AGE Edwards AG

ST. LOUIS, June 21 /PRNewswire-FirstCall/ -- A.G. Edwards, Inc. (NYSE:AGE) today announced results for the first quarter of fiscal 2008, which ended May 31, 2007. Net earnings for the quarter were $83 million, or $1.10 per diluted share, on net revenues of $842 million. Net earnings for the first quarter last year were $78 million, or $1.01 per diluted share, on net revenues of $765 million. On May 31, 2007, the company announced a merger agreement with Wachovia Corporation, pursuant to which the company would merge with and into a wholly owned subsidiary of Wachovia Corporation. The first-quarter fiscal 2008 results include $10 million, or $0.08 per diluted share, in other expenses related to the merger agreement. "We were pleased to see our first-quarter results reflect the continued client interest in fee-based services, as demonstrated by solid increases in our fee-based revenues and a new record for total client assets," said Robert L. Bagby, chairman and chief executive officer. "We also received a strong performance from investment banking, which posted its second-best-ever quarterly results. I want to thank our employees for working so well with their clients to achieve these results." RESULTS OF OPERATIONS Asset Management and Service Fees -- Asset-management and service-fee revenues increased 16 percent ($50 million) versus last year's first quarter. The results reflect increases in all of the company's asset-management and service-fee categories, led mainly by greater client interest in the company's fund-advisory programs and higher client-asset values in mutual funds and insurance products. The results were additionally bolstered by fees received in connection with the company's FDIC-insured bank deposit program. Since the program's launch in February 2007, clients have deposited approximately $6 billion into this program. Commissions -- Commission revenues decreased 3 percent ($8 million) in the first quarter compared to the same quarter last year. The results reflect decreases in client activity in individual equities, futures and options, partially offset by increased client activity in insurance products. Principal Transactions -- Revenues from principal transactions in this year's first quarter increased 2 percent ($1 million) versus last year's first quarter. The increase was driven by increased client activity in fixed-income products, partially offset by lower revenue from over-the-counter equities. Investment Banking -- Investment banking revenues increased 108 percent ($52 million) in the first quarter compared to the same quarter last year. The results largely reflected higher underwriting revenue from closed-end funds and greater fee revenue from private-placement transactions. Net Interest Revenue -- Interest revenue net of interest expense increased 3 percent ($2 million) in fiscal 2008's first quarter compared to last year's first quarter. The increase reflects higher interest payments on the fixed- income inventory held for sale to clients and higher revenue from short-term investments, partially offset by lower average client margin balances. Other revenue -- Other revenue decreased 63 percent ($19 million) in this year's first quarter versus the same period last year. The results largely reflect last year's gains related to the merger of the New York Stock Exchange and Archipelago Holdings, Inc. and subsequent mark-to-market on NYSE Euronext shares the firm held. Decreases in other revenue were partially offset by $5.4 million in gains on the mark-to-market of Chicago Board of Trade (CBOT) shares the company held but that are no longer required for CBOT membership. Non-Interest Expenses -- Non-interest expenses increased 10 percent ($66 million) during the first quarter of fiscal 2008 compared to the first quarter of fiscal 2007. Compensation and benefits increased 11 percent ($53 million) in this year's first quarter versus last year's first quarter, largely reflecting higher commissionable revenue and higher accruals for incentive compensation based on increased profitability. Non-compensation-related expenses increased 8 percent ($13 million) for the first quarter compared to the same period last year. The results largely reflect increased expenses for certain