[FIRST UNION LOGO]
4th Quarter Earnings Review
January 18th, 2001
<PAGE>
Cautionary Statement
A number of statements we will be making in our presentation and in the
accompanying slides 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, targets,
estimates and intentions. These forward-looking statements involve significant
risks and uncertainties and are subject to change based on various factors (many
of which are beyond the Corporation's control).
Factors that could cause the Corporation's actual results to differ materially
from such forward-looking statements are set forth in the Corporation's most
recent Annual Report on Form 10-K, Current Reports on Form 8-K, including its
Current Report on Form 8-K dated January 18, 2001, and Quarterly Reports on Form
10-Q.
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.
<PAGE>
Fourth Quarter Financial Highlights [FIRST UNION LOGO]
--------------------------------------------------------------------------------
o Delivered on previously announced EPS guidance of $.69 or $.76 on a cash
basis.
o Cash expenses declined 9% to $2.1 billion, linked quarter, driving a 2.7%
improvement in the cash overhead ratio from 64.2% to 61.5%.
o Total NPA's rose 24%, linked quarter. Excluding a previously disclosed credit,
total NPA's rose 8%, linked quarter.
o Charge offs rose to .64% of loans. Excluding a previously disclosed credit,
charge offs improved to .33% from .46%, linked quarter.
o Average balance sheet contracted $7 billion, linked quarter, as low yielding
securities were sold.
o Restructuring program on schedule. Completed previously announced sale of 58
branches.
o Announced dividend reduction of 50%, conserving approximately $1 billion in
capital per year. Will also result in lower funding costs.
o Core businesses showed strength in a difficult market
- General Bank -> deposits and loans up linked quarter, improved
service scores
- Capital Management -> Wealth and Trust Services and Retail Brokerage
Services revenue up, linked quarter
- Capital Markets -> revenues unchanged in a difficult market despite
a negative contribution from principal investing
2
<PAGE>
Summary Operating Results: 4Q 2000* [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
------------------------------------------------- --------------------------
Fourth Third % Fourth %
Quarter Quarter Change Quarter Change
------------------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
Net Interest Income (TE) $ 1,757 $ 1,860 (6)% $ 1,971 (11)%
Fee and Other Income 1,582 1,645 (4) 1,837 (14)
----------- ------------ ----------
Total Revenue $ 3,339 $ 3,505 (5)% $ 3,808 (12)%
Provision for Loan Losses 192 142 35 173 11
Noninterest Expense 2,052 2,249 (9) 2,249 (9)
Taxes 342 336 2 449 (24)
----------- ------------ ----------
Net Income - Cash Basis* $ 753 $ 778 (3)% $ 937 (20)%
=========== ============ ====== ========== ==========
EPS** - Cash Basis $ 0.76 $ 0.79 (4)% $ 0.95 (20)%
=========== ============ ====== ========== ==========
EPS** - Operating Basis $ 0.69 $ 0.71 (3)% $ 0.86 (20)%
=========== ============ ====== ========== ==========
ROE - Cash Basis 21.55% 22.15% 32.93%
=========== ============ ==========
ROE - Operating Basis 15.36% 15.76% 19.78%
=========== ============ ==========
</TABLE>
* Consolidated results excluding restructuring and other charges and intangible
amortization except operating data which includes intangible amortization. All
dollars in millions except EPS data.
** Diluted.
3
<PAGE>
Summary Operating Results*:
Full Year 2000 [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Estimated
As Reported Core Earnings**
-------------------------------------------------------------------- --------------------
2000 1999 % Change 2000
-------------------------------------------------------------------- --------------------
<S> <C> <C> <C> <C>
Net Interest Income (TE) $ 7,536 $ 7,570 -- % $ 6,467
Fee and Other Income 6,815 6,933 (2) 6,391
------------- --------------- -------------
Total Revenue $ 14,351 $ 14,503 (1)% $ 12,858
Provision for Loan Losses 754 692 9 620
Noninterest Expense 8,852 8,067 10 8,181
Taxes 1,475 1,927 (23) 1,353
------------- --------------- -------------
Net Income - Cash Basis* $ 3,270 $ 3,817 (14)% $ 2,704
============= =============== =========== =============
EPS*** - Cash Basis $ 3.30 $ 3.94 (16)% $ 2.73
============= =============== =========== =============
EPS*** - Operating Basis $ 2.97 $ 3.60 (18)% $ 2.43
============= =============== =========== =============
ROE - Cash Basis 26.33% 34.67% 22.81%
============= =============== =============
ROE - Operating Basis 17.23% 21.60% 14.55%
============= =============== =============
</TABLE>
* Consolidated results excluding restructuring and other charges and intangible
amortization except Operating data which includes intangible amortization. Year
2000 includes full year of EVEREN results while 1999 includes EVEREN results
only for the fourth quarter of 1999. All dollars in millions except EPS data.
