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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 1-10000
FIRST UNION CORPORATION
(Exact name of registrant as specified in its charter)
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NORTH CAROLINA 56-0898180
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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FIRST UNION CORPORATION
ONE FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28288-0013
(Address of principal executive offices)
(Zip Code)
(704) 374-6565
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
171,669,951 shares of Common Stock, par value $3.33 1/3 per share, were
outstanding as of April 30, 1995.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following unaudited consolidated financial statements of First Union
Corporation (the "Corporation" or "FUNC") within Item 1 include, in the opinion
of management, all adjustments (consisting only of normal recurring adjustments)
necessary for fair presentation of such consolidated financial statements for
the periods indicated.
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FIRST UNION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Consolidated Balance Sheets of First Union Corporation and Subsidiaries
at March 31, 1995, March 31, 1994, and December 31, 1994, respectively, set
forth on page T-23 of the Corporation's First Quarter Financial Supplement for
the three months ended March 31, 1995, (the "Financial Supplement"), are
incorporated herein by reference.
The Consolidated Statements of Income of First Union Corporation and
Subsidiaries for the three months ended March 31, 1995 and 1994, set forth on
page T-24 of the Financial Supplement, are incorporated herein by reference.
The Consolidated Statements of Cash Flows of First Union Corporation and
Subsidiaries for the three months ended March 31, 1995 and 1994, set forth on
page T-25 of the Financial Supplement, are incorporated herein by reference.
A copy of the Financial Supplement is being filed as Exhibit (19) to this
Report.
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FIRST UNION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: LOANS
The Financial Accounting Standards Board (FASB) has issued Standard No.
114, "Accounting by Creditors for Impairment of a Loan," which requires that all
creditors value all specifically reviewed loans for which it is probable that
the creditor will be unable to collect all amounts due according to the terms of
the loan agreement at the present value of expected cash flows, market price of
the loan, if available, or value of the underlying collateral. Expected cash
flows are required to be discounted at the loan's effective interest rate. This
Standard is required for fiscal years beginning after December 15, 1994.
The FASB also has issued Standard No. 118, "Accounting by Creditors for
Impairment of a Loan -- Income Recognition and Disclosures," that amends FASB
Standard No. 114 to allow a creditor to use existing methods for recognizing
interest income on an impaired loan and by requiring additional disclosures
about how a creditor recognizes interest income related to impaired loans. This
Standard is to be implemented concurrently with Standard No. 114.
On January 1, 1995, the provisions of Standards No. 114 and 118 were
adopted. The adoption of the Standards required no increase to the allowance for
loan losses and had no impact on net income in the first quarter of 1995. The
impact to historical and current amounts related to in-substance foreclosures
was not material, and accordingly, historical amounts have not been restated.
When the ultimate collectibility of an impaired loan's principal is in
doubt, wholly or partially, all cash receipts are applied to principal. When
this doubt does not exist, cash receipts are applied under the contractual terms
of the loan agreement first to principal and then to interest income. Once the
recorded principal balance has been reduced to zero, future cash receipts are
applied to interest income, to the extent that any interest has been foregone.
Further cash receipts are recorded as recoveries of any amounts previously
charged off.
A loan is also considered impaired if its terms are modified in a troubled
debt restructuring after January 1, 1995. For these accruing impaired loans,
cash receipts are typically applied to principal and interest receivable in
accordance with the terms of the restructured loan agreement. Interest income is
recognized on these loans using the accrual method of accounting. As of March
31, 1995, there were no accruing impaired loans.
At March 31, 1995, impaired loans amounted to $330 million. Included in the
allowance for loan losses is $15 million related to $230 million of impaired
loans. The remainder of the impaired loans are recorded at or below fair value.
In the first quarter of 1995, the average recorded investment in impaired
loans was $295 million and $4 million of interest income was recognized on loans
while they were impaired. All of this income was recognized using a cash-basis
method of accounting.
NOTE 2: OFF-BALANCE SHEET RISK AND CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
Information related to off-balance sheet risk as of March 31, 1995, is
included in Tables 19 through 21 of the Financial Supplement on pages T-16
through T-18.
At March 31, 1995, the net fair value of the Corporation's recorded net
financial assets subject to valuation in accordance with Financial Accounting
Standard No. 107, "Disclosures about Fair Value of Financial Instruments,"
increased 24 percent from year-end 1994 as a result of an increase in the net
financial assets subject to such valuation and 33 percent as a result of changes
in interest rates from year-end 1994.
Information related to off-balance sheet risk and the impact of changes in
interest rates should be read in conjunction with the "Interest Rate Risk
Management" section of the Financial Supplement.
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PART II. OTHER INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's Analysis of Operations appears on pages 2 through 16 and T-1
through T-25 of the Financial Supplement and is incorporated herein by
reference.
A copy of the Financial Supplement is being filed as Exhibit (19) to this
Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the annual meeting of the stockholders of the Corporation held on April
18, 1995, in addition to the election of the 12 directors nominated to serve as
such and the ratification of the selection of KPMG Peat Marwick LLP as auditors
of the Corporation, the following proposals were approved at the meeting:
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FOR AGAINST ABSTAIN
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1. Proposal to approve certain amendments to the Corporation's 1992 Master Stock
Compensation Plan............................................................. 144,374,855 5,742,116 1,238,765
2. Proposal to approve certain amendments to the Corporation's Management
Incentive Plan................................................................ 143,646,778 6,431,891 1,277,067
3. Proposal to approve certain amendments to the Corporation's Long-Term Cash
Incentive Plan................................................................ 144,323,260 5,703,519 1,328,957
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
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EXHIBIT NO. DESCRIPTION
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(4) Instruments defining the rights of security holders, including indentures.*
(10)(a) The Corporation's 1992 Master Stock Compensation Plan, as amended.
(10)(b) The Corporation's Management Incentive Plan, as amended.
(10)(c) The Corporation's Management Long-Term Cash Incentive Plan, as amended.
(12) Computations of Consolidated Ratios of Earnings to Fixed Charges.
(19) The Corporation's First Quarter Financial Supplement.
(20) The Corporation's First Quarter Report to Stockholders.**
(27) The Corporation's Financial Data Schedules.***
(99)(a) First Union Corporation of Virginia and Subsidiaries Summarized Financial Information.
(99)(b) Pro Forma Financial Information.
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* The Corporation agrees to furnish to the Commission upon request, copies of
the instruments, including indentures, defining the rights of the holders of
the long-term debt of the Corporation and its consolidated subsidiaries.
** The First Quarter Report to Stockholders is furnished for the information of
the Commission only and is not to be deemed "filed" as part of this Form
10-Q.
*** Filing by Electronic Data Gathering, Analysis and Retrieval System only.
(b) Reports on Form 8-K.
During the quarter ended March 31, 1995, a Current Report on Form 8-K,
dated January 13, 1995, was filed with the Commission by the Corporation.
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SIGNATURES
Pursuant to the Requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST UNION CORPORATION
Date: May 12, 1995
By: /s/ JAMES H. HATCH
JAMES H. HATCH
SENIOR VICE PRESIDENT AND
CORPORATE CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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(4) Instruments defining the rights of security holders, including indentures.*
(10)(a) The Corporation's 1992 Master Stock Compensation Plan, as amended.
(10)(b) The Corporation's Management Incentive Plan, as amended.
(10)(c) The Corporation's Management Long-Term Cash Incentive Plan, as amended.
(12) Computations of Consolidated Ratios of Earnings to Fixed Charges.
(19) The Corporation's First Quarter Financial Supplement.
(20) The Corporation's First Quarter Report to Stockholders.**
(27) The Corporation's Financial Data Schedules.***
(99)(a) First Union Corporation of Virginia and Subsidiaries Summarized Financial Information.
(99)(b) Pro Forma Financial Information.
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* The Corporation agrees to furnish to the Commission upon request, copies of
the instruments, including indentures, defining the rights of the holders of
the long-term debt of the Corporation and its consolidated subsidiaries.
** The First Quarter Report to Stockholders is furnished for the information of
the Commission only and is not to be deemed "filed" as part of this Form
10-Q.
*** Filing by Electronic Data Gathering, Analysis and Retrieval System only.
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EXHIBIT (10)(A)
FIRST UNION CORPORATION
1992 MASTER STOCK COMPENSATION PLAN
as amended and restated on April 18, 1995
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FIRST UNION CORPORATION
1992 MASTER STOCK COMPENSATION PLAN
SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN
1.1 ESTABLISHMENT. First Union Corporation, a North Carolina corporation,
hereby establishes a master stock compensation plan for key Employees, which
shall be known as the "1992 MASTER STOCK COMPENSATION PLAN" (the "Plan"),
similar to the 1984 and 1988 Master Stock Compensation Plans previously
established by the Corporation. It is intended that certain of the Options
issued pursuant to the Plan may constitute incentive stock options within the
meaning of Section 422 of the Internal Revenue Code (the "Code"). The Plan also
shall provide for the issuance of nonstatutory stock options and Restricted
Stock.
1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Corporation, by encouraging and providing for the acquisition of an equity
interest in the success of the Corporation by key Employees through the grant of
incentive stock options, nonstatutory stock options, and Restricted Stock. The
Plan will help enable the Corporation to attract and retain the services of key
Employees upon whose judgment, interest and special effort the successful
conduct of its operations is largely dependent.
1.3 EFFECTIVE DATE. The Plan shall become effective as of April 21, 1992,
subject to ratification by the shareholders of the Corporation.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used herein, the following terms shall have their
respective meanings set forth below:
(a) "Adjusted Net Income" means net income applicable to common
shareholders, adjusted to remove the effect of the following:
(i) items disclosed under generally accepted accounting principles,
or that would be disclosed absent a materiality concept, in the
Corporation's income statement as extraordinary gains or losses
or as changes in accounting principles;
(ii) net income or loss attributable to companies acquired in
acquisition transactions which are being treated as poolings
under generally accepted accounting principles to the extent
the income or loss is attributable to periods prior to the
consummation date of the transaction; and
(iii) restructuring charges recognized in the Corporation's income
statement as a result of current and/or pending acquisition
transactions.
(b) "Base Salary" means the annual base salary being paid to a Covered
Officer as of December 31 of a particular year.
(c) "Board" means the Board of Directors of the Corporation, excluding
members who are not eligible to serve on the Committee.
(d) "Committee" means the Human Resources Committee of the Board
consisting of three or more members of the Board who are not, and who have
not been at any time within one year prior to appointment to the Committee,
eligible to receive Stock under the Plan or any similar plan of the
Corporation.
(e) "Corporation" means First Union Corporation, a North Carolina
corporation, and shall include any subsidiary, 50% or more of the
outstanding voting stock of which is owned by the Corporation, unless
otherwise indicated by the context.
(f) "Covered Officers" means such executive officers of the
Corporation as the Committee may designate in writing as Covered Officers.
(g) "Disability" means the permanent and total disability, by reason
of physical or mental infirmity, or both, of a Participant to perform the
work customarily assigned to him by the Corporation. The determination of
the existence or nonexistence of Disability shall be made by the Committee
pursuant to a medical examination by a medical doctor selected or approved
by the Committee.
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(h) "Employee" means the Chairman of the Board, any Vice Chairman of
the Board, the President, Secretary or Treasurer of the Corporation, any
Vice President of the Corporation, and any other individual who performs
similar policy making functions of the Corporation.
(i) "Fair Market Value" means the closing price of the Stock on the
New York Stock Exchange on a particular date.
(j) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan an Option may be either
(i) an "incentive stock option" within the meaning of Section 422 of the
Code or (ii) a "nonstatutory stock option."
(k) "Participant" means an Employee designated by the Committee to
participate in the Plan.
(l) "Period of Restriction" means the period during which the transfer
of shares of Restricted Stock granted under the Plan is restricted pursuant
to Section 8 of the Plan.
(m) "Proposed Amendments" means the amendments to the Plan to be voted
upon by the shareholders of the Corporation at the Annual Meeting of
Stockholders to be held on April 18, 1995.
(n) "Restricted Stock" means Stock granted to a Participant pursuant
to Section 8 of the Plan.
(o) "ROE" means the Corporation's Adjusted Net Income as a percentage
of average common shareholders' equity, excluding any adjustment for
unrealized gains or losses on debt and equity securities pursuant to the
Statement of Financial Accounting Standards Number 115. In situations where
net income applicable to common shareholders is adjusted as a result of
pooling transactions noted under Section 2.1(a) above, the average equity
of the Corporation for the period against which the Adjusted Net Income is
compared to determine ROE, shall be computed without taking into account
the equity of an acquired company for any time periods prior to the
consummation date of the transaction.
(p) "Retirement" (including "Early Retirement" and "Normal
Retirement") means termination of employment under the terms of the
Corporation's Pension Plan.
(q) "Stock" means the Common Stock of the Corporation.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural
shall include the singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY AND PARTICIPATION. Participants in the Plan shall be
selected by the Committee from among those Employees who, in the opinion of
the Committee, are in a position to contribute materially to the
Corporation's continued growth and development and to its long-term
financial success.
SECTION 4. ADMINISTRATION
4.1 ADMINISTRATION. The Committee shall be responsible for
administration of the Plan. The Committee, by majority action thereof, is
authorized to select officers for participation in the Plan, make decisions
concerning the timing, pricing and amount of grants or awards under the
Plan, interpret the Plan, prescribe, amend, and rescind rules and
regulations relating to the Plan, provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Corporation,
and make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the
express provisions of the Plan. Determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the
Plan shall be final and binding and conclusive for all purposes and upon
all persons whomsoever.
SECTION 5. STOCK SUBJECT TO PLAN
5.1 NUMBER. The total number of shares of Stock subject to issuance
under the Plan may not exceed 5,000,000 subject to adjustment as provided
by Subsection 5.3. Of this total number, up to 2,000,000 shares of Stock
may be granted in Restricted Stock to Participants under Section 8 of the
Plan.
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5.2 UNUSED STOCK. In the event any shares of Stock that are subject to
an Option which, for any reason, expires or is terminated unexercised as to
such shares, such shares again shall become available for issuance under
the Plan. Any shares of Stock withheld by the Corporation pursuant to
Subsection 13.1 hereof and any shares of Restricted Stock that are
forfeited pursuant to the Plan shall not become available for reissuance
under the Plan.
5.3 ADJUSTMENT IN CAPITALIZATION. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by
the shareholders of the Corporation, by reason of a Stock dividend or
split, recapitalization, combination, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock subject to (i)
the limitation set forth in Subsection 7.1, and (ii) each outstanding
Option, and its stated option price, shall be appropriately adjusted by the
Committee, whose determination shall be conclusive; provided, however, that
fractional shares shall be rounded to the nearest whole share. In such
event, the Committee shall also make any appropriate adjustments in the
number and type of shares subject to Restricted Stock grants then
outstanding under the Plan pursuant to the terms of such grants or
otherwise.
SECTION 6. DURATION OF PLAN
6.1 DURATION OF PLAN. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Subsection 11.1
hereof, until all Stock subject to it shall have been purchased or acquired
pursuant to the provisions hereof. Notwithstanding the foregoing, no option
or Restricted Stock may be granted under the Plan on or after the tenth
(10th) anniversary of the Plan's effective date.
SECTION 7. TERMS OF OPTIONS
7.1 GRANT OF OPTIONS. Subject to the provisions of Subsections 3.1 and
5.1, Options may be granted to Employees at any time and from time to time
as shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each
Participant; provided, however, that no Participant shall be granted
Options to purchase more than 200,000 shares of Stock, subject to
adjustment as set forth in Subsection 5.3, during any fiscal year. The
Committee also shall determine whether an Option is to be an incentive
stock option within the meaning of Section 422 of the Code or a
nonstatutory stock option.
7.2 OPTION AGREEMENT. As determined by the Committee on the date of
grant, each Option shall be evidenced by an Option agreement that shall
specify the type of Option granted, the Option price, the duration of the
Option, the number of shares of Stock to which the Option pertains, the
date or dates on which the Option is exercisable and any other terms of the
Option.
7.3 OPTION PRICE. No Option granted pursuant to the Plan shall have an
Option price that is less than the Fair Market Value of the Stock on the
date the Option is granted.
7.4 DURATION OF OPTIONS. Each Option shall expire at such time as the
Committee shall determine at the time it is granted, provided, however,
that no Option shall be exercisable later than the tenth (10th) anniversary
date of its grant.
7.5 EXERCISE OF OPTIONS. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve (within the
meaning of Section 422 of the Code), which need not be the same for all
Participants.
7.6 RESTRICTIONS ON STOCK TRANSFERABILITY. The Committee shall impose
such restrictions on any shares of Stock acquired pursuant to the exercise
of an option under the Plan as it may deem advisable, including, without
limitation, restrictions under applicable federal securities law, under the
requirements of any stock exchange upon which such shares of Stock are then
listed and under any blue sky or state securities laws applicable to such
shares.
7.7 PAYMENT. The Option price upon exercise of any option shall be
payable to the Corporation in full either (i) in cash or its equivalent, or
(ii) by tendering shares of previously acquired Stock having a Fair Market
Value at the time of exercise equal to the total option price, or (iii) by
a combination of (i) and (ii). The proceeds from such a payment shall be
added to the general funds of the Corporation and shall be used for general
corporate purposes.
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7.8 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
In the event the employment of a Participant is terminated by reason of
death, Disability, or Retirement, any outstanding Options shall become
immediately exercisable at any time prior to the expiration date of the
Options or within three years after such date of termination of employment,
whichever period is the shorter. However, in the case of incentive stock
options, the tax treatment prescribed under section 422 of the Code shall
not be available if such options are not exercised within (i) three months
after such date of termination due to Retirement, or (ii) one year after
such date of termination due to Disability.
7.9 TERMINATION OF EMPLOYMENT OTHER THAN FOR DEATH, DISABILITY, OR
RETIREMENT. If the employment of the Participant shall terminate for any
reason other than death, Disability, or Retirement, the rights under any
then outstanding Options granted pursuant to the Plan shall terminate upon
the expiration date of the Options or three months after such date of
termination of employment, whichever first occurs; provided, however, in
the event of an involuntary termination of the employment of a Participant
by the Corporation, the Committee may, in its sole discretion, cause any
outstanding Options held by the Participant to become immediately
exercisable at any time prior to the expiration date of the Options or
three months after such date of termination of employment, whichever first
occurs.
7.10 NONTRANSFERABILITY OF OPTIONS. No option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated by the Participant, otherwise than by will or by the laws of
descent and distribution. Further, all Options granted to a Participant
under the Plan shall be exercisable during his lifetime only by such
Participant.
SECTION 8. RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK.
(a) Subject to Subsections 3.1 and 5.1 and paragraph (b) of this
Subsection 8.1, the Committee, at any time and from time to time, may grant
shares of Restricted Stock under the Plan to such Participants and in such
amounts as it shall determine. Each grant of Restricted Stock shall be in
writing. Certificates for the shares so granted shall be issued and
delivered to or held by the Corporation for the Participants as soon as is
practicable after grant; provided, however, at the option of the Committee,
such shares may be recorded on the shareholder records of the Corporation
by the Transfer Agent of the Stock without the issuance of such
certificates.
(b) Shares of Restricted Stock may only be granted to a Covered
Officer under the following conditions:
(i) prior to April 1, 1994, as to shares of Restricted Stock
granted to a Covered Officer in 1994 ("1994 Grants"), the
Committee shall determine the Covered Officers and an ROE
performance goal for 1994 that will need to be attained in
order to permit vesting of the shares of Restricted Stock
included in the 1994 Grants, subject to any other vesting
requirements that may be imposed at the time of grant of such
shares;
(ii) prior to April 1, 1994, as to shares of restricted stock
granted to a Covered Officer in 1995, and prior to January 1
of each year thereafter (commencing with 1995), the Committee
shall determine the Covered Officers and an ROE performance
goal for 1994 and each year thereafter that will need to be
attained in order to permit shares of Restricted Stock to be
granted to the Covered Officers in 1995 and each year
thereafter, as applicable; and
(iii) the value of shares of Restricted Stock granted to a Covered
Officer (calculated by multiplying the Fair Market Value on
the date of grant times the number of shares of Restricted
Stock granted) shall equal 100% of the Covered Officer's 1993
Base Salary (as to the 1994 Grants) and 200% of the Covered
Officer's Base Salary for each year thereafter (as to grants
in the year following each such year); provided, however,
such value may not exceed $3,000,000; and provided, further,
the Committee may, in its discretion, reduce the number of
such shares to be granted.
(c) In addition to the foregoing with respect to 1994 Grants:
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(i) vesting of shares of restricted stock included in 1994 Grants
to Covered Officers may only occur after the Committee
certifies in writing that the ROE performance goal for 1994 and
any other material conditions precedent with respect to such
vesting have been satisfied; and
(ii) the payment of any dividends or other distributions on shares
of restricted stock included in 1994 Grants to Covered
Officers that are payable in the third and fourth quarters of
1994 may only be paid after the Committee certifies in writing
that the ROE performance goal for the second quarter of 1994
(as to dividends or distributions payable in the third
quarter) and the third quarter (as to dividends or
distributions payable in the fourth quarter) and any other
material conditions precedent to such payments have been
satisfied.
8.2 TRANSFERABILITY. Except as provided in Section 8 and Subsection 12.2
hereof, the shares of Restricted Stock granted hereunder may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated by the
Participant for such period of time as shall be determined by the Committee and
shall be specified in the Restricted Stock grant, or upon earlier satisfaction
of other conditions as specified by the Committee in its sole discretion and set
forth in the Restricted Stock grant.
8.3 REMOVAL OF RESTRICTIONS. Except as otherwise provided in Section 8 and
Subsection 12.2 hereof, shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan shall become freely transferable by the
Participant after the last day of the Period of Restriction.
8.4 OTHER RESTRICTIONS. The Committee shall impose such other restrictions
on any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable federal
or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.
8.5 CERTIFICATE LEGEND. In addition to any legends placed on certificates
pursuant to Subsection 8.4 hereof, each certificate representing shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in First Union
Corporation's 1992 Master Stock Compensation Plan, rules of administration
adopted pursuant to such Plan, and a Restricted Stock Award Agreement dated
. A copy of the Plan, such rules, and such Restricted Stock
Award Agreement may be obtained from the Secretary of First Union
Corporation."
Once the shares are released from the restrictions set forth in Subsection
8.2 hereof, the Participant shall be entitled to have the legend required by
this Subsection 8.5 removed from his Stock certificates.
8.6 VOTING RIGHTS. During the Period of Restriction, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those shares.
8.7 DIVIDENDS AND OTHER DISTRIBUTIONS.
(a) Except as otherwise set forth in paragraph (b) of this Subsection
8.7, during the Period of Restriction, Participants holding shares of
Restricted Stock granted hereunder shall be entitled to receive all
dividends and other distributions paid with respect to those shares while
they are so held. If any such dividends or distributions are paid in shares
of Stock, the shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which
they were paid.
(b) Dividends and other distributions payable to the Covered Officers
in the third and fourth quarters of 1994 with respect to shares of
Restricted Stock included in 1994 Grants ("Distributions") may only be paid
if, prior to April 1, 1994, the Committee shall determine an ROE
performance goal for the second and third quarters of 1994 that will need
to be attained in order to permit payment of any Distributions that are
scheduled to be paid in the third and fourth quarters of 1994,
respectively.
8.8 TERMINATION OF EMPLOYMENT DUE TO NORMAL RETIREMENT, DEATH, OR
DISABILITY. In the event that a Participant terminates his employment with
the Corporation because of Normal Retirement, death, or Disability, any
remaining Period of Restriction applicable to the Restricted Stock pursuant
to Subsection 8.2 hereof
5
<PAGE>
shall automatically terminate and, except as otherwise provided in
Subsection 8.4, the shares of Restricted Stock shall thereby be free of
restrictions and freely transferable; provided, however, the foregoing
shall not apply with respect to a 1994 Grant to a Covered Officer whose
Normal Retirement occurs prior to December 31, 1994.
