<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1994 Commission File Number 1-9021
WACHOVIA CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1473727
- - - ------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 North Main Street, Winston-Salem, North Carolina 27150
191 Peachtree Street, N.E., Atlanta, Georgia 30303
- - - ---------------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(910) 770-5000, (404) 332-5000
---------------------------------
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
--- ---
Indicated below is the number of shares outstanding of each of the issuer's
classes of common stock as of October 31, 1994
Common Stock, $5.00 par value, 170,828,306 shares
<PAGE> 2
QUARTERLY REPORT ON FORM 10-Q
WACHOVIA CORPORATION
September 30, 1994
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- - - -----------------------------
Wachovia Corporation ("Wachovia"), a North Carolina corporation, is a bank
holding company registered under the Bank Holding Company Act of 1956, as
amended, and a savings and loan holding company within the meaning of the Home
Owners Loan Act of 1933, as amended by the Financial Institutions Reform,
Recovery and Enforcement Act of 1989. Its member companies provide a wide
range of banking and bank-related services to customers throughout the United
States and abroad.
Wachovia's principal subsidiaries, Wachovia Bank of North Carolina, N.A.,
Wachovia Bank of Georgia, N.A., and Wachovia Bank of South Carolina, N.A.
provide personal, commerical, trust and institutional banking services
through 491 full-service banking offices located in North Carolina, South
Carolina and Georgia. In addition, The First National Bank of Atlanta, another
subsidiary of Wachovia Corporation, provides credit card services for
Wachovia's affiliated banks. National and international banking services are
provided through Wachovia's three Cayman Island branches, an Edge Act
subsidiary located in New York, and various offices located throughout the
Southeast, the nation and the world.
The following consolidated financial statements of Wachovia Corporation and
subsidiaries are included on pages 22 through 25 of the quarterly Report to
Shareholders of the Registrant (attached hereto as Exhibit 19) and are
incorporated herein by reference:
Consolidated Statement of Condition
Consolidated Statement of Income
Consolidated Statement of Shareholders' Equity
Consolidated Statement of Cash Flows
The accompanying unaudited consolidated financial statements in Exhibit 19 do
not include all information and footnotes required under generally accepted
accounting principles. However, in the opinion of management, the profit and
loss information presented in the interim financial statements reflects all
adjustments necessary to present fairly the results of operations for the
periods presented. Adjustments reflected in the third quarter 1994 figures are
of a normal, recurring nature. The results of operations shown in the interim
statements are not necessarily indicative of the results that may be expected
for the entire year.
Item 2. Management's Discussion and Analysis of Financial Condition and
- - - ------------------------------------------------------------------------
Results of Operations
---------------------
Management's discussion and analysis included on pages 4 - 21 of the quarterly
Report to Shareholders of the Registrant (attached hereto as Exhibit 19) is
incorporated herein by reference.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- - - -----------------------------------------
(a) Exhibits
11 Computation of Earnings Per Common Share
19 Wachovia Corporation Report to Shareholders for the
period ending September 30, 1994
27 Financial Data Schedule (for SEC purposes only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended September 30,
1994.
<PAGE> 3
QUARTERLY REPORT ON FORM 10-Q
WACHOVIA CORPORATION
September 30, 1994
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 thereunto duly authorized.
WACHOVIA CORPORATION
November 11, 1994 By: ROBERT S. McCOY, JR.
------------------------------
Robert S. McCoy, Jr.
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
November 11, 1994 By: JOHN C. McLEAN, JR.
------------------------------
John C. McLean, Jr.
Comptroller
(Principal Accounting Officer)
<PAGE> 1
WACHOVIA CORPORATION
Computation of Earnings Per Comon Share
<TABLE>
<CAPTION>
EXHIBIT 11
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------- ------------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PRIMARY (in thousands,
except per share amount)
Average common shares outstanding 170,874 172,632 171,204 172,511
Dilutive common stock options -
based on treasury stock method
using average market price 1,141 1,591 1,180 1,618
Dilutive common stock awards -
based on treasury stock method
using average market price 82 77 78 71
-------- -------- -------- --------
Average primary shares outstanding 172,097 174,300 172,462 174,200
======== ======== ======== ========
Net income $137,992 $124,407 $396,932 $369,098
======== ======== ======== ========
Per share amount $ .80 $ .71 $ 2.30 $ 2.12
FULLY DILUTED (in thousands,
except per share amount)
Average common shares outstanding 170,874 172,632 171,204 172,511
Dilutive common stock options -
based on treasury stock method
using higher of period-end market
price or average market price 1,141 1,859 1,180 1,891
Dilutive common stock awards -
based on treasury stock method
using higher of period-end market
price or average market price 82 85 78 85
Convertible notes assumed converted 604 838 624 1,418
-------- -------- -------- --------
Average fully diluted shares
outstanding 172,701 175,414 173,086 175,905
======== ======== ======== ========
Net income $137,992 $124,407 $396,932 $369,098
Add interest on convertible notes
after taxes 127 167 393 777
-------- -------- -------- --------
Adjusted net income $138,119 $124,574 $397,325 $369,875
======== ======== ======== ========
Per share amount $ .80 $ .71 $ 2.30 $ 2.10
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION>
<S> <C>
[3]
WACHOVIA
____________________________________________________________________________________________________________________________________
REPORT TO SHAREHOLDERS FOR THE PERIOD ENDING SEPTEMBER 30, 1994
Dear Wachovia Shareholder:
Despite a slowdown in some sectors, the economy continued its overall expansion
in the third quarter of 1994. Both productivity and consumer spending edged
higher, while concerns regarding the potential for price inflation kept
financial markets unsettled. Loan demand for banking remained strong and credit
quality further improved, but competitive pricing and higher interest rates
narrowed margins and limited overall business growth. In this environment
Wachovia performed well.
Net income per fully diluted share was $.80 for the third quarter, higher by
12.6 percent from $.71 a year earlier. Net income totaled $138 million compared
with $124.4 million and represented annualized returns of 17.7 percent on
shareholders' equity and 1.48 percent on assets.
For the first nine months of 1994, net income per fully diluted share was
$2.30, an increase of 9.2 percent from $2.10 in the same period of 1993. Net
income was $396.9 million versus $369.1 million and represented annualized
returns of 17.3 percent on equity and 1.44 percent on assets.
Average interest-earning assets rose $3.052 billion or 10.2 percent and $3.236
billion or 11.1 percent for the three- and nine-month periods, respectively.
Growth was paced by strong loan demand, with average loans up $2.897 billion or
13.4 percent for the third quarter and $2.512 billion or 11.8 percent year to
date. Compared with the second quarter, loan growth remained good with retail
and commercial loans both increasing.
Average interest-bearing liabilities were higher by $3.135 billion or 12.7
percent for the third period and $3.213 billion or 13.4 percent for the first
nine months. Both long-term debt, particularly bank notes, and short-term
borrowings increased as interest-bearing time deposits remained essentially
unchanged.
Taxable equivalent net interest income grew $10.8 million or 3.1 percent for
the third quarter and $20.7 million or 2 percent year to date. Increases were
driven primarily by interest-earning assets growth but were moderated by a
higher cost of funds, particularly in the third period as short-term interest
rates rose. The net yield on interest-earning assets decreased 29 basis points
for the quarter and 39 basis points for the first nine months but was down a
more moderate 4 basis points from the second period.
Other operating revenue was higher by $1.8 million or 1.2 percent for the three
months and $2 million or less than 1 percent year to date. Good gains
achieved in trust service fees and credit card income were offset, in part, by
lower levels of deposit service charges, mortgage fee income and trading
account profits. Growth in other service charges and fees and in other income
has helped supplement and diversify the corporation's total other operating
revenues. Noninterest expense was lower by $2.3 million or under 1 percent for
the quarter and $15.6 million or 1.9 percent for the first nine months of the
year.
Nonperforming assets at September 30, 1994 were $110 million or .44 percent of
loans and foreclosed property, down from $188 million or .85 percent a year
earlier and from $125 million or .51 percent at June 30. Net loan losses were
$18.1 million or .29 percent of average loans for the third quarter and $51
million or .29 percent for the first nine months versus $18.9 million or .35
percent and $50.1 million or .31 percent, respectively, in the same periods of
1993.
The provision for loan losses was $18.1 million for the three months and $52.2
million year to date, down $5.4 million or 22.8 percent and $22.4 million or 30
percent, respectively, from year-earlier amounts. At September 30, the
allowance for loan losses totaled $406 million, representing 1.63 percent of
loans and 455 percent coverage of nonperforming loans. Shareholders' equity to
assets was 8.43 percent, while the Tier I and total capital to risk-adjusted
assets ratios were 9.40 percent and 13.03 percent, respectively.
Through more than a century Wachovia has positioned itself to be among the
forefront of banking and business. Today, Wachovia's deep and abiding
commitment to soundness remains intact. At the same time, the organization is
shifting with the economy, the reality of the marketplace and the needs and
desires of our customers to capitalize on opportunities for enhancement of
shareholder value. Your continued confidence and support are appreciated.
Sincerely,
/s/ L. M. Baker, Jr.
L. M. Baker, Jr.
Chief Executive Officer
October 28, 1994
</TABLE>
<PAGE> 2
[ ] News Developments
<TABLE>
____________________________________________________________________________________________________________________________________
<S> <C>
- - - - The board of directors declared a fourth quarter dividend of $.33 per share,
payable December 1 to shareholders of record on November 8. The dividend is
higher by 10 percent from the $.30 per share paid both in the previous quarter
and in the year-earlier period. For the full year, dividends will total $1.23
per share, an increase of 10.8 percent from the $1.11 per share paid in 1993.
- - - - Wachovia Corporate Services, Inc., began offering a new program for companies
seeking to restructure deferred compensation to executives through
non-qualified pension plans. Under the program, known as ExecuComp, Wachovia
serves as an independent trustee, with plan assets safeguarded by Wachovia and
held apart from company assets. Customers have access to numerous
nonproprietary investment alternatives as well as to Wachovia's proprietary
Biltmore Funds. The program utilizes an IRS-approved rabbi trust as its funding
mechanism, with Wachovia providing consultation, trustee, account valuation,
tax reporting and payment services.
- - - - Wachovia is introducing over the next several months a new automated mortgage
origination processing system. The software program, known as Wachovia Mortgage
Origination System, automatically calculates mortgage-related data such as
monthly payments, mortgage insurance, escrows, closing costs and minimum
qualifying income levels based on variables entered by mortgage lenders. The
system also provides comparisons of various mortgage products, interest rates
and down payment options allowing customers to make quicker and more informed
decisions. Mortgage processing and approval time is reduced by transmitting
customer data electronically to a mortgage processing center and by
automatically generating loan application forms and all necessary loan
origination documents as customers are being served.
- - - - Wachovia Bank of South Carolina began offering in September its Crown
Account, a premium package of more than 10 banking services to individual
customers. The package is offered in conjunction with the Crown Classic account
which provides the same premium services plus others to banking customers 50
and over. Crown account is already available in Georgia and North Carolina.
