-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Th4p+8MMlHaMt/h4tM6kdZ/rsUJUt6hebY3Oz1R/+j0tC1gOGDDHLDnOoPIHycoT vAs3r+qmxOLdNZs4G5M/pw== 0000950168-01-500058.txt : 20010418 0000950168-01-500058.hdr.sgml : 20010418 ACCESSION NUMBER: 0000950168-01-500058 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010416 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WACHOVIA CORP/ NC CENTRAL INDEX KEY: 0000774203 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 561473727 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09021 FILM NUMBER: 1603793 BUSINESS ADDRESS: STREET 1: 100 N MAIN ST STREET 2: P O BOX 3099 CITY: WINSTON SALEM STATE: NC ZIP: 27101 BUSINESS PHONE: 3367705000 MAIL ADDRESS: STREET 1: 100 NORTH MAIN ST STREET 2: P O BOX 3099 CITY: WINSTON SALEM STATE: NC ZIP: 27101 FORMER COMPANY: FORMER CONFORMED NAME: FIRST WACHOVIA CORP DATE OF NAME CHANGE: 19910603 8-K 1 form8k_42347.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 16, 2001 WACHOVIA CORPORATION (Exact name of registrant as specified in its charter)
NORTH CAROLINA No. 1-9021 No. 56-1473727 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification No.)
100 North Main Street, Winston-Salem, NC 27101 191 Peachtree Street NE, Atlanta, GA 30303 (Address of principal executive offices) Registrant's telephone number, including area code: Winston-Salem 336-770-5000 Atlanta 404-332-5000 Not applicable (Former name or former address, if changed since last report) Items 1 - 4. Not Applicable Item 5. Other Events The Merger On April 16, 2001, Wachovia Corporation ("Wachovia") and First Union Corporation ("First Union") announced that they had agreed to combine in a merger of equals, pursuant to an Agreement and Plan of Merger, dated as of April 15, 2001 (the "Merger Agreement"). Pursuant to the Merger Agreement, Wachovia will merge with and into First Union, with First Union as the surviving corporation (the "Merger"). Upon effectiveness of the Merger, First Union will change its name to Wachovia Corporation. As a result of the Merger, each outstanding share of Wachovia common stock will be converted into 2.0 shares of First Union's common stock. The Merger is intended to constitute a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, and is to be accounted for as a purchase. Consummation of the Merger is subject to various conditions, including: (i) receipt of the approval of the Merger Agreement by Wachovia's and First Union's stockholders; (ii) receipt of requisite regulatory approvals from the Board of Governors of the Federal Reserve System and other federal and state regulatory authorities; (iii) receipt of opinions as to the tax treatment of the Merger; (iv) listing on the New York Stock Exchange, Inc., subject to notice of issuance, of First Union's common stock to be issued in the Merger; and (v) satisfaction of certain other conditions. In connection with the Merger Agreement, each of Wachovia and First Union entered into reciprocal stock option agreements, dated as of April 15, 2001, pursuant to one of which Wachovia has the right, under certain circumstances and among other things, to purchase up to 19.9% of the issued and outstanding shares of common stock of First Union, at a price equal to $31.892 per share, and pursuant to the other of which First Union has the right, under certain circumstances and among other things, to purchase up to 19.9% of the issued and outstanding shares of common stock of Wachovia, at a price equal to $59.842 per share. The news release jointly issued by Wachovia and First Union announcing the Merger is included as Exhibit 99.1 to this report and is incorporated into this Item 5 by reference (the "Merger Release"). On April 16, 2001, Wachovia and First Union intend to hold a presentation for analysts and others regarding the Merger (the "Meeting"), which will be accessible via the Internet and by conference call. At the Meeting, certain financial and other information relating to the Merger will be presented (the "Merger Presentation Materials"). The Merger Presentation Materials are included as Exhibit 99.2 to this report and are incorporated into this Item 5 by reference. Information regarding the Meeting is included in the Merger Release. 2001 Annual Meeting and First Quarter 2001 Earnings In connection with the Merger, Wachovia also announced first quarter 2001 earnings and that it was postponing its 2001 Annual Shareholders' Meeting, which was scheduled to occur on Friday, April 27, 2001. The news release announcing first quarter earnings and postponement of the Annual Shareholders' Meeting is included as Exhibit 99.3 to this report and is incorporated into this Item 5 by reference. Wachovia currently expects that the 2001 Annual Shareholders' Meeting will be held in conjunction with the meeting at which its shareholders will vote on the Merger and the transactions related to the Merger. Information relating to such meeting will be released to shareholders when available. Item 6. Not Applicable Item 7. Exhibits. 99.1 The Merger Release 99.2 The Merger Presentation Materials 99.3 The Earnings Release and Postponement of Annual Shareholders' Meeting Item 8. Not Applicable Item 9. Regulation FD Disclosure The Merger Release, the Merger Presentation Materials, the Earnings Release and Postponement of Annual Shareholders' Meeting, and any statements made by Wachovia may contain, among other things, certain forward-looking statements with respect to each of Wachovia, First Union and the combined company following the Merger, as well as the goals, plans, objectives, intentions, expectations, financial condition, results of operations, future performance and business of Wachovia, including, without limitation, (i) statements relating to the benefits of the Merger, including future financial and operating results, cost savings, enhanced revenues, and the accretion to reported earnings that may be realized from the Merger, (ii) statements regarding certain of Wachovia's goals and expectations with respect to earnings, earnings per share, revenue, expenses, and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (iii) statements preceded by, followed by or that include the words "may", "could", "would", "should", "believes", "expects", "anticipates", "estimates", "intends", "plans", "targets" "probably", "potentially", "projects" or similar expressions. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond Wachovia's control). The following factors, among others, could cause Wachovia's financial performance to differ materially from the goals, plans, objectives, intentions, and expectations expressed in such forward-looking statements: (1) the risk that the businesses of Wachovia and First Union will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected time frame; (3) revenues following the Merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption following the Merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the ability to obtain governmental approvals of the Merger on the proposed terms and schedule; (6) the failure of Wachovia's and First Union's stockholders to approve the Merger; (7) the strength of the United States economy in general and the strength of the local economies in which Wachovia conducts operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on Wachovia's loan portfolio and allowance for loan losses; (8) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (9) inflation, interest rate, market and monetary fluctuations; (10) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on Wachovia's capital markets, brokerage and asset management activities; (11) the timely development of competitive new products and services by Wachovia and the acceptance of these products and services by new and existing customers; (12) the