Ex-19

WACHOVIA CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL SUPPLEMENT
NINE MONTHS ENDED SEPTEMBER 30, 2006
TABLE OF CONTENTS


	PAGE


Financial Highlights		1

Management’s Discussion and Analysis		2

Explanation of Our Use of Non-GAAP Financial Measures		27

Selected Statistical Data		28

Summaries of Income, Per Common Share and Balance Sheet Data		29

Merger-Related and Restructuring Expenses		30

Business Segments		31

Net Trading Revenue — Investment Banking		47

Selected Ratios		47

Trading Account Assets and Liabilities		48

Loans — On-Balance Sheet, and Managed and Servicing Portfolios		49

Loans Held for Sale		50

Allowance for Loan Losses and Nonperforming Assets		51

Reserve for Unfunded Lending Commitments		52

Nonaccrual Loan Activity		52

Goodwill and Other Intangible Assets		53

Deposits		54

Time Deposits in Amounts of $100,000 or More		54

Long-Term Debt		55

Changes in Stockholders’ Equity		56

Capital Ratios		57

Net Interest Income Summaries — Five Quarters Ended September 30, 2006		58

Net Interest Income Summaries — Nine Months Ended September 30, 2006 and 2005		60

Consolidated Balance Sheets — Five Quarters Ended September 30, 2006		61

Consolidated Statements of Income — Five Quarters Ended September 30, 2006		62

Wachovia Corporation and Subsidiaries — Consolidated Financial Statements		63

FINANCIAL HIGHLIGHTS


	*Three Months Ended*								*Nine Months Ended*
	*September 30,*					Percent			*September 30,*					Percent
						Increase								Increase
(Dollars in millions, except per share data)	*2006*			2005		(Decrease)			*2006*			2005		(Decrease)

EARNINGS SUMMARY
Net interest income (GAAP)	$	3,541			3,387		5	%	$	10,672			10,158		5	%
Tax-equivalent adjustment		37			53		(30	)		120			167		(28	)

Net interest income (Tax-equivalent)		3,578			3,440		4			10,792			10,325		5
Fee and other income		3,465			3,258		6			10,565			9,230		14

Total revenue (Tax-equivalent)		7,043			6,698		5			21,357			19,555		9
Provision for credit losses		108			82		32			228			168		36
Other noninterest expense		3,915			3,820		2			12,133			11,107		9
Merger-related and restructuring expenses		38			83		(54	)		130			234		(44	)
Other intangible amortization		92			101		(9	)		282			323		(13	)

Total noninterest expense		4,045			4,004		1			12,545			11,664		8
Minority interest in income of consolidated subsidiaries		104			104		—			289			239		21

Income before income taxes (Tax-equivalent)		2,786			2,508		11			8,295			7,484		11
Tax-equivalent adjustment		37			53		(30	)		120			167		(28	)
Income taxes		872			790		10			2,685			2,381		13

Net income	$	1,877			1,665		13	%	$	5,490			4,936		11	%

Diluted earnings per common share	$	1.17			1.06		10	%	$	3.43			3.10		11	%
Return on average common stockholders’ equity		14.85	%		13.95		—			14.96	%		13.97		—
Return on average assets		1.34	%		1.29		—			1.36	%		1.31		—

ASSET QUALITY
Allowance for loan losses as % of loans, net		1.03	%		1.13		—			1.03	%		1.13		—
Allowance for loan losses as % of nonperforming assets		396			303		—			396			303		—
Allowance for credit losses as % of loans, net		1.09			1.20		—			1.09			1.20		—
Net charge-offs as % of average loans, net		0.33			0.27		—			0.11			0.09		—
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		0.26	%		0.37		—			0.26	%		0.37		—

CAPITAL ADEQUACY
Tier I capital ratio		7.74	%		7.42		—			7.74	%		7.42		—
Total capital ratio		11.47			10.79		—			11.47			10.79		—
Leverage ratio		6.60	%		5.96		—			6.60	%		5.96		—

OTHER FINANCIAL DATA
Net interest margin		3.03	%		3.18		—			3.13	%		3.24		—
Fee and other income as % of total revenue		49.20			48.63		—			49.47			47.20		—
Effective income tax rate		31.71	%		32.21		—			32.85	%		32.55		—

BALANCE SHEET DATA
Securities	$	107,826			117,195		(8)	%	$	107,826			117,195		(8)	%
Loans, net		290,759			239,733		21			290,759			239,733		21
Total assets		559,922			532,381		5			559,922			532,381		5
Total deposits		323,298			320,439		1			323,298			320,439		1
Long-term debt		86,419			45,846		88			86,419			45,846		88
Stockholders’ equity	$	51,180			46,757		9	%	$	51,180			46,757		9	%

OTHER DATA
Average diluted common shares (In millions)		1,600			1,575		2	%		1,600			1,590		1	%
Actual common shares (In millions)		1,581			1,553		2			1,581			1,553		2
Dividends paid per common share	$	0.56			0.51		10		$	1.58			1.43		10
Dividend payout ratio on common shares		47.86	%		48.11		(1	)		46.06	%		46.13		(0	)
Book value per common share	$	32.37			30.10		8		$	32.37			30.10		8
Common stock price		55.80			47.59		17			55.80			47.59		17
Market capitalization	$	88,231			73,930		19		$	88,231			73,930		19
Common stock price to book value		172	%		158		9			172	%		158		9
FTE employees		97,060			92,907		4			97,060			92,907		4
Total financial centers/brokerage offices		3,870			3,840		1			3,870			3,840		1
ATMs		5,163			5,119		1	%		5,163			5,119		1	%

Management’s Discussion and Analysis

This discussion contains forward-looking statements. Please refer to our Third Quarter 2006 Report on 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.

Summary of Results of Operations


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions, except per share data)	*2006*		2005		*2006*		2005

Net interest income (GAAP)	$	3,541		3,387		10,672		10,158
Tax-equivalent adjustment		37		53		120		167

Net interest income ^(a)		3,578		3,440		10,792		10,325
Fee and other income		3,465		3,258		10,565		9,230

Total revenue ^(a)		7,043		6,698		21,357		19,555
Provision for credit losses		108		82		228		168
Other noninterest expense		3,915		3,820		12,133		11,107
Merger-related and restructuring expenses		38		83		130		234
Other intangible amortization		92		101		282		323

Total noninterest expense		4,045		4,004		12,545		11,664
Minority interest in income of consolidated subsidiaries		104		104		289		239
Income taxes		872		790		2,685		2,381
Tax-equivalent adjustment		37		53		120		167

Net income		1,877		1,665		5,490		4,936

Diluted earnings per common share	$	1.17		1.06		3.43		3.10


(a)		Tax-equivalent.

Executive Summary

Wachovia’s net income in the first nine months of 2006 was $5.5 billion, up 11 percent from the same period in 2005, and diluted earnings per common share were also up 11 percent to $3.43. After-tax net merger-related and restructuring expenses were 6 cents per share in the first nine months of 2006 and 9 cents per share in the first nine months of 2005. Results reflect the impact of acquisitions, including Westcorp, an auto dealer financial services business and its retail branch network, on March 1, 2006, as well as divestitures. Key factors in the first nine months of 2006 compared with the same period in 2005 include:

	•		9 percent revenue growth driven largely by a 14 percent increase in fee and other income, led by growth in service charges and other banking fees; strong capital markets-related income; and solid advisory, underwriting and other investment banking fees. Fee and other income represented 49 percent of total revenue compared with 47 percent in the prior year period.

	•		5 percent growth in net interest income on strong balance sheet growth, although growth was dampened by margin compression. Average loans grew 21 percent, including $11.0 billion in loans related to Westcorp.

	•		8 percent growth in noninterest expense, reflecting revenue-related and other incentives, the impact of acquisitions, higher salaries and efficiency initiative costs.

	•		$107 million in increased employee stock compensation expense relating to the implementation of the revised share-based payment accounting standard, which is discussed further in the Outlook section and in Notes to Consolidated Financial Statements.

	•		The previously disclosed $100 million credit card-related termination fee received in the first quarter of 2006 as a result of the Bank of America/MBNA merger, which is discussed further in the Outlook section.

In addition, the increase in other income included $49 million related to commercial mortgage securitization activity, which was included in trading account profits prior to 2006, and $52 million in consumer asset sale and securitization income.

Credit quality continued to be very strong, with an annualized net charge-off ratio of 0.11 percent and a ratio of nonperforming assets to loans, net, foreclosed properties and loans held for sale of 0.26 percent. Provision expense increased to $228 million, largely reflecting growth in our auto lending business through the Westcorp acquisition. We continue to mitigate risk and volatility on our balance sheet by actively monitoring and reducing potential problem loans, including their sale when prudent.

The 21 percent increase from the first nine months of 2005 in average net loans to $272.4 billion included average consumer loan growth of 34 percent, which reflected the addition of $11.0 billion in auto loans from Westcorp and increased consumer real estate-secured activity, including the effect of the transfer of $12.5 billion of home equity lines to the loan portfolio from loans held for sale at year-end 2005. Excluding the transfer of home equity lines and the impact of Westcorp, average consumer loans increased 9 percent. Average commercial loan growth of 12 percent reflected strength in middle-market commercial and commercial real estate construction, large corporate lending and international lending. Average core deposits increased 6 percent to $291.0 billion and average low-cost core deposits increased 2 percent to $242.0 billion from the nine months ended September 30, 2005.

Our four major businesses continued to generate strong sales activity and market share gains in the first nine months of 2006. The General Bank’s earnings rose 24 percent to $3.5 billion, reflecting the addition of Westcorp and organic growth. Capital Management grew earnings 30 percent to $677 million, reflecting strength in retail brokerage managed account fees and growth in net interest income as deposit spreads improved. Wealth Management’s earnings grew $3 million to $190 million. Our Corporate and Investment Bank increased earnings 11 percent to $1.4 billion, reflecting higher principal investing gains, strong trading profits and investment banking results.

In the first nine months of 2006, we paid common stockholders dividends of $2.5 billion, or $1.58 per common share. Our target is to return 40 percent to 50 percent of our earnings to shareholders as dividends, and in the first nine months of 2006 our dividend payout ratio was 46.06 percent, or 43.89 percent excluding merger-related and restructuring expenses and other intangibles amortization, which is the basis we use in measuring our goal.

Our balance sheet is strong and well capitalized under regulatory guidelines with a tier 1 capital ratio of 7.74 percent and a leverage ratio of 6.60 percent at September 30, 2006.

In the third quarter of 2006 compared with the third quarter of 2005, net income rose 13 percent to $1.9 billion from $1.7 billion, and diluted earnings per common share rose 10 percent to $1.17 from $1.06. These amounts include after-tax net merger-related and restructuring expenses of 2 cents per share in the third quarter of 2006 and 3 cents per share in the third quarter of 2005.

Total revenue rose 5 percent to $7.0 billion in the third quarter of 2006 compared with the third quarter of 2005, with 4 percent growth in tax-equivalent net interest income and 6 percent growth in fee and other income. Net interest income growth was driven by a larger balance sheet. Loan growth was driven by 36 percent growth in average consumer loans largely related to Westcorp and the year-end transfer noted above, as well as organic growth. Core deposits continued to be relatively stable, with average core deposits up 4 percent and average low-cost core deposits essentially flat. In addition to the items mentioned above, growth in fee and other income in the third quarter of 2006 also came from higher service charges and interchange fees, and higher asset management and investment banking fee income.

On October 1, 2006, we completed the acquisition of Golden West Financial Corporation. This transaction is discussed further in the Outlook section.

Outlook

Based on our consistent performance, confidence in our business model and our capital strength, our bottom line 2006 financial outlook generally remains unchanged from the outlook provided in our 2005 Annual Report. However, this outlook did not include the impact of the Golden West

	•		Net interest income generally consistent with the third quarter’s $3.6 billion.

	•		Fee income growth in the high single digit percentage range from $3.5 billion.

	•		Noninterest expense growth in the mid single digit percentage range from $3.9 billion.

	•		Minority interest expense flat at $104 million.

	•		Loan growth in the mid single digit percentage range from $281.1 billion, including consumer loan growth in the low double digits from $130.5 billion, and commercial loan growth in the low single digit percentage range from $150.6 billion.

	•		Net charge-offs in the 16 basis points to 20 basis points range, with provision expense expected to be within this range.

	•		An effective income tax rate in line with the year-to-date rate of 33.87 percent at September 30, 2006.

	•		A tier 1 capital ratio above 7.5 percent, a leverage ratio above 6.0 percent and a tangible capital to tangible asset ratio above 4.7 percent.

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

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


	•		Net charge-offs in the 10 basis point to 20 basis point range, up from an adjusted 15 basis points, with provision expense also expected to be in the 10 basis point to 20 basis point range.

	•		An effective income tax rate of approximately 34 percent on a tax-equivalent basis.

	•		The same capital and leverage ratios, dividend payout ratio and goals for use of excess capital as noted in the fourth quarter 2006 outlook above.

Recent standards issued by the Financial Accounting Standards Board (FASB) on pensions, leveraged lease accounting and uncertain tax positions will affect our financial results in future periods. The pension standard will result in a one-time noncash charge recorded as a cumulative effect of a change in accounting principle recorded as a reduction of accumulated other comprehensive income, a component of stockholders’ equity, on December 31, 2006. The impact of the other standards will include (i) a one-time noncash charge recorded as a cumulative effect of a change in accounting principle through a reduction to beginning retained earnings on January 1, 2007, and (ii) pursuant to leveraged lease standards, the recognition as income during the remaining terms of the affected leases of amounts which in the aggregate approximate the amount of the one-time charge. The Accounting and Regulatory Matters section has additional information about these and other FASB projects.

On October 1, 2006, we completed our merger with Golden West Financial Corporation of Oakland, California, the parent of World Savings Bank. This combination will enable us to continue to build our mortgage lending operations, leveraging the World Savings Bank presence in 39 states. It also strengthens Wachovia’s retail banking presence in California, Florida and Texas, and extends our banking network into attractive metropolitan markets in Arizona, Colorado, Illinois, Kansas and Nevada. According to the merger agreement, Golden West shareholders received 1.05105 shares of Wachovia common stock and $18.6461 in cash for each of their Golden West shares. Based on a Wachovia share price of $55.69 per common share, which is based on the weighted average of Wachovia’s closing prices for a four-day period beginning two trading days before the day of the merger announcement and two trading days after the merger announcement (which includes the day of announcement), this represents total consideration of $24.3 billion, or a price of $81.07 per share of Golden West common stock. Total merger-related and restructuring expenses for the Golden West merger are expected to be $288 million pre-tax ($176 million after tax) related to staff training, retention and severance; real estate; systems integration; and other miscellaneous expenses. This transaction is expected to dilute fourth quarter 2006 earnings per share by approximately 4 cents before merger-related and restructuring expense. It is expected to be modestly dilutive to earnings per share on a GAAP basis in 2007 and 2008, and excluding merger-related and restructuring expenses and intangible amortization, to add to Wachovia’s earnings per share in 2008. Purchase accounting adjustments have not been finalized and thus are not included in these expectations. In addition, as previously disclosed, some of our capital measurements will decline as a consequence of the Golden West transaction. Specifically, we estimate that as a result of the merger, our tangible capital to tangible asset ratio is 4.5 percent and our leverage ratio is 5.8 percent.

We reentered the credit card market as a direct issuer in January 2006. Results include the $100 million MBNA termination fee received in the first quarter of 2006, which will defray systems, personnel and other costs to build our credit card business. We may use securities gains or other gains during the rest of the year to defray the initial dilution associated with building this business. Actions taken in the first nine months of 2006 better position us to be able to do this during the rest of the year. Key leaders are in place and we are hiring additional personnel, making decisions on operating systems and establishing business strategies. Marketing strategies, which will focus on our existing customer base, were launched in midsummer. Year-to-date, we have recorded $42 million of noninterest expense associated with the credit card business and the provision for credit losses includes $9 million related to credit card outstandings.

In addition, in June 2006, we announced the sale of our subprime mortgage servicing business, HomEq Servicing, for $469 million. This transaction closed on November 1, 2006, and disposition-related costs of $43 million year-to-date have been recorded and are reflected as merger-related and restructuring expenses.

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 intention to have the lowest overhead efficiency ratio in our peer group because we expect to continue to invest in higher growth businesses. As we disclosed in January 2005, we believe we will slow annual 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, which when implemented, are expected to result in cost savings in the range of $650 million to $750 million annually.

In conjunction with these efforts, we have established overhead efficiency targets, excluding merger-related and restructuring expenses, other intangible amortization, discontinued operations and changes in accounting principle, 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
• Wachovia Corporation		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

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 estimations. We have identified five policies as being particularly sensitive in terms of judgments and the extent to which significant 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 2005 Annual Report on Form 10-K.

Corporate Results of Operations

Average Balance Sheets and Interest Rates


	*Nine Months Ended*					Nine Months Ended
	*September 30, 2006*					September 30, 2005
	*Average*		*Interest*			Average		Interest
(In millions)	*Balances*		*Rates*			Balances		Rates

Interest-bearing bank balances	$	2,523		4.77	%	$	2,516		3.05	%
Federal funds sold		18,264		4.70			24,467		3.05
Trading account assets		29,232		5.23			33,577		4.71
Securities		121,415		5.37			114,956		5.11
Commercial loans, net		146,489		6.84			130,530		5.50
Consumer loans, net		125,903		6.89			94,171		5.71

Total loans, net		272,392		6.86			224,701		5.59

Loans held for sale		9,922		6.82			14,500		5.56
Other earning assets		5,660		7.79			10,296		4.90

Risk management derivatives		—		0.12			—		0.25

Total earning assets		459,408		6.40			425,013		5.46

Interest-bearing deposits		261,212		3.03			237,550		1.85
Federal funds purchased		50,049		4.47			53,954		2.84
Commercial paper		4,684		4.41			13,191		2.91
Securities sold short		8,910		3.28			10,776		3.37
Other short-term borrowings		6,399		2.22			6,511		1.75
Long-term debt		69,591		5.24			47,764		4.35

Risk management derivatives		—		0.14			—		0.14

Total interest-bearing liabilities		400,845		3.74			369,746		2.54

Net interest income and margin	$	10,792		3.13	%	$	10,325		3.24	%

Net Interest Income and Margin Tax-equivalent net interest income increased 5 percent in the first nine months of 2006 from the first nine months of 2005, reflecting strong balance sheet growth. The net interest margin declined 11 basis points to 3.13 percent primarily due to growth in lower spread loans and other assets, lower trading-related net interest income, a modest shift in deposits from lower spread categories and the impact of a flattening yield curve. The margin compression was offset by the addition of higher spread consumer loans from Westcorp. Growth in retail, small business and commercial deposits were somewhat offset by decreases in retail brokerage deposits. The average federal funds rate in the first nine months of 2006 was 191 basis points higher than the average for 2005, while the average longer-term two-year treasury note rate increased 116 basis points and the average 10-year treasury note rate increased 63 basis points.

In order to maintain our targeted interest rate risk profile, derivatives are often 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. In the first nine months of 2006, net interest rate risk management-related derivative expense resulted in a decrease of $6 million in net interest income, which did not have an impact on our net interest margin, compared with an income contribution of $369 million, or 12 basis points, in the first nine months of 2005. The decline in the impact from derivatives largely reflects deposit growth, the effect of receive fixed/pay floating rate swaps in a rising rate environment, and greater use of cash securities instead of derivatives to maintain our relatively neutral interest rate risk position.

Fee and Other Income


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	*2006*		2005		*2006*		2005

Service charges	$	638		555		1,834		1,596
Other banking fees		427		385		1,304		1,091
Commissions		562		598		1,773		1,770
Fiduciary and asset management fees		823		749		2,392		2,221
Advisory, underwriting and other investment banking fees		292		294		912		784
Trading account profits		123		160		506		317
Principal investing		91		166		383		266
Securities gains		94		29		71		163
Other income		415		322		1,390		1,022

Total fee and other income	$	3,465		3,258		10,565		9,230

Fee and Other Income Fee and other income growth of 14 percent in the first nine months of 2006 from the same period in 2005 came in nearly every category, and reflected:

	•		Higher service charges and other banking fees driven by strength in consumer charges and higher interchange income on higher rates and increased volume, and higher commercial mortgage servicing income.

	•		Commissions were essentially flat as higher insurance commissions were partially offset by lower retail brokerage commissions as customers migrate to retail brokerage managed account relationships.

	•		Strong growth in retail brokerage managed account assets drove higher fiduciary and asset management fees.

	•		Strong results in advisory and underwriting largely related to continued strong performance in structured products, investment grade, loan syndications, and merger and acquisition advisory services.

	•		Stronger trading account profits with increases in global rate products and leveraged finance, offset by a decline in structured products.

	•		Higher principal investing income related to our fund portfolio included a $116 million unrealized gain along with higher realized gains.

	•		Net securities gains of $71 million, which included net gains of $29 million in the corporate portfolio and gains of $33 million in our Corporate and Investment Bank related to corporate lending activities.

	•		Increased other income including $49 million of higher income related to commercial mortgage securitization activity, which was included in trading account profits prior to 2006; a $52 million increase in consumer asset sale and securitization income; the $100 million MBNA termination fee; and the $33 million gain related to the Archipelago/New York Stock Exchange merger. The first nine months of 2005 included a gain of $122 million from the sale of equity securities received in settlement of loans.

Many of the same factors contributed to the 6 percent growth in the third quarter of 2006, although commissions, trading account profits and principal investing results were lower than in the third quarter of 2005. Net securities gains were substantially lower in the third quarter a year ago.

