<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 June 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 July 31, 1994
Common Stock, $5.00 par value, 171,081,682 shares
<PAGE> 2
QUARTERLY REPORT ON FORM 10-Q
WACHOVIA CORPORATION
June 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, commercial, trust and institutional banking services through
494 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 18 through 21 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 second 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 - 17 of the quarterly
Report to Shareholders of the Registrant (attached hereto as Exhibit 19) is
incorporated herein by reference.
PART II - OTHER INFORMATION
Item 5. Other Information
On July 22, 1994, the board of directors of Wachovia Corporation
authorized the repurchase of up to 5 million shares of the corporation's common
stock. The action replaces earlier authorizations to repurchase the
corporation's common stock. The company intends to continue reissuing some or
all of the repurchased shares for its employee stock plans, dividend
reinvestment plan and for other appropriate purposes.
<PAGE> 3
QUARTERLY REPORT ON FORM 10-Q
WACHOVIA CORPORATION
June 30, 1994
Item 5. Other Information (continued)
In May 1994, South Carolina National Bank, a member company of Wachovia
Corporation since 1991, changed its name to Wachovia Bank of South Carolina,
N.A. The action was approved by its board of directors in October 1993.
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 June 30, 1994
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended June 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
August 12, 1994 By ROBERT S. McCOY, JR.
------------------------------
Robert S. McCoy, Jr.
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
August 12, 1994 By JOHN C. McLEAN, JR.
------------------------------
John C. McLean, Jr.
Comptroller
(Principal Accounting Officer)
<PAGE> 1
Wachovia Corporation
Computation of Earnings Per Common Share
Exhibit 11
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY (in thousands,
except per share amount)
Average common shares outstanding 171,298 172,979 171,372 172,449
Dilutive common stock options -
based on treasury stock method
using average market price 1,178 1,662 1,200 1,633
Dilutive common stock awards -
based on treasury stock method
using average market price 82 71 76 67
-------- -------- -------- --------
Average primary shares outstanding 172,558 174,712 172,648 174,149
======== ======== ======== ========
Net income $134,141 $123,123 $258,940 $244,691
======== ======== ======== ========
Per share amount $ .78 $ .71 $ 1.50 $ 1.41
FULLY DILUTED (in thousands,
except per share amount)
Average common shares outstanding 171,298 172,979 171,372 172,449
Dilutive common stock options -
based on treasury stock method
using higher of period-end market
price or average market price 1,188 1,662 1,216 1,633
Dilutive common stock awards -
based on treasury stock method
using higher of period-end market
price or average market price 82 71 76 71
Convertible notes assumed converted 629 1,292 634 1,712
-------- -------- -------- --------
Average fully diluted
shares outstanding 173,197 176,004 173,298 175,865
======== ======== ======== ========
Net income $134,141 $123,123 $258,940 $244,691
Add interest on convertible
notes after taxes 133 250 266 610
-------- -------- -------- --------
Adjusted net income $134,274 $123,373 $259,206 $245,301
======== ======== ======== ========
Per share amount $ .78 $ .70 $ 1.50 $ 1.39
</TABLE>
<PAGE> 1
Exhibit 19
2 WACHOVIA
- - --------------------------------------------------------------------------------
REPORT TO SHAREHOLDERS FOR THE PERIOD ENDING JUNE 30, 1994
Dear Wachovia Shareholder:
During the second quarter, the economy continued to grow at a moderate pace,
while price inflation remained subdued. Banking benefited from increased loan
demand and improved credit losses, although net interest margins remained under
pressure. In this environment, Wachovia achieved good earnings growth.
Net income per fully diluted share was $.78, up 10.6 percent from $.70 in the
same three months of 1993. Net income totaled $134.1 million versus $123.1
million and represented annualized returns of 17.5 percent on shareholders'
equity and 1.46 percent on assets. Annualized returns include unrealized gains
or losses on securities available-for-sale, net of tax.
For the first six months, net income per fully diluted share was $1.50, higher
by 7.2 percent from $1.39 in the year-earlier period. Net income was $258.9
million compared with $244.7 million and represented annualized returns of 17
percent on equity and 1.43 percent on assets.
Average interest-earning assets increased $3.537 billion or 12.2 percent for
the second period and $3.328 billion or 11.5 percent for the first half led by
good growth in loan demand. Average loans rose $2.701 billion or 12.7 percent
for the quarter, with the commercial category leading the increase, and $2.316
billion or 10.9 percent for the first six months, with the retail portfolio
showing the largest gain. Compared with the strong growth experienced in the
first quarter, average loans were up an additional $959 million or an
annualized rate of 16.8 percent, although the rate of increase is expected to
moderate in the latter half of the year.
Average interest-bearing liabilities expanded $3.531 billion or 14.9 percent
and $3.253 billion or 13.8 percent for the three and six months, respectively.
Average interest-bearing time deposits remained largely unchanged for both
periods in comparison with year-earlier levels, while short-term borrowings and
long-term debt rose.
Taxable equivalent net interest income increased modestly for both the quarter
and first half. The impact from good growth in interest-earning assets was
moderated by lower average rates earned and higher levels of interest-bearing
liabilities. The net yield on interest-earning assets decreased 44 basis points
for both the second period and year to date.
Other operating revenue rose $4.7 million or 3.2 percent for the quarter and
was up modestly for the first six months but grew $8.4 million or 5.8 percent
from the first quarter. Year-over-year gains, largely in trust fees and credit
card income, offset lower revenues from mortgage fee income, deposit account
service charges and trading account profits. Noninterest expense increased $1.7
million or less than 1 percent for the second period and was down $13.4 million
or 2.4 percent for the first half.
At June 30, 1994, nonperforming assets totaled $125 million or .51 percent of
loans and foreclosed property compared with $227 million or 1.04 percent a year
earlier. Net loan losses for the second period and first half were $15.9
million or .26 percent of average loans and $33 million or .28 percent,
respectively, versus $17.2 million or .32 percent and $31.2 million or .29
percent in the same periods of 1993.
The provision for loan losses was $16.3 million for the quarter, down $9.7
million or 37.3 percent, and $34.1 million year to date, a decrease of $17.1
million or 33.3 percent. At second quarter-end, the allowance for loan losses
totaled $406 million, representing 1.67 percent of loans and 403 percent
coverage of nonperforming loans. Shareholders' equity was 8.50 percent of
assets, and the Tier I and total capital to risk-adjusted assets ratios were
9.56 percent and 13.35 percent, respectively.
The pace of economic growth is likely to be somewhat more restrained over the
remainder of the year, while competition among banks and other financial
services providers continues to intensify. As part of its strategy to address
an increasingly challenging period for banking, Wachovia is realigning its
corporate, consumer, investment management and trust functions. The changes
will strengthen the development and delivery of services and increase
responsiveness and attention to customers in each market served by Wachovia.
In the News Developments section on page 2, the important steps are discussed
in more detail. These initiatives, combined with a strong credit culture,
advanced technology and excellent people, position Wachovia well to remain a
leader in banking.
Sincerely,
/s/ L. M. Baker, Jr.
- - --------------------------
L. M. Baker, Jr.
Chief Executive Officer
July 29, 1994
<PAGE> 2
[ ] NEWS DEVELOPMENTS
- - --------------------------------------------------------------------------------
- - - Wachovia announced on July 22 a realignment of its corporate, consumer,
investment management and trust functions to strengthen the development and
delivery of services to customers and provide more focus on each market served
by the corporation.
L.M. Baker, Jr., chief executive officer, said corporate banking, corporate
trust, employee benefit and charitable trust services will be combined under
the Corporate Financial Services Division. Retail banking and personal trust
services will be part of the Consumer Financial Services Division. The
Financial Management Division will have responsibility for fiduciary investment
management services, bond, money market and brokerage services as well as the
control and funds management functions.
"Individual and corporate customers are increasingly looking for convenient and
effective access to professional financial services," Mr. Baker said. "The
alignment of customer-centered functions with relationship bankers and trust
professionals will enable Wachovia to identify and respond more directly to the
specialized financial needs of customers."
Hugh M. Durden will succeed G. Joseph Prendergast as executive in charge of the
Corporate Financial Services Division and president of Wachovia Corporate
Services, Inc., which offers corporate banking services outside Wachovia's home
markets. Currently, Mr. Durden is responsible for the Trust Division. Under the
new structure, Mr. Prendergast will devote full energy to his continuing
responsibilities as president and chief executive officer of Wachovia Bank of
Georgia.
Will B. Spence, Jr., will continue as executive in charge of the newly named
Consumer Financial Services Division. Robert S. McCoy, Jr., continues as
executive in charge of the expanded Financial Management Division.
Within the Consumer Financial Services Division, George W.P. Atkins will
continue as the senior Personal Trust executive. Mr. Atkins has ongoing
accountability for maintaining the integrity of personal trust relationships
and high standards of fiduciary responsibility. Fiduciary services such as
estate planning, estate settlement and estate management will continue to be
provided by Personal Trust officers and estate administrators in Wachovia's
member banks.
Earlier, it was announced that W. Doug King became executive in charge of the
Consumer Credit Services Division of Wachovia Corporation effective June 3. He
is responsible for the corporation's credit card, sales finance, mortgage
banking activities and the Wachovia On-Call central telephone and sales and
service center. In addition, Mr. King was elected an executive vice president
of Wachovia Corporation by the board of directors at its July meeting.
- - - The board of directors on July 22 declared a third quarter dividend of $.30
per share, payable September 1 to shareholders of record on August 8. The
dividend represents an increase of 11.1 percent from $.27 per share paid in the
same quarter of 1993. For the year to date, dividends will total $.90 per
share, higher by 11.1 percent from $.81 per share paid in the same year-earlier
period. The board also authorized the repurchase of up to 5 million shares of
the corporation's common stock. The action replaces earlier authorizations to
repurchase the corporation's common stock. The company intends to continue
reissuing some or all of the repurchased shares for its employee stock plans,
dividend reinvestment plan and for other appropriate purposes.
