Wachovia Corp New
Wachovia Corp New — Golden West Financial — Merger or Acquisition (June 2006)
51 slides from Wachovia Corp New's merger presentation, Jun 1, 2006
Slide 1: Rule 425 filing legend and forward-looking statements
Filed by Wachovia Corporation pursuant to Rule 425 under the Securities Act of 1933, as amended, and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934, as amended Subject Company: Golden West Financial Corporation Commission File No.: 1-4629 Date: June 1, 2006 This filin
Slide 2: Forward-looking statements (continued)
more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the Merger or the Westcorp Transaction may not be fully realized or realized within the expected time frame; (3) revenues following the Merger or the Westcorp Transaction may be lower than ex
Slide 3: Additional information and participants in solicitation
filings that will be incorporated by reference in the definitive joint proxy statement/prospectus can also be obtained, free of charge, by directing a request to Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, NC 28288-0206, (704)-374-6782; or to G
Slide 4: Investor Update June 2006 Wachovia Corporation
Investor June Wachovia 2006Update Corporation
Slide 5: Wachovia Key Statistics and market position
Wachovia First #4 3rd Market Note: Top Company 1 2 3 4 5 6 7 8 9 10 Page Wachovia Wells W U.S. SunTrust National BB&T Citigroup Bank HSBC Mitsubishi-Tokyo JPMorgan UBS RBS Santander Wachovia assets Fifth largest Ten ells Union 1Financial Bancorp 101 –123 of Cap: Fargo Third World US Fargo 203 June 1
Slide 6: Diversified business segments
Page Diversified 2005 Parent 4% 5% 20% 22% * 49% ** #Other Key General Retail, Corporate Top Capital Retail Wealth 45,100 500 Represents Excludes Insurance 3Business 2Revenue structured Brokerage: $1.1B small –clients, data Management Bank June &franchise and Lending, as merger-related Investment bu
Slide 7: Superior customer service drives core deposit growth
Page Superior WB Top Score Wachovia All Bank JPM/Bank Wells *American ($ Low 2005 2004 2003 2002 2001 $181 $190 $209 $255 $279 11.4% CAGR Core **For 2004: billions) Others 10 led Cost 3ACSI* deposits** Deposits vs. of Fargo $23.0. comparative –Service survey America 2000 customer June Core 79 78 One
Slide 8: Conservative balance sheet: asset mix and funding
* DataDeposits Page Conservative Diversified, Cash Trading Loans, 23% Securities 9% 8% Funding 54% Other 6% Short 4% Long Tangible 14% Core 5% 57% 4& Term Deposits Liabs as –Equivalents net Assets Breakdown* June Common ofDebt Liquid March balance Investor Equity Asset 31,sheet Update, 2006; Mix*exc
Slide 9: Stable net interest margin
PageInterest Stable Spread: 1Q06 4Q05 3Q05 2Q05 1Q05 4Q04 3Q04 2Q04 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 (percent) NIM: Net Fed 10-year funds 5-16 NIM –bond -350 June bps target Margin despite bps Investor yield vs. Update, Market curve Rates 2006 compression
Slide 10: Increasing fee income contribution
Pageinterest Increasing CAGR: Fee 1Q06 4Q05 3Q05 2Q05 1Q05 4Q04 3Q04 2Q04 Net Income and 6 –NII other June contribution income 19% 12%; income Investor Update, of fee income 2006 $ millions $3,800 $3,600 $3,400 $3,200 $3,000 $2,800 $2,600 $2,400 $2,200 $2,000
Slide 11: Improving operating efficiency
Page Improving Staffing 52 57.8% 58.0% 60.0% 60.6% 59.1% 63.6% 2001 * for Overhead -a55% number 72002 –effectiveness June operating 2003 efficiency ofInvestor reasons. 2004leverage* and 2005 ratio Update, efficiency excludes 1Q062006 2007 End merger-related Goal to end process and improvements restr
Slide 12: Consistent, growing earnings and EPS
Page Consistent, 0.81 0.72 0.71 0.68 0.66 0.58 0.88 1,501 0.98 1,698 1,716 1.11 1.07 1,299 1,318 0.99 1,171 1,092 983 4Q01 799 908 Wachovia EPS* Earnings* EPS Earnings 17% *Represents 20% of $46 987 1.12 CAGR 0.79 0.88 1.03 81Q02 1.00 1,652 1,744 1,299 1,175 1,067 million – 944 June CAGR 1.09 Corp.
