WACHOVIA CORP/ NC, 10-Q, 2000-08-11

WACHOVIA CORP/ NC
10-Q, 2000-08-11
NATIONAL COMMERCIAL BANKS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended June 30, 2000

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

Commission File Number 1-9021

Wachovia Corporation

North Carolina 56-1473727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Address and Tele phone Number:

100 North Main Street 191 Peachtree Street NE
Winston-Salem, North Carolina 27101 Atlanta, Georgia 30303
(336) 770-5000 (404) 332-5000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No

As of June 30, 2000, Wachovia Corporation had 203,267,427 shares of common stock
outstanding.
<PAGE>

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C>
Page No.
---------
Consolidated Statements of Condition at June 30, 2000, December 31, 1999 and June 30, 1999 ................ 3

Consolidated Statements of Income for the three and six months ended June 30, 2000 and June 30, 1999 ...... 4

Consolidated Statements of Shareholders' Equity for the six months ended June 30, 2000 and June 30, 1999 .. 5

Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and June 30, 1999 ............ 6
</TABLE>

The unaudited consolidated financial statements referred to above do not include
all information and footnotes required under generally accepted accounting
principles. However, in the opinion of management, the interim financial
information includes all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the results of operations for the
periods presented. The results of operations shown in the interim statements are
not necessarily indicative of the results that may be expected for the entire
year.

2
<PAGE>

CONSOLIDATED STATEMENTS OF CONDITION
--------------------------------------------------------------------------------
$ IN THOUSANDS, EXCEPT PER SHARE DATA WACHOVIA CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31 JUNE 30
2000 1999 1999
----------- ----------- -----------
ASSETS
<S> <C> <C> <C>
Cash and due from banks ......................................................... $ 3,260,788 $ 3,475,004 $ 3,110,827
Interest-bearing bank balances .................................................. 158,049 184,904 92,156
Federal funds sold and securities purchased under resale agreements ............. 202,273 761,962 803,065
Trading account assets .......................................................... 1,457,467 870,304 791,419
Securities available-for-sale ................................................... 7,172,001 7,095,790 8,299,719
Securities held-to-maturity (fair value of $1,109,096, $1,061,150 and $1,354,480
respectively) .................................................................. 1,101,461 1,048,724 1,324,588
Loans, net of unearned income ................................................... 53,152,357 49,621,225 48,428,086
Less allowance for loan losses .................................................. 799,351 554,810 548,540
------------- ------------ -------------
Net loans ..................................................................... 52,353,006 49,066,415 47,879,546
Premises and equipment .......................................................... 934,873 953,832 972,092
Due from customers on acceptances ............................................... 80,917 111,684 179,847
Other assets .................................................................... 4,089,980 3,783,918 3,560,210
------------- ------------ -------------
Total assets .................................................................. $70,810,815 $67,352,537 $67,013,469
============= ============ =============
LIABILITIES
Deposits in domestic offices:
Demand ......................................................................... $ 8,783,729 $ 8,730,673 $ 8,570,418
Interest-bearing demand ........................................................ 4,885,151 4,527,711 4,857,922
Savings and money market savings ............................................... 12,716,834 13,760,479 13,160,810
Savings certificates ........................................................... 9,530,065 8,701,074 8,724,157
Large denomination certificates ................................................ 3,862,754 3,154,754 3,001,260
------------- ------------ -------------
Total deposits in domestic offices ............................................ 39,778,533 38,874,691 38,314,567
Interest-bearing deposits in foreign offices .................................... 2,807,675 2,911,727 2,500,952
------------- ------------ -------------
Total deposits ................................................................ 42,586,208 41,786,418 40,815,519
Federal funds purchased and securities sold under repurchase agreements ......... 7,440,013 5,372,493 6,185,220
Commercial paper ................................................................ 1,649,239 1,658,988 1,538,089
Other short-term borrowed funds ................................................. 2,172,587 3,071,493 2,632,238
Long-term debt .................................................................. 8,858,331 7,814,263 8,515,499
Acceptances outstanding ......................................................... 80,917 111,684 179,847
Other liabilities ............................................................... 2,087,476 1,878,741 1,720,340
------------- ------------ -------------
Total liabilities ............................................................. 64,874,771 61,694,080 61,586,752
SHAREHOLDERS' EQUITY
Preferred stock, par value $5 per share:
Authorized 50,000,000 shares; none outstanding ................................. ---- ---- ----
Common stock, par value $5 per share:
Authorized 1,000,000,000 shares; issued and outstanding 203,267,427,
201,812,295 and 202,230,680 shares, respectively .............................. 1,016,337 1,009,061 1,011,153
Capital surplus ................................................................. 721,378 598,149 615,900
Retained earnings ............................................................... 4,277,886 4,125,524 3,810,257
Accumulated other comprehensive loss ............................................ (79,557) (74,277) (10,593)
------------- ------------ -------------
Total shareholders' equity .................................................... 5,936,044 5,658,457 5,426,717
------------- ------------ -------------
Total liabilities and shareholders' equity .................................... $70,810,815 $67,352,537 $67,013,469
============= ============ =============
</TABLE>

3
<PAGE>

CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------
$ IN THOUSANDS, EXCEPT PER SHARE WACHOVIA CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------------ ------------------------------
2000 1999 2000 1999
------------- ---- ------------- ----
INTEREST INCOME
<S> <C> <C> <C> <C>
Loans, including fees ............................................... $ 1,169,233 $ 974,734 $ 2,263,012 $ 1,944,028
Securities available-for-sale ....................................... 117,736 130,692 230,478 253,805
Securities held-to-maturity:
State and municipal ................................................ 3,727 2,715 7,367 5,398
Other investments .................................................. 15,197 20,593 31,021 42,228
Interest-bearing bank balances ...................................... 1,400 1,391 2,923 3,584
Federal funds sold and securities purchased under resale agreements.. 6,796 8,429 14,288 14,231
Trading account assets .............................................. 11,022 8,051 21,379 13,717
------------- ------------ ------------- -----------
Total interest income ............................................. 1,325,111 1,146,605 2,570,468 2,276,991
INTEREST EXPENSE
Deposits:
Domestic offices ................................................... 346,818 284,386 669,676 567,833
Foreign offices .................................................... 62,308 24,039 114,230 47,959
------------- ------------ ------------- -----------
Total interest on deposits ........................................ 409,126 308,425 783,906 615,792
Short-term borrowed funds ........................................... 132,206 112,301 255,523 215,471
Long-term debt ...................................................... 144,397 108,877 272,161 220,650
------------- ------------ ------------- -----------
Total interest expense ............................................ 685,729 529,603 1,311,590 1,051,913
NET INTEREST INCOME ................................................. 639,382 617,002 1,258,878 1,225,078
Provision for loan losses ........................................... 273,365 74,525 347,031 155,161
------------- ------------ ------------- -----------
Net interest income after provision for loan losses ................. 366,017 542,477 911,847 1,069,917
OTHER INCOME
Service charges on deposit accounts ................................. 104,380 91,454 205,191 178,409
Fees for trust services ............................................. 54,189 54,907 105,423 104,043
Credit card income .................................................. 71,463 58,110 142,645 119,411
Investment fees ..................................................... 81,439 69,877 178,209 87,239
Capital markets income .............................................. 45,014 41,780 89,800 79,892
Electronic banking .................................................. 26,153 22,558 49,549 41,013
Mortgage fees ....................................................... 5,921 9,863 10,922 20,829
Other operating income .............................................. 81,740 55,995 159,359 106,977
------------- ------------ ------------- -----------
Total other operating revenue ..................................... 470,299 404,544 941,098 737,813
Securities gains .................................................... 59 10,453 226 10,687
------------- ------------ ------------- -----------
Total other income ................................................ 470,358 414,997 941,324 748,500
OTHER EXPENSE
Salaries ............................................................ 282,610 259,733 570,239 477,848
Employee benefits ................................................... 52,881 48,019 109,133 101,090
------------- ------------ ------------- -----------
Total personnel expense ........................................... 335,491 307,752 679,372 578,938
Net occupancy expense ............................................... 40,684 38,908 80,210 73,841
Equipment expense ................................................... 45,908 49,714 95,103 96,556
Merger-related charges .............................................. 8,872 8,347 17,030 8,347
Litigation settlement charge ........................................ ---- ---- 20,000 ----
Other operating expense ............................................. 200,336 175,896 377,554 315,133
------------- ------------ ------------- -----------
Total other expense ............................................... 631,291 580,617 1,269,269 1,072,815
Income before income taxes .......................................... 205,084 376,857 583,902 745,602
Income tax expense .................................................. 67,513 129,307 201,624 254,816
------------- ------------ ------------- -----------
NET INCOME .......................................................... $ 137,571 $ 247,550 $ 382,278 $ 490,786
============= ============ ============= ===========
Net income per common share:
Basic .............................................................. $ .68 $ 1.21 $ 1.89 $ 2.41
Diluted ............................................................ $ .67 $ 1.19 $ 1.87 $ 2.37
Average shares outstanding:
Basic .............................................................. 202,728 203,746 202,596 203,434
Diluted ............................................................ 204,572 207,400 204,392 207,181
</TABLE>

4
<PAGE>

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
$ IN THOUSANDS, EXCEPT PER SHARE WACHOVIA CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------- CAPITAL
SHARES AMOUNT SURPLUS
------------ -------- -------
PERIOD ENDED JUNE 30, 1999
<S> <C> <C> <C>
Balance at beginning of year ......................... 202,986,100 $1,014,931 $ 669,244
Net income ...........................................
Unrealized holding losses on securities available-
for-sale, net of deferred tax benefit and
reclassification adjustment .........................
Comprehensive income* ..............................
Cash dividends declared on common
stock -- $.98 a share................................
Common stock issued pursuant to:
Stock option and employee benefit plans ............. 819,351 4,097 91,612
Dividend reinvestment plan .......................... 133,584 668 10,794
Conversion of debentures ............................ 2,304 11 177
Acquisitions ........................................ 2,578,837 12,894 201,591
Common stock acquired ................................ (4,289,496) (21,448) (357,518)
Miscellaneous ........................................
------------- ---------- -----------
Balance at end of period ............................. 202,230,680 $1,011,153 $ 615,900
============= ========== ===========
PERIOD ENDED JUNE 30, 2000
Balance at beginning of year ......................... 201,812,295 $1,009,061 $ 598,149
Net income ...........................................
Unrealized holding losses on securities available-
for-sale, net of deferred tax benefit and
reclassification adjustment .........................
Comprehensive income* ..............................
Cash dividends declared on common
stock -- $1.08 a share...............................
Common stock issued pursuant to:
Stock option and employee benefit plans ............. 800,534 4,003 43,752
Dividend reinvestment plan .......................... 177,253 886 10,374
Acquisitions ........................................ 2,254,947 11,275 167,674
Common stock acquired ................................ (1,777,602) (8,888) (98,571)
Miscellaneous ........................................
------------- ---------- -----------
Balance at end of period ............................. 203,267,427 $1,016,337 $ 721,378
============= ========== ===========

<CAPTION>
Accumulated
Other
Retained Comprehensive
Earnings Income (Loss) Total
-------- ---------------- -------
PERIOD ENDED JUNE 30, 1999
<S> <C> <C> <C>
Balance at beginning of year ......................... $3,571,617 $ 82,440 $5,338,232
Net income ........................................... 490,786 490,786
Unrealized holding losses on securities available-
for-sale, net of deferred tax benefit and
reclassification adjustment ......................... (93,033) (93,033)
----------
Comprehensive income* .............................. 397,753
Cash dividends declared on common
stock -- $.98 a share................................ (199,954) (199,954)
Common stock issued pursuant to:
Stock option and employee benefit plans ............. 95,709
Dividend reinvestment plan .......................... 11,462
Conversion of debentures ............................ 188
Acquisitions ........................................ 214,485
Common stock acquired ................................ (378,966)
Miscellaneous ........................................ (52,192) (52,192)
---------- -------- ----------
Balance at end of period ............................. $3,810,257 $(10,593) $5,426,717
========== ======== ==========
PERIOD ENDED JUNE 30, 2000
Balance at beginning of year ......................... $4,125,524 $(74,277) $5,658,457
Net income ........................................... 382,278 382,278
Unrealized holding losses on securities available-
for-sale, net of deferred tax benefit and
reclassification adjustment ......................... (5,280) (5,280)
----------
Comprehensive income* .............................. 376,998
Cash dividends declared on common
stock -- $1.08 a share............................... (219,599) (219,599)
Common stock issued pursuant to:
Stock option and employee benefit plans ............. 47,755
Dividend reinvestment plan .......................... 11,260
Acquisitions ........................................ 178,949
Common stock acquired ................................ (107,459)
Miscellaneous ........................................ (10,317) (10,317)
---------- -------- ----------
Balance at end of period ............................. $4,277,886 $(79,557) $5,936,044
========== ======== ==========
</TABLE>

* Comprehensive income for the second quarters of 2000 and 1999 was $146,140 and
$176,315, respectively.

5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
$ IN THOUSANDS WACHOVIA CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
--------------------------
2000 1999
---------- ----------
OPERATING ACTIVITIES
<S> <C> <C>
Net income ............................................................................... $ 382,278 $ 490,786
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses ............................................................... 347,031 155,161
Depreciation and amortization ........................................................... 142,764 115,426
Deferred income taxes ................................................................... 87,693 198,597
Securities gains ........................................................................ (226) (10,687)
Loss (gain) on sale of noninterest-earning assets ....................................... 334 (7,829)
(Decrease) increase in accrued income taxes ............................................. (3,439) 9,373
Increase in accrued interest receivable ................................................. (24,543) (15,042)
Increase in accrued interest payable .................................................... 9,339 28,099
Net change in other accrued and deferred income and expense ............................. (8,363) (55,583)
Net trading account activities .......................................................... (587,163) (63,524)
Net loans held for resale ............................................................... (3,356) 176,461
------------- -------------
Net cash provided by operating activities .............................................. 342,349 1,021,238
INVESTING ACTIVITIES
Net decrease in interest-bearing bank balances ........................................... 42,239 17,827
Net decrease (increase) in federal funds sold and securities purchased under resale
agreements ............................................................................. 578,006 (81,464)
Purchases of securities available-for-sale ............................................... (646,876) (1,874,974)
Purchases of securities held-to-maturity ................................................. (126,786) (646)
Sales of securities available-for-sale ................................................... 361,371 144,802
Calls, maturities and prepayments of securities available-for-sale ....................... 356,867 1,276,976
Calls, maturities and prepayments of securities held-to-maturity ......................... 97,501 57,928
Net increase in loans made to customers .................................................. (2,755,646) (3,554,985)
Credit card receivables securitized ...................................................... ---- 895,954
Capital expenditures ..................................................................... (56,325) (145,595)
Proceeds from sales of premises and equipment ............................................ 3,312 17,798
Net decrease (increase) in other assets .................................................. 68,216 (212,829)
Business combinations .................................................................... (762,629) (11,556)
------------- -------------
Net cash used by investing activities .................................................. (2,840,750) (3,470,764)
FINANCING ACTIVITIES
Net (decrease) increase in demand, savings and money market accounts ..................... (874,838) 198,398
Net increase (decrease) in certificates of deposit ....................................... 1,161,479 (377,608)
Net increase in federal funds purchased and securities sold under repurchase agreements .. 2,063,641 661,658
Net (decrease) increase in commercial paper .............................................. (9,749) 178,707
Net (decrease) increase in other short-term borrowings ................................... (898,906) 686,303
Proceeds from issuance of long-term debt ................................................. 1,522,859 1,483,576
Maturities and repayments of long-term debt .............................................. (487,413) (603,366)
Common stock issued ...................................................................... 23,602 29,855
Dividend payments ........................................................................ (219,599) (199,954)
Common stock repurchased ................................................................. (104,088) (370,381)
Net increase in other liabilities ........................................................ 107,197 72,900
------------- -------------
Net cash provided by financing activities .............................................. 2,284,185 1,760,088

DECREASE IN CASH AND CASH EQUIVALENTS .................................................... (214,216) (689,438)
Cash and cash equivalents at beginning of year ........................................... 3,475,004 3,800,265
------------- -------------
Cash and cash equivalents at end of period ............................................... $ 3,260,788 $ 3,110,827
============= =============
</TABLE>

6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

SELECTED PERIOD-END DATA TABLE 1
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30
------------------
2000 1999
------- -------
Banking offices:
<S> <C> <C>
North Carolina ............................... 190 190
Virginia ..................................... 212 253
Georgia ...................................... 142 132
South Carolina ............................... 118 119
Florida ...................................... 38 40
-------- --------
Total ..................................... 700 734
======== ========
Automated banking machines:
North Carolina ............................... 454 444
Virginia ..................................... 285 307
Georgia ...................................... 313 303
South Carolina ............................... 286 292
Florida ...................................... 39 37
-------- --------
Total ..................................... 1,377 1,383
======== ========
Employees (full-time equivalent) .............. 21,509 21,716
Common stock shareholders of record ........... 51,377 52,956
Common shares outstanding (thousands) ......... 203,267 202,231
</TABLE>

COMMON STOCK DATA -- PER SHARE TABLE 2
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
2000 1999
------------------- --------------------------------
SECOND FIRST FOURTH THIRD SECOND
QUARTER QUARTER QUARTER QUARTER QUARTER
------- -------- ------- ------- --------
Market value:
<S> <C> <C> <C> <C> <C>
Period-end ............................................. $ 54.25 $ 67.56 $ 68.00 $ 78.63 $ 85.56
High ................................................... 75.25 68.94 88.88 85.25 92.31
Low .................................................... 53.56 53.63 65.44 75.31 80.56
Book value at period-end ................................ 29.20 28.88 28.04 27.76 26.83
Dividend ................................................ .54 .54 .54 .54 .49
Price/earnings ratio (1) ................................ 12.3x 13.7x 13.9x 16.4x 18.5x
Price/earnings ratio without nonrecurring items (1), (2) 11.9 13.3 13.7 16.2 18.1
</TABLE>

(1) Based on the most recent four quarters of net income per diluted share and
end of period stock price.
(2) Excludes the after-tax impact of nonrecurring charges.

