Earnings Announcement Wachovia
Wachovia Corporation
Atlanta, GA 30383
Winston-Salem, NC 27150
For Additional Information:
Robert S. McCoy, Jr.
Vice Chairman and
Chief Financial Officer, 336-732-5926
Marsha L. Smunt
Investor Relations, 336-732-5788 January 17, 2001
Wachovia Announces Fourth Quarter Operating Earnings Per Share of $1.26
Wachovia Corporation (NYSE: WB) today reported operating earnings of
$1.26 per diluted share for the fourth quarter of 2000 compared with $1.30 per
diluted share a year earlier. Operating net income was $257.4 million compared
with $266.6 million for the fourth quarter of 1999. Total revenue rose from the
fourth quarter of 1999 despite continued softness in capital markets income and
investment fees. For the full year of 2000, operating earnings per diluted share
were $4.58 compared with $4.97 in 1999, reflecting actions taken in 2000 to
increase loan loss reserves. Operating earnings exclude nonrecurring charges,
principally for merger integration and restructuring.
"In a challenging year for the financial services industry, Wachovia
took aggressive steps that will be the foundation for good performance going
forward," said L.M. Baker Jr., chairman and chief executive officer. "Fourth
quarter and year-to-date results give evidence to the steps taken to manage
credit risk and control expenses while growing revenue. Despite the dampening
effect of a slowing economy, revenue for the year increased in all categories
except investment fees and capital markets income. Operating expenses were
contained for the year and declined significantly in the fourth quarter."
Wachovia Corporation (WB)
Fourth Quarter Full Year
-------------- ---------
Financial Summary * 2000 1999 2000 1999
- ----------------- ---- ---- ---- ----
Operating net income ($ millions) $257.4 $266.6 $935.5 $1,023.9
Operating earnings per diluted share $1.26 $1.30 $4.58 $4.97
Total revenue ($ millions) ** $1,105.3 $1,078.5 $4,483.9 $4,120.7
Return on equity 16.96% 19.20% 15.89% 18.85%
Return on assets 1.43% 1.59% 1.34% 1.57%
* excludes nonrecurring charges ** includes taxable equivalent net interest
income and other operating revenue
Reported net income was $244.7 million or $1.20 per diluted share for the
fourth quarter and $832.3 million or $4.07 per diluted share for the full year
2000. Reported earnings for the same periods of 1999 were $262.9 million or
$1.28 per diluted share and $1.011 billion or $4.90 per diluted share,
respectively. Included in fourth quarter 2000
-Continued-
reported pretax earnings were $19.5 million in restructuring charges associated
with Wachovia's ongoing performance project designed to lift pretax earnings by
$425 million by the end of 2002. Remaining restructuring charges will be
incurred in the first quarter of 2001. Fourth quarter 1999 reported pretax
earnings included $5.7 million in charges to integrate the operations of
acquired companies.
Total revenue rose $26.8 million from the fourth quarter of 1999 and
$363.2 million for the full year from 1999. Total revenue was down $55 million
from the third quarter, which included gains from branch sales and net
securitization activity of $42 million and $9 million, respectively. The net
yield on interest earning assets declined from 4.26 percent for fourth quarter
1999 to 3.94 percent for fourth quarter 2000 primarily as a result of
securitization transactions and pressure on funding costs. Average loans rose
$5.7 billion or 11.7 percent for the fourth quarter and $5.2 billion or 11
percent for the year, with most growth coming from real estate lending, both
commercial and residential. Growth occurred in all categories of other operating
revenue except investment fees and capital markets income that were affected by
market conditions.
The provision for loan losses was $117.5 million for the fourth quarter
compared with $66.2 million a year ago and $124 million for the prior quarter.
The fourth quarter 2000 provision added $23 million to loan loss reserves
bringing the reserve balance to 1.50 percent of outstanding loans at December
31, 2000, compared with 1.12 percent a year earlier and 1.47 percent at the end
of the previous quarter. Nonperforming loans were up $55 million for the quarter
to $499.9 million at December 31, 2000. Net loan losses at $94.4 million for the
fourth quarter were above the $65.3 million reported a year ago and below the
$123.8 million reported in the third quarter. As a percentage of average loans
outstanding, net loan losses were .7 percent for the fourth quarter 2000
compared with .54 percent a year earlier and .94 percent in the third quarter.
