EX-99.A 3 dex99a.htm PRESS RELEASE Press Release
 
Media Contacts:
Mary Eshet 704-383-7777
Christy Phillips 704-383-8178
  
Exhibit 99(a)
 
Wachovia
Investor Contacts:
Alice Lehman 704-374-4139
Ellen Taylor 704-383-1381
    
 
[LOGO]
  
Press Release October 16, 2002
   
WACHOVIA REPORTS 3RD QUARTER NET INCOME OF 66 CENTS PER SHARE; 71 CENTS OF OPERATING EARNINGS
3rd QUARTER 2002 HIGHLIGHTS
 
 
•
 
Reported net income of $913 million or 66 cents per share; operating earnings of $983 million or 71 cents.
 
 
•
 
Substantially reduced tax provision fully offset by risk reduction strategies.
 
 
•
 
Customer satisfaction scores improved for 14th consecutive quarter.
 
 
•
 
Merger integration continued to progress well.
 
 
•
 
General Bank deposit, loan and investment sales showed continued strength.
 
 
•
 
Nonperforming assets, including loans held for sale, declined 2 percent.
 
 
•
 
Tier 1 capital ratio improved to 8.10 percent.
 
Earnings Highlights
 
      
Three Months Ended      
  
      
September 30,
2002
     
June 30,
2002(d)
     
September 30,
2001
  
                    
Not restated*
  
      
(In millions, except per share data)
  
Earnings
                         
Net income (loss) available to common stockholders (GAAP)
     
$
913
 
   
849
     
(334
)
Diluted earnings per common share (GAAP)
     
 
0.66
 
   
0.62
     
(0.31
)
Operating earnings(a)
     
 
983
 
   
944
     
298
 
Diluted earnings per common share (Operating earnings)
     
$
0.71
 
   
0.68
     
0.27
 
      
  
    
Financial ratios (Operating earnings)
                         
Return on average common stockholders’ equity
     
 
12.44
%
   
12.72
     
5.77
 
Overhead efficiency ratio
     
 
64.33
 
   
60.19
     
76.74
 
Net interest margin
     
 
3.93
 
   
3.96
     
3.58
 
Fee and other income as % of total revenue
     
 
42.86
%
   
45.63
     
34.42
 
      
  
    
Cash operating earnings(b)
                         
Net income
     
$
1,081
 
   
1,047
     
395
 
Diluted earnings per common share
     
$
0.78
 
   
0.76
     
0.36
 
Return on average tangible common stockholders’ equity
     
 
22.84
%
   
24.66
     
11.36
 
Dividend payout ratio(c)
     
 
33.33
 
   
31.58
     
66.67
 
Overhead efficiency ratio
     
 
60.87
%
   
56.72
     
72.86
 
      
  
    
Asset quality
                         
Allowance as % of nonaccrual and restructured loans
     
 
163
%
   
163
     
202
 
Allowance as % of loans, net
     
 
1.81
 
   
1.86
     
1.79
 
Net charge-offs as % of average loans, net
     
 
0.59
 
   
0.97
     
0.73
 
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale
     
 
1.23
%
   
1.24
     
1.08
 
(a)
 
Operating earnings are reported net income excluding after-tax net merger-related, restructuring and other charges.
(b)
 
Cash operating earnings are reported net income excluding after-tax net merger-related, restructuring and other charges, and exclude deposit base intangible, goodwill and other intangible amortization.
(c)
 
Based on common shares.
(d)
 
The second quarter of 2002 has been recast to include $19 million ($13 million after-tax, or 1 cent per share) in stock option expense related to stock options granted in 2002.
*
 
Periods prior to the September 1, 2001, merger of First Union and the former Wachovia, which was accounted for as a purchase, have not been restated.
 
— more —
 

 
WACHOVIA REPORTS 3rd Quarter 2002 EARNINGS/Page 2
 
CHARLOTTE, N.C. —Wachovia Corp. (NYSE:WB) today reported third quarter 2002 net income available to common stockholders of $913 million, or 66 cents per share; operating earnings of $983 million, or 71 cents per share; and cash operating earnings of $1.1 billion, or 78 cents per share. Operating earnings exclude $67 million, or 5 cents per share, of after-tax net merger-related and restructuring charges. Cash operating earnings exclude deposit base intangible, goodwill and other intangible amortization as well as the net merger-related and restructuring charges. Results also include $13 million after-tax, or 1 cent per share after-tax, of expense related to stock options.
 
“In a difficult operating environment for revenue growth, we continued to be well served by our balanced business model, and we are delighted at how well our people are progressing with merger integration,” said Ken Thompson, Wachovia president and CEO. With 14 straight quarters of rising customer satisfaction levels, we believe we now lead the major bank competitors on service quality. This level of service has contributed greatly to growth in low-cost core deposits, where we are among the industry leaders in our markets. At the same time, we are well positioned to attract our customers’ investment business when the financial markets ultimately recover. We’ve continued to invest in our businesses, including upgrading branch automation and making selected acquisitions to enhance our insurance and investment management offerings. We continue to actively reduce risk, control expenses and build capital. In short, this was another solid performance despite very difficult markets.”
 
Third quarter 2002 results also reflected a significantly lower tax provision due primarily to the recognition of a 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 balance sheet risk.
 
Average loans in the third quarter of 2002 were $152 billion, down 2 percent from the previous quarter, reflecting loan sales, securitizations and transfers to loans held for sale of an average of $1.6 billion in the second and third quarters, as well as weak loan demand. Average core deposits increased 2 percent from the previous quarter to $167 billion, while average low-cost core deposits increased 4 percent to $119 billion.
 
Third quarter 2002 net charge-offs declined 40 percent from the previous quarter to $224 million, or 0.59 percent of average net loans. The provision exceeded net charge-offs by $211 million related to write-downs on commercial loans sold or transferred to the held for sale portfolio and the sale of consumer loans directly out of the loan portfolio. Total nonperforming assets including loans held for sale declined 2 percent to $2.0 billion in the third quarter of 2002.
 
Lines of Business
 
General Bank
 
General Bank Highlights: 3Q01 not restated
 
    
Three Months Ended            
    
September 30,
   
June 30,
   
September 30,
    
2002
   
2002
   
2001
    
(In millions)
Total revenue (Tax-equivalent)
   
$
2,287
   
2,263
   
1,745
Provision for loan losses
   
 
114
   
98
   
97
Noninterest expense
   
 
1,256
   
1,231
   
1,015
Operating earnings
   
 
583
   
593
   
411
Average loans, net
   
 
101,402
   
100,832
   
76,383
Average core deposits
   
 
141,860
   
139,649
   
109,641
Economic capital, average
   
$
5,519
   
5,554
   
4,298
 
— more —

 
WACHOVIA REPORTS 3rd QUARTER 2002 EARNINGS/Page 3
 
The General Bank includes retail, small business and commercial customers. General Bank revenue, which increased modestly from the second quarter of 2002, was driven by solid growth in core deposits, consumer loans and investment sales through the branch system, offset by higher expense related to variable compensation and increased legal expense. Average core deposits increased 2 percent from the second quarter of 2002, and the increase in average low-cost core deposits was particularly strong at 4 percent from the prior quarter. Average loans grew slightly from the second quarter of 2002, reflecting strength in consumer real estate-secured products, which offset declines due to mortgage refinancing.
 
Capital Management
 
Capital Management Highlights: 3Q01 not restated
 
      
Three Months Ended          
      
September 30,
2002
   
June 30,
2002
     
September 30,
2001
      
(In millions)
Total revenue (Tax-equivalent)
     
$
754
   
809
     
677
Provision for loan losses
     
 
—  
   
—  
     
—  
Noninterest expense
     
 
623
   
669
     
574
Operating earnings
     
 
83
   
89
     
67
Average loans, net
     
 
177
   
186
     
269
Average core deposits
     
 
1,314
   
1,269
     
1,535
Economic capital, average
     
$
624
   
675
     
611
 
The Capital Management Group (CMG) includes asset management and retail brokerage services. Weak equities markets dampened revenues, although CMG’s multi-distribution channels and tight expense controls helped stabilize these businesses. Traditional annuity sales of $1.5 billion (including bank annuity sales of $900 million) were comparable with similar strong sales production levels of the second quarter of 2002. Assets under management at September 30, 2002, were $227 billion, down 1 percent from June 30, 2002. Included in assets under management are mutual fund assets of $107 billion, which had record quarterly gross fluctuating sales of $4.5 billion. The acquisition of certain assets of E-Risk Services, LLC, a leading agency provider of management liability insurance, closed October 1, 2002. The acquisition of J.L.Kaplan Associates, LLC, a privately held investment management firm with $3 billion in assets under management, is expected to close in the fourth quarter of 2002.
 
