News Release

EX-99.(A) 3 dex99a.htm NEWS RELEASE News Release

Exhibit 99(a)

[WACHOVIA

GRAPHIC]

Contacts:

Mary Eshet 704-383-7777

Christy Phillips 704-383-8178

Investor Contacts:

Alice Lehman 704-374-4139

Ellen Taylor 704-383-1381

Press Release January 16, 2003

WACHOVIA REPORTS 4^th QUARTER GAAP NET INCOME OF 66 CENTS PER SHARE

Full Year 2002 Earnings Were $3.6 Billion, Or $2.60 Per Share

4^th QUARTER 2002 HIGHLIGHTS

•

Quarterly GAAP earnings per share increased 22 percent from fourth quarter 2001.

•

GAAP net income included merger-related and restructuring expenses of $92 million, or $0.06 per share, in the fourth quarter and $243 million, or $0.18, in the full year.

•

Customer satisfaction scores improved for the 15^th consecutive quarter.

•

Florida branch and deposit conversion successfully completed.

•

Average low-cost core deposits increased 16 percent from fourth quarter 2001.

•

Mutual fund assets rose 9 percent to $113 billion; fund family ranks 11^th in the nation compared with 19^th in fourth quarter 2001.

•

Nonperforming assets, including loans held for sale, declined 4 percent from the fourth quarter of 2001 and 7 percent from third quarter 2002.

•

Tier 1 capital ratio improved to 8.23 percent from 7.04 percent in fourth quarter 2001.

Earnings Highlights
	Three Months Ended
	*December 31,*			September 30,	December 31,

(In millions, except per share data)	*2002*			2002	2001

Earnings
Net income available to common stockholders	$	891		913	730
Diluted earnings per common share ^(a)	$	0.66		0.66	0.54

Financial ratios
Return on average common stockholders’ equity		11.07	%	11.63	10.15
Net interest margin		3.86		3.95	3.85
Fee and other income as % of total revenue		43.89	%	42.86	45.33

Capital adequacy ^(b)
Tier 1 capital ratio		8.23	%	8.11	7.04
Total capital ratio		12.04		12.02	11.08
Leverage ratio		6.73	%	6.82	6.19

Asset quality
Allowance as % of nonaccrual and restructured loans		177	%	163	195
Allowance as % of loans, net		1.72		1.81	1.83
Net charge-offs as % of average loans, net		0.52		0.59	0.93
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		1.11	%	1.23	1.13

^(a) Reported diluted earnings per common share included $0.06 per share of merger-related and restructuring expenses in the fourth quarter of 2002. ^(b) The fourth quarter of 2002 is based on estimates.

WACHOVIA REPORTS 4^TH QUARTER 2002 EARNINGS

CHARLOTTE, N.C. – Wachovia Corp. (NYSE:WB) today reported fourth quarter 2002 net income available to common stockholders of $891 million, or $0.66 per share. These earnings included $92 million, or $0.06 per share, of after-tax net merger-related and restructuring expenses. Fourth quarter 2002 results also reflected a lower tax provision due primarily to the recognition of the remaining tax benefit related to the company’s loss on its investment in The Money Store. This tax benefit was fully offset by credit and legal actions initiated in the quarter as part of the company’s ongoing efforts to reduce risk.

Full year 2002 net income available to common stockholders was $3.6 billion, or $2.60 per share. Results in 2002 included $243 million, or $0.18 per share, of after-tax net merger-related and restructuring expenses.

“Our strong fourth quarter performance caps a year of superb execution on our goals. We delivered on all of our promises – we expanded distribution, reduced risk, controlled expenses and built capital, which enabled us to regain a double A (Aa3) Moody’s debt rating,” said Ken Thompson, president and CEO. “Our people have much to be proud of – their great teamwork and dedication helped us meet each merger integration milestone on time and on budget. In fact, we exceeded our merger expense efficiency goal by 23 percent. And through a year of new product rollouts, systems conversion and merger integration, our customer service rankings improved for the 15^th consecutive quarter and we emerged as best-in-class among the major banks in our footprint.

“Each line of business focused on the fundamentals and showed excellent progress against strong economic headwinds,” he added. “Our balanced business model and broad distribution enabled us in 2002 to grow client assets in mutual funds 9 percent, annuities sales 22 percent, and low-cost core deposits 16 percent despite the very difficult economic environment.

“In addition, we are pleased that our improved performance enabled us to increase the dividend an annualized 8 percent. And we’re particularly proud of generating a total return to stockholders of 19.5 percent in 2002, best among the 50 largest U.S. banks.”

Wachovia Corporation
	Three Months Ended
	*December 31,*		September 30,	December 31,

(In millions)		*2002*	2002	2001

Total revenue (Tax-equivalent)	$	4,507	4,410	4,544
Provision for loan losses		308	435	381
Noninterest expense		3,042	2,945	3,030
Net income available to common stockholders		891	913	730
Average loans, net		153,036	151,676	162,839
Average core deposits	$	171,000	167,452	161,043

Average loans in the fourth quarter of 2002 were $153 billion, up modestly from the previous quarter and down from the fourth quarter of 2001, reflecting higher consumer loan balances dampened by continued lower corporate loan demand. Average loans declined $9.8 billion from the previous year due to loan sales and securitizations, transfers to loans held for sale, and weak commercial loan demand. Average core deposits increased 2 percent from the previous quarter and 6 percent from the previous year to $171 billion, while average low-cost core deposits increased 4 percent from the previous quarter and 16 percent from the previous year to $124 billion.

