Ex-(19)

WACHOVIA CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL SUPPLEMENT
SIX MONTHS ENDED JUNE 30, 2004
TABLE OF CONTENTS


	PAGE
Financial Highlights		1
Management’s Discussion and Analysis		2
Explanation of Our Use of Non-GAAP Financial Measures		27
Selected Statistical Data		28
Summaries of Income, Per Common Share and Balance Sheet Data		29
Merger-Related and Restructuring Expenses		30
Business Segments		31
Net Trading Revenue - Investment Banking		47
Selected Ratios		47
Trading Account Assets and Liabilities		48
Securities		49
Loans - On-Balance Sheet, and Managed and Servicing Portfolios		50
Loans Held for Sale		51
Allowance for Loan Losses and Nonperforming Assets		52
Nonaccrual Loan Activity		53
Goodwill and Other Intangible Assets		54
Deposits		55
Time Deposits in Amounts of $100,000 or More		55
Long-Term Debt		56
Changes in Stockholders’ Equity		57
Capital Ratios		57
Risk Management Derivative Financial Instruments		58
Risk Management Derivative Financial Instruments - Expected Maturities		60
Risk Management Derivative Financial Instruments Activity		60
Net Interest Income Summaries - Five Quarters Ended June 30, 2004		61
Net Interest Income Summaries - Six Months Ended June 30, 2004 and 2003		63
Consolidated Balance Sheets - Five Quarters Ended June 30, 2004		64
Consolidated Statements of Income - Five Quarters Ended June 30, 2004		65
Consolidated Statements of Income - Six Months Ended June 30, 2004 and 2003		66
Consolidated Statements of Cash Flows - Six Months Ended June 30, 2004 and 2003		67

FINANCIAL HIGHLIGHTS


	Three Months Ended								Six Months Ended
	June 30,								June 30,
						Percent								Percent
						Increase								Increase
(Dollars in millions, except per share data)	2004			2003		(Decrease)			2004			2003		(Decrease)
EARNINGS SUMMARY
Net interest income (GAAP)	$	2,838			2,540		12	%	$	5,699			5,077		12	%
Tax-equivalent adjustment		65			63		3			127			127		—

Net interest income (Tax-equivalent)		2,903			2,603		12			5,826			5,204		12
Fee and other income		2,599			2,158		20			5,356			4,224		27

Total revenue (Tax-equivalent)		5,502			4,761		16			11,182			9,428		19
Provision for credit losses		61			195		(69	)		105			419		(75	)
Other noninterest expense		3,278			2,774		18			6,723			5,475		23
Merger-related and restructuring expenses		102			96		6			201			160		26
Other intangible amortization		107			131		(18	)		219			271		(19	)

Total noninterest expense		3,487			3,001		16			7,143			5,906		21
Minority interest in income of consolidated subsidiaries		45			16		—			102			25		—

Income before income taxes (Tax-equivalent)		1,909			1,549		23			3,832			3,078		24
Tax-equivalent adjustment		65			63		3			127			127		—
Income taxes		592			454		30			1,202			892		35

Net income		1,252			1,032		21			2,503			2,059		22
Dividends on preferred stock		—			1		—			—			5		—

Net income available to common stockholders	$	1,252			1,031		21	%	$	2,503			2,054		22	%

Diluted earnings per common share	$	0.95			0.77		23	%	$	1.89			1.53		24	%
Return on average common stockholders’ equity		15.49	%		12.78		—			15.43	%		12.86		—
Return on average assets		1.22	%		1.21		—			1.24	%		1.22		—

ASSET QUALITY
Allowance for loan losses as % of loans, net		1.35	%		1.54		—			1.35	%		1.54		—
Allowance for loan losses as % of nonperforming assets		241			154		—			241			154		—
Allowance for credit losses as % of loans, net		1.43			1.66					1.43			1.66
Net charge-offs as % of average loans, net		0.17			0.43		—			0.15			0.46		—
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		0.55	%		1.04		—			0.55	%		1.04		—

CAPITAL ADEQUACY
Tier I capital ratio		8.36	%		8.33		—			8.36	%		8.33		—
Total capital ratio		11.32			11.92		—			11.32			11.92		—
Leverage ratio		6.23	%		6.78		—			6.23	%		6.78		—

OTHER FINANCIAL DATA
Net interest margin		3.37	%		3.81		—			3.46	%		3.85		—
Fee and other income as % of total revenue		47.24			45.34		—			47.90			44.81		—
Effective income tax rate		32.19	%		30.54		—			32.46	%		30.24		—

BALANCE SHEET DATA
Securities	$	102,934			73,764		40	%	$	102,934			73,764		40	%
Loans, net		172,917			162,833		6			172,917			162,833		6
Total assets		418,441			364,479		15			418,441			364,479		15
Total deposits		243,380			201,292		21			243,380			201,292		21
Long-term debt		37,022			37,051		—			37,022			37,051		—
Stockholders’ equity	$	32,646			32,464		1	%	$	32,646			32,464		1	%

OTHER DATA
Average diluted common shares (In millions)		1,320			1,346		(2	)%		1,323			1,346		(2	)%
Actual common shares (In millions)		1,309			1,332		(2	)		1,309			1,332		(2	)
Dividends paid per common share	$	0.40			0.29		38		$	0.80			0.55		45
Dividend payout ratio on common shares		42.11	%		37.66		12			42.33	%		35.95		18
Book value per common share	$	24.93			24.37		2		$	24.93			24.37		2
Common stock price		44.50			39.96		11			44.50			39.96		11
Market capitalization	$	58,268			53,228		9		$	58,268			53,228		9
Common stock price to book		178	%		164		9			178	%		164		9
FTE employees		85,042			78,965		8			85,042			78,965		8
Total financial centers/brokerage offices		3,272			3,176		3			3,272			3,176		3
ATMs		4,396			4,479		(2	)%		4,396			4,479		(2	)%

This discussion contains forward-looking statements. Please refer to our Second Quarter 2004 Form 10-Q for a discussion of various factors that could cause our actual results to differ materially from those expressed in such forward-looking statements.

Wachovia’s net income available to common stockholders in the first six months of 2004 rose 22 percent and earnings per share rose 24 percent from the first six months of 2003, with continued strong sales and service execution in our core businesses.

Total revenue rose 19 percent to $11.2 billion, with strong balance sheet growth overcoming margin compression largely related to the addition of lower-yielding assets. Tax-equivalent net interest income grew 12 percent year over year on growth in average earning assets of 24 percent. Fee and other income grew 27 percent year over year, and represented 48 percent of our total revenue, compared with 45 percent in the prior year’s first half. The first six months of 2004 included the impact of the Wachovia Securities retail brokerage transaction, which closed on July 1, 2003.

Average loans in the first six months of 2004 increased $3.6 billion from the first six months of 2003 to $161.4 billion, primarily reflecting growth in middle-market commercial loans and in consumer real estate-secured loans, dampened by continued lower corporate loan demand. Average core deposits increased 23 percent from the first six months of 2003 to $216.2 billion, including an average $20.0 billion of deposits associated with our FDIC-insured money market sweep product. Average low-cost core deposits increased 32 percent from the first six months a year ago to $175.9 billion, including $15.7 billion from the FDIC-insured sweep product.

Additionally, the improving credit markets and actions we have taken in previous quarters to mitigate risk led to a 75 percent decline in the provision for credit losses.

Annualized net charge-offs in the six months ended June 30, 2004, remained at a very low 15 basis points of average net loans.

We also continue to focus on improving efficiency. Our mix of businesses and variable expense structure enables us to manage expenses in line with revenues. Total noninterest expense rose 21 percent from the first six months of 2003, primarily reflecting the retail brokerage transaction and continued investments for the future. Expense growth slowed as expenses were down for the second consecutive quarter this year, largely reflecting lower brokerage commission expense in the first half of this year and continuing expense discipline.

Our first half 2004 performance underscores the benefits of our balanced business model, which combines the strength and stability of our traditional retail and corporate banking businesses, with faster-growing but less predictable businesses related primarily to retail brokerage and investment banking.

Our General Bank, which contributed 45 percent of total revenue, set quarterly earnings records in both the first and second quarters of 2004. The General Bank continued to experience outstanding deposit growth, particularly in low-cost core deposits, as well as solid loan growth. General Bank operating leverage improved tremendously, with revenue growth of 5 percent and relatively flat expenses in the comparative period. Credit quality in the General Bank also continued to be strong, resulting in a 35 percent decline in its provision for credit losses.

The retail brokerage and asset management businesses in Capital Management, which represented 25 percent of our total revenue, experienced year over year growth largely due to the impact of the retail brokerage transaction, although lower trading volumes in the first half of 2004 dampened their results. These businesses are poised to benefit when markets improve.

Wealth Management’s contribution to revenue increased to 5 percent with record earnings in each quarter of the first six months of 2004 and fee growth exhibited solid momentum. Average loans grew 10 percent and average core deposits grew 11 percent year over year.

Our Corporate and Investment Bank, which contributed 23 percent of total revenue, gained market share and continued its strong performance in the first six months of 2004, with growth in fixed income products, syndications and equity capital markets originations. Improving credit conditions and lower loan outstandings lessened the use of economic capital.

In addition, as we manage interest rate risk, we believe a rising rate environment – assuming that it is accompanied by a rebound in business activity in the wake of a more robust economy – would produce many benefits for our business model. Since the beginning of 2004, we have repositioned our balance sheet to be modestly asset sensitive under a broad range of interest rate scenarios. Our balance sheet remains strong, with our tier 1 capital ratio above 8 percent and our leverage ratio above 6 percent.

In the first six months of 2004, we paid common stockholders total dividends of $1.0 billion, or 80 cents per share, compared with $740 million, or 55 cents per share, in the first six months of 2003. This represented dividend per share growth of 45 percent, and a dividend payout ratio on earnings excluding merger-related and restructuring expenses and other intangible amortization of 38.65 percent in the first six months of 2004 and 31.79 percent in the first six months of 2003.

As we look into the future, the combination of revenue growth and efficiency initiatives we are developing, fueled by the momentum we are creating in our major businesses in an improving economy, gives us confidence that Wachovia will be one of the leading growth companies in our industry.

We continue to make excellent progress in meeting our corporate objectives of quality earnings growth, increased distribution of products and services, hallmark customer service, disciplined expense control and a strong balance sheet. Our expectations for the full year 2004 (excluding the impact of our proposed merger with SouthTrust, which is discussed below) are fundamentally the same as we announced previously, although we have revised our expectations for net charge-offs to reflect the current favorable point in the credit cycle. We expect the benefits from improved credit quality to be offset by weaker-than-expected brokerage and principal investing results. The following outlook is for the full year 2004 and reflects the full-year effect of the combined retail brokerage operation compared with a six-month effect included in 2003 results:

•		Total revenue growth in the low double-digit percentage range;

•		Net interest income growth in the mid single-digit percentage range;

•		A lower net interest margin, primarily due to the effect of certain items amounting to 30 basis points, discussed further below;

•		Fee income growth in the mid- to upper teens percentage range;

•		Noninterest expense growth (excluding merger-related and restructuring expenses) in the high single-digit percentage range and marginally lower than revenue growth;

•		Loan growth in the mid single-digit percentage range from the fourth quarter of 2003, excluding the impact of securitization activity;

•		Net charge-offs in the 15 basis point to 25 basis point range with provision expense also expected to be in this range;

•		An effective tax rate of approximately 35 percent on a tax-equivalent basis;

•		A leverage ratio above 6 percent;

•		A dividend payout ratio of 40 percent to 50 percent of earnings excluding merger-related and restructuring expenses and other intangible amortization; and

•		Use of excess capital to opportunistically repurchase shares, reinvest in our businesses, and to undertake financially attractive, shareholder friendly small acquisitions.

As referenced above, we expect our net interest margin to decline in 2004 reflecting anticipated growth in our FDIC-insured money market sweep product (15 basis points), as well as the full-year impact of the July 1, 2003, consolidation of the commercial paper conduits we administer (6 basis points) and the full-year impact of lower spread assets resulting from the combined brokerage operation (9 basis points). We would otherwise expect our margin to be relatively stable.

While these factors will put pressure on the margin, we also expect to achieve higher net interest income and to improve overall liquidity as a result of the FDIC-insured sweep product.

In addition, our outlook for fee income growth includes the effect of the retail brokerage transaction. Approximately half of the fee income growth is expected to result from the full year effect of this transaction. We own a 62 percent interest in the retail brokerage business, which is a consolidated subsidiary of Wachovia, and Prudential Financial, Inc., owns the remaining 38 percent interest.

Noninterest expense growth, excluding merger-related and restructuring expenses, will reflect the retail brokerage transaction as well as our continuing investments for the future. For future growth, we are building new financial centers and upgrading financial center technology and infrastructure; hiring additional small business bankers and wealth relationship managers; making selected investments to enhance our distribution in asset management and insurance; and expanding our investment management capabilities.

Looking forward, we believe our competitive position will be strengthened by our proposed merger with SouthTrust Corporation, which we expect to complete before the end of 2004, subject to normal regulatory approvals and shareholder approvals. We believe this merger will create clear market leadership in a number of high-growth southeastern states and accelerate our already announced expansion into attractive Texas markets. The terms of this transaction call for Wachovia to exchange 0.89 shares of its common stock for each share of SouthTrust common stock. It is expected to dilute Wachovia’s fourth quarter 2004 earnings by 4 cents per share, including 1 cent per share from merger-related and restructuring expenses. Initial due diligence projected $255 million in annual after-tax expense reductions after a 15-month integration period following consummation of the merger, and one-time costs, including merger-related and restructuring expenses and exit cost purchase accounting adjustments, of $431 million after tax over the integration period. In addition, we now estimate fair market value purchase accounting adjustments of $126 million after-tax, down from our original estimate of $232 million. These adjustments will depend on the value of SouthTrust’s net tangible assets at closing. We anticipate $540 million in deposits would be divested as a condition of regulatory approval.

We will continue to evaluate our operations and organizational structures to ensure they are closely aligned with our goal of maximizing performance through increased efficiency and competitiveness in our four core businesses. When consistent with our overall business strategy, we may consider disposing of certain assets, branches, subsidiaries or lines of business. We continue to routinely explore acquisition opportunities in areas that would complement our core businesses, and frequently conduct due diligence activities in connection with possible acquisitions. As a result, acquisition discussions and, in some cases, negotiations frequently take place and future acquisitions involving cash, debt or equity securities could occur.

In order to understand our financial position and results of operations, it is important to understand our more significant accounting policies and the extent to which we use judgment and estimates in applying those policies. Our accounting and reporting policies are in accordance with accounting principles generally accepted in the United States (GAAP), and they conform to general practices within the applicable industries. We use a significant amount of judgment and estimates based on assumptions for which the actual results are uncertain when we make the estimation. We have identified five policies as being particularly sensitive in terms of judgments and the extent to which estimates are used: allowance for loan losses and the reserve for unfunded lending commitments, which is recorded in other liabilities, fair value of certain financial instruments, consolidation, goodwill impairment and contingent liabilities. An update of our accounting policy for the allowance for loan losses and the reserve for unfunded lending commitments is provided below. For more information on our other critical accounting policies, please refer to our 2003 Annual Report.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments The allowance for loan losses is maintained at a level we believe is adequate to absorb probable losses inherent in the loan portfolio as of the date of the consolidated financial statements. We have developed appropriate policies and procedures for assessing the adequacy of the allowance for loan losses that reflect our careful evaluation of credit risk considering all information available to us. In developing this assessment, we must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown. Depending on changes in circumstances, future assessments of credit risk may yield materially different results, which may require an increase or a decrease in the allowance for loan losses.

We employ a variety of modeling and estimation tools in developing the appropriate allowance. Our allowance consists of formula-based components for both commercial and consumer loans, allowance for impaired commercial loans and an unallocated component. The following provides a description of each of these components of the allowance, the techniques we use and the estimates and judgments inherent to each. In the second quarter of 2004, we refined our methodologies for the formula-based components to more appropriately align the allowance methodology with our current framework for analyzing credit losses.

For commercial loans, the formula-based component of the allowance is based on statistical estimates of the average losses observed for each commercial credit grade. Average losses are computed using the historical rate at which loans in each credit grade have defaulted and the historical average losses realized for defaulted loans.

For consumer loans, the formula-based component of the allowance is based on loss rates for specific groups of similar loans in each product category. The loss rates are based on historical loss data, historical delinquency patterns, vintage analyses and credit score-based forecasting methods.

For both commercial and consumer loans, these formula-based loss estimates are augmented with additional amounts that establish a range for probable incurred losses not fully captured elsewhere in the model. The additional components are developed from data on

observed cyclical trends in historical loss rates validated by reference to observed data. Factors we consider in establishing these components of the allowance include, but are not limited to, industry-specific data and macroeconomic conditions. At June 30, 2004, the formula-based allowance was $1.6 billion for commercial loans and $647 million for consumer loans.

We have established specific reserves within the allowance for large impaired loans. We define impaired loans as commercial loans on nonaccrual status. Impaired loans with a balance of $10 million and above are individually reviewed. An allowance for each individually reviewed loan is determined based on the difference between the loan’s carrying amount and the loan’s fair value. Fair value is based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. No other allowance is provided on impaired loans that are individually reviewed. At June 30, 2004, the allowance for individually reviewed impaired loans amounted to $29 million.

The allowance for commercial, consumer and impaired loans is supplemented with an unallocated component. This component reflects in part the inherent uncertainty of estimates and is designed as a final tool in fully capturing probable incurred losses in the loan portfolio. This component may change from one period to another, and the relationship of this component to the total may change. We anticipate that the unallocated portion of the allowance will generally be no more than 5 percent of the total allowance. At June 30, 2004, the unallocated portion of the allowance was $83 million.

We are responsible for ensuring that the allowance covers the losses inherent in the portfolio, and the process involves significant judgment. The allowance for loan losses is adjusted from one quarter to the next if we believe a change is warranted to reflect changes in the probable incurred losses in the loan portfolio. Reasons for changes include, but are not limited to, changes in losses indicated by the grades assigned to commercial loans, changes in delinquency and other credit indicators in the consumer loan portfolio, changes in portfolio size, changes in the economy and other circumstances that are not yet evident in borrowers’ performance or identified by the grades assigned to borrowers’ loans.

At June 30, 2004, we reclassified our reserve for unfunded lending commitments from the allowance for loan losses to other liabilities. The modeling process used in the determination of the adequacy of the reserve for unfunded lending commitments is consistent with the process described above for the allowance for loan losses. Computations use the observed rate at which borrowers in each credit grade have defaulted, the historical average rate at which unfunded exposures have been funded in the event of default, and the historical average loss realized once default occurs. The reserve also includes specific allocations assigned to the unfunded commitments associated with impaired loans as described above.

