-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tPYD2thgtMz4yQ+i7iDWPdd03RG4VAI6vA4rHrAJC15GJKnWX5NI6WPGlwqdDi0G KnYj+eYDQO83BjDt6htvww== 0000950144-94-001969.txt : 19941117 0000950144-94-001969.hdr.sgml : 19941117 ACCESSION NUMBER: 0000950144-94-001969 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WACHOVIA CORP/ NC CENTRAL INDEX KEY: 0000774203 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 561473727 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09021 FILM NUMBER: 94558991 BUSINESS ADDRESS: STREET 1: 301 N MAIN STREET CITY: WINSTON SALEM STATE: NC ZIP: 27150 BUSINESS PHONE: 9197705000 MAIL ADDRESS: STREET 1: 191 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30303 FORMER COMPANY: FORMER CONFORMED NAME: FIRST WACHOVIA CORP DATE OF NAME CHANGE: 19910603 10-Q 1 WACHOVIA CORPORATION FORM 10-Q SEPTEMBER 30, 1994 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 1994 Commission File Number 1-9021 WACHOVIA CORPORATION ---------------------------------------------------- (Exact name of registrant as specified in its charter) North Carolina 56-1473727 - - - ------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 301 North Main Street, Winston-Salem, North Carolina 27150 191 Peachtree Street, N.E., Atlanta, Georgia 30303 - - - ---------------------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (910) 770-5000, (404) 332-5000 --------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No --- --- Indicated below is the number of shares outstanding of each of the issuer's classes of common stock as of October 31, 1994 Common Stock, $5.00 par value, 170,828,306 shares 2 QUARTERLY REPORT ON FORM 10-Q WACHOVIA CORPORATION September 30, 1994 PART I - FINANCIAL INFORMATION Item 1. Financial Statements - - - ----------------------------- Wachovia Corporation ("Wachovia"), a North Carolina corporation, is a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and a savings and loan holding company within the meaning of the Home Owners Loan Act of 1933, as amended by the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Its member companies provide a wide range of banking and bank-related services to customers throughout the United States and abroad. Wachovia's principal subsidiaries, Wachovia Bank of North Carolina, N.A., Wachovia Bank of Georgia, N.A., and Wachovia Bank of South Carolina, N.A. provide personal, commerical, trust and institutional banking services through 491 full-service banking offices located in North Carolina, South Carolina and Georgia. In addition, The First National Bank of Atlanta, another subsidiary of Wachovia Corporation, provides credit card services for Wachovia's affiliated banks. National and international banking services are provided through Wachovia's three Cayman Island branches, an Edge Act subsidiary located in New York, and various offices located throughout the Southeast, the nation and the world. The following consolidated financial statements of Wachovia Corporation and subsidiaries are included on pages 22 through 25 of the quarterly Report to Shareholders of the Registrant (attached hereto as Exhibit 19) and are incorporated herein by reference: Consolidated Statement of Condition Consolidated Statement of Income Consolidated Statement of Shareholders' Equity Consolidated Statement of Cash Flows The accompanying unaudited consolidated financial statements in Exhibit 19 do not include all information and footnotes required under generally accepted accounting principles. However, in the opinion of management, the profit and loss information presented in the interim financial statements reflects all adjustments necessary to present fairly the results of operations for the periods presented. Adjustments reflected in the third quarter 1994 figures are of a normal, recurring nature. The results of operations shown in the interim statements are not necessarily indicative of the results that may be expected for the entire year. Item 2. Management's Discussion and Analysis of Financial Condition and - - - ------------------------------------------------------------------------ Results of Operations --------------------- Management's discussion and analysis included on pages 4 - 21 of the quarterly Report to Shareholders of the Registrant (attached hereto as Exhibit 19) is incorporated herein by reference. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - - - ----------------------------------------- (a) Exhibits 11 Computation of Earnings Per Common Share 19 Wachovia Corporation Report to Shareholders for the period ending September 30, 1994 27 Financial Data Schedule (for SEC purposes only) (b) Reports on Form 8-K No reports on Form 8-K were filed during the three months ended September 30, 1994. 3 QUARTERLY REPORT ON FORM 10-Q WACHOVIA CORPORATION September 30, 1994 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WACHOVIA CORPORATION November 11, 1994 By: ROBERT S. McCOY, JR. ------------------------------ Robert S. McCoy, Jr. Executive Vice President and Chief Financial Officer (Principal Financial Officer) November 11, 1994 By: JOHN C. McLEAN, JR. ------------------------------ John C. McLean, Jr. Comptroller (Principal Accounting Officer) EX-11 2 COMPUTATION OF EARNINGS 1 WACHOVIA CORPORATION Computation of Earnings Per Comon Share
EXHIBIT 11 Three Months Ended Nine Months Ended September 30 September 30 -------------------------- ------------------------------ 1994 1993 1994 1993 -------- -------- -------- -------- PRIMARY (in thousands, except per share amount) Average common shares outstanding 170,874 172,632 171,204 172,511 Dilutive common stock options - based on treasury stock method using average market price 1,141 1,591 1,180 1,618 Dilutive common stock awards - based on treasury stock method using average market price 82 77 78 71 -------- -------- -------- -------- Average primary shares outstanding 172,097 174,300 172,462 174,200 ======== ======== ======== ======== Net income $137,992 $124,407 $396,932 $369,098 ======== ======== ======== ======== Per share amount $ .80 $ .71 $ 2.30 $ 2.12 FULLY DILUTED (in thousands, except per share amount) Average common shares outstanding 170,874 172,632 171,204 172,511 Dilutive common stock options - based on treasury stock method using higher of period-end market price or average market price 1,141 1,859 1,180 1,891 Dilutive common stock awards - based on treasury stock method using higher of period-end market price or average market price 82 85 78 85 Convertible notes assumed converted 604 838 624 1,418 -------- -------- -------- -------- Average fully diluted shares outstanding 172,701 175,414 173,086 175,905 ======== ======== ======== ======== Net income $137,992 $124,407 $396,932 $369,098 Add interest on convertible notes after taxes 127 167 393 777 -------- -------- -------- -------- Adjusted net income $138,119 $124,574 $397,325 $369,875 ======== ======== ======== ======== Per share amount $ .80 $ .71 $ 2.30 $ 2.10
EX-19 3 WACHOVIA REPORT TO SHAREHOLDERS 1
[3] WACHOVIA ____________________________________________________________________________________________________________________________________ REPORT TO SHAREHOLDERS FOR THE PERIOD ENDING SEPTEMBER 30, 1994 Dear Wachovia Shareholder: Despite a slowdown in some sectors, the economy continued its overall expansion in the third quarter of 1994. Both productivity and consumer spending edged higher, while concerns regarding the potential for price inflation kept financial markets unsettled. Loan demand for banking remained strong and credit quality further improved, but competitive pricing and higher interest rates narrowed margins and limited overall business growth. In this environment Wachovia performed well. Net income per fully diluted share was $.80 for the third quarter, higher by 12.6 percent from $.71 a year earlier. Net income totaled $138 million compared with $124.4 million and represented annualized returns of 17.7 percent on shareholders' equity and 1.48 percent on assets. For the first nine months of 1994, net income per fully diluted share was $2.30, an increase of 9.2 percent from $2.10 in the same period of 1993. Net income was $396.9 million versus $369.1 million and represented annualized returns of 17.3 percent on equity and 1.44 percent on assets. Average interest-earning assets rose $3.052 billion or 10.2 percent and $3.236 billion or 11.1 percent for the three- and nine-month periods, respectively. Growth was paced by strong loan demand, with average loans up $2.897 billion or 13.4 percent for the third quarter and $2.512 billion or 11.8 percent year to date. Compared with the second quarter, loan growth remained good with retail and commercial loans both increasing. Average interest-bearing liabilities were higher by $3.135 billion or 12.7 percent for the third period and $3.213 billion or 13.4 percent for the first nine months. Both long-term debt, particularly bank notes, and short-term borrowings increased as interest-bearing time deposits remained essentially unchanged. Taxable equivalent net interest income grew $10.8 million or 3.1 percent for the third quarter and $20.7 million or 2 percent year to date. Increases were driven primarily by interest-earning assets growth but were moderated by a higher cost of funds, particularly in the third period as short-term interest rates rose. The net yield on interest-earning assets decreased 29 basis points for the quarter and 39 basis points for the first nine months but was down a more moderate 4 basis points from the second period. Other operating revenue was higher by $1.8 million or 1.2 percent for the three months and $2 million or less than 1 percent year to date. Good gains achieved in trust service fees and credit card income were offset, in part, by lower levels of deposit service charges, mortgage fee income and trading account profits. Growth in other service charges and fees and in other income has helped supplement and diversify the corporation's total other operating revenues. Noninterest expense was lower by $2.3 million or under 1 percent for the quarter and $15.6 million or 1.9 percent for the first nine months of the year. Nonperforming assets at September 30, 1994 were $110 million or .44 percent of loans and foreclosed property, down from $188 million or .85 percent a year earlier and from $125 million or .51 percent at June 30. Net loan losses were $18.1 million or .29 percent of average loans for the third quarter and $51 million or .29 percent for the first nine months versus $18.9 million or .35 percent and $50.1 million or .31 percent, respectively, in the same periods of 1993. The provision for loan losses was $18.1 million for the three months and $52.2 million year to date, down $5.4 million or 22.8 percent and $22.4 million or 30 percent, respectively, from year-earlier amounts. At September 30, the allowance for loan losses totaled $406 million, representing 1.63 percent of loans and 455 percent coverage of nonperforming loans. Shareholders' equity to assets was 8.43 percent, while the Tier I and total capital to risk-adjusted assets ratios were 9.40 percent and 13.03 percent, respectively. Through more than a century Wachovia has positioned itself to be among the forefront of banking and business. Today, Wachovia's deep and abiding commitment to soundness remains intact. At the same time, the organization is shifting with the economy, the reality of the marketplace and the needs and desires of our customers to capitalize on opportunities for enhancement of shareholder value. Your continued confidence and support are appreciated. Sincerely, /s/ L. M. Baker, Jr. L. M. Baker, Jr. Chief Executive Officer October 28, 1994
2 [ ] News Developments ____________________________________________________________________________________________________________________________________ - - - - The board of directors declared a fourth quarter dividend of $.33 per share, payable December 1 to shareholders of record on November 8. The dividend is higher by 10 percent from the $.30 per share paid both in the previous quarter and in the year-earlier period. For the full year, dividends will total $1.23 per share, an increase of 10.8 percent from the $1.11 per share paid in 1993. - - - - Wachovia Corporate Services, Inc., began offering a new program for companies seeking to restructure deferred compensation to executives through non-qualified pension plans. Under the program, known as ExecuComp, Wachovia serves as an independent trustee, with plan assets safeguarded by Wachovia and held apart from company assets. Customers have access to numerous nonproprietary investment alternatives as well as to Wachovia's proprietary Biltmore Funds. The program utilizes an IRS-approved rabbi trust as its funding mechanism, with Wachovia providing consultation, trustee, account valuation, tax reporting and payment services. - - - - Wachovia is introducing over the next several months a new automated mortgage origination processing system. The software program, known as Wachovia Mortgage Origination System, automatically calculates mortgage-related data such as monthly payments, mortgage insurance, escrows, closing costs and minimum qualifying income levels based on variables entered by mortgage lenders. The system also provides comparisons of various mortgage products, interest rates and down payment options allowing customers to make quicker and more informed decisions. Mortgage processing and approval time is reduced by transmitting customer data electronically to a mortgage processing center and by automatically generating loan application forms and all necessary loan origination documents as customers are being served. - - - - Wachovia Bank of South Carolina began offering in September its Crown Account, a premium package of more than 10 banking services to individual customers. The package is offered in conjunction with the Crown Classic account which provides the same premium services plus others to banking customers 50 and over. Crown account is already available in Georgia and North Carolina.
