EXHIBIT 99.1
EARNINGS ANNOUNCEMENT WACHOVIA
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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 July 11, 2001
Wachovia Announces Second Quarter Financial Results
Operating Earnings Per Share of $1.22
Wachovia Corporation (NYSE: WB) today announced second quarter
operating earnings of $1.22 per diluted share compared with $.70 per diluted
share a year earlier. Operating net income, which excludes nonrecurring charges,
was $252.7 million compared with $143.3 million for the second quarter of 2000.
Year earlier results were impacted by an after tax charge of $130 million to
increase the allowance for loan losses. Operating net income from continuing
operations, which excludes the results of the credit card business and
nonrecurring charges, was $230.8 million for the second quarter of 2001 compared
with $104.5 million a year ago. Wachovia expects to complete the sale of its
consumer credit card business later this month.
"We are pleased to report higher than expected revenues in a period of
soft economic growth," said L.M. Baker Jr., chairman and chief executive
officer. "This performance clearly demonstrates the focus of Wachovia employees
in serving customers and building a firm foundation for the proposed merger of
equals with First Union. During the period, we also maintained diligent expense
control and continued to take prudent and aggressive actions to mitigate credit
risk and strengthen loan loss reserves."
Wachovia Corporation (WB) Second Quarter First Six Months
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Operating Earnings Continuing Operations(1) Operating Earnings Continuing Operations(1)
--------------------- ------------------------ --------------------- ------------------------
Financial Summary (2) 2001 2000 2001 2000 2001 2000 2001 2000
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Operating net income ($ millions) $252.7 $143.3 $230.8 $104.5 $505.2 $407.8 $458.2 $326.3
Operating earnings per diluted share $1.22 $.70 $1.11 $.51 $2.44 $2.00 $2.21 $1.60
Total revenue ($ millions) (3) $1,146.0 $1,119.2 $983.8 $938.0 $2,276.1 $2,218.8 $1,957.4 $1,859.1
(1) excludes the results of the credit card business (3) includes taxable equivalent net interest income and other
operating revenue
(2) excludes nonrecurring charges
-Continued-
Reported net income was $245.1 million or $1.18 per diluted share for the
second quarter compared with $137.6 million or $.67 per diluted share a year
ago. Continuing operations, excluding the consumer credit card business, had
earnings of $223.2 million or $1.08 per diluted share for the quarter compared
with $98.7 million or $.48 per diluted share for the same period of 2000.
Included in reported pretax earnings were merger-related charges of $11.7
million relating to Wachovia's acquisition of Republic Security Bank and the
proposed merger of equals with First Union. Second quarter 2000 reported pretax
earnings included $8.9 million in merger-related charges.
Total revenues, excluding securities gains, rose $26.8 million from the
second quarter of 2000 and were up $15.9 million from the first quarter. The net
yield on interest earning assets was 3.97 percent as compared with 4.22 percent
in the second quarter of 2000 and 3.93 percent in the first quarter. Average
loans rose $4.5 billion or 8.7 percent from the second quarter of 2000, with
strong growth in commercial and residential real estate as well as other retail
loans that exceeded declines in the commercial and credit card portfolios.
During the quarter, Wachovia took advantage of the lower rate environment
by realizing gains on securities transactions. These gains offset the increased
provision for loan losses resulting from aggressive actions to reduce credit
exposures and strengthen reserves. The provision for loan losses was $215.7
million for the second quarter compared with $121.5 million in the first
quarter. At June 30, 2001, the allowance for loan losses represented 1.60
percent of outstanding loans, compared with 1.50 percent at the end of the first
quarter. Nonperforming loans were down $30 million from March 31, 2001, to $380
million at June 30, 2001. Net loan losses of $160.1 million for the second
quarter were above the $118.7 million reported in the first quarter, in part
reflecting loan sales. As a percentage of average loans outstanding, net loan
losses were 1.13 percent for the second quarter 2001 compared with .85 percent
in the first quarter.
Operating expense, excluding nonrecurring charges, increased modestly
from the second quarter of 2000 and first quarter 2001.