[ ] SELECTED PERIOD-END DATA
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30 June 30
1994 1993
-------- --------
<S> <C> <C>
Banking offices:
North Carolina . . . . . . . . . . . . . . . . 216 222
Georgia . . . . . . . . . . . . . . . . . . . . 127 129
South Carolina . . . . . . . . . . . . . . . . 151 158
------- -------
Total . . . . . . . . . . . . . . . . . . . . 494 509
======= =======
Automated banking machines:
North Carolina . . . . . . . . . . . . . . . . 270 232
Georgia . . . . . . . . . . . . . . . . . . . . 181 175
South Carolina . . . . . . . . . . . . . . . . 165 166
------- -------
Total . . . . . . . . . . . . . . . . . . . . 616 573
======= =======
Employees (full-time equivalent) . . . . . . . . 15,553 15,838
Common stock shareholders of record . . . . . . . 28,722 27,696
Common shares outstanding (thousands) . . . . . . 171,182 173,498
</TABLE>
2
<PAGE> 3
<TABLE>
[ ] FINANCIAL HIGHLIGHTS
- - -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended Six Months Ended
June 30 Percent June 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 . . . . . . . . . . . . . . . . . . . $134,141 $123,123 8.9 $258,940 $244,691 5.8
Cash dividends paid on common stock . . . . . . . 51,399 46,762 9.9 102,842 93,216 10.3
Payout ratio (total cash dividends\
net income) . . . . . . . . . . . . . . . . . . 38.3% 38.0% 39.7% 38.1%
Net income per common share:
Primary . . . . . . . . . . . . . . . . . . . . $ .78 $ .71 10.3 $ 1.50 $ 1.41 6.7
Fully diluted . . . . . . . . . . . . . . . . . $ .78 $ .70 10.6 $ 1.50 $ 1.39 7.2
Cash dividends paid per common share . . . . . . $ .30 $ .27 11.1 $ .60 $ .54 11.1
Average primary shares outstanding . . . . . . . 172,558 174,712 (1.2) 172,648 174,149 (.9)
Average fully diluted shares outstanding . . . . 173,197 176,004 (1.6) 173,298 175,865 (1.5)
Annualized return on average assets . . . . . . . 1.46% 1.51% 1.43% 1.50%
Annualized return on average
shareholders' equity . . . . . . . . . . . . . 17.47 17.27 17.06 17.33
Including average unrealized gains (losses) on
securities available-for-sale, net of tax:*
Annualized return on average assets . . . . . . 1.46 -- 1.43 --
Annualized return on average
shareholders' equity . . . . . . . . . . . . 17.52 -- 17.03 --
BALANCE SHEET DATA AT PERIOD-END
(millions, except per share data)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,069 $ 33,248 11.5
Interest-earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,964 29,573 11.5
Loans -- net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,300 21,690 12.0
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,218 21,886 1.5
Interest-bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,637 24,392 13.3
Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,149** 2,950 6.7
Shareholders' equity to total assets . . . . . . . . . . . . . . . . . . . . . . . . 8.50% 8.87%
Risk-based capital ratios:
Tier I capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.56 10.06
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.35 13.34
Per share:
Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18.40 $ 17.01 8.2
Common stock closing price (NYSE) . . . . . . . . . . . . . . . . . . . . . . . . . 33.125 34.375 (3.6)
* Includes unrealized gains (losses) on securities available-for-sale of
($9) for the second quarter and $7 year-to-date, net of tax
** Includes unrealized losses on securities available-for-sale of ($15),
net of tax
</TABLE>
<TABLE>
[ ] COMMON STOCK DATA -- PER SHARE
- - --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
-------------------- -------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Market value:
Period-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33 1/8 $ 31 3/4 $ 33 1/2 $ 39 1/8 $ 34 3/8
High . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3/8 35 1/8 40 1/2 40 3/8 40 1/2
Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3/4 30 1/8 31 7/8 33 3/8 32 3/8
Book value at period-end . . . . . . . . . . . . . . . . . . . . . . 18.40 18.05 17.61 17.29 17.01
Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 .30 .30 .27 .27
Price/earnings ratio* . . . . . . . . . . . . . . . . . . . . . . . . 11.3x 11.1x 11.8x 14.2x 12.8x
* Based on most recent twelve months net income per primary share and
period-end stock price
</TABLE>
3
<PAGE> 4
<TABLE>
[ ] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SUMMARY TABLE 1
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Twelve
Months 1994 1993
Ended --------------- -------------------------- Six Months Ended
June 30 Second First Fourth Third Second June 30
1994 Quarter Quarter Quarter Quarter Quarter 1994 1993
------- ------- ------- ------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income -- taxable equivalent . . . $2,280,165 $594,669 $558,329 $568,749 $558,418 $549,446 $1,152,998 $1,094,571
Interest expense . . . . . . . . . . . . . 887,472 242,488 216,007 217,832 211,145 203,377 458,495 410,035
---------- -------- -------- -------- -------- -------- ---------- ----------
Net interest income -- taxable equivalent . 1,392,693 352,181 342,322 350,917 347,273 346,069 694,503 684,536
Taxable equivalent adjustment . . . . . . . 100,577 24,882 24,476 24,732 26,487 24,423 49,358 47,682
---------- -------- -------- -------- -------- -------- ---------- ----------
Net interest income . . . . . . . . . . . . 1,292,116 327,299 317,846 326,185 320,786 321,646 645,145 636,854
Provision for loan losses . . . . . . . . . 75,597 16,342 17,759 18,013 23,483 26,084 34,101 51,156
---------- -------- -------- -------- -------- -------- ---------- ----------
Net interest income after
provision for loan losses . . . . . . . . 1,216,519 310,957 300,087 308,172 297,303 295,562 611,044 585,698
Other operating revenue . . . . . . . . . . 600,370 153,299 144,869 152,441 149,761 148,593 298,168 297,977
Gain on sale of subsidiary . . . . . . . . -- -- -- -- -- -- -- 8,030
Investment securities gains . . . . . . . . 8,711 221 572 7,216 702 1,254 793 11,476
---------- -------- -------- -------- -------- -------- ---------- ----------
Total other income . . . . . . . . . . . . 609,081 153,520 145,441 159,657 150,463 149,847 298,961 317,483
Personnel expense . . . . . . . . . . . . . 572,348 141,232 141,014 147,709 142,393 138,234 282,246 278,578
Other expense . . . . . . . . . . . . . . . 545,533 133,313 129,036 152,031 131,153 134,600 262,349 279,372
---------- -------- -------- -------- -------- -------- ---------- ----------
Total other expense . . . . . . . . . . . . 1,117,881 274,545 270,050 299,740 273,546 272,834 544,595 557,950
Income before income taxes . . . . . . . . 707,719 189,932 175,478 168,089 174,220 172,575 365,410 345,231
Applicable income taxes* . . . . . . . . . 201,375 55,791 50,679 45,092 49,813 49,452 106,470 100,540
---------- -------- -------- -------- -------- -------- ---------- ----------
Net income . . . . . . . . . . . . . . . . $ 506,344 $134,141 $124,799 $122,997 $124,407 $123,123 $ 258,940 $ 244,691
========== ======== ======== ======== ======== ======== ========== ==========
Net income per common share:
Primary . . . . . . . . . . . . . . . . . $ 2.92 $ .78 $ .72 $ .71 $ .71 $ .71 $ 1.50 $ 1.41
Fully diluted . . . . . . . . . . . . . . $ 2.92 $ .78 $ .72 $ .71 $ .71 $ .70 $ 1.50 $ 1.39
Cash dividends paid per common share . . . $ 1.17 $ .30 $ .30 $ .30 $ .27 $ .27 $ .60 $ .54
Average primary shares outstanding . . . . 173,197 172,558 172,739 173,175 174,300 174,712 172,648 174,149
Average fully diluted shares outstanding 173,988 173,197 173,378 173,943 175,414 176,004 173,298 175,865
SELECTED AVERAGE BALANCES (millions)
Total assets . . . . . . . . . . . . . . . $ 35,450 $ 36,753 $ 35,778 $ 35,420 $ 33,870 $ 32,718 $ 36,268 $ 32,596
Loans -- net of unearned income . . . . . . 22,695 23,969 23,010 22,165 21,656 21,268 23,492 21,176
Investment securities . . . . . . . . . . . 7,629** 7,767** 7,690** 7,992 7,072 6,615 7,728* 6,539
Other interest-earning assets . . . . . . . 1,106 829 1,083 1,234 1,277 1,145 955 1,132
Total interest-earning assets . . . . . . . 31,430 32,565 31,783 31,391 30,005 29,028 32,175 28,847
Interest-bearing deposits . . . . . . . . . 16,882 16,964 16,694 17,030 16,835 16,986 16,831 17,106
Short-term borrowed funds . . . . . . . . . 5,957 6,038 6,148 6,218 5,432 4,998 6,092 4,974
Long-term debt . . . . . . . . . . . . . . 3,269 4,281 3,670 2,774 2,370 1,768 3,977 1,567
Total interest-bearing liabilities . . . . 26,108 27,283 26,512 26,022 24,637 23,752 26,900 23,647
Noninterest-bearing deposits . . . . . . . 5,414 5,333 5,366 5,544 5,410 5,253 5,349 5,231
Total deposits . . . . . . . . . . . . . . 22,296 22,297 22,060 22,574 22,245 22,239 22,180 22,337
Shareholders' equity . . . . . . . . . . . 2,981 3,063 3,021 2,934 2,907 2,852 3,042 2,823
RATIOS (averages)
Loans to deposits . . . . . . . . . . . . . 101.79% 107.49% 104.31% 98.19% 97.35% 95.63% 105.92% 94.80%
Annualized net loan losses to loans . . . . .30 .26 .30 .31 .35 .32 .28 .29
Annualized net yield on
interest-earning assets . . . . . . . . . 4.43 4.34 4.37 4.44 4.59 4.78 4.35 4.79
Shareholders' equity to:
Total assets . . . . . . . . . . . . . . 8.41 8.33 8.44 8.28 8.58 8.72 8.39 8.66
Net loans . . . . . . . . . . . . . . . . 13.37 13.00 13.36 13.48 13.68 13.66 13.18 13.58
Annualized return on assets . . . . . . . . 1.43 1.46 1.40 1.39 1.47 1.51 1.43 1.50
Annualized return on
shareholders' equity . . . . . . . . . . 16.99 17.52 16.53 16.77 17.12 17.27 17.03 17.33
* Income taxes applicable to securities transactions were $3,452, $89,
$226, $2,846, $291, $371, $315 and $4,335, respectively
** Reported at amortized cost; excludes pretax unrealized gains (losses) on
securities available-for-sale of $6 for the twelve months ended June 30,
1994, ($14) for the second quarter of 1994, $37 for the first quarter of
1994 and $11 for the six months ended June 30, 1994
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
RESULTS OF OPERATIONS
Overview
The economy continued to expand moderately in the
second quarter of 1994. Business activity within the
corporation's three primary states of Georgia, North
Carolina and South Carolina increased in general with
seasonally adjusted unemployment averaging 5.4 percent, 3.9
percent and 6.5 percent, respectively, for the second three
months of the year.
Wachovia's net income was $134.141 million for the
second quarter and $258.940 million for the first six months
of 1994 compared with $123.123 million and $244.691 million
in the same periods of 1993. On a fully diluted basis, net
income per share was $.78 for the quarter and $1.50 for the
first half versus $.70 and $1.39, respectively, in 1993.
Annualized returns including unrealized gains or losses on
securities available-for-sale, net of tax, were 17.5 percent
on shareholders' equity and 1.46 percent on assets for the
second quarter. For the first six months, annualized returns
were 17 percent on shareholders' equity and 1.43 percent on
assets.
