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| ## Comptroller of the Currency                                        |
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| > Administrator of National Banks                                     |
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Large Bank Licensing

Mail Stop 7-13

250 E Street, SW

Washington, DC 20219

**Conditional Approval #732**

**March 2006**

February 13, 2006

Ms. Courtney D. Allison

Senior Vice President and Assistant General Counsel

Wachovia Corporation

Legal Division NC0630

One Wachovia Center

301 South College Street

Charlotte, NC 28288

Re: Applications to convert Western Financial Bank, Irvine, CA to a
national bank and to merge Wachovia Bank, National Association,
Charlotte, NC into the converted bank

OCC Control Nos.: 2005-ML-01-0007 and 2005-ML-02-0007

Dear Ms. Allison:

This is to inform you that, on February 13, 2006, the Office of the
Comptroller of the Currency ("OCC") approved the application by Western
Financial Bank ("WFB"), Irvine, California, to convert into a national
banking association with the title of Western Financial Bank, National
Association ("WFBNA"), under 12 C.F.R. § 5.24. The OCC also approved the
application to merge Wachovia Bank, National Association ("WBNA"),
Charlotte, North Carolina, with and into WFBNA, under 12 U.S.C. §§ 215a,
1828(c), and 1831u. The resulting bank will be named Wachovia Bank,
National Association (the "Resulting Bank") and its main office will be
located in Charlotte, North Carolina. The Resulting Bank will also adopt
the articles of association of WBNA.

These approvals are granted based on a thorough review of all
information available, including commitments and representations made in
the applications, merger agreement, and those of the banks'
representatives. In addition, these approvals are granted based on our
understanding that the merger will occur immediately after the
conversion. The approvals are subject to the following conditions:

1\. WFB shall not effect the conversion to a national bank charter
until: (a) all required regulatory approvals relating to the conversion
and the merger have been obtained, (b) all post approval waiting periods
applicable to the merger have expired, and (c) the merger of Westcorp
with and into Wachovia Corporation has occurred.[^1]

Ms. Courtney D. Allison

February 13, 2006

Page 2

2\. The Resulting Bank may continue to conduct the activity of WFS Web
Investments, Inc. for a period not to exceed two years from consummation
of the transaction. Unless, during this period, the bank demonstrates to
the OCC that the activity conforms to activities permissible for a
national bank, the bank must divest of the activity prior to the end of
the period.

3\. The Resulting Bank may continue its ownership of Western Consumer
Services, Inc., so long as the subsidiary remains inactive or, if the
bank decides to activate the subsidiary, the bank must comply with the
applicable filing requirements to seek approval for the subsidiary as an
operating subsidiary.

Please be advised that these conditions are conditions "imposed in
writing by the agency in connection with the granting of any application
or other request" within the meaning of 12 U.S.C. § 1818 and, as such,
are enforceable under 12 U.S.C. § 1818.

**Review of Statutory Factors**

The conversion of WFB to a national banking association is legally
authorized under 12 C.F.R. § 5.24 and 12 U.S.C. § 1464(i)(5). In
addition, the converted bank is legally authorized to retain all of its
branches under 12 U.S.C. § 1464(i)(5) or 12 U.S.C. § 36(c). The merger
of WFBNA and WBNA is legally authorized as an interstate merger
transaction under the Riegle-Neal Act, 12 U.S.C. §§ 215a-1 and 1831u(a).
Accordingly, the Resulting Bank is authorized to operate the main office
of WBNA as its main office, and to operate as branches the main office
of WFBNA and the branches of both banks under 12 U.S.C. § 36(d) and
1831u(d)(1). In addition, WBNA currently exercises fiduciary powers as
authorized by the OCC and, after the merger, the Resulting Bank is
authorized to continue to exercise fiduciary powers in the same manner
and to the same extent as WBNA.