Wachovia will hold a conference call to discuss these results on July 11,
2001, at 10 a.m. (Eastern Time). The call will be available via the Internet at
www.wachovia.com/investor/earnings.asp or by calling 719-457-2637. Replays of
the conference call will be available from 2 p.m. July 11 until midnight July 18
at the same Internet address or by phone (719-457-0820, access code 730974).
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.
Shareholders are urged to read the joint proxy statement/prospectus
regarding the proposed merger between First Union and Wachovia and any other
relevant documents filed with the SEC because they contain important
information. Shareholders may obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing information about
First Union and Wachovia, without charge, at the SEC's Internet site
(http://www.sec.gov). Copies of the joint proxy statement/prospectus and other
SEC filings that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, from First Union,
Investor Relations, One First Union Center, Charlotte, North Carolina 28288-0206
(704-374-6782), or from Wachovia, Investor Relations, 100 North Main Street,
Winston-Salem, North Carolina 27150 (866-883-0789).
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 Six Months Ended
June 30 June 30
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Percent Percent
2001 2000 Variance 2001 2000 Variance
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SELECTED AVERAGE
BALANCES
(millions)
Total assets $ 75,031 $ 69,466 8.0 $ 74,419 $ 68,610 8.5
Loans - net of unearned income 56,680 52,133 8.7 56,172 51,342 9.4
Securities 8,820 8,407 4.9 8,903 8,401 6.0
Other interest-earning assets 1,301 1,241 4.8 1,263 1,243 1.6
Total interest-earning assets 66,801 61,781 8.1 66,338 60,986 8.8
Interest-bearing deposits 37,049 35,663 3.9 36,392 35,268 3.2
Short-term borrowed funds 9,918 8,621 15.0 10,056 8,771 14.7
Long-term debt 10,300 8,851 16.4 10,509 8,466 24.1
Total interest-bearing liabilities 57,267 53,135 7.8 56,957 52,505 8.5
Noninterest-bearing deposits 8,460 8,373 1.0 8,363 8,346 0.2
Total deposits 45,509 44,036 3.3 44,755 43,614 2.6
Shareholders' equity 6,528 5,833 11.9 6,484 5,760 12.6
CREDIT QUALITY DATA
(thousands)
Nonperforming assets $401,735 $298,716 34.5 $401,735 $298,716 34.5
Nonperforming loans 379,774 283,577 33.9 379,774 283,577 33.9
Net loan losses 160,128 72,958 119.5 278,845 146,283 90.6
Net loan losses excluding credit
cards 85,509 22,585 278.6 146,447 43,156 239.3
Allowance for loan losses 906,674 799,351 13.4 906,674 799,351 13.4
Nonperforming assets to total
loans and foreclosed property .71% .56% .71% .56%
Annualized net loan losses to
average loans 1.13 .56 .99 .57
Annualized net loan losses to
average loans excluding
credit cards .66 .19 .57 .19
Allowance for loans losses to
total loans 1.60 1.50 1.60 1.50
Allowance for loan losses coverage
of nonperforming loans 2.39 x 2.82 x 2.39 x 2.82 x
SELECTED FINANCIAL DATA AT PERIOD-END
(millions, except per share data)
Total assets $74,828 $ 70,811 5.7
Interest-earning assets 66,467 63,244 5.1
Loans - net of unearned income 56,739 53,152 6.7
Deposits 44,278 42,586 4.0
Shareholders' equity 6,455 5,936 8.7
Shareholders' equity to total assets 8.63% 8.38%
Risk-based capital ratios:
Tier I capital 7.3 (1) 7.4
Total capital 11.2 (1) 11.1
Per share:
Book value $ 31.75 $ 29.20 8.7
Common stock closing price (NYSE) $ 71.15 $ 54.25 31.2
Common shares outstanding (thousands) 203,323 203,267
(1) Estimated
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 Six Months Ended
June 30 June 30
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Percent Percent
2001 2000 Variance 2001 2000 Variance
---------------- --------------- ----------- ---------------- ---------------- ---------
