EX-99.A 2 ex99-a_75243.txt THE NEWS RELEASE EXHIBIT 99(a) NEWS [First Union logo appears here] Thursday Media Contact: July 12, 2001 Ginny Mackin 704-383-3715 Mary Eshet 704-383-7777 Investor Contact: Alice Lehman 704-374-4139 FIRST UNION REPORTS OPERATING EARNINGS OF $649 MILLION, OR 66 CENTS PER SHARE IN 2nd QUARTER 2001 CEO Thompson says First Union has momentum and proposed First Union-Wachovia merger will leverage strengths to continue building value for shareholders SECOND QUARTER 2001 OVERVIEW o Cash operating earnings of 73 cents per share; operating earnings of 66 cents, exceeding market expectations. o Outstanding results in the General Bank, with revenue up 9 percent and operating earnings up 28 percent from second quarter 2000. o Core deposits grew 4 percent, excluding divested businesses. o Operating expense decreased 8 percent from second quarter 2000. o Net charge-offs of 0.52 percent declined 17 basis points from second quarter 2000. o Tier 1 capital ratio improved for the fourth consecutive quarter, to 7.40 percent. -------------------------------------------------------------------------------- Earnings Highlights Three Months Ended June 30, March 31, June 30, --------------------------------- (In millions, except per share data) 2001 2001 2000 -------------------------------------------------------------------------------- Earnings Operating earnings (a) $ 649 610 714 Diluted earnings per share (Operating earnings) 0.66 0.62 0.73 Net income (As reported) 633 584 (2,199) Diluted earnings per share (As reported) $ 0.64 0.59 (2.27) -------------------------------------------------------------------------------- Financial ratios (Operating earnings) Return on average stockholders' equity 16.19 % 15.64 17.74 Overhead efficiency ratio 64.34 65.18 64.36 Net interest margin 3.41 3.42 3.51 Fee and other income as % of total revenue 48.32 47.13 47.50 Dividend payout ratio 36.36 % 38.71 65.75 -------------------------------------------------------------------------------- Cash operating earnings Net income $ 723 684 807 Diluted earnings per share $ 0.73 0.69 0.82 Return on average tangible stockholders' equity 23.35 % 22.91 30.18 Overhead efficiency ratio 62.06 % 62.80 61.64 -------------------------------------------------------------------------------- Asset quality Allowance as % of nonaccrual and restructured loans 144 % 143 215 Net charge-offs as % of average loans, net 0.52 0.53 0.69 Nonperforming assets to loans, net, foreclosed properties and assets held for sale 1.23 % 1.30 0.87 -------------------------------------------------------------------------------- (a) Operating earnings are reported net income excluding after tax net restructuring, merger-related and other charges and gains. -------------------------------------------------------------------------------- Note: The first half of 2000 included the results of businesses that were divested in connection with the strategic repositioning announced in June 2000, as well as extraordinarily strong principal investing revenue. -- more -- FIRST UNION REPORTS 2ND QUARTER EARNINGS/Page 2 CHARLOTTE, N.C. - First Union (NYSE:FTU) today reported second quarter 2001 cash operating earnings of $723 million, or 73 cents per share; operating earnings of $649 million, or 66 cents per share; and net income of $633 million, or 64 cents per share. Highlights of the quarter included broad revenue growth, solid expense control, strengthened capital ratios and improved loan losses. In the six months ended June 30, 2001, cash operating earnings were $1.4 billion, or $1.43 per share; operating earnings were $1.3 billion, or $1.28 per share; and net income was $1.2 billion, or $1.23 per share. The cash operating return on average tangible stockholders' equity was 23.35 percent in the second quarter of 2001. Cash operating earnings are operating earnings before goodwill and other intangible amortization. Based on second quarter 2001 operating earnings, First Union's return on average stockholders' equity was 16.19 percent. "These strong operating results underscore First Union's momentum. We are extremely pleased with the revenue growth in all of our businesses this year, particularly the excellent results from our General Bank," said Ken Thompson, First Union chairman and CEO. "In addition, capital ratios improved, credit quality was stable and expenses decreased as expense management becomes more and more a part of our culture. "With our restructuring now complete, we are seeing the results, which we believe provide us a firm foundation for continued growth. We achieved these solid results while continuing to make excellent progress on planning for a smooth integration with our merger partner, Wachovia. This is exactly the right platform to leverage our strengths, and continue building value for shareholders. We have enormous optimism about our future together," he said. Net Interest Income Net interest income on a tax-equivalent basis was $1.7 billion in the second quarter of 2001, a 10 percent decline from $1.9 billion in the second quarter of 2000, largely due to the reduction in earning assets related to the sale of loans and securities in connection with First Union's strategic repositioning announced in June 2000. The net interest margin was 3.41 percent in the second quarter of 2001 and 3.51 percent in the second quarter of 2000. Fee and Other Income On an operating basis, fee and other income in the second quarter of 2001 was $1.6 billion, down 7 percent from the second quarter of 2000, attributable to a $263 million decline in principal investing revenue, partially offset by across-the-board growth in other fee income categories. On an operating basis, fee and other income as a percentage of total revenue was 48 percent in the second quarter of 2001 and 47 percent in the second quarter of 2000. Provision for Loan Losses The loan loss provision was $223 million in the second quarter of 2001, a decline of $5 million from the second quarter of 2000. The provision exceeded net charge-offs by $66 million. At June 30, 2001, the ratio of allowance to net loans increased to 1.44 percent from 1.33 percent at June 30, 2000. -- more -- FIRST UNION REPORTS 2ND QUARTER EARNINGS/Page 3 Noninterest Expense On an operating basis, noninterest expense was $2.2 billion in the second quarter of 2001, down 8 percent from the second quarter of 2000, reflecting the winding down of divested businesses and solid expense control. Restructuring and Other Charges and Gains Restructuring and other charges and gains in the second quarter of 2001, primarily related to the 2000 strategic repositioning, amounted to a pre-tax charge of $27 million ($16 million after-tax) or 2 cents per share. Net Charge-offs and Nonperforming Assets Net charge-offs amounted to $157 million in the second quarter of 2001, a decrease of $71 million from the second quarter of 2000. This represented 0.52 percent of average net loans, down 17 basis points from the second quarter of 2000. At June 30, 2001, nonperforming assets were $1.6 billion, or 1.23 percent of net loans, foreclosed properties and assets held for sale, an increase of 30 percent from June 30, 2000. Second quarter 2001 nonperforming assets included $250 million of nonperforming assets classified as held for sale. Lines of Business -------------------------------------------------------------------------------- General Bank Highlights