WACHOVIA REPORTS 4^TH QUARTER 2002 EARNINGS

Fourth quarter 2002 net charge-offs declined 11 percent from the third quarter of 2002 and 47 percent from the fourth quarter of 2001 to $199 million, or 0.52 percent of average net loans. Total nonperforming assets including loans held for sale declined 7 percent from the third quarter of 2002 and 4 percent from the fourth quarter of 2001 to $1.9 billion in the fourth quarter of 2002. In the full year of 2002, net charge-offs were $1.1 billion, or 0.73 percent of average net loans.

Lines of Business

General Bank

General Bank Highlights
	Three Months Ended
	*December 31,*		September 30,	December 31,

(In millions)	*2002*		2002	2001

Total revenue (Tax-equivalent)	$	2,378	2,288	2,262
Provision for loan losses		144	114	130
Noninterest expense		1,318	1,256	1,239
Segment earnings		581	583	568
Average loans, net		106,081	101,429	97,054
Average core deposits		144,252	141,861	133,976
Economic capital, average	$	5,531	5,520	5,346

The General Bank includes retail, small business and commercial customers. General Bank revenue increased 4 percent from the third quarter of 2002 and 5 percent from the fourth quarter a year ago. Key factors included solid growth in core deposits and residential mortgage-related revenues, investment sales through the branch system and continued strong debit card sales volume. Expenses rose largely due to higher variable compensation, technology and infrastructure upgrades, and nonrecurring personnel expenses. Average core deposits increased 2 percent from the third quarter of 2002 and 8 percent from the prior year. The increase in average low-cost core deposits was particularly strong at 4 percent from the prior quarter and 21 percent from the prior year. Average loans grew 5 percent from the third quarter of 2002 and 9 percent from the prior year, reflecting strength in consumer real estate-secured products. The General Bank added 87,000 net new checking accounts since December 31, 2001.

Capital Management

Capital Management Highlights
	Three Months Ended
	*December 31,*		September 30,	December 31,

(In millions)	*2002*		2002	2001

Total revenue (Tax-equivalent)	$	773	754	809
Provision for loan losses		–	–	–
Noninterest expense		627	623	669
Segment earnings		92	83	88
Average loans, net		131	177	337
Average core deposits		1,487	1,314	1,505
Economic capital, average	$	637	624	673

The Capital Management Group (CMG) includes asset management and retail brokerage services. CMG grew fourth quarter 2002 earnings 11 percent from third quarter 2002 and 5 percent from the fourth quarter of 2001 due to its broad product array, multi-distribution channels and tight expense controls despite the weak equities markets.

WACHOVIA REPORTS 4^TH QUARTER 2002 EARNINGS

Annuity sales of $1.5 billion (including record bank annuity sales of $1.1 billion) and strong net mutual fund sales of $5.4 billion in the quarter drove revenue growth. Assets under management at December 31, 2002, were a record $232 billion, up 3 percent from December 31, 2001. Included in assets under management are mutual fund assets of a record $113 billion. The acquisitions of certain assets of E-Risk Services, LLC, a leading agency provider of management liability insurance, and of J.L. Kaplan Associates, LLC, a privately held investment management firm with $3 billion in assets under management, both closed in the fourth quarter of 2002.

Wealth Management

Wealth Management Highlights
	Three Months Ended
	*December 31,*		September 30,	December 31,

(In millions)	*2002*		2002	2001

Total revenue (Tax-equivalent)	$	245	228	230
Provision for loan losses		6	3	4
Noninterest expense		174	163	160
Segment earnings		41	39	42
Average loans, net		9,028	8,854	8,148
Average core deposits		10,339	10,006	9,431
Economic capital, average	$	353	345	318

Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Revenue increased 7 percent from both the third quarter of 2002 and the fourth quarter of 2001, led by strength in net interest income and insurance commissions, which offset soft investment management fees. Average loans grew 2 percent from the third quarter of 2002 and 11 percent year over year, while average core deposits, led by higher money market and checking account balances, rose 3 percent from the third quarter of 2002 and 10 percent from the fourth quarter of 2001. Expenses increased due to higher variable compensation costs and higher overhead expenses related to increased infrastructure investment. Wealth Management assets under management (included in the CMG total) declined 14 percent from December 31, 2001, to $66 billion at December 31, 2002, primarily due to lower equity market valuations year over year.

Corporate and Investment Bank

Corporate and Investment Bank Highlights
	Three Months Ended
	*December 31,*		September 30,	December 31,

(In millions)	*2002*		2002	2001

Total revenue (Tax-equivalent)	$	946	936	1,087
Provision for loan losses		161	317	254
Noninterest expense		535	508	550
Segment earnings		155	67	177
Average loans, net		38,673	40,250	46,235
Average core deposits		13,491	12,832	12,625
Economic capital, average	$	6,747	7,131	8,288

While weak market conditions dampened year over year revenue growth in the Corporate and Investment Bank, revenue grew modestly in the fourth quarter of 2002 compared with the previous quarter due to improved investment banking performance that resulted in 7 percent growth in fee income. Higher net principal investing losses more than offset

WACHOVIA REPORTS 4^TH QUARTER 2002 EARNINGS

lower trading account losses in the quarter. The increase in expense from the previous quarter reflected severance expenses and higher incentive payments tied to higher revenue. The decline in expense from the fourth quarter of 2001 reflected reductions in personnel. Average loans declined due to weak overall loan demand.