The OCC reviewed the proposed merger transaction under the criteria of
the Bank Merger Act, 12 U.S.C. § 1828(c), and applicable OCC regulations
and policies. Among other matters, we found that the proposed
transaction would not have significant anticompetitive effects. The OCC
considered the financial and managerial resources of the banks, their
future prospects, and the convenience and needs of the communities to be
served. In addition, the Bank Merger Act requires the OCC to consider ".
. . the effectiveness of any insured depository institution involved in
the proposed merger transaction in combating money laundering
activities, including in overseas branches." 12 U.S.C. § 1828(c)(11). We
considered these factors and found them consistent with approval under
the statutory provisions.

Ms. Courtney D. Allison

February 13, 2006

Page 3

The Community Reinvestment Act ("CRA") requires the OCC to take into
account the applicants' record of helping to meet the credit needs of
the community, including low- and moderate-income ("LMI") neighborhoods,
when evaluating certain applications, including conversions and mergers.
12 U.S.C. § 2903; 12 C.F.R. § 25.29. The OCC considers the CRA
performance evaluation ("PE") of each institution involved in the
transaction. A review of the record of these applications and other
information available to the OCC as a result of its regulatory
responsibilities revealed no evidence that the applicants' records of
helping to meet the credit needs of their communities, including low-
and moderate-income neighborhoods, are less than satisfactory.

WBNA plans to bring its products, policies, and CRA programs to the
California market. WBNA's latest PE, dated June 30, 2003, and issued by
the OCC, assigned an "Outstanding" rating. The PE noted the bank's
excellent levels of community development lending, investments, and
services in most assessment areas. The PE also noted that WBNA had
creative and innovative investments, services, and loan products. The
OCC found no evidence of illegal discrimination or other illegal credit
practices.

WFB's latest PE, dated April 3, 2003, and issued by the Office of Thrift
Supervision, assigned a "Satisfactory" rating. The PE noted an excellent
volume of automobile loan originations and an overall excellent
distribution of those loans among areas and persons of differing income.
The PE also indicated that WFB makes an adequate level of community
development investments and provides a relatively high level of
community development services. No substantive fair lending violations
were identified.

#### Review of Public Comments

The OCC received numerous comments supporting WBNA's merger with WFB.
However, one commenter indicated that while it was not protesting the
applications, it wished to offer several cautionary notes.[^2] The
commenter expressed concern with WFB's CRA record and, in particular,
its auto lending program. The commenter, however, failed to offer any
specific information concerning these alleged deficiencies.

Ms. Courtney D. Allison

February 13, 2006

Page 4

As previously mentioned, WBNA plans to incorporate its CRA program into
the operation of the merged entity. It also plans to incorporate its
fair lending program, which includes comprehensive testing and training,
as well as measures to prevent predatory lending. Representatives of
WBNA met with over 30 community organizations in Southern California in
the fall of 2005 in order to begin assessing community needs. WBNA
represented that it is committed to maintaining its outstanding CRA
record in its California operations.

The commenter also expressed concerns with WBNA's record and commitment
to minority small business lending. The commenter stated that WBNA lags
behind other large banks in the number and dollar amount of Small
Business Administration ("SBA") loans to minorities. WBNA pointed out
that it actively markets to minority firms and is committed to meeting
the needs of minority small businesses. WBNA indicated that it expects
to increase its SBA lending to minorities during 2006 by creating a more
efficient SBA Express loan process. In addition, it plans to hire an SBA
Express Manager and a support staff by April 2006.

**Subsidiaries and Other Assets**

Currently, WFB owns, directly and indirectly, various subsidiaries that
will become subsidiaries of the Resulting Bank. Most of the subsidiaries
conduct activities that are permissible for national banks, and the
Resulting Bank may retain these. WFB also holds three subsidiaries as
follows:

1\. Westfin Insurance Agency, Inc., a direct subsidiary of WFB, is an
insurance agency formed under California law that is also licensed in
Arizona, Nevada, New Mexico, and Texas to sell life, health, disability,
property and casualty insurance coverages. Westfin also sells fixed
annuities to the general public. Westfin is located in Irvine,
California, which has a population of greater than 5,000, precluding the
Resulting Bank's continued operation of Westfin under 12 U.S.C. § 92.
Accordingly, the application included a Notice pursuant to 12 C.F.R. §
5.39 requesting authority for the Resulting Bank to retain Westfin as a
financial subsidiary. Pursuant to 12 C.F.R. § 5.39(i), the Resulting
Bank is approved to conduct the activity described in the Notice in a
financial subsidiary.