Three Months Ended June 30, March 31, June 30, ------------------------------------- 2001 2001 2000 -------------------------------------------------------------------------------- (In millions) Total revenue $ 1,545 1,453 1,412 Provision for loan losses 98 101 51 Noninterest expense 935 908 966 Operating earnings 343 295 268 Average loans, net 65,501 63,771 58,105 Average core deposits 99,424 98,415 97,499 Economic capital $ 3,744 3,618 3,555 -------------------------------------------------------------------------------- The General Bank has three major business lines: Consumer, Commercial and Small Business. General Bank total revenue increased 9 percent from the second quarter of 2000. The General Bank produced record consumer loan volume and solid deposit growth in the second quarter of 2001, reflecting improved sales production, a beneficial rate environment and a renewed focus on attracting low cost core deposits. Fee and other income grew 30 percent year over year, led by higher mortgage-related income, service charges and other fee income. The Consumer provision increased $31 million, of which $18 million was related to a market valuation adjustment on nonperforming assets moved to assets held for sale and increased charge-offs on a more seasoned First Union Home Equity portfolio. -- more -- FIRST UNION REPORTS 2ND QUARTER EARNINGS/Page 4 The Commercial and Small Business provisions increased $16 million. The impact of expense control initiatives was reflected in a 3 percent decline in noninterest expense from the second quarter of 2000 and an operating overhead efficiency ratio that improved from 67 percent in the second quarter of 2000 to 59 percent in the second quarter of this year. Average loans increased 13 percent from the second quarter of 2000, with across-the-board strength in consumer lending, while commercial real estate and small business lending drove commercial lending growth. Average core deposits grew 2 percent from the second quarter of 2000, primarily in low cost interest checking, savings and money market accounts. Overall customer satisfaction scores as measured by Gallup improved for the ninth consecutive quarter. Household retention also remained strong. Online customer growth continued to be rapid, with a 55 percent increase from June 30, 2000, to 2.9 million enrollments at June 30, 2001. This included 130,000 online wholesale enrollments, which grew 136 percent from June 30, 2000. -------------------------------------------------------------------------------- Capital Management Highlights Three Months Ended June 30, March 31, June 30, ------------------------------------- 2001 2001 2000 -------------------------------------------------------------------------------- (In millions) Total revenue $ 838 831 829 Provision for loan losses - - - Noninterest expense 667 659 624 Operating earnings 113 113 135 Average loans, net 4,559 4,497 4,250 Average core deposits 7,976 8,003 7,888 Economic capital $ 986 985 972 -------------------------------------------------------------------------------- Capital Management includes Retail Brokerage Services, Asset Management, and Wealth and Trust Services. These businesses, with their balanced approach and multiple channels of distribution, performed solidly in the second quarter of 2001 as mutual fund assets and annuity sales through the bank channel reached an all-time high. Total revenue increased modestly from the second quarter of 2000 primarily due to increased brokerage production largely related to annuity sales, as well as the impact of the acquisitions since the second quarter of 2000. Noninterest expense increased 7 percent from the second quarter of 2000, primarily due to increased corporate allocations and these acquisitions. In partnership with the General Bank, bank channel annuity sales reached a quarterly record of $717 million in the second quarter of 2001, a 54 percent increase from the second quarter of 2000. Mutual fund assets grew to a quarter-end record $90 billion, up 6 percent from year-end 2000, driven by strong money market inflows. Assets under management increased modestly from year-end 2000 to $172 billion at June 30, 2001. Assets under management include $82 billion in trust assets in addition to the $90 billion in mutual fund assets. -- more -- FIRST UNION REPORTS 2ND QUARTER EARNINGS/Page 5 -------------------------------------------------------------------------------- Corporate and Investment Banking Highlights Three Months Ended June 30, March 31, June 30, ------------------------------------- 2001 2001 2000 -------------------------------------------------------------------------------- (In millions) Total revenue $ 773 725 897 Provision for loan losses 93 70 126 Noninterest expense 490 467 509 Operating earnings 153 150 199 Average loans, net 41,145 42,511 42,787 Average core deposits 10,202 9,465 8,928 Economic capital $ 6,112 6,278 5,940 -------------------------------------------------------------------------------- Our Corporate and Investment Banking businesses offer a range of fixed income products, debt and equity products, structured products and advisory services for corporate and institutional clients. Total revenue declined 14 percent from the second quarter of 2000, primarily related to anticipated lower principal investing revenue, which was down $263 million from a strong second quarter of 2000. Excluding principal investing, revenue increased 21 percent and operating earnings were up 200 percent from the second quarter of 2000, reflecting broad line of business growth. Fixed income fee and other income increased 53 percent from the second quarter of 2000, primarily driven by fixed income sales and trading. The agency businesses, primarily merger and acquisition advisory services, loan syndications and equity capital markets, grew 3 percent from the second quarter of 2000. Noninterest expense decreased 4 percent from the second quarter of 2000. --- First Union (NYSE:FTU), with $246 billion in assets and stockholders' equity of $16 billion at June 30, 2001, is a leading provider of financial services to 15 million retail and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices in 11 East Coast states and Washington, D.C., and full-service brokerage offices in 47 states. Online banking and brokerage products and services can be accessed through www.firstunion.com. Earnings Conference Call First Union Chairman and CEO Ken Thompson and CFO Bob Kelly will review First Union's second quarter results in a conference call and audio webcast beginning at 9 a.m. today. Supplemental materials relating to the second quarter results are available on the Internet at www.ftuinvestor.com, and investors are encouraged to access such materials. Webcast Instructions: To gain access to the webcast, which will be "listen-only," go to www.ftuinvestor.com and click on the link First Union Second Quarter Earnings Audio Webcast. In order to listen to the webcast, you will need to download Real Player Basic 8. Teleconference Instructions: The telephone number for the conference call is 888-606-7037 for U.S. callers or 415-228-4891 for international callers. You will be asked to tell the answering coordinator your name and the name of your firm. Mention the conference Access Code: 33345. Replay: Thursday, July 12, from noon until 5 p.m. EDT on Monday, July 23. Replay telephone number is 402-220-3026. -- more -- FIRST