technology projects and expenses related to the merger agreement with Wachovia Corporation. Last year's first quarter reflected increased training and business-development expenses associated with the company's national sales conference held last year. ADDITIONAL SHAREHOLDER INFORMATION Total client assets at the end of the first quarter of fiscal 2008 were $396 billion, a 15 percent increase when compared to the end of the first quarter of fiscal 2007. Client assets in fee-based accounts at the end of the first quarter of fiscal 2008 were $48 billion, a 26 percent increase when compared to the end of the first quarter of fiscal 2007. As of May 31, 2007, stockholders' equity was $2.2 billion, for a book value per share of $28.69. Diluted per-share earnings for the first quarter were based on 76.0 million average common and common equivalent shares outstanding compared to 76.7 million in the first quarter last year. ABOUT A.G. EDWARDS, INC. A.G. Edwards, Inc. is a financial services holding company whose primary subsidiary is the national investment firm of A.G. Edwards & Sons, Inc. Founded in 1887, A.G. Edwards and its affiliates employ 6,623 financial consultants in 741 offices nationwide and two European locations in London and Geneva. More information can be found on http://www.agedwards.com/. FORWARD-LOOKING STATEMENTS This material may contain forward-looking statements within the meaning of federal securities laws. Actual results are subject to risks and uncertainties, including both those specific to A.G. Edwards and those to the industry, which could cause results to differ materially from those contemplated. The risks and uncertainties include, but are not limited to, completion and closing of the merger agreement between A.G. Edwards and Wachovia Corporation (see below for additional information regarding the proposed transaction), general economic conditions, government monetary and fiscal policy, the actions of competitors, changes in and effects of marketing strategies, client interest in specific products and services, the completion of all contractual, technological, legal and other requirements for the introduction of new products or services, regulatory changes and actions, changes in legislation, risk management, the results of the AGE Bank Deposit Program and the expansion of powers of A.G. Edwards Trust Company FSB, legal claims, technology changes, compensation changes, the impact of outsourcing agreements, the impact of Statement of Financial Accounting Standards No. 123 (Revised 2004) "Share-Based Payment," and implementation and effects of expense-reduction strategies. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this release. A.G. Edwards does not undertake any obligation to publicly update any forward-looking statements. This material references certain expenses associated with the execution of the merger agreement between Wachovia and A.G. Edwards. The proposed merger between Wachovia and A.G. Edwards (the "Merger") is subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by forward-looking statements for a variety of factors including: (1) the risk that the businesses of Wachovia and A.G. Edwards, in connection with the Merger will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) the risk that expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected time frame; (3) the risk that revenues following the Merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption following the Merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the inability to obtain governmental approvals of the Merger on the proposed terms and schedule; (6) the failure of A.G. Edwards' shareholders to approve the Merger; (7) the risk that the strength of the United States economy in general and the strength of the local economies in which Wachovia and/or A.G. Edwards conducts operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on Wachovia's loan portfolio and allowance for loan losses; (8) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (9) potential or actual litigation; (10) inflation, interest rate, market and monetary fluctuations; and (11) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on Wachovia's and A.G. Edwards' brokerage and capital markets activities. Additional