<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 23, 1997
WACHOVIA CORPORATION
(Exact Name of Registrant as specified in its charter)
NORTH CAROLINA No. 1-9021 No. 56-1473727
(State or other jurisdiction of (Commission (IRS employer
incorporation) File Number) Identification No.)
100 NORTH MAIN STREET, WINSTON-SALEM, NC 27101
191 PEACHTREE STREET NE, ATLANTA, GA 30303
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
WINSTON-SALEM 910-770-5000
ATLANTA 404-332-5000
Not applicable
(Registrant's former address of principal executive offices)
<PAGE> 2
Item 5. Other Events.
On June 23, 1997, Wachovia Corporation, a North Carolina corporation
(the "Registrant"), entered into an Agreement and Plan of Merger by and between
the Registrant and Central Fidelity Banks, Inc., a Virginia corporation
("Central"), for a tax-free merger of the two companies pursuant to which each
outstanding share of common stock, par value $5.00 per share, of Central would
be converted into 0.63 shares of common stock, par value $5.00 per share, of the
Registrant (the "Proposed Merger").
This current report on Form 8-K, including the investor materials,
contains forward-looking statements that involve risk and uncertainty. The
Registrant notes that a variety of factors could cause the Registrant's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Registrant's forward-looking statements.
The risks and uncertainties that may affect the operations,
performance, development, growth projections and results of the Registrant's
business include, but are not limited to, the growth of the economy, interest
rate movements, timely development by the Registrant of technology enhancements
for its products and operating systems, the impact of competitive products,
services and pricing, customer business requirements, Congressional legislation,
acquisition cost savings and revenue enhancements and similar matters. Readers
of this report are cautioned not to place undue reliance on forward-looking
statements which are subject to influence by the named risk factors and
unanticipated future events. Actual results, accordingly, may differ materially
from management expectations.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1 Press release dated June 24, 1997 announcing the
Proposed Merger.
99.2 Investor presentation materials used by the
Registrant on June 24, 1997 relating to the Proposed
Merger.
-2-
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date June 24, 1997
WACHOVIA CORPORATION
By: /s/ Kenneth W. McAllister
----------------------------------
Name: Kenneth W. McAllister
Title: Executive Vice-President
-3-
<PAGE> 4
Exhibit Index
99.1 Press release dated June 24, 1997 announcing the Proposed Merger.
99.2 Investor presentation materials used by the Registrant on June 24, 1997
relating to the Proposed Merger.
-4-
<PAGE> 1
For Additional Information:
Susan Mistr, Central Fidelity, 804-697-7261
Paul E. Mason, Wachovia, 910-732-6387
June 24, 1997
FOR RELEASE: Immediately
WACHOVIA, CENTRAL FIDELITY BANKS INC. ANNOUNCE MERGER
Central Fidelity Banks Inc., the parent of Central Fidelity National
Bank in Richmond, Va., and Wachovia Corporation announced the signing of a
definitive agreement for a merger between the two companies. The agreement has
been approved by the boards of directors of both companies and is subject to
the approval of shareholders and appropriate regulatory agencies. The merger is
expected to close in the fourth quarter.
The merger with Central Fidelity, combined with Wachovia's recently
announced acquisition of Jefferson Bankshares Inc. of Charlottesville, Va.,
will position Wachovia as the leading bank in Virginia with 335 branch offices
and deposits totaling $9.9 billion. Upon completion of both mergers, Wachovia
will have assets totaling approximately $60.2 billion, making it the 17th
largest bank in the country, and a retail banking network totaling 817 banking
offices and 1,134 ATMs throughout Virginia, the Carolinas and Georgia.
The agreement with Central Fidelity is expected to be accounted for as
a pooling of interests and provides for a tax-free exchange of .63 shares of
Wachovia Corporation common stock for each common share of Central Fidelity.
Based on Wachovia Corporation's June 23 closing stock price and Central
Fidelity's 58.8 million fully diluted shares, the transaction would have a
value of approximately $39.45 per share, or a purchase price of $2.3 billion.
The merger is expected to have a positive impact on Wachovia's earnings in 1999.
Wachovia Chief Executive L.M. Banker Jr. said, "Central Fidelity has an
impressive franchise throughout Virginia. The company's culture is quite
similar to Wachovia's, with a focus on meeting customer needs and a
relationship-management approach to the market. I am very excited about the
opportunity to merge our companies and look forward to introducing Wachovia's
services to individuals and businesses across this great commonwealth."
