<PAGE> 1
WACHOVIA
- --------------------------------------------------------------------------------
FINANCIAL SUPPLEMENT
AND FORM 10-Q
THIRD QUARTER 1995
<PAGE> 2
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
WACHOVIA CORPORATION DIRECTORS AND OFFICERS
DIRECTORS
<S> <C> <C>
L. M. BAKER, JR. THOMAS K. HEARN, JR. JAMES W. JOHNSTON
President and President Chairman and
Chief Executive Officer Wake Forest University Chief Executive Officer
R.J. Reynolds Tobacco Company
JOHN G. MEDLIN, JR. W. HAYNE HIPP
Chairman of the Board President and WYNDHAM ROBERTSON
Chief Executive Officer Vice President, Communications
RUFUS C. BARKLEY, JR. The Liberty Corporation University of North Carolina
Chairman of the Board
Cameron & Barkley Company ROBERT M. HOLDER, JR. HERMAN J. RUSSELL
Chairman of the Board Chairman of the Board and
CRANDALL C. BOWLES Holder Corporation Chief Executive Officer
Executive Vice President H.J. Russell & Company
Springs Industries, Inc. DONALD R. HUGHES
Consultant and Retired SHERWOOD H. SMITH, JR.
JOHN L. CLENDENIN Vice Chairman of the Board Chairman of the Board and
Chairman of the Board Burlington Industries, Inc. Chief Executive Officer
and Chief Executive Officer Carolina Power & Light Company
BellSouth Corporation F. KENNETH IVERSON
Chairman and CHARLES MCKENZIE TAYLOR
LAWRENCE M. GRESSETTE, JR. Chief Executive Officer Chairman of the Board
Chairman of the Board, Nucor Corporation Taylor & Mathis, Inc.
President and
Chief Executive Officer
SCANA Corporation
PRINCIPAL CORPORATE OFFICERS
L. M. BAKER, JR. W. DOUG KING ROBERT S. MCCOY, JR.
President and Executive Vice President Executive Vice President
Chief Executive Officer Consumer Services Chief Financial Officer
MICKEY W. DRY WALTER E. LEONARD, JR. G. JOSEPH PRENDERGAST
Executive Vice President Executive Vice President Executive Vice President
Chief Credit Officer Operations/Technology General Banking
HUGH M. DURDEN KENNETH W. MCALLISTER RICHARD B. ROBERTS
Executive Vice President Executive Vice President Executive Vice President
Corporate Banking General Counsel/Administrative Treasurer
</TABLE>
2
<PAGE> 3
_______________________________________________________________________________
<TABLE>
<CAPTION>
SELECTED PERIOD-END DATA September 30 September 30
1995 1994
------- -------
<S> <C> <C>
Banking offices:
North Carolina ................................. 218 216
Georgia ........................................ 125 126
South Carolina ................................. 146 149
------- -------
Total ......................................... 489 491
======= =======
Automated banking machines:
North Carolina ................................. 319 285
Georgia ........................................ 202 185
South Carolina ................................. 173 169
------- -------
Total ......................................... 694 639
======= =======
Employees (full-time equivalent) ................. 15,843 15,614
Common stock shareholders of record .............. 28,042 28,878
Common shares outstanding(thousands) ............. 170,326 170,760
</TABLE>
________________________________________________________________________________
COMMON STOCK DATA--PER SHARE
<TABLE>
<CAPTION>
1995 1994
------------------------------------ -----------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
--------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Market value:
Period-end.................................. $ 43 1/8 $ 35 3/4 $ 35 1/2 $ 32 1/4 $ 32 1/4
High ...................................... 45 37 7/8 36 1/2 34 1/2 35 1/4
Low......................................... 35 3/8 34 1/4 32 31 1/2 31 3/8
Book value at period-end...................... 21.24 20.75 19.89 19.23 18.83
Dividend...................................... .36 .33 .33 .33 .30
Price/earnings ratio*......................... 12.4x 10.5x 11.0x 10.3x 10.7x
</TABLE>
*Based on most recent twelve months net income per primary share and period-end
stock price
________________________________________________________________________________
FINANCIAL INFORMATION
Analysts, investors and others seeking additional financial information about
Wachovia Corporation or its member companies should contact the following
either by phone or in writing.
Robert S. McCoy, Jr., Chief Financial Officer, (910) 770-5926
James C. Mabry, Investor Relations Manager, (910) 770-5788
Wachovia Corporation
P. O. Box 3099
Winston-Salem, NC 27150
Common Stock Listing -- New York Stock Exchange, ticker symbol - WB
3
<PAGE> 4
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
____________________________________________________________________________________________________________________________________
FINANCIAL SUMMARY TABLE 1
____________________________________________________________________________________________________________________________________
Twelve
Months 1995 1994
Ended --------------------------------- ----------------------
September 30 Third Second First Fourth Third
1995 Quarter Quarter Quarter Quarter Quarter
----------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income -- taxable equivalent ..... $ 2,979,706 $ 813,117 $ 774,078 $ 715,414 $677,097 $632,359
Interest expense .......................... 1,460,047 418,917 392,970 342,596 305,564 274,329
----------- --------- --------- --------- -------- --------
Net interest income -- taxable equivalent . 1,519,659 394,200 381,108 372,818 371,533 358,030
Taxable equivalent adjustment ............. 100,135 26,633 23,987 23,622 25,893 24,909
----------- --------- --------- --------- -------- --------
Net interest income ....................... 1,419,524 367,567 357,121 349,196 345,640 333,121
Provision for loan losses ................. 93,158 23,179 28,652 21,788 19,539 18,123
----------- --------- --------- --------- -------- --------
Net interest income after
provision for loan losses ............... 1,326,366 344,388 328,469 327,408 326,101 314,998
Other operating revenue ................... 648,535 170,415 166,304 157,093 154,723 151,541
Gain on sale of mortgage servicing
portfolio ............................... 79,025 -- 79,025 -- -- --
Investment securities gains (losses) ...... (23,954) 317 (26,236) (129) 2,094 433
----------- --------- --------- --------- -------- --------
Total other income ........................ 703,606 170,732 219,093 156,964 156,817 151,974
Personnel expense ......................... 589,814 153,298 149,987 144,963 141,566 139,695
Other expense ............................. 581,242 145,584 156,630 138,069 140,959 131,598
----------- --------- --------- --------- -------- --------
Total other expense ....................... 1,171,056 298,882 306,617 283,032 282,525 271,293
Income before income taxes ................ 858,916 216,238 240,945 201,340 200,393 195,679
Applicable income taxes* .................. 260,445 64,958 78,036 59,184 58,267 57,687
----------- --------- --------- --------- -------- --------
Net income ................................ $ 598,471 $ 151,280 $ 162,909 $ 142,156 $142,126 $137,992
=========== ========= ========= ========= ======== ========
Net income per common share:
Primary ................................. $ 3.48 $ .88 $ .94 $ .83 $ .83 $ .80
Fully diluted ........................... $ 3.46 $ .87 $ .95 $ .82 $ .82 $ .80
Cash dividends paid per common share ...... $ 1.35 $ .36 $ .33 $ .33 $ .33 $ .30
Cash dividends paid on common stock ....... $ 230,492 $ 61,312 $ 56,302 $ 56,458 $ 56,420 $ 51,241
Cash dividend payout ratio ................ 38.5% 40.5% 34.6% 39.7% 39.7% 37.1%
Average primary shares outstanding ........ 171,988 171,793 171,986 172,205 171,973 172,097
Average fully diluted shares outstanding .. 172,567 172,512 172,446 172,760 172,552 172,701
SELECTED AVERAGE BALANCES (millions)
Total assets .............................. $ 40,129 $ 42,573 $ 40,876 $ 38,902 $ 38,146 $ 37,409
Loans -- net of unearned income ........... 26,704 28,097 27,203 26,219 25,290 24,553
Investment securities** ................... 8,064 8,778 8,276 7,612 7,582 7,695
Other interest-earning assets ............. 979 1,210 1,012 815 877 809
Total interest-earning assets ............. 35,747 38,085 36,491 34,646 33,749 33,057
Interest-bearing deposits ................. 18,037 19,352 18,388 17,354 17,040 17,020
Short-term borrowed funds ................. 7,618 8,593 7,869 7,390 6,619 6,115
Long-term debt ............................ 4,796 4,851 4,863 4,674 4,795 4,637
Total interest-bearing liabilities ........ 30,451 32,796 31,120 29,418 28,454 27,772
Noninterest-bearing deposits .............. 5,329 5,212 5,333 5,302 5,471 5,364
Total deposits ............................ 22,366 24,564 23,721 22,656 22,511 22,384
Shareholders' equity ...................... 3,312 3,463 3,345 3,253 3,186 3,114
RATIOS (averages)
Annualized net loan losses to loans ....... .34% .33% .42% .30% .31% .29%
Annualized net yield on
interest-earning assets ................. 4.25 4.11 4.19 4.36 4.37 4.30
Shareholders' equity to:
Total assets ............................ 8.25 8.13 8.18 8.36 8.35 8.32
Net loans ............................... 12.59 12.51 12.48 12.60 12.80 12.89
Annualized return on assets*** ............ 1.49 1.42 1.59 1.46 1.49 1.48
Annualized return on
shareholders' equity*** ................. 18.07 17.47 19.48 17.48 17.84 17.73
<CAPTION>
Nine Months Ended
September 30
1995 1994
---------- ----------
<S> <C> <C>
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income -- taxable equivalent ..... $2,302,609 $1,785,357
Interest expense .......................... 1,154,483 732,824
---------- ----------
Net interest income -- taxable equivalent.. 1,148,126 1,052,533
Taxable equivalent adjustment ............. 74,242 74,267
---------- ----------
Net interest income ....................... 1,073,884 978,266
Provision for loan losses ................. 73,619 52,224
---------- ----------
Net interest income after
provision for loan losses ................ 1,000,265 926,042
Other operating revenue ................... 493,812 449,709
Gain on sale of mortgage servicing
portfolio ............................... 79,025 --
Investment securities gains (losses) ...... (26,048) 1,226
---------- ----------
Total other income ........................ 546,789 450,935
Personnel expense ......................... 448,248 421,941
Other expense ............................. 440,283 393,947
---------- ----------
Total other expense ....................... 888,531 815,888
Income before income taxes ................ 658,523 561,089
Applicable income taxes* .................. 202,178 164,157
---------- ----------
Net income ................................ $ 456,345 $ 396,932
========== ==========
Net income per common share:
Primary ................................. $ 2.65 $ 2.30
Fully diluted ........................... $ 2.64 $ 2.30
Cash dividends paid per common share ...... $ 1.02 $ .90
Cash dividends paid on common stock ....... $ 174,072 $ 154,083
Cash dividend payout ratio ................ 38.1% 38.8%
Average primary shares outstanding ........ 171,993 172,462
Average fully diluted shares outstanding .. 172,882 173,086
SELECTED AVERAGE BALANCES (millions)
Total assets .............................. $ 40,797 $ 36,653
Loans -- net of unearned income ........... 27,180 23,850
Investment securities** ................... 8,226 7,717
Other interest-earning assets ............. 1,014 906
Total interest-earning assets ............. 36,420 32,473
Interest-bearing deposits ................. 18,372 16,894
Short-term borrowed funds ................. 7,955 6,100
Long-term debt ............................ 4,797 4,200
Total interest-bearing liabilities ........ 31,124 27,194
Noninterest-bearing deposits .............. 5,282 5,355
Total deposits ............................ 23,654 22,249
Shareholders' equity ...................... 3,354 3,066
RATIOS (averages)
Annualized net loan losses to loans ....... .35% .29%
Annualized net yield on
interest-earning assets ................. 4.21 4.33
Shareholders' equity to:
Total assets ............................ 8.22 8.37
Net loans ............................... 12.53 13.08
Annualized return on assets*** ............ 1.49 1.44
Annualized return on
shareholders' equity*** ................. 18.14 17.26
*Income taxes applicable to securities transactions were ($8,716), $91, ($9,580), ($67), $840, $173, ($9,556), and $488,
respectively
**Reported at amortized cost; excludes pretax unrealized gains (losses) on securities available-for-sale of ($3), $65, $15,
($49), ($44), ($28), $11 and ($2), respectively
***Includes average unrealized gains (losses) on securities available-for-sale of ($2), $40, $9, ($30), ($27), ($17),
$7 and ($1) net of tax, respectively
____________________________________________________________________________________________________________________________________
</TABLE>
4
<PAGE> 5
RESULTS OF OPERATIONS
OVERVIEW
Wachovia Corporation ("Wachovia") is a southeastern interstate
bank holding company with dual headquarters in Atlanta, Georgia, and
Winston-Salem, North Carolina. Principal banking subsidiaries are
Wachovia Bank of Georgia, N.A., Wachovia Bank of North Carolina, N.A.,
and Wachovia Bank of South Carolina, N.A. The First National Bank of
Atlanta provides credit card services for Wachovia's affiliated banks.