FORWARD-LOOKING STATEMENTS
--------------------------------------------------------------------------------
This Quarterly Report on Form 10-Q of Wachovia Corporation ("Wachovia") contains
forward-looking statements as encouraged by the Private Securities Litigation
Reform Act of 1995. All forward-looking statements involve risks and uncertainty
and any number of factors could cause actual results to differ materially from
the anticipated results or other expectations expressed in forward-looking
statements. Risks and uncertainties that may affect future results include, but
are not limited to, changes in the economy, interest rate movements, timely
development by Wachovia of technology enhancements for its products and
operating systems, the impact of competitive products, services and pricing,
Congressional legislation and similar matters. Management cautions readers not
to place undue reliance on forward-looking statements, which are subject to
influence by the named risk factors and unanticipated future events.

7
<PAGE>
FINANCIAL SUMMARY TABLE 3
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TWELVE
MONTHS 2000
ENDED --------------------------
JUNE 30, SECOND FIRST
2000 QUARTER QUARTER
----------- ----------- --------
SUMMARY OF OPERATIONS
<S> <C> <C> <C>
(thousands, except per share data)
Interest income ........................ $4,960,297 $ 1,325,111 $ 1,245,357
Interest expense ....................... 2,456,411 685,729 625,861
----------- ------------- -----------
Net interest income .................... 2,503,886 639,382 619,496
Provision for loan losses .............. 489,975 273,365 73,666
----------- ------------- -----------
Net interest income after provision
for loan losses ....................... 2,013,911 366,017 545,830
Other operating revenue ................ 1,813,408 470,299 470,799
Securities gains ....................... 433 59 167
----------- ------------- -----------
Total other income ..................... 1,813,841 470,358 470,966
Personnel expense ...................... 1,320,720 335,491 343,881
Merger-related charges ................. 27,992 8,872 8,158
Litigation settlement charge ........... 20,000 ---- 20,000
Other expense .......................... 1,078,367 286,928 265,939
----------- ------------- -----------
Total other expense .................... 2,447,079 631,291 637,978
Income before income tax expense ....... 1,380,673 205,084 378,818
Income tax expense ..................... 477,960 67,513 134,111
----------- ------------- -----------
Net income ............................. $ 902,713 $ 137,571 $ 244,707
=========== ============= ===========
Net income per common share:
Basic ................................. $ 4.46 $ .68 $ 1.21
Diluted ............................... $ 4.40 $ .67 $ 1.20
Cash dividends paid per common
share ................................. $ 2.16 $ .54 $ .54
Cash dividends paid on common
stock ................................. $ 438,092 $ 109,505 $ 110,094
Cash dividend payout ratio ............. 48.53% 79.60% 44.99%
Average basic shares outstanding ....... 202,381 202,728 202,464
Average diluted shares outstanding ..... 204,809 204,572 204,213
SELECTED AVERAGE
BALANCES (millions)
Total assets ........................... $ 67,247 $ 69,466 $ 67,755
Loans -- net of unearned income ........ 49,560 52,133 50,550
Securities ............................. 8,822 8,407 8,395
Other interest-earning assets .......... 1,449 1,241 1,245
Interest-bearing deposits .............. 33,903 35,663 34,873
Short-term borrowed funds .............. 9,058 8,621 8,920
Long-term debt ......................... 8,457 8,851 8,081
Noninterest-bearing deposits ........... 8,347 8,373 8,319
Shareholders' equity ................... 5,616 5,833 5,688
RATIOS (averages)
Annualized net loan losses to loans .... .57% .56% .58%
Annualized return on assets ............ 1.34 .79 1.44
Annualized return on shareholders'
equity ................................ 16.07 9.43 17.21
OPERATING PERFORMANCE
EXCLUDING
NONRECURRING ITEMS (1)
(thousands, except per share data)
Net income ............................. $ 935,406 $ 143,337 $ 264,510
Net income per diluted share ........... $ 4.57 $ .70 $ 1.30
Annualized return on assets ............ 1.39% .83% 1.56%
Annualized return on shareholders'
equity ................................ 16.66 9.83 18.60
Cash dividend payout ratio ............. 46.83 76.40 41.62
CASH BASIS FINANCIAL
INFORMATION (1) (2)
Net income ............................. $ 995,821 $ 162,566 $ 281,589
Net income per diluted share ........... $ 4.86 $ .79 $ 1.38
Annualized return on assets ............ 1.48% .95% 1.69%
Annualized return on shareholders'
equity ................................ 17.73 13.84 24.27

<CAPTION>
1999 SIX MONTHS ENDED
------------------------------------------ JUNE 30
FOURTH THIRD SECOND ----------------------------
QUARTER QUARTER QUARTER 2000 1999
--------- -------- -------- ------------ ------------
SUMMARY OF OPERATIONS
<S> <C> <C> <C> <C> <C>
(thousands, except per share data)
Interest income ......................... $ 1,224,486 $ 1,165,343 $ 1,146,605 $ 2,570,468 $ 2,276,991
Interest expense ........................ 596,583 548,238 529,603 1,311,590 1,051,913
------------- ----------- ----------- ------------- -----------
Net interest income ..................... 627,903 617,105 617,002 1,258,878 1,225,078
Provision for loan losses ............... 66,174 76,770 74,525 347,031 155,161
------------- ----------- ----------- ------------- -----------
Net interest income after provision
for loan losses ........................ 561,729 540,335 542,477 911,847 1,069,917
Other operating revenue ................. 439,469 432,841 404,544 941,098 737,813
Securities gains ........................ 60 147 10,453 226 10,687
------------- ----------- ----------- ------------- -----------
Total other income ...................... 439,529 432,988 414,997 941,324 748,500
Personnel expense ....................... 324,288 317,060 307,752 679,372 578,938
Merger-related charges .................. 5,669 5,293 8,347 17,030 8,347
Litigation settlement charge ............ ---- ---- ---- 20,000 ----
Other expense ........................... 270,661 254,839 264,518 552,867 485,530
------------- ----------- ----------- ------------- -----------
Total other expense ..................... 600,618 577,192 580,617 1,269,269 1,072,815
Income before income tax expense ........ 400,640 396,131 376,857 583,902 745,602
Income tax expense ...................... 137,704 138,632 129,307 201,624 254,816
------------- ----------- ----------- ------------- -----------
Net income .............................. $ 262,936 $ 257,499 $ 247,550 $ 382,278 $ 490,786
============= =========== =========== ============= ===========
Net income per common share:
Basic .................................. $ 1.30 $ 1.27 $ 1.21 $ 1.89 $ 2.41
Diluted ................................ $ 1.28 $ 1.25 $ 1.19 $ 1.87 $ 2.37
Cash dividends paid per common
share .................................. $ .54 $ .54 $ .49 $ 1.08 $ .98
Cash dividends paid on common
stock .................................. $ 109,273 $ 109,220 $ 100,292 $ 219,599 $ 199,954
Cash dividend payout ratio .............. 41.56% 42.42% 40.51% 57.44% 40.74%
Average basic shares outstanding ........ 202,168 202,167 203,746 202,596 203,434
Average diluted shares outstanding ...... 205,096 205,345 207,400 204,392 207,181
SELECTED AVERAGE
BALANCES (millions)
Total assets ............................ $ 66,982 $ 64,815 $ 65,454 $ 68,610 $ 64,934
Loans -- net of unearned income ......... 48,593 47,003 47,012 51,342 46,638
Securities .............................. 9,016 9,461 9,664 8,401 9,444
Other interest-earning assets ........... 1,844 1,464 1,588 1,243 1,451
Interest-bearing deposits ............... 33,107 31,996 32,343 35,268 32,095
Short-term borrowed funds ............... 9,836 8,848 9,629 8,771 9,461
Long-term debt .......................... 8,327 8,571 7,998 8,466 7,814
Noninterest-bearing deposits ............ 8,326 8,368 8,261 8,346 8,162
Shareholders' equity .................... 5,555 5,391 5,459 5,760 5,387
RATIOS (averages)
Annualized net loan losses to loans ..... .54% .61% .63% .57% .66%
Annualized return on assets ............. 1.57 1.59 1.51 1.11 1.51
Annualized return on shareholders'
equity ................................. 18.93 19.11 18.14 13.27 18.22
OPERATING PERFORMANCE
EXCLUDING
NONRECURRING ITEMS (1)
(thousands, except per share data)
Net income .............................. $ 266,620 $ 260,939 $ 253,060 $ 407,847 $ 496,296
Net income per diluted share ............ $ 1.30 $ 1.27 $ 1.22 $ 2.00 $ 2.40
Annualized return on assets ............. 1.59% 1.61% 1.55% 1.19% 1.53%
Annualized return on shareholders'
equity ................................. 19.20 19.36 18.54 14.16 18.43
Cash dividend payout ratio .............. 40.98 41.86 39.63 53.84 40.29
CASH BASIS FINANCIAL
INFORMATION (1) (2)
Net income .............................. $ 279,401 $ 272,265 $ 263,529 $ 444,155 $ 515,953
Net income per diluted share ............ $ 1.36 $ 1.33 $ 1.27 $ 2.17 $ 2.49
Annualized return on assets ............. 1.69% 1.70% 1.63% 1.32% 1.61%
Annualized return on shareholders'
equity ................................. 24.02 23.40 22.36 19.02 21.95
</TABLE>

(1) Excludes the effects of nonrecurring merger-related and litigation
settlement charges.
(2) Excludes the effects of purchase accounting related intangibles.

8
<PAGE>
RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q should be read in conjunction with Wachovia's
1999 Annual Report on Form 10-K, and will serve to update previously reported
information for current interim period results.

OVERVIEW

Reports on the second quarter from the twelve Federal Reserve Districts
indicated continued economic expansion with some signs of slowing from the rapid
pace experienced earlier in the year. Retail sales were higher than year-earlier
levels but showed some signs of slowing toward the latter part of the quarter.
Overall manufacturing activity rose during the quarter with interest-sensitive
sectors beginning to weaken. Gross domestic product rose 5.2 percent, based on
preliminary data. Economic expansion continued in spite of growing concerns
about higher levels of inflation, significant amounts of consumer indebtedness,
and generally tight labor markets. These concerns prompted the Federal Reserve
to raise short-term interest rates by 50 basis points, following five 25 basis
point increases since July 1999. Based on preliminary data, the nation's average
unemployment rate fell to 4.0 percent from 4.3 percent during second quarter
1999. Within Wachovia's five state operating area, unemployment averaged 3.5
percent. Although economic conditions within Wachovia's five state operating
area remained generally strong, signs of some credit deterioration were
beginning to surface within Wachovia's loan portfolio.

Wachovia's strategy is to focus on entering and expanding businesses with strong
potential for growth, and redirecting resources as appropriate for the most
attractive returns. This will continue to be accomplished by enhancing products
and services through internal development, as well as by selective acquisitions
and partnerships. On February 1, Wachovia completed its purchase of a majority
of the credit card business of Partners First Holdings LLC, adding 1.2 million
customers and approximately $2 billion of managed receivables. The transaction
resulted in approximately $230 million of purchased credit card intangibles. The
acquisition of B C Bankshares, Inc., parent company of the Bank of Canton also
was completed in February, resulting in goodwill of approximately $97 million.
On June 1, Wachovia completed the acquisition of Commerce National Corporation,
the parent company of the National Bank of Commerce, resulting in goodwill of
approximately $33 million. These transactions follow several purchase
acquisitions completed in 1999 that strengthened Wachovia's wealth advisory and
capital markets capabilities.

COMPUTATION OF EARNINGS PER COMMON SHARE TABLE 4
--------------------------------------------------------------------------------
(THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------- -------------------------
2000 1999 2000 1999
----------- --------- ----------- ----------
BASIC
<S> <C> <C> <C> <C>
Average common shares outstanding ......................... 202,728 203,746 202,596 203,434
=========== ========= =========== =========
Net income ................................................ $ 137,571 $ 247,550 $ 382,278 $ 490,786
=========== ========= =========== =========
Per share amount .......................................... $ .68 $ 1.21 $ 1.89 $ 2.41
DILUTED
Average common shares outstanding ......................... 202,728 203,746 202,596 203,434
Dilutive common stock options at average market price ..... 1,640 3,215 1,590 3,316
Dilutive common stock awards at average market price ...... 181 415 184 406
Convertible long-term debt assumed converted .............. 23 24 22 25
----------- --------- ----------- ---------
Average diluted shares outstanding ........................ 204,572 207,400 204,392 207,181
=========== ========= =========== =========
Net income ................................................ $ 137,571 $ 247,550 $ 382,278 $ 490,786
Add interest on convertible long-term debt -- net of tax .. 11 16 28 36
----------- --------- ----------- ---------
Adjusted net income ....................................... $ 137,582 $ 247,566 $ 382,306 $ 490,822
=========== ========= =========== =========
Per share amount .......................................... $ .67 $ 1.19 $ 1.87 $ 2.37
</TABLE>

Wachovia's operating net income for the second quarter of 2000 was $143 million
or $.70 per diluted share versus $253 million or $1.22 per diluted share a year
earlier. On a reported basis, Wachovia's net income for the quarter was $138
million or $.67 per diluted share versus $248 million or $1.19 per diluted share
a year earlier. The second quarter of 2000 included a $200 million provision for
loan losses charge that affected comparability between periods. The charge
reflected stress on the commercial loan portfolio as a result of pressure on
customer performance in light of rising interest rates and the slowing economy.
The provision for loan losses is discussed in more detail on pages 23 and 24.
Year-to-date operating earnings were

9
<PAGE>

$408 million or $2.00 per diluted share compared with $496 million or $2.40 per
diluted share for the same period in 1999. Operating earnings exclude
merger-integration and other nonrecurring charges. Reported earnings for the
first six months of 2000 were $382 million or $1.87 per diluted share and $491
million or $2.37 per diluted share a year earlier. Comparisons between the 2000
and 1999 periods are also impacted by the results of acquisitions that are
included in reported results from their respective acquisition dates each year.

Expanded discussion of results of operations and financial condition follows.
Interest income is stated on a taxable equivalent basis, which is adjusted for
the tax-favored status of earnings from certain loans and securities. References
to changes in assets and liabilities represent daily average levels unless
otherwise noted.

BUSINESS SEGMENTS

Wachovia has five reportable business segments: Asset and Wealth Management,
Corporate, Credit Card, Consumer and Treasury & Administration.

Business segment results are reported on a management accounting basis. They
reflect evolving information needs specific to a company's business managers and
may differ by company due to wide discretion in application. As a result,
Wachovia's business segment results are not necessarily comparable with those of
other financial institutions with similar segments or with those of other
companies that compete directly in one or more of its lines of business. In
addition, business segment results may be restated in the future as Wachovia's
management structure, information needs or reporting systems evolve.

The provision for loan losses is charged to each business segment based on the
credit risk of each segment's loan portfolio. Operating expenses to support
business unit revenues are either charged directly as incurred or allocated from
support areas based on usage. In addition, general overhead expense that cannot
be specifically identified to a business unit is allocated based on the
proportion of each segment's direct expenses to total direct expenses of the
combined segments. Income tax expense is calculated for each business segment
with a blended tax rate. This rate is adjusted as applicable for the assumed tax
effect of tax-exempt income and nondeductible intangible amortization expense.

Beginning January 2000, Wachovia adopted a marginal matched maturity funds
transfer pricing methodology for management reporting. Formerly, Wachovia
utilized a multiple pool method to simulate matched funding. This change in
management accounting has been reflected for all periods. Given the complexity
of products and services and their impact on cash and balance sheet management,
the marginal matched maturity method provides an improved method of measuring
the economics of products, services and business unit results. The new approach
evaluates the cash flows and repricing characteristics of all balance sheet
transactions at an instrument level by benchmarking pricing decisions against
Wachovia's wholesale cost of funds. This approach removes most forms of interest
rate risk, prepayment risk and liquidity risk from the balance sheets of the
business units and isolates them in Treasury & Administration for centralized
evaluation and management. Under marginal matched maturity funds transfer
pricing, business unit results more closely represent the economic impact of
growth and pricing decisions. Other minor changes in management accounting were
implemented during the second quarter with all prior periods restated to reflect
the changes.
10
<PAGE>
Financial results by business segment are discussed below.

