425 1 file001.txt RULE 425 COMMUNICATION Filed by SunTrust Banks, Inc. Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Wachovia Corporation Commission File No. 1-9021 Date: May 14, 2001 The following is a press release and written materials presented at an analyst conference held on Monday, May 14, 2001. [SunTrust Banks, Inc. Logo] Contacts: Investors Media Gary Peacock Barry Koling George Sard/Debbie Miller/Denise DesChenes SunTrust SunTrust Citigate Sard Verbinnen 404-658-4879 404-230-5268 212-687-8080
SUNTRUST OFFERS TO ACQUIRE WACHOVIA FOR STOCK CURRENTLY VALUED AT $70.06 PER WACHOVIA SHARE Combination Would Create Premier Financial Services Franchise In The Southeast Offers Significant Premium To Wachovia Shareholders Over First Union Agreement; Would Avoid Substantial Job Losses In Carolinas Planned By First Union Atlanta, GA, May 14, 2001 -- SunTrust Banks, Inc. (NYSE: STI) announced today that it has delivered a letter to the Board of Directors of Wachovia Corporation (NYSE: WB) proposing to acquire Wachovia in a stock transaction currently valued at $70.06 per Wachovia share, or a total of approximately $14.7 billion. Under SunTrust's proposal, Wachovia shareholders would receive 1.081 shares of SunTrust common stock for each Wachovia share. Based on last Friday's closing prices, SunTrust's offer represents a 17% premium to the implied value of Wachovia's proposed acquisition by First Union Corporation (NYSE: FTU). SunTrust would also increase its annual dividend to $2.22 per common share so that Wachovia shareholders would receive on a pro forma equivalent basis the same $2.40 per share dividend that they currently receive. The combination of SunTrust and Wachovia would create the premier financial services franchise in the Southeast. The pro forma company, with approximately $180 billion in combined assets, will have a strong presence in seven contiguous, high-growth states with 20% of the U.S. population. It would have over 7.5 million retail customers; #1 market positions in Georgia, South Carolina, and Virginia based on deposits; and approximately 85% of its $98 billion of U.S. deposits in markets where it has a Top 3 ranking. Together, SunTrust and Wachovia would also have a strong balance sheet; superior credit quality; and a powerful wealth management business with $138 billion in assets under management and $260 billion in assets under administration. "We are delighted to propose this combination which offers superior value to Wachovia's shareholders, and we are confident that the terms of Wachovia's merger agreement with First Union will allow Wachovia's Board of Directors to consider our proposal consistent with its fiduciary obligation to Wachovia shareholders," said L. Phillip Humann, SunTrust's Chairman, President and Chief Executive Officer. "Our interest in a transaction with Wachovia goes back many years and makes even more sense today as our organizations have never been more compatible or complementary. This is a compelling strategic combination for both companies -- and a substantially better deal for Wachovia's shareholders and other constituencies than the First Union transaction. Shareholders would get a higher price in a better-performing security as well as a higher dividend from a better-capitalized company. Our transaction involves a simpler integration process which means customers should experience less disruption and communities would face substantially fewer job losses and branch closings, especially in the Carolinas where SunTrust does not currently operate. We would make Winston-Salem the headquarters of our Carolinas bank and maintain a meaningful presence there. We stand ready to meet with Wachovia as soon as possible to fully explain our proposal and its many advantages." SunTrust's proposal contemplates that the Board of Directors of the combined company would include appropriate representation from Wachovia's current Board of Directors, and that there would be leadership roles in the combined company for numerous members of Wachovia's management. The combined company would be headquartered in Atlanta. The transaction is expected to be slightly accretive to SunTrust's earnings per share in the first year, excluding one-time merger-related charges, and increasingly accretive thereafter. SunTrust expects to achieve approximately $500 million in annual cost savings to be fully phased in over a carefully planned three-year integration period. This includes a staff reduction of approximately 4,000, or 8% of the combined work force, far less than the 7,000 jobs to be lost under the First Union transaction. Wachovia shareholders would own approximately 44% of the combined SunTrust/Wachovia compared to 30% of the combined First Union/Wachovia. "One of the most attractive aspects of