Outlook

“While economic growth in 2003 may continue to be somewhat subdued, we expect some improvement over 2002,” said Thompson. “For our industry, we expect diminished credit problems and modestly better conditions in the financial markets. That bodes well for our customers, and we are well positioned to meet all of their needs. We feel very confident about our prospects in 2003.”

***

Wachovia Corporation (NYSE:WB), created through the September 1, 2001, merger of First Union and Wachovia, had assets of $342 billion and stockholders’ equity of $32 billion at December 31, 2002. Wachovia is a leading provider of financial services to retail, brokerage and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices under the First Union and Wachovia names in 11 East Coast states and Washington, D.C., and offers full-service brokerage with offices in 49 of the 50 states. Global services are provided through more than 30 international offices. Online banking and brokerage products and services are available through wachovia.com.

Earnings Conference Call and Supplemental Materials

Wachovia President and CEO Ken Thompson and CFO Bob Kelly will review Wachovia’s fourth quarter 2002 results in a conference call and audio webcast beginning at 11 a.m. Eastern Time today. Supplemental materials relating to fourth quarter results are available on the Internet at wachovia.com/investor, and investors are encouraged to access these materials in advance of the conference call.

Webcast Instructions: To gain access to the webcast, which will be “listen-only,” go to wachovia.com/investor and click on the link “Wachovia Fourth Quarter Earnings Audio Webcast.” In order to listen to the webcast, you will need to download either Real Player or Media Player.

Teleconference Instructions: The telephone number for the conference call is 1-888-889-1954 for U.S. callers or 212-287-1616 for international callers. You will be asked to tell the answering coordinator your name and the name of your firm. Mention the conference Access Code: Kelly.

Replay: Thursday, January 16 at 2 p.m. through 5 p.m., Friday, February 14. Replay telephone number is 402-280-9967.

***

This news release may contain various forward-looking statements. A discussion of various factors that could cause Wachovia Corporation’s actual results to differ materially from those expressed in such forward-looking statements is included in Wachovia’s filings with the Securities and Exchange Commission, including its Current Report on Form 8-K dated January 16, 2003.

WACHOVIA CORPORATION AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS

(Unaudited)

	*2002*							2001
	*Fourth*			Third	Second	First		Fourth
(Dollars in millions, except per share data)	*Quarter*			Quarter	Quarter	Quarter		Quarter

EARNINGS SUMMARY
Net interest income (Tax-equivalent)	$	2,529		2,520	2,515	2,477		2,484
Fee and other income		1,978		1,890	2,110	2,027		2,060

Total revenue (Tax-equivalent)		4,507		4,410	4,625	4,504		4,544
Provision for loan losses		308		435	397	339		381
Other noninterest expense		2,750		2,686	2,622	2,609		2,691
Merger-related and restructuring expenses		145		107	143	(8	)	88
Goodwill and other intangible amortization		147		152	161	168		251

Total noninterest expense		3,042		2,945	2,926	2,769		3,030

Income before income taxes (Tax-equivalent)		1,157		1,030	1,302	1,396		1,133
Income taxes (Tax-equivalent)		262		114	447	483		397

Net income		895		916	855	913		736
Dividends on preferred stock		4		3	6	6		6

Net income available to common stockholders	$	891		913	849	907		730

Diluted earnings per common share	$	0.66		0.66	0.62	0.66		0.54
Return on average common stockholders' equity		11.07	%	11.63	11.52	12.74		10.15
Return on average assets		1.08	%	1.13	1.09	1.17		0.91

ASSET QUALITY
Allowance as % of loans, net		1.72	%	1.81	1.86	1.84		1.83
Allowance as % of nonperforming assets		161		149	150	162		175
Net charge-offs as % of average loans, net		0.52		0.59	0.97	0.83		0.93
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		1.11		1.23	1.24	1.21		1.13

CAPITAL ADEQUACY (a)
Tier I capital ratio		8.23	%	8.11	7.83	7.49		7.04
Total capital ratio		12.04		12.02	11.89	11.56		11.08
Leverage ratio		6.73	%	6.82	6.75	6.51		6.19

OTHER DATA
Average diluted common shares (In millions)		1,360		1,374	1,375	1,366		1,363
Actual common shares (In millions)		1,357		1,373	1,371	1,368		1,362
Dividends paid per common share	$	0.26		0.26	0.24	0.24		0.24
Dividends paid per preferred share		0.04		0.04	0.06	0.06		0.06
Book value per common share		23.63		23.38	22.15	21.04		20.88
Common stock price		36.44		32.69	38.18	37.08		31.36
Market capitalization (In millions)	$	49,461		44,887	52,347	50,716		42,701
Common stock to book price		154	%	140	172	176		150
FTE employees		80,778		80,987	82,686	82,809		84,046
Total financial centers/brokerage offices		3,280		3,342	3,347	3,362		3,434
ATMs		4,560		4,604	4,617	4,618		4,675

(a)

The fourth quarter of 2002 is based on estimates.

