10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission file number 1-10000

Wachovia Corporation

(Exact name of registrant as specified in its charter)

North Carolina
(State or other jurisdiction of
incorporation or organization) 56-0898180
(I.R.S. Employer
Identification No.)

Wachovia Corporation
One Wachovia Center
Charlotte, North Carolina 28288-0013
(Address of principal executive offices)
(Zip Code)

(704) 374-6565
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes x      No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).      Yes x      No o

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.      Yes o      No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

1,577,341,830 shares of Common Stock, par value $3.33 1/3 per share, were outstanding as of June 30, 2005.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements.
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Item 3. Quantitative and Qualitative Disclosures About Market Risk.
	Item 4. Controls and Procedures.
Part II. OTHER INFORMATION
	Item 1. Legal Proceedings.
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
	Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
EXHIBIT INDEX
EX-10
EX-12(A)
EX-12(B)
EX-19
EX-31(A)
EX-31(B)
EX-32(A)
EX-32(B)

PART I — FINANCIAL INFORMATION

Forward-Looking Statements

Wachovia Corporation (formerly named First Union Corporation, “Wachovia”) may from time to time make written or oral forward-looking statements, including statements contained in Wachovia’s filings with the Securities and Exchange Commission (including this Quarterly Report on Form 10-Q and the Exhibits hereto and thereto), in its reports to stockholders and in other Wachovia communications. These statements relate to future, not past, events.

These forward-looking statements include, among others, statements with respect to Wachovia’s beliefs, plans, objectives, goals, guidelines, expectations, financial condition, results of operations, future performance and business of Wachovia, including without limitation, (i) statements relating to the benefits of the merger (including divestitures made by Wachovia related to the merger, the “Merger”) between Wachovia and SouthTrust Corporation (“SouthTrust”) completed on November 1, 2004, including future financial and operating results, cost savings, enhanced revenues and the accretion or dilution to reported earnings that may be realized from the Merger, (ii) statements relating to the benefits of the retail securities brokerage combination transaction between Wachovia and Prudential Financial, Inc. completed on July 1, 2003 (the “Brokerage Transaction”), including future financial and operating results, cost savings, enhanced revenues and the accretion of reported earnings that may be realized from the Brokerage Transaction, (iii) statements regarding Wachovia’s goals and expectations with respect to earnings, earnings per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (iv) statements preceded by, followed by or that include the words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “projects”, “outlook” or similar expressions. These statements are based upon the current beliefs and expectations of Wachovia’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond Wachovia’s control).

The following factors, among others, could cause Wachovia’s financial performance to differ materially from that expressed in any forward-looking statements: (1) the risk that the businesses of Wachovia and SouthTrust in connection with the Merger or the businesses of Wachovia and Prudential in connection with the Brokerage Transaction will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the Merger or the Brokerage Transaction may not be fully realized or realized within the expected time frame; (3) revenues following the Merger or the Brokerage Transaction may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption following the Merger or the Brokerage Transaction, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the strength of the United States economy in general and the strength of the local economies in which Wachovia conducts operations may be different than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on Wachovia’s loan portfolio and allowance for loan losses; (6) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (7) inflation, interest rate, market and monetary fluctuations; (8) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on Wachovia’s capital markets and capital management activities, including, without limitation, Wachovia’s mergers and acquisition advisory business, equity and debt underwriting activities, private equity investment activities, derivative securities activities, investment and wealth management advisory businesses, and brokerage activities; (9) the timely development of competitive new products and services by Wachovia and the acceptance of these products and services by new and existing customers; (10) the willingness of customers to accept third party products marketed by Wachovia; (11) the willingness of customers to substitute competitors’ products and services for Wachovia’s products and services and vice versa; (12) the impact of changes in financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); (13) technological changes; (14) changes in consumer spending and saving habits; (15) the effect of corporate restructurings, acquisitions and/or dispositions we may undertake from time to time, and the actual restructuring and other expenses related thereto, and the failure to achieve the expected revenue growth and/or expense savings from such corporate restructurings, acquisitions and/or dispositions; (16) the growth and profitability of Wachovia’s non-interest or fee income being less than expected; (17) unanticipated regulatory or judicial proceedings or rulings; (18) the impact of changes in accounting principles; (19) adverse changes in financial performance and/or condition of Wachovia’s borrowers which could impact repayment of such borrowers’ outstanding loans; (20) the

impact on Wachovia’s businesses, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (21) Wachovia’s success at managing the risks involved in the foregoing.

Wachovia cautions that the foregoing list of important factors is not exclusive. Wachovia does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of Wachovia.

Item 1. Financial Statements.

     The Consolidated Balance Sheets of Wachovia and subsidiaries at June 30, 2005, and December 31, 2004, respectively, set forth on page 62 of Wachovia’s Second Quarter 2005 Financial Supplement for the six months ended June 30, 2005 (the “Financial Supplement”), are incorporated herein by reference.

     The Consolidated Statements of Income of Wachovia and subsidiaries for the three and six months ended June 30, 2005 and 2004, set forth on page 63 of the Financial Supplement, are incorporated herein by reference.

     The Consolidated Statements of Cash Flows of Wachovia and subsidiaries for the six months ended June 30, 2005 and 2004, set forth on page 64 of the Financial Supplement, are incorporated herein by reference.

     Notes to Consolidated Financial Statements, set forth on pages 65 through 75 of the Financial Supplement, are incorporated herein by reference.

     A copy of the Financial Supplement is being filed as Exhibit (19) to this Report.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     Management’s Discussion and Analysis of Financial Condition and Results of Operations appears on pages 2 through 60 of the Financial Supplement and is incorporated herein by reference.

     A copy of the Financial Supplement is being filed as Exhibit (19) to this Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     Quantitative and Qualitative Disclosures About Market Risk appears on pages 21 through 23, pages 67 and 68, and pages 72 through 74 of the Financial Supplement and is incorporated herein by reference.

     A copy of the Financial Supplement is being filed as Exhibit (19) to this Report.

Item 4. Controls and Procedures.

     Evaluation of Disclosure Controls and Procedures. As of June 30, 2005, the end of the period covered by this Quarterly Report on Form 10-Q, Wachovia’s management, including Wachovia’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, Wachovia’s Chief Executive Officer and Chief Financial Officer each concluded that as of June 30, 2005, the end of the period covered by this Quarterly Report on Form 10-Q, Wachovia maintained effective disclosure controls and procedures.

     Changes in Internal Control Over Financial Reporting. No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal quarter ended June 30, 2005, that has materially affected, or is reasonably likely to materially affect, Wachovia’s internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

     Wachovia and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wachovia and/or its subsidiaries with respect to transactions in which Wachovia and/or our subsidiaries acted as banker, lender, underwriter, financial advisor or broker or in activities related thereto. In addition, Wachovia and its subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. It is Wachovia’s policy to cooperate in all regulatory inquiries and investigations.

     Although there can be no assurance as to the ultimate outcome, Wachovia and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each such case. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

     The following supplements certain matters previously reported in Wachovia’s Annual Report on Form 10-K for the year ended December 31, 2004 and in Wachovia’s Quarterly Report on Form 10-Q for the period ended March 31, 2005.

     Mutual Fund Sales Practices. Various securities regulators are currently investigating Wachovia Securities regarding Wachovia Securities’ practices and procedures for the offer and sale of certain mutual funds. Wachovia believes the regulators are reviewing the adequacy of Wachovia Securities’ disclosures regarding revenue sharing arrangements with certain investment companies and Wachovia Securities’ mutual fund sales and distribution practices.

     Adelphia Litigation. Certain Wachovia affiliates are defendants in an adversary proceeding pending in the United States Bankruptcy Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation (“Adelphia”). The Official Committee of Unsecured Creditors in that bankruptcy case has filed an adversary proceeding on behalf of Adelphia against over 300 financial services companies, including the Wachovia affiliates. The complaint asserts claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and seeks equitable relief and an unspecified amount of compensatory and punitive damages. The Official Committee of Equity Security Holders has sought leave to intervene in that complaint and sought leave to bring additional claims against certain of the financial services companies, including the Wachovia affiliates, including additional federal and state claims. The bankruptcy court has not yet permitted the creditors’ committee or the equity holders’ committee to proceed with either of their claims and Wachovia and other defendants have filed motions to dismiss the complaints.

     In addition, certain affiliates of Wachovia, together with numerous other financial services companies, have been named in several private civil actions by investors in Adelphia debt and/or equity securities, alleging among other claims, misstatements in connection with Adelphia securities offerings between 1997 and 2001. Wachovia affiliates acted as an underwriter in certain of those securities offerings, as agent and/or lender for certain Adelphia credit facilities, and as a provider of Adelphia’s treasury/cash management services. These complaints, which seek unspecified damages, have been consolidated in the United States District Court for the Southern District of New York. In separate orders entered in May and July 2005, the District Court dismissed a number of the securities law claims asserted against Wachovia, leaving some securities law claims pending. Wachovia still has a pending motion to dismiss with respect to these claims.

     Bluebird Partners, L.P., Litigation. On December 12, 2002, the jury in the Supreme Court of the State of New York, County of New York, returned a verdict against First Fidelity Bank, N.A. New Jersey, a predecessor to WBNA in the case captioned Bluebird Partners, L.P. v. First Fidelity Bank, N.A., et al. The trial court directed a verdict in favor of CoreStates New Jersey National Bank, another predecessor of WBNA. In this action for breach of contract, breach of fiduciary duty, negligence and malpractice, plaintiff alleges that First Fidelity, while serving as indenture trustee for debt certificates issued by Continental Airlines, failed to take the necessary action to protect the value of the collateral after Continental Airlines filed for bankruptcy on December 3, 1990 and that the decline in the value of the collateral during the pendency of the bankruptcy caused plaintiff’s losses. On July 10, 2003, the trial judge granted First Fidelity’s

motion to set aside the verdict, holding that the evidence was insufficient to support the verdict. Plaintiff appealed, and on October 7, 2004, the Supreme Court, Appellate Division, First Department reversed the dismissal and reinstated the verdict. On January 13, 2005, the court entered judgment against WBNA in the amount of $32.9 million plus pre- and post-judgment interest at the statutory rate from April 27, 1993. Post-judgment interest continues to accrue at the statutory rate until the judgment is paid. On January 24, 2005, Bluebird filed a notice of appeal of the judgment amount. Wachovia filed a motion for a new trial. In addition, Wachovia believes that numerous reversible errors occurred, and that the evidence was insufficient to support the verdict that First Fidelity’s actions caused Bluebird’s loss. Wachovia’s motion for leave to appeal to the Court of Appeals from the October 7 Appellate Division order was denied. The trial court denied Wachovia’s motion requesting the trial court to rule on its motion for a new trial on the ground that the motion for a new trial had been decided by the Appellate Division’s October 7 order. Wachovia has appealed from both the motion for a new trial as well as from the final verdict in favor of plaintiff.

     Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia’s consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia’s results of operations for any particular period.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

     Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

     In January 2004, our board of directors authorized the repurchase of 60 million shares of our common stock, which together with remaining authority from previous board authorizations in 1999 and 2000, permitted Wachovia to repurchase up to 123 million shares of our common stock as of January 15, 2004, the date that authorization was announced. Future stock repurchases may be private or open-market purchases, including block transactions, accelerated or delayed block transactions, forward transactions, collar transactions, and similar transactions. The amount and timing of stock repurchases will be based on various factors, such as management’s assessment of Wachovia’s capital structure and liquidity, the market price of Wachovia common stock compared to management’s assessment of the stock’s underlying value, and applicable regulatory, legal and accounting factors. In 2004, Wachovia repurchased 41.98 million shares of Wachovia common stock in the open market and 752 thousand shares of Wachovia common stock in private transactions at average prices of $49.56 per share and $46.18 per share, respectively. In addition, Wachovia settled equity collar contracts in 2004 representing 5.0 million shares at an average cost of $47.34 per share. Please see “Stockholders’ Equity” beginning on page 20 in the Financial Supplement, filed as Exhibit (19) to this Report, for additional information about Wachovia’s share repurchases in the second quarter of 2005. The following table sets forth information about our stock repurchases for the three months ended June 30, 2005.

Issuer Repurchases of Equity Securities

					Total Number of		Approximate Dollar
					Shares Purchased		Value) of Shares
			Average Price		as Part of		that May Yet Be
	Total Number of		Paid		Publicly Announced		Purchased Under the
Period (1)	Shares Purchased (2)		per Share		Plans or Programs (3)		Plans or Programs (3)
April 1, 2005 to April 30, 2005		2,900,000	$	50.33		2,900,000		52,383,564
May 1, 2005 to May 31, 2005		1,555,000		51.74		1,555,000		50,828,564
June 1, 2005 to June 30, 2005		400,000		50.98		400,000		50,428,564
Total		4,855,000	$	50.84		4,855,000		50,428,564

(1) Based on trade date, not settlement date.

(2) All of these shares were repurchased pursuant to publicly announced share repurchase programs. The nature of these repurchases were as follows: April 2005 — open market repurchases: 2.9 million shares; May 2005 — open market

repurchases: 1.55 million shares; and June 2005 — open market repurchases: 0.4 million shares.

In addition to these repurchases, pursuant to Wachovia’s employee stock option plans, participants may exercise Wachovia stock options by surrendering shares of Wachovia common stock the participants already own as payment of the option exercise price. Shares so surrendered by participants in Wachovia’s employee stock option plans are repurchased pursuant to the terms of the applicable stock option plan and not pursuant to publicly announced share repurchase programs. For the quarter ended June 30, 2005, the following shares of Wachovia common stock were surrendered by participants in Wachovia’s employee stock option plans: April 2005 — 6,095 shares at an average price per share of $51.27; May 2005 — 33,526 shares at an average price per share of $51.76; and June 2005 — 25,562 shares at an average price per share of $50.54.

(3) On May 25, 1999, Wachovia announced a stock repurchase program pursuant to which Wachovia was authorized to repurchase up to 50 million shares of its common stock. On June 26, 2000, Wachovia announced a stock repurchase program pursuant to which Wachovia was authorized to repurchase up to 50 million shares of its common stock. On January 15, 2004, Wachovia announced a stock repurchase program pursuant to which Wachovia was authorized to repurchase up to 60 million shares of its common stock. None of these programs has an expiration date and each respective program expires upon completion of repurchases totaling the amount authorized for repurchase. During the second quarter of 2004, all remaining shares authorized under the May 1999 authorization, which totaled approximately 5.2 million shares at the beginning of the quarter, were repurchased. During the first quarter of 2005, all remaining shares authorized under the June 2000 authorization, which totaled approximately 15.7 million shares at the beginning of the quarter, were repurchased. As of June 30, 2005, there are no more shares remaining under the May 1999 and June 2000 authorizations, and approximately 50.4 million shares remaining under the January 2004 authorization.

Item 6. Exhibits and Reports on Form 8-K.

     (a) Exhibits.

Exhibit No.	Description
(4)	Instruments defining the rights of security holders, including indentures.*
(10)	Schedule of fees payable to the non-employee members of Wachovia’s board of directors.
(12)(a)	Computations of Consolidated Ratios of Earnings to Fixed Charges.
(12)(b)	Computations of Consolidated Ratios of Earnings to Fixed Charges and Preferred Stock Dividends.
(19)	Wachovia’s Second Quarter 2005 Financial Supplement.
(31)(a)	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31)(b)	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32)(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Wachovia agrees to furnish to the Commission upon request, copies of the instruments, including indentures, defining the rights of the holders of the long-term debt of Wachovia and its consolidated subsidiaries.

     (b) Reports on Form 8-K.

     During the quarter ended June 30, 2005, Wachovia filed the following Current Reports on Form 8-K with the Commission:

• Current Report on Form 8-K dated April 15, 2005, reporting Item 2.02, which Item 2.02 contained financial statements filed as Exhibit (99)(c), relating to the announcement of Wachovia’s first quarter 2005 earnings results.

• Current Report on Form 8-K dated May 2, 2005, reporting Item 1.01, relating to (i) the establishment of Wachovia’s Executive Severance Pay Plan, which is available to certain executive officers of Wachovia, (ii) the amendment of the SouthTrust Corporation Supplemental Retirement Benefit Plan and the SouthTrust Corporation Deferred Compensation Plan, in each case which is available to certain executive officers of Wachovia who were former employees of SouthTrust Corporation, and (iii) the establishment of performance goals for Wachovia for 2005 under Wachovia’s 2003 Stock Incentive Plan for Wachovia’s executive officers.

• Current Report on Form 8-K dated June 21, 2005, reporting Item 1.01, relating to an increase in the fees payable to Wachovia’s non-employee members of its board of directors effective August 1, 2005.

In addition, Wachovia filed the following Current Report on Form 8-K with the Commission:

• Current Report on Form 8-K dated July 19, 2005, reporting Item 2.02, which Item 2.02 contained financial statements filed as Exhibit (99)(c), relating to the announcement of Wachovia’s second quarter 2005 earnings results.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Wachovia Corporation
Date: August 4, 2005
	By:	/s/ David M. Julian David M. Julian Executive Vice President and Corporate Controller (Principal Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description
(4)	Instruments defining the rights of security holders, including indentures.*
(10)	Schedule of fees payable to the non-employee members of Wachovia’s board of directors.
(12)(a)	Computations of Consolidated Ratios of Earnings to Fixed Charges.
(12)(b)	Computations of Consolidated Ratios of Earnings to Fixed Charges and Preferred Stock Dividends.
(19)	Wachovia’s Second Quarter 2005 Financial Supplement.
(31)(a)	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31)(b)	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32)(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Wachovia agrees to furnish to the Commission upon request, copies of the instruments, including indentures, defining the rights of the holders of the long-term debt of Wachovia and its consolidated subsidiaries.

EX-10

Exhibit (10)

Schedule of Fees Payable to Non-Employee
Members of the Wachovia Corporation Board of Directors

Effective August 1, 2005, the compensation of Wachovia Corporation’s non-employee directors shall be:

Quarterly Director Retainer	$	17,500
Quarterly Committee Chair Retainer		3,750
Quarterly Audit Committee Chair Retainer		6,250
Quarterly Lead Independent Director Retainer		6,250
Quarterly deferral to common stock account in Wachovia Corporation Deferred Compensation Plan for Non-Employee Directors		37,500

In the event more than 6 board or committee meetings are held during the fiscal year, the following fees will be paid for attendance at each such additional meeting:

Board Meeting Fee	$	2,000
Committee Meeting Fee		1,500

EX-12.A

Exhibit (12)(a)

WACHOVIA CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES

			Six
			Months
			Ended			Years Ended December 31,
			June 30,
(In millions)			2005			2004		2003		2002		2001		2000
EXCLUDING INTEREST ON DEPOSITS
Pretax income from continuing operations			$	4,862			7,633		6,080		4,667		2,293		632
Fixed charges, excluding capitalized interest				2,246			2,701		2,309		2,414		3,734		4,963
Earnings	(A	)	$	7,108			10,334		8,389		7,081		6,027		5,595
Interest, excluding interest on deposits			$	2,113			2,474		2,113		2,247		3,581		4,828
One-third of rents				133			227		196		167		153		135
Capitalized interest				—			—		—		—		—		—
Fixed charges (a)	(B	)	$	2,246			2,701		2,309		2,414		3,734		4,963
Consolidated ratios of earnings to fixed charges, excluding interest on deposits	(A)/	(B)		3.16	X		3.83		3.63		2.93		1.61		1.13
INCLUDING INTEREST ON DEPOSITS
Pretax income from continuing operations			$	4,862			7,633		6,080		4,667		2,293		632
Fixed charges, excluding capitalized interest				4,517			5,554		4,669		5,844		8,478		10,232
Earnings	(C	)	$	9,379			13,187		10,749		10,511		10,771		10,864
Interest, including interest on deposits			$	4,384			5,327		4,473		5,677		8,325		10,097
One-third of rents				133			227		196		167		153		135
Capitalized interest				—			—		—		—		—		—
Fixed charges (a)	(D	)	$	4,517			5,554		4,669		5,844		8,478		10,232
Consolidated ratios of earnings to fixed charges, including interest on deposits	(C)/	(D)		2.08	X		2.37		2.30		1.80		1.27		1.06

(a) The amount of fixed charges do not include other obligations which exist under Financial Accounting Standards Board Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”.

EX-12.B

Exhibit (12)(b)

WACHOVIA CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
     AND PREFERRED STOCK DIVIDENDS

			Six
			Months
			Ended			Years Ended December 31,
			June 30,
(In millions)			2005			2004		2003		2002		2001		2000
EXCLUDING INTEREST ON DEPOSITS
Pretax income from continuing operations			$	4,862			7,633		6,080		4,667		2,293		632
Fixed charges, excluding preferred stock dividends and capitalized interest				2,246			2,701		2,309		2,414		3,734		4,963
Earnings	(A	)	$	7,108			10,334		8,389		7,081		6,027		5,595
Interest, excluding interest on deposits			$	2,113			2,474		2,113		2,247		3,581		4,828
One-third of rents				133			227		196		167		153		135
Preferred stock dividends				—			—		5		19		6		—
Capitalized interest				—			—		—		—		—		—
Fixed charges (a)	(B	)	$	2,246			2,701		2,314		2,433		3,740		4,963
Consolidated ratios of earnings to fixed charges and preferred stock dividends, excluding interest on deposits	(A)/	(B)		3.16	X		3.83		3.63		2.91		1.61		1.13
INCLUDING INTEREST ON DEPOSITS
Pretax income from continuing operations			$	4,862			7,633		6,080		4,667		2,293		632
Fixed charges, excluding preferred stock dividends and capitalized interest				4,517			5,554		4,669		5,844		8,478		10,232
Earnings	(C	)	$	9,379			13,187		10,749		10,511		10,771		10,864
Interest, including interest on deposits			$	4,384			5,327		4,473		5,677		8,325		10,097
One-third of rents				133			227		196		167		153		135
Preferred stock dividends				—			—		5		19		6		—
Capitalized interest				—			—		—		—		—		—
Fixed charges (a)	(D	)	$	4,517			5,554		4,674		5,863		8,484		10,232
Consolidated ratios of earnings to fixed charges and preferred stock dividends, including interest on deposits	(C)/	(D)		2.08	X		2.37		2.30		1.79		1.27		1.06

(a) The amount of fixed charges do not include other obligations which exist under Financial Accounting Standards Board Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”.