The economy grew at a faster pace in the third quarter of 1995
compared with the preceding year. Seasonally adjusted unemployment
for the nation averaged 5.6 percent for the third period versus 5.7
percent in the second quarter. Within Wachovia's primary operating
states of Georgia, North Carolina and South Carolina, seasonally
adjusted unemployment averaged 5.1 percent, 4.4 percent and 5 percent,
respectively, for the three months ended September 30.
Wachovia's net income for the 1995 third quarter was $151.280
million or $.87 per fully diluted share compared with $137.992 million
or $.80 per fully diluted share in the same period of 1994. For the
first nine months, net income totaled $456.345 million or $2.64 per
fully diluted share versus $396.932 million or $2.30 per fully diluted
share a year earlier. Annualized returns for the quarter were 17.47
percent on shareholders' equity and 1.42 percent on assets. Year to
date, annualized returns were 18.14 percent on equity and 1.49 percent
on assets. The equity and assets used in computing these returns
include unrealized gains or losses, net of tax, on securities
available-for-sale. Excluding these unrealized amounts, annualized
returns were 17.68 percent on equity and 1.42 percent on assets for
the three months and were 18.17 percent and 1.49 percent,
respectively, year to date.
Results for the first nine months included an aftertax gain in
the second quarter of $47.385 million or $.27 per share from the sale
of the corporation's mortgage servicing portfolio, aftertax
securities losses of $16.656 million or $.10 per share from
restructuring of maturities in the available-for-sale portfolio and
aftertax expenses of $11.291 million or $.07 per share for severance
costs from consolidations, higher consulting fees for strategic
initiatives and charitable contributions. Proceeds from the sale of
the mortgage servicing portfolio are being invested in programs to
enhance growth and productivity such as next generation branch
automation, upgrades to customer information databases to improve
sales effectiveness and service, and major refinements to financial
systems for performance measurement.
Expanded discussion of operating results and the corporation's
financial condition is 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.
5
<PAGE> 6
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________
COMPONENTS OF EARNINGS PER PRIMARY SHARE TABLE 2
___________________________________________________________________________________________________________________________
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 Change 1995 1994 Change
------ ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Interest income -- taxable equivalent .......... $ 4.74 $ 3.67 $ 1.07 $13.39 $10.35 $ 3.04
Interest expense ............................... 2.44 1.59 .85 6.71 4.25 2.46
------ ------ ------- ------ ------ ------
Net interest income -- taxable equivalent ...... 2.30 2.08 .22 6.68 6.10 .58
Taxable equivalent adjustment .................. .15 .14 .01 .43 .43 --
------ ------ ------- ------ ------ ------
Net interest income ............................ 2.15 1.94 .21 6.25 5.67 .58
Provision for loan losses ...................... .14 .11 .03 .43 .30 .13
------ ------ ------- ------ ------ ------
Net interest income after provision
for loan losses .............................. 2.01 1.83 .18 5.82 5.37 .45
Other operating revenue ........................ .99 .88 .11 2.87 2.61 .26
Gain on sale of mortgage servicing portfolio ... -- -- -- .46 -- .46
Investment securities losses ................... -- -- -- (.15) -- (.15)
------ ------ ------- ------ ------ ------
Total other income ............................. .99 .88 .11 3.18 2.61 .57
Personnel expense .............................. .89 .81 .08 2.61 2.45 .16
Other expense .................................. .85 .76 .09 2.56 2.28 .28
------ ------ ------- ------ ------ ------
Total other expense ............................ 1.74 1.57 .17 5.17 4.73 .44
Income before income taxes ..................... 1.26 1.14 .12 3.83 3.25 .58
Applicable income taxes ........................ .38 .34 .04 1.18 .95 .23
------ ------ ------- ------ ------ ------
Net income ..................................... $ .88 $ .80 $ .08 $ 2.65 $ 2.30 $ .35
====== ====== ======= ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________
COMPUTATION OF EARNINGS PER COMMON SHARE TABLE 3
(thousands, except per share)
___________________________________________________________________________________________________________________________
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PRIMARY
Average common shares outstanding ............... 170,291 170,874 170,696 171,204
Dilutive common stock options -- based on treasury
stock method using average market price ....... 1,412 1,141 1,217 1,180
Dilutive common stock awards -- based on treasury
stock method using average market price ....... 90 82 80 78
-------- -------- -------- --------
Average primary shares outstanding .............. 171,793 172,097 171,993 172,462
======== ======== ======== ========
Net income ...................................... $151,280 $137,992 $456,345 $396,932
======== ======== ======== ========
Net income per common share -- primary .......... $ .88 $ .80 $ 2.65 $ 2.30
FULLY DILUTED
Average common shares outstanding ............... 170,291 170,874 170,696 171,204
Dilutive common stock options -- based on treasury
stock method using higher of period-end
market price or average market price .......... 1,738 1,141 1,651 1,180
Dilutive common stock awards -- based on treasury
stock method using higher of period-end
market price or average market price .......... 102 82 102 78
Convertible notes assumed converted ............. 381 604 433 624
-------- -------- -------- --------
Average fully diluted shares outstanding ........ 172,512 172,701 172,882 173,086
======== ======== ======== ========
Net income ...................................... $151,280 $137,992 $456,345 $396,932
Add interest on convertible notes after taxes ... 71 127 263 393
-------- -------- -------- --------
Adjusted net income ............................. $151,351 $138,119 $456,608 $397,325
======== ======== ======== ========
Net income per common share -- fully diluted .... $ .87 $ .80 $ 2.64 $ 2.30
</TABLE>
________________________________________________________________________________
6
<PAGE> 7
NET INTEREST INCOME
Taxable equivalent net interest income for the third quarter
rose $36.170 million or 10.1 percent year over year and expanded
$95.593 million or 9.1 percent for the first nine months of 1995.
Higher levels of interest-earning assets along with improved rates
principally in the securities available-for-sale portfolio accounted
for the growth in both periods, offsetting the impact of competitive
pricing pressures on both loans and deposits. On a sequential quarter
basis, taxable equivalent net interest income for the third period
increased $13.092 million or 3.4 percent. The net yield on
interest-earning assets (net interest income as a percentage of
average interest-earning assets) was lower by 19 basis points and 12
basis points for the third quarter and first nine months,
respectively, compared with year-earlier periods and decreased 8
basis points from the second quarter. The corporation anticipates
pricing pressures to continue throughout the remainder of the year.
Taxable equivalent interest income expanded $180.758 million or
28.6 percent for the quarter and $517.252 million or 29 percent year
to date, the result of both interest-earning asset growth and a higher
average rate earned. Average interest-earning assets were up $5.028
billion or 15.2 percent for the three-month period and $3.947 billion
or 12.2 percent for the first nine months, with the average yield
rising 88 basis points and 110 basis points, respectively. Taxable
equivalent interest income increased $39.039 million or 5 percent from
the second quarter, with average interest-earning assets higher by
$1.594 billion or 4.4 percent and the average rate earned down 4 basis
points.
Loan growth remained strong. Year over year, average loans
rose $3.544 billion or 14.4 percent for the third quarter and $3.330
billion or 14 percent for the first nine months. Loans were up an
additional $894 million or 3.3 percent from the second quarter.
Commercial loans, including related real estate categories,
were higher by $2.733 billion or 20 percent for the quarter and $2.495
billion or 18.9 percent year to date compared with the same periods in
1994. Growth was strongest in regular commercial loans and in
commercial mortgages, with increases of $1.745 billion or 23.1 percent
and $307 million or 9 percent, respectively, for the three months and
$1.894 billion or 26.3 percent and $313 million or 9.4 percent,
respectively, for the first nine months. Construction lending for
apartments, shopping centers and office buildings principally in
Wachovia's three home states accelerated briskly in the three months
ended September 30. Gains in both periods also occurred in foreign
loans and lease financing. Tax-exempt loans rose for the quarter,
reflecting growth in financing of corporate employee stock ownership
plans, but remained moderately lower year to date.
Based on regulatory definitions, commercial real estate loans
were $4.476 billion or 15.4 percent of total loans at September 30,
1995. Commercial mortgages were $3.725 billion and construction loans
were $751 million. Comparable amounts a year earlier were $3.921
billion in commercial real estate loans, representing 15.7 percent of
total loans, with $3.421 billion in commercial mortgages and $500
million in construction loans. At June 30, 1995, commercial mortgages
totaled $3.673 billion and construction loans were $675 million,
representing a combined 15.4 percent of the corporation's loan
portfolio.
Retail loans, including residential mortgages, rose $811
million or 7.4 percent for the third quarter versus a year earlier and
were up $835 million or 7.9 percent for the first nine months.
Substantially all of the growth in both periods occurred in
residential mortgages and in credit card loans. Residential mortgages
were higher by $437 million or 12 percent for the quarter and $290
million or 7.9 percent year to date, with increases accelerating in
the third period. Credit card outstandings grew $369 million or 10
percent for the three months and $571 million or 16.6 percent for the
first nine months. At September 30, 1995, managed credit card
outstandings totaled $4.239 billion, including $124 million of net
securitized loans, compared with $3.816 billion a year earlier and
$4.160 billion at June 30. As part of a diversified funding
strategy, the corporation securitized $500 million of its credit card
receivables on October 26, 1995. Revenues received from the
securitized portfolio will be part of other operating revenue reducing
future net interest income from credit cards.
Investment securities increased $1.083 billion or 14.1 percent
for the quarter and $509 million or 6.6 percent year to date and were
higher by $502 million or 6.1 percent from the preceding three months.
In the second quarter, the corporation sold $1.950 billion of
available-for-sale securities at a loss with the proceeds being
reinvested in higher-yielding investments to help enhance the overall
yield of the portfolio.