willingness of customers to accept third party products marketed by Wachovia; (13) the willingness of customers to substitute competitors' products and services for Wachovia's products and services and vice versa; (14) the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); (15) technological changes; (16) changes in consumer spending and saving habits; (17) the effect of corporate restructurings, acquisitions and/or dispositions, including, without limitation, the Merger, and the actual restructuring and other charges related thereto; (18) the growth and profitability of Wachovia's noninterest or fee income being less than expected; (19) unanticipated regulatory or judicial proceedings; (20) the impact of changes in accounting policies by the Securities and Exchange Commission; (21) adverse changes in the financial performance and/or condition of Wachovia's borrowers which could impact the repayment of such borrowers' outstanding loans; and (22) the success of Wachovia at managing the risks involved in the foregoing. Additional information with respect to factors that may cause actual results to differ materially from those contemplated by such forward-looking statements is included in the reports filed by Wachovia with the Securities and Exchange Commission. Wachovia cautions that the foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements concerning the Merger, the Earnings Release or other matters and attributable to Wachovia or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Wachovia does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in the Merger Release, the Merger Presentation Materials, the Earnings Release and Postponement of Annual Shareholders' Meeting. SIGNATURE 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 hereunto duly authorized. WACHOVIA CORPORATION By: /s/ Robert S. McCoy, Jr. ------------------------ Name: Robert S. McCoy, Jr. Title: Vice Chairman and Chief Financial Officer Date: April 16, 2001 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 The Merger Release 99.2 The Merger Presentation Materials 99.3 The Earnings Release and Postponement of Annual Shareholders' Meeting EX-99.1 2 ex99-1_42347.txt THE MERGER RELEASE Exhibit 99.1 [First Union Logo appears here] [Wachovia logo appears here] Media Contacts: First Union: Ginny Mackin 704-383-3715 Mary Eshet 704-383-3715 Wachovia: Ed L. Hutchins 336-732-4200 Jay E. Reed 336-732-5855 Investor Contacts: First Union: Alice Lehman 704-374-4139 Wachovia: Robert S. McCoy Jr. 336-732-5926 Marsha L. Smunt 336-732-5788 FIRST UNION AND WACHOVIA TO MERGE --------------------------------- Creating the Premier East Coast Financial Services Company CHARLOTTE and WINSTON-SALEM, N.C., April 16, 2001 - First Union Corporation (NYSE:FTU) and Wachovia Corporation (NYSE:WB) said today they have signed a definitive agreement for a merger of equals. The combined company, which will be known as Wachovia Corporation, will offer its 19 million combined customers an unprecedented array of corporate banking, retail banking, asset and wealth management, capital markets and securities brokerage services and products. With total assets of $324 billion and a market capitalization of $45 billion, the company will be the largest financial holding company in its Southeast/East Coast region and the fourth largest nationwide. The company will be headquartered in Charlotte, and maintain the regional headquarters for its North and South Carolina banks in Winston-Salem. Terms of the agreement call for common stockholders of Wachovia to receive 2.0 shares of common stock of First Union in exchange for each share of Wachovia common stock. In addition, Wachovia's board is expected to approve a special 48 cents per common share dividend payable prior to closing in the third quarter. The purchase accounting transaction will be immediately accretive to the cash earnings per share of both companies upon closing, and will provide an internal rate of return in excess of 20 percent for both groups of shareholders. When the merger is completed, L.M. Baker Jr., chairman, president and chief executive officer of Wachovia, will become chairman of the new organization. G. Kennedy Thompson, chairman, president and chief executive officer of First Union, will become president and chief executive officer of the new company. The board of directors of the combined company will comprise 18 members, with nine coming from the Wachovia board and nine from the First Union board. - more - "Together, this new company will have what superregional banks rarely have: a full line of financial products, services and distribution capabilities, sufficient density of coverage and depth of talent to leverage its leading share in key growth markets, strong capital position and an experienced management team. These strengths will enable superior growth rates in revenues and profits," said Baker. "At the core, each company has an accomplished corporate bank, a wonderfully positioned retail franchise, and unbeatable opportunities in wealth and asset management. Our home region has great economic fundamentals. Our corporate cultures are very similar, focused on customer relationships." "Wachovia and First Union have a common vision, common values, common markets - and now a common name," said Thompson. "While scale is important in this business, this merger is about getting better, not just bigger." The companies said the new Wachovia will have leading market share in numerous high growth markets, with an extensive product offering - the No. 1 retail bank in the East, No. 1 in small business banking, a leading national brokerage and fund manager, an investment bank focused on growth companies and a well-positioned corporate bank. The new Wachovia will have total deposits of $183 billion, assets under management of $222 billion and mutual fund assets of $96 billion. The company's 19 million customers (3.1 million of them on-line) will be served by 90,000 total employees, 2,900 banking branches, 5,100 ATMs, and nearly 600 brokerage offices staffed by 8,300 registered representatives. Wachovia and First Union also have designated the other key members of the new company's senior management team: o Robert P. Kelly, executive vice president and chief financial officer of First Union, will become chief financial officer; o Donald K. Truslow, senior executive vice president and chief risk officer of Wachovia, will become chief risk management officer; o Benjamin P. Jenkins III, vice chairman of First Union, will head General Banking; o Stanhope A. Kelly, senior executive vice president of Wachovia, will head Wealth Management; o Donald A. McMullen Jr., vice chairman of First Union, will head Brokerage and Asset Management; o W. Barnes Hauptfuhrer, managing director, and Stephen E. Cummings, managing director, of First Union, will co-head Corporate and Investment Banking; o Paul G. George, executive vice president of Wachovia, will head Human Resources; o Jean E. Davis, senior executive vice president of Wachovia, will head Operations and Technology; o Mark C. Treanor, executive vice president, secretary and general counsel of First Union, will head Legal Affairs; o Robert S. McCoy Jr., vice chairman and chief financial officer of Wachovia, and David M. Carroll, executive vice president of First Union, will head the merger integration team. - more - The companies expect the merger integration process to be completed in three years. "Successful mergers today are about satisfied customers and energized employees," said Thompson. "Throughout this transition, customers will remain our top priority. Our customers will benefit from enhanced products and services and the best employee talent in the industry. Our unwavering commitment to teamwork and quality will help