EX-19

Second Quarter 2005

Management’s Discussion and Analysis

Quarterly Financial Supplement

Six Months Ended June 30, 2005

WACHOVIA CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL SUPPLEMENT
SIX MONTHS ENDED JUNE 30, 2005
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		47
Loans — On-Balance Sheet, and Managed and Servicing Portfolios		48
Loans Held for Sale		49
Allowance for Loan Losses and Nonperforming Assets		50
Reserve for Unfunded Lending Commitments		51
Nonaccrual Loan Activity		51
Goodwill and Other Intangible Assets		52
Deposits		53
Time Deposits in Amounts of $100,000 or More		53
Long-Term Debt		54
Changes in Stockholders’ Equity		55
Capital Ratios		55
Net Interest Income Summaries — Five Quarters Ended June 30, 2005		56
Net Interest Income Summaries — Six Months Ended June 30, 2005 and 2004		58
Consolidated Balance Sheets — Five Quarters Ended June 30, 2005		59
Consolidated Statements of Income — Five Quarters Ended June 30, 2005		60
Wachovia Corporation and Subsidiaries — Consolidated Financial Statements		61

FINANCIAL HIGHLIGHTS

	Three Months Ended								Six Months Ended
	June 30,					Percent			June 30,					Percent
						Increase								Increase
(Dollars in millions, except per share data)	2005			2004		(Decrease)			2005			2004		(Decrease)
EARNINGS SUMMARY
Net interest income (GAAP)	$	3,358			2,838		18	%	$	6,771			5,699		19	%
Tax-equivalent adjustment		53			65		(18	)		114			127		(10	)
Net interest income (Tax-equivalent)		3,411			2,903		17			6,885			5,826		18
Fee and other income		2,977			2,607		14			5,972			5,374		11
Total revenue (Tax-equivalent)		6,388			5,510		16			12,857			11,200		15
Provision for credit losses		50			61		(18	)		86			105		(18	)
Other noninterest expense		3,591			3,286		9			7,287			6,741		8
Merger-related and restructuring expenses		90			102		(12	)		151			201		(25	)
Other intangible amortization		107			107		—			222			219		1
Total noninterest expense		3,788			3,495		8			7,660			7,161		7
Minority interest in income of consolidated subsidiaries		71			45		58			135			102		32
Income before income taxes (Tax-equivalent)		2,479			1,909		30			4,976			3,832		30
Tax-equivalent adjustment		53			65		(18	)		114			127		(10	)
Income taxes		776			592		31			1,591			1,202		32
Net income	$	1,650			1,252		32	%	$	3,271			2,503		31	%
Diluted earnings per common share	$	1.04			0.95		9	%	$	2.05			1.89		8	%
Return on average common stockholders’ equity		14.04	%		15.49		—			13.98	%		15.43		—
Return on average assets		1.31	%		1.22		—			1.31	%		1.24		—
ASSET QUALITY
Allowance for loan losses as % of loans, net		1.18	%		1.35		—			1.18	%		1.35		—
Allowance for loan losses as % of nonperforming assets		284			241		—			284			241		—
Allowance for credit losses as % of loans, net		1.25			1.43					1.25			1.43
Net charge-offs as % of average loans, net		0.09			0.17		—			0.09			0.15		—
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		0.44	%		0.55		—			0.44	%		0.55		—
CAPITAL ADEQUACY
Tier I capital ratio		7.85	%		8.36		—			7.85	%		8.36		—
Total capital ratio		11.25			11.02		—			11.25			11.02		—
Leverage ratio		6.10	%		6.23		—			6.10	%		6.23		—
OTHER FINANCIAL DATA
Net interest margin		3.23	%		3.37		—			3.27	%		3.46		—
Fee and other income as % of total revenue		46.60			47.33		—			46.45			47.99		—
Effective income tax rate		32.02	%		32.19		—			32.72	%		32.46		—
BALANCE SHEET DATA
Securities	$	117,906			102,934		15	%	$	117,906			102,934		15	%
Loans, net		230,287			172,917		33			230,287			172,917		33
Total assets		511,840			418,441		22			511,840			418,441		22
Total deposits		299,910			243,380		23			299,910			243,380		23
Long-term debt		49,006			37,022		32			49,006			37,022		32
Stockholders’ equity	$	47,904			32,646		47	%	$	47,904			32,646		47	%
OTHER DATA
Average diluted common shares (In millions)		1,591			1,320		21	%		1,597			1,323		21	%
Actual common shares (In millions)		1,577			1,309		20			1,577			1,309		20
Dividends paid per common share	$	0.46			0.40		15		$	0.92			0.80		15
Dividend payout ratio on common shares		44.23	%		42.11		5			44.88	%		42.33		6
Book value per common share	$	30.37			24.93		22		$	30.37			24.93		22
Common stock price		49.60			44.50		11			49.60			44.50		11
Market capitalization	$	78,236			58,268		34		$	78,236			58,268		34
Common stock price to book value		163	%		178		(8	)		163	%		178		(8	)
FTE employees		93,385			85,042		10			93,385			85,042		10
Total financial centers/brokerage offices		3,825			3,239		18			3,825			3,239		18
ATMs		5,089			4,396		16	%		5,089			4,396		16	%

1

Management’s Discussion and Analysis

This discussion contains forward-looking statements. Please refer to our Second Quarter 2005 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.

Executive Summary

Summary of Results of Operations	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions, except per share data)	2005		2004		2005		2004
Net interest income (GAAP)	$	3,358		2,838		6,771		5,699
Tax-equivalent adjustment		53		65		114		127
Net interest income (a)		3,411		2,903		6,885		5,826
Fee and other income		2,977		2,607		5,972		5,374
Total revenue (a)		6,388		5,510		12,857		11,200
Provision for credit losses		50		61		86		105
Other noninterest expense		3,591		3,286		7,287		6,741
Merger-related and restructuring expenses		90		102		151		201
Other intangible amortization		107		107		222		219
Total noninterest expense		3,788		3,495		7,660		7,161
Minority interest in income of consolidated subsidaries		71		45		135		102
Income taxes		776		592		1,591		1,202
Tax-equivalent adjustment		53		65		114		127
Net income		1,650		1,252		3,271		2,503
Diluted earnings per common share	$	1.04		0.95		2.05		1.89
(a) Tax-equivalent.

Wachovia’s net income in the first six months of 2005 was $3.3 billion, up 31 percent from the first six months of 2004, and diluted earnings per common share were $2.05, up 8 percent. These results reflect the merger of Wachovia and SouthTrust Corporation, which closed on November 1, 2004. Under the purchase method of accounting, prior periods have not been restated.

In the first six months of 2005 compared with the first six months of 2004, revenue grew 15 percent to $12.9 billion on growth in average earning assets of 25 percent.

• An 18 percent increase in net interest income related to balance sheet growth largely reflected the SouthTrust acquisition.

• 11 percent growth in fee and other income, in addition to SouthTrust, largely reflected higher asset securitization and securities gains, gains on the sale of equity securities received in settlement of problem loans and increased debit card interchange fees. Weaker markets dampened growth in commissions and trading revenues.

• Fee income represented 46 percent of our total revenue in the first six months of 2005 compared with 48 percent in the first six months of 2004.

2

Credit quality remained very strong, with a $189 million decline in total nonperforming assets from December 31, 2004. The annualized net charge-off ratio was 0.09 percent, down from 0.15 percent in the first six months of 2004. Provision expense declined 18 percent from the first six months of 2004 as a result of these trends and our ongoing strategy to mitigate risk and volatility on our balance sheet by actively monitoring and reducing potential problem loans, including the sale of at-risk credits when prudent.

Average net loans in the first six months of 2005 increased $61.1 billion from the first six months of 2004 to $222.5 billion. The increase included not only the addition from SouthTrust, but also the effect of a net $9.4 billion of consumer real-estate secured loans transferred to the loan portfolio in the fourth quarter of 2004 from loans held for sale and $2.6 billion in higher net leasing balances due to a previously reported income tax settlement. In addition, commercial loans reflected strength in middle-market commercial and large corporate lending. Average core deposits increased $57.0 billion from the first six months of 2004 to $273.2 billion, and average low-cost core deposits increased $49.4 billion to $225.4 billion.

Merger and other expense efficiencies held noninterest expense growth to 7 percent from the first six months of 2004, which drove a 436 basis point improvement in the overhead efficiency ratio to 59.58 percent. Further information about our goals for improving efficiency is in the Outlook section.

Our diversified business model and this strategic focus on expense control helped drive solid performance by our four major businesses amid such industry challenges as a flattening yield curve and a weaker retail brokerage and trading environment.

The General Bank’s earnings rose 36 percent on 25 percent higher revenue from the first six months of 2004 due to increased earning assets related to the SouthTrust acquisition and to strong expense management. The General Bank drove its overhead efficiency ratio down to a record low 49.11 percent.

Capital Management grew earnings 8 percent from the first six months of 2004 despite a 5 percent decline in revenues as efficiencies from the now-completed brokerage integration offset weak retail brokerage transaction activity.

Wealth Management generated record earnings, up 34 percent, on record revenue growth of 16 percent. These results reflected strong growth in loans and deposits, improved trust and investment management fees, and the May 2005 acquisition of an insurance brokerage firm.

Our Corporate and Investment Bank generated relatively stable earnings on a 9 percent increase in revenue with particular strength in advisory, underwriting and other investment banking fee and other income, which offset lower net interest income and weak trading results. Expenses rose due to strategic hiring and other personnel costs.

3

In addition, as we manage interest rate risk, we believe a rising rate environment – assuming it is accompanied by a rebound in business activity in the wake of a more robust economy – will produce many benefits for our business model. Accordingly, we have positioned our balance sheet to be slightly asset-sensitive in a rising rate environment. Our balance sheet is strong and “well capitalized” under regulatory guidelines with a tier 1 capital ratio of 7.85 percent and a leverage ratio of 6.10 percent at June 30, 2005.

In the second quarter of 2005 compared with the second quarter of 2004, net income including the SouthTrust impact rose 32 percent to a record $1.65 billion from $1.25 billion, and diluted earnings per common share rose 9 percent to $1.04 cents from 95 cents. These amounts include after-tax net merger-related and restructuring expenses of 3 cents per share in both the second quarters of 2005 and 2004.

Total revenue rose 16 percent to $6.4 billion in the second quarter of 2005 compared with the second quarter of 2004, with 17 percent growth in tax-equivalent net interest income and 14 percent growth in fee and other income. Net interest income growth reflected higher loans and deposits, largely related to SouthTrust. Growth in fee and other income, in addition to SouthTrust, came from stronger investment banking fees, asset securitizations and securities gains, partially offset by lower retail brokerage commissions and weaker trading results. In addition, the second quarter of 2004 included a loss of $68 million associated with the sale and leaseback of corporate real estate. Merger and other expense efficiencies held expense growth to 8 percent.

Outlook

Our diversified business model and strong execution in our four major businesses on their efficiency initiatives and revenue growth strategies give us confidence Wachovia will be one of the leading growth companies in our industry. We continue to make excellent progress in meeting our corporate objectives of revenue growth and disciplined expense control, increased distribution of products and services, hallmark customer service and balance sheet strength.

Our overall financial outlook for 2005 remains relatively unchanged, although we have revised the underlying assumptions due to changing economic conditions during the course of the year. Our assumptions include growth in the real gross domestic product (GDP) of 3.00 percent; inflation (based on the Consumer Price Index) of 3.00 percent; a federal funds rate of 4.00 percent by December 2005; and a 10-year Treasury bond rate of 4.25 percent by December 2005. We also note that while our original outlook incorporated growth in the S&P 500 index of 6.00 percent, this index was up only 2 percent in mid-July 2005.

This outlook compares growth rates from an illustrative combined Wachovia-SouthTrust, as if the two companies had been merged on January 1, 2004. This illustrative comparison includes Wachovia’s full year 2004 results plus SouthTrust’s results from January 1, 2004, to October 31, 2004, and includes assumed deposit base and other intangible amortization. The following outlook is for the full year 2005:

4

• Net interest income growth in the low single-digit percentage range on a tax-equivalent basis;

• A 10 basis point to 15 basis point decline (stabilizing in the second half of 2005) in the net interest margin from 3.42 percent for full year 2004;

• Fee income growth in the high single-digit percentage range;

• Noninterest expense (excluding merger-related and restructuring expenses) flat to slightly down, reflecting an estimated $250 million of incremental expense savings related to the retail brokerage integration, $250 million related to SouthTrust and approximately $150 million in 2005 related to our efficiency initiative;

• Minority interest expense (excluding merger-related and restructuring expenses) in the range of 3.0 percent to 3.5 percent of pre-tax income (before minority interest expense);

• Loan growth in the low teens percentage range, including consumer loan growth in the low- to mid-teens and commercial loan growth in the high-single-digit range;

• Net charge-offs in the 10 basis point to 20 basis point range with provision expense also expected to be in this range;

• An effective tax rate of approximately 34.5 percent to 35.0 percent on a tax-equivalent basis;

• A leverage ratio above 6.00 percent and a tangible capital to tangible asset ratio of approximately 4.7 percent to 4.8 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, to reinvest in our businesses and to undertake financially attractive, shareholder friendly acquisitions.

Recent proposals by the Financial Accounting Standards Board (FASB), if adopted as currently proposed, may have an impact on our financial results in future periods. Such impact, if adopted as currently proposed, would include (i) a one-time noncash charge to the results of operations recorded as a cumulative effect of a change in accounting principle, and (ii) the recognition as income in future periods of amounts in the aggregate approximating the amount of the one-time charge. Please see the Accounting and Regulatory Matters section for additional information about these FASB proposals.

5

The 15-month integration of SouthTrust is proceeding on track and on budget. Deposit and branch conversions in overlapping states were completed in June 2005, and preparations have begun for conversions in remaining states in the fall. We project $255 million in annual after-tax expense reductions after integration is complete, and merger-related and restructuring expenses and exit cost purchase accounting adjustments of $431 million after tax. In addition, we have recorded preliminary fair market value purchase accounting adjustments of $340 million after tax, representing a net increase in goodwill. These are preliminary adjustments and are subject to further refinements as integration plans and valuations are finalized.

We 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. We are striving to make Wachovia a more efficient company, but it is not our goal to have the lowest overhead efficiency ratio in our peer group, because of our business mix. We believe we will slow expense growth by $600 million to $1.0 billion by 2007. We believe this will result in position reductions in the range of 3,500 to 4,000, approximately 20 percent of which will result from normal attrition, although we also expect to add positions in higher growth businesses. To date, we have identified initial expense reduction opportunities in the range of $400 million to $500 million and work continues. We also expect to reinvest approximately 30 percent to 50 percent of the identified annual savings to increase revenues in our higher growth businesses.

In conjunction with these efforts, we have established overhead efficiency targets, excluding merger-related and restructuring expenses, changes in accounting principle and intangible amortization, for each of our four businesses and for the overall company to achieve by 2007. These 2007 targets are as follows: General Bank, 45 percent to 47 percent; Capital Management, 75 percent to 77 percent; Wealth Management, 60 percent to 62 percent; Corporate and Investment Bank, 49 percent to 51 percent; and for the company overall, 52 percent to 55 percent. Segment tables in the Business Segments section have additional information.

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.

Critical Accounting Policies

It is important to understand our more significant accounting policies and the extent to which we use judgment and estimates in applying those policies when analyzing our financial position and results of operations. Our accounting and reporting policies are in accordance with U.S. generally accepted accounting principles (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. For more information on these critical accounting policies, please refer to our 2004 Annual Report on Form 10-K.

6

Corporate Results of Operations

Our results for the first half of 2005 reflect the November 1, 2004, merger of Wachovia and SouthTrust Corporation.

Average Balance Sheets and Interest Rates	Six Months Ended					Six Months Ended
	June 30, 2005					June 30, 2004
	Average		Interest			Average		Interest
(In millions)	Balances		Rates			Balances		Rates
Interest-bearing bank balances	$	2,567		2.85	%	$	3,626		1.15	%
Federal funds sold		24,475		2.82			24,303		1.02
Trading account assets		33,504		4.66			23,546		4.08
Securities		114,983		5.13			99,216		4.87
Commercial loans, net		129,459		5.33			91,238		4.51
Consumer loans, net		93,077		5.59			70,174		5.20
Total loans, net		222,536		5.44			161,412		4.81
Loans held for sale		13,450		5.35			14,181		4.12
Other earning assets		10,279		4.71			11,299		2.96
Risk management derivatives		—		0.26			—		0.47
Total earning assets		421,794		5.37			337,583		4.84
Interest-bearing deposits		234,580		1.70			182,822		1.04
Federal funds purchased		52,697		2.63			47,486		1.02
Commercial paper		13,458		2.68			12,117		1.03
Securities sold short		11,659		3.36			9,491		2.54
Other short-term borrowings		6,532		1.73			6,225		0.69
Long-term debt		47,752		4.28			37,555		3.95
Risk management derivatives		—		0.15			—		0.13
Total interest-bearing liabilities		366,678		2.41			295,696		1.58
Net interest income and margin	$	6,885		3.27	%	$	5,826		3.46	%

Net Interest Income and Margin Tax-equivalent net interest income increased 18 percent in the first half of 2005 from the first half of 2004 due to balance sheet growth largely reflecting the SouthTrust merger. This growth offset compression in the net interest margin, which declined 19 basis points to 3.27 percent primarily due to the impact of growth in our FDIC-insured sweep product and related investments, increased low-yielding trading assets and lower contributions from hedge-related derivatives, partially offset by wider deposit spreads. The average federal funds discount rate in the first half of 2005 was 170 basis points higher than the average for the first half of 2004, while average longer-term two-year and 10-year treasury note rates increased 147 basis points and decreased 8 basis points, respectively.

In order to maintain our targeted interest rate risk profile, derivatives are used to manage the interest rate risk inherent in our assets and liabilities. We routinely deploy hedging strategies designed to protect future net interest income. These strategies may reduce current income in the short-term, although we expect them to benefit future periods. Hedging actions reduced income in the second quarter of 2005, although we expect these strategies to benefit income over the rest of 2005 and throughout 2006. In the first half of 2005, net interest rate risk management-related derivative income contributed $279 million to net interest income, representing a 13 basis point impact on our net interest margin, compared with $594 million, or 35 basis points, in the first half of 2004. Risk management-related derivatives are those that have been designated and accounted for as accounting hedges.

7

Fee and Other Income	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2005		2004		2005		2004
Service charges	$	528		489		1,041		960
Other banking fees		355		301		706		570
Commissions		603		657		1,202		1,413
Fiduciary and asset management fees		728		700		1,442		1,404
Advisory, underwriting and other investment banking fees		257		203		490		403
Trading account profits		17		34		116		111
Principal investing		41		15		100		53
Securities gains		136		36		134		38
Other income		312		172		741		422
Total fee and other income	$	2,977		2,607		5,972		5,374

Fee and Other Income Eleven percent growth in the first half of 2005 compared with the first half of 2004 included the impact of SouthTrust and also reflected:

• Improved asset securitization income, mortgage banking-related fees and debit card interchange income.

• Weaker commissions in challenging retail brokerage markets.

• $122 million in gains on the sale of equity securities received in settlement of loans and a $38 million gain on the sale of our investment in a United Kingdom-based asset-based lending subsidiary.

• Actions taken in the investment portfolio resulting in $53 million in gains and in our Corporate and Investment Bank, principally structured products activity, resulting in $81 million in gains.

Many of the same factors contributed to the 14 percent growth in the second quarter of 2005 from the second quarter of 2004. Other contributing factors beyond the impact of SouthTrust included:

• Increased advisory, underwriting and other investment banking fees largely from growth in merger and acquisition advisory services and loan syndications.

• Higher principal investing results and weaker net trading profits.

• The second quarter of 2004 included a loss of $68 million associated with the sale and leaseback of corporate real estate.

Noninterest Expense	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2005		2004		2005		2004
Salaries and employee benefits	$	2,324		2,164		4,725		4,346
Occupancy		271		224		521		453
Equipment		269		253		534		512
Advertising		48		48		92		96
Communications and supplies		158		157		320		308
Professional and consulting fees		155		126		282		235
Sundry expense		366		314		813		791
Other noninterest expense		3,591		3,286		7,287		6,741
Merger-related and restructuring expenses		90		102		151		201
Other intangible amortization		107		107		222		219
Total noninterest expense	$	3,788		3,495		7,660		7,161

Noninterest Expense Noninterest expense increased 7 percent in the first half of 2005 from the first half of 2004 largely due to the SouthTrust merger, offset by merger efficiencies and expense discipline. In addition to the SouthTrust impact, increased salaries and employee

8

benefits, higher revenue-based incentives and strategic hiring, led to the increase. Noninterest expense increased 8 percent in the second quarter of 2005 from the second quarter of 2004 largely due to the same factors as above.

Merger-Related and Restructuring Expenses Merger-related and restructuring expenses in the first half of 2005 of $151 million included $88 million related to the SouthTrust merger and $63 million related to the retail brokerage transaction, the integration of which is completed. In the first half of 2004, we recorded $201 million of these expenses relating to the retail brokerage and First Union-Wachovia transactions.

In the second quarter of 2005, we recorded $90 million in net merger-related and restructuring expenses, of which $55 million related to the SouthTrust integration and $35 million related to the retail brokerage integration, compared with $102 million in the second quarter of 2004.

We currently expect total merger-related and restructuring expenses for the SouthTrust merger to be $253 million before tax, of which $129 million had been recorded by June 30, 2005 with the remaining to be incurred through the first quarter of 2006.

Business Segments

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 performance and results of our business segments in the first half of 2005 compared with the first half of 2004. Business segment data excludes merger-related and restructuring expenses and intangible amortization.

Business segment earnings are the primary measure of segment profit or loss we use to assess segment performance and to allocate resources. Economic profit, risk-adjusted return on capital (RAROC) and efficiency ratios are additional metrics, all of which are based on and calculated directly from segment earnings, that assist management in evaluating segment results. Please refer to our 2004 Annual Report for additional information related to our business segments and performance metrics.

We continuously update segment information for changes that occur in the management of our businesses. In the first half of 2005, we transferred certain insurance business lines to Wealth Management from Capital Management and have updated information for 2004 to reflect this change. The impact of this and other changes to previously reported segment earnings for full year 2004 was a $12 million decrease in the General Bank, a $2 million decrease in Capital Management, an $8 million increase in Wealth Management, a $40 million decrease in the Corporate and Investment Bank, and a $46 million increase in the Parent.

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General Bank	Three Months Ended					Six Months Ended
Performance Summary	June 30,					June 30,
(Dollars in millions)	2005			2004		2005		2004
Income statement data
Net interest income (Tax-equivalent)	$	2,407			1,891		4,766		3,739
Fee and other income		686			601		1,370		1,170
Intersegment revenue		49			40		92		78
Total revenue (Tax-equivalent)		3,142			2,532		6,228		4,987
Provision for credit losses		68			65		125		133
Noninterest expense		1,515			1,305		3,059		2,627
Income taxes (Tax-equivalent)		571			422		1,117		808
Segment earnings	$	988			740		1,927		1,419
Performance and other data
Economic profit	$	759			565		1,455		1,061
Risk adjusted return on capital (RAROC)		54.62	%		54.90		52.79		51.86
Economic capital, average	$	6,981			5,167		7,022		5,220
Cash overhead efficiency ratio (Tax-equivalent)		48.18	%		51.54		49.11		52.67
Lending commitments	$	102,189			73,372		102,189		73,372
Average loans, net		161,609			122,108		160,499		120,170
Average core deposits	$	205,495			166,021		203,502		163,201
FTE employees		41,466			34,529		41,466		34,529

General Bank The General Bank segment includes our Retail and Small Business and Commercial lines of business. Results in the first half of 2005 reflect the SouthTrust acquisition. Key General Bank trends in the first half of 2005 compared with the first half of 2004 included:

• 36 percent earnings growth on 25 percent higher revenue driven by 27 percent growth in net interest income and a 17 percent increase in fee and other income, largely due to SouthTrust.

• Higher net interest income was generated by growth in demand deposits and interest checking, as well as consumer certificates of deposit, and by higher commercial and consumer loans largely reflecting the impact of SouthTrust.

• Increased fee and other income, in addition to SouthTrust, was driven by strong debit card interchange income offset by decreases in commercial service charges reflecting higher earnings credit rates on customer balances and lower mortgage banking fee income.

• Continued improvement in the overhead efficiency ratio, despite the SouthTrust impact and our de novo branch initiative, due to merger efficiencies and strong expense management.