[ ] SELECTED PERIOD-END DATA ____________________________________________________________________________________________________________________________________ September 30 September 30 1994 1993 ------------ ------------ Banking offices: North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 223 Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 129 South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 157 --- --- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 509 === === Automated banking machines: North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 245 Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 177 South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 166 --- --- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 588 === === Employees (full-time equivalent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,614 15,731 Common stock shareholders of record . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,878 27,783 Common shares outstanding (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,760 172,012
2 3
[ ] FINANCIAL HIGHLIGHTS ____________________________________________________________________________________________________________________________________ Three Months Ended Nine Months Ended September 30 Percent September 30 Percent 1994 1993 Change 1994 1993 Change -------- -------- ------- -------- -------- ------- EARNINGS AND DIVIDENDS (thousands, except per share data) Net income . . . . . . . . . . . . . . . . . . . . $137,992 $124,407 10.9 $396,932 $369,098 7.5 Cash dividends paid on common stock . . . . . . . . 51,241 46,702 9.7 154,083 139,918 10.1 Payout ratio (total cash dividends/ net income) . . . . . . . . . . . . . . . . . . . 37.1% 37.5% 38.8% 37.9% Net income per common share: Primary . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 12.3 $ 2.30 $ 2.12 8.6 Fully diluted . . . . . . . . . . . . . . . . . . $ .80 $ .71 12.6 $ 2.30 $ 2.10 9.2 Cash dividends paid per common share . . . . . . . $ .30 $ .27 11.1 $ .90 $ .81 11.1 Average primary shares outstanding . . . . . . . . 172,097 174,300 (1.3) 172,462 174,200 (1.0) Average fully diluted shares outstanding . . . . . 172,701 175,414 (1.5) 173,086 175,905 (1.6) Annualized return on average assets . . . . . . . . 1.47% 1.47% 1.44% 1.49% Annualized return on average shareholders' equity . . . . . . . . . . . . . . 17.63 17.12 17.25 17.26 Including average unrealized gains (losses) on securities available-for-sale, net of tax:* Annualized return on average assets . . . . . . . 1.48 -- 1.44 -- Annualized return on average shareholders' equity . . . . . . . . . . . . . 17.73 -- 17.26 -- Balance Sheet Data at Period-End (millions, except per share data) Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,134 $ 35,320 8.0 Interest-earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,580 31,499 6.6 Loans - net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,968 22,066 13.1 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,256 22,187 .3 Interest-bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,477 26,154 8.9 Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,215** 2,975 8.1 Shareholders' equity to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.43% 8.42% Risk-based capital ratios: Tier I capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.40 9.94 Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03 13.18 Per share: Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18.83 $ 17.29 8.9 Common stock closing price (NYSE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.250 39.125 (17.6) *Includes unrealized gains (losses) on securities available-for-sale of ($17) for the third quarter and ($1) year-to-date, net of tax **Includes unrealized gains (losses) on securities available-for-sale of ($22), net of tax
[ ] COMMON STOCK DATA - PER SHARE ____________________________________________________________________________________________________________________________________ 1994 1993 ------------------------------------ --------------------- Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter ------- ------- -------- -------- ------- Market value: Period-end . . . . . . . . . . . . . . . . . . . . $ 32 1/4 $ 33 1/8 $ 31 3/4 $ 33 1/2 $ 39 1/8 High . . . . . . . . . . . . . . . . . . . . . . . 35 1/4 35 3/8 35 1/8 39 3/4 40 3/8 Low . . . . . . . . . . . . . . . . . . . . . . . . 31 3/8 30 3/4 30 1/8 31 7/8 33 3/8 Book value at period-end . . . . . . . . . . . . . . 18.83 18.40 18.05 17.61 17.29 Dividend . . . . . . . . . . . . . . . . . . . . . . .30 .30 .30 .30 .27 Price/earnings ratio* . . . . . . . . . . . . . . . 10.7x 11.3x 11.1x 11.8x 14.2x
*Based on most recent twelve months net income per primary share and period-end stock price 4
[ ] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ____________________________________________________________________________________________________________________________________ ____________________________________________________________________________________________________________________________________ FINANCIAL SUMMARY TABLE 1 ____________________________________________________________________________________________________________________________________ Twelve Months 1994 Ended ----------------------------------- September 30 Third Second First 1994 Quarter Quarter Quarter ---------- -------- -------- -------- SUMMARY OF OPERATIONS (thousands, except per share data) Interest income - taxable equivalent . . . . . $2,354,106 $632,359 $594,669 $558,329 Interest expense . . . . . . . . . . . . . . . 950,656 274,329 242,488 216,007 ---------- -------- -------- -------- Net interest income - taxable equivalent . . . 1,403,450 358,030 352,181 342,322 Taxable equivalent adjustment . . . . . . . . . 98,999 24,909 24,882 24,476 ---------- -------- -------- -------- Net interest income . . . . . . . . . . . . . . 1,304,451 333,121 327,299 317,846 Provision for loan losses . . . . . . . . . . . 70,237 18,123 16,342 17,759 ---------- -------- -------- -------- Net interest income after provision for loan losses . . . . . . . . . . 1,234,214 314,998 310,957 300,087 Other operating revenue . . . . . . . . . . . . 602,150 151,541 153,299 144,869 Gain on sale of subsidiary . . . . . . . . . . -- -- -- -- Investment securities gains . . . . . . . . . . 8,442 433 221 572 ---------- -------- -------- -------- Total other income . . . . . . . . . . . . . . 610,592 151,974 153,520 145,441 Personnel expense . . . . . . . . . . . . . . . 569,650 139,695 141,232 141,014 Other expense . . . . . . . . . . . . . . . . . 545,978 131,598 133,313 129,036 ---------- -------- -------- -------- Total other expense . . . . . . . . . . . . . . 1,115,628 271,293 274,545 270,050 Income before income taxes . . . . . . . . . . 729,178 195,679 189,932 175,478 Applicable income taxes* . . . . . . . . . . . 209,249 57,687 55,791 50,679 ---------- -------- -------- -------- Net income . . . . . . . . . . . . . . . . . . $ 519,929 $137,992 $134,141 $124,799 ========== ======== ======== ======== Net income per common share: Primary . . . . . . . . . . . . . . . . . . . $ 3.01 $ .80 $ .78 $ .72 Fully diluted . . . . . . . . . . . . . . . . $ 3.01 $ .80 $ .78 $ .72 Cash dividends paid per common share . . . . . $ 1.20 $ .30 $ .30 $ .30 Average primary shares outstanding . . . . . . 172,642 172,097 172,558 172,739 Average fully diluted shares outstanding . . . 173,305 172,701 173,197 173,378 SELECTED AVERAGE BALANCES (millions) Total assets . . . . . . . . . . . . . . . . . $ 36,342 $ 37,409 $ 36,753 $ 35,778 Loans - net of unearned income . . . . . . . . 23,425 24,553 23,969 23,010 Investment securities . . . . . . . . . . . . . 7,785** 7,695** 7,767** 7,690** Other interest-earning assets . . . . . . . . . 989 809 829 1,083 Total interest-earning assets . . . . . . . . . 32,199 33,057 32,565 31,783 Interest-bearing deposits . . . . . . . . . . . 16,928 17,020 16,964 16,694 Short-term borrowed funds . . . . . . . . . . . 6,130 6,115 6,038 6,148 Long-term debt . . . . . . . . . . . . . . . . 3,840 4,637 4,281 3,670 Total interest-bearing liabilities . . . . . . 26,898 27,772 27,283 26,512 Noninterest-bearing deposits . . . . . . . . . 5,402 5,364 5,333 5,366 Total deposits . . . . . . . . . . . . . . . . 22,330 22,384 22,297 22,060 Shareholders' equity . . . . . . . . . . . . . 3,033 3,114 3,063 3,021 RATIOS (averages) Loans to deposits . . . . . . . . . . . . . . . 104.90% 109.69% 107.49% 104.31% Annualized net loan losses to loans . . . . . . .29 .29 .26 .30 Annualized net yield on interest-earning assets . . . . . . . . . . . 4.36 4.30 4.34 4.37 Shareholders' equity to: Total assets . . . . . . . . . . . . . . . . 8.34 8.32 8.33 8.44 Net loans . . . . . . . . . . . . . . . . . . 13.18 12.89 13.00 13.36 Annualized return on assets . . . . . . . . . . 1.43 1.48 1.46 1.40 Annualized return on shareholders' equity . . . . . . . . . . . . 17.14 17.73 17.52 16.53 1993 -------------------- Nine Months Ended Fourth Third September 30 Quarter Quarter 1994 1993 -------- -------- ---------- ---------- SUMMARY OF OPERATIONS (thousands, except per share data) Interest income - taxable equivalent . . . . . $568,749 $558,418 $1,785,357 $1,652,989 Interest expense . . . . . . . . . . . . . . . 217,832 211,145 732,824 621,180 -------- -------- ---------- ---------- Net interest income - taxable equivalent . . . 350,917 347,273 1,052,533 1,031,809 Taxable equivalent adjustment . . . . . . . . . 24,732 26,487 74,267 74,169 -------- -------- ---------- ---------- Net interest income . . . . . . . . . . . . . . 326,185 320,786 978,266 957,640 Provision for loan losses . . . . . . . . . . . 18,013 23,483 52,224 74,639 -------- -------- ---------- ---------- Net interest income after provision for loan losses . . . . . . . . . . 308,172 297,303 926,042 883,001 Other operating revenue . . . . . . . . . . . . 152,441 149,761 449,709 447,738 Gain on sale of subsidiary . . . . . . . . . . -- -- -- 8,030 Investment securities gains . . . . . . . . . . 7,216 702 1,226 12,178 -------- -------- ---------- ---------- Total other income . . . . . . . . . . . . . . 159,657 150,463 450,935 467,946 Personnel expense . . . . . . . . . . . . . . . 147,709 142,393 421,941 420,971 Other expense . . . . . . . . . . . . . . . . . 152,031 131,153 393,947 410,525 -------- -------- ---------- ---------- Total other expense . . . . . . . . . . . . . . 299,740 273,546 815,888 831,496 Income before income taxes . . . . . . . . . . 168,089 174,220 561,089 519,451 Applicable income taxes* . . . . . . . . . . . 45,092 49,813 164,157 150,353 -------- -------- ---------- ---------- Net income . . . . . . . . . . . . . . . . . . $ 122,997 $124,407 $ 396,932 $ 369,098 ========== ======== ========== ========== Net income per common share: Primary . . . . . . . . . . . . . . . . . . . $ .71 $ .71 $ 2.30 $ 2.12 Fully diluted . . . . . . . . . . . . . . . . $ .71 $ .71 $ 2.30 $ 2.10 Cash dividends paid per common share . . . . . $ .30 $ .27 $ .90 $ .81 Average primary shares outstanding . . . . . . 173,175 174,300 172,462 174,200 Average fully diluted shares outstanding . . . 173,943 175,414 173,086 175,905 SELECTED AVERAGE BALANCES (millions) Total assets . . . . . . . . . . . . . . . . . $ 35,420 $ 33,870 $ 36,653 $ 33,025 Loans - net of unearned income . . . . . . . . 22,165 21,656 23,850 21,338 Investment securities . . . . . . . . . . . . . 7,992 7,072 7,717** 6,718 Other interest-earning assets . . . . . . . . . 1,234 1,277 906 1,181 Total interest-earning assets . . . . . . . . . 31,391 30,005 32,473 29,237 Interest-bearing deposits . . . . . . . . . . . 17,030 16,835 16,894 17,015 Short-term borrowed funds . . . . . . . . . . . 6,218 5,432 6,100 5,128 Long-term debt . . . . . . . . . . . . . . . . 2,774 2,370 4,200 1,838 Total interest-bearing liabilities . . . . . . 26,022 24,637 27,194 23,981 Noninterest-bearing deposits . . . . . . . . . 5,544 5,410 5,355 5,291 Total deposits . . . . . . . . . . . . . . . . 22,574 22,245 22,249 22,306 Shareholders' equity . . . . . . . . . . . . . 2,934 2,907 3,066 2,851 RATIOS (averages) Loans to deposits . . . . . . . . . . . . . . . 98.19% 97.35% 107.20% 95.66% Annualized net loan losses to loans . . . . . . .31 .35 .29 .31 Annualized net yield on interest-earning assets . . . . . . . . . . . 4.44 4.59 4.33 4.72 Shareholders' equity to: Total assets . . . . . . . . . . . . . . . . 8.28 8.58 8.37 8.63 Net loans . . . . . . . . . . . . . . . . . . 13.48 13.68 13.08 13.62 Annualized return on assets . . . . . . . . . . 1.39 1.47 1.44 1.49 Annualized return on shareholders' equity . . . . . . . . . . . . 16.77 17.12 17.26 17.26 * Income taxes applicable to securities transactions were $3,334, $173, $89, $226, $2,846, $291, $488 and $4,626, respectively ** Reported at amortized cost; excludes pretax unrealized gains (losses) on securities available- for-sale of ($1) for the twelve months ended September 30, 1994, ($28) for the third quarter of 1994, ($14) for the second quarter of 1994, $37 for the first quarter of 1994 and ($2) for the nine months ended September 30, 1994 ____________________________________________________________________________________________________________________________________
5 RESULTS OF OPERATIONS Overview During the third quarter of 1994, business conditions generally improved as the economy continued to expand. Job growth in Wachovia Corporation's primary operating states remained good, with seasonally adjusted unemployment for the quarter averaging 5.5 percent, 5 percent and 6 percent for Georgia, North Carolina and South Carolina, respectively. Wachovia Corporation's net income was $137.992 million or $.80 per fully diluted share for the third quarter of 1994 and totaled $396.932 million or $2.30 per fully diluted share for the first nine months. This compares with $124.407 million or $.71 per share and with $369.098 million or $2.10 per share, respectively, in the same periods of 1993. Annualized returns for the quarter were 17.7 percent on shareholders' equity and 1.48 percent on assets. Year to date, annualized returns were 17.3 percent on equity and 1.44 percent on assets, with equity and assets used in computing returns including unrealized gains or losses, net of tax, on securities available-for-sale. Expanded operating results and the corporation's financial condition are presented in the following narrative and tables. Interest income is stated on a taxable equivalent basis which is adjusted for the tax-favored status of earnings from certain loans and investments. References to changes in assets and liabilities represent daily average levels unless otherwise noted.