8.9 TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH,
DISABILITY, OR NORMAL RETIREMENT. In the event that a Participant
terminates his employment with the Corporation for any reason other than
those set forth in Subsection 8.8 hereof during the Period of Restriction,
then any shares of Restricted Stock still subject to restrictions at the
date of such termination shall automatically be forfeited and returned to
the Corporation; provided, however, that, in the event that a Participant
terminates his employment with the Corporation because of Early Retirement
or in the event of an involuntary termination of the employment of a
Participant by the Corporation, the Committee may, in its sole discretion,
waive the automatic forfeiture of any or all such shares and/or may add
such new restrictions to such shares of Restricted Stock as it deems
appropriate; provided, however, the Committee may not waive such automatic
forfeitures with respect to a 1994 Grant to a Covered Officer whose Early
Retirement or involuntary termination occurs prior to December 31, 1994.
8.10 NONTRANSFERABILITY OF RESTRICTED STOCK. No shares of Restricted
Stock granted under the Plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated by the Participant, otherwise than
by will or by the laws of descent and distribution until the termination of
the applicable Period of Restriction. All rights with respect to Restricted
Stock granted to a Participant under the Plan shall be exercisable during
his lifetime only by such Participant.
SECTION 9. BENEFICIARY DESIGNATION
9.1 BENEFICIARY DESIGNATION. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be
paid in case of his death before he receives any or all of such benefit.
Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to his estate.
SECTION 10. RIGHTS OF EMPLOYEES
10.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Corporation to terminate any Employee's employment
at any time, nor confer upon any Employee any right to continue in the
employ of the Corporation.
SECTION 11. AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
11.1 AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN. The Board may
at any time terminate, and from time to time may amend or modify the Plan,
provided, however, that no such action of the Board, without approval of
the shareholders, may:
(a) Increase the total amount of Stock which may be issued under the
Plan, except as provided in Subsection 5.3 of the Plan.
(b) Change the class of Employees eligible to receive Options or
Restricted Stock.
(c) Change the provisions of the Plan regarding the option price
except as permitted by Subsection 5.3.
(d) Materially increase the cost of the Plan.
(e) Extend the period during which Options or Restricted Stock may be
granted.
(f) Extend the maximum period after the date of grant during which
Options may be exercised.
6
<PAGE>
(g) Change the material terms of the performance goal provided for in
Subsection 8.1(b) or 8.7(b), including (i) the class of individuals
eligible to receive shares of Restricted Stock or Distributions under such
Subsections, (ii) a description of the business criteria on which the
performance goal is based, and (iii) the maximum limitation set forth in
Subsection 8.1(b)(iii), it being understood that the determination by the
Committee of varying ROE goals pursuant to Subsection 8.1(b) or 8.7(b)
shall not be deemed to be a change in the material terms of the performance
goal.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Option or Restricted Stock theretofore granted under the
Plan, without the consent of the Participant.
11.2 PROPOSED AMENDMENTS. If the Proposed Amendments are not approved by
the shareholders of the Corporation, the Plan shall remain in effect in
accordance with the terms and conditions contained therein prior to the Proposed
Amendments; provided, however, in such case no shares of restricted stock may
thereafter be granted under the Plan to any "covered employee" (as such term is
defined under Section 162(m) of the Internal Revenue Code of 1986, as amended.
SECTION 12. MERGER OR CONSOLIDATION
12.1 TREATMENT OF OPTIONS. A dissolution or a liquidation of the
Corporation or a merger or consolidation in which the Corporation is not the
surviving corporation or in which the Corporation survives but in which its
Stock is exchanged for cash or securities of another entity shall cause every
Option outstanding hereunder to terminate. However, the Participant shall have
the right immediately prior to such dissolution, liquidation, merger, or
consolidation to exercise any unexercised Options whether or not then
exercisable, subject to the provisions of the Plan.
12.2 TREATMENT OF RESTRICTED STOCK. In the event of a dissolution or
liquidation of the Corporation or a merger or consolidation in which the
Corporation is not the surviving corporation or in which the Corporation
survives but in which its Stock is exchanged for cash or securities of another
entity, all restrictions shall lapse on the shares of Restricted Stock granted
under the Plan and thereafter such shares shall be freely transferable by the
Participant, subject to applicable federal or state securities laws.
SECTION 13. TAX WITHHOLDING
13.1 TAX WITHHOLDING. Whenever shares of Stock are to be issued under the
Plan, the Corporation shall have the power to require the recipient of the Stock
to remit to the Corporation an amount sufficient to satisfy federal, state, and
local withholding tax requirements. Participants may elect, subject to approval
by the Committee, to satisfy the foregoing tax withholding requirements, in
whole or in part, by having the Corporation withhold shares of Common Stock
having a Fair Market Value equal to the amount required to be withheld. The
election must be made on or before the date that the amount of tax to be
withheld is determined (the "Tax Date").
The foregoing elections are subject to the following restrictions: (1) they
must be made on or prior to the Tax Date, (2) they must be irrevocable and (3)
they must be subject to the disapproval of the Committee. Elections by
Participants who are subject to Section 16(b) of the Securities Exchange Act of
1934 are subject to the following additional restrictions: they must be made (1)
six months or more prior to the Tax Date, (2) in a "window period" beginning on
the third business day after the release of the Corporation's quarterly or
annual earnings news release following the date of grant as to which the
election relates and prior to the Tax Date (which must be at least six months
following such date of grant) and ending on the twelfth business day following
the date of such news release, or (3) outside of such window period but to take
effect in such window period.
SECTION 14. INDEMNIFICATION
14. INDEMNIFICATION. Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held harmless by the
Corporation against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Corporation's approval, or paid by him in satisfaction of any judgment in
any such action, suit, or proceeding against him, provided he shall give the
Corporation an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Corporation's
Articles of
7
<PAGE>
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Corporation may have to indemnify them or hold them harmless.
SECTION 15. REQUIREMENTS OF LAW
15.1 REQUIREMENTS OF LAW. The granting of Options or Restricted Stock and
the issuance of shares of Stock upon the exercise of an Option shall be subject
to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
15.2 GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of North
Carolina.
8
<PAGE>
EXHIBIT (10)(B)
FIRST UNION CORPORATION
MANAGEMENT INCENTIVE PLAN, AS AMENDED
<TABLE>
<C> <S>
I. PURPOSE
II. EFFECTIVE DATE
III. ELIGIBILITY
IV. PROCEDURE
V. AWARD PAYMENT
VI. ADMINISTRATION
VII. MODIFICATION AND TERMINATION
VIII. NONASSIGNABILITY
</TABLE>
Date: April 18, 1995
<PAGE>
FIRST UNION CORPORATION
MANAGEMENT INCENTIVE PLAN, AS AMENDED
I. PURPOSE:
Through recognition of both Corporate and individual performance, the Plan
is intended to provide significant and sustaining motivation to key Corporate
management personnel who are responsible for meeting growth and profit
objectives.
II. EFFECTIVE DATE:
The Plan shall be effective with the fiscal year beginning January 1, 1978,
and shall continue for each fiscal year thereafter until terminated.
III. ELIGIBILITY:
It is the Plan intent that primary participants will be limited to key
members of senior management selected by the Human Resources Committee. In
addition, management positions may be designated on a periodic basis by the
Human Resources Committee.
IV. PROCEDURE:
The following procedure will be used to determine award payments under the
Plan:
(A) FUNDING:
A management incentive pool will be developed on the following basis:
(Bullet) A contribution to the pool will be made only after a 12%
return on common equity, excluding any adjustment for
unrealized gains or losses on debt and equity securities
pursuant to Statement of Financial Accounting Standards
Number 115 (ROE) has been attained for a given fiscal year,
based on the net income of First Union Corporation adjusted
for unusual items to be determined at the discretion of the
Human Resources Committee ("Adjusted Net Income for Pool
Purposes").
(Bullet) The pool contribution would then be made on the basis of the
following table:
<TABLE>
<CAPTION>
ROE
(BASED
ON
ADJUSTED
NET
INCOME
FOR POOL % OF ADJUSTED NET
PURPOSES)* INCOME FOR POOL PURPOSES*
<S> <C>
%
12.00 1.00
12.50 1.15
13.00 1.30
13.50 1.45
14.00 1.60
14.50 1.75
15.00 1.90
15.50 2.05
16.00 2.20
16.50 2.35
17.00 2.50
Greater than 17.00% 2.50
</TABLE>
(Bullet) The aforelisted funding requirements are general guidelines
that may be adjusted from time to time by the Human Resources
Committee of the Board. The Committee may, at its discretion,
make incentive payments notwithstanding these guidelines at
such time and to such individuals as deemed appropriate based
on unforeseen circumstances. In addition, the evaluation of
performance under the Plan should take into consideration
actions taken in support of the Corporation's long-term
growth strategy that may negatively impact the Corporation's
single year ROE calculation.
* Each ten basis points increase in ROE between 12% and 17% shall result in a
three basis points increase in the corresponding % of Adjusted Net Income for
Pool Purposes.
1
<PAGE>
(B) (1) INDIVIDUAL AWARDS:
Participants will receive awards from the management incentive pool on the
basis of individual performance as determined by the Human Resources Committee
of the Board of Directors.
(2) INDIVIDUAL PERFORMANCE:
Performance used as a determinant for individual award grants will be based
upon achievement of predetermined goals and objectives and will be supported by
the Corporation's formally documented performance evaluation system. The maximum
potential award per individual shall be 200% of base salary.
(3) COVERED OFFICERS:
Notwithstanding the foregoing, awards may only be granted to such executive
officers of First Union Corporation (the "Corporation") and its subsidiaries as
the Human Resource Committee may designate in writing as Covered Officers
("Covered Officers"), on the following conditions:
(Bullet) Prior to April 1, 1994, as to awards for 1994, and prior to
January 1 of each year thereafter as to awards for each such
year, the Human Resources Committee shall determine the
Covered Officers and an ROE performance goal, based on
Adjusted Net Income for Award Purposes (as defined below),
for 1994 and each year thereafter that will need to be
attained by the Corporation in order for awards to be made to
the Covered Officers for each such year.
(Bullet) Each award shall be equal to 100% of the Covered Officer's
base salary as of December 31, 1994, as to 1994 awards, and
shall be equal to 200% of the Covered Officer's base salary
as of December 31 of each year thereafter as to awards for
each such year; provided, however, such award may not exceed
$3,000,000; and provided, further, the Human Resources
Committee, in its discretion, may reduce the amount of any
such award at any time before such award is paid to a Covered
Officer.
(Bullet) "Adjusted Net Income for Award Purposes" means the
Corporation's annual net income applicable to common
stockholders, adjusted to remove the effect of the following:
(i) items to be disclosed under generally accepted accounting
principles, or that would be disclosed absent a materiality
concept, in the Corporation's annual income statement as
extraordinary gains or losses or as changes in accounting
principles;
(ii) net income or loss attributable to companies acquired in
acquisition transactions which are being treated as poolings
under generally accepted accounting principles to the extent
the income or loss is attributable to periods prior to the
consummation date of the transaction; and
(iii) restructuring charges to be recognized in the Corporation's
annual income statement as a result of current and/or pending
acquisition transactions.
(Bullet) In situations where net income applicable to common
stockholders is adjusted as a result of pooling transactions
noted above, the average equity of the Corporation for the
year, against which the Adjusted Net Income for Award
Purposes is compared to determine ROE, shall be computed
without taking into account the equity of an acquired company
for any time periods prior to consummation of the
transaction.
(4) In all cases, the recommended individual awards must be approved by the
Human Resources Committee. In addition, the total of all actual awards made will
be subject to any governmental wage guidelines which may exist and individual
awards will be subject to applicable tax withholdings.
To the extent contributions to the management incentive pool exceed
individual awards made under the Plan, such excess shall be held under the Plan
and shall be available to be granted to individuals under the Plan at such time
and in such amounts as may be determined in accordance with the provisions of
the Plan.
V. AWARD PAYMENT:
Except as may otherwise be determined by the Human Resources Committee
pursuant to the last paragraph of the preceding Article IV, awards made in a
given fiscal year will be paid during the first quarter of the year subsequent
to the fiscal year on which the award is based or at such other time or times as
the Human Resources
2
<PAGE>
Committee may determine. Participants must be employed as of December 31 to
receive a payment during the following year, except in the case of retirement
under the First Union Corporation Pension Plan, death, or disability under the
First Union Corporation Long-Term Disability Plan. In these cases, the amount
would be paid to the individual or beneficiary in the same manner.
Notwithstanding the foregoing, awards to Covered Officers shall be made on
the January 31st following the year for which the awards are being made or at
any time thereafter; provided, however, awards may be made prior to such January
31st if such awards are discounted using the applicable short-term federal rate
in effect at the time of payment in accordance with Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the "Code"); and provided further,
however, awards may only be paid to Covered Officers after the Human Resources
Committee certifies in writing that the applicable ROE performance goal and any
other material conditions precedent to the payment of such awards have been
satisfied.
VI. ADMINISTRATION:
This Plan shall be administered by the Human Resources Committee of the
Board of Directors. As indicated previously, all actual awards made under the
Plan must be approved by the Human Resources Committee.
VII. MODIFICATION AND TERMINATION:
The Plan may be terminated at any time by the Board of Directors. This Plan
may be amended in whole or in part from time to time by the Human Resources
Committee of the Board of Directors, but no amendment shall operate to decrease
the awards previously made and due any participant.
Notwithstanding the foregoing, any amendment that changes the performance
goal provided for in Article IV (B) (3), including (i) the class of individuals
eligible to receive awards under such Article IV (B) (3), (ii) a description of
the business criteria on which the performance goal is based, and (iii) the
maximum limitation set forth in such Article IV (B) (3), shall be subject to the
approval of the stockholders of First Union Corporation, it being understood
that the determination by the Human Resources Committee of varying ROE goals
pursuant to such Article IV (B)(3) shall not be deemed to be a change in the
material terms of the performance goal.
Notwithstanding anything to the contrary contained in the Plan, if the
amendments to the Plan adopted by the Human Resources Committee on February 15,
1994, and reflected above, are not approved by the stockholders of the
Corporation, the Plan shall remain in full force and effect in accordance with
the terms and conditions of the Plan in effect prior to the adoption of such
amendments; provided, however, in such case no awards may thereafter be made
under the Plan to "covered employees" (as such term is defined in Section 162(m)
of the Code).
VIII. NONASSIGNABILITY:
Interests in the Plan may not be transferred or assigned by participants
other than by will or the laws of descent and distribution.
3
<PAGE>
EXHIBIT (10)(C)
FIRST UNION CORPORATION
MANAGEMENT LONG-TERM CASH INCENTIVE PLAN, AS AMENDED
<TABLE>
<C> <S>
I. PURPOSE
II. EFFECTIVE DATE
III. ELIGIBILITY
IV. PROCEDURE
V. AWARD PAYMENTS
VI. ADMINISTRATION
VII. MODIFICATION AND TERMINATION
VIII. NONASSIGNABILITY
</TABLE>
Date: April 18, 1995
<PAGE>
FIRST UNION CORPORATION
MANAGEMENT LONG-TERM CASH INCENTIVE PLAN, AS AMENDED
I. PURPOSE:
Through recognition of both long-term Corporate performance relative to its
peers and individual performance, the Plan is intended to provide significant
and sustaining motivation to key Corporate management personnel who are
responsible for meeting growth and profit objectives.
II. EFFECTIVE DATE:
The Plan shall be effective with the fiscal year beginning January 1, 1992,
and shall continue for each fiscal year thereafter until terminated.
III. ELIGIBILITY:
It is the Plan intent that primary participants will be limited to key
members of senior management selected by the Human Resources Committee. In
addition, management positions may be designated on a periodic basis by the
Human Resources Committee.
IV. PROCEDURE:
The following procedure will be used to determine award payments under the
Plan:
(A) FUNDING
An incentive pool will be developed on the following basis:
(Bullet) A contribution to the pool will be made only if a 10% average
return on common equity, excluding any adjustment for unrealized
gains or losses on debt and equity securities pursuant to
Statement of Financial Accounting Standards Number 115 (ROE) has
been attained for the two-year period ending December 31, 1992,
and for the three-year period ending each December 31 thereafter,
based on the net income of First Union Corporation adjusted for
unusual items to be determined at the discretion of the Human
Resources Committee of the Board of Directors of First Union
Corporation.
(Bullet) If such ROE exceeds 10%, a pool contribution would then be made
based on the following table:
<TABLE>
<S> <C>
RANK COMPARED PERCENTAGE OF
TO PEER GROUP* BASE SALARIES**
1 50%
2 49%
3 48%
4 47%
5 46%
6 45%
7 43%
8 41%
9 39%
10 37%
11 35%
12 31%
13 27%
</TABLE>
1
<PAGE>
* Represents the rank of First Union Corporation's average ROE, calculated as
hereinabove provided, for the applicable three-year period (two-year period
for 1991 and 1992) compared to the average return on common equity of the 25
largest bank holding companies based in the U.S. for such period.
** Represents the percentage of the base salaries of all participants in the
Plan for the last year of the three-year period (two-year period for 1991 and
1992) prior to individual awards being made for such period.
(Bullet) The aforelisted funding requirements are general guidelines that
may be adjusted from time to time by the Human Resources Committee
of the Board. The Committee may, at its discretion, make incentive
payments notwithstanding these guidelines at such time and to such
individuals as deemed appropriate based on unforeseen
circumstances. In addition to the average ROE for a particular
period, certain long-range strategic objectives should be taken
into consideration when determining the funding and payment of
incentives under the Plan. Long-range strategic objectives include
but are not limited to growth of capital, growth of earning
assets, consummation of acquisitions, repositioning of the balance
sheet and other steps in support of the Corporation's long-range
growth strategy. The contribution level to the designated
incentive pool will be determined based on the Human Resource
Committee's assessment of the long-range strategic benefit to the
Corporation of the specific actions taken by management.
(B) (1) INDIVIDUAL AWARDS:
Participants will receive awards from the incentive pool on the basis of
individual performance as determined by the Human Resources Committee of the
Board of Directors.
(2) INDIVIDUAL PERFORMANCE:
Performance used as a determinant for individual award grants will be based
upon achievement of predetermined goals and objectives and will be supported by
the Corporation's formally documented performance evaluation system. The maximum
potential award per individual shall be 100% of base salary.
(3) COVERED OFFICERS:
Notwithstanding the foregoing, commencing with the 1994-1996 three-year
period, awards may only be granted to such executive officers of First Union
Corporation (the "Corporation") and its subsidiaries as the Human Resource
Committee may designate in writing as Covered Officers ("Covered Officers"), on
the following conditions:
(Bullet) Prior to April 1, 1994, as to awards for the 1994-1996 three-year
period, and prior to January 1 of the first year of each
three-year period thereafter as to awards for each such three-year
period thereafter, the Human Resources Committee shall determine
the Covered Officers and an average ROE performance goal, based on
Adjusted Net Income for Award Purposes (as defined below), for the
1994-1996 three-year period and each three-year period thereafter
that will need to be attained by the Corporation in order for
awards to be made to the Covered Officers for each such three-year
period.
(Bullet) Each award shall be equal to 100% of the Covered Officer's base
salary as of December 31 of the last year of each three-year
period; provided, however, such award may not exceed $1,500,000;
and provided, further, the Human Resources Committee, at its
discretion, may reduce the amount of any such award at any time
before such award is paid to a Covered Officer.
(Bullet) "Adjusted Net Income for Award Purposes" means the Corporation's
annual net income applicable to common stockholders, adjusted to
remove the effect of the following:
(i) items to be disclosed under generally accepted accounting
principles, or that would be disclosed absent a materiality
concept, in the Corporation's annual income statement as
extraordinary gains or losses or as changes in accounting
principles;
(ii) net income or loss attributable to companies acquired in
acquisition transactions which are being treated as poolings
under generally accepted accounting principles to the extent
the income or loss is attributable to periods prior to the
consummation date of the transaction; and
2
<PAGE>
(iii) restructuring charges to be recognized in the Corporation's
annual income statement as a result of current and/or pending
acquisition transactions.
(Bullet) In situations where net income applicable to common stockholders
is adjusted as a result of pooling transactions noted above, the
average equity of the Corporation for the year, against which the
Adjusted Net Income for Award Purposes is compared to determine
ROE, shall be computed without taking into account the equity of
an acquired company for any time periods prior to consummation of
the transaction.
(4) In all cases, the recommended individual awards must be approved by the
Human Resources Committee. In addition, the total of all actual awards made will
be subject to any governmental wage guidelines which may exist and individual
awards will be subject to applicable tax withholdings.
To the extent contributions to the incentive pool exceed individual awards
made under the Plan, such excess shall be held under the Plan and shall be
available to be granted to individuals under the Plan at such time and in such
amounts as may be determined in accordance with the provisions of the Plan.
V. AWARD PAYMENT:
Awards made for any given three-year period (two-year period for 1991 and
1992) will be made at such time or times as the Human Resources Committee may
determine during the year subsequent to the three-year period (two-year period
for 1991 and 1992) on which the award is based. Participants must be employed as
of December 31 in the last year of the applicable three-year period (two-year
period for 1991 and 1992), to receive a payment during the following year,
except in the case of retirement under the First Union Corporation Pension Plan,
death, or disability under the First Union Corporation Long-Term Disability
Plan. In these cases, the amounts would be paid to the individual or beneficiary
in the same manner.
Notwithstanding the foregoing, commencing with the 1994-1996 three-year
period, awards to Covered Officers shall be made on the June 30th following the
end of the three-year period for which the awards are being made or at any time
thereafter; provided, however, awards may be made prior to such June 30th if
such awards are discounted using the applicable short-term federal rate in
effect at the time of payment in accordance with Section 1274(d) of the Internal
Revenue Code of 1986, as amended (the "Code"); and provided further, however,
awards may only be paid to Covered Officers after the Human Resources Committee
certifies in writing that the applicable average ROE performance goal and any
other material conditions precedent for the payment of such awards have been
satisfied.
VI. ADMINISTRATION:
This Plan shall be administered by the Human Resources Committee of the
Board of Directors. As indicated previously, all actual awards made under the
Plan must be approved by the Human Resources Committee.
VII. MODIFICATION AND TERMINATION:
The Plan may be terminated at any time by the Board of Directors. This Plan
may be amended in whole or in part from time to time by the Human Resources
Committee of the Board of Directors, but no amendment shall operate to decrease
the awards previously made and due any participant.
Notwithstanding the foregoing, any amendment that changes the performance
goal provided for in Article IV (B)(3), including (i) the class of individuals
eligible to receive awards under such Article IV (B)(3), (ii) a description of
the business criteria on which the performance goal is based, and (iii) the
maximum limitation set forth in such Article IV (B)(3), shall be subject to the
approval of the stockholders of First Union Corporation, it being understood
that the determination by the Human Resources Committee of varying ROE goals
pursuant to such Article IV (B)(3) shall not be deemed to be a change in the
material terms of the performance goal.
Notwithstanding anything to the contrary contained in the Plan, if the
amendments to the Plan adopted by the Human Resources Committee on February 15,
1994, and reflected above, are not approved by the stockholders of the
Corporation, the Plan shall remain in full force and effect in accordance with
the terms and conditions of the Plan in effect prior to the adoption of such
amendments; provided, however, in such case no awards may be made under the Plan
to "covered employees" (as such term is defined in Section 162(m) of the Code)
for the three-year periods ending on or after December 31, 1996.
VIII. NONASSIGNABILITY:
Interests in the Plan may not be transferred or assigned by participants
other than by will or the laws of descent and distribution.
