10-Q 1 g90303e10vq.txt SOUTHTRUST CORPORATION ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington , D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004 Commission File Number 0-3613 SOUTHTRUST CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 63-0574085 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 420 NORTH 20TH STREET, BIRMINGHAM, ALABAMA 35203 (Address of principal executive offices) (Zip Code) (205) 254-5000 (Registrant's telephone number, including area code) 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. Yes X No Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) Yes X No At July 31, 2004, there were 332,852,751 shares of the Registrant's Common Stock, $2.50 par value, outstanding. ================================================================================ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS

2 SOUTHTRUST CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

See Notes to Consolidated Condensed Financial Statements 3 SOUTHTRUST CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)

See Notes to Consolidated Condensed Financial Statements 4 SOUTHTRUST CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (UNAUDITED)

*See disclosure of reclassification amount and tax effect in Notes to Consolidated Condensed Financial Statements See Notes to Consolidated Condensed Financial Statements 5 SOUTHTRUST CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

See Notes to Consolidated Condensed Financial Statements 6 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003 Note A - General The Consolidated Condensed Financial Statements were prepared by SouthTrust Corporation (the "Company" or "SouthTrust") without an audit, but in the opinion of Management, reflect all adjustments necessary for the fair presentation of the Company's financial position and results of operations as of and for the three and six month periods ended June 30, 2004 and 2003. Results of operations for the interim 2004 period are not necessarily indicative of results expected for the full year. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, the Company believes that the disclosures herein are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2003. The accounting policies employed are the same as those shown in Note A to the Consolidated Financial Statements on Form 10-K. On June 20, 2004, SouthTrust and Wachovia Corporation ("Wachovia") entered into a definitive merger agreement providing for the merger of SouthTrust into Wachovia, with Wachovia as the surviving corporation. According to the agreement, Wachovia will exchange 0.89 shares of its common stock for each share of SouthTrust common stock. Based on Wachovia's closing price of $47.00 on June 18, 2004, the transaction would be valued at approximately $14.3 billion and represent an exchange value of $41.83 for each share of SouthTrust common stock at the date of the agreement. The merger is expected to close in the fourth quarter of 2004 and is subject to normal regulatory approvals and shareholder approval. In connection with the merger agreement, SouthTrust and Wachovia also entered into a Stock Option agreement, dated as of June 20, 2004, pursuant to which Wachovia has the right, under certain circumstances, to purchase up to 19.5% of the issued and outstanding shares of common stock of SouthTrust, at a price equal to the lesser of $34.755 per share and the closing price of SouthTrust common stock on the business day immediately prior to any date Wachovia notifies SouthTrust that it intends to exercise the option. 7 Note B - Recent Accounting Pronouncements Statement of Position ("SOP") 03-3 - Accounting for Loans or Certain Debt Securities Acquired in a Transfer In October 2003, the American Institute of Certified Public Accountants ("AICPA") issued SOP 03-3, which addresses accounting for differences between contractual cash flows expected to be collected from an investor's initial investment in loans or debt securities (loans) acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes such loans acquired in purchase business combinations and applies to all nongovernmental entities, including not-for-profit organizations. This SOP does not apply to loans originated by the entity. This SOP limits the yield that may be accreted ("accretable yield") to the excess of the investor's estimate of undiscounted expected principal, interest, and other cash flows (cash flows expected at acquisition to be collected) over the investor's initial investment in the loan. This SOP requires that the excess of contractual cash flows over cash flows expected to be collected ("nonaccretable difference") not be recognized as an adjustment of yield, loss accrual, or valuation allowance. This SOP prohibits investors from displaying accretable yield and nonaccretable difference in the balance sheet. Subsequent increases in cash flows expected to be collected generally would be recognized prospectively through adjustment of the loan's yield over its remaining life. Decreases in cash flows expected to be collected would be recognized as impairment. This SOP prohibits "carrying over" or creation of valuation allowances in the initial accounting of all loans acquired in a transfer that are within the scope of this SOP. The prohibition of the valuation allowance carryover applies to the purchase of an individual loan, a pool of loans, a group of loans, and loans acquired in a purchase business combination. This SOP is effective for loans acquired in fiscal years beginning after December 15, 2004. Management does not expect this SOP to have a material impact to the Consolidated Financial Statements. Note C - Other Non-Interest Income and Other Non-Interest Expense A detail of other non-interest income and non-interest expense for the three and six-month periods ended June 30, 2004 and 2003 is as follows: (In Thousands)

8 Note D - Earnings per Share Reconciliation A reconciliation of the numerator and denominator of the basic EPS computation to the diluted EPS computation is as follows:

The Company had zero and 1,466,875 options issued that were not included in the calculation of diluted EPS for the three and six-month periods ended June 30, 2004, respectively, as the exercise price of these options was in excess of the average market price. There were zero and 1,418,992 excluded options for the three and six-month periods ended June 30, 2003, respectively. Note E - Comprehensive Income (Loss) Comprehensive income (loss) is the total of net income and all other non-owner changes in equity. Items that are recognized under accounting standards as components of comprehensive income (loss) are displayed in the Consolidated Condensed Statements of Stockholders' Equity and Comprehensive Income. In the calculation of comprehensive income (loss), certain reclassification adjustments are made to avoid double counting items that are displayed as part of net income for a period that also had been displayed as part of other comprehensive income in that period or earlier periods. The disclosure of the reclassification amount is as follows: 9

10 Note F - Supplemental Cash Flow Information The following is supplemental disclosure to the Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2004 and 2003.

