<PAGE>
3,143,510 SHARES
[FIRST UNION logo FIRST UNION CORPORATION
appears here--see appendix] COMMON STOCK
(PAR VALUE $3.33 1/3 PER SHARE)
This Prospectus relates to the shares (the "Shares") of Common Stock,
$3.33 1/3 par value per share (together with the FUNC Rights (as hereinafter
defined) attached thereto, the "Common Stock"), of First Union Corporation (the
"Corporation" or "FUNC") owned by the stockholders named herein under "Selling
Stockholders". The Shares were issued to such Selling Stockholders in connection
with the acquisition of Lieber & Company ("Lieber") and Evergreen Asset
Management Corp. ("EAMC") by FUNC on June 30, 1994. The Selling Stockholders
have advised FUNC that they propose to offer such Shares which they own for
sale, from time to time, through brokers in brokerage transactions on the New
York Stock Exchange ("NYSE"), to underwriters or dealers in negotiated
transactions or in a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Brokers,
dealers and underwriters that participate in the distribution of the Shares may
be deemed to be underwriters under the Securities Act of 1933 (as amended, and
together with the rules and regulations thereunder, the "Securities Act"), and
any discounts or commissions received by them from the Selling Stockholders and
any profit on the resale of Shares by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Each Selling Stockholder may
be deemed to be an underwriter under the Securities Act.
FUNC will not receive any part of the proceeds from the sale of the Shares.
The Selling Stockholders will pay all applicable stock transfer taxes, brokerage
commissions, underwriting discounts or commissions and the fees of Selling
Stockholders' counsel, but FUNC will bear all other expenses in connection with
the offering made hereunder. FUNC has agreed to indemnify the Selling
Stockholders and underwriters of the Selling Stockholders against certain
liabilities, including certain liabilities under the Securities Act, in
connection with the registration and the offering and sale of the Shares.
The Shares are listed on the NYSE. The closing price per share of Common
Stock on the NYSE Composite Transactions Tape (the "NYSE Tape") on December 21,
1994, was $41.125.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF THE CORPORATION'S COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION
OR ANY OTHER GOVERNMENT AGENCY.
The date of this Prospectus is December 22, 1994.
<PAGE>
AVAILABLE INFORMATION
FUNC is subject to the informational requirements of the Securities
Exchange Act of 1934 (as amended, and the rules and regulations thereunder, the
"Exchange Act"), and, in accordance therewith, files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by FUNC can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's Regional Offices in New York (7 World Trade Center, 13th Floor, New
York, New York 10048) and Chicago (Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661) and copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock and
FUNC's Series 1990 Cumulative Perpetual Adjustable Rate Preferred Stock ("Series
1990 Preferred Stock") are listed and traded on the NYSE. Reports, proxy
statements and other information relating to FUNC can also be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-3, of which this Prospectus is a part, and the
exhibits thereto (together with any amendments or supplements thereto, the
"Registration Statement"), which has been filed by FUNC with the Commission
under the Securities Act, certain portions of which have been omitted pursuant
to the rules and regulations of the Commission and to which portions reference
is hereby made for further information.
THIS PROSPECTUS INCORPORATES CERTAIN FUNC DOCUMENTS BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. A COPY OF SUCH DOCUMENTS IS
AVAILABLE WITHOUT CHARGE (OTHER THAN CERTAIN EXHIBITS TO SUCH DOCUMENTS) TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER TO WHOM A PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST FROM: FIRST UNION CORPORATION, INVESTOR RELATIONS, TWO
FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28288-0206 (TELEPHONE NUMBER (704)
374-6782).
The Commissioner of Insurance of the State of North Carolina (the
"Commissioner") has not approved or disapproved this offering nor has the
Commissioner passed upon the accuracy or adequacy of this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by FUNC with the Commission (File No.
1-10000) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference in this Prospectus:
(i) FUNC's Annual Report on Form 10-K for the year ended December 31, 1993;
(ii) FUNC's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1994, June 30, 1994 and September 30, 1994; and
(iii) FUNC's Current Report on Form 8-K dated December 20, 1994.
All documents filed by FUNC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date hereof are hereby incorporated by
reference into this Prospectus and shall be deemed a part hereof from the date
of filing of such documents.
Any statement contained herein, in any supplement hereto or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, in any supplement
hereto or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement, this
Prospectus or any supplement hereto.
2
<PAGE>
FUNC
GENERAL
Financial and other information relating to FUNC, including information
relating to FUNC's directors and executive officers, is set forth in FUNC's 1993
Annual Report on Form 10-K, 1994 Annual Meeting Proxy Statement and 1994 First,
Second and Third Quarter Reports on Form 10-Q, copies of which may be obtained
from FUNC as indicated under "AVAILABLE INFORMATION".
HISTORY AND BUSINESS
FUNC was incorporated under the laws of North Carolina in 1967 and is
registered as a bank holding company under the Bank Holding Company Act of 1956
(the "BHCA"). Pursuant to a corporate reorganization in 1968, First Union
National Bank of North Carolina ("FUNB-NC") and First Union Mortgage
Corporation, a mortgage banking firm acquired by FUNB-NC in 1964, became
subsidiaries of FUNC.
In addition to FUNB-NC, FUNC also operates banks in Florida, South
Carolina, Georgia, Tennessee, Virginia, Maryland and Washington, D.C. In
addition to providing a wide range of commercial and retail banking and trust
services through its banking subsidiaries, FUNC also provides various other
financial services, including mortgage banking, home equity lending, insurance
and securities brokerage services, through other subsidiaries.
Since the 1985 Supreme Court decision upholding regional interstate banking
legislation, FUNC has concentrated its efforts on building a large, regional
banking organization in what it perceives to be some of the better banking
markets in the southeastern and south atlantic regions of the United States.
Since November 1985, FUNC has completed 48 banking related acquisitions,
including the more significant completed and pending acquisitions (I.E.,
acquisitions involving the acquisition of $3.0 billion or more of assets or
deposits) set forth in the following table.
<TABLE>
<CAPTION>
ASSETS/ CONSIDERATION/
NAME HEADQUARTERS DEPOSITS(1)(3) ACCOUNTING TREATMENT COMPLETION DATE
<S> <C> <C> <C> <C>
Atlantic Bancorporation........................... Florida $ 3.8 billion common stock/pooling November 1985
Northwestern Financial Corporation................ North Carolina 3.0 billion common stock/pooling December 1985
First Railroad & Banking Company of
Georgia......................................... Georgia 3.7 billion common stock/pooling November 1986
Florida National Banks of Florida, Inc............ Florida 7.9 billion cash and preferred January 1990
stock/purchase
Southeast banks................................... Florida 9.9 billion cash, notes and September 1991
preferred stock/
purchase
Resolution Trust Corporation ("RTC") 1991-1994
acquisitions.................................... Florida 5.3 billion cash/purchase
Dominion Bankshares Corporation................... Virginia 8.9 billion common stock and March 1993
preferred
stock/pooling
Georgia Federal Bank, FSB......................... Georgia 4.0 billion cash/purchase June 1993
First American Metro Corp......................... Virginia 4.6 billion cash/purchase June 1993
American Savings of Florida, F.S.B.