BUSINESS SEGMENTS TABLE 5
--------------------------------------------------------------------------------
(THREE MONTHS ENDED JUNE 30)
<TABLE>
<CAPTION>
ASSET AND
WEALTH
MANAGEMENT CORPORATE CREDIT CARD
------------------ ------------------- -------------------
2000 1999 2000 1999 2000 1999
------ ----- ----- ----- ------- -----
OPERATIONS SUMMARY
(millions)
<S> <C> <C> <C> <C> <C> <C>
External net interest
margin ....................... $ 36 $ 26 $ 649 $ 532 $ 293 $ 209
Internal funding (charge)
credit ....................... 2 8 (406) (302) (126) (79)
-------- ------ ------- ------- ------- ------
Net interest income* .......... 38 34 243 230 167 130
Total other income ............ 149 128 107 101 55 42
-------- ------ ------- ------- ------- ------
Total revenues ................ 187 162 350 331 222 172
Provision for loan losses ..... 1 ---- 224 9 100 73
Total other expense ........... 158 133 179 168 77 54
-------- ------ ------- ------- ------- ------
Pretax profit ................. 28 29 (53) 154 45 45
Income taxes (benefit) ........ 11 11 (19) 55 16 16
-------- ------ ------- ------- ------- ------
Net income (loss) ............. $ 17 $ 18 $ (34) $ 99 $ 29 $ 29
======== ====== ======= ======= ======= ======
Percentage contribution to
total revenues** ............. 16.4% 15.2% 30.6% 31.1% 19.4% 16.1%
Percentage contribution to
net income ................... 12.3% 7.3% (24.6%) 39.9% 21.0% 11.7%
AVERAGE BALANCES
(millions)
Total assets .................. $3,608 $2,599 $37,913 $34,389 $8,086 $6,238

<CAPTION>
TREASURY & TOTAL
CONSUMER ADMINISTRATION ELIMINATIONS CORPORATION
----------------- -------------------- ---------------- ------------------
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------- ------ ----- ------ ------ -------
OPERATIONS SUMMARY
(millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
External net interest
margin ....................... $ (44) $ (37) $(284) $ (103) $ (11) $ (10) $ 639 $ 617
Internal funding (charge)
credit ....................... 273 248 281 149 (24) (24) ---- ----
------- ------ -------- ------- ------- ------- -------- --------
Net interest income* .......... 229 211 (3) 46 (35) (34) 639 617
Total other income ............ 110 104 49 40 ---- ---- 470 415
------- ------ ---------- ------- ------- ------- -------- --------
Total revenues ................ 339 315 46 86 (35) (34) 1,109 1,032
Provision for loan losses ..... 5 5 (57) (13) ---- ---- 273 74
Total other expense ........... 239 233 3 17 (25) (24) 631 581
------- ------ ---------- ------- ------- ------- -------- --------
Pretax profit ................. 95 77 100 82 (10) (10) 205 377
Income taxes (benefit) ........ 34 28 35 29 (10) (10) 67 129
------- ------ ---------- ------- ------- ------- -------- --------
Net income (loss) ............. $ 61 $ 49 $ 65 $ 53 $---- $---- $ 138 $ 248
======= ====== ========== ======= ======= ======= ======== ========
Percentage contribution to
total revenues** ............. 29.6% 29.5% 4.0% 8.1%
Percentage contribution to
net income ................... 44.2% 19.7% 47.1% 21.4%
AVERAGE BALANCES
(millions)
Total assets .................. $10,871 $9,622 $8,988 $12,606 $69,466 $65,454
</TABLE>

* Net interest income is reported on a taxable equivalent basis by segment and
on a nontaxable equivalent basis for the corporation, reflecting segment
eliminations.
** Percentage contribution to total revenues is based on the proportion of each
segment's revenues to the combined revenues of all segments. Revenues for the
total corporation are presented based on nontaxable equivalent net interest
income and total other income, including securities transactions.

BUSINESS SEGMENTS TABLE 6
--------------------------------------------------------------------------------
(SIX MONTHS ENDED JUNE 30)
<TABLE>
<CAPTION>
ASSET AND
WEALTH
MANAGEMENT CORPORATE CREDIT CARD
------------------ ------------------- -------------------
2000 1999 2000 1999 2000 1999
------ ----- ----- ----- ------- -----
OPERATIONS SUMMARY
(millions)
<S> <C> <C> <C> <C> <C> <C>
External net interest
margin ....................... $ 70 $ 45 $ 1,263 $ 1,039 $ 560 $ 420
Internal funding (charge)
credit ....................... 5 14 (776) (591) (240) (156)
-------- ------ ------- ------- ------- ------
Net interest income* .......... 75 59 487 448 320 264
Total other income ............ 315 204 218 193 106 78
-------- ------ ------- ------- ------- ------
Total revenues ................ 390 263 705 641 426 342
Provision for loan losses ..... 3 ---- 242 17 186 145
Total other expense ........... 320 213 355 311 143 106
-------- ------ ------- ------- ------- ------
Pretax profit ................. 67 50 108 313 97 91
Income taxes .................. 27 19 40 112 35 32
-------- ------ ------- ------- ------- ------
Net income .................... $ 40 $ 31 $ 68 $ 201 $ 62 $ 59
======== ====== ======= ======= ======= ======
Percentage contribution to
total revenues** ............. 17.2% 12.9% 31.1% 31.4% 18.8% 16.8%
Percentage contribution to
net income ................... 10.5% 6.3% 17.8% 40.9% 16.2% 12.0%
AVERAGE BALANCES
(millions)
Total assets .................. $3,478 $2,555 $37,433 $34,010 $7,893 $6,296

<CAPTION>
TREASURY & TOTAL
CONSUMER ADMINISTRATION ELIMINATIONS CORPORATION
----------------- -------------------- ---------------- ------------------
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------- ------ ----- ------ ------ -------
OPERATIONS SUMMARY
(millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
External net interest
margin ....................... $ (87) $ (73) $(528) $ (186) $ (19) $ (20) $ 1,259 $ 1,225
Internal funding (charge)
credit ....................... 536 495 524 284 (49) (46) ---- ----
------- ------ -------- ------- ------- ------- -------- --------
Net interest income* .......... 449 422 (4) 98 (68) (66) 1,259 1,225
Total other income ............ 214 203 88 71 ---- ---- 941 749
------- ------ ---------- ------- ------- ------- -------- --------
Total revenues ................ 663 625 84 169 (68) (66) 2,200 1,974
Provision for loan losses ..... 11 9 (95) (16) ---- ---- 347 155
Total other expense ........... 466 454 34 35 (49) (46) 1,269 1,073
------- ------ ---------- ------- ------- ------- -------- --------
Pretax profit ................. 186 162 145 150 (19) (20) 584 746
Income taxes .................. 68 59 51 53 (19) (20) 202 255
------- ------ ---------- ------- ------- ------- -------- --------
Net income .................... $ 118 $ 103 $ 94 $ 97 $---- $---- $ 382 $ 491
======= ====== ========== ======= ======= ======= ======== ========
Percentage contribution to
total revenues** ............. 29.2% 30.6% 3.7% 8.3%
Percentage contribution to
net income ................... 30.9% 21.0% 24.6% 19.8%
AVERAGE BALANCES
(millions)
Total assets .................. $10,572 $9,607 $9,234 $12,466 $68,610 $64,934
</TABLE>

11
<PAGE>

Asset and Wealth Management

Asset and Wealth Management provides integrated financial services to the
affluent marketplace. During 1999, Wachovia made three acquisitions to advance
its capabilities. In April 1999, Wachovia acquired Interstate/Johnson Lane Inc.
("IJL") and in September, Wachovia completed the acquisitions of OFFITBANK
Holdings, Inc. ("OFFITBANK") and Barry, Evans, Josephs & Snipes, Inc. ("BEJS").
Also in the third quarter of 1999, Wachovia sold its master trust and
institutional custody business in order to focus on more strategically oriented
businesses.

Products and Services. Asset and Wealth Management delivers innovative tailored
products and services through a variety of channels. The Private Financial
Advisors group provides a full range of products and services to affluent
customers, including banking and credit services, tax planning and consulting,
trust services, portfolio management, estate planning, investment counseling and
insurance. OFFITBANK and BEJS provide wealth management and specialized
investment and insurance products for the high-end of the affluent market.

Wachovia's brokerage business offers a wide variety of services and investment
products including the Wachovia Funds through full-service brokers and
branch-based investment consultants. Customers making their own investment
decisions can trade through Wachovia Investments Direct using a broker, a
touch-tone service or the Internet.

Institutional Client Services provides asset management, retirement services and
philanthropy management services to businesses, individuals and foundations.
Executive Services is a nationally recognized leader in providing retirement and
wealth accumulation products for high-net-worth individuals. It also provides
change-of-control and employee benefit protection services to client management
teams. Wachovia Asset Management provides investment strategies and portfolio
management for individuals and institutions, in addition to managing the
Wachovia Funds. At June 30, 2000, trust assets under discretionary management
exceeded $50 billion.

Industry Dynamics and Strategy. Wachovia believes the current marketplace is
underserved with few national brands and fragmented competition. Within
Wachovia's five-state geographic footprint, households are growing much faster
than the national average, and over the next five years, the subset of affluent
households is expected to grow substantially. These factors combine to create an
attractive market opportunity. Market volatility and the projected need for
intergenerational wealth transfer capabilities also will drive demand.

Asset and Wealth Management's market presence, brand names and strategic focus
position it to take unique advantage of this environment. The integration of the
acquisitions has allowed this business segment to increase its product
offerings, leverage existing services and expand distribution channels. In
addition, close coordination with Wachovia's Consumer and Corporate business
segments creates a continuous pipeline of customers. When retail customers fit
the affluent profile, they are offered wealth management products that better
serve their changing needs. Corporate identifies potential customers for asset
management, retirement plans and executive or charitable funds services.

Financial Results. Comparisons of financial results between periods were
affected by acquisitions and market sensitivity of certain revenue sources.
Second quarter 2000 saw a decline in trading activity that contributed to the
decrease in quarterly pretax profit from a year earlier. The acquisition of IJL
significantly increased the scale of Wachovia's market sensitive revenue in
investment fee income. Goodwill amortization expense and the expense base from
the acquisitions of OFFITBANK and BEJS as well as start up costs incurred with
opening new OFFITBANK offices in Palm Beach, Florida, Atlanta, Georgia,
Charlotte and Winston-Salem, North Carolina, accounted for the higher level of
expense from a year ago. Increases in loan and deposit volumes pushed net
interest income up over $4 million from the second quarter of 1999 after
covering the additional cost of funding intangible assets resulting from
acquisitions. Without the impact of acquisitions, net interest income was up
approximately 20 percent from a year ago, and other income and expense rose 6
percent and 1 percent, respectively.

Year-to-date pretax profit increased 34 percent over the same period last year.
Despite the decline in market sensitive businesses in the second quarter of
2000, first quarter activity achieved record levels contributing to a net
increase in investment fees for the first six months of 2000 compared with a
year ago. Loan and deposit growth was primarily responsible for the

12
<PAGE>

$16 million increase in net interest income. The increase in expenses reflected
goodwill amortization and the added expense base of the acquired entities.

Corporate

Corporate strives to be the preferred provider of services to targeted corporate
clients through comprehensive relationship management. To achieve this goal, it
works to know its customers better than the competition; anticipate customer
needs and provide innovative solutions; align products, services and delivery
channels with customer needs; and serve customers through insightful, trusted
professionals.

Products and Services. Corporate provides a comprehensive array of capital
solutions, strategic consulting, and risk management services to public and
private companies primarily in the Southeast, but also on a national and global
level. Corporate is a leading provider of treasury consulting and cash
management solutions, and its Treasury Services group consistently is cited for
superior quality of service, technology and operations performance. The
acquisition of IJL strengthened Wachovia's capabilities as a provider of capital
and financial advisory services by doubling the number of investment banking
professionals; adding equity research, sales and trading; and expanding its
fixed income distribution capacity. The acquisition of IJL also resulted in the
formation of Wachovia Securities, Inc. (WSI), a subsidiary that has full powers
to underwrite and deal in all types of corporate debt and equities. WSI is a
member of the NYSE, regional exchanges and the NASD, publishes equity research
on an expanding list of approximately 150 companies, and makes a market in more
than 180 stocks.

Industry Dynamics and Strategy. In a highly competitive environment, Corporate
maintains a strong market position in the Southeast and a top ten share in the
U.S. large corporate market. Client attitudes and behaviors, as well as rapid
changes in technology and communications continue to transform the marketplace.
To achieve continued success in this environment, Corporate segments the market
to best align its sales approach, service model and product development
priorities with customer requirements, segment profitability and growth
potential. As a result, the traditional market-based segmentation is augmented
with needs-based segmentation where specialization is more appropriate. Examples
of Wachovia's segment specialization include Commercial Real Estate, the
Emerging Growth and Technology Group, the Communications Group, Leveraged
Finance, Dealer Financial Services, Aircraft Finance, Government Contract
Finance and Financial Institutions.

Financial Results. Net interest income increased $13 million or 6 percent
compared with the second quarter of 1999. Average loans outstanding increased 11
percent over the prior year second quarter, while loan spreads tightened. The
loan loss provision increased by $215 million, consistent with the loan loss
charge recorded in the second quarter. Other income rose 6 percent, driven by
gains in letter of credit fees and Treasury Services revenues. Noninterest
expense was up 7 percent due primarily to increased expenditures on technology
initiatives.

Year to date, net interest income increased $39 million or 9 percent over the
same period in 1999, reflecting 12 percent growth in average loans, offset
partially by loan spread compression. The loan loss provision increased by $225
million, driven by the reasons discussed in more detail in the Allowance for
Loan Losses section beginning on page 23. Other income grew by 13 percent,
reflecting the inclusion of the former IJL Capital Markets business activity for
the full six months in 2000, in addition to stronger Treasury Services results.
Noninterest expense increased 14 percent, due to the addition of the former IJL
business units, as well as higher technology spending. Excluding the impact of
the 1999 IJL acquisition, other income rose 6 percent year to date, while other
expense rose 7 percent.

Credit Card

Credit Card's mission is to be the preferred credit card issuer, offering the
best value on a combined rate and fee package while providing excellent customer
service.

13
<PAGE>

Products and Services. The Credit Card business segment is a full-service
provider of consumer and business credit cards and merchant acquirer services.
Credit Card manages most components of credit card processing in-house, with the
exception of servicing business card products and the Partners First portfolio
that are processed through outside vendors. Currently, 92 percent of Wachovia's
credit card portfolio accrues interest at a variable rate and 34 percent of the
accounts are within Wachovia's five state geographic footprint.

Industry Dynamics and Strategy. The credit card industry is in a period of
intense competition and consolidation. Leading providers are leveraging
technology to build scale and operating efficiencies. Credit Card's strategy
focuses on serving above-average credit quality customers whom carry
higher-than-average loan balances while maintaining an efficient and
cost-effective process.

Financial Results. Comparison between periods for Credit Card was significantly
affected by the acquisition of the Partners First credit card portfolio on
February 1, 2000. The acquisition of Partners First added approximately $2
billion in managed receivables, increasing the total by more than 30 percent.
The Partners First receivables have a higher charge off rate and higher yield
than the rest of the portfolio. Quarterly pretax profit was flat from the amount
reported for the second quarter of 1999. Net interest income grew 28 percent,
primarily due to the Partners First acquisition. This was partially offset by
compressed spreads resulting from rising interest rates and the lag effect of
repricing accounts, as well as lower late fees. The loan loss provision
increased 37 percent, primarily as a result of the acquisition offset by
improved losses on the original Wachovia portfolio. Excluding the Partners First
portfolio, the loan loss ratio was 4.03 percent of average loans. Noninterest
income increased 31 percent largely due to the acquisition and higher overlimit
fees. Total expenses increased by 43 percent due to the acquisition.

Year to date, pretax profit increased 7 percent. The acquisition of the Partners
First portfolio was the cause for the 21 percent increase in net interest
income, which was partially offset by lower spreads resulting from rising
interest rates and the lag effect of repricing accounts. Lower late fees also
offset some of the increase resulting from acquisitions. The increase in the
loan loss provision was due to the acquisition as the charge off rate on the
original Wachovia portfolio improved from a year ago. Excluding the Partners
First portfolio, the loan loss ratio was 4.08 percent. Noninterest income grew
36 percent mainly due to the acquisition; strong interchange income from
increased purchase volume and higher overlimit fees. Total expenses rose by 35
percent primarily due to the acquisition.

Consumer

Consumer develops customer relationships for the greatest lifetime value,
manages the cost of the sales and service network and pursues opportunities to
attract and serve customers through digital channels. It targets consumers,
worksite groups and small businesses throughout the Southeast, offering a broad
array of competitively priced products and services. Consumer's importance to
the entire Wachovia enterprise cannot be measured entirely by its profit
contribution because its customer base and the impact of its branch network are
fundamental to the success of Wachovia's business segments.

Products and Services. Consumer provides the more traditional retail banking
services, including mortgage lending, deposit products and consumer loans, as
well as services for the small business market. It also offers access to
investment and insurance products. Delivery channels include 700 traditional and
in-store branches and worksite centers, 1,377 ATMs and 31 kiosks, supported by
four automated phone centers. Wachovia is the ninth largest Visa check card
issuer and has enjoyed the growing consumer acceptance of this electronic
capability. Campus Card programs provide card-based banking access at 10
university campuses, and Wachovia At Work serves employees of more than 4,200
companies.

The Internet is growing in importance as a forum for financial services. Three
hundred seventy-five thousand of Wachovia's demand deposit customers are
enrolled in Internet banking, up from 226 thousand at year-end and 113 thousand
the prior year. Wachovia's Internet site, www.wachovia.com, serves as a
financial portal with full transaction capability and relevant financial news.

14
<PAGE>

Industry Dynamics and Strategy. Consumer serves more than 3.8 million consumers
and approximately 180,000 small business customers. A majority of Wachovia's
deposits are in large, high-growth metropolitan areas. Consumer's strategy is to
assess customer potential, identify their financial needs and achieve alignment
between their needs, service expectations and price. Specific initiatives to
implement this strategy include: SELECTIVE GEOGRAPHIC EXPANSION. Wachovia
continues to evaluate merger and branching opportunities in high-growth areas.
During the first quarter of 2000, Wachovia completed the acquisition of Bank of
Canton in the suburban Atlanta area. Wachovia completed the acquisition of the
National Bank of Commerce in Winter Park, Florida in early June. PROFITABLE
RELATIONSHIP OPTIMIZATION (PRO). Desktop technology connects to data warehouses
that analyze customer information and anticipate the next likely desired
service. This technology is combined with solution-selling skills by Personal
Financial Advisors, small business, and branch bankers to serve more than
400,000 high-potential customers. WACHOVIA AT WORK AND CAMPUS BANKING PROGRAMS.
These strategies involve deploying Wachovia products and services through
employers and universities to provide access to employees and students. MARKET
NETWORK STRATEGY. Network optimization models provide an analytical framework to
reduce branch network expenses, while at the same time maximizing customer
points of presence. In May, Wachovia announced agreements to sell 15 branches in
Virginia and 4 in North Carolina. SEAMLESS CUSTOMER SERVICE. During the second
quarter, Wachovia On-Call, Consumer's automated phone center group, implemented
new technology to enhance customer service, reduce cost and provide the
foundation for network-based call processing.

eBusiness activities at Wachovia are enterprise wide. Advances in technology are
rapidly transforming the financial services industry. The eBusiness Division
provides eBusiness strategic planning, leadership and operational management.
Business units sponsor specific Internet initiatives to meet the dynamic demands
of their customer groups. This collaborative structure maximizes the leverage
from technology and research with the necessary responsiveness to customer
requirements and deliverables. Wachovia's eBusiness strategy is to develop a
personalized and seamlessly delivered customer experience when using
www.wachovia.com and to augment the site with relevant financial data. Value is
created by aligning customer acquisition, retention, cross-selling and cost
reduction throughout all customer segment and delivery channels.