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>
- - ----------------------------------------------------------------------------------------------------------------------------------
COMPONENTS OF EARNINGS PER PRIMARY SHARE TABLE 2
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 Change 1994 1993 Change
----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Interest income -- taxable equivalent . . . . . . . . . . . . $3.45 $3.14 $ .31 $6.68 $6.28 $ .40
Interest expense . . . . . . . . . . . . . . . . . . . . . . 1.41 1.16 .25 2.66 2.35 .31
----- ----- ----- ----- ----- -----
Net interest income -- taxable equivalent . . . . . . . . . . 2.04 1.98 .06 4.02 3.93 .09
Taxable equivalent adjustment . . . . . . . . . . . . . . . . .15 .14 .01 .28 .27 .01
----- ----- ----- ----- ----- -----
Net interest income . . . . . . . . . . . . . . . . . . . . . 1.89 1.84 .05 3.74 3.66 .08
Provision for loan losses . . . . . . . . . . . . . . . . . . .09 .15 (.06) .20 .29 (.09)
----- ----- ----- ----- ----- -----
Net interest income after provision for loan losses . . . . . 1.80 1.69 .11 3.54 3.37 .17
Other operating revenue . . . . . . . . . . . . . . . . . . . .89 .85 .04 1.73 1.71 .02
Gain on sale of subsidiary . . . . . . . . . . . . . . . . . -- -- -- -- .05 (.05)
Investment securities gains . . . . . . . . . . . . . . . . . -- .01 (.01) -- .06 (.06)
----- ----- ----- ----- ----- -----
Total other income . . . . . . . . . . . . . . . . . . . . . .89 .86 .03 1.73 1.82 (.09)
Personnel expense . . . . . . . . . . . . . . . . . . . . . . .82 .79 .03 1.63 1.60 .03
Other expense . . . . . . . . . . . . . . . . . . . . . . . . .77 .77 -- 1.52 1.60 (.08)
----- ----- ----- ----- ----- -----
Total other expense . . . . . . . . . . . . . . . . . . . . . 1.59 1.56 .03 3.15 3.20 (.05)
Income before income taxes . . . . . . . . . . . . . . . . . 1.10 .99 .11 2.12 1.99 .13
Applicable income taxes . . . . . . . . . . . . . . . . . . . .32 .28 .04 .62 .58 .04
----- ----- ----- ----- ----- -----
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ .78 $ .71 $ .07 $1.50 $1.41 $ .09
===== ===== ===== ===== ===== =====
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AND AVERAGE BALANCES TABLE 3
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Twelve
Months 1994 1993
Ended ----------------- ---------------------------- Six Months Ended
June 30 Second First Fourth Third Second June 30
1994 Quarter Quarter Quarter Quarter Quarter 1994 1993
---------- -------- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET INTEREST INCOME -- TAXABLE
EQUIVALENT (thousands)
Interest income:
Loans . . . . . . . . . . . . . . . . . $1,730,948 $458,695 $422,388 $427,617 $422,248 $416,418 $ 881,083 $ 827,763
Investment securities . . . . . . . . . 506,448 126,313 125,663 129,845 124,627 122,779 251,976 245,867
Interest-bearing bank balances . . . . 946 185 160 116 485 712 345 2,304
Federal funds sold and securities
purchased under resale agreements . . 12,654 1,842 3,111 4,089 3,612 2,535 4,953 4,732
Trading account assets . . . . . . . . 29,169 7,634 7,007 7,082 7,446 7,002 14,641 13,905
---------- -------- -------- -------- -------- -------- ---------- ----------
Total . . . . . . . . . . . . . . . 2,280,165 594,669 558,329 568,749 558,418 549,446 1,152,998 1,094,571
Interest expense:
Interest-bearing demand . . . . . . . . 57,145 13,456 13,235 14,976 15,478 14,771 26,691 29,979
Savings and money market savings . . . 146,830 37,928 34,284 36,774 37,844 37,778 72,212 77,130
Savings certificates . . . . . . . . . 222,077 53,156 53,465 56,393 59,063 61,221 106,621 125,339
Large denomination certificates . . . . 74,079 18,507 15,057 19,338 21,177 23,693 33,564 49,586
Time deposits in foreign offices . . . 15,624 4,098 3,280 5,170 3,076 2,797 7,378 6,257
Short-term borrowed funds . . . . . . . 206,749 61,337 51,625 49,877 43,910 39,659 112,962 80,060
Long-term debt . . . . . . . . . . . . 164,968 54,006 45,061 35,304 30,597 23,458 99,067 41,684
---------- -------- -------- -------- -------- -------- ---------- ----------
Total . . . . . . . . . . . . . . . 887,472 242,488 216,007 217,832 211,145 203,377 458,495 410,035
---------- -------- -------- -------- -------- -------- ---------- ----------
Net interest income . . . . . . . . . . . $1,392,693 $352,181 $342,322 $350,917 $347,273 $346,069 $ 694,503 $ 684,536
========== ======== ======== ======== ======== ======== ========== ==========
Annualized net yield on
interest-earning assets . . . . . . . . 4.43% 4.34% 4.37% 4.44% 4.59% 4.78% 4.35% 4.79%
AVERAGE BALANCES (millions)
Assets:
Loans -- net of unearned income . . . . $ 22,695 $ 23,969 $ 23,010 $ 22,165 $ 21,656 $ 21,268 $ 23,492 $ 21,176
Investment securities . . . . . . . . . 7,629 7,767 7,690 7,992 7,072 6,615 7,728 6,539
Interest-bearing bank balances . . . . 26 18 17 11 59 88 18 122
Federal funds sold and securities
purchased under resale agreements . . 386 182 394 513 454 329 287 305
Trading account assets . . . . . . . . 694 629 672 710 764 728 650 705
---------- -------- -------- -------- -------- -------- ---------- ----------
Total interest-earning assets . . . 31,430 32,565 31,783 31,391 30,005 29,028 32,175 28,847
Cash and due from banks . . . . . . . . 2,376 2,346 2,387 2,421 2,349 2,332 2,367 2,351
Premises and equipment . . . . . . . . 501 510 502 497 493 444 506 441
Other assets . . . . . . . . . . . . . 1,544 1,754 1,476 1,520 1,427 1,310 1,617 1,348
Unrealized gains (losses) on securities
available-for-sale . . . . . . . . . 6 (14) 37 -- -- -- 11 --
Allowance for loan losses . . . . . . . (407) (408) (407) (409) (404) (396) (408) (391)
---------- -------- -------- -------- -------- -------- ---------- ----------
Total assets . . . . . . . . . . . $ 35,450 $ 36,753 $ 35,778 $ 35,420 $ 33,870 $ 32,718 $ 36,268 $ 32,596
========== ======== ======== ======== ======== ======== ========== ==========
Liabilities and shareholders' equity:
Interest-bearing demand . . . . . . . . $ 3,339 $ 3,420 $ 3,385 $ 3,319 $ 3,233 $ 3,196 $ 3,403 $ 3,162
Savings and money market savings . . . 6,068 6,103 6,074 6,080 6,013 5,946 6,089 5,948
Savings certificates . . . . . . . . . 5,404 5,283 5,355 5,426 5,551 5,648 5,319 5,703
Large denomination certificates . . . . 1,597 1,736 1,463 1,550 1,637 1,825 1,600 1,889
Time deposits in foreign offices . . . 474 422 417 655 401 371 420 404
Short-term borrowed funds . . . . . . . 5,957 6,038 6,148 6,218 5,432 4,998 6,092 4,974
Long-term debt . . . . . . . . . . . . 3,269 4,281 3,670 2,774 2,370 1,768 3,977 1,567
---------- -------- -------- -------- -------- -------- ---------- ----------
Total interest-bearing liabilities. 26,108 27,283 26,512 26,022 24,637 23,752 26,900 23,647
Demand deposits in domestic offices . . 5,336 5,245 5,302 5,480 5,314 5,168 5,273 5,156
Demand deposits in foreign offices . . 5 5 5 6 5 5 5 6
Noninterest-bearing time deposits
in domestic offices . . . . . . . . . 73 83 59 58 91 80 71 69
Other liabilities . . . . . . . . . . . 947 1,074 879 920 916 861 977 895
Shareholders' equity . . . . . . . . . 2,981 3,063 3,021 2,934 2,907 2,852 3,042 2,823
---------- -------- -------- -------- -------- -------- ---------- ----------
Total liabilities and
shareholders' equity . . . . . . $ 35,450 $ 36,753 $ 35,778 $ 35,420 $ 33,870 $ 32,718 $ 36,268 $ 32,596
========== ======== ======== ======== ======== ======== ========== ==========
Total deposits . . . . . . . . . . . . . $ 22,296 $ 22,297 $ 22,060 $ 22,574 $ 22,245 $ 22,239 $ 22,180 $ 22,337
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
Net Interest Income
Taxable equivalent net interest income increased $6.112
million or 1.8 percent for the second quarter of 1994 and
$9.967 million or 1.5 percent for the first half. Good
growth occurred in interest-earning assets, but net interest
income increases were moderated by lower average asset
yields and higher levels of interest-bearing liabilities.
Also negatively impacting net interest income for the second
quarter was a modestly higher average cost of funds.
Continued growth in interest-earning assets pushed taxable
equivalent net interest income up $9.859 million or 2.9
percent from the first quarter of 1994.
The net yield on interest-earning assets (net interest
income as a percentage of average interest-earning assets)
was lower by 44 basis points for both the second period and
first half. The declines in comparison with the year-earlier
periods reflected erosion of average asset yields relative
to average funding costs. The average rate earned decreased
26 basis points for the second period and 42 basis points
year to date as rates earned on newly acquired assets were
lower than those on assets being replaced. Average funding
costs rose 13 basis points for the quarter, reflecting, in
part, higher short-term borrowing costs and continued
lengthening by the corporation of its debt market maturities
through the issuance of long-term debt. For the first half,
average funding costs declined 6 basis points. As interest
rates continued to rise during the second quarter, the
average asset yield expanded 21 basis points, the average
cost of funds rose 26 basis points and the net yield on
interest-earning assets declined 3 basis points from the
first quarter.
Taxable equivalent interest income increased $45.223
million or 8.2 percent for the quarter and $58.427 million
or 5.3 percent year to date supported by higher levels of
interest-earning assets. Average interest-earning assets
grew $3.537 billion or 12.2 percent for the second quarter,
$3.328 billion or 11.5 percent for the first half and $782
million or 2.5 percent from the preceding quarter.
Average loans rose $2.701 billion or 12.7 percent for
the quarter and $2.316 billion or 10.9 percent for the first
six months of 1994. Growth in the commercial portfolio was
stronger in the second period, while consumer lending
outpaced commercial loan growth year to date. Average loans
for the quarter were up an additional $959 million or 4.2
percent, representing an annualized growth rate of 16.8
percent, from the strong gains achieved in the first
quarter, fueled primarily by continued good gains in
commercial lending.
Commercial loans, including related real estate
categories, increased $1.527 billion or 12.9 percent for the
second quarter, $1.086 billion or 9.1 percent year to date
and $741 million or 5.9 percent from the first quarter.
Regular commercial loans led the growth in all periods,
rising $1.199 billion or 19.6 percent, $800 million or 12.9
percent and $660 million or 9.9 percent, respectively. Gains
also were achieved in commercial mortgages, tax-exempt loans
and lease financing. Construction loans declined for the
second period and from the first quarter but were up year to
date. Based on regulatory definitions, construction loans at
June 30, 1994 were $477 million and commercial mortgages
were $3.357 billion. Comparable amounts were $453 million
and $3.165 billion, respectively, a year earlier and $477
million and $3.323 billion, respectively, at March 31, 1994.
Retail loans, including residential mortgages, were
higher by $1.174 billion or 12.5 percent for the quarter,
$1.230 billion or 13.3 percent year to date and $218 million
or 2.1 percent from the first three months of 1994. Gains
occurred mainly in credit card loans, indirect retail
lending, which primarily consists of automobile sales
financing, and direct retail loans. Average credit card
loans rose $967 million or 39.1 percent for the second
period and $935 million or 39.5 percent for the six months
in comparison with year-earlier periods and were up $276
million or 8.7 percent from the first quarter. At June 30,
1994, credit card outstandings totaled $3.591 billion versus
$2.603 billion at the end of the 1993 second quarter and
$3.298 billion at first quarter-close. Consumers continued
to be attracted to Wachovia's First Year Prime Visa and
MasterCard pricing option introduced in the fall of 1993.
