EX-99.B 3 dex99b.htm THE THIRD QUARTER PRESENTATION The Third Quarter Presentation
Wachovia Corporation
3Q08 Financial Highlights
October 22, 2008
Exhibit (99)(b)


1
Results reflect higher
goodwill impairment,
credit costs, market
disruption-related
losses including
higher securities
impairments, and
lower asset
valuations and
market activity
3Q08 quarterly summary
(a)  EPS calculated
on
net
loss
available
to
common
stockholders
of
$23.9
billion,
reflecting
preferred
dividends
of
$191
million.
(b)  Total
noninterest
expense
less
merger-related
and
restructuring
expenses,
goodwill
impairment
and other intangible amortization.
(c)  Period-end CD growth.
Loss of $23.9 billion, EPS
(a)
of ($11.18) includes $18.7 billion after-tax goodwill
impairment
-
Operating loss of $4.8 billion, EPS of ($2.23) driven by increased provision, market
disruption losses and auction rate securities (ARS) settlement costs
Revenue of $5.8 billion down 23%; down 8% excluding market disruption losses,
2Q08 SILO charge, and principal investing valuation marks
-
Net
interest
income
down
5%
and
margin
down
21
bps
excluding
the
effect
of
the
$975
million 2Q08 SILO charge; results largely reflect pressure from capital and liquidity
strategies, deposit
mix shift and higher nonperforming assets
-
Fees down $2.4 billion largely driven by higher market disruption losses including
investment portfolio securities impairments and lower principal investing results
Provision of $6.6 billion with $4.8 billion of reserve build includes $3.4 billion
Pick-a-Pay reserve build reflecting updated cumulative loss estimates of 22%
-
Core portfolio continued to perform relatively in-line with expectations
Other noninterest expense
(b)
of $6.0 billion, down 6% from 2Q08 which included
substantial additions to legal reserves
Remain focused on industry-leading customer service and execution
-
General Bank retail CDs up 17%
(c)
and net new checking accounts of 208,000
-
Wealth management investment sales up 10% QoQ
-
Stable financial advisor headcount and A.G. Edwards integration on track; client assets
down 16% since merger vs. 24% decrease in S&P 500
-
CIB expense efficiencies and balance sheet reductions on track
Wells Fargo merger on track for 4Q08 close pending Wachovia shareholder
approval


2
3Q08 GAAP loss of $23.9 billion includes $18.8 billion noncash, capital neutral
goodwill impairment; Operating loss of $4.8 billion
(a)
Tax-equivalent.
(b)
3Q08 pre-tax goodwill impairment of $18,786 million, $18,715 million after-tax. 
Difference relates to small amount of goodwill that is deductible for tax purposes.
(c)
See page 3 for additional information.
Results reflect $4.8 billion of reserve build, and
$3.9
billion
of
notable
items
(c)
NII up $695 million; down $280 million excluding
the $975 million 2Q08 SILO charge
-
Increased liquidity/capital focus, lower trading-related
NII and rising NPAs
-
Margin up 36 bps QoQ to 2.94%; down 21 bps before
the effect of the SILO charge
-
Earning assets up 2% QoQ
Fees down $2.4 billion QoQ despite higher service
charges and other banking fees
-
Market disruption losses of $2.5 billion
Provision includes $4.2 billion for Pick-a-Pay
loans; cumulative loss estimate now 22%
Expense flat QoQ as higher restructuring costs
were more than offset by declines from 2Q08
which included substantial additions to legal
reserves
-
$697 million of merger-related and restructuring
expenses vs. $251 million in 2Q08
-
$497 million of auction rate securities (ARS)
settlement costs vs. $500 million in 2Q08
-
Additions to legal reserves declined substantially from
2Q08
vs
vs
($ in millions, except per share data)
3Q08
2Q08
3Q07
Net interest income
(a)
$
5,039
16
%
10
Fee and other income
733
(77)
(75)
Total revenue
(a)
5,772
(23)
(23)
Provision for charge-offs
1,872
43
-
Provision for reserve build
4,757
12
-
Expense
6,759
1
49
Goodwill impairment
(b)
18,786
-
-
Minority interest
(105)
-
-
Pre-tax income (loss)
(a)
(26,297)
-
-
Income taxes (benefits)
(a)
(2,599)
-
-
Net income (loss)
(23,698)
-
-
Preferred dividends
191
(1)
-
Net income (loss) available to
common stockholders
(23,889)
-
-
Net merger-related
414
-
-
After-tax goodwill impairment
(b)
18,715
-
-
Operating income (loss)
$
(4,760)
63
%
-
Avg
basic shares
2,137
1
%
13
EPS
(available to common stockholders)
$
(11.18)
-
-
EPS operating
$
(2.23)
62
%
-
Net interest margin
2.94
36
bps
2
Net interest margin              
(excluding SILO charge)
2.94
(21)
bps
2


3
Core results masked by significant charges
Pre-tax pre-provision results include goodwill impairment and notable items
(a)  Tax-equivalent.
(b)  Pre-tax goodwill impairment of $18,786 million in 3Q08 and $6,060 million in 2Q08, after-tax
goodwill
impairment
of
$18,715
million
in
3Q08
and
$6,056
million
in
2Q08.
Difference
relates
to small amount of goodwill that is deductible for tax purposes.
(c)  Net of Prudential Financial’s minority interest on a pre-tax basis of $99 million in 3Q08 and $115 million in 2Q08.
(d)  Write-downs
to
fair
value
on
certain
securities
where
our
intent
is
to
sell.
(e)  $37 million of 3Q08 additions to legal reserves related to Visa/Discover settlement.
Market disruption losses of $2.5 billion include:
-
$940 million in CIB distribution-related losses
-
$619 million of investment portfolio securities
impairments
-
$737 million in valuation losses relating to the
support of 3 Evergreen money market funds
$515 million restructuring charge on 2Q08
announced expense reductions
$497 million of costs related to the previously
announced ARS settlement, $398 million net of
minority interest
$397 million of securities losses on planned
securities sales includes $171 million from sale
of GSE preferred shares
Pre-tax pre-provision results also lowered by:
$446 MM
Lower principal investing fees
Fees
4 bps
$ 50 MM
Increase in nonperforming assets
5 bps
$ 90 MM
Deposit shift mix including CD
strategies
10 bps
$100 MM
Capital and liquidity strategies
affect on earning asset mix
Margin
NII
Income Statement
($ in millions)
3Q08
2Q08
Line Item
Pre-tax GAAP loss
(a)
$
(26,297)
(10,824)
Provision for credit losses
6,629
5,567
Pre-tax pre-provision
earnings (loss)
(a)
(19,668)
(5,257)
Goodwill
impairment
(b)
18,786
6,060
Goodwill impairment
Notable items:
Market disruption-related
losses
2,490
936
See page 7 for details
SILO charge
-
975
Net interest income
Restructuring charge
515
-
Merger-related and
restucturing
expenses
ARS settlement, net of
minority
interest
(c)
398
385
Sundry expense
Planned
securities
sales
(d)
397
391
Securities gains (losses)
Legal reserves (excluding
ARS)
(e)
55
590
Sundry expense
Total notable items
3,855
3,277
Pre-tax pre-provision results
excluding goodwill impairment
and notable items
(a)
$
2,973
4,080


4
NII results reflect stable loan balances and capital preservation strategies
Average loans were flat QoQ
Pick-a-Pay mortgage down 1% QoQ
-
Ceased originations of negative amortization loans
as of 6/30/08
-
Waived prepayment penalty fees
Traditional mortgage down 6% QoQ
-
Results include an average net $2.7 billion decrease
from sales/securitizations/transfers to held-for-sale
-
Origination strategy focused on marketable products
Home equity up 3% QoQ on modestly higher line
utilization and slowing prepayments
Other consumer up 5% QoQ largely on seasonal
growth in student
C & I up 1% QoQ on strength in middle-market,
structured products and large corporate
CRE up 1% QoQ reflecting slower pre-pays,
increased fundings and modest income producing
originations
Period-end loans down 1% QoQ on a net $9.0
billion in sales/securitizations/transfers
-
Sale/securitization/transfer activity of $3.5 billion in
traditional mortgages, $3.3 billion in auto, $1.3 billion in
student loans and $678 million in home equity
Average Loans
vs
vs
($ in billions)
3Q08
2Q08
3Q07
Pick-a-Pay mortgage
$
120.7
(1)
%
2
Traditional mortgage
48.7
(6)
-
Home equity
59.4
3
6
Other consumer
40.8
5
28
Total consumer
269.6
-
6
Commercial and industrial
162.9
1
20
Commercial real estate
46.0
1
19
Total commercial
208.9
1
20
Total loans, net
$
478.5
-
%
11
Period-End Loans
vs
vs
($ in billions)
3Q08
2Q08
3Q07
Commercial
$
218.9
1
%
15
Consumer
263.5
(3)
1
Total loans, net
$
482.4
(1)
%
7