** Reported results adjusted to exclude $545 million in balance sheet strategies
and the impact of divested and discontinued businesses and balance sheet
restructuring. The difference between Cash and Operating EPS is due to
amortization of intangibles.
*** Diluted.
4
<PAGE>
Key Financial Measures [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
------------------------------------------------------------------ --------------
Fourth Third Second First Fourth
(Dollars in millions) Quarter Quarter Quarter Quarter Quarter
--------------------- ------------------------------------------------------------------ --------------
Profitability Ratios
--------------------
<S> <C> <C> <C> <C> <C>
Overhead Ratio (cash basis) 61.46% 64.17% 61.64% 59.65% 59.06%
Operating Leverage* (cash basis) $ 32 $ (155) $ (138) $ (10) $ 56
Net Interest Margin (tax equivalent) 3.46% 3.52% 3.51% 3.69% 3.72%
Fee Income / Total Revenue 47.41% 46.78% 47.55% 48.34% 48.34%
Effective Tax Rate 31.21% 30.43% 32.45% 31.81% 32.59%
Capital
-------
Total Capital 11.00% 11.32% 10.57% 10.67% 10.87%
Tier 1 Capital 6.89% 7.00% 6.65% 6.94% 7.08%
Leverage 5.92% 5.73% 5.34% 5.94% 5.97%
Diluted Shares Outstanding (thousands) 990,445 986,763 981,940 984,095 984,537
Dividends $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.47
</TABLE>
* The change in revenue from period to period less the change in noninterest
expenses from period to period.
5
<PAGE>
Key Operating Measures [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
-------------------------------------------------------------------------- ---------------
Fourth Third Second First Fourth
(Dollars in millions) Quarter Quarter Quarter Quarter Quarter
--------------------- -------------------------------------------------------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Capital Management Group
------------------------
Mutual Funds $ 84,797 $ 85,223 $ 82,131 $ 82,967 $ 79,840
Trust Assets 85,933 87,922 83,499 92,033 89,886
----------- -------------- ------------ ------------ ------------
Assets Under Management $ 170,730 $ 173,145 $ 165,630 $ 175,000 $ 169,726
=========== ============== ============ ============ ============
Broker Client Assets $ 204,742 $ 216,012 $ 202,017 $ 207,038 $ 192,500
CAP Assets* $ 60,551 $ 60,814 $ 59,097 $ 59,878 $ 55,519
Registered Reps 7,459 7,342 7,091 6,881 6,589
Brokerage Offices (excludes branches) 375 370 346 342 332
Mutual Fund Sales (fluctuating funds) 1,713 1,819 1,656 2,020 1,674
General Bank
------------
Online Customers (thousands) 2,367 2,149 1,869 1,583 1,254
Financial Centers 2,193 2,253 2,258 2,305 2,318
ATMs 3,772 3,831 3,832 3,786 3,778
Service Scores (overall)** 6.3 6.2 6.2 6.1 6.0
Other
-----
FTEs $ 71,262 $ 71,718 $ 73,988 $ 73,060 $ 71,659
</TABLE>
* Includes assets reflected in mutual funds.
** Highest possible score is 7. Fourth Quarter 2000 data based on October and
November results.
6
<PAGE>
Fee and Other Income [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Percent Change
------------------------------------------------------ --------------- -----------------------
Fourth Third Second First Fourth
(In millions) Quarter Quarter Quarter Quarter Quarter Yr/Yr 4Q00/3Q00
------------- ------------------------------------------------------ --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Service Charges $ 481 $ 508 $ 491 $ 486 $ 513 (6)% (5)%
Commissions 383 365 375 468 398 (4) 5
Fiduciary and Asset
Management 387 384 374 366 353 10 1
Advisory, Underwriting and
Other Capital Markets 187 146 182 209 205 (9) 28
Principal Investing (33) 37 185 203 210 (116) (189)
Other Income 177 205 139 110 158 12 (14)
--------- ---------- ----------- ---------- ----------- ----------- -----------
Total $ 1,582 $ 1,645 $ 1,746 $ 1,842 $ 1,637 (14)% (4)%
========= ========== =========== ========== =========== =========== ===========
</TABLE>
Key Points (4Q vs 3Q)
---------------------
o Service Charge decline due to sale of credit card business.
o Good Fiduciary and Asset Management performance given challenging market
conditions.
o Lower Other Income from higher Tax Credit Investment write-offs and no credit
card securitization income.
