-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sb4A8GelK5aiH6bne+ArpvBrgktHTL5We4zC0O8jRPUVWwfoT7SlZ7y8JoDB0pfT vy9/4BOLgJoOgBuiGxAhnA== 0000950168-96-001261.txt : 19960718 0000950168-96-001261.hdr.sgml : 19960718 ACCESSION NUMBER: 0000950168-96-001261 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960717 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION CORP CENTRAL INDEX KEY: 0000036995 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 560898180 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: 1933 Act SEC FILE NUMBER: 033-61941 FILM NUMBER: 96595840 BUSINESS ADDRESS: STREET 1: ONE FIRST UNION CTR CITY: CHARLOTTE STATE: NC ZIP: 28288-0630 BUSINESS PHONE: 7043746565 MAIL ADDRESS: STREET 1: FIRST UNION CORPORA STREET 2: ONE FIRST UNION CENTER CITY: CHARLOTTE STATE: NC ZIP: 28288-0630 FORMER COMPANY: FORMER CONFORMED NAME: CAMERON FINANCIAL CORP DATE OF NAME CHANGE: 19750522 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION NATIONAL BANCORP INC DATE OF NAME CHANGE: 19721115 424B5 1 FUNB PROSPECTUS SUPPLEMENT 43775 424B5 PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 7, 1995 $300,000,000 (First Union Logo appears here) FIRST UNION CORPORATION 7 1/2% SUBORDINATED NOTES DUE JULY 15, 2006 Interest on the Notes is payable semi-annually on January 15 and July 15. The first interest payment date will be January 15, 1997. The Notes will be issued only in registered form in denominations of $1,000 and integral multiples thereof. Settlement of the Notes will be made in immediately available funds. The Notes will be in the Same Day Funds Settlement System at The Depository Trust Company and, to the extent that secondary market trading in the Notes is effected through the facilities of such depositary, such trades will be settled in immediately available funds. The Notes are not redeemable prior to maturity and no sinking fund is provided for the Notes. See "Description of Certain Terms of the Notes". The Notes will be unsecured and subordinated to Senior Indebtedness of the Corporation as described herein. The Notes will rank PARI PASSU with Existing Subordinated Indebtedness of the Corporation, subject to the Holders of the Notes being obligated to pay over any Excess Proceeds to Entitled Persons in respect of Other Financial Obligations as described herein. Payment of the principal of the Notes may be accelerated only in the case of certain events involving the bankruptcy, insolvency or reorganization of the Corporation. There is no right of acceleration in the case of a default in the performance of any covenant of the Corporation, including the payment of principal or interest. See "Description of the Debt Securities" in the Prospectus accompanying this Prospectus Supplement. The Notes will not be deposits or other obligations of a bank and will not be insured by the Federal Deposit Insurance Corporation or any other governmental agency. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INITIAL PUBLIC UNDERWRITING PROCEEDS TO OFFERING PRICE (1) DISCOUNT (2) CORPORATION (1)(3) Per Note................................................... 99.762% 0.650% 99.112% Total...................................................... $299,286,000 $ 1,950,000 $297,336,000
(1) Plus accrued interest from July 15, 1996. (2) The Corporation has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. (3) Before deducting estimated expenses of $100,000 payable by the Corporation. The Notes offered hereby are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that the Notes will be ready for delivery in New York, New York, on or about July 19, 1996, against payment therefor in immediately available funds. GOLDMAN, SACHS & CO. FIRST UNION CAPITAL MARKETS CORP. MERRILL LYNCH & CO. J.P. MORGAN & CO. MORGAN STANLEY & CO. INCORPORATED The date of this Prospectus Supplement is July 16, 1996. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY OR OTHER NOTES OR DEBENTURES OF THE CORPORATION AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Commissioner of Insurance of the State of North Carolina (the "Commissioner") has not approved or disapproved this offering, nor has the Commissioner passed upon the accuracy or adequacy of this Prospectus Supplement or the accompanying Prospectus. DESCRIPTION OF CERTAIN TERMS OF THE NOTES The following description of the particular terms of the 7 1/2% Subordinated Notes Due July 15, 2006 offered hereby (the "Notes" and referred to in the accompanying Prospectus as the "Debt Securities", the "Offered Debt Securities" and the "Subordinated Debt Securities") supplements and modifies the description of the general terms and provisions of the Notes set forth in the Prospectus under "Description of the Debt Securities", to which description reference is hereby made. The following description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the description set forth in the accompanying Prospectus and the provisions of the Indenture (as defined below). Section references used herein are referenced to the Indenture. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Indenture. GENERAL The Notes will be limited to $300,000,000 aggregate principal amount, will be direct, unsecured, subordinated obligations of First Union Corporation (the "Corporation") and will mature on July 15, 2006. The Notes will not be redeemable at the option of the Corporation prior to maturity. No sinking fund will be provided for the Notes. The Notes are to be issued under the Indenture (the "Indenture"), dated as of March 15, 1986, as amended by supplemental indentures dated as of August 1, 1990, November 15, 1992 and February 7, 1996, between the Corporation and Harris Trust and Savings Bank, as successor trustee under the Indenture (the "Trustee"). All references in the accompanying Prospectus to the Subordinated Trustee shall mean the Trustee, and all references to the Subordinated Indenture shall mean the Indenture. As of June 30, 1996, $3.5 billion aggregate principal amount of subordinated long-term debt was issued and outstanding as additional series of Securities under the Indenture. The Trustee is the trustee for such additional series. As of June 30, 1996, the Corporation had outstanding an aggregate of $559 million of long-term Senior Indebtedness, an aggregate of $1.1 billion in short-term Senior Indebtedness, which consisted primarily of commercial paper, and a net receivable position with respect to outstanding Other Financial Obligations. The Indenture does not prohibit or limit the incurrence of additional Senior Indebtedness or Other Financial Obligations by the Corporation. Principal of and interest on the Notes are to be payable, and the transfer of the Notes will be registrable, at the Corporate Trust Office of the Trustee in the City of New York or the City of Chicago or at the Corporate Trust Office of First Union National Bank of North Carolina (the "Bank"), a subsidiary of the Corporation, in Charlotte, North Carolina, except that interest may be paid at the option of the Corporation by check mailed to the address of the Holder entitled thereto as it appears on the Note Register. (SECTIONS 301, 305, AND 1002). The Notes will be issued in fully registered form only in denominations of $1,000 and any integral multiple of $1,000, and may be transferred or exchanged without payment of any charge other than taxes or other governmental charges. (SECTION 302 AND 305). Settlement for the Notes will be made in immediately available funds. The Notes will be in the Same Day Funds Settlement System at The Depository Trust Company and, to the extent that secondary market trading in the Notes is effected through the facilities of such depositary, such trades will be settled in immediately available funds. S-2 INTEREST The Notes will bear interest at 7.50% per annum from July 15, 1996, payable semi-annually in arrears on January 15 and July 15 of each year. The first Interest Payment Date will be January 15, 1997, and will include interest accrued from July 15, 1996. The interest to be paid on each Note on each Interest Payment Date will be paid to the Person in whose name such Note (or any Predecessor Note) is registered at the close of business on the preceding January 1 or July 1, as the case may be. (SECTION 307). USE OF PROCEEDS The Corporation currently intends to use the net proceeds from the sale of the Notes for general corporate purposes, which may include the reduction of indebtedness, investments at the holding company level, investments in, or extensions of credit to, its banking and other subsidiaries and other banks and companies engaged in other financial service activities, possible acquisitions and the repurchase of capital stock. Pending such use, the net proceeds may be temporarily invested. The precise amounts and timing of the application of proceeds will depend upon the funding requirements of the Corporation and its subsidiaries and the availability of other funds. Based upon the historical and anticipated future growth of the Corporation and the financial needs of its subsidiaries, the Corporation may engage in additional financings of a character and amount to be determined as the need arises. RECENT DEVELOPMENTS CERTAIN FINANCIAL DATA FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 The Corporation's earnings applicable to common stockholders were $436 million in the second quarter of 1996, compared with $420 million in the first quarter of 1996 (excluding $181 million of after tax merger-related restructuring charges) and $359 million in the second quarter a year ago. On a per common share basis, earnings increased to $1.55, compared with $1.50 in the first quarter of 1996 (excluding $.65 per share relating to the merger-related restructuring charges) and $1.30 in the second quarter a year ago. All data as of and for periods ended on or prior to December 31, 1995, have been restated to reflect the pooling of interests acquisition of First Fidelity Bancorporation on January 1, 1996. In the first six months ended June 30, 1996, net income applicable to common stockholders was $856 million (excluding the foregoing after tax merger-related restructuring charges), or $3.04 per share, compared with $697 million, or $2.49, in the first six months of 1995. Tax-equivalent net interest income increased to $1.3 billion from $1.2 billion in the first quarter of 1996 and $1.2 billion in the second quarter of 1995. Nonperforming assets were $836 million, or 0.91 percent of loans and foreclosed properties, at June 30, 1996, compared with $842 million, or 0.93 percent, at March 31, 1996, and $845 million, or 1.00 percent, at June 30, 1995. Annualized net charge-offs as a percentage of average net loans were 0.45 percent in the second quarter of 1996, compared with 0.66 percent in the first quarter of 1996 and 0.44 percent in the second quarter of 1995. The loan loss provision was $80 million in the second quarter of 1996, compared with $70 million in the first quarter of 1996 and $54 million the second quarter of 1995. Net loans at June 30, 1996, were $91.3 billion, compared with $90.0 billion at the end of the first quarter of 1996 and $84.0 billion a year ago. Deposits were $91.5 billion at June 30, 1996, compared with $90.5 billion at the end of the first quarter of 1996 and $87.7 billion a year ago. Total stockholders' equity was $9.3 billion at June 30, 1996, compared with $9.1 billion at the end of the first quarter of 1996 and $8.7 billion a year ago. At June 30, 1996, the Corporation had assets of $139.9 billion. CERTAIN COMPLETED 1996 ACQUISITIONS On January 1, 1996, the Corporation completed the pooling of interests acquisition of First Fidelity Bancorporation ("FFB"). Each share of FFB common stock was exchanged for 1.35 shares of the Corporation's common stock; and each share of the three outstanding series of FFB preferred stock was exchanged for one share of one of three corresponding new series of the Corporation's Class A Preferred Stock having substantially identical S-3 terms as the related series of FFB preferred stock. Based on the closing price of the Corporation's common stock on the New York Stock Exchange Composite Transactions Tape on December 29, 1995 ($55.625), the FFB acquisition was valued at $5.9 billion and represented a purchase price of $75.09 for each share of FFB common stock. Approximately 106.3 million shares of the Corporation's common stock were issued in the FFB acquisition. Two of the three series of the Corporation's Class A Preferred Stock that were issued in the FFB acquisition were redeemed by the Corporation on July 1, 1996, at an aggregate redemption price of $109 million. At December 31, 1995, FFB had assets of $35.3 billion, net loans of $24.9 billion, deposits of $27.6 billion and net income applicable to common stockholders of $398 million. The Corporation's 1995 Annual Report on Form 10-K includes as an exhibit, supplemental consolidated financial statements of the Corporation and FFB on a combined basis, and the related notes thereto, and additional financial and other information on a combined basis. Reference is made thereto for such statements and information. In addition to the FFB acquisition, during the first six months of 1996, the Corporation completed three additional banking-related acquisitions, RS Financial Corp. (a savings and loan holding company based in Raleigh, North Carolina, completed January 11, 1996), Brentwood Savings Bank (based in Brentwood, Tennessee, completed January 31, 1996) and Society First Federal Savings Bank (based in Fort Myers, Florida, completed June 1, 