</TABLE>
<TABLE>
<CAPTION>
[ ] SELECTED PERIOD-END DATA
____________________________________________________________________________________________________________________________________
September 30 September 30
1994 1993
------------ ------------
<S> <C> <C>
Banking offices:
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 223
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 129
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 157
--- ---
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 509
=== ===
Automated banking machines:
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 245
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 177
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 166
--- ---
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 588
=== ===
Employees (full-time equivalent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,614 15,731
Common stock shareholders of record . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,878 27,783
Common shares outstanding (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,760 172,012
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
[ ] FINANCIAL HIGHLIGHTS
____________________________________________________________________________________________________________________________________
Three Months Ended Nine Months Ended
September 30 Percent September 30 Percent
1994 1993 Change 1994 1993 Change
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
(thousands, except per share data)
Net income . . . . . . . . . . . . . . . . . . . . $137,992 $124,407 10.9 $396,932 $369,098 7.5
Cash dividends paid on common stock . . . . . . . . 51,241 46,702 9.7 154,083 139,918 10.1
Payout ratio (total cash dividends/
net income) . . . . . . . . . . . . . . . . . . . 37.1% 37.5% 38.8% 37.9%
Net income per common share:
Primary . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 12.3 $ 2.30 $ 2.12 8.6
Fully diluted . . . . . . . . . . . . . . . . . . $ .80 $ .71 12.6 $ 2.30 $ 2.10 9.2
Cash dividends paid per common share . . . . . . . $ .30 $ .27 11.1 $ .90 $ .81 11.1
Average primary shares outstanding . . . . . . . . 172,097 174,300 (1.3) 172,462 174,200 (1.0)
Average fully diluted shares outstanding . . . . . 172,701 175,414 (1.5) 173,086 175,905 (1.6)
Annualized return on average assets . . . . . . . . 1.47% 1.47% 1.44% 1.49%
Annualized return on average
shareholders' equity . . . . . . . . . . . . . . 17.63 17.12 17.25 17.26
Including average unrealized gains (losses) on
securities available-for-sale, net of tax:*
Annualized return on average assets . . . . . . . 1.48 -- 1.44 --
Annualized return on average
shareholders' equity . . . . . . . . . . . . . 17.73 -- 17.26 --
Balance Sheet Data at Period-End
(millions, except per share data)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,134 $ 35,320 8.0
Interest-earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,580 31,499 6.6
Loans - net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,968 22,066 13.1
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,256 22,187 .3
Interest-bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,477 26,154 8.9
Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,215** 2,975 8.1
Shareholders' equity to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.43% 8.42%
Risk-based capital ratios:
Tier I capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.40 9.94
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03 13.18
Per share:
Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18.83 $ 17.29 8.9
Common stock closing price (NYSE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.250 39.125 (17.6)
*Includes unrealized gains (losses) on securities available-for-sale of ($17)
for the third quarter and ($1) year-to-date, net of tax
**Includes unrealized gains (losses) on securities available-for-sale of ($22),
net of tax
</TABLE>
<TABLE>
<CAPTION>
[ ] COMMON STOCK DATA - PER SHARE
____________________________________________________________________________________________________________________________________
1994 1993
------------------------------------ ---------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Market value:
Period-end . . . . . . . . . . . . . . . . . . . . $ 32 1/4 $ 33 1/8 $ 31 3/4 $ 33 1/2 $ 39 1/8
High . . . . . . . . . . . . . . . . . . . . . . . 35 1/4 35 3/8 35 1/8 39 3/4 40 3/8
Low . . . . . . . . . . . . . . . . . . . . . . . . 31 3/8 30 3/4 30 1/8 31 7/8 33 3/8
Book value at period-end . . . . . . . . . . . . . . 18.83 18.40 18.05 17.61 17.29
Dividend . . . . . . . . . . . . . . . . . . . . . . .30 .30 .30 .30 .27
Price/earnings ratio* . . . . . . . . . . . . . . . 10.7x 11.3x 11.1x 11.8x 14.2x
</TABLE>
*Based on most recent twelve months net income per
primary share and period-end stock price
<PAGE> 4
<TABLE>
<CAPTION>
[ ] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
FINANCIAL SUMMARY TABLE 1
____________________________________________________________________________________________________________________________________
Twelve
Months 1994
Ended -----------------------------------
September 30 Third Second First
1994 Quarter Quarter Quarter
---------- -------- -------- --------
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income - taxable equivalent . . . . . $2,354,106 $632,359 $594,669 $558,329
Interest expense . . . . . . . . . . . . . . . 950,656 274,329 242,488 216,007
---------- -------- -------- --------
Net interest income - taxable equivalent . . . 1,403,450 358,030 352,181 342,322
Taxable equivalent adjustment . . . . . . . . . 98,999 24,909 24,882 24,476
---------- -------- -------- --------
Net interest income . . . . . . . . . . . . . . 1,304,451 333,121 327,299 317,846
Provision for loan losses . . . . . . . . . . . 70,237 18,123 16,342 17,759
---------- -------- -------- --------
Net interest income after
provision for loan losses . . . . . . . . . . 1,234,214 314,998 310,957 300,087
Other operating revenue . . . . . . . . . . . . 602,150 151,541 153,299 144,869
Gain on sale of subsidiary . . . . . . . . . . -- -- -- --
Investment securities gains . . . . . . . . . . 8,442 433 221 572
---------- -------- -------- --------
Total other income . . . . . . . . . . . . . . 610,592 151,974 153,520 145,441
Personnel expense . . . . . . . . . . . . . . . 569,650 139,695 141,232 141,014
Other expense . . . . . . . . . . . . . . . . . 545,978 131,598 133,313 129,036
---------- -------- -------- --------
Total other expense . . . . . . . . . . . . . . 1,115,628 271,293 274,545 270,050
Income before income taxes . . . . . . . . . . 729,178 195,679 189,932 175,478
Applicable income taxes* . . . . . . . . . . . 209,249 57,687 55,791 50,679
---------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . . $ 519,929 $137,992 $134,141 $124,799
========== ======== ======== ========
Net income per common share:
Primary . . . . . . . . . . . . . . . . . . . $ 3.01 $ .80 $ .78 $ .72
Fully diluted . . . . . . . . . . . . . . . . $ 3.01 $ .80 $ .78 $ .72
Cash dividends paid per common share . . . . . $ 1.20 $ .30 $ .30 $ .30
Average primary shares outstanding . . . . . . 172,642 172,097 172,558 172,739
Average fully diluted shares outstanding . . . 173,305 172,701 173,197 173,378
SELECTED AVERAGE BALANCES (millions)
Total assets . . . . . . . . . . . . . . . . . $ 36,342 $ 37,409 $ 36,753 $ 35,778
Loans - net of unearned income . . . . . . . . 23,425 24,553 23,969 23,010
Investment securities . . . . . . . . . . . . . 7,785** 7,695** 7,767** 7,690**
Other interest-earning assets . . . . . . . . . 989 809 829 1,083
Total interest-earning assets . . . . . . . . . 32,199 33,057 32,565 31,783
Interest-bearing deposits . . . . . . . . . . . 16,928 17,020 16,964 16,694
Short-term borrowed funds . . . . . . . . . . . 6,130 6,115 6,038 6,148
Long-term debt . . . . . . . . . . . . . . . . 3,840 4,637 4,281 3,670
Total interest-bearing liabilities . . . . . . 26,898 27,772 27,283 26,512
Noninterest-bearing deposits . . . . . . . . . 5,402 5,364 5,333 5,366
Total deposits . . . . . . . . . . . . . . . . 22,330 22,384 22,297 22,060
Shareholders' equity . . . . . . . . . . . . . 3,033 3,114 3,063 3,021
RATIOS (averages)
Loans to deposits . . . . . . . . . . . . . . . 104.90% 109.69% 107.49% 104.31%
Annualized net loan losses to loans . . . . . . .29 .29 .26 .30
Annualized net yield on
interest-earning assets . . . . . . . . . . . 4.36 4.30 4.34 4.37
Shareholders' equity to:
Total assets . . . . . . . . . . . . . . . . 8.34 8.32 8.33 8.44
Net loans . . . . . . . . . . . . . . . . . . 13.18 12.89 13.00 13.36
Annualized return on assets . . . . . . . . . . 1.43 1.48 1.46 1.40
Annualized return on
shareholders' equity . . . . . . . . . . . . 17.14 17.73 17.52 16.53
1993
-------------------- Nine Months Ended
Fourth Third September 30
Quarter Quarter 1994 1993
-------- -------- ---------- ----------
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income - taxable equivalent . . . . . $568,749 $558,418 $1,785,357 $1,652,989
Interest expense . . . . . . . . . . . . . . . 217,832 211,145 732,824 621,180
-------- -------- ---------- ----------
Net interest income - taxable equivalent . . . 350,917 347,273 1,052,533 1,031,809
Taxable equivalent adjustment . . . . . . . . . 24,732 26,487 74,267 74,169
-------- -------- ---------- ----------
Net interest income . . . . . . . . . . . . . . 326,185 320,786 978,266 957,640
Provision for loan losses . . . . . . . . . . . 18,013 23,483 52,224 74,639
-------- -------- ---------- ----------
Net interest income after
provision for loan losses . . . . . . . . . . 308,172 297,303 926,042 883,001
Other operating revenue . . . . . . . . . . . . 152,441 149,761 449,709 447,738
Gain on sale of subsidiary . . . . . . . . . . -- -- -- 8,030
Investment securities gains . . . . . . . . . . 7,216 702 1,226 12,178
-------- -------- ---------- ----------
Total other income . . . . . . . . . . . . . . 159,657 150,463 450,935 467,946
Personnel expense . . . . . . . . . . . . . . . 147,709 142,393 421,941 420,971
Other expense . . . . . . . . . . . . . . . . . 152,031 131,153 393,947 410,525
-------- -------- ---------- ----------
Total other expense . . . . . . . . . . . . . . 299,740 273,546 815,888 831,496
Income before income taxes . . . . . . . . . . 168,089 174,220 561,089 519,451
Applicable income taxes* . . . . . . . . . . . 45,092 49,813 164,157 150,353
-------- -------- ---------- ----------
Net income . . . . . . . . . . . . . . . . . . $ 122,997 $124,407 $ 396,932 $ 369,098
========== ======== ========== ==========
Net income per common share:
Primary . . . . . . . . . . . . . . . . . . . $ .71 $ .71 $ 2.30 $ 2.12
Fully diluted . . . . . . . . . . . . . . . . $ .71 $ .71 $ 2.30 $ 2.10
Cash dividends paid per common share . . . . . $ .30 $ .27 $ .90 $ .81
Average primary shares outstanding . . . . . . 173,175 174,300 172,462 174,200
Average fully diluted shares outstanding . . . 173,943 175,414 173,086 175,905
SELECTED AVERAGE BALANCES (millions)
Total assets . . . . . . . . . . . . . . . . . $ 35,420 $ 33,870 $ 36,653 $ 33,025
Loans - net of unearned income . . . . . . . . 22,165 21,656 23,850 21,338
Investment securities . . . . . . . . . . . . . 7,992 7,072 7,717** 6,718
Other interest-earning assets . . . . . . . . . 1,234 1,277 906 1,181
Total interest-earning assets . . . . . . . . . 31,391 30,005 32,473 29,237
Interest-bearing deposits . . . . . . . . . . . 17,030 16,835 16,894 17,015
Short-term borrowed funds . . . . . . . . . . . 6,218 5,432 6,100 5,128
Long-term debt . . . . . . . . . . . . . . . . 2,774 2,370 4,200 1,838
Total interest-bearing liabilities . . . . . . 26,022 24,637 27,194 23,981
Noninterest-bearing deposits . . . . . . . . . 5,544 5,410 5,355 5,291
Total deposits . . . . . . . . . . . . . . . . 22,574 22,245 22,249 22,306
Shareholders' equity . . . . . . . . . . . . . 2,934 2,907 3,066 2,851
RATIOS (averages)
Loans to deposits . . . . . . . . . . . . . . . 98.19% 97.35% 107.20% 95.66%
Annualized net loan losses to loans . . . . . . .31 .35 .29 .31
Annualized net yield on
interest-earning assets . . . . . . . . . . . 4.44 4.59 4.33 4.72
Shareholders' equity to:
Total assets . . . . . . . . . . . . . . . . 8.28 8.58 8.37 8.63
Net loans . . . . . . . . . . . . . . . . . . 13.48 13.68 13.08 13.62
Annualized return on assets . . . . . . . . . . 1.39 1.47 1.44 1.49
Annualized return on
shareholders' equity . . . . . . . . . . . . 16.77 17.12 17.26 17.26
* Income taxes applicable to securities transactions
were $3,334, $173, $89, $226, $2,846, $291,
$488 and $4,626, respectively
** Reported at amortized cost; excludes pretax
unrealized gains (losses) on securities available-
for-sale of ($1) for the twelve months ended
September 30, 1994, ($28) for the third quarter
of 1994, ($14) for the second quarter of 1994,
$37 for the first quarter of 1994 and ($2) for the
nine months ended September 30, 1994
____________________________________________________________________________________________________________________________________
</TABLE>
<PAGE> 5
RESULTS OF OPERATIONS
Overview
During the third quarter of 1994, business conditions generally
improved as the economy continued to expand. Job growth in Wachovia
Corporation's primary operating states remained good, with seasonally adjusted
unemployment for the quarter averaging 5.5 percent, 5 percent and 6 percent for
Georgia, North Carolina and South Carolina, respectively.
Wachovia Corporation's net income was $137.992 million or $.80 per
fully diluted share for the third quarter of 1994 and totaled $396.932 million
or $2.30 per fully diluted share for the first nine months. This compares with
$124.407 million or $.71 per share and with $369.098 million or $2.10 per
share, respectively, in the same periods of 1993. Annualized returns for the
quarter were 17.7 percent on shareholders' equity and 1.48 percent on assets.
Year to date, annualized returns were 17.3 percent on equity and 1.44 percent
on assets, with equity and assets used in computing returns including
unrealized gains or losses, net of tax, on securities available-for-sale.
Expanded operating results and the corporation's financial condition
are presented in the following narrative and tables. Interest income is stated
on a taxable equivalent basis which is adjusted for the tax-favored status of
earnings from certain loans and investments. References to changes in assets
and liabilities represent daily average levels unless otherwise noted.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
COMPONENTS OF EARNINGS PER PRIMARY SHARE TABLE 2
____________________________________________________________________________________________________________________________________
Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 Change 1994 1993 Change
----- ----- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Interest income - taxable equivalent . . . . . . . . . $3.67 $3.20 $.47 $10.35 $9.49 $.86
Interest expense . . . . . . . . . . . . . . . . . . . 1.59 1.21 .38 4.25 3.57 .68
----- ----- ---- ------ ----- ----
Net interest income - taxable equivalent . . . . . . . 2.08 1.99 .09 6.10 5.92 .18
Taxable equivalent adjustment . . . . . . . . . . . . . .14 .15 (.01) .43 .42 .01
----- ----- ---- ------ ----- ----
Net interest income . . . . . . . . . . . . . . . . . . 1.94 1.84 .10 5.67 5.50 .17
Provision for loan losses . . . . . . . . . . . . . . . .11 .13 (.02) .30 .43 (.13)
----- ----- ---- ------ ----- ----
Net interest income after provision for loan losses . . 1.83 1.71 .12 5.37 5.07 .30
Other operating revenue . . . . . . . . . . . . . . . . .88 .86 .02 2.61 2.57 .04
Gain on sale of subsidiary . . . . . . . . . . . . . . -- -- -- -- .05 (.05)
Investment securities gains . . . . . . . . . . . . . . -- -- -- -- .07 (.07)
----- ----- ---- ------ ----- ----
Total other income . . . . . . . . . . . . . . . . . . .88 .86 .02 2.61 2.69 (.08)
Personnel expense . . . . . . . . . . . . . . . . . . . .81 .82 (.01) 2.45 2.42 .03
Other expense . . . . . . . . . . . . . . . . . . . . . .76 .75 .01 2.28 2.36 (.08)
----- ----- ---- ------ ----- ----
Total other expense . . . . . . . . . . . . . . . . . . 1.57 1.57 -- 4.73 4.78 (.05)
Income before income taxes . . . . . . . . . . . . . . 1.14 1.00 .14 3.25 2.98 .27
Applicable income taxes . . . . . . . . . . . . . . . . .34 .29 .05 .95 .86 .09
----- ----- ---- ------ ----- ----
Net income . . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 $.09 $ 2.30 $2.12 $.18
===== ===== ==== ====== ===== ====
____________________________________________________________________________________________________________________________________
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
NET INTEREST INCOME AND AVERAGE BALANCES TABLE 3
____________________________________________________________________________________________________________________________________
Twelve
Months 1994
Ended ---------------------------------------
September 30 Third Second First
1994 Quarter Quarter Quarter
---------- -------- -------- --------
<S> <C> <C> <C> <C>
NET INTEREST INCOME - TAXABLE
EQUIVALENT (thousands)
Interest income:
Loans . . . . . . . . . . . . . . . . . $1,804,061 $495,361 $458,695 $422,388
Investment securities . . . . . . . . . 507,743 125,922 126,313 125,663
Interest-bearing bank balances . . . . 603 142 185 160
Federal funds sold and securities . . .