ensure a seamless transition for all customers." The companies expect the merger to generate $890 million in annual expense reductions, phased in over the three-year integration period. This equals eight percent of the companies' current combined expense base. The companies expect to take merger-related one-time charges of $1.45 billion, related to staff training, retention and severance; real estate; systems integration; and other miscellaneous accruals. The companies believe that they may be required to divest approximately $1.5 billion to $2 billion in deposits as a condition of regulatory approval. Over the three-year integration period, the combined staff will be reduced by approximately 7,000 positions. Close to half of this reduction is expected to be achieved through normal attrition. "Our policy in integrating our companies will be to provide the best value to customers and the best service to our communities. We will select the best of the best - systems, facilities, products and people - to attract, retain and enhance customer relationships," said Baker. "Both companies have a long and proud tradition of outstanding community service. Together, we will be able to strengthen our community leadership, and our shared commitment to the communities we serve will be made more powerful by this merger," concluded Baker. The combined company expects to pay a quarterly cash dividend of 24 cents per common share, and to maintain over time a dividend payout ratio of 35 percent to 40 percent of its earnings. The transaction will be accounted for under purchase accounting. It is expected to close in the third quarter of 2001 and is subject to normal shareholder and regulatory approvals. The merger has been unanimously approved by the boards of directors of both companies. Wachovia and First Union have granted each other options to purchase, under certain circumstances, up to 19.9 percent of each other's outstanding common shares. Wachovia was represented by Credit Suisse First Boston and Simpson Thacher & Bartlett. First Union was represented by Merrill Lynch and Sullivan & Cromwell. First Union: (NYSE:FTU), with $253 billion in assets and stockholders' equity of $16 billion at March 31, 2001, is a leading provider of financial services to 15 million retail and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices in 11 East Coast states and Washington, D.C., and full-service brokerage offices in 47 states. Online banking products and services can be accessed through www.firstunion.com. Wachovia: (NYSE:WB) is a major interstate financial holding company offering banking and financial services to individuals primarily in Florida, Georgia, North Carolina, South Carolina - more - and Virginia and to corporations and institutions throughout the United States and globally. Wachovia Corporation is headquartered in Winston-Salem, N.C., and Atlanta, and had assets of $74 billion at December 31, 2000. Announcement Conference Call: Ken Thompson and Bud Baker will discuss the combination of the two companies on a conference call at 10:45 a.m. EDT on Monday, April 16. The call will be available by telephone and audio webcast. During the call, the speakers will review information presented in handouts that are available through www.firstunion.com or www.wachovia.com and through fax-on-demand at 800-281-3244, code 700. Participants are encouraged to access the handouts before the teleconference begins. Webcast Instructions: To gain access to the webcast, which will be "listen-only," go to www.firstunion.com or www.wachovia.com and click on the audio webcast link. Please log on to the Web site at least 10 minutes prior to the call to register and download and install any necessary audio software. A replay of the webcast also will be available beginning at 1 p.m. today. Teleconference Instructions: The telephone number to participate in today's teleconference is 888-946-7205 for U.S. callers (or 712-271-0175 for international callers). You will be asked to provide your name and business affiliation. Mention the conference access code: 33345. A continuous telephone replay will be available beginning at 1 p.m. today through 5 p.m. on Monday, April 23. The replay telephone number is 402-998-1145. Video New Release: B-roll with footage of Ken Thompson and Bud Baker and of the two companies can be downlinked from the following coordinates: Telstar 5, Transponder 16, Downlink frequency 4020 Horizontal, 8:00-8:30 a.m. EDT and 12:00-12:30 p.m. EDT. This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements about the benefits of the merger between First Union Corporation and Wachovia Corporation, including future financial and operating results, cost savings, enhanced revenues, and accretion to reported earnings that may be realized from the merger; (ii) statements with respect to First Union's and Wachovia's plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as "believes", "expects", "anticipates", "estimates", "intends", "plans", "targets" and similar expressions. These statements are based upon the current beliefs and expectations of First Union's and Wachovia's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in such forward-looking statements: (1) the risk that the businesses of First Union and Wachovia will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; (3) revenues following the merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption following the merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the ability to obtain governmental approvals of the merger on the proposed terms and schedule; (6) the failure of First Union's and Wachovia's stockholders to approve the merger; (7) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (8) the strength of the United States economy in general and the strength of the local economies in which the combined company will conduct operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the combined company's loan portfolio and allowance for loan losses; (9) changes in the U.S. and foreign legal and regulatory framework; and (10) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on the combined company's capital markets and asset management activities. Additional factors that could cause First Union's and - more - Wachovia's results to differ materially from those described in the forward-looking statements can be found in First Union's and Wachovia's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters and attributable to First Union or Wachovia or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements referenced above. First Union and Wachovia do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made. Additional Information The proposed transaction will be submitted to First Union's and Wachovia's stockholders for their consideration, and First Union and Wachovia will file a registration statement, a joint proxy statement/prospectus and other relevant documents concerning the proposed transaction with the SEC. Stockholders are urged to read the registration statement and the joint proxy statement/prospectus regarding the proposed transaction when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about First Union and Wachovia, at the SEC's Internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC filings that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to First Union Corporation, Investor Relations, One First Union Center, 301 South College Street, Charlotte, NC 28288-0206, (704)-374-6782, or to Wachovia Corporation, Investor Relations, 100 North Main Street, Winston-Salem, NC 27150, (888)-492-6397. First Union and Wachovia, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies from the stockholders of First Union and Wachovia in connection with the merger. Information about the directors and executive