5
Average core deposits relatively stable QoQ as 4%
growth in consumer offset higher-rate commercial
declines
-
Retail CDs grew 13% QoQ reflecting strong sales and
changing market environment
-
8% decline in commercial reflects money market and
interest checking outflows
Average low-cost core deposits down 5% QoQ
largely reflecting market turmoil and effect of CD
strategies
-
Retail brokerage core deposits increased $6.1 billion
-
Net new checking account sales of 208,000
-
Way2Save results continued to exceed expectations with
41% of accounts generating a new checking account; $328
million in new checking balances year-to-date
Period-end core deposits decreased 8% QoQ
driven by a 24% decline in higher cost commercial
deposits reflecting significant market turmoil at
quarter-end
-
Experiencing reversal of commercial deposit trends
following the proposed Wells Fargo merger and global
regulatory banking initiatives
NII results reflect weaker deposit trends on market turbulence
and actions to preserve and enhance liquidity
Average Deposits
vs
vs
($ in billions)
3Q08
2Q08
3Q07
2Q08
3Q07
Consumer core deposits
DDA
$
12.5
13.1
12.4
(5)
%
1
Interest checking
30.5
32.2
30.9
(5)
(1)
Savings
29.7
33.3
31.8
(11)
(7)
Money market
92.6
91.1
71.2
2
30
Low-cost core
165.3
169.7
146.3
(3)
13
Retail CDs
128.6
113.6
122.5
13
5
Total consumer core deposits
293.9
283.3
268.8
4
9
Commercial core deposits
DDA
45.0
44.9
45.9
-
(2)
Interest checking
18.7
20.6
18.8
(9)
(1)
Savings
0.2
0.2
0.3
-
(33)
Money market
34.5
41.7
45.2
(17)
(24)
Total commercial core deposits
98.4
107.4
110.2
(8)
(11)
Total low-cost core
263.7
277.1
256.5
(5)
3
Total core deposits
392.3
390.7
379.0
-
4
Other deposits
54.7
44.8
37.1
22
47
Total deposits
$
447.0
435.5
416.1
3
%
7
Period-End Deposits
vs
vs
($ in billions)
3Q08
2Q08
3Q07
Consumer core deposits
286.6
(1)
6
Commercial core deposits
83.4
(24)
(23)
Total core deposits
370.0
(8)
(2)
Other deposits
48.8
3
11
Total deposits
$
418.8
(6)
%
(1)


6
Fee and other income
Results largely driven by continued lower market valuations and overall activity levels
Service charges grew 1% on higher consumer
volumes partially offset by lower commercial
Other banking fees rose 1% driven by
improvement in trade finance and interchange
Commissions declined $111 million reflecting
lower retail brokerage activity somewhat offset by
growth in insurance
Fiduciary and asset management down $64
million driven by the effect of a shift to retail
brokerage deposits from money market funds, and
declines in AUM including lower market valuations
Trading account losses of $701 million include
$780 million of market disruption losses down
from $835 million in 2Q08
Principal investing fees down $446 million driven
by lower
valuations 
Securities losses include $1.6 billion of market
disruption losses vs. $415 million in 2Q08
Other income declined $428 million from 2Q08
which included $438 million leveraged finance
gain
-
Results include $103 million in market disruption losses
vs
vs
($ in millions, except per share data)
3Q08
2Q08
3Q07
Service charges
$
717
1
%
4
Other banking fees
525
1
11
Commissions
799
(12)
33
Fiduciary and asset
management fees
1,291
(5)
25
Advisory, underwriting and other
investment banking fees
243
(13)
(38)
Trading account profits (losses)
(701)
37
-
Principal investing
(310)
-
-
Securities gains (losses)
(1,978)
-
-
Other income
147
(74)
-
Total fee and other income
$
733
(77)
%
(75)


7
Market disruption-related losses driven by impairment losses
(a) Net of associated hedges.
(b) 2 
half
2007
includes
$50
million
of
provision
expense
relating
to
loan
impairments.
(c) Includes $99 million and $115 million pre-tax relating to Prudential Financial’s minority interest in 3Q08 and 2Q08, respectively. 
Market Disruption-Related Losses, Net
(a)
($ in millions)
3Q08
2Q08
1Q08
Corporate
and
Investment
Bank
ABS CDO and other subprime-related
$
(235)
(238)
(339)
(1,048)
Commercial mortgage (CMBS)
(347)
(209)
(521)
(1,088)
Consumer mortgage
(146)
(68)
(251)
(205)
Leveraged finance
22
102
(309)
(179)
Other
(234)
(152)
(144)
(50)
Total
(940)
(565)
(1,564)
(2,570)
Capital
Management
Impairment and trading losses
(851)
(113)
0
(57)
Auction Rate Securities (ARS) losses
(80)
(5)
0
0
Parent
Impairment
losses/other
(b)
(619)
(253)
(723)
(94)
Total market disruption-related
losses, net
(2,490)
(936)
(2,287)
(2,721)
Discontinued operations
(BluePoint)
$
0
0
0
(330)
ARS settlement costs in sundry expense
Capital
Management
(c)
$
(432)
(500)
0
0
Corporate and Investment Bank
(65)
0
0
0
Total
$
(497)
(500)
0
0
2nd Half
2007
nd


8
General Bank results affected by housing market decline and liquidity strategies
Earnings down 4% QoQ excluding mortgage results
(a)
Excludes mortgage earnings (losses) of ($198) million in 3Q08, $26 million in 2Q08, and
$322 million in 3Q07, which reflects mortgage provision expense of $831 million in
3Q08, $527 million in 2Q08 and $16 million in 3Q07. Please see page 39 for additional
information.
Solid NII growth of 2% QoQ reflects improving
spreads and balance sheet growth despite rising
NPAs; NII up 3% excluding mortgage
-
Loans flat and core deposits up 1% QoQ
Fees flat as higher service charges were offset by
lower mortgage and other banking fees; fees up
2% excluding mortgage
-
Service charge growth reflects higher consumer
volume and treasury services sales
Provision up 45% driven by $810 million in Pick-a-
Pay charge-offs vs. $508 million in 2Q08; provision
up 29% excluding mortgage on higher retail credit
losses driven by higher losses in auto and student
loans
Expense up 3% on higher credit-related costs and
FDIC fees despite lower personnel costs
-
Mortgage FTEs down 817 QoQ
Customer service metrics remain strong in difficult
environment
-
Customer satisfaction score of 6.62 on a
scale of 1 to 7
-
Customer loyalty of 51%
New/lost ratio of 1.24
-
Retail customer acquisition rate of 16.0% and attrition
of 12.9%
vs
vs
($ in millions)
3Q08
2Q08
3Q07
Net interest income
$
3,763
2
%
9
Service charges
608
2
3
Interchange income
204
(2)
6
Mortgage banking fees
68
(12)
21
All other fees/income
123
5
29
Fee and other income
1,003
7
Total revenue
4,816
1
8
Provision
1,340
45
-
Expense
2,127
3
12
Segment earnings
$
857
(24)
%
(43)
vs
vs
($ in millions)
3Q08
2Q08
3Q07
Net interest income
$
2,937
3
%
8
Service charges
608
2
3
Interchange income
204
(2)
6
All other fees/income
118
13
44
Fee and other income
930
2
7
Total revenue
3,937
3
8
Provision
509
29
166
Expense
1,768
4
10
Segment earnings
$
1,055
(4)
%
(10)
-
General
Bank
results
excluding
mortgage
(a)


