Exhibit (19)

FINANCIAL HIGHLIGHTS


	*Three Months Ended*					Percent
	*March 31,*					Increase
(Dollars in millions, except per share data)	*2008*			2007		(Decrease)

EARNINGS SUMMARY
Net interest income (GAAP)	$	4,752			4,500		6	%
Tax-equivalent adjustment		53			37		43

Net interest income (Tax-equivalent)		4,805			4,537		6
Fee and other income		2,777			3,734		(26	)

Total revenue (Tax-equivalent)		7,582			8,271		(8	)
Provision for credit losses		2,831			177		—
Other noninterest expense		5,097			4,493		13
Merger-related and restructuring expenses		241			10		—
Other intangible amortization		103			118		(13	)

Total noninterest expense		5,441			4,621		18
Minority interest in income of consolidated subsidiaries		155			136		14

Income (loss) before income taxes (benefits) (Tax-equivalent)		(845	)		3,337		—
Tax-equivalent adjustment		53			37		43
Income taxes (benefits)		(234	)		998		—

Net income (loss)		(664	)		2,302		—
Dividends on preferred stock		43			—		—

Net income (loss) available to common stockholders	$	(707	)		2,302		—	%

Diluted earnings per common share (a)
Net income (loss) available to common stockholders	$	(0.36	)		1.20		—	%
Return on average common stockholders’ equity		(3.81	)%		13.47		—
Return on average total stockholders’ equity		(3.39	)		13.47		—
Return on average assets (b)		(0.34	)%		1.35		—

ASSET QUALITY
Allowance for loan losses as % of loans, net		1.37	%		0.80		—
Allowance for loan losses as % of nonperforming assets		78			189		—
Allowance for credit losses as % of loans, net		1.41			0.84		—
Net charge-offs as % of average loans, net		0.66			0.15		—
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		1.70	%		0.42		—

CAPITAL ADEQUACY
Tier I capital ratio		7.42	%		7.35		—
Total capital ratio		12.05			11.41		—
Leverage ratio		6.18	%		6.08		—

OTHER FINANCIAL DATA
Net interest margin		2.92	%		3.06		—
Fee and other income as % of total revenue		36.62			45.15		—
Effective income tax rate		26.02	%		30.22		—

BALANCE SHEET DATA
Securities	$	114,183			106,841		7	%
Loans, net		480,482			421,663		14
Total assets		808,575			702,669		15
Total deposits		444,964			405,270		10
Long-term debt		175,653			142,334		23
Stockholders’ equity	$	77,992			69,786		12	%

OTHER DATA
Average basic common shares (In millions)		1,963			1,894		4	%
Average diluted common shares (In millions)		1,977			1,925		3
Actual common shares (In millions)		1,992			1,913		4
Dividends paid per common share	$	0.64			0.56		14
Dividend payout ratio on common shares		(177.78	)%		46.67		—
Book value per common share	$	36.24			36.47		(1	)
Common stock price		27.00			55.05		(51	)
Market capitalization	$	53,782			105,330		(49	)
Common stock price to book value		75	%		151		(50	)
FTE employees		120,378			110,369		9
Total financial centers/brokerage offices		4,850			4,167		16
ATMs		5,308			5,146		3	%

(a) Calculated using average basic common shares in the first quarter of 2008.

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

Management’s Discussion and Analysis

This discussion contains forward-looking statements. Please refer to our First Quarter 2008 Report on Form 10-Q for a discussion of various factors that could cause our actual results to differ materially from those expressed in such forward-looking statements.

Executive Summary

Summary of Results of Operations


	Three Months Ended
	March 31,
(In millions, except per share data)	*2008*			2007

Net interest income (GAAP)	$	4,752			4,500
Tax-equivalent adjustment		53			37

Net interest income ^(a)		4,805			4,537
Fee and other income		2,777			3,734

Total revenue ^(a)		7,582			8,271
Provision for credit losses		2,831			177
Other noninterest expense		5,097			4,493
Merger-related and restructuring expenses		241			10
Other intangible amortization		103			118

Total noninterest expense		5,441			4,621
Minority interest in income of consolidated subsidiaries		155			136
Income taxes (benefits)		(234	)		998
Tax-equivalent adjustment		53			37

Net income (loss)		(664	)		2,302

Dividends on preferred stock		43			—

Net income (loss) available to common stockholders		(707	)		2,302

Diluted earnings per common share	$	(0.36	)		1.20


^(a)		Tax-equivalent.

Against a backdrop of the weakest domestic economy in more than 16 years, sudden and severe home price deterioration particularly in certain markets in California and Florida, and dislocated capital markets, we took several actions in the first quarter of 2008 to fortify Wachovia’s credit reserves and balance sheet. Solid underlying performance in the majority of our businesses in the first quarter of 2008 was overwhelmed by the increased credit provision of $2.8 billion and additional net market disruption-related valuation losses of $2.3 billion. Subsequent to our announcement of first quarter financial results on April 14, 2008, these valuation losses now include a $314 million loss on assets related to our bank-owned life insurance (BOLI) portfolio. As a result, our first quarter 2008 earnings reflect a net loss available to common shareholders of $707 million, or 36 cents per share, compared with earnings of $2.3 billion, or $1.20 per share, in the first quarter of 2007. More information on the May 6, 2008, announcement regarding valuation losses related to our BOLI assets is in the Market Disruption, Fee Income and Parent sections.

Results for the quarter benefited from $445 million in net gains related to the adoption and application of new fair value accounting standards and a $225 million gain from our ownership in Visa, which completed its initial public offering in March.

On April 14, 2008, we announced the following capital initiatives designed to further strengthen and enhance our capital levels and improve our operational flexibility in the face of deteriorating economic conditions:

•		A public offering of an aggregate $8.05 billion in capital consisting of concurrent offerings of common stock and noncumulative perpetual convertible preferred stock, and
•		A reduction in the quarterly common stock dividend, which preserves approximately $2.1 billion of capital annually.

On April 30, 2008, we announced we expect to record an after-tax noncash charge of between $800 million and $1 billion in the second quarter of 2008 related to certain leasing transactions we entered into between 1999 and 2003 involving lease-to-service contracts and leases of qualified technological equipment, which are widely known as sale-in, lease-out or “SILO” transactions. We discontinued originating these transactions in 2003. The decision to record the noncash charge came after our analysis of a federal appeals court opinion in a case involving another financial institution that disallowed tax benefits associated with certain lease-in, lease-out or “LILO” transactions. While the tax law involving SILO transactions remains unsettled, as we disclosed in Note 1 to Consolidated Financial Statements in our 2007 Annual Report, applicable accounting standards require us to update the tax cash flow assessment on our SILO transactions in light of the federal court ruling. A majority of the charge will be recognized as income over the remaining terms of the affected leases, generally 35 to 40 years. More information is in Note 1 to Consolidated Financial Statements in our First Quarter 2008 Report on Form 10-Q.

The provision for credit losses of $2.8 billion, up from $177 million in the first quarter of 2007, exceeded net charge-offs by $2.1 billion. This included $1.1 billion related to our payment option mortgage product (Pick-a-Payment), reflecting higher expected 12-month forward losses in the portfolio that incorporate the use of a new dynamic loss model which more closely ties deterioration in housing prices and changes in borrower behavior related to loss of equity in their home. In general, the model is more forward-looking and less reliant on historical loss experience. These changes also reflect our current view that nationwide home prices will continue to decline until mid 2009.

On January 1, 2008, we adopted Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements,” and SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS 157 defines “fair value,” and is applied in any situation where an asset or liability is measured at fair value. SFAS 159 permits companies to elect to carry certain financial instruments at fair value with corresponding changes in fair value recorded in the results of operations.

The adoption and application of these standards resulted in a net gain of $445 million in the first quarter 2008 results of operations, of which net gains of $517 million related to SFAS 157 and net losses of $72 million related to SFAS 159. Of the net gains resulting from the adoption and application of SFAS 157, $486 million related to a change in the methodology used to calculate the fair value of certain investments in private equity funds held in our Principal Investing business. For more information on the adoption and application of these standards, please refer to Note 1 to Consolidated Financial Statements.

Market Disruption-Related Losses The net market disruption-related valuation losses in the first quarter of 2008 amounted to $2.3 billion, of which $1.6 billion was in our Corporate and Investment Bank, and $723 million was in the Parent (see Market Disruption-Related Losses, Net table on the next page).

Market Disruption-Related Losses, Net


	*2008*												*2007*
	*First Quarter*												*2nd Half*			*Cumulative*
	*Trading*			*Securities*
	*profits*			*gains*			*Other*
(Pre-tax dollars in millions)	*(losses)*			*(losses)*			*Income*			*Total*			*Total*			*Total*

Corporate and Investment Bank
ABS CDO and other subprime-related	$	(281	)		(67	)		9			(339	)		(1,048	)		(1,387	)
Commercial mortgage (CMBS)		(283	)		—			(238	)		(521	)		(1,088	)		(1,609	)
Consumer mortgage		(187	)		—			(64	)		(251	)		(205	)		(456	)
Leveraged finance		483			—			(792	)		(309	)		(179	)		(488	)
Other		(131	)		(4	)		(9	)		(144	)		(50	)		(194	)

Total		(399	)		(71	)		(1,094	)		(1,564	)		(2,570	)		(4,134	)
Capital Management
Asset-backed commercial paper		—			—			—			—			(57	)		(57	)
Parent
Securities impairment losses		—			(409	)		—			(409	)		(94	)		(503	)
Valuation losses on BOLI contracts		—			—			(314	)		(314	)		—			(314	)

Total, net	$	(399	)		(480	)		(1,408	)		(2,287	)		(2,721	)		(5,008	)

Discontinued operations (BluePoint)	$	—			—			—			—			(330	)		(330	)

For a number of years, we have been a major participant in structuring and underwriting fixed income investment products backed by pools of loans, such as commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (RMBS), as well as collateralized debt obligations (CDOs) that are typically backed by pools of bonds including CMBS and RMBS, loans and other assets. We have also been a participant in underwriting and syndicating leveraged commercial loans.

Our CMBS and RMBS structuring activities involve consumer and commercial real estate loans underwritten primarily through our direct origination channels. Our CDO business involves transactions predominantly backed by commercial loans and commercial real estate loans. While we do not operate a subprime residential origination channel, we have purchased subprime residential assets such as RMBS as part of our CDO distribution strategy.

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

Rising defaults and delinquencies in subprime residential mortgages as well as rating agencies’ downgrades of a large number of subprime RMBS have led to continued declines in the valuations of these types of securities and certain indices that serve as a reference point for determining the value of such securities. The continued pressures of the weaker housing markets despite relatively solid commercial real estate fundamentals and performance of underlying loans, particularly in income-producing categories, as well as growing concerns over the U.S. economy and reduced liquidity in the commercial real estate sector led to further declines in the value of CMBS and CDOs backed by commercial real estate loans. In addition, investor reaction to weak market conditions and expectations of returns on commercial loans fueled increased declines in the value of leveraged finance commitments.

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


				*3/31/08*
				*Exposure*
	*3/31/08*			*Hedged With*			*3/31/08*			*12/31/07*
	*Gross*			*Various*			*Net*			*Net*
($ in millions)	*Exposure*			*Instruments*			*Exposure*			*Exposure*

ABS CDO-related exposures:
Super senior ABS CDO exposures
High grade	$	2,403			(2,403	)		—			—
Mezzanine		2,038			(1,599	)		439			613
CDO-squared		—			—			—			—

Total super senior ABS CDO exposures		4,441			(4,002	)		439			613
Other retained ABS CDO-related exposures		67			—			67			208

Total ABS CDO-related exposures ^(a)		4,508			(4,002	)		506			821
Subprime RMBS exposures:
AAA rated		1,684			—			1,684			1,948
Below AAA rated (net of hedges) ^(b)		(365	)		—			(365	)		(253	)

Total subprime RMBS exposures		1,319			—			1,319			1,695
Total subprime-related exposure		5,827			(4,002	)		1,825			2,516
Commercial mortgage-related (CMBS)		3,793			(840	)		2,953			7,564
Leveraged finance (net of applicable fees)	$	n.a.			n.a.			8,157			9,149


^(a)		At 3/ 31/ 08, $2.0 billion is hedged with highly rated monoline financial guarantors; $900 million with a AA-rated large European bank, under margin agreements; and $1.1 billion with a large AA-rated global multi-line insurer, under margin agreements.

^(b)		Net short position due to hedging activities.

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

Since the market disruption began in July 2007, we have elected to transfer certain assets that were originally intended for distribution to the loan portfolio based on our view that the market valuations provide attractive longer term investment returns. These assets were transferred at fair value and are no longer being marketed. In the first quarter of 2008, these transfers amounted to $6.9 billion, which included $4.6 billion of commercial and commercial real estate exposure, of which $529 million was unfunded; $2.0 billion of consumer real estate loans and $801 million of auto loans.

As of March 31, 2008, our notional subprime ABS CDO distribution exposure, net of hedges with financial guarantors, was $506 million and $1.7 billion of our subprime RMBS exposure was rated AAA or equivalent by rating agencies.

Our CMBS mark-to-market exposure of $3.0 billion at March 31, 2008, was down from $7.6 billion at December 31, 2007. More than 50 percent of the exposure was AAA-rated or equivalent. Leveraged finance exposure at March 31, 2008, of $8.2 billion included $6.5 billion of unfunded commitments.

The fair values of all of our assets that are subject to market valuation adjustments, including subprime RMBS and ABS CDOs, CMBS warehouse assets and leveraged finance commitments, depend on market conditions and assumptions that may change over time. Accordingly, the fair values of these investments in future periods and their effect on our financial results will depend on future market developments and assumptions and may be materially greater or less than the changes in values discussed above.

Market disruption-related losses of $723 million in the Parent included securities impairments of $409 million with $301 million related to fixed income securities, of which $269 million resulted from revised cash flow estimates largely on RMBS and subprime RMBS securities. The remaining $108 million of impairments was recorded on publicly traded equity securities. Parent results also reflected the previously mentioned $314 million valuation losses related to our BOLI portfolio.

In the second half of 2007, we recorded market disruption-related losses of $330 million related to BluePoint Re Limited, a Bermuda-based monoline bond reinsurer and a consolidated subsidiary of Wachovia. There were no additional losses in the first quarter of 2008. The management of BluePoint is currently pursuing a restructuring strategy that, if completed, will lead to a significant reduction in our ownership interest and result in the deconsolidation of BluePoint in Wachovia’s financial statements. Accordingly, BluePoint results are presented as discontinued operations. More information is in the Parent section.

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

Other Earnings Factors Results included after-tax net merger-related and restructuring expenses of $123 million, or 6 cents per share, in the first quarter of 2008 and $6 million in the first quarter of 2007, which had no effect on earnings per share. Revenues and expenses also reflect the impact of the A.G. Edwards Inc. acquisition from October 1, 2007; and a majority interest investment in European Credit Management Ltd. (ECM), a London-based fixed income investment management firm, from January 31, 2007.

Growth Trends The market disruption and credit headwinds that continued to weigh on our first quarter 2008 revenue overwhelmed solid performance in many of our businesses. In the first quarter of 2008 compared with the first quarter of 2007, growth came from:

	•		6 percent higher net interest income, driven by higher loans and deposits, despite a 14 basis point decline in the margin that largely reflected customer preference for fixed rate deposits and loans in a rising rate environment as well as the effect of higher wholesale borrowing costs and increased liquidity levels.

	•		Strength in fiduciary and asset management fees and in brokerage commissions, reflecting the A.G. Edwards acquisition and organic growth, as well as higher traditional banking fees. These results were muted by a 17 percent decline in fee and other income as a result of the market disruption-related valuation losses of $2.3 billion, somewhat offset by $445 million of net gains from the January 1, 2008, adoption and application of new fair value accounting standards and the $225 million Visa initial public offering gain.

Most of our core banking businesses, while absorbing increased credit costs, continued to generate strong underlying performance, as did our brokerage operations. The General Bank’s earnings declined to $1.2 billion, down $249 million, driven by rapidly rising credit costs and related expenses, which overshadowed continued strong sales momentum. Wealth Management earned $92 million on 4 percent revenue growth in challenging markets. The capital markets disruption hit our Corporate and Investment Bank (CIB) particularly hard, resulting in a segment loss of $77 million driven by $1.6 billion in net valuation losses reflecting continued disruption in the capital markets and reduced origination volume in most markets-related businesses. The losses were somewhat offset by the $486 million of principal investing net gains related to the adoption and application of new fair value accounting standards. In addition, CIB has a number of businesses that continued to generate solid results and were not adversely affected by the market disruption, as described further in the Corporate and Investment Bank section. Capital Management generated earnings of $381 million in the first quarter of 2008, reflecting 42 percent revenue growth, primarily related to the A.G. Edwards acquisition.

Average loans increased 12 percent from the first quarter of 2007 to $465.9 billion. Average consumer loans rose 4 percent, driven by organic growth in traditional mortgage loans. The payment option mortgage product increased 2 percent as slower prepayments offset lower volumes. Certain of the

payment options under this product result in deferral of interest, which is included in the loan balance. The balance of deferred interest was $3.5 billion at March 31, 2008, and $3.1 billion at December 31, 2007.

Average commercial loan growth of 26 percent reflected strength in large corporate and middle-market commercial loans and in commercial real estate. This included the transfer of $4.1 billion in commercial loans and $2.8 billion in consumer loans from the held-for-sale portfolio in the first quarter of 2008. We currently expect new loan growth to be more modest due to increased pricing discipline and tighter underwriting guidelines.

Average core deposits increased 7 percent from the first quarter of 2007 to $394.5 billion. We expect deposits to grow further in 2008 as we continue to expand product distribution in the newly integrated former World Savings branches, offer FDIC sweep deposits in the former A.G. Edwards franchise, increase productivity in our de novo (or new) branches and benefit from new product introductions throughout our marketplace. We also continue to enhance the efficiency of our financial center network and expand our presence in higher growth markets. In the first quarter of 2008, we opened 23 de novo branches, consolidated 58 branches and expanded our commercial banking presence, which added $44 million to noninterest expense.

The increase in provision expense noted above was prompted by continuing home price devaluation in certain stressed markets, particularly in Florida and California. In addition, we refined our credit reserve modeling for the payment option mortgage portfolio in response to the rapid decreases in home market values and the related effect on borrower behavior. The model better captures multiple and more granular factors that affect expected losses over the succeeding 12 months given our view that changes in borrowers’ equity levels are a greater predictor of future losses than credit scores and historical payment experience. In the first quarter of 2008 our net charge-offs were $765 million, an increase of $610 million from the first quarter of 2007, and represented a 51 basis point increase in the net charge-off ratio to 0.66 percent of average net loans. This included increased commercial net charge-offs of $237 million, up $209 million from the first quarter of 2007, including $120 million from consumer-related commercial real estate and $66 million relating to a Corporate and Investment Bank loan backed by ABS securities. Consumer net charge-offs increased $401 million to $528 million, driven by net losses of $341 million in consumer real estate, including $240 million in our payment option mortgage product, and $145 million in auto loans.

Nonperforming assets, including loans held for sale, were $8.4 billion, representing a ratio of nonperforming assets to loans, foreclosed properties and loans held for sale of 1.70 percent, an increase from $1.8 billion, or 42 basis points, from the first quarter of 2007, largely reflecting increases relating to our payment option mortgage product and residential-related commercial real estate. We continue to mitigate the risk and volatility of our balance sheet through prudent risk management practices, including increased collection efforts and the enhanced credit reserve modeling described above.

In the first quarter of 2008, we paid common stockholders dividends of $1.3 billion, or 64 cents per share. On April 13, 2008, the board of directors declared a quarterly common stock dividend of $0.375 per common share, payable on June 16, 2008, to stockholders of record on May 30, 2008. This dividend level is consistent with Wachovia’s capital needs and growth opportunities for each of its business segments, and over the intermediate horizon, aligns with an anticipated 40 percent to 50 percent dividend payout ratio before merger-related and restructuring charges and other intangible amortization.

We remain well positioned in a challenging environment with a strong liquidity position and fortified capital levels. The concurrent April 2008 issuances of $4.025 billion of convertible preferred

stock and $4.025 billion of common stock, the February 2008 issuance of $3.5 billion of preferred stock, and the December 2007 issuances of $2.3 billion of preferred stock and $838 million of trust preferred securities increased tier 1 capital by approximately 225 basis points. We are well capitalized under regulatory guidelines with a tier 1 capital ratio of 7.42 percent, a leverage ratio of 6.18 percent and a tangible capital ratio of 4.31 percent at March 31, 2008. On a pro forma basis including the April issuances, our tier 1 ratio would have been approximately 8.70 percent at March 31, 2008, and our tangible capital ratio would have been approximately 5.30 percent.

More information is in the Stockholders’ Equity section.

Outlook

Despite the disruption in the capital markets that began in July 2007, our diversified business model and fundamental strengths continued to serve us well even in the face of significant deterioration in the housing market and pressure on our markets-oriented businesses. We expect that revenue generation from many of our markets-related businesses will be challenged over the next few quarters and we anticipate higher credit costs through 2009. But longer term, we are optimistic that our strong capital and liquidity position us well to capitalize on the opportunities arising in the wake of these market conditions.

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

Our outlook for 2008, which follows, generally assumes a slowing U.S. economy overall and the benefits of a steeper yield curve and low short-term interest rates. Based on these assumptions, for full year 2008 compared with full year 2007, and before merger-related and restructuring expenses, we expect:

	•		Net interest income will grow approximately 5 percent to 7 percent in the second quarter of 2008 compared with the first quarter of 2008, and then grow slightly over the rest of 2008 reflecting the benefits of our liability sensitive interest rate positioning, modest loan growth, continued deposit growth including growth in FDIC sweep deposits, the capital issuance and a lower dividend rate.

	•		Fee income will remain exposed to net market disruption losses/gains.

	•		Higher charge-offs and continued increases in the allowance throughout the rest of 2008.

	•		An after-tax noncash charge of between $800 million and $1 billion in the second quarter of 2008, related to SILO transactions, as noted earlier.

	•		An effective income tax rate (updated subsequent to our first quarter 2008 earnings release in April 2008) of approximately 32.5 percent to 33 percent on a tax-equivalent basis.

	•		No share repurchases in the rest of 2008. We estimate that our second quarter 2008 common and convertible preferred issuances will increase our 2008 fully diluted shares by approximately 120 million related to the common issuance and an insignificant amount for the convertible preferred issuance.

We are focused on ensuring a successful integration of the A.G. Edwards acquisition, which is scheduled to continue through the third quarter of 2009. The integration of former World Savings offices in the overlapping states in our Eastern regions was successfully completed in February 2008, while the offices in our Western regions were integrated in the fall of 2007.

When consistent with our overall business strategy, we may consider disposing of certain assets, branches, subsidiaries or lines of business. We routinely explore acquisition opportunities in areas that would complement our core businesses, and conduct due diligence activities in connection with possible acquisitions. As a result, acquisition discussions and, in some cases, negotiations take place and future acquisitions involving cash, debt or equity securities could occur.

Critical Accounting Policies

Our accounting and reporting policies are in accordance with U.S. GAAP, and conform to general practices within the applicable industries. We use a significant amount of judgment and estimates based on assumptions for which the actual results are uncertain when we make the estimations. We have identified five policies as being particularly sensitive to judgments and the extent to which significant estimates are used: allowance for loan losses and the reserve for unfunded lending commitments (which is recorded in other liabilities); fair value of certain financial instruments; consolidation; goodwill impairment; and contingent liabilities. For more information on these critical accounting policies, please refer to our 2007 Annual Report on Form 10-K.