purchased under resale agreements . . 10,389 1,347 1,842 3,111
Trading account assets . . . . . . . . 31,310 9,587 7,634 7,007
---------- -------- -------- --------
Total . . . . . . . . . . . . . . . 2,354,106 632,359 594,669 558,329
Interest expense:
Interest-bearing demand . . . . . . . . 55,621 13,954 13,456 13,235
Savings and money market savings . . . 153,797 44,811 37,928 34,284
Savings certificates . . . . . . . . . 220,037 57,023 53,156 53,465
Large denomination certificates . . . . 71,355 18,453 18,507 15,057
Time deposits in foreign offices . . . 19,590 7,042 4,098 3,280
Short-term borrowed funds . . . . . . . 234,334 71,495 61,337 51,625
Long-term debt . . . . . . . . . . . . 195,922 61,551 54,006 45,061
---------- -------- -------- --------
Total . . . . . . . . . . . . . . . 950,656 274,329 242,488 216,007
---------- -------- -------- --------
Net interest income . . . . . . . . . . . $1,403,450 $358,030 $352,181 $342,322
========== ======== ======== ========
Annualized net yield on
interest-earning assets . . . . . . . 4.36% 4.30% 4.34% 4.37%
AVERAGE BALANCES (millions)
Assets:
Loans - net of unearned income . . . . $ 23,425 $ 24,553 $ 23,969 $ 23,010
Investment securities . . . . . . . . . 7,785 7,695 7,767 7,690
Interest-bearing bank balances . . . . 14 11 18 17
Federal funds sold and securities
purchased under resale agreements . . 301 115 182 394
Trading account assets . . . . . . . . 674 683 629 672
---------- -------- -------- --------
Total interest-earning assets . . . . 32,199 33,057 32,565 31,783
Cash and due from banks . . . . . . . . 2,376 2,350 2,346 2,387
Premises and equipment . . . . . . . . 508 523 510 502
Other assets . . . . . . . . . . . . . 1,667 1,912 1,754 1,476
Unrealized gains (losses) on securities
available-for-sale . . . . . . . . . (1) (28) (14) 37
Allowance for loan losses . . . . . . . (407) (405) (408) (407)
---------- -------- -------- --------
Total assets . . . . . . . . . . . . $ 36,342 $ 37,409 $ 36,753 $ 35,778
========== ======== ======== ========
Liabilities and shareholders' equity:
Interest-bearing demand . . . . . . . . $ 3,373 $ 3,367 $ 3,420 $ 3,385
Savings and money market savings . . . 6,114 6,197 6,103 6,074
Savings certificates . . . . . . . . . 5,327 5,247 5,283 5,355
Large denomination certificates . . . . 1,587 1,599 1,736 1,463
Time deposits in foreign offices . . . 527 610 422 417
Short-term borrowed funds . . . . . . . 6,130 6,115 6,038 6,148
Long-term debt . . . . . . . . . . . . 3,840 4,637 4,281 3,670
---------- -------- -------- --------
Total interest-bearing liabilities . 26,898 27,772 27,283 26,512
Demand deposits in domestic offices . . 5,326 5,277 5,245 5,302
Demand deposits in foreign offices . . 5 5 5 5
Noninterest-bearing time deposits
in domestic offices . . . . . . . . . 71 82 83 59
Other liabilities . . . . . . . . . . . 1,009 1,159 1,074 879
Shareholders' equity . . . . . . . . . 3,033 3,114 3,063 3,021
---------- -------- -------- --------
Total liabilities and
shareholders' equity . . . . . . . $ 36,342 $ 37,409 $ 36,753 $ 35,778
========== ======== ======== ========
Total deposits . . . . . . . . . . . . . $ 22,330 $ 22,384 $ 22,297 $ 22,060
1993
-------------------- Nine Months Ended
Fourth Third September 30
Quarter Quarter 1994 1993
-------- -------- ---------- ----------
NET INTEREST INCOME - TAXABLE
EQUIVALENT (thousands)
Interest income:
Loans . . . . . . . . . . . . . . . . . $427,617 $422,248 $1,376,444 $1,250,011
Investment securities . . . . . . . . . 129,845 124,627 377,898 370,494
Interest-bearing bank balances . . . . 116 485 487 2,789
Federal funds sold and securities
purchased under resale agreements . . . 4,089 3,612 6,300 8,344
Trading account assets . . . . . . . . 7,082 7,446 24,228 21,351
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . 568,749 558,418 1,785,357 1,652,989
Interest expense:
Interest-bearing demand . . . . . . . . 14,976 15,478 40,645 45,457
Savings and money market savings . . . . 36,774 37,844 117,023 114,974
Savings certificates . . . . . . . . . 56,393 59,063 163,644 184,402
Large denomination certificates . . . . 19,338 21,177 52,017 70,763
Time deposits in foreign offices . . . . 5,170 3,076 14,420 9,333
Short-term borrowed funds . . . . . . . 49,877 43,910 184,457 123,970
Long-term debt . . . . . . . . . . . . 35,304 30,597 160,618 72,281
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . 217,832 211,145 732,824 621,180
-------- -------- -------- --------
Net interest income . . . . . . . . . . . $350,917 $347,273 $1,052,533 $1,031,809
======== ======== ========== ==========
Annualized net yield on
interest-earning assets . . . . . . . 4.44% 4.59% 4.33% 4.72%
AVERAGE BALANCES (millions)
Assets:
Loans - net of unearned income . . . . $ 22,165 $ 21,656 $ 23,850 $ 21,338
Investment securities . . . . . . . . . 7,992 7,072 7,717 6,718
Interest-bearing bank balances . . . . 11 59 15 101
Federal funds sold and securities
purchased under resale agreements . . 513 454 229 355
Trading account assets . . . . . . . . 710 764 662 725
-------- -------- -------- --------
Total interest-earning assets . . . . 31,391 30,005 32,473 29,237
Cash and due from banks . . . . . . . . 2,421 2,349 2,361 2,351
Premises and equipment . . . . . . . . 497 493 512 458
Other assets . . . . . . . . . . . . . 1,520 1,427 1,716 1,374
Unrealized gains (losses) on securities
available-for-sale . . . . . . . . . -- -- (2) --
Allowance for loan losses . . . . . . . (409) (404) (407) (395)
-------- -------- --------- --------
Total assets . . . . . . . . . . . . $ 35,420 $ 33,870 $ 36,653 $ 33,025
======== ======== ========= ========
Liabilities and shareholders' equity:
Interest-bearing demand . . . . . . . . $ 3,319 $ 3,233 $ 3,391 $ 3,186
Savings and money market savings 6,080 6,013 6,125 5,970
Savings certificates . . . . . . . . . 5,426 5,551 5,294 5,652
Large denomination certificates . . . . 1,550 1,637 1,600 1,804
Time deposits in foreign offices 655 401 484 403
Short-term borrowed funds . . . . . . . 6,218 5,432 6,100 5,128
Long-term debt . . . . . . . . . . . . 2,774 2,370 4,200 1,838
-------- -------- --------- --------
Total interest-bearing liabilities 26,022 24,637 27,194 23,981
Demand deposits in domestic offices 5,480 5,314 5,275 5,209
Demand deposits in foreign offices 6 5 5 6
Noninterest-bearing time deposits
in domestic offices . . . . . . . . . 58 91 75 76
Other liabilities . . . . . . . . . . . 920 916 1,038 902
Shareholders' equity . . . . . . . . . 2,934 2,907 3,066 2,851
-------- -------- --------- --------
Total liabilities and
shareholders' equity . . . . . . . $ 35,420 $ 33,870 $ 36,653 $ 33,025
======== ======== ========= ========
Total deposits . . . . . . . . . . . . . $ 22,574 $ 22,245 $ 22,249 $ 22,306
____________________________________________________________________________________________________________________________________
</TABLE>
6
<PAGE> 7
Net Interest Income
Net interest income on a taxable equivalent basis rose $10.757 million or
3.1 percent for the third quarter and $20.724 million or 2 percent for the
first nine months of 1994. Increases reflected good growth in both periods of
interest-earning assets, particularly loans, and higher asset yields in the
third quarter. Moderating the gains were increased levels of interest-bearing
liabilities and a higher cost of funds, particularly for the three months
ended September 30. Compared with the second quarter of 1994, taxable
equivalent net interest income increased $5.849 million or 1.7 percent, the
result of continued loan growth and expanded asset yields.
The net yield on interest-earning assets (net interest income as a
percentage of average interest-earning assets) was lower by 29 basis points for
the quarter and 39 basis points year to date. Although the average rate earned
in the third period increased 21 basis points, the average rate paid expanded
52 basis points, primarily reflecting the immediate impact of Federal Reserve
actions in August to raise short-term interest rates. For the first nine months
of 1994, average asset yields declined 21 basis points as rates earned on newly
acquired assets remained lower than those on replaced assets. Average rates
paid increased 14 basis points for the period due to higher short-term
borrowing costs. The net yield on interest-earning assets was down 4 basis
points from the second quarter of 1994.
Taxable equivalent interest income increased $73.941 million or 13.2
percent for the quarter and $132.368 million or 8 percent year to date,
primarily reflecting higher volumes of interest-earning assets. A 21 basis
point rise in the average rate earned on interest-earning assets in the third
quarter of 1994 versus a year earlier also contributed to the increase.
Average interest-earning assets for the three- and nine-month periods were
up $3.052 billion or 10.2 percent and $3.236 billion or 11.1 percent,
respectively, led by strong loan growth. Average loans increased $2.897 billion
or 13.4 percent for the quarter, with gains occurring primarily in the
commercial portfolio, and rose $2.512 billion or 11.8 percent year to date,
with growth balanced largely between commercial and retail. Loan growth
moderated somewhat from the second quarter of 1994 but exceeded total
interest-earning assets growth. Average loans were up $584 million or 2.4
percent in comparison with the second quarter versus gains of $492 million or
1.5 percent for average interest-earning assets.
Commercial loans, including related real estate categories, rose $1.846
billion or 15.7 percent for the three months, $1.343 billion or 11.3 percent
year to date and $258 million or 1.9 percent from the second quarter of 1994.
Gains were concentrated in regular commercial loans which were higher by $1.442
billion or 23.6 percent, $1.016 billion or 16.5 percent and $227 million or 3.1
percent, respectively. Other categories of growth included commercial mortgages
and construction loans as well as tax-exempt loans on a year-over-year basis
only. Based on regulatory definitions, commercial mortgages totaled $3.421
billion at September 30, 1994 and construction loans were $500 million. This
compared with $3.115 billion and $458 million, respectively, a year earlier and
with $3.357 billion in commercial mortgages and $477 million in construction
loans at June 30, 1994.
Retail loans, including residential mortgages, increased $1.051 billion or
10.7 percent and $1.169 billion or 12.4 percent for the three- and nine-month
periods, respectively, and were up $326 million or 3.1 percent from the second
quarter. Volume gains were driven primarily by credit cards and indirect loans
which principally consists of automobile sales financing in Georgia, North
Carolina and South Carolina. Average credit card loans grew $995 million or
36.9 percent for the third quarter, $955 million or 38.5 percent year to date
and $258 million or 7.5 percent from the second period. At September 30, 1994,
credit card outstandings totaled $3.816 billion versus $2.825 billion a year
earlier and $3.591 billion at June 30, 1994.
7
<PAGE> 8
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS - THIRD QUARTER* TABLE 4
___________________________________________________________________________________________________________________________________
Variance
Average Volume Average Rate Interest Attributable to
--------------- ------------ ------------------- ------------------
1994 1993 1994 1993 1994 1993 Variance Rate Volume
------ ------ ----- ----- -------- -------- -------- ------- -------
(Millions) INTEREST INCOME (Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans:
$ 7,557 $ 6,115 6.32 5.33 Commercial . . . . . . . . . . $120,422 $ 82,115 $38,307 $16,934 $21,373
1,951 1,853 8.88 9.34 Tax-exempt . . . . . . . . . . 43,703 43,617 86 (2,183) 2,269
------- ------- -------- -------- -------
9,508 7,968 6.85 6.26 Total commercial . . . . . . 164,125 125,732 38,393 12,550 25,843
740 691 8.35 8.52 Direct retail . . . . . . . . . 15,579 14,838 741 (308) 1,049
2,490 2,271 7.68 8.34 Indirect retail . . . . . . . . 48,179 47,723 456 (3,937) 4,393
3,695 2,700 11.00 11.37 Credit card . . . . . . . . . 102,450 77,378 25,072 (2,591) 27,663
335 330 11.67 11.16 Other revolving credit . . . . 9,840 9,274 566 430 136
------- ------- -------- -------- -------
7,260 5,992 9.62 9.88 Total retail . . . . . . . . 176,048 149,213 26,835 (4,005) 30,840
481 454 9.41 7.54 Construction . . . . . . . . . 11,400 8,633 2,767 2,243 524
3,389 3,160 7.83 7.30 Commercial mortgages . . . . . 66,917 58,120 8,797 4,432 4,365
3,654 3,871 7.82 7.86 Residential mortgages . . . . . 72,026 76,691 (4,665) (376) (4,289)
------- ------- -------- -------- -------
7,524 7,485 7.93 7.60 Total real estate . . . . . 150,343 143,444 6,899 6,170 729
176 137 7.68 8.78 Lease financing . . . . . . . . 3,415 3,039 376 (413) 789
85 74 6.66 4.41 Foreign . . . . . . . . . . . . 1,430 820 610 469 141
------- ------- -------- -------- -------
24,553 21,656 8.00 7.74 Total loans . . . . . . . . 495,361 422,248 73,113 15,077 58,036
Investment securities:
Held-to-maturity:
2,286 3,946 6.52 6.08 U.S. Government and agency . . 37,574 60,505 (22,931) 4,073 (27,004)
1,017 2,132 7.83 7.27 Mortgage backed securities . . 20,067 39,046 (18,979) 2,801 (21,780)
587 666 12.35 12.64 State and municipal . . . . . 18,262 21,216 (2,954) (471) (2,483)
15 328 3.98 4.66 Other . . . . . . . . . . . . 146 3,860 (3,714) (492) (3,222)
------- ------- -------- -------- -------
Total securities held-to-
3,905 7,072 7.73 6.99 maturity . . . . . . . . . 76,049 124,627 (48,578) 11,985 (60,563)
Available-for-sale:**
2,622 -- 5.41 -- U.S. Government and agency . . 35,776 -- 35,776 -- 35,776
924 -- 4.64 -- Mortgage backed securities . . 10,813 -- 10,813 -- 10,813
244 -- 5.33 -- Other . . . . . . . . . . . . 3,284 -- 3,284 -- 3,284
------- ------- -------- -------- -------
Total securities available
3,790 -- 5.22 -- -for-sale . . . . . . . . 49,873 -- 49,873 -- 49,873
------- ------- -------- -------- -------
7,695 7,072 6.49 6.99 Total investment securities. 125,922 124,627 1,295 (9,257) 10,552
11 59 5.20 3.29 Interest-bearing bank balances. . 142 485 (343) 186 (529)
Federal funds sold and
securities purchased under
115 454 4.66 3.15 resale agreements . . . . . . . 1,347 3,612 (2,265) 1,221 (3,486)
683 764 5.57 3.87 Trading account assets . . . . . 9,587 7,446 2,141 2,996 (855)
------- ------- -------- -------- -------
Total interest-earning
$33,057 $30,005 7.59 7.38 assets . . . . . . . . . . 632,359 558,418 73,941 15,904 58,037
======= =======
INTEREST EXPENSE
$ 3,367 $ 3,233 1.64 1.90 Interest-bearing demand . . . . . 13,954 15,478 (1,524) (2,141) 617
6,197 6,013 2.87 2.50 Savings and money market savings. 44,811 37,844 6,967 5,780 1,187
5,247 5,551 4.31 4.22 Savings certificates . . . . . . 57,023 59,063 (2,040) 1,246 (3,286)
1,599 1,637 4.58 5.13 Large denomination certificates . 18,453 21,177 (2,724) (2,253) (471)
------- ------- -------- -------- -------
Total time deposits in
16,410 16,434 3.25 3.22 domestic offices . . . . . 134,241 133,562 679 877 (198)
610 401 4.58 3.04 Time deposits in foreign offices. 7,042 3,076 3,966 1,953 2,013
------- ------- -------- -------- -------
17,020 16,835 3.29 3.22 Total time deposits. . . . . 141,283 136,638 4,645 3,138 1,507
Federal funds purchased and
securities sold under
4,909 3,934 4.66 3.24 repurchase agreements . . . . . 57,688 32,140 25,548 16,316 9,232
437 538 4.44 3.05 Commercial paper . . . . . . . . 4,882 4,136 746 1,630 (884)
769 960 4.60 3.15 Other short-term borrowed funds . 8,925 7,634 1,291 3,021 (1,730)
------- ------- -------- -------- -------
Total short-term
6,115 5,432 4.64 3.21 borrowed funds . . . . . . 71,495 43,910 27,585 21,523 6,062