Slide 13: Disciplined acquisition approach and history
*Prior **Wachovia’s ***Pending Page Acquisition A 41.4% Ken First Wachovia Wachovia/ WB Transaction Est. April September June November March disciplined 4Q06 Mkt Thompson 2003 Union/ 92000 to 1.1% 2006 – June consummation Cap* brokerage 2004 Westcorp SouthTrust Golden 2001 history Value Value/Mkt me
Slide 14: Golden West overview
*Assets Page Golden Ranks rated Low-risk, CAGR Retail 285 Mortgage history highly-visible AA 10 branch 11th of EPS West: as – ARM lending superior June of in growth 3/31/2006. network Overview assets, Investor originations $120 branches performance 19% 10th billion Update, $128 Market since inlocate
Slide 15: Compelling strategic and financial rationale
Compelling Expands Accelerates Solidifies Diversifies Consumer Strategic Financially Low Complementary Assumptions Page Risk 11 –high Rationale national Transaction June loans Wachovia’s Attractive long-term retail California revenue validated growth Investor sales / momentum total consumer synergie
Slide 16: Combination creates high-growth footprint
Combination 5.9% Footprint High 8.8% Creates – US Deposits Rank 1 2 3 Wachovia 4 5 6 Source: 1. 2. 3. Page Wachovia/Golden Wells #Includes Bank JP Citigroup US Deposit 6Banking Morgan 12 growth pro Bancorp combined projected Institution of Top Fargo SNL –(2) forma MSAs America June stand-alone weigh
Slide 17: Combination strengthens business mix
Page 13 Combination WB's 57% 25% 5% 9% Combined General Capital 65% Wealth 7% Corporate 3% Mortgage-Related Parent 4% 21% Mortgage *Represents (Wachovia’s anticipated portfolio. 2005 Management Bank – Businesses June &Pro purchase Segment 2005 Investment strengthens Forma** Investor segment GAAP Ear
Slide 18: Deepen mortgage channel depth
*Includes Page Wachovia WB GDW 2005 Deepen Wholesale “Loan By Underwritten offering Mortgage 14 production: Mortgage Experts” channel – AmNet June and brokers option fixed and Golden Investor (in-house depth: $55.3 $51.5 rate serviced production ARM Retail and West billion* billion Update, branches
Slide 19: Proven, low-risk underwriting of Golden West loans
Page Proven, Low Average Product Payment Reduces Conservative Underwritten Net Golden GDW -0.20% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% Peak 1Q'0 '04 '02 '00 '98 '96 '94 '92 '90 CA 0 bps Real Charge-Offs Balance 6Year 15 15West low Features –loan risk Estate rates year June 18risk Top
Slide 20: Diversified pro forma loan portfolio
*Proindustry Diversified 90% 100% 68% $151 77% No Pro Other Auto, Student 14% 5% 3% 22% 4% Commercial 8% Consumer 11% Golden 30% Page forma average secured forma 16 billion Other Consumer secured West – June loan Mortgage loan for > Consumer wholesale Financial Foreign Leasing RE (additional Mortgag
Slide 21: Credit risk: net charge-off reduction
Source: Page Credit Risk Net 1 0.93% 0.85% 0.77% 0.51% 0.00% 0.09% 0.33% 0.70% 0.99% Wachovia NPA/Loans 0 C 0.62% JPM 0.49% WFC USB 0.36% GDW BAC WB 2005 2001 0.28% 0.43% 1.04% 1.05% .49% .95% Charge-off reduction 17quality Company – June Median: Ratio =Investor Ratio best-in-class reports. Top 20 U
Slide 22: Credit risk: allowance and earnings coverage
