SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 2, 1997
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FIRST UNION CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 1-10000 56-0898180
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First Union Center
Charlotte, North Carolina 28288-0013
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704)374-6565
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On December 2, 1997, First Union Corporation (the "Corporation") issued
a news release (the "News Release") announcing certain new financial performance
guidelines, assuming, among other things, that the acquisition of CoreStates
Financial Corp ("CoreStates") by the Corporation is consummated by April 30,
1998. Such performance guidelines also exclude the merger-related restructuring
charges expected to be taken by the Corporation in connection with the
CoreStates acquisition. In addition, following the issuance of the News Release,
the Corporation intends to hold certain meetings with analysts and others with
respect to the matters contained in the News Release. At such meetings, certain
financial and other information relating to the News Release is to be presented
(the "Presentation Materials").
A copy of the News Release is being filed as Exhibit (99)(a) to this
report. A copy of the visual portion of the Presentation Materials is being
filed as Exhibit (99)(b) to this report. The News Release and the Presentation
Materials are incorporated herein by reference.
The News Release and certain of the Presentation Materials contain, among
other things, certain forward-looking statements with respect to the goals,
plans, objectives, intentions, expectations, financial condition, results of
operations, future performance and business of the Corporation, including (i)
statements relating to the Corporation's goals with respect to (a) growth in
earnings per share, (b) return on equity, (c) return on assets, (d) overhead
efficiency ratio, (e) tier 1 leverage ratio, (f) annualized net charge-offs, (g)
dividend pay-out ratio, and (h) fee income as a percentage of total revenue, and
(ii) statements preceded by, followed by or that include the words "believes",
"expects", "anticipates", "estimates" or similar expressions. These
forward-looking statements involve risks and uncertainties that are subject to
change based on various important factors (some of which are beyond the
Corporation's control). The following factors, among others, could cause the
Corporation's financial performance to differ materially from the goals, plans,
objectives, intentions and expectations expressed in such forward-looking
statements: (1) the strength of the United States economy in general and the
strength of the local economies in which the Corporation conducts operations;
(2) the effects of, and changes in, trade, monetary and fiscal policies and
laws, including interest rate policies of the Board of Governors of the Federal
Reserve System; (3) inflation, interest rate, market and monetary fluctuations;
(4) the timely development of and acceptance of new products and services of the
Corporation and the perceived overall value of these products and services by
users, including the features, pricing and quality compared to competitors'
products and services; (5) the willingness of users to substitute competitors'
products and services for the Corporation's products and services; (6) the
success of the Corporation in gaining regulatory approval of its products and
services, when required; (7) the impact of changes in financial services' laws
and regulations (including laws concerning taxes, banking, securities and
insurance); (8) technological changes; (9) changes in consumer spending and
saving habits; (10) the impact of pending and completed acquisitions on the
Corporation, including the success of the Corporation in fully realizing or
realizing within the expected time frame expected cost savings and/or revenue
enhancements from such pending or completed acquisitions, including, without
limitation, the expected cost savings and revenue enhancements expected from the
CoreStates and Signet Banking Corporation acquisitions; and (11) the success of
the Corporation at managing the risks involved in the foregoing. Additional
information with respect to factors that may cause actual results to differ
materially from those contemplated by such forward-looking
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statements is included in the reports filed by the Corporation with the
Securities and Exchange Commission (the "Commission") in 1997, including,
without limitation, the Current Reports on Form 8-K dated July 21, 1997, August
20, 1997, November 18, 1997 and November 28, 1997, and the 1997 Third Quarter
Report on Form 10-Q, and may be included in subsequent reports filed by the
Corporation with the Commission.
The Corporation cautions that the foregoing list of important factors
is not exclusive, and neither such list nor any such forward-looking statement
takes into account the impact that any future acquisitions may have on the
Corporation and any such forward-looking statement. In addition, the Corporation
does not intend to update any forward-looking statement, whether written or
oral, relating to the matters discussed in the News Release, the Presentation
Materials and herein.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
(99)(a) The News Release.
(99)(b) The Presentation Materials.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST UNION CORPORATION
Date: December 2, 1997 By: /s/ Kent S. Hathaway
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Name: Kent S. Hathaway
Title: Senior Vice President
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EXHIBIT INDEX
Exhibit No. Description
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(99)(a) The News Release.
(99)(b) The Presentation Materials.
Exhibit (99)(a)
Tuesday Media Contact: Jeep Bryant
December 2, 1997 704-374-2957
Mary Eshet
704-383-7777
Investor Contact: Alice Lehman
704-374-4139
FIRST UNION BOOSTS PERFORMANCE GUIDELINES--AGAIN
CHARLOTTE- For the second time in just over a year, First Union Corporation
(NYSE: FTU) has announced new performance guidelines to lead the company toward
the year 2000, beginning with the completion of First Union's merger with
CoreStates Financial Corp (NYSE: CFL), which is currently expected in the
second quarter of 1998.
The company first announced higher performance guidelines in November 1996. The
decision to raise the bar even higher reflects the company's pending acquisition
of CoreStates, its growing market and customer base and confidence in its future
earnings power.
As was the case last year, the performance guidelines include eight key
financial indicators, as follows:
Guideline Prior New
Return on Equity 18-20% 20-22%
Earnings Per Share Growth 10-13% 10-14%
Return on Assets 1.30-1.50% 1.60-1.90%
Overhead Efficiency 53-57% 50-54%
Fee Income/Revenue 40% 40-45%
Tier 1 Leverage 6-7% 6-7%
Net Charge Offs/Average Loans 50-65 basis points 55-70 basis points
Dividend Payout 30-35% 40-45%
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FIRST UNION BOOSTS PERFORMANCE GUIDELINES-Page 2
"We have been very pleased with our performance under our current guidelines,"
said Edward E. Crutchfield, First Union chairman and chief executive officer.