____________________________________________________________________________________________________________________________________ COMPONENTS OF EARNINGS PER PRIMARY SHARE TABLE 2 ____________________________________________________________________________________________________________________________________ Three Months Ended Nine Months Ended September 30 September 30 1994 1993 Change 1994 1993 Change ----- ----- ------ ------ ----- ------ Interest income - taxable equivalent . . . . . . . . . $3.67 $3.20 $.47 $10.35 $9.49 $.86 Interest expense . . . . . . . . . . . . . . . . . . . 1.59 1.21 .38 4.25 3.57 .68 ----- ----- ---- ------ ----- ---- Net interest income - taxable equivalent . . . . . . . 2.08 1.99 .09 6.10 5.92 .18 Taxable equivalent adjustment . . . . . . . . . . . . . .14 .15 (.01) .43 .42 .01 ----- ----- ---- ------ ----- ---- Net interest income . . . . . . . . . . . . . . . . . . 1.94 1.84 .10 5.67 5.50 .17 Provision for loan losses . . . . . . . . . . . . . . . .11 .13 (.02) .30 .43 (.13) ----- ----- ---- ------ ----- ---- Net interest income after provision for loan losses . . 1.83 1.71 .12 5.37 5.07 .30 Other operating revenue . . . . . . . . . . . . . . . . .88 .86 .02 2.61 2.57 .04 Gain on sale of subsidiary . . . . . . . . . . . . . . -- -- -- -- .05 (.05) Investment securities gains . . . . . . . . . . . . . . -- -- -- -- .07 (.07) ----- ----- ---- ------ ----- ---- Total other income . . . . . . . . . . . . . . . . . . .88 .86 .02 2.61 2.69 (.08) Personnel expense . . . . . . . . . . . . . . . . . . . .81 .82 (.01) 2.45 2.42 .03 Other expense . . . . . . . . . . . . . . . . . . . . . .76 .75 .01 2.28 2.36 (.08) ----- ----- ---- ------ ----- ---- Total other expense . . . . . . . . . . . . . . . . . . 1.57 1.57 -- 4.73 4.78 (.05) Income before income taxes . . . . . . . . . . . . . . 1.14 1.00 .14 3.25 2.98 .27 Applicable income taxes . . . . . . . . . . . . . . . . .34 .29 .05 .95 .86 .09 ----- ----- ---- ------ ----- ---- Net income . . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 $.09 $ 2.30 $2.12 $.18 ===== ===== ==== ====== ===== ==== ____________________________________________________________________________________________________________________________________
5 6
____________________________________________________________________________________________________________________________________ NET INTEREST INCOME AND AVERAGE BALANCES TABLE 3 ____________________________________________________________________________________________________________________________________ Twelve Months 1994 Ended --------------------------------------- September 30 Third Second First 1994 Quarter Quarter Quarter ---------- -------- -------- -------- NET INTEREST INCOME - TAXABLE EQUIVALENT (thousands) Interest income: Loans . . . . . . . . . . . . . . . . . $1,804,061 $495,361 $458,695 $422,388 Investment securities . . . . . . . . . 507,743 125,922 126,313 125,663 Interest-bearing bank balances . . . . 603 142 185 160 Federal funds sold and securities . . . purchased under resale agreements . . 10,389 1,347 1,842 3,111 Trading account assets . . . . . . . . 31,310 9,587 7,634 7,007 ---------- -------- -------- -------- Total . . . . . . . . . . . . . . . 2,354,106 632,359 594,669 558,329 Interest expense: Interest-bearing demand . . . . . . . . 55,621 13,954 13,456 13,235 Savings and money market savings . . . 153,797 44,811 37,928 34,284 Savings certificates . . . . . . . . . 220,037 57,023 53,156 53,465 Large denomination certificates . . . . 71,355 18,453 18,507 15,057 Time deposits in foreign offices . . . 19,590 7,042 4,098 3,280 Short-term borrowed funds . . . . . . . 234,334 71,495 61,337 51,625 Long-term debt . . . . . . . . . . . . 195,922 61,551 54,006 45,061 ---------- -------- -------- -------- Total . . . . . . . . . . . . . . . 950,656 274,329 242,488 216,007 ---------- -------- -------- -------- Net interest income . . . . . . . . . . . $1,403,450 $358,030 $352,181 $342,322 ========== ======== ======== ======== Annualized net yield on interest-earning assets . . . . . . . 4.36% 4.30% 4.34% 4.37% AVERAGE BALANCES (millions) Assets: Loans - net of unearned income . . . . $ 23,425 $ 24,553 $ 23,969 $ 23,010 Investment securities . . . . . . . . . 7,785 7,695 7,767 7,690 Interest-bearing bank balances . . . . 14 11 18 17 Federal funds sold and securities purchased under resale agreements . . 301 115 182 394 Trading account assets . . . . . . . . 674 683 629 672 ---------- -------- -------- -------- Total interest-earning assets . . . . 32,199 33,057 32,565 31,783 Cash and due from banks . . . . . . . . 2,376 2,350 2,346 2,387 Premises and equipment . . . . . . . . 508 523 510 502 Other assets . . . . . . . . . . . . . 1,667 1,912 1,754 1,476 Unrealized gains (losses) on securities available-for-sale . . . . . . . . . (1) (28) (14) 37 Allowance for loan losses . . . . . . . (407) (405) (408) (407) ---------- -------- -------- -------- Total assets . . . . . . . . . . . . $ 36,342 $ 37,409 $ 36,753 $ 35,778 ========== ======== ======== ======== Liabilities and shareholders' equity: Interest-bearing demand . . . . . . . . $ 3,373 $ 3,367 $ 3,420 $ 3,385 Savings and money market savings . . . 6,114 6,197 6,103 6,074 Savings certificates . . . . . . . . . 5,327 5,247 5,283 5,355 Large denomination certificates . . . . 1,587 1,599 1,736 1,463 Time deposits in foreign offices . . . 527 610 422 417 Short-term borrowed funds . . . . . . . 6,130 6,115 6,038 6,148 Long-term debt . . . . . . . . . . . . 3,840 4,637 4,281 3,670 ---------- -------- -------- -------- Total interest-bearing liabilities . 26,898 27,772 27,283 26,512 Demand deposits in domestic offices . . 5,326 5,277 5,245 5,302 Demand deposits in foreign offices . . 5 5 5 5 Noninterest-bearing time deposits in domestic offices . . . . . . . . . 71 82 83 59 Other liabilities . . . . . . . . . . . 1,009 1,159 1,074 879 Shareholders' equity . . . . . . . . . 3,033 3,114 3,063 3,021 ---------- -------- -------- -------- Total liabilities and shareholders' equity . . . . . . . $ 36,342 $ 37,409 $ 36,753 $ 35,778 ========== ======== ======== ======== Total deposits . . . . . . . . . . . . . $ 22,330 $ 22,384 $ 22,297 $ 22,060 1993 -------------------- Nine Months Ended Fourth Third September 30 Quarter Quarter 1994 1993 -------- -------- ---------- ---------- NET INTEREST INCOME - TAXABLE EQUIVALENT (thousands) Interest income: Loans . . . . . . . . . . . . . . . . . $427,617 $422,248 $1,376,444 $1,250,011 Investment securities . . . . . . . . . 129,845 124,627 377,898 370,494 Interest-bearing bank balances . . . . 116 485 487 2,789 Federal funds sold and securities purchased under resale agreements . . . 4,089 3,612 6,300 8,344 Trading account assets . . . . . . . . 7,082 7,446 24,228 21,351 -------- -------- -------- -------- Total . . . . . . . . . . . . . . . 568,749 558,418 1,785,357 1,652,989 Interest expense: Interest-bearing demand . . . . . . . . 14,976 15,478 40,645 45,457 Savings and money market savings . . . . 36,774 37,844 117,023 114,974 Savings certificates . . . . . . . . . 56,393 59,063 163,644 184,402 Large denomination certificates . . . . 19,338 21,177 52,017 70,763 Time deposits in foreign offices . . . . 5,170 3,076 14,420 9,333 Short-term borrowed funds . . . . . . . 49,877 43,910 184,457 123,970 Long-term debt . . . . . . . . . . . . 35,304 30,597 160,618 72,281 -------- -------- -------- -------- Total . . . . . . . . . . . . . . . 217,832 211,145 732,824 621,180 -------- -------- -------- -------- Net interest income . . . . . . . . . . . $350,917 $347,273 $1,052,533 $1,031,809 ======== ======== ========== ========== Annualized net yield on interest-earning assets . . . . . . . 4.44% 4.59% 4.33% 4.72% AVERAGE BALANCES (millions) Assets: Loans - net of unearned income . . . . $ 22,165 $ 21,656 $ 23,850 $ 21,338 Investment securities . . . . . . . . . 7,992 7,072 7,717 6,718 Interest-bearing bank balances . . . . 11 59 15 101 Federal funds sold and securities purchased under resale agreements . . 513 454 229 355 Trading account assets . . . . . . . . 710 764 662 725 -------- -------- -------- -------- Total interest-earning assets . . . . 31,391 30,005 32,473 29,237 Cash and due from banks . . . . . . . . 2,421 2,349 2,361 2,351 Premises and equipment . . . . . . . . 497 493 512 458 Other assets . . . . . . . . . . . . . 1,520 1,427 1,716 1,374 Unrealized gains (losses) on securities available-for-sale . . . . . . . . . -- -- (2) -- Allowance for loan losses . . . . . . . (409) (404) (407) (395) -------- -------- --------- -------- Total assets . . . . . . . . . . . . $ 35,420 $ 33,870 $ 36,653 $ 33,025 ======== ======== ========= ======== Liabilities and shareholders' equity: Interest-bearing demand . . . . . . . . $ 3,319 $ 3,233 $ 3,391 $ 3,186 Savings and money market savings 6,080 6,013 6,125 5,970 Savings certificates . . . . . . . . . 5,426 5,551 5,294 5,652 Large denomination certificates . . . . 1,550 1,637 1,600 1,804 Time deposits in foreign offices 655 401 484 403 Short-term borrowed funds . . . . . . . 6,218 5,432 6,100 5,128 Long-term debt . . . . . . . . . . . . 2,774 2,370 4,200 1,838 -------- -------- --------- -------- Total interest-bearing liabilities 26,022 24,637 27,194 23,981 Demand deposits in domestic offices 5,480 5,314 5,275 5,209 Demand deposits in foreign offices 6 5 5 6 Noninterest-bearing time deposits in domestic offices . . . . . . . . . 58 91 75 76 Other liabilities . . . . . . . . . . . 920 916 1,038 902 Shareholders' equity . . . . . . . . . 2,934 2,907 3,066 2,851 -------- -------- --------- -------- Total liabilities and shareholders' equity . . . . . . . $ 35,420 $ 33,870 $ 36,653 $ 33,025 ======== ======== ========= ======== Total deposits . . . . . . . . . . . . . $ 22,574 $ 22,245 $ 22,249 $ 22,306 ____________________________________________________________________________________________________________________________________
6 7 Net Interest Income Net interest income on a taxable equivalent basis rose $10.757 million or 3.1 percent for the third quarter and $20.724 million or 2 percent for the first nine months of 1994. Increases reflected good growth in both periods of interest-earning assets, particularly loans, and higher asset yields in the third quarter. Moderating the gains were increased levels of interest-bearing liabilities and a higher cost of funds, particularly for the three months ended September 30. Compared with the second quarter of 1994, taxable equivalent net interest income increased $5.849 million or 1.7 percent, the result of continued loan growth and expanded asset yields. The net yield on interest-earning assets (net interest income as a percentage of average interest-earning assets) was lower by 29 basis points for the quarter and 39 basis points year to date. Although the average rate earned in the third period increased 21 basis points, the average rate paid expanded 52 basis points, primarily reflecting the immediate impact of Federal Reserve actions in August to raise short-term interest rates. For the first nine months of 1994, average asset yields declined 21 basis points as rates earned on newly acquired assets remained lower than those on replaced assets. Average rates paid increased 14 basis points for the period due to higher short-term borrowing costs. The net yield on interest-earning assets was down 4 basis points from the second quarter of 1994. Taxable equivalent interest income increased $73.941 million or 13.2 percent for the quarter and $132.368 million or 8 percent year to date, primarily reflecting higher volumes of interest-earning assets. A 21 basis point rise in the average rate earned on interest-earning assets in the third quarter of 1994 versus a year earlier also contributed to the increase. Average interest-earning assets for the three- and nine-month periods were up $3.052 billion or 10.2 percent and $3.236 billion or 11.1 percent, respectively, led by strong loan growth. Average loans increased $2.897 billion or 13.4 percent for the quarter, with gains occurring primarily in the commercial portfolio, and rose $2.512 billion or 11.8 percent year to date, with growth balanced largely between commercial and retail. Loan growth moderated somewhat from the second quarter of 1994 but exceeded total interest-earning assets growth. Average loans were up $584 million or 2.4 percent in comparison with the second quarter versus gains of $492 million or 1.5 percent for average interest-earning assets. Commercial loans, including related real estate categories, rose $1.846 billion or 15.7 percent for the three months, $1.343 billion or 11.3 percent year to date and $258 million or 1.9 percent from the second quarter of 1994. Gains were concentrated in regular commercial loans which were higher by $1.442 billion or 23.6 percent, $1.016 billion or 16.5 percent and $227 million or 3.1 percent, respectively. Other categories of growth included commercial mortgages and construction loans as well as tax-exempt loans on a year-over-year basis only. Based on regulatory definitions, commercial mortgages totaled $3.421 billion at September 30, 1994 and construction loans were $500 million. This compared with $3.115 billion and $458 million, respectively, a year earlier and with $3.357 billion in commercial mortgages and $477 million in construction loans at June 30, 1994. Retail loans, including residential mortgages, increased $1.051 billion or 10.7 percent and $1.169 billion or 12.4 percent for the three- and nine-month periods, respectively, and were up $326 million or 3.1 percent from the second quarter. Volume gains were driven primarily by credit cards and indirect loans which principally consists of automobile sales financing in Georgia, North Carolina and South Carolina. Average credit card loans grew $995 million or 36.9 percent for the third quarter, $955 million or 38.5 percent year to date and $258 million or 7.5 percent from the second period. At September 30, 1994, credit card outstandings totaled $3.816 billion versus $2.825 billion a year earlier and $3.591 billion at June 30, 1994. 7 8
____________________________________________________________________________________________________________________________________ TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS - THIRD QUARTER* TABLE 4 ___________________________________________________________________________________________________________________________________ Variance Average Volume Average Rate Interest Attributable to --------------- ------------ ------------------- ------------------ 1994 1993 1994 1993 1994 1993 Variance Rate Volume ------ ------ ----- ----- -------- -------- -------- ------- ------- (Millions) INTEREST INCOME (Thousands) Loans: $ 7,557 $ 6,115 6.32 5.33 Commercial . . . . . . . . . . $120,422 $ 82,115 $38,307 $16,934 $21,373 1,951 1,853 8.88 9.34 Tax-exempt . . . . . . . . . . 43,703 43,617 86 (2,183) 2,269 ------- ------- -------- -------- ------- 9,508 7,968 6.85 6.26 Total commercial . . . . . . 164,125 125,732 38,393 12,550 25,843 740 691 8.35 8.52 Direct retail . . . . . . . . . 15,579 14,838 741 (308) 1,049 2,490 2,271 7.68 8.34 Indirect retail . . . . . . . . 48,179 47,723 456 (3,937) 4,393 3,695 2,700 11.00 11.37 Credit card . . . . . . . . . 102,450 77,378 25,072 (2,591) 27,663 335 330 11.67 11.16 Other revolving credit . . . . 9,840 9,274 566 430 136 ------- ------- -------- -------- ------- 7,260 5,992 9.62 9.88 Total retail . . . . . . . . 176,048 149,213 26,835 (4,005) 30,840 481 454 9.41 7.54 Construction . . . . . . . . . 11,400 8,633 2,767 2,243 524 3,389 3,160 7.83 7.30 Commercial mortgages . . . . . 66,917 58,120 8,797 4,432 4,365 3,654 3,871 7.82 7.86 Residential mortgages . . . . . 72,026 76,691 (4,665) (376) (4,289) ------- ------- -------- -------- ------- 7,524 7,485 7.93 7.60 Total real estate . . . . . 150,343 143,444 6,899 6,170 729 176 137 7.68 8.78 Lease financing . . . . . . . . 3,415 3,039 376 (413) 789 85 74 6.66 4.41 Foreign . . . . . . . . . . . . 1,430 820 610 469 141 ------- ------- -------- -------- ------- 24,553 21,656 8.00 7.74 Total loans . . . . . . . . 495,361 422,248 73,113 15,077 58,036 Investment securities: Held-to-maturity: 2,286 3,946 6.52 6.08 U.S. Government and agency . . 37,574 60,505 (22,931) 4,073 (27,004) 1,017 2,132 7.83 7.27 Mortgage backed securities . . 20,067 39,046 (18,979) 2,801 (21,780) 587 666 12.35 12.64 State and municipal . . . . . 18,262 21,216 (2,954) (471) (2,483) 15 328 3.98 4.66 Other . . . . . . . . . . . . 146 3,860 (3,714) (492) (3,222) ------- ------- -------- -------- ------- Total securities held-to- 3,905 7,072 7.73 6.99 maturity . . . . . . . . . 76,049 124,627 (48,578) 11,985 (60,563) Available-for-sale:** 2,622 -- 5.41 -- U.S. Government and agency . . 35,776 -- 35,776 -- 35,776 924 -- 4.64 -- Mortgage backed securities . . 10,813 -- 10,813 -- 10,813 244 -- 5.33 -- Other . . . . . . . . . . . . 3,284 -- 3,284 -- 3,284 ------- ------- -------- -------- ------- Total securities available 3,790 -- 5.22 -- -for-sale . . . . . . . . 49,873 -- 49,873 -- 49,873 ------- ------- -------- -------- ------- 7,695 7,072 6.49 6.99 Total investment securities. 125,922 124,627 1,295 (9,257) 10,552 11 59 5.20 3.29 Interest-bearing bank balances. . 142 485 (343) 186 (529) Federal funds sold and securities purchased under 115 454 4.66 3.15 resale agreements . . . . . . . 1,347 3,612 (2,265) 1,221 (3,486) 683 764 5.57 3.87 Trading account assets . . . . . 9,587 7,446 2,141 2,996 (855) ------- ------- -------- -------- ------- Total interest-earning $33,057 $30,005 7.59 7.38 assets . . . . . . . . . . 632,359 558,418 73,941 15,904 58,037 ======= ======= INTEREST EXPENSE $ 3,367 $ 3,233 1.64 1.90 Interest-bearing demand . . . . . 13,954 15,478 (1,524) (2,141) 617 6,197 6,013 2.87 2.50 Savings and money market savings. 44,811 37,844 6,967 5,780 1,187 5,247 5,551 4.31 4.22 Savings certificates . . . . . . 57,023 59,063 (2,040) 1,246 (3,286) 1,599 1,637 4.58 5.13 Large denomination certificates . 18,453 21,177 (2,724) (2,253) (471) ------- ------- -------- -------- ------- Total time deposits in 16,410 16,434 3.25 3.22 domestic offices . . . . . 134,241 133,562 679 877 (198) 610 401 4.58 3.04 Time deposits in foreign offices. 7,042 3,076 3,966 1,953 2,013 ------- ------- -------- -------- ------- 17,020 16,835 3.29 3.22 Total time deposits. . . . . 141,283 136,638 4,645 3,138 1,507 Federal funds purchased and securities sold under 4,909 3,934 4.66 3.24 repurchase agreements . . . . . 57,688 32,140 25,548 16,316 9,232 437 538 4.44 3.05 Commercial paper . . . . . . . . 4,882 4,136 746 1,630 (884) 769 960 4.60 3.15 Other short-term borrowed funds . 8,925 7,634 1,291 3,021 (1,730) ------- ------- -------- -------- ------- Total short-term 6,115 5,432 4.64 3.21 borrowed funds . . . . . . 71,495 43,910 27,585 21,523 6,062 3,798 1,776 4.97 4.51 Bank notes . . . . . . . . . . . 47,538 20,180 27,358 2,238 25,120 839 594 6.62 6.95 Other long-term debt . . . . . . 14,013 10,417 3,596 (513) 4,109 ------- ------- -------- -------- ------- 4,637 2,370 5.27 5.12 Total long-term debt . . . . 61,551 30,597 30,954 887 30,067 ------- ------- -------- -------- ------- Total interest-bearing $27,772 $24,637 3.92 3.40 liabilities . . . . . . . 274,329 211,145 63,184 34,460 28,724 ======= ======= ----- ----- -------- -------- ------- 3.67 3.98 Interest rate spread ===== ===== Net yield on interest-earning assets 4.30 4.59 and net interest income . $358,030 $347,273 $10,757 (23,176) 33,933 ===== ===== ======== ======== ======= ____________________________________________________________________________________________________________________________________ * Interest income and yields are presented on a fully taxable equivalent basis using the federal income tax rate and state tax rates, as applicable, reduced by the nondeductible portion of interest expense ** Volume amounts are reported at amortized cost; excludes pretax unrealized losses of $28 million
8 9