Financial Results. Consumer's pretax profit increased 23 percent from the same
quarter last year. Net interest income increased 9 percent to $229 million,
driven by higher loans and net deposits and rising interest rates. Other income
increased 6 percent to $110 million, primarily due to deposit account fee
growth. Electronic banking revenues grew 17 percent, mostly in ATM, check card
and interchange revenues. Mortgage fees decreased 30 percent, as sales declined
and the mix shifted to adjustable-rate mortgages from fixed-rate mortgages which
are sold in the secondary market. Total expenses increased 2.6 percent due to
the investment in Wachovia's Internet site to support retail and the additions
of Bank of Canton and National Bank of Commerce.

Six-month pretax profit of $186 million increased 15 percent over the first half
of 1999. Strong results from the branch-based consumer business offset a
difficult mortgage lending environment and investments in Wachovia's retail
delivery through the Internet. Results included five months of Bank of Canton
and one month of National Bank of Commerce. Net interest income increased 6
percent on good loan and deposit growth and higher interest rates. Loan growth
was solid in the Bankline and Equity Bankline categories. Savings certificates
was the highest growth category in deposits as a result of the acquired banks
and special marketing promotions. Other income was up 5 percent driven by
healthy deposit account and electronic banking fee growth. Electronic banking
revenues grew 21 percent due to rising ATM, debit card volumes and interchange
revenues. Mortgage fees declined 39 percent on lower volume and a continued
shift from fixed rate to adjustable-rate mortgages. Expenses grew 3 percent, as
a result of the addition of the Bank of Canton and investment in the Internet
site to support retail customers.

Treasury & Administration

The Treasury & Administration segment principally reflects asset and liability
management for interest rate risk, management of the securities portfolio,
internal compensation for funding sources and charges for funds used. Also
reflected is the funding

15
<PAGE>

impact and the gain on the sale of credit card securitized loans, since the
Credit Card business segment is reported on a managed basis. Other unallocated
corporate costs and certain nonrecurring expenses are also included.

Financial Results. The credit card securitization transactions that occurred
during March and September 1999 and the securitized portion of the acquired
Partners First credit card portfolio impacted comparability to prior year
results. Average securitized loans outstanding during these periods increased
approximately 29 percent on a quarterly basis and 25 percent on a year to date
basis. Quarterly pretax profit increased $18 million to $100 million in the
second quarter of 2000 from 1999. The net interest income was down $49 million
principally as a result of the impact of the credit card securitized portfolios.
Similarly, the loan loss provision declined $44 million, with $37 million
related to the securitized portfolios. Other income rose $9 million, principally
as a result of the processing revenue for servicing the securitized credit card
portfolios. Other expense decreased $14 million due to lower software
development and operational expenses related in part to enterprise wide projects
such as Year 2000 preparations.

Year-to-date pretax profit declined $5 million to $145 million from $150 million
in 1999. As a result of the credit card securitized portfolios, net interest
income and loan loss provision declined $102 million and $79 million,
respectively. Other income rose $17 million, with credit card processing revenue
up $22 million and credit card income down $9 million, both due to the
securitized portfolios. Other expense decreased $1 million caused by lower
software development and operational expenses, including $11 million associated
with expenses incurred in 1999 to prepare for the Year 2000 event, offset by
lower nonrecurring integration and litigation settlement charges of $29 million.

16
<PAGE>
TAXABLE EQUIVALENT RATE/VOLUME ANALYSIS -- SECOND QUARTER* TABLE 7
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE VOLUME AVERAGE RATE
--------------------- -------------------
2000 1999 2000 1999
------- ------- ------- ----
(MILLIONS) INTEREST INCOME
<S> <C> <C> <C> <C>
Loans:
$17,570 $15,976 8.50 6.91 Commercial ...............................
673 832 9.30 9.07 Tax-exempt ...............................
-------- --------
18,243 16,808 8.53 7.02 Total commercial .....................
1,236 1,072 8.84 8.60 Direct retail ............................
3,906 3,371 8.11 7.92 Indirect retail ..........................
4,741 4,932 14.21 13.37 Credit card ..............................
741 572 11.54 10.79 Other revolving credit ...................
-------- --------
10,624 9,947 11.16 10.86 Total retail .........................
2,797 2,149 9.96 8.16 Construction .............................
8,206 7,200 8.48 7.95 Commercial mortgages .....................
8,272 7,311 8.00 7.81 Residential mortgages ....................
-------- --------
19,275 16,660 8.49 7.91 Total real estate ....................
2,694 2,265 9.08 11.79 Lease financing ..........................
1,297 1,332 7.64 6.32 Foreign ..................................
-------- --------
52,133 47,012 9.06 8.36 Total loans ..........................
Securities:
Held-to-maturity:
452 614 6.04 6.21 U.S. Government and agency .............
400 510 8.13 8.12 Mortgage-backed ........................
214 159 9.52 9.99 State and municipal ....................
32 62 6.96 6.99 Other ..................................
-------- --------
1,098 1,345 7.51 7.41 Total held-to-maturity ...............
Available-for-sale:**
2,867 3,573 6.87 6.57 U.S. Government and agency .............
3,756 4,181 6.52 6.32 Mortgage-backed ........................
686 565 6.65 6.60 Other ..................................
-------- --------
7,309 8,319 6.67 6.44 Total available-for-sale .............
-------- --------
8,407 9,664 6.78 6.58 Total securities .....................
108 83 5.23 6.70 Interest-bearing bank balances .............
Federal funds sold and securities
444 707 6.16 4.78 purchased under resale agreements ........
689 798 6.43 4.07 Trading account assets .....................
-------- --------
$61,781 $58,264 8.69 7.96 Total interest-earning assets ........
======== ========
INTEREST EXPENSE
$ 4,793 $ 4,691 1.46 1.20 Interest-bearing demand ....................
13,305 13,424 4.20 3.48 Savings and money market savings ...........
9,243 8,746 5.59 5.09 Savings certificates .......................
4,198 3,394 5.92 5.08 Large denomination certificates ............
-------- --------
Total interest-bearing deposits in
31,539 30,255 4.42 3.77 domestic offices ..................
Interest-bearing deposits in foreign
4,124 2,088 6.08 4.62 offices ..................................
-------- --------
35,663 32,343 4.61 3.82 Total interest-bearing deposits ......
Federal funds purchased and securities
5,597 6,155 5.95 4.47 sold under repurchase agreements .........
1,627 1,452 5.88 4.48 Commercial paper ...........................
1,397 2,022 7.37 5.46 Other short-term borrowed funds ............
-------- --------
8,621 9,629 6.17 4.68 Total short-term borrowed funds.......
2,106 2,544 6.30 5.43 Bank notes .................................
6,745 5,454 6.64 5.47 Other long-term debt .......................
-------- --------
8,851 7,998 6.56 5.46 Total long-term debt .................
-------- --------
$53,135 $49,970 5.19 4.25 Total interest-bearing liabilities ...
======== ======== -------- -----
3.50 3.71 Interest rate spread
======== =====
Net yield on interest-earning assets and
4.22 4.31 net interest income ......................
======== =====

<CAPTION>
VARIANCE
INTEREST ATTRIBUTABLE TO
-------------------------- --------------------------
2000 1999 VARIANCE RATE VOLUME
--------- ------------ ------------ ---------- --------
INTEREST INCOME (THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loans:
Commercial ............................... $ 371,154 $ 275,364 $ 95,790 $ 66,695 $ 29,095
Tax-exempt ............................... 15,545 18,813 (3,268) 462 (3,730)
------------ ------------ -------------
Total commercial ..................... 386,699 294,177 92,522 66,171 26,351
Direct retail ............................ 27,162 22,970 4,192 640 3,552
Indirect retail .......................... 78,756 66,579 12,177 1,578 10,599
Credit card .............................. 167,493 164,369 3,124 9,828 (6,704)
Other revolving credit ................... 21,264 15,387 5,877 1,125 4,752
------------ ------------ -------------
Total retail ......................... 294,675 269,305 25,370 7,246 18,124
Construction ............................. 69,244 43,702 25,542 10,795 14,747
Commercial mortgages ..................... 173,096 142,724 30,372 9,855 20,517
Residential mortgages .................... 164,611 142,330 22,281 3,557 18,724
------------ ------------ -------------
Total real estate .................... 406,951 328,756 78,195 24,792 53,403
Lease financing .......................... 60,794 66,606 (5,812) (17,038) 11,226
Foreign .................................. 24,636 21,007 3,629 4,197 (568)
------------ ------------ -------------
Total loans .......................... 1,173,755 979,851 193,904 83,944 109,960
Securities:
Held-to-maturity:
U.S. Government and agency ............. 6,777 9,493 (2,716) (256) (2,460)
Mortgage-backed ........................ 8,092 10,320 (2,228) 19 (2,247)
State and municipal .................... 5,067 3,962 1,105 (198) 1,303
Other .................................. 554 1,073 (519) (4) (515)
------------ ------------ -------------
Total held-to-maturity ............... 20,490 24,848 (4,358) 298 (4,656)
Available-for-sale:**
U.S. Government and agency ............. 48,965 58,525 (9,560) 2,549 (12,109)
Mortgage-backed ........................ 60,895 65,861 (4,966) 2,026 (6,992)
Other .................................. 11,339 9,285 2,054 72 1,982
------------ ------------ -------------
Total available-for-sale ............. 121,199 133,671 (12,472) 4,462 (16,934)
------------ ------------ -------------
Total securities ..................... 141,689 158,519 (16,830) 4,605 (21,435)
Interest-bearing bank balances ............. 1,400 1,391 9 (346) 355
Federal funds sold and securities 6,796 8,429 (1,633) 2,029 (3,662)
purchased under resale agreements ........
Trading account assets ..................... 11,025 8,107 2,918 4,152 (1,234)
------------ ------------ -------------
Total interest-earning assets ........ 1,334,665 1,156,297 178,368 107,481 70,887

INTEREST EXPENSE
Interest-bearing demand .................... 17,379 13,991 3,388 3,080 308
Savings and money market savings ........... 139,095 116,476 22,619 23,677 (1,058)
Savings certificates ....................... 128,528 110,926 17,602 11,193 6,409
Large denomination certificates ............ 61,816 42,992 18,824 7,744 11,080
------------ ------------ -------------
Total interest-bearing deposits in
domestic offices .................. 346,818 284,385 62,433 50,130 12,303
Interest-bearing deposits in foreign
offices .................................. 62,308 24,039 38,269 9,368 28,901
------------ ------------ -------------
Total interest-bearing deposits ...... 409,126 308,424 100,702 67,239 33,463
Federal funds purchased and securities 82,804 68,530 14,274 20,983 (6,709)
sold under repurchase agreements .........
Commercial paper ........................... 23,783 16,234 7,549 5,443 2,106
Other short-term borrowed funds ............ 25,619 27,537 (1,918) 8,006 (9,924)
------------ ------------ -------------
Total short-term borrowed funds....... 132,206 112,301 19,905 32,669 (12,764)
Bank notes ................................. 32,962 34,467 (1,505) 4,986 (6,491)
Other long-term debt ....................... 111,435 74,410 37,025 17,587 19,438
------------ ------------ -------------
Total long-term debt ................. 144,397 108,877 35,520 23,254 12,266
------------ ------------ -------------
Total interest-bearing liabilities ... 685,729 529,602 156,127 121,351 34,776
------------ ------------ -------------
Interest rate spread

Net yield on interest-earning assets and
net interest income ...................... $ 648,936 $ 626,695 $ 22,241 (13,681) 35,922
============ ============ =============
</TABLE>
* Interest income and yields are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable, reduced
by the nondeductible portion of interest expense. Any variance attributable
jointly to volume and rate changes is allocated to the volume and rate in
proportion to the relationship of the absolute dollar amount of the change in
each.
** Volume amounts are reported at amortized cost; excludes pretax unrealized
losses of $159 million in 2000 and pretax unrealized gains of $68 million in
1999.
17
<PAGE>
TAXABLE EQUIVALENT RATE/VOLUME ANALYSIS -- SIX MONTHS* TABLE 8
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE VOLUME AVERAGE RATE
--------------------- -------------------
2000 1999 2000 1999
------- ------- ------- --------
(MILLIONS) INTEREST INCOME
<S> <C> <C> <C> <C>
Loans:
$17,393 $15,418 8.28 6.94 Commercial ...............................
673 881 9.29 9.18 Tax-exempt ...............................
-------- --------
18,066 16,299 8.32 7.06 Total commercial .....................
1,172 1,072 8.77 8.75 Direct retail ............................
3,855 3,340 8.00 7.94 Indirect retail ..........................
4,813 5,389 13.80 13.31 Credit card ..............................
716 559 11.42 10.87 Other revolving credit ...................
-------- --------
10,556 10,360 10.96 10.98 Total retail .........................
2,626 2,121 9.45 8.36 Construction .............................
8,100 7,127 8.40 8.01 Commercial mortgages .....................
8,066 7,324 7.91 7.82 Residential mortgages ....................
-------- --------
18,792 16,572 8.34 7.97 Total real estate ....................
2,650 2,104 9.32 11.95 Lease financing ..........................
1,278 1,303 7.50 6.32 Foreign ..................................
-------- --------
51,342 46,638 8.90 8.45 Total loans ..........................
Securities:
Held-to-maturity:
444 592 6.36 6.21 U.S. Government and agency .............
404 543 8.07 8.28 Mortgage-backed ........................
211 163 9.51 9.86 State and municipal ....................
37 67 6.59 6.85 Other ..................................
-------- --------
1,096 1,365 7.60 7.50 Total held-to-maturity ...............
Available-for-sale:**
2,876 3,374 6.53 6.50 U.S. Government and agency .............
3,762 4,134 6.50 6.39 Mortgage-backed ........................
667 571 6.67 7.04 Other ..................................
-------- --------
7,305 8,079 6.53 6.48 Total available-for-sale .............
-------- --------
Total securities .....................
8,401 9,444 6.67 6.63 Interest-bearing bank balances .............
103 107 5.74 6.78 Federal funds sold and securities
484 595 5.93 4.82 purchased under resale agreements ........
656 749 6.55 3.70 Trading account assets .....................
-------- --------
$60,986 $57,533 8.54 8.05 Total interest-earning assets ........
======== ========
INTEREST EXPENSE
$ 4,774 $ 4,678 1.48 1.15 Interest-bearing demand ....................
13,334 13,158 4.08 3.53 Savings and money market savings ...........
9,104 8,796 5.44 5.14 Savings certificates .......................
4,112 3,385 5.77 5.17 Large denomination certificates ............
-------- --------
Total interest-bearing deposits in
31,324 30,017 4.30 3.81 domestic offices ..................
Interest-bearing deposits in foreign
3,944 2,078 5.82 4.65 offices ..................................
-------- --------
35,268 32,095 4.47 3.87 Total interest-bearing deposits ........
Federal funds purchased and securities
5,721 6,087 5.63 4.41 sold under repurchase agreements .........
1,633 1,436 5.64 4.48 Commercial paper ...........................
1,417 1,938 7.04 5.26 Other short-term borrowed funds ............
-------- --------
8,771 9,461 5.86 4.59 Total short-term borrowed funds.......
2,088 2,646 6.24 5.57 Bank notes .................................
6,378 5,168 6.54 5.76 Other long-term debt .......................
-------- --------
8,466 7,814 6.46 5.69 Total long-term debt .................
-------- --------
$52,505 $49,370 5.02 4.30 Total interest-bearing liabilities ...
======== ======== -------- -----
3.52 3.75 Interest rate spread
======== =====
Net yield on interest-earning assets and
4.21 4.36 net interest income ......................
======== =====

<CAPTION>
VARIANCE
INTEREST ATTRIBUTABLE TO
------------------------- ---------------------
2000 1999 VARIANCE RATE VOLUME
---------- ----------- ----------- -------- --------
INTEREST INCOME (THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loans:
Commercial ............................... $ 716,050 $ 530,319 $ 185,731 $ 111,777 $ 73,954
Tax-exempt ............................... 31,104 40,141 (9,037) 485 (9,522)
----------- ----------- -------------
Total commercial ..................... 747,154 570,460 176,694 109,924 66,770
Direct retail ............................ 51,131 46,523 4,608 117 4,491
Indirect retail .......................... 153,382 131,561 21,821 1,011 20,810
Credit card .............................. 330,305 355,703 (25,398) 12,945 (38,343)
Other revolving credit ................... 40,676 30,134 10,542 1,633 8,909
----------- ----------- -------------
Total retail ......................... 575,494 563,921 11,573 (573) 12,146
Construction ............................. 123,400 87,891 35,509 12,581 22,928
Commercial mortgages ..................... 338,324 283,046 55,278 14,572 40,706
Residential mortgages .................... 317,391 284,007 33,384 3,506 29,878
----------- ----------- -------------
Total real estate .................... 779,115 654,944 124,171 31,808 92,363
Lease financing .......................... 122,731 124,679 (1,948) (30,605) 28,657
Foreign .................................. 47,685 40,858 6,827 7,599 (772)
----------- ----------- -------------
Total loans .......................... 2,272,179 1,954,862 317,317 109,210 208,107
Securities:
Held-to-maturity:
U.S. Government and agency ............. 14,024 18,238 (4,214) 418 (4,632)
Mortgage-backed ........................ 16,211 22,285 (6,074) (535) (5,539)
State and municipal .................... 9,986 7,986 2,000 (296) 2,296
Other .................................. 1,222 2,270 (1,048) (83) (965)
----------- ----------- -------------
Total held-to-maturity ............... 41,443 50,779 (9,336) 690 (10,026)
Available-for-sale:**
U.S. Government and agency ............. 93,312 108,739 (15,427) 459 (15,886)
Mortgage-backed ........................ 121,674 130,965 (9,291) 2,372 (11,663)
Other .................................. 22,122 19,915 2,207 (1,080) 3,287
----------- ----------- -------------
Total available-for-sale ............. 237,108 259,619 (22,511) 1,901 (24,412)
----------- ----------- -------------
Total securities ..................... 278,551 310,398 (31,847) 1,878 (33,725)
Interest-bearing bank balances ............. 2,923 3,584 (661) (526) (135)
Federal funds sold and securities
purchased under resale agreements ........ 14,288 14,231 57 2,970 (2,913)
Trading account assets ..................... 21,382 13,760 7,622 9,502 (1,880)
----------- ----------- -------------
Total interest-earning assets ........ 2,589,323 2,296,835 292,488 146,931 145,557