Wealth Management
 
Wealth Management Highlights: 3Q01 not restated
 
 
    
     Three Months Ended          
    
September 30, 2002
   
June 30, 2002
     
September 30, 2001
    
(In millions)
Total revenue (Tax-equivalent)
   
$
228
   
243
     
161
Provision for loan losses
   
 
3
   
7
     
2
Noninterest expense
   
 
163
   
166
     
114
Operating earnings
   
 
39
   
45
     
29
Average loans, net
   
 
8,854
   
8,632
     
5,680
Average core deposits
   
 
10,006
   
9,879
     
7,313
Economic capital, average
   
$
345
   
338
     
212
 
Wealth Management includes private banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. The decline in revenue from the second quarter of 2002 was due to a reduction in insurance commissions and lower personal trust fees related to asset valuation declines.
 
— more —

 
WACHOVIA REPORTS 3rd QUARTER 2002 EARNINGS/Page 4
 
Continued strength in loans and deposits partially offset this decline. Expenses declined due to decreased personnel expense. The acquisition of Cameron M. Harris & Company, a privately held insurance brokerage firm, closed August 30, 2002. Wealth Management assets under management (included in the CMG total) declined 6 percent from June 30, 2002, to $67 billion at September 30, 2002, due to lower equity market valuations, although sales production was improving.
 
Corporate and Investment Bank
 
Corporate and Investment Bank Highlights: 3Q01 not restated
 
    
Three Months Ended          
  
    
September 30,
   
June 30,
     
September 30,
  
    
2002
   
2002
     
2001
  
    
(In millions)
  
Total revenue (Tax-equivalent)
   
$
939
   
1,060
     
273
 
Provision for loan losses
   
 
317
   
293
     
126
 
Noninterest expense
   
 
508
   
521
     
485
 
Operating earnings
   
 
69
   
153
     
(208
)
Average loans, net
   
 
40,250
   
41,580
     
42,069
 
Average core deposits
   
 
12,832
   
12,207
     
10,479
 
Economic capital, average
   
$
7,145
   
7,372
     
6,328
 
 
Corporate and Investment Bank revenue declined due to the weak market conditions, which dampened activity in the advisory businesses and loan syndications and increased losses in trading results. The decline was partially offset by lower principal investing net losses and lower expense. The increased provision was driven by the transfer of loans, primarily related to the telecommunications sector, to loans held for sale. Average loans declined 3 percent due to weak overall loan demand.
 
***
 
Wachovia Corporation (NYSE:WB), created through the September 1, 2001, merger of First Union and Wachovia, had assets of $334 billion and stockholders’ equity of $32 billion at September 30, 2002. Wachovia is a leading provider of financial services to 20 million 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 states and global services through more than 30 international offices. Online banking and brokerage products and services are available through wachovia.com and firstunion.com.
 
Earnings Conference Call and Supplemental Materials
 
Wachovia President and CEO Ken Thompson and CFO Bob Kelly will review Wachovia’s third quarter results in a conference call and audio webcast beginning at 10 a.m. EDT today. Supplemental materials relating to third quarter results are available on the Internet at http://wachovia.firstunion.com, 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 http://wachovia.firstunion.com and click on the link “Wachovia Third 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 1-877-546-1568 for U.S. callers or 415-228-4836 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:    Wednesday, October 16 at 1 p.m. through 5 p.m., Friday, October 25. Replay telephone number is 402-220-3835.
 
***
 
        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 October 16, 2002.
 
— more —

 
PAGE 5
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
FINANCIAL HIGHLIGHTS(a)
(Unaudited)
 
    
2002
   
2001
  
    
Third Quarter
     
Second Quarter
     
First Quarter
   
Fourth Quarter
     
Third Quarter
  
    
(Dollars in millions, except per share data)
  
FINANCIAL HIGHLIGHTS
                                   
Operating Earnings
                                   
Net interest income (Tax-equivalent)
   
$
2,520
 
   
2,515
 
   
2,477
   
2,484
 
   
1,974
 
Fee and other income
   
 
1,890
 
   
2,110
 
   
2,027
   
2,060
 
   
1,036
 
    
  
  
  
  
Total revenue (Tax-equivalent)
   
 
4,410
 
   
4,625
 
   
4,504
   
4,544
 
   
3,010
 
Provision for loan losses
   
 
435
 
   
397
 
   
339
   
381
 
   
244
 
Noninterest expense, excluding goodwill and other intangible amortization
   
 
2,686
 
   
2,622
 
   
2,609
   
2,691
 
   
2,193
 
Goodwill and other intangible amortization
   
 
152
 
   
161
 
   
168
   
251
 
   
117
 
Income taxes (Tax-equivalent)
   
 
154
 
   
501
 
   
480
   
422
 
   
158
 
    
  
  
  
  
Income before net merger-related, restructuring and other charges
                                   
(Operating earnings)
   
 
983
 
   
944
 
   
908
   
799
 
   
298
 
Ater-tax net merger-related, restructuring and other charges
   
 
(67
)
   
(89
)
   
5
   
(63
)
   
(632
)
    
  
  
  
  
Net income (loss)
   
 
916
 
   
855
 
   
913
   
736
 
   
(334
)
Dividends on preferred stock
   
 
3
 
   
6
 
   
6
   
6
 
   
—  
 
    
  
  
  
  
Net income (loss) available to common stockholders
   
$
913
 
   
849
 
   
907
   
730
 
   
(334
)
    
  
  
  
  
DILUTED EARNINGS PER COMMON SHARE
                                   
Net income (loss)
   
$
0.66
 
   
0.62
 
   
0.66
   
0.54
 
   
(0.31
)
    
  
  
  
  
PROFITABILITY (Operating earnings)
                                   
Return on average common stockholders’ equity
   
 
12.44
%
   
12.72
 
   
12.68
   
10.77
 
   
5.77
 
Net interest margin
   
 
3.93
 
   
3.96
 
   
3.90
   
3.81
 
   
3.58
 
Fee and other income as % of total revenue
   
 
42.86
 
   
45.63
 
   
45.00
   
45.33
 
   
34.42
 
Overhead efficiency ratio
   
 
64.33
 
   
60.19
 
   
61.66
   
64.74
 
   
76.74
 
Effective income tax rate
   
 
9.29
%
   
32.06
 
   
32.09
   
31.65
 
   
27.67
 
    
  
  
  
  
CASH OPERATING EARNINGS
                                   
Net income
   
$
1,081
 
   
1,047
 
   
1,016
   
980
 
   
395
 
Return on average tangible common stockholders’ equity
   
 
22.84
%
   
24.66
 
   
25.30
   
23.56
 
   
11.36
 
Return on average common stockholders’ equity
   
 
13.69
 
   
14.12
 
   
14.19
   
13.23
 
   
7.66
 
Overhead efficiency ratio
   
 
60.87
%
   
56.72
 
   
57.93
   
59.22
 
   
72.86
 
Operating leverage
   
$
(275
)
   
105
 
   
42
   
1,036
 
   
(462
)
    
  
  
  
  
(a)
 
The second quarter of 2002 has been recast to include $19 million ($13 million after-tax, or 1 cent per share) in stock option expense related to stock options granted in 2002.
 

 
PAGE 6
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
OTHER FINANCIAL DATA
(Unaudited)
 
    
2002
   
2001
    
Third Quarter
     
Second Quarter
   
First Quarter
   
Fourth
Quarter
   
Third
Quarter
    
(Dollars in millions, except per share data)
CAPITAL ADEQUACY(a)
                             
Tier I capital ratio
   
 
8.10
%
   
7.83
   
7.49
   
7.04
   
6.75
Total capital ratio
   
 
12.02
 
   
11.89
   
11.56
   
11.08
   
10.84
Leverage ratio
   
 
6.78
%
   
6.75
   
6.51
   
6.19
   
7.22
    
  
  
  
  
ASSET QUALITY
                             
Allowance as % of loans, net
   
 
1.81
%
   
1.86
   
1.84
   
1.83
   
1.79
Allowance as % of nonperforming assets
   
 
149
 
   
150
   
162
   
175
   
186
Net charge-offs as % of average loans, net
   
 
0.59
 
   
0.97
   
0.83
   
0.93
   
0.73
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale
   
 
1.23
%
   
1.24
   
1.21
   
1.13
   
1.08
    
  
  
  
  
OTHER DATA
                             
Employees
   
 
80,987
 
   
82,686
   
82,809
   
84,046
   
85,534
Financial centers
   
 
3,342
 
   
3,347
   
3,362
   
3,434
   
3,461
ATMs
   
 
4,604
 
   
4,617
   
4,618
   
4,675
   
4,698
Common shares outstanding (In millions)
   
 
1,373
 
   
1,371
   
1,368
   
1,362
   
1,361
Common stock price
   
$
32.69
 
   
38.18
   
37.08
   
31.36
   
31.00
Book value per common share
   
$
23.38
 
   
22.15
   
21.04
   
20.88
   
20.94
Common stock price to book value
   
 
140
%
   
172
   
176
   
150
   
148
Market capitalization
   
$
44,887
 
   
52,347
   
50,716
   
42,701
   
42,191
Dividends paid per common share
   
 
0.26
 
   
0.24
   
0.24
   
0.24
   
0.24
Dividends paid per preferred share
   
$
0.04
 
   
0.06
   
0.06
   
0.06
   
—  
    
  
  