Corporate Results of Operations

Average Balance Sheets and Interest Rates


	*Three Months Ended*					Three Months Ended
	*March 31, 2008*					March 31, 2007
	*Average*		*Interest*			Average		Interest
(In millions)	*Balances*		*Rates*			Balances		Rates

Interest-bearing bank balances	$	4,253		4.85	%	$	1,523		7.80	%
Federal funds sold		11,865		3.49			14,124		5.07
Trading account assets		44,655		5.28			29,681		5.97
Securities		110,401		5.60			108,071		5.42
Commercial loans, net		198,578		5.72			157,288		7.15
Consumer loans, net		267,358		7.04			257,973		7.55

Total loans, net		465,936		6.48			415,261		7.40

Loans held for sale		11,592		7.71			16,748		6.16
Other earning assets		10,331		5.69			8,255		6.82

Risk management derivatives		—		0.04			—		0.03

Total earning assets		659,033		6.23			593,663		6.90

Interest-bearing deposits		387,021		3.03			338,130		3.63
Federal funds purchased		35,956		3.45			35,142		4.97
Commercial paper		5,509		2.74			4,920		4.72
Securities sold short		6,919		3.63			8,709		3.86
Other short-term borrowings		10,154		1.77			6,898		2.54
Long-term debt		165,540		4.75			141,979		5.35

Risk management derivatives		—		0.06			—		0.09

Total interest-bearing liabilities		611,099		3.57			535,778		4.26

Net interest income and margin	$	4,805		2.92	%	$	4,537		3.06	%

Net Interest Income and Margin Tax-equivalent net interest income increased 6 percent in the first quarter of 2008 from the first quarter of 2007. The effect of earning asset growth of $65.4 billion, improving loan spreads and deposit growth were partially offset by the shift to lower spread deposits, increased liquidity levels and higher funding costs in response to the market disruption, as well as increased nonaccrual loans.

The net interest margin declined 14 basis points to 2.92 percent, primarily due to growth in consumer and commercial loans, and as noted above, a shift in deposits toward lower-spread categories, the impact of increased liquidity levels and higher funding costs in response to the

market disruption, as well as increased nonaccrual loans, partially offset by the benefit of a liability sensitive rate position.

The average federal funds rate in the first quarter of 2008 was 208 basis points lower than the average rate in the first quarter of 2007, while the average longer-term two-year treasury note rate decreased 275 basis points and the average 10-year treasury note rate decreased 102 basis points. Market rates suggest that in 2008 the yield curve will be steeper than in 2007 as a result of short-term rates falling more than long-term rates. If this expectation materializes, we expect the effect on net interest income and the margin to be positive. The Interest Rate Risk Management section has more information.

In order to maintain our targeted interest rate risk profile, derivatives are often used to manage the interest rate risk inherent in our assets and liabilities. We routinely deploy hedging strategies designed to protect future net interest income. These strategies may reduce current income in the short-term, although we expect them to benefit future periods. In the first quarter of 2008, interest rate risk management-related derivatives reduced net interest income by $45 million, or 3 basis points on our net interest margin, compared with a decrease of $71 million, or 5 basis points, in the first quarter of 2007.

Fee and Other Income


	Three Months Ended
	March 31,
(In millions)	*2008*			2007

Service charges	$	676			614
Other banking fees		498			416
Commissions		914			659
Fiduciary and asset management fees		1,439			953
Advisory, underwriting and other investment banking fees		261			407
Trading account profits (losses)		(308	)		128
Principal investing		446			48
Securities gains (losses)		(205	)		53
Other income		(944	)		456

Total fee and other income	$	2,777			3,734

Fee and Other Income Fee and other income declined 26 percent in the first quarter of 2008 compared with the first quarter of 2007 due to net market disruption-related valuation losses of $2.3 billion and reduced volume in several of our investment banking businesses. Otherwise, strong momentum continued in fiduciary and asset management fees and in brokerage commissions, which largely related to the A.G. Edwards acquisition. Results included $445 million in net gains related to adoption and application of new fair value accounting standards and a $225 million gain related to the Visa initial public offering. In addition, in the first quarter of 2008 compared with the first quarter of 2007:

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

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

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

	•		Increased fiduciary and asset management fees were driven by continued growth in retail brokerage managed account and other asset-based fees, trust and investment fees, and the addition of A.G. Edwards and ECM.


	•		Advisory and underwriting results declined from a strong first quarter a year ago driven by lower origination activity in businesses affected by the market disruption, partially offset by strong results in high grade, global rate products and equities despite market weakness.

	•		Trading account losses of $308 million driven by $399 million of market disruption losses, including:

	o		$281 million in subprime residential asset-backed CDOs and other subprime-related products largely relating to losses in warehouse positions.

	o		$283 million in commercial mortgage structured products.

	o		$187 million in consumer mortgage structured products.

	o		$483 million of hedging gains in leveraged finance.

	o		$131 million in non-subprime collateralized debt obligations and other structured products.

	•		Principal investing results were up from the year ago quarter largely due to the $486 million of net gains related to the adoption and application of new fair value accounting standards.

	•		Net securities losses were $205 million compared with gains of $53 million in the year ago quarter. Results included market-disruption impairment losses of $480 million, partially offset by the $225 million gain related to the Visa initial public offering.

Other income was a net loss of $944 million in the first quarter of 2008 compared with income of $456 million a year ago. The decline was largely attributable to $1.4 billion of market disruption losses in other income in the first quarter this year. The market disruption losses included $238 million in commercial mortgage sales/securitization activity; a gross $792 million of leveraged finance losses ($310 million net of related macro credit hedge gains reflected in trading); and $314 million of valuation losses related to our BOLI portfolio discussed above. Of the leveraged finance losses, $729 million related to write-downs on unfunded commitments, which are valued assuming the commitments were fully funded under the current contractual terms.

Noninterest Expense


	Three Months Ended
	March 31,
(In millions)	*2008*		2007

Salaries and employee benefits	$	3,260		2,972
Occupancy		379		312
Equipment		323		307
Marketing		97		62
Communications and supplies		186		173
Professional and consulting fees		196		177
Sundry expense		656		490

Other noninterest expense		5,097		4,493
Merger-related and restructuring expenses		241		10
Other intangible amortization		103		118

Total noninterest expense	$	5,441		4,621

Noninterest Expense Noninterest expense increased 18 percent in the first quarter of 2008 from the first quarter of 2007, primarily reflecting the A.G. Edwards acquisition impact as well as growth in credit-related sundry expense. More than a third of the increase was in salaries and employee benefits expense largely attributable to the addition of A.G. Edwards, which more than offset lower revenue-based incentives in other areas as well as other expense initiatives. Expenses also reflected higher legal expense offset by the reversal of $102 million of Visa litigation reserves, and $87

million associated with our strategic initiatives, including de novo expansion, branch consolidations and western expansion, compared with $73 million in 2007.

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

Merger-Related and Restructuring Expenses Merger-related and restructuring expenses in the first quarter of 2008 of $241 million included $206 million related to A.G. Edwards and $35 million related to Golden West. In the first quarter of 2007, we recorded $10 million of these expenses.

Income Taxes Income tax benefit on a tax-equivalent basis was $181 million in the first quarter of 2008, which included $49 million related primarily to amounts on deposit with the IRS for prior periods, compared with income tax expense of $1.0 billion in the first quarter of 2007. The related income tax rates were 21.38 percent and 30.99 percent, with the decrease primarily due to the valuation losses on our bank-owned life insurance portfolio.

Business Segments

We provide diversified banking and nonbanking financial services and products primarily through four core business segments, the General Bank, Wealth Management, the Corporate and Investment Bank, and Capital Management. We also have a Parent segment that includes all asset and liability management functions, including managing our securities portfolio for liquidity and interest rate risk. Business segment data excludes merger-related and restructuring expenses, other intangible amortization, discontinued operations, and the effect of changes in accounting principles. A provision for credit losses is allocated to each core business segment based on net charge-offs, and the difference between the total for the segments and the consolidated provision for credit losses is recorded in the Parent segment. In the first quarter of 2008, provision for credit losses amounted to $2.1 billion in the Parent segment.

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

•		In the General Bank, an increase of $194 million.

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

•		In the Corporate and Investment Bank, an increase of $329 million.

•		In Capital Management, an increase of $76 million.

•		In the Parent, a decrease of $625 million, which included $230 million in 2007 losses from discontinued operations excluded from core segment earnings; previously, this amount was included in Corporate and Investment Bank segment earnings.

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

General Bank
Performance Summary


	Three Months Ended
	March 31,
(Dollars in millions)	*2008*			2007

Income statement data
Net interest income (Tax-equivalent)	$	3,455			3,398
Fee and other income		990			845
Intersegment revenue		55			47

Total revenue (Tax-equivalent)		4,500			4,290
Provision for credit losses		569			147
Noninterest expense		2,050			1,869
Income taxes (Tax-equivalent)		686			830

Segment earnings	$	1,195			1,444


Performance and other data

Economic profit	$	997			1,123
Risk adjusted return on capital (RAROC)		42.58	%		53.73
Economic capital, average	$	12,695			10,662
Cash overhead efficiency ratio (Tax-equivalent)		45.55	%		43.56
Lending commitments	$	132,165			124,253
Average loans, net		311,447			288,229
Average core deposits	$	297,680			284,046
FTE employees		54,847			56,722

General Bank The General Bank includes our Retail and Small Business and Commercial lines of business. The General Bank’s earnings declined to $1.2 billion, down $249 million, driven by rapidly rising credit costs and related expenses, which overshadowed continued strong sales momentum reflected in total revenue of $4.5 billion, up 5 percent. Other key General Bank trends in the first quarter of 2008 compared with the first quarter of 2007 included:

•

Average loan growth of 8 percent, with double digit growth in wholesale businesses and consumer installment loans, and 6 percent growth in consumer real estate, as a decline in prepayments offset lower volumes in the payment option mortgage product.

	o		Significant efforts in our mortgage business to mitigate risk in the face of declining housing markets, by restructuring its operating model, implementing extensive loss mitigation efforts and undertaking initiatives to increase the volume of marketable mortgages.

	o		Reduced home equity originations, reflecting efforts to improve the efficiency of originations and implementation of tightened credit standards. Over 95 percent of our home equity loans are originated through our branch network and other direct channels.

	o		A 26 percent increase in auto originations with continued focus on increasing credit scores.

•

Average core deposit growth of 5 percent, largely reflecting strength in wholesale deposits, which were up 10 percent, and an increase of 4 percent in retail deposits.

Growth in net new retail checking accounts, reflecting continued benefits from retention and acquisition efforts resulting in a still strong increase of 174,000 in

			the first quarter of 2008 compared with an increase of 268,000 in the first quarter of 2007.

	o		Net new checking accounts include 139,000 linked to the new Way2Save accounts, which launched in mid-January 2008.

	•		17 percent growth in fee and other income, with strength in service charges, interchange income and mortgage banking fee income. Strong interchange income reflected an 18 percent increase in debit/credit card volume from the first quarter of 2007.

	•		Noninterest expense up 10 percent due to growth in credit-related sundry expense, as well as continued strategic investment in de novo branch activity, Western expansion and buildup in credit card operations. During the first quarter of 2008, 23 de novo branches were opened and 58 branches were consolidated. As a result of performance initiatives, operating leverage continued to improve, which enabled the continued strategic investment.

	•		$422 million increase in the provision for credit losses largely reflecting rapid deterioration in consumer real estate in certain housing markets and higher losses in auto loans.

Wealth Management

Performance Summary


	Three Months Ended
	March 31,
(Dollars in millions)	*2008*			2007

Income statement data
Net interest income (Tax-equivalent)	$	181			181
Fee and other income		211			196
Intersegment revenue		5			3

Total revenue (Tax-equivalent)		397			380
Provision for credit losses		5			1
Noninterest expense		246			247
Income taxes (Tax-equivalent)		54			48

Segment earnings	$	92			84


Performance and other data

Economic profit	$	70			63
Risk adjusted return on capital (RAROC)		50.80	%		54.31
Economic capital, average	$	705			592
Cash overhead efficiency ratio (Tax-equivalent)		62.08	%		65.12
Lending commitments	$	7,007			6,686
Average loans, net		22,413			20,394
Average core deposits	$	17,397			17,267
FTE employees		4,650			4,589

Wealth Management Wealth Management includes banking, personal trust, investment advisory services, charitable services, financial planning and insurance brokerage. Wealth Management earned $92 million on 4 percent revenue growth in challenging markets. Other key Wealth Management trends in the first quarter of 2008 compared with the first quarter of 2007 included:

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

	•		Relatively flat net interest income as solid loan growth offset deposit spread compression.

	•		A slight decline in expense driven by efficiency initiatives, which offset the impact of private banking and Western expansion investment.

•

5 percent growth in assets under management to $79.8 billion as asset gathering overcame market depreciation.

Corporate and Investment Bank
Performance Summary


	Three Months Ended
	March 31,
(Dollars in millions)	*2008*			2007

Income statement data
Net interest income (Tax-equivalent)	$	1,032			716
Fee and other income		(159	)		1,109
Intersegment revenue		(50	)		(43	)

Total revenue (Tax-equivalent)		823			1,782
Provision for credit losses		197			6
Noninterest expense		747			911
Income taxes (benefits) (Tax-equivalent)		(44	)		315

Segment earnings (loss)	$	(77	)		550


Performance and other data

Economic profit (loss)	$	(411	)		286
Risk adjusted return on capital (RAROC)		(1.49	)%		24.91
Economic capital, average	$	13,242			8,329
Cash overhead efficiency ratio (Tax-equivalent)		90.76	%		51.10
Lending commitments	$	113,521			110,214
Average loans, net		101,024			73,385
Average core deposits	$	33,623			34,227
FTE employees		6,358			6,650

Corporate and Investment Bank Our Corporate and Investment Bank includes corporate lending, investment banking and treasury and international trade finance. The capital markets disruption has hit our Corporate and Investment Bank particularly hard, resulting in a segment loss of $77 million driven by $1.6 billion in net valuation losses reflecting continued disruption in the capital markets and reduced origination volume in most markets-related businesses. The losses were somewhat offset by $447 million of principal investing net gains largely due to $486 million of gains related to the adoption and application of new fair value accounting standards.

The market valuation losses, net of applicable hedges, included:

	•		$339 million in subprime residential asset-backed collateralized debt obligations and other related exposures;

	•		$521 million in commercial mortgage structured products;

	•		$251 million in consumer mortgage structured products;

	•		$309 million in leveraged finance net of fees and macro credit hedges; and

	•		$144 million in non-subprime collateralized debt obligations and other structured products.

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

	•		A 44 percent increase in net interest income, which reflected 38 percent growth in average loans including the transfer into the loan portfolio at fair value of certain loans originally slated for disposition, as well as loan growth in the corporate lending and the global financial institutions businesses.

	•		Strong performance in high grade, global rate products and equities offset by lower results in structured products and leveraged finance.

	•		An 18 percent decline in noninterest expense primarily due to lower revenue-based incentive compensation and reduced headcount in markets-related businesses.

	•		Provision of $197 million largely reflecting residential-related commercial real estate losses, compared to $6 million in the first quarter of 2007.

Capital Management
Performance Summary


	Three Months Ended
	March 31,
(Dollars in millions)	*2008*			2007

Income statement data
Net interest income (Tax-equivalent)	$	274			259
Fee and other income		2,191			1,477
Intersegment revenue		(10	)		(8	)

Total revenue (Tax-equivalent)		2,455			1,728
Provision for credit losses		—			—
Noninterest expense		1,855			1,237
Income taxes (Tax-equivalent)		219			179

Segment earnings	$	381			312


Performance and other data

Economic profit	$	322			275
Risk adjusted return on capital (RAROC)		71.51	%		94.78
Economic capital, average	$	2,143			1,334
Cash overhead efficiency ratio (Tax-equivalent)		75.54	%		71.59
Lending commitments	$	1,348			961
Average loans, net		2,562			1,554
Average core deposits	$	43,084			31,683
FTE employees		29,838			17,703

Capital Management Capital Management includes Retail Brokerage Services and Asset Management. Capital Management generated earnings of $381 million in the first quarter of 2008, reflecting 42 percent revenue growth, primarily related to the A.G. Edwards acquisition. Other key Capital Management trends in the first quarter of 2008 compared with the first quarter of 2007 included:

•

Solid growth in revenue despite declining equity markets:

	o		$2.2 billion in revenue from our retail brokerage businesses including transactional revenues of $822 million and asset-based and other income of $1.3 billion. Retail brokerage fee income increased 57 percent driven by the addition of A.G. Edwards, strength in managed account and other asset-based fees, partially offset by lower brokerage transaction activity and equity syndicate distribution fees.

	o		$300 million in revenue from our asset management businesses, up $25 million, primarily driven by the ECM acquisition and higher securities lending revenue, partially offset by the impact of declining equity markets.

	•		The impact of FDIC sweep deposit growth of $11.0 billion partially offset spread compression in the declining interest rate environment.

	•		50 percent growth in noninterest expense largely due to the effect of A.G. Edwards, as well as higher legal expense and revenue-based commissions.

Total Assets Under Management (AUM)


	*2008*					2007
	*First Quarter*					Fourth Quarter					First Quarter
(In billions)	*Amount*		*Mix*			Amount		Mix			Amount		Mix

Equity	$	74		28	%	$	84		30	%	$	107		34	%
Fixed income		118		46			123		45			143		45
Money market		67		26			68		25			65		21

Total assets under management ^(a)	$	259		100	%	$	275		100	%	$	315		100	%
Securities lending		46		—			52		—			56		—

Total assets under management and securities lending	$	305		—		$	327		—		$	371		—


^(a)		Includes $39 billion in assets managed for Wealth Management, which are also reported in that segment.

Mutual Funds (AUM also included in the above)


	*2008*					2007
	*First Quarter*					Fourth Quarter					First Quarter
			*Fund*					Fund					Fund
(In billions)	*Amount*		*Mix*			Amount		Mix			Amount		Mix

Equity	$	32		30	%	$	36		32	%	$	37		34	%
Fixed income		18		17			19		17			23		21
Money market		57		53			58		51			50		45

Total mutual fund assets	$	107		100	%	$	113		100	%	$	110		100	%

Total assets under management (AUM) of $258.7 billion at March 31, 2008, decreased 6 percent from December 31, 2007, due to $9.6 billion in declining market valuations as well as $6.4 billion in net outflows. Total brokerage client assets were $1.1 trillion at March 31, 2008, down 4 percent from year-end 2007.

Parent
Performance Summary


	Three Months Ended
	March 31,
(Dollars in millions)	*2008*			2007

Income statement data
Net interest income (Tax-equivalent)	$	(137	)		(17	)
Fee and other income		(456	)		107
Intersegment revenue		—			1

Total revenue (Tax-equivalent)		(593	)		91
Provision for credit losses		2,060			23
Noninterest expense		302			347
Minority interest		198			136
Income taxes (benefits) (Tax-equivalent)		(1,021	)		(333	)

Segment earnings (loss)	$	(2,132	)		(82	)


Performance and other data

Economic profit (loss)	$	(842	)		(61	)
Risk adjusted return on capital (RAROC)		(167.55	)%		1.61
Economic capital, average	$	1,888			2,658
Cash overhead efficiency ratio (Tax-equivalent)		(34.17	)%		250.80
Lending commitments	$	538			503
Average loans, net		28,490			31,699
Average core deposits	$	2,729			2,047
FTE employees		24,685			24,705

Parent Parent includes all asset and liability management functions, including managing our securities portfolio for liquidity and interest rate risk. Parent also includes goodwill and other intangible assets, and related funding costs; certain revenue and expenses that are not allocated to the business segments; and the results of wind-down or divested businesses, including the cross-border leasing activity. In addition, the Parent includes the provision for loan losses that exceeds net charge-offs in the business segments. Key trends in the Parent segment in the first quarter of 2008 compared with the first quarter of 2007 included:

•

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

•		A $2.0 billion increase in the provision for credit losses reflecting increased credit risk and loan growth.

•		A $249 million decrease in fee and other income reflecting net securities losses of $143 million, including $409 million of impairment losses related to the market disruption, compared with $47 million of net securities gains in 2007, and $314 million of valuation losses related to our BOLI portfolio discussed above. This was partially offset by the $225 million Visa gain.

•		A 13 percent decrease in noninterest expense, reflecting efficiencies, as well as increased costs in the business segments offset in the Parent. In addition, noninterest expense includes higher legal costs, which were flat year over year, including the reversal of legal reserves established in late 2007 related to the Visa initial public offering.

As mentioned in the Executive Summary, we recorded valuation losses of $314 million in the Parent segment following a review of three stable value agreements (SVAs) totaling $386 million provided by a third party guarantor in connection with our BOLI portfolio. Although no assurances can be given, we believe it is possible that certain circumstances may arise that would allow us to realize benefits from these SVAs, which would be recorded as gains in future periods.

BOLI assets on our balance sheet amounted to $14.9 billion at March 31, 2008, and $15.0 billion at December 31, 2007. BOLI is an insurance investment product where we purchase life insurance policies on a group of officer-level employees, and where we are the owner and beneficiary of the policies. The insurance premiums we pay are recorded as cash surrender value on the balance sheet. The earnings from the policies, represented by increases in the cash surrender value, offset the costs of providing employee benefits. BOLI portfolio results are reported as a component of other noninterest income in our results of operations. The cash surrender value of BOLI may increase or decrease further depending on market conditions related to the underlying investments.

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

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

As discussed above and in connection with Wachovia’s acquisition of A.G. Edwards and under the terms of Wachovia Securities’ joint venture with Prudential Financial, Prudential elected to

exercise its lookback option, which permits Prudential to delay for two years following the combination of the A.G. Edwards retail brokerage business with Wachovia Securities its decision to make or not make an additional capital contribution to the joint venture or other payments to avoid or limit dilution of its 38 percent ownership interest in the joint venture. During this period, Prudential’s share in the joint venture’s earnings and one-time costs associated with the combination will be based on Prudential’s diluted ownership level following the A.G. Edwards combination. At the end of the lookback period, Prudential may elect to make an additional capital contribution or other payment, based on the appraised value (as defined in the joint venture agreement) of the existing joint venture and the A.G. Edwards business as of the date of the combination with Wachovia Securities, to avoid or limit dilution. In this case, Prudential also would make a true-up payment of one-time costs to reflect the incremental increase in its ownership interest in the joint venture. In addition, in this case, Prudential may not then exercise its existing discretionary put option, described below, until the first anniversary of the end of the lookback period. Alternatively, at the end of the lookback period Prudential may put its joint venture interests to Wachovia based on the appraised value of the joint venture, excluding the A.G. Edwards business, as of the date of the combination of the A.G. Edwards business with Wachovia Securities. Prudential also has a discretionary right to put its joint venture interests to Wachovia at its appraised value, including the A.G. Edwards business, at any time after July 1, 2008. If this put option is exercised, the closing would occur approximately 1 year from the date of exercise. Wachovia may pay the purchase price for the put option in cash, shares of Wachovia common stock, or a combination thereof. Total minority interest expense, which also includes other subsidiaries, was $155 million in the first quarter of 2008 compared with $136 million in the first quarter of 2007.

In the first quarter of 2008, management of BluePoint Re Limited, a 100-percent owned monoline reinsurer based in Bermuda, initiated a restructuring strategy that, if completed, will lead to a significant reduction in Wachovia’s ownership interest in BluePoint and result in deconsolidation of BluePoint in Wachovia’s financial statements.

We currently expect that a resolution with respect to BluePoint will be effected by September 30, 2008. Accordingly, the results for the third and fourth quarters of 2007 have been reclassified to reflect the results of BluePoint as a discontinued operation. Results from inception of BluePoint in 2005 through the second quarter of 2007 were not material, and accordingly, have not been included in discontinued operations.