("ASF") (2)..................................... Florida $ 3.5 billion common stock/purchase
</TABLE>
(1) The dollar amounts indicated represent the assets of the related
organization as of the last reporting period prior to acquisition or, in the
case of the pending acquisition, as of the most recent reporting period,
except for (i) the dollar amount relating to RTC acquisitions, which
represents savings and loan deposits acquired from the RTC, and (ii) the
dollar amount relating to Southeast banks, which represents assets of the
two banking subsidiaries of Southeast Banking Corporation acquired from the
Federal Deposit Insurance Corporation ("FDIC").
(2) The ASF acquisition was announced on December 5, 1994, and is currently
expected to close during the first half of 1995, subject to certain
conditions of closing. The acquisition provides for the issuance of $21.00
in value of shares of Common Stock (based on the price of the Common Stock
prior to the closing) in exchange for each share of ASF common stock,
resulting in a purchase price of approximately $253 million. FUNC expects to
repurchase from 50 to 100 percent of the number of shares of Common Stock to
be issued in the acquisition and to account for the acquisition as a
purchase.
3
<PAGE>
(3) During 1994, the Corporation has entered into various transactions which
have included (i) the completed pooling of interest acquisitions of American
Bancshares, Inc., Lieber & Company and Home Federal Savings Bank with
aggregate assets of $487 million at December 31, 1993, and income before
income taxes and other items of $21 million for the year then ended, which
involved in the aggregate the issuance of four million shares of Common
Stock, (ii) the August 1994 purchase accounting acquisition of BancFlorida
Financial Corporation ("BancFlorida") and the pending purchase accounting
acquisitions of First Florida Savings Bank, FSB, Ameribanc Investors Group
and ASF with aggregate assets of $5.8 billion at December 31, 1993, and
income before income taxes and other items of $28 million, at an aggregate
estimated cost of approximately $532 million, (iii) the purchase of a DE
MINIMUS amount of loans, and the purchase of deposits from Chase Manhattan
Bank of Florida, N.A. ("Chase") and Great Western Federal Savings Bank
("Great Western"), which in the aggregate amounted to $1.8 billion, at an
aggregate cost of approximately $129 million, and (iv) during the first nine
months of 1994, the purchase of deposits of Jacksonville Federal Savings
Association, Citizens Federal Savings Association, Cobb Federal Savings
Association and Hollywood Federal Savings Association from the RTC in the
aggregate amount of $642 million, at an aggregate cost of $68 million. At
December 31, 1993, and for the year then ended, the Corporation had assets
of $70.8 billion, income before income taxes and other items of $1.2 billion
and Common Stock outstanding of 170 million shares. Purchases of deposits
from Chase, Great Western and the RTC do not constitute a sufficient
continuity of operations, and moreover, additional financial data is not
available to develop meaningful and reliable pro forma financial information
with respect to such purchases. Prior to September 30, 1994, completed
transactions included two pooling of interests acquisitions with aggregate
assets of $244 million and income before income taxes and other items of $20
million as of and for the year ended December 31, 1993, and BancFlorida
assets of $1.5 billion and income before income taxes of $12 million at
December 31, 1993. Goodwill and deposit base premium of approximately $253
million and $28 million, respectively, are currently expected to result from
all completed and pending purchase transactions.
FUNC is continually evaluating acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of FUNC's book value and net income
per common share may occur in connection with any future transactions. See
" -- Certain Regulatory Considerations; INTERSTATE BANKING AND BRANCHING
LEGISLATION".
COMMON STOCK REPURCHASE
The Board of Directors of FUNC has authorized the repurchase from time to
time of up to 13 million shares of Common Stock, in addition to the four million
shares FUNC previously repurchased and cancelled in 1994 in connection with the
acquisition of BancFlorida Financial Corporation at a cost of $175 million. The
13 million shares include the shares expected to be repurchased in connection
with the pending ASF acquisition referred to above.
CERTAIN REGULATORY CONSIDERATIONS
AS A BANK HOLDING COMPANY, FUNC IS SUBJECT TO REGULATION UNDER THE BHCA AND
TO ITS EXAMINATION AND REPORTING REQUIREMENTS. THE FOLLOWING DISCUSSION SETS
FORTH CERTAIN OF THE MATERIAL ELEMENTS OF THE REGULATORY FRAMEWORK APPLICABLE TO
BANK HOLDING COMPANIES AND THEIR SUBSIDIARIES AND PROVIDES CERTAIN SPECIFIC
INFORMATION RELEVANT TO FUNC. TO THE EXTENT THAT THE FOLLOWING INFORMATION
DESCRIBES STATUTORY AND REGULATORY PROVISIONS, IT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE PARTICULAR STATUTORY AND REGULATORY PROVISIONS. A CHANGE IN
APPLICABLE REGULATION MAY HAVE A MATERIAL EFFECT ON THE BUSINESS OF FUNC.
GENERAL
FUNC is a bank holding company within the meaning of the BHCA and is
registered as such with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"). Under the BHCA, bank holding companies may not
directly or indirectly acquire the ownership or control of more than five
percent of the voting shares or substantially all of the assets of any company,
including a bank, without the prior approval of the Federal Reserve Board. In
addition, bank holding companies are generally prohibited under the BHCA from
engaging in nonbanking activities, subject to certain exceptions.
The earnings of FUNC's subsidiaries, and therefore the earnings of FUNC,
are affected by general economic conditions, management policies and the
legislative and governmental actions of various regulatory authorities,
including the Federal Reserve Board and the Comptroller of the Currency ("OCC").
In addition, there are numerous governmental requirements and regulations which
affect the activities of FUNC and its subsidiaries.
4
<PAGE>
PAYMENT OF DIVIDENDS
FUNC is a legal entity separate and distinct from its banking and other
subsidiaries. FUNC's banking subsidiaries are subject to legal limitations on
the amount of dividends they can pay. A major portion of FUNC's revenues result
from amounts paid as dividends to FUNC by its national bank subsidiaries. The
prior approval of the OCC is required if the total of all dividends declared by
a national bank in any calendar year will exceed the sum of such bank's net
profits for that year and its retained net profits for the preceding two
calendar years, less any required transfers to surplus. Federal law also
prohibits any national bank from paying dividends which would be greater than
such bank's undivided profits after deducting statutory bad debt in excess of
such bank's allowance for loan losses.