  
  
AVERAGE BALANCE SHEET DATA
                             
Commercial loans, net
   
$
96,552
 
   
98,303
   
99,489
   
102,230
   
83,633
Consumer loans, net
   
 
55,124
 
   
56,782
   
57,575
   
60,609
   
49,393
Loans, net
   
 
151,676
 
   
155,085
   
157,064
   
162,839
   
133,026
Earning assets
   
 
255,789
 
   
254,424
   
255,488
   
259,884
   
219,672
Total assets
   
 
321,511
 
   
314,714
   
315,322
   
319,221
   
267,746
Core deposits
   
 
167,452
 
   
164,781
   
162,812
   
161,043
   
131,495
Total deposits
   
 
180,077
 
   
178,196
   
178,509
   
179,971
   
150,598
Interest-bearing liabilities
   
 
224,170
 
   
223,812
   
227,365
   
231,742
   
198,307
Stockholders’ equity
   
$
31,103
 
   
29,576
   
28,903
   
28,540
   
20,330
    
  
  
  
  
PERIOD-END BALANCE SHEET DATA
                             
Commercial loans, net
   
$
101,931
 
   
102,780
   
104,883
   
106,308
   
107,673
Consumer loans, net
   
 
55,611
 
   
56,020
   
57,411
   
57,493
   
62,007
Loans, net
   
 
157,542
 
   
158,800
   
162,294
   
163,801
   
169,680
Goodwill and other intangible assets
                             
Goodwill
   
 
10,810
 
   
10,728
   
10,728
   
10,616
   
10,496
Deposit base
   
 
1,363
 
   
1,508
   
1,661
   
1,822
   
2,433
Customer relationships
   
 
222
 
   
229
   
237
   
244
   
8
Tradename
   
 
90
 
   
90
   
90
   
90
   
—  
Total assets
   
 
333,880
 
   
324,679
   
319,853
   
330,452
   
325,897
Core deposits
   
 
173,697
 
   
166,779
   
165,759
   
169,310
   
158,564
Total deposits
   
 
187,785
 
   
180,663
   
180,033
   
187,453
   
180,549
Stockholders’ equity
   
$
32,105
 
   
30,379
   
28,785
   
28,455
   
28,506
    
  
  
  
  
(a)
 
The third quarter of 2002 is based on estimates.

 
PAGE 7
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED CONDENSED STATEMENTS OF INCOME(a)
(Unaudited)
 
    
Three Months Ended
September 30, 2002
   
Nine Months Ended
September 30, 2002
  
    
Operating
Earnings
     
Net Merger-Related,
Restructuring
and Other
Charges
     
As Reported
   
Operating
Earnings
     
Net Merger-Related,
Restructuring
and Other
Charges
     
As Reported
  
    
(In millions)
  
Net interest income
   
$
2,466
     
—  
 
   
2,466
   
7,353
     
—  
 
   
7,353
 
Provision for loan losses
   
 
435
     
—  
 
   
435
   
1,171
     
—  
 
   
1,171
 
    
    
  
  
    
  
Net interest income after provision for loan losses
   
 
2,031
     
—  
 
   
2,031
   
6,182
     
—  
 
   
6,182
 
    
    
  
  
    
  
Fee and other income
                                          
Asset sales and securitization
   
 
86
     
—  
 
   
86
   
242
     
—  
 
   
242
 
Other fee and other income
   
 
1,804
     
—  
 
   
1,804
   
5,785
     
—  
 
   
5,785
 
    
    
  
  
    
  
Total fee and other income
   
 
1,890
     
—  
 
   
1,890
   
6,027
     
—  
 
   
6,027
 
    
    
  
  
    
  
Noninterest expense
                                          
Merger-related and restructuring charges
                                          
Personnel and employee termination benefits
   
 
—  
     
14
 
   
14
   
—  
     
58
 
   
58
 
Occupancy and equipment
   
 
—  
     
14
 
   
14
   
—  
     
117
 
   
117
 
Gain on regulatory-mandated branch sales
   
 
—  
     
—  
 
   
—  
   
—  
     
(121
)
   
(121
)
Contract cancellations and system conversions
   
 
—  
     
49
 
   
49
   
—  
     
118
 
   
118
 
Advertising
   
 
—  
     
18
 
   
18
   
—  
     
25
 
   
25
 
Other
   
 
—  
     
12
 
   
12
   
—  
     
45
 
   
45
 
    
    
  
  
    
  
Net merger-related and restructuring charges
   
 
—  
     
107
 
   
107
   
—  
     
242
 
   
242
 
Other noninterest expense
   
 
2,838
     
—  
 
   
2,838
   
8,398
     
—  
 
   
8,398
 
    
    
  
  
    
  
Total noninterest expense
   
 
2,838
     
107
 
   
2,945
   
8,398
     
242
 
   
8,640
 
    
    
  
  
    
  
Income before income taxes (benefits)
   
 
1,083
     
(107
)
   
976
   
3,811
     
(242
)
   
3,569
 
Income taxes (benefits)
   
 
100
     
(40
)
   
60
   
976
     
(91
)
   
885
 
    
    
  
  
    
  
Net income
   
 
983
     
(67
)
   
916
   
2,835
     
(151
)
   
2,684
 
Dividends on preferred stock
   
 
3
     
—  
 
   
3
   
15
     
—  
 
   
15
 
    
    
  
  
    
  
Net income available to common stockholders
   
$
980
     
(67
)
   
913
   
2,820
     
(151
)
   
2,669
 
    
    
  
  
    
  
(a)
 
The nine months ended September 30, 2002, includes $38 million ($26 million after-tax) in stock option expense related to stock options granted in 2002.

 
PAGE 8
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATING EARNINGS(a)(b)
(Unaudited)
 
    
2002
     
2001
  
    
Third Quarter
     
Second
Quarter
     
First
Quarter
     
Fourth
Quarter
     
Third
Quarter
  
    
(In millions)
  
INTEREST INCOME
                                     
Interest and fees on loans
   
$
2,558
 
   
2,563
 
   
2,637
 
   
2,970
 
   
2,621
 
Interest and dividends on securities
   
 
935
 
   
906
 
   
856
 
   
876
 
   
852
 
Trading account interest
   
 
179
 
   
173
 
   
155
 
   
166
 
   
192
 
Other interest income
   
 
240
 
   
252
 
   
255
 
   
299
 
   
279
 
    
  
  
  
  
Total interest income
   
 
3,912
 
   
3,894
 
   
3,903
 
   
4,311
 
   
3,944
 
    
  
  
  
  
INTEREST EXPENSE
                                     
Interest on deposits
   
 
847
 
   
836
 
   
915
 
   
1,116
 
   
1,183
 
Interest on short-term borrowings
   
 
310
 
   
300
 
   
286
 
   
372
 
   
417
 
Interest on long-term debt
   
 
289
 
   
297
 
   
276
 
   
391
 
   
414
 
    
  
  
  
  
Total interest expense
   
 
1,446
 
   
1,433
 
   
1,477
 
   
1,879
 
   
2,014
 
    
  
  
  
  
Net interest income
   
 
2,466
 
   
2,461
 
   
2,426
 
   
2,432
 
   
1,930
 
Provision for loan losses
   
 
435
 
   
397
 
   
339
 
   
381
 
   
244
 
    
  
  
  
  
Net interest income after provision for loan losses
   
 
2,031
 
   
2,064
 
   
2,087
 
   
2,051
 
   
1,686
 
    
  
  
  
  
FEE AND OTHER INCOME
                                     
Service charges and fees
   
 
664
 
   
661
 
   
661
 
   
672
 
   
541
 
Commissions
   
 
458
 
   
481
 
   
464
 
   
448
 
   
356
 
Fiduciary and asset management fees
   
 
427
 
   
466
 
   
477
 
   
478
 
   
400
 
Advisory, underwriting and other investment banking fees
   
 
72
 
   
225
 
   
240
 
   
223
 
   
177
 
Principal investing
   
 
(29
)
   
(42
)
   
(90
)
   
(21
)
   
(585
)
Other income
   
 
298
 
   
319
 
   
275
 
   
260
 
   
147
 
    
  
  
  
  
Total fee and other income
   
 
1,890
 
   
2,110
 
   
2,027
 
   
2,060
 
   
1,036
 
    
  
  
  
  
NONINTEREST EXPENSE
                                     
Salaries and employee benefits
   
 
1,588
 
   
1,665
 
   
1,663
 
   
1,663
 
   
1,374
 
Occupancy
   
 
195
 
   
194
 
   
195
 
   
210
 
   
176
 
Equipment
   
 
234
 
   
231
 
   
226
 
   
247
 
   
214
 
Advertising
   
 
20
 
   
25
 
   
19
 
   
21
 
   
15
 
Communications and supplies
   
 
136
 
   
132
 
   
134
 
   
142
 
   
117
 
Professional and consulting fees
   
 
111
 
   
96
 
   
88
 
   
113
 
   
79
 
Goodwill and other intangible amortization
   
 
152
 
   
161
 
   
168
 
   
251
 
   
117
 
Sundry expense
   
 
402
 
   
279
 
   
284
 
   
295
 
   
218
 
    
  
  
  
  
Total noninterest expense
   
 
2,838
 
   
2,783
 
   
2,777
 
   
2,942
 
   
2,310
 
    
  
  
  
  
Income before income taxes
   
 
1,083
 
   
1,391
 
   
1,337
 
   
1,169
 
   
412
 
Income taxes
   
 
100
 
   
447
 
   
429
 
   
370
 
   
114
 
    
  
  
  
  
Net operating earnings
   
$
983
 
   
944
 
   
908
 
   
799
 
   
298
 
    
  
  
  
  
(a)
 
Operating earnings exclude net merger-related, restructuring and other charges.
(b)
 
The second quarter of 2002 has been recast to include $19 million ($13 million after-tax) in stock option expense related to stock options granted in 2002.

