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):
May 13, 1999
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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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
Winston-Salem 336-770-5000
Atlanta 404-332-5000
Not applicable
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(Registrant's former address of principal executive offices)
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Item 5. Other Events.
On May 13, 1999, Wachovia Corporation, a North Carolina corporation
("Wachovia"), entered into an Agreement and Plan of Merger with OFFITBANK
Holdings, Inc., a Delaware corporation ("OFFIT Holdings"), for a tax-free merger
of the two companies pursuant to which OFFIT Holdings would be merged into
Wachovia and each outstanding share of common stock, par value $0.01 per share,
of OFFIT Holdings would be converted into 0.2284 shares of Wachovia's common
stock, par value $5.00 per share (the "Proposed Merger").
This current report on Form 8-K, including the investor materials,
contains certain forward looking statements with respect to the financial
condition, results of operations and business of Wachovia after OFFIT Holdings
merges with Wachovia, including statements relating to: (a) the reported
earnings that will be realized from the Proposed Merger; and (b) the impact on
revenues of the Proposed 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) costs or difficulties related to
the combination of the businesses of Wachovia and OFFIT Holdings are greater
than expected; (2) revenues following the Proposed Merger are lower than
expected; (3) competitive pressure among financial institutions increases
significantly; (4) general economic conditions, or conditions in securities
markets are less favorable than expected; and (5) legislation or regulatory
changes adversely affect the businesses in which Wachovia would be engaged.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1 Press release dated May 13, 1999 announcing the Proposed
Merger.
99.2 Investor presentation materials used by Wachovia on May
13, 1999 relating to the Proposed Merger.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Wachovia has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 14, 1999
WACHOVIA CORPORATION
By: /s/ Robert S. McCoy, Jr.
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Name: Robert S. McCoy, Jr.
Title: Vice Chairman and
Chief Financial Officer
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<PAGE>
Exhibit Index
99.1 Press release dated May 13, 1999 announcing the Proposed Merger.
99.2 Investor presentation materials used by Wachovia on May 13, 1999
relating to the Proposed Merger.
[WACHOVIA LOGO]
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NEWS ANNOUNCEMENT
Wachovia Corporation
Atlanta, GA 30383
Winston-Salem, NC 27150
EDITOR'S NOTICE: A CONFERENCE CALL TO ANSWER MEDIA QUESTIONS WILL BE HELD TODAY
AT 2:30 P.M. TO PARTICIPATE, CALL 1-800-611-1148.
For Additional Information:
Wachovia - Ed L. Hutchins, 336-732-4200 (Home 336-761-1532)
OFFITBANK representative, Robert W. Bloch, 212-755-8047
(Home 212-734-6425/203-264-3250)
May 13, 1999
For Release: Immediately
OFFITBANK, A LEADING WEALTH MANAGEMENT COMPANY, TO MERGE WITH WACHOVIA
Wachovia Corporation and OFFITBANK Holdings Inc. today announced an
agreement in which OFFITBANK Holdings, a privately held holding company
headquartered in New York City, will merge with Wachovia. OFFITBANK, the
principal subsidiary, is a state-chartered trust bank providing wealth
management services for individuals, family groups, nonprofit organizations and
other institutions. The Merger is subject to the approval of federal and state
regulators.
OFFITBANK presently has nearly $11 billion in assets under management. The
bank has offices in New York City and San Francisco and serves more than 350
individual clients in 28 states, Latin America, Europe and Asia. Approximately
60 percent of the company's portfolio is comprised of managed account
relationships of $30 million or more. In addition, the company provides services
to more than 100 nonprofit organizations and other institutions.
The transaction will be accounted for as a purchase and provides for a
tax-free exchange of 0.2284 of a share of Wachovia Corporation common stock for
each OFFITBANK share. The transaction is valued at an estimated $200 million
based on Wachovia's May 12 closing stock price and is expected to close in the
third quarter. The agreement provides for a retention pool of $3.5 million in
restricted stock for key employees.
Wachovia intends to repurchase in the open market or otherwise a number of
shares of Wachovia common stock approximately equal to the number of shares
issued in the merger. These repurchases will be in addition to Wachovia's
previously announced repurchase plan.
"OFFITBANK will bring to Wachovia a proven wealth management business model
for serving the needs of individuals with investable assets of $10 million or
more," said L.M. Baker Jr., Wachovia chairman and chief executive officer. "This
outstanding organization will complement services provided by IJL Wachovia's
financial consultants and the successful Private Financial Advisors' strategy
Wachovia has developed to serve affluent individuals."