Under the foregoing dividend restrictions and certain restrictions
applicable to certain of FUNC's nonbanking subsidiaries, as of September 30,
1994, FUNC's subsidiaries, without obtaining affirmative governmental approvals,
could pay aggregate dividends of $193 million to FUNC. During the first nine
months of 1994, FUNC's subsidiaries paid $474 million in dividends to FUNC.
In addition, FUNC and its national bank subsidiaries are subject to various
general regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain adequate capital above regulatory
minimums. The appropriate federal regulatory authority is authorized to
determine under certain circumstances relating to the financial condition of a
national bank or bank holding company that the payment of dividends would be an
unsafe or unsound practice and to prohibit payment thereof. The OCC and the FDIC
have indicated that paying dividends that deplete a bank's capital base to an
inadequate level would be an unsound and unsafe banking practice. The OCC, the
FDIC and the Federal Reserve Board have each indicated that banking
organizations should generally pay dividends only out of current operating
earnings.
BORROWINGS
There are also various legal restrictions on the extent to which each of
FUNC and its nonbank subsidiaries can borrow or otherwise obtain credit from its
bank subsidiaries. In general, these restrictions require that any such
extensions of credit must be secured by designated amounts of specified
collateral and are limited, as to any one of FUNC or such nonbank subsidiaries,
to ten percent of the lending bank's capital stock and surplus, and as to FUNC
and all such nonbank subsidiaries in the aggregate, to 20 percent of such
lending bank's capital stock and surplus.
CAPITAL
The minimum guidelines for the ratio of capital to risk-weighted assets
(including certain off-balance-sheet activities, such as standby letters of
credit) is eight percent. At least half of the total capital is to be composed
of common equity, retained earnings and a limited amount of qualifying perpetual
preferred stock, less certain intangibles ("tier 1 capital" and together with
tier 2 capital "total capital"). The remainder may consist of subordinated debt,
qualifying preferred stock and a limited amount of the loan loss allowance
("tier 2 capital"). At September 30, 1994, FUNC's tier 1 and total capital
ratios were 8.84 percent and 14.20 percent, respectively.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum leverage ratio of tier 1 capital to adjusted average quarterly assets
("leverage ratio") equal to three percent for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating. All
other bank holding companies will generally be required to maintain a leverage
ratio of from at least four to five percent. FUNC's leverage ratio at September
30, 1994 was 6.77 percent. The guidelines also provide that bank holding
companies experiencing internal growth or making acquisitions will be expected
to maintain strong capital positions substantially above the minimum supervisory
levels without significant reliance on intangible assets. Furthermore, the
guidelines indicate that the Federal Reserve Board will continue to consider a
"tangible tier 1 leverage ratio" (deducting all intangibles) in evaluating
proposals for expansion or new activity. The Federal Reserve Board has not
advised FUNC of any specific minimum leverage ratio or tangible tier 1 leverage
ratio applicable to it.
Each of FUNC's subsidiary national banks is subject to similar capital
requirements adopted by the OCC. Each of FUNC's subsidiary banks had a leverage
ratio in excess of 5.73 percent as of September 30, 1994. The OCC has not
advised any of FUNC's subsidiary national banks of any specific minimum leverage
ratio applicable to it.
5
<PAGE>
As of September 30, 1994, the capital ratios of FUNC's banking
subsidiaries, which consist of FUNB-NC, First Union National Bank of South
Carolina ("FUNB-SC"), First Union National Bank of Georgia ("FUNB-GA"), First
Union National Bank of Florida ("FUNB-FL"), First Union National Bank of
Tennessee ("FUNB-TN"), First Union National Bank of Virginia ("FUNB-VA"), First
Union National Bank of Maryland ("FUNB-MD"), First Union National Bank of
Washington, D.C. ("FUNB-DC") and First Union Home Equity Bank, N.A. ("FUHEB")
were as follows:
<TABLE>
<CAPTION>
REGULATORY
MINIMUM FUNB-NC FUNB-SC FUNB-GA FUNB-FL FUNB-TN FUNB-VA FUNB-MD FUNB-DC FUHEB
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tier 1 capital ratio.... 4% 7.14 8.21 8.28 8.79 13.08 10.88 19.01 17.31 7.16
Total capital ratio..... 8 9.62 12.53 11.22 10.35 14.34 13.17 20.30 18.60 11.54
Leverage ratio.......... 3-5% 5.74 6.06 5.96 6.30 8.54 8.26 11.53 7.88 6.24
</TABLE>
Banking regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations, including a proposal to add an
interest rate risk component to risk-based capital guidelines.
FIRREA
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), among other things, imposes liability on an institution the deposits
of which are insured by the FDIC, such as FUNC's subsidiary national banks, for
certain potential obligations to the FDIC incurred in connection with other
FDIC-insured institutions under common control with such institution.
Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the bank's stockholders, pro rata and, to the
extent necessary, if any such assessment is not paid by any stockholder after
three months notice, to sell the stock of such stockholder to make good the
deficiency. Under Federal Reserve Board policy, FUNC is expected to act as a
source of financial strength to each of its subsidiary banks and to commit
resources to support each of such subsidiaries. This support may be required at
times when, absent such Federal Reserve Board policy, FUNC may not find itself
willing or able to provide it.
Any capital loans by a bank holding company to any of its subsidiary banks
are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary banks. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
FDICIA
In December 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 (as amended, "FDICIA") was enacted, which substantially revises the bank
regulatory and funding provisions of the Federal Deposit Insurance Act and makes
revisions to several other federal banking statutes.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized"; "adequately capitalized"; "undercapitalized"; "significantly
undercapitalized"; and "critically undercapitalized". A depository institution's
capital tier will depend upon how its capital levels compare to various relevant
capital measures and certain other factors, as established by regulation.
