10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-10000

Wachovia Corporation

(Exact name of registrant as specified in its charter)

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

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (defined in Rule 12b-2 of the Exchange Act). Yes o No x

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

2,158,855,014 shares of Common Stock, par value $3.33 1/3 per share, were outstanding as of June 30, 2008.

PART I — FINANCIAL INFORMATION

Forward-Looking Statements

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

These forward-looking statements include, among others, statements with respect to Wachovia’s beliefs, plans, objectives, goals, guidelines, expectations, financial condition, results of operations, future performance and business, including without limitation, (i) statements relating to the benefits of the merger between Wachovia and A.G. Edwards, Inc. (the “A.G. Edwards Merger”), completed on October 1, 2007, including future financial and operating results, cost savings, enhanced revenues and the accretion or dilution to reported earnings that may be realized from the A.G. Edwards Merger, (ii) statements regarding Wachovia’s goals and expectations with respect to earnings, earnings per share, revenue, expenses, loan losses, loan loss provision and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (iii) statements preceded by, followed by or that include the words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “projects”, “outlook” or similar expressions. These forward-looking statements are based upon the current beliefs and expectations of Wachovia’s management and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Wachovia’s control). Actual results may differ from those set forth in the forward-looking statements.

The following factors, among others, could cause Wachovia’s financial performance to differ materially from that expressed in any forward-looking statements: (1) the risk that the businesses of Wachovia and A.G. Edwards in connection with the A.G. Edwards Merger will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the A.G. Edwards Merger may not be fully realized or realized within the expected time frame; (3) revenues following the A.G. Edwards Merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption following the A.G. Edwards Merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the strength of the United States economy in general and the strength of the local economies in which Wachovia conducts operations may be different than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on Wachovia’s loan portfolio and allowance for loan losses; (6) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (7) inflation, interest rate, market and monetary fluctuations; (8) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on Wachovia’s capital markets and capital management activities, including, without limitation, Wachovia’s mergers and acquisition advisory business, equity and debt underwriting activities, private equity investment activities, derivative securities activities, investment and wealth management advisory businesses, and brokerage activities; (9) the timely development of competitive new products and services by Wachovia and the acceptance of these products and services by new and existing customers; (10) the willingness of customers to accept third party products marketed by Wachovia; (11) the willingness of customers to substitute competitors’ products and services for Wachovia’s products and services and vice versa; (12) the impact of changes in financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); (13) technological changes; (14) changes in consumer spending and saving habits as well as consumer borrowing and repayment patterns; (15) the effect of corporate restructurings, acquisitions and/or dispositions we may undertake from time to time, and the actual restructuring and other expenses related thereto, and the failure to achieve the expected revenue growth and/or expense savings from such corporate restructurings, acquisitions and/or dispositions; (16) the growth and profitability of Wachovia’s noninterest or fee income being less than expected; (17) unanticipated regulatory or judicial proceedings or rulings; (18) the impact of changes in accounting principles; (19) adverse changes in financial performance and/or condition of Wachovia’s borrowers which could impact repayment of such borrowers’ outstanding loans; (20) the impact on Wachovia’s businesses, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (21) Wachovia’s success at managing the risks involved in the foregoing.

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

Item 1. Financial Statements.

     The Consolidated Balance Sheets of Wachovia and subsidiaries at June 30, 2008, and December 31, 2007, respectively, set forth on page 82 of Wachovia’s Second Quarter 2008 Financial Supplement for the six months ended June 30, 2008 (the “Financial Supplement”), are incorporated herein by reference.

     The Consolidated Statements of Income of Wachovia and subsidiaries for the three and six months ended June 30, 2008 and 2007, set forth on page 83 of the Financial Supplement, are incorporated herein by reference.

     The Consolidated Statements of Cash Flows of Wachovia and subsidiaries for the six months ended June 30, 2008 and 2007, set forth on page 84 of the Financial Supplement, are incorporated herein by reference.

     Notes to Consolidated Financial Statements, set forth on pages 85 through 112 of the Financial Supplement, are incorporated herein by reference.

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

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

     Management’s Discussion and Analysis of Financial Condition and Results of Operations appears on pages 2 through 41 of the Financial Supplement and is incorporated herein by reference.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     Quantitative and Qualitative Disclosures About Market Risk appears on pages 37 through 39, pages 88 and 89, and pages 101 through 105 of the Financial Supplement and is incorporated herein by reference.

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

Item 4. Controls and Procedures.

     Evaluation of Disclosure Controls and Procedures. As of June 30, 2008, the end of the period covered by this Quarterly Report on Form 10-Q, Wachovia’s management, including Wachovia’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, Wachovia’s Chief Executive Officer and Chief Financial Officer each concluded that as of June 30, 2008, the end of the period covered by this Quarterly Report on Form 10-Q, Wachovia maintained effective disclosure controls and procedures.

     Changes in Internal Control Over Financial Reporting. No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal quarter ended June 30, 2008, that has materially affected, or is reasonably likely to materially affect, Wachovia’s internal control over financial reporting. As part of Wachovia’s ongoing risk reduction activities, management continues to review various policies and procedures, including those relating to our internal control over financial reporting. Management will continue to assess and monitor our internal control over financial reporting and may make refinements and enhancements, as appropriate.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

     The following supplements and amends our discussion of certain matters previously reported in the “Legal Proceedings” sections of Wachovia’s Annual Report on Form 10-K for the year ended December 31, 2007 and Wachovia’s Quarterly Report on Form 10-Q for the period ended March 31, 2008.

     Adelphia Litigation. On July 17, 2008, the U.S. District Court for the Southern District of New York issued a ruling dismissing all of the creditors’ committee and equity holders’ committee bankruptcy-related claims.

      Le-Nature’s, Inc. The U.S. Bankruptcy Court confirmed Le-Nature’s Plan of Reorganization and it became effective on July 28, 2008. Such plan includes the appointment of a liquidation trustee, who could bring claims on behalf of the estate against Wachovia and other third parties.

     Municipal Derivatives Bid Practices Investigation. Wachovia Bank, N.A. has been informed that in connection with the bidding of various financial instruments associated with municipal securities, the Staff of the Securities and Exchange Commission is considering recommending that the Commission institute civil and/or administrative proceedings against Wachovia Bank, N.A. In addition, Wachovia has received subpoenas from various states attorneys general regarding these matters. Wachovia Bank, N.A. is cooperating with the government investigations.

     Four previously disclosed purported private class actions have been assigned to the Southern District of New York for consolidated pre-trial proceedings. Two additional complaints were recently filed in California state court asserting claims similar to those in the purported class actions, along with claims under California law.

      Golden West and Related Litigation. A purported securities class action, Lipetz v. Wachovia Corporation, et al., has been filed in the U.S. District Court for the Southern District of New York by purported Wachovia shareholders alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia’s common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. (“Golden West”) mortgage portfolio, Wachovia’s exposure to other mortgage related products such as collateralized debt obligations (“CDOs”), control issues and auction rate securities.

     A purported class action, Miller, et al. v. Wachovia Corporation, et al., has been filed against Wachovia, its board of directors and certain senior officers in the New York Supreme Court for the County of Nassau, since removed by Wachovia to the U.S. District Court for the Eastern District of New York, relating to Wachovia’s May 2007 issuance of trust preferred securities. The plaintiffs allege violations of Sections 11, 12 and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio.

      Seven purported class actions have been filed against Wachovia, its board of directors and certain senior officers in the U.S. District Court for the Southern District of New York on behalf of Wachovia employees who held shares of Wachovia common stock in their Wachovia Savings Plan accounts. The plaintiffs allege breach of fiduciary duty under ERISA, among other things, claiming that the defendants should not have permitted Wachovia common stock to remain an investment option in the Savings Plan because alleged misleading disclosures relating to the Golden West mortgage portfolio, exposure to CDOs and other problem loans, and other alleged misstatements made its stock a risky and imprudent investment for employee retirement accounts.

     In addition, several purported shareholders have submitted notices that they may initiate, and one purported shareholder has filed a complaint, Estate of Joseph Romain v. Wachovia Corporation, et al., in the U.S. District Court for the Southern District of New York initiating, shareholder derivative claims alleging breaches of fiduciary duty against Wachovia’s board of directors and various senior officers arising out of various alleged failures of controls relating to its disclosures regarding the Golden West mortgage portfolio, CDOs, and other alleged control issues involving anti-money laundering, bank owned life insurance, auction rate securities, municipal derivatives bid practices and the previously disclosed settlement with the OCC in the Payment Processing Center matter.

      These matters are in a preliminary stage. Wachovia intends to defend vigorously each such case.

      Auction Rate Securities. Wachovia is engaged in active settlement discussions with various state regulators and the SEC of ongoing investigations concerning the underwriting, sale and subsequent auctions of certain auction rate securities by Wachovia Securities, LLC, and Wachovia Capital Markets, LLC, including the likelihood of liquidity solutions. See also “Management’s Discussion & Analysis” in the Financial Supplement contained in Exhibit (19) to this Report.

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

Item 1A. Risk Factors.

Not Applicable.

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

     Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

In August 2005, our board of directors authorized the repurchase of 100 million shares of our common stock, which together with remaining authority from previous board authorizations in 1999, 2000, and 2004 permitted Wachovia to repurchase up to approximately 150 million shares of our common stock as of August 16, 2005, the date that authorization was announced. Future stock repurchases may be private or open-market purchases, including block transactions, accelerated or delayed block transactions, forward transactions, collar transactions, and similar transactions. The amount and timing of stock repurchases will be based on various factors, such as management’s assessment of Wachovia’s capital structure and liquidity, the market price of Wachovia common stock compared to management’s assessment of the stock’s underlying value, and applicable regulatory, legal and accounting factors. In 2007, Wachovia repurchased 22 million shares of Wachovia common stock, all of such repurchases were in the open market, at an average cost of $54.35 per share. Please see “Stockholders’ Equity” in the Financial Supplement, filed as Exhibit (19) to this Report, for additional information about Wachovia’s share repurchases in the second quarter of 2008. The following table sets forth information about our stock repurchases for the three months ended June 30, 2008.

Issuer Repurchases of Equity Securities

			Total Number	Maximum Number
			of Shares	(or Approximate
			Purchased	Dollar Value)
			as Part of	of Shares that
			Publicly	May Yet Be
	Total Number	Average Price	Announced	Purchased Under
	of Shares	Paid	Plans or	the Plans or
Period (1)	Purchased (2)	per Share	Programs (3)	Programs (3)
April 1, 2008 to April 30, 2008	—	—	—	18,952,721
May 1, 2008 to May 31, 2008	—	—	—
June 1, 2008 to June 30, 2008	—	—	—
Total	—	—	—	18,952,721

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

(2) In addition to these repurchases, pursuant to Wachovia’s employee stock option plans, participants may exercise Wachovia stock options by surrendering shares of Wachovia common stock that participants already own as payment of the option exercise price. Shares so surrendered by participants in Wachovia’s employee stock option plans are repurchased pursuant to the terms of the applicable stock option plan and not pursuant to publicly announced share repurchase programs. For the quarter ended June 30, 2008, no shares of Wachovia common stock were surrendered by participants in Wachovia’s employee stock option plans.

(3) On May 25, 1999, Wachovia announced a stock repurchase program pursuant to which Wachovia was authorized to repurchase up to 50 million shares of its common stock. On June 26, 2000, Wachovia announced a stock repurchase

program pursuant to which Wachovia was authorized to repurchase up to 50 million shares of its common stock. On January 15, 2004, Wachovia announced a stock repurchase program pursuant to which Wachovia was authorized to repurchase up to 60 million shares of its common stock. On August 16, 2005, Wachovia announced a stock repurchase program pursuant to which Wachovia was authorized to repurchase up to 100 million shares of its common stock. None of these programs has an expiration date and each respective program expires upon completion of repurchases totaling the amount authorized for repurchase. During the second quarter of 2004, all remaining shares authorized under the May 1999 authorization, which totaled approximately 5.2 million shares at the beginning of the quarter, were repurchased. During the first quarter of 2005, all remaining shares authorized under the June 2000 authorization, which totaled approximately 15.7 million shares at the beginning of the quarter, were repurchased. During the first quarter of 2006, all remaining shares authorized under the January 2004 authorization, which totaled approximately 23.6 million shares at the beginning of the quarter, were repurchased. As of June 30, 2008, there are no more shares remaining under the May 1999, June 2000 and January 2004 authorizations, and approximately 18.95 million shares remaining under the August 2005 authorization.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Other Information.

The information set forth (i) in the first two paragraphs and in the third bullet under “Actions on Capital, Liquidity and Risk” beginning on page 3 of the Financial Supplement, and (ii) in the second paragraph under “Merger-Related and Restructuring Expenses” beginning on page 17 of the Financial Supplement, is incorporated herein by reference. This information supplements the information previously reported on page 25 of Exhibit (99)(b) to Wachovia’s Current Report on Form 8-K, dated July 22, 2008.

Item 6. Exhibits.

Exhibit No.	Description
(3)(a)	Restated Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit (3)(a) to Wachovia’s 2001 Third Quarter Report on Form 10-Q.)
(3)(b)	Articles of Amendment to Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit (3)(b) to Wachovia’s 2002 Annual Report on Form 10-K.)
(3)(c)	Articles of Amendment to Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit (3)(c) to Wachovia’s 2002 Annual Report on Form 10-K.)
(3)(d)	Articles of Amendment to Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit 4.1 to Wachovia’s Current Report on Form 8-K dated February 1, 2006.)
(3)(e)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit (3)(a) to Wachovia’s Current Report on Form 8-K dated April 18, 2007.)
(3)(f)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Wachovia’s Current Report on Form 8-K dated December 21, 2007.)
(3)(g)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Wachovia’s Current Report on Form 8-K dated February 8, 2008.)
(3)(h)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Wachovia’s Current Report on Form 8-K dated April 17, 2008.)
(3)(i)	Wachovia’s Amended and Restated Bylaws. (Incorporated by reference to Exhibit (3)(i) to Wachovia’s 2008 First Quarter Report on Form 10-Q.)
(4)	Instruments defining the rights of security holders, including indentures.*

(10)(a)	Stock Award Letter, dated July 15, 2008, between Wachovia and Robert K. Steel.
(10)(b)	Employment Agreement, dated as of May 6, 2008, between Wachovia and Jane C. Sherburne.
(12)(a)	Computations of Consolidated Ratios of Earnings to Fixed Charges.
(12)(b)	Computations of Consolidated Ratios of Earnings to Fixed Charges and Preferred Stock Dividends.
(19)	Wachovia’s Second Quarter 2008 Financial Supplement.
(31)(a)	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31)(b)	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32)(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

SIGNATURES

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

	Wachovia Corporation
Date: August 11, 2008
	By:	/s/ Peter M. Carlson
		Peter M. Carlson Executive Vice President and Corporate Controller (Principal Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description
(3)(a)	Restated Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit (3)(a) to Wachovia’s 2001 Third Quarter Report on Form 10-Q.)
(3)(b)	Articles of Amendment to Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit (3)(b) to Wachovia’s 2002 Annual Report on Form 10-K.)
(3)(c)	Articles of Amendment to Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit (3)(c) to Wachovia’s 2002 Annual Report on Form 10-K.)
(3)(d)	Articles of Amendment to Articles of Incorporation of Wachovia. (Incorporated by reference to Exhibit 4.1 to Wachovia’s Current Report on Form 8-K dated February 1, 2006.)
(3)(e)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit (3)(a) to Wachovia’s Current Report on Form 8-K dated April 18, 2007.)
(3)(f)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Wachovia’s Current Report on Form 8-K dated December 21, 2007.)
(3)(g)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Wachovia’s Current Report on Form 8-K dated February 8, 2008.)
(3)(h)	Articles of Amendment to Wachovia’s Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Wachovia’s Current Report on Form 8-K dated April 17, 2008.)
(3)(i)	Wachovia’s Amended and Restated Bylaws. (Incorporated by reference to Exhibit (3)(i) to Wachovia’s 2008 First Quarter Report on Form 10-Q.)
(4)	Instruments defining the rights of security holders, including indentures.*
(10)(a)	Stock Award Letter, dated July 15, 2008, between Wachovia and Robert K. Steel.
(10)(b)	Employment Agreement, dated as of May 6, 2008, between Wachovia and Jane C. Sherburne.
(12)(a)	Computations of Consolidated Ratios of Earnings to Fixed Charges.
(12)(b)	Computations of Consolidated Ratios of Earnings to Fixed Charges and Preferred Stock Dividends.
(19)	Wachovia’s Second Quarter 2008 Financial Supplement.
(31)(a)	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31)(b)	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32)(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

EX-10.A

July 15, 2008

Robert K. Steel
301 South College Street
One Wachovia Center
Charlotte, North Carolina 28288

Re: NOTIFICATION OF GRANT UNDER WACHOVIA CORPORATION’S AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN

Dear Bob:

Wachovia Corporation (the “Corporation”) is extremely pleased that you have accepted its offer to become Chief Executive Officer and President of Wachovia pursuant to our offer letter to you dated, July 9, 2008 (the “Offer Letter”). As set forth in the Offer Letter, you have been granted under the Corporation’s Amended and Restated 2003 Stock Incentive Plan (the “Plan”) the stock options and performance restricted stock awards relating to the Corporation’s common stock set forth below. The grant of the awards is subject in all respects to the terms and conditions of this letter, the Offer Letter, the Plan and the related Information Statement. The terms of the Plan and the Information Statement are expressly incorporated into this letter. To the extent this letter and the Plan conflict, the terms of the Plan control. Any capitalized terms not defined in this letter will have the meanings given to them in the Plan.

2008 Long-Term Incentive Non-qualified Stock Options

On July 15, 2008, you were granted a non-qualified stock option (“NQSO”) to purchase an aggregate of 1,500,000 shares of the Corporation’s common stock, at a price of $9.08 per share. Subject to the terms of the Plan, the Offer Letter and this letter, the shares under this option shall become exercisable in substantially equal installments on the first, second and third anniversary of the date of grant as set forth below and will remain so exercisable until July 15, 2018, on which date the NQSO hereby granted shall terminate, to the extent not previously exercised or forfeited.

Number of Options	Vesting Schedule
500,000	July 15, 2009
500,000	July 15, 2010
500,000	July 15, 2011

2008 Long-Term Incentive Performance Restricted Stock Awards

On July 15, 2008, you were granted 888,767 performance restricted shares (the “2008 Long-Term Incentive Performance RSAs”) of the Corporation’s common stock. Each 2008 Long-Term Incentive Performance RSA granted hereby has a performance goal and an employment requirement, and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated (the “Transfer Restrictions”), except as set forth below or as otherwise may be provided in the Plan:

Number of Shares	Date Transfer Restrictions Lapse
444,383	The Transfer Restrictions on the 444,383 shares of the 2008 Long-Term Incentive Performance RSAs will lapse upon satisfaction of the later of the Fair Market Value of the Corporation’s common stock being at least $25.00 per share for 15 consecutive trading days on the New York Stock Exchange (the “$25 Performance Goal”) and you remaining employed at the Corporation until July 15, 2011.

Number of Shares
444,384	The Transfer Restrictions on the 444,384 shares of the 2008 Long-Term Incentive Performance RSAs will lapse upon satisfaction of the later of the Fair Market Value of the Corporation’s common stock being at least $30.00 per share for 15 consecutive trading days on the New York Stock Exchange (the “$30 Performance Goal”) and you remaining employed at the Corporation until July 15, 2011.

Subject to the terms of the Offer Letter, the Plan, and this letter, you will forfeit the 444,383 shares of the 2008 Long-Term Incentive Performance RSAs if the $25 Performance Goal is not satisfied by July 15, 2014, and you will forfeit the 444,384 shares of the 2008 Long-Term Incentive Performance RSAs if the $30 Performance Goal is not satisfied by July 15, 2014.

Special Performance Restricted Stock Awards

On July 15, 2008, you were granted 1,101,322 performance restricted shares (the “Special Performance RSAs” ) of the Corporation’s common stock. Each Special Performance RSA granted hereby has a performance goal and an employment requirement, and is subject to the Transfer Restrictions, except as set forth below or as otherwise may be provided in the Plan:

Number of Shares	Date Transfer Restrictions Lapse
550,661	The Transfer Restrictions on the 550,661 shares of the Special Performance RSAs will lapse upon satisfaction of the later of the Fair Market Value of the Corporation’s common stock being at least $20.00 per share for 15 consecutive trading days on the New York Stock Exchange (the “$20 Performance Goal”) and you remaining employed at the Corporation until July 15, 2011.

Number of Shares
550,661	The Transfer Restrictions on the 550,661 shares of the Special Performance RSAs will lapse upon satisfaction of the later of the Fair Market Value of the Corporation’s common stock being at least $35.00 per share for 15 consecutive trading days on the New York Stock Exchange (the “$35 Performance Goal”) and you remaining employed at the Corporation until July 15, 2011.

Subject to the terms of the Offer Letter, the Plan, and this letter, you will forfeit the 550,661 shares of the Special Performance RSAs if the $20 Performance Goal is not satisfied by July 15, 2014, and you will forfeit the 550,661 shares of the Special Performance RSAs if the $35 Performance Goal is not satisfied by July 15, 2014.

Termination of Employment and Change of Control:

(1) Effect on Stock Options:

If your employment with the Corporation terminates (i) because you terminate your employment with the Corporation for Good Reason (as defined in the Offer Letter), (ii) because the Corporation terminates your employment other than for Cause (as defined in the Offer Letter), death, Disability or Retirement, or (iii) because of your death, Disability or Retirement, all of the shares under the NQSO that are unvested shall continue to vest in accordance with the vesting schedule set forth above under “2008 Long-Term Incentive Non-qualified Stock Options” as if your employment had continued for a period of two years and then, to the extent not otherwise vested, all such remaining unvested NQSOs will vest, to the extent not previously exercised or forfeited. All vested NQSO will remain exercisable until July 15, 2018. In the event of a Change of Control (as defined in the Offer Letter), all of the shares under the NQSO that are unvested shall vest and remain exercisable until July 15, 2018, to the extent not previously exercised or forfeited.

(2) Effect On 2008 Long-Term Incentive Performance Restricted Stock Awards and Special Performance Restricted Stock Awards

If your employment with the Corporation terminates, including following a Change of Control (as defined in the Offer Letter), (i) because you terminate your employment with the Corporation for Good Reason (as defined in the Offer Letter), (ii) because the Corporation terminates your employment other than for Cause (as defined in the Offer Letter), death, Disability or Retirement, or (iii) because of your death, Disability or Retirement, the employment requirement will be waived, and the Transfer Restrictions applicable to 444,383 shares of the 2008 Long-Term Incentive Performance Restricted Stock Awards will terminate upon satisfaction of the $25 Performance Goal, the Transfer Restrictions applicable to 444,384 shares of the 2008 Long-Term Incentive Performance Restricted Stock Awards will terminate upon satisfaction of the $30 Performance Goal, the Transfer Restrictions applicable to 550,661 shares of the Special Performance Restricted Stock Awards will terminate upon satisfaction of the $20 Performance Goal, and the Transfer Restrictions applicable to 550,661 shares of the Special Performance Restricted Stock Awards will terminate upon satisfaction of the $35 Performance Goal, in each case provided that the relevant performance goal is satisfied by July 15, 2014. In the event of a Change of Control (as defined in the Offer Letter), the employment requirement will be waived, and the $25 Performance Goal, the $30 Performance Goal, the $20 Performance Goal, and the $35 Performance Goal will be adjusted equitably based on the consideration received in the Change of Control transaction.

If you have any questions concerning your grant, please contact Chuck Loring at 704-383-3007.

Sincerely,

Shannon McFayden
Senior Executive Vice President
Director of Human Resources and Corporate Relations

Enclosures

EX-10.B

EMPLOYMENT AGREEMENT

     This Employment Agreement, made and entered into as of the 6th day of May, 2008, by and between Wachovia Corporation (the “Company”), a North Carolina corporation, and Jane C. Sherburne (the “Executive”);

     WHEREAS, the Management Resources & Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its stockholders to assure that the Company employ the Executive and have the continued service of the Executive. The Committee believes it is imperative to encourage the Executive’s full attention and dedication to the Company, and to provide the Executive with compensation and benefits arrangements upon a termination of employment with the Company which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.

     NOW, THEREFORE, in order to accomplish the objectives set forth above and in consideration of the mutual covenants herein contained, the parties hereby agree as follows:

     1. Employment Period. (a) The “Effective Date” shall mean the first day that the Executive commences performing her duties for the Company. It is expected that the Effective Date will be August 1, 2008 but such date may be altered by agreement between the Company and the Executive; provided that in the event that the Executive is unable to commence performing her duties by October 1, 2008, then this Agreement shall be void and of no effect.

          (b) The Company hereby agrees to employ the Executive and to continue the Executive in its employ, and the Executive hereby agrees to be employed by and to remain in the employ of the Company upon the terms and conditions set forth in this Agreement, for the period commencing on the Effective Date and ending on the third anniversary thereof (the “Employment Period”); provided, however, that commencing on the third anniversary, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Employment Period shall be automatically extended so as to terminate one year from such Renewal Date, unless at least 90 days prior to the Renewal Date the Company or the Executive, respectively, shall give notice to the Executive or the Company, respectively, that the Employment Period shall not be so extended. Notwithstanding the foregoing, in the event a “Change in Control” (as defined herein) occurs, the Employment Period, unless previously terminated, shall be extended immediately prior to the Change in Control so that the Employment Period shall terminate no earlier than three years from such Change in Control.

     2. Terms of Employment. (a) Positions and Duties. (i) During the Employment Period, the Company agrees to employ the Executive, and the Executive agrees to serve as an employee of the Company and as an employee of one or more of its subsidiaries. The Executive shall perform such duties and responsibilities, in such capacity and with such authority, for the Company (or one or more of its subsidiaries) as the Company may designate from time to time.

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Such duties shall be of a type for which the Executive is suited by background, experience and training, in the Company’s reasonable discretion.

               (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote her full professional attention and time during normal business hours to the business and affairs of the Company and to perform the responsibilities assigned to the Executive hereunder. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage personal investments, so long as such activities do not interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement and are consistent with the Company’s policies. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company.

          (b) Compensation. (i) Salary and Bonus. For all services rendered by the Executive in any capacity under this Agreement, the Company shall pay the Executive during the Employment Period as compensation (i) an annual salary in an amount not less than the amount of the Executive’s annual salary as of the Effective Date (as set forth in Appendix A, the “Annual Base Salary”) and (ii) such annual cash incentive bonus, if any, as may be awarded to her by the Board or by a Committee designated by the Board (the “Annual Bonus”). Such salary shall be payable in accordance with the Company’s customary payroll practices, and any such bonus shall be payable in cash in accordance with the Company’s incentive bonus plans from which the Annual Bonus is awarded. During the Employment Period prior to the Date of Termination, the Annual Base Salary shall be reviewed in accordance with the Company’s policies and procedures applicable to the Executive and may be increased from time to time consistent with such procedures. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. In the event the Executive’s actual Annual Base Salary is increased above the then current Annual Base Salary during the Employment Period, such increased Annual Base Salary shall constitute “Annual Base Salary” for purposes of this Agreement, and may not thereafter be reduced except with the written consent of the Executive.

               (ii) Employee Benefits. During the Employment Period prior to the Date of Termination, the Executive and/or the Executive’s family, as the case may be, shall be eligible to participate in employee benefit plans generally available to other peer executives of the Company or its subsidiaries, including without limitation, savings plans, retirement plans, welfare benefit plans (including, without limitation, medical, dental, disability and life, but excluding severance plans) and similar plans, practices, policies and programs. In addition, during the Employment Period, the Executive shall be eligible to participate in the Company’s stock-based incentive compensation plans then available to other peer executives of the

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Company with awards thereunder determined by the Board or by a Committee designated by the Board, in its sole discretion, except as provided in this Agreement.

               (iii) Expenses. During the Employment Period prior to the Date of Termination, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at the time the expense is incurred.

               (iv) Fringe Benefits. During the Employment Period prior to the Date of Termination, the Executive shall be entitled to fringe benefits and perquisite plans or programs of the Company and its affiliated companies generally available to executives who are peers of the Executive; provided that the Company reserves the right to modify, change or terminate such fringe benefits and perquisite plans or programs from time to time, in its sole discretion.

               (v) Indemnification/D&O Insurance. During the Employment Period for acts prior to the Date of Termination, the Executive shall be entitled to indemnification with respect to the performance of her duties hereunder, and directors’ and officers’ liability insurance, on the same terms and conditions as generally available to other peer executives of the Company and its affiliated companies.

               (vi) Sign-On Arrangements. In order to induce the Executive to accept employment with the Company and to replace equity compensation which she will forfeit as a consequence, the Company will make certain payments and grant retention awards to the Executive as set forth in Appendix A.

     3. Termination of Employment. (a) Retirement, Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death or Retirement (as defined herein) during the Employment Period. For purposes of this Agreement, “Retirement” shall mean either (i) voluntary termination by the Executive of the Executive’s employment upon satisfaction of the requirements for early retirement under the Company’s tax-qualified defined benefit pension plan or (ii) voluntary termination by the Executive of the Executive’s employment upon satisfaction of the requirements for normal retirement under the terms of the Company’s tax-qualified pension plan. If the Company determines in good faith that Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30^th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean termination of the Executive’s employment upon satisfaction of the requirements to receive benefits under the Company’s long-term disability plan.

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          (b) Cause. The Company may terminate the Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

               (i) the continued and willful failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Company which specifically identifies the manner in which the Company believes that the Executive has not substantially performed the Executive’s duties and a reasonable time for such substantial performance has elapsed since delivery of such demand, or

               (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chairman of the Board or a senior executive officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. Following a Change in Control (as defined herein), the Company’s termination of the Executive’s employment shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-fourths of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before such Board), finding that, in the good faith opinion of such Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

          (c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in the absence of a written consent of the Executive which expressly refers to a provision of this Section 3(c):

               (i) prior to a Change in Control, the substantial diminution in the overall importance of the Executive’s role, as determined by a reduction in the Executive’s targeted Annual Bonus opportunity (but not a reduction in the Executive’s actual Annual Bonus payment), targeted stock-based incentive compensation opportunity (but not a reduction in the Executive’s actual stock-based incentive awards) or the Executive no longer being deemed to be an “executive officer” of the Company as determined by the Board; provided, however, that none of (I) a change in the Executive’s title, (II) a change in the hierarchy, (III) a change in the Executive’s responsibilities from line to staff or vice versa, and (IV) placing the Executive on

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temporary leave pending an inquiry into whether the Executive has engaged in conduct that could constitute “Cause” under this Agreement, either individually or in the aggregate shall be considered Good Reason;

               (ii) any failure by the Company to comply with any material provision of this Agreement (including, without limitation, any provision of Section 2 of this Agreement), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

               (iii) any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement;

               (iv) following a Change in Control, the relocation of the principal place of the Executive’s employment to a location that is more than 35 miles from such principal place of employment immediately prior to the date the proposed Change in Control is publicly announced, or the Company’s requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Change in Control;

               (v) following a Change in Control, the Company’s requiring the Executive or all or substantially all of the employees of the Company who report directly to the Executive immediately prior to the date the proposed Change in Control is publicly announced to be based at any office or location other than such person’s office or location on such date;

               (vi) any failure by the Company to comply with and satisfy Section 9(c) of this Agreement; or

               (vii) following a Change in Control, assignment to the Executive of any duties inconsistent in any respect with the Executive’s position as in effect immediately prior to the public announcement of the proposed Change in Control (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company which results in any diminution in such position, authority, duties or responsibilities.

For purposes of this Section 3(c), any good faith determination of “Good Reason” made by the Executive after a Change in Control shall be conclusive (including any such determination when the Executive is then eligible for Retirement). In the event the Company challenges the Executive’s determination of Good Reason, the Company shall continue to make the payments and provide the benefits to the Executive as set forth in Section 4(a). If it is finally determined pursuant to the procedures set forth in this Agreement that the Executive’s termination was not for Good Reason, the Executive shall reimburse the Company the amounts to which it is finally determined to be entitled.

          (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with this Agreement. For purposes of this Agreement, a

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“Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder. To be effective, a Notice of Termination given by the Executive terminating employment with the Company for Good Reason must be received by the Company no later than 60 days from the event(s) giving rise to the Good Reason termination.

          (e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, the date of receipt of the Notice of Termination, unless the Company agrees to a later date no more than 30 days after such notice, as the case may be, (ii) if the Executive’s employment is terminated by the Executive for Good Reason or Retirement, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be, (iii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the date on which the Company notifies the Executive of such termination or any later date specified therein within 30 days of such notice, as the case may be, (iv) if the Executive’s employment is terminated by reason of death or Disability, the date of death of the Executive or the Disability Effective Date, as the case may be, and (v) if the Executive’s employment is terminated by the Executive for other than Good Reason, death, Disability or Retirement, the date that is 60 days after the date of receipt of the Notice of Termination by the Company, provided, however, the Company may elect to waive such notice or place the Executive on paid leave for all or any part of such 60-day period during which the Executive will be entitled to continue to receive the Annual Base Salary but shall not receive any Annual Bonus or any other payment from the Company other than reimbursement for expenses as contemplated in Section 2(b)(iii) and continued participation in the employee benefit plans as contemplated in Section 2(b)(ii).

          (f) Change in Control. For purpose of this Agreement, a “Change in Control” shall mean:

               (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a

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Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 3(f); or

               (ii) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or contests by or on behalf of a Person other than the Board; or

               (iii) Consummation of a reorganization, merger, share exchange or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from the Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board immediately prior to the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

               (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

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     4. Obligations of the Company upon Termination. (a) Good Reason; Company Termination other than for Cause, Death, Disability or Retirement. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, Death, Disability or Retirement or the Executive shall terminate employment for Good Reason:

               (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of (A) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, and (B) the product of (1) an Annual Bonus of an amount equal to the greater of (x) the highest annual cash incentive bonus paid by the Company to the Executive for the three calendar years prior to the Date of Termination or (y) the Executive’s then applicable “target” incentive bonus under the then applicable cash incentive compensation plan prior to the Date of Termination (the greater of clauses (x) or (y) is defined as the “Base Bonus”), and (2) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination, and the denominator of which is 365, to the extent not theretofore paid (the “Pro Rata Bonus”), (C) any unpaid Annual Bonus for the prior year, and (D) any accrued paid time off, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (A), (B), (C), and (D) shall be hereinafter referred to as the “Accrued Obligations”).

For purposes of determining the Base Bonus hereunder, the Company shall exclude any special or one-time bonuses and any premium enhancements to bonuses but shall include any portions of bonuses (other than the excluded bonuses) which have been deferred by the Executive;

               (ii) for each of the two years after the Executive’s Date of Termination (the “Compensation Continuance Period”), the Company shall pay to the Executive a cash benefit equal to the sum of (A) the Executive’s highest Annual Base Salary during the twelve months immediately prior to the Date of Termination, (B) the Base Bonus, and (C) the amount equal to the highest matching contribution by the Company to the Executive’s account in the Company’s 401(k) plan for the three years immediately prior to the Date of Termination (the payments described in clauses (A), (B) and (C) shall be hereinafter referred to as the “Compensation Continuance Payments” and, together with the benefits referred to in Sections 4(a)(iii), (iv), (v), (vi) and (vii), shall be hereinafter referred to as the “Compensation Continuance Benefits”). The Company shall make the Compensation Continuance Payments no more frequently than semi-monthly (and may make the Compensation Continuance Payments in accordance with the Company’s normal payroll policies and practices), and shall withhold from the Compensation Continuance Payments all applicable federal, state and local taxes. Notwithstanding anything contained in this Agreement to the contrary, in the event a Change of Control has occurred on or prior to the Date of Termination, the Company shall pay the Compensation Continuance Payments to the Executive in a lump sum in cash within 30 days after the Date of Termination.

               (iii) during the Compensation Continuance Period, the Company shall continue medical, dental and life insurance benefits to the Executive and/or the Executive’s

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family on a substantially equivalent basis to those which would have been provided to them in accordance with the medical, dental and life insurance programs described in Section 2(b)(iv) of this Agreement if the Executive’s employment had not been terminated. At the end of the Compensation Continuance Period, if eligible to participate in the applicable programs described in Section 2(b)(iv) as a “retiree”, the Executive will be treated as a “retiree” under such programs. If the Date of Termination is after a Change in Control and the Executive is not eligible for retiree coverage after the Compensation Continuance Period, the Executive and/or the Executive’s family will receive medical coverage for the remainder of the Executive’s life through the Company at its cost of providing this coverage. Notwithstanding the foregoing, in the event the Executive becomes reemployed with another employer and becomes eligible to receive medical, dental and/or life insurance benefits from such employer, the medical, dental and/or life insurance benefits described herein shall be secondary to such benefits during the period of the Executive’s eligibility, but only to the extent that the Company reimburses the Executive for any increased cost and provides any additional benefits necessary to give the Executive the benefits provided hereunder. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have terminated employment with the Company on the Date of Termination. Notwithstanding the foregoing, if the Company reasonably determines that providing continued coverage under one or more of its welfare benefit plans contemplated herein could adversely affect the tax treatment of other participants covered under such plans, or would otherwise have adverse legal ramifications, the Company may, in its discretion, either (A) provide other coverage at least as valuable as the continued coverage through insurance or otherwise, or (B) pay the Executive a lump sum cash amount that reasonably approximates the after-tax value to the Executive of the premiums for continued coverage, in lieu of providing such continued coverage;

               (iv) during the Compensation Continuance Period, to the extent not otherwise vested in accordance with the Company’s stock compensation plans nor pursuant to the terms of the applicable awards, all unvested options to purchase shares of Company common stock and restricted stock awards will continue to vest in accordance with the applicable terms of such stock option or restricted stock grants as if the Executive’s employment with the Company had not been terminated. At the end of the Compensation Continuance Period, to the extent not otherwise vested in accordance with the preceding sentence, all unvested stock options and restricted stock awards will vest. Notwithstanding the termination of the Executive’s employment with the Company, all stock options granted to the Executive as of the date of this Agreement and during the Employment Period will be exercisable until the scheduled expiration date of such stock options; provided, however, in the event any such stock options are designated as “incentive stock options” pursuant to section 422 of the Code (as defined herein), such stock options shall be treated as non-qualified stock options for purposes of this sentence to the extent that they are exercised after the period specified in section 422(a)(2) of the Code (to the extent such provision applies);

               (v) during the Compensation Continuance Period, the Executive shall be entitled to continue to participate in the Company’s fringe benefit and perquisite plans or

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programs in which the Executive participated immediately prior to the Date of Termination, in each case in accordance with the Company’s plans, programs, practices and policies;

               (vi) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (excluding any severance plan, program, policy or practice) through the Date of Termination, including without limitation, payment of any amounts previously deferred by the Executive in the Company’s deferred compensation plans in accordance with the terms of such plans and the Executive’s elections thereunder (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

               (vii) the Company will provide outplacement services to the Executive in accordance with the Company’s policies generally applicable to involuntarily terminated employees.

          (b) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations, Other Benefits, and the payment of an amount equal to the Executive’s Annual Base Salary. Accrued Obligations and cash payments pursuant to the preceding sentence shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 4(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, death benefits then applicable to the Executive.

          (c) Retirement. If the Executive’s employment is terminated by reason of the Executive’s Retirement during the Employment Period, this Agreement shall terminate without further obligations to the Executive under this Agreement, other than for payment of Accrued Obligations and Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 4(c) shall include, without limitation, and the Executive shall be entitled to receive, all retirement benefits then applicable to the Executive.

          (d) Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations, Other Benefits, and the payment of an amount equal to the Executive’s Annual Base Salary. Accrued Obligations and the cash payments pursuant to the preceding sentence shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 4(d) shall include,

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and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits then applicable to the Executive.

          (e) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated by the Company for Cause or by the Executive without Good Reason (other than for Retirement) during the Employment Period, this Agreement shall terminate without further obligations of the Company to the Executive other than the obligation to pay to the Executive (x) her Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, and (z) Other Benefits, in each case only to the extent owing and theretofore unpaid.

          (f) Delayed Payment Date. Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed at the time to be a “key employee” within the meaning of that term under Section 416(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Section 409A(a)(2) of the Code, no payments or benefits to which the Executive otherwise becomes entitled under this Agreement shall be made or provided to the Executive prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” (as such term is defined in Treasury Regulations issued under Section 409A of the Code) or (ii) the date of the Executive’s death. Upon the expiration of the applicable Code Section 409A(a)(2) deferral period referred to in the preceding sentence, all payments and benefits deferred pursuant to this Section 4(f) (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

     5. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify (excluding any severance plan or program of the Company), nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

     6. Full Settlement. Except as specifically provided in this Agreement, the Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions

11

of this Agreement and, such amounts shall not be reduced whether or not the Executive obtains other employment. The Executive acknowledges and agrees that subject to the payment by the Company of the benefits provided in this Agreement to the Executive, in no event will the Company or its subsidiaries or affiliates be liable to the Executive for damages under any claim of breach of contract as a result of the termination of the Executive’s employment. In the event of such termination, the Company shall be liable only to provide the benefits specified in this Agreement. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. Notwithstanding the foregoing, if it is finally judicially determined that the Executive brought any claims contemplated in the previous sentence in bad faith, the Executive shall reimburse the Company for such fees and expenses which are reasonably related to such bad faith claim.

     7. Covenants. (a) The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret, non-public or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their related businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies (or predecessors thereto). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In addition to the foregoing, the Executive will refrain from taking any action or making any statements, written or oral, which are intended to or which disparage the business, goodwill or reputation of the Company or any of its affiliated companies, or their respective directors, officers, executives or other employees, or which could adversely affect the morale of employees of the Company or any of its affiliated companies.

          (b) (i) While employed by the Company and for two years after the Date of Termination (which may include the Compensation Continuance Period), the Executive shall not, directly or indirectly, on behalf of the Executive or any other person, (A) solicit for employment by other than the Company, (B) encourage to leave the employ of the Company, or (C) interfere with the Company’s or its affiliated companies’ relationship with, any person employed by the Company or its affiliated companies.