our proposal is our currency," said Mr. Humann. "We have an excellent track record of earnings and dividend growth, and SunTrust has taken a cautious approach to credit management. This has allowed us to consistently meet our earnings targets and to largely avoid non-merger-related restructuring charges and write-downs. As evidenced by our successful acquisition of Crestar, SunTrust also brings a conservative and 2 disciplined approach to execution of merger transactions. By setting achievable cost-savings targets and retaining our customer focus, we are able to minimize revenue loss during integration. We are confident that we can integrate SunTrust's and Wachovia's complementary and overlapping businesses without the customer disruption and other problems that often accompany large bank mergers." SunTrust's proposed merger would be accounted for as a purchase and would be subject to the receipt of shareholder and regulatory approvals and the satisfaction of other customary conditions. It would also be subject to Wachovia shareholders not approving Wachovia's merger agreement with First Union, the valid termination of that agreement, and the negotiation and execution of a definitive merger agreement between SunTrust and Wachovia. Although SunTrust reserves the right to challenge the validity of the stock option granted to First Union by Wachovia because it contains several excessive and unprecedented features, in the interest of facilitating the transaction, SunTrust's proposal assumes a payment to First Union of the "in-the-money" value of the option, subject to the cap set forth in the option agreement. SunTrust's proposal also assumes divestitures of up to $1.5 billion in deposits for regulatory reasons. In addition to delivering its proposal to the Wachovia Board of Directors, SunTrust is filing, before its investor/analyst presentation at 9:15 a.m. today, a preliminary proxy statement with the Securities and Exchange Commission for the purpose of enabling SunTrust to solicit Wachovia's shareholders to vote against the proposed First Union/Wachovia merger. SunTrust's letter to the Wachovia Board of Directors is included in this proxy statement. SunTrust Banks, Inc. is the nation's ninth-largest commercial banking organization. The Company operates through an extensive distribution network in Alabama, Florida, Georgia, Maryland, Tennessee, Virginia, and the District of Columbia and also serves customers in selected markets nationally. Its primary businesses include traditional deposit and credit services as well as trust and investment services. Through various subsidiaries the Company provides credit cards, mortgage banking, insurance, brokerage and capital markets services. Conference Call Information SunTrust senior management will hold an investor/analyst presentation today at 9:15 a.m. EDT to discuss its proposal to acquire Wachovia. The conference call dial-in numbers are: (888) 868-9080 (domestic) and (973) 628-6885 (international). A webcast of the meeting and slide presentation can also be accessed from the SunTrust website at www.suntrust.com. A replay will be available beginning later today at (877) 519-4471 (domestic) or (973) 341-3080 3 (international); pass code is 2600481. An archived version of the webcast will also be available beginning later today. The press release and investor presentation are also available via fax on demand at (888) 861-6282. * * * 4 This filing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, (i) statements about the benefits of a merger between SunTrust and Wachovia, including future financial and operating results, cost savings and accretion to reported and cash earnings that may be realized from such merger; (ii) statements with respect to SunTrust's plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as "believes", "expects", "anticipates", "estimates", "intends", "plans", "targets", "projects" and similar expressions. These statements are based upon the current beliefs and expectations of SunTrust's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the businesses of SunTrust and Wachovia may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; (3) revenues following the merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption, including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the merger; (5) the regulatory approvals required for the merger may not be obtained on the proposed terms or on the anticipated schedule; (6) the failure of SunTrust's and Wachovia's stockholders to approve the merger; (7) competitive pressures among depository and other financial institutions may increase significantly and may have an effect on pricing, spending, third-party relationships and revenues; (8) the strength of the United States economy in general and the strength