Wachovia to Acquire Golden West Financial For $25.5 Billion

Wachovia Corporation and Golden West Financial Corporation, parent of World Savings Bank, said today they have signed a definitive agreement to merge, creating a leading retail banking and mortgage lending franchise in many of the nation’s most attractive growth markets. This combination strengthens Wachovia’s presence in California, Florida and Texas, and extends the banking franchise within reach of 55 percent of the U.S. population.

With the acquisition of Oakland, California-based Golden West, Wachovia will add 285 consumer banking offices with $62 billion in retail deposits in 10 states while entering new markets in California, Arizona, Colorado, Illinois, Kansas and Nevada. The combined company, which will have assets of $669 billion and a market capitalization of $117 billion, will serve banking customers in 21 states and Washington, D.C. Wachovia will gain mortgage lending operations under the World Savings Bank name in 39 states.

“We believe this combination of our two companies, both known for exceptional customer service and pristine credit quality, will generate superior long-term growth in earnings per share,” said Ken Thompson, Wachovia chairman and chief executive officer, who noted that Golden West?s World Savings Bank is the nation?s only standalone savings and loan with a “AA” debt rating. “For four decades, Golden West has taken industry-wide challenges in stride and maintained a singular focus as a risk-averse residential mortgage portfolio lender. The result is an astonishing 25-year track record of 17 percent compound annual growth in earnings per share and virtually no credit losses realized even in the toughest year in its history.”

Herbert M. Sandler, Golden West chairman and chief executive officer, commented, “I?ve been a keen observer of the market and the mortgage and banking industries for nearly 40 years. Wachovia is the company we selected to entrust with our legacy as one of the nation?s most admired and trusted financial institutions. We share the same values of operating with integrity, putting customers first and encouraging teamwork.”

Added Marion O. Sandler, Golden West chairman and chief executive officer, “Golden West has grown consistently over many years, and now we?d like to provide our loyal customers with the additional banking products they?ve been asking for. We believe Wachovia is the perfect partner to deliver on customers? needs and further enhance the strong company we have built.”

Terms of the agreement call for each Golden West shareholder to receive a package of 1.051 shares of Wachovia common stock and $18.65 in cash. Based on the closing price of Wachovia common stock on May 5, 2006, this represents total consideration of $25.5 billion, or a price of $81.07 per share of Golden West common stock, a 15 percent premium over Golden West?s share price on that date. The purchase accounting transaction, which is expected to close in the fourth quarter of 2006, is expected to add to Wachovia?s earnings per share excluding merger-related and restructuring expense and intangibles amortization in the second year after closing. It is expected to provide an internal rate of return of 17 percent for Wachovia shareholders.

Wachovia and Golden West will be well-positioned in numerous high-growth markets, with an extensive product offering ? the No. 1 retail bank in the Southeast, a Top 5 bank in the western United States, Top 10 mortgage origination and servicing company, Top 10 indirect auto lender, a leading national brokerage and fund manager, and a well-positioned corporate and investment bank. The combined company will have total deposits of $390 billion and loans of $402 billion. The company?s 15 million customers will be served by more than 110,000 employees, 3,400 banking branches, 5,300 ATMs, 360 mortgage lending offices and 730 full-service retail brokerage offices.

“We?re very excited to partner with such strong management and with an extremely knowledgeable and diligent team of sales leaders,” said Ben Jenkins, Wachovia vice chairman and General Bank president. “Customers will continue to be served by the same dedicated and passionate people who have always met their needs ? only over time, they?ll have more products and services to choose from. We?ll work hard with our new partners to achieve merger efficiencies, but we expect that no employees who deal directly with customers will lose their jobs.”

“Both companies are proud of their tradition of outstanding community service,” added Marion Sandler of Golden West. “Together, we will strengthen our community leadership, and our shared commitment to the communities we serve will be made more powerful by this merger.” Each company currently has been rated “outstanding” for Community Reinvestment Act compliance by federal regulators.

Wachovia expects the merger will generate $53 million after tax in annual expense reductions, phased in over two years. This equals less than 1 percent of the companies’ current combined expense base. Wachovia expects to take merger-related one-time charges of $293 million after tax, related to staff training, retention and severance; real estate; systems integration; and other miscellaneous accruals.

The complementary strengths of the two companies are expected to generate significant revenue opportunities; however, revenue assumptions were not included in the financial assumptions for the transaction.

When the merger is completed, two members of the current Golden West board of directors will join the Wachovia board. Completion of the transaction is subject to shareholder approvals by both companies and normal regulatory approvals. The boards of directors of both companies unanimously approved the merger. In addition, Golden West?s chief executive officers and another Golden West director, Bernard A. Osher, have entered into voting agreements with Wachovia whereby they each agree to vote their shares of Golden West common stock in favor of the merger. Merrill Lynch, Wachovia Securities and Sullivan & Cromwell represented Wachovia and Lehman Brothers and Wachtell, Lipton, Rosen & Katz represented Golden West.