3
<PAGE>
EXHIBIT (12)
FIRST UNION CORPORATION
COMPUTATIONS OF CONSOLIDATED
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS) 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS:
Pretax income from continuing
operations............................ $ 367,872 1,415,456 1,220,781 581,203 419,801 327,360
Fixed charges, excluding capitalized
interest.............................. 213,793 669,978 517,742 456,867 698,898 982,086
(A.) Earnings........................... $ 581,665 2,085,434 1,738,523 1,038,070 1,118,699 1,309,446
Interest, excluding interest on
deposits.............................. $ 201,471 619,698 467,181 405,297 652,393 949,046
One-third of rents...................... 12,322 50,280 50,561 51,570 46,505 33,040
Capitalized interest.................... 4 1,120 285 381 2,326 3,144
(B.) Fixed charges...................... $ 213,797 671,098 518,027 457,248 701,224 985,230
Consolidated ratios of earnings to fixed
charges, excluding interest on
deposits (A./B.)...................... 2.72X 3.11 3.36 2.27 1.60 1.33
INCLUDING INTEREST ON DEPOSITS:
Pretax income from continuing
operations............................ $ 367,872 1,415,456 1,220,781 581,203 419,801 327,360
Fixed charges, excluding capitalized
interest.............................. 680,531 2,111,226 1,841,000 2,072,538 2,789,501 3,127,374
(C.) Earnings........................... $1,048,403 3,526,682 3,061,781 2,653,741 3,209,302 3,454,734
Interest, including interest on
deposits.............................. $ 668,209 2,060,946 1,790,439 2,020,968 2,742,996 3,094,334
One-third of rents...................... 12,322 50,280 50,561 51,570 46,505 33,040
Capitalized interest.................... 4 1,120 285 381 2,326 3,144
(D.) Fixed charges...................... $ 680,535 2,112,346 1,841,285 2,072,919 2,791,827 3,130,518
Consolidated ratios of earnings to fixed
charges, including interest
on deposits (C./D.)................... 1.54X 1.67 1.66 1.28 1.15 1.10
</TABLE>
FIRST UNION CORPORATION
AND SUBSIDIARIES
First Quarter
Financial
Supplement
Three Months Ended
March 31, 1995
<PAGE>
FIRST UNION CORPORATION
AND SUBSIDIARIES
FIRST QUARTER FINANCIAL SUPPLEMENT
THREE MONTHS ENDED MARCH 31, 1995
(Unaudited)
TABLE OF CONTENTS
Page
Selected Financial Data . . . . . . . . . . . . . . . . . 1
Management's Analysis of Operations . . . . . . . . . . . 2
Consolidated Summaries of Income and Per Share Data . . . T-1
Noninterest Income . . . . . . . . . . . . . . . . . . . T-2
Noninterest Expense . . . . . . . . . . . . . . . . . . . T-2
Internal Capital Growth and Dividend Payout Ratios . . . T-3
Selected Quarterly Data . . . . . . . . . . . . . . . . . T-4
Growth through Acquisitions . . . . . . . . . . . . . . . T-5
Securities Available for Sale . . . . . . . . . . . . . . T-6
Investment Securities . . . . . . . . . . . . . . . . . . T-7
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . T-8
Allowance for Loan Losses and Nonperforming Assets . . . T-9
Intangible Assets . . . . . . . . . . . . . . . . . . . . T-10
Allowance for Foreclosed Properties . . . . . . . . . . . T-10
Deposits . . . . . . . . . . . . . . . . . . . . . . . . T-11
Time Deposits in Amounts of $100,000 or More . . . . . . T-11
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . T-12
Changes in Stockholders' Equity . . . . . . . . . . . . . T-13
Capital Ratios . . . . . . . . . . . . . . . . . . . . . T-14
Interest Rate Gap . . . . . . . . . . . . . . . . . . . . T-15
Off-Balance Sheet Derivative Financial Instruments . . . T-16
Off-Balance Sheet Derivatives-Expected Maturities . . . . T-18
Off-Balance Sheet Derivatives Activity . . . . . . . . . T-18
Net Interest Income Summaries
Five Quarters Ended March 31, 1995 . . . . . . . . . . T-19
Year-to-date December 31, 1994; September 30, and June 30,
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . T-21
Consolidated Balance Sheets
Five Quarters Ended March 31, 1995 . . . . . . . . . . T-23
Consolidated Statements of Income . . . . . . . . . . . . T-24
Consolidated Statements of Cash Flows . . . . . . . . . . T-25
<PAGE>
SELECTED FINANCIAL DATA
Three Months Ended
March 31,
Per Common Share Data 1995 1994
Net income applicable to common stockholders . . $ 1.32 1.27
Cash dividends . . . . . . . . . . . . . . . . . . .46 .40
Book value . . . . . . . . . . . . . . . . . . . . 31.91 29.46
Quarter-end price . . . . . . . . . . . . . . . .$43.375 41.625
Financial Ratios
Return on average assets (a)(b) . . . . . . . . . . 1.24% 1.28
Return on average common stockholders' equity (a)(c) 16.71 17.54
Net interest margin(a) . . . . . . . . . . . . . . 4.57 4.79
Net charge-offs to average loans, net (a) . . . . . .31 .27
Allowance for loan losses to:
Loans, net . . . . . . . . . . . . . . . . . . 1.74 2.17
Nonaccrual and restructured loans . . . . . . 224 168
Nonperforming assets . . . . . . . . . . . . 168 127
Nonperforming assets to loans, net and
foreclosed properties . . . . . . . . . . . . 1.03 1.70
Stockholders' equity to assets . . . . . . . . . 7.05 7.30
Tier 1 capital to risk-weighted assets . . . . . 7.53 9.36
Dividend payout ratio on common shares . . . . . 34.85% 31.50
(a) Annualized.
(b) Based on net income.
(c) Based on net income applicable to common stockholders and
average common stockholders' equity excluding average net
unrealized gains and losses on debt and equity securities.
1
<PAGE>
MANAGEMENT'S ANALYSIS OF OPERATIONS
Earnings Highlights
First Union's net income applicable to common
stockholders increased to $230 million, or $1.32 per
common share, in the first quarter of 1995. This compared
with $217 million, or $1.27, in the first quarter of 1994
and $225 million, or $1.28, in the fourth quarter of
1994.
First Union's first quarter 1995 return on average common
stockholders' equity was 16.71 percent and return on
average assets was 1.24 percent.
This first quarter 1995 performance reflected:
(Diamond) 3 percent growth in loans, up $1.7 billion since
year-end 1994;
(Diamond) 3 percent decrease in expenses from the fourth
quarter of 1994; and
(Diamond) 13 percent growth in capital management income
and 13 percent growth in mortgage banking income from the
fourth quarter of 1994.
Net loans at March 31, 1995, were $55.8 billion.
Nonperforming assets were $577 million at March 31, 1995,
compared with $558 million at year-end 1994. They
remained stable at 1.03 percent of net loans and
foreclosed properties. Annualized net charge-offs also
remained low at .31 percent of average net loans.
Domestic banking operations, including trust operations,
located in North and South Carolina, Georgia, Florida,
Maryland, Tennessee, Virginia and Washington, D.C., and
mortgage banking operations are our principal sources of
revenues. Foreign banking operations are immaterial.
The Net Interest Income section provides information
about lost interest income related to nonaccrual and
restructured loans and the Asset Quality section includes
information about the loan loss provision.
Outlook
We were pleased with our first quarter 1995 financial
performance and with the steps we have taken to maintain
our earnings momentum.
In subsequent quarters of 1995, we expect to continue
making discretionary investments to expand the capacity
of our fundamental businesses and to develop new areas
for growth.
On April 1, 1995, we completed the purchase accounting
acquisitions of Ameribanc Investors Group, parent of
American Savings Bank, FSB, in Virginia and First Florida
Savings Bank, FSB. Consummation of the purchase
accounting acquisition of Coral Gables Fedcorp, Inc., is
expected June 1, 1995, and of United Financial
Corporation of South Carolina Inc., American Savings of
Florida, FSB, and Columbia First Bank, FSB, in Virginia in
the second half of 1995. At March 31, 1995, the foregoing
bank acquisitions had combined assets, net loans and
deposits of $11.0 billion, $7.7 billion and $7.4 billion,
respectively. We expect these acquisitions will have a
minor impact on 1995 earnings and will be positive to
earnings within 12 months of consummation.
We continue to be alert to opportunities to enhance
stockholder value through acquisitions. We are evaluating
acquisition opportunities, and teams of experienced
2
<PAGE>
bankers from all areas of the corporation frequently
conduct 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
may be expected. Acquisitions typically involve the
payment of a premium over book and market values. Some
dilution of First Union's book value and temporary
dilution of net income per common share may occur in
connection with some future acquisitions.
The Accounting and Regulatory Matters section provides
information about various other legislative, accounting
and regulatory matters that have recently been adopted or
proposed.
Net Interest Income
Tax-equivalent net interest income increased from the
first quarter of 1994 and remained flat compared with the
fourth quarter of 1994. Tax-equivalent net interest
income in the first quarter of 1995 reflected changes in
the deposit mix and the seasonal influence on
noninterest-bearing deposits, and also included amortized
premiums related to the purchase of futures contracts to
hedge against rising interest rates in the second half of
1995. In subsequent quarters of 1995, we are optimistic
that growth in loans and the repricing of credit card and
other variable rate assets will increase tax-equivalent
net interest income.
Nonperforming loans reduced interest income because the
contribution from these loans is eliminated or sharply
reduced. In the first quarter of 1995, $12 million in
gross interest income would have been recorded if all
nonaccrual and restructured loans had been current in
accordance with their original terms and had been
outstanding throughout the period, or since origination
if held for part of the period. The amount of interest
income related to these assets and included in income in
the first quarter of 1995 was $1 million.
Net Interest Margin
The net interest margin, which is the difference between
the tax-equivalent yield on earning assets and the rate
paid on funds to support those assets, was 4.57 percent
in the first quarter of 1995, compared with 4.79 percent
in the first quarter of 1994. An increase in deposit
repricing and a lag in loan repricing were factors in the
margin decline. It should be noted that the margin is not
our primary management focus or goal. Our goal is to
continue increasing net interest income.
The average rate earned on earning assets was 8.44
percent in the first quarter of 1995, compared with 7.59
percent in the first quarter of 1994. The average rate
paid on interest-bearing liabilities was 4.48 percent in
the first quarter of 1995 and 3.29 percent in the first
quarter of 1994.
We use securities and off-balance sheet transactions to
manage interest rate sensitivity. More information on
these transactions is included in the Interest Rate Risk
Management section.
Noninterest Income
Growth in noninterest income since the first quarter of
1994 came primarily from increased capital management and
mortgage banking income. Capital management income,
including personal and corporate trust, brokerage, and
asset management
3
<PAGE>
income, increased 32 percent, to a
record $67 million. There were declines in noncore
sources of noninterest income, including security gain
income.
Trading Activities
Trading activities are undertaken to satisfy customers'
risk management and investment needs and for the
corporation's own account. All trading activities are
conducted within risk limits established by the
corporation's Funds Management Committee, and all trading
positions are marked to market daily.
Trading activities include fixed income securities, money
market instruments, foreign exchange, options, futures,
forward rate agreements and swaps.
At March 31, 1995, trading account assets were $1.5
billion, compared with $1.2 billion at year-end 1994.
Noninterest Expense
Noninterest expense increased in the first quarter of
1995, compared with the first quarter of 1994, largely
reflecting growth in personnel, advertising and other
expenses related to card products, financial planning and
capital markets initiatives undertaken to improve
prospects for revenue growth, as well as expenses related
to acquisitions. Noninterest expense declined 3 percent
compared with the fourth quarter of 1994, which included
reductions in professional fees and other sundry
expenses. Costs related to environmental matters were not
material.
Securities Available For Sale
Securities available for sale are used as a part of the
corporation's interest rate risk management strategy and
may be sold in response to changes in interest rates,
changes in prepayment risk, liquidity needs, the need to
increase regulatory capital ratios and other factors.
During the first quarter of 1995, our portfolio strategy
was designed to protect net interest income from the
potential negative impact of projected rising short-term
interest rates during the year. We also allowed
securities to mature without material reinvestment to
avoid material exposure to interest rate movements.
At March 31, 1995, we had securities available for sale
with a market value of $7.3 billion, compared with a
market value of $7.8 billion at year-end 1994. The market
value of securities available for sale was $123 million
below amortized cost at the end of the first quarter of
1995. As a result, a $97 million after-tax unrealized
loss was recorded as a reduction of stockholders' equity
at March 31, 1995. Table 7 provides information related
to unrealized gains and losses and realized gains and
losses on these securities.
The average rate earned on securities available for sale
in the first quarter of 1995 was 6.33 percent, compared
with 5.23 percent in the first quarter of 1994. The
average maturity of the portfolio was 3.65 years at March
31, 1995.
Investment Securities
First Union's investment securities amounted to $3.6
billion at March 31, 1995, compared with $3.7 billion at
year-end 1994.
4
<PAGE>
The average rate earned on investment securities in the
first quarter of 1995 was 8.80 percent, compared with
9.04 percent in the first quarter of 1994. The average
maturity of the portfolio was 5.94 years at March 31,
1995.
Table 8 provides information related to unrealized gains
and losses and realized gains and losses on these
securities.
Loans
Our lending strategy stresses quality growth, diversified
by product, geography and industry. A common credit
underwriting structure is in place throughout the
company, and a special real estate credit group reviews
large commercial real estate loans before approval.
Consistent with our long-time standard, we generally look
for two repayment sources for commercial real estate
loans: cash flows from the project and other resources of
the borrower.
Our commercial lenders focus principally on middle-market
companies. A majority of our commercial loans are for
less than $10 million.
Our consumer lenders emphasize credit judgments that
focus on a customer's debt obligations, ability and
willingness to repay, and general economic trends.
Net loans at March 31, 1995, were $55.8 billion, compared
with $54.0 billion at year-end 1994. This increase was
led by 6 percent loan growth in North Carolina. Consumer
loan growth largely reflected strength in direct lending
and credit cards.
The loan portfolio at March 31, 1995, was composed of 47
percent in commercial loans and 53 percent in consumer
loans. The portfolio mix did not change significantly
from year-end 1994.
At March 31, 1995, unused loan commitments related to
commercial and consumer loans were $15.6 billion and
$11.6 billion, respectively. Commercial and standby
letters of credit were $2.2 billion.
At March 31, 1995, loan participations sold to other
lenders amounted to $1.0 billion and were recorded as a
reduction of gross loans.
The average rate earned on loans in the first quarter of
1995 was 8.90 percent, compared with 8.29 percent in the
first quarter of 1994. The average prime rate in the
first quarter of 1995 was 8.83 percent, compared with
6.02 percent in the first quarter of 1994. Factors
affecting rates between the first quarter of 1994 and
the first quarter of 1995 included: rapid increases in
the prime rate throughout the year; an increased portion
of the loan portfolio tied to rate indices other than
the prime rate; a larger portfolio of fixed and adjustable
rate mortgages; and a rapidly growing credit card
portfolio, which reflected recent solicitations with
introductory rates that will reprice throughout 1995.
The Asset Quality section provides information about
geographic exposure in the loan portfolio.
Commercial Real Estate Loans
Commercial real estate loans amounted to 13 percent of
the total portfolio at March 31, 1995, and at December
31, 1994. This portfolio included commercial real estate
mortgage loans of $5.7 billion at March 31, 1995, and
$5.4 billion at December 31, 1994.
5
<PAGE>
Highly Leveraged Transactions
An HLT loan generally is defined as a loan amounting to
more than $20 million involving a buyout, acquisition or
recapitalization of an existing business, in which the
loan substantially increases a company's debt to equity
ratio. At March 31, 1995, outstanding HLT loans amounted
to $1.2 billion, compared with $971 million at December
31, 1994.
Asset Quality
Nonperforming Assets
At March 31, 1995, nonperforming assets were $577
million, or 1.03 percent of net loans and foreclosed
properties, compared with $558 million, or 1.03 percent,
at December 31, 1994.
Segregated assets, which are not included in
nonperforming assets and which relate to the acquisition
of Southeast Banks in 1991, were $178 million at March
31, 1995, or $156 million net of a $22 million allowance
for losses on segregated assets. This compared with $187
million, or $165 million net of a $22 million allowance,
at December 31, 1994. Under a loss-sharing arrangement,
the FDIC reimburses First Union for 85 percent of any
losses associated with the acquired Southeast Banks
commercial and consumer loan portfolio, except revolving
consumer credit, for which reimbursement declines five
percent per year to 65 percent by 1996. Segregated assets
are included in other assets.
Loans or properties of less than $5 million each made up
79 percent, or $458 million, of nonperforming assets at
March 31, 1995. Of the rest:
(Diamond) Six loans or properties between $5 million and
$10 million each accounted for $41 million; and
(Diamond) Three loans or properties over $10 million each
accounted for $78 million.
Sixty-five percent of nonperforming assets were
collateralized by real estate at March 31, 1995, compared
with 72 percent at year-end 1994.
Past Due Loans
In addition to these nonperforming assets, at March 31,
1995, accruing loans 90 days past due were $80 million,
compared with $140 million at December 31, 1994. Of
these, $11 million were related to commercial and
commercial real estate loans, compared with $27 million
at December 31, 1994.
Net Charge-offs
Annualized net charge-offs as a percentage of average net
loans were .31 percent in the first quarter of 1995,
compared with .40 percent in the fourth quarter of 1994
and .27 percent in the first quarter of 1994. We expect
annualized net charge-offs to increase moderately
throughout 1995 as the credit card portfolios mature.
Table 10 provides information on net charge-offs by
category.
Provision And Allowance For Loan Losses
The loan loss provision was $32 million in the first
quarter of 1995, compared with $25 million in the first
quarter of 1994. The increase in the loan loss provision
was based primarily on current economic conditions, on
the maturity and level of nonperforming assets, and on
projected levels of charge-offs.
6
<PAGE>
We establish reserves based upon various other factors,
including the results of quantitative analyses of the
quality of commercial loans and commercial real estate
loans. Reserves for commercial and commercial real estate
loans are based principally on loan grades, historical
loss rates, borrowers' creditworthiness, underlying cash
flows from the project and from borrowers, and analysis
of other less quantifiable factors that might influence
the portfolio. Reserves for consumer loans are based
principally on delinquencies and historical loss rates.
We analyze all loans in excess of $500,000 that are being
monitored as potential credit problems to determine
whether supplemental, specific reserves are necessary.
Since December 31, 1994, the loan loss allowance as a
percentage of net loans, nonaccrual and restructured
loans, and nonperforming assets has declined, as
indicated in Table 10.
At March 31, 1995, impaired loans amounted to $330
million. Included in the allowance for loan losses is $15
million related to $230 million of impaired loans. The
rest of the impaired loans are recorded at or below fair
value.
Geographic Exposure
The loan portfolio in the South Atlantic region of the
United States is spread primarily across 61 metropolitan
statistical areas with diverse economies. Washington,
D.C.; Charlotte, North Carolina; Atlanta, Georgia; and
Miami, Jacksonville, West Palm Beach and Tampa, Florida,
are our largest markets, but no individual metropolitan
market contains more than 8 percent of the commercial
loan portfolio.
Substantially all of the $7.5 billion commercial real
estate portfolio at March 31, 1995, was located in our
banking region.
Liquidity and Funding Sources
Liquidity planning and management are necessary to ensure
we maintain the ability to fund operations cost-
effectively and to meet current and future obligations.
In this process, we focus on both assets and liabilities
and the manner in which they combine to provide adequate
liquidity to meet the corporation's needs.
Funding sources primarily include customer-based core
deposits but also include purchased funds and cash flows
from operations. First Union is one of the nation's
largest core deposit-funded banking institutions. Our
large consumer deposit base, which is spread across the
economically strong South Atlantic region, creates
considerable funding diversity and stability. Further,
recently acquired bank and thrift deposits have enhanced
liquidity.
Asset liquidity is maintained through maturity management
and our ability to liquidate assets, primarily assets
held for sale. Another significant source of asset
liquidity is the potential to securitize assets such as
credit card receivables and auto, home equity and
mortgage loans. Off-balance sheet sources of liquidity
exist as well, such as a mortgage servicing portfolio for
which the estimated fair value exceeded book value by
$203 million at March 31, 1995.
Core Deposits
Core deposits were $52.3 billion at March 31, 1995,
compared with $53.2 billion at December 31, 1994. Core
deposits include savings, negotiable order of withdrawal
7
<PAGE>
(NOW), money market and noninterest-bearing accounts, and
other consumer time deposits.
In the first quarter of 1995 and the first quarter of
1994, average noninterest-bearing deposits were 19
percent and 20 percent, respectively, of average core
deposits. The Net Interest Income Summaries provide
additional information about average core deposits.
The portion of core deposits in higher-rate, other
consumer time deposits was 36 percent at March 31, 1995,
and 35 percent at year-end 1994. Other consumer time and
other noncore deposits usually pay higher rates than
savings and transaction accounts, but they generally are
not available for immediate withdrawal and are less
expensive to process.
Average core deposit balances in the first quarter of
1995 increased $2.4 billion from the first quarter of
1994. Average balances in savings and NOW and other
consumer time deposits were higher when compared with the
previous year, while money market and noninterest bearing
deposits were lower. Deposits were primarily affected by
our 1994 acquisitions and can also be affected by branch
closings or consolidations, seasonal factors and the
rates being offered for deposits compared to other
investment opportunities.
Purchased Funds
Purchased funds at March 31, 1995, were $14.1 billion,
compared with $13.3 billion at year-end 1994. Purchased
funds are acquired primarily through (i) our large branch
network, consisting principally of $100,000 and over
certificates of deposit, public funds and treasury
deposits, and (ii) national market sources, consisting
of relatively short-term funding sources such as federal
funds, securities sold under repurchase agreements,
eurodollar time deposits and commercial paper, and
longer-term funding sources such as bank notes and
corporate notes.
Average purchased funds in the first quarter of 1995 were
$14.9 billion, an increase of 36 percent from $10.9
billion in the first quarter of 1994, primarily as a
result of our 1994 acquisitions.
Cash Flows
Net cash provided from operations primarily results from
net income adjusted for the following noncash accounting
items: the provisions for loan losses and foreclosed
properties; and depreciation and amortization. These
items amounted to $127 million in the first quarter of
1995, compared with $106 million in the first quarter of
1994. This cash was available during the first quarter of
1995 to increase earning assets, to reduce borrowings by
$40 million and to pay dividends of $87 million.
Long-Term Debt
Long-term debt was 69 percent of total stockholders'
equity at March 31, 1995, compared with 64 percent at
December 31, 1994.
In the first quarter of 1995, we issued $300 million of
three-year floating rate notes. On April 26, 1995, we
issued $250 million of 40-year, 7-1/2 percent subordinated
debentures, which can be redeemed in whole or in part at
the option of the holders in 2005. Proceeds from these
debt issues will be used for general corporate purposes.
8
<PAGE>
Under a shelf registration statement filed with the
Securities and Exchange Commission, we currently have
available for issuance $450 million of senior or
subordinated debt securities. The sale of any additional
debt securities will depend on future market conditions,
funding needs and other factors.
Debt Obligations
We have a $350 million, three-year committed back-up line
of credit that expires in June 1997. This credit facility
contains financial covenants that require First Union to
maintain a minimum level of tangible net worth, restrict
double leverage ratios and require capital levels at
subsidiary banks to meet regulatory standards. First
Union is currently in compliance with these requirements
and has not used this line of credit.
In 1995, $267 million of long-term debt will mature.
Maturing in 1996 is $503 million, which includes notes
related to the Southeast Banks acquisition payable to the
FDIC of $101 million at March 31, 1995. We expect the
notes payable to the FDIC to decrease over the remaining
period ending in September 1996 through cash flows
generated by the acquired loans, the sale of the
Southeast Banks segregated assets and FDIC
reimbursements.
Stockholders' Equity
At March 31, 1995, common stockholders' equity was $5.49
billion, compared with $5.40 billion at December 31,
1994. Since year-end 1994, we have paid $284 million for
the purchase in the open market of 6.5 million shares of
First Union common stock related to the pending
acquisitions of American Savings of Florida, United
Financial and Columbia First. These shares have been
retired. In addition, in April 1995, the board of directors
renewed its authorization for the purchase from time to
time of up to 15 million additional shares of common
stock. As of May 5, 1995, 13.9 million shares can be
purchased pursuant to such authorization.