7
<PAGE> 8
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
NET INTEREST INCOME AND AVERAGE BALANCES TABLE 4
____________________________________________________________________________________________________________________________________
Twelve
Months 1995 1994
Ended ------------------------------------- -----------------------
September 30 Third Second First Fourth Third
1995 Quarter Quarter Quarter Quarter Quarter
------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET INTEREST INCOME -- TAXABLE
EQUIVALENT (thousands)
Interest income:
Loans ................................. $ 2,344,182 $ 630,199 $ 605,468 $ 571,334 $ 537,181 $ 495,361
Investment securities ................. 571,396 163,187 151,695 130,210 126,304 125,922
Interest-bearing bank balances ........ 789 473 105 101 110 142
Federal funds sold and securities
purchased under resale agreements .... 5,306 1,959 763 1,202 1,382 1,347
Trading account assets ................ 58,033 17,299 16,047 12,567 12,120 9,587
----------- --------- --------- --------- --------- ---------
Total ............................. 2,979,706 813,117 774,078 715,414 677,097 632,359
Interest expense:
Interest-bearing demand ............... 58,067 14,845 14,412 14,367 14,443 13,954
Savings and money market savings ...... 222,036 62,425 61,595 50,578 47,438 44,811
Savings certificates .................. 335,058 99,999 96,773 74,870 63,416 57,023
Large denomination certificates ....... 87,204 28,679 20,226 20,011 18,288 18,453
Time deposits in foreign offices ...... 36,207 11,299 9,503 7,507 7,898 7,042
Short-term borrowed funds ............. 445,401 129,411 119,486 108,389 88,115 71,495
Long-term debt ........................ 276,074 72,259 70,975 66,874 65,966 61,551
----------- --------- --------- --------- --------- ---------
Total ............................. 1,460,047 418,917 392,970 342,596 305,564 274,329
----------- --------- --------- --------- --------- ---------
Net interest income ..................... $ 1,519,659 $ 394,200 $ 381,108 $ 372,818 $ 371,533 $ 358,030
=========== ========= ========= ========= ========= =========
Annualized net yield on
interest-earning assets ............... 4.25% 4.11% 4.19% 4.36% 4.37% 4.30%
AVERAGE BALANCES (millions)
Assets:
Loans -- net of unearned income ....... $ 26,704 $ 28,097 $ 27,203 $ 26,219 $ 25,290 $ 24,553
Investment securities ................. 8,064 8,778 8,276 7,612 7,582 7,695
Interest-bearing bank balances ........ 10 23 6 6 7 11
Federal funds sold and securities
purchased under resale agreements .... 91 133 51 77 100 115
Trading account assets ................ 878 1,054 955 732 770 683
----------- --------- --------- --------- --------- ---------
Total interest-earning assets ..... 35,747 38,085 36,491 34,646 33,749 33,057
Cash and due from banks ............... 2,517 2,530 2,491 2,502 2,544 2,350
Premises and equipment ................ 556 578 563 546 536 523
Other assets .......................... 1,719 1,725 1,724 1,662 1,767 1,912
Unrealized gains (losses) on securities
available-for-sale ................... (3) 65 15 (49) (44) (28)
Allowance for loan losses ............. (407) (410) (408) (405) (406) (405)
----------- --------- --------- --------- --------- ---------
Total assets ..................... $ 40,129 $ 42,573 $ 40,876 $ 38,902 $ 38,146 $ 37,409
=========== ========= ========= ========= ========= =========
Liabilities and shareholders' equity:
Interest-bearing demand ............... $ 3,276 $ 3,231 $ 3,218 $ 3,288 $ 3,364 $ 3,367
Savings and money market savings ...... 6,320 6,689 6,415 6,060 6,114 6,197
Savings certificates .................. 6,196 6,698 6,712 5,917 5,457 5,247
Large denomination certificates ....... 1,587 1,939 1,407 1,502 1,493 1,599
Time deposits in foreign offices ...... 658 795 636 587 612 610
Short-term borrowed funds ............. 7,618 8,593 7,869 7,390 6,619 6,115
Long-term debt ........................ 4,796 4,851 4,863 4,674 4,795 4,637
----------- --------- --------- --------- --------- ---------
Total interest-bearing liabilities 30,451 32,796 31,120 29,418 28,454 27,772
Demand deposits in domestic offices ..... 5,303 5,199 5,316 5,275 5,424 5,277
Demand deposits in foreign offices ...... 7 8 7 6 6 5
Noninterest-bearing time deposits in
domestic offices ...................... 19 5 10 21 41 82
Other liabilities ....................... 1,037 1,102 1,078 929 1,035 1,159
Shareholders' equity .................... 3,312 3,463 3,345 3,253 3,186 3,114
----------- --------- --------- --------- --------- ---------
Total liabilities and
shareholders' equity ............. $ 40,129 $ 42,573 $ 40,876 $ 38,902 $ 38,146 $ 37,409
=========== ========= ========= ========= ========= =========
Total deposits ......................... $ 23,366 $ 24,564 $ 23,721 $ 22,656 $ 22,511 $ 22,384
<CAPTION>
Nine Months Ended
September 30
1995 1994
----------- -----------
<S> <C> <C>
NET INTEREST INCOME -- TAXABLE
EQUIVALENT (thousands)
Interest income:
Loans ................................. $ 1,807,001 $ 1,376,444
Investment securities ................. 445,092 377,898
Interest-bearing bank balances ........ 679 487
Federal funds sold and securities
purchased under resale agreements .... 3,924 6,300
Trading account assets ................ 45,913 24,228
----------- -----------
Total ............................. 2,302,609 1,785,357
Interest expense:
Interest-bearing demand ............... 43,624 40,645
Savings and money market savings ...... 174,598 117,023
Savings certificates .................. 271,642 163,644
Large denomination certificates ....... 68,916 52,017
Time deposits in foreign offices ...... 28,309 14,420
Short-term borrowed funds ............. 357,286 184,457
Long-term debt ........................ 210,108 160,618
----------- -----------
Total ............................. 1,154,483 732,824
----------- -----------
Net interest income ..................... $ 1,148,126 $ 1,052,533
=========== ===========
Annualized net yield on
interest-earning assets ............... 4.21% 4.33%
AVERAGE BALANCES (millions)
Assets:
Loans -- net of unearned income ....... $ 27,180 $ 23,850
Investment securities ................. 8,226 7,717
Interest-bearing bank balances ........ 12 15
Federal funds sold and securities
purchased under resale agreements .... 87 229
Trading account assets ................ 915 662
----------- -----------
Total interest-earning assets ..... 36,420 32,473
Cash and due from banks ............... 2,508 2,361
Premises and equipment ................ 563 512
Other assets .......................... 1,703 1,716
Unrealized gains (losses) on securities
available-for-sale ................... 11 (2)
Allowance for loan losses ............. (408) (407)
----------- -----------
Total assets ..................... $ 40,797 $ 36,653
=========== ===========
Liabilities and shareholders' equity:
Interest-bearing demand ............... $ 3,246 $ 3,391
Savings and money market savings ...... 6,390 6,125
Savings certificates .................. 6,445 5,294
Large denomination certificates ....... 1,618 1,600
Time deposits in foreign offices ...... 673 484
Short-term borrowed funds ............. 7,955 6,100
Long-term debt ........................ 4,797 4,200
----------- -----------
Total interest-bearing liabilities 31,124 27,194
Demand deposits in domestic offices ..... 5,263 5,275
Demand deposits in foreign offices ...... 7 5
Noninterest-bearing time deposits in
domestic offices ...................... 12 75
Other liabilities ....................... 1,037 1,038
Shareholders' equity .................... 3,354 3,066
----------- -----------
Total liabilities and
shareholders' equity ............. $ 40,797 $ 36,653
=========== ===========
Total deposits ......................... $ 23,654 $ 22,249
____________________________________________________________________________________________________________________________________
</TABLE>
8
<PAGE> 9
At September 30, 1995, securities available-for-sale were $4.248
billion and securities held-to-maturity were $4.389 billion as
detailed in the following table.
<TABLE>
<CAPTION>
$ in thousands
<S> <C>
Securities available-for-sale at market value:
U.S. Government and agency .................... $3,174,133
Mortgage backed securities .................... 905,889
Other ......................................... 168,274
----------
Total securities available-for-sale ........ 4,248,296
Securities held-to-maturity:
U.S. Government and agency .................... 2,481,518
Mortgage backed securities .................... 1,508,660
State and municipal ........................... 381,146
Other ......................................... 17,434
----------
Total securities held-to-maturity .......... 4,388,758
----------
Total investment securities ................ $8,637,054
==========
</TABLE>
Securites held-to-maturity had a market value of $4.513 billion
at September 30, 1995, representing a $124 million appreciation over
book value. On the same date, securities available-for-sale marked to
fair market value under Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (FASB 115), had an unrealized gain of $71.993 million,
pretax, and $44.431 million, net of tax. Average available-for-sale
securities for the third quarter had an unrealized gain of $64.920
million, pretax, and $39.715 million, net of tax. For the first nine
months of 1995, average available-for-sale securities had an
unrealized gain of $10.659 million, pretax, and $6.576 million, net of
tax.
Interest expense for the third quarter increased $144.588
million or 52.7 percent and was up $421.659 million or 57.5 percent
for the first nine months, primarily due to a higher average cost of
funds as well as to expanded levels of interest-bearing liabilities.
The average rate paid rose 115 basis points for the three months and
136 basis points year to date, with average interest-bearing
liabilities increasing $5.024 billion or 18.1 percent and $3.930
billion or 14.5 percent, respectively. Funding growth in the third
period versus a year earlier occurred primarily in interest-bearing
time deposits and in short-term borrowings with long-term debt
increasing at a more moderate pace. Interest expense in the third
quarter was higher by $25.947 million or 6.6 percent from the previous
three months, with average interest-bearing liabilities rising $1.676
billion or 5.4 percent and the average rate paid up 1 basis point.
Interest-bearing time deposits grew $2.332 billion or 13.7
percent for the quarter and $1.478 billion or 8.7 percent year to date
and were up $964 million or 5.2 percent from the second period.
Average interest-bearing time deposits have increased on a sequential
monthly basis in eight of the first nine months of 1995.
Year-over-year growth occurred primarily in savings certificates,
which rose $1.451 billion or 27.7 percent for the quarter and $1.151
billion or 21.7 percent for the first nine months, largely reflecting
the results of the corporation's certificates of deposit sale in
March. The one-day sale attracted over $1 billion, with approximately
86 percent representing new money, and generated approximately 28,000
new account relationships out of about 77,000 participating accounts.
Savings and money market savings rose for both periods with good
growth occurring in Wachovia's Premiere money market account. Foreign
time deposits and large denomination certificates also were higher,
both in the third period and year to date. Interest-bearing demand
deposits were down moderately in both periods.
Short-term borrowings for the third quarter and first nine
months rose $2.478 billion or 40.5 percent and $1.855 billion or 30.4
percent, respectively, and were higher by $724 million or 9.2 percent
from the second quarter. Increases from the year-earlier periods
occurred largely in other short-term borrowings, which were up $1.580
billion for the three months and $1.335 billion year to date, and in
federal funds purchased and securities sold under repurchase
agreements, which rose $778 million or 15.8 percent for the quarter
and $552 million or 11.2 percent for the first nine months.
Commercial paper borrowings expanded for the third period but were
modestly lower year to date. Other short-term borrowings include
short-term bank notes issued beginning in the fourth quarter of 1994
with maturities from 30 days to one year. At
9
<PAGE> 10
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS -- THIRD QUARTER* TABLE 5
____________________________________________________________________________________________________________________________________
Variance
Average Volume Average Rate Interest Attributable to
----------------- ------------ ------------------ ------------------
1995 1994 1995 1994 1995 1994 Variance Rate Volume
------- ------- ----- ----- ------- ------- -------- -------- -------
(Millions) (Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans:
$ 9,302 $ 7,557 7.32 6.32 Commercial ..................... $171,542 $120,422 $ 51,120 $ 20,707 $30,413
2,117 1,951 10.50 8.88 Tax-exempt ..................... 56,008 43,703 12,305 8,381 3,924
------- ------- -------- -------- --------
11,419 9,508 7.91 6.85 Total commercial ............ 227,550 164,125 63,425 27,561 35,864
732 740 9.32 8.35 Direct retail................... 17,195 15,579 1,616 1,793 (177)
2,493 2,490 8.41 7.68 Indirect retail ................ 52,836 48,179 4,657 4,599 58
4,064 3,695 12.28 11.00 Credit card .................... 125,739 102,450 23,289 12,525 10,764
345 335 12.64 11.67 Other revolving credit.......... 11,000 9,840 1,160 843 317
------- ------- -------- -------- --------
7,634 7,260 10.75 9.62 Total retail ................ 206,770 176,048 30,722 21,335 9,387
698 481 9.79 9.41 Construction.................... 17,235 11,400 5,835 484 5,351
3,696 3,389 8.55 7.83 Commercial mortgages ........... 79,673 66,917 12,756 6,430 6,326
4,091 3,654 8.53 7.82 Residential mortgages........... 87,934 72,026 15,908 6,827 9,081
------- ------- -------- -------- --------
8,485 7,524 8.64 7.93 Total real estate ........... 184,842 150,343 34,499 14,259 20,240
236 176 8.56 7.68 Lease financing ................ 5,095 3,415 1,680 425 1,255
323 85 7.29 6.66 Foreign ........................ 5,942 1,430 4,512 149 4,363
------- ------- -------- -------- --------
28,097 24,553 8.90 8.00 Total loans ................. 630,199 495,361 134,838 58,828 76,010
Investment securities:
Held-to-maturity:
2,487 2,286 6.70 6.52 U.S. Government and agency..... 42,029 37,574 4,455 1,083 3,372
1,552 1,017 7.98 7.83 Mortgage backed securities..... 31,231 20,067 11,164 411 10,753
395 587 11.67 12.35 State and municipal ........... 11,625 18,262 (6,637) (955) (5,682)
16 15 5.57 3.98 Other.......................... 221 146 75 62 13