WACHOVIA CORPORATION AND SUBSIDIARIES

OTHER FINANCIAL DATA

(Unaudited)

	*2002*							2001
(In millions)	*Fourth* *Quarter*			Third Quarter		Second Quarter	First Quarter	Fourth Quarter
(In millions)	*Fourth* *Quarter*			Third Quarter		Second Quarter	First Quarter	Fourth Quarter

EARNINGS EXCLUDING MERGER-RELATED AND RESTRUCTURING EXPENSES
Net income	$	987		983		944	908	799
Return on average assets		1.19	%	1.21		1.20	1.17	0.99
Return on average common stockholders' equity		12.13		12.44		12.72	12.68	10.77
Overhead efficiency ratio		64.30	%	64.33		60.19	61.66	64.74
Operating leverage	$	36		(267	)	113	125	902

EARNINGS EXCLUDING MERGER-RELATED AND RESTRUCTURING EXPENSES, GOODWILL AND OTHER INTANGIBLE AMORTIZATION
Net income	$	1,070		1,081		1,047	1,016	980
Dividend payout ratio on common shares		33.33	%	33.33		31.58	32.43	33.80
Return on average tangible assets		1.34		1.39		1.39	1.36	1.27
Return on average tangible common stockholders' equity		21.52		22.84		24.66	25.30	23.56
Overhead efficiency ratio		61.04	%	60.87		56.72	57.93	59.22
Operating leverage	$	30		(275	)	105	42	1,036

OTHER FINANCIAL DATA
Net interest margin		3.86	%	3.95		3.97	3.91	3.85
Fee and other income as % of total revenue		43.89		42.86		45.63	45.00	45.33
Effective income tax rate		18.39		6.20		31.46	32.12	31.91
Tax rate (tax-equivalent) (a)		22.50	%	11.20		34.27	34.60	35.04

AVERAGE BALANCE SHEET DATA
Commercial loans, net	$	94,854		96,552		98,303	99,489	102,230
Consumer loans, net		58,182		55,124		56,782	57,575	60,609
Loans, net		153,036		151,676		155,085	157,064	162,839
Earning assets		260,968		254,673		253,679	254,739	257,577
Total assets		329,960		321,511		314,714	315,322	319,221
Core deposits		171,000		167,452		164,781	162,812	161,043
Total deposits		187,704		180,077		178,196	178,509	179,971
Interest-bearing liabilities		232,024		224,170		223,812	227,365	231,742
Stockholders' equity	$	31,946		31,103		29,576	28,903	28,540

PERIOD-END BALANCE SHEET DATA
Commercial loans, net	$	98,905		101,931		102,780	104,883	106,308
Consumer loans, net		64,192		55,611		56,020	57,411	57,493
Loans, net		163,097		157,542		158,800	162,294	163,801
Goodwill and other intangible assets
Goodwill		10,880		10,810		10,728	10,728	10,616
Deposit base		1,225		1,363		1,508	1,661	1,822
Customer relationships		239		222		229	237	244
Tradename		90		90		90	90	90
Total assets		341,839		333,880		324,679	319,853	330,452
Core deposits		175,743		173,697		166,779	165,759	169,310
Total deposits		191,518		187,785		180,663	180,033	187,453
Stockholders' equity	$	32,078		32,105		30,379	28,785	28,455

(a)

The tax-equivalent tax rate applies to fully tax-equivalized revenues.

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	*2002*									2001
	*Fourth*			Third		Second		First		Fourth
(In millions, except per share data)	*Quarter*			Quarter		Quarter		Quarter		Quarter

INTEREST INCOME
Interest and fees on loans	$	2,538		2,558		2,563		2,637		2,970
Interest and dividends on securities		978		935		906		856		876
Trading account interest		158		179		173		155		166
Other interest income		203		240		252		255		299

Total interest income		3,877		3,912		3,894		3,903		4,311

INTEREST EXPENSE
Interest on deposits		832		847		836		915		1,116
Interest on short-term borrowings		295		310		300		286		372
Interest on long-term debt		280		289		297		276		391

Total interest expense		1,407		1,446		1,433		1,477		1,879

Net interest income		2,470		2,466		2,461		2,426		2,432
Provision for loan losses		308		435		397		339		381

Net interest income after provision for loan losses		2,162		2,031		2,064		2,087		2,051

FEE AND OTHER INCOME
Service charges		421		432		420		425		426
Other banking fees		236		232		241		236		246
Commissions		473		458		481		464		448
Fiduciary and asset management fees		439		427		466		477		478
Advisory, underwriting and other investment banking fees		182		143		192		136		157
Trading account profits (losses)		(42	)	(71	)	33		104		66
Principal investing		(105	)	(29	)	(42	)	(90	)	(21	)
Security gains (losses)		46		71		58		(6	)	(16	)
Other income		328		227		261		281		276

Total fee and other income		1,978		1,890		2,110		2,027		2,060

NONINTEREST EXPENSE
Salaries and employee benefits		1,681		1,588		1,665		1,663		1,663
Occupancy		202		195		194		195		210
Equipment		255		234		231		226		247
Advertising		16		20		25		19		21
Communications and supplies		143		136		132		134		142
Professional and consulting fees		126		111		96		88		113
Goodwill and other intangible amortization		147		152		161		168		251
Merger-related and restructuring expenses		145		107		143		(8	)	88
Sundry expense		327		402		279		284		295