OFFITBANK will retain its name and be known as a Wachovia Corporation
company. Morris W. Offit will continue as chief executive officer of the company
and become a director of
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Wachovia/OFFITBANK page two
Wachovia upon consummation of the transaction. The headquarters will remain in
New York City. No job losses are anticipated, and the firm will expand its staff
as business opportunities grow.
"The wealth management market offers the opportunity to combine the
strengths of our two organizations to become a preeminent provider of
comprehensive wealth management services," said Offit. "The goals we are
pursuing for the company in 1999 include both geographic and product expansion,
and by joining with Wachovia we can accomplish both."
Directors and executive officers holdings in excess of 50 percent of
OFFITBANK's stock have agreed to vote in favor of the merger. In addition,
OFFITBANK has agreed to pay a fee to Wachovia if the transaction is not
consummated under certain circumstances.
OFFITBANK was formed as Offit Associates, a registered investment adviser,
in 1983. The firm converted to a New York State trust bank in July 1990. As a
wealth management firm, OFFITBANK is recognized specifically for fixed income
investment management. Currently, some $2.5 billion is invested in OFFITBANK
mutual funds. OFFITBANK's Internet Web site is located at www.OFFITBANK.com.
Prior to forming Offit Associates in 1983, Morris W. Offit held positions
with Mercantile Safe Deposit and Trust Company, Baltimore; Salomon Brothers, New
York; and Julius Baer Group, Zurich. He now serves as chairman and chief
executive officer of OFFITBANK.
He received a BA from The Johns Hopkins University and an MBA from the
Wharton School of the University of Pennsylvania. Offit serves as a trustee of
The Johns Hopkins University, where he served as chairman of the board from
1990-1996. He also is a trustee and a past chairman of The Jewish Museum and a
trustee of The Jewish Theological Seminary, the Union Theological Seminary,
Teachers College at Columbia University, Thirteen-WNET and the American Jewish
Committee.
Wachovia Corporation is a leading bank holding company with Wachovia Bank,
N.A. its principal subsidiary. At March 31, 1999, Wachovia had $65.3 billion in
assets and ranked 16th among U.S. banking firms. Wachovia Bank, N.A. has more
than 700 offices and 1,300 ATMs in Florida, Georgia, North Carolina, South
Carolina and Virginia. The Wachovia Web site can be accessed at
www.wachovia.com.
[WACHOVIA LOGO]
MERGER WITH
[OFFITBANK LOGO]
The Wealth Management Bank
MAY 13, 1999
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FORWARD LOOKING INFORMATION
================================================================================
THIS PRESENTATION CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF WACHOVIA AFTER
ITS MERGER WITH OFFITBANK INCLUDING STATEMENTS RELATING TO: (A) THE REPORTED
EARNINGS THAT WILL BE REALIZED FROM THE PROPOSED MERGER; AND (B) THE IMPACT ON
REVENUES OF THE PROPOSED 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) COSTS OR DIFFICULTIES RELATED TO
THE INTEGRATION OF THE BUSINESSES OF WACHOVIA AND OFFITBANK ARE GREATER THAN
EXPECTED; (2) REVENUES FOLLOWING THE PROPOSED MERGER ARE LOWER THAN EXPECTED;
(3) COMPETITIVE PRESSURE AMONG FINANCIAL INSTITUTIONS INCREASES SIGNIFICANTLY;
(4) GENERAL ECONOMIC CONDITIONS, OR CONDITIONS IN SECURITIES MARKETS ARE LESS
FAVORABLE THAN EXPECTED; OR (5) LEGISLATION OR REGULATORY CHANGES ADVERSELY
AFFECT THE BUSINESSES IN WHICH WACHOVIA WILL BE ENGAGED.
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STRATEGIC RATIONALE
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o Creates leading wealth management/private banking franchise:
o Over $19 billion in pro forma AUM for affluent and high net worth
individuals
o High quality franchise with superior investment capability in a wealth
management culture
o Allows for clear and immediate revenue synergies:
o Value-added Wachovia products into OFFITBANK's client base
particularly trust and lending facilities
o Provide OFFITBANK with unparalleled access to Southeastern based high
net worth ("HNW") client base
o Provide OFFITBANK with a platform to expand its current national
franchise
o HNW market represents a compelling market opportunity for Wachovia
o Relatively underserved marketplace - no dominant national or global
franchises
o Consistent with Wachovia's culture and client relationship focus
o Highest growth segment of the investment management market - a $25
trillion market by 2000
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TRANSACTION SUMMARY
================================================================================
FIXED EXCHANGE RATIO: 0.2284 WACHOVIA Shares per OFFITBANK Share
PURCHASE PRICE: $200 Million Plus $3.5 Million Retention Pool
STRUCTURE: Purchase Accounting / Tax-free Exchange
DUE DILIGENCE: Completed On-Site Due Diligence, Including Y2K Review
EXPECTED CLOSING: 3rd Quarter 1999
BOARD COMPOSITION: Morris W. Offit to be Added to Board
WALK AWAY PROVISION: Triggered by 15% or Greater Loss of Fixed Fee Accounts
(Net of Market Movements)
DEAL PROTECTION: Voting Agreements Plus $10 Million Break-Up Fee
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OVERVIEW OF OFFITBANK
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o Founded in 1983 as a registered investment advisor, OFFITBANK converted to
a New York state trust bank in 1990.