Noninterest Expense


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	*2006*		2005		*2006*		2005

Salaries and employee benefits	$	2,531		2,476		7,880		7,201
Occupancy		284		260		850		781
Equipment		291		276		870		810
Advertising		54		50		157		142
Communications and supplies		158		158		487		478
Professional and consulting fees		200		167		551		449
Sundry expense		397		433		1,338		1,246

Other noninterest expense		3,915		3,820		12,133		11,107
Merger-related and restructuring expenses		38		83		130		234
Other intangible amortization		92		101		282		323

Total noninterest expense	$	4,045		4,004		12,545		11,664

Noninterest Expense Noninterest expense increased 8 percent in the first nine months of 2006 from the same period in 2005 largely reflecting revenue-based and other incentives; the $107 million increase in employee stock compensation expense, which is included in salaries and employee benefits; the effect of acquisitions; and costs related to reentering the credit card business. A favorable resolution of franchise tax matters was a partial offset to the increase in noninterest expense. The employee stock compensation expense increase related to the implementation of a new share-based payment accounting standard, which applied to annual stock awards in the first nine months of 2006. The increased expense is primarily due to the impact of awards granted to retirement-eligible employees, which are now expensed in full at the date of the grant rather than over the full contractual three- to five-year vesting period. The increases in most other components of noninterest expense were largely a result of de novo branch activity, branch consolidation and other costs related to the efficiency initiative, and the impact of acquisitions.

Noninterest expense increased slightly in the third quarter of 2006 from the third quarter of 2005 largely due to the same factors as above, although incentive expense decreased on the year-over-year basis and there was no significant increase in stock compensation expense.

Merger-Related and Restructuring Expenses Merger-related and restructuring expenses in the first nine months of 2006 of $130 million included $64 million related to the SouthTrust merger, which is now completed, and $66 million related to other acquisitions and the HomEq servicing business divestiture. In the first nine months of 2005, we recorded $170 million of these expenses relating to SouthTrust and $63 million related to the retail brokerage integration, which was completed in the second quarter of 2005.

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.

Business segment data excludes merger-related and restructuring expenses, other intangible amortization, the gain on sale of discontinued operations and changes in accounting principle.

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.

We continuously update segment information for changes that occur in the management of our businesses. For example, in the first nine months of 2006, we moved deposit balances relating to certain brokerage sweep accounts originated in the General Bank to Capital Management, which resulted in these certain brokerage sweep accounts being included in Capital Management’s results consistent with how they are managed. In addition, we transferred certain customer relationships and financial advisors to Wealth Management from Capital Management relating to a new investment management platform in Wealth Management. While these changes are not significant to the results of

operations of our segments, we have updated the information for 2005 to reflect these and other changes. The impact to segment earnings in 2005 as a result of these changes was:

	•		A $99 million decrease in the General Bank.

	•		A $121 million increase in Capital Management.

	•		A $12 million decrease in Wealth Management.

	•		A $3 million increase in the Corporate and Investment Bank.

	•		A $13 million decrease in the Parent.

General Bank

Performance Summary


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Dollars in millions)	*2006*			2005		*2006*		2005

Income statement data
Net interest income (Tax-equivalent)	$	2,823			2,379		8,147		7,020
Fee and other income		902			760		2,631		2,132
Intersegment revenue		48			53		139		140

Total revenue (Tax-equivalent)		3,773			3,192		10,917		9,292
Provision for credit losses		123			77		280		202
Noninterest expense		1,689			1,575		5,107		4,612
Income taxes(Tax-equivalent)		715			565		2,018		1,643

Segment earnings	$	1,246			975		3,512		2,835


Performance and other data
Economic profit	$	981			749		2,726		2,144
Risk adjusted return on capital (RAROC)		56.88	%		53.26		56.12		51.87
Economic capital, average	$	8,476			7,038		8,076		7,015
Cash overhead efficiency ratio (Tax-equivalent)		44.75	%		49.33		46.78		49.63
Lending commitments	$	128,380			106,570		128,380		106,570
Average loans, net		197,138			163,752		189,378		161,671
Average core deposits	$	216,795			203,104		214,253		199,646
FTE employees		45,687			41,399		45,687		41,399

General Bank The General Bank includes our Retail and Small Business and Commercial lines of business.

The General Bank’s earnings rose 24 percent to $3.5 billion, reflecting the addition of Westcorp and organic growth. Key General Bank trends in the first nine months of 2006 compared with the same period in 2005 included:

	•		17 percent revenue growth, including 23 percent growth in fee and other income.

	•		16 percent growth in net interest income related to a larger balance sheet on strengthening loan production, particularly in commercial. Westcorp contributed $620 million to net interest income.

	•		The growth in fee and other income included growth in service charges and strong debit card interchange income, as well as the $100 million MBNA termination fee. In addition, a larger mortgage servicing portfolio and higher mortgage originations contributed to growth.

	•		Commercial loan growth was driven by commercial real estate and middle-market commercial. Consumer loan growth included the addition of an average $11.0 billion in Westcorp lending, with additional strength in mortgages and home equity loans. Higher interest spreads in the Westcorp portfolio partially offset slowing growth in home equity lines as customers shifted from variable rate to fixed rate products.

	•		Deposit growth was led by consumer certificates of deposit and money market funds. Net new retail checking accounts increased by 467,000 in the first nine months of 2006, compared with an increase of 420,000 in the first nine months of 2005.

	•		11 percent growth in noninterest expense included higher personnel costs related to increased revenue-based incentive expense, hiring and employee stock compensation

			expense, de novo branch activity and branch consolidations, the impact of Westcorp and costs related to reentering the credit card business.

	•		Continued improvement in the overhead efficiency ratio to 46.78 percent, despite expense growth, due to merger efficiencies, expense management efforts and revenue growth.

The same trends drove General Bank results in the third quarter of 2006 compared with the third quarter of 2005. However, mortgage banking-related fee and other income declined 5 percent in this period on lower origination activity.

Capital Management

Performance Summary


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in millions)	*2006*			2005			*2006*			2005

Income statement data
Net interest income (Tax-equivalent)	$	247			211			756			600
Fee and other income		1,230			1,146			3,679			3,418
Intersegment revenue		(8	)		(9	)		(25	)		(27	)

Total revenue (Tax-equivalent)		1,469			1,348			4,410			3,991
Provision for credit losses		—			—			—			—
Noninterest expense		1,095			1,067			3,343			3,171
Income taxes (Tax-equivalent)		137			102			390			300

Segment earnings	$	237			179			677			520


Performance and other data
Economic profit	$	194			137			549			398
Risk adjusted return on capital (RAROC)		61.27	%		47.88			58.09			47.00
Economic capital, average	$	1,534			1,476			1,559			1,478
Cash overhead efficiency ratio(Tax-equivalent)		74.59	%		79.13			75.81			79.44
Lending commitments	$	263			184			263			184
Average loans, net		795			372			626			347
Average core deposits	$	30,114			33,807			31,829			35,100
FTE employees		17,303			17,310			17,303			17,310

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 advisory services and defined benefit and defined contribution retirement services.

Capital Management grew earnings 30 percent to $677 million, reflecting strength in managed account fees and growth in net interest income as deposit spreads improved. Key Capital Management trends in the first nine months of 2006 compared with the same period in 2005 included:

•

10 percent revenue growth driven by strength in retail brokerage managed account fees as 29 percent growth in managed assets to $128.8 billion overcame lower brokerage transaction activity. Momentum in building recurring revenue streams continued as this growth reflected strong client demand for managed accounts. Net interest income rose 26 percent as a result of improved deposit spreads.

	O		$3.7 billion in revenue from our retail brokerage businesses included transactional revenues of $1.5 billion and recurring and other income of $2.2 billion.

	O		$696 million in revenue from our asset management businesses, an increase of $51 million reflecting the June 2006 acquisitions of the Ameriprise 401(k) record-keeping business and Metropolitan West Capital Management, as well as 7 percent growth in assets under management.

•

5 percent growth in noninterest expense, primarily due to increased production-based and other incentives, increased employee stock compensation expense and the impact of the two acquisitions.

Total Assets Under Management (AUM)


	*2006*					2005
	*Third Quarter*					Fourth Quarter
(In billions)	*Amount*		*Mix*			Amount		Mix

Equity	$	93		37	%	$	82		35	%
Fixed income		107		43			105		46
Money market		50		20			43		19

Total assets under management ^(a)	$	250		100	%	$	230		100	%
Securities lending		50		—			57		—

Total assets under management and securities lending	$	300		—		$	287		—


(a)		Includes $70 billion in assets managed for Wealth Management, which are also reported in that segment.

Mutual Funds (AUM also included in the above)


	*2006*					2005
	*Third Quarter*					Fourth Quarter
			*Fund*					Fund
(In billions)	*Amount*		*Mix*			Amount		Mix

Equity	$	33		34	%	$	32		35	%
Fixed income		22		23			23		25
Money market		41		43			37		40

Total mutual fund assets	$	96		100	%	$	92		100	%

Total assets under management increased 9 percent from year-end 2005 to $250.1 billion, led by a 14 percent increase in equity assets to $93.7 billion, including $5.5 billion in assets from the Metropolitan West Capital Management acquisition. Total net inflows in assets under management were approximately $9.2 billion in the first nine months of 2006 while net asset appreciation was approximately $5.8 billion from increased market valuations. Total brokerage client assets grew 7 percent from year-end 2005 to $729.9 billion at September 30, 2006, and included the addition of $23.0 billion in certain mutual fund assets not previously included in client asset totals. This increase was offset by a decline in client assets of $29.9 billion during the period due to the loss of assets from a clearing client that was acquired by another firm.

In the third quarter of 2006 compared with the third quarter of 2005, the same trends drove Capital Management results. Total assets under management rose 7 percent.

Wealth Management

Performance Summary


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Dollars in millions)	*2006*			2005		*2006*		2005

Income statement data
Net interest income (Tax-equivalent)	$	149			146		451		428
Fee and other income		199			196		587		534
Intersegment revenue		1			1		3		4

Total revenue (Tax-equivalent)		349			343		1,041		966
Provision for credit losses		—			6		2		5
Noninterest expense		237			241		740		666
Income taxes (Tax-equivalent)		41			34		109		108

Segment earnings	$	71			62		190		187


Performance and other data
Economic profit	$	53			47		137		140
Risk adjusted return on capital (RAROC)		50.45	%		48.28		45.88		49.96
Economic capital, average	$	532			506		526		481
Cash overhead efficiency ratio (Tax-equivalent)		67.81	%		70.13		71.05		68.93
Lending commitments	$	6,481			5,574		6,481		5,574
Average loans, net		16,438			14,202		16,002		13,571
Average core deposits	$	13,790			13,475		14,322		13,327
FTE employees		4,492			4,816		4,492		4,816

Wealth Management Wealth Management includes private banking, personal trust, investment advisory services, financial planning and insurance brokerage services (property and casualty, employee benefits and high net worth life for wealthy individuals, their families and businesses).

Wealth Management’s earnings increased by $3 million to $190 million. Key Wealth Management trends in the first nine months of 2006 compared with the same period in 2005 included:

•

8 percent revenue growth driven by 10 percent growth in fee and other income and a 5 percent increase in net interest income.

	O		Fee and other income growth reflected increased commissions due to the May 2005 acquisition of Palmer & Cay, a commercial insurance brokerage firm, and modest growth in trust and investment management fees.

	O		Net interest income growth driven by an 18 percent increase in average loans, largely in commercial accounts and consumer mortgages, and a 7 percent increase in average core deposits.

	•		11 percent growth in noninterest expense, including costs related to the transition to a new investment management platform, the impact of Palmer & Cay, and increased employee stock compensation expense.

	•		Growth in assets under management from year-end 2005 to $69.7 billion.

In the third quarter of 2006 compared with the third quarter of 2005, revenue trends were more modest as a decline in insurance commissions related to lower renewals and business divestitures from Palmer & Cay offset growth from higher banking fees and increased trust and investment management fees from higher asset valuations.

Corporate and Investment Bank

Performance Summary


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in millions)	*2006*			2005			*2006*			2005

Income statement data
Net interest income (Tax-equivalent)	$	482			532			1,492			1,642
Fee and other income		989			1,027			3,446			2,795
Intersegment revenue		(43	)		(45	)		(122	)		(118	)

Total revenue (Tax-equivalent)		1,428			1,514			4,816			4,319
Provision for credit losses		(5	)		(3	)		(37	)		(14	)
Noninterest expense		791			808			2,556			2,252
Income taxes (Tax-equivalent)		238			263			849			773

Segment earnings	$	404			446			1,448			1,308


Performance and other data
Economic profit	$	189			264			825			784
Risk adjusted return on capital (RAROC)		22.37	%		29.64			28.56			30.50
Economic capital, average	$	6,605			5,606			6,283			5,373
Cash overhead efficiency ratio (Tax-equivalent)		55.37	%		53.35			53.08			52.14
Lending commitments	$	102,698			92,966			102,698			92,966
Average loans, net		45,705			38,813			44,125			37,740
Average core deposits	$	26,048			24,790			25,862			22,741
FTE employees		5,692			4,792			5,692			4,792

Corporate and Investment Bank Our Corporate and Investment Bank includes corporate lending, investment banking, and treasury and international trade finance.

Our Corporate and Investment Bank increased earnings 11 percent to $1.4 billion, reflecting higher principal investing gains, strong trading profits and investment banking results. Key Corporate and Investment Bank trends in the first nine months of 2006 compared with the same period in 2005 included:

•

12 percent revenue growth reflecting a 23 percent increase in fee and other income offsetting a 9 percent decline in net interest income.

	O		Net interest income declined as solid loan and deposit growth was offset by spread compression in asset-based lending, run-off in higher spread leasing assets and a decline in trading-related interest income that was offset in trading profits.

	O		The growth in fee income reflected strong investment banking results, including strength in underwriting activities, strong structured products results including the impact of the AmNet Mortgage, Inc. acquisition, the previously mentioned principal investing gains and higher trading account profits, as well as $43 million in fees related to the issuance of Wachovia corporate securities, which is eliminated in the Parent; and a $33 million gain related to the Archipelago/New York

			Stock Exchange merger. The first nine months of 2005 included a gain of $122 million from the sale of equity securities received in settlement of loans.
	O		The principal investing income included a $116 million unrealized gain in our fund portfolio recognized on the portion we retained following the sale of a minority interest in an entity holding certain of our fund investments. Additionally, realized gains on the fund portfolio were higher in the first nine months of 2006 compared with the same period in 2005.

	•		A 13 percent increase in noninterest expense due primarily to higher revenue-based compensation, strategic hiring in 2005, investment in both revenue and efficiency projects, the impact of acquisitions, including AmNet, American Property Financing, Inc., and Union Bank of California’s international correspondent banking business, and increased employee stock compensation expense.

	•		Strong core deposit growth primarily from higher commercial mortgage servicing and international correspondent banking, and increased loans primarily reflecting higher large corporate loans and the acquisition of the international correspondent banking business.

In the third quarter of 2006 compared with the third quarter of 2005, the 9 percent decline in earnings was driven by lower principal investing gains and lower equities and advisory results. Additionally, commercial mortgage securitization results were lower, including $76 million of economic hedge losses for assets recorded at the lower of cost or market, while offsetting economic gains are not recorded until the assets are sold.

Parent

Performance Summary


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in millions)	*2006*			2005			*2006*			2005

Income statement data
Net interest income (Tax-equivalent)	$	(123	)		172			(54	)		635
Fee and other income		145			129			222			351
Intersegment revenue		2			—			5			1

Total revenue (Tax-equivalent)		24			301			173			987
Provision for credit losses		(10	)		2			(17	)		(25	)
Noninterest expense		195			230			669			729
Minority interest		104			105			288			264
Income taxes (Tax-equivalent)		(209	)		(90	)		(516	)		(197	)

Segment earnings (loss)	$	(56	)		54			(251	)		216


Performance and other data
Economic profit	$	(90	)		32			(328	)		148
Risk adjusted return on capital (RAROC)		(1.15	)%		15.28			(4.62	)		18.04
Economic capital, average	$	2,918			2,890			2,807			2,818
Cash overhead efficiency ratio (Tax-equivalent)		449.86	%		43.78			224.92			41.32
Lending commitments	$	472			433			472			433
Average loans, net		21,034			11,821			22,261			11,372
Average core deposits	$	4,480			5,572			4,764			4,948
FTE employees		23,886			24,590			23,886			24,590

Parent Parent includes all asset and liability management functions, including managing our securities 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 allocated to the business segments; and the results of wind-down or divested businesses, including our HomEq Servicing business, which was divested on November 1, 2006; and the corporate and institutional trust (CIT) businesses that were sold in December 2005.

Key trends in the Parent segment in the first nine months of 2006 compared with the same period in 2005 included:

•

Lower net interest income, reflecting reduced spreads on funding the securities portfolio and growth in wholesale borrowings due to the addition of Westcorp, partially offset by growth in the securities portfolio. In addition, the contribution from hedge-related derivatives was lower.


	•		A $129 million decrease in fee and other income reflecting the impact of the divested CIT businesses and increased intercompany fees paid to the Corporate and Investment Bank that are eliminated in the Parent, while the first nine months of 2005 included a gain of $38 million on the sale of a United Kingdom asset-based lending subsidiary.

	•		Net securities gains of $29 million compared with $74 million in the year-ago period.

	•		An 8 percent decrease in noninterest expense, reflecting lower legal costs.

This segment reflects the impact of Prudential Financial’s 38 percent minority interest in Wachovia Securities Financial Holdings, LLC. Total minority interest expense, which also includes other subsidiaries, was $288 million in the first nine months of 2006 compared with $264 million in the first nine months of 2005.

In the third quarter of 2006 compared with the third quarter of 2005, the same trends drove Parent results. In addition, noninterest expense was lower reflecting lower general liability expenses.

Balance Sheet Analysis

Securities The decrease in securities available for sale from December 31, 2005, reflects the 2006 third quarter-end sale of securities to achieve our desired asset/liability profile in preparation for our merger with Golden West. Unrealized net securities losses in the first nine months of 2006 increased $566 million due to the effect of higher rates primarily affecting our fixed rate mortgage-backed securities, having recovered from higher levels of unrealized losses earlier in the year as rates decreased in the third quarter of 2006. The average duration of this portfolio increased to 3.5 years from 3.3 years due to the extension of mortgage-backed securities in the higher rate environment.

Securities Available For Sale

September 30,

December 31,

(In billions)

2006

2005

Market value

107.8

114.9

Net unrealized loss

(1.1

)

(0.5

)

Memoranda (Market value)

Residual interests

0.9

0.9

Retained bonds

Investment grade ^(a)

6.8

5.1

Other

0.2

0.1

Total

7.0

5.2


(a)		$ 6.2 billion had credit ratings of AA and above at September 30, 2006.

Included in securities available for sale at September 30, 2006, were residual interests with a market value of $913 million, which included a net unrealized gain of $301 million, and retained bonds from securitizations with a market value of $7.0 billion, which included a net unrealized loss of $3 million.

The average rate earned on securities available for sale was 5.37 percent in the first nine months of 2006 and 5.11 percent in the first nine months of 2005. The Interest Rate Risk Management section further explains our interest rate risk management practices.

Loans — On-Balance Sheet


	*2006*						2005
	*Third*		Second		First		Fourth		Third
(In millions)	*Quarter*		Quarter		Quarter		Quarter		Quarter

Commercial
Commercial, financial and agricultural	$	95,281		91,737		89,138		87,327		83,241
Real estate — construction and other		16,067		15,329		14,483		13,972		13,653
Real estate — mortgage		19,455		19,745		20,066		19,966		19,864
Lease financing		25,253		25,194		25,238		25,368		25,022
Foreign		12,677		11,680		11,535		10,221		8,888

Total commercial		168,733		163,685		160,460		156,854		150,668

Consumer
Real estate secured		100,115		98,420		98,898		94,748		80,128
Student loans		9,175		9,139		10,555		9,922		11,458
Installment loans		21,454		20,508		20,189		6,751		6,745

Total consumer		130,744		128,067		129,642		111,421		98,331

Total loans		299,477		291,752		290,102		268,275		248,999
Unearned income		8,718		8,836		9,170		9,260		9,266

Loans, net (On-balance sheet)	$	290,759		282,916		280,932		259,015		239,733

Loans — Managed Portfolio (Including on-balance sheet)


	*2006*						2005
	*Third*		Second		First		Fourth		Third
(In millions)	*Quarter*		Quarter		Quarter		Quarter		Quarter

Commercial	$	174,507		167,537		165,239		161,941		155,970
Real estate secured		116,201		115,974		114,803		110,299		106,261
Student loans		12,445		12,544		12,473		11,974		11,799
Installment loans		25,477		24,803		24,271		10,598		10,458

Total managed portfolio	$	328,630		320,858		316,786		294,812		284,488

Loans We have taken several steps to enhance loan growth with several small acquisitions and investments that we expect will strengthen our loan portfolio mix with a greater proportion of consumer loans, including auto loans through our expanded dealer financial services network, direct issuance of credit cards, and a renewed focus on mortgage loan originations through our bank branch network. In commercial lending, we have pursued risk reduction strategies in recent years to actively reduce potential problem loans and certain large corporate loans. We will continue to actively monitor loan quality and take proactive steps to reduce risk when warranted.

The 12 percent increase in net loans from year-end 2005 included 8 percent growth in commercial loans, reflecting strength in middle-market lending, commercial real estate construction, large corporate lending and international lending, partially offset by lower commercial real estate and lease financing. The 17 percent growth in consumer loans from year-end 2005 reflected the addition of $13.2 billion in auto loans from Westcorp and increased consumer real estate-secured activity. Additionally, the increase reflected movement into fixed rate products, particularly in the home equity market.

Our loan portfolio is broadly diversified by industry, concentration and geography. Additionally, the portfolio is well collateralized:

	•		Commercial loans represented 56 percent and consumer loans 44 percent of the loan portfolio at September 30, 2006.

