Presentation to Carnegie Mellon University September 2003
I. Overview II. Corporate & Investment Banking Platform III. Corporate & Investment Banking Product Expertise IV. Analyst Career Opportunities V. Why Wachovia Securities? VI. Recruiting Process Appendix Table of Contents "Wachovia Securities" is the trade name for the corporate and investment banking services of Wachovia Corporation and its subsidiaries. Debt and equity underwriting, trading, research and sales, loan syndications agent services, and corporate finance and M&A advisory services are offered by Wachovia Securities, Inc., member NASD, NYSE and SIPC. Mezzanine capital, private equity, municipal securities trading and sales, cash management, credit, international, leasing and risk management products and services are offered by various non-broker dealer subsidiaries of Wachovia Corporation.
Industry Trends Overview WHAT WILL DETERMINE SUCCESS IN THIS NEW ENVIRONMENT? IMPORTANCE OF CAPITAL AND BALANCE SHEET STRENGTH CONSOLIDATION / ATTRITION CONVERGENCE OF CORPORATE AND INVESTMENT BANKING CROSS SELLING OF BROAD PRODUCT CAPABILTIES CREATION OF NEW MARKETS AND FINANCIAL INSTRUMENTS EMERGENCE OF NEW CLASSES OF INSTITUTIONAL INVESTORS
Management: G. Kennedy Thompson Chairman, President & CEO
Headquarters: Charlotte, North Carolina
U.S. Rankings: Largest deposit share on East Coast; 3rd largest share in U.S.
2nd largest cash management provider
3rd largest branch network
3rd largest brokerage firm
5th largest in assets
Total Assets: $348 Billion
Loans: $164 Billion
Deposits: $196 Billion
Customers: 20 million
Employees: Over 80,000
Wachovia Corporation - Superior Market Share and Distribution Powerhouse As of March 31, 2003 Overview
One of the largest full-service institutions in the financial services industry.
#1 stock performer in the financial services industry since 2002.
Wachovia Corporation Note: As of 8/8/03. Overview 2002 to YTD Stock Price Performance of Selected Financial Institutions
In a trying two year period for Wall Street, Wachovia Securities dramatically improved its relative positioning in all major capital markets sectors.
Strong Investment Banking Momentum $0 $5 $10 $15 $20 2000 2002 $5.9 $18.1 EQUITY $50 $100 $125 $150 $175 $200 Wachovia Securities Wall Street 206% (46%) CONVERTS $0 $2 $4 $6 $8 $10 $1.1 $5.6 $0 $20 $40 $60 $80 $100 410% (11%) INVESTMENT GRADE $0 $25 $50 $75 $100 $125 $31.4 $113.0 $0 $200 $400 $600 $800 (12%) Wachovia Securities HIGH YIELD $0 $10 $15 $20 $5.5 $14.6 167% Wachovia Securities Wachovia Securities *Note: Y axis indicates dollar volume and the numbers within bars are number of deals. Data above bars is dollar volume in billions. 32 54 535 825 17 4 141 119 389 2,736 88 2,684 261 148 46 11 $53.8 $60.7 $181.6 $98.2 $51.3 $66.6 $546.0 $623.0 $75 $5 $0 $40 $60 $80 $20 Wall Street Wall Street Wall Street 2000 2002 2000 2002 2000 2002 2000 2002 260% 2000 2002 2000 2002 2000 2002 30% Overview of Wachovia Securities
Mid-capitalization client focus.
Broad product and distribution capabilities.
Large capital base.
Fully integrated business model.
Business model built for success in the new age of corporate and investment banking.
Corporate & Investment Banking Overview
Corporate & Investment Banking Platform
Wachovia’s Corporate & Investment Banking Platform Corporate & Investment Banking Platform General Bank Corporate & Investment Banking Capital Management Wealth Management CIB Origination Mergers & Acquisitions Convertible Securities Public Equity Cash Management Fixed Income Sales & Trading Asset Backed Finance Derivatives Asset Based Lending Investment Grade Debt Senior Debt Loan Syndications Principal Investing High Yield Debt Private Placements
Leading Capital Markets Capabilities Corporate & Investment Banking Platform
Comprehensive Product Capabilities PRINCIPAL INVESTING
7th for domestic high yield
62 investment grade debt offerings in 2002; raising over $31 billion. Ranked 7th in Q1 2003
Leading provider of interest rate, currency and equity derivatives
FIXED INCOME M&A ADVISORY DEBT PRIVATE PLACEMENTS EQUITY CAPITAL MARKETS ASSET BACKED FINANCE LOAN SYNDICATIONS WACHOVIA Corporate & Investment Banking Idea Generation Capital Raising TREASURY SERVICES
2nd largest cash management provider
One of the nation’s largest lockbox networks (#2 retail and #3 wholesale)
Ranked in the top two providers in eight of 11 product categories by Ernst & Young, top four providers in all 11
1st in trade receivable transactions
3rd largest bank owned leasing company in U.S.