The OCC has adopted regulations establishing relevant capital measures and
relevant capital levels. The relevant capital measures are the total capital
ratio, tier 1 capital ratio and the leverage ratio. Under the regulations, a
bank will be (i) "well capitalized" if it has a total capital ratio of ten
percent or greater, a tier 1 capital ratio of six percent or greater and a
leverage ratio of five percent or greater and is not subject to any order or
written directive by the OCC to meet and maintain a specific capital level for
any capital measure; (ii) "adequately capitalized" if it has a total capital
ratio of eight percent or greater, a tier 1 capital ratio of four percent or
greater and a leverage ratio of four percent or greater (three percent in
certain circumstances) and is not "well capitalized"; (iii) "undercapitalized"
if it has a total capital ratio of less than eight percent, a tier 1 capital
ratio of less than four percent or a leverage ratio of less than four percent
(three percent in certain circumstances); (iv) "significantly undercapitalized"
if it has a total capital ratio of less than six percent, a tier 1 capital ratio
of less than three percent or a leverage ratio of less than three percent; and
(v) "critically undercapitalized" if its tangible equity is equal to or less
than two percent of average quarterly tangible assets. As of September 30, 1994,
all of FUNC's subsidiary banks had capital levels that qualify them as being
"well capitalized" under such regulations, except for FUNB-NC, which had a total
capital ratio of 9.62 percent. As a result of a subsequent capital contribution
from the Corporation, FUNB-NC's total capital ratio at September 30, 1994, would
have been 10.03 percent.
6
<PAGE>
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
"undercapitalized". "Undercapitalized" depository institutions are subject to
growth limitations and are required to submit a capital restoration plan. The
federal banking agencies may not accept a capital plan without determining,
among other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital. In
addition, for a capital restoration plan to be acceptable, the depository
institution's parent holding company must guarantee that the institution will
comply with such capital restoration plan. The aggregate liability of the parent
holding company is limited to the lesser of: (i) an amount equal to five percent
of the depository institution's total assets at the time it became
"undercapitalized"; and (ii) the amount which is necessary (or would have been
necessary) to bring the institution into compliance with all capital standards
applicable with respect to such institution as of the time it fails to comply
with the plan. If a depository institution fails to submit an acceptable plan,
it is treated as if it is "significantly undercapitalized".
"Significantly undercapitalized" depository institutions may be subject to
a number of requirements and restrictions, including orders to sell sufficient
voting stock to become "adequately capitalized", requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
"Critically undercapitalized" institutions are subject to the appointment of a
receiver or conservator.
FDICIA directs that each federal banking agency prescribe standards or
guidelines for depository institutions and depository institution holding
companies relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, a maximum ratio of classified assets to capital, minimum
earnings sufficient to absorb losses, a minimum ratio of market value to book
value for publicly traded shares and such other standards as the agency deems
appropriate. The ultimate effect of these standards cannot be ascertained until
final regulations are adopted.
FDICIA also contains a variety of other provisions that may affect the
operations of FUNC, including reporting requirements, regulatory standards for
real estate lending, "truth in savings" provisions, the requirement that a
depository institution give 90 days' prior notice to customers and regulatory
authorities before closing any branch and a prohibition on the acceptance or
renewal of brokered deposits by depository institutions that are not "well
capitalized" or are "adequately capitalized" and have not received a waiver from
the FDIC.
DEPOSITOR PREFERENCE STATUTE
Legislation has been enacted providing that deposits and certain claims for
administrative expenses and employee compensation against an insured depository
institution would be afforded a priority over other general unsecured claims
against such an institution, including federal funds and letters of credit, in
the "liquidation or other resolution" of such an institution by any receiver.
INTERSTATE BANKING AND BRANCHING LEGISLATION
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("IBBEA"), which was enacted on September 29, 1994, authorizes interstate
acquisitions of banks and bank holding companies without geographic limitation
beginning one year after enactment. In addition, beginning June 1, 1997, the
IBBEA authorizes a bank to merge with a bank in another state as long as neither
of the states has opted out of interstate branching between the date of
enactment of the IBBEA and May 31, 1997. The IBBEA further provides that states
may enact laws permitting interstate bank merger transactions prior to June 1,
1997. A bank may establish and operate a DE NOVO branch in a state in which the
bank does not maintain a branch if that state expressly permits DE NOVO
branching. Once a bank has established branches in a state through an interstate
merger transaction, the bank may establish and acquire additional branches at
any location in the state where any bank involved in the interstate merger
transaction could have established or acquired branches under applicable federal
or state law. A bank that has established a branch in a state through DE NOVO
branching may establish and acquire additional branches in such state in the
same manner and to the same extent as a bank having a branch in such state as a
result of an interstate merger. If a state opts out of interstate branching
within the specified time period, no bank in any other state may establish a
branch in the opting out state, whether through an acquisition or DE NOVO.
7
<PAGE>
DIVIDENDS AND PRICE RANGE OF COMMON STOCK
The Common Stock, including the Shares, is listed on the NYSE. The
following table sets forth, for the periods indicated, the high and low reported
closing sale prices per share of the Common Stock on the NYSE Tape and cash
dividends paid per share of Common Stock. See "FUNC -- Common Stock Repurchase".
<TABLE>
<CAPTION>
MARKET PRICE(1)
CALENDAR PERIOD HIGH LOW
<S> <C> <C>
1992:
First Quarter............................................................................ $ 38 1/4 29 1/2
Second Quarter........................................................................... 39 3/4 34 3/4
Third Quarter............................................................................ 40 35
Fourth Quarter........................................................................... 44 7/8 35 7/8
1993:
First Quarter............................................................................ 50 7/8 42 1/4
Second Quarter........................................................................... 51 1/2 40
Third Quarter............................................................................ 49 5/8 43 1/2
Fourth Quarter........................................................................... 48 1/8 37 7/8
1994:
First Quarter............................................................................ 43 3/4 39 3/4
Second Quarter........................................................................... 47 5/8 41 1/4
Third Quarter............................................................................ 47 1/4 43 1/4
Fourth Quarter (through December 21, 1994)............................................... $ 45 1/4 39 3/8
<CAPTION>
CALENDAR PERIOD DIVIDENDS(2)
<S> <C><C>
1992:
First Quarter............................................................................ .31
Second Quarter........................................................................... .31
Third Quarter............................................................................ .31
Fourth Quarter........................................................................... .35
1993:
First Quarter............................................................................ .35
Second Quarter........................................................................... .35
Third Quarter............................................................................ .40
Fourth Quarter........................................................................... .40
1994:
First Quarter............................................................................ .40
Second Quarter........................................................................... .40
Third Quarter............................................................................ .46
Fourth Quarter (through December 21, 1994)............................................... .46
</TABLE>
(1) For a recent closing price of the Common Stock, see the cover page of this
Prospectus.
(2) The timing and amount of future dividends will depend upon the earnings,
cash requirements and financial condition of the Corporation and its
subsidiaries, applicable government regulations and policies and other
factors. See "FUNC -- Certain Regulatory Considerations; PAYMENT OF
DIVIDENDS".