In the second quarter of 2005 compared with the second quarter of 2004, the same trends drove General Bank results. In addition:

• Earnings growth was driven in both the retail and the wholesale segments.

• Excluding the SouthTrust impact, fees were relatively flat as improved checking account and interchange fees were offset by lower mortgage income and the effect of higher earnings credit rates on commercial deposit charges. Mortgage banking income declined due to servicing impairment, lower originations and lower mortgage banking spreads.

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• The rate of loan growth slowed in the second quarter of 2005 compared with the first quarter of 2005 as rising rates prompted movement into fixed rate products, particularly in the home equity market and commercial term loans.

• Higher deposit spreads and balance sheet growth offset increased pressure on loan margins.

Capital Management	Three Months Ended						Six Months Ended
Performance Summary	June 30,						June 30,
(Dollars in millions)	2005			2004			2005			2004
Income statement data
Net interest income (Tax-equivalent)	$	160			135			319			257
Fee and other income		1,189			1,236			2,378			2,580
Intersegment revenue		(12	)		(11	)		(24	)		(24	)
Total revenue (Tax-equivalent)		1,337			1,360			2,673			2,813
Provision for credit losses		—			—			—			—
Noninterest expense		1,089			1,141			2,182			2,362
Income taxes (Tax-equivalent)		91			80			180			164
Segment earnings	$	157			139			311			287
Performance and other data
Economic profit	$	118			102			234			210
Risk adjusted return on capital (RAROC)		45.09	%		40.67			44.64			40.86
Economic capital, average	$	1,394			1,380			1,403			1,413
Cash overhead efficiency ratio (Tax-equivalent)		81.48	%		83.90			81.64			83.97
Lending commitments	$	176			103			176			103
Average loans, net		689			522			665			440
Average core deposits	$	31,160			25,533			31,760			22,348
FTE employees		18,504			19,867			18,504			19,867

Capital Management Capital Management includes Retail Brokerage Services, which includes retail brokerage and our annuity and reinsurance businesses, and Asset Management, which includes mutual funds, customized investment advisory services, and corporate and institutional trust services. Key Capital Management trends in the first half of 2005 compared with the first half of 2004 included:

• 8 percent earnings growth despite a 5 percent decline in revenue as noninterest expenses declined.

• A 24 percent increase in net interest income largely due to $9.4 billion in average core deposit growth primarily due to the movement of money market fund balances to the FDIC-insured sweep product.

• 8 percent lower fee and other income as higher retail brokerage recurring and other income, including managed account fees, was offset by lower retail brokerage commissions due to sluggish transaction activity and the impact of lower asset management fee income from the sale of two nonstrategic businesses in 2004.

• $2.1 billion in revenue from the retail brokerage businesses, down $122 million, as transactional revenues declined 18 percent to $978 million, offset by 9 percent growth in recurring and other revenues to $1.1 billion.

• $555 million in revenue from the asset management businesses, down 4 percent due to a $27 million decline from the 2004 sale of the two non-strategic businesses, partially offset by higher equity assets under management and a modest benefit from the SouthTrust merger.

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• An 8 percent decline in noninterest expense largely due to efficiencies gained from the retail brokerage integration.

Mutual Funds	2005										2004
	Second Quarter					First Quarter					Fourth Quarter					Third Quarter					Second Quarter					2Q05			2Q05
			Fund					Fund					Fund					Fund					Fund			vs			vs
(In billions)	Amount		Mix			Amount		Mix			Amount		Mix			Amount		Mix			Amount		Mix			1Q05			2Q04
Assets under management
Equity	$	30		29	%	$	29		29	%	$	29		27	%	$	26		25	%	$	26		25	%		3	%		15
Fixed income		25		25			26		26			27		26			27		25			27		26			(4	)		(7	)
Money market		47		46			45		45			50		47			54		50			51		49			4			(8	)
Total mutual fund assets	$	102		100	%	$	100		100	%	$	106		100	%	$	107		100	%	$	104		100	%		1	%		(3	)

Total Assets Under Management	2005										2004															2Q05			2Q05
	Second Quarter					First Quarter					Fourth Quarter					Third Quarter					Second Quarter					vs			vs
(In billions)	Amount		Mix			Amount		Mix			Amount		Mix			Amount		Mix			Amount		Mix			1Q05			2Q04
Assets under management
Equity	$	80		31	%	$	79		32	%	$	81		32	%	$	73		29	%	$	74		30	%		1	%		8
Fixed income		111		44			114		45			112		44			111		45			110		44			(3	)		1
Money market		63		25			59		23			63		24			65		26			64		26			7			(2	)
Total assets under management	$	254		100	%	$	252		100	%	$	256		100	%	$	249		100	%	$	248		100	%		1			3
Securities lending		48		—			45		—			41		—			36		—			36		—			6			31
Total assets under management and securities lending	$	302		—		$	297		—		$	297		—		$	285		—		$	284		—			2	%		6

Total assets under management were essentially stable compared with year-end 2004 at $254.0 billion.

• Total net outflows were approximately $2.0 billion in the first half of 2005.

• Assets under management also reflected a net asset decline of approximately $300 million since year-end 2004 from lower market valuations. Equity mutual fund assets reached their highest level in five years, ending at $29.6 billion at June 30, 2005.

The same trends described above for the first half largely drove Capital Management results in the second quarter of 2005 compared with the second quarter of 2004.

Wealth Management	Three Months Ended					Six Months Ended
Performance Summary	June 30,					June 30,
(Dollars in millions)	2005			2004		2005			2004
Income statement data
Net interest income (Tax-equivalent)	$	143			118		283			230
Fee and other income		185			153		331			301
Intersegment revenue		1			1		3			2
Total revenue (Tax-equivalent)		329			272		617			533
Provision for credit losses		—			—		(1	)		—
Noninterest expense		222			193		413			382
Income taxes (Tax-equivalent)		39			28		75			54
Segment earnings	$	68			51		130			97
Performance and other data
Economic profit	$	50			33		95			62
Risk adjusted return on capital (RAROC)		49.60	%		40.35		49.36			38.36
Economic capital, average	$	522			458		501			458
Cash overhead efficiency ratio (Tax-equivalent)		67.39	%		70.89		66.85			71.55
Lending commitments	$	5,154			4,342		5,154			4,342
Average loans, net		13,546			10,593		13,175			10,374
Average core deposits	$	13,192			11,835		13,223			11,496
FTE employees		4,737			3,715		4,737			3,715

Wealth Management Wealth Management provides a comprehensive suite of private banking, trust and investment management, financial planning and insurance brokerage services for wealthy individuals, their families and businesses. Results include the impact of

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the May 6, 2005, acquisition of the Palmer & Cay, Inc., insurance brokerage firm, as well as SouthTrust. Key Wealth Management trends in the first half of 2005 compared with the first half of 2004 included:

• 34 percent earnings growth as 16 percent revenue growth outpaced 8 percent expense growth.

• 23 percent increased net interest income was driven by higher loan balances in both consumer and commercial lending, and deposit growth.

• 10 percent higher fee and other income was due to the Palmer & Cay acquisition, which added $30 million in fee and other income in the second quarter of 2005, as well as improved trust and investment management fees. These positives offset a decline in commercial service charges, which reflected higher earnings rates on compensating balances.

• 8 percent noninterest expense growth largely related to $26 million from Palmer & Cay.

• Essentially stable assets under management compared with year-end 2004, at $64.9 billion.

These trends also drove results in the second quarter of 2005 compared with the second quarter of 2004.

Corporate and Investment Bank	Three Months Ended						Six Months Ended
Performance Summary	June 30,						June 30,
(Dollars in millions)	2005			2004			2005			2004
Income statement data
Net interest income (Tax-equivalent)	$	522			603			1,112			1,186
Fee and other income		789			713			1,767			1,454
Intersegment revenue		(39	)		(30	)		(73	)		(57	)
Total revenue (Tax-equivalent)		1,272			1,286			2,806			2,583
Provision for credit losses		(8	)		(4	)		(11	)		(30	)
Noninterest expense		711			619			1,443			1,237
Income taxes (Tax-equivalent)		212			247			511			506
Segment earnings	$	357			424			863			870
Performance and other data
Economic profit	$	176			273			519			552
Risk adjusted return on capital (RAROC)		23.88	%		35.35			30.77			35.59
Economic capital, average	$	5,483			4,505			5,297			4,513
Cash overhead efficiency ratio (Tax-equivalent)		55.85	%		48.11			51.41			47.88
Lending commitments	$	94,333			75,295			94,333			75,295
Average loans, net		37,972			29,552			37,447			29,471
Average core deposits	$	22,505			17,927			21,699			16,981
FTE employees		4,845			4,521			4,845			4,521

Corporate and Investment Bank Our Corporate and Investment Bank segment includes corporate lending, investment banking, and treasury and international trade finance. Key Corporate and Investment Bank trends in the first half of 2005 compared with the first half of 2004 included:

• Relatively stable earnings on 9 percent revenue growth as higher fee and other income overcame a decline in net interest income.

• Fee and other income rose largely due to 28 percent growth in advisory and underwriting services, a first quarter 2005 gain of $122 million on the sale of

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	equity securities received in settlement of loans, higher principal investing results and a $41 million gain on a structured products consumer loan securitization.
•	Net interest income declined 6 percent due primarily to higher funding costs associated with the second quarter 2004 resolution of tax matters related to our commercial leasing portfolio.

• A 17 percent increase in noninterest expense due to increased strategic hiring of key personnel, coupled with costs related to expense reduction initiatives.

• Average loan growth reflecting higher net leasing balances due to the previously reported income tax settlement and the inclusion of SouthTrust, as well as increases in real estate capital markets, international and large corporate loans. Recoveries continued to be a net benefit to the provision.

• Average core deposits growth primarily from higher commercial mortgage servicing and international money market deposits.

The trends described above also drove results in the second quarter of 2005 compared with the second quarter of 2004. In addition:

• Fee income increased 11 percent on solid advisory and underwriting results, driven by strong merger and acquisition advisory activity, loan syndications and investment grade underwriting, and higher other income, which offset lower trading revenues.

• Trading revenues declined due to losses in high yield trading, convertible bonds and credit default swaps due largely to credit spread behavior. Principal investing results improved due to increased gains in fund and direct investments.

• An increase in economic capital usage due to higher loan balances and an increased expense base.

Parent	Three Months Ended						Six Months Ended
Performance Summary	June 30,						June 30,
(Dollars in millions)	2005			2004			2005			2004
Income statement data
Net interest income (Tax-equivalent)	$	179			156			405			414
Fee and other income		128			(96	)		126			(131	)
Intersegment revenue		1			—			2			1
Total revenue (Tax-equivalent)		308			60			533			284
Provision for credit losses		(10	)		—			(27	)		2
Noninterest expense		161			135			412			352
Minority interest		85			70			159			149
Income taxes (Tax-equivalent)		(56	)		(90	)		(130	)		(144	)
Segment earnings	$	128			(55	)		119			(75	)
Performance and other data
Economic profit	$	116			(59	)		96			(77	)
Risk adjusted return on capital (RAROC)		30.05	%		0.61			18.92			4.12
Economic capital, average	$	2,424			2,240			2,417			2,249
Cash overhead efficiency ratio (Tax-equivalent)		17.63	%		50.07			35.65			47.25
Lending commitments	$	430			328			430			328
Average loans, net		10,065			867			10,750			957
Average core deposits	$	2,986			2,493			3,044			2,215
FTE employees		23,833			22,410			23,833			22,410

Parent Parent includes all asset and liability management functions, including managing our investment portfolio for liquidity and interest rate risk. Parent also includes goodwill and other intangible assets, and related funding costs; certain revenues and expenses that are not

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allocated to the business segments; and the results of our HomEq Servicing business, which is responsible for home equity loan servicing, including that generated and retained by our mortgage company, as well as servicing for third party portfolios. Key trends in the Parent segment in the first half of 2005 compared with the first half of 2004 included:

• A revenue increase due to higher fee and other income, offset by a small decline in net interest income.

• Higher fee and other income included a $112 million increase in securities gains and a $148 million increase in other income.

• Other income included a gain of $38 million associated with the sale of an asset-based lending subsidiary in the United Kingdom and a $39 million increase in income from asset securitizations, which included $44 million of losses related to auto loan securitization activity. Other income in 2004 included a loss of $68 million associated with a sale and leaseback of corporate real estate.

• A $14.0 billion increase in average securities to $106.7 billion reflected deposit growth and higher balance sheet positions as discussed in the Balance Sheet Analysis section.

• A $60 million increase in noninterest expense.

In the second quarter of 2005 compared with the second quarter of 2004:

• Total revenue increased $248 million primarily due to higher fee and other income reflecting higher securities gains of $99 million.

• Other income rose $137 million reflecting higher asset securitization results of $51 million and the 2004 loss on the sale and leaseback transaction.

• Noninterest expense rose 19 percent primarily due to higher legal costs.

This segment reflects the impact of Prudential Financial’s 38 percent minority interest in Wachovia Securities Financial Holdings, LLC. Total minority interest, which also includes other subsidiaries, was $159 million in the first half of 2005 compared with $149 million in the first half of 2004.

Balance Sheet Analysis

Securities The increase in securities available for sale from December 31, 2004, reflects higher business unit positions, deposit growth and greater use of cash securities in lieu of derivatives to maintain our moderately asset-sensitive position. The Interest Rate Risk Management section further explains our interest rate risk management practices. The average rate earned on securities available for sale was 5.13 percent in the first half of 2005 and 4.87 percent in the first half of 2004.

Securities Available For Sale
	June 30,		December 31,
(In billions)	2005		2004
Market value	$	117.9		110.6
Net unrealized gain	$	1.5		1.8
Memoranda (Market value)
Residual interests	$	0.9		0.9
Retained bonds
Investment grade (a)		4.6		5.2
Other		0.1		—
Total	$	4.7		5.2
(a) Substantially all had credit ratings of AA and above.

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Loans - On-Balance Sheet
	2005				2004
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
Commercial
Commercial, financial and agricultural	$	80,528		78,669		75,095		59,271		58,340
Real estate — construction and other		13,216		12,713		12,673		6,985		6,433
Real estate — mortgage		19,724		20,707		20,742		14,771		14,927
Lease financing		24,836		25,013		25,000		24,042		23,894
Foreign		7,549		7,504		7,716		7,402		8,075
Total commercial		145,853		144,606		141,226		112,471		111,669
Consumer
Real estate secured		76,213		74,631		74,161		54,965		53,759
Student loans		10,828		10,795		10,468		10,207		9,838
Installment loans		6,783		6,808		7,684		6,410		7,330
Total consumer		93,824		92,234		92,313		71,582		70,927
Total loans		239,677		236,840		233,539		184,053		182,596
Unearned income		9,390		9,574		9,699		9,549		9,679
Loans, net (on-balance sheet)	$	230,287		227,266		223,840		174,504		172,917

Loans The increase in net loans from year-end 2004 reflects growth in commercial loans, while consumer loan growth was offset by transfers to loans held for sale. The majority of the 3 percent commercial loan growth from year-end 2004 was in middle-market commercial and large corporate, partially offset by lower commercial real estate. Consumer loans increased slightly from year-end 2004 as new production was partially offset by the transfer of $1.2 billion of auto loans to loans held for sale in connection with securitization activity and, as interest rates rose, some movement into fixed rate products particularly in the home equity market and commercial term loans. Our loan portfolio is broadly diversified by industry, concentration and geography:

• Commercial loans represented 61 percent and consumer loans 39 percent of the loan portfolio at June 30, 2005.

• The majority of our loan portfolio is secured by collateral or is guaranteed.

• 81 percent of the commercial loan portfolio is secured by collateral.

• 98 percent of the consumer loan portfolio is secured by collateral or is guaranteed.

• Of our $76.2 billion consumer real estate-secured loan portfolio, 78 percent is secured by a first lien, 66 percent has a loan-to-value ratio of 80 percent or less, 88 percent has a loan-to-value ratio of 90 percent or less, and 43 percent is priced on a variable rate basis.

Loans - Managed Portfolio (Including on-balance sheet)
	2005				2004
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
Commercial	$	148,929		147,125		145,072		116,287		115,424
Real estate secured		102,761		98,161		97,021		86,043		84,462
Student loans		11,226		11,283		11,059		10,921		10,817
Installment loans		10,417		9,959		10,359		9,094		9,254
Total managed portfolio	$	273,333		266,528		263,511		222,345		219,957

Our managed loan portfolio grew 4 percent from year-end 2004, reflecting the growth discussed above and real estate-secured securitizations. The managed loan portfolio includes the on-balance sheet loan portfolio, loans held for sale, loans securitized for which the retained interests are classified in securities, and the off-balance sheet portfolio of securitized loans sold where we service the loans.

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Asset Quality	2005						2004
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Nonperforming assets
Nonaccrual loans	$	819			910			955			798			863
Foreclosed properties		138			132			145			101			104
Total nonperforming assets	$	957			1,042			1,100			899			967
as % of loans, net and foreclosed properties		0.42	%		0.46			0.49			0.51			0.56
Nonperforming assets in loans held for sale	$	111			159			157			57			68
Total nonperforming assets in loans and in loans held for sale	$	1,068			1,201			1,257			956			1,035
as % of loans, net, foreclosed properties and loans held for sale		0.44	%		0.50			0.53			0.50			0.55
Allowance for credit losses (a)
Allowance for loan losses, beginning of period	$	2,732			2,757			2,324			2,331			2,338
Balance of acquired entities at purchase date		—			—			510			—			—
Net charge-offs		(51	)		(46	)		(115	)		(65	)		(68	)
Allowance relating to loans transferred or sold		(11	)		(13	)		(51	)		3			(3	)
Provision for credit losses related to loans transferred or sold (b)		—			1			(6	)		(8	)		(9	)
Provision for credit losses		48			33			95			63			73
Allowance for loan losses, end of period		2,718			2,732			2,757			2,324			2,331
Reserve for unfunded lending commitments, beginning of period		156			154			134			146			149
Provision for credit losses		2			2			20			(12	)		(3	)
Reserve for unfunded lending commitments, end of period		158			156			154			134			146
Allowance for credit losses	$	2,876			2,888			2,911			2,458			2,477
Allowance for loan losses
as % of loans, net		1.18	%		1.20			1.23			1.33			1.35
as % of nonaccrual and restructured loans (c)		332			300			289			291			270
as % of nonperforming assets (c)		284			262			251			258			241
Allowance for credit losses
as % of loans, net		1.25	%		1.27			1.30			1.41			1.43
Net charge-offs	$	51			46			115			65			68
Commercial, as % of average commercial loans		0.03	%		—			0.20			0.05			0.08
Consumer, as % of average consumer loans		0.18	%		0.19			0.28			0.30			0.28
Total, as % of average loans, net		0.09	%		0.08			0.23			0.15			0.17
Past due loans, 90 days and over, and nonaccrual loans (c)
Commercial, as a % of loans, net		0.45	%		0.50			0.56			0.57			0.66
Consumer, as a % of loans, net		0.77	%		0.80			0.80			0.89			0.86
(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 loans held for sale.

Nonperforming Assets Nonperforming assets decreased 15 percent from year-end 2004. Nonaccrual loans declined $136 million, or 14 percent from year-end 2004 and reflected sales of $129 million. Continued improvement in credit quality is reflected in the 9 basis point decline in nonperforming assets to 0.44 percent of loans, foreclosed properties and loans held for sale. New inflows to commercial nonaccrual loans were $405 million from year-end 2004. Impaired loans were $585 million at June 30, 2005 down from $712 million at December 31, 2004.

Past Due Loans Accruing loans 90 days or more past due, excluding loans that are classified as loans held for sale, were $521 million at June 30, 2005, compared with $522 million at December 31, 2004. Of total past due loans, $31 million were commercial loans or commercial real estate loans and $490 million were consumer loans.

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Net Charge-offs Annualized net charge-offs as a percentage of average net loans of 0.09 percent in the first half of 2005 were down 6 basis points from the first half of 2004. Commercial net charge-offs were $10 million compared with $9 million and consumer net charge-offs were $87 million compared with $111 million in the first half of 2005 compared with the first half of 2004. The low level of net charge-offs reflects moderating trends in nonperforming assets at the current beneficial point in the credit cycle, our strategic decision to actively manage down potential problem loans and a higher level of recoveries during the period. In addition, as older vintages of consumer loans mature or pay down, a higher quality consumer loan mix remains.

Provision for Credit Losses Our strategy is to mitigate risk and volatility on our balance sheet by actively monitoring and reducing potential problem loans, including the sale of at-risk credits when prudent. With improved loan quality and favorable economic conditions, this strategy resulted in an 18 percent decline in the provision for credit losses from the first half of 2004 to $86 million in the first half of 2005. Based on our expectations of positive trends in the economy and solid asset quality over the next few quarters, our outlook for 2005 anticipates a provision in the range of 10 basis points to 20 basis points of average net loans. In the second quarter of 2005 compared with the second quarter of 2004, the provision for credit losses declined 18 percent due to positive economic trends and solid asset quality.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments The allowance for loan losses decreased by $39 million from year-end 2004 to $2.7 billion at June 30, 2005, reflecting a $24 million reduction related to transfers to loans held for sale and loans sold out of the loan portfolio and reduced risk in our loan portfolio. The reserve for unfunded lending commitments was $158 million at June 30, 2005, and $154 million at year-end 2004. The reserve for unfunded lending commitments relates to commercial loans and is included in other liabilities.

Loans Held for Sale Loans held for sale include loans originated for sale or securitization as part of our core business strategy and the activities related to our ongoing portfolio risk management strategies to reduce exposure to areas of perceived higher risk. Our core business activity represents loans we originate with the intent to sell to third parties and primarily includes mortgages, commercial and consumer real estate-secured loans, and, beginning in the second quarter of 2005, auto loans. At June 30, 2005, and December 31, 2004, core business activity represented substantially all of loans held for sale.

In the first half of 2005, we sold or securitized $12.7 billion in loans out of the loans held for sale portfolio, including $3.2 billion of commercial loans and $9.5 billion of consumer loans, primarily residential mortgages. We transferred $1.2 billion of auto loans to loans held for sale in connection with securitization activity. Of the loans sold, $19 million were nonperforming.

In the first half of 2004, we sold or securitized $9.8 billion of loans out of the loans held for sale portfolio. Of these loans, $18 million were nonperforming.

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At June 30, 2005, consumer real estate-secured loans in loans held for sale amounted to $9.8 billion, a $1.5 billion increase from year-end 2004. Mortgage loans in loans held for sale amounted to $2.1 billion, an increase of $168 million from year-end 2004, and auto loans in loans held for sale amounted to $808 million.

Goodwill In connection with acquisitions, we recorded purchase accounting adjustments to reflect the respective fair values of the assets and liabilities of SouthTrust as of November 1, 2004, and of Palmer & Cay as of May 6, 2005, as well as certain exit costs related to these mergers, which has the effect of increasing goodwill. These purchase accounting adjustments are preliminary and are subject to refinement for up to one year following consummation. Specifically, we expect further refinements related to premises and equipment and financial assets as we receive final appraisals and complete our valuation procedures. In addition, we expect to record exit cost purchase accounting adjustments through October 2005 for SouthTrust and through April 2006 for Palmer & Cay.