4th in trade receivable commitments
9th largest leasing company in U.S.
Total commitments in excess of $7 billion for 2003
1st in 1997-1Q 2003 as lead manager for public equipment-backed issues
12th in volume of public and private issuances for 1Q 2003, $4.5B issued
1st in SBA 7(a), conventional, and middle market commercial loan issuance 2000-1Q 2003
Rank in the top 3 in third party home equity securitization
Direct investments of more than $2.5B in over 200 companies since 1988
Fund commitments of more than $2B in over 200 funds
13th in equity underwriting for Q1 2003
Managed 6 deals in Q1 2003, raising over $743M
Combination with Prudential creates 3rd largest retail brokerage firm in the U.S. with over $537B in client assets
Integrated managed offering, restricted block trading and corporate finance services team
As of March 31, 2003
4th in traditional private placements transactions for 2002 (#issues)
11 traditional private placement transactions completed in 2002, raising over $1 billion in proceeds
Providing senior debt, synthetic leases, credit tenant leases and investment and non-investment grade transactions
7th in leveraged lead arranged transactions and 5th in investment grade lead arranged transactions in Q1 2003
72 agent only transactions for $26.5 B (#5) in Q1 2003
Ranked 7 th in Institutional lead arranged transactions in Q1 2003
Over 360 transactions completed since 1996
Leading M&A advisor serving growing companies since 1975
Sellside, buyside, strategic financial advisory, takeover defense and special committee presentation experience
Integrated Corporate & Investment Banking Coverage Model Corporate & Investment Banking Platform Consumer & Retail Healthcare Defense & Aerospace Energy & Power Financial Institutions Industrial Growth Real Estate International IT & Business Services Media & Communications Strategic Advisory Group Technology Public Equity Loan Syndications High Yield Debt Mergers & Acquisitions Congress Financial Cash Management Wealth Management Asset Securitization Investment Grade Debt Private Placements Convertible Securities Asset Based Lending Derivative Securities Leasing Asset Based Conduit Finance
Corporate & Investment Banking Product Expertise
Interest Rate Products:
$300 million of revenues/80 employees.
4 th largest swap and 4 th largest OTC Option portfolios among all U.S. Commercial Banks as of 12/31/02.
Based on customer sources, #2 in Mortgage options over the past 3 ½ years with trading volume between $120 to 180 billion annually (no published numbers).
$300 million of revenues/184 employees.
Lead or co-manager in 20% of deals done in market in 2002 and 2003.
#6 in High Yield Domestic Deals issuance.
Lead manager on 40 deals raising $12.2 billion in 2002.
#5 in High Grade (# of deals).
Corporate & Investment Banking Product Expertise Fixed Income
$650 million of revenues/490 employees.
Structured Credit Products:
#3 in overall CDO issuance and #1 in RE CDO issuance in 2002.
#1 in Middle Market CLO issuance in 2002.
Commercial ABS Finance:
#1 in equipment ABS issuance by the 1997-2002 total volume.
Real Estate Capital Markets:
#8 in Floating Rate Loan Issuance , #1 in Commercial RE Lending.
#2 Commercial Mortgage Loan Contributor to CMBS deals, # 8 Mortgage Loan Contributor to domestic deals, # 8 US CMBS Bookrunner.
$120 million of revenues/50 employees.
Offer 24 hour trading and marketing with an extensive coverage in spot, forward, option, interest rate swaps and options, with customized solutions.
327 experienced professionals focused exclusively on growing, dynamic companies driving industry change.
Proven managed offering underwriter.
Revenue up 25%, Wall Street down 30% in 2002.
15 year institutional relationships.
Wall Street leading retail stock retention.
Consistent after-market trading support.
32 senior research analysts covering over 350 companies (average analyst covers 10-12 companies).
Franchise approach to coverage vs. “I.I.” model.
43 equity salespeople covering over 600 accounts in the U.S. and Europe.
Recently completed Prudential combination creates the third largest retail brokerage firm in the U.S.
Integrated managed offering, restricted block trading and corporate finance services team dedicated to designing optimal client solutions.