We continuously monitor qualitative and quantitative trends in the loan portfolio, including changes in the levels of past due, criticized and nonperforming loans. The distribution of the allowance and the reserve for unfunded lending commitments as described above does not diminish the fact that the entire allowance and reserve are available to absorb all credit losses in the loan portfolio. Our principal focus, therefore, is on the adequacy of the total allowance for loan losses and the reserve for unfunded commitments. Our Allowance for Loan Losses Committee, chaired by our chief risk officer, meets quarterly and is responsible for the review and approval of the allowance for loan losses as well as for policies and procedures surrounding the calculation of the allowance and the reserve.

In addition to compliance with GAAP, the allowance for loan losses is also subject to federal and state banking regulations. Our primary bank regulators may also make recommendations regarding the adequacy of the allowance.

Net Interest Income and Margin Net interest income increased 12 percent in the first six months of 2004 from the first six months of 2003 due to balance sheet growth. This growth offset compression in the net interest margin, which declined 39 basis points to 3.46 percent primarily due to the impact of growth in our FDIC-insured sweep product and related hedging, as well as to the consolidation of our commercial paper conduits and to the retail brokerage transaction. In addition, margin compression was driven by declining yields on consumer loans as higher yielding mortgage loans were refinanced over the past 18 months and were replaced with newly originated lower yielding mortgage loans. The average federal funds discount rate declined 24 basis points in the first six months of 2004 from the first six months of 2003, while average longer-term 5-year and 10-year treasury note rates increased 62 basis points and 54 basis points, respectively.

As discussed previously, we began marketing our FDIC-insured sweep product to brokerage customers in the fourth quarter of 2003. Since then, customer balances have been transferred from money market mutual fund accounts to these deposit accounts. We have been investing these deposits in securities that together produce an asset and liability structure that enables us to maintain our desired interest rate sensitivity.

By the end of the first six months of 2004, this product had captured $25.0 billion in new deposits, up $13.2 billion from year-end 2003. Of the $25.0 billion, $13.5 billion was originally from Evergreen money market mutual funds and $11.5 billion was originally from Prudential Financial, Inc., money market funds. These deposits represented $20.0 billion in average core deposits in the first six months of 2004.

Fee and Other Income Traditionally banks earn fee and other income from service charges on deposit accounts and other banking products and services, and these continue to be a significant component of our fee income. In addition, we have balanced our earnings with a diversified mix of businesses that provide alternative investment and financing products and services for the more sophisticated needs of our clients. These alternative products produce income in our brokerage, asset management and investment banking businesses from commissions and fees for financial advice, custody, insurance and financing alternatives such as loan syndications and asset securitizations. Additionally, we realize gains from selling our investments in securities such as bonds and equities.

The fees on many of these products and services are based on market valuations and therefore are sensitive to movements in the financial markets. As the financial markets begin to recover, we are seeing gradual improvement in these market-based fees.

Fee and other income increased 27 percent in the first six months of 2004 from the first six months of 2003, with commissions and fiduciary and asset management fees rising due to the addition of the retail brokerage business. Principal investing, which includes the results of proprietary investments in equity and mezzanine securities, had net gains in the first six months of 2004 of $53 million, due largely to lower write-downs in improving markets, compared with net losses of $101 million in the first six months of 2003. Service charges increased 12 percent, reflecting growth in checking accounts.

Net securities gains were $38 million in the first six months of 2004, down $9 million from the first six months of 2003, and included gains of $88 million from sales of securities received in settlement of problem loans, offset by net losses from portfolio sales of $18 million and impairment losses of $32 million. Net securities gains of $47 million in the first six months of 2003 included net gains from portfolio sales of $153 million offset by $106 million in impairment losses.

Other income declined $198 million in the first six months of 2004 from the first six months of 2003 primarily due to lower mortgage, consumer real estate and other sales and securitization income, including a $46 million loss on an auto loan securitization, as well as a $68 million loss associated with a sale and leaseback of corporate real estate. We expect the sale and leaseback of corporate real estate will reduce annual occupancy and other related expenses by $22 million in future periods.

Noninterest Expense Noninterest expense increased 21 percent in the first six months of 2004 from the first six months of 2003 primarily due to the addition of expenses related to the retail brokerage transaction and continued investments for the future. Salaries, incentives and other payroll costs all reflected the increased level of personnel from the retail brokerage transaction, along with higher incentives from increased revenues and earnings. Sundry expense increased 26 percent year over year primarily due to the retail brokerage transaction.

Merger-Related and Restructuring Expenses We recorded $201 million in net merger-related and restructuring expenses in the first six months of 2004. This included $120 million related to the retail brokerage transaction and $84 million related to the First Union-Wachovia merger, offset by $3 million in reversals of previously recorded restructuring expenses. The $120 million related to the retail brokerage transaction principally comprised personnel and employee termination benefits, system conversion costs and $17 million of incremental advertising expense. The $84 million related to the First Union-Wachovia merger principally comprised personnel and employee termination benefits, occupancy and equipment costs and system conversion costs. In the first six months of 2003, we recorded $160 million in merger-related and restructuring expenses. This included $166 million of expenses related to the First Union-Wachovia merger, offset by $6 million in reversals of previously recorded restructuring expenses.

We provide a diversified range of banking and nonbanking financial services and products primarily through our four core business segments, the General Bank, Capital Management, Wealth Management, and the Corporate and Investment Bank. In this section, we discuss the first six months 2004 performance and results of our business segments.

Business segment results are presented excluding merger-related and restructuring expenses, other intangible amortization expense, minority interest and the cumulative effect of a change in accounting principle. We believe that while these items apply to our overall corporate operations, they are not meaningful to understanding or evaluating the performance of our individual business segments. We do not take these items into account as we manage our business segment operations or allocate capital, and therefore, we present segment performance under GAAP with these items excluded. Also, for segment reporting purposes, net interest income reflects tax-exempt interest income on a tax-equivalent basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources.

In addition to traditional profitability measures such as segment earnings and efficiency ratios, we use two other key financial metrics – risk-adjusted return on capital (RAROC) and economic profit – to allocate resources and to assess the performance of our business segments. Both of these are aimed at measuring returns in relationship to the risks taken. Please refer to our 2003 Annual Report, including pages 31 through 35 and pages 103 through 105, for additional information related to our business segments and performance metrics.

We continuously assess assumptions, methodologies and reporting classifications to better reflect the true economics of our business segments. Several refinements have been incorporated for 2004. Business segment results for each quarter of 2003 have been restated to reflect these changes, which did not affect consolidated results. In the first six months of 2004, we updated our cost methodology to better align support costs to our business segments and product lines. The impact to segment earnings for full year 2003 as a result of these refinements was a $20 million increase in the General Bank, a $16 million decrease in Capital Management, a $14 million decrease in Wealth Management, a $5 million decrease in the Corporate and Investment Bank, and a $15 million increase in the Parent.

General Bank The General Bank segment includes our Retail and Small Business and Commercial lines of business. With quarterly records in both the first and second quarters of 2004, General Bank segment earnings rose 15 percent in the first six months of 2004 from the same period in 2003 to $1.4 billion. Revenue increased 5 percent in the same period, largely driven by outstanding core deposit growth and growth in loans.

Fee income increased 4 percent from the first six months of 2003 on strong service charge growth, offset by a market-driven 59 percent decline in mortgage-related fee income. Non-mortgage-related fees rose 18 percent from the first six months a year ago.

The General Bank continues to do exceptionally well in attracting and retaining low-cost core deposits, with average balances up 20 percent from the first six months of 2003. The General Bank generated record growth in retail checking accounts, with net new retail accounts up 329,000 in the first six months of 2004, compared with 412,000 in full year 2003 and an 83 percent improvement over 180,000 net new retail accounts in the

same period a year ago. Average loans grew 7 percent year over year due primarily to growth in consumer real-estate secured, auto and student loans, as well as in middle market commercial, small business and commercial real estate lending.

Provision expense declined by more than a third from the first six months of 2003, primarily reflecting risk reduction strategies implemented in 2003, as well as declines in both commercial and consumer loan losses.

Noninterest expense increased slightly in the first six months of 2004 from the first six months of 2003, reflecting strong expense management and the realization of merger efficiencies, which were evident in an improved cash overhead efficiency ratio of 52.17 percent.

Capital Management Capital Management includes Retail Brokerage Services, which includes the retail brokerage and insurance groups; and Asset Management, which includes mutual funds, customized investment advisory services, and corporate and institutional trust services.

Capital Management’s segment earnings increased 64 percent and revenue increased 76 percent, while noninterest expense grew 79 percent from the first six months of 2003. Growth was primarily related to the retail brokerage transaction, which closed on July 1, 2003. The weak retail brokerage environment dampened Capital Management’s second quarter 2004 results, which included a net benefit of $17 million on the sale of two nonstrategic businesses. Positive net sales of equity mutual funds continued.

In addition, deposit balances related to the FDIC-insured sweep product grew to $25.0 billion, compared with $11.8 billion at year-end 2003, contributing to growth in net interest income. The shift to the FDIC-insured product resulted in a 5 percent decline in mutual fund assets from year-end 2003 to $104.2 billion. Despite the decline in money market mutual fund assets, total assets under management of $247.6 billion at June 30, 2004, were relatively unchanged compared with December 31, 2003. Total assets under management and securities lending were $284.1 billion, including $38.2 billion from the January 1, 2004, acquisition of a securities lending firm.

Wealth Management Wealth Management provides a comprehensive suite of private banking, trust and investment management, financial planning and insurance services.

Wealth Management’s segment earnings were $99 million, an increase of 39 percent from the first six months of 2003, with revenue up 11 percent. Net interest income grew 13 percent on increased loans and core deposits. Fee and other income increased 9 percent due to solid growth in trust and investment management fees and insurance commissions. Noninterest expense rose 6 percent from the prior year’s first half primarily due to higher incentives related to improved revenues and earnings. Provision expense declined due to improved credit quality.

Average loans increased 10 percent from the first six months of 2003, reflecting growth in both commercial and consumer loans. Average core deposits rose 11 percent in the same period, led by higher demand deposits, money market and interest-checking account balances. Included in total assets under management are Wealth assets under management of $60.0 billion in the first six months of 2004, which represented a modest increase from year-end 2003, and reflected stable market conditions.

Corporate and Investment Bank Our Corporate and Investment Bank segment includes Corporate Lending, Global Treasury and Trade Finance, Investment Banking and Principal Investing lines of business.

Corporate and Investment Bank segment earnings increased 59 percent to $887 million compared with the first six months of 2003, as revenue grew 18 percent driven by strong origination revenue in loan syndications, structured products and equity capital markets. In addition, improved principal investing results and higher securities gains primarily related to equity securities received in settlement of nonperforming loans also fueled revenue growth. Net interest income rose 5 percent driven by strong deposit growth in international correspondent banking and commercial mortgage servicing. Corporate loan balances declined due to low demand and continued strong refinance activity by our customers in the public debt markets. Provision expense showed a net benefit of $30 million in the first six months of 2004, due to improving credit conditions resulting in decreased charge-offs. The provision benefit included $26 million related to the recovery of write-downs on loans sold out of the loan portfolio. Noninterest expense rose 11 percent due to increased revenue-based variable pay and higher personnel costs, coupled with increased investment in growth initiatives. Economic capital usage declined driven by a continued trend of improving credit quality and lower loan outstandings.

Parent Parent includes all asset and liability management functions, including managing our investment portfolio for earnings, liquidity and interest rate risk. Parent also includes goodwill and other intangible assets, and related funding costs; certain revenues and expenses that are not allocated to the business segments; and the results of our HomEq Servicing business, which is responsible for loan servicing for the former Money Store loans and home equity loans generated by our mortgage company, as well as servicing for third party portfolios.

The Parent had a segment loss of $112 million in the first six months of 2004 compared with segment earnings of $105 million in the first six months of 2003. Total revenue in the Parent declined $158 million from the first six months of 2003 to $225 million in the first six months of 2004 primarily as a result of a $139 million reduction in securities

gains; a $127 million reduction in other income, including a loss of $68 million associated with a sale and leaseback of corporate real estate; and a $100 million reduction in income from asset securitizations, including a $46 million loss on an auto loan securitization, partially offset by a $167 million increase in net interest income. Average securities increased $25.6 billion from the first six months of 2003 to $92.7 billion, reflecting investment of the proceeds from the FDIC-insured sweep product.

Noninterest expense decreased $14 million in the first six months of 2004 from the first six months of 2003 due primarily to lower intangible amortization.

Income tax benefits increased $51 million from the first six months of 2003. For segment reporting, income tax expense or benefit is allocated to each business segment based on the statutory rate, adjusted for certain other items, and any difference between the total for all core business segments and the consolidated results is included in the Parent.

This segment reflects the impact of Prudential’s 38 percent minority interest in Wachovia Securities Financial Holdings, LLC. Net interest income, fee income and noninterest expense related to this transaction are included in Capital Management. Total minority interest, which also includes other subsidiaries, was $149 million in the first six months of 2004 and $25 million in the first six months of 2003.

Securities The securities portfolio, all of which is classified as available for sale, consists primarily of U.S. Government agency and asset-backed securities. We use this portfolio primarily to manage liquidity, interest rate risk and regulatory capital, and to take advantage of market conditions that create more economically attractive returns on these investments. We had securities available for sale with a market value of $102.9 billion at June 30, 2004, an increase from $100.4 billion at December 31, 2003. The increase related to continued investment of FDIC-insured sweep balances.

Securities available for sale included an unrealized gain of $798 million at June 30, 2004, and $2.2 billion at December 31, 2003, reflecting lower valuations due to the rising rate environment. The average rate earned on securities available for sale was 4.87 percent in the first six months of 2004 and 5.67 percent in the first six months of 2003.

We retain interests in the form of either bonds or residual interests in connection with certain securitizations. The retained interests result primarily from the securitization of residential mortgage loans and prime equity lines. Included in securities available for sale at June 30, 2004, were residual interests with a market value of $937 million, which included an unrealized gain of $321 million, and retained bonds from securitizations with a market value of $10.0 billion, which included a net unrealized gain of $299 million. At June 30, 2004, retained bonds with an amortized cost of $9.6 billion and a market value of $9.9 billion were considered investment grade based on external ratings. Retained bonds with an amortized cost of $8.9 billion and a market value of $9.2 billion at June 30, 2004, had external credit ratings of AA and above. The decrease in the first six months of 2004 in retained interests in securities available for sale from December 31, 2003, was primarily due to pay-downs in retained bonds.

Loans Net loans increased 4 percent in the first six months of 2004 from year-end 2003. Commercial loans grew 4 percent, with the majority of the growth reflecting a second quarter 2004 increase in asset-based lending, international correspondent bank lending, middle-market commercial, small business and commercial real estate loans. Corporate loans continued to decline as we assisted our clients in accessing the capital markets. Consumer loans grew 4 percent, driven primarily by increases in consumer real estate-secured loans. In addition, student loans increased due to terminated securitizations and installment loans declined from year-end 2003 due to the securitization of $2.0 billion in auto loans.

Commercial loans represented 61 percent and consumer loans 39 percent of the loan portfolio at June 30, 2004. The portfolio mix continues to strengthen, with a greater proportion of consumer real estate-secured loans as we have pursued risk reduction strategies to actively reduce potential problem loans and certain large corporate loans. The majority of our loan portfolio is secured by collateral or is guaranteed. Seventy-nine percent of the commercial loan portfolio is secured by collateral, and 97 percent of the consumer loan portfolio is secured by collateral or is guaranteed.

Our consumer managed loan portfolio grew 5 percent from year-end 2003, reflecting higher balances in loans and loans held for sale, partially offset by lower securitized loans on- and off-balance sheet. The managed loan portfolio includes the on-balance sheet loan portfolio, loans securitized for which the retained interests are classified in securities, loans held for sale that are classified in other assets and the off-balance sheet portfolio of securitized loans sold where we service the loans.


	*2004*						2003
	*Second*			First			Fourth			Third			Second
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter
Nonperforming assets
Nonaccrual loans	$	863			968			1,035			1,391			1,501
Foreclosed properties		104			103			111			116			130

Total nonperforming assets	$	967			1,071			1,146			1,507			1,631

as % of loans, net and foreclosed properties		0.56	%		0.64			0.69			0.91			1.00

Nonperforming assets in loans held for sale	$	68			67			82			160			167

Total nonperforming assets in loans and in loans held for sale	$	1,035			1,138			1,228			1,667			1,798

as % of loans, net, foreclosed properties and loans in other assets as held for sale		0.55	%		0.63			0.69			0.95			1.04

Allowance for credit losses ^(a)
Allowance for loan losses, beginning of period	$	2,338			2,348			2,474			2,510			2,553
Net charge-offs		(68	)		(52	)		(156	)		(132	)		(169	)
Allowance relating to loans transferred or sold		(3	)		(9	)		(57	)		(22	)		(69	)
Provision for credit losses related to loans transferred or sold ^(b)		(9	)		(8	)		24			—			26
Provision for credit losses		73			59			63			118			169

Allowance for loan losses, end of period		2,331			2,338			2,348			2,474			2,510

Reserve for unfunded lending commitments, beginning of period		149			156			157			194			194
Provision for credit losses		(3	)		(7	)		(1	)		(37	)		—

Reserve for unfunded lending commitments, end of period		146			149			156			157			194

Allowance for credit losses	$	2,477			2,487			2,504			2,631			2,704

Allowance for loan losses
as % of loans, net		1.35	%		1.40			1.42			1.49			1.54
as % of nonaccrual and restructured loans ^(c)		270			242			227			178			167
as % of nonperforming assets ^(c)		241			218			205			164			154
Allowance for credit losses
as % of loans, net		1.43	%		1.49			1.51			1.59			1.66

Net charge-offs	$	68			52			156			132			169
Commercial, as % of average commercial loans		0.08	%		(0.05	)		0.31			0.21			0.42
Consumer, as % of average consumer loans		0.28			0.36			0.50			0.51			0.44
Total, as % of average loans, net		0.17	%		0.13			0.39			0.33			0.43

Past due loans, 90 days and over, and nonaccrual loans ^(c)
Commercial, as a % of loans, net		0.66	%		0.78			0.87			1.20			1.30
Consumer, as a % of loans, net		0.86	%		0.77			0.77			0.76			0.80

^(a) The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments.
^(b) The provision related to loans transferred or sold includes recovery of lower of cost or market losses.
^(c) These ratios do not include nonperforming assets included in other assets as held for sale.

Nonperforming Assets The continuing decline in nonperforming assets reflects more favorable market conditions, with new inflows to commercial nonaccrual loans down more than half in the first six months of 2004 compared with the same period of 2003. Nonperforming assets were also reduced by charge-offs, payments and sales of $110 million in nonperforming loans from the loan portfolio and from loans held for sale in the first six months of 2004.

Impaired Loans Impaired loans, which are included in nonperforming loans, amounted to $643 million at June 30, 2004, and $810 million at December 31, 2003. Included in the allowance for loan losses at June 30, 2004, was $29 million related to $160 million of impaired loans. The remaining impaired loans were either recorded at or below either the fair value of collateral or the present value of expected future cash flows or were not large enough to be individually reviewed. In the first six months of 2004, the average recorded investment in impaired loans was $742 million and $22 million of interest income was recognized on impaired loans. This income was recognized using the cash-basis method of accounting.