8
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following is selected unaudited consolidated financial information for
FUNC for (i) the nine months ended September 30, 1994 and September 30, 1993,
and (ii) each of the five years ended December 31, 1993. The summary below
should be read in conjunction with the consolidated financial statements of
FUNC, and the related notes thereto, and the other detailed information
contained in FUNC's 1993 Annual Report on Form 10-K and 1994 Third Quarter
Report on Form 10-Q, and which are incorporated herein by reference.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1994 1993 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARIES OF INCOME
(In thousands)
Interest income..................................... $ 3,705,191 3,384,811 4,556,332 4,479,385 4,647,440 4,829,520
Interest expense.................................... 1,450,774 1,327,045 1,790,439 2,020,968 2,742,996 3,094,334
Net interest income................................. 2,254,417 2,057,766 2,765,893 2,458,417 1,904,444 1,735,186
Provision for loan losses........................... 75,000 171,780 221,753 414,708 648,284 425,409
Net interest income after provision for loan
losses............................................ 2,179,417 1,885,986 2,544,140 2,043,709 1,256,160 1,309,777
Securities available for sale transactions.......... (1,581) 22,963 25,767 34,402 -- --
Investment security transactions.................... 3,595 4,386 7,435 (2,881) 155,048 7,884
Noninterest income.................................. 855,051 847,359 1,165,086 1,032,651 914,511 690,672
Noninterest expense................................. 1,973,280 1,833,725 2,521,647 2,526,678 1,905,918 1,680,973
Income before income taxes.......................... 1,063,202 926,969 1,220,781 581,203 419,801 327,360
Income taxes........................................ 369,371 304,791 403,260 196,152 71,070 64,993
Net income.......................................... 693,831 622,178 817,521 385,051 348,731 262,367
Dividends on preferred stock........................ 18,522 19,411 24,900 31,979 34,570 33,868
Net income applicable to common stockholders........ $ 675,309 602,767 792,621 353,072 314,161 228,499
PER COMMON SHARE DATA
Net income.......................................... $ 3.94 3.61 4.73 2.23 2.24 1.68
Cash dividends...................................... 1.26 1.10 1.50 1.28 1.12 1.08
Book value.......................................... 31.34 28.14 28.90 25.25 23.23 21.81
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands)...................................... 215,850 175,768 243,845 167,601 126,029 116,696
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets.............................................. 74,243,118 71,388,087 70,786,969 63,828,031 59,273,177 54,588,410
Loans, net of unearned income....................... 51,633,034 46,224,944 46,876,177 41,923,767 41,383,580 36,050,719
Deposits............................................ 53,687,051 52,935,414 53,742,411 49,150,965 47,176,223 38,194,268
Long-term debt...................................... 3,269,363 3,137,152 3,061,944 3,151,260 2,630,930 1,850,860
Preferred stockholders' equity...................... 284,041 284,040 284,041 297,215 397,356 317,011
Common stockholders' equity......................... 5,509,508 4,772,478 4,923,584 4,161,948 3,463,441 2,983,361
Total stockholders' equity.......................... $ 5,622,631 5,056,518 5,207,625 4,459,163 3,860,797 3,300,372
Preferred shares outstanding........................ 6,318 6,318 6,318 6,846 10,851 7,293
Common shares outstanding........................... 175,785 169,574 170,338 164,849 149,112 136,777
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets.............................................. $71,739,670 66,724,447 68,101,222 61,145,974 55,095,439 52,124,595
Loans, net of unearned income....................... 47,866,113 42,758,481 43,631,410 41,270,991 37,314,358 35,877,585
Deposits............................................ 52,615,361 49,387,036 50,248,848 47,173,706 40,482,433 36,209,083
Long-term debt...................................... 3,162,021 2,932,760 3,006,560 2,789,653 2,187,595 1,587,497
Common stockholders' equity......................... 5,174,974 4,451,024 4,550,048 3,889,256 3,131,716 2,937,441
Total stockholders' equity.......................... $ 5,404,796 4,742,163 4,839,397 4,213,896 3,467,437 3,244,473
Common shares outstanding........................... 171,265 166,929 167,692 158,683 140,003 135,622
<CAPTION>
1989
<S> <C>
CONSOLIDATED SUMMARIES OF INCOME
(In thousands)
Interest income..................................... 4,179,100
Interest expense.................................... 2,703,623
Net interest income................................. 1,475,477
Provision for loan losses........................... 139,291
Net interest income after provision for loan
losses............................................ 1,336,186
Securities available for sale transactions.......... --
Investment security transactions.................... 19,018
Noninterest income.................................. 532,295
Noninterest expense................................. 1,445,836
Income before income taxes.......................... 441,663
Income taxes........................................ 87,840
Net income.......................................... 353,823
Dividends on preferred stock........................ 1,380
Net income applicable to common stockholders........ 352,443
PER COMMON SHARE DATA
Net income.......................................... 2.62
Cash dividends...................................... 1.00
Book value.......................................... 20.49
CASH DIVIDENDS PAID ON COMMON STOCK
(In thousands)...................................... 106,952
CONSOLIDATED PERIOD-END BALANCE SHEET ITEMS
(In thousands)
Assets.............................................. 45,506,847
Loans, net of unearned income....................... 31,600,776
Deposits............................................ 31,531,770
Long-term debt...................................... 1,514,834
Preferred stockholders' equity...................... 13,773
Common stockholders' equity......................... 2,868,913
Total stockholders' equity.......................... 2,882,686
Preferred shares outstanding........................ 551
Common shares outstanding........................... 140,023
CONSOLIDATED AVERAGE BALANCE SHEET ITEMS
(In thousands)
Assets.............................................. 43,224,474
Loans, net of unearned income....................... 29,507,834
Deposits............................................ 29,804,143
Long-term debt...................................... 1,554,548
Common stockholders' equity......................... 2,758,156
Total stockholders' equity.......................... 2,771,982
Common shares outstanding........................... 134,446
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED PERCENTAGES
Net income applicable to common stockholders to
average common stockholders' equity............... 17.45%* 18.11* 17.42 9.08 10.03 7.78
Net income to:
Average total stockholders' equity................ 16.99* 17.54* 16.89 9.14 10.06 8.09
Average assets.................................... 1.29* 1.25* 1.20 .63 .63 .50
Average stockholders' equity to average assets...... 7.53 7.11 7.11 6.89 6.29 6.22
Allowance for loan losses to:
Net loans......................................... 1.95 2.23 2.18 2.24 2.06 1.95
Nonaccrual and restructured loans................. 203 112 147 96 72 77
Nonperforming assets.............................. 154 85 111 70 50 56
Net charge-offs to average net loans................ .31* .60* .58 .86 1.48 .68
Nonperforming assets to loans, net and foreclosed
properties........................................ 1.26 2.60 1.95 3.19 4.10 3.42
Capital ratios:**
Tier 1 capital.................................... 8.84 8.63 9.14 9.22 7.56 6.53
Total capital..................................... 14.20 13.78 14.64 14.31 11.76 10.83
Leverage.......................................... 6.77 5.94 6.13 6.55 5.31 4.90
Net interest margin................................. 4.80%* 4.85* 4.78 4.77 4.08 3.99
<CAPTION>
CONSOLIDATED PERCENTAGES
<S> <C>
Net income applicable to common stockholders to
average common stockholders' equity............... 12.78
Net income to:
Average total stockholders' equity................ 12.76
Average assets.................................... .82
Average stockholders' equity to average assets...... 6.41
Allowance for loan losses to:
Net loans......................................... 1.12
Nonaccrual and restructured loans................. 131
Nonperforming assets.............................. 89
Net charge-offs to average net loans................ .39
Nonperforming assets to loans, net and foreclosed
properties........................................ 1.25
Capital ratios:**
Tier 1 capital.................................... --
Total capital..................................... --
Leverage.......................................... --
Net interest margin................................. 4.15
</TABLE>
* Annualized.