- more -
<PAGE> 2
Merger Agreement - Page 2
"In looking at our industry recently, and after careful consideration
of the challenges we face, we determined that the best way to serve our
customers and build value for shareholders was to form an alliance with another
bank, one that shares our philosophy for doing business," said Lewis N. Miller
Jr., Chairman and Chief Executive Officer of Central Fidelity Banks Inc. "In
seeking a partner, there was one obvious choice--Wachovia. It is only natural
that the best bank in Virginia would choose as its partner the best bank in the
nation."
Central Fidelity, headquartered in Richmond, Va., had assets of $10.6
billion as of March 31, 1997, and is the third largest Virginia-based banking
company with 244 offices and 221 ATMs throughout the commonwealth. Central
Fidelity is among the top three banks in market share in five of the six
largest markets in Virginia.
Central Fidelity has granted Wachovia a stock option representing
approximately 19.9 percent of Central Fidelity's outstanding shares. Wachovia
also announced that it and Central Fidelity each have terminated their stock
repurchase programs.
On June 10, Wachovia announced that it has reached a definitive
agreement to merge with Jefferson Bankshares. As of March 31, Jefferson
Bankshares had assets of $2.1 billion. Jefferson National Bank has 96 offices
and 60 ATMs. Jefferson National has the No. 1 deposit share in Charlottesville
with additional branch presence in the Tidewater, Richmond, Fredericksburg and
Shenandoah Valley areas of Virginia.
Wachovia Corporation, which has dual headquarters in Winston-Salem,
N.C., and Atlanta, is the 20th largest U.S. banking company with assets of
$47.5 billion. Wachovia has 473 banking offices and 830 ATMs, predominately in
North Carolina, South Carolina and Georgia. U.S. Banker magazine recently rated
Wachovia the No. 1 bank in the country for 1996 among banks with assets of more
than $25 billion.
THIS ANNOUNCEMENT ALSO IS AVAILABLE ON PR NEWSWIRE. ADDITIONAL INFORMATION ON
WACHOVIA CORPORATION AND ITS SUBSIDIARIES IS AVAILABLE ON THE INTERNET AT
HTTP://WWW.WACHOVIA.COM.
EDITOR/REPORTER ADVISORY: Central Fidelity and Wachovia invite you to
participate in a 12 p.m. telephone news conference today. Executives from
Central Fidelity, Wachovia and Jefferson Bankshares will be available to
discuss the merger.
To participate in the call, dial 1-800-611-1147 and ask to participate in the
"Central Fidelity News Conference." Please call in between 11:45 a.m. and 12
p.m. No calls will be admitted to the news conference after 12 p.m. A recording
of the news conference will be available from 3 p.m. Tuesday to 3 p.m.
Wednesday at 1-800-475-6701, Access Code #346881.
<PAGE> 1
CREATING VIRGINIA'S PREMIER BANKING FRANCHISE
[WACHOVIA LOGO]
Merger with
[CENTRAL FIDELITY LOGO]
June 24, 1997
<PAGE> 2
This presentation contains certain forward looking statements with respect to
the financial condition, results of operations and business of Wachovia
Corporation and, assuming the consummation of the merger, a combined Wachovia
Corporation/Central Fidelity Banks, Inc., including statements relating to: (a)
the cost savings and accretion to cash earnings and reported earnings that will
be realized from the merger; (b) the impact on revenues of the merger, including
the potential for enhanced revenues and the impact on revenues of consolidation
of retail branches and other operations as planned: and (c) the restructuring
charges expected to be incurred in connection with the merger. These forward
looking statements involve certain risks and uncertainties. Factors that may
cause actual results to differ materially from those contemplated by such
forward looking statements include, among others, the following possibilities:
(1) expected costs savings from the merger cannot be fully realized or realized
within the expected time frame; (2) revenues following the merger are lower than
expected; (3) competitive pressure among depository institutions increases
significantly; (4) costs or difficulties related to the integration of the
businesses of Wachovia Corporation and Central Fidelity Banks, Inc. are greater
than expected; (5) changes in the interest rate environment reduce interest
margins; (6) general economic conditions, either nationally or in the states in
which the combined company will be doing business, are less favorable than
expected; or (7) legislation or regulatory changes adversely affect the
businesses in which the combined company would be engaged.