------- ------- -------- -------- --------
Total securities held-
4,450 3,905 7.59 7.73 to-maturity .............. 85,106 76,049 9,057 (1,394) 10,451
Available-for-sale:**
3,246 2,622 7.17 5.41 U.S. Government and agency..... 58,631 35,776 22,855 13,172 9,683
910 924 7.31 4.64 Mortgage backed securities .... 16,761 10,813 5,948 6,118 (170)
172 244 6.22 5.33 Other.......................... 2,689 3,284 (595) 489 (1,084)
------- ------- -------- -------- --------
Total securities available-
4,328 3,790 7.16 5.22 for-sale ................. 78,081 49,873 28,208 20,421 7,787
------- ------- -------- -------- --------
8,778 7,695 7.38 6.49 Total investment securities.. 163,187 125,922 37,265 18,332 18,933
23 11 8.03 5.20 Interest-bearing bank balances.... 473 142 331 106 225
Federal funds sold and
securities purchased under
133 115 5.83 4.66 resale agreements............... 1,959 1,347 612 373 239
1,054 683 6.51 5.57 Trading account assets ........... 17,299 9,587 7,712 1,841 5,871
------- ------- -------- -------- --------
Total interest-earning
$38,085 $33,057 8.47 7.59 assets .................... 813,117 632,359 180,758 78,243 102,515
======= =======
INTEREST EXPENSE
$ 3,231 $ 3,367 1.82 1.64 Interest-bearing demand .......... 14,845 13,954 891 1,467 (576)
6,689 6,197 3.70 2.87 Savings and money market savings.. 62,425 44,811 17,614 13,836 3,778
6,698 5,247 5.92 4.31 Savings certificates ............. 99,999 57,023 42,976 24,713 18,263
1,939 1,599 5.87 4.58 Large denomination certificates... 28,679 18,453 10,226 5,830 4,396
------- ------- -------- -------- --------
Total time deposits in
18,557 16,410 4.40 3.25 domestic offices .......... 205,948 134,241 71,707 52,465 19,242
795 610 5.64 4.58 Time deposits in foreign offices.. 11,299 7,042 4,257 1,830 2,427
------- ------- -------- -------- --------
19,352 17,020 4.45 3.29 Total time deposits.......... 217,247 141,283 75,964 54,690 21,274
Federal funds purchased and
securities sold under
5,687 4,909 6.00 4.66 repurchase agreements .......... 86,062 57,688 28,374 18,296 10,078
557 437 5.45 4.44 Commercial paper ................. 7,654 4,882 2,772 1,258 1,514
Other short-term borrowed
2,349 769 6.03 4.60 funds .......................... 35,695 8,925 26,770 3,512 23,258
------- ------- -------- -------- --------
Total short-term
8,593 6,115 5.98 4.64 borrowed funds ............ 129,411 71,495 57,916 24,065 33,851
3,765 3,798 5.70 4.97 Bank notes ....................... 54,109 47,538 6,571 6,980 (409)
1,086 839 6.63 6.62 Other long-term debt ............. 18,150 14,013 4,137 16 4,121
------- ------- -------- -------- --------
4,851 4,637 5.91 5.27 Total long-term debt ........ 72,259 61,551 10,708 7,770 2,938
------- ------- -------- -------- --------
Total interest-bearing
$32,796 $27,772 5.07 3.92 liabilities ............... 418,917 274,329 144,588 89,402 55,186
======= ======= ----- ----- -------- -------- --------
3.40 3.67 Interest rate spread
===== =====
Net yield on interest-
earning assets and
4.11 4.30 net interest income ............ $394,200 $358,030 $ 36,170 (16,416) 52,586
===== ===== ======== ======== ========
____________________________________________________________________________________________________________________________________
</TABLE>
*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 (losses) of $65 million in 1995 and ($28) million in 1994
10
<PAGE> 11
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS -- NINE MONTHS* TABLE 6
____________________________________________________________________________________________________________________________________
Variance
Average Volume Average Rate Interest Attributable to
--------------- ------------ ---------------------- -------------------
1995 1994 1995 1994 1995 1994 Variance Rate Volume
------ ------- ------ ------ ---------- ---------- -------- -------- ---------
(Millions) (Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans:
$ 9,083 $ 7,189 7.49 5.72 Commercial.................... $ 508,921 $ 307,795 $201,126 $108,510 $ 92,616
1,888 1,973 9.99 8.68 Tax-exempt ................... 141,146 128,119 13,027 18,685 (5,658)
------- ------- ---------- ---------- --------
10,971 9,162 7.92 6.36 Total commercial .......... 650,067 435,914 214,153 118,628 95,525
732 730 9.18 8.21 Direct retail ................ 50,210 44,825 5,385 5,272 113
2,415 2,453 8.22 7.75 Indirect retail .............. 148,513 142,134 6,379 8,602 (2,223)
4,004 3,433 12.36 10.90 Credit card .................. 370,139 279,837 90,302 40,323 49,979
Other revolving
342 332 12.64 11.38 credit .................... 32,379 28,259 4,120 3,224 896
------- ------- ---------- ---------- --------
7,493 6,948 10.73 9.53 Total retail................. 601,241 495,055 106,186 65,474 40,712
611 487 9.83 8.68 Construction ................. 44,966 31,630 13,336 4,563 8,773
3,638 3,325 8.63 7.54 Commercial mortgages.......... 234,827 187,570 47,257 28,611 18,646
3,968 3,678 8.32 7.75 Residential mortgages ........ 246,834 213,152 33,682 16,220 17,462
------- ------- ---------- ---------- --------
8,217 7,490 8.57 7.72 Total real estate .......... 526,627 432,352 94,275 50,128 44,147
209 169 8.21 7.86 Lease financing .............. 12,849 9,948 2,901 453 2,448
290 81 7.49 5.23 Foreign ...................... 16,217 3,175 13,042 1,883 11,159
------- ------- ---------- ---------- --------
27,180 23,850 8.89 7.72 Total loans ............... 1,807,001 1,376,444 430,557 224,368 206,189
Investment securities:
Held-to-maturity:
2,490 2,248 6.79 6.60 U.S. Government and agency... 126,533 110,868 15,665 3,405 12,260
1,437 1,058 8.03 7.70 Mortgage backed securities... 86,328 60,944 25,384 2,723 22,661
453 610 11.97 12.59 State and municipal ......... 40,535 57,490 (16,955) (2,714) (14,241)
15 12 5.95 4.75 Other ....................... 672 409 263 117 146
------- ------- ---------- ---------- --------
Total securities held-
4,395 3,928 7.73 7.82 to-maturity ............. 254,068 229,711 24,357 (2,702) 27,059
Available-for-sale:**
2,782 2,542 6.79 5.53 U.S. Government and agency... 141,221 105,062 36,159 25,576 10,583
832 971 6.35 4.61 Mortgage backed securities... 39,503 33,499 6,004 11,312 (5,308)
217 276 6.35 4.66 Other........................ 10,300 9,626 674 3,023 (2,349)
------- ------- ---------- ---------- --------
Total securities available-
3,831 3,789 6.67 5.23 for-sale ............... 191,024 148,187 42,837 41,208 1,629
------- ------- ---------- ---------- --------
8,226 7,717 7.23 6.55 Total investment securities. 445,092 377,898 67,194 41,268 25,926
12 15 7.78 4.28 Interest-bearing bank balances.. 679 487 192 326 (134)
Federal funds sold and
securities purchased under
87 229 6.01 3.68 resale agreements ............ 3,924 6,300 (2,376) 2,745 (5,121)
915 662 6.71 4.90 Trading account assets ......... 45,913 24,228 21,685 10,647 11,038
------- ------- ---------- ---------- --------
Total interest-earning
$36,420 $32,473 8.45 7.35 assets ................... 2,302,609 1,785,357 517,252 285,653 231,599
======= =======
INTEREST EXPENSE
$ 3,246 $ 3,391 1.80 1.60 Interest-bearing demand ........ 43,624 40,645 2,979 4,771 (1,792)
6,390 6,125 3.65 2.55 Savings and money market savings 174,598 117,023 57,575 52,320 5,255
6,445 5,294 5.64 4.13 Savings certificates............ 271,642 163,644 107,998 67,600 40,398
1,618 1,600 5.69 4.35 Large denomination certificates. 68,916 52,017 16,899 16,303 596
------- ------- ---------- ---------- --------
Total time deposits in
17,699 16,410 4.22 3.04 domestic offices......... 558,780 373,329 185,451 154,226 31,225
673 484 5.62 3.99 Time deposits in foreign offices 28,309 14,420 13,889 7,097 6,792
------- ------- ---------- ---------- --------
18,372 16,894 4.27 3.07 Total time deposits ....... 587,089 387,749 199,340 162,985 36,355
Federal funds purchased and
securities sold under
5,459 4,907 6.02 4.10 repurchase agreements......... 245,789 150,366 95,423 76,985 18,438
486 518 5.56 3.65 Commercial paper................ 20,182 14,155 6,027 6,973 (946)
Other short-term borrowed
2,010 675 6.07 3.95 funds ........................ 91,315 19,936 71,379 15,217 56,162
------- ------- ---------- ---------- --------
Total short-term
7,955 6,100 6.01 4.04 borrowed funds .......... 357,286 184,457 172,829 106,259 66,570
3,855 3,377 5.63 4.76 Bank notes ..................... 162,446 120,100 42,346 23,963 18,383
942 823 6.77 6.58 Other long-term debt ........... 47,662 40,518 7,144 1,157 5,987
------- ------- ---------- ---------- --------
4,797 4,200 5.86 5.11 Total long-term debt ...... 210,108 160,618 49,490 25,005 24,485
------- ------- ---------- ---------- --------
Total interest-bearing
$31,124 $27,194 4.96 3.60 liabilities ............. 1,154,483 732,824 421,659 304,684 116,975
======= ======= ----- ----- ---------- ---------- --------
3.49 3.75 Interest rate spread
===== =====
Net yield on interest-earning
assets and net interest
4.21 4.33 income ....................... $1,148,126 $1,052,533 $ 95,593 (29,492) 125,085
===== ===== ========== ========== ========
____________________________________________________________________________________________________________________________________
</TABLE>
*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 (losses) of $11 million in 1995 and ($2) million in 1994
11
<PAGE> 12
September 30, 1995, short-term bank notes outstanding totaled $1.825
billion with an average cost of 5.87 percent and an average maturity
of 1.4 months compared with $1.907 billion in outstandings with an
average cost of 6.07 percent and an average maturity of 2.2 months at
June 30.
Long-term debt was higher by $214 million or 4.6 percent for
the three months and $597 million or 14.2 percent year to date but was
largely unchanged from the second period. Growth in the third quarter
versus a year earlier occurred in other long-term debt. As part of a
strategy to broaden its funding sources, the corporation began issuing
subordinated debentures in the fourth quarter of 1992. In October
1995, Wachovia issued $250 million of 30-year subordinated debentures.
The notes have a 10-year put option and were priced at par to yield
6.605 percent or 47.5 basis points above comparable 10-year
Treasuries. With the latest offering, the corporation has issued a
total of $1.300 billion in subordinated notes.
For the first nine months, medium-term bank notes were up $478
million or 14.2 percent while other long-term debt rose $119 million or
14.4 percent. At September 30, 1995, medium-term bank notes totaled
$3.926 billion with an average cost of 5.69 percent and an average
maturity of 1.4 years. Comparable amounts a year earlier were $3.890
billion in outstandings with an average cost of 5.04 percent and an
average maturity of 1.9 years. At June 30, 1995, medium-term bank
notes totaled $3.979 billion.
Gross deposits averaged $24.564 billion for the third quarter
and $23.654 billion year to date, up $2.180 billion or 9.7 percent and
$1.405 billion or 6.3 percent, from the same respective periods in
1994. Collected deposits, net of float, averaged $22.780 billion for
the third period and $21.911 billion for the first nine months,
representing increases of $1.983 billion or 9.5 percent and $1.237
billion or 6 percent, respectively.
ASSET AND LIABILITY MANAGEMENT AND INTEREST RATE SENSITIVITY
The corporation uses a number of tools to measure interest rate
risk, including monitoring the difference or gap between rate sensitive
assets and liabilities over various time periods, monitoring the change
in present value of the asset and liability portfolios under various
rate scenarios and simulating net interest income under the same rate
scenarios. Management believes that rate risk is best measured by
simulation modeling which calculates expected net interest income based
on projected interest-earning assets, interest-bearing liabilities,
off-balance sheet financial instruments and interest rates.
The corporation monitors exposure to a gradual change in rates
of 200 basis points up or down over a rolling 12-month period and an
interest rate shock of an instantaneous change in rates of 200 basis
points up or down over the same period. From time to time, the model
horizon is expanded to a 24-month period. The corporation policy limit
for the maximum negative impact on net interest income from a gradual
change in interest rates of 2 percentage points over 12 months is 7.5
percent. Management generally has maintained a risk position well
within the policy guideline level. As of September 30, 1995, the model
indicated the impact of a 2 percentage point gradual rise in rates over
12 months would approximate a .2 percent increase in net interest
income, while a 2 percentage point decline in rates over the same
period would approximate a .4 percent decrease from an unchanged rate
environment.
In addition to on-balance sheet instruments such as investment
securities and purchased funds, the corporation uses off-balance sheet
derivative instruments to manage interest rate risk, liquidity and net
interest income. Off-balance sheet instruments include interest rate
swaps, futures and options with indices that directly correlate to
on-balance sheet instruments. The corporation has used off-balance
sheet financial instruments, principally interest rate swaps, over a
number of years and believes their use on a sound basis enhances the
effectiveness of asset and liability and interest rate sensitivity
management.
Off-balance sheet asset and liability derivative transactions
are based on referenced or notional amounts. At September 30, 1995, the
corporation had $1.342 billion notional amount of derivatives
outstanding for asset and liability management purposes. Interest rate
swaps were $1.327 billion or 99 percent of the total notional amount.
Credit risk of off-balance sheet derivative financial instruments is
equal to the fair value gain of the instrument if a counterparty fails
to perform. The credit risk is normally a small percentage of the
notional amount and fluctuates as interest rates move up or down. The
corporation mitigates this risk by subjecting the transactions to the
same rigorous approval and monitoring process as is used for on-balance
sheet credit transactions, by dealing in the national market with
highly rated counterparties, by executing all transactions under
International Swaps and Derivatives Association Master Agreements and
by using collateral instruments to reduce exposure. Collateral is
delivered by either party when the fair value of a particular
12
<PAGE> 13
transaction or group of transactions with the same counterparty on a
net basis exceeds an acceptable threshold of exposure. The threshold
level is determined based on the strength of the individual
counterparty.