of the local economies in which the combined company will conduct operations may be different than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the combined company's loan portfolio and allowance for loan losses; (9) changes in the U.S. and foreign legal and regulatory framework; and (10) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on the combined company's capital markets and asset management activities. Additional factors that could cause SunTrust's results to differ materially from those described in the forward-looking statements can be found in SunTrust's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available at the SEC's Internet site (http:// www.sec.gov). All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to SunTrust or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SunTrust does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made. On May 14, 2001 SunTrust filed with the Securities and Exchange Commission ("SEC") a preliminary proxy statement for solicitation of proxies from Wachovia stockholders in connection with the Wachovia 2001 annual meeting of stockholders. Subject to future developments, SunTrust intends to file with the SEC a registration statement at a date or dates subsequent hereto to register the SunTrust shares to be issued in the proposed transaction. Investors and security holders are urged to read the proxy statement and registration statement (when available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain (or will contain) important information. Investors and security holders may obtain a free copy of the proxy statement and the registration statement (when available) and other relevant documents at the SEC's Internet web site at www.sec.gov. The proxy statement, the registration statement (when available) and such other documents may also be obtained free of charge from SunTrust by directing such request to: SunTrust, 303 Peachtree Street, N.E., Atlanta, GA 30308, Attention: Gary Peacock (404-658-4753). SunTrust, its directors and executive officers and certain other persons may be deemed to be "participants" in SunTrust's solicitation of proxies from Wachovia stockholders. A detailed list of the names, affiliations and interests of the participants in the solicitation is contained in SunTrust's preliminary proxy statement on Schedule 14A, filed with the SEC on May 14, 2001. 5 [Logo of SunTrust] [Logo of Wachovia] A Better Deal For Shareholders May 14, 2001 FORWARD LOOKING INFORMATION This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, (i) statements about the benefits of a merger between SunTrust and Wachovia, including future financial and operating results, cost savings and accretion to reported and cash earnings that may be realized from such merger; (ii) statements with respect to SunTrust's plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as "believes", "expects", "anticipates", "estimates", "intends", "plans", "targets", "projects" and similar expressions. These statements are based upon the current beliefs and expectations of SunTrust's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the businesses of SunTrust and Wachovia may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; (3) revenues following the merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption, including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the merger; (5) the regulatory approvals required for the merger may not be obtained on the proposed terms or on the anticipated schedule; (6) the failure of SunTrust's and Wachovia's stockholders to approve the merger; (7) competitive pressures among depository and other financial institutions may increase significantly and may have an effect on pricing, spending, third-party relationships and revenues; (8) the strength of the United States economy in general and the strength of the local economies in which the combined company will conduct operations may be different than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the combined company's loan portfolio and allowance for loan losses; (9) changes in the U.S. and foreign legal and regulatory framework; and (10) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on the combined company's capital markets and asset management activities. [Logo of SunTrust] FORWARD LOOKING INFORMATION Additional factors that could cause SunTrust's results to differ materially from those described in the forward-looking statements can be found in SunTrust's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available at the SEC's Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to SunTrust or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SunTrust does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made. On May 14, 2001 SunTrust filed with the Securities