In 2007, BluePoint recorded significant losses on certain derivative instruments (principally credit default swaps on ABS CDOs) and these losses through December 31, 2007, approximated substantially all of Wachovia’s investment in BluePoint and were included in Wachovia’s 2007 consolidated results. Wachovia has no further obligation to inject capital in BluePoint. BluePoint continued to record these instruments at fair value in the first quarter of 2008. In estimating the fair value of these instruments under the new fair value measurement accounting standard, a company must consider, among other things, its own credit rating, which in this case is BluePoint’s. As Wachovia has no obligation to fund losses in excess of BluePoint’s equity, BluePoint assessed the discount required in valuing these instruments to reflect a market participant’s view of BluePoint’s nonperformance risk. BluePoint’s valuation at March 31, 2008, reflected a discount of approximately 60 percent for its nonperformance risk, such that BluePoint recorded no further loss on the derivative instruments in the first quarter of 2008. Accordingly, our first quarter 2008 consolidated results reflect no additional losses in discontinued operations.

Balance Sheet Analysis

Securities The decrease in securities from December 31, 2007, is primarily attributable to the transfer to trading of $6.8 billion of securities in connection with the January 1, 2008, election under SFAS 159 to carry these securities at fair value and a $1.0 billion increase in net unrealized losses due to continued spread widening predominantly on our fixed rate mortgage-backed securities, largely offset by purchases and net securities retained from agency securitizations of consumer real estate loans. The average duration of this portfolio was 3.5 years in the first quarter of 2008 and 3.4 years in the first quarter of 2007. The average rate earned on securities available for sale was 5.60 percent in the first quarter of 2008 and 5.42 percent in the first quarter of 2007.

Securities Available For Sale


	*March 31,*			December 31,
(In billions)	*2008*			2007

Market value	$	114.2			115.0
Net unrealized loss	$	(2.3	)		(1.3	)

Memoranda *(Market value)*
Residual interests	$	0.5			0.5
Retained bonds
Investment grade ^(a)	$	12.9			11.6


^(a)		$ 12.6 billion had credit ratings of AA and above at March 31, 2008.

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

We retain interests in the form of either bonds or residual interests in connection with certain securitizations primarily of residential mortgage loans, home equity lines, auto loans and student loans. Securities available for sale at March 31, 2008, included residual interests with a market value of $472 million, which included a net unrealized gain of $108 million, and retained bonds from securitizations with a market value of $12.9 billion, which included a net unrealized gain of $260 million.

Retained interests from securitizations recorded as either available for sale securities, trading account assets or loans amounted to $13.7 billion at March 31, 2008, and $12.4 billion at December 31, 2007.

Loans — On-Balance Sheet


	*2008*			2007
	*First*			Fourth			Third			Second			First
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

Commercial
Commercial, financial and agricultural	$	119,193			112,509			109,269			102,397			99,687
Real estate - construction and other		18,597			18,543			18,167			17,449			16,965
Real estate - mortgage		26,370			23,846			21,514			20,448			20,130
Lease financing		23,637			23,913			23,966			24,083			24,053
Foreign		33,616			29,540			26,471			20,959			16,240

Total commercial		221,413			208,351			199,387			185,336			177,075

Consumer
Real estate secured		230,197			227,719			225,355			220,293			220,682
Student loans		9,324			8,149			7,742			6,757			8,479
Installment loans		27,437			25,635			24,763			25,017			23,665

Total consumer		266,958			261,503			257,860			252,067			252,826

Total loans		488,371			469,854			457,247			437,403			429,901
Unearned income		(7,889	)		(7,900	)		(8,041	)		(8,283	)		(8,238	)

Loans, net (On-balance sheet)	$	480,482			461,954			449,206			429,120			421,663

Loans — Managed Portfolio (Including on-balance sheet)


	*2008*		2007
	*First*		Fourth		Third		Second		First
(In millions)	*Quarter*		Quarter		Quarter		Quarter		Quarter

Commercial	$	224,875		217,896		213,434		197,079		187,723
Real estate secured		254,685		250,520		242,526		238,575		236,995
Student loans		11,962		11,012		12,618		11,760		11,576
Installment loans		31,571		30,487		29,365		28,273		27,118

Total managed portfolio	$	523,093		509,915		497,943		475,687		463,412

Loans The increase in net loans from year-end 2007 reflected 6 percent growth in commercial loans and 2 percent growth in consumer loans. Commercial loan growth reflected strength in large corporate and middle-market, including the impact of $4.1 billion transferred to the loan portfolio from loans held for sale as a result of a change in management’s strategy based on our view that the market valuations provide attractive long-term investment returns.

Consumer loan growth reflected strength in consumer real estate and auto loans, partially offset by the impact of the securitization and sale of $1.9 billion of consumer loans, including securitization of $1.8 billion of real estate secured loans and $47 million in student loans. We transferred to held for sale $2.3 billion of first lien home equity loans and transferred from held for sale $801 million of auto loans and $1.9 billion of consumer real estate loans in the Corporate and Investment Bank.

Our loan portfolio is broadly diversified by industry, concentration and geography. Additionally, the portfolio is well collateralized and we periodically estimate the impact that changes in market conditions would have on our loan-to-value (LTV) positions for loans in certain portfolios. At March 31, 2008:

	•		Commercial loans represented 45 percent and consumer loans 55 percent of the loan portfolio.

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

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

Of our $230.2 billion consumer real estate loan portfolio:

	•		86 percent is secured by a first lien.

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

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

	•		14 percent of the home equity and prime equity portfolios have an original loan-to-value ratio greater than 90 percent; of which 44 percent are in the first lien position.

Our managed loan portfolio grew 3 percent from year-end 2007, reflecting the growth discussed above. The managed loan portfolio includes the on-balance sheet loan portfolio; loans held for sale; loans securitized for which the retained interests are classified in securities; and the off-balance sheet portfolio of securitized loans sold where we service the loans.

Asset Quality


	*2008*			2007
	*First*			Fourth		Third		Second		First
(In millions)	*Quarter*			Quarter		Quarter		Quarter		Quarter

Nonperforming assets
Nonaccrual loans	$	7,788			4,995		2,715		1,945		1,632
Troubled debt restructurings ^(a)		48			—		—		—		—
Foreclosed properties		530			389		334		207		155

Total nonperforming assets	$	8,366			5,384		3,049		2,152		1,787

as % of loans, net and foreclosed properties		1.74	%		1.16		0.68		0.50		0.42

Nonperforming assets in loans held for sale	$	5			62		59		42		26

Total nonperforming assets in loans and in loans held for sale	$	8,371			5,446		3,108		2,194		1,813

as % of loans, net, foreclosed properties and loans held for sale		1.70	%		1.14		0.66		0.49		0.42

Provision for credit losses	$	2,831			1,497		408		179		177
Allowance for credit losses	$	6,767			4,717		3,691		3,552		3,533

Allowance for loan losses
as % of loans, net		1.37	%		0.98		0.78		0.79		0.80
as % of nonaccrual and restructured loans ^(b)		84			90		129		174		207
as % of nonperforming assets ^(b)		78			84		115		157		189
Allowance for credit losses
as % of loans, net		1.41	%		1.02		0.82		0.83		0.84

Net charge-offs	$	765			461		206		150		155
Commercial, as % of average commercial loans		0.48	%		0.34		0.08		0.07		0.07
Consumer, as % of average consumer loans		0.79			0.46		0.27		0.19		0.20
Total, as % of average loans, net		0.66	%		0.41		0.19		0.14		0.15

Past due accruing loans, 90 days and over	$	1,047			708		590		562		555
Commercial, as a % of loans, net		0.05	%		0.05		0.04		0.03		0.03
Consumer, as a % of loans, net		0.35	%		0.23		0.20		0.20		0.20


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

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

Nonperforming Assets Increases in both nonaccrual loans and foreclosed properties resulting from significant weakness, particularly in certain stressed housing markets, contributed to an increase in nonperforming assets from year-end 2007 to 1.70 percent of loans, foreclosed properties and loans held for sale. Consumer nonaccrual loans were $5.1 billion at March 31, 2008, up $1.8 billion from year-end 2007, driven primarily by new nonaccruals of $1.5 billion related to our Pick-a-Payment portfolio and $215 million related to nonbranch-originated Alt-A loans in the Corporate and Investment Bank transferred from loans held for sale to the portfolio. Commercial nonaccrual loans at March 31, 2008, were $2.7 billion, up $1.0 billion from year-end 2007, reflecting new nonaccrual loans of $1.4 billion, which included $722 million of residential-related commercial real estate in our Real Estate Financial Services portfolio, partially offset by gross charge-offs of $252 million.

Nonperforming Assets


	*2008*			2007
	*First*			Fourth		Third		Second		First
(In millions)	*Quarter*			Quarter		Quarter		Quarter		Quarter

Nonaccrual Loans
Commercial:
Commercial, financial and agricultural	$	908			602		354		318		303
Commercial real estate — construction and mortgage		1,750			1,059		289		161		117

Total commercial		2,658			1,661		643		479		420

Consumer:
Real estate secured:
First lien		5,015			3,234		1,986		1,380		1,124
Second lien		75			58		41		44		37
Installment and other loans ^(a)		40			42		45		42		51

Total consumer		5,130			3,334		2,072		1,466		1,212

Total nonaccrual loans		7,788			4,995		2,715		1,945		1,632
Troubled debt restructurings ^(b)		48			—		—		—		—
Foreclosed properties		530			389		334		207		155

Total nonperforming assets	$	8,366			5,384		3,049		2,152		1,787
As % of loans, net, and foreclosed properties ^(c)		1.74	%		1.16		0.68		0.50		0.42

Nonperforming assets included in loans held for sale
Commercial	$	—			—		—		—		1
Consumer		5			62		50		37		23

Total nonaccrual loans		5			62		50		37		24
Foreclosed properties		—			—		9		5		2

Total nonperforming assets included in loans held for sale		5			62		59		42		26

Nonperforming assets included in loans and in loans held for sale	$	8,371			5,446		3,108		2,194		1,813
As % of loans, net, foreclosed properties and loans held for sale ^(d)		1.70	%		1.14		0.66		0.49		0.42

Past due loans, 90 days and over, and nonaccrual loans
Accruing loans past due 90 days and over	$	1,047			708		590		562		555
Nonaccrual loans		7,788			4,995		2,715		1,945		1,632

Total past due loans 90 days and over, and nonaccrual loans	$	8,835			5,703		3,305		2,507		2,187
Commercial, as a % of loans, net		1.31	%		0.89		0.38		0.31		0.28
Consumer, as a % of loans, net		2.26	%		1.49		1.00		0.78		0.68


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

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

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

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

Past Due Loans Accruing loans 90 days or more past due, excluding loans that are classified as loans held for sale, were $1.0 billion at March 31, 2008, compared with $708 million at year-end 2007. Of the total past due loans, $113 million were commercial loans or commercial real estate loans and $934 million were consumer loans.

Charge-offs


	*2008*			2007
	*First*			Fourth			Third			Second			First
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

Loan losses:
Commercial, financial and agricultural	$	(171	)		(67	)		(41	)		(39	)		(34	)
Commercial real estate - construction and mortgage		(81	)		(117	)		(5	)		(4	)		(6	)

Total commercial		(252	)		(184	)		(46	)		(43	)		(40	)
Real estate secured		(351	)		(156	)		(59	)		(40	)		(33	)
Student loans		(3	)		(4	)		(5	)		(2	)		(3	)
Installment and other loans ^(a)		(242	)		(225	)		(168	)		(138	)		(142	)

Total consumer		(596	)		(385	)		(232	)		(180	)		(178	)

Total loan losses		(848	)		(569	)		(278	)		(223	)		(218	)
Loan recoveries:
Commercial, financial and agricultural		14			22			9			15			9
Commercial real estate - construction and mortgage		1			—			3			—			3

Total commercial		15			22			12			15			12
Real estate secured		10			9			12			11			6
Student loans		1			2			3			—			1
Installment and other loans ^(a)		57			75			45			47			44

Total consumer		68			86			60			58			51

Total loan recoveries		83			108			72			73			63

Net charge-offs	$	(765	)		(461	)		(206	)		(150	)		(155	)
Net charge-offs as a % of average loans, net ^(b)
Commercial, financial and agricultural		0.41	%		0.12			0.10			0.07			0.08
Commercial real estate - construction and mortgage		0.73			1.12			0.02			0.04			0.04

Total commercial		0.48			0.34			0.08			0.07			0.07
Real estate secured		0.59			0.26			0.08			0.05			0.05
Student loans		0.08			0.10			0.14			0.07			0.10
Installment and other loans ^(a)		2.76			2.35			1.99			1.47			1.67

Total consumer		0.79			0.46			0.27			0.19			0.20

Total, as % of average loans, net		0.66	%		0.41			0.19			0.14			0.15

Consumer real estate secured net charge-offs:
First lien	$	(291	)		(122	)		(32	)		(17	)		(15	)
Second lien		(50	)		(25	)		(15	)		(12	)		(12	)

Total consumer real estate secured net charge-offs	$	(341	)		(147	)		(47	)		(29	)		(27	)


^(a)		Principally auto loans.

^(b)		Annualized.

Net Charge-offs Net charge-offs, which represent loan amounts written off as uncollectible, net of recoveries of previously charged-off amounts, were $765 million, or 66 basis points of average net loans in the first quarter of 2008, an increase from $155 million, or 15 basis points, in the first quarter of 2007. Commercial net charge-offs were $237 million in the first quarter of 2008, compared with $28 million in the first quarter of 2007, and included $120 million in residential-related commercial real estate loans. Consumer net charge-offs were $528 million, up from $127 million in the first quarter of 2007. The increase in consumer net charge-offs was driven by consumer real estate losses of $341 million, including Pick-a-Payment losses of $240 million, and installment losses of $185 million, including $145 million in the auto portfolio.

Allowance for Credit Losses


	*2008*			2007
	*First*			Fourth			Third			Second			First
(In millions)	*Quarter*			Quarter			Quarter			Quarter			Quarter

Allowance for credit losses ^(a)
Allowance for loan losses, beginning of period	$	4,507			3,505			3,390			3,378			3,360
Net charge-offs		(765	)		(461	)		(206	)		(150	)		(155	)
Allowance relating to loans acquired, transferred to loans held for sale or sold		(16	)		(10	)		(63	)		(10	)		(3	)
Provision for credit losses related to loans transferred to loans held for sale or sold ^(b)		7			6			3			4			1
Provision for credit losses		2,834			1,467			381			168			175

Allowance for loan losses, end of period		6,567			4,507			3,505			3,390			3,378

Reserve for unfunded lending commitments, beginning of period		210			186			162			155			154
Provision for credit losses		(10	)		24			24			7			1

Reserve for unfunded lending commitments, end of period		200			210			186			162			155

Allowance for credit losses	$	6,767			4,717			3,691			3,552			3,533

Allowance for loan losses
as % of loans, net		1.37	%		0.98			0.78			0.79			0.80
as % of nonaccrual and restructured loans ^(c)		84			90			129			174			207
as % of nonperforming assets ^(c)		78			84			115			157			189
Allowance for credit losses
as % of loans, net		1.41	%		1.02			0.82			0.83			0.84


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

^(b)		The provision related to loans transferred or sold includes recovery of lower of cost or market losses.

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

Provision, Allowance and Reserves Provision expense was $2.8 billion in the first quarter of 2008 and $177 million in the first quarter of 2007, with the increase driven mostly by the effect of dramatic deterioration in certain housing markets as well as the refinement in our credit reserve modeling.

Provision exceeded net charge-offs by $2.1 billion, which included:

	•		$1.6 billion due to higher expected loss factors for Pick-a-Payment, home equity and traditional mortgage, and auto portfolios on significant market weakness and changing consumer behaviors. Of this amount, $1.1 billion related to the Pick-a-Payment portfolio.

	•		$137 million on the commercial portfolio on higher loss frequency and severity expectations.

	•		$107 million on the commercial real estate portfolio, including $98 million on impaired loans.

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

In the first quarter of 2008, we refined our reserve modeling for the Pick-a-Payment portfolio, which, when combined with significant continuing deterioration in the housing market particularly in certain geographic areas, resulted in additional reserves of $1.1 billion. We believe the new model more precisely captures key factors that drive default rates and credit losses. The new model strongly correlates forward expected losses to changes in home prices and the resulting change in borrower behavior, and is less reliant on historical delinquency trends. In addition, the new model incorporates approximately 20 loan and/or borrower characteristics to further enhance loss forecasting by correlating borrower propensity to default and resulting loss severity to a widely used home price index, and it connects borrower equity to projected changes in home prices by geographic region.

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

The allowance for credit losses increased $2.1 billion from year-end 2007 to $6.8 billion at March 31, 2008, reflecting higher credit risk and loan growth. Our allowance for loan losses as a percent of nonperforming assets declined to 78 percent at March 31, 2008, from 84 percent at December 31, 2007. In the context of evaluating this allowance coverage ratio, it is important to note the high percentage of our portfolio that is collateralized and our low level of unsecured loans on which industry-wide losses are typically high, such as credit card loans.

The reserve for unfunded lending commitments declined $10 million from year-end 2007 to $200 million at March 31, 2008, which reflected funding of commitments. The reserve for unfunded lending commitments relates to commercial lending activity.

Loans Held for Sale Loans held for sale declined $5.3 billion from year-end 2007 to $11.4 billion at March 31, 2008, as $6.9 billion of transfers to the loan portfolio of commercial and consumer real estate and auto loans, sales activity and lower originations in commercial real estate were somewhat offset by leveraged finance fundings. Net write-downs on the held for sale portfolio amounted to $353 million in the first quarter of 2008 compared with $3 million in the same period a year ago.

The loans held for sale portfolio includes loans originated for sale or securitization as part of our core business strategy and the activities related to our ongoing portfolio risk management strategies to reduce exposure to areas of perceived higher risk. At March 31, 2008 and 2007, core business activity represented the majority of loans held for sale. Core business activity includes residential and commercial mortgages, auto loans and credit card receivables, which we originate with the intent to sell to third parties.

In the first quarter of 2008, we sold or securitized $8.3 billion in loans out of the loans held for sale portfolio, including $3.3 billion of commercial loans and $5.0 billion of consumer loans. In the first quarter of 2007, we sold or securitized $14.7 billion of loans out of the loans held for sale portfolio, including $9.5 billion of commercial loans and $5.2 billion of consumer loans, primarily residential mortgages. Substantially all of the loans sold in both periods were performing.

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

Related to the October 1, 2007, A.G. Edwards acquisition, in the first quarter of 2008, we recorded fair value and exit cost purchase accounting adjustments amounting to a net $10 million increase in goodwill. Based on a purchase price of $6.8 billion, A.G. Edwards tangible stockholders’ equity of $2.2 billion and a customer relationship intangible of $850 million ($513 million after-tax), goodwill amounted to $4.1 billion at March 31, 2008. The rest of the $54 million net decrease in goodwill from December 31, 2007, related to other acquisitions.

We test goodwill for impairment on an annual basis, or more often if events or circumstances indicate there may be impairment. If the carrying amount of a reporting unit’s goodwill exceeds its implied fair value, we would recognize an impairment loss in an amount equal to that excess. A reporting unit is our sub-segment level.

Historically, we determined fair values of reporting units using two methods, one based on market earnings multiples of peer companies for each reporting unit, and the other based on discounted cash flow models with estimated cash flows based on internal forecasts of revenues and expenses. In the first quarter of 2008, we added a third method, one based on the previously described market earnings multiples of peer companies adjusted to include a control premium calculated based on comparable transactions for each reporting unit. The earnings multiples for the first method ranged between 9.1 times and 17.2 times. The estimated cash flows for the second method used market-based discount rates ranging from 12.4 percent to 17.8 percent. The method employing a control premium adjusted earnings multiple resulted in multiples ranging from 12.6 times to 23.7 times. These three methods provide a range of valuations we use in evaluating goodwill for possible impairment. Also, we stress the results of each of our three testing methods by approximately 20 percent to identify areas where additional investigation or procedures may be necessary to complete our analysis.

Our goodwill impairment testing indicated that none of our goodwill is impaired at March 31, 2008. However, as a result of the market disruption and the further spread between our market capitalization and our book value, the excess of the fair value over the carrying value of several of our reporting units continues to narrow. A continuing period of market disruption, or further market deterioration, may result in impairment of our goodwill in the future.

Liquidity and Capital Adequacy

Core Deposits Core deposits increased modestly from year-end 2007 to $398.6 billion at March 31, 2008. Compared with the first quarter of 2007, average core deposits in the first quarter of 2008 increased 7 percent to $394.5 billion. Average low-cost core deposits, which exclude consumer certificates of deposit, also increased 7 percent, to $270.9 billion. Average consumer certificates of deposit rose $7.4 billion from the first quarter of 2007.

The portion of core deposits in higher rate, other consumer time deposits was 30 percent at March 31, 2008, and 32 percent at March 31, 2007. Other consumer time and other noncore deposits usually pay higher rates than savings and transaction accounts, but they generally are not available for immediate withdrawal. They are also less expensive to service.

Purchased Funds Purchased funds, which include federal funds purchased, commercial paper, other short-term borrowings and foreign and other time deposits with maturities of 12 months or less, were $104.3 billion at March 31, 2008, compared with $102.1 billion at December 31, 2007.

Average purchased funds were $100.5 billion in the first quarter of 2008 and $76.8 billion in the first quarter of 2007. The level of average purchased funds has increased since the beginning of the third quarter of 2007, reflecting significantly higher liquidity levels in response to the market disruption.

Long-term Debt Long-term debt was $175.7 billion at March 31, 2008, and $161.0 billion at December 31, 2007, reflecting issuances of $23.7 billion, including $14.5 billion in Federal Home Loan Bank advances in the first quarter of 2008, partially offset by maturities. In the rest of 2008, scheduled maturities of long-term debt amount to $31.2 billion, which includes $13.3 billion in Federal Home Loan Bank advances and $1.4 billion in structured debt. We anticipate replacing the maturing obligations.

Wachovia and Wachovia Bank, National Association have a $45.0 billion Euro medium term note programme (EMTN), under which we may issue senior and subordinated debt securities. These securities are not registered with the Securities and Exchange Commission (SEC) and may not be

offered in the United States without applicable exemptions from registration. No EMTN debt securities were issued in the first quarter of 2008. We had up to $33.7 billion available for issuance at March 31, 2008.

In addition, Wachovia and Wachovia Bank, National Association have an A$10.0 billion Australian medium term note programme (AMTN), under which we may issue senior and subordinated debt securities. These securities are not registered with the SEC and may not be offered in the United States without applicable exemptions from registration. No AMTN debt securities were issued in the first quarter of 2008. We had up to A$8.5 billion available for issuance at March 31, 2008.

At March 31, 2008, we had $515 million of senior or subordinated debt securities, common stock or preferred stock available for issuance under our current shelf registration statement filed with the SEC. In the first quarter of 2008, we issued $3.5 billion of preferred stock under this program. In addition, we had available for issuance up to $12.1 billion under a medium-term note program covering senior or subordinated debt securities. Wachovia Bank has a global note program with $202 million of senior and subordinated notes remaining in this shelf. In the first quarter of 2008, we issued $6.1 billion of senior and subordinated bank notes under this program. In April 2008, we filed with the SEC a new shelf registration statement to issue senior or subordinated debt securities, common stock or preferred stock and issued the previously mentioned $8.05 billion of common stock and perpetual convertible preferred stock under the shelf registration.

We also have a shelf registration under which we may offer and sell hybrid trust preferred securities. At March 31, 2008, $2.5 billion was available for issuance under this shelf registration. The issuance of debt or equity securities may continue under all our programs and depends on future market conditions, funding needs and other factors.

Credit Lines Wachovia Bank has a $1.9 billion committed back-up line of credit that expires in 2010. This credit facility contains a covenant that requires us to maintain a minimum level of adjusted total equity capital. We have not used this line of credit. Wachovia Investment Holdings, LLC, a nonbank subsidiary, has $5.0 billion of committed back-up lines of credit that expire in 2011. These credit facilities have no financial covenants associated with them.