3,798 1,776 4.97 4.51 Bank notes . . . . . . . . . . . 47,538 20,180 27,358 2,238 25,120
839 594 6.62 6.95 Other long-term debt . . . . . . 14,013 10,417 3,596 (513) 4,109
------- ------- -------- -------- -------
4,637 2,370 5.27 5.12 Total long-term debt . . . . 61,551 30,597 30,954 887 30,067
------- ------- -------- -------- -------
Total interest-bearing
$27,772 $24,637 3.92 3.40 liabilities . . . . . . . 274,329 211,145 63,184 34,460 28,724
======= ======= ----- ----- -------- -------- -------
3.67 3.98 Interest rate spread
===== =====
Net yield on interest-earning assets
4.30 4.59 and net interest income . $358,030 $347,273 $10,757 (23,176) 33,933
===== ===== ======== ======== =======
____________________________________________________________________________________________________________________________________
* Interest income and yields are presented on a fully taxable equivalent basis using the federal income tax rate and state tax
rates, as applicable, reduced by the nondeductible portion of interest expense
** Volume amounts are reported at amortized cost; excludes pretax unrealized losses of $28 million
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS - NINE MONTHS* TABLE 5
___________________________________________________________________________________________________________________________________
Variance
Average Volume Average Rate Interest Attributable to
---------------- ------------ ---------------------- ------------------
1994 1993 1994 1993 1994 1993 Variance Rate Volume
------- ------- ----- ----- ---------- ---------- --------- ------- -------
(Millions) INTEREST INCOME (Thousands)
<S> <C> <C> <C> <C> <S> <C> <C> <C> <C>
Loans:
$ 7,189 $ 6,173 5.72 5.31 Commercial . . . . . . . . . $ 307,795 $ 245,188 $ 62,607 $20,117 $42,490
1,973 1,884 8.68 9.13 Tax-exempt . . . . . . . . . 128,119 128,749 (630) (6,501) 5,871
------- ------- ---------- ---------- ---------
9,162 8,057 6.36 6.20 Total commercial . . . . . 435,914 373,937 61,977 9,647 52,330
730 677 8.21 8.81 Direct retail . . . . . . . . 44,825 44,635 190 (3,133) 3,323
2,453 2,197 7.75 8.57 Indirect retail . . . . . . . 142,134 140,860 1,274 (14,279) 15,553
3,433 2,478 10.90 11.98 Credit card . . . . . . . . . 279,837 222,063 57,774 (21,542) 79,316
332 328 11.38 11.15 Other revolving credit. . . . 28,259 27,314 945 561 384
------- ------- ---------- ---------- ---------
6,948 5,680 9.53 10.24 Total retail . . . . . . . 495,055 434,872 60,183 (31,762) 91,945
487 470 8.68 7.37 Construction. . . . . . . . . 31,630 25,918 5,712 4,769 943
3,325 3,144 7.54 7.34 Commercial mortgages. . . . . 187,570 172,585 14,985 4,853 10,132
3,678 3,777 7.75 8.18 Residential mortgages . . . . 213,152 231,178 (18,026) (12,080) (5,946)
------- ------- ---------- ---------- ---------
7,490 7,391 7.72 7.77 Total real estate. . . . . 432,352 429,681 2,671 (3,054) 5,725
169 132 7.86 9.09 Lease financing . . . . . . . 9,948 8,938 1,010 (1,321) 2,331
81 78 5.23 4.44 Foreign . . . . . . . . . . . 3,175 2,583 592 475 117
------- ------- ---------- ---------- ---------
23,850 21,338 7.72 7.83 Total loans . . . . . . . 1,376,444 1,250,011 126,433 (18,794) 145,227
Investment securities:
Held-to-maturity:
2,248 3,352 6.60 6.40 U.S. Government and agency . 110,868 160,408 (49,540) 4,814 (54,354)
1,058 2,312 7.70 7.66 Mortgage backed securities . 60,944 132,369 (71,425) 761 (72,186)
610 698 12.59 12.57 State and municipal . . . . 57,490 65,664 (8,174) 128 (8,302)
12 356 4.75 4.53 Other . . . . . . . . . . . 409 12,053 (11,644) 576 (12,220)
------- ------- ---------- ---------- ---------
Total securities held-
3,928 6,718 7.82 7.37 to-maturity . . . . . . 229,711 370,494 (140,783) 21,259 (162,042)
Available-for-sale:**
2,542 -- 5.53 -- U.S. Government and agency . 105,062 -- 105,062 -- 105,062
971 -- 4.61 -- Mortgage backed securities . 33,499 -- 33,499 -- 33,499
276 -- 4.66 -- Other . . . . . . . . . . . 9,626 -- 9,626 -- 9,626
------- ------- ---------- ---------- ---------
Total securities available-
3,789 -- 5.23 -- -for-sale . . . . . . . 148,187 -- 148,187 -- 148,187
------- ------- ---------- ---------- ---------
7,717 6,718 6.55 7.37 Total investment securities 377,898 370,494 7,404 (44,160) 51,564
15 101 4.28 3.70 Interest-bearing bank balances. 487 2,789 (2,302) 381 (2,683)
Federal funds sold and
securities purchased under
229 355 3.68 3.14 resale agreements . . . . . . 6,300 8,344 (2,044) 1,258 (3,302)
662 725 4.90 3.94 Trading account assets . . . . 24,228 21,351 2,877 4,873 (1,996)
------- ------- ---------- ---------- ---------
Total interest-earning
$32,473 $29,237 7.35 7.56 assets . . . . . . . . 1,785,357 1,652,989 132,368 (46,531) 178,899
======= =======
INTEREST EXPENSE
$ 3,391 $ 3,186 1.60 1.91 Interest-bearing demand . . . . 40,645 45,457 (4,812) (7,599) 2,787
6,125 5,970 2.55 2.57 Savings and money market savings. 117,023 114,974 2,049 (925) 2,974
5,294 5,652 4.13 4.36 Savings certificates. . . . . . 163,644 184,402 (20,758) (9,419) (11,339)
1,600 1,804 4.35 5.24 Large denomination certificates. 52,017 70,763 (18,746) (11,290) (7,456)
------- ------- ---------- ---------- ---------
Total time deposits in
16,410 16,612 3.04 3.34 domestic offices . . . . 373,329 415,596 (42,267) (37,275) (4,992)
484 403 3.99 3.10 Time deposits in foreign offices. 14,420 9,333 5,087 2,993 2,094
------- ------- ---------- ---------- ---------
16,894 17,015 3.07 3.34 Total time deposits . . . 387,749 424,929 (37,180) (34,181) (2,999)
Federal funds purchased and
securities sold under
4,907 3,723 4.10 3.25 repurchase agreements . . . . 150,366 90,563 59,803 26,867 32,936
518 449 3.65 3.01 Commercial paper . . . . . . . 14,155 10,109 4,046 2,347 1,699
675 956 3.95 3.26 Other short-term borrowed funds. 19,936 23,298 (3,362) 4,357 (7,719)
------- ------- ---------- ---------- ---------
Total short-term
6,100 5,128 4.04 3.23 borrowed funds . . . . . 184,457 123,970 60,487 34,457 26,030
3,377 1,319 4.76 4.55 Bank notes . . . . . . . . . . 120,100 44,872 75,228 2,111 73,117
823 519 6.58 7.06 Other long-term debt . . . . . 40,518 27,409 13,109 (1,954) 15,063
------- ------- ---------- ---------- ---------
4,200 1,838 5.11 5.26 Total long-term debt . . . 160,618 72,281 88,337 (2,048) 90,385
------- ------- ---------- ---------- ---------
Total interest-bearing
$27,194 $23,981 3.60 3.46 liabilities . . . . . . 732,824 621,180 $111,644 25,842 85,802
======= ======= ----- ----- ---------- ---------- --------
3.75 4.10 Interest rate spread
===== =====
Net yield on interest-earning
4.33 4.72 assets and interest income. . $1,052,533 $1,031,809 $ 20,724 (88,104) 108,828
===== ===== ========== ========== ========
__________________________________________________________________________________________________________________________________
* Interest income and yields are presented on a fully taxable equivalent basis using the federal income tax rate and state tax
rates, as applicable, reduced by the nondeductible portion of interest expense
** Volume amounts are reported at amortized cost; excludes pretax unrealized losses of $2 million
</TABLE>
9
<PAGE> 10
Investment securities were higher by $623 million or 8.8
percent for the third quarter and $999 million or 14.9 percent year to
date but decreased $72 million or under 1 percent from the second
quarter as good loan growth continued. At September 30, 1994,
securities available-for-sale totaled $3.689 billion and securities
held-to-maturity were $3.973 billion as detailed in the following.
<TABLE>
<S> <C>
$ in thousands
Securities available-for-sale at market value:
U.S. Government and agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,557,183
Mortgage backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891,105
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,696
----------
Total securities available-for-sale. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,688,984
Securities held-to-maturity:
U.S. Government and agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,303,835
Mortgage backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,074,633
State and municipal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579,527
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,872
----------
Total securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,972,867
----------
Total investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,661,851
==========
</TABLE>
The corporation prospectively adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (FASB 115), effective January 1, 1994.
FASB 115 classifies debt securities which management can demonstrate
positive intent and ability to hold to maturity as securities
held-to-maturity and reported at amortized cost. Debt and equity
securities acquired principally to sell in the near term continue to
be classified as trading securities and reported at fair market value
under FASB 115. Unrealized gains and losses resulting from adjustments
to market value are included in earnings under trading account
profits. Debt and equity securities not classified as either
held-to-maturity or trading are classified as available-for-sale and
reported at fair market value with unrealized gains and losses
included, net of tax, in shareholders' equity.
At September 30, 1994, the market value of securities
held-to-maturity was $3.981 billion, representing an $8 million
appreciation over book value. Unrealized losses on securities
available-for-sale were $35.225 million, pretax, and $21.510 million,
net of tax. For the third quarter, unrealized losses on average
securities available-for-sale were $27.589 million, pretax, and
$16.885 million, net of tax. For the first nine months of 1994, there
was an unrealized loss of $1.897 million on a pretax basis and $1.151
million, net of tax, on average securities available-for-sale.
Interest expense rose $63.184 million or 29.9 percent for the
three months and $111.644 million or 18 percent for the first nine
months of 1994, reflecting both higher levels of interest-bearing
liabilities and an increased cost of funds, particularly in the third
quarter. The average rate paid on interest-bearing liabilities was up
52 basis points for the third period and 14 basis points for the first
nine months.
Average interest-bearing liabilities were higher by $3.135
billion or 12.7 percent for the third quarter, $3.213 billion or 13.4
percent year to date and $489 million or 1.8 percent from the second
period. Increases reflected expanded funding for interest-earning
assets growth, particularly loans. Incremental funding has come
primarily from long-term debt as well as short-term borrowings due to
modest and uneven growth in interest-bearing time deposits.
Average interest-bearing time deposits were modestly higher by
$185 million or 1.1 percent for the third period and $56 million or
less than 1 percent from the second quarter but were lower by $121
million or under 1 percent year to date. Interest-bearing demand,
savings and money market savings, and foreign time deposits were up
for the quarter and year-to-date periods, while savings certificates
and large denomination certificates declined in both periods.
10
<PAGE> 11
Short-term borrowings expanded $683 million or 12.6 percent and
$972 million or 19 percent for the three and nine months,
respectively, and were up $77 million or 1.3 percent from the second
quarter. Higher levels of federal funds purchased and repurchase
agreements accounted for all the increase in the third period versus a
year earlier and for the majority of the growth year to date.
Commercial paper borrowings also were up for the first nine months but
decreased for the third quarter. Other short-term borrowings, largely
consisting of term federal funds, declined in both periods.
Long-term debt increased $2.267 billion or 95.6 percent from
the third quarter, $2.362 billion or 128.5 percent year to date but
rose a more moderate $356 million or 8.3 percent from the second
quarter. Growth remained driven primarily by the bank note program
begun in the second quarter of 1992. At September 30, 1994, bank notes
outstanding totaled $3.890 billion with an average cost of 5.04
percent and an average maturity of 1.9 years. Comparable amounts a
year earlier were $2.063 billion, 4.48 percent and 1.8 years,
respectively. At June 30, 1994, bank notes outstanding were $3.661
billion.
For the third quarter, gross deposits averaged $22.384 billion,
an increase of $139 million or less than 1 percent from the same
period a year earlier, and collected deposits, net of float, averaged
$20.797 billion, up $110 million or under 1 percent. For the first
nine months, gross deposits averaged $22.249 billion, lower by $57
million or less than 1 percent, while collected deposits averaged
$20.674 billion, lower by $27 million or less than 1 percent.
ASSET AND LIABILITY MANAGEMENT, INTEREST RATE SENSITIVITY AND LIQUIDITY
MANAGEMENT
Maintaining high quality and consistent growth of
net interest income with acceptable levels of risk to changes in
interest rates is the goal of asset and liability management. The
corporation seeks to meet this goal by influencing the maturity and
repricing characteristics of the various lending and deposit taking
lines of business, by managing discretionary balance sheet asset and
liability portfolios and by utilizing off-balance sheet financial
instruments.
Interest rate risk management is carried out by Funds
Management which operates under policies established by the Finance
Committee of the corporation's board of directors and the guidance of
the Management Finance Committee.
The corporation uses a number of tools to measure interest rate
risk, including monitoring the difference or gap between rate
sensitive assets and liabilities over various time periods, monitoring
the change in present value of the asset and liability portfolios
under various rate scenarios and income simulation modeling.
Management believes that rate risk is best measured by simulation
modeling which can incorporate changes in asset and liability
volumes, changes in interest rates as well as the associated timing of
the rate of change in interest rates of various categories of assets
and liabilities.
The model captures interest-earning assets, interest-bearing
liabilities and off-balance sheet financial instruments and projects
net interest income on a continuous rolling 12-month basis. The
corporation monitors exposure to a gradual change in rates of 200
basis points up or down over the rolling 12-month period and an
interest rate shock of an instantaneous change in rates of 200 basis
points up or down over the same period. From time to time, the model
horizon is expanded to a 24-month period. The results of these
simulations are monitored for compliance with policy and analyzed
with the objective of identifying potential adverse performance
situations. If conditions indicate an adverse situation is likely,
management's immediate goal is to construct a strategy to alter the
balance sheet or enter into off-balance sheet financial instruments to
neutralize, as much as possible, the adverse impact.
The corporation uses both on-balance sheet instruments such as
investment securities and purchased funds and off-balance sheet
derivative instruments to manage interest rate risk and net interest
income. Off-balance sheet instruments used for asset and liability
management purposes include interest rate swaps, futures and options
with indices that directly correlate to on-balance sheet instruments.
These financial instruments, principally interest rate swaps, have
been used by the corporation over a number of years and management
believes the use of such instruments enhances the effectiveness of
asset and liability management on a sound basis.