Total noninterest expense		3,042		2,945		2,926		2,769		3,030

Income before income taxes		1,098		976		1,248		1,345		1,081
Income taxes		203		60		393		432		345

Net income		895		916		855		913		736
Dividends on preferred stock		4		3		6		6		6

Net income available to common stockholders	$	891		913		849		907		730

PER COMMON SHARE DATA
Basic earnings	$	0.66		0.67		0.62		0.67		0.54
Diluted earnings		0.66		0.66		0.62		0.66		0.54
Cash dividends	$	0.26		0.26		0.24		0.24		0.24
AVERAGE COMMON SHARES
Basic		1,350		1,362		1,360		1,355		1,352
Diluted		1,360		1,374		1,375		1,366		1,363

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Years Ended December 31,
(In millions, except per share data)	*2002*			2001

INTEREST INCOME
Interest and fees on loans	$	10,296		10,537
Interest and dividends on securities		3,675		3,534
Trading account interest		665		760
Other interest income		950		1,269

Total interest income		15,586		16,100

INTEREST EXPENSE
Interest on deposits		3,430		4,744
Interest on short-term borrowings		1,191		1,736
Interest on long-term debt		1,142		1,845

Total interest expense		5,763		8,325

Net interest income		9,823		7,775
Provision for loan losses		1,479		1,947

Net interest income after provision for loan losses		8,344		5,828

FEE AND OTHER INCOME
Service charges		1,698		1,361
Other banking fees		945		806
Commissions		1,876		1,568
Fiduciary and asset management fees		1,809		1,643
Advisory, underwriting and other investment banking fees		653		492
Trading account profits		24		344
Principal investing		(266	)	(707	)
Security gains (losses)		169		(67	)
Other income		1,097		856

Total fee and other income		8,005		6,296

NONINTEREST EXPENSE
Salaries and employee benefits		6,597		5,810
Occupancy		786		730
Equipment		946		879
Advertising		80		66
Communications and supplies		545		480
Professional and consulting fees		421		359
Goodwill and other intangible amortization		628		523
Merger-related and restructuring expenses		387		106
Sundry expense		1,292		878

Total noninterest expense		11,682		9,831

Income before income taxes		4,667		2,293
Income taxes		1,088		674

Net income		3,579		1,619
Dividends on preferred stock		19		6

Net income available to common stockholders	$	3,560		1,613

PER COMMON SHARE DATA
Basic earnings	$	2.62		1.47
Diluted earnings		2.60		1.45
Cash dividends	$	1.00		0.96
AVERAGE COMMON SHARES
Basic		1,356		1,096
Diluted		1,369		1,105

WACHOVIA CORPORATION AND SUBSIDIARIES

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

(Unaudited)

	*2002*					2001
	*Fourth*		Third	Second	First	Fourth
(In millions)	*Quarter*		Quarter	Quarter	Quarter	Quarter

ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and agricultural	$	56,501	57,899	57,984	60,385	61,258
Real estate—construction and other		6,849	7,558	8,035	8,137	7,969
Real estate—mortgage		16,655	16,967	17,349	17,186	17,234
Lease financing		22,667	22,616	22,044	22,223	21,958
Foreign		6,425	6,992	7,241	6,920	7,653

Total commercial		109,097	112,032	112,653	114,851	116,072

CONSUMER
Real estate—mortgage		24,979	17,527	19,803	20,901	22,139
Installment loans		38,817	37,889	35,940	36,073	34,666
Vehicle leasing		80	43	168	345	618

Total consumer		63,876	55,459	55,911	57,319	57,423

Total loans		172,973	167,491	168,564	172,170	173,495
Unearned income		9,876	9,949	9,764	9,876	9,694

Loans, net (on-balance sheet)	$	163,097	157,542	158,800	162,294	163,801


MANAGED PORTFOLIO (a)

COMMERCIAL
On-balance sheet loan portfolio	$	109,097	112,032	112,653	114,851	116,072
Securitized loans—off-balance sheet		2,218	2,288	2,318	5,816	5,827
Loans held for sale included in other assets		1,140	1,271	779	962	1,478

Total commercial		112,455	115,591	115,750	121,629	123,377

CONSUMER
Real estate—mortgage
On-balance sheet loan portfolio		24,979	17,527	19,803	20,901	22,139
Securitized loans—off-balance sheet		325	397	—	—	—
Securitized loans included in securities		6,223	7,268	5,761	5,219	5,344
Loans held for sale included in other assets		2,720	2,473	1,387	1,554	2,420

Total real estate—mortgage		34,247	27,665	26,951	27,674	29,903

Installment loans
On-balance sheet loan portfolio		38,817	37,889	35,940	36,073	34,666
Securitized loans—off-balance sheet		13,217	13,164	13,379	13,989	14,095
Securitized loans included in securities		11,093	11,695	8,918	9,230	9,776
Loans held for sale included in other assets		2,152	2,513	6,232	4,615	3,865