[WACHOVIA LOGO] 1 [CENTRAL FIDELITY LOGO]
<PAGE> 3
TRANSACTION RATIONALE
- --------------------------------------------------------------------------------
- Creates Virginia's Premier Banking Franchise
- Attractive growth market
- Positions WB as the premier player in the state
- Leadership position in major MSAs
- Financially Attractive
- Accretive to reported EPS by 4th Q 1998, prior to merger expenses
- Significant cost savings and revenue enhancement opportunities
- Best of class operating and credit quality statistics
- Low Risk
- Virginia strategy represents less than 25% of WB's market cap.
- Solidifies balance sheet position
- WB is acquisition-ready
[WACHOVIA LOGO] 2 [CENTRAL FIDELITY LOGO]
<PAGE> 4
TRANSACTION SUMMARY
- --------------------------------------------------------------------------------
CONSIDERATION: 0.63 WB shares for each CFBS share
TERMS: Fixed Exchange Ratio
19.9% Stock Option ($32.19 Exercise Price)
No Caps, Collars or Walkaways
PRICE PER SHARE: $39.45 per CFBS share*
TRANSACTION VALUE: $2.3 billion*
STRUCTURE: Pooling of Interests/Tax-Free Exchange
EXPECTED CLOSING: 4th Quarter 1997
SHARE REPURCHASE: Both companies to suspend announced share
repurchase initiatives
BOARD COMPOSITION: 3 CFBS members added to WB's Board
- ----------
* Based on WB's closing share price of $62.625 on June 23, 1997
[WACHOVIA LOGO] 3 [CENTRAL FIDELITY LOGO]
<PAGE> 5
TRANSACTION PRICING
================================================================================
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CFBS
CFBS ACQUISITION WITH WB TRADING
ACQUISITION SYNERGIES(1) MULTIPLES
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate Value $2.3B $2.3B $10.2B
Price to:
LTM EPS 19.8x 13.9x 16.0x
1997E EPS(2) 18.3 13.0 15.1
1998E EPS(2) 16.6 12.2 13.6
Book Value 2.99 2.99 2.75
Tangible Book Value 3.24 3.24 2.78
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes the full phase-in of cost savings and revenue enhancements
associated with the transaction.
(2) Based on I.B.E.S. estimates.
[WACHOVIA LOGO] 4 [CENTRAL FIDELITY LOGO]
<PAGE> 6
TRANSACTION PRICING
================================================================================
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TOTAL VIRGINIA STRATEGY WB TRADING
WITH SYNERGIES(1) MULTIPLES
- --------------------------------------------------------------------------------
<S> <C> <C>
Aggregate Value $2.9B $10.2B
Price to:
LTM EPS 13.9x 16.0x
1997E EPS(2) 13.1 15.1
1998E EPS(2) 12.3 13.6
Book Value 2.93 2.75
Tangible Book Value 3.15 2.78
</TABLE>
- --------------------------------------------------------------------------------
(1) Reflects acquisition of both CFBS and JBNK, and includes full phase-in of
cost savings and revenue enhancements associated with both transactions.
(2) Based on I.B.E.S. estimates.
[WACHOVIA LOGO] 5 [CENTRAL FIDELITY LOGO]
<PAGE> 7
TRANSACTION ECONOMICS
================================================================================
- Accretive to reported EPS by 4th Q 1998, before merger related costs
- 4% accretive to reported 1999E EPS
- Significant cost savings and revenue enhancement opportunities
- Cost savings equal to 30% of CFBS's operating expenses
- Revenue enhancements equal to at least 10% of non-interest income
- Ability to reinvest additional capital created
- Non-recurring charges - $174 million pre-tax
- $117 million taken through one-time charge in 1997
- $57 million expensed in 1998
[WACHOVIA LOGO] 6 [CENTRAL FIDELITY LOGO]
<PAGE> 8
LOW RISK STRATEGY
================================================================================
- Two transactions represent less than 25% of WB's pro forma total assets
and market capitalization
- In-market cost savings are available
- Market is adjacent and complementary
- Familiar competitive landscape
- Solidifies balance sheet position
- WB is acquisition - ready
[WACHOVIA LOGO] 7 [CENTRAL FIDELITY LOGO]
<PAGE> 9
PRO FORMA OVERVIEW
================================================================================
<TABLE>
<CAPTION>
(Data as of March 31, 1997)
- --------------------------------------------------------------------------------
WB WB
STAND ALONE (1) PRO FORMA (2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets $47.5B $60.8B
Deposits 28.8 38.7
Branches 483 817
ATMs 830 1,134
Market Capitalization(3) $10.2B $13.0B
Tangible Leverage Ratio 8.93% 9.14%
</TABLE>
- --------------------------------------------------------------------------------
(1) Before acquisition of CFBS and JBNK.