7
<PAGE>
Fee Revenue: Capital Markets [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Percent Change
----------------------------------------------------- -------------- --------------------------
Fourth Third Second First Fourth
(In millions) Quarter Quarter Quarter Quarter Quarter Yr/Yr 4Q00/3Q00
------------- ----------------------------------------------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Principal Investing $ (33) $ 37 $ 185 $ 203 $ 210 (116)% (189)%
Risk Management 65 61 74 63 41 59 7
Investment Banking 168 87 123 120 157 7 93
Corporate Banking 52 56 66 53 49 6 (7)
International 57 60 56 53 52 10 (5)
Fixed Income and Other 35 43 14 39 41 (15) (19)
----------- ----------- ----------- --------- ----------- ----------- ------------
Total $ 344 $ 344 $ 518 $ 531 $ 550 (37)% - %
Eliminations (128) (32) (32) (31) (72) (78) (300)
----------- ----------- ----------- --------- ----------- ----------- ------------
Net Fees $ 216 $ 312 $ 486 $ 500 $ 478 (55)% (31)%
=========== =========== =========== ========= =========== =========== ============
</TABLE>
Key Points (4Q vs 3Q)
---------------------
o Net Fee Income up 10% excluding Tax Credit Investments and Principal
Investing.
o Investment Banking exhibited strong performance in Asset Securitization, M&A
and Tax Credit Investments.
o Principal Investing as well as Loan Syndications and High Yield (in Investment
Banking) were negatively impacted by market conditions.
8
<PAGE>
Fee Revenue: Capital Management [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Percent Change
------------------------------------------------------ --------------- -------------------------
Fourth Third Second First Fourth
(In millions) Quarter Quarter Quarter Quarter Quarter Yr/Yr 4Q00/3Q00
------------- ------------------------------------------------------ --------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wealth and Trust Services $ 186 $ 181 $ 177 $ 183 $ 188 (1)% 3 %
Mutual Funds 135 137 130 130 125 8 (1)
CAP Account 43 42 41 38 34 26 2
Retail Brokerage Services 451 442 448 546 452 - 2
----------- ----------- ----------- ---------- ------------ ----------- -----------
Total $ 815 $ 802 $ 796 $ 897 $ 799 2 % 2 %
Eliminations (23) (23) (23) (25) (26) 12 -
----------- ----------- ----------- ---------- ------------ ---------- -----------
Net Fees $ 792 $ 779 $ 773 $ 872 $ 773 2 % 2 %
=========== =========== =========== ========== ============ =========== ===========
</TABLE>
Key Points (4Q vs 3Q)
---------------------
o Good performance in spite of difficult market conditions.
o Mutual Funds benefited from a diverse portfolio of funds.
o Retail Brokerage Services up on strength from annuity and insurance sales.
o Full year 2000 vs 1999 net fees up 16% (excluding EVEREN ).
9
<PAGE>
General Bank [FIRST UNION LOGO]
--------------------------------------------------------------------------------
o Strong growth in loans vs. 4Q 1999.
o Financial Centers recorded 7th consecutive quarterly increase in consumer
customer satisfaction measures.
o Customer attrition* was 3.3% for 3Q 2000 vs. 4.1% for 4Q 1999.
o Financial Center turnover** down to 37% in 4Q 2000 compared to 41% in 4Q 1999.
* Quarterly attrition rates.
** Annual turnover rates including Financial Specialist, Customer Relationship
Manager and Teller job categories.
