This summary is based on the first quarter fiscal 2008 earnings call conducted by Wachovia Corp. (WB: chart) on April 14, 2008.

Management:

- Chairman, President and CEO: G. Kennedy Thompson
- Senior Executive Vice President and Chief Risk Officer: Donald Truslow

Key Investors Issues

- Total revenue dropped 5% to $7.9 billion from $8.3 billion in the prior year.
- The firm had a loss of $350 million or 20 cents a share from a profit of $2.3 billion or $1.20 a share in 2007.
- Wachovia announced actions to enhance its capital base and operational flexibility.

First Quarter Highlights

The firm had a loss of $350 million or 20 cents a share from $2.3 billion or $1.20 a share in the prior year due to higher credit costs and disruptions in the market.

- The firm also incurred a 6 cents a share charge of merger and restructuring charges, primarily associated with the integration of A.G. Edwards.
- Despite strong performance across most segments, results were overwhelmed by credit costs and continued market disruption loses, which included a $2.8 billion in provision expense.
- This included about $1.1 billion in reserve build for the Pick-A-Pay portfolio, an increase of about $800 million for all other loan portfolios, and about $175 million to the unallocated reserve.
- The results include the $2.1 billion reserve build, that''s on top of about $785 million of charge-offs and $2 billion of market disruption losses.
- Those were somewhat offset by $445 million in FAS 157/159 fair value net gains that''s primarily associated with the funds portfolio in the principal investing business, and also the firm is a participant in the Visa IPO, which resulted in a gain of $225 million.

Wachovia generated total revenue of $7.9 billion, down 4.8% from $8.3 billion in 2007 on higher loans and deposits and strength in fiduciary and asset management fees, brokerage commissions and traditional banking fees.

- Net interest income was up 6% year-over-year, 3% on a linked-quarter basis on strong earning asset growth and improved margin.
- Low-cost core deposits were up 7% year-over-year, 3% on a linked-quarter basis, though fees were down based on those market disruption losses, up 13% quarter-over-quarter.
- Expenses rose 18% year-over-year, reflecting the addition of A.G. Edwards, down 6% on a linked-quarter basis, primarily driven by lower incentives.
- The firm took substantial hits across most products ADS CDO and subprime related, $339 million; commercial mortgage, $521 million; consumer mortgage, $250 million; leveraged finance, $309 million; other security types, $144 million.

Segment Highlights:

- General Bank earnings of $1.2 billion, were 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%.
- The average loan growth was 8%, with double digit growth in wholesale businesses and 4% growth in mortgage lending as a decline in prepayments offset lower volumes on the payment option mortgage product.
- Significant efforts in the mortgage business included a restructuring of the operating model, extensive loss mitigation efforts and initiatives to increase the volume of marketable mortgages.

Home equity lending declined 41%, reflecting implementation of tightened credit standards.

- The firm realized a 26% increase in auto loan originations as average core deposit growth was 5%, largely reflecting strength in wholesale deposits, which were up 10%, and an increase of 4% in retail deposits.
- Growth in net new retail checking accounts slowed to a still strong increase of 174,000 compared with an increase of 268,000 in 2007, while new checking accounts include 139,000 linked to the new Way2Save accounts, which launched in mid-January 2008.

- Wealth Management: earnings were $92 million on 4% revenue growth in challenging markets.
- 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.

The firm had a relatively flat net interest income as solid loan growth offset deposit spread compression.

- There was a slight decline in expense driven by efficiency initiatives, which offset the impact of private banking and Western expansion investment.
- The firm also realized a 5% growth in assets under management to $79.8 billion as asset gathering overcame market depreciation.

- Corporate and Investment Bank realized a 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 market-related businesses.
- Market valuation losses, included $339 million in subprime residential asset-backed collateralized debt obligations and other related exposures, $521 million in commercial mortgage structured products, and $309 million in leveraged finance.
- There was a 44% increase in net interest income, reflecting 38% growth in average loans, as well as loan growth in the corporate lending and global financial institutions business.
- Principal investing revenue of $414 million, largely due to a net $486 million of gains related to the adoption of new fair value accounting standards in January 2008, offset by mark-to-market losses in the direct investment portfolio.

- Capital Management has earnings of $381 million on 42% percent revenue growth, which primarily reflected the A.G. Edwards acquisition.
- In addition, solid growth in retail brokerage managed account and other asset-based fees despite declining equity markets offset lower transactional revenue and equity syndicate distribution fees.

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