On March 31, 1995, we redeemed all of the 6.3 million
outstanding shares of Series 1990 cumulative perpetual
adjustable rate preferred stock at a redemption price of
$51.50 per share.
In 1995 and beyond, the preferred stock redemption is
expected to have a positive impact on earnings of
approximately 7 to 10 cents per share, based on the
current number of common shares outstanding.
We recorded a redemption premium in the fourth quarter of
1994, representing the difference between the $44.96 book
value of the preferred issue and the $51.50 redemption
price. The redemption premium reduced fourth quarter and
full year 1994 earnings per share applicable to common
stockholders by 24 cents.
We paid $87 million in dividends to preferred and common
stockholders in the first quarter of 1995.
At March 31, 1995, stockholders' equity included a $97
million unrealized after-tax loss related to debt and
equity securities. The Securities Available for Sale
section provides additional information about debt and
equity securities.
Subsidiary Dividends
Our banking subsidiaries are the largest source of parent
company dividends. Capital requirements established by
regulators limit dividends that these and certain other
of
9
<PAGE>
our subsidiaries can pay. The Office of the
Comptroller of the Currency (OCC) generally limits a
national bank's dividends in two principal ways: first,
dividends cannot exceed the bank's undivided profits,
less statutory bad debt in excess of a bank's allowance
for loan losses; and second, in any year dividends may
not exceed a bank's net profits for that year, plus its
retained earnings from the preceding two years, less any
required transfers to surplus.
Under these and other limitations, our subsidiaries had
$301 million available for dividends at March 31, 1995.
Our subsidiaries paid $188 million in dividends to the
corporation in the first quarter of 1995.
Risk-Based Capital
The minimum requirement for the ratio of total capital to
risk-weighted assets (including certain off-balance-sheet
financial instruments, such as standby letters of credit
and interest rate swaps) is currently 8 percent. At least
half of the total capital is to be composed of common
equity, retained earnings and a limited amount of
qualifying preferred stock, less certain intangible
assets (tier 1 capital). The rest may consist of a
limited amount of subordinated debt, nonqualifying
preferred stock and a limited amount of the loan loss
allowance (together with tier 1 capital, total capital).
At March 31, 1995, the corporation's tier 1 and total
capital ratios were 7.53 percent and 12.59 percent,
respectively.
In addition, the Federal Reserve Board has established
minimum leverage ratio requirements for bank holding
companies. These requirements provide for a minimum
leverage ratio of tier 1 capital to adjusted average
quarterly assets equal to 3 percent for bank holding
companies that meet specified criteria, including having
the highest regulatory rating. All other bank holding
companies will generally be required to maintain a
leverage ratio of at least 4 to 5 percent. The
corporation's leverage ratio at March 31, 1995, was 6.02
percent.
The requirements 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. The
Federal Reserve Board also has indicated it 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
us of any specific minimum leverage ratio applicable to
us.
Each subsidiary bank is subject to similar capital
requirements adopted by the OCC. Each subsidiary bank
listed in Table 17 had a leverage ratio in excess of 5.74
percent at March 31, 1995. None of our subsidiary banks
has been advised of any specific minimum capital ratios
applicable to it.
The regulatory agencies also have adopted regulations
establishing capital tiers for banks. Banks in the
highest capital tier, or "well capitalized," must have a
leverage ratio of 5 percent, a tier 1 capital ratio of 6
percent and a total capital ratio of 10 percent.
At March 31, 1995, the subsidiary banks listed in Table
17 met the capital and leverage ratio requirements for
"well capitalized" banks. We expect to maintain these
banks' ratios at the required levels by the retention of
earnings and, if necessary, the issuance of additional
capital.
10
<PAGE>
Failure to meet certain capital ratio or leverage ratio
requirements could subject a bank to a variety of
enforcement remedies, including termination of deposit
insurance by the FDIC.
The Accounting and Regulatory Matters section provides
more information about proposed changes in risk-based
capital standards.
Interest Rate Risk Management
Managing interest rate risk is fundamental to banking.
Banking institutions manage the inherently different
maturity and repricing characteristics of the lending and
deposit-taking lines of business to achieve a desired
interest rate sensitivity position and to limit exposure
to interest rate risk. The inherent maturity and
repricing characteristics of our lending and deposit
activities create a naturally asset-sensitive structure.
By using a combination of on- and off-balance sheet
financial instruments, we manage the sensitivity of
earnings to changes in interest rates within our
established policy guidelines.
The Financial Management Committee of the corporation's
board of directors reviews overall interest rate risk
management activity. The corporation's Funds Management
Committee, which includes the corporation's chief
executive officer and president, and senior executives
from our Capital Markets Group, credit and finance areas,
oversees the interest rate risk management process and
approves policy guidelines. Balance sheet management
personnel monitor the day-to-day exposure to changes in
interest rates in response to loan and deposit flows and
make adjustments within established policy guidelines.
We measure interest rate sensitivity by estimating the
amount of earnings per share at risk based on the
modeling of future changes in interest rates. Our model
captures all assets and liabilities and off-balance sheet
financial instruments, and combines various assumptions
affecting rate sensitivity and changes in balance sheet
mix into an earnings outlook that incorporates our view
of the interest rate environment most likely over the
next 24 months. Balance sheet management and finance
personnel review and update continuously the underlying
assumptions included in the earnings simulation model.
The results of the model are reviewed by the Funds
Management Committee. The model is updated at least
monthly and more often as appropriate.
Our interest rate sensitivity analysis is based on
multiple interest rate scenarios, projected changes in
growth in balance sheet categories and other assumptions.
Changes in management's outlook related to interest rates
and their effect on our balance sheet mix of assets and
liabilities and other market factors may cause actual
results to differ from our current simulated outlook.
We believe our earnings simulation model is a more
relevant depiction of interest rate risk than traditional
gap tables because it captures multiple effects excluded
in less sophisticated presentations, and it includes
significant variables that we identify as being affected
by interest rates. For example, our model captures rate
of change differentials, such as federal funds rates
versus savings account rates; maturity effects, such as
calls on securities; and rate barrier effects, such as
caps and floors on loans. It also captures changing
balance sheet levels, such as commercial and consumer
loans, both floating and fixed rate, noninterest-bearing
deposits and investment securities. In addition, it
considers leads and lags that occur in long-term rates as
short-term rates move away from current levels; the
elasticity in the repricing characteristics of savings
and money market deposits; and the effects of prepayment
volatility on various fixed
11
<PAGE>
rate assets such as residential mortgages, mortgage-backed
securities and consumer loans. These and certain other
effects are evaluated in developing the scenarios from which
sensitivity of earnings to changes in interest rates is
determined.
We use three standard scenarios in analyzing interest
rate sensitivity for policy measurement. The base-line
scenario is our estimated most likely path for future
short-term interest rates over the next 24 months. The
base-line scenario currently assumes that federal funds
rates rise through 1995 and fall modestly in 1996. The
"high rate" and "low rate" scenarios assume 100 basis
point shifts from the base- line scenario in the federal
funds rate by the fourth succeeding month and that rates
remain 100 basis points higher or lower through the rest
of the 24-month period. Our estimate in April 1995 of the
most likely path for future short-term interest rates was
that the federal funds rate would increase to 6.98
percent by March 1996, followed by a gradual decline to
6.50 percent by February 1997.
We determine interest rate sensitivity by the change in
earnings per share between the three scenarios over a 12-
month policy measurement period. The earnings per share
as calculated by the earnings simulation model under the
base-line scenario becomes the standard. The measurement
of interest rate sensitivity is the percentage change in
earnings per share calculated by the model under high
rate versus base-line and under low rate versus base-
line. The policy measurement period begins with the
fourth month forward and ends with the 15th month (i.e.,
the 12-month period.)
Our policy limit for the maximum negative impact on
earnings per share resulting from either the high rate or
low rate scenario is 5 percent. Based on the April 1995
outlook, if interest rates were to rise to follow the
high rate scenario, which means a full 100 basis point
increase over the base-line (already a rising rate
scenario), then earnings during the policy measurement
period would be negatively affected by 1.5 percent.
In addition to the three standard scenarios used to
analyze rate sensitivity over the policy measurement
period, we also analyze the potential impact of other
interest rate scenarios on corporate earnings in managing
and monitoring our interest rate sensitivity. These
alternate scenarios may include interest rate paths both
higher, lower and more volatile than those used for
policy measurement.
While our interest rate sensitivity modeling assumes that
management takes no action, we regularly assess the
viability of strategies to reduce unacceptable risks to
earnings resulting not only from the standard scenarios
over which policy period sensitivity is measured, but
also from alternate scenarios.
We have taken several actions to mitigate the negative
effect on earnings of adverse changes in interest rates
beyond the rate changes set forth by our policy
measurement criteria. For example, at March 31, 1995, we
had $24.5 billion in eurodollar put protection to reduce
rate sensitivity in the last half of 1995 that would
result if interest rates rose above our high rate
scenario. As new monthly forecast results become
available, management will continue to formulate
strategies to protect earnings from the potential
negative effects of changing assumptions and interest
rates.
Off-Balance Sheet Derivatives For Interest Rate Risk
Management
As part of our overall interest rate risk management
strategy, for many years we have used off-balance sheet
derivatives as a cost- and capital-efficient way to
modify the repricing or maturity characteristics of on-
balance sheet assets and liabilities. Our off-balance
sheet derivative transactions used for interest rate
sensitivity management
12
<PAGE>
include interest rate swaps, futures and options with
indices that relate to the pricing of specific core assets
and liabilities of the corporation. We believe we have
appropriately controlled the risk so that the derivatives
used for rate sensitivity management will not have any
significant unintended effect on corporate earnings.
As a result of interest rate fluctuations, off-balance
sheet transactions (and securities) will from time to
time develop unrealized appreciation or depreciation in
market values when compared with their cost. The impact
on net interest income attributable to off-balance sheet
transactions, all of which are linked to specific assets
and liabilities as part of our overall interest rate risk
management strategy, will generally be offset by net
interest income of on-balance sheet assets and
liabilities.
Our asset sensitivity arises naturally, primarily because
the repricing characteristics of our large core deposit
base have a positive effect on net interest income in a
rising rate environment and a negative effect on net
interest income in a declining or low-rate environment.
Conversely, our fixed-rate securities and off-balance
sheet instruments have the opposite effect when rates go
up or down. We mitigate our natural asset sensitivity by
holding fixed-rate debt instruments in the available-for-
sale securities portfolio or by holding off-balance sheet
"asset proxies." These asset proxies consist of interest
rate swaps that convert floating rate assets (primarily
variable rate loans) to fixed rate assets. The unrealized
appreciation and depreciation of these asset proxies
generally offset the appreciation and depreciation of
core deposits. The combination of securities and interest
rate swaps enables us to achieve a desired level of
interest rate sensitivity.
Another common application of off-balance sheet
instruments is the use of interest rate swaps to convert
fixed rate debt into floating rate debt. This is
accomplished by entering into interest rate swap
contracts to receive a fixed rate of interest to the
contractual maturity of the debt issued and to pay a
variable rate, usually six-month LIBOR. These "liability
swaps," all of which are linked to specific debt
issuances, leave rate sensitivity unchanged, whereas the
fixed-rate debt issuance alone would have increased asset
sensitivity or reduced liability sensitivity. The
combination of the liability swaps and debt produces the
desired LIBOR-based floating rate funding regardless of
changes in overall rates.
Our overall goal is to manage the corporation's rate
sensitivity in ways that the earnings momentum is not
adversely affected materially whether rates go up or
down.
The important consideration is not the shifting of
unrealized appreciation or depreciation between and among
on- and off-balance sheet instruments, but the prudent
management of interest rate sensitivity so that corporate
earnings are not at risk as interest rates move up or
down.
The fair value depreciation of off-balance sheet
derivative financial instruments used to manage our
interest rate sensitivity was $205 million at March 31,
1995, compared with $422 million at December 31, 1994.
The carrying amount of financial instruments used for
interest rate risk management includes amounts for
deferred gains and losses. The amount of deferred gains
and losses from off-balance sheet instruments used to
manage interest rate risk was $13 million and $28
million, respectively, as of March 31, 1995. These net
losses will reduce net interest income by $13 million in
1995 and $2 million in 1996. The increased contribution
to net interest income in a higher interest rate
environment from on-balance sheet assets and liabilities
is expected to substantially offset the potential
13
<PAGE>
reduced contribution to net interest income reflected by the
decline in market value of off-balance sheet derivative
financial instruments.
Although off-balance sheet derivative financial
instruments do not expose the corporation to credit risk
equal to the notional amount, we are exposed to credit
risk equal to the extent of the fair value gain in an
off-balance sheet derivative financial instrument if the
counterparty fails to perform. We minimize the credit
risk in these instruments by dealing only with high
quality counterparties. Each transaction is specifically
approved for applicable credit exposure.
In addition, our policy is to require all swaps and
options be governed by an International Swaps and
Derivatives Association Master Agreement. Bilateral
collateral arrangements are in place for substantially
all dealer counterparties.
Collateral for dealer transactions and derivatives used
in our trading activities is delivered by either party
when the credit risk associated with a particular
transaction, or group of transactions to the extent
netting exists, exceeds acceptable thresholds of credit
risk. Thresholds are determined based on the strength of
the individual counterparty and are bilateral. As of
March 31, 1995, the total credit risk in excess of
thresholds was $53 million. The fair value of collateral
held was 100 percent of the total credit risk in excess
of thresholds. For nondealer transactions, the need for
collateral is evaluated on an individual transaction
basis and is primarily dependent on the financial
strength of the counterparty.
14
<PAGE>
Accounting And Regulatory Matters
The Financial Accounting Standards Board (FASB) has
issued Standard No. 114, "Accounting by Creditors for
Impairment of a Loan," which requires that all creditors
value all specifically reviewed loans for which it is
probable that the creditor will be unable to collect all
amounts due according to the terms of the loan agreement
at the present value of expected cash flows, market price
of the loan, if available, or value of the underlying
collateral. Expected cash flows are required to be
discounted at the loan's effective interest rate. This
Standard is required for fiscal years beginning after
December 15, 1994. The FASB also has issued Standard No.
118, "Accounting by Creditors for Impairment of a Loan --
Income Recognition and Disclosures," that amends FASB
Standard No. 114 to allow a creditor to use existing
methods for recognizing interest income on an impaired
loan and by requiring additional disclosures about how a
creditor recognizes interest income related to impaired
loans. This Standard is to be implemented concurrently
with Standard No. 114. On January 1, 1995, we adopted the
provisions of Standards No. 114 and 118. The adoption of
the Standards required no increase to the allowance for
loan losses and had no impact on net income in the first
quarter of 1995. The impact to historical and current
amounts related to in-substance foreclosures was not
material, and accordingly, historical amounts will not be
restated. The Asset Quality section includes information
about impaired loans.
The FASB has also issued FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts,"
which defines right of set-off and sets forth the
conditions under which that right may be applied.
Specific guidance with respect to certain financial
instruments such as forward, interest rate swap, currency
swap, option and other conditional or exchange contracts
and clarification of the circumstances in which it is
appropriate to offset amounts recognized for those
contracts in the statement of financial position is also
included in this Interpretation. In addition, it permits
offsetting of fair value amounts recognized for multiple
forward, swap, option and other conditional or exchange
contracts executed with the same counterparty under a
master netting arrangement. This Interpretation is
effective for financial statements issued for periods
beginning after December 15, 1993. The FASB has also
issued FASB Interpretation No. 41, "Offsetting of Amounts
Related to Certain Repurchase and Reverse Repurchase
Agreements," which modifies FASB Interpretation No. 39 to
permit offsetting in the statement of financial position
of payables and receivables that represent repurchase
agreements and reverse repurchase agreements,
respectively, which have the same settlement date, are
executed with the same counterparty in accordance with a
master netting arrangement, involve securities that exist
in "book entry" form, and settle on securities transfer
systems that have the same key operating characteristics
as the Federal Securities Transfer System. This
Interpretation is effective for financial statements
issued for periods ending after December 31, 1994. The
effect of the Corporation's adoption of the provisions of
these Interpretations currently has been immaterial.
The FASB also has issued Standard No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of, which requires that
long-lived assets and certain identifiable intangibles to
be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
An estimate of the future cash flows expected to result
from the use of the asset and its eventual disposition
should be performed during a review for recoverability.
An impairment loss (based on the fair value of the asset)
is recognized if the sum of the expected future cash
flows (undiscounted and without interest charges) is less
than the carrying amount of the
15
<PAGE>
asset. Additionally, Standard No. 121 requires that
long-lived assets and certain identifiable intangibles to
be disposed of be reported at the lower of carrying amount
or fair value less cost to sell, except for certain assets.
The assets will continue to be reported at the lower of
carrying amount or net realizable value. The periodic
effect on net income, if any, has not been determined.
This Standard is required for fiscal years beginning after
December 15, 1995.
The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA), among other provisions,
imposes liability on a bank insured by the FDIC for
certain obligations to the FDIC incurred in connection
with other insured banks under common control.
The Federal Deposit Insurance Corporation Improvement
Act, among other things, requires a revision of risk-
based capital standards. The new standards are required
to incorporate interest rate risk, concentration of
credit risk and the risks of nontraditional activities
and to reflect the actual performance and expected risk
of loss of multifamily mortgages. The Risk-Based Capital
section provides information on risk assessment
classifications.
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.
The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (IBBEA) authorizes interstate
acquisitions of banks and bank holding companies without
geographic limitation beginning September 27, 1995. In
addition, beginning June 1, 1997, a bank may merge with a
bank in another state as long as neither of the states
opt out of interstate branching between the date of
enactment of IBBEA and May 31, 1997. IBBEA further
provides that a state may enact laws permitting
interstate merger transactions before June 1, 1997.
The Riegle Community Development and Regulatory
Improvement Act of 1994 includes a list of regulatory
relief items. The regulatory relief sections eliminate or
modify many regulatory requirements under existing law.
Various other legislative proposals concerning the
banking industry are pending in Congress. Given the
uncertainty of the legislative process, we cannot assess
the impact of any such legislation on our financial
condition or results of operations.
16
<PAGE>
Table 1
CONSOLIDATED SUMMARIES OF INCOME AND PER SHARE DATA
<TABLE>
<CAPTION>
Twelve
Months 1995 1994
Ended
March 31, First Fourth Third Second First
(In thousands except per share data) 1995 Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARIES
OF INCOME
Interest income* $ 5,470,989 1,469,997 1,411,877 1,330,197 1,258,918 1,186,412
Interest expense 2,293,152 668,209 610,172 530,858 483,913 436,003
Net interest income* 3,177,837 801,788 801,705 799,339 775,005 750,409
Provision for loan losses 107,500 32,500 25,000 25,000 25,000 25,000
Net interest income after
provision for loan losses* 3,070,337 769,288 776,705 774,339 750,005 725,409
Securities available for sale
transactions (12,172) 3,635 (9,926) (2,946) (2,935) 4,300
Investment security transactions 3,608 217 411 2,286 694 615
Noninterest income 1,192,228 301,539 311,419 303,259 276,011 275,781
Noninterest expense 2,722,089 684,702 703,948 682,219 651,220 639,841
Income before income taxes* 1,531,912 389,977 374,661 394,719 372,555 366,264
Income taxes 501,038 130,963 120,705 130,147 119,223 120,001
Tax-equivalent adjustment 91,044 22,105 22,407 22,820 23,712 23,804
Net income 939,830 236,909 231,549 241,752 229,620 222,459
Dividends on preferred stock 26,656 7,029 6,831 6,595 6,201 5,726
Net income applicable to common
stockholders before redemption premium 913,174 229,880 224,718 235,157 223,419 216,733
Redemption premium on preferred stock 41,355 - 41,355 - - -
Net income applicable to common
stockholders after redemption premium $ 871,819 229,880 183,363 235,157 223,419 216,733
PER COMMON SHARE DATA
Net income before redemption premium $ 5.27 1.32 1.28 1.35 1.32 1.27
Net income after redemption premium $ 5.03 1.32 1.04 1.35 1.32 1.27
Average common shares - 173,928,984 176,378,717 174,417,288 169,063,689 170,314,176
Average common
stockholders' equity**
Quarter-to-date $ - 5,579,362 5,601,222 5,396,497 5,112,116 5,012,086
Year-to-date - 5,579,362 5,282,412 5,174,974 5,062,377 5,012,086
Common stock price
High 47 5/8 45 1/8 45 1/4 47 1/4 47 5/8 43 3/4
Low 39 3/8 41 3/8 39 3/8 43 1/4 41 1/4 39 3/4
Period-end $ 43 3/8 43 3/8 41 3/8 43 1/4 46 1/8 41 5/8
To earnings ratio*** 8.23 X 8.23 7.93 8.55 9.55 8.62
To book value 136 % 136 135 142 156 141
Cash dividends $ 1.78 .46 .46 .46 .40 .40
Book value $ 31.91 31.91 30.66 30.37 29.54 29.46
</TABLE>
* Tax-equivalent.
** Quarter-to-date and year-to-date average common stockholders' equity
excludes average net unrealized gains or losses equity securities.
***Based on net income applicable to common stockholders before redemption
premium.
T-1
<PAGE>
Table 2
NONINTEREST INCOME
<TABLE>
<CAPTION>
Twelve
Months 1995 1994
Ended
March 31, First Fourth Third Second First
(In thousands) 1995 Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C>
Trading account profits $ 35,796 1,536 13,107 10,906 10,247 7,323
Service charges on deposit accounts 437,317 110,127 110,782 109,325 107,083 108,022
Mortgage banking income 78,099 23,586 20,873 21,401 12,239 19,421
Capital management income 240,989 67,413 59,727 63,469 50,380 50,949
Securities available for sale transactions (12,172) 3,635 (9,926) (2,946) (2,935) 4,300
Investment security transactions 3,608 217 411 2,286 694 615
Fees for other banking services 77,423 21,928 20,703 16,833 17,959 13,757
Merchant discounts 65,112 16,633 16,939 16,257 15,283 14,361
Insurance commissions 46,571 11,490 11,870 12,506 10,705 9,990
Sundry income 210,921 48,826 57,418 52,562 52,115 51,958
Total $ 1,183,664 305,391 301,904 302,599 273,770 280,696
</TABLE>
Table 3
NONINTEREST EXPENSE
<TABLE>
<CAPTION>
Twelve
Months 1995 1994
Ended
March 31, First Fourth Third Second First
(In thousands) 1995 Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C>
Personnel expense
Salaries $ 1,069,307 273,862 283,101 262,187 250,157 244,254
Other benefits 250,078 67,797 55,845 63,875 62,561 65,386
Total 1,319,385 341,659 338,946 326,062 312,718 309,640
Occupancy 237,138 59,401 62,006 58,854 56,877 60,391
Equipment rentals, depreciation
and maintenance 237,589 65,917 63,245 55,987 52,440 56,700
Advertising 40,814 10,852 10,221 9,082 10,659 8,622
Telephone 58,380 14,727 15,769 13,879 14,005 14,678
Travel 54,912 13,467 16,157 12,797 12,491 12,076
Postage 55,094 18,128 13,147 12,609 11,210 11,908
Printing and office supplies 54,800 13,309 16,899 11,892 12,700 13,374
FDIC insurance 119,931 30,162 30,293 29,321 30,155 29,939
Other insurance 16,122 4,954 2,956 3,438 4,774 3,715
Professional fees 73,233 17,263 27,637 16,302 12,031 10,908
Data processing 24,998 5,735 9,493 5,188 4,582 5,236
Owned real estate expense 20,218 3,220 3,305 8,785 4,908 5,296
Mortgage servicing amortization 20,023 4,824 5,266 4,980 4,953 8,326
Other amortization 131,858 38,827 34,488 31,141 27,402 28,052
Sundry 257,594 42,257 54,120 81,902 79,315 60,980
Total $ 2,722,089 684,702 703,948 682,219 651,220 639,841
</TABLE>
T-2
<PAGE>
Table 4
INTERNAL CAPITAL GROWTH AND DIVIDEND PAYOUT RATIOS
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
INTERNAL CAPITAL GROWTH*
Assets to stockholders' equity (a) 13.89 X 12.92 12.85 13.31 13.28
X
Return on assets 1.24 % 1.22 1.31 1.28 1.28
Return on total stockholders' equity (a) 17.22 % 15.74 16.88 17.07 17.03
X
Earnings retained 63.41 % 61.61 64.04 67.96 66.79
Internal capital growth (a) 10.92 % 9.70 10.81 11.60 11.38
DIVIDEND PAYOUT RATIO ON
Common shares 34.85 % 44.23 34.16 30.30 31.50
Preferred and common shares 36.59 % 38.39 35.96 32.04 33.21
Return on common stockholders' equity 16.71 % 15.92 17.29 17.53 17.54
before redemption premium** (a)
Return on common stockholders' equity
after redemption premium** (a) 16.71 % 12.99 17.29 17.53 17.54
</TABLE>
(a) The determination of these ratios exclude average net unrealized
gains or losses on debt and equity securities
* Based on average balances and net income.
