For Additional Information:
Robert S. McCoy, Jr.
Vice Chairman and
Chief Financial Officer, 336-732-5926
Marsha L. Smunt
Investor Relations, 336-732-5788 July 19, 2000
Wachovia Announces Second Quarter Results
Wachovia Corporation (NYSE: WB) today announced second quarter 2000
operating earnings of $.70 per diluted share, which includes the effects of the
previously announced $200 million pretax loan loss charge of $.64 per share.
Operating earnings a year earlier were $1.22 per share. Second quarter operating
net income was $143.3 million compared with $253.1 million a year earlier.
Excluding the effects of the loan loss charge, operating earnings per share
increased 10 percent from a year earlier.
"Wachovia achieved good revenue growth of 8.5 percent in a challenging
interest rate environment," said L.M. Baker, Jr., chairman and chief executive
officer. "Loan demand remained strong, net interest margin yields improved and
expenses were contained. As expected, revenue growth moderated in certain
market-sensitive areas such as investment and capital markets businesses.
Timely, prudent actions have been taken to strengthen Wachovia's loan loss
reserves in response to pressures that rising interest rates and a slowing
economy are placing on the commercial portfolio."
For the first six months, operating earnings, which excludes
nonrecurring charges, were $407.8 million or $2.00 per diluted share in 2000
versus $496.3 million or $2.40 per share in 1999. Reported net income was $137.6
million or $.67 per diluted share for the second quarter of 2000 and $382.3
million or $1.87 per share year to date. Returns on equity and assets reflect
the additional loan loss charge recognized in the second quarter.
<TABLE>
<CAPTION>
Wachovia Corporation (WB) Second Quarter First Six Months
----------------------------- ---------------------------
Financial Summary * 2000 1999 2000 1999
----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating net income ($ millions) $143.3 $253.1 $407.8 $496.3
Operating earnings per diluted share $.70 $1.22 $2.00 $2.40
Total revenue ($ millions) ** $1,119.2 $1,031.2 $2,218.8 $1,982.7
Return on equity 9.83% 18.54% 14.16% 18.43%
Return on assets .83% 1.55% 1.19% 1.53%
* excludes nonrecurring charges ** includes taxable equivalent net interest income and other operating revenue
</TABLE>
-Continued-
<PAGE>
Total revenue rose $88 million or 8.5 percent from the second quarter of
1999 and $236.1 million or 11.9 percent from the first six months of 1999.
Adjusting for credit card securitization transactions in 1999 and purchase
acquisitions completed in 1999 and 2000, total revenue increased approximately 6
percent during the second quarter and about 7 percent year to date. Taxable
equivalent net interest income was up $22.2 million or 3.5 percent for the
quarter and $32.8 million or 2.6 percent for the first half of 2000. Average
loans rose $5.1 billion or 10.9 percent for the second quarter and $4.7 billion
or 10.1 percent year to date, led by the real estate loan portfolio. Increases
in total other operating revenue for both reporting periods were concentrated in
investment fees, credit card income, deposit service charges and credit card
processing fees.
The provision for loan losses was $273.4 million for the three months and
$347 million for the first six months of 2000 compared with $74.5 million and
$155.2 million in 1999. The increases in 2000 are attributable to the previously
announced $200 million additional provision for loan losses recorded in the
second quarter to reflect management's concern about the slowing economy and its
impact on the financial performance of some corporate customers. Reflecting
these pressures, nonperforming assets at June 30, 2000 were $298.7 million, up
$52.6 million from the preceding quarter. Net loan losses were $73 million or
.56 percent of average loans for the quarter and $146.3 million or .57 percent
of average loans year to date. Excluding credit cards, net loan losses were .19
percent of loans for the quarter and first half of 2000.
Noninterest expense, excluding nonrecurring charges, was higher by $50.1
million or 8.8 percent for the second quarter and $167.8 million or 15.8 percent
year to date. Increases reflected a higher expense base from the addition of
recent acquisitions and were concentrated in personnel, occupancy costs and
amortization of intangible assets. Adjusting for acquisitions, noninterest
expense increased approximately 2 percent during the second quarter and about 3
percent for the first six months.