Past Due Loans Accruing loans 90 days or more past due, excluding loans that are classified as loans held for sale, were $419 million at June 30, 2004. Of these past due loans, $27 million were commercial loans or commercial real estate loans and $392 million were consumer loans.

Net Charge-offs Net charge-offs as a percentage of average net loans declined by 31 basis points in the first six months of 2004 from the first six months of 2003. Commercial net charge-offs declined to 0.02 percent of average commercial loans mainly due to moderating trends in nonperforming assets at the current beneficial point in the credit cycle, and our strategic decision to actively manage down potential problem loans. Consumer net charge-offs declined to 0.32 percent of average consumer loans. As older vintages of consumer loans mature or pay down, a higher quality consumer loan mix remains due to changes in our underwriting policies in 2001.

Provision for Credit Losses The provision for credit losses declined 75 percent from the first six months of 2003, reflecting improved loan quality, and more favorable economic conditions. The provision for credit losses in the first six months of 2004 of $105 million included a $17 million benefit associated with the sale of $183 million of corporate and commercial loans directly out of the loan portfolio and the transfer of $100 million of exposure, including $82 million of outstandings and the related unfunded commitments of $18 million, to loans held for sale. This compares with the first six months of 2003, in which the provision of $419 million included $51 million of expense associated with the transfer of $704 million of exposure, including $462 million of outstandings and the related unfunded commitments of $242 million, to loans held for sale and to the sale of $720 million of corporate, commercial and consumer exposure directly out of the loan portfolio. The provision related to the transfer of loans to loans held for sale was recorded to reduce the carrying amount of these loans to their respective fair values.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments The allowance for loan losses declined $17 million in the first six months of 2004 to $2.3 billion, or 1.35 percent of net loans, compared with $2.3 billion, or 1.42 percent of net loans, at year-end 2003. The decline was primarily related to loan sales or transfers to loans held for sale.

The reserve for unfunded lending commitments declined $10 million in the first six months of 2004 to $146 million, compared with $156 million at year-end 2003. The decline was primarily related to decreasing risk in the portfolio. The reserve for unfunded lending commitments relates to the commercial loan portfolio and is included in other liabilities.

The allowance for credit losses, which includes both the allowance for loan losses and the reserve for unfunded lending commitments, amounted to $2.5 billion at June 30, 2004. The allowance for credit losses relating to commercial loans amounted to $1.7 billion, or 1.72 percent of commercial loans at June 30, 2004. The allowance for loan losses related to consumer loans amounted to $647 million and represented 0.91 percent of consumer loans.

Loans Held for Sale Loans held for sale include not only loans originated for sale or securitization as part of our core business strategy but also the activities related to our ongoing portfolio risk management strategies to reduce exposure to areas of perceived higher risk.

In the first six months of 2004, we sold or securitized $9.8 billion in loans out of the loans held for sale portfolio. Of the $9.8 billion, $2.9 billion were commercial loans and $6.9 billion were consumer loans, primarily residential mortgages and prime equity lines. Substantially all of these loan sales and securitizations represented normal flow, or core business activity, which means we originate the loans with the intent to sell them to third parties. Of the loans sold, $18 million were nonperforming.

As part of our ongoing portfolio management activities, we transferred $82 million of commercial loans and $18 million of additional unfunded exposure to loans held for sale in the first six months of 2004. In connection with these transfers to loans held for sale, these loans were written down to the lower of cost or market value.

In the first six months of 2003, we sold or securitized $13.1 billion of loans out of the loans held for sale portfolio. Of these loans, $53 million were nonperforming.

Goodwill In the first six months of 2004, we recorded certain refinements to our initial estimates of the fair value of the assets and liabilities related to the retail brokerage transaction and recorded additional exit cost purchase accounting adjustments. Together, these adjustments resulted in an after-tax net increase to goodwill of $298 million. This amount includes an additional $402 million in pre-tax exit cost purchase accounting adjustments principally pertaining to occupancy and equipment as we finalized our plans for the integration, and reflects the costs associated with consolidating operations to Richmond, Va., and personnel and employee termination benefits. At June 30, 2004, the goodwill attributable to this transaction amounted to $503 million.

Core Deposits Core deposits increased 12 percent from December 31, 2003, to $228.2 billion at June 30, 2004. This increase in core deposits included an average $20.0 billion of core deposits associated with the FDIC-insured sweep product. Average low-cost core deposits grew 32 percent to $175.9 billion in the first six months of 2004 from the first six months of 2003 as we focused on increasing the proportion of low-cost core deposits over higher cost deposit balances. Low-cost core deposits are those in demand deposit, interest checking, savings and money market accounts, and exclude CAP accounts and certificates of deposit.

The ratio of average noninterest-bearing deposits to average core deposits was 22 percent in the first six months of 2004 and 24 percent in the first six months of 2003. The portion of core deposits in higher rate, other consumer time deposits was 12 percent at June 30, 2004, and 14 percent at December 31, 2003. Other consumer time and other noncore deposits usually pay higher rates than savings and transaction accounts, but they generally are not available for immediate withdrawal. They are also less expensive to service.

Purchased Funds Average purchased funds, which include wholesale borrowings with maturities of 12 months or less, were $80.9 billion in the first six months of 2004 and $58.8 billion in the first six months of 2003. The increase was primarily the result of increases of $9.8 billion in average federal funds purchased and $9.6 billion in commercial paper primarily due to the consolidation of the commercial paper conduits we administer. Purchased funds were $81.5 billion at June 30, 2004, and $87.9 billion at December 31, 2003.

Long-term Debt Long-term debt increased modestly from December 31, 2003, to $37.0 billion at June 30, 2004, primarily due to the securities issuances described below. For the rest of 2004, scheduled maturities of long-term debt amount to $2.4 billion. We anticipate either extending the maturities of these obligations or replacing the maturing obligations.

In the first quarter of 2004, with the adoption of Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities, Revised, we deconsolidated trust preferred securities that amounted to $3.0 billion at December 31, 2003, and that were included in long-term debt. The trusts that issued these preferred securities used the related proceeds to purchase our junior subordinated debentures. Accordingly, at June 30, 2004, long-term debt included $3.1 billion of junior subordinated debentures. Junior subordinated debentures at June 30, 2004, and trust preferred securities at December 31, 2003, are included in tier 1 capital for regulatory purposes.

Wachovia Bank has available a global note program for the issuance of up to $44.5 billion of senior or subordinated notes.

Under a current shelf registration statement filed with the Securities and Exchange Commission, we have $2.3 billion of senior or subordinated debt securities, common stock or preferred stock available for issuance. In the first six months of 2004, we issued $1.7 billion in senior debt securities and $900 million in subordinated debt securities, and in July 2004, we issued $3.5 billion in senior debt securities and $1.5 billion in subordinated debt securities under this shelf registration. In addition, we have available for issuance up to $4.0 billion under a medium-term note program covering senior or subordinated debt securities.

The sale of debt or equity securities will depend on future market conditions, funding needs and other factors.

Stockholders’ Equity The management of capital in a regulated banking environment requires a balance between optimizing leverage and return on equity while maintaining sufficient capital levels and related ratios to satisfy regulatory requirements. Our goal is to generate attractive returns on equity to our stockholders while maintaining sufficient regulatory capital ratios.

Stockholders’ equity increased $218 million from year-end 2003 to $32.6 billion at June 30, 2004. We paid $1.0 billion, or 80 cents per share, in dividends to common stockholders in the first six months of 2004 compared with $740 million, or 55 cents per share, in the first six months of 2003. Average diluted common shares outstanding declined by 12 million shares from December 31, 2003, to 1.3 billion diluted common shares at June 30, 2004. In the first six months of 2004, we repurchased 16 million common shares at a cost of $734 million in connection with our previously announced share repurchase program, under which we are authorized to buy back up to a remaining 108 million shares of our common stock. Please refer to our Second Quarter 2004 Form 10-Q for additional information on share repurchases.

In the second quarter of 2004, we entered into transactions involving the simultaneous sale of put options and purchase of call options on 10 million shares of our common stock with expiration dates from October 2004 to August 2005. We entered into these equity collars to manage potential dilution associated with our employee stock options. These transactions are recorded as assets or liabilities with changes in fair value recorded in earnings. In the six months ended June 30, 2004, we recorded a loss of $13 million related to market value changes of these collars.

Subsidiary Dividends Wachovia Bank, National Association, is the largest source of subsidiary dividends paid to the parent company. Capital requirements established by regulators limit dividends that this subsidiary and certain other of our subsidiaries can pay. Under these and other limitations, which include an internal requirement to maintain all deposit-taking banks at the well capitalized level, at June 30, 2004, our subsidiaries had $4.9 billion available for dividends that could be paid without prior regulatory approval. Our subsidiaries paid $750 million in dividends to the parent company in the first six months of 2004.

Regulatory Capital Our capital ratios remained strong at June 30, 2004. The tier 1 capital ratio decreased 16 basis points from December 31, 2003, to 8.36 percent, driven primarily by higher risk-weighted assets. The minimum tier 1 capital ratio is 4 percent, and we were classified as well capitalized for regulatory purposes, the highest classification, at June 30, 2004, Our total capital ratio was 11.32 percent and our leverage ratio was 6.23 percent at June 30, 2004, and 11.82 percent and 6.36 percent, respectively, at December 31, 2003.

In the normal course of business, we engage in a variety of financial transactions that, under GAAP, either are not recorded on the balance sheet or are recorded on the balance sheet in amounts that differ from the full contract or notional amounts. These transactions involve varying elements of market, credit and liquidity risk.

Guarantees Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or changes in an underlying asset, liability, rate or index. Our guarantees are generally in the form of standby letters of credit, liquidity obligations, recourse obligations and residual value guarantees. For more information on these types of guarantees, please refer to our 2003 Annual Report.

Additionally, as a result of our acquisition of a securities lending firm in January 2004, we act as a securities lending agent. Our clients’ securities are loaned, on a fully collateralized basis, to third party broker/dealers. We indemnify our clients against broker default and support these guarantees with the collateral that is marked to market daily. We generally require cash or other highly liquid collateral from the broker/dealer. At June 30, 2004, there was $46.0 billion in collateral supporting the $45.0 billion loaned. Accordingly, there is no carrying amount associated with these agreements.

Retained Interests We periodically securitize assets originated through our normal loan production channels or purchased in the open market. In securitization transactions, assets are typically sold to special purpose entities that are off-balance sheet. Certain securitization transactions result in a complete transfer of risk to investors, and in others, we retain risk in the form of senior or subordinated notes or residual interests in the

securities issued by the off-balance sheet entities. Retained interests from securitizations with off-balance sheet entities recorded as either available for sale securities, trading account assets, loans or other assets amounted to $12.8 billion at June 30, 2004. Please refer to the Balance Sheet Analysis section and our 2003 Annual Report for more information on retained interests.

In the first six months of 2004, we securitized and sold $1.0 billion of prime equity lines, retaining $24 million in the form of residual interests, and $2.0 billion of auto loans, retaining $130 million in the form of investment grade securities and $39 million in the form of residual interests. Included in other income were net losses of $44 million in the first six months of 2004 related to these securitizations.

Please refer to our 2003 Annual Report for a more detailed discussion of our comprehensive approach to managing credit, operational and liquidity risks; to allocating capital and measuring risk-adjusted returns; and to our governance structure and practices.

Market Risk Management We trade a variety of equities, debt securities, foreign exchange instruments and other derivatives to provide customized solutions for the risk management needs of our customers and for proprietary trading. Market risk management activities are overseen by an independent market risk group, which reports outside of the business units to the risk management group. Risk measures include the use of value-at-risk (VAR) methodology with limits approved by the Market Risk Committee and subsequently by the Asset and Liability Committee. The Market Risk Committee also approves a variety of other trading limits designed to match trading activities to our appetite for risk and to our strategic objectives.

The VAR methodology uses recent market volatility to estimate within a given level of confidence the maximum trading loss over a period of time that we would expect to incur from an adverse movement in market rates and prices over the period. We calculate 1-day VAR at the 97.5 percent confidence level. The VAR model uses historical data from the most recent 252 trading days. The VAR model is supplemented by stress testing on a daily basis. The analysis captures all financial instruments that are considered trading positions. Our 1-day VAR limit in the first six months of 2004 was $30 million. The total 1-day VAR was $17 million at June 30, 2004, and $12 million at December 31, 2003, and primarily related to interest rate risk and equity risk. The high, low and average VARs in the first six months of 2004 were $27 million, $12 million and $18 million, respectively.

The market risk associated with interest rate risk management derivatives is fully incorporated into our earnings simulation model in the same manner as financial instruments for which the interest-bearing balance is reflected on the balance sheet. The Interest Rate Risk Management section describes the way in which we manage this risk.

Detailed information on our derivatives used for interest rate risk management is included in Table 20 through Table 22.

Interest Rate Risk Management One of the fundamental roles in banking is the management of interest rate risk, or the risk that changes in interest rates may diminish the income that we earn on loans, securities and other earning assets. The following

discussion explains how we oversee the interest rate risk management process, and the actions we have taken to protect earnings from interest rate risk.

A balance sheet is considered asset sensitive when its assets (loans and securities) reprice faster or to a greater extent than liabilities (deposits and borrowings). An asset-sensitive balance sheet will produce more net interest income when interest rates rise and less net interest income when interest rates decline. Our large and relatively rate-insensitive deposit base funds a portfolio of primarily floating rate commercial and consumer loans. This mix naturally creates a highly asset-sensitive balance sheet. Over the past two years, our deposit growth has far outpaced our loan growth, significantly adding to our naturally asset-sensitive position. To achieve more neutrality in our balance sheet, we maintain a large portfolio of fixed rate discretionary instruments such as loans, securities and derivatives.

We often elect to use derivatives to protect assets, liabilities and future financial transactions from changes in interest rates. When deciding whether to use derivatives instead of investing in securities to reach the same goal, we consider a number of factors, such as cost, efficiency, the effect on our liquidity and capital, and our overall strategy. We choose to use derivatives when they provide greater relative value or more efficient execution of our strategy than securities. The derivatives we use for interest rate risk management include various interest rate swaps, futures, forwards and options. We fully incorporate the market risk associated with interest rate risk management derivatives into our earnings simulation model in the same manner as other on-balance sheet financial instruments. The market risk associated with trading and customer derivative positions is managed using the VAR methodology, as described in the Market Risk Management section.

As economic conditions improve and loan demand increases, we expect to rely to a larger extent on our large base of low-cost core deposits to fund lending activities. The characteristics of the loans that we add will prompt different strategies. Fixed rate loans, for example, diminish the need to buy discretionary investments, so if we add more fixed rate loans to our loan portfolio, we would likely allow existing discretionary investments to mature or be liquidated. If we add more variable rate loans, we would likely allow fixed rate securities to mature or be liquidated, and then add new derivatives that, in effect, would convert the incremental variable rate loans to fixed rate loans.

We analyze and manage the amount of risk we are taking to changes in interest rates by forecasting a wide range of interest rate scenarios and for time periods as long as 36 months. However, in analyzing interest rate sensitivity for policy measurement, we compare our forecasted earnings per share in both “high rate” and “low rate” scenarios to the “market forward rate” and “flat rate” scenarios. The policy measurement period is 12 months in length, beginning with the first month of the forecast. Our objective is to ensure that we prudently manage the interest-bearing assets and liabilities on our balance sheet in ways that improve our financial performance without unduly putting earnings at risk. Our policy is to limit the risk we can take through balance sheet management actions to 5 percent of our earnings per share in both falling and rising rate environments.

Our “market forward rate” is constructed using currently implied market forward rate estimates for all points on the yield curve over the next 36 months. Our standard approach evaluates expected earnings in a 200 basis point range both above and below the “market forward rate” scenario. However, due to the currently low absolute level of the federal funds rate, we modified the “low rate” scenario to measure a decline of only 50 basis points.

We simultaneously measure the impact of a parallel and nonparallel shift in rates on each of our interest rate scenarios. A parallel shift would, as the term implies, shift all points on the yield curve by the same increments. For example, by the twelfth month in our policy measurement period, short-term rates such as the federal funds rate would increase by 200 basis points over the “market forward rate,” while longer term rates such as the 10-year and 30-year treasury note rates would increase by 200 basis points as well. A nonparallel shift would consist of a 200 basis point increase in short-term rates, while long-term rates would increase by a different amount. A rate shift in which short-term rates rise to a greater degree than long-term rates is referred to as a “flattening” of the yield curve. Conversely long-term rates rising to a greater degree than short-term rates would lead to a “steepening” of the yield curve.

The impact of a nonparallel shift in rates depends on the types of assets in which funds are invested, and the shape of the curve implicit in the “market forward rate” scenario. For example, at June 30, 2004, the spread between the 10-year and two-year treasury note rates was 190 basis points, which historically would be considered very wide. The average spread between the 10-year and two-year treasury note rates since 1980 has been approximately 81 basis points, including periods of inversion.

In this historically steep yield curve environment, we believe prudent risk management practices dictate the evaluation of rate shifts that include a “flattening” of the yield curve where short-term rates rise faster and to a greater degree than long-term rates. Accordingly, in June 2004 we evaluated scenarios that measure the impact of a “moderate flattening” and a “severe flattening” of the yield curve. Interest rate risk management decisions are based on a composite view of sensitivity considering parallel and nonparallel shifts. The methodology we use is discussed further in the Earnings Sensitivity section.

Earnings Sensitivity The Policy Period Sensitivity Measurement table provides a summary of our interest rate sensitivity measurement.

* Assumes that base Fed Funds rate remains unchanged.
** Assumes that base Fed Funds rate mirrors market expectations.

In June 2004, our earnings simulation model indicated that earnings would be positively affected by 0.3 percent in a “high rate composite” scenario relative to the “market forward rate” over the policy period. Additionally, we measure a scenario where rates gradually decline 50 basis points over a 12-month period relative to the “market forward rate” scenario. The model indicates that earnings would be negatively affected in this scenario by 0.3 percent, which indicates an asset sensitive position to changes in interest rates.

Our sensitivity to the “market forward rate” scenario is measured using three different yield curve shapes. The first is a gradual 200 basis point increase at each point on

the yield curve over a 12-month period. This is referred to as a parallel shift in the curve and would follow the “market forward rate” scenario’s expected flattening. Next we measure the exposure to nonparallel shifts by allowing short-term rates to rise by 200 basis points, while allowing rates of terms longer than one year to increase by a lesser degree. This approach creates incrementally flatter curves. This has the impact of stressing liability costs by a full 200 basis points, while new fixed rate lending and investment rates receive less than a 200 basis point increase. The focal point is the spread between the 10-year and two-year treasury note rates. In our “moderate flattening” scenario, this spread declines from 140 basis points in the “market forward rate” scenario to 83 basis points. This flattening is quite significant in relation to the most likely scenario; however, it is still above the historical average. Our “severe flattening” scenario reduces the spread between the 10-year and two-year treasury note rates to 26 basis points by the end of the measurement period. This approach fully stresses expected earnings to the risks of nonparallel curve shifts. The reported sensitivity is a composite of these three scenarios.