officers of First Union and their ownership of First Union common stock is set forth in the proxy statement, dated March 13, 2001, for First Union's 2001 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Information about the directors and executive officers of Wachovia and their ownership of Wachovia common stock is set forth in the proxy statement, dated March 19, 2001, for Wachovia's 2001 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Additional information regarding the interests of those participants may be obtained by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. # # # EX-99.2 3 ex99-2_42347.txt THE MERGER PRESENTATION Exhibit 99.2 [First Union Logo appears here] [Wachovia logo appears here] The New Wachovia Strategic and Clearly Compelling for Stockholders - -------------------------------------------------------------------------------- April 16, 2001 Cautionary Statement - -------------------------------------------------------------------------------- This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements about the benefits of the merger between First Union Corporation and Wachovia Corporation, including future financial and operating results, cost savings, enhanced revenues, and accretion to reported earnings that may be realized from the merger; (ii) statements with respect to First Union's and Wachovia's plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as "believes", "expects", "anticipates", "estimates", "intends", "plans", "targets", "projects" and similar expressions. These statements are based upon the current beliefs and expectations of First Union's and Wachovia's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the risk that the businesses of First Union and Wachovia will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; (3) revenues following the merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption following the merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the ability to obtain governmental approvals of the merger on the proposed terms and schedule; (6) the failure of First Union's and Wachovia's stockholders to approve the merger; (7) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (8) the strength of the United States economy in general and the strength of the local economies in which the combined company will conduct operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the combined company's loan portfolio and allowance for loan losses; (9) changes in the U.S. and foreign legal and regulatory framework; and (10) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on the combined company's capital markets and asset management activities. Additional factors that could cause First Union's and Wachovia's results to differ materially from those described in the forward-looking statements can be found in First Union's and Wachovia's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available at the SEC's Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to First Union or Wachovia or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. First Union and Wachovia do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made. [First Union Logo appears here] [Wachovia logo appears here] 1 Additional Information - -------------------------------------------------------------------------------- The proposed transaction will be submitted to First Union's and Wachovia's stockholders for their consideration, and First Union and Wachovia will file a registration statement, a joint proxy statement/prospectus and other relevant documents concerning the proposed transaction with the SEC. Stockholders are urged to read the registration statement and the joint proxy statement/prospectus regarding the proposed transaction when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about First Union and Wachovia, at the SEC's Internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC filings that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to First Union, Investor Relations, One First Union Center, Charlotte, North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor Relations, 100 North Main Street, Winston-Salem, North Carolina 27150 (888-492-6397). First Union and Wachovia, and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of First Union and Wachovia in connection with the merger. Information about the directors and executive officers of First Union and their ownership of First Union common stock is set forth in the proxy statement, dated March 13, 2001, for First Union's 2001 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Information about the directors and executive officers of Wachovia and their ownership of Wachovia common stock is set forth in the proxy statement, dated March 19, 2001, for Wachovia's 2001 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Additional information regarding the interests of those participants may be obtained by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. [First Union Logo appears here] [Wachovia logo appears here] 2 The New Wachovia - -------------------------------------------------------------------------------- --------------------------------------------- Regional Ruler with Scale National Businesses --------------------------------------------- Strategic #1 Retail bank in East Proposition: Premier wealth management and brokerage franchise Strengthened middle market-focused corporate and investment banking group Low Risk: Market-for-market merger of equals In market-- significant efficiencies Measured approach to integration Key management in place Strong balance sheet and enhanced reserves [First Union Logo appears here] [Wachovia logo appears here] 3 The New Wachovia Focused Strong Management Team - -------------------------------------------------------------------------------- [A chart appears here with the following text] New Wachovia Board of Directors 50/50 Ken Thompson L.M. "Bud" Baker President and CEO Chairman Ben Jenkins General Banking Bob Kelly Finance David Carroll Merger Integration Bob McCoy Jean Davis Operations and Technology Stan Kelly Wealth Management Don Truslow Risk Management Mark Treanor Legal Paul George Human Resources Don McMullen Brokerage and Asset Management Barnes Hauptfuhrer Steve Cummings Corporate and Investment Banking [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 4 The New Wachovia Strategic and Clearly Compelling for All Shareholders - -------------------------------------------------------------------------------- o Positioned for superior financial performance - Attractive demographics - Standout distribution - Product leadership o Compatible, disciplined management team o Leverages best practices, products and people of each partner - -------------------------------------------------------------------------------- Significant Value Creation This Is Not Simply About Getting Bigger - -------------------------------------------------------------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 5 The New Wachovia Shareholder Value Created - -------------------------------------------------------------------------------- New Paradigm Transaction o Immediately accretive to cash EPS for all shareholders o IRR in excess of 20% for each partner o All assumptions are conservative - Cost saves-- 8% of combined expenses - No revenue enhancements - No credit given to significant investable excess capital generated - Measured approach to integration o In market-- low execution risk [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 6 The New Wachovia Merger Summary Name: Wachovia Accounting: Purchase Exchange Ratio: 2.0 First Union shares for each Wachovia share Dividend: Initial quarterly dividend rate of $0.24 Payout ratio targeted at 35-40% Management: L.M. (Bud) Baker, Chairman