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

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

Of our $100.1 billion consumer real estate-secured loan portfolio:

	•		73 percent is secured by a first lien.

	•		67 percent has a loan-to-value ratio of 80 percent or less.

	•		89 percent has a loan-to-value ratio of 90 percent or less.

	•		40 percent is priced on a variable rate basis.

Our managed loan portfolio grew 11 percent from year-end 2005, reflecting the growth discussed above and real estate-secured securitizations. In addition, commercial mortgage warehouse activity is now reflected in loans held for sale.

Asset Quality


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

Nonperforming assets
Nonaccrual loans	$	578			619			672			620			784
Foreclosed properties		181			99			108			100			112

Total nonperforming assets	$	759			718			780			720			896

as % of loans, net and foreclosed properties		0.26	%		0.25			0.28			0.28			0.37

Nonperforming assets in loans held for sale	$	23			23			24			32			59

Total nonperforming assets in loans and in loans held for sale	$	782			741			804			752			955

as % of loans, net, foreclosed properties and loans held for sale		0.26	%		0.25			0.28			0.28			0.37

Allowance for credit losses ^(a)
Allowance for loan losses, beginning of period	$	3,021			3,036			2,724			2,719			2,718
Balance of acquired entities at purchase date		—			—			300			—			—
Net charge-offs		(116	)		(51	)		(59	)		(51	)		(59	)
Allowance relating to loans acquired, transferred to loans held for sale or sold		(15	)		(18	)		12			(21	)		(26	)
Provision for credit losses related to loans transferred to loans held for sale or sold ^(b)		(4	)		5			—			5			12
Provision for credit losses		118			49			59			72			74

Allowance for loan losses, end of period		3,004			3,021			3,036			2,724			2,719

Reserve for unfunded lending commitments, beginning of period		165			160			158			154			158
Provision for credit losses		(6	)		5			2			4			(4	)

Reserve for unfunded lending commitments, end of period		159			165			160			158			154

Allowance for credit losses	$	3,163			3,186			3,196			2,882			2,873

Allowance for loan losses
as % of loans, net		1.03	%		1.07			1.08			1.05			1.13
as % of nonaccrual and restructured loans ^(c)		520			488			452			439			347
as % of nonperforming assets ^(c)		396			421			389			378			303
Allowance for credit losses
as % of loans, net		1.09	%		1.13			1.14			1.11			1.20

Net charge-offs	$	116			51			59			51			59
Commercial, as % of average commercial loans		0.03	%		(0.06	)		0.05			0.03			0.05
Consumer, as % of average consumer loans		0.32			0.23			0.14			0.16			0.18
Total, as % of average loans, net		0.16	%		0.08			0.09			0.09			0.10

Past due loans, 90 days and over, and nonaccrual loans ^(c)
Commercial, as a % of loans, net		0.28	%		0.28			0.32			0.30			0.43
Consumer, as a % of loans, net		0.61	%		0.64			0.62			0.72			0.71


(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 declined from year-end 2005 to 0.26 percent of loans, foreclosed properties and loans held for sale. Nonaccrual loans decreased 7 percent from year-end 2005, primarily driven by paydowns and the sale of $77 million in commercial loans. New inflows to commercial nonaccrual loans since year-end 2005 were $464 million. Impaired commercial loans were $355 million at September 30, 2006, and $392 million at December 31, 2005. Foreclosed properties increased $81 million, including $70 million relating to the purchase of a well-collateralized commercial loan.

Past Due Loans Accruing loans 90 days or more past due, excluding loans that are classified as loans held for sale, were $666 million at September 30, 2006, compared with $625 million at December 31, 2005. Of total past due loans, $89 million were commercial loans or commercial real estate loans and $577 million were consumer loans.

Net Charge-offs Annualized net charge-offs as a percentage of average net loans of 0.11 percent in the first nine months of 2006 were up slightly from the first nine months of 2005. In the first nine months of 2006, commercial net charge-offs were $10 million, compared with commercial net charge-offs of $25 million in the first nine months of 2005. Consumer net charge-offs were $216 million, up from $131 million in the first nine months of 2005, largely reflecting the addition of

Westcorp. The low level of net charge-offs reflects a continuing robust credit environment and our careful management of the inherent credit risk in our loan portfolio.

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. Provision expense rose 36 percent to $228 million, largely reflecting growth in auto and other consumer businesses. Lower commercial recoveries and higher consumer net charge-offs also influenced the 32 percent increase in the provision in the third quarter 2006 compared with the third quarter 2005.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments The allowance for loan losses increased $280 million from year-end 2005 to $3.0 billion at September 30, 2006, primarily reflecting the addition of Westcorp. The unallocated portion of the allowance decreased from year-end 2005 by $45 million primarily reflecting updated analyses of exposures to the 2005 hurricanes. The reserve for unfunded lending commitments was $159 million at September 30, 2006, and $158 million at December 31, 2005. The reserve for unfunded lending commitments relates to commercial lending activity 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. At September 30, 2006, and at year-end 2005, core business activity, which includes residential and commercial mortgages and auto loans that we originate with the intent to sell to third parties, represented substantially all loans held for sale.

In the first nine months of 2006, we sold or securitized $39.9 billion in loans out of the loans held for sale portfolio, including $19.0 billion of commercial loans and $20.9 billion of consumer loans. None of the loans sold were nonperforming. In the first nine months of 2005, we sold or securitized $21.4 billion of loans out of the loans held for sale portfolio, including $7.1 billion of commercial loans and $14.3 billion of consumer loans, primarily residential mortgages. Of these loans, $56 million were nonperforming. We also transferred $1.2 billion of auto loans to loans held for sale in connection with securitization activity.

Goodwill In connection with acquisitions, we record purchase accounting adjustments to reflect the respective fair values of the assets and liabilities of acquired entities, as well as certain exit costs related to these mergers, which have the effect of increasing goodwill. Purchase accounting adjustments are preliminary and are subject to refinement for up to one year following consummation.

For the Westcorp acquisition, we recorded preliminary fair value and exit cost purchase accounting adjustments of $341 million ($208 million after tax). In addition, we recorded dealer relationship and deposit base intangibles amounting to $405 million ($253 million after tax). Based on a purchase price of $3.8 billion and Westcorp tangible stockholders’ equity of $1.9 billion, this resulted in goodwill of $1.5 billion at September 30, 2006.

Liquidity and Capital Adequacy

Core Deposits Core deposits, which include savings, interest-bearing checking accounts, noninterest-bearing and other consumer time deposits, and deposits held in certain brokerage sweep accounts, declined slightly from year-end 2005 to $291.7 billion at September 30, 2006. Compared with the first nine months of 2005, average core deposits in the first nine months of 2006, which included $1.8 billion related to Westcorp, increased 6 percent to $291.0 billion and average low-cost core deposits, which exclude consumer certificates of deposit, increased 2 percent to $242.0 billion. Average consumer certificates of deposit rose $10.6 billion from the first nine months of 2005.

Purchased Funds Average purchased funds, which include wholesale borrowings with maturities of 12 months or less, were $95.8 billion in the first nine months of 2006 and $97.4 billion in the first nine months of 2005. Purchased funds were $90.4 billion at September 30, 2006, compared with $93.3 billion at December 31, 2005, as higher foreign deposits were partially offset by the effect of greater use of long-term debt for funding rather than short-term borrowings.

Long-term Debt Long-term debt was $86.4 billion at September 30, 2006, and $49.0 billion at December 31, 2005, reflecting the addition of $13.0 billion of Westcorp debt, the issuance of $27.7 billion of debt including the multi-currency and WITS hybrid securities noted below, and $2.9 billion of on-balance sheet securitizations. In the fourth quarter of 2006, scheduled maturities of long-term debt amount to $7.1 billion. We anticipate either extending or replacing the maturing obligations.

In July 2006, Wachovia and Wachovia Bank, National Association established a $20.0 billion Euro Medium Term Note Programme (EMTN), pursuant to which they may issue senior and subordinated debt securities. These securities are not registered with the Securities and Exchange Commission and may not be offered in the United States without applicable exemptions from registration. Pursuant to this EMTN Programme, Wachovia and Wachovia Bank, National Association issued an aggregate $7.7 billion of debt securities in the third quarter of 2006 and have available for issuance approximately $12.3 billion.

The WITS transaction included a junior subordinated note and a forward contract for the sale of noncumulative perpetual preferred stock to a trust. The trust then issued $2.5 billion of securities to investors. The junior subordinated note qualifies as tier 1 capital.

Under our current shelf registration statement filed with the Securities and Exchange Commission, we have $14.0 billion of senior or subordinated debt securities, common stock or preferred stock available for issuance. In addition, we have available for issuance up to $6.2 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 $21.1 billion of senior or subordinated notes. In the first nine months of 2006, we issued $1.5 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.

Credit Lines Wachovia Bank, National Association has a $1.9 billion committed back-up line of credit that expires in 2010. This credit facility contains a covenant that requires us to maintain a minimum level of adjusted total equity capital. We have not used this line of credit. Wachovia Investment Holdings, LLC has a $2.0 billion committed backup line of credit that expires in 2011. This credit facility has no financial covenants associated with it. We borrowed $250 million on this line in September 2006, and repaid this amount in October 2006.

Dividend and Share Activity


	Nine Months Ended
	September 30,
(In millions, except per share data)	*2006*		2005

Dividends	$	2,525		2,245
Dividends per common share	$	1.58		1.43
Common shares repurchased		75		51
Average diluted common shares outstanding		1,600		1,590

Stockholders’ Equity Stockholders’ equity increased 8 percent from year-end 2005 to $51.2 billion at September 30, 2006, including the $3.8 billion purchase of Westcorp; repurchases of 75 million common shares at a cost of $4.1 billion in connection with our share repurchase programs; and net depreciation in the securities portfolio. The higher level of share repurchases in the first nine months of 2006 compared with the first nine months of 2005 reflected

opportunistic deployment of excess capital partially related to higher earnings. At September 30, 2006, we were authorized to buy back 49 million shares of common stock. Our 2005 Form 10-K has additional information related to share repurchases.

We adopted SFAS No. 156, Accounting for Servicing of Financial Assets, effective January 1, 2006, which is discussed further in Notes to Consolidated Financial Statements. Accordingly, we recorded a cumulative effect adjustment to beginning retained earnings of $64 million ($41 million after tax.)

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 September 30, 2006, our subsidiaries had $10.2 billion available for dividends that could be paid without prior regulatory approval. Our subsidiaries paid $2.5 billion in dividends to the parent company in the first nine months of 2006.

Regulatory Capital Our capital ratios were above regulatory minimums in the first nine months of 2006 and we continued to be classified as well capitalized. The tier 1 capital ratio increased 24 basis points from December 31, 2005, to 7.74 percent at September 30, 2006, driven primarily by the issuance of securities noted above and a benefit resulting from the purchase of credit protection from a securitization trust on a portion of $9.8 billion of consumer real estate-secured loans, offset by additional risk-weighted assets. Our total capital ratio was 11.47 percent and our leverage ratio was 6.60 percent at September 30, 2006, and 10.82 percent and 6.12 percent, respectively, at December 31, 2005.

Summary of Off-Balance Sheet Exposures


	*September 30, 2006*				December 31, 2005
	*Carrying*				Carrying
(In millions)	*Amount*		*Exposure*		Amount		Exposure

Guarantees
Securities and other lending indemnifications	$	—		54,608		—		62,597
Standby letters of credit		113		35,902		108		35,568
Liquidity agreements		11		26,495		8		27,193
Loans sold with recourse		63		8,446		47		9,322
Residual value guarantees		—		1,129		—		1,109

Total guarantees	$	187		126,580		163		135,789

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. Retained interests from securitizations recorded as either available for sale securities, trading account assets or loans amounted to $8.3 billion at September 30, 2006, and $6.4 billion at December 31, 2005.

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 nine months of 2006 was $30 million. The total 1-day VAR was

$18 million at both September 30, 2006, and December 31, 2005, and primarily related to interest rate risk and equity risk. The high, low and average VARs in the first nine months of 2006 were $27 million, $13 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 net interest income we earn on loans, securities and other earning assets. The following discussion explains how we oversee the interest rate risk management process and describes the actions we take to protect earnings from interest rate risk.

A balance sheet is considered asset sensitive when its assets (loans and securities) reprice faster or to a greater extent than liabilities (deposits and borrowings). An asset-sensitive balance sheet will produce more net interest income when interest rates rise and less net interest income when interest rates decline. Historically, our large and relatively rate-insensitive deposit base has funded a portfolio of primarily floating rate commercial and consumer loans. This mix naturally creates a highly asset-sensitive balance sheet. 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 July 2007 federal funds rate ranging from 2.94 percent to 6.94 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 treasury note rate and 30-year treasury note rate 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 yield curve implicit in the “market forward rate” scenario. In the first nine months of 2004, the threat of rising rates, but uncertain timing, kept the yield 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, 2005 and the first nine months of 2006. At September 30, 2006, the spread between the 10-year treasury note rate and the federal funds rate was inverted at a negative 68 basis points, which is considerably different from the long-term average spread of

a positive 120 basis points. While we still believe further inversion 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 inversion has somewhat subsided.

Considering the balance of risks for 2006, we will focus primarily on managing the value created through our expanded deposit base as we protect the net interest margin against the pressures of rising short-term rates, and relative to 2005, a flatter yield 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 more fixed rate loans were added to our loan portfolio, we would likely allow existing discretionary investments to mature or to be liquidated. If more variable rate loans were added to our loan portfolio, we would likely allow fixed rate securities to mature or to be liquidated, and then add new derivatives that, in effect, would convert the incremental variable rate loans to fixed rate loans. For example, Golden West option ARMs, despite being a monthly floating rate product, reprice on an index that generally lags changes in short-term rates. A portion of these option ARMs are funded with short-term floating rate notes, which together create a profile that is liability sensitive as measured under our earnings sensitivity analysis. Therefore, prior to consummation of the Golden West merger, we reduced the size of our fixed rate exposure in residential mortgage-backed securities and commercial mortgage-backed securities in order to help achieve the desired interest rate risk profile for the combined company.

Earnings Sensitivity The Policy Period Sensitivity Measurement table provides a summary of the combination of Wachovia and Golden West interest rate sensitivity measurements.

Policy Period

Actual

Implied

Sensitivity Measurement

Fed Funds

Percent

Rate at

Earnings

August 31, 2006

July 31, 2007

Sensitivity

Market Forward Rate Scenarios ^(a)

5.25

4.94

—

High Rate Composite

6.94

(1.90

)

Low Rate

2.94

3.30


(a)		Assumes base federal funds rate mirrors market expectations.

Our model’s forward rate expectations imply a high probability of 25 basis points easing for the federal funds target rate by the end of the policy period in July 2007. If these expectations prove to be correct, the spread between the 10-year treasury note rate and the federal funds rate would compress from a negative 37 basis points of slope in August 2006 to a slightly less inverted yield curve of negative 23 basis points of slope by July 2007. The current market expectations, therefore, do not reflect a yield 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 yield 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 September 2006, the combined company’s earnings simulation model indicated earnings would be negatively affected by 1.9 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 the longer-term 10-year treasury note and 30-year treasury note rates decline by less than 200 basis points relative to the “market forward rate” scenario. The model indicates earnings would be positively affected by 3.3 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. As new monthly outlooks become available, we formulate strategies aimed at protecting earnings from the potential negative effects of changes in interest rates.

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.

Pension and Other Postretirement Plans In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, which amends several existing Statements that address employers’ accounting and reporting for defined benefit pension and other postretirement plans and represents the initial phase of a comprehensive project on employers’ accounting for these plans. SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan, measured solely as the difference between the fair value of plan assets and the benefit obligation, as an asset or liability on the balance sheet. Unrecognized actuarial gains and losses and unrecognized prior service costs, which have previously been recorded as part of the postretirement asset or liability, are to be included as a component of accumulated other comprehensive income. Actuarial gains and losses and prior service costs and credits that arise during a period will be included in other comprehensive income to the extent they are not included in net periodic pension cost (a component of salaries and employee benefits expense for us). Upon implementation of SFAS 158, we will be required to record a reduction of accumulated other comprehensive income, which is a component of shareholders’ equity, for the after-tax amounts of unrecognized actuarial losses and prior service costs at December 31, 2006. At December 31, 2005, this amounted to $1.9 billion before taxes, or $1.2 billion after tax. SFAS 158 also requires that employers use a plan measurement date that is the same as its fiscal year-end. We have historically used a measurement date of September 30, and will be required to change to a December 31 measurement date no later than December 31, 2008. We will remain well capitalized for regulatory capital purposes following the reduction to stockholders’ equity for these plans. Information regarding our pension and other postretirement plans can be found in the Notes to Consolidated Financial Statements in our 2005 Annual Report on Form 10-K.

Income Taxes In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (FIN 48) which clarifies the criteria for recognition and measurement of income tax benefits in accordance with SFAS No. 109, Accounting for Income Taxes. Under FIN 48, evaluation of tax benefits is a two-step process. First, tax benefits can be recognized in financial statements for a tax position only if it is considered “more likely than not,” as defined in SFAS No. 5, Accounting for Contingencies, of being sustained on audit based solely on the technical merits of the tax position. Second, if the recognition criteria are met, the amount of tax benefits to be recognized is measured based on the largest benefit that is more than 50 percent likely to be realized upon ultimate resolution of the tax position. FIN 48 has an effective date of January 1, 2007, and any amounts to be recorded upon implementation will result in a one-time charge to be recorded as a cumulative effect of a change in accounting principle through an adjustment of beginning retained earnings. As noted below, we are still assessing the impact of FIN 48 for Sale-In, Lease-Out transactions (SILOs). We do not expect the implementation of FIN 48 for other tax benefits to have a material impact on our consolidated financial position or results of operations.

Leveraged Lease Accounting In July 2006, the FASB issued FASB Staff Position FAS 13-2, Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction, (FSP 13-2). FSP 13-2 amends SFAS 13 to provide that changes affecting the timing of cash flows but not the total net income under a leveraged lease trigger a recalculation of the net investment in the lease. Currently, SFAS No. 13, Accounting for Leases, 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. Under FSP 13-2, recalculations affecting existing leveraged leases will result in a one-time noncash charge to be recorded as a cumulative effect of a change in

accounting principle through a reduction of beginning retained earnings on the date of adoption, which is January 1, 2007. Amounts, which in the aggregate approximate the amount of the charge initially recorded, will be recognized as income over the remaining terms of the affected leases.

We have two primary classes of leveraged lease transactions that are affected by FSP 13-2: Lease-In, Lease-Out transactions (LILOs) and a second group of transactions that the Internal Revenue Service (IRS) broadly refers to as 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 with the IRS led to a change in the timing of cash flows under the lease transactions and FSP 13-2 requires a recalculation of the leases. This recalculation will result in a one-time noncash charge to beginning retained earnings. We believe the one-time noncash reduction to beginning retained earnings under FSP 13-2 related to LILOs will be approximately $700 million after-tax.

FSP 13-2 also affects our SILOs. The IRS has announced its intention to challenge the industry-wide tax treatment of SILOs. While we believe our tax treatment of SILOs is consistent with well-established tax law and that it is more likely than not that we would prevail if litigation were to become necessary, it is possible that, upon resolution of a potential dispute with the IRS, we may not realize some of the tax benefits originally recorded. Because of this possibility, the combination of FSP 13-2 and FIN 48 requires that we (i) assess our ability to recognize tax benefits associated with SILOs, (ii) estimate the amount of tax benefits to recognize, and (iii) recalculate the net investment in the leases. We have concluded for SILOs that we meet the recognition threshold in FIN 48 and, accordingly, it is appropriate to continue to recognize tax benefits associated with SILOs. However, we are still assessing the amount of tax benefits that will continue to be recognized and used in recalculation of the leases, and thus we are unable to estimate the amount of any reduction to retained earnings from recalculation of the leases.

The amount of the reduction to beginning retained earnings from the affected leases will be recognized as income over the remaining terms of the affected leases, generally 35 to 40 years. We believe that the amounts to be recognized as income over the remaining terms of the affected leases would not have a material impact to our earnings per share in future periods. We will remain well capitalized for regulatory capital purposes following the reduction to retained earnings relating to the affected leases.

Quantifying Financial Statement Misstatements In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 requires that both an income statement approach and a balance sheet approach be used when evaluating whether an error is material to an entity’s financial statements, based on all relevant quantitative and qualitative factors. The SEC staff issued SAB 108 to address what they identified as diversity in practice whereby entities were using either an income statement approach or a balance sheet approach, but not both. SAB 108 is effective no later than December 31, 2006. We have consistently used the income statement approach in prior periods. Upon implementation of SAB 108, we will record a cumulative effect adjustment to beginning retained earnings for any misstatements we previously identified as immaterial under the income statement approach, but that we identify as material when considering both the income statement and balance sheet approaches. We are currently assessing the impact of SAB 108 on our consolidated financial position and results of operations.

Financial Instruments The FASB has an ongoing project addressing the accounting for the transfer and retention of financial instruments. As part of this project, the FASB issued two statements in the first nine months of 2006, SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, which

is discussed below, and SFAS No. 156, which we implemented effective January 1, 2006, and is discussed in Notes to Consolidated Financial Statements. The FASB has also issued an exposure draft that would amend SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. This amendment would revise or clarify the criteria for derecognition of financial assets after a transfer. In addition, the FASB initiated a project regarding securitization structures that use a qualifying special purpose entity (QSPE) and the related servicing activities. The FASB is considering the need for clarifying guidance, which may result in changes to the structure of and/or the accounting for these transactions. This project was recently combined with redeliberations on the SFAS 140 amendment. We cannot predict with certainty whether any guidance will be issued or what the transition provisions for implementing the guidance will be from these redeliberations.