Operating expense, excluding nonrecurring charges, decreased $9.4 million
for the fourth quarter and increased $195.3 million for the year. Adjusting for
acquisitions, operating expense decreased approximately 6 percent compared with
fourth quarter 1999 and was level for the year. The decrease for the quarter
primarily reflects lower incentive compensation and management's ongoing efforts
to control costs.
Wachovia will hold a conference call to discuss these results on January
17, 2001, at 9:30 a.m. (Eastern Time). The call will be available at
913-981-4911 or via the Internet at www.wachovia.com/investor/conference.asp.
Replays of the conference call will be available from 12:30 p.m. January 17
until midnight January 21 at the same Internet address or by phone
(719-457-0820, access code 779293).
This news release contains forward-looking statements regarding Wachovia
Corporation. All forward-looking statements involve risk and uncertainty and
actual results could differ materially from the anticipated results or other
expectations expressed in the forward-looking statements. A discussion of
factors that could cause actual results to differ materially from those
expressed in the forward-looking statements is included in Wachovia's filings
with the Securities and Exchange Commission.
Additional information can be found in the Investor Relations section of
Wachovia's web site at www.wachovia.com/investor
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
Quarter Ended Year Ended
December 31 December 31
----------------------------------- -----------------------------------------
Percent Percent
2000 1999 Variance 2000 1999 Variance
---------- ---------- -------- ---------- ---------- --------
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income - taxable equivalent $1,412,949 $1,235,609 14.4 $5,381,842 $4,707,306 14.3
Interest expense 778,287 596,583 30.5 2,829,633 2,196,734 28.8
---------- ---------- ---------- ----------
Net interest income - taxable equivalent 634,662 639,026 (0.7) 2,552,209 2,510,572 1.7
Taxable equivalent adjustment 8,556 11,123 (23.1) 36,488 40,486 (9.9)
---------- ---------- ---------- ----------
Net interest income 626,106 627,903 (0.3) 2,515,721 2,470,086 1.8
Provision for loan losses 117,463 66,174 77.5 588,450 298,105 97.4
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 508,643 561,729 (9.5) 1,927,271 2,171,981 (11.3)
Other operating revenue 470,601 439,469 7.1 1,931,689 1,610,123 20.0
Securities (losses) gains (480) 60 (417) 10,894
---------- ---------- ---------- ----------
Total other income 470,121 439,529 7.0 1,931,272 1,621,017 19.1
Personnel expense 294,228 324,288 (9.3) 1,299,343 1,220,286 6.5
Merger-related charges - 5,669 28,958 19,309
Litigation settlement charge - - 20,000 -
Restructuring charge 19,543 - 107,487 -
Other expense 291,276 270,661 7.6 1,127,225 1,011,030 11.5
---------- ---------- ---------- ----------
Total other expense 605,047 600,618 0.7 2,583,013 2,250,625 14.8
Income before income taxes 373,717 400,640 (6.7) 1,275,530 1,542,373 (17.3)
Applicable income taxes 129,011 137,704 (6.3) 443,222 531,152 (16.6)
---------- ---------- ---------- ----------
Net income $ 244,706 $ 262,936 (6.9) $ 832,308 $1,011,221 (17.7)
========== ========== ========== ==========
Net income per common share:
Basic $ 1.20 $ 1.30 (7.7) $ 4.10 $ 4.99 (17.8)
Diluted $ 1.20 $ 1.28 (6.3) $ 4.07 $ 4.90 (16.9)
Cash dividends paid per common share $ .60 $ .54 11.1 $ 2.28 $ 2.06 10.7
Average basic shares outstanding 203,407 202,168 0.6 202,989 202,795 0.1
Average diluted shares outstanding 204,393 205,096 (0.3) 204,450 206,192 (0.8)
PERFORMANCE RATIOS
(averages)
Annualized net yield on interest-earning
assets 3.94% 4.26% 4.11% 4.32%