Additional information can be found in the Investor Relations section of
Wachovia's web site at www.wachovia.com/investor
<PAGE>
W A C H O V I A C O R P O R A T I O N A N D S U B S I D I A R I E S
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
Second Six Months Ended
2000 1999 Quarter June 30
------- ------- 2000 - 1999 ----------------------------------
Second Second Percent Percent
Quarter Quarter Variance 2000 1999 Variance
SELECTED AVERAGE ------- ------- --------- --------- ------- ---------
BALANCES
(millions)
<S> <C> <C> <C> <C> <C> <C>
Total assets $69,466 $65,454 6.1 $68,610 $64,934 5.7
Loans - net of unearned income 52,133 47,012 10.9 51,342 46,638 10.1
Loans (managed) (4) 55,528 48,408 14.7 54,482 47,628 14.4
Securities 8,407 9,664 (13.0) 8,401 9,444 (11.0)
Other interest-earning assets 1,241 1,588 (21.9) 1,243 1,451 (14.3)
Total interest-earning assets 61,781 58,264 6.0 60,986 57,533 6.0
Interest-bearing deposits 35,663 32,343 10.3 35,268 32,095 9.9
Short-term borrowed funds 8,621 9,629 (10.5) 8,771 9,461 (7.3)
Long-term debt 8,851 7,998 10.7 8,466 7,814 8.3
Total interest-bearing liabilities 53,135 49,970 6.3 52,505 49,370 6.4
Noninterest-bearing deposits 8,373 8,261 1.4 8,346 8,162 2.3
Total deposits 44,036 40,604 8.5 43,614 40,257 8.3
Shareholders' equity 5,833 5,459 6.9 5,760 5,387 6.9
CREDIT QUALITY DATA
(thousands)
Nonperforming assets $298,716 $234,787 27.2 $298,716 $234,787 27.2
Nonperforming loans 283,577 209,550 35.3 283,577 209,550 35.3
Loans past due 90 days or
more and still accruing 127,218 98,486 29.2 127,218 98,486 29.2
Net loan losses 72,958 74,326 (1.8) 146,283 154,652 (5.4)
Net loan losses (managed) (4) 122,792 83,888 46.4 230,403 166,797 38.1
Net loan losses excluding credit
cards 22,585 13,325 69.5 43,156 26,602 62.2
Allowance for loan losses 799,351 548,540 45.7 799,351 548,540 45.7
Nonperforming assets to total
loans and foreclosed property .56% .48% .56% .48%
Annualized net loan losses to
average loans .56 .63 .57 .66
Annualized net loan losses to
average loans (managed) (4) .88 .69 .85 .70
Annualized net loan losses to
average loans excluding
credit cards .19 .13 .19 .13
Allowance for loan losses to total
loans 1.50 1.13 1.50 1.13
Allowance for loan losses times
nonperforming loans 2.82x 2.62x 2.82x 2.62x
SELECTED FINANCIAL DATA AT PERIOD-END
(millions, except per share data)
Total assets $70,811 $67,013 5.7
Interest-earning assets 63,244 59,739 5.9
Loans - net of unearned income 53,152 48,428 9.8
Loans (managed) (4) 56,547 49,824 13.5
Deposits 42,586 40,816 4.3
Shareholders' equity 5,936 5,427 9.4
Shareholders' equity to total assets 8.38% 8.10%
Risk-based capital ratios:
Tier I capital 7.4(2) 7.6
Total capital 11.1(2) 11.1
Per share:
Book value $29.20 $26.83 8.8
Common stock closing price (NYSE) $54.25 $85.56 (36.6)
Common shares outstanding (thousands) 203,267 202,231 .5
</TABLE>
(1) Excludes the effects of nonrecurring merger-related and litigation
settlement charges
(2) Estimated
(3) Excludes the effects of purchase accounting-related intangibles
(4) Includes securitized credit card receivables
<PAGE>
W A C H O V I A C O R P O R A T I O N A N D S U B S I D I A R I E S
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
Second Six Months Ended
2000 1999 Quarter June 30