For the SouthTrust merger, to date we have recorded preliminary fair value purchase accounting adjustments and corresponding increases in goodwill of $414 million ($340 million after tax) and exit cost purchase accounting adjustments of $207 million ($172 million after tax), primarily related to personnel, employee termination benefits, and occupancy and equipment costs, offset by the effect of regulatory mandated branch sales. In addition, we recorded deposit base and customer relationship intangibles of $735 million ($452 million after tax). Based on a purchase price of $14.0 billion and SouthTrust tangible stockholders’ equity of $3.9 billion, this resulted in goodwill of $10.1 billion at June 30, 2005.

In the second quarter of 2005, we favorably resolved certain exit cost liabilities related to the Wachovia Securities retail brokerage transaction and recorded a $60 million ($36 million after tax) reduction in goodwill to reflect the exit cost purchase accounting impact. Goodwill relating to this transaction was $543 million at June 30, 2005.

Liquidity and Capital Adequacy

Core Deposits Core deposits increased slightly from December 31, 2004, to $275.3 billion at June 30, 2005. Compared with the first half of 2004, average core deposits increased $57.0 billion to $273.2 billion and average low-cost core deposits increased $49.4 billion to $225.4 billion, including the SouthTrust impact.

Purchased Funds Average purchased funds, which include wholesale borrowings with maturities of 12 months or less, were $95.4 billion in the first half of 2005 and $80.9 billion in the first half of 2004. The increase was primarily related to the SouthTrust merger. Purchased funds were $100.4 billion at June 30, 2005, and $83.9 billion at December 31, 2004, reflecting commercial paper increases and higher borrowings.

Long-term Debt Long-term debt increased $2.2 billion from December 31, 2004, to $49.0 billion at June 30, 2005, reflecting debt issuances in the first half of 2005. In the rest of 2005, scheduled maturities of long-term debt amount to $7.2 billion. We anticipate either extending the maturities of these obligations or replacing the maturing obligations.

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Under our current shelf registration statement filed with the Securities and Exchange Commission, we have $21.5 billion of senior or subordinated debt securities, common stock or preferred stock available for issuance. In addition, we have available for issuance up to $7.9 billion under a medium-term note program covering senior or subordinated debt securities. Also, Wachovia Bank, National Association, has available a global note program for the issuance of up to $41.8 billion of senior or subordinated notes. In the first half of 2005, we issued $1.7 billion of subordinated bank notes under the global note program.

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

Stockholders’ Equity Stockholders’ equity increased to $47.9 billion at June 30, 2005, from $47.3 billion at year-end 2004, including share repurchases amounting to $1.3 billion. We paid $1.5 billion, or 92 cents per share, in dividends to common stockholders in the first half of 2005 compared with $1.0 billion, or 80 cents per share, in the first half of 2004. Average diluted common shares outstanding increased 73 million shares from December 31, 2004, to 1.6 billion at June 30, 2005, due to the effect of the SouthTrust acquisition. In the first half of 2005, we repurchased 25 million common shares at a cost of $1.3 billion in connection with our previously announced share repurchase programs. At June 30, 2005, we were authorized to buy back up to a remaining 50 million shares of common stock.

In 2004 and 2005, we entered into transactions involving the simultaneous sale of put options and purchase of call options on a remaining 10 million shares of our common stock with expiration dates to September 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 first half of 2005, we recorded a loss of $21 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, 2005, our subsidiaries had $7.2 billion available for dividends that could be paid without prior regulatory approval. Our subsidiaries paid $1.8 billion in dividends to the parent company in the first half of 2005.

Regulatory Capital Our capital ratios were above regulatory minimums in the first half of 2005 and we continued to be classified as “well capitalized.” The tier 1 capital ratio decreased 16 basis points from December 31, 2004, to 7.85 percent, driven primarily by higher risk-weighted assets. Our total capital ratio was 11.25 percent and our leverage ratio was 6.10 percent at June 30, 2005, and 11.11 percent and 6.38 percent, respectively, at December 31, 2004.

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Off-Balance Sheet Transactions

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. For more information on off-balance sheet guarantees and retained interests, please refer to our 2004 Annual Report on Form 10-K.

Summary of Off-Balance Sheet Exposures
	June 30, 2005				December 31, 2004
	Carrying				Carrying
(In millions)	Amount		Exposure		Amount		Exposure
Guarantees
Securities lending indemnifications	$	—		54,651		—		48,879
Standby letters of credit		108		31,091		101		30,815
Liquidity agreements		686		7,144		1		7,568
Loans sold with recourse		42		4,922		39		5,238
Residual value guarantees		11		637		9		629
Total guarantees	$	847		98,445		150		93,129

Retained Interests Retained interests from securitizations with off-balance sheet entities recorded as either available for sale securities, trading account assets or loans amounted to $7.9 billion at June 30, 2005, and $6.5 billion at December 31, 2004. In the first six months of 2005, we securitized and sold $4.6 billion of consumer loans, principally consumer real estate-secured loans, retaining $99 million in the form of residual interests.

Risk Governance and Administration

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 is inherent in all these activities.

We use Value-at-Risk (VAR) methodology to assess market volatility over the most recent 252 trading days 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 and 99 percent confidence levels, and 10-day VAR at the 99 percent confidence level. 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 half of 2005 was $30 million. The total 1-day VAR was $25 million at June 30, 2005, and $21 million at December 31, 2004, and primarily related to interest rate risk and equity risk. The high, low and average VARs in the first half of 2005 were $28 million, $15 million and $19 million, respectively.

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 take to protect earnings from interest rate risk. Please refer to our 2004 Annual Report for a more detailed discussion of Wachovia’s interest rate risk management practices.

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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 focus on new customer acquisition and quality customer service has enabled us to generate deposit growth that has far outpaced loan growth, significantly adding to our naturally asset-sensitive position. To achieve more neutrality, we maintain a large portfolio of fixed rate discretionary instruments such as loans, securities and derivatives.

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 for time periods as long as 36 months. In analyzing interest rate sensitivity for policy measurement, we compare forecasted earnings per share in both “high rate” and “low rate” scenarios to the “market forward rate.” The policy measurement period is 12 months in length, beginning with the first month of the forecast. Our objective is to ensure we prudently manage interest-bearing assets and liabilities in ways that improve 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 earnings per share in both falling and rising rate environments.

The “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 400 basis point range, or 200 basis points both above and below the “market forward rate” scenario. Our various scenarios together measure earnings volatility to a May 2006 federal funds rate ranging from 1.76 percent to 5.76 percent.

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 bond 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. In the first half of 2004, the threat of rising rates, but uncertain timing, kept the curve very steep. Before the Federal Reserve’s Federal Open Market Committee’s tightening campaign began, our investment and hedging strategies were designed to manage both repricing risk and curve flattening that typically accompanies a rapid rise in short-term rates. Much of the anticipated flattening has occurred throughout 2004 and early 2005. At June 30, 2005, the spread between the 10-year treasury note rate and the federal funds rate was 59 basis points, which is below the long-term

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average of 125 basis points. While we still believe further flattening is possible, and we will continue to measure the impact of a nonparallel shift in rates, we feel the risk of earnings volatility due to further flattening has somewhat subsided.

Considering the balance of risks for 2005, we will focus primarily on managing the value created through our expanded deposit base as we defend the net interest margin against the pressures of rising short-term rates and, relative to 2004, a significantly flatter curve. We expect to rely on our large base of low-cost core deposits to fund incremental investments in loans and securities. The characteristics of the loans 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.

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

Policy Period	Actual			Implied
Sensitivity Measurement	Fed Funds			Fed Funds		Percent
	Rate at			Rate at		Earnings
	June 1, 2005			May 31, 2006		Sensitivity
Market Forward Rate Scenarios (a)		3.01	%		3.76		—
High Rate Composite					5.76		0.40
Low Rate					1.76		0.90
(a) Assumes base Fed Funds rate mirrors market expectations.

Current forward rate expectations imply an additional 75 basis points of tightening by the Federal Reserve to a 4.00 percent federal funds target by year-end, followed by a period of stable short-term rates for all of 2006. If these expectations prove to be correct, the spread between the 10-year treasury note yield and the federal funds rate would compress from 59 basis points at June 30, 2005, to 22 basis points at December 31, 2005. The current market expectations therefore do not reflect a curve shape consistent with a scenario where short-term rates rise an additional 200 basis points. Therefore, our high rate sensitivity to the “market forward rate” scenario is measured using three different yield curve shapes. These curves are constructed to represent the likely range of yield curve shapes that may prevail in an environment where short-term rates rise 200 basis points above current market expectations. The reported sensitivity is a composite of these three scenarios.

In June 2005, our earnings simulation model indicated earnings would be positively affected by 0.4 percent in a “high rate composite” scenario relative to the “market forward rate” over the policy period. Additionally, we measure a scenario where short-term rates gradually decline 200 basis points over a 12-month period while longer-term 10-year and 30-year treasury notes decline by less than 200 basis points relative to the “market forward rate” scenario. The model indicates earnings would be positively affected by 0.9 percent in this scenario.

While our interest rate sensitivity modeling assumes 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.

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Accounting and Regulatory Matters

The following information addresses significant new developments in accounting standard setting that will affect us, as well as new or proposed legislation that will continue to have a significant impact on our industry.

Share-Based Payments In December 2004, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 123 (revised) (SFAS 123R), Share-Based Payments, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in income. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS 123R is effective for share-based awards granted on or after January 1, 2006, based on recent guidance from the SEC, which delayed the original effective date of July 1, 2005. Early adoption is permitted. We adopted the fair value method of accounting for stock options in 2002. Accordingly, the implementation of SFAS 123R was not expected to have a material impact on our consolidated financial position or results of operations. However, interpretations of SFAS 123R are indicating that the period to recognize expense for options granted to retiree-eligible employees should be different than for other employees, which is not current practice. We are assessing the impact of these interpretations of SFAS 123R on our consolidated financial position and results of operations.

Leveraged Lease Accounting As previously disclosed, the FASB has been discussing several matters relating to leveraged lease accounting. Currently, SFAS No. 13, Accounting for Leases, (SFAS 13) as amended and interpreted, states that if a change in an important lease assumption changes the total estimated net income under the lease, then a recalculation of the net investment in the leveraged lease must occur. On July 14, 2005, the FASB issued a proposed FASB Staff Position (FSP) that would amend SFAS 13 to provide that changes affecting the timing of cash flows but not the total net income under a leveraged lease will also trigger a recalculation of the lease. Under the proposed FSP, recalculations affecting existing leveraged leases would result in a one-time noncash charge to be recorded as a cumulative effect of a change in accounting principle on December 31, 2005. The proposed FSP provides that amounts would be recognized as income over the remaining terms of the affected leases, which in the aggregate would approximate the amount of the charge initially taken. The proposed FSP is subject to a 60-day comment period followed by final deliberations by the FASB and, therefore, is subject to change. We cannot predict with certainty what the final FSP will provide.

We have two broad classes of leveraged lease transactions on our books that would be affected if the final FSP is the same as the proposed FSP: Lease-In, Lease-Out transactions (LILOs) and a second group of transactions that the IRS broadly refers to as Sale-In, Lease-Out transactions (SILOs). SILOs principally include service contract and qualified technological equipment leases. As previously disclosed, in 2004 Wachovia and the IRS settled all issues relating to the IRS’s challenge of the tax position on LILOs entered into by First Union Corporation and legacy Wachovia Corporation. The resolution of these LILO issues led to a change in the timing of cash flows under the lease transactions. Accordingly, if the FSP is finalized as proposed and based on our interpretation of the proposed FSP, we

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currently estimate that we would be required to recognize a one-time after-tax noncash charge to the results of operations for LILOs of between $500 million and $800 million on December 31, 2005. Under the proposed FSP, this amount would be recorded as a cumulative effect of a change in accounting principle, which would be presented on the consolidated statement of income after “income before cumulative effect of a change in accounting principle,” and would be recognized as income over the remaining terms of the affected LILO leases. Retrospective restatement of prior periods is not permitted under the proposed FSP. Assuming the final FSP is the same as the proposed FSP, we currently estimate that the amounts to be recognized as income over the remaining term of the affected LILO leases would not have a material impact to our earnings per share in future periods. In addition, we also believe the recognition of the one-time noncash charge for LILOs would not have an impact on our financial outlook relating to revenue and expense items or capital ratios for 2005 as described in the Outlook section.

The proposed FSP may also affect our SILO leases. The IRS has announced its intention to challenge the industry-wide tax treatment of SILOs. We believe that our tax treatment of SILOs is consistent with well-established tax law and that it is probable that we would prevail if litigation were to become necessary. However, assuming the final FSP and the final FASB Interpretation relating to uncertain tax positions discussed below are finalized as proposed, and in the event that we were unable to meet the recognition threshold of the FASB Interpretation, we might incur a material one-time noncash charge to our consolidated results of operations for SILOs. This one-time charge for SILOs would be recorded as a cumulative effect of a change in accounting principle and an amount approximating the charge would be recognized as income over the remaining life of the affected SILO leases. We are currently unable to predict with certainty the amount, if any, and financial impact of such one-time charge for SILO leases.

Income Taxes The FASB has issued a proposed FASB Interpretation, Uncertain Tax Positions, to clarify the criteria for recognition of tax benefits in accordance with SFAS No. 109, Accounting for Income Taxes. Under the proposed Interpretation, a company would recognize in its financial statements its best estimate of the benefit associated with a tax position only if it is considered “probable”, as that term is defined in SFAS No. 5, Accounting for Contingencies, of being sustained on audit based solely on the technical merits of the tax position. The proposed effective date for the Interpretation is December 31, 2005, with a cumulative effect of a change in accounting principle to be recorded upon the initial adoption. Under the proposed Interpretation, only tax positions that meet the “probable” threshold at the effective date would continue to be recognized. We are currently analyzing the proposed Interpretation and have not determined its potential impact on our consolidated financial position or results of operations, including as noted above for SILO lease transactions. The proposed Interpretation is subject to a 60-day comment period followed by final deliberations by the FASB and, therefore, is subject to change. We cannot predict with certainty what the final Interpretation will provide.

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The American Jobs Creation Act of 2004 (the Act) introduces a special one-time dividends-received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer, provided certain criteria are met. The amount of deferred income taxes we recorded in 2004 in connection with a decision to repatriate certain earnings was not significant. We continue to evaluate the impact of the Act on our remaining undistributed earnings.

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 2004 Annual Report on Form 10-K.

In June 2004, the Basel Committee on Bank Supervision published new international guidelines for determining regulatory capital. The U.S. regulators have published a draft containing guidance of their interpretation of the new Basel guidelines. We will be required to determine regulatory capital under the new methodologies, in parallel with the existing capital rules, beginning in 2007. In 2008, we will determine regulatory capital solely under the new rules, which include certain limitations in 2008 and 2009. This is a very significant change that results in regulatory capital being more risk sensitive than under the current framework, and represents a significant implementation effort for us to be in compliance with the new regulations. The necessary project management infrastructure and funding have been established to ensure we will fully comply with the new regulations.

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Table 1
EXPLANATION OF OUR USE OF NON-GAAP FINANCIAL MEASURES

     In addition to the results of operations presented in accordance with U.S. 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 other intangible amortization, merger-related and restructuring expenses, and the cumulative effect of a change in accounting principle; 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 other intangible amortization, merger-related and restructuring expenses, and the cumulative effect of a change in accounting principle, and has communicated certain dividend payout ratio goals to investors on this basis. We believe this 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, except per share data)	2005			2004		2005		2004
Net interest income (GAAP)	$	3,358			2,838		6,771		5,699
Tax-equivalent adjustment		53			65		114		127
Net interest income (Tax-equivalent)	$	3,411			2,903		6,885		5,826
DIVIDEND PAYOUT RATIOS ON COMMON SHARES
Diluted earnings per common share (GAAP)	$	1.04			0.95		2.05		1.89
Other intangible amortization		0.04			0.05		0.09		0.11
Merger-related and restructuring expenses		0.03			0.03		0.05		0.07
Earnings per share (a)	$	1.11			1.03		2.19		2.07
Dividends paid per common share	$	0.46			0.40		0.92		0.80
Dividend payout ratios (GAAP) (b)		44.23	%		42.11		44.88		42.33
Dividend payout ratios (a) (b)		41.44	%		38.83		42.01		38.65

(a)	Excludes other intangible amortization, and merger-related and restructuring expenses.
(b)	Dividend payout ratios are determined by dividing dividends per common share by earnings per common share.

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Table 2
SELECTED STATISTICAL DATA

	2005					2004
	Second			First		Fourth		Third		Second
(Dollars in millions, except per share data)	Quarter			Quarter		Quarter		Quarter		Quarter
PROFITABILITY
Return on average common stockholders’ equity		14.04	%		13.92		13.50		15.12		15.49
Net interest margin (a)		3.23			3.31		3.37		3.36		3.37
Fee and other income as % of total revenue		46.60			46.30		45.50		46.21		47.33
Effective income tax rate		32.02	%		33.42		31.20		30.71		32.19
ASSET QUALITY
Allowance for loan losses as % of loans, net		1.18	%		1.20		1.23		1.33		1.35
Allowance for loan losses as % of nonperforming assets (b)		284			262		251		258		241
Allowance for credit losses as % of loans, net		1.25			1.27		1.30		1.41		1.43
Net charge-offs as % of average loans, net		0.09			0.08		0.23		0.15		0.17
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		0.44	%		0.50		0.53		0.50		0.55
CAPITAL ADEQUACY
Tier 1 capital ratio		7.85	%		7.91		8.01		8.34		8.36
Total capital ratio		11.25			11.40		11.11		11.22		11.02
Leverage		6.10	%		5.99		6.38		6.21		6.23
OTHER DATA
FTE employees		93,385			93,669		96,030		84,503		85,042
Total financial centers/brokerage offices		3,825			3,970		3,971		3,215		3,239
ATMs		5,089			5,234		5,321		4,395		4,396
Actual common shares (In millions)		1,577			1,576		1,588		1,308		1,309
Common stock price	$	49.60			50.91		52.60		46.95		44.50
Market capitalization	$	78,236			80,256		83,537		61,395		58,268

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

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Table 3
SUMMARIES OF INCOME, PER COMMON SHARE AND BALANCE SHEET DATA

	2005						2004
	Second			First			Fourth		Third			Second
(In millions, except per share data)	Quarter			Quarter			Quarter		Quarter			Quarter
SUMMARIES OF INCOME
Interest income	$	5,702			5,453			4,969		4,301			4,019
Tax-equivalent adjustment		53			61			60		63			65
Interest income (a)		5,755			5,514			5,029		4,364			4,084
Interest expense		2,344			2,040			1,672		1,336			1,181
Net interest income (a)		3,411			3,474			3,357		3,028			2,903
Provision for credit losses		50			36			109		43			61
Net interest income after provision for credit losses (a)		3,361			3,438			3,248		2,985			2,842
Securities gains (losses)		136			(2	)		23		(71	)		36
Fee and other income		2,841			2,997			2,781		2,672			2,571
Merger-related and restructuring expenses		90			61			116		127			102
Other noninterest expense		3,698			3,811			3,718		3,544			3,393
Minority interest in income of consolidated subsidiaries		71			64			54		28			45
Income before income taxes		2,479			2,497			2,164		1,887			1,909
Income taxes		776			815			656		561			592
Tax-equivalent adjustment		53			61			60		63			65
Net income	$	1,650			1,621			1,448		1,263			1,252
PER COMMON SHARE DATA
Basic earnings	$	1.05			1.03			0.97		0.97			0.96
Diluted earnings		1.04			1.01			0.95		0.96			0.95
Cash dividends	$	0.46			0.46			0.46		0.40			0.40
Average common shares — Basic		1,564			1,571			1,487		1,296			1,300
Average common shares — Diluted		1,591			1,603			1,518		1,316			1,320
Average common stockholders’ equity
Quarter-to-date	$	47,114			47,231			42,644		33,246			32,496
Year-to-date		47,172			47,231			35,295		32,828			32,616
Book value per common share		30.37			29.48			29.79		25.92			24.93
Common stock price
High		53.07			56.01			54.52		47.50			47.66
Low		49.52			49.91			46.84		43.56			44.16
Period-end	$	49.60			50.91			52.60		46.95			44.50
To earnings ratio (b)		12.53	X		13.16			13.84		12.76			12.54
To book value		163	%		173			177		181			178
BALANCE SHEET DATA
Assets	$	511,840			506,833			493,324		436,698			418,441
Long-term debt	$	49,006			47,932			46,759		41,444			37,022

(a)	Tax-equivalent.
(b)	Based on diluted earnings per common share.

29

Table 4
MERGER-RELATED AND RESTRUCTURING EXPENSES

	Six
	Months
	Ended
	June 30,
(In millions)	2005
MERGER—RELATED AND RESTRUCTURING EXPENSES — WACHOVIA/SOUTHTRUST
Merger—related expenses
Personnel costs	$	14
Occupancy and equipment		8
Advertising		6
System conversion costs		41
Other		17
Total merger—related expenses		86
Restructuring expenses
Occupancy and equipment		1
Other		1
Total restructuring expenses		2
Total Wachovia/SouthTrust merger—related and restructuring expenses		88
MERGER—RELATED AND RESTRUCTURING EXPENSES — WACHOVIA SECURITIES RETAIL BROKERAGE
Merger—related expenses
Personnel costs		4
Occupancy and equipment		(1	)
System conversion costs		48
Other		11
Total merger—related expenses		62
Restructuring expenses
Occupancy and equipment		1
Total restructuring expenses		1
Total Wachovia Securities retail brokerage merger—related and restructuring expenses		63
Total merger—related and restructuring expenses	$	151

30

Table 5
BUSINESS SEGMENTS (a)

	2005					2004
	Second			First		Fourth		Third		Second
(Dollars in millions)	Quarter			Quarter		Quarter		Quarter		Quarter
GENERAL BANK COMBINED (b)
Net interest income (c)	$	2,407			2,359		2,283		1,982		1,891
Fee and other income		686			684		659		602		601
Intersegment revenue		49			43		47		43		40
Total revenue (c)		3,142			3,086		2,989		2,627		2,532
Provision for credit losses		68			57		107		74		65
Noninterest expense		1,515			1,544		1,525		1,362		1,305
Income taxes		561			536		482		423		411
Tax-equivalent adjustment		10			10		10		10		11
Segment earnings	$	988			939		865		758		740
Economic profit	$	759			696		667		590		565
Risk adjusted return on capital		54.62	%		50.97		52.13		56.88		54.90
Economic capital, average	$	6,981			7,063		6,447		5,123		5,167
Cash overhead efficiency ratio (c)		48.18	%		50.06		51.01		51.85		51.54
Lending commitments	$	102,189			96,559		93,608		76,592		73,372
Average loans, net		161,609			159,376		146,933		124,663		122,108
Average core deposits	$	205,495			201,487		191,266		169,812		166,021
FTE employees		41,466			42,263		43,404		34,519		34,529
COMMERCIAL
Net interest income (c)	$	747			736		720		592		556
Fee and other income		100			112		96		102		98
Intersegment revenue		33			29		33		28		24
Total revenue (c)		880			877		849		722		678
Provision for credit losses		10			4		40		18		15
Noninterest expense		288			311		305		285		270
Income taxes		203			196		174		142		131
Tax-equivalent adjustment		10			10		10		10		11
Segment earnings	$	369			356		320		267		251
Economic profit	$	227			207		207		178		159
Risk adjusted return on capital		35.95	%		33.91		36.08		41.60		38.79
Economic capital, average	$	3,643			3,671		3,286		2,317		2,303
Cash overhead efficiency ratio (c)		32.65	%		35.48		35.98		39.42		39.82
Average loans, net	$	77,524			75,702		67,357		52,597		51,577
Average core deposits	$	42,148			42,554		42,722		39,289		37,974
RETAIL AND SMALL BUSINESS
Net interest income (c)	$	1,660			1,623		1,563		1,390		1,335
Fee and other income		586			572		563		500		503
Intersegment revenue		16			14		14		15		16
Total revenue (c)		2,262			2,209		2,140		1,905		1,854
Provision for credit losses		58			53		67		56		50
Noninterest expense		1,227			1,233		1,220		1,077		1,035
Income taxes		358			340		308		281		280
Tax-equivalent adjustment		—			—		—		—		—
Segment earnings	$	619			583		545		491		489
Economic profit	$	532			489		460		412		406
Risk adjusted return on capital		74.99	%		69.43		68.83		69.49		67.86
Economic capital, average	$	3,338			3,392		3,161		2,806		2,864
Cash overhead efficiency ratio (c)		54.23	%		55.85		56.97		56.55		55.83
Average loans, net	$	84,085			83,674		79,576		72,066		70,531
Average core deposits	$	163,347			158,933		148,544		130,523		128,047

(a)	Certain amounts presented in this Table 5 in periods prior to the second quarter of 2005 have been reclassified to conform to the presentation in the second quarter of 2005.
(b)	General Bank Combined represents the consolidation of the General Bank’s Commercial, and Retail and Small Business lines of business.
(c)	Tax-equivalent.