               (ii) While employed by the Company and for two years after the Date of Termination (which may include the Compensation Continuance Period), subject to the provisions of Rule 5.6 of the North Carolina State Bar Code of Professional Responsibility, the Executive will not become a director, officer, employee or consultant engaging in activities similar to those performed by a senior officer for any business which is in competition with any line of business of the Company or its affiliates and in which the Executive participated in a

12

direct capacity while she was employed by the Company or its affiliates (including predecessors thereof) at any time within the one year period preceding the Date of Termination and which has offices in any location in which the Executive had supervisory responsibility in the geographic footprint of Wachovia Bank, National Association (or successors thereto, including but not limited to, Alabama, Arizona, California, Connecticut, Delaware, Florida, Georgia, Maryland, Mississippi, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Washington, D.C. plus any other state or states added during the Employment Period) during that one year period; provided that the parties acknowledge that the Executive engaging in the private practice of law shall not constitute a violation of this Section 7(b)(ii). The Executive expressly acknowledges the reasonableness of such restrictions and such geographic area. Further, during such period, the Executive will not acquire an equity or equity-like interest in such an organization for her own account, except that he may acquire equity interests of not more than 5% of any such organization from time to time as an investment. Notwithstanding anything to the contrary contained herein, this Section 7(b)(ii) shall not apply if the Executive terminates employment with the Company pursuant to Retirement or the Executive terminates employment with the Company for any reason following a Change in Control or the Company terminates the Executive’s employment for any reason following a Change in Control. Upon the Executive’s request to the Company’s Chief Executive Officer, the Company will provide an advance opinion as to whether a proposed activity would violate the provisions of this Section 7(b)(ii).

               (iii) During the Compensation Continuance Period, the Executive shall provide consulting services to the Company at such time or times as the Company shall reasonably request, subject to appropriate notice and to reimbursement by the Company of all reasonable travel and other expenses incurred and paid by the Executive in accordance with the Company’s then-current policy for expense reimbursement. In the event the Executive shall engage in any employment permitted hereunder during the Compensation Continuance Period for another employer or on a self-employed basis, the Executive’s obligation to provide the consulting services hereunder shall be adjusted in accordance with the requirements of such employment.

          (c) In the event of a breach or threatened breach of this Section 7, the Executive agrees that the Company shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach and, prior to a Change in Control, the Company may terminate the Compensation Continuance Period and the Compensation Continuance Benefits, if applicable, in its sole discretion. The Executive acknowledges that monetary damages would be inadequate and insufficient remedy for a breach or threatened breach of Section 7. Following the occurrence of a Change in Control, in no event shall an asserted violation of the provisions of this Section 7 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. If it is finally determined pursuant to the procedures set forth in this Agreement that the Executive did not breach this Section 7, the Company shall reimburse the Executive the amounts to which it is finally determined to be entitled.

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          (d) Any termination of the Executive’s employment or of this Agreement shall have no effect on the continuing operation of this Section 7; provided, however, upon termination of this Agreement due to the Company’s or the Executive’s failure to extend the term of this Agreement pursuant to Section 1(b), Section 7(b)(ii) shall no longer apply to the Executive if the Executive’s employment shall terminate after the term of this Agreement expires; and provided, further, Section 7(b)(ii) shall not apply if the Executive terminates employment with the Company pursuant to Retirement or the Executive terminates employment with the Company for any reason following a Change in Control or the Company terminates the Executive’s employment for any reason following a Change in Control.

          (e) The Executive hereby agrees that prior to accepting employment with any other person or entity during the Employment Period or during the two years following the Date of Termination (which may include the Compensation Continuance Period), the Executive will provide such prospective employer with written notice of the existence of this Agreement and the provisions of Section 3(e) and this Section 7, with a copy of such notice delivered simultaneously to the Company in accordance with Section 12(c). The foregoing provision shall not apply if the Company terminates the Executive’s employment without Cause following a Change in Control, or if the Executive terminates employment for Good Reason following a Change in Control.

          (f) The Executive hereby covenants that her execution of this Agreement and performance of the obligations under this Agreement do not and will not conflict with, violate the terms of, or constitute a default under, and will be in compliance with (i) any agreement or instrument to which the Executive is a party or by which the Executive is bound, or to which the Executive is subject and (ii) any order, rule, law, regulation or other legal requirement applicable to the Executive. The Executive covenants that she is not a party to any employment agreement. In addition, she covenants that she is not subject to any contractual post-termination employment restrictions other than a covenant not to solicit away Citigroup employees for a period of twelve months following her termination of employment with Citigroup.

     8. Certain Additional Payments by the Company. (a) Except as set forth below or in Section 11 of this Agreement, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive following a Change in Control (whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or otherwise, but determined without regard to any additional payments required under this Section 8) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (or any successor statute) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

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          (b) Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG LLP or such other certified public accounting firm reasonably acceptable to the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within 30 business days of the receipt of notice from the Company that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Executive by the due date for the payment of any Excise Tax, or, if earlier, 30 days after the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

          (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

               (i) give the Company any information reasonably requested by the Company relating to such claim,

               (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order to effectively contest such claim, and

               (iv) permit the Company to participate in any proceedings relating to such

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claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

          (d) If, after the receipt of an amount advanced by the Company pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 8(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto) upon receipt thereof. If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial or refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

          (e) For purposes of this Section 8, any reference to the Executive shall be deemed to include the Executive’s surviving spouse, estate and/or beneficiaries with respect to payments or adjustments provided by this Section 8.

     9. Successors. (a) This Agreement is personal to the Executive and without the prior consent of the Company shall not be assignable by the Executive otherwise than by will or

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the laws of descent and distribution.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

          (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly in writing and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

     10. Arbitration. Except with respect to the Company’s rights to injunctive relief for matters arising under Section 7 of this Agreement, any disputes or controversies arising under or in connection with this Agreement (including, without limitation, whether any such disputes or controversies have been brought in bad faith) shall be settled exclusively by arbitration in Charlotte, North Carolina in accordance with the commercial arbitration rules of the American Arbitration Association then in effect; provided, however, that the Company may invoke the American Arbitration Association’s Optional Rules for Emergency Measures of Protection. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

     11. Limitation on Payments. Notwithstanding anything to the contrary contained in this Agreement, including without limitation, Sections 4, 5, 6, 8 and 12(g), aggregate payments by the Company to the Executive under this Agreement that constitute “Severance Benefits” within the meaning of the Wachovia Corporation Policy Regarding Shareholder Approval of Future Severance Agreements shall not exceed the sum of (a) the Executive’s Annual Base Salary plus (b) the highest annual bonus awarded to the Executive in any of the three full fiscal years immediately preceding the Executive’s termination of employment, times 2.99, as determined in accordance with such policy.

     12. General Provisions. (a) Governing Law; Amendment; Modification. This Agreement shall be governed and construed in accordance with the laws of the State of North Carolina, without reference to principles of conflict of laws. This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

          (b) Severability. If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision not held so invalid and the rest of such provision, together with all other provisions of this Agreement, shall to the full extent consistent with law continue in full force and effect.

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          (c) Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person (in the Company’s case, to its Secretary) or forty-eight (48) hours after deposit thereof in the U.S. mail, postage prepaid, for delivery as registered or certified mail — addressed, in the case of the Executive, to such Executive at her residential address, and in the case of the Company, to its corporate headquarters, attention of the Secretary, or to such other address as the Executive or the Company may designate in writing at any time or from time to time to the other party. In lieu of notice by deposit in the U.S. mail, a party may give notice by telegram or telex.

          (d) Tax Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

          (e) Strict Compliance. The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 3(c) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. The waiver, whether express or implied, by either party of a violation of any of the provisions of this Agreement shall not operate or be construed as a waiver of any subsequent violation of any such provision.

          (f) Entire Understanding. From and after the Effective Date this Agreement (including Appendix A) shall supersede any other agreement between the parties with respect to the subject matter hereof.

          (g) Conflicts with Plans. To the extent any plan, policy, practice or program of or contract or agreement with the Company attempts to cap, restrict, limit or reduce payments to the Executive hereunder, such caps, restrictions, limitations or reductions are expressly modified to permit the payments contemplated hereby and the parties intend that the terms of this Agreement shall be construed as having precedence over any such caps, restrictions, limitations or reductions.

          (h) Release and Waiver of Claims. In consideration of any Compensation Continuance Benefits the Company provides to the Executive under this Agreement, the Executive upon termination of employment with the Company shall execute a separate general release and waiver of claims in favor of the Company, its affiliates and personnel in a form acceptable to the Company. The Executive shall not be eligible for any Compensation Continuance Benefits until the Executive has executed such release and waiver of claims.

          (i) Creditor Status. No benefit or promise hereunder shall be secured by any specific assets of the Company. The Executive shall have only the rights of an unsecured general creditor of the Company in seeking satisfaction of such benefits or promises.

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          (j) No Assignment of Benefits. No right, benefit or interest hereunder shall be subject to assignment, encumbrance, charge, pledge, hypothecation or set off in respect of any claim, debt or obligation, or similar process.

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereunto duly authorized, and the Executive has signed this Agreement under seal, all as of the date and year first above written.

WACHOVIA CORPORATION	ATTEST:
[SEAL]
By: /s/ G. Kennedy Thompson	/s/ Mark C. Treanor
Name: G. Kennedy Thompson	Mark C. Treanor
Title: Chief Executive Officer	Secretary
/s/ Jane C. Sherburne Jane C. Sherburne

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Appendix A

Position as of the Effective Date: Senior Executive Vice President, Secretary, General Counsel, and member of the Operating Committee of the Company, reporting to the Chief Executive Officer of the Company.

Annual Base Salary as of the Effective Date: $467,000.

Annual Bonus for 2008: For 2008, the Executive will receive a guaranteed minimum cash incentive of $1,750,000 (including if the Executive’s employment terminates in 2008 or 2009 prior to payment of such amount, other than the Executive’s voluntary termination other than for Good Reason or a termination by the Company for Cause). This payment will be subject to applicable withholding taxes and standard deductions and will be payable on February 28, 2009 or as soon thereafter as reasonably practicable. If the Executive’s employment is terminated by the Company other than for Cause or the Executive terminates her employment for Good Reason, in each case prior to the payment of the Annual Bonus for 2008, for purposes of Section 4(a)(ii)(B) of this Agreement the Base Bonus shall be, and for purposes of Section 11(b) of this Agreement the “highest annual bonus awarded to the Executive in any of the three full fiscal years immediately preceding the Executive’s termination of employment” shall be, $1,750,000.

Annual stock-based compensation award for 2008: The Executive will receive a guaranteed minimum equity award for 2008 with an economic value of $2,000,000 provided that the Executive has not voluntarily terminated her employment for any reason other than Good Reason or has not been terminated by the Company for Cause as of the date such equity award is made. For 2008, the Executive will receive 20% of the economic value of such award in the form of stock options and 80% in the form of restricted stock. Both the stock options and restricted stock shall vest over 5 years in equal annual installments from the date of grant (currently scheduled for February 17, 2009). Stock options shall be exercisable for a 10 year period from the date of grant. The grants will be subject to the terms and conditions of the Stock Incentive Plan (or successor plan) and applicable award agreements. Applicable award agreements will provide for accelerated vesting in event of the termination of the Executive’s employment due to death, Disability, by the Company other than for Cause or by the Executive for Good Reason. In the event that the Executive’s employment is terminated due to death, Disability, by the Company other than for Cause or by the Executive for Good Reason prior to granting of such awards, the $2,000,000 will be paid in a cash lump sum to the Executive (or her estate, if applicable), subject to applicable withholding taxes and the applicable limits of Wachovia’s Policy Regarding Shareholder Approval of Future Severance Agreements (it being understood that to the extent such policy limits such cash payments, such cash payments shall be reduced to the limits imposed by such policy).

Annual Bonus and stock-based incentive plans following 2008: The Executive will be eligible to participate in the Operating Committee Incentive Plan. In the years following 2008 during the Employment Period, the Committee will establish the Executive’s target incentive award and target equity award based on its annual review of target compensation for executive officers and

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the market for executive compensation in October of each year. Beginning with the 2009 performance year, the Executive’s incentive compensation will be based on the Executive’s target compensation, and will be adjusted based on the Company’s performance and the Executive’s individual performance.

Sign-On Arrangements:

(A)

Upfront Bonus: The Executive is eligible to receive an “upfront” bonus of $500,000, minus required taxes and withholdings, payable in a lump sum as promptly as practicable following the Effective Date. In the event the Executive voluntarily terminates employment with the Company within one year of the Effective Date for any reason other than Good Reason or the Company terminates her employment for Cause, the Executive will reimburse the Company within thirty (30) days of the Date of Termination (or have deducted from amounts still owed the Executive, other than amounts which constitute deferred compensation pursuant to Section 409A of the Code) such upfront bonus (net of taxes withheld) in the following amount: 0-6 months employed — 75%; and 6-12 months employed — 50%.

(B)

Upfront Stock Award: The Company will recommend at the first meeting of the Committee after the Effective Date, that the Executive be considered to receive stock options or restricted shares with an economic value of $1,750,000 under the Company’s Stock Incentive Plan, provided that the Executive is an active employee of the Company on that date. For purposes of determining the number of stock options to grant, a stock option value equal to 25% of the average closing price for the 30 trading days ending the last trading day in the month prior to grant will be used. For purposes of determining the number of shares of restricted stock to grant, a stock value equal to the average closing price for the 30 trading days ending the last trading day in the month prior to grant will be used. Any grant of restricted stock or stock options will be subject to the approval of the Committee at the meeting wherein they review such awards. The effective date of the grant will be the date of such meeting, and the option price on any options granted will be the closing price of the Company’s common stock on the date of grant. Vesting for both the stock options and restricted shares will occur in equal annual installments over (5) five years. The grants are subject to the terms and conditions of the Stock Incentive Plan. Applicable award agreements will provide for accelerated vesting in event of the termination of the Executive’s employment due to death, Disability, by the Company other than for Cause or by the Executive for Good Reason. The Executive will advise the Company’s Executive Compensation department of her desired mix of stock options and restricted stock (e.g., 20% options and 80% restricted stock) by August 1, 2008.

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(C) Make-Whole Award: If the Executive becomes an employee of the Company as contemplated herein, the Executive will forfeit certain unvested shares of stock from her current employer. The Company will recommend at the first meeting of the Committee following the Effective Date that the Executive be awarded a grant of restricted shares under the Stock Incentive Plan. The number of shares the Executive will receive will be based on the value of the 30 day average closing price of Citigroup shares in the 30 days preceding the date of such grant times the number of forfeited shares. This value will be converted into a number of shares of the Company’s common stock based on the 30 day average closing price of the Company’s stock over the same period. Such recommendation will be made only if the following two conditions are met: (1) the Executive shall have provided full documentation of the ownership and plan documents for Citigroup shares owned, and (2) the Executive shall remain employed by the Company on the date the recommendation is made. Any grant of stock will be subject to the approval of the Committee at the meeting wherein they review such awards. The effective date of the grant will be the date of such meeting. Vesting of the restricted stock will occur in equal annual installments over (3) three years. The grants are subject to the terms and conditions of the Stock Incentive Plan. Applicable award agreements will provide for accelerated vesting in event of the termination of the Executive’s employment due to death, Disability, by the Company other than for Cause or by the Executive for Good Reason.

Expenses: The Executive will be reimbursed for the Executive’s weekly commutation costs between Washington, D.C. and Charlotte, N.C. Such reimbursement will be applicable until August 1, 2010 and may be extended by mutual agreement thereafter. Such reimbursement will be considered taxable income to the Executive.

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EX-12.A

Exhibit (12)(a)

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

		Six
		Months
		Ended			Years Ended December 31,
		June 30,
(In millions)		2008			2007		2006	2005		2004		2003
EXCLUDING INTEREST ON DEPOSITS
Pretax income (loss) from continuing operations		$	(11,776	)		8,773	11,470		9,462		7,633		6,080
Fixed charges, excluding capitalized interest			4,837			11,458	8,189		4,971		2,701		2,309
Earnings (loss)	(A)	$	(6,939	)		20,231	19,659		14,433		10,334		8,389
Interest, excluding interest on deposits		$	4,666			11,140	7,897		4,711		2,474		2,113
One-third of rents			171			318	292		260		227		196
Capitalized interest			-			-	-		-		-		-
Fixed charges (a)	(B)	$	4,837			11,458	8,189		4,971		2,701		2,309
Consolidated ratios of earnings (loss) to fixed charges, excluding interest on deposits	(A)/(B)		(1.43	)  X		1.77	2.40		2.90		3.83		3.63
INCLUDING INTEREST ON DEPOSITS
Pretax income (loss) from continuing operations		$	(11,776	)		8,773	11,470		9,462		7,633		6,080
Fixed charges, excluding capitalized interest			9,954			24,419	17,308		10,268		5,554		4,669
Earnings (loss)	(C)	$	(1,822	)		33,192	28,778		19,730		13,187		10,749
Interest, including interest on deposits		$	9,783			24,101	17,016		10,008		5,327		4,473
One-third of rents			171			318	292		260		227		196
Capitalized interest			-			-	-		-		-		-
Fixed charges (a)	(D)	$	9,954			24,419	17,308		10,268		5,554		4,669
Consolidated ratios of earnings (loss) to fixed charges, including interest on deposits	(C)/(D)		(0.18	)  X		1.36	1.66		1.92		2.37		2.30

(a) Fixed charges do not include: 1) other obligations which exist under Financial Accounting Standards Board Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” and 2) interest on uncertain income tax positions.

EX-12.B

Exhibit (12)(b)

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

		Six
		Months
		Ended			Years Ended December 31,
		June 30,
(In millions)		2008			2007		2006		2005		2004		2003
EXCLUDING INTEREST ON DEPOSITS
Pretax income (loss) from continuing operations		$	(11,776	)		8,773		11,470		9,462		7,633		6,080
Fixed charges, excluding preferred stock dividends and capitalized interest			4,837			11,458		8,189		4,971		2,701		2,309
Earnings (loss)	(A)	$	(6,939	)		20,231		19,659		14,433		10,334		8,389
Interest, excluding interest on deposits		$	4,666			11,140		7,897		4,711		2,474		2,113
One-third of rents			171			318		292		260		227		196
Preferred stock dividends			236			-		-		-		-		5
Capitalized interest			-			-		-		-		-		-
Fixed charges (a)	(B)	$	5,073			11,458		8,189		4,971		2,701		2,314
Consolidated ratios of earnings (loss) to fixed charges and preferred stock dividends, excluding interest on deposits	(A)/(B)		(1.37)	X		1.77		2.40		2.90		3.83		3.63
INCLUDING INTEREST ON DEPOSITS
Pretax income (loss) from continuing operations		$	(11,776	)		8,773		11,470		9,462		7,633		6,080
Fixed charges, excluding preferred stock dividends and capitalized interest			9,954			24,419		17,308		10,268		5,554		4,669
Earnings (loss)	(C)	$	(1,822	)		33,192		28,778		19,730		13,187		10,749
Interest, including interest on deposits		$	9,783			24,101		17,016		10,008		5,327		4,473
One-third of rents			171			318		292		260		227		196
Preferred stock dividends			236			-		-		-		-		5
Capitalized interest			-			-		-		-		-		-
Fixed charges (a)	(D)	$	10,190			24,419		17,308		10,268		5,554		4,674
Consolidated ratios of earnings (loss) to fixed charges and preferred stock dividends, including interest on deposits	(C)/(D)		(0.18)	X		1.36		1.66		1.92		2.37		2.30

(a) Fixed charges do not include: 1) other obligations which exist under Financial Accounting Standards Board Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” and 2) interest on uncertain income tax positions.

EX-19

Exhibit (19)

WACHOVIA CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL SUPPLEMENT
SIX MONTHS ENDED JUNE 30, 2008
TABLE OF CONTENTS

	PAGE
Financial Highlights		1
Management’s Discussion and Analysis		2
Explanation of Our Use of Non-GAAP Financial Measures		42
Selected Statistical Data		43
Summaries of Income, Per Common Share and Balance Sheet Data		44
Merger-Related and Restructuring Expenses		45
Business Segments		46
Net Trading Revenue — Investment Banking		62
Selected Ratios		63
Trading Account Assets and Liabilities		64
Loans — On-Balance Sheet, and Managed and Servicing Portfolios		65
Loans Held for Sale		66
Allowance for Credit Losses		67
Allowance and Charge-Off Ratios		68
Nonperforming Assets		69
Nonaccrual Loan Activity		70
Goodwill and Other Intangible Assets		71
Deposits		72
Time Deposits in Amounts of $100,000 or More		72
Long-Term Debt		73
Changes in Stockholders’ Equity		74
Capital Ratios		75
Net Interest Income Summaries — Five Quarters Ended June 30, 2008		76
Net Interest Income Summaries — Six Months Ended June 30, 2008 and 2007		78
Consolidated Balance Sheets — Five Quarters Ended June 30, 2008		79
Consolidated Statements of Income — Five Quarters Ended June 30, 2008		80
Wachovia Corporation and Subsidiaries — Consolidated Financial Statements		81

FINANCIAL HIGHLIGHTS

	Three Months Ended					Percent			Six Months Ended					Percent
	June 30,					Increase			June 30,					Increase
(Dollars in millions, except per share data)	2008			2007		(Decrease)			2008			2007		(Decrease)
EARNINGS SUMMARY
Net interest income (GAAP)	$	4,290			4,449		(4)	%	$	9,042			8,949		1	%
Tax-equivalent adjustment		54			38		42			107			75		43
Net interest income (Tax-equivalent)		4,344			4,487		(3	)		9,149			9,024		1
Fee and other income		3,165			4,240		(25	)		5,942			7,974		(25	)
Total revenue (Tax-equivalent)		7,509			8,727		(14	)		15,091			16,998		(11	)
Provision for credit losses		5,567			179		—			8,398			356		—
Other noninterest expense		6,376			4,755		34			11,473			9,248		24
Merger-related and restructuring expenses		251			32		—			492			42		—
Goodwill impairment		6,060			—		—			6,060			—		—
Other intangible amortization		97			103		(6	)		200			221		(10	)
Total noninterest expense		12,784			4,890		—			18,225			9,511		92
Minority interest in income of consolidated subsidiaries		(18	)		139		—			137			275		(50	)
Income (loss) before income taxes (benefits) (Tax-equivalent)		(10,824	)		3,519		—			(11,669	)		6,856		—
Tax-equivalent adjustment		54			38		42			107			75		43
Income taxes (benefits)		(1,963	)		1,140		—			(2,197	)		2,138		—
Net income (loss)		(8,915	)		2,341		—			(9,579	)		4,643		—
Dividends on preferred stock		193			—		—			236			—		—
Net income (loss) available to common stockholders	$	(9,108	)		2,341		—	%	$	(9,815	)		4,643		—	%
Diluted earnings per common share (a)
Net income (loss) available to common stockholders	$	(4.31	)		1.22		—	%	$	(4.82	)		2.42		—	%
Return on average common stockholders’ equity		(50.47	)%		13.54		—			(26.80	)%		13.51		—
Return on average assets (b)		(4.50	)%		1.33		—			(2.44	)%		1.34		—
ASSET QUALITY
Allowance for loan losses as % of loans, net		2.20	%		0.79		—			2.20	%		0.79		—
Allowance for loan losses as % of nonperforming assets		90			157		—			90			157		—
Allowance for credit losses as % of loans, net		2.24			0.83		—			2.24			0.83		—
Net charge-offs as % of average loans, net		1.10			0.14		—			0.88			0.15		—
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		2.41	%		0.49		—			2.41	%		0.49		—
CAPITAL ADEQUACY
Tier I capital ratio		8.00	%		7.47		—			8.00	%		7.47		—
Total capital ratio		12.74			11.46		—			12.74			11.46		—
Leverage ratio		6.57	%		6.23		—			6.57	%		6.23		—
OTHER FINANCIAL DATA
Net interest margin		2.58	%		2.96		—			2.74	%		3.01		—
Fee and other income as % of total revenue		42.15			48.58		—			39.37			46.91		—
Effective income tax rate		18.06	%		32.78		—			18.67	%		31.53		—
BALANCE SHEET DATA
Securities	$	113,461			106,184		7	%	$	113,461			106,184		7	%
Loans, net		488,198			429,120		14			488,198			429,120		14
Total assets		812,433			715,428		14			812,433			715,428		14
Total deposits		447,790			410,030		9			447,790			410,030		9
Long-term debt		184,401			142,047		30			184,401			142,047		30
Stockholders’ equity	$	75,127			69,266		8	%	$	75,127			69,266		8	%
OTHER DATA
Average basic common shares (In millions)		2,111			1,891		12	%		2,037			1,892		8	%
Average diluted common shares (In millions)		2,119			1,919		10			2,048			1,922		7
Actual common shares (In millions)		2,159			1,903		13			2,159			1,903		13
Dividends paid per common share	$	0.38			0.56		(33	)	$	1.02			1.12		(9	)
Dividend payout ratio on common shares		(8.70	)%		45.90		—			(21.06	)%		46.28		—
Book value per common share	$	30.25			36.40		(17	)	$	30.25			36.40		(17	)
Common stock price		15.53			51.25		(70	)		15.53			51.25		(70	)
Market capitalization	$	33,527			97,530		(66	)	$	33,527			97,530		(66	)
Common stock price to book value		51	%		141		(64	)		51	%		141		(64	)
FTE employees		119,952			110,493		9			119,952			110,493		9
Total financial centers/brokerage offices		4,820			4,135		17			4,820			4,135		17
ATMs		5,277			5,099		3	%		5,277			5,099		3	%

(a) Calculated using average basic common shares in 2008.

(b) Net income (loss) as a percentage of average assets.

1

Management’s Discussion and Analysis

This discussion contains forward-looking statements. Please refer to our Second Quarter 2008 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.

Executive Summary

Summary of Results of Operations

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In millions, except per share data)	2008			2007		2008			2007
Net interest income (GAAP)	$	4,290			4,449		9,042			8,949
Tax-equivalent adjustment		54			38		107			75
Net interest income (a)		4,344			4,487		9,149			9,024
Fee and other income		3,165			4,240		5,942			7,974
Total revenue (a)		7,509			8,727		15,091			16,998
Provision for credit losses		5,567			179		8,398			356
Other noninterest expense		6,376			4,755		11,473			9,248
Goodwill impairment		6,060			-		6,060			-
Merger-related and restructuring expenses		251			32		492			42
Other intangible amortization		97			103		200			221
Total noninterest expense		12,784			4,890		18,225			9,511
Minority interest in income (loss) of consolidated subsidiaries		(18	)		139		137			275
Income taxes (benefits)		(1,963	)		1,140		(2,197	)		2,138
Tax-equivalent adjustment		54			38		107			75
Net income (loss)		(8,915	)		2,341		(9,579	)		4,643
Dividends on preferred stock		193			-		236			-
Net income (loss) available to common stockholders		(9,108	)		2,341		(9,815	)		4,643
Diluted earnings (loss) per common share	$	(4.31	)		1.22		(4.82	)		2.42

(a) Tax-equivalent.

Against a backdrop of the weakest domestic economy in more than 16 years and continued instability in the housing and financial markets, we reported a net loss applicable to common shareholders of $9.8 billion, or a net loss of $4.82 per share, in the first half of 2008 compared with earnings of $4.6 billion, or $2.42 per share, in the first half of 2007. Subsequent to our announcement of second quarter financial results on July 22, 2008, we further increased our legal reserves as of June 30, 2008, by $500 million pre-tax to reflect the effect of recent and active settlement discussions with securities regulators of investigations relating to auction rate securities. More information about the increased legal reserve is in the Outlook and Noninterest Expense sections. Key drivers in the pre-tax loss were:

• An $8.4 billion loan loss provision, which increased reserves by $6.2 billion, including $4.4 billion for the payment option mortgage portfolio called Pick-a-Payment.

• A $6.1 billion noncash goodwill impairment charge in commercial-related subsegments reflecting declining equity market valuations and underlying asset values. The goodwill impairment charge had no impact on Wachovia’s tangible capital levels, regulatory capital ratios or liquidity. More information is in the Critical Accounting Policies and Balance Sheet Analysis: Goodwill sections.

• $3.2 billion in market disruption-related losses.

• A $1.2 billion increase in legal reserves, $590 million of which was recorded in the second quarter of 2008, primarily related to previously disclosed matters, and $500 million of which was recorded after our July 22, 2008 release of second quarter 2008 results, for the effect of recent and active settlement discussions related to auction rate securities, partially offset by the first quarter 2008 reversal of $102 million of litigation reserves related to our ownership interest in Visa, Inc.

2

• A $975 million noncash charge related to certain leasing transactions widely referred to as “sale in, lease out” or SILO transactions.

• $481 million in net gains related to the adoption of new fair value accounting standards on January 1, 2008.

• $391 million in losses related to planned discretionary securities sales.

• A $225 million gain from our ownership in Visa, which completed its initial public offering in March 2008.

Results also included after-tax net merger-related and restructuring expenses of $251 million, or 12 cents per share, in the first half of 2008 and $26 million, or 1 cent per share, in the first half of 2007. Revenues and expenses also reflect the impact of the A.G. Edwards, Inc. acquisition from October 1, 2007; and a majority interest investment in European Credit Management Ltd. (ECM), a London-based fixed income investment management firm, from January 31, 2007.

Actions on Capital, Liquidity and Risk

We are committed to protecting and creating shareholder value through the disciplined use of capital and maintaining a strong balance sheet in view of current and anticipated challenges in the credit environment.

During the second quarter of 2008, the board of directors and senior management conducted a strategic review of our major business lines given the changing financial services landscape. As a result, we outlined several initiatives aimed at three near-term strategic priorities: Protecting, preserving and generating capital; further enhancing Wachovia’s liquidity position; and reducing risk. On July 22, 2008, actions announced included:

• Reducing the quarterly dividend on our common stock by 32.5 cents to 5 cents per share, which is estimated to preserve approximately $700 million in capital per quarter. The dividend is payable on September 15, 2008, to shareholders of record on August 29, 2008. In the first half of 2008, we paid common stockholders dividends of $2.1 billion, or $1.015 per share.

• More aggressively managing our balance sheet, which we estimate will result in a $20 billion reduction in loans and securities by year-end 2008 and preserve an estimated $1.5 billion in capital. Proceeds from selected maturing securities will not be reinvested in order to reduce the securities portfolio balance. To reduce capital usage in the loan portfolio, we are implementing enhanced discipline to ensure more focus on strategic commercial customer relationships, and instituting programs to further enhance the mix of our consumer loan portfolio. This includes reducing mortgage concentration in our consumer loan portfolio by tightening mortgage underwriting standards, discontinuing origination of negative amortization loans, eliminating the General Bank wholesale mortgage origination channel, eliminating focus on Pick-a-Payment loan retention and offering opportunities for Pick-a-Payment borrowers to refinance mortgages into marketable products. Also, as we focus on disciplined deployment of capital in this environment, we currently expect new loan growth to be more modest due to increased pricing discipline and tighter underwriting guidelines. In addition, we will also consider the possible sale of certain noncore assets, which could preserve additional capital.

3

• Instituting a more rigorous expense discipline, which we estimate will preserve up to $1 billion in capital. This includes an initiative to reduce planned expense growth in the second half of this year by approximately $490 million, more than offset by restructuring costs, and a reduction in full year 2009 planned expense growth by $1.5 billion. As part of this initiative, we reviewed 500 existing or planned capital expenditure projects and decided to delay or cancel $350 million of expenses related to these projects. Forty percent of the expense savings is expected to come from lower personnel costs and will involve reductions affecting approximately 6,950 active employees, revised upward by 600 subsequent to our original announcement, and 4,400 open positions. These expense actions are expected to have only a modest impact on revenue. Initiatives such as western expansion in retail, commercial and wealth will continue but at a more deliberate pace. The Merger-Related and Restructuring Expenses section has more information.

We estimate these strategies will generate or preserve more than $5 billion in tier 1 capital by year-end 2009 and further enhance our liquidity position. Wachovia ended the second quarter of 2008 with approximately $50 billion in tier 1 regulatory capital and a tier 1 capital ratio of 8.00 percent, a leverage ratio of 6.57 percent and a tangible capital ratio of 4.68 percent at June 30, 2008. Based on our tier 1, leverage and tangible capital ratios, we are considered “well capitalized.” More information is in the Stockholders’ Equity section.

On August 6, 2008, we announced a decision to end our acceptance of private undergraduate student loan applications effective immediately. This decision was made in light of the current economic environment.

In the first half of 2008, we added $11.55 billion in capital through common and preferred stock offerings. In April 2008, we issued in concurrent offerings $4.025 billion of convertible preferred stock and $4.025 billion of common stock and in February 2008 we issued $3.5 billion of preferred stock.

Over the past four quarters, prompted by continuing significant home price devaluation in stressed real estate markets, particularly in Florida and California, and our current expectation for continued devaluation through mid 2010, we have increased the allowance for credit losses by $7.4 billion, to $11.0 billion or 2.24 percent of loans. The $3.3 billion increase in Pick-a-Payment reserves in the second quarter reflected a continued severe decline in home market values and what we believe will be the related effect on borrower behavior in the face of the loss of equity in their home.

The provision for credit losses of $8.4 billion compared with $356 million in the first half of 2007, and exceeded net charge-offs by $6.3 billion. In the first half of 2008 our net charge-offs were $2.1 billion, an increase of $1.8 billion from the first half of 2007, and represented a 73 basis point increase in the net charge-off ratio to 0.88 percent of average net loans. This included commercial net charge-offs of $692 million, up $636 million from the first half of 2007, with the increase driven by $398 million of net losses in our Real Estate Financial Services portfolio and $182 million of net losses on large corporate loans. Consumer net charge-offs were $1.4 billion, up $1.1 billion, driven by net losses of $1.0 billion in consumer real estate, including $748 million in Pick-a-Payment loans as well as $274 million in auto loans.

Nonperforming assets, including loans held for sale, were $12.0 billion, representing a ratio of nonperforming assets to loans, foreclosed properties and loans held for sale of 2.41 percent at June 30, 2008, an increase from $5.4 billion, or 1.14 percent, at December 31, 2007, largely reflecting increases relating to our Pick-a-Payment mortgage product and residential-related

4

commercial real estate. We continue to mitigate the risk and volatility of our balance sheet through risk management practices, including increased collection efforts.

Strengthening Core Businesses

Another significant strategic priority is a continued focus on generating growth in our core businesses. While credit headwinds and the capital markets disruption overwhelmed our first half 2008 results, continued momentum in most of our businesses generated solid underlying performance. In the first half of 2008 compared with the first half of 2007, growth came from:

• Modestly higher net interest income, driven by our higher loans and deposits and improved margins, somewhat offset by the effect of the $975 million SILO-related lease charge and increasing nonaccrual loans.

• A 13 percent increase in average loans to $471.3 billion. Average consumer loans rose 5 percent, driven by higher traditional mortgage loans. Average commercial loan growth of 25 percent reflected strength in large corporate and middle-market commercial loans and in commercial real estate. Increased consumer and commercial loans included the transfer of $4.1 billion in commercial loans and $2.8 billion in consumer loans from the held-for-sale portfolio in the first half of 2008.

• A 5 percent increase in average core deposits to $392.6 billion. We expect deposits to grow further in 2008 as we continue to expand product distribution in the newly integrated former World Savings branches, offer retail brokerage deposits in the former A.G. Edwards franchise, increase productivity in our de novo (or new) branches and benefit from product introductions, such as Way2Save and competitive certificate of deposit campaigns, to attract and enhance customer relationships. We also continue to enhance the efficiency of our financial center network and expand our presence in higher growth markets. In the first half of 2008, we opened 46 de novo branches, consolidated 94 branches, and expanded our commercial banking presence, all of which added $84 million to noninterest expense. As a result of our strategic review, we currently plan to continue to open additional branches, but at a more deliberate pace.

• Higher fiduciary and asset management fees and brokerage commissions largely reflecting the A.G. Edwards acquisition.

Our core banking businesses, while absorbing increased credit costs, continued to perform well, as did our brokerage operations, in the first half of 2008 compared with the first half of 2007. The General Bank’s earnings declined to $2.3 billion, down 20 percent, driven by rapidly rising credit costs and related expenses, which overshadowed continued sales momentum and a 6 percent increase in revenue. Wealth Management earned $190 million, up 10 percent, on 6 percent revenue growth in challenging markets. The capital markets disruption continued to dampen results in the Corporate and Investment Bank (CIB), which earned $131 million, down 90 percent, driven by $2.1 billion in net market-related valuation losses and reduced origination volume in most markets-related businesses. The losses were somewhat offset by $466 million of principal investing net gains related to the adoption of new fair value accounting standards. In addition, CIB has a number of businesses that were not adversely affected by the market disruption, as described further in the Corporate and Investment Bank section. Capital Management earnings declined to $365 million, reflecting 35 percent revenue growth, primarily related to the A.G. Edwards acquisition, more than offset by legal reserves related to the auction rate securities.

5

Other Matters

Leveraged Lease Charge The noncash charge of $975 million, or $855 million after tax, recorded in the second quarter of 2008 relates to certain leasing transactions we entered into between 1999 and 2003 involving lease-to-service contracts and leases of qualified technological equipment, which are widely known as sale in, lease-out or SILO transactions. We discontinued originating these transactions in 2003. The decision to record the noncash charge came after our analysis of a federal appeals court opinion in a case involving another financial institution that disallowed tax benefits associated with certain lease-in, lease-out or LILO transactions. We believe some aspects of the court decision could be extended to SILO transactions. Subsequently, a federal court issued an adverse decision on a SILO transaction entered into by two other large financial institutions. While the tax law involving SILO transactions remains unsettled, as we disclosed in Note 1 to Consolidated Financial Statements in our 2007 Annual Report, applicable accounting standards require us to update the tax cash flow assessment on our SILO transactions in light of the federal court ruling. A majority of the charge will be recognized as income over the remaining terms of the affected leases, generally 35 to 40 years. However, because this charge occurs relatively early in the term of the SILOs, the effect on net interest income of recording this charge is expected to be a decrease through 2018, then positive thereafter. We estimate the related decrease in net interest income in the second half of 2008 will be $45 million. More information is in Note 1 to Consolidated Financial Statements in our Second Quarter 2008 Report on Form 10-Q.

On August 6, 2008, the Internal Revenue Service announced a settlement initiative related to SILO transactions. Management is evaluating the offer notification and potential impact to our financial condition and results of operations, in the event that we were to accept the terms of the offer. This settlement offer would have no impact on our LILO portfolio as we settled all issued related to this portfolio with the IRS in 2004.

Fair Value Implementation On January 1, 2008, we adopted Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS 157 establishes a framework for measuring fair value under U.S. GAAP, expands disclosures about fair value measurements and provides new income recognition criteria for certain derivative contracts. SFAS 157 does not establish any new fair value measurements; rather it defines “fair value” for other accounting standards that require the use of fair value for recognition or disclosure. SFAS 159 permits companies to elect to carry certain financial instruments at fair value with corresponding changes in fair value recorded in the results of operations. The effect of adopting SFAS 157 was recorded either directly to first quarter 2008 results of operations or as a cumulative effect of a change in accounting principle through an adjustment to beginning retained earnings on January 1, 2008, depending on the nature of the fair value adjustment. The transition adjustment for SFAS 159 was recorded as a cumulative effect of a change in accounting principle through an adjustment to beginning retained earnings on January 1, 2008.

The adoption of SFAS 157 resulted in net gains in the first quarter 2008 results of operations of $481 million pre-tax related primarily to a change in the methodology used to calculate the fair value of certain investments in private equity funds held in a wholly owned investment company. This amount excludes the ongoing effect in the first half of 2008 related to the application of SFAS 157. Also, on January 1, 2008, we recorded a $38 million after-tax gain ($61 million pre-tax) as a cumulative effect adjustment to beginning retained earnings related to removal of blockage discounts previously applied in determining the fair value of certain actively traded public equity investments and to profits previously deferred on certain derivative transactions. SFAS 157 prohibits the use of blockage discounts in determining the fair value of certain financial instruments.

6

Upon adoption of SFAS 159, we elected to record certain existing securities available for sale and a small percentage of our loans held-for-sale portfolio at fair value, and as a result recorded a $38 million after-tax charge ($60 million pre-tax) to 2008 beginning retained earnings as a cumulative effect of the adoption of SFAS 159.

Market Disruption-Related Losses, Net

	2008												2007
	1st Half												2nd Half			Cumulative
	Trading			Securities
	profits			gains			Other
(Pre-tax dollars in millions)	(losses)			(losses)			Income			Total			Total			Total
Corporate and Investment Bank
ABS CDO and other subprime-related	$	(387	)		(199	)		9			(577	)		(1,048	)		(1,625	)
Commercial mortgage (CMBS)		(399	)		(2	)		(329	)		(730	)		(1,088	)		(1,818	)
Consumer mortgage		(229	)		-			(90	)		(319	)		(205	)		(524	)
Leveraged finance		147			-			(354	)		(207	)		(179	)		(386	)
Other		(272	)		(15	)		(9	)		(296	)		(50	)		(346	)
Total		(1,140	)		(216	)		(773	)		(2,129	)		(2,570	)		(4,699	)
Capital Management
Impairment losses		(94	)		(24	)		-			(118	)		(57	)		(175	)
Parent
Impairment losses / other		-			(655	)		(321	)		(976	)		(94	)		(1,070	)
Total, net		(1,234	)		(895	)		(1,094	)		(3,223	)		(2,721	)		(5,944	)
Discontinued operations (Bluepoint)	$	-			-			-			-			(330	)		(330	)

Market Disruption-Related Losses Net market disruption-related valuation losses were $3.2 billion in the first half of 2008, with $2.3 billion in the first quarter of 2008 and $936 million in the second quarter of 2008. We began to incur market disruption-related losses in the second half of 2007 and such losses amounted to $2.7 billion in 2007, excluding discontinued operations. Of the 2008 losses, $2.1 billion were in the Corporate and Investment Bank, $976 million were in the Parent, and $118 million were in Capital Management, as detailed in the Market Disruption-Related Losses, Net table.

For a number of years, we have been a major participant in structuring and underwriting fixed income investment products backed by pools of loans, such as commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (RMBS), as well as collateralized debt obligations (CDOs) that are typically backed by pools of bonds including CMBS and RMBS, loans and other assets. We have also been a participant in underwriting and syndicating leveraged commercial loans. Our CMBS and RMBS structuring activities involved consumer and commercial real estate loans underwritten primarily through our direct origination channels. Our CDO business involved transactions predominantly backed by commercial loans and commercial real estate loans. We purchased subprime residential assets such as RMBS as part of our CDO distribution strategy.