Stockholders’ Equity Stockholders’ equity increased 1 percent from $76.9 billion at year-end 2007 to $78.0 billion at March 31, 2008, including the issuance of $3.5 billion of perpetual preferred stock in February 2008, repurchases of 540,000 common shares at a cost of $20 million in connection with our share repurchase program, and net depreciation of $1.0 billion in the fair value of the securities portfolio. At March 31, 2008, we had authorization to buy back 19 million shares of common stock. Our First Quarter 2008 Report on Form 10-Q has additional information related to share repurchases.

Dividend and Share Activity


	Three Months Ended
	March 31,
(In millions, except per share data)	*2008*		2007

Dividends on common shares	$	1,274		1,071
Dividends per common share	$	0.64		0.56
Common shares repurchased		1		5
Average diluted common shares outstanding		1,977		1,925

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

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

In April 2008, we issued in concurrent public offerings an aggregate $8.05 billion of capital consisting of 168 million shares or $4.025 billion of common stock and 4 million shares or $4.025 billion of 7.50 percent perpetual convertible preferred stock.

Subsidiary Dividends Wachovia Bank and Wachovia Mortgage, FSB (formerly World Savings Bank, FSB) are the largest sources of subsidiary dividends paid to the parent company. Capital requirements established by regulators limit dividends that these subsidiaries and certain other of our subsidiaries can pay. Under these and other limitations, which include an internal requirement to maintain all deposit-taking banks at the well capitalized level, at March 31, 2008, our subsidiaries had $11.0 billion available for dividends that could be paid without prior regulatory approval. Our subsidiaries paid no dividends to the parent company in the first quarter of 2008.

Regulatory Capital Our capital ratios were above regulatory minimums in the first quarter of 2008 and we continued to be classified as well capitalized. The tier 1 capital ratio was 7.42 percent at March 31, 2008, up from 7.35 percent at December 31, 2007. Our total capital ratio was 12.05 percent and our leverage ratio was 6.18 percent at March 31, 2008, and 11.82 percent and 6.09 percent, respectively, at December 31, 2007. The common and preferred stock issued in April 2008 will contribute approximately 125 basis points to our tier 1 capital ratio. In addition, the 41 percent reduction in the common stock dividend will preserve approximately $2.1 billion in capital annually. The expected second quarter charge announced April 30, 2008, related to SILO transactions would reduce the tier 1 ratio by approximately 12 to 15 basis points.

Off-Balance Sheet Transactions
Summary of Off-Balance Sheet Exposures


	*March 31, 2008*				December 31, 2007
	*Carrying*				Carrying
(In millions)	*Amount*		*Exposure*		Amount		Exposure

Guarantees
Securities and other lending indemnifications	$	—		53,132		—		59,238
Standby letters of credit		114		28,958		124		29,295
Liquidity agreements		159		34,775		14		36,926
Loans sold with recourse		33		6,399		44		6,710
Residual value guarantees		—		936		—		1,123
Other written put options		1,964		17,013		1,221		15,273

Total guarantees	$	2,270		141,213		1,403		148,565

In the normal course of business, we engage in a variety of financial transactions that under GAAP either are not recorded on the balance sheet or are in amounts that differ from the full contract or notional amounts. These transactions, included in the Summary of Off-Balance Sheet Exposures table, involve varying elements of market, credit and liquidity risk. Generally these transactions are forms of guarantees that contingently require us to make payments to a guaranteed party based on an event or change in an underlying asset, liability, rate or index.

Risk Governance and Administration

Market Risk Management We trade a variety of equities, debt securities, foreign exchange instruments and other derivatives to provide customized solutions for the risk management needs of our customers and for proprietary trading. Market risk is inherent in all these activities.

The VaR methodology assesses market volatility over the most recent 252 trading days to estimate within a given level of confidence the maximum trading loss over a period of time that we would expect to incur from an adverse movement in market rates and prices over the period. We calculate 1-day VaR at the 97.5 percent and 99 percent confidence levels, and 10-day VaR at the 99 percent confidence level. The VaR model is supplemented by stress testing on a daily basis. The analysis captures all financial instruments that are considered trading positions. As of January 1, 2008, we chose to split our VaR analysis into two categories: discretionary VaR, which is subject to limits, and non-discretionary VaR, which is reserved for positions in runoff and for positions under the discretion of the asset and liability committee. Our 1-day VaR limit on the discretionary portion in the first quarter of 2008 was $50 million. The total 1-day VaR was $75 million at March 31, 2008, and $62 million at December 31, 2007, and was primarily related to interest rate risk and credit spread risk. The high, low and average VaRs in the first quarter of 2008 were $76 million, $56 million and $66 million, respectively.

Interest Rate Risk Management One of the fundamental roles in banking is the management of interest rate risk, or the risk that changes in interest rates may diminish the net interest income we earn on loans, securities and other earning assets. The following discussion explains how we oversee the interest rate risk management process and describes the actions we take to protect earnings from interest rate risk.

A balance sheet is considered asset sensitive when its assets (loans and securities) reprice faster or to a greater extent than liabilities (deposits and borrowings). An asset-sensitive balance sheet will produce more net interest income when interest rates rise and less net interest income when interest rates decline. Historically, our large and relatively rate-insensitive deposit base has funded a portfolio of primarily floating rate commercial and consumer loans. This mix naturally creates an asset-sensitive balance sheet. To achieve more neutrality or to establish a liability-sensitive position, we maintain a large portfolio of fixed rate discretionary instruments such as loans, securities and derivatives.

We expect to rely on our large base of low-cost core deposits as well as diverse wholesale sources to fund incremental investments in loans and securities. The characteristics of the loans we add will prompt different strategies. Fixed rate loans, for example, diminish the need to buy discretionary investments, so if more fixed rate loans were added to our loan portfolio, we would likely allow existing discretionary investments to mature or we would liquidate them. If more variable rate loans were added to our loan portfolio, we would likely allow fixed rate securities to mature or we would liquidate them, and then add new derivatives that, in effect, would convert the incremental variable rate loans to fixed rate loans.

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

management derivatives into our earnings simulation model in the same manner as other on-balance sheet financial instruments.

We analyze and manage the amount of risk we are taking to changes in interest rates by forecasting a wide range of interest rate scenarios for time periods as long as 36 months. In analyzing interest rate sensitivity for policy measurement, we compare forecasted earnings per share in both “high rate” and “low rate” scenarios to the “market forward rate.” Our policy measurement period is 12 months in length, beginning with the first month of the forecast. Our objective is to ensure we prudently manage interest-bearing assets and liabilities in ways that improve financial performance without unduly putting earnings at risk. Our policy is to limit the risk we can take through balance sheet management actions to 5 percent of earnings per share in both falling and rising rate environments.

The “market forward rate” is constructed using currently implied market forward rate estimates for all points on the yield curve over the next 36 months. Our standard approach evaluates expected earnings in a 400 basis point range, or 200 basis points both above and below the “market forward rate” scenario. However, due to the currently low absolute level of the federal funds rate, we modified the “low rate” scenario to measure a decline of only 100 basis points. Based on our April 2008 forward rate expectation, our various scenarios together measure earnings volatility to a March 2009 federal funds rate ranging from 1.11 percent to 4.11 percent. We always incorporate into our modeling all repricing and balance sheet dynamics that depend on interest rate levels. For example, in the current market outlook and low rate scenario referenced above, we particularly stress the repricing characteristics of our deposit portfolio. We expect deposit repricing downward to be slowed in very low rate environments and we have taken actions to mitigate this risk.

We simultaneously measure the impact of a parallel and nonparallel shift in rates on each of our interest rate scenarios. A parallel shift would, as the term implies, shift all points on the yield curve by the same increments. For example, by the twelfth month in our policy measurement period, short-term rates such as the federal funds rate would increase by 200 basis points over the “market forward rate,” while longer term rates such as the 10-year treasury note rate and 30-year treasury note rate would increase by 200 basis points as well. A nonparallel shift would consist of a 200 basis point increase in short-term rates, while long-term rates would increase by a different amount. A rate shift in which short-term rates rise to a greater degree than long-term rates is referred to as a “flattening” of the yield curve. Conversely, long-term rates rising to a greater degree than short-term rates is a “steepening” of the yield curve.

The impact of a nonparallel shift in rates depends on the types of assets in which funds are invested and the shape of the yield curve implicit in the “market forward rate” scenario.

Earnings Sensitivity The Policy Period Sensitivity Measurement table provides a summary of our interest rate sensitivity measurements.

The April 2008 forward rate expectations imply a high probability that the federal funds rate will decline an additional 14 basis points by the end of our policy period in March 2009. If this occurs, the spread between the 10-year treasury note rate and the target federal funds rate would migrate from a positive 116 basis points of slope as of March 31, 2008, to a positive slope of 164 basis points by March 2009. The long-term average spread is a positive 112 basis points. Because it is unlikely short-term rates would rise an additional 200 basis points above the market forward rates while all other points on the yield curve would move in simultaneous parallel increments, our high rate sensitivity to the “market forward rate” scenario is measured using three different yield curve shapes. These yield curves are constructed to represent the more likely range of yield curve shapes that may prevail throughout the policy period in an environment where short-term rates rise 200 basis points above current market expectations. The reported high rate sensitivity is a composite of these three scenarios.

Policy Period
Sensitivity Measurement

Actual

Implied

Fed Funds

Percent

Rate at

Earnings

March 31, 2008

March 2009

Sensitivity

Market Forward Rate Scenarios ^(a)

2.25

2.11

—

High Rate Composite

4.11

(3.90

)

Low Rate

1.11

1.70


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

In April 2008, our earnings simulation model indicated earnings would be negatively affected by 3.9 percent in a “high rate composite” scenario relative to the “market forward rate” over the policy period. Additionally, we measure a scenario where short-term rates gradually decline 100 basis points over a 12-month period while the longer-term rates also decline by 100 basis points relative to the “market forward rate” scenario. The model indicates earnings would be positively affected by 1.7 percent in this scenario. These percentages are for a full year, but may be higher or lower in individual reporting periods.

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

Accounting and Regulatory Matters

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

Business Combinations and Noncontrolling Interests In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised), Business Combinations (SFAS 141(R)), and SFAS 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB 51. These new standards will significantly change the accounting and reporting for business combinations and noncontrolling interests (previously referred to as minority interests).

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

at their respective acquisition date fair values, expensing acquisition-related transaction costs as incurred, and capitalizing acquisition-related restructuring costs only if certain criteria are met. SFAS 160 retains much of the existing guidance for consolidation while making significant changes to the reporting of noncontrolling interests, which we currently report as liabilities. Under SFAS 160, noncontrolling interests in consolidated subsidiaries will be reported as a component of stockholders’ equity. Also under SFAS 160, a change in ownership interests in a consolidated subsidiary that does not result in loss of control will be recorded directly to stockholders’ equity. A change in ownership interest that results in deconsolidation may trigger recognition of a gain or loss and establishment of a new fair value basis in the remaining interest held.

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

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

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

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

The FASB currently plans to issue exposure drafts of amendments to SFAS 140 and FIN 46R in the second quarter of 2008, with a final standard effective on January 1, 2009. However, at this time, we cannot predict with any degree of certainty whether any guidance will be issued, what changes may be required to the structure of or the accounting for transactions subject to SFAS 140 or FIN 46R, or what the transition provisions for implementation of any new guidance would be.

Legislative and Regulatory Matters Various legislative and regulatory proposals concerning the financial services industry are pending in Congress, the legislatures in states in which we conduct operations and before various regulatory agencies that supervise our operations. Given the uncertainty of the legislative and regulatory process, we cannot assess the effect of any such legislation or regulations on our consolidated financial position or results of operations. For a more detailed description of the laws and regulations governing our business operations, please see our 2007 Annual Report on Form 10-K.

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

Table 1
EXPLANATION OF OUR USE OF NON-GAAP FINANCIAL MEASURES

In addition to the results of operations presented in accordance with U.S. generally accepted accounting principles (GAAP), our management uses certain non-GAAP financial measures such as expenses excluding merger-related and restructuring expenses; the dividend payout ratio on a basis that excludes other intangible amortization, merger-related and restructuring expenses, discontinued operations and the cumulative effect of a change in accounting principle; and net interest income on a tax-equivalent basis.

We believe these non-GAAP financial measures provide information useful to investors in understanding our underlying operational performance and our business and performance trends, and they facilitate comparisons with the performance of others in the financial services industry. Specifically, we believe the exclusion of merger-related and restructuring expenses permits evaluation and comparison of results for ongoing business operations, and it is on this basis that our management internally assesses our performance. Those non-operating items also are excluded from our segment measures used internally to evaluate segment performance in accordance with GAAP because management does not consider them particularly relevant or useful in evaluating the operating performance of our business segments. For additional information related to segment performance, see the Business Segments section and the Business Segments footnote to Notes to Consolidated Financial Statements. This report contains information relating to estimates of our future expenses excluding merger-related and restructuring expenses. The amount and timing of those future merger-related and restructuring expenses, however, are not estimable until such expenses actually occur, and therefore, reconciliation information relating to those future expenses and GAAP expenses has not been provided.

In addition, because of the significant amount of deposit base intangible amortization, we believe the exclusion of this expense provides investors with consistent and meaningful comparisons to other financial service firms. Also, our management makes recommendations to our board of directors about dividend payments based on reported earnings excluding other intangible amortization, merger-related and restructuring expenses, discontinued operations and the cumulative effect of a change in accounting principle and has communicated certain dividend payout ratio goals to investors on this basis. We believe this dividend payout ratio is useful to investors because it provides investors with a better understanding of and permits investors to monitor our dividend payout policy.

This report also includes net interest income on a tax-equivalent basis. We believe the presentation of net interest income on a tax-equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

Although we believe the above mentioned non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. The reconciliation of these non-GAAP financial measures from GAAP to non-GAAP is presented below.


	*Three Months Ended*
	*March 31,*
(In millions, except per share data)	*2008*			2007

Net interest income (GAAP)	$	4,752			4,500
Tax-equivalent adjustment		53			37

Net interest income (Tax-equivalent)	$	4,805			4,537

DIVIDEND PAYOUT RATIOS ON COMMON SHARES
Diluted earnings per common share (GAAP) (a)	$	(0.36	)		1.20
Other intangible amortization		0.04			0.04
Merger-related and restructuring expenses		0.06			—

Earnings per share (b)	$	(0.26	)		1.24

Dividends paid per common share	$	0.64			0.56
Dividend payout ratios (GAAP) (c)		(177.78	)%		46.67
Dividend payout ratios (b) (c)		(246.15	)%		45.16

(a) Calculated using average basic common shares in the first quarter of 2008.

(b) Excludes other intangible amortization, and merger-related and restructuring expenses.

Table 2
SELECTED STATISTICAL DATA


	*2008*			2007
	*First*			Fourth		Third		Second		First
(Dollars in millions, except per share data)	*Quarter*			Quarter		Quarter		Quarter		Quarter

PROFITABILITY
Return on average common stockholders’ equity		(3.81	)%		0.28		9.19		13.54		13.47
Return on average total stockholders’ equity		(3.39	)		0.28		9.19		13.54		13.47
Net interest margin (a)		2.92			2.88		2.92		2.96		3.06
Fee and other income as % of total revenue		36.62			36.99		39.02		48.58		45.15
Effective income tax rate		26.02	%		122.05		27.33		32.78		30.22

ASSET QUALITY
Allowance for loan losses as % of loans, net		1.37	%		0.98		0.78		0.79		0.80
Allowance for loan losses as % of nonperforming assets (b)		78			84		115		157		189
Allowance for credit losses as % of loans, net		1.41			1.02		0.82		0.83		0.84
Net charge-offs as % of average loans, net		0.66			0.41		0.19		0.14		0.15
Nonperforming assets as % of loans, net, foreclosed properties and loans held for sale		1.70	%		1.14		0.66		0.49		0.42

CAPITAL ADEQUACY
Tier 1 capital ratio		7.42	%		7.35		7.10		7.47		7.35
Total capital ratio		12.05			11.82		10.84		11.46		11.41
Leverage		6.18			6.09		6.10		6.23		6.08
Tangible capital ratio		4.31			4.29		4.19		4.30		4.44
Tangible capital ratio (c)		4.59	%		4.50		4.56		4.76		4.71

OTHER DATA
FTE employees		120,378			121,890		109,724		110,493		110,369
Total financial centers/brokerage offices		4,850			4,894		4,167		4,135		4,167
ATMs		5,308			5,139		5,123		5,099		5,146
Actual common shares (In millions) (d)		1,992			1,980		1,901		1,903		1,913
Common stock price	$	27.00			38.03		50.15		51.25		55.05
Market capitalization (d)	$	53,782			75,302		95,326		97,530		105,330

(a) Tax-equivalent.

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

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

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

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


	*2008*			2007

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

SUMMARIES OF INCOME
Interest income	$	10,179			10,910			10,831			10,350		10,140
Tax-equivalent adjustment		53			44			33			38		37

Interest income (a)		10,232			10,954			10,864			10,388		10,177
Interest expense		5,427			6,280			6,280			5,901		5,640

Net interest income (a)		4,805			4,674			4,584			4,487		4,537
Provision for credit losses		2,831			1,497			408			179		177

Net interest income after provision for credit losses (a)		1,974			3,177			4,176			4,308		4,360
Securities gains (losses)		(205	)		(320	)		(34	)		23		53
Fee and other income		2,982			3,064			2,967			4,217		3,681
Merger-related and restructuring expenses		241			187			36			32		10
Other noninterest expense		5,200			5,599			4,489			4,858		4,611
Minority interest in income of consolidated subsidiaries		155			107			189			139		136

Income (loss) from continuing operations before
income taxes (benefits) (a)		(845	)		28			2,395			3,519		3,337
Income taxes (benefits)		(234	)		(209	)		656			1,140		998
Tax-equivalent adjustment		53			44			33			38		37

Income (loss) from continuing operations		(664	)		193			1,706			2,341		2,302
Discontinued operations, net of income taxes		-			(142	)		(88	)		-		-

Net income (loss)		(664	)		51			1,618			2,341		2,302
Dividends on preferred stock		43			-			-			-		-

Net income (loss) available to common stockholders	$	(707	)		51			1,618			2,341		2,302

PER COMMON SHARE DATA
Basic earnings
Income (loss) from continuing operations	$	(0.36	)		0.03			0.86			1.24		1.22
Net income (loss) available to common stockholders		(0.36	)		0.03			0.86			1.24		1.22
Diluted earnings (b)
Income (loss) from continuing operations		(0.36	)		0.03			0.85			1.22		1.20
Net income (loss) available to common stockholders		(0.36	)		0.03			0.85			1.22		1.20
Cash dividends	$	0.64			0.64			0.64			0.56		0.56
Average common shares - Basic		1,963			1,959			1,885			1,891		1,894
Average common shares - Diluted		1,977			1,983			1,910			1,919		1,925
Average common stockholders’ equity
Quarter-to-date	$	74,697			73,599			69,857			69,317		69,320
Year-to-date		74,697			70,533			69,500			69,318		69,320
Book value per common share (c)		36.24			37.66			36.90			36.40		36.47
Common stock price
High		38.76			51.80			52.64			56.81		58.77
Low		25.60			38.03			44.94			51.25		53.88
Period-end	$	27.00			38.03			50.15			51.25		55.05
To earnings ratio (d)		15.52	X		11.52			11.22			10.70		11.61
To book value		75	%		101			136			141		151
BALANCE SHEET DATA
Assets	$	808,575			782,896			754,168			715,428		702,669
Long-term debt	$	175,653			161,007			158,584			142,047		142,334

(a) Tax-equivalent.

(b) Calculated using average basic common shares in the first quarter of 2008.

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

(d) Based on diluted earnings per common share.

Table 5
BUSINESS SEGMENTS (a)


	*2008*			2007

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

GENERAL BANK COMBINED (b)
Net interest income (c)	$	3,455			3,402		3,464		3,371		3,398
Fee and other income		990			929		935		936		845
Intersegment revenue		55			58		58		56		47

Total revenue (c)		4,500			4,389		4,457		4,363		4,290
Provision for credit losses		569			320		207		154		147
Noninterest expense		2,050			2,041		1,897		1,926		1,869
Income taxes		675			730		848		823		819
Tax-equivalent adjustment		11			11		11		10		11

Segment earnings	$	1,195			1,287		1,494		1,450		1,444

Economic profit	$	997			1,041		1,188		1,122		1,123
Risk adjusted return on capital		42.58	%		47.92		54.29		52.57		53.73
Economic capital, average	$	12,695			11,179		10,894		10,819		10,662
Cash overhead efficiency ratio (c)		45.55	%		46.50		42.57		44.14		43.56
Lending commitments	$	132,165			133,024		132,778		129,850		124,253
Average loans, net		311,447			303,269		294,579		291,493		288,229
Average core deposits	$	297,680			296,568		290,377		290,591		284,046
FTE employees		54,847			55,579		56,538		57,595		56,722

COMMERCIAL
Net interest income (c)	$	942			931		901		865		836
Fee and other income		140			117		114		110		109
Intersegment revenue		43			43		44		42		36

Total revenue (c)		1,125			1,091		1,059		1,017		981
Provision for credit losses		174			178		121		96		97
Noninterest expense		410			389		346		353		359
Income taxes		186			181		205		198		180
Tax-equivalent adjustment		11			11		11		10		11

Segment earnings	$	344			332		376		360		334

Economic profit	$	212			241		255		230		213
Risk adjusted return on capital		28.02	%		33.00		35.19		33.42		32.90
Economic capital, average	$	5,015			4,332		4,195		4,109		3,944
Cash overhead efficiency ratio (c)		36.41	%		35.71		32.63		34.78		36.55
Average loans, net	$	84,840			82,089		80,137		78,162		75,915
Average core deposits	$	47,713			46,361		42,752		43,065		43,522

RETAIL AND SMALL BUSINESS
Net interest income (c)	$	2,513			2,471		2,563		2,506		2,562
Fee and other income		850			812		821		826		736
Intersegment revenue		12			15		14		14		11

Total revenue (c)		3,375			3,298		3,398		3,346		3,309
Provision for credit losses		395			142		86		58		50
Noninterest expense		1,640			1,652		1,551		1,573		1,510
Income taxes		489			549		643		625		639
Tax-equivalent adjustment		-			-		-		-		-

Segment earnings	$	851			955		1,118		1,090		1,110

Economic profit	$	785			800		933		892		910
Risk adjusted return on capital		52.08	%		57.36		66.25		64.31		65.96
Economic capital, average	$	7,680			6,847		6,699		6,710		6,718
Cash overhead efficiency ratio (c)		48.60	%		50.07		45.67		46.98		45.65
Average loans, net	$	226,607			221,180		214,442		213,331		212,314
Average core deposits	$	249,967			250,207		247,625		247,526		240,524

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

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

(Continued)

Table 5
BUSINESS SEGMENTS


		*2008*		2007

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

CORPORATE AND INVESTMENT BANK COMBINED (a)
Net interest income (b)	$	1,032			988			838			774			716
Fee and other income		(159	)		(555	)		175			1,522			1,109
Intersegment revenue		(50	)		(50	)		(52	)		(50	)		(43	)

Total revenue (b)		823			383			961			2,246			1,782
Provision for credit losses		197			112			1			(2	)		6
Noninterest expense		747			952			626			1,020			911
Income taxes (benefits)		(65	)		(269	)		114			438			305
Tax-equivalent adjustment		21			19			9			11			10

Segment earnings (loss)	$	(77	)		(431	)		211			779			550

Economic profit (loss)	$	(411	)		(746	)		(114	)		490			286
Risk adjusted return on capital		(1.49	)%		(15.18	)		6.36			33.22			24.91
Economic capital, average	$	13,242			11,293			9,794			8,852			8,329
Cash overhead efficiency ratio (b)		90.76	%		247.83			65.23			45.43			51.10
Lending commitments	$	113,521			118,127			119,295			114,971			110,214
Average loans, net		101,024			91,702			83,002			76,779			73,385
Average core deposits	$	33,623			36,200			37,177			36,702			34,227
FTE employees		6,358			6,589			6,719			6,860			6,650

CORPORATE LENDING
Net interest income (b)	$	432			418			413			406			400
Fee and other income		154			148			135			140			125
Intersegment revenue		13			18			16			19			18

Total revenue (b)		599			584			564			565			543
Provision for credit losses		132			103			2			(1	)		5
Noninterest expense		141			137			139			148			152
Income taxes		119			126			152			152			142
Tax-equivalent adjustment		-			-			1			-			-

Segment earnings	$	207			218			270			266			244

Economic profit	$	46			65			82			98			89
Risk adjusted return on capital		13.77	%		15.37			17.15			19.22			18.81
Economic capital, average	$	6,634			5,929			5,273			4,784			4,619
Cash overhead efficiency ratio (b)		23.55	%		23.46			24.58			26.19			28.08
Average loans, net	$	64,161			62,473			58,663			56,186			55,193
Average core deposits	$	4,537			4,606			5,101			5,067			5,083


(a) Corporate and Investment Bank Combined represents the consolidation of the Corporate and Investment Bank’s Corporate Lending, Treasury and International Trade Finance, and Investment Banking lines of business.