Equity Corporate & Investment Banking Product Expertise Strong Momentum in a Difficult Market Experienced Leadership Co-Head Research 12 Years of Name Head Titles Former Position Experience Mickey Misera Equity Group Head of Trading at Alex. Brown 21 Mike Cummings ECM Desk Head of Equity Origination at WFS 10 Clinton Daly Institutional Sales Head of Inst. Sales at Alex. Brown 21 Mike Murphy Coverage Trading Equity Trader at Alex. Brown 31 Chris Bartlett OTC Trading Top OTC Trader at Alex. Brown 18 Jim Whelen Listed Trading Listed Trader at Alex. Brown 16 Billy Nolan Equity Marketing Inst. Salesman at Alex. Brown 10 Anthony Gallo Co-Head Research I.I. Analyst at Alex. Brown 10 Todd Wickwire Inst. Salesman at Alex. Brown
Involved as lead or co-manager in 20% of deals done in market in 2002 and 2003.
No deal priced outside of price talk.
No failed or pulled transactions.
4th best default record as measured by Bondweek.
Over $1 billion of capital committed to trading desk.
Wachovia’s high yield new issuance increased by 21% in 2002 in the face of a market that was down 26%.
High Yield Corporate & Investment Banking Product Expertise League Table Growth In Market Share
Consistently ranked as a top 5 Lead Arranger in every broad market category.
Successfully executed over 700 transactions since 1998, raising in excess of $115 billion.
The Syndications group includes over 140 professionals dedicated to leading market knowledge and superior transaction execution in the syndicated loan market, including origination, underwriting, syndicate, sales, trading, agency management and market research.
Proven, award-winning ability to structure and execute a diverse array of syndicated loans, from working capital facilities to highly structured, complex leveraged buyouts.
Recipient of International Finance Review’s “U.S. Leveraged Loan of the Year” award two years running:
$2.7 billion acquisition financing for Suiza Food’s purchase of Dean Foods in 2001.
$1.49 billion leveraged loan associated with the Qwest-Dex East portion of the total $7.05 billion leveraged buyout of Qwest’s yellow pages assets by The Carlyle Group and Welsh, Carson, Anderson & Stowe in 2002.
Exceptional distribution capabilities via our Sales and Trading professionals, who maintain strong relationships with over 300 investors.
Top-rated par loan trading desk to provide secondary market support and market color to our investors. Our par loan trading team executed over $3.5 billion in total trading volume during 2002.
Research professionals dedicated to identifying and analyzing trends in the syndicated loan market to provide insight and commentary to our issuers and investors.
The anticipated recovery in M&A activity has yet to arrive ...although a surge in activity in the first few weeks of July is hopeful.
M&A volume in the first six months of 2003 showed little in the way of a renewed fervor to buy companies, shed divisions or consolidate operations in the same manner that had occurred in the late 1990’s.
First Half 2003 domestic M&A activity decreased 17% from a year ago, while worldwide activity decreased 6%. Based on current trends, US M&A dollar volume this year is on track to finish below 2002’s announced total of $439.4 billion, and would mark the third straight year of declining volume.
Despite the statistics, there is a strong view among PEGs that deal flow has increased significantly in the past six weeks. Combined with the recent lift in announced deal activity, M&A volumes should show some increases in the second half.
Despite a declining market, Wachovia Securities’ gained significant market share with announced deal volume more than doubling ($1.7B to $4.9B) in the first half of 2003.
Active relationships with over 190 clients nationwide.
Staff of 140 professionals with specialists in the areas of:
Collateral evaluation & Monitoring
Origination & Structuring
Asset Backed Conduit Program:
As of May 15, 2003, ranked 4 th in Trade Receivable Commitments.
1 st in net Trade Receivable Transactions for the period January 15, 2000 to May 15, 2003.
Lead or Sole Agent on Eighty-two percent of transactions.
2 warehouse vehicles: Variable Funding Capital Corp. (“VFCC”) and Blue Ridge. As of May 15, 2003, Blue Ridge held approximately:
$6.6 billion in commercial paper purchase limits; and
$3.1 billion in commercial paper outstanding.
Corporate & Investment Banking Product Expertise Capital Finance
3rd largest bank owned leasing company in U.S..
9th largest leasing company in U.S..
$14 billion in lease receivables.
Projected to complete more than $2.5 billion in equipment cost by FYE 2003.
Since 1994, completed more than $30 billion in transactions.
Awarded “Deal of the Year” by Asset Finance International : 1997, 1999, 2000, 2001 & 2002
Began more than 50 years as a family owned business
Owned by Core States for 30 years.
Integrated within Wachovia in 1988.
Offices throughout U.S., Canada, and the United Kingdom including New York, NY, Montreal, Quebec and London, England..
Projected to complete more than 100 new transactions by FYE 2003.
