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SUPPLEMENT TO PROSPECTUS/PROXY STATEMENT DATED APRIL 11, 1994
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PROSPECTUS SUPPLEMENT PROXY STATEMENT SUPPLEMENT
FIRST UNION CORPORATION AMERICAN BANCSHARES, INC.
COMMON STOCK SPECIAL MEETING OF STOCKHOLDERS
(PAR VALUE $3.33 1/3 PER SHARE) TO BE HELD ON MAY 9, 1994
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The following is a Supplement to the Prospectus/Proxy Statement dated April
11, 1994. Capitalized terms that are not defined herein are defined in the
Prospectus/Proxy Statement.
FIRST QUARTER 1994 RESULTS
FUNC
FUNC's earnings applicable to common stockholders were $217 million in the
first quarter of 1994, a 12 percent increase from $193 million in the first
quarter of 1993 and 14 percent from $190 million in the fourth quarter of 1993.
Net income per common share increased to $1.27 from $1.17 in the first quarter
of 1993 and $1.12 in the fourth quarter of 1993.
FUNC's return on average common equity was 17.54 percent and the return on
average assets was 1.28 percent in the first quarter of 1994, compared with
18.41 percent and 1.28 percent in the first quarter of 1993 and 15.55 percent
and 1.07 percent in the fourth quarter of 1993.
Important factors in FUNC's first quarter 1994 earnings performance
compared with the fourth quarter of 1993 included:
(Bullet) Continued growth in net interest income;
(Bullet) Continued improvement in credit quality, including a $120 million
reduction in nonperforming assets, lower charge-offs and a lower loan
loss provision; and
(Bullet) A $48 million decline in noninterest expense.
Tax-equivalent net interest income increased to $750 million from $696
million in the first quarter of 1993 and $733 million in the fourth quarter of
1993.
Nonperforming assets declined to $796 million, or 1.70 percent of net loans
and foreclosed properties, at March 31, 1994, compared with $1.268 billion, or
3.07 percent, at the end of the first quarter a year ago, and $916 million, or
1.95 percent, at December 31, 1993.
Annualized net charge-offs as a percentage of average net loans were .27
percent in the first quarter of 1994, compared with .61 percent in the first
quarter of 1993 and .51 percent in the fourth quarter of 1993. The loan loss
provision declined to $25 million, from $60 million in the first quarter of 1993
and $50 million in the fourth quarter of 1993.
Net loans at March 31, 1994, were $46.7 billion, compared with $40.9
billion at the end of first quarter of 1993 and $46.9 billion at year-end 1993.
Since year-end, commercial and consumer loan growth has been partially offset by
the planned runoff of acquired loans and lower balances of mortgages held for
sale.
Deposits were $52.1 billion at March 31, 1994, compared with $47.9 billion
at the end of the first quarter a year ago and $53.7 billion at year-end 1993.
Total stockholders' equity was $5.28 billion at March 31, 1994, compared with
$4.66 billion at March 31, 1993 and $5.21 billion at year-end.
Results in the first quarter of 1993 do not include the purchase accounting
acquisitions of Georgia Federal Bank, FSB, and First American Metro Corp., which
were completed in June 1993.
At March 31, 1994, FUNC had assets of $72.2 billion and operated 1,308
banking offices in Florida, North Carolina, Georgia, Virginia, South Carolina,
Tennessee, Maryland and Washington, D.C., and 206 nonbanking offices in 39
states.
ABI
During the three months ended March 31, 1994, assets decreased by $19.5
million, or 8.3 percent, from $235.4 million at the beginning of the quarter to
$215.9 million at quarter's end. Substantially all of this decrease relates to
scheduled maturities of deposits from institutional investors or brokered
deposits. Brokered deposits decreased from $38.4 million, or 18.3 percent of
total deposits, at December 31, 1993, to $21.7 million, or 11.3 percent of
deposits, at March 31, 1994.
In February 1994, immediately after the Federal Reserve Board announced its
intention to raise interest rates, ABI sold its investment of $22.7 million in
FNMA bonds at a gain of $65,000. This sale provided the necessary liquidity to
fund the
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deposit maturities described above, while protecting ABI from the significant
decline in value of these securities which has occurred during the period since
the securities were sold.
Net income in the quarter ended March 31, 1994, was $160,000, or $.06 per
common share, compared with $388,000, or $.16 per common share for the
corresponding quarter of 1993. Income before income taxes decreased to $240,000
in the first quarter of 1994 from $711,000 in the first quarter of 1993. This
decrease of $471,000 in income before income taxes resulted from a decrease of
$420,000 in gains from sales of investments, and from significant additional
costs, aggregating in excess of $300,000 during the first quarter of 1994,
incurred in connection with the Corporate Merger. This decrease in earnings was
partially offset by a reduction in the provision for losses on loans of
$300,000, which was $65,000 for the three months ended March 31, 1994, compared
with $365,000 for the quarter ended March 31, 1993. The allowance for loan
losses as a percent of net loans was 1.16 percent at March 31, 1994, nearly
double the comparable percentage of .59 percent at March 31, 1993.
OCC APPROVAL; EFFECTIVE DATE
On April 12, 1994, the OCC approved the Bank Merger. Since the FUNC Closing
Price (I E., the average of the closing sale prices of FUNC Common Stock on the
NYSE Tape for the 20 trading days ended on the OCC Approval Date) on the OCC
Approval Date ($42.28) was greater than $32.50, there will be no adjustment to
the Common Stock Exchange Ratio or the Preferred Stock Exchange Ratio as a
result of an FUNC Common Stock Decline.
The Mergers are currently expected to be consummated on May 31, 1994,
subject to the approval of the Merger Agreement by ABI stockholders at the
Special Meeting and to the satisfaction or waiver of the other conditions of
closing.
THE DATE OF THIS PROSPECTUS/PROXY STATEMENT SUPPLEMENT IS APRIL 18, 1994
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