and Exchange Commission ("SEC") a preliminary proxy statement for solicitation of proxies from Wachovia stockholders in connection with the Wachovia 2001 annual meeting of stockholders. Subject to future developments, SunTrust intends to file with the SEC a registration statement at a date or dates subsequent hereto to register the SunTrust shares to be issued in the proposed transaction. Investors and security holders are urged to read the proxy statement and registration statement (when available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain (or will contain) important information. Investors and security holders may obtain a free copy of the proxy statement and the registration statement (when available) and other relevant documents at the SEC's Internet web site at www.sec.gov. The proxy statement, the registration statement (when available) and such other documents may also be obtained free of charge from SunTrust by directing such request to: SunTrust, 303 Peachtree Street, N.E., Atlanta, GA 30308, Attention: Gary Peacock (404-658-4753). SunTrust, its directors and executive officers and certain other persons may be deemed to be "participants" in SunTrust's solicitation of proxies from Wachovia stockholders. A detailed list of the names, affiliations and interests of the participants in the solicitation is contained in SunTrust's preliminary proxy statement on Schedule 14A, filed with the SEC on May 14, 2001. [Logo of SunTrust] OUR STORY || The Transaction Phil Humann || A Premier Franchise Jim Wells || Shared Values and Growth Culture John Clay || Solid Credit Quality Ted Hoepner || Superior Shareholder Value & || SunTrust Offers a Stronger Currency John Spiegel || A Better Deal For Shareholders Phil Humann PROPOSED TRANSACTION TERMS
Price: $70.06 (1) Fixed Exchange Ratio: 1.081 SunTrust shares per Wachovia share Dividends: (2) SunTrust to increase annual dividend to $2.22 per share post closing - equal to $2.40 per Wachovia share Cost Savings: $500MM 23% of estimated Wachovia's core expense base(3) Divestitures: Estimated to be up to $1.5 Bn of deposits Accounting/Structure: Purchase; tax-free exchange Steps to Completion: Customary regulatory approvals; Valid termination of First Union merger agreement; Entry into merger agreement with Wachovia
Notes: (1) Based on May 11, 2001 close. (2) All dividends on common stock subject to determination by the combined company's Board of Directors in its discretion. (3) Wachovia's estimated core non-interest expense base pro forma for impact of Republic Security transaction and card sale. [Logo of SunTrust] A BETTER DEAL FOR SHAREHOLDERS
First Union Deal SunTrust Deal ------------------ ---------------- Price (1) $60.04 $70.06 17% higher Premium to Current (1%) 15% Wachovia Price (1) Dividends $1.92 $2.40 25% higher Cost Savings $890MM $500MM % Estimated Wachovia's 42% 23% More achievable Core Expense Base (2) with less customer and employee disruption Wachovia Pro Forma Ownership(3) 30% 44%
Notes: (1) Based on May 11, 2001 close; SunTrust transaction based on 1.081 exchange ratio. (2) Wachovia's core non-interest expense base pro forma for impact of Republic Security transaction and card sale. (3) Based on common shares outstanding on 3/31/01. [Logo of SunTrust] A BETTER DEAL FOR SHAREHOLDERS From Every Perspective || Better price || Higher dividend || Better currency || Better fit - Management philosophy - Customer relationship driven - Focus on local markets and lines of business || Lower risk/better execution - Clean slate - successful Crestar integration complete - Proven large deal execution capability - More conservative and achievable cost savings - Less customer disruption [Logo of SunTrust] A LOGICAL AND COMPELLING FIT || Leadership position in high growth and affluent southeastern markets || Enhanced scale in high growth / high margin businesses || Superior financial strength and credit risk management || Crestar behind us; clean slate for this transaction || Complementary cultures and business strengths || Opportunity for reinvestment of excess capital [Logo of SunTrust] A LOWER RISK TRANSACTION || SunTrust is ready || Integration will be SunTrust's sole focus - First Union still focused on completing its internal restructuring || More realistic cost savings and less customer disruption - 4,000 staff reductions for SunTrust vs. 7,000 for First Union - 150 - 175 branch closings for SunTrust vs. 300 for First Union || Complementary corporate cultures and business mix [Logo of SunTrust] A PREMIER FRANCHISE [Logo of SunTrust] THE BEST FOOTPRINT IN BANKING Concentration in High Growth and Affluent Markets(1) || 7.5 million retail customers || $98Bn in U.S. deposits(2) || 1,842 branches || 3,347 ATMs || 85% of U.S. Deposits are in Markets with Top 3 Ranking [Graphic Omitted] #1 FL #1 GA #3 NC #1 SC #5 MD #1 VA #1 Greater Washington Area #4 TN Source: SNL Securities and company financials. Notes: (1) Map does not include Alabama and Delaware. Before estimated divestitures. (2) As of 9/00, most recent data available. [Logo of SunTrust]
