Annual ReportAnnual Report

WachoviaWachovia

Stephanie CagnetStephanie Cagnet

080080

Executive SummaryExecutive Summary Wachovia consists of a diverse banking system Wachovia consists of a diverse banking system

designed to benefit its shareholders by operating designed to benefit its shareholders by operating efficiently. This reduces the expenses and efficiently. This reduces the expenses and increases increases profits. It also has a main focus on profits. It also has a main focus on customer customer service. From year 2002 to 2003 there service. From year 2002 to 2003 there has provenhas proven to be increasing assets and to be increasing assets and profitability, which will profitability, which will continue through 2004.continue through 2004.

http://www.wachovia.com/inside/page/0,,133_202_257,00.htmlhttp://www.wachovia.com/inside/page/0,,133_202_257,00.html

Part A. IntroductionPart A. Introduction•Chief Executive Officer: Ken Thompson

•Home Office: Charlotte, North Carolina

•Last Fiscal Year: Wednesday December 31, 2003

•Services: Complete Banking, Retail Brokerage, Asset and Wealth Management, Corporate and Investment Banking, International Banking for Business Customers, Home Equity Lending

•Geographic Area: International, but mainly located along the east coast

Part A. Audit ReportPart A. Audit Report Independent Auditors: KPMG LLPIndependent Auditors: KPMG LLP The auditors report states that the company’s financial The auditors report states that the company’s financial

report is in compliance with the auditing standardsreport is in compliance with the auditing standardswithin the United within the United States of States of

America and free of America and free of

misstatementsmisstatements

Part A. Stock Market Part A. Stock Market InformationInformation

Recent Stock Price: 47.82 Recent Stock Price: 47.82 Twelve Month Trading Range: High 49.49 as of 3/11/04Twelve Month Trading Range: High 49.49 as of 3/11/04

Low 42.10 as of 10/3/03Low 42.10 as of 10/3/03 Dividends Per Share: 1.60Dividends Per Share: 1.60 Date of Information: 10/01/2004Date of Information: 10/01/2004 It would be best to hold the stock because it is It would be best to hold the stock because it is

predicted to keep risingpredicted to keep rising

Part B. Industry Situation Part B. Industry Situation and Company Plansand Company Plans

The banking industry is continuing to see The banking industry is continuing to see large bank large bank mergers, such as the mergers, such as the successful merger of First successful merger of First Union and Union and Wachovia. Currently Wachovia is Wachovia. Currently Wachovia is merging merging with SouthTrust. with SouthTrust.

Wachovia is the fourth largest banking Wachovia is the fourth largest banking company, and with company, and with the Prudential the Prudential Securities merger, it is now the third Securities merger, it is now the third largest brokerage firm in the United States.largest brokerage firm in the United States.

Wachovia is increasing its market share by Wachovia is increasing its market share by continually continually focusing on building new bank focusing on building new bank branches and branches and expanding. Wachovia is expanding. Wachovia is currently expanding into currently expanding into Texas. Texas. http://ccbn.mobular.net/ccbn/7/418/463/

http://www.wachovia.com/corp_inst/page/0,,13_54,00.html

Part C. Income Part C. Income StatementStatement

2002 2003

Net Income 3,579 4,264

Income From Operations 23,505 24,474

Gross Profit 4,673 6,223

•Format is most like a multi-step format (numbers are in millions)

•The year 2003 was more profitable than 2002

Part C. Balance SheetPart C. Balance SheetAssets= Liabilities+

Stockholders' Equity

2002 341,839 309,258 32,078

2003 401,032 366,094 32,428

(numbers are shown in millions)

•In general, from 2002 to 2003 there were only positive changes which occurred. The liabilities decreased while the assets increased in 2003.

Part C. Statement of Cash Part C. Statement of Cash FlowsFlows

•Cash Flows from operations were less than net income in 2003, but were more than net income in 2002.

•The company is not growing through investing activities, but is growing through its financing activities.

•The company’s primary source of financing is through net deposits.

•Overall, cash has increased over the past two years.

Part D. Accounting Part D. Accounting PoliciesPolicies

Five Main PoliciesFive Main Policies Allowance for loan Allowance for loan

losseslosses Fair value of Fair value of

certain financial certain financial instrumentsinstruments

ConsolidationConsolidation Goodwill Goodwill

impairmentimpairment Contingent Contingent

liabilitiesliabilities

Part E. Financial Analysis Part E. Financial Analysis Liquidity RatiosLiquidity Ratios

(numbers calculated in millions)

•Working Capital: 2003: 34,938

2002: 32,581

•Current Ratio: 2003: 1.095

2002: 1.105

•Receivable Turnover: 2003: 12.23%

2002: 12.01%

•Average Days Sales Uncollected: 2003:10595.24

2002: 10327.18

Part E. Financial Analysis Part E. Financial Analysis Profitability RatiosProfitability Ratios

Profit Margin: 2003: .21Profit Margin: 2003: .212002: .202002: .20

Asset Turnover: 2003: .0505Asset Turnover: 2003: .0505 2002: .05022002: .0502

Return on Assets:Return on Assets:2003: 1.18%2003: 1.18%2002: 1.12%2002: 1.12%

Return on Equity:Return on Equity: 2003: 2003:

13.27%13.27%2002: 11.78%2002: 11.78%

Part E. Financial Analysis Part E. Financial Analysis Solvency RatioSolvency Ratio

•Debt to Equity:

2003: 11.29

2004: 9.64

Part E. Financial Analysis Part E. Financial Analysis Market Strength RatiosMarket Strength Ratios

Price/Earnings Per Share: Price/Earnings Per Share:

2003: 14.582003: 14.58

2002: 14.972002: 14.97 Dividend Yield:Dividend Yield:

2003: 2.68%2003: 2.68%

2002: 2.55%2002: 2.55%