Total installment loans		65,279	65,261	64,469	63,907	62,402

Vehicle leasing—on-balance sheet loan portfolio		80	43	168	345	618

Total consumer		99,606	92,969	91,588	91,926	92,923

Total managed portfolio	$	212,061	208,560	207,338	213,555	216,300


SERVICING PORTFOLIO (b)
Commercial	$	59,336	53,611	50,001	47,657	42,210
Consumer	$	2,272	2,490	1,773	1,844	2,900

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

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

WACHOVIA CORPORATION AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS

(Unaudited)

	*2002*									2001
	*Fourth*			Third		Second		First		Fourth
(In millions)	*Quarter*			Quarter		Quarter		Quarter		Quarter

ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period	$	2,847		2,951		2,986		2,995		3,039
Provision for loan losses relating to loans transferred to other assets or sold		109		211		23		14		3
Provision for loan losses		199		224		374		325		378
Allowance relating to loans acquired, transferred to other assets or sold		(158	)	(315	)	(58	)	(23	)	(47	)
Net charge-offs		(199	)	(224	)	(374	)	(325	)	(378	)

Balance, end of period	$	2,798		2,847		2,951		2,986		2,995

as % of loans, net		1.72	%	1.81		1.86		1.84		1.83

as % of nonaccrual and restructured loans (a)		177	%	163		163		177		195

as % of nonperforming assets (a)		161	%	149		150		162		175

LOAN LOSSES
Commercial, financial and agricultural	$	136		160		319		275		333
Real estate—commercial construction and mortgage		12		5		3		2		2
Real estate—residential mortgage		1		3		1		4		–
Installment loans and vehicle leasing		91		91		86		100		90

Total loan losses		240		259		409		381		425

LOAN RECOVERIES
Commercial, financial and agricultural		24		17		16		36		30
Real estate—commercial construction and mortgage		–		–		2		–		1
Real estate—residential mortgage		1		–		–		–		–
Installment loans and vehicle leasing		16		18		17		20		16

Total loan recoveries		41		35		35		56		47

Net charge-offs	$	199		224		374		325		378

Commercial loans net charge-offs as % of average commercial loans, net (b)		0.53	%	0.61		1.24		0.97		1.19
Consumer loans net charge-offs as % of average consumer loans, net (b)		0.52		0.56		0.48		0.59		0.48
Total net charge-offs as % of average loans, net (b)		0.52	%	0.59		0.97		0.83		0.93

NONPERFORMING ASSETS
Nonaccrual loans
Commercial, financial and agricultural	$	1,269		1,440		1,456		1,371		1,294
Real estate—commercial construction and mortgage		105		137		144		128		87
Real estate—residential mortgage		79		62		60		58		60
Installment loans and vehicle leasing		132		112		145		128		93

Total nonaccrual loans		1,585		1,751		1,805		1,685		1,534
Foreclosed properties (c)		150		156		156		159		179

Total nonperforming assets	$	1,735		1,907		1,961		1,844		1,713

Nonperforming loans included in loans held for sale (d)	$	138		115		108		213		228
Nonperforming assets included in loans and in loans held for sale	$	1,873		2,022		2,069		2,057		1,941

as % of loans, net, and foreclosed properties (a)		1.06	%	1.21		1.23		1.14		1.04

as % of loans, net, foreclosed properties and loans in other assets as held for sale (d)		1.11	%	1.23		1.24		1.21		1.13

Accruing loans past due 90 days	$	304		284		250		275		288

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

(b) Annualized.

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

WACHOVIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	*2002*									2001
(In millions, except per share data)		Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter

ASSETS
Cash and due from banks	$	12,264		11,930		10,668		10,038		13,917
Interest-bearing bank balances		3,512		3,561		2,269		3,356		6,875
Federal funds sold and securities purchased under resale agreements		9,160		7,132		11,541		13,154		13,919

Total cash and cash equivalents		24,936		22,623		24,478		26,548		34,711

Trading account assets		33,155		35,902		34,570		28,227		25,386
Securities		75,804		72,071		60,999		57,382		58,467
Loans, net of unearned income		163,097		157,542		158,800		162,294		163,801
Allowance for loan losses		(2,798	)	(2,847	)	(2,951	)	(2,986	)	(2,995	)

Loans, net		160,299		154,695		155,849		159,308		160,806

Premises and equipment		4,903		5,422		5,494		5,596		5,719
Due from customers on acceptances		1,051		1,080		1,105		888		745
Goodwill		10,880		10,810		10,728		10,728		10,616
Intangible assets		1,554		1,675		1,827		1,988		2,156
Other assets		29,257		29,602		29,629		29,188		31,846

Total assets	$	341,839		333,880		324,679		319,853		330,452

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits		44,640		44,186		39,558		39,323		43,464
Interest-bearing deposits		146,878		143,599		141,105		140,710		143,989

Total deposits		191,518		187,785		180,663		180,033		187,453
Short-term borrowings		47,093		41,146		46,109		46,559		44,385
Bank acceptances outstanding		1,061		1,093		1,110		892		762
Trading account liabilities		16,983		17,760		14,108		10,261		11,437
Other liabilities		13,444		14,233		14,379		13,387		16,227
Long-term debt		39,662		39,758		37,931		39,936		41,733