____________________________________________________________________________________________________________________________________ TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS - NINE MONTHS* TABLE 5 ___________________________________________________________________________________________________________________________________ Variance Average Volume Average Rate Interest Attributable to ---------------- ------------ ---------------------- ------------------ 1994 1993 1994 1993 1994 1993 Variance Rate Volume ------- ------- ----- ----- ---------- ---------- --------- ------- ------- (Millions) INTEREST INCOME (Thousands) Loans: $ 7,189 $ 6,173 5.72 5.31 Commercial . . . . . . . . . $ 307,795 $ 245,188 $ 62,607 $20,117 $42,490 1,973 1,884 8.68 9.13 Tax-exempt . . . . . . . . . 128,119 128,749 (630) (6,501) 5,871 ------- ------- ---------- ---------- --------- 9,162 8,057 6.36 6.20 Total commercial . . . . . 435,914 373,937 61,977 9,647 52,330 730 677 8.21 8.81 Direct retail . . . . . . . . 44,825 44,635 190 (3,133) 3,323 2,453 2,197 7.75 8.57 Indirect retail . . . . . . . 142,134 140,860 1,274 (14,279) 15,553 3,433 2,478 10.90 11.98 Credit card . . . . . . . . . 279,837 222,063 57,774 (21,542) 79,316 332 328 11.38 11.15 Other revolving credit. . . . 28,259 27,314 945 561 384 ------- ------- ---------- ---------- --------- 6,948 5,680 9.53 10.24 Total retail . . . . . . . 495,055 434,872 60,183 (31,762) 91,945 487 470 8.68 7.37 Construction. . . . . . . . . 31,630 25,918 5,712 4,769 943 3,325 3,144 7.54 7.34 Commercial mortgages. . . . . 187,570 172,585 14,985 4,853 10,132 3,678 3,777 7.75 8.18 Residential mortgages . . . . 213,152 231,178 (18,026) (12,080) (5,946) ------- ------- ---------- ---------- --------- 7,490 7,391 7.72 7.77 Total real estate. . . . . 432,352 429,681 2,671 (3,054) 5,725 169 132 7.86 9.09 Lease financing . . . . . . . 9,948 8,938 1,010 (1,321) 2,331 81 78 5.23 4.44 Foreign . . . . . . . . . . . 3,175 2,583 592 475 117 ------- ------- ---------- ---------- --------- 23,850 21,338 7.72 7.83 Total loans . . . . . . . 1,376,444 1,250,011 126,433 (18,794) 145,227 Investment securities: Held-to-maturity: 2,248 3,352 6.60 6.40 U.S. Government and agency . 110,868 160,408 (49,540) 4,814 (54,354) 1,058 2,312 7.70 7.66 Mortgage backed securities . 60,944 132,369 (71,425) 761 (72,186) 610 698 12.59 12.57 State and municipal . . . . 57,490 65,664 (8,174) 128 (8,302) 12 356 4.75 4.53 Other . . . . . . . . . . . 409 12,053 (11,644) 576 (12,220) ------- ------- ---------- ---------- --------- Total securities held- 3,928 6,718 7.82 7.37 to-maturity . . . . . . 229,711 370,494 (140,783) 21,259 (162,042) Available-for-sale:** 2,542 -- 5.53 -- U.S. Government and agency . 105,062 -- 105,062 -- 105,062 971 -- 4.61 -- Mortgage backed securities . 33,499 -- 33,499 -- 33,499 276 -- 4.66 -- Other . . . . . . . . . . . 9,626 -- 9,626 -- 9,626 ------- ------- ---------- ---------- --------- Total securities available- 3,789 -- 5.23 -- -for-sale . . . . . . . 148,187 -- 148,187 -- 148,187 ------- ------- ---------- ---------- --------- 7,717 6,718 6.55 7.37 Total investment securities 377,898 370,494 7,404 (44,160) 51,564 15 101 4.28 3.70 Interest-bearing bank balances. 487 2,789 (2,302) 381 (2,683) Federal funds sold and securities purchased under 229 355 3.68 3.14 resale agreements . . . . . . 6,300 8,344 (2,044) 1,258 (3,302) 662 725 4.90 3.94 Trading account assets . . . . 24,228 21,351 2,877 4,873 (1,996) ------- ------- ---------- ---------- --------- Total interest-earning $32,473 $29,237 7.35 7.56 assets . . . . . . . . 1,785,357 1,652,989 132,368 (46,531) 178,899 ======= ======= INTEREST EXPENSE $ 3,391 $ 3,186 1.60 1.91 Interest-bearing demand . . . . 40,645 45,457 (4,812) (7,599) 2,787 6,125 5,970 2.55 2.57 Savings and money market savings. 117,023 114,974 2,049 (925) 2,974 5,294 5,652 4.13 4.36 Savings certificates. . . . . . 163,644 184,402 (20,758) (9,419) (11,339) 1,600 1,804 4.35 5.24 Large denomination certificates. 52,017 70,763 (18,746) (11,290) (7,456) ------- ------- ---------- ---------- --------- Total time deposits in 16,410 16,612 3.04 3.34 domestic offices . . . . 373,329 415,596 (42,267) (37,275) (4,992) 484 403 3.99 3.10 Time deposits in foreign offices. 14,420 9,333 5,087 2,993 2,094 ------- ------- ---------- ---------- --------- 16,894 17,015 3.07 3.34 Total time deposits . . . 387,749 424,929 (37,180) (34,181) (2,999) Federal funds purchased and securities sold under 4,907 3,723 4.10 3.25 repurchase agreements . . . . 150,366 90,563 59,803 26,867 32,936 518 449 3.65 3.01 Commercial paper . . . . . . . 14,155 10,109 4,046 2,347 1,699 675 956 3.95 3.26 Other short-term borrowed funds. 19,936 23,298 (3,362) 4,357 (7,719) ------- ------- ---------- ---------- --------- Total short-term 6,100 5,128 4.04 3.23 borrowed funds . . . . . 184,457 123,970 60,487 34,457 26,030 3,377 1,319 4.76 4.55 Bank notes . . . . . . . . . . 120,100 44,872 75,228 2,111 73,117 823 519 6.58 7.06 Other long-term debt . . . . . 40,518 27,409 13,109 (1,954) 15,063 ------- ------- ---------- ---------- --------- 4,200 1,838 5.11 5.26 Total long-term debt . . . 160,618 72,281 88,337 (2,048) 90,385 ------- ------- ---------- ---------- --------- Total interest-bearing $27,194 $23,981 3.60 3.46 liabilities . . . . . . 732,824 621,180 $111,644 25,842 85,802 ======= ======= ----- ----- ---------- ---------- -------- 3.75 4.10 Interest rate spread ===== ===== Net yield on interest-earning 4.33 4.72 assets and interest income. . $1,052,533 $1,031,809 $ 20,724 (88,104) 108,828 ===== ===== ========== ========== ======== __________________________________________________________________________________________________________________________________ * Interest income and yields are presented on a fully taxable equivalent basis using the federal income tax rate and state tax rates, as applicable, reduced by the nondeductible portion of interest expense ** Volume amounts are reported at amortized cost; excludes pretax unrealized losses of $2 million
9 10 Investment securities were higher by $623 million or 8.8 percent for the third quarter and $999 million or 14.9 percent year to date but decreased $72 million or under 1 percent from the second quarter as good loan growth continued. At September 30, 1994, securities available-for-sale totaled $3.689 billion and securities held-to-maturity were $3.973 billion as detailed in the following. $ in thousands Securities available-for-sale at market value: U.S. Government and agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,557,183 Mortgage backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891,105 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,696 ---------- Total securities available-for-sale. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,688,984 Securities held-to-maturity: U.S. Government and agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,303,835 Mortgage backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,074,633 State and municipal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579,527 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,872 ---------- Total securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,972,867 ---------- Total investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,661,851 ==========
The corporation prospectively adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (FASB 115), effective January 1, 1994. FASB 115 classifies debt securities which management can demonstrate positive intent and ability to hold to maturity as securities held-to-maturity and reported at amortized cost. Debt and equity securities acquired principally to sell in the near term continue to be classified as trading securities and reported at fair market value under FASB 115. Unrealized gains and losses resulting from adjustments to market value are included in earnings under trading account profits. Debt and equity securities not classified as either held-to-maturity or trading are classified as available-for-sale and reported at fair market value with unrealized gains and losses included, net of tax, in shareholders' equity. At September 30, 1994, the market value of securities held-to-maturity was $3.981 billion, representing an $8 million appreciation over book value. Unrealized losses on securities available-for-sale were $35.225 million, pretax, and $21.510 million, net of tax. For the third quarter, unrealized losses on average securities available-for-sale were $27.589 million, pretax, and $16.885 million, net of tax. For the first nine months of 1994, there was an unrealized loss of $1.897 million on a pretax basis and $1.151 million, net of tax, on average securities available-for-sale. Interest expense rose $63.184 million or 29.9 percent for the three months and $111.644 million or 18 percent for the first nine months of 1994, reflecting both higher levels of interest-bearing liabilities and an increased cost of funds, particularly in the third quarter. The average rate paid on interest-bearing liabilities was up 52 basis points for the third period and 14 basis points for the first nine months. Average interest-bearing liabilities were higher by $3.135 billion or 12.7 percent for the third quarter, $3.213 billion or 13.4 percent year to date and $489 million or 1.8 percent from the second period. Increases reflected expanded funding for interest-earning assets growth, particularly loans. Incremental funding has come primarily from long-term debt as well as short-term borrowings due to modest and uneven growth in interest-bearing time deposits. Average interest-bearing time deposits were modestly higher by $185 million or 1.1 percent for the third period and $56 million or less than 1 percent from the second quarter but were lower by $121 million or under 1 percent year to date. Interest-bearing demand, savings and money market savings, and foreign time deposits were up for the quarter and year-to-date periods, while savings certificates and large denomination certificates declined in both periods. 10 11 Short-term borrowings expanded $683 million or 12.6 percent and $972 million or 19 percent for the three and nine months, respectively, and were up $77 million or 1.3 percent from the second quarter. Higher levels of federal funds purchased and repurchase agreements accounted for all the increase in the third period versus a year earlier and for the majority of the growth year to date. Commercial paper borrowings also were up for the first nine months but decreased for the third quarter. Other short-term borrowings, largely consisting of term federal funds, declined in both periods. Long-term debt increased $2.267 billion or 95.6 percent from the third quarter, $2.362 billion or 128.5 percent year to date but rose a more moderate $356 million or 8.3 percent from the second quarter. Growth remained driven primarily by the bank note program begun in the second quarter of 1992. At September 30, 1994, bank notes outstanding totaled $3.890 billion with an average cost of 5.04 percent and an average maturity of 1.9 years. Comparable amounts a year earlier were $2.063 billion, 4.48 percent and 1.8 years, respectively. At June 30, 1994, bank notes outstanding were $3.661 billion. For the third quarter, gross deposits averaged $22.384 billion, an increase of $139 million or less than 1 percent from the same period a year earlier, and collected deposits, net of float, averaged $20.797 billion, up $110 million or under 1 percent. For the first nine months, gross deposits averaged $22.249 billion, lower by $57 million or less than 1 percent, while collected deposits averaged $20.674 billion, lower by $27 million or less than 1 percent. ASSET AND LIABILITY MANAGEMENT, INTEREST RATE SENSITIVITY AND LIQUIDITY MANAGEMENT Maintaining high quality and consistent growth of net interest income with acceptable levels of risk to changes in interest rates is the goal of asset and liability management. The corporation seeks to meet this goal by influencing the maturity and repricing characteristics of the various lending and deposit taking lines of business, by managing discretionary balance sheet asset and liability portfolios and by utilizing off-balance sheet financial instruments. Interest rate risk management is carried out by Funds Management which operates under policies established by the Finance Committee of the corporation's board of directors and the guidance of the Management Finance Committee. The corporation uses a number of tools to measure interest rate risk, including monitoring the difference or gap between rate sensitive assets and liabilities over various time periods, monitoring the change in present value of the asset and liability portfolios under various rate scenarios and income simulation modeling. Management believes that rate risk is best measured by simulation modeling which can incorporate changes in asset and liability volumes, changes in interest rates as well as the associated timing of the rate of change in interest rates of various categories of assets and liabilities. The model captures interest-earning assets, interest-bearing liabilities and off-balance sheet financial instruments and projects net interest income on a continuous rolling 12-month basis. The corporation monitors exposure to a gradual change in rates of 200 basis points up or down over the rolling 12-month period and an interest rate shock of an instantaneous change in rates of 200 basis points up or down over the same period. From time to time, the model horizon is expanded to a 24-month period. The results of these simulations are monitored for compliance with policy and analyzed with the objective of identifying potential adverse performance situations. If conditions indicate an adverse situation is likely, management's immediate goal is to construct a strategy to alter the balance sheet or enter into off-balance sheet financial instruments to neutralize, as much as possible, the adverse impact. The corporation uses both on-balance sheet instruments such as investment securities and purchased funds and off-balance sheet derivative instruments to manage interest rate risk and net interest income. Off-balance sheet instruments used for asset and liability management purposes include interest rate swaps, futures and options with indices that directly correlate to on-balance sheet instruments. These financial instruments, principally interest rate swaps, have been used by the corporation over a number of years and management believes the use of such instruments enhances the effectiveness of asset and liability management on a sound basis. 11 12 Off-balance sheet asset and liability derivative transactions, on a stand-alone basis, resulted in additional interest expense of $1.981 million for the third quarter of 1994 and $7.289 million year to date. However, this effect was more than offset by net interest income from related on-balance sheet instruments. The combination of on-balance sheet instruments and off-balance sheet contracts is intended to provide growth of net interest income, stability to the corporation's interest rate sensitivity and enhanced liquidity. At September 30, 1994, the corporation had $1.375 billion notional amount of derivatives outstanding for asset and liability management purposes. Interest rate swaps were $960 million or 70 percent of the total notional amount. Off-balance sheet derivative financial instruments do not expose the corporation to credit risk equal to the notional amount, but instead credit risk is equal to the fair value gain of the instrument if a counterparty fails to perform. The credit risk is normally a small percentage of the notional amount and fluctuates as interest rates move up and down. The corporation mitigates this risk by subjecting the transactions to the same rigorous approval and monitoring process as is used for on-balance sheet credit transactions, by dealing in the national market with highly rated counterparties, by executing all transactions under International Swaps and Derivatives Association Master Agreements and by using collateral instruments to reduce exposure. Collateral is delivered by either party when the fair value of a particular transaction or group of transactions with the same counterparty on a net basis exceeds an acceptable threshold of exposure. The threshold level is determined based on the strength of the individual counterparty. The fair value of all asset and liability derivative positions for which the corporation was exposed to counterparties totaled $13.199 million as of September 30, 1994. The fair value of all asset and liability derivative positions for which counterparties were exposed to the corporation amounted to $48.377 million on the same date. Details of the net fair value loss of $35.178 million and additional asset and liability derivative information are included in the accompanying tables.