Analyst Career Opportunities
Wachovia Securities is looking to hire over 130 analysts for the class of 2004 to work across a broad range of industries and product groups, including:
Capital Finance Analyst:
Provides hands on training in structuring financial solutions for companies involved in leveraged and management buyouts, refinancing of bank debt or comprehensive debt restructuring, and the acquisition of large equipment.
Credit Capital Markets Analyst:
Responsible for the active management of the return, diversity, and quality of Wachovia's overall corporate banking loan portfolio, while also serving as the primary contact point for clients, participant lenders, and agent banks on a wide range of issues or needs related to credit and capital commitments provided by Wachovia to individual client relationships.
Fixed Income Analyst: Provides fixed income products and risk management solutions including Interest Rate Products, Non-Dollar Products, Credit Products, and Structured Products through origination, asset management, sales, trading, and research .
Investment Banking Analyst:
Corporate Finance - Deliver proprietary ideas and advisory services to priority corporate clients. Work closely with all product groups to originate and execute certain investment banking products (high yield, equity, M&A, etc.).
Loan Syndications - Execute, structure, and market all senior debt and high yield products
M&A - Execute buyside, sellside, and advisory assignments in a variety of industries and assist in relationship management for key financial sponsor clients.
Analyst Career Opportunities Analyst Career Opportunities
Capital Finance Analyst Career Opportunities
Wachovia Capital Finance offers alternative financing solutions for clients generally not suited to traditional bank approaches. These solutions include asset-based lending, leasing, and rail services; all of which are tailored to meet any financing objective.
Capital Finance works to maximize a client’s borrowing capacity through leveraging its business assets such as account receivables, inventories, machinery and equipment, real estate and certain intangibles.
Assist in underwriting, deal execution, and business planning activities
Participate in client meetings, due diligence and other client interactions.
Model financial projections, structure senior loans and perform on-going administration.
The Portfolio Management team has responsibility for the borrowing/credit relationships of the corporate banking clients. In its role, the various Portfolio Management units interact directly with these clients; monitor the changing risk trends of individual client relationships; routinely assess the evolving mix of loans in the portfolio; and actively manage the diversity and return of the assets held in the portfolio
Credit Capital Markets Analyst Career Opportunities
Prepare primary assessments of and recommendations on client borrowing requests, as well as secondary market debt trading opportunities.
Perform transaction valuation analysis and prepare financial models.
Monitor and prepare summary updates on changing trends in the respective industries and financial markets in which Wachovia’s clients operate.
Participate in due diligence activities, client interactions, and market trading activity assessment in conjunction with senior bankers and credit officers.
Fixed Income – Interest Rate Products & Non-Dollar Products Analyst Career Opportunities
Support marketers and traders by:
Structuring and executing client transactions.
Preparing marketing materials including pitch books, analytical graphs, and capital structure analysis.
Providing market data and pricing indications on a daily basis to bank clients.
Coordinating with Relationship Managers and Credit Officers to facilitate the closing of transactions.
Researching company financial disclosures for immediate opportunities and new business.
Interest Rate Products:
Specialized structuring teams focused on institutional, corporate, commercial, and tax-exempt hedging needs with experienced professionals in each of these unique disciplines.
Analyzes and implements strategies in cost-effective ways that are responsive to changing market conditions through specific marketing and trading efforts.
Offers a full range of products and services designed to help corporations and investors manage their foreign currency exposure.
Emphasizes a consultative approach to solve the global risk management needs of clients including global debt strategy, foreign interest rate management, and currency hedging.
Analyst Career Opportunities Fixed Income – Credit Products & Structured Products
Perform analysis of various ABS assets.
Assist in the creation of pitches, proposals, and marketing materials.
Participate in client meetings.
Gain understanding of fixed income markets and operational support of traders.
Acquire Series 7 and Series 63 licenses
Focused group specializing in corporate bond origination, sales and trading, high yield origination, sales and trading, municipal securities origination, sales and trading, money market trading and research.
Credit research focused on industry reports and issuer profiles.
Group of over 500 professionals engaged in origination, asset management, sales and trading of structured products in the areas of commercial mortgage backed securities, residential mortgage and consumer ABS, commercial ABS, and CDOs.
The Corporate Finance Group is the origination arm of Wachovia Securities, working closely with all product groups to originate and execute various investment banking products, including equity, high yield, M&A, loan syndications, convertible debt, etc.
Bankers within Corporate Finance are assigned to a specific industry group (see page.11) and maintain active dialog with their priority clients in those sectors.
Investment Banking - Corporate Finance Analyst Career Opportunities
Perform valuation and credit analysis through sophisticated leveraged buyout, discounted cash flow, merger, comparable public company and comparable transaction models .