The markets for subprime RMBS and for CDOs collateralized by subprime RMBS, which we refer to as ABS CDOs, as well as for CMBS, have been particularly hard hit by the market disruption, while the market for leveraged loans has been affected by spread widening.

Rising defaults and delinquencies in subprime residential mortgages as well as rating agencies’ downgrades of a large number of subprime RMBS have led to continued declines in the valuations of these types of securities and certain indices that serve as a reference point for determining the value of such securities. The continued pressures of the weaker housing markets, particularly in income-producing categories, as well as continuing concerns over the U.S. economy and illiquidity in the commercial real estate sector have led to further declines in the value of CMBS and CDOs backed by commercial real estate loans.

Leveraged finance results included net market disruption-related losses of $309 million in the first quarter of 2008 and net gains of $102 million in the second quarter of 2008. The first quarter results were driven by losses on several large unfunded commitments partially offset by gains on

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economic hedges. Second quarter results were driven by recoveries of previous write-downs related to the resolution of certain commitments, partially offset by $372 million of losses related to ineffectiveness of economic hedges that were largely unwound during the second quarter.

With respect to our monoline-related structured product exposure, in the first half of 2008 we recorded $166 million of reserves based on monoline exposure profiles and our assessments of the credit quality of each monoline.

Market disruption-related losses in Capital Management in the first half of 2008 amounted to $118 million of write-downs on trading and available for sale securities. This included $89 million of securities write-downs related to the liquidation of an Evergreen fund and $24 million on securities purchased in the third quarter of 2007 from Evergreen money market funds. Market disruption-related losses in the Parent in the first half of 2008 amounted to $976 million, including impairment write-downs on securities available for sale of $655 million, and valuation losses of $314 million related to our BOLI portfolio.

In the second half of 2007, we recorded market disruption-related losses of $330 million related to BluePoint Re Limited, a Bermuda-based monoline bond reinsurer that is a consolidated subsidiary of Wachovia. There were no additional losses in the first half of 2008.

The fair values of all of our assets that are subject to market valuation adjustments, including but not limited to subprime RMBS and ABS CDOs, CMBS warehouse assets and leveraged finance commitments, depend on market conditions and assumptions that may change over time. Accordingly, the fair values of these assets in future periods and their effect on our financial results will depend on future market developments and assumptions and may be materially greater or less than the changes in values discussed above.

Further information on these market disruption-related losses is provided in the Corporate Results of Operations, Fee Income, Corporate and Investment Bank and Capital Management sections that follow. The Outlook section also has additional information.

Subprime-Related, CMBS and Leveraged Finance
Distribution Exposure, Net

				6/ 30/ 08
				Exposure
	6/ 30/ 08			Hedged With			6/ 30/ 08			3/ 31/ 08		12/ 31/ 07
	Gross			Various			Net			Net		Net
($ in millions)	Exposure			Instruments			Exposure			Exposure		Exposure
ABS CDO-related exposures:
Super senior ABS CDO exposures
High grade	$	2,331			(2,331	)		-			-		-
Mezzanine		2,022			(1,603	)		419			439		613
Total super senior ABS CDO exposures		4,353			(3,934	)		419			439		613
Other retained ABS CDO-related exposures		29			(17	)		12			68		208
Total ABS CDO-related exposures (a)		4,382			(3,951	)		431			507		821
Subprime RMBS exposures:
AAA rated		1,524			-			1,524			1,684		1,948
Below AAA rated (net of hedges) (b)		(46	)		-			(46	)		40		(253	)
Total subprime RMBS exposures		1,478			-			1,478			1,724		1,695
Total subprime-related exposure		5,860			(3,951	)		1,909			2,231		2,516
Commercial mortgage-related (CMBS)		756			-			756			2,954		7,564
Leveraged finance (net of applicable fees)	$	n.a.			n.a.			3,766			8,157		9,149

(a) At 6/ 30/ 08, $2.0 billion is hedged with highly rated monoline financial guarantors; $900 million with a AA-rated large European bank, under margin agreements; and $1.0 billion with a large AA-rated global multi-line insurer, under margin agreements.
(b) Net short position due to hedging activities.

Market Disruption-Related Distribution Exposure We have taken steps to reduce the size of our exposure to structured products and leveraged finance assets originally intended for distribution, which have been most exposed to market disruptions, specifically ABS CDOs, subprime RMBS, CMBS and leveraged finance commitments. The table above shows our remaining exposure at June 30, 2008, and the comparable changes in those exposures since March 31, 2008, and December 31, 2007.

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Since the market disruption began in July 2007, we have elected to transfer certain assets that were originally intended for distribution to the loan portfolio based on our view that the market valuations provide attractive longer term investment returns. These assets were transferred at fair value and are no longer being marketed. In the first half of 2008, these transfers amounted to $4.4 billion of commercial and commercial real estate exposure and $2.0 billion of consumer real estate loans.

As of June 30, 2008, our notional subprime ABS CDO distribution exposure, net of hedges with financial guarantors, was $431 million and $1.5 billion of our subprime RMBS exposure was rated AAA or equivalent by rating agencies.

Our CMBS mark-to-market exposure of $756 million at June 30, 2008, was down from $7.6 billion at December 31, 2007. More than 50 percent of the remaining exposure at June 30, 2008, was AAA-rated or equivalent.

Our leveraged finance exposure of $3.8 billion at June 30, 2008, was down from $9.1 billion at December 31, 2007, with the decrease attributable in part to cancellation of a large unfunded commitment. Of the June 30, 2008 exposure $574 million related to unfunded commitments. There was no bridge equity exposure at June 30, 2008.

Outlook

In the face of significant deterioration in the housing market and pressure on our markets-oriented businesses beginning with the disruption in the capital markets in the second half of 2007, our core businesses are performing well and we are committed to strengthening them. We anticipate continued housing market deterioration and rising credit costs as well as a continuing challenge for revenue generation in many of our markets-related businesses over the next few quarters. But longer term, we are optimistic that our capital and liquidity position us well to take advantage of the opportunities arising in the wake of these market conditions.

Looking ahead, we are taking steps to ensure that as financial markets remain unsettled and loan losses increase, we focus intently on strengthening our balance sheet, controlling costs and actively managing our exposures in a challenging credit environment. We believe our company is in the right businesses for long-term growth, and that our strategies around capital and liquidity, focus on high growth businesses and markets, customer service, expense discipline, and our commitment to credit risk management will restore value for shareholders over the long term.

Wachovia is in active discussions of potential settlement with various state regulators and the SEC of ongoing investigations concerning the underwriting, sale and subsequent auctions of certain auction rate securities by Wachovia Securities, LLC, and Wachovia Capital Markets, LLC, including the likelihood of liquidity solutions. Based on the probability of such settlement, current market value estimates, affected auction rate securities and expected future redemptions, we recorded a $500 million pre-tax increase to legal reserves for the second quarter of 2008. This legal expense includes amounts reserved for estimated market valuation losses on auction rate securities associated with a potential settlement. We do not currently expect that the possible settlement would have a material effect on capital, liquidity or overall financial results through estimated maturities or redemptions for affected auction rate securities, or alter Wachovia’s previously announced focus on improving our tier 1 capital ratio. We currently expect that our tier 1 capital ratio will decrease by approximately 3 basis points following a potential settlement. More information is in the Noninterest Expense and Business Segments: Capital Management sections and Note 1 to Consolidated Financial Statements.

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Our outlook for 2008, which follows, generally assumes a slowing U.S. economy overall and the benefits of a steeper yield curve and low short-term interest rates. Based on these assumptions and before merger-related and restructuring expenses, we expect that in the second half of 2008:

• Net interest income will decline modestly from first half 2008 levels, excluding the impact of the SILO lease-related charge;

• Fee income will remain exposed to net market disruption-related losses/gains;

• A continued focus on expense control;

• A continued challenging credit environment;

• A full year 2008 effective income tax rate of approximately 20.5 percent to 21.5 percent on a tax-equivalent basis; and

• A focus on the actions described above to increase tier 1 capital from current levels.

In addition, we are focused on ensuring a successful integration of the A.G. Edwards acquisition, with integration activity scheduled to continue through the third quarter of 2009. Merger milestones have been met to date and systems integration activities remain on track.

As part of our near-term strategic priorities and when consistent with our overall business strategy, we may consider disposing of certain assets, branches, subsidiaries or lines of business. Although not currently a priority or focus of management, in the future we may also explore acquisition opportunities in areas that would complement our core businesses 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. GAAP, and 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. There are five policies that we identify as being particularly sensitive to 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 (which includes assessment of available for sale securities for other-than-temporary impairment); consolidation; goodwill impairment; and contingent liabilities. Because of the relative significance of the provision for credit losses and the goodwill impairment charge to our results in the first half of 2008, we included information regarding the related policies below. For more information on the other critical accounting policies, please refer to our 2007 Annual Report on Form 10-K.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments The allowance for loan losses and reserve for unfunded lending commitments, which we refer to collectively as the allowance for credit losses, are maintained at levels we believe are adequate to absorb probable losses inherent in the loan portfolio and unfunded lending commitments as of the date of the consolidated financial statements. We monitor various qualitative and quantitative credit metrics and trends, including changes in the levels of past due, criticized and nonperforming

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loans as part of our allowance modeling process. In addition, we rely on estimates and exercise judgment in assessing credit risk. At June 30, 2008, the allowance for loan losses was $10.7 billion and the reserve for unfunded lending commitments was $212 million.

We employ a variety of modeling and estimation tools for measuring credit risk. These tools are periodically reevaluated and refined as appropriate. The following provides a description of each component of our allowance for credit losses, the techniques we use and the estimates and judgments inherent in each.

Our model for the allowance for loan losses has four components: formula-based components for both the commercial and consumer portfolios, each including a factor for historical loss variability; a reserve for impaired commercial loans; and an unallocated component.

For commercial loans, the formula-based component of the allowance for loan losses is based on statistical estimates of the average losses observed by credit grade. Average losses for each credit grade reflect the annualized historical default rate and the average losses realized for defaulted loans.

For consumer loans, the formula-based component of the allowance for loan losses is based on statistical estimates of the average losses observed by product classification. We compute average losses for each product class using historical loss data, including analysis of delinquency patterns, origination vintage and various credit risk forecast indicators. In addition, for certain residential real estate loans, primarily the Pick-a-Payment portfolio, we use borrowers’ standard credit scoring measure (FICO), loan-to-value ratios for underlying properties, home price appreciation or depreciation data and other general economic data in estimating losses. In certain cases, we may stratify the portfolio geographically in the estimation of future home value changes. Credit loss estimates derived from statistical models may be augmented by amounts reflecting management’s judgment regarding probable incurred losses not captured by the applicable models. In the second quarter of 2008, we updated our model inputs to reflect expected continued deterioration in housing and a general worsening of the overall economy. Model inputs for our Pick-a-Payment portfolio were adjusted to include a more severe home price decline scenario and greater sensitivity to changes in borrower equity, which resulted in an increased cumulative loss output.

For both commercial and consumer loans, the formula-based components include additional amounts to establish reasonable ranges that consider observed historical variability in losses. This historical loss variability component represents a measure of the potential for significant volatility above average losses over short periods. Factors we may consider in setting these amounts include, but are not limited to, industry-specific data, geographic data, portfolio-specific risks or concentrations, and macroeconomic conditions.

At June 30, 2008, the formula-based components of the allowance were $2.3 billion for commercial loans and $7.6 billion for consumer loans, compared with $2.2 billion and $2.0 billion, respectively, at December 31, 2007.

We have established specific reserves within the allowance for loan losses for impaired commercial loans. We individually review any nonaccrual commercial loan with a minimum total exposure of $10 million in the Corporate and Investment Bank and $5 million in other segments to determine the amount of impairment, if any. In addition, certain nonaccrual commercial real estate loans in the Corporate and Investment Bank having a minimum exposure of $5 million are also reviewed individually. The reserve for each individually reviewed loan is based on the difference between the loan’s carrying amount and the loan’s estimated fair value. No other reserve is provided on impaired loans that are individually reviewed. At June 30, 2008,

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the allowance for loan losses included $457 million and the reserve for unfunded lending commitments included $3 million for individually reviewed impaired loans compared with $226 million and $4 million, respectively, at December 31, 2007.

The allowance for loan losses is supplemented with an unallocated component to reflect the inherent uncertainty of our estimates. The amount of this component and its relationship to the total allowance for loan losses may change from one period to another as warranted by facts and circumstances. We anticipate the unallocated component of the allowance will generally not exceed 5 percent of the total allowance for loan losses. At June 30, 2008, the unallocated component of the allowance for loan losses was $330 million, or 3 percent of the allowance for loan losses, compared with $165 million, or 4 percent, at December 31, 2007.

The reserve for unfunded lending commitments, which relates only to commercial business where our intent is to hold the funded loan in the loan portfolio, is based on a modeling process that is consistent with the methodology described above for the commercial portion of the allowance. In addition, this model includes as a key factor the historical average rate at which unfunded commercial exposures have been funded at the time of default. At June 30, 2008, and December 31, 2007, the reserve for unfunded lending commitments was $212 million and $210 million, respectively, including the reserve for impaired commitments.

The factors supporting the allowance for loan losses and the reserve for unfunded lending commitments as described above do not diminish the fact that the entire allowance for loan losses and reserve for unfunded lending commitments are available to absorb losses in the loan portfolio and related commitment portfolio, respectively. Our principal focus, therefore, is on the adequacy of the total allowance for loan losses and reserve for unfunded lending commitments.

Additionally, our primary bank regulators regularly conduct examinations of the allowance for credit losses and make assessments regarding its adequacy and the methodology employed in its determination.

Goodwill Impairment We test goodwill for impairment on an annual basis, or more often if events or circumstances indicate there may be impairment. As discussed in the Business Segments section, we operate in four core business segments. Goodwill impairment testing is performed at the sub-segment level (referred to as a reporting unit). The eight reporting units are General Bank: Commercial, and Retail and Small Business; Wealth Management; Corporate and Investment Bank: Corporate Lending, Investment Banking, and Treasury and International Trade Finance; and Capital Management: Retail Brokerage Services and Asset Management.

Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.

Under applicable accounting standards, goodwill impairment analysis is a two-step test. The first step, used to identify potential impairment, involves comparing each reporting unit’s fair value to its carrying value including goodwill. If the fair value of a reporting unit exceeds its carrying value, applicable goodwill is considered not to be impaired. If the carrying value exceeds fair value, there is an indication of impairment and the second step is performed to measure the amount of impairment.

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At June 30, 2008, the fair values of our reporting units were based on a discounted cash flow methodology using discount rates that reflect our current market capitalization plus a control premium. In the past, we used a composite of several methods in estimating the fair value of reporting units. However, in view of the current market environment, we believe the discounted cash flow methodology is more reflective of a market participant’s view, and accordingly, we used this methodology exclusively in our second quarter 2008 impairment analysis.

Estimating the fair value of reporting units is a very subjective process that involves the use of estimates and judgments, particularly related to cash flows, the appropriate discount rates and an applicable control premium. Our cash flow estimates were consistent with our most recent financial projections for each reporting unit. The discount rates used ranged from 14.2 percent to 20.9 percent and were based on the relationship between the total fair value of the reporting units and the market capitalization of the company plus an estimated control premium.

The second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated impairment. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill in the “pro forma” business combination accounting as described above, exceeds the goodwill assigned to the reporting unit, there is no impairment. If the goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss recognized cannot exceed the amount of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted under applicable accounting standards.

The more significant fair value adjustments in the pro forma business combination in the second step were to loans in each of the reporting units. Also, our step two analysis included adjustments to previously recorded identifiable intangible assets to reflect them at fair value and also included the fair value of additional intangibles not previously recognized (generally related to businesses not acquired in a purchase business combination). The adjustments to measure the assets, liabilities and intangibles at fair value are for the purpose of measuring the implied fair value of goodwill and such adjustments are not reflected in the consolidated balance sheet.

We performed goodwill impairment testing for all eight reporting units at December 31, 2007, March 31, 2008, and June 30, 2008. Goodwill amounted to $37.0 billion at June 30, 2008, compared with $43.1 billion at December 31, 2007, with the decrease related to the second quarter 2008 goodwill impairment charge of $6.1 billion. The Goodwill section has further information. Applicable Notes to Consolidated Financial Statements provide additional information.

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Corporate Results of Operations

Average Balance Sheets and Interest Rates

	Six Months Ended					Six Months Ended
	June 30, 2008					June 30, 2007
	Average		Interest			Average		Interest
(In millions)	Balances		Rates			Balances		Rates
Interest-bearing bank balances	$	4,616		3.91	%	$	2,459		6.55	%
Federal funds sold		12,470		2.98			13,111		5.16
Trading account assets		44,115		5.13			32,438		5.93
Securities		113,452		5.55			108,253		5.42
Commercial loans, net (a)		202,391		4.34			161,423		7.12
Consumer loans, net		268,944		6.86			256,852		7.53
Total loans, net		471,335		5.78			418,275		7.37
Loans held for sale		10,367		7.03			17,199		6.32
Other earning assets		10,706		5.30			8,119		7.02
Risk management derivatives		-		0.05			-		0.03
Total earning assets		667,061		5.69			599,854		6.88
Interest-bearing deposits		382,293		2.67			342,159		3.66
Federal funds purchased		39,622		2.95			36,595		4.97
Commercial paper		5,348		2.19			5,032		4.70
Securities sold short		6,581		3.53			7,929		3.81
Other short-term borrowings		9,722		1.57			7,295		2.66
Long-term debt		171,506		4.33			142,746		5.36
Risk management derivatives		-		0.06			-		0.10
Total interest-bearing liabilities		615,072		3.20			541,756		4.29
Net interest income and margin	$	9,149		2.74	%	$	9,024		3.01	%

(a) Includes the effect of the $975 million leverage lease recalculation charge in the second quarter of 2008.

Net Interest Income and Margin Tax-equivalent net interest income increased modestly in the first half of 2008 from the first half of 2007. The effect of earning asset growth of $67.2 billion, improving loan spreads and deposit growth, the effect of our preferred stock issuances in the first half of 2008 and in December 2007, and the benefit of a liability sensitive rate position were partially offset by the noncash $975 million SILO lease-related charge, the shift to lower spread deposits, increased liquidity levels and higher funding costs in response to the market disruption, as well as increased nonperforming loans.

The net interest margin declined 27 basis points to 2.74 percent. The net interest margin was 3.15 percent excluding the 41 basis point impact of the SILO charge, an improvement of 14 basis points reflecting improving loan spreads, deposit growth as well as the benefit of a liability sensitive rate position. Offsets to margin improvement, excluding the impact of the SILO charge, were a shift in deposits toward lower-spread categories, the impact of increased liquidity levels and higher wholesale funding costs in response to the market disruption, as well as increased nonperforming loans.

The average federal funds rate in the first half of 2008 was 262 basis points lower than the average rate in the first half of 2007, while the average longer-term two-year treasury note rate decreased 257 basis points and the average 10-year treasury note rate decreased 98 basis points.

Market rates suggest that in 2008 the yield curve will be steeper than in 2007 as a result of short-term rates falling more than long-term rates. If this expectation materializes, we expect the effect on net interest income and the margin to be positive. The Interest Rate Risk Management section has more information.

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 income in the short-term, although we expect them to benefit future periods. In the first half of 2008, interest rate risk management-related derivatives reduced net interest income by $15 million, which had an insignificant effect on the net interest margin, compared with a decrease in the first half of 2007 of $176 million, or 6 basis points.

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Fee and Other Income

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In millions)	2008			2007		2008			2007
Service charges	$	709			667		1,385			1,281
Other banking fees		518			449		1,016			865
Commissions		910			649		1,824			1,308
Fiduciary and asset management fees		1,355			1,015		2,794			1,968
Advisory, underwriting and other investment banking fees		280			454		541			861
Trading account profits (losses)		(510	)		195		(818	)		323
Principal investing		136			298		582			346
Securities gains (losses)		(808	)		23		(1,013	)		76
Other income		575			490		(369	)		946
Total fee and other income	$	3,165			4,240		5,942			7,974

Fee and Other Income Fee and other income declined 25 percent in the first half of 2008 compared with the first half of 2007 due to net market disruption-related valuation losses of $3.2 billion and reduced volume in several of our investment banking businesses. Otherwise, momentum continued in underlying businesses. Results included $481 million in net gains related to adoption of new fair value accounting standards and a $225 million gain related to the Visa initial public offering. In addition, in the first half of 2008 compared with the first half of 2007:

• Service charge growth was driven by consumer service charges on higher volume and improved pricing, while commercial service charges rose on increased volume.

• Other banking fees rose largely due to mortgage banking income and interchange fees.

• Higher commissions reflected the addition of A.G. Edwards, partially offset by lower transactional revenue as well as lower insurance commissions.

• Increased fiduciary and asset management fees were driven by continued growth in retail brokerage managed account and other asset-based fees, reflecting the addition of A.G. Edwards and organic growth, somewhat offset by the effect of lower market valuations.

• Advisory and underwriting results declined from a strong first half a year ago driven by lower origination activity in businesses affected by the market disruption.

• Trading account losses of $818 million compared with profits of $323 million in the same period a year ago, with the decline driven by net market disruption-related losses of $1.2 billion in the first half of 2008 including:

o $387 million in subprime residential asset-backed CDOs and other subprime-related products largely relating to losses on warehouse positions.

o $399 million in commercial mortgage structured products.

o $229 million in consumer mortgage structured products.

o $147 million of hedging gains on economic hedges in leveraged finance.

o $272 million in non-subprime collateralized debt obligations and other structured products.

o $94 million of primarily securities write-downs recorded in connection with the liquidation of an Evergreen fund.

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• Principal investing results were up from the first half of 2007 largely due to the $466 million of net gains related to the adoption of new fair value accounting standards on January 1, 2008.

• Net securities losses of $1.0 billion were driven by $895 million of market disruption-related losses and $391 million of losses (of which $343 million was in the Parent) reflecting our change in intent from holding certain securities to selling them in the near term, partially offset by the $225 million gain related to the Visa initial public offering. This compared with gains of $76 million in the first half a year ago.

• Other income was a net loss of $369 million in the first half of 2008 compared with income of $946 million a year ago. The decline was largely attributable to $1.1 billion of market disruption-related losses in other income in the first half of this year. The year over year results included:

o A $336 million loss in the commercial sales and securitization business in the first half of 2008 largely related to the market disruption compared with $241 million of income in the same period a year ago.

o A decline in results for certain corporate investments largely reflecting the $314 million loss on certain BOLI contracts in the first quarter of 2008.

o An $80 million decline in consumer loan sale and securitization results on lower volume.

o Net market disruption-related losses of $354 million in the leveraged finance business largely related to net write-downs on unfunded commitments. The first quarter of 2008 included $792 million of write-downs, while the second quarter results were a net gain of $438 million reflecting recoveries of previous write-downs related to the resolution of certain leveraged finance commitments. Related economic hedge results are reflected in trading. Unfunded commitments are valued assuming the commitments are fully funded under the current contractual terms.

The same trends described above in the six month period also were the primary drivers in fee and other income results in the second quarter of 2008. These included market disruption-related valuation losses, net securities losses, and lower advisory, underwriting and other investment banking fees. These were partially offset by higher service charges, other banking fees, commissions, and fiduciary and asset management fees. However, principal investing gains were lower in the second quarter of 2008 compared with the second quarter of 2007 due to lower gains on public and private direct investments. While other income was higher in the second quarter of 2008 compared with the same quarter one year ago.

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Noninterest Expense

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2008		2007		2008		2007
Salaries and employee benefits	$	3,435		3,122		6,695		6,094
Occupancy		377		331		756		643
Equipment		317		309		640		616
Marketing		95		78		192		140
Communications and supplies		184		178		370		351
Professional and consulting fees		218		205		414		382
Sundry expense		1,750		532		2,406		1,022
Other noninterest expense		6,376		4,755		11,473		9,248
Merger-related and restructuring expenses		251		32		492		42
Goodwill impairment		6,060		-		6,060		-
Other intangible amortization		97		103		200		221
Total noninterest expense	$	12,784		4,890		18,225		9,511

Noninterest Expense Noninterest expense increased 92 percent in the first half of 2008 from the first half of 2007. The majority of the increase was driven by the $6.1 billion noncash goodwill impairment charge as well as increased credit-related sundry expense primarily related to maintaining foreclosed properties, and previously mentioned legal expense. In addition, salaries and employee benefits expense contributed to the increase, largely attributable to the addition of A.G. Edwards. Nonmerger-related severance expense increased $40 million in the first half of 2008 compared with the same period a year ago.

Legal reserves in the first half of 2008 increased $1.2 billion, driven by second quarter of 2008 reserves of $590 million, primarily related to previously disclosed matters, and $500 million for the effect of recent and active settlement discussions related to auction rate securities, partially offset by the first quarter 2008 reversal of $102 million of litigation reserves related to our ownership interest in Visa. The first half of 2008 also included $208 million associated with our strategic initiatives, including de novo expansion, branch consolidations and western expansion, compared with $93 million in 2007.

In the first half of 2008 and 2007, we made annual stock award grants to employees. Under the applicable accounting standards, we are required to fully expense the fair value as of the grant date of awards to employees who are retirement-eligible at the date of the grant. This incremental salaries and employee benefits expense for retirement-eligible employees amounted to $109 million in the first half of 2008 and $93 million in the same period a year ago.

The same trends described above in the six month period also drove noninterest expense results in the second quarter of 2008 compared with the second quarter of 2007.

Merger-Related and Restructuring Expenses Merger-related and restructuring expenses in the first half of 2008 of $492 million included $411 million related to A.G. Edwards and $79 million related to Golden West. In the first half of 2007, we recorded $42 million of these expenses.

As described in the Executive Summary, on July 22, 2008, we announced a plan to reduce the number of active employees by 6,350. Subsequently, we revised this number to 6,950, which includes all of the personnel reductions contemplated in the strategies outlined in Executive Summary: Actions on Capital, Liquidity and Risk. In connection with the personnel reductions, we expect to record $525 million to $650 million in restructuring costs, including approximately $50 million in exit costs, primarily lease terminations, with the rest being severance. We expect to record substantially all the severance costs in the third quarter of 2008; however, the cash expenditures will occur through the end of 2009.

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Income Taxes Income tax benefit on a tax-equivalent basis was $2.1 billion in the first half of 2008 compared with income tax expense of $2.2 billion in the first half of 2007. The related effective income tax rates were 17.92 percent and 32.28 percent, respectively. The significant decline in the tax rate was the result of the $6.1 billion goodwill impairment charge, only a very small percentage of which is deductible for income tax purposes.

Business Segments

We provide diversified banking and nonbanking financial services and products primarily through four core business segments, the General Bank, Wealth Management, the Corporate and Investment Bank, and Capital Management. We also have a Parent segment that includes all asset and liability management functions, including managing our securities portfolio for liquidity and interest rate risk. Business segment data excludes the goodwill impairment charge, merger-related and restructuring expenses, other intangible amortization, discontinued operations, and the effect of changes in accounting principles. A provision for credit losses is allocated to each core business segment based on net charge-offs, and the difference between the total provision for the segments and the consolidated provision is recorded in the Parent segment. In the first half of 2008, provision for credit losses in the Parent segment amounted to $6.3 billion, the majority of which related to certain loans in the General Bank. While the $6.1 billion goodwill impairment charge is not included in segment results, the Goodwill section shows the components of the charge attributed to each sub-segment.

We continuously update segment information for changes that occur in the management of our businesses. In the first half of 2008, we updated our segment reporting to reflect BluePoint as a discontinued operation, which is included in the Parent. Previously, BluePoint was included in the Corporate and Investment Bank. Also, we realigned corporate overhead allocations, resulting in a shift of such allocations from the four core business segments to the Parent. Our current and historical financial reporting reflects these changes. The impact to full year 2007 segment earnings as a result of these changes was:

• In the General Bank, an increase of $203 million.

• In Wealth Management, an increase of $26 million.

• In the Corporate and Investment Bank, an increase of $330 million.

• In Capital Management, an increase of $77 million.

• In the Parent, a decrease of $406 million, not including $230 million in 2007 losses from discontinued operations excluded from core segment earnings; previously, this amount was included in Corporate and Investment Bank segment earnings.

The economic capital and expected loss factors for the Pick-a-Payment mortgage portfolio within the General Bank’s Retail and Small Business line of business were revised in the second quarter of 2008 based on updated performance expectations, modeling and macroeconomic conditions. This will more closely align economic capital and expected loss with management’s view of the perceived risk profile of the business going forward.

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General Bank
Performance Summary

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(Dollars in millions)	2008			2007		2008		2007
Income statement data
Net interest income (Tax-equivalent)	$	3,671			3,372		7,116		6,770
Fee and other income		1,000			935		1,980		1,781
Intersegment revenue		57			56		112		102
Total revenue (Tax-equivalent)		4,728			4,363		9,208		8,653
Provision for credit losses		919			154		1,488		301
Noninterest expense		2,050			1,922		4,088		3,787
Income taxes (Tax-equivalent)		642			834		1,326		1,665
Segment earnings	$	1,117			1,453		2,306		2,900
Performance and other data
Economic profit	$	919			1,124		1,911		2,250
Risk adjusted return on capital (RAROC)		33.02	%		52.66		37.07		53.24
Economic capital, average	$	16,786			10,821		14,739		10,744
Cash overhead efficiency ratio (Tax-equivalent)		43.35	%		44.05		44.39		43.76
Lending commitments	$	133,201			129,851		133,201		129,851
Average loans, net		319,574			291,607		315,565		289,985
Average core deposits	$	290,381			290,455		293,776		287,263
FTE employees		54,415			57,574		54,415		57,574

General Bank The General Bank includes our Retail and Small Business and our Commercial lines of business. The General Bank’s earnings declined to $2.3 billion, down $594 million, driven by rapidly rising credit costs and related expenses, primarily in the mortgage business, which overshadowed continued sales momentum elsewhere as reflected in total revenue of $9.2 billion, up 6 percent. Other key General Bank trends in the first half of 2008 compared with the first half of 2007 included:

• Average loan growth of 9 percent, with 12 percent growth in wholesale and 8 percent growth in retail. Retail growth included a 5 percent increase in consumer real estate lending that primarily reflected a decline in prepayments.

• Significant efforts in our mortgage business to mitigate risk in the face of declining housing markets by restructuring its operating model, including exiting the General Bank’s wholesale mortgage origination channel; implementing extensive loss mitigation efforts; tightening underwriting guidelines and undertaking initiatives such as waiving prepayment fees on Pick-a-Payment loans and assisting Pick-a-Payment customers in refinancing their loans, to increase the volume of marketable mortgages.

• Reduced home equity originations, reflecting implementation of tightened credit standards. More than 95 percent of our home equity loans are originated through our branch network and other direct channels.

• An 18 percent increase in auto originations with continued focus on higher credit scores.

• Average core deposit growth of 2 percent, largely reflecting strength in wholesale deposits, which were up 8 percent, and an increase of 1 percent in retail deposits.

• Growth in net new retail checking accounts, reflecting continued benefits from retention and acquisition efforts resulting in an increase of 437,000 in the first half of 2008 compared with an increase of 582,000 in the first half of 2007.

• 305,000 new checking accounts linked to the new Way2Save accounts, which launched in mid-January 2008.

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• 11 percent growth in fee and other income, with strength in service charges, interchange income and mortgage banking fee income. Growth of 21 percent in interchange income reflected a 17 percent increase in debit/credit card volume from the first half of 2007.

• Noninterest expense up 8 percent due to growth in credit-related sundry expense, as well as continued strategic investment in de novo branch activity and western expansion. During the first half of 2008, 46 de novo branches were opened and 94 branches were consolidated. As a result of performance initiatives, operating leverage continued to improve, which enabled continued strategic investment.

• An increase in the provision for credit losses to $1.5 billion largely reflecting rapid deterioration in consumer real estate in certain housing markets and higher losses in auto.

The same trends described above in the six month period also drove General Bank results in the second quarter of 2008 compared with the second quarter of 2007.

Wealth Management
Performance Summary

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(Dollars in millions)	2008			2007		2008		2007
Income statement data
Net interest income (Tax-equivalent)	$	202			182		384		362
Fee and other income		207			202		418		398
Intersegment revenue		3			3		8		6
Total revenue (Tax-equivalent)		412			387		810		766
Provision for credit losses		8			2		13		3
Noninterest expense		253			244		499		491
Income taxes (Tax-equivalent)		53			51		108		99
Segment earnings	$	98			90		190		173
Performance and other data
Economic profit	$	76			70		146		133
Risk adjusted return on capital (RAROC)		52.61	%		56.73		52.04		55.46
Economic capital, average	$	731			612		715		602
Cash overhead efficiency ratio (Tax-equivalent)		61.05	%		62.80		61.50		64.00
Lending commitments	$	6,915			6,892		6,915		6,892
Average loans, net		23,151			21,056		22,758		20,689
Average core deposits	$	17,559			17,466		17,732		17,368
FTE employees		4,665			4,580		4,665		4,580

Wealth Management Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Wealth Management earned $190 million on 6 percent revenue growth in challenging markets. Other key Wealth Management trends in the first half of 2008 compared with the first half of 2007 included:

• 6 percent growth in net interest income led by loan growth.

• 22 percent growth in fiduciary and asset management fees as a pricing initiative implemented in the third quarter of 2007 and other growth offset declines in equity valuations. Insurance commissions declined largely due to a soft market for insurance premiums and nonstrategic insurance account dispositions.

• Modest expense growth as efficiency initiatives offset the effect of private banking and western expansion investment.

• An 8 percent decline in assets under management since year-end 2007 to $77.3 billion largely due to market depreciation.

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The same trends described above in the six month period also drove Wealth Management results in the second quarter of 2008 compared with the second quarter of 2007, along with improved deposit spreads.

Corporate and Investment Bank
Performance Summary

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in millions)	2008			2007			2008			2007
Income statement data
Net interest income (Tax-equivalent)	$	1,124			773			2,152			1,489
Fee and other income		657			1,522			499			2,631
Intersegment revenue		(52	)		(50	)		(102	)		(93	)
Total revenue (Tax-equivalent)		1,729			2,245			2,549			4,027
Provision for credit losses		438			(2	)		635			4
Noninterest expense		960			1,020			1,707			1,931
Income taxes (Tax-equivalent)		122			448			76			763
Segment earnings	$	209			779			131			1,329
Performance and other data
Economic profit (loss)	$	4			490			(408	)		776
Risk adjusted return on capital (RAROC)		11.12	%		33.22			4.93			29.22
Economic capital, average	$	13,816			8,850			13,525			8,590
Cash overhead efficiency ratio (Tax-equivalent)		55.60	%		45.43			67.00			47.94
Lending commitments	$	113,559			115,430			113,559			115,430
Average loans, net		106,642			76,744			103,844			75,065
Average core deposits	$	31,682			36,713			32,652			35,481
FTE employees		6,394			6,872			6,394			6,872

Corporate and Investment Bank Our Corporate and Investment Bank includes corporate lending, investment banking and treasury and international trade finance. The capital markets disruption has hit our Corporate and Investment Bank particularly hard since the third quarter of 2007, with a 90 percent decline in first half 2008 segment earnings to $131 million driven by $2.1 billion in net valuation losses reflecting continued disruption in the capital markets and reduced origination volume in most markets-related businesses. The losses were somewhat offset by $584 million of principal investing net gains largely due to $466 million of gains in the first quarter of 2008 related to the adoption of new fair value accounting standards. The market disruption-related valuation losses, net of applicable hedges, included:

• $577 million in subprime residential asset-backed collateralized debt obligations and other related exposures;

• $730 million in commercial mortgage structured products;

• $319 million in consumer mortgage structured products;

• $207 million in leveraged finance net of fees and macro credit hedges; and

• $296 million in non-subprime collateralized debt obligations and other structured products.

Additional key Corporate and Investment Bank trends in the first half of 2008 compared with the first half of 2007 included:

• A 45 percent increase in net interest income, which reflected 38 percent growth in average loans including $7.2 billion of net transfers into the loan portfolio of certain loans originally slated for disposition, as well as loan growth in the corporate lending and the global financial institutions businesses.

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• Growth in equities, global rate products and high grade, offset by lower results in loan syndications, structured products and merger and advisory products and services.

• A 12 percent decline in noninterest expense primarily due to lower revenue-based incentive compensation and reduced headcount in markets-related businesses.

• Provision for credit losses of $635 million largely reflecting residential-related commercial real estate losses, compared with $4 million in the first half of 2007.

The same trends described above in the six month period also were the primary drivers of the Corporate and Investment Bank’s results in the second quarter of 2008 compared with the second quarter of 2007, with the exception of principal investing. Principal investing results were higher in the first half of 2008 compared with the same period a year ago while the second quarter of 2008 was lower than the second quarter of 2007 due to lower gains on public and private direct investments.

Capital Management
Performance Summary

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in millions)	2008			2007			2008			2007
Income statement data
Net interest income (Tax-equivalent)	$	308			260			589			519
Fee and other income		1,995			1,536			4,186			3,013
Intersegment revenue		(8	)		(11	)		(18	)		(19	)
Total revenue (Tax-equivalent)		2,295			1,785			4,757			3,513
Provision for credit losses		-			-			-			-
Noninterest expense		2,327			1,294			4,182			2,531
Income taxes (benefits) (Tax-equivalent)		(11	)		179			210			358
Segment earnings (loss)	$	(21	)		312			365			624
Performance and other data
Economic profit (loss)	$	(79	)		275			248			550
Risk adjusted return on capital (RAROC)		(3.97	)%		92.77			34.49			93.76
Economic capital, average	$	2,105			1,348			2,124			1,341
Cash overhead efficiency ratio (Tax-equivalent)		101.39	%		72.47			87.91			72.04
Lending commitments	$	1,544			1,169			1,544			1,169
Average loans, net		2,881			1,663			2,722			1,609
Average core deposits	$	48,647			31,221			45,866			31,450
FTE employees		29,680			17,905			29,680			17,905

Capital Management Capital Management includes Retail Brokerage Services and Asset Management. Capital Management generated earnings of $365 million in the first half of 2008, reflecting 35 percent revenue growth, primarily related to the A.G. Edwards acquisition. Results in the first half of 2008 included net market disruption-related losses of $118 million, including $89 million of write-downs on securities recorded in connection with the liquidation of the Evergreen Ultra Short Opportunities Fund. In June 2008, we provided financing to this fund in connection with its planned liquidation. As a result we consolidated the fund and recorded its assets on our consolidated balance sheet. The market disruption-related losses also included $24 million of write-downs on securities purchased in the third quarter of 2007 from Evergreen money market funds. Other key Capital Management trends in the first half of 2008 compared with the first half of 2007 included:

• Growth in revenue despite declining equity markets year over year.

o $4.3 billion in revenue from our retail brokerage businesses reflecting transactional revenues of $1.6 billion and asset-based and other income of $2.7 billion. Retail brokerage fee income increased 53 percent driven by the addition of A.G. Edwards and growth in managed account and other asset-based fees, partially offset by lower brokerage transaction activity and equity syndicate distribution fees.

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o $484 million in revenue from our asset management businesses, down $108 million, driven by the $118 million of market disruption-related losses.

• Retail brokerage core deposit growth of $14.4 billion, which was partially offset by spread compression.

• 65 percent growth in noninterest expense largely due to the effect of A.G. Edwards as well as higher legal expense including $500 million for the effect of recent and active settlement discussions related to auction rate securities.

Total Assets Under Management (AUM)

	2008					2007
	Second Quarter					Fourth Quarter					Second Quarter
(In billions)	Amount		Mix			Amount		Mix			Amount		Mix
Equity	$	73		30	%	$	84		30	%	$	85		30	%
Fixed income		108		44			123		45			135		48
Money market		65		26			68		25			61		22
Total assets under management (a)	$	246		100	%	$	275		100	%	$	281		100	%
Securities lending		42		-			52		-			64		-
Total assets under management and securities lending	$	288		-		$	327		-		$	345		-

(a) Includes $37 billion in assets managed for Wealth Management, which are also reported in that segment.

Mutual Funds (AUM also included in the above)

	2008					2007
	Second Quarter					Fourth Quarter					Second Quarter
			Fund					Fund					Fund
(In billions)	Amount		Mix			Amount		Mix			Amount		Mix
Equity	$	30		29	%	$	36		32	%	$	38		35	%
Fixed income		16		16			19		17			22		20
Money market		57		55			58		51			49		45
Total mutual fund assets	$	103		100	%	$	113		100	%	$	109		100	%

Total assets under management (AUM) of $245.9 billion at June 30, 2008, decreased 10 percent from December 31, 2007, driven by net outflows of $17.6 billion as well as $11.2 billion in lower market valuations. Total brokerage client assets were $1.1 trillion at June 30, 2008, down 5 percent from year-end 2007 as lower market valuations were partially offset by positive net inflows. Retail Brokerage client accounts held an estimated $8.7 billion, $9.6 billion and $13.2 billion of auction rate securities at August 1, 2008, June 30, 2008 and March 31, 2008, respectively.

The same trends described above in the six month period also drove Capital Management results in the second quarter of 2008 compared with the second quarter of 2007.

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Parent
Performance Summary

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in millions)	2008			2007			2008			2007
Income statement data
Net interest income (Tax-equivalent)	$	(961	)		(100	)		(1,092	)		(116	)
Fee and other income		(694	)		45			(1,141	)		151
Intersegment revenue		-			2			-			4
Total revenue (Tax-equivalent)		(1,655	)		(53	)		(2,233	)		39
Provision for credit losses		4,202			25			6,262			48
Noninterest expense		883			378			1,197			729
Minority interest		26			139			224			275
Income taxes (benefits) (Tax-equivalent)		(2,633	)		(322	)		(3,653	)		(656	)
Preferred dividends		193			-			236			-
Segment loss	$	(4,326	)		(273	)		(6,499	)		(357	)
Performance and other data
Economic loss	$	(1,623	)		(246	)		(2,463	)		(310	)
Risk adjusted return on capital (RAROC)		(430.13	)%		(29.52	)		(284.89	)		(13.56	)
Economic capital, average	$	1,480			2,436			1,674			2,546
Cash overhead efficiency ratio (Tax-equivalent)		(47.55	)%		(496.52	)		(44.70	)		1,390.16
Lending commitments	$	543			569			543			569
Average loans, net		24,486			30,187			26,446			30,927
Average core deposits	$	2,401			2,641			2,565			2,346
FTE employees		24,798			23,562			24,798			23,562

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 revenue and expenses that are not allocated to the business segments; and the results of wind-down or divested businesses, including the cross-border leasing activity. In addition, the Parent includes the provision for loan losses that exceeds net charge-offs in the business segments. Key trends in the Parent segment in the first half of 2008 compared with the first half of 2007 included:

• A decline in net interest income, reflecting the SILO lease-related charge, growth in wholesale funding as well as securitization of higher yielding real estate-secured loans that were largely replaced by lower yielding foreign commercial loans.