HIGH GROWTH AND AFFLUENT MARKETS Projected MSA Household Growth Rates (1) Top 10 SunTrust/Wachovia SunTrust/Wachovia Deposits Market MSAs Growth Rates (%) ($Bn) Rank Share -------------------- ------------------- ------------------ ------ ----------- Atlanta 13.7 $16.8 #1 31% Greater Washington Area 7 11.6 #1 19 Richmond 5.5 5.7 #1 39 Greensboro/ Winston Salem 6.3 5.5 #2 27 Orlando 11.6 4.3 #1 27 Norfolk 2.9 3.2 #1 30 Tampa/St. Petersberg 5.8 3.0 #3 10 Miami 5.2 3.0 #3 8 West Palm Beach 11.5 2.8 #3 16 Nashville 8.6 2.8 #2 17 ----- ---- ---- Weighted Average(2) 8.9 Over 60% higher than national average $58.6 Average: 22% =====
Source: SNL Securities and U.S. Census data. Notes: (1) Projected 5-year household growth rates (2000-2005). (2) Based on deposits. [Logo of SunTrust] WE STACK UP WELL AGAINST OUR PEERS Growth of Market is 70%+ Higher Than U.S. Average Weighted Average Population Growth (1) (5-Year Projected Growth Rate: 2000-2005) SunTrust has captured benefits of its high growth markets: 12% annualized core EPS growth 1996 - 2001E(2)
SunTrust/Wachovia Bank of America Wells Fargo BB&T First Union/Wachovia U.S. Bancorp Bank One 7.7 7.1 6.9 5.8 5.3 4.9 4.7 Northern Trust U.S. Average Comerica JP Morgan Chase Citigroup Fifth Third Bank of New York 4.7 4.5 3.7 3.4 2.7 2.7 2.2 KeyCorp FleetBoston National City PNC Mellon 2.2 2 1 0.4 0.2
Source: SNL Securities and U.S. Census data. Notes: (1) Weighted average based on MSA deposits. Pro forma for announced transactions before estimated divestitures. (2) Based on First Call estimates. [Logo of SunTrust]
ASSET/WEALTH MANAGEMENT FRANCHISE Proven Capability Full Product Array Asset & Wealth Management Personal Trust Corporate and Institutional Trust $138Bn AUM Retirement Full Service Discount $31Bn Mutual Funds Services Brokerage Brokerage $260Bn Assets Under Administration Private Client Investment Advisors Management Premier Position for Future Growth
[Logo of SunTrust] BUSINESS BANKING || TOP MARKET SHARE OF BUSINESS BANKING RELATIONSHIPS IN ITS FOOTPRINT || WE HAVE WHAT BUSINESS CLIENTS WANT - High quality management - High touch relationship management - Best-in-class customer service and satisfaction - Broad array of product offerings || MERGER WILL INCREASE OUR LEADERSHIP - Best practices and products - Leading Internet-based cash management products - High margin product sales and increased penetration - Capital available to reinvest [Logo of SunTrust] THE NEW SUNTRUST - BUSINESS MIX SUMMARY || Our businesses: - A leading retail franchise in the highest growth markets - Premier financial solutions provider to small and middle market businesses - Full complement of fee businesses including capital markets, treasury management and insurance - Complete wealth management platform operating in highly affluent markets [Logo of SunTrust] SHARED VALUES AND GROWTH CULTURE [Logo of SunTrust] COMPLEMENTARY CULTURES A COMMON VISION || Common values of soundness, profitability and growth || Holistic, integrated relationship approach || "Balanced" operating models - Strong geographic ownership of sales and service - Empowered lines of business to expedite strategic decision making - Functional competencies supporting the business [Logo of SunTrust] BOTH BANKS COMMITTED TO LOCAL OWNERSHIP AS WELL AS BUSINESS LINES Local Banks Line accountability for market penetration and strengthened relationship management at the local level Business Lines Strong influence and ability to drive strategies, programs, and priorities Corporate Functions Important role in support of lines-of-business and geographic strategies and priorities || Fully empowered local market CEOs - Lead the sales and service culture - Drive effective and timely decision making for credit, pricing and people - Deliver superior service quality - Develop talent - Execute against corporate strategy to drive superior results [Logo of SunTrust] BOTH ORGANIZATIONS SHARE COMMON VALUES SERIOUS ABOUT TALENT OBSESSED ABOUT QUALITY RELATIONSHIP FOCUSED PASSIONATE ABOUT GROWTH COMMITTED TO EFFICIENCYCUSTOMER DRIVEN TECHNOLOGY PERFORMANCE DRIVEN [Logo of SunTrust] SOLID CREDIT QUALITY [Logo of SunTrust] PRO FORMA FINANCIALS Loan Portfolio Comparable Loan Mix
($MM) SunTrust Wachovia(1) Pro Forma ----- -------- ----------- --------- % of Total % of Total % of Total Total Loans Total Loans Total Loans ----- ----- ----- ----- ----- ----- Commercial and Industrial $28,042 40% $18,831 36% $46,873 38% Commercial Real Estate 11,325 16 13,324 25 24,649 20 Residential Real Estate 17,707 25 10,395 20 28,102 23 Consumer 10,663 15 6,948 13 17,611 14 Lease Financing 2,624 4 2,806 5 5,430 4 ------- --- ------- --- -------- --- Total Loans $70,360 100% $52,304 100% $122,664 100% ======= === ======= === ======== ===