(b) Tax-equivalent.

(Continued)

Table 5
BUSINESS SEGMENTS


		*2008*		2007

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

TREASURY AND INTERNATIONAL TRADE FINANCE
Net interest income (b)	$	112			110			104			100			91
Fee and other income		219			219			220			213			209
Intersegment revenue		(47	)		(47	)		(46	)		(49	)		(45	)

Total revenue (b)		284			282			278			264			255
Provision for credit losses		(2	)		-			(1	)		-			-
Noninterest expense		175			174			170			172			173
Income taxes		41			39			40			33			30
Tax-equivalent adjustment		-			-			-			-			-

Segment earnings	$	70			69			69			59			52

Economic profit	$	56			56			58			48			41
Risk adjusted return on capital		70.22	%		74.10			77.79			68.14			61.40
Economic capital, average	$	383			355			342			335			334
Cash overhead efficiency ratio (b)		61.69	%		61.78			60.99			65.13			67.79
Average loans, net	$	13,461			12,309			10,813			9,540			8,269
Average core deposits	$	19,623			20,830			21,222			21,091			19,908

INVESTMENT BANKING
Net interest income (b)	$	488			460			321			268			225
Fee and other income		(532	)		(922	)		(180	)		1,169			775
Intersegment revenue		(16	)		(21	)		(22	)		(20	)		(16	)

Total revenue (b)		(60	)		(483	)		119			1,417			984
Provision for credit losses		67			9			-			(1	)		1
Noninterest expense		431			641			317			700			586
Income taxes (benefits)		(225	)		(434	)		(78	)		253			133
Tax-equivalent adjustment		21			19			8			11			10

Segment earnings (loss)	$	(354	)		(718	)		(128	)		454			254

Economic profit (loss)	$	(513	)		(867	)		(254	)		344			156
Risk adjusted return on capital		(22.17	)%		(57.68	)		(13.11	)		48.03			29.66
Economic capital, average	$	6,225			5,009			4,179			3,733			3,376
Cash overhead efficiency ratio (b)		(719.88	)%		(133.14	)		270.51			49.44			59.46
Average loans, net	$	23,402			16,920			13,526			11,053			9,923
Average core deposits	$	9,463			10,764			10,854			10,544			9,236

(Continued)

Table 5
BUSINESS SEGMENTS


		*2008*		2007

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

CAPITAL MANAGEMENT COMBINED (a)
Net interest income (b)	$	274			318			268			260			259
Fee and other income		2,191			2,211			1,444			1,536			1,477
Intersegment revenue		(10	)		(11	)		(8	)		(11	)		(8	)

Total revenue (b)		2,455			2,518			1,704			1,785			1,728
Provision for credit losses		-			-			-			-			-
Noninterest expense		1,855			1,938			1,241			1,294			1,237
Income taxes		218			211			169			179			179
Tax-equivalent adjustment		1			1			-			-			-

Segment earnings	$	381			368			294			312			312

Economic profit	$	322			309			258			275			275
Risk adjusted return on capital		71.51	%		68.92			88.96			92.77			94.78
Economic capital, average	$	2,143			2,120			1,310			1,348			1,334
Cash overhead efficiency ratio (b)		75.54	%		76.96			72.82			72.47			71.59
Lending commitments	$	1,348			1,281			1,164			1,169			961
Average loans, net		2,562			2,295			2,142			1,663			1,554
Average core deposits	$	43,084			38,019			31,489			31,221			31,683
FTE employees		29,838			29,885			17,908			17,905			17,703
Assets under management	$	258,691			274,697			285,423			281,462			314,551

ASSET MANAGEMENT
Net interest income (b)	$	6			7			6			5			3
Fee and other income		295			279			244			312			272
Intersegment revenue		(1	)		-			(1	)		-			-

Total revenue (b)		300			286			249			317			275
Provision for credit losses		-			-			-			-			-
Noninterest expense		224			217			206			222			220
Income taxes		28			26			15			35			20
Tax-equivalent adjustment		-			-			-			-			-

Segment earnings	$	48			43			28			60			35

Economic profit	$	42			37			22			55			29
Risk adjusted return on capital		90.31	%		82.68			56.73			112.79			68.24
Economic capital, average	$	214			205			194			215			207
Cash overhead efficiency ratio (b)		74.75	%		76.33			82.50			70.01			80.04
Average loans, net	$	41			22			36			17			33
Average core deposits	$	453			405			418			364			278


(a) Capital Management Combined represents the consolidation of Capital Management’s Asset Management, Retail Brokerage Services, and Other, which primarily serves to eliminate intersegment revenue.

(b) Tax-equivalent.

(Continued)

Table 5
BUSINESS SEGMENTS


	*2008*			2007

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

RETAIL BROKERAGE SERVICES
Net interest income (b)	$	268			311			262			254			256
Fee and other income		1,898			1,934			1,202			1,227			1,207
Intersegment revenue		(9	)		(11	)		(7	)		(11	)		(8	)

Total revenue (b)		2,157			2,234			1,457			1,470			1,455
Provision for credit losses		-			-			-			-			-
Noninterest expense		1,634			1,725			1,038			1,076			1,022
Income taxes		190			184			154			143			158
Tax-equivalent adjustment		1			1			-			-			-

Segment earnings	$	332			324			265			251			275

Economic profit	$	279			271			235			219			244
Risk adjusted return on capital		69.23	%		67.17			94.13			88.54			99.04
Economic capital, average	$	1,929			1,915			1,116			1,133			1,127
Cash overhead efficiency ratio (b)		75.74	%		77.15			71.33			73.18			70.22
Average loans, net	$	2,521			2,273			2,106			1,646			1,521
Average core deposits	$	42,631			37,614			31,071			30,857			31,405

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

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

Segment earnings	$	1			1			1			1			2

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

(Continued)

Table 5
BUSINESS SEGMENTS

Three Months Ended March 31, 2008

Net Merger-

Corporate

Related

and

General

Wealth

Investment

Capital

Restructuring

(Dollars in millions)

Bank

Management

Bank

Management

Parent

Expenses (b)

Total

CONSOLIDATED

Net interest income (a)

3,455

181

1,032

274

(137

)

(53

)

4,752

Fee and other income

990

211

(159

)

2,191

(456

)

2,777

Intersegment revenue

(50

)

(10

)

Total revenue (a)

4,500

397

823

2,455

(593

)

(53

)

7,529

Provision for credit losses

569

197

2,060

2,831

Noninterest expense

2,050

246

747

1,855

302

241

5,441

Minority interest

198

(43

)

155

Income taxes (benefits)

675

(65

)

218

(1,041

)

(75

)

(234

)

Tax-equivalent adjustment

(53

)

Net income (loss)

1,195

(77

)

381

(2,132

)

(123

)

(664

)

Dividends on preferred stock

Net income (loss) available to common stockholders

1,195

(77

)

381

(2,175

)

(123

)

(707

)

Economic profit (loss)

997

(411

)

322

(842

)

136

Risk adjusted return on capital

42.58

50.80

(1.49

)

71.51

(167.55

)

12.79

Economic capital, average

12,695

705

13,242

2,143

1,888

30,673

Cash overhead efficiency ratio (a)

45.55

62.08

90.76

75.54

(34.17

)

67.22

Lending commitments

132,165

7,007

113,521

1,348

538

254,579

Average loans, net

311,447

22,413

101,024

2,562

28,490

465,936

Average core deposits

297,680

17,397

33,623

43,084

2,729

394,513

FTE employees

54,847

4,650

6,358

29,838

24,685

120,378


	Three Months Ended March 31, 2007

															Net Merger-
						Corporate									Related
						and									and
	General			Wealth		Investment			Capital						Restructuring
(Dollars in millions)	Bank			Management		Bank			Management			Parent			Expenses (b)			Total

CONSOLIDATED
Net interest income (a)	$	3,398			181		716			259			(17	)		(37	)		4,500
Fee and other income		845			196		1,109			1,477			107			-			3,734
Intersegment revenue		47			3		(43	)		(8	)		1			-			-

Total revenue (a)		4,290			380		1,782			1,728			91			(37	)		8,234
Provision for credit losses		147			1		6			-			23			-			177
Noninterest expense		1,869			247		911			1,237			347			10			4,621
Minority interest		-			-		-			-			136			-			136
Income taxes (benefits)		819			48		305			179			(349	)		(4	)		998
Tax-equivalent adjustment		11			-		10			-			16			(37	)		-

Net income (loss)	$	1,444			84		550			312			(82	)		(6	)		2,302

Economic profit (loss)	$	1,123			63		286			275			(61	)		-			1,686
Risk adjusted return on capital		53.73	%		54.31		24.91			94.78			1.61			-			40.01
Economic capital, average	$	10,662			592		8,329			1,334			2,658			-			23,575
Cash overhead efficiency ratio (a)		43.56	%		65.12		51.10			71.59			250.80			-			54.33
Lending commitments	$	124,253			6,686		110,214			961			503			-			242,617
Average loans, net		288,229			20,394		73,385			1,554			31,699			-			415,261
Average core deposits	$	284,046			17,267		34,227			31,683			2,047			-			369,270
FTE employees		56,722			4,589		6,650			17,703			24,705			-			110,369

(a) Tax-equivalent.

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

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


	*2008*			2007

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

ON-BALANCE SHEET LOAN PORTFOLIO
COMMERCIAL
Commercial, financial and agricultural	$	119,193			112,509			109,269			102,397			99,687
Real estate — construction and other		18,597			18,543			18,167			17,449			16,965
Real estate — mortgage		26,370			23,846			21,514			20,448			20,130
Lease financing		23,637			23,913			23,966			24,083			24,053
Foreign		33,616			29,540			26,471			20,959			16,240

Total commercial		221,413			208,351			199,387			185,336			177,075

CONSUMER
Real estate secured (a)		230,197			227,719			225,355			220,293			220,682
Student loans		9,324			8,149			7,742			6,757			8,479
Installment loans		27,437			25,635			24,763			25,017			23,665

Total consumer		266,958			261,503			257,860			252,067			252,826

Total loans		488,371			469,854			457,247			437,403			429,901
Unearned income		(7,889	)		(7,900	)		(8,041	)		(8,283	)		(8,238	)

Loans, net (On-balance sheet)	$	480,482			461,954			449,206			429,120			421,663


MANAGED PORTFOLIO (b)

COMMERCIAL
On-balance sheet loan portfolio	$	221,413			208,351			199,387			185,336			177,075
Securitized loans — off-balance sheet		120			131			142			170			181
Loans held for sale		3,342			9,414			13,905			11,573			10,467

Total commercial		224,875			217,896			213,434			197,079			187,723

CONSUMER
Real estate secured
On-balance sheet loan portfolio		230,197			227,719			225,355			220,293			220,682
Securitized loans — off-balance sheet		6,845			7,230			7,625			8,112			6,595
Securitized loans included in securities		11,683			10,755			5,963			6,091			5,629
Loans held for sale		5,960			4,816			3,583			4,079			4,089

Total real estate secured		254,685			250,520			242,526			238,575			236,995

Student
On-balance sheet loan portfolio		9,324			8,149			7,742			6,757			8,479
Securitized loans — off-balance sheet		2,586			2,811			2,856			2,905			3,045
Securitized loans included in securities		52			52			52			52			52
Loans held for sale		-			-			1,968			2,046			-

Total student		11,962			11,012			12,618			11,760			11,576

Installment
On-balance sheet loan portfolio		27,437			25,635			24,763			25,017			23,665
Securitized loans — off-balance sheet		1,968			2,263			2,572			3,105			2,851
Securitized loans included in securities		39			47			55			116			126
Loans held for sale		2,127			2,542			1,975			35			476

Total installment		31,571			30,487			29,365			28,273			27,118

Total consumer		298,218			292,019			284,509			278,608			275,689

Total managed portfolio	$	523,093			509,915			497,943			475,687			463,412


SERVICING PORTFOLIO (c)
Commercial	$	354,624			353,464			337,721			298,374			271,038
Consumer	$	27,415			27,967			28,474			26,789			25,952

(a) Includes deferred interest of $3.5 billion, $3.1 billion, $2.7 billion, $2.3 billion and $1.9 billion, at March 31, 2008, and at December 31, September 30, June 30 and March 31, 2007, respectively.

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

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

Table 10
LOANS HELD FOR SALE


	*2008*			2007

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

CORE BUSINESS ACTIVITY (a)
Core business activity, beginning of period	$	15,094			17,646			15,696			15,030			12,566
Originations and/or purchases		8,144			8,160			13,007			22,671			17,873
Transfer to (from) loans held for sale, net		(6,801	)		(1,278	)		2,162			(71	)		(180	)
Allowance for loan losses related to loans		-			-			(57	)		-			-
Lower of cost or market value adjustments (b)		(364	)		(223	)		(249	)		(91	)		(3	)
Market value adjustments for fair value option loans		42			-			-			-			-
Performing loans sold or securitized		(7,355	)		(8,992	)		(11,606	)		(20,910	)		(14,745	)
Other, principally payments		(354	)		(219	)		(1,307	)		(933	)		(481	)

Core business activity, end of period		8,406			15,094			17,646			15,696			15,030

PORTFOLIO MANAGEMENT ACTIVITY (a)
Portfolio business activity, beginning of period		1,678			3,785			2,037			2			2
Originations and/or purchases		83			-			-			-			-
Transfer to loans held for sale
Performing loans (c)		2,317			137			1,831			2,046			-
Lower of cost or market value adjustments (b)		(31	)		(30	)		(6	)		(10	)		-
Performing loans sold or securitized		(990	)		(2,078	)		-			-			-
Other, principally payments		(34	)		(136	)		(77	)		(1	)		-

Portfolio management activity, end of period		3,023			1,678			3,785			2,037			2

Total loans held for sale (d)	$	11,429			16,772			21,431			17,733			15,032

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

(b) Lower of cost or market value adjustments exclude amounts related to unfunded commitments. Market disruption-related write-downs on unfunded commitments amounted to $729 million, $78 million and $311 million in the first quarter of 2008 and in the fourth and third quarters of 2007, respectively.

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

(d) Nonperforming loans included in loans held for sale at March 31, 2008 and at December 31, September 30, June 30 and March 31, 2007, were $5 million, $62 million, $59 million, $42 million and $26 million, respectively.

Table 11
ALLOWANCE FOR CREDIT LOSSES


	*2008*			2007

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

ALLOWANCE FOR CREDIT LOSSES (a)
Balance, beginning of period	$	4,717			3,691			3,552			3,533			3,514
Provision for credit losses		2,834			1,467			381			168			175
Provision for credit losses relating to loans transferred to loans held for sale or sold		7			6			3			4			1
Provision for credit losses for unfunded lending commitments		(10	)		24			24			7			1
LOAN LOSSES
Commercial, financial and agricultural		(171	)		(67	)		(41	)		(39	)		(34	)
Commercial real estate — construction and mortgage		(81	)		(117	)		(5	)		(4	)		(6	)

Total commercial		(252	)		(184	)		(46	)		(43	)		(40	)

Real estate secured		(351	)		(156	)		(59	)		(40	)		(33	)
Student loans		(3	)		(4	)		(5	)		(2	)		(3	)
Installment and other loans (b)		(242	)		(225	)		(168	)		(138	)		(142	)

Total consumer		(596	)		(385	)		(232	)		(180	)		(178	)

Total loan losses		(848	)		(569	)		(278	)		(223	)		(218	)

LOAN RECOVERIES
Commercial, financial and agricultural		14			22			9			15			9
Commercial real estate — construction and mortgage		1			-			3			-			3

Total commercial		15			22			12			15			12

Real estate secured		10			9			12			11			6
Student loans		1			2			3			-			1
Installment and other loans (b)		57			75			45			47			44

Total consumer		68			86			60			58			51

Total loan recoveries		83			108			72			73			63

Net charge-offs		(765	)		(461	)		(206	)		(150	)		(155	)

Allowance relating to loans acquired, transferred to loans held for sale or sold		(16	)		(10	)		(63	)		(10	)		(3	)

Balance, end of period	$	6,767			4,717			3,691			3,552			3,533

CONSUMER REAL ESTATE SECURED NET CHARGE-OFFS
First lien	$	(291	)		(122	)		(32	)		(17	)		(15	)
Second lien		(50	)		(25	)		(15	)		(12	)		(12	)

Total consumer real estate secured net charge-offs	$	(341	)		(147	)		(47	)		(29	)		(27	)

ALLOWANCE FOR CREDIT LOSSES
Allocation of the allowance for loan losses
Commercial	$	2,645			2,392			2,054			1,889			1,879
Consumer		3,592			1,950			1,246			1,371			1,354
Unallocated		330			165			205			130			145

Total allowance for loan losses		6,567			4,507			3,505			3,390			3,378
Reserve for unfunded lending commitments		200			210			186			162			155

Total allowance for credit losses	$	6,767			4,717			3,691			3,552			3,533

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

(b) Principally auto loans.

Table 13
NONPERFORMING ASSETS


	*2008*			2007

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

NONPERFORMING ASSETS
Nonaccrual loans
Commercial
Commercial, financial and agricultural	$	908			602		354		318		303
Commercial real estate — construction and mortgage		1,750			1,059		289		161		117

Total commercial		2,658			1,661		643		479		420

Consumer
Real estate secured
First lien		5,015			3,234		1,986		1,380		1,124
Second lien		75			58		41		44		37
Installment and other loans (a)		40			42		45		42		51

Total consumer		5,130			3,334		2,072		1,466		1,212

Total nonaccrual loans		7,788			4,995		2,715		1,945		1,632
Troubled debt restructurings (b)		48			-		-		-		-
Foreclosed properties		530			389		334		207		155

Total nonperforming assets	$	8,366			5,384		3,049		2,152		1,787

as % of loans, net, and foreclosed properties (c)		1.74	%		1.16		0.68		0.50		0.42

Nonperforming assets included in loans held for sale
Commercial	$	-			-		-		-		1
Consumer		5			62		50		37		23

Total nonaccrual loans		5			62		50		37		24
Foreclosed properties		-			-		9		5		2

Total nonperforming assets included in loans held for sale		5			62		59		42		26

Nonperforming assets included in loans and in loans held for sale	$	8,371			5,446		3,108		2,194		1,813

as % of loans, net, foreclosed properties and loans held for sale (d)		1.70	%		1.14		0.66		0.49		0.42

PAST DUE LOANS 90 DAYS AND OVER, AND NONACCRUAL LOANS (c)
Accruing loans past due 90 days and over	$	1,047			708		590		562		555
Nonaccrual loans		7,788			4,995		2,715		1,945		1,632

Total past due loans 90 days and over, and nonaccrual loans	$	8,835			5,703		3,305		2,507		2,187

Commercial as % of loans, net		1.31	%		0.89		0.38		0.31		0.28
Consumer as % of loans, net		2.26	%		1.49		1.00		0.78		0.68

(a) Principally auto loans; nonaccrual status does not apply to student loans.
(b) Troubled debt restructurings were not significant prior to the first quarter of 2008.
(c) These ratios do not include nonperforming loans included in loans held for sale.
(d) These ratios reflect nonperforming loans included in loans held for sale. Loans held for sale are recorded at the lower of cost or market value, and accordingly, the amounts shown and included in the ratios are net of the transferred allowance for loan losses and the lower of cost or market value adjustments.

Table 18
LONG-TERM DEBT


	*2008*		2007

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

NOTES AND DEBENTURES ISSUED BY
THE PARENT COMPANY
Notes
Floating rate, 2.69% to 4.39%, due 2008 to 2017	$	15,513		15,514		15,401			13,651			11,151
Equity-linked and commodity-linked, due 2008 to 2012		814		792		1,047			1,055			988
3.50% to 5.80%, due 2008 to 2020		11,508		9,011		8,551			8,193			6,835
Floating rate, EMTN notes, due 2011 to 2014		3,955		3,649		3,549			3,370			3,321
Floating rate, Australian notes, due 2012		822		789		799			764			-
6.75%, Australian notes, due 2012		137		131		133			127			-
4.375%, EMTN notes, due 2016		1,181		1,090		1,060			1,006			992
Subordinated notes
4.875% to 6.40%, due 2008 to 2035		6,491		6,454		6,452			6,449			6,441
Floating rate, due 2015 to 2016		1,250		1,250		1,250			1,250			1,250
4.375% to 4.875%, EMTN notes, due 2018 to 2035		2,158		2,099		2,112			2,055			2,013
6.605%, due 2025		250		250		250			250			250
6.30%, Putable/Callable, due 2028		200		200		200			200			200
Floating rate, hybrid trust securities, due 2037 to 2047		2,513		2,513		1,675			1,675			875
5.20%, income trust securities, due 2042		2,501		2,501		2,501			2,501			2,501
Subordinated debentures
6.55% to 7.574%, due 2026 to 2035		795		795		795			795			795
Hedge-related basis adjustments		1,073		406		(139	)		(660	)		(74	)

Total notes and debentures issued by the
Parent Company		51,161		47,444		45,636			42,681			37,538

NOTES ISSUED BY SUBSIDIARIES
Primarily notes issued under global bank note programs,
varying rates and terms to 2040		29,550		23,562		21,226			21,537			21,911
Floating rate, 2.59% to 3.20%, due 2008 to 2011		5,133		5,133		7,133			7,133			7,730
4.125% to 4.75%, due 2009 to 2012		1,690		2,390		2,389			2,689			2,687
Floating rate, EMTN notes, due 2009 to 2011		4,652		4,316		3,907			3,710			3,657
Subordinated notes
Bank, 2.971% to 9.625%, due 2008 to 2038		12,802		12,955		9,532			9,533			9,535
7.95%		-		-		100			100			100
Floating rate, due 2013		417		417		417			417			417
6.75%, Australian notes, due 2017		182		175		176			169			-
Floating rate, Australian notes, due 2017		183		175		177			170			-
5.25%, EMTN notes, due 2023		1,475		1,477		1,512			1,488			1,455

Total notes issued by subsidiaries		56,084		50,600		46,569			46,946			47,492

OTHER DEBT
Auto secured financing, 2.56% to 9.05%, due 2008 to 2015		6,147		6,679		7,748			8,994			8,289
Collateralized notes		-		4,300		4,300			4,420			4,420
Junior subordinated debentures, floating rate, due 2026 to 2029		3,110		3,098		3,099			3,100			3,097
Advances from the Federal Home Loan Bank, 1.00% to 8.45%, due 2008 to 2031		53,209		41,888		43,017			30,542			34,699
Preferred units issued by subsidiaries		2,852		2,852		2,852			2,852			2,852
Capitalized leases		7		8		9			9			9
Mortgage notes and other debt of subsidiaries, varying rates and terms		2,467		3,870		5,411			2,809			3,916
Hedge-related basis adjustments		616		268		(57	)		(306	)		22

Total other debt		68,408		62,963		66,379			52,420			57,304

Total long-term debt	$	175,653		161,007		158,584			142,047			142,334

Table 20
CAPITAL RATIOS


	*2008*			2007

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

CONSOLIDATED CAPITAL RATIOS (a)
Qualifying capital
Tier 1 capital	$	45,353			43,528		41,853		41,516		39,790
Total capital		73,684			70,003		63,948		63,705		61,803
Adjusted risk-weighted assets		611,596			592,065		589,844		555,702		541,628
Adjusted leverage ratio assets	$	734,233			714,633		686,373		666,646		653,994
Ratios
Tier 1 capital		7.42	%		7.35		7.10		7.47		7.35
Total capital		12.05			11.82		10.84		11.46		11.41
Leverage		6.18			6.09		6.10		6.23		6.08
STOCKHOLDERS’ EQUITY TO ASSETS
Quarter-end		9.65			9.82		9.30		9.68		9.93
Average		10.05	%		9.69		9.58		9.84		10.03

BANK CAPITAL RATIOS
Tier 1 capital
Wachovia Bank, National Association		7.50	%		7.50		7.09		7.34		7.28
Wachovia Bank of Delaware, National Association		15.04			15.60		17.14		18.37		17.82
Wachovia Mortgage, FSB (b)		11.46			12.97		13.44		16.07		14.37
Wachovia Bank, FSB (c)		19.66			17.07		15.94		12.42		-
Total capital
Wachovia Bank, National Association		11.72			11.45		10.57		10.95		10.94
Wachovia Bank of Delaware, National Association		17.07			17.67		19.27		20.29		19.41
Wachovia Mortgage, FSB (b)		12.73			14.06		13.81		16.45		14.77
Wachovia Bank, FSB (c)		20.91			17.95		16.25		12.83		-
Leverage
Wachovia Bank, National Association		6.39			6.71		6.69		6.72		6.62
Wachovia Bank of Delaware, National Association		9.99			9.82		15.66		14.33		13.42
Wachovia Mortgage, FSB (b)		6.11			6.88		7.17		8.78		7.84
Wachovia Bank, FSB (c)		6.26	%		5.94		5.50		5.20		-

(a) Risk-based capital ratio guidelines require a minimum ratio of tier 1 capital to risk-weighted assets of 4.00 percent and a minimum ratio of total capital to risk-weighted assets of 8.00 percent. The minimum leverage ratio of tier 1 capital to adjusted average quarterly assets is from 3.00 percent to 4.00 percent.