Create and edit pitchbooks used in the origination of investment banking transactions .
Participate in due diligence, drafting sessions and preparing offering memoranda and management presentations primarily for equity, high yield and M&A transactions.
Assist in the origination, structuring, execution and servicing of Loan Syndications and High Yield debt offerings for all corporate customers and private equity groups in certain industries for acquisitions, recapitalizations, LBOs and growth financings.
Serve as senior “deal manager” to execute all senior debt underwriting, due diligence, and marketing documents and materials, and manage internal credit and pricing approval processes.
Investment Banking - Origination & Execution Analyst Career Opportunities
Prepare offering memorandums, lender, rating agency and roadshow materials for debt offerings.
Perform valuation analysis and develop financial models.
Research comparable transactions and perform relative value analysis to determine pricing for securities.
Participate in client meetings, due diligence visits and other client interactions.
The Mergers & Acquisitions/Financial Sponsors Group is responsible for transaction execution of buyside, sellside, and advisory assignments in a variety of industries, as well as relationship management for key financial sponsor clients.
Senior bankers within M&A are aligned with Corporate Finance industry groups and are responsible for maintaining an active M&A dialogue with clients in their respective sectors.
Analysts and Associates in M&A are generalists and work on transactions in a broad range of industries.
Investment Banking - M&A/Financial Sponsors Analyst Career Opportunities
Creation of detailed financial models used for valuation (DCF, LBO, merger plans, accretion/dilution, comparable company, and transaction analysis).
Research and preparation of industry analyses, buyers lists, and acquisition opportunities.
Preparation of marketing documents, including pitch materials, confidential offering memoranda, management presentations, fairness opinions, and board presentations.
Support of the relationship management efforts of Financial Sponsors Group coverage officers through the development of value-added ideas, preparation of marketing presentations, and execution of M&A and financing opportunities.
Following the conclusion of the program, analysts have pursued a variety of career options, including corporate clients and the following representative equity firms and graduate schools.
After The Analyst Program Analyst Career Opportunities
Why Wachovia Securities?
Wall Street caliber experience.
Small deal teams result in immediate responsibility.
Allows for direct access to senior bankers.
Allows for direct and frequent client interaction.
Middle market client base provides more interaction with senior-level decision makers.
Comprehensive financial services platform provides variety of career opportunities in multiple locations.
Senior bankers actively support efforts to develop career opportunities at conclusion of analyst program.
Intensive training program.
The Analyst Experience Why Wachovia Securities?
What this means for you
The Analyst Program will expose you to a broad range of responsibilities, a diverse mix of financial products, and an excellent opportunity to increase the depth of your understanding of the financial markets.
The Analyst is the primary analytical support for corporate and investment bankers in the design and origination of corporate and investment banking transactions.
As an Analyst, you will be conducting research, participating in strategic planning and assisting in the execution of advisory services, attending client meetings/due diligence visits and gaining exposure to key executives and senior bankers.
The Analyst provides these services as part of a team consisting of Associates, Vice Presidents, and Managing Directors.
These positions require a high level of personal motivation, strong interpersonal communication skills and sound analytical thinking.
Candidates must be comfortable working independently and as part of a team, have proven academic performance and be willing to take on significant responsibility for meeting stringent deadlines and high quality standards.
Opportunities exist within the following lines of business: Investment Banking (includes Corporate Finance, M&A/Financial Sponsors Group, and Loan Syndications), Credit Capital Markets, Capital Finance, and Fixed Income Division(includes Credit Products, Interest Rate Products, Non-Dollar Products, and Structured Products).
Recruiting Process ON CAMPUS INTERVIEWS SUPER SATURDAY Charlotte, North Carolina Friday Evening: Presentation & Dinner Saturday: Series of 6 or 8 interviews with a debrief at the end Follow-up: Extension of final offers SELECTION OF FINAL CANDIDATES
CONTACT INFORMATION School Captains: Barbara Hall Loan Syndications [email_address] Brian Grabenstein Fixed Income, Structured Products [email_address] Ernie May Credit Capital Markets, Agency Management [email_address] Recruiting Information
Campus Interviews: October 8, 2003
Super Saturdays: October 25, 2003
November 1, 2003
November 15, 2003
November 22, 2003
December 6, 2003
College Recruiting Contact: Melissa Hunter CIB Analyst Recruiter [email_address]
APPENDIX Selected Closed Transactions Follow-On Offering Initial Public Offering Convertible Debt Asset Securitization Equity Derivatives Initial Public Offering Loan Syndications High Yield Capital Management Loan Syndications Follow-On Offering Asset Securitization Initial Public Offering Senior Notes Currency Derivatives