Note G - Proforma Stock-Based Compensation The Company applies APB Opinion 25, Accounting for Stock Issued to Employees, and related Interpretations in accounting for employee stock compensation plans and, accordingly, does not recognize compensation cost for stock options granted when the option price is greater than or equal to the underlying stock price. This accounting method is referred to as the intrinsic value method. The Company follows the pro-forma disclosures of Statement of Financial Accounting Standards ("SFAS") 123, Accounting for Stock-Based Compensation, as amended, using the fair value method of accounting for stock-based compensation. If the Company had elected to recognize compensation cost for options based on the fair value of the options as permitted by SFAS 123, net income and earnings per share would have been reduced to the pro forma amounts indicated below:

11 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model using the following assumptions:

Note H - Pension Disclosures In December 2003, the Financial Accounting Standards Board ("FASB") issued SFAS 132 (revised 2003), which revises employers' disclosures about pension plans and other postretirement benefits. Net periodic benefits cost includes the following components for the three and six months ended June 30:

12 The Company previously disclosed in its financial statements for the year ended December 31, 2003, the expected contributions to its pension, additional retirement, deferred, incentive, enhanced retirement, and postretirement plans during the 2004 plan year. It does not expect to contribute to the Pension Plan in the 2004 plan year. The Company plans to contribute approximately $1.7 million to its additional retirement, deferred, incentive, and enhanced retirement plans in 2004. However, no contributions were made to these plans in the first six months of 2004. The Company also expects to contribute approximately $0.7 million to its postretirement medical plan in 2004. There were no contributions made to the postretirement medical plan in the first six months of 2004. Note I - Business Segments The Company segregates financial information for use in assessing its performance, which is ultimately used for allocating resources to its business segments. The Company has four reportable business segments which are primarily aligned along the Company's organizational structure. Each segment is managed by one or more of the Company's executives who, in conjunction with the Chief Executive Officer, make strategic business decisions regarding that segment. The four reportable business segments are Commercial Banking, Regional Banking, Funds Management, and Capital Management. The Commercial Banking segment provides financing and other services for corporate customers throughout all geographic areas covered by SouthTrust. Types of corporate lending include the following: commercial and industrial, commercial real estate, middle-market lending, commercial leasing, asset-based lending, residential construction and health care. Also, the Commercial Banking segment provides cash management and international services in conjunction with the lending relationship established with commercial banking customers. The Regional Banking segment generates revenues through the Company's branch banking network. Services and products include retail and small business lending, depository services, and business banking. Also included in Regional Banking are certain centralized consumer lending areas such as mortgage lending and auto leasing, and branch administration costs. The Funds Management segment provides asset and liablity management, which includes management of interest rate and liquidity risk. Activities include management of the Company's securities portfolio, wholesale and long-term funding sources, and the use of derivatives such as interest rate swap agreements. The Capital Management segment provides trust, brokerage, investment, insurance services and private banking. All of these functions are managed as one area with the goal of providing a variety of financial management products to customers. The remaining Company divisions included within the Reconciliation grouping are divisions that have no operating revenue. They contain unallocated costs not directly associated with the other reportable segments. Other items in this grouping include income from bank owned life insurance, income tax expense and intercompany eliminations. The Company's management accounting policies generally follow those for the Company described in Note A to the Consolidated Financial Statements on Form 10-K for the year ended December 31, 2003, except for the following items. The Company uses a transfer pricing process, which involves matched rate transfer pricing of assets and liabilities to determine a contribution to the net interest margin by segment. Also, net interest margin is reported on a fully taxable equivalent basis. Data processing and other support function costs are allocated to business segments primarily based on resource usage. Also, the Company uses a risk-based methodology to allocate capital to business segments. 13 The Company's management accounting policies are continuously evolving based on both internal and external factors. Therefore, the Company has restated the comparative 2003 segment information to conform to the 2004 presentation for methodology changes made during the latter part of 2003. As management accounting policies change, prior period restatements may also be necessary in the future. In addition, results of operations for SouthTrust's reportable segments may not be comparable to similar reportable segments for other financial institutions. 14 The following tables present the Company's business segment information for the three and six month periods ended June 30, 2004 and 2003:

15 Note J - Business Combinations On June 20, 2004, SouthTrust and Wachovia Corporation entered into a definitive merger agreement that provides, among other things, for SouthTrust to be merged with and into Wachovia, with Wachovia as the surviving corporation. Refer to Note A for further discussion about the merger. During the first six months of 2004, the Company completed the following acquisition:

