Exhibit 99(b)
Consolidated Statements of Condition
- --------------------------------------------------------------------------------
($ in thousands, except per share) wachovia corporation and subsidiaries
June 30 December 31 June 30
2001 2000 2000
----------- ----------- -----------
Assets
Cash and due from banks................. $ 2,587,278 $ 3,686,871 $ 3,208,459
Interest bearing bank balances.......... 54,976 137,504 118,971
Federal funds sold and securities
purchased under resale agreements...... 631,129 788,618 202,273
Trading account assets.................. 2,084,549 960,838 1,457,467
Securities available-for-sale........... 6,276,448 7,487,696 7,088,977
Securities held-to-maturity (fair value
of $655,212, $1,052,535 and $1,109,096
respectively).......................... 625,327 1,023,750 1,101,461
Loans, net of unearned income........... 52,159,625 50,567,502 48,522,061
Less allowance for loan losses.......... 756,768 667,654 644,445
----------- ----------- -----------
Net loans............................. 51,402,857 49,899,848 47,877,616
Investment in discontinued operations... 354,495 392,469 403,154
Premises and equipment.................. 927,285 903,411 926,602
Due from customers on acceptances....... 62,782 82,008 80,917
Goodwill and other intangible assets.... 1,317,592 1,024,766 1,008,071
Other assets............................ 3,977,888 3,223,349 2,698,404
----------- ----------- -----------
Total assets.......................... $70,302,606 $69,611,128 $66,172,372
=========== =========== ===========
Liabilities
Deposits in domestic offices:
Demand................................. $ 8,525,977 $ 9,180,330 $ 8,783,729
Interest-bearing demand................ 5,380,199 5,116,571 4,885,151
Savings and money market savings....... 14,499,195 12,902,336 12,716,834
Savings certificates................... 9,474,735 9,534,778 9,530,065
Large denomination certificates........ 3,413,320 3,673,219 3,862,754
----------- ----------- -----------
Total deposits in domestic offices.... 41,293,426 40,407,234 39,778,533
Interest-bearing deposits in foreign
offices................................ 2,984,283 4,004,948 2,807,675
----------- ----------- -----------
Total deposits........................ 44,277,709 44,412,182 42,586,208
Federal funds purchased and securities
sold under repurchase agreements....... 7,167,806 6,753,164 7,440,013
Commercial paper........................ 1,990,469 1,855,923 1,649,239
Other short-term borrowed funds......... 1,893,562 1,253,058 2,172,587
Short-term borrowed funds allocated to
discontinued operations................ (3,136,636) (3,055,119) (3,204,459)
Long-term debt.......................... 10,006,181 10,808,218 8,858,331
Long-term debt allocated to discontinued
operations............................. (1,344,273) (1,309,337) (1,373,339)
Acceptances outstanding................. 62,782 82,008 80,917
Other liabilities....................... 2,929,531 2,526,492 2,026,831
----------- ----------- -----------
Total liabilities..................... 63,847,131 63,326,589 60,236,328
Shareholder's Equity
Preferred stock, par value $5 per share:
Authorized 50,000,000 shares; none
outstanding........................... -- -- --
Common stock, par value $5 per share:
Authorized 1,000,000,000 shares; issued
and outstanding 203,322,801,
203,423,606 and 203,267,427 shares,
respectively.......................... 1,016,614 1,017,118 1,016,337
Capital surplus......................... 704,933 731,162 721,378
Retained earnings....................... 4,727,783 4,505,947 4,277,886
Accumulated other comprehensive income
(loss)................................. 6,145 30,312 (79,557)
----------- ----------- -----------
Total shareholders' equity............ 6,455,475 6,284,539 5,936,044
----------- ----------- -----------
Total liabilities and shareholders'
equity............................... $70,302,606 $69,611,128 $66,172,372
=========== =========== ===========
1
Consolidated Statements of Income
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(thousands, except per share) wachovia corporation and subsidiaries
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ---------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Interest Income
Loans, including fees............. $ 978,522 $1,002,913 $2,019,301 $1,935,156
Securities available-for-sale..... 123,690 117,736 249,412 230,478
Securities held-to-maturity:
State and municipal.............. 3,554 3,727 7,342 7,367
Other investments................ 10,857 15,197 24,888 31,021
Interest-bearing bank balances.... 2,496 954 4,210 2,176
Federal funds sold and securities
purchased under resale
agreements....................... 8,010 6,796 16,436 14,288
Trading account assets............ 5,008 11,022 11,888 21,379
---------- ---------- ---------- ----------
Total interest income........... 1,132,137 1,158,345 2,333,477 2,241,865
Interest Expense
Deposits:
Domestic offices................. 338,002 346,818 704,868 669,676
Foreign offices.................. 38,001 62,308 84,987 114,230
---------- ---------- ---------- ----------
Total interest on deposits...... 376,003 409,126 789,855 783,906