Estimated Fair Value of Asset and Liability Management Derivatives by Purpose ----------------------------------------------------------------------------- September 30, 1994 June 30, 1994 September 30, 1993 ------------------- ---------------- ------------------ Notional Fair Notional Fair Notional Fair $ in millions Amount Value* Amount Value* Amount Value* -------- ------ -------- ------ -------- ------ Convert floating rate liabilities to fixed: Swaps-pay fixed/receive floating . . . . . . . . . $237 $(2) $279 $(3) $ 530 ($29) Forward starting swaps-pay fixed/receive floating 75 1 Caps purchased-pay fixed/receive floating . . . . 15 - 15 - 15 - Convert fixed rate liabilities to floating: Swaps-receive fixed/pay floating . . . . . . . . . 100 (16) 100 (13) - - Convert floating rate assets to fixed: Swaps-receive fixed/pay floating . . . . . . . . . 373 (15) 385 (15) 298 1 Index amortizing swaps-receive fixed/pay floating 175 (3) 150 (1) Hedge spread between prime and fed funds: Interest rate caps . . . . . . . . . . . . . . . . 400 - 400 - 200 1 ------ ---- ------ ----- ------ ----- Total derivatives . . . . . . . . . . . . . . . $1,375 ($35) $1,329 ($32) $1,043 ($27) ====== ==== ====== ===== ====== =====
* Fair value consists of unrealized gains and losses, accrued interest receivable or payable, and unamortized premiums paid or received. 12 13 Maturity Schedule of Asset and Liability Management Derivatives --------------------------------------------------------------- September 30, 1994
Within Over Average One Two Three Four Five Five Life Year Years Years Years Years Years Total (Years) ------ ----- ----- ----- ----- ----- ----- ------- $ in millions Interest rate swaps: Pay fixed/receive floating: Notional amount . . . . . . . . . . $123 $ 43 $ 24 $13 $14 $ 20 $237 1.78 Weighted average rates received . . 5.06% 5.34% 4.95% 5.36% 5.33% 5.03% 5.13% Weighted average rates paid . . . . 8.16 8.84 7.56 6.36 6.54 6.79 7.91 Receive fixed/pay floating: Notional amount . . . . . . . . . . 12 359 - 2 - 100 473 4.43 Weighted average rates received . . 9.12% 4.61% - 10.90% - 6.31% 5.11% Weighted average rates paid . . . . 7.63 5.17 - 7.69 - 5.31 5.27 Index amoritzing swaps:* Receive fixed/pay floating: Notional amount . . . . . . . . . . 2 15 116 10 32 - 175 2.91 Weighted average rates received . . 5.65% 6.62% 6.17% 7.16% 7.17% - 6.44% Weighted average rates paid . . . . 5.25 4.95 5.08 4.92 4.93 - 5.04 Total interest rate swaps: Notional amount . . . . . . . . . . . $137 $417 $140 $25 $46 $120 $885 3.42 Weighted average rates received . . . 5.41% 4.75% 5.97% 6.46% 6.66% 6.10% 5.38% Weighted average rates paid . . . . . 8.06 5.54 5.52 5.86 5.41 5.56 5.93 Forward starting interest rate swaps: Notional amount . . . . . . . . . . . - - - - - 75 75 9.51 Weighted average rates received . . . - - - - - - - Weighted average rates paid . . . . . - - - - - 6.03% 6.03% Interest rate caps (notional amount)**. - 415 - - - - 415 1.50 Total derivatives (notional amount). $137 $832 $140 $25 $46 $195 $1,375 3.17
* Maturity is based upon expected average lives rather than contractual lives. ** Average rates are not meaningful. Asset and liability derivative transactions are accounted for following hedge accounting rules. Accordingly, gains and losses related to the fair value of derivative contracts used for asset and liability management purposes are not immediately recognized in earnings. If the hedged or altered balance sheet amounts were marked to market, the resulting unrealized balance sheet gains or losses could be expected to compensate for unrealized derivatives gains and losses. Management regularly reviews the liquidity position under normal business conditions and under significant market disruption or stress conditions. Results of these reviews are presented to the Management Finance Committee and Board Finance Committee quarterly. The objective of liquidity management is to ensure that the corporation is positioned to meet all immediate and future demands for cash. Liquidity management relies upon liquidity analysis, knowledge of historical trends over past credit and business cycles and forecasts of future conditions to achieve its objectives. The two broad-based sources of liquidity which exist for the corporation are its high quality marketable assets and liabilities which are readily accepted in the marketplace. Asset liquidity primarily is provided by securities which by their maturity structure or marketability can produce cash flows that result in enhanced liquidity. The corporation generates additional cash through the liability side of the balance sheet from the growth of deposits and the issuance of bank notes and other forms of debt securities. Wachovia's ability to attract a variety of funds rests on the corporation's strength of capital, reputation, credit ratings and diverse statewide banking networks. At September 30, 1994, Wachovia's senior debt was rated (P)Aa3 by Moody's and (P)AA by Standard & Poor's. The corporation's subordinated debt was rated A1 and AA- by Moody's and Standard & Poor's, respectively. Commercial paper was rated P-1 by Moody's and A-1+ by Standard & Poor's. 14 Nonperforming Assets The corporation's nonperforming assets at September 30, 1994 totaled $109.511 million, representing .44 percent of loans and foreclosed property. This was down $78.567 million or 41.8 percent from a year earlier and lower by $15.018 million or 12.1 percent from June 30, 1994, continuing the generally improving trend that began in the first quarter of 1992. The decreases in nonperforming assets were due to improvement in the credit quality of borrowers as well as sales of foreclosed property. The corporation historically has shown relatively low levels of problem assets as a result of its strong underwriting standards, consistent credit reviews and aggressive charge-off policy. The majority of nonperforming assets are real estate related. At September 30, 1994, real estate non-performing assets were $73.033 million or .95 percent of real estate loans and foreclosed real estate. The total decreased $78.359 million or 51.8 percent from $151.392 million or 2.05 percent a year earlier and was down $12.411 million or 14.5 percent from $85.444 million or 1.14 percent at June 30, 1994. Included in real estate nonperforming assets was $55.749 million of real estate nonperforming loans at September 30, 1994, $93.618 million a year earlier and $64.875 million at second quarter-close. Commercial real estate nonperforming assets were $53.418 million or 1.36 percent of related loans and foreclosed real estate versus $122.209 million or 3.38 percent at the end of the 1993 third quarter and $63.503 million or 1.66 percent at June 30, 1994. Commercial real estate nonperforming loans included in the above totals were $44.780 million at September 30, 1994, $75.175 million a year earlier and $51.295 million at second quarter-end.
____________________________________________________________________________________________________________________________________ NONPERFORMING ASSETS AND CONTRACTUALLY PAST DUE LOANS TABLE 6 (thousands) ___________________________________________________________________________________________________________________________________ Sept. 30 June 30 March 31 Dec. 31 Sept. 30 1994 1994 1994 1993 1993 --------- --------- --------- --------- --------- NONPERFORMING ASSETS Cash-basis assets -- domestic borrowers . . . . . . . $ 89,184 $100,696 $100,126 $108,882 $126,474 Restructured loans -- domestic . . . . . . . . . . . --* -- -- 80 84 ------- ------- ------- ------- ------- Total nonperforming loans . . . . . . . . . . . 89,184 100,696 100,126 108,962 126,558 Foreclosed property: Foreclosed real estate . . . . . . . . . . . . . . 22,309 26,347 30,136 51,701 65,038 Less valuation allowance . . . . . . . . . . . . . 5,025 5,778 6,977 9,168 7,264 Other foreclosed assets . . . . . . . . . . . . . . 3,043 3,264 2,982 3,406 3,746 ------- ------- ------- ------- ------- Total foreclosed property . . . . . . . . . . . 20,327 23,833 26,141 45,939 61,520 ------- ------- ------- ------- ------- Total nonperforming assets . . . . . . . . . . . $109,511** $124,529 $126,267 $154,901 $188,078 ======= ======= ======= ======= ======= Nonperforming loans to period-end loans . . . . . . . .36% .41% .42% .47% .57% Nonperforming assets to period-end loans and foreclosed property . . . . . . . . . . . . . . . . .44 .51 .53 .67 .85 Period-end allowance for loan losses times nonperforming loans . . . . . . . . . . . . . . . . 4.55x 4.03x 4.05x 3.72x 3.19x Period-end allowance for loan losses times nonperforming assets . . . . . . . . . . . . . . . 3.71 3.26 3.21 2.61 2.15 CONTRACTUALLY PAST DUE LOANS (accruing loans past due 90 days or more) Domestic borrowers . . . . . . . . . . . . . . . . . $ 43,708 $ 50,321 $ 42,744 $ 44,897 $ 47,532 ======= ======= ======= ======= =======
*Excludes $14,382 of loans which have been renegotiated at market rates and have demonstrated performance at the renegotiated terms for at least one year **Net of cumulative corporate and commercial real estate charge-offs and foreclosed real estate write-downs totaling $36,745; includes $17,946 of nonperforming assets on which interest and principal are paid current 14 15 Provision and Allowance for Loan Losses The provision for loan losses was $18.123 million for the third quarter and $52.224 million for the first nine months of 1994, down $5.360 million or 22.8 percent and $22.415 million or 30 percent, respectively, from the same periods in 1993. The provision reflects management's assessment of the adequacy of the allowance for loan losses to absorb potential write-offs in the loan portfolio. This assessment considers several factors, including growth and composition of the portfolio, historical credit loss experience, current and anticipated economic conditions, and changes in borrowers' financial conditions. For the three months ended September 30, 1994, net loan losses totaled $18.060 million or .29 percent of average loans on an annualized basis. This compares with $18.872 million or .35 percent in the year-earlier period. Year to date, net loan losses were $51.017 million or .29 percent of average loans versus $50.105 million or .31 percent in the first nine months of 1993. Real estate loans had net recoveries of $524 thousand for the third quarter and $4.471 million year to date versus net charge-offs of $2.181 million and $4.665 million, respectively, in 1993. Credit card net loan losses for the quarter totaled $14.473 million or 1.57 percent annualized of average credit card loans and $41.678 million or 1.62 percent for the first nine months of 1994. This compared with $14.581 million or 2.16 percent and $39.908 million or 2.15 percent in the same year-earlier periods. The allowance for loan losses at September 30, 1994 was $406.005 million, representing 1.63 percent of period-end loans and 455 percent coverage of nonperforming loans. Comparable amounts a year earlier were $404.091 million, 1.83 percent and 319 percent coverage, respectively. 15 16
Allowance for Loan Losses (thousands) Table 7 1994 1993 --------------------------- ---------------- Nine Months Ended Third Second First Fourth Third September 30 Quarter Quarter Quarter Quarter Quarter 1994 1993 ------- ------- ------- ------- ------- ------ ------ SUMMARY OF TRANSACTIONS Balance at beginning of period . . . . . . $405,942 $405,474 $404,798 $404,091 $399,480 $404,798 $379,557 Provision for loan losses . . . . . . . . . 18,123 16,342 17,759 18,013 23,483 52,224 74,639 Deduct net loan losses: Loans charged off: Commercial . . . . . . . . . . . . . . 3,063 2,947 5,080 1,418 1,875 11,090 5,374 Credit card . . . . . . . . . . . . . 17,310 16,808 15,928 15,392 17,147 50,046 47,599 Other revolving credit . . . . . . . . 908 902 905 1,375 758 2,715 2,547 Other retail . . . . . . . . . . . . . 2,504 2,605 3,084 2,754 1,853 8,193 5,677 Real estate . . . . . . . . . . . . . 749 1,352 819 4,899 3,706 2,920 9,615 Lease financing . . . . . . . . . . . 28 80 61 81 110 169 377 Foreign . . . . . . . . . . . . . . . - - - - - - - ------- ------- ------- ------- ------- -------- ------- Total . . . . . . . . . . . . . . . 24,562 24,694 25,877 25,919 25,449 75,133 71,189 Recoveries: Commercial . . . . . . . . . . . . . . 915 1,423 1,957 971 1,354 4,295 4,601 Credit card . . . . . . . . . . . . . 2,837 2,760 2,771 2,625 2,566 8,368 7,691 Other revolving credit . . . . . . . . 285 303 247 270 228 835 759 Other retail . . . . . . . . . . . . . 1,159 749 1,121 942 842 3,029 2,849 Real estate . . . . . . . . . . . . . 1,273 3,506 2,612 3,743 1,525 7,391 4,950 Lease financing . . . . . . . . . . . 25 70 78 53 54 173 211 Foreign . . . . . . . . . . . . . . . 8 9 8 9 8 25 23 ------- ------- ------- ------- ------- -------- ------- Total . . . . . . . . . . . . . . . 6,502 8,820 8,794 8,613 6,577 24,116 21,084 ------- ------- ------- ------- ------- -------- ------- Net loan losses . . . . . . . . . . . . 18,060 15,874 17,083 17,306 18,872 51,017 50,105 ------- ------- ------- ------- ------- -------- ------- Balance at end of period . . . . . . . . . $406,005 $405,942 $405,474 $404,798 $404,091 $406,005 $404,091 ======= ======= ======= ======= ======= ======= ======= NET LOAN LOSSES (RECOVERIES) BY CATEGORY Commercial . . . . . . . . . . . . . . . . $ 2,148 $ 1,524 $ 3,123 $ 447 $ 521 $ 6,795 $ 773 Credit card . . . . . . . . . . . . . . . . 14,473 14,048 13,157 12,767 14,581 41,678 39,908 Other revolving credit . . . . . . . . . . 623 599 658 1,105 530 1,880 1,788 Other retail . . . . . . . . . . . . . . . 1,345 1,856 1,963 1,812 1,011 5,164 2,828 Real estate . . . . . . . . . . . . . . . . (524) (2,154) (1,793) 1,156 2,181 (4,471) 4,665 Lease financing . . . . . . . . . . . . . . 3 10 (17) 28 56 (4) 166 Foreign . . . . . . . . . . . . . . . . . . (8) (9) (8) (9) (8) (25) (23) ------- ------- ------- ------- ------- -------- ------- Total . . . . . . . . . . . . . . . $ 18,060 $ 15,874 $ 17,083 $ 17,306 $ 18,872 $ 51,017 $ 50,105 ======= ======= ======= ======= ======= ======= ======= ANNUALIZED NET LOAN LOSSES (RECOVERIES) TO AVERAGE LOANS BY CATEGORY Commercial . . . . . . . . . . . . . . . . .09% .07% .14% .02% .03% .10% .01% Credit card . . . . . . . . . . . . . . . . 1.57 1.63 1.67 1.74 2.16 1.62 2.15 Other revolving credit . . . . . . . . . . .74 .72 .80 1.34 .64 .75 .73 Other retail . . . . . . . . . . . . . . . .17 .23 .25 .23 .14 .22 .13 Real estate . . . . . . . . . . . . . . . . (.03) (.12) (.10) .06 .12 (.08) .08 Lease financing . . . . . . . . . . . . . . .01 .02 (.04) .08 .16 (.00) .17 Foreign . . . . . . . . . . . . . . . . . . (.04) (.04) (.04) (.05) (.04) (.04) (.04) Total loans . . . . . . . . . . . . . . . . .29 .26 .30 .31 .35 .29 .31 Period-end allowance to outstanding loans . 1.63% 1.67% 1.71% 1.76% 1.83% 1.63% 1.83%