** The 1990-1992 capital ratios are not restated for 1993 pooling of interests
acquisitions.
9
<PAGE>
DESCRIPTION OF FUNC CAPITAL STOCK
THE DESCRIPTIVE INFORMATION SUPPLIED HEREIN OUTLINES CERTAIN PROVISIONS OF
THE ARTICLES OF INCORPORATION, AS AMENDED (THE "ARTICLES"), AND BYLAWS OF FUNC
AND THE NORTH CAROLINA BUSINESS CORPORATION ACT ("NCBCA"). THE INFORMATION DOES
NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ALL RESPECTS BY REFERENCE TO THE
PROVISIONS OF FUNC'S ARTICLES AND BYLAWS AND THE NCBCA.
AUTHORIZED CAPITAL
The authorized capital stock of FUNC consists of 750,000,000 shares of
Common Stock, 10,000,000 shares of Preferred Stock, no-par value per share
("Preferred Stock"), and 40,000,000 shares of Class A Preferred Stock, no-par
value per share ("Class A Preferred Stock"). As of September 30, 1994, there
were 175,784,527 shares of Common Stock, 6,318,350 shares of Series 1990
Preferred Stock, constituting a single series of Preferred Stock, and no shares
of Class A Preferred Stock issued and outstanding. The Preferred Stock and Class
A Preferred Stock are each issuable in one or more series and, with respect to
any series, the Board of Directors of FUNC, subject to certain limitations, is
authorized to fix the numbers of shares, dividend rates, liquidation prices,
liquidation rights of holders, redemption, conversion and voting rights and
other terms of the series. Shares of Class A Preferred Stock and Preferred Stock
that are redeemed, repurchased or otherwise acquired by have the status of
authorized, unissued and undesignated shares of Class A Preferred Stock and
Preferred Stock, respectively, and may be reissued. On December 20, 1994, the
Board of Directors of FUNC called the Series 1990 Preferred Stock for redemption
on March 31, 1995, at the redemption price of $51.50 per share.
COMMON STOCK
Subject to the prior rights of the holders of any Preferred Stock and any
Class A Preferred Stock then outstanding, holders of Common Stock are entitled
to receive such dividends as may be declared by the Board of Directors out of
funds legally available therefor and, in the event of liquidation or
dissolution, to receive the net assets of FUNC remaining after payment of all
liabilities and after payment to holders of all shares of Preferred Stock and
Class A Preferred Stock of the full preferential amounts to which such holders
are respectively entitled, in proportion to their respective holdings.
See "FUNC -- Certain Regulatory Considerations" for information relating to
certain regulatory restrictions on the payment of dividends by national banks,
including FUNC's subsidiary national banks.
Subject to the rights of the holders of any Preferred Stock and any Class A
Preferred Stock then outstanding, all voting rights are vested in the holders of
the shares of Common Stock, each share being entitled to one vote on all matters
requiring stockholder action and in the election of directors. Holders of Common
Stock have no preemptive, subscription or conversion rights. All of the
outstanding shares of Common Stock, including the Shares, are fully paid and
nonassessable.
FUNB-NC is the Transfer Agent, Registrar and Dividend Disbursement Agent for
the Common Stock, including the Shares.
PREFERRED STOCK
All shares of each series of Preferred Stock must be of equal rank and have
the same powers, preferences and rights and are subject to the same
qualifications, limitations and restrictions, except with respect to dividend
rates, redemption prices, liquidation amounts, terms of conversion or exchange
and voting rights.
SERIES 1990 PREFERRED STOCK
The following summary of the Series 1990 Preferred Stock is qualified in its
entirety by reference to the Statement of Classification of Shares of FUNC
relating thereto, a copy of which is incorporated by reference as an exhibit to
the Registration Statement, and to the applicable provisions of the NCBCA.
The Series 1990 Preferred Stock, the only series of Preferred Stock
currently outstanding, is entitled, in the event of involuntary liquidation,
dissolution or winding up of FUNC, to receive a distribution of $5.00 per share,
plus accrued and unpaid dividends (whether or not declared) to the date of the
final distribution (the "Preferential Amount"), if any, before any payment or
distribution shall be made or set apart for payment on the Common Stock or any
other class or series of stock ranking junior to the Series 1990 Preferred
Stock. If FUNC's assets are insufficient to pay the full Preferential Amount, no
distribution may be made to holders of any other series of Preferred Stock or
any series of stock ranking on a parity with the Series 1990 Preferred Stock
unless proportionate distributive amounts are paid ratably in proportion to the
preferential sums that would be payable if all sums payable in respect of all
such stock were discharged in full.
10
<PAGE>
The Series 1990 Preferred Stock is redeemable, at FUNC's option, at $51.50
per share on any dividend payment date after January 29, 1995, and after January
29, 2000, at $50.00 per share, in each case plus accrued and unpaid dividends to
the date fixed for redemption. The Series 1990 Preferred Stock is not
convertible. As indicated above, the Series 1990 Preferred Stock has been called
for redemption on March 31, 1995, at the redemption price of $51.50 per share.
The dividend rate on the Series 1990 Preferred Stock is calculated on the
basis of a price of $50.00 per share, payable quarterly, and is reset quarterly
at a rate of one percent per annum above the highest of: (i) a three-month U.S.