The Policy Period Sensitivity Measurement table shows that our “flat rate” scenario holds the federal funds rate constant at 1.00 percent through May 2005. Based on our June 2004 outlook, if interest rates were to follow our “high rate” scenario (i.e., a 200 basis point increase in short-term rates from our “flat rate” scenario) with a parallel shift in the yield curve, our earnings sensitivity model indicates earnings during the 12-month policy measurement period would increase by 1.8 percent.

Typically, we analyze a 200 basis point decline for our “low rate” scenario. However, because of the current federal funds rate level, we believe a 50 basis point decline in rates is more appropriate. If rates were to follow the “low rate” scenario relative to our “flat rate” scenario, our earnings would decrease by 0.8 percent. For our “most likely rate” scenario, we believe the “market forward rate” is the most appropriate. The “market forward rate” scenario assumes the federal funds rate of 1.02 percent at June 1, 2004, gradually rises to 2.90 percent through the end of our policy measurement period.

While our interest rate sensitivity modeling assumes that management takes no action, we regularly assess the viability of strategies to reduce unacceptable risks to earnings and we implement such strategies when we believe those actions are prudent. As new monthly outlooks become available, we formulate strategies aimed at protecting earnings from the potential negative effects of changes in interest rates.

The following information addresses recently issued accounting standards that will affect us as well as new or proposed legislation that will continue to have a significant impact on our industry.

Other Postretirement Benefits In December 2003, Congress enacted into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act), which introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care plans. Statement of Financial Accounting Standards No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, requires currently enacted changes in relevant laws to be considered in the current period measurement of postretirement benefit cost and the accumulated benefit obligation. However, the FASB issued guidance that permitted companies to defer recognition of the

impact of the Act until certain accounting issues are resolved by the FASB. In May 2004, the FASB issued FASB Staff Position (FSP) 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which provides guidance on accounting for the impact of the Act. We adopted the provisions of FSP 106-2 in the second quarter of 2004. The adoption of FSP 106-2 did not have a material impact on our consolidated financial position or results of operations.

Loan Commitments In March 2004, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 105, Application of Accounting Principles to Loan Commitments. SAB 105 requires that the fair value measurement of mortgage loan commitments, which are derivatives, exclude any expected future cash flows related to the customer relationship or to servicing rights. We adopted the provisions of SAB 105 in the second quarter of 2004. The adoption of SAB 105 did not have a material impact on our consolidated financial position or results of operations.

Purchased Loans In December 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position (SOP) 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer, which addresses the accounting for differences between contractual cash flows and expected cash flows for loans acquired in a transfer when those differences are attributable at least in part to a decline in credit quality. The scope of SOP 03-3 includes loans that have shown evidence of deterioration in credit quality since origination, and includes loans acquired individually, in pools or as part of a business combination. Under SOP 03-3, the difference between expected cash flows and the purchase price is accreted as an adjustment to yield over the life of the acquired loans. The difference between contractual cash flows and expected cash flows is not subject to accretion under SOP 03-3. For loans acquired in a business combination that have evidence of credit deterioration, SOP 03-3 represents a significant change from current purchase accounting practice whereby the acquiree’s allowance for loan losses is typically added to the acquirer’s allowance for loan losses. SOP 03-3 is effective for loans acquired beginning in 2005. We are currently evaluating the impact its adoption will have on our consolidated financial position or results of operations.

Regulatory Matters Various legislative and regulatory proposals concerning the financial services industry are pending in Congress, the legislatures in states in which we conduct operations and before various regulatory agencies that supervise our operations. Given the uncertainty of the legislative and regulatory process, we cannot assess the impact of any such legislation or regulations on our consolidated financial position or results of operations. For a more detailed description of the laws and regulations governing our business operations, please see our 2003 Annual Report on Form 10-K.

Table 1

EXPLANATION OF OUR USE OF NON-GAAP FINANCIAL MEASURES

In addition to the results of operations presented in accordance with generally accepted accounting principles (GAAP), our management uses, and this quarterly financial supplement contains, certain non-GAAP financial measures, such as expenses excluding merger-related and restructuring expenses; the dividend payout ratio on a basis that excludes merger-related and restructuring expenses and other intangible amortization; and net interest income on a tax-equivalent basis.

We believe these non-GAAP financial measures provide information useful to investors in understanding our underlying operational performance, our business and performance trends, and facilitates comparisons with the performance of others in the financial services industry. Specifically, we believe the exclusion of merger-related and restructuring expenses permits evaluation and a comparison of results for ongoing business operations, and it is on this basis that our management internally assesses our performance. These non-operating items also are excluded from our segment measures used internally to evaluate segment performance in accordance with GAAP because management does not consider them particularly relevant or useful in evaluating the operating performance of our business segments. For additional information regarding segment performance, see the “Business Segments” sections. This quarterly financial supplement contains information regarding estimates of our future expenses excluding merger-related and restructuring expenses. The amount and timing of those future merger-related and restructuring expenses, however, are not estimable until such expenses actually occur, and therefore, reconciliation information relating to those future expenses and GAAP expenses has not been provided.

In addition, because of the significant amount of deposit base intangible amortization, we believe the exclusion of this expense provides investors with consistent and meaningful comparisons to other financial service firms. Also, our management makes recommendations to our board of directors about dividend payments based on reported earnings excluding merger-related and restructuring expenses and other intangible amortization (cash earnings), and has communicated certain cash dividend payout ratio goals to investors. We believe the cash dividend payout ratio is useful to investors because it provides investors with a better understanding of and permits investors to monitor our dividend payout policy.

This quarterly financial supplement also includes net interest income on a tax-equivalent basis. We believe the presentation of net interest income on a tax-equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

Although we believe the above mentioned non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. The reconciliation of these non-GAAP financial measures from GAAP to non-GAAP is presented below.


	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In millions)	2004			2003		2004			2003
Net interest income (GAAP)	$	2,838			2,540	$	5,699			5,077
Tax-equivalent adjustment		65			63		127			127

Net interest income (Tax-equivalent)	$	2,903			2,603	$	5,826			5,204

DIVIDEND PAYOUT RATIOS ON COMMON SHARES
Diluted earnings per common share (GAAP)	$	0.95			0.77	$	1.89			1.53
Other intangible amortization		0.05			0.06		0.11			0.13
Merger-related and restructuring expenses		0.03			0.04		0.07			0.07

Earnings per share (Cash basis)	$	1.03			0.87	$	2.07			1.73

Dividends paid per common share	$	0.40			0.29	$	0.80			0.55
Dividend payout ratios (GAAP)		42.11	%		37.66		42.33	%		35.95
Dividend payout ratios (Cash basis) (a)		38.83	%		33.33		38.65	%		31.79

(a) Dividend payout ratios are calculated by dividing dividends per common share by earnings per common share on a cash basis.

Table 2

SELECTED STATISTICAL DATA


	2004					2003
	Second			First		Fourth		Third		Second
(Dollars in millions, except per share data)	Quarter			Quarter		Quarter		Quarter		Quarter
PROFITABILITY
Return on average common stockholders’ equity		15.49	%		15.37		13.58		13.71		12.78
Net interest margin (a)		3.37			3.55		3.64		3.57		3.81
Fee and other income as % of total revenue		47.24			48.53		46.95		49.05		45.34
Effective income tax rate		32.19	%		32.73		29.76		30.41		30.54

ASSET QUALITY
Allowance for loan losses as % of loans, net (b)		1.35	%		1.40		1.42		1.49		1.54
Allowance for loan losses as % of nonperforming assets (b) (c)		241			218		205		164		154
Allowance for credit losses as % of nonperforming assets (b)		1.43			1.49		1.51		1.59		1.66
Net charge-offs as % of average loans, net		0.17			0.13		0.39		0.33		0.43
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		0.55	%		0.63		0.69		0.95		1.04

CAPITAL ADEQUACY
Tier 1 capital ratio		8.36	%		8.54		8.52		8.67		8.33
Total capital ratio		11.32			11.67		11.82		12.21		11.92
Leverage		6.23	%		6.33		6.36		6.56		6.78

OTHER DATA
FTE employees		85,042			85,460		86,114		86,635		78,965
Total financial centers/brokerage offices		3,272			3,305		3,360		3,399		3,176
ATMs		4,396			4,404		4,408		4,420		4,479
Actual common shares (In millions)		1,309			1,312		1,312		1,328		1,332
Common stock price	$	44.50			47.00		46.59		41.19		39.96
Market capitalization	$	58,268			61,650		61,139		54,701		53,228

(a) Tax-equivalent.

(b) As of June 30, 2004, the reserve for unfunded lending commitments has been reclassified from the allowance for loan losses to other liabilities. The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004.

Table 3

SUMMARIES OF INCOME, PER COMMON SHARE AND BALANCE SHEET DATA


	2004					2003
	Second			First		Fourth			Third		Second
(In millions, except per share data)	Quarter			Quarter		Quarter			Quarter		Quarter
SUMMARIES OF INCOME
Interest income	$	4,019			3,999		3,951			3,712		3,696
Tax-equivalent adjustment		65			62		65			64		63

Interest income (a)		4,084			4,061		4,016			3,776		3,759
Interest expense		1,181			1,138		1,074			1,059		1,156

Net interest income (a)		2,903			2,923		2,942			2,717		2,603
Provision for credit losses		61			44		86			81		195

Net interest income after provision for loan losses (a)		2,842			2,879		2,856			2,636		2,408
Securities gains (losses)		36			2		(24	)		22		10
Fee and other income		2,563			2,755		2,628			2,594		2,148
Merger-related and restructuring expenses		102			99		135			148		96
Other noninterest expense		3,385			3,557		3,631			3,422		2,905
Minority interest in income of consolidated subsidiaries		45			57		63			55		16

Income before income taxes and cumulative effect of a change in accounting principle		1,909			1,923		1,631			1,627		1,549
Income taxes		592			610		466			475		454
Tax-equivalent adjustment		65			62		65			64		63

Income before cumulative effect of a change in accounting principle		1,252			1,251		1,100			1,088		1,032
Cumulative effect of a change in accounting principle, net of income taxes		—			—		—			17		—

Net income		1,252			1,251		1,100			1,105		1,032
Dividends on preferred stock		—			—		—			—		1

Net income available to common stockholders	$	1,252			1,251		1,100			1,105		1,031

PER COMMON SHARE DATA
Basic
Income before change in accounting principle	$	0.96			0.96		0.84			0.83		0.77
Net income		0.96			0.96		0.84			0.84		0.77
Diluted
Income before change in accounting principle		0.95			0.94		0.83			0.82		0.77
Net income		0.95			0.94		0.83			0.83		0.77
Cash dividends	$	0.40			0.40		0.35			0.35		0.29
Average common shares - Basic		1,300			1,302		1,311			1,321		1,333
Average common shares - Diluted		1,320			1,326		1,332			1,338		1,346
Average common stockholders’ equity
Quarter-to-date	$	32,496			32,737		32,141			31,985		32,362
Year-to-date		32,616			32,737		32,135			32,132		32,208
Book value per common share		24.93			25.42		24.71			24.71		24.37
Common stock price
High		47.66			48.90		46.59			44.71		43.15
Low		44.16			45.91		42.07			40.60		34.47
Period-end	$	44.50			47.00		46.59			41.19		39.96
To earnings ratio (b)		12.54	X		13.95		14.61			13.64		14.02
To book value		178	%		185		189			167		164
BALANCE SHEET DATA
Assets (c)	$	418,441			411,140		401,188			388,924		364,479
Long-term debt	$	37,022			39,352		36,730			37,541		37,051

(a) Tax-equivalent.

(b) Based on diluted earnings per common share.

(c) As of June 30, 2004, the reserve for unfunded lending commitments has been reclassified from the allowance for loan losses to other liabilities. Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004.

Table 4

MERGER-RELATED AND RESTRUCTURING EXPENSES


	Six
	Months
	Ended
	June 30,
(In millions)	2004
MERGER-RELATED AND RESTRUCTURING EXPENSES — WACHOVIA/PRUDENTIAL FINANCIAL RETAIL BROKERAGE TRANSACTION
Merger-related expenses
Personnel costs	$	39
Occupancy and equipment		4
Advertising		17
System conversion costs		48
Other		7

Total merger-related expenses		115

Restructuring expenses
Occupancy and equipment		5

Total restructuring expenses		5

Total Wachovia/Prudential Financial merger-related and restructuring expenses		120

MERGER-RELATED AND RESTRUCTURING EXPENSES — FIRST UNION/WACHOVIA
Merger-related expenses
Personnel costs		25
Occupancy and equipment		24
Advertising		1
System conversion costs		24
Other		10

Total merger-related expenses		84

Restructuring expenses
Employee termination benefits		1
Occupancy and equipment		(1	)

Total restructuring expenses		—

Total First Union/Wachovia merger-related and restructuring expenses		84

Other restructuring expenses (reversals), net		(3	)

Total merger-related and restructuring expenses	$	201


(In millions)	Total
ACTIVITY IN THE RESTRUCTURING ACCRUAL
Balance, December 31, 2003	$	3
Reversals of prior accruals		(3	)

Balance, June 30, 2004	$	—

Table 5

BUSINESS SEGMENTS (a)


	2004					2003
	Second			First		Fourth		Third		Second
(Dollars in millions)	Quarter			Quarter		Quarter		Quarter		Quarter
GENERAL BANK COMBINED (b)
Net interest income (c)	$	1,902			1,856		1,875		1,882		1,811
Fee and other income		601			568		501		561		572
Intersegment revenue		40			38		49		46		42

Total revenue (c)		2,543			2,462		2,425		2,489		2,425
Provision for credit losses		65			68		145		120		100
Noninterest expense		1,297			1,314		1,386		1,318		1,307
Income taxes		419			381		315		375		362
Tax-equivalent adjustment		11			10		10		9		10

Segment earnings	$	751			689		569		667		646

Economic profit	$	575			506		422		499		466
Risk adjusted return on capital		55.11	%		48.92		41.17		45.84		43.68
Economic capital, average	$	5,247			5,366		5,559		5,681		5,713
Cash overhead efficiency ratio (c)		51.03	%		53.35		57.14		52.96		53.91
Lending commitments	$	73,372			69,977		65,457		63,509		63,712
Average loans, net		122,028			118,123		116,336		114,535		113,267
Average core deposits	$	166,628			160,845		158,091		155,296		151,409
FTE employees		34,487			34,382		34,550		34,882		35,300

COMMERCIAL
Net interest income (c)	$	551			534		543		528		507
Fee and other income		96			125		90		91		80
Intersegment revenue		24			23		31		27		23

Total revenue (c)		671			682		664		646		610
Provision for credit losses		15			6		57		35		28
Noninterest expense		275			274		292		280		271
Income taxes		127			136		106		111		103
Tax-equivalent adjustment		11			10		10		9		10

Segment earnings	$	243			256		199		211		198

Economic profit	$	156			158		125		115		99
Risk adjusted return on capital		39.61	%		38.53		30.98		28.99		26.40
Economic capital, average	$	2,203			2,305		2,467		2,554		2,583
Cash overhead efficiency ratio (c)		40.96	%		40.17		44.05		43.34		44.28
Average loans, net	$	51,488			50,318		50,085		50,009		50,481
Average core deposits	$	37,434			35,014		33,868		31,775		29,236

RETAIL AND SMALL BUSINESS
Net interest income (c)	$	1,351			1,322		1,332		1,354		1,304
Fee and other income		505			443		411		470		492
Intersegment revenue		16			15		18		19		19

Total revenue (c)		1,872			1,780		1,761		1,843		1,815
Provision for credit losses		50			62		88		85		72
Noninterest expense		1,022			1,040		1,094		1,038		1,036
Income taxes		292			245		209		264		259
Tax-equivalent adjustment		—			—		—		—		—

Segment earnings	$	508			433		370		456		448

Economic profit	$	419			348		297		384		367
Risk adjusted return on capital		66.32	%		56.74		49.30		59.60		57.95
Economic capital, average	$	3,044			3,061		3,092		3,127		3,130
Cash overhead efficiency ratio (c)		54.65	%		58.39		62.07		56.33		57.16
Average loans, net	$	70,540			67,805		66,251		64,526		62,786
Average core deposits	$	129,194			125,831		124,223		123,521		122,173

(a) Certain amounts presented in this Table 5 in periods prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004.

(b) General Bank Combined represents the consolidation of the General Bank’s Commercial, and Retail and Small Business lines of business.

(Continued)

Table 5

BUSINESS SEGMENTS


	2004						2003
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	131			118			95			79			37
Fee and other income		1,245			1,350			1,327			1,304			814
Intersegment revenue		(12	)		(13	)		(17	)		(17	)		(16	)

Total revenue (b)		1,364			1,455			1,405			1,366			835
Provision for credit losses		—			—			—			—			—
Noninterest expense		1,147			1,226			1,196			1,161			683
Income taxes		79			83			74			75			56
Tax-equivalent adjustment		—			—			1			—			—

Segment earnings	$	138			146			134			130			96

Economic profit	$	101			108			96			94			76
Risk adjusted return on capital		41.66	%		41.83			38.52			39.79			53.80
Economic capital, average	$	1,336			1,403			1,374			1,299			712
Cash overhead efficiency ratio (b)		84.08	%		84.25			85.07			84.98			81.97
Average loans, net	$	254			139			156			135			137
Average core deposits	$	24,732			18,360			7,015			1,630			1,226
FTE employees		19,461			19,581			19,937			20,012			12,404
Assets under management	$	247,585			250,559			246,626			240,260			238,637

RETAIL BROKERAGE SERVICES
Net interest income (b)	$	119			109			84			71			30
Fee and other income		963			1,086			1,070			1,057			582
Intersegment revenue		(13	)		(12	)		(16	)		(15	)		(16	)

Total revenue (b)		1,069			1,183			1,138			1,113			596
Provision for credit losses		—			—			—			—			—
Noninterest expense		931			1,009			982			961			495
Income taxes		48			64			53			58			37
Tax-equivalent adjustment		—			—			1			—			—

Segment earnings	$	90			110			102			94			64

Economic profit	$	59			77			69			64			49
Risk adjusted return on capital		31.68	%		36.84			34.03			34.25			47.30
Economic capital, average	$	1,140			1,205			1,168			1,104			540
Cash overhead efficiency ratio (b)		86.83	%		85.36			86.16			86.50			83.18
Average loans, net	$	1			—			—			—			2
Average core deposits	$	23,166			17,161			5,628			418			208

(a) Capital Management Combined represents the consolidation of Capital Management’s Retail Brokerage Services, Asset Management, and Other, which primarily serves to eliminate intersegment revenue.

(b) Tax-equivalent.