Under purchase accounting, the results of operations, subsequent to the acquisition date, are included in the Consolidated Condensed Financial Statements. 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK BUSINESS SouthTrust Corporation ("SouthTrust" or the "Company") is a registered financial holding company incorporated under the laws of Delaware in 1968. The Company is headquartered in Birmingham, Alabama, and engages, through its subsidiary bank, SouthTrust Bank, and its non-banking subsidiaries, in a full range of banking services from 736 banking locations in Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Virginia. As of June 30, 2004, the Company had consolidated total assets of $52.9 billion, which ranked it among the top twenty bank holding companies in the United States. SouthTrust Bank offers a broad range of banking services, either directly or through other affiliated bank related subsidiaries. Services to business customers include providing checking and time deposit accounts, cash management services, various types of lending and credit services, and corporate and other trust services. Services provided to individual customers directly or through other affiliated corporations include checking accounts, money market investment and money market checking accounts, personal money management accounts, passbook savings accounts and various other time deposit savings programs, loans (including business, personal, automobile, mortgage, home improvement and educational loans), and a variety of trust services. SouthTrust Bank also offers Visa and/or MasterCard multi-purpose nationally recognized credit card services. The Company also offers brokerage and other investment services through its subsidiary SouthTrust Securities, Inc. Information relating to the Company's business segments can be found in Note I to the unaudited Consolidated Condensed Financial Statements. On June 20, 2004, SouthTrust and Wachovia Corporation ("Wachovia") entered into a definitive merger agreement providing for the merger of SouthTrust into Wachovia, with Wachovia as the surviving corporation. According to the agreement, Wachovia will exchange 0.89 shares of its common stock for each share of SouthTrust common stock. Based on Wachovia's closing price of $47.00 on June 18, 2004, the transaction would be valued at approximately $14.3 billion and represent an exchange value of $41.83 for each share of SouthTrust common stock at the date of the agreement. The merger is expected to close in the fourth quarter of 2004 and is subject to normal regulatory approvals and shareholder approval. In connection with the merger agreement, SouthTrust and Wachovia also entered into a Stock Option agreement, dated as of June 20, 2004, pursuant to which Wachovia has the right, under certain circumstances, to purchase up to 19.5% of the issued and outstanding shares of common stock of SouthTrust at a price equal to the lesser of $34.755 per share and the closing price of SouthTrust common stock on the business day immediately prior to any date Wachovia notifies SouthTrust that it intends to exercise the option. During the second quarter of 2004, SouthTrust and MBNA Corporation ("MBNA") signed a multi-year agreement under which MBNA acquired SouthTrust's bankcard portfolio. The effects of this sale on the Company's Consolidated Financial Statements are discussed further in this document. 17 FORWARD-LOOKING STATEMENTS This report (including information included or incorporated by reference herein) may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, with respect to SouthTrust, including, without limitation, (i) statements relating to SouthTrust's expectations with respect to the proposed merger (the "Merger") of SouthTrust with and into Wachovia and (ii) statements preceded by, followed by or that include the words "may", "could", "should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan", "projects", "outlook" or similar expressions. These statements are based upon the current beliefs and expectations of SouthTrust's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond SouthTrust's control). The following factors, among others, could cause SouthTrust's financial performance to differ materially from that expressed in such forward-looking statements: (1) the risk that the businesses of Wachovia and SouthTrust in connection with the Merger will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected time frame; (3) 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 ability to obtain governmental approvals of the Merger on the proposed terms and schedule; (6) the failure of Wachovia's and SouthTrust's shareholders to approve the Merger; (7) the strength of the United States economy in general and the strength of the local economies in which Wachovia and/or SouthTrust 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 and/or SouthTrust'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) inflation, interest rate, market and monetary fluctuations; (10) 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 capital markets and capital management activities, including, without limitation, Wachovia's mergers and acquisition advisory business, equity and debt underwriting activities, private equity investment activities, derivative securities activities, investment and wealth management advisory businesses, and brokerage activities; (11) the timely development of competitive new products and services by Wachovia and SouthTrust and the acceptance of these products and services by new and existing customers; (12) the willingness of customers to accept third party products marketed by Wachovia and SouthTrust; (13) the willingness of customers to substitute competitors' products and services for Wachovia's and SouthTrust's products and services and vice versa; (14) the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); (15) technological changes; (16) changes in consumer spending and saving habits; (17) the effect of corporate restructurings, acquisitions and/or dispositions, including, without limitation, the Merger (and any required divestitures related thereto) and the actual restructuring and other expenses related thereto, and the failure to achieve the expected revenue growth and/or expense savings from such corporate restructurings, acquisitions and/or dispositions; (18) the growth and profitability of Wachovia's and SouthTrust's non-interest or fee income being less than expected; (19) unanticipated regulatory or judicial proceedings or rulings; (20) the impact of changes in accounting principles; (21) adverse changes in financial performance and/or condition of Wachovia's and/or SouthTrust's borrowers which could impact repayment of such borrowers' outstanding loans; (22) the impact on Wachovia's and SouthTrust's businesses, as well as on the risks set forth above, of various 18 domestic or international military or terrorist activities or conflicts; and (23) Wachovia's and SouthTrust's success at managing the risks involved in the foregoing. SouthTrust cautions that the foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements concerning SouthTrust or the Merger or other matters and attributable to SouthTrust or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SouthTrust does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this report. SELECTED QUARTERLY FINANCIAL DATA TABLE 1 (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)

19 AVERAGE BALANCES, INTEREST INCOME AND EXPENSE AND TABLE 2 AVERAGE YIELDS EARNED AND RATES PAID (DOLLARS IN MILLIONS; YIELDS ON TAXABLE EQUIVALENT BASIS)

(1) YIELDS WERE CALCULATED USING THE AVERAGE AMORTIZED COST OF THE UNDERLYING ASSETS. ALL YIELDS AND RATES ARE PRESENTED ON AN ANNUALIZED BASIS. (2) INCLUDED IN INTEREST ARE NET LOAN FEES OF $15.8 MILLION, $10.8 MILLION, $12.8 MILLION, $11.5 MILLION, AND $9.3 MILLION FOR EACH OF THE FIVE QUARTERS IN THE PERIOD ENDED JUNE 30, 2004, RESPECTIVELY. THE AVERAGES INCLUDE LOANS ON WHICH THE ACCRUAL OF INTEREST HAS BEEN DISCONTINUED. INCOME ON NON-ACCRUAL LOANS IS RECOGNIZED ON A CASH BASIS. 20 TABLE 2