Hybrid Financial Instruments SFAS No. 155 amends SFAS No. 133, Accounting for Derivatives and Hedging Activity, and SFAS No. 140. Hybrid financial instruments contain an embedded derivative within a single instrument, either a debt or equity host contract. SFAS 155 permits entities the option to record certain hybrid financial instruments at fair value as individual financial instruments, with corresponding changes in value recorded in earnings. Prior to this amendment, certain hybrid financial instruments were required to be separated into two instruments, the derivative and host, and generally only the derivative was recorded at fair value. SFAS 155 also removes an existing exception for evaluating certain interests in securitized assets for embedded derivatives. SFAS 155 is effective for all financial instruments acquired or issued after January 1, 2007. Additionally, SFAS 155 provides a one-time opportunity to apply the fair value election to hybrid financial instruments existing at the date of implementation. For any instruments included in this one-time transition, the difference between the carrying amount of the derivative and host component of the existing hybrid financial instruments and the fair value of the single financial instrument will be recorded as a cumulative effect adjustment to beginning retained earnings. We are currently assessing the impact of SFAS 155 on our consolidated financial position and results of operations.

Fair Value Measurement In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement, which establishes a framework for measuring fair value in U.S. generally accepted accounting principles, expands disclosures about fair value measurement, and provides new income recognition criteria for certain derivative contracts. SFAS 157 does not establish any new fair value measurements itself, but applies to other accounting standards that require the use of fair value for recognition or disclosure. In particular, the framework in SFAS 157 will be required for financial instruments for which fair value is elected, such as under SFAS 155 discussed above or under the fair value option proposal currently being deliberated by the FASB. SFAS 157 eliminates the income deferral requirements of Emerging Issues Task Force (EITF) Issue No. 02-03, Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities, to allow full recognition of income on affected derivatives at initiation of the derivative contract. Any remaining amounts that had been previously deferred for these derivatives are to be recorded as a cumulative effect of a change in accounting principle through an adjustment of beginning retained earnings on the date of adoption. Application of the SFAS 157 framework may also lead to changes in the measurement of fair value in our financial statements. SFAS 157 is effective January 1, 2008, with earlier adoption allowed on January 1, 2007, provided financial statements for any period in 2007 have not yet been issued. We are currently assessing the impact of SFAS 157 on our consolidated financial position and results of operations, and we have not determined our date of implementation.

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 2005 Annual Report on Form 10-K.

In September 2006, regulatory agencies published a draft Notice of Proposed Rulemaking for Basel II, a new advanced risk-based regulatory capital framework. Under the proposed rules we must develop an implementation plan that begins no later than 36 months after the effective date of the rule. Regulatory efforts in the U.S. for Basel II have experienced timing delays, and the date of a final rule is unknown. The regulatory agencies are currently proposing to make 2008 the first possible year for a bank to conduct its parallel run for measuring regulatory capital under the new regulatory capital rules and the existing general risk-based capital rules. They are also proposing 2009-2011 as the first possible years for the transitional floor periods. The necessary project management infrastructure and funding have been established to ensure we will fully comply with the new regulations.

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 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, discontinued operations 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 and our business and performance trends, and they facilitate 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 comparison of results for ongoing business operations, and it is on this basis that our management internally assesses our performance. Those 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 section and the Business Segments footnote to Notes to Consolidated Financial Statements. 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, discontinued operations 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*					*Nine Months Ended*
	*September 30,*					*September 30,*
(In millions, except per share data)	*2006*			2005		*2006*		2005

Net interest income (GAAP)	$	3,541			3,387		10,672		10,158
Tax-equivalent adjustment		37			53		120		167

Net interest income (Tax-equivalent)	$	3,578			3,440		10,792		10,325

DIVIDEND PAYOUT RATIOS ON COMMON SHARES
Diluted earnings per common share (GAAP)	$	1.17			1.06		3.43		3.10
Other intangible amortization		0.04			0.04		0.11		0.13
Merger-related and restructuring expenses		0.02			0.03		0.06		0.09

Earnings per share (a)	$	1.23			1.13		3.60		3.32

Dividends paid per common share	$	0.56			0.51		1.58		1.43
Dividend payout ratios (GAAP) (b)		47.86	%		48.11		46.06		46.13
Dividend payout ratios (a) (b)		45.53	%		45.13		43.89		43.07

(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.

Table 2
SELECTED STATISTICAL DATA


	*2006*							2005
	*Third*			Second		First		Fourth		Third
(Dollars in millions, except per share data)	*Quarter*			Quarter		Quarter		Quarter		Quarter


PROFITABILITY
Return on average common stockholders’ equity		14.85	%		15.41		14.62		14.60		13.95
Net interest margin (a)		3.03			3.18		3.21		3.25		3.18
Fee and other income as % of total revenue		49.20			49.37		49.84		45.55		48.63
Effective income tax rate		31.71	%		33.05		33.84		34.10		32.21

ASSET QUALITY
Allowance for loan losses as % of loans, net		1.03	%		1.07		1.08		1.05		1.13
Allowance for loan losses as % of nonperforming assets (b)		396			421		389		378		303
Allowance for credit losses as % of loans, net		1.09			1.13		1.14		1.11		1.20
Net charge-offs as % of average loans, net		0.16			0.08		0.09		0.09		0.10
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		0.26	%		0.25		0.28		0.28		0.37

CAPITAL ADEQUACY
Tier 1 capital ratio		7.74	%		7.81		7.87		7.50		7.42
Total capital ratio		11.47			11.42		11.45		10.82		10.79
Leverage		6.60	%		6.57		6.86		6.12		5.96

OTHER DATA
FTE employees		97,060			97,316		97,134		93,980		92,907
Total financial centers/brokerage offices		3,870			3,847		3,889		3,850		3,840
ATMs		5,163			5,134		5,179		5,119		5,119
Actual common shares (In millions)		1,581			1,589		1,608		1,557		1,553
Common stock price	$	55.80			54.08		56.05		52.86		47.59
Market capitalization	$	88,231			85,960		90,156		82,291		73,930

(a) Tax-equivalent.

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

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


	*2006*								2005
	*Third*			Second		First			Fourth			Third
(In millions, except per share data)	*Quarter*			Quarter		Quarter			Quarter			Quarter

SUMMARIES OF INCOME
Interest income	$	7,784			7,404		6,707			6,490			6,044
Tax-equivalent adjustment		37			34		49			52			53

Interest income (a)		7,821			7,438		6,756			6,542			6,097
Interest expense		4,243			3,763		3,217			2,967			2,657

Net interest income (a)		3,578			3,675		3,539			3,575			3,440
Provision for credit losses		108			59		61			81			82

Net interest income after provision for credit losses (a)		3,470			3,616		3,478			3,494			3,358
Securities gains (losses)		94			25		(48	)		(74	)		29
Fee and other income		3,371			3,558		3,565			3,063			3,229
Merger-related and restructuring expenses		38			24		68			58			83
Other noninterest expense		4,007			4,237		4,171			4,125			3,921
Minority interest in income of consolidated subsidiaries		104			90		95			103			104

Income from continuing operations before income taxes (a)		2,786			2,848		2,661			2,197			2,508
Income taxes		872			929		884			652			790
Tax-equivalent adjustment		37			34		49			52			53

Income from continuing operations		1,877			1,885		1,728			1,493			1,665
Discontinued operations, net of income taxes		—			—		—			214			—

Net income	$	1,877			1,885		1,728			1,707			1,665

PER COMMON SHARE DATA
Basic earnings
Income from continuing operations	$	1.19			1.19		1.11			0.97			1.07
Net income		1.19			1.19		1.11			1.11			1.07
Diluted earnings
Income from continuing operations		1.17			1.17		1.09			0.95			1.06
Net income		1.17			1.17		1.09			1.09			1.06
Cash dividends	$	0.56			0.51		0.51			0.51			0.51
Average common shares — Basic		1,573			1,585		1,555			1,541			1,549
Average common shares — Diluted		1,600			1,613		1,586			1,570			1,575
Average common stockholders’ equity
Quarter-to-date	$	50,143			49,063		47,926			46,407			47,328
Year-to-date		49,052			48,498		47,926			47,019			47,225
Book value per common share		32.37			30.75		30.95			30.55			30.10
Common stock price
High		56.67			59.85		57.69			55.13			51.34
Low		52.40			52.03		51.09			46.49			47.23
Period-end	$	55.80			54.08		56.05			52.86			47.59
To earnings ratio (b)		12.35	X		12.26		13.10			12.59			11.72
To book value		172	%		176		181			173			158
BALANCE SHEET DATA
Assets	$	559,922			553,614		541,842			520,755			532,381
Long-term debt	$	86,419			74,627		70,218			48,971			45,846

(a) Tax-equivalent.

(b) Based on diluted earnings per common share.

Table 5
BUSINESS SEGMENTS (a)


	*2006*							2005
	*Third*			Second		First		Fourth		Third
(Dollars in millions)	*Quarter*			Quarter		Quarter		Quarter		Quarter

GENERAL BANK COMBINED (b)
Net interest income (c)	$	2,823			2,786		2,538		2,469		2,379
Fee and other income		902			857		872		746		760
Intersegment revenue		48			48		43		54		53

Total revenue (c)		3,773			3,691		3,453		3,269		3,192
Provision for credit losses		123			95		62		75		77
Noninterest expense		1,689			1,752		1,666		1,661		1,575
Income taxes		704			663		619		551		555
Tax-equivalent adjustment		11			10		11		12		10

Segment earnings	$	1,246			1,171		1,095		970		975

Economic profit	$	981			894		851		744		749
Risk adjusted return on capital		56.88	%		54.02		57.63		52.70		53.26
Economic capital, average	$	8,476			8,340		7,401		7,072		7,038
Cash overhead efficiency ratio (c)		44.75	%		47.47		48.26		50.82		49.33
Lending commitments	$	128,380			121,181		115,788		111,202		106,570
Average loans, net		197,138			192,552		178,235		168,841		163,752
Average core deposits	$	216,795			214,750		211,153		208,112		203,104
FTE employees		45,687			45,406		45,349		42,022		41,399

COMMERCIAL
Net interest income (c)	$	1,097			1,074		875		822		782
Fee and other income		125			117		114		103		107
Intersegment revenue		36			35		30		44		40

Total revenue (c)		1,258			1,226		1,019		969		929
Provision for credit losses		76			57		22		21		22
Noninterest expense		376			395		358		326		319
Income taxes		284			274		221		217		205
Tax-equivalent adjustment		10			10		11		12		10

Segment earnings	$	512			490		407		393		373

Economic profit	$	336			307		252		253		234
Risk adjusted return on capital		37.20	%		35.97		36.32		38.21		36.24
Economic capital, average	$	5,089			4,943		4,029		3,694		3,676
Cash overhead efficiency ratio (c)		29.86	%		32.31		35.08		33.67		34.30
Average loans, net	$	103,835			101,322		89,051		81,974		79,348
Average core deposits	$	47,042			46,722		47,612		48,155		46,186

RETAIL AND SMALL BUSINESS
Net interest income (c)	$	1,726			1,712		1,663		1,647		1,597
Fee and other income		777			740		758		643		653
Intersegment revenue		12			13		13		10		13

Total revenue (c)		2,515			2,465		2,434		2,300		2,263
Provision for credit losses		47			38		40		54		55
Noninterest expense		1,313			1,357		1,308		1,335		1,256
Income taxes		420			389		398		334		350
Tax-equivalent adjustment		1			—		—		—		—

Segment earnings	$	734			681		688		577		602

Economic profit	$	645			587		599		491		515
Risk adjusted return on capital		86.45	%		80.28		83.08		68.54		71.87
Economic capital, average	$	3,387			3,397		3,372		3,378		3,362
Cash overhead efficiency ratio (c)		52.19	%		55.01		53.78		58.02		55.51
Average loans, net	$	93,303			91,230		89,184		86,867		84,404
Average core deposits	$	169,753			168,028		163,541		159,957		156,918


(a)		Certain amounts presented in this Table 5 in periods prior to the third quarter of 2006 have been reclassified to conform to the presentation in the third quarter of 2006.

(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)

Table 5
BUSINESS SEGMENTS


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(Dollars in millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	247			259			250			234			211
Fee and other income		1,230			1,222			1,227			1,165			1,146
Intersegment revenue		(8	)		(9	)		(8	)		(7	)		(9	)

Total revenue (b)		1,469			1,472			1,469			1,392			1,348
Provision for credit losses		—			—			—			—			—
Noninterest expense		1,095			1,116			1,132			1,107			1,067
Income taxes		137			129			123			105			101
Tax-equivalent adjustment		—			1			—			—			1

Segment earnings	$	237			226			214			180			179

Economic profit	$	194			184			171			138			137
Risk adjusted return on capital		61.27	%		58.43			54.60			46.72			47.88
Economic capital, average	$	1,534			1,556			1,587			1,530			1,476
Cash overhead efficiency ratio (b)		74.59	%		75.75			77.09			79.55			79.13
Lending commitments	$	263			250			237			208			184
Average loans, net		795			616			462			389			372
Average core deposits	$	30,114			31,827			33,583			33,348			33,807
FTE employees		17,303			17,212			17,107			17,295			17,310
Assets under management	$	250,075			237,270			238,305			229,631			233,114

ASSET MANAGEMENT
Net interest income (b)	$	3			2			2			3			2
Fee and other income		242			231			217			216			211
Intersegment revenue		—			(1	)		—			—			—

Total revenue (b)		245			232			219			219			213
Provision for credit losses		—			—			—			—			—
Noninterest expense		197			190			180			200			179
Income taxes		18			15			14			8			13
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings	$	30			27			25			11			21

Economic profit	$	23			21			19			4			16
Risk adjusted return on capital		49.49	%		48.15			46.78			19.04			42.07
Economic capital, average	$	236			225			218			225			203
Cash overhead efficiency ratio (b)		81.04	%		81.65			81.96			92.18			84.05
Average loans, net	$	25			13			28			13			18
Average core deposits	$	248			245			258			220			214


(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)

Table 5
BUSINESS SEGMENTS


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(Dollars in millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

RETAIL BROKERAGE SERVICES
Net interest income (b)	$	244			256			248			231			209
Fee and other income		990			994			1,013			952			937
Intersegment revenue		(7	)		(8	)		(8	)		(7	)		(8	)

Total revenue (b)		1,227			1,242			1,253			1,176			1,138
Provision for credit losses		—			—			—			—			—
Noninterest expense		902			931			957			912			892
Income taxes		120			112			108			97			88
Tax-equivalent adjustment		—			1			—			—			1

Segment earnings	$	205			198			188			167			157

Economic profit	$	169			162			151			132			120
Risk adjusted return on capital		62.98	%		59.80			55.51			51.06			48.38
Economic capital, average	$	1,298			1,331			1,369			1,305			1,273
Cash overhead efficiency ratio (b)		73.52	%		74.86			76.44			77.44			78.44
Average loans, net	$	770			603			434			376			354
Average core deposits	$	29,866			31,582			33,325			33,128			33,593

OTHER
Net interest income (b)	$	—			1			—			—			—
Fee and other income		(2	)		(3	)		(3	)		(3	)		(2	)
Intersegment revenue		(1	)		—			—			—			(1	)

Total revenue (b)		(3	)		(2	)		(3	)		(3	)		(3	)
Provision for credit losses		—			—			—			—			—
Noninterest expense		(4	)		(5	)		(5	)		(5	)		(4	)
Income taxes		(1	)		2			1			—			—
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings	$	2			1			1			2			1

Economic profit	$	2			1			1			2			1
Risk adjusted return on capital		—	%		—			—			—			—
Economic capital, average	$	—			—			—			—			—
Cash overhead efficiency ratio (b)		—	%		—			—			—			—
Average loans, net	$	—			—			—			—			—
Average core deposits	$	—			—			—			—			—

(Continued)

Table 5
BUSINESS SEGMENTS


	*2006*							2005
	*Third*			Second		First		Fourth		Third
(Dollars in millions)	*Quarter*			Quarter		Quarter		Quarter		Quarter

WEALTH MANAGEMENT
Net interest income (a)	$	149			151		151		153		146
Fee and other income		199			197		191		193		196
Intersegment revenue		1			1		1		2		1

Total revenue (a)		349			349		343		348		343
Provision for credit losses		—			2		—		1		6
Noninterest expense		237			252		251		257		241
Income taxes		41			34		34		33		34
Tax-equivalent adjustment		—			—		—		—		—

Segment earnings	$	71			61		58		57		62

Economic profit	$	53			43		41		40		47
Risk adjusted return on capital		50.45	%		44.08		42.96		42.14		48.28
Economic capital, average	$	532			528		518		510		506
Cash overhead efficiency ratio (a)		67.81	%		72.20		73.18		73.79		70.13
Lending commitments	$	6,481			6,285		6,229		5,840		5,574
Average loans, net		16,438			15,986		15,571		14,887		14,202
Average core deposits	$	13,790			14,355		14,832		14,365		13,475
FTE employees		4,492			4,732		4,771		4,808		4,816


(a)		Tax-equivalent.

(Continued)

Table 5
BUSINESS SEGMENTS


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(Dollars in millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	482			507			503			588			532
Fee and other income		989			1,215			1,242			901			1,027
Intersegment revenue		(43	)		(42	)		(37	)		(51	)		(45	)

Total revenue (b)		1,428			1,680			1,708			1,438			1,514
Provision for credit losses		(5	)		(33	)		1			(13	)		(3	)
Noninterest expense		791			878			887			784			808
Income taxes		229			300			280			226			242
Tax-equivalent adjustment		9			9			22			23			21

Segment earnings	$	404			526			518			418			446

Economic profit	$	189			303			333			228			264
Risk adjusted return on capital		22.37	%		30.15			33.92			27.10			29.64
Economic capital, average	$	6,605			6,352			5,883			5,628			5,606
Cash overhead efficiency ratio (b)		55.37	%		52.30			51.92			54.54			53.35
Lending commitments	$	102,698			106,105			103,812			103,079			92,966
Average loans, net		45,705			43,728			42,911			41,541			38,813
Average core deposits	$	26,048			26,174			25,357			25,903			24,790
FTE employees		5,692			5,879			5,659			5,789			4,792

CORPORATE LENDING
Net interest income (b)	$	183			205			190			211			215
Fee and other income		114			113			162			109			111
Intersegment revenue		8			7			7			7			6

Total revenue (b)		305			325			359			327			332
Provision for credit losses		(5	)		(33	)		1			(25	)		(3	)
Noninterest expense		97			110			108			96			116
Income taxes		82			94			95			99			82
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings	$	131			154			155			157			137

Economic profit	$	5			15			48			36			29
Risk adjusted return on capital		11.60	%		12.68			16.93			15.66			14.67
Economic capital, average	$	3,666			3,589			3,260			3,101			3,113
Cash overhead efficiency ratio (b)		31.88	%		33.76			30.18			29.64			34.56
Average loans, net	$	31,819			31,295			30,761			30,388			29,440
Average core deposits	$	148			136			156			230			358


(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)

Table 5
BUSINESS SEGMENTS


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(Dollars in millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

TREASURY AND INTERNATIONAL TRADE FINANCE
Net interest income (b)	$	96			97			90			93			89
Fee and other income		198			199			191			183			185
Intersegment revenue		(33	)		(32	)		(30	)		(30	)		(29	)

Total revenue (b)		261			264			251			246			245
Provision for credit losses		—			—			—			12			—
Noninterest expense		163			176			172			171			168
Income taxes		35			32			29			23			29
Tax-equivalent adjustment		—			—			—			—			—

Segment earnings	$	63			56			50			40			48

Economic profit	$	51			45			38			34			37
Risk adjusted return on capital		71.80	%		64.13			54.01			46.53			58.28
Economic capital, average	$	338			333			362			382			314
Cash overhead efficiency ratio (b)		61.97	%		66.95			68.39			69.58			69.10
Average loans, net	$	7,793			7,273			7,116			6,320			5,610
Average core deposits	$	17,426			16,812			16,251			16,520			15,603

INVESTMENT BANKING
Net interest income (b)	$	203			205			223			284			228
Fee and other income		677			903			889			609			731
Intersegment revenue		(18	)		(17	)		(14	)		(28	)		(22	)

Total revenue (b)		862			1,091			1,098			865			937
Provision for credit losses		—			—			—			—			—
Noninterest expense		531			592			607			517			524
Income taxes		112			174			156			104			131
Tax-equivalent adjustment		9			9			22			23			21

Segment earnings	$	210			316			313			221			261

Economic profit	$	133			243			247			158			198
Risk adjusted return on capital		31.13	%		51.29			55.20			40.17			46.91
Economic capital, average	$	2,601			2,430			2,261			2,145			2,179
Cash overhead efficiency ratio (b)		61.64	%		54.31			55.24			59.66			55.92
Average loans, net	$	6,093			5,160			5,034			4,833			3,763
Average core deposits	$	8,474			9,226			8,950			9,153			8,829

(Continued)

Table 5
BUSINESS SEGMENTS


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(Dollars in millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

PARENT
Net interest income (a)	$	(123	)		(28	)		97			131			172
Fee and other income		145			92			(15	)		(16	)		129
Intersegment revenue		2			2			1			2			—

Total revenue (a)		24			66			83			117			301
Provision for credit losses		(10	)		(5	)		(2	)		18			2
Noninterest expense		195			239			235			316			230
Minority interest		104			89			95			103			105
Income tax benefits		(226	)		(187	)		(150	)		(242	)		(111	)
Tax-equivalent adjustment		17			14			16			17			21

Segment earnings (loss)	$	(56	)		(84	)		(111	)		(95	)		54

Economic profit	$	(90	)		(105	)		(133	)		(117	)		32
Risk adjusted return on capital		(1.15)	%		(4.09	)		(9.07	)		(4.68	)		15.28
Economic capital, average	$	2,918			2,828			2,674			2,948			2,890
Cash overhead efficiency ratio (a)		449.86	%		212.25			172.20			188.44			43.78
Lending commitments	$	472			473			516			508			433
Average loans, net		21,034			22,383			23,395			11,824			11,821
Average core deposits	$	4,480			4,532			5,289			5,774			5,572
FTE employees		23,886			24,087			24,248			24,066			24,590


(a)		Tax-equivalent.

