A.G. Edwards, Inc. Announces Results for the Second Quarter and First Half of Fiscal 2008

ST. LOUIS, Sept. 20  /PRNewswire-FirstCall/ -- A.G. Edwards, Inc. (NYSE:AGE) today announced results for the second quarter and first half of fiscal 2008, which ended August 31, 2007.

Net earnings for the quarter were $95 million, or $1.25 per diluted share, on net revenues of $821 million.  For the same quarter last year, net earnings were $66 million, or $0.86 per diluted share, on net revenues of $713 million.

For the first six months of fiscal 2008, net earnings were $178 million, or $2.34 per diluted share, on net revenues of $1.66 billion.  For the same period last year, net earnings were $144 million, or $1.88 per diluted share, on net revenues of $1.48 billion.

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 and first-half results include $10 million, or $0.08 per diluted share, in other expenses related to the merger agreement.

A special meeting of stockholders of A.G. Edwards, Inc. is being held on Friday, Sept. 28, 2007 to consider and vote on the proposal to adopt the merger agreement and to consider and vote upon a proposal to approve the adjournment of the special meeting, including, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt the merger agreement.

"Thanks to the hard work and dedication of our employees serving clients during a difficult market environment in the second quarter, we were able to post increases in nearly every major revenue category," said Robert L. Bagby, chairman and chief executive officer.  "In particular, client interest in fee- based services again led the way for our strong results, both in the second quarter and first half of the year."

RESULTS OF OPERATIONS

Asset management and service fees -- Asset-management and service-fee revenues for the second quarter increased 22 percent ($69 million) versus the second quarter last year.  For the first six months of fiscal 2008, these revenues increased 19 percent ($118 million) versus last year's first six months.  Results in both periods continued to reflect greater client interest in the firm's fee-based programs and services, particularly its fund-advisory programs, as well as increased client-asset values in mutual funds and insurance products.  The results were enhanced by fees received in connection with the firm's FDIC-insured bank deposit program, which was not in operation during either time period last year.  Since the program's launch in February 2007, clients have deposited approximately $7.2 billion into this program.

Commissions -- Commission revenues for the second quarter increased 10 percent ($24 million) versus last year's second quarter and increased 3 percent ($16 million) versus last year's first half.  The results in both time periods were mainly due to increased investor activity in individual equities, mutual funds and insurance products.

Principal transactions -- Revenues from principal transactions increased 8 percent ($5 million) compared to the year-ago quarter.  Compared to the first six months of last fiscal year, principal-transaction revenues increased 5 percent ($6 million).  The increases in both periods reflected increased client activity in municipal securities and over-the-counter equity markets, partially offset by decreased activity in corporate-debt and agency securities.

Investment banking -- Investment-banking revenues for the second quarter increased 13 percent ($7 million) versus the same three-month period last year.  For the first six months of fiscal 2008, investment-banking revenues increased 57 percent ($59 million) compared to the same period last year.  The results in both periods largely reflected higher revenue from closed-end funds.  The six-month results additionally reflected greater fee revenue from private-placement transactions.

Net interest revenue -- Interest revenue net of interest expense in the second quarter increased 10 percent ($5 million) from the year-ago quarter. For fiscal 2008's first half, net interest revenue increased 7 percent ($7 million) over last year's first half.  The increases in both the second-quarter and six-month results reflected 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 30 percent ($1 million) in the second quarter and decreased 59 percent ($20 million) for the first half of fiscal 2008 compared to the same periods last year.  The decreases in other revenues for both the second quarter and first half of fiscal 2008 were mainly due to declines in the mark-to-market valuations of certain private-equity investments and stock-exchange shares the firm held.

Non-interest expenses -- During the second quarter, non-interest expenses increased 11 percent ($66 million) compared to last year's second quarter. For the first six months of fiscal 2008, non-interest expenses increased 11 percent ($132 million) compared to the same period last fiscal year.

Compensation and benefits increased 16 percent ($74 million) in this year's second quarter versus last year's second quarter.  Comparing the first half of fiscal 2008 to the same period last year, compensation and benefits increased 14 percent ($127 million).  The results in both periods mainly reflected higher commissionable revenue as well as higher incentive compensation due to increased firm profitability.