Short-term borrowed funds......... 74,948 82,425 174,612 160,288
Long-term debt.................... 115,843 121,578 260,768 226,913
---------- ---------- ---------- ----------
Total interest expense.......... 566,794 613,129 1,225,235 1,171,107
Net Interest Income............... 565,343 545,216 1,108,242 1,070,758
Provision for loan losses......... 143,809 223,169 210,373 244,212
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses........ 421,534 322,047 897,869 826,546
Other Income
Service charges on deposit
accounts......................... 115,157 104,380 219,439 205,191
Fees for trust services........... 57,923 54,189 115,013 105,423
Investment fees................... 75,609 81,439 151,473 178,209
Capital markets income............ 45,581 45,014 93,747 89,800
Electronic banking................ 29,300 26,153 56,070 49,549
Mortgage fees..................... 14,955 5,921 23,323 10,922
Other operating income............ 72,600 66,119 174,120 130,361
---------- ---------- ---------- ----------
Total other operating revenue... 411,125 383,215 833,185 769,455
Securities gains.................. 97,180 59 106,256 226
---------- ---------- ---------- ----------
Total other income.............. 508,305 383,274 939,441 769,681
Other Expense
Salaries.......................... 283,179 270,569 551,995 546,262
Employee benefits................. 55,420 50,916 108,230 104,675
---------- ---------- ---------- ----------
Total personnel expense......... 338,599 321,485 660,225 650,937
Net occupancy expense............. 42,088 39,347 82,003 77,548
Equipment expense................. 43,250 44,806 87,343 92,928
Merger-related charges............ 11,670 8,872 11,670 17,030
Litigation settlement charge...... -- -- -- 20,000
Restructuring charge.............. -- -- 13,152 --
Other operating expense........... 150,024 147,793 301,581 284,243
---------- ---------- ---------- ----------
Total other expense............. 585,631 562,303 1,155,974 1,142,686
Income from continuing operations
before income tax expense........ 344,208 143,018 681,336 453,541
Income tax expense................ 121,030 44,287 241,207 152,843
---------- ---------- ---------- ----------
Income from continuing
operations....................... 223,178 98,731 440,129 300,698
Income from discontinued
operations, net of income tax.... 21,935 38,840 47,076 81,580
---------- ---------- ---------- ----------
Net Income........................ $ 245,113 $ 137,571 $ 487,205 $ 382,278
========== ========== ========== ==========
Income per common share --
continuing operations:
Basic............................ $ 1.09 .49 $ 2.14 $ 1.48
Diluted.......................... $ 1.08 .48 $ 2.12 $ 1.47
Net income per common share:
Basic............................ $ 1.19 .68 $ 2.37 $ 1.89
Diluted.......................... $ 1.18 .67 $ 2.35 $ 1.87
Average shares outstanding:
Basic............................ 205,595 202,728 205,827 202,596
Diluted.......................... 207,123 204,572 207,345 204,392
2
Consolidated Statement of Shareholders' Equity
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($ in thousands, except per share) wachovia corporation and subsidiaries
Accumulated
Common Stock Other
----------------------- Capital Retained Comprehensive
Shares Amount Surplus Earnings Income (Loss) Total
----------- ---------- --------- ---------- ------------- ----------
Period ended June 30,
2000
Balance at beginning of
year................... 201,812,295 $1,009,061 $ 598,149 $4,125,524 $(74,277) $5,658,457
Net income............. 177,253 886 10,374 11,260
Other comprehensive
income, net of tax:
Unrealized losses on
securities available-
for-sale, net of
deferred tax benefit
and reclassification
adjustment........... (5,280) (5,280)
----------
Comprehensive
income*............ 376,998
Cash dividends declared
-- $1.08 a share....... (219,599) (219,599)
Common stock issued
pursuant to:
Stock option and
employee benefit
plans................. 800,534 4,003 43,752 47,755
Dividend reinvestment
plan.................. 382,278 382,278
Acquisitions........... 2,254,947 11,275 167,674 178,949
Common stock acquired... (1,777,602) (8,888) (98,571) (107,459)
Miscellaneous........... (10,317) (10,317)
----------- ---------- --------- ---------- -------- ----------
Balance at end of
period................. 203,267,427 $1,016,337 $ 721,378 $4,277,886 $(79,557) $5,936,044
=========== ========== ========= ========== ======== ==========
Period ended June 30,
2001
Balance at beginning of
year................... 203,423,606 $1,017,118 $ 731,162 $4,505,947 $ 30,312 $6,284,539
Net income............. 487,205 487,205
Other comprehensive
income, net of tax:
Unrealized losses on
securities available-
for-sale, net of
deferred tax benefit
and reclassification
adjustment........... (8,388) (8,388)
Minimum pension
liability
adjustment........... (15,207) (15,207)
Unrealized gains on
derivative financial
instruments
qualifying as cash
flow hedges.......... (572) (572)
-------- ----------
Comprehensive
income*............ 463,038
Cash dividends declared
-- $1.20 a share....... (243,993) (243,993)
Common stock issued
pursuant to:
Stock option and
employee benefit