 
PAGE 9
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATING EARNINGS(a)(b)
(Unaudited)
 
    
Nine Months Ended
September 30,
  
    
2002
     
2001
  
    
(In millions)
  
INTEREST INCOME
                
Interest and fees on loans
   
$
7,758
 
   
7,567
 
Interest and dividends on securities
   
 
2,697
 
   
2,658
 
Trading account interest
   
 
507
 
   
594
 
Other interest income
   
 
747
 
   
970
 
    
  
Total interest income
   
 
11,709
 
   
11,789
 
    
  
INTEREST EXPENSE
                
Interest on deposits
   
 
2,598
 
   
3,628
 
Interest on short-term borrowings
   
 
896
 
   
1,364
 
Interest on long-term debt
   
 
862
 
   
1,454
 
    
  
Total interest expense
   
 
4,356
 
   
6,446
 
    
  
Net interest income
   
 
7,353
 
   
5,343
 
Provision for loan losses
   
 
1,171
 
   
686
 
    
  
Net interest income after provision for loan losses
   
 
6,182
 
   
4,657
 
    
  
FEE AND OTHER INCOME
                
Service charges and fees
   
 
1,986
 
   
1,495
 
Commissions
   
 
1,403
 
   
1,120
 
Fiduciary and asset management fees
   
 
1,370
 
   
1,165
 
Advisory, underwriting and other investment banking fees
   
 
537
 
   
613
 
Principal investing
   
 
(161
)
   
(686
)
Other income
   
 
892
 
   
504
 
    
  
Total fee and other income
   
 
6,027
 
   
4,211
 
    
  
NONINTEREST EXPENSE
                
Salaries and employee benefits
   
 
4,916
 
   
4,066
 
Occupancy
   
 
584
 
   
494
 
Equipment
   
 
691
 
   
617
 
Advertising
   
 
64
 
   
35
 
Communications and supplies
   
 
402
 
   
338
 
Professional and consulting fees
   
 
295
 
   
221
 
Goodwill and other intangible amortization
   
 
481
 
   
272
 
Sundry expense
   
 
965
 
   
574
 
    
  
Total noninterest expense
   
 
8,398
 
   
6,617
 
    
  
Income before income taxes
   
 
3,811
 
   
2,251
 
Income taxes
   
 
976
 
   
694
 
    
  
Net operating earnings
   
$
2,835
 
   
1,557
 
    
  
(a)
 
Operating earnings exclude net merger-related, restructuring and other charges.
(b)
 
The nine months ended September 30, 2002, includes $38 million ($26 million after-tax) in stock option expense related to stock options granted in 2002.

 
PAGE 10
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME (LOSS)(a)
(Unaudited)
 
    
2002
     
2001
  
    
Third
Quarter
     
Second
Quarter
     
First
Quarter
     
Fourth
Quarter
     
Third
Quarter
  
    
(In millions, except per share data)
  
INTEREST INCOME
                                     
Interest and fees on loans
   
$
2,558
 
   
2,563
 
   
2,637
 
   
2,970
 
   
2,621
 
Interest and dividends on securities
   
 
935
 
   
906
 
   
856
 
   
876
 
   
852
 
Trading account interest
   
 
179
 
   
173
 
   
155
 
   
166
 
   
192
 
Other interest income
   
 
240
 
   
252
 
   
255
 
   
299
 
   
279
 
    
  
  
  
  
Total interest income
   
 
3,912
 
   
3,894
 
   
3,903
 
   
4,311
 
   
3,944
 
    
  
  
  
  
INTEREST EXPENSE
                                     
Interest on deposits
   
 
847
 
   
836
 
   
915
 
   
1,116
 
   
1,183
 
Interest on short-term borrowings
   
 
310
 
   
300
 
   
286
 
   
372
 
   
417
 
Interest on long-term debt
   
 
289
 
   
297
 
   
276
 
   
391
 
   
414
 
    
  
  
  
  
Total interest expense
   
 
1,446
 
   
1,433
 
   
1,477
 
   
1,879
 
   
2,014
 
    
  
  
  
  
Net interest income
   
 
2,466
 
   
2,461
 
   
2,426
 
   
2,432
 
   
1,930
 
Provision for loan losses
   
 
435
 
   
397
 
   
339
 
   
381
 
   
1,124
 
    
  
  
  
  
Net interest income after provision for loan losses
   
 
2,031
 
   
2,064
 
   
2,087
 
   
2,051
 
   
806
 
    
  
  
  
  
FEE AND OTHER INCOME
                                     
Service charges and fees
   
 
664
 
   
661
 
   
661
 
   
672
 
   
541
 
Commissions
   
 
458
 
   
481
 
   
464
 
   
448
 
   
356
 
Fiduciary and asset management fees
   
 
427
 
   
466
 
   
477
 
   
478
 
   
400
 
Advisory, underwriting and other investment banking fees
   
 
72
 
   
225
 
   
240
 
   
223
 
   
177
 
Principal investing
   
 
(29
)
   
(42
)
   
(90
)
   
(21
)
   
(585
)
Other income
   
 
298
 
   
319
 
   
275
 
   
260
 
   
143
 
    
  
  
  
  
Total fee and other income
   
 
1,890
 
   
2,110
 
   
2,027
 
   
2,060
 
   
1,032
 
    
  
  
  
  
NONINTEREST EXPENSE
                                     
Salaries and employee benefits
   
 
1,588
 
   
1,665
 
   
1,663
 
   
1,663
 
   
1,374
 
Occupancy
   
 
195
 
   
194
 
   
195
 
   
210
 
   
176
 
Equipment
   
 
234
 
   
231
 
   
226
 
   
247
 
   
214
 
Advertising
   
 
20
 
   
25
 
   
19
 
   
21
 
   
15
 
Communications and supplies
   
 
136
 
   
132
 
   
134
 
   
142
 
   
117
 
Professional and consulting fees
   
 
111
 
   
96
 
   
88
 
   
113
 
   
79
 
Goodwill and other intangible amortization
   
 
152
 
   
161
 
   
168
 
   
251
 
   
117
 
Merger-related and restructuring charges
   
 
107
 
   
143
 
   
(8
)
   
88
 
   
85
 
Sundry expense
   
 
402
 
   
279
 
   
284
 
   
295
 
   
218
 
    
  
  
  
  
Total noninterest expense
   
 
2,945
 
   
2,926
 
   
2,769
 
   
3,030
 
   
2,395
 
    
  
  
  
  
Income (loss) before income taxes (benefits)
   
 
976
 
   
1,248
 
   
1,345
 
   
1,081
 
   
(557
)
Income taxes (benefits)
   
 
60
 
   
393
 
   
432
 
   
345
 
   
(223
)
    
  
  
  
  
Net income (loss)
   
 
916
 
   
855
 
   
913
 
   
736
 
   
(334
)
Dividends on preferred stock
   
 
3
 
   
6
 
   
6
 
   
6
 
   
—  
 
    
  
  
  
  
Net income (loss) available to common stockholders
   
$
913
 
   
849
 
   
907
 
   
730
 
   
(334
)
    
  
  
  
  
PER COMMON SHARE DATA
                                     
Basic earnings
   
$
0.67
 
   
0.62
 
   
0.67
 
   
0.54
 
   
(0.31
)
Diluted earnings
   
 
0.66
 
   
0.62
 
   
0.66
 
   
0.54
 
   
(0.31
)
Cash dividends
   
$
0.26
 
   
0.24
 
   
0.24
 
   
0.24
 
   
0.24
 
AVERAGE COMMON SHARES
                                     
Basic
   
 
1,362
 
   
1,360
 
   
1,355
 
   
1,352
 
   
1,094
 
Diluted
   
 
1,374
 
   
1,375
 
   
1,366
 
   
1,363
 
   
1,105
 
    
  
  
  
  
(a)
 
The second quarter of 2002 has been recast to include $19 million ($13 million after-tax, or 1 cent per share) in stock option expense related to stock options granted in 2002.