• A $6.2 billion increase in the provision for credit losses reflecting greater credit risk and loan growth. More information is in the Provision for Credit Losses section.

• A $1.3 billion decrease in fee and other income, reflecting net securities losses of $713 million compared with net gains of $70 million in the year ago period, as well as $314 million of valuation losses on our BOLI portfolio in the first half of 2008. Of the $713 million of net securities losses, $655 million of losses were market disruption-related and $343 million reflected our change in intent from holding certain securities to selling them in the near term, partially offset by the $225 million Visa gain.

• A 64 percent increase in noninterest expense, primarily reflecting higher legal costs.

The same trends described above in the six month period also drove the Parent results for the second quarter of 2008 compared with the second quarter of 2007.

In the first quarter of 2008 we recorded valuation losses of $314 million in the Parent segment following a review of three stable value agreements (SVAs) totaling $386 million provided by a third party guarantor in connection with our BOLI portfolio. SVAs are designed to protect cash surrender value on certain BOLI policies from market fluctuations on underlying investments.

BOLI assets on our balance sheet amounted to $15.0 billion at June 30, 2008, and at December 31, 2007. BOLI is an insurance investment product where we purchase life insurance policies on a

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group of officer-level employees, and where we are the owner and beneficiary of the policies. The insurance premiums we pay are recorded as cash surrender value on the balance sheet. The earnings from the policies, represented by increases in the cash surrender value, offset the costs of providing employee benefits. BOLI portfolio results are reported as a component of other noninterest income in our results of operations. The cash surrender value of BOLI may increase or decrease further depending on market conditions related to the underlying investments.

Of our total BOLI portfolio, 25 percent is in general account life insurance placed with several highly rated insurance carriers. This general account life insurance typically includes a feature guaranteeing minimum returns. Seventy-five percent is in separate account life insurance, which is managed by third party investment advisors under pre-determined investment guidelines. Stable value protection is a feature available with respect to separate account life insurance policies that is designed to protect a policy’s cash surrender value from market fluctuations on underlying investments. Approximately 95 percent of our separate account portfolio has some form of stable value protection, with 74 percent of such protected portfolio being fully protected and 26 percent having partial protection. Nearly all of the stable value protection is provided by large, highly rated financial institutions. Approximately 5 percent of the separate account portfolio has no protection.

The Parent segment includes the impact of Prudential Financial Inc.’s (Prudential’s) minority interest in Wachovia Securities Financial Holdings, LLC (WSFH). As a result of Wachovia’s contribution to WSFH of the retail securities business of A.G. Edwards on January 1, 2008, Prudential’s percentage interest in WSFH was diluted as of that date based on the value of the contributed business relative to the value of WSFH. Although the adjustment in Prudential’s interest will be effective on a retroactive basis as of the January 1, 2008 contribution date, the valuations necessary to calculate the precise reduction in that percentage interest are not yet complete. Based on currently available information, Wachovia estimates that Prudential’s percentage interest has been diluted from its pre-contribution percentage interest of 38 percent to approximately 23 percent as a result of the A.G. Edwards contribution. This percentage interest may be adjusted higher or lower in a subsequent quarter retroactive to January 1, 2008, if the final valuations differ from Wachovia’s current estimate.

In connection with Wachovia’s acquisition of A.G. Edwards and under the terms of Wachovia Securities’ joint venture with Prudential, Prudential elected to exercise its lookback option, which permits Prudential to delay for two years following the combination of the A.G. Edwards retail brokerage business with Wachovia Securities its decision to make or not make an additional capital contribution to the joint venture or other payments to avoid or limit dilution of its ownership interest in the joint venture. During this period, Prudential’s share in the joint venture’s earnings and one-time costs associated with the combination will be based on Prudential’s diluted ownership level following the A.G. Edwards combination. At the end of the lookback period, Prudential may elect to make an additional capital contribution or other payment, based on the appraised value (as defined in the joint venture agreement) of the existing joint venture and the A.G. Edwards business as of the date of the combination with Wachovia Securities, to avoid or limit dilution. In this case, Prudential also would make a true-up payment of one-time costs to reflect the incremental increase in its ownership interest in the joint venture. In addition, in this case, Prudential may not then exercise its existing discretionary put option, described below, until the first anniversary of the end of the lookback period. Alternatively, at the end of the lookback period, Prudential may put its joint venture interests to Wachovia based on the appraised value of the joint venture, excluding the A.G. Edwards business, as of the date of the combination of the A.G. Edwards business with Wachovia Securities. Prudential also has a discretionary right to put its joint venture interests to Wachovia, including the A.G. Edwards business, at any time after July 1, 2008. If this put option is exercised, the closing would occur

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approximately one year from the date of exercise and the appraised value would be determined at that time. Wachovia may pay the purchase price for the put option in cash, shares of Wachovia common stock, or a combination thereof. Total minority interest expense was $137 million in the first half of 2008 compared with $275 million in the first half of 2007, of which $81 million and $208 million, respectively, related to Prudential.

Wachovia controls 100 percent of the outstanding stock of BluePoint Re Limited (BluePoint), a Bermuda-based monoline bond reinsurer, and accordingly consolidates this subsidiary. The results for the third and fourth quarters of 2007 have been reclassified to reflect the results of BluePoint as a discontinued operation. Results from inception of BluePoint in 2005 through the second quarter of 2007 were not material and, accordingly, have not been included in discontinued operations. BluePoint’s board of directors has authorized its management to wind-up the company’s affairs, and a petition to wind up BluePoint was filed with the Supreme Court of Bermuda on August 7, 2008.

In the second half of 2007, BluePoint recorded significant losses on certain derivative instruments (principally credit default swaps on ABS CDOs) and these losses through December 31, 2007, approximated substantially all of Wachovia’s investment in BluePoint and were included in Wachovia’s 2007 consolidated financial results. Wachovia has no further obligation to inject capital in BluePoint. BluePoint continued to record these instruments at fair value in 2008. In estimating the fair value of these instruments under SFAS 157, a company must consider, among other things, its own credit rating, which in this case is BluePoint’s. As Wachovia has no obligation to fund losses in excess of BluePoint’s equity, BluePoint assessed the discount required in valuing these instruments to reflect a market participant’s view of BluePoint’s non-performance risk. BluePoint’s valuation at June 30, 2008, reflected a very significant discount for its non-performance risk, such that BluePoint recorded no further loss on the derivative instruments in the first half of 2008. Accordingly, consolidated results for the first half of 2008 reflected no additional losses in discontinued operations.

Balance Sheet Analysis

Securities The decrease in securities from December 31, 2007, is primarily attributable to the transfer to trading of $6.8 billion of securities in connection with the January 1, 2008, election under SFAS 159 to carry these securities at fair value as well as a $2.7 billion increase in net unrealized losses due to continued spread widening predominantly on our fixed rate mortgage-backed securities, largely offset by purchases and net securities retained from agency securitizations of consumer real estate loans. The average duration of this portfolio was 4.1 years in the first half of 2008, an increase from 3.4 years at year-end 2007 driven largely by slowing prepayments. The average rate earned on securities available for sale was 5.55 percent in the first half of 2008 and 5.42 percent in the first half of 2007.

Securities Available For Sale

	June 30,			December 31,
(In billions)	2008			2007
Market value	$	113.5			115.0
Net unrealized loss	$	(4.0	)		(1.3	)
Memoranda (Market value)
Residual interests	$	0.4			0.5
Retained bonds Investment grade (a)	$	16.0			11.6

(a) $ 15.7 billion had credit ratings of AA and above at June 30, 2008.

The Interest Rate Risk Management section further explains our interest rate risk management practices.

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We retain interests in the form of either bonds or residual interests in connection with certain securitizations primarily of residential mortgage loans, home equity loans and lines, auto loans and student loans. Securities available for sale at June 30, 2008, included residual interests with a market value of $374 million, which included a net unrealized gain of $69 million, and retained bonds from securitizations with a market value of $16.0 billion, which included a net unrealized gain of $97 million.

Retained interests from securitizations recorded as either securities available for sale, trading account assets or loans amounted to $16.7 billion at June 30, 2008, and $12.4 billion at December 31, 2007.

Loans — On-Balance Sheet

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
COMMERCIAL
Commercial, financial and agricultural	$	122,628			119,193			112,509			109,269			102,397
Real estate — construction and other		18,629			18,597			18,543			18,167			17,449
Real estate — mortgage		27,191			26,370			23,846			21,514			20,448
Lease financing		24,605			23,637			23,913			23,966			24,083
Foreign		35,168			33,616			29,540			26,471			20,959
Total commercial		228,221			221,413			208,351			199,387			185,336
Consumer
Real estate secured		230,520			230,197			227,719			225,355			220,293
Student loans		9,945			9,324			8,149			7,742			6,757
Installment loans		29,261			27,437			25,635			24,763			25,017
Total consumer		269,726			266,958			261,503			257,860			252,067
Total loans		497,947			488,371			469,854			457,247			437,403
Unearned income		(9,749	)		(7,889	)		(7,900	)		(8,041	)		(8,283	)
Loans, Net (On-balance sheet)	$	488,198			480,482			461,954			449,206			429,120

Loans — Managed Portfolio (including on-balance sheet)

	2008				2007
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
Commercial	$	230,550		224,875		217,896		213,434		197,079
Real estate secured		255,190		254,685		250,520		242,526		238,575
Student loans		12,718		12,148		11,012		12,618		11,760
Installment loans		33,710		31,571		30,487		29,365		28,273
Total managed portfolio	$	532,168		523,279		509,915		497,943		475,687

Loans The 6 percent increase in net loans from year-end 2007 to $488.2 billion reflected 10 percent growth in commercial loans and 3 percent growth in consumer loans. Commercial loan growth was driven by large corporate and middle-market loans as well as commercial real estate, including the impact of $4.1 billion transferred to the loan portfolio from loans held for sale in late 2007 and early 2008 as a result of a change in management’s strategy based on our view that the market valuations provide attractive long-term investment returns.

Consumer loan growth was driven by consumer real estate and auto loans, partially offset by the impact of the securitization and sale of $3.9 billion of consumer loans, including securitization of $3.7 billion of real estate secured loans and $128 million in student loans. We transferred to held for sale $2.6 billion of real estate secured loans and transferred from held for sale $801 million of auto loans and $1.9 billion of consumer real estate loans in the Corporate and Investment Bank.

Our loan portfolio is broadly diversified by industry, concentration and geography. Additionally, the majority of the portfolio is collateralized and we periodically estimate the impact that changes in market conditions would have on our loan-to-value (LTV) positions for loans in certain portfolios. At June 30, 2008:

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• Commercial loans represented 46 percent and consumer loans 54 percent of the loan portfolio.

• 73 percent of the commercial loan portfolio was secured by collateral.

• 99 percent of the consumer loan portfolio was either secured by collateral or guaranteed.

     Of our $230.5 billion consumer real estate loan portfolio:

• 85 percent is secured by a first lien.

• 84 percent has an original loan-to-value ratio of 80 percent or less.

• 95 percent has an original loan-to-value ratio of 90 percent or less.

• 13 percent of the home equity and prime equity portfolios have an original loan-to-value ratio greater than 90 percent; of which 43 percent are in the first lien position.

For Pick-a-Payment loans, certain of the payment options result in deferral of interest, which is added to the loan balance. The balance of deferred interest on this portfolio at June 30, 2008, was $3.9 billion, of which $307 million related to loans classified as nonperforming, compared with $3.1 billion, of which $81 million was related to loans classified as nonperforming, at December 31, 2007.

Our managed loan portfolio grew 4 percent from year-end 2007, reflecting the growth discussed above. The managed loan portfolio includes the on-balance sheet loan portfolio; loans held for sale; loans securitized for which the retained interests are classified in securities; and the off-balance sheet portfolio of securitized loans sold where we service the loans.

Asset Quality

Asset Quality

	2008					2007
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
Nonperforming assets
Nonaccrual loans	$	11,049			7,788		4,995		2,715		1,945
Troubled debt restructurings (a)		248			48		-		-		-
Foreclosed properties		631			530		389		334		207
Total nonperforming assets	$	11,928			8,366		5,384		3,049		2,152
as % of loans, net and foreclosed properties		2.44	%		1.74		1.16		0.68		0.50
Nonperforming assets in loans held for sale	$	63			5		62		59		42
Total nonperforming assets in loans and in loans held for sale	$	11,991			8,371		5,446		3,108		2,194
as % of loans, net, foreclosed properties and loans held for sale		2.41	%		1.70		1.14		0.66		0.49
Provision for credit losses	$	5,567			2,831		1,497		408		179
Allowance for credit losses	$	10,956			6,767		4,717		3,691		3,552
Allowance for loan losses
as % of loans, net		2.20	%		1.37		0.98		0.78		0.79
as % of nonaccrual and restructured loans (b)		95			84		90		129		174
as % of nonperforming assets (b)		90			78		84		115		157
Allowance for credit losses
as % of loans, net		2.24	%		1.41		1.02		0.82		0.83
Net charge-offs	$	1,309			765		461		206		150
Commercial, as % of average commercial loans		0.88	%		0.48		0.34		0.08		0.07
Consumer, as % of average consumer loans		1.26			0.79		0.46		0.27		0.19
Total, as % of average loans, net		1.10	%		0.66		0.41		0.19		0.14
Past due accruing loans, 90 days and over	$	1,181			866		708		590		562
Commercial, as a % of loans, net		0.14	%		0.05		0.05		0.04		0.03
Consumer, as a % of loans, net		0.32	%		0.28		0.23		0.20		0.20

(a) Troubled debt restructurings were not significant prior to the first quarter of 2008.

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

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Nonperforming Assets Increases in both nonaccrual loans and foreclosed properties resulting from significant weakness in the housing market particularly in stressed regions of Florida and California contributed to the $6.5 billion increase in nonperforming assets from year-end 2007 to $12.0 billion, or 2.41 percent of loans, foreclosed properties and loans held for sale at June 30, 2008. Consumer nonaccrual loans were $7.6 billion at June 30, 2008, up $4.3 billion from year-end 2007, driven primarily by new nonaccruals of $3.7 billion related to our Pick-a-Payment portfolio and $228 million related to nonbranch-originated Alt-A loans in the Corporate and Investment Bank transferred from loans held for sale to the portfolio. Commercial nonaccrual loans at June 30, 2008, were $3.4 billion, up $1.8 billion from year-end 2007, reflecting new nonaccrual loans of $3.1 billion, including $1.5 billion of residential-related commercial real estate in our Real Estate Financial Services portfolio, and three large commercial credits, partially offset by gross charge-offs of $722 million. We continue to mitigate the risk and volatility of our balance sheet through prudent risk management practices, including increased collection efforts.

Nonperforming Assets

	2008					2007
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
Nonaccrual Loans
Commercial:
Commercial, financial and agricultural	$	1,229			908		602		354		318
Commercial real estate — construction and mortgage		2,203			1,750		1,059		289		161
Total commercial		3,432			2,658		1,661		643		479
Consumer:
Real estate secured:
First lien		7,430			5,015		3,234		1,986		1,380
Second lien		147			75		58		41		44
Installment and other loans (a)		40			40		42		45		42
Total consumer		7,617			5,130		3,334		2,072		1,466
Total nonaccrual loans		11,049			7,788		4,995		2,715		1,945
Troubled debt restructurings (b)		248			48		-		-		-
Foreclosed properties		631			530		389		334		207
Total nonperforming assets	$	11,928			8,366		5,384		3,049		2,152
As % of loans, net, and foreclosed properties (c)		2.44	%		1.74		1.16		0.68		0.50
Nonperforming assets included in loans held for sale
Commercial	$	56			-		-		-		-
Consumer		7			5		62		50		37
Total nonaccrual loans		63			5		62		50		37
Foreclosed properties		-			-		-		9		5
Total nonperforming assets included in loans held for sale		63			5		62		59		42
Nonperforming assets included in loans and in loans held for sale	$	11,991			8,371		5,446		3,108		2,194
As % of loans, net, foreclosed properties and loans held for sale (d)		2.41	%		1.70		1.14		0.66		0.49
Past due loans, 90 days and over, and nonaccrual loans
Accruing loans past due 90 days and over	$	1,181			866		708		590		562
Nonaccrual loans		11,049			7,788		4,995		2,715		1,945
Total past due loans 90 days and over, and nonaccrual loans	$	12,230			8,654		5,703		3,305		2,507
Commercial, as a % of loans, net		1.73	%		1.31		0.89		0.38		0.31
Consumer, as a % of loans, net		3.12	%		2.19		1.49		1.00		0.78

(a) Principally auto loans; nonaccrual status does not apply to student loans.

(b) Troubled debt restructurings were not significant prior to the first quarter of 2008.

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

(d) These ratios reflect nonperforming assets included in loans held for sale.

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Nonperforming assets at June 30, 2008, included $248 million of troubled debt restructurings, all of which were consumer real estate-secured loans and included $129 million of Pick-a-Payment loans, $73 million of predominantly first lien home equity loans and $46 million of first lien construction loans to consumer borrowers. A loan is classified as a troubled debt restructuring in situations where we modify a loan to a borrower who is unable to make payments under the terms of the loan agreement and the modification represents a concession to the borrower as measured using a discounted cash flows analysis. The majority of our troubled debt restructurings involve interest rate reductions.

Past Due Loans Accruing loans 90 days or more past due, excluding loans that are classified as loans held for sale, were $1.2 billion at June 30, 2008, compared with $708 million at year-end 2007. Of the total past due loans, $312 million were commercial loans or commercial real estate loans and $869 million were consumer loans.

Charge-offs

	2008					2007
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
Loan losses:
Commercial, financial and agricultural	$	254			171		67		41		39
Commercial real estate — construction and mortgage		216			81		117		5		4
Total commercial		470			252		184		46		43
Real estate secured		700			351		156		59		40
Student loans		3			3		4		5		2
Installment and other loans (a)		230			242		225		168		138
Total consumer		933			596		385		232		180
Total loan losses		1,403			848		569		278		223
Loan recoveries:
Commercial, financial and agricultural		15			14		22		9		15
Commercial real estate — construction and mortgage		-			1		-		3		-
Total commercial		15			15		22		12		15
Real estate secured		18			10		9		12		11
Student loans		1			1		2		3		-
Installment and other loans (a)		60			57		75		45		47
Total consumer		79			68		86		60		58
Total loan recoveries		94			83		108		72		73
Net charge-offs:
Commercial, financial and agricultural		239			157		45		32		24
Commercial real estate — construction and mortgage		216			80		117		2		4
Total commercial		455			237		162		34		28
Real estate secured		682			341		147		47		29
Student loans		2			2		2		2		2
Installment and other loans (a)		170			185		150		123		91
Total consumer		854			528		299		172		122
Net charge-offs	$	1,309			765		461		206		150
Net charge-offs as a % of average loans, net(b)
Commercial, financial and agricultural		0.60	%		0.41		0.12		0.10		0.07
Commercial real estate — construction and mortgage		1.89			0.73		1.12		0.02		0.04
Total commercial		0.88			0.48		0.34		0.08		0.07
Real estate secured		1.18			0.59		0.26		0.08		0.05
Student loans		0.07			0.08		0.10		0.14		0.07
Installment and other loans (a)		2.36			2.76		2.35		1.99		1.47
Total consumer		1.26			0.79		0.46		0.27		0.19
Total, as % of average loans, net		1.10	%		0.66		0.41		0.19		0.14
Consumer real estate secured net charge-offs:
First lien	$	592			291		122		32		17
Second lien		90			50		25		15		12
Total consumer real estate secured net charge-offs	$	682			341		147		47		29

(a) Principally auto loans.

(b) Annualized.

Net Charge-offs Net charge-offs, which represent loan amounts written off as uncollectible, net of recoveries of previously charged-off amounts, were $2.1 billion, or 88 basis points of average net loans in the first half of 2008, an increase of $1.8 billion from the first half of 2007. The increase was driven by the effect of declining home values particularly in stressed markets such as California and Florida. Commercial net charge-offs were $692 million in the first half of 2008,

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compared with $56 million in the first half of 2007, and included $296 million in residential-related commercial real estate loans. Consumer net charge-offs were $1.4 billion, up $1.1 billion from the first half of 2007. The increase in consumer net charge-offs was driven by consumer real estate losses of $1.0 billion, including Pick-a-Payment losses of $748 million, and installment losses of $355 million, including $274 million in the auto portfolio.

Allowance for Credit Losses

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Allowance for credit losses (a)
Allowance for loan losses, beginning of period	$	6,567			4,507			3,505			3,390			3,378
Net charge-offs		(1,309	)		(765	)		(461	)		(206	)		(150	)
Allowance relating to loans acquired, transferred to loans held for sale or sold		(69	)		(16	)		(10	)		(63	)		(10	)
Provision for credit losses related to loans transferred to loans held for sale or sold (b)		51			7			6			3			4
Provision for credit losses		5,504			2,834			1,467			381			168
Allowance for loan losses, end of period		10,744			6,567			4,507			3,505			3,390
Reserve for unfunded lending commitments, beginning of period		200			210			186			162			155
Provision for credit losses		12			(10	)		24			24			7
Reserve for unfunded lending commitments, end of period		212			200			210			186			162
Allowance for credit losses	$	10,956			6,767			4,717			3,691			3,552
Allowance for loan losses
as % of loans, net		2.20	%		1.37			0.98			0.78			0.79
as % of nonaccrual and restructured loans (c)		95			84			90			129			174
as % of nonperforming assets (c)		90			78			84			115			157
Allowance for credit losses
as % of loans, net		2.24	%		1.41			1.02			0.82			0.83

(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.

Provision and Allowance for Credit Losses Provision expense was $8.4 billion in the first half of 2008 and $356 million in the first half of 2007, with the increase driven mostly by the effect of dramatic deterioration in certain housing markets. Provision exceeded net charge-offs by $6.3 billion, which included:

• $5.7 billion due principally to higher expected loss factors for Pick-a-Payment, home equity and traditional mortgage, and auto portfolios on significant market weakness and changing consumer behaviors. Of this amount, $4.4 billion related to the Pick-a-Payment portfolio.

• $247 million on the commercial portfolio on higher loss frequency and severity expectations.

• $157 million on the commercial real estate portfolio, including $127 million on impaired loans.

• $165 million higher unallocated reserves due to increased credit risk uncertainty stemming from economic and other market environmental factors.

In the first quarter of 2008, we updated our credit loss modeling for the Pick-a-Payment portfolio in the context of significant continuing deterioration in the housing market particularly in certain geographic areas, resulting in additional reserves of $4.4 billion. Our credit loss modeling strongly correlates forward expected losses to changes in home prices and the resulting change in borrower behavior, although it does rely on historical delinquency trends over the shorter term. In addition, the updated model incorporates a variety of loan and/or borrower

31

characteristics to further enhance loss forecasting by correlating borrower propensity to default and resulting loss severity to a widely used home price index, and it connects borrower equity to projected changes in home prices by geographic region. In the second quarter of 2008, the Pick-a-Payment portfolio performed below our first quarter 2008 expectations as trends and outlooks for both housing and the economy continued to worsen. As a result of these negative trends and outlooks, we further updated our model inputs to reflect greater sensitivity to changes in borrower equity and more severe home price decline scenarios, which resulted in increased 12-month forward expected losses for the portfolio. We use 12-month forward expected losses as a measure of probable incurred losses in the portfolio as of the balance sheet date.

More information on the provision for credit losses, including the impact of transfers to loans held for sale, is in Table 11: Allowance for Credit Losses. The Corporate Results of Operations section has further information.

The allowance for credit losses increased $6.2 billion from year-end 2007 to $11.0 billion at June 30, 2008, reflecting increased overall credit risk and loan growth. Our allowance for loan losses as a percent of nonperforming assets increased to 90 percent at June 30, 2008, from 84 percent at December 31, 2007. In the context of evaluating this allowance coverage ratio, it is important to note the high percentage of our portfolio that is collateralized and our low level of unsecured loans, such as credit card loans, which on an industry-wide basis typically generate higher losses.

The reserve for unfunded lending commitments increased $2 million from year-end 2007 to $212 million at June 30, 2008, which reflected slightly increased volume. The reserve for unfunded lending commitments relates to commercial lending activity.

Loans Held for Sale Loans held for sale declined $8.3 billion from year-end 2007 to $8.4 billion at June 30, 2008, as $6.9 billion of transfers to the loan portfolio of commercial and consumer real estate and auto loans, largely in the first quarter, and sales activity were somewhat offset by leveraged finance fundings. Net write-downs on the held for sale portfolio amounted to $461 million in the first half of 2008 compared with $104 million in the same period a year ago.

The loans held for sale portfolio includes 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 June 30, 2008 and 2007, core business activity represented the majority of loans held for sale. Core business activity includes residential and commercial mortgages, auto loans and credit card receivables that we originate with the intent to sell to third parties.

In the first half of 2008, we sold or securitized $19.5 billion in loans out of the loans held for sale portfolio, including $5.6 billion of commercial loans and $13.9 billion of consumer loans. In the first half of 2007, we sold or securitized $35.7 billion of loans out of the loans held for sale portfolio, including $23.7 billion of commercial loans and $12.0 billion of consumer loans, primarily residential mortgages. Substantially all of the loans sold in both periods were performing.

Goodwill

Goodwill amounted to $37.0 billion at June 30, 2008, compared with $43.1 billion at December 31, 2007, with the decrease related to the second quarter 2008 goodwill impairment charge of $6.1 billion described below.

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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 acquisitions. Purchase accounting adjustments are subject to refinement for up to one year following acquisition consummation.

Related to the October 1, 2007, A.G. Edwards acquisition, in the first half of 2008, we recorded fair value and exit cost purchase accounting adjustments amounting to a net $25 million increase in goodwill. Based on a purchase price of $6.8 billion, A.G. Edwards tangible stockholders’ equity of $2.2 billion and a customer relationship intangible of $850 million ($513 million after-tax), goodwill amounted to $4.1 billion at June 30, 2008.

Goodwill impairment testing is performed at the sub-segment level (referred to as the reporting unit). The eight reporting units are General Bank: Commercial, and Retail and Small Business; Wealth Management; Corporate and Investment Bank: Corporate Lending, Investment Banking, and Treasury and International Trade Finance; and Capital Management: Retail Brokerage Services and Asset Management. The Critical Accounting Policies: Goodwill Impairment section discusses our methodology, including the two-step testing process, and the key estimates and judgments involved in testing goodwill for impairment.

We performed goodwill impairment testing for all eight reporting units at December 31, 2007, March 31, 2008, and June 30, 2008. There was no indication of impairment in the first step of the test in any of these reporting units at either December 31, 2007, or March 31, 2008, and accordingly, we did not perform the second step. At June 30, 2008, there was an indication of impairment in four of our eight reporting units, and accordingly, the second step was performed on these four reporting units. Based on the results of the second step, we recorded the $6.1 billion goodwill impairment charge in the second quarter of 2008 across three of the four reporting units, as shown in the table below.

Goodwill Impairment

	General Bank					Corporate and Investment Bank						All Other		June 30,
				Retail and		Corporate			Investment			Reporting		2008
(Dollars in millions)	Commercial			Small Business		Lending			Banking			Units		Total
Assigned goodwill	$	7,083			23,976		2,937			597			8,460		43,053
Impairment		(2,526	)		-		(2,937	)		(597	)		-		(6,060	)
Remaining goodwill	$	4,557			23,976		-			-			8,460		36,993

The primary cause of impairment of our goodwill in the three reporting units was the 38 percent decline in our market capitalization from March 31, 2008, to $33.5 billion at June 30, 2008. The decline was a function of both financial services industry-wide and company-specific factors. Although there was an initial indication of possible impairment in the General Bank Retail and Small Business reporting unit, which holds the Pick-a-Payment portfolio, the step two measurement indicated no impairment largely due to the value that the retail banking network contributes to that reporting unit.

The goodwill impairment charge includes all of the goodwill assigned to the two reporting units in the Corporate and Investment Bank that were subject to the step two analysis and approximately one-third of the goodwill assigned to the Commercial reporting unit in the General Bank. As indicated in the Critical Accounting Policies section, the total fair value of the reporting units does not exceed our June 30, 2008, market capitalization plus a control premium (referred to as enterprise value). As an indication of the relative sensitivity of the goodwill impairment measurement to changes in the enterprise value, a 30 percent decrease in the enterprise value would increase the impairment charge by approximately $2 billion in the Commercial reporting unit and would not result in impairment in the Retail and Small Business reporting unit.

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Liquidity and Capital Adequacy

We have recently announced a series of initiatives to preserve, generate and protect capital and maintain strong liquidity as described in the Executive Summary. Our liquidity position benefits from our liquidity management processes, which we have had in place for many years. Throughout the current credit markets disruption, we have heightened our focus on balance sheet liquidity. Our liquidity management processes incorporate liquidity stress-testing in a range of possible scenarios. In addition, we focus on both assets and liabilities and the manner in which they combine to provide adequate liquidity to meet our objectives. As one of the largest deposit-funded financial institutions in the country, we have a stable funding base with 87 percent of our funding provided through deposits, long-term debt and capital.

Core Deposits Core deposits increased modestly from year-end 2007 to $400.4 billion at June 30, 2008. Compared with the first half of 2007, average core deposits in the first half of 2008 increased 5 percent to $392.6 billion. Average low-cost core deposits, which exclude consumer certificates of deposit, increased 7 percent, to $274.0 billion. Average consumer certificates of deposit rose $131 million from the first half of 2007. Core deposit growth benefited from higher retail brokerage deposits driven by the A.G. Edwards acquisition as well as organic growth, including our new retail checking account product Way2Save, which was launched in early 2008.

Purchased Funds Purchased funds, which include federal funds purchased, commercial paper, other short-term borrowings and foreign and other time deposits with maturities of 12 months or less, were $102.9 billion at June 30, 2008, compared with $102.1 billion at December 31, 2007.

Average purchased funds were $101.6 billion in the first half of 2008 and $78.8 billion in the first half of 2007. The level of average purchased funds has increased since the beginning of the third quarter of 2007, reflecting significantly higher liquidity levels in response to the market disruption.

Long-term Debt Long-term debt was $184.4 billion at June 30, 2008, and $161.0 billion at December 31, 2007, reflecting issuances of $45.2 billion, including $21.5 billion in Federal Home Loan Bank advances in the first half of 2008, partially offset by maturities. In the rest of 2008, scheduled maturities of long-term debt amount to $20.7 billion, which includes $8.8 billion in Federal Home Loan Bank advances and $1.0 billion in structured debt. We anticipate replacing the maturing obligations, subject to market conditions.

Wachovia and Wachovia Bank, National Association have a $25.0 billion Euro medium-term note programme (EMTN), under which we may issue senior and subordinated debt securities. These securities are not registered with the Securities and Exchange Commission (SEC) and may not be offered in the United States without applicable exemptions from registration. Under the EMTN, Wachovia and Wachovia Bank issued an aggregate $2.3 billion of debt securities in the first six months of 2008 and had up to $22.4 billion available for issuance at June 30, 2008.

In addition, Wachovia and Wachovia Bank, National Association have an A$10.0 billion Australian medium-term note programme (AMTN), under which we may issue senior and subordinated debt securities. These securities are not registered with the SEC and may not be offered in the United States without applicable exemptions from registration. No AMTN debt securities were issued in the first half of 2008. We had up to A$8.5 billion available for issuance at June 30, 2008.

At June 30, 2008, we had $17.5 billion of senior or subordinated debt securities, common stock or preferred stock available for issuance under our current shelf registration statement filed with the SEC. In the first half of 2008, we issued $11.55 billion of common stock and preferred stock under

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this program. The Stockholders’ Equity section has more information. In addition, we had available for issuance up to $8.4 billion under a medium-term note program covering senior or subordinated debt securities under a separate shelf registration filed with the SEC. We issued $6.3 billion of senior and subordinated debt securities in the first half of 2008 under this program. Wachovia Bank has a global note program under which we issued $7.4 billion of senior and subordinated bank notes in the first half of 2008. We had $49.0 billion available for issuance under this program at June 30, 2008.

We also have a shelf registration with the SEC under which we may offer and sell hybrid trust preferred securities. At June 30, 2008, $2.5 billion was available for issuance under this shelf registration.

In June 2008, Wachovia Bank, National Association obtained $6.0 billion of term funding in a transaction with a third party. For liquidity management purposes, this funding, due to its terms, is considered one-year financing, but it has a contractual maturity of June 2038.

The issuance of debt or equity securities may continue under any of our programs and depends on future market conditions, funding needs and other factors.

Following our second quarter 2008 earnings announcement on July 22, 2008, Fitch Ratings, Standard and Poor’s and Moody’s each downgraded the long-term debt ratings of Wachovia Corporation and its rated subsidiaries by one grade, which was above investment grade. All short-term ratings were affirmed.

Credit Lines Wachovia Bank 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.

Stockholders’ Equity Stockholders’ equity declined 2 percent from $76.9 billion at year-end 2007 to $75.1 billion at June 30, 2008. In February 2008, we issued $3.5 billion of perpetual preferred stock. In April 2008, we issued in concurrent public offerings an aggregate $8.05 billion of capital consisting of 168 million shares or $4.025 billion of common stock and 4 million shares or $4.025 billion of 7.5 percent perpetual convertible preferred stock. The effect on stockholders’ equity of the issuance of $11.55 billion of additional capital from these offerings was more than offset by $9.6 billion of net losses in the first half of 2008, $2.1 billion of common stock dividends and $236 million of preferred stock dividends paid in the first half of 2008, a $20 million reduction related to share repurchases, a $24 million reduction related to adoption of new accounting standards, and a $2.7 billion increase in after-tax depreciation in securities available for sale to $4.0 billion at June 30, 2008.

Dividend and Share Activity

	Six Months Ended
			June 30,
(In millions, except per share data)	2008		2007
Dividends on common shares	$	2,082		2,137
Dividends per common share	$	1.02		1.12
Common shares repurchased		1		18
Average diluted common shares outstanding		2,048		1,922

In the six months ended June 30, 2008, we repurchased 540,000 common shares at a cost of $20 million. At June 30, 2008, we had authorization to buy back approximately 19 million shares of common stock. Our Second Quarter 2008 Report on Form 10-Q has additional information related to share repurchases.

In the first half of 2008, we reduced the quarterly dividend on our common stock twice; first, from 64 cents to 37.5 cents per common share effective with the June 2008 dividend, and then

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from 37.5 cents to 5 cents per common share effective with the September 15, 2008, dividend. The Executive Summary has further information.

In connection with the January 1, 2008, adoption of new fair value accounting standards, certain of the effects of adoption were recorded as an adjustment to January 1, 2008, retained earnings and the amount was insignificant.

Also on January 1, 2008, we adopted two new accounting pronouncements relating to the accounting for split-dollar life insurance policies that we hold on certain current and former employees. The effect of adoption of these standards amounted to a $19 million after-tax reduction in January 1, 2008, retained earnings.

Subsidiary Dividends Wachovia Bank and Wachovia Mortgage, FSB (formerly World Savings Bank, FSB) are the largest sources of subsidiary dividends paid to the parent company. Capital requirements established by regulators limit dividends that these subsidiaries and certain other of our subsidiaries can pay. Under these and other limitations, which include an internal requirement to maintain all deposit-taking banks at the well capitalized level, at June 30, 2008, our subsidiaries had $9.2 billion available for dividends that could be paid without prior regulatory approval. Our subsidiaries paid $22 million to the parent company in the first half of 2008.

Regulatory Capital Our capital ratios were above regulatory minimums at June 30, 2008, and we continued to be classified as well capitalized. The tier 1 capital ratio was 8.00 percent at June 30, 2008, up from 7.35 percent at December 31, 2007. Our total capital ratio was 12.74 percent and our leverage ratio was 6.57 percent at June 30, 2008, and 11.82 percent and 6.09 percent, respectively, at December 31, 2007. The goodwill impairment charge had no impact on our regulatory capital ratios or tangible capital levels because goodwill is deducted when computing those ratios.

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 in amounts that differ from the full contract or notional amounts. These transactions, included in the Summary of Off-Balance Sheet Exposures table, involve varying elements of market, credit and liquidity risk. Generally these transactions are forms of guarantees that contingently require us to make payments to a guaranteed party based on an event or change in an underlying asset, liability, rate or index.

Summary of Off-Balance Sheet Exposures

	June 30, 2008				December 31, 2007
	Carrying				Carrying
(In millions)	Amount		Exposure		Amount		Exposure
GUARANTEES
Securities and other lending indemnifications	$	-		48,041		-		59,238
Standby letters of credit		118		32,423		124		29,295
Liquidity agreements		360		29,773		14		36,926
Loans sold with recourse		45		6,111		44		6,710
Residual value guarantees		-		1,315		-		1,220
Written put options		2,373		14,892		2,001		15,273
Total guarantees	$	2,896		132,555		2,183		148,662

The decrease in securities and other lending indemnifications exposure reflected seasonality. The decrease in liquidity agreement exposure was due to lower volume in our off-balance sheet commercial paper conduit as a result of our strategic focus on customer relationships and protecting our liquidity profile. The increase in the carrying amount of written put options was due to widening

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spreads on liquidity puts related to certain ABS CDOs. Of the written put option exposure, approximately $400 million is included in our market disruption-related distribution exposure.

In addition to the off-balance sheet exposures in the table above, the Business Segments: Parent section provides information on the option Prudential holds relative to their minority interest in our retail brokerage joint venture, and the Business Segments: Capital Management section provides information on the second quarter 2008 consolidation of a fund we manage.

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.

The Value at Risk methodology assesses 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. As of January 1, 2008, we chose to split our VaR analysis into two categories: discretionary VaR, which is subject to limits, and nondiscretionary VaR, which is reserved for positions in runoff and for positions under the discretion of the asset and liability committee. On May 20, 2008, the market risk committee increased our 1-day VaR limit on the discretionary portion from $50 million to $70 million due to volatility arising from the market disruptions and the effect of the adoption of fair value accounting, which resulted in the addition of the mortgage pipeline and associated hedges to the VaR analysis. The total 1-day VaR was $65 million at June 30, 2008, and $62 million at December 31, 2007, and was primarily related to interest rate risk and credit spread risk. The high, low and average VaRs in the first half of 2008 were $78 million, $54 million and $66 million, respectively.

Interest Rate Risk Management One of the fundamental roles in banking is the management of interest rate risk, or the risk that changes in interest rates may diminish the 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 net interest income 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 an asset-sensitive balance sheet. To achieve more neutrality or to establish a liability-sensitive position, we maintain a large portfolio of fixed rate discretionary instruments such as loans, securities and derivatives.

We expect to rely on our large base of low-cost core deposits as well as diverse wholesale sources 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 we would liquidate

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them. If more variable rate loans were added to our loan portfolio, we would likely allow fixed rate securities to mature or we would liquidate them, and then add new derivatives that, in effect, would convert the incremental variable rate loans to fixed rate loans.

We often elect to use derivatives to protect assets, liabilities and future financial transactions from changes in interest rates. When deciding whether to use derivatives instead of investing in securities to reach the same goal, we consider a number of factors, such as cost, efficiency, the effect on our liquidity and capital, and our overall interest rate risk management strategy. We choose to use derivatives when they provide greater relative value or more efficient execution of our strategy than securities. The derivatives we use for interest rate risk management include interest rate swaps, futures, forwards and various option strategies, which in some cases are designated and accounted for as accounting hedges. We fully incorporate the market risk associated with interest rate risk management derivatives into our earnings simulation model in the same manner as other on-balance sheet financial instruments.

Our policy is to limit the risk we can take through balance sheet management actions such that consolidated net interest income will not be negatively affected by more than 3.5 percent in both rising and falling rate environments over the policy measurement period. In June 2008, we established our policy limit as a percent of net interest income rather than our previously defined limit of 5 percent of consolidated net income. This change was made to decrease the volatility of the measurement caused by items unrelated to the margin. The policy is sized to be in line with our historical interest rate risk limits.

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 net interest income in both “high rate” and “low rate” scenarios to the “market forward rate.” Our 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 net interest income at risk.

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 net interest income in a 400 basis point range, or 200 basis points both above and below the “market forward rate” scenario. Based on our July 2008 forward rate expectation, our various scenarios together measure net interest income volatility to a June 2009 federal funds rate ranging from 1.15 percent to 5.15 percent. We always incorporate into our modeling all repricing and balance sheet dynamics that depend on interest rate levels. For example, in the current market outlook and low rate scenario referenced above, we particularly stress the repricing characteristics of our deposit portfolio. We expect deposit repricing downward to be slowed in very low rate environments and we have taken actions to mitigate this risk.

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

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greater degree than short-term rates is 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.

Net Interest Income Sensitivity The Policy Period Sensitivity Measurement table provides a summary of our interest rate sensitivity measurements, and as noted earlier, in June 2008 we changed our sensitivity measurement to measure sensitivity over a base of net interest income rather than consolidated net income.

The July 2008 forward rate expectations imply a high probability that the federal funds rate will increase by 115 basis points by the end of our policy period in June 2009. If this occurs, the spread between the 10-year treasury note rate and the target federal funds rate would migrate from a positive 197 basis points of slope at June 30, 2008, to a positive slope of 121 basis points by June 2009. The long-term average spread is a positive 113 basis points. Because it is unlikely short-term rates would rise an additional 200 basis points above the market forward rates while all other points on the yield curve would move in simultaneous parallel increments, 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 more likely range of yield curve shapes that may prevail throughout the policy period in an environment where short-term rates rise 200 basis points above current market expectations. The reported high rate sensitivity is a composite of these three scenarios.