(2) Pro forma acquisition of CFBS and JBNK.
(3) Based on WB's closing share price of $62.625 on June 23, 1997.
[WACHOVIA LOGO] 8 [CENTRAL FIDELITY LOGO]
<PAGE> 10
================================================================================
CREATES VIRGINIA'S PREMIER FRANCHISE
================================================================================
[WACHOVIA LOGO] [CENTRAL FIDELITY LOGO]
<PAGE> 11
ATTRACTIVE AND COMPLEMENTARY MARKET
================================================================================
[MAP]
Percent MSA Households in the Attractive Segments as of 1996*
* Based on ranking of MSAs on percent of households in attractive segments
solely within the states of GA, NC, SC, & VA.
" Attractive segments" include younger affluent, affluent, middle core, older
upscale & older mass market PSI segments.
[WACHOVIA LOGO] 9 [CENTRAL FIDELITY LOGO]
<PAGE> 12
PREMIER VIRGINIA FRANCHISE
================================================================================
- - WB will be the leading bank in Virginia
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MARKET
SHARE DEPOSITS BRANCHES
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. WB PRO FORMA 13.6% $9.9B 335(1)
2. NationsBank 13.5 9.7 211
3. Crestar 12.8 9.2 252
4. First Union 9.6 6.9 144
5. First Virginia 8.8 6.3 311
</TABLE>
- --------------------------------------------------------------------------------
(1) Before planned branch consolidations.
[WACHOVIA LOGO] 10 [CENTRAL FIDELITY LOGO]
<PAGE> 13
STRONG VIRGINIA MARKET PRESENCE
================================================================================
- - Top three position in five of the six largest MSAs
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEPOSIT MARKET
MSAs RANK SIZE
- --------------------------------------------------------------------------------
<S> <C> <C>
Charlottesville 1 $1,520MM
Lynchburg 1 2,381
Norfolk/Virginia Beach 1 9,933
Richmond/Petersburg 3 16,560
Roanoke 3 3,614
- --------------------------------------------------------------------------------
</TABLE>
[WACHOVIA LOGO] 11 [CENTRAL FIDELITY LOGO]
<PAGE> 14
================================================================================
FINANCIALLY ATTRACTIVE
================================================================================
[WACHOVIA LOGO] [CENTRAL FIDELITY LOGO]
<PAGE> 15
FINANCIALLY ATTRACTIVE TRANSACTION
================================================================================
- - Accretive to reported EPS by 4th Q 1998, before merger related expenses
- Significant cost savings and revenue enhancement opportunities
- Meaningful opportunities to leverage additional capital created
- Best of class operating and credit quality statistics
- - Low risk transaction
- Represents less than 25% of WB's pro forma market capitalization
- Solidifies balance sheet position
- WB is acquisition - ready
[WACHOVIA LOGO] 12 [CENTRAL FIDELITY LOGO]
<PAGE> 16
EARNINGS IMPACT
================================================================================
<TABLE>
<CAPTION>
(Dollars in Millions; Except For Per Share Amounts)
- --------------------------------------------------------------------------------
1997 1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
WB Estimated Net Income(1) $ 672 $ 744 $ 820
JBNK Estimated Net Income(2) 8 32 34
Cost Savings/Revenue Enhancements 2 6 13
Goodwill Amortization (4) (17) (17)
CFBS Estimated Net Income(2) 125 136 146
Cost Savings/Revenue Enhancements -- 27 58
Return on Additional Capital Created (3) -- 20 40
Merger Related Charges (81) (34) --
------- ------- -------
WB Reported Est. Net Income $ 722 $ 914 $ 1,094
WB Stand Alone Est. EPS $ 4.15 $ 4.59 $ 5.05
Est. Pro Forma Reported EPS 3.59 4.38 5.24
Accretion/(Dilution) (13.5)% (4.6)% 3.8%
Avg. Shares Outstanding (Millions) 201.3 208.5 208.5
</TABLE>
- --------------------------------------------------------------------------------
(1) 1997 and 1998 based on mean I.B.E.S. estimates, with 10% growth rate in
1999.
(2) 1997 and 1998 based on mean I.B.E.S. estimates with 8.0% and 7.5% growth
rate in 1999 for JBNK and CFBS, respectively.
(3) Assumes additional capital (defined as capital in excess of tangible
leverage ratio of 8.50% resulting from transaction) to be redeployed at an
after tax rate of 8%.