9
Wealth Management
Results reflect turbulent market conditions
(a)  Assets-under-management*include-$28.5-billion-in-assets-managed-by-and-reported-in-Capital-Management.
(b)  Trust and investment management new recurring fee sales.
(c)  Annualized Wealth revenue per relationship manager.
NII down 3% QoQ driven by a 17% decrease in
core deposits largely reflecting the effect of
market turmoil
Fees down 8% QoQ driven by lower market
valuations and AUM; up 4% YoY reflecting
growth in fiduciary and asset management fees
despite declining market values, and higher
insurance commissions
Expense down 2% QoQ reflecting lower
personnel expense relating to efficiency initiatives
Overhead efficiency ratio of 63.55% reflects
improvement of 116 bps YoY
AUM down 5% QoQ largely reflecting lower
market valuations
vs
vs
($ in millions)
3Q08
2Q08
3Q07
Net interest income
$
194
(3)
%
5
Fee and other income
192
(8)
4
Total revenue
388
(6)
4
Provision
8
60
33
Expense
246
(2)
3
Segment earnings
84
(14)
5
Avg
loans, net
22,765
1
8
Avg
core deposits
14,690
(17)
(14)
AUM
(a)
73,192
(5)
(12)
Investment mgmt sales
(b)
13.7
10
10
Revenue/RM
(c)
$
2.7
(7)
4
Wealth Mgmt producers
957
(2)
%
(1)


10
Corporate and Investment Bank
Results reflect lower valuations and market activity
(a)  Please see page 7 for additional information.
NII down $89 million driven by lower trading-
related results
Fees down $1.1 billion; down $697 million
excluding market disruption losses on lower asset
valuations and origination activity
-
Market disruption-related losses of $940 million vs.
$565 million in 2Q08
(a)
-
Principal investing loss of $310 million vs. $136
million gain in 2Q08
Expense up 20% QoQ on higher incentives and
included $65 million of ARS settlement costs; up
13% before ARS costs
-
Expense reduction on track with 643 FTE reductions,
ahead of previous estimates of 400 to 500
Provision up $87 million driven by higher losses
on consumer mortgage and commercial real
estate
Average loans up 2% QoQ driven by growth in
global financial institutions, leveraged finance and 
commercial real estate
-
Balance sheet reduction of $9.0 billion in period-end
earning assets exceeded target
vs
vs
($ in millions)
3Q08
2Q08
3Q07
Net interest income
$
1,043
(8)
%
24
Fee and other income
(excluding market disruption losses)
524
(57)
(61)
Market disruption losses
(940)
(66)
20
Total fee and other income
(416)
-
-
Total revenue
570
(67)
(41)
Provision
525
20
-
Expense
1,154
20
84
Segment earnings (loss)
(703)
-
-
Avg
loans, net
109,323
2
32
Avg
core deposits
27,497
(13)
(26)
Lending commitments
$
99,489
(12)
%
(17)


11
Capital Management
Results reflect significant market disruption losses
NII up 26% QoQ on higher retail brokerage
deposits and spread expansion
Fees down $1.0 billion QoQ; down $214 million
excluding $931 million of market disruption losses
-
Commissions down 17% QoQ driven by lower retail
brokerage transaction revenue
-
Fiduciary and asset management fees down 4%
QoQ on declines in AUM including lower market
valuations
Expense down 8% QoQ; down 6% QoQ
excluding $432 million of ARS settlement costs on
lower revenue-based incentives and other
personnel costs as well as merger efficiencies
A.G. Edwards merger progressing as planned;
integration is more than 50% complete
-
Since AGE merger, client assets down 16%
despite 24% decline in S&P 500
Series 7 headcount flat QoQ; growth in high
producing FAs offset by lower-producing FA
attrition
Internal cross-sell results
-
General Bank referrals: lending down 2%, deposits
up 30% YoY
vs
vs
($ in millions)
3Q08
2Q08
3Q07
Net interest income
$
388
26
%
45
Fee and other income
(excluding market disruption losses)
1,899
(10)
28
Market disruption losses
(931)
-
-
Total fee and other income
968
(51)
(33)
Total revenue
1,360
(41)
(20)
Provision
1
-
-
ARS expense
432
(14)
-
Other expense
1,713
(6)
-
Total expense
2,145
(8)
73
Segment earnings (loss)
(499)
-
-
Avg
loans, net
3,223
12
50
Avg
core deposits
$
54,734
13
74
Retail brokerage headcount
Series 7 brokers
14,635
-
74
Bank series 6 reps
4,447
3
%
48


12
Update on core loan portfolio (excluding Golden West)
12


13
Asset quality
Core loan portfolio performance in line with expectations
(a)  Pick-a-Pay loan outstandings gross of unearned income.
(b)  Excluding nonperforming assets in period-end loans held-for-sale.
NPAs and charge-offs largely reflect continued
weakness in the residential housing market
Pick-a-Pay portfolio results discussed on pages
22-26
Core loan portfolio NPAs up $1.1 billion, or
32 bps, to 1.65% of loans
Core loan portfolio provision expense of $2.4
billion includes reserve build of $1.3 billion
-
Consumer reserve build of $651 million
Consumer real estate reserves increased $576
million driven largely by home equity
Auto reserves increased $132 million
-
Commercial reserve build of $214 million including
$46 million in FAS 114 reserves
-
Unallocated reserve build of $440 million
Core loan portfolio charge-offs up $261 million
to $1.1 billion, or 1.19% of loans
Core loan portfolio allowance for credit losses of
$7.0
billion, or 1.92% of loans, up $1.2 billion
Total
Core Loan
($ in millions)
Wachovia
Pick-a-Pay
Portfolio
Total period-end loans
(a)
$
482,373
118,704
363,669
Total NPAs
$
14,982
8,989
5,993
as % of loans, net ORE
(b)
3.10
%
7.54
1.65
Provision
$
6,629
4,245
2,384
Provision for reserve build
4,757
3,435
1,322
Net charge-offs
$
1,872
810
1,062
as % of loans
1.57
%
2.69
1.19
Commercial
1.05
n.a
1.05
Consumer
1.97
%
2.69
1.38
Allowance for loan losses
$
15,351
8,648
6,703
Allowance for credit losses
$
15,605
8,648
6,957
Allowance for loan losses
as % of loans, net
3.18
%
7.22
1.85
Commercial
1.35
n.a.
1.35
Consumer
4.41
7.22
2.07
Allowance for credit losses
as % of loans, net
3.24
%
7.22
1.92
30 -
89 days past due
$
9,124
6,044
3,080
as % of loans, net
1.89
%
5.09
0.85
90+ days past due
$
1,119
0
1,119
as % of loans, net
0.23
%
0.00
0.31
3Q08


14
Core
consumer
loan
portfolio
(a)
continues
solid performance
$145
Billion
Core
Consumer
Loan
Portfolio
(a)
(a)  Net loans as of 9/30/08. Excludes $118.7 billion in gross Pick-a-Pay mortgages.
(b)
Wachovia delinquencies as of 9/30/08 while industry data is based on August 2008
industry averages. Source: LoanPerformance. 
(c)  Source:
Moody’s
Economy.com
forecast
based
on
data
through
August
2008.
19%
29%
16%
Traditional Mortgage
29%
1
Lien Home Equity
19%
2
Lien Home Equity
25%
Auto
16%
Student Loans                   
7%
25%
7%
Other
3%
3%
NPAs up $371 million to 1.23% of loans on
increases in consumer real estate
Charge-offs up $169 million, or 45 bps, in line
with expectations
-
Real estate up $76 million driven by $51 million in
CIB mortgage/home equity
-
Auto loan charge-offs up $60 million reflecting
seasonality as well as increased severity
and frequency
-
Student loan charge-offs up $26 million on the
bankruptcy of one large insurer
Consumer past dues up but outperforming
industry averages
-
Traditional mortgage 90+ days past due 50% of
industry average, 1.20% vs. 2.39%
(b)
-
Second lien home equity 60+ days past due one-
third
of
the
industry
average,
0.75%
vs.
2.03%
-
Auto 30+ days past due 78% of industry average,
2.89% vs. 3.77%
(c)
CIB
Consumer
Real
Estate
1%
1%
($ in millions)
3Q08-
2Q08
3Q07
Consumer loans
$
144,751
149,552
139,834
Consumer NPAs
$
1,782
1,411
519
as % of loans
1.23
%
0.94
0.37
Consumer net charge-offs
$
515
346
159
as % of average loans
1.38
%
0.93
0.47
30 -
89 days past due
as % of loans, net
1.65
1.29
0.93
90+ days past due
as % of loans, net
0.67
0.58
0.37
Allowance as a % of loans
2.07
%
1.62
0.70
nd
st
(b)