** Based on average balances and net income applicable to common stockholders.
T-3
<PAGE>
Table 5
SELECTED QUARTERLY DATA*
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
MORTGAGE LOAN PORTFOLIO
PERMANENT LOAN ORIGINATIONS
Residential
Direct $ 400,998 605,034 656,986 1,028,783 1,278,648
Wholesale 64,097 98,624 132,828 277,302 424,460
Total 465,095 703,658 789,814 1,306,085 1,703,108
Income property 44,050 190,266 123,291 78,353 51,446
Total $ 509,145 893,924 913,105 1,384,438 1,754,554
VOLUME OF LOANS SERVICED
Residential $ 32,668,000 32,677,000 31,661,000 31,779,000 32,178,000
Income property 1,532,000 1,537,000 1,603,000 1,744,000 1,884,000
Total $ 34,200,000 34,214,000 33,264,000 33,523,000 34,062,000
NUMBER OF OFFICES
Banking
North Carolina 273 276 280 284 272
South Carolina 62 66 66 67 67
Georgia 149 154 157 159 161
Florida 521 552 545 491 485
Washington, D.C. 25 33 28 30 30
Maryland 26 26 31 32 32
Tennessee 55 54 55 65 64
Virginia 174 177 186 186 197
Foreign 2 2 2 2 2
Total banking offices 1,287 1,340 1,350 1,316 1,310
First Union Home Equity Bank 154 184 183 173 164
Mortgage banking 17 18 23 24 24
Other 21 20 18 18 18
Total offices 1,479 1,562 1,574 1,531 1,516
OTHER DATA
ATMs 1,247 1,242 1,185 1,186 1,180
Employees 31,844 31,858 32,019 31,581 31,670
</TABLE>
*Direct residential loan originations in the first three quarters of 1994 have
been restated to include bank branch production.
T-4
<PAGE>
Table 6
GROWTH THROUGH ACQUISITIONS
Loans,
(In thousands) Assets net Deposits
December 31, 1989, as reported $ 45,506,847 31,600,776 31,531,770
1990 acquisition 7,946,973 4,174,478 5,727,330
Growth in operations 1,134,590 275,465 935,168
December 31, 1990, as reported 54,588,410 36,050,719 38,194,268
1991 acquisitions 12,322,456 7,025,621 9,921,421
Reduction in operations (7,637,689) (1,692,760) (939,466)
December 31, 1991, as reported 59,273,177 41,383,580 47,176,223
1992 acquisitions 3,739,039 1,773,797 3,645,316
Growth (reduction) in operations 815,815 (1,233,610) (1,670,574)
December 31, 1992, as reported 63,828,031 41,923,767 49,150,965
1993 acquisitions 7,785,479 4,380,362 6,302,873
Growth (reduction) in operations (826,541) 572,048 (1,711,427)
December 31, 1993, as reported 70,786,969 46,876,177 53,742,411
1994 acquisitions 4,595,762 1,238,703 4,026,375
Growth in operations 1,930,774 5,914,872 1,189,487
December 31, 1994, as reported 77,313,505 54,029,752 58,958,273
1995 acquisitions - - -
Growth (reduction) in operations 541,103 1,737,966 (2,155,368)
March 31, 1995, as reported $ 77,854,608 55,767,718 56,802,905
Acquisitions (those greater than $3.0 billion in acquired assets and/or
deposits) include the purchase acquisitions of Florida National Banks of
Florida, Inc. in 1990 and the Southeast Banks transaction in 1991; the pooling
of interests acquisition of Dominion Bankshares Corporation in 1993; and the
Georgia Federal Savings Bank, FSB and First American Metro Corp. purchase
acquisitions in 1993.
T-5
<PAGE>
Table 7
SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
March 31, 1995
Average
1 Year 1-5 5-10 After 10 Gross Unrealized Amortized Maturity
(In thousands) or Less Years Years Years Total Gains Losses Cost in Years
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MARKET VALUE
U.S. Treasury $ 1,338,817 819,578 - - 2,158,395 (2,298) 53,953 2,210,050 1.61
U.S. Government
agencies 413,202 361,221 2,090,152 570 2,865,145 (5,252) 91,325 2,951,218 5.67
CMOs 24,183 988,225 36,306 - 1,048,714 (3,824) 16,442 1,061,332 3.24
Other 147,540 778,595 32,090 268,374 1,226,599 (59,934) 32,152 1,198,817 2.64
Total $ 1,923,742 2,947,619 2,158,548 268,944 7,298,853 (71,308) 193,872 7,421,417 3.65
MARKET VALUE
Debt securities $ 1,923,742 2,947,619 2,158,548 25,601 7,055,510 (13,227) 188,910 7,231,193
Sundry securities - - - 243,343 243,343 (58,081) 4,962 190,224
Total $ 1,923,742 2,947,619 2,158,548 268,944 7,298,853 (71,308) 193,872 7,421,417
AMORTIZED COST
Debt securities $ 1,922,459 3,044,793 2,235,891 28,050 7,231,193
Sundry securities - - - 190,224 190,224
Total $ 1,922,459 3,044,793 2,235,891 218,274 7,421,417
WEIGHTED AVERAGE YIELD
U.S. Treasury 7.49 % 5.31 - - 6.63
U.S. Government
agencies 6.87 5.97 6.29 7.65 6.33
CMOs 7.69 6.27 5.84 - 6.29
Other 5.12 6.54 2.70 3.84 5.77
Consolidated 7.18 % 6.03 6.23 3.85 6.32
</TABLE>
Included in "Other" at March 31, 1995, are $824,782,000 of securities that are
denominated in currencies other than the U.S. dollar. The currency exchange
rates were hedged utilizing both on and off-balance sheet instruments to
minimize the exposure to currency revaluation risks. At March 31, 1995, these
securities had a weighted average maturity of 2.32 years and a weighted
average yield of 6.53 percent. The weighted average U.S. equivalent yield for
comparative purposes of these securities was 4.81 percent based on a weighted
average funding cost differential of (1.72) percent.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties. The aging of mortgage-backed securities is based on
their weighted average maturities at March 31, 1995. Average maturity in years
excludes preferred and common stocks and money market funds.
Weighted average yields are based on amortized cost. Yields related to
securities exempt from both federal and state income taxes, federal
income taxes only or state income taxes only are stated on a fully
tax-equivalent basis. They are reduced by the nondeductible portion of
interest expense, assuming a federal tax rate of 35 percent; a North Carolina
state tax rate of 7.75 percent; a Georgia and Tennessee state tax
rate of 6 percent; a South Carolina state tax rate of 4.5 percent; a Florida
state tax rate of 5.5 percent; a Maryland state tax rate of 7 percent;
and a Washington, D.C. tax rate of 9.975 percent, respectively.
There were commitments to purchase securities at a cost of $224,355,000 that
had a market value of $224,667,000 at March 31, 1995. Commitments to sell
securities at March 31, 1995 had a cost of $310,456,000 and market value of
$315,127,000. Gross gains and losses from sales are accounted for on a trade
date basis. Gross gains and losses realized on the sale of debt securites the
first quarter of 1995 were $12,835,000 and $11,529,000, respectively. Gross
gains realized on sundry securities were $2,329,000.
T-6
<PAGE>
Table 8
INVESTMENT SECURITIES
<TABLE>
<CAPTION>
March 31, 1995
Average
1 Year 1-5 5-10 After 10 Gross Unrealized Market Maturity
(In thousands) or Less Years Years Years Total Gains Losses Value in Years
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CARRYING VALUE
U.S. Government
agencies $ 17,309 121,515 1,149,139 9,138 1,297,101 11,185 (17,177) 1,291,109 6.48
CMOs - 938,957 41,927 - 980,884 3,305 (2,809) 981,380 3.26
State, county
and municipal 345,875 235,759 161,225 425,132 1,167,991 104,394 (2,698) 1,269,687 7.13
Other - 4,031 4,172 180,619 188,822 5,287 (5,708) 188,401 13.29
Total $ 363,184 1,300,262 1,356,463 614,889 3,634,798 124,171 (28,392) 3,730,577 5.94
CARRYING VALUE
Debt securities $ 363,184 1,300,262 1,356,463 499,807 3,519,716 124,171 (24,242) 3,619,645
Sundry
securities - - - 115,082 115,082 - (4,150) 110,932
Total $ 363,184 1,300,262 1,356,463 614,889 3,634,798 124,171 (28,392) 3,730,577
MARKET VALUE
Debt securities $ 369,776 1,314,303 1,365,162 570,404 3,619,645
Sundry
securities - - - 110,932 110,932
Total $ 369,776 1,314,303 1,365,162 681,336 3,730,577
WEIGHTED AVERAGE YIELD
U.S. Government
agencies 8.84 % 8.73 8.29 7.44 8.33
CMOs - 7.18 7.44 - 7.19
State, county
and municipal 11.55 10.59 11.41 12.32 11.62
Other - 6.88 7.62 7.83 7.94
Consolidated 11.49 % 7.94 8.63 10.93 9.06
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties. The aging of mortgage-backed securities is based on
their weighted average maturities at March 31, 1995.
Yields related to securities exempt from both federal and state income taxes,
federal income taxes only or state income taxes only are stated on
a fully tax-equivalent basis. They are reduced by the nondeductible portion
of interest expense, assuming a federal tax rate of 35 percent; a
North Carolina state tax rate of 7.75 percent; a Georgia and Tennessee state
tax rate of 6 percent; a South Carolina state tax rate of 4.5 percent;
a Florida state tax rate of 5.5 percent; a Maryland state tax rate of 7
percent; and a Washington, D.C. tax rate of 9.975 percent, respectively.
There were no commitments to purchase or sell investment securities at
March 31, 1995. Gross gains and losses realized on the sales (underdeliveries)
and calls of debt securities in the first quarter of 1995 were $435,000
and $218,000, respectively. There were no sales of sundry securities.
T-7
<PAGE>
Table 9
LOANS
</TABLE>
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
FIRST UNION CORPORATION
COMMERCIAL
Commercial, financial and agricultural
Taxable $ 15,849,852 15,198,651 13,765,745 13,460,873 12,630,234
Nontaxable 658,502 709,092 688,238 658,190 701,791
Total commercial, financial
and agricultural 16,508,354 15,907,743 14,453,983 14,119,063 13,332,025
Real estate - construction and other 1,842,099 1,734,095 1,674,297 1,504,546 1,572,105
Real estate - mortgage 5,664,837 5,437,496 5,932,374 5,730,311 5,761,598
Lease financing 1,940,681 1,613,763 1,334,570 931,297 916,068
Foreign 426,907 415,857 509,030 437,967 384,740
Total commercial 26,382,878 25,108,954 23,904,254 22,723,184 21,966,536
RETAIL
Real estate - mortgage 14,292,795 15,014,775 14,682,624 13,813,215 13,401,838
Installment loans - Bankcard 4,098,790 3,959,657 3,299,675 2,785,470 2,037,645
Installment loans - other 11,795,465 10,618,696 10,288,391 9,930,333 9,653,004
Total retail 30,187,050 29,593,128 28,270,690 26,529,018 25,092,487
Total loans 56,569,928 54,702,082 52,174,944 49,252,202 47,059,023
UNEARNED INCOME
Loans 148,584 145,691 142,587 136,352 133,735
Lease financing 653,626 526,639 399,323 190,355 192,864
Total unearned income 802,210 672,330 541,910 326,707 326,599
Loans, net $ 55,767,718 54,029,752 51,633,034 48,925,495 46,732,424
</TABLE>
T-8
Table 10
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of quarter $ 978,795 1,004,298 1,007,839 1,014,001 1,020,191
Provision for loan losses 32,500 25,000 25,000 25,000 25,000
Allowance of acquired loans - 2,296 18,615 609
Loan losses, net (42,467) (52,799) (47,156) (31,771) (31,190)
Balance, end of quarter $ 968,828 978,795 1,004,298 1,007,839 1,014,001
(as % of loans, net) 1.74 % 1.81 1.95 2.06 2.17
(as % of nonaccrual and restructured loans) 224 % 245 203 192 168
(as % of nonperforming assets) 168 % 175 154 152 127
LOAN LOSSES
Commercial, financial and agricultural $ 6,321 16,357 20,898 16,373 14,176
Real estate - construction and other 41 1,270 2,974 1,711 2,942
Real estate - mortgage 3,457 20,228 17,773 7,574 8,533
Installment loans - Bankcard 38,096 19,970 15,492 15,399 14,899
Installment loans - other 14,047 14,398 14,983 13,459 15,518
Total 61,962 72,223 72,120 54,516 56,068
LOAN RECOVERIES
Commercial, financial and agricultural 9,097 11,125 12,965 8,388 15,836
Real estate - construction and other 907 884 424 1,095 431
Real estate - mortgage 2,466 1,530 4,657 5,076 1,291
Installment loans - Bankcard 2,572 2,455 2,234 2,710 2,206
Installment loans - other 4,453 3,430 4,684 5,476 5,114
Total 19,495 19,424 24,964 22,745 24,878
Loan losses, net $ 42,467 52,799 47,156 31,771 31,190
(as % of average loans, net)* .31 % .40 .38 .27 .27
NONPERFORMING ASSETS
Nonaccrual loans
Commercial loans $ 200,915 155,752 154,861 159,858 189,759
Real estate loans 231,183 241,886 339,881 363,433 412,748
Total nonaccrual loans 432,098 397,638 494,742 523,291 602,507
Restructured loans 670 1,872 674 2,730 2,742
Foreclosed properties 144,188 158,464 158,234 136,408 191,153
Total nonperforming assets $ 576,956 557,974 653,650 662,429 796,402
(as % of loans, net and foreclosed properties) 1.03 % 1.03 1.26 1.35 1.70
Accruing loans past due 90 days $ 205,654 140,081 115,903 85,948 80,479
</TABLE>
*Annualized.
T-9
<PAGE>
Table 11
INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
MORTGAGE SERVICING RIGHTS $ 80,266 84,898 89,666 79,826 82,102
CREDIT CARD PREMIUM $ 54,703 58,494 62,463 67,524 71,538
OTHER INTANGIBLE ASSETS
Goodwill $ 742,435 754,417 763,832 682,570 703,559
Deposit base premium 422,827 437,025 319,522 224,918 240,935
Other 6,844 7,465 8,134 9,118 9,817
Total $ 1,172,106 1,198,907 1,091,488 916,606 954,311
</TABLE>
Table 12
ALLOWANCE FOR FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Foreclosed properties $ 178,416 193,290 197,261 177,274 239,037
Allowance for foreclosed properties, beginning of quarter 34,826 39,027 40,866 47,884 56,191
Provision for foreclosed properties 715 1,913 (2,114) 1,910 2,794
Transfer from (to) allowance for segregate assets (48) 1,177 302 (52) 295
Dispositions, net (1,265) (7,291) (27) (8,876) (11,396)
Allowance for foreclosed properties, end of quarter 34,228 34,826 39,027 40,866 47,884
Foreclosed properties, net $ 144,188 158,464 158,234 136,408 191,153
</TABLE>
T-10
<PAGE>
Table 13
DEPOSITS
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
CORE DEPOSITS
Noninterest-bearing $ 10,412,883 10,523,538 10,295,616 10,207,807 10,428,019
Savings and NOW accounts 14,065,617 13,991,987 12,677,630 12,085,198 12,132,581
Money market accounts 9,122,752 10,118,963 10,316,481 10,490,933 10,931,222
Other consumer time 18,667,810 18,544,324 17,361,310 16,486,243 16,536,800
Total core deposits 52,269,062 53,178,812 50,651,037 49,270,181 50,028,622
Foreign 2,582,452 4,069,587 1,328,032 2,852,926 574,868
Other time 1,951,391 1,709,874 1,707,982 1,649,153 1,484,301
Total deposits $ 56,802,905 58,958,273 53,687,051 53,772,260 52,087,791
</TABLE>
Table 14
TIME DEPOSITS IN AMOUNTS OF $100,000 OR MORE
<TABLE>
<CAPTION>
March 31, 1995
Time Other
(In thousands) Certificates Time
<S> <C> <C>
MATURITY OF
3 months or less $ 2,241,819 76,972
Over 3 months through 6 months 884,370 -
Over 6 months through 12 months 904,948 -
Over 12 months 919,048 -
Total $ 4,950,185 76,972
</TABLE>
T-11
<PAGE>
Table 15
LONG-TERM DEBT
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
DEBENTURES AND NOTES
7-1/2% debentures due 2002 $ 15,619 15,619 15,619 15,619 15,619
Floating rate extendible notes due 2005 100,000 100,000 100,000 100,000 100,000
11% notes due 1996 18,360 18,360 18,360 18,360 18,360
Floating rate notes due 1996 150,000 150,000 150,000 150,000 150,000
5.95% notes due 1995 149,960 149,921 149,881 149,842 149,802
6-3/4% notes due 1998 248,634 248,511 248,389 248,267 248,144
Floating rate notes due 1998 299,744 - - - -
Fixed rate medium-term senior notes, varying
rates and terms to 1996 200 32,700 61,700 61,700 61,700
Fixed rate medium-term subordinated notes, varying
rates and terms to 2001 54,000 54,000 54,000 54,000 54,000
Floating rate subordinated notes due 2003 149,127 149,101 149,074 149,048 149,022
11% subordinated and variable rate notes due 1996 17,951 17,951 17,954 17,954 17,954
8-1/8% subordinated notes due 1996 100,000 100,000 100,000 100,000 100,000
9.45% subordinated notes due 1999 250,000 250,000 250,000 250,000 250,000
9.45% subordinated notes due 2001 147,628 147,535 147,442 147,349 147,256
8-1/8% subordinated notes due 2002 248,526 248,475 248,424 248,373 248,322
8% subordinated notes due 2002 223,099 223,037 222,972 222,910 222,850
7-1/4% subordinated notes due 2003 148,772 148,733 148,694 148,655 148,707
6-5/8% subordinated notes due 2005 248,046 247,999 247,935 247,888 247,856
6% subordinated notes due 2008 197,081 197,028 196,974 196,920 197,160
6-3/8% subordinated notes due 2009 147,538 147,495 147,449 147,405 147,406
8% subordinated notes due 2009 148,583 148,559 148,535 - -
8.77% subordinated notes due 2004 148,470 148,430 - - -
Debentures and notes of subsidiaries
9-7/8% subordinated capital notes due 1999 74,439 74,404 74,370 74,334 74,301
9-5/8% subordinated capital notes due 1999 74,948 74,945 74,942 74,937 74,935
10-1/2% collateralized mortgage obligations due 2014 56,919 60,010 65,927 69,950 74,008
Subordinated bank notes with varying rates and terms to 1997 225,000 100,000 - - -
Debentures and notes with varying rates and terms to 2002 7,275 7,275 7,275 7,400 7,400
Total 3,649,919 3,260,088 3,045,916 2,900,911 2,904,802
MORTGAGES AND OTHER DEBT
Notes payable to FDIC due 1996 99,887 117,271 171,614 193,258 214,682
Advances from the Federal Home Loan Bank 4,846 4,696 4,603 4,603 4,453
Mortgage notes and other debt 41,578 41,153 41,814 24,623 25,401
Capitalized leases 5,196 5,306 5,416 6,049 5,492
Total long-term debt $ 3,801,426 3,428,514 3,269,363 3,129,444 3,154,830
</TABLE>
T-12
<PAGE>
Table 16
CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Twelve
Months 1995 1994
Ended
March 31, First Fourth Third Second First
(In thousands) 1995 Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of period $ 5,276,060 5,397,517 5,622,631 5,388,581 5,276,060 5,207,625
Stockholders' equity of pooled banks
not restated prior to 1994 64,351 - 12,535 (16) 51,832 -
Net income 939,830 236,909 231,549 241,752 229,620 222,459
Redemption of preferred stock (325,396) (325,396) - - -
Purchase of common stock (368,868) (197,371) (37,580) (82,392) (51,525) (46,057)
Common stock issued for stock
options exercised 72,044 6,168 15,386 21,430 29,060 2,082
Common stock issued through
dividend reinvestment plan 43,133 16,952 10,628 6,615 8,938 5,659
Common stock issued for purchase
accounting acquisition 161,073 - (6) 161,079 - -
Converted debentures 19,760 - 19,760 - -
Cash dividends paid
Series 1990 preferred stock (26,656) (7,029) (6,831) (6,595) (6,201) (5,726)
Common stock (309,406) (79,660) (82,052) (80,330) (67,364) (68,156)
Unrealized gain (loss) on debt and
equity securities (55,191) 117,248 (43,347) (47,253) (81,839) (41,826)
Balance, end of period $ 5,490,734 5,490,734 5,397,517 5,622,631 5,388,581 5,276,060
</TABLE>
T-13
<PAGE>
Table 17
CAPITAL RATIOS
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
CONSOLIDATED CAPITAL RATIOS*
Qualifying capital
Tier 1 capital $ 4,489,955 4,466,670 4,763,409 4,664,358 4,467,801
Total capital 7,512,040 7,450,602 7,654,430 7,361,013 7,235,875
Adjusted risk-based assets 59,651,481 57,593,799 53,904,132 50,155,408 47,746,123
Adjusted leverage ratio assets $ 74,633,796 73,011,243 70,315,199 69,971,938 68,023,421
Ratios
Tier 1 capital 7.53 % 7.76 8.84 9.30 9.36
Total capital 12.59 12.94 14.20 14.68 15.15
Leverage 6.02 6.12 6.77 6.67 6.57
Stockholders' equity to assets
Quarter-end 7.05 6.98 7.57 7.42 7.30
Average 7.01 % 7.49 7.62 7.39 7.60
BANK CAPITAL RATIOS
Tier 1 capital
First Union National Bank of
North Carolina 7.13 % 7.32 7.14 7.70 8.34
South Carolina 8.24 7.88 8.21 8.54 7.80
Georgia 8.61 8.26 8.28 8.74 9.55
Florida 7.94 7.95 8.79 9.63 9.98
Washington, D.C. 16.55 16.75 17.31 16.30 19.07
Maryland 20.78 20.53 19.01 17.75 16.23
Tennessee 12.34 12.76 13.08 13.36 12.34
Virginia 8.97 9.21 10.88 10.57 10.25
First Union Home Equity Bank 6.49 7.60 7.16 - -
Total capital
First Union National Bank of
North Carolina 10.32 10.69 9.62 10.51 11.41
South Carolina 12.40 12.15 12.53 12.96 12.09
Georgia 11.46 11.18 11.22 11.70 12.60
Florida 10.70 10.76 10.35 11.31 11.68
Washington, D.C. 17.83 18.03 18.60 17.60 20.36
Maryland 22.07 21.81 20.30 19.04 17.52
Tennessee 13.60 14.02 14.34 14.62 13.60
Virginia 12.80 13.11 13.17 12.90 12.58
First Union Home Equity Bank 10.34 12.10 11.54 - -
Leverage
First Union National Bank of
North Carolina 6.25 6.10 5.74 5.65 5.86
South Carolina 5.75 5.77 6.06 6.03 5.59
Georgia 6.06 5.69 5.96 6.07 6.17
Florida 5.75 5.91 6.30 6.53 6.33
Washington, D.C. 7.11 8.33 7.88 7.11 7.05
Maryland 13.44 12.82 11.53 10.62 9.72
Tennessee 7.88 8.47 8.54 8.41 8.30
Virginia 6.95 7.10 8.26 7.70 7.03
First Union Home Equity Bank 6.22 % 7.22 6.24 - -
</TABLE>
*Risk-based capital ratio guidelines require a minimum ratio of tier 1 capital
to risk-weighted assets of 4.00 percent and a minimum ratio of total capital
to risk-weighted assets of 8.00 percent. The minimum leverage ratio of tier 1
capital to adjusted average quarterly assets is from 3.00 to 5.00 percent.