[WACHOVIA LOGO] 13 [CENTRAL FIDELITY LOGO]
<PAGE> 17
COST SAVINGS ESTIMATES
================================================================================
- - Contribution from in-market nature of JBNK allows for total cost savings
equal to 30% of CFBS's expense base
<TABLE>
<CAPTION>
(Dollars in Millions)
- --------------------------------------------------------------------------------
CFBS
EXPENSE PROJ. COST % OF
BASE SAVINGS EXPENSE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Personnel $151 $ 55 36%
Occupancy 31 6 19
Equipment 19 4 21
Other 63 14 22
---- ----
TOTAL $264 $ 79 30%
- --------------------------------------------------------------------------------
</TABLE>
[WACHOVIA LOGO] 14 [CENTRAL FIDELITY LOGO]
<PAGE> 18
SIGNIFICANT REVENUE ENHANCEMENT OPPORTUNITIES
================================================================================
- - Revenue enhancements estimates of 10% of CFBS's non-interest income base
are driven by:
- Broader array of products
- Repricing initiatives
- No assumptions made with regard to potential funding advantages
- - Pro forma for projected revenue enhancements, the VA franchise's fee
income will reach 21% of total revenues
[WACHOVIA LOGO] 15 [CENTRAL FIDELITY LOGO]
<PAGE> 19
ENHANCED PROFITABILITY LEVELS
================================================================================
<TABLE>
<CAPTION>
(Data as of March 31, 1997)
- --------------------------------------------------------------------------------
WB STAND WB PRO
ALONE (1) FORMA (2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Net Interest Margin 4.14% 4.17%
Efficiency Ratio 52.2 49.6
ROAA 1.42 1.47
ROAE 17.9 18.4(3)
</TABLE>
- --------------------------------------------------------------------------------
(1) Before acquisition of CFBS and JBNK.
(2) Pro forma acquisition of CFBS and JBNK, assuming full realization of cost
savings and synergies.
(3) ROAE prior to impact of restructuring charge. Based on tangible returns on
tangible common equity.
[WACHOVIA LOGO] 16 [CENTRAL FIDELITY LOGO]
<PAGE> 20
SUPERIOR ASSET QUALITY
================================================================================
- - Asset quality statistics remain best of class
<TABLE>
<CAPTION>
(Data as of March 31, 1997; Dollars in Millions)
- --------------------------------------------------------------------------------
WB PRO
WB JBNK CFBS FORMA
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nonperforming Loans (NPLs) $ 58 $ 5 $ 38 $100
REO 16 2 16 33
---- ---- ---- ----
Nonperforming Assets (NPAs) $ 73 $ 6 $ 53 $133
Loan Loss Reserves $409 $ 15 $110 $549(1)
Reserves/Total Loans 1.26% 1.08% 1.62% 1.35%
Reserves/NPLs 707 335 293 550
NPLs/Loans 0.18% 0.32% 0.56% 0.25%
NPAs/Loans & REO 0.23 0.45 0.78 0.33
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes $15 million of additional loan loss reserves.
N.B. Totals may not foot because of rounding.
[WACHOVIA LOGO] 17 [CENTRAL FIDELITY LOGO]
<PAGE> 21
POSITIVE BALANCE SHEET IMPACT
================================================================================
- - Transactions improve WB's funding mix, liquidity and capital ratios
<TABLE>
<CAPTION>
(Dollars in Millions)
- --------------------------------------------------------------------------------
WB WB
STAND ALONE (1) PRO FORMA (2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Loans $32,570 $40,781
Total Assets 47,491 60,842
Deposits 28,832 38,736
Loans/Deposits 113% 105%
Deposits/Liabilities 66.7 70.6
Tangible Leverage Ratio 8.93% 9.14%
</TABLE>
- --------------------------------------------------------------------------------
(1) Before acquisition of CFBS and JBNK.
(2) Pro forma acquisition of CFBS and JBNK.
[WACHOVIA LOGO] 18 [CENTRAL FIDELITY LOGO]
<PAGE> 22
SUMMARY
================================================================================
- - Creates Virginia's Premier Banking Franchise
- Attractive growth market
- Positions WB as the premier player in the state
- Leadership position in major MSAs
- - Financially Attractive
- Accretive to reported EPS by 4th Q 1998, prior to merger expenses
- Significant cost savings and revenue enhancement opportunities
- Best of class operating and credit quality statistics
- - Low Risk
- Virginia strategy represents less than 25% of WB's pro forma market
capitalization
- Solidifies balance sheet position
- Wachovia is acquisition-ready
[WACHOVIA LOGO] 19 [CENTRAL FIDELITY LOGO]