"The recent CoreStates announcement spurred us to increase the goals once again.
With this merger, we will be combining two top-performing companies. We will
gain efficiencies on major projects, such as preparing our systems for the year
2000, where First Union is already extremely well prepared. Even more important,
we have enormous opportunities to increase sales of capital management and
capital markets products to CoreStates' strong consumer and commercial customer
base."
The capital markets and capital management businesses are key producers of fee
income for First Union. The rapid growth in these areas and the increased
market opportunities offered by First Union's recent acquisition of Signet
Banking Corporation and its pending acquisitions of Wheat First Securities,
Covenant Bancorp and CoreStates Financial Corp led management to increase its
goals.
First Union announced its merger agreement with CoreStates Financial Corp
November 18. The merger would create a $204 billion financial services company
with the leading banking presence on the Eastern Seaboard. Completion of the
merger is currently expected by April 30, 1998, subject to CoreStates and First
Union shareholder approvals, regulatory approvals and other conditions of
closing.
First Union plans to achieve all eight goals by the year 2000, and expects to
meet some of the new targets as early as 1998. The new goals are based on
various assumptions, including the company's ability to increase fee income and
control expenses, as well as factors that are beyond the company's control, such
as the state of the economy, tax issues and other laws that may affect First
Union's initiatives. In the event the CoreStates transaction is not completed
for any reason, First Union will continue to operate under the prior guidelines.
These goals exclude merger-related restructuring charges. As with any goals,
there are factors that could cause actual results to differ materially from such
goals, such as the foregoing and other factors indicated in a Form 8-K filed
with the Securities and Exchange Commission.
First Union is a leading provider of financial services to retail and
corporate customers throughout the East Coast and the nation. It is the nation's
sixth-largest bank holding company, with assets of $144 billion as of September
30, 1997.
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Exhibit (99)(b)
( First Union logo )
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Conference Call
December 2, 1997
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(logo) Cautionary Statement
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A number of statements we will be making in our presentation and in the
accompanying exhibits will be "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, such as
statements of the Corporation's plans, goals, objectives, expectations,
projections, estimates and intentions. These forward-looking statements
involve significant risks and uncertainties and are subject to change
based on various factors (some of which are beyond the Corporation's
control). Factors which could cause the Corporation's actual results to
differ materially from such forward-looking statements made herein or by
management of the Corporation are set forth in the Corporation's Third
Quarter Report on Form 10-Q, the Corporation's Current Reports on Form
8-K dated July 21, 1997, August 20, 1997, November 18, 1997, November
28, 1997, and December 2, 1997, and the Corporation's Registration
Statements 333-35363, 333-36839 and 333-37709.
In addition to the foregoing, a significant portion of the financial
information presented has not been prepared based on GAAP and is derived
from internal management reporting sources.
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(First Union logo)
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(logo) CoreStates' Superior Financial Performance (1)
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(graphs with plot points as listed below)
ROE ROA
1995--19.4% 1995--1.6%
1996--20.1% 1996--1.8%
1997--23.3% 1997--1.8%
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Fee Income/Revenue Efficiency Ratio
1995--28.6% 1995--57.8%
1996--29.3% 1996--54.4%
1997--29.6% 1997--53.0%
(1) 1997 data annualized for nine months ended 9/30/97. Such annualized
data are not intended to be projections for the full year.
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(First Union logo) exhibit 2
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(logo) CoreStates' Superior Financial Contribution (1) (2)
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(graphs with plot points as listed below)
ROE ROA
1997--23.3% 1997--1.8%
1998--36.8% 1998--2.4%
1999--36.8% 1999--2.5%
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Fee Income/Revenue Efficiency Ratio
1997--29.6% 1997--53.0%
1998--31.0% 1998--36.9%
1999--31.0% 1999--26.5%
(1) 1997 data annualized for nine months ended 9/30/97. Such annualized
data are not intended to be projections for the full year. Data excludes
merger-related restructuring charges and assumes reaching efficiencies of
45% and revenue enhancements of 21% by 1999, and leveraging of excess
capital.
(2) 1998 data is based on First Call consensus estimates and 1999 data is an
illustration based on 1998 First Call consensus estimates plus 10%. See
First Union's Current Report on Form 8-K dated November 18, 1997, for
additional information.
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(First Union logo) exhibit 3
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(logo) Financial Performance Guidelines Raising the Bar - Again
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Guideline Prior New
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ROE 18-20% 20-22%
ROA 1.30%-1.50% 1.60%-1.90%
Overhead Efficiency 53-57% 50-54%
Fee Income/Revenue 40% 40-45%
EPS Growth 10-13% 10-14%
NCO/Average Loans 50-65bps 55-70bps
Dividend Payout 30-35% 40-45%
Tier 1 Leverage 6-7% 6-7%
Note: Assumes Average Annual Asset Growth of 4-6%. Excludes merger-related
restructuring charges.
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(First Union logo) exhibit 4
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(logo) First Union's Performance vs. Nations Top 10 Banks
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Current FTU Rank (1) Guideline Rank (2)
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ROE 3 1
EPS Growth 4 3
ROA 3 1
Efficiency Ratio 2 2
Fee Income/Revenue 9 4
Leverage Ratio 7 4
NCO/Average Loans 6 6
Dividend Payout 5 3
(1) As of September 30, 1997
(2) Assumes best performance against financial guidelines using September 30,
1997, data.
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(First Union logo) exhibit 5