1996). These three acquisitions had combined assets, net loans and deposits of approximately $2.1 billion, $1.4 billion and $1.8 billion, respectively. An aggregate of 2.4 million shares of the Corporation's common stock were issued in the RS Financial Corp. and Brentwood National Bank acquisitions and $164 million in cash was paid in the Society First Federal Savings Bank acquisition. The acquisitions were accounted for as purchases. A number of shares of the Corporation's common stock equal to the number of such shares issued in the two stock-for-stock acquisitions has been repurchased by the Corporation in the open market. CERTAIN PENDING ACQUISITIONS On May 22, 1996, a subsidiary of the Corporation entered into an agreement to acquire the assets of USL Capital's railcar leasing business. USL Capital is a member of Ford Motor Company's Financial Services Group. The purchase price is expected to be approximately $900 million in cash, subject to adjustment as of the closing of the acquisition based on the net book value of such assets at that time. The acquisition is expected to be consummated in the third quarter of 1996, subject to certain conditions of closing. On June 14, 1996, the Corporation entered into an agreement to acquire Center Financial Corporation ("CFC"), a bank holding company based in Waterbury, Connecticut. CFC operates 46 branches in Connecticut and at March 31, 1996, reported assets of $3.7 billion and deposits of $2.6 billion. Under the terms of the agreement, the Corporation will exchange shares of its common stock having a value of $25.44 for each share of CFC common stock, for an estimated purchase price of approximately $379 million. The acquisition, which will be accounted for as a purchase, is expected to close late in 1996 or early in 1997, subject to certain conditions of closing. The Corporation expects to repurchase in the open market the number of shares of the Corporation's common stock to be issued in the acquisition. On June 16, 1996, the Corporation entered into an agreement to acquire Home Financial Corporation ("HFC"), a savings and loan holding company based in Hollywood, Florida. HFC operates eight branches in southeast Florida and at March 31, 1996, reported $1.2 billion in assets and $881 million in deposits. Under the terms of the agreement, the Corporation will exchange 0.2233 shares of its common stock for each share of HFC common stock, subject to adjustment under certain circumstances. Based on a price of $60.00 per share of the Corporation's common stock and a 0.2233 exchange ratio, the purchase price would be approximately $336 million. The acquisition, which will be accounted for as a purchase, is expected to close late in 1996 or early in 1997, subject to certain conditions of closing. The Corporation expects to repurchase in the open market the number of shares of the Corporation's common stock to be issued in the acquisition. The Corporation is continually evaluating acquisition opportunities and frequently conducts due diligence activities in connection with possible acquisitions. As a result, acquisition discussions and, in some cases, negotiations, frequently take place and future acquisitions involving cash, debt and equity securities can be expected. Acquisitions typically involve the payment of a premium over book and market values, and therefore some dilution of the Corporation's book value and net income may occur in connection with future acquisitions. See "The Corporation" in the accompanying Prospectus. S-4 COMPUTATIONS OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31,* 1996 1995 1994 1993 1992 1991 Excluding interest on deposits............................... 1.94x 2.75 3.55 3.95 2.71 1.80 Including interest on deposits............................... 1.33x 1.54 1.73 1.70 1.32 1.17
* Restated to reflect the pooling of interests acquisition of FFB on January 1, 1996. For purposes of computing these ratios, earnings represent income from continuing operations before extraordinary items and cumulative effect of a change in accounting principle plus income taxes and fixed charges (excluding capitalized interest). Fixed charges, excluding interest on deposits, represent interest (other than on deposits, but including capitalized interest), one-third (the proportion deemed representative of the interest factor) of rents and all amortization of debt issuance costs. Fixed charges, including interest on deposits, represent all interest (including capitalized interest), one-third (the proportion deemed representative of the interest factor) of rents and all amortization of debt issuance costs. SELECTED CONSOLIDATED FINANCIAL DATA The following is selected unaudited consolidated financial information for the Corporation for the three months ended March 31, 1996 and March 31, 1995, and for each of the five years ended December 31, 1995. The summary below should be read in conjunction with the consolidated financial statements of the Corporation, and the related notes thereto, and the other detailed information contained in the Corporation's 1995 Annual Report on Form 10-K, the Corporation's 1996 First Quarter Report on Form 10-Q, and the Corporation's 1996 Current Reports on Form 8-K, which are incorporated herein by reference. All such information as of and for periods ended on or prior to December 31, 1995, have been restated to reflect the pooling of interests acquisition of FFB on January 1, 1996. S-5 THE CORPORATION
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31, 1996 1995 1995 1994 1993 1992 1991 CONSOLIDATED SUMMARIES OF INCOME (In thousands, except per share data) Interest income....................... $ 2,339,480 2,022,998 8,686,377 7,230,813 6,601,528 6,608,666 7,031,400 Interest expense...................... 1,127,418 895,549 4,051,815 2,792,982 2,481,952 2,941,680 4,070,885 Net interest income................... 1,212,062 1,127,449 4,634,562 4,437,831 4,119,576 3,666,986 2,960,515 Provision for loan losses.............................. 70,000 42,500 220,000 179,000 369,753 642,708 946,284 Net interest income after provision for loan losses.............................. 1,142,062 1,084,949 4,414,562 4,258,831 3,749,823 3,024,278 2,014,231 Securities available for sale transactions........................ 14,583 10,708 44,340 6,213 32,784 39,227 53,566 Investment security transactions...... 800 217 4,818 4,006 7,435 (2,881) 155,048 Noninterest income.................... 511,081 403,811 1,847,350 1,565,694 1,541,569 1,360,202 1,254,635 Noninterest expense................... 1,292,615 956,542 4,092,469 3,746,857 3,536,346 3,443,524 2,777,665 Income before income taxes............ 375,911 543,143 2,218,601 2,087,887 1,795,265 977,302 699,815 Income taxes.......................... 133,061 193,299 788,420 711,444 578,912 278,514 129,843 Net income............................ 242,850 349,844 1,430,181 1,376,443 1,216,353 698,788 569,972 Dividends on preferred stock.......... 3,900 12,237 26,390 46,020 45,553 53,040 51,746 Net income applicable to common stockholders before redemption premium............................. 238,950 337,607 1,403,791 1,330,423 1,170,800 645,748 518,226 Redemption premium on preferred stock............................... -- -- -- 41,355 -- -- -- Net income applicable to common stockholders after redemption premium............................. $ 238,950 337,607 1,403,791 1,289,068 1,170,800 645,748 518,226 PER COMMON SHARE DATA Net income before redemption premium... $ 0.85 1.19 5.04 4.72 4.30 2.53 2.34 Net income after redemption premium... 0.85 1.19 5.04 4.58 4.30 2.53 2.34 Cash dividends........................ 0.52 0.46 1.96 1.72 1.50 1.28 1.12 Book value............................ 31.80 29.18 31.89 28.19 26.71 23.36 21.21 CASH DIVIDENDS PAID ON COMMON STOCK (In thousands)......................... 145,195 79,660 336,321 297,902 243,845 167,601 126,029 CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS (In thousands) Assets................................ 130,581,264 113,253,413 131,879,873 113,529,201 104,549,554 95,308,328 89,488,406 Loans, net of unearned income......... 89,990,048 79,860,248 90,562,880 77,830,993 68,263,088 60,301,462 58,725,097 Deposits.............................. 90,517,804 84,747,144 92,555,218 87,865,125 81,885,433 76,155,800 72,394,773 Long-term debt........................ 7,539,045 4,615,040 7,120,947 4,242,137 3,675,002 3,732,768 3,549,815 Preferred stockholders' equity........ 170,960 227,604 183,223 229,707 262,014 276,946 377,144 Common stockholders' equity........... 8,938,603 8,146,002 8,859,921 8,044,785 7,431,590 6,187,426 5,175,987 Total stockholders' equity............ $ 9,109,563 8,373,606 9,043,144 8,274,492 7,946,053 6,716,813 5,805,579 Preferred shares outstanding.......... 2,897 4,738 3,388 5,213 11,560 12,158 16,165 Common shares outstanding............. 281,064 279,146 277,846 285,361 278,204 264,895 244,070 CONSOLIDATED AVERAGE BALANCE SHEET ITEMS (In thousands) Assets................................ $130,736,733 112,140,775 118,142,086 106,413,103 99,610,438 90,620,843 83,822,199 Loans, net of unearned income......... 89,274,004 77,537,930 83,265,397 70,725,906 62,996,378 58,700,311 54,844,025 Deposits.............................. 91,135,291 85,300,878 87,274,641 80,760,083 76,830,389 71,946,699 64,602,620 Long-term debt........................ 7,242,535 4,390,421 5,707,257 4,009,128 3,597,957 3,527,853 3,192,477 Common stockholders' equity*.......... 8,930,379 8,286,051 8,412,020 7,869,710 6,781,863 5,723,532 4,554,234 Total stockholders' equity*........... $ 9,109,662 8,514,440 8,623,039 8,371,959 7,302,152 6,280,407 5,083,574 Common shares outstanding............. 280,374 282,566 278,677 281,663 272,438 255,384 221,469 CONSOLIDATED PERCENTAGES Net income applicable to common stockholders before redemption premium to average common stockholders' equity*................ 10.76%** 16.52** 16.69 16.91 17.26 11.28 11.38 Net income applicable to common stockholders after redemption premium to average common stockholders' equity*............... 10.76** 16.52** 16.69 16.38 17.26 11.28 11.38 Net income to: Average total stockholders' equity*........................... 10.72** 16.66** 16.59 16.44 16.66 11.13 11.21 Average assets...................... 0.75** 1.27** 1.21 1.29 1.22 0.77 0.68 Average stockholders' equity to average assets***........................... 7.04 7.40 7.23 7.52 7.11 6.89 6.29 Allowance for loan losses to: Net loans........................... 1.60 1.94 1.66 2.03 2.38 2.57 2.49 Nonaccrual and restructured loans... 197 243 233 248 151 105 77 Nonperforming assets................ 171 178 182 178 115 76 55 Net charge-offs to average net loans............................... 0.66** 0.37** 0.41 0.40 0.78 1.03 1.53 Nonperforming assets to loans, net and foreclosed properties............... 0.93 1.09 0.91 1.14 2.06 3.36 4.45 Capital ratios:*** Tier 1 capital...................... 7.00 7.89 6.70 7.76 9.14 9.22 7.56 Total capital....................... 11.91 12.38 11.45 12.94 14.64 14.31 11.76 Leverage............................ 5.56 6.18 5.49 6.12 6.13 6.55 5.31 Net interest margin................... 4.19%** 4.65** 4.46 4.75 4.82 4.73 4.12
* Average common stockholders' equity and total stockholders' equity exclude net unrealized gains (losses) on debt and equity securities in 1994 through 1996. ** Annualized. *** The average stockholders' equity to average asset ratios and all capital ratios for 1991-1994 are not restated for pooling of interest acquisitions. Risk-based capital ratio guidelines require a minimum ratio of Tier 1 capital to risk-weighted assets of four percent and total capital to risk-weighted assets of eight percent. The minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets is from three to five percent. S-6 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, the Corporation has agreed to sell to each of the Underwriters named below, and each of the Underwriters has severally agreed to purchase, the principal amount of Notes set forth opposite its name below:
PRINCIPAL AMOUNT OF UNDERWRITER NOTES Goldman, Sachs & Co....................................................... $ 60,000,000 First Union Capital Markets Corp. ........................................ 60,000,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated........................ 60,000,000 J.P. Morgan Securities Inc. .............................................. 60,000,000 Morgan Stanley & Co., Incorporated........................................ 60,000,000 Total.............................................................. $300,000,000
Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed to take and pay for all of the Notes, if any are taken. The Underwriters propose to offer the Notes in part directly to retail purchasers at the public offering price set forth on the cover page of this Prospectus Supplement and in part to certain securities dealers at such price less a concession of 0.40% of the principal amount of the Notes. The Underwriters may allow, and such dealers may reallow, a concession not to exceed 0.25% of the principal amount of the Notes to certain brokers and dealers. After the Notes are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Underwriters. The Notes are a new issue of securities with no established trading market. The Corporation has been advised by each Underwriter that each such Underwriter intends to make a market in the Notes but is not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Notes. Settlement for the Notes will be made in immediately available funds. The Notes will be in the Same Day Funds Settlement System at The Depository Trust Company and, to the extent the secondary market trading in the Notes is effected through the facilities of such depositary, such trades will be settled in immediately available funds. The Corporation has agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. This Prospectus Supplement and the Prospectus may be used by First Union Capital Markets Corp., an affiliate of the Corporation, in connection with offers and sales related to market-making transactions in the Notes. First Union Capital Markets Corp. may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of sale or otherwise. The participation of First Union Capital Markets Corp. in the offer and sale of the Notes will comply with the requirements of Schedule E to the Bylaws of the National Association of Securities Dealers, Inc. (the "NASD"). No NASD member participating in offers and sales will execute a transaction in the Notes in a discretionary account without the prior specific written approval of such member's customer. The Underwriters and certain of their affiliates and associates are customers of, including borrowers from, engage in transactions with, and/or perform services for, the Corporation and its subsidiaries, in the ordinary course of business. Also, in the ordinary course of their respective businesses, affiliates of J.P. Morgan Securities Inc. engage, and may in the future engage, in commercial banking and investment banking transactions with the Corporation and its subsidiaries. The Underwriters have performed investment banking services for the Corporation in the last two years and have received fees in connection therewith. S-7 EXPERTS The supplemental consolidated balance sheets of the Corporation as of December 31, 1995 and 1994, and the related supplemental consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995, included in the Corporation's 1995 Supplemental Annual Report to Stockholders which is incorporated by reference in the Corporation's 1995 Annual Report on Form 10-K and incorporated by reference herein, have been incorporated by reference herein in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The aforementioned reports of KPMG Peat Marwick LLP covering the Corporation's consolidated financial statements refer to a change in the method of accounting for investments. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Corporation with the Commission (File No. 1-10000) under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are hereby incorporated by reference in the Prospectus as supplemented by this Prospectus Supplement: (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1995; (2) the Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; and (3) the Corporation's Current Reports on Form 8-K dated January 10, 1996 and February 9, 1996. All documents filed pursuant to Section 13(a), 13(c), or 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the termination of the offering of the Notes are hereby incorporated by reference into the Prospectus as supplemented by this Prospectus Supplement and shall be deemed a part hereof from the date of filing of such documents. Any statement contained in the Prospectus, in this Prospectus Supplement or in a document incorporated or deemed to be incorporated by reference in the Prospectus as supplemented by this Prospectus Supplement shall be deemed to be modified or superseded for purposes of the Registration Statement (as defined in the Prospectus) and the Prospectus as supplemented by this Prospectus Supplement to the extent that a statement contained in the Prospectus, in this Prospectus Supplement or in any subsequently filed document which also is or is deemed to be incorporated by reference in the Prospectus as supplemented by this Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement, the Prospectus or this Prospectus Supplement. THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THE PROSPECTUS AS SUPPLEMENTED BY THIS PROSPECTUS SUPPLEMENT IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED BY REFERENCE IN THE PROSPECTUS AS SUPPLEMENTED BY THIS PROSPECTUS SUPPLEMENT, EXCEPT FOR CERTAIN EXHIBITS TO SUCH DOCUMENTS. WRITTEN REQUESTS SHOULD BE SENT TO: INVESTOR RELATIONS, FIRST UNION CORPORATION, TWO FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28288-0206. TELEPHONE REQUESTS MAY BE DIRECTED TO (704) 374-6782. S-8 FIRST UNION CORPORATION DEBT SECURITIES First Union Corporation (the "Corporation" or "FUNC") may offer from time to time an aggregate initial offering price of not more than $2,000,000,000 (or, at the option of the Corporation if so specified in the applicable prospectus supplement or prospectus supplements to this Prospectus (each, a "Prospectus Supplement"), the equivalent thereof in any other currency or currency unit such as the European Currency Unit), of its unsecured debt securities (the "Debt Securities") consisting of unsecured senior debt securities (the "Senior Debt Securities") and/or unsecured subordinated debt securities (the "Subordinated Debt Securities"). The Debt Securities may be offered as separate series in amounts, at maturities, at prices and on terms to be determined at the time of sale as set forth in a Prospectus Supplement or Prospectus Supplements. Although the aggregate initial offering price of the Debt Securities is limited as set forth above, the respective indentures pursuant to which the Senior Debt Securities and the Subordinated Debt Securities are to be issued do not contain any limitation on the aggregate principal amount of the debt securities covered thereby. The Senior Debt Securities when issued will rank on a parity with all other unsecured and unsubordinated indebtedness of the Corporation, and the Subordinated Debt Securities when issued will be subordinated as described herein under "DESCRIPTION OF THE DEBT SECURITIES -- Subordination of the Subordinated Debt Securities". When a particular series of Debt Securities is offered, a Prospectus Supplement or Prospectus Supplements will be delivered setting forth the terms of such Debt Securities, including the specific designation, aggregate principal amount, the currency or currency unit in which payments are to be made, denominations, maturity, premium, if any, rate (which may be fixed or variable) and time of payment of interest, if any, terms for redemption at the option of the Corporation or the holder, if any, terms for sinking fund payments, if any, subordination terms, if any, and any other terms of such Debt Securities or otherwise in connection with the offering and sale of the Debt Securities in respect of which the Prospectus Supplement or Prospectus Supplements are being delivered. In addition, the Prospectus Supplement or Prospectus Supplements will set forth the initial public offering price, the names of any underwriters or agents, the principal amounts, if any, to be purchased by underwriters, the compensation of such underwriters and agents, if any, and the net proceeds to the Corporation. The Debt Securities may be issued in definitive or permanent global form. The Corporation may sell Debt Securities to or through underwriters, including First Union Capital Markets Corp., an affiliate of the Corporation, acting as principals for their own account or as agents, and also may sell Debt Securities directly to other purchasers or through agents designated from time to time. If the Corporation, directly or through agents, solicits offers to purchase the Debt Securities, the Corporation reserves the sole right to accept and, together with its agents, to reject in whole or in part any proposed purchase of Debt Securities. See "PLAN OF DISTRIBUTION". Any underwriters, dealers or agents participating in the offering may be deemed "underwriters" within the meaning of the Securities Act of 1933 (as amended, the "Securities Act"). See "PLAN OF DISTRIBUTION" for possible indemnification arrangements for underwriters, agents and their controlling persons. This Prospectus and the related Prospectus Supplements may be used by First Union Capital Markets Corp. in connection with offers and sales related to market-making transactions in the Debt Securities. First Union Capital Markets Corp. may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of sale. The Securities will be unsecured obligations of the Corporation and will not be savings accounts, deposits or other obligations of any bank or nonbank subsidiary of the Corporation and are not insured by the Federal Deposit Insurance Corporation ("FDIC"), the Bank Insurance Fund ("BIF") or any government agency. This Prospectus may not be used to consummate the sale of Debt Securities unless accompanied by a Prospectus Supplement. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS- SION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS SEPTEMBER 7, 1995. AVAILABLE INFORMATION The Corporation and First Fidelity Bancorporation ("First Fidelity") are subject to the informational requirements of the Securities Exchange Act of 1934 (as amended, the "Exchange Act") and, in accordance therewith, file reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Corporation and First Fidelity can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices in New York (7 World Trade Center, New York, New York 10048) and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661), and copies of such materials can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Corporation's Common Stock, $3.33 1/3 par value per share ("First Union Common Stock"), and First Fidelity's Common Stock, $1.00 par value per share, are each listed and traded on the New York Stock Exchange, Inc. (the "NYSE"). Reports, proxy statements and other information of the Corporation and First Fidelity can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. This Prospectus does not contain all of the information set forth in the Registration Statement on Form S-3 of which this Prospectus is a part (together with all amendments and exhibits thereto, the "Registration Statement"), which the Corporation has filed with the Commission under the Securities Act, certain portions of which have been omitted pursuant to the rules and regulations of the Commission, and to which reference is hereby made for further information. The Commissioner of Insurance (the "Commissioner") of the State of North Carolina has not approved or disapproved this offering nor has the Commissioner passed upon the adequacy of this Prospectus. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Corporation with the Commission (File No. 1-10000) under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated by reference in this Prospectus: (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1994 (the "Form 10-K"); (2) the Corporation's Quarterly Reports on Form 10-Q for the periods ended March 31, 1995 (as amended by Form 10-Q/A-No. 1 dated May 16, 1995) and June 30, 1995; and (3) the Corporation's Current Reports on Form 8-K dated January 13, 1995, June 19, 1995, June 20, 1995, June 21, 1995, June 30, 1995 and August 30, 1995. All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the termination of the offering of any Debt Securities are hereby incorporated by reference into this Prospectus and shall be deemed a part hereof from the date of filing of such documents. Any statement contained herein, in any Prospectus Supplement or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of the Registration Statement and this Prospectus to the extent that a statement contained herein, in any Prospectus Supplement or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement, this Prospectus or any Prospectus Supplement. THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN, EXCEPT FOR CERTAIN EXHIBITS TO SUCH DOCUMENTS. WRITTEN REQUESTS SHOULD BE SENT TO: INVESTOR RELATIONS, FIRST UNION CORPORATION, TWO FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28288-0206. TELEPHONE REQUESTS MAY BE DIRECTED TO (704) 374-6782. 2 THE CORPORATION The Corporation was incorporated under the laws of North Carolina in 1967 and is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (the "BHCA"). Pursuant to a corporate reorganization in 1968, First Union National Bank of North Carolina ("FUNB-NC") and First Union Mortgage Corporation, a mortgage banking firm acquired by FUNB-NC in 1964, became subsidiaries of the Corporation. In addition to North Carolina, the Corporation also operates banking subsidiaries in Florida, South Carolina, Georgia, Tennessee, Virginia, Maryland and Washington, D.C. In addition to providing a wide range of commercial and retail banking and trust services through its banking subsidiaries, the Corporation also provides various other financial services, including mortgage banking, home equity lending, leasing, investment banking, insurance and securities brokerage services, through other subsidiaries. The Corporation's principal executive offices are located at One First Union Center, Charlotte, North Carolina 28288-0013 (telephone number (704) 374-6565). Following the 1985 Supreme Court decision upholding regional interstate banking legislation, the Corporation concentrated its efforts on building a large regional banking organization in the southeastern and south atlantic regions of the United States. Since November 1985, the Corporation has completed 57 banking-related acquisitions and currently has five acquisitions pending, including the more significant acquisitions (I.E., acquisitions involving the acquisition of $3.0 billion or more of assets or deposits) set forth in the following table.