o OFFITBANK has established itself as a premier provider of high net worth
services and is well known nationally as a high quality, wealth management
franchise for the upper tier of the wealth management market.
o OFFITBANK's business model targets the upper tier of the wealth management
market, with a focus on high net worth individuals and families:
o 60% of portfolio assets are managed account relationships of $30
million or more
o 95% of portfolio assets are managed account relationships of $5
million or more
o Employs seasoned high net worth wealth management professionals.
o OFFITBANK is specifically recognized for fixed income management, with
$10.8 billion AUM. Portfolio products include investment grade, high yield,
municipal, emerging markets, bond products plus liquidity/cash management.
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TRACK RECORD OF GROWTH AND PROFITABILITY
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[GRAPH]
Assets Under
Management
(Dollars in Billions)
1991 $3.8
1992 $4.5
1993 $6.1
1994 $5.9
1995 $6.7
1996 $8.0
1997 $9.3
1998 $10.3
CAGR 15.3%
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[GRAPH]
Revenues
(Dollars in
Millons)
1991 $15.5
1992 $20.3
1993 $32.3
1994 $31.3
1995 $25.9
1996 $31.4
1997 $36.1
1998 $41.2
CAGR 15.0%
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[GRAPH]
Net Income
(Dollars in Millions)(1)
1991 $1.6
1992 $2.0
1993 $4.7
1994 $2.8
1995 $1.4
1996 $3.1
1997 $4.4
1998 $5.4
CAGR 19.0%
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(1) excludes non-recurring items
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SUPERIOR INVESTMENT PERFORMANCE
================================================================================
OFFITBANK'S SUCCESS IS PREDICATED UPON ITS REPUTATION FOR PROFESSIONALISM,
CLIENT FOCUS AND SUPERIOR INVESTMENT PERFORMANCE:
FIXED INCOME PERFORMANCE:
================================================================================
1 YEAR 3 YEARS 5 YEARS
--------------- --------------- ---------------
OFFIT INDEX OFFIT INDEX OFFIT INDEX
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U.S. Government 9.3% 8.4% 7.4% 6.8% 7.1% 6.6%
High Yield 5.3 3.7 9.8 9.1 9.7 9.0
Municipal 6.2 5.8 6.0 5.5 5.6 5.3
Total Return 7.9 8.7 8.2 7.3 8.0 7.3
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HIGH NET WORTH MARKET
================================================================================
THE MARKET REPRESENTS A SIGNIFICANT OPPORTUNITY FOR WACHOVIA:
o Fast growing, relatively underserved marketplace
o High growth/high margin product set
o Marketplace is highly dispersed, with no established national or global
brand names
o Represents a large market with significant revenue potential
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<PAGE>
NEW BUSINESS INITIATIVES - OFFITBANK'S
FRANCHISE
================================================================================
o Expand product offering to existing OFFITBANK clients:
o Core Equity Management o Collateralized Lending
o Deposit Services o Mortgage Lending
o Trust Services o Philanthropy Management
o Insurance Products
o Leverage Wachovia's franchise by introducing OFFITBANK services in
Wachovia's existing footprint to serve high net worth clients.
o Expand national franchise of OFFITBANK to serve target clients.
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COMPELLING STRATEGIC RATIONALE
================================================================================
OFFITBANK REPRESENTS A UNIQUE ACQUISITION OPPORTUNITY FOR WACHOVIA:
o High net worth market represents a compelling market opportunity for
Wachovia.
o Provides Wachovia with a leadership position in a highly dispersed, high
growth market.
o Wachovia's ability to add value to OFFITBANK's businesses is significant
o Transaction is financially affordable, while having the potential for
meaningful value creation
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CREATES SHAREHOLDER VALUE
================================================================================
TRANSACTION CREATES VALUE FOR WACHOVIA'S SHAREHOLDERS:
o Minimal initial EPS impact
o Significant shareholder value creation
o Returns in excess of cost of capital without initiatives
o IRR in excess of 25% including future initiatives
o Enhances Wachovia's underlying growth rate
o Addition of high growth business model
o Accelerated growth with additional opportunities from future
initiatives
o Low risk strategy takes advantage of operating leverage
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