7
<PAGE> 8
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------------
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS -- SECOND QUARTER* TABLE 4
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
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:
$ 7,330 $ 6,131 5.71 5.31 Commercial . . . . . . . . . . . . . $104,411 $ 81,119 $23,292 $ 6,558 $16,734
1,985 1,884 8.61 9.09 Tax-exempt . . . . . . . . . . . . . 42,633 42,691 (58) (2,280) 2,222
------- ------- -------- -------- -------
9,315 8,015 6.33 6.20 Total commercial . . . . . . . . 147,044 123,810 23,234 2,773 20,461
735 674 8.18 9.05 Direct retail. . . . . . . . . . . . . 14,988 15,213 (225) (1,530) 1,305
2,444 2,172 7.81 8.61 Indirect retail . . . . . . . . . . . 47,629 46,623 1,006 (4,527) 5,533
3,437 2,470 10.80 11.96 Credit card . . . . . . . . . . . . . 92,522 73,633 18,889 (7,726) 26,615
331 328 11.28 11.05 Other revolving credit . . . . . . . . 9,302 9,045 257 195 62
------- ------- -------- -------- -------
6,947 5,644 9.49 10.27 Total retail . . . . . . . . . . 164,441 144,514 19,927 (11,542) 31,469
480 484 8.62 7.32 Construction . . . . . . . . . . . . . 10,317 8,822 1,495 1,560 (65)
3,333 3,139 7.60 7.35 Commercial mortgages . . . . . . . . . 63,138 57,506 5,632 2,006 3,626
3,641 3,770 7.65 8.29 Residential mortgages. . . . . . . . . 69,466 77,865 (8,399) (5,812) (2,587)
------- ------- -------- -------- -------
7,454 7,393 7.69 7.82 Total real estate 142,921 144,193 (1,272) (2,472) 1,200
172 131 7.78 9.14 Lease financing. . . . . . . . . . . . 3,328 2,997 331 (492) 823
81 85 4.76 4.29 Foreign. . . . . . . . . . . . . . . . 961 904 57 96 (39)
------- ------- -------- -------- -------
23,969 21,268 7.68 7.85 Total loans. . . . . . . . . . . 458,695 416,418 42,277 (9,595) 51,872
Investment securities:
Held-to-maturity:
2,248 3,252 6.57 6.13 U.S. Government and agency. . . . 36,806 49,701 (12,895) 3,346 (16,241)
999 2,318 7.71 8.09 Mortgage backed securities. . . . 19,215 46,731 (27,516) (2,071) (25,445)
614 701 12.78 12.82 State and municipal . . . . . . . 19,565 22,381 (2,816) (64) (2,752)
6 344 3.57 4.62 Other . . . . . . . . . . . . . . 53 3,966 (3,913) (736) (3,177)
------- ------- -------- -------- -------
3,867 6,615 7.85 7.45 Total securities held-to-maturity 75,639 122,779 (47,140) 6,286 (53,426)
Available-for-sale:**
2,643 -- 5.52 -- U.S. Government and agency. . . . 36,396 -- 36,396 -- 36,396
977 -- 4.51 -- Mortgage backed securities. . . . 10,992 -- 10,992 -- 10,992
280 -- 4.72 -- Other . . . . . . . . . . . . . . 3,286 -- 3,286 -- 3,286
------- ------- -------- -------- -------
3,900 -- 5.21 -- Total securities available-for-sale 50,674 -- 50,674 -- 50,674
------- ------- -------- -------- -------
7,767 6,615 6.52 7.45 Total investment securities. . . 126,313 122,779 3,534 (16,301) 19,835
18 88 4.15 3.23 Interest-bearing bank balances . . . . 185 712 (527) 159 (686)
Federal funds sold and
securities purchased under
182 329 4.07 3.09 resale agreements. . . . . . . . . . 1,842 2,535 (693) 652 (1,345)
629 728 4.87 3.85 Trading account assets . . . . . . . . 7,634 7,002 632 1,679 (1,047)
------- ------- -------- -------- -------
$32,565 $29,028 7.33 7.59 Total interest-earning assets. . 594,669 549,446 45,223 (19,870) 65,093
======= =======
INTEREST EXPENSE
$ 3,420 $ 3,196 1.58 1.85 Interest-bearing demand. . . . . . . . 13,456 14,771 (1,315) (2,302) 987
6,103 5,946 2.49 2.55 Savings and money market savings . . . 37,928 37,778 150 (835) 985
5,283 5,648 4.04 4.35 Savings certificates . . . . . . . . . 53,156 61,221 (8,065) (4,247) (3,818)
1,736 1,825 4.28 5.21 Large denomination certificates. . . . 18,507 23,693 (5,186) (4,077) (1,109)
------- ------- -------- -------- -------
Total time deposits in
16,542 16,615 2.98 3.32 domestic offices . . . . . . . 123,047 137,463 (14,416) (13,816) (600)
422 371 3.89 3.02 Time deposits in foreign offices . . . 4,098 2,797 1,301 881 420
------- ------- -------- -------- -------
16,964 16,986 3.01 3.31 Total time deposits. . . . . . . 127,145 140,260 (13,115) (12,938) (177)
Federal funds purchased and
securities sold under
4,955 3,574 4.15 3.19 repurchase agreements. . . . . . . . 51,217 28,454 22,763 9,920 12,843
517 447 3.51 2.96 Commercial paper . . . . . . . . . . . 4,515 3,299 1,216 662 554
566 977 3.97 3.25 Other short-term borrowed funds. . . . 5,605 7,906 (2,301) 1,503 (3,804)
------- ------- -------- -------- -------
Total short-term
6,038 4,998 4.07 3.18 borrowed funds . . . . . . . . 61,337 39,659 21,678 12,441 9,237
3,441 1,218 4.71 4.55 Bank notes . . . . . . . . . . . . . 40,397 13,822 26,575 499 26,076
840 550 6.50 7.03 Other long-term debt . . . . . . . . . 13,609 9,636 3,973 (769) 4,742
------- ------- -------- -------- -------
4,281 1,768 5.06 5.32 Total long-term debt . . . . . . 54,006 23,458 30,548 (1,200) 31,748
------- ------- -------- -------- -------
$ 27,283 $23,752 3.56 3.43 Total interest-bearing liabilities 242,488 203,377 39,111 7,966 31,145
======== ======= ----- ------ -------- -------- -------
3.77 4.16 Interest rate spread
===== ======
Net yield on interest-earning assets
4.34 4.78 and net interest income. . . . . . . . 352,181 346,069 6,112 (33,815) 39,927
===== ====== ======== ======== =======
- - ------------------------------------------------------------------------------------------------------------------------------------
*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 ($14) million
</TABLE>
8
<PAGE> 9
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------------
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS -- SIX MONTHS* TABLE 5
- - -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Variance
Average Volume Average Rate Interest Attributable to
- - ---------------- ------------ --------------------- ------------------
1994 1993 1994 1993 1994 1993 Variance Rate Volume
- - ------- ------- ----- ----- ---------- --------- -------- ------- -------
(Millions) (Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans:
$ 7,002 $ 6,202 5.40 5.30 Commercial . . . . . . . . . . . . . . . . $ 187,373 $ 163,073 $24,300 $ 2,944 $21,356
1,983 1,901 8.58 9.03 Tax-exempt . . . . . . . . . . . . . . . . 84,416 85,132 (716) (4,327) 3,611
- - ------- ------- ---------- --------- -------
8,985 8,103 6.10 6.18 Total commercial. . . . . . . . . . . . 271,789 248,205 23,584 (3,138) 26,722
724 671 8.14 8.96 Direct retail. . . . . . . . . . . . . . . 29,246 29,797 (551) (2,835) 2,284
2,434 2,159 7.78 8.70 Indirect retail. . . . . . . . . . . . . . 93,955 93,137 818 (10,367) 11,185
3,300 2,365 10.84 12.34 Credit card. . . . . . . . . . . . . . . . 177,387 144,685 32,702 (19,171) 51,873
331 326 11.23 11.14 Other revolving credit . . . . . . . . . . 18,419 18,040 379 131 248
- - ------- ------- ---------- --------- -------
6,789 5,521 9.48 10.43 Total retail. . . . . . . . . . . . . . 319,007 285,659 33,348 (27,952) 61,300
490 479 8.32 7.28 Construction . . . . . . . . . . . . . . . 20,230 17,285 2,945 2,514 431
3,292 3,135 7.39 7.36 Commercial mortgages . . . . . . . . . . . 120,653 114,465 6,188 440 5,748
3,691 3,729 7.71 8.35 Residential mortgages. . . . . . . . . . . 141,126 154,487 (13,361) (11,776) (1,585)
- - ------- ------- ---------- --------- -------
7,473 7,343 7.61 7.86 Total real estate . . . . . . . . . . . 282,009 286,237 (4,228) (9,237) 5,009
166 129 7.96 9.26 Lease financing. . . . . . . . . . . . . . 6,533 5,899 634 (908) 1,542
79 80 4.44 4.45 Foreign. . . . . . . . . . . . . . . . . . 1,745 1,763 (18) (4) (14)
- - ------- ------- ---------- --------- -------
23,492 21,176 7.56 7.88 Total loans . . . . . . . . . . . . . . 881,083 827,763 53,320 (34,560) 87,880
Investment securities:
Held-to-maturity:
2,228 3,051 6.63 6.60 U.S. Government and agency. . . . . . . . 73,294 99,903 (26,609) 458 (27,067)
1,079 2,403 7.64 7.83 Mortgage backed securities. . . . . . . . 40,877 93,323 (52,446) (2,226) (50,220)
622 715 12.71 12.54 State and municipal . . . . . . . . . . . 39,228 44,448 (5,220) 606 (5,826)
10 370 5.33 4.46 Other . . . . . . . . . . . . . . . . . . 263 8,193 (7,930) 1,331 (9,261)
- - ------- ------- ---------- --------- -------
3,939 6,539 7.87 7.58 Total securities held-to-maturity . . . 153,662 245,867 (92,205) 8,892 (101,097)
Available-for-sale:**
2,502 -- 5.59 -- U.S. Government and agency. . . . . . . . 69,286 -- 69,286 -- 69,286
995 -- 4.59 -- Mortgage backed securities. . . . . . . . 22,686 -- 22,686 -- 22,686
292 -- 4.38 -- Other . . . . . . . . . . . . . . . . . . 6,342 -- 6,342 -- 6,342
- - ------- ------- ---------- --------- -------
3,789 -- 5.23 -- Total securities available-for-sale . . 98,314 -- 98,314 -- 98,314
- - ------- ------- ---------- --------- -------
7,728 6,539 6.57 7.58 Total investment securities . . . . . . 251,976 245,867 6,109 (35,190) 41,299
18 122 3.99 3.80 Interest-bearing bank balances . . . . . . . 345 2,304 (1,959) 111 (2,070)
Federal funds sold and
securities purchased under
287 305 3.48 3.13 resale agreements. . . . . . . . . . . . . 4,953 4,732 221 502 (281)
650 705 4.54 3.98 Trading account assets . . . . . . . . . . . 14,641 13,905 736 1,874 (1,138)
- - ------- ------- ---------- --------- -------
$32,175 $28,847 7.23 7.65 Total interest-earning assets . . . . . 1,152,998 1,094,571 58,427 (63,153) 121,580
======= =======
INTEREST EXPENSE
$ 3,403 $ 3,162 1.58 1.91 Interest-bearing demand. . . . . . . . . . . 26,691 29,979 (3,288) (5,454) 2,166
6,089 5,948 2.39 2.61 Savings and money market savings . . . . . . 72,212 77,130 (4,918) (6,711) 1,793
5,319 5,703 4.04 4.43 Savings certificates . . . . . . . . . . . . 106,621 125,339 (18,718) (10,578) (8,140)
1,600 1,889 4.23 5.29 Large denomination certificates. . . . . . . 33,564 49,586 (16,022) (9,100) (6,922)
- - ------- ------- ----------- --------- -------
Total time deposits in
16,411 16,702 2.94 3.41 domestic offices. . . . . . . . . . . 239,088 282,034 (42,946) (38,094) (4,852)
420 404 3.54 3.12 Time deposits in foreign offices . . . . . . 7,378 6,257 1,121 869 252
- - -------- -------- ---------- --------- -------
16,831 17,106 2.95 3.40 Total time deposits . . . . . . . . . . 246,466 288,291 (41,825) (37,239) (4,586)
Federal funds purchased and
securities sold under
4,906 3,616 3.81 3.26 repurchase agreements. . . . . . . . . . . 92,678 58,423 34,255 11,004 23,251
560 404 3.34 2.98 Commercial paper . . . . . . . . . . . . . . 9,273 5,973 3,300 782 2,518
626 954 3.55 3.31 Other short-term borrowed funds. . . . . . . 11,011 15,664 (4,653) 1,052 (5,705)
- - ------- ------- ---------- --------- -------
Total short-term
6,092 4,974 3.74 3.25 borrowed funds. . . . . . . . . . . . 112,962 80,060 32,902 13,263 19,639
3,162 1,086 4.63 4.59 Bank notes . . . . . . . . . . . . . . . . . 72,562 24,692 47,870 228 47,642
815 481 6.56 7.12 Other long-term debt . . . . . . . . . . . . 26,505 16,992 9,513 (1,436) 10,949
- - ------- ------- ---------- --------- -------
3,977 1,567 5.02 5.36 Total long-term debt. . . . . . . . . . 99,067 41,684 57,383 (2,810) 60,193
- - ------- ------- ---------- --------- -------
$26,900 $23,647 3.44 3.50 Total interest-bearing liabilities. . . 458,495 410,035 48,460 (7,086) 55,546
======= ======= ---- ---- ---------- --------- -------
3.79 4.15 Interest rate spread
==== ====
Net yield on interest-earning assets
4.35 4.79 and net interest income. . . . . . . . . . $ 694,503 $684,536 $ 9,967 (65,024) 74,991
==== ==== ========== ======== =======
- - --------------------------------------------------------------------------------------------------------------------------------
*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 gains of $11 million
</TABLE>
9
<PAGE> 10
Investment securities were up $1.152 billion or 17.4
percent for the second period and $1.189 billion or 18.2
percent year to date. However, investment securities
increased $77 million or 1 percent from the first quarter as
loans continued to show strong growth. Effective January 1,
1994, the corporation prospectively adopted Statement of
Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (FASB
115), pertaining to the accounting and classification of all
debt securities and equity securities having a readily
determinable fair value. FASB 115 requires debt securities
which management can demonstrate positive intent and ability
to hold to maturity to be classified as 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. Unrealized gains and losses resulting from
adjustments to market value are included in earnings under
trading account profits or losses. 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. Unrealized gains and losses are
included, net of tax, in shareholders' equity.