CONSIDERATION/ ASSETS/ ACCOUNTING NAME HEADQUARTERS DEPOSITS (1)(2) TREATMENT COMPLETION DATE Atlantic Bancorporation Florida $3.8 billion common stock/ November 1985 pooling Northwestern Financial Corporation North Carolina 3.0 billion common stock/ December 1985 pooling First Railroad & Banking Company of Georgia Georgia 3.7 billion common stock/ November 1986 pooling Florida National Banks of Florida, Inc. Florida 7.9 billion cash and preferred January 1990 stock/purchase Southeast banks Florida 9.9 billion cash, notes September 1991 and preferred stock/purchase Resolution Trust Corporation ("RTC") acquisitions Florida, Georgia, 5.3 billion cash/purchase 1991-1994 Virginia Dominion Bankshares Corporation Virginia 8.9 billion common stock March 1993 and preferred stock/pooling Georgia Federal Bank, FSB Georgia 4.0 billion cash/purchase June 1993 First American Metro Corp. Virginia 4.6 billion cash/purchase June 1993 American Savings of Florida, F.S.B. Florida 3.5 billion common stock/ July 1995 purchase First Fidelity (3) New Jersey, $35.4 billion common stock Pennsylvania and preferred stock/pooling
(1) The dollar amounts indicated represent assets of the related organization as of the last reporting period prior to acquisition except for (i) the dollar amount relating to RTC acquisitions, which represents savings and loan deposits acquired from the RTC, and (ii) the dollar amount relating to Southeast banks, which represents assets of the two banking subsidiaries of Southeast Banking Corporation acquired from the FDIC. 3 (2) In addition, the Corporation purchased Lieber & Company ("Lieber"), a mutual fund advisory company with approximately $3.4 billion in assets under management, in June 1994. Since such assets are not owned by Lieber, they are not reflected on the Corporation's balance sheet. (3) Certain financial and other information regarding First Fidelity is incorporated herein by reference through the Corporation's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE". The Corporation is continually evaluating acquisition opportunities and frequently conducts due diligence activities in connection with possible acquisitions. As a result, acquisition discussions and, in some cases, negotiations frequently take place and future acquisitions involving cash, debt or equity securities can be expected. Acquisitions typically involve the payment of a premium over book and market values, and therefore some dilution of the Corporation's book value and net income per common share may occur in connection with any future transactions. See "CERTAIN REGULATORY CONSIDERATIONS -- Interstate Banking and Branching Legislation". USE OF PROCEEDS The Corporation currently intends to use the net proceeds from the sale of any Debt Securities for general corporate purposes, which may include the reduction of indebtedness, investments at the holding company level, investments in, or extensions of credit to, its banking and other subsidiaries and other banks and companies engaged in other financial service activities, possible acquisitions, stock repurchases and such other purposes as may be stated in any Prospectus Supplement. Pending such use, the net proceeds may be temporarily invested. The precise amounts and timing of the application of proceeds will depend upon the funding requirements of the Corporation and its subsidiaries and the availability of other funds. Except as may be described in any Prospectus Supplement, specific allocations of the proceeds to such purposes will not have been made at the date of such Prospectus Supplement. Based upon the historical and anticipated future growth of the Corporation and the financial needs of the Corporation and its subsidiaries, the Corporation may engage in additional financings of a character and amount to be determined as the need arises. CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, JUNE 30, 1995 1994 1993 1992 1991 1990 Excluding interest on deposits................................. 2.63x 3.11 3.36 2.27 1.60 1.33 Including interest on deposits................................. 1.53x 1.67 1.66 1.28 1.15 1.10
For purposes of computing these ratios, earnings represent income from continuing operations before extraordinary items and cumulative effect of a change in accounting principle plus income taxes and fixed charges (excluding capitalized interest). Fixed charges, excluding interest on deposits, represent interest (other than on deposits, but including capitalized interest), one-third (the proportion deemed representative of the interest factor) of rents and all amortization of debt issuance costs. Fixed charges, including interest on deposits, represent all interest (including capitalized interest), one-third (the proportion deemed representative of the interest factor) of rents and all amortization of debt issuance costs. CERTAIN REGULATORY CONSIDERATIONS GENERAL As a bank holding company, the Corporation is subject to regulation under the BHCA and its examination and reporting requirements. Under the BHCA, bank holding companies may not directly or indirectly acquire the ownership or control of more than five percent of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). In addition, bank holding companies are generally prohibited under the BHCA from engaging in nonbanking activities, subject to certain exceptions. 4 The earnings of the Corporation's subsidiaries, and therefore the earnings of the Corporation, are affected by general economic conditions, management policies and the legislative and governmental actions of various regulatory authorities, including the Federal Reserve Board and the Comptroller of the Currency (the "Comptroller"). In addition, there are numerous governmental requirements and regulations which affect the activities of the Corporation and its subsidiaries. PAYMENT OF DIVIDENDS The Corporation is a legal entity separate and distinct from its banking and other subsidiaries. A major portion of the revenues of the Corporation result from amounts paid as dividends to the Corporation by its national bank subsidiaries. The Corporation's national banking subsidiaries are subject to legal limitations on the amount of dividends they can pay. The prior approval of the Comptroller is required if the total of all dividends declared by a national bank in any calendar year will exceed the sum of such bank's net profits for that year and its retained net profits for the preceding two calendar years, less any required transfers to surplus. Federal law also prohibits national banks from paying dividends which would be greater than the bank's undivided profits after deducting statutory bad debt in excess of the bank's allowance for loan losses. Under the foregoing dividend restrictions and certain restrictions applicable to certain of the Corporation's nonbanking subsidiaries, as of June 30, 1995, the Corporation's subsidiaries, without obtaining affirmative governmental approvals, could pay aggregate dividends of $153 million to the Corporation. During the first six months of 1995, the Corporation's subsidiaries paid $394 million in cash dividends to the Corporation. In addition, both the Corporation and its bank subsidiaries are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The appropriate federal regulatory authority is authorized to determine under certain circumstances relating to the financial condition of a bank or bank holding company that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. The Comptroller has indicated that paying dividends that deplete a national bank's capital base to an inadequate level would be an unsound and unsafe banking practice. The Comptroller and the Federal Reserve Board have each indicated that banking organizations should generally pay dividends only out of current operating earnings. BORROWINGS BY THE CORPORATION There are also various legal restrictions on the extent to which the Corporation and its nonbank subsidiaries can borrow or otherwise obtain credit from its bank subsidiaries. In general, these restrictions require that any such extensions of credit must be secured by designated amounts of specified collateral and are limited, as to any one of the Corporation or such nonbank subsidiaries, to ten percent of the lending bank's capital stock and surplus, and as to the Corporation and all such nonbank subsidiaries in the aggregate, to 20 percent of such lending bank's capital stock and surplus. CAPITAL The minimum requirement for the ratio of capital to risk-weighted assets (including certain off-balance-sheet activities, such as standby letters of credit) is eight percent. At least half of the total capital is to be composed of common equity, retained earnings and qualifying perpetual preferred stock, less certain intangibles ("tier 1 capital" and, together with tier 2 capital, "total capital"). The remainder may consist of subordinated debt, qualifying preferred stock and a limited amount of the loan loss allowance ("tier 2 capital"). At June 30, 1995, the Corporation's tier 1 and total capital ratios were 6.86 percent and 11.58 percent, respectively. In addition, the Federal Reserve Board has established minimum leverage ratio requirements for bank holding companies. These requirements provide for a minimum leverage ratio of tier 1 capital to adjusted average quarterly assets ("leverage ratio") equal to three percent for bank holding companies that meet certain specified criteria, including having the highest regulatory rating. All other bank holding companies will generally be required to maintain a leverage ratio of from at least four to five percent. The Corporation's leverage ratio at June 30, 1995, was 5.74 percent. The requirements also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the requirements indicate that the Federal Reserve Board will continue to consider a "tangible tier 1 leverage ratio" (deducting all 5 intangibles) in evaluating proposals for expansion or new activity. The Federal Reserve Board has not advised the Corporation of any specific minimum tier 1 leverage ratio applicable to it. Each of the Corporation's subsidiary national banks is subject to similar capital requirements adopted by the Comptroller. The Comptroller has not advised any of the Corporation's subsidiary national banks of any specific minimum leverage ratio applicable to it. As of June 30, 1995, the capital ratios of the Corporation's banking subsidiaries, FUNB-NC, First Union National Bank of South Carolina ("FUNB-SC"), First Union National Bank of Georgia ("FUNB-GA"), First Union National Bank of Florida ("FUNB-FL"), First Union National Bank of Washington ("FUNB-DC"), First Union National Bank of Maryland ("FUNB-MD"), First Union National Bank of Tennessee ("FUNB-TN"), First Union National Bank of Virginia ("FUNB-VA") and First Union Home Equity Bank, N.A. ("FUHEB"), were as follows:
REGULATORY MINIMUM FUNB-NC FUNB-SC FUNB-GA FUNB-FL FUNB-DC FUNB-MD FUNB-TN FUNB-VA FUHEB Tier 1 capital ratio..... 4% 6.65 7.86 8.72 6.55 17.46 20.14 11.62 6.81 5.28 Total capital ratio...... 8 10.32 11.79 11.52 10.01 18.74 21.42 12.88 10.39 8.28 Leverage ratio........... 3-5% 5.81 5.94 6.40 5.15 7.70 13.08 7.71 5.28 5.53
Banking regulators continue to indicate their desire to raise capital requirements applicable to banking organizations, including a proposal to add an interest rate risk component to risk-based capital requirements. FIRREA The Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), among other things, imposes liability on an institution the deposits of which are insured by the FDIC, such as the Corporation's subsidiary banks, for certain potential obligations to the FDIC incurred in connection with other FDIC-insured institutions under common control with such institution. Under the National Bank Act, if the capital stock of a national bank is impaired by losses or otherwise, the Comptroller is authorized to require payment of the deficiency by assessment upon the bank's stockholders, pro rata, and to the extent necessary, if any such assessment is not paid by any stockholder after three months notice, to sell the stock of such stockholder to make good the deficiency. Under Federal Reserve Board policy, the Corporation is expected to act as a source of financial strength to each of its subsidiary banks and to commit resources to support each of such subsidiaries. This support may be required at times when, absent such Federal Reserve Board policy, the Corporation may not find itself able to provide it. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary banks. In the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. FDICIA The Federal Deposit Insurance Corporation Improvement Act of 1991 (as amended, "FDICIA"), among other things, requires the federal banking agencies to take "prompt corrective action" in respect of depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: "well capitalized", "adequately capitalized", "undercapitalized", "significantly undercapitalized" and "critically undercapitalized". A depository institution's capital tier will depend upon where its capital levels compare to various relevant capital measures and certain other factors, as established by regulation. The Comptroller has adopted regulations establishing relevant capital measures and relevant capital levels. The relevant capital measures are the total capital ratio, tier 1 capital ratio and the leverage ratio. Under the regulations, a bank will be: (i) "well capitalized" if it has a total capital ratio of ten percent or greater, a tier 1 capital ratio of six percent or greater and a leverage ratio of five percent or greater and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) "adequately capitalized" if it has a total capital ratio of eight percent or greater, a tier 1 capital ratio of four percent or greater and a leverage ratio of four percent or greater (three percent in certain circumstances) and is not "well capitalized"; (iii) "undercapitalized" if it has a total capital ratio of less than eight percent, a tier 1 capital ratio of less than four percent or a leverage ratio of less than four percent (three percent in certain 6 circumstances); (iv) "significantly undercapitalized" if it has a total capital ratio of less than six percent, a tier 1 capital ratio of less than three percent or a leverage ratio of less than three percent; and (v) "critically undercapitalized" if its tangible equity is equal to or less than two percent of average quarterly tangible assets. As of June 30, 1995, all of the Corporation's deposit-taking subsidiary banks listed above under "Capital" had capital levels that qualify them as being "well capitalized" under such regulations. FUHEB is not a deposit-taking bank. FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be "undercapitalized". "Undercapitalized" depository institutions are subject to growth limitations and are required to submit a capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of (i) an amount equal to five percent of the depository institution's total assets at the time it became "undercapitalized", and (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is "significantly undercapitalized". "Significantly undercapitalized" depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become "adequately capitalized", requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. "Critically undercapitalized" institutions are subject to the appointment of a receiver or conservator. DEPOSITOR PREFERENCE STATUTE Legislation has been enacted providing that deposits and certain claims for administrative expenses and employee compensation against an insured depository institution would be afforded a priority over other general unsecured claims against such an institution, including federal funds and letters of credit, in the "liquidation or other resolution" of such an institution by any receiver. INTERSTATE BANKING AND BRANCHING LEGISLATION The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("IBBEA"), authorizes interstate acquisitions of banks and bank holding companies without geographic limitation beginning one year after enactment. In addition, beginning June 1, 1997, IBBEA authorizes a bank to merge with a bank in another state as long as neither of the states has opted out of interstate branching between the date of enactment of IBBEA and May 31, 1997. IBBEA further provides that states may enact laws permitting interstate bank merger transactions prior to June 1, 1997. A bank may establish and operate a DE NOVO branch in a state in which the bank does not maintain a branch if that state expressly permits DE NOVO branching. Once a bank has established branches in a state through an interstate merger transaction, the bank may establish and acquire additional branches at any location in the state where any bank involved in the interstate merger transaction could have established or acquired branches under applicable federal or state law. A bank that has established a branch in a state through DE NOVO branching may establish and acquire additional branches in such state in the same manner and to the same extent as a bank having a branch in such state as a result of an interstate merger. If a state opts out of interstate branching within the specified time period, no bank in any other state may establish a branch in the opting out state, whether through an acquisition or DE NOVO. FDIC INSURANCE ASSESSMENTS On August 8, 1995, the FDIC amended its regulations on insurance assessments to establish a new assessment rate schedule of 4 to 31 cents per $100 of deposits in replacement of the existing schedule of 23 to 31 cents per $100 of deposits for institutions whose deposits are subject to assessment by the Bank Insurance Fund ("BIF"). The FDIC has maintained the current assessment rate schedule of 23 to 31 cents per $100 of deposits for the institutions whose deposits are subject to assessment by the Savings Association Insurance Fund ("SAIF"). The new BIF schedule will become effective on the first day of the month after the month in which the BIF reaches its "designated reserve ratio" of 1.25 percent which the FDIC has estimated occurred sometime in the second quarter of 1995. Assessments collected at the previous assessment schedule that exceed the amount due 7 under the new schedule will be refunded, with interest, from the effective date of the new schedule. As of March 31, 1995, the Corporation had a BIF deposit assessment base of $40.5 billion and a SAIF deposit assessment base of $14.7 billion. Various legislative proposals regarding the future of the BIF and the SAIF have been reported recently. Several of these proposals include a one-time special assessment for SAIF deposits and a subsequent comparable and reduced level of annual premiums for SAIF and BIF deposits. The Corporation does not know when and if any such proposal or any other related proposal may be adopted. DESCRIPTION OF THE DEBT SECURITIES GENERAL The following description of the terms of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement (the "Offered Debt Securities") will be described in the Prospectus Supplement or Prospectus Supplements relating to such Offered Debt Securities (the "Applicable Prospectus Supplement(s)"). Senior Debt Securities are to be issued under an Indenture, dated as of April 1, 1983, as amended by supplemental indentures dated as of May 17, 1986, July 1, 1988 and August 1, 1990 (the "Senior Indenture"), between the Corporation and Chemical Bank, as Trustee (the "Senior Trustee"). Subordinated Debt Securities are to be issued under an Indenture, dated as of March 15, 1986, as amended by supplemental indentures dated as of August 1, 1990 and November 15, 1992 (the "Subordinated Indenture" and together with the Senior Indenture, the "Indentures"), between the Corporation and The Bank of New York (formerly Irving Trust Company), as Trustee (the "Subordinated Trustee", and together with the Senior Trustee, the "Trustees"). Copies of the Senior Indenture and the Subordinated Indenture are incorporated by reference as exhibits to the Registration Statement. The following summaries of certain provisions of the Senior Debt Securities, the Subordinated Debt Securities, the Senior Indenture and the Subordinated Indenture, as modified or superseded by the Applicable Prospectus Supplement(s), are brief summaries of certain provisions thereof, do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indenture applicable to a particular series of Debt Securities (the "Applicable Indenture"), including the definitions therein of certain terms. Whenever particular provisions or defined terms in one or both of the Indentures are referred to, such provisions or defined terms are incorporated herein by reference. Section references used herein are references to the Applicable Indenture. Capitalized terms not otherwise defined herein shall have the meaning given to them in the Applicable Indenture. The Debt Securities will be limited to an aggregate initial offering price of $2,000,000,000 (or, at the option of the Corporation if so specified in the Applicable Prospectus Supplement(s), the equivalent thereof in any other currency or currency unit such as the European Currency Unit), and will be direct, unsecured obligations of the Corporation. The Debt Securities will not be deposits or other obligations of a bank and will not be insured by the FDIC. The Indentures do not limit the aggregate principal amount of Securities or of any particular series of Securities which may be issued thereunder and provide that Securities issued thereunder may be issued from time to time in one or more series, in each case with the same or various maturities, at par or at a discount. (SECTION 301). The Indentures provide that there may be more than one trustee under the Indentures with respect to different series of Securities. As of June 30, 1995, $879 million aggregate principal amount of Senior Debt Securities was issued and outstanding as additional series of Securities under the Senior Indenture. The Senior Trustee is trustee for such additional series. As of June 30, 1995, $2.6 billion aggregate principal amount of Subordinated Debt Securities was issued and outstanding as additional series of Securities under the Subordinated Indenture. The Subordinated Trustee is trustee for such additional series. The Indentures do not limit the amount of other debt that may be issued by the Corporation and do not contain financial or similar restrictive covenants. As of June 30, 1995, the Corporation had an aggregate of $1.3 billion of short-term Senior Indebtedness outstanding which consisted primarily of commercial paper. The Corporation expects from time to time to incur additional indebtedness constituting Senior Indebtedness and Other Financial Obligations (as defined in the Subordinated Indenture). The Indentures do not prohibit or limit the incurrence of additional Senior Indebtedness or Other Financial Obligations. 8 Because the Corporation is a holding company and a legal entity separate and distinct from its subsidiaries, the rights of the Corporation to participate in any distribution of assets of any subsidiary upon its liquidation of assets or reorganization or otherwise (and thus the ability of Holders of Debt Securities to benefit indirectly from such distribution) would be subject to the prior claims of creditors of that subsidiary, except to the extent that the Corporation itself may be a creditor of that subsidiary with recognized claims. Claims on the Corporation's subsidiary banks by creditors other than the Corporation include long-term debt and substantial obligations with respect to deposit liabilities and federal funds purchased, securities sold under repurchase agreements, other short-term borrowings and various other financial obligations. The Indentures do not contain any covenants designed to afford holders of Securities, including holders of the Debt Securities, protection in the event of a highly leveraged transaction involving the Corporation. Reference is made to the Applicable Prospectus Supplement(s) for the following terms of the Offered Debt Securities offered thereby: (i) the title of the Offered Debt Securities; (ii) whether the Offered Debt Securities are Senior Debt Securities or Subordinated Debt Securities; (iii) any limit upon the aggregate principal amount of the Offered Debt Securities and the percentage of such principal amount at which such Offered Debt Securities may be issued; (iv) the date or dates on which the principal of the Offered Debt Securities is payable (the "Stated Maturity"); (v) the rate or rates (which may be fixed or variable) per annum at which the Offered Debt Securities will bear interest, or the method of determining such rate or rates, if any, the date or dates from which any such interest will accrue, the Interest Payment Dates on which any such interest will be payable, the Regular Record Date for the interest payable on any Interest Payment Date, the Person to whom any Offered Debt Security of such series will be payable, if other than the Person in whose name that Offered Debt Security (or one or more predecessor Debt Securities) is registered at the close of business on the Regular Record Date for such interest and the extent to which, or the manner in which, any interest payable on a permanent global Offered Debt Security on an Interest Payment Date will be paid; (vi) if other than the location specified in this Prospectus, the place or places where the principal of and premium, if any, and interest on the Offered Debt Securities will be payable; (vii) the period or periods within which, the price or prices at which and the terms and conditions upon which the Offered Debt Securities will, pursuant to any mandatory sinking fund provisions or otherwise, or may, pursuant to any optional sinking fund provisions or otherwise, be redeemed in whole or in part by the Corporation; (viii) the period or periods within which, the price or prices at which and the terms and conditions upon which the Offered Debt Securities may be repaid, in whole or in part, at the option of the Holders thereof; (ix) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which the Offered Debt Securities shall be issuable; (x) if other than the principal amount thereof, the portion of the principal amount of the Offered Debt Securities which shall be payable upon declaration of acceleration of the Maturity thereof; (xi) the currency or currency unit of payment of principal and premium, if any, and interest on such Offered Debt Securities, and any index used to determine the amount of payment of principal or premium, if any, and interest on such Offered Debt Securities; (xii) whether the Offered Debt Securities are to be issuable in permanent global form and, in such case, the initial depository with respect thereto and the circumstances under which such permanent global Debt Security may be exchanged; (xiii) whether the subordination provisions summarized below or different subordination provisions, including a different definition of "Senior Indebtedness", "Entitled Persons", "Existing Subordinated Indebtedness" or "Other Financial Obligations", shall apply to the Offered Debt Securities; and (xiv) any other terms of the Offered Debt Securities not specified in this Prospectus. (SECTION 301). Where appropriate, the Applicable Prospectus Supplement(s) will describe the United States federal income tax considerations relevant to the Offered Debt Securities. Unless otherwise indicated in the Applicable Prospectus Supplement(s), principal, premium, if any, and interest, if any, on the Debt Securities will be payable, and the Debt Securities will be transferable, at the Corporate Trust Office of FUNB-NC in Charlotte, North Carolina, except that interest may be paid at the option of the Corporation by check mailed to the address of the Holder entitled thereto as it appears on the Security Register. (SECTIONS 301, 305 AND 1002). Unless otherwise indicated in the Applicable Prospectus Supplement(s), the Debt Securities will be issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiple thereof. (SECTION 302). The Indentures provide that Offered Debt Securities of any series may be issuable in permanent global form (SECTION 301). No service charge will be made for any registration of transfer or exchange of the Debt Securities, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (SECTION 305). 