Total liabilities		309,761		301,775		294,300		291,068		301,997

STOCKHOLDERS' EQUITY
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at December 31, 2002		—		2		5		11		17
Common stock, $3.33¹/3 par value; authorized 3 billion shares, outstanding 1.357 billion shares at December 31, 2002		4,524		4,577		4,570		4,559		4,539
Paid-in capital		18,070		18,233		18,106		17,989		17,911
Retained earnings		7,349		7,221		6,663		6,136		5,551
Accumulated other comprehensive income, net		2,135		2,072		1,035		90		437

Total stockholders' equity		32,078		32,105		30,379		28,785		28,455

Total liabilities and stockholders' equity	$	341,839		333,880		324,679		319,853		330,452

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES (a)

(Unaudited)

	*FOURTH QUARTER 2002*						THIRD QUARTER 2002
(In millions)	*Average Balances*		*Interest Income/ Expense*		*Average Rates Earned/ Paid*		Average Balances		Interest Income/ Expense		Average Rates Earned/ Paid

ASSETS
Interest-bearing bank balances	$	3,416		14	1.59	%	$	2,891		14	1.90	%
Federal funds sold and securities purchased under resale agreements		9,507		74	3.08			10,474		82	3.11
Trading account assets		14,683		178	4.83			14,945		194	5.17
Securities		71,355		1,004	5.63			62,917		961	6.11
Loans
Commercial
Commercial, financial and agricultural		57,108		1,072	7.45			57,571		1,068	7.36
Real estate – construction and other		7,133		68	3.80			7,809		81	4.10
Real estate – mortgage		16,770		214	5.06			17,188		228	5.26
Lease financing		7,112		187	10.53			7,105		189	10.65
Foreign		6,731		58	3.43			6,879		59	3.41

Total commercial		94,854		1,599	6.70			96,552		1,625	6.68

Consumer
Real estate – mortgage		19,295		296	6.12			18,970		294	6.20
Installment loans and vehicle leasing		38,887		656	6.71			36,154		652	7.17

Total consumer		58,182		952	6.51			55,124		946	6.84

Total loans		153,036		2,551	6.63			151,676		2,571	6.74

Other earning assets		8,971		115	5.11			11,770		144	4.86

Total earning assets		260,968		3,936	6.01			254,673		3,966	6.20

Cash and due from banks		10,636						9,955
Other assets		58,356						56,883

Total assets	$	329,960					$	321,511

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts		50,031		171	1.35			49,156		199	1.61
Money market accounts		45,618		252	2.19			43,495		239	2.18
Other consumer time		34,833		331	3.78			36,029		347	3.82
Foreign		8,030		33	1.59			6,491		30	1.84
Other time		8,674		45	2.06			6,134		32	2.07

Total interest-bearing deposits		147,186		832	2.24			141,305		847	2.38
Federal funds purchased and securities sold under repurchase agreements		32,404		238	2.92			31,884		241	3.00
Commercial paper		2,794		6	0.79			2,999		9	1.18
Other short-term borrowings		9,525		51	2.16			9,505		60	2.49
Long-term debt		40,115		280	2.79			38,477		289	3.00

Total interest-bearing liabilities		232,024		1,407	2.41			224,170		1,446	2.56

Noninterest-bearing deposits		40,518						38,772
Other liabilities		25,472						27,466
Stockholders' equity		31,946						31,103

Total liabilities and stockholders' equity	$	329,960					$	321,511

Interest income and rate earned			$	3,936	6.01	%			$	3,966	6.20	%
Interest expense and equivalent rate paid				1,407	2.15					1,446	2.25

Net interest income and margin (b)			$	2,529	3.86	%			$	2,520	3.95	%

(a) Certain amounts presented in periods prior to the fourth quarter of 2002 have been reclassified to conform to the presentation in the fourth quarter of 2002.

(b) The net interest margin includes (in basis points): 42, 38, 39, 47 and 27 in the fourth, third, second and first quarters of 2002 and in the fourth quarter of 2001, respectively, in net interest income from hedge-related derivative transactions.

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES (a)

(Unaudited)

SECOND QUARTER 2002						FIRST QUARTER 2002						FOURTH QUARTER 2001
				Average						Average						Average
		Interest		Rates				Interest		Rates				Interest		Rates
Average		Income/		Earned/		Average		Income/		Earned/		Average		Income/		Earned/
Balances		Expense		Paid		Balances		Expense		Paid		Balances		Expense		Paid

$	2,613		13	2.02	%	$	4,341		22	2.07	%	$	3,333		21	2.50	%
	10,835		85	3.18			12,020		93	3.13			11,784		99	3.32
	15,503		186	4.79			13,954		165	4.77			12,245		175	5.71
	58,282		933	6.40			56,287		884	6.29			55,708		905	6.49
	58,534		1,027	7.03			59,927		1,049	7.10			62,220		1,202	7.67
	8,115		84	4.19			8,126		86	4.28			7,919		101	5.02
	17,310		231	5.36			17,163		238	5.61			17,139		263	6.10
	7,286		193	10.60			7,442		193	10.37			7,578		199	10.51
	7,058		60	3.37			6,831		62	3.71			7,374		81	4.34

	98,303		1,595	6.50			99,489		1,628	6.62			102,230		1,846	7.17

	20,104		318	6.34			21,444		354	6.60			24,032		414	6.90
	36,678		664	7.25			36,131		668	7.49			36,577		724	7.87