INTEREST EXPENSE
Interest-bearing demand .................... 35,225 26,716 8,509 7,943 566
Savings and money market savings ........... 270,226 230,023 40,203 37,030 3,173
Savings certificates ....................... 246,265 224,375 21,890 13,581 8,309
Large denomination certificates ............ 117,960 86,718 31,242 11,019 20,223
----------- ----------- -------------
Total interest-bearing deposits in
domestic offices .................. 669,676 567,832 101,844 75,841 26,003
Interest-bearing deposits in foreign
offices .................................. 114,230 47,959 66,271 14,515 51,756
----------- ----------- -------------
Total interest-bearing deposits ...... 783,906 615,791 168,115 102,721 65,394
Federal funds purchased and securities 160,099 132,994 27,105 35,410 (8,305)
sold under repurchase agreements .........
Commercial paper ........................... 45,799 31,915 13,884 9,081 4,803
Other short-term borrowed funds ............ 49,625 50,562 (937) 14,637 (15,574)
----------- ----------- -------------
Total short-term borrowed funds....... 255,523 215,471 40,052 56,533 (16,481)
Bank notes ................................. 64,831 73,054 (8,223) 8,259 (16,482)
Other long-term debt ....................... 207,330 147,596 59,734 21,857 37,877
----------- ----------- -------------
Total long-term debt ................. 272,161 220,650 51,511 31,873 19,638
----------- ----------- -------------
Total interest-bearing liabilities ... 1,311,590 1,051,912 259,678 188,829 70,849
----------- ----------- -------------
Interest rate spread

Net yield on interest-earning assets and
net interest income ...................... $1,277,733 $1,244,923 $ 32,810 (42,511) 75,321
=========== =========== =============
</TABLE>

* Interest income and yields are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable, reduced
by the nondeductible portion of interest expense. Any variance attributable
jointly to volume and rate changes is allocated to the volume and rate in
proportion to the relationship of the absolute dollar amount of the change in
each.
** Volume amounts are reported at amortized cost; excludes pretax unrealized
losses of $154 million in 2000 and unrealized gains of $93 million in 1999.

18
<PAGE>

CONSOLIDATED FINANCIAL RESULTS

NET INTEREST INCOME

Wachovia's taxable equivalent net interest income rose $22 million or 3.5
percent from the second quarter of 1999 to $649 million. Year-to-date net
interest income increased $33 million from the same period a year ago. During
the second quarter, the Federal Reserve continued to take action to slow the
economy with a 50 basis point rate increase that followed five 25 basis point
increases from July 1999 through the end of the first quarter. Upon each action
by the Federal Reserve, Wachovia raised its prime lending rate to keep pace with
the rise in funding costs. For second quarter 2000, Wachovia's average prime
lending rate and the average federal funds rate were 9.25 percent and 6.27
percent, respectively, compared with 7.75 percent and 4.75 percent,
respectively, a year ago.

Wachovia's net yield on interest-earning assets was 4.22 percent compared with
4.31 percent reported for the second quarter of 1999. For the six-month period,
the net yield on interest-earning assets was 4.21 percent compared with 4.36
percent a year ago. Loan growth continued to outpace growth in core deposits
leading to greater use of wholesale sources to fund loan demand. Although this
contributed positively to net interest income, it had a slightly dilutive effect
on the net yield on interest-earning assets. Competitive pressures, primarily in
the consumer and real estate loan categories, kept pricing for new loans from
including the full impact of the Federal Reserve's rate increases. Most of the
new loan growth occurred in these two categories.

MANAGED CREDIT CARD DATA TABLE 9
--------------------------------------------------------------------------------
$ IN THOUSANDS

2000 1999
---------------------------- ------------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
----------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Average credit card loans ............ $ 8,135,853 $ 7,771,010 $ 6,397,350 $ 6,343,811 $ 6,327,848
Period-end loans ..................... 8,085,573 8,256,409 6,632,439 6,371,927 6,340,473
Net loan losses ...................... 100,207 87,040 57,720 59,261 70,563
Annualized net loan losses to
average loans ....................... 4.93% 4.48% 3.61% 3.74% 4.46%
Delinquencies (30 days or more) to
period-end loans .................... 3.74% 3.72% 3.22% 3.35% 2.79%

<CAPTION>
Six Months Ended
June 30
-----------------------------
2000 1999
------------- -------------
<S> <C> <C>
Average credit card loans ............ $ 7,953,430 $ 6,378,839
Period-end loans ..................... 8,085,573 6,340,473
Net loan losses ...................... 187,247 140,195
Annualized net loan losses to
average loans ....................... 4.71% 4.40%
Delinquencies (30 days or more) to
period-end loans .................... 3.74% 2.79%
</TABLE>

The average yield on interest-earning assets increased 73 basis points from the
second quarter of 1999 and 49 basis points, comparing year-to-date results. The
rise in rates resulted in higher yields in all loan categories. Strong demand
for Wachovia's new prime rate home equity product has tempered the rise in
yields in the residential real estate portfolio as that product has a lower rate
than the existing portfolio. Changes in portfolio mix resulting from credit card
securitization transactions completed during 1999 subdued retail loan yields in
2000. The effect of the securitizations was most evident in comparing
year-to-date yields to 1999 as the Series 1999-1 transaction, representing $896
million in receivables, occurred late in the first quarter of 1999. The Series
1999-2 transaction occurred in late third quarter 1999.

The average rate paid on interest-bearing liabilities increased by 94 basis
points from the second quarter of 1999 and 72 basis points year-to-date from
1999. Comparisons with prior year reflect the rising rate environment that began
with the Federal Reserve's actions to slow the economy in early third quarter
1999. Liability mix, although to a much more limited extent, contributed to the
increase in the rate on interest bearing liabilities as most of the growth in
the balance sheet was funded from wholesale sources. Interest-bearing core
deposit funding increased $480 million and $580 million, respectively, compared
to the second quarter and the first six months of 1999. The acquisitions of Bank
of Canton and National Bank of Commerce and the 1999 third quarter sale of
branches all affected growth in core deposits.

For the remainder of the year, management expects the net yield on
interest-earning assets to decline moderately from the rate reported in the
second quarter. Net interest income is anticipated to grow at a more modest rate
for the remainder of the year.

19
<PAGE>
NET INTEREST INCOME AND AVERAGE BALANCES TABLE 10
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TWELVE
MONTHS 2000
ENDED ---------------------------
JUNE 30 SECOND FIRST
2000 QUARTER QUARTER
----------- ---------- ----------
NET INTEREST INCOME --
TAXABLE EQUIVALENT
(thousands)
<S> <C> <C> <C>
Interest income: .........................
Loans -- including fees ................. $4,339,379 $ 1,173,755 $ 1,098,424
Securities .............................. 583,152 141,689 136,862
Interest-bearing bank balances .......... 6,729 1,400 1,523
Federal funds sold and securities
purchased under resale
agreements ............................. 30,753 6,796 7,492
Trading account assets .................. 39,781 11,025 10,357
----------- ------------- -----------
Total ................................. 4,999,794 1,334,665 1,254,658
Interest expense:
Interest-bearing demand ................. 66,943 17,379 17,846
Savings and money market
savings ................................ 517,760 139,095 131,131
Savings certificates .................... 469,473 128,528 117,737
Large denomination certificates ......... 203,781 61,816 56,144
Interest-bearing deposits in foreign
offices ................................ 175,353 62,308 51,922
Short-term borrowed funds ............... 497,213 132,206 123,317
Long-term debt .......................... 525,889 144,397 127,764
----------- ------------- -----------
Total ................................. 2,456,412 685,729 625,861
----------- ------------- -----------
Net interest income ...................... $2,543,382 $ 648,936 $ 628,797
=========== ============= ===========
Annualized net yield on interest-
earning assets .......................... 4.25% 4.22% 4.20%
AVERAGE BALANCES
(millions)
Assets:
Loans -- net of unearned income.......... $ 49,560 $ 52,133 $ 50,550
Securities .............................. 8,822 8,407 8,395
Interest-bearing bank balances .......... 116 108 97
Federal funds sold and securities
purchased under resale
agreements ............................. 550 444 525
Trading account assets .................. 783 689 623
----------- ------------- -----------
Total interest-earning assets ......... 59,831 61,781 60,190
Cash and due from banks ................. 3,087 2,946 2,981
Premises and equipment .................. 948 931 945
Other assets ............................ 4,049 4,565 4,355
Unrealized gains (losses) on
securities available-for-sale .......... (104) (159) (149)
Allowance for loan losses ............... (564) (598) (567)
----------- ------------- -----------
Total assets .......................... $ 67,247 $ 69,466 $ 67,755
=========== ============= ===========
Liabilities and shareholders' equity:
Interest-bearing demand ................. $ 4,704 $ 4,793 $ 4,755
Savings and money market
savings ................................ 13,427 13,305 13,363
Savings certificates .................... 8,919 9,243 8,966
Large denomination certificates ......... 3,679 4,198 4,025
Interest-bearing deposits in foreign
offices ................................ 3,174 4,124 3,764
Short-term borrowed funds ............... 9,058 8,621 8,920
Long-term debt .......................... 8,457 8,851 8,081
----------- ------------- -----------
Total interest-bearing
liabilities .......................... 51,418 53,135 51,874
Demand deposits ......................... 8,347 8,373 8,319
Other liabilities ....................... 1,866 2,125 1,874
Shareholders' equity .................... 5,616 5,833 5,688
----------- ------------- -----------
Total liabilities and
shareholders' equity ................. $ 67,247 $ 69,466 $ 67,755
=========== ============= ===========
Total deposits ........................... $ 42,250 $ 44,036 $ 43,192

<CAPTION>
1999 SIX MONTHS ENDED
------------------------------------------- JUNE 30
FOURTH THIRD SECOND ----------------------------
QUARTER QUARTER QUARTER 2000 1999
---------- --------- ---------- ----------- -----------
NET INTEREST INCOME --
TAXABLE EQUIVALENT
(thousands)
<S> <C> <C> <C> <C> <C>
Interest income: ..........................
Loans -- including fees .................. $ 1,062,662 $ 1,004,538 $ 979,851 $ 2,272,179 $ 1,954,862
Securities ............................... 150,305 154,296 158,519 278,551 310,398
Interest-bearing bank balances ........... 2,175 1,631 1,391 2,923 3,584
Federal funds sold and securities
purchased under resale
agreements .............................. 9,403 7,062 8,429 14,288 14,231
Trading account assets ................... 11,064 7,335 8,107 21,382 13,760
------------- ----------- ------------ ------------- -----------
Total .................................. 1,235,609 1,174,862 1,156,297 2,589,323 2,296,835
Interest expense:
Interest-bearing demand .................. 16,439 15,279 13,991 35,225 26,716
Savings and money market
savings ................................. 126,428 121,106 116,476 270,226 230,023
Savings certificates ..................... 112,639 110,569 110,926 246,265 224,375
Large denomination certificates .......... 45,867 39,954 42,992 117,960 86,718
Interest-bearing deposits in foreign
offices ................................. 36,393 24,730 24,039 114,230 47,959
Short-term borrowed funds ................ 129,354 112,336 112,301 255,523 215,471
Long-term debt ........................... 129,463 124,265 108,877 272,161 220,650
------------- ----------- ------------ ------------- -----------
Total .................................. 596,583 548,239 529,602 1,311,590 1,051,912
------------- ----------- ------------ ------------- -----------
Net interest income ....................... $ 639,026 $ 626,623 $ 626,695 $ 1,277,733 $ 1,244,923
============= =========== ============ ============= ===========
Annualized net yield on interest-
earning assets ........................... 4.26% 4.29% 4.31% 4.21% 4.36%
AVERAGE BALANCES
(millions)
Assets:
Loans -- net of unearned income........... $ 48,593 $ 47,003 $ 47,012 $ 51,342 $ 46,638
Securities ............................... 9,016 9,461 9,664 8,401 9,444
Interest-bearing bank balances ........... 136 124 83 103 107
Federal funds sold and securities
purchased under resale
agreements .............................. 681 550 707 484 595
Trading account assets ................... 1,027 790 798 656 749
------------- ----------- ------------ ------------- -----------
Total interest-earning assets .......... 59,453 57,928 58,264 60,986 57,533
Cash and due from banks .................. 3,532 2,888 2,975 2,963 3,023
Premises and equipment ................... 955 962 970 938 941
Other assets ............................. 3,653 3,632 3,713 4,460 3,880
Unrealized gains (losses) on
securities available-for-sale ........... (65) (47) 68 (154) 93
Allowance for loan losses ................ (546) (548) (536) (583) (536)
------------- ----------- ------------ ------------- -----------
Total assets ........................... $ 66,982 $ 64,815 $ 65,454 $ 68,610 $ 64,934
============= =========== ============ ============= ===========
Liabilities and shareholders' equity:
Interest-bearing demand .................. $ 4,653 $ 4,617 $ 4,691 $ 4,774 $ 4,678
Savings and money market
savings ................................. 13,470 13,566 13,424 13,334 13,158
Savings certificates ..................... 8,774 8,696 8,746 9,104 8,796
Large denomination certificates .......... 3,428 3,076 3,394 4,112 3,385
Interest-bearing deposits in foreign
offices ................................. 2,782 2,041 2,088 3,944 2,078
Short-term borrowed funds ................ 9,836 8,848 9,629 8,771 9,461
Long-term debt ........................... 8,327 8,571 7,998 8,466 7,814
------------- ----------- ------------ ------------- -----------
Total interest-bearing
liabilities ........................... 51,270 49,415 49,970 52,505 49,370
Demand deposits .......................... 8,326 8,368 8,261 8,346 8,162
Other liabilities ........................ 1,831 1,641 1,764 1,999 2,015
Shareholders' equity ..................... 5,555 5,391 5,459 5,760 5,387
------------- ----------- ------------ ------------- -----------
Total liabilities and
shareholders' equity .................. $ 66,982 $ 64,815 $ 65,454 $ 68,610 $ 64,934
============= =========== ============ ============= ===========
Total deposits ............................ $ 41,433 $ 40,364 $ 40,604 $ 43,614 $ 40,257
</TABLE>

20
<PAGE>
RELATED BALANCE SHEET ANALYSIS

Strong loan growth continued through the second quarter of 2000 predominantly in
the consumer, real estate and commercial categories. Adjusting for acquisitions
and securitization transactions, loan growth was approximately 11 percent year
over year in comparing the second quarter and the first six months. In
comparison with the fourth quarter of 1999, average loan volume, excluding
acquisitions, grew approximately $4 billion. Economic conditions in Wachovia's
five state primary lending area, as well as nationally have been good, but show
evidence of slowing in some sectors. For the remainder of the year, management
expects loan growth to continue but at a somewhat slower rate than the first
half of the year.

PERIOD-END LOANS BY CATEGORY TABLE 11
--------------------------------------------------------------------------------
(THOUSANDS)

<TABLE>
<CAPTION>
JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
2000 2000 1999 1999 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Commercial ..................... $17,823,579 $17,160,717 $17,042,740 $16,166,045 $16,852,028
Tax-exempt ..................... 668,953 673,634 690,053 757,601 796,523
----------- ----------- ----------- ----------- -----------
Total commercial ........... 18,492,532 17,834,351 17,732,793 16,923,646 17,648,551
Direct retail .................. 1,270,661 1,160,287 1,063,619 1,053,909 1,082,526
Indirect retail ................ 3,985,073 3,856,229 3,740,683 3,616,862 3,458,466
Credit card .................... 4,690,595 4,860,455 4,736,485 4,475,973 4,944,519
Other revolving credit ......... 761,049 715,317 667,149 620,342 588,880
----------- ----------- ----------- ----------- -----------
Total retail ............... 10,707,378 10,592,288 10,207,936 9,767,086 10,074,391
Construction ................... 2,960,285 2,577,621 2,311,362 2,235,387 2,233,128
Commercial mortgages ........... 8,423,985 8,164,304 7,754,206 7,550,770 7,289,241
Residential mortgages .......... 8,558,292 7,994,283 7,756,983 7,498,541 7,385,728
----------- ----------- ----------- ----------- -----------
Total real estate .......... 19,942,562 18,736,208 17,822,551 17,284,698 16,908,097
Lease financing ................ 2,701,108 2,696,605 2,597,271 2,453,749 2,346,467
Foreign ........................ 1,308,777 1,265,864 1,260,674 1,195,842 1,450,580
----------- ----------- ----------- ----------- -----------
Total loans ................ $53,152,357 $51,125,316 $49,621,225 $47,625,021 $48,428,086
=========== =========== =========== =========== ===========
</TABLE>
Average balances of securities for the second quarter of 2000 declined in
comparison to both the second and fourth quarters of 1999. During 1999, Wachovia
allowed portfolio attrition to fund a portion of the loan growth. During the
first and second quarter of 2000, maturing securities were replaced to maintain
the portfolio at a relatively constant level.