Policy Period
Sensitivity Measurement

				Implied		Percent
	Fed Funds			Fed Funds		Net Interest
	Rate at			Rate for		Income
	June 30, 2008			June 2009		Sensitivity
Market Forward Rate Scenarios (a)		2.00	%		3.15		-
High Rate Composite					5.15		(0.90	)
Low Rate					1.15		0.50

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

In July 2008, our earnings simulation model indicated net interest income would be negatively affected by 0.9 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 rates decline by less than 200 basis points relative to the “market forward rate” scenario. The model indicates net interest income would be positively affected by 0.5 percent in this scenario. These percentages are for a full year, but may be higher or lower in individual reporting periods.

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

Accounting and Regulatory Matters

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

Business Combinations and Noncontrolling Interests In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised), Business Combinations (SFAS 141(R)), and SFAS 160, Noncontrolling

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Interests in Consolidated Financial Statements—an amendment of ARB 51. These new standards will significantly change the accounting and reporting for business combinations and noncontrolling interests (previously referred to as minority interests).

SFAS 141(R) retains the fair value model for assets and liabilities acquired in a business combination while making other significant changes to business combination accounting. The more significant changes include: recognizing 100 percent of the fair values of assets and liabilities acquired in acquisitions of less than a 100 percent controlling interest, measuring shares issued as consideration in a business combination based on their fair value at the acquisition date, recognizing contingent consideration arrangements and pre-acquisition gain and loss contingencies at their respective acquisition date fair values, expensing acquisition-related transaction costs as incurred, and capitalizing acquisition-related restructuring costs only if certain criteria are met.

SFAS 160 retains much of the existing guidance for consolidation while making significant changes to the reporting of noncontrolling interests, which we currently report as liabilities. Under SFAS 160, noncontrolling interests in consolidated subsidiaries will be reported as a component of stockholders’ equity. Also under SFAS 160, a change in ownership interests in a consolidated subsidiary that does not result in loss of control will be recorded directly to stockholders’ equity. A change in ownership interest that results in deconsolidation may trigger recognition of a gain or loss and establishment of a new fair value basis in the remaining interest held.

These standards are effective on January 1, 2009, for calendar year-end companies, with early adoption prohibited. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the adoption date. SFAS 160 must be adopted prospectively with retrospective adoption required for disclosure of noncontrolling interests held as of the adoption date.

Derivative Disclosure In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133, which enhances the disclosure requirements for derivative instruments and hedging activities. SFAS 161 requires quantitative disclosures of the fair value of all derivative instruments by primary underlying risk and accounting designation, as well as gains and losses recognized on derivative instruments. Further, SFAS 161 requires qualitative disclosures about how and why a company uses derivatives as well as any credit risk-related contingencies. This new standard is effective on January 1, 2009.

Hedge Accounting In June 2008, the FASB issued an exposure draft of a proposed Statement of Financial Accounting Standards, Accounting for Hedging Activities—an amendment of FASB Statement No. 133. The FASB’s primary objectives in undertaking this project are to simplify the accounting for hedging activities, improve financial reporting for hedging activities, and resolve practice issues that have arisen under SFAS No. 133. The proposed changes are substantial including an amendment that will no longer permit companies to hedge by individual risk (for example, benchmark interest rate). Further, significant changes are being proposed to the frequency and manner in which a company must assess whether a hedge is effective in offsetting the overall changes in fair value of the hedged item. Additional provisions of the exposure draft would affect a company’s ability to achieve hedge accounting and the income/expense recognition associated with hedging instruments.

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The exposure draft provides for an effective date of January 1, 2010. We have not completed our assessment of the potential impact that a new standard, if finalized as currently drafted, would have on us.

Transfers of Financial Assets and Consolidation The FASB has an ongoing project that may result in significant changes to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and FASB Interpretation (FIN) No. 46R, Consolidation of Variable Interest Entities.

The FASB has tentatively decided to remove the concept of a qualifying special purpose entity (QSPE) from SFAS 140, thereby eliminating the exception from consolidation that is accorded to QSPEs. This will have the effect of dramatically increasing the number of variable interest entities that companies must evaluate for consolidation under FIN 46R. The FASB has also decided to make other amendments to SFAS 140 and FIN 46R that may significantly reduce the number of transactions that qualify for off-balance sheet treatment, which may result in assets and liabilities remaining on a transferor’s or sponsor’s balance sheet.

The FASB currently plans to issue exposure drafts of amendments to SFAS 140 and FIN 46R in the third quarter of 2008, with final standards effective on January 1, 2010. We cannot predict with certainty whether any guidance will be issued, what changes may be required to the structure of or the accounting for transactions subject to SFAS 140 or FIN 46R, or what the transition provisions for implementation of any new guidance would be.

Legislative and 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 effect 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 2007 Annual Report on Form 10-K.

In June 2004, the Basel Committee on Bank Supervision published new international guidelines for determining regulatory capital (Basel II) that are designed to be more risk sensitive than the current framework. In December 2007, the U.S. regulatory agencies jointly adopted a final rule for Basel II that represents the U.S. version of the international guidelines. Under the final rule, which was effective April 1, 2008, we must adopt a board of directors-approved implementation plan by October 1, 2008, and begin a three-year transitional period for capital calculation no later than April 1, 2011. The final rule also requires that prior to beginning the three-year transitional period, we complete a satisfactory parallel run period of no less than four consecutive calendar quarters during which we will be required to confidentially report regulatory capital under the new risk-based capital rule as well as under the existing capital rule. The final rule allows banks to enter a parallel run starting in April 2008, and the first possible years for the transitional periods are 2009 through 2011. We have established necessary project management infrastructure, funding and management support to ensure we will comply with the new regulations.

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Table 1

EXPLANATION OF OUR USE OF NON-GAAP FINANCIAL MEASURES

     In addition to 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, other intangible amortization and goodwill impairment charges; net interest income excluding charges related to certain leasing transactions widely referred to as SILO transactions; and net interest income on a tax-equivalent basis. In addition, Wachovia presents certain information regarding its loan portfolio on a “managed” basis, which is a non-GAAP financial measure that combines loans reported on-balance sheet with 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.

     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, other intangible amortization and goodwill impairment charges, as well as the exclusion of the SILO lease-related charge from net interest income, 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 related to segment performance, see the Business Segments section and the Business Segments footnote to Notes to Consolidated Financial Statements.

     This report 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, to the extent any of these non-GAAP financial measures are included in this report, is presented below or elsewhere in this report, including in the Loans — On-Balance Sheet, and Managed and Servicing Portfolios table.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2008		2007		2008		2007
Net interest income (GAAP)	$	4,290		4,449		9,042		8,949
Tax-equivalent adjustment		54		38		107		75
Net interest income (Tax-equivalent)	$	4,344		4,487		9,149		9,024

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Table 2

SELECTED STATISTICAL DATA

	2008						2007
	Second			First			Fourth		Third		Second
(Dollars in millions, except per share data)	Quarter			Quarter			Quarter		Quarter		Quarter
PROFITABILITY
Return on average common stockholders’ equity		(50.47	)%		(3.81	)		0.28		9.19		13.54
Return on average total stockholders’ equity		(43.86	)		(3.39	)		0.28		9.19		13.54
Net interest margin (a)		2.58			2.92			2.88		2.92		2.96
Fee and other income as % of total revenue		42.15			36.62			36.99		39.02		48.58
Effective income tax rate		18.06	%		26.02			122.05		27.33		32.78
ASSET QUALITY
Allowance for loan losses as % of loans, net		2.20	%		1.37			0.98		0.78		0.79
Allowance for loan losses as % of nonperforming assets (b)		90			78			84		115		157
Allowance for credit losses as % of loans, net		2.24			1.41			1.02		0.82		0.83
Net charge-offs as % of average loans, net		1.10			0.66			0.41		0.19		0.14
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		2.41	%		1.70			1.14		0.66		0.49
CAPITAL ADEQUACY
Tier 1 capital ratio		8.00	%		7.42			7.35		7.10		7.47
Total capital ratio		12.74			12.05			11.82		10.84		11.46
Leverage		6.57			6.18			6.09		6.10		6.23
Tangible capital ratio		4.68			4.31			4.29		4.19		4.30
Tangible capital ratio (c)		5.07	%		4.59			4.50		4.56		4.76
OTHER DATA
FTE employees		119,952			120,378			121,890		109,724		110,493
Total financial centers/brokerage offices		4,820			4,850			4,894		4,167		4,135
ATMs		5,277			5,308			5,139		5,123		5,099
Actual common shares (In millions) (d)		2,159			1,992			1,980		1,901		1,903
Common stock price	$	15.53			27.00			38.03		50.15		51.25
Market capitalization (d)	$	33,527			53,782			75,302		95,326		97,530

(a) Tax-equivalent.

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

(c) These ratios exclude the effect on tangible capital of the unamortized gains and losses under employee benefit plans, the unrealized gains and losses on available for sale securities, certain risk management derivatives and the pension accounting adjustments to stockholders’ equity.

(d) Includes restricted stock for which the holder receives dividends and has full voting rights.

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Table 3

SUMMARIES OF INCOME, PER COMMON SHARE AND BALANCE SHEET DATA

	2008						2007
	Second			First			Fourth			Third			Second
(In millions, except per share data)	Quarter			Quarter			Quarter			Quarter			Quarter
SUMMARIES OF INCOME
Interest income	$	8,646			10,179			10,910			10,831			10,350
Tax-equivalent adjustment		54			53			44			33			38
Interest income (a)		8,700			10,232			10,954			10,864			10,388
Interest expense		4,356			5,427			6,280			6,280			5,901
Net interest income (a)		4,344			4,805			4,674			4,584			4,487
Provision for credit losses		5,567			2,831			1,497			408			179
Net interest income after provision for credit losses (a)		(1,223	)		1,974			3,177			4,176			4,308
Securities gains (losses)		(808	)		(205	)		(320	)		(34	)		23
Fee and other income		3,973			2,982			3,064			2,967			4,217
Merger-related and restructuring expenses		251			241			187			36			32
Goodwill impairment		6,060			-			-			-			-
Other noninterest expense		6,473			5,200			5,599			4,489			4,858
Minority interest in income of consolidated subsidiaries		(18	)		155			107			189			139
Income (loss) from continuing operations before income taxes (benefits) (a)		(10,824	)		(845	)		28			2,395			3,519
Income taxes (benefits)		(1,963	)		(234	)		(209	)		656			1,140
Tax-equivalent adjustment		54			53			44			33			38
Income (loss) from continuing operations		(8,915	)		(664	)		193			1,706			2,341
Discontinued operations, net of income taxes		-			-			(142	)		(88	)		-
Net income (loss)		(8,915	)		(664	)		51			1,618			2,341
Dividends on preferred stock		193			43			-			-			-
Net income (loss) available to common stockholders	$	(9,108	)		(707	)		51			1,618			2,341
PER COMMON SHARE DATA
Basic earnings
Income (loss) from continuing operations	$	(4.31	)		(0.36	)		0.10			0.91			1.24
Net income (loss) available to common stockholders		(4.31	)		(0.36	)		0.03			0.86			1.24
Diluted earnings (b) Income (loss) from continuing operations		(4.31	)		(0.36	)		0.10			0.90			1.22
Net income (loss) available to common stockholders		(4.31	)		(0.36	)		0.03			0.85			1.22
Cash dividends	$	0.38			0.64			0.64			0.64			0.56
Average common shares - Basic		2,111			1,963			1,959			1,885			1,891
Average common shares - Diluted		2,119			1,977			1,983			1,910			1,919
Average common stockholders’ equity Quarter-to-date	$	72,579			74,697			73,599			69,857			69,317
Year-to-date		73,638			74,697			70,533			69,500			69,318
Book value per common share (c)		30.25			36.24			37.66			36.90			36.40
Common stock price High		30.08			38.76			51.80			52.64			56.81
Low		15.53			25.60			38.03			44.94			51.25
Period-end	$	15.53			27.00			38.03			50.15			51.25
To earnings ratio (d)		(4.10	)X		15.52			11.52			11.22			10.70
To book value		51	%		75			101			136			141
BALANCE SHEET DATA
Assets	$	812,433			808,575			782,896			754,168			715,428
Long-term debt	$	184,401			175,653			161,007			158,584			142,047

(a) Tax-equivalent.

(b) Calculated using average basic common shares in 2008.

(c) Share count in the calculation includes restricted stock for which the holder receives dividends and has full voting rights.

(d) Based on diluted earnings per common share.

44

Table 4

MERGER-RELATED AND RESTRUCTURING EXPENSES

	Six
	Months
	Ended
	June 30,
(In millions)	2008
Wachovia/A.G. Edwards	$	411
Wachovia/Golden West		79
Other		2
Total merger-related and restructuring expenses	$	492

45

Table 5

BUSINESS SEGMENTS (a)

	2008					2007
	Second			First		Fourth		Third		Second
(Dollars in millions)	Quarter			Quarter		Quarter		Quarter		Quarter
GENERAL BANK COMBINED (b)
Net interest income (c)	$	3,671			3,445		3,401		3,464		3,372
Fee and other income		1,000			980		929		936		935
Intersegment revenue		57			55		58		59		56
Total revenue (c)		4,728			4,480		4,388		4,459		4,363
Provision for credit losses		919			569		320		207		154
Noninterest expense		2,050			2,038		2,037		1,897		1,922
Income taxes		632			673		730		850		824
Tax-equivalent adjustment		10			11		11		11		10
Segment earnings	$	1,117			1,189		1,290		1,494		1,453
Economic profit	$	919			992		1,043		1,189		1,124
Risk adjusted return on capital		33.02	%		42.43		47.99		54.28		52.66
Economic capital, average	$	16,786			12,693		11,183		10,898		10,821
Cash overhead efficiency ratio (c)		43.35	%		45.50		46.42		42.56		44.05
Lending commitments	$	133,201			132,805		133,733		132,779		129,851
Average loans, net		319,574			311,556		303,396		294,709		291,607
Average core deposits	$	290,381			297,171		296,194		290,133		290,455
FTE employees		54,415			54,831		55,559		56,519		57,574
COMMERCIAL
Net interest income (c)	$	1,013			943		932		903		865
Fee and other income		133			131		116		114		110
Intersegment revenue		46			43		43		44		42
Total revenue (c)		1,192			1,117		1,091		1,061		1,017
Provision for credit losses		180			174		178		121		96
Noninterest expense		394			400		389		347		353
Income taxes		215			187		181		205		198
Tax-equivalent adjustment		10			11		11		11		10
Segment earnings	$	393			345		332		377		360
Economic profit	$	224			213		240		256		230
Risk adjusted return on capital		28.20	%		28.09		33.01		35.20		33.43
Economic capital, average	$	5,245			5,015		4,333		4,196		4,110
Cash overhead efficiency ratio (c)		33.04	%		35.78		35.73		32.64		34.79
Average loans, net	$	88,272			84,875		82,127		80,172		78,178
Average core deposits	$	45,396			47,844		46,460		42,828		43,145
RETAIL AND SMALL BUSINESS
Net interest income (c)	$	2,658			2,502		2,469		2,561		2,507
Fee and other income		867			849		813		822		825
Intersegment revenue		11			12		15		15		14
Total revenue (c)		3,536			3,363		3,297		3,398		3,346
Provision for credit losses		739			395		142		86		58
Noninterest expense		1,656			1,638		1,648		1,550		1,569
Income taxes		417			486		549		645		626
Tax-equivalent adjustment		-			-		-		-		-
Segment earnings	$	724			844		958		1,117		1,093
Economic profit	$	695			779		803		933		894
Risk adjusted return on capital		35.21	%		51.79		57.46		66.23		64.44
Economic capital, average	$	11,541			7,678		6,850		6,702		6,711
Cash overhead efficiency ratio (c)		46.83	%		48.72		49.95		45.65		46.86
Average loans, net	$	231,302			226,681		221,269		214,537		213,429
Average core deposits	$	244,985			249,327		249,734		247,305		247,310

(a) Certain amounts presented in this Table 5 in periods prior to the second quarter of 2008 have been reclassified to conform to the presentation in the second quarter of 2008.

(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)

46

Table 5
BUSINESS SEGMENTS

	2008					2007
	Second			First		Fourth		Third		Second
(Dollars in millions)	Quarter			Quarter		Quarter		Quarter		Quarter
WEALTH MANAGEMENT
Net interest income (a)	$	202			182		183		186		182
Fee and other income		207			211		215		185		202
Intersegment revenue		3			5		3		4		3
Total revenue (a)		412			398		401		375		387
Provision for credit losses		8			5		7		6		2
Noninterest expense		253			246		250		240		244
Income taxes		53			55		52		48		51
Tax-equivalent adjustment		-			-		-		-		-
Segment earnings	$	98			92		92		81		90
Economic profit	$	76			70		73		62		70
Risk adjusted return on capital		52.61	%		51.44		58.46		50.96		56.73
Economic capital, average	$	731			699		616		616		612
Cash overhead efficiency ratio (a)		61.05	%		61.98		62.23		64.36		62.80
Lending commitments	$	6,915			7,007		7,011		7,007		6,892
Average loans, net		23,151			22,365		21,727		21,494		21,056
Average core deposits	$	17,559			17,906		17,132		17,167		17,466
FTE employees		4,665			4,650		4,712		4,547		4,580

(a) Tax-equivalent.

(Continued)

47

Table 5
BUSINESS SEGMENTS

	2008						2007
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	1,124			1,028			988			839			773
Fee and other income		657			(158	)		(552	)		175			1,522
Intersegment revenue		(52	)		(50	)		(50	)		(52	)		(50	)
Total revenue (b)		1,729			820			386			962			2,245
Provision for credit losses		438			197			112			1			(2	)
Noninterest expense		960			747			953			626			1,020
Income taxes (benefits)		103			(67	)		(267	)		114			437
Tax-equivalent adjustment		19			21			19			9			11
Segment earnings (loss)	$	209			(78	)		(431	)		212			779
Economic profit (loss)	$	4			(412	)		(744	)		(114	)		490
Risk adjusted return on capital		11.12	%		(1.53	)		(15.22	)		6.39			33.22
Economic capital, average	$	13,816			13,233			11,263			9,791			8,850
Cash overhead efficiency ratio (b)		55.60	%		91.00			247.26			65.15			45.43
Lending commitments	$	113,559			114,114			118,734			119,791			115,430
Average loans, net		106,642			101,046			91,665			82,969			76,744
Average core deposits	$	31,682			33,623			36,214			37,188			36,713
FTE employees		6,394			6,342			6,600			6,730			6,872
CORPORATE LENDING
Net interest income (b)	$	410			431			417			412			405
Fee and other income		69			154			148			135			140
Intersegment revenue		10			13			18			16			19
Total revenue (b)		489			598			583			563			564
Provision for credit losses		350			132			103			2			(1	)
Noninterest expense		128			141			137			139			148
Income taxes		4			119			126			152			152
Tax-equivalent adjustment		-			-			-			1			-
Segment earnings	$	7			206			217			269			265
Economic profit (loss)	$	(20	)		45			65			81			97
Risk adjusted return on capital		9.82	%		13.74			15.34			17.12			19.20
Economic capital, average	$	6,739			6,627			5,922			5,266			4,778
Cash overhead efficiency ratio (b)		26.21	%		23.61			23.50			24.62			26.22
Average loans, net	$	65,451			64,035			62,338			58,533			56,083
Average core deposits	$	4,429			4,534			4,597			5,087			5,054

(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)

48

Table 5
BUSINESS SEGMENTS

	2008						2007
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
TREASURY AND INTERNATIONAL TRADE FINANCE
Net interest income (b)	$	122			112			110			104			100
Fee and other income		226			218			218			220			213
Intersegment revenue		(52	)		(47	)		(47	)		(46	)		(49	)
Total revenue (b)		296			283			281			278			264
Provision for credit losses		-			(2	)		-			(1	)		-
Noninterest expense		169			175			174			170			172
Income taxes		46			40			38			40			33
Tax-equivalent adjustment		-			-			-			-			-
Segment earnings	$	81			70			69			69			59
Economic profit	$	68			56			56			58			47
Risk adjusted return on capital		82.71	%		70.21			74.12			77.84			68.15
Economic capital, average	$	382			383			355			342			335
Cash overhead efficiency ratio (b)		57.09	%		61.70			61.78			60.98			65.13
Average loans, net	$	13,612			13,461			12,309			10,813			9,540
Average core deposits	$	18,132			19,633			20,858			21,253			21,121
INVESTMENT BANKING
Net interest income (b)	$	592			485			461			323			268
Fee and other income		362			(530	)		(918	)		(180	)		1,169
Intersegment revenue		(10	)		(16	)		(21	)		(22	)		(20	)
Total revenue (b)		944			(61	)		(478	)		121			1,417
Provision for credit losses		88			67			9			-			(1	)
Noninterest expense		663			431			642			317			700
Income taxes (benefits)		53			(226	)		(431	)		(78	)		252
Tax-equivalent adjustment		19			21			19			8			11
Segment earnings (loss)	$	121			(354	)		(717	)		(126	)		455
Economic profit (loss)	$	(44	)		(513	)		(865	)		(253	)		346
Risk adjusted return on capital		8.34	%		(22.21	)		(57.88	)		(12.96	)		48.01
Economic capital, average	$	6,695			6,223			4,986			4,183			3,737
Cash overhead efficiency ratio (b)		70.37	%		(708.47	)		(134.16	)		265.36			49.41
Average loans, net	$	27,579			23,550			17,018			13,623			11,121
Average core deposits	$	9,121			9,456			10,759			10,848			10,538

(Continued)

49

Table 5
BUSINESS SEGMENTS

	2008						2007
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	308			281			320			268			260
Fee and other income		1,995			2,191			2,210			1,444			1,536
Intersegment revenue		(8	)		(10	)		(11	)		(8	)		(11	)
Total revenue (b)		2,295			2,462			2,519			1,704			1,785
Provision for credit losses		-			-			-			-			-
Noninterest expense		2,327			1,855			1,936			1,241			1,294
Income taxes (benefits)		(11	)		220			213			169			179
Tax-equivalent adjustment		1			1			1			-			-
Segment earnings (loss)	$	(21	)		386			369			294			312
Economic profit (loss)	$	(79	)		327			310			258			275
Risk adjusted return on capital		(3.97	)%		72.26			69.14			88.96			92.77
Economic capital, average	$	2,105			2,144			2,119			1,310			1,348
Cash overhead efficiency ratio (b)		101.39	%		75.34			76.90			72.82			72.47
Lending commitments	$	1,544			1,348			1,281			1,164			1,169
Average loans, net		2,881			2,562			2,295			2,142			1,663
Average core deposits	$	48,647			43,084			38,019			31,489			31,221
FTE employees		29,680			29,841			29,891			17,908			17,905
Assets under management	$	245,940			258,691			274,736			285,422			281,462
ASSET MANAGEMENT
Net interest income (b)	$	12			14			7			6			5
Fee and other income		165			295			279			244			312
Intersegment revenue		(1	)		(1	)		-			(1	)		-
Total revenue (b)		176			308			286			249			317
Provision for credit losses		-			-			-			-			-
Noninterest expense		209			224			217			206			222
Income taxes		(13	)		31			26			15			35
Tax-equivalent adjustment		-			-			-			-			-
Segment earnings (loss)	$	(20	)		53			43			28			60
Economic profit (loss)	$	(25	)		47			37			22			55
Risk adjusted return on capital		(39.89	)%		99.16			82.68			56.73			112.79
Economic capital, average	$	203			216			205			194			215
Cash overhead efficiency ratio (b)		117.97	%		72.81			76.33			82.50			70.01
Average loans, net	$	17			41			22			36			17
Average core deposits	$	304			453			405			418			364

(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)

50

Table 5
BUSINESS SEGMENTS

	2008						2007
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
RETAIL BROKERAGE SERVICES
Net interest income (b)	$	296			267			313			262			254
Fee and other income		1,832			1,898			1,933			1,202			1,227
Intersegment revenue		(7	)		(9	)		(11	)		(7	)		(11	)
Total revenue (b)		2,121			2,156			2,235			1,457			1,470
Provision for credit losses		-			-			-			-			-
Noninterest expense		2,121			1,634			1,723			1,038			1,076
Income taxes		1			189			186			154			143
Tax-equivalent adjustment		1			1			1			-			-
Segment earnings (loss)	$	(2	)		332			325			265			251
Economic profit (loss)	$	(55	)		279			272			235			219
Risk adjusted return on capital		(.30	)%		69.06			67.42			94.13			88.54
Economic capital, average	$	1,902			1,928			1,914			1,116			1,133
Cash overhead efficiency ratio (b)		100.07	%		75.79			77.08			71.33			73.18
Average loans, net	$	2,864			2,521			2,273			2,106			1,646
Average core deposits	$	48,343			42,631			37,614			31,071			30,857
OTHER
Net interest income (b)	$	-			-			-			-			1
Fee and other income		(2	)		(2	)		(2	)		(2	)		(3	)
Intersegment revenue		-			-			-			-			-
Total revenue (b)		(2	)		(2	)		(2	)		(2	)		(2	)
Provision for credit losses		-			-			-			-			-
Noninterest expense		(3	)		(3	)		(4	)		(3	)		(4	)
Income taxes		-			-			1			-			1
Tax-equivalent adjustment		-			-			-			-			-
Segment earnings	$	1			1			1			1			1
Economic profit	$	1			1			1			1			1
Risk adjusted return on capital		-	%		-			-			-			-
Economic capital, average	$	-			-			-			-			-
Cash overhead efficiency ratio (b)		-	%		-			-			-			-
Average loans, net	$	-			-			-			-			-
Average core deposits	$	-			-			-			-			-

(Continued)

51

Table 5
BUSINESS SEGMENTS

				2008			2007
	Second			First			Fourth			Third			Second
(Dollars in millions)	Quarter			Quarter			Quarter			Quarter			Quarter
PARENT
Net interest income (a)	$	(961	)		(131	)		(218	)		(173	)		(100	)
Fee and other income		(694	)		(447	)		(58	)		193			45
Intersegment revenue		-			-			-			(3	)		2
Total revenue (a)		(1,655	)		(578	)		(276	)		17			(53	)
Provision for credit losses		4,202			2,060			1,058			194			25
Noninterest expense		883			314			423			485			378
Minority interest		26			198			118			189			139
Income tax benefits		(2,657	)		(1,040	)		(869	)		(511	)		(339	)
Tax-equivalent adjustment		24			20			13			13			17
Dividends on preferred stock		193			43			-			-			-
Segment loss	$	(4,326	)		(2,173	)		(1,019	)		(353	)		(273	)
Economic loss	$	(1,623	)		(840	)		(481	)		(318	)		(246	)
Risk adjusted return on capital		(430.13	)%		(169.74	)		(83.78	)		(41.68	)		(29.52	)
Economic capital, average	$	1,480			1,867			2,014			2,395			2,436
Cash overhead efficiency ratio (a)		(47.55	)%		(36.54	)		(113.98	)		1,988.83			(496.52	)
Lending commitments	$	543			538			599			529			569
Average loans, net		24,486			28,407			30,722			28,487			30,187
Average core deposits	$	2,401			2,729			2,484			3,032			2,641
FTE employees		24,798			24,714			25,128			24,020			23,562

(a) Tax-equivalent.

(Continued)

52

Table 5
BUSINESS SEGMENTS

	Three Months Ended June 30, 2008
															Goodwill
															Impairment,
						Corporate									Net Merger-
						and									Related and
	General			Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank			Management		Bank			Management			Parent			Expenses (b)			Total
CONSOLIDATED
Net interest income (a)	$	3,671			202		1,124			308			(961	)		(54	)		4,290
Fee and other income		1,000			207		657			1,995			(694	)		-			3,165
Intersegment revenue		57			3		(52	)		(8	)		-			-			-
Total revenue (a)		4,728			412		1,729			2,295			(1,655	)		(54	)		7,455
Provision for credit losses		919			8		438			-			4,202			-			5,567
Noninterest expense		2,050			253		960			2,327			883			6,311			12,784
Minority interest		-			-		-			-			26			(44	)		(18	)
Income taxes (benefits)		632			53		103			(12	)		(2,657	)		(82	)		(1,963	)
Tax-equivalent adjustment		10			-		19			1			24			(54	)		-
Net income (loss)		1,117			98		209			(21	)		(4,133	)		(6,185	)		(8,915	)
Dividends on preferred stock		-			-		-			-			193			-			193
Net income (loss) available to common stockholders	$	1,117			98		209			(21	)		(4,326	)		(6,185	)		(9,108	)
Economic profit (loss)	$	919			76		4			(79	)		(1,623	)		-			(703	)
Risk adjusted return on capital		33.02	%		52.61		11.12			(3.97	)		(430.14	)		-			2.90
Economic capital, average	$	16,786			731		13,816			2,105			1,480			-			34,918
Cash overhead efficiency ratio (a)		43.35	%		61.05		55.60			101.39			(47.55	)		-			84.92
Lending commitments	$	133,201			6,915		113,559			1,544			543			-			255,762
Average loans, net		319,574			23,151		106,642			2,881			24,486			-			476,734
Average core deposits	$	290,381			17,559		31,682			48,647			2,401			-			390,670
FTE employees		54,415			4,665		6,394			29,680			24,798			-			119,952

	Three Months Ended June 30, 2007
															Net Merger-
						Corporate									Related
						and									and
	General			Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank			Management		Bank			Management			Parent			Expenses (b)			Total
CONSOLIDATED
Net interest income (a)	$	3,372			182		773			260			(100	)		(38	)		4,449
Fee and other income		935			202		1,522			1,536			45			-			4,240
Intersegment revenue		56			3		(50	)		(11	)		2			-			-
Total revenue (a)		4,363			387		2,245			1,785			(53	)		(38	)		8,689
Provision for credit losses		154			2		(2	)		-			25			-			179
Noninterest expense		1,922			244		1,020			1,294			378			32			4,890
Minority interest		-			-		-			-			139			-			139
Income taxes (benefits)		824			51		437			179			(339	)		(12	)		1,140
Tax-equivalent adjustment		10			-		11			-			17			(38	)		-
Net income (loss)	$	1,453			90		779			312			(273	)		(20	)		2,341
Economic profit (loss)	$	1,124			70		490			275			(246	)		-			1,713
Risk adjusted return on capital		52.66	%		56.73		33.22			92.77			(29.52	)		-			39.55
Economic capital, average	$	10,821			612		8,850			1,348			2,436			-			24,067
Cash overhead efficiency ratio (a)		44.05	%		62.80		45.43			72.47			(496.52	)		-			54.47
Lending commitments	$	129,851			6,892		115,430			1,169			569			-			253,911
Average loans, net		291,607			21,056		76,744			1,663			30,187			-			421,257
Average core deposits	$	290,455			17,466		36,713			31,221			2,641			-			378,496
FTE employees		57,574			4,580		6,872			17,905			23,562			-			110,493

(a) Tax-equivalent.

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

(Continued)

53

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2008			2007
GENERAL BANK COMBINED (a)
Net interest income (b)	$	7,116			6,770
Fee and other income		1,980			1,781
Intersegment revenue		112			102
Total revenue (b)		9,208			8,653
Provision for credit losses		1,488			301
Noninterest expense		4,088			3,787
Income taxes		1,305			1,644
Tax-equivalent adjustment		21			21
Segment earnings	$	2,306			2,900
Economic profit	$	1,911			2,250
Risk adjusted return on capital		37.07	%		53.24
Economic capital, average	$	14,739			10,744
Cash overhead efficiency ratio (b)		44.39	%		43.76
Lending commitments	$	133,201			129,851
Average loans, net		315,565			289,985
Average core deposits	$	293,776			287,263
FTE employees		54,415			57,574
COMMERCIAL
Net interest income (b)	$	1,956			1,702
Fee and other income		264			219
Intersegment revenue		89			78
Total revenue (b)		2,309			1,999
Provision for credit losses		354			193
Noninterest expense		794			711
Income taxes		402			379
Tax-equivalent adjustment		21			21
Segment earnings	$	738			695
Economic profit	$	437			444
Risk adjusted return on capital		28.14	%		33.22
Economic capital, average	$	5,130			4,028
Cash overhead efficiency ratio (b)		34.37	%		35.59
Average loans, net	$	86,574			77,060
Average core deposits	$	46,620			43,367
RETAIL AND SMALL BUSINESS
Net interest income (b)	$	5,160			5,068
Fee and other income		1,716			1,562
Intersegment revenue		23			24
Total revenue (b)		6,899			6,654
Provision for credit losses		1,134			108
Noninterest expense		3,294			3,076
Income taxes		903			1,265
Tax-equivalent adjustment		-			-
Segment earnings	$	1,568			2,205
Economic profit	$	1,474			1,806
Risk adjusted return on capital		41.83	%		65.25
Economic capital, average	$	9,609			6,716
Cash overhead efficiency ratio (b)		47.75	%		46.21
Average loans, net	$	228,991			212,925
Average core deposits	$	247,156			243,896

(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)

54

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2008			2007
WEALTH MANAGEMENT
Net interest income (a)	$	384			362
Fee and other income		418			398
Intersegment revenue		8			6
Total revenue (a)		810			766
Provision for credit losses		13			3
Noninterest expense		499			491
Income taxes		108			99
Tax-equivalent adjustment		-			-
Segment earnings	$	190			173
Economic profit	$	146			133
Risk adjusted return on capital		52.04	%		55.46
Economic capital, average	$	715			602
Cash overhead efficiency ratio (a)		61.50	%		64.00
Lending commitments	$	6,915			6,892
Average loans, net		22,758			20,689
Average core deposits	$	17,732			17,368
FTE employees		4,665			4,580

(a) Tax-equivalent.

(Continued)

55

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2008			2007
CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	2,152			1,489
Fee and other income		499			2,631
Intersegment revenue		(102	)		(93	)
Total revenue (b)		2,549			4,027
Provision for credit losses		635			4
Noninterest expense		1,707			1,931
Income taxes		36			742
Tax-equivalent adjustment		40			21
Segment earnings	$	131			1,329
Economic profit (loss)	$	(408	)		776
Risk adjusted return on capital		4.93	%		29.22
Economic capital, average	$	13,525			8,590
Cash overhead efficiency ratio (b)		67.00	%		47.94
Lending commitments	$	113,559			115,430
Average loans, net		103,844			75,065
Average core deposits	$	32,652			35,481
FTE employees		6,394			6,872
CORPORATE LENDING
Net interest income (b)	$	841			804
Fee and other income		223			265
Intersegment revenue		23			37
Total revenue (b)		1,087			1,106
Provision for credit losses		482			4
Noninterest expense		269			300
Income taxes		123			293
Tax-equivalent adjustment		-			-
Segment earnings	$	213			509
Economic profit	$	25			186
Risk adjusted return on capital		11.77	%		18.99
Economic capital, average	$	6,683			4,696
Cash overhead efficiency ratio (b)		24.78	%		27.15
Average loans, net	$	64,743			55,593
Average core deposits	$	4,481			5,061

(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)

56

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2008			2007
TREASURY AND INTERNATIONAL TRADE FINANCE
Net interest income (b)	$	234			192
Fee and other income		444			422
Intersegment revenue		(99	)		(94	)
Total revenue (b)		579			520
Provision for credit losses		(2	)		-
Noninterest expense		344			345
Income taxes		86			64
Tax-equivalent adjustment		-			-
Segment earnings	$	151			111
Economic profit	$	124			89
Risk adjusted return on capital		76.45	%		64.86
Economic capital, average	$	382			334
Cash overhead efficiency ratio (b)		59.34	%		66.41
Average loans, net	$	13,536			8,908
Average core deposits	$	18,883			20,533
INVESTMENT BANKING
Net interest income (b)	$	1,077			493
Fee and other income		(168	)		1,944
Intersegment revenue		(26	)		(36	)
Total revenue (b)		883			2,401
Provision for credit losses		155			-
Noninterest expense		1,094			1,286
Income taxes		(173	)		385
Tax-equivalent adjustment		40			21
Segment earnings (loss)	$	(233	)		709
Economic profit (loss)	$	(557	)		501
Risk adjusted return on capital		(6.38	) %		39.35
Economic capital, average	$	6,460			3,560
Cash overhead efficiency ratio (b)		124.00	%		53.52
Average loans, net	$	25,565			10,564
Average core deposits	$	9,288			9,887

(Continued)

57

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2008			2007
CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	589			519
Fee and other income		4,186			3,013
Intersegment revenue		(18	)		(19	)
Total revenue (b)		4,757			3,513
Provision for credit losses		-			-
Noninterest expense		4,182			2,531
Income taxes		208			358
Tax-equivalent adjustment		2			-
Segment earnings	$	365			624
Economic profit	$	248			550
Risk adjusted return on capital		34.49	%		93.76
Economic capital, average	$	2,124			1,341
Cash overhead efficiency ratio (b)		87.91	%		72.04
Lending commitments	$	1,544			1,169
Average loans, net		2,722			1,609
Average core deposits	$	45,866			31,450
FTE employees		29,680			17,905
Assets under management	$	245,940			281,462
ASSET MANAGEMENT
Net interest income (b)	$	26			8
Fee and other income		460			584
Intersegment revenue		(2	)		-
Total revenue (b)		484			592
Provision for credit losses		-			-
Noninterest expense		433			442
Income taxes		18			55
Tax-equivalent adjustment		-			-
Segment earnings	$	33			95
Economic profit	$	22			84
Risk adjusted return on capital		31.69	%		91.06
Economic capital, average	$	210			211
Cash overhead efficiency ratio (b)		89.27	%		74.67
Average loans, net	$	29			25
Average core deposits	$	378			321

(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)

58

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2008			2007
RETAIL BROKERAGE SERVICES
Net interest income (b)	$	563			510
Fee and other income		3,730			2,434
Intersegment revenue		(16	)		(19	)
Total revenue (b)		4,277			2,925
Provision for credit losses		-			-
Noninterest expense		3,755			2,098
Income taxes		190			301
Tax-equivalent adjustment		2			-
Segment earnings	$	330			526
Economic profit	$	224			463
Risk adjusted return on capital		34.62	%		93.75
Economic capital, average	$	1,914			1,130
Cash overhead efficiency ratio (b)		87.83	%		71.70
Average loans, net	$	2,693			1,584
Average core deposits	$	45,488			31,129
OTHER
Net interest income (b)	$	-			1
Fee and other income		(4	)		(5	)
Intersegment revenue		-			-
Total revenue (b)		(4	)		(4	)
Provision for credit losses		-			-
Noninterest expense		(6	)		(9	)
Income taxes		-			2
Tax-equivalent adjustment		-			-
Segment earnings	$	2			3
Economic profit	$	2			3
Risk adjusted return on capital		-	%		-
Economic capital, average	$	-			-
Cash overhead efficiency ratio (b)		-	%		-
Average loans, net	$	-			-
Average core deposits	$	-			-

(Continued)

59

Table 5
BUSINESS SEGMENTS

	Six Months Ended
	June 30,
(Dollars in millions)	2008			2007
PARENT
Net interest income (a)	$	(1,092	)		(116	)
Fee and other income		(1,141	)		151
Intersegment revenue		-			4
Total revenue (a)		(2,233	)		39
Provision for credit losses		6,262			48
Noninterest expense		1,197			729
Minority interest		224			275
Income tax benefits		(3,697	)		(689	)
Tax-equivalent adjustment		44			33
Dividends on preferred stock		236			-
Segment loss	$	(6,499	)		(357	)
Economic loss	$	(2,463	)		(310	)
Risk adjusted return on capital		(284.89	)%		(13.56	)
Economic capital, average	$	1,674			2,546
Cash overhead efficiency ratio (a)		(44.70	)%		1,390.16
Lending commitments	$	543			569
Average loans, net		26,446			30,927
Average core deposits	$	2,565			2,346
FTE employees		24,798			23,562

(a) Tax-equivalent.

(Continued)

60

Table 5
BUSINESS SEGMENTS

	Six Months Ended June 30, 2008
															Goodwill
															Impairment,
						Corporate									Net Merger-
						and									Related and
	General			Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank			Management		Bank			Management			Parent			Expenses (b)			Total
CONSOLIDATED
Net interest income (a)	$	7,116			384		2,152			589			(1,092	)		(107	)		9,042
Fee and other income		1,980			418		499			4,186			(1,141	)		-			5,942
Intersegment revenue		112			8		(102	)		(18	)		-			-			-
Total revenue (a)		9,208			810		2,549			4,757			(2,233	)		(107	)		14,984
Provision for credit losses		1,488			13		635			-			6,262			-			8,398
Noninterest expense		4,088			499		1,707			4,182			1,197			6,552			18,225
Minority interest		-			-		-			-			224			(87	)		137
Income taxes (benefits)		1,305			108		36			208			(3,697	)		(157	)		(2,197	)
Tax-equivalent adjustment		21			-		40			2			44			(107	)		-
Net income (loss)		2,306			190		131			365			(6,263	)		(6,308	)		(9,579	)
Dividends on preferred stock		-			-		-			-			236			-			236
Net income (loss) available to common stockholders	$	2,306			190		131			365			(6,499	)		(6,308	)		(9,815	)
Economic profit (loss)	$	1,911			146		(408	)		248			(2,463	)		-			(566	)
Risk adjusted return on capital		37.07	%		52.04		4.93			34.49			(284.89	)		-			7.53
Economic capital, average	$	14,739			715		13,525			2,124			1,674			-			32,777
Cash overhead efficiency ratio (a)		44.39	%		61.50		67.00			87.91			(44.70	)		-			76.03
Lending commitments	$	133,201			6,915		113,559			1,544			543			-			255,762
Average loans, net		315,565			22,758		103,844			2,722			26,446			-			471,335
Average core deposits	$	293,776			17,732		32,652			45,866			2,565			-			392,591
FTE employees		54,415			4,665		6,394			29,680			24,798			-			119,952

	Six Months Ended June 30, 2007
															Net Merger-
						Corporate									Related
						and									and
	General			Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank			Management		Bank			Management			Parent			Expenses (b)			Total
CONSOLIDATED
Net interest income (a)	$	6,770			362		1,489			519			(116	)		(75	)		8,949
Fee and other income		1,781			398		2,631			3,013			151			-			7,974
Intersegment revenue		102			6		(93	)		(19	)		4			-			-
Total revenue (a)		8,653			766		4,027			3,513			39			(75	)		16,923
Provision for credit losses		301			3		4			-			48			-			356
Noninterest expense		3,787			491		1,931			2,531			729			42			9,511
Minority interest		-			-		-			-			275			-			275
Income taxes (benefits)		1,644			99		742			358			(689	)		(16	)		2,138
Tax-equivalent adjustment		21			-		21			-			33			(75	)		-
Net income (loss)	$	2,900			173		1,329			624			(357	)		(26	)		4,643
Economic profit (loss)	$	2,250			133		776			550			(310	)		-			3,399
Risk adjusted return on capital		53.24	%		55.46		29.22			93.76			(13.56	)		-			39.77
Economic capital, average	$	10,744			602		8,590			1,341			2,546			-			23,823
Cash overhead efficiency ratio (a)		43.76	%		64.00		47.94			72.04			1,390.16			-			54.40
Lending commitments	$	129,851			6,892		115,430			1,169			569			-			253,911
Average loans, net		289,985			20,689		75,065			1,609			30,927			-			418,275
Average core deposits	$	287,263			17,368		35,481			31,450			2,346			-			373,908
FTE employees		57,574			4,580		6,872			17,905			23,562			-			110,493

(a) Tax-equivalent.