16 17 Noninterest Income Total other operating revenue increased modestly for both the third quarter and first nine months of 1994, rising $1.780 million or 1.2 percent and $1.971 million or less than 1 percent, respectively. Good growth in trust service fees and credit card income was supplemented by strong gains primarily in other service charges and fees, and in other income. Increases were tempered, however, by lower levels primarily of deposit account service charges, mortgage fee income and trading account profits. Trust service fees were up $2.454 million or 8.3 percent for the third period and $7.137 million or 8 percent for the first nine months. Gains were largely due to growth in Personal Trust, which primarily consists of Personal Financial Services, and to increased revenues associated with the corporation's proprietary Biltmore Funds. Service fees for Corporate Trust largely were unchanged for the quarter but increased year to date. Credit card income rose $2.262 million or 8.7 percent for the quarter and $7.779 million or 10.5 percent year to date. Continued good gains in cardholder interchange income and higher annual fee revenue, reflecting greater card usage, growth in new accounts and high renewals among existing cardholders, primarily accounted for the increases in both periods. Cardholder purchase volume totaled $862.031 million for the third quarter and $2.337 billion year to date. Service charges on deposit accounts were lower by $2.969 million or 5.7 percent and $6.167 million or 4 percent for the three- and nine-month periods, respectively. Commercial account analysis fees decreased in both periods, reflecting, in part, the closing of the corporation's retail lockbox in late 1993 and the impact of rising interest rates which increased the value of corporate deposit balances. Overdraft and NSF charges increased for the third period but remained down year to date. Mortgage fee income declined $1.109 million or 11.4 percent for the third quarter and $4.633 million or 16 percent year to date, primarily reflecting a rising interest rate environment. Higher interest rates depressed residential mortgage volumes, lowering origination fees from year-earlier periods. Loan originations amounted to $296.307 million for the quarter and $1.146 billion year to date compared with $602.618 million and $1.480 billion, respectively, a year earlier. Increased interest rates also resulted in losses on loan sales versus gains in the third period and first nine months of 1993. At September 30, 1994, the mortgage portfolio serviced was $9.372 billion, representing 138,330 loans versus $8.970 billion and 136,431 loans a year earlier. Rising interest rates also weakened the bond market, negatively impacting trading account profits which decreased $1.945 million or 55.2 percent for the quarter and $7.325 million or 66.6 percent year to date. Remaining combined categories of total other operating revenue, excluding income from student loan servicing which was sold as a subsidiary in February 1993, increased $3.087 million or 10.7 percent and $10.715 million or 12.7 percent for the three and nine months, respectively. Bankers' acceptance and letter of credit fees were up $902 thousand or 18.3 percent for the quarter and $2.768 million or 18.4 percent year 17 18 to date. Other income rose $334 thousand or 3.8 percent for the quarter and $4.750 million or 20.6 percent year to date, while other service charges and fees rose $2.323 million or 19 percent and $4.387 million or 11.9 percent, respectively. Included in other service charges and fees are net ATM fees, mutual fund fees, safe deposit fees, brokerage commissions and debit card interchange fees. At September 30, 1994, Wachovia's customer portfolio of interest rate and currency derivatives (excluding foreign exchange forwards and options) had a notional value of $2.549 billion and a fair value of $2.505 million. This compares with $2.407 billion notional and $2.698 million fair value at June 30, 1994. Wachovia manages the credit risk of derivative instruments by applying its standard credit underwriting criteria to assess and periodically review the creditworthiness of each counterparty. Wachovia's present exposure to market risk for its customer portfolio is negligible. Revenues from the customer portfolio represent a small profit margin on intermediated transactions and are recorded in other operating income. Including gains on securities and subsidiary sales, total noninterest income for the third quarter increased $1.511 million or 1 percent but was down $17.011 million or 3.6 percent year to date. Gains on securities sales were $433 thousand for the three months and $1.226 million for the first nine months of 1994 compared with $702 thousand and $12.178 million, respectively, in the same periods of 1993. The first nine months of 1993 also included a pretax gain of $8.030 million on the sale of Wachovia Student Financial Services, Inc.
Noninterest Income (thousands) Table 8 1994 1993 --------------------------- ---------------- Nine Months Ended Third Second First Fourth Third September 30 Quarter Quarter Quarter Quarter Quarter 1994 1993 ------- ------- ------- ------- ------- ------ ------- Service charges on deposit accounts . . . . . $ 48,940 $ 50,646 $ 48,150 $ 48,982 $ 51,909 $147,736 $153,903 Fees for trust services . . . . . . . . . . . 32,151 32,983 31,681 30,352 29,697 96,815 89,678 Credit card income - net of interchange payments . . . . . . . . . . . . . . . . . 28,271 28,120 25,334 27,834 26,009 81,725 73,946 Mortgage fee income . . . . . . . . . . . . . 8,590 7,715 8,033 10,130 9,699 24,338 28,971 Trading account profits - excluding interest . . . . . . . . . . . . . . . . . 1,576 598 1,507 2,097 3,521 3,681 11,006 Insurance premiums and commissions . . . . . 2,425 3,379 2,686 2,167 2,897 8,490 9,680 Bankers' acceptance and letter of credit fees . . . . . . . . . . . . . . . 5,827 5,689 6,287 4,633 4,925 17,803 15,035 Student loan servicing . . . . . . . . . . . - - - - - - 5,535 Other service charges and fees . . . . . . . 14,571 13,156 13,627 11,948 12,248 41,354 36,967 Other income . . . . . . . . . . . . . . . . 9,190 11,013 7,564 14,298 8,856 27,767 23,017 -------- -------- -------- -------- -------- -------- -------- Total other operating revenue . . . . . 151,541 153,299 144,869 152,441 149,761 449,709 447,738 Gain on sale of subsidiary . . . . . . . . . - - - - - - 8,030 Investment securities gains . . . . . . . . . 433 221 572 7,216 702 1,226 12,178 -------- -------- -------- -------- -------- -------- -------- Total . . . . . . . . . . . . . . . . . $151,974 $153,520 $145,441 $159,657 $150,463 $450,935 $467,946 ======== ======== ======== ======== ======== ======== ========
18 19 Noninterest Expense Total noninterest expense decreased $2.253 million or less than 1 percent for the third quarter and $15.608 million or 1.9 percent year to date. Included in the first nine months of 1993 was $15.872 million of nonrecurring charges taken in the first quarter. Excluding these charges, noninterest expense for the first nine months of 1994 increased $264 thousand or less than 1 percent from the year-earlier period. Total personnel expense was down $2.698 million or 1.9 percent for the quarter but modestly higher by $970 thousand or under 1 percent year to date. Salaries expense rose $3.811 million or 3.4 percent and $13.470 million or 4 percent for the three- and nine-month periods, respectively. Primary factors for the increases were higher base salaries and increased relocation costs and temporary help. Benefits expense declined $6.509 million or 22.1 percent for the quarter and $12.500 million or 14.3 percent for the first nine months, in part, reflecting lower than anticipated costs for retiree medical benefits. Combined net occupancy and equipment expense rose $3.009 million or 6.9 percent for the three months ended September 30 and $5.515 million or 4.1 percent for the nine months. Equipment expense was up $1.933 million or 7.8 percent for the quarter and $4.348 million or 5.8 percent year to date, accounting for the majority of the increases and primarily driven by higher depreciation, equipment maintenance and installation, and telephone expenses. Remaining combined categories of noninterest expense declined $2.564 million or 2.9 percent for the third period and $22.093 million or 8 percent for the first nine months. Foreclosed property expense had net gains of $452 thousand for the quarter and $4.297 million for the first nine months versus net expenses of $1.737 million and $5.024 million, respectively, in 1993.
Noninterest Expense (thousands) Table 9 1994 1993 --------------------------- ---------------- Nine Months Ended Third Second First Fourth Third September 30 Quarter Quarter Quarter Quarter Quarter 1994 1993 ------- ------- ------- ------- ------- ------ ------- Salaries . . . . . . . . . . . . . . . . . . $116,793 $114,882 $115,211 $122,205 $112,982 $346,886 $333,416 Employee benefits . . . . . . . . . . . . . . 22,902 26,350 25,803 25,504 29,411 75,055 87,555 -------- -------- -------- -------- -------- -------- -------- Total personnel expense . . . . . . . . 139,695 141,232 141,014 147,709 142,393 421,941 420,971 Net occupancy expense . . . . . . . . . . . . 20,026 20,196 19,428 23,587 18,950 59,650 58,483 Equipment expense . . . . . . . . . . . . . . 26,789 26,010 26,512 27,283 24,856 79,311 74,963 Postage and delivery . . . . . . . . . . . . 8,645 8,816 9,052 9,315 8,921 26,513 28,845 Outside data processing, programming and software . . . . . . . . . 7,834 8,119 8,485 12,494 9,194 24,438 26,119 Stationery and supplies . . . . . . . . . . . 6,578 5,836 5,962 7,018 6,353 18,376 18,326 Advertising and sales promotion . . . . . . . 8,019 9,316 9,783 11,435 7,681 27,118 26,706 Professional services . . . . . . . . . . . . 4,617 5,385 3,952 6,381 4,120 13,954 10,763 Travel and business promotion . . . . . . . . 3,757 4,343 3,504 4,706 3,668 11,604 10,857 FDIC insurance and regulatory examinations . . . . . . . . . . . . . . . 13,294 13,589 13,380 13,122 13,274 40,263 40,541 Check clearing and other bank services . . . . . . . . . . . . . . . . . 2,475 1,920 2,295 2,348 2,563 6,690 7,811 Amortization of intangible assets . . . . . . 4,524 4,602 5,137 6,844 7,502 14,263 21,157 Foreclosed property expense . . . . . . . . . (452) (404) (3,441) 2,630 1,737 (4,297) 5,024 Other expense . . . . . . . . . . . . . . . . 25,492 25,585 24,987 24,868 22,334 76,064 80,930 -------- -------- -------- -------- -------- -------- -------- Total . . . . . . . . . . . . . . . . . $271,293 $274,545 $270,050 $299,740 $273,546 $815,888 $831,496 ======== ======== ======== ======== ======== ======== ======== Overhead ratio . . . . . . . . . . . . . . . 53.2% 54.3% 55.4% 59.5% 55.0% 54.3% 56.2%
19 20 Income Taxes Applicable income taxes were higher by $7.874 million or 15.8 percent for the quarter and $13.804 million or 9.2 percent year to date. Income taxes computed at the statutory rate are reduced primarily by the interest earned on state and municipal debt securities and industrial revenue obligations. Also, within certain limitations, one-half of the interest income on qualifying employee stock ownership plan loans is exempt from federal taxes. The interest earned on state and municipal debt instruments is exempt from federal taxes and, except for out-of-state issues, from North Carolina and Georgia taxes as well, and results in substantial interest savings for local governments and their constituents.