Source: Page Credit Risk PTPP 1.65x 1.75x 2.77x Allowance/NPAs Wachovia 2005 2001 11.2x 4.96x 5.82x 1 2.53x 2.74x 3.45x 3.78x 5.02x 4 C 5.0x JPM 6.2x WFC 6.7x BAC 10.6x USB 51.0x WB 459.9x 0.69x GDW *Pre-tax, .76xreduction .6x 18 Earnings*/Charge-offs quality Company –pre-provision June Median: =Inv
Slide 23: Strong capital position
Source: Page Strong Tangible Incl. JTCE/TA 3.48% 6.17% 3.81% 4.72% 4.02% 4.70% 4.32% 4.52% 4.60% 5.09% 4.94% 5.90% L C JPM WB USB 5.22% 6.11% 6.18% 6.86% 7.13% 8.17% WFC BAC PM everage servicing 19capital Form –Common Ratio JuneFRY-9C, position intangibles/ex-FAS115/133 Investor Equity as Update, of
Slide 24: Strong economic capital positioning
Page120 Strong -$0.9B Economic 2005 2004 2003 2002 2001 Tangible Tier capital capital $1.8B –common June capital $4.2B positioning Investor figures equity $7.0B Update, vs. are for $8.1B economic fourth low2006 risk quarter business capital averages. –amodel widening $900 million gap $35added $30 $2
Slide 25: Disciplined capital management
* Does **Dividends Page Disciplined Estimated Reinvest Cost Dividend Target Financially IRR Cash Repurchase Authorization Capital outstanding) 4.7%+ 6.0%+ Expect of of 21 EPS cash tangible leverage 15%+ no to not ratio capital –in payouts dip June accretion $3+ major include attractive growth divide
Slide 26: Term debt maturities and liquidity
Term 2006-2010 ($ 2006 0.0 1.3 2.3 2.1 3.5 2.4 3.6 1.7 5.1 4.9 3.9 4.1 2.9 Wachovia Golden Maintain Outlook Continued * Page Golden billions) 22 2007 debt West* –sufficient West June Bank Corp maturity solid 2008 Term maturities Investor NA deposit 2009 Maturities holding summary 2010 growth Update,
Slide 27: Selected credit ratings
Page Wachovia A 11/20/02 Aa2 A1 Aa3 Moody’s Outlook Date Sub Senior Current Ratings Selected Stable 3/21/05 AA AA- Fitch Positive CreditWatch 5/08/05 A+ S&P and consumer large associated A-the (5/8/05): 23 core addition –comments: lending June deposit corporate Corporation Bank with“The Investor mer
Slide 28: Going forward: Wachovia's strengths
Page 24 Wachovia’s Resilient, Footprint Sales Aggressive, Disciplined Low-risk, Going Superior Seamless Strong Golden Improved Generate and forward: retail West –execution significant merger in service diversified market-related fortress June capital value effective higher sales Investor integration
Slide 29: Additional Information
Page 25 – June Additional Information Investor Update, 2006
Slide 30: Market leadership across businesses
Sources: ** Page Market General Corporate Capital Wealth Dominant Western Top 3rd 4thInside largest 326 10leveraged issuer Management leadership Bank –US* *SNL Mortgage June and East manager full-service No. of Investment Coast Investor Financial loan domestic 7across pro Finance based syndications
Slide 31: Steady return on assets and equity
Page 27on Steady Return *Ratios 29.6% 26.7% 24.2% 23.5% 20.3% 2005 2004 2003 2002 2001 1.46% 1.38% 1.37% 1.06% million. improvement based 2003 – June Tangible also onInvestor net excludes Assets* Equity* in income profitability Update, a before benefit 2006after-tax of $17 million effect of related
Slide 32: General Bank sales and production
*Total General Same Deposit +23% Loan +20% Revenue* ($ +15% *Same 1Q06 4Q05 3Q05 2Q05 1Q05 Loans Page in thousands) 28 Production Store results $3,765 $2,951 $657 defined Retail store Production Bank – June per Sales $706 sales exclude & $4,625 $3,549 sales Financial asInvestor Small per Big $733 Pr