At June 30, 1994, securities held-to-maturity totaled
$3.850 billion and securities available-for-sale were $3.819
billion. These compared with total investment securities at
amortized cost of $6.604 billion a year earlier. The market
value of the securities held-to-maturity at second
quarter-end was $3.907 billion, representing a $57 million
appreciation over book value.
The following details securities available-for-sale and
securities held-to-maturity as of June 30, 1994.
<TABLE>
<S> <C>
$ in thousands
Securities available-for-sale at market value:
U.S. Government and agency . . . . . . . . . . . . . . . . . . . . . . . . . . $2,611,837
Mortgage backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . 933,760
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273,812
----------
Total securities available-for-sale . . . . . . . . . . . . . . . . . . . . 3,819,409
Securities held-to-maturity:
U.S. Government and agency . . . . . . . . . . . . . . . . . . . . . . . . . . 2,281,949
Mortgage backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . 950,375
State and municipal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602,816
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,505
----------
Total securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . 3,849,645
----------
Total investment securities . . . . . . . . . . . . . . . . . . . . . . . . $7,669,054
==========
</TABLE>
Unrealized losses on securities available-for-sale were
$24.720 million on a pretax basis and $15.140 million, net of
tax, at June 30, 1994. For the second quarter, the
corporation had an unrealized loss on average securities
available-for-sale of $13.905 million, pretax, and $8.535
million, net of tax. For the six months ended June 30, 1994,
there was an unrealized gain of $11.162 million, pretax,
and $6.847 million, net of tax, on average securities
available-for-sale.
Interest expense rose $39.111 million or 19.2 percent
for the quarter and $48.460 million or 11.8 percent for the
first half. Higher levels of interest-bearing liabilities
largely accounted for the increases. Average
interest-bearing liabilities expanded $3.531 billion or
14.9 percent for the second period and $3.253 billion or
13.8 percent for the first half providing funding for
interest-earning assets growth, particularly loans.
Total interest-bearing time deposits were down modestly
for the second quarter and the first six months.
Interest-bearing demand deposits were up in both periods,
rising $224 million or 7 percent and $241 million
or 7.6 percent, respectively. Savings and money market
savings also were higher, while savings certificates and
large denomination certificates declined.
10
<PAGE> 11
Both short-term borrowings and long-term debt grew for
the second period and first six months, offsetting the
modest decline in interest-bearing time deposits. Short-term
borrowings expanded $1.040 billion or 20.8 percent for the
second quarter and $1.118 billion or 22.5 percent year to
date. Increases in the second period and first half
primarily occurred in federal funds purchased and repurchase
agreements. Other short-term borrowings, which largely
consists of term federal funds, declined from the
year-earlier periods.
Total long-term debt rose $2.513 billion for the second
quarter and $2.410 billion year to date. Growth primarily
was due to the continued issuance of bank notes. The note
program, begun in the second quarter of 1992, provides
long-term funding at attractive market rates due to the
corporation's strong credit ratings. Bank notes outstanding
at June 30, 1994 totaled $3.661 billion with an average cost
of 4.77 percent and an average maturity of 2.1 years. This
compared with $1.391 billion with an average rate of 4.52
percent and an average maturity of 1.5 years at second
quarter-end 1993 and with $3.263 billion in outstandings at
March 31, 1994.
Gross deposits averaged $22.297 billion for the quarter
and $22.180 billion year to date, higher by $58 million or
less than 1 percent and lower by $157 million or less than 1
percent, respectively, from the prior year periods.
Collected deposits, net of float, averaged $20.737 billion
for the second period and $20.611 billion for the first
half, an increase of $103 million or .5 percent and a
decrease of $97 million or .5 percent, respectively.
The corporation uses off-balance sheet or "derivative"
instruments to change the structure of both assets and
liabilities to help manage the interest rate sensitivity of
its balance sheet and also as a product to assist corporate
and other customers manage their interest rate risk. The
primary instruments used have been interest rate swaps, caps
and floors. At June 30, 1994, the corporation had $3.768
billion in notional amount of these transactions outstanding
including $1.329 billion related to its balance sheet
management. This compared with $3.545 billion and $1.322
billion, respectively, at March 31, 1994.
Derivative activity is generally reported in terms of
notional amounts, which are the basis for calculating
interest payments, not the value of payments due to and due
from counterparties to derivative contracts. The
corporation's financial risk of derivatives is the present
value of the difference between cash flows payable and
receivable should counterparties fail to perform and amounts
receivable exceed amounts payable for any given
counterparty. This financial risk is substantially less than
the notional amounts reported. The corporation controls this
financial risk by subjecting the transactions to a similar
approval process as is used for on-balance sheet credit
transactions, by dealing in the national market with a few
highly rated counterparties and by using collateral
agreements to reduce exposure when appropriate.
Nonperforming Assets
Nonperforming assets totaled $124.529 million or .51
percent of loans and foreclosed property at June 30, 1994, a
decline of $101.979 million or 45 percent from a year
earlier. Continued improvement in the general credit quality
of borrowers, as well as sales of foreclosed property,
accounted for the decrease from second quarter-end 1993.
Real estate loans comprise the majority of total
nonperforming assets. At June 30, 1994, real estate
nonperforming assets were $85.444 million or 1.14 percent of
real estate loans and foreclosed real estate. This compared
with $189.361 million or 2.54 percent a year earlier, a
decrease of $103.917 million or 54.9 percent, and with
$95.077 million or 1.28 percent at first quarter-close, down
$9.633 million or 10.1 percent.
11
<PAGE> 12
Included in real estate nonperforming assets were
$64.875 million of real estate nonperforming loans at June
30, 1994, $144.468 million a year earlier and $71.918
million at March 31, 1994.
Commercial real estate nonperforming assets were
$63.503 million or 1.66 percent of related loans and
foreclosed real estate versus $157.515 million or 4.32
percent at second quarter-close 1993 and $72.374 million or
1.90 percent at March 31, 1994. The total at June 30, 1994
included $51.295 million of commercial real estate
nonperforming loans compared with $127.022 million a year
earlier and $58.354 million at first quarter-end.
<TABLE>
- - -----------------------------------------------------------------------------------------------------------------------------------
NONPERFORMING ASSETS AND CONTRACTUALLY PAST DUE LOANS TABLE 6
(thousands)
- - -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
June 30 March 31 Dec. 31 Sept. 30 June 30
1994 1994 1993 1993 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NONPERFORMING ASSETS
Cash-basis assets -- domestic borrowers . . . . . . . . . . . . . . $100,696 $100,126 $108,882 $126,474 $179,150
Restructured loans -- domestic . . . . . . . . . . . . . . . . . . --* -- 80 84 105
-------- -------- -------- -------- --------
Total nonperforming loans . . . . . . . . . . . . . . . . . . 100,696 100,126 108,962 126,558 179,255
Foreclosed property:
Foreclosed real estate . . . . . . . . . . . . . . . . . . . . . 26,347 30,136 51,701 65,038 51,411
Less valuation allowance . . . . . . . . . . . . . . . . . . . . 5,778 6,977 9,168 7,264 6,518
Other foreclosed assets . . . . . . . . . . . . . . . . . . . . 3,264 2,982 3,406 3,746 2,360
-------- -------- -------- -------- --------
Total foreclosed property . . . . . . . . . . . . . . . . . . 23,833 26,141 45,939 61,520 47,253
-------- -------- -------- -------- --------
Total nonperforming assets . . . . . . . . . . . . . . . . . $124,529** $126,267 $154,901 $188,078 $226,508
======== ======== ======== ======== ========
Nonperforming loans to period-end loans . . . . . . . . . . . . . . .41% .42% .47% .57% .83%
Nonperforming assets to period-end loans and foreclosed property . .51 .53 .67 .85 1.04
Period-end allowance for loan losses times nonperforming loans . . 4.03x 4.05x 3.72x 3.19x 2.23x
Period-end allowance for loan losses times nonperforming assets . . 3.26 3.21 2.61 2.15 1.76
CONTRACTUALLY PAST DUE LOANS
(accruing loans past due 90 days or more)
Domestic borrowers . . . . . . . . . . . . . . . . . . . . . . . . $ 50,321 $ 42,744 $ 44,897 $ 47,532 $ 49,515
======== ======== ======== ======== ========
*Excludes $14,528 of loans which have been renegotiated at market rates and
have been reclassified to performing status
**Net of cumulative corporate and commercial real estate charge-offs and
foreclosed real estate write-downs totaling $42,242; includes $24,351 of
nonperforming assets on which interest and principal are paid current
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Provision and Allowance for Loan Losses
The provision for loan losses was $16.342 million for
the second quarter and $34.101 million year to date, lower by
$9.742 million or 37.3 percent and $17.055 million or 33.3
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.
Net loan losses for the second quarter totaled $15.874
million or .26 percent on an annualized basis of average
loans and $32.957 million or .28 percent for the first six
months. This compares with $17.225 million or .32 percent and
$31.233 million or .29 percent, respectively, in the same
periods of 1993.
12
<PAGE> 13
Real estate loans had net recoveries of $2.154 million
for the second quarter and $3.947 million for the first half
versus net loan losses of $1.939 million and $2.484 million,
respectively, in 1993. Credit card net charge-offs for the
second period were higher by $1.043 million or 8 percent but
represented 1.63 percent annualized of average credit card
loans compared with 2.11 percent in the same three months of
1993. Year to date, credit card net loan losses increased
$1.878 million or 7.4 percent to $27.205 million,
representing 1.65 percent annualized of average credit card
loans versus $25.327 million or 2.14 percent in the same
year-earlier period.
At June 30, 1994, the allowance for loan losses was
$405.942 million, representing 1.67 percent of loans and 403
percent coverage of nonperforming loans. This compared with
$399.480 million, 1.84 percent and 223 percent,
respectively, a year earlier.