21 NET INTEREST INCOME / MARGIN Net interest income is the principal component of SouthTrust's earnings and represents the difference between revenue generated by interest-earning assets and the interest cost related to funding those assets. The net interest margin and net interest spread are affected by the composition of interest-earning assets and interest-bearing liabilities, competitive pressures, and Federal Reserve Bank (the "Federal Reserve") monetary policies. For purposes of discussion, income that is either exempt from federal income taxes or taxed at a preferential rate has been adjusted to fully taxable equivalent ("FTE") amounts, using a statutory federal tax rate of 35%. The Company's net interest margin decreased 9 basis points from the second quarter of 2003 to 3.51% for the 2004-second quarter period. On a year-to-date basis, net interest margin decreased 15 basis points to 3.50% for the six months ended June 30, 2004. The economic conditions during 2003 and the prolonged low interest rate environment have presented a challenge to the Company as well as other financial institutions. From the beginning of 2001 until this quarter, the Fed lowered short-term interest rates a total of 500 basis points. These factors contributed to historically low mortgage interest rates, leading to higher prepayments of mortgage-backed securities, 1-4 family mortgage loans, as well as other fixed-rate interest-earning assets tied to treasury yields (which are the benchmark for mortgage interest rates). Prepayments from these assets, as well as fixed-rate commercial loans, were being reinvested at lower rates, while liability costs, which are tied to other indexes, were not declining at the same pace as asset yields. These factors caused compression in the Company's net interest margin during 2003. The net interest margin began to stabilize at the end of 2003, which reflected the stabilization of long-term interest rates. Looking at the remainder of 2004, Management continues to manage the interest rate sensitivity position of the Company to a neutral to slightly asset sensitive position. This is accomplished by remaining focused on variable-rate lending, managing the maturity and duration of securities purchases, carefully managing the level of fixed-rate loans, and continued emphasis on the growth of core deposits. In June of 2004, the Federal Reserve raised short-term interest rates 25 basis points. Given the recent improvement in economic conditions, this upward trend in interest rates is likely to continue. Since the balance sheet is in a slightly asset sensitive interest rate position, an increase in interest rates might improve the net interest margin over time. However, the impact of the sale of the Company's bankcard portfolio is expected to lower the net interest margin by approximately four basis points in subsequent quarters. Also, if a contraction of the spread between long-term and short-term interest rates were to occur (i.e., a flattening of the yield curve), then net interest margin could decrease because the Company's funding durations are typically shorter (and therefore, reprice quicker) than its asset durations. See Table 2 for detailed information concerning quarterly average volumes, interest, yields earned and rates paid. PROVISION FOR LOAN LOSSES During the second quarter of 2004, the Company recorded a $29.0 million provision for loan losses. This compares to a provision of $30.3 million for the quarter ended June 30, 2003. For the six-month periods ended June 30, 2004 and 2003, the provisions for loan losses were $56.5 million and $59.7 million, respectively. Provisions for loan losses are charged to income to bring the allowance to a level deemed appropriate by Management based on the factors as described in "Allowance for Loan Losses" later in Management's Discussion and Analysis of Financial Condition and Results of Operations Earnings Summary. 22 NON-INTEREST INCOME Total non-interest income for the quarter ended June 30, 2004 was $242.2 million, an increase of $64.5 million or 36% over the same period in 2003. Growth in non-interest income between these periods primarily came from the sources discussed below. Service charges on deposit accounts increased in the second quarter of 2004 by 5% from the comparable year-ago period. For the six months ended June 30, 2004, service charges on deposit accounts increased 4% over the same period in 2003. These increases primarily related to fees charged for non-sufficient funds. Mortgage banking operations income decreased 61% for the three and six-month periods ended June 30, 2004, compared to the same periods in 2003. The decrease was driven by decreased loan production during the first six months of 2004 when compared to the same period in 2003. Mortgage loan production during the first six months of 2004 totaled $2,763.8 million, compared to $3,652.5 million during the first six months of 2003. As expected, mortgage loan production has slowed down when compared to 2003 levels as a result of higher mortgage interest rates during the current period. Bankcard fees decreased during the second quarter of 2004 by 11% compared to the second quarter of 2003, and were relatively flat for the six months ended June 30, 2004 compared to the same period in 2003. The decrease for the second quarter of 2004 reflects the sale of the Company's bankcard portfolio during the second quarter of 2004, discussed further below. Debit card fees increased 3% during the second quarter of 2004 compared to the same period in 2003. On a year-to-date basis, debit card fees were relatively flat, increasing 1% for the six months ended June 30, 2004 when compared to the same period in 2003. During the third quarter of 2003, Visa and MasterCard settled lawsuits initiated by several major retailers. The effect of the settlements on the Company during 2004 has been slower growth in debit card fees, since the fees charged to merchants by Visa and MasterCard to process their debit cards have decreased. This trend is likely to continue as a result of the settled lawsuits. Trust fee income decreased 6% from the second quarter of 2003 to the second quarter of 2004. For the six months ended June 30, 2004, trust fee income increased 2% compared to the six months ended June 30, 2003. This decrease during the second quarter of 2004 was due to fluctuations in market conditions, as well as fluctuations in sales during the year. Investment fee income decreased by 26% and 14% during the second quarter and first six months of 2004, respectively, compared to the same year-ago periods. This is mainly attributable to market conditions, as higher interest rates have slowed the demand for customer derivatives. Income from bank owned life insurance ("BOLI") for the second quarter of 2004 decreased 7% over the comparable year-ago period and decreased 10% for the six months ended June 30, 2004 compared to the same period in 2003. Securities gains during the second quarter and first six months of 2004 were $6.4 million and $9.3 million, respectively. During the second quarter of 2004, a $3.8 million gain was recognized from the sale of an equity investment that was obtained in a previous acquisition and no longer served its original purpose under the Company's long-term strategy. For the second quarter and first six months of 2003, securities losses were $1.4 million and $2.5 million, respectively. 23 During the second quarter of 2004, the Company sold its bankcard portfolio to MBNA Corporation and recorded a gain of approximately $75.7 million, which is included in other non-interest income. There were no other significant non-recurring non-interest income items recorded in the second quarter of 2004 or 2003 that have not been disclosed above. NON-INTEREST INCOME TABLE 3 (In Millions)

NON-INTEREST EXPENSE Total non-interest expense was $349.7 million in the second quarter of 2004 compared to $306.4 million for the same period in 2003. For the six months ended June 30, 2004 and 2003, total non-interest expense was $635.1 million and $604.4 million, respectively. The efficiency ratio, a measure of non-interest expense compared to net interest income plus non-interest income, was 53.14% and 51.45% for the three and six-month periods ended June 30, 2004, respectively. This compares to an efficiency ratio of 51.17% for both the three and six-month periods ended June 30, 2003, respectively. Salaries and employee benefits expense is the largest component of non-interest expense, accounting for 53% and 57% of all non-interest expense for the second quarter and first six months of 2004, respectively. From second quarter 2003 to second quarter 2004, salaries and employee benefits expense has increased 2% due to an increase in the number of full-time equivalent employees from 12,358 to 12,640, respectively. For the six-month period ended June 30, 2004 compared to the same year-ago period, salaries and employee benefits expense has remained relatively constant. Expense for net occupancy increased 5% for both the second quarter and first six months of 2004, respectively, when compared to the same periods in 2003. This increase is related to a 5% increase in the number of banking offices, as well as increases in property taxes. 24 Expense for equipment decreased 6% and 7% for the second quarter and first six months of 2004, respectively, when compared to the second quarter and first six months of 2003, due in part to retirements of old or unused personal computers during 2003. Also, the Company experienced a reduction in the number of phones being utilized as a result of efficiencies gained from a new phone system implemented in 2002. Expense for professional services for the second quarter of 2004 increased 131% over the same period a year ago, and increased 74% in the first six months of 2004 when compared to the same six-month period of 2003. These increases are due to approximately $20.0 million in investment banking and legal fees related to the impending merger with Wachovia Corporation. Data processing expense increased 10% during the second quarter of 2004 compared to the second quarter of 2003. The increase in the second quarter of 2004 is attributable to accrued expenses for processing contract terminations related to the sale of the Company's bankcard portfolio, totaling approximately $4.0 million. For the six-month period ended June 30, 2004 when compared to the same period in 2003, the increase was 3%. For both the three and six months ended June 30, 2004, communications expense decreased 5% over the same periods in 2003. This decrease relates primarily to the renegotiation of rates and contracts during 2003. Business development expense increased 29% and 12% during the second quarter and first six months of 2004, respectively, over the same year-ago periods. The increase reflects an increase in corporate donations during 2004. Foreclosed property expense for the second quarter of 2004 increased 29% over the second quarter of 2003. The increase was driven by increased reserves for other real estate owned ("OREO") during 2004. For the first six months of 2004, the increase was 6% over the first six months of 2003. Miscellaneous losses increased 264% and 107% during the second quarter and first six months of 2004, respectively, when compared to the same periods in 2003. The increase reflects increases in the Company's litigation reserve as well as a fraud loss of approximately $4.2 million, both occurring during the second quarter of 2004. Other expense increased 18% from the second quarter 2003 to second quarter 2004. This increase was primarily related to marking delinquent bankcard loans held for sale to the lower of cost of market, which totaled approximately $6.8 million. For the six months ended June 30, 2004, compared to the same period a year ago, other expense was relatively flat. There were no significant non-recurring non-interest expense items recorded in the first six months of 2004 or 2003 that have not been disclosed above. 25 NON-INTEREST EXPENSE TABLE 4 (In Millions)