11
<PAGE> 12
Off-balance sheet asset and liability derivative transactions,
on a stand-alone basis, resulted in additional interest expense of
$1.981 million for the third quarter of 1994 and $7.289 million year to
date. However, this effect was more than offset by net interest income
from related on-balance sheet instruments. The combination of
on-balance sheet instruments and off-balance sheet contracts is
intended to provide growth of net interest income, stability to the
corporation's interest rate sensitivity and enhanced liquidity.
At September 30, 1994, the corporation had $1.375 billion
notional amount of derivatives outstanding for asset and liability
management purposes. Interest rate swaps were $960 million or 70
percent of the total notional amount. Off-balance sheet derivative
financial instruments do not expose the corporation to credit risk
equal to the notional amount, but instead credit risk is equal to the
fair value gain of the instrument if a counterparty fails to perform.
The credit risk is normally a small percentage of the notional amount
and fluctuates as interest rates move up and down. The corporation
mitigates this risk by subjecting the transactions to the same rigorous
approval and monitoring process as is used for on-balance sheet credit
transactions, by dealing in the national market with highly rated
counterparties, by executing all transactions under International Swaps
and Derivatives Association Master Agreements and by using collateral
instruments to reduce exposure. Collateral is delivered by either party
when the fair value of a particular transaction or group of
transactions with the same counterparty on a net basis exceeds an
acceptable threshold of exposure. The threshold level is determined
based on the strength of the individual counterparty.
The fair value of all asset and liability derivative positions
for which the corporation was exposed to counterparties totaled $13.199
million as of September 30, 1994. The fair value of all asset and
liability derivative positions for which counterparties were exposed to
the corporation amounted to $48.377 million on the same date. Details
of the net fair value loss of $35.178 million and additional asset and
liability derivative information are included in the accompanying
tables.
<TABLE>
<CAPTION>
Estimated Fair Value of Asset and Liability Management Derivatives by Purpose
-----------------------------------------------------------------------------
September 30, 1994 June 30, 1994 September 30, 1993
------------------- ---------------- ------------------
Notional Fair Notional Fair Notional Fair
$ in millions Amount Value* Amount Value* Amount Value*
-------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Convert floating rate liabilities to fixed:
Swaps-pay fixed/receive floating . . . . . . . . . $237 $(2) $279 $(3) $ 530 ($29)
Forward starting swaps-pay fixed/receive floating 75 1
Caps purchased-pay fixed/receive floating . . . . 15 - 15 - 15 -
Convert fixed rate liabilities to floating:
Swaps-receive fixed/pay floating . . . . . . . . . 100 (16) 100 (13) - -
Convert floating rate assets to fixed:
Swaps-receive fixed/pay floating . . . . . . . . . 373 (15) 385 (15) 298 1
Index amortizing swaps-receive fixed/pay floating 175 (3) 150 (1)
Hedge spread between prime and fed funds:
Interest rate caps . . . . . . . . . . . . . . . . 400 - 400 - 200 1
------ ---- ------ ----- ------ -----
Total derivatives . . . . . . . . . . . . . . . $1,375 ($35) $1,329 ($32) $1,043 ($27)
====== ==== ====== ===== ====== =====
</TABLE>
* Fair value consists of unrealized gains and losses, accrued
interest receivable or payable, and unamortized premiums paid or
received.
12
<PAGE> 13
Maturity Schedule of Asset and Liability Management Derivatives
---------------------------------------------------------------
September 30, 1994
<TABLE>
<CAPTION>
Within Over Average
One Two Three Four Five Five Life
Year Years Years Years Years Years Total (Years)
------ ----- ----- ----- ----- ----- ----- -------
$ in millions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest rate swaps:
Pay fixed/receive floating:
Notional amount . . . . . . . . . . $123 $ 43 $ 24 $13 $14 $ 20 $237 1.78
Weighted average rates received . . 5.06% 5.34% 4.95% 5.36% 5.33% 5.03% 5.13%
Weighted average rates paid . . . . 8.16 8.84 7.56 6.36 6.54 6.79 7.91
Receive fixed/pay floating:
Notional amount . . . . . . . . . . 12 359 - 2 - 100 473 4.43
Weighted average rates received . . 9.12% 4.61% - 10.90% - 6.31% 5.11%
Weighted average rates paid . . . . 7.63 5.17 - 7.69 - 5.31 5.27
Index amoritzing swaps:*
Receive fixed/pay floating:
Notional amount . . . . . . . . . . 2 15 116 10 32 - 175 2.91
Weighted average rates received . . 5.65% 6.62% 6.17% 7.16% 7.17% - 6.44%
Weighted average rates paid . . . . 5.25 4.95 5.08 4.92 4.93 - 5.04
Total interest rate swaps:
Notional amount . . . . . . . . . . . $137 $417 $140 $25 $46 $120 $885 3.42
Weighted average rates received . . . 5.41% 4.75% 5.97% 6.46% 6.66% 6.10% 5.38%
Weighted average rates paid . . . . . 8.06 5.54 5.52 5.86 5.41 5.56 5.93
Forward starting interest rate swaps:
Notional amount . . . . . . . . . . . - - - - - 75 75 9.51
Weighted average rates received . . . - - - - - - -
Weighted average rates paid . . . . . - - - - - 6.03% 6.03%
Interest rate caps (notional amount)**. - 415 - - - - 415 1.50
Total derivatives (notional amount). $137 $832 $140 $25 $46 $195 $1,375 3.17
</TABLE>
* Maturity is based upon expected average lives rather than contractual
lives.
** Average rates are not meaningful.
Asset and liability derivative transactions are accounted for
following hedge accounting rules. Accordingly, gains and losses related
to the fair value of derivative contracts used for asset and liability
management purposes are not immediately recognized in earnings. If the
hedged or altered balance sheet amounts were marked to market, the
resulting unrealized balance sheet gains or losses could be expected to
compensate for unrealized derivatives gains and losses.
Management regularly reviews the liquidity position under normal
business conditions and under significant market disruption or stress
conditions. Results of these reviews are presented to the Management
Finance Committee and Board Finance Committee quarterly.
The objective of liquidity management is to ensure that the
corporation is positioned to meet all immediate and future demands for
cash. Liquidity management relies upon liquidity analysis, knowledge
of historical trends over past credit and business cycles and forecasts
of future conditions to achieve its objectives. The two broad-based
sources of liquidity which exist for the corporation are its high
quality marketable assets and liabilities which are readily accepted in
the marketplace. Asset liquidity primarily is provided by securities
which by their maturity structure or marketability can produce cash
flows that result in enhanced liquidity. The corporation generates
additional cash through the liability side of the balance sheet from
the growth of deposits and the issuance of bank notes and other forms
of debt securities. Wachovia's ability to attract a variety of funds
rests on the corporation's strength of capital, reputation, credit
ratings and diverse statewide banking networks.
At September 30, 1994, Wachovia's senior debt was rated (P)Aa3
by Moody's and (P)AA by Standard & Poor's. The corporation's
subordinated debt was rated A1 and AA- by Moody's and Standard &
Poor's, respectively. Commercial paper was rated P-1 by Moody's and
A-1+ by Standard & Poor's.
<PAGE> 14
Nonperforming Assets
The corporation's nonperforming assets at September 30, 1994
totaled $109.511 million, representing .44 percent of loans and
foreclosed property. This was down $78.567 million or 41.8 percent
from a year earlier and lower by $15.018 million or 12.1 percent from
June 30, 1994, continuing the generally improving trend that began in
the first quarter of 1992. The decreases in nonperforming assets were
due to improvement in the credit quality of borrowers as well as sales
of foreclosed property. The corporation historically has shown
relatively low levels of problem assets as a result of its strong
underwriting standards, consistent credit reviews and aggressive
charge-off policy.
The majority of nonperforming assets are real estate related.
At September 30, 1994, real estate non-performing assets were $73.033
million or .95 percent of real estate loans and foreclosed real
estate. The total decreased $78.359 million or 51.8 percent from
$151.392 million or 2.05 percent a year earlier and was down $12.411
million or 14.5 percent from $85.444 million or 1.14 percent at June
30, 1994. Included in real estate nonperforming assets was $55.749
million of real estate nonperforming loans at September 30, 1994,
$93.618 million a year earlier and $64.875 million at second
quarter-close.
Commercial real estate nonperforming assets were $53.418
million or 1.36 percent of related loans and foreclosed real estate
versus $122.209 million or 3.38 percent at the end of the 1993 third
quarter and $63.503 million or 1.66 percent at June 30, 1994.
Commercial real estate nonperforming loans included in the above
totals were $44.780 million at September 30, 1994, $75.175 million a
year earlier and $51.295 million at second quarter-end.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
NONPERFORMING ASSETS AND CONTRACTUALLY PAST DUE LOANS TABLE 6
(thousands)
___________________________________________________________________________________________________________________________________
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
1994 1994 1994 1993 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NONPERFORMING ASSETS
Cash-basis assets -- domestic borrowers . . . . . . . $ 89,184 $100,696 $100,126 $108,882 $126,474
Restructured loans -- domestic . . . . . . . . . . . --* -- -- 80 84
------- ------- ------- ------- -------
Total nonperforming loans . . . . . . . . . . . 89,184 100,696 100,126 108,962 126,558
Foreclosed property:
Foreclosed real estate . . . . . . . . . . . . . . 22,309 26,347 30,136 51,701 65,038
Less valuation allowance . . . . . . . . . . . . . 5,025 5,778 6,977 9,168 7,264
Other foreclosed assets . . . . . . . . . . . . . . 3,043 3,264 2,982 3,406 3,746
------- ------- ------- ------- -------
Total foreclosed property . . . . . . . . . . . 20,327 23,833 26,141 45,939 61,520
------- ------- ------- ------- -------
Total nonperforming assets . . . . . . . . . . . $109,511** $124,529 $126,267 $154,901 $188,078
======= ======= ======= ======= =======
Nonperforming loans to period-end loans . . . . . . . .36% .41% .42% .47% .57%
Nonperforming assets to period-end loans and
foreclosed property . . . . . . . . . . . . . . . . .44 .51 .53 .67 .85
Period-end allowance for loan losses times
nonperforming loans . . . . . . . . . . . . . . . . 4.55x 4.03x 4.05x 3.72x 3.19x
Period-end allowance for loan losses times
nonperforming assets . . . . . . . . . . . . . . . 3.71 3.26 3.21 2.61 2.15
CONTRACTUALLY PAST DUE LOANS
(accruing loans past due 90 days or more)
Domestic borrowers . . . . . . . . . . . . . . . . . $ 43,708 $ 50,321 $ 42,744 $ 44,897 $ 47,532
======= ======= ======= ======= =======
</TABLE>
*Excludes $14,382 of loans which have been renegotiated at market rates and
have demonstrated performance at the renegotiated terms for at least one year
**Net of cumulative corporate and commercial real estate charge-offs and
foreclosed real estate write-downs totaling $36,745; includes $17,946 of
nonperforming assets on which interest and principal are paid current
14
<PAGE> 15
Provision and Allowance for Loan Losses
The provision for loan losses was $18.123 million for the
third quarter and $52.224 million for the first nine months of 1994,
down $5.360 million or 22.8 percent and $22.415 million or 30 percent,
respectively, from the same periods in 1993.
The provision reflects management's assessment of the adequacy
of the allowance for loan losses to absorb potential write-offs in the
loan portfolio. This assessment considers several factors, including
growth and composition of the portfolio, historical credit loss
experience, current and anticipated economic conditions, and changes
in borrowers' financial conditions.
For the three months ended September 30, 1994, net loan losses
totaled $18.060 million or .29 percent of average loans on an
annualized basis. This compares with $18.872 million or .35 percent in
the year-earlier period. Year to date, net loan losses were $51.017
million or .29 percent of average loans versus $50.105 million or .31
percent in the first nine months of 1993.
Real estate loans had net recoveries of $524 thousand for the
third quarter and $4.471 million year to date versus net charge-offs
of $2.181 million and $4.665 million, respectively, in 1993. Credit
card net loan losses for the quarter totaled $14.473 million or 1.57
percent annualized of average credit card loans and $41.678 million or
1.62 percent for the first nine months of 1994. This compared with
$14.581 million or 2.16 percent and $39.908 million or 2.15 percent in
the same year-earlier periods.
The allowance for loan losses at September 30, 1994 was
$406.005 million, representing 1.63 percent of period-end loans and
455 percent coverage of nonperforming loans. Comparable amounts a year
earlier were $404.091 million, 1.83 percent and 319 percent coverage,
respectively.
15
<PAGE> 16
<TABLE>
<CAPTION>
Allowance for Loan Losses (thousands) Table 7
1994 1993
--------------------------- ---------------- Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1994 1993
------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF TRANSACTIONS
Balance at beginning of period . . . . . . $405,942 $405,474 $404,798 $404,091 $399,480 $404,798 $379,557
Provision for loan losses . . . . . . . . . 18,123 16,342 17,759 18,013 23,483 52,224 74,639
Deduct net loan losses:
Loans charged off:
Commercial . . . . . . . . . . . . . . 3,063 2,947 5,080 1,418 1,875 11,090 5,374
Credit card . . . . . . . . . . . . . 17,310 16,808 15,928 15,392 17,147 50,046 47,599
Other revolving credit . . . . . . . . 908 902 905 1,375 758 2,715 2,547
Other retail . . . . . . . . . . . . . 2,504 2,605 3,084 2,754 1,853 8,193 5,677
Real estate . . . . . . . . . . . . . 749 1,352 819 4,899 3,706 2,920 9,615
Lease financing . . . . . . . . . . . 28 80 61 81 110 169 377
Foreign . . . . . . . . . . . . . . . - - - - - - -
------- ------- ------- ------- ------- -------- -------
Total . . . . . . . . . . . . . . . 24,562 24,694 25,877 25,919 25,449 75,133 71,189
Recoveries:
Commercial . . . . . . . . . . . . . . 915 1,423 1,957 971 1,354 4,295 4,601
Credit card . . . . . . . . . . . . . 2,837 2,760 2,771 2,625 2,566 8,368 7,691
Other revolving credit . . . . . . . . 285 303 247 270 228 835 759
Other retail . . . . . . . . . . . . . 1,159 749 1,121 942 842 3,029 2,849
Real estate . . . . . . . . . . . . . 1,273 3,506 2,612 3,743 1,525 7,391 4,950
Lease financing . . . . . . . . . . . 25 70 78 53 54 173 211
Foreign . . . . . . . . . . . . . . . 8 9 8 9 8 25 23
------- ------- ------- ------- ------- -------- -------
Total . . . . . . . . . . . . . . . 6,502 8,820 8,794 8,613 6,577 24,116 21,084
------- ------- ------- ------- ------- -------- -------
Net loan losses . . . . . . . . . . . . 18,060 15,874 17,083 17,306 18,872 51,017 50,105
------- ------- ------- ------- ------- -------- -------
Balance at end of period . . . . . . . . . $406,005 $405,942 $405,474 $404,798 $404,091 $406,005 $404,091
======= ======= ======= ======= ======= ======= =======
NET LOAN LOSSES (RECOVERIES) BY CATEGORY
Commercial . . . . . . . . . . . . . . . . $ 2,148 $ 1,524 $ 3,123 $ 447 $ 521 $ 6,795 $ 773
Credit card . . . . . . . . . . . . . . . . 14,473 14,048 13,157 12,767 14,581 41,678 39,908
Other revolving credit . . . . . . . . . . 623 599 658 1,105 530 1,880 1,788
Other retail . . . . . . . . . . . . . . . 1,345 1,856 1,963 1,812 1,011 5,164 2,828
Real estate . . . . . . . . . . . . . . . . (524) (2,154) (1,793) 1,156 2,181 (4,471) 4,665
Lease financing . . . . . . . . . . . . . . 3 10 (17) 28 56 (4) 166
Foreign . . . . . . . . . . . . . . . . . . (8) (9) (8) (9) (8) (25) (23)
------- ------- ------- ------- ------- -------- -------
Total . . . . . . . . . . . . . . . $ 18,060 $ 15,874 $ 17,083 $ 17,306 $ 18,872 $ 51,017 $ 50,105
======= ======= ======= ======= ======= ======= =======
ANNUALIZED NET LOAN LOSSES (RECOVERIES)
TO AVERAGE LOANS BY CATEGORY
Commercial . . . . . . . . . . . . . . . . .09% .07% .14% .02% .03% .10% .01%
Credit card . . . . . . . . . . . . . . . . 1.57 1.63 1.67 1.74 2.16 1.62 2.15
Other revolving credit . . . . . . . . . . .74 .72 .80 1.34 .64 .75 .73
Other retail . . . . . . . . . . . . . . . .17 .23 .25 .23 .14 .22 .13
Real estate . . . . . . . . . . . . . . . . (.03) (.12) (.10) .06 .12 (.08) .08
Lease financing . . . . . . . . . . . . . . .01 .02 (.04) .08 .16 (.00) .17
Foreign . . . . . . . . . . . . . . . . . . (.04) (.04) (.04) (.05) (.04) (.04) (.04)
Total loans . . . . . . . . . . . . . . . . .29 .26 .30 .31 .35 .29 .31
Period-end allowance to outstanding loans . 1.63% 1.67% 1.71% 1.76% 1.83% 1.63% 1.83%
</TABLE>
16
<PAGE> 17
Noninterest Income
Total other operating revenue increased modestly for both the
third quarter and first nine months of 1994, rising $1.780 million or
1.2 percent and $1.971 million or less than 1 percent, respectively.