 
PAGE 11
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME(a)
(Unaudited)
 
    
Nine Months Ended
September 30,
  
    
2002
     
2001
  
    
(In millions, except per share data)
  
INTEREST INCOME
                
Interest and fees on loans
   
$
7,758
 
   
7,567
 
Interest and dividends on securities
   
 
2,697
 
   
2,658
 
Trading account interest
   
 
507
 
   
594
 
Other interest income
   
 
747
 
   
970
 
    
  
Total interest income
   
 
11,709
 
   
11,789
 
    
  
INTEREST EXPENSE
                
Interest on deposits
   
 
2,598
 
   
3,628
 
Interest on short-term borrowings
   
 
896
 
   
1,364
 
Interest on long-term debt
   
 
862
 
   
1,454
 
    
  
Total interest expense
   
 
4,356
 
   
6,446
 
    
  
Net interest income
   
 
7,353
 
   
5,343
 
Provision for loan losses
   
 
1,171
 
   
1,566
 
    
  
Net interest income after provision for loan losses
   
 
6,182
 
   
3,777
 
    
  
FEE AND OTHER INCOME
                
Service charges and fees
   
 
1,986
 
   
1,495
 
Commissions
   
 
1,403
 
   
1,120
 
Fiduciary and asset management fees
   
 
1,370
 
   
1,165
 
Advisory, underwriting and other investment banking fees
   
 
537
 
   
613
 
Principal investing
   
 
(161
)
   
(686
)
Other income
   
 
892
 
   
529
 
    
  
Total fee and other income
   
 
6,027
 
   
4,236
 
    
  
NONINTEREST EXPENSE
                
Salaries and employee benefits
   
 
4,916
 
   
4,147
 
Occupancy
   
 
584
 
   
520
 
Equipment
   
 
691
 
   
632
 
Advertising
   
 
64
 
   
45
 
Communications and supplies
   
 
402
 
   
338
 
Professional and consulting fees
   
 
295
 
   
246
 
Goodwill and other intangible amortization
   
 
481
 
   
272
 
Merger-related and restructuring charges
   
 
242
 
   
18
 
Sundry expense
   
 
965
 
   
583
 
    
  
Total noninterest expense
   
 
8,640
 
   
6,801
 
    
  
Income before income taxes
   
 
3,569
 
   
1,212
 
Income taxes
   
 
885
 
   
329
 
    
  
Net income
   
 
2,684
 
   
883
 
Dividends on preferred stock
   
 
15
 
   
—  
 
    
  
Net income available to common stockholders
   
$
2,669
 
   
883
 
    
  
PER COMMON SHARE DATA
                
Basic earnings
   
$
1.96
 
   
0.86
 
Diluted earnings
   
 
1.95
 
   
0.85
 
Cash dividends
   
$
0.74
 
   
0.72
 
AVERAGE COMMON SHARES
                
Basic
   
 
1,359
 
   
1,010
 
Diluted
   
 
1,372
 
   
1,020
 
    
  
(a)
 
The nine months ended September 30, 2002, includes $38 million ($26 million after-tax, or 2 cents per share) in stock option expense related to stock options granted in 2002.

 
PAGE 12
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
LOANS—ON-BALANCE SHEET, AND MANAGED AND SERVICING PORTFOLIOS
(Unaudited)
 
    
2002
   
2001
    
Third Quarter
   
Second
Quarter
   
First
Quarter
   
Fourth
Quarter
   
Third
Quarter
    
(In millions)
ON-BALANCE SHEET LOAN PORTFOLIO
                           
COMMERCIAL
                           
Commercial, financial and agricultural
   
$
57,899
   
57,984
   
60,385
   
61,258
   
63,616
Real estate—construction and other
   
 
7,558
   
8,035
   
8,137
   
7,969
   
7,457
Real estate—mortgage
   
 
16,967
   
17,349
   
17,186
   
17,234
   
17,156
Lease financing
   
 
22,616
   
22,044
   
22,223
   
21,958
   
21,625
Foreign
   
 
6,992
   
7,241
   
6,920
   
7,653
   
7,572
    
  
  
  
  
Total commercial
   
 
112,032
   
112,653
   
114,851
   
116,072
   
117,426
    
  
  
  
  
CONSUMER
                           
Real estate—mortgage
   
 
17,527
   
19,803
   
20,901
   
22,139
   
25,466
Installment loans
   
 
37,889
   
35,940
   
36,073
   
34,666
   
35,577
Vehicle leasing
   
 
43
   
168
   
345
   
618
   
941
    
  
  
  
  
Total consumer
   
 
55,459
   
55,911
   
57,319
   
57,423
   
61,984
    
  
  
  
  
Total loans
   
 
167,491
   
168,564
   
172,170
   
173,495
   
179,410
Unearned income
   
 
9,949
   
9,764
   
9,876
   
9,694
   
9,730
    
  
  
  
  
Loans, net (on-balance sheet)
   
$
157,542
   
158,800
   
162,294
   
163,801
   
169,680
    
  
  
  
  
MANAGED PORTFOLIO(a)
                           
COMMERCIAL
                           
On-balance sheet loan portfolio
   
$
112,032
   
112,653
   
114,851
   
116,072
   
117,426
Securitized loans—off-balance sheet
   
 
2,288
   
2,318
   
5,816
   
5,827
   
6,613
Loans held for sale included in other assets
   
 
1,271
   
779
   
962
   
1,478
   
1,648
    
  
  
  
  
Total commercial
   
 
115,591
   
115,750
   
121,629
   
123,377
   
125,687
    
  
  
  
  
CONSUMER
                           
Real estate—mortgage
                           
On-balance sheet loan portfolio
   
 
17,527
   
19,803
   
20,901
   
22,139
   
25,466
Securitized loans included in securities
   
 
6,431
   
4,868
   
4,181
   
5,344
   
2,506
Loans held for sale included in other assets
   
 
2,473
   
1,387
   
1,554
   
2,420
   
1,687
    
  
  
  
  
Total real estate—mortgage
   
 
26,431
   
26,058
   
26,636
   
29,903
   
29,659
    
  
  
  
  
Installment loans
                           
On-balance sheet loan portfolio
   
 
37,889
   
35,940
   
36,073
   
34,666
   
35,577
Securitized loans—off-balance sheet
   
 
13,164
   
13,379
   
13,989
   
14,095
   
12,746
Securitized loans included in securities
   
 
11,695
   
8,918
   
9,230
   
9,776
   
9,460
Loans held for sale included in other assets
   
 
2,513
   
6,232
   
4,615
   
3,865
   
3,502
    
  
  
  
  
Total installment loans
   
 
65,261
   
64,469
   
63,907
   
62,402
   
61,285
    
  
  
  
  
Vehicle leasing—on-balance sheet loan portfolio
   
 
43
   
168
   
345
   
618
   
941
    
  
  
  
  
Total consumer
   
 
91,735
   
90,695
   
90,888
   
92,923
   
91,885
    
  
  
  
  
Total managed portfolio
   
$
207,326
   
206,445
   
212,517
   
216,300
   
217,572
    
  
  
  
  
SERVICING PORTFOLIO(b)
                           
Commercial
   
$
53,611
   
50,001
   
47,657
   
42,210
   
41,394
Consumer
   
$
2,490
   
1,773
   
1,844
   
2,900
   
2,807
    
  
  
  
  
(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 manage 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.