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

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

WACHOVIA CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES


	*FIRST QUARTER 2008*							FOURTH QUARTER 2007

					*Average*							Average
			*Interest*		*Rates*					Interest		Rates
	*Average*		*Income/*		*Earned/*			Average		Income/		Earned/
(In millions)	*Balances*		*Expense*		*Paid*			Balances		Expense		Paid

ASSETS
Interest-bearing bank balances	$	4,253		51		4.85	%	$	5,083		64		5.05	%
Federal funds sold and securities purchased under resale agreements		11,865		103		3.49			12,901		155		4.77
Trading account assets (a)		44,655		589		5.28			37,694		569		6.04
Securities (a)		110,401		1,545		5.60			115,436		1,625		5.62
Loans (a) (b)
Commercial
Commercial, financial and agricultural		115,377		1,671		5.82			111,500		1,908		6.79
Real estate — construction and other		18,634		251		5.42			18,435		318		6.85
Real estate — mortgage		25,291		374		5.95			22,973		426		7.36
Lease financing		7,167		140		7.79			7,374		145		7.82
Foreign		32,109		389		4.86			27,882		380		5.42

Total commercial		198,578		2,825		5.72			188,164		3,177		6.70

Consumer
Real estate secured		231,392		3,926		6.79			227,893		4,042		7.08
Student loans		9,155		113		4.96			8,073		126		6.19
Installment loans		26,811		659		9.88			25,675		651		10.04

Total consumer		267,358		4,698		7.04			261,641		4,819		7.35

Total loans		465,936		7,523		6.48			449,805		7,996		7.08

Loans held for sale		11,592		223		7.71			18,998		360		7.53
Other earning assets		10,331		146		5.69			10,223		166		6.48

Total earning assets excluding derivatives		659,033		10,180		6.19			650,140		10,935		6.70
Risk management derivatives (c)		-		52		0.04			-		19		0.01

Total earning assets including derivatives		659,033		10,232		6.23			650,140		10,954		6.71

Cash and due from banks		11,645							12,028
Other assets		112,915							101,319

Total assets	$	783,593						$	763,487

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits
Savings and NOW accounts		86,452		236		1.10			83,370		345		1.64
Money market accounts		128,074		747		2.34			121,717		949		3.09
Other consumer time		123,655		1,437		4.68			127,061		1,557		4.86
Foreign		26,197		231		3.55			27,354		306		4.44
Other time		22,643		265		4.71			20,169		263		5.16

Total interest-bearing deposits		387,021		2,916		3.03			379,671		3,420		3.57
Federal funds purchased and securities sold under repurchase agreements		35,956		308		3.45			36,386		413		4.50
Commercial paper		5,509		38		2.74			7,272		78		4.27
Securities sold short		6,919		62		3.63			6,728		61		3.62
Other short-term borrowings		10,154		45		1.77			10,369		58		2.24
Long-term debt		165,540		1,961		4.75			158,704		2,129		5.34

Total interest-bearing liabilities excluding derivatives		611,099		5,330		3.51			599,130		6,159		4.08
Risk management derivatives (c)		-		97		0.06			-		121		0.08

Total interest-bearing liabilities including derivatives		611,099		5,427		3.57			599,130		6,280		4.16

Noninterest-bearing deposits		56,332							57,895
Other liabilities		37,415							32,476
Stockholders’ equity		78,747							73,986

Total liabilities and stockholders’ equity	$	783,593						$	763,487

Interest income and rate earned — including derivatives			$	10,232		6.23	%			$	10,954		6.71	%
Interest expense and equivalent rate paid — including derivatives				5,427		3.31					6,280		3.83

Net interest income and margin — including derivatives			$	4,805		2.92	%			$	4,674		2.88	%

(a) Yields related to securities and loans exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 35 percent and applicable state tax rates. Lease financing amounts include related deferred income taxes.
(b) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.


THIRD QUARTER 2007							SECOND QUARTER 2007							FIRST QUARTER 2007

				Average							Average							Average
		Interest		Rates					Interest		Rates					Interest		Rates
Average		Income/		Earned/			Average		Income/		Earned/			Average		Income/		Earned/
Balances		Expense		Paid			Balances		Expense		Paid			Balances		Expense		Paid


$	6,459		93		5.68	%	$	3,384		50		6.00	%	$	1,523		30		7.80	%

	14,206		194		5.42			12,110		158		5.25			14,124		177		5.07
	38,737		575		5.93			35,165		519		5.90			29,681		442		5.97
	111,424		1,522		5.46			108,433		1,467		5.41			108,071		1,461		5.42


	106,263		1,927		7.19			101,012		1,805		7.16			98,413		1,736		7.16
	17,795		344		7.66			17,334		329		7.62			16,508		313		7.69
	20,883		406		7.71			20,175		378		7.53			20,231		380		7.61
	7,523		146		7.80			7,759		150		7.74			7,730		150		7.75
	22,208		308		5.53			19,232		265		5.51			14,406		196		5.49

	174,672		3,131		7.12			165,512		2,927		7.09			157,288		2,775		7.15


	223,356		4,070		7.28			222,096		4,042		7.28			225,909		4,148		7.36
	7,299		122		6.61			8,850		141		6.42			8,524		136		6.47
	24,474		614		9.96			24,799		609		9.84			23,540		566		9.75

	255,129		4,806		7.52			255,745		4,792		7.50			257,973		4,850		7.55

	429,801		7,937		7.35			421,257		7,719		7.34			415,261		7,625		7.40

	20,209		363		7.14			17,644		285		6.47			16,748		255		6.16
	7,937		138		6.91			7,985		144		7.23			8,255		139		6.82

	628,773		10,822		6.86			605,978		10,342		6.84			593,663		10,129		6.87
	-		42		0.02			-		46		0.03			-		48		0.03

	628,773		10,864		6.88			605,978		10,388		6.87			593,663		10,177		6.90

	11,134							11,533							12,260
	89,097							87,262							85,106

$	729,004						$	704,773						$	691,029



	81,851		357		1.73			83,977		367		1.75			84,247		373		1.80
	116,404		980		3.34			111,562		976		3.51			107,785		917		3.45
	122,474		1,507		4.88			120,684		1,455		4.84			116,262		1,369		4.77
	23,322		292		4.97			21,871		270		4.96			20,802		249		4.85
	13,776		187		5.40			8,051		107		5.30			9,034		119		5.36

	357,827		3,323		3.68			346,145		3,175		3.68			338,130		3,027		3.63

	44,334		556		4.98			38,031		473		4.98			35,142		430		4.97
	5,799		65		4.42			5,143		60		4.67			4,920		57		4.72
	7,420		70		3.74			7,158		67		3.75			8,709		83		3.86
	7,793		55		2.74			7,688		52		2.77			6,898		44		2.54
	151,226		2,067		5.44			143,504		1,923		5.37			141,979		1,880		5.35

	574,399		6,136		4.24			547,669		5,750		4.21			535,778		5,521		4.17
	-		144		0.10			-		151		0.11			-		119		0.09

	574,399		6,280		4.34			547,669		5,901		4.32			535,778		5,640		4.26

	58,280							62,273							60,976
	26,468							25,514							24,955
	69,857							69,317							69,320

$	729,004						$	704,773						$	691,029

		$	10,864		6.88	%			$	10,388		6.87	%			$	10,177		6.90	%

			6,280		3.96					5,901		3.91					5,640		3.84

		$	4,584		2.92	%			$	4,487		2.96	%			$	4,537		3.06	%

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

WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


	*2008*			2007

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

ASSETS
Cash and due from banks	$	14,703			15,124			12,681			12,065			12,593
Interest-bearing bank balances		3,236			3,057			4,449			2,726			2,591
Federal funds sold and securities purchased under resale agreements		10,644			15,449			11,995			11,511			10,322

Total cash and cash equivalents		28,583			33,630			29,125			26,302			25,506

Trading account assets		72,592			55,882			54,835			51,540			44,161
Securities		114,183			115,037			111,827			106,184			106,841
Loans, net of unearned income		480,482			461,954			449,206			429,120			421,663
Allowance for loan losses		(6,567	)		(4,507	)		(3,505	)		(3,390	)		(3,378	)

Loans, net		473,915			457,447			445,701			425,730			418,285

Loans held for sale		11,429			16,772			21,431			17,733			15,032
Premises and equipment		6,733			6,605			6,002			6,080			6,058
Due from customers on acceptances		1,109			1,418			1,295			831			992
Goodwill		43,068			43,122			38,848			38,766			38,838
Other intangible assets		2,038			2,119			1,380			1,468			1,570
Other assets		54,925			50,864			43,724			40,794			45,386

Total assets	$	808,575			782,896			754,168			715,428			702,669

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		60,951			60,893			56,825			62,112			63,399
Interest-bearing deposits		384,013			388,236			365,112			347,918			341,871

Total deposits		444,964			449,129			421,937			410,030			405,270
Short-term borrowings		57,857			50,393			62,714			52,715			47,144
Bank acceptances outstanding		1,118			1,424			1,303			840			1,004
Trading account liabilities		28,887			21,585			17,771			19,319			17,291
Other liabilities		19,036			19,151			18,424			18,080			16,741
Long-term debt		175,653			161,007			158,584			142,047			142,334

Total liabilities		727,515			702,689			680,733			643,031			629,784

Minority interest in net assets of consolidated subsidiaries		3,068			3,335			3,295			3,131			3,099

STOCKHOLDERS’ EQUITY
Preferred stock, Class A, 40 million shares, no par value; 10 million shares, no par value; none issued		-			-			-			-			-
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at March 31, 2008		-			-			-			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized		-			-			-			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series J, $1,000 liquidation preference per share, 92 million depositary shares issued and outstanding at March 31, 2008		2,300			2,300			-			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series K, $1,000 liquidation preference per share, 3.5 million shares issued and outstanding at March 31, 2008		3,500			-			-			-			-
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.965 billion shares at March 31, 2008		6,551			6,534			6,283			6,289			6,316
Paid-in capital		56,367			56,149			51,938			51,905			52,026
Retained earnings		11,449			13,456			14,670			14,335			13,378
Accumulated other comprehensive income, net		(2,175	)		(1,567	)		(2,751	)		(3,263	)		(1,934	)

Total stockholders’ equity		77,992			76,872			70,140			69,266			69,786

Total liabilities and stockholders’ equity	$	808,575			782,896			754,168			715,428			702,669

WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME


	*2008*			2007

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

INTEREST INCOME
Interest and fees on loans	$	7,577			7,980			7,937			7,723		7,618
Interest and dividends on securities		1,496			1,616			1,529			1,474		1,478
Trading account interest		571			557			566			506		433
Other interest income		535			757			799			647		611

Total interest income		10,179			10,910			10,831			10,350		10,140

INTEREST EXPENSE
Interest on deposits		2,941			3,433			3,334			3,180		3,014
Interest on short-term borrowings		523			673			801			706		669
Interest on long-term debt		1,963			2,174			2,145			2,015		1,957

Total interest expense		5,427			6,280			6,280			5,901		5,640

Net interest income		4,752			4,630			4,551			4,449		4,500
Provision for credit losses		2,831			1,497			408			179		177

Net interest income after provision for credit losses		1,921			3,133			4,143			4,270		4,323

FEE AND OTHER INCOME
Service charges		676			716			689			667		614
Other banking fees		498			497			471			449		416
Commissions		914			970			600			649		659
Fiduciary and asset management fees		1,439			1,436			1,029			1,015		953
Advisory, underwriting and other investment banking fees		261			249			393			454		407
Trading account profits (losses)		(308	)		(524	)		(301	)		195		128
Principal investing		446			41			372			298		48
Securities gains (losses)		(205	)		(320	)		(34	)		23		53
Other income		(944	)		(321	)		(286	)		490		456

Total fee and other income		2,777			2,744			2,933			4,240		3,734

NONINTEREST EXPENSE
Salaries and employee benefits		3,260			3,468			2,628			3,122		2,972
Occupancy		379			375			325			331		312
Equipment		323			334			283			309		307
Marketing		97			80			74			78		62
Communications and supplies		186			191			176			178		173
Professional and consulting fees		196			271			194			205		177
Other intangible amortization		103			111			92			103		118
Merger-related and restructuring expenses		241			187			36			32		10
Sundry expense		656			769			717			532		490

Total noninterest expense		5,441			5,786			4,525			4,890		4,621

Minority interest in income of consolidated subsidiaries		155			107			189			139		136

Income (loss) from continuing operations before income taxes (benefits)		(898	)		(16	)		2,362			3,481		3,300
Income taxes (benefits)		(234	)		(209	)		656			1,140		998

Income (loss) from continuing operations		(664	)		193			1,706			2,341		2,302
Discontinued operations, net of income taxes		-			(142	)		(88	)		-		-

Net income (loss)		(664	)		51			1,618			2,341		2,302
Dividends on preferred stock		43			-			-			-		-

Net income (loss) available to common stockholders	$	(707	)		51			1,618			2,341		2,302

PER COMMON SHARE DATA (after preferred stock dividends)
Basic earnings
Income (loss) from continuing operations	$	(0.36	)		0.10			0.91			1.24		1.22
Net income (loss) available to common stockholders		(0.36	)		0.03			0.86			1.24		1.22
Diluted earnings (a)
Income (loss) from continuing operations		(0.36	)		0.10			0.90			1.22		1.20
Net income (loss) available to common stockholders		(0.36	)		0.03			0.85			1.22		1.20
Cash dividends	$	0.64			0.64			0.64			0.56		0.56
AVERAGE COMMON SHARES
Basic		1,963			1,959			1,885			1,891		1,894
Diluted		1,977			1,983			1,910			1,919		1,925


(a)		Calculated using average basic common shares in the first quarter of 2008.

WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)


	*March 31,*				December 31,

(In millions, except per share data)		*2008*			2007

ASSETS
Cash and due from banks		$	14,703			15,124
Interest-bearing bank balances			3,236			3,057
Federal funds sold and securities purchased under resale agreements			10,644			15,449

Total cash and cash equivalents			28,583			33,630

Trading account assets			72,592			55,882
Securities			114,183			115,037
Loans, net of unearned income			480,482			461,954
Allowance for loan losses			(6,567	)		(4,507	)

Loans, net			473,915			457,447

Loans held for sale (includes $3,652 at fair value at March 31, 2008)			11,429			16,772
Premises and equipment			6,733			6,605
Due from customers on acceptances			1,109			1,418
Goodwill			43,068			43,122
Other intangible assets			2,038			2,119
Other assets			54,925			50,864

Total assets		$	808,575			782,896

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits			60,951			60,893
Interest-bearing deposits			384,013			388,236

Total deposits			444,964			449,129
Short-term borrowings			57,857			50,393
Bank acceptances outstanding			1,118			1,424
Trading account liabilities			28,887			21,585
Other liabilities			19,036			19,151
Long-term debt			175,653			161,007

Total liabilities			727,515			702,689

Minority interest in net assets of consolidated subsidiaries			3,068			3,335

STOCKHOLDERS’ EQUITY
Preferred stock, Class A, 40 million shares, no par value; 10 million shares, no par value; none issued			-			-
Dividend Equalization Preferred shares, no par value, 97 million shares issued and outstanding at March 31, 2008			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized			-			-
Non-Cumulative Perpetual Class A Preferred Stock, Series J, $1,000 liquidation preference per share, 92 million depositary shares issued and outstanding at March 31, 2008			2,300			2,300
Non-Cumulative Perpetual Class A Preferred Stock, Series K, $1,000 liquidation preference per share, 3.5 million shares issued and outstanding at March 31, 2008			3,500			-
Common stock, $3.33-1/3 par value; authorized 3 billion shares, outstanding 1.965 billion shares at March 31, 2008			6,551			6,534
Paid-in capital			56,367			56,149
Retained earnings			11,449			13,456
Accumulated other comprehensive income, net			(2,175	)		(1,567	)

Total stockholders’ equity			77,992			76,872

Total liabilities and stockholders’ equity		$	808,575			782,896

See accompanying Notes to Consolidated Financial Statements.

WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	*Three Months Ended*
	*March 31,*

(In millions, except per share data)	*2008*			2007

INTEREST INCOME
Interest and fees on loans	$	7,577			7,618
Interest and dividends on securities		1,496			1,478
Trading account interest		571			433
Other interest income		535			611

Total interest income		10,179			10,140

INTEREST EXPENSE
Interest on deposits		2,941			3,014
Interest on short-term borrowings		523			669
Interest on long-term debt		1,963			1,957

Total interest expense		5,427			5,640

Net interest income		4,752			4,500
Provision for credit losses		2,831			177

Net interest income after provision for credit losses		1,921			4,323

FEE AND OTHER INCOME
Service charges		676			614
Other banking fees		498			416
Commissions		914			659
Fiduciary and asset management fees		1,439			953
Advisory, underwriting and other investment banking fees		261			407
Trading account profits (losses)		(308	)		128
Principal investing		446			48
Securities gains (losses)		(205	)		53
Other income		(944	)		456

Total fee and other income		2,777			3,734

NONINTEREST EXPENSE
Salaries and employee benefits		3,260			2,972
Occupancy		379			312
Equipment		323			307
Marketing		97			62
Communications and supplies		186			173
Professional and consulting fees		196			177
Other intangible amortization		103			118
Merger-related and restructuring expenses		241			10
Sundry expense		656			490

Total noninterest expense		5,441			4,621

Minority interest in income of consolidated subsidiaries		155			136

Income (loss) before income taxes (benefits)		(898	)		3,300
Income taxes (benefits)		(234	)		998

Net income (loss)		(664	)		2,302
Dividends on preferred stock		43			-

Net income (loss) available to common stockholders	$	(707	)		2,302

PER COMMON SHARE DATA (after preferred stock dividends)
Basic earnings
Net income (loss) available to common stockholders	$	(0.36	)		1.22
Diluted earnings
Net income (loss) available to common stockholders		(0.36	)		1.20
Cash dividends	$	0.64			0.56
AVERAGE COMMON SHARES
Basic		1,963			1,894
Diluted		1,977			1,925

See accompanying Notes to Consolidated Financial Statements.

WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	*Three Months Ended*
	*March 31,*

(In millions)	*2008*			2007

OPERATING ACTIVITIES
Net income (loss)	$	(664	)		2,302
Adjustments to reconcile net income to net cash provided (used) by operating activities
Accretion and amortization of securities discounts and premiums, net		2			(5	)
Provision for credit losses		2,831			177
Gain on securitization transactions		(13	)		(69	)
Gain on sale of mortgage servicing rights		-			(2	)
Securities transactions		205			(53	)
Depreciation and other amortization		583			534
Trading account assets, net		(9,903	)		580
Loss on sales of premises and equipment		(5	)		1
Valuation losses on bank-owned separate account life insurance		314			-
Contribution to qualified pension plan		-			(270	)
Income tax shortfall (excess income tax benefit) from share-based payment arrangements		18			(8	)
Loans held for sale, net		(3,307	)		(2,644	)
Deferred interest on certain loans		(438	)		(378	)
Other assets, net		(3,626	)		(3,560	)
Trading account liabilities, net		7,302			(937	)
Other liabilities, net		(627	)		(3,378	)

Net cash used by operating activities		(7,328	)		(7,710	)

INVESTING ACTIVITIES
Increase (decrease) in cash realized from
Sales of securities		8,209			2,136
Maturities of securities		4,529			4,468
Purchases of securities		(18,099	)		(4,108	)
Origination of loans, net		(12,031	)		(1,535	)
Sales of premises and equipment		19			107
Purchases of premises and equipment		(396	)		(235	)
Goodwill and other intangible assets		32			(512	)
Purchase of bank-owned separate account life insurance, net		(90	)		(397	)

Net cash used by investing activities		(17,827	)		(76	)

FINANCING ACTIVITIES
Increase (decrease) in cash realized from
Increase (decrease) in deposits, net		(4,165	)		(2,188	)
Securities sold under repurchase agreements and other short-term borrowings, net		7,464			(2,013	)
Issuances of long-term debt		23,719			12,430
Payments of long-term debt		(9,073	)		(8,690	)
Issuances of preferred shares		3,497			-
Issuances of common stock, net		21			184
Purchases of common stock		(20	)		(284	)
(Income tax shortfall) excess income tax benefit from share-based payment arrangements		(18	)		8
Cash dividends paid		(1,317	)		(1,071	)

Net cash provided (used) by financing activities		20,108			(1,624	)

Decrease in cash and cash equivalents		(5,047	)		(9,410	)
Cash and cash equivalents, beginning of year		33,630			34,916

Cash and cash equivalents, end of period	$	28,583			25,506

NONCASH ITEMS
Transfer to securities from loans resulting from securitizations	$	-			499
Transfer to securities from loans held for sale resulting from securitizations		1,849			-
Transfer to trading account assets from securities		6,807			-
Transfer to loans from loans held for sale		6,801			180
Cumulative effect of accounting changes, net of income taxes	$	(24	)		(1,447	)

See accompanying Notes to Consolidated Financial Statements.

WACHOVIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS

GENERAL

Wachovia Corporation and subsidiaries (together “Wachovia” or the “Company”) is a diversified financial services company whose operations are principally domestic.