Ken Thompson, President & CEO Board Composition: 50% First Union directors, 50% Wachovia directors Headquarters: Charlotte, North Carolina Estimated Divestitures: Approximately $1.5-$2 billion Timing: Expected closing 3rd quarter 2001 Approvals: Normal regulatory approvals and both companies' shareholder approvals Stock Options: Reciprocal options for 19.9% Other: Pre closing $.48 dividend to existing Wachovia stockholders [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 7 The New Wachovia Low Risk -- High Rewards - -------------------------------------------------------------------------------- Impact on Business Lines Each Partner o Retail Bank Strength - Distribution Improved - Market share Improved o Brokerage and Wealth Management Scope - Product mix Improved - Distribution Improved o Corporate/Investment Bank Scale - Client mix Improved - Cross sell opportunities Improved Financial o Cash EPS Improved o Growth Rate of Net Income Improved o Reserve Coverage Improved o Capacity to Generate Excess Capital Improved [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 8 The New Wachovia Asset Gathering, Distribution Powerhouse - -------------------------------------------------------------------------------- Pro Forma Net Income Composition 2001 Estimate [Pie chart appears here with the following plot points] Retail Bank 46% Brokerage and Wealth Management 21% Corporate and Investment Bank 24% Other 9% [Arrow appears here] "Normalized" over 3-5 years [Pie chart appears here with the following plot points] Retail Bank 35-40% Brokerage and Wealth Management 30-35% Corporate/Investment Bank and Other 25-30% ------------------------------------------------- Focus on higher growth businesses has not changed ------------------------------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 9 The New Wachovia Business/Financial Goals - -------------------------------------------------------------------------------- Net Income Business Line Growth Goals Retail Bank 7% - 9% Brokerage and Wealth Management 15%+ Corporate and Investment Bank 10%+ Corporate Goals Cash EPS Growth 10% - 12%+ Cash Return on Equity 16% - 20% Cash Return on Tangible Equity 25% - 30% [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 10 The New Wachovia Superior Market Share - -------------------------------------------------------------------------------- [Map appears here depicting all Wachovia and First Union offices on East Coast] #1 Retail Bank in East Deposit Rank State Share - -------------------------------------------------------------------- #1 North Carolina 24% #1 South Carolina 21% #1 Virginia 20% #1 Eastern PA 20% #1 Georgia 19% #2 Florida 16% #2 New Jersey 12% [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 11 The New Wachovia Enhanced Share AND Growth - -------------------------------------------------------------------------------- Projected Population Growth(1) [Bar chart appears here with the following plot points.] Total U.S. 4.5% New Wachovia Markets 6.0% o #1 Share in 8 of top 15 MSAs in footprint - Atlanta - Philadelphia - Charlotte - West Palm - Greensboro - Jacksonville - Richmond - Raleigh-Durham o 90% of deposits in MSAs where combined company will rank in top 3 in market share o Improved market position and potential efficiencies drive growth - -------------------------------------------------------------------------------- Retail Bank Earnings Growth Target of 7%-9% - -------------------------------------------------------------------------------- (1) Weighted average growth rates. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 12 The New Wachovia Distribution Powerhouse - -------------------------------------------------------------------------------- o #3 bank branch network -- 2,900 branches o #6 brokerage network in U.S. -- 600 offices o #5 nationwide ATM network -- 5,128 ATMs o #2 on-line banking franchise -- 3 million customers o Private client, high net worth platform -- 133 offices o Leading direct telephone bank -- 150 million + call capacity ----------------------------------------- Tailored Delivery to 19 Million Customers ----------------------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 13 The New Wachovia Brokerage and Wealth Management Scope - -------------------------------------------------------------------------------- [FIRST UNION o 8,350 registered reps nationwide SECURITIES LOGO APPEARS HERE] [EVERGREEN FUNDS o $222 billion AUM LOGO APPEARS HERE] [IJL WACHOVIA o $96 billion in mutual fund assets LOGO APPEARS HERE] - 4th largest among banks - 112 mutual funds [OFFITBANK LOGO o $15 billion in ultra high* net worth assets APPEARS HERE] *Over $10 million in investable assets [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 14 The New Wachovia Brokerage and Asset Management Growth Drivers - -------------------------------------------------------------------------------- o Expanded mutual fund/annuity offerings o Enhanced brokerage distribution for securities o Cross-sale of institutional asset management o Drive greater penetration of both partners' customer base ------------------------------ Targeting 15%+ Earnings Growth Over a Cycle ------------------------------ [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 15 The New Wachovia Corporate and Investment Banking Leader - -------------------------------------------------------------------------------- o Leader in corporate/middle market relationships on East Coast o Premier treasury services/cash management provider o Full service investment banking capability - Capital Markets - Advisory Services - Private Equity ------------------------------------------- Leverages significant platform over broader corporate customer base ------------------------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 16 The New Wachovia Corporate and Investment Banking Growth Drivers - -------------------------------------------------------------------------------- Maintain Strategic o Industry-aligned corporate and investment Focus banking teams o Focus on middle market companies o Leverage in-footprint advantage - -------------------------------------------------------------------------------- Actively Manage o Active portfolio management Credit Relationships o Manage down significant concentrations o Higher RAROC hurdles to be applied to credit relationships - -------------------------------------------------------------------------------- Deepen and o Treasury services/cash management Enhance Client Relationships o Capital markets/derivatives o Debt and equity underwriting o M&A/High yield ------------------------------------------- Targeting 10%+ Earnings Growth over a Cycle ------------------------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 17 The New Wachovia Disciplined Financial Operating Philosophy - -------------------------------------------------------------------------------- o Culture of expense control and positive operating leverage o Financial performance driven -- focused on quality growth - Utilize RAROC and economic profit (EP) metrics - Minimum 18% IRR for external investments o Rigorous capital allocation methodology - Minimum 15% IRR for internal investments - Willingness to exit low return, capital intensive businesses o Cash earnings will be used as basis for future reporting ----------------------------- Commitment to measurement and accountability at every level ----------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 18 The New Wachovia Financial Assumptions - -------------------------------------------------------------------------------- Cost Savings: $890 million pre-tax Integration Period: 3 years Restructuring Charge: $1.45 billion pre-tax Accounting: Purchase Allowance Increase: $450 million Assumed Impact $30 million net income