The fair value of all asset and liability derivative positions
for which the corporation was exposed to counterparties totaled $16
million at September 30, 1995. The fair value of all asset and liability
derivative positions for which counterparties were exposed to the
corporation amounted to $16 million on the same date. Fair value details
and additional asset and liability derivative information are included
in the accompanying tables.
<TABLE>
<CAPTION>
Estimated Fair Value of Asset and Liability Management Derivatives by Purpose
-----------------------------------------------------------------------------
September 30, 1995 September 30, 1994
-------------------------------------------------- -------------------------
Notional Fair Value Fair Value Net Fair Value Notional Net Fair Value
$ in millions Value Gains (Losses) Gains (Losses) Value Gains (Losses)
-------- ---------- ---------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Convert floating rate liabilities
to fixed:
Swaps-pay fixed/receive floating........ $ 124 $-- $(3) $(3) $ 237 $(2)
Caps purchased-pay fixed/receive
floating.............................. 15 -- -- -- 15 --
Convert fixed rate assets to floating:
Swaps-pay fixed/receive floating........ 402 -- (3) (3) -- --
Forward starting swaps-pay
fixed/receive floating................ 58 -- (4) (4) 75 1
Convert fixed rate liabilities to
floating:
Swaps-receive fixed/pay floating........ 200 3 (5) (2) 100 (16)
Convert floating rate assets to fixed:
Swaps-receive fixed/pay floating........ 218 1 (1) -- 373 (15)
Index amortizing swaps-receive
fixed/pay floating.................... 325 12 -- 12 175 (3)
Hedge spread between prime and fed funds:
Interest rate caps...................... -- -- -- -- 400 --
------ --- ---- --- ------ ----
Total derivatives.................... $1,342 $16 ($16) $-- $1,375 ($35)
====== === ==== === ====== ====
</TABLE>
<TABLE>
<CAPTION>
Maturity Schedule of Asset and Liability Management Derivatives
---------------------------------------------------------------
September 30, 1995
Within Over Average
One Two Three Four Five Five Life
$ in millions Year Years Years Years Years Years Total (Years)
------ ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest rate swaps:
Pay fixed/receive floating:
Notional amount.................... $ 430 $ 32 $ 13 $ 13 $ 14 $ 24 $ 526 1.09
Weighted average rates received.... 4.80% 6.18% 6.00% 5.98% 5.92% 5.88% 5.02%
Weighted average rates paid........ 7.53 7.85 6.36 6.51 7.07 7.54 7.49
Receive fixed/pay floating:
Notional amount.................... $ 108 $ 108 $ 2 $ -- $ 100 $ 100 $ 418 5.09
Weighted average rates received.... 5.10% 6.91% 10.71% -- 7.75% 6.31% 6.52%
Weighted average rates paid........ 6.16 6.11 8.75 -- 5.88 5.88 6.02
Index amortizing swaps:*
Receive fixed/pay floating:
Notional amount.................... $ 75 $ 53 $ 70 $ 47 $ 54 $ 26 $ 325 2.27
Weighted average rates received.... 7.14% 7.88% 8.22% 8.38% 8.10% 8.48% 7.94%
Weighted average rates paid........ 5.90 6.00 5.96 5.95 5.98 5.94 5.95
Total interest rate swaps:
Notional amount...................... $ 613 $ 193 $ 85 $ 60 $ 168 $ 150 $1,269 2.71
Weighted average rates received...... 5.14% 7.06% 7.93% 7.85% 7.71% 6.62% 6.26%
Weighted average rates paid.......... 7.09 6.37 6.08 6.09 6.01 6.15 6.61
Forward starting interest rate swaps:
Notional amount...................... $ -- -- -- -- -- $ 58 $ 58 8.52
Weighted average rates paid.......... -- -- -- -- -- 8.03% 8.03%
Interest rate caps
(notional amount)**................ $ 15 -- -- -- -- -- $ 15 .13
Total derivatives
(notional amount).............. $ 628 $ 193 $ 85 $ 60 $ 168 $ 208 $1,342 2.93
*Maturity is based upon expected average lives rather than contractual lives.
**Average rates are not meaningful.
</TABLE>
13
<PAGE> 14
Asset and liability transactions are accounted for following
hedge accounting rules. Accordingly, gains and losses related to the
fair value of derivative contracts used for asset and liability
management purposes are not immediately recognized in earnings. If the
hedged or altered balance sheet amounts were marked to market, the
resulting unrealized balance sheet gains or losses could be expected
to offset unrealized derivatives gains and losses.
NONPERFORMING ASSETS
Nonperforming assets were $75.449 million or .26 percent of
loans and foreclosed property at September 30, 1995, down $34.062
million or 31.1 percent from a year earlier and lower by $1.191
million or 1.6 percent from June 30. Paydowns by borrowers, the
return of cash-basis assets to accrual status and sales of foreclosed
property primarily accounted for the decreases from both periods.
Included in the above total at September 30, 1995 were real
estate nonperforming assets of $60.813 million or .70 percent of real
estate loans and foreclosed real estate. Comparable amounts were
$73.033 million or .95 percent a year earlier and $53.558 million or
.64 percent at June 30. Real estate nonperforming loans were $47.142
million at September 30, 1995, $55.749 million one year earlier and
$37.783 million at the end of the second quarter of 1995.
Commercial real estate nonperforming assets were $32.904
million or .73 percent of related loans and foreclosed real estate
compared with $53.418 million or 1.36 percent at September 30, 1994
and $29.837 million or .69 percent at June 30, 1995. Commercial real
estate nonperforming loans included in these amounts were $28.121
million at September 30, 1995, $44.780 million a year earlier and
$23.721 million at second-quarter close.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
NONPERFORMING ASSETS AND CONTRACTUALLY PAST DUE LOANS TABLE 7
(thousands)
_____________________________________________________________________________________________________________________________
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
1995 1995 1995 1994 1994
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NONPERFORMING ASSETS
Cash-basis assets -- domestic borrowers........................ $57,524* $57,918 $ 71,848 $ 78,712 $ 89,184
Restructured loans -- domestic................................. --** -- -- -- --
------- ------- -------- -------- --------
Total nonperforming loans................................. 57,524 57,918 71,848 78,712 89,184
Foreclosed property:
Foreclosed real estate........................................ 16,651 18,859 20,669 22,900 22,309
Less valuation allowance...................................... 2,980 3,084 3,304 4,026 5,025
Other foreclosed assets....................................... 4,254 2,947 3,510 2,931 3,043
------- ------- -------- -------- --------
Total foreclosed property................................. 17,925 18,722 20,875 21,805 20,327
------- ------- -------- -------- --------
Total nonperforming assets................................ $75,449*** $76,640 $ 92,723 $100,517 $109,511
======= ======= ======== ======== ========
Nonperforming loans to period-end loans........................ .20% .21% .27% .30% .36%
Nonperforming assets to period-end loans and
foreclosed property.......................................... .26 .27 .35 .39 .44
Period-end allowance for loan losses times
nonperforming loans.......................................... 7.10x 7.06x 5.69x 5.16x 4.55x
Period-end allowance for loan losses times
nonperforming assets......................................... 5.42 5.33 4.41 4.04 3.71
CONTRACTUALLY PAST DUE LOANS
(accruing loans past due 90 days or more)
Domestic borrowers............................................. $47,058 $49,004 $ 48,998 $ 37,010 $ 43,708
======= ======= ======== ======== ========
*Includes $7,856 of loans which have been defined as impaired per Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" (FASB 114)
**Excludes $4,262 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 $23,684;
includes $2,722 of nonperforming assets on which interest and principal are paid current
_____________________________________________________________________________________________________________________________
</TABLE>
14
<PAGE> 15
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses was $23.179 million for the third
quarter and $73.619 million year to date, up $5.056 million or 27.9
percent and $21.395 million or 41 percent from the same respective
periods in 1994. The provision decreased $5.473 million or 19.1
percent from the second quarter, primarily due to higher loan
recoveries in the period.
The provision reflects management's assessment of the adequacy
of the allowance for loan losses to absorb potential write-offs in the
loan portfolio. Factors considered in this assessment include growth
and composition of the loan portfolio, historical credit loss
experience, current and anticipated economic conditions and changes in
borrowers' financial positions.
Net loan losses totaled $23.128 million or .33 percent
annualized of average loans for the three months and $71.067 million
or .35 percent for the first nine months, increasing $5.068 million or
28.1 percent and $20.050 million or 39.3 percent, respectively, from
the same periods in 1994. Net charge-offs for the third quarter were
lower by $5.391 million or 18.9 percent from the preceding three
months. Excluding credit cards, loans had net recoveries of $1.089
million or .02 percent of average loans for the quarter and net losses
of $7.979 million or .05 percent year to date versus net losses of
$3.587 million or .07 percent and $9.339 million or .06 percent,
respectively, in the same year-earlier periods and $7.876 million or
.14 percent in the second quarter.
Credit card net charge-offs totaled $24.217 million or 2.38
percent of average credit card loans for the three months and $63.088
million or 2.10 percent for the first nine months versus $14.473
million or 1.57 percent and $41.678 million or 1.62 percent in the
same respective periods a year earlier. Commercial loans had net
recoveries of $2.130 million or .07 percent of average commercial
loans for the quarter and $2.035 million or .02 percent year to date
compared with net loan losses of $2.148 million or .09 percent and
$6.795 million or .10 percent, respectively, in 1994.
At September 30, 1995, the allowance for loan losses totaled
$408.684 million, representing 1.41 percent of period-end loans and
710 percent coverage of nonperforming loans. This compared with
$406.005 million, 1.63 percent and 455 percent, respectively, a year
earlier and with $408.633 million, 1.45 percent and 706 percent
coverage at June 30, 1995.
15
<PAGE> 16
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________
ALLOWANCE FOR LOAN LOSSES (thousands) TABLE 8
___________________________________________________________________________________________________________________________
1995 1994
----------------------------- ------------------ Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1995 1994
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF TRANSACTIONS
Balance at beginning of period................ $408,633 $408,500 $406,132 $406,005 $405,942 $406,132 $404,798
Provision for loan losses..................... 23,179 28,652 21,788 19,539 18,123 73,619 52,224
Deduct net loan losses:
Loans charged off:
Commercial................................. 431 1,872 318 1,793 3,063 2,621 11,090
Credit card................................ 27,424 23,829 21,431 19,682 17,310 72,684 50,046
Other revolving credit..................... 1,202 1,058 805 1,000 908 3,065 2,715
Other retail............................... 3,609 3,528 3,412 3,216 2,504 10,549 8,193
Real estate................................ 526 5,499 391 1,785 749 6,416 2,920
Lease financing............................ 99 636 101 57 28 836 169
Foreign.................................... -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total..................................... 33,291 36,422 26,458 27,533 24,562 96,171 75,133
Recoveries:
Commercial................................. 2,561 1,400 695 1,382 915 4,656 4,295
Credit card................................ 3,207 3,186 3,203 2,926 2,837 9,596 8,368
Other revolving credit..................... 273 267 322 224 285 862 835
Other retail............................... 1,056 972 1,019 927 1,159 3,047 3,029
Real estate................................ 3,021 2,037 1,761 2,624 1,273 6,819 7,391
Lease financing............................ 45 41 30 31 25 116 173
Foreign.................................... -- -- 8 7 8 8 25
-------- -------- -------- -------- -------- -------- --------
Total..................................... 10,163 7,903 7,038 8,121 6,502 25,104 24,116
-------- -------- -------- -------- -------- -------- --------
Net loan losses............................. 23,128 28,519 19,420 19,412 18,060 71,067 51,017
-------- -------- -------- -------- -------- -------- --------
Balance at end of period...................... $408,684* $408,633* $408,500* $406,132 $406,005 $408,684* $406,005
======== ======== ======== ======== ======== ======== ========
NET LOAN LOSSES (RECOVERIES) BY CATEGORY
Commercial.................................... $ (2,130) $ 472 $ (377) $ 411 $ 2,148 $ (2,035) $ 6,795
Credit card................................... 24,217 20,643 18,228 16,756 14,473 63,088 41,678
Other revolving credit........................ 929 791 483 776 623 2,203 1,880
Other retail.................................. 2,553 2,556 2,393 2,289 1,345 7,502 5,164
Real estate................................... (2,495) 3,462 (1,370) (839) (524) (403) (4,471)
Lease financing............................... 54 595 71 26 3 720 (4)
Foreign....................................... -- -- (8) (7) (8) (8) (25)
-------- -------- -------- -------- -------- -------- --------
Total..................................... $ 23,128 $ 28,519 $ 19,420 $ 19,412 $ 18,060 $ 71,067 $ 51,017
======== ======== ======== ======== ======== ======== ========
Net Loan Losses -- excluding credit cards..... $ (1,089) $ 7,876 $ 1,192 $ 2,656 $ 3,587 $ 7,979 $ 9,339
ANNUALIZED NET LOAN LOSSES (RECOVERIES)
TO AVERAGE LOANS BY CATEGORY
Commercial.................................... (.07%) .02% (.01%) .02 % .09% (.02%) .10%
Credit card................................... 2.38 2.07 1.84 1.76 1.57 2.10 1.62
Other revolving credit........................ 1.08 .93 .57 .92 .74 .86 .75
Other retail.................................. .32 .33 .31 .29 .17 .32 .22
Real estate................................... (.12) .17 (.07) (.04) (.03) (.01) (.08)
Lease financing............................... .09 1.19 .15 .06 .01 .46 --
Foreign....................................... -- -- (.01) (.01) (.04) -- (.04)
Total loans................................... .33 .42 .30 .31 .29 .35 .29
Total loans -- excluding credit cards......... (.02) .14 .02 .05 .07 .05 .06
Period-end allowance to outstanding loans..... 1.41 1.45 1.53 1.57 1.63 1.41 1.63
*Includes the related allowance for credit losses for impaired loans as defined in FASB 114, "Accounting by Creditors for
Impairment of a Loan", of $916 at September 30, 1995, $0 at June 30, 1995 and $2,070 at March 31, 1995
___________________________________________________________________________________________________________________________
</TABLE>
16
<PAGE> 17
NONINTEREST INCOME
Total other operating revenue rose $18.874 million or 12.5
percent for the third quarter versus a year earlier and $44.103 million
or 9.8 percent for the first nine months. Higher levels of deposit
account service charges and credit card income, strong growth in other
service charges and fees and other income, and widened trading account
profits primarily accounted for the gains in both periods. Total
other operating revenue for the third quarter increased $4.111 million
or 2.5 percent from the preceding three months.