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR LOAN LOSSES (thousands) TABLE 7
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
------------------ ----------------------------- Six Months Ended
Second First Fourth Third Second June 30
Quarter Quarter Quarter Quarter Quarter 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF TRANSACTIONS
Balance at beginning of period . . . . . . $405,474 $404,798 $404,091 $399,480 $390,621 $404,798 $379,557
Provision for loan losses. . . . . . . . . 16,342 17,759 18,013 23,483 26,084 34,101 51,156
Deduct net loan losses:
Loans charged off:
Commercial . . . . . . . . . . . . . . 2,947 5,080 1,418 1,875 2,129 8,027 3,499
Credit card . . . . . . . . . . . . . . 16,808 15,928 15,392 17,147 15,650 32,736 30,452
Other revolving credit. . . . . . . . . 902 905 1,375 758 943 1,807 1,789
Other retail. . . . . . . . . . . . . . 2,605 3,084 2,754 1,853 1,904 5,689 3,824
Real estate . . . . . . . . . . . . . . 1,352 819 4,899 3,706 3,384 2,171 5,909
Lease financing . . . . . . . . . . . . 80 61 81 110 63 141 267
Foreign . . . . . . . . . . . . . . . . -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . 24,694 25,877 25,919 25,449 24,073 50,571 45,740
Recoveries:
Commercial. . . . . . . . . . . . . . . 1,423 1,957 971 1,354 1,382 3,380 3,247
Credit card . . . . . . . . . . . . . . 2,760 2,771 2,625 2,566 2,645 5,531 5,125
Other revolving credit. . . . . . . . . 303 247 270 228 316 550 531
Other retail. . . . . . . . . . . . . . 749 1,121 942 842 996 1,870 2,007
Real estate . . . . . . . . . . . . . . 3,506 2,612 3,743 1,525 1,445 6,118 3,425
Lease financing 70 78 53 54 55 148 157
Foreign . . . . . . . . . . . . . . . . 9 8 9 8 9 17 15
-------- -------- -------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . 8,820 8,794 8,613 6,577 6,848 17,614 14,507
-------- -------- -------- -------- -------- -------- --------
Net loan losses . . . . . . . . . . . . 15,874 17,083 17,306 18,872 17,225 32,957 31,233
-------- -------- -------- -------- -------- -------- --------
Balance at end of period . . . . . . . . . $405,942 $405,474 $404,798 $404,091 $399,480 $405,942 $399,480
======== ======== ======== ======== ======== ======== ========
NET lOAN LOSSES (RECOVERIES) BY CATEGORY
Commercial . . . . . . . . . . . . . . . $ 1,524 $ 3,123 $ 447 $ 521 $ 747 $ 4,647 $ 252
Credit card . . . . . . . . . . . . . . . 14,048 13,157 12,767 14,581 13,005 27,205 25,327
Other revolving credit . . . . . . . . . . 599 658 1,105 530 627 1,257 1,258
Other retail . . . . . . . . . . . . . . . 1,856 1,963 1,812 1,011 908 3,819 1,817
Real estate . . . . . . . . . . . . . . . (2,154) (1,793) 1,156 2,181 1,939 (3,947) 2,484
Lease financing. . . . . . . . . . . . . . 10 (17) 28 56 8 (7) 110
Foreign . . . . . . . . . . . . . . . . (9) (8) (9) (8) (9) (17) (15)
-------- -------- -------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . $ 15,874 $ 17,083 $ 17,306 $ 18,872 $ 17,225 $ 32,957 $ 31,233
======== ======== ======== ======== ======== ======== ========
ANNUALIZED NET LOAN LOSSES (RECOVERIES)
TO AVERAGE LOANS BY CATEGORY . . . . . .
Commercial . . . . . . . . . . . . . . . . .07% .14% .02% .03% .04% .10% .01%
Credit card . . . . . . . . . . . . . . . 1.63 1.67 1.74 2.16 2.11 1.65 2.14
Other revolving credit . . . . . . . . . . .72 .80 1.34 .64 .76 .76 .77
Other retail . . . . . . . . . . . . . . . .23 .25 .23 .14 .13 .24 .13
Real estate . . . . . . . . . . . . . . . (.12) (.10) .06 .12 .10 (.11) .07
Lease financing. . . . . . . . . . . . . . .02 (.04) .08 .16 .02 (.01) .17
Foreign. . . . . . . . . . . . . . . . . . (.04) (.04) (.05) (.04) (.04) (.04) (.04)
Total loans. . . . . . . . . . . . . . . . .26 .30 .31 .35 .32 .28 .29
Period-end allowance to outstanding loans. 1.67% 1.71% 1.76% 1.83% 1.84% 1.67% 1.84%
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
Noninterest Income
Total other operating revenue grew $4.706 million or
3.2 percent for the quarter and $191 thousand or less than 1
percent year to date. Good gains in trust service fees and
credit card income were moderated by lower levels of deposit
account service charges, mortgage fee income and trading
account profits. In comparison with the first three months
of 1994, total other operating revenue for the second
quarter rose $8.430 million or 5.8 percent, reflecting
growth, in part, in credit card income, deposit account
service charges and trust service fees.
Trust service fees were up $3.369 million or 11.4
percent for the three months and $4.683 million or 7.8
percent for the first half. Gains primarily reflected
increased business volume in Personal Financial Services,
along with higher revenues from the Biltmore Funds, a
proprietary family of mutual funds.
Credit card income rose $2.491 million or 9.7 percent
and $5.517 million or 11.5 percent for the three and six
month periods, respectively. Primary factors were increased
levels of annual fee and interchange income, reflecting
continued growth in new accounts and high cardholder renewal
rates, as well as stronger net sales volume.
Service charges on deposit accounts decreased $976
thousand or 1.9 percent for the quarter and $3.198 million
or 3.1 percent year to date. The declines resulted from
lower commercial analysis fees and overdraft and NSF charges
attributable, in part, to the closing of the corporation's
retail lockbox processing services in late 1993. Partially
offsetting these decreases were higher levels of savings
service charges, which are assessed primarily on
interest-bearing demand accounts, and increased
miscellaneous service charges, which include charges on
consumer demand accounts and wire transfer fees. Deposit
account service charges rose $2.496 million or 5.2 percent
from the first quarter, mainly due to higher levels of
overdraft and NSF charges and miscellaneous service charges.
Mortgage fee income, which primarily consists of
servicing and origination fees and gains or losses from the
sale of mortgage loans, was lower by $2.387 million or 23.6
percent for the second quarter and $3.524 million or 18.3
percent for the first half. Net losses on the sale of loans
due to inventory write-downs and lower originations in a
higher interest rate environment contributed to the
declines. At June 30, 1994, the mortgage portfolio serviced
totaled $9.294 billion, representing 137,501 loans compared
with $8.833 billion and 135,840 loans a year earlier. Higher
interest rates also impacted trading account profits which
decreased $2.148 million or 78.2 percent for the quarter and
$5.380 million or 71.9 percent for the first six months.
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME (thousands) TABLE 8
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
------------------ ---------------------------- Six Months Ended
Second First Fourth Third Second June 30
Quarter Quarter Quarter Quarter Quarter 1994 1993
-------- -------- --------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts . . . . . . . . $ 50,646 $ 48,150 $ 48,982 $ 51,909 $ 51,622 $ 98,796 $101,994
Fees for trust services . . . . . . . . . . . . . . 32,983 31,681 30,352 29,697 29,614 64,664 59,981
Credit card income -- net of interchange payments . 28,120 25,334 27,834 26,009 25,629 53,454 47,937
Mortgage fee income . . . . . . . . . . . . . . . . 7,715 8,033 10,130 9,699 10,102 15,748 19,272
Trading account profits -- excluding interest . . . 598 1,507 2,097 3,521 2,746 2,105 7,485
Insurance premiums and commissions. . . . . . . . . 3,379 2,686 2,167 2,897 3,764 6,065 6,783
Bankers' acceptance and letter of credit fees . . . 5,689 6,287 4,633 4,925 5,276 11,976 10,110
Student loan servicing. . . . . . . . . . . . . . . -- -- -- -- -- -- 5,535
Other service charges and fees. . . . . . . . . . . 13,156 13,627 11,948 12,248 11,907 26,783 24,719
Other income. . . . . . . . . . . . . . . . . . . . 11,013 7,564 14,298 8,856 7,933 18,577 14,161
-------- -------- -------- -------- -------- -------- --------
Total other operating revenue . . . . . . . . . 153,299 144,869 152,441 149,761 148,593 298,168 297,977
Gain on sale of subsidiary. . . . . . . . . . . . . -- -- -- -- -- -- 8,030
Investment securities gains . . . . . . . . . . . . 221 572 7,216 702 1,254 793 11,476
-------- -------- -------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . $153,520 $145,441 $159,657 $150,463 $149,847 $298,961 $317,483
======== ======== ======== ======== ======== ======== ========
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
Excluding income from student loan servicing, which the
corporation sold as a subsidiary in the first quarter of
1993, remaining combined categories of total other operating
revenue rose $4.357 million or 15.1 percent for the second
quarter and $7.628 million or 13.7 percent year to date.
Good gains were achieved in bankers' acceptance and letter
of credit fees as well as in other service charges and fees.
The latter category includes net ATM fees, mutual fund fees,
brokerage commissions and debit card interchange fees.
Including gains on securities and subsidiary sales,
total noninterest income increased $3.673 million or 2.5
percent for the quarter but declined $18.522 million or 5.8
percent for the first six months. Gains on securities sales
totaled $221 thousand for the second period and $793
thousand year to date compared with $1.254 million and
$11.476 million, respectively, in 1993. A pretax gain of
$8.030 million from the sale of Wachovia Student Financial
Services, Inc., also was included in the first half of 1993.
Noninterest Expense
Noninterest expense was modestly higher by $1.711
million or under 1 percent for the quarter but down $13.355
million or 2.4 percent year to date. Excluding $15.872
million of nonrecurring charges taken in the 1993 first
quarter, noninterest expense was up $2.517 million or less
than 1 percent for the 1994 first half. Total personnel
expense and combined net occupancy and equipment expense
categories increased in both periods, while remaining
combined categories of total other expense declined.
Total personnel expense was up $2.998 million or 2.2
percent for the quarter and $3.668 million or 1.3 percent
for the first half led by higher salaries expense in both
periods. Salaries expense rose $4.763 million or 4.3 percent
for the three months and $9.659 million or 4.4 percent year
to date. Employee benefits expense declined $1.765 million
or 6.3 percent for the quarter and $5.991 million or 10.3
percent for the first six months.
Combined net occupancy and equipment expense increased
$913 thousand or 2 percent for the three months and $2.506
million or 2.8 percent year to date. Equipment expense
remained essentially flat in the second period versus the
same three months of 1993 but rose $2.415 million or 4.8
percent for the first half.
Remaining combined categories of noninterest expense
were down $2.200 million or 2.5 percent for the quarter and
$19.529 million or 10.3 percent for the first six months.
Foreclosed property expense had net gains of $404 thousand
for the second quarter and $3.845 million year to date
versus net expenses in the same periods of 1993.