factors that could cause Wachovia's and A.G. Edwards' results to differ materially from those described in the forward- looking statements can be found in Wachovia's and A.G. Edwards' Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. All subsequent written and oral forward-looking statements concerning A.G. Edwards or the proposed Merger or other matters and attributable to Wachovia or A.G. Edwards or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Wachovia and A.G. Edwards do not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this material. ADDITIONAL INFORMATION The proposed Merger will be submitted to A.G. Edwards' shareholders for their consideration. Wachovia will file a registration statement with the SEC, which will include a proxy statement/prospectus regarding the proposed Merger. A.G. Edwards' shareholders and other investors are urged to read the registration statement and the proxy statement/prospectus when they become available, as well as any other relevant documents concerning the proposed Merger filed with the SEC (and any amendments or supplements to those documents), because they will contain important information. You will be able to obtain a free copy of the registration statement and the proxy statement/prospectus, as well as other filings containing information about Wachovia and A.G. Edwards, at the SEC's website (http://www.sec.gov/) and at the companies' respective websites, http://www.wachovia.com/ and http://www.agedwards.com/. Copies of the proxy statement/prospectus and the SEC filings that will be incorporated by reference in the proxy statement/prospectus can also be obtained, free of charge, by directing a request to Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, NC 28288-0206, 704-383-0798; or to A.G. Edwards, Inc., Investor Relations, One North Jefferson Avenue, St. Louis, MO 63103, 314-955-3782. Wachovia and A.G. Edwards and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of A.G. Edwards in connection with the proposed Merger. Information about the directors and executive officers of Wachovia is set forth in the proxy statement for Wachovia's 2007 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 9, 2007. Information about the directors and executive officers of A.G. Edwards is set forth in the proxy statement for A.G. Edwards' 2007 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on May 15, 2007. Additional information regarding the interests of those participants and other persons who may be deemed participants in the Merger may be obtained by reading the proxy statement/prospectus regarding the proposed Merger when it becomes available. You may obtain free copies of these documents as described in the preceding paragraph. A. G. EDWARDS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) (Unaudited) For the Three Months Ended May 31, May 31, Increase/ % 2007 2006 (Decrease) Chg. Revenues Asset management and service fees: Distribution fees $187,896 $166,438 $21,458 12.9 Fee-based accounts 134,535 112,060 22,475 20.1 Service fees 34,339 28,581 5,758 20.1 Total 356,770 307,079 49,691 16.2 Commissions: Equities 135,949 144,039 (8,090) (5.6) Mutual funds 66,956 67,115 (159) (0.2) Insurance 54,195 51,267 2,928 5.7 Futures and options 10,819 13,639 (2,820) (20.7) Other 480 266 214 80.5 Total 268,399 276,326 (7,927) (2.9) Principal transactions: Debt securities 32,049 29,994 2,055 6.9 Equities 22,341 23,154 (813) (3.5) Total 54,390 53,148 1,242 2.3 Investment banking: Underwriting fees and selling concessions 64,628 32,798 31,830 97.0 Management fees 35,473 15,289 20,184 132.0 Total 100,101 48,087 52,014 108.2 Interest: Margin account balances 33,299 37,957 (4,658) (12.3) Securities owned and deposits 21,967 15,684 6,283 40.1 Total 55,266 53,641 1,625 3.0 Other 11,187 30,193 (19,006) (62.9) Total Revenues 846,113 768,474 77,639 10.1 Interest expense 3,663 3,781 (118) (3.1) Net Revenues 842,450 764,693 77,757 10.2 Non-Interest Expenses Compensation and benefits 534,019 480,928 53,091 11.0 Communication and technology 71,463 59,889 11,574 19.3 Occupancy and equipment 37,330 36,016 1,314 3.6 Marketing and business development 21,466 25,549 (4,083) (16.0) Floor brokerage and clearance 2,942 3,552 (610) (17.2) Other 40,846 36,337 4,509 12.4 Total