Treasury bill rate; (ii) a U.S. Treasury ten-year constant maturity rate; and
(iii) a U.S. Treasury 30-year constant maturity rate. In no event will such rate
be less than 6.75 percent per annum or more than 13.75 percent per annum.
Dividends on the Series 1990 Preferred Stock are cumulative.
The Series 1990 Preferred Stock has no voting rights except as set forth
below.
If the equivalent of six full quarterly dividends payable on the Series 1990
Preferred Stock or any other series of Preferred Stock are in arrears, holders
of the Series 1990 Preferred Stock will have the right, voting together as a
single class with the holders of all other series of Preferred Stock having like
voting rights, to elect two additional directors of FUNC until all dividends in
arrears on the Series 1990 Preferred Stock and any such other series of
Preferred Stock have been fully paid or set apart for payment.
The affirmative vote or consent of the holders of 66 2/3 percent, or in some
cases a majority, of the outstanding shares of the Series 1990 Preferred Stock
and all other series of Preferred Stock then outstanding having like voting
rights, voting together as a single class, will be necessary for the approval of
certain matters affecting the rights of the series, including the authorization,
creation, establishment or increase in the amount of shares of any series of
stock ranking prior to the Series 1990 Preferred Stock, or any voluntary
liquidation, dissolution or winding up of FUNC; provided that a consolidation or
merger of FUNC with or into any other corporation or corporations or a sale,
lease or other conveyance of all or substantially all of the assets of FUNC will
not be deemed to be a liquidation, dissolution or winding up of FUNC.
CLASS A PREFERRED STOCK
Shares of Class A Preferred Stock rank prior or superior to Common Stock and
on a parity with or junior to (but not prior or superior to) Preferred Stock or
any series thereof, in respect of the right to receive dividends and/or the
right to receive payments out of the net assets of FUNC upon any involuntary or
voluntary liquidation, dissolution or winding up of FUNC. However, shares of
Class A Preferred Stock do not have the right to vote with shares of Series 1990
Preferred Stock for purposes of electing two directors in the event of dividend
arrearages, as described under " -- Preferred Stock" above. Subject to the
foregoing and the terms of any particular series of Class A Preferred Stock,
series of Class A Preferred Stock may vary as to priority.
RIGHTS PLAN
Each share of Common Stock has attached to it one right (a "Right") issued
pursuant to a Shareholder Protection Rights Agreement (as amended, the "Rights
Agreement"). Each Right entitles its registered holder to purchase one
one-hundredth of a share of a junior participating series of Class A Preferred
Stock designed to have economic and voting terms similar to those of one share
of Common Stock, for $110.00 (the "Rights Exercise Price"), subject to
adjustment, after the earlier of: (i) the tenth business day (subject to
extension) after commencement of a tender or exchange offer which, if
consummated, would result in a person becoming the beneficial owner of 15
percent or more of the outstanding shares of Common Stock (an "Acquiring
Person"); and (ii) the tenth business day after the first date (the "Flip-in
Date") of a public announcement that a person has become an Acquiring Person (in
either case, the "Separation Time"). The Rights will not trade separately from
the shares of Common Stock unless and until the Separation Time occurs.
The Rights will not be exercisable until the business day following the
Separation Time. The Rights will expire on the earliest of: (i) the Exchange
Time (as defined below); (ii) the close of business on December 28, 2000; and
(iii) the date on which the Rights are redeemed or terminated as described below
(in any such case, the "Expiration Time"). The Rights Exercise Price and the
number of Rights outstanding, or in certain circumstances the securities
purchasable upon exercise of the Rights, are subject to adjustment upon the
occurrence of certain events.
In the event that prior to the Expiration Time a Flip-in Date occurs, FUNC
will take such action as shall be necessary to ensure and provide that each
Right (other than Rights beneficially owned by an Acquiring Person or any
affiliate, associate or transferee thereof, which Rights shall become void)
shall constitute the right to purchase, from FUNC, shares of Common Stock having
an aggregate market price equal to twice the Rights Exercise Price for an amount
in cash equal to the then
11
<PAGE>
current Rights Exercise Price. In addition, the Board of Directors of FUNC may,
at its option, at any time after a Flip-in Date and prior to the time that an
Acquiring Person becomes the beneficial owner of more than 50 percent of the
outstanding shares of Common Stock, elect to exchange all of the then
outstanding Rights for shares of Common Stock, at an exchange ratio of two
shares of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the Separation Time
(the "Rights Exchange Rate"). Immediately upon such action by the Board of
Directors (the "Exchange Time"), the right to exercise the Rights will terminate
and each Right will thereafter represent only the right to receive a number of
shares of Common Stock equal to the Rights Exchange Rate. If FUNC becomes
obligated to issue shares of Common Stock upon exercise of or in exchange for
Rights, FUNC, at its option, may substitute therefor shares of junior
participating Class A Preferred Stock upon exercise of each Right at a rate of
two one-hundredths of a share of junior participating Class A Preferred Stock
upon the exchange of each Right.
The Rights are redeemable by FUNC at $0.01 per right, subject to adjustment
upon the occurrence of certain events, at any date prior to the date on which
they become exercisable and, in certain events, may be canceled and terminated
without any payment to the holders thereof. The Rights have no voting rights and
are not entitled to dividends.
The Rights will not prevent a takeover of FUNC. The Rights, however, may
cause substantial dilution to a person or group that acquires 15 percent or more
of Common Stock unless the Rights are first redeemed or terminated by the Board
of Directors of FUNC. Nevertheless, the Rights should not interfere with a
transaction that is in the best interests of FUNC and its stockholders because
the Rights can be redeemed or terminated, as hereinabove described, before the
consummation of such transaction.
The complete terms of the Rights are set forth in the Rights Agreement. The
Rights Agreement is incorporated by reference as an exhibit to the Registration
Statement. A copy of the Rights Agreement can be obtained upon written request
to the Rights Agent, First Union National Bank of North Carolina, Two First
Union Center, Charlotte, North Carolina 28288-1154.
OTHER PROVISIONS
The Articles and Bylaws of FUNC contain a number of provisions which may be
deemed to have the effect of discouraging or delaying attempts to gain control
of FUNC, including provisions in the Articles: (i) classifying the Board of
Directors into three classes with each class to serve for three years, with one
class being elected annually; (ii) authorizing the Board of Directors to fix the
size of the Board of Directors between nine and 30 directors; (iii) authorizing
directors to fill vacancies on the Board of Directors that occur between annual
meetings, except that vacancies resulting from a removal of a director by a
stockholder vote may only be filled by a stockholder vote; (iv) providing that
directors may be removed only for cause and only by affirmative vote of the
majority of shares entitled to be voted in the election of directors, voting as
a single class; (v) authorizing only the Board of Directors, the Chairman of the
Board or the President to call a special meeting of stockholders (except for
special meetings called under specified circumstances for holders of classes or
series of stock ranking superior to the Common Stock); and (vi) requiring an 80
percent vote of stockholders entitled to vote in the election of directors,
voting as a single class, to alter any of the foregoing provisions.