(Continued)

Table 5

BUSINESS SEGMENTS


	2004						2003
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
ASSET MANAGEMENT
Net interest income (b)	$	11			9			10			8			6
Fee and other income		287			269			262			252			240
Intersegment revenue		—			—			—			(1	)		1

Total revenue (b)		298			278			272			259			247
Provision for credit losses		—			—			—			—			—
Noninterest expense		227			226			226			209			199
Income taxes		26			19			17			17			18
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings	$	45			33			29			33			30

Economic profit	$	39			28			23			27			25
Risk adjusted return on capital		90.84	%		66.13			55.59			64.31			69.31
Economic capital, average	$	199			201			209			198			175
Cash overhead efficiency ratio (b)		76.35	%		81.28			83.05			80.50			80.69
Average loans, net	$	253			139			156			135			135
Average core deposits	$	1,566			1,199			1,387			1,212			1,018

OTHER
Net interest income (b)	$	1			—			1			—			1
Fee and other income		(5	)		(5	)		(5	)		(5	)		(8	)
Intersegment revenue		1			(1	)		(1	)		(1	)		(1	)

Total revenue (b)		(3	)		(6	)		(5	)		(6	)		(8	)
Provision for credit losses		—			—			—			—			—
Noninterest expense		(11	)		(9	)		(12	)		(9	)		(11	)
Income taxes		5			—			4			—			1
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings	$	3			3			3			3			2

Economic profit	$	3			3			4			3			2
Risk adjusted return on capital		—	%		—			—			—			—
Economic capital, average	$	(3	)		(3	)		(3	)		(3	)		(3	)
Cash overhead efficiency ratio (b)		—	%		—			—			—			—
Average loans, net	$	—			—			—			—			—
Average core deposits	$	—			—			—			—			—

(Continued)

Table 5

BUSINESS SEGMENTS


	2004						2003
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	610			594			591			572			568
Fee and other income		716			743			621			539			556
Intersegment revenue		(30	)		(27	)		(34	)		(31	)		(27	)

Total revenue (b)		1,296			1,310			1,178			1,080			1,097
Provision for credit losses		(4	)		(26	)		35			10			95
Noninterest expense		616			617			648			578			559
Income taxes		222			231			153			149			135
Tax-equivalent adjustment		31			32			32			32			31

Segment earnings	$	431			456			310			311			277

Economic profit	$	274			280			161			138			130
Risk adjusted return on capital		34.23	%		34.52			23.47			21.10			19.77
Economic capital, average	$	4,735			4,794			5,138			5,401			5,974
Cash overhead efficiency ratio (b)		47.59	%		47.06			55.04			53.37			51.05
Lending commitments	$	75,295			71,147			69,728			69,481			72,275
Average loans, net		29,850			29,755			30,869			31,947			34,393
Average core deposits	$	18,772			16,748			16,465			16,422			14,744
FTE employees		4,525			4,355			4,317			4,224			4,229

CORPORATE LENDING
Net interest income (b)	$	289			279			293			299			299
Fee and other income		186			181			200			189			134
Intersegment revenue		5			6			3			4			3

Total revenue (b)		480			466			496			492			436
Provision for credit losses		(4	)		(27	)		36			10			95
Noninterest expense		127			124			123			124			121
Income taxes		133			138			126			135			83
Tax-equivalent adjustment		—			—			—			—			1

Segment earnings	$	224			231			211			223			136

Economic profit	$	131			120			123			106			54
Risk adjusted return on capital		31.33	%		29.59			27.32			23.79			16.82
Economic capital, average	$	2,574			2,607			2,983			3,278			3,708
Cash overhead efficiency ratio (b)		26.40	%		26.61			24.78			25.26			27.78
Average loans, net	$	22,874			23,766			25,021			26,121			28,890
Average core deposits	$	789			807			916			1,355			1,250

GLOBAL TREASURY AND TRADE FINANCE
Net interest income (b)	$	87			85			85			80			75
Fee and other income		180			179			176			178			173
Intersegment revenue		(27	)		(26	)		(25	)		(24	)		(21	)

Total revenue (b)		240			238			236			234			227
Provision for credit losses		—			—			—			—			(3	)
Noninterest expense		164			168			181			174			170
Income taxes		28			25			21			22			23
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings	$	48			45			34			38			37

Economic profit	$	41			37			26			28			25
Risk adjusted return on capital		80.54	%		75.81			51.20			51.14			46.80
Economic capital, average	$	236			230			251			277			284
Cash overhead efficiency ratio (b)		68.29	%		70.54			77.07			74.43			75.19
Average loans, net	$	4,959			4,306			4,045			4,042			3,702
Average core deposits	$	11,901			11,022			10,618			10,073			9,081

(a) Corporate and Investment Bank Combined represents the consolidation of the Corporate and Investment Bank’s Corporate Lending, Global Treasury and Trade Finance, Investment Banking, and Principal Investing lines of business.

(b) Tax-equivalent.

(Continued)

Table 5

BUSINESS SEGMENTS


	2004						2003
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
INVESTMENT BANKING
Net interest income (b)	$	240			235			214			190			194
Fee and other income		335			345			257			197			306
Intersegment revenue		(8	)		(7	)		(12	)		(11	)		(9	)

Total revenue (b)		567			573			459			376			491
Provision for credit losses		—			1			(1	)		—			3
Noninterest expense		316			316			332			268			255
Income taxes		61			59			15			4			55
Tax-equivalent adjustment		31			32			32			32			30

Segment earnings	$	159			165			81			72			148

Economic profit	$	121			128			51			49			119
Risk adjusted return on capital		50.97	%		52.46			30.36			29.66			55.06
Economic capital, average	$	1,224			1,236			1,073			1,030			1,089
Cash overhead efficiency ratio (b)		56.01	%		55.01			72.29			70.31			52.20
Average loans, net	$	2,017			1,683			1,803			1,784			1,801
Average core deposits	$	6,082			4,919			4,931			4,994			4,413

PRINCIPAL INVESTING
Net interest income (b)	$	(6	)		(5	)		(1	)		3			—
Fee and other income		15			38			(12	)		(25	)		(57	)
Intersegment revenue		—			—			—			—			—

Total revenue (b)		9			33			(13	)		(22	)		(57	)
Provision for credit losses		—			—			—			—			—
Noninterest expense		9			9			12			12			13
Income taxes (benefits)		—			9			(9	)		(12	)		(26	)
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings (loss)	$	—			15			(16	)		(22	)		(44	)

Economic profit	$	(19	)		(5	)		(39	)		(45	)		(68	)
Risk adjusted return on capital		0.08	%		8.46			(7.59	)		(10.71	)		(19.66	)
Economic capital, average	$	701			721			831			816			893
Cash overhead efficiency ratio (b)		n/m	%		n/m			n/m			n/m			n/m
Average loans, net	$	—			—			—			—			—
Average core deposits	$	—			—			—			—			—

(Continued)

Table 5

BUSINESS SEGMENTS

Three Months Ended June 30, 2004

Net Merger-

Corporate

Related

and

General

Capital

Wealth

Investment

Restructuring

(Dollars in millions)

Bank

Management

Bank

Parent

Expenses (b)

Total

CONSOLIDATED

Net interest income (a)

1,902

131

119

610

141

(65

)

2,838

Fee and other income

601

1,245

147

716

(110

)

—

2,599

Intersegment revenue

(12

)

(30

)

—

Total revenue (a)

2,543

1,364

269

1,296

(65

)

5,437

Provision for credit losses

—

)

—

Noninterest expense

1,297

1,147

187

616

138

102

3,487

Minority interest

—

(25

)

Income taxes (benefits)

419

222

(128

)

(30

)

592

Tax-equivalent adjustment

—

(65

)

—

Net income (loss)

751

138

431

(73

)

(47

)

1,252

Economic profit

575

101

274

(72

)

—

915

Risk adjusted return on capital

55.11

41.66

50.88

34.23

(2.82

)

—

37.67

Economic capital, average

5,247

1,336

369

4,735

2,109

—

13,796

Cash overhead efficiency ratio (a)

51.03

84.08

69.95

47.59

96.06

—

59.60

Lending commitments

73,372

—

4,445

75,295

328

—

153,440

Average loans, net

122,028

254

10,534

29,850

976

—

163,642

Average core deposits

166,628

24,732

12,032

18,772

1,645

—

223,809

FTE employees

34,487

19,461

3,674

4,525

22,895

—

85,042


	Three Months Ended June 30, 2003
															Net Merger-
									Corporate						Related
									and						and
	General			Capital			Wealth		Investment						Restructuring
(Dollars in millions)	Bank			Management			Management		Bank			Parent			Expenses (b)			Total
CONSOLIDATED
Net interest income (a)	$	1,811			37			105		568			82			(63	)		2,540
Fee and other income		572			814			132		556			84			—			2,158
Intersegment revenue		42			(16	)		2		(27	)		(1	)		—			—

Total revenue (a)		2,425			835			239		1,097			165			(63	)		4,698
Provision for credit losses		100			—			5		95			(5	)		—			195
Noninterest expense		1,307			683			179		559			177			96			3,001
Minority interest		—			—			—		—			16			—			16
Income taxes (benefits)		362			56			20		135			(83	)		(36	)		454
Tax-equivalent adjustment		10			—			—		31			22			(63	)		—

Net income		646			96			35		277			38			(60	)		1,032
Dividends on preferred stock		—			—			—		—			1			—			1

Net income available to common stockholders	$	646			96			35		277			37			(60	)		1,031

Economic profit	$	466			76			23		130			44			—			739
Risk adjusted return on capital		43.68	%		53.80			36.19		19.77			18.05			—			30.46
Economic capital, average	$	5,713			712			368		5,974			2,452			—			15,219
Cash overhead efficiency ratio (a)		53.91	%		81.97			74.77		51.05			27.15			—			58.27
Lending commitments	$	63,712			—			3,678		72,275			524			—			140,189
Average loans, net		113,267			137			9,558		34,393			380			—			157,735
Average core deposits	$	151,409			1,226			10,754		14,744			1,284			—			179,417
FTE employees		35,300			12,404			3,842		4,229			23,190			—			78,965

(a) Tax-equivalent.

(b) The tax-equivalent amounts are eliminated herein in order for “Total” amounts to agree with amounts appearing in the Consolidated Statements of Income.

(Continued)

Table 5

BUSINESS SEGMENTS


	Six Months Ended
	June 30,
(Dollars in millions)	2004			2003
GENERAL BANK COMBINED (a)
Net interest income (b)	$	3,758			3,556
Fee and other income		1,169			1,128
Intersegment revenue		78			84

Total revenue (b)		5,005			4,768
Provision for credit losses		133			205
Noninterest expense		2,611			2,590
Income taxes		800			700
Tax-equivalent adjustment		21			20

Segment earnings	$	1,440			1,253

Economic profit	$	1,081			901
Risk adjusted return on capital		51.98	%		43.00
Economic capital, average	$	5,307			5,677
Cash overhead efficiency ratio (b)		52.17	%		54.32
Lending commitments	$	73,372			63,712
Average loans, net		120,075			112,205
Average core deposits	$	163,736			148,634
FTE employees		34,487			35,300

COMMERCIAL
Net interest income (b)	$	1,085			992
Fee and other income		221			174
Intersegment revenue		47			46

Total revenue (b)		1,353			1,212
Provision for credit losses		21			68
Noninterest expense		549			542
Income taxes		263			200
Tax-equivalent adjustment		21			20

Segment earnings	$	499			382

Economic profit	$	314			195
Risk adjusted return on capital		39.06	%		26.34
Economic capital, average	$	2,254			2,559
Cash overhead efficiency ratio (b)		40.56	%		44.71
Average loans, net	$	50,903			50,214
Average core deposits	$	36,224			27,840

RETAIL AND SMALL BUSINESS
Net interest income (b)	$	2,673			2,564
Fee and other income		948			954
Intersegment revenue		31			38

Total revenue (b)		3,652			3,556
Provision for credit losses		112			137
Noninterest expense		2,062			2,048
Income taxes		537			500
Tax-equivalent adjustment		—			—

Segment earnings	$	941			871

Economic profit	$	767			706
Risk adjusted return on capital		61.52	%		56.69
Economic capital, average	$	3,053			3,118
Cash overhead efficiency ratio (b)		56.48	%		57.59
Average loans, net	$	69,172			61,991
Average core deposits	$	127,512			120,794

(a) General Bank Combined represents the consolidation of the General Bank’s Commercial, and Retail and Small Business lines of business.

(b) Tax-equivalent.

(Continued)

Table 5

BUSINESS SEGMENTS


	Six Months Ended
	June 30,
(Dollars in millions)	2004			2003
CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	249			75
Fee and other income		2,595			1,560
Intersegment revenue		(25	)		(35	)

Total revenue (b)		2,819			1,600
Provision for credit losses		—			—
Noninterest expense		2,373			1,327
Income taxes		162			100
Tax-equivalent adjustment		—			—

Segment earnings	$	284			173

Economic profit	$	209			135
Risk adjusted return on capital		41.75	%		50.16
Economic capital, average	$	1,370			695
Cash overhead efficiency ratio (b)		84.17	%		82.98
Average loans, net	$	197			133
Average core deposits	$	21,546			1,254
FTE employees		19,461			12,404
Assets under management	$	247,585			238,637

RETAIL BROKERAGE SERVICES
Net interest income (b)	$	228			62
Fee and other income		2,049			1,109
Intersegment revenue		(25	)		(34	)

Total revenue (b)		2,252			1,137
Provision for credit losses		—			—
Noninterest expense		1,940			963
Income taxes		112			63
Tax-equivalent adjustment		—			—

Segment earnings	$	200			111

Economic profit	$	136			82
Risk adjusted return on capital		34.33	%		42.52
Economic capital, average	$	1,173			525
Cash overhead efficiency ratio (b)		86.06	%		84.66
Average loans, net	$	1			2
Average core deposits	$	20,164			194

(Continued)

Table 5

BUSINESS SEGMENTS


	Six Months Ended
	June 30,
(Dollars in millions)	2004			2003
CORPORATE AND INVESTMENT
BANK COMBINED (a)
Net interest income (b)	$	1,204			1,152
Fee and other income		1,459			1,102
Intersegment revenue		(57	)		(51	)

Total revenue (b)		2,606			2,203
Provision for credit losses		(30	)		205
Noninterest expense		1,233			1,110
Income taxes		453			269
Tax-equivalent adjustment		63			62

Segment earnings	$	887			557

Economic profit	$	554			259
Risk adjusted return on capital		34.38	%		19.52
Economic capital, average	$	4,765			6,140
Cash overhead efficiency ratio (b)		47.32	%		50.43
Lending commitments	$	75,295			72,275
Average loans, net		29,803			35,134
Average core deposits	$	17,760			14,389
FTE employees		4,525			4,229

CORPORATE LENDING
Net interest income (b)	$	568			607
Fee and other income		367			288
Intersegment revenue		11			7

Total revenue (b)		946			902
Provision for credit losses		(31	)		207
Noninterest expense		251			242
Income taxes		271			170
Tax-equivalent adjustment		—			1

Segment earnings	$	455			282

Economic profit	$	251			108
Risk adjusted return on capital		30.46	%		16.56
Economic capital, average	$	2,591			3,927
Cash overhead efficiency ratio (b)		26.50	%		26.83
Average loans, net	$	23,320			29,676
Average core deposits	$	798			1,272

GLOBAL TREASURY AND TRADE FINANCE
Net interest income (b)	$	172			153
Fee and other income		359			350
Intersegment revenue		(53	)		(43	)

Total revenue (b)		478			460
Provision for credit losses		—			(6	)
Noninterest expense		332			342
Income taxes		53			46
Tax-equivalent adjustment		—			—

Segment earnings	$	93			78

Economic profit	$	78			54
Risk adjusted return on capital		78.21	%		49.84
Economic capital, average	$	233			282
Cash overhead efficiency ratio (b)		69.41	%		74.43
Average loans, net	$	4,632			3,604
Average core deposits	$	11,461			9,009

(Continued)

Table 5

BUSINESS SEGMENTS


	Six Months Ended
	June 30,
(Dollars in millions)	2004			2003
INVESTMENT BANKING
Net interest income (b)	$	475			391
Fee and other income		680			565
Intersegment revenue		(15	)		(15	)

Total revenue (b)		1,140			941
Provision for credit losses		1			3
Noninterest expense		632			505
Income taxes		120			98
Tax-equivalent adjustment		63			61

Segment earnings	$	324			274

Economic profit	$	249			221
Risk adjusted return on capital		51.72	%		53.03
Economic capital, average	$	1,230			1,060
Cash overhead efficiency ratio (b)		55.51	%		53.79
Average loans, net	$	1,851			1,852
Average core deposits	$	5,501			4,108

PRINCIPAL INVESTING
Net interest income (b)	$	(11)			1
Fee and other income		53			(101	)
Intersegment revenue		—			—

Total revenue (b)		42			(100	)
Provision for credit losses		—			1
Noninterest expense		18			21
Income taxes (benefits)		9			(45	)
Tax-equivalent adjustment		—			—

Segment earnings (loss)	$	15			(77	)

Economic profit	$	(24)			(124	)
Risk adjusted return on capital		4.33	%		(17.72	)
Economic capital, average	$	711			871
Cash overhead efficiency ratio (b)		n/m	%		n/m
Average loans, net	$	—			2
Average core deposits	$	—			—

(Continued)

Table 5

BUSINESS SEGMENTS

Six Months Ended June 30, 2004

Net Merger-

Corporate

Related

and

General

Capital

Wealth

Investment

Restructuring

(Dollars in millions)

Bank

Management

Bank

Parent

Expenses (b)

Total

CONSOLIDATED

Net interest income (a)

3,758

249

233

1,204

382

(127

)

5,699

Fee and other income

1,169

2,595

290

1,459

(157

)

—

5,356

Intersegment revenue

(25

)

(57

)

—

Total revenue (a)

5,005

2,819

527

2,606

225

(127

)

11,055

Provision for credit losses

133

—

(30

)

—

105

Noninterest expense

2,611

2,373

372

1,233

353

201

7,143

Minority interest

—

149

(47

)

102

Income taxes (benefits)

800

162

453

(210

)

(59

)

1,202

Tax-equivalent adjustment

—

(127

)

—

Net income (loss)

1,440

284

887

(112

)

(95

)

2,503

Economic profit

1,081

209

554

(105

)

—

1,808

Risk adjusted return on capital

51.98

41.75

47.95

34.38

0.93

—

37.11

Economic capital, average

5,307

1,370

374

4,765

2,109

—

13,925

Cash overhead efficiency ratio (a)

52.17

84.17

70.65

47.32

59.55

—

60.13

Lending commitments

73,372

—

4,445

75,295

328

—

153,440

Average loans, net

120,075

197

10,422

29,803

915

—

161,412

Average core deposits

163,736

21,546

11,760

17,760

1,439

—

216,241

FTE employees

34,487

19,461

3,674

4,525

22,895

—

85,042


	Six Months Ended June 30, 2003
															Net Merger-
									Corporate						Related
									and						and
	General			Capital			Wealth		Investment						Restructuring
(Dollars in millions)	Bank			Management			Management		Bank			Parent			Expenses (b)			Total
CONSOLIDATED
Net interest income (a)	$	3,556			75			206		1,152			215			(127	)		5,077
Fee and other income		1,128			1,560			265		1,102			169			—			4,224
Intersegment revenue		84			(35	)		3		(51	)		(1	)		—			—

Total revenue (a)		4,768			1,600			474		2,203			383			(127	)		9,301
Provision for credit losses		205			—			9		205			—			—			419
Noninterest expense		2,590			1,327			352		1,110			367			160			5,906
Minority interest		—			—			—		—			25			—			25
Income taxes (benefits)		700			100			42		269			(159	)		(60	)		892
Tax-equivalent adjustment		20			—			—		62			45			(127	)		—

Net income		1,253			173			71		557			105			(100	)		2,059
Dividends on preferred stock		—			—			—		—			5			—			5

Net income available to common stockholders	$	1,253			173			71		557			100			(100	)		2,054

Economic profit	$	901			135			48		259			129			—			1,472
Risk adjusted return on capital		43.00	%		50.16			37.90		19.52			21.57			—			30.37
Economic capital, average	$	5,677			695			360		6,140			2,452			—			15,324
Cash overhead efficiency ratio (a)		54.32	%		82.98			74.27		50.43			24.97			—			58.07
Lending commitments	$	63,712			—			3,678		72,275			524			—			140,189
Average loans, net		112,205			133			9,435		35,134			942			—			157,849
Average core deposits	$	148,634			1,254			10,629		14,389			1,314			—			176,220
FTE employees		35,300			12,404			3,842		4,229			23,190			—			78,965

(a) Tax-equivalent.