plans................. 1,196,912 5,985 64,303 70,288
Dividend reinvestment
plan.................. 95,031 475 5,492 5,967
Acquisitions........... 6,775,695 33,878 394,957 428,835
Note conversions....... 5,183 26 76 102
Common stock acquired... (8,173,626) (40,868) (491,035) (531,903)
Miscellaneous........... (22) (21,376) (21,398)
----------- ---------- --------- ---------- -------- ----------
Balance at end of
period................. 203,322,801 $1,016,614 $ 704,933 $4,727,783 $ 6,145 $6,455,475
=========== ========== ========= ========== ======== ==========
* Comprehensive income for the second quarters of 2001 and 2000 was $176,656
and $146,140, respectively.
3
Consolidated Statements of Cash Flows
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($ in thousands) wachovia corporation and subsidiaries
Six Months Ended
June 30
----------------------
2001 2000
---------- ----------
Operating Activities
Net income............................................ $ 487,205 $ 382,278
Income from discontinued operations................... (47,076) (81,580)
---------- ----------
Income from continuing operations..................... 440,129 300,698
Adjustments to reconcile income from continuing
operations to net cash provided by operations:
Provision for loan losses............................. 210,373 244,212
Depreciation and amortization......................... 122,331 122,504
Deferred income taxes................................. 120,201 96,221
Securities gains...................................... (106,256) (226)
Loss on sale of noninterest-earning assets............ 654 334
Increase (decrease) in accrued income taxes........... 28,348 (3,439)
Decrease (increase) in accrued interest receivable.... 89,911 (24,543)
(Decrease) increase in accrued interest payable....... (127,883) 9,339
Net change in other accrued and deferred income and
expense.............................................. (171,528) (8,363)
Net trading account activities........................ 637,267 (587,163)
Net loans held for resale............................. (201,520) (3,356)
---------- ----------
Net cash provided by operating activities........... 1,042,027 146,218
Investing Activities
Net decrease in interest-bearing bank balances........ 96,805 56,113
Net decrease in federal funds sold and securities
purchased under resale agreements.................... 164,929 578,006
Purchases of securities available-for-sale............ (3,089,110) (646,876)
Purchases of securities held-to-maturity.............. (14,154) (126,786)
Sales of securities available-for-sale................ 1,475,969 361,371
Calls, maturities and prepayments of securities
available-for-sale................................... 1,206,137 355,891
Calls, maturities and prepayments of securities held-
to-maturity.......................................... 414,739 97,501
Net decrease (increase) in loans made to customers.... 513,453 (3,205,066)
Capital expenditures.................................. (45,163) (55,511)
Proceeds from sales of premises and equipment......... 10,337 3,312
Net decrease in other assets.......................... 252,185 91,976
Business combinations................................. 83,597 19,377
Net cash used by discontinued operations.............. (32,931) (173,560)
---------- ----------
Net cash provided (used) by investing activities.... 1,036,793 (2,644,252)
Financing Activities
Net increase (decrease) in demand, savings and money
market accounts...................................... 166,831 (874,838)
Net (decrease) increase in certificates of deposit.... (2,405,709) 1,161,479
Net increase in federal funds purchased and securities
sold under repurchase agreements..................... 228,464 2,063,641
Net increase (decrease) in commercial paper........... 134,546 (9,749)
Net increase (decrease) in other short-term
borrowings........................................... 389,004 (898,906)
Proceeds from issuance of long-term debt.............. 4,100 1,522,859
Maturities and repayments of long-term debt........... (1,284,773) (487,413)
Net increase in other liabilities..................... 327,538 92,423
Common stock issued................................... 41,706 23,602
Dividend payments..................................... (243,993) (219,599)
Common stock repurchased.............................. (536,127) (104,088)
---------- ----------
Net cash (used) provided by financing activities.... (3,178,413) 2,269,411
Decrease in Cash and Cash Equivalents (1,099,593) (228,623)
Cash and cash equivalents at beginning of year........ 3,686,871 3,437,082
---------- ----------
Cash and cash equivalents at end of period............ $2,587,278 $3,208,459
========== ==========
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
Note 1 -- Basis of Presentation
In the opinion of management, the unaudited interim consolidated financial
statements include all adjustments, consisting of normal recurring adjustments,
necessary to present fairly the results of operations for the periods present-
ed. The results of operations shown in the interim statements are not necessar-
ily indicative of the results that may be expected for the entire year.