Non-compensation-related expenses for fiscal 2008's second quarter decreased 5 percent  ($8 million) compared to the same quarter last year. For this year's first six months, non-compensation-related expenses increased 2 percent ($5 million) versus last year's first six months.  Both periods reflected lower branding-related expenses and lower business-development expenses compared to last year, which included expenses for the firm's national sales conference.  Both periods also reflected $3 million in tax benefits due to the resolution of certain tax matters and lower expenses for addressing various regulatory changes and legal matters.  The decreases in the six-month results were partially offset by expenses related to the merger agreement with Wachovia Corporation and increased technology-consulting expenses.

ADDITIONAL STOCKHOLDER INFORMATION

Total client assets at the end of the second quarter were $384 billion, an 8 percent increase when compared to the end of the second quarter last year. Client assets in fee-based accounts at the end of the second quarter of fiscal 2008 were $45 billion, a 12 percent increase when compared to the end of the second quarter of fiscal 2007.

As of August 31, 2007, stockholders' equity was $2.3 billion, for a book value per share of $29.78.  Diluted per-share earnings for the second quarter were based on 76.0 million average common and common equivalent shares outstanding compared to 76.7 million in the prior year.  Diluted per-share earnings for the current six-month period were based on 76.0 million average common and common equivalent shares outstanding compared to 76.6 million in the prior 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 6,363 financial consultants in 739 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, and the impact of Statement of Financial Accounting Standards No. 123 (Revised 2004) "Share-Based Payment." 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 has been submitted to A.G. Edwards' shareholders for their consideration.  Wachovia filed on August 30 a registration statement with the SEC, which includes 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, 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 contain important information. You can 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 are 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. 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
                             August 31,    August 31,    Increase/      %
                               2007          2006       (Decrease)     Chg.

  Revenues
  Asset management and
   service fees:
    Distribution fees        $190,692      $164,131       $26,561      16.2
    Fee-based accounts        140,314       115,203        25,111      21.8
    Service fees               42,584        25,750        16,834      65.4
          Total               373,590       305,084        68,506      22.5
  Commissions:
    Equities                  135,289       126,399         8,890       7.0
    Mutual funds               56,597        51,046         5,551      10.9
    Insurance                  57,587        48,529         9,058      18.7
    Futures and options        11,913        11,386           527       4.6
    Other                         269           342           (73)    (21.3)
          Total               261,655       237,702        23,953      10.1
  Principal transactions:
    Debt securities            37,020        35,871         1,149       3.2
    Equities                   22,657        19,285         3,372      17.5
          Total                59,677        55,156         4,521       8.2
  Investment banking:
    Underwriting fees and
     selling concessions       48,122        40,003         8,119      20.3
    Management fees            15,867        16,709          (842)     (5.0)
          Total                63,989        56,712         7,277      12.8
  Interest:
    Margin account balances    34,504        39,020        (4,516)    (11.6)
    Securities owned and
     deposits                  29,232        20,030         9,202      45.9
          Total                63,736        59,050         4,686       7.9
  Other                         2,938         4,206        (1,268)    (30.1)

    Total Revenues            825,585       717,910       107,675      15.0

  Interest expense              4,128         4,682          (554)    (11.8)

    Net Revenues              821,457       713,228       108,229      15.2

  Non-Interest Expenses
  Compensation and benefits   525,131       451,366        73,765      16.3
  Communication and
   technology                  64,008        63,347           661       1.0
  Occupancy and equipment      37,951        37,845           106       0.3
  Marketing and business
   development                 14,059        17,870        (3,811)    (21.3)
  Floor brokerage and
   clearance                    4,661         5,548          (887)    (16.0)
  Other                        29,050        32,890        (3,840)    (11.7)

    Total Non-Interest
     Expenses                 674,860       608,866        65,994      10.8

  Earnings Before
   Income Taxes               146,597       104,362        42,235      40.5

  Income Taxes                 51,698        38,136        13,562      35.6

  Net Earnings                $94,899       $66,226       $28,673      43.3

  Earnings per diluted share    $1.25         $0.86         $0.39      45.3

  Average Common and Common
   Equivalent Shares
   Outstanding (Diluted)       76,040        76,691

  Stockholders' Equity     $2,259,812    $2,009,699
  Book Value per share         $29.78        $26.40

  Total Shares Outstanding
   (end of period)             75,878        76,115



                           A. G. EDWARDS, INC.
                   CONSOLIDATED STATEMENTS OF EARNINGS
                 (In thousands, except per share amounts)
                               (Unaudited)

                             For the Six Months Ended
                             August 31,    August 31,    Increase/      %
                               2007          2006       (Decrease)     Chg.