SECURITIES TABLE 12
--------------------------------------------------------------------------------
JUNE 30, 2000 (THOUSANDS)

<TABLE>
<CAPTION>
Securities available-for-sale at fair value:
<S> <C>
U.S. Government and agency ................ $2,803,489
Mortgage-backed ........................... 3,713,314
Other ..................................... 655,198
----------
Total available-for-sale ............... 7,172,001
Securities held-to-maturity:
U.S. Government and agency ................ 468,695
Mortgage-backed ........................... 382,745
State and municipal ....................... 226,788
Other ..................................... 23,233
----------
Total held-to-maturity ................. 1,101,461
----------
Total securities ....................... $8,273,462
==========
</TABLE>

The increase in other assets from the second and fourth quarters of 1999 was
primarily the result of increased intangible assets resulting from acquisitions.

Exclusive of the effects of acquisitions and branch sales, average
interest-bearing core deposits held steady compared with the second and fourth
quarters of 1999. Bank of Canton and National Bank of Commerce added
approximately $275 million and approximately $30 million, respectively to second
quarter 2000 average balances. Branch sales that occurred in the third quarter
of 1999 reduced average interest bearing core deposits by approximately $115
million. The mix of interest bearing core deposits shifted more to savings
certificates in the second quarter 2000 compared with the same period a year
ago.

21
<PAGE>

Wachovia utilizes a wide variety of wholesale funding sources including large
denomination certificates of deposit, foreign deposits, repurchase agreements,
federal funds, Federal Home Loan Bank advances, bank notes and senior and
subordinated debt to fund the balance sheet. The mix and characteristics of
wholesale funding are determined based on interest rate risk management,
liquidity needs and available pricing. Subordinated debt is used for capital
management purposes since it qualifies for inclusion in Tier II capital for risk
based capital purposes. Several large debt transactions affected comparability
of both period-end and average balances between reported periods. During 1999,
Wachovia issued $1 billion in senior and subordinated debt. On March 31, 2000,
Wachovia issued $300 million in subordinated debt that replaced $300 million in
subordinated debt that matured on December 15, 1999. Wachovia entered into
several funding transactions after the end of the second quarter. On July 6,
2000, Wachovia issued $550 million in senior debt securities followed by $300
million in subordinated securities issued by Wachovia Bank on July 24, 2000. On
August 1, 2000, Wachovia securitized $750 million in credit card receivables.

LIQUIDITY MANAGEMENT

Wachovia manages liquidity at both the parent and subsidiary levels through
active management of the balance sheet. Parent company liquidity comes from
short-term investments that can be sold immediately, the ability to issue debt
and equity securities, and from dividends and interest income from subsidiaries.
At June 30, 2000, Wachovia Corporation had $1.016 billion in interest-bearing
balances with Wachovia Bank, N.A. ("Wachovia Bank"), and $1.6 billion available
for issuance as senior or subordinate debt securities under existing shelf
registrations filed with the Securities and Exchange Commission. At July 1,
2000, $703 million was available from Wachovia Bank to pay dividends to Wachovia
Corporation without prior regulatory approval. As a back-up liquidity facility
for commercial paper, Wachovia has $490 million in lines of credit from
unaffiliated banks. No borrowings have occurred under these lines.

Wachovia Corporation's senior notes are rated Aa3 by Moody's and AA- by Standard
& Poor's, and its subordinated notes are rated A1 by Moody's and A+ by Standard
& Poor's. The subordinated debt securities qualify for inclusion in Tier II
capital under risk-based capital guidelines. Capital securities, also classified
as part of other long-term debt, totaled $997 million at June 30, 2000. The
capital securities are rated aa3 by Moody's and A by Standard & Poor's and
qualify as Tier I capital under risk-based capital guidelines.

Through its global bank note program, Wachovia Bank is authorized to issue up to
$21.557 billion of bank notes. The global bank note program consists of
issuances with original maturities beginning at seven days. Bank notes with
original maturities of one year or less are included in other short-term
borrowed funds, and bank notes with original maturities greater than one year
are considered medium-term in nature and are classified as long-term debt. Under
the existing offering circular, Wachovia Bank can have outstanding up to $10
billion of notes at any one time with original maturities from 7 to 270 days.
Wachovia Bank may issue up to an aggregate of $8 billion of notes with
maturities of more than 270 days. At June 30, 2000, Wachovia Bank had
approximately $6.7 billion of the notes with maturities of more than 270 days
available under the existing authorization. Short-term bank notes outstanding as
of June 30, 2000 were $70 million, with an average cost of 6.20 percent and an
average maturity of less than 1 month. Medium-term bank notes were $2.154
billion on the same date, with an average cost of 6.27 percent and an average
maturity of 4.7 years. Short-term issues under the global bank note program are
rated P-1 by Moody's and A-1+ by Standard & Poor's, while medium-term issues are
rated Aa2 by Moody's and AA by Standard & Poor's.

22
<PAGE>
ALLOWANCE FOR LOAN LOSSES TABLE 13
--------------------------------------------------------------------------------
(THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
----------------------- ------------------------------------
SECOND FIRST FOURTH THIRD SECOND
QUARTER QUARTER QUARTER QUARTER QUARTER
-------- --------- -------- -------- --------
SUMMARY OF TRANSACTIONS
<S> <C> <C> <C> <C> <C>
Balance at beginning of period ................ $ 595,655 $ 554,810 $ 553,894 $ 548,540 $548,302
Additions from acquisitions ................... 3,289 40,504 ---- ---- 39
Provision for loan losses ..................... 273,365 73,666 66,174 76,770 74,525
Deduct net loan losses:
Loans charged off:
Commercial .................................. 14,991 11,280 17,805 15,509 7,592
Credit card ................................. 62,469 62,883 49,478 54,925 69,619
Other revolving credit ...................... 2,219 2,379 1,332 2,305 3,126
Other retail ................................ 8,124 9,875 8,905 8,561 7,888
Real estate ................................. 1,612 1,220 2,632 4,005 1,397
Lease financing ............................. 404 568 908 855 585
Foreign ..................................... ---- ---- ---- ---- ----
----------- --------- ----------- --------- --------
Total ...................................... 89,819 88,205 81,060 86,160 90,207
Recoveries:
Commercial .................................. 583 621 2,400 1,018 1,667
Credit card ................................. 12,096 10,129 8,152 8,967 8,618
Other revolving credit ...................... 641 647 610 774 828
Other retail ................................ 3,018 2,566 2,886 2,674 2,718
Real estate ................................. 402 786 1,627 1,124 1,836
Lease financing ............................. 121 131 127 187 214
Foreign ..................................... ---- ---- ---- ---- ----
----------- --------- ----------- --------- --------
Total ...................................... 16,861 14,880 15,802 14,744 15,881
----------- --------- ----------- --------- --------
Net loan losses .............................. 72,958 73,325 65,258 71,416 74,326
----------- --------- ----------- --------- --------
Balance at end of period ...................... $ 799,351 $ 595,655 $ 554,810 $ 553,894 $548,540
=========== ========= =========== ========= ========
NET LOAN LOSSES (RECOVERIES) BY CATEGORY
Commercial .................................... $ 14,408 $ 10,659 $ 15,405 $ 14,491 $ 5,925
Credit card ................................... 50,373 52,754 41,326 45,958 61,001
Other revolving credit ........................ 1,578 1,732 722 1,531 2,298
Other retail .................................. 5,106 7,309 6,019 5,887 5,170
Real estate ................................... 1,210 434 1,005 2,881 (439)
Lease financing ............................... 283 437 781 668 371
Foreign ....................................... ---- ---- ---- ---- ----
----------- --------- ----------- --------- --------
Total ...................................... $ 72,958 $ 73,325 $ 65,258 $ 71,416 $ 74,326
=========== ========= =========== ========= ========
Net loan losses -- excluding credit cards ..... $ 22,585 $ 20,571 $ 23,932 $ 25,458 $ 13,325
ANNUALIZED NET LOAN LOSSES (RECOVERIES)
TO AVERAGE LOANS BY CATEGORY
Commercial .................................... .32% .24% .35% .36% .14%
Credit card ................................... 4.25 4.32 3.67 3.76 4.95
Other revolving credit ........................ .85 1.00 .45 1.02 1.61
Other retail .................................. .40 .60 .51 .51 .47
Real estate ................................... .03 .01 .02 .07 (.01)
Lease financing ............................... .04 .07 .13 .11 .07
Foreign ....................................... ---- ---- ---- ---- ----
Total loans ................................... .56 .58 .54 .61 .63
Total loans -- excluding credit cards ......... .19 .18 .22 .24 .13
Period-end allowance to outstanding loans ..... 1.50 1.17 1.12 1.16 1.13

<CAPTION>
SIX MONTHS ENDED
JUNE 30
------------------------
2000 1999
----------- ----------
SUMMARY OF TRANSACTIONS
<S> <C> <C>
Balance at beginning of period ................ $ 554,810 $ 547,992
Additions from acquisitions ................... 43,793 39
Provision for loan losses ..................... 347,031 155,161
Deduct net loan losses:
Loans charged off:
Commercial .................................. 26,271 13,454
Credit card ................................. 125,352 143,713
Other revolving credit ...................... 4,598 6,015
Other retail ................................ 17,999 16,798
Real estate ................................. 2,832 2,885
Lease financing ............................. 972 1,177
Foreign ..................................... ---- ----
----------- ---------
Total ...................................... 178,024 184,042
Recoveries:
Commercial .................................. 1,204 3,623
Credit card ................................. 22,225 15,663
Other revolving credit ...................... 1,288 1,535
Other retail ................................ 5,584 5,531
Real estate ................................. 1,188 2,685
Lease financing ............................. 252 353
Foreign ..................................... ---- ----
----------- ---------
Total ...................................... 31,741 29,390
----------- ---------
Net loan losses .............................. 146,283 154,652
----------- ---------
Balance at end of period ...................... $ 799,351 $ 548,540
=========== =========
NET LOAN LOSSES (RECOVERIES) BY CATEGORY
Commercial .................................... $ 25,067 $ 9,831
Credit card ................................... 103,127 128,050
Other revolving credit ........................ 3,310 4,480
Other retail .................................. 12,415 11,267
Real estate ................................... 1,644 200
Lease financing ............................... 720 824
Foreign ....................................... ---- ----
----------- ---------
Total ...................................... $ 146,283 $ 154,652
=========== =========
Net loan losses -- excluding credit cards ..... $ 43,156 $ 26,602
ANNUALIZED NET LOAN LOSSES (RECOVERIES)
TO AVERAGE LOANS BY CATEGORY
Commercial .................................... .28% .12%
Credit card ................................... 4.29 4.75
Other revolving credit ........................ .92 1.60
Other retail .................................. .49 .51
Real estate ................................... .02 ----
Lease financing ............................... .05 .08
Foreign ....................................... ---- ----
Total loans ................................... .57 .66
Total loans -- excluding credit cards ......... .19 .13
Period-end allowance to outstanding loans ..... 1.50 1.13
</TABLE>

ALLOWANCE FOR LOAN LOSSES

Wachovia's allowance for loan losses is maintained at a level adequate to absorb
probable losses inherent in the loan portfolio as of the date of the financial
statements. At June 30, 2000, the allowance for loan losses was $799 million or
1.50 percent of outstanding loans compared with $555 million or 1.12 percent and
$549 million or 1.13 percent at December 31, 1999 and June 30, 1999,
respectively. The allowance for loan losses varied over the periods presented as
a result of changes in the portfolio's risk profile reflecting changes in
portfolio mix. The increase in the allowance at June 30, 2000 was due to a rise
in the level of nonperforming loans and management's view that rising interest
rates and the slowing economy had affected corporate borrowers' ability to
service debt.

The provision for loan losses charged to earnings was an amount sufficient to
position the allowance for loan losses at the appropriate level as described
above. For the second quarter and the first six months of 2000, the provision
for loan losses was $273 million and $347 million, respectively, compared with
$75 million and $155 million for the same periods of 1999. The increase in the
provision reflected deterioration in some commercial credits as evidenced in the
increase in

23
<PAGE>
nonperforming loans. External indicators in the market, such as rising default
rates, the significant increase in credit rating downgrades versus upgrades and
widening credit spreads also suggest that deterioration in the credit cycle is
developing. Prompted by higher interest rates and signs of a slowing economy,
management reviewed the loan portfolio in considerable detail to determine the
full impact on the financial performance of customers, particularly in the
commercial portfolio. Management's findings led to the conclusion that the
historical loss rates used in determining the adequacy of the allowance for loan
loss did not reflect the risk in the portfolio and therefore did not accurately
measure losses inherent in the portfolio. Management's views were further
supported by downward migration in credit quality ratings and a resulting
increase in the number of loans appearing on Wachovia's internal watch list.

Management is closely monitoring the loan portfolio while paying particular
attention to changing business and economic conditions. Appropriate actions will
be taken if and when the circumstances dictate. Provision expense levels for the
remainder of the year will be affected by changing conditions in the market and
the resulting impact on Wachovia's customers. Given the current outlook,
provision expense is expected to return to levels modestly higher than that
reported for the last few quarters.

Despite the challenging business environment and the rise in nonperforming
assets, overall asset quality remained strong and within an acceptable level at
June 30, 2000. The net increase of $75 million in nonperforming assets from
December 31, 1999 primarily was attributable to two commercial credits of $45
million and $50 million that were downgraded during the first and second
quarters, respectively. At June 30, 2000, Wachovia's nonperforming assets
represented .56 percent of total loans and foreclosed property compared with .45
percent and .48 percent at December 31, 1999 and June 30, 1999, respectively.
There were no significant concentrations of loans in any one industry at June
30, 2000.

NONPERFORMING ASSETS AND CONTRACTUALLY PAST DUE LOANS TABLE 14
--------------------------------------------------------------------------------
(THOUSANDS)

<TABLE>
<CAPTION>
JUN 30 MAR 31 DEC 31 SEPT 30 JUN 30
2000 2000 1999 1999 1999
----------- ----------- --------- ---------- ---------
Nonperforming assets:
<S> <C> <C> <C> <C> <C>
Cash-basis assets ....................................... $283,577 $226,176 $204,098 $214,594 $209,550
Restructured loans ...................................... ---- ---- ---- ---- ----
----------- ----------- --------- ---------- ---------
Total nonperforming loans ............................ 283,577 226,176 204,098 214,594 209,550
Foreclosed property:
Foreclosed real estate ................................. 12,946 17,665 19,759 24,540 28,354
Less valuation allowance ............................... 2,867 4,077 5,941 7,456 8,162
Other foreclosed assets ................................ 5,060 6,343 5,874 6,602 5,045
----------- ----------- --------- ---------- ---------
Total foreclosed property ............................ 15,139 19,931 19,692 23,686 25,237
----------- ----------- --------- ---------- ---------
Total nonperforming assets ........................... $298,716 $246,107 $223,790 $238,280 $234,787
=========== =========== ========= ========== =========
Nonperforming loans to period-end loans ................. .53% .44% .41% .45% .43%
Nonperforming assets to period-end loans and
foreclosed property .................................... .56 .48 .45 .50 .48
Period-end allowance for loan losses times
nonperforming loans .................................... 2.82x 2.63x 2.72x 2.58x 2.62x
Period-end allowance for loan losses times
nonperforming assets ................................... 2.68 2.42 2.48 2.32 2.34
Contractually past due loans -- accruing loans past due
90 days or more ......................................... $127,218 $126,318 $97,642 $106,755 $99,486
=========== =========== ========= ========== =========
</TABLE>

24
<PAGE>

NONINTEREST INCOME TABLE 15
--------------------------------------------------------------------------------
(THOUSANDS)

2000 1999 SIX MONTHS ENDED
--------------------- -------------------------------- JUNE 30
SECOND FIRST FOURTH THIRD SECOND ----------------------
QUARTER QUARTER QUARTER QUARTER QUARTER 2000 1999
-------- ------- -------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts .............. $104,380 $100,811 $ 96,642 $ 94,595 $ 91,454 $205,191 $178,409
Fees for trust services .......................... 54,189 51,234 52,283 60,066 54,907 105,423 104,043
Credit card income -- net of interchange
payments ........................................ 71,463 71,182 65,046 70,786 58,110 142,645 119,411
Investment fees .................................. 81,439 96,770 78,747 69,364 69,877 178,209 87,239
Capital markets income ........................... 45,014 44,786 48,965 41,914 41,780 89,800 79,892
Electronic banking ............................... 26,153 23,396 24,303 23,310 22,558 49,549 41,013
Mortgage fees .................................... 5,921 5,001 5,006 7,378 9,863 10,922 20,829
Bankers' acceptance and letter of credit fees..... 13,671 11,597 12,444 11,688 11,563 25,268 21,905
Other service charges and fees ................... 30,361 29,181 26,720 19,494 18,153 59,542 33,679
Other income ..................................... 37,708 36,841 29,313 34,246 26,279 74,549 51,393
--------- -------- --------- -------- -------- --------- ---------
Total other operating revenue .................. 470,299 470,799 439,469 432,841 404,544 941,098 737,813
Securities gains ................................. 59 167 60 147 10,453 226 10,687
--------- -------- --------- -------- -------- --------- ---------
Total .......................................... $470,358 $470,966 $439,529 $432,988 $414,997 $941,324 $748,500
========= ======== ========= ======== ======== ========= =========
</TABLE>

NONINTEREST INCOME

Operating revenue, which excludes securities transactions, grew $66 million or
16.3 percent for the second quarter from a year earlier and was higher by $203
million or 27.6 percent for the first six months. The largest portion of the
growth was attributable to the strategic acquisitions of IJL, OFFITBANK and BEJS
and their respective impact on investment fee income and capital markets income.
The two 1999 credit card securitizations and the acquired Partners First
portfolio also contributed substantially. Adjusting for the effects of
acquisitions and securitization transactions, operating revenue grew
approximately 7 percent for the quarter and approximately 10 percent year to
date. For the remainder of the year, fee income growth is expected to remain
somewhat lower than Wachovia has experienced in recent quarters. Market
sensitive sources such as capital markets income and investment fee income will
be the key to whether the growth rate in overall fee income returns to the pace
experienced last year. The outlook for the remaining fee income categories
remains good.