INCOME TAX EXPENSE Income tax expense for the second quarter of 2004 was $88.1 million for an effective tax rate of 31.2%. This compares to income tax expense for the second quarter of 2003 of $83.0 million for an effective rate of 32.2%. The statutory federal income tax rate was 35% in 2004 and 2003. During 2003, the Company realized an effective income tax rate reduction relating to the realignment of its corporate structure to facilitate a more efficient management of its business. The reduced effective tax rate is expected to continue for future periods; however, this reduction is subject to several factors and may not be consistent in future periods. LOANS Loans, net of unearned income at June 30, 2004 were $36,510.9 million, a net increase of $1,230.7 million over the December 31, 2003 level, which includes $515.9 million obtained with the FloridaFirst Bancorp, Inc. ("FloridaFirst") acquisition (See Note J for further discussion). Dispositions included about $313.7 million in bankcard loans that were sold during the second quarter of 2004. Additionally, the auto lease portfolio declined $31.5 million to $728.0 million as SouthTrust ceased new originations early in the second quarter of 2004. Low interest rates and the prospect that rates will rise in the near future caused many commercial real estate mortgage customers to seek permanent financing, which contributed to a $353.7 million decrease in the commercial real estate mortgage portfolio during the six months ended June 30, 2004. Loan growth has recently begun to accelerate, beginning during the latter part of 2003, as a result of signs of a healthier economy. Loan production continues to improve, particularly in middle-market commercial lending and real estate construction lending, and the recent stabilization of long-term interest rates has resulted in reduced loan prepayments. Management believes that the Company is well- positioned to achieve more loan growth due to an increasing number of lending opportunities. 26 The Company considers the appropriate mix of variable and fixed-rate loans in asset/liability management strategy. As of June 30, 2004, 75% of the Company's loan portfolio had variable interest rates. Of the Company's variable-rate loan portfolio balance, 51% of these loans were tied to the floating London Interbank Offered Rate ("LIBOR"), 43% were tied to the Prime rate, and 6% were tied to other indexes. LOAN PORTFOLIO TABLE 5 (In Millions)

ALLOWANCE FOR LOAN LOSSES The lending process carries with it some level of credit risk, which is reflected in the Company's Consolidated Financial Statements as the allowance for loan losses. The Company maintains an allowance for loan losses at a level that Management believes is sufficient to absorb credit losses inherent in the loan portfolio. The allowance at any period-end represents Management's best assessment of losses within a range of estimated losses. As with any estimate, actual results can potentially vary significantly from this assessment. The methodology and assumptions used to calculate the allowance are continually reviewed as to their appropriateness given the most recent losses realized and other factors that influence the estimation process. The model and resulting allowance level are adjusted accordingly as these factors change. The allowance allocated to specifically identified loans at June 30, 2004 and December 31, 2003 totaled $35.6 million and $20.4 million, respectively. The allowance allocated to Watch-list loans at June 30, 2004 totaled $87.3 million, and the allowance allocated to Non-problem loans totaled $387.0 million. Based on the methodology outlined above, the total allowance for loan losses was $509.9 million at June 30, 2004 and $501.2 million at December 31, 2003. As a percentage of outstanding loans, the total allowance for loan losses was 1.40 %, compared to the December 31, 2003 level of 1.42 %. Net charge-offs during the three months ended June 30, 2004 totaled $28.5 million or .32% of average net loans on an annualized basis, a decrease of $1.8 million from the 2003 second-quarter period. For the six months ended June 30, 2004, net charge-offs were $56.0 million or .31% of average net loans, a decrease of $2.7 million from the same period in June 2003. 27 ALLOWANCE FOR LOAN LOSSES TABLE 6 (In Thousands)

28 NON-PERFORMING ASSETS Non-performing assets, which include non-accrual and restructured loans, other real estate owned and other repossessed assets were $199.8 million at June 30, 2004, a decrease of $24.3 million from December 31, 2003. The ratio of non-performing assets to total loans plus other non-performing assets was 0.55% at June 30, 2004, while the allowance to non-performing loans ratio was 307.09% for the same period. The decrease in non-performing assets during 2004 relates primarily to paydowns from a few of the Company's larger borrowers that are on non-accrual status. The Company has historically maintained high credit underwriting standards and consistent credit disciplines, and does not see any trends that would result in any significant changes in ultimate losses. In addition to loans on non-accrual status, the Company has loans where known information about possible credit problems of borrowers causes Management to have concerns as to the ability of such borrowers to fully comply with their present loan repayment terms at June 30, 2004. These loans, although they are currently performing, could become non-performing and be placed on non-accrual status in the future. However, the magnitude of these loans is not such that any potential future losses are expected to have a material effect on the Consolidated Financial Statements. NON-PERFORMING ASSETS TABLE 7 (Dollars In Millions)