(Continued)

Table 5
BUSINESS SEGMENTS

Three Months Ended September 30, 2006

Net Merger-

Corporate

Related

and

General

Capital

Wealth

Investment

Restructuring

(Dollars in millions)

Bank

Management

Bank

Parent

Expenses (b)

Total

CONSOLIDATED

Net interest income (a)

2,823

247

149

482

(123

)

(37

)

3,541

Fee and other income

902

1,230

199

989

145

—

3,465

Intersegment revenue

)

(43

)

—

Total revenue (a)

3,773

1,469

349

1,428

(37

)

7,006

Provision for credit losses

123

—

)

(10

)

—

108

Noninterest expense

1,689

1,095

237

791

195

4,045

Minority interest

—

104

—

104

Income taxes (benefits)

704

137

229

(226

)

(13

)

872

Tax-equivalent adjustment

—

(37

)

—

Net income (loss)

1,246

237

404

(56

)

(25

)

1,877

Economic profit

981

194

189

(90

)

—

1,327

Risk adjusted return on capital

56.88

61.27

50.45

22.37

(1.15

)

—

37.25

Economic capital, average

8,476

1,534

532

6,605

2,918

—

20,065

Cash overhead efficiency ratio (a)

44.75

74.59

67.81

55.37

449.86

—

55.60

Lending commitments

128,380

263

6,481

102,698

472

—

238,294

Average loans, net

197,138

795

16,438

45,705

21,034

—

281,110

Average core deposits

216,795

30,114

13,790

26,048

4,480

—

291,227

FTE employees

45,687

17,303

4,492

5,692

23,886

—

97,060


	Three Months Ended September 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)	$	2,379			211			146		532			172			(53	)		3,387
Fee and other income		760			1,146			196		1,027			129			—			3,258
Intersegment revenue		53			(9	)		1		(45	)		—			—			—

Total revenue (a)		3,192			1,348			343		1,514			301			(53	)		6,645
Provision for credit losses		77			—			6		(3	)		2			—			82
Noninterest expense		1,575			1,067			241		808			230			83			4,004
Minority interest		—			—			—		—			105			(1	)		104
Income taxes (benefits)		555			101			34		242			(111	)		(31	)		790
Tax-equivalent adjustment		10			1			—		21			21			(53	)		—

Net income	$	975			179			62		446			54			(51	)		1,665

Economic profit	$	749			137			47		264			32			—			1,229
Risk adjusted return on capital		53.26	%		47.88			48.28		29.64			15.28			—			38.84
Economic capital, average	$	7,038			1,476			506		5,606			2,890			—			17,516
Cash overhead efficiency ratio (a)		49.33	%		79.13			70.13		53.35			43.78			—			57.06
Lending commitments	$	106,570			184			5,574		92,966			433			—			205,727
Average loans, net		163,752			372			14,202		38,813			11,821			—			228,960
Average core deposits	$	203,104			33,807			13,475		24,790			5,572			—			280,748
FTE employees		41,399			17,310			4,816		4,792			24,590			—			92,907


a)		Tax-equivalent.

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

(Continued)

Table 5
BUSINESS SEGMENTS


	*Nine Months Ended*
	*September 30,*
(Dollars in millions)	*2006*			2005

GENERAL BANK COMBINED (a)
Net interest income (b)	$	8,147			7,020
Fee and other income		2,631			2,132
Intersegment revenue		139			140

Total revenue (b)		10,917			9,292
Provision for credit losses		280			202
Noninterest expense		5,107			4,612
Income taxes		1,986			1,613
Tax-equivalent adjustment		32			30

Segment earnings	$	3,512			2,835

Economic profit	$	2,726			2,144
Risk adjusted return on capital		56.12	%		51.87
Economic capital, average	$	8,076			7,015
Cash overhead efficiency ratio (b)		46.78	%		49.63
Lending commitments	$	128,380			106,570
Average loans, net		189,378			161,671
Average core deposits	$	214,253			199,646
FTE employees		45,687			41,399

COMMERCIAL
Net interest income (b)	$	3,046			2,312
Fee and other income		356			329
Intersegment revenue		101			102

Total revenue (b)		3,503			2,743
Provision for credit losses		155			37
Noninterest expense		1,129			934
Income taxes		779			620
Tax-equivalent adjustment		31			30

Segment earnings	$	1,409			1,122

Economic profit	$	895			692
Risk adjusted return on capital		36.52	%		36.27
Economic capital, average	$	4,690			3,660
Cash overhead efficiency ratio (b)		32.23	%		34.06
Average loans, net	$	98,124			78,216
Average core deposits	$	47,124			46,070

RETAIL AND SMALL BUSINESS
Net interest income (b)	$	5,101			4,708
Fee and other income		2,275			1,803
Intersegment revenue		38			38

Total revenue (b)		7,414			6,549
Provision for credit losses		125			165
Noninterest expense		3,978			3,678
Income taxes		1,207			993
Tax-equivalent adjustment		1			—

Segment earnings	$	2,103			1,713

Economic profit	$	1,831			1,452
Risk adjusted return on capital		83.28	%		68.89
Economic capital, average	$	3,386			3,355
Cash overhead efficiency ratio (b)		53.65	%		56.15
Average loans, net	$	91,254			83,455
Average core deposits	$	167,129			153,576


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

(b)		Tax-equivalent.

(Continued)

Table 5
BUSINESS SEGMENTS


	*Nine Months Ended*
	*September 30,*
(Dollars in millions)	*2006*			2005

CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	756			600
Fee and other income		3,679			3,418
Intersegment revenue		(25	)		(27	)

Total revenue (b)		4,410			3,991
Provision for credit losses		—			—
Noninterest expense		3,343			3,171
Income taxes		389			299
Tax-equivalent adjustment		1			1

Segment earnings	$	677			520

Economic profit	$	549			398
Risk adjusted return on capital		58.09	%		47.00
Economic capital, average	$	1,559			1,478
Cash overhead efficiency ratio (b)		75.81	%		79.44
Lending commitments	$	263			184
Average loans, net		626			347
Average core deposits	$	31,829			35,100
FTE employees		17,303			17,310
Assets under management	$	250,075			233,114

ASSET MANAGEMENT
Net interest income (b)	$	7			6
Fee and other income		690			640
Intersegment revenue		(1	)		(1	)

Total revenue (b)		696			645
Provision for credit losses		—			—
Noninterest expense		567			524
Income taxes		47			44
Tax-equivalent adjustment		—			—

Segment earnings	$	82			77

Economic profit	$	63			61
Risk adjusted return on capital		48.19	%		50.80
Economic capital, average	$	226			203
Cash overhead efficiency ratio (b)		81.53	%		81.10
Average loans, net	$	22			16
Average core deposits	$	250			206


(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)

Table 5
BUSINESS SEGMENTS


	*Nine Months Ended*
	*September 30,*
(Dollars in millions)	*2006*			2005

RETAIL BROKERAGE SERVICES
Net interest income (b)	$	748			593
Fee and other income		2,997			2,787
Intersegment revenue		(23	)		(25	)

Total revenue (b)		3,722			3,355
Provision for credit losses		—			—
Noninterest expense		2,790			2,662
Income taxes		340			253
Tax-equivalent adjustment		1			1

Segment earnings	$	591			439

Economic profit	$	482			333
Risk adjusted return on capital		59.39	%		45.96
Economic capital, average	$	1,333			1,275
Cash overhead efficiency ratio (b)		74.95	%		79.37
Average loans, net	$	604			331
Average core deposits	$	31,579			34,894

OTHER
Net interest income (b)	$	1			1
Fee and other income		(8	)		(9	)
Intersegment revenue		(1	)		(1	)

Total revenue (b)		(8	)		(9	)
Provision for credit losses		—			—
Noninterest expense		(14	)		(15	)
Income taxes		2			2
Tax-equivalent adjustment		—			—

Segment earnings	$	4			4

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

(Continued)

Table 5
BUSINESS SEGMENTS


	*Nine Months Ended*
	*September 30,*
(Dollars in millions)	*2006*			2005

CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	1,492			1,642
Fee and other income		3,446			2,795
Intersegment revenue		(122	)		(118	)

Total revenue (b)		4,816			4,319
Provision for credit losses		(37	)		(14	)
Noninterest expense		2,556			2,252
Income taxes		809			697
Tax-equivalent adjustment		40			76

Segment earnings	$	1,448			1,308

Economic profit	$	825			784
Risk adjusted return on capital		28.56	%		30.50
Economic capital, average	$	6,283			5,373
Cash overhead efficiency ratio (b)		53.08	%		52.14
Lending commitments	$	102,698			92,966
Average loans, net		44,125			37,740
Average core deposits	$	25,862			22,741
FTE employees		5,692			4,792

CORPORATE LENDING
Net interest income (b)	$	578			668
Fee and other income		389			458
Intersegment revenue		22			17

Total revenue (b)		989			1,143
Provision for credit losses		(37	)		(15	)
Noninterest expense		315			328
Income taxes		271			314
Tax-equivalent adjustment		—			—

Segment earnings	$	440			516

Economic profit	$	68			205
Risk adjusted return on capital		13.60	%		20.21
Economic capital, average	$	3,506			2,974
Cash overhead efficiency ratio (b)		31.88	%		28.64
Average loans, net	$	31,296			28,790
Average core deposits	$	146			434


(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)

Table 5
BUSINESS SEGMENTS


	*Nine Months Ended*
	*September 30,*
(Dollars in millions)	*2006*			2005

TREASURY AND INTERNATIONAL TRADE FINANCE
Net interest income (b)	$	283			267
Fee and other income		588			544
Intersegment revenue		(95	)		(87	)

Total revenue (b)		776			724
Provision for credit losses		—			—
Noninterest expense		511			496
Income taxes		96			84
Tax-equivalent adjustment		—			—

Segment earnings	$	169			144

Economic profit	$	134			115
Risk adjusted return on capital		63.17	%		62.10
Economic capital, average	$	344			301
Cash overhead efficiency ratio (b)		65.74	%		68.57
Average loans, net	$	7,397			5,359
Average core deposits	$	16,834			14,549

INVESTMENT BANKING
Net interest income (b)	$	631			707
Fee and other income		2,469			1,793
Intersegment revenue		(49	)		(48	)

Total revenue (b)		3,051			2,452
Provision for credit losses		—			1
Noninterest expense		1,730			1,428
Income taxes		442			299
Tax-equivalent adjustment		40			76

Segment earnings	$	839			648

Economic profit	$	623			464
Risk adjusted return on capital		45.22	%		40.53
Economic capital, average	$	2,433			2,098
Cash overhead efficiency ratio (b)		56.72	%		58.25
Average loans, net	$	5,432			3,591
Average core deposits	$	8,882			7,758

(Continued)

Table 5
BUSINESS SEGMENTS

Nine Months Ended September 30, 2006

Net Merger-

Corporate

Related

and

General

Capital

Wealth

Investment

Restructuring

(Dollars in millions)

Bank

Management

Bank

Parent

Expenses (b)

Total

CONSOLIDATED

Net interest income (a)

8,147

756

451

1,492

(54

)

(120

)

10,672

Fee and other income

2,631

3,679

587

3,446

222

—

10,565

Intersegment revenue

139

(25

)

(122

)

—

Total revenue (a)

10,917

4,410

1,041

4,816

173

(120

)

21,237

Provision for credit losses

280

—

(37

)

(17

)

—

228

Noninterest expense

5,107

3,343

740

2,556

669

130

12,545

Minority interest

—

288

289

Income taxes (benefits)

1,986

389

109

809

(563

)

(45

)

2,685

Tax-equivalent adjustment

—

(120

)

Net income (loss)

3,512

677

190

1,448

(251

)

(86

)

5,490

Economic profit

2,726

549

137

825

(328

)

—

3,909

Risk adjusted return on capital

56.12

58.09

45.88

28.56

(4.62

)

—

38.15

Economic capital, average

8,076

1,559

526

6,283

2,807

—

19,251

Cash overhead efficiency ratio (a)

46.78

75.81

71.05

53.08

224.92

—

56.81

Lending commitments

128,380

263

6,481

102,698

472

—

238,294

Average loans, net

189,378

626

16,002

44,125

22,261

—

272,392

Average core deposits

214,253

31,829

14,322

25,862

4,764

—

291,030

FTE employees

45,687

17,303

4,492

5,692

23,886

—

97,060


	Nine Months Ended September 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)	$	7,020			600			428		1,642			635			(167	)		10,158
Fee and other income		2,132			3,418			534		2,795			351			—			9,230
Intersegment revenue		140			(27	)		4		(118	)		1			—			—

Total revenue (a)		9,292			3,991			966		4,319			987			(167	)		19,388
Provision for credit losses		202			—			5		(14	)		(25	)		—			168
Noninterest expense		4,612			3,171			666		2,252			729			234			11,664
Minority interest		—			—			—		—			264			(25	)		239
Income taxes (benefits)		1,613			299			108		697			(257	)		(79	)		2,381
Tax-equivalent adjustment		30			1			—		76			60			(167	)		—

Net income	$	2,835			520			187		1,308			216			(130	)		4,936

Economic profit	$	2,144			398			140		784			148			—			3,614
Risk adjusted return on capital		51.87	%		47.00			49.96		30.50			18.04			—			39.15
Economic capital, average	$	7,015			1,478			481		5,373			2,818			—			17,165
Cash overhead efficiency ratio (a)		49.63	%		79.44			68.93		52.14			41.32			—			56.80
Lending commitments	$	106,570			184			5,574		92,966			433			—			205,727
Average loans, net		161,671			347			13,571		37,740			11,372			—			224,701
Average core deposits	$	199,646			35,100			13,327		22,741			4,948			—			275,762
FTE employees		41,399			17,310			4,816		4,792			24,590			—			92,907


(a)		Tax-equivalent.

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

Table 6
NET TRADING REVENUE — INVESTMENT BANKING (a)


	*2006*						2005
	*Third*		Second		First		Fourth			Third
(In millions)	*Quarter*		Quarter		Quarter		Quarter			Quarter

Net interest income (Tax-equivalent)	$	25		63		57		123			107
Trading accounts profits (losses)		125		156		208		(51	)		135
Other fee income		76		63		98		52			67

Total net trading revenue (Tax-equivalent)	$	226		282		363		124			309


(a)		Certain amounts presented in periods prior to the third quarter of 2006 have been reclassified to conform to the presentation in the third quarter of 2006.

Table 7
SELECTED RATIOS


	*Nine Months Ended*
	*September 30,*					*2006*						2005
						*Third*		Second		First		Fourth		Third
	*2006*			2005		*Quarter*		Quarter		Quarter		Quarter		Quarter

PERFORMANCE RATIOS (a)
Assets to stockholders’ equity		11.02	X		10.70		11.07		11.08		10.90		11.21		10.81
Return on assets		1.36	%		1.31		1.34		1.39		1.34		1.30		1.29
Return on common stockholders’ equity		14.96			13.97		14.85		15.41		14.62		14.60		13.95
Return on total stockholders’ equity		14.96	%		13.97		14.85		15.41		14.62		14.60		13.95

DIVIDEND PAYOUT RATIOS
Common shares		46.06	%		46.13		47.86		43.59		46.79		46.79		48.11


(a)		Based on average balances and net income.

Table 8
TRADING ACCOUNT ASSETS AND LIABILITIES


	*2006*						2005
	*Third*		Second		First		Fourth		Third
(In millions)	*Quarter*		Quarter		Quarter		Quarter		Quarter

TRADING ACCOUNT ASSETS
U.S. Treasury	$	2,145		2,176		938		1,293		1,120
U.S. Government agencies		2,492		2,319		1,990		2,154		2,692
State, county and municipal		1,199		1,077		1,449		2,180		1,998
Mortgage-backed securities		1,617		1,280		2,580		2,582		4,470
Other asset-backed securities		8,151		11,505		5,923		7,486		9,360
Corporate bonds and debentures		4,851		5,475		5,578		4,932		5,598
Equity securities		4,654		4,828		4,864		5,665		5,657
Derivative financial instruments		10,735		12,002		10,990		10,010		11,144
Sundry		8,060		5,890		5,073		6,402		7,607

Total trading account assets	$	43,904		46,552		39,385		42,704		49,646

TRADING ACCOUNT LIABILITIES
Securities sold short		9,502		8,182		8,418		8,790		9,914
Derivative financial instruments		10,051		10,227		9,428		8,808		9,901

Total trading account liabilities	$	19,553		18,409		17,846		17,598		19,815

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


	*2006*						2005
	*Third*		Second		First		Fourth		Third
(In millions)	*Quarter*		Quarter		Quarter		Quarter		Quarter

ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and agricultural	$	95,281		91,737		89,138		87,327		83,241
Real estate — construction and other		16,067		15,329		14,483		13,972		13,653
Real estate — mortgage		19,455		19,745		20,066		19,966		19,864
Lease financing		25,253		25,194		25,238		25,368		25,022
Foreign		12,677		11,680		11,535		10,221		8,888

Total commercial		168,733		163,685		160,460		156,854		150,668

CONSUMER
Real estate secured		100,115		98,420		98,898		94,748		80,128
Student loans		9,175		9,139		10,555		9,922		11,458
Installment loans		21,454		20,508		20,189		6,751		6,745

Total consumer		130,744		128,067		129,642		111,421		98,331

Total loans		299,477		291,752		290,102		268,275		248,999
Unearned income		8,718		8,836		9,170		9,260		9,266

Loans, net (On-balance sheet)	$	290,759		282,916		280,932		259,015		239,733

MANAGED PORTFOLIO (a)

COMMERCIAL
On-balance sheet loan portfolio	$	168,733		163,685		160,460		156,854		150,668
Securitized loans — off-balance sheet		218		250		1,191		1,227		1,263
Loans held for sale		5,556		3,602		3,588		3,860		4,039

Total commercial		174,507		167,537		165,239		161,941		155,970

CONSUMER
Real estate secured
On-balance sheet loan portfolio		100,115		98,420		98,898		94,748		80,128
Securitized loans — off-balance sheet		6,151		6,833		7,598		8,438		9,255
Securitized loans included in securities		6,611		6,878		4,628		4,817		4,218
Loans held for sale		3,324		3,843		3,679		2,296		12,660

Total real estate secured		116,201		115,974		114,803		110,299		106,261

Student
On-balance sheet loan portfolio		9,175		9,139		10,555		9,922		11,458
Securitized loans — off-balance sheet		3,218		3,353		1,866		2,000		341
Securitized loans included in securities		52		52		52		52		—

Total student		12,445		12,544		12,473		11,974		11,799

Installment
On-balance sheet loan portfolio		21,454		20,508		20,189		6,751		6,745
Securitized loans — off-balance sheet		3,695		3,809		3,297		3,392		2,228
Securitized loans included in securities		169		181		193		206		146
Loans held for sale		159		305		592		249		1,339

Total installment		25,477		24,803		24,271		10,598		10,458

Total consumer		154,123		153,321		151,547		132,871		128,518

Total managed portfolio	$	328,630		320,858		316,786		294,812		284,488

SERVICING PORTFOLIO (b)
Commercial	$	227,899		212,500		192,367		173,428		158,650
Consumer	$	60,854		58,082		58,697		56,741		55,813


(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.

Table 10
LOANS HELD FOR SALE


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

Core business activity, beginning of period (a)	$	7,740			7,846			6,388			18,014			14,447
Balance of acquired entities at purchase date		—			—			—			873			—
Originations/purchases		17,113			13,870			13,068			13,704			15,157
Transfer to (from) loans held for sale, net		(154	)		(238	)		(70	)		(12,060	)		(562	)
Performing loans sold or securitized		(15,137	)		(13,357	)		(11,397	)		(11,444	)		(8,604	)
Other, principally payments		(532	)		(381	)		(143	)		(2,699	)		(2,424	)

Core business activity, end of period		9,030			7,740			7,846			6,388			18,014
Portfolio management activity, end of period (a)		9			10			13			17			24

Total loans held for sale (b)	$	9,039			7,750			7,859			6,405			18,038


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

(b)		Nonperforming assets included in loans held for sale at September 30, June 30, and March 31, 2006, and at December 31, and September 30, 2005, were $23 million, $23 million, $24 million, $32 million and $59 million, respectively.