9 Both Senior Debt Securities and Subordinated Debt Securities may be issued as Original Issue Discount Securities to be offered and sold at a substantial discount below their stated principal amount. Federal income tax consequences and other special considerations applicable to any such Original Issue Discount Securities will be described in the Applicable Prospectus Supplement(s). "Original Issue Discount Security" means any security which provides for an amount less than the principal amount thereof to be due and payable upon the declaration of acceleration of the Maturity thereof in accordance with the terms of the related Indenture. (SECTION 101). Reference is made to the Applicable Prospectus Supplement(s) relating to any series of Offered Debt Securities that are Original Issue Discount Securities for the particular provisions relating to acceleration of the maturity of a portion of the principal amount of such series of Original Issue Discount Securities upon the occurrence of an Event of Default and the continuation thereof. PERMANENT GLOBAL DEBT SECURITIES Some or all of the Debt Securities of any series may be represented, in whole or in part, by one or more permanent global Debt Securities ("Global Securities") which will have an aggregate principal amount equal to that of the Debt Securities represented thereby. Each Global Security will be registered in the name of a Depositary or a nominee thereof identified in the Applicable Prospectus Supplement, will be deposited with such Depositary or nominee or a custodian therefor and will bear a legend regarding the restrictions on exchanges and registration of transfer thereof referred to below and any such other matters as may be provided for pursuant to the Applicable Indenture. Notwithstanding any provision of the Applicable Indenture or any Debt Security described herein, no Global Security may be exchanged in whole or in part for Debt Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or any nominee of such Depositary unless (i) the Depositary has notified the Corporation that it is unwilling or unable to continue as Depositary for such Global Security or has ceased to be qualified to act as such as required by the Applicable Indenture, (ii) there shall have occurred and be continuing an Event of Default with respect to the Debt Securities represented by such Global Security or (iii) there shall exist such circumstances, if any, in addition to or in lieu of those described above as may be described in the Applicable Prospectus Supplement. All securities issued in exchange for a Global Security or any portion thereof will be registered in such names as the Depositary may direct. (SECTIONS 203 AND 305). As long as the Depositary, or its nominee, is the registered Holder of a Global Security, the Depositary or such nominee, as the case may be, will be considered the sole owner and Holder of such Global Security and the Debt Securities represented thereby for all purposes under the Debt Securities and the Applicable Indenture. Except in the limited circumstances referred to above, owners of beneficial interests in a Global Security will not be entitled to have such Global Security or any Debt Securities represented thereby registered in their names, will not receive or be entitled to receive physical delivery of certificated Debt Securities in exchange therefor and will not be considered to be the owners or Holders of such Global Security or any Debt Securities represented thereby for any purpose under the Debt Securities or the Applicable Indenture. All payments of principal of and any premium and interest on a Global Security will be made to the Depositary or its nominee, as the case may be, as the Holder thereof. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the ability to transfer beneficial interests in a Global Security. Ownership of beneficial interests in a Global Security will be limited to institutions that have accounts with the Depositary or its nominee ("participants") and to Persons that may hold beneficial interests through participants. In connection with the issuance of any Global Security, the Corporation has been advised by the Depositary that it will credit, on its book-entry registration and transfer system, the respective principal amounts of Debt Securities represented by the Global Security to the accounts of its participants. Ownership of beneficial interests in a Global Security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the Depositary (with respect to participants' interests) or any such participant (with respect to interests of Persons held by such participants on their behalf). Payments, transfers, exchanges and other matters relating to beneficial interests in a Global Security may be subject to various policies and procedures adopted by the Depositary from time to time. None of the Corporation, the Trustees or any agent of the Corporation or the Trustees will have any responsibility or liability for any aspect of the Depositary's or any 10 participant's records relating to, or for payments made on account of, beneficial interests in a Global Security, or for maintaining, supervising or reviewing any records relating to such beneficial interests. Secondary trading in notes and debentures of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, beneficial interests in a Global Security, in some cases, may trade in the Depositary's same-day funds settlement system, in which secondary market trading activity in those beneficial interests would be required by the Depositary to settle in immediately available funds. There is no assurance as to the effect, if any, that settlement in immediately available funds would have on trading activity in such beneficial interests. Also, settlement for purchases of beneficial interests in a Global Security upon the original issuance thereof may be required to be made in immediately available funds. SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES The obligations of the Corporation to make any payment on account of the principal of and interest on any Subordinated Debt Securities will, to the extent set forth in the Subordinated Indenture, be subordinate and junior in right of payment to all Senior Indebtedness of the Corporation. Unless otherwise specified in the Applicable Prospectus Supplement relating to the particular series of Subordinated Debt Securities offered thereby, "Senior Indebtedness" of the Corporation is defined in the Subordinated Indenture to mean the principal of, premium, if any, and interest on (i) all indebtedness of the Corporation for money borrowed (including indebtedness of others guaranteed by the Corporation) other than the Subordinated Debt Securities, whether outstanding on the date of execution of the Indenture or thereafter created, assumed or incurred, except (a) any obligations on account of Existing Subordinated Indebtedness, and (b) such indebtedness as is by terms expressly stated to be not superior in right of payment to the Subordinated Debt Securities or to rank PARI PASSU with the Subordinated Debt Securities, and (ii) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "indebtedness of the Corporation for money borrowed" is defined in the Subordinated Indenture to mean any obligation of, or any obligation guaranteed by, the Corporation for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation for the payment of the purchase price of property or assets. (SECTION 101 and ARTICLE FOURTEEN of the Subordinated Indenture). The payment of the principal of and interest on the Subordinated Debt Securities will, to the extent set forth in the Subordinated Indenture, be subordinated in right of payment to the prior payment in full of all Senior Indebtedness. Unless otherwise specified in the Applicable Prospectus Supplement relating to the particular series of Subordinated Debt Securities offered thereby, in certain events of insolvency, the payment of the principal of and interest on the Subordinated Debt Securities, other than Subordinated Debt Securities that are also Existing Subordinated Indebtedness (as defined in the Subordinated Indenture), will, to the extent set forth in the Subordinated Indenture, also be effectively subordinated in right of payment to the prior payment in full of all Other Financial Obligations. Upon any payment or distribution of assets to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshalling of assets or any bankruptcy, insolvency or similar proceedings of the Corporation, the holders of all Senior Indebtedness will first be entitled to receive payment in full of all amounts due or to become due thereon before the Holders of the Subordinated Debt Securities will be entitled to receive any payment in respect of the principal of or interest on the Subordinated Debt Securities. If upon any such payment or distribution of assets to creditors, there remains, after giving effect to such subordination provisions in favor of the holders of Senior Indebtedness, any amount of cash, property or securities available for payment or distribution in respect of Subordinated Debt Securities (defined in the Subordinated Indenture as "Excess Proceeds") and if, at such time, any Entitled Persons (as defined in the Subordinated Indenture) in respect of Other Financial Obligations have not received payment in full of all amounts due or to become due on or in respect of such Other Financial Obligations, then such Excess Proceeds shall first be applied to pay or provide for the payment in full of such Other Financial Obligations before any payment or distribution may be made in respect of the Subordinated Debt Securities which are not Existing Subordinated Indebtedness. In the event of the acceleration of the maturity of any Subordinated Debt Securities, the holders of all Senior Indebtedness will first be entitled to receive payment in full of all amounts due thereon before the Holders of the Subordinated Debt Securities will be entitled to receive any payment upon the principal of or interest on the Subordinated Debt Securities. By reason of such subordination in favor of the holders of Senior Indebtedness, in the event of insolvency, creditors of the Corporation who are not holders of Senior Indebtedness or Holders of the Subordinated Debt Securities may recover less, ratably, than the holders of Senior Indebtedness and may recover more, ratably, than 11 the Holders of the Subordinated Debt Securities. By reason of the obligation of the Holders of Subordinated Debt Securities (other than Existing Subordinated Indebtedness) to pay over any Excess Proceeds to Entitled Persons in respect to Other Financial Obligations, in the event of insolvency, holders of Existing Subordinated Indebtedness may recover less, ratably, than Entitled Persons in respect of Other Financial Obligations and may recover more, ratably, than the Holders of Subordinated Debt Securities (other than Existing Subordinated Indebtedness). Unless otherwise specified in the Applicable Prospectus Supplement relating to the particular series of Subordinated Debt Securities offered thereby, "Existing Subordinated Indebtedness" means Securities issued pursuant to the Subordinated Indenture prior to November 15, 1992. (SECTION 101 of the Subordinated Indenture). Unless otherwise specified in the Applicable Prospectus Supplement relating to the particular series of Subordinated Debt Securities offered thereby, "Other Financial Obligations" means all obligations of the Corporation to make payment pursuant to the terms of financial instruments, such as (i) securities contracts and foreign currency exchange contracts, (ii) derivative instruments, such as swap agreements (including interest rate and foreign exchange rate swap agreements), cap agreements, floor agreements, collar agreements, interest rate agreements, foreign exchange rate agreements, options, commodity futures contracts, commodity option contracts, and (iii) in the case of both (i) and (ii) above, similar financial instruments, other than (a) obligations on account of Senior Indebtedness, and (b) obligations on account of indebtedness for money borrowed ranking PARI PASSU with or subordinate to the Subordinated Debt Securities. Unless otherwise specified in the Applicable Prospectus Supplement relating to the particular series of Subordinated Debt Securities offered thereby, "Entitled Persons" means any person who is entitled to payment pursuant to the terms of Other Financial Obligations. The Corporation's obligations under the Subordinated Debt Securities shall rank PARI PASSU in right of payment with each other and with the Existing Subordinated Indebtedness, subject (unless otherwise specified in the Applicable Prospectus Supplement relating