 7,318 294 4.01 8,780 514 5.85
Other time 10,851 514 4.73 13,648 938 6.87
- ------------------------------------------------------------------ ----------------------
Total interest-bearing deposits 120,729 4,744 3.93 112,275 5,269 4.69
Federal funds purchased and securities
sold under repurchase agreements 28,055 1,364 4.86 30,997 1,893 6.11
Commercial paper 2,912 112 3.84 2,882 173 6.00
Other short-term borrowings 9,719 260 2.68 9,697 470 4.85
Long-term debt 38,538 1,845 4.79 34,279 2,292 6.69
- ------------------------------------------------------------------ ----------------------
Total interest-bearing liabilities 199,953 8,325 4.16 190,130 10,097 5.31
Noninterest-bearing deposits 30,372 --------------------- 28,491 -----------------------
Other liabilities 19,351 13,330
Stockholders' equity 20,221 15,541
- ------------------------------------------------------ --------
Total liabilities and stockholders'
equity $269,897 $247,492
- ------------------------------------------------------ ------------
Interest income and rate earned $ 16,259 7.32 % $ 17,633 8.30 %
Interest expense and equivalent rate paid 8,325 3.75 10,097 4.75
- ---------------------------------------------------------------------------------- -----------------------
Net interest income and margin (a) $ 7,934 3.57 % $ 7,536 3.55 %
- ---------------------------------------------------------------------------------- -----------------------
(a) The net interest margin includes (in basis points): 18 and 23 for the years
ended December 31, 2001, and December 31, 2000, respectively, in net interest
income from hedge-related derivative transactions.