10
<PAGE>
Noninterest Expense [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Percent Change
------------------------------------------------- ------------- ---------------------------
Fourth Third Second First Fourth
(In millions) Quarter Quarter Quarter Quarter Quarter Yr/Yr 4Q00/3Q00
------------- ------------------------------------------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Personnel Expense $ 1,243 $ 1,381 $ 1,396 $ 1,429 $ 1,310 (5)% (10)%
Occupancy and Equipment 371 370 365 371 363 2 -
Communications,
Advertising and Professional 236 218 235 226 262 (10) 8
Intangible Amortization 80 79 100 102 105 (24) 1
Sundry 202 280 270 259 314 (36) (28)
--------- --------- --------- -------- --------- --------- -----------
Total $ 2,132 $ 2,328 $ 2,366 $ 2,387 $ 2,354 (9)% (8)%
========= ========= ========= ======== ========= ========= ===========
Cash Basis* $ 2,052 $ 2,249 $ 2,266 $ 2,285 $ 2,249 (9)% (9)%
========= ========= ========= ======== ========= ========= ===========
</TABLE>
Key Points (4Q vs 3Q)
---------------------
o Noninterest expense declined 8%.
o Personnel expense declined on lower incentives and a decline in headcount.
o Sundry expense down primarily from lower hiring and relocation, lower
non-credit losses and credit card reimbursements.
* Excludes intangibles amortization.
11
<PAGE>
Credit Quality [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Percent Change
----------------------------------------------------- ------------- -----------------------
Fourth Third Second First Fourth
(Dollars in millions) Quarter Quarter Quarter Quarter Quarter Yr/Yr 4Q00/3Q00
--------------------- ----------------------------------------------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Loans (period-end) $123,760 $123,419 $128,359 $135,803 $133,177 (7)% -%
Nonperforming Assets:
Nonperforming Loans (NPLs) $ 1,176 $ 854 $ 791 $ 1,175 $ 968 21 % 38 %
Other Real Estate 103 97 93 95 98 5 % 6 %
Assets Held for Sale 334 349 331 30 14 -% (4)%
---------- ------------ ------------ ------------ ------------
Total Nonperforming Assets $ 1,613 $ 1,300 $ 1,215 $ 1,300 $ 1,080 49 % 24 %
========== ============ ============ ============ ============
Allowance $ 1,722 $ 1,720 $ 1,706 $ 1,760 $ 1,757 (2)% - %
Net Charge-offs $ 192 $ 142 $ 228 $ 189 $ 169 14 % 35 %
Ratios:
Allowance/Loans 1.39% 1.39% 1.33% 1.30% 1.32%
Allowance/NPLs 146% 202% 215% 150% 181%
NPLs/Loans 0.95% 0.69% 0.62% 0.87% 0.73%
Net Charge-offs/Average Loans 0.64% 0.46% 0.69% 0.57% 0.52%
</TABLE>
Key Points (4Q vs 3Q)
---------------------
o Excluding a previously disclosed large single credit, NPL's/Loans were .78%
and Allowance/NPL's stood at 179%. See appendix for full details.
o Delinquencies 90 days past due were $183 million vs $145 million at September
30.
12
<PAGE>
Reconciliation of Loan and
Deposit Growth [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 - As Reported Adjusted % Change
------------------------------------ ----------------
Fourth Third Impact of Fourth
(In millions) Quarter Quarter Actions* Quarter 4Q vs 3Q
------------- ------------------------------------ ----------------- ----------------- ----------------
Period-End
----------
<S> <C> <C> <C> <C> <C>
Commercial Loans $ 80,240 $ 79,361 $ (200) $ 80,440 1 %
Retail Loans 43,520 44,058 (2,029) 45,549 3
------------ ---------------- ----------------- -----------------
Total Loans $123,760 $123,419 $ (2,229) $125,989 2 %
============ ================ ================= ================= ================
Core Deposits:
Interest Bearing $ 92,068 $ 89,816 $ (1,813) $ 93,881 5 %
Non-interest Bearing 30,315 28,501 (275) 30,590 7
------------ ---------------- ----------------- -----------------
Total $122,383 $118,317 $ (2,088) $124,471 5 %
============ ================ ================= ================= ================
Average
-------
Commercial Loans $ 76,253 $ 75,380 $ (970) $ 77,223 2 %
Retail Loans 43,840 48,095 (4,791) 48,631 1
------------ ---------------- ----------------- -----------------
Total Loans $120,093 $123,475 $ (5,761) $125,854 2 %
============ ================ ================= ================= ================
Core Deposits:
Interest Bearing $ 91,069 $ 89,637 $ (458) $ 91,527 2 %
Non-interest Bearing 27,875 28,437 (69) 27,944 (2)
------------ ---------------- ----------------- -----------------
Total $118,944 $118,074 $ (527) $119,471 1 %
============ ================ ================= ================= ================
</TABLE>
* Loan sales, securitizations, divestitures, transfers and auto finance runoff;
deposit divestitures 4Q00 events impact period-end comparisons; 4Q00 and 3Q00
events impact average comparisons.