 
PAGE 13
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS
(Unaudited)
 
    
2002
     
2001
  
    
Third Quarter
     
Second
Quarter
     
First
Quarter
     
Fourth
Quarter
     
Third
Quarter
  
    
(In millions)
  
ALLOWANCE FOR LOAN LOSSES
                                     
Balance, beginning of period
   
$
2,951
 
   
2,986
 
   
2,995
 
   
3,039
 
   
1,760
 
Provision for loan losses relating to loans transferred to other assets or sold
   
 
211
 
   
23
 
   
14
 
   
3
 
   
230
 
Provision for loan losses
   
 
224
 
   
374
 
   
325
 
   
378
 
   
894
 
Former Wachovia balance, September 1, 2001
   
 
—  
 
   
—  
 
   
—  
 
   
—  
 
   
766
 
Allowance relating to loans acquired, transferred to other assets or sold
   
 
(315
)
   
(58
)
   
(23
)
   
(47
)
   
(368
)
Net charge-offs
   
 
(224
)
   
(374
)
   
(325
)
   
(378
)
   
(243
)
    
  
  
  
  
Balance, end of period
   
$
2,847
 
   
2,951
 
   
2,986
 
   
2,995
 
   
3,039
 
    
  
  
  
  
as % of loans, net
   
 
1.81
% 
   
1.86
 
   
1.84
 
   
1.83
 
   
1.79
 
    
  
  
  
  
as % of nonaccrual and restructured loans (a)
   
 
163
%
   
163
 
   
177
 
   
195
 
   
202
 
    
  
  
  
  
as % of nonperforming assets (a)
   
 
149
%
   
150
 
   
162
 
   
175
 
   
186
 
    
  
  
  
  
LOAN LOSSES
                                     
Commercial, financial and agricultural
   
$
160
 
   
319
 
   
275
 
   
333
 
   
192
 
Real estate—commercial construction and mortgage
   
 
5
 
   
3
 
   
2
 
   
2
 
   
1
 
Real estate—residential mortgage
   
 
3
 
   
1
 
   
4
 
   
—  
 
   
1
 
Installment loans and vehicle leasing
   
 
91
 
   
86
 
   
100
 
   
90
 
   
80
 
    
  
  
  
  
Total loan losses
   
 
259
 
   
409
 
   
381
 
   
425
 
   
274
 
    
  
  
  
  
LOAN RECOVERIES
                                     
Commercial, financial and agricultural
   
 
17
 
   
16
 
   
36
 
   
30
 
   
14
 
Real estate—commercial construction and mortgage
   
 
—  
 
   
2
 
   
—  
 
   
1
 
   
1
 
Real estate—residential mortgage
   
 
—  
 
   
—  
 
   
—  
 
   
—  
 
   
1
 
Installment loans and vehicle leasing
   
 
18
 
   
17
 
   
20
 
   
16
 
   
15
 
    
  
  
  
  
Total loan recoveries
   
 
35
 
   
35
 
   
56
 
   
47
 
   
31
 
    
  
  
  
  
Net charge-offs
   
$
224
 
   
374
 
   
325
 
   
378
 
   
243
 
    
  
  
  
  
Commercial loans net charge-offs as % of average commercial loans, net (b)
   
 
0.61
%
   
1.24
 
   
0.97
 
   
1.19
 
   
0.85
 
Consumer loans net charge-offs as % of average consumer loans, net (b)
   
 
0.56
 
   
0.48
 
   
0.59
 
   
0.48
 
   
0.53
 
Total net charge-offs as % of average loans, net (b)
   
 
0.59
%
   
0.97
 
   
0.83
 
   
0.93
 
   
0.73
 
    
  
  
  
  
NONPERFORMING ASSETS
                                     
Nonaccrual loans
                                     
Commercial, financial and agricultural
   
$
1,440
 
   
1,456
 
   
1,371
 
   
1,294
 
   
1,253
 
Real estate—commercial construction and mortgage
   
 
137
 
   
144
 
   
128
 
   
87
 
   
63
 
Real estate—residential mortgage
   
 
62
 
   
60
 
   
58
 
   
60
 
   
75
 
Installment loans and vehicle leasing
   
 
112
 
   
145
 
   
128
 
   
93
 
   
115
 
    
  
  
  
  
Total nonaccrual loans
   
 
1,751
 
   
1,805
 
   
1,685
 
   
1,534
 
   
1,506
 
Foreclosed properties (c)
   
 
156
 
   
156
 
   
159
 
   
179
 
   
126
 
    
  
  
  
  
Total nonperforming assets
   
$
1,907
 
   
1,961
 
   
1,844
 
   
1,713
 
   
1,632
 
    
  
  
  
  
Nonperforming loans included in loans held for sale (d)
   
$
115
 
   
108
 
   
213
 
   
228
 
   
273
 
Nonperforming assets included in loans and in loans held for sale
   
$
2,022
 
   
2,069
 
   
2,057
 
   
1,941
 
   
1,905
 
    
  
  
  
  
as % of loans, net, and foreclosed properties (a)
   
 
1.21
%
   
1.23
 
   
1.14
 
   
1.04
 
   
0.96
 
    
  
  
  
  
as % of loans, net, foreclosed properties and loans in other assets as held for sale (d)
   
 
1.23
%
   
1.24
 
   
1.21
 
   
1.13
 
   
1.08
 
    
  
  
  
  
Accruing loans past due 90 days
   
$
235
 
   
250
 
   
275
 
   
288
 
   
310
 
    
  
  
  
  
(a)
 
These ratios do not include nonperforming loans included in loans held for sale.
(b)
 
Annualized.
(c)
 
Restructured loans are insignificant.
(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.

 
PAGE 14
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS(a)
(Unaudited)
 
    
2002
     
2001
  
    
Third
Quarter
     
Second
Quarter
     
First
Quarter
     
Fourth
Quarter
     
Third
Quarter
  
    
(In millions, except per share data)
  
ASSETS
                                     
Cash and due from banks
   
$
11,930
 
   
10,668
 
   
10,038
 
   
13,917
 
   
10,051
 
Interest-bearing bank balances
   
 
3,561
 
   
2,269
 
   
3,356
 
   
6,875
 
   
2,128
 
Federal funds sold and securities purchased under resale agreements
   
 
7,132
 
   
11,541
 
   
13,154
 
   
13,919
 
   
9,354
 
    
  
  
  
  
Total cash and cash equivalents
   
 
22,623
 
   
24,478
 
   
26,548
 
   
34,711
 
   
21,533
 
    
  
  
  
  
Trading account assets
   
 
35,902
 
   
34,570
 
   
28,227
 
   
25,386
 
   
26,763
 
Securities
   
 
72,071
 
   
60,999
 
   
57,382
 
   
58,467
 
   
56,929
 
Loans, net of unearned income
   
 
157,542
 
   
158,800
 
   
162,294
 
   
163,801
 
   
169,680
 
Allowance for loan losses
   
 
(2,847
)
   
(2,951
)
   
(2,986
)
   
(2,995
)
   
(3,039
)
    
  
  
  
  
Loans, net
   
 
154,695
 
   
155,849
 
   
159,308
 
   
160,806
 
   
166,641
 
    
  
  
  
  
Premises and equipment
   
 
5,422
 
   
5,494
 
   
5,596
 
   
5,719
 
   
5,775
 
Due from customers on acceptances
   
 
1,080
 
   
1,105
 
   
888
 
   
745
 
   
796
 
Goodwill
   
 
10,810
 
   
10,728
 
   
10,728
 
   
10,616
 
   
10,496
 
Intangible assets
   
 
1,675
 
   
1,827
 
   
1,988
 
   
2,156
 
   
2,441
 
Other assets
   
 
29,602
 
   
29,629
 
   
29,188
 
   
31,846
 
   
34,523
 
    
  
  
  
  
Total assets
   
$
333,880
 
   
324,679
 
   
319,853
 
   
330,452
 
   
325,897
 
    
  
  
  
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                     
Deposits
                                     
Noninterest-bearing deposits
   
 
44,186
 
   
39,558
 
   
39,323
 
   
43,464
 
   
36,382
 
Interest-bearing deposits
   
 
143,599
 
   
141,105
 
   
140,710
 
   
143,989
 
   
144,167
 
    
  
  
  
  
Total deposits
   
 
187,785
 
   
180,663
 
   
180,033
 
   
187,453
 
   
180,549
 
Short-term borrowings
   
 
41,146
 
   
46,109
 
   
46,559
 
   
44,385
 
   
44,303
 
Bank acceptances outstanding
   
 
1,093
 
   
1,110
 
   
892
 
   
762
 
   
798
 
Trading account liabilities
   
 
17,760
 
   
14,108
 
   
10,261
 
   
11,437
 
   
10,084
 
Other liabilities
   
 
14,233
 
   
14,379
 
   
13,387
 
   
16,227
 
   
18,424
 
Long-term debt
   
 
39,758
 
   
37,931
 
   
39,936
 
   
41,733
 
   
43,233
 
    
  
  
  
  
Total liabilities
   
 
301,775
 
   
294,300
 
   
291,068
 
   
301,997
 
   
297,391
 
    
  
  
  
  
STOCKHOLDERS’ EQUITY
                                     
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at September 30, 2002
   
 
2
 
   
5
 
   
11
 
   
17
 
   
—  
 
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.373 billion shares at September 30, 2002
   
 
4,577
 
   
4,570
 
   
4,559
 
   
4,539
 
   
4,537
 
Paid-in capital
   
 
18,233
 
   
18,106
 
   
17,989
 
   
17,911
 
   
17,835
 
Retained earnings
   
 
7,221
 
   
6,663
 
   
6,136
 
   
5,551
 
   
5,139
 
Accumulated other comprehensive income, net
   
 
2,072
 
   
1,035
 
   
90
 
   
437
 
   
995
 
    
  
  
  
  
Total stockholders’ equity
   
 
32,105
 
   
30,379
 
   
28,785
 
   
28,455
 
   
28,506
 
    
  
  
  
  
Total liabilities and stockholders’ equity
   
$
333,880
 
   
324,679
 
   
319,853
 
   
330,452
 
   
325,897
 
    
  
  
  
  
(a)
 
In the second quarter of 2002, certain amounts were recast to reflect the adoption of expensing stock options granted in 2002.