(b) The tax-equivalent amounts are eliminated herein in order for “Total” amounts to agree with amounts appearing in the Consolidated Statements of Income.

Table 6

NET TRADING REVENUE — INVESTMENT BANKING (a)


	2004				2003
	Second		First		Fourth		Third			Second
(In millions)	Quarter		Quarter		Quarter		Quarter			Quarter
Net interest income (Tax-equivalent)	$	140		143		130		107			122
Trading accounts profits (losses)		47		91		20		(30	)		67
Other fee income		67		64		68		67			58

Total net trading revenue (Tax-equivalent)	$	254		298		218		144			247

(a) Certain amounts presented in periods prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004.

Table 7

SELECTED RATIOS


	Six Months Ended
	June 30,					2004				2003
						Second		First		Fourth		Third		Second
	2004			2003		Quarter		Quarter		Quarter		Quarter		Quarter
PERFORMANCE RATIOS (a)
Assets to stockholders’ equity (b)		12.41	X		10.55		12.65		12.18		12.10		11.78		10.57
Return on assets		1.24	%		1.22		1.22		1.26		1.12		1.16		1.21
Return on common stockholders’ equity		15.43			12.86		15.49		15.37		13.58		13.71		12.78
Return on total stockholders’ equity		15.43	%		12.89		15.49		15.37		13.58		13.71		12.79

DIVIDEND PAYOUT RATIOS
Common shares		42.33	%		35.95		42.11		42.55		42.17		42.17		37.66
Preferred and common shares		42.33	%		36.17		42.11		42.55		42.17		42.17		37.90

(a) Based on average balances and net income.

(b) Certain amounts presented in periods prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004.

Table 9

SECURITIES

June 30, 2004

1 Year

1-5

5-10

After 10

Gross Unrealized

Amortized

Average
Maturity

(In millions)

or Less

Years

Total

Gains

Losses

Cost

in Years

MARKET VALUE

U.S. Treasury

125

620

1,334

2,081

—

2,121

7.03

U.S. Government agencies

10,587

39,502

—

50,169

290

577

50,456

6.26

Asset-backed

Residual interests from securitizations

433

435

937

321

—

616

5.25

Retained bonds from securitizations

399

5,601

2,128

—

8,128

240

7,889

4.33

Collateralized mortgage obligations

1,602

9,778

427

—

11,807

11,815

2.79

Commercial mortgage-backed

105

4,376

4,070

—

8,551

435

8,166

5.37

Other

3,624

1,407

151

5,194

5,181

1.38

State, county and municipal

305

475

2,803

3,660

202

3,497

17.16

Sundry

332

6,230

3,052

2,793

12,407

101

12,395

7.83

Total market value

6,383

39,337

51,574

5,640

102,934

1,634

836

102,136

5.94

MARKET VALUE

Debt securities

6,383

39,337

51,574

4,356

101,650

1,610

836

100,876

Equity securities

—

1,284

—

1,260

Total market value

6,383

39,337

51,574

5,640

102,934

1,634

836

102,136

AMORTIZED COST

Debt securities

6,321

38,541

51,744

4,270

100,876

Equity securities

—

1,260

Total amortized cost

6,321

38,541

51,744

5,530

102,136

WEIGHTED AVERAGE YIELD

U.S. Treasury

1.01

2.66

4.41

5.13

3.70

U.S. Government agencies

5.76

4.37

5.06

—

4.92

Asset-backed

Residual interests from securitizations

20.59

37.36

23.92

14.93

30.86

Retained bonds from securitizations

7.17

4.78

2.02

—

4.16

Collateralized mortgage obligations

3.77

2.21

4.64

—

2.51

Commercial mortgage-backed

1.78

5.57

5.52

—

5.50

Other

2.20

1.81

3.65

10.62

2.15

State, county and municipal

8.72

9.28

9.65

7.24

7.73

Sundry

5.25

4.62

4.92

5.58

4.93

Consolidated

3.20

4.25

5.06

6.46

4.72

At June 30, 2004, all securities were classified as available for sale.

Included in U.S. Government agencies are agency securities retained from the securitization of residential mortgage loans. These securities had an amortized cost and market value of $1.8 billion and $1.9 billion at June 30, 2004, respectively.

Included in asset-backed securities are retained bonds primarily from the securitization of prime equity lines, residential mortgage, commercial real estate, SBA and student loans. At June 30, 2004, retained bonds with an amortized cost of $7.8 billion and a market value of $8.0 billion were considered investment grade based on external ratings. Retained bonds with an amortized cost and market value of $7.1 billion and $7.3 billion at June 30, 2004, respectively, had an external credit rating of AA and above.

Securities with an aggregate amortized cost of $50.1 billion at June 30, 2004, are pledged to secure U.S. Government and other public deposits and for other purposes as required by various statutes or agreements.

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Average maturity excludes equity securities and money market funds.

Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 35 percent and applicable state tax rates.

At June 30, 2004, there were forward commitments to purchase securities at a cost that approximates a market value of $3.7 billion. At June 30, 2004, there were commitments to sell securities at a cost that approximates a market value of $2.4 billion.

Gross gains and losses realized on the sale of debt securities for the six months ended June 30, 2004, were $177 million and $217 million (including $23 million of impairment losses), respectively, and gross gains and losses realized on the sale of equity securities were $86 million and $8 million (including $8 million of impairment losses), respectively.

Table 10

LOANS — ON-BALANCE SHEET, AND MANAGED AND SERVICING PORTFOLIOS


	2004				2003
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and agricultural	$	58,340		55,999		55,453		55,181		56,070
Real estate — construction and other		6,433		6,120		5,969		5,741		5,442
Real estate — mortgage		14,927		15,099		15,186		15,746		16,325
Lease financing		23,894		23,688		23,978		23,598		23,204
Foreign		8,075		7,054		6,880		6,815		6,622

Total commercial		111,669		107,960		107,466		107,081		107,663

CONSUMER
Real estate secured		53,759		51,207		50,726		51,516		47,853
Student loans		9,838		8,876		8,435		8,160		7,657
Installment loans		7,330		9,054		8,965		9,110		9,644

Total consumer		70,927		69,137		68,126		68,786		65,154

Total loans		182,596		177,097		175,592		175,867		172,817
Unearned income		9,679		9,794		10,021		9,942		9,984

Loans, net (On-balance sheet)	$	172,917		167,303		165,571		165,925		162,833

MANAGED PORTFOLIO (a)
COMMERCIAL
On-balance sheet loan portfolio	$	111,669		107,960		107,466		107,081		107,663
Securitized loans — off-balance sheet		1,868		1,927		2,001		2,071		2,126
Loans held for sale included in other assets		1,887		2,242		2,574		1,347		1,282

Total commercial		115,424		112,129		112,041		110,499		111,071

CONSUMER
Real estate secured
On-balance sheet loan portfolio		53,759		51,207		50,726		51,516		47,853
Securitized loans — off-balance sheet		7,194		8,218		8,897		10,192		9,944
Securitized loans included in securities		9,506		10,261		10,905		11,809		13,015
Loans held for sale included in other assets		14,003		11,607		9,618		8,368		8,223

Total real estate secured		84,462		81,293		80,146		81,885		79,035

Student
On-balance sheet loan portfolio		9,838		8,876		8,435		8,160		7,657
Securitized loans — off-balance sheet		612		1,532		1,658		1,786		1,947
Loans held for sale included in other assets		367		433		433		458		583

Total student		10,817		10,841		10,526		10,404		10,187

Installment
On-balance sheet loan portfolio		7,330		9,054		8,965		9,110		9,644
Securitized loans — off-balance sheet		1,794		—		—		—		—
Securitized loans included in securities		130		—		—		—		—

Total installment		9,254		9,054		8,965		9,110		9,644

Total consumer		104,533		101,188		99,637		101,399		98,866

Total managed portfolio	$	219,957		213,317		211,678		211,898		209,937

SERVICING PORTFOLIO (b)
Commercial	$	108,207		99,601		85,693		80,207		73,128
Consumer	$	24,475		16,240		13,279		8,465		6,581

(a) The managed portfolio includes the on-balance sheet loan portfolio, loans securitized for which the retained interests are classified in securities on-balance sheet, loans held for sale that are classified in other assets on-balance sheet and the off-balance sheet portfolio of securitized loans sold, where we service the loans.

(b) The servicing portfolio consists of third party commercial and consumer loans for which our sole function is that of servicing the loans for the third parties.

Table 11

LOANS HELD FOR SALE


	2004						2003
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period	$	14,282			12,625			10,173			10,088			7,461

CORE BUSINESS ACTIVITY (a)
Core business activity, beginning of period		14,183			12,504			9,897			9,762			6,937
Originations/purchases		10,165			6,978			8,343			9,271			9,729
Transfer to (from) loans held for sale, net		(124	)		(92	)		8			(783	)		18
Lower of cost or market value adjustments		—			—			(8	)		(7	)		(6	)
Performing loans sold or securitized		(5,879	)		(3,770	)		(4,484	)		(7,253	)		(6,171	)
Nonperforming loans sold		—			(2	)		(36	)		(11	)		—
Other, principally payments		(2,145	)		(1,435	)		(1,216	)		(1,082	)		(745	)

Core business activity, end of period		16,200			14,183			12,504			9,897			9,762

PORTFOLIO MANAGEMENT ACTIVITY (a)
Portfolio management activity, beginning of period		99			121			276			326			524
Transfers to loans held for sale, net
Performing loans		16			50			29			81			83
Nonperforming loans		5			6			13			61			59
Lower of cost or market value adjustments		—			—			5			—			—
Performing loans sold		(43	)		(60	)		(108	)		(102	)		(220	)
Nonperforming loans sold		(8	)		(8	)		(63	)		(64	)		(2	)
Allowance for loan losses related to loans transferred to loans held for sale		(1	)		(7	)		(17	)		(18	)		(44	)
Other, principally payments		(11	)		(3	)		(14	)		(8	)		(74	)

Portfolio management activity, end of period		57			99			121			276			326

Balance, end of period (b)	$	16,257			14,282			12,625			10,173			10,088

(a) Core business activity means we originate loans with the intent to sell them to third parties, and portfolio management activity means we look for market opportunities to reduce risk in the loan portfolio by transferring loans to loans held for sale.

(b) Nonperforming assets included in loans held for sale at June 30, and March 31, 2004, and at December 31, September 30, and June 30, 2003, were $68 million, $67 million, $82 million, $160 million and $167 million, respectively.

Table 12

ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS


	2004						2003
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
ALLOWANCE FOR LOAN LOSSES (a)
Balance, beginning of period	$	2,338			2,348			2,474			2,510			2,553
Provision for credit losses		73			59			63			118			169
Provision for credit losses relating to loans transferred to other assets or sold		(9	)		(8	)		24			—			26
Allowance relating to loans acquired, transferred to other assets or sold		(3	)		(9	)		(57	)		(22	)		(69	)
Net charge-offs		(68	)		(52	)		(156	)		(132	)		(169	)

Balance, end of period	$	2,331			2,338			2,348			2,474			2,510

as a % of loans, net		1.35	%		1.40			1.42			1.49			1.54

as a % of nonaccrual and restructured loans (b)		270	%		242			227			178			167

as a % of nonperforming assets (b)		241	%		218			205			164			154

LOAN LOSSES
Commercial, financial and agricultural	$	41			48			105			88			128
Commercial real estate - construction and mortgage		1			1			4			5			7
Consumer		66			86			106			106			91

Total loan losses		108			135			215			199			226

LOAN RECOVERIES
Commercial, financial and agricultural		23			57			37			45			37
Commercial real estate - construction and mortgage		—			2			2			1			1
Consumer		17			24			20			21			19

Total loan recoveries		40			83			59			67			57

Net charge-offs	$	68			52			156			132			169

Commercial loan net charge-offs as % of average commercial loans, net (c)		0.08	%		(0.05	)		0.31			0.21			0.42
Consumer loan net charge-offs as % of average consumer loans, net (c)		0.28			0.36			0.50			0.51			0.44
Total net charge-offs as % of average loans, net (c)		0.17	%		0.13			0.39			0.33			0.43

NONPERFORMING ASSETS
Nonaccrual loans
Commercial, financial and agricultural	$	610			700			765			1,072			1,153
Commercial real estate - construction and mortgage		33			47			54			76			96
Consumer real estate secured		207			199			192			215			221
Installment loans		13			22			24			28			31

Total nonaccrual loans		863			968			1,035			1,391			1,501
Foreclosed properties (d)		104			103			111			116			130

Total nonperforming assets	$	967			1,071			1,146			1,507			1,631

Nonperforming loans included in loans held for sale (e)	$	68			67			82			160			167
Nonperforming assets included in loans and in loans held for sale	$	1,035			1,138			1,228			1,667			1,798

as % of loans, net, and foreclosed properties (b)		0.56	%		0.64			0.69			0.91			1.00

as % of loans, net, foreclosed properties and loans in other assets as held for sale (e)		0.55	%		0.63			0.69			0.95			1.04

Accruing loans past due 90 days	$	419			328			341			291			293

(a) As of June 30, 2004, Wachovia has reclassified its reserve for unfunded lending commitments from the allowance for loan losses to other liabilities. Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004. At June 30, 2004, the reserve for unfunded lending commitments was $146 million.

(b) These ratios do not include nonperforming loans included in loans held for sale.

(d) Restructured loans are not significant.

(e) These ratios reflect nonperforming loans included in loans held for sale. Loans held for sale, which are included in other assets, are recorded at the lower of cost or market value, and accordingly, the amounts shown and included in the ratios are net of the transferred allowance for loan losses and the lower of cost or market value adjustments.

Table 13

NONACCRUAL LOAN ACTIVITY (a)


	2004						2003
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period	$	968			1,035			1,391			1,501			1,622

Commercial nonaccrual loan activity
Commercial nonaccrual loans, beginning of period		747			819			1,148			1,249			1,371
New nonaccrual loans and advances		100			183			122			252			291
Gross charge-offs		(42	)		(49	)		(109	)		(93	)		(135	)
Transfers to loans held for sale		(6	)		(7	)		—			(37	)		(44	)
Transfers to other real estate owned		(2	)		—			(5	)		—			(6	)
Sales		(19	)		(73	)		(101	)		(56	)		(29	)
Other, principally payments		(135	)		(126	)		(236	)		(167	)		(199	)

Net commercial nonaccrual loan activity		(104	)		(72	)		(329	)		(101	)		(122	)

Commercial nonaccrual loans, end of period		643			747			819			1,148			1,249

Consumer nonaccrual loan activity
Consumer nonaccrual loans, beginning of period		221			216			243			252			251
New nonaccrual loans, advances and other, net		(1	)		5			13			15			22
Transfers to loans held for sale		—			—			(13	)		(24	)		(21	)
Sales and securitizations		—			—			(27	)		—			—

Net consumer nonaccrual loan activity		(1	)		5			(27	)		(9	)		1

Consumer nonaccrual loans, end of period		220			221			216			243			252

Balance, end of period	$	863			968			1,035			1,391			1,501

(a) Excludes nonaccrual loans included in loans held for sale and foreclosed properties.