15
Traditional
mortgage
and
home
equity
continues
to
outperform
the
industry
Source:
Industry
Prime,
Alt-A,
Subprime,
NegAm
ARM,
and
second
lien
home
equity
loans
and
lines
delinquency data from LoanPerformance, a unit of First American CoreLogic.
(a) Excludes Wealth Management and Retail Brokerage home equity loans and lines.
Mortgage 90+ Days Past Due vs. Industry
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
Second Lien Home Equity Loans
Second Lien Home Equity Lines
Second lien home equity 60+ days
past due vs. Industry
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
WB Traditional
Pick-a-Pay
Industry Prime
Industry Alt-A
Industry Subprime
Industry
Prime
ARM
NegAm
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
WB Total General Bank
(a)
WB Bank Channel
Industry


16
Consumer mortgage excluding Pick-a-Pay
Traditional mortgage performing relatively well
-
NPAs up 45 bps QoQ to 1.43% driven by construction
TDRs
as well as increases in stressed geographies
-
Charge-offs up $19 million or 19 bps
Traditional mortgage average LTV at origination of
71%; average FICO score of 732
-
Current
average
LTV
of
72%
(a)
;
current
average
FICO
score of 732
CIB mortgage non-branch originated largely Alt-A
loans originally intended for distribution
-
NPAs of $333 million, up $71 million QoQ
-
Charge-offs of $48 million, up 739 bps to 9.53%
Gross period-end loans.
All FICO scores and LTVs at origination unless otherwise noted and where available.
(a) Based on AVM (Automated Valuation Method) using August 2008 data. Source: Veros.
($ in millions)
3Q08
2Q08
3Q07
Traditional mortgage
$
41,601
44,601
47,478
NPAs
$
595
436
185
as a % of loans
1.43
%
0.98
0.39
Net charge-offs
$
51
32
9
as % of avg
loans
0.47
%
0.28
0.08
CIB mortgage
$
1,950
2,097
58
NPAs
$
333
262
8
as a % of loans
17.08
%
12.51
14.04
Net charge-offs
$
48
12
-
as % of avg
loans
9.53
%
2.14
-


17
Home equity loans and lines
Gross period-end loans.
FICOs
and LTVs at origination unless otherwise noted and where available.
(a)  Based
on
AVM
(Automated
Valuation
Method)
using
August
2008
data.
Source:
Veros.
Traditional home equity
-
44% secured by first lien
-
Portfolio is predominantly customer-relationship
based
> 95% of the portfolio originated through direct
channels
6% of portfolio in CA and 20% in FL
-
NPAs up 25 bps since 2Q08 driven by increases in
stressed geographies
-
Net charge-offs up $4 million, or 2 bps
Traditional home equity average LTV at
origination of 74%; 730 average FICO
-
Current average LTV of 77%
(a)
, current average
FICO of 727
CIB home equity
-
Non-branch originated portfolio had charge-offs
of $15 million, or 15.88%
Implemented additional limitations on utilization
of undrawn equity lines
-
Average line utilization remains relatively low
at 36%
($ in millions)
3Q08
2Q08
3Q07
Traditional home equity
First lien
$
27,321
27,827
27,086
Second lien
34,865
33,498
30,907
Total home equity
$
62,186
61,325
57,993
30+ days past due
as % of loans
1.58
%
1.40
1.10
NPAs
$
730
563
262
as % of loans
1.17
%
0.92
0.45
Net charge-offs
$
134
130
25
as % of avg
loans
0.87
%
0.85
0.17
CIB home equity
First lien
$
-
-
-
Second lien
401
471
-
Total home equity
$
401
471
-
30+ days past due
as % of loans
12.28
%
9.77
-
NPAs
$
25
78
-
as % of loans
6.32
%
16.50
-
Net charge-offs
$
15
-
-
as % of avg
loans
15.88
%
0.23
-
Total home equity loans
$
62,587
61,796
57,993


18
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
WB Balances
WB 30+ days past due
Industry 30+ days past due
Managed auto portfolio
Managed losses of 2.82% up 86 bps QoQ
-
30+ days past due of 2.89% vs. industry forecast
of 3.77%
(b)
Managed NPAs up $27 million, or 10 bps, to
34 bps
Risk mitigation strategies
Ongoing focus on prime credit originations
-
New originations average FICO score of 673
Average LTV of new originations continued
to decline
Reducing extended term (7-year) loans
-
Goal for 2% of originations from a high of 6.50%
Collection system upgrade resulting in improved
response times
Managed Consumer Auto 30+ Days
Past Due vs. Industry
All FICO scores and LTVs at origination unless otherwise noted and where available.
(a)
Includes loans, NPAs and net charge-offs from securitizations not included in our reported NPAs and net charge-offs.  Please see page 40 for additional information.
(b) Source: Moody’s Economy.com; 3Q08 industry average is a forecast.
($ in millions)
3Q08 
2Q08 
3Q07
Managed auto
(a)
$
27,529
27,528
24,015
NPAs
(a)
$
93
66
69
as % of loans
0.34
%
0.24
0.29
Net charge-offs
(a)
$
195
134
98
as % of avg
loans
2.82
%
1.96
1.65
30 + days past due
as % of loans
2.89
%
2.33
2.42


19
Commercial loan portfolio, excluding REFS commercial real estate,
continues to perform well
Period-end loans net of unearned income.
(a)  Includes commercial loans in the Parent, Wealth Management and Capital Management
segments.
(b)  dpd
= days past due.
Commercial NPAs excluding REFS up $133 million or
13% QoQ
-
General Bank middle market-commercial NPAs up 31%, or
18 bps, driven by 4 large credits in the consumer spending
and residential construction-related sectors
-
CIB large corporate NPAs stable
-
Other commercial NPAs down 21%, or 5 bps
Commercial charge-offs excluding REFS up $47
million,
or
11
bps,
QoQ
reflecting
relatively
modest
increases in middle market and large corporate
Total
commercial
30
-
89
days
past
due
down
10
bps
QoQ
Total commercial 90+ days past due down 4 bps QoQ
Total commercial allowance up 6 bps to 1.35% of
average loans
($ in millions)
3Q08-
2Q08
3Q07
General Bank
$
74,129
73,287
67,568
NPAs
$
578
441
309
as % of loans
0.78
%
0.60
0.46
Net charge-offs
$
78
59
33
as % of avg
loans
0.43
%
0.33
0.20
CIB
(excluding REFS)
$
62,797
60,216
48,715
NPAs
$
470
452
23
as % of loans
0.75
%
0.75
0.05
Net charge-offs
$
125
111
(2)
as % of avg
loans
0.85
%
0.79
(0.02)
Other Commercial
(a)
$
33,823
34,762
33,932
NPAs
$
84
106
20
as % of loans
0.25
%
0.30
0.06
Net charge-offs
$
16
2
0
as % of avg
loans
0.22
%
0.03
0.01
Total
(excluding REFS)
$
170,749
168,265
150,215
NPAs
$
1,132
999
352
as % of loans
0.66
%
0.59
0.23
Net charge-offs
$
219
172
31
as % of avg
loans
0.54
%
0.43
0.09
REFS portfolio
$
48,169
48,355
39,330
Total commercial loans
218,918
216,620
189,545
NPAs
$
4,211
3,468
650
as % of loans
1.92
%
1.60
0.34
Net charge-offs
$
547
455
34
as % of avg
loans
1.05
%
0.88
0.08
30 -
89 dpd
as % of loans
(b)
0.32
0.42
0.24
90+ dpd
as % of loans
(b)
0.07
%
0.11
0.04
Allowance
$
2,959
2,793
2,054
as % of loans
1.35
%
1.29
1.08


