full text:
Strength in core banking and brokerage businesses offset by impact of global fixed income market disruption

    3rd QUARTER 2007 COMPARED WITH 3rd QUARTER 2006

    -- Lower earnings reflecting disruption in the capital markets resulting
       in valuation losses of $1.3 billion before tax and reduced origination
       and distribution revenues in the Corporate and Investment Bank.

    -- Revenue growth led by a 28 percent increase in net interest income,
       including Golden West, coupled with disciplined expense control
       partially offset lower fee income.

    -- Average loans up 53 percent, driven by higher consumer real estate
       loans related to the Golden West acquisition, and strong organic growth
       in commercial, international and auto lending.

    -- Average core deposits up 30 percent, including Golden West. Sales
       productivity solid in expanded markets.

    -- Net charge-offs rose 3 basis points to an annualized 0.19 percent of
       average net loans. Increased provision for credit losses reflects
       modest deterioration in credit quality, a more uncertain credit
       environment and loan growth. Higher nonperforming assets largely
       related to Golden West consumer real estate NPAs and to higher
       commercial real estate NPAs largely related to downgrades of
       residential developers.

    -- Customer loyalty scores at near record 53.1 percent; organic customer
       acquisition grew 14.8 percent annualized.

Wachovia Corp. (NYSE: WB) today reported net income of $1.69 billion, or 89 cents per share, in the third quarter of 2007 compared with $1.88 billion, or $1.17 per share, in the third quarter of 2006.
After-tax net merger-related expenses amounted to 1 cent per common share in the third quarter of 2007 and 2 cents per common share in the third quarter of 2006. Excluding these expenses, earnings were $1.71 billion, or 90 cents per share, in the third quarter of 2007 and $1.90 billion, or $1.19 per share, in the third quarter of 2006.
"I'm very proud of our ability to provide capital, liquidity and advice to our customers and peers in the face of the disruption in the fixed income markets in the third quarter. These conditions clearly had a disappointing impact on the results of market-oriented businesses, but the strength in our core banking and brokerage businesses continued to serve us very well," said Ken Thompson, Wachovia chairman and chief executive officer. "Our loan and deposit trends were solid, and our retail brokerage performance was strong -- and poised for even more growth as our A.G. Edwards colleagues join our team. Additionally, the first of our World Savings branch and deposit conversions was completed successfully last weekend, and going forward, attention in our expanded platform returns fully to sales production. While the impact of the market disruption was significant, it's worth noting that the majority of the lower market valuations in the third quarter largely arose from a repricing of risk in the marketplace and do not reflect deterioration in the underlying credit quality of the assets in our leveraged finance and commercial real estate securitization businesses. Looking ahead, we're taking the appropriate steps to ensure that as markets remain unsettled, we focus intently on actively managing our exposures and controlling costs. Longer term, we believe the challenges of the third quarter will be an advantage to companies like Wachovia with strong capital and liquidity positions and a clear understanding of the needs of customers and investors."
Results in the third quarter of 2007 included the full quarter impact of the October 1, 2006, acquisition of Golden West. Results do not include the impact of the acquisition of A.G. Edwards, Inc., a retail brokerage firm headquartered in St. Louis, Missouri, which closed on October 1 of this year.
For more information: http://www.wachovia.com/