Table 17

LONG-TERM DEBT


	2004				2003
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
NOTES AND DEBENTURES ISSUED BY THE PARENT COMPANY
Notes
3.50% to 7.70%, due 2004 to 2009	$	7,007		8,015		6,757		7,057		6,500
Floating rate, due 2004 to 2007		990		990		490		490		840
Floating rate extendible, due 2005		10		10		10		10		10
Equity-linked, due 2005 to 2009		35		35		25		25		19
Subordinated notes
4.875% to 7.50%, due 2005 to 2014		4,479		4,478		3,622		3,630		3,639
8.00%, due 2009		149		149		149		149		149
6.605%, due 2025		250		250		250		250		250
6.30%, Putable/Callable, due 2028		200		200		200		200		200
Floating rate, due 2003		—		—		—		—		150
Subordinated debentures
6.55% to 7.574%, due 2026 to 2035		795		795		795		795		795
Hedge-related basis adjustments		385		847		728		911		1,123

Total notes and debentures issued by the Parent Company		14,300		15,769		13,026		13,517		13,675

NOTES ISSUED BY SUBSIDIARIES
Notes, primarily notes issued under global bank note programs, varying rates and terms to 2040		4,597		5,740		6,059		6,059		6,188
Subordinated notes
6.625% to 6.75%, due 2005 to 2006		375		375		375		575		575
Bank, 5.00% to 7.875%, due 2006 to 2036		3,047		3,047		3,047		3,047		2,547
7.80% to 7.95%, due 2006 to 2007		249		248		248		248		248
Floating rate, due 2013		417		417		417		417		—

Total notes issued by subsidiaries		8,685		9,827		10,146		10,346		9,558

OTHER DEBT
Trust preferred securities		—		—		3,022		3,022		3,021
Subordinated debentures
Floating rate, due 2026 to 2029		3,106		3,106		—		—		—
Collateralized notes, floating rate, due 2006 to 2007		4,420		4,420		4,420		4,420		4,420
4.556% auto securitization financing		—		1		2		3		13
Advances from the Federal Home Loan Bank		5,001		5,001		5,001		5,010		5,010
Preferred units - The Money Store, LLC		57		57		57		57		57
Capitalized leases		753		757		761		764		768
Mortgage notes and other debt of subsidiaries		568		9		9		14		17
Hedge-related basis adjustments		132		405		286		388		512

Total other debt		14,037		13,756		13,558		13,678		13,818

Total long-term debt	$	37,022		39,352		36,730		37,541		37,051

Table 18

CHANGES IN STOCKHOLDERS’ EQUITY


	2004						2003
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period	$	33,337			32,428			32,813			32,464			32,267

Comprehensive income
Net income		1,252			1,251			1,100			1,105			1,032
Net unrealized (loss) gain on debt and equity securities		(1,342	)		485			(94	)		(300	)		78
Net unrealized gain (loss) on derivative financial instruments		99			(110	)		(242	)		(159	)		(46	)

Total comprehensive income		9			1,626			764			646			1,064
Purchases of common stock		(347	)		(387	)		(852	)		(285	)		(619	)
Common stock issued for Stock options and restricted stock		198			270			128			124			139
Gain (loss) on subsidiary issuance of stock		—			—			(33	)		257			—
Deferred compensation, net		(27	)		(75	)		67			73			4
Cash dividends
Preferred shares		—			—			—			—			(1	)
Common shares		(524	)		(525	)		(459	)		(466	)		(390	)

Balance, end of period	$	32,646			33,337			32,428			32,813			32,464

Table 19

CAPITAL RATIOS


	2004					2003
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
CONSOLIDATED CAPITAL RATIOS (a)
Qualifying capital
Tier 1 capital	$	24,747			24,389		23,863		23,828		22,270
Total capital		33,517			33,329		33,102		33,553		31,871
Adjusted risk-weighted assets		296,041			285,691		279,979		274,895		267,447
Adjusted leverage ratio assets	$	397,514			385,192		375,447		363,303		328,483
Ratios
Tier 1 capital		8.36	%		8.54		8.52		8.67		8.33
Total capital		11.32			11.67		11.82		12.21		11.92
Leverage		6.23			6.33		6.36		6.56		6.78
STOCKHOLDERS’ EQUITY TO ASSETS
Quarter-end		7.80			8.11		8.09		8.44		8.91
Average		7.91	%		8.21		8.27		8.49		9.47

BANK CAPITAL RATIOS
Tier 1 capital
Wachovia Bank, National Association		7.83	%		7.81		7.60		7.78		7.76
Wachovia Bank of Delaware, National Association		15.01			15.25		15.46		14.82		16.01
Total capital
Wachovia Bank, National Association		11.67			11.79		11.72		12.12		11.94
Wachovia Bank of Delaware, National Association		17.56			17.94		18.28		17.64		18.94
Leverage
Wachovia Bank, National Association		6.00			6.06		5.85		6.16		6.45
Wachovia Bank of Delaware, National Association		9.69	%		10.30		9.72		10.57		11.83

(a) Risk-based capital ratio guidelines require a minimum ratio of tier 1 capital to risk-weighted assets of 4.00 percent and a minimum ratio of total capital to risk-weighted assets of 8.00 percent. The minimum leverage ratio of tier 1 capital to adjusted average quarterly assets is from 3.00 percent to 4.00 percent.

Table 20

RISK MANAGEMENT DERIVATIVE FINANCIAL INSTRUMENTS (a)


	June 30, 2004
	Notional		Gross Unrealized								In- effective-			Average Maturity in
(In millions)	Amount		Gains		Losses (f)			Equity (g)			ness (h)			Years (i)
ASSET HEDGES
Cash flow hedges (b)
Interest rate swaps–receive fixed	$	35,277		1,470		(258	)		744			(2	)		5.14
Interest rate swaps–pay fixed		1,377		—		(122	)		(76	)		—			6.26
Interest rate options		16,500		16		(35	)		(11	)		—			1.61
Forward purchase commitments		2,285		24		—			15			—			0.11
Call options on Eurodollar futures		9,000		—		(5	)		(3	)		—			0.25
Futures		2,500		—		(1	)		(1	)		—			0.25
Fair value hedges (c)
Interest rate swaps–pay fixed		1,608		35		(4	)		—			(10	)		19.87
Forward sale commitments		2,805		—		(19	)		—			(9	)		0.14
Options		35		—		—			—			—			1.27

Total asset hedges	$	71,387		1,545		(444	)		668			(21	)		3.53

LIABILITY HEDGES
Cash flow hedges (d)
Interest rate swaps–pay fixed	$	48,031		329		(628	)		(185	)		2			3.99
Interest rate options		47,200		81		(460	)		(233	)		1			3.39
Put options on Eurodollar futures		6,000		4		—			2			—			0.25
Futures		13,975		3		(18	)		(10	)		—			0.25
Fair value hedges (e)
Interest rate swaps–receive fixed		17,112		829		(106	)		—			—			4.07
Interest rate options		4,925		—		(1	)		—			—			1.13

Total liability hedges	$	137,243		1,246		(1,213	)		(426	)		3			3.15

We use derivative contracts, primarily interest rate swaps, to manage exposure to interest rate risk. Derivatives used to protect against variability in the periodic payments associated with floating rate assets, liabilities or forecasted transactions are designated as cash flow hedges. Generally, receive-fixed swaps are used to hedge the variability associated with the floating rate loans we make; pay-fixed swaps are used to hedge the variability associated with our forecasted issuance of fixed rate short-term liabilities.

Derivatives used to protect against changes in the fair value of fixed-rate assets and liabilities due to changes in interest rates are designated as fair value hedges. Generally, we use pay-fixed swaps to hedge the fair value of our fixed rate assets, principally available for sale securities, and we use receive-fixed swaps to hedge the fair value of our fixed rate liabilities, mainly debt. The following provides additional detail of our hedging relationships.

(a) Includes only derivative financial instruments related to interest rate risk management activities. All other derivative financial instruments are classified as trading.

(b) Receive-fixed interest rate swaps with a notional amount of $35.3 billion, of which $1.5 billion are forward-starting, and with pay rates based on one-to-six month LIBOR are primarily designated as cash flow hedges of the variability in cash flows related to the forecasted interest rate resets of one-to-six month LIBOR-indexed loans. Pay-fixed interest rate swaps with a notional amount of $1.4 billion and with receive rates based on one-month LIBOR are designated as cash flow hedges of available for sale securities. Net purchased option combinations including options on receive-fixed swaps, with a strike rate based on one-month or three-month LIBOR, have a notional amount of $16.5 billion and are primarily designated as cash flow hedges of the variability in cash flows related to the forecasted interest rate resets of one-month LIBOR-indexed loans. Forward purchase commitments of $1.0 billion and $1.3 billion are designated as cash flow hedges of the variability of the consideration to be paid on the forecasted purchase of available for sale securities and loans, respectively. Purchased call options on Eurodollar futures with a notional amount of $9.0 billion and a set strike rate, and Eurodollar futures with a notional amount of $2.5 billion are designated as cash flow hedges of the variability in cash flows related to the forecasted interest rate resets of one-to-three month LIBOR-indexed loans.

(c) Pay-fixed interest rate swaps with a notional amount of $1.6 billion and receive rates based on one-month LIBOR are designated as fair value hedges of available for sale securities. Forward sale commitments of $305 million are designated as fair value hedges of mortgage loans in the warehouse and forward sale commitments of $2.5 billion are designated as fair value hedges of available for sale securities.

(d) Derivatives with a notional amount of $106.1 billion are designated as cash flow hedges of the variability in cash flows attributable to the forecasted issuance of fixed rate short-term liabilities that are part of a rollover strategy, primarily repurchase agreements and deposit products. Of this amount, $14.0 billion are Eurodollar futures, $6.0 billion are purchased put options on Eurodollar futures with a set strike rate, $42.4 billion are pay-fixed interest rate swaps with receive rates based on one-to-three month LIBOR, of which $27.5 billion are forward-starting, and $40.9 billion are net purchased options on pay-fixed swaps with a strike based on three-month LIBOR. Interest rate collars with a notional amount of $2.8 billion that qualify as net purchased options also hedge the forecasted issuance of fixed rate short-term liabilities that are part of a rollover strategy, when three-month LIBOR is below the sold floor or between the purchased and written caps. Purchased options on pay-fixed swaps with a notional amount of $3.5 billion and pay-fixed interest rate swaps with a notional amount of $5.6 billion are designated as cash flow hedges of the variability in cash flows related to the forecasted interest rate resets of long-term debt.

(e) Receive-fixed interest rate swaps with a notional amount of $17.1 billion and with pay rates based primarily on one-to-six month LIBOR are designated as fair value hedges of fixed rate liabilities, primarily long-term debt and bank notes. Purchased interest rate options with a notional amount of $4.9 billion are designated as fair value hedges of embedded interest rate options in long-term debt.

(f) Represents the fair value of derivative financial instruments less accrued interest receivable or payable.

(g) At June 30, 2004, the net unrealized loss on derivatives included in accumulated other comprehensive income, which is a component of stockholders’ equity, was $30 million, net of income taxes. Of this net of tax amount, a $242 million gain represents the effective portion of the net gains (losses) on derivatives that qualify as cash flow hedges, and a $272 million loss relates to terminated and/or redesignated derivatives. At June 30, 2004, $163 million of net gains, net of income taxes, recorded in accumulated other comprehensive income are expected to be reclassified as interest income or expense during the next twelve months. The maximum length of time over which cash flow hedges are hedging the variability in future cash flows associated with the forecasted transactions is 21.85 years.

(h) In the six months ended June 30, 2004, losses in the amount of $18 million were recognized in other fee income representing the ineffective portion of the net gains (losses) on derivatives that qualify as cash flow and fair value hedges. In addition, net interest income for the six months ended June 30, 2004, was decreased by $3 million representing ineffectiveness of cash flow hedges caused by differences between the critical terms of the derivative and the hedged item, primarily differences in reset dates.

(i) Estimated maturity approximates average life.

Table 21

RISK MANAGEMENT DERIVATIVE FINANCIAL INSTRUMENTS - EXPECTED MATURITIES

June 30, 2004

1 Year

1-2

2-5

5-10

After 10

(In millions)

or Less

Years

Total

CASH FLOW ASSET HEDGES

Notional amount - swaps-receive fixed

1,370

1,477

13,179

19,251

—

35,277

Notional amount - swaps-pay fixed

—

240

1,098

1,377

Notional amount - other

24,285

—

6,000

—

30,285

Weighted average receive rate (a)

6.58

6.27

4.99

4.97

0.77

5.04

Weighted average pay rate (a)

1.53

1.28

1.57

1.69

4.58

1.63

Unrealized gain (loss)

487

540

)

1,089

FAIR VALUE ASSET HEDGES

Notional amount - swaps-pay fixed

—

1,555

1,608

Notional amount - other

2,805

—

2,840

Weighted average receive rate (a)

—

1.33

0.77

0.79

Weighted average pay rate (a)

—

5.12

3.70

3.74

Unrealized gain (loss)

(19

)

—

CASH FLOW LIABILITY HEDGES

Notional amount - swaps-pay fixed

8,265

6,403

23,093

5,457

4,813

48,031

Notional amount - other

25,780

7,895

25,500

8,000

—

67,175

Weighted average receive rate (a)

3.12

1.53

1.49

1.34

1.21

2.06

Weighted average pay rate (a)

3.23

2.80

7.17

6.59

6.09

4.59

Unrealized gain (loss)

(178

)

(125

)

(66

)

(202

)

(118

)

(689

)

FAIR VALUE LIABILITY HEDGES

Notional amount - swaps-receive fixed

1,650

3,050

9,140

2,250

1,022

17,112

Notional amount - other

500

4,425

—

4,925

Weighted average receive rate (a)

7.08

6.89

5.61

6.10

5.74

6.05

Weighted average pay rate (a)

1.98

1.22

1.46

1.37

1.26

1.45

Unrealized gain (loss)

133

366

145

722

(a) Weighted average receive and pay rates include the impact of currently effective interest rate swaps and basis swaps only and not the impact of forward-starting interest rate swaps. All the interest rate swaps have variable pay or receive rates based on one-to-six month LIBOR, and they are the pay or receive rates in effect at June 30, 2004.

Table 22

RISK MANAGEMENT DERIVATIVE FINANCIAL INSTRUMENTS ACTIVITY

Asset

Liability

(In millions)

Hedges

Total

Balance, December 31, 2003

58,761

129,736

188,497

Additions

39,045

46,047

85,092

Maturities and amortizations

(18,245

)

(35,507

)

(53,752

)

Terminations

(7,331

)

(2,526

)

(9,857

)

Redesignations and transfers to trading account assets

(843

)

(507

)

(1,350

)

Balance, June 30, 2004

71,387

137,243

208,630


	SECOND QUARTER 2004							FIRST QUARTER 2004
					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	$	4,015		11		1.13	%	$	3,237		10		1.18	%
Federal funds sold and securities purchased under resale agreements		23,800		62		1.05			24,806		61		0.99
Trading account assets (a)		26,135		260		3.98			20,956		220		4.21
Securities (a)		100,209		1,196		4.77			98,222		1,221		4.97
Loans (a) (b)
Commercial
Commercial, financial and agricultural		56,648		599		4.25			55,476		576		4.18
Real estate — construction and other		6,309		56		3.56			6,022		53		3.52
Real estate — mortgage		15,029		158		4.21			15,241		160		4.23
Lease financing		7,011		180		10.28			6,945		183		10.52
Foreign		7,110		41		2.32			6,684		41		2.49

Total commercial		92,107		1,034		4.51			90,368		1,013		4.50

Consumer
Real estate secured		52,389		691		5.29			50,879		705		5.55
Student loans		9,941		90		3.63			8,908		78		3.53
Installment loans		9,205		126		5.48			9,026		130		5.80

Total consumer		71,535		907		5.08			68,813		913		5.32

Total loans		163,642		1,941		4.76			159,181		1,926		4.86

Loans held for sale (c)		15,603		161		4.12			12,759		131		4.12
Other earning assets (c)		11,443		82		2.91			11,159		84		3.02

Total earning assets excluding derivatives		344,847		3,713		4.32			330,320		3,653		4.43
Risk management derivatives (d)		—		371		0.43			—		408		0.50

Total earning assets including derivatives		344,847		4,084		4.75			330,320		4,061		4.93

Cash and due from banks		11,254							10,957
Other assets		54,973							57,411

Total assets	$	411,074						$	398,688

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		70,205		78		0.45			65,366		70		0.43
Money market accounts		76,850		172		0.90			69,208		154		0.90
Other consumer time		26,288		176		2.69			27,496		189		2.76
Foreign		7,110		20		1.14			7,673		22		1.17
Other time		7,773		34		1.76			7,676		34		1.75

Total interest-bearing deposits		188,226		480		1.03			177,419		469		1.06
Federal funds purchased and securities sold under repurchase agreements		46,620		116		1.00			48,353		124		1.03
Commercial paper		12,382		32		1.04			11,852		30		1.01
Securities sold short		10,571		73		2.78			8,412		47		2.25
Other short-term borrowings		6,013		11		0.80			6,436		10		0.59
Long-term debt		37,840		378		3.99			37,269		364		3.91

Total interest-bearing liabilities excluding derivatives		301,652		1,090		1.45			289,741		1,044		1.45
Risk management derivatives (d)		—		91		0.12			—		94		0.13

Total interest-bearing liabilities including derivatives		301,652		1,181		1.57			289,741		1,138		1.58

Noninterest-bearing deposits		50,466							46,603
Other liabilities		26,460							29,607
Stockholders’ equity		32,496							32,737

Total liabilities and stockholders’ equity	$	411,074						$	398,688

Interest income and rate earned — including derivatives			$	4,084		4.75	%			$	4,061		4.93	%
Interest expense and equivalent rate paid — including derivatives				1,181		1.38					1,138		1.38

Net interest income and margin — including derivatives			$	2,903		3.37	%			$	2,923		3.55	%

(a) Yields related to securities and loans exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 35 percent and applicable state tax rates. Lease financing amounts include related deferred income taxes.


FOURTH QUARTER 2003							THIRD QUARTER 2003							SECOND QUARTER 2003
				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

$	2,569		7		1.17	%	$	4,342		14		1.27	%	$	4,751		16		1.34	%
	23,591		60		1.00			22,080		48		0.88			12,282		35		1.10
	20,038		213		4.24			18,941		197		4.15			18,254		203		4.46
	94,584		1,184		5.00			78,436		962		4.90			68,994		977		5.67


	55,439		593		4.25			55,596		588		4.19			56,928		599		4.22
	5,789		52		3.53			5,574		48		3.47			5,516		49		3.54
	15,555		166		4.23			16,075		174		4.31			16,508		186		4.52
	7,084		185		10.45			6,911		183		10.61			6,885		187		10.87
	6,761		45		2.66			6,756		47		2.73			6,627		47		2.89

	90,628		1,041		4.56			90,912		1,040		4.55			92,464		1,068		4.63


	51,380		718		5.58			49,438		707		5.70			47,558		691		5.82
	8,502		78		3.62			7,962		74		3.70			7,710		78		4.04
	9,090		137		5.99			9,682		152		6.18			10,003		166		6.63

	68,972		933		5.39			67,082		933		5.54			65,271		935		5.73

	159,600		1,974		4.92			157,994		1,973		4.97			157,735		2,003		5.09

	10,627		109		4.10			10,244		111		4.34			8,917		99		4.45
	11,265		83		2.95			11,466		87		2.98			2,942		35		4.74

	322,274		3,630		4.49			303,503		3,392		4.45			273,875		3,368		4.92
	—		386		0.47			—		384		0.50			—		391		0.58

	322,274		4,016		4.96			303,503		3,776		4.95			273,875		3,759		5.50

	10,728							11,092							10,845
	55,985							62,299							57,192

$	388,987						$	376,894						$	341,912



	56,755		58		0.40			52,570		52		0.39			52,196		71		0.55
	63,202		141		0.89			58,576		126		0.85			53,302		156		1.18
	28,456		200		2.80			29,814		217		2.89			31,330		243		3.09
	10,648		31		1.13			7,581		22		1.17			6,841		24		1.44
	7,520		33		1.77			7,099		33		1.80			7,542		35		1.88

	166,581		463		1.10			155,640		450		1.15			151,211		529		1.40
	55,378		133		0.95			46,359		114		0.98			37,957		139		1.47
	11,670		31		1.06			11,978		32		1.05			2,381		5		0.80
	7,970		50		2.48			8,850		57		2.58			8,121		58		2.84
	6,551		9		0.53			7,136		15		0.87			3,590		8		0.88
	35,855		357		3.97			36,388		365		4.02			35,751		366		4.10

	284,005		1,043		1.46			266,351		1,033		1.54			239,011		1,105		1.85
	—		31		0.04			—		26		0.04			—		51		0.09

	284,005		1,074		1.50			266,351		1,059		1.58			239,011		1,156		1.94

	45,696							44,755							42,589
	27,145							33,803							27,950
	32,141							31,985							32,362

$	388,987						$	376,894						$	341,912

		$	4,016		4.96	%			$	3,776		4.95	%			$	3,759		5.50	%
			1,074		1.32					1,059		1.38					1,156		1.69

		$	2,942		3.64	%			$	2,717		3.57	%			$	2,603		3.81	%

(c) Amounts presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004.