Good growth in trust service fees and credit card income was
supplemented by strong gains primarily in other service charges and
fees, and in other income. Increases were tempered, however, by lower
levels primarily of deposit account service charges, mortgage fee
income and trading account profits.
Trust service fees were up $2.454 million or 8.3 percent for
the third period and $7.137 million or 8 percent for the first nine
months. Gains were largely due to growth in Personal Trust, which
primarily consists of Personal Financial Services, and to increased
revenues associated with the corporation's proprietary Biltmore Funds.
Service fees for Corporate Trust largely were unchanged for the
quarter but increased year to date.
Credit card income rose $2.262 million or 8.7 percent for the
quarter and $7.779 million or 10.5 percent year to date. Continued
good gains in cardholder interchange income and higher annual fee
revenue, reflecting greater card usage, growth in new accounts and
high renewals among existing cardholders, primarily accounted for the
increases in both periods. Cardholder purchase volume totaled $862.031
million for the third quarter and $2.337 billion year to date.
Service charges on deposit accounts were lower by $2.969
million or 5.7 percent and $6.167 million or 4 percent for the three-
and nine-month periods, respectively. Commercial account analysis fees
decreased in both periods, reflecting, in part, the closing of the
corporation's retail lockbox in late 1993 and the impact of rising
interest rates which increased the value of corporate deposit
balances. Overdraft and NSF charges increased for the third period but
remained down year to date.
Mortgage fee income declined $1.109 million or 11.4 percent for
the third quarter and $4.633 million or 16 percent year to date,
primarily reflecting a rising interest rate environment. Higher
interest rates depressed residential mortgage volumes, lowering
origination fees from year-earlier periods. Loan originations
amounted to $296.307 million for the quarter and $1.146 billion year
to date compared with $602.618 million and $1.480 billion,
respectively, a year earlier. Increased interest rates also resulted
in losses on loan sales versus gains in the third period and first
nine months of 1993. At September 30, 1994, the mortgage portfolio
serviced was $9.372 billion, representing 138,330 loans versus $8.970
billion and 136,431 loans a year earlier. Rising interest rates also
weakened the bond market, negatively impacting trading account profits
which decreased $1.945 million or 55.2 percent for the quarter and
$7.325 million or 66.6 percent year to date.
Remaining combined categories of total other operating revenue,
excluding income from student loan servicing which was sold as a
subsidiary in February 1993, increased $3.087 million or 10.7 percent
and $10.715 million or 12.7 percent for the three and nine months,
respectively. Bankers' acceptance and letter of credit fees were up
$902 thousand or 18.3 percent for the quarter and $2.768 million or
18.4 percent year
17
<PAGE> 18
to date. Other income rose $334 thousand or 3.8 percent for the
quarter and $4.750 million or 20.6 percent year to date, while other
service charges and fees rose $2.323 million or 19 percent and $4.387
million or 11.9 percent, respectively. Included in other service
charges and fees are net ATM fees, mutual fund fees, safe deposit
fees, brokerage commissions and debit card interchange fees.
At September 30, 1994, Wachovia's customer portfolio of
interest rate and currency derivatives (excluding foreign exchange
forwards and options) had a notional value of $2.549 billion and a
fair value of $2.505 million. This compares with $2.407 billion
notional and $2.698 million fair value at June 30, 1994. Wachovia
manages the credit risk of derivative instruments by applying its
standard credit underwriting criteria to assess and periodically
review the creditworthiness of each counterparty. Wachovia's present
exposure to market risk for its customer portfolio is negligible.
Revenues from the customer portfolio represent a small profit margin
on intermediated transactions and are recorded in other operating
income.
Including gains on securities and subsidiary sales, total
noninterest income for the third quarter increased $1.511 million or 1
percent but was down $17.011 million or 3.6 percent year to date.
Gains on securities sales were $433 thousand for the three months and
$1.226 million for the first nine months of 1994 compared with $702
thousand and $12.178 million, respectively, in the same periods of
1993. The first nine months of 1993 also included a pretax gain of
$8.030 million on the sale of Wachovia Student Financial Services,
Inc.
<TABLE>
<CAPTION>
Noninterest Income (thousands) Table 8
1994 1993
--------------------------- ---------------- Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1994 1993
------- ------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts . . . . . $ 48,940 $ 50,646 $ 48,150 $ 48,982 $ 51,909 $147,736 $153,903
Fees for trust services . . . . . . . . . . . 32,151 32,983 31,681 30,352 29,697 96,815 89,678
Credit card income - net of interchange
payments . . . . . . . . . . . . . . . . . 28,271 28,120 25,334 27,834 26,009 81,725 73,946
Mortgage fee income . . . . . . . . . . . . . 8,590 7,715 8,033 10,130 9,699 24,338 28,971
Trading account profits - excluding
interest . . . . . . . . . . . . . . . . . 1,576 598 1,507 2,097 3,521 3,681 11,006
Insurance premiums and commissions . . . . . 2,425 3,379 2,686 2,167 2,897 8,490 9,680
Bankers' acceptance and letter of
credit fees . . . . . . . . . . . . . . . 5,827 5,689 6,287 4,633 4,925 17,803 15,035
Student loan servicing . . . . . . . . . . . - - - - - - 5,535
Other service charges and fees . . . . . . . 14,571 13,156 13,627 11,948 12,248 41,354 36,967
Other income . . . . . . . . . . . . . . . . 9,190 11,013 7,564 14,298 8,856 27,767 23,017
-------- -------- -------- -------- -------- -------- --------
Total other operating revenue . . . . . 151,541 153,299 144,869 152,441 149,761 449,709 447,738
Gain on sale of subsidiary . . . . . . . . . - - - - - - 8,030
Investment securities gains . . . . . . . . . 433 221 572 7,216 702 1,226 12,178
-------- -------- -------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . $151,974 $153,520 $145,441 $159,657 $150,463 $450,935 $467,946
======== ======== ======== ======== ======== ======== ========
</TABLE>
18
<PAGE> 19
Noninterest Expense
Total noninterest expense decreased $2.253 million or less than
1 percent for the third quarter and $15.608 million or 1.9 percent
year to date. Included in the first nine months of 1993 was $15.872
million of nonrecurring charges taken in the first quarter. Excluding
these charges, noninterest expense for the first nine months of 1994
increased $264 thousand or less than 1 percent from the year-earlier
period.
Total personnel expense was down $2.698 million or 1.9 percent
for the quarter but modestly higher by $970 thousand or under 1
percent year to date. Salaries expense rose $3.811 million or 3.4
percent and $13.470 million or 4 percent for the three- and
nine-month periods, respectively. Primary factors for the increases
were higher base salaries and increased relocation costs and temporary
help. Benefits expense declined $6.509 million or 22.1 percent for the
quarter and $12.500 million or 14.3 percent for the first nine months,
in part, reflecting lower than anticipated costs for retiree medical
benefits.
Combined net occupancy and equipment expense rose $3.009
million or 6.9 percent for the three months ended September 30 and
$5.515 million or 4.1 percent for the nine months. Equipment expense
was up $1.933 million or 7.8 percent for the quarter and $4.348
million or 5.8 percent year to date, accounting for the majority of
the increases and primarily driven by higher depreciation, equipment
maintenance and installation, and telephone expenses.
Remaining combined categories of noninterest expense declined
$2.564 million or 2.9 percent for the third period and $22.093 million
or 8 percent for the first nine months. Foreclosed property expense
had net gains of $452 thousand for the quarter and $4.297 million for
the first nine months versus net expenses of $1.737 million and $5.024
million, respectively, in 1993.
<TABLE>
<CAPTION>
Noninterest Expense (thousands) Table 9
1994 1993
--------------------------- ---------------- Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1994 1993
------- ------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries . . . . . . . . . . . . . . . . . . $116,793 $114,882 $115,211 $122,205 $112,982 $346,886 $333,416
Employee benefits . . . . . . . . . . . . . . 22,902 26,350 25,803 25,504 29,411 75,055 87,555
-------- -------- -------- -------- -------- -------- --------
Total personnel expense . . . . . . . . 139,695 141,232 141,014 147,709 142,393 421,941 420,971
Net occupancy expense . . . . . . . . . . . . 20,026 20,196 19,428 23,587 18,950 59,650 58,483
Equipment expense . . . . . . . . . . . . . . 26,789 26,010 26,512 27,283 24,856 79,311 74,963
Postage and delivery . . . . . . . . . . . . 8,645 8,816 9,052 9,315 8,921 26,513 28,845
Outside data processing,
programming and software . . . . . . . . . 7,834 8,119 8,485 12,494 9,194 24,438 26,119
Stationery and supplies . . . . . . . . . . . 6,578 5,836 5,962 7,018 6,353 18,376 18,326
Advertising and sales promotion . . . . . . . 8,019 9,316 9,783 11,435 7,681 27,118 26,706
Professional services . . . . . . . . . . . . 4,617 5,385 3,952 6,381 4,120 13,954 10,763
Travel and business promotion . . . . . . . . 3,757 4,343 3,504 4,706 3,668 11,604 10,857
FDIC insurance and regulatory
examinations . . . . . . . . . . . . . . . 13,294 13,589 13,380 13,122 13,274 40,263 40,541
Check clearing and other bank
services . . . . . . . . . . . . . . . . . 2,475 1,920 2,295 2,348 2,563 6,690 7,811
Amortization of intangible assets . . . . . . 4,524 4,602 5,137 6,844 7,502 14,263 21,157
Foreclosed property expense . . . . . . . . . (452) (404) (3,441) 2,630 1,737 (4,297) 5,024
Other expense . . . . . . . . . . . . . . . . 25,492 25,585 24,987 24,868 22,334 76,064 80,930
-------- -------- -------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . $271,293 $274,545 $270,050 $299,740 $273,546 $815,888 $831,496
======== ======== ======== ======== ======== ======== ========
Overhead ratio . . . . . . . . . . . . . . . 53.2% 54.3% 55.4% 59.5% 55.0% 54.3% 56.2%
</TABLE>
19
<PAGE> 20
Income Taxes
Applicable income taxes were higher by $7.874 million or 15.8
percent for the quarter and $13.804 million or 9.2 percent year to
date. Income taxes computed at the statutory rate are reduced
primarily by the interest earned on state and municipal debt
securities and industrial revenue obligations. Also, within certain
limitations, one-half of the interest income on qualifying employee
stock ownership plan loans is exempt from federal taxes. The interest
earned on state and municipal debt instruments is exempt from federal
taxes and, except for out-of-state issues, from North Carolina and
Georgia taxes as well, and results in substantial interest savings for
local governments and their constituents.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
INCOME TAXES (thousands) TABLE 10
____________________________________________________________________________________________________________________________________
Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . $195,679 $174,220 $561,089 $519,451
======== ======== ======== ========
Federal income taxes at statutory rate* . . . . . . . . . . . . . . . . . . $ 68,488 $ 64,429 $196,381 $181,808
State and local income taxes - net of federal benefit . . . . . . . . . . . 1,235 1,386 3,426 5,497
Effect of tax-exempt securities interest and other income . . . . . . . . . (12,707) (14,088) (37,693) (40,060)
Tax cost to carry tax-exempt assets . . . . . . . . . . . . . . . . . . . . 592 568 1,606 1,618
Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 (2,482) 437 1,490
-------- -------- -------- --------
Total tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,687 $ 49,813 $164,157 $150,353
======== ======== ======== ========
Currently payable:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 52,835 $ 51,822 $154,905 $161,991
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 114 106 268
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,773 1,939 6,549 9,755
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,654 53,875 161,560 172,014
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,907 (4,350) 3,876 (20,362)
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 288 (1,279) (1,299)
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,033 (4,062) 2,597 (21,661)
-------- -------- -------- --------
Total tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,687 $ 49,813 $164,157 $150,353
======== ======== ======== ========
* An increase in the federal income tax statutory rate from 34% to 35% was
enacted during the third quarter of 1993, retroactive to January 1, 1993. The
federal income tax amount for the three months ended September 30, 1993 of
$64,429 represents the 35% rate and a $3,452 cumulative adjustment related to
the retroactive increase in the federal income tax statutory rate. The amounts
for 1994 and the nine months ended September 30, 1993 represent a federal
income tax statutory rate of 35%.
____________________________________________________________________________________________________________________________________
</TABLE>
FINANCIAL CONDITION AND CAPITAL RATIOS
Total assets at September 30, 1994 were $38.134 billion,
including $33.580 billion of interest-earning assets and $24.968
billion of loans. Assets at third quarter-close 1993 totaled $35.320
billion, with $31.499 billion of interest-earning assets and $22.066
billion of loans. At June 30, 1994, assets were $37.069 billion,
including $32.964 billion of interest-earning assets and $24.300
billion of loans.