Slide 33: General Bank strong sales culture
Page General Strong incentives, 25% 43% +72% 116% < *Legacy Legacy 1 Merger 45% 22% +105% *4Q05 yr 4 yrs post-merger 29sales legacy post-merger Wachovia SouthTrust Bank –Wachovia June coaching, culture leveraging SouthTrust Investor (Merger*) Loan Loan production (Merger*) drives andProduction Updat
Slide 34: Capital Management
Page 30 Capital Managed 20-25% 17% 16% 13% 11% Recurring 39% 50% 55% 57% 70% 2007 1Q06 2005 2004 2003 *Excluding Goal Management –Account June Revenues Revenues* referral Investor Assets fees as focus ($aUpdate, in % asbillions) ($on of in a% managed Total billions) 2006 of Total $0.7 Revenues $68 a
Slide 35: Wealth Management
Page 04060VC65 Wealth Quarterly Core +9% +21% Assets ($ +6% 4Q05 3Q05 2Q05 1Q06 1Q05 in billions) millions) $13,303 $64.6 31 Deposits Loans Under Management’s – Balances June $64.9 (WB $12,829 Management $14,557 Investor $65.6 Fixed $15,526 focus $65.6 Update, Income) on$68.3 relationship 2006 manag
Slide 36: Corporate and Investment Bank market share
Sources: (Thomson Page 7.4% 6.7% 4.0% 3.1% 1.3% 0.2% 0.5% 0.0% TOTAL CIB’s Wachovia (based 2000 10.3%32 market 2005 6.8% 6.0% 3.5% 3.2%3.2% 1.2% 0.3% 0.0% market onConverts –Converts lead June Market Financial), 1Q06 6.9% 5.4% 0.7% 0.2% share share deal Investor 2.9% Equity Share (Bloomberg), is$gai
Slide 37: Global Trade
Global Trade 40+ combined #1 Page Asia Latin offices 33 finance leader –America CHIPS, June throughout and Investor #4 correspondent Fed Western and Europe, Update, ACH Europe Asia 2006 payment banking and Latin volume America 4th in13,000 U.S. trade tradevolume services (letters clients of(financia
Slide 38: Focused plan for sustainable growth
Pagelending Investing Consumer Focused Introduce Sustainable Auto Retail Westcorp plan Golden Offer Increase 34 Loans full Banking West –ARM WB marketing for acquisition product credit June Lending growth to sustainable Financial mortgage sales WES; Investor &cards: Mortgage set to through through c
Slide 39: Combination projected deposit and population growth
* Source: ** *** Combination Projected 6.6% 7.7% 8.9% 9.5% WB 5.0% Weighted 22.7% 27.5% 15.0% 19.2% WFC *Deposit Page Combined Avg MSA Deposit-Wtd % Income** Growth* Population Golden 42% $82,000 8.77% Wachovia 91,000 8.91% Wells 17% 75,000 8.63% SunTrust 55% 84,000 8.79% Bank 70,000 7.00% BB&T 36%
Slide 40: Option ARM features
Page Option Thirty Accrual Payment Minimum Permits payment Resets Loans to 15-year Fully 1,899 Interest Minimum: Creates borrow 36 amortizing: “recast” generally year, to ARM only: negative fully rate –options: amortize up June payment $832 monthly based to amortizing: loan $1,125 after Investor $28
Slide 41: Golden West mortgage loan portfolio
*Loans ***Assumes Page Golden Mortgage Loan Balance Average $121 (Average At < $54 $61 70-80 $ 80+ LTV Created Loans Minimum Is 84.5%* Deferred May Would 670 $250K collaterized, Origination billion billion grow 37 billion Size underwritten raise West originated of when –interest Portfolio portfolio
Slide 42: Option ARM indices