Annualized return on assets 1.36 1.57 1.19 1.55
Annualized return on shareholders' equity 16.13 18.93 14.14 18.62
Overhead ratio 54.74 55.69 57.61 54.62
OPERATING PERFORMANCE EXCLUDING
NONRECURRING ITEMS (1)
Net income $ 257,409 $ 266,620 (3.5) $ 935,497 $1,023,855 (8.6)
Net income per diluted common share $ 1.26 $ 1.30 (3.1) $ 4.58 $ 4.97 (7.8)
Annualized return on assets 1.43% 1.59% 1.34% 1.57%
Annualized return on shareholders' equity 16.96 19.20 15.89 18.85
Overhead ratio 52.97 55.16 54.12 54.15
CASH-BASIS FINANCIAL
INFORMATION (1), (2)
Net income $ 276,647 $ 279,401 (1.0) $1,010,683 $1,067,619 (5.3)
Net income per diluted common share $ 1.35 $ 1.36 (0.7) $ 4.94 $ 5.18 (4.6)
Annualized return on assets 1.57% 1.69% 1.48% 1.65%
Annualized return on shareholders' equity 22.49 24.02 21.19 22.83
Overhead ratio 50.81 53.82 52.05 52.91
(1) Excludes the effects of nonrecurring merger-related, litigation
settlement and restructuring charges
(2) Excludes the effects of purchase accounting-related intangibles
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
Quarter Ended Year Ended
December 31 December 31
--------------------------------- -----------------------------------
Percent Percent
2000 1999 Variance 2000 1999 Variance
---------- --------- -------- ---------- -------- ----------
SELECTED AVERAGE BALANCES
(millions)
Total assets $ 71,844 $ 66,982 7.3 $ 69,699 $ 65,420 6.5
Loans - net of unearned income 54,279 48,593 11.7 52,436 47,223 11.0
Loans (managed) (2) 57,946 50,489 14.8 55,871 48,557 15.1
Securities 8,434 9,016 (6.5) 8,365 9,340 (10.4)
Other interest-earning assets 1,363 1,844 (26.1) 1,261 1,553 (18.8)
Total interest-earning assets 64,076 59,453 7.8 62,062 58,116 6.8
Interest-bearing deposits 35,518 33,107 7.3 35,213 32,325 8.9
Short-term borrowed funds 9,386 9,836 (4.6) 8,988 9,401 (4.4)
Long-term debt 10,133 8,327 21.7 9,144 8,134 12.4
Total interest-bearing liabilities 55,037 51,270 7.3 53,345 49,860 7.0
Noninterest-bearing deposits 8,428 8,326 1.2 8,399 8,255 1.7
Total deposits 43,946 41,433 6.1 43,612 40,580 7.5
Shareholders' equity 6,069 5,555 9.3 5,886 5,430 8.4
CREDIT QUALITY DATA
(thousands)
Nonperforming assets $521,277 $223,790 132.9 $521,277 $223,790 132.9
Nonperforming loans 499,899 204,098 144.9 499,899 204,098 144.9
Loans past due 90 days or more and still accruing 155,008 97,642 58.8 155,008 97,642 58.8
Net loan losses 94,364 65,258 44.6 364,493 291,326 25.1
Net loan losses (managed) (2) 143,739 81,652 76.0 550,432 333,168 65.2
Net loan losses excluding credit cards 45,200 23,932 88.9 165,549 75,992 117.9
Allowance for loan losses 822,560 554,810 48.3 822,560 554,810 48.3
Nonperforming assets to total
loans and foreclosed property .95% .45% .95% .45%
Annualized net loan losses to average loans .70 .54 .70 .62
Annualized net loan losses to
average loans (managed) (2) .99 .65 .99 .69
Annualized net loan losses to average loans
excluding credit cards .36 .22 .35 .18
Allowance for loans losses to total loans 1.50 1.12 1.50 1.12
Allowance for loan losses times
nonperforming loans 1.65x 2.72x 1.65x 2.72x
SELECTED FINANCIAL DATA AT PERIOD-END
(millions, except per share data)
Total assets $ 74,032 $ 67,353 9.9
Interest-earning assets 65,520 59,583 10.0
Loans - net of unearned income 55,002 49,621 10.8
Loans (managed) (2) 58,648 51,517 13.8
Deposits 44,412 41,786 6.3
Shareholders' equity 6,285 5,658 11.1
Shareholders' equity to total assets 8.49% 8.40%
Risk-based capital ratios:
Tier I capital 7.6(1) 7.5
Total capital 11.6(1) 11.0
Per share:
Book value $ 30.89 $ 28.04 10.2
Common stock closing price (NYSE) $ 58.13 $ 68.00 (14.5)
Common shares outstanding (thousands) 203,424 201,812
(1) Estimated
(2) Includes securitized credit card receivables