to the particular series of Subordinated Debt Securities offered thereby) to the obligations of the Holders of Subordinated Debt Securities (other than Existing Subordinated Indebtedness) to pay over any Excess Proceeds to Entitled Persons in respect of Other Financial Obligations as provided in the Subordinated Indenture. The Applicable Prospectus Supplement may further describe the provisions, if any, applicable to the subordination of the Subordinated Debt Securities of a particular series. LIMITATION ON DISPOSITION OF STOCK OF FUNB-NC THE SENIOR INDENTURE The Senior Indenture contains a covenant by the Corporation that, so long as any of the Senior Debt Securities issued thereunder before August 1, 1990 are outstanding, but subject to the rights of the Corporation in connection with its consolidation with or merger into another corporation or a sale of the Corporation's assets, it will not sell, assign, transfer, grant a security interest in or otherwise dispose of any shares of, securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of FUNB-NC, nor will it permit FUNB-NC to issue (other than to the Corporation) any shares (other than directors' qualifying shares) of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of FUNB-NC, unless (i) any such sale, assignment, transfer, issuance, grant of a security interest or other disposition is made for fair market value, as determined by the Board of Directors of the Corporation, and (ii) the Corporation will own at least 80 percent of the issued and outstanding Voting Stock of FUNB-NC (or any successor to FUNB-NC) free and clear of any security interest after giving effect to such transaction. (SECTION 1006). The foregoing covenant is not a covenant for the benefit of any series of Senior Debt Securities issued on or after August 1, 1990. THE SUBORDINATED INDENTURE The Subordinated Indenture contains a covenant by the Corporation that, so long as any of the Subordinated Debt Securities issued thereunder before August 1, 1990 are outstanding, but subject to the rights of the Corporation in connection with its consolidation with or merger into another corporation or a sale of the Corporation's assets, it will not sell, assign, transfer, grant a security interest in or otherwise dispose of any shares of, securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of FUNB-NC (other than to a Wholly-Owned Subsidiary), nor will it permit FUNB-NC to issue (other than to the Corporation 12 or to a Wholly-Owned Subsidiary) any shares (other than directors' qualifying shares) of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of FUNB-NC, unless (i) any such sale, assignment, transfer, issuance, grant of a security interest or other disposition is made for fair market value, as determined by the Board of Directors of the Corporation, and (ii) the Corporation and/or its Wholly-Owned Subsidiaries will own at least 80 percent of the issued and outstanding Voting Stock of FUNB-NC (or any successor to FUNB-NC) free and clear of any security interest after giving effect to such transaction. (SECTION 1006). The foregoing covenant is not a covenant for the benefit of any series of Subordinated Debt Securities issued on or after August 1, 1990. RESTRICTION ON SALE OR ISSUANCE OF VOTING STOCK OF MAJOR SUBSIDIARY BANKS The Indentures each contain a covenant by the Corporation that it will not, and will not permit any Subsidiary to, sell, assign, transfer, grant a security interest or otherwise dispose of any shares of Voting Stock, or any securities convertible into shares of Voting Stock, of any Major Subsidiary Bank or any Subsidiary owning, directly or indirectly, any shares of Voting Stock of any Major Subsidiary Bank and that it will not permit any Major Subsidiary Bank or any Subsidiary owning, directly or indirectly, any shares of Voting Stock of a Major Subsidiary Bank to issue any shares of its Voting Stock or any securities convertible into shares of its Voting Stock, except for sales, assignments, transfers or other dispositions which: (i) are for the purpose of qualifying a Person to serve as a director; (ii) are for fair market value (as determined by the Board of Directors of the Corporation) and, after giving effect to such dispositions and to any potential dilution, the Corporation will own not less than 80 percent of the shares of Voting Stock of such Major Subsidiary Bank or any such Subsidiary owning any shares of Voting Stock of such Major Subsidiary Bank; (iii) are made (x) in compliance with an order of a court or regulatory authority of competent jurisdiction, or (y) in compliance with a condition imposed by any such court or authority permitting the acquisition by the Corporation, directly or indirectly, of any other Bank or entity the activities of which are legally permissible for a Person such as the Corporation or a Subsidiary to engage in, or (z) in compliance with an undertaking made to such authority in connection with such an acquisition (provided that, in the case of clauses (y) and (z), the assets of the Bank or entity being acquired and its consolidated subsidiaries equal or exceed 75 percent of the assets of such Major Subsidiary Bank or such Subsidiary owning, directly or indirectly, any shares of Voting Stock of a Major Subsidiary Bank and its respective consolidated subsidiaries on the date of acquisition); or (iv) are made to the Corporation or any Wholly-Owned Subsidiary. Notwithstanding the foregoing, any Major Subsidiary Bank may be merged into or consolidated with another banking institution organized under the laws of the United States, any State thereof or Washington D.C., if after giving effect to such merger or consolidation the Corporation or any Wholly-Owned Subsidiary owns at least 80 percent of the Voting Stock of such other banking institution then issued and outstanding free and clear of any security interest and if, immediately after giving effect thereto, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing. (SECTION 1007). A Major Subsidiary Bank is defined in each Indenture to mean any Subsidiary which is a bank and has total assets equal to 25 percent or more of the consolidated assets of the Corporation determined as of the date of the most recent audited financial statements of such entities. At present, the only Major Subsidiary Banks are FUNB-NC and FUNB-FL. The foregoing covenant is not a covenant for the benefit of any series of Debt Securities issued before August 1, 1990, or, in the case of Subordinated Debt Securities, issued after November 15, 1992. DEFAULTS THE SENIOR INDENTURE An Event of Default is defined in the Senior Indenture as, with respect to Debt Securities of any series issued thereunder: default in payment of principal of or premium, if any, on any Security of that series at Maturity; default for 30 days in payment of interest of any Debt Security of that series; failure to deposit any sinking fund payment when due in respect of that series; failure by the Corporation for 60 days after due notice in performance of any other of the covenants or warranties in the Indenture (other than a covenant or warranty included in the Indenture solely for the benefit of a series of Securities other than that series); failure to pay when due any indebtedness of the Corporation or, in the case of any series of Senior Debt Securities issued on or after August 1, 1990, any Major Subsidiary Bank, or, in the case of any series of Senior Debt Securities issued before 13 August 1, 1990, FUNB-NC, for borrowed money in excess of $5,000,000, or acceleration of the maturity of any such indebtedness in excess of such amount if acceleration results from a default under the instrument giving rise to such indebtedness and is not annulled within 30 days after due notice, unless in either case such default is contested in good faith by appropriate proceedings; certain events of bankruptcy, insolvency or reorganization of the Corporation or, in the case of any series of Senior Debt Securities issued on or after August 1, 1990, any Major Subsidiary Bank, or, in the case of any series of Senior Debt Securities issued before August 1, 1990, FUNB-NC; and any other Event of Default provided with respect to Debt Securities of that series. (SECTION 501). The Senior Indenture provides that, if any Event of Default with respect to Debt Securities of any series at the time Outstanding thereunder occurs and is continuing, either the Senior Trustee or the Holders of not less than 25 percent in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Debt Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all Debt Securities of that series to be due and payable immediately (provided that no such declaration is required upon certain events of bankruptcy), but upon certain conditions such declaration may be annulled and past defaults (except, unless theretofore cured, a default in payment of principal of or premium, if any, or interest on the Debt Securities of that series and certain other specified defaults) may be waived by the Holders of a majority in principal amount of the Outstanding Securities of that series on behalf of the Holders of all Securities of that series. (SECTIONS 502 AND 513). See the penultimate paragraph under "General" above. In the event of the bankruptcy, insolvency or reorganization of the Corporation, the claims of Holders would be subject as to enforcement to the broad equity power of a federal bankruptcy court, and to the determination by that court of the nature of the rights of the Holders. The Senior Indenture contains a provision entitling the Senior Trustee, subject to the duty of the Senior Trustee upon the occurrence and continuation of an Event of Default to act with the required standard of care, to be indemnified by the Holders of any series of Outstanding Securities thereunder before proceeding to exercise any right or power under the Indenture at the request of the Holders of such series of Securities. (SECTION 603). The Senior Indenture provides that the Holders of a majority in principal amount of Outstanding Securities thereunder of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Senior Trustee, or exercising any trust or other power conferred on the Senior Trustee, with respect to the Securities of such series, provided that the Senior Trustee may decline to act if such direction is contrary to law or the Senior Indenture or would involve the Senior Trustee in personal liability. (SECTION 512). The Corporation will file annually with the Senior Trustee a certificate as to compliance with all conditions and covenants in the Senior Indenture. (SECTION 1007). THE SUBORDINATED INDENTURE Payment of principal of the Subordinated Debt Securities may be accelerated only upon an Event of Default (as defined below). There is no right of acceleration in the case of a default in the payment of interest or the payment of principal prior to the date of maturity or a default in the performance of any other covenant of the Corporation in the Subordinated Indenture, unless the terms of a particular series of Subordinated Debt Securities specifically provide otherwise, in which case any such extension of such right of acceleration will be described in the Applicable Prospectus Supplement(s). An Event of Default is defined in the Subordinated Indenture as, with respect to Subordinated Debt Securities of any series issued thereunder, certain events involving the bankruptcy, insolvency or reorganization of the Corporation and any other Event of Default which may be provided for with respect to the Subordinated Debt Securities of that series. (SECTION 501). A Default, with respect to Securities of that series, is defined in the Subordinated Indenture to include: (i) any Event of Default; (ii) a default in the payment of principal or premium, if any, of any Security of that series at its Maturity; (iii) default in the payment of any interest when due, continued for 30 days; (iv) a default in any required designation of funds as Available Funds; or (v) default in the performance, or breach, of any other covenant of the Corporation in the Subordinated Indenture or in the Securities of that series, continued for 90 days after written notice to the Corporation by the Subordinated Trustee or to the Corporation and the Subordinated Trustee by the Holders of not less than 25 percent in aggregate principal amount of the Outstanding Securities of such series. (SECTION 503). If an Event of Default with respect to the Securities of any series occurs and is continuing, either the Subordinated Trustee or the Holders of not less than 25 percent in aggregate principal amount of the Outstanding Securities of that series may accelerate the maturity 14 of all Outstanding Securities of such series. The Holders of a majority in aggregate principal amount of the Outstanding Securities of that series may waive an Event of Default resulting in acceleration of the Securities of such series, but only if all Events of Default have been remedied and all payments due on the Securities of that series (other than those due as a result of acceleration) have been made and certain other conditions have been met. (SECTION 502). Subject to the provisions of the Subordinated Indenture relating to the duties of the Subordinated Trustee, in case a Default shall occur and be continuing, the Subordinated Trustee will be under no obligation to exercise any of its rights or powers under the Subordinated Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Subordinated Trustee reasonable indemnity. (SECTION 603). Subject to such provisions for the indemnification of the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Subordinated Trustee or exercising any trust or power conferred on