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):
October 15, 1997
WACHOVIA CORPORATION
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(Exact Name of Registrant as specified in its charter)
NORTH CAROLINA No. 1-9021 No. 56-1473727
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(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
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(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>
Item 5. Other Events.
On October 15, 1997, Wachovia Corporation announced its third quarter
earnings. This current report on Form 8-K contains the financial information
released on October 15, 1997.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1 Press release dated October 15, 1997 announcing third
quarter earnings.
2
<PAGE>
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 October 20, 1997
WACHOVIA CORPORATION
By: /s/ KENNETH W. MCALLISTER
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Name: Kenneth W. McAllister
Title: Executive Vice-President
3
Exhibit 99.1 WACHOVIA
Press Release Dated
October 15, 1997 Wachovia Corporation
Atlanta, GA 30383
Winston-Salem, NC 27150
REPORT TO SHAREHOLDERS: For the Period Ending September 30, 1997
Dear Wachovia Shareholder:
Wachovia Corporation reported net income per fully diluted share of $1.03 for
the 1997 third quarter, a gain of 5.3 percent from $.97 a year earlier. Net
income totaled $167.3 million, up from $164.6 million, and represented
annualized returns of 18.6 percent on shareholders' equity and 1.43 percent on
assets. For the first nine months, net income per fully diluted share was
$3.03, an increase of 8.7 percent from $2.78. Net income was $496 million, up
4.7 percent from $473.8 million, and represented annualized returns of 18.3
percent on shareholders' equity and 1.42 percent on assets.
The earnings gains in both periods reflected good revenue growth offset by
aggressive spending for growth initiatives and Year 2000 conversion costs and
by a higher provision for loan losses. Total revenues, excluding securities
transactions, rose $51 million or 8.3 percent for the quarter and $161.1
million or 9 percent year to date. taxable equivalent net interest income
was up $20.4 million or 4.9 percent for the three months and $78.5 million
or 6.5 percent for the first nine months, while other operating revenue
grew $30.7 million or 15.5 percent and $82.6 million or 14.2 percent,
respectively.
Increases in taxable equivalent net interest income were driven by solid
loan growth and a higher net yield on interest-earning assets. Average loans
expanded $2.098 billion or 6.8 percent for the quarter and $2.204 billion or
7.4 percent year to date, led by taxable commercial loans, credit cards,
commercial mortgages and construction loans. The net yield on interest-
earning assets improved 9 basis points for the quarter and 13 basis points
for the first nine months of the year.
Total other operating revenue advanced in all categories except mortgage fee
income and other service charges and fees. Growth was led by fees from trust
services, credit card income, investment income and deposit account service
revenues. Included in total other operating revenue year to date were gains of
approximately $2.4 million in the third quarter and $18.4 million in the
second quarter from branch sales. Total other operating revenue for the
first nine months of 1996 included a gain of $9.6 million from the sale of
Wachovia's bond trustee business.
The provision for loan losses was $50.3 million for the three months and $148.1
million year to date, up $9.6 million or 23.6 percent and $45.6 million or
44.5 percent, respectively, from year-earlier periods. Net loan losses were
$50.3 million or .61 percent of loans for the quarter and $148 million or .61
percent for the first nine months, higher by $9.7 million or 23.8 percent
and $45.8 million or 44.8 percent, respectively. Excluding credit cards, net
loan losses were $5.5 million or .08 percent of loans for the quarter and
$19.7 million or .10 percent year to date.
Noninterest expense increased $39.7 million or 12.5 percent for the three
months and $100.2 million or 10.7 percent for the first nine months. Spending
growth was concentrated in salaries, programming and consulting services
for Year 2000 conversion work and advertising expense for Wachovia's ongoing
brand recognition campaign. The corporation's overhead ratio was 53.6 percent
for the quarter and 53.2 percent year to date.
The continued focus and commitment to our growth initiatives will result in
Wachovia's expansion into very attractive markets in Virginia and Florida
during the fourth quarter. We are excited about the new opportunities in these
states and look forward to providing our products and services to a broader
customer base. Your confidence is appreciated.