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

61

Table 6
NET TRADING REVENUE — INVESTMENT BANKING (a)

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Net interest income (Tax-equivalent)	$	122			78			51			34			43
Trading account profits (losses)		(365	)		(245	)		(562	)		(381	)		191
Other fee income		185			188			181			140			160
Total net trading revenue (Tax-equivalent)	$	(58	)		21			(330	)		(207	)		394

(a) Certain amounts presented in periods prior to the second quarter of 2008 have been reclassified to conform to the presentation in the second quarter of 2008.

62

Table 7
SELECTED RATIOS

	Six Months Ended
	June 30,					2008						2007
						Second			First			Fourth		Third		Second
	2008			2007		Quarter			Quarter			Quarter		Quarter		Quarter
PERFORMANCE RATIOS (a)
Assets to stockholders’ equity		9.85	X		10.07		9.74			9.95			10.32		10.44		10.17
Return on assets		(2.44	)%		1.34		(4.50	)		(0.34	)		0.03		0.88		1.33
Return on common stockholders’ equity		(26.80	)		13.51		(50.47	)		(3.81	)		0.28		9.19		13.54
Return on total stockholders’ equity		(24.00	)%		13.51		(43.86	)		(3.39	)		0.28		9.19		13.54
DIVIDEND PAYOUT RATIOS
Common shares		(21.06	)%		46.28		(8.70	)		(177.78	)		2,133.33		75.29		45.90

(a) Based on average balances and net income.

63

Table 8
TRADING ACCOUNT ASSETS AND LIABILITIES

	2008				2007
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
TRADING ACCOUNT ASSETS
U.S. Treasury	$	1,211		1,422		604		993		2,348
U.S. Government agencies		2,674		3,045		2,811		3,104		2,865
State, county and municipal		5,557		5,195		3,898		3,844		3,551
Mortgage-backed securities		7,031		8,488		2,208		2,332		1,807
Other asset-backed securities		6,154		8,376		11,427		11,704		12,474
Corporate bonds and debentures		5,406		5,143		5,340		5,379		5,386
Equity securities		2,831		4,051		4,411		3,918		2,973
Derivative financial instruments (a)		23,487		28,379		19,116		13,194		9,707
Sundry		8,238		8,493		6,067		10,367		10,429
Total trading account assets	$	62,589		72,592		55,882		54,835		51,540
TRADING ACCOUNT LIABILITIES
Securities sold short		7,378		7,706		6,287		7,014		9,564
Derivative financial instruments (a)		18,927		21,181		15,298		10,757		9,755
Total trading account liabilities	$	26,305		28,887		21,585		17,771		19,319

(a) Derivative financial instruments are reported net of cash collateral received and paid.

64

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

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
ON-BALANCE SHEET LOAN PORTFOLIO COMMERCIAL
Commercial, financial and agricultural	$	122,628			119,193			112,509			109,269			102,397
Real estate — construction and other		18,629			18,597			18,543			18,167			17,449
Real estate — mortgage		27,191			26,370			23,846			21,514			20,448
Lease financing		24,605			23,637			23,913			23,966			24,083
Foreign		35,168			33,616			29,540			26,471			20,959
Total commercial		228,221			221,413			208,351			199,387			185,336
CONSUMER
Real estate secured (a)		230,520			230,197			227,719			225,355			220,293
Student loans		9,945			9,324			8,149			7,742			6,757
Installment loans		29,261			27,437			25,635			24,763			25,017
Total consumer		269,726			266,958			261,503			257,860			252,067
Total loans		497,947			488,371			469,854			457,247			437,403
Unearned income		(9,749	)		(7,889	)		(7,900	)		(8,041	)		(8,283	)
Loans, net (On-balance sheet)	$	488,198			480,482			461,954			449,206			429,120
MANAGED PORTFOLIO (b) (c)
COMMERCIAL
On-balance sheet loan portfolio	$	228,221			221,413			208,351			199,387			185,336
Securitized loans — off-balance sheet		105			120			131			142			170
Loans held for sale		2,224			3,342			9,414			13,905			11,573
Total commercial		230,550			224,875			217,896			213,434			197,079
CONSUMER
Real estate secured
On-balance sheet loan portfolio		230,520			230,197			227,719			225,355			220,293
Securitized loans — off-balance sheet		6,337			6,845			7,230			7,625			8,112
Securitized loans included in securities		14,918			11,683			10,755			5,963			6,091
Loans held for sale		3,415			5,960			4,816			3,583			4,079
Total real estate secured		255,190			254,685			250,520			242,526			238,575
Student
On-balance sheet loan portfolio		9,945			9,324			8,149			7,742			6,757
Securitized loans — off-balance sheet		2,721			2,772			2,811			2,856			2,905
Securitized loans included in securities		52			52			52			52			52
Loans held for sale		-			-			-			1,968			2,046
Total student		12,718			12,148			11,012			12,618			11,760
Installment
On-balance sheet loan portfolio		29,261			27,437			25,635			24,763			25,017
Securitized loans — off-balance sheet		1,630			1,968			2,263			2,572			3,105
Securitized loans included in securities		28			39			47			55			116
Loans held for sale		2,791			2,127			2,542			1,975			35
Total installment		33,710			31,571			30,487			29,365			28,273
Total consumer		301,618			298,404			292,019			284,509			278,608
Total managed portfolio	$	532,168			523,279			509,915			497,943			475,687
SERVICING PORTFOLIO (c) (d)
Commercial	$	351,277			354,624			353,464			337,721			298,374
Consumer	$	29,100			27,415			27,523			28,015			26,341

(a) Includes deferred interest of $3.9 billion, $3.5 billion, $3.1 billion, $2.7 billion and $2.3 billion, at June 30 and March 31, 2008, and at December 31, September 30 and June 30, 2007, respectively.

(b) 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.

(c) Certain amounts presented in periods prior to the second quarter of 2008 have been reclassified to conform to the presentation in the second quarter of 2008.

(d) 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.

65

Table 10
LOANS HELD FOR SALE

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
CORE BUSINESS ACTIVITY (a)
Core business activity, beginning of period	$	8,406			15,094			17,646			15,696			15,030
Originations and/or purchases		8,069			8,144			8,160			13,007			22,671
Transfer to (from) loans held for sale, net		373			(6,801	)		(1,278	)		2,162			(71	)
Allowance for loan losses related to loans		-			-			-			(57	)		-
Lower of cost or market value adjustments (b)		(87	)		(364	)		(223	)		(249	)		(91	)
Market value adjustments for fair value option loans		(47	)		42			-			-			-
Performing loans sold or securitized		(8,796	)		(7,355	)		(8,992	)		(11,606	)		(20,910	)
Other, principally payments		(94	)		(354	)		(219	)		(1,307	)		(933	)
Core business activity, end of period		7,824			8,406			15,094			17,646			15,696
PORTFOLIO MANAGEMENT ACTIVITY (a)
Portfolio business activity, beginning of period		3,023			1,678			3,785			2,037			2
Originations and/or purchases		-			83			-			-			-
Transfer to (from) loans held for sale, net Performing loans (c)		(19	)		2,317			137			1,831			2,046
Lower of cost or market value adjustments (b)		26			(31	)		(30	)		(6	)		(10	)
Performing loans sold or securitized		(2,373	)		(990	)		(2,078	)		-			-
Other, principally payments		(51	)		(34	)		(136	)		(77	)		(1	)
Portfolio management activity, end of period		606			3,023			1,678			3,785			2,037
Total loans held for sale (d)	$	8,430			11,429			16,772			21,431			17,733

(a) Core business activity means we originate and/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) Lower of cost or market value adjustments exclude amounts related to unfunded commitments. Market disruption-related recoveries on unfunded commitments amounted to $438 million in the second quarter of 2008. Market disruption-related write-downs on unfunded commitments amounted to $729 million, $78 million and $311 million in the first quarter of 2008 and in the fourth and third quarters of 2007, respectively.

(c) Includes $1.8 billion in the third quarter of 2007 in connection with consolidation of a structured lending vehicle that we administered; first quarter of 2008 and fourth quarter of 2007 include funding of the structured lending vehicle’s commitments amounting to $54 million and $159 million, respectively.

(d) Nonperforming loans included in loans held for sale at June 30 and March 31, 2008, and at December 31, September 30 and June 30, 2007, were $63 million, $5 million, $62 million, $59 million and $42 million, respectively.

66

Table 11

ALLOWANCE FOR CREDIT LOSSES

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
ALLOWANCE FOR CREDIT LOSSES (a)
Balance, beginning of period	$	6,767			4,717			3,691			3,552			3,533
Provision for credit losses		5,504			2,834			1,467			381			168
Provision for credit losses relating to loans transferred to loans held for sale or sold		51			7			6			3			4
Provision for credit losses for unfunded lending commitments		12			(10	)		24			24			7
LOAN LOSSES
Commercial, financial and agricultural		(254	)		(171	)		(67	)		(41	)		(39	)
Commercial real estate — construction and mortgage		(216	)		(81	)		(117	)		(5	)		(4	)
Total commercial		(470	)		(252	)		(184	)		(46	)		(43	)
Real estate secured		(700	)		(351	)		(156	)		(59	)		(40	)
Student loans		(3	)		(3	)		(4	)		(5	)		(2	)
Installment and other loans (b)		(230	)		(242	)		(225	)		(168	)		(138	)
Total consumer		(933	)		(596	)		(385	)		(232	)		(180	)
Total loan losses		(1,403	)		(848	)		(569	)		(278	)		(223	)
LOAN RECOVERIES
Commercial, financial and agricultural		15			14			22			9			15
Commercial real estate — construction and mortgage		-			1			-			3			-
Total commercial		15			15			22			12			15
Real estate secured		18			10			9			12			11
Student loans		1			1			2			3			-
Installment and other loans (b)		60			57			75			45			47
Total consumer		79			68			86			60			58
Total loan recoveries		94			83			108			72			73
Net charge-offs		(1,309	)		(765	)		(461	)		(206	)		(150	)
Allowance relating to loans acquired, transferred to loans held for sale or sold		(69	)		(16	)		(10	)		(63	)		(10	)
Balance, end of period	$	10,956			6,767			4,717			3,691			3,552
CONSUMER REAL ESTATE SECURED NET CHARGE-OFFS
First lien	$	(592	)		(291	)		(122	)		(32	)		(17	)
Second lien		(90	)		(50	)		(25	)		(15	)		(12	)
Total consumer real estate secured net charge-offs	$	(682	)		(341	)		(147	)		(47	)		(29	)
ALLOWANCE FOR CREDIT LOSSES
Allocation of the allowance for loan losses
Commercial	$	2,793			2,645			2,392			2,054			1,889
Consumer		7,621			3,592			1,950			1,246			1,371
Unallocated		330			330			165			205			130
Total allowance for loan losses		10,744			6,567			4,507			3,505			3,390
Reserve for unfunded lending commitments		212			200			210			186			162
Total allowance for credit losses	$	10,956			6,767			4,717			3,691			3,552

(a) The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments.

(b) Principally auto loans.

67

Table 12

ALLOWANCE AND CHARGE-OFF RATIOS

				2008						2007
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
ALLOWANCE FOR LOAN LOSSES
as % of loans, net		2.20	%		1.37		0.98		0.78		0.79
as % of nonaccrual and restructured loans (a)		95			84		90		129		174
as % of nonperforming assets (a)		90			78		84		115		157
ALLOWANCE FOR CREDIT LOSSES
as % of loans, net		2.24	%		1.41		1.02		0.82		0.83
NET CHARGE-OFFS AS % OF AVERAGE LOANS, NET (b)
Commercial, financial and agricultural		0.60	%		0.41		0.12		0.10		0.07
Commercial real estate — construction and mortgage		1.89			0.73		1.12		0.02		0.04
Total commercial		0.88			0.48		0.34		0.08		0.07
Real estate secured		1.18			0.59		0.26		0.08		0.05
Student loans		0.07			0.08		0.10		0.14		0.07
Installment and other loans (c)		2.36			2.76		2.35		1.99		1.47
Total consumer		1.26			0.79		0.46		0.27		0.19
Total as % of average loans, net		1.10	%		0.66		0.41		0.19		0.14

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

(b) Annualized.

(c) Principally auto loans.

68

Table 13

NONPERFORMING ASSETS

	2008					2007
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
NONPERFORMING ASSETS
Nonaccrual loans
Commercial
Commercial, financial and agricultural	$	1,229			908		602		354		318
Commercial real estate — construction and mortgage		2,203			1,750		1,059		289		161
Total commercial		3,432			2,658		1,661		643		479
Consumer
Real estate secured
First lien		7,430			5,015		3,234		1,986		1,380
Second lien		147			75		58		41		44
Installment and other loans (a)		40			40		42		45		42
Total consumer		7,617			5,130		3,334		2,072		1,466
Total nonaccrual loans		11,049			7,788		4,995		2,715		1,945
Troubled debt restructurings (b)		248			48		-		-		-
Foreclosed properties		631			530		389		334		207
Total nonperforming assets	$	11,928			8,366		5,384		3,049		2,152
as % of loans, net, and foreclosed properties (c)		2.44	%		1.74		1.16		0.68		0.50
Nonperforming assets included in loans held for sale
Commercial	$	56			-		-		-		-
Consumer		7			5		62		50		37
Total nonaccrual loans		63			5		62		50		37
Foreclosed properties		-			-		-		9		5
Total nonperforming assets included in loans held for sale		63			5		62		59		42
Nonperforming assets included in loans and in loans held for sale	$	11,991			8,371		5,446		3,108		2,194
as % of loans, net, foreclosed properties and loans held for sale (d)		2.41	%		1.70		1.14		0.66		0.49
PAST DUE LOANS 90 DAYS AND OVER, AND NONACCRUAL LOANS (c)
Accruing loans past due 90 days and over	$	1,181			866		708		590		562
Nonaccrual loans		11,049			7,788		4,995		2,715		1,945
Total past due loans 90 days and over, and nonaccrual loans	$	12,230			8,654		5,703		3,305		2,507
Commercial as % of loans, net		1.73	%		1.31		0.89		0.38		0.31
Consumer as % of loans, net		3.12	%		2.19		1.49		1.00		0.78

(a) Principally auto loans; nonaccrual status does not apply to student loans.

(b) Troubled debt restructurings were not significant prior to the first quarter of 2008.

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

(d) 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.

69

Table 14

NONACCRUAL LOAN ACTIVITY (a)

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period	$	7,788			4,995			2,715			1,945			1,632
COMMERCIAL NONACCRUAL LOAN ACTIVITY
Commercial nonaccrual loans, beginning of period		2,658			1,661			643			479			420
New nonaccrual loans and advances		1,651			1,421			1,303			298			205
Gross charge-offs		(470	)		(252	)		(184	)		(46	)		(43	)
Transfers to loans held for sale		(88	)		-			-			-			-
Transfers to other real estate owned		(7	)		(26	)		-			(5	)		(2	)
Sales		(68	)		(33	)		(26	)		(14	)		(15	)
Other, principally payments		(244	)		(113	)		(75	)		(69	)		(86	)
Net commercial nonaccrual loan activity		774			997			1,018			164			59
Commercial nonaccrual loans, end of period		3,432			2,658			1,661			643			479
CONSUMER NONACCRUAL LOAN ACTIVITY
Consumer nonaccrual loans, beginning of period		5,130			3,334			2,072			1,466			1,212
New nonaccrual loans, advances and other, net		2,487			1,696			1,262			606			257
Transfers from loans held for sale		-			100			-			-			-
Sales and securitizations		-			-			-			-			(3	)
Net consumer nonaccrual loan activity		2,487			1,796			1,262			606			254
Consumer nonaccrual loans, end of period		7,617			5,130			3,334			2,072			1,466
Balance, end of period	$	11,049			7,788			4,995			2,715			1,945

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

70

Table 15

GOODWILL AND OTHER INTANGIBLE ASSETS

	2008				2007
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
Goodwill (a)	$	36,993		43,068		43,122		38,848		38,766
Deposit base		531		573		619		670		727
Customer relationships		1,321		1,375		1,410		620		651
Tradename		90		90		90		90		90
Total goodwill and other intangible assets	$	38,935		45,106		45,241		40,228		40,234

	Six Months Ended June 30, 2008
	Employee			Occupancy
	Termination			and
(In millions)	Benefits			Equipment			Other		Total
EXIT COST PURCHASE ACCOUNTING ACCRUAL ACTIVITY Wachovia/A.G. Edwards — October 1, 2007
Balance, December 31, 2007	$	16			-			-		16
Purchase accounting adjustments		36			-			-		36
Cash payments		(14	)		-			-		(14	)
Balance, June 30, 2008	$	38			-			-		38
EXIT COST PURCHASE ACCOUNTING ACCRUAL ACTIVITY Wachovia/Golden West — October 1, 2006
Balance, December 31, 2007	$	49			9			-		58
Purchase accounting adjustments		(6	)		-			-		(6	)
Cash payments		(28	)		(16	)		-		(44	)
Balance, June 30, 2008	$	15			(7	)		-		8
EXIT COST PURCHASE ACCOUNTING ACCRUAL ACTIVITY Wachovia/SouthTrust — November 1, 2004
Balance, December 31, 2007	$	37			-			-		37
Purchase accounting adjustments		-			-			-		-
Cash payments		(11	)		-			-		(11	)
Balance, June 30, 2008	$	26			-			-		26

(a) Goodwill impairment of $6.1 billion was recorded in the second quarter of 2008. See Note 3 of accompanying Notes to Consolidated Financial Statements.

71

Table 16

DEPOSITS

	2008				2007
	Second		First		Fourth		Third		Second
(In millions)	Quarter		Quarter		Quarter		Quarter		Quarter
CORE DEPOSITS
Noninterest-bearing	$	63,393		60,951		60,893		56,825		62,112
Savings and NOW accounts		83,915		87,920		88,078		81,037		82,629
Money market accounts		139,215		128,839		124,651		114,457		111,666
Other consumer time		113,864		120,852		123,783		125,546		121,781
Total core deposits		400,387		398,562		397,405		377,865		378,188
OTHER DEPOSITS
Foreign		27,940		27,399		27,386		27,226		23,324
Other time		19,463		19,003		24,338		16,846		8,518
Total deposits	$	447,790		444,964		449,129		421,937		410,030

Table 17

TIME DEPOSITS IN AMOUNTS OF $100,000 OR MORE

(In millions)	June 30,2008
MATURITY OF
3 months or less	$	23,585
Over 3 months through 6 months		9,024
Over 6 months through 12 months		16,285
Over 12 months		11,888
Total time deposits in amounts of $100,000 or more	$	60,782

72

Table 18

LONG-TERM DEBT

	2008				2007
	Second		First		Fourth		Third			Second
(In millions)	Quarter		Quarter		Quarter		Quarter			Quarter
NOTES AND DEBENTURES ISSUED BY THE PARENT COMPANY
Notes
Floating rate, 2.483% to 4.69%, due 2008 to 2017	$	16,163		15,513		15,514		15,401			13,651
Equity-linked and commodity-linked, due 2008 to 2012		612		814		792		1,047			1,055
3.50% to 5.80%, due 2008 to 2020		14,560		11,508		9,011		8,551			8,193
Floating rate, EMTN notes, due 2011 to 2014		3,932		3,955		3,649		3,549			3,370
Floating rate, Australian notes, due 2012		864		822		789		799			764
6.75%, Australian notes, due 2012		144		137		131		133			127
4.375%, EMTN notes, due 2016		1,174		1,181		1,090		1,060			1,006
Subordinated notes
4.875% to 6.375%, due 2008 to 2035		6,159		6,491		6,454		6,452			6,449
Floating rate, due 2015 to 2016		1,250		1,250		1,250		1,250			1,250
4.375% to 4.875%, EMTN notes, due 2018 to 2035		2,156		2,158		2,099		2,112			2,055
6.605%, due 2025		250		250		250		250			250
6.30%		-		200		200		200			200
Floating rate, hybrid trust securities, due 2037 to 2047		2,513		2,513		2,513		1,675			1,675
5.20%, income trust securities, due 2042		2,501		2,501		2,501		2,501			2,501
Subordinated debentures
6.55% to 7.574%, due 2026 to 2035		796		795		795		795			795
Hedge-related basis adjustments		198		1,073		406		(139	)		(660	)
Total notes and debentures issued by the Parent Company		53,272		51,161		47,444		45,636			42,681
NOTES ISSUED BY SUBSIDIARIES
Primarily notes issued under global bank note programs, varying rates and terms to 2040		27,654		29,550		23,562		21,226			21,537
Floating rate, 2.403% to 2.901%, due 2008 to 2011		3,400		5,133		5,133		7,133			7,133
4.125% to 4.75%, due 2009 to 2012		1,691		1,690		2,390		2,389			2,689
Floating rate, EMTN notes, due 2009 to 2011		4,628		4,652		4,316		3,907			3,710
6.00%, EMTN notes, due 2013		2,363		-		-		-			-
Subordinated notes
Bank, 3.076% to 9.625%, due 2008 to 2038		12,800		12,802		12,955		9,532			9,533
7.95%		-		-		-		100			100
Floating rate, due 2013		417		417		417		417			417
6.75%, Australian notes, due 2017		191		182		175		176			169
Floating rate, Australian notes, due 2017		192		183		175		177			170
5.25%, EMTN notes, due 2023		1,477		1,475		1,477		1,512			1,488
Total notes issued by subsidiaries		54,813		56,084		50,600		46,569			46,946
OTHER DEBT
Auto secured financing, 2.50% to 7.05%, due 2008 to 2015		6,292		6,147		6,679		7,748			8,994
Collateralized notes		-		-		4,300		4,300			4,420
Junior subordinated debentures, floating rate, due 2026 to 2029		3,110		3,110		3,098		3,099			3,100
Advances from the Federal Home Loan Bank, 1.00% to 8.45%, due 2010 to 2031		55,611		53,209		41,888		43,017			30,542
Preferred units issued by subsidiaries		2,852		2,852		2,852		2,852			2,852
Capitalized leases		7		7		8		9			9
Mortgage notes and other debt of subsidiaries, varying rates and terms		8,323		2,467		3,870		5,411			2,809
Hedge-related basis adjustments		121		616		268		(57	)		(306	)
Total other debt		76,316		68,408		62,963		66,379			52,420
Total long-term debt	$	184,401		175,653		161,007		158,584			142,047

73

Table 19

CHANGES IN STOCKHOLDERS’ EQUITY

	2008						2007
	Second			First			Fourth			Third			Second
(In millions)	Quarter			Quarter			Quarter			Quarter			Quarter
Balance, beginning of period, as reported	$	77,992			76,872			70,140			69,266			69,786
Cumulative effect of accounting changes, net of income taxes (a)		-			(24	)		-			-			-
Balance, beginning of period		77,992			76,848			70,140			69,266			69,786
Comprehensive income (loss)
Net income (loss)		(8,915	)		(664	)		51			1,618			2,341
Unamortized gains and losses under employee benefit plans		5			6			561			16			31
Net unrealized gains (losses) on debt and equity securities		(1,112	)		(705	)		459			493			(1,284	)
Net unrealized gains (losses) on derivative financial instruments		132			91			164			3			(76	)
Total comprehensive income (loss)		(9,890	)		(1,272	)		1,235			2,130			1,012
Purchases of common stock		-			(20	)		-			(190	)		(723	)
Preferred shares issued		3,975			3,497			2,263			-			-
Common stock issued		3,969			-			-			-			-
Common stock issued for
Stock options and restricted stock		(48	)		372			404			35			132
Acquisitions		-			-			3,942			-			-
Deferred compensation, net		130			(116	)		152			114			125
Cash dividends
Preferred shares		(193	)		(43	)		-			-			-
Common shares		(808	)		(1,274	)		(1,264	)		(1,215	)		(1,066	)
Balance, end of period	$	75,127			77,992			76,872			70,140			69,266

(a) First quarter 2008 includes a net increase of $369,000 related to the adoption of SFAS 157 and SFAS 159. See Note 12 of accompanying Notes to Consolidated Financial Statements.

74

Table 20

CAPITAL RATIOS

	2008					2007
	Second			First		Fourth		Third		Second
(In millions)	Quarter			Quarter		Quarter		Quarter		Quarter
CONSOLIDATED CAPITAL RATIOS (a)
Qualifying capital
Tier 1 capital	$	49,473			45,353		43,528		41,853		41,516
Total capital		78,811			73,684		70,003		63,948		63,705
Adjusted risk-weighted assets		618,736			611,596		592,065		589,844		555,702
Adjusted leverage ratio assets	$	753,108			734,233		714,633		686,373		666,646
Ratios
Tier 1 capital		8.00	%		7.42		7.35		7.10		7.47
Total capital		12.74			12.05		11.82		10.84		11.46
Leverage		6.57			6.18		6.09		6.10		6.23
STOCKHOLDERS’ EQUITY TO ASSETS
Quarter-end		9.25			9.65		9.82		9.30		9.68
Average		10.26	%		10.05		9.69		9.58		9.84
BANK CAPITAL RATIOS
Tier 1 capital
Wachovia Bank, National Association		7.25	%		7.50		7.50		7.09		7.34
Wachovia Bank of Delaware, National Association		13.90			15.04		15.60		17.14		18.37
Wachovia Mortgage, FSB (b)		11.88			11.92		12.44		13.44		16.07
Wachovia Bank, FSB (c)		22.17			19.66		17.07		15.94		12.42
Total capital
Wachovia Bank, National Association		11.58			11.72		11.45		10.57		10.95
Wachovia Bank of Delaware, National Association		16.02			17.07		17.67		19.27		20.29
Wachovia Mortgage, FSB (b)		13.19			13.18		13.70		13.81		16.45
Wachovia Bank, FSB (c)		23.45			20.91		17.95		16.25		12.83
Leverage
Wachovia Bank, National Association		6.27			6.39		6.71		6.69		6.72
Wachovia Bank of Delaware, National Association		9.48			9.99		9.82		15.66		14.33
Wachovia Mortgage, FSB (b)		6.00			6.38		6.56		7.17		8.78
Wachovia Bank, FSB (c)		6.45	%		6.26		5.94		5.50		5.20

(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.

(b) Formerly World Savings Bank, FSB, prior to December 31, 2007.

(c) Formerly World Savings Bank, FSB (Texas) prior to December 31, 2007, which was a subsidiary of Wachovia Mortgage, FSB (formerly World Savings Bank, FSB) prior to April 1, 2007.

75

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES

	SECOND QUARTER 2008								FIRST QUARTER 2008
						Average							Average
			Interest			Rates					Interest		Rates
	Average		Income/			Earned/			Average		Income/		Earned/
(In millions)	Balances		Expense			Paid			Balances		Expense		Paid
ASSETS
Interest-bearing bank balances	$	4,980		39			3.11	%	$	4,253		51		4.85	%
Federal funds sold and securities purchased under resale agreements		13,075		81			2.51			11,865		103		3.49
Trading account assets (a)		43,575		541			4.97			44,655		589		5.28
Securities (a)		116,504		1,603			5.51			110,401		1,545		5.60
Loans (a) (b)
Commercial
Commercial, financial and agricultural		120,693		1,493			4.98			115,377		1,671		5.82
Real estate — construction and other		18,849		204			4.35			18,634		251		5.42
Real estate — mortgage		26,730		338			5.08			25,291		374		5.95
Lease financing (c)		6,713		(857	)		(51.02	)		7,167		140		7.79
Foreign		33,219		360			4.34			32,109		389		4.86
Total commercial		206,204		1,538			3.01			198,578		2,825		5.72
Consumer
Real estate secured		231,754		3,715			6.42			231,392		3,926		6.79
Student loans		9,887		108			4.41			9,155		113		4.96
Installment loans		28,889		686			9.55			26,811		659		9.88
Total consumer		270,530		4,509			6.68			267,358		4,698		7.04
Total loans		476,734		6,047			5.09			465,936		7,523		6.48
Loans held for sale		9,141		141			6.17			11,592		223		7.71
Other earning assets		11,080		136			4.94			10,331		146		5.69
Total earning assets excluding derivatives		675,089		8,588			5.10			659,033		10,180		6.19
Risk management derivatives (d)		-		112			0.07			-		52		0.04
Total earning assets including derivatives		675,089		8,700			5.17			659,033		10,232		6.23
Cash and due from banks		11,472								11,645
Other assets		109,876								112,915
Total assets	$	796,437							$	783,593
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		86,317		137			0.64			86,452		236		1.10
Money market accounts		132,792		504			1.53			128,074		747		2.34
Other consumer time		113,579		1,145			4.05			123,655		1,437		4.68
Foreign		25,913		191			2.97			26,197		231		3.55
Other time		18,965		181			3.83			22,643		265		4.71
Total interest-bearing deposits		377,566		2,158			2.30			387,021		2,916		3.03
Federal funds purchased and securities sold under repurchase agreements		43,288		274			2.54			35,956		308		3.45
Commercial paper		5,186		20			1.61			5,509		38		2.74
Securities sold short		6,243		53			3.42			6,919		62		3.63
Other short-term borrowings		9,288		33			1.34			10,154		45		1.77
Long-term debt		177,473		1,737			3.93			165,540		1,961		4.75
Total interest-bearing liabilities excluding derivatives		619,044		4,275			2.77			611,099		5,330		3.51
Risk management derivatives (d)		-		81			0.06			-		97		0.06
Total interest-bearing liabilities including derivatives		619,044		4,356			2.83			611,099		5,427		3.57
Noninterest-bearing deposits		57,982								56,332
Other liabilities		37,671								37,415
Stockholders’ equity		81,740								78,747
Total liabilities and stockholders’ equity	$	796,437							$	783,593
Interest income and rate earned — including derivatives			$	8,700			5.17	%			$	10,232		6.23	%
Interest expense and equivalent rate paid — including derivatives				4,356			2.59					5,427		3.31
Net interest income and margin — including derivatives			$	4,344			2.58	%			$	4,805		2.92	%

(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.

76

FOURTH QUARTER 2007								THIRD QUARTER 2007							SECOND QUARTER 2007
					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
	$	5,083		64		5.05	%	$	6,459		93		5.68	%	$	3,384		50		6.00	%
		12,901		155		4.77			14,206		194		5.42			12,110		158		5.25
		37,694		569		6.04			38,737		575		5.93			35,165		519		5.90
		115,436		1,625		5.62			111,424		1,522		5.46			108,433		1,467		5.41
		111,500		1,908		6.79			106,263		1,927		7.19			101,012		1,805		7.16
		18,435		318		6.85			17,795		344		7.66			17,334		329		7.62
		22,973		426		7.36			20,883		406		7.71			20,175		378		7.53
		7,374		145		7.82			7,523		146		7.80			7,759		150		7.74
		27,882		380		5.42			22,208		308		5.53			19,232		265		5.51
		188,164		3,177		6.70			174,672		3,131		7.12			165,512		2,927		7.09
		227,893		4,042		7.08			223,356		4,070		7.28			222,096		4,042		7.28
		8,073		126		6.19			7,299		122		6.61			8,850		141		6.42
		25,675		651		10.04			24,474		614		9.96			24,799		609		9.84
		261,641		4,819		7.35			255,129		4,806		7.52			255,745		4,792		7.50
		449,805		7,996		7.08			429,801		7,937		7.35			421,257		7,719		7.34
		18,998		360		7.53			20,209		363		7.14			17,644		285		6.47
		10,223		166		6.48			7,937		138		6.91			7,985		144		7.23
		650,140		10,935		6.70			628,773		10,822		6.86			605,978		10,342		6.84
		-		19		0.01			-		42		0.02			-		46		0.03
		650,140		10,954		6.71			628,773		10,864		6.88			605,978		10,388		6.87
		12,028							11,134							11,533
		101,319							89,097							87,262
	$	763,487						$	729,004						$	704,773
		83,370		345		1.64			81,851		357		1.73			83,977		367		1.75
		121,717		949		3.09			116,404		980		3.34			111,562		976		3.51
		127,061		1,557		4.86			122,474		1,507		4.88			120,684		1,455		4.84
		27,354		306		4.44			23,322		292		4.97			21,871		270		4.96
		20,169		263		5.16			13,776		187		5.40			8,051		107		5.30
		379,671		3,420		3.57			357,827		3,323		3.68			346,145		3,175		3.68
		36,386		413		4.50			44,334		556		4.98			38,031		473		4.98
		7,272		78		4.27			5,799		65		4.42			5,143		60		4.67
		6,728		61		3.62			7,420		70		3.74			7,158		67		3.75
		10,369		58		2.24			7,793		55		2.74			7,688		52		2.77
		158,704		2,129		5.34			151,226		2,067		5.44			143,504		1,923		5.37
		599,130		6,159		4.08			574,399		6,136		4.24			547,669		5,750		4.21
		-		121		0.08			-		144		0.10			-		151		0.11
		599,130		6,280		4.16			574,399		6,280		4.34			547,669		5,901		4.32
		57,895							58,280							62,273
		32,476							26,468							25,514
		73,986							69,857							69,317
	$	763,487						$	729,004						$	704,773
			$	10,954		6.71	%			$	10,864		6.88	%			$	10,388		6.87	%
				6,280		3.83					6,280		3.96					5,901		3.91
			$	4,674		2.88	%			$	4,584		2.92	%			$	4,487		2.96	%

(c) Includes the effect of the $975 million leverage lease recalculation charge in the second quarter of 2008.

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

77

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES

	SIX MONTHS ENDED								SIX MONTHS ENDED
	JUNE 30, 2008								JUNE 30, 2007
						Average							Average
			Interest			Rates					Interest		Rates
	Average		Income/			Earned/			Average		Income/		Earned/
(In millions)	Balances		Expense			Paid			Balances		Expense		Paid
ASSETS
Interest-bearing bank balances	$	4,616		90			3.91	%	$	2,459		80		6.55	%
Federal funds sold and securities purchased under resale agreements		12,470		184			2.98			13,111		335		5.16
Trading account assets (a)		44,115		1,130			5.13			32,438		961		5.93
Securities (a)		113,452		3,148			5.55			108,253		2,928		5.42
Loans (a) (b)
Commercial
Commercial, financial and agricultural		118,036		3,164			5.39			99,719		3,541		7.16
Real estate — construction and other		18,741		455			4.88			16,924		642		7.65
Real estate — mortgage		26,010		712			5.51			20,203		758		7.57
Lease financing (c)		6,940		(717	)		(20.65	)		7,745		300		7.74
Foreign		32,664		749			4.60			16,832		461		5.50
Total commercial		202,391		4,363			4.34			161,423		5,702		7.12
Consumer
Real estate secured		231,573		7,641			6.61			223,992		8,190		7.32
Student loans		9,521		221			4.68			8,688		277		6.45
Installment loans		27,850		1,345			9.71			24,172		1,175		9.80
Total consumer		268,944		9,207			6.86			256,852		9,642		7.53
Total loans		471,335		13,570			5.78			418,275		15,344		7.37
Loans held for sale		10,367		364			7.03			17,199		540		6.32
Other earning assets		10,706		282			5.30			8,119		283		7.02
Total earning assets excluding derivatives		667,061		18,768			5.64			599,854		20,471		6.85
Risk management derivatives (d)		-		164			0.05			-		94		0.03
Total earning assets including derivatives		667,061		18,932			5.69			599,854		20,565		6.88
Cash and due from banks		11,558								11,894
Other assets		111,396								86,191
Total assets	$	790,015							$	697,939
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		86,385		373			0.87			84,111		740		1.77
Money market accounts		130,433		1,251			1.93			109,684		1,893		3.48
Other consumer time		118,616		2,582			4.38			118,485		2,824		4.81
Foreign		26,055		422			3.26			21,340		519		4.90
Other time		20,804		446			4.31			8,539		226		5.34
Total interest-bearing deposits		382,293		5,074			2.67			342,159		6,202		3.66
Federal funds purchased and securities sold under repurchase agreements		39,622		582			2.95			36,595		903		4.97
Commercial paper		5,348		58			2.19			5,032		117		4.70
Securities sold short		6,581		115			3.53			7,929		150		3.81
Other short-term borrowings		9,722		78			1.57			7,295		96		2.66
Long-term debt		171,506		3,698			4.33			142,746		3,803		5.36
Total interest-bearing liabilities excluding derivatives		615,072		9,605			3.14			541,756		11,271		4.19
Risk management derivatives (d)		-		178			0.06			-		270		0.10
Total interest-bearing liabilities including derivatives		615,072		9,783			3.20			541,756		11,541		4.29
Noninterest-bearing deposits		57,157								61,628
Other liabilities		37,542								25,237
Stockholders’ equity		80,244								69,318
Total liabilities and stockholders’ equity	$	790,015							$	697,939
Interest income and rate earned — including derivatives			$	18,932			5.69	%			$	20,565		6.88	%
Interest expense and equivalent rate paid — including derivatives				9,783			2.95					11,541		3.87
Net interest income and margin — including derivatives			$	9,149			2.74	%			$	9,024		3.01	%

(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) Includes the effect of the $975 million leverage lease recalculation charge in the second quarter of 2008.
(d) The rates earned and the rates paid on risk management derivatives are based on off-balance sheet notional amounts. The fair value of these instruments is included in other assets and other liabilities.

78

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	2008						2007
	Second			First			Fourth			Third			Second
(In millions, except per share data)	Quarter			Quarter			Quarter			Quarter			Quarter
ASSETS
Cash and due from banks	$	15,127			14,703			15,124			12,681			12,065
Interest-bearing bank balances		10,289			3,236			3,057			4,449			2,726
Federal funds sold and securities purchased under resale agreements		21,923			10,644			15,449			11,995			11,511
Total cash and cash equivalents		47,339			28,583			33,630			29,125			26,302
Trading account assets		62,589			72,592			55,882			54,835			51,540
Securities		113,461			114,183			115,037			111,827			106,184
Loans, net of unearned income		488,198			480,482			461,954			449,206			429,120
Allowance for loan losses		(10,744	)		(6,567	)		(4,507	)		(3,505	)		(3,390	)
Loans, net		477,454			473,915			457,447			445,701			425,730
Loans held for sale		8,430			11,429			16,772			21,431			17,733
Premises and equipment		6,667			6,733			6,605			6,002			6,080
Due from customers on acceptances		1,302			1,109			1,418			1,295			831
Goodwill		36,993			43,068			43,122			38,848			38,766
Other intangible assets		1,942			2,038			2,119			1,380			1,468
Other assets		56,256			54,925			50,864			43,724			40,794
Total assets	$	812,433			808,575			782,896			754,168			715,428
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		63,393			60,951			60,893			56,825			62,112
Interest-bearing deposits		384,397			384,013			388,236			365,112			347,918
Total deposits		447,790			444,964			449,129			421,937			410,030
Short-term borrowings		55,448			57,857			50,393			62,714			52,715
Bank acceptances outstanding		1,307			1,118			1,424			1,303			840
Trading account liabilities		26,305			28,887			21,585			17,771			19,319
Other liabilities		19,023			19,036			19,151			18,424			18,080
Long-term debt		184,401			175,653			161,007			158,584			142,047
Total liabilities		734,274			727,515			702,689			680,733			643,031
Minority interest in net assets of consolidated subsidiaries		3,032			3,068			3,335			3,295			3,131
STOCKHOLDERS’ EQUITY
Preferred stock, Class A, 40 million shares, no par value; 10 million shares, no par value; none issued		-			-			-			-			-
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at June 30, 2008		-			-			-			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized		-			-			-			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series J, $1,000 liquidation preference per share, 92 million depositary shares issued and outstanding at June 30, 2008		2,300			2,300			2,300			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series K, $1,000 liquidation preference per share, 3.5 million shares issued and outstanding at June 30, 2008		3,500			3,500			-			-			-
Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L, $1,000 liquidation preference per share, 4.025 million shares issued and outstanding at June 30, 2008		4,025			-			-			-			-
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 2.136 billion shares at June 30, 2008		7,121			6,551			6,534			6,283			6,289
Paid-in capital		59,797			56,367			56,149			51,938			51,905
Retained earnings		1,534			11,449			13,456			14,670			14,335
Accumulated other comprehensive income (loss), net		(3,150	)		(2,175	)		(1,567	)		(2,751	)		(3,263	)
Total stockholders’ equity		75,127			77,992			76,872			70,140			69,266
Total liabilities and stockholders’ equity	$	812,433			808,575			782,896			754,168			715,428

79

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	2008						2007
	Second			First			Fourth			Third			Second
(In millions, except per share data)	Quarter			Quarter			Quarter			Quarter			Quarter
INTEREST INCOME
Interest and fees on loans	$	6,187			7,577			7,980			7,937			7,723
Interest and dividends on securities		1,530			1,496			1,616			1,529			1,474
Trading account interest		522			571			557			566			506
Other interest income		407			535			757			799			647
Total interest income		8,646			10,179			10,910			10,831			10,350
INTEREST EXPENSE
Interest on deposits		2,176			2,941			3,433			3,334			3,180
Interest on short-term borrowings		418			523			673			801			706
Interest on long-term debt		1,762			1,963			2,174			2,145			2,015
Total interest expense		4,356			5,427			6,280			6,280			5,901
Net interest income		4,290			4,752			4,630			4,551			4,449
Provision for credit losses		5,567			2,831			1,497			408			179
Net interest income (loss) after provision for credit losses		(1,277	)		1,921			3,133			4,143			4,270
FEE AND OTHER INCOME
Service charges		709			676			716			689			667
Other banking fees		518			498			497			471			449
Commissions		910			914			970			600			649
Fiduciary and asset management fees		1,355			1,439			1,436			1,029			1,015
Advisory, underwriting and other investment banking fees		280			261			249			393			454
Trading account profits (losses)		(510	)		(308	)		(524	)		(301	)		195
Principal investing		136			446			41			372			298
Securities gains (losses)		(808	)		(205	)		(320	)		(34	)		23
Other income		575			(944	)		(321	)		(286	)		490
Total fee and other income		3,165			2,777			2,744			2,933			4,240
NONINTEREST EXPENSE
Salaries and employee benefits		3,435			3,260			3,468			2,628			3,122
Occupancy		377			379			375			325			331
Equipment		317			323			334			283			309
Marketing		95			97			80			74			78
Communications and supplies		184			186			191			176			178
Professional and consulting fees		218			196			271			194			205
Goodwill impairment		6,060			-			-			-			-
Other intangible amortization		97			103			111			92			103
Merger-related and restructuring expenses		251			241			187			36			32
Sundry expense		1,750			656			769			717			532
Total noninterest expense		12,784			5,441			5,786			4,525			4,890
Minority interest in income (loss) of consolidated subsidiaries		(18	)		155			107			189			139
Income (loss) from continuing operations before income taxes (benefits)		(10,878	)		(898	)		(16	)		2,362			3,481
Income taxes (benefits)		(1,963	)		(234	)		(209	)		656			1,140
Income (loss) from continuing operations		(8,915	)		(664	)		193			1,706			2,341
Discontinued operations, net of income taxes		-			-			(142	)		(88	)		-
Net income (loss)		(8,915	)		(664	)		51			1,618			2,341
Dividends on preferred stock		193			43			-			-			-
Net income (loss) available to common stockholders	$	(9,108	)		(707	)		51			1,618			2,341
PER COMMON SHARE DATA (after preferred stock dividends)
Basic earnings
Income (loss) from continuing operations	$	(4.31	)		(0.36	)		0.10			0.91			1.24
Net income (loss) available to common stockholders		(4.31	)		(0.36	)		0.03			0.86			1.24
Diluted earnings (a)
Income (loss) from continuing operations		(4.31	)		(0.36	)		0.10			0.90			1.22
Net income (loss) available to common stockholders		(4.31	)		(0.36	)		0.03			0.85			1.22
Cash dividends	$	0.38			0.64			0.64			0.64			0.56
AVERAGE COMMON SHARES
Basic		2,111			1,963			1,959			1,885			1,891
Diluted		2,119			1,977			1,983			1,910			1,919

(a) Calculated using average basic common shares in 2008.