Table 11
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

ALLOWANCE FOR LOAN LOSSES (a)
Balance, beginning of period	$	3,021			3,036			2,724			2,719			2,718
Provision for credit losses		118			49			59			72			74
Provision for credit losses relating to loans transferred to loans held for sale or sold		(4	)		5			—			5			12
Balance of acquired entities at purchase date		—			—			300			—			—
Allowance relating to loans acquired, transferred to loans held for sale or sold		(15	)		(18	)		12			(21	)		(26	)
Net charge-offs		(116	)		(51	)		(59	)		(51	)		(59	)

Balance, end of period	$	3,004			3,021			3,036			2,724			2,719

as a % of loans, net		1.03	%		1.07			1.08			1.05			1.13

as a % of nonaccrual and restructured loans (b)		520	%		488			452			439			347

as a % of nonperforming assets (b)		396	%		421			389			378			303

LOAN LOSSES
Commercial, financial and agricultural	$	25			32			27			52			43
Commercial real estate — construction and mortgage		2			3			7			12			9
Consumer		149			116			69			65			71

Total loan losses		176			151			103			129			123

LOAN RECOVERIES
Commercial, financial and agricultural		14			54			16			50			35
Commercial real estate — construction and mortgage		1			1			—			3			2
Consumer		45			45			28			25			27

Total loan recoveries		60			100			44			78			64

Net charge-offs	$	116			51			59			51			59

Commercial loan net charge-offs as % of average commercial loans, net (c)		0.03	%		(0.06	)		0.05			0.03			0.05
Consumer loan net charge-offs as % of average consumer loans, net (c)		0.32			0.23			0.14			0.16			0.18
Total net charge-offs as % of average loans, net (c)		0.16	%		0.08			0.09			0.09			0.10

NONPERFORMING ASSETS
Nonaccrual loans
Commercial, financial and agricultural	$	275			299			342			307			445
Commercial real estate — construction and mortgage		80			88			84			85			120
Consumer real estate secured		213			226			240			221			209
Installment loans		10			6			6			7			10

Total nonaccrual loans		578			619			672			620			784
Foreclosed properties (d)		181			99			108			100			112

Total nonperforming assets	$	759			718			780			720			896

Nonperforming loans included in loans held for sale (e)	$	23			23			24			32			59
Nonperforming assets included in loans and in loans held for sale	$	782			741			804			752			955

as % of loans, net, and foreclosed properties (b)		0.26	%		0.25			0.28			0.28			0.37

as % of loans, net, foreclosed properties and loans held for sale (e)		0.26	%		0.25			0.28			0.28			0.37

Accruing loans past due 90 days	$	666			624			610			625			525


(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.

Table 12
RESERVE FOR UNFUNDED LENDING COMMITMENTS


	*2006*							2005
	*Third*			Second		First		Fourth		Third
(In millions)	*Quarter*			Quarter		Quarter		Quarter		Quarter

RESERVE FOR UNFUNDED LENDING COMMITMENTS
Balance, beginning of period	$	165			160		158		154		158
Provision for credit losses		(6	)		5		2		4		(4	)

Balance, end of period	$	159			165		160		158		154

Table 13
NONACCRUAL LOAN ACTIVITY (a)


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

Balance, beginning of period	$	619			672			620			784			819

Commercial nonaccrual loan activity
Commercial nonaccrual loans, beginning of period		387			426			392			565			585

New nonaccrual loans and advances		129			188			147			117			229
Gross charge-offs		(27	)		(35	)		(34	)		(64	)		(52	)
Transfers to other real estate owned		(2	)		(1	)		—			(1	)		(1	)
Sales		(43	)		(32	)		(2	)		(91	)		(93	)
Other, principally payments		(89	)		(159	)		(77	)		(134	)		(103	)

Net commercial nonaccrual loan activity		(32	)		(39	)		34			(173	)		(20	)

Commercial nonaccrual loans, end of period		355			387			426			392			565

Consumer nonaccrual loan activity
Consumer nonaccrual loans, beginning of period		232			246			228			219			234

New nonaccrual loans, advances and other, net		(9	)		(14	)		18			(5	)		(15	)
Transfers from loans held for sale		—			—			—			15			—
Sales and securitizations		—			—			—			(1	)		—

Net consumer nonaccrual loan activity		(9	)		(14	)		18			9			(15	)

Consumer nonaccrual loans, end of period		223			232			246			228			219

Balance, end of period	$	578			619			672			620			784


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

Table 15
DEPOSITS


	*2006*						2005
	*Third*		Second		First		Fourth		Third
(In millions)	*Quarter*		Quarter		Quarter		Quarter		Quarter

CORE DEPOSITS
Noninterest-bearing	$	63,880		66,388		67,365		67,487		68,402
Savings and NOW accounts		75,536		77,297		80,773		81,536		78,013
Money market accounts		97,762		98,426		100,078		100,220		98,838
Other consumer time		54,489		50,132		47,876		44,319		42,479

Total core deposits		291,667		292,243		296,092		293,562		287,732
OTHER DEPOSITS
Foreign		18,753		20,326		19,157		18,041		15,736
Other time		12,878		15,045		13,315		13,291		16,971

Total deposits	$	323,298		327,614		328,564		324,894		320,439

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


	*September 30, 2006*
(In millions)

MATURITY OF
3 months or less	$	8,235
Over 3 months through 6 months		3,102
Over 6 months through 12 months		9,975
Over 12 months		4,847

Total time deposits in amounts of $100,000 or more	$	26,159

Table 17
LONG-TERM DEBT


	*2006*								2005
	*Third*		Second			First			Fourth			Third
(In millions)	*Quarter*		Quarter			Quarter			Quarter			Quarter

NOTES AND DEBENTURES ISSUED BY THE PARENT COMPANY
Notes
3.50% to 6.625%, due 2006 to 2020	$	6,975		6,366			6,352			5,724			5,724
Floating rate, due 2006 to 2013		9,649		9,249			9,249			8,449			7,149
Equity-linked, due 2006 to 2012		699		590			444			343			168
Floating rate, Euro notes, due 2011		1,897		—			—			—			—
4.375%, Euro notes, due 2016		943		—			—			—			—
Subordinated notes
4.875% to 6.40%, due 2008 to 2035		5,192		5,491			5,489			5,784			5,787
Floating rate, due 2015		600		600			600			600			—
6.605%, due 2025		250		250			250			250			250
6.30%, Putable/Callable, due 2028		200		200			200			200			200
5.80%, income trust securities, due 2042		2,501		2,501			2,501			—			—
Subordinated debentures
6.55% to 7.574%, due 2026 to 2035		795		795			795			796			795
Hedge-related basis adjustments		35		(310	)		(103	)		111			97

Total notes and debentures issued by the Parent Company		29,736		25,732			25,777			22,257			20,170

NOTES ISSUED BY SUBSIDIARIES
Notes, primarily notes issued under global bank note programs, varying rates and terms to 2040		18,134		15,996			9,619			6,235			4,386
Floating rate, Euro notes, due 2011		3,480		—			—			—			—
Subordinated notes
Bank, 4.75% to 9.625%, due 2006 to 2036		8,333		8,334			8,336			6,549			6,549
6.75%, due 2006		200		200			200			200			200
7.95%, due 2007		100		250			250			250			250
Floating rate, due 2013		417		417			417			417			417
5.25%, Euro notes, due 2023		1,386		—			—			—			—

Total notes issued by subsidiaries		32,050		25,197			18,822			13,651			11,802

OTHER DEBT
Junior subordinated debentures, floating rate, due 2026 to 2029		3,112		3,112			3,114			3,114			3,106
Auto secured financing, due 2006 to 2014		9,694		9,571			11,138			—			—
Collateralized notes, floating rate, due 2007 to 2011		4,420		4,420			4,420			4,420			4,420
Advances from the Federal Home Loan Bank		2,512		2,517			2,519			2,519			4,145
Preferred units issued by subsidiaries		2,352		2,352			2,352			2,352			852
Capitalized leases		38		38			38			39			737
Mortgage notes and other debt of subsidiaries		2,441		1,826			2,072			706			525
Hedge-related basis adjustments		64		(138	)		(34	)		(87	)		89

Total other debt		24,633		23,698			25,619			13,063			13,874

Total long-term debt	$	86,419		74,627			70,218			48,971			45,846

Table 18
CHANGES IN STOCKHOLDERS’ EQUITY


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

Balance, beginning of period, as reported	$	48,872			49,789			47,561			46,757			47,904
Cumulative effect of an accounting change, net of income taxes		—			—			41			—			—

Balance, beginning of period		48,872			49,789			47,602			46,757			47,904

Comprehensive income
Net income		1,877			1,885			1,728			1,707			1,665
Minimum pension liability		—			—			—			(19	)		—
Net unrealized gain (loss) on debt and equity securities		1,389			(943	)		(792	)		(397	)		(848	)
Net unrealized gain (loss) on derivative financial instruments		63			16			(23	)		(29	)		(9	)

Total comprehensive income		3,329			958			913			1,262			808
Purchases of common stock		(554	)		(1,462	)		(2,108	)		(42	)		(1,305	)
Common stock issued for
Stock options and restricted stock		315			209			455			299			73
Acquisitions		(2	)		97			3,868			—			3
Deferred compensation, net		108			96			(119	)		79			67
Cash dividends on common shares		(888	)		(815	)		(822	)		(794	)		(793	)

Balance, end of period	$	51,180			48,872			49,789			47,561			46,757

Table 19
CAPITAL RATIOS


	*2006*							2005
	*Third*			Second		First		Fourth		Third
(In millions)	*Quarter*			Quarter		Quarter		Quarter		Quarter

CONSOLIDATED CAPITAL RATIOS (a)
Qualifying capital
Tier 1 capital	$	34,842			33,910		34,013		30,308		28,993
Total capital		51,624			49,592		49,510		43,709		42,183
Adjusted risk-weighted assets		450,067			434,390		432,215		404,068		390,843
Adjusted leverage ratio assets	$	528,071			516,500		495,531		495,601		486,865
Ratios
Tier 1 capital		7.74	%		7.81		7.87		7.50		7.42
Total capital		11.47			11.42		11.45		10.82		10.79
Leverage		6.60			6.57		6.86		6.12		5.96
STOCKHOLDERS’ EQUITY TO ASSETS
Quarter-end		9.14			8.83		9.19		9.13		8.78
Average		9.03	%		9.03		9.18		8.92		9.25

BANK CAPITAL RATIOS
Tier 1 capital
Wachovia Bank, National Association		7.65	%		7.93		7.71		7.45		7.55
Wachovia Bank of Delaware, National Association		15.08			15.64		15.02		14.07		13.59
Total capital
Wachovia Bank, National Association		11.29			11.47		11.25		10.70		11.07
Wachovia Bank of Delaware, National Association		16.96			17.72		17.16		16.27		15.67
Leverage
Wachovia Bank, National Association		6.58			6.66		6.89		6.26		6.27
Wachovia Bank of Delaware, National Association		11.84	%		11.52		11.60		10.52		11.48


(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.

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES


	*THIRD QUARTER 2006*							SECOND QUARTER 2006
					*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	$	2,671		34		5.07	%	$	2,027		25		5.04	%
Federal funds sold and securities purchased under resale agreements		17,530		224		5.08			17,628		209		4.75
Trading account assets (a)		31,160		409		5.24			29,252		393		5.37
Securities (a)		122,152		1,661		5.44			124,102		1,668		5.38
Loans (a) (b)
Commercial
Commercial, financial and agricultural		93,886		1,673		7.07			90,259		1,555		6.92
Real estate — construction and other		15,787		308		7.74			14,946		277		7.43
Real estate — mortgage		19,507		378		7.69			20,118		369		7.36
Lease financing		9,731		172		7.04			9,895		175		7.08
Foreign		11,655		158		5.37			11,123		142		5.10

Total commercial		150,566		2,689		7.09			146,341		2,518		6.90

Consumer
Real estate secured		99,669		1,670		6.69			97,377		1,584		6.51
Student loans		9,605		161		6.65			10,842		170		6.30
Installment loans		21,270		517		9.66			20,705		482		9.33

Total consumer		130,544		2,348		7.17			128,924		2,236		6.95

Total loans		281,110		5,037		7.13			275,265		4,754		6.92

Loans held for sale		12,130		214		6.99			9,320		165		7.11
Other earning assets		5,386		113		8.35			5,638		99		7.00

Total earning assets excluding derivatives		472,139		7,692		6.49			463,232		7,313		6.32
Risk management derivatives (c)		—		129		0.11			—		125		0.11

Total earning assets including derivatives		472,139		7,821		6.60			463,232		7,438		6.43

Cash and due from banks		11,973							12,055
Other assets		71,052							68,325

Total assets	$	555,164						$	543,612

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		75,534		355		1.86			78,539		332		1.70
Money market accounts		99,788		862		3.43			99,212		764		3.09
Other consumer time		52,352		548		4.15			48,389		465		3.85
Foreign		20,599		244		4.70			21,031		234		4.47
Other time		14,534		191		5.23			15,269		197		5.16

Total interest-bearing deposits		262,807		2,200		3.32			262,440		1,992		3.04
Federal funds purchased and securities sold under repurchase agreements		51,314		629		4.86			48,732		543		4.47
Commercial paper		5,190		63		4.77			4,659		51		4.45
Securities sold short		8,951		82		3.61			9,255		74		3.21
Other short-term borrowings		5,575		30		2.14			6,423		36		2.24
Long-term debt		80,726		1,095		5.41			71,725		940		5.25

Total interest-bearing liabilities excluding derivatives		414,563		4,099		3.93			403,234		3,636		3.62
Risk management derivatives (c)		—		144		0.14			—		127		0.12

Total interest-bearing liabilities including derivatives		414,563		4,243		4.07			403,234		3,763		3.74

Noninterest-bearing deposits		63,553							65,498
Other liabilities		26,905							25,817
Stockholders’ equity		50,143							49,063

Total liabilities and stockholders’ equity	$	555,164						$	543,612

Interest income and rate earned — including derivatives			$	7,821		6.60	%			$	7,438		6.43	%
Interest expense and equivalent rate paid — including derivatives				4,243		3.57					3,763		3.25

Net interest income and margin — including derivatives			$	3,578		3.03	%			$	3,675		3.18	%


(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.


FIRST QUARTER 2006						FOURTH QUARTER 2005							THIRD QUARTER 2005
			Average							Average							Average
	Interest		Rates					Interest		Rates					Interest		Rates
Average	Income/		Earned/			Average		Income/		Earned/			Average		Income/		Earned/
Balances	Expense		Paid			Balances		Expense		Paid			Balances		Expense		Paid


$ 2,872		31		4.31	%	$	2,514		24		3.75	%	$	2,417		21		3.46	%

19,657		209		4.31			22,647		237		4.17			24,451		216		3.50
27,240		344		5.08			34,461		482		5.59			33,720		407		4.82
117,944		1,557		5.28			115,557		1,506		5.21			114,902		1,461		5.08


87,784		1,411		6.51			85,155		1,326		6.17			81,488		1,184		5.77
14,184		243		6.95			13,803		226		6.51			13,322		201		5.96
20,166		350		7.04			20,132		333		6.57			19,684		302		6.09
10,050		171		6.81			10,153		184		7.26			9,979		178		7.15
10,285		118		4.67			9,118		97		4.23			8,164		80		3.88

142,469		2,293		6.52			138,361		2,166		6.22			132,637		1,945		5.82


96,082		1,514		6.31			80,984		1,236		6.10			78,088		1,166		5.97
10,589		157		6.00			11,235		155		5.46			11,267		144		5.07
11,434		242		8.57			6,902		127		7.32			6,968		124		7.04

118,105		1,913		6.50			99,121		1,518		6.11			96,323		1,434		5.94

260,574		4,206		6.51			237,482		3,684		6.17			228,960		3,379		5.87

8,274		128		6.24			17,646		270		6.10			16,567		244		5.90
5,966		118		8.04			8,897		155		6.92			10,329		138		5.27

442,527		6,593		6.00			439,204		6,358		5.77			431,346		5,866		5.42
—		163		0.15			—		184		0.16			—		231		0.21

442,527		6,756		6.15			439,204		6,542		5.93			431,346		6,097		5.63

12,762							12,770							12,277
66,920							68,408							67,944

$522,209						$	520,382						$	511,567



79,783		304		1.54			78,936		258		1.30			78,961		220		1.10
99,632		670		2.73			100,999		609		2.39			97,746		529		2.15
46,309		407		3.57			43,549		369		3.37			41,063		325		3.13
19,330		187		3.92			17,464		157		3.56			15,285		123		3.18
13,286		153		4.67			14,859		166		4.46			10,338		109		4.21

258,340		1,721		2.70			255,807		1,559		2.42			243,393		1,306		2.13

50,087		503		4.07			55,336		526		3.77			56,426		460		3.24
4,193		41		3.93			8,062		76		3.74			12,664		108		3.39
8,520		63		3.01			8,801		70		3.13			9,040		77		3.38
7,214		40		2.26			7,164		39		2.18			6,471		29		1.80
56,052		697		4.99			47,804		576		4.81			47,788		536		4.48


384,406		3,065		3.23			382,974		2,846		2.95			375,782		2,516		2.66
—		152		0.16			—		121		0.13			—		141		0.15


384,406		3,217		3.39			382,974		2,967		3.08			375,782		2,657		2.81

64,490							64,018							62,978
25,387							26,983							25,479
47,926							46,407							47,328

$522,209						$	520,382						$	511,567

	$	6,756		6.15	%			$	6,542		5.93	%			$	6,097		5.63	%

		3,217		2.94					2,967		2.68					2,657		2.45

	$	3,539		3.21	%			$	3,575		3.25	%			$	3,440		3.18	%


(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.

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES


	*NINE MONTHS ENDED*							NINE MONTHS ENDED
	*SEPTEMBER 30, 2006*							SEPTEMBER 30, 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	$	2,523		90		4.77	%	$	2,516		57		3.05	%
Federal funds sold and securities purchased under resale agreements		18,264		642		4.70			24,467		558		3.05
Trading account assets (a)		29,232		1,146		5.23			33,577		1,186		4.71
Securities (a)		121,415		4,886		5.37			114,956		4,407		5.11
Loans (a) (b)
Commercial
Commercial, financial and agricultural		90,666		4,639		6.84			79,469		3,228		5.43
Real estate — construction and other		14,978		828		7.39			12,941		534		5.51
Real estate — mortgage		19,928		1,097		7.36			20,205		861		5.70
Lease financing		9,891		518		6.98			10,246		543		7.07
Foreign		11,026		418		5.06			7,669		206		3.59

Total commercial		146,489		7,500		6.84			130,530		5,372		5.50

Consumer
Real estate secured		97,722		4,768		6.51			75,861		3,275		5.76
Student loans		10,342		488		6.31			11,089		393		4.74
Installment loans		17,839		1,241		9.30			7,221		361		6.69

Total consumer		125,903		6,497		6.89			94,171		4,029		5.71

Total loans		272,392		13,997		6.86			224,701		9,401		5.59

Loans held for sale		9,922		507		6.82			14,500		604		5.56
Other earning assets		5,660		330		7.79			10,296		378		4.90

Total earning assets excluding derivatives		459,408		21,598		6.28			425,013		16,591		5.21
Risk management derivatives (c)		—		417		0.12			—		775		0.25

Total earning assets including derivatives		459,408		22,015		6.40			425,013		17,366		5.46

Cash and due from banks		12,260							12,441
Other assets		68,781							67,724

Total assets	$	540,449						$	505,178

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		77,937		991		1.70			80,041		575		0.96
Money market accounts		99,545		2,296		3.08			95,420		1,341		1.88
Other consumer time		49,038		1,420		3.87			38,395		837		2.91
Foreign		20,325		665		4.38			12,728		265		2.78
Other time		14,367		541		5.03			10,966		270		3.29

Total interest-bearing deposits		261,212		5,913		3.03			237,550		3,288		1.85
Federal funds purchased and securities sold under repurchase agreements		50,049		1,675		4.47			53,954		1,147		2.84
Commercial paper		4,684		155		4.41			13,191		287		2.91
Securities sold short		8,910		219		3.28			10,776		271		3.37
Other short-term borrowings		6,399		106		2.22			6,511		85		1.75
Long-term debt		69,591		2,732		5.24			47,764		1,557		4.35

Total interest-bearing liabilities excluding derivatives		400,845		10,800		3.60			369,746		6,635		2.40
Risk management derivatives (c)		—		423		0.14			—		406		0.14

Total interest-bearing liabilities including derivatives		400,845		11,223		3.74			369,746		7,041		2.54

Noninterest-bearing deposits		64,510							61,906
Other liabilities		26,042							26,301
Stockholders’ equity		49,052							47,225

Total liabilities and stockholders’ equity	$	540,449						$	505,178

Interest income and rate earned — including derivatives			$	22,015		6.40	%			$	17,366		5.46	%
Interest expense and equivalent rate paid — including derivatives				11,223		3.27					7,041		2.22

Net interest income and margin — including derivatives			$	10,792		3.13	%			$	10,325		3.24	%


(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.