(Continued)

31

Table 5
BUSINESS SEGMENTS

	2005						2004
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	160			159			161			158			135
Fee and other income		1,189			1,189			1,212			1,123			1,236
Intersegment revenue		(12	)		(12	)		(10	)		(13	)		(11	)
Total revenue (b)		1,337			1,336			1,363			1,268			1,360
Provision for credit losses		—			—			—			—			—
Noninterest expense		1,089			1,093			1,143			1,095			1,141
Income taxes		91			89			80			62			80
Tax-equivalent adjustment		—			—			1			—			—
Segment earnings	$	157			154			139			111			139
Economic profit	$	118			116			101			74			102
Risk adjusted return on capital		45.09	%		44.19			39.02			33.56			40.67
Economic capital, average	$	1,394			1,412			1,422			1,313			1,380
Cash overhead efficiency ratio (b)		81.48	%		81.81			83.93			86.29			83.90
Lending commitments	$	176			148			119			107			103
Average loans, net		689			641			673			643			522
Average core deposits	$	31,160			32,367			32,246			29,866			25,533
FTE employees		18,504			18,932			19,819			19,696			19,867
Assets under management	$	253,984			252,223			256,321			249,238			247,585
ASSET MANAGEMENT
Net interest income (b)	$	12			11			12			11			11
Fee and other income		266			267			269			254			287
Intersegment revenue		—			(1	)		—			(1	)		—
Total revenue (b)		278			277			281			264			298
Provision for credit losses		—			—			—			—			—
Noninterest expense		219			218			232			222			227
Income taxes		21			22			17			16			25
Tax-equivalent adjustment		—			—			—			—			—
Segment earnings	$	38			37			32			26			46
Economic profit	$	31			31			25			20			39
Risk adjusted return on capital		62.88	%		62.01			52.41			46.17			76.06
Economic capital, average	$	240			244			241			228			239
Cash overhead efficiency ratio (b)		78.61	%		78.68			82.34			84.19			76.22
Average loans, net	$	354			338			370			346			253
Average core deposits	$	1,811			1,625			1,680			1,563			1,568

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

(Continued)

32

Table 5
BUSINESS SEGMENTS

	2005						2004
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
RETAIL BROKERAGE SERVICES
Net interest income (b)	$	147			148			148			147			123
Fee and other income		926			926			946			872			954
Intersegment revenue		(12	)		(11	)		(9	)		(12	)		(12	)
Total revenue (b)		1,061			1,063			1,085			1,007			1,065
Provision for credit losses		—			—			—			—			—
Noninterest expense		875			881			920			881			924
Income taxes		68			67			61			44			52
Tax-equivalent adjustment		—			—			1			—			—
Segment earnings	$	118			115			103			82			89
Economic profit	$	86			83			72			51			59
Risk adjusted return on capital		40.91	%		39.88			34.91			29.69			31.93
Economic capital, average	$	1,155			1,170			1,184			1,087			1,144
Cash overhead efficiency ratio (b)		82.46	%		82.91			84.95			87.36			86.63
Average loans, net	$	335			303			303			297			269
Average core deposits	$	29,349			30,742			30,566			28,303			23,965
OTHER
Net interest income (b)	$	1			—			1			—			1
Fee and other income		(3	)		(4	)		(3	)		(3	)		(5	)
Intersegment revenue		—			—			(1	)		—			1
Total revenue (b)		(2	)		(4	)		(3	)		(3	)		(3	)
Provision for credit losses		—			—			—			—			—
Noninterest expense		(5	)		(6	)		(9	)		(8	)		(10	)
Income taxes		2			—			2			2			3
Tax-equivalent adjustment		—			—			—			—			—
Segment earnings	$	1			2			4			3			4
Economic profit	$	1			2			4			3			4
Risk adjusted return on capital		—	%		—			—			—			—
Economic capital, average	$	(1	)		(2	)		(3	)		(2	)		(3	)
Cash overhead efficiency ratio (b)		—	%		—			—			—			—
Average loans, net	$	—			—			—			—			—
Average core deposits	$	—			—			—			—			—

(Continued)

33

Table 5
BUSINESS SEGMENTS

	2005						2004
	Second			First			Fourth		Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter		Quarter			Quarter
WEALTH MANAGEMENT
Net interest income (a)	$	143			140			137		129			118
Fee and other income		185			146			150		145			153
Intersegment revenue		1			2			1		2			1
Total revenue (a)		329			288			288		276			272
Provision for credit losses		—			(1	)		—		(1	)		—
Noninterest expense		222			191			201		192			193
Income taxes		39			36			30		33			28
Tax-equivalent adjustment		—			—			—		—			—
Segment earnings	$	68			62			57		52			51
Economic profit	$	50			45			38		36			33
Risk adjusted return on capital		49.60	%		49.10			41.58		41.74			40.35
Economic capital, average	$	522			480			493		456			458
Cash overhead efficiency ratio (a)		67.39	%		66.24			69.54		70.09			70.89
Lending commitments	$	5,154			4,862			4,711		4,390			4,342
Average loans, net		13,546			12,801			12,015		11,173			10,593
Average core deposits	$	13,192			13,255			12,867		12,201			11,835
FTE employees		4,737			3,878			3,911		3,671			3,715

(a) Tax-equivalent.

(Continued)

34

Table 5
BUSINESS SEGMENTS

	2005						2004
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	522			590			621			587			603
Fee and other income		789			978			683			785			713
Intersegment revenue		(39	)		(34	)		(38	)		(33	)		(30	)
Total revenue (b)		1,272			1,534			1,266			1,339			1,286
Provision for credit losses		(8	)		(3	)		4			(15	)		(4	)
Noninterest expense		711			732			658			680			619
Income taxes		185			271			193			218			216
Tax-equivalent adjustment		27			28			30			30			31
Segment earnings	$	357			506			381			426			424
Economic profit	$	176			343			227			268			273
Risk adjusted return on capital		23.88	%		38.25			29.74			34.22			35.35
Economic capital, average	$	5,483			5,109			4,807			4,603			4,505
Cash overhead efficiency ratio (b)		55.85	%		47.73			52.01			50.81			48.11
Lending commitments	$	94,333			84,495			84,052			77,007			75,295
Average loans, net		37,972			36,916			35,308			32,909			29,552
Average core deposits	$	22,505			20,883			21,035			18,623			17,927
FTE employees		4,845			4,623			4,723			4,548			4,521
CORPORATE LENDING
Net interest income (b)	$	217			235			232			217			278
Fee and other income		99			244			121			100			148
Intersegment revenue		5			6			7			6			5
Total revenue (b)		321			485			360			323			431
Provision for credit losses		(9	)		(3	)		4			(14	)		(4	)
Noninterest expense		105			109			105			107			106
Income taxes		85			143			94			85			124
Tax-equivalent adjustment		—			—			—			1			—
Segment earnings	$	140			236			157			144			205
Economic profit	$	32			140			65			46			116
Risk adjusted return on capital		15.36	%		31.12			20.70			18.23			30.39
Economic capital, average	$	2,999			2,815			2,688			2,499			2,416
Cash overhead efficiency ratio (b)		32.43	%		22.58			29.17			32.97			24.76
Average loans, net	$	29,032			28,417			27,137			25,273			22,623
Average core deposits	$	700			762			733			746			828

(a)	Corporate and Investment Bank Combined represents the consolidation of the Corporate and Investment Bank’s Corporate Lending, Treasury and International Trade Finance, and Investment Banking lines of business.
(b)	Tax-equivalent.

(Continued)

35

Table 5
BUSINESS SEGMENTS

	2005						2004
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
TREASURY AND INTERNATIONAL TRADE FINANCE
Net interest income (b)	$	89			95			98			88			87
Fee and other income		177			182			182			182			179
Intersegment revenue		(28	)		(30	)		(29	)		(27	)		(27	)
Total revenue (b)		238			247			251			243			239
Provision for credit losses		—			—			—			—			—
Noninterest expense		166			159			161			173			168
Income taxes		27			32			32			26			26
Tax-equivalent adjustment		—			—			—			—			—
Segment earnings	$	45			56			58			44			45
Economic profit	$	36			48			49			36			37
Risk adjusted return on capital		59.03	%		92.02			89.32			68.63			72.24
Economic capital, average	$	301			241			250			251			243
Cash overhead efficiency ratio (b)		69.61	%		64.33			64.16			71.09			70.37
Average loans, net	$	5,239			5,199			5,247			5,226			4,953
Average core deposits	$	14,500			13,796			13,865			11,949			11,787
INVESTMENT BANKING
Net interest income (b)	$	216			260			291			282			238
Fee and other income		513			552			380			503			386
Intersegment revenue		(16	)		(10	)		(16	)		(12	)		(8	)
Total revenue (b)		713			802			655			773			616
Provision for credit losses		1			—			—			(1	)		—
Noninterest expense		440			464			392			400			345
Income taxes		73			96			67			107			66
Tax-equivalent adjustment		27			28			30			29			31
Segment earnings	$	172			214			166			238			174
Economic profit	$	108			155			113			186			120
Risk adjusted return on capital		30.74	%		41.72			34.78			51.13			36.98
Economic capital, average	$	2,183			2,053			1,869			1,853			1,846
Cash overhead efficiency ratio (b)		61.86	%		57.79			59.94			51.88			55.85
Average loans, net	$	3,701			3,300			2,924			2,410			1,976
Average core deposits	$	7,305			6,325			6,437			5,928			5,312

(Continued)

36

Table 5
BUSINESS SEGMENTS

	2005						2004
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
PARENT
Net interest income (a)	$	179			226			155			172			156
Fee and other income		128			(2	)		100			(54	)		(96	)
Intersegment revenue		1			1			—			1			—
Total revenue (a)		308			225			255			119			60
Provision for credit losses		(10	)		(17	)		(2	)		(15	)		—
Noninterest expense		161			251			191			215			135
Minority interest		85			74			83			65			70
Income tax benefits		(72	)		(97	)		(95	)		(140	)		(113	)
Tax-equivalent adjustment		16			23			19			23			23
Segment earnings (loss)	$	128			(9	)		59			(29	)		(55	)
Economic profit	$	116			(20	)		53			(47	)		(59	)
Risk adjusted return on capital		30.05	%		7.59			20.53			2.60			0.61
Economic capital, average	$	2,424			2,411			2,291			2,243			2,240
Cash overhead efficiency ratio (a)		17.63	%		60.44			29.93			96.04			50.07
Lending commitments	$	430			398			408			319			328
Average loans, net		10,065			11,441			1,598			(836	)		867
Average core deposits	$	2,986			3,103			3,213			2,487			2,493
FTE employees		23,833			23,973			24,173			22,069			22,410

(a) Tax-equivalent.

(Continued)

37

Table 5
BUSINESS SEGMENTS

	Three Months Ended June 30, 2005
															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)	$	2,407			160			143		522			179			(53	)		3,358
Fee and other income		686			1,189			185		789			128			—			2,977
Intersegment revenue		49			(12	)		1		(39	)		1			—			-
Total revenue (a)		3,142			1,337			329		1,272			308			(53	)		6,335
Provision for credit losses		68			—			—		(8	)		(10	)		—			50
Noninterest expense		1,515			1,089			222		711			161			90			3,788
Minority interest		—			—			—		—			85			(14	)		71
Income taxes (benefits)		561			91			39		185			(72	)		(28	)		776
Tax-equivalent adjustment		10			—			—		27			16			(53	)		-
Net income	$	988			157			68		357			128			(48	)		1,650
Economic profit	$	759			118			50		176			116			—			1,219
Risk adjusted return on capital		54.62	%		45.09			49.60		23.88			30.05			—			40.10
Economic capital, average	$	6,981			1,394			522		5,483			2,424			—			16,804
Cash overhead efficiency ratio (a)		48.18	%		81.48			67.39		55.85			17.63			—			56.19
Lending commitments	$	102,189			176			5,154		94,333			430			—			202,282
Average loans, net		161,609			689			13,546		37,972			10,065			—			223,881
Average core deposits	$	205,495			31,160			13,192		22,505			2,986			—			275,338
FTE employees		41,466			18,504			4,737		4,845			23,833			—			93,385

	Three Months Ended June 30, 2004
															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)	$	1,891			135			118		603			156			(65	)		2,838
Fee and other income		601			1,236			153		713			(96	)		—			2,607
Intersegment revenue		40			(11	)		1		(30	)		—			—			—
Total revenue (a)		2,532			1,360			272		1,286			60			(65	)		5,445
Provision for credit losses		65			—			—		(4	)		—			—			61
Noninterest expense		1,305			1,141			193		619			135			102			3,495
Minority interest		—			—			—		—			70			(25	)		45
Income taxes (benefits)		411			80			28		216			(113	)		(30	)		592
Tax-equivalent adjustment		11			—			—		31			23			(65	)		—
Net income (loss)	$	740			139			51		424			(55	)		(47	)		1,252
Economic profit	$	565			102			33		273			(59	)		—			914
Risk adjusted return on capital		54.90	%		40.67			40.35		35.35			0.61			—			37.74
Economic capital, average	$	5,167			1,380			458		4,505			2,240			—			13,750
Cash overhead efficiency ratio (a)		51.54	%		83.90			70.89		48.11			50.07			—			59.66
Lending commitments	$	73,372			103			4,342		75,295			328			—			153,440
Average loans, net		122,108			522			10,593		29,552			867			—			163,642
Average core deposits	$	166,021			25,533			11,835		17,927			2,493			—			223,809
FTE employees		34,529			19,867			3,715		4,521			22,410			—			85,042

(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)

38

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2005			2004
GENERAL BANK COMBINED (a)
Net interest income (b)	$	4,766			3,739
Fee and other income		1,370			1,170
Intersegment revenue		92			78
Total revenue (b)		6,228			4,987
Provision for credit losses		125			133
Noninterest expense		3,059			2,627
Income taxes		1,097			787
Tax-equivalent adjustment		20			21
Segment earnings	$	1,927			1,419
Economic profit	$	1,455			1,061
Risk adjusted return on capital		52.79	%		51.86
Economic capital, average	$	7,022			5,220
Cash overhead efficiency ratio (b)		49.11	%		52.67
Lending commitments	$	102,189			73,372
Average loans, net		160,499			120,170
Average core deposits	$	203,502			163,201
FTE employees		41,466			34,529
COMMERCIAL
Net interest income (b)	$	1,483			1,095
Fee and other income		212			224
Intersegment revenue		62			47
Total revenue (b)		1,757			1,366
Provision for credit losses		14			21
Noninterest expense		599			540
Income taxes		399			271
Tax-equivalent adjustment		20			21
Segment earnings	$	725			513
Economic profit	$	434			319
Risk adjusted return on capital		34.93	%		38.29
Economic capital, average	$	3,657			2,348
Cash overhead efficiency ratio (b)		34.06	%		39.54
Average loans, net	$	76,618			50,998
Average core deposits	$	42,350			36,733
RETAIL AND SMALL BUSINESS
Net interest income (b)	$	3,283			2,644
Fee and other income		1,158			946
Intersegment revenue		30			31
Total revenue (b)		4,471			3,621
Provision for credit losses		111			112
Noninterest expense		2,460			2,087
Income taxes		698			516
Tax-equivalent adjustment		—			—
Segment earnings	$	1,202			906
Economic profit	$	1,021			742
Risk adjusted return on capital		72.21	%		62.95
Economic capital, average	$	3,365			2,872
Cash overhead efficiency ratio (b)		55.03	%		57.63
Average loans, net	$	83,881			69,172
Average core deposits	$	161,152			126,468

(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)

39

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2005			2004
CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	319			257
Fee and other income		2,378			2,580
Intersegment revenue		(24	)		(24	)
Total revenue (b)		2,673			2,813
Provision for credit losses		—			—
Noninterest expense		2,182			2,362
Income taxes		180			164
Tax-equivalent adjustment		—			—
Segment earnings	$	311			287
Economic profit	$	234			210
Risk adjusted return on capital		44.64	%		40.86
Economic capital, average	$	1,403			1,413
Cash overhead efficiency ratio (b)		81.64	%		83.97
Lending commitments	$	176			103
Average loans, net		665			440
Average core deposits	$	31,760			22,348
FTE employees		18,504			19,867
Assets under management	$	253,984			247,585
ASSET MANAGEMENT
Net interest income (b)	$	23			20
Fee and other income		533			556
Intersegment revenue		(1	)		—
Total revenue (b)		555			576
Provision for credit losses		—			—
Noninterest expense		437			453
Income taxes		43			44
Tax-equivalent adjustment		—			—
Segment earnings	$	75			79
Economic profit	$	62			66
Risk adjusted return on capital		62.44	%		65.98
Economic capital, average	$	242			240
Cash overhead efficiency ratio (b)		78.65	%		78.57
Average loans, net	$	346			196
Average core deposits	$	1,719			1,378

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

(Continued)

40

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2005			2004
RETAIL BROKERAGE SERVICES
Net interest income (b)	$	295			236
Fee and other income		1,852			2,034
Intersegment revenue		(23	)		(24	)
Total revenue (b)		2,124			2,246
Provision for credit losses		—			—
Noninterest expense		1,756			1,928
Income taxes		135			116
Tax-equivalent adjustment		—			—
Segment earnings	$	233			202
Economic profit	$	169			138
Risk adjusted return on capital		40.40	%		34.64
Economic capital, average	$	1,162			1,176
Cash overhead efficiency ratio (b)		82.68	%		85.84
Average loans, net	$	319			244
Average core deposits	$	30,041			20,970
OTHER
Net interest income (b)	$	1			1
Fee and other income		(7	)		(10	)
Intersegment revenue		—			—
Total revenue (b)		(6	)		(9	)
Provision for credit losses		—			—
Noninterest expense		(11	)		(19	)
Income taxes		2			4
Tax-equivalent adjustment		—			—
Segment earnings	$	3			6
Economic profit	$	3			6
Risk adjusted return on capital		—	%		—
Economic capital, average	$	(1	)		(3	)
Cash overhead efficiency ratio (b)		—	%		—
Average loans, net	$	—			—
Average core deposits	$	—			—

(Continued)

41

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2005			2004
WEALTH MANAGEMENT
Net interest income (a)	$	283			230
Fee and other income		331			301
Intersegment revenue		3			2
Total revenue (a)		617			533
Provision for credit losses		(1	)		—
Noninterest expense		413			382
Income taxes		75			54
Tax-equivalent adjustment		—			—
Segment earnings	$	130			97
Economic profit	$	95			62
Risk adjusted return on capital		49.36	%		38.36
Economic capital, average	$	501			458
Cash overhead efficiency ratio (a)		66.85	%		71.55
Lending commitments	$	5,154			4,342
Average loans, net		13,175			10,374
Average core deposits	$	13,223			11,496
FTE employees		4,737			3,715

(a) Tax-equivalent.

(Continued)

42

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2005			2004
CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	1,112			1,186
Fee and other income		1,767			1,454
Intersegment revenue		(73	)		(57	)
Total revenue (b)		2,806			2,583
Provision for credit losses		(11	)		(30	)
Noninterest expense		1,443			1,237
Income taxes		456			443
Tax-equivalent adjustment		55			63
Segment earnings	$	863			870
Economic profit	$	519			552
Risk adjusted return on capital		30.77	%		35.59
Economic capital, average	$	5,297			4,513
Cash overhead efficiency ratio (b)		51.41	%		47.88
Lending commitments	$	94,333			75,295
Average loans, net		37,447			29,471
Average core deposits	$	21,699			16,981
FTE employees		4,845			4,521
CORPORATE LENDING
Net interest income (b)	$	452			544
Fee and other income		343			290
Intersegment revenue		11			11
Total revenue (b)		806			845
Provision for credit losses		(12	)		(31	)
Noninterest expense		214			211
Income taxes		228			249
Tax-equivalent adjustment		—			—
Segment earnings	$	376			416
Economic profit	$	172			221
Risk adjusted return on capital		22.95	%		29.32
Economic capital, average	$	2,907			2,429
Cash overhead efficiency ratio (b)		26.51	%		25.03
Average loans, net	$	28,726			23,007
Average core deposits	$	730			822

(a)	Corporate and Investment Bank Combined represents the consolidation of the Corporate and Investment Bank’s Corporate Lending, Treasury and International Trade Finance, and Investment Banking lines of business.
(b)	Tax-equivalent.

(Continued)

43

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2005			2004
TREASURY AND INTERNATIONAL TRADE FINANCE
Net interest income (b)	$	184			172
Fee and other income		359			356
Intersegment revenue		(58	)		(53	)
Total revenue (b)		485			475
Provision for credit losses		—			—
Noninterest expense		325			339
Income taxes		59			49
Tax-equivalent adjustment		—			—
Segment earnings	$	101			87
Economic profit	$	84			71
Risk adjusted return on capital		73.60	%		69.80
Economic capital, average	$	271			241
Cash overhead efficiency ratio (b)		66.92	%		71.41
Average loans, net	$	5,219			4,626
Average core deposits	$	14,150			11,392
INVESTMENT BANKING
Net interest income (b)	$	476			470
Fee and other income		1,065			808
Intersegment revenue		(26	)		(15	)
Total revenue (b)		1,515			1,263
Provision for credit losses		1			1
Noninterest expense		904			687
Income taxes		169			145
Tax-equivalent adjustment		55			63
Segment earnings	$	386			367
Economic profit	$	263			260
Risk adjusted return on capital		36.03	%		39.37
Economic capital, average	$	2,119			1,843
Cash overhead efficiency ratio (b)		59.70	%		54.32
Average loans, net	$	3,502			1,838
Average core deposits	$	6,819			4,767

(Continued)

44

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2005			2004
PARENT
Net interest income (a)	$	405			414
Fee and other income		126			(131	)
Intersegment revenue		2			1
Total revenue (a)		533			284
Provision for credit losses		(27	)		2
Noninterest expense		412			352
Minority interest		159			149
Income tax benefits		(169	)		(187	)
Tax-equivalent adjustment		39			43
Segment earnings (loss)	$	119			(75	)
Economic profit	$	96			(77	)
Risk adjusted return on capital		18.92	%		4.12
Economic capital, average	$	2,417			2,249
Cash overhead efficiency ratio (a)		35.65	%		47.25
Lending commitments	$	430			328
Average loans, net		10,750			957
Average core deposits	$	3,044			2,215
FTE employees		23,833			22,410

(a) Tax-equivalent.