2\. WFS Web Investments, Inc., an indirect subsidiary of WFB, holds a
non-controlling investment in an Internet based automobile finance
service company. The activity of WFS Web Investments may not be
permissible for a national bank. Accordingly, under OCC policy, the
applicants requested that the Resulting Bank be permitted to continue to
conduct the activity of WFS Web Investments for a period not to exceed
two years from consummation of the transaction and committed to divest
of the activity within this period. The OCC grants the request subject
to Condition 2.

Ms. Courtney D. Allison

February 13, 2006

Page 5

3\. Western Consumer Services, Inc., a direct subsidiary of WFB,
historically conducted real estate development activities through two
California limited liability companies ("LLCs"). The purpose of the LLCs
was to acquire, develop and ultimately sell single- family residences.
Western Consumer Services also held properties that were prohibited to
be held by WFB due to regulatory guidelines. The applicants represented
that Western Consumer Services does not currently hold any real estate
investments or conduct any real estate development activities, and is
inactive. Since such activities are not permissible for national bank
operating subsidiaries, WBNA committed not to reactivate this entity
except to conduct activities approved by the OCC as permissible for a
national bank operating subsidiary. The Resulting Bank may retain
Western Consumer Services subject to Condition 3.

WFB is a member of the Federal Home Loan Bank of San Francisco
("FHLBSF"), however, the Resulting Bank does not intend to maintain the
membership. At the time the Resulting Bank ceases to be a member of the
FHLBSF, it must use its best efforts, including contacting the FHLBSF or
the Federal Housing Finance Board, to dispose of any stock in the
FHLBSF. The OCC will consider this stock a nonconforming asset for any
period that the Resulting Bank is not a member of the Federal Home Loan
Bank System.

**Consummation Procedures**

The Large Bank Licensing unit must be advised in writing in advance of
the desired effective date for the conversion and merger so that the OCC
may issue the necessary conversion authorization and merger
certification letter. The effective date must follow the applicable
Department of Justice's waiting period and any other required regulatory
approval.

The OCC will include the appropriate branch authorizations in its letter
authorizing the conversion and certifying the consummation of the
merger. The OCC will not issue this letter until we have received:

1\. A "Conversion Completion Certification" (enclosed) certifying that
all of the steps required to convert Western Financial Bank to a
national banking association have been completed.

2\. A Secretary's Certificate for each institution certifying that a
majority of each bank's board of directors approved the merger.

3\. An executed merger agreement with Articles of Association for the
resulting bank attached.

Ms. Courtney D. Allison

February 13, 2006

Page 6

4\. A Secretary's Certificate from each institution certifying that the
shareholder approvals have been obtained, if required.

If the transaction is not consummated within six months from the
approval date, the approval will automatically terminate unless the OCC
grants an extension of the time period.

A separate letter is enclosed requesting your feedback on how we handled
your applications. We would appreciate your response so we may improve
our service.

If you have questions regarding this letter, please contact me at (202)
874-4957 or by email at: <largebanks@occ.treas.gov>. Please reference
the application control number in any correspondence.

Sincerely,

signed

Robert A. Sihler

Senior Licensing Analyst

Enclosures: Conversion Completion Certification

Survey Letter

[^1]: WFB is a wholly owned subsidiary of Westcorp and WBNA is a wholly
    owned subsidiary of Wachovia Corporation.

[^2]: Several of the items raised were issues that are not among the
    statutory criteria that the OCC considers in rendering decisions on
    conversion or merger applications. Those concerns included WBNA's
    commitment to diversity with respect to management personnel and
    third-party suppliers. WBNA responded that it is committed to
    ensuring that supplier diversity is an integral part of its
    strategic sourcing and procurement processes. In addition, WBNA
    indicated it seeks to incorporate diversity in all aspects of its
    business.