 
PAGE 15
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
NET INTEREST INCOME SUMMARIES(a)
(Unaudited)
 
    
Third Quarter 2002
     
Second Quarter 2002
  
    
Average
Balances
     
Interest Income/Expense
     
Average Rates
Earned/Paid
     
Average
Balances
     
Interest
Income/Expense
     
Average Rates
Earned/Paid
  
    
(In millions)
  
ASSETS
                                                  
Interest-bearing bank balances
   
$
2,891
     
 
14
     
1.90
%
   
$
2,613
     
 
13
     
2.02
%
Federal funds sold and securities purchased under resale agreements
   
 
10,474
     
 
82
     
3.11
 
   
 
10,835
     
 
85
     
3.18
 
Trading account assets
   
 
16,061
     
 
194
     
4.82
 
   
 
16,248
     
 
186
     
4.57
 
Securities
   
 
62,917
     
 
961
     
6.11
 
   
 
58,282
     
 
933
     
6.40
 
Loans
                                                  
Commercial
                                                  
Commercial, financial and agricultural
   
 
57,571
     
 
1,068
     
7.36
 
   
 
58,534
     
 
1,027
     
7.03
 
Real estate—construction and other
   
 
7,809
     
 
81
     
4.10
 
   
 
8,115
     
 
84
     
4.19
 
Real estate—mortgage
   
 
17,188
     
 
228
     
5.26
 
   
 
17,310
     
 
231
     
5.36
 
Lease financing
   
 
7,105
     
 
189
     
10.65
 
   
 
7,286
     
 
193
     
10.60
 
Foreign
   
 
6,879
     
 
59
     
3.41
 
   
 
7,058
     
 
60
     
3.37
 
    
    
           
    
        
Total commercial
   
 
96,552
     
 
1,625
     
6.68
 
   
 
98,303
     
 
1,595
     
6.50
 
    
    
           
    
        
Consumer
                                                  
Real estate—mortgage
   
 
18,970
     
 
294
     
6.20
 
   
 
20,104
     
 
318
     
6.34
 
Installment loans and vehicle leasing
   
 
36,154
     
 
652
     
7.17
 
   
 
36,678
     
 
664
     
7.25
 
    
    
           
    
        
Total consumer
   
 
55,124
     
 
946
     
6.84
 
   
 
56,782
     
 
982
     
6.93
 
    
    
           
    
        
Total loans
   
 
151,676
     
 
2,571
     
6.74
 
   
 
155,085
     
 
2,577
     
6.66
 
    
    
           
    
        
Other earning assets
   
 
11,770
     
 
144
     
4.86
 
   
 
11,361
     
 
154
     
5.42
 
    
    
           
    
        
Total earning assets
   
 
255,789
     
 
3,966
     
6.17
 
   
 
254,424
     
 
3,948
     
6.22
 
             
    
           
    
Cash and due from banks
   
 
9,955
                     
 
10,110
                  
Other assets
   
 
55,767
                     
 
50,180
                  
    
                    
                 
Total assets
   
$
321,511
                     
$
314,714
                  
    
                    
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                  
Interest-bearing deposits
                                                  
Savings and NOW accounts
   
 
49,156
     
 
199
     
1.61
 
   
 
49,341
     
 
183
     
1.49
 
Money market accounts
   
 
43,495
     
 
239
     
2.18
 
   
 
40,035
     
 
224
     
2.25
 
Other consumer time
   
 
36,029
     
 
347
     
3.82
 
   
 
36,956
     
 
365
     
3.96
 
Foreign
   
 
6,491
     
 
30
     
1.84
 
   
 
7,195
     
 
33
     
1.88
 
Other time
   
 
6,134
     
 
32
     
2.07
 
   
 
6,220
     
 
31
     
1.93
 
    
    
           
    
        
Total interest-bearing deposits
   
 
141,305
     
 
847
     
2.38
 
   
 
139,747
     
 
836
     
2.40
 
Federal funds purchased and securities sold under repurchase agreements
   
 
31,884
     
 
241
     
3.00
 
   
 
31,894
     
 
229
     
2.88
 
Commercial paper
   
 
2,999
     
 
9
     
1.18
 
   
 
3,025
     
 
8
     
1.17
 
Other short-term borrowings
   
 
9,505
     
 
60
     
2.49
 
   
 
10,039
     
 
63
     
2.51
 
Long-term debt
   
 
38,477
     
 
289
     
3.00
 
   
 
39,107
     
 
297
     
3.04
 
    
    
           
    
        
Total interest-bearing liabilities
   
 
224,170
     
 
1,446
     
2.56
 
   
 
223,812
     
 
1,433
     
2.57
 
             
    
           
    
Noninterest-bearing deposits
   
 
38,772
                     
 
38,449
                  
Other liabilities
   
 
27,466
                     
 
22,877
                  
Stockholders’ equity
   
 
31,103
                     
 
29,576
                  
    
                    
                 
Total liabilities and stockholders’ equity
   
$
321,511
                     
$
314,714
                  
    
                    
                 
Interest income and rate earned
            
$
3,966
     
6.17
%
            
$
3,948
     
6.22
%
Interest expense and equivalent rate paid
            
 
1,446
     
2.24
 
            
 
1,433
     
2.26
 
             
    
           
    
Net interest income and margin(b)
            
$
2,520
     
3.93
%
            
$
2,515
     
3.96
%
             
    
           
    
(a)
 
Certain amounts presented in periods prior to the third quarter of 2002 have been reclassified to conform to the presentation in the third quarter of 2002.
(b)
 
The net interest margin includes (in basis points): 38, 39, 47, 27 and 18 in the third, second and first quarters of 2002 and in the fourth and third quarters of 2001, respectively, in net interest income from hedge-related derivative transactions.

PAGE 16
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
NET INTEREST INCOME SUMMARIES
(Unaudited)
 
First Quarter 2002
     
Fourth Quarter 2001
     
Third Quarter 2001
  
Average
Balances
     
Interest
Income/Expense
     
Average Rates
Earned/Paid
     
Average
Balances
     
Interest
Income/Expense
     
Average Rates
Earned/Paid
     
Average
Balances
     
Interest
Income/Expense
     
Average Rates
Earned/Paid
  
                                                           
                                                                       
$
4,341
     
 
22
     
2.07
%
   
$
3,333
     
 
21
     
2.50
%
   
$
1,740
     
 
17
     
3.86
%
 
 
12,020
     
 
93
     
3.13
 
   
 
11,784
     
 
99
     
3.32
 
   
 
10,031
     
 
107
     
4.25
 
 
14,703
     
 
165
     
4.53
 
   
 
14,552
     
 
175
     
4.81
 
   
 
14,572
     
 
199
     
5.43
 
 
56,287
     
 
884
     
6.29
 
   
 
55,708
     
 
905
     
6.49
 
   
 
50,621
     
 
877
     
6.93
 
                                                                       
                                                                       
 
59,927
     
 
1,049
     
7.10
 
   
 
62,220
     
 
1,202
     
7.67
 
   
 
55,490
     
 
1,142
     
8.17
 
 
8,126
     
 
86
     
4.28
 
   
 
7,919
     
 
101
     
5.02
 
   
 
4,512
     
 
66
     
5.88
 
 
17,163
     
 
238
     
5.61
 
   
 
17,139
     
 
263
     
6.10
 
   
 
10,923
     
 
184
     
6.66
 
 
7,442
     
 
193
     
10.37
 
   
 
7,578
     
 
199
     
10.51
 
   
 
6,441
     
 
168
     
10.42
 
 
6,831
     
 
62
     
3.71
 
   
 
7,374
     
 
81
     
4.34
 
   
 
6,267
     
 
83
     
5.26
 
    
           
    
           
    
        
 
99,489
     
 
1,628
     
6.62
 
   
 
102,230
     
 
1,846
     
7.17
 
   
 
83,633
     
 
1,643
     
7.80
 
    
           
    
           
    
        
                                                                       
 
21,444
     
 
354
     
6.60
 
   
 
24,032
     
 
414
     
6.90
 
   
 
19,816
     
 
353
     
7.12
 
 
36,131
     
 
668
     
7.49
 
   
 
36,577
     
 
724
     
7.87
 
   
 
29,577
     
 
637
     
8.57
 
    
           
    
           
    
        
 
57,575
     
 
1,022
     
7.16
 
   
 
60,609
     
 
1,138
     
7.49
 
   
 
49,393
     
 
990
     
7.99
 
    
           
    
           
    
        
 
157,064
     
 
2,650
     
6.82
 
   
 
162,839
     
 
2,984
     
7.29
 
   
 
133,026
     
 
2,633
     
7.87
 
    
           
    
           
    
        
 
11,073
     
 
140
     
5.13
 
   
 
11,668
     
 
179
     
6.11
 
   
 
9,682
     
 
155
     
6.35
 
    
           