(Continued)

45

Table 5
BUSINESS SEGMENTS

	Six Months Ended June 30, 2005
																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)	$	4,766			319			283			1,112			405			(114	)		6,771
Fee and other income		1,370			2,378			331			1,767			126			—			5,972
Intersegment revenue		92			(24	)		3			(73	)		2			—			—
Total revenue (a)		6,228			2,673			617			2,806			533			(114	)		12,743
Provision for credit losses		125			—			(1	)		(11	)		(27	)		—			86
Noninterest expense		3,059			2,182			413			1,443			412			151			7,660
Minority interest		—			—			—			—			159			(24	)		135
Income taxes (benefits)		1,097			180			75			456			(169	)		(48	)		1,591
Tax-equivalent adjustment		20			—			—			55			39			(114	)		—
Net income	$	1,927			311			130			863			119			(79	)		3,271
Economic profit	$	1,455			234			95			519			96			—			2,399
Risk adjusted return on capital		52.79	%		44.64			49.36			30.77			18.92			—			40.07
Economic capital, average	$	7,022			1,403			501			5,297			2,417			—			16,640
Cash overhead efficiency ratio (a)		49.11	%		81.64			66.85			51.41			35.65			—			56.67
Lending commitments	$	102,189			176			5,154			94,333			430			—			202,282
Average loans, net		160,499			665			13,175			37,447			10,750			—			222,536
Average core deposits	$	203,502			31,760			13,223			21,699			3,044			—			273,228
FTE employees		41,466			18,504			4,737			4,845			23,833			—			93,385

	Six Months Ended June 30, 2004
															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)	$	3,739			257			230		1,186			414			(127	)		5,699
Fee and other income		1,170			2,580			301		1,454			(131	)		—			5,374
Intersegment revenue		78			(24	)		2		(57	)		1			—			—
Total revenue (a)		4,987			2,813			533		2,583			284			(127	)		11,073
Provision for credit losses		133			—			—		(30	)		2			—			105
Noninterest expense		2,627			2,362			382		1,237			352			201			7,161
Minority interest		—			—			—		—			149			(47	)		102
Income taxes (benefits)		787			164			54		443			(187	)		(59	)		1,202
Tax-equivalent adjustment		21			—			—		63			43			(127	)		—
Net income (loss)	$	1,419			287			97		870			(75	)		(95	)		2,503
Economic profit	$	1,061			210			62		552			(77	)		—			1,808
Risk adjusted return on capital		51.86	%		40.86			38.36		35.59			4.12			—			37.24
Economic capital, average	$	5,220			1,413			458		4,513			2,249			—			13,853
Cash overhead efficiency ratio (a)		52.67	%		83.97			71.55		47.88			47.25			—			60.19
Lending commitments	$	73,372			103			4,342		75,295			328			—			153,440
Average loans, net		120,170			440			10,374		29,471			957			—			161,412
Average core deposits	$	163,201			22,348			11,496		16,981			2,215			—			216,241
FTE employees		34,529			19,867			3,715		4,521			22,410			—			85,042

(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.

46

Table 6
NET TRADING REVENUE — INVESTMENT BANKING (a)

	2005				2004
	Second		First		Fourth			Third			Second
(In millions)	Quarter		Quarter		Quarter			Quarter			Quarter
Net interest income (Tax-equivalent)	$	107		147		177			171			137
Trading accounts profits (losses)		27		99		(7	)		(43	)		50
Other fee income		55		57		60			56			67
Total net trading revenue (Tax-equivalent)	$	189		303		230			184			254

(a) Certain amounts presented in periods prior to the second quarter of 2005 have been reclassified to conform to the presentation in the second quarter of 2005.

Table 7
SELECTED RATIOS

	Six Months Ended
	June 30,					2005				2004
						Second		First		Fourth		Third		Second
	2005			2004		Quarter		Quarter		Quarter		Quarter		Quarter
PERFORMANCE RATIOS (a)
Assets to stockholders’ equity		10.64	X		12.41		10.68		10.60		11.08		12.77		12.65
Return on assets		1.31	%		1.24		1.31		1.31		1.22		1.18		1.22
Return on common stockholders’ equity		13.98			15.43		14.04		13.92		13.50		15.12		15.49
Return on total stockholders’ equity		13.98	%		15.43		14.04		13.92		13.50		15.12		15.49
DIVIDEND PAYOUT RATIOS
Common shares		44.88	%		42.33		44.23		45.54		48.42		41.67		42.11
Preferred and common shares		44.88	%		42.33		44.23		45.54		48.42		41.67		42.11

(a) Based on average balances and net income.

Table 8
TRADING ACCOUNT ASSETS AND LIABILITIES (a)

	2005				2004
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
TRADING ACCOUNT ASSETS
U.S. Treasury	$	2,815		5,822		2,768		3,374		3,682
U.S. Government agencies		2,882		3,414		3,799		3,461		3,118
State, county and municipal		1,874		1,587		868		966		1,000
Mortgage-backed securities		5,112		4,269		7,486		6,336		4,942
Other asset-backed securities		8,523		7,303		5,600		6,891		6,858
Corporate bonds and debentures		5,604		6,284		6,920		6,634		5,467
Equity securities		5,297		4,696		4,166		3,921		3,529
Derivative financial instruments		11,110		10,886		10,658		10,676		9,862
Sundry		3,302		2,888		3,667		2,870		1,201
Total trading account assets	$	46,519		47,149		45,932		45,129		39,659
TRADING ACCOUNT LIABILITIES
Securities sold short		9,953		13,020		12,258		13,285		12,017
Derivative financial instruments		9,874		9,398		9,451		9,419		8,310
Total trading account liabilities	$	19,827		22,418		21,709		22,704		20,327

(a) Certain amounts presented in periods prior to the second quarter of 2005 have been reclassified to conform to the presentation in the second quarter of 2005.

47

Table 9
LOANS — ON—BALANCE SHEET, AND MANAGED AND SERVICING PORTFOLIOS

	2005				2004
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and agricultural	$	80,528		78,669		75,095		59,271		58,340
Real estate — construction and other		13,216		12,713		12,673		6,985		6,433
Real estate — mortgage		19,724		20,707		20,742		14,771		14,927
Lease financing		24,836		25,013		25,000		24,042		23,894
Foreign		7,549		7,504		7,716		7,402		8,075
Total commercial		145,853		144,606		141,226		112,471		111,669
CONSUMER
Real estate secured		76,213		74,631		74,161		54,965		53,759
Student loans		10,828		10,795		10,468		10,207		9,838
Installment loans		6,783		6,808		7,684		6,410		7,330
Total consumer		93,824		92,234		92,313		71,582		70,927
Total loans		239,677		236,840		233,539		184,053		182,596
Unearned income		9,390		9,574		9,699		9,549		9,679
Loans, net (On-balance sheet)	$	230,287		227,266		223,840		174,504		172,917
MANAGED PORTFOLIO (a)
COMMERCIAL
On-balance sheet loan portfolio	$	145,853		144,606		141,226		112,471		111,669
Securitized loans — off-balance sheet		1,293		1,402		1,734		1,823		1,868
Loans held for sale		1,783		1,117		2,112		1,993		1,887
Total commercial		148,929		147,125		145,072		116,287		115,424
CONSUMER
Real estate secured
On-balance sheet loan portfolio		76,213		74,631		74,161		54,965		53,759
Securitized loans — off-balance sheet		10,199		6,979		7,570		6,567		7,194
Securitized loans included in securities		4,426		4,626		4,838		8,909		9,506
Loans held for sale		11,923		11,925		10,452		15,602		14,003
Total real estate secured		102,761		98,161		97,021		86,043		84,462
Student
On-balance sheet loan portfolio		10,828		10,795		10,468		10,207		9,838
Securitized loans — off-balance sheet		382		423		463		554		612
Loans held for sale		16		65		128		160		367
Total student		11,226		11,283		11,059		10,921		10,817
Installment
On-balance sheet loan portfolio		6,783		6,808		7,684		6,410		7,330
Securitized loans — off-balance sheet		2,662		1,930		2,184		2,489		1,794
Securitized loans included in securities		163		155		195		195		130
Loans held for sale		809		1,066		296		—		—
Total installment		10,417		9,959		10,359		9,094		9,254
Total consumer		124,404		119,403		118,439		106,058		104,533
Total managed portfolio	$	273,333		266,528		263,511		222,345		219,957
SERVICING PORTFOLIO (b)
Commercial	$	152,923		140,493		136,578		130,313		108,207
Consumer	$	53,261		46,552		40,053		31,549		24,475

(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 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.

48

Table 10
LOANS HELD FOR SALE

	2005						2004
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period	$	14,173			12,988			17,755			16,257			14,282
CORE BUSINESS ACTIVITY (a)
Core business activity, beginning of period		13,715			12,293			17,720			16,200			14,183
Balance of acquired entities at purchase date		—			—			653			—			—
Originations/purchases		10,577			7,692			12,941			8,108			10,165
Transfer to (from) loans held for sale, net (b)		(583	)		462			(8,968	)		(190	)		(124	)
Lower of cost or market value adjustments		(1	)		1			(1	)		(1	)		—
Performing loans sold or securitized		(6,999	)		(5,109	)		(7,033	)		(4,142	)		(5,879	)
Nonperforming loans sold		—			—			—			—			—
Other, principally payments		(2,262	)		(1,624	)		(3,019	)		(2,255	)		(2,145	)
Core business activity, end of period		14,447			13,715			12,293			17,720			16,200
PORTFOLIO MANAGEMENT ACTIVITY (a)
Portfolio management activity, beginning of period		458			695			35			57			99
Transfers to (from) loans held for sale, net Performing loans		(15	)		96			602			12			16
Nonperforming loans		—			25			125			—			5
Lower of cost or market value adjustments		—			—			—			1			—
Performing loans sold		(297	)		(295	)		(12	)		(21	)		(43	)
Nonperforming loans sold		(13	)		(6	)		—			(6	)		(8	)
Allowance for loan losses related to loans transferred to loans held for sale		—			(5	)		(51	)		—			(1	)
Other, principally payments		(49	)		(52	)		(4	)		(8	)		(11	)
Portfolio management activity, end of period		84			458			695			35			57
Balance, end of period (c)	$	14,531			14,173			12,988			17,755			16,257

(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)	The first quarter of 2005 has been reduced by a $5 million transfer from the allowance for loan losses related to installment loans.
(c)	Nonperforming assets included in loans held for sale at June 30, and March 31, 2005, and at December 31, September 30, and June 30, 2004, were $111 million, $159 million, $157 million, $57 million and $68 million, respectively.

49

Table 11
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS

	2005						2004
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
ALLOWANCE FOR LOAN LOSSES (a)
Balance, beginning of period	$	2,732			2,757			2,324			2,331			2,338
Provision for credit losses		48			33			95			63			73
Provision for credit losses relating to loans transferred to loans held for sale or sold		—			1			(6	)		(8	)		(9	)
Balance of acquired entities at purchase date		—			—			510			—			—
Allowance relating to loans acquired, transferred to loans held for sale or sold		(11	)		(13	)		(51	)		3			(3	)
Net charge-offs		(51	)		(46	)		(115	)		(65	)		(68	)
Balance, end of period	$	2,718			2,732			2,757			2,324			2,331
as a % of loans, net		1.18	%		1.20			1.23			1.33			1.35
as a % of nonaccrual and restructured loans (b)		332	%		300			289			291			270
as a % of nonperforming assets (b)		284	%		262			251			258			241
LOAN LOSSES
Commercial, financial and agricultural	$	35			26			82			50			41
Commercial real estate — construction and mortgage		—			1			4			3			1
Consumer		75			67			74			70			66
Total loan losses		110			94			160			123			108
LOAN RECOVERIES
Commercial, financial and agricultural		25			26			27			41			23
Commercial real estate — construction and mortgage		1			—			—			1			—
Consumer		33			22			18			16			17
Total loan recoveries		59			48			45			58			40
Net charge-offs	$	51			46			115			65			68
Commercial loan net charge-offs as % of average commercial loans, net (c)		0.03	%		—			0.20			0.05			0.08
Consumer loan net charge-offs as % of average consumer loans, net (c)		0.18			0.19			0.28			0.30			0.28
Total net charge-offs as % of average loans, net (c)		0.09	%		0.08			0.23			0.15			0.17
NONPERFORMING ASSETS
Nonaccrual loans
Commercial, financial and agricultural	$	497			527			585			534			610
Commercial real estate — construction and mortgage		88			131			127			42			33
Consumer real estate secured		221			239			230			211			207
Installment loans		13			13			13			11			13
Total nonaccrual loans		819			910			955			798			863
Foreclosed properties (d)		138			132			145			101			104
Total nonperforming assets	$	957			1,042			1,100			899			967
Nonperforming loans included in loans held for sale (e)	$	111			159			157			57			68
Nonperforming assets included in loans and in loans held for sale	$	1,068			1,201			1,257			956			1,035
as % of loans, net, and foreclosed properties (b)		0.42	%		0.46			0.49			0.51			0.56
as % of loans, net, foreclosed properties and loans held for sale (e)		0.44	%		0.50			0.53			0.50			0.55
Accruing loans past due 90 days	$	521			510			522			428			419

(a)	See Table 12 for information related to the reserve for unfunded lending commitments.
(b)	These ratios do not include nonperforming loans included in loans held for sale.
(c)	Annualized.
(d)	Restructured loans are not significant.
(e)	These ratios reflect nonperforming loans included in loans held for sale. Loans held for sale are recorded at the lower of cost or market value, and accordingly, the amounts shown and included in the ratios are net of the transferred allowance for loan losses and the lower of cost or market value adjustments.

50

Table 12
RESERVE FOR UNFUNDED LENDING COMMITMENTS

	2005				2004
	Second		First		Fourth		Third			Second
(In millions)	Quarter		Quarter		Quarter		Quarter			Quarter
RESERVE FOR UNFUNDED LENDING COMMITMENTS
Balance, beginning of period	$	156		154		134		146			149
Provision for credit losses		2		2		20		(12	)		(3	)
Balance, end of period	$	158		156		154		134			146

Table 13
NONACCRUAL LOAN ACTIVITY (a)

	2005						2004
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period	$	910			955			798			863			968
Commercial nonaccrual loan activity
Commercial nonaccrual loans, beginning of period		658			712			576			643			747
Balance of acquired entities at purchase date		—			—			321			—			—
New nonaccrual loans and advances		195			210			149			143			100
Gross charge-offs		(35	)		(27	)		(86	)		(53	)		(42	)
Transfers to loans held for sale		—			(25	)		(121	)		—			(6	)
Transfers to other real estate owned		(25	)		—			—			(1	)		(2	)
Sales		(83	)		(46	)		(24	)		(19	)		(19	)
Other, principally payments		(125	)		(166	)		(103	)		(137	)		(135	)
Net commercial nonaccrual loan activity		(73	)		(54	)		(185	)		(67	)		(104	)
Commercial nonaccrual loans, end of period		585			658			712			576			643
Consumer nonaccrual loan activity
Consumer nonaccrual loans, beginning of period		252			243			222			220			221
Balance of acquired entities at purchase date		—			—			21			—			—
New nonaccrual loans, advances and other, net		(18	)		9			4			2			(1	)
Transfers to loans held for sale		—			—			(4	)		—			—
Net consumer nonaccrual loan activity		(18	)		9			—			2			(1	)
Consumer nonaccrual loans, end of period		234			252			243			222			220
Balance, end of period	$	819			910			955			798			863

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

51

Table 14
GOODWILL AND OTHER INTANGIBLE ASSETS

	2005				2004
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
Goodwill	$	21,861		21,635		21,526		11,481		11,481
Deposit base		861		951		1,048		484		568
Customer relationships		427		387		443		372		387
Tradename		90		90		90		90		90
Total goodwill and other intangible assets	$	23,239		23,063		23,107		12,427		12,526

	Six Months Ended June 30, 2005
	Employee			Occupancy
	Termination			and
(In millions)	Benefits			Equipment			Other			Total
ACTIVITY IN THE EXIT COST PURCHASE ACCOUNTING
ADJUSTMENT ACCRUAL
Wachovia/SouthTrust — November 1, 2004
Balance, December 31, 2004	$	167			—			4			171
Purchase accounting adjustments		44			80			25			149
Cash payments		(54	)		(9	)		(22	)		(85	)
Noncash write-downs		—			(5	)		—			(5	)
Balance, June 30, 2005	$	157			66			7			230

	Six Months Ended June 30, 2005
	Employee			Occupancy
	Termination			and
(In millions)	Benefits			Equipment			Other			Total
ACTIVITY IN THE EXIT COST PURCHASE ACCOUNTING
ADJUSTMENT ACCRUAL
Wachovia Securities retail brokerage — July 1, 2003
Balance, December 31, 2004	$	88			228			5			321
Purchase accounting adjustments		(9	)		(42	)		—			(51	)
Cash payments		(70	)		(126	)		(2	)		(198	)
Noncash write-downs		—			(57	)		—			(57	)
Balance, June 30, 2005	$	9			3			3			15

52

Table 15
DEPOSITS

	2005				2004
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
CORE DEPOSITS
Noninterest-bearing	$	63,079		61,626		64,197		52,524		51,613
Savings and NOW accounts		79,957		81,485		83,678		73,477		71,696
Money market accounts		92,869		93,840		91,184		84,075		78,658
Other consumer time		39,376		36,932		35,529		27,239		26,237
Total core deposits		275,281		273,883		274,588		237,315		228,204
OTHER DEPOSITS
Foreign		15,029		13,293		9,881		7,917		7,412
Other time		9,600		10,481		10,584		7,749		7,764
Total deposits	$	299,910		297,657		295,053		252,981		243,380

Table 16
TIME DEPOSITS IN AMOUNTS OF $100,000 OR MORE

	June 30, 2005
(In millions)
MATURITY OF
3 months or less	$	4,879
Over 3 months through 6 months		1,641
Over 6 months through 12 months		2,673
Over 12 months		6,123
Total time deposits in amounts of $100,000 or more	$	15,316

53

Table 17

LONG-TERM DEBT

	2005				2004
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
NOTES AND DEBENTURES ISSUED BY THE PARENT COMPANY
Notes
3.50% to 7.55%, due 2005 to 2020	$	7,575		6,825		7,275		6,657		7,007
Floating rate, due 2006 to 2012		7,149		6,749		6,400		4,400		990
Equity-linked, due 2005 to 2010		128		107		73		59		35
Floating rate extendible, due 2005		—		10		10		10		10
Subordinated notes
6.30%, Putable/Callable, due 2028		200		200		200		200		200
6.605%, due 2025		250		250		250		250		250
4.875% to 7.50%, due 2005 to 2014		5,738		5,994		6,000		5,973		4,479
8.00%		—		—		—		—		149
Subordinated debentures
6.55% to 7.574%, due 2026 to 2035		795		795		795		795		795
Hedge-related basis adjustments		405		172		412		538		385
Total notes and debentures issued by the Parent Company		22,240		21,102		21,415		18,882		14,300
NOTES ISSUED BY SUBSIDIARIES
Notes, primarily notes issued under global bank note programs, varying rates and terms to 2040		4,922		5,238		5,124		4,124		4,294
Subordinated notes
Bank, 3.59% to 7.875%, due 2006 to 2036		6,849		6,849		5,174		3,350		3,350
Floating rate, due 2013		417		417		417		417		417
7.80% to 7.95%, due 2006 to 2007		250		250		249		249		249
6.75%, due 2006		200		200		375		375		375
Total notes issued by subsidiaries		12,638		12,954		11,339		8,515		8,685
OTHER DEBT
Junior subordinated debentures, floating rate, due 2026 to 2029		3,106		3,106		3,106		3,106		3,106
Collateralized notes, floating rate, due 2006 to 2007		4,420		4,420		4,420		4,420		4,420
Advances from the Federal Home Loan Bank		4,970		5,001		5,001		5,001		5,001
Preferred units issued by subsidiaries		322		102		57		57		57
Capitalized leases		740		743		748		750		753
Mortgage notes and other debt of subsidiaries		324		483		483		460		568
Hedge-related basis adjustments		246		21		190		253		132
Total other debt		14,128		13,876		14,005		14,047		14,037
Total long-term debt	$	49,006		47,932		46,759		41,444		37,022

54

Table 18
CHANGES IN STOCKHOLDERS’ EQUITY

	2005						2004
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period	$	46,467			47,317			33,897			32,646			33,337
Comprehensive income
Net income		1,650			1,621			1,448			1,263			1,252
Minimum pension liability		—			—			(65	)		—			—
Net unrealized gain (loss) on debt and equity securities		607			(786	)		(132	)		744			(1,342	)
Net unrealized gain (loss) on derivative financial instruments		5			(22	)		(72	)		(221	)		99
Total comprehensive income		2,262			813			1,179			1,786			9
Purchases of common stock		(247	)		(1,099	)		(1,334	)		(289	)		(347	)
Common stock issued for
Stock options and restricted stock		234			292			315			192			198
Acquisitions		—			—			14,000			—			—
Deferred income taxes on subsidiary stock		—			—			(87	)		—			—
Deferred compensation, net		(87	)		(129	)		82			84			(27	)
Cash dividends on common shares		(725	)		(727	)		(735	)		(522	)		(524	)
Balance, end of period	$	47,904			46,467			47,317			33,897			32,646

Table 19
CAPITAL RATIOS

	2005					2004
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
CONSOLIDATED CAPITAL RATIOS (a)
Qualifying capital
Tier 1 capital	$	29,176			28,519		28,583		25,514		24,747
Total capital		41,791			41,093		39,633		34,342		32,623
Adjusted risk-weighted assets		371,511			360,516		356,766		306,040		296,041
Adjusted leverage ratio assets	$	478,524			475,845		448,205		410,790		397,514
Ratios
Tier 1 capital		7.85	%		7.91		8.01		8.34		8.36
Total capital		11.25			11.40		11.11		11.22		11.02
Leverage		6.10			5.99		6.38		6.21		6.23
STOCKHOLDERS’ EQUITY TO ASSETS
Quarter-end		9.36			9.17		9.59		7.76		7.80
Average		9.36	%		9.44		9.03		7.83		7.91
BANK CAPITAL RATIOS
Tier 1 capital
Wachovia Bank, National Association		7.95	%		8.02		7.86		7.93		7.83
Wachovia Bank of Delaware, National Association		14.09			15.13		15.76		17.48		15.01
Total capital
Wachovia Bank, National Association		11.79			11.96		11.52		11.52		11.67
Wachovia Bank of Delaware, National Association		16.43			17.58		18.28		20.07		17.56
Leverage
Wachovia Bank, National Association		6.40			6.33		6.15		6.08		6.00
Wachovia Bank of Delaware, National Association		11.83	%		13.25		12.18		10.15		9.69

(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.