20
Commercial real estate
Real Estate Financial Services portfolio
(a)
(a)  Includes the Real Estate Financial Services (REFS) portfolio of $37.8 billion and $10.4
billion in commercial real estate loans held-for-investment in Investment Banking.
Please see pages 34-35 for additional information.
Commercial real estate outstandings
(a)
relatively flat as the effect of slower
prepayments and advances under existing
commitments offset reduced originations
-
Residential outstandings down 8% with focus
on up-pricing renewals and restructuring existing
facilities
-
Income producing outstandings up 2% on slower
run-off, funding of existing construction loans and
modest originations
NPAs up $610 million QoQ on $502 million
increase in residential
3Q08 charge-offs of $328 million, or 2.73%; up
$45 million, or 36 bps, from 2Q08
-
Residential charge-offs of $247 million, down
$15 million
-
Income producing charge-offs up $60 million to  
87 bps
on land and unsecured loans
An intensive review of the income producing
portfolio completed in August
-
Minimal overall negative grade migration
4% migrated to criticized / classified
4% added to the observation list
-
Expect weakness in income producing portfolio to
escalate in 2009-2010 as broader economy
deteriorates
($ in millions)
3Q08
2Q08
3Q07
Residential
$
10,857
11,739
13,217
Income producing
37,312
36,616
26,113
Total REFS
(a)
48,169
48,355
39,330
Residential NPAs
2,510
2,008
183
Income producing NPAs
569
461
115
Total NPAs
$
3,079
2,469
298
as % of loans
6.39
%
5.11
0.76
Residential c/o
$
247
262
3
Income producing c/o
81
21
-
Total net charge-offs
$
328
283
3
as % of avg
loans
2.73
%
2.37
0.03


21
Update on Golden West portfolio
21


22
Pick-a-Pay mortgage portfolio
(a)
snapshot
Period-end loans gross of unearned income.
(a)  Includes other non Pick-a-Pay product balances of $6.5 billion and excludes $2.6 billion in home equity loans.
(b)  FICO scores where available; loan pool without FICO scores stratified proportionately to available data.
(c)  Based
on
AVM
(Automated
Valuation
Method)
using
August
2008
data
where
available.
Source:
Veros.
Excludes REO/REJ balances of $457.8 million as of 9/30/08.
(d)  Includes Real Estate in Judgment (REJ) properties as of 9/30/08.
(e)  2008 Year-to-date (YTD) severity through September.
438,000 loans
-
Average loan = $272,000
-
CA average loan = $349,000
Pick-a-Pay loans down 3% following the June
2008 exit from product origination
-
Prepay speeds continue to slow
NPAs up $1.9 billion and charge-offs up $302
million since 2Q08
-
Trends reflect the continued effect of declining
home values, particularly in stressed areas such as
CA and FL
Deferred interest of $4.1 billion or 3.5% of Pick-
a-Pay mortgage portfolio
-
66% of borrowers have some deferred
interest balance
Average Pick-a-Pay original LTV of 71%; current
average LTV of 95%
(c)
2,097
REO/REJ
properties
(d)
-
Average time to sale 66 days in September
-
Average September loss severity of 43% including
14% selling costs; 3Q08 loss severity of 41%;
2008
YTD
loss
severity
of
38%
(e)
($ in millions)
3Q08
2Q08
3Q07
Pick-a-Pay
(a)
$
118,704
122,026
119,827
NPAs
$
8,989
7,049
1,880
as a % of loans
7.57
%
5.78
1.57
Net charge-offs
$
810
508
13
as % of avg
loans
2.69
%
1.67
0.04
30+ days past due
4.99
%
3.92
2.86
60+ days past due
1.66
1.28
0.65
Average original FICO
(b)
675
675
674
Current average FICO
(b)
661
661
672
Average original LTV
71
%
71
70
Current average LTV
(c)
95
%
85
70


23
120 to 149 Days Past Due
150 to 180+ Days Past Due
Current To 29 Days
30 to 59 Days Past Due
60 to 89 Days Past Due
90 to 119 Days Past Due
The above roll rates reflect the impact of loan modification programs of $4.6 billion in 2008 through September 30, 2008.
Pick-a-Pay mortgage
Rising delinquencies tied to higher forward roll rates and declining late stage cure rates
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
70.0%
80.0%
90.0%
100.0%
70.0%
80.0%
90.0%
100.0%
70.0%
80.0%
90.0%
100.0%
45.0%
55.0%
65.0%
75.0%
20.0%
30.0%
40.0%
50.0%


24
Expected cumulative loss of approximately 22%
over the remaining life of the portfolio
The
above
does
not
reflect
the
anticipated
benefit
of
planned
portfolio
reduction
and
other
loss mitigation strategies or the potential benefit of government initiatives
(a)
Reserve
process
output
for
3Q08
as
of
September
24,
2008.
Periods
prior
to
3Q08
include
reserves
for
$2.6
billion
in
Golden
West
home
equity
loans
now
reserved
for
in
total
home
equity.
Future
changes
in
assumptions
could
cause
outputs
to
change.
These
outputs
are
generated
via
a
modeling
process
in
which
adjustments
are
made
for
non-modeled
calculations
and
known
model
risks.
Outputs
are
expected
to
be
affected
by
changes
in
a
variety
of
factors
including
actual
home
price
trends,
economic
conditions,
changes
in
borrower
behavior,
regulatory
changes
and
loss
mitigation
strategies.
Ending
allowance
to
loans
assumes
2008
and
2009
period-end
loans
of
$118.7
billion.
Actual
2008
and
2009
results
are
expected
to
be
affected
by
proactive
credit risk management and capital management strategies. Outputs are not intended to be forecasts. Future actual reserves may differ from current reserve process outputs.
(b)
HPI defined as house price index and is balance-weighted by MSA according to Pick-a-Pay portfolio stratification.
Updated GDW/Pick-a-Pay reserve process output
70% of increase in cumulative loss estimate tied to more severe housing scenario
1Q08
2Q08
3Q08
4Q08 Reserve
2009 Reserve
($ in billions)
Actual
Actual
Actual
(a)
Process Output
(a)
Process Output
(a)
As of 3Q08
Charge-offs
0.2
$   
0.5
0.8
1.7
9.9
Additional provision
1.1
3.3
3.4
1.4
1.3
Total Pick-a-Pay credit costs
1.3
3.8
4.2
3.1
11.2
Ending allowance
2.0
$   
5.2
8.6
10.0
11.2
Ending allowance to loans
1.6
%
4.2
7.2
8.4
9.4
Model variables included:
Housing price trough occurs in
Mid-2009
Mid-2010
Mid-2010
Portfolio-weighted peak to trough HPI
(b)
Nationwide
-12.4
%
-20.8
-27.6
California
-13.9
-23.1
-30.2
Florida
-16.4
%
-28.6
-36.3


25
Pick-a-Pay losses
(a)
expected to be incurred by end of 2009
90%+
Implied % of total expected cumulative credit
costs incurred by end of 2009
$26.1 billion
= Total expected cumulative losses on Pick-a-Pay portfolio
22%
$118.7 billion
Expected cumulative loss on Pick-a-Pay portfolio
x Current Pick-a-Pay mortgage loan balance
$24.4 billion
=
Total
expected
Pick-a-Pay
credit
costs
incurred
through
2009-
(a)
$13.2 billion
$11.2 billion
Expected
cumulative
Pick-a-Pay
charge-offs
through
2009-
(a)
+
Expected
2009
ending
allowance
(a)
(a)
Reserve process output as of September 24, 2008. Future changes in assumptions could cause outputs to change. These outputs are generated via a modeling process in which
adjustments
are
made
for
non-modeled
calculations
and
known
model
risks.
Outputs
are
expected
to
be
affected
by
changes
in
a
variety
of
factors
including
actual
home
price
trends,
economic
conditions,
changes
in
borrower
behavior,
regulatory
changes
and
loss
mitigation
strategies.
Actual
2008
and
2009
results
are
expected
to
be
affected
by
proactive
credit
risk
management
and
capital
management
strategies.
Outputs
are
not
intended
to
be
forecasts.
Future
actual
reserves
may
differ
from
current
reserve
process
outputs.