UNION REPORTS 2ND QUARTER EARNINGS/Page 6 This news release and the conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements about the benefits of the merger between First Union Corporation and Wachovia Corporation, including future financial and operating results, cost savings, enhanced revenues, and accretion to reported earnings that may be realized from the merger; (ii) statements with respect to First Union's plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as "believes", "expects", "anticipates", "estimates", "intends", "plans", "targets", "projects" and similar expressions. These statements are based upon the current beliefs and expectations of First Union's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the risk that the businesses of First Union and Wachovia 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 First Union's and Wachovia's stockholders to approve the merger; (7) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (8) the strength of the United States economy in general and the strength of the local economies in which First Union 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 First Union's loan portfolio and allowance for loan losses; (9) changes in the U.S. and foreign legal and regulatory framework; and (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 First Union's and the combined company's investment banking and asset management activities. Additional factors that could cause First Union's results to differ materially from those described in the forward-looking statements can be found in First Union's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available at the SEC's Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the proposed transaction with Wachovia or other matters attributable to First Union or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. First Union does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made. Additional Information The proposed merger between First Union and Wachovia will be submitted to First Union's and Wachovia's stockholders for their consideration. Stockholders are urged to read the definitive joint proxy statement/prospectus regarding the proposed transaction and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain (or will contain) important information. You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about First Union and Wachovia, at the SEC's Internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC filings that have been or will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to First Union, Investor Relations, One First Union Center, Charlotte, North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor Relations, 100 North Main Street, Winston-Salem, North Carolina 27150 (888-492-6397). -- more --
PAGE 7 FIRST UNION CORPORATION FINANCIAL HIGHLIGHTS (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ 2001 2000 ---------------------------- ------------------------------------- (Dollars in millions, except Second First Fourth Third Second per share data) Quarter Quarter Quarter Quarter Quarter ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Operating Earnings Net interest income - tax-equivalent $ 1,742 1,734 1,757 1,860 1,930 Fee and other income 1,629 1,546 1,582 1,645 1,746 ------------------------------------------------------------------------------------------------------------------------------------ Total revenue - tax-equivalent 3,371 3,280 3,339 3,505 3,676 Provision for loan losses 223 219 192 142 228 Noninterest expense 2,169 2,138 2,132 2,328 2,366 Income taxes - tax-equivalent 330 313 334 333 368 ------------------------------------------------------------------------------------------------------------------------------------ Income before restructuring, merger- related and other charges and cumulative effect of a change in accounting principle (Operating earnings) 649 610 681 702 714 After-tax restructuring, merger-related and other charges (16) (26) (36) 150 (2,913) ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) before cumulative effect of a change in accounting principle 633 584 645 852 (2,199) Cumulative effect of a change in the accounting for beneficial interests, net of tax - - (46) - - ------------------------------------------------------------------------------------------------------------------------------------ Net income (loss) (As reported) $ 633 584 599 852 (2,199) ==================================================================================================================================== DILUTED EARNINGS PER SHARE Income before restructuring, merger- related and other charges and cumulative effect of a change in accounting principle $ 0.66 0.62 0.69 0.71 0.73 Income (loss) before cumulative effect of a change in accounting principle 0.64 0.59 0.65 0.86 (2.27) Net income (loss) $ 0.64 0.59 0.60 0.86 (2.27) ==================================================================================================================================== PROFITABILITY (Operating earnings) Return on average stockholders' equity 16.19 % 15.64 15.36 15.76 17.74 Net interest margin 3.41 3.42 3.46 3.52 3.51 Fee and other income as % of total revenue 48.32 47.13 47.38 46.93 47.50 Overhead efficiency ratio 64.34 65.18 63.85 66.42 64.36 Effective income tax rate 31.54 % 31.54 31.21 30.43 32.45 ==================================================================================================================================== CASH OPERATING EARNINGS Net income $ 723 684 753 778 807 Diluted earnings per share $ 0.73 0.69 0.76 0.79 0.82 Return on average tangible stockholders' equity 23.35 % 22.91 21.55 22.15 30.18 Return on average stockholders' equity 18.04 17.52 17.00 17.47 20.04 Overhead efficiency ratio 62.06 % 62.80 61.46 64.17 61.64 Operating leverage $ 59 (67) 31 (154) (136) ====================================================================================================================================
PAGE 8 FIRST UNION CORPORATION OTHER FINANCIAL DATA (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ 2001 2000 ---------------------------- ------------------------------------- (Dollars in millions, except Second First Fourth Third Second per share data) Quarter Quarter Quarter Quarter Quarter ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL ADEQUACY (a) Tier I capital ratio 7.40 % 7.18 7.02 7.00 6.65 Total capital ratio 11.48 11.33 11.19 11.32 10.57 Leverage ratio 6.01 % 5.88 5.92 5.73 5.34 ==================================================================================================================================== ASSET QUALITY Allowance as % of loans, net 1.44 % 1.43 1.39 1.39 1.33 Allowance as % of nonperforming assets 133 132 135 181 193 Net charge-offs as % of average loans, net 0.52 0.53 0.64 0.46 0.69 Nonperforming assets to loans, net, foreclosed properties and assets held for sale 1.23 % 1.30 1.22 0.98 0.87 ==================================================================================================================================== OTHER DATA Employees 67,420 69,362 70,639 70,533 72,890 Branches 2,162 2,164 2,193 2,253 2,258 ATMs 3,419 3,676 3,772 3,831 3,832 Shares outstanding (In thousands) 979,205 981,268 979,963 986,004 986,394 Common stock price $ 34.94 33.00 27.81 32.19 25.00 Book value per common share $ 16.49 16.39 15.66 15.00 14.14 Common stock price to book value 212 % 201 178 215 177 Market