Note 2 -- Discontinued Operations
On July 27, 2001, Wachovia completed the sale of its consumer credit card busi-
ness to Bank One Corporation. The capital made available by the transaction
will be redeployed for general corporate purposes including investing in higher
growth businesses, repurchasing shares, reducing balance sheet leverage or re-
ducing debt. The pre-tax gain from the sale is estimated to be approximately
$1.3 billion. As a result of the recent shareholder approval of the merger with
First Union Corporation, $450 million has been deferred in connection with cer-
tain provisions of the agent bank arrangement. Condensed financial information
for the consumer credit card business is presented below.
Three Months Ended Six Months Ended
June 30 June 30
---------------------- ---------------------
2001 2000 2001 2000
---------- ----------- ---------- ----------
Summary Income Statement
Interest income................... $ 138,403 $ 166,766 $ 287,259 $ 328,603
Allocated interest expense (2).... 50,652 72,600 112,566 140,483
---------- ---------- ---------- ----------
Net interest income.............. 87,751 94,166 174,693 188,120
Provision for loan losses......... 71,911 50,196 126,847 102,819
Noninterest income................ 74,447 87,084 143,973 171,643
Noninterest expense (3)........... 55,254 68,988 116,633 126,583
---------- ---------- ---------- ----------
Income before income tax
expense......................... 35,033 62,066 75,186 130,361
Income tax expense................ 13,098 23,226 28,110 48,781
---------- ---------- ---------- ----------
Net income....................... $ 21,935 $ 38,840 $ 47,076 $ 81,580
========== ========== ========== ==========
June 30 December 31 June 30
2001 2000 2000
---------- ----------- ----------
Summary Balance Sheet
Cash.............................. $ 39,351 $ 40,570 $ 52,329
Interest bearing bank balances.... 13,596 36,025 39,078
Securities available-for-sale..... 41,228 84,000 83,024
Loans, net of allowance........... 4,429,771 4,279,313 4,475,390
Intangible assets................. 211,529 231,461 249,816
Other assets...................... 144,828 141,624 141,960
---------- ---------- ----------
Total assets..................... $4,880,303 $4,812,993 $5,041,597
========== ========== ==========
Short-term borrowed funds (2)..... $3,136,636 $3,055,119 $3,204,459
Long-term debt (2)................ 1,344,273 1,309,337 1,373,339
Other liabilities................. 44,899 56,068 60,645
---------- ---------- ----------
Total liabilities................ 4,525,808 4,420,524 4,638,443
Equity capital (1)................ 354,495 392,469 403,154
---------- ---------- ----------
Total liabilities and equity..... $4,880,303 $4,812,993 $5,041,597
========== ========== ==========
(1) Equity capital was assigned to discontinued operations based upon
Wachovia's targeted Tier I risk-based capital requirements for the under-
lying risk weighted assets and off-balance sheet items.
(2) Interest-bearing liabilities were assigned to discontinued operations
based on an assumed funding mix of 70 percent short-term borrowings and 30
percent long-term debt. Interest expense was calculated by applying
Wachovia's average funding cost for each period and funding category to
the respective assigned average balances.
(3) The amount of general overhead costs allocated to discontinued operations
is the amount estimated to be eliminated upon completion of the transac-
tion.
5