Source: Company financials. Note: (1) Pro forma for card sale. [Logo of SunTrust] PRO FORMA FINANCIALS Loan Portfolio - Us Vs. Them (1) Preferable Loan Mix
($MM) SunTrust/Wachovia First Union/Wachovia --------------------------- --------------------------------- Loans % of Total Loans Loans % of Total Loans ----- ---------------- ----- ---------------- Commercial and Industrial $46,873 38% $79,306 44% Commercial Real Estate 24,649 20 24,717 14 Residential Real Estate 28,102 23 26,942 15 Consumer 17,611 14 31,480 17 Lease Financing 5,430 4 18,305 10 -------- --- -------- --- Total Loans $122,664 100% $180,750 100% ======== === ======== ===
Source: Company financials. SunTrust/Wachovia as of 3/31/01. First Union/Wachovia as of 12/31/00. Note: (1) Pro forma for card sale. [Logo of SunTrust] SOLID CREDIT QUALITY 5-Year Net Charge-off Ratio(1) SunTrust Comerica BB&T Mellon National City 0.29 0.30 0.31 0.35 0.41 U.S. Bancorp PNC Fifth Third KeyCorp First Union Bank of New York 0.43 0.44 0.47 0.55 0.57 0.57 Bank of America Wachovia FleetBoston JP Morgan Chase Bank One 0.59 0.63 0.75 0.75 0.98 Wells Fargo Citigroup 1.10 1.25 Source: SNL Securities, company financials. Note: (1) 1996-2000 average. [Logo of SunTrust] SOLID CREDIT QUALITY 5-Year Net Charge-off Trend(1) - Us Vs. Them SunTrust/Wachovia First Union/Wachovia 1996 0.14 0.3 1997 0.13 0.27 1998 0.13 0.27 1999 0.23 0.36 2000 0.25 0.49 Note: (1) Excludes credit card losses. [Logo of SunTrust] SOLID CREDIT QUALITY Allowance for Loan Losses to Non-performing Loans(1) Fifth Third BB&T Bank of New York SunTrust/Wachovia 407.13 301.46 299.03 286 Wells Fargo Bank One National City 275.59 232.96 230.12 FleetBoston PNC First Union/Wachovia U.S. Bancorp JP Morgan Chase 229.31 200.89 186 176 173 Citigroup Keycorp Comerica Mellon Bank of America 147.55 140 136.92 134.36 122.78 Source: SNL Securities, company financials. Notes: (1) As of latest available quarter. (2) Assumes $450MM special provision for both SunTrust/Wachovia and First Union/Wachovia. [Logo of SunTrust] SUPERIOR SHAREHOLDER VALUE [Logo of SunTrust] CONSERVATIVE ASSUMPTIONS || Street estimates utilized for 2002 base case - 10% and 9% growth rates assumed thereafter for SunTrust and Wachovia, respectively || Expense savings of $500MM fully phased-in by 2004 - 23% of estimated Wachovia's expenses (1) - 10% of combined expenses (1) || Restructuring charge estimated to be $1Bn pre-tax || Additional credit reserve of up to $450MM || Estimated breakup fee of $440MM (2) o No revenue enhancements assumed Notes: (1) Wachovia's estimated core non-interest expense base pro forma for impact of Republic Security transaction and card sale. (2) In-the-money value of option as of 5/11/01, based on 1.081 exchange ratio. [Logo of SunTrust] PRO FORMA CASH RESULTS (1) Illustrative - Based On First Call Estimates ($MM, except per share amounts) 2002 2003 2004 ---- ---- ---- SunTrust Earnings $1,527 $1,631 $1,740 Wachovia Earnings(2) 1,053 1,147 1,251 ----- ----- ----- Subtotal 2,580 2,778 2,991 Cost Savings 124 217 310 Other(3) (87) (84) (75) ---- ---- ---- Pro Forma Earnings 2,616 2,911 3,226 ===== ===== ===== EPS $5.35 $6.06 $6.82 SunTrust Accretion 0.6% 3.6% 6.3% Wachovia Accretion 1.9 5.7 9.3 Notes: (1) Estimated in-the-money value of option is $440MM. If in-the-money value of option is $780MM, SunTrust accretion will be 0.5% lower each period. (2) Assumes 25 million share repurchase to conform with street estimates. (3) Includes earnings loss due to divestitures, restructuring charge, breakup fee, reserve addition and increased dividend. [Logo of SunTrust] CONSERVATIVE COST SAVINGS Phase in: 40% in Year 1, 70% in Year 2, 100% in Year 3 ($MM) Staff/Administration $250 Data Processing 60 Occupancy 30 Equipment 30 Professional Services 30 Other 100 --- Fully Phased-In Total $500 ==== 23% of Wachovia's expense base Note: (1) Wachovia's estimated core non-interest expense base pro forma for impact of Republic Security transaction and card sale. [Logo of SunTrust] CONSERVATIVE COST SAVINGS TARGETS BY ANY MEASURE Cost Savings as a % of Target Operating Expenses (Median 10%) (1) How they look at it Chemical/Chase 16 Chemical/Manufactorers Hanover 13 First Union/Core States 12 Banc One/First Chicago NBD 10 Nations Bank/Bank America ~10 Fleet/Boston 10 Suntrust/Wachovia(2) 10 First Union/Wachovia(3) 8 Norwest/Wells 8 Firstar/US Bancorp 5 Cost Savings as a % of Target Operating Expenses (Median 27%) (1) How we look at it First Union/Core States 45 First Union/Wachovia(2) 42 Chemical/Chase 34 Chemical/Manufacturers