29 AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES The investment portfolio is managed to maximize yield over an entire interest rate cycle while providing liquidity and minimizing risk. Securities classified as held-to-maturity are carried at amortized cost, as the Company has the ability and Management has the positive intent to hold these securities to maturity. All securities not considered held-to-maturity or part of the trading portfolio have been designated as available-for-sale and are recorded at fair value. Unrealized gains and losses on available-for-sale securities are excluded from earnings and are reported in accumulated other comprehensive income, a component of stockholders' equity, net of deferred taxes. This caption includes securities that Management intends to use as part of its asset/liability management strategy or that may be sold in response to changes in interest rates, changes in prepayment risk, liquidity needs, or for other purposes. Total securities, including those designated as available-for-sale and held-to-maturity, have decreased $246.6 million since December 31, 2003. During the second quarter of 2004, $176.2 million of available-for-sale securities were obtained in the acquisition of FloridaFirst. The net decrease is a result of current market conditions in which the rising rate environment has led to a decrease in the valuation of bonds. AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES TABLE 8

30 SHORT-TERM INVESTMENTS Short-term investments at June 30, 2004 totaled $825.7 million, reflecting an increase of $0.5 million from the December 31, 2003 level of $825.2 million. At June 30, 2004, short-term investments consisted of $13.9 million in federal funds sold, $13.4 million in time deposits with other banks, $135.9 million in trading securities and $662.5 million in loans held for sale. Securities held for trading purposes primarily include inventory at the Company's brokerage subsidiary and are carried at fair value. Loans held for sale, primarily 1-4 family mortgage loans in the process of being securitized and sold to third party investors, are carried at the lower of cost or fair value in the aggregate. The Company regularly participates in loan sales in the secondary market, which facilitate the management of its loan portfolio. Specifically, these sales allow the Company to manage credit concentrations, while continuing to extend credit to customers. Loans sold, consisting mainly of 1-4 family mortgages, amounted to approximately $2,383.8 million during the six month period ended June 30, 2004. The Company's Asset/Liability Management Committee monitors current and future expected economic conditions, as well as the Company's liquidity position, in determining desired balances of short-term investments and alternative uses of such funds. FUNDING The Company's overall funding level is governed by current and expected asset demand and capital needs. The Company's funding sources can be divided into four broad categories: deposits, short-term borrowings, Federal Home Loan Bank ("FHLB") advances, and long-term debt. The mixture of these funding types depends upon the Company's maturity and liquidity needs, the current rate environment, and the availability of such funds. The Company monitors certain ratios and liability concentrations to ensure funding levels are maintained within established policies. These policies include a maximum short-term liability to total asset ratio of 40% and a limit on funding concentrations from any one source as a percent of total assets of 20%. Various maturity limits have also been established. Deposits are the Company's primary source of funding. Total deposits at June 30, 2004 were $36,800.2 million, up $2,053.6 million or 6% from the December 31, 2003 level of $34,746.6 million. Of this increase, $1,482.4 million is from wholesale funding sources. Core deposits, defined as demand deposits, time deposits less than $100,000 and other long-term customers' deposits, increased $571.2 million during the period. In addition, $535.3 million of deposits were obtained in the acquisition of FloridaFirst. At June 30, 2004 total deposits included interest-bearing deposits of $31,146.2 million and non-interest-bearing deposits of $5,654.0 million. Short-term borrowings at June 30, 2004 were $3,997.2 million and included federal funds purchased of $2,117.6 million, securities sold under agreements to repurchase of $1,774.1 million and other borrowed funds of $105.5 million. At June 30, 2004, total short-term borrowings were 7.6% of total liabilities and stockholders' equity, which is down from the December 31, 2003 level of 11.3%. 31 FHLB advances totaled $3,596.0 million at June 30, 2004. The current quarter-end balance is up $15.2 million from the level outstanding at December 31, 2003. During the first six months of 2004, $114.5 million of FHLB advances were obtained with the FloridaFirst acquisition. The Company uses FHLB advances as an alternative to other funding sources with similar maturities. They are also flexible, allowing the Company to quickly obtain the necessary maturities and rates that best suit its overall asset/liability management strategy. At June 30, 2004 and December 31, 2003, total long-term debt was $3,221.1 million and $2,506.9 million, respectively. During the first six months of 2004, $1,400.0 million in Bank Notes were issued and $400.0 million of Subordinated Notes were issued, while maturities of long-term debt totaled $1,075.9 million. Maturities of long-term debt during the remainder of 2004 include $25.0 million of variable-rate Bank Notes. CAPITAL The Company continually monitors current and projected capital adequacy positions of both the Company and its subsidiary bank. Maintaining adequate capital levels is integral to providing stability to the Company, resources to achieve the Company's growth objectives, and returns to stockholders in the form of dividends. The Company is subject to various regulatory capital requirements that prescribe quantitative measures of the Company's assets, liabilities, and certain off-balance sheet items. The Company's regulators have also imposed qualitative guidelines for capital amounts and classifications such as risk weighting, capital components, and other details. The quantitative measures to ensure capital adequacy require that the Company maintain Tier 1 and Total capital to risk-weighted assets of 4% and 8%, respectively, and Tier 1 capital to adjusted quarter average total assets of 4%. Failure to meet minimum capital requirements can initiate certain actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. As of the periods ended in the table below, the Company meets all capital adequacy requirements imposed by its regulators. The June 30, 2004 Tier 1 and Total capital to risk weighted assets were 8.13% and 11.92%, respectively, compared to the December 31, 2003 ratios of 7.77% and 10.68%, respectively. 32 CAPITAL RATIOS TABLE 9 (DOLLARS IN MILLIONS)

33 ISSUER PURCHASES OF EQUITY SECURITIES During 2003, the Company repurchased 17.9 million shares of Common Stock under the previous program authorized for up to $500 million of common stock, thereby utilizing the entire authorized amount. The following table summarizes information regarding the Company's repurchases of common stock during the six months ended June 30, 2004 under a new repurchase program for 2004: ISSUER PURCHASES OF EQUITY SECURITIES TABLE 10