55

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES

	SECOND QUARTER 2005							FIRST QUARTER 2005
					Average							Average
			Interest		Rates					Interest		Rates
	Average		Income/		Earned/			Average		Income/		Earned/
(In millions)	Balances		Expense		Paid			Balances		Expense		Paid
ASSETS
Interest-bearing bank balances	$	2,649		20		3.07	%	$	2,484		16		2.62	%
Federal funds sold and securities purchased under resale agreements		24,676		189		3.08			24,272		153		2.55
Trading account assets (a)		31,879		377		4.73			35,147		402		4.59
Securities (a)		115,006		1,469		5.11			114,961		1,477		5.15
Loans (a) (b)
Commercial
Commercial, financial and agricultural		80,213		1,084		5.42			76,651		960		5.08
Real estate — construction and other		12,885		177		5.53			12,608		156		5.01
Real estate — mortgage		20,204		288		5.71			20,739		271		5.31
Lease financing		10,252		183		7.11			10,513		182		6.94
Foreign		7,641		68		3.55			7,192		58		3.28
Total commercial		131,195		1,800		5.50			127,703		1,627		5.16
Consumer
Real estate secured		74,799		1,072		5.74			74,658		1,037		5.57
Student loans		10,995		129		4.72			11,003		120		4.41
Installment loans		6,892		115		6.75			7,811		122		6.31
Total consumer		92,686		1,316		5.69			93,472		1,279		5.49
Total loans		223,881		3,116		5.58			221,175		2,906		5.30
Loans held for sale		14,024		194		5.51			12,869		166		5.19
Other earning assets		10,419		125		4.84			10,139		115		4.58
Total earning assets excluding derivatives		422,534		5,490		5.20			421,047		5,235		5.00
Risk management derivatives (c)		—		265		0.26			—		279		0.27
Total earning assets including derivatives		422,534		5,755		5.46			421,047		5,514		5.27
Cash and due from banks		12,389							12,661
Other assets		68,438							66,778
Total assets	$	503,361						$	500,486
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		80,113		194		0.97			81,071		161		0.81
Money market accounts		94,990		455		1.92			93,477		357		1.55
Other consumer time		38,064		273		2.87			36,005		239		2.70
Foreign		11,857		81		2.75			10,996		61		2.26
Other time		9,999		78		3.09			12,583		83		2.67
Total interest-bearing deposits		235,023		1,081		1.84			234,132		901		1.56
Federal funds purchased and securities sold under repurchase agreements		53,984		375		2.79			51,395		312		2.46
Commercial paper		13,365		97		2.91			13,553		82		2.45
Securities sold short		10,648		92		3.49			12,681		102		3.25
Other short-term borrowings		6,694		30		1.82			6,370		26		1.63
Long-term debt		48,114		528		4.39			47,385		493		4.17
Total interest-bearing liabilities excluding derivatives		367,828		2,203		2.40			365,516		1,916		2.12
Risk management derivatives (c)		—		141		0.16			—		124		0.14
Total interest-bearing liabilities including derivatives		367,828		2,344		2.56			365,516		2,040		2.26
Noninterest-bearing deposits		62,171							60,542
Other liabilities		26,248							27,197
Stockholders’ equity		47,114							47,231
Total liabilities and stockholders’ equity	$	503,361						$	500,486
Interest income and rate earned — including derivatives			$	5,755		5.46	%			$	5,514		5.27	%
Interest expense and equivalent rate paid — including derivatives				2,344		2.23					2,040		1.96
Net interest income and margin — including derivatives			$	3,411		3.23	%			$	3,474		3.31	%

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

56

FOURTH QUARTER 2004							THIRD QUARTER 2004							SECOND QUARTER 2004
				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
$	3,909		18		1.85	%	$	3,153		12		1.52	%	$	4,015		11		1.13	%
	24,722		123		1.99			26,419		96		1.44			23,800		62		1.05
	36,517		411		4.49			32,052		348		4.34			26,135		260		3.98
	103,879		1,297		5.00			101,493		1,237		4.88			100,209		1,196		4.77
	69,394		836		4.79			58,278		642		4.40			56,648		599		4.25
	10,537		120		4.53			6,683		67		4.02			6,309		56		3.56
	19,035		237		4.95			14,877		170		4.54			15,029		158		4.21
	10,185		180		7.07			9,692		178		7.33			7,011		180		10.28
	7,448		58		3.10			7,330		47		2.51			7,110		41		2.32
	116,599		1,431		4.88			96,860		1,104		4.54			92,107		1,034		4.51
	62,083		853		5.49			54,288		732		5.38			52,389		691		5.29
	10,560		107		4.04			10,145		97		3.80			9,941		90		3.63
	7,285		111		6.12			7,259		107		5.86			9,205		126		5.48
	79,928		1,071		5.35			71,692		936		5.21			71,535		907		5.08
	196,527		2,502		5.08			168,552		2,040		4.83			163,642		1,941		4.76
	21,405		261		4.89			17,119		186		4.34			15,603		161		4.12
	10,531		104		3.89			11,121		96		3.43			11,443		82		2.91
	397,490		4,716		4.74			359,909		4,015		4.45			344,847		3,713		4.32
	—		313		0.31			—		349		0.39			—		371		0.43
	397,490		5,029		5.05			359,909		4,364		4.84			344,847		4,084		4.75
	11,870							11,159							11,254
	63,071							53,331							54,973
$	472,431						$	424,399						$	411,074
	79,476		128		0.64			73,171		93		0.51			70,205		78		0.45
	90,382		271		1.19			81,525		197		0.96			76,850		172		0.90
	32,540		212		2.58			26,860		180		2.68			26,288		176		2.69
	9,486		46		1.92			7,453		27		1.42			7,110		20		1.14
	9,938		56		2.31			7,803		39		1.98			7,773		34		1.76
	221,822		713		1.28			196,812		536		1.08			188,226		480		1.03
	47,264		233		1.96			47,052		164		1.39			46,620		116		1.00
	11,840		58		1.94			12,065		43		1.42			12,382		32		1.04
	12,694		102		3.18			12,388		96		3.09			10,571		73		2.78
	5,859		19		1.33			6,042		15		0.91			6,013		11		0.80
	44,010		443		4.02			39,951		404		4.05			37,840		378		3.99
	343,489		1,568		1.82			314,310		1,258		1.60			301,652		1,090		1.45
	—		104		0.12			—		78		0.09			—		91		0.12
	343,489		1,672		1.94			314,310		1,336		1.69			301,652		1,181		1.57
	58,229							51,433							50,466
	28,069							25,410							26,460
	42,644							33,246							32,496
$	472,431						$	424,399						$	411,074
		$	5,029		5.05	%			$	4,364		4.84	%			$	4,084		4.75	%
			1,672		1.68					1,336		1.48					1,181		1.38
		$	3,357		3.37	%			$	3,028		3.36	%			$	2,903		3.37	%

(c) 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.

57

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES

	SIX MONTHS ENDED 2005							SIX MONTHS ENDED 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	$	2,567		36		2.85	%	$	3,626		21		1.15	%
Federal funds sold and securities purchased under resale agreements		24,475		342		2.82			24,303		123		1.02
Trading account assets (a)		33,504		779		4.66			23,546		480		4.08
Securities (a)		114,983		2,946		5.13			99,216		2,417		4.87
Loans (a) (b)
Commercial
Commercial, financial and agricultural		78,442		2,044		5.25			56,062		1,175		4.21
Real estate — construction and other		12,747		333		5.28			6,166		109		3.54
Real estate — mortgage		20,470		559		5.51			15,135		318		4.22
Lease financing		10,382		365		7.02			6,978		363		10.40
Foreign		7,418		126		3.42			6,897		82		2.40
Total commercial		129,459		3,427		5.33			91,238		2,047		4.51
Consumer
Real estate secured		74,729		2,109		5.65			51,634		1,396		5.42
Student loans		10,999		249		4.56			9,425		168		3.58
Installment loans		7,349		237		6.52			9,115		256		5.64
Total consumer		93,077		2,595		5.59			70,174		1,820		5.20
Total loans		222,536		6,022		5.44			161,412		3,867		4.81
Loans held for sale		13,450		360		5.35			14,181		292		4.12
Other earning assets		10,279		240		4.71			11,299		166		2.96
Total earning assets excluding derivatives		421,794		10,725		5.11			337,583		7,366		4.37
Risk management derivatives (c)		—		544		0.26			—		779		0.47
Total earning assets including derivatives		421,794		11,269		5.37			337,583		8,145		4.84
Cash and due from banks		12,524							11,105
Other assets		67,613							56,193
Total assets	$	501,931						$	404,881
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		80,589		355		0.89			67,786		148		0.44
Money market accounts		94,238		812		1.74			73,029		326		0.90
Other consumer time		37,040		512		2.79			26,891		365		2.73
Foreign		11,429		142		2.51			7,392		42		1.16
Other time		11,284		161		2.86			7,724		68		1.76
Total interest-bearing deposits		234,580		1,982		1.70			182,822		949		1.04
Federal funds purchased and securities sold under repurchase agreements		52,697		687		2.63			47,486		240		1.02
Commercial paper		13,458		179		2.68			12,117		62		1.03
Securities sold short		11,659		194		3.36			9,491		120		2.54
Other short-term borrowings		6,532		56		1.73			6,225		21		0.69
Long-term debt		47,752		1,021		4.28			37,555		742		3.95
Total interest-bearing liabilities excluding derivatives		366,678		4,119		2.26			295,696		2,134		1.45
Risk management derivatives (c)		—		265		0.15			—		185		0.13
Total interest-bearing liabilities including derivatives		366,678		4,384		2.41			295,696		2,319		1.58
Noninterest-bearing deposits		61,361							48,535
Other liabilities		26,720							28,034
Stockholders’ equity		47,172							32,616
Total liabilities and stockholders’ equity	$	501,931						$	404,881
Interest income and rate earned — including derivatives			$	11,269		5.37	%			$	8,145		4.84	%
Interest expense and equivalent rate paid — including derivatives				4,384		2.10					2,319		1.38
Net interest income and margin — including derivatives			$	6,885		3.27	%			$	5,826		3.46	%

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

58

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	2005						2004
	Second			First			Fourth			Third			Second
(In millions, except per share data)	Quarter			Quarter			Quarter			Quarter			Quarter
ASSETS
Cash and due from banks	$	12,464			12,043			11,714			10,355			10,701
Interest-bearing bank balances		2,852			1,285			4,441			7,664			2,059
Federal funds sold and securities purchased under resale agreements (carrying amount of collateral held $12,663 at June 30, 2005, $5,370 repledged)		22,528			24,899			22,436			30,629			21,970
Total cash and cash equivalents		37,844			38,227			38,591			48,648			34,730
Trading account assets		46,519			47,149			45,932			45,129			39,659
Securities		117,906			116,731			110,597			102,157			102,934
Loans, net of unearned income		230,287			227,266			223,840			174,504			172,917
Allowance for loan losses		(2,718	)		(2,732	)		(2,757	)		(2,324	)		(2,331	)
Loans, net		227,569			224,534			221,083			172,180			170,586
Loans held for sale		14,531			14,173			12,988			17,755			16,257
Premises and equipment		5,354			5,260			5,268			4,150			4,522
Due from customers on acceptances		826			826			718			563			703
Goodwill		21,861			21,635			21,526			11,481			11,481
Other intangible assets		1,378			1,428			1,581			946			1,045
Other assets		38,052			36,870			35,040			33,689			36,524
Total assets	$	511,840			506,833			493,324			436,698			418,441
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		63,079			61,626			64,197			52,524			51,613
Interest-bearing deposits		236,831			236,031			230,856			200,457			191,767
Total deposits		299,910			297,657			295,053			252,981			243,380
Short-term borrowings		75,726			73,401			63,406			67,589			66,360
Bank acceptances outstanding		859			866			755			570			708
Trading account liabilities		19,827			22,418			21,709			22,704			20,327
Other liabilities		15,750			15,281			15,507			14,838			15,321
Long-term debt		49,006			47,932			46,759			41,444			37,022
Total liabilities		461,078			457,555			443,189			400,126			383,118
Minority interest in net assets of consolidated subsidiaries		2,858			2,811			2,818			2,675			2,677
STOCKHOLDERS’ EQUITY
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at June 30, 2005		—			—			—			—			—
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.577 billion shares at June 30, 2005		5,258			5,255			5,294			4,359			4,365
Paid-in capital		31,038			30,976			31,120			18,095			17,920
Retained earnings		11,079			10,319			10,178			10,449			9,890
Accumulated other comprehensive income, net		529			(83	)		725			994			471
Total stockholders’ equity		47,904			46,467			47,317			33,897			32,646
Total liabilities and stockholders’ equity	$	511,840			506,833			493,324			436,698			418,441

59

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	2005					2004
	Second		First			Fourth			Third			Second
(In millions, except per share data)	Quarter		Quarter			Quarter			Quarter			Quarter
INTEREST INCOME
Interest and fees on loans	$	3,362		3,174			2,814			2,393			2,316
Interest and dividends on securities		1,437		1,426			1,232			1,156			1,110
Trading account interest		354		378			388			325			237
Other interest income		549		475			535			427			356
Total interest income		5,702		5,453			4,969			4,301			4,019
INTEREST EXPENSE
Interest on deposits		1,221		1,050			860			691			654
Interest on short-term borrowings		670		601			492			396			316
Interest on long-term debt		453		389			320			249			211
Total interest expense		2,344		2,040			1,672			1,336			1,181
Net interest income		3,358		3,413			3,297			2,965			2,838
Provision for credit losses		50		36			109			43			61
Net interest income after provision for credit losses		3,308		3,377			3,188			2,922			2,777
FEE AND OTHER INCOME
Service charges		528		513			519			499			489
Other banking fees		355		351			343			313			301
Commissions		603		599			620			568			657
Fiduciary and asset management fees		728		714			700			668			700
Advisory, underwriting and other investment banking fees		257		233			271			237			203
Trading account profits (losses)		17		99			(16	)		(60	)		34
Principal investing		41		59			7			201			15
Securities gains (losses)		136		(2	)		23			(71	)		36
Other income		312		429			337			246			172
Total fee and other income		2,977		2,995			2,804			2,601			2,607
NONINTEREST EXPENSE
Salaries and employee benefits		2,324		2,401			2,239			2,118			2,164
Occupancy		271		250			260			234			224
Equipment		269		265			272			268			253
Advertising		48		44			51			46			48
Communications and supplies		158		162			163			149			157
Professional and consulting fees		155		127			179			134			126
Other intangible amortization		107		115			113			99			107
Merger-related and restructuring expenses		90		61			116			127			102
Sundry expense		366		447			441			496			314
Total noninterest expense		3,788		3,872			3,834			3,671			3,495
Minority interest in income of consolidated subsidiaries		71		64			54			28			45
Income before income taxes		2,426		2,436			2,104			1,824			1,844
Income taxes		776		815			656			561			592
Net income	$	1,650		1,621			1,448			1,263			1,252
PER COMMON SHARE DATA
Basic earnings	$	1.05		1.03			0.97			0.97			0.96
Diluted earnings		1.04		1.01			0.95			0.96			0.95
Cash dividends	$	0.46		0.46			0.46			0.40			0.40
AVERAGE COMMON SHARES
Basic		1,564		1,571			1,487			1,296			1,300
Diluted		1,591		1,603			1,518			1,316			1,320

60

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets - June 30, 2005 and December 31, 2004 (Unaudited)	62
Consolidated Statements of Income - Three and Six Months Ended June 30, 2005 and 2004 (Unaudited)	63
Consolidated Statements of Cash Flows - Six Months Ended June 30, 2005 and 2004 (Unaudited)	64
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies and Other Matters	65
Note 2: Securities	67
Note 3: Comprehensive Income	68
Note 4: Business Segments	69
Note 5: Basic and Diluted Earnings Per Common Share	72
Note 6: Derivatives	72
Note 7: Guarantees	75

61

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

	June 30,			December 31,
(In millions, except per share data)	2005			2004
ASSETS
Cash and due from banks	$	12,464			11,714
Interest-bearing bank balances		2,852			4,441
Federal funds sold and securities purchased under resale agreements (carrying amount of collateral held $12,663 at June 30, 2005, $5,370 repledged)		22,528			22,436
Total cash and cash equivalents		37,844			38,591
Trading account assets		46,519			45,932
Securities		117,906			110,597
Loans, net of unearned income		230,287			223,840
Allowance for loan losses		(2,718	)		(2,757	)
Loans, net		227,569			221,083
Loans held for sale		14,531			12,988
Premises and equipment		5,354			5,268
Due from customers on acceptances		826			718
Goodwill		21,861			21,526
Other intangible assets		1,378			1,581
Other assets		38,052			35,040
Total assets	$	511,840			493,324
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		63,079			64,197
Interest-bearing deposits		236,831			230,856
Total deposits		299,910			295,053
Short-term borrowings		75,726			63,406
Bank acceptances outstanding		859			755
Trading account liabilities		19,827			21,709
Other liabilities		15,750			15,507
Long-term debt		49,006			46,759
Total liabilities		461,078			443,189
Minority interest in net assets of consolidated subsidiaries		2,858			2,818
STOCKHOLDERS’ EQUITY
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at June 30, 2005		—			—
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.577 billion shares at June 30, 2005		5,258			5,294
Paid-in capital		31,038			31,120
Retained earnings		11,079			10,178
Accumulated other comprehensive income, net		529			725
Total stockholders’ equity		47,904			47,317
Total liabilities and stockholders’ equity	$	511,840			493,324

62

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions, except per share data)	2005		2004		2005		2004
INTEREST INCOME
Interest and fees on loans	$	3,362		2,316		6,536		4,651
Interest and dividends on securities		1,437		1,110		2,863		2,251
Trading account interest		354		237		732		434
Other interest income		549		356		1,024		682
Total interest income		5,702		4,019		11,155		8,018
INTEREST EXPENSE
Interest on deposits		1,221		654		2,271		1,302
Interest on short-term borrowings		670		316		1,271		615
Interest on long-term debt		453		211		842		402
Total interest expense		2,344		1,181		4,384		2,319
Net interest income		3,358		2,838		6,771		5,699
Provision for credit losses		50		61		86		105
Net interest income after provision for credit losses		3,308		2,777		6,685		5,594
FEE AND OTHER INCOME
Service charges		528		489		1,041		960
Other banking fees		355		301		706		570
Commissions		603		657		1,202		1,413
Fiduciary and asset management fees		728		700		1,442		1,404
Advisory, underwriting and other investment banking fees		257		203		490		403
Trading account profits		17		34		116		111
Principal investing		41		15		100		53
Securities gains		136		36		134		38
Other income		312		172		741		422
Total fee and other income		2,977		2,607		5,972		5,374
NONINTEREST EXPENSE
Salaries and employee benefits		2,324		2,164		4,725		4,346
Occupancy		271		224		521		453
Equipment		269		253		534		512
Advertising		48		48		92		96
Communications and supplies		158		157		320		308
Professional and consulting fees		155		126		282		235
Other intangible amortization		107		107		222		219
Merger-related and restructuring expenses		90		102		151		201
Sundry expense		366		314		813		791
Total noninterest expense		3,788		3,495		7,660		7,161
Minority interest in income of consolidated subsidiaries		71		45		135		102
Income before income taxes		2,426		1,844		4,862		3,705
Income taxes		776		592		1,591		1,202
Net income	$	1,650		1,252		3,271		2,503
PER COMMON SHARE DATA
Basic earnings	$	1.05		0.96		2.09		1.92
Diluted earnings		1.04		0.95		2.05		1.89
Cash dividends	$	0.46		0.40		0.92		0.80
AVERAGE COMMON SHARES
Basic		1,564		1,300		1,567		1,301
Diluted		1,591		1,320		1,597		1,323

63

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
	June 30,
(In millions)	2005			2004
OPERATING ACTIVITIES
Net income	$	3,271			2,503
Adjustments to reconcile net income to net cash provided (used) by operating activities
Accretion and amortization of securities discounts and premiums, net		128			115
Provision for credit losses		86			105
Securitization transactions		(99	)		(28	)
Gain on sale of mortgage servicing rights		(12	)		(23	)
Securities transactions		(134	)		(38	)
Depreciation and other amortization		727			704
Trading account assets, net		(587	)		(4,945	)
Mortgage loans held for resale		(121	)		(301	)
Loss on sales of premises and equipment		61			90
Contribution to qualified pension plan		(330	)		(253	)
Loans held for sale, net		(1,524	)		(3,632	)
Other assets, net		(554	)		(1,477	)
Trading account liabilities, net		(1,882	)		1,143
Other liabilities, net		(167	)		(1,628	)
Net cash used by operating activities		(1,137	)		(7,665	)
INVESTING ACTIVITIES
Increase (decrease) in cash realized from
Sales of securities		24,000			28,083
Maturities of securities		18,762			16,402
Purchases of securities		(50,198	)		(48,276	)
Origination of loans, net		(6,530	)		(7,457	)
Sales of premises and equipment		35			26
Purchases of premises and equipment		(519	)		(356	)
Goodwill and other intangible assets		(327	)		(353	)
Purchase of bank-owned separate account life insurance		(1,624	)		(129	)
Cash equivalents acquired, net of purchases of insurance organizations		18			—
Net cash used by investing activities		(16,383	)		(12,060	)
FINANCING ACTIVITIES
Increase (decrease) in cash realized from
Increase in deposits, net		4,857			22,155
Securities sold under repurchase agreements and other short-term borrowings, net		12,320			(4,930	)
Issuances of long-term debt		4,261			2,933
Payments of long-term debt		(2,014	)		(2,641	)
Issuances of common stock, net		147			209
Purchases of common stock		(1,346	)		(734	)
Cash dividends paid		(1,452	)		(1,049	)
Net cash provided by financing activities		16,773			15,943
Decrease in cash and cash equivalents		(747	)		(3,782	)
Cash and cash equivalents, beginning of year		38,591			38,512
Cash and cash equivalents, end of period	$	37,844			34,730
NONCASH ITEMS
Transfer to securities from loans	$	51			154
Transfer to securities from loans held for sale		87			—
Transfer to loans held for sale from loans, net	$	(15	)		(139	)

64

WACHOVIA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS

GENERAL

     Wachovia Corporation and subsidiaries (together the “Company”) is a diversified financial services company whose operations are principally domestic.

     The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The unaudited condensed consolidated financial statements of the Company include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such financial statements for all periods presented. The financial position and result of operations as of and for the three and six months ended June 30, 2005, are not necessarily indicative of the results of operations that may be expected in the future. Please refer to the Company’s 2004 Annual Report on Form 10-K for additional information related to the Company’s audited consolidated financial statements for the three years ended December 31, 2004, including the related notes to consolidated financial statements.

BUSINESS COMBINATIONS

     On June 21, 2004, the Company announced the signing of a definitive merger agreement with SouthTrust Corporation (“SouthTrust”), and the merger was completed on November 1, 2004. The terms of this transaction called for the Company to exchange 0.89 shares of its common stock for each share of SouthTrust common stock. Based on the Company’s average of the closing prices for a period beginning two trading days before the announcement of the merger and ending two days after the merger announcement of $45.86, the transaction is valued at $14.0 billion and represents an exchange value of $40.82 for each share of SouthTrust common stock.

STOCK-BASED COMPENSATION

     In 2002, the Company adopted the fair value method of accounting for stock options. Certain awards made prior to January 1, 2002, continued to be accounted for using the intrinsic value method through their required service period which ended in 2004.