  Revenues
  Asset management and
   service fees:
    Distribution fees        $378,588      $330,569       $48,019      14.5
    Fee-based accounts        274,849       227,263        47,586      20.9
    Service fees               76,923        54,331        22,592      41.6
          Total               730,360       612,163       118,197      19.3
  Commissions:
    Equities                  271,238       270,438           800       0.3
    Mutual funds              123,553       118,161         5,392       4.6
    Insurance                 111,782        99,796        11,986      12.0
    Futures and options        22,732        25,025        (2,293)     (9.2)
    Other                         749           608           141      23.2
          Total               530,054       514,028        16,026       3.1
  Principal transactions:
    Debt securities            69,069        65,865         3,204       4.9
    Equities                   44,998        42,439         2,559       6.0
          Total               114,067       108,304         5,763       5.3
  Investment banking:
    Underwriting fees and
     selling concessions      112,750        72,801        39,949      54.9
    Management fees            51,340        31,998        19,342      60.4
          Total               164,090       104,799        59,291      56.6
  Interest:
    Margin account balances    67,803        76,977        (9,174)    (11.9)
    Securities owned and
     deposits                  51,199        35,714        15,485      43.4
          Total               119,002       112,691         6,311       5.6
  Other                        14,125        34,399       (20,274)    (58.9)

    Total Revenues          1,671,698     1,486,384       185,314      12.5

  Interest expense              7,791         8,463          (672)     (7.9)

    Net Revenues            1,663,907     1,477,921       185,986      12.6

  Non-Interest Expenses
  Compensation and
   benefits                 1,059,150       932,294       126,856      13.6
  Communication and
   technology                 135,471       123,236        12,235       9.9
  Occupancy and equipment      75,281        73,861         1,420       1.9
  Marketing and business
   development                 35,525        43,419        (7,894)    (18.2)
  Floor brokerage and
   clearance                    7,603         9,100        (1,497)    (16.5)
  Other                        69,896        69,227           669       1.0

    Total Non-Interest
     Expenses               1,382,926     1,251,137       131,789      10.5

  Earnings Before
   Income Taxes               280,981       226,784        54,197      23.9

  Income Taxes                102,833        82,935        19,898      24.0

  Net Earnings               $178,148      $143,849       $34,299      23.8

  Earnings per diluted share    $2.34         $1.88         $0.46      24.5

  Average Common and Common
   Equivalent Shares
   Outstanding (Diluted)       76,030        76,633

  Stockholders' Equity     $2,259,812    $2,009,699
  Book Value per share         $29.78        $26.40

  Total Shares Outstanding
   (end of period)             75,878        76,115



                           A. G. EDWARDS, INC.
                    CONSOLIDATED FIVE-QUARTER SUMMARY
                 (In thousands, except per share amounts)
                               (Unaudited)

                                    For the Three Months Ended
                         August     May      February    November    August
                           31,       31,        28,        30,         31,
                          2007      2007       2007       2006        2006
  Revenues
  Asset management
   and service fees:
    Distribution
     fees               $190,692   $187,896   $181,395   $172,326   $164,131
    Fee-based
     accounts            140,314    134,535    127,383    119,886    115,203
    Service fees          42,584     34,339     26,927     25,982     25,750
       Total             373,590    356,770    335,705    318,194    305,084
  Commissions:
    Equities             135,289    135,949    136,456    132,314    126,399
    Mutual funds          56,597     66,956     69,527     56,343     51,046
    Insurance             57,587     54,195     53,110     48,050     48,529
    Futures and
     options              11,913     10,819     10,968     10,696     11,386
    Other                    269        480        247        218        342
       Total             261,655    268,399    270,308    247,621    237,702
  Principal
   transactions:
    Debt securities       37,020     32,049     30,161     31,694     35,871
    Equities              22,657     22,341     23,005     21,966     19,285
       Total              59,677     54,390     53,166     53,660     55,156
  Investment banking:
    Underwriting fees
     and selling
     concessions          48,122     64,628     70,974     52,818     40,003
    Management fees       15,867     35,473     41,495     19,802     16,709
       Total              63,989    100,101    112,469     72,620     56,712
  Interest:
    Margin account
     balances             34,504     33,299     33,671     35,546     39,020
    Securities owned
     and deposits         29,232     21,967     26,936     22,453     20,030
       Total              63,736     55,266     60,607     57,999     59,050
  Other                    2,938     11,187     35,954     21,390      4,206