Deposits constitute the primary source of the corporation's
funding. At September 30, 1994, deposits were $22.256 billion,
including time deposits of $16.984 billion, representing 76.3 percent
of the total. Comparable amounts a year earlier were $22.187 billion
and $16.864 billion or 76 percent, respectively, and at June 30, 1994
they were $22.218 billion and $16.945 billion or 76.3 percent,
respectively.
Shareholders' equity at September 30, 1994 was $3.215 billion,
up $240 million or 8.1 percent from $2.975 billion a year earlier and
higher by $66 million or 2.1 percent from the end of the second
quarter. The total at September 30, 1994 included $21.510 million, net
of tax, of unrealized losses on securities available-for-sale marked to
fair market value under FASB 115.
Wachovia's board of directors authorized at their third quarter
meeting on July 22, 1994 the repurchase of up to 5 million shares of
common stock, replacing an earlier authorization for the same number of
shares. Repurchased shares will be used for various corporate purposes,
including the issuance of shares for the
20
<PAGE> 21
corporation's employee stock plans and dividend reinvestment plan.
During the third quarter of 1994, the corporation repurchased 591,000
shares at an average price of $32.60 per share for a total cost of
$19.268 million. At September 30, 1994, a total of 4,519,500 shares
remained available for possible repurchase.
Intangible assets at third quarter-close 1994 totaled $82.546
million, consisting of $37.286 million in mortgage servicing rights,
$31.334 million in goodwill, $9.092 million in deposit base
intangibles and $4.834 million in other intangible assets, primarily
purchased credit card intangibles. This compares with $92.443 million
of intangible assets a year earlier, including $41.728 million in
mortgage servicing rights, $32.824 million in goodwill, $11.309
million in deposit base intangibles and $6.582 million in other
intangibles. Intangible assets at June 30, 1994 totaled $85.601
million.
Regulatory agencies divide capital into Tier I (consisting of
shareholders' equity less ineligible intangible assets) and Tier II
(consisting of the allowable portion of the reserve for loan losses
and certain long-term debt) and measure capital adequacy by applying
both capital levels to a banking company's risk-adjusted assets and
off-balance sheet items. Regulatory requirements presently specify
that Tier I capital should exclude the market appreciation or
depreciation of securities available-for-sale arising from valuation
adjustments under FASB 115. In addition to these capital ratios,
regulatory agencies have established a Tier I leverage ratio which
measures Tier I capital to average assets less ineligible intangible
assets.
Regulatory guidelines require a minimum total capital to
risk-adjusted assets ratio of 8 percent with one-half consisting of
tangible common shareholders' equity and a minimum Tier I leverage
ratio of 3 percent. Banks which meet or exceed a Tier I ratio of 6
percent, a total capital ratio of 10 percent and a Tier I leverage
ratio of 5 percent are considered well capitalized by regulatory
standards.
At September 30, 1994, Wachovia's Tier I to risk-adjusted
assets ratio was 9.40 percent and including Tier II was 13.03 percent.
The corporation's Tier I leverage ratio was 8.51 percent.
<TABLE>
<CAPTION>
CAPITAL COMPONENTS AND RATIOS (thousands) Table 11
1994 1993
--------------------------------------- ------------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Tier I capital:
Common shareholders' equity . . . . . . . . . . . . $ 3,214,881 $ 3,149,144 $ 3,093,593 $ 3,017,947 $ 2,974,699
Less ineligible intangible assets . . . . . . . . . 31,334 32,349 32,095 32,451 36,039
Unrealized (gains) losses on securities
available-for-sale, net of tax . . . . . . . . . 21,510 15,140 (3,825) - -
---------- ---------- ---------- ---------- ----------
Total Tier I capital . . . . . . . . . . . . . . 3,205,057 3,131,935 3,057,673 2,985,496 2,938,660
Tier II capital:
Allowable allowance for loan losses . . . . . . . . 406,005 405,942 396,449 384,032 370,017
Allowable long-term debt . . . . . . . . . . . . . 832,881 833,253 833,125 583,738 587,158
---------- ---------- ---------- ---------- ----------
Tier II capital additions . . . . . . . . . . . . 1,238,886 1,239,195 1,229,574 967,770 957,175
---------- ---------- ---------- ---------- ----------
Total capital . . . . . . . . . . . . . . . . . $ 4,443,943 $ 4,371,130 $ 4,287,247 $ 3,953,266 $ 3,895,835
========== ========== ========== ========== ==========
Risk-adjusted assets . . . . . . . . . . . . . . . . $34,100,248 $32,746,004 $31,706,868 $30,701,782 $29,567,305
Quarterly average assets . . . . . . . . . . . . . . $37,676,339 $37,174,827 $35,778,460 $35,419,829 $33,869,607
Risk-based capital ratios:
Tier I capital . . . . . . . . . . . . . . . . . . 9.40% 9.56% 9.64% 9.72% 9.94%
Total capital . . . . . . . . . . . . . . . . . . . 13.03 13.35 13.52 12.88 13.18
Tier I leverage ratio* . . . . . . . . . . . . . . . 8.51% 8.43% 8.56% 8.44% 8.69%
Shareholders' equity to total assets . . . . . . . . 8.43% 8.50% 8.51% 8.26% 8.42%
</TABLE>
* Ratio excludes the average unrealized gains (losses) on securities
available-for-sale, net of tax, of ($16,885) for the third quarter of 1994,
($8,535) for the second quarter of 1994 and $22,399 for the first quarter of
1994
21
<PAGE> 22
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
<TABLE>
<CAPTION>
September 30 December 31 September 30
$ in thousands 1994 1993 1993
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . $ 2,508,241 $ 2,529,528 $ 2,169,531
Interest-bearing bank balances . . . . . . . . . . . . . . . . . . . 5,758 12,478 11,213
Federal funds sold and securities
purchased under resale agreements . . . . . . . . . . . . . . . . 199,386 691,106 586,569
Trading account assets . . . . . . . . . . . . . . . . . . . . . . . 745,000 788,779 778,966
Securities available-for-sale . . . . . . . . . . . . . . . . . . . . 3,688,984 - -
Securities held-to-maturity (market value of $3,980,564,
$8,156,690 and $8,407,776, respectively) . . . . . . . . . . . . . 3,972,867 7,878,656 8,055,644
Loans and net leases . . . . . . . . . . . . . . . . . . . . . . . . 24,975,597 22,986,307 22,072,618
Less unearned income on loans . . . . . . . . . . . . . . . . . . . . 7,881 8,819 6,433
----------- ----------- -----------
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . 24,967,716 22,977,488 22,066,185
Less allowance for loan losses . . . . . . . . . . . . . . . . . . . 406,005 404,798 404,091
----------- ----------- -----------
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,561,711 22,572,690 21,662,094
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . 532,121 502,699 495,593
Due from customers on acceptances . . . . . . . . . . . . . . . . . . 774,222 434,584 456,518
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145,995 1,115,252 1,103,553
----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $38,134,285 $36,525,772 $35,319,681
=========== =========== ===========
LIABILITIES
Deposits in domestic offices:
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,265,733 $ 6,140,884 $ 5,315,479
Interest-bearing demand . . . . . . . . . . . . . . . . . . . . . 3,336,611 3,515,680 3,220,722
Savings and money market savings . . . . . . . . . . . . . . . . . 6,099,692 6,194,086 6,192,030
Savings certificates . . . . . . . . . . . . . . . . . . . . . . . 5,177,269 5,141,410 5,250,509
Large denomination certificates . . . . . . . . . . . . . . . . . 1,484,147 1,507,461 1,645,129
Noninterest-bearing time . . . . . . . . . . . . . . . . . . . . . 50,753 45,802 65,182
----------- ----------- -----------
Total deposits in domestic offices . . . . . . . . . . . . . . 21,414,205 22,545,323 21,689,051
Deposits in foreign offices:
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,399 3,011 7,834
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835,091 804,064 490,490
----------- ----------- -----------
Total deposits in foreign offices . . . . . . . . . . . . . . . 841,490 807,075 498,324
----------- ----------- -----------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . 22,255,695 23,352,398 22,187,375
Federal funds purchased and securities
sold under repurchase agreements . . . . . . . . . . . . . . . . . 5,528,088 4,741,283 5,307,332
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . 432,012 589,178 425,656
Other short-term borrowed funds . . . . . . . . . . . . . . . . . . . 854,559 1,091,123 965,207
Long-term debt:
Bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,890,345 2,370,091 2,062,664
Other long-term debt . . . . . . . . . . . . . . . . . . . . . . . 839,246 590,365 594,362
----------- ----------- -----------
Total long-term debt . . . . . . . . . . . . . . . . . . . . . 4,729,591 2,960,456 2,657,026
Acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . 774,222 434,584 456,518
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 345,237 338,803 345,868
----------- ----------- -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 34,919,404 33,507,825 32,344,982
SHAREHOLDERS' EQUITY
Preferred stock, par value $5 per share:
Authorized 50,000,000 shares; none outstanding . . . . . . . . . . - - -
Common stock, par value $5 per share:
Issued 170,759,977, 171,375,772 and
172,011,522, respectively . . . . . . . . . . . . . . . . . . . . 853,800 856,879 860,058
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . 741,083 761,573 787,416
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 1,619,998 1,399,495 1,327,225
----------- ----------- -----------
Total shareholders' equity . . . . . . . . . . . . . . . . . . 3,214,881 3,017,947 2,974,699
----------- ----------- -----------
Total liabilities and shareholders' equity . . . . . . . . . . $38,134,285 $36,525,772 $35,319,681
=========== =========== ===========
</TABLE>
22
<PAGE> 23
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
$ in thousands, except per share 1994 1993 1994 1993
--------- -------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $483,087 $408,737 $1,340,149 $1,212,138
Securities available-for-sale:
State and municipal . . . . . . . . . . . . . . . . . . . . . . . - - 14 -
Other investments . . . . . . . . . . . . . . . . . . . . . . . . 46,801 - 139,133 -
Securities held-to-maturity:
State and municipal . . . . . . . . . . . . . . . . . . . . . . . 12,192 13,708 38,316 44,071
Other investments . . . . . . . . . . . . . . . . . . . . . . . . 54,992 98,497 164,226 291,709
Interest-bearing bank balances . . . . . . . . . . . . . . . . . . 142 485 487 2,789
Federal funds sold and securities
purchased under resale agreements . . . . . . . . . . . . . . . . 1,347 3,612 6,300 8,344
Trading account assets . . . . . . . . . . . . . . . . . . . . . . 8,889 6,892 22,465 19,769
-------- -------- ---------- ----------
Total interest income . . . . . . . . . . . . . . . . . . . . 607,450 531,931 1,711,090 1,578,820
INTEREST EXPENSE
Deposits:
Domestic offices . . . . . . . . . . . . . . . . . . . . . . . . 134,241 133,562 373,329 415,596
Foreign offices . . . . . . . . . . . . . . . . . . . . . . . . . 7,042 3,076 14,420 9,333
-------- -------- ---------- ----------
Total interest on deposits . . . . . . . . . . . . . . . . . 141,283 136,638 387,749 424,929
Short-term borrowed funds . . . . . . . . . . . . . . . . . . . . . 71,495 43,910 184,457 123,970
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 61,551 30,597 160,618 72,281
-------- -------- ---------- ----------
Total interest expense . . . . . . . . . . . . . . . . . . . 274,329 211,145 732,824 621,180
NET INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . 333,121 320,786 978,266 957,640
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . 18,123 23,483 52,224 74,639
-------- -------- ---------- ----------
Net interest income after
provision for loan losses . . . . . . . . . . . . . . . . . . . . 314,998 297,303 926,042 883,001
OTHER INCOME
Service charges on deposit accounts . . . . . . . . . . . . . . . . 48,940 51,909 147,736 153,903
Fees for trust services . . . . . . . . . . . . . . . . . . . . . . 32,151 29,697 96,815 89,678
Credit card income . . . . . . . . . . . . . . . . . . . . . . . . 28,271 26,009 81,725 73,946
Mortgage fee income . . . . . . . . . . . . . . . . . . . . . . . . 8,590 9,699 24,338 28,971
Trading account profits . . . . . . . . . . . . . . . . . . . . . . 1,576 3,521 3,681 11,006
Student loan servicing . . . . . . . . . . . . . . . . . . . . . . - - - 5,535
Other operating income . . . . . . . . . . . . . . . . . . . . . . 32,013 28,926 95,414 84,699
-------- -------- ---------- ----------
Total other operating revenue . . . . . . . . . . . . . . . . 151,541 149,761 449,709 447,738
Gain on sale of subsidiary . . . . . . . . . . . . . . . . . . . . - - - 8,030
Investment securities gains . . . . . . . . . . . . . . . . . . . . 433 702 1,226 12,178
-------- -------- ---------- ----------
Total other income . . . . . . . . . . . . . . . . . . . . . 151,974 150,463 450,935 467,946
OTHER EXPENSE
Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,793 112,982 346,886 333,416
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . 22,902 29,411 75,055 87,555
-------- -------- ---------- ----------
Total personnel expense . . . . . . . . . . . . . . . . . . . 139,695 142,393 421,941 420,971
Net occupancy expense . . . . . . . . . . . . . . . . . . . . . . . 20,026 18,950 59,650 58,483
Equipment expense . . . . . . . . . . . . . . . . . . . . . . . . . 26,789 24,856 79,311 74,963
Other operating expense . . . . . . . . . . . . . . . . . . . . . . 84,783 87,347 254,986 277,079
-------- -------- ---------- ----------
Total other expense . . . . . . . . . . . . . . . . . . . . . 271,293 273,546 815,888 831,496
Income before income taxes . . . . . . . . . . . . . . . . . . . . 195,679 174,220 561,089 519,451
Applicable income taxes . . . . . . . . . . . . . . . . . . . . . . 57,687 49,813 164,157 150,353
-------- -------- ---------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . $137,992 $124,407 $ 396,932 $ 369,098
======== ======== ========== ==========
Net income per common share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 $ 2.30 $ 2.12
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . $ .80 $ .71 $ 2.30 $ 2.10
Average shares outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,097 174,300 172,462 174,200
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 172,701 175,414 173,086 175,905
</TABLE>
23
<PAGE> 24
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
----------------------- Capital Retained
$ in thousands, except per share Shares Amount Surplus Earnings
---------- -------- --------- ----------
<S> <C> <C> <C> <C>
PERIOD ENDED SEPTEMBER 30, 1993
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . 171,471,178 $857,356 $817,889 $1,099,522