     The effect on net income available to common stockholders and earnings per share as if the fair value method had been applied to all outstanding and unvested awards for the three and six months ended June 30, 2005 and 2004, is presented below.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions, except per share data)	2005			2004			2005			2004
Net income available to common stockholders, as reported	$	1,650			1,252			3,271			2,503
Add stock-based employee compensation expense included in reported net income, net of income taxes		14			22			36			40
Deduct total stock-based employee compensation expense determined under the fair value method for all awards, net of income taxes		(14	)		(35	)		(36	)		(70	)
Pro forma net income available to common stockholders	$	1,650			1,239			3,271			2,473
PER COMMON SHARE DATA
Basic — as reported	$	1.05			0.96			2.09			1.92
Basic — pro forma		1.05			0.95			2.09			1.90
Diluted — as reported		1.04			0.95			2.05			1.89
Diluted — pro forma	$	1.04			0.94			2.05			1.87

65

PERSONNEL EXPENSE AND RETIREMENT BENEFITS

     The components of the retirement benefit costs included in salaries and employee benefits for the six months ended June 30, 2005 and 2004, are presented below.

											Other Postretirement
	Qualified Pension						Nonqualified Pension				Benefits
	Six Months Ended						Six Months Ended				Six Months Ended
	June 30,						June 30,				June 30,
(In millions)	2005			2004			2005		2004		2005			2004
RETIREMENT BENEFIT COSTS
Service cost	$	89			77			2		1		2			3
Interest cost		121			116			13		10		26			26
Expected return on plan assets		(207	)		(189	)		—		—		(1	)		(1	)
Amortization of prior service cost		(13	)		(13	)		—		—		(4	)		(4	)
Amortization of actuarial losses		44			40			5		4		3			4
Net retirement benefit costs	$	34			31			20		15		26			28

     In April 2005, the Company contributed $330 million to the Qualified Pension. The Company does not expect to make any additional contributions to the Qualified Pension during the year. Additionally, the Company’s practice is to contribute annually to each of the Nonqualified Pension and Other Postretirement Benefits an amount equal to the benefit payments made during the year less any retiree contributions received during the year.

RECLASSIFICATIONS

     Certain amounts in 2004 were reclassified to conform with the presentation in 2005. These reclassifications had no effect on the Company’s previously reported consolidated financial position or results of operations.

66

NOTE 2: SECURITIES

	June 30, 2005
																		Average
	1 Year			1-5		5-10		After 10				Gross Unrealized				Amortized		Maturity
(In millions)	or Less			Years		Years		Years		Total		Gains		Losses		Cost		in Years
MARKET VALUE
U.S. Treasury	$	787			48		40		43		918		4		1		915		1.62
Mortgage-backed securities, principally obligations of U.S. Government agencies		572			49,502		25,060		14		75,148		435		218		74,931		4.76
Asset-backed
Residual interests from securitizations		32			486		339		—		857		244		—		613		3.76
Retained bonds from securitizations		281			2,654		152		3		3,090		36		4		3,058		3.26
Collateralized mortgage obligations		170			4,669		309		103		5,251		33		24		5,242		4.01
Commercial mortgage-backed		9			3,894		4,306		7		8,216		436		2		7,782		5.59
Other		4,433			387		13		25		4,858		10		—		4,848		0.74
State, county and municipal		56			493		659		2,372		3,580		238		1		3,343		15.39
Sundry		532			7,799		3,607		4,050		15,988		338		33		15,683		7.32
Total market value	$	6,872			69,932		34,485		6,617		117,906		1,774		283		116,415		5.16
MARKET VALUE
Debt securities	$	6,872			69,932		34,485		4,584		115,873		1,727		276		114,422
Equity securities		—			—		—		2,033		2,033		47		7		1,993
Total market value	$	6,872			69,932		34,485		6,617		117,906		1,774		283		116,415
AMORTIZED COST
Debt securities	$	6,827			69,163		33,978		4,454		114,422
Equity securities		—			—		—		1,993		1,993
Total amortized cost	$	6,827			69,163		33,978		6,447		116,415
WEIGHTED AVERAGE YIELD
U.S. Treasury		3.05	%		2.81		4.21		4.95		3.17
Mortgage-backed securities, principally obligations of U.S. Government agencies		5.31			5.03		4.85		5.22		4.98
Asset-backed
Residual interests from securitizations		6.82			16.36		23.08		—		18.06
Retained bonds from securitizations		7.66			4.04		7.63		8.51		4.54
Collateralized mortgage obligations		5.08			4.79		5.00		5.04		4.82
Commercial mortgage-backed		3.46			6.57		5.11		6.06		5.79
Other		3.99			5.52		7.20		11.01		4.15
State, county and municipal		8.22			8.90		8.44		6.96		7.50
Sundry		5.03			4.23		4.67		6.16		4.85
Consolidated		4.28	%		5.07		5.03		6.43		5.09

67

     At June 30, 2005, all securities were classified as available for sale.

     At June 30, 2005, mortgage-backed securities included Federal National Mortgage Association and Federal Home Loan Mortgage Corporation securities with an amortized cost of $56.4 billion and a market value of $56.5 billion, and an amortized cost of $15.9 billion and a market value of $15.9 billion, respectively. Also included in mortgage-backed securities are U.S. Government agency and Government-sponsored entity securities retained from the securitization of residential mortgage loans. These securities had an amortized cost and market value of $1.6 billion and $1.7 billion at June 30, 2005, respectively.

     Included in asset-backed securities are retained bonds primarily from the securitization of commercial and consumer real estate, SBA and auto loans. At June 30, 2005, retained bonds with an amortized cost of $2.9 billion and a market value of $3.0 billion were considered investment grade based on external ratings. Retained bonds with an amortized cost and market value of $2.3 billion and $2.3 billion at June 30, 2005, respectively, had an external credit rating of AA and above.

     Securities with an aggregate amortized cost of $58.3 billion at June 30, 2005, 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, 2005, there were forward commitments to purchase securities at a cost that approximates a market value of $2.4 billion. At June 30, 2005, there were commitments to sell securities at a cost that approximates a market value of $4.5 billion.

     Gross gains and losses realized on the sale of debt securities in the six months ended June 30, 2005, were $297 million and $176 million (including $52 million of impairment losses), respectively, and gross gains and losses realized on the sale of equity securities were $15 million and $2 million (including $2 million of impairment losses), respectively.

NOTE 3: COMPREHENSIVE INCOME

     Comprehensive income is defined as the change in equity from all transactions other than those with stockholders, and it includes net income and other comprehensive income. Comprehensive income for the three and six months ended June 30, 2005 and 2004, is presented below.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In millions)	2005		2004			2005			2004
COMPREHENSIVE INCOME
Net income	$	1,650		1,252			3,271			2,503
OTHER COMPREHENSIVE INCOME
Net unrealized holding gain (loss) on securities		607		(1,342	)		(179	)		(857	)
Net unrealized gain (loss) on cash flow hedge derivatives		5		99			(17	)		(11	)
Total comprehensive income	$	2,262		9			3,075			1,635

68

NOTE 4: BUSINESS SEGMENTS (a)

     Business segment earnings are presented excluding merger-related and restructuring expenses, other intangible amortization, minority interest income in consolidated subsidiaries, and the change in accounting principle. The Company believes that while these items apply to overall corporate operations, they are not meaningful to understanding or evaluating the performance of the Company’s individual business segments. The Company does not take these items into account as it manages business segment operations or allocates capital, and therefore, the Company’s GAAP segment presentation excludes these items. 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.

     Business segment earnings are the primary measure of segment profit or loss that the Company uses to assess segment performance and to allocate resources. Economic profit, risk-adjusted return on capital (“RAROC”) and efficiency ratios are additional metrics, all of which are based on and calculated directly from segment earnings, that assist management in evaluating segment results. Please refer to the Company’s 2004 Annual Report, including pages 26 through 32 and pages 104 through 106, for additional information related to business segments and performance metrics.

     The Company continuously updates segment information for changes that occur in the management of the Company’s businesses. Additionally, in the first quarter of 2005, the Company transferred certain insurance business lines to Wealth Management from Capital Management and have updated information for 2004 to reflect this change. The impact of this and other changes to previously reported segment earnings for full year 2004 was a $12 million decrease in the General Bank, a $2 million decrease in Capital Management, an $8 million increase in Wealth Management, a $40 million decrease in the Corporate and Investment Bank, and a $46 million increase in the Parent.

	Three Months Ended June 30, 2005
															Net Merger-
									Corporate						Related
									and						and
	General			Capital			Wealth		Investment						Restructuring
(Dollars in millions)	Bank			Management			Management		Bank			Parent			Expenses (c)			Total
CONSOLIDATED
Net interest income (b)	$	2,407			160			143		522			179			(53	)		3,358
Fee and other income		686			1,189			185		789			128			—			2,977
Intersegment revenue		49			(12	)		1		(39	)		1			—			—
Total revenue (b)		3,142			1,337			329		1,272			308			(53	)		6,335
Provision for credit losses		68			—			—		(8	)		(10	)		—			50
Noninterest expense		1,515			1,089			222		711			161			90			3,788
Minority interest		—			—			—		—			85			(14	)		71
Income taxes (benefits)		561			91			39		185			(72	)		(28	)		776
Tax-equivalent adjustment		10			—			—		27			16			(53	)		—
Net income	$	988			157			68		357			128			(48	)		1,650
Economic profit	$	759			118			50		176			116			—			1,219
Risk adjusted return on capital		54.62	%		45.09			49.60		23.88			30.05			—			40.10
Economic capital, average	$	6,981			1,394			522		5,483			2,424			—			16,804
Cash overhead efficiency ratio (b)		48.18	%		81.48			67.39		55.85			17.63			—			56.19
Lending commitments	$	102,189			176			5,154		94,333			430			—			202,282
Average loans, net		161,609			689			13,546		37,972			10,065			—			223,881
Average core deposits	$	205,495			31,160			13,192		22,505			2,986			—			275,338
FTE employees		41,466			18,504			4,737		4,845			23,833			—			93,385

69

	Three Months Ended June 30,2004
															Net Merger-
									Corporate						Related
									and						and
	General			Capital			Wealth		Investment						Restructuring
(Dollars in millions)	Bank			Management			Management		Bank			Parent			Expenses (c)			Total
CONSOLIDATED
Net interest income (b)	$	1,891			135			118		603			156			(65	)		2,838
Fee and other income		601			1,236			153		713			(96	)		—			2,607
Intersegment revenue		40			(11	)		1		(30	)		—			—			—
Total revenue (b)		2,532			1,360			272		1,286			60			(65	)		5,445
Provision for credit losses		65			—			—		(4	)		—			—			61
Noninterest expense		1,305			1,141			193		619			135			102			3,495
Minority interest		—			—			—		—			70			(25	)		45
Income taxes (benefits)		411			80			28		216			(113	)		(30	)		592
Tax-equivalent adjustment		11			—			—		31			23			(65	)		—
Net income (loss)	$	740			139			51		424			(55	)		(47	)		1,252
Economic profit	$	565			102			33		273			(59	)		—			914
Risk adjusted return on capital		54.90	%		40.67			40.35		35.35			0.61			—			37.74
Economic capital, average	$	5,167			1,380			458		4,505			2,240			—			13,750
Cash overhead efficiency ratio (b)		51.54	%		83.90			70.89		48.11			50.07			—			59.66
Lending commitments	$	73,372			103			4,342		75,295			328			—			153,440
Average loans, net		122,108			522			10,593		29,552			867			—			163,642
Average core deposits	$	166,021			25,533			11,835		17,927			2,493			—			223,809
FTE employees		34,529			19,867			3,715		4,521			22,410			—			85,042

	Six Months Ended June 30, 2005
																Net Merger-
										Corporate						Related
										and						and
	General			Capital			Wealth			Investment						Restructuring
(Dollars in millions)	Bank			Management			Management			Bank			Parent			Expenses (c)			Total
CONSOLIDATED
Net interest income (b)	$	4,766			319			283			1,112			405			(114	)		6,771
Fee and other income		1,370			2,378			331			1,767			126			—			5,972
Intersegment revenue		92			(24	)		3			(73	)		2			—			—
Total revenue (b)		6,228			2,673			617			2,806			533			(114	)		12,743
Provision for credit losses		125			—			(1	)		(11	)		(27	)		—			86
Noninterest expense		3,059			2,182			413			1,443			412			151			7,660
Minority interest		—			—			—			—			159			(24	)		135
Income taxes (benefits)		1,097			180			75			456			(169	)		(48	)		1,591
Tax-equivalent adjustment		20			—			—			55			39			(114	)		—
Net income	$	1,927			311			130			863			119			(79	)		3,271
Economic profit	$	1,455			234			95			519			96			—			2,399
Risk adjusted return on capital		52.79	%		44.64			49.36			30.77			18.92			—			40.07
Economic capital, average	$	7,022			1,403			501			5,297			2,417			—			16,640
Cash overhead efficiency ratio (b)		49.11	%		81.64			66.85			51.41			35.65			—			56.67
Lending commitments	$	102,189			176			5,154			94,333			430			—			202,282
Average loans, net		160,499			665			13,175			37,447			10,750			—			222,536
Average core deposits	$	203,502			31,760			13,223			21,699			3,044			—			273,228
FTE employees		41,466			18,504			4,737			4,845			23,833			—			93,385

70

	Six Months Ended June 30,2004
															Net Merger-
									Corporate						Related
									and						and
	General			Capital			Wealth		Investment						Restructuring
(Dollars in millions)	Bank			Management			Management		Bank			Parent			Expenses (c)			Total
CONSOLIDATED
Net interest income (b)	$	3,739			257			230		1,186			414			(127	)		5,699
Fee and other income		1,170			2,580			301		1,454			(131	)		—			5,374
Intersegment revenue		78			(24	)		2		(57	)		1			—			—
Total revenue (b)		4,987			2,813			533		2,583			284			(127	)		11,073
Provision for credit losses		133			—			—		(30	)		2			—			105
Noninterest expense		2,627			2,362			382		1,237			352			201			7,161
Minority interest		—			—			—		—			149			(47	)		102
Income taxes (benefits)		787			164			54		443			(187	)		(59	)		1,202
Tax-equivalent adjustment		21			—			—		63			43			(127	)		—
Net income (loss)	$	1,419			287			97		870			(75	)		(95	)		2,503
Economic profit	$	1,061			210			62		552			(77	)		—			1,808
Risk adjusted return on capital		51.86	%		40.86			38.36		35.59			4.12			—			37.24
Economic capital, average	$	5,220			1,413			458		4,513			2,249			—			13,853
Cash overhead efficiency ratio (b)		52.67	%		83.97			71.55		47.88			47.25			—			60.19
Lending commitments	$	73,372			103			4,342		75,295			328			—			153,440
Average loans, net		120,170			440			10,374		29,471			957			—			161,412
Average core deposits	$	163,201			22,348			11,496		16,981			2,215			—			216,241
FTE employees		34,529			19,867			3,715		4,521			22,410			—			85,042

(a)	Certain amounts presented in periods prior to the second quarter of 2005 have been reclassified to conform to the presentation in the second quarter of 2005.
(b)	Tax-equivalent.
(c)	Tax-equivalent amounts are eliminated herein in order for “Total” amounts to agree with amounts appearing in the Consolidated Statements of Income.

71

NOTE 5: BASIC AND DILUTED EARNINGS PER COMMON SHARE

     The calculation of basic and diluted earnings per common share for the three and six months ended June 30, 2005 and 2004, is presented below.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions, except per share data)	2005		2004		2005		2004
Income available to common stockholders	$	1,650		1,252		3,271		2,503
Basic earnings per common share		1.05		0.96		2.09		1.92
Diluted earnings per common share	$	1.04		0.95		2.05		1.89
Average common shares — basic		1,564		1,300		1,567		1,301
Common share equivalents, unvested restricted stock, incremental common shares from forward purchase contracts		27		20		30		22
Average common shares — diluted		1,591		1,320		1,597		1,323

NOTE 6: DERIVATIVES (a)

     Risk management derivative financial instruments at June 30, 2005, are presented below.

	June 30, 2005
											In-			Average
	Notional		Gross Unrealized								effective-			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	$	36,487		1,370		(102	)		782			(1	)		4.25
Interest rate swaps—pay fixed		1,369		—		(118	)		(74	)		—			5.06
Forward purchase commitments		2,598		1		—			1			—			0.09
Futures		400		—		(1	)		—			—			0.25
Fair value hedges (c)
Interest rate swaps—pay fixed		2,214		1		(28	)		—			(1	)		16.02
Forward sale commitments		5,542		—		(31	)		—			(4	)		0.04
Total asset hedges	$	48,610		1,372		(280	)		709			(6	)		4.07
LIABILITY HEDGES
Cash flow hedges (d)
Interest rate swaps—pay fixed	$	43,382		82		(901	)		(508	)		—			4.32
Futures		56,688		41		—			25			—			0.25
Fair value hedges (e)
Interest rate swaps—receive fixed		20,757		663		(42	)		—			—			6.66
Interest rate options		4,425		—		(1	)		—			—			0.15
Total liability hedges	$	125,252		786		(944	)		(483	)		—			2.72

72

(a) Includes only derivative financial instruments related to interest rate risk management activities that have been designated and accounted for as accounting hedges. All other derivative financial instruments are classified as trading.

(b) Receive-fixed interest rate swaps with a notional amount of $36.5 billion 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. Forward purchase commitments of $2.2 billion and $443 million are designated as cash flow hedges of the variability of the consideration to be paid on the forecasted purchase of loans and available for sale securities, respectively. Eurodollar futures with a notional amount of $400 million are designated as cash flow hedges of the variability in cash flows related to the forecasted interest rate resets of one-month LIBOR-indexed loans.

(c) Pay-fixed interest rate swaps with a notional amount of $2.2 billion and receive rates based on one-month LIBOR are designated as fair value hedges of available for sale securities. Forward sale commitments of $4.8 billion and $792 million are designated as fair value hedges of available for sale securities and mortgage loans in the warehouse, respectively.

(d) Derivatives with a notional amount of $100.1 billion are designated as cash flow hedges of the variability in interest payments attributable to the forecasted issuance of fixed rate short-term liabilities that are part of a rollover strategy. Of this amount, $43.4 billion are pay-fixed interest rate swaps with receive rates based on one-to-three month LIBOR, of which $11.3 billion are forward-starting, and $56.7 billion are Eurodollar futures.

(e) Receive-fixed interest rate swaps with a notional amount of $20.8 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. Purchased interest rate options with a notional amount of $4.4 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, 2005, the net unrealized loss on derivatives included in accumulated other comprehensive income, which is a component of stockholders’ equity, was $340 million, net of income taxes. Of this net of tax amount, a $226 million gain represents the effective portion of the net gains (losses) on derivatives that qualify as cash flow hedges, and a $566 million loss relates to terminated and/or redesignated derivatives. At June 30, 2005, $12 million of net losses, 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 20.85 years.

(h) In the six months ended June 30, 2005, losses in the amount of $6 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 in the six months ended June 30, 2005, was increased by $5 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.

73

     Expected maturities of risk management derivative financial instruments at June 30, 2005, are presented below.

	June 30, 2005
	1 Year			1-2		2-5			5-10			After 10
(In millions)	or Less			Years		Years			Years			Years			Total
CASH FLOW ASSET HEDGES
Notional amount — swaps—receive fixed	$	4,014			717		17,908			13,848			—			36,487
Notional amount — swaps—pay fixed		1			6		571			753			38			1,369
Notional amount — other	$	2,998			—		—			—			—			2,998
Weighted average receive rate (a)		3.69	%		5.87		4.57			5.26			2.11			4.77
Weighted average pay rate (a)		3.38	%		3.24		3.37			3.46			4.58			3.41
Unrealized gain (loss)	$	(20	)		11		260			902			(3	)		1,150
FAIR VALUE ASSET HEDGES
Notional amount — swaps—pay fixed	$	—			41		66			473			1,634			2,214
Notional amount — other	$	5,542			—		—			—			—			5,542
Weighted average receive rate (a)		—	%		3.20		3.35			3.30			2.19			2.37
Weighted average pay rate (a)		—	%		3.24		3.76			4.47			3.81			3.94
Unrealized gain (loss)	$	(31	)		—		1			(7	)		(21	)		(58	)
CASH FLOW LIABILITY HEDGES
Notional amount — swaps—pay fixed	$	4,006			12,055		13,202			10,527			3,592			43,382
Notional amount — other	$	41,438			10,800		4,450			—			—			56,688
Weighted average receive rate (a)		3.41	%		3.36		3.37			2.32			4.97			3.40
Weighted average pay rate (a)		2.69	%		4.01		5.34			4.70			8.08			4.66
Unrealized gain (loss)	$	65			5		(93	)		(409	)		(346	)		(778	)
FAIR VALUE LIABILITY HEDGES
Notional amount — swaps—receive fixed	$	2,800			2,357		6,260			5,972			3,368			20,757
Notional amount — other	$	4,425			—		—			—			—			4,425
Weighted average receive rate (a)		6.92	%		5.15		4.52			5.08			6.37			5.38
Weighted average pay rate (a)		3.22	%		3.53		3.29			3.38			3.06			3.30
Unrealized gain (loss)	$	13			30		96			271			210			620

(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, 2005.

     Activity related to risk management derivative financial instruments for the six months ended June 30, 2005, is presented below.

	June 30, 2005
	Asset			Liability
(In millions)	Hedges			Hedges			Total
Balance, December 31, 2004	$	57,438			166,238			223,676
Additions		68,556			82,130			150,686
Maturities and amortizations		(30,547	)		(46,378	)		(76,925	)
Terminations		(15,371	)		(3,754	)		(19,125	)
Redesignations and transfers to trading account assets		(31,466	)		(72,984	)		(104,450	)
Balance, June 30, 2005	$	48,610			125,252			173,862

74

NOTE 7: GUARANTEES

	June 30, 2005				December 31, 2004
			Maximum				Maximum
	Carrying		Risk of		Carrying		Risk of
(In millions)	Amount		Loss		Amount		Loss
Securities lending indemnifications	$	—		54,651		—		48,879
Standby letters of credit		108		31,091		101		30,815
Liquidity agreements		686		7,144		1		7,568
Loans sold with recourse		42		4,922		39		5,238
Residual value guarantees on operating leases		11		637		9		629
Written put options		210		9,490		353		3,187
Contingent consideration		—		251		—		259
Total guarantees	$	1,057		108,186		503		96,575

75

EX-31.A

Exhibit (31)(a)

WACHOVIA CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, G. Kennedy Thompson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 of Wachovia Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2005

/s/ G. Kennedy Thompson
G. Kennedy Thompson
Chief Executive Officer

EX-31.B

Exhibit (31)(b)

WACHOVIA CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Robert P. Kelly, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 of Wachovia Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2005

/s/ Robert P. Kelly
Robert P. Kelly
Chief Financial Officer

EX-32.A

Exhibit (32)(a)

CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Wachovia Corporation (“Wachovia”) for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, G. Kennedy Thompson, Chief Executive Officer of Wachovia, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Wachovia.

/s/ G. Kennedy Thompson
G. Kennedy Thompson
Chief Executive Officer

August 4, 2005

EX-32.B

Exhibit (32)(b)

CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Wachovia Corporation (“Wachovia”) for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert P. Kelly, Chief Financial Officer of Wachovia, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Wachovia.

/s/ Robert P. Kelly
Robert P. Kelly
Chief Financial Officer

August 4, 2005