capitalization $ 34,213 32,382 27,253 31,739 24,660 Dividends paid per common share $ 0.24 0.24 0.48 0.48 0.48 ==================================================================================================================================== AVERAGE BALANCE SHEET DATA Commercial loans, net $ 76,378 77,270 76,253 75,380 75,951 Consumer loans, net 42,834 42,580 43,840 48,095 56,663 Loans, net 119,212 119,850 120,093 123,475 132,614 Earning assets 204,673 203,720 202,606 211,089 220,061 Total assets 247,254 245,469 239,375 246,818 255,583 Core deposits 119,035 118,192 118,944 118,074 118,256 Total deposits 136,979 137,282 138,329 143,112 141,204 Interest-bearing liabilities 185,224 183,995 181,832 190,146 196,954 Stockholders' equity $ 16,026 15,846 14,753 14,236 16,614 ==================================================================================================================================== PERIOD END BALANCE SHEET DATA Commercial loans, net $ 79,529 80,470 80,240 79,361 78,615 Consumer loans, net 42,963 42,383 43,520 44,058 49,744 Loans, net 122,492 122,853 123,760 123,419 128,359 Goodwill and other intangible assets Goodwill 3,476 3,524 3,481 3,551 3,510 Deposit base premium 140 157 174 195 215 Other 9 9 9 10 11 Total assets 245,941 252,949 254,170 246,640 257,994 Core deposits 121,022 120,786 122,383 118,317 119,352 Total deposits 138,567 140,795 142,668 138,870 144,864 Stockholders' equity $ 16,144 16,081 15,347 14,795 13,951 ==================================================================================================================================== (a) The second quarter of 2001 is based on estimates.
PAGE 9 FIRST UNION CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- Three Months Ended June 30, 2001 Six Months Ended June 30, 2001 -------------------------------------------------------------------------------- Restructuring Restructuring and Other and Other Operating Charges/ As Operating Charges/ As (In millions, except per share data) Earnings Gains Reported Earnings Gains Reported ----------------------------------------------------------------------------------------------------------------------------------- Net interest income $ 1,711 - 1,711 3,413 - 3,413 Provision for loan losses 223 - 223 442 - 442 ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 1,488 - 1,488 2,971 - 2,971 ----------------------------------------------------------------------------------------------------------------------------------- Fee and other income Service charges and fees 486 - 486 954 - 954 Advisory, underwriting and other investment banking fees 238 - 238 436 - 436 Other income Security transactions - portfolio - - - (16) - (16) Asset sales and securitization 64 (8) 56 76 (52) 24 Gain on sale of branches - - - - 73 73 Other income 841 9 850 1,725 8 1,733 ----------------------------------------------------------------------------------------------------------------------------------- Total fee and other income 1,629 1 1,630 3,175 29 3,204 ----------------------------------------------------------------------------------------------------------------------------------- Noninterest expense Restructuring charges - (69) (69) - (67) (67) Other noninterest expense 2,169 97 2,266 4,307 166 4,473 ----------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 2,169 28 2,197 4,307 99 4,406 ----------------------------------------------------------------------------------------------------------------------------------- Income before income taxes (benefits) 948 (27) 921 1,839 (70) 1,769 Income taxes (benefits) 299 (11) 288 580 (28) 552 ----------------------------------------------------------------------------------------------------------------------------------- Net income $ 649 (16) 633 1,259 (42) 1,217 =================================================================================================================================== Diluted earnings per share $ 0.66 (0.02) 0.64 1.28 (0.05) 1.23 ===================================================================================================================================
PAGE 10 FIRST UNION CORPORATION CONSOLIDATED STATEMENTS OF OPERATING EARNINGS (a) (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- 2001 2000 ---------------------------- ------------------------------------- Second First Fourth Third Second (In millions, except per share data) Quarter Quarter Quarter Quarter Quarter ----------------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $ 2,420 2,526 2,701 2,768 2,929 Interest and dividends on securities 881 925 939 975 1,023 Trading account interest 198 204 199 212 218 Other interest income 321 370 425 510 322 ----------------------------------------------------------------------------------------------------------------------------------- Total interest income 3,820 4,025 4,264 4,465 4,492 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest on deposits 1,192 1,253 1,367 1,422 1,285 Interest on short-term borrowings 454 493 538 609 750 Interest on long-term debt 463 577 627 600 552 ----------------------------------------------------------------------------------------------------------------------------------- Total interest expense 2,109 2,323 2,532 2,631 2,587 ----------------------------------------------------------------------------------------------------------------------------------- Net interest income 1,711 1,702 1,732 1,834 1,905 Provision for loan losses 223 219 192 142 228 ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 1,488 1,483 1,540 1,692 1,677 ----------------------------------------------------------------------------------------------------------------------------------- FEE AND OTHER INCOME Service charges and fees 486 468 481 508 491 Commissions 389 375 383 365 375 Fiduciary and asset management fees 384 381 387 384 374 Advisory, underwriting and other investment banking fees 238 198 187 148 182 Principal investing (58) (43) (43) 34 205 Other income 190 167 187 206 119 ----------------------------------------------------------------------------------------------------------------------------------- Total fee and other income 1,629 1,546 1,582 1,645 1,746 ----------------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and employee benefits 1,363 1,329 1,243 1,381 1,396 Occupancy 155 163 150 157 155 Equipment 198 205 221 213 210 Advertising 11 9 16 14 31 Communications and supplies 111 110 123 117 122 Professional and consulting fees 69 73 97 87 82 Goodwill and other intangible amortization 77 78 80 79 100 Sundry expense 185 171 202 280 270 ----------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 2,169 2,138 2,132 2,328 2,366 ----------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 948 891 990 1,009 1,057 Income taxes 299 281 309 307 343 ----------------------------------------------------------------------------------------------------------------------------------- Net operating earnings $ 649 610 681 702 714 =================================================================================================================================== Diluted earnings per share $ 0.66 0.62 0.69 0.71 0.73 =================================================================================================================================== (a) Operating earnings exclude restructuring, merger-related and other changes and gains and cumulative effect of a change in accounting principle.