26
Maximizing value of the Golden West portfolio
Focus on reducing consumer real estate concentration
Launched
customer
outreach
beta
program
July
22
nd
-
Current staff of 300 in sales and 385 in fulfillment
-
Through September 1
st
, successfully contacted 70% of sample loan pool of 6,700
-
Results for 4,700 successful contacts
47%--application
received
or
in
progress
30%--in
active
discussion
regarding
alternatives
23%--declined
to
submit
application
or
rejected
current
offer
Unsuccessful contacts considered for skip tracing, direct marketing
and auto dialer contact
Application process provides documented income and appraisal values
Deploying unique offer parameters across 6 customer stratifications for non-delinquent borrowers based
on estimated probability of default and severity
-
Current estimated model parameters indicate average expected spend for offers and servicing costs of 53% of current
expected losses
As
of
September
1
st
,
assume
$77.1
billion
may
be
eligible
for
refinance


27
Appendix


28
General Bank key metrics
(a)  Volume of purchase activity on debit and credit cards.
(b)
Percentage
of
customers
who
rate
Wachovia
a
7
on
all
three
loyalty
questions
(scale
1
-
7).
Goal:
55%.
Results
based
on
Gallup
survey.
(c)  Controllable retail households acquired/retail households attrited; controllable households exclude single service mortgage.
(d)  New commercial banking relationship or customer with no prior loan or deposit account.
Average loans up 8% YoY, flat Q0Q
-
Mortgage originations down 64%; higher
marketable production offset by lower
Pick-a-Pay volumes
-
Home equity down 74% largely reflecting
implementation of tightened credit standards
and sales efficiency efforts
> 95% direct channel originations
-
Auto originations down 24% reflecting tighter
credit standards
Average core deposits up 1% YoY; low-cost
core deposits down 2% YoY
-
3Q08 net new checking account sales of 208,000,
including 137,000 checking accounts linked to
Way2Save accounts
Debit/credit card purchase volume up
14% YoY
Opened 13 de novo branches and consolidated
7 branches in 3Q08
Customer satisfaction remains best in class
New/lost ratio of 1.24
-
Retail customer acquisition rate of 16.0%; attrition
of 12.9%
vs
vs
($ in millions)
3Q08
2Q08
3Q07
Product originations
Mortgage
$
5,005
(57)
%
(64)
First lien home equity
850
(51)
(69)
Second lien home equity
1,037
(53)
(77)
Auto
2,602
(30)
(24)
Avg
loans, net
$
318,573
-
8
Net new checking
207,657
(21)
(21)
Avg
core deposits
$
292,653
1
1
Card purchase volume
(a)
$
18,775
(2)
%
14
Customer satisfaction
6.62
(3)
bps
(1)
Customer loyalty
(b)
51
%
(200)
bps
(220)
New/Lost ratio
(c)
1.24
1
bps
(10)
Commercial customer
acquisition
(d)
297
(12)
%
(4)


29
Capital Management key metrics
(a)  Annualized.
(b)  Assets
under
management
include
$28.5
billion
in
assets
managed
for
Wealth
Management,
which
are
also
reported
in
that
segment. 
Series 7 brokers flat QoQ
Series 6 reps up 3% QoQ
Broker client assets up 24% YoY
Managed account assets up 9% YoY driven by the
AGE acquisition as well as $7.7 billion in net
inflows
Retail brokerage core deposits up 75% YoY driven
by $23.0 billion from AGE merger including solid
growth since the acquisition
Continued strong annuity sales, up 36% YoY
AUM down 27% YoY largely on net asset outflows
as well as lower market valuations
vs
vs
($ in billions)
3Q08
2Q08
3Q07
Retail Brokerage
Series 7 brokers
14,635
-
%
74
Bank series 6 reps
4,447
3
48
Managed acct assets
$
171.3
(11)
9
Avg
FDIC sweep deposits
54.4
13
75
Client assets
$
1,004.4
(9)
%
24
Recurring revenue
69.5
%
850
bps
510
Rev/broker
(000)
(a)
$
522
(9)
%
(24)
In-bank revenue
(millions)
256
(8)
(6)
Loan originations
$
1.4
(26)
%
-
Asset Management
Total AUM
(b)
$
209.1
(15)
%
(27)
Gross fluctuating 
fund flows
$
1.3
(24)
%
(35)


30
Consumer real estate portfolio
FICO scores and LTVs at origination.                           
(a)  Second
lien
LTVs
reflect
total
amount
borrowed,
including
first
lien
positions
held
by
third
parties.
LTV
data
assumes
that
home
equity
lines
are
fully
funded.
(b)  Total mortgage includes Traditional mortgage, CIB mortgage and Pick-a-Pay.
% Loans
3Q08 -
Average
LTV
($ in millions)
Balances
LTV
(a)
> 90%
(a)
Home equity loans and lines
First lien
$
27,321
731
72
%
12
Second lien
35,266
730
77
13
Total home equity loans and lines
62,587
730
75
13
Total mortgage
(b)
162,255
689
71
2
Total consumer real estate portolio
$
224,842
700
72
5
Nonaccrual loans
First lien
$
9,197
651
75
2
Second lien
110
693
83
22
Total consumer real estate nonaccrual loans
9,307
651
75
2
Troubled debt restructurings
615
636
77
9
Total consumer real estate nonperforming loans
$
9,922
650
75
%
3
FICO
Average


31
Consumer real estate
($ in millions)
All FICO scores and LTVs at origination unless otherwise noted and where available.
(a)  Based
on
AVM
(Automated
Valuation
Method)
using
August
2008
data.
Source:
Veros.
(b)  Total Traditional mortgage excludes CIB mortgage.
Region
Outstandings
Original
LTV
Current
LTV -
AVM
(a)
Original
FICO
Current
FICO
Central Valley
$9,833
72
132
667
645
Inland Empire
$10,938
71
115
664
645
Total CA
$69,300
70
104
668
654
FL
$11,853
71
92
683
656
NJ
$5,416
71
76
691
680
AZ
$2,993
72
100
681
668
TX
$2,839
75
62
679
663
Other States
$26,302
72
79
687
674
Total Pick A Pay
$118,704
71
95
675
661
FL
$7,767
70
81
730
725
CA
$7,461
67
70
742
752
NC
$3,247
75
70
731
729
NJ
$3,124
70
73
730
729
GA
$2,792
72
73
733
736
Other States
$19,160
72
70
729
728
Total Trad
Mtg
(b)
$41,601
71
72
732
732
Total Mortgage
$160,304
71
89
690
679
FL
$12,584
74
86
730
722
NJ
$7,742
71
71
734
732
NC
$6,169
79
74
731
729
PA
$6,139
76
69
732
733
VA
$5,047
74
73
735
735
Other States
$24,905
75
78
726
720
Total Home Equity
$62,587
74
77
730
726