Hanover 33 Bank One/First Chicago NBD 27 NationsBank/BankAmerica 26 SunTrust/Wachovia(2) 23 Fleet/BankBoston 19 Norwest/Wells 17 Firstar/US Bancorp 8 Notes: (1) Includes completed transactions. (2) Wachovia's estimated core non-interest expense base pro forma for impact of Republic Security transaction and card sale. (3) Source: First Union/Wachovia analyst presentation. [Logo of SunTrust] ESTIMATED MERGER RELATED CHARGES ($MM) Staff Development, Retention and Severance $290 Conversion Costs 310 Accounting Standardization 150 Occupancy / Equipment / Software Writedowns 75 Other 175 --- Total Pre-Tax Merger Related Charges $1,000 Estimated Breakup Fee(1) $440 Addition to Reserve Up to $450 Required purchase accounting adjustments will be made at closing. Note: (1) In-the-money value of option as of 5/11/01 based on 1.081 exchange ratio. [Logo of SunTrust] STRONG ECONOMIC RETURNS WITH CONSERVATIVE ASSUMPTIONS SunTrust Cost of Equity: Transaction IRR: 10 - 12% 13 - 15% Major Assumptions: || 11 - 12x Terminal cash multiple (2006) || 10% EPS growth for SunTrust 2002 - 2006 || 9% EPS growth for Wachovia 2002 - 2006 || Other transaction assumptions same as used earlier [Logo of SunTrust] INTEGRATION RISK IS LOW || Thoughtful and deliberate 3-year integration plan || Emphasizes customer and revenue retention - Low customer attrition rates during Crestar integration || Customer service quality standards not diminished during system conversions Emphasis on customer key to seamless execution and achievement of financial goals [Logo of SunTrust] THIS IS NOT WELLS FARGO/FIRST INTERSTATE Wells Fargo/First Interstate ---------------------------- || Dramatically different operational structure || Aggressive cost take-outs targeted || Attempted 9 month integration || Wells in midst of re-working distribution || Incentives for managers to leave || No due diligence SunTrust/Wachovia ----------------- || Similar operational structure || Reasonable assumptions || 3 Years for integration || Clean slate || Encouraging significant management participation || Strong familiarity with wachovia; due diligence to be updated [Logo of SunTrust] RESULTS NOT PROMISES SunTrust Offers a Superior Currency [Logo of SunTrust] RESULTS NOT PROMISES Total Return(1) [GRAPHIC OMITTED] 1-YEAR 31% higher 5-YEAR 81% higher ------ ------ SunTrust 29 SunTrust 100 First Union (2) First Union 19 10-YEAR 174% higher ------ SunTrust 521 First Union 347 Source: FactSet. Note: (1) As of 5/11/01, assumes reinvestment of dividends. [Logo of SunTrust] RESULTS NOT PROMISES NET REVENUE PER SHARE (1) [Graphic Omitted] 1996 1997 1998 1999 2000 1Q '01 Ann. (SunTrust) 11.58 13.25 14.36 14.96 16.22 17.36 8% CAGR (First Union) 13.11(2) 14.42 13.64 14.56 14.38 13.14 0% CAGR Notes: (1) Excludes non-recurring items. (2) Adjusted for 1997 2-for-1 stock split. [Logo of SunTrust] RESULTS NOT PROMISES Core EPS (1) [GRAPHIC OMITTED] 1996 1997 1998 1999 2000 2001E(2) (SunTrust) 2.72 3.13 3.31 3.92 4.39 4.74 12% CAGR (First Union) 3.10(3) 3.25 3.21 3.42 2.97 2.58 (4%) CAGR Whose stock would you want to own? Notes: (1) Originally reported; excludes non-recurring items, merger-related and restructuring charges. (2) First Call estimates as of 5/11/01. (3) Adjusted for 1997 2-for-1 stock split. [Logo of SunTrust] RESULTS NOT PROMISES Annual Dividends Per Share(1) [GRAPHIC OMITTED] SunTrusT First Union(2) Wachovia CAGR: 18% CAGR: (2%) CAGR with Sun Trust: 10% CAGR with FirstUnion: 5% 1996 0.83 1996 1.10 1996 1.52 1997 0.93 1997 1.22 1997 1.68 1998 1.00 1998 1.58 1998 1.86 1999 1.38 1999 1.88 1999 2.06 2000 1.48 2000 1.92 2000 2.28 1Q '01 1Q '01 Ann. 1.60 Ann. 0.96 SunTrust/ SunTrust/ First Union/ Wachovia Wachovia Wachovia Proposal 2.40 Future 2.22 Future 0.96 First Union/ Wachovia Proposal 1.92 Notes: (1) Company financials, as originally reported. (2) Adjusted for 1997 2-for-1 stock split. Does not reflect one time $0.48 special dividend. [Logo of SunTrust] RESULTS NOT PROMISES Restructuring Charges Since 1997 Restructuring Merger Related Provision Other Total First Union 3471 789 1157 1658 7075 SunTrust 0 250 115 365 Source: Company financials. [Logo of SunTrust] RESULTS NOT PROMISES Financial Ratios for 1Q '01(1) ROA ROE(2) SunTrust 1.2 SunTrust 19.5 First Union 1.0 First Union 15.6 Reported Efficiency Ratio Tangible Common Equity Ratio SunTrust 55.4 SunTrust 6.8 First Union 65.2 First Union 5.0 Notes: (1) Excludes non-recurring items, merger-related and restructuring charges. (2) Excludes Coke. [Logo of SunTrust] RESULTS NOT PROMISES [First Union Logo] [SunTrust Logo] [CoreStates Logo] [Crestar Logo] 23% Shortfall 3.0% Shortfall Promised 4.46 Promised 4.52 IBES(1) 4.35 IBES(1) 4.40 Delivered(2) 3.42 Delivered(2) 4.39 1999 EPS 2000 EPS Source: Analyst presentation, company financials, SNL Securities. Notes: (1) First Union IBES as of 1/1/99. SunTrust IBES as of 1/1/00. (2) Excluding merger-related and restructuring charges and other non-recurring items. [Logo of SunTrust] A BETTER DEAL FOR SHAREHOLDERS [Logo of SunTrust] A BETTER DEAL FOR SHAREHOLDERS FROM EVERY PERSPECTIVE || Better price || Higher dividend || Better currency || Better fit - Management philosophy - Customer relationship driven - Focus on local markets and lines of business || Lower risk/better execution - Clean slate - successful crestar integration complete - Proven large deal execution capability - More conservative and achievable cost savings - Less customer disruption This deal should happen [Logo of SunTrust] APPENDIX [Logo of SunTrust] PRO FORMA FINANCIALS Balance Sheet - Based On Purchase Accounting As of March 31, 2001 ($MM) SunTrust Wachovia (1) Pro Forma -------- ------------ --------- Loans $ 70,360 $52,304 $122,664 Reserves 872 851 2,173(2) Other Interest Earning Assets 22,955 10,764 33,719 Intangibles 869 1,284 11,394 Total Assets 103,726 77,006 189,973 Deposits $ 62,723 $45,617 $106,840(3) Short Term Borrowings 16,040 9,516 25,557 Long-Term Borrowings 12,526 10,712 23,238 Equity $ 7,830 $ 7,705 $ 22,648 Source: Company financials. Notes: (1) Pro forma for credit card sale. (2) Assumes $450MM of special provision. (3) Assumes $1.5Bn of deposit divestitures. [Logo of SunTrust] PRO FORMA FINANCIALS Loan Portfolio
As of March 31, 2001 ($Mm) SunTrust Wachovia(1) Pro Forma(1) ---------------------- ---------------------- ---------------------- % of Total % of Total % of Total Total Loans Total Loans Total Loans ----- ----- ----- ----- ----- ----- Commercial and Industrial $27,959 40% $18,831 36% $ 46,790 38% Real Estate 29,032 41 23,719 45 52,750 43 Construction 3,631 5 3,747 7 7,378 6 Commercial Mortgages 7,694 11 9,577 18 17,271 14 Residential Mortgages 17,707 25 10,395 20 28,102 23 Consumer 10,663 15 6,948 13 17,611 14 Indirect Consumer 5,612 8 4,572 9 10,183 8 Direct Consumer 5,051 7 2,377 5 7,428 6 Credit - Commercial 83 0 - 0 83 0 Lease Financing 2,624 4 2,806 5 5,430 4 ------- --- ------- --- -------- - Total Loans $70,360 100% $52,304 100% $122,664 100% ======= === ======= === ======== ===
Source: Company financials. Note: (1) Pro forma for credit card sale. [Logo of SunTrust] PRO FORMA FINANCIALS Deposit Composition (1)
As of December 31, 2000 ($MM) SunTrust Wachovia Pro Forma ------------------------ ------------------------ ------------------------ % of Total % of Total % of Total Total Deposits Total Deposits Total Deposits ----- -------- ----- -------- ----- -------- Non-Interest Bearing $13,178 20% $8,428 19% $21,606 20% Savings/NOW/MMDAs 26,563 40 17,678 40 44,241 40 Time Deposits (LESS THAN) 100k 9,936 15 9,494 22 19,430 18 Time Deposits >100k 17,016 26 8,346 19 25,362 23 ------- --- ------- --- -------- --- Total $66,692 100% $43,946 100% $110,638 100%
Note: (1) Based on average balances as of 12/31/00. Not pro forma for divested deposits. [Logo of SunTrust] PRO FORMA FINANCIALS Nonperforming Assets (1) As of March 31, 2001 ($MM) SunTrust Wachovia Pro Forma ----- -------- -------- --------- Nonperforming Loans $349 $410 $759 Other Foreclosed Assets 21 27 48 ---- ---- ---- Total Nonperforming Assets $369 $437 $806 ==== ==== ==== NPLs to Loans 0.50% 0.78% 0.62% NPAs to Loans + Foreclosed Assets 0.52% 0.84% 0.66% Allowance to NPLs 250% 208% 286%(2) Source: Company financials. Notes: (1) Loans pro forma for card sale. Assumes no reserves are being transferred with the card portfolio. (2) Includes $450MM special provision as a result of transaction. [Logo of SunTrust] RESERVING FOR PORTFOLIO RISK || SunTrust will reserve up to to $450 MM to strengthen Wachovia's portfolio ($Bn) SunTrust/Wachovia(1) Loans $122.7 Loan Loss Reserves 2.2 NPAs 0.8 Reserves/Loans 1.77% Reserves/NPAs 270% NPAs/Assets 0.42% Note: (1) As of 3/31/01. Pro forma for card sale except NPA figures, assumes no reserves adjustment. [Logo of SunTrust] SENSITIVITY ANALYSIS Pro Forma Cash Results - Illustrative
Suntrust Accretion/(Dilution) -------------------------------------------- 2002 2003 2004 ---- ---- ---- First Call Estimates ($5.68 for 2002) 0.6% 3.6% 6.3% What if? Wachovia 2002 Cash Estimate: $5.73 1.0% 4.0% 6.7% $5.63 0.3% 3.3% 5.9% $5.58 (0.1)% 2.9% 5.5% $5.53 (0.4)% 2.5% 5.2%
[Logo of SunTrust] "NEW" GAAP || "New" GAAP procedures not yet formally established; below is our best guess: Estimated 2002 2003 2004 ---------- ---- ---- ---- Standalone "New" GAAP EPS $5.29 $5.81 $6.39 Core deposit Intangible amortization ($MM) $215-295 $195-250 $175-210 Pro Forma "New" GAAP EPS (7-11%) (3-5%) Breakeven Note: (1) Assumes core deposit intangibles of 5% excluding deposits greater than $100K. Amortization between 7-10 years sum-of-the-year's digits. [Logo of SunTrust]