	56,782		982	6.93			57,575		1,022	7.16			60,609		1,138	7.49

	155,085		2,577	6.66			157,064		2,650	6.82			162,839		2,984	7.29

	11,361		154	5.42			11,073		140	5.13			11,668		179	6.11

	253,679		3,948	6.23			254,739		3,954	6.26			257,577		4,363	6.74

	10,110						10,553						10,313
	50,925						50,030						51,331

$	314,714					$	315,322					$	319,221

	49,341		183	1.49			48,931		175	1.45			47,527		222	1.85
	40,035		224	2.25			37,589		265	2.86			35,023		282	3.19
	36,956		365	3.96			38,166		399	4.24			40,931		484	4.70
	7,195		33	1.88			7,578		35	1.85			8,603		56	2.58
	6,220		31	1.93			8,119		41	2.09			10,325		72	2.73

	139,747		836	2.40			140,383		915	2.64			142,409		1,116	3.11
	31,894		229	2.88			31,940		211	2.68			33,028		298	3.59
	3,025		8	1.17			3,435		10	1.15			3,709		29	3.07
	10,039		63	2.51			10,550		65	2.51			9,617		45	1.86
	39,107		297	3.04			41,057		276	2.69			42,979		391	3.64

	223,812		1,433	2.57			227,365		1,477	2.63			231,742		1,879	3.22

	38,449						38,126						37,562
	22,877						20,928						21,377
	29,576						28,903						28,540

$	314,714					$	315,322					$	319,221

		$	3,948	6.23	%			$	3,954	6.26	%			$	4,363	6.74	%
			1,433	2.26					1,477	2.35					1,879	2.89

		$	2,515	3.97	%			$	2,477	3.91	%			$	2,484	3.85	%

WACHOVIA CORPORATION AND SUBSIDIARIES

NET INTEREST INCOME SUMMARIES (a)

(Unaudited)

	*YEAR ENDED 2002*						YEAR ENDED 2001
(In millions)	*Average* *Balances*		*Interest* *Income/* *Expense*		*Average* *Rates* *Earned/* *Paid*		Average Balances		Interest Income/ Expense		Average Rates Earned/ Paid

ASSETS
Interest-bearing bank balances	$	3,312		63	1.90	%	$	2,359		92	3.92	%
Federal funds sold and securities purchased under resale agreements		10,702		334	3.13			9,458		400	4.23
Trading account assets		14,774		723	4.89			12,965		782	6.03
Securities		62,253		3,782	6.08			51,681		3,626	7.02
Loans
Commercial
Commercial, financial and agricultural		58,275		4,216	7.23			56,094		4,572	8.15
Real estate—construction and other		7,793		319	4.10			4,726		281	5.95
Real estate—mortgage		17,107		911	5.33			11,466		776	6.77
Lease financing		7,235		762	10.54			6,548		685	10.46
Foreign		6,875		239	3.48			6,109		339	5.55

Total commercial		97,285		6,447	6.63			84,943		6,653	7.83

Consumer
Real estate—mortgage		19,945		1,262	6.33			19,741		1,416	7.17
Installment loans and vehicle leasing		36,967		2,640	7.14			29,164		2,513	8.61

Total consumer		56,912		3,902	6.86			48,905		3,929	8.03

Total loans		154,197		10,349	6.71			133,848		10,582	7.91

Other earning assets		10,790		553	5.12			10,683		777	7.28

Total earning assets		256,028		15,804	6.17			220,994		16,259	7.36

Cash and due from banks		10,313						8,784
Other assets		54,079						40,525

Total assets	$	320,420					$	270,303

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and NOW accounts		49,367		728	1.47			41,979		1,012	2.41
Money market accounts		41,711		980	2.35			23,461		944	4.02
Other consumer time		36,486		1,442	3.95			36,037		1,941	5.39
Foreign		7,323		131	1.78			7,318		294	4.01
Other time		7,285		149	2.04			11,916		553	4.64

Total interest-bearing deposits		142,172		3,430	2.41			120,711		4,744	3.93
Federal funds purchased and securities sold under repurchase agreements		32,031		919	2.87			28,055		1,364	4.86
Commercial paper		3,061		33	1.08			2,912		112	3.84
Other short-term borrowings		9,901		239	2.42			9,719		260	2.68
Long-term debt		39,683		1,142	2.88			38,538		1,845	4.79

Total interest-bearing liabilities		226,848		5,763	2.54			199,935		8,325	4.16

Noninterest-bearing deposits		38,972						30,796
Other liabilities		24,208						19,351
Stockholders' equity		30,392						20,221

Total liabilities and stockholders' equity	$	320,420					$	270,303

Interest income and rate earned			$	15,804	6.17	%			$	16,259	7.36	%
Interest expense and equivalent rate paid				5,763	2.25					8,325	3.77

Net interest income and margin (b)			$	10,041	3.92	%			$	7,934	3.59	%

(a) Certain amounts presented in 2001 have been reclassified to conform to the presentation in 2002.

(b) The net interest margin includes (in basis points) : 41 and 18 for the years ended 2002 and 2001, respectively, in net interest income from hedge-related derivative transactions.