(1) During the first six months of 2004, the Company repurchased 16,168 shares in connection with exercises of stock options. (2) On January 21, 2004, the Company's board of directors authorized and the Company announced the repurchase of up to $300 million of the Company's common stock, which at current prices would represent approximately 8 million shares. The repurchase program will be implemented through open market transactions at prevailing prices from time to time throughout 2004, and will expire on December 31, 2004. On June 20, 2004, SouthTrust and Wachovia Corporation signed a definitive merger agreement. Therefore, no further repurchases of SouthTrust's common stock are expected to occur under this repurchase plan. 34 OFF-BALANCE SHEET ARRANGEMENTS The Company, in the normal course of business, is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments primarily include commitments to extend credit to borrowers whose loans will be maintained for the Company's portfolio and standby letters of credit. The contract or notional amounts of the instruments reflect the extent of involvement the Company has in particular classes of financial instruments. Creditworthiness for all instruments is evaluated on a case-by-case basis in accordance with the Company's credit policies. Collateral, if deemed necessary, is based on Management's credit evaluation of the customer and may include business assets of commercial borrowers as well as personal property and real estate of individual borrowers and guarantors. The Company's subsidiary bank had outstanding commitments to extend credit of approximately $14,490.1 million at June 30, 2004 and $14,464.1 million at December 31, 2003. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company's subsidiary bank had commitments to issue standby letters of credit outstanding of approximately $1,428.7 million at June 30, 2004 and $1,413.2 million at December 31, 2003. In addition, the Company has recorded a liability for the estimated fair value of these standby letters of credit of approximately $1.9 million at June 30, 2004 and $2.5 million at December 31, 2003, based on the fees charged for these arrangements. Prior to December 31, 2002, the Company participated in securitizations of its 1-4 family mortgage loans, where the Company received 100% of the securities backed by the 1-4 family mortgage loans. These securities are guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC") and the Federal National Mortgage Association ("FNMA"). The Company provided first-loss guarantees in some of these securitizations, which provide for the Company to reimburse FHLMC or FNMA a certain percentage of credit losses. The maximum potential future payments the Company could be required to make under these guarantees at June 30, 2004 was $69.5 million, which is not recorded as a liability since the securitizations were not accounted for as sales transactions. The Company has pledged $44.7 million in available-for-sale securities to support these guarantees as of June 30, 2004. INTEREST RATE RISK MANAGEMENT The Company's primary market risk is its exposure to interest rate changes. Interest rate risk management strategies are designed to optimize net interest income while minimizing fluctuations caused by changes in the interest rate environment. It is through these strategies that the Company seeks to manage the maturity and repricing characteristics of its balance sheet. The modeling techniques used by SouthTrust simulate changes in net interest income under various rate scenarios. Important elements of the techniques include the mix of floating versus fixed rate assets and liabilities, the scheduled repricing and maturing volumes and rates of the existing balance sheet, the slope of the yield curve, and prepayment assumptions. Actual financial results may differ from simulated results because of many factors including, but not limited to, the timing, magnitude and frequency of changes in interest rates, market conditions and management strategies. 35 The following table illustrates the expected effect a given parallel interest rate shift would have on the annualized projected net interest income of the Company as of June 30, 2004. These projections are based on a flat rate scenario. Actual interest rate adjustments made by the Federal Reserve do not result in parallel shifts in interest rate because of factors relating to the sloping yield curve. Actual financial results may differ from simulated results because of many factors including, but not limited to, the timing, magnitude and frequency in changes in interest rates, market conditions, and management strategies.

DERIVATIVE FINANCIAL INSTRUMENTS HEDGING ACTIVITIES Derivative financial instruments that are used as part of the Company's interest rate risk management strategy include interest rate swap agreements ("swaps"). These swaps are designated as fair value hedges and provide for the Company to pay interest based on LIBOR while receiving payments of a fixed rate. Balance sheet items hedged include pools of fixed-rate deposit liabilities and certain issuances of fixed-rate long-term debt. Also, the Company's mortgage banking subsidiary enters into forward sales commitments that are commitments for future sales of closed mortgage loans to third parties at a specified price and are designated as fair value hedges. Additionally, swaps are used as part of the Company's interest rate risk management strategy that are designated as cash flow hedges. These swaps provide for the Company to pay interest based on LIBOR while receiving payments of a fixed rate, and are designated as cash flow hedges of pools of floating-rate LIBOR loans. DERIVATIVE INSTRUMENTS USED FOR HEDGING ACTIVITIES TABLE 11 (Dollars in Millions)

36 TRADING ACTIVITIES The Company enters into various contracts to provide derivative products to customers and enters into offsetting positions with third parties. These derivatives do not qualify for hedge accounting; therefore, changes in fair value are reflected in earnings. The Company's mortgage banking subsidiary enters into interest rate lock commitments, which are commitments to originate loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. The interest rate lock commitments are considered to be derivatives. To offset changes in the interest rate lock commitments, the Company's mortgage banking subsidiary enters into forward sales commitments against some of its interest rate lock commitments. These derivatives do not qualify as an accounting hedge. Credit risk represents the potential loss that may occur due to the nonperformance by a party to a contract. The Company controls credit risk for derivatives by applying uniform credit standards maintained for other activities with credit risk. The Company monitors transactions under credit risk limits previously approved as a result of the credit review and also enters into collateralization agreements with each counter party. TRADING DERIVATIVES (Dollars in Millions)