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	*2006*									2005
	*Third*			Second			First			Fourth			Third
(In millions, except per share data)	*Quarter*			Quarter			Quarter			Quarter			Quarter

ASSETS
Cash and due from banks	$	11,850			12,761			12,668			15,072			12,976
Interest-bearing bank balances		5,270			2,244			1,563			2,638			2,492
Federal funds sold and securities purchased under resale agreements (carrying amount of collateral held $10,198 at September 30, 2006, $4,069 repledged)		18,497			17,223			18,807			19,915			27,083

Total cash and cash equivalents		35,617			32,228			33,038			37,625			42,551

Trading account assets		43,904			46,552			39,385			42,704			49,646
Securities		107,826			120,453			118,818			114,889			117,195
Loans, net of unearned income		290,759			282,916			280,932			259,015			239,733
Allowance for loan losses		(3,004	)		(3,021	)		(3,036	)		(2,724	)		(2,719	)

Loans, net		287,755			279,895			277,896			256,291			237,014

Loans held for sale		9,039			7,750			7,859			6,405			18,038
Premises and equipment		5,536			5,322			5,194			4,910			5,352
Due from customers on acceptances		1,200			1,010			968			824			882
Goodwill		23,535			23,550			23,443			21,807			21,857
Other intangible assets		1,355			1,435			1,523			1,208			1,285
Other assets		44,155			35,419			33,718			34,092			38,561

Total assets	$	559,922			553,614			541,842			520,755			532,381

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		63,880			66,388			67,365			67,487			68,402
Interest-bearing deposits		259,418			261,226			261,199			257,407			252,037

Total deposits		323,298			327,614			328,564			324,894			320,439
Short-term borrowings		58,749			62,787			55,390			61,953			78,184
Bank acceptances outstanding		1,213			1,021			985			892			932
Trading account liabilities		19,553			18,409			17,846			17,598			19,815
Other liabilities		16,513			17,305			16,070			15,986			16,504
Long-term debt		86,419			74,627			70,218			48,971			45,846

Total liabilities		505,745			501,763			489,073			470,294			481,720

Minority interest in net assets of consolidated subsidiaries		2,997			2,979			2,980			2,900			3,904

STOCKHOLDERS’ EQUITY
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at September 30, 2006		—			—			—			—			—
Non-Cumulative Perpetual Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized		—			—			—			—			—
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.581 billion shares at September 30, 2006		5,271			5,298			5,362			5,189			5,178
Paid-in capital		34,276			34,086			34,291			31,172			30,821
Retained earnings		12,696			12,003			11,724			11,973			11,086
Accumulated other comprehensive income, net		(1,063	)		(2,515	)		(1,588	)		(773	)		(328	)

Total stockholders’ equity		51,180			48,872			49,789			47,561			46,757

Total liabilities and stockholders’ equity	$	559,922			553,614			541,842			520,755			532,381

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	*2006*							2005
	*Third*		Second		First				Fourth			Third
(In millions, except per share data)	*Quarter*		Quarter		Quarter				Quarter			Quarter

INTEREST INCOME
Interest and fees on loans	$	5,096		4,823		4,321				3,846			3,588
Interest and dividends on securities		1,692		1,685		1,565				1,486			1,434
Trading account interest		401		387		325				462			387
Other interest income		595		509		496				696			635

Total interest income		7,784		7,404		6,707				6,490			6,044

INTEREST EXPENSE
Interest on deposits		2,238		2,035		1,779				1,618			1,408
Interest on short-term borrowings		860		755		718				764			742
Interest on long-term debt		1,145		973		720				585			507

Total interest expense		4,243		3,763		3,217				2,967			2,657

Net interest income		3,541		3,641		3,490				3,523			3,387
Provision for credit losses		108		59		61				81			82

Net interest income after provision for credit losses		3,433		3,582		3,429				3,442			3,305

FEE AND OTHER INCOME
Service charges		638		622		574				555			555
Other banking fees		427		449		428				400			385
Commissions		562		588		623				573			598
Fiduciary and asset management fees		823		808		761				790			749
Advisory, underwriting and other investment banking fees		292		318		302				325			294
Trading account profits (losses)		123		164		219				(31	)		160
Principal investing		91		189		103				135			166
Securities gains (losses)		94		25		(48	)			(74	)		29
Other income		415		420		555				316			322

Total fee and other income		3,465		3,583		3,517				2,989			3,258

NONINTEREST EXPENSE
Salaries and employee benefits		2,531		2,652		2,697				2,470			2,476
Occupancy		284		291		275				283			260
Equipment		291		299		280				277			276
Advertising		54		56		47				51			50
Communications and supplies		158		162		167				155			158
Professional and consulting fees		200		184		167				213			167
Other intangible amortization		92		98		92				93			101
Merger-related and restructuring expenses		38		24		68				58			83
Sundry expense		397		495		446				583			433

Total noninterest expense		4,045		4,261		4,239				4,183			4,004

Minority interest in income of consolidated subsidiaries		104		90		95				103			104

Income from continuing operations before income taxes		2,749		2,814		2,612				2,145			2,455
Income taxes		872		929		884				652			790

Income from continuing operations		1,877		1,885		1,728				1,493			1,665
Discontinued operations, net of income taxes		—		—		—				214			—

Net income	$	1,877		1,885		1,728				1,707			1,665

PER COMMON SHARE DATA
Basic earnings
Income from continuing operations	$	1.19		1.19		1.11				0.97			1.07
Net income		1.19		1.19		1.11				1.11			1.07
Diluted earnings
Income from continuing operations		1.17		1.17		1.09				0.95			1.06
Net income		1.17		1.17		1.09				1.09			1.06
Cash dividends	$	0.56		0.51		0.51				0.51			0.51
AVERAGE COMMON SHARES
Basic		1,573		1,585		1,555				1,541			1,549
Diluted		1,600		1,613		1,586				1,570			1,575

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)


	*September 30,*			December 31,
(In millions, except per share data)	*2006*			2005

ASSETS
Cash and due from banks	$	11,850			15,072
Interest-bearing bank balances		5,270			2,638
Federal funds sold and securities purchased under resale agreements (carrying amount of collateral held $10,198 at September 30, 2006, $4,069 repledged)		18,497			19,915

Total cash and cash equivalents		35,617			37,625

Trading account assets		43,904			42,704
Securities		107,826			114,889
Loans, net of unearned income		290,759			259,015
Allowance for loan losses		(3,004	)		(2,724	)

Loans, net		287,755			256,291

Loans held for sale		9,039			6,405
Premises and equipment		5,536			4,910
Due from customers on acceptances		1,200			824
Goodwill		23,535			21,807
Other intangible assets		1,355			1,208
Other assets		44,155			34,092

Total assets	$	559,922			520,755

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		63,880			67,487
Interest-bearing deposits		259,418			257,407

Total deposits		323,298			324,894
Short-term borrowings		58,749			61,953
Bank acceptances outstanding		1,213			892
Trading account liabilities		19,553			17,598
Other liabilities		16,513			15,986
Long-term debt		86,419			48,971

Total liabilities		505,745			470,294

Minority interest in net assets of consolidated subsidiaries		2,997			2,900

STOCKHOLDERS’ EQUITY
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at September 30, 2006		—			—
Non-Cumulative Perpetual Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized		—			—
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.581 billion shares at September 30, 2006		5,271			5,189
Paid-in capital		34,276			31,172
Retained earnings		12,696			11,973
Accumulated other comprehensive income, net		(1,063	)		(773	)

Total stockholders’ equity		51,180			47,561

Total liabilities and stockholders’ equity	$	559,922			520,755

See accompanying Notes to Consolidated Financial Statements.

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
(In millions, except per share data)	*2006*		2005		*2006*		2005

INTEREST INCOME
Interest and fees on loans	$	5,096		3,588		14,240		10,124
Interest and dividends on securities		1,692		1,434		4,942		4,297
Trading account interest		401		387		1,113		1,119
Other interest income		595		635		1,600		1,659

Total interest income		7,784		6,044		21,895		17,199

INTEREST EXPENSE
Interest on deposits		2,238		1,408		6,052		3,679
Interest on short-term borrowings		860		742		2,333		2,013
Interest on long-term debt		1,145		507		2,838		1,349

Total interest expense		4,243		2,657		11,223		7,041

Net interest income		3,541		3,387		10,672		10,158
Provision for credit losses		108		82		228		168

Net interest income after provision for credit losses		3,433		3,305		10,444		9,990

FEE AND OTHER INCOME
Service charges		638		555		1,834		1,596
Other banking fees		427		385		1,304		1,091
Commissions		562		598		1,773		1,770
Fiduciary and asset management fees		823		749		2,392		2,221
Advisory, underwriting and other investment banking fees		292		294		912		784
Trading account profits		123		160		506		317
Principal investing		91		166		383		266
Securities gains		94		29		71		163
Other income		415		322		1,390		1,022

Total fee and other income		3,465		3,258		10,565		9,230

NONINTEREST EXPENSE
Salaries and employee benefits		2,531		2,476		7,880		7,201
Occupancy		284		260		850		781
Equipment		291		276		870		810
Advertising		54		50		157		142
Communications and supplies		158		158		487		478
Professional and consulting fees		200		167		551		449
Other intangible amortization		92		101		282		323
Merger-related and restructuring expenses		38		83		130		234
Sundry expense		397		433		1,338		1,246

Total noninterest expense		4,045		4,004		12,545		11,664

Minority interest in income of consolidated subsidiaries		104		104		289		239

Income before income taxes		2,749		2,455		8,175		7,317
Income taxes		872		790		2,685		2,381

Net income	$	1,877		1,665		5,490		4,936

PER COMMON SHARE DATA
Basic earnings	$	1.19		1.07		3.49		3.16
Diluted earnings		1.17		1.06		3.43		3.10
Cash dividends	$	0.56		0.51		1.58		1.43
AVERAGE COMMON SHARES
Basic		1,573		1,549		1,571		1,561
Diluted		1,600		1,575		1,600		1,590

See accompanying Notes to Consolidated Financial Statements.

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	*Nine Months Ended*
	*September 30,*
(In millions)	*2006*			2005

OPERATING ACTIVITIES
Net income	$	5,490			4,936
Adjustments to reconcile net income to net cash provided (used) by operating activities
Accretion and amortization of securities discounts and premiums, net		(24	)		187
Provision for credit losses		228			168
Gain on securitization transactions		(200	)		(148	)
Gain on sale of mortgage servicing rights		(23	)		(20	)
Securities transactions		(71	)		(163	)
Depreciation and other amortization		1,227			1,087
Trading account assets, net		(1,200	)		(3,714	)
Loss on sales of premises and equipment		—			90
Contribution to qualified pension plan		(600	)		(330	)
Excess income tax benefits from share-based payment arrangements		(130	)		—
Loans held for sale, net		(3,137	)		(5,713	)
Other assets, net		(7,890	)		(647	)
Trading account liabilities, net		1,955			(1,894	)
Other liabilities, net		1,337			1,969

Net cash used by operating activities		(3,038	)		(4,192	)

INVESTING ACTIVITIES
Increase (decrease) in cash realized from
Sales of securities		30,566			41,173
Maturities of securities		14,186			28,560
Purchases of securities		(32,958	)		(77,858	)
Origination of loans, net		(20,241	)		(15,452	)
Sales of premises and equipment		241			50
Purchases of premises and equipment		(1,383	)		(865	)
Goodwill and other intangible assets		(98	)		(331	)
Purchase of bank-owned separate account life insurance		(1,742	)		(1,705	)
Cash equivalent acquired, net of purchases of banking operations		997			18

Net cash used by investing activities		(10,432	)		(26,410	)

FINANCING ACTIVITIES
Increase (decrease) in cash realized from
Increase (decrease) in deposits, net		(3,837	)		25,386
Securities sold under repurchase agreements and other short-term borrowings, net		(3,204	)		14,778
Issuances of long-term debt		30,614			6,599
Payments of long-term debt		(6,139	)		(7,512	)
Issuances of common stock, net		547			207
Purchases of common stock		(4,124	)		(2,651	)
Excess income tax benefits from share-based payment arrangements		130			—
Cash dividends paid		(2,525	)		(2,245	)

Net cash provided by financing activities		11,462			34,562

Increase (decrease) in cash and cash equivalents		(2,008	)		3,960
Cash and cash equivalents, beginning of year		37,625			38,591

Cash and cash equivalents, end of period	$	35,617			42,551

NONCASH ITEMS
Transfer to securities from loans	$	2,422			51
Transfer to securities from loans held for sale		67			87
Transfer to loans from loans held for sale		462			576
Cumulative effect of an accounting change, net of income taxes		41			—
Issuance of common stock for purchase accounting acquisitions	$	3,963			—

See accompanying Notes to Consolidated Financial Statements.

WACHOVIA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 nine months ended September 30, 2006, are not necessarily indicative of the results of operations that may be expected in the future. Please refer to the Company’s 2005 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, 2005, including the related notes to consolidated financial statements.

Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.

BUSINESS COMBINATIONS

On May 7, 2006, the Company announced the signing of a definitive merger agreement with Golden West Financial Corporation (“Golden West”). The acquisition of this California-based retail banking and mortgage lending franchise was completed on October 1, 2006. The terms of this transaction called for the Company to exchange 1.05105 shares of its common stock plus cash of $18.6461 for each share of Golden West common stock. Based on the Company’s weighted average of the closing prices for a period two trading days before the announcement of the merger and two trading days after the merger announcement of $55.69 (which includes the day of announcement), the transaction is valued at $24.3 billion.

On September 12, 2005, the Company announced the signing of a definitive merger agreement with Westcorp and WFS Financial Inc (“WFS”) the common stock of which 84 percent was owned by Westcorp and 16 percent was held by the public. The acquisition of this California-based auto loan originator business was completed on March 1, 2006. The terms of this transaction called for the Company to exchange 1.2749 shares of its common stock for each share of Westcorp common stock and 1.4661 shares of its common stock for each share of WFS common stock. Based on the Company’s weighted average of the closing prices for a period two trading days before the announcement of the merger and two trading days after the merger announcement of $49.60 (which includes the day of announcement), the transaction is valued at $3.8 billion. As of September 30, 2006, the Company has recorded fair value and exit cost purchase accounting adjustments of $341 million along with dealer relationship and deposit base intangibles of $405 million. Based on Westcorp tangible stockholders’ equity of $1.9 billion, this resulted in preliminary goodwill of $1.5 billion. The Westcorp March 1, 2006, allowance for loan losses recorded by the Company excluded Westcorp’s allowance for loan losses related to nonperforming loans.

PERSONNEL EXPENSE AND RETIREMENT BENEFITS

The components of the retirement benefit costs included in salaries and employee benefits for the nine months ended September 30, 2006 and 2005, are presented below.


											*Other Postretirement*
	*Qualified Pension*						*Nonqualified Pension*				*Benefits*
	*Nine Months Ended*						*Nine Months Ended*				*Nine Months Ended*
	*September 30,*						*September 30,*				*September 30,*
(In millions)	*2006*			2005			*2006*		2005		*2006*			2005

RETIREMENT BENEFIT COSTS
Service cost	$	146			134			3		3		3			3
Interest cost		188			182			19		19		35			38
Expected return on plan assets		(319	)		(312	)		—		—		(2	)		(2	)
Amortization of prior service cost		(20	)		(20	)		1		—		(6	)		(6	)
Amortization of actuarial losses		104			66			9		7		4			5
Special and/or contractual termination benefits		—			—			17		—		—			1

Net retirement benefit costs	$	99			50			49		29		34			39

In September 2006, the Company contributed $600 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 2005 were reclassified to conform with the presentation in 2006. These reclassifications had no effect on the Company’s previously reported consolidated financial position or results of operations. Changes in fair value of certain derivatives held for other-than-trading purposes, which are economic hedges not designated and accounted for as accounting hedges, are now presented in other income. Previously, for these certain derivatives, the changes in fair value were included in trading account profits. Prior period amounts have been reclassified to be consistent with the current period presentation.

NOTE 2: SECURITIES

September 30, 2006

Average

1 Year

1-5

5-10

After 10

Gross Unrealized

Amortized

Maturity

(In millions)

or Less

Years

Total

Gains

Losses

Cost

in Years

MARKET VALUE

U.S. Treasury

977

163

142

1,323

1,330

2.08

Mortgage-backed securities, principally obligations of U.S. Government agencies and sponsored entities

161

13,234

57,823

71,226

1,545

72,704

6.48

Asset-backed

Residual interests from securitizations

663

201

913

302

612

3.55

Retained bonds from securitizations

325

2,409

195

—

2,929

2,897

2.10

Collateralized mortgage obligations

100

3,791

4,091

296

8,278

105

8,358

5.70

Commercial mortgage-backed

1,396

1,234

2,669

108

2,606

5.37

Other

418

236

—

747

751

3.64

State, county and municipal

642

584

2,008

3,290

180

3,115

14.13

Sundry

693

2,026

6,619

7,113

16,451

180

16,534

10.61

Total market value

2,483

24,742

71,125

9,476

107,826

816

1,897

108,907

6.93

MARKET VALUE

Debt securities

2,483

24,742

71,125

6,455

104,805

756

1,883

105,932

Equity securities

—

3,021

2,975

Total market value

2,483

24,742

71,125

9,476

107,826

816

1,897

108,907

AMORTIZED COST

Debt securities

2,470

24,517

72,505

6,440

105,932

Equity securities

—

2,975

Total amortized cost

2,470

24,517

72,505

9,415

108,907

WEIGHTED AVERAGE YIELD

U.S. Treasury

5.15

2.00

2.61

4.95

4.47

Mortgage-backed securities, principally obligations of U.S. Government agencies and sponsored entities

6.14

5.44

5.23

5.02

5.27

Asset-backed

Residual interests from securitizations

27.81

24.19

25.22

—

24.57

Retained bonds from securitizations

6.29

6.12

7.12

—

6.20

Collateralized mortgage obligations

4.35

5.32

5.40

5.78

5.36

Commercial mortgage-backed

5.93

7.89

4.99

5.86

6.46

Other

7.45

5.54

5.80

—

5.86

State, county and municipal

8.28

8.58

8.02

6.56

7.24

Sundry

5.04

5.00

4.64

5.44

5.05

Consolidated

5.78

5.97

5.24

5.67

5.45

At September 30, 2006, all securities were classified as available for sale.

At September 30, 2006, mortgage-backed securities included Federal National Mortgage Association and Federal Home Loan Mortgage Corporation securities with an amortized cost of $52.8 billion and a market value of $51.7 billion, and an amortized cost of $17.9 billion and a market value of $17.5 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 of $4.1 billion and a market value of $4.0 billion at September 30, 2006.

Included in asset-backed securities are retained bonds primarily from the securitization of commercial and consumer real estate, SBA and auto loans. At September 30, 2006, retained bonds with an amortized cost and a market value of $2.8 billion were considered investment grade based on external ratings. Retained bonds with an amortized cost and market value of $2.1 billion at September 30, 2006, had an external credit rating of AA and above.

Securities with an aggregate amortized cost of $63.1 billion at September 30, 2006, are pledged to secure U.S. Government and other public deposits and for other purposes as required by various statutes or agreements.

Expected maturities of beneficial interests and the contractual maturities of all other securities are summarized in the table. 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 September 30, 2006, there were forward commitments to purchase securities on both a regular way and non-regular way basis at a cost that approximates a market value of $828 million. At September 30, 2006, there were commitments to sell securities at a cost that approximates a market value of $8.2 billion.

On a quarterly basis, the Company makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis. The Company considers many factors including the severity and duration of the impairment; the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, external credit ratings and recent downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value with the write-down recorded as a realized loss in securities gains (losses).

Gross unrealized losses at September 30, 2006, are primarily caused by interest rate changes. The Company has reviewed these securities in accordance with its accounting policy for other-than-temporary impairment discussed above and does not consider them other-than-temporarily impaired.

Gross gains and losses realized on the sale of debt securities in the nine months ended September 30, 2006, were $182 million and $167 million (including $34 million of impairment losses), respectively, and gross gains and losses realized on the sale of equity securities were $58 million and $2 million (no impairment losses), respectively.

NOTE 3: VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

VARIABLE INTEREST ENTITIES

The Company administers a multi-seller commercial paper conduit through which it arranges financing for certain customer transactions that provide customers with access to the commercial paper market. The Company provides liquidity agreements to this multi-seller conduit which is a variable interest entity (“VIE”) and the liquidity agreements are considered variable interests. The Company is not the primary beneficiary of the conduit and does not consolidate the conduit. At September 30, 2006, and December 31, 2005, the conduit administered by the Company had total assets of $11.2 billion and $9.7 billion, respectively, and the Company had a maximum exposure to losses of $19.0 billion and $19.9 billion, respectively, related to its liquidity agreements.

The Company has an ownership interest in an investment fund that is a VIE. At September 30, 2006, this investment fund had total assets of $24.7 billion and the Company’s maximum exposure to losses was $2.7 billion.

SERVICING ASSETS

In connection with certain transactions where the Company securitizes and sells originated or purchased loans with servicing retained, servicing assets or liabilities are recorded based on the relative fair value of the servicing rights on the date the loans are sold. The Company also purchases certain servicing assets. Servicing assets recorded at amortized cost are amortized in proportion to and over the estimated period of net servicing income.

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 156, “Accounting for Servicing of Financial Assets,” effective January 1, 2006. SFAS 156 requires that all servicing assets and liabilities initially be recognized at fair value, rather than based on an allocated fair value amount. Additionally, SFAS 156 permits entities to choose to recognize individual classes of servicing assets at fair value on an ongoing basis, with subsequent changes in fair value recorded in earnings. The Company determined its classes of servicing assets based on the asset type being serviced along with the methods used to manage the risk inherent in the servicing assets, which includes the market inputs used to value the servicing assets. The risks inherent in these servicing assets vary based on asset class but include changes in market interest rates, prepayments, default rates and cost to service in event of default, among other factors. The Company elected to record a class of originated residential mortgage servicing assets at fair value on an ongoing basis with the adoption of SFAS 156. Accordingly, the Company has recorded a $41 million after-tax cumulative effect adjustment to beginning retained earnings, as required by SFAS 156, for the difference between the carrying amount of originated residential mortgage servicing assets and their fair value at the date of adoption. Valuation of the originated residential mortgage servicing assets recorded at fair value is estimated using discounted cash flows with prepayment speeds and discount rates as significant assumptions. At September 30, 2006, the weighted average prepayment speed assumption was 16.00 percent and the weighted average discount rate used was 11.12 percent. Valuation of the servicing assets recorded on an amortized cost basis is also estimated using discounted cash flows with key assumptions including prepayment speeds, discount rates, estimated default rates and cost to service. Servicing assets recorded at amortized cost are periodically evaluated for impairment based on the fair value of those assets. If, by individual stratum, the carrying amount of servicing assets exceeds fair value, a valuation reserve is established. The valuation reserve is adjusted as the fair value changes. For purposes of impairment evaluation and measurement, the Company stratifies servicing assets based on predominant risk characteristics of the underlying loans, including loan type, amortization type, loan coupon rate, and in certain circumstances, period of origination.

Included in other servicing assets below are servicing assets with a carrying amount of $247 million at September 30, 2006, that are associated with the Company’s HomEq servicing business which was divested on November 1, 2006.

Servicing fee income in the nine months ended September 30, 2006, was $340 million and is included in other banking fees on the consolidated statements of income. Changes in the fair value and amortization of servicing assets are included in other banking fees. The change in the fair value of originated residential mortgage servicing assets and the change in the carrying amount of servicing assets which are recorded at amortized cost in the nine months ended September 30, 2006, follows.