T-14
<PAGE>
Table 18
INTEREST RATE GAP
<TABLE>
<CAPTION>
March 31, 1995
Interest Sensitivity in Days Non-Sensitive
One to Two to and Sensitive
(In thousands) 1-90 91-180 181-365 Total two years five years Over five years Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Interest-bearing bank
balances $ 721,962 - 100 722,062 - - - 722,062
Federal funds sold and
securities
purchased under resale
agreements 1,479,437 9,025 - 1,488,462 - - - 1,488,462
Trading account assets 1,453,038 - - 1,453,038 - - - 1,453,038
Securities available for sale 420,532 1,185,680 719,223 2,325,435 872,013 3,344,854 879,115 7,421,417
Investment securities 163,132 151,851 358,472 673,455 521,319 1,306,278 1,133,746 3,634,798
Loans* 30,669,602 2,807,929 4,593,406 38,070,937 4,809,867 6,568,315 6,318,599 55,767,718
Total earnings assets 34,907,703 4,154,485 5,671,201 44,733,389 6,203,199 11,219,447 8,331,460 70,487,495
INTEREST-BEARING LIABILITIES
Interest-bearing deposits 22,230,178 3,865,748 4,465,644 30,561,570 2,400,555 3,427,491 10,000,406 46,390,022
Short-term borrowings 9,550,480 30,596 - 9,581,076 - - - 9,581,076
Long-term debt 803,592 156,081 23,861 983,535 623,267 466,342 1,728,283 3,801,426
Total interest-
bearing
liabilities 32,584,250 4,052,426 4,489,505 41,126,181 3,023,822 3,893,833 11,728,689 59,772,525
OFF-BALANCE SHEET FINANCIAL
INSTRUMENTS 6,792,067 (11,126,724) 11,890,000 7,555,343 (1,978,985) (3,751,358)(1,825,000) -
Total interest-bearing
liabilities and
off-balance
sheet financial
instruments 39,376,317 (7,074,299) 16,379,505 48,681,524 1,044,837 142,475 9,903,689 59,772,525
Interest rate gap $ (4,468,614) 11,228,784 (10,708,304) (3,948,135) 5,158,362 11,076,972
Cumulative gap $ (4,468,614) 6,760,169 (3,948,135) (3,948,135) 1,210,228 12,287,199
Ratio of cumulative gap to
total earnings assets (6.34)% 9.59 (5.60) (5.60) 1.72 17.43
</TABLE>
The information included herein should be read in conjunction with the
discussion appearing under "Interest Rate Risk Management" and with Tables
19-21. This interest rate gap table has inherent limitations on its ability
to accurately portray interest rate sensitivity and, therefore, it is only
provided with common banking industry practice. Additionally, in conjunction
with such practices, savings and NOW accounts are included in the non-sensitive
and sensitive over five years classification. Money market accounts are
included in the 1-90 day classification.
*Loans are stated net of unearned income.
T-15
<PAGE>
Table 19
OFF-BALANCE SHEET DERIVATIVE FINANCIAL INSTRUMENTS*
<TABLE>
<CAPTION>
Weighted
Average Rate Estimated
March 31, 1995 Notional Maturity Fair
(In thousands) Amount Receive Pay In Years Value Comments
<S> <C> <C> <C> <C> <C> <C>
Asset Rate Conversions
Interest rate swaps $6,092,196 5.94% 6.53% 2.25 Converts floating rate commercial loans to fix rate.
Carrying amount $ 10,495 Adds to liability sensitivity. Similar characteristic
Unrealized gross gain 4,164 to a fixed income security funded with variable rate
Unrealized gross loss (172,828) liabilities. Includes $1.9 billion of indexed
Total (158,169) amortizing swaps, all of which mature within three
and one half years.
Forward interest rate swaps 1,120,000 8.05 - 1.58 Converts floating rates on commercial loans to fixed
Carrying amount - rates at higher than current yields in future periods.
Unrealized gross gain 8,875 $63 million effective March 1996 and $57 million
Unrealized gross loss - effective March 1997. $1.0 billion effective September
Total 8,875 1995 with put options on forward swaps referenced under
"Rate Sensitivity Hedges" linked to this item.
Total asset rate conversions $7,212,196 6.27% 6.53% 2.14 $(149,294)
Liability Rate Conversions
Interest rate swaps $2,702,000 7.16% 6.61% 6.90 Converts long-term fixed rate debt to floating rate by
Carrying amount $ 21,328 matching maturity of the swap to the debt issue. Rate
Unrealized gross gain 15,042 sensitivity remains unchanged due to the direct
linkage of the swap to the debt issue.
Unrealized gross loss (85,262)
Total (48,892)
Other financial instruments 250,000 4.00 - 5.16 Miscellaneous purchased option-based products for
Carrying amount (2,903) liability management purposes include $10 million of
Unrealized gross gain - options on swaps, $90 million of eurodollar caps and
Unrealized gross loss (1,561) $150 million of eurodollar floors
Total (4,464)
Total liability rate
conversions $ 2,952,000 6.99% 6.61% 6.75 $ (53,356)
Asset Hedge
Short T-bill futures $1,000,000 -% 7.19% .23 Converts the maturity of $1.0 billion U.S. Treasury
Carrying amount $ - bills in the available for sale portfolio from
Unrealized gross gain - September 1995 to June 1995.
Unrealized gross loss (3,125)
Total (3,125)
Total asset hedge $1,000,000 -% 7.19% .23 $ (3,125)
</TABLE>
(Continued)
T-16
<PAGE>
Table 19
OFF-BALANCE SHEET DERIVATIVE FINANCIAL INSTRUMENTS*
<TABLE>
<CAPTION>
Weighted
Average Rate Estimated
March 31, 1995 Notional Maturity Fair
(In thousands) Amount Receive Pay In Years Value Comments
<S> <C> <C> <C> <C> <C> <C>
Rate Sensitivity Hedges
Put options on
eurodollar futures $24,506,000 -- % 8.05% .36 Paid a premium for the right to lock in the 3 month
Carrying amount $ 12,332 LIBOR reset rates on pay variable rate swaps and
Unrealized gross gain -- short-term liabilities. $11.5 billion effective June
Unrealized gross loss (10,833) 1995 and $13.0 billion effective September 1995.
Total 1,499
Put options on foward swaps 1,000,000 -- 8.08 .47 Paid a premium for the right to terminate $1.0 billion
Carrying amount 2,428 of forward interest rate swaps based on interest rates
Unrealized gross gain -- in effect in September 1995. Reduces liability
Unrealized gross loss (1,587) sensitivity.
Total 841
Interest rate cap 67,200 -- -- 1.18 Purchased cap to convert floating rate liabilities to
fixed rate if short-term rates rise above 8 percent.
Carrying amount 319
Unrealized gross gain 3
Unrealized gross loss (268)
Total 54
Short eurodollar futures 3,427,431 -- 6.51 .25 Locks in the 3 month LIBOR reset rates on pay
Carrying amount -- variable rate swaps and the 1 month LIBOR rate on
Unrealized gross gain 25 short-term liabilities. $390 million effective April
Unrealized gross loss (1,752) 1995; $390 million effective May 1995; $2.1 billion
Total (1,727) effective June 1995; $283 million effective September
Total rate sensitivity $29,000,631 -- % 7.88% .37 $ 667 1995; and $261 million effective December 1995.
hedges
Offsetting Positions
Interest rate floors $ 800,000 6.59% 6.59% 1.21 Consists of $800 million of interest rate floors, of
Carrying amount $ (1,388) which $400 million were purchased and offset by $400
Unrealized gross gain 2,792 million sold, locking in gains to be amortized
Unrealized gross loss (1,404) over the remaining life of the contracts.
Total --
Prime/federal funds cap 4,000,000 4.63 4.63 1.02 In December 1994, the corporation offset an existing
Carrying amount 1,709 federal funds cap (purchased) and a prime rate cap
Unrealized gross gain 1,014 (written) position by simultaneously purchasing a
Unrealized gross loss (2,723) prime rate cap and writing a federal funds cap at
Total -- strikes of 6.00 percent and 3.25 percent,
respectively. The notional amount of each cap is $1.0
billion. Locks in losses to be amortized over the
remaining life of the contracts.
Total offsetting positions $4,800,000 4.95% 4.95% 1.06 $ --
</TABLE>
*Includes only off-balance sheet derivative financial instruments related to
interest rate risk management activities.
Prime Rate - The base rate on corporate loans posted by at least 75 percent
of the nation's 30 largest banks as defined in The Wall Street Journal.
London Interbank Offered Rates (LIBOR) - The average of interbank offered
rates on dollar deposits in the London market, based on quotations at five
major banks.
Weighted average pay rates are generally based upon one to six month LIBOR.
Pay rates related to forward interest rate swaps are set on the future
effective date. Pay rates reset at predetermined reset dates over the life
of the contract. Rates shown are the rates in effect as of March 31, 1995.
Weighted average receive rates are fixed rates at the time the contract
was transacted.
Carrying amount includes accrued interest receivable/payable and unamortized
premiums paid/received.
T-17
<PAGE>
Table 20
OFF-BALANCE SHEET DERIVATIVES - EXPECTED MATURITIES*
<TABLE>
<CAPTION>
March 31, 1995 1 Year 1 -2 2 -5 5 -10 After 10
(In thousands) or Less Years Years Years Years Total
<S> <C> <C> <C> <C> <C> <C>
Asset Rate Conversions
Notional amount $ 2,076,053 1,914,785 3,221,358 7,212,196
Weighted average receive rate 6.66 % 7.36 5.37 6.27
Estimated fair value $ (2,264) (438) (146,592) (149,294)
Liability Rate Conversions
Notional amount $ 430,000 110,000 587,000 1,075,000 750,000 2,952,000
Weighted average receive rate 6.14 % 8.04 6.55 7.21 6.43 6.99
Estimated fair value $ 1,871 2,175 (7,360) 25,666 (75,708) (53,356)
Asset Hedge
Notional amount $ 1,000,000 - - - - 1,000,000
Weighted average receive rate -% - - - - -
Estimated fair value $ (3,125) - - - - (3,125)
Rate Sensitivity Hedges
Notional amount $ 28,983,431 17,200 - - - 29,000,631
Weighted average receive rate -% - - - -
Estimated fair value $ 625 42 - - - 667
Offsetting Positions
Notional amount $ - 4,800,000 - - - 4,800,000
Weighted average receive rate -% 4.95 - - - 4.95
Estimated fair value $ - - - - - -
</TABLE>
*Includes only off-balance sheet derivative financial instruments related to
interest rate risk management activities.
Pay rates are generally based upon one to six month LIBOR and reset at
predetermined reset dates. Current pay rates are not necessarily
indicative of future pay rates and therefore have been excluded from the above
table. Weighted average pay rates are indicated in Table 19.
Table 21
OFF-BALANCE SHEET DERIVATIVES ACTIVITY*
<TABLE>
<CAPTION>
Rate
Asset Rate Liability Rate Asset Sensitivity Offsetting
(In thousands) Conversions Conversions Hedge Hedges Positions Total
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $ 8,222,116 2,762,500 1,200,000 28,256,000 4,800,000 45,240,616
Additions 120,000 342,000 - 10,053,631 - 10,515,631
Maturities/Amortizations (1,129,920) (152,500) (200,000) (8,309,000) - (9,791,420)
Terminations - - - (1,000,000) - (1,000,000)
Balance, March 31, 1995 $ 7,212,196 2,952,000 1,000,000 29,000,631 4,800,000 44,964,827
</TABLE>
*Includes only off-balance sheet derivative financial instruments related to
interest rate risk management activities.
T-18
<PAGE>
FIRST UNION CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
<TABLE>
<CAPTION>
FIRST QUARTER 1995 FOURTH QUARTER 1994
Interest Average Interest Average
Average Income/ Rates Average Income/ Rates
(In thousands) Balances Expense Earned/Paid Balances Expense Earned/Paid
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing bank balances $ 689,482 10,147 5.97% $ 879,330 12,342 5.57%
Federal funds sold and securities
purchased under resale agreements 1,855,472 26,274 5.74 1,507,490 19,473 5.12
Trading account assets (a) 1,310,294 21,360 6.61 1,187,382 19,776 6.61
Securities available for sale (a) 7,993,897 126,046 6.33 8,199,014 121,948 5.93
Investment securities (a)
U.S. Government and other 2,474,530 46,902 7.58 2,435,018 46,625 7.66
State, county and municipal 1,190,113 33,761 11.34 1,233,949 35,554 11.53
Total investment securities 3,664,643 80,663 8.80 3,668,967 82,179 8.96
Loans (a) (b)
Commercial
Commercial, financial and
agricultural 16,126,010 323,169 8.13 14,662,782 288,875 7.82
Real estate - construction and
other 1,795,504 41,579 9.39 1,722,032 39,020 8.99
Real estate - mortgage 5,435,291 119,344 8.90 5,764,302 125,431 8.63
Lease financing 908,580 22,259 9.80 807,143 19,641 9.73
Foreign 426,788 7,089 6.74 520,581 8,397 6.40
Total commercial 24,692,173 513,440 8.34 23,476,840 481,364 8.14
Retail
Real estate - mortgage 14,193,098 268,320 7.56 14,228,831 271,675 7.64
Installment loans - Bankcard 3,993,532 138,477 13.87 3,633,266 124,530 13.71
Installment loans - Other 11,536,143 285,270 10.01 11,244,806 278,590 9.87
Total retail 29,722,773 692,067 9.36 29,106,903 674,795 9.26
Total loans 54,414,946 1,205,507 8.90 52,583,743 1,156,159 8.76
Total earning assets 69,928,734 1,469,997 8.44 68,025,926 1,411,877 8.27
Cash and due from banks 3,261,626 3,265,432
Other assets 4,302,719 4,142,050
Total assets $ 77,493,079 $ 75,433,408
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing deposits
Savings and NOW accounts 14,015,277 98,540 2.85 13,259,937 86,455 2.59
Money market accounts 9,504,775 66,326 2.83 10,132,757 67,193 2.63
Other consumer time 18,502,556 226,494 4.96 17,690,805 210,568 4.72
Foreign 3,319,697 45,566 5.57 2,361,927 32,459 5.45
Other time 1,951,836 29,812 6.19 1,669,113 24,289 5.77
Total interest-bearing deposits 47,294,141 466,738 4.00 45,114,539 420,964 3.70
Federal funds purchased and securities
sold under repurchase agreements 7,268,262 101,498 5.66 7,490,396 95,168 5.04
Commercial paper 669,792 9,551 5.78 615,930 7,684 4.95
Other short-term borrowings 1,655,853 27,205 6.66 1,601,779 25,238 6.25
Long-term debt 3,576,802 63,217 7.07 3,366,685 61,118 7.26
Total interest-bearing
liabilities 60,464,850 668,209 4.48 58,189,329 610,172 4.16
Noninterest-bearing deposits 9,978,428 9,997,860
Other liabilities 1,614,095 1,593,558
Stockholders' equity 5,435,706 5,652,661
Total liabilities and
stockholders' equity $ 77,493,079 $ 75,433,408
Interest income and rate earned $1,469,997 8.44% $ 1,411,877 8.27%
Interest expense and rate paid 668,209 3.87 610,172 3.56
Net interest income and margin $ 801,788 4.57% $ 801,705 4.71%
</TABLE>
(a) Yields related to securities and loans exempt from both federal and state
income taxes, federal income taxes only or state income taxes only are
stated on a fully tax-equivalent basis. They are reduced by the
nondeductible portion of interest expense, assuming a federal income tax
rate of 35 percent; a North Carolina state tax rate of 7.75 percent in
1995 and 7.8275 percent in 1994; a Georgia and Tennessee state tax rate
of 6 percent; a South Carolina state tax rate of 4.5 percent; a Florida
state tax rate of 5.5 percent; a Maryland state tax rate of 7 percent; and
a Washington, D.C. tax rate of 9.975 percent in 1995 and 10.25 percent in
1994, respectively.
T-19
<PAGE>
<TABLE>
<CAPTION>
THIRD QUARTER 1994 SECOND QUARTER 1994 FIRST QUARTER 1994
Interest Average Interest Average Interest Average
Average Income/ Rates Average Income/ Rates Average Income/ Rates
Balances Expense Earned/Paid Balances Expense Earned/Paid Balances Expense Earned/Paid
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 675,188 8,552 5.03 % $ 786,723 9,915 5.06 % $ 687,314 8,740 5.16%
1,469,486 16,354 4.42 1,595,394 13,575 3.41 884,366 6,328 2.90
1,062,744 15,641 5.84 904,729 14,010 6.21 928,576 11,190 4.89
9,777,730 139,512 5.69 11,480,968 152,237 5.31 11,655,783 151,785 5.23
1,715,051 32,076 7.48 1,575,796 27,310 6.93 1,221,890 19,574 6.41
1,248,484 35,694 11.44 1,282,173 37,116 11.58 1,307,801 37,633 11.51
2,963,535 67,770 9.15 2,857,969 64,426 9.02 2,529,691 57,207 9.04
14,001,417 291,147 8.25 13,375,599 281,454 8.44 13,155,105 261,856 8.07
1,588,419 33,731 8.42 1,515,456 28,710 7.60 1,605,390 27,712 7.00
5,964,848 121,637 8.09 5,743,998 110,471 7.71 5,839,560 105,404 7.32
665,678 15,983 9.60 582,340 13,761 9.45 577,342 13,243 9.17
434,532 5,844 5.34 424,662 4,739 4.48 332,993 3,518 4.28
22,654,894 468,342 8.20 21,642,055 439,135 8.14 21,510,390 411,733 7.76
14,239,519 260,489 7.32 13,600,744 247,665 7.28 13,154,439 240,126 7.30
3,088,541 106,859 13.84 2,351,062 85,594 14.56 2,007,730 74,619 14.87
10,029,803 246,678 9.80 9,727,881 232,361 9.57 9,549,628 224,684 9.47
27,357,863 614,026 8.96 25,679,687 565,620 8.82 24,711,797 539,429 8.76
50,012,757 1,082,368 8.62 47,321,742 1,004,755 8.51 46,222,187 951,162 8.29
65,961,440 1,330,197 8.03 64,947,525 1,258,918 7.76 62,907,917 1,186,412 7.59
3,017,964 2,857,885 3,038,166
4,040,685 4,020,590 4,397,425
$ 73,020,089 $71,826,000 $70,343,508
12,449,336 71,848 2.29 12,120,552 64,856 2.15 11,964,371 61,993 2.10
10,483,003 65,849 2.49 10,791,758 62,199 2.31 10,906,396 59,622 2.22
17,042,759 187,185 4.36 16,462,456 171,773 4.19 16,663,990 172,855 4.21
1,958,291 21,840 4.42 1,327,343 14,088 4.26 834,297 7,569 3.68
1,674,511 21,696 5.14 1,567,754 20,266 5.19 1,515,325 16,645 4.45
43,607,900 368,418 3.35 42,269,863 333,182 3.16 41,884,379 318,684 3.09
6,970,468 78,962 4.49 7,511,271 77,201 4.12 7,109,922 65,895 3.76
998,167 11,115 4.42 702,645 7,089 4.05 321,628 2,277 2.87
1,422,176 20,617 5.75 1,486,748 18,739 5.05 1,162,345 10,932 3.82
3,198,320 51,746 6.47 3,138,257 47,702 6.08 3,148,942 38,215 4.85
56,197,031 530,858 3.75 55,108,784 483,913 3.52 53,627,216 436,003 3.29
9,927,448 10,067,077 10,072,065
1,331,994 1,344,882 1,301,135
5,563,616 5,305,257 5,343,092
$ 73,020,089 $71,826,000 $70,343,508
$ 1,330,197 8.03 % $ 1,258,918 7.76 % $ 1,186,412 7.59%
530,858 3.19 483,913 2.98 436,003 2.80
$ 799,339 4.84 % $ 775,005 4.78 % $ 750,409 4.79%
</TABLE>
(b) The loan averages include loans on which the accrual of interest
has been discontinued and are stated net of unearned income.
T-20
<PAGE>
FIRST UNION CORPORATION AND SUBSIDIARIES
NET INTEREST INCOME SUMMARIES
<TABLE>
<CAPTION>
YEAR ENDED 1994
Interest Average
Average Income/ Rates
(In thousands) Balances Expense Earned/Paid
<S> <C> <C> <C>
ASSETS
Interest-bearing bank balances $ 757,440 39,550 5.22 %
Federal funds sold and securities
purchased under resale agreements 1,366,180 55,729 4.08
Trading account assets (a) 1,021,681 60,617 5.93
Securities available for sale (a) 10,267,532 565,482 5.51
Investment securities (a)
U.S. Government and other 1,740,203 125,585 7.22
State, county and municipal 1,267,845 145,997 11.52
Total investment securities 3,008,048 271,582 9.03
Loans (a) (b)
Commercial
Commercial, financial and
agricultural 13,803,412 1,123,333 8.14
Real estate - construction and
other 1,608,090 129,173 8.03
Real estate - mortgage 5,828,345 462,942 7.94
Lease financing 658,776 62,628 9.51
Foreign 428,724 22,498 5.25
Total commercial 22,327,347 1,800,574 8.06
Retail
Real estate-mortgage 13,810,015 1,019,955 7.39
Installment loans - Bankcard 2,775,476 391,603 14.11
Installment loans -Other 10,142,377 982,312 9.69
Total retail 26,727,868 2,393,870 8.96
Total loans 49,055,215 4,194,444 8.55
Total earnings assets 65,476,096 5,187,404 7.92
Cash and due from banks 3,045,410
Other assets 4,149,188
Total assets $ 72,670,694
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing deposits
Savings and NOW accounts 12,452,101 285,151 2.29
Money market accounts 10,576,097 254,863 2.41
Other consumer time 16,968,029 742,381 4.38
Foreign 1,625,575 75,956 4.67
Other time 1,607,283 82,897 5.16
Total interest-bearing deposits 43,229,085 1,441,248 3.33
Federal funds purchased and securities
sold under repurchase agreements 7,270,734 317,225 4.36
Commercial paper 661,327 28,166 4.26
Other short-term borrowings 1,419,477 75,526 5.32
Long-term debt 3,213,607 198,781 6.19
Total interest-bearing
liabilities 55,794,230 2,060,946 3.69
Noninterest-bearing deposits 10,015,666
Other liabilities 1,393,526
Stockholders' equity 5,467,272
Total liabilities and
stockholders' equity $ 72,670,694
Interest income and rate earned $ 5,187,404 7.92 %
Interest expense and rate paid 2,060,946 3.15
Net interest income and margin $ 3,126,458 4.77 %
</TABLE>
(a) Yields related to securities and loans exempt from both federal and state
income taxes, federal income taxes only or state income taxes only are
stated on a fully tax-equivalent basis. They are reduced by the
nondeductible portion of interest expense, assuming a federal income tax
rate of 35 percent; a North Carolina state tax rate of 7.8275 percent;
a Georgia and Tennenessee state tax rate of 6 percent; a South Carolina
state tax rate of 4.5 percent; a Florida state tax rate of 5.5 percent;
a Maryland state tax rate of 7 percent; and a Washington, D.C. tax rate
of 10.25 percent.