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369,098
Cash dividends declared on
common stock - $.81 a share . . . . . . . . . . . . . . . . . . . . . (139,918)
Common stock issued pursuant to:
Stock option and employee benefit plans . . . . . . . . . . . . . . . 453,667 2,268 8,989 (41)
Dividend reinvestment plan . . . . . . . . . . . . . . . . . . . . . 233,100 1,166 6,946 (15)
Conversion of notes . . . . . . . . . . . . . . . . . . . . . . . . . 1,555,020 7,775 5,237 (60)
Common stock acquired . . . . . . . . . . . . . . . . . . . . . . . . . (1,701,214) (8,506) (51,640) 8
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (229) (1) (5) (1,369)
----------- ------- ------- ---------
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . 172,011,522 $860,058 $787,416 $1,327,225
=========== ======== ======== ==========
PERIOD ENDED SEPTEMBER 30, 1994
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . 171,375,772 $856,879 $761,573 $1,399,495
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396,932
Cash dividends declared on
common stock - $.90 a share . . . . . . . . . . . . . . . . . . . . . (154,083)
Common stock issued pursuant to:
Stock option and employee benefit plans . . . . . . . . . . . . . . . 544,925 2,724 12,255
Dividend reinvestment plan . . . . . . . . . . . . . . . . . . . . . 260,354 1,302 7,255
Conversion of notes . . . . . . . . . . . . . . . . . . . . . . . . . 47,174 236 665
Common stock acquired . . . . . . . . . . . . . . . . . . . . . . . . . (1,468,248) (7,341) (40,471)
Unrealized losses on securities available-
for-sale, net of tax . . . . . . . . . . . . . . . . . . . . . . . . (21,510)
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (194) (836)
----------- -------- -------- ----------
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . 170,759,977 $853,800 $741,083 $1,619,998
=========== ======== ======== ==========
</TABLE>
24
<PAGE> 25
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30
$ in thousands 1994 1993
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 396,932 $ 369,098
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,224 74,639
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . 83,893 78,122
Deferred income taxes (benefit) . . . . . . . . . . . . . . . . . . . . . . . . 2,597 (21,661)
Investment securities gains . . . . . . . . . . . . . . . . . . . . . . . . . . (1,226) (12,178)
Gain on sale of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . - (8,030)
Gain on sale of noninterest-earning assets . . . . . . . . . . . . . . . . . . (4,649) (1,186)
Increase (decrease) in accrued income taxes . . . . . . . . . . . . . . . . . . (327) 9,591
(Increase) decrease in accrued interest receivable . . . . . . . . . . . . . . 7,851 (24,589)
Increase in accrued interest payable . . . . . . . . . . . . . . . . . . . . . 51,802 2,481
Net change in other accrued and deferred income and expense . . . . . . . . . . 4,140 (32,912)
Net trading account activities . . . . . . . . . . . . . . . . . . . . . . . . 43,779 117,002
Net loans held for resale . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,175 (349,813)
----------- -----------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . 901,191 200,564
INVESTING ACTIVITIES
Net decrease in interest-bearing bank balances . . . . . . . . . . . . . . . . . 6,720 178,340
Net decrease (increase) in federal funds sold and securities
purchased under resale agreements . . . . . . . . . . . . . . . . . . . . . . . 491,720 (107,597)
Purchases of securities available-for-sale . . . . . . . . . . . . . . . . . . . (722,958) -
Purchases of securities held-to-maturity . . . . . . . . . . . . . . . . . . . . (304,060) (2,937,940)
Sales of securities available-for-sale . . . . . . . . . . . . . . . . . . . . . 69,376 -
Sales of securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . - 59,233
Calls, maturities and prepayments of securities available-for-sale . . . . . . . 654,953 -
Calls, maturities and prepayments of securities held-to-maturity . . . . . . . . 470,771 1,309,508
Net increase in loans made to customers . . . . . . . . . . . . . . . . . . . . . (2,314,157) (716,309)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (87,128) (119,106)
Proceeds from sales of premises and equipment . . . . . . . . . . . . . . . . . . 5,710 5,720
Net increase in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (74,639) (208,299)
Business combinations and dispositions . . . . . . . . . . . . . . . . . . . . . - 20,000
----------- -----------
Net cash used by investing activities . . . . . . . . . . . . . . . . . . . (1,803,692) (2,516,450)
FINANCING ACTIVITIES
Net decrease in demand, savings and money market accounts . . . . . . . . . . . . (1,140,275) (345,557)
Net increase (decrease) in certificates of deposit . . . . . . . . . . . . . . . 43,572 (842,529)
Net increase in federal funds purchased and securities sold under repurchase
agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786,805 1,593,840
Net increase (decrease) in commercial paper . . . . . . . . . . . . . . . . . . . (157,166) 39,038
Net increase (decrease) in other short-term borrowings . . . . . . . . . . . . . (236,564) 266,384
Proceeds from issuance of bank notes . . . . . . . . . . . . . . . . . . . . . . 1,945,589 1,304,771
Maturities of bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (427,800) (150,000)
Proceeds from issuance of other long-term debt . . . . . . . . . . . . . . . . . 247,800 248,075
Payments on other long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (263) (80,003)
Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,804 17,944
Common stock repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,601) (60,144)
Dividend payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (154,083) (139,918)
Net increase in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 396 5,657
----------- -----------
Net cash provided by financing activities . . . . . . . . . . . . . . . . . 881,214 1,857,558
DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . (21,287) (458,328)
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . 2,529,528 2,627,859
----------- -----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 2,508,241 $ 2,169,531
=========== ===========
SUPPLEMENTAL DISCLOSURES
Unrealized losses on securities available-for-sale:
Decrease in securities available-for-sale . . . . . . . . . . . . . . . . . . . $ 35,225 $ -
Increase in deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 13,715 -
Decrease in shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . 21,510 -
</TABLE>
25
<PAGE> 26
MEMBER COMPANY DIRECTORS
WACHOVIA BANK OF GEORGIA, N.A.
G. JOSEPH PRENDERGAST
Chairman of the Board,
President and
Chief Executive Officer
F. DUANE ACKERMAN
President and
Chief Executive Officer
BellSouth Telecommunications, Inc.
EDWARD L. ADDISON
Chairman of the Board and
Chief Executive Officer
The Southern Company
L. M. BAKER, JR.
President and
Chief Executive Officer
Wachovia Corporation
THOMAS E. BOLAND
Retired Chairman of the Board
CARL BOLCH, JR.
Chairman of the Board and
Chief Executive Officer
Racetrac Petroleum, Inc.
JAMES E. BOSTIC, JR.
Group Vice President
Communication Papers Division
Georgia-Pacific Corporation
MICHAEL C. CARLOS
Chairman of the Board and
Chief Executive Officer
National Distributing Co., Inc.
G. STEPHEN FELKER
Chairman of the Board and
Chief Executive Officer
Avondale Mills, Inc.
BRYAN D. LANGTON
(Advisory Director)
Chairman of the Board and
Chief Executive Officer
Holiday Inn Worldwide
BERNARD MARCUS
Chairman of the Board and
Chief Executive Officer
The Home Depot, Inc.
DANIEL W. MCGLAUGHLIN
President and
Chief Operating Officer
Equifax Inc.
D. RAYMOND RIDDLE
Chairman of the Board and
Chief Executive Officer
National Service Industries, Inc.
S. STEPHEN SELIG III
Chairman of the Board
and President
Selig Enterprises, Inc.
ALANA S. SHEPHERD
Secretary of the Board
Shepherd Spinal Center
J. V. WHITE
Chairman of the
Executive Committee
Equifax Inc.
WACHOVIA BANK OF NORTH CAROLINA, N.A.
J. WALTER MCDOWELL
President and
Chief Executive Officer
L. M. BAKER, JR.
Chairman of the Board
THOMAS M. BELK, JR.
Senior Vice President
Belk Stores Services, Inc.
H. C. BISSELL
Chairman of the Board and
Chief Executive Officer
The Bissell Companies, Inc.
FELTON J. CAPEL
Chairman of the Board
and President
Century Associates of
North Carolina
WILLIAM CAVANAUGH, III
President and
Chief Operating Officer
Carolina Power & Light Company
BERT COLLINS
President and
Chief Executive Officer
North Carolina Mutual
Life Insurance Company
RICHARD L. DAUGHERTY
North Carolina Senior
State Executive,
Vice President Worldwide
Manufacturing
IBM PC Company
IBM Corporation
(Retired/Consultant)
ESTELL C. LEE
Chairman of the Board
and President
The Lee Company
WYNDHAM ROBERTSON
Vice President, Communications
University of North Carolina
JOHN F. WARD
Senior Vice President
Sara Lee Corporation
Chief Executive Officer
Hanes Group
ANDERSON D. WARLICK
President and
Chief Operating Officer
Parkdale Mills, Inc.
DAVID J. WHICHARD, II
Chairman
The Daily Reflector
JOHN C. WHITAKER, JR.
Chairman of the Board and
Chief Executive Officer
Inmar Enterprises, Inc.
SOUTH CAROLINA NATIONAL CORPORATION
WACHOVIA BANK OF SOUTH CAROLINA, N.A.
ANTHONY L. FURR
Chairman of the Board,
President and
Chief Executive Officer
L. M. BAKER, JR.
President and
Chief Executive Officer
Wachovia Corporation
CHARLES J. BRADSHAW
President
Bradshaw Investments, Inc.
FRANK W. BRUMLEY
President
The Brumley Company
W. T. CASSELS, JR.
Chairman of the Board
Southeastern Freight Lines, Inc.
THOMAS C. COXE, III
Executive Vice President
Sonoco Products Company
FREDERICK B. DENT, JR.
President
Mayfair Mills, Inc.
JAMES B. EDWARDS, D.M.D.
President
Medical University of South Carolina
JAMES G. LINDLEY
Chairman Emeritus
JOE A. PADGETT
Retired Executive Vice President
Wachovia Bank of South Carolina, N.A.
W. M. SELF
President and
Chief Executive Officer
Greenwood Mills, Inc.
ROBERT S. SMALL, JR.
President
AVTEX Properties, Inc.
WILLIAM G. TAYLOR
President
The Springs Company
BEATRICE R. THOMPSON, PH.D.
Coordinator of Psychological Services
Anderson School District Five
<PAGE> 27
WACHOVIA CORPORATION DIRECTORS AND OFFICERS
DIRECTORS
L. M. BAKER, JR.
President and
Chief Executive Officer
JOHN G. MEDLIN, JR.
Chairman of the Board
RUFUS C. BARKLEY, JR.
Chairman of the Board
Cameron & Barkley Company
CRANDALL C. BOWLES
Executive Vice President
Springs Industries, Inc.
JOHN L. CLENDENIN
Chairman of the Board
and Chief Executive Officer
BellSouth Corporation
LAWRENCE M. GRESSETTE, JR.
Chairman of the Board,
President and
Chief Executive Officer
SCANA Corporation
THOMAS K. HEARN, JR.
President
Wake Forest University
W. HAYNE HIPP
President and
Chief Executive Officer
The Liberty Corporation
ROBERT M. HOLDER, JR.
Chairman of the Board
Holder Corporation
DONALD R. HUGHES
Vice Chairman of the Board
Burlington Industries, Inc.
F. KENNETH IVERSON
Chairman and
Chief Executive Officer
Nucor Corporation
JAMES W. JOHNSTON
Chairman and
Chief Executive Officer
R.J. Reynolds Tobacco Worldwide
W. DUKE KIMBRELL
Chairman of the Board and
Chief Executive Officer
Parkdale Mills, Inc.
HERMAN J. RUSSELL
Chairman of the Board and
Chief Executive Officer
H.J. Russell & Company
SHERWOOD H. SMITH, JR.
Chairman of the Board and
Chief Executive Officer
Carolina Power & Light Company
CHARLES MCKENZIE TAYLOR
Chairman of the Board
Taylor & Mathis, Inc.
EXECUTIVE OFFICERS
L. M. BAKER, JR.
President and
Chief Executive Officer
MICKEY W. DRY
Executive Vice President
Chief Credit Officer
HUGH M. DURDEN
Executive Vice President
ANTHONY L. FURR
Executive Vice President
W. DOUG KING
Executive Vice President
WALTER E. LEONARD, JR.
Executive Vice President
KENNETH W. MCALLISTER
Executive Vice President
General Counsel
ROBERT S. MCCOY, JR.
Executive Vice President
Chief Financial Officer
J. WALTER MCDOWELL
Executive Vice President
G. JOSEPH PRENDERGAST
Executive Vice President
RICHARD B. ROBERTS
Executive Vice President
Treasurer
27
<PAGE> 28
BULK RATE
U.S. POSTAGE PAID
WACHOVIA
CORPORATION
WACHOVIA
Wachovia Corporation
P.O. Box 3099
Winston-Salem, NC 27150
[ ] SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
Dividend Reinvestment and Common Stock Purchase Plan - The plan provides common
stockholders of record a regular way of investing cash dividends in additional
shares at an average market price and/or investing optional cash payments
without payment of brokerage commissions or service charges.
Direct Deposit of Cash Dividends - Direct deposit is a safe, fast and
timesaving method of receiving cash dividends through automatic deposit on date
of payment to a checking, savings or money market account at any financial
institution which participates in an Automated Clearing House.
Address Change and Account Assistance - To help ensure timely receipt of
shareholder mailings, please notify the corporation, in writing, immediately of
any address change or correction. Use of your shareholder account number and a
daytime phone number in all correspondence will be appreciated.
For information about these services, requests for address changes and account
assistance, please contact:
H. Jo Barlow Wachovia Corporation
Shareholder Services P.O. Box 3099
910-770-5787 Winston-Salem, NC 27150
OTHER INFORMATION
Additional information about Wachovia Corporation or its member companies may
be obtained by contacting:
Robert S. McCoy, Jr., Chief Financial Officer, 910-770-5926
James C. Mabry, Investor Relations, 910-770-5788
Wachovia Corporation
P.O. Box 3099
Winston-Salem, NC 27150
COMMON STOCK LISTING
New York Stock Exchange Symbol: WB
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WACHOVIA FOR THE PERIOD ENDED SEPTEMBER 30, 1994,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 2,508,241
<INT-BEARING-DEPOSITS> 5,758
<FED-FUNDS-SOLD> 199,386
<TRADING-ASSETS> 745,000
<INVESTMENTS-HELD-FOR-SALE> 3,688,984
<INVESTMENTS-CARRYING> 3,972,867
<INVESTMENTS-MARKET> 3,980,564
<LOANS> 24,967,716
<ALLOWANCE> 406,005
<TOTAL-ASSETS> 38,134,285
<DEPOSITS> 22,255,695
<SHORT-TERM> 6,814,659
<LIABILITIES-OTHER> 1,119,459
<LONG-TERM> 4,729,591
<COMMON> 853,800
0
0
<OTHER-SE> 2,361,081
<TOTAL-LIABILITIES-AND-EQUITY> 38,134,285
<INTEREST-LOAN> 1,340,149
<INTEREST-INVEST> 341,689
<INTEREST-OTHER> 29,252
<INTEREST-TOTAL> 1,711,090
<INTEREST-DEPOSIT> 387,749
<INTEREST-EXPENSE> 732,824
<INTEREST-INCOME-NET> 978,266
<LOAN-LOSSES> 52,224
<SECURITIES-GAINS> 1,226
<EXPENSE-OTHER> 815,888
<INCOME-PRETAX> 561,089
<INCOME-PRE-EXTRAORDINARY> 396,932
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 396,932
<EPS-PRIMARY> 2.30
<EPS-DILUTED> 2.30
<YIELD-ACTUAL> 4.33
<LOANS-NON> 89,184
<LOANS-PAST> 43,708
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 404,798
<CHARGE-OFFS> 75,133
<RECOVERIES> 24,116
<ALLOWANCE-CLOSE> 406,005
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