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements of the Company include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such financial statements for all periods presented. The financial position and results of operations as of and for the three months ended March 31, 2008, are not necessarily indicative of the results of operations that may be expected in the future. Please refer to the Company’s 2007 Annual Report on Form 10-K for additional information related to the Company’s audited consolidated financial statements for the three years ended December 31, 2007, including the related notes to consolidated financial statements.

The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates and assumptions. The Company regularly assesses various assets for impairment as dictated by applicable GAAP, giving appropriate consideration to general economic and specific market factors. The accounting policies that are particularly sensitive to judgments and the extent to which significant estimates are used include allowance for loan losses and the reserve for unfunded lending commitments, fair value of certain financial instruments, consolidation, goodwill impairment and contingent liabilities.

PERSONNEL EXPENSE AND RETIREMENT BENEFITS

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

The components of the retirement benefit costs (credit) included in salaries and employee benefits for the three months ended March 31, 2008 and 2007, are presented below.


											*Other*
											*Postretirement*
	*Qualified Pension*						*Nonqualified Pension*				*Benefits*
	*Three Months Ended*						*Three Months Ended*				*Three Months Ended*
	*March 31,*						*March 31,*				*March 31,*
(In millions)	*2008*			2007			*2008*		2007		*2008*			2007

RETIREMENT BENEFIT COSTS (CREDIT)
Service cost	$	43			46			-		1		1			1
Interest cost		64			66			5		5		11			11
Expected return on plan assets		(130	)		(123	)		-		-		(1	)		(1	)
Amortization of prior service cost		(11	)		(7	)		-		-		-			(2	)
Amortization of actuarial losses		19			30			1		2		-			-

Net retirement benefit costs (credit)	$	(15	)		12			6		8		11			9

DISCONTINUED OPERATIONS

In the first quarter of 2008, management of BluePoint Re Limited, a 100 percent owned monoline reinsurer based in Bermuda, initiated a restructuring strategy that, if completed, will lead to a significant reduction in Wachovia’s ownership interest in BluePoint and result in deconsolidation of this subsidiary in Wachovia’s financial statements. The Company currently expects that a resolution with respect to BluePoint will be effected by September 30, 2008.

In 2007, BluePoint recorded significant losses on certain derivative instruments (principally credit default swaps on collateralized debt obligations where the underlying collateral is subprime residential mortgage-backed securities) and these losses through December 31, 2007, approximated substantially all of Wachovia’s investment in this subsidiary and were included in Wachovia’s 2007 consolidated results. Wachovia has no further obligation to inject capital in BluePoint. BluePoint continued to record these instruments at fair value in the first quarter of 2008. In estimating the fair value of these instruments under SFAS 157 (see “New Accounting Pronouncements” section of this note), a company must consider, among other things, its own credit rating, which in this case is BluePoint’s. As Wachovia has no obligation to fund losses in excess of BluePoint’s equity, BluePoint assessed the discount required in valuing these instruments to reflect a market participant’s view of BluePoint’s nonperformance risk. BluePoint’s valuation at March 31, 2008, reflected a discount of approximately 60 percent for its nonperformance risk, such that BluePoint recorded no further losses on the derivative instruments in the first quarter of 2008. Accordingly, the Company’s first quarter 2008 consolidated results reflect no additional losses in discontinued operations.

GOODWILL

The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate there may be impairment. If the carrying amount of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss would be recognized in an amount equal to that excess. A reporting unit is the Company’s sub-segment level.

Historically, the Company determined fair values of reporting units using two methods, one based on market earnings multiples of peer companies for each reporting unit, and the other based on discounted cash flow models with estimated cash flows based on internal forecasts of revenues and expenses. In the first quarter of 2008, the Company added a third method, one based on the previously described market earnings multiples of peer companies adjusted to include a control premium calculated based on comparable transactions for each reporting unit. The earnings multiples for the first method ranged between 9.1 times and 17.2 times. The estimated cash flows for the second method used market-based discount rates ranging from 12.4 percent to 17.8 percent. The control premium adjusted earnings multiple method resulted in multiples ranging from 12.6 times to 23.7 times. These three methods provide a range of valuations the Company uses in evaluating goodwill for possible impairment. Also, the Company stress tests the results of each of the three testing methods by approximately 20 percent to identify areas where additional investigation or procedures may be necessary to complete the analysis.

The goodwill impairment testing indicated that none of the Company’s goodwill is impaired at March 31, 2008. However, as a result of the market disruption and the further spread between the Company’s market capitalization and book value, the excess of the fair value over the carrying value of several of the reporting units continues to narrow. A continuing period of market disruption, or further market deterioration, may result in impairment of goodwill in the future.

OTHER INCOME

Market disruption-related net valuation losses of $1.4 billion are included in other income in the consolidated statement of income for the three months ended March 31, 2008. This amount includes $792 million related to the Company’s leveraged finance commitments, $238 million related to the commercial mortgage securitization business, $64 million related to wholesale consumer warehouses and $314 million related to certain bank-owned life insurance assets.

PREFERRED STOCK

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

NEW ACCOUNTING PRONOUNCEMENTS

On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,” SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” Emerging Issues Task Force (EITF) Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements,” and EITF Issue No. 06-10, “Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements.” The effect of adopting SFAS 157 is recorded directly to first quarter 2008 results of operations or is recorded as a cumulative effect of a change in accounting principle as an adjustment, net of applicable taxes, to beginning retained earnings on January 1, 2008, depending on the nature of the financial instrument to which the new fair value measurement is applied. For SFAS 159 and the two EITF issues, the cumulative effect of adoption is recorded as an adjustment, net of applicable taxes, to beginning retained earnings on January 1, 2008. See Note 11 for SFAS 157 and SFAS 159 disclosures.

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

RECLASSIFICATIONS

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

SUBSEQUENT EVENT

Subsequent to the end of the first quarter of 2008, the Company announced that it expects to record an after-tax charge of between $800 million and $1.0 billion in the second quarter of 2008 related to certain leasing transactions entered into between 1999 and 2003. These transactions are widely known as sale-in, lease-out or “SILO” transactions. This noncash charge resulted from the Company’s analysis of a federal court of appeals opinion in a case involving another financial institution where tax benefits associated with certain lease-in, lease-out or “LILO” transactions were disallowed. The Company believes that some portions of the court decision may also apply to SILO transactions. While tax laws involving SILO transactions remain unsettled, applicable accounting standards, including Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”) on income taxes and FASB Staff Position FAS 13-2 (“FSP 13-2”) on leveraged leases, require the Company to update the income tax cash flow assessment on SILO transactions for potential changes in the timing of tax cash flows in light of the court ruling. See Note 1 to the Consolidated Financial Statements in the Company’s 2007 Annual Report on Form 10-K for more information on the applicable accounting standards. The expected earnings charge noted above includes the impact to unrecognized income tax benefits pursuant to FIN 48 as discussed in Note 8.

OTHER MATTERS

In March 2008, Visa completed their initial public offering of shares. Visa redeemed a proportionate share of member banks’ ownership which resulted in the Company recording a gain of $225 million. Visa also established an escrow account of $3 billion to cover litigation. The Company recorded a $102 million reduction to sundry expense which represents the Company’s proportionate share of that escrow account.

NOTE 2: SECURITIES

March 31, 2008

Average

1 Year

1-5

5-10

After 10

Gross Unrealized

Amortized

Maturity

(In millions)

or Less

Years

Total

Gains

Losses

Cost

in Years

MARKET VALUE

U.S. Treasury

268

183

173

666

642

3.47

Mortgage-backed securities

557

33,734

29,934

64,252

700

208

63,760

4.78

Asset-backed

Residual interests from securitizations

133

180

118

472

130

364

3.04

Retained bonds from securitizations

1,546

187

1,803

1,851

1.34

Collateralized mortgage obligations

685

18,147

1,428

20,266

118

1,343

21,491

2.88

Commercial mortgage-backed

624

776

1,240

2,666

123

2,749

4.40

Other

1,387

3,148

257

4,797

161

685

5,321

2.38

State, county and municipal

615

635

2,398

3,710

121

3,650

13.74

Sundry

787

2,057

5,610

7,097

15,551

122

1,266

16,695

9.26

Total market value

5,957

58,980

39,527

9,719

114,183

1,418

3,758

116,523

5.10

MARKET VALUE

Debt securities

5,957

58,980

39,527

7,835

112,299

1,309

3,517

114,507

Equity securities

1,884

109

241

2,016

Total market value

5,957

58,980

39,527

9,719

114,183

1,418

3,758

116,523

AMORTIZED COST

Debt securities

6,066

60,089

40,238

8,114

114,507

Equity securities

2,016

Total amortized cost

6,066

60,089

40,238

10,130

116,523

WEIGHTED AVERAGE YIELD

U.S. Treasury

1.40

2.00

2.75

4.95

2.12

Mortgage-backed securities

2.66

5.55

5.22

5.20

5.37

Asset-backed

Residual interests from securitizations

54.69

19.13

27.14

53.32

30.78

Retained bonds from securitizations

5.04

6.08

8.43

5.33

Collateralized mortgage obligations

6.00

6.14

6.30

5.45

6.15

Commercial mortgage-backed

7.06

7.88

4.98

11.31

6.34

Other

5.66

6.22

30.43

5.71

State, county and municipal

9.55

7.55

6.70

6.41

6.69

Sundry

3.37

5.04

4.96

5.23

5.02

Consolidated

5.25

5.80

5.31

5.80

5.60

At March 31, 2008, all securities not classified as trading were classified as available for sale.

At March 31, 2008, mortgage-backed securities consist principally of obligations of U.S. Government agencies and sponsored entities. Included in mortgage-backed securities are Federal National Mortgage Association and Federal Home Loan Mortgage Corporation securities with an amortized cost of $49.9 billion and a market value of $50.3 billion, and an amortized cost of $11.2 billion and a market value of $11.3 billion, respectively.

Also included in mortgage-backed securities are U.S. Government agency and Government-sponsored entity securities retained from the securitization of residential mortgage loans. These securities had an amortized cost of $10.9 billion and a market value of $11.2 billion at March 31, 2008.

Included in asset-backed securities are retained bonds primarily from the securitization of commercial and consumer real estate, SBA, student and auto loans. At March 31, 2008, retained bonds with an amortized cost and market value of $1.8 billion were considered investment grade based on external ratings. Retained bonds with an amortized cost and market value of $1.5 billion at March 31, 2008, have an external credit rating of AA and above.

Securities with an aggregate amortized cost of $76.3 billion at March 31, 2008, are pledged to secure U.S. Government and other public deposits and for other purposes as required by various statutes or agreements.

Expected maturities of beneficial interests and the contractual maturities of all other securities are summarized in the table. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Average maturity excludes equity securities and money market funds.

Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 35 percent and applicable state tax rates.

At March 31, 2008, there were forward commitments to purchase securities on both a regular way and non-regular way basis at a cost that approximates a market value of $364 million. At March 31, 2008, there were commitments to sell securities at a price that approximates a market value of $1.3 billion.

On a quarterly basis, the Company makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis. The Company considers many factors including the severity and duration of the impairment; the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, external credit ratings and recent downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value with the write-down recorded as a realized loss in securities gains (losses). Gross unrealized losses at March 31, 2008, are primarily caused by interest rate changes. The Company has reviewed these securities in accordance with its accounting policy for other-than-temporary impairment discussed above and recorded $484 million of impairment losses, as noted below. The Company does not consider any other securities to be other-than-temporarily impaired. However, without recovery in the near term such that liquidity returns to the markets and spreads return to levels that reflect underlying credit characteristics, additional other-than-temporary impairments may occur in future periods.

The components of realized gains and losses on sales of debt and equity securities for the three months ended March 31, 2008 and 2007 are presented below.


	*Three Months Ended*
	*March 31,*
(In millions)	*2008*			2007

Debt securities	$
Gross gains		49			38
Gross losses (a)		(379	)		(7	)

Net gains (losses) on sales of debt securities		(330	)		31

Equity securities
Gross gains		235			22
Gross losses (b)		(110	)		-

Net gains on sales of equity securities		125			22

Total securities gains (losses)	$	(205	)		53

(a) Impairment losses were $374 million and $4 million in the three months ended March 31, 2008 and 2007, respectively.
(b) Impairment losses were $110 million in the three months ended March 31, 2008; none in the three months ended March 31, 2007.

NOTE 3: VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

VARIABLE INTEREST ENTITIES

The Company administers a multi-seller commercial paper conduit that arranges financing for certain customer transactions thereby providing customers with access to the commercial paper market. The Company provides liquidity facilities on all the commercial paper issued by the conduit. The conduit is a variable interest entity (“VIE”) and the liquidity agreements are considered variable interests; however, because the Company does not hold a majority of the expected losses or expected residual returns through its variable interests, the Company does not consolidate the conduit on the balance sheet. At the discretion of the administrator, the provisions of the liquidity agreements require the Company to purchase assets from the conduit at par value plus interest, including in situations where the conduit is unable to issue commercial paper. Par value may be different from fair value. Any losses incurred on such purchases would be initially absorbed by the third-party holder of a subordinated note in the conduit. The ability of the conduit to issue commercial paper is a function of general market conditions and the credit rating of the liquidity provider. This conduit has always been able to issue commercial paper. At March 31, 2008, and December 31, 2007, the conduit had total assets of $14.3 billion and $15.0 billion, respectively, and the Company had a maximum exposure to losses of $25.0 billion and $26.1 billion, respectively, including funded positions and committed exposure, related to its liquidity agreement.

The Company provides liquidity to certain third party commercial paper conduits and other entities in connection with collateralized debt obligation (“CDO”) securitization transactions. The Company has also entered into derivative contracts with certain entities in connection with CDO securitization transactions that may require the Company to purchase assets at a specified price. These entities are VIEs and the Company’s liquidity facilities and derivative exposures are variable interests. The Company does not consolidate these entities because the Company does not hold a majority of the expected losses or expected residual returns through its variable interests. At March 31, 2008 and December 31, 2007, the Company had a maximum exposure to losses of $7.0 billion and $7.3 billion, respectively, related to these agreements.

The Company has an ownership interest in three investment funds managed by ECM. In January 2007, the Company purchased a majority interest in ECM. This purchase did not alter the Company’s conclusion that these funds are not subject to consolidation. At March 31, 2008 and December 31, 2007, these funds had total assets of $18.4 billion and $20.0 billion, respectively. The Company’s maximum exposure to losses was $3.5 billion and $3.2 billion, respectively. In March 2008, the Company entered into lending arrangements with a fourth investment fund managed by ECM. The lending arrangements have a maximum loss exposure of $200 million and total assets of this fund were $1.5 billion at March 31, 2008.

In the third quarter of 2007, the Company purchased and placed in the securities available for sale portfolio $1.1 billion of asset-backed commercial paper from Evergreen money market funds, which the Company manages. The Company recorded $57 million of valuation losses in 2007 on this purchase, which were included in securities gains (losses) in the consolidated results of operations. There were no additional losses on these securities in the first quarter of 2008. The Company was not required by contract to purchase these or any other assets from the Evergreen funds. There are certain circumstances under which a money market fund may be considered a VIE and consolidated by the manager. At March 31, 2008, the Company did not consolidate the money market funds it manages.

SERVICING ASSETS

In connection with certain transactions where the Company securitizes and sells originated or purchased loans with servicing retained, servicing assets or liabilities are recorded based on the fair value of the servicing rights on the date the loans are sold. The Company also purchases certain servicing assets. The Company recognizes individual classes of servicing assets under either a fair value method or an amortized cost method.

Originated residential mortgage servicing assets, recorded under the fair value method, are estimated using discounted cash flows with prepayment speeds and discount rates as the significant assumptions. At March 31, 2008, the weighted average prepayment speed assumption was 16.77 percent and the weighted average discount rate used was 11.57 percent.

Servicing fee income for the three months ended March 31, 2008, was $79 million and is included in other banking fees in the consolidated results of operations. Changes in the fair value and amortization of servicing assets are included in other banking fees. The change in the fair value of originated residential mortgage servicing assets and the change in the carrying amount of servicing assets which are recorded at amortized cost in the three months ended March 31, 2008, are presented on the following page.

NOTE 4: SHARE-BASED PAYMENTS

The Company has stock option plans under which incentive and nonqualified stock options as well as restricted stock may be granted periodically to certain employees. The options typically are granted at an exercise price equal to the fair value of the underlying shares at the date of grant, vest based on continued service with the Company for a specified period, generally three years to five years following the date of grant, and have a contractual life of ten years. The restricted stock generally vests over three years to five years, during which time the holder receives dividends and has full voting rights. Employee stock compensation expense was $249 million in the three months ended March 31, 2008, including $196 million related to restricted stock awards and $53 million related to stock option awards. The related income tax benefit in the three months ended March 31, 2008, was $87 million. Employee stock compensation expense was $212 million in the three months ended March 31, 2007, including $171 million related to restricted stock awards and $41 million related to stock option awards. The related income tax benefit in the three months ended March 31, 2007, was $74 million. Employee stock compensation expense in the three months ended March 31, 2008 and 2007, includes $109 million and $93 million, respectively, related to the impact of awards granted to employees who were retirement-eligible at the date of grant.

The stock compensation awards granted in the three months ended March 31, 2008, vest over three to five years based only on continued service with the Company, with the exception of 720,000 shares of restricted stock awards to certain senior executives of the Company, which vest over three years if the Company achieves a specified return on average tangible common stockholders’ equity for 2008; otherwise these shares are forfeited. For stock options, the exercise price is the closing price on the date of grant, with the exception of 852,000 and 994,000 options awarded to certain senior executives of the Company, for which the exercise price is approximately a 20 percent and 40 percent premium, respectively, above the closing price on the date of grant.

At March 31, 2008, there was $687 million and $163 million of total unrecognized compensation costs related to restricted stock and stock options, respectively. Those costs are expected to be recognized over a weighted-average period of 1.4 years. The fair value of restricted stock vested in the three months ended March 31, 2008 and 2007, was $146 million and $200 million, respectively. The total intrinsic value of stock option awards exercised in the three months ended March 31, 2008 and 2007, was $33 million and $183 million, respectively. The amount of cash received from the exercise of stock options granted under share-based payment arrangements was $63 million in the three months ended March 31, 2008, and the income tax benefit realized from stock options exercised was $10 million in the same period.

The weighted average grant date fair value of options awarded in the three months ended March 31, 2008, was $6.82. The more significant assumptions used in estimating the fair value of these stock options include risk-free interest rate of 3.51 percent, expected dividend yield of 7.58 percent (as of the date of grant; subsequently the Company made the decision and announced a reduction in the dividend), expected volatility of the Company’s common stock of 44 percent and weighted average expected life of the stock options of 8.0 years. The Company calculated its volatility estimate from implied volatility of actively traded options on the Company’s common stock with remaining maturities of two years. This method is consistent with the prior two years, but represents a change from years prior to 2006, in which the Company calculated its volatility estimate based on historical volatility adjusted for significant changes in the Company’s business activities. For the 2008 grant, the Company determined the estimated life based on historical stock option experience.

At March 31, 2008, the Company had authorization to reserve 84 million shares of its common stock for issuance under its stock option plans.

Stock award activity in the three months ended March 31, 2008, is presented on the following page.

NOTE 6: BUSINESS SEGMENTS

Business segment results are presented excluding merger-related and restructuring expenses, other intangible amortization, minority interest in consolidated subsidiaries, discontinued operations and the effect of changes in accounting principles. The Company believes that while these items apply to overall corporate operations, they are not meaningful to understanding or evaluating the performance of the Company’s individual business segments. The Company does not take these items into account as it manages business segment operations or allocates capital, and therefore, the Company’s segment presentation excludes these items. Provision for credit losses is allocated to each core business segment in an amount equal to net charge-offs, and the difference between the total for the core segments and the consolidated provision, amounting to $2.1 billion in the first quarter of 2008, is recorded in the Parent. The majority of the provision reflected in the Parent related to loans in the General Bank segment.

The Company continuously updates segment information for changes that occur in the management of the Company’s businesses. In the first quarter of 2008, the Company updated its segment reporting to reflect BluePoint as a discontinued operation (see Note 1), which is included in the Parent, and realigned certain corporate overhead allocations resulting in a shift of such allocations from the four core business segments to the Parent.

Segment information for 2007 has been restated to reflect these and other changes and the impact to previously reported 2007 segment earnings resulted in a $194 million increase to the General Bank, a $26 million increase in Wealth Management, a $329 million increase in the Corporate and Investment Bank, a $76 million increase in Capital Management, and a $395 million decrease in the Parent. Losses from discontinued operations in 2007 excluded from segment earnings were $230 million.

Certain amounts presented in periods prior to the first quarter of 2008 have been reclassified to conform to the presentation in the first quarter of 2008.

Three Months Ended March 31, 2008

Corporate

Net Merger-

and

Related and

General

Wealth

Investment

Capital

Restructuring

(Dollars in millions)

Bank

Management

Bank

Management

Parent

Expenses (b)

Consolidated

CONSOLIDATED

Net interest income (a)

3,455

181

1,032

274

(137

)

(53

)

4,752

Fee and other income

990

211

(159

)

2,191

(456

)

2,777

Intersegment revenue

(50

)

(10

)

Total revenue (a)

4,500

397

823

2,455

(593

)

(53

)

7,529

Provision for credit losses

569

197

2,060

2,831

Noninterest expense

2,050

246

747

1,855

302

241

5,441

Minority interest

198

(43

)

155

Income taxes (benefits)

675

(65

)

218

(1,041

)

(75

)

(234

)

Tax-equivalent adjustment

(53

)

Net income (loss)

1,195

(77

)

381

(2,132

)

(123

)

(664

)

Dividends on preferred stock

Net income (loss) available to

common stockholders

1,195

(77

)

381

(2,175

)

(123

)

(707

)

Lending commitments

132,165

7,007

113,521

1,348

538

254,579

Average loans, net

311,447

22,413

101,024

2,562

28,490

465,936

Average core deposits

297,680

17,397

33,623

43,084

2,729

394,513

NOTE 8: INCOME TAXES

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

A reconciliation of the change in the UTB balance from January 1, 2008 to March 31, 2008, is presented below.


													*Unrecognized*
													*Income Tax*
							*Gross*			*Deferred*			*Benefits, Net*
	*Federal,*			*Accrued*			*Unrecognized*			*Federal and*			*of Deferred*
	*State and*			*Interest and*			*Income Tax*			*State Income*			*Federal and*
(In millions)	*Foreign Tax*			*Penalties*			*Benefits*			*Tax Benefits*			*State Benefits*

Balance at January 1, 2008	$	2,217			425			2,642			(257	)		2,385
Additions for tax positions related to the current year		64			-			64			(7	)		57
Additions for tax positions related to prior years		32			48			80			(17	)		63
Reduction for tax positions related to prior years		(1	)		-			(1	)		-			(1	)
Reductions for tax positions related to acquired entities in prior years, offset to goodwill		-			(4	)		(4	)		(1	)		(5	)

Balance at March 31, 2008		2,312			469			2,781			(282	)		2,499
Less: tax attributable to timing items included above		(1,534	)		-			(1,534	)		-			(1,534	)
Less: UTBs included above that relate to acquired entities that would impact goodwill if recognized by December 31, 2008		(80	)		(9	)		(89	)		25			(64	)

Total UTBs that, if recognized, would impact the effective income tax rate as of March 31, 2008	$	698			460			1,158			(257	)		901

The Company recognizes accrued interest and penalties, if any, related to UTBs in the effective income tax rate. The balance of accrued interest and penalties at the reporting periods is presented in the table above.

On March 30, 2007, the Internal Revenue Service (“IRS”) issued a Revenue Agent’s Report for the years 2000 through 2002 challenging certain deductions claimed by the Company. The unagreed issues, including the Company’s SILO transactions, are on appeal with the IRS Appeals Office and are not expected to be resolved by December 31, 2008.