13
<PAGE>
Restructuring and Other Charges [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000
-----------------------------------------------------------------
Fourth Third Second
(In millions) Year Quarter Quarter Quarter
------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
RESTRUCTURING CHARGES (Includes Merger-Related Charges)
Employee Termination Benefits $ 172 $ 10 $ 27 $ 135
Occupancy 108 - 15 93
Goodwill and Other Intangible Impairments (noncash) 1,754 - - 1,754
Other Asset Impairments 18 (1) (16) 35
Contract Cancellations 74 (10) 5 79
Other (14) - (3) 3
----------- --------------- ------------ ---------------
Total 2,112 (1) 28 2,099
EVEREN and Other Merger-Related Charges 78 34 24 11
----------- --------------- ------------ ---------------
Total 2,190 33 52 2,110
----------- --------------- ------------ ---------------
OTHER CHARGES/GAINS
Provision for Loan Losses 325 - 60 265
Service Charges and Fees 46 - 2 44
Advisory, Underwriting and Other Capital Markets Fees 8 5 3 -
Other Income 706 (176) (423) 1,305
Other Noninterest Expense 307 212 68 27
----------- --------------- ------------ ---------------
Total Other Charges/Gains 1,392 41 (290) 1,641
----------- --------------- ------------ ---------------
Total Restructuring and Other Charges/Gains (3,582) (74) 238 (3,751)
Income Taxes (Benefits) (785) (38) 88 (838)
----------- --------------- ------------ ---------------
After-tax Restructuring and Other Charges/Gains $(2,797) $ (36) $ 150 $(2,913)
=========== =============== ============ ===============
</TABLE>
--------------------------------------------------------------------------------
Completed in Fourth Quarter:
----------------------------
o 58 branches sold ($2.1 billion in deposits, $482 million in loans).
o $3 billion in securities were sold.
o Merged our home equity servicing business into a single platform.
Remaining:
----------
o Contracts signed to sell 26 branches in 1Q 2001 ($1.2 billion in deposits).
--------------------------------------------------------------------------------
14
<PAGE>
4th Quarter Summary [FIRST UNION LOGO]
--------------------------------------------------------------------------------
o Met operating earnings guidance of 69(cent).
o NPAs up but only 8% excluding large credit.
o Charge-offs down excluding large credit.
o Strong expense control evident.
o Reduced dividend.
o Restructuring on track.
15
<PAGE>
2001 Outlook [FIRST UNION LOGO]
--------------------------------------------------------------------------------
o Positive core earnings growth but less than medium term 10-12% goal.
o Expense control will continue.
o Capital ratios continue to improve.
o NPAs increase, but at lower rate vs. 2000.
o Charge-offs still expected in range of 60-80 basis points.
o Restructuring will be complete in Q2/01.
o Share repurchases unlikely.
o Improved segment reporting, commencing Q1/01.
16
<PAGE>
Appendix
17
<PAGE>
Adjusted Credit Quality* [FIRST UNION LOGO]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Percent Change
-------------------------------------------------- ------------ -------------------------
Fourth Third Second First Fourth
(In millions) Quarter Quarter Quarter Quarter Quarter Yr/Yr 4Q00/3Q00
------------- -------------------------------------------------- ------------ --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Loans (period-end) $123,760 $123,419 $128,359 $135,803 $133,177 (7)% -%
Nonperforming Assets:
Nonperforming Loans (NPLs) $ 964 $ 854 $ 791 $ 1,175 $ 968 -% 13 %
Other Real Estate 103 97 93 95 98 5 % 6 %
Assets Held for Sale 334 349 331 30 14 -% (4)%
--------- ---------- ---------- ------------ ------------
Total Nonperforming Assets $ 1,401 $ 1,300 $ 1,215 $ 1,300 $ 1,080 30 % 8 %
========= ========== ========== ============ ============
Net Charge-offs $ 99 $ 142 $ 228 $ 189 $ 169 (41)% (30)%
Ratios:
Allowance/Loans 1.39% 1.39% 1.33% 1.30% 1.32%
Allowance/NPLs 179% 202% 215% 150% 181%
NPLs/Loans 0.78% 0.69% 0.62% 0.87% 0.73%
Net Charge-offs/Average Loans 0.33% 0.46% 0.69% 0.57% 0.52%
</TABLE>
* Adjusted to eliminate the impact of a single large credit.
18