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income -
taxable equivalent $1,277,865 $1,334,665 (4.3) $2,636,724 $2,589,323 1.8
Interest expense 617,446 685,729 (10.0) 1,337,801 1,311,590 2.0
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Net interest income -
taxable equivalent 660,419 648,936 1.8 1,298,923 1,277,733 1.7
Taxable equivalent adjustment 7,325 9,554 (23.3) 15,988 18,855 (15.2)
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Net interest income 653,094 639,382 2.1 1,282,935 1,258,878 1.9
Provision for loan losses 215,720 273,365 (21.1) 337,220 347,031 (2.8)
---------------- --------------- ---------------- ----------------
Net interest income after
provision for loan losses 437,374 366,017 19.5 945,715 911,847 3.7
Other operating revenue 485,572 470,299 3.2 977,158 941,098 3.8
Securities gains (losses) 97,180 59 106,256 226
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Total other income 582,752 470,358 23.9 1,083,414 941,324 15.1
Personnel expense 351,022 335,491 4.6 685,695 679,372 0.9
Merger-related charges 11,670 8,872 11,670 17,030
Litigation settlement charge - - - 20,000
Restructuring charge - - 13,152 -
Other expense 278,193 286,928 (3.0) 562,090 552,867 1.7
---------------- --------------- ---------------- ----------------
Total other expense 640,885 631,291 1.5 1,272,607 1,269,269 0.3
Income before income taxes 379,241 205,084 84.9 756,522 583,902 29.6
Applicable income taxes 134,128 67,513 98.7 269,317 201,624 33.6
---------------- --------------- ---------------- ----------------
Net income $ 245,113 $ 137,571 78.2 $ 487,205 $ 382,278 27.4
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Net income per common share:
Basic $ 1.19 $ .68 75.0 $ 2.37 $ 1.89 25.4
Diluted $ 1.18 $ .67 76.1 $ 2.35 $ 1.87 25.7
Cash dividends paid per
common share $ .60 $ .54 11.1 $ 1.20 $ 1.08 11.1
Average basic shares
outstanding 205,595 202,728 1.4 205,827 202,596 1.6
Average diluted shares
outstanding 207,123 204,572 1.2 207,345 204,392 1.4
PERFORMANCE RATIOS
(averages)
Annualized net yield on
interest-earning assets 3.97% 4.22% 3.95% 4.21%
Annualized return on assets 1.31 .79 1.31 1.11
Annualized return on
shareholders' equity 15.02 9.43 15.03 13.27
Overhead ratio 55.92 56.40 55.91 57.20
OPERATING PERFORMANCE (1)
Net income $ 252,698 $ 143,337 76.3 $ 505,239 $ 407,847 23.9
Net income per diluted
common share $ 1.22 $ .70 74.3 $ 2.44 $ 2.00 22.0
Annualized return on assets 1.35% .83% 1.36% 1.19%
Annualized return on
shareholders' equity 15.49 9.83 15.59 14.16
Overhead ratio 54.91 55.61 54.82 55.54
CASH-BASIS FINANCIAL
INFORMATION (1), (2)
Net income $ 275,496 $ 162,566 69.5 $ 548,322 $ 444,155 23.5
Net income per diluted
common share $ 1.33 $ .79 68.4 $ 2.64 $ 2.17 21.7
Annualized return on assets 1.50% .95% 1.50% 1.32%
Annualized return on
shareholders' equity 21.50 13.84 21.22 19.02
Overhead ratio 52.46 53.48 52.49 53.52
(1) Excludes the effects of 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
DISCONTINUED OPERATIONS
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CONSUMER CREDIT CARD BUSINESS
PRESENTED AS DISCONTINUED OPERATIONS
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The following schedules have been prepared in accordance with Generally Accepted
Accounting Principles to present Wachovia's consumer credit card business as
discontinued operations.
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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 CONSUMER CREDIT CARD BUSINESS
FINANCIAL SUMMARY PRESENTED AS DISCONTINUED OPERATIONS
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Quarter Ended Six Months Ended
June 30 June 30
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Percent Percent
2001 2000 Variance 