____________________________________________________________________________________________________________________________________ INCOME TAXES (thousands) TABLE 10 ____________________________________________________________________________________________________________________________________ Three Months Ended Nine Months Ended September 30 September 30 1994 1993 1994 1993 -------- -------- --------- -------- Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . $195,679 $174,220 $561,089 $519,451 ======== ======== ======== ======== Federal income taxes at statutory rate* . . . . . . . . . . . . . . . . . . $ 68,488 $ 64,429 $196,381 $181,808 State and local income taxes - net of federal benefit . . . . . . . . . . . 1,235 1,386 3,426 5,497 Effect of tax-exempt securities interest and other income . . . . . . . . . (12,707) (14,088) (37,693) (40,060) Tax cost to carry tax-exempt assets . . . . . . . . . . . . . . . . . . . . 592 568 1,606 1,618 Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 (2,482) 437 1,490 -------- -------- -------- -------- Total tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,687 $ 49,813 $164,157 $150,353 ======== ======== ======== ======== Currently payable: Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 52,835 $ 51,822 $154,905 $161,991 Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 114 106 268 State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,773 1,939 6,549 9,755 -------- -------- -------- -------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,654 53,875 161,560 172,014 Deferred: Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,907 (4,350) 3,876 (20,362) State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 288 (1,279) (1,299) -------- -------- -------- -------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,033 (4,062) 2,597 (21,661) -------- -------- -------- -------- Total tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,687 $ 49,813 $164,157 $150,353 ======== ======== ======== ======== * An increase in the federal income tax statutory rate from 34% to 35% was enacted during the third quarter of 1993, retroactive to January 1, 1993. The federal income tax amount for the three months ended September 30, 1993 of $64,429 represents the 35% rate and a $3,452 cumulative adjustment related to the retroactive increase in the federal income tax statutory rate. The amounts for 1994 and the nine months ended September 30, 1993 represent a federal income tax statutory rate of 35%. ____________________________________________________________________________________________________________________________________
FINANCIAL CONDITION AND CAPITAL RATIOS Total assets at September 30, 1994 were $38.134 billion, including $33.580 billion of interest-earning assets and $24.968 billion of loans. Assets at third quarter-close 1993 totaled $35.320 billion, with $31.499 billion of interest-earning assets and $22.066 billion of loans. At June 30, 1994, assets were $37.069 billion, including $32.964 billion of interest-earning assets and $24.300 billion of loans. Deposits constitute the primary source of the corporation's funding. At September 30, 1994, deposits were $22.256 billion, including time deposits of $16.984 billion, representing 76.3 percent of the total. Comparable amounts a year earlier were $22.187 billion and $16.864 billion or 76 percent, respectively, and at June 30, 1994 they were $22.218 billion and $16.945 billion or 76.3 percent, respectively. Shareholders' equity at September 30, 1994 was $3.215 billion, up $240 million or 8.1 percent from $2.975 billion a year earlier and higher by $66 million or 2.1 percent from the end of the second quarter. The total at September 30, 1994 included $21.510 million, net of tax, of unrealized losses on securities available-for-sale marked to fair market value under FASB 115. Wachovia's board of directors authorized at their third quarter meeting on July 22, 1994 the repurchase of up to 5 million shares of common stock, replacing an earlier authorization for the same number of shares. Repurchased shares will be used for various corporate purposes, including the issuance of shares for the 20 21 corporation's employee stock plans and dividend reinvestment plan. During the third quarter of 1994, the corporation repurchased 591,000 shares at an average price of $32.60 per share for a total cost of $19.268 million. At September 30, 1994, a total of 4,519,500 shares remained available for possible repurchase. Intangible assets at third quarter-close 1994 totaled $82.546 million, consisting of $37.286 million in mortgage servicing rights, $31.334 million in goodwill, $9.092 million in deposit base intangibles and $4.834 million in other intangible assets, primarily purchased credit card intangibles. This compares with $92.443 million of intangible assets a year earlier, including $41.728 million in mortgage servicing rights, $32.824 million in goodwill, $11.309 million in deposit base intangibles and $6.582 million in other intangibles. Intangible assets at June 30, 1994 totaled $85.601 million. Regulatory agencies divide capital into Tier I (consisting of shareholders' equity less ineligible intangible assets) and Tier II (consisting of the allowable portion of the reserve for loan losses and certain long-term debt) and measure capital adequacy by applying both capital levels to a banking company's risk-adjusted assets and off-balance sheet items. Regulatory requirements presently specify that Tier I capital should exclude the market appreciation or depreciation of securities available-for-sale arising from valuation adjustments under FASB 115. In addition to these capital ratios, regulatory agencies have established a Tier I leverage ratio which measures Tier I capital to average assets less ineligible intangible assets. Regulatory guidelines require a minimum total capital to risk-adjusted assets ratio of 8 percent with one-half consisting of tangible common shareholders' equity and a minimum Tier I leverage ratio of 3 percent. Banks which meet or exceed a Tier I ratio of 6 percent, a total capital ratio of 10 percent and a Tier I leverage ratio of 5 percent are considered well capitalized by regulatory standards. At September 30, 1994, Wachovia's Tier I to risk-adjusted assets ratio was 9.40 percent and including Tier II was 13.03 percent. The corporation's Tier I leverage ratio was 8.51 percent.
CAPITAL COMPONENTS AND RATIOS (thousands) Table 11 1994 1993 --------------------------------------- ------------------------ Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter ----------- ----------- ----------- ----------- ----------- Tier I capital: Common shareholders' equity . . . . . . . . . . . . $ 3,214,881 $ 3,149,144 $ 3,093,593 $ 3,017,947 $ 2,974,699 Less ineligible intangible assets . . . . . . . . . 31,334 32,349 32,095 32,451 36,039 Unrealized (gains) losses on securities available-for-sale, net of tax . . . . . . . . . 21,510 15,140 (3,825) - - ---------- ---------- ---------- ---------- ---------- Total Tier I capital . . . . . . . . . . . . . . 3,205,057 3,131,935 3,057,673 2,985,496 2,938,660 Tier II capital: Allowable allowance for loan losses . . . . . . . . 406,005 405,942 396,449 384,032 370,017 Allowable long-term debt . . . . . . . . . . . . . 832,881 833,253 833,125 583,738 587,158 ---------- ---------- ---------- ---------- ---------- Tier II capital additions . . . . . . . . . . . . 1,238,886 1,239,195 1,229,574 967,770 957,175 ---------- ---------- ---------- ---------- ---------- Total capital . . . . . . . . . . . . . . . . . $ 4,443,943 $ 4,371,130 $ 4,287,247 $ 3,953,266 $ 3,895,835 ========== ========== ========== ========== ========== Risk-adjusted assets . . . . . . . . . . . . . . . . $34,100,248 $32,746,004 $31,706,868 $30,701,782 $29,567,305 Quarterly average assets . . . . . . . . . . . . . . $37,676,339 $37,174,827 $35,778,460 $35,419,829 $33,869,607 Risk-based capital ratios: Tier I capital . . . . . . . . . . . . . . . . . . 9.40% 9.56% 9.64% 9.72% 9.94% Total capital . . . . . . . . . . . . . . . . . . . 13.03 13.35 13.52 12.88 13.18 Tier I leverage ratio* . . . . . . . . . . . . . . . 8.51% 8.43% 8.56% 8.44% 8.69% Shareholders' equity to total assets . . . . . . . . 8.43% 8.50% 8.51% 8.26% 8.42%
* Ratio excludes the average unrealized gains (losses) on securities available-for-sale, net of tax, of ($16,885) for the third quarter of 1994, ($8,535) for the second quarter of 1994 and $22,399 for the first quarter of 1994 21 22 WACHOVIA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CONDITION
September 30 December 31 September 30 $ in thousands 1994 1993 1993 ------------ ------------ ------------ ASSETS Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . $ 2,508,241 $ 2,529,528 $ 2,169,531 Interest-bearing bank balances . . . . . . . . . . . . . . . . . . . 5,758 12,478 11,213 Federal funds sold and securities purchased under resale agreements . . . . . . . . . . . . . . . . 199,386 691,106 586,569 Trading account assets . . . . . . . . . . . . . . . . . . . . . . . 745,000 788,779 778,966 Securities available-for-sale . . . . . . . . . . . . . . . . . . . . 3,688,984 - - Securities held-to-maturity (market value of $3,980,564, $8,156,690 and $8,407,776, respectively) . . . . . . . . . . . . . 3,972,867 7,878,656 8,055,644 Loans and net leases . . . . . . . . . . . . . . . . . . . . . . . . 24,975,597 22,986,307 22,072,618 Less unearned income on loans . . . . . . . . . . . . . . . . . . . . 7,881 8,819 6,433 ----------- ----------- ----------- Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . 24,967,716 22,977,488 22,066,185 Less allowance for loan losses . . . . . . . . . . . . . . . . . . . 406,005 404,798 404,091 ----------- ----------- ----------- Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,561,711 22,572,690 21,662,094 Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . 532,121 502,699 495,593 Due from customers on acceptances . . . . . . . . . . . . . . . . . . 774,222 434,584 456,518 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145,995 1,115,252 1,103,553 ----------- ----------- ----------- Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $38,134,285 $36,525,772 $35,319,681 =========== =========== =========== LIABILITIES Deposits in domestic offices: Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,265,733 $ 6,140,884 $ 5,315,479 Interest-bearing demand . . . . . . . . . . . . . . . . . . . . . 3,336,611 3,515,680 3,220,722 Savings and money market savings . . . . . . . . . . . . . . . . . 6,099,692 6,194,086 6,192,030 Savings certificates . . . . . . . . . . . . . . . . . . . . . . . 5,177,269 5,141,410 5,250,509 Large denomination certificates . . . . . . . . . . . . . . . . . 1,484,147 1,507,461 1,645,129 Noninterest-bearing time . . . . . . . . . . . . . . . . . . . . . 50,753 45,802 65,182 ----------- ----------- ----------- Total deposits in domestic offices . . . . . . . . . . . . . . 21,414,205 22,545,323 21,689,051 Deposits in foreign offices: Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,399 3,011 7,834 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835,091 804,064 490,490 ----------- ----------- ----------- Total deposits in foreign offices . . . . . . . . . . . . . . . 841,490 807,075 498,324 ----------- ----------- ----------- Total deposits . . . . . . . . . . . . . . . . . . . . . . . . 22,255,695 23,352,398 22,187,375 Federal funds purchased and securities sold under repurchase agreements . . . . . . . . . . . . . . . . . 5,528,088 4,741,283 5,307,332 Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . 432,012 589,178 425,656 Other short-term borrowed funds . . . . . . . . . . . . . . . . . . . 854,559 1,091,123 965,207 Long-term debt: Bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,890,345 2,370,091 2,062,664 Other long-term debt . . . . . . . . . . . . . . . . . . . . . . . 839,246 590,365 594,362 ----------- ----------- ----------- Total long-term debt . . . . . . . . . . . . . . . . . . . . . 4,729,591 2,960,456 2,657,026 Acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . 774,222 434,584 456,518 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 345,237 338,803 345,868 ----------- ----------- ----------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 34,919,404 33,507,825 32,344,982 SHAREHOLDERS' EQUITY Preferred stock, par value $5 per share: Authorized 50,000,000 shares; none outstanding . . . . . . . . . . - - - Common stock, par value $5 per share: Issued 170,759,977, 171,375,772 and 172,011,522, respectively . . . . . . . . . . . . . . . . . . . . 853,800 856,879 860,058 Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . 741,083 761,573 787,416 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 1,619,998 1,399,495 1,327,225 ----------- ----------- ----------- Total shareholders' equity . . . . . . . . . . . . . . . . . . 3,214,881 3,017,947 2,974,699 ----------- ----------- ----------- Total liabilities and shareholders' equity . . . . . . . . . . $38,134,285 $36,525,772 $35,319,681 =========== =========== ===========
22 23 WACHOVIA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Nine Months Ended September 30 September 30 $ in thousands, except per share 1994 1993 1994 1993 --------- -------- ---------- ---------- INTEREST INCOME Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $483,087 $408,737 $1,340,149 $1,212,138 Securities available-for-sale: State and municipal . . . . . . . . . . . . . . . . . . . . . . . - - 14 - Other investments . . . . . . . . . . . . . . . . . . . . . . . . 46,801 - 139,133 - Securities held-to-maturity: State and municipal . . . . . . . . . . . . . . . . . . . . . . . 12,192 13,708 38,316 44,071 Other investments . . . . . . . . . . . . . . . . . . . . . . . . 54,992 98,497 164,226 291,709 Interest-bearing bank balances . . . . . . . . . . . . . . . . . . 142 485 487 2,789 Federal funds sold and securities purchased under resale agreements . . . . . . . . . . . . . . . . 1,347 3,612 6,300 8,344 Trading account assets . . . . . . . . . . . . . . . . . . . . . . 8,889 6,892 22,465 19,769 -------- -------- ---------- ---------- Total interest income . . . . . . . . . . . . . . . . . . . . 607,450 531,931 1,711,090 1,578,820 INTEREST EXPENSE Deposits: Domestic offices . . . . . . . . . . . . . . . . . . . . . . . . 134,241 133,562 373,329 415,596 Foreign offices . . . . . . . . . . . . . . . . . . . . . . . . . 7,042 3,076 14,420 9,333 -------- -------- ---------- ---------- Total interest on deposits . . . . . . . . . . . . . . . . . 141,283 136,638 387,749 424,929 Short-term borrowed funds . . . . . . . . . . . . . . . . . . . . . 71,495 43,910 184,457 123,970 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 61,551 30,597 160,618 72,281 -------- -------- ---------- ---------- Total interest expense . . . . . . . . . . . . . . . . . . . 274,329 211,145 732,824 621,180 NET INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . 333,121 320,786 978,266 957,640 Provision for loan losses . . . . . . . . . . . . . . . . . . . . . 18,123 23,483 52,224 74,639 -------- -------- ---------- ---------- Net interest income after provision for loan losses . . . . . . . . . . . . . . . . . . . . 314,998 297,303 926,042 883,001 OTHER INCOME Service charges on deposit accounts . . . . . . . . . . . . . . . . 48,940 51,909 147,736 153,903 Fees for trust services . . . . . . . . . . . . . . . . . . . . . . 32,151 29,697 96,815 89,678 Credit card income . . . . . . . . . . . . . . . . . . . . . . . . 28,271 26,009 81,725 73,946 Mortgage fee income . . . . . . . . . . . . . . . . . . . . . . . . 8,590 9,699 24,338 28,971 Trading account profits . . . . . . . . . . . . . . . . . . . . . . 1,576 3,521 3,681 11,006 Student loan servicing . . . . . . . . . . . . . . . . . . . . . . - - - 5,535 Other operating income . . . . . . . . . . . . . . . . . . . . . . 32,013 28,926 95,414 84,699 -------- -------- ---------- ---------- Total other operating revenue . . . . . . . . . . . . . . . . 151,541 149,761 449,709 447,738 Gain on sale of subsidiary . . . . . . . . . . . . . . . . . . . . - - - 8,030 Investment securities gains . . . . . . . . . . . . . . . . . . . . 433 702 1,226 12,178 -------- -------- ---------- ---------- Total other income . . . . . . . . . . . . . . . . . . . . . 151,974 150,463 450,935 467,946 OTHER EXPENSE Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,793 112,982 346,886 333,416 Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . 22,902 29,411 75,055 87,555 -------- -------- ---------- ---------- Total personnel expense . . . . . . . . . . . . . . . . . . . 139,695 142,393 421,941 420,971 Net occupancy expense . . . . . . . . . . . . . . . . . . . . . . . 20,026 18,950 59,650 58,483 Equipment expense . . . . . . . . . . . . . . . . . . . . . . . . . 26,789 24,856 79,311 74,963 Other operating expense . . . . . . . . . . . . . . . . . . . . . . 84,783 87,347 254,986 277,079 -------- -------- ---------- ---------- Total other expense . . . . . . . . . . . . . . . . . . . . . 271,293 273,546 815,888 831,496 Income before income taxes . . . . . . . . . . . . . . . . . . . . 195,679 174,220 561,089 519,451 Applicable income taxes . . . . . . . . . . . . . . . . . . . . . . 57,687 49,813 164,157 150,353 -------- -------- ---------- ---------- NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . $137,992 $124,407 $ 396,932 $ 369,098 ======== ======== ========== ========== Net income per common share: Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 $ 2.30 $ 2.12 Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 $ 2.30 $ 2.10 Average shares outstanding: Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,097 174,300 172,462 174,200 Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 172,701 175,414 173,086 175,905