32
Pick-a-Pay mortgage portfolio performance
(a)
Based on AVM (Automated Valuation Method) using August 2008 data. Source: Veros. 
($ in millions)
MSA
Total
Outstandings
% of Total
Avg.
Original
Avg.
Current
(a)
Avg.
Original
Avg.
Current
Los Angeles
12,699
11%
68
89
661
655
Oakland
10,423
9%
70
109
669
654
Santa Ana
6,232
5%
69
92
674
663
Riverside
6,103
5%
72
126
658
636
San Francisco
5,319
4%
68
74
681
673
San Diego
4,835
4%
70
102
673
657
San Jose
4,582
4%
69
87
672
661
Sacramento
3,941
3%
72
119
673
654
Washington D.C.
2,797
2%
73
82
683
663
Phoenix
2,631
2%
72
103
680
667
Ft. Lauderdale
2,578
2%
71
93
679
651
Stockton
1,984
2%
72
155
664
640
Vallejo
1,771
1%
73
127
667
645
Oxnard
1,635
1%
70
99
667
656
Santa Rosa
1,624
1%
71
100
676
661
West Palm Beach
1,523
1%
70
94
679
653
Tampa
1,507
1%
72
91
685
663
Modesto
1,397
1%
72
148
666
641
Salinas
1,242
1%
69
132
668
644
Fresno
899
1%
71
114
660
645
Santa Barbara
898
1%
68
98
674
660
Bakersfield
606
1%
72
125
657
635
Cape Coral
560
0%
70
110
691
655
Merced
476
0%
72
166
664
634
Naples
460
0%
68
96
690
664
Total 25 MSAs
78,725
66%
70
102
670
655
Other U.S.
39,978
34%
72
79
686
672
Central Valley
9,833
8%
72
132
667
646
Inland Empire
10,938
9%
71
115
664
645
California
69,300
58%
70
104
668
654
Florida
11,853
10%
71
92
683
656
Total Pick-a-Pay
118,704
100%
71
95
675
661
Balance-Weighted
Balance-Weighted
Pick-a-Pay
Loan to Value
FICO


33
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
Wachovia Mortgage
90+ days past due by vintage vs. industry
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2007  -
$32.4 billion Pick-a-Pay / $10.2 billion Traditional
0.0%
4.0%
8.0%
12.0%
16.0%
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
24.0%
Source:
Industry
Prime,
Alt-A,
Subprime
and
NegAm
ARM
delinquency
data
from
LoanPerformance,
a
unit
of
First
American
CoreLogic.
Traditional mortgage includes CIB mortgage outstandings of $2.0 billion.
Month
Month
2006  -
$30.8 billion Pick-a-Pay / $6.4 billion Traditional 
2004  -
$10.8 billion Pick-a-Pay / $4.2 billion Traditional 
2005
-
$22.6 billion Pick-a-Pay / $11.9 billion Traditional
WB Traditional
Pick-a-Pay
Industry Prime
Industry Alt-A
Industry Subprime
Industry Prime ARM NegAm


34
Real Estate Financial Services
Diversified loan portfolio
77% income producing
23% residential-related
-
Average maturity of 0.9 years
Homebuilders -
$3.8 billion
-
Regional/small builder portfolio is largely recourse
based with disciplined inventory controls and 1–2
year terms
-
Focus on strong sponsorship/management
Land -
$4.6 billion
-
Primarily originated with substantial equity cushion
and recourse to borrowers
Condos -
$2.6 billion
Average maturity of 1.6 years
19% of outstandings currently have an interest
reserve associated with the loan
(a)
-
If sources of cash to make loan payments cannot be
identified, loan is placed on NPA even if no default
has occurred; interest reserves on NPAs are not
funded on defaulted loans
$48.2
Billion Commercial Real Estate
Portfolio
(b)
Office
17%
Retail
14%
Multi-Family
15%
Industrial
5%
Income
Producing
Land
7%
Lodging
Other
Single
Family
7%
Residential
Improved
Land
7%
Condos
6%
Residential
Unimproved
Land
2%
Non-RE
Collateral
3%
Loans as of 9/30/2008.
(a)  Based on the Real Estate Financial Services portfolio of $37.8 billion.
(b)  Includes the Real Estate Financial Services portfolio of $37.8 billion and $10.4 billion in commercial real estate loans held-for-investment in Investment Banking.
6%
4%
3%
Mixed
Use
Unsecured
Real Estate
4%


35
Real Estate Financial Services 
Geographic concentrations
Loans as of 9/30/2008.
(a)  Includes the Real Estate Financial Services portfolio of $37.8 billion and $10.4 billion in Commercial Real Estate
loans held-for-investment in Investment Banking.
(b)  Geographic concentration totals do not include $5.5 billion in Commercial Real Estate outstandings related to
loans unsecured, secured by non-real estate collateral and loans with undefined property locations. International
includes Europe and Asia.
(c)  Residential portfolio geographic concentrations do not include $1.7 billion in Commercial Real Estate outstandings
related to loans unsecured, secured by non-real estate collateral and loans with undefined property locations.
$48.2
Billion Commercial Real Estate Portfolio
(a)
Top 10 Geographic Concentrations
(b)
California
$4.7
17%
International
$3.3
11%
North
Carolina
$3.3
8%
Texas
$3.3
8%
Virginia
$2.8
8%
Other Remaining
States
$10.6
Georgia
$2.8
Florida
$7.1
25%
6%
6%
New Jersey
$1.6
4%
New York
$1.8
4%
Pennsylvania
$1.4
3%
Residential Portfolio
(c)
Top 5 Geographies
By Asset Type
Single Family
State
O/S $
O/S %
Florida
$473
19%
Georgia
391
16%
North Carolina
336
14%
Pennsylvania
304
13%
Texas
186
8%
All Other
740
30%
Total
2,430
100%
Land
State
O/S $
O/S %
Florida
$1,059
26%
North Carolina
584
14%
Virginia
501
12%
Georgia
455
11%
South Carolina
347
9%
All Other
1,131
28%
Total
4,078
100%
Condo
State
O/S $
O/S %
Florida
$954
40%
New York
258
11%
Virginia
155
7%
California
152
6%
New Jersey
125
5%
All Other
727
31%
Total
2,370
100%
($ in millions)


36
Goodwill impairment
Background
Goodwill impairment testing is required annually, or more frequently if events or circumstances indicate
there may be impairment
Impairment testing is performed at the sub-segment level (“reporting unit”); testing is not performed on an
individual acquisition basis
Goodwill impairment is a two-step test
-
Step 1: compare fair value of reporting unit to its carrying value
-
Step 2: calculate implied fair value of goodwill as if a reporting unit is purchased at Step 1 fair value (determined in the
same manner as goodwill in a business combination)
A discounted cash flow analysis is used to estimate fair value of reporting units
Impairment test as of September 30, 2008, used the proposed Wells Fargo purchase price of $7 per
share, based on the exchange ratio of 0.1991 and the closing Wells Fargo common stock price of $35.16
on October 2.
If
Step
1
fair
value
is
greater
than
carrying
value,
there
is
no
indication
of
impairment
and
Step
2
is
not
performed.  If Step 1 fair value is less than carrying value, then Step 2 is performed.
Step 2 involves a process similar to business combination accounting
-
As if a reporting unit is purchased at the Step 1 fair value
-
Involves assigning fair values to all assets, liabilities and intangibles
-
Result is implied fair value of goodwill
If Step 2 implied fair value of goodwill is less than actual goodwill, impairment is recorded for the
difference
For segment reporting purposes, no goodwill is recorded in our segments
-
Allocation is for purposes of impairment testing
-
Allocated as of acquisition date, adjusted for transfers or sales


37
Goodwill impairment
Test results
Performed Step 1 analysis on all reporting units
Performed Step 2 impairment measurement on four reporting units at both June 30 and September 30
Goodwill impairment testing
-
As of September 30, 2008, resulted in $18.8 billion pre-tax of impairment
-
$18.7 billion after-tax as only a small percentage of goodwill is tax deductible
Drivers of impairment was declining market valuation and the terms of the merger with Wells Fargo
Of remaining $18.4 billion of goodwill, 63% is in General Bank Retail and Small Business where the Pick-a-Pay
portfolio resides
($ in milllions)
General Bank   Retail and Small  
Commercial
General Bank           
Business
CMG Retail
Brokerage
CMG Asset
Management
Wealth
Management
CIB Treasury  
and Trade
Finance
Total
Third quarter Impairment
(4,557)
(12,332)
0
(899)
(998)
0
(18,786)
Remaining goodwill at 9/30/08
0
11,633
6,024
231
0
465
18,353


38
Cautionary statement
This presentation may contain, among other things, certain forward-looking statements with respect to Wachovia and/or the proposed merger (the “Merger”) between Wachovia and Wells
Fargo & Company (“Wells Fargo”) , as well as the goals, plans, objectives, intentions, expectations, financial condition, results of operations, future performance and business of Wachovia or
Wells Fargo, including, without limitation, (i) statements relating to the benefits of the proposed Merger,  and (ii) statements preceded by, followed by or that include the words “may”, “could”,
“should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “projects”, “outlook” or similar expressions.  These statements are based upon the current beliefs and expectations
of Wachovia’s and/or Wells Fargo’s management and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond
Wachovia’s and Wells Fargo’s control).  Actual results may differ from those set forth in the forward-looking statements.  
  