Non-Interest Expenses 708,066 642,271 65,795 10.2 Earnings Before Income Taxes 134,384 122,422 11,962 9.8 Income Taxes 51,135 44,799 6,336 14.1 Net Earnings $83,249 $77,623 $5,626 7.2 Earnings per diluted share $1.10 $1.01 $0.09 8.9 Average Common and Common Equivalent Shares Outstanding (Diluted) 76,021 76,690 Stockholders' Equity $2,173,710 $1,971,895 Book Value per share $28.69 $25.81 Total Shares Outstanding (end of period) 75,777 76,414 A. G. EDWARDS, INC. CONSOLIDATED FIVE-QUARTER SUMMARY (In thousands, except per share amounts) (Unaudited) For the Three Months Ended May February November August May 31, 28, 30, 31, 31, 2007 2007 2006 2006 2006 Revenues Asset management and service fees: Distribution fees $187,896 $181,395 $172,326 $164,131 $166,438 Fee-based accounts 134,535 127,383 119,886 115,203 112,060 Service fees 34,339 26,927 25,982 25,750 28,581 Total 356,770 335,705 318,194 305,084 307,079 Commissions: Equities 135,949 136,456 132,314 126,399 144,039 Mutual funds 66,956 69,527 56,343 51,046 67,115 Insurance 54,195 53,110 48,050 48,529 51,267 Futures and options 10,819 10,968 10,696 11,386 13,639 Other 480 247 218 342 266 Total 268,399 270,308 247,621 237,702 276,326 Principal transactions: Debt securities 32,049 30,161 31,694 35,871 29,994 Equities 22,341 23,005 21,966 19,285 23,154 Total 54,390 53,166 53,660 55,156 53,148 Investment banking: Underwriting fees and selling concessions 64,628 70,974 52,818 40,003 32,798 Management fees 35,473 41,495 19,802 16,709 15,289 Total 100,101 112,469 72,620 56,712 48,087 Interest: Margin account balances 33,299 33,671 35,546 39,020 37,957 Securities owned and deposits 21,967 26,936 22,453 20,030 15,684 Total 55,266 60,607 57,999 59,050 53,641 Other 11,187 35,954 21,390 4,206 30,193 Total Revenues 846,113 868,209 771,484 717,910 768,474 Interest expense 3,663 3,199 3,955 4,682 3,781 Net Revenues 842,450 865,010 767,529 713,228 764,693 Non-Interest Expenses Compensation and benefits 534,019 523,368 476,208 451,366 480,928 Communication and technology 71,463 69,866 64,736 63,347 59,889 Occupancy and equipment 37,330 39,019 37,584 37,845 36,016 Marketing and business development 21,466 15,862 17,669 17,870 25,549 Floor brokerage and clearance 2,942 5,106 4,895 5,548 3,552 Other 40,846 42,026 42,391 32,890 36,337 Total Non-Interest Expenses 708,066 695,247 643,483 608,866 642,271 Earnings Before Income Taxes 134,384 169,763 124,046 104,362 122,422 Income Taxes 51,135 60,586 45,719 38,136 44,799 Net Earnings $83,249 $109,177 $78,327 $66,226 $77,623 Earnings per diluted share $1.10 $1.44 $1.03 $0.86 $1.01 Average Common and Common Equivalent Shares Outstanding (Diluted) 76,021 76,024 76,411 76,691 76,690 Stockholders' Equity $2,173,710 $2,102,039 $2,039,141 $2,009,699 $1,971,895 Book Value per share $28.69 $27.91 $27.02 $26.40 $25.81 A.G. EDWARDS, INC. QUARTERLY STATISTICAL INFORMATION (Dollars in thousands, except per share amounts) (Unaudited) 1Q FY08 4Q FY07 3Q FY07 2Q FY07 1Q FY07 Net Revenues $842,450 $865,010 $767,529 $713,228 $764,693 Earnings Before Income Taxes $134,384 $169,763 $124,046 $104,362 $122,422 Net Earnings $83,249 $109,177 $78,327 $66,226 $77,623 Pre-tax Net Earnings as a Percent of Net Revenues 16.0% 19.6% 16.2% 14.6% 16.0% Average Diluted Shares- (000's Omitted) 76,021 76,024 76,411 76,691 76,690 Earnings Per Diluted Share $1.10 $1.44 $1.03 $0.86 $1.01 Dividends Per Share $0.20 $0.20 $0.20 $0.20 $0.20 Total Assets $5,066,104 $5,312,118 $5,076,078 $4,708,961 $4,413,379 Stockholders' Equity $2,173,710 $2,102,039 $2,039,141 $2,009,699 $1,971,895 Book Value Per Share $28.69 $27.91 $27.02 $26.40 $25.81 Return On Average Equity-(Quarter Results Annualized) 15.6% 21.1% 15.5% 13.3% 16.1% Financial Consultants 6,623 6,618 6,628 6,666 6,745 Full-time Employees 15,368 15,338 15,364 15,323 15,420 Locations 743 744 746 744 745 Total Client Assets (in millions) $396,000 $374,000 $370,000 $354,000 $345,000 Assets In Fee-based Accounts (in millions) $48,000 $44,000 $42,000 $40,000 $38,000 DATASOURCE: A.G. Edwards, Inc. CONTACT: Media, Pia Reinhold, +1-314-955-4651, , or Investors, Justin Gioia, +1-314-955-2379, , both of A.G. Edwards, Inc. Web site: http://www.agedwards.com/ http://www.wachovia.com/

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