23 24 WACHOVIA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Common Stock ----------------------- Capital Retained $ in thousands, except per share Shares Amount Surplus Earnings ---------- -------- --------- ---------- PERIOD ENDED SEPTEMBER 30, 1993 Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . 171,471,178 $857,356 $817,889 $1,099,522 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369,098 Cash dividends declared on common stock - $.81 a share . . . . . . . . . . . . . . . . . . . . . (139,918) Common stock issued pursuant to: Stock option and employee benefit plans . . . . . . . . . . . . . . . 453,667 2,268 8,989 (41) Dividend reinvestment plan . . . . . . . . . . . . . . . . . . . . . 233,100 1,166 6,946 (15) Conversion of notes . . . . . . . . . . . . . . . . . . . . . . . . . 1,555,020 7,775 5,237 (60) Common stock acquired . . . . . . . . . . . . . . . . . . . . . . . . . (1,701,214) (8,506) (51,640) 8 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (229) (1) (5) (1,369) ----------- ------- ------- --------- Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . 172,011,522 $860,058 $787,416 $1,327,225 =========== ======== ======== ========== PERIOD ENDED SEPTEMBER 30, 1994 Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . 171,375,772 $856,879 $761,573 $1,399,495 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396,932 Cash dividends declared on common stock - $.90 a share . . . . . . . . . . . . . . . . . . . . . (154,083) Common stock issued pursuant to: Stock option and employee benefit plans . . . . . . . . . . . . . . . 544,925 2,724 12,255 Dividend reinvestment plan . . . . . . . . . . . . . . . . . . . . . 260,354 1,302 7,255 Conversion of notes . . . . . . . . . . . . . . . . . . . . . . . . . 47,174 236 665 Common stock acquired . . . . . . . . . . . . . . . . . . . . . . . . . (1,468,248) (7,341) (40,471) Unrealized losses on securities available- for-sale, net of tax . . . . . . . . . . . . . . . . . . . . . . . . (21,510) Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (194) (836) ----------- -------- -------- ---------- Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . 170,759,977 $853,800 $741,083 $1,619,998 =========== ======== ======== ==========
24 25 WACHOVIA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended September 30 $ in thousands 1994 1993 -------- -------- OPERATING ACTIVITIES Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 396,932 $ 369,098 Adjustments to reconcile net income to net cash provided by operations: Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,224 74,639 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . 83,893 78,122 Deferred income taxes (benefit) . . . . . . . . . . . . . . . . . . . . . . . . 2,597 (21,661) Investment securities gains . . . . . . . . . . . . . . . . . . . . . . . . . . (1,226) (12,178) Gain on sale of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . - (8,030) Gain on sale of noninterest-earning assets . . . . . . . . . . . . . . . . . . (4,649) (1,186) Increase (decrease) in accrued income taxes . . . . . . . . . . . . . . . . . . (327) 9,591 (Increase) decrease in accrued interest receivable . . . . . . . . . . . . . . 7,851 (24,589) Increase in accrued interest payable . . . . . . . . . . . . . . . . . . . . . 51,802 2,481 Net change in other accrued and deferred income and expense . . . . . . . . . . 4,140 (32,912) Net trading account activities . . . . . . . . . . . . . . . . . . . . . . . . 43,779 117,002 Net loans held for resale . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,175 (349,813) ----------- ----------- Net cash provided by operating activities . . . . . . . . . . . . . . . . . 901,191 200,564 INVESTING ACTIVITIES Net decrease in interest-bearing bank balances . . . . . . . . . . . . . . . . . 6,720 178,340 Net decrease (increase) in federal funds sold and securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . . . . . 491,720 (107,597) Purchases of securities available-for-sale . . . . . . . . . . . . . . . . . . . (722,958) - Purchases of securities held-to-maturity . . . . . . . . . . . . . . . . . . . . (304,060) (2,937,940) Sales of securities available-for-sale . . . . . . . . . . . . . . . . . . . . . 69,376 - Sales of securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . - 59,233 Calls, maturities and prepayments of securities available-for-sale . . . . . . . 654,953 - Calls, maturities and prepayments of securities held-to-maturity . . . . . . . . 470,771 1,309,508 Net increase in loans made to customers . . . . . . . . . . . . . . . . . . . . . (2,314,157) (716,309) Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (87,128) (119,106) Proceeds from sales of premises and equipment . . . . . . . . . . . . . . . . . . 5,710 5,720 Net increase in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (74,639) (208,299) Business combinations and dispositions . . . . . . . . . . . . . . . . . . . . . - 20,000 ----------- ----------- Net cash used by investing activities . . . . . . . . . . . . . . . . . . . (1,803,692) (2,516,450) FINANCING ACTIVITIES Net decrease in demand, savings and money market accounts . . . . . . . . . . . . (1,140,275) (345,557) Net increase (decrease) in certificates of deposit . . . . . . . . . . . . . . . 43,572 (842,529) Net increase in federal funds purchased and securities sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786,805 1,593,840 Net increase (decrease) in commercial paper . . . . . . . . . . . . . . . . . . . (157,166) 39,038 Net increase (decrease) in other short-term borrowings . . . . . . . . . . . . . (236,564) 266,384 Proceeds from issuance of bank notes . . . . . . . . . . . . . . . . . . . . . . 1,945,589 1,304,771 Maturities of bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (427,800) (150,000) Proceeds from issuance of other long-term debt . . . . . . . . . . . . . . . . . 247,800 248,075 Payments on other long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (263) (80,003) Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,804 17,944 Common stock repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,601) (60,144) Dividend payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (154,083) (139,918) Net increase in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 396 5,657 ----------- ----------- Net cash provided by financing activities . . . . . . . . . . . . . . . . . 881,214 1,857,558 DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . (21,287) (458,328) Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . 2,529,528 2,627,859 ----------- ----------- Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 2,508,241 $ 2,169,531 =========== =========== SUPPLEMENTAL DISCLOSURES Unrealized losses on securities available-for-sale: Decrease in securities available-for-sale . . . . . . . . . . . . . . . . . . . $ 35,225 $ - Increase in deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 13,715 - Decrease in shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . 21,510 -
25 26 MEMBER COMPANY DIRECTORS WACHOVIA BANK OF GEORGIA, N.A. G. JOSEPH PRENDERGAST Chairman of the Board, President and Chief Executive Officer F. DUANE ACKERMAN President and Chief Executive Officer BellSouth Telecommunications, Inc. EDWARD L. ADDISON Chairman of the Board and Chief Executive Officer The Southern Company L. M. BAKER, JR. President and Chief Executive Officer Wachovia Corporation THOMAS E. BOLAND Retired Chairman of the Board CARL BOLCH, JR. Chairman of the Board and Chief Executive Officer Racetrac Petroleum, Inc. JAMES E. BOSTIC, JR. Group Vice President Communication Papers Division Georgia-Pacific Corporation MICHAEL C. CARLOS Chairman of the Board and Chief Executive Officer National Distributing Co., Inc. G. STEPHEN FELKER Chairman of the Board and Chief Executive Officer Avondale Mills, Inc. BRYAN D. LANGTON (Advisory Director) Chairman of the Board and Chief Executive Officer Holiday Inn Worldwide BERNARD MARCUS Chairman of the Board and Chief Executive Officer The Home Depot, Inc. DANIEL W. MCGLAUGHLIN President and Chief Operating Officer Equifax Inc. D. RAYMOND RIDDLE Chairman of the Board and Chief Executive Officer National Service Industries, Inc. S. STEPHEN SELIG III Chairman of the Board and President Selig Enterprises, Inc. ALANA S. SHEPHERD Secretary of the Board Shepherd Spinal Center J. V. WHITE Chairman of the Executive Committee Equifax Inc. WACHOVIA BANK OF NORTH CAROLINA, N.A. J. WALTER MCDOWELL President and Chief Executive Officer L. M. BAKER, JR. Chairman of the Board THOMAS M. BELK, JR. Senior Vice President Belk Stores Services, Inc. H. C. BISSELL Chairman of the Board and Chief Executive Officer The Bissell Companies, Inc. FELTON J. CAPEL Chairman of the Board and President Century Associates of North Carolina WILLIAM CAVANAUGH, III President and Chief Operating Officer Carolina Power & Light Company BERT COLLINS President and Chief Executive Officer North Carolina Mutual Life Insurance Company RICHARD L. DAUGHERTY North Carolina Senior State Executive, Vice President Worldwide Manufacturing IBM PC Company IBM Corporation (Retired/Consultant) ESTELL C. LEE Chairman of the Board and President The Lee Company WYNDHAM ROBERTSON Vice President, Communications University of North Carolina JOHN F. WARD Senior Vice President Sara Lee Corporation Chief Executive Officer Hanes Group ANDERSON D. WARLICK President and Chief Operating Officer Parkdale Mills, Inc. DAVID J. WHICHARD, II Chairman The Daily Reflector JOHN C. WHITAKER, JR. Chairman of the Board and Chief Executive Officer Inmar Enterprises, Inc. SOUTH CAROLINA NATIONAL CORPORATION WACHOVIA BANK OF SOUTH CAROLINA, N.A. ANTHONY L. FURR Chairman of the Board, President and Chief Executive Officer L. M. BAKER, JR. President and Chief Executive Officer Wachovia Corporation CHARLES J. BRADSHAW President Bradshaw Investments, Inc. FRANK W. BRUMLEY President The Brumley Company W. T. CASSELS, JR. Chairman of the Board Southeastern Freight Lines, Inc. THOMAS C. COXE, III Executive Vice President Sonoco Products Company FREDERICK B. DENT, JR. President Mayfair Mills, Inc. JAMES B. EDWARDS, D.M.D. President Medical University of South Carolina JAMES G. LINDLEY Chairman Emeritus JOE A. PADGETT Retired Executive Vice President Wachovia Bank of South Carolina, N.A. W. M. SELF President and Chief Executive Officer Greenwood Mills, Inc. ROBERT S. SMALL, JR. President AVTEX Properties, Inc. WILLIAM G. TAYLOR President The Springs Company BEATRICE R. THOMPSON, PH.D. Coordinator of Psychological Services Anderson School District Five 27 WACHOVIA CORPORATION DIRECTORS AND OFFICERS DIRECTORS L. M. BAKER, JR. President and Chief Executive Officer JOHN G. MEDLIN, JR. Chairman of the Board RUFUS C. BARKLEY, JR. Chairman of the Board Cameron & Barkley Company CRANDALL C. BOWLES Executive Vice President Springs Industries, Inc. JOHN L. CLENDENIN Chairman of the Board and Chief Executive Officer BellSouth Corporation LAWRENCE M. GRESSETTE, JR. Chairman of the Board, President and Chief Executive Officer SCANA Corporation THOMAS K. HEARN, JR. President Wake Forest University W. HAYNE HIPP President and Chief Executive Officer The Liberty Corporation ROBERT M. HOLDER, JR. Chairman of the Board Holder Corporation DONALD R. HUGHES Vice Chairman of the Board Burlington Industries, Inc. F. KENNETH IVERSON Chairman and Chief Executive Officer Nucor Corporation JAMES W. JOHNSTON Chairman and Chief Executive Officer R.J. Reynolds Tobacco Worldwide W. DUKE KIMBRELL Chairman of the Board and Chief Executive Officer Parkdale Mills, Inc. HERMAN J. RUSSELL Chairman of the Board and Chief Executive Officer H.J. Russell & Company SHERWOOD H. SMITH, JR. Chairman of the Board and Chief Executive Officer Carolina Power & Light Company CHARLES MCKENZIE TAYLOR Chairman of the Board Taylor & Mathis, Inc. EXECUTIVE OFFICERS L. M. BAKER, JR. President and Chief Executive Officer MICKEY W. DRY Executive Vice President Chief Credit Officer HUGH M. DURDEN Executive Vice President ANTHONY L. FURR Executive Vice President W. DOUG KING Executive Vice President WALTER E. LEONARD, JR. Executive Vice President KENNETH W. MCALLISTER Executive Vice President General Counsel ROBERT S. MCCOY, JR. Executive Vice President Chief Financial Officer J. WALTER MCDOWELL Executive Vice President G. JOSEPH PRENDERGAST Executive Vice President RICHARD B. ROBERTS Executive Vice President Treasurer 27 28 BULK RATE U.S. POSTAGE PAID WACHOVIA CORPORATION WACHOVIA Wachovia Corporation P.O. Box 3099 Winston-Salem, NC 27150 [ ] SHAREHOLDER INFORMATION SHAREHOLDER SERVICES Dividend Reinvestment and Common Stock Purchase Plan - The plan provides common stockholders of record a regular way of investing cash dividends in additional shares at an average market price and/or investing optional cash payments without payment of brokerage commissions or service charges. Direct Deposit of Cash Dividends - Direct deposit is a safe, fast and timesaving method of receiving cash dividends through automatic deposit on date of payment to a checking, savings or money market account at any financial institution which participates in an Automated Clearing House. Address Change and Account Assistance - To help ensure timely receipt of shareholder mailings, please notify the corporation, in writing, immediately of any address change or correction. Use of your shareholder account number and a daytime phone number in all correspondence will be appreciated. For information about these services, requests for address changes and account assistance, please contact: H. Jo Barlow Wachovia Corporation Shareholder Services P.O. Box 3099 910-770-5787 Winston-Salem, NC 27150 OTHER INFORMATION Additional information about Wachovia Corporation or its member companies may be obtained by contacting: Robert S. McCoy, Jr., Chief Financial Officer, 910-770-5926 James C. Mabry, Investor Relations, 910-770-5788 Wachovia Corporation P.O. Box 3099 Winston-Salem, NC 27150 COMMON STOCK LISTING New York Stock Exchange Symbol: WB EX-27 4 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF WACHOVIA FOR THE PERIOD ENDED SEPTEMBER 30, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS DEC-31-1993 JAN-01-1994 SEP-30-1994 1 2,508,241 5,758 199,386 745,000 3,688,984 3,972,867 3,980,564 24,967,716 406,005 38,134,285 22,255,695 6,814,659 1,119,459 4,729,591 853,800 0 0 2,361,081 38,134,285 1,340,149 341,689 29,252 1,711,090 387,749 732,824 978,266 52,224 1,226 815,888 561,089 396,932 0 0 396,932 2.30 2.30 4.33 89,184 43,708 0 0 404,798 75,133 24,116 406,005 0 0 0
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