The following factors, among others, could cause Wachovia’s  or Wells Fargo’s financial performance to differ materially from that expressed in such forward-looking statements: (1) the risk
that the businesses of Wachovia and/or Wells Fargo  in connection with the Merger  will not be integrated successfully or such integration may be more difficult, time-consuming or costly than
expected; (2) the risk that expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected time frame; (3) the risk that revenues following
the Merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption following the Merger, including, without limitation, difficulties in maintaining
relationships with employees, may be greater than expected; (5) the inability to obtain governmental approvals of the Merger on the proposed terms and schedule; (6) the failure of Wachovia’s
shareholders to approve the Merger; (7) the risk that the strength of the United States economy in general and the strength of the local economies in which Wachovia and/or Wells Fargo
conducts operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on Wachovia’s
and/or Wells Fargo’s loan portfolio and allowance for loan losses; (8) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of
Governors of the Federal Reserve System; (9) potential or actual litigation; (10) inflation, interest rate, market and monetary fluctuations; (11) adverse conditions in the stock market, the public
debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on Wachovia’s brokerage and capital markets activities; (12) the impact
of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance); (13) the growth and profitability of Wachovia’s  and/or Wells Fargo’s
non-interest or fee income being less than expected; (14) unanticipated regulatory or judicial proceedings or rulings; (15) the impact of changes in accounting principles; (16) adverse changes
in financial performance and/or condition of Wachovia’s and/or Wells Fargo’s borrowers which could impact repayment of such borrowers’ outstanding loans; (17) the impact on Wachovia
and/or Wells Fargo’s  businesses, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (18) Wachovia’s and/or Wells Fargo’s
success at managing the risks involved in the foregoing.
Wachovia cautions that the foregoing list of factors is not exclusive.  All subsequent written and oral forward-looking statements concerning Wachovia, Wells Fargo, the Merger, or other
matters and attributable to Wachovia or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.  Wachovia does not undertake any
obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this presentation.
The proposed Merger will be submitted to Wachovia’s shareholders for their consideration. Wells Fargo will file a registration statement with the SEC, which will include a proxy
statement/prospectus, and each of Wachovia and Wells Fargo may file other relevant documents concerning the proposed Merger.  Shareholders and other investors are urged to read the
registration statement and the proxy statement/prospectus when they become available, as well as any other relevant documents concerning the proposed Merger filed with the SEC (and any
amendments or supplements to those documents), because they will contain important information.  You will be able to obtain a free copy of the registration statement and the proxy
statement/prospectus, as well as other filings containing information about Wachovia and Wells Fargo, at the SEC’s website (http://www.sec.gov) and at the companies’
respective websites, wachovia.com and wellsfargo.com.  Copies of the proxy statement/prospectus and the SEC filings that will be incorporated by reference in the proxy
statement/prospectus can also be obtained, free of charge, by directing a request to Wachovia Corporation, Investor Relations, One Wachovia Center, Charlotte, NC 28288-0206, (704) 383-
0798; or to Wells Fargo & Company, Investor Relations, MAC A0101-025, 420 Montgomery Street, 2nd Floor, San Francisco, California 94104-1207, (415) 396-3668. 
Wachovia and Wells Fargo and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Wachovia in connection
with the proposed Merger.  Information about the directors and executive officers of Wachovia is set forth in the proxy statement for Wachovia’s 2008 annual meeting of shareholders, as filed
with the SEC on a Schedule 14A on March 10, 2008.  Information about the directors and executive officers of Wells Fargo is set forth in the proxy statement for Wells Fargo’s 2008 annual
meeting of shareholders, as filed with the SEC on a Schedule 14A on March 17, 2008.   Additional information regarding the interests of those participants and other persons who may be
deemed participants in the Merger may be obtained by reading the proxy statement/prospectus regarding the proposed Merger when it becomes available.  You may obtain free copies of these
documents as described in the preceding paragraph. 


39
Notes on non-GAAP financial measures
General Bank results excluding mortgage
($ in millions)
3Q08
2Q08
3Q07
Net
interest
income
GBG
3,763
$     
3,697
3,466
Mortgage
(826)
(856)
(752)
Total net interest income General Bank results excluding mortgage
2,937
2,841
2,714
Service
charges
GBG
608
597
592
Mortgage
-
-
-
Total service charges General Bank results excluding mortgage
608
597
592
Interchange
income
GBG
204
209
192
Mortgage
-
-
-
Total interchange income General Bank results excluding mortgage
204
209
192
Mortgage
banking
fees
GBG
68
77
56
Mortgage
(68)
(77)
(56)
Total mortgage banking fees General Bank results excluding mortgage
-
-
-
All
other
fees/income
GBG
123
117
95
Mortgage
(5)
(13)
(13)
Total all other fees/income General Bank results excluding mortgage
118
104
82
Fee and other income
GBG
1,003
1,000
935
Mortgage
(73)
(90)
(69)
Total fee and other income General Bank results excluding mortgage
930
910
866
Total revenue
GBG
4,816
4,754
4,460
Mortgage
(879)
(933)
(817)
Total revenue General Bank results excluding mortgage
3,937
3,821
3,643
Provision
GBG
1,340
922
207
Mortgage
(831)
(527)
(16)
Total provision General Bank results excluding mortgage
509
395
191
Expense
GBG
2,127
2,061
1,898
Mortgage
(359)
(364)
(294)
Total expense General Bank results excluding mortgage
1,768
1,697
1,604
Segment
earnings
GBG
857
1,124
1,495
Mortgage
198
(26)
(322)
Total segment earnings General Bank results excluding mortgage
1,055
$     
1,098
1,173
In addition to results in accordance with GAAP, this presentation includes certain non-GAAP financial measures, which exclude certain items from GAAP numbers, such as the
goodwill impairment charge and Wachovia’s mortgage results from the General Bank’s results as described on page 8. In addition, this presentation includes certain information
regarding Wachovia’s  auto loan portfolio on a “managed”  basis, which is a non-GAAP financial measure that combines auto loans reported on-balance  sheet on a GAAP     
basis with auto loans that have been securitized and are off-balance sheet as shown on page 40.  
The foregoing non-GAAP financial measures are reconciled to GAAP on pages 2 and 3 or as set forth below.  Wachovia believes that 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.


40
Notes on non-GAAP financial measures
Managed Auto Portfolio
($ in millions)
3Q08
2Q08
3Q07
Managed
auto
On-balance sheet
22,858
$   
25,870
21,099
Securitized
4,671
1,658
2,916
Total managed auto
27,529
27,528
24,015
NPAs
On-balance sheet
84
61
62
Securitized
9
5
7
Total NPAs
93
66
69
Net charge-offs
On-balance sheet
189
129
92
Securitized
6
5
6
Total net charge-offs
195
134
98
Average
loans
On-balance sheet
25,037
25,409
20,663
Securitized
2,615
1,887
3,145
Total average loans
27,652
$   
27,296
23,808
NPAs
as
a
%
of
loans
On-balance sheet
0.37
%
0.24
0.29
Securitized
0.19
0.30
0.24
Total NPAs
as a % of loans
0.34
0.24
0.29
Net
charge-offs
as
a
%
of
average
loans
On-balance sheet
3.02
2.03
1.78
Securitized
0.92
1.06
0.76
Total net charge-offs as a % of average loans
2.82
%
1.96
1.65
Managed
consumer
auto
30+
days
past
due
loans
On-balance sheet
750
$        
600
533
Securitized
45
42
48
Total managed consumer auto 30+ days past due loans
795
$        
642
581
Managed
consumer
auto
30+
days
past
due
loans
as
a
%
of
loans
On-balance sheet
3.28
%
2.32
2.53
Securitized
0.96
2.53
1.65
Total managed consumer auto 30+ days past due loans as a % of loans
2.89
%
2.33
2.42