    
           
    
        
 
255,488
     
 
3,954
     
6.24
 
   
 
259,884
     
 
4,363
     
6.68
 
   
 
219,672
     
 
3,988
     
7.23
 
        
    
           
    
           
    
 
10,553
                     
 
10,313
                     
 
8,737
                  
 
49,281
                     
 
49,024
                     
 
39,337
                  
                    
                    
                 
$
315,322
                     
$
319,221
                     
$
267,746
                  
                    
                    
                 
                                                                       
                                                                       
 
48,931
     
 
175
     
1.45
 
   
 
47,527
     
 
222
     
1.85
 
   
 
41,897
     
 
259
     
2.46
 
 
37,589
     
 
265
     
2.86
 
   
 
35,023
     
 
282
     
3.19
 
   
 
23,816
     
 
260
     
4.32
 
 
38,166
     
 
399
     
4.24
 
   
 
40,931
     
 
484
     
4.70
 
   
 
35,469
     
 
474
     
5.30
 
 
7,578
     
 
35
     
1.85
 
   
 
8,603
     
 
56
     
2.58
 
   
 
7,441
     
 
71
     
3.74
 
 
8,119
     
 
41
     
2.09
 
   
 
10,325
     
 
72
     
2.73
 
   
 
11,662
     
 
119
     
4.07
 
    
           
    
           
    
        
 
140,383
     
 
915
     
2.64
 
   
 
142,409
     
 
1,116
     
3.11
 
   
 
120,285
     
 
1,183
     
3.90
 
 
 
31,940
     
 
211
     
2.68
 
   
 
33,028
     
 
298
     
3.59
 
   
 
26,982
     
 
332
     
4.87
 
                                                                       
 
3,435
     
 
10
     
1.15
 
   
 
3,709
     
 
29
     
3.07
 
   
 
2,950
     
 
25
     
3.36
 
 
10,550
     
 
65
     
2.51
 
   
 
9,617
     
 
45
     
1.86
 
   
 
9,870
     
 
60
     
2.45
 
 
41,057
     
 
276
     
2.69
 
   
 
42,979
     
 
391
     
3.64
 
   
 
38,220
     
 
414
     
4.34
 
    
           
    
           
    
        
 
227,365
     
 
1,477
     
2.63
 
   
 
231,742
     
 
1,879
     
3.22
 
   
 
198,307
     
 
2,014
     
4.04
 
        
    
           
    
           
    
 
38,126
                     
 
37,562
                     
 
30,313
                  
 
20,928
                     
 
21,377
                     
 
18,796
                  
 
28,903
                     
 
28,540
                     
 
20,330
                  
                    
                    
                 
 
$315,322
                     
$
319,221
                     
$
267,746
                  
                    
                    
                 
        
$
3,954
     
6.24
%
            
$
4,363
     
6.68
%
            
$
3,988
     
7.23
%
        
 
1,477
     
2.34
 
            
 
1,879
     
2.87
 
            
 
2,014
     
3.65
 
        
    
           
    
           
    
        
$
2,477
     
3.90
%
            
$
2,484
     
3.81
%
            
$
1,974
     
3.58
%
        
    
           
    
           
    

 
PAGE 17
 
WACHOVIA CORPORATION AND SUBSIDIARIES
 
NET INTEREST INCOME SUMMARIES(a)
(Unaudited)
 
    
Nine Months Ended 2002
     
Nine Months Ended 2001
  
    
Average Balances
     
Interest
Income/Expense
     
Average Rates
Earned/Paid
     
Average
Balances
     
Interest
Income/Expense
     
Average Rates
Earned/Paid
  
    
(In millions)
  
ASSETS
                                                  
Interest-bearing bank balances
   
$
3,276
     
 
49
     
2.00
%
   
$
2,031
     
 
71
     
4.70
%
Federal funds sold and securities purchased under resale agreements
   
 
11,104
     
 
260
     
3.14
 
   
 
8,674
     
 
301
     
4.64
 
Trading account assets
   
 
15,676
     
 
545
     
4.64
 
   
 
13,955
     
 
607
     
5.80
 
Securities
   
 
59,186
     
 
2,778
     
6.26
 
   
 
50,324
     
 
2,721
     
7.21
 
Loans
                                                  
Commercial
                                                  
Commercial, financial and agricultural
   
 
58,669
     
 
3,144
     
7.16
 
   
 
54,029
     
 
3,370
     
8.34
 
Real estate—construction and other
   
 
8,016
     
 
251
     
4.19
 
   
 
3,651
     
 
180
     
6.63
 
Real estate—mortgage
   
 
17,220
     
 
697
     
5.41
 
   
 
9,554
     
 
513
     
7.17
 
Lease financing
   
 
7,276
     
 
575
     
10.54
 
   
 
6,201
     
 
486
     
10.44
 
Foreign
   
 
6,923
     
 
181
     
3.49
 
   
 
5,682
     
 
258
     
6.08
 
    
    
           
    
        
Total commercial
   
 
98,104
     
 
4,848
     
6.60
 
   
 
79,117
     
 
4,807
     
8.12
 
    
    
           
    
        
Consumer
                                                  
Real estate—mortgage
   
 
20,164
     
 
966
     
6.39
 
   
 
18,295
     
 
1,002
     
7.30
 
Installment loans and vehicle leasing
   
 
36,321
     
 
1,984
     
7.30
 
   
 
26,666
     
 
1,789
     
8.97
 
    
    
           
    
        
Total consumer
   
 
56,485
     
 
2,950
     
6.97
 
   
 
44,961
     
 
2,791
     
8.29
 
    
    
           
    
        
Total loans
   
 
154,589
     
 
7,798
     
6.74
 
   
 
124,078
     
 
7,598
     
8.18
 
    
    
           
    
        
Other earning assets
   
 
11,404
     
 
438
     
5.13
 
   
 
10,352
     
 
598
     
7.72
 
    
    
           
    
        
Total earning assets
   
 
255,235
     
 
11,868
     
6.21
 
   
 
209,414
     
 
11,896
     
7.59
 
             
    
           
    
Cash and due from banks
   
 
10,204
                     
 
8,269
                  
Other assets
   
 
51,766
                     
 
36,135
                  
    
                    
                 
Total assets
   
$
317,205
                     
$
253,818
                  
    
                    
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                  
Interest-bearing deposits
                                                  
Savings and NOW accounts
   
 
49,143
     
 
557
     
1.52
 
   
 
40,109
     
 
790
     
2.63
 
Money market accounts
   
 
40,395
     
 
728
     
2.41
 
   
 
19,565
     
 
662
     
4.52
 
Other consumer time
   
 
37,043
     
 
1,111
     
4.01
 
   
 
34,389
     
 
1,457
     
5.67
 
Foreign
   
 
7,084
     
 
98
     
1.86
 
   
 
6,885
     
 
238
     
4.62
 
Other time
   
 
6,818
     
 
104
     
2.03
 
   
 
12,452
     
 
481
     
5.17
 
    
    
           
    
        
Total interest-bearing deposits
   
 
140,483
     
 
2,598
     
2.47
 
   
 
113,400
     
 
3,628
     
4.28
 
Federal funds purchased and securities sold under repurchase agreements
   
 
31,906
     
 
681
     
2.85
 
   
 
26,379
     
 
1,066
     
5.40
 
Commercial paper
   
 
3,151
     
 
27
     
1.17
 
   
 
2,643
     
 
83
     
4.20
 
Other short-term borrowings
   
 
10,026
     
 
188
     
2.50
 
   
 
9,754
     
 
215
     
2.95
 
Long-term debt
   
 
39,538
     
 
862
     
2.91
 
   
 
37,041
     
 
1,454
     
5.24
 
    
    
           
    
        
Total interest-bearing liabilities
   
 
225,104
     
 
4,356
     
2.59
 
   
 
189,217
     
 
6,446
     
4.55
 
             
    
           
    
Noninterest-bearing deposits
   
 
38,451
                     
 
28,515
                  
Other liabilities
   
 
23,781
                     
 
18,669
                  
Stockholders’ equity
   
 
29,869
                     
 
17,417
                  
    
                    
                 
Total liabilities and stockholders’ equity
   
$
317,205
                     
$
253,818
                  
    
                    
                 
Interest income and rate earned
            
$
11,868
     
6.21
%
            
$
11,896
     
7.59
%
Interest expense and equivalent rate paid
            
 
4,356
     
2.28
 
            
 
6,446
     
4.12
 
             
    
           
    
Net interest income and margin (b)
            
$
7,512
     
3.93
%
            
$
5,450
     
3.47
%
             
    
           
    
(a)
 
Certain amounts presented in the nine months ended 2001 have been reclassified to conform to the presentation in the nine months ended 2002.
(b)
 
The net interest margin includes (in basis points) : 41 and 15 for the nine months ended September 30, 2002, and September 30, 2001, respectively, in net interest income from hedge-related derivative transactions.