foregone of Divestiture: No credit given for reinvestment of sale proceeds Revenue Enhancements: None Assumed Reinvestment of Net Excess Capital Generated: None Assumed Additionally, purchase accounting adjustments will be made at closing [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 19 The New Wachovia Pro Forma Financial Results - -------------------------------------------------------------------------------- 2002E 2003E 2004E Cash EPS $3.28 $3.67 $4.11 Wachovia Accretion 15.2% 17.4% 19.8% First Union Accretion 3.7% 5.3% 7.1% New GAAP EPS $3.09 $3.49 $3.96 Wachovia Accretion 9.1% 12.8% 16.6% First Union Accretion 0.0% 2.5% 5.4% Conservative Assumptions o Modest cost savings phased in over 3 years o No revenue enhancements o No credit given to significant investable excess capital [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 20 The New Wachovia Financial Overview - -------------------------------------------------------------------------------- ($ in millions, except per share data) 2002 2003 2004 - ------------------------------------------------------------------- Projected First Union Cash Income $ 3,090 $ 3,383 $ 3,710 Projected Wachovia Cash Income 1,056 1,154 1,262 Impact of Divestiture (30) (30) (30) Core Deposit Amortization (273) (232) (191) Expense Efficiencies 303 414 552 ------- ------- ------- Total Deal Impact 0 152 331 ------- ------- ------- Projected Net New GAAP Income $ 4,146 $ 4,689 $ 5,303 Projected Net Cash Income $ 4,419 $ 4,921 $ 5,494 ======= ======= ======= [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 21 The New Wachovia Conservative/Achievable Expected Cost Synergies - -------------------------------------------------------------------------------- Amount - ---------------------------------------------- Personnel $420 Equipment/Related Assets 30 Occupancy 114 Other 326 ---- Total Pre-Tax Synergies per Annum $890 As a % of Combined Expenses 8% Peer Transaction Average 12% ------------------------------------------ Quarterly disclosure of actual performance against expected synergies ------------------------------------------ [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 22 The New Wachovia One-Time Restructuring Charge - -------------------------------------------------------------------------------- One-time integration charge of $1,450 million pre-tax expected Staff Training, Retention and Severance $465 Integration Real Estate/Premises 295 Systems 435 Other 255 ------ Total Pre-Tax Charges $1,450 Pre-Tax Charges as a % of Synergies 163% Peer Transaction Average 160% Addition to Allowance $450 Additionally, purchase accounting adjustments will be made at closing [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 23 The New Wachovia Positioned to Generate Significant Excess Capital - -------------------------------------------------------------------------------- 2002(1) ------- ($ in billions) Pro forma earnings $ 4.2 Efficiencies .5 Capital generated annually $ 4.7 ------ Pro forma dividend (1.5) 6% loan growth (0.7) ------ Net Excess Annual Capital Generated $ 2.5 -------------------------------------- Free Capital Expected To Grow Over 15% Per Annum Over Next 3 Years -------------------------------------- (1) Assumes fully phased in efficiencies and all numbers are on an after-tax basis. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 24 The New Wachovia Potential Reinvestment Impact - -------------------------------------------------------------------------------- o Redeploying $2.5 billion of net excess capital generated per annum should substantially enhance cash EPS and growth Per Annum/Per Share Impact - - Share Repurchase $0.20 - - Reinvestment in Key Business Lines 15% IRR $0.27 18% IRR $0.32 ----------------------------------------------------------- Purchase accounting affords New Wachovia substantial flexibility to optimally manage and redeploy excess capital ----------------------------------------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 25 The New Wachovia Three Year Integration Plan Minimizes Risk - -------------------------------------------------------------------------------- ---------------------------------------- Decisive, clear, clean and appropriately paced for our customers ---------------------------------------- o Approximately 250-300 planned branch consolidations - No branch closures within first 12 months and until system conversion is complete - Approximately 65% within .5 mile and all within 1 mile o 7,000 positions affected over the next 3 years - Approximately 50% absorbed through normal attrition - Hiring freeze immediately in place o Actively communicate with all constituencies - Customers - Employees - Communities [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 26 The New Wachovia Well Reserved for Portfolio Risk o Enhanced reserves of $450 million established to reduce credit concentrations New Wachovia ------------ Total Assets $323.7 Net Loans 174.3 Loan Loss Reserves 3.1 Nonperforming Loans** 1.6 Top 20 Bank Median* ------------ Reserves/Loans 1.76% 1.50% NPAs/Assets 0.56% 0.51% * As of 12/31/00. ** Excludes NPLs classified in held for sale. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 27 The New Wachovia Strong Balance Sheet The New Wachovia ($ in billions) Pro forma at Closing - ------------------------------------------------ Common equity $28.7 Trust preferred 3.0 Intangibles (11.7) ----- Tier 1 capital $20.0 Total capital 31.3 Net risk weighted assets $258.6 Top 20 Adj. avg. assets 294.9 Bank Median* Tier 1 capital 7.7% 7.6% Total capital 12.1% 11.2% Leverage Ratio 6.8% 7.1% * As of 12/31/00. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 28 The New Wachovia Returns Well in Excess of Investment Hurdle Rates -------------------------------------- 20%+ internal rates of return for both companies' shareholders -------------------------------------- Conservative IRR Assumptions o Cash earnings through 2004 as shown herein o Growth of 10% per annum through 2006, low end of expectations o Net excess free capital generated, before dividends, assumed as per annum cashflow o Initial investment equal to adjusted current share prices o Terminal values consistent with both partners' current public market earnings multiple [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 29 The New Wachovia Financially Attractive -- Execution Risk Mitigated - -------------------------------------------------------------------------------- o Clearly defined management roles o Strong balance sheet o In market-- measured integration over 3 years o Realistic expense savings estimates o Modest deposit divestitures expected o No revenue enhancements assumed despite opportunities o No credit given to significant investable excess capital generated ------------------------------ Customers will be our #1 focus ------------------------------ [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 30 The New Wachovia Summary - -------------------------------------------------------------------------------- o Creates regional ruler with scale national businesses o Conservative, compelling, shareholder focused transaction o Integration excellence o Will remain intensely focused on: - Customer Service - Revenue Growth - Cost Control - Value Creation ------------------------------ Customers will be our #1 focus ------------------------------ [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 31 - -------------------------------------------------------------------------------- Appendix [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 32 The New Wachovia Balance Sheet - -------------------------------------------------------------------------------- December 31, 2000 ($ millions) First Union Wachovia Pro Forma - ----------------------------------------------------------------------- Cash & Equivalents 24,385 4,690 29,075 Net Loans 122,038 54,179 176,217 Securities & Trading Assets 70,876 9,556 80,432 Other Assets 36,871 5,607 42,478 ------- ------ ------- Total Assets 254,170 74,032 328,202 Deposits 142,668 44,412 187,080 Short-term Borrowings 47,801 9,944 57,745 Long-term Debt 35,809 10,808 46,617 Other Liabilities 12,545 2,583 15,128 ------- ------ ------- Total Liabilities 238,823 67,747 306,570 Common Equity 15,347 6,285 21,632 ------- ------ ------- Total Liabilities and Equity 254,170 74,032 328,202 Not adjusted for Republic Security Financial acquisition. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 33 The New Wachovia Loan Composition - --------------------------------------------------------------------------------