80

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets — June 30, 2008 and December 31, 2007 (Unaudited)	82
Consolidated Statements of Income — Three and Six Months Ended June 30, 2008 and 2007 (Unaudited)	83
Consolidated Statements of Cash Flows — Six Months Ended June 30, 2008 and 2007 (Unaudited)	84
Notes to Consolidated Financial Statements (Unaudited)
Note 1: Summary of Significant Accounting Policies and Other Matters	85
Note 2: Securities	88
Note 3: Goodwill Impairment	90
Note 4: Variable Interest Entities and Servicing Assets	91
Note 5: Share-Based Payments	93
Note 6: Comprehensive Income (Loss)	95
Note 7: Business Segments	96
Note 8: Basic and Diluted Earnings Per Common Share	99
Note 9: Income Taxes	100
Note 10: Derivatives	101
Note 11: Guarantees	105
Note 12: Fair Value Measurements and Fair Value Option	106

81

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

	June 30,			December 31,
(In millions, except per share data)	2008			2007
ASSETS
Cash and due from banks	$	15,127			15,124
Interest-bearing bank balances		10,289			3,057
Federal funds sold and securities purchased under resale agreements		21,923			15,449
Total cash and cash equivalents		47,339			33,630
Trading account assets		62,589			55,882
Securities		113,461			115,037
Loans, net of unearned income (includes $18 at fair value at June 30, 2008)		488,198			461,954
Allowance for loan losses		(10,744	)		(4,507	)
Loans, net		477,454			457,447
Loans held for sale (includes $3,350 at fair value at June 30, 2008)		8,430			16,772
Premises and equipment		6,667			6,605
Due from customers on acceptances		1,302			1,418
Goodwill		36,993			43,122
Other intangible assets		1,942			2,119
Other assets		56,256			50,864
Total assets	$	812,433			782,896
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		63,393			60,893
Interest-bearing deposits		384,397			388,236
Total deposits		447,790			449,129
Short-term borrowings		55,448			50,393
Bank acceptances outstanding		1,307			1,424
Trading account liabilities		26,305			21,585
Other liabilities		19,023			19,151
Long-term debt		184,401			161,007
Total liabilities		734,274			702,689
Minority interest in net assets of consolidated subsidiaries		3,032			3,335
STOCKHOLDERS’ EQUITY
Preferred stock, Class A, 40 million shares, no par value; 10 million shares, no par value; none issued		-			-
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at June 30, 2008		-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized		-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series J, $1,000 liquidation preference per share, 92 million depositary shares issued and outstanding at June 30, 2008		2,300			2,300
Non-Cumulative Perpetual Class A Preferred Stock, Series K, $1,000 liquidation preference per share, 3.5 million shares issued and outstanding at June 30, 2008		3,500			-
Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L, $1,000 liquidation preference per share, 4.025 million shares issued and outstanding at June 30, 2008		4,025			-
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 2.136 billion shares at June 30, 2008		7,121			6,534
Paid-in capital		59,797			56,149
Retained earnings		1,534			13,456
Accumulated other comprehensive income (loss), net		(3,150	)		(1,567	)
Total stockholders’ equity		75,127			76,872
Total liabilities and stockholders’ equity	$	812,433			782,896

See accompanying Notes to Consolidated Financial Statements.

82

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In millions, except per share data)	2008			2007		2008			2007
INTEREST INCOME
Interest and fees on loans	$	6,187			7,723		13,764			15,341
Interest and dividends on securities		1,530			1,474		3,026			2,952
Trading account interest		522			506		1,093			939
Other interest income		407			647		942			1,258
Total interest income		8,646			10,350		18,825			20,490
INTEREST EXPENSE
Interest on deposits		2,176			3,180		5,117			6,194
Interest on short-term borrowings		418			706		941			1,375
Interest on long-term debt		1,762			2,015		3,725			3,972
Total interest expense		4,356			5,901		9,783			11,541
Net interest income		4,290			4,449		9,042			8,949
Provision for credit losses		5,567			179		8,398			356
Net interest income (loss) after provision for credit losses		(1,277	)		4,270		644			8,593
FEE AND OTHER INCOME
Service charges		709			667		1,385			1,281
Other banking fees		518			449		1,016			865
Commissions		910			649		1,824			1,308
Fiduciary and asset management fees		1,355			1,015		2,794			1,968
Advisory, underwriting and other investment banking fees		280			454		541			861
Trading account profits (losses)		(510	)		195		(818	)		323
Principal investing		136			298		582			346
Securities gains (losses)		(808	)		23		(1,013	)		76
Other income		575			490		(369	)		946
Total fee and other income		3,165			4,240		5,942			7,974
NONINTEREST EXPENSE
Salaries and employee benefits		3,435			3,122		6,695			6,094
Occupancy		377			331		756			643
Equipment		317			309		640			616
Marketing		95			78		192			140
Communications and supplies		184			178		370			351
Professional and consulting fees		218			205		414			382
Goodwill impairment		6,060			-		6,060			-
Other intangible amortization		97			103		200			221
Merger-related and restructuring expenses		251			32		492			42
Sundry expense		1,750			532		2,406			1,022
Total noninterest expense		12,784			4,890		18,225			9,511
Minority interest in income (loss) of consolidated subsidiaries		(18	)		139		137			275
Income (loss) before income taxes (benefits)		(10,878	)		3,481		(11,776	)		6,781
Income taxes (benefits)		(1,963	)		1,140		(2,197	)		2,138
Net income (loss)		(8,915	)		2,341		(9,579	)		4,643
Dividends on preferred stock		193			-		236			-
Net income (loss) available to common stockholders	$	(9,108	)		2,341		(9,815	)		4,643
PER COMMON SHARE DATA
Basic earnings
Net income (loss) available to common stockholders	$	(4.31	)		1.24		(4.82	)		2.45
Diluted earnings
Net income (loss) available to common stockholders		(4.31	)		1.22		(4.82	)		2.42
Cash dividends	$	0.38			0.56		1.02			1.12
AVERAGE COMMON SHARES
Basic		2,111			1,891		2,037			1,892
Diluted		2,119			1,919		2,048			1,922

See accompanying Notes to Consolidated Financial Statements.

83

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
	June 30,
(In millions)	2008			2007
OPERATING ACTIVITIES
Net income (loss)	$	(9,579	)		4,643
Adjustments to reconcile net income to net cash provided (used) by operating activities Accretion and amortization of securities discounts and premiums, net		81			(34	)
Provision for credit losses		8,398			356
Gain on securitization transactions		(33	)		(58	)
Gain on sale of mortgage servicing rights		(1	)		(3	)
Securities transactions		1,013			(76	)
Goodwill impairment		6,060			-
Depreciation and other amortization		1,034			961
Trading account assets, net		100			(6,799	)
Loss (gain) on sales of premises and equipment		18			(4	)
Valuation losses on bank-owned separate account life insurance		314			-
Contribution to qualified pension plan		-			(270	)
Income tax shortfall (excess income tax benefit) from share-based payment arrangements		19			(61	)
Loans held for sale, net		(3,967	)		(5,416	)
Deferred interest on certain loans		(796	)		(722	)
Other assets, net		(3,722	)		1,214
Trading account liabilities, net		4,720			1,091
Other liabilities, net		(606	)		(1,392	)
Net cash provided (used) by operating activities		3,053			(6,570	)
INVESTING ACTIVITIES
Increase (decrease) in cash realized from
Sales of securities		13,430			3,852
Maturities of securities		21,416			9,882
Purchases of securities		(38,012	)		(11,868	)
Origination of loans, net		(21,113	)		(9,370	)
Sales of premises and equipment		132			131
Purchases of premises and equipment		(754	)		(498	)
Goodwill and other intangible assets		46			(441	)
Purchase of bank-owned separate account life insurance, net		(665	)		(499	)
Net cash used by investing activities		(25,520	)		(8,811	)
FINANCING ACTIVITIES
Increase (decrease) in cash realized from
Increase (decrease) in deposits, net		(1,339	)		2,572
Securities sold under repurchase agreements and other short-term borrowings, net		5,055			3,558
Issuances of long-term debt		45,162			23,477
Payments of long-term debt		(21,768	)		(20,024	)
Issuances of preferred shares		7,472			-
Issuances of common stock, net		3,951			267
Purchases of common stock		(20	)		(1,007	)
(Income tax shortfall) excess income tax benefit from share-based payment arrangements		(19	)		61
Cash dividends paid		(2,318	)		(2,137	)
Net cash provided by financing activities		36,176			6,767
Increase (decrease) in cash and cash equivalents		13,709			(8,614	)
Cash and cash equivalents, beginning of year		33,630			34,916
Cash and cash equivalents, end of period	$	47,339			26,302
NONCASH ITEMS
Transfer to securities from loans resulting from securitizations	$	-			1,119
Transfer to securities from loans held for sale resulting from securitizations		5,881			-
Transfer to trading account assets from securities		6,807			-
Transfer to loans from loans held for sale		6,428			251
Cumulative effect of accounting changes, net of income taxes	$	(24	)		(1,447	)

See accompanying Notes to Consolidated Financial Statements.

84

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 “Wachovia” or 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 (“GAAP”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all the information and footnotes required by GAAP 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 results of operations as of and for the six months ended June 30, 2008, are not necessarily indicative of the results of operations that may be expected in the future. Please refer to the Company’s 2007 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, 2007, including the related notes to consolidated financial statements.

     The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates and assumptions. The Company regularly assesses various assets, including goodwill, for impairment as dictated by applicable GAAP, giving appropriate consideration to general economic and specific market factors.

PERSONNEL EXPENSE AND RETIREMENT BENEFITS

     Statement of Financial Accounting Standards (“SFAS”) No. 158, “Employers’ Accounting for Certain Defined Benefit Pension and Other Postretirement Plans,” which the Company adopted on December 31, 2006, also requires employers to use a plan measurement date that is the same as its fiscal year-end beginning no later than December 31, 2008. The Company has historically used a measurement date of September 30, and is required under SFAS 158 to change to a December 31 measurement date by no later than December 31, 2008. The Company changed its measurement date using the alternative provided in SFAS 158 where the September 30, 2007, measurement establishes a 15-month cost, three-fifteenths of which, or $4 million, was recorded as an adjustment to retained earnings on January 1, 2008.

     The components of the retirement benefit costs (credits) included in salaries and employee benefits expense for the six months ended June 30, 2008 and 2007, are presented below.

											Other Postretirement
	Qualified Pension						Nonqualified Pension				Benefits
	Six Months Ended						Six Months Ended				Six Months Ended
	June 30,						June 30,				June 30,
(In millions)	2008			2007			2008		2007		2008			2007
RETIREMENT BENEFIT COSTS (CREDITS)
Service cost	$	86			92			-		1		1			2
Interest cost		129			132			10		11		23			22
Expected return on plan assets		(259	)		(246	)		-		-		(1	)		(1	)
Amortization of prior service cost		(23	)		(13	)		-		-		-			(4	)
Amortization of actuarial losses		38			60			2		4		-			-
Net retirement benefit costs (credits)	$	(29	)		25			12		16		23			19

SALE-IN, LEASE-OUT TRANSACTIONS

     In the second quarter of 2008, the Company recorded a $975 million charge to interest income related to the recalculation of certain leveraged lease transactions. These transactions, which the Company entered into between 1999 and 2003, are widely known as sale-in, lease-out or “SILO” transactions. This noncash charge resulted from the Company’s analysis of a federal court of appeals opinion in a case involving another financial institution where tax benefits associated with certain lease-in, lease-out or “LILO” transactions were disallowed. The Company believes that some aspects of the court decision could be extended to SILO transactions. Subsequently, a federal court issued an adverse decision regarding a SILO transaction entered into by two other large financial institutions. While tax laws involving SILO transactions remain unsettled, applicable accounting standards, including Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”) on income taxes and FASB Staff Position FAS 13-2 on leveraged leases, require the Company to update the income tax cash flow assessment on SILO transactions for potential changes in the timing of tax cash flows in light of the court rulings. See Note 1 to the Consolidated Financial Statements in the Company’s 2007 Annual Report on Form 10-K for more information on these leasing transactions and on the applicable accounting standards. On August 6, 2008, the Internal Revenue Service announced a settlement initiative related to SILO transactions. See Note 9 for more information.

85

GOODWILL

     The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate there may be impairment. The Company operates in four core business segments. Goodwill impairment testing is performed at the sub-segment level (or “reporting unit”). There are eight reporting units within the Company. They are General Bank: Commercial, and Retail and Small Business; Wealth Management; Corporate and Investment Bank: Corporate Lending, Investment Banking, and Treasury and International Trade Finance; and Capital Management: Retail Brokerage Services and Asset Management.

     Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.

     The goodwill impairment analysis is a two-step test. The first step, used to identify potential impairment, involves comparing each reporting unit’s fair value to its carrying value including goodwill. If the fair value of a reporting unit exceeds its carrying value, applicable goodwill is considered not to be impaired. If the carrying value exceeds fair value, there is an indication of impairment and the second step is performed to measure the amount of impairment.

     The second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated impairment. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill exceeds the goodwill assigned to the reporting unit, there is no impairment. If the goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss recognized cannot exceed the amount of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted under applicable accounting standards.

     At June 30, 2008, the fair values of the Company’s reporting units were based on a discounted cash flow methodology using discount rates that reflect the Company’s current market capitalization plus a control premium.

     See Note 3 for goodwill impairment recorded at June 30, 2008.

OTHER

     The company recorded market disruption-related net valuation gains of $314 million and losses of $1.1 billion in other income in the consolidated statement of income for the three and six months ended June 30, 2008, respectively. For the six months ended June 30, 2008, this amount includes net losses of $354 million related to the Company’s leveraged finance commitments, $329 million related to the commercial mortgage securitization business, $90 million related to wholesale consumer warehouses and $314 million related to certain bank-owned life insurance assets.

     In March 2008, Visa, Inc. (“Visa”) completed their initial public offering (“IPO”) of shares. Visa redeemed a proportionate share of member banks’ ownership which resulted in the Company recording a gain of $225 million in securities gains (losses) within fee and other income. In connection with the IPO, Visa also established an escrow account of $3 billion to cover litigation, and as a result, the Company recorded a $102 million reduction to previously established reserves representing the Company’s proportionate share of that escrow account. The reduction is reported in sundry expense within noninterest expense.

PREFERRED STOCK

     On February 8, 2008, the Company issued $3.5 billion of non-cumulative perpetual Class A preferred stock. This preferred stock pays dividends of 7.98 percent until 2018, after which dividends will be payable at a floating rate of three-month LIBOR plus 3.77 percent. If the Company does not declare a preferred stock dividend for a particular period, the Company may not pay a dividend on its common stock. Beginning on March 18, 2018, the Company may redeem the preferred stock at par plus accrued but unpaid dividends.

     On April 14, 2008, the Company issued $4.025 billion of non-cumulative perpetual convertible Class A preferred stock. This preferred stock pays dividends of 7.50 percent. If the Company does not declare a preferred stock dividend for a particular period, the Company may not pay a dividend on its common stock. The preferred stock is not redeemable by the Company.

DISCONTINUED OPERATIONS

     The Company controls 100 percent of the outstanding equity of BluePoint Re Limited (“BluePoint”), a Bermuda-based monoline bond reinsurer, and accordingly consolidates this subsidiary. The results for the third and fourth quarters of 2007 have been reclassified to reflect the results of BluePoint as a discontinued operation. Results from inception of BluePoint in 2005 through the second quarter of 2007 were not material, and accordingly, have not been included in discontinued operations.

86

     In the six months ended December 31, 2007, BluePoint recorded significant losses on certain derivative instruments (principally credit default swaps on collateralized debt obligations where the underlying collateral is subprime residential mortgage-backed securities) and these losses through December 31, 2007, approximated substantially all of Wachovia’s investment in this subsidiary and were included in Wachovia’s 2007 consolidated results of operations. Wachovia has no further obligation to inject capital in BluePoint. BluePoint continued to record these instruments at fair value in the first six months of 2008. In estimating the fair value of these instruments under SFAS 157 (see “New Accounting Pronouncements” section of this note), a company must consider, among other things, its own credit rating, which in this case is BluePoint’s. As Wachovia has no obligation to fund losses in excess of BluePoint’s equity, BluePoint assessed the discount required in valuing these instruments to reflect a market participant’s view of BluePoint’s nonperformance risk. BluePoint’s valuation at June 30, 2008, reflected a very significant discount for its nonperformance risk, such that BluePoint recorded no further losses on the derivative instruments in the first six months of 2008. Accordingly, the Company’s consolidated results for the six months ended June 30, 2008, reflected no additional losses in discontinued operations.

NEW ACCOUNTING PRONOUNCEMENTS

     On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,” SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” Emerging Issues Task Force (EITF) Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements,” and EITF Issue No. 06-10, “Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements.” The effect of adopting SFAS 157 is recorded directly to first quarter 2008 results of operations or is recorded as a cumulative effect of a change in accounting principle as an adjustment, net of applicable taxes, to beginning retained earnings on January 1, 2008, depending on the nature of the financial instrument to which the new fair value measurement is applied. For SFAS 159 and the two EITF issues, the cumulative effect of adoption is recorded as an adjustment, net of applicable taxes, to beginning retained earnings on January 1, 2008. See Note 12 for SFAS 157 and SFAS 159 disclosures.

     EITF Issue No. 06-4 and EITF Issue No. 06-10 address the accounting for split-dollar life insurance policies that are held on certain current and former employees. The effect of adopting these standards was a $19 million after-tax charge to January 1, 2008, retained earnings.

RECLASSIFICATIONS

     Certain amounts in 2007 were reclassified to conform with the presentation in 2008. These reclassifications had no effect on the Company’s previously reported consolidated financial position or results of operations.

SUBSEQUENT EVENT

     Wachovia is in active discussions of potential settlement with various state regulators and the SEC of ongoing investigations concerning the underwriting, sale and subsequent auctions of certain auction rate securities by two subsidiaries of the Company. Auction rate securities are debt instruments with long-term maturities, but which reprice through auction on a more frequent basis. Subsequent to June 30, 2008, this matter reached the threshold for accrual of a liability as of June 30, 2008. Based on the probability of such settlement, current market value estimates, affected auction rate securities and expected future redemptions, the Company recorded a $500 million increase to legal reserves as of June 30, 2008. This expense, which is reflected in sundry, includes estimated market valuation losses on auction rate securities associated with a potential settlement.

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NOTE 2: SECURITIES

	June 30, 2008
																		Average
	1 Year			1-5		5-10		After 10				Gross Unrealized				Amortized		Maturity
(In millions)	or Less			Years		Years		Years		Total		Gains		Losses		Cost		in Years
MARKET VALUE
U.S. Treasury	$	322			185		170		40		717		15		-		702		3.06
Mortgage-backed securities		128			18,138		45,779		40		64,085		332		979		64,732		6.40
Asset-backed
Residual interests from securitizations		17			217		132		8		374		78		9		305		4.18
Retained bonds from securitizations		1,386			143		56		-		1,585		1		74		1,658		1.34
Collateralized mortgage obligations		650			14,308		4,548		140		19,646		72		1,683		21,257		4.26
Commercial mortgage-backed		257			1,082		1,174		27		2,540		42		126		2,624		4.58
Other		489			3,698		394		227		4,808		7		679		5,480		3.86
State, county and municipal		62			678		543		2,590		3,873		113		64		3,824		13.61
Sundry		1,551			2,241		4,942		7,099		15,833		147		1,205		16,891		9.36
Total market value	$	4,862			40,690		57,738		10,171		113,461		807		4,819		117,473		6.38
MARKET VALUE
Debt securities	$	4,862			40,690		57,738		8,618		111,908		667		4,791		116,032
Equity securities		-			-		-		1,553		1,553		140		28		1,441
Total market value	$	4,862			40,690		57,738		10,171		113,461		807		4,819		117,473
AMORTIZED COST
Debt securities	$	4,873			42,439		59,346		9,374		116,032
Equity securities		-			-		-		1,441		1,441
Total amortized cost	$	4,873			42,439		59,346		10,815		117,473
WEIGHTED AVERAGE YIELD
U.S. Treasury		1.58	%		1.96		2.70		4.87		2.12
Mortgage-backed securities		3.67			5.44		5.34		5.32		5.36
Asset-backed
Residual interests from securitizations		126.45			21.55		18.20		-		22.28
Retained bonds from securitizations		3.12			6.02		7.02		-		3.65
Collateralized mortgage obligations		4.72			6.22		6.09		6.34		6.15
Commercial mortgage-backed		6.39			7.42		4.98		11.37		6.19
Other		4.29			4.67		4.96		4.66		4.66
State, county and municipal		6.57			5.58		5.17		4.87		5.06
Sundry		2.88			4.82		4.78		4.86		4.64
Consolidated		3.69	%		5.72		5.35		4.89		5.38

88

     At June 30, 2008, all securities not classified as trading were classified as available for sale.

     At June 30, 2008, mortgage-backed securities consist principally of obligations of U.S. Government agencies and sponsored entities. Included in mortgage-backed securities are Federal National Mortgage Association and Federal Home Loan Mortgage Corporation securities with an amortized cost of $48.7 billion and a market value of $48.3 billion, and an amortized cost of $12.8 billion and a market value of $12.6 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 $14.2 billion and a market value of $14.4 billion at June 30, 2008.

     Included in asset-backed securities are retained bonds primarily from the securitization of commercial and consumer real estate, SBA, student and auto loans. At June 30, 2008, retained bonds with an amortized cost and market value of $1.6 billion were considered investment grade based on external ratings. Retained bonds with an amortized cost and market value of $1.3 billion at June 30, 2008, have an external credit rating of AA and above.

     Securities with an aggregate amortized cost of $79.1 billion at June 30, 2008, 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 June 30, 2008, 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 $1.9 billion. At June 30, 2008, there were commitments to sell securities at a price that approximates a market value of $1.7 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 June 30, 2008, 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 recorded $1.3 billion of impairment losses, as noted below. The Company does not consider any other securities to be other-than-temporarily impaired. However, without recovery in the near term such that liquidity returns to the markets and spreads return to levels that reflect underlying credit characteristics, additional other-than-temporary impairments may occur in future periods.

     The components of realized gains and losses on sales of debt and equity securities for the six months ended June 30, 2008 and 2007, are presented below.

	Six Months Ended
	June 30,
(In millions)	2008			2007
Debt securities	$
Gross gains		79			72
Gross losses (a)		(950	)		(41	)
Net gains (losses) on sales of debt securities		(871	)		31
Equity securities
Gross gains		248			46
Gross losses (b)		(390	)		(1	)
Net gains (losses) on sales of equity securities		(142	)		45
Total securities gains (losses)	$	(1,013	)		76

(a) Impairment losses were $945 million and $36 million in the six months ended June 30, 2008 and 2007, respectively.

(b) Impairment losses were $378 million in the six months ended June 30, 2008 and insignificant in the six months ended June 30, 2007.

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NOTE 3: GOODWILL IMPAIRMENT

     The Company performed goodwill impairment testing for all eight reporting units at December 31, 2007, March 31, 2008 and June 30, 2008, in accordance with the policy described in Note 1. There was no indication of impairment in the first step of the impairment test in any reporting unit at either December 31, 2007, or March 31, 2008, and accordingly, the Company did not perform the second step. At June 30, 2008, there was an indication of impairment in four of the eight reporting units, and accordingly, the second step was performed on these four reporting units. Based on the results of the second step, the Company recorded a $6.1 billion goodwill impairment charge in the second quarter of 2008 across three of the four reporting units, as shown in the table below.

	General Bank					Corporate and Investment Bank						All Other
				Retail and		Corporate			Investment			Reporting
(In millions)	Commercial			Small Business		Lending			Banking			Units		Total
Assigned goodwill	$	7,083			23,976		2,937			597			8,460		43,053
Impairment		(2,526	)		-		(2,937	)		(597	)		-		(6,060	)
Remaining goodwill	$	4,557			23,976		-			-			8,460		36,993

     The primary cause of the goodwill impairment in the three reporting units is the decline in the Company’s market capitalization, which declined 38 percent from March 31, 2008, to $33.5 billion at June 30, 2008. The decline was a function of both financial services industry-wide and company-specific factors. Although there was an initial indication of possible impairment in the General Bank Retail and Small Business reporting unit, which holds the Pick-a-Payment portfolio, the step two measurement indicated no impairment largely due to the value that the retail banking network contributes to that reporting unit.

90

NOTE 4: VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

VARIABLE INTEREST ENTITIES

     The Company administers a multi-seller commercial paper conduit that arranges financing for certain customer transactions thereby providing customers with access to the commercial paper market. The Company provides liquidity facilities on all the commercial paper issued by the conduit. The conduit is a variable interest entity (“VIE”) and the liquidity agreements are considered variable interests; however, because the Company does not hold a majority of the expected losses or expected residual returns through its variable interests, the Company does not consolidate the conduit on the balance sheet. At the discretion of the administrator, the provisions of the liquidity agreements require the Company to purchase assets from the conduit at par value plus interest, including in situations where the conduit is unable to issue commercial paper. Par value may be different from fair value. Any losses incurred on such purchases would be initially absorbed by the third-party holder of a subordinated note in the conduit. The ability of the conduit to issue commercial paper is a function of general market conditions and the credit rating of the liquidity provider. This conduit has always been able to issue commercial paper. At June 30, 2008 and December 31, 2007, the conduit had total assets of $12.3 billion and $15.0 billion, respectively, and the Company had a maximum exposure to losses of $19.7 billion and $26.1 billion, respectively, including funded positions and committed exposure, related to its liquidity agreements.

     The Company provides liquidity to certain third party commercial paper conduits and other entities in connection with collateralized debt obligation (“CDO”) securitization transactions. The Company has also entered into derivative contracts with certain entities in connection with CDO securitization transactions that may require the Company to purchase assets at a specified price. These entities are VIEs and the Company’s liquidity facilities and derivative exposures are variable interests. The Company does not consolidate these entities because the Company does not hold a majority of the expected losses or expected residual returns through its variable interests. At June 30, 2008 and December 31, 2007, the Company had a maximum exposure to losses of $6.0 billion and $7.3 billion, respectively, related to these agreements.

     The Company holds an investment amounting to $3.5 billion and $3.2 billion at June 30, 2008 and December 31, 2007, respectively, in four investment funds managed by European Credit Management Ltd. (“ECM”). In January 2007, the Company purchased a majority interest in ECM. This purchase did not alter the Company’s conclusion that these funds are not subject to consolidation. At June 30, 2008 and December 31, 2007, the funds in which the Company held an investment had total assets of $19.2 billion and $20.0 billion, respectively. In March 2008, the Company entered into repo lending arrangements with one of these funds. The Company also entered into a default protection agreement with another repo lender to this fund. These lending arrangements have a maximum loss exposure, before considering collateral the Company holds, of $141 million, of which $50 million is unfunded. The total assets of this fund were $886 million at June 30, 2008.

     In the third quarter of 2007, the Company purchased and placed in the securities available for sale portfolio $1.1 billion of asset-backed commercial paper from Evergreen money market funds, which the Company manages. The Company recorded $57 million of valuation losses in 2007 and $24 million in the first half of 2008 on this purchase, which were included in securities gains (losses) in the consolidated results of operations. The Company was not required by contract to purchase these or any other assets from the Evergreen funds. There are certain circumstances under which a money market fund may be considered a VIE and consolidated by the manager. At June 30, 2008, the Company did not consolidate the money market funds it manages.

     In June 2008, the Company provided financing to a fund the Company manages in connection with the liquidation of the fund. As a result of providing this financing, the Company became the primary beneficiary of the fund, which is a VIE, and accordingly consolidated the fund in June 2008. In connection with consolidation of this fund, the Company recorded $351 million of trading securities in the consolidated balance sheet and $89 million of write-downs on these securities.

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 fair value of the servicing rights on the date the loans are sold. The Company also purchases certain servicing assets. The Company recognizes individual classes of servicing assets under either a fair value method or an amortized cost method.

     The fair values of originated residential mortgage servicing assets, recorded under the fair value method, are estimated using discounted cash flows with prepayment speeds and discount rates as the significant assumptions. At June 30, 2008, the weighted average prepayment speed assumption was 15.62 percent and the weighted average discount rate used was 12.04 percent.

     Servicing fee income for the six months ended June 30, 2008, was $158 million and is included in other banking fees in the consolidated results of operations. 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 six months ended June 30, 2008, are presented on the following page.

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	Six Months Ended June 30, 2008
	Fair Value			Amortized Cost
				Fixed Rate
	Originated			Commercial
	Residential			Mortgage-
(In millions)	Mortgages			Backed			Other			Total
Balance, December 31, 2007	$	437			771			240			1,448
Fair value of servicing assets purchased, assumed or originated, or retained from securitizations		184			21			38			243
Servicing sold or otherwise disposed of		(9	)		-			-			(9	)
Change in fair value due to changes in model inputs and/or assumptions		35			-			-			35
Other changes in fair value, primarily from fees earned		(46	)		-			-			(46	)
Amortization of servicing assets		-			(72	)		(26	)		(98	)
Impairment		-			(1	)		-			(1	)
Balance, June 30, 2008	$	601			719			252			1,572
FAIR VALUE
June 30, 2008	$	601			949			289			1,839
December 31, 2007	$	437			991			261			1,689

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NOTE 5: SHARE-BASED PAYMENTS

     The Company has stock option plans under which incentive and nonqualified stock options as well as restricted stock may be granted periodically to certain employees. The options typically 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. 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 for the three and six months ended June 30, 2008 and 2007, are presented below.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2008		2007		2008		2007
Employee stock compensation expense
Restricted stock awards	$	97		93		293		264
Stock option awards		22		27		75		68
Total employee stock compensation expense		119		120		368		332
Related income tax benefit		42		42		129		116
Retirement-eligible portion of total employee stock compensation expense	$	-		-		109		93

     The stock compensation awards granted in the six months ended June 30, 2008, vest over three to five years based only on continued service with the Company, with the exception of 720,000 shares of restricted stock awards to certain senior executives of the Company, which vest over three years if the Company achieves a specified return on average tangible common stockholders’ equity for 2008; otherwise these shares are forfeited. For stock options, the exercise price is the closing price on the date of grant, with the exception of 852,000 and 994,000 options awarded to certain senior executives of the Company, for which the exercise price is approximately a 20 percent and 40 percent premium, respectively, above the closing price on the date of grant.

     Information on unrecognized compensation cost for restricted stock and stock options at June 30, 2008 and 2007, and for the six months ended June 30, 2008 and 2007, is presented below.

	June 30,
(Dollars in millions)	2008			2007
Unrecognized compensation cost
Restricted stock	$	572			639
Stock options	$	139			196
Weighted average period for cost recognition	1.4		yrs		1.4

	Six Months Ended
	June 30,
(In millions)	2008		2007
Fair value of restricted stock vested	$	259		323
Intrinsic value of stock option awards exercised		35		259
Cash received from the exercise of stock options granted		65		350
Income tax benefit realized from stock options exercised	$	11		78

     The weighted average grant date fair value of options awarded in the six months ended June 30, 2008, was $6.83. The more significant assumptions used in estimating the fair value of these stock options include risk-free interest rate of 3.51 percent, expected dividend yield of 7.58 percent (as of the date of grant; subsequently the Company made the decision and announced a reduction in the dividend), expected volatility of the Company’s common stock of 44 percent and weighted average expected life of the stock options of 8.0 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 method is consistent with the prior two years, but represents a change from years prior to 2006, in which the Company calculated its volatility estimate based on historical volatility adjusted for significant changes in the Company’s business activities. For the 2008 grants, the Company determined the estimated life based on historical stock option experience. Of the options and restricted stock awarded in the six months ended June 30, 2008, substantially all was awarded in the three months ended March 31, 2008.

     At June 30, 2008, the Company had authorization to reserve 88 million shares of its common stock for issuance under its stock option plans.

93

     Stock award activity in the six months ended June 30, 2008, is presented below.

	June 30, 2008
				Weighted-
				Average
(Options and shares in thousands)	Number			Price (a)
STOCK OPTIONS
Options outstanding, beginning of period		128,971		$	41.09
Granted		10,653			35.65
Exercised		(3,003	)		22.10
Expired		(5,803	)		53.35
Forfeited		(482	)		43.50
Options outstanding, end of period		130,336		$	40.52
Options vested and expected to vest, end of period		128,484		$	40.46
Options exercisable, end of period		105,567		$	39.17
RESTRICTED STOCK
Unvested shares, beginning of period		19,914		$	54.18
Granted		11,473			34.48
Vested		(8,247	)		53.35
Forfeited		(539	)		47.10
Unvested shares, end of period		22,601		$	44.23

(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.

94

NOTE 6: COMPREHENSIVE INCOME (LOSS)

     Comprehensive income (loss) is defined as the change in equity from all transactions other than those with stockholders, and it includes net income and other comprehensive income (loss). Comprehensive income (loss) for the three and six months ended June 30, 2008 and 2007, is presented below.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2008			2007			2008			2007
COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$	(8,915	)		2,341			(9,579	)		4,643
OTHER COMPREHENSIVE INCOME (LOSS)
Unamortized gains under employee benefit plans		5			31			11			31
Net unrealized losses on debt and equity securities		(1,112	)		(1,284	)		(1,817	)		(1,183	)
Net unrealized gains (losses) on derivative financial instruments		132			(76	)		223			(11	)
Total comprehensive income (loss)	$	(9,890	)		1,012			(11,162	)		3,480

95

NOTE 7: BUSINESS SEGMENTS

     Business segment results are presented excluding merger-related and restructuring expenses, goodwill impairment, other intangible amortization, minority interest in consolidated subsidiaries, discontinued operations and the effect of changes in accounting principles. 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 segment presentation excludes these items. Provision for credit losses is allocated to each core business segment in an amount equal to net charge-offs, and the difference between the total provision for the core segments and the consolidated provision, amounting to $4.2 billion and $6.3 billion in the three and six months ended June 30, 2008, respectively, is recorded in the Parent. The majority of the provision reflected in the Parent relates to loans in the General Bank segment.

     The Company continuously updates segment information for changes that occur in the management of the Company’s businesses. In the first quarter of 2008, the Company updated its segment reporting to reflect BluePoint as a discontinued operation (see Note 1), which is included in the Parent, and realigned certain corporate overhead allocations resulting in a shift of such allocations from the four core business segments to the Parent. Segment information for 2007 has been restated to reflect these changes and the impact to previously reported 2007 segment earnings is a $203 million increase to the General Bank, a $26 million increase in Wealth Management, a $330 million increase in the Corporate and Investment Bank, a $77 million increase in Capital Management, and a $406 million decrease in the Parent. Losses from discontinued operations in 2007 excluded from segment earnings were $230 million. Certain amounts presented in periods prior to the second quarter of 2008 have been reclassified to conform to the presentation in the second quarter of 2008.

	Three Months Ended June 30, 2008
														Goodwill
														Impairment,
					Corporate									Net Merger-
					and									Related and
	General		Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank		Management		Bank			Management			Parent			Expenses (b)			Consolidated
CONSOLIDATED
Net interest income (a)	$	3,671		202		1,124			308			(961	)		(54	)		4,290
Fee and other income		1,000		207		657			1,995			(694	)		-			3,165
Intersegment revenue		57		3		(52	)		(8	)		-			-			-
Total revenue (a)		4,728		412		1,729			2,295			(1,655	)		(54	)		7,455
Provision for credit losses		919		8		438			-			4,202			-			5,567
Noninterest expense		2,050		253		960			2,327			883			6,311			12,784
Minority interest		-		-		-			-			26			(44	)		(18	)
Income taxes (benefits)		632		53		103			(12	)		(2,657	)		(82	)		(1,963	)
Tax-equivalent adjustment		10		-		19			1			24			(54	)		-
Net income (loss)		1,117		98		209			(21	)		(4,133	)		(6,185	)		(8,915	)
Dividends on preferred stock		-		-		-			-			193			-			193
Net income (loss) available to common stockholders	$	1,117		98		209			(21	)		(4,326	)		(6,185	)		(9,108	)
Lending commitments	$	133,201		6,915		113,559			1,544			543			-			255,762
Average loans, net		319,574		23,151		106,642			2,881			24,486			-			476,734
Average core deposits	$	290,381		17,559		31,682			48,647			2,401			-			390,670

96

	Three Months Ended June 30, 2007
					Corporate									Net Merger-
					and									Related and
	General		Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank		Management		Bank			Management			Parent			Expenses (b)			Consolidated
CONSOLIDATED
Net interest income (a)	$	3,372		182		773			260			(100	)		(38	)		4,449
Fee and other income		935		202		1,522			1,536			45			-			4,240
Intersegment revenue		56		3		(50	)		(11	)		2			-			-
Total revenue (a)		4,363		387		2,245			1,785			(53	)		(38	)		8,689
Provision for credit losses		154		2		(2	)		-			25			-			179
Noninterest expense		1,922		244		1,020			1,294			378			32			4,890
Minority interest		-		-		-			-			139			-			139
Income taxes (benefits)		824		51		437			179			(339	)		(12	)		1,140
Tax-equivalent adjustment		10		-		11			-			17			(38	)		-
Net income (loss)	$	1,453		90		779			312			(273	)		(20	)		2,341
Lending commitments	$	129,851		6,892		115,430			1,169			569			-			253,911
Average loans, net		291,607		21,056		76,744			1,663			30,187			-			421,257
Average core deposits	$	290,455		17,466		36,713			31,221			2,641			-			378,496

	Six Months Ended June 30, 2008
														Goodwill
														Impairment,
					Corporate									Net Merger-
					and									Related and
	General		Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank		Management		Bank			Management			Parent			Expenses (b)			Consolidated
CONSOLIDATED
Net interest income (a)	$	7,116		384		2,152			589			(1,092	)		(107	)		9,042
Fee and other income		1,980		418		499			4,186			(1,141	)		-			5,942
Intersegment revenue		112		8		(102	)		(18	)		-			-			-
Total revenue (a)		9,208		810		2,549			4,757			(2,233	)		(107	)		14,984
Provision for credit losses		1,488		13		635			-			6,262			-			8,398
Noninterest expense		4,088		499		1,707			4,182			1,197			6,552			18,225
Minority interest		-		-		-			-			224			(87	)		137
Income taxes (benefits)		1,305		108		36			208			(3,697	)		(157	)		(2,197	)
Tax-equivalent adjustment		21		-		40			2			44			(107	)		-
Net income (loss)		2,306		190		131			365			(6,263	)		(6,308	)		(9,579	)
Dividends on preferred stock		-		-		-			-			236			-			236
Net income (loss) available to common stockholders	$	2,306		190		131			365			(6,499	)		(6,308	)		(9,815	)
Lending commitments	$	133,201		6,915		113,559			1,544			543			-			255,762
Average loans, net		315,565		22,758		103,844			2,722			26,446			-			471,335
Average core deposits	$	293,776		17,732		32,652			45,866			2,565			-			392,591

97

	Six Months Ended June 30, 2007
					Corporate									Net Merger-
					and									Related and
	General		Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank		Management		Bank			Management			Parent			Expenses (b)			Consolidated
CONSOLIDATED
Net interest income (a)	$	6,770		362		1,489			519			(116	)		(75	)		8,949
Fee and other income		1,781		398		2,631			3,013			151			-			7,974
Intersegment revenue		102		6		(93	)		(19	)		4			-			-
Total revenue (a)		8,653		766		4,027			3,513			39			(75	)		16,923
Provision for credit losses		301		3		4			-			48			-			356
Noninterest expense		3,787		491		1,931			2,531			729			42			9,511
Minority interest		-		-		-			-			275			-			275
Income taxes (benefits)		1,644		99		742			358			(689	)		(16	)		2,138
Tax-equivalent adjustment		21		-		21			-			33			(75	)		-
Net income (loss)	$	2,900		173		1,329			624			(357	)		(26	)		4,643
Lending commitments	$	129,851		6,892		115,430			1,169			569			-			253,911
Average loans, net		289,985		20,689		75,065			1,609			30,927			-			418,275
Average core deposits	$	287,263		17,368		35,481			31,450			2,346			-			373,908

(a) Tax-equivalent.