T-21
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS 1994 SIX MONTHS 1994
Interest Average Interest Average
Average Income/ Rates Average Income/ Rates
Balances Expense Earned/Paid Balances Expense Earned/Paid
<S> <C> <C> <C> <C> <C>
$ 716,364 27,208 5.08 % $ 737,293 18,656 5.10 %
1,318,559 36,256 3.68 1,241,844 19,902 3.23
965,841 40,840 5.65 916,586 25,200 5.54
10,964,614 443,534 5.40 11,567,892 304,022 5.27
1,506,052 78,960 6.99 1,399,821 46,884 6.70
1,279,269 110,443 11.51 1,294,916 74,749 11.54
2,785,321 189,403 9.07 2,694,737 121,633 9.03
13,513,807 834,458 8.26 13,265,962 543,310 8.26
1,569,693 90,153 7.68 1,560,175 56,422 7.29
5,849,927 337,512 7.71 5,791,515 215,875 7.51
608,777 42,987 9.41 579,854 27,004 9.31
397,768 14,101 4.74 379,081 8,257 4.39
21,939,972 1,319,211 8.04 21,576,587 850,868 7.95
13,668,875 748,280 7.30 13,378,825 487,791 7.29
2,486,403 267,072 14.32 2,180,345 160,213 14.70
9,770,863 703,723 9.62 9,639,246 457,045 9.52
25,926,141 1,719,075 8.85 25,198,416 1,105,049 8.79
47,866,113 3,038,286 8.48 46,775,003 1,955,917 8.40
64,616,812 3,775,527 7.80 63,933,355 2,445,330 7.68
2,971,264 2,947,527
4,151,594 4,207,967
$ 71,739,670 $ 71,088,849
12,179,863 198,697 2.18 12,042,894 126,849 2.12
10,725,502 187,670 2.34 10,848,760 121,821 2.26
16,724,456 531,813 4.25 16,562,666 344,628 4.20
1,377,427 43,497 4.22 1,082,182 21,657 4.04
1,586,446 58,607 4.94 1,541,684 36,911 4.83
42,593,694 1,020,284 3.20 42,078,186 651,866 3.12
7,196,709 222,058 4.13 7,311,705 143,096 3.95
676,625 20,481 4.05 513,189 9,366 3.68
1,358,042 50,288 4.95 1,325,443 29,671 4.51
3,162,021 137,663 5.80 3,143,570 85,917 5.47
54,987,091 1,450,774 3.53 54,372,093 919,916 3.41
10,021,667 10,069,557
1,326,116 1,323,129
5,404,796 5,324,070
$ 71,739,670 $ 71,088,849
$ 3,775,527 7.80 % $ 2,445,330 7.68 %
1,450,774 3.00 919,916 2.90
$ 2,324,753 4.80 % $ 1,525,414 4.78 %
</TABLE>
(b) The loan averages include loans on which the accrual of interest has been
discontinued and are stated net of unearned income.
T-22
<PAGE>
FIRST UNION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands except per share data) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 3,157,119 3,740,691 3,212,888 2,809,958 3,054,037
Interest-bearing bank balances 722,062 945,126 632,206 1,387,532 799,569
Federal funds sold and securities
purchased under resale agreements 1,488,462 1,371,025 1,771,643 1,909,486 1,438,561
Total cash and cash equivalents 5,367,643 6,056,842 5,616,737 6,106,976 5,292,167
Trading account assets 1,453,038 1,206,675 1,303,453 933,011 820,876
Securities available for sale 7,298,853 7,752,479 8,226,530 9,709,341 12,665,905
Investment securities 3,634,798 3,729,869 3,179,763 2,995,102 2,539,647
Loans, net of unearned income 55,767,718 54,029,752 51,633,034 48,925,495 46,732,424
Allowance for loan losses (968,828) (978,795) (1,004,298) (1,007,839) (1,014,001)
Loans, net 54,798,890 53,050,957 50,628,736 47,917,656 45,718,423
Premises and equipment 1,771,052 1,756,297 1,617,933 1,518,171 1,535,383
Due from customers on acceptances 302,248 218,849 133,928 94,535 220,698
Mortgage servicing rights 80,266 84,898 89,666 79,826 82,102
Credit card premium 54,703 58,494 62,463 67,524 71,538
Other intangible assets 1,172,106 1,198,907 1,091,488 916,606 954,311
Other assets 1,921,011 2,199,238 2,292,421 2,265,653 2,347,323
Total assets $ 77,854,608 77,313,505 74,243,118 72,604,401 72,248,373
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits 10,412,883 10,523,538 10,295,616 10,207,807 10,428,019
Interest-bearing deposits 46,390,022 48,434,735 43,391,435 43,564,453 41,659,772
Total deposits 56,802,905 58,958,273 53,687,051 53,772,260 52,087,791
Short-term borrowings 9,581,076 7,532,343 9,988,596 8,959,378 10,058,342
Bank acceptances outstanding 302,248 218,849 133,928 94,535 220,698
Other liabilities 1,876,219 1,778,009 1,541,549 1,260,203 1,450,652
Long-term debt 3,801,426 3,428,514 3,269,363 3,129,444 3,154,830
Total liabilities 72,363,874 71,915,988 68,620,487 67,215,820 66,972,313
STOCKHOLDERS' EQUITY
Preferred stock
Class A, authorized 40,000,000 shares
Series A, 11% cumulative perpetual;
$25.00 stated and liquidation value - - - - -
Series A, $2.50 cumulative convertible;
no-par value; $25.00 stated and
liquidation value - - - - -
Series B, none issued - - - - -
Series 1990 cumulative perpetual
adjustable rate, no par value;
$5.00 liquidation value;
authorized 10,000,000 shares - - 31,592 31,592 31,592
Common stock, $3.33-1/3 par value;
authorized 750,000,000 shares 573,564 586,779 585,948 575,989 564,812
Paid-in capital 1,272,386 1,433,422 1,693,389 1,576,872 1,555,938
Retained earnings 3,741,801 3,591,581 3,482,620 3,327,793 3,165,544
Unrealized loss on debt and equity (97,017) (214,265) (170,918) (123,665) (41,826)
securities
Total stockholders' equity 5,490,734 5,397,517 5,622,631 5,388,581 5,276,060
Total liabilities and stockholders' $ 77,854,608 77,313,505 74,243,118 72,604,401 72,248,373
equity
MEMORANDA
Securities available for sale-amortized $ 7,421,417 8,054,592 8,489,477 9,907,974 12,731,630
cost
Investment securities-market value 3,730,577 3,742,534 3,269,641 3,104,804 2,696,736
Common stockholders' equity, net of
unrealized loss
on debt and equity securities $ 5,490,734 5,397,517 5,338,590 5,104,540 4,992,020
Preferred shares outstanding 6,318,350 6,318,350 6,318,350
Common shares outstanding 172,069,353 176,033,912 175,784,527 172,796,786 169,443,814
</TABLE>
T-23
<PAGE>
FIRST UNION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1995 1994
First Fourth Third Second First
(In thousands except per share data) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,199,923 1,150,493 1,077,083 999,611 946,151
Interest and dividends on securities
available for sale 123,000 119,062 135,621 147,755 147,558
Interest and dividends on investment securities
Taxable income 46,313 46,029 31,478 26,632 18,829
Nontaxable income 22,321 23,394 23,490 24,341 24,610
Trading account interest 19,914 18,677 14,799 13,377 10,392
Other interest income 36,421 31,815 24,906 23,490 15,068
Total interest income 1,447,892 1,389,470 1,307,377 1,235,206 1,162,608
INTEREST EXPENSE
Interest on deposits 466,738 420,964 368,418 333,182 318,684
Interest on short-term borrowings 138,254 128,090 110,694 103,029 79,104
Interest on long-term debt 63,217 61,118 51,746 47,702 38,215
Total interest expense 668,209 610,172 530,858 483,913 436,003
Net interest income 779,683 779,298 776,519 751,293 726,605
Provision for loan losses 32,500 25,000 25,000 25,000 25,000
Net interest income after
provision for loan losses 747,183 754,298 751,519 726,293 701,605
NONINTEREST INCOME
Trading account profits 1,536 13,107 10,906 10,247 7,323
Service charges on deposit accounts 110,127 110,782 109,325 107,083 108,022
Mortgage banking income 23,586 20,873 21,401 12,239 19,421
Capital management income 67,413 59,727 63,469 50,380 50,949
Securities available for sale transactions 3,635 (9,926) (2,946) (2,935) 4,300
Investment security transactions 217 411 2,286 694 615
Fees for other banking services 21,928 20,703 16,833 17,959 13,757
Merchant discounts 16,633 16,939 16,257 15,283 14,361
Insurance commissions 11,490 11,870 12,506 10,705 9,990
Sundry income 48,826 57,418 52,562 52,115 51,958
Total noninterest income 305,391 301,904 302,599 273,770 280,696
NONINTEREST EXPENSE
Personnel expense 341,659 338,946 326,062 312,718 309,640
Occupancy 59,401 62,006 58,854 56,881 60,391
Equipment rentals, depreciation
and maintenance 65,917 63,245 55,987 52,436 56,700
Postage, printing and supplies 31,437 30,046 24,501 23,910 25,282
FDIC insurance 30,162 30,293 29,321 30,155 29,939
Professional fees 17,263 27,637 16,302 12,031 10,908
Owned real estate expense 3,220 3,305 8,785 4,908 5,296
Amortization 43,651 39,754 36,121 32,355 36,378
Sundry 91,992 108,716 126,286 125,826 105,307
Total noninterest expense 684,702 703,948 682,219 651,220 639,841
Income before income taxes 367,872 352,254 371,899 348,843 342,460
Income taxes 130,963 120,705 130,147 119,223 120,001
Net income 236,909 231,549 241,752 229,620 222,459
Dividends on preferred stock 7,029 6,831 6,595 6,201 5,726
Net income applicable to common
stockholders before
redemption premium 229,880 224,718 235,157 223,419 216,733
Redemption premium on preferred stock 41,355 - - -
Net income applicable to
common stockholders after
redemption premium $ 229,880 183,363 235,157 223,419 216,733
PER COMMON SHARE DATA
Net income before redemption premium $ 1.32 1.28 1.35 1.32 1.27
Net income after redemption premium 1.32 1.04 1.35 1.32 1.27
Cash dividends $ .46 .46 .46 .40 .40
Average common shares 173,928,984 176,378,717 174,417,288 169,779,057 170,314,176
</TABLE>
T-24
<PAGE>
FIRST UNION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(In thousands) 1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 236,909 222,459
Adjustments to reconcile net income to net cash provided (used)
by operating activities
Accretion and amortization of securities discounts and premiums (14,126) 13,479
Provision for loan losses 32,500 25,000
Provision for foreclosed properties 715 2,794
Securities available for sale transactions (3,635) (4,300)
Investment security transactions (217) (615)
Depreciation and amortization 93,625 78,079
Trading account assets, net (246,363) (168,406)
Mortgage loans held for resale 140,166 391,190
(Gain) loss on sales of premises and equipment 1,300 (739)
Gain on sale of First American segregated assets (6,978) (16,731)
Other assets, net 224,032 196,831
Other liabilities, net 98,210 175,936
Net cash provided by operating activities 556,138 914,977
INVESTING ACTIVITIES
Increase (decrease) in cash realized from
Sales of securities available for sale 1,140,671 2,922,982
Maturities of securities available for sale 84,544 1,204,690
Purchases of securities available for sale (571,830) (5,116,298)
Sales and calls of investment securities 8,821 1,334
Maturities of investment securities 102,043 161,975
Purchases of investment securities (18,025) (17,106)
Origination of loans, net (1,922,442) (271,920)
Sales of premises and equipment 24,964 30,398
Purchases of premises and equipment (90,993) (81,888)
Purchases of mortgage servicing rights (192) (3,079)
Other intangible assets, net (8,235) -
Net cash used by investing activities (1,250,674) (1,168,912)
FINANCING ACTIVITIES
Increase (decrease) in cash realized from
Sales of deposits, net (2,155,368) (1,654,620)
Securities sold under repurchase agreements
and other short-term borrowings, net 2,048,733 2,804,164
Issuances of long-term debt 427,556 149,270
Payments of long-term debt (54,644) (56,384)
Sales of common stock 23,120 7,741
Purchases of common stock (197,371) (46,057)
Cash dividends paid (86,689) (73,882)
Net cash provided by financing activities 5,337 1,130,232
Increase (decrease) in cash and cash equivalents (689,199) 876,297
Cash and cash equivalents, beginning of period 6,056,842 4,415,870
Cash and cash equivalents, end of period $ 5,367,643 5,292,167
NONCASH ITEMS
Increase in foreclosed properties and decrease in loans $ 1,843 6,707
Effect on stockholders' equity of an unrealized gain (loss)
on debt and equity securities included in
Securities available for sale 179,549 (65,725)
Other assets (deferred income taxes) $ 62,301 (23,899)
</TABLE>
T-25
FIRST UNION CORPORATION
FIRST QUARTER REPORT
FIRST
UNION
1995
<PAGE>
CONTENTS
Letter from the Chairman
3
News Highlights
4
Financial Tables
6
Board of Directors
16
<PAGE>
LONG-TERM PERFORMANCE
DIVIDENDS PER COMMON SHARE
(DOLLARS PER SHARE)
*ANNUALIZED.
(Bar graph appears here. The plot points are as listed below.)
Vertical Range: 0.4, 0.8, 1.2, 1.6, 2.0
Horizontal Range: 1978, 1995
Plot Points: .29, .31, .33, .36, .40, .45, .49, .58, .65, .77, .86, 1.00,
1.08, 1.12, 1.28, 1.50, 1.72, 1.84*
BOOK VALUE PER SHARE GROWTH
(IN DOLLARS)
ORIGINALLY REPORTED (ADJUSTED FOR STOCK SPLITS),
NOT RESTATED FOR POOLING OF INTEREST ACQUISITIONS.
(Bar graph appears here. The plot points are as listed below.)
Vertical Range: 5, 10, 15, 20, 25, 30, 35
Horizontal Range: Dec 1978, Mar 1995
Plot Points: 6.63, 7.39, 8.30, 8.19, 9.20, 10.66, 12.51, 12.96, 14.55, 16.25,
17.98, 19.37, 20,72, 22.54, 26.08, 28.90, 30.66, 31.91
1
...
<PAGE>
BUSINESS PROFILE
FIRST UNION CORPORATION, A BANK HOLDING COMPANY WITH HEADQUARTERS IN
CHARLOTTE, NORTH CAROLINA, HAD ASSETS OF $77.9 BILLION AT MARCH 31, 1995. FIRST
UNION IS THE NATION'S NINTH LARGEST BANK HOLDING COMPANY, WITH THE FOURTH
LARGEST BANKING NETWORK AND EIGHTH LARGEST ATM NETWORK.
FIRST UNION'S FULL-SERVICE BANKING OFFICES IN FLORIDA, NORTH CAROLINA,
GEORGIA, VIRGINIA, SOUTH CAROLINA, TENNESSEE, MARYLAND AND WASHINGTON, D.C.,
PROVIDE A WIDE RANGE OF COMMERCIAL BANKING AND CONSUMER BANKING SERVICES.
THROUGH MORE THAN 200 OFFICES IN 42 STATES, WE ALSO PROVIDE SUCH FINANCIAL
SERVICES AS MORTGAGE BANKING, HOME EQUITY LENDING, CAPITAL MARKETS PRODUCTS AND
SERVICES, INSURANCE AND SECURITIES BROKERAGE SERVICES.
2
...
<PAGE>
LETTER FROM THE CHAIRMAN
Your company built momentum for the rest of the year with a solid first
quarter financial performance. We earned $230 million, or $1.32 on a per common
share basis. This compared with $225 million, or $1.28, in the fourth quarter
of 1994 and $217 million, or $1.27, in the first quarter a year ago.
First Union's first quarter 1995 return on average common stockholders'
equity was 16.71 percent and return on average assets was 1.24 percent.
This first quarter 1995 performance also reflected:
(Bullet) 3 percent growth in loans, up $1.7 billion since year-end 1994;
(Bullet) 3 percent decrease in expenses from the fourth quarter of 1994;
and
(Bullet) 13 percent growth in capital management income, which includes
trust and brokerage services, as well as 13 percent growth in mortgage banking
income from the fourth quarter of 1994.
Net loans at March 31, 1995, were $55.8 billion. Nonperforming assets were
$577 million at March 31, 1995, compared with $558 million at year-end 1994.
They remained a low 1.03 percent of net loans and foreclosed properties.
Annualized net charge-offs also remained low at .31 percent of average net
loans.
We are pleased with this financial performance and with the steps we have
taken to maintain our earnings momentum.
I would like to express my appreciation to our stockholders for their
continuing support. I would also like to thank our employees and directors for
their invaluable contributions to the success of First Union.
Sincerely,
Edward E. Crutchfield
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
3
...
<PAGE>
NEWS HIGHLIGHTS
FIRST UNION TO LAUNCH "SMART CARDS"
First Union will issue up to one million "smart cards" in Atlanta between
September 1995 and the start of the Summer Olympics in 1996.
Smart Cards look like credit cards, but they have microchips imbedded in
plastic that store the cash value. These cards can be used in place of currency
and coins for purchases. While other "smart cards" have been launched in
localized, "closed" environments, this is the first effort to launch the use of
the cards in an "open" environment, allowing consumers to make purchases at fast
food stores, convenience stores, grocery stores, laundromats and vending
machines, as well as for buses, subways and taxis.
"We believe this is a bold, groundbreaking product introduction that could
revolutionize the way consumers and merchants transact business," said Fred
Winkler, senior vice president and head of First Union's card products division.
In addition, First Union plans to launch a smart card in a "closed"
environment in conjunction with the Jacksonville Jaguars of the National
Football League. These smart cards, which will be introduced in August 1995,
will enable stadium-goers to purchase concessions and merchandise inside the
Jaguars stadium. This is the first step toward introducing the "open"
environment smart cards in major metropolitan areas in Florida in 1997.
Also in 1997, First Union will introduce its smart cards in the greater
Washington, D.C., and Richmond, Va., areas. In 1998, they will be introduced in
the Charlotte and the Raleigh-Durham areas in North Carolina; in the Columbia
and the Greenville-Spartanburg areas in South Carolina; and in Nashville,
Tennessee.
EMPLOYEES TO BE LICENSED TO SELL ANNUITIES
First Union will train 800 of its current investment sales specialists to be
licensed to sell insurance annuity products. The licensing program, which began
with a pilot effort in North Carolina, is now expanding to six other states and
Washington, D.C. About 400 employees are expected to complete the program by
year-end 1995, and the rest are expected to complete the program by the end of
1996.
4
...
<PAGE>
FIRST UNION, PARTNER TO DEVELOP FIXED ANNUITY PRODUCT
First Union Insurance Group has signed an agreement with Western National
Life Insurance Company to develop the first proprietary fixed annuity product to
be offered by First Union.The two companies will jointly develop the product,
which will be sold to First Union customers who are interested in saving for
their retirement. Western National Life will issue the product and provide
marketing and administrative support, and First Union's Capital Management Group
will provide investment management of the program's assets.
FIRST UNION CREATES "COMMUNITY COMMERCE"
Customers and merchants who prefer alternative electronic delivery of
financial services or other products now have an additional way to purchase
merchandise or gain information - through their personal computers. First Union
and Open Market Inc., a company that develops products to facilitate electronic
commerce on such "information superhighway" networks as the Internet and the
World Wide Web, have created "First Union CommunityCommerceSM," a "virtual"
marketplace on the Internet. First Union is the intermediary for this electronic
marketplace, which features virtual storefronts, electronic purchasing, a full
range of financial services, and business development opportunities for small to
mid-size companies.
Open Market can be reached on the World Wide Web (URU) at:
http//www.openmarket.com.
First Union began offering information on the Internet in January 1995. The
First Access Network "branch" is available at URL:http://www:firstunion.com/; or
via the electronic mail address of comments-firstunion.com.
CASH DIVIDEND DECLARED
In April 1995, First Union's board of directors declared a regular quarterly
cash dividend of 46 cents per share for its common stock, or $1.84 per share on
an annualized basis.
The common stock dividend is payable June 15 to holders of record as of May
31, 1995.
5
...
<PAGE>
FINANCIAL TABLES
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
.................................
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, PERCENT
(IN THOUSANDS EXCEPT PER SHARE DATA) 1995 1994 INCREASE
<S> <C> <C> <C>
Net income $ 236,909 222,459 6.5%
Dividends on preferred stock 7,029 5,726 22.8
Net income applicable to common stockholders $ 229,880 216,733 6.1%
Net income per common share $ 1.32 1.27 3.9%
Average common shares 173,929 170,314 2.1
Common stockholders' equity $ 5,490,734 4,992,020 10.0
Total stockholders' equity 5,490,734 5,276,060 4.1
Book value per common share $ 31.91 29.46 8.3
Actual common shares 172,069 169,444 1.5
Common stock period-end price $ 43.375 41.625 4.2%
</TABLE>
.................................
EARNINGS SUMMARY
<TABLE>
<CAPTION>
1Q '95
1995 1994 VS.
(IN THOUSANDS EXCEPT PER SHARE DATA) 1Q 4Q 3Q 2Q 1Q 1Q '94
<S> <C> <C> <C> <C> <C> <C>
Net interest income (a) $ 801,788 801,705 799,339 775,005 750,409 6.8%
Provision for loan losses 32,500 25,000 25,000 25,000 25,000 30.0
Net interest income after provision for loan losses (a) 769,288 776,705 774,339 750,005 725,409 6.0
Securities available for sale transactions 3,635 (9,926) (2,946) (2,935) 4,300 (15.5)
Investment security transactions 217 411 2,286 694 615 (64.7)
Noninterest income 301,539 311,419 303,259 276,011 275,781 9.3
Noninterest expense 684,702 703,948 682,219 651,220 639,841 7.0
Income before income taxes (a) 389,977 374,661 394,719 372,555 366,264 6.5
Income taxes 130,963 120,705 130,147 119,223 120,001 9.1
Tax-equivalent adjustment 22,105 22,407 22,820 23,712 23,804 (7.1)
Net income 236,909 231,549 241,752 229,620 222,459 6.5
Dividends on preferred stock 7,029 6,831 6,595 6,201 5,726 22.8
Net income applicable to common stockholders before
redemption premium 229,880 224,718 235,157 223,419 216,733 6.1
Redemption premium on preferred stock - 41,355 - - - -
Net income applicable to common stockholders after
redemption premium $ 229,880 183,363 235,157 223,419 216,733 6.1%
Net income per common share before redemption premium $ 1.32 1.28 1.35 1.32 1.27 3.9%
Net income per common share after redemption premium $ 1.32 1.04 1.35 1.32 1.27 3.9%
</TABLE>
(a) Tax-equivalent.
6 7
... ...
<PAGE>
FINANCIAL TABLES
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
.................................
AVERAGE BALANCE SHEET SUMMARY
<TABLE>
<CAPTION>
1Q '95
1995 1994 VS.
(IN THOUSANDS) 1Q 4Q 3Q 2Q 1Q 1Q '94
<S> <C> <C> <C> <C> <C> <C>
Loans, net $ 54,414,946 52,583,743 50,012,757 47,321,742 46,222,187 17.7%
Earning assets 69,928,734 68,025,926 65,961,440 64,947,525 62,907,917 11.2
Total assets 77,493,080 75,433,408 73,020,089 71,826,000 70,343,508 10.2
Noninterest-bearing deposits 9,978,428 9,997,860 9,927,448 10,067,077 10,072,065 (0.9)
Consumer time deposits 42,022,608 41,083,499 39,975,098 39,374,766 39,534,757 6.3
Other time deposits 5,271,533 4,031,040 3,632,802 2,895,097 2,349,622 124.4
Common stockholders' equity (a) 5,579,362 5,601,222 5,396,497 5,112,116 5,012,086 11.3
Total stockholders' equity (a) $ 5,579,362 5,837,407 5,680,537 5,396,156 5,296,126 5.3%
.................................