Service charges on deposit accounts for the second quarter and year to date grew
$13 million or 14.1 percent and $27 million or 15 percent, respectively from the
same periods in 1999. The increase in both periods was evidenced in all
categories -- returned check charges for overdraft and insufficient funds,
commercial analysis fees and retail service charges.

Credit card income for the second quarter and year to date increased $13 million
or 23 percent and $23 million or 19.5 percent, respectively from the same
periods in 1999 driven by the two 1999 securitizations and the Partners First
acquired portfolio. Exclusive of these transactions, credit card income was flat
for the quarter and increased approximately 8 percent year to date. The year to
date increase reflected increased pricing on overlimit charges and other fees
that went into effect in late first quarter 1999.

Investment fees were up for both the quarter and year to date by $12 million or
16.5 percent and $91 million or 104.3 percent, respectively from the same
periods a year ago largely as a result of the expanded customer base from
acquisitions. The acquisitions of OFFITBANK, which was completed late in the
third quarter of 1999, and Interstate/Johnson Lane, which was completed on April
1, 1999, affected comparability between periods and accounted for most of the
increase. Excluding those acquisitions, investment fees increased approximately
3 percent for the quarter and 12 percent for the first six months from the same
periods a year ago. This income is also market sensitive and during the second
quarter, trading activity dropped after achieving record levels in the first
quarter and, as a result, equity commissions declined. Market conditions also
unfavorably impacted capital markets income leaving it level compared with the
first quarter of 2000 but up 7.7 percent from the 1999 second quarter.
Year-to-date capital markets income was up 12.4 percent from 1999 or
approximately 9 percent excluding the IJL acquisition.

Electronic banking fees, although less significant in terms of dollars,
experienced strong growth in comparison to prior year. For the second quarter
and first six months, electronic banking fees increased $4 million or 15.9
percent and $9 million or

25
<PAGE>

20.8 percent, respectively with acquisitions having minimal impact. Debit card
interchange fees accounted for substantially all of the increase reflecting a
continued trend of growing consumer acceptance.

Other service charges and fees increased by $12 million or 67.3 percent and $26
million or 76.8 percent, respectively, for the second quarter and first six
months compared with the same periods in 1999. Most of the increase was in fees
for servicing the securitized portion of the Partners First credit card
portfolio. Excluding the effects of Partners First and other acquisitions and
the 1999 securitization transactions, this revenue category remained relatively
level over the comparable periods.

NONINTEREST EXPENSE TABLE 16
--------------------------------------------------------------------------------
(THOUSANDS)

2000 1999 SIX MONTHS ENDED
------------------------ ----------------------------------- JUNE 30
SECOND FIRST FOURTH THIRD SECOND ------------------------
QUARTER QUARTER QUARTER QUARTER QUARTER 2000 1999
---------- --------- ----------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries ................................ $282,610 $287,629 $276,048 $266,488 $ 259,733 $ 570,239 $ 477,848
Employee benefits ....................... 52,881 56,252 48,240 50,572 48,019 109,133 101,090
---------- -------- ---------- -------- --------- ---------- -----------
Total personnel expense ............... 335,491 343,881 324,288 317,060 307,752 679,372 578,938
Net occupancy expense ................... 40,684 39,526 38,486 38,955 38,908 80,210 73,841
Equipment expense ....................... 45,908 49,195 52,425 49,081 49,714 95,103 96,556
Postage and delivery .................... 13,661 13,817 13,912 13,700 13,670 27,478 27,798
Outside data processing, programming
and software ........................... 25,918 26,874 27,370 26,385 25,561 52,792 49,018
Stationery and supplies ................. 10,037 9,072 9,270 9,262 8,598 19,109 17,407
Advertising and sales promotion ......... 16,938 16,649 21,090 16,086 17,173 33,587 29,292
Professional services ................... 18,639 13,532 23,008 18,619 19,351 32,171 33,375
Travel and business promotion ........... 11,202 9,572 10,106 9,138 8,749 20,774 14,700
Telecommunications ...................... 15,471 14,726 14,801 13,915 15,978 30,197 29,372
Amortization of intangible assets ....... 23,906 20,797 14,540 13,156 12,230 44,703 23,183
Foreclosed property expense -- net of
income ................................. (220) (2,722) (602) (470) 301 (2,942) 219
Merger-related charges* ................. 8,872 8,158 5,669 5,293 8,347 17,030 8,347
Litigation settlement charge* ........... ---- 20,000 ---- ---- ---- 20,000 ----
Other expense ........................... 64,784 54,901 46,255 47,012 54,285 119,685 90,769
---------- -------- ---------- -------- --------- ---------- -----------
Total ................................. $631,291 $637,978 $600,618 $577,192 $ 580,617 $1,269,269 $ 1,072,815
========== ======== ========== ======== ========= ========== ===========
Overhead Ratio .......................... 56.4% 58.0% 55.7% 54.5% 56.3% 57.2% 54.1%
Overhead ratio without nonrecurring
charges ................................ 55.6% 55.5% 55.2% 54.0% 55.5% 55.5% 53.7%
</TABLE>

* Nonrecurring charges

NONINTEREST EXPENSE

Noninterest expense rose $51 million or 8.7 percent for the quarter and $196
million or 18.3 percent for the first six months compared to the same periods in
1999. These increases primarily resulted from the added expense base from
acquisitions. Acquisitions, merger-related expenses, and a litigation charge
impacted comparisons between 2000 and 1999 in the first quarter of 2000. The
litigation settlement charge resulted from an agreement reached with the U. S.
Department of Labor to settle litigation stemming from a lawsuit begun against
South Carolina National Bank (a predecessor of Wachovia Bank) in May 1991. The
litigation stemmed from the purchase of Charter Medical Corporation's then
privately held stock by its Employee Stock Ownership Plan to fund retirement
benefits. South Carolina National Bank served as the trustee to the ESOP.
Excluding these transactions, expense control initiatives were effective in
holding the increase in noninterest expense to approximately 2 percent for the
quarter and approximately 3 percent year to date. Expenses are expected to rise
in the upper single digits for the remainder of the year. Adjusting for
acquisitions, expense increases should be contained to lower single digits
compared with 1999.

Total personnel expense increased $28 million or 9 percent for the quarter and
$100 million or 17.3 percent from the comparable periods in 1999. Exclusive of
acquisitions, total personnel expense increased approximately 5 percent from a
year ago both for the quarter and year to date. The 5 percent increase resulted
from strategic hiring and variable incentive pay.

Amortization of intangible assets rose from prior year levels as a result of
goodwill and purchased credit card premiums added by acquisitions. The
acquisition of the Partners First portfolio had the most significant impact on
intangible amortization due to the shorter period over which it is being
amortized.

26
<PAGE>

Other expense increased $10 million or 19.3 percent for the quarter and $29
million or 31.9 percent for the first six months compared with 1999.
Acquisitions accounted for most of the increase with the largest component being
external processing fees paid to service the acquired Partners First credit card
portfolio. Charitable donations were also up during the first half of 2000.
Aside from the impact of acquisitions, overall expenses in the remaining
categories were generally level with a year ago.

INCOME TAXES TABLE 17
--------------------------------------------------------------------------------
(THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------- -----------------------
2000 1999 2000 1999
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Income before income taxes .................................... $ 205,084 $ 376,857 $ 583,902 $ 745,602
========== ========== ========== ==========
Federal income taxes at statutory rate ........................ $ 71,779 $ 131,900 $ 204,366 $ 260,961
State and local income taxes -- net of federal benefit ........ 1,909 7,570 10,604 15,622
Effect of tax-exempt securities interest and other income ..... (11,454) (10,884) (22,723) (22,078)
Other items ................................................... 5,279 721 9,377 311
---------- ---------- ---------- ----------
Total tax expense ......................................... $ 67,513 $ 129,307 $ 201,624 $ 254,816
========== ========== ========== ==========
Current:
Federal ...................................................... $ 39,301 $ 21,127 $ 94,516 $ 42,650
Foreign ...................................................... 364 195 700 497
State and local .............................................. 8,366 6,458 18,715 13,072
---------- ---------- ---------- ----------
Total ..................................................... 48,031 27,780 113,931 56,219
Deferred: .....................................................
Federal ...................................................... 24,910 96,339 90,094 187,636
State and local .............................................. (5,428) 5,188 (2,401) 10,961
---------- ---------- ---------- ----------
Total ..................................................... 19,482 101,527 87,693 198,597
---------- ---------- ---------- ----------
Total tax expense ......................................... $ 67,513 $ 129,307 $ 201,624 $ 254,816
========== ========== ========== ==========
</TABLE>

INCOME TAXES

Applicable income taxes for the second quarter and first six months of 2000
decreased $62 million or 47.8 percent and $53 million or 20.9 percent,
respectively from the prior year. Wachovia's effective tax rate also declined as
tax-exempt income accounted for a proportionately larger share of pretax income
after the increased provision for loan losses recorded in the second quarter.

NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FASB 133). FASB 133 establishes new accounting and
reporting requirements for derivative instruments embedded in other contracts
and hedging activities. The standard requires all derivatives to be measured at
fair value and recognized as either assets or liabilities in the statement of
condition. Under certain conditions, a derivative may be specifically designated
as a hedge. Accounting for the changes in the fair value of a derivative depends
on the intended use of the derivative and the resulting designation. Adoption of
the standard is required for Wachovia's December 31, 2001 financial statements
with early adoption allowed as of the beginning of any quarter after June 30,
1998. Management is in the process of assessing the impact and plans to adopt
the standard effective January 1, 2001. Adoption is not expected to result in a
material financial impact.

SHAREHOLDERS' EQUITY AND CAPITAL RATIOS

Shareholders' equity at June 30, 2000 was $5.936 billion, up $509 million or 9.4
percent from $5.427 billion one year earlier and up $278 million or 4.9 percent
from December 31, 1999. Included in shareholders' equity at the end of the first
quarter of 2000 was $80 million, net of tax, of unrealized losses on securities
available-for-sale compared with unrealized losses of $11 million, net of tax,
one year earlier. The increase in unrealized losses reflects the impact of
rising interest rates on Wachovia's primarily fixed rate securities portfolio.

Wachovia repurchased a total of 1,674,300 shares of its common stock as
authorized by the Board of Directors during the first six months of 2000 at an
average price of $60 per share for a total cost of $101 million. Included in the
total were

27
<PAGE>

573,594 shares repurchased to offset shares issued for the acquisition of B C
Bankshares, Inc. and 633,176 shares repurchased to offset shares issued for the
acquisition of Commerce National Corporation. Wachovia can repurchase up to 8
million shares of its common stock under a January 28, 2000 authorization
effective through January 25, 2002. As of June 30, 2000, a total of 467,530
shares had been repurchased under the January 28, 2000 authorization. Management
will continue to work within the guidelines of its share repurchase
authorization while assessing the best deployment of Wachovia's capital.

At its July 28, 2000 meeting, the Board of Directors declared a third quarter
dividend of $.60 per share, payable September 1 to shareholders of record as of
August 10. The dividend is higher by 11 percent from $.54 per share paid in the
same quarter of 1999.

Intangible assets at June 30, 2000 totaled $1.263 billion, consisting of $935
million of goodwill, $73 million of deposit base intangibles, $250 million of
purchased credit card premiums and $5 million of other intangibles. The
acquisitions of B C Bankshares, Inc., the Partners First Holdings LLC portfolio,
and Commerce National Corporation added approximately $97 million, $230 million
and $33 million, respectively, in intangibles based on preliminary information.
Intangible assets at the end of the second quarter of 1999 were $790 million,
with $656 million of goodwill, $87 million of deposit base intangibles, $37
million of purchased credit card premiums, $10 million of other intangibles.

Regulatory agencies divide capital into Tier I (consisting of shareholders'
equity and certain cumulative preferred stock instruments less ineligible
intangible assets) and Tier II (consisting of the allowable portion of the
reserve for loan losses and certain long-term debt) and measure capital adequacy
by applying both capital levels to a banking company's risk-adjusted assets and
off-balance sheet items. Regulatory requirements presently specify that Tier I
capital should exclude the unrealized gain or loss, net of tax, on securities
available-for-sale. In addition to these capital ratios, regulatory agencies
have established a Tier I leverage ratio which measures Tier I capital to
average assets less ineligible intangible assets.

CAPITAL COMPONENTS AND RATIOS TABLE 18
--------------------------------------------------------------------------------
(THOUSANDS)

<TABLE>
<CAPTION>
2000 1999
------------------------------ ----------------------------------------------
SECOND FIRST FOURTH THIRD SECOND
QUARTER QUARTER QUARTER QUARTER QUARTER
-------------- ----------- ------------- ---------- ----------
Tier I capital:
<S> <C> <C> <C> <C> <C>
Common shareholders' equity ...................... $ 5,936,044 $ 5,846,430 $ 5,658,457 $ 5,628,083 $ 5,426,717
Trust capital securities ......................... 996,932 996,838 996,744 996,650 996,556
Less ineligible intangible assets ................ 1,057,314 1,040,021 931,257 944,304 772,696
Unrealized losses on securities available-for-
sale -- net of tax .............................. 77,233 87,939 72,002 27,600 9,618
-------------- ------------ -------------- ------------ ------------
Total Tier I capital .......................... 5,952,895 5,891,186 5,795,946 5,708,029 5,660,195
Tier II capital:
Allowable allowance for loan losses .............. 799,351 595,655 554,810 553,894 548,540
Allowable long-term debt ......................... 2,242,780 2,407,529 2,107,334 2,137,158 2,136,952
-------------- ------------ -------------- ------------ ------------
Tier II capital additions ..................... 3,042,131 3,003,184 2,662,144 2,691,052 2,685,492
-------------- ------------ -------------- ------------ ------------
Total capital ................................. $ 8,995,026 $ 8,894,370 $ 8,458,090 $ 8,399,081 $ 8,345,687
============== ============ ============== ============ ============
Risk-adjusted assets .............................. $ 80,796,945 $ 79,228,699 $ 77,060,603 $ 73,870,211 $ 74,897,805
Quarterly average assets * ........................ $ 68,559,502 $ 66,863,406 $ 66,113,697 $ 63,916,969 $ 64,611,973
Risk-based capital ratios:
Tier I capital ................................... 7.37% 7.44% 7.52% 7.73% 7.56%
Total capital .................................... 11.13 11.23 10.98 11.37 11.14
Tier I leverage ratio ............................. 8.68 8.81 8.77 8.93 8.76
</TABLE>

* Excludes ineligible intangible assets and average unrealized gains (losses) on
securities available-for-sale, net of tax.

Regulatory guidelines require a minimum of total capital to risk-adjusted assets
ratio of 8 percent with at least one-half consisting of tangible common
shareholders' equity and a minimum Tier I leverage ratio of 3 percent. Banks
that meet or exceed a Tier I ratio of 6 percent, a total capital ratio of 10
percent and a Tier I leverage ratio of 5 percent are considered well capitalized
by regulatory standards. It is Wachovia's policy that it and its banking
subsidiaries be well capitalized at all times.

28
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK AND ASSET/LIABILITY MANAGEMENT

Market risk is the risk of loss due to adverse changes in instrument values or
earnings fluctuation resulting from changes in market factors including changes
in interest rates, foreign exchange rates, commodity prices and other market
variables such as equity price risk. Wachovia primarily is exposed to interest
rate risk with immaterial risk exposure to changes in foreign exchange rates and
equity prices in the nontrading portfolios.

TRADING MARKET RISK

Trading market risk is the risk to net income from changes in the fair value of
assets and liabilities and off-balance sheet instruments that are
marked-to-market through the income statement. The earnings risk due to changes
in fair value in the trading portfolios is limited by the short-term holding
periods of some of the portfolios, entering into offsetting trades with market
counterparties, establishing and monitoring market risk limits by portfolio, and
utilizing various hedging techniques.

Wachovia uses a value-at-risk (VaR) methodology to gauge potential losses in
various trading portfolios due to changes in interest rates. The VaR estimate
represents the maximum expected loss in fair value of a trading portfolio over a
one day time horizon, given a 99 percent confidence level. In other words, there
is about a 1 percent chance, given historical volatility of interest rates, that
a loss greater than the VaR estimate will occur by the end of the next day.

At June 30, 2000, the combined VaR exposure was $368 thousand representing .04
percent of the combined trading portfolio value of $933 million. The combined
average VaR exposure for the first quarter of 2000 was $412 thousand
representing .07 percent of the combined average trading portfolio value of $631
million. These VaR numbers are for the combined U. S. Treasury and government
agency, municipal bond, residential mortgage-backed securities and money market
instrument trading portfolios.

NONTRADING MARKET RISK

Nontrading market risk is the risk to net income from changes in interest rates
on asset, liability and off-balance sheet portfolios other than trading. The
risk is driven by potential mismatches resulting from timing differences in the
repricing of assets, liabilities and off-balance sheet instruments, and
potential exercise of explicit and embedded options. There also is net income
risk from changes in market rate relationships known as basis risk.

Management believes that nontrading interest rate risk is best measured by
simulation modeling which calculates expected net income based on projected
interest-earning assets, interest-bearing liabilities, off-balance sheet
financial instruments, other income and other expense. The model projections are
based upon historical trends and management's expectations of balance sheet
growth patterns, spreads to market rates, historical market rate relationships,
prepayment behavior, current and expected product offerings, sales activity, and
expected exercise of explicit and embedded options.