    Total Revenues       825,585    846,113    868,209    771,484    717,910

  Interest expense         4,128      3,663      3,199      3,955      4,682

    Net Revenues         821,457    842,450    865,010    767,529    713,228

  Non-Interest Expenses
  Compensation and
   benefits              525,131    534,019    523,368    476,208    451,366
  Communication
   and technology         64,008     71,463     69,866     64,736     63,347
  Occupancy and
   equipment              37,951     37,330     39,019     37,584     37,845
  Marketing and
   business development   14,059     21,466     15,862     17,669     17,870
  Floor brokerage
   and clearance           4,661      2,942      5,106      4,895      5,548
  Other                   29,050     40,846     42,026     42,391     32,890

    Total Non-Interest
     Expenses            674,860    708,066    695,247    643,483    608,866

  Earnings Before
   Income Taxes          146,597    134,384    169,763    124,046    104,362

  Income Taxes            51,698     51,135     60,586     45,719     38,136

  Net Earnings           $94,899    $83,249   $109,177    $78,327    $66,226

  Earnings per
   diluted share           $1.25      $1.10      $1.44      $1.03      $0.86

  Average Common and
   Common Equivalent
   Shares Outstanding
   (Diluted)              76,040     76,021     76,024     76,411     76,691

  Stockholders'
   Equity             $2,259,812 $2,173,710 $2,102,039 $2,039,141 $2,009,699
  Book Value
   per share              $29.78     $28.69     $27.91     $27.02     $26.40



                            A.G. EDWARDS, INC.
                    QUARTERLY STATISTICAL INFORMATION
             (Dollars in thousands, except per share amounts)
                               (Unaudited)

                    2Q FY08     1Q FY08     4Q FY07     3Q FY07     2Q FY07

  Net Revenues
                   $821,457    $842,450    $865,010    $767,529    $713,228

  Earnings Before
   Income Taxes    $146,597    $134,384    $169,763    $124,046    $104,362

  Net Earnings      $94,899     $83,249    $109,177     $78,327     $66,226

  Pre-tax Net
   Earnings as a
   Percent of
   Net Revenues       17.8%       16.0%       19.6%       16.2%       14.6%

  Average Diluted
   Shares-
   (000's Omitted)   76,040      76,021      76,024      76,411      76,691

  Earnings Per
   Diluted Share      $1.25       $1.10       $1.44       $1.03       $0.86

  Dividends
   Per Share          $0.20       $0.20       $0.20       $0.20       $0.20

  Total Assets   $5,239,146  $5,066,104  $5,312,118  $5,076,078  $4,708,961

  Stockholders'
   Equity        $2,259,812  $2,173,710  $2,102,039  $2,039,141  $2,009,699

  Book Value Per
   Share             $29.78      $28.69      $27.91      $27.02      $26.40

  Return On
   Average Equity-
   (Quarter Results
   Annualized)        17.1%       15.6%       21.1%       15.5%       13.3%

  Financial
   Consultants        6,363       6,623       6,618       6,628       6,666

  Full-time
   Employees         14,816      15,368      15,338      15,364      15,323

  Locations             741         743         744         746         744

  Total Client
   Assets
   (in millions)   $384,000    $396,000    $374,000    $370,000    $354,000

  Assets In Fee-based
   Accounts
   (in millions)    $45,000     $48,000     $44,000     $42,000     $40,000


DATASOURCE: A.G. Edwards, Inc.



CONTACT:  Media, Byron Goodrich, [phone],

, or Investors, Justin Gioia, [phone],

, both of A.G. Edwards, Inc.



Web site:  http://www.agedwards.com/ 

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