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