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES (a)


	SIX MONTHS ENDED 2004							SIX MONTHS ENDED 2003
					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	$	3,626		21		1.15	%	$	4,222		29		1.38	%
Federal funds sold and securities purchased under resale agreements		24,303		123		1.02			10,624		64		1.20
Trading account assets (b)		23,546		480		4.08			17,281		404		4.70
Securities (b)		99,216		2,417		4.87			70,546		1,997		5.67
Loans (b) (c)
Commercial
Commercial, financial and agricultural		56,062		1,175		4.21			57,302		1,209		4.25
Real estate - construction and other		6,166		109		3.54			5,100		90		3.55
Real estate - mortgage		15,135		318		4.22			16,972		380		4.51
Lease financing		6,978		363		10.40			6,831		371		10.87
Foreign		6,897		82		2.40			6,545		97		3.00

Total commercial		91,238		2,047		4.51			92,750		2,147		4.66

Consumer
Real estate secured		51,634		1,396		5.42			47,354		1,399		5.92
Student loans		9,425		168		3.58			7,601		153		4.06
Installment loans		9,115		256		5.64			10,144		341		6.78

Total consumer		70,174		1,820		5.20			65,099		1,893		5.84

Total loans		161,412		3,867		4.81			157,849		4,040		5.15

Loans held for sale		14,181		292		4.12			7,763		175		4.51
Other earning assets		11,299		166		2.96			2,965		73		5.00

Total earning assets excluding derivatives		337,583		7,366		4.37			271,250		6,782		5.02
Risk management derivatives (d)		—		779		0.47			—		762		0.57

Total earning assets including derivatives		337,583		8,145		4.84			271,250		7,544		5.59

Cash and due from banks		11,105							10,866
Other assets		56,193							57,590

Total assets	$	404,881						$	339,706

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		67,786		148		0.44			51,545		150		0.59
Money market accounts		73,029		326		0.90			50,659		298		1.19
Other consumer time		26,891		365		2.73			31,997		506		3.18
Foreign		7,392		42		1.16			7,071		51		1.46
Other time		7,724		68		1.76			8,096		77		1.93

Total interest-bearing deposits		182,822		949		1.04			149,368		1,082		1.46
Federal funds purchased and securities sold under repurchase agreements		47,486		240		1.02			37,676		278		1.49
Commercial paper		12,117		62		1.03			2,492		9		0.75
Securities sold short		9,491		120		2.54			7,431		102		2.76
Other short-term borrowings		6,225		21		0.69			3,458		16		0.89
Long-term debt		37,555		742		3.95			37,240		754		4.05

Total interest-bearing liabilities excluding derivatives		295,696		2,134		1.45			237,665		2,241		1.90
Risk management derivatives (d)		—		185		0.13			—		99		0.08

Total interest-bearing liabilities including derivatives		295,696		2,319		1.58			237,665		2,340		1.98

Noninterest-bearing deposits		48,535							42,019
Other liabilities		28,034							27,814
Stockholders’ equity		32,616							32,208

Total liabilities and stockholders’ equity	$	404,881						$	339,706

Interest income and rate earned - including derivatives			$	8,145		4.84	%			$	7,544		5.59	%
Interest expense and equivalent rate paid - including derivatives				2,319		1.38					2,340		1.74

Net interest income and margin - including derivatives			$	5,826		3.46	%			$	5,204		3.85	%

(a) Certain amounts presented in 2003 have been reclassified to conform to the presentation in 2004.

(b) Yields related to securities and loans exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 35 percent and applicable state tax rates. Lease financing amounts include related deferred income taxes.

(c) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.

(d) The rates earned and the rates paid on risk management derivatives are based on off-balance sheet notional amounts. The fair value of these instruments is included in other assets and other liabilities.

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	2004						2003
	Second			First			Fourth			Third			Second
(In millions, except per share data)	Quarter			Quarter			Quarter			Quarter			Quarter
ASSETS
Cash and due from banks	$	10,701			10,564			11,479			11,178			13,088
Interest-bearing bank balances		2,059			5,881			2,308			3,664			7,539
Federal funds sold and securities purchased under resale agreements (carrying amount of collateral held $9,274 at June 30, 2004, $3,811 repledged)		21,970			23,845			24,725			22,491			13,854

Total cash and cash equivalents		34,730			40,290			38,512			37,333			34,481

Trading account assets		39,659			36,893			34,714			36,392			40,436
Securities		102,934			104,203			100,445			87,176			73,764
Loans, net of unearned income		172,917			167,303			165,571			165,925			162,833
Allowance for loan losses		(2,331	)		(2,338	)		(2,348	)		(2,474	)		(2,510	)

Loans, net (a)		170,586			164,965			163,223			163,451			160,323

Premises and equipment		4,522			4,620			4,619			4,746			4,635
Due from customers on acceptances		703			605			854			732			1,074
Goodwill		11,481			11,233			11,149			11,094			10,907
Other intangible assets		1,045			1,150			1,243			1,353			1,321
Other assets		52,781			47,181			46,429			46,647			37,538

Total assets (a)	$	418,441			411,140			401,188			388,924			364,479

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		51,613			49,018			48,683			45,493			48,081
Interest-bearing deposits		191,767			183,320			172,542			158,002			153,211

Total deposits		243,380			232,338			221,225			203,495			201,292
Short-term borrowings		66,360			65,452			71,290			65,474			49,123
Bank acceptances outstanding		708			613			876			743			1,078
Trading account liabilities		20,327			21,956			19,184			23,959			25,141
Other liabilities (a)		15,321			15,564			16,945			22,800			17,481
Long-term debt		37,022			39,352			36,730			37,541			37,051

Total liabilities (a)		383,118			375,275			366,250			354,012			331,166

Minority interest in net assets of consolidated subsidiaries		2,677			2,528			2,510			2,099			849

STOCKHOLDERS’ EQUITY
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at June 30, 2004		—			—			—			—			—
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.309 billion shares at June 30, 2004		4,365			4,372			4,374			4,427			4,440
Paid-in capital		17,920			17,869			17,811			17,882			17,784
Retained earnings		9,890			9,382			8,904			8,829			8,106
Accumulated other comprehensive income, net		471			1,714			1,339			1,675			2,134

Total stockholders’ equity		32,646			33,337			32,428			32,813			32,464

Total liabilities and stockholders’ equity (a)	$	418,441			411,140			401,188			388,924			364,479

(a) As of June 30, 2004, Wachovia has reclassified its reserve for unfunded lending commitments from the allowance for loan losses to other liabilities. Amount presented prior to the second quarter of 2004 have been reclassified to conform to the presentation in the second quarter of 2004.

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	2004				2003
	Second		First		Fourth			Third			Second
(In millions, except per share data)	Quarter		Quarter		Quarter			Quarter			Quarter
INTEREST INCOME
Interest and fees on loans	$	2,316		2,335		2,357			2,352			2,391
Interest and dividends on securities		1,110		1,141		1,104			885			900
Trading account interest		237		197		189			174			182
Other interest income		356		326		301			301			223

Total interest income		4,019		3,999		3,951			3,712			3,696

INTEREST EXPENSE
Interest on deposits		654		648		568			534			619
Interest on short-term borrowings		316		299		311			317			303
Interest on long-term debt		211		191		195			208			234

Total interest expense		1,181		1,138		1,074			1,059			1,156

Net interest income		2,838		2,861		2,877			2,653			2,540
Provision for credit losses		61		44		86			81			195

Net interest income after provision for credit losses		2,777		2,817		2,791			2,572			2,345

FEE AND OTHER INCOME
Service charges		489		471		436			439			426
Other banking fees		293		259		241			257			248
Commissions		682		792		778			765			468
Fiduciary and asset management fees		675		679		672			662			474
Advisory, underwriting and other investment banking fees		197		192		213			191			220
Trading account profits (losses)		39		74		5			(46	)		49
Principal investing		15		38		(13	)		(25	)		(57	)
Securities gains (losses)		36		2		(24	)		22			10
Other income		173		250		296			351			320

Total fee and other income		2,599		2,757		2,604			2,616			2,158

NONINTEREST EXPENSE
Salaries and employee benefits		2,164		2,182		2,152			2,109			1,748
Occupancy		224		229		244			220			190
Equipment		253		259		285			264			238
Advertising		48		48		56			38			34
Communications and supplies		157		151		156			159			140
Professional and consulting fees		126		109		146			109			105
Other intangible amortization		107		112		120			127			131
Merger-related and restructuring expenses		102		99		135			148			96
Sundry expense		306		467		472			396			319

Total noninterest expense		3,487		3,656		3,766			3,570			3,001

Minority interest in income of consolidated subsidiaries		45		57		63			55			16

Income before income taxes and cumulative effect of a change in accounting principle		1,844		1,861		1,566			1,563			1,486
Income taxes		592		610		466			475			454

Income before cumulative effect of a change in accounting principle		1,252		1,251		1,100			1,088			1,032
Cumulative effect of a change in accounting principle, net of income taxes		—		—		—			17			—

Net income		1,252		1,251		1,100			1,105			1,032
Dividends on preferred stock		—		—		—			—			1

Net income available to common stockholders	$	1,252		1,251		1,100			1,105			1,031

PER COMMON SHARE DATA
Basic
Income before change in accounting principle	$	0.96		0.96		0.84			0.83			0.77
Net income		0.96		0.96		0.84			0.84			0.77
Diluted
Income before change in accounting principle		0.95		0.94		0.83			0.82			0.77
Net income		0.95		0.94		0.83			0.83			0.77
Cash dividends	$	0.40		0.40		0.35			0.35			0.29
AVERAGE COMMON SHARES
Basic		1,300		1,302		1,311			1,321			1,333
Diluted		1,320		1,326		1,332			1,338			1,346

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	Six Months Ended
	June 30,
(In millions, except per share data)	2004		2003
INTEREST INCOME (a)
Interest and fees on loans	$	4,651		4,798
Interest and dividends on securities		2,251		1,839
Trading account interest		434		361
Other interest income		682		419

Total interest income		8,018		7,417

INTEREST EXPENSE (a)
Interest on deposits		1,302		1,258
Interest on short-term borrowings		615		591
Interest on long-term debt		402		491

Total interest expense		2,319		2,340

Net interest income		5,699		5,077
Provision for credit losses		105		419

Net interest income after provision for credit losses		5,594		4,658

FEE AND OTHER INCOME (a)
Service charges		960		856
Other banking fees		552		481
Commissions		1,474		886
Fiduciary and asset management fees		1,354		943
Advisory, underwriting and other investment banking fees		389		365
Trading account profits		113		126
Principal investing		53		(101	)
Securities gains		38		47
Other income		423		621

Total fee and other income		5,356		4,224

NONINTEREST EXPENSE (a)
Salaries and employee benefits		4,346		3,447
Occupancy		453		387
Equipment		512		472
Advertising		96		66
Communications and supplies		308		283
Professional and consulting fees		235		205
Other intangible amortization		219		271
Merger-related and restructuring expenses		201		160
Sundry expense		773		615

Total noninterest expense		7,143		5,906

Minority interest in income of consolidated subsidiaries		102		25

Income before income taxes		3,705		2,951
Income taxes (a)		1,202		892

Net income		2,503		2,059
Dividends on preferred stock		—		5

Net income available to common stockholders	$	2,503		2,054

PER COMMON SHARE DATA
Basic earnings	$	1.92		1.54
Diluted earnings		1.89		1.53
Cash dividends	$	0.80		0.55
AVERAGE COMMON SHARES
Basic		1,301		1,334
Diluted		1,323		1,346

(a) Certain amounts presented in 2003 have been reclassified to conform to the presentation in 2004.

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	June 30,
(In millions)	2004			2003
OPERATING ACTIVITIES
Net income	$	2,503			2,059
Adjustments to reconcile net income to net cash provided (used) by operating activities
Accretion and amortization of securities discounts and premiums, net		115			132
Provision for credit losses		105			419
Securitization transactions		(28	)		(220	)
Gain on sale of mortgage servicing rights		(23	)		(61	)
Securities transactions		(38	)		(47	)
Depreciation and other amortization		704			740
Trading account assets, net		(4,945	)		(7,281	)
Mortgage loans held for resale		(301	)		26
Loss on sales of premises and equipment		90			20
Contribution to qualified pension plan		(253	)		(418	)
Other assets, net		(5,109	)		(7,540	)
Trading account liabilities, net		1,143			2,241
Minority interest		—			300
Other liabilities, net		(1,628	)		4,475

Net cash used by operating activities		(7,665	)		(5,155	)

INVESTING ACTIVITIES
Increase (decrease) in cash realized from
Sales of securities		28,083			12,115
Maturities of securities		16,402			14,402
Purchases of securities		(48,276	)		(24,435	)
Origination of loans, net		(7,457	)		(379	)
Sales of premises and equipment		26			762
Purchases of premises and equipment		(356	)		(873	)
Goodwill and other intangible assets		(353	)		(65	)
Purchase of bank-owned separate account life insurance		(129	)		(123	)

Net cash provided (used) by investing activities		(12,060	)		1,404

FINANCING ACTIVITIES
Increase (decrease) in cash realized from
Increase in deposits, net		22,155			9,774
Securities sold under repurchase agreements and other short-term borrowings, net		(4,930	)		7,950
Issuances of long-term debt		2,933			660
Payments of long-term debt		(2,641	)		(3,271	)
Issuances of common stock		209			48
Purchases of common stock		(734	)		(1,120	)
Cash dividends paid		(1,049	)		(745	)

Net cash provided by financing activities		15,943			13,296

Increase (decrease) in cash and cash equivalents		(3,782	)		9,545
Cash and cash equivalents, beginning of year		38,512			24,936

Cash and cash equivalents, end of period	$	34,730			34,481

NONCASH ITEMS
Transfer to securities from loans	$	154			—
Transfer to other assets from loans, net	$	(139	)		343


	*June 30, 2004*				December 31, 2003
	*Carrying*				Carrying
(In millions)	*Amount*		*Exposure*		Amount		Exposure
Guarantees
Securities lending indemnifications	$	—		44,991		—		—
Standby letters of credit		102		28,645		72		27,597
Liquidity guarantees		1		7,595		6		10,319
Loans sold with recourse		37		4,639		29		2,655
Residual value guarantees		7		638		4		641

Total guarantees	$	147		86,508		111		41,212


	2004				2003
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
TRADING ACCOUNT ASSETS
U.S. Treasury	$	3,682		2,417		1,460		1,604		2,832
U.S. Government agencies		3,118		3,483		3,653		2,912		3,203
State, county and municipal		1,000		592		734		647		248
Mortgage-backed securities		4,942		1,844		4,009		3,185		7,439
Other asset-backed securities		6,328		6,181		4,748		4,115		3,351
Corporate bonds and debentures		4,780		4,166		3,977		3,808		4,077
Derivative financial instruments		9,862		12,015		11,859		15,660		16,722
Sundry		5,947		6,195		4,274		4,461		2,564

Total trading account assets	$	39,659		36,893		34,714		36,392		40,436

TRADING ACCOUNT LIABILITIES
Securities sold short		12,017		10,762		8,654		9,187		9,064
Derivative financial instruments		8,310		11,194		10,530		14,772		16,077

Total trading account liabilities	$	20,327		21,956		19,184		23,959		25,141


	2004				2003
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
CORE DEPOSITS
Noninterest-bearing	$	51,613		49,018		48,683		45,493		48,081
Savings and NOW accounts		71,696		68,858		63,011		52,520		52,765
Money market accounts		78,658		73,170		65,045		60,363		55,927
Other consumer time		26,237		26,908		27,921		29,140		30,620

Total core deposits		228,204		217,954		204,660		187,516		187,393
OTHER DEPOSITS
Foreign		7,412		6,709		9,151		8,589		6,561
Other time		7,764		7,675		7,414		7,390		7,338

Total deposits	$	243,380		232,338		221,225		203,495		201,292


(In millions)	June 30, 2004
MATURITY OF
3 months or less	$	2,232
Over 3 months through 6 months		1,712
Over 6 months through 12 months		1,427
Over 12 months		4,745

Total time deposits in amounts of $100,000 or more	$	10,116


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions, except per share data)	*2004*		2003		*2004*		2003
Net interest income (GAAP)	$	2,838		2,540		5,699		5,077
Tax-equivalent adjustment		65		63		127		127

Net interest income ^(a)		2,903		2,603		5,826		5,204
Fee and other income		2,599		2,158		5,356		4,224

Total revenue ^(a)		5,502		4,761		11,182		9,428
Provision for credit losses		61		195		105		419
Other noninterest expense		3,278		2,774		6,723		5,475
Merger-related and restructuring expenses		102		96		201		160
Other intangible amortization		107		131		219		271

Total noninterest expense		3,487		3,001		7,143		5,906
Minority interest in income of consolidated subsidiaries		45		16		102		25
Income taxes		592		454		1,202		892
Tax-equivalent adjustment		65		63		127		127

Net income		1,252		1,032		2,503		2,059
Dividends on preferred stock		—		1		—		5

Net income available to common stockholders		1,252		1,031		2,503		2,054

Diluted earnings per common share	$	0.95		0.77		1.89		1.53


	*Six Months Ended*					Six Months Ended
	*June 30, 2004*					June 30, 2003
	*Average*		*Interest*			Average		Interest
(In millions)	*Balances*		*Rates*			Balances		Rates
Interest-bearing bank balances	$	3,626		1.15	%	$	4,222		1.38	%
Federal funds sold		24,303		1.02			10,624		1.20
Trading account assets		23,546		4.08			17,281		4.70
Securities		99,216		4.87			70,546		5.67
Commercial loans, net		91,238		4.51			92,750		4.66
Consumer loans, net		70,174		5.20			65,099		5.84

Total loans, net		161,412		4.81			157,849		5.15

Loans held for sale		14,181		4.12			7,763		4.51
Other earning assets		11,299		2.96			2,965		5.00

Risk management derivatives		—		0.47			—		0.57

Total earning assets		337,583		4.84			271,250		5.59

Interest-bearing deposits		182,822		1.04			149,368		1.46
Federal funds purchased		47,486		1.02			37,676		1.49
Commercial paper		12,117		1.03			2,492		0.75
Securities sold short		9,491		2.54			7,431		2.76
Other short-term borrowings		6,225		0.69			3,458		0.89
Long-term debt		37,555		3.95			37,240		4.05
Risk management derivatives		—		0.13			—		0.08

Total interest-bearing liabilities		295,696		1.58			237,665		1.98

Net interest income and margin	$	5,826		3.46	%	$	5,204		3.85	%

(a)		Tax-equivalent.

(b)		The tax-equivalent amounts are eliminated herein in order for “Total” amounts to agree with amounts appearing in the Consolidated Statements of Income.

(a)		General Bank Combined represents the consolidation of the General Bank’s Commercial, and Retail and Small Business lines of business.

(b)		Tax-equivalent.

(a)		Capital Management Combined represents the consolidation of Capital Management’s Retail Brokerage Services, Asset Management, and Other, which primarily serves to eliminate intersegment revenue.

(b)		Tax-equivalent.

(a)		Corporate and Investment Bank Combined represents the consolidation of the Corporate and Investment Bank’s Corporate Lending, Global Treasury and Trade Finance, Investment Banking, and Principal Investing lines of business.

(b)		Tax-equivalent.