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE (thousands) TABLE 9
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
------------------ ---------------------------- Six Months Ended
Second First Fourth Third Second June 30
Quarter Quarter Quarter Quarter Quarter 1994 1993
-------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries . . . . . . . . . . . . . . . . . . . . . $114,882 $115,211 $122,205 $112,982 $110,119 $230,093 $220,434
Employee benefits . . . . . . . . . . . . . . . . 26,350 25,803 25,504 29,411 28,115 52,153 58,144
-------- -------- -------- -------- -------- -------- --------
Total personnel expense . . . . . . . . . . . 141,232 141,014 147,709 142,393 138,234 282,246 278,578
Net occupancy expense. . . . . . . . . . . . . . . 20,196 19,428 23,587 18,950 19,660 39,624 39,533
Equipment expense . . . . . . . . . . . . . . . . 26,010 26,512 27,283 24,856 25,633 52,522 50,107
Postage and delivery . . . . . . . . . . . . . . . 8,816 9,052 9,315 8,921 11,643 17,868 19,924
Outside data processing, programming and software. 8,119 8,485 12,494 9,194 8,198 16,604 16,925
Stationery and supplies. . . . . . . . . . . . . . 5,836 5,962 7,018 6,353 5,572 11,798 11,973
Advertising and sales promotion . . . . . . . . . 9,316 9,783 11,435 7,681 7,805 19,099 19,025
Professional services . . . . . . . . . . . . . . 5,385 3,952 6,381 4,120 3,771 9,337 6,643
Travel and business promotion. . . . . . . . . . . 4,343 3,504 4,706 3,668 3,905 7,847 7,189
FDIC insurance and regulatory examinations . . . . 13,589 13,380 13,122 13,274 13,084 26,969 27,267
Check clearing and other bank services . . . . . . 1,920 2,295 2,348 2,563 2,586 4,215 5,248
Amortization of intangible assets. . . . . . . . . 4,602 5,137 6,844 7,502 6,540 9,739 13,655
Foreclosed property expense . . . . . . . . . . . (404) (3,441) 2,630 1,737 1,226 (3,845) 3,287
Other expense. . . . . . . . . . . . . . . . . . . 25,585 24,987 24,868 22,334 24,977 50,572 58,596
-------- -------- -------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . . . . . . $274,545 $270,050 $299,740 $273,546 $272,834 $544,595 $557,950
======== ======== ======== ======== ======== ======== ========
Overhead ratio . . . . . . . . . . . . . . . . . . 54.3% 55.4% 59.5% 55.0% 55.2% 54.9% 56.8%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
Income Taxes
Applicable income taxes for the second quarter and
first half increased $6.339 million or 12.8 percent and
$5.930 million or 5.9 percent, respectively, from the same
periods of 1993. 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 of 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>
- - -----------------------------------------------------------------------------------------------------------------------------
INCOME TAXES (thousands) TABLE 10
- - -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . $189,932 $172,575 $365,410 $345,231
======== ======== ======== ========
Federal income taxes at statutory rate* . . . . . . . . . . . . . . . $ 66,476 $ 58,676 $127,893 $117,379
State and local income taxes -- net of federal benefit . . . . . . . . 970 1,895 2,191 4,111
Effect of tax-exempt securities interest and other income. . . . . . . (12,566) (13,023) (24,986) (25,972)
Tax cost to carry tax-exempt assets. . . . . . . . . . . . . . . . . . 561 505 1,014 1,050
Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 1,399 358 3,972
-------- -------- -------- --------
Total tax expense. . . . . . . . . . . . . . . . . . . . . . . . . $ 55,791 $ 49,452 $106,470 $100,540
======== ======== ======== ========
Currently payable:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,811 $ 49,648 $102,070 $110,169
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 52 60 154
State and local. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,363 2,827 4,776 7,816
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,200 52,527 106,906 118,139
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,539) (3,119) 969 (16,012)
State and local. . . . . . . . . . . . . . . . . . . . . . . . . . . (870) 44 (1,405) (1,587)
-------- -------- -------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,409) (3,075) (436) (17,599)
-------- -------- -------- --------
Total tax expense. . . . . . . . . . . . . . . . . . . . . . . . . $ 55,791 $ 49,452 $106,470 $100,540
======== ======== ======== ========
*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 amounts for 1993 of $58,676 and $117,379 represent the 34%
rate originally reported for these periods prior to enactment of the tax rate
increase. A cumulative adjustment related to the increase in the tax rate was
reported in the third quarter of 1993. The 1994 amounts represent a federal
income tax statutory rate of 35%.
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL CONDITION AND CAPITAL RATIOS
At June 30, 1994, total assets were $37.069 billion,
including $32.964 billion of interest-earning assets and
$24.300 billion of loans. Comparable amounts a year earlier
were $33.248 billion, $29.573 billion and $21.690 billion,
respectively, and at first quarter-end totals were $36.350
billion of assets, including $32.370 billion of earning
assets and $23.662 billion of loans.
Deposits constitute the primary source of funding. At
June 30, 1994, deposits totaled $22.218 billion including
time deposits of $16.945 billion, representing 76.3 percent
of the total. This compared with total deposits of $21.886
billion, including $16.828 billion of time deposits or 76.9
percent of the total a year earlier. At March 31, 1994,
deposits were $22.279 billion and time deposits were $16.914
billion or 75.9 percent of the total.
Shareholders' equity at June 30, 1994 was $3.149
billion, an increase of $199 million or 6.7 percent from
$2.950 billion a year earlier and up $55 million or 1.8
percent from first quarter-close. Included in the June 30,
1994 total were unrealized losses of $15 million, net of tax,
on securities available-for-sale marked to fair market value
under FASB 115.
As noted in the News Developments section, the
corporation's board of directors at its July 22, 1994 meeting
authorized the repurchase of up to 5 million shares of the
corporation's common stock. This replaces a July 23, 1993
authorization to repurchase the same number of shares. During
the second quarter of 1994, the corporation repurchased
412,900 shares at an average price of $31.97 per share for a
total cost of
16
<PAGE> 17
$13.201 million. As of June 30, 1994, a total of
3,565,100 shares had been repurchased under earlier
authorizations which were terminated effective with the new
authorization. The company intends to continue reissuing
some or all of the repurchased shares for its employee stock
plans, dividend reinvestment plan and for other appropriate
purposes.
Intangible assets were $85.601 million at the end of
the 1994 second quarter versus $95.688 million a year
earlier and $88.423 million at first quarter-close. The
total at June 30, 1994 consisted of $39.014 million in
mortgage servicing rights, $31.706 million in goodwill,
$9.610 million in deposit base intangibles and $5.271
million in other intangible assets, principally consisting
of purchased credit card intangibles. Comparable amounts a
year earlier were $43.501 million, $33.196 million, $11.972
million and $7.019 million, respectively, and at March 31,
1994 they were $40.493 million, $32.095 million, $10.127
million and $5.708 million, respectively.
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 June 30, 1994, Wachovia's Tier I to risk-adjusted
assets ratio was 9.56 percent and including Tier II was
13.35 percent. The corporation's Tier I leverage ratio was
8.43 percent.
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL COMPONENTS AND RATIOS (thousands) TABLE 11
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
------------------------- ---------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Tier I capital:
Common shareholders' equity. . . . . . . . . . . . . $ 3,149,144 $ 3,093,593 $ 3,017,947 $ 2,974,699 $ 2,950,413
Less ineligible intangible assets. . . . . . . . . . 32,349 32,095 32,451 36,039 33,196
Unrealized gains (losses) on securities
available-for-sale, net of tax . . . . . . . . . . 15,140 (3,825) -- -- --
----------- ----------- ----------- ----------- -----------
Total Tier I capital . . . . . . . . . . . . . . . 3,131,935 3,057,673 2,985,496 2,938,660 2,917,217
Tier II capital:
Allowable allowance for loan losses. . . . . . . . . 405,942 396,449 384,032 370,017 362,867
Allowable long-term debt . . . . . . . . . . . . . . 833,253 833,125 583,738 587,158 587,321
----------- ----------- ----------- ----------- -----------
Tier II capital additions . . . . . . . . . . . . . 1,239,195 1,229,574 967,770 957,175 950,188
----------- ----------- ----------- ----------- -----------
Total capital. . . . . . . . . . . . . . . . . . . $ 4,371,130 $ 4,287,247 $ 3,953,266 $ 3,895,835 $ 3,867,405
=========== =========== =========== =========== ===========
Risk-adjusted assets . . . . . . . . . . . . . . . . . $32,746,004 $31,706,868 $30,701,782 $29,567,305 $28,992,768
Quarterly average assets . . . . . . . . . . . . . . . $37,174,827 $35,778,460 $35,419,829 $33,869,607 $32,718,390
Risk-based capital ratios:
Tier I capital . . . . . . . . . . . . . . . . . . . 9.56% 9.64% 9.72% 9.94% 10.06%
Total capital. . . . . . . . . . . . . . . . . . . . 13.35 13.52 12.88 13.18 13.34
Tier I leverage ratio* . . . . . . . . . . . . . . . . 8.43% 8.56% 8.44% 8.69% 8.93%
Shareholders' equity to total assets . . . . . . . . . 8.50% 8.51% 8.26% 8.42% 8.87%
*Ratio excludes the average unrealized gains (losses) on securities
available-for-sale, net of tax, of ($8,535) for the second quarter
of 1994 and $22,399 for the first quarter of 1994
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
<TABLE>
<CAPTION>
June 30 December 31 June 30
$ in thousands 1994 1993 1993
ASSETS ----------- ----------- -----------
<S> <C> <C> <C>
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,200,729 $ 2,529,528 $ 2,185,015
Interest-bearing bank balances. . . . . . . . . . . . . . . . . . . . . . 14,464 12,478 97,777
Federal funds sold and securities
purchased under resale agreements . . . . . . . . . . . . . . . . . . . 225,471 691,106 317,004
Trading account assets. . . . . . . . . . . . . . . . . . . . . . . . . . 754,735 788,779 863,949
Securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . 3,819,409 -- --
Securities held-to-maturity (market value of $3,906,979,
$8,156,690 and $6,950,069, respectively). . . . . . . . . . . . . . . . 3,849,645 7,878,656 6,604,313
Loans and net leases. . . . . . . . . . . . . . . . . . . . . . . . . . . 24,308,606 22,986,307 21,697,849
Less unearned income on loans . . . . . . . . . . . . . . . . . . . . . . 8,714 8,819 7,714
----------- ----------- -----------
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,299,892 22,977,488 21,690,135
Less allowance for loan losses. . . . . . . . . . . . . . . . . . . . . . 405,942 404,798 399,480
----------- ----------- -----------
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,893,950 22,572,690 21,290,655
Premises and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 522,317 502,699 490,829
Due from customers on acceptances . . . . . . . . . . . . . . . . . . . . 614,908 434,584 437,794
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,173,386 1,115,252 960,426
----------- ----------- -----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,069,014 $36,525,772 $33,247,762
=========== =========== ===========
LIABILITIES
Deposits in domestic offices:
Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,267,941 $ 6,140,884 $ 5,052,582
Interest-bearing demand . . . . . . . . . . . . . . . . . . . . . . . . 3,369,453 3,515,680 3,192,082
Savings and money market savings. . . . . . . . . . . . . . . . . . . . 6,178,332 6,194,086 6,100,803
Savings certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 5,096,976 5,141,410 5,347,707
Large denomination certificates . . . . . . . . . . . . . . . . . . . . 1,418,034 1,507,461 1,758,995
Noninterest-bearing time. . . . . . . . . . . . . . . . . . . . . . . . 95,557 45,802 83,681
----------- ----------- -----------
Total deposits in domestic offices. . . . . . . . . . . . . . . . . 21,426,293 22,545,323 21,535,850
Deposits in foreign offices:
Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,448 3,011 5,404
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786,314 804,064 344,951
----------- ----------- -----------
Total deposits in foreign offices . . . . . . . . . . . . . . . . . 791,762 807,075 350,355
----------- ----------- -----------
Total deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . 22,218,055 23,352,398 21,886,205
Federal funds purchased and securities
sold under repurchase agreements. . . . . . . . . . . . . . . . . . . . 5,066,104 4,741,283 3,957,930
Commercial paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471,639 589,178 554,677
Other short-term borrowed funds . . . . . . . . . . . . . . . . . . . . . 749,414 1,091,123 1,149,296
Long-term debt:
Bank notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,660,767 2,370,091 1,391,101
Other long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . 839,710 590,365 594,607
----------- ----------- -----------
Total long-term debt. . . . . . . . . . . . . . . . . . . . . . . . 4,500,477 2,960,456 1,985,708
Acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 614,908 434,584 437,794
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,273 338,803 325,739
----------- ----------- -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 33,919,870 33,507,825 30,297,349
SHAREHOLDERS' EQUITY
Preferred stock, par value $5 per share:
Authorized 50,000,000 shares; none outstanding. . . . . . . . . . . . . -- -- --
Common stock, par value $5 per share:
Issued 171,181,931, 171,375,772 and
173,498,420, respectively. . . . . . . . . . . . . . . . . . . . . . 855,910 856,879 867,492
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 753,940 761,573 833,708
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,539,294 1,399,495 1,249,213