37 CONTINGENCIES Certain of the Company's subsidiaries are defendants in various legal proceedings arising in the normal course of business. These claims relate to the lending and investment advisory services provided by the Company and include alleged compensatory and punitive damages. In addition, subsidiaries of the Company have been named as defendants in suits that allege fraudulent, deceptive or collusive practices in connection with certain financing and deposit-taking activities, including suits filed as class actions. These suits are typical of complaints that have been filed in recent years challenging financial transactions between plaintiffs and various financial institutions. The complaints in such cases frequently seek punitive damages in transactions involving fairly small amounts of actual damages, and in recent years, have resulted in large punitive damage awards to plaintiffs. Although it is not possible to determine, with any certainty at this point in time, the potential exposure related to punitive damages in connection with these suits, Management, based upon consultation with legal counsel, believes that the ultimate resolutions of these proceedings will not have a material adverse effect on the Company's financial statements. On June 22, 2004, an individual shareholder of SouthTrust, purporting to represent a class of holders of SouthTrust common stock, filed a complaint in the Court of Chancery of the State of Delaware, naming SouthTrust and some of its officers and directors as defendants. In the complaint the plaintiff alleges that the defendants breached their fiduciary duties to SouthTrust shareholders in agreeing to the merger by, among other things, failing to conduct an auction. The plaintiff seeks, among other things, to enjoin the merger and to be awarded unspecified monetary damages, including the fees of the plaintiff's attorneys. In addition, on June 24, 2004, an individual shareholder of SouthTrust filed a purported class action complaint in the Circuit Court of Jefferson County, Alabama, naming SouthTrust and all of its directors as defendants. The complaint alleges that the defendants breached their fiduciary duties to SouthTrust shareholders in approving the merger by, among other things, failing to wait for the announcement of SouthTrust's second quarter 2004 earnings results in order to achieve a higher price and agreeing to a merger that results in change of control payments to SouthTrust's senior management. The plaintiff seeks, among other things, to enjoin the merger and to be awarded attorneys' fees. It is a condition to closing the merger that no judicial body of competent jurisdiction shall have issued any judgment, decree, injunction or other order that prohibits the closing of the merger. SouthTrust believes that these lawsuits are without merit and intends to defend them vigorously. 38 ITEM 4. CONTROLS AND PROCEDURES The Company has evaluated the effectiveness of its disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. The evaluation was performed under the supervision and with the participation of the Company's Disclosure Committee and Management, including the principal executive officer and the principal financial officer, as of the end of the period covered by this quarterly report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms, and all material information required to be disclosed in this quarterly report has been accumulated and communicated to them in a manner appropriate to allow timely decisions regarding required disclosure. During the period covered by this quarterly report, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 39 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Information required by this item is contained herein in response to Item 2 of Part I on page 38. ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES (e) Purchases of equity securities by the issuer and affiliated purchasers - Information required by this item is contained herein in response to Item 2 of Part I on page 32. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders of SouthTrust Corporation was held on April 21, 2004. The stockholders elected four nominees as directors. The following is a tabulation of the voting on this matter:

The stockholders also ratified the selection of KPMG, LLP as SouthTrust's principal independent auditors for the fiscal year ending December 31, 2004. The following is a tabulation of the voting on this matter:

The stockholders also voted to approve and ratify the Amended and Restated Senior Officer Performance Incentive Plan. The following is a tabulation of the voting on this matter:

The stockholders also voted to approve and ratify the 2004 Long-Term Incentive Plan. The following is a tabulation of the voting on this matter:

40 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 2 Agreement and Plan of Merger dated as of June 20, 2004, between Wachovia Corporation and SouthTrust Corporation and restated on July 9, 2004. * 3(i) Composite Restated Certificate of Incorporation of SouthTrust Corporation, which was filed as Exhibit 3(i) to SouthTrust Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 (File No. 0-3613). * 3(ii) Composite Restated Bylaws of SouthTrust Corporation which was filed as Exhibit 4(e) to the Registration Statement on Form S-4 of SouthTrust Corporation (Registration No. 33-61557). * 4(a) Articles FOURTH, SIXTH, SEVENTH, and ELEVENTH of the Restated Certificate of Incorporation of SouthTrust Corporation (included at Exhibit 3(a)). * 4(b) Certificate of Designation of Preferences and Rights of Series 1999 Junior Participating Preferred Stock, adopted December 16, 1998 and effective February 22, 1999, which was filed as Exhibit A to Exhibit 1 to SouthTrust Corporation's Registration Statement on Form 8-A (File No. 001-14781). * 4(c) Amended and Restated Shareholder's Rights Agreement, dated as of August 1, 2000 between SouthTrust Corporation and American Stock Transfer & Trust Company, Rights Agent, which was filed as Exhibit 1 to SouthTrust Corporation's Registration Statement on Form 8-A (File No. 001-14781). * 4(d) Indenture, dated as of May 1, 1987, between SouthTrust Corporation and National Westminster Bank USA, which was filed as Exhibit 4(a) to SouthTrust Corporation's Registration Statement on Form S-3 (Registration No. 33-13637). * 4(e) Subordinated Indenture, dated as of May 1, 1992, between SouthTrust Corporation and Chemical Bank, which was filed as Exhibit 4(b)(ii) to the Registration Statement on Form S-3 of SouthTrust Corporation (Registration No. 33-52717). * 4(f) Form of Senior Indenture, which was filed as Exhibit 4(b)(i) to the Registration Statement on Form S-3 of SouthTrust Corporation (Registration No. 33-52717). * 4(g) Amendment, dated as of June 20, 2004, to the Amended and Restated Rights Agreement, dated as of August 1, 2000, between SouthTrust Corporation and American Stock Transfer & Trust Company, as Rights Agent, which was filed as Exhibit 1 to SouthTrust Corporation's Registration Statement on Form 8-A/A filed on June 23, 2004. 10(a) Stock Option Agreement, dated as of June 20, 2004, between Wachovia Corporation and SouthTrust Corporation. 31(a) Certification of principal executive officer pursuant to Exchange Act Rule 13a- 14(a) or 15d-14(a). 41 31(b) Certification of principal financial officer pursuant to Exchange Act Rule 13a- 14(a) or 15d-14(a). 32(a) Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32(b) Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * Incorporated herein by reference (b) Reports on Form 8-K filed in the second quarter of 2004: (1) A Form 8-K was filed on April 1, 2004, discussing the nature and amount of non-audit fees incurred by the Company during fiscal 2003. (2) A Form 8-K was filed on April 21, 2004, announcing financial results and disclosing supplemental financial information for the quarter March 31, 2004. (3) A Form 8-K was filed on May 20, 2004, announcing the formal establishment of a series of notes captioned 5.80% Subordinated Notes due 2014 with an aggregate principal amount of $400,000,000. (4) A Form 8-K was filed on June 21, 2004, announcing that Wachovia Corporation and SouthTrust Corporation had entered into an Agreement and Plan of Merger, dated as of June 20, that provides, among other things, for SouthTrust to be merged with and into Wachovia, with Wachovia as the surviving corporation. (5) A Form 8-K was filed on June 23, 2004, announcing that MBNA Corporation and SouthTrust signed a multi-year agreement under which MBNA will acquire SouthTrust's $323 million bankcard portfolio. 42 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. SOUTHTRUST CORPORATION /s/ Wallace D. Malone, Jr. Date: August 9, 2004 -------------------------------- Wallace D. Malone, Jr. Chairman and Chief Executive Officer (Principal Executive Officer) Date: August 9, 2004 /s/ Alton E. Yother -------------------------------- Alton E. Yother Executive Vice President, Treasurer and Controller (Principal Financial Officer) 43

SOUTHTRUST CORP 10-Q