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

98

NOTE 8: BASIC AND DILUTED EARNINGS PER COMMON SHARE

     The calculation of basic and diluted earnings per common share for the three and six months ended June 30, 2008 and 2007, is presented below. For the three and six months ended June 30, 2008, options to purchase an average 108 million and 128 million shares, respectively, were anti-dilutive. For the three and six months ended June 30, 2007, options to purchase an average 24 million and 21 million shares, respectively, were anti-dilutive. Accordingly, these anti-dilutive options were excluded in determining diluted earnings per common share in both periods.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In millions, except per share data)	2008			2007		2008			2007
Net income (loss)	$	(8,915	)		2,341		(9,579	)		4,643
Dividends on preferred stock		193			-		236			-
Net income (loss) available to common stockholders	$	(9,108	)		2,341		(9,815	)		4,643
Basic earnings (loss) per common share	$	(4.31	)		1.24		(4.82	)		2.45
Diluted earnings (loss) per common share (a)	$	(4.31	)		1.22		(4.82	)		2.42
Average common shares — basic		2,111			1,891		2,037			1,892
Common share equivalents and unvested restricted stock		8			28		11			30
Average common shares — diluted		2,119			1,919		2,048			1,922

(a) Calculated using average basic common shares in 2008.

99

NOTE 9: INCOME TAXES

     At January 1, 2008, the Company had $2.6 billion of gross unrecognized income tax benefits (“UTBs”), including $1.5 billion of UTBs attributed to income tax on timing differences and $830 million of UTBs, net of deferred federal and state income tax benefits, that would impact the effective tax rate if recognized. The tax on timing difference items relates to SILO leasing transactions as described below, for which the period of recognition of income or deductions differs for tax return and financial statement purposes. The income tax liability for the change in the period of deduction would not impact the effective income tax rate.

     A reconciliation of the change in the UTB balance from January 1, 2008 to June 30, 2008, is presented below.

													Unrecognized
													Income Tax
							Gross			Deferred			Benefits, Net
	Federal,			Accrued			Unrecognized			Federal and			of Deferred
	State and			Interest and			Income Tax			State Income			Federal and
(In millions)	Foreign Tax			Penalties			Benefits			Tax Benefits			State Benefits
Balance at January 1, 2008	$	2,217			425			2,642			(257	)		2,385
Additions for tax positions related to the current year		32			-			32			(11	)		21
Additions for tax positions related to prior years		1,622			461			2,083			(169	)		1,914
Reduction for tax positions related to prior years		(3	)		-			(3	)		1			(2	)
Reductions for tax positions related to acquired entities in prior years, offset to goodwill		-			(4	)		(4	)		(1	)		(5	)
Reductions related to settlements with taxing authorities		(3	)		-			(3	)		-			(3	)
Balance at June 30, 2008		3,865			882			4,747			(437	)		4,310
Less: tax attributable to timing items included above		(3,050	)		-			(3,050	)		-			(3,050	)
Less: UTBs included above that relate to acquired entities that would impact goodwill if recognized by December 31, 2008		(78	)		(9	)		(87	)		25			(62	)
Total UTBs that, if recognized, would impact the effective income tax rate as of June 30, 2008	$	737			873			1,610			(412	)		1,198

     On April 29, 2008, the U.S. Court of Appeals for the Fourth Circuit issued an opinion in the matter of BB&T Corporation v. United States of America that disallowed tax benefits associated with certain of BB&T’s LILO transactions (see Note 1 for a more detailed description of these leasing transactions). Although the BB&T decision involved LILOs, the Company believes some aspects of the decision could be extended to SILO transactions. Subsequently, on May 28, 2008, the United States District Court for the Northern District of Ohio issued an adverse decision regarding a SILO transaction entered into by two other large financial institutions. While the Company continues to believe its SILO transactions comply with applicable laws, under the principles established by FIN 48, the Company increased its projected December 31, 2008 UTBs by approximately $1.7 billion as a result of applying these decisions to the Company’s SILO transactions. Of the total increase, approximately $1.4 billion represents the tax on timing differences that will impact deferred income tax on the balance sheet, in accordance with the applicable accounting for leveraged leases. The remaining $300 million will impact income tax expense, of which $263 million was recorded through June 30, 2008.

     The IRS is currently examining the Company for tax years 2003 through 2005, certain non-consolidated subsidiaries for tax years 2001 through 2006 and A.G. Edwards for the period ending October 1, 2007. The Company and its subsidiaries are currently subject to examination by various state, local and foreign taxing authorities. While one or more of these examinations may be concluded by year end, management does not believe that a significant impact to the UTB balance will occur.

     With few exceptions, the Company is no longer subject to state, local or foreign income tax examinations by taxing authorities for years before 2000. The expiration of statutes of limitations for various jurisdictions is expected to reduce the UTB balance by an insignificant amount during the remainder of 2008.

     Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to uncertain income tax positions. On August 6, 2008, the IRS announced a settlement initiative related to SILO transactions. Management is evaluating the offer notification and potential impact to our financial condition and results of operations. In the event that the Company were to accept the terms of the offer, management estimates a decrease to the December 31, 2008 UTB balance that would impact the effective income tax rate, pursuant to FIN 48, of between zero and $150 million. The full potential impact (of which the effect on the UTB is only a part), such as the impact of applying FSP 13-2 and lease termination costs, is under evaluation. Management has not yet decided whether the Company will accept the offer. The settlement initiative does not impact the Company’s LILO transactions, which were settled with the IRS in 2004. At June 30, 2008, management had identified no other potential subsequent events that are expected to have a significant impact on the UTB balance during the remainder of 2008.

100

NOTE 10: DERIVATIVES

DERIVATIVES USED FOR RISK MANAGEMENT

     The Company may designate a derivative as either an accounting hedge of the fair value of a recognized fixed rate asset or liability or an unrecognized firm commitment (“fair value” hedge), an accounting hedge of a forecasted transaction or of the variability of future cash flows of a floating rate asset or liability (“cash flow” hedge), or a foreign currency fair value or cash flow hedge (“foreign currency” hedge). Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded as other fee income in the results of operations. To the extent of the effectiveness of a hedge, changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income, net of income taxes. For all hedge relationships, ineffectiveness resulting from differences between the changes in fair value or cash flows of the hedged item and changes in fair value of the derivative are recognized as other fee income in the results of operations. Net interest settlements on derivatives designated as fair value or cash flow hedges are treated as an adjustment to the interest income or interest expense of the hedged assets or liabilities.

     Concurrent with entering into a transaction that qualifies as an accounting hedge, the Company formally documents the hedge relationship, the risk management objective and the strategy for entering into the hedge. This process and documentation include identification of the hedging instrument, hedged item, risk being hedged and the methodology for assessing effectiveness and measuring ineffectiveness.

     For cash flow hedges, the designated hedged risk is primarily the risk of changes in cash flows attributable to changes in the benchmark interest rate of the hedged item or forecasted transactions. For cash flow hedges, the Company uses regression analysis to make the initial assessment of the expectation of hedge effectiveness, and for each monthly period thereafter to reassess that the hedging relationship is expected to be highly effective during the period designated as being hedged. The Company also uses regression analysis to perform the retrospective evaluation of whether the derivative was effective during the hedged period. The regression analysis includes an evaluation of the quantitative measures of regression necessary to validate the conclusion of high effectiveness. The Company uses the hypothetical derivative method of measuring the hedge ineffectiveness, which is recorded on a monthly basis. Forward purchase commitments of loans and securities available for sale are considered all-in-one hedges for which the prospective and retrospective evaluations are performed through matching terms at inception and on a monthly basis.

     For fair value hedges, the designated hedged risk is primarily the risk of changes in fair value attributable to changes in the benchmark interest rate of the hedged item or transactions. For fair value hedges, the Company assesses the expectation of effectiveness at the inception of the hedge and at each monthly period thereafter by analyzing the price sensitivity of the hedging instrument relative to that of the hedged item for changes in fair value attributable to the hedged risk. On a monthly basis, the Company uses the cumulative dollar-offset approach to validate the effectiveness of the hedge on a retrospective basis. The Company measures ongoing ineffectiveness for fair value hedges by comparing the changes in fair value of the hedging instrument to the changes in fair value of the hedged item attributable to the hedged risk. Fair value hedges of warehoused residential mortgage loans are designated and de-designated on a daily basis, and the frequency of the prospective, retrospective and actual ineffectiveness tests follows the hedge period. Forward sale commitments of securities available for sale share the same issuer, coupon rate and contractual maturity date as the hedged item; therefore, the prospective and retrospective evaluations are performed through matching terms at inception and on a monthly basis.

     The Company discontinues hedge accounting prospectively when either it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative expires or is sold, terminated or exercised; the derivative is de-designated because it is unlikely that a forecasted transaction will occur; or management determines designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the derivative is either terminated or reclassified as a trading account asset or liability. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted as an adjustment to yield over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transaction are still expected to occur, unrealized gains and losses accumulated in other comprehensive income are included in the results of operations in the same period when the results of operations are also affected by the hedged cash flow. The unrealized gains and losses are recognized in the results of operations immediately if the cash flow hedge was discontinued because a forecasted transaction is not expected to occur. For the six months ended June 30, 2008, losses of $314,000 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 includes the time value of options. In addition, net interest income in the six months ended June 30, 2008, was decreased by $31 million, representing ineffectiveness of cash flow hedges caused by differences between the critical terms of the derivative and the hedged item, primarily differences in reset dates.

     Commitments to purchase certain securities or loans and certain commitments to sell loans are derivatives. At inception, these commitments may be designated in a hedge relationship; otherwise, they are recorded as either trading derivatives or economic hedges depending upon their purpose. In the normal course of business the Company enters into contracts that contain a derivative that is embedded in the financial instrument. If applicable, an embedded derivative is separated from the host contract and can be designated in a hedge relationship; otherwise, it is recorded as a freestanding derivative and recorded as either a trading derivative or an economic hedge depending upon its purpose. The Company enters into credit derivative agreements in connection with altering the risk profile of certain loans or pools of loans in the Company’s loan portfolio. These credit derivatives do not meet the criteria for designation as an accounting hedge and are recorded as either trading derivatives or economic hedges depending upon their purpose. The Company enters into interest rate lock commitments as part of its commercial and consumer mortgage lending activities. These loan commitments are initially recorded at fair value. Subsequent adjustments in the value of the loan commitment are primarily related to changes in interest rates, changes in the probability that a commitment will be exercised and the passage of time. The estimate of fair value specifically excludes the value of servicing cash flows and excess servicing.

     Derivatives used for risk management activity at June 30, 2008, are presented on the following page.

101

	June 30, 2008
												Average
		Notional		Gross Unrealized								Maturity in
(In millions)	Hedged items or Transactions	Amount		Gains		Losses (b)			Equity (c)			Years (d)
ASSET HEDGES (a)
Cash flow hedges
Interest rate swaps-receive fixed	First forecasted interest receipts on commercial loans
Pay 1 month LIBOR swaps	1 month LIBOR risk	$	2,998		82		-			51			2.62
Pay 3 month LIBOR swaps	1 month LIBOR risk		11,510		320		-			199			3.61
Purchased interest rate floors-3 month LIBOR	First forecasted interest receipts on 1 month LIBOR commercial loans		9,000		-		(56	)		(35	)		1.99
Call options on Eurodollar futures	First forecasted interest payments on 1 month LIBOR commercial loans		36,250		-		(10	)		-			0.25
Fair value hedges
Interest rate swaps-pay fixed/ receive LIBOR	Individual fixed rate debt securities classified as available for sale		732		1		(18	)		-			11.06
Foreign currency forwards	Currency risk associated with foreign currency denominated securities classified as available for sale		9,714		1		-			-			0.04
Total asset hedges		$	70,204		404		(84	)		215			1.21
LIABILITY HEDGES (a)
Cash flow hedges
Interest rate swaps-pay fixed	First forecasted interest payments on long-term debt
Receive 1 month LIBOR swaps	1 month LIBOR risk		2,144		2		(187	)		(114	)		9.66
Receive 3 month LIBOR swaps	1 month LIBOR risk		6,503		-		(174	)		(108	)		2.73
Receive 3 month LIBOR swaps	3 month LIBOR risk		8,225		70		-			43			2.21
Receive 6 month LIBOR swaps	6 month LIBOR risk		7		-		-			-			4.97
Eurodollar futures	1 day LIBOR risk associated with the proceeds from first forecasted issuance of repurchase agreements that are part of a rollover strategy		10,000		12		(1	)		7			0.25
Eurodollar futures	First forecasted interest payments on 3 month LIBOR long-term debt		137,000		252		(15	)		148			0.25
Fair value hedges
Interest rate swaps-receive fixed/ pay floating (e)	Individual fixed rate long-term debt issuances		35,144		760		(511	)		-			9.70
Foreign currency forwards	Currency risk associated with foreign currency denominated repurchase agreements and long-term debt		18,369		4		(1	)		-			0.13
Currency swaps (e)	Currency risk associated with individual foreign currency denominated long-term debt		1,055		151		-			-			4.81
Total liability hedges			218,447		1,251		(889	)		(24	)		2.02
Total		$	288,651		1,655		(973	)		191			-

102

(a) Includes only derivative financial instruments related to interest rate risk and foreign currency risk management activities that have been designated and accounted for as accounting hedges.

(b) Represents the fair value of derivative financial instruments less accrued interest receivable or payable less unamortized premium or discount.

(c) At June 30, 2008, the net unrealized gain on derivatives included in accumulated other comprehensive income, which is a component of stockholders’ equity, was $23 million, net of income taxes. Of this net of tax amount, a $191 million gain represents the effective portion of the net gains (losses) on interest rate derivatives that qualify as cash flow hedges and a $168 million loss relates to terminated and/or redesignated derivatives. At June 30, 2008, $2 million of net gains, 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 17.84 years.

(d) Estimated maturity approximates average life.

(e) At June 30, 2008, such swaps are denominated in U.S. dollars, Euros, Pounds Sterling and Australian dollars in the notional amounts of $27.6 billion, $4.3 billion, $2.9 billion and $1.4 billion, respectively, and the hedged risk is the benchmark interest rate.

103

     Expected maturities of risk management derivative financial instruments at June 30, 2008, are presented below.

	June 30, 2008
	1 Year			1-2			2-5			5-10			After 10
(In millions)	or Less			Years			Years			Years			Years			Total
CASH FLOW ASSET HEDGES
Notional amount — swaps—receive fixed	$	676			93			12,999			740			-			14,508
Notional amount — other	$	36,250			5,000			4,000			-			-			45,250
Weighted average receive rate (a)		5.23	%		5.26			5.11			4.71			-			5.10
Weighted average pay rate (a)		2.65	%		2.48			2.71			2.91			-			2.72
Unrealized gain (loss)	$	1			(20	)		345			10			-			336
FAIR VALUE ASSET HEDGES
Notional amount — swaps—pay fixed	$	-			-			215			181			336			732
Notional amount — other	$	9,704			10			-			-			-			9,714
Weighted average receive rate (a)		-	%		-			1.65			1.65			1.69			1.67
Weighted average pay rate (a)		-	%		-			3.39			3.39			3.92			3.63
Unrealized gain (loss)	$	-			-			(5	)		(4	)		(7	)		(16	)
CASH FLOW LIABILITY HEDGES
Notional amount — swaps—pay fixed	$	39			13,390			546			1,553			1,351			16,879
Notional amount — other	$	147,000			-			-			-			-			147,000
Weighted average receive rate (a)		2.27	%		2.78			2.48			2.61			2.53			2.69
Weighted average pay rate (a)		5.84	%		5.27			5.56			5.71			5.95			5.47
Unrealized gain (loss)	$	247			(30	)		(27	)		(101	)		(130	)		(41	)
FAIR VALUE LIABILITY HEDGES
Notional amount — swaps—receive fixed	$	4,925			1,900			6,006			13,145			9,168			35,144
Notional amount — other	$	18,369			-			863			192			-			19,424
Weighted average receive rate (a)		4.27	%		4.78			5.21			4.81			5.17			4.89
Weighted average pay rate (a)		2.84	%		2.72			3.58			3.11			3.92			3.34
Unrealized gain (loss)	$	38			32			179			281			(127	)		403

(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 one-month to six-month LIBOR, Euros, Pounds Sterling, or Australian dollars and they are the pay or receive rates in effect at June 30, 2008.

104

     Activity related to risk management derivative financial instruments for the six months ended June 30, 2008, is presented below.

	June 30, 2008
	Asset			Liability
(In millions)	Hedges			Hedges			Total
Balance, December 31, 2007	$	50,047			152,993			203,040
Additions (a)		97,693			237,161			334,854
Maturities and amortizations (a)		(25,109	)		(87,978	)		(113,087	)
Terminations		(52,175	)		(80,102	)		(132,277	)
Redesignations and transfers to trading account assets		(252	)		(3,627	)		(3,879	)
Balance, June 30, 2008	$	70,204			218,447			288,651

(a) Foreign currency forwards are shown as either net additions or maturities. The foreign currency forwards are primarily short-dated contracts. At maturity of these contracts, a new foreign currency forward is typically executed to hedge the same risk as the maturing contracts.

NOTE 11: GUARANTEES

	June 30, 2008				December 31, 2007
			Maximum				Maximum
	Carrying		Risk of		Carrying		Risk of
(In millions)	Amount		Loss		Amount		Loss
Securities and other lending indemnifications	$	-		48,041		-		59,238
Standby letters of credit		118		32,423		124		29,295
Liquidity agreements		360		29,773		14		36,926
Loans sold with recourse		45		6,111		44		6,710
Residual value guarantees		-		1,315		-		1,220
Written put options		2,373		14,892		2,001		15,273
Contingent consideration		-		14		-		101
Total guarantees	$	2,896		132,569		2,183		148,763

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NOTE 12: FAIR VALUE MEASUREMENTS AND FAIR VALUE OPTION

FAIR VALUE MEASUREMENTS

     The Company adopted SFAS 157, “Fair Value Measurements,” on January 1, 2008. SFAS 157 establishes a framework for measuring fair value, expands disclosures about fair value measurements and provides new income recognition criteria for certain derivative contracts. SFAS 157 nullifies the guidance included in EITF Issue No. 02-3, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities,” that prohibited the recognition of gain or loss at the inception of a derivative contract unless the fair value was based on observable market data. SFAS 157 requires that a fair value measurement reflect assumptions market participants would use in pricing an asset or liability. In addition, SFAS 157 prohibits the use of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market, and requires a company to consider its creditworthiness when valuing derivatives and other liabilities recorded at fair value. The provisions of SFAS 157 are applied prospectively with changes recorded in current earnings, except changes in fair value measurements that result from the initial application of SFAS 157 to existing derivative financial instruments measured under EITF 02-3, existing hybrid financial instruments measured at fair value and block discounts, all of which are recorded as an adjustment to beginning retained earnings on the date of adoption. Accordingly, the Company recorded a cumulative effect adjustment of $61 million ($38 million after-tax) as an increase to beginning retained earnings on January 1, 2008. Additionally, on the date of adoption, the Company recorded net gains in the first quarter 2008 results of continuing operations of $481 million related primarily to a change in methodology used to calculate the fair value of certain investments in private equity funds held in a wholly owned investment company subsidiary, as described in more detail in the Principal Investments section below. Also, BluePoint reflected a significant discount for its nonperformance risk when estimating the fair value of its derivatives under SFAS 157. See “Discontinued Operations” in Note 1 for additional information on BluePoint.

     FASB Staff Position (“FSP”) No. 157-2, “Effective Date of FASB Statement No. 157,” delays the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for items recognized or disclosed at fair value on a recurring basis. Under the provisions of FSP 157-2, the Company has not applied certain provisions of SFAS 157 to non-financial assets, such as real estate owned.

     SFAS 157 defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market, or if none exists, the most advantageous market, for the specific asset or liability at the measurement date (referred to as an exit price). SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy under SFAS 157 are:

     Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

     Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

     Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

     A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. SFAS 157 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

DETERMINATION OF FAIR VALUE

     In determining fair value, the Company uses market prices of the same or similar instruments whenever such prices are available, even in situations where trading volume may be low when compared with prior periods as has been the case during the current market disruption. A fair value measurement assumes that an asset or liability is exchanged in an orderly transaction between market participants, and accordingly, fair value is not determined based upon a forced liquidation or distressed sale. Where necessary, the Company estimates fair value using other market observable data such as prices for synthetic or derivative instruments, market indices, industry ratings of underlying collateral or models employing techniques such as discounted cash flow analyses. The assumptions used in the models, which typically include assumptions for interest rates, credit losses and prepayments, are corroborated by and independently verified against market observable data where possible. Market observable real estate data is used in valuing instruments where the underlying collateral is real estate or where the fair value of an instrument being valued highly correlates to real estate prices. Where appropriate, the Company may use a combination of these valuation approaches.

     Where the market price of the same or similar instruments is not available, the valuation of financial instruments becomes more subjective and involves a high degree of judgment. Where modeling techniques are used, the models are subject to independent validation procedures in accordance with risk management policies and procedures. Further, pricing data is subject to independent verification.

     The following sections describe the valuation methodologies used by the Company to measure classes of financial instruments at fair value and specify the level in the fair value hierarchy where various financial instruments are generally classified. Valuation models, significant inputs to those models and any significant assumptions are included where appropriate.

Derivatives

     The Company enters into both exchange-traded and over-the-counter (“OTC”) derivatives. Exchange-traded derivatives are generally valued using quoted market or exchange prices and are accordingly classified within Level 1 of the fair value hierarchy.

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     The majority of the Company’s derivatives, however, are not listed on an exchange and are instead executed over the counter. As no quoted market prices exist for such instruments, OTC derivatives are valued using internal valuation techniques. Valuation techniques and inputs to internally-developed models depend on the type of derivative and the nature of the underlying rate, price or index upon which the derivative’s value is based. Key inputs can include yield curves, credit curves, foreign-exchange rates, prepayment rates, volatility measurements and correlation of such inputs. Where model inputs can be observed in a liquid market and the model does not require significant judgment, such derivatives are typically classified within Level 2 of the fair value hierarchy. Examples of derivatives within Level 2 include generic interest rate swaps, foreign currency swaps, commodity swaps and option contracts. When instruments are traded in less liquid markets and significant inputs are unobservable, such derivatives are classified within Level 3. Examples of derivatives within Level 3 include complex and highly structured derivatives, credit default swaps referenced to subprime residential mortgage-backed securities (“RMBS”) and long-dated equity options where volatility is not observable.

     Derivatives include accounting hedges, trading derivatives, economic hedges and interest rate locks in the Company’s mortgage business. Accounting hedges are included in other assets or other liabilities. Those derivatives that are held for trading purposes are considered trading derivatives and are included in trading account assets or liabilities. Economic hedges are included in other assets or other liabilities, and interest rate locks are included in other assets.

Securities and Trading Activities

     When available, the Company uses quoted market prices in active markets to determine the fair value of securities. Such instruments are classified within Level 1 of the fair value hierarchy. Examples include exchange-traded equity securities and some highly liquid government securities such as U.S. Treasuries.

     When instruments are traded in secondary markets and quoted market prices do not exist for such securities, the Company generally relies on internal valuation techniques or on prices obtained from independent vendors. The majority of fair values derived using internal valuation techniques are verified against prices obtained from independent vendors. Vendors compile prices from various sources and often apply matrix pricing for similar securities when no price is observable. Securities measured with these internal valuation techniques are generally classified within Level 2 of the hierarchy and often involve using quoted market prices for similar securities, pricing models or discounted cash flow analyses using inputs observable in the market where available. Examples include corporate bonds and U.S. Government agency and Government-sponsored entity mortgage-backed securities and collateralized mortgage obligations.

     Where significant inputs are unobservable in the market due to limited activity or a less liquid market, securities valued using models with such inputs are classified in Level 3 of the fair value hierarchy. Securities classified within Level 3 include subprime RMBS and collateralized debt obligations (“CDOs”) backed by subprime RMBS, which the Company refers to as ABS CDOs. ABS CDOs are valued using the prices of similar instruments, the pricing of completed or pending third party transactions or the pricing of the underlying collateral within the CDO. Where prices are not readily available, management’s best estimate is used. Additional examples of securities classified within Level 3 include certain residual and retained interests in securitizations and collateralized loan obligations (“CLOs”) that are backed by leveraged loans. Subordinated and residual interests and CLOs for which there are no quoted market prices are valued using discounted cash flow analyses with credit losses, prepayments and discount rates as assumptions.

Principal Investments

     With the adoption of SFAS 157, the valuation methodology for investments in the Company’s principal investing business, included in other assets, changed significantly. Prior to adoption, for public equity investments, fair value was based on quoted market prices, net of applicable blockage discounts and other discounts relating to trading restrictions and liquidity. Public equity investments are now valued using quoted market prices and discounts will only be applied when there are trading restrictions that are an attribute of the investment. Accordingly, the Company recorded gains of $28 million after-tax ($45 million pre-tax) as a cumulative effect adjustment to beginning 2008 retained earnings, related to removal of blockage discounts previously applied in determining the fair value of certain public equity investments. These public equity investments are classified within Level 1 of the fair value hierarchy unless adjustments for restrictions are applied, which would result in a classification as either Level 2 or 3.

     Prior to adoption of SFAS 157, investments in non-public securities, both private direct investments and investments in funds, were recorded at the Company’s estimate of fair value, which was generally the original cost basis unless either the investee had raised additional debt or equity capital and the Company believed the transaction, taking into consideration differences in the terms of securities, was a better indicator of fair value; or the Company believed the fair value was less than the carrying amount. Under SFAS 157, private direct investments are valued using metrics such as security prices of comparable public companies, acquisition prices for similar companies and original investment purchase price multiples, while also incorporating a portfolio company’s financial performance and specific risk factors. For certain fund investments, where the best estimates of fair value were primarily determined based upon fund sponsor data, the Company now uses net asset value (“NAV”) provided by the fund sponsor as an appropriate measure of fair value. In some cases, such NAVs require adjustments based on certain unobservable inputs. Due to the absence of quoted market prices and the inherent lack of liquidity for these investments, significant management judgment is required, and as such, non-public securities are classified within Level 3 of the hierarchy. These changes in valuation methodology to reflect an estimated exit price, versus the prior methodology that was based primarily upon initial fair value and fund sponsor data, led to the Company’s recognition of a $466 million pre-tax gain related to adoption of SFAS 157 on January 1, 2008.

107

Mortgage Servicing Rights

     With the adoption of SFAS 156, the Company elected to record a class of originated residential mortgage servicing assets at fair value on an ongoing basis. Mortgage servicing rights (“MSRs”), which are classified in other assets, do not trade in active markets with readily observable prices. Valuations of originated residential MSRs recorded at fair value are estimated using discounted cash flows with prepayment speeds and discount rates as significant assumptions. Accordingly, MSRs are included within Level 3 of the fair value hierarchy. See Note 4 for additional information on MSRs.

Loans and Loans Held For Sale

     The market value of loans and loans held for sale is determined based on quoted market prices for the same or similar loans when such information is available; otherwise the Company uses outstanding investor commitments, discounted cash flow analyses with market assumptions or the fair value of the collateral if the loan is collateral dependent. Loans held for sale are aggregated for purposes of calculating the market value, consistent with the strategy for sale of the loans. Such loans are classified within either Level 2 or Level 3 of the fair value hierarchy. Where assumptions are made using significant unobservable inputs, such loans held for sale are classified as Level 3.

ITEMS MEASURED AT FAIR VALUE ON A RECURRING BASIS

     The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2008, for each of the fair value hierarchy levels.

	June 30, 2008
(In millions)	Level 1		Level 2		Level 3		Netting (b)			Total
ASSETS
Cash trading instruments	$	3,109		29,784		6,209		-			39,102
Derivatives		207		74,461		10,336		(61,517	)		23,487
Total trading account assets		3,316		104,245		16,545		(61,517	)		62,589
Securities		1,305		103,979		8,177		-			113,461
Loans		-		-		18		-			18
Loans held for sale		-		3,307		43		-			3,350
Other assets (a)		700		2,154		3,491		(2,977	)		3,368
Total assets at fair value	$	5,321		213,685		28,274		(64,494	)		182,786
LIABILITIES
Cash trading instruments		4,457		2,878		43		-			7,378
Derivatives		1,113		70,710		11,556		(64,452	)		18,927
Total trading account liabilities		5,570		73,588		11,599		(64,452	)		26,305
Other liabilities (a)		16		1,023		76		(2,977	)		(1,862	)
Total liabilities at fair value	$	5,586		74,611		11,675		(67,429	)		24,443

(a) Other assets and other liabilities include accounting hedges and economic hedges that are entered into for certain risk management purposes. Other assets also include principal investments and mortgage servicing assets carried at fair value.

(b) Derivatives are reported net of cash collateral received and paid, and to the extent the criteria of FIN 39 are met, positions with the same counterparty are netted as a part of a legally enforceable master netting agreement between the Company and the derivative counterparty.

LEVEL 3 ITEMS MEASURED AT FAIR VALUE ON A RECURRING BASIS

     The determination to classify a financial instrument within Level 3 of the fair value hierarchy is based on the significance of the unobservable inputs to the overall fair value measurement. However, in addition to unobservable inputs, the valuation of Level 3 instruments typically includes observable inputs as well. Thus, the gains and losses reflected in the rollforward of balances in the table on the following page include changes in fair value that are due at least partially to observable factors that are part of the valuation methodology. Additionally, the Company uses derivatives classified within Level 1 or 2 of the fair value hierarchy to manage certain risk characteristics of Level 3 financial instruments. Because Level 1 and 2 instruments are not included in this discussion or in the rollforward, gains and losses may appear to reflect a certain degree of volatility when presented exclusive of related Level 1 and 2 derivatives that may be used to offset risk in Level 3 instruments.

     Additionally, certain instruments within Level 3 assets include derivatives related to private label RMBS and certain commercial mortgage-backed securities transactions. Included in derivative assets and liabilities is activity associated with the intermediation of ABS and commercial real estate (“CRE”) CDO securitizations, where the Company purchases credit default protection related to the securitization of specific RMBS and CRE reference obligations and then sells protection on the same exposure to various market participants, resulting in a significant amount of credit default exposure being economically hedged. Of the $10.3 billion of Level 3 derivative assets, $7.8 billion represents credit default exposure that is economically hedged with derivative liabilities on the same reference obligation. The remaining Level 3 derivative assets and liabilities are also subject to the Company’s established risk management practices.

108

     Total Level 3 assets were 4 percent of the Company’s total assets at March 31, 2008, and 3 percent of total assets at June 30, 2008. During the six months ended June 30, 2008, the Company purchased $2.6 billion of RMBS, which were partially offset by transfer of certain securities available for sale from Level 3 to Level 2, as significant inputs to the valuation of such securities became observable.

     The following tables present the changes in the Level 3 assets and liabilities for the three and six months ended June 30, 2008.

	Three Months Ended June 30, 2008
																	Change in
																	unrealized gains
						Included in			Purchases,								(losses) relating
						other			issuances and			Transfers in					to instruments
	Beginning		Included in			comprehensive			settlements,			and/or out			Ending		still held at the
(In millions)	balance		earnings			income (loss)			net			of Level 3			balance		reporting date
ASSETS
Cash trading instruments	$	6,825		(180	)		-			(392	)		(44	)		6,209		(76	)
Securities		9,038		(499	)		(144	)		(243	)		25			8,177		(329	)
Loans		3		(3	)		-			-			18			18		(3	)
Loans held for sale		106		-			-			(63	)		-			43		-
Other assets	$	3,324		99			-			68			-			3,491		144
LIABILITIES
Cash trading instruments	$	55		2			-			(33	)		19			43		1
Derivatives, net (a)		974		160			-			127			(41	)		1,220		(157	)
Other liabilities	$	61		15			-			-			-			76		(14	)

(a)   Total Level 3 derivative exposures are netted for presentation purposes.

	Six Months Ended June 30, 2008
																	Change in
																	unrealized gains
						Included in			Purchases,								(losses) relating
						other			issuances and			Transfers in					to instruments
	Beginning		Included in			comprehensive			settlements,			and/or out			Ending		still held at the
(In millions)	balance		earnings			income (loss)			net			of Level 3			balance		reporting date
ASSETS
Cash trading instruments	$	6,494		(574	)		-			(54	)		343			6,209		(315	)
Securities		9,575		(1,043	)		(434	)		2,314			(2,235	)		8,177		(387	)
Loans		-		(3	)		-			-			21			18		(3	)
Loans held for sale		106		-			-			(63	)		-			43		(1	)
Other assets	$	2,737		723			-			31			-			3,491		697
LIABILITIES
Cash trading instruments	$	29		4			-			(33	)		43			43		1
Derivatives, net (a)		605		65			-			567			(17	)		1,220		(14	)
Other liabilities	$	32		44			-			-			-			76		(39	)

(a)   Total Level 3 derivative exposures are netted for presentation purposes.

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     Gains and losses (realized and unrealized) included in earnings for the three and six months ended June 30, 2008, for Level 3 assets and liabilities reported in net interest income, trading account profits (losses), principal investing, securities gains (losses) and other income are presented in the tables below.

	Three Months Ended June 30, 2008
			Trading
	Net		Account					Securities
	Interest		Profits			Principal		Gains			Other
(In millions)	Income		(Losses)			Investing		(Losses)			Income
Total gains (losses)	$	7		(349	)		73		(501	)		10
Change in unrealized gains (losses) relating to
assets still held at June 30, 2008	$	-		(240	)		34		(328	)		100

	Six Months Ended June 30, 2008
			Trading
	Net		Account					Securities
	Interest		Profits			Principal		Gains			Other
(In millions)	Income		(Losses)			Investing		(Losses)			Income
Total gains (losses)	$	8		(673	)		561		(1,042	)		136
Change in unrealized gains (losses) relating to
assets still held at June 30, 2008	$	-		(357	)		422		(387	)		261

ITEMS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

     Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value measurement in certain circumstances, for example, when there is evidence of impairment. These instruments are measured at fair value on a nonrecurring basis and include assets such as certain loans held for sale, which are measured at the lower of cost or market value (“LOCOM”), and certain loans that have been deemed impaired.

     Recoveries of previous declines in fair value for certain loans held for sale resulted in a net gain of $183 million, which was included in results of operations for the six months ended June 30, 2008, as the carrying amount increased from $1.5 billion to $1.7 billion. Certain of these positions are economically hedged with derivatives classified as trading account assets.

     When a loan held for investment is deemed impaired, a creditor measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, impairment may be measured based on the fair value of the loan or on the fair value of the underlying collateral if the loan is collateral dependent. Loans deemed to be impaired based on a fair value measurement totaled $3.8 billion with the portion deemed to be impaired included in the allowance for loan losses.

     The Company recorded a $6.1 billion goodwill impairment charge in the second quarter of 2008, which was primarily driven by the decline in the Company’s market capitalization. The decline was a function of both financial services industry-wide and company-specific factors. See Note 3 for additional information on goodwill impairment.

110

     The following table presents financial instruments still held on the balance sheet at June 30, 2008, by level within the fair value hierarchy for which a nonrecurring change in fair value was recorded during the three and six months ended June 30, 2008. Because certain items, such as loans held for sale, are not measured at fair value on a recurring basis, certain carrying amounts may reflect fair value measurements at an earlier interim period and may no longer represent the fair value at June 30, 2008. Additionally, the carrying amount of any loans fully charged off is zero. Other assets include foreclosed properties, and related losses include charge-offs on loans prior to reclassification as foreclosed properties.

									Total gains (losses)
									June 30, 2008
	Fair Value Measurements								Three			Six
									Months			Months
(In millions)	Level 1		Level 2		Level 3		Total		Ended			Ended
ASSETS
Loans	$	-		2,277		1,505		3,782		(972	)		(1,385	)
Loans held for sale		-		1,409		310		1,719		369			183
Goodwill		-		-		4,557		4,557		(6,060	)		(6,060	)
Other assets		3		304		98		405		(78	)		(192	)
LIABILITIES
Other liabilities	$	-		-		-		-		-			-

FAIR VALUE OPTION

     The Company adopted SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” on January 1, 2008. SFAS 159 permits companies to elect to carry certain financial instruments at fair value with corresponding changes in fair value reported in the results of operations. The election to carry an instrument at fair value is made at the individual contract level and can be made only at origination or inception of the instrument, or upon the occurrence of an event that results in a new basis of accounting. The election is irrevocable. On January 1, 2008, the Company recorded a cumulative effect adjustment of $60 million ($38 million after-tax) as a charge to beginning retained earnings as a result of the adoption of SFAS 159.

     The instruments for which the Company elected fair value and the resulting transition adjustment are presented below.

	As of					As of
	January 1,					January 1,
	2008, prior to		Transition			2008, after
	adoption of		adjustment			adoption of
(In millions)	SFAS 159		gain (loss)			SFAS 159
Trading account assets	$	6,807		(60	)		6,747
Loans held for sale		16		-			16
Pretax cumulative effect of adoption of fair value option				(60	)
Income taxes				22
Cumulative effect of adoption of fair value option			$	(38	)

     The total transition adjustment is attributable to certain securities available for sale elected for fair value option and represents the unrealized loss at December 31, 2007, reclassified from accumulated other comprehensive income to retained earnings effective January 1, 2008. The intent of the Company’s election was to provide an alternative to hedge accounting. Following election of the fair value option, these securities available for sale were reclassified to trading account assets as required by SFAS 159. Election of fair value and the consequent move to trading account assets did not change the intent of the Company to hold the elected securities as originally intended when they were reported as securities available for sale. The securities carried at fair value continue to be managed as they had been managed within securities available for sale.

     On January 1, 2008, certain purchased distressed nonperforming residential real estate loans held for sale were also elected to be carried at fair value with corresponding changes in fair value reported in the results of operations. As these loans held for sale were carried at LOCOM prior to adoption and were in a loss position, no transition adjustment was required. This election was intended to decrease earnings volatility.

     As the adoption of SFAS 159 provides the Company with the opportunity to mitigate volatility in earnings caused by measuring related assets and liabilities differently without the need to apply complex hedge accounting provisions, the Company has chosen to elect fair value option for certain financial assets and liabilities on a prospective basis and will continue to evaluate opportunities for election going forward.

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     In the first half of 2008, the Company elected fair value for certain newly originated residential mortgage loans held for sale. These elections were made due to the short holding period of such loans, and accordingly, the Company still owns certain loans held for sale originated prior to adoption of SFAS 159 that are not carried at fair value under the fair value option. Securities elected upon adoption included certain seasoned mortgage-backed securities and were elected due to their predictable price risk as interest rates change, in connection with the Company’s risk management strategy.

     During the second quarter of 2008, the Company elected fair value for certain letters of credit that are hedged with derivative instruments to better reflect the economics of the transactions. These letters of credit are included in trading account assets or liabilities. Additionally, certain residential mortgage loans held for sale carried at fair value were transferred to the loan portfolio, where they continue to be carried at fair value with unrealized gains and losses reported in the results of operations.

     Prospectively, the Company plans to elect fair value for certain newly originated loans and loans held for sale, certain purchased securities and certain debt issuances with related unrealized gains and losses reported in the results of operations.

     The following tables present gains and losses due to changes in fair value for items measured at fair value pursuant to election of the fair value option for the three and six months ended June 30, 2008.

	Three Months Ended June 30, 2008
	Trading
	Profits			Other
(In millions)	(Losses)			Income			Total
Trading account assets	$	(67	)		-			(67	)
Loans		-			(3	)		(3	)
Loans held for sale	$	-			(49	)		(49	)

	Six Months Ended June 30, 2008
	Trading
	Profits			Other
(In millions)	(Losses)			Income			Total
Trading account assets	$	(14	)		-			(14	)
Loans		-			(3	)		(3	)
Loans held for sale	$	-			(5	)		(5	)

     The above amounts do not include interest and dividends earned during the period. Such interest and dividends are recorded in interest income or interest expense on an accrual basis. Additionally, amounts do not reflect associated hedges.

     For the six months ended June 30, 2008, the estimated change in fair value of loans and other receivables for which the fair value option was elected that was attributable to changes in instrument-specific credit risk was insignificant.

     As of June 30, 2008, the aggregate fair value of loans and long-term receivables for which the fair value option was elected was exceeded by the aggregate unpaid contractual principal amount by $26 million. The aggregate fair value of loans carried at fair value that are 90 days or more past due as of June 30, 2008, was $5 million, and the contractual principal amount of such loans exceeded the fair value by $20 million. The aggregate fair value of loans that were in nonaccrual status as of June 30, 2008, was $8 million and the contractual principal amount of such loans exceeded the fair value by an insignificant amount.

     The aggregate carrying amount of items not eligible for the fair value option is $24.6 billion, which represents the Company’s lease financing receivables, which are included in loans on the balance sheet.

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EX-31.A

Exhibit (31)(a)

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

CERTIFICATION

I, Robert K. Steel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 of Wachovia Corporation;

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

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

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

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

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

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

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

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

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

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

Date: August 11, 2008

/s/ Robert K. Steel
Robert K. Steel
Chief Executive Officer

EX-31.B

Exhibit (31)(b)

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

CERTIFICATION

I, Thomas J. Wurtz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 of Wachovia Corporation;

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

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

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

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

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

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

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

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

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

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

Date: August 11, 2008

/s/ Thomas J. Wurtz
Thomas J. Wurtz
Chief Financial Officer

EX-32.A

Exhibit (32)(a)

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

In connection with the Quarterly Report on Form 10-Q of Wachovia Corporation (“Wachovia”) for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert K. Steel, Chief Executive Officer of Wachovia, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Robert K. Steel
Robert K. Steel
Chief Executive Officer

August 11, 2008

EX-32.B

Exhibit (32)(b)

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

In connection with the Quarterly Report on Form 10-Q of Wachovia Corporation (“Wachovia”) for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas J. Wurtz, Chief Financial Officer of Wachovia, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Thomas J. Wurtz
Thomas J. Wurtz
Chief Financial Officer

August 11, 2008