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

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

Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to uncertain income tax positions. On April 29, 2008, the U.S. Court of Appeals for the Fourth Circuit issued an opinion in the matter of BB&T Corporation v. United States of America that disallowed tax benefits associated with certain of BB&T’s LILO transactions (see the Subsequent Event section of Note 1 for a more detailed description of these leasing transactions). Although the BB&T decision involved LILOs, the Company believes some aspects of the decision may also apply to SILO transactions. While the Company continues to believe its SILO transactions comply with applicable laws, under the principles established by FIN 48 the Company has estimated that a reasonably possible increase to its projected December 31, 2008 UTBs will be approximately $1.6 billion as a result of applying this ruling to the Company’s SILO transactions. Of the total increase, approximately $1.3 billion represents the tax on timing differences that will impact deferred income tax on the balance sheet, in accordance with the applicable accounting for leveraged leases. The remaining $300 million of the $1.6 billion is included in the projected charge referenced in Note 1.

NOTE 9: DERIVATIVES

DERIVATIVES USED FOR RISK MANAGEMENT

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

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

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

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

The Company discontinues hedge accounting prospectively when either it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative expires or is sold, terminated or exercised; the derivative is de-designated because it is unlikely that a forecasted transaction will occur; or management determines designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the derivative is either terminated or reclassified as a trading account asset or liability. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted as an adjustment to yield over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transaction are still expected to occur, unrealized gains and losses accumulated in other comprehensive income are included in the results of operations in the same period when the results of operations are also affected by the hedged cash flow. The unrealized gains and losses are recognized in the results of operations immediately if the cash flow hedge was discontinued because a forecasted transaction is not expected to occur. For the three months ended March 31, 2008, losses of $10 million were recognized in other fee income representing the ineffective portion of the net gains (losses) on derivatives that qualify as cash flow and fair value hedges. This amount includes the time value of options. In addition, net interest income in the three months ended March 31, 2008, was decreased by $31 million, representing ineffectiveness of cash flow hedges caused by differences between the critical terms of the derivative and the hedged item, primarily differences in reset dates.

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

Derivatives used for risk management activity at March 31, 2008 are presented on the following page.

March 31, 2008

Average

Notional

Gross Unrealized

Maturity in

(In millions)

Hedged items or Transactions

Amount

Gains

Losses (b)

Equity (c)

Years (d)

ASSET HEDGES (a)

Cash flow hedges

Interest rate swaps-receive fixed

First forecasted interest receipts on

commercial loans

Pay 1 month LIBOR swaps

1 month LIBOR risk

3,037

187

116

2.84

Pay 3 month LIBOR swaps

1 month LIBOR risk

11,510

773

479

3.86

Purchased interest rate floors-

First forecasted interest receipts on 1

3 month LIBOR

month LIBOR commercial loans

21,250

2.06

Call options on Eurodollar futures

First forecasted interest payments on 1

month LIBOR commercial loans

56,500

0.25

Fair value hedges

Interest rate swaps-pay fixed/

Individual fixed rate debt securities

receive LIBOR

classified as available for sale

949

(47

)

12.55

Foreign currency forwards

Currency risk associated with foreign

currency denominated securities

classified as available for sale

9,591

)

0.02

Total asset hedges

102,837

1,044

(48

)

639

1.20

LIABILITY HEDGES (a)

Cash flow hedges

Interest rate swaps-pay fixed

First forecasted interest payments on

long-term debt

Receive 1 month LIBOR swaps

1 month LIBOR risk

2,197

(281

)

(173

)

9.88

Receive 3 month LIBOR swaps

1 month LIBOR risk

6,531

(342

)

(212

)

2.99

Receive 3 month LIBOR swaps

3 month LIBOR risk

8,000

(115

)

(71

)

1.99

Receive 6 month LIBOR swaps

6 month LIBOR risk

5.22

Eurodollar futures

1 day LIBOR risk associated with the

proceeds from first forecasted issuance

of repurchase agreements that are part

of a rollover strategy

15,000

(25

)

(15

)

0.25

Eurodollar futures

First forecasted interest payments on 3

month LIBOR ling-term debt

139,000

(115

)

(71

)

0.25

Fair value hedges

Interest rate swaps-receive fixed/

Individual fixed rate long-term debt

pay floating (e)

issuances

33,607

1,739

(128

)

10.04

Foreign currency forwards

Currency risk associated with foreign

Currency denominated repurchase

agreements and long-term debt

12,951

)

0.09

Currency swaps

Currency risk associated with individual

foreign currency denominated long-term

debt

1,004

100

5.06

Total liability hedges

218,297

1,843

(1,008

)

(542

)

2.01

Total

321,134

2,887

(1,056

)

Expected maturities of risk management derivative financial instruments at March 31, 2008, are presented below.

March 31, 2008

1 Year

1-2

2-5

5-10

After 10

(In millions)

or Less

Years

Total

CASH FLOW ASSET HEDGES

Notional amount — swaps—receive fixed

102

695

13,010

740

14,547

Notional amount — other

56,500

21,250

77,750

Weighted average receive rate (a)

5.27

5.23

5.11

4.71

5.10

Weighted average pay rate (a)

2.82

2.97

3.08

3.26

3.08

Unrealized gain (loss)

943

1,044

FAIR VALUE ASSET HEDGES

Notional amount — swaps—pay fixed

198

553

949

Notional amount — other

9,591

Weighted average receive rate (a)

1.98

2.05

2.04

2.03

Weighted average pay rate (a)

3.36

3.42

3.92

3.70

Unrealized gain (loss)

)

(10

)

(11

)

(26

)

(48

)

CASH FLOW LIABILITY HEDGES

Notional amount — swaps—pay fixed

13,414

510

1,281

1,487

16,735

Notional amount — other

154,000

Weighted average receive rate (a)

2.71

3.10

2.85

2.63

2.78

2.96

Weighted average pay rate (a)

5.52

5.28

5.42

6.10

5.82

5.50

Unrealized gain (loss)

(141

)

(325

)

(44

)

(170

)

(196

)

(876

)

FAIR VALUE LIABILITY HEDGES

Notional amount — swaps—receive fixed

5,375

1,550

4,387

13,138

9,157

33,607

Notional amount — other

12,951

822

182

13,955

Weighted average receive rate (a)

4.34

4.94

5.47

4.80

5.17

4.92

Weighted average pay rate (a)

3.44

2.66

3.62

3.63

4.06

3.67

Unrealized gain (loss)

371

890

314

1,711

(a) Weighted average receive and pay rates include the impact of currently effective interest rate swaps only and not the impact of forward-starting interest rate swaps. All the interest rate swaps have variable pay or receive rates based on one-month to six-month LIBOR, Euros, Pounds Sterling, or Australian dollars and they are the pay or receive rates in effect at March 31, 2008.

NOTE 11: FAIR VALUE MEASUREMENTS AND FAIR VALUE OPTION

FAIR VALUE MEASUREMENTS

The Company adopted SFAS 157, “Fair Value Measurements,” on January 1, 2008. SFAS 157 establishes a framework for measuring fair value, expands disclosures about fair value measurements and provides new income recognition criteria for certain derivative contracts. SFAS 157 nullifies the guidance included in EITF Issue No. 02-3, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities,” that prohibited the recognition of gain or loss at the inception of a derivative contract unless the fair value was based on observable market data. SFAS 157 requires that a fair value measurement reflect assumptions market participants would use in pricing an asset or liability. In addition, SFAS 157 prohibits the recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market and requires the consideration of the Company’s creditworthiness when valuing derivatives and other liabilities recorded at fair value. The provisions of SFAS 157 are applied prospectively with changes recorded in current earnings, except changes in fair value measurements that result from the initial application of SFAS 157 to existing derivative financial instruments measured under EITF 02-3, existing hybrid financial instruments measured at fair value and block discounts, all of which are recorded as an adjustment to beginning retained earnings on the date of adoption. Accordingly, the Company recorded a cumulative effect adjustment of $61 million ($38 million after-tax) as an increase to beginning retained earnings on January 1, 2008. Additionally, the Company recorded net gains in the first quarter 2008 results of continuing operations of $517 million related primarily to a change in methodology used to calculate the fair value of certain investments in private equity funds held in a wholly owned investment company subsidiary, as described in more detail in the Principal Investments section below. Also BluePoint reflected a 57 percent discount at March 31, 2008, for its nonperformance risk when estimating the fair value of its derivatives under SFAS 157. See “Discontinued Operations” in Note 1 for additional information on BluePoint.

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

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

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

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

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

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

DETERMINATION OF FAIR VALUE

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

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

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

Derivatives

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

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

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

Securities and Trading Activities

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

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

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

Principal Investments

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

Prior to adoption of SFAS 157, investments in non-public securities, both private direct investments and investments in funds, were recorded at the Company’s estimate of fair value, which was generally the original cost basis unless either the investee had raised additional debt or equity capital and the Company believed the transaction, taking into consideration differences in the terms of securities, was a better indicator of fair value; or the Company believed the fair value was less than the carrying amount. Under SFAS 157, private direct investments are valued using metrics such as security prices of comparable public companies, acquisition prices for similar companies and original investment purchase price multiples, while also incorporating a portfolio company’s financial performance and specific risk factors. For certain fund investments, where the best estimates of fair value were primarily determined based upon fund sponsor data, the Company now uses net asset value (“NAV”) provided by the fund sponsor as an appropriate measure of fair value. In some cases, such NAVs require adjustments based on certain unobservable inputs. Due to the absence of quoted market prices and the inherent lack of liquidity for these investments, significant management judgment is required, and as such, non-public securities are classified within Level 3 of the hierarchy. These changes in valuation methodology to reflect an estimated exit price, versus the prior methodology that was based primarily upon initial fair value and fund sponsor data, led to the Company’s recognition of a $486 million pre-tax gain in the first quarter 2008 results of operations.

Mortgage Servicing Rights

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

Loans and Loans Held For Sale

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

ITEMS MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2008, for each of the fair value hierarchy levels.

March 31, 2008

(In millions)

Level 1

Level 2

Level 3

Netting (b)

Total

ASSETS

Cash trading instruments

4,707

32,681

6,825

44,213

Derivatives

260

121,011

11,179

(104,071

)

28,379

Total trading account assets

4,967

153,692

18,004

(104,071

)

72,592

Securities

1,394

103,751

9,038

114,183

Loans

Loans held for sale

3,546

106

3,652

Other assets (a)

547

4,072

3,325

(4,311

)

3,633

Total assets at fair value

6,908

265,061

30,476

(108,382

)

194,063

LIABILITIES

Cash trading instruments

4,973

2,678

7,706

Derivatives

679

116,653

12,153

(108,304

)

21,181

Total trading account liabilities

5,652

119,331

12,208

(108,304

)

28,887

Other liabilities (a)

140

1,172

(4,311

)

(2,938

)

Total liabilities at fair value

5,792

120,503

12,269

(112,615

)

25,949

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

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

LEVEL 3 ITEMS MEASURED AT FAIR VALUE ON A RECURRING BASIS

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

Additionally, certain instruments within Level 3 assets include derivatives related to private label RMBS and certain commercial mortgage-backed securities transactions. Included in derivative assets and liabilities is activity associated with the intermediation of ABS and commercial real estate (“CRE”) CDO securitizations, where the Company purchases credit default protection related to the securitization of specific RMBS and CRE reference obligations and then sells protection on the same exposure to various market participants, resulting in a significant amount of credit default exposure being economically hedged. Of the $11.2 billion of Level 3 derivative assets, $7.8 billion represents credit default exposure that is economically hedged with derivative liabilities on the same reference obligation. The remaining Level 3 derivative assets and liabilities are also subject to the Company’s established risk management practices.

There was no significant change in total Level 3 assets measured at fair value during the first quarter of 2008, as total Level 3 assets were 4 percent of the Company’s total assets at both December 31, 2007, and March 31, 2008. Prior to adoption of SFAS 157, these assets increased in the second half of 2007, when the financial markets experienced unprecedented deterioration, particularly the markets for subprime RMBS and ABS CDOs, as well as for credit default swaps. Significant inputs typically used to value such instruments became unobservable in the mortgage market due to a decline in liquidity, as new issue activity no longer existed and independent pricing information was not always available for the instruments. During the three months ended March 31, 2008, the Company purchased $2.6 billion of RMBS, which were partially offset by certain securities available for sale transferring from Level 3 to Level 2, as significant inputs to the valuation of such securities became observable.

The following table presents the changes in the Level 3 assets and liabilities for the three months ended March 31, 2008.


	*Three Months Ended March 31, 2008*
																	*Change in*
																	*unrealized gains*
						*Included in*			*Purchases,*								*(losses) relating*
						*other*			*issuances and*			*Transfers in*					*to instruments*
	*Beginning*		*Included in*			*comprehensive*			*settlements,*			*and/or out*			*Ending*		*still held at the*
(In millions)	*balance*		*earnings*			*income*			*net*			*of Level 3*			*balance*		*reporting date*

ASSETS
Cash trading instruments	$	6,494		(397	)		-			341			387			6,825		(399	)
Securities		9,575		(544	)		(290	)		2,558			(2,261	)		9,038		(58	)
Loans		-		-			-			-			3			3		-
Loans held for sale		106		-			-			-			-			106		-
Other assets	$	2,737		642			-			(54	)		-			3,325		546

LIABILITIES
Cash trading instruments	$	29		3			-			(1	)		24			55		2
Derivatives, net (a)		605		(94	)		-			438			25			974		178
Other liabilities	$	32		29			-			-			-			61		(25	)

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

Gains and losses (realized and unrealized) included in earnings for the three months ended March 31, 2008, for Level 3 assets and liabilities reported in net interest income, trading account profits (losses), principal investing, securities gains (losses) and other income are presented in the table below.

Three Months Ended March 31, 2008

Trading

Net

Account

Securities

Interest

Profits

Principal

Gains

Other

(In millions)

Income

(Losses)

Investing

(Losses)

Income

Total gains (losses)

(330

)

506

(543

)

127

Change in unrealized gains (losses) relating to assets still held at March 31, 2008

(241

)

407

(58

)

136

ITEMS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

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

Loans held for sale with a carrying amount of $3.2 billion were written down to their fair value of $2.8 billion, resulting in a loss of $375 million, which was included in first quarter 2008 results of operations. Certain of these positions are economically hedged with derivatives classified as trading account assets.

When a loan held for investment is deemed impaired, a creditor measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, impairment may be measured based on the fair value of the loan or on the fair value of the underlying collateral if the loan is collateral dependent. Loans deemed to be impaired based on a fair value measurement totaled $2.7 billion with the portion deemed to be impaired included in the allowance for loan losses.

The following table presents financial instruments by level within the fair value hierarchy at March 31, 2008, for which a nonrecurring change in fair value was recorded during the three months ended March 31, 2008.

Fair Value Measurements

Total

gains

(In millions)

Level 1

Level 2

Level 3

Total

(losses)

ASSETS

Loans

1,416

1,258

2,674

(530

)

Loans held for sale

2,084

748

2,832

(375

)

Other assets

242

110

352

(117

)

LIABILITIES

Other liabilities

FAIR VALUE OPTION

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

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

As of

January 1,

2008, prior to

Transition

2008, after

adoption of

adjustment

adoption of

(In millions)

SFAS 159

gain (loss)

SFAS 159

Trading account assets

6,807

(60

)

6,747

Loans held for sale

Pretax cumulative effect of adoption of fair value option

(60

)

Income taxes

Cumulative effect of adoption of fair value option

(38

)

The total transition adjustment is attributable to certain securities available for sale elected for fair value option and represents the unrealized loss at December 31, 2007, reclassified from accumulated other comprehensive income to retained earnings effective January 1, 2008. The intent of the Company’s election was to provide an alternative to hedge accounting. Following election of the fair value option, these securities available for sale were reclassified to trading account assets as required by SFAS 159.

Election of fair value and the consequent move to trading account assets did not change the intent of the Company to hold the elected securities as originally intended when they were accounted for in securities available for sale. The securities carried at fair value continue to be managed as they had been managed within securities available for sale.

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

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

During first quarter 2008, the Company elected fair value for certain newly originated retail mortgage loans held for sale. These elections were made due to the short holding period of such loans, and accordingly the Company still owns certain loans held for sale originated prior to adoption of SFAS 159 that are not carried at fair value under the fair value option. Securities elected upon adoption resulted in a $114 million charge to results of operations, net of their related interest rate hedges. These securities included certain seasoned mortgage-backed securities and were elected due to their predictable price risk as interest rates change, in connection with the Company’s risk management strategy. Prospectively, the Company plans to elect fair value for certain newly originated loans and loans held for sale, certain purchased securities and certain debt issuances with related unrealized gains and losses reported in the results of operations.

The following table presents gains due to changes in fair value for items measured at fair value pursuant to election of the fair value option for the three months ended March 31, 2008.


	*Three Months Ended March 31, 2008*
	*Trading*		*Other*
(In millions)	*Profits*		*Income*		*Total*

Trading account assets (a)	$	52		-		52
Loans held for sale	$	-		42		42

(a) The gain related to securities elected for fair value option excludes a $166 million net loss on related interest rate hedges.

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

For the three months ended March 31, 2008, the estimated change in fair value of loans and other receivables for which the fair value option was elected that was attributable to changes in instrument-specific credit risk was insignificant.

As of March 31, 2008, the aggregate fair value of loans and long-term receivables for which the fair value option has been elected exceeded the aggregate unpaid contractual principal amount by $20 million. As of March 31, 2008, no loans and long-term receivables for which the fair value option has been elected are 90 days or more past due. The aggregate fair value of loans that are in nonaccrual status as of March 31, 2008, was $14 million and the contractual principal amount of such loans exceeded the fair value by $20 million.

The aggregate carrying amount of items not eligible for the fair value option is $23.6 billion, which represents the Company’s lease financing receivables and is included in loans on the balance sheet.


	PAGE

Financial Highlights		1

Management’s Discussion and Analysis		2

Explanation of Our Use of Non-GAAP Financial Measures		35

Selected Statistical Data		36

Summaries of Income, Per Common Share and Balance Sheet Data		37

Merger-Related and Restructuring Expenses		38

Business Segments		39

Net Trading Revenue — Investment Banking		47

Selected Ratios		47

Trading Account Assets and Liabilities		48

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

Loans Held for Sale		50

Allowance for Credit Losses		51

Allowance and Charge-Off Ratios		52

Nonperforming Assets		53

Nonaccrual Loan Activity		54

Goodwill and Other Intangible Assets		55

Deposits		56

Time Deposits in Amounts of $100,000 or More		56

Long-Term Debt		57

Changes in Stockholders’ Equity		58

Capital Ratios		59

Net Interest Income Summaries — Five Quarters Ended March 31, 2008		60

Consolidated Balance Sheets — Five Quarters Ended March 31, 2008		62

Consolidated Statements of Income — Five Quarters Ended March 31, 2008		63

Wachovia Corporation and Subsidiaries — Consolidated Financial Statements		64


	*Three*
	*Months*
	*Ended*
	*March 31,*
(In millions)	*2008*

Wachovia/A.G. Edwards	$	206
Wachovia/Golden West		35

Total merger-related and restructuring expenses	$	241


	*Three Months Ended March 31, 2008*

	*Employee*			*Occupancy*
	*Termination*			*and*
(In millions)	*Benefits*			*Equipment*		*Other*		*Total*

EXIT COST PURCHASE ACCOUNTING ACCRUAL ACTIVITY
Wachovia/A.G. Edwards — October 1, 2007
Balance, December 31, 2007	$	16			-		-		16
Purchase accounting adjustments		25			-		-		25
Cash payments		(9	)		-		-		(9	)

Balance, March 31, 2008	$	32			-		-		32

EXIT COST PURCHASE ACCOUNTING ACCRUAL ACTIVITY
Wachovia/Golden West — October 1, 2006
Balance, December 31, 2007	$	49			9		-		58
Purchase accounting adjustments		-			-		-		-
Cash payments		(20	)		-		-		(20	)

Balance, March 31, 2008	$	29			9		-		38

EXIT COST PURCHASE ACCOUNTING ACCRUAL ACTIVITY
Wachovia/SouthTrust — November 1, 2004
Balance, December 31, 2007	$	37			-		-		37
Purchase accounting adjustments		-			-		-		-
Cash payments		(7	)		-		-		(7	)

Balance, March 31, 2008	$	30			-		-		30


	*March 31, 2008*
(In millions)

MATURITY OF
3 months or less	$	32,144
Over 3 months through 6 months		16,241
Over 6 months through 12 months		8,541
Over 12 months		6,660

Total time deposits in amounts of $100,000 or more	$	63,586


Consolidated Balance Sheets — March 31, 2008 and December 31, 2007 (Unaudited)			65

Consolidated Statements of Income — Three Months Ended March 31, 2008 and 2007 (Unaudited)			66

Consolidated Statements of Cash Flows — Three Months Ended March 31, 2008 and 2007 (Unaudited)			67

Notes to Consolidated Financial Statements (Unaudited)

Note 1: Summary of Significant Accounting Policies and Other Matters			68

Note 2: Securities			70

Note 3: Variable Interest Entities and Servicing Assets			72

Note 4: Share-Based Payments			74

Note 5: Comprehensive Income			76

Note 6: Business Segments			77

Note 7: Basic and Diluted Earnings Per Common Share			79

Note 8: Income Taxes			80

Note 9: Derivatives			81

Note 10: Guarantees			86

Note 11: Fair Value Measurements and Fair Value Option			87


	*Three Months Ended March 31, 2008*
	*Fair Value*			*Amortized Cost*
				*Fixed Rate*
	*Originated*			*Commercial*
	*Residential*			*Mortgage-*
(In millions)	*Mortgages*			*Backed*			*Other*			*Total*

Balance, December 31, 2007	$	437			771			240			1,448
Fair value of servicing assets purchased, assumed or originated, or retained from securitizations		56			-			21			77
Servicing sold or otherwise disposed of		(1	)		-			-			(1	)
Change in fair value due to changes in model inputs and/or assumptions		(29	)		-			-			(29	)
Other changes in fair value, primarily from fees earned		(23	)		-			-			(23	)
Amortization of servicing assets		-			(36	)		(13	)		(49	)
Impairment		-			(2	)		-			(2	)

Balance, March 31, 2008	$	440			733			248			1,421

FAIR VALUE
March 31, 2008	$	440			907			278			1,625
December 31, 2007	$	437			991			261			1,689


	*March 31, 2008*

				*Weighted-*
				*Average*
(Options and shares in thousands)	*Number*			*Price (a)*

STOCK OPTIONS
Options outstanding, beginning of period		128,971		$	41.09
Granted		10,604			35.70
Exercised		(2,816	)		22.71
Expired		(2,178	)		42.02
Forfeited		(193	)		46.13

Options outstanding, end of period		134,388		$	41.02

Options vested and expected to vest, end of period		132,146		$	40.95

Options exercisable, end of period		100,047		$	39.49

RESTRICTED STOCK
Unvested shares, beginning of period		19,914		$	54.18
Granted		11,144			33.79
Vested		(4,273	)		56.27
Forfeited		(176	)		46.83

Unvested shares, end of period		26,609		$	45.36


	*March 31, 2008*				December 31, 2007

			*Maximum*				Maximum
	*Carrying*		*Risk of*		Carrying		Risk of
(In millions)	*Amount*		*Loss*		Amount		Loss

Securities and other lending indemnifications	$	-		53,132		-		59,238
Standby letters of credit		114		28,958		124		29,295
Liquidity agreements		159		34,775		14		36,926
Loans sold with recourse		33		6,399		44		6,710
Residual value guarantees		-		936		-		1,123
Written put options		1,964		17,013		1,221		15,273
Contingent consideration		-		96		-		101

Total guarantees	$	2,270		141,309		1,403		148,666