First Union Wachovia Pro Forma ----------------------------------------------------------------------------------- Total % of Total Total % of Total % of Total 12/31/00 Loans 12/31/00 Loans Total Loans - ------------------------------------------------------------------------------------------------------------ Commercial & Industrial $ 54,207 44% $ 18,266 36% $ 72,473 42% Lease Financing, net 8,983 7% 2,840 6% 11,823 7% Commercial Real Estate 12,322 10% 12,395 25% 24,717 14% Residential Real Estate 17,708 14% 9,234 18% 26,942 15% Consumer 25,087 20% 6,393 13% 31,480 18% Other 5,453 4% 1,380 3% 6,833 4% ------- --- ------ --- ------- --- 123,760 100% 50,508 100% 174,268 100% Card 4,494 4,494 Loan Loss Reserve (1,722) (823) (2,545) ------ ---- ------ Net Loans 122,038 54,179 176,217
Not adjusted for Republic Security Financial acquisition. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 34 The New Wachovia Deposit Composition - --------------------------------------------------------------------------------
($ millions) First Union Wachovia Pro Forma ----------------------------------------------------------------------- Total % of Total Total % of Total % of Total 12/31/00 Loans 12/31/00 Loans Total Loans - ------------------------------------------------------------------------------------------------ Deposits Demand $ 30,315 21% $ 9,180 21% $ 39,495 21% Savings, NOW 56,845 40% 18,019 41% 74,864 40% Consumer CDs 35,223 25% 9,535 21% 44,758 24% ------- -- ------ -- ------- -- Core Deposits 122,383 86% 36,734 83% 159,117 85% Other Time 12,490 9% 3,673 8% 16,163 9% Foreign 7,795 5% 4,005 9% 11,800 6% ------- -- ------ -- ------- -- Total Deposits 142,668 100% 44,412 100% 187,080 100%
Not adjusted for Republic Security Financial acquisition. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 35 The New Wachovia Modest Estimated Deposit Divestiture - -------------------------------------------------------------------------------- ($ millions) Required Divested Announce Date Transaction Deposits % of Deposits - -------------------------------------------------------------------------------- 3/15/99 Fleet/BankBoston $13,400 27.6% 8/12/91 Bank America/Security Pacific 9,000 11.2 5/8/95 U.S. Bancorp/West One 720 10.5 4/10/00 Wells Fargo/First Security 1,200 9.1 8/29/97 NationsBank/Barnett 2,600 7.8 4/27/98 First Union/CoreStates 2,300 6.8 1/24/96 Wells Fargo/First Interstate 2,546 5.2 ---------------------------- Average 11.2% ---------------------------- - -------------------------------------------------------------------------------- 4/16/01 First Union/Wachovia $1,500-2,000 3.4%-4.5% - -------------------------------------------------------------------------------- [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 36 The New Wachovia Strong Market Share and Branch Efficiency - -------------------------------------------------------------------------------- ($ billions) Market Deposits/ (Post Consolidation) Deposits Share Rank Branch Rank - ---------------------------------------------------------------- North Carolina $ 27.2 24.2% 1 $54 1 South Carolina 8.1 21.2 1 55 1 Virginia 17.4 19.7 1 60 1 Georgia 18.5 19.1 1 59 1 Florida 34.3 16.5 2 54 2 Eastern Pennsylvania 21.5 19.5 1 62 3 District of Columbia 1.8 15.2 3 55 3 New Jersey 18.3 11.7 2 54 2 Connecticut 4.1 7.1 4 50 5 Maryland 4.1 6.4 6 41 4 New York 18.6 4.2 5 56 5 [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 37 The New Wachovia Strategic Rationale - -------------------------------------------------------------------------------- Largest Bank in the Southeast by Deposits(a) Rank Institution Deposits ($B) Share Branches - ----------------------------------------------------------------------------- ProForma $98.2(b) 18.90% 1,920 1 Bank of America Corp. 78.2(b) 15.00 1,636 2 First Union 64.1 12.30 1,139 3 SunTrust Banks, Inc. 45.1 8.66 879 4 Wachovia 41.3 7.92 781 5 BB&T Corp. 35.2 6.76 852 6 SouthTrust Corp. 16.0 3.07 413 7 Regions Financial Corp. 9.3 1.79 256 8 First Citizens BancShares Inc. 8.5 1.64 394 9 Synovus Financial Corp. 8.3 1.59 198 10 Royal Bank of Canada 8.1 1.56 258 --------------------------------------------------------------- The combined company will be the leading Southeastern franchise with 25% more deposits than its next nearest competitor --------------------------------------------------------------- Source: SNL Securities, as of June 30, 2000. (a) Includes the states of VA, NC, SC, GA and FL. (b) Excludes home office branch deposits. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 38 The New Wachovia Executive Summary - -------------------------------------------------------------------------------- Creates One of the Nation's Largest Banking Franchises by any Measure(a) ($ in billions) Market Value - ---------------------------------- 1 Citigroup $223.7 2 Bank of America 88.4 3 J.P. Morgan Chase 86.7 4 Wells Fargo 84.7 Pro Forma 45.1 5 FleetBoston/Summit 41.3 6 U.S. Bancorp/Firstar 39.5 7 Bank of New York 36.4 8 Bank One 36.1 9 Fifth Third/Old Kent 33.1 10 First Union 32.4 17 Wachovia 12.7 Common Equity - ---------------------------------- 1 Citigroup $63.0 2 Bank of America 47.6 3 J.P. Morgan Chase 40.8 4 Wells Fargo 26.2 Pro Forma 21.9 5 FleetBoston/Summit 18.8 6 Bank One 18.4 7 First Union 15.3 8 U.S. Bancorp/Firstar 15.2 9 SunTrust Banks 8.2 10 National City 6.7 15 Wachovia 6.5 2000 Operating Income - ---------------------------------- 1 Citigroup $14.0 2 Bank of America 7.9 3 J.P. Morgan Chase 5.8 4 Wells Fargo 4.4 Pro Forma 3.9 5 U.S. Bancorp/Firstar 3.6 6 FleetBoston/Summit 3.1 7 First Union 2.9 8 Bank One 2.0 9 Bank of New York 1.4 10 SunTrust Banks 1.3 17 Wachovia 1.0 Total Assets - ---------------------------------- 1 Citigroup $901 2 J.P. Morgan Chase 715 3 Bank of America 642 Pro Forma 328 4 Wells Fargo 272 5 Bank One 269 6 First Union 254 7 FleetBoston/Summit 219 8 U.S. Bancorp/Firstar 165 9 SunTrust Banks 103 10 National City 89 14 Wachovia 74 * Note: Wachovia data pro forma for Republic Financial acquisition. (a) Financial information as of December 31, 2000; market information as of March 31, 2000 [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 39 The New Wachovia Strategic Rationale - -------------------------------------------------------------------------------- Leading Market Share Position in Many of the Largest MSAs
Pro Forma First Union/Wachovia ------------------------------ 5 Year Est. Pro Forma Largest MSAs Rank Deposits Share Pop. Growth - ---------------------- ---- -------- ----- ----------- Philadelphia, PA-NJ 1 16,517 23.9 0.28 Atlanta, GA 1 14,838 27.2 12.73 Charlotte-Gastonia-Rock Hill, NC-SC (a) 1 9,407 46.5 7.06 Washington, DC-MD-VA-WV 3 7,492 10.8 6.32 Greensboro-Winston-Salem-High Point, NC 1 6,803 33.4 5.55 Miami, FL 2 6,377 15.8 0.76 Newark, NJ 2 6,369 18.4 4.82 West Palm Beach-Boca Raton, FL 1 4,936 23.1 10.91 Jacksonville, FL 1 4,148 41.0 7.28 Richmond-Petersburg, VA 1 4,068 25.4 3.62 Tampa-St. Petersburg-Clearwater, FL 2 4,039 12.9 5.38 New Haven-Bridgeport-Stamford, CT 3 3,725 12.7 0.84 Fort Lauderdale, FL 2 3,660 16.0 8.03 Raleigh-Durham-Chapel Hill, NC 1 3,251 26.7 12.16 Roanoke, VA 1 2,944 58.2 (0.62) Middlesex-Somerset-Hunterdon, NJ 3 2,919 11.5 2.51 Monmouth-Ocean, NJ 2 2,823 16.0 6.42 Baltimore, MD 5 2,635 8.1 2.37 Orlando, FL 3 2,316 14.0 10.87