The policy guideline limit for net income simulation is a negative impact to net
income of 7.5 percent for the up or down 200 basis point ramp scenarios when
compared with the flat rate scenario. Management has generally maintained a risk
position well within the policy guideline level. The model indicated the impact
of a 200 basis point gradual rise in rates over the next 12 months would cause
approximately a .64 percent increase in net income at June 30, 2000 versus a .96
percent decrease one year earlier. A gradual decrease in rates over the next 12
months would cause approximately a .68 percent decrease in net income as of June
30, 2000 compared with a .64 percent increase at June 30, 1999. Wachovia runs
additional scenarios beyond the standard shock and ramp scenarios, including
yield curve steepening, flattening and inversion scenarios. Various sensitivity
analyses are performed on a regular basis to segregate interest rate risk into
separate components and understand the risk attributable to prepayments, caps
and floors, and other options. Extensive assumptions testing is performed to
understand the degree of impact from changing key assumptions such as the speed
of prepayments, the interest rate elasticity of core deposit rates and faster-
or slower-growing balance sheets.

29
<PAGE>

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Wachovia held its annual meeting of shareholders on April 28, 2000.

At the annual meeting, the shareholders elected Morris W. Offit as director for
a two-year term and F. Duane Ackerman, John T. Casteen III, George W.
Henderson, III, Robert A. Ingram, George R. Lewis and G. Joseph Prendergast as
directors for three-year terms. The elections were approved by the votes set
forth in the following table. James S. Balloun, Peter C. Browning, W. Hayne
Hipp, Lloyd U. Noland, III and Sherwood H. Smith, Jr. continued as directors
until the 2001 annual meeting, and Leslie M. Baker, Jr., Thomas K. Hearn, Jr.,
Elizabeth Valk Long and John C. Whitaker, Jr. continued as directors until the
2002 annual meeting.

<TABLE>
<CAPTION>
SHARES VOTED SHARES
ELECTION OF DIRECTORS IN FAVOR WITHHELD
---------------------------------- ------------- ---------
<S> <C> <C>
Morris W. Offit .................. 171,824,487 1,907,581
F. Duane Ackerman ................ 171,836,143 1,895,924
John T. Casteen III .............. 171,685,939 2,046,128
George W. Henderson, III ......... 171,835,898 1,896,170
Robert A. Ingram ................. 171,685,807 2,046,260
George R. Lewis .................. 171,783,347 1,948,720
G. Joseph Prendergast ............ 171,817,391 1,914,676
</TABLE>

At the annual meeting, the shareholders ratified the appointment of Ernst &
Young LLP as independent auditors for 2000.

The proposal was approved by the following votes:

<TABLE>
<CAPTION>
<S> <C>
Shares voted in favor ......... 172,420,896
Shares voted against .......... 700,375
Abstentions ................... 610,796
Broker nonvotes ............... ----
</TABLE>

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits -- The exhibits listed on the accompanying Exhibit Index,
immediately following the signature page are filed as part of or incorporated by
reference into this report.

(b) Reports on Form 8-K.

A current report on Form 8-K dated April 19, 2000 was filed with the Securities
and Exchange Commission announcing Wachovia Corporation's earnings for the
quarter ended March 31, 2000.

A current report on Form 8-K dated June 15, 2000 was filed with the Securities
and Exchange Commission concerning Wachovia Corporation's anticipated revenues
and earnings for the second quarter of 2000 and for the remainder of the year.

30
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

WACHOVIA CORPORATION

August 11, 2000 /s/ ROBERT S. MCCOY, JR.
--------------------------------------
By: Robert S. McCoy, Jr.
Vice Chairman
Chief Financial Officer

August 11, 2000 /s/ ALBERT J. DEFOREST, III
--------------------------------------
By: Albert J. DeForest, III
Chief Accounting Officer

31
<PAGE>

EXHIBIT INDEX

Exhibit
Number Description
------- -----------
3.1 Amended and Restated Articles of Incorporation of the registrant
(incorporated by reference to Exhibit 3.1 of Report on Form 10-Q of
Wachovia Corporation for the quarter ended June 30, 1998, File No.
1-9021).

3.2 Bylaws of the registrant as amended (incorporated by reference to
Exhibit 3.2 of Form S-4 Registration Statement of Wachovia
Corporation dated December 14, 1998, File No. 333-68823).

4 Instruments defining the rights of security holders, including
indentures -- Wachovia Corporation hereby agrees to furnish to the
Commission, upon request, a copy of any instruments defining the
rights of security holders that are not required to be filed.

4.1 Articles IV, VII, IX, X and XI of the registrant's Amended and
Restated Articles of Incorporation (included in Exhibit 3.1 hereto).

4.2 Article 1, Section 1.8, and Article 6 of the registrant's Bylaws
(included in Exhibit 3.2 hereto).

4.3 Indenture dated as of May 15, 1986 between South Carolina National
Corporation and Morgan Guaranty Trust Company of New York, as
Trustee, relating to $35,000,000 principal amount of 6 1/2%
Convertible Subordinated Debentures due in 2001 (incorporated by
reference to Exhibit 28 of Form S-3 Registration Statement of South
Carolina National Corporation, File No. 33-7710).

4.4 First Supplemental Indenture dated as of November 26, 1991 by and
among South Carolina National Corporation, Wachovia Corporation and
Morgan Guaranty Trust Company of New York, Trustee, amending the
Indenture described in Exhibit 4.3 hereto (incorporated by reference
to Exhibit 4.10 of Report on Form 10-K of Wachovia Corporation for
the year ended December 31, 1991, File No. 1-9021).

4.5 Indenture dated as of March 15, 1991 between South Carolina National
Corporation and Bankers Trust Company, as Trustee, relating to
certain unsecured subordinated securities (incorporated by reference
to Exhibit 4(a) of Form S-3 Registration Statement of South Carolina
National Corporation, File No. 33-39754).

4.6 First Supplemental Indenture dated as of January 24, 1992 by and
among South Carolina National Corporation, Wachovia Corporation and
Bankers Trust Company, as Trustee, amending the Indenture described
in Exhibit 4.5 hereto (incorporated by reference to Exhibit 4.12 of
Report on Form 10-K of Wachovia Corporation for the year ended
December 31, 1991, File No. 1-9021).

4.7 Indenture dated as of July 15, 1998 between Wachovia Corporation and
The Chase Manhattan Bank, as Trustee, relating to subordinated debt
securities (incorporated by reference to Exhibit 4(b) of Form S-3
Registration Statement of Wachovia Corporation, File No. 333-59165).

4.8 Indenture dated as of August 15, 1996 between Wachovia Corporation
and The Chase Manhattan Bank, as Trustee, relating to senior debt
securities (incorporated by reference to Exhibit 4(a) of
Post-Effective Amendment No. 1 of Form S-3 Registration Statement of
Wachovia Corporation, File No. 33-6280).

4.9 Indenture between Wachovia Corporation, Wachovia Capital Trust II and
First National Bank of Chicago, as Trustee, relating to Floating-Rate
Junior Subordinated Deferrable Interest Debentures (Junior
Subordinated Debentures) (incorporated by reference to Exhibit 4(c)
of Amendment No. 1 of Form S-3 Registration Statement of Wachovia
Corporation and Wachovia Capital Trust II dated January 22, 1997,
File No. 333-19365).

4.10 Amended and Restated Declaration of Trust of Wachovia Capital Trust
II, relating to Preferred Securities (incorporated by reference to
Exhibit 4(b)(iv) of Amendment No. 1 of Form S-3 Registration
Statement of Wachovia Corporation and Wachovia Capital Trust II dated
January 22, 1997, File No. 333-19365).

4.11 Preferred Securities Guarantee Agreement of Wachovia Corporation
(incorporated by reference to Exhibit 4(g) of Amendment No. 1 of Form
S-3 Registration Statement of Wachovia Corporation and Wachovia
Capital Trust II dated January 22, 1997, File No. 333-19365).

4.12 Indenture between Central Fidelity Banks, Inc. and Chemical Bank, as
Trustee, relating to $150,000,000 principal amount of subordinated
debt securities (incorporated by reference to Exhibit 4.1 of Form 8-K
of Central Fidelity Banks, Inc., dated November 18, 1992, File No.
0-8829).

4.13 Indenture between Central Fidelity Banks, Inc., Central Fidelity
Capital Trust I and The Bank of New York, as Trustee, relating to
$100,000,000 Floating-Rate Junior Subordinated Debentures
(incorporated by reference to Exhibit 4.1 of Form S-3 Registration
Statement of Central Fidelity Banks, Inc., dated April 23, 1997, File
No. 333-28917).

4.14 Amended and Restated Declaration of Trust of Central Fidelity Capital
Trust I (incorporated by reference to Exhibit 4.4 of Form S-3
Registration Statement of Central Fidelity Banks, Inc., dated April
23, 1997, File No. 333-28917).

4.15 Form of New Guarantee Agreement for the benefit of the holders of the
Trust Securities (incorporated by reference to Exhibit 4.6 of Form
S-3 Registration Statement of Central Fidelity Banks, Inc., dated as
of April 23, 1997, File No. 333-28917).

10.1 Senior Management Incentive Plan of Wachovia Corporation as amended
through January 1, 1999 (incorporated by reference to Exhibit 10.4 of
Report on Form 10-Q of Wachovia Corporation for the quarter ended
June 30, 1999, File No. 1-9021).

32
<PAGE>

EXHIBIT INDEX (continued)

Exhibit
Number Description
------- -----------
10.2 Wachovia Corporation Amended and Restated Executive Deferred
Compensation Plan (incorporated by reference to Exhibit 10.2 of
Report on Form 10-Q for Wachovia Corporation for the quarter ended
March 31, 2000, File No. 1-9021).

10.3 Employment Agreement between Wachovia Corporation and L. M. Baker,
Jr. dated as of November 29, 1999 (incorporated by reference to
Exhibit 10.3 of Report on Form 10-K of Wachovia Corporation for the
year ended December 31, 1999, File No. 1-9021).

10.4 Employment Agreement between Wachovia Corporation and Robert S.
McCoy, Jr. dated as of October 22, 1999 (incorporated by reference to
Exhibit 10.4 of Report on Form 10-K of Wachovia Corporation for the
year ended December 31, 1999, File No. 1-9021).

10.5 Employment Agreement between Wachovia Corporation and G. Joseph
Prendergast dated as of October 22, 1999 (incorporated by reference
to Exhibit 10.5 of Report on Form 10-K of Wachovia Corporation for
the year ended December 31, 1999, File No. 1-9021).

10.6 Employment Agreement between Wachovia Corporation and Mickey W. Dry
dated as of October 22, 1999 (incorporated by reference to Exhibit
10.6 of Report on Form 10-K of Wachovia Corporation for the year
ended December 31, 1999, File No. 1-9021).

10.7 Employment Agreement between Wachovia Corporation and Walter E.
Leonard, Jr. dated as of October 22, 1999 (incorporated by reference
to Exhibit 10.7 of Report on Form 10-K of Wachovia Corporation for
the year ended December 31, 1999, File No. 1-9021).

10.8 Form of Employment Agreement between Wachovia Corporation and
Executive Officers (other than Messrs. Baker, McCoy, Prendergast, Dry
and Leonard) (incorporated by reference to Exhibit 10.8 of Report on
Form 10-K of Wachovia Corporation for the year ended December 31,
1999, File No. 1-9021.)

10.9 Employment Agreement between Wachovia Corporation and Morris W. Offit
dated as of May 13, 1999 (incorporated by reference to Exhibit 10.1
of Form S-4 Registration Statement of Wachovia Corporation dated June
25, 1999, File No. 1-9021).

10.10 Senior Executive Retirement Agreement between Wachovia Corporation
and L. M. Baker, Jr. dated as of November 29, 1999 (incorporated by
reference to Exhibit 10.10 of Report on Form 10-K of Wachovia
Corporation for the year ended December 31, 1999, File No. 1-9021).

10.11 Senior Executive Retirement Agreement between Wachovia Corporation
and Robert S. McCoy, Jr. dated as of October 22, 1999 (incorporated
by reference to Exhibit 10.11 of Report on Form 10-K of Wachovia
Corporation for the year ended December 31, 1999, File No. 1-9021).

10.12 Senior Executive Retirement Agreement between Wachovia Corporation
and G. Joseph Prendergast dated as of October 22, 1999 (incorporated
by reference to Exhibit 10.12 of Report on Form 10-K of Wachovia
Corporation for the year ended December 31, 1999, File No. 1-9021).

10.13 Senior Executive Retirement Agreement between Wachovia Corporation
and Mickey W. Dry dated as of October 22, 1999 (incorporated by
reference to Exhibit 10.13 of Report on Form 10-K of Wachovia
Corporation for the year ended December 31, 1999, File No. 1-9021).

10.14 Senior Executive Retirement Agreement between Wachovia Corporation
and Walter E. Leonard, Jr. dated as of October 22, 1999 (incorporated
by reference to Exhibit 10.14 of Report on Form 10-K of Wachovia
Corporation for the year ended December 31, 1999, File No. 1-9021).

10.15 Form of Senior Executive Retirement Agreement between Wachovia
Corporation and Executive Officers (other than Messrs. Baker, McCoy,
Prendergast, Dry and Leonard) (incorporated by reference to Exhibit
10.15 of Report on Form 10-K of Wachovia Corporation for the year
ended December 31, 1999, File No. 1-9021).

10.16 Senior Management and Director Stock Plan of Wachovia Corporation
(incorporated by reference to Exhibit 10 of Quarterly Report on Form
10-Q of First Wachovia Corporation for the quarter ended March 31,
1989, File No. 1-9021).

10.17 1990 Declaration of Amendment to Senior Management and Director Stock
Plan as described in Exhibit 10.16 hereto (incorporated by reference
to Exhibit 10.17 of Report on Form 10-K of First Wachovia Corporation
for the year ended December 31, 1989, File No. 1-9021).

10.18 1996 Declaration of Amendment to Senior Management and Director Stock
Plan as described in Exhibit 10.16 hereto (incorporated by reference
to Exhibit 10.24 of Report on Form 10-K of Wachovia Corporation for
the year ended December 31, 1996, File No. 1-9021).

10.19 Deferred Compensation Plan dated as of January 19, 1987, as amended
(incorporated by reference to Exhibit 10(c) of Report on Form 10-K of
South Carolina National Corporation for the year ended December 31,
1986, File No. 0-7042).

10.20 Amendment to Deferred Compensation Plan described in Exhibit 10.19
hereto (incorporated by reference to Exhibit 19(b) of Quarterly
Report on Form 10-Q of South Carolina National Corporation for the
quarter ended September 30, 1987, File No. 0-7042).

33
<PAGE>

EXHIBIT INDEX (continued)

Exhibit
Number Description
------- -----------

10.21 Amendment to Deferred Compensation Plan described in Exhibit 10.19
hereto (incorporated by reference to Exhibit 10(d) of Report on Form
10-K of South Carolina National Corporation for the year ended
December 31, 1988, File No. 0-7042).

10.22 Amendment to Deferred Compensation Plan described in Exhibit 10.19
hereto (incorporated by reference to Exhibit 10.35 of Report on Form
10-K of Wachovia Corporation for the year ended December 31, 1993,
File No. 1-9021).

10.23 Amended and Restated Wachovia Corporation Stock Plan (incorporated by
reference to Exhibit 4.1 of Form S-8 Registration Statement File No.
033-53325).

10.24 Wachovia Corporation Director Deferred Stock Unit Plan (incorporated
by reference to Exhibit 10.37 of Report on Form 10-K of Wachovia
Corporation for the year ended December 31, 1996, File No. 1-9021).

10.25 Wachovia Corporation Executive Insurance Plan (incorporated by
reference to Exhibit 10.36 of Report on Form 10-K of Wachovia
Corporation for the year ended December 31, 1995, File No. 1-9021).

10.26 Executive Long-Term Disability Income Plan (incorporated by reference
to Exhibit 10.34 of Report on Form 10-K of Wachovia Corporation for
the year ended December 31, 1997, File No. 1-9021).

10.27 Deferred Compensation Plan of Wachovia Bank of North Carolina, N.A.
(incorporated by reference to Exhibit 10.1 of Report on Form 10-K of
Wachovia Corporation for the year ended December 31,1992, File No.
1-9021).

10.28 1983 Amendment to Deferred Compensation Plan described in Exhibit
10.27 hereto (incorporated by reference to Exhibit 10.2 of Report on
Form 10-K of Wachovia Corporation for the year ended December 31,
1992, File No. 1-9021).

10.29 1986 Amendment to Deferred Compensation Plan described in Exhibit
10.27 hereto (incorporated by reference to Exhibit 10.9 of Report on
Form 10-K of First Wachovia Corporation for the year ended December
31, 1986, File No. 1-9021).

10.30 Agreement between Wachovia Corporation and John G. Medlin, Jr.
(incorporated by reference to Exhibit 10.13 of Report on Form 10-Q of
Wachovia Corporation for the quarter ended June 30, 1998, File No.
1-9021).

10.31 Executive Retirement Agreement between Wachovia Corporation and John
G. Medlin, Jr. (incorporated by reference to Exhibit 10.18 of Report
on Form 10-K of First Wachovia Corporation for the year ended
December 31, 1987, File No. 1-9021).

10.32 Amendment to Executive Retirement Agreement described in Exhibit
10.31 hereto (incorporated by reference to Exhibit 10.17 of Report on
Form 10-K of Wachovia Corporation for the year ended December 31,
1991, File No. 1-9021).

10.33 Amendment to Executive Retirement Agreement described in Exhibit
10.31 hereto (incorporated by reference to Exhibit 10.3 of Quarterly
Report on Form 10-Q of Wachovia Corporation for the quarter ended
September 30, 1993, File No. 1-9021).

10.34 Amendment to Executive Retirement Agreement described in Exhibit
10.31 hereto (incorporated by reference to Exhibit 10.4 of Quarterly
Report on Form 10-Q of Wachovia Corporation for the quarter ended
September 30, 1993, File No. 1-9021).

11 "Computation of Earnings Per Common Share" (included on page 9
herein).

12 Statement setting forth computation of ratio of earnings to fixed
charges.

27 Financial Data Schedule (for SEC purposes only).