The Bylaws include provisions setting forth specific conditions under which:
(i) business may be transacted at an annual meeting of stockholders; and (ii)
persons may be nominated for election as directors of FUNC at an annual meeting
of stockholders.
Two North Carolina "anti-takeover" statutes adopted in 1990, The North
Carolina Shareholder Protection Act and The North Carolina Control Share
Acquisition Act, allowed North Carolina corporations to elect to either be
covered or not be covered by such statutes. FUNC elected not to be covered by
such statutes.
In addition to the foregoing, in certain instances the issuance of
authorized but unissued shares of Common Stock, Class A Preferred Stock or
Preferred Stock may have an anti-takeover effect.
12
<PAGE>
SELLING STOCKHOLDERS
All of the Shares offered hereby are beneficially owned by Stephen A.
Lieber, Nola Maddox Falcone and Theodore J. Israel, Jr. (each a "Selling
Stockholder" and collectively, the "Selling Stockholders") in the amounts listed
below:
<TABLE>
<CAPTION>
SHARES OWNED IF
SHARES SHARES BEING ALL REGISTERED
OWNED PRE-OFFERING REGISTERED FOR SALE SHARES ARE SOLD
<S> <C> <C> <C>
Stephen A. Lieber............................ 2,408,176(1) 2,408,176 0
Nola Maddox Falcone.......................... 499,520 499,520 0
Theodore J. Israel, Jr....................... 235,814 235,814 0
Total................................. 3,143,510 3,143,510 0
</TABLE>
(1) Represents 1.8 percent of Common Stock outstanding as of September 30, 1994.
The Shares offered hereby were acquired by the Selling Stockholders in
connection with the acquisition by FUNC of EAMC and Lieber on June 30, 1994 (the
"Acquisition"), the investment adviser and sub-investment adviser, respectively,
to the Evergreen family of mutual funds. The Selling Stockholders were the sole
owners of all of the issued and outstanding shares, in the case of EAMC, and all
of the partnership interests, in the case of Lieber. Upon consummation of the
Acquisition, EAMC was merged into a subsidiary of FUNB-NC and two subsidiaries
of FUNB-NC became the general partners of Lieber.
To facilitate the continuity of the investment advisory and other
management services following the Acquisition, Lieber entered into five-year
employment contracts, effective as of June 30, 1994, with each of the Selling
Stockholders.
The Registration Statement of which this Prospectus is a part has been
filed by FUNC at the request of the Selling Stockholders pursuant to
registration rights granted to the Selling Stockholders under the Agreement and
Plan of Acquisition, dated as of October 15, 1993, among FUNC, FUNB-NC, EAMC,
Lieber and the Selling Stockholders.
PLAN OF DISTRIBUTION
The Selling Stockholders have advised FUNC that they propose to offer the
Shares for sale, from time to time, through brokers in brokerage transactions on
the NYSE, to underwriters or dealers in negotiated transactions or in a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Brokers, dealers and
underwriters that participate in the distribution of the Shares may be deemed to
be underwriters under the Securities Act, and any discounts or commissions
received by them from the Selling Stockholders and any profit on the resale of
Shares by them may be deemed to be underwriting discounts and commissions under
the Securities Act. Each Selling Stockholder may be deemed to be an underwriter
under the Securities Act. FUNC is not aware of any arrangements or contracts
that the Selling Stockholders have entered into to effect any such transactions
in the Shares, nor is FUNC aware of which brokerage firms the Selling
Stockholders may select to effect brokerage transactions.
FUNC will not receive any part of the proceeds from the sale of the Shares.
The Selling Stockholders will pay all applicable stock transfer taxes, brokerage
commissions, underwriting discounts or commissions and the fees of the Selling
Stockholders' counsel, and FUNC will bear all other expenses in connection with
the offering and sale of the Shares, including filing fees, legal and accounting
fees and expenses, printing costs, and other expenses arising out of the
preparation and filing of the Registration Statement and the Prospectus. FUNC
has agreed to indemnify the Selling Stockholders and underwriters of the Selling
Stockholders against certain liabilities, including certain liabilities under
the Securities Act, in connection with the registration and the offering and
sale of the Shares.
The Selling Stockholders have advised FUNC that they may make gifts of
Shares to certain charitable organizations, including charitable organizations
affiliated with the Selling Stockholders (I.E., Essel Foundation, Inc., Essel II
Foundation and Nola Maddox Falcone Trustee Charitable Foundation). Any
charitable organization receiving and selling Shares may be deemed to be an
underwriter under the Securities Act. A Prospectus Supplement will be prepared
in connection with sales of Shares by affiliated charitable organizations, and
in the event of any sales of Shares through underwriters.
13
<PAGE>
VALIDITY OF SHARES OF COMMON STOCK
The validity of the Shares being offered hereby is being passed upon for
FUNC by Marion A. Cowell, Jr., Esq., Executive Vice President, Secretary and
General Counsel of FUNC. Mr. Cowell is also a stockholder of FUNC and holds
options to purchase additional shares of Common Stock.
EXPERTS
The consolidated balance sheets of FUNC as of December 31, 1993 and 1992,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1993, included in FUNC's 1993 Annual Report to Stockholders which
is incorporated by reference in FUNC's 1993 Annual Report on Form 10-K and
incorporated by reference, have been incorporated herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
14
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FUNC, BY
THE SELLING STOCKHOLDERS OR BY ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FUNC SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES DESCRIBED IN THIS
PROSPECTUS OR AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY SUCH SHARES IN
ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information............................... 2
Incorporation of Certain Documents by
Reference......................................... 2
FUNC................................................ 3
Dividends and Price Range of Common Stock........... 8
Selected Consolidated Financial Data................ 9
Description of FUNC Capital Stock................... 10
Selling Stockholders................................ 13
Plan of Distribution................................ 13
Validity of Shares of Common Stock.................. 14
Experts............................................. 14
</TABLE>
3,143,510 SHARES
FIRST UNION CORPORATION
COMMON STOCK
(PAR VALUE $3.33 1/3 PER SHARE)
[First Union logo appears here-- see appendix]
***********************************************************************
APPENDIX
On the front cover a FIRST UNION logo appears where indicated.
On the back cover a FIRST UNION logo appears where indicated.