-------------------------------------------------------------------------- The combined company will be the leading player in 7 of its top 10 markets -------------------------------------------------------------------------- Source: SNL Securities, as of June 30,2000,excluding foreign deposits. (a) Excludes BAC's $22.4 billion home office deposit. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 40 The New Wachovia Comparison to Peers* - --------------------------------------------------------------------------------
New(1) Wachovia Ranking FBF ONE USB WFC BAC -------- ------- --- --- --- --- --- Market Capitalization (as of 03/31/01) $ 45 5 $ 41 $ 36 $ 39 $ 85 $ 88 Total Assets $ 324 2 $ 219 $ 269 $ 165 $ 272 $ 642 Deposits $ 187 2 $ 129 $ 167 $ 110 $ 170 $ 364 Fee Revenue/Total Revenue 46.5% 2 52.1% 36.6% 42.9% 44.9% 44.0% Assets Under Management $ 222 2 $ 127 $ 131 $ 116 $ 138 $ 277 Mutual Funds $ 96 2 $ 39 $ 70 $ 50 $ 69 $ 107 Registered Representatives 8,350 1 1,226 770 1,175 626 2,472 Online Customers (millions) 2.9 2 1.0 0.9 0.4 2.5 3.0 Branches 2,861 3 1,700 1,800 2,239 3,092 4,500
* $s in billions and as of 12/31/00 except as noted (1) Pro forma for Wachovia card divestiture [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 41 The New Wachovia Conservative Synergy Estimates - --------------------------------------------------------------------------------
($ millions) Pre-Tax Synergies as a % of Ratio of One Time Recent Merger Transactions Synergies Combined Expenses Synergies - -------------------------- --------- ----------------- --------- Star Banc/Firstar (July 1998) $ 174 16% 1.9x Fleet Financial/BankBoston (March 1999) 1,000 14%* 0.7 NationsBank/BankAmerica (April 1998) 2,203 13% 0.6 Bank One/First Chicago (April 1998) 930 10% 1.3 Firstar/Mercantile (September 1999) 169 8% 2.5 Norwest/Wells Fargo (June 1998) 650 8% 1.5 Firstar/U.S. Bancorp (October 2000) 266 5% 3.0 Average 11% 1.6 In-Market Average 12% - --------------------------------------------------------------------------------------------- New Wachovia $890 8% 1.6x - ---------------------------------------------------------------------------------------------
* Excludes Latin American expense base [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 42 The New Wachovia Strategic Rationale - -------------------------------------------------------------------------------- Compelling Pro Forma Market Presence
Pro Forma ---------------------------------------------------------- MSA Market # of # of Deposits % of Total Share Rank MSAs Branches ($ B) MSA Deposits Cumulative - ---------- ---- -------- ----- ------------- ---------- #1 24 1,252 $ 76.5 52% 52% #2 14 614 38.0 26% 78% #3 8 405 18.8 13% 90% Other MSA 29 370 14.3 10% 100% Total MSAs (a) 75 2,641 $ 147.6 100% ======= ==== Non MSAs 246 $10.9 Total Deposits (a) $158.4 ======= % of U.S. Deposits in MSAs (a) 93% U.S. Total Deposit Rank 4
----------------------------------------------------------- 90% of pro forma MSAs will have a top 3 ranking by deposits ----------------------------------------------------------- Source: SNL Securities, as of June 30,2000,excluding foreign deposits. (a) Deposits exclude $15.8 billion deposit in Kent, NY branch. [FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE] 43 EX-99.3 4 ex99-3_42347.txt THE EARNINGS RELEASE Exhibit 99.3 For Additional Information: Robert S. McCoy, Jr. Vice Chairman and Chief Financial Officer, 336-732-5926 Marsha L. Smunt Investor Relations, 336-732-5788 April 16, 2001 Wachovia Reports First Quarter Earnings and Postponement of Annual Shareholders' Meeting Wachovia Corporation (NYSE: WB) today announced operating earnings of $1.22 per diluted share for the first quarter of 2001 compared with $1.30 per diluted share a year earlier. Wachovia also announced postponement of its shareholders' meeting originally scheduled for April 27, 2001, following today's announcement of the proposed merger with First Union Corporation. The shareholders' meeting will be rescheduled for a later time. "This was a steady quarter of performance for Wachovia," said L.M. Baker Jr., chairman and chief executive officer. "Although the economic slowdown continues, several measures of performance improved, including important progress on credit issues. Results for the quarter were similar to expectations communicated during our Analyst and Institutional Investor Conference on March 28th and 29th. Compared with the fourth quarter, net interest margin yield was stable, nonperforming loans decreased 18 percent, loan losses and expenses were as planned. Looking forward, we are excited about opportunities available through the proposed merger with First Union and believe it is appropriate to postpone our annual meeting until we can provide a full discussion of these opportunities." Operating net income in the first quarter was $252.5 million compared with $257.4 million in the fourth quarter of 2000. Reported net income in the first quarter was $242.1 million or $1.17 per diluted share. Operating earnings exclude nonrecurring pretax restructuring charges of $13.2 million. The net yield on interest earning assets was 3.93 percent compared with 3.94 percent in the fourth quarter. Net interest income increased on moderately higher loan volumes. The provision for loan losses was $121.5 million for the first quarter, and the ratio of the allowance for loan losses to period-end loans remained 1.50 percent. Nonperforming loans declined $90 million from December 31, 2000, to $410 million at March 31, 2001. Net loan losses of $118.7 million for the first quarter were near the average of the prior two quarters. As a percentage of average loans outstanding, net loan losses were .85 percent for the first quarter 2001 compared with .70 percent in the fourth quarter. Wachovia will provide complete financial results, as scheduled, on Wednesday, April 18, 2001. A conference call will be held at 9:30 a.m. (Eastern Time) on Wednesday and will be available by calling 913-981-5592 or via the Internet at www.wachovia.com/investor/conference.asp. Replays of the conference call will be available from 12:30 p.m. April 18 until midnight April 22 at the same Internet address or by phone (719-457-0820, access code 797962). This news release contains forward-looking statements regarding Wachovia Corporation. All forward-looking statements involve risk and uncertainty and actual results could differ materially from the anticipated results or other expectations expressed in the forward-looking statements. A discussion of factors that could cause actual results to differ materially from those expressed in the forward-looking statements is included in Wachovia's filings with the Securities and Exchange Commission.
Wachovia Corporation First Quarter Fourth Quarter Financial Summary 2001 2000 - ----------------------------------------------------------------------------------------- Operating net income ($ millions)* $252.5 $257.4 Operating earnings per diluted share* $1.22 $1.26 Net yield on interest earning assets 3.93% 3.94% Provision for loan losses ($ millions) $121.5 $117.5 Ratio of allowance for loan losses to period-end loans 1.50% 1.50% Non-performing loans at period-end ($ millions) $410.1 $499.9 Reported net income ($ millions) $242.1 $244.7 Reported net income per diluted share $1.17 $1.20 Average diluted shares (millions) 207.6 204.4 * excludes nonrecurring charges
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