Sincerely,
/s/ L.M. Baker, Jr.
L.M. Baker, Jr.
Chief Executive Officer
October 15, 1997
<PAGE>
Financial Summary
<TABLE>
<CAPTION>
Third
1997 1996 Quarter
--------------------------------------- --------------- 1997-1996
Third Second First Fourth Third Percent
Quarter Quarter Quarter Quarter Quarter Variance
----------- ---------------------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
(thousands, except per share data)
Interest income - taxable equivalent $ 882,392 $ 865,416 $ 837,010 $ 842,365 $ 842,109 4.8
Interest expense 446,655 438,359 417,955 421,079 426,723 4.7
Net interest income - taxable
equivalent 435,737 427,057 419,055 421,286 415,386 4.9
Taxable equivalent adjustment 12,501 13,315 14,086 16,246 16,880 (25.9)
Net interest income 423,236 413,742 404,969 405,040 398,506 6.2
Provision for loan losses 50,344 49,715 47,998 47,443 40,730 23.6
Net interest income after provision
for loan losses 372,892 364,027 356,971 357,597 357,776 4.2
Other operating revenue 228,463 232,905 201,665 203,436 197,778 15.5
Investment securities gains 421 326 335 2,864 393 7.1
Total other income 228,884 233,231 202,000 206,300 198,171 15.5
Personnel expense 190,099 181,650 174,104 167,236 165,509 14.9
Other expense 166,034 173,044 150,032 155,502 150,970 10.0
Total other expense 356,133 354,694 324,136 322,738 316,479 12.5
Income before income taxes 245,643 242,564 234,835 241,159 239,468 2.6
Applicable income taxes * 78,387 76,941 71,753 70,431 74,872 4.7
Net income $ 167,256 $ 165,623 $ 163,082 $ 170,728 $ 164,596 1.6
Net income per common share:
Primary 1.04 $ 1.01 .99 1.02 .98 5.6
Fully diluted 1.03 $ 1.01 .99 1.02 .97 5.3
Cash dividends paid per common share .44 $ .40 .40 .40$ .40 10.0
Average primary shares outstanding 161,717 162,872 165,432 167,118 167,966 (3.7)
Average fully diluted shares outstanding 162,207 162,888 165,441 167,281 168,354 (3.7)
Performance Ratios (averages)
Annualized net yield on
interest-earning assets 4.12% 4.11% 4.14% 4.11% 4.03%
Annualized return on assets 1.43 1.42 1.42 1.49 1.44
Annualized return on shareholders' equity 18.55 18.44 17.86 18.60 18.13
Overhead ratio 53.62 53.74 52.22 51.66 51.61
</TABLE>
September 30
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Percent
1997 1996 Variance
-------- ---------- -----------
[S] [C] [C] [C]
Interest income - taxable equivalent $2,584,818 $2,454,866 5.3
Interest expense 1,302,969 1,251,523 4.1
Net interest income - taxable
equivalent 1,281,849 1,203,343 6.5
Taxable equivalent adjustment 39,902 53,671 (25.7)
Net interest income 1,241,947 1,149,672 8.0
Provision for loan losses 148,057 102,468 44.5
Net interest income after provision
for loan losses 1,093,890 1,047,204 4.5
Other operating revenue 663,033 580,478 14.2
Investment securities gains 1,082 872 24.1
Total other income 664,115 581,350 14.2
Personnel expense 545,853 487,289 12.0
Other expense 489,110 447,522 9.3
Total other expense 1,034,963 934,811 10.7
Income before income taxes 723,042 693,743 4.2
Applicable income taxes * 227,081 219,914 3.3
Net income $ 495,961 $ 473,829 4.7
Net income per common share:
Primary 3.04 2.79 8.8
Fully diluted 3.03 2.78 8.7
Cash dividends paid per common share 1.24 1.12 10.7
Average primary shares outstanding 163,327 169,758 (3.8)
Average fully diluted shares outstanding 163,876 170,251 (3.7)
Performance Ratios (averages)
Annualized net yield on
interest-earning assets 4.12% 3.99%
Annualized return on assets 1.42 1.40
Annualized return on shareholders' equity 18.28 17.29
Overhead ratio 53.21 52.40
<PAGE>
Wachovia Corporation and Subsidiaries
Financial Summary
<TABLE>
<CAPTION>
Third
Quarter Nine Months Ended