	*Nine Months Ended September 30, 2006*
	*Servicing Assets*
	*Fair Value*			*Amortized Cost*
				*Fixed Rate*
	*Originated*			*Commercial*
	*Residential*			*Mortgage-*
(In millions)	*Mortgages*			*Backed*			*Other*			*Total*

Balance, December 31, 2005	$	195			372			400			967
Cumulative effect of an accounting change		64			—			—			64

Balance, January 1, 2006		259			372			400			1,031
Fair value of servicing assets purchased, assumed or originated, or retained from securitizations		115			157			226			498
Servicing sold or otherwise disposed of		(29	)		(2	)		—			(31	)
Change in fair value due to changes in model inputs and/or assumptions		(1	)		—			—			(1	)
Other changes in fair value, primarily from fees earned		(49	)		—			—			(49	)
Amortization of servicing assets		—			(67	)		(140	)		(207	)
Impairment		—			—			(4	)		(4	)
Other		5			—			(7	)		(2	)

Balance, September 30, 2006	$	300			460			475			1,235

FAIR VALUE
December 31, 2005	$	259			516			515			1,290
September 30, 2006	$	300			692			583			1,575

NOTE 4: SHARE-BASED PAYMENTS

The Company has stock option plans under which incentive and nonqualified stock options may be granted periodically to certain employees. The options are granted at an exercise price equal to the fair value of the underlying shares at the date of grant, vest based on continued service with the Company for a specified period, generally three years to five years following the date of grant, and have a contractual life of ten years. Restricted stock may also be granted under the stock option plans. The restricted stock generally vests over three years to five years, during which time the holder receives dividends and has full voting rights. Employee stock compensation expense was $108 million in the three months ended September 30, 2006, including $77 million related to restricted stock awards and $31 million related to stock option awards. Employee stock compensation expense was $421 million in the nine months ended September 30, 2006, including $275 million related to restricted stock awards and $146 million related to stock option awards. The related income tax benefit in the three and nine months ended September 30, 2006, was $38 million and $147 million, respectively.

At September 30, 2006, there was $525 million and $262 million of total unrecognized compensation costs related to restricted stock awards and stock option awards, respectively. Those costs are expected to be recognized over a weighted-average period of 1.3 years and 1.6 years, respectively. The fair value of restricted stock awards vested in the nine months ended September 30, 2006, and September 30, 2005, was $274 million and $327 million, respectively. The total intrinsic value of stock option awards exercised in the nine months ended September 30, 2006, and September 30, 2005, was $355 million and $211 million, respectively. The amount of cash received from the exercise of stock options granted under share-based payment arrangements was $562 million in the nine months ended September 30, 2006, and the income tax benefits realized from stock options exercised was $126 million in the same period.

The Company adopted the fair value method of accounting for stock options in 2002 and all awards made prior to January 1, 2002, had fully vested prior to December 31, 2005. Under this method, fair value is measured on the date of grant using the Black-Scholes option pricing model with market assumptions. This amount was amortized on a straight-line basis over the vesting period for all recipients. Accordingly, the primary impact to the Company from the implementation of SFAS 123 (revised) (“SFAS 123R”) “Share-Based Payments”, effective January 1, 2006, was the different treatment of awards to retirement-eligible employees, which must now be expensed in full at the date of grant, or from the date of grant to the date that an employee will become retirement-eligible, if that is before the end of the stated vesting period. Employee stock compensation expense in the nine months ended September 30, 2006, includes $107 million associated with the implementation of SFAS 123R, primarily related to the impact of awards granted to employees that were retirement-eligible at the date of grant. There was no such expense in the three months ended September 30, 2006.

On August 31, 2006, shareholder approval was received to reserve for issuance an additional 50 million shares of common stock. At September 30, 2006, the Company had authorization to reserve 116 million shares of its common stock for issuance under its stock option plans.

The weighted average grant date fair value of options awarded under the stock option plans in the nine months ended September 30, 2006, was $10.07. The more significant assumptions used in estimating the fair value of stock options include risk-free interest rates of 4.83 percent, dividend yield of 3.64 percent, volatility of the Company’s common stock of 18.87 percent and weighted average expected lives of the stock options of 7.0 years. The Company calculated its volatility estimate from implied volatility of actively traded options on the Company’s common stock with remaining maturities of two years. This represents a change from prior years, in which the Company calculated its volatility estimate based on historical volatility adjusted for significant changes in the Company’s business activities. The Company determined the estimated life using the simple average of the 10-year contractual term of the options and the vesting term (using an average of the 5-year graded vesting period). In prior years, the Company determined the estimated life based on historical share option experience.

Stock award activity in the nine months ended September 30, 2006, is presented below.


	*September 30, 2006*
				*Weighted-*
				*Average*
(Options and shares in thousands)	*Number*			*Price (a)*

STOCK OPTIONS
Options outstanding, beginning of period		133,870		$	38.67
Granted		14,256			56.03
Options of acquired entities		1,619			27.89
Exercised		(16,795	)		34.87
Expired		(358	)		46.38
Forfeited		(1,431	)		46.60

Options outstanding, end of period		131,161		$	40.80

Options exercisable, end of period		94,794		$	37.67

RESTRICTED STOCK
Unvested shares, beginning of period		14,055		$	48.59
Granted		6,700			56.00
Vested		(5,118	)		47.24
Forfeited		(949	)		51.61

Unvested shares, end of period		14,688		$	52.24


(a)		The weighted-average price for stock options is the weighted-average exercise price of the options, and for restricted stock, the weighted-average fair value of the stock at the date of grant.

NOTE 6: BUSINESS SEGMENTS (a)

Business segment earnings are presented excluding merger-related and restructuring expenses, other intangible amortization, minority interest in consolidated subsidiaries and a 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. Cost transfers are made for service provided by one segment to another. In the first nine months of 2006, fee and other income in the Corporate and Investment Bank included $103 million of fees related to certain corporate underwriting and structured products activity which was eliminated in the Parent segment.

The Company continuously updates segment information for changes that occur in the management of the Company’s businesses. For example, in the first nine months of 2006, we moved deposit balances relating to certain brokerage sweep accounts originated in the General Bank to Capital Management, which resulted in these certain brokerage sweep accounts being included in Capital Management’s results consistent with how they are managed. In the first quarter of 2006, the Company transferred certain customer relationships and financial advisors to Wealth Management from Capital Management relating to a new investment platform in Wealth Management. Information for 2005 has been updated to reflect these and other changes. The impact to segment earnings in 2005 as a result of these changes was a $99 million decrease in the General Bank, a $121 million increase in Capital Management, a $12 million decrease in Wealth Management, a $3 million increase in the Corporate and Investment Bank, and a $13 million decrease in the Parent.

Three Months Ended September 30, 2006

Net Merger-

Corporate

Related

and

General

Capital

Wealth

Investment

Restructuring

(Dollars in millions)

Bank

Management

Bank

Parent

Expenses (c)

Total

CONSOLIDATED

Net interest income (b)

2,823

247

149

482

(123

)

(37

)

3,541

Fee and other income

902

1,230

199

989

145

—

3,465

Intersegment revenue

)

(43

)

—

Total revenue (b)

3,773

1,469

349

1,428

(37

)

7,006

Provision for credit losses

123

—

)

(10

)

—

108

Noninterest expense

1,689

1,095

237

791

195

4,045

Minority interest

—

104

—

104

Income taxes (benefits)

704

137

229

(226

)

(13

)

872

Tax-equivalent adjustment

—

(37

)

—

Net income (loss)

1,246

237

404

(56

)

(25

)

1,877

Economic profit

981

194

189

(90

)

—

1,327

Risk adjusted return on capital

56.88

61.27

50.45

22.37

(1.15

)

—

37.25

Economic capital, average

8,476

1,534

532

6,605

2,918

—

20,065

Cash overhead efficiency ratio (b)

44.75

74.59

67.81

55.37

449.86

—

55.60

Lending commitments

128,380

263

6,481

102,698

472

—

238,294

Average loans, net

197,138

795

16,438

45,705

21,034

—

281,110

Average core deposits

216,795

30,114

13,790

26,048

4,480

—

291,227

FTE employees

45,687

17,303

4,492

5,692

22,886

—

96,060


	Three Months Ended September 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)	$	2,379			211			146		532			172			(53	)		3,387
Fee and other income		760			1,146			196		1,027			129			—			3,258
Intersegment revenue		53			(9	)		1		(45	)		—			—			—

Total revenue (b)		3,192			1,348			343		1,514			301			(53	)		6,645
Provision for credit losses		77			—			6		(3	)		2			—			82
Noninterest expense		1,575			1,067			241		808			230			83			4,004
Minority interest		—			—			—		—			105			(1	)		104
Income taxes (benefits)		555			101			34		242			(111	)		(31	)		790
Tax-equivalent adjustment		10			1			—		21			21			(53	)		—

Net income	$	975			179			62		446			54			(51	)		1,665

Economic profit	$	749			137			47		264			32			—			1,229
Risk adjusted return on capital		53.26	%		47.88			48.28		29.64			15.28			—			38.84
Economic capital, average	$	7,038			1,476			506		5,606			2,890			—			17,516
Cash overhead efficiency ratio (b)		49.33	%		79.13			70.13		53.35			43.78			—			57.06
Lending commitments	$	106,570			184			5,574		92,966			433			—			205,727
Average loans, net		163,752			372			14,202		38,813			11,821			—			228,960
Average core deposits	$	203,104			33,807			13,475		24,790			5,572			—			280,748
FTE employees		41,399			17,310			4,816		4,792			24,590			—			92,907

Nine Months Ended September 30, 2006

Net Merger-

Corporate

Related

and

General

Capital

Wealth

Investment

Restructuring

(Dollars in millions)

Bank

Management

Bank

Parent

Expenses (c)

Total

CONSOLIDATED

Net interest income (b)

8,147

756

451

1,492

(54

)

(120

)

10,672

Fee and other income

2,631

3,679

587

3,446

222

—

10,565

Intersegment revenue

139

(25

)

(122

)

—

Total revenue (b)

10,917

4,410

1,041

4,816

173

(120

)

21,237

Provision for credit losses

280

—

(37

)

(17

)

—

228

Noninterest expense

5,107

3,343

740

2,556

669

130

12,545

Minority interest

—

288

289

Income taxes (benefits)

1,986

389

109

809

(563

)

(45

)

2,685

Tax-equivalent adjustment

—

(120

)

—

Net income (loss)

3,512

677

190

1,448

(251

)

(86

)

5,490

Economic profit

2,726

549

137

825

(328

)

—

3,909

Risk adjusted return on capital

56.12

58.09

45.88

28.56

(4.62

)

—

38.15

Economic capital, average

8,076

1,559

526

6,283

2,807

—

19,251

Cash overhead efficiency ratio (b)

46.78

75.81

71.05

53.08

224.92

—

56.81

Lending commitments

128,380

263

6,481

102,698

472

—

238,294

Average loans, net

189,378

626

16,002

44,125

22,261

—

272,392

Average core deposits

214,253

31,829

14,322

25,862

4,764

—

291,030

FTE employees

45,687

17,303

4,492

5,692

23,886

—

97,060


	Nine Months Ended September 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)	$	7,020			600			428		1,642			635			(167	)		10,158
Fee and other income		2,132			3,418			534		2,795			351			—			9,230
Intersegment revenue		140			(27	)		4		(118	)		1			—			—

Total revenue (b)		9,292			3,991			966		4,319			987			(167	)		19,388
Provision for credit losses		202			—			5		(14	)		(25	)		—			168
Noninterest expense		4,612			3,171			666		2,252			729			234			11,664
Minority interest		—			—			—		—			264			(25	)		239
Income taxes (benefits)		1,613			299			108		697			(257	)		(79	)		2,381
Tax-equivalent adjustment		30			1			—		76			60			(167	)		—

Net income	$	2,835			520			187		1,308			216			(130	)		4,936

Economic profit	$	2,144			398			140		784			148			—			3,614
Risk adjusted return on capital		51.87	%		47.00			49.96		30.50			18.04			—			39.15
Economic capital, average	$	7,015			1,478			481		5,373			2,818			—			17,165
Cash overhead efficiency ratio (b)		49.63	%		79.44			68.93		52.14			41.32			—			56.80
Lending commitments	$	106,570			184			5,574		92,966			433			—			205,727
Average loans, net		161,671			347			13,571		37,740			11,372			—			224,701
Average core deposits	$	199,646			35,100			13,327		22,741			4,948			—			275,762
FTE employees		41,399			17,310			4,816		4,792			24,590			—			92,907


(a)		Certain amounts presented in periods prior to the third quarter of 2006 have been reclassified to conform to the presentation in the third quarter of 2006.

(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.

NOTE 8: DERIVATIVES (a)

Risk management derivative financial instruments at September 30, 2006, are presented below.


	*September 30, 2006*
											*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	$	31,958		192		(400	)		(130	)		(7	)		3.87
Interest rate options		7,000		5		—			3			—			0.75
Forward purchase commitments		617		4		—			2			—			0.05
Fair value hedges (c)
Interest rate swaps—pay fixed		1,531		29		(12	)		—			2			15.65
Forward sale commitments		5,437		2		(20	)		—			3			0.00

Total asset hedges	$	46,543		232		(432	)		(125	)		(2	)		3.28

LIABILITY HEDGES
Cash flow hedges (d)
Interest rate swaps—pay fixed		29,671		223		(228	)		(3	)		—			3.48
Interest rate options		17,500		—		(10	)		(6	)		—			1.00
Eurodollar futures		112,362		—		(15	)		(9	)		1			0.25
Fair value hedges (e)
Interest rate swaps—receive fixed		22,411		62		(154	)		—			(2	)		7.14

Total liability hedges		181,944		285		(407	)		(18	)		(1	)		1.70

Total	$	228,487		517		(839	)		(143	)		(3	)		—



(a)		Includes only derivative financial instruments related to interest rate risk management activities that have been designated and accounted for as accounting hedges. The change in fair value of derivatives not accounted for as accounting hedges is recorded in the results of operations.

(b)		Receive-fixed interest rate swaps with a notional amount of $32.0 billion, of which $10.7 billion are forward-starting, and with pay rates based on LIBOR are primarily designated as cash flow hedges of the variability in cash flows related to the forecasted interest rate resets of LIBOR-indexed loans. In addition, $7.0 billion of purchased interest rate floors also hedge the variability in cash flows related to the forecasted interest rate resets of LIBOR-indexed loans when LIBOR is below the purchased floor. Forward purchase commitments of $617 million are designated as cash flow hedges of the variability of the consideration to be paid on the forecasted purchase of available for sale securities.

(c)		Pay-fixed interest rate swaps with a notional amount of $1.5 billion and receive rates based on LIBOR are designated as fair value hedges of available for sale securities. Forward sale commitments of $5.0 billion and $437 million are designated as fair value hedges of available for sale securities and warehoused mortgage loans, respectively.

(d)		Derivatives with a notional amount of $148.9 billion are designated as cash flow hedges of the variability in cash flows attributable to the forecasted issuance of fixed rate short-term liabilities that are part of a rollover strategy. Of this amount, $19.0 billion are pay-fixed interest rate swaps with receive rates based on LIBOR, of which $6.0 billion are forward-starting, $112.4 billion are Eurodollar futures and $17.5 billion are LIBOR-based purchased interest rate options. Pay-fixed interest rate swaps with a notional amount of $10.6 billion, of which $2.0 billion are forward starting, and with rates based on LIBOR, are designated as cash flow hedges of the variability in cash flows related to the forecasted interest rate resets of LIBOR-indexed long-term debt.

(e)		Receive-fixed interest rate swaps with a notional amount of $22.4 billion and with pay rates based on benchmark interest rates are designated as fair value hedges of fixed rate liabilities, primarily long-term debt.

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

(g)		At September 30, 2006, the net unrealized loss on derivatives included in accumulated other comprehensive income, which is a component of stockholders’ equity, was $322 million, net of income taxes. Of this net of tax amount, a $143 million loss represents the effective portion of the net gains (losses) on derivatives that qualify as cash flow hedges, and a $179 million loss relates to terminated and/or redesignated derivatives. At September 30, 2006, $131 million of net losses, net of income taxes, recorded in accumulated other comprehensive income, is 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 19.59 years.

(h)		In the nine months ended September 30, 2006, losses in the amount of $3 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. This amount also includes the changes in the time value of options. In addition, net interest income in the nine months ended September 30, 2006, decreased by $16 million representing ineffectiveness of cash flow hedges caused by certain differences between the terms of the derivative and the hedged item, primarily differences in reset dates.

(i)		Estimated maturity approximates average life.

Expected maturities of risk management derivative financial instruments at September 30, 2006, are presented below.

September 30, 2006

1 Year

1-2

2-5

5-10

After 10

(In millions)

or Less

Years

Total

CASH FLOW ASSET HEDGES

Notional amount — swaps—receive fixed

955

1,509

19,435

10,059

—

31,958

Notional amount — other

7,617

—

7,617

Weighted average receive rate (a)

4.26

3.84

4.80

4.63

—

4.67

Weighted average pay rate (a)

5.39

5.47

5.38

5.40

—

5.39

Unrealized gain (loss)

—

(26

)

(120

)

(53

)

—

(199

)

FAIR VALUE ASSET HEDGES

Notional amount — swaps—pay fixed

—

266

1,265

1,531

Notional amount — other

5,437

—

5,437

Weighted average receive rate (a)

—

3.57

3.59

3.58

Weighted average pay rate (a)

—

3.37

3.82

3.74

Unrealized gain (loss)

(18

)

—

)

CASH FLOW LIABILITY HEDGES

Notional amount — swaps—pay fixed

11,986

3,092

2,630

9,907

2,056

29,671

Notional amount — other

127,637

2,225

—

129,862

Weighted average receive rate (a)

5.44

5.40

5.27

5.36

5.31

5.40

Weighted average pay rate (a)

3.99

3.85

6.54

5.12

5.58

4.42

Unrealized gain (loss)

(111

)

(30

)

FAIR VALUE LIABILITY HEDGES

Notional amount — swaps—receive fixed

2,615

2,227

6,075

7,773

3,721

22,411

Weighted average receive rate (a)

5.18

4.31

5.07

4.77

5.22

4.93

Weighted average pay rate (a)

5.39

5.38

5.40

5.19

5.23

5.30

Unrealized gain (loss)

(14

)

(10

)

(19

)

(51

)

(92

)


(a)		Weighted average receive and pay rates include the impact of currently effective interest rate 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 LIBOR, and they are the pay or receive rates in effect at September 30, 2006.


		Third Quarter 2006
		Management’s Discussion and Analysis
		Quarterly Financial Supplement
		Nine Months Ended September 30, 2006

	•		Net interest income growth generally consistent on a tax-equivalent basis compared with an adjusted $14.6 billion.

	•		Fee income growth in the mid teens percentage range from an adjusted $12.3 billion.

	•		Noninterest expense growth in the mid single digit percentage range from an adjusted $15.8 billion, including the effect of employee stock compensation costs related to Statement of Financial Accounting Standards (SFAS) No. 123 (revised) (SFAS 123R), Share-Based Payments.

	•		Minority interest expense increase in the high single digit percentage range from an adjusted $367 million.

	•		Loan growth in the mid teens percentage range from an adjusted $240.6 billion, including consumer loan growth in the high teens from an adjusted $107.9 billion, and commercial loan growth in the low double digits percentage range from an adjusted $132.7 billion.


	*Nine*
	*Months*
	*Ended*
	*September 30,*
(In millions)	*2006*

MERGER-RELATED AND RESTRUCTURING EXPENSES — WACHOVIA/SOUTHTRUST
Personnel costs	$	37
Occupancy and equipment		11
Advertising		1
System conversion costs		7
Other		8

Total Wachovia/SouthTrust merger-related and restructuring expenses		64
Total HomEq merger-related and restructuring expenses		43
Other merger-related and restructuring expenses		23

Total merger-related and restructuring expenses	$	130


	*Nine Months Ended September 30, 2006*
	*Employee*			*Occupancy*
	*Termination*			*and*
(In millions)	*Benefits*			*Equipment*			*Other*			*Total*

EXIT COST PURCHASE ACCOUNTING ACCRUAL ACTIVITY
Wachovia/SouthTrust — November 1, 2004
Balance, December 31, 2005	$	123			9			3			135
Purchase accounting adjustments		—			—			—			—
Cash payments		(60	)		(3	)		(1	)		(64	)
Noncash write-downs		—			(6	)		—			(6	)

Balance, September 30, 2006	$	63			—			2			65


Consolidated Balance Sheets — September 30, 2006 and December 31, 2005 (Unaudited)			64

Consolidated Statements of Income — Three and Nine Months Ended September 30, 2006 and 2005 (Unaudited)			65

Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2006 and 2005 (Unaudited)			66

Notes to Consolidated Financial Statements (Unaudited)

Note 1: Summary of Significant Accounting Policies and Other Matters			67

Note 2: Securities			69

Note 3: Variable Interest Entities and Servicing Assets			71

Note 4: Share-Based Payments			73

Note 5: Comprehensive Income			75

Note 6: Business Segments			76

Note 7: Basic and Diluted Earnings Per Common Share			79

Note 8: Derivatives			80

Note 9: Guarantees			84


	*September 30, 2006*				December 31, 2005
			*Maximum*				Maximum
	*Carrying*		*Risk of*		Carrying		Risk of
(In millions)	*Amount*		*Loss*		Amount		Loss

Securities and other lending indemnifications	$	—		54,608		—		62,597
Standby letters of credit		113		35,902		108		35,568
Liquidity agreements		11		26,495		8		27,193
Loans sold with recourse		63		8,446		47		9,322
Residual value guarantees on operating leases		—		1,129		—		1,109
Written put options		114		8,292		133		8,337
Contingent consideration		—		180		—		264

Total guarantees	$	301		135,052		296		144,390