Page Option Indices % Definition COSI Based CODI 54% of 37% Reserve Equal COFI savings 8% Index All Indexes Also Risks ofindices deposit would Portfolio 38 to elected to on ARM used institutions should –in repricing GDW’s average average June yield H-15 reprice benefit by spread byrise Investor Gold
Slide 43: Resilience of option ARM product
Page of Resilience Product 2005 1994 Essentially Option 89% Portfolio 99% Features California 1989-1994 1997-2005 Peak Experience Credit Current Debt Holding Subsidiary: 39ARMs: year Ratings: loans, loans charge-offs NPAs/loans Features –company: charge-offs NPAs/loans June loans/total through avera
Slide 44: Strong revenue opportunities
Pre-tax Strong 2009 Wachovia $60 $100 Expand Increase to $17 $7 production Channel spread Company Retail WMC “marketable” ARMs through Mortgage areas Wholesale full gains offering increase base customer $70 World $3.1 Does Other Incremental Business Investment Wealth Note: Page include billion offer
Slide 45: Modest expense reductions
*Assumes Page Modest 9% and Reductions systems 55 1,100 All ($ Expense 26 42 Other 18 30 Taxes $43 $70 Personnel After-tax* Pre-tax Expect $53 $87 Total (34) (55) in branch front-line, of 0.5% millions) 41 planned Golden annual to expense from –increase of realize June consolidations marginal primar
Slide 46: Capital and EPS dilution
Page Capital West Reduces Limits Excess Estimated Market $3.7-4.1B Limited $3.3-3.7B Golden 11.56x Wachovia 11.40x * (0.4%) ***See Ranges 42 shareholders cash capital premium required West pp. cash –effective depend June 2007 GDW 14-15 EPS 2007 EPS created and Investor P/E** cash to dilution excess
Slide 47: Summary pro forma consolidated balance sheet
Page Summary Consolidated March Pro (in Golden Wachovia ASSETS Combined Adjustments Trading $34,859 $- $1,821 $33,038 39,385 1,766 118,818 Securities 121,057 280,932 (Allowance (300) (3,036) Loans, 120,757 277,896 Loans 7 137 7,859 23,443 Goodwill 37,659 1 1,523 3,372 4 3,075 39,880 LIABILITIES Noni
Slide 48: Summary pro forma income statement, year 2005
Page Summary 2005 Year Pro (in Golden Wachovia CONSOLIDATED Combined Adjustments Interest $30,206 $317 $6,200 $23,689 13,617 344 3,265 10,008 Provision 16,589 2,935 13,681 8 249 Fee 16,332 (27) 2,927 13,432 Merger-related 12,364 (317) 462 12,219 2 292 Other Minority 16,854 336 963 15,555 -3 342 Inco
Slide 49: Summary pro forma income statement, 1Q06
*Pro Page Summary 1Q06 Three Pro (in Golden Wachovia CONSOLIDATED Combined Adjustments Interest $8,726 $- $2,019 $6,707 4,439 86 1,136 3,217 Provision 4,287 883 3,490 4 61 Fee 4,222 (86) 879 3,429 3 36 3,517 Merger-related 6 68 Other Minority 4,526 84 271 4,171 -9 95 Income 3,086 (170) 644 2,612 Net
Slide 50: Cautionary statement
Page Cautionary This (the regarding measures “should”, Golden The West savings customer obtain strength among (8) litigation; rate business, Additional Annual proposed Wachovia the conditions) “Merger”), following investor 46 ingovernmental effects other West’s Reports from connection –ofequity loss
Slide 51: Additional information
Page Additional The Shareholders with statement/prospectus, free joint Harrison Wachovia in filed meeting participants documents connection of proposed the with proxy 47charge, –of SEC, Street, the June Corporation, and information shareholders, as statement/prospectus inare SEC with described Merge
Golden West Financial — Merger or Acquisition (June 2006) on 6ix