1997 1996 1997-1996 September 30
------------------------------ --------------- ---------- ---------------------
Third Second First Fourth Third Percent Percent
Quarter Quarter Quarter Quarter Quarter Variance 1997 1996 Variance
--------- --------- -------- ------- ------- ------- ------- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Average Balances (millions)
Total assets $ 46,690 $ 46,619 $ 45,984 $ 45,737 $ 45,778 2.0 $ 46,434 $ 45,059 3.1
Loans - net of unearned income 32,758 32,249 31,481 31,101 30,660 6.8 32,167 29,963 7.4
Investment securities 7,912 8,220 8,387 8,324 8,774 (9.8) 8,171 8,833 (7.5)
Other interest-earning assets 1,328 1,278 1,242 1,409 1,611 (17.6) 1,284 1,574 (18.4)
Total interest-earning assets 41,998 41,747 41,110 40,834 41,045 2.3 41,622 40,370 3.1
Interest-bearing deposits 22,604 22,641 22,034 21,211 20,873 8.3 22,428 20,626 8.7
Short-term borrowed funds 7,991 7,943 7,444 7,668 8,099 (1.3) 7,795 8,123 (4.0)
Long-term debt 5,461 5,450 5,910 6,206 6,454 (15.4) 5,606 6,025 (7.0)
Total interest-bearing liabilities 36,056 36,034 35,388 35,085 35,426 1.8 35,829 34,774 3.0
Noninterest-bearing deposits 5,677 5,631 5,518 5,604 5,408 5.0 5,609 5,402 3.8
Total deposits 28,281 28,272 27,552 26,815 26,281 7.6 28,037 26,028 7.7
Shareholders' equity ** 3,606 3,593 3,653 3,671 3,631 (0.7) 3,617 3,654 (1.0)
Credit Quality Data (thousands)
Nonperforming loans 55,563 54,837 57,934 60,066 61,283 (9.3) 55,563 61,283 (9.3)
Net loan losses 50,323 49,692 47,983 47,417 40,664 23.8 147,998 102,205 44.8
Net loan losses excluding credit cards 5,483 6,305 7,901 7,759 6,460 (15.1) 19,689 8,379 135.0
Allowance for loan losses 409,356 409,335 409,312 409,297 409,271 409,356 409,271
Nonperforming assets to total loans
and foreclosed property .20% .21% .23% .25% .25% .20% .25%
Annualized net loan losses to average
loans .61 .62 .61 .61 .53 .61 .45
Annualized net loan losses to average
loans
excluding credit cards .08 .09 .12 .12 .10 .10 .04
Allowance for loan losses to total
loans 1.21 1.23 1.26 1.31 1.30 1.21 1.30
Allowance for loan losses times
nonperforming loans 7.37x 7.46x 7.07x 6.81x 6.68x 7.37x 6.68x
Selected Financial Data at Period-End (millions, except per share data)
Total assets $ 47,670 $ 47,483 0.4
Interest-earning assets 42,171 42,036 0.3
Loans - net of unearned income 33,754 31,549 7.0
Deposits 29,091 27,436 6.0
Shareholders' equity *** 3,677 3,729 (1.4)
Shareholders' equity to total assets 7.71% 7.85%
Risk-based capital ratios:
Tier I capital 9.7**** 8.9
Total capital 13.0**** 12.8
Per Share:
Book value $ 23.31 22.57 3.3
Common stock closing price (NYSE) $ 72.00 49.50 45.5
Common shares outstanding (thousands) 157,773 165,213 (4.5)
* Income taxes applicable to securities transactions were $171, $118, $134,
$1,181, $149, $422 and $341, respectively
** Includes unrealized gains on securities available-for-sale of $47, $17,
$37, $45, $24, $34 and $61 net of tax, respectively
*** Includes unrealized gains on securities available-for-sale of $56 and $33
net of tax, respectively
**** Estimated
</TABLE>
<PAGE>
NEWS DEVELOPMENTS
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o In August, Wachovia announced plans to acquire 1st United Bancorp, the largest
commercial bank headquartered in Palm Beach County, Florida. The merger
represents Wachovia's first acquisition of a Florida bank holding company and
will provide an initial base in the state upon which to expand Wachovia's
consumer and commercial franchise. The transaction is expected to close by
year-end along with Wachovia's two Virginia mergers announced in June with
Jefferson Bankshares and Central Fidelity Banks.