PAGE 11 FIRST UNION CORPORATION CONSOLIDATED STATEMENTS OF OPERATING EARNINGS (a) (Unaudited) -------------------------------------------------------------------------------- Six Months Ended June 30, ------------------- (In millions, except per share data) 2001 2000 -------------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $ 4,946 5,777 Interest and dividends on securities 1,806 1,989 Trading account interest 402 409 Other interest income 691 630 -------------------------------------------------------------------------------- Total interest income 7,845 8,805 -------------------------------------------------------------------------------- INTEREST EXPENSE Interest on deposits 2,445 2,480 Interest on short-term borrowings 947 1,389 Interest on long-term debt 1,040 1,065 -------------------------------------------------------------------------------- Total interest expense 4,432 4,934 -------------------------------------------------------------------------------- Net interest income 3,413 3,871 Provision for loan losses 442 420 -------------------------------------------------------------------------------- Net interest income after provision for loan losses 2,971 3,451 -------------------------------------------------------------------------------- FEE AND OTHER INCOME Service charges and fees 954 977 Commissions 764 843 Fiduciary and asset management fees 765 740 Advisory, underwriting and other investment banking fees 436 391 Principal investing (101) 404 Other income 357 233 -------------------------------------------------------------------------------- Total fee and other income 3,175 3,588 -------------------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and employee benefits 2,692 2,825 Occupancy 318 312 Equipment 403 424 Advertising 20 61 Communications and supplies 221 247 Professional and consulting fees 142 153 Goodwill and other intangible amortization 155 202 Sundry expense 356 529 -------------------------------------------------------------------------------- Total noninterest expense 4,307 4,753 -------------------------------------------------------------------------------- Income before income taxes 1,839 2,286 Income taxes 580 734 -------------------------------------------------------------------------------- Net operating earnings $ 1,259 1,552 ================================================================================ Diluted earnings per share $ 1.28 1.58 ================================================================================ (a) Operating earnings exclude restructuring, merger-related and other changes and gains.
PAGE 12 FIRST UNION CORPORATION CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- 2001 2000 ---------------------------- ------------------------------------- Second First Fourth Third Second (In millions, except per share data) Quarter Quarter Quarter Quarter Quarter ----------------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $ 2,420 2,526 2,701 2,768 2,929 Interest and dividends on securities 881 925 939 975 1,023 Trading account interest 198 204 199 212 218 Other interest income 321 370 425 510 322 ----------------------------------------------------------------------------------------------------------------------------------- Total interest income 3,820 4,025 4,264 4,465 4,492 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest on deposits 1,192 1,253 1,367 1,422 1,285 Interest on short-term borrowings 454 493 538 609 750 Interest on long-term debt 463 577 627 600 552 ----------------------------------------------------------------------------------------------------------------------------------- Total interest expense 2,109 2,323 2,532 2,631 2,587 ----------------------------------------------------------------------------------------------------------------------------------- Net interest income 1,711 1,702 1,732 1,834 1,905 Provision for loan losses 223 219 192 322 1,030 ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 1,488 1,483 1,540 1,512 875 ----------------------------------------------------------------------------------------------------------------------------------- FEE AND OTHER INCOME Service charges and fees 486 468 481 506 447 Commissions 389 375 383 365 375 Fiduciary and asset management fees 384 381 387 384 374 Advisory, underwriting and other investment banking fees 238 198 182 145 182 Principal investing (58) (43) (43) 34 205 Other income 191 195 363 749 (649) ----------------------------------------------------------------------------------------------------------------------------------- Total fee and other income 1,630 1,574 1,753 2,183 934 ----------------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and employee benefits 1,400 1,373 1,407 1,427 1,396 Occupancy 180 164 150 160 155 Equipment 207 211 233 213 210 Advertising 16 14 35 18 31 Communications and supplies 111 110 130 125 123 Professional and consulting fees 84 83 104 91 82 Goodwill and other intangible amortization 77 78 80 79 100 Restructuring and merger-related charges (69) 2 33 52 2,110 Sundry expense 191 174 205 283 296 ----------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 2,197 2,209 2,377 2,448 4,503 ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (benefits) and cumulative effect of a change in accounting principle 921 848 916 1,247 (2,694) Income taxes (benefits) 288 264 271 395 (495) ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) before cumulative effect of a change in accounting principle 633 584 645 852 (2,199) Cumulative effect of a change in the accounting for beneficial interests, net of tax - - (46) - - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 633 584 599 852 (2,199) =================================================================================================================================== PER SHARE DATA Basic Income (loss) before change in accounting principle $ 0.65 0.60 0.66 0.87 (2.27) Net income (loss) 0.65 0.60 0.61 0.87 (2.27) Diluted Income (loss) before change in accounting principle 0.64 0.59 0.65 0.86 (2.27) Net income (loss) 0.64 0.59 0.60 0.86 (2.27) Cash Dividends $ 0.24 0.24 0.48 0.48 0.48 AVERAGE SHARES (In thousands) Basic 969,333 967,671 969,097 971,453 969,707 Diluted 978,185 975,847 990,445 986,763 981,940 ===================================================================================================================================