----------- ----------- -----------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . 3,149,144 3,017,947 2,950,413
----------- ----------- -----------
Total liabilities and shareholders' equity. . . . . . . . . . . . . $37,069,014 $36,525,772 $33,247,762
=========== =========== ===========
</TABLE>
18
<PAGE> 19
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
$ in thousands, except per share 1994 1993 1994 1993
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $446,610 $404,145 $ 857,062 $ 803,401
Securities available-for-sale:
State and municipal . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 14 --
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . 47,534 -- 92,332 --
Securities held-to-maturity:
State and municipal . . . . . . . . . . . . . . . . . . . . . . . . . 13,100 15,005 26,124 30,363
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . 53,458 96,118 109,234 193,212
Interest-bearing bank balances . . . . . . . . . . . . . . . . . . . . 185 712 345 2,304
Federal funds sold and securities
purchased under resale agreements . . . . . . . . . . . . . . . . . . 1,842 2,535 4,953 4,732
Trading account assets . . . . . . . . . . . . . . . . . . . . . . . . 7,058 6,508 13,576 12,877
-------- -------- ---------- ----------
Total interest income . . . . . . . . . . . . . . . . . . . . . . 569,787 525,023 1,103,640 1,046,889
INTEREST EXPENSE
Deposits:
Domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . 123,047 137,463 239,088 282,034
Foreign offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,098 2,797 7,378 6,257
-------- -------- ---------- ----------
Total interest on deposits . . . . . . . . . . . . . . . . . . . 127,145 140,260 246,466 288,291
Short-term borrowed funds . . . . . . . . . . . . . . . . . . . . . . . 61,337 39,659 112,962 80,060
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,006 23,458 99,067 41,684
-------- -------- ---------- ----------
Total interest expense . . . . . . . . . . . . . . . . . . . . . 242,488 203,377 458,495 410,035
NET INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . 327,299 321,646 645,145 636,854
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . 16,342 26,084 34,101 51,156
-------- -------- ---------- ----------
Net interest income after
provision for loan losses . . . . . . . . . . . . . . . . . . . . . . 310,957 295,562 611,044 585,698
OTHER INCOME
Service charges on deposit accounts . . . . . . . . . . . . . . . . . . 50,646 51,622 98,796 101,994
Fees for trust services . . . . . . . . . . . . . . . . . . . . . . . . 32,983 29,614 64,664 59,981
Credit card income . . . . . . . . . . . . . . . . . . . . . . . . . . 28,120 25,629 53,454 47,937
Mortgage fee income . . . . . . . . . . . . . . . . . . . . . . . . . . 7,715 10,102 15,748 19,272
Trading account profits . . . . . . . . . . . . . . . . . . . . . . . . 598 2,746 2,105 7,485
Student loan servicing . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- 5,535
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . 33,237 28,880 63,401 55,773
-------- -------- ---------- ----------
Total other operating revenue . . . . . . . . . . . . . . . . . . 153,299 148,593 298,168 297,977
Gain on sale of subsidiary . . . . . . . . . . . . . . . . . . . . . . -- -- -- 8,030
Investment securities gains . . . . . . . . . . . . . . . . . . . . . . 221 1,254 793 11,476
-------- -------- ---------- ----------
Total other income . . . . . . . . . . . . . . . . . . . . . . . 153,520 149,847 298,961 317,483
OTHER EXPENSE
Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,882 110,119 230,093 220,434
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,350 28,115 52,153 58,144
-------- -------- ---------- ----------
Total personnel expense . . . . . . . . . . . . . . . . . . . . . 141,232 138,234 282,246 278,578
Net occupancy expense . . . . . . . . . . . . . . . . . . . . . . . . . 20,196 19,660 39,624 39,533
Equipment expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,010 25,633 52,522 50,107
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . 87,107 89,307 170,203 189,732
-------- -------- ---------- ----------
Total other expense . . . . . . . . . . . . . . . . . . . . . . . 274,545 272,834 544,595 557,950
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . 189,932 172,575 365,410 345,231
Applicable income taxes . . . . . . . . . . . . . . . . . . . . . . . . 55,791 49,452 106,470 100,540
-------- -------- ---------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $134,141 $123,123 $ 258,940 $ 244,691
======== ======== ========== ==========
Net income per common share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .78 $ .71 $ 1.50 $ 1.41
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .78 $ .70 $ 1.50 $ 1.39
Average shares outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,558 174,712 172,648 174,149
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,197 176,004 173,298 175,865
</TABLE>
19
<PAGE> 20
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 JUNE 30, 1993
Balance at beginning of year . . . . . . . . . . . . . . . . . . . 171,471,178 $857,356 $817,889 $1,099,522
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244,691
Cash dividends declared on
common stock -- $.54 a share . . . . . . . . . . . . . . . . . . (93,216)
Common stock issued pursuant to:
Stock option and employee benefit plans . . . . . . . . . . . . 374,540 1,873 7,492 (41)
Dividend reinvestment plan . . . . . . . . . . . . . . . . . . . 155,276 776 4,632 (15)
Conversion of notes . . . . . . . . . . . . . . . . . . . . . . 1,540,506 7,702 5,033 (60)
Common stock acquired . . . . . . . . . . . . . . . . . . . . . . (42,851) (214) (1,334) 8
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . (229) (1) (4) (1,676)
----------- -------- -------- ----------
Balance at end of period . . . . . . . . . . . . . . . . . . . . . 173,498,420 $867,492 $833,708 $1,249,213
=========== ======== ======== ==========
PERIOD ENDED JUNE 30, 1994
Balance at beginning of year . . . . . . . . . . . . . . . . . . . 171,375,772 $856,879 $761,573 $1,399,495
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258,940
Cash dividends declared on
common stock -- $.60 a share . . . . . . . . . . . . . . . . . . (102,842)
Common stock issued pursuant to:
Stock option and employee benefit plans. . . . . . . . . . . . . 475,983 2,380 11,352
Dividend reinvestment plan . . . . . . . . . . . . . . . . . . . 176,845 885 4,817
Conversion of notes. . . . . . . . . . . . . . . . . . . . . . . 21,254 106 301
Common stock acquired. . . . . . . . . . . . . . . . . . . . . . . (867,923) (4,340) (23,909)
Unrealized losses on securities available-
for-sale, net of tax . . . . . . . . . . . . . . . . . . . . . . (15,140)
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . (194) (1,159)
----------- -------- -------- ----------
Balance at end of period . . . . . . . . . . . . . . . . . . . . . 171,181,931 $855,910 $753,940 $1,539,294
=========== ======== ======== ==========
</TABLE>
20
<PAGE> 21
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30
$ in thousands 1994 1993
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 258,940 $ 244,691
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,101 51,156
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,174 50,213
Deferred income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (436) (17,599)
Investment securities gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (793) (11,476)
Gain on sale of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (8,030)
Gain on sale of noninterest-earning assets. . . . . . . . . . . . . . . . . . . . . . . . . (3,964) (1,098)
Increase (decrease) in accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . (2,036) 9,257
Increase in accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . (7,567) (35,771)
Increase (decrease) in accrued interest payable . . . . . . . . . . . . . . . . . . . . . . 5,442 (7,649)
Net change in other accrued and deferred income and expense . . . . . . . . . . . . . . . . (20,388) 27,475
Net trading account activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,044 32,019
Net loans held for resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334,077 (364,751)
---------- ----------
Net cash provided (used) by operating activities. . . . . . . . . . . . . . . . . . . . 687,594 (31,563)
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing bank balances . . . . . . . . . . . . . . . . . . (1,986) 91,776
Net decrease in federal funds sold and securities
purchased under resale agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,635 161,968
Purchases of securities available-for-sale. . . . . . . . . . . . . . . . . . . . . . . . . . (653,997) --
Purchases of securities held-to-maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . (92,171) (744,800)
Sales of securities available-for-sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,876 --
Sales of securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 40,733
Calls, maturities and prepayments of securities available-for-sale. . . . . . . . . . . . . . 500,870 --
Calls, maturities and prepayments of securities held-to-maturity. . . . . . . . . . . . . . . 384,165 590,137
Net increase in loans made to customers . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,695,888) (275,575)
Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,391) (96,042)
Proceeds from sales of premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . 3,956 4,708
Net increase in other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,719) (149,206)
Business combinations and dispositions. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 20,000
---------- ----------
Net cash used by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . (1,169,650) (356,301)
FINANCING ACTIVITIES
Net decrease in demand, savings and money market accounts . . . . . . . . . . . . . . . . . . (982,732) (712,252)
Net decrease in certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . (151,611) (777,004)
Net increase in federal funds purchased and securities sold under repurchase agreements . . . 324,821 244,438
Net increase (decrease) in commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . (117,539) 168,059
Net increase (decrease) in other short-term borrowings. . . . . . . . . . . . . . . . . . . . (341,709) 300,473
Proceeds from issuance of bank notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,619,281 633,208
Maturities of bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (330,000) --
Proceeds from issuance of other long-term debt. . . . . . . . . . . . . . . . . . . . . . . . 247,800 248,075
Payments on other long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (171) (79,921)
Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,009 13,041
Common stock repurchased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,345) (1,545)
Dividend payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (102,842) (93,216)
Net increase (decrease) in other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . (705) 1,664
---------- ----------
Net cash provided (used) by financing activities. . . . . . . . . . . . . . . . . . . . 153,257 (54,980)
DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . (328,799) (442,844)
Cash and cash equivalents at beginning of year. . . . . . . . . . . . . . . . . . . . . . . . 2,529,528 2,627,859
---------- ----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . 2,200,729 2,185,015
========== ==========
SUPPLEMENTAL DISCLOSURES
Unrealized losses on securities available-for-sale:
Decrease in securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,720 $ --
Increase in deferred taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,580 --
Decrease in shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,140 --
</TABLE>
21
<PAGE> 22
[ ] 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
President 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
ESTELL C. LEE
Chairman of the Board
and President
The Lee Company
WYNDHAM ROBERTSON
Vice President, Communications
University of North Carolina
JOHN F. WARD
Chief Executive Officer
Hanes Group
Senior Vice President
Sara Lee Corporation
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
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
22
<PAGE> 23
[ ] 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
and Chief Financial Officer
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
23
<PAGE> 24
(Logo) (Graphic)
Wachovia Corporation
P.O. Box 3099
Winston-Salem, NC 27150
<TABLE>
[ ] SHAREHOLDER INFORMATION
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SHAREHOLDER SERVICES
Dividend Reinvestment and Common Stock Purchase Plan -- For information about these services, requests for address
The plan provides common stockholders of record a regular changes and account assistance, please contact:
way of investing cash dividends in additional shares at an
average market price and/or investing optional cash payments H. Jo Barlow Wachovia Corporation
without payment of brokerage commissions or service charges. Shareholder Services P.O. Box 3099
910-770-5787 Winston-Salem, NC 27150
Direct Deposit of Cash Dividends -- Direct deposit is OTHER INFORMATION
a safe, fast and timesaving method of receiving cash Additional information about Wachovia Corporation or its
dividends through automatic deposit on date of payment member companies may be obtained by contacting:
to a checking, savings or money market account at any
financial institution which participates in an Automated Robert S. McCoy, Jr., Chief Financial Officer, 910-770-5926
Clearing House. James C. Mabry, Investor Relations, 910-770-5788
Address Change And Account Assistance -- To help ensure Wachovia Corporation
timely receipt of shareholder mailings, please notify the P.O. Box 3099
corporation, in writing, immediately of any address change Winston-Salem, NC 27150
or correction. Use of your shareholder account number and a
daytime phone number in all correspondence will be appreciated. COMMON STOCK LISTING
New York Stock Exchange Symbol: WB
</TABLE>