o Wachovia is adding online investing and interactive kiosks to its system of
alternative delivery channels. Using Wachovia PC Access, MarketLink customers
now can place stock, option and mutual fund trades, review their balances and
account holdings, and conduct investment research through the convenience of
their personal computers. Interactive kiosks enable users to obtain product
information, perform calculations for education and retirement savings needs,
and explore different options for CDs, credit cards, home mortgages and other
loans 24 hours a day, seven days a week at Wachovia in-store banking centers in
the Atlanta area.
o In early October, Wachovia received regulatory approval to convert its
representative office in London to an operating branch. The conversion to branch
office status enables Wachovia to offer a broader array of corporate banking
services to companies conducting business in Europe and is part of Wachovia's
strategy to provide enhanced global banking services for its corporate clients.
Wachovia operates international representative offices in Tokyo and Sao Paulo,
Brazil, a foreign branch in Grand Cayman, and has a global services
representative in Hong Kong.
COMMON STOCK DATA - PER SHARE
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1997 1996
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Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
Market Value:
Period-end ........... $ 72 $58 5/16 $54 1/2 $56 1/2 $49 1/2
High ................. 72 3/8 66 7/8 64 5/8 60 1/4 49 7/8
Low .................. 58 3/16 53 1/2 54 1/2 48 3/4 39 5/8
Book value at
period-end ............. 23.31 23.07 22.75 22.96 22.57
Dividend ................... .44 .40 .40 .40 .40
Price/earnings ratio* ...... 17.7X 14.6x 13.9x 14.8x 13.6x
* Based on most recent twelve months net income per primary share and
period-end stock price
SHAREHOLDER INFORMATION
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SHAREHOLDER ACCOUNT ASSISTANCE
Shareholders who wish to change the name, address or ownership of
stock, report lost certificates, eliminate duplicate mailings of financial
material or for other account reregistration procedures and assistance should
contact the Transfer Agent at the listed address or phone number. Use of your
shareholder account number and a daytime phone number in all correspondence
will be appreciated.
TRANSFER AGENT
Wachovia Bank, N.A.
Winston-Salem, NC
1-800-633-4236
Correspondence should be sent to the following:
Wachovia Shareholder Services
P.O. Box 8218
Boston, MA 02266-8218
CORPORATION SHAREHOLDER SERVICES
H. Jo Barlow Wachovia Corporation
910-732-5787 P.O. Box 3099
Winston-Salem, NC 27150
DIVIDEND SERVICES
DIVIDEND REINVESTMENT AND COMMON STOCK PURCHASE PLAN -
The plan provides common stockholders of record a regular
way of investing cash dividends in additional shares at an
average market price and/or investing optional cash payments
without payment of brokerage commissions or service charges.
DIRECT DEPOSIT OF CASH DIVIDENDS - Direct deposit is a safe, fast
and timesaving method of receiving cash dividends through automatic deposit on
date of payment to a checking, savings or money market account at any financial
institution which participates in an Automated Clearing House.
Information about these services can be obtained from the Transfer Agent or the
Corporation's shareholder services office.
FINANCIAL INFORMATION
The corporation's Form 10-Q and Financial Supplement
and related information may be obtained by contacting the
following either by phone or in writing.
Robert S. McCoy, Jr. James C. Mabry
Chief Financial Officer Investor Relations Manager
910-732-5926 910-732-5788
Wachovia Corporation
P.O. Box 3099
Winston-Salem, NC 27150
COMMON STOCK LISTING
New York Stock Exchange Symbol: WB