PAGE 13 FIRST UNION CORPORATION CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) -------------------------------------------------------------------------------- Six Months Ended June 30, ---------------------- (In millions, except per share data) 2001 2000 -------------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $ 4,946 5,777 Interest and dividends on securities 1,806 1,989 Trading account interest 402 409 Other interest income 691 630 -------------------------------------------------------------------------------- Total interest income 7,845 8,805 -------------------------------------------------------------------------------- INTEREST EXPENSE Interest on deposits 2,445 2,480 Interest on short-term borrowings 947 1,389 Interest on long-term debt 1,040 1,065 -------------------------------------------------------------------------------- Total interest expense 4,432 4,934 -------------------------------------------------------------------------------- Net interest income 3,413 3,871 Provision for loan losses 442 1,222 -------------------------------------------------------------------------------- Net interest income after provision for loan losses 2,971 2,649 -------------------------------------------------------------------------------- FEE AND OTHER INCOME Service charges and fees 954 933 Commissions 764 843 Fiduciary and asset management fees 765 740 Advisory, underwriting and other investment banking fees 436 391 Principal investing (101) 404 Other income 386 (535) -------------------------------------------------------------------------------- Total fee and other income 3,204 2,776 -------------------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and employee benefits 2,773 2,825 Occupancy 344 312 Equipment 418 424 Advertising 30 61 Communications and supplies 221 248 Professional and consulting fees 167 153 Goodwill and other intangible amortization 155 202 Restructuring and merger-related charges (67) 2,105 Sundry expense 365 555 -------------------------------------------------------------------------------- Total noninterest expense 4,406 6,885 -------------------------------------------------------------------------------- Income (loss) before income taxes (benefits) 1,769 (1,460) Income taxes (benefits) 552 (101) -------------------------------------------------------------------------------- Net income (loss) $ 1,217 (1,359) ================================================================================ PER SHARE DATA Basic earnings $ 1.24 (1.41) Diluted earnings 1.23 (1.41) Cash dividends $ 0.48 0.96 AVERAGE SHARES (In thousands) Basic 968,502 970,940 Diluted 976,978 983,147 ================================================================================
PAGE 14 FIRST UNION CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ 2001 2000 ---------------------------- ------------------------------------- Second First Fourth Third Second (In millions, except per share data) Quarter Quarter Quarter Quarter Quarter ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks $ 8,665 7,857 9,906 7,063 8,028 Interest-bearing bank balances 1,666 2,971 3,239 4,585 1,913 Federal funds sold and securities purchased under resale agreements (carrying amount of collateral $2,255 at June 30,2001, $819 repledged) 9,161 11,866 11,240 5,395 9,054 ------------------------------------------------------------------------------------------------------------------------------------ Total cash and cash equivalents 19,492 22,694 24,385 17,043 18,995 ------------------------------------------------------------------------------------------------------------------------------------ Trading account assets 23,181 20,431 21,630 17,417 18,237 Securities (carrying amount of collateral $21,674 at June 30,2001) 48,055 51,528 49,246 52,065 55,203 Loans, net of unearned income 122,492 122,853 123,760 123,419 128,359 Allowance for loan losses (1,760) (1,759) (1,722) (1,720) (1,706) ------------------------------------------------------------------------------------------------------------------------------------ Loans, net 120,732 121,094 122,038 121,699 126,653 ------------------------------------------------------------------------------------------------------------------------------------ Premises and equipment 4,852 4,968 5,024 5,090 5,211 Due from customers on acceptances 856 894 874 968 839 Goodwill and other intangible assets 3,625 3,690 3,664 3,756 3,736 Other assets 25,148 27,650 27,309 28,602 29,120 ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 245,941 252,949 254,170 246,640 257,994 ==================================================================================================================================== IABILITIES AND STOCKHOLDERS' EQUITY Deposits Noninterest-bearing deposits 29,633 28,582 30,315 28,501 30,229 Interest-bearing deposits 108,934 112,213 112,353 110,369 114,635 ------------------------------------------------------------------------------------------------------------------------------------ Total deposits 138,567 140,795 142,668 138,870 144,864 Short-term borrowings 34,754 39,719 39,446 39,388 50,883 Bank acceptances outstanding 859 902 880 976 847 Trading account liabilities 7,907 8,130 7,475 5,138 4,541 Other liabilities 11,650 11,230 12,545 11,215 9,768 Long-term debt 36,060 36,092 35,809 36,258 33,140 ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 229,797 236,868 238,823 231,845 244,043 ------------------------------------------------------------------------------------------------------------------------------------ STOCKHOLDERS' EQUITY Preferred stock - - - - - Common stock, $3.33-1/3 par value; authorized 2 billion shares 3,264 3,271 3,267 3,287 3,288 Paid-in capital 6,345 6,307 6,272 6,211 6,066 Retained earnings 6,627 6,281 6,021 6,135 5,783 Accumulated other comprehensive income, net (92) 222 (213) (838) (1,186) ------------------------------------------------------------------------------------------------------------------------------------ Total stockholders' equity 16,144 16,081 15,347 14,795 13,951 ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $ 245,941 252,949 254,170 246,640 257,994 ====================================================================================================================================