CAPITAL RATIOS (B)
Tier 1 capital 7.86% 7.76 8.84 9.30 9.36
Total capital 13.02 12.94 14.20 14.68 15.15
Leverage 6.04% 6.12 6.77 6.67 6.57
.................................
INTANGIBLE ASSETS
(IN THOUSANDS)
Intangible assets
Goodwill $ 742,435 754,417 763,832 682,570 703,559
Deposit base premium 422,827 437,025 319,522 224,918 240,935
Other 6,844 7,465 8,134 9,118 9,817
Total $ 1,172,106 1,198,907 1,091,488 916,606 954,311
Mortgage servicing rights $ 80,266 84,898 89,666 79,826 82,102
Credit card premium $ 54,703 58,494 62,463 67,524 71,538
</TABLE>
(a) Average common stockholders' equity and average total stockholders'
equity exclude average net unrealized gains or losses on debt and equity
securities.
(b) First quarter 1995 ratios are based on estimates and exclude net
unrealized losses on debt and equity securities.
8 9
... ...
<PAGE>
FINANCIAL TABLES
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
.................................
OTHER FINANCIAL DATA
<TABLE>
<CAPTION>
1995 1994
1Q 4Q 3Q 2Q 1Q
<S> <C> <C> <C> <C> <C>
Return on average assets (a)(b) 1.24% 1.22 1.31 1.28 1.28
Return on average common equity before redemption premium
(a)(c) 16.71 15.92 17.29 17.53 17.54
Return on average common equity after redemption premium
(a)(c) 16.71 12.99 17.29 17.53 17.54
Net interest margin (a) 4.57 4.71 4.84 4.78 4.79
Allowance as % of loans, net 1.74 1.81 1.95 2.06 2.17
Allowance as % of nonaccrual and restructured loans 224 245 203 192 168
Allowance as % of nonperforming assets 168% 175 154 152 127
Loan losses $ 61,962 72,223 72,120 54,516 56,068
Loan recoveries 19,495 19,424 24,964 22,745 24,878
Loan losses, net $ 42,467 52,799 47,156 31,771 31,190
As % of average loans, net (a) .31% .40 .38 .27 .27
Nonperforming assets
Commercial nonaccrual $ 200,915 155,752 154,861 159,858 189,759
Real estate nonaccrual 231,183 241,886 339,881 363,433 412,748
Total nonaccrual loans 432,098 397,638 494,742 523,291 602,507
Restructured loans 670 1,872 674 2,730 2,742
Foreclosed properties 144,188 158,464 158,234 136,408 191,153
Total nonperforming assets $ 576,956 557,974 653,650 662,429 796,402
As % of loans, net and foreclosed properties 1.03% 1.03 1.26 1.35 1.70
(a) Annualized.
(b) Based on net income.
(c) Based on net income applicable to common stockholders and average
common stockholders' equity excluding average net unrealized gains or losses on
debt and equity securities.
10 11
... ...
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1995 1994
(IN THOUSANDS)
Interest Income <S> <C>
Interest and fees on loans $ 1,199,923 946,151
Interest and dividends on securities available for sale 123,000 147,558
Interest and dividends on investment securities
Taxable income 46,313 18,829
Nontaxable income 22,321 24,610
Trading account interest 19,914 10,392
Other interest income 36,421 15,068
Total interest income 1,447,892 1,162,608
Interest Expense
Interest on deposits 466,738 318,684
Interest on short-term borrowings 138,254 79,104
Interest on long-term debt 63,217 38,215
Total interest expense 668,209 436,003
Net interest income 779,683 726,605
Provision for loan losses 32,500 25,000
Net interest income after provision for loan losses 747,183 701,605
Noninterest Income
Trading account profits 1,536 7,323
Service charges on deposit accounts 110,127 108,022
Mortgage banking income 23,586 19,421
Capital management income 67,413 50,949
Securities available for sale transactions 3,635 4,300
Investment security transactions 217 615
Fees for other banking services 21,928 13,757
Merchant discounts 16,633 14,361
Insurance commissions 11,490 9,990
Sundry income 48,826 51,958
Total noninterest income 305,391 280,696
Noninterest Expense
Personnel expense 341,659 309,640
Occupancy 59,401 60,391
Equipment rentals, depreciation and maintenance 65,917 56,700
Postage, printing and supplies 31,437 25,282
FDIC insurance 30,162 29,939
Professional fees 17,263 10,908
Owned real estate expense 3,220 5,296
Amortization 43,651 36,378
Sundry 91,992 105,307
Total noninterest expense 684,702 639,841
Income before income taxes 367,872 342,460
Income taxes 130,963 120,001
Net income 236,909 222,459
Dividends on preferred stock 7,029 5,726
Net income applicable to common stockholders $ 229,880 216,733
</TABLE>
12 13
... ...
<PAGE>
CONSOLIDATED BALANCE SHEETS
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
<TABLE>
<CAPTION> MARCH 31,
(IN THOUSANDS) 1995 1994
<S> <C> <C>
Assets
Cash and due from banks $ 3,157,119 3,054,037
Interest-bearing bank balances 722,062 799,569
Federal funds sold and securities purchased under resale agreements 1,488,462 1,438,561
Total cash and cash equivalents 5,367,643 5,292,167
Trading account assets 1,453,038 820,876
Securities available for sale 7,298,853 12,665,905
Investment securities 3,634,798 2,539,647
Loans, net of unearned income 55,767,718 46,732,424
Allowance for loan losses (968,828) (1,014,001)
Loans, net 54,798,890 45,718,423
Premises and equipment 1,771,052 1,535,383
Due from customers on acceptances 302,248 220,698
Mortgage servicing rights 80,266 82,102
Credit card premium 54,703 71,538
Other intangible assets 1,172,106 954,311
Other assets 1,921,011 2,347,323
Total assets $77,854,608 72,248,373
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing deposits 10,412,883 10,428,019
Interest-bearing deposits 46,390,022 41,659,772
Total deposits 56,802,905 52,087,791
Short-term borrowings 9,581,076 10,058,342
Bank acceptances outstanding 302,248 220,698
Other liabilities 1,876,219 1,450,652
Long-term debt 3,801,426 3,154,830
Total liabilities 72,363,874 66,972,313
Stockholders' Equity
Preferred stock
Class A, authorized 40,000,000 shares
Series A, 11% cumulative perpetual; $25.00 stated and liquidation value - -
Series A, $2.50 cumulative convertible, no par value; $25.00 stated
and liquidation value - -
Series B, none issued - -
Series 1990 cumulative perpetual adjustable rate, no par value;
$5.00 liquidation value; authorized 10,000,000 shares - 31,592
Common stock, $3.331/3 par value; authorized 750,000,000 shares 573,564 564,812
Paid-in capital 1,272,386 1,555,938
Retained earnings 3,741,801 3,165,544
Unrealized loss on debt and equity securities (97,017) (41,826)
Total stockholders' equity 5,490,734 5,276,060
Total liabilities and stockholders' equity $77,854,608 72,248,373
</TABLE>
14 15
... ...
<PAGE>
BOARD OF DIRECTORS
G. ALEX BERNHARDT
President and Chief Executive Officer,
Bernhardt Furniture Company
Lenoir, North Carolina
W. WALDO BRADLEY
Chairman, Bradley Plywood Corporation
Savannah, Georgia
ROBERT J. BROWN
Chairman, President and Chief
Executive Officer, B&C Associates, Inc.
High Point, North Carolina
EDWARD E. CRUTCHFIELD
Chairman and Chief Executive Officer
First Union Corporation
Charlotte, North Carolina
ROBERT D. DAVIS
Chairman, D.D.I., Inc.
Jacksonville, Florida
R. STUART DICKSON
Chairman of Executive Committee,
Ruddick Corporation
Charlotte, North Carolina
B.F. DOLAN
Investor
Charlotte, North Carolina
RODDEY DOWD SR.
Chairman,Charlotte Pipe & Foundry Co.
Charlotte, North Carolina
JOHN R. GEORGIUS
President, First Union Corporation
Charlotte, North Carolina
WILLIAM H. GOODWIN JR.
Chairman, AMF Companies
Richmond, Virginia
BRENTON S. HALSEY
Chairman Emeritus,
James River Corporation
Richmond, Virginia
HOWARD H. HAWORTH
President, The Haworth Group
Morganton, North Carolina
TORRENCE E. HEMBY JR.
President, Beverly Crest Corporation
Charlotte, North Carolina
LEONARD G. HERRING
President and Chief Executive Officer
Lowe's Companies, Inc.
North Wilkesboro, North Carolina
JACK A. LAUGHERY
Chairman, The Bagel Group, Inc.
Rocky Mount, North Carolina
MAX LENNON
President and Chief Executive Officer
Eastern Foods, Inc.
Atlanta, Georgia
RADFORD D. LOVETT
Chairman, Commodores Point
Terminal Corporation
Jacksonville, Florida
HENRY D. PERRY JR.
Physician
Plantation, Florida
RANDOLPH N. REYNOLDS
Vice Chairman,
Reynolds Metals Company
Richmond, Virginia
RUTH G. SHAW
Senior Vice President, Corporate
Resources and Chief Administrative
Officer, Duke Power Company
Charlotte, North Carolina
LANTY L. SMITH
Chairman and Chief Executive Officer
Precision Fabrics Group, Inc.
Greensboro, North Carolina
DEWEY L. TROGDON
Chairman, Cone Mills Corporation
Greensboro, North Carolina
JOHN D. UIBLE
Investor
Jacksonville, Florida
B.J. WALKER
Vice Chairman,
First Union Corporation
Jacksonville, Florida
KENNETH G. YOUNGER
Transportation Consultant
Gastonia, North Carolina
16
...
<PAGE>
FIRST Bulk Rate
UNION U.S. Postage
PAID
FIRST UNION CORPORATION Charlotte, N.C.
Two First Union Center Permit No. 1
Charlotte, NC 28288-0570
This First Union Quarterly report includes information released to the public
and the news media on April 12, 1995. You may obtain a copy of our First
Quarter Financial Supplement, which contains more detailed financial and other
information, by writing to Investor Relations, Two First Union Center,
Charlotte, North Carolina 28288-0206. There is no charge.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,157,119
<INT-BEARING-DEPOSITS> 722,062
<FED-FUNDS-SOLD> 1,488,462
<TRADING-ASSETS> 1,453,038
<INVESTMENTS-HELD-FOR-SALE> 7,298,853
<INVESTMENTS-CARRYING> 3,634,798
<INVESTMENTS-MARKET> 3,730,577
<LOANS> 56,569,928
<ALLOWANCE> (968,828)
<TOTAL-ASSETS> 77,854,608
<DEPOSITS> 56,802,905
<SHORT-TERM> 9,581,076
<LIABILITIES-OTHER> 1,876,219
<LONG-TERM> 3,801,426
<COMMON> 573,564
0
0
<OTHER-SE> 4,917,170
<TOTAL-LIABILITIES-AND-EQUITY> 77,854,608
<INTEREST-LOAN> 1,199,923
<INTEREST-INVEST> 191,634
<INTEREST-OTHER> 36,421
<INTEREST-TOTAL> 1,447,892
<INTEREST-DEPOSIT> 466,738
<INTEREST-EXPENSE> 668,209
<INTEREST-INCOME-NET> 779,683
<LOAN-LOSSES> 32,500
<SECURITIES-GAINS> 3,852
<EXPENSE-OTHER> 684,702
<INCOME-PRETAX> 367,872
<INCOME-PRE-EXTRAORDINARY> 236,909
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 236,909
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
<YIELD-ACTUAL> 4.57
<LOANS-NON> 432,098
<LOANS-PAST> 205,654
<LOANS-TROUBLED> 670
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 978,795
<CHARGE-OFFS> 61,962
<RECOVERIES> 19,495
<ALLOWANCE-CLOSE> 968,828
<ALLOWANCE-DOMESTIC> 727,409
<ALLOWANCE-FOREIGN> 3,038
<ALLOWANCE-UNALLOCATED> 238,381
</TABLE>
<PAGE>
EXHIBIT (99)(A)
FIRST UNION CORPORATION OF VIRGINIA AND SUBSIDIARIES
SUMMARIZED FINANCIAL INFORMATION
In connection with the merger of Dominion Bankshares Corporation into First
Union Corporation of Virginia ("FUNC-VA"), a wholly-owned subsidiary of First
Union Corporation (the "Corporation"), on March 1, 1993, FUNC-VA assumed, and
subsequently the Corporation guaranteed, FUNC-VA's publicly held 9 5/8%
Subordinated Capital Notes Due 1999. Set forth below is summarized consolidated
financial information for FUNC-VA and subsidiaries for the periods indicated.
CONSOLIDATED STATEMENTS OF INCOME DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(IN THOUSANDS) 1995 1994
<S> <C> <C>
Net interest income.............................................................................. $ 126,884 119,659
Income before income taxes....................................................................... 62,974 34,517
Net income....................................................................................... $ 41,141 22,316
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
MARCH 31,
(IN THOUSANDS) 1995 1994
<S> <C> <C>
Assets........................................................................................ $13,167,312 13,194,259
Securities available for sale................................................................. 2,267,339 2,748,875
Investment securities......................................................................... 358,496 76,702
Loans, net of unearned income................................................................. 7,890,963 7,091,396
Stockholder's equity.......................................................................... $ 1,081,742 1,210,099
</TABLE>
<PAGE>
EXHIBIT (99)(B)
FIRST UNION CORPORATION
PRO FORMA FINANCIAL INFORMATION
PRO FORMA COMBINED CONDENSED INCOME STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined condensed statements of income
present the combined statements of income assuming the companies had been
combined for each period presented on a purchase accounting basis (effective as
of January 1, 1994).
<TABLE>
<CAPTION>
FIRST UNION PURCHASE PRO FORMA PRO FORMA
(IN THOUSANDS EXCEPT PER SHARE DATA) CORPORATION ACQUISITIONS ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1995
Interest income............................................................ $1,447,892 188,762 (27,220) 1,609,434
Interest expense........................................................... 668,209 120,251 -- 788,460
Net interest income........................................................ 779,683 68,511 (27,220) 820,974
Provision for loan losses.................................................. 32,500 3,116 -- 35,616
Net interest income after provision for loan losses........................ 747,183 65,395 (27,220) 785,358
Securities available for sale transactions................................. 3,635 239 -- 3,874
Investment security transactions........................................... 217 -- -- 217
Noninterest income......................................................... 301,539 19,766 -- 321,305
Noninterest expense........................................................ 684,702 57,084 11,442 753,228
Income before income taxes................................................. 367,872 28,316 (38,662) 357,526
Income taxes............................................................... 130,963 13,304 (12,251) 132,016
Net income................................................................. 236,909 15,012 (26,411) 225,510
Dividends on preferred stock............................................... 7,029 -- -- 7,029
Net income applicable to common stockholders............................... $ 229,880 15,012 (26,411) 218,481
Pro forma per common share data
Net income available to common stockholders.............................. $ 1.32 1.25
Average common shares (in thousands)..................................... 173,929 175,159
</TABLE>
<TABLE>
<CAPTION>
FIRST UNION PURCHASE PRO FORMA PRO FORMA
(IN THOUSANDS EXCEPT PER SHARE DATA) CORPORATION ACQUISITIONS ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Interest income............................................................ $5,094,661 726,224 (81,501) 5,739,384
Interest expense........................................................... 2,060,946 424,282 -- 2,485,228
Net interest income........................................................ 3,033,715 301,942 (81,501) 3,254,156
Provision for loan losses.................................................. 100,000 1,008 -- 101,008
Net interest income after provision for loan losses........................ 2,933,715 300,934 (81,501) 3,153,148
Securities available for sale transactions................................. (11,507 ) 2,315 -- (9,192 )
Investment security transactions........................................... 4,006 -- -- 4,006
Noninterest income......................................................... 1,166,470 50,754 -- 1,217,224
Noninterest expense........................................................ 2,677,228 246,965 55,763 2,979,956
Income before income taxes................................................. 1,415,456 107,038 (137,264) 1,385,230
Income taxes............................................................... 490,076 33,855 (40,093) 483,838
Net income................................................................. 925,380 73,183 (97,171) 901,392
Dividends on preferred stock............................................... 25,353 -- -- 25,353
Net income applicable to common stockholders before redemption premium..... 900,027 73,183 (97,171) 876,039
Redemption premium on preferred stock...................................... 41,355 -- -- 41,355
Net income applicable to common stockholders after redemption premium...... $ 858,672 73,183 (97,171) 834,684
Pro forma per common share data
Net income available to common stockholders before redemption premium.... $ 5.22 4.89
Net income available to common stockholders after redemption premium..... $ 4.98 4.66
Average common shares (in thousands)..................................... 172,543 179,044
</TABLE>
See accompanying notes to pro forma financial information.
<PAGE>
FIRST UNION CORPORATION
PRO FORMA FINANCIAL INFORMATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST UNION PURCHASE PRO FORMA PRO FORMA
(IN THOUSANDS) CORPORATION ACQUISITIONS ADJUSTMENT COMBINED
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks........................................ $ 3,157,119 119,482 (1,713,279 ) 1,563,322
Interest-bearing balances...................................... 722,062 29,504 -- 751,566
Federal funds sold and securities purchased under resale
agreements................................................... 1,488,462 34,607 -- 1,523,069
Total cash and cash equivalents.............................. 5,367,643 183,593 (1,713,279 ) 3,837,957
Trading account assets......................................... 1,453,038 -- -- 1,453,038
Securities available for sale.................................. 7,298,853 499,310 -- 7,798,163
Investment securities.......................................... 3,634,798 2,312,908 (62,800 ) 5,884,906
Loans, net of unearned income.................................. 55,767,718 7,667,537 (857 ) 63,434,398
Allowance for loan losses.................................... (968,828) (61,996) -- (1,030,824)
Loans, net................................................... 54,798,890 7,605,541 (857 ) 62,403,574
Premises and equipment......................................... 1,771,052 102,940 (24,152 ) 1,849,840
Due from customers on acceptances.............................. 302,248 -- -- 302,248
Mortgage servicing rights...................................... 80,266 11,067 16,862 108,195
Credit card premium............................................ 54,703 -- -- 54,703
Other intangible assets........................................ 1,172,106 80,098 1,213,420 2,465,624
Other assets................................................... 1,921,011 212,176 (16,570 ) 2,116,617
Total assets................................................. $77,854,608 11,007,633 (587,376 ) 88,274,865
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing.......................................... 10,412,883 340,274 -- 10,753,157
Interest-bearing............................................. 46,390,022 7,062,260 -- 53,452,282
Total deposits............................................ 56,802,905 7,402,534 -- 64,205,439
Short-term borrowings.......................................... 9,581,076 1,493,933 -- 11,075,009
Bank acceptances outstanding................................... 302,248 -- -- 302,248
Other liabilities.............................................. 1,876,219 166,144 16,793 2,059,156
Long-term debt................................................. 3,801,426 1,060,322 -- 4,861,748
Total liabilities......................................... 72,363,874 10,122,933 16,793 82,503,600
STOCKHOLDERS' EQUITY
Preferred stock................................................ -- 5,500 (5,500 ) --
Common stock................................................... 573,564 52,504 (29,639 ) 596,429
Paid-in capital................................................ 1,272,386 612,112 (354,446 ) 1,530,052
Retained earnings.............................................. 3,741,801 271,224 (271,224 ) 3,741,801
Less: Treasury stock........................................... -- (50,235) 50,235 --
Unrealized loss on debt and equity securities.................. (97,017) (6,405) 6,405 (97,017)
Total stockholders' equity................................ 5,490,734 884,700 (604,169 ) 5,771,265
Total liabilities and stockholders' equity................ $77,854,608 11,007,633 (587,376 ) 88,274,865
</TABLE>
See accompanying notes to pro forma financial information.
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) The pro forma information presented is not necessarily indicative of
the results of operations or the combined financial position that would
have resulted had the acquisitions indicated in Note (2) been
consummated at the beginning of the periods indicated, nor is it
necessarily indicative of the results of operations in future periods
or the future financial position of the combined entities.
(2) During 1994, First Union Corporation (the "Corporation") entered into
various transactions which included (i) the pooling of interests
acquisitions of American Bancshares, Inc., Lieber & Company and Home
Federal Savings Bank of Washington, D.C. with aggregate assets of $478
million as of the dates acquired and which involved the issuance of
4,169,000 shares of the Corporation's common stock, and the August 1994
purchase accounting acquisition of BancFlorida Financial Corporation
with assets of $1.6 billion at a cost of $161 million, (ii) the pending
purchase accounting acquisitions of First Florida Savings Bank, FSB,
Ameribanc Investors Group, and Coral Gables Fedcorp, Inc., at an
aggregate estimated cost of approximately $602 million in cash and the
pending purchase accounting acquisitions of American Savings Bank of
Florida, FSB ("American Savings") and United Financial Corporation of
South Carolina, Inc. ("United Financial") for approximately 8.9 million
shares of the Corporation's common stock valued at approximately $387
million, (iii) the December 1994 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 $137 million, and (iv) the purchase of
deposits of Jacksonville Federal Savings Association, Citizens Federal
Savings Association, Cobb Federal Savings Association and Hollywood
Federal Savings Association from the Resolution Trust Corporation
("RTC") in the aggregate amount of $640 million, at an aggregate cost
of $68 million. 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 income statement information with
respect to such purchases.
Additionally, on April 6, 1995, the Corporation entered into an
agreement to acquire Columbia First Bank, FSB ("Columbia") in which the
Corporation agreed to issue its common stock equal to $60.00 for each
share of Columbia common stock. This purchase accounting acquisition is
expected to cost approximately $247 million. On March 29, 1995, the
Corporation entered into an agreement to acquire Home Federal Savings
Bank of Rome, Georgia for approximately $20 million.
Beginning in the third quarter of 1994 and continuing through February
14, 1995, the Corporation paid $161 million to purchase 3.8 million
shares of its common stock expected to be issued in connection with the
American Savings acquisition. The Corporation purchased 2.5 million
shares of its common stock for $111 million expected to be issued for
the United Financial acquisition. The Corporation expects to purchase 5
million shares of its common stock for approximately $233 million which
is expected to be issued in the Columbia acquisition. Goodwill and
deposit base premium of approximately $918 million and $341 million,
respectively, are currently expected to result from all completed and
pending purchase transactions. Such common stock purchased by the
Corporation is cancelled.
On a pooling of interests accounting basis, income and other financial
statements of the Corporation issued after consummation of such pooling
of interests transactions would normally be restated retroactively to
reflect the consolidated combined financial position and results of
operations of the Corporation as if such transactions had taken place
prior to the periods covered by such financial statements; however,
because of the relative immateriality of such transactions to the
Corporation on a consolidated basis, such statements, will not be
retroactively restated solely as a result of consummation of those
acquisitions.
(3) In determining the pro forma adjustment amounts related to the pro
forma combined condensed statements of income, a 5.74 percent and 4.08
percent cost of funds for the three months ended March 31, 1995 and the
year ended December 31, 1994, respectively, a six-to-ten year
straight-line life related to investment securities, a nine-year
straight-line life related to loans, a 10-year straight-line life
related to premises and equipment and mortgage servicing rights, a
10-year sum-of-the-years digits method related to deposit base premium,
and a 25-year straight-line life related to goodwill, were used.
(4) Certain insignificant reclassifications have been included herein to
conform statement presentations. Transactions conducted in the ordinary
course of business between the companies are immaterial, and
accordingly, have not been eliminated.
<PAGE>
(5) The unaudited pro forma financial information does not include any
material expenses or restructuring charges related to the acquisitions.
(6) As indicated by the foregoing unaudited pro forma financial information
and based solely on combined financial information as of March 31,
1995, upon consummation of the acquisitions, the Corporation's
historical net income per common share for the three months ended March
31, 1995 and year ended December 31, 1994, would have been dilutive by
6.4 percent and 5.3 percent, respectively. It should not necessarily be
assumed, however, that the foregoing data will represent actual
dilution with respect to the acquisitions.