-------- -------- 2000 - 1999 --------------------------------------
Second Second Percent Percent
Quarter Quarter Variance 2000 1999 Variance
SUMMARY OF OPERATIONS ------- ------- -------- ---------- ------------ ---------
(thousands, except per
share data)
<S> <C> <C> <C> <C> <C> <C>
Interest income -
taxable equivalent $1,334,665 $1,156,297 15.4 $2,589,323 $2,296,835 12.7
Interest expense 685,729 529,603 29.5 1,311,590 1,051,912 24.7
---------- ---------- --------- ---------
Net interest income -
taxable equivalent 648,936 626,694 3.5 1,277,733 1,244,923 2.6
Taxable equivalent
adjustment 9,554 9,692 (1.4) 18,855 19,845 (5.0)
---------- ---------- --------- ---------
Net interest income 639,382 617,002 3.6 1,258,878 1,225,078 2.8
Provision for loan losses 273,365 74,525 266.8 347,031 155,161 123.7
---------- ---------- --------- ---------
Net interest income after
provision for loan
losses 366,017 542,477 (32.5) 911,847 1,069,917 (14.8)
Other operating revenue 470,299 404,544 16.3 941,098 737,813 27.6
Securities gains 59 10,453 226 10,687
---------- ---------- --------- ---------
Total other income 470,358 414,997 13.3 941,324 748,500 25.8
Personnel expense 335,491 307,752 9.0 679,372 578,938 17.3
Merger-related charges 8,872 8,347 17,030 8,347
Litigation settlement charge - - 20,000 -
Other expense 286,928 264,518 8.5 552,867 485,530 13.9
---------- ---------- --------- ---------
Total other expense 631,291 580,617 8.7 1,269,269 1,072,815 18.3
Income before income taxes 205,084 376,857 (45.6) 583,902 745,602 (21.7)
Applicable income taxes 67,513 129,307 (47.8) 201,624 254,816 (20.9)
---------- ---------- --------- ---------
Net income $137,571 $247,550 (44.4) $382,278 $490,786 (22.1)
========== ========== ========= =========
Net income per common share:
Basic $.68 $1.21 (43.8) $1.89 $2.41 (21.6)
Diluted $.67 $1.19 (43.7) $1.87 $2.37 (21.1)
Cash dividends paid per
common share $.54 $.49 10.2 $1.08 $.98 10.2
Average basic shares
outstanding 202,728 203,746 (.5) 202,596 203,434 (.4)
Average diluted shares
outstanding 204,572 207,400 (1.4) 204,392 207,181 (1.3)
PERFORMANCE RATIOS
(averages)
Annualized net yield on
interest-earning assets 4.22% 4.31% 4.21% 4.36%
Annualized return on assets .79 1.51 1.11 1.51
Annualized return on
shareholders' equity 9.43 18.14 13.27 18.22
Overhead ratio 56.40 56.30 57.20 54.11
OPERATING PERFORMANCE
EXCLUDING NONRECURRING
ITEMS (1)
Net income $143,337 $253,060 (43.4) $407,847 $496,296 (17.8)
Net income per diluted
common share $.70 $1.22 (42.6) $2.00 $2.40 (16.7)
Annualized return on
assets .83% 1.55% 1.19% 1.53%
Annualized return on
shareholders' equity 9.83 18.54 14.16 18.43
Overhead ratio 55.61 55.49 55.54 53.69
CASH-BASIS FINANCIAL
INFORMATION (1), (3)
Net income $162,566 $263,529 (38.3) $444,154 $515,953 (13.9)
Net income per diluted
common share $.79 $1.27 (37.8) $2.17 $2.49 (12.9)
Annualized return on
assets .95% 1.63% 1.32% 1.61%
Annualized return on
shareholders' equity 13.84 22.36 19.02 21.95
Overhead ratio 53.48 54.31 53.52 52.52
</TABLE>
(1) Excludes the effects of nonrecurring merger-related and litigation
settlement charges
(2) Estimated
(3) Excludes the effects of purchase accounting-related intangibles
(4) Includes securitized credit card receivables