PAGE 15 FIRST UNION CORPORATION NET INTEREST INCOME SUMMARIES (Unaudited) --------------------------------------------------------------------------------------------------------------------------------- SECOND QUARTER 2001 FIRST QUARTER 2001 ------------------------------------------------------------------------- Average Average Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ (In millions) Balances Expense Paid Balances Expense Paid --------------------------------------------------------------------------------------------------------------------------------- ASSETS Interest-bearing bank balances $ 2,529 29 4.57 % $ 1,826 25 5.69 % Federal funds sold and securities purchased under resale agreements 8,923 99 4.41 7,036 95 5.49 Trading account assets 13,965 202 5.78 13,315 206 6.24 Securities 49,931 899 7.21 50,417 945 7.50 Loans Commercial Commercial, financial and agricultural 53,160 1,098 8.29 53,416 1,130 8.56 Real estate - construction and other 3,193 52 6.56 3,231 62 7.76 Real estate - mortgage 8,525 149 7.01 9,195 180 7.95 Lease financing 6,075 157 10.29 6,084 161 10.62 Foreign 5,425 83 6.12 5,344 92 7.01 ------------------------------------------------------------------------------- ---------------------- Total commercial 76,378 1,539 8.08 77,270 1,625 8.51 ------------------------------------------------------------------------------- ---------------------- Consumer Real estate - mortgage 17,435 318 7.29 17,610 331 7.52 Installment loans and vehicle leasing 25,399 572 9.02 24,970 580 9.41 ------------------------------------------------------------------------------- ---------------------- Total consumer 42,834 890 8.32 42,580 911 8.63 ------------------------------------------------------------------------------- ---------------------- Total loans 119,212 2,429 8.17 119,850 2,536 8.55 ------------------------------------------------------------------------------- ---------------------- Other earning assets 10,113 193 7.68 11,276 250 8.96 ------------------------------------------------------------------------------- ---------------------- Total earning assets 204,673 3,851 7.54 203,720 4,057 8.03 ====================== ==================== Cash and due from banks 7,568 7,749 Other assets 35,013 34,000 -------------------------------------------------------------------- ----------- Total assets $ 247,254 $ 245,469 ==================================================================== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing deposits Savings and NOW accounts 39,640 267 2.70 38,756 264 2.76 Money market accounts 18,746 225 4.81 17,941 200 4.52 Other consumer time 33,268 477 5.76 34,452 506 5.96 Foreign 6,357 73 4.62 6,851 94 5.59 Other time 11,587 150 5.20 12,239 189 6.27 ------------------------------------------------------------------------------- ---------------------- Total interest-bearing deposits 109,598 1,192 4.36 110,239 1,253 4.61 Federal funds purchased and securities sold under repurchase agreements 27,128 356 5.27 25,005 378 6.13 Commercial paper 2,435 25 4.08 2,540 33 5.32 Other short-term borrowings 9,809 73 2.98 9,580 82 3.46 Long-term debt 36,254 463 5.11 36,631 577 6.30 ------------------------------------------------------------------------------- ---------------------- Total interest-bearing liabilities 185,224 2,109 4.57 183,995 2,323 5.10 ====================== ==================== Noninterest-bearing deposits 27,381 27,043 Other liabilities 18,623 18,585 Stockholders' equity 16,026 15,846 -------------------------------------------------------------------- ----------- Total liabilities and stockholders' equity $ 247,254 $ 245,469 ==================================================================== =========== Interest income and rate earned $ 3,851 7.54 % $ 4,057 8.03 % Interest expense and equivalent rate paid 2,109 4.13 2,323 4.61 ------------------------------------------------------------------------------------------- ---------------------- Net interest income and margin (a) $ 1,742 3.41 % $ 1,734 3.42 % =========================================================================================== ====================== (a) The net margin includes (in basis points): 13, 14, 15, 22, and 27 for the quarters ended June 30, 2001, March 31, 2001, December 31, 2000, September 30, 2000, and June 30, 2000, respectively, related to net interest income from hedge-related derivative transactions.
PAGE 16 FIRST UNION CORPORATION NET INTEREST INCOME SUMMARIES (Unaudited) --------------------------------------------------------------------------------------------------------------------------- FOURTH QUARTER 2000 THIRD QUARTER 2000 SECOND QUARTER 2000 ------------------------------------------------------------------------------------------------------------------------ Average Average Average Interest Rates Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ Average Income/ Earned/ Balances Expense Paid Balances Expense Paid Balances Expense Paid ------------------------------------------------------------------------------------------------------------------------ $ 1,266 14 4.34 % $ 1,465 20 5.28 % $ 977 13 5.52 % 5,994 89 5.86 6,367 97 6.11 9,318 132 5.72 11,569 201 6.95 12,204 214 6.99 12,950 220 6.83 50,554 952 7.54 52,780 988 7.48 56,027 1,035 7.40 53,554 1,233 9.17 53,226 1,250 9.34 54,486 1,251 9.22 3,011 65 8.69 2,676 59 8.65 2,458 52 8.49 9,130 198 8.63 9,294 203 8.70 9,302 195 8.44 5,272 150 11.37 5,168 148 11.45 5,123 153 11.90 5,286 97 7.29 5,016 91 7.17 4,582 80 7.08 ------------------------ ------------------------ ------------------------ 76,253 1,743 9.11 75,380 1,751 9.24 75,951 1,731 9.15 ------------------------ ------------------------ ------------------------ 18,805 362 7.70 23,163 432 7.47 25,760 469 7.28 25,035 606 9.63 24,932 596 9.51 30,903 740 9.61 ------------------------ ------------------------ ------------------------ 43,840 968 8.80 48,095 1,028 8.53 56,663 1,209 8.55 ------------------------ ------------------------ ------------------------ 120,093 2,711 8.99 123,475 2,779 8.96 132,614 2,940 8.90 ------------------------ ------------------------ ------------------------ 13,130 322 9.76 14,798 393 10.63 8,175 177 8.66 ------------------------ ------------------------ ------------------------ 202,606 4,289 8.44 211,089 4,491 8.48 220,061 4,517 8.24 ====================== ====================== ======================= 7,653 7,446 7,830 29,116 28,283 27,692 ------------ ------------ ----------- $ 239,375 $ 246,818 $ 255,583 ============ ============ =========== 37,640 301 3.17 37,680 296 3.13 38,940 283 2.92 17,008 202 4.74 15,629 175 4.46 14,959 154 4.13 36,421 541 5.91 36,328 524 5.74 35,386 478 5.43 7,483 110 5.85 9,721 151 6.18 8,795 130 5.92 11,902 213 7.13 15,317 276 7.16 14,153 240 6.82 ------------------------ ------------------------ ------------------------ 110,454 1,367 4.92 114,675 1,422 4.93 112,233 1,285 4.60 23,686 400 6.72 28,363 459 6.43 36,762 552 6.04 2,639 42 6.19 2,588 40 6.25 3,308 49 6.03 9,345 96 4.09 9,257 110 4.74 11,096 149 5.37 35,708 627 7.03 35,263 600 6.80 33,555 552 6.58 ------------------------ ------------------------ ------------------------ 181,832 2,532 5.55 190,146 2,631 5.51 196,954 2,587 5.28 ====================== ====================== ======================= 27,875 28,437 28,971 14,915 13,999 13,044 14,753 14,236 16,614 ------------ ------------ ----------- $ 239,375 $ 246,818 $ 255,583 ============ ============ =========== $ 4,289 8.44 % $ 4,491 8.48 % $ 4,517 8.24 % 2,532 4.98 2,631 4.96 2,587 4.73 ---------------------- ---------------------- ----------------------- $ 1,757 3.46 % $ 1,860 3.52 % $ 1,930 3.51 % ====================== ====================== =======================
PAGE 17 FIRST UNION CORPORATION NET INTEREST INCOME SUMMARIES (Unaudited) ---------------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED 2001 SIX MONTHS ENDED 2000 --------------------------------------------------------------------------- Average Average Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ (In millions) Balances Expense Paid Balances Expense Paid ---------------------------------------------------------------------------------------------------------------------------------- ASSETS Interest-bearing bank balances $ 2,179 54 5.04 % $ 822 20 5.07 % Federal funds sold and securities purchased under resale agreements 7,985 194 4.89 9,436 261 5.56 Trading account assets 13,642 408 6.00 12,138 413 6.84 Securities 50,173 1,844 7.35 55,208 2,013 7.29 Loans Commercial Commercial, financial and agricultural 53,286 2,228 8.43 53,647 2,425 9.09 Real estate - construction and other 3,212 114 7.16 2,432 100 8.29 Real estate - mortgage 8,858 329 7.50 9,141 378 8.32 Lease financing 6,080 318 10.46 5,168 313 12.10 Foreign 5,385 175 6.56 4,557 154 6.82 ------------------------------------------------------------------------------ ------------------------ Total commercial 76,821 3,164 8.30 74,945 3,370 9.04 ------------------------------------------------------------------------------ ------------------------ Consumer Real estate - mortgage 17,522 649 7.41 26,655 968 7.26 Installment loans and vehicle leasing 25,186 1,152 9.22 30,448 1,459 9.62 ------------------------------------------------------------------------------ ------------------------ Total consumer 42,708 1,801 8.47 57,103 2,427 8.52 ------------------------------------------------------------------------------ ------------------------ Total loans 119,529 4,965 8.36 132,048 5,797 8.81 ------------------------------------------------------------------------------ ------------------------ Other earning assets 10,691 443 8.35 8,256 349 8.47 ------------------------------------------------------------------------------ ------------------------ Total earning assets 204,199 7,908 7.78 217,908 8,853 8.15 ===================== ===================== Cash and due from banks 7,658 7,954 Other assets 34,510 26,074 ------------------------------------------------------------------- ----------- Total assets $ 246,367 $ 251,936 =================================================================== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing deposits Savings and NOW accounts 39,200 531 2.73 39,385 572 2.92 Money market accounts 18,346 425 4.67 15,262 305 4.01 Other consumer time 33,857 983 5.86 34,688 901 5.22 Foreign 6,603 167 5.12 8,960 253 5.68 Other time 11,911 339 5.75 13,688 449 6.60 ------------------------------------------------------------------------------ ------------------------ Total interest-bearing deposits 109,917 2,445 4.49 111,983 2,480 4.45 Federal funds purchased and securities sold under repurchase agreements 26,072 734 5.68 36,024 1,034 5.77 Commercial paper 2,487 58 4.71 3,152 91 5.81 Other short-term borrowings 9,695 155 3.21 10,098 264 5.24 Long-term debt 36,442 1,040 5.71 33,060 1,065 6.44 ------------------------------------------------------------------------------ ------------------------ Total interest-bearing liabilities 184,613 4,432 4.83 194,317 4,934 5.10 ===================== ===================== Noninterest-bearing deposits 27,213 28,829 Other liabilities 18,604 12,191 Stockholders' equity 15,937 16,599 ------------------------------------------------------------------- ----------- Total liabilities and stockholders' equity $ 246,367 $ 251,936 =================================================================== =========== Interest income and rate earned $ 7,908 7.78 % $ 8,853 8.15 % Interest expense and equivalent rate paid 4,432 4.36 4,934 4.55 ------------------------------------------------------------------------------------------ --------------------- Net interest income and margin (a) $ 3,476 3.42 % $ 3,919 3.60 % ========================================================================================== ===================== (a) The net interest margin includes (in basis points): 14 and 27 for the six months ended June 30, 2001, and June 30, 2000, respectively, related to net interest income from hedge-related derivative transactions.