the Subordinated Trustee. (SECTION 512). The Holders of a majority in aggregate principal amount of the Outstanding Securities of that series may waive any past default under the Subordinated Indenture with respect to such series, except a default in the payment of principal or interest or a default in respect of a covenant in the Subordinated Indenture which cannot be modified without the consent of the Holder of each Outstanding Security of the series affected. (SECTION 513). See the penultimate paragraph under "General" above. In the event of the bankruptcy, insolvency or reorganization of the Corporation, the claims of the Holders would be subject as to enforcement to the broad equity power of a federal bankruptcy court, and to the determination by that court of the nature of the rights of the Holders. The Corporation will file annually with the Subordinated Trustee a certificate as to compliance with all conditions and covenants in the Subordinated Indenture. (SECTION 1007). MODIFICATION AND WAIVER Certain modifications and amendments of each of the Senior Indenture or the Subordinated Indenture may be made by the Corporation and the Trustee under the Applicable Indenture only with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of each series issued under such Indenture and affected by the modification or amendment, provided that no such modification or amendment may, without the consent of the Holder of each Outstanding Security issued under such Indenture and affected thereby: (i) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any such Security; (ii) reduce the principal amount of, or the premium, if any, or the interest on, any such Security (including in the case of an Original Issue Discount Security the amount payable upon acceleration of the maturity thereof); (iii) change the place of payment where, or the coin or currency or currency unit in which, any principal of, or premium, if any, or interest on, any such Security is payable; (iv) impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); (v) reduce the above-stated percentage of Outstanding Securities of any series the consent of the Holders of which is necessary to modify or amend the Applicable Indenture; or (vi) modify the foregoing requirements or reduce the percentage of aggregate principal amount of Outstanding Securities of any series required to be held by Holders seeking to waive compliance with certain provisions of the Applicable Indenture or seeking to waive certain defaults. (SECTION 902). The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series may on behalf of the Holders of all Securities of that series waive, insofar as that series is concerned, compliance by the Corporation with certain restrictive provisions of the Applicable Indenture. (SECTION 1008). The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series may on behalf of the Holders of all Securities of that series waive any past default under the Applicable Indenture with respect to that series, except a default in the payment of the principal of, or premium, if any, or interest on any Security of that series or in respect of a covenant or provision which under the Applicable Indenture cannot be modified or amended without the consent of the Holder of each Outstanding Security issued thereunder of the series affected. (SECTION 513). Certain modifications and amendments of each of the Senior Indenture and the Subordinated Indenture may be made by the Corporation and the Trustee under the Applicable Indenture without the consent of Holders of the Outstanding Securities issued under such Indenture. (SECTION 901). 15 Each Indenture provides that in determining whether the Holders of the requisite principal amount of the Outstanding Securities issued under such Indenture have given any request, demand, authorization, direction, notice, consent or waiver thereunder or are present at a meeting of Holders of Securities for quorum purposes, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof, and (ii) the principal amount of a Security denominated in a foreign currency or currency unit shall be the U.S. dollar equivalent, determined on the date of original issuance of such Security, of the principal amount of such Security or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent, determined on the date of original issuance of such Security, of the amount determined as provided in (i) above. (SECTION 101). CONSOLIDATION, MERGER AND SALE OF ASSETS The Indentures each provide that the Corporation may not consolidate with or merge into any other corporation or transfer its properties and assets substantially as an entirety to any Person unless (i) the corporation formed by such consolidation or into which the Corporation is merged or the Person to which the properties and assets of the Corporation are so transferred shall be a corporation organized and existing under the laws of the United States, any State thereof or Washington, D.C. and shall expressly assume by supplemental indenture the payment of the principal of and premium, if any, and interest on the Senior Debt Securities or the Subordinated Debt Securities, as the case may be, and the performance of the other covenants of the Corporation under the Applicable Indenture; (ii) immediately after giving effect to such transaction, no Event of Default or Default, as applicable, and no event which, after notice or lapse of time or both, would become an Event of Default or Default, as applicable, shall have occurred and be continuing; and (iii) certain other conditions are met. (SECTION 801). TRUSTEES Either or both of the Trustees may resign or be removed with respect to one or more series of Securities and a successor Trustee may be appointed to act with respect to such series. (SECTION 610). In the event that two or more persons are acting as Trustee with respect to different series of Securities, each such Trustee shall be a Trustee of a trust under the related Indenture separate and apart from the trust administered by any other such Trustee (SECTION 611), and any action described herein to be taken by the "Trustee" may then be taken by each such Trustee with respect to, and only with respect to, the one or more series of Securities for which it is Trustee. In the normal course of business, the Corporation and its subsidiaries conduct banking transactions with the Trustees, and the Trustees conduct banking transactions with the Corporation and its subsidiaries. VALIDITY OF OFFERED DEBT SECURITIES The validity of any Offered Debt Securities will be passed upon for the Corporation by Marion A. Cowell, Jr., Esq., Executive Vice President, Secretary and General Counsel of the Corporation, and for any underwriters or agents by Sullivan & Cromwell, 125 Broad Street, New York, New York. Sullivan & Cromwell will rely upon the opinion of Mr. Cowell as to matters of North Carolina law, and Mr. Cowell will rely upon the opinion of Sullivan & Cromwell as to matters of New York law. Mr. Cowell owns shares of the Corporation's Common Stock and holds options to purchase additional shares of such Common Stock. Sullivan & Cromwell regularly performs legal services for the Corporation and its subsidiaries. Certain members of Sullivan & Cromwell performing these legal services own shares of the Corporation's Common Stock. EXPERTS The consolidated balance sheets of the Corporation as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1994, included in the Corporation's 1994 Annual Report to Stockholders which is incorporated by reference in the Corporation's 1994 Annual Report on Form 10-K and incorporated by reference herein, have been incorporated by reference herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The aforementioned report of KPMG Peat Marwick LLP covering the 16 Corporation's consolidated financial statements refers to a change in the method of accounting for investments in 1994. The consolidated statements of condition of First Fidelity as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1994, included in First Fidelity's 1994 Annual Report on Form 10-K and incorporated by reference herein, have been incorporated by reference herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The aforementioned report of KPMG Peat Marwick LLP covering First Fidelity's consolidated financial statements refers to changes in the methods of accounting for income taxes, postretirement benefits other than pensions, postemployment benefits, and investments in 1993. PLAN OF DISTRIBUTION The Corporation may sell Debt Securities to or through underwriters, including First Union Capital Markets Corp., an affiliate of the Corporation, to be designated from time to time, and also may sell Debt Securities directly to other purchasers or through agents. The distribution of the Debt Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Debt Securities will be new issues of securities with no established trading market. It has not presently been established whether the underwriters, if any, of the Debt Securities will make a market in the Debt Securities. If a market in the Debt Securities is made by any such underwriters, such market making may be discontinued at any time without notice. No assurance can be given as to the liquidity of the trading market for the Debt Securities. This Prospectus and the related Prospectus Supplement may be used by First Union Capital Markets Corp., an affiliate of the Corporation, in connection with offers and sales related to market-making transactions in the Debt Securities. First Union Capital Markets Corp. may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of sale or otherwise. In connection with the sale of Debt Securities, underwriters may receive compensation from the Corporation or from purchasers of Debt Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Corporation and any profit on the resale of Debt Securities by them may be deemed to be underwriting discounts and commissions under the Securities Act. Any such underwriter or agent will be identified, and any such compensation received from the Corporation will be described, in the Applicable Prospectus Supplement(s) relating to such Debt Securities. Unless otherwise indicated in the Applicable Prospectus Supplement(s), the obligations of any such underwriters to purchase the Debt Securities will be subject to certain conditions precedent, and each of the underwriters with respect to a sale of Debt Securities will be obligated to purchase all of its Debt Securities if any are purchased. Unless otherwise indicated in the Applicable Prospectus Supplement(s), any such agent involved in the offer and sale of the Debt Securities in respect of which this Prospectus is being delivered will be acting on a best efforts basis for the period of its appointment. Under agreements which may be entered into by the Corporation, underwriters, agents and their controlling persons who participate in the distribution of Debt Securities may be entitled to indemnification by the Corporation against certain liabilities, including liabilities under the Securities Act. If so indicated in the Applicable Prospectus Supplement(s) relating to any Offered Debt Securities, the Corporation will authorize dealers or other persons acting as the Corporation's agents to solicit offers by certain institutions to purchase any Offered Debt Securities from the Corporation pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial 17 and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by the Corporation. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of any Offered Debt Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. The participation of First Union Capital Markets Corp. in the offer and sale of the Debt Securities will comply with the requirements of Schedule E to the Bylaws of the National Association of Securities Dealers, Inc. (the "NASD"). No NASD member participating in offers and sales will execute a transaction in the Debt Securities in a discretionary account without the prior specific written approval of such member's customer. Underwriters or agents and their associates may be customers of (including borrowers from), engage in transactions with, and/or perform services for, the Corporation and its subsidiaries, the Senior Trustee and the Subordinated Trustee, in the ordinary course of business. 18 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE Description of Certain Terms of the Notes..... S-2 Use of Proceeds............................... S-3 Recent Developments........................... S-3 Computations of Consolidated Ratios of Earnings to Fixed Charges................... S-5 Selected Consolidated Financial Data.......... S-5 Underwriting.................................. S-7 Experts....................................... S-8 Incorporation of Certain Documents by Reference................................... S-8 PROSPECTUS Available Information......................... 2 Incorporation of Certain Documents by Reference................................... 2 The Corporation............................... 3 Use of Proceeds............................... 4 Consolidated Ratios of Earnings to Fixed Charges..................................... 4 Certain Regulatory Considerations............. 4 Description of the Debt Securities............ 8 Validity of Offered Debt Securities........... 16 Experts....................................... 16 Plan of Distribution.......................... 17
$300,000,000 FIRST UNION CORPORATION 7 1/2% SUBORDINATED NOTES DUE JULY 15, 2006 (First Union Logo appears here) GOLDMAN, SACHS & CO. FIRST UNION CAPITAL MARKETS CORP. MERRILL LYNCH & CO. J.P. MORGAN & CO. MORGAN STANLEY & CO. INCORPORATED -----END PRIVACY-ENHANCED MESSAGE-----