Service charges on deposit accounts were up $3.469 million or
7.1 percent for the quarter and $6.006 million or 4.1 percent year to
date. The favorable variances in both periods reflected higher
revenues from overdraft and insufficient fund charges and from savings
account service charges. Commercial account analysis fees were
slightly lower for both the quarter and first nine months, largely due
to increased credit given for commercial deposit account balances. The
level of corporate service activities expanded in both periods.
Credit card income rose $2.909 million or 10.3 percent for the
three months and $10.266 million or 12.6 percent year to date. Gains in
cardholder interchange income and net merchant discount income along
with higher levels of other card income, including loan securitization,
accounted for the growth in both periods. Cardholder purchase volume
for the quarter and first nine months totaled $952 million and $2.654
billion, respectively, versus $862 million and $2.337 billion in the
same respective periods a year earlier.
Other service charges and fees grew $8.690 million or 59.6
percent for the third period and $20.612 million or 49.8 percent year
to date, led by strong gains in investment fee income and electronic
banking. Investment fee income consists primarily of fees from mutual
funds, variable rate demand bond fees, brokerage commissions, private
placements and loan syndications, while electronic banking represents
revenues received principally from debit card and ATM usage. On a
year-to-date basis, investment fee income represents approximately 30
percent of total other service charges and fees, while electronic
banking represents approximately 40 percent. Safe deposit and
safekeeping fees, representing approximately 10 percent of the total,
showed modest growth on a year-to-date basis, while being down for the
quarter. Gains in both periods occurred in remaining other service
charges and fees, representing approximately 20 percent of total other
service charges and fees.
Trading account profits were higher by $805 thousand or 51.1
percent for the quarter and $4.142 million or 112.5 percent for the
first nine months, reflecting improved bond market conditions from the
prior year periods.
Trust fee income was down a modest $411 thousand or 1.3 percent
for the third period and $983 thousand or 1 percent year to date, the
result primarly of lower corporate trust fees in both periods.
Personal trust fees were moderately higher for both the quarter and
first nine months.
Mortgage fee income was down $4.321 million or 50.3 percent for
the three months and $5.068 million or 20.8 percent for the first nine
months. Declines principally reflected the loss of servicing fees,
primarily due to the sale in April of the corporation's mortgage
servicing portfolio. Origination fees increased in the third period
but remained lower year to date. Loan originations totaled $421.066
million for the third quarter versus $296.307 million a year earlier
and were $930.751 million for the first nine months compared with
$1.146 billion in the same period of 1994.
Remaining combined categories of total other operating revenue
grew $7.733 million or 44.3 percent for the third period and $9.128
million or 16.9 percent year to date. Insurance premiums and
commissions increased $619 thousand or 25.5 percent for the three
months and $1.252 million or 14.7 percent for the first nine months.
Bankers' acceptance and letter of credit fees were modestly higher for
the quarter but decreased $616 thousand or 3.5 percent year to date.
Other income rose $7.056 million or 76.8 percent for the third period
and $8.492 million or 30.6 percent for the first nine months
reflecting, in part, increased
17
<PAGE> 18
activity in the Capital Markets Group. Included in other income are
revenues from the corporation's customer portfolio of interest rate
and currency derivatives (excluding foreign exchange forwards and
options) which had a notional amount of $5.847 billion and a fair
value of $3.310 million at September 30, 1995 compared with $2.549
billion and $2.505 million, respectively, a year earlier.
Including investment securities sales and the sale of the
corporation's mortgage servicing portfolio in the second quarter, total
noninterest income was higher by $18.758 million or 12.3 percent for
the third period and $95.854 million or 21.3 percent year to date.
Investment securities sales resulted in net gains of $317 thousand for
the quarter and net losses of $26.048 million for the first nine
months. The April sale of the mortgage servicing portfolio resulted in
a pretax gain of $79.025 million.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
NONINTEREST INCOME (thousands) TABLE 9
____________________________________________________________________________________________________________________________________
1995 1994
----------------------------------- ------------------- Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1995 1994
--------- --------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts ....... $ 52,409 $ 52,452 $ 48,881 $ 48,413 $ 48,940 $ 153,742 $147,736
Fees for trust services ................... 31,740 33,211 30,881 31,285 32,151 95,832 96,815
Credit card income -- net of
interchange payments .................... 31,180 31,867 28,944 30,200 28,271 91,991 81,725
Mortgage fee income ....................... 4,269 6,547 8,454 8,886 8,590 19,270 24,338
Trading account profits (losses) --
excluding interest....................... 2,381 2,375 3,067 (582) 1,576 7,823 3,681
Insurance premiums and commissions ........ 3,044 3,385 3,313 3,189 2,425 9,742 8,490
Bankers' acceptance and letter of
credit fees ............................. 5,885 5,743 5,559 5,365 5,827 17,187 17,803
Other service charges and fees ............ 23,261 19,888 18,817 15,530 14,571 61,966 41,354
Other income .............................. 16,246 10,836 9,177 12,437 9,190 36,259 27,767
--------- --------- --------- -------- -------- --------- --------
Total other operating revenue ....... 170,415 166,304 157,093 154,723 151,541 493,812 449,709
Gain on sale of mortgage servicing
portfolio ............................... -- 79,025 -- -- -- 79,025 --
Investment securities gains (losses) ...... 317 (26,236) (129) 2,094 433 (26,048) 1,226
--------- --------- --------- -------- -------- --------- --------
Total ............................... $ 170,732 $ 219,093 $ 156,964 $156,817 $151,974 $ 546,789 $450,935
========= ========= ========= ======== ======== ========= ========
____________________________________________________________________________________________________________________________________
</TABLE>
NONINTEREST EXPENSE
Noninterest expense for the third quarter increased $27.589
million or 10.2 percent year over year and was up $72.643 million or
8.9 percent for the first nine months. Wachovia's overhead ratio
measuring noninterest expense as a percentage of total adjusted
revenues (taxable equivalent net interest income and total other
operating revenue) was 52.94 percent for the third period and 54.11
percent year to date. Noninterest expense decreased $7.735 million or
2.5 percent from the second quarter.
Total personnel expense rose $13.603 million or 9.7 percent for
the third period and $26.307 million or 6.2 percent for the first nine
months. Salaries expense grew $10.359 million or 8.9 percent for the
quarter and $22.171 million or 6.4 percent year to date, primarily
reflecting higher base salaries with severance and incentive pay also
up in both periods. Employee benefits expense increased $3.244 million
or 14.2 percent for the three months and $4.136 million or 5.5 percent
for the first nine months, largely due to rises in retirement benefits
expense and payroll taxes.
Combined net occupancy and equipment expense was up modestly for
the quarter and was higher by $5.541 million or 4 percent year to
date. Net occupancy expense rose $1.398 million or 7 percent for the
18
<PAGE> 19
three months and $2.904 million or 4.9 percent for the first nine
months, principally due to increased building maintenance and operating
premise lease expenses and to higher building depreciation expense.
Equipment expense was lower by $1.039 million or 3.9 percent for the
third period, largely reflecting the reclassification of some
telecommunications expenses to other expense. For the first nine
months, equipment expense was up $2.637 million or 3.3 percent, due
primarily to higher equipment maintenance costs as well as to
increased expenses associated with equipment installation and
relocation.
Remaining combined categories of noninterest expense were higher
by $13.627 million or 16.1 percent and $40.795 million or 16 percent
for the third quarter and first nine months, respectively.
Advertising and sales promotion expense rose $6.315 million or 78.8
percent for the quarter and $6.375 million or 23.5 percent for the
first nine months, due principally to credit card solicitations.
Expenses for professional services increased $5.104 million or 110.5
percent for the three months and $10.607 million or 76 percent year to
date, with consulting fees associated with ongoing strategic
initiatives principally accounting for the growth. Outside data
processing, programming and software expense was up $2.125 million or
27.1 percent for the three months and $6.082 million or 24.9 percent
year to date, primarily reflecting higher external programming
services costs, increased volume of treasury cash services operations
and amortization of externally purchased software.
Deposit insurance premiums paid by banking companies to the
Federal Deposit Insurance Corporation were reduced in the third quarter
retroactive to June 1, 1995. The rate for well-capitalized banks
decreased from $.23 to $.04 per $100 of deposits resulting in a refund
of $13.173 million to the corporation. Also in the third period, the
corporation made an accrual of $8.581 million for an expected one-time
Savings Association Insurance Fund assessment.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
NONINTEREST EXPENSE (thousands) TABLE 10
____________________________________________________________________________________________________________________________________
1995 1994
-------------------------------------- -------------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
-------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Salaries ............................................ $127,152 $ 123,720 $118,185 $ 117,904 $ 116,793
Employee benefits ................................... 26,146 26,267 26,778 23,662 22,902
-------- --------- -------- --------- ---------
Total personnel expense ....................... 153,298 149,987 144,963 141,566 139,695
Net occupancy expense ............................... 21,424 20,940 20,190 21,261 20,026
Equipment expense ................................... 25,750 27,935 28,263 27,197 26,789
Postage and delivery ................................ 9,379 9,190 9,592 8,650 8,645
Outside data processing, programming and software ... 9,959 10,664 9,897 10,773 7,834
Stationery and supplies ............................. 6,374 6,619 6,208 6,182 6,578
Advertising and sales promotion ..................... 14,334 9,747 9,412 6,949 8,019
Professional services ............................... 9,721 9,149 5,691 6,539 4,617
Travel and business promotion ....................... 4,474 5,110 4,059 4,650 3,757
FDIC insurance and regulatory examinations .......... 9,464 13,344 13,339 13,188 13,294
Check clearing and other bank services .............. 2,374 2,337 2,150 2,204 2,475
Amortization of intangible assets ................... 1,210 2,116 4,071 4,430 4,524
Foreclosed property expense ......................... (146) 408 (155) 9 (452)
Other expense ....................................... 31,267 39,071 25,352 28,927 25,492
-------- --------- -------- --------- ---------
Total ......................................... $298,882 $ 306,617 $283,032 $ 282,525 $ 271,293
======== ========= ======== ========= =========
Overhead ratio ...................................... 52.94% 56.01% 53.41% 53.69% 53.24%
<CAPTION>
Nine Months Ended
September 30
1995 1994
-------- ---------
<S> <C> <C>
Salaries ............................................ $369,057 $ 346,886
Employee benefits ................................... 79,191 75,055
-------- ---------
Total personnel expense ....................... 448,248 421,941
Net occupancy expense ............................... 62,554 59,650
Equipment expense ................................... 81,948 79,311
Postage and delivery ................................ 28,161 26,513
Outside data processing, programming and software ... 30,520 24,438
Stationery and supplies ............................. 19,201 18,376
Advertising and sales promotion ..................... 33,493 27,118
Professional services ............................... 24,561 13,954
Travel and business promotion ....................... 13,643 11,604
FDIC insurance and regulatory examinations .......... 36,147 40,263
Check clearing and other bank services .............. 6,861 6,690
Amortization of intangible assets ................... 7,397 14,263
Foreclosed property expense ......................... 107 (4,297)
Other expense ....................................... 95,690 76,064
-------- ---------
Total ......................................... $888,531 $ 815,888
======== =========
Overhead ratio ...................................... 54.11% 54.31%
____________________________________________________________________________________________________________________________________
</TABLE>
19
<PAGE> 20
INCOME TAXES
Applicable income taxes were higher by $7.271 million or 12.6
percent for the third period and $38.021 million or 23.2 percent for
the first nine months. Income taxes computed at the statutory rate
are reduced primarily by the interest earned on state and municipal
debt securities and industrial revenue obligations. Also, within
certain limitations, one-half of the interest income on qualifying
employee stock ownership plan loans is exempt from federal taxes. The
interest earned on state and municipal debt instruments is exempt from
federal taxes and, except for out-of-state issues, from Georgia and
North Carolina taxes as well, and results in substantial interest
savings for local governments and their constituents.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
INCOME TAXES (thousands) TABLE 11
____________________________________________________________________________________________________________________________________
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income before income taxes .................................. $ 216,238 $ 195,679 $ 658,523 $ 561,089
========= ========= ========= =========
Federal income taxes at statutory rate ...................... $ 75,683 $ 68,488 $ 230,483 $ 196,381
State and local income taxes -- net of federal benefit....... 952 1,235 (864) 3,426
Effect of tax-exempt securities interest and other income ... (11,799) (12,115) (33,404) (36,087)
Other items ................................................. 122 79 5,963 437
--------- --------- --------- ---------
Total tax expense ...................................... $ 64,958 $ 57,687 $ 202,178 $ 164,157
========= ========= ========= =========
Currently payable:
Federal ................................................... $ 60,398 $ 52,835 $ 213,143 $ 154,905
Foreign ................................................... 59 46 183 106
State and local ........................................... 241 1,773 10,954 6,549
--------- --------- --------- ---------
Total .................................................. 60,698 54,654 224,280 161,560
Deferred:
Federal ................................................... 3,036 2,907 (9,819) 3,876
State and local ........................................... 1,224 126 (12,283) (1,279)
--------- --------- --------- ---------
Total .................................................. 4,260 3,033 (22,102) 2,597
--------- --------- --------- ---------
Total tax expense ...................................... $ 64,958 $ 57,687 $ 202,178 $ 164,157
========= ========= ========= =========
____________________________________________________________________________________________________________________________________
</TABLE>
FINANCIAL CONDITION AND CAPITAL RATIOS
Total assets at September 30, 1995 were $44.101 billion,
including $39.483 billion of interest-earning assets and $29.012
billion of loans. Comparable amounts one year earlier were $38.134
billion in assets, $33.580 billion in interest-earning assets and
$24.968 billion in loans. At June 30, 1995, assets totaled $42.867
billion, interest-earning assets were $38.329 billion and loans were
$28.251 billion.
Deposits at third period-end were $25.283 billion, including
$20.066 billion of time deposits, representing 79.4 percent of the
total. This compared with deposits of $22.256 billion a year earlier,
including $16.984 billion of time deposits or 76.3 percent of the
total. Deposits at June 30, 1995 were $23.892 billion, with $18.530
billion of time deposits, representing 77.6 percent of the total.
Shareholders' equity was $3.618 billion at September 30, 1995,
up $403 million or 12.5 percent from $3.215 billion at the end of the
1994 third quarter and higher by $83 million or 2.3 percent from
$3.535 billion at June 30, 1995. Included in the total at September
30, 1995 was $44.431 million, net of tax, of unrealized gains on
securities available-for-sale marked to fair market value under FASB
115.
Cash dividends paid totaled $61.312 million for the third
quarter and $174.072 million for the first nine months, an increase of
19.7 percent and 13 percent, respectively, from the same periods in
1994. Cash dividends paid represented a payout of 40.5 percent of net
income for the three months and 38.1 percent year to date.
The corporation was authorized by the board of directors on
July 28, 1995 to repurchase up to 5 million shares of its common
stock. The authorization replaced an earlier action on July 22, 1994
to repurchase the same number of shares. Repurchased shares will be
used for various corporate purposes, including share issuance for the
corporation's employee stock plans and dividend reinvestment plan. In
the third quarter, the
20
<PAGE> 21
corporation repurchased 436,000 shares under the new and previous
authorizations at an average price of $36.939 per share for a total
cost of $16.105 million. As of September 30, 1995, a total of
4,800,000 shares remained available for repurchase under the new
authorization.
Intangible assets were $40.283 million at September 30, 1995,
consisting of $29.844 million in goodwill, $7.342 million in deposit
base intangibles, $1.725 million in purchased credit card intangibles
and $1.372 million in other intangible assets. In April, the
corporation sold its mortgage servicing portfolio with associated
mortgage servicing rights of $31.903 million at March 31, 1995. At
third quarter-close 1994, intangible assets were $82.546 million, with
$37.286 million in mortgage servicing rights, $31.334 million in
goodwill, $9.092 million in deposit base intangibles, $3.045 million
in purchased credit card intangibles and $1.789 million in other
intangibles. Intangible assets at June 30, 1995 were $41.492 million.
Regulatory agencies divide capital into Tier I (consisting of
shareholders' equity less ineligible intangible assets) and Tier II
(consisting of the allowable portion of the reserve for loan losses
and certain long-term debt) and measure capital adequacy by applying
both capital levels to a banking company's risk-adjusted assets and
off-balance sheet items. Regulatory requirements presently specify
that Tier I capital should exclude the market appreciation or
depreciation of securities available-for-sale arising from valuation
adjustments under FASB 115. In addition to these capital ratios,
regulatory agencies have established a Tier I leverage ratio which
measures Tier I capital to average assets less ineligible intangible
assets.
Regulatory guidelines require a minimum of total capital to
risk-adjusted assets ratio of 8 percent with one-half consisting of
tangible common shareholders' equity and a minimum Tier I leverage
ratio of 3 percent. Banks which meet or exceed a Tier I ratio of 6
percent, a total capital ratio of 10 percent and a Tier I leverage
ratio of 5 percent are considered well capitalized by regulatory
standards.
At September 30, 1995, Wachovia's Tier I to risk-adjusted assets
ratio was 9.32 percent with total capital 13.08 percent of
risk-adjusted assets. The corporation's Tier I leverage ratio was
8.34 percent.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
CAPITAL COMPONENTS AND RATIOS (thousands) TABLE 12
____________________________________________________________________________________________________________________________________
1995 1994
----------------------------------------------- ----------------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Tier I capital:
Common shareholders' equity ............... $ 3,617,642 $ 3,535,313 $ 3,404,983 $ 3,286,507 $ 3,214,881
Less ineligible intangible assets ......... 29,844 30,216 30,589 30,961 31,334
Unrealized (gains) losses on securities
available-for-sale, net of tax .......... (44,431) (44,556) 10,111 37,635 21,510
------------ ----------- ----------- ----------- -----------
Total Tier I capital ................... 3,543,367 3,460,541 3,384,505 3,293,181 3,205,057
Tier II capital:
Allowable allowance for loan losses ....... 408,684 408,633 408,500 406,132 406,005
Allowable long-term debt .................. 1,018,003 1,020,267 770,680 830,782 832,881
------------ ----------- ----------- ----------- -----------
Tier II capital additions .............. 1,426,687 1,428,900 1,179,180 1,236,914 1,238,886
------------ ----------- ----------- ----------- -----------
Total capital .......................... $ 4,970,054 $ 4,889,441 $ 4,563,685 $ 4,530,095 $ 4,443,943
============ =========== =========== =========== ===========
Risk-adjusted assets ........................ $ 38,011,712 $37,189,208 $36,207,967 $35,573,896 $34,100,248
Quarterly average assets .................... $ 42,572,976 $40,875,958 $38,901,940 $38,146,370 $37,676,339
Risk-based capital ratios:
Tier I capital ............................ 9.32% 9.31% 9.35% 9.26% 9.40%
Total capital ............................. 13.08 13.15 12.60 12.73 13.03
Tier I leverage ratio* ...................... 8.34 8.47 8.70 8.63 8.51
Shareholders' equity to total assets ........ 8.20 8.25 8.47 8.39 8.43
*Ratio excludes the average unrealized gains
(losses) on securities available-for-sale,
net of tax, of $39,715, $8,933, ($29,681),
($26,581) and ($16,885), respectively
____________________________________________________________________________________________________________________________________
</TABLE>
21
<PAGE> 22
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
September 30 December 31 September 30
$ in thousands 1995 1994 1994
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks.................................................... $ 2,516,429 $ 2,670,115 $ 2,508,241
Interest-bearing bank balances............................................. 419,555 6,763 5,758
Federal funds sold and securities
purchased under resale agreements........................................ 347,962 201,606 199,386
Trading account assets..................................................... 1,065,949 889,958 745,000
Securities available-for-sale.............................................. 4,248,296 3,538,247 3,688,984
Securities held-to-maturity (market value of $4,513,177,
$4,114,644 and $3,980,564, respectively)................................. 4,388,758 4,184,610 3,972,867
Loans and net leases....................................................... 29,020,208 25,898,774 24,975,597
Less unearned income on loans.............................................. 7,956 7,970 7,881
----------- ----------- -----------
Total loans.......................................................... 29,012,252 25,890,804 24,967,716
Less allowance for loan losses............................................. 408,684 406,132 406,005
----------- ----------- -----------
Net loans............................................................ 28,603,568 25,484,672 24,561,711
Premises and equipment..................................................... 591,879 543,548 532,121
Due from customers on acceptances.......................................... 608,825 416,591 774,222
Other assets............................................................... 1,309,884 1,251,848 1,145,995
----------- ----------- -----------
Total assets......................................................... $44,101,105 $39,187,958 $38,134,285
=========== =========== ===========
LIABILITIES
Deposits in domestic offices:
Demand................................................................... $ 5,208,185 $ 5,657,579 $ 5,265,733
Interest-bearing demand.................................................. 3,278,742 3,524,857 3,336,611
Savings and money market savings......................................... 6,796,514 6,065,966 6,099,692
Savings certificates..................................................... 6,641,131 5,464,532 5,177,269
Large denomination certificates.......................................... 2,401,901 1,416,318 1,484,147
Noninterest-bearing time................................................. 5,695 24,121 50,753
----------- ----------- -----------
Total deposits in domestic offices................................... 24,332,168 22,153,373 21,414,205
Deposits in foreign offices:
Demand................................................................... 8,522 5,540 6,399
Time..................................................................... 942,325 910,345 835,091
----------- ----------- -----------
Total deposits in foreign offices.................................... 950,847 915,885 841,490
----------- ----------- -----------
Total deposits....................................................... 25,283,015 23,069,258 22,255,695
Federal funds purchased and securities
sold under repurchase agreements......................................... 6,472,005 5,898,398 5,528,088
Commercial paper........................................................... 535,019 406,706 432,012
Other short-term borrowed funds............................................ 2,080,499 1,007,340 854,559
Long-term debt:
Bank notes............................................................... 3,925,550 3,953,318 3,890,345
Other long-term debt..................................................... 1,084,663 837,146 839,246
----------- ----------- -----------
Total long-term debt................................................. 5,010,213 4,790,464 4,729,591
Acceptances outstanding.................................................... 608,825 416,591 774,222
Other liabilities.......................................................... 493,887 312,694 345,237
----------- ----------- -----------
Total liabilities.................................................... 40,483,463 35,901,451 34,919,404
SHAREHOLDERS' EQUITY
Preferred stock, par value $5 per share:
Authorized 50,000,000 shares; none outstanding........................... -- -- --
Common stock, par value $5 per share:
Issued 170,325,647, 170,933,749 and
170,759,977, respectively.............................................. 851,628 854,669 853,800
Capital surplus............................................................ 714,051 741,946 741,083
Retained earnings.......................................................... 2,051,963 1,689,892 1,619,998
----------- ----------- -----------
Total shareholders' equity........................................... 3,617,642 3,286,507 3,214,881
----------- ----------- -----------
Total liabilities and shareholders' equity........................... $44,101,105 $39,187,958 $38,134,285
=========== =========== ===========
</TABLE>
22
<PAGE> 23
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
$ in thousands, except per share 1995 1994 1995 1994
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans............................................................ $615,542 $483,087 $1,769,174 $1,340,149
Securities available-for-sale:
State and municipal............................................ -- -- -- 14
Other investments.............................................. 74,019 46,801 180,054 139,133
Securities held-to-maturity:
State and municipal............................................ 7,923 12,192 27,398 38,316
Other investments.............................................. 70,466 54,992 204,460 164,226
Interest-bearing bank balances................................... 473 142 679 487
Federal funds sold and securities
purchased under resale agreements.............................. 1,959 1,347 3,924 6,300
Trading account assets........................................... 16,102 8,889 42,678 22,465
-------- -------- ---------- ----------
Total interest income...................................... 786,484 607,450 2,228,367 1,711,090
INTEREST EXPENSE
Deposits:
Domestic offices............................................... 205,948 134,241 558,780 373,329
Foreign offices................................................ 11,299 7,042 28,309 14,420
-------- -------- ---------- ----------
Total interest on deposits................................. 217,247 141,283 587,089 387,749
Short-term borrowed funds........................................ 129,411 71,495 357,286 184,457
Long-term debt................................................... 72,259 61,551 210,108 160,618
-------- -------- ---------- ----------
Total interest expense..................................... 418,917 274,329 1,154,483 732,824
NET INTEREST INCOME.............................................. 367,567 333,121 1,073,884 978,266
Provision for loan losses........................................ 23,179 18,123 73,619 52,224
-------- -------- ---------- ----------
Net interest income after
provision for loan losses ..................................... 344,388 314,998 1,000,265 926,042
OTHER INCOME
Service charges on deposit accounts.............................. 52,409 48,940 153,742 147,736
Fees for trust services.......................................... 31,740 32,151 95,832 96,815
Credit card income............................................... 31,180 28,271 91,991 81,725
Mortgage fee income.............................................. 4,269 8,590 19,270 24,338
Trading account profits.......................................... 2,381 1,576 7,823 3,681
Other operating income........................................... 48,436 32,013 125,154 95,414
-------- -------- ---------- ----------
Total other operating revenue.............................. 170,415 151,541 493,812 449,709
Gain on sale of mortgage servicing portfolio..................... -- -- 79,025 --
Investment securities gains (losses)............................. 317 433 (26,048) 1,226
-------- -------- ---------- ----------
Total other income......................................... 170,732 151,974 546,789 450,935
OTHER EXPENSE
Salaries......................................................... 127,152 116,793 369,057 346,886
Employee benefits................................................ 26,146 22,902 79,191 75,055
-------- -------- ---------- ----------
Total personnel expense ................................... 153,298 139,695 448,248 421,941
Net occupancy expense............................................ 21,424 20,026 62,554 59,650
Equipment expense................................................ 25,750 26,789 81,948 79,311
Other operating expense.......................................... 98,410 84,783 295,781 254,986
-------- -------- ---------- ----------
Total other expense........................................ 298,882 271,293 888,531 815,888
Income before income taxes....................................... 216,238 195,679 658,523 561,089
Applicable income taxes.......................................... 64,958 57,687 202,178 164,157
-------- -------- ---------- ----------
NET INCOME....................................................... $151,280 $137,992 $ 456,345 $ 396,932
======== ======== ========== ==========
Net income per common share:
Primary........................................................ $ .88 $ .80 $ 2.65 $ 2.30
Fully diluted.................................................. $ .87 $ .80 $ 2.64 $ 2.30
Average shares outstanding:
Primary........................................................ 171,793 172,097 171,993 172,462
Fully diluted.................................................. 172,512 172,701 172,882 173,086
</TABLE>
23
<PAGE> 24
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
-------------------------- Capital Retained
$ in thousands, except per share Shares Amount Surplus Earnings
----------- -------- -------- ----------
<S> <C> <C> <C> <C>
PERIOD ENDED SEPTEMBER 30, 1994
Balance at beginning of year ........................................ 171,375,772 $856,879 $761,573 $1,399,495
Net income .......................................................... 396,932
Cash dividends declared on common
stock -- $.90 a share ............................................. (154,083)
Common stock issued pursuant to:
Stock option and employee benefit plans ........................... 544,925 2,724 12,255
Dividend reinvestment plan ........................................ 260,354 1,302 7,255
Conversion of debentures .......................................... 47,174 236 665
Common stock acquired ............................................... (1,468,248) (7,341) (40,471)
Unrealized losses on securities
available-for-sale, net of tax .................................... (21,510)
Miscellaneous ....................................................... (194) (836)
----------- -------- -------- ----------
Balance at end of period ............................................ 170,759,977 $853,800 $741,083 $1,619,998
=========== ======== ======== ==========
PERIOD ENDED SEPTEMBER 30, 1995
Balance at beginning of year ........................................ 170,933,749 $854,669 $741,946 $1,689,892
Net income .......................................................... 456,345
Cash dividends declared on common
stock -- $1.02 a share ............................................ (174,072)
Common stock issued pursuant to:
Stock option and employee benefit plans ........................... 625,298 3,126 12,442
Dividend reinvestment plan ........................................ 271,933 1,360 8,592
Conversion of debentures .......................................... 165,885 829 2,355
Common stock acquired ............................................... (1,671,218) (8,356) (51,249)
Unrealized gains on securities
available-for-sale, net of tax .................................... 82,065
Miscellaneous ....................................................... (35) (2,267)
----------- -------- -------- ----------
Balance at end of period ............................................ 170,325,647 $851,628 $714,051 $2,051,963
=========== ======== ======== ==========
</TABLE>
24
<PAGE> 25
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30
$ in thousands 1995 1994
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income.................................................................................... $ 456,345 $ 396,932
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses................................................................... 73,619 52,224
Depreciation and amortization............................................................... 53,780 83,893
Deferred income tax benefit................................................................. (22,102) 2,597
Investment securities (gains) losses........................................................ 25,979 (1,226)
Gain on sale of noninterest-earning assets.................................................. (1,621) (4,649)
Gain on sale of mortgage servicing portfolio................................................ (79,025) --
Increase (decrease) in accrued income taxes................................................. 22,047 (327)
Increase (decrease) in accrued interest receivable.......................................... (68,599) 7,851
Increase in accrued interest payable........................................................ 87,770 51,802
Net change in other accrued and deferred income and expense................................. 78,819 4,140
Net trading account activities.............................................................. (175,991) 43,779
Net loans held for resale................................................................... (216,831) 264,175
---------- ----------
Net cash provided by operating activities............................................... 234,190 901,191
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing bank balances..................................... (412,792) 6,720
Net (increase) decrease in federal funds sold and securities
purchased under resale agreements........................................................... (146,356) 491,720
Purchases of securities available-for-sale.................................................... (3,670,330) (722,958)
Purchases of securities held-to-maturity...................................................... (555,926) (304,060)
Sales of securities available-for-sale........................................................ 2,390,251 69,376
Calls, maturities and prepayments of securities available-for-sale............................ 681,106 654,953
Calls, maturities and prepayments of securities held-to-maturity.............................. 349,887 470,771
Net increase in loans made to customers....................................................... (2,979,765) (2,314,157)
Capital expenditures.......................................................................... (113,131) (87,128)
Proceeds from sales of premises and equipment................................................. 11,196 5,710
Proceeds from sale of mortgage servicing portfolio............................................ 142,011 --
Net increase in other assets.................................................................. (81,583) (74,639)
---------- ----------
Net cash used by investing activities................................................... (4,385,432) (1,803,692)
FINANCING ACTIVITIES
Net increase (decrease) in demand, savings and money market accounts.......................... 19,595 (1,140,275)
Net increase in certificates of deposit....................................................... 2,194,162 43,572
Net increase in federal funds purchased and securities sold under repurchase agreements....... 573,607 786,805
Net increase (decrease) in commercial paper................................................... 128,313 (157,166)
Net increase (decrease) in other short-term borrowings........................................ 1,073,159 (236,564)
Proceeds from issuance of bank notes.......................................................... 946,897 1,945,589
Maturities of bank notes...................................................................... (975,731) (427,800)
Proceeds from issuance of other long-term debt................................................ 248,012 247,800
Payments on other long-term debt.............................................................. (384) (263)
Common stock issued........................................................................... 17,653 19,804
Dividend payments............................................................................. (174,072) (154,083)
Common stock repurchased...................................................................... (56,025) (46,601)
Net increase in other liabilities............................................................. 2,370 396
---------- ----------
Net cash provided by financing activities............................................... 3,997,556 881,214
DECREASE IN CASH AND CASH EQUIVALENTS......................................................... (153,686) (21,287)
Cash and cash equivalents at beginning of year................................................ 2,670,115 2,529,528
---------- ----------
Cash and cash equivalents at end of period.................................................... $2,516,429 $2,508,241
========== ==========
SUPPLEMENTAL DISCLOSURES
Unrealized appreciation in securities available-for-sale:
Increase in securities available-for-sale................................................... $ 133,840 $ 35,225
Increase (decrease) in deferred taxes....................................................... (51,775) 13,715
Increase in shareholders' equity............................................................ 82,065 21,510
</TABLE>
25
<PAGE> 26
________________________________________________________________________________
1995 FORM 10Q
United States Securities and Exchange Commission
Washington, DC 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 1995
Commission File Number 1-9021
WACHOVIA CORPORATION
Incorporated in the State of North Carolina
IRS Employer Identification Number 56-1473727
Address and Telephone:
301 North Main Street, Winston-Salem, North Carolina 27150,
(910) 770-5000
191 Peachtree Street NE, Atlanta, Georgia 30303, (404) 332-5000
Securities registered pursuant to Section 12(b) of the Act:
Common Stock -- $5.00 par value, which is registered on the New York
Stock Exchange.
As of September 30, 1995, Wachovia Corporation had 170,325,647
shares of common stock outstanding.
Wachovia Corporation has (1) 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.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the financial supplement for the quarter ended
September 30, 1995 are incorporated by reference into Parts I and II as
indicated in the table below. Except for parts of the Wachovia
Corporation Financial Supplement expressly incorporated herein by
reference, this Financial Supplement is not to be deemed filed with
the Securities and Exchange Commission.
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1 FINANCIAL STATEMENTS (UNAUDITED)
Selected Period-End Data ................. 3
Common Stock Data -- Per Share ........... 3
Consolidated Statements of Condition...... 22
Consolidated Statements of Income......... 23
Consolidated Statements of
Shareholders' Equity ................... 24
Consolidated Statements of Cash Flows..... 25
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ............................... 4-21
</TABLE>
26
<PAGE> 27
________________________________________________________________________________
1995 FORM 10-Q - continued
PART II OTHER INFORMATION
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) 11 "Computation of Earnings per Common Share," is presented as
Table 3 on page 6 of the third quarter 1995 financial
supplement.
19 "Unaudited Consolidated Financial Statements," listed in Part
I, Item 1 do not include all information and footnotes required
under generally accepted accounting principles. However, in
the opinion of management, the profit and loss information
presented in the interim financial statements reflects all
adjustments necessary to present fairly the results of
operations for the periods presented. Adjustments reflected in
the third quarter of 1995 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.
27 Financial Data Schedule (for SEC purposes only).
(b) Reports on Form 8-K: No reports on Form 8-K were filed during
the three months ended September 30, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
WACHOVIA CORPORATION
November 9, 1995 ROBERT S. McCOY, JR. November 9, 1995 JOHN C. McLEAN, JR.
------------------------ -------------------
Robert S. McCoy, Jr. John C. McLean, Jr.
Executive Vice President Comptroller
and Chief Financial Officer
27
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WACHOVIA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,516,429
<INT-BEARING-DEPOSITS> 419,555
<FED-FUNDS-SOLD> 347,962
<TRADING-ASSETS> 1,065,949
<INVESTMENTS-HELD-FOR-SALE> 4,248,296
<INVESTMENTS-CARRYING> 4,388,758
<INVESTMENTS-MARKET> 4,513,177
<LOANS> 29,012,252
<ALLOWANCE> 408,684
<TOTAL-ASSETS> 44,101,105
<DEPOSITS> 25,283,015
<SHORT-TERM> 9,087,523
<LIABILITIES-OTHER> 1,102,712
<LONG-TERM> 5,010,213
<COMMON> 851,628
0
0
<OTHER-SE> 2,766,014
<TOTAL-LIABILITIES-AND-EQUITY> 44,101,105
<INTEREST-LOAN> 1,769,174
<INTEREST-INVEST> 411,912
<INTEREST-OTHER> 47,281
<INTEREST-TOTAL> 2,228,367
<INTEREST-DEPOSIT> 587,089
<INTEREST-EXPENSE> 1,154,483
<INTEREST-INCOME-NET> 1,073,884
<LOAN-LOSSES> 73,619
<SECURITIES-GAINS> (26,048)
<EXPENSE-OTHER> 888,531
<INCOME-PRETAX> 658,523
<INCOME-PRE-EXTRAORDINARY> 456,345
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 456,345
<EPS-PRIMARY> 2.65
<EPS-DILUTED> 2.64
<YIELD-ACTUAL> 4.21
<LOANS-NON> 57,524
<LOANS-PAST> 47,058
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 406,132
<CHARGE-OFFS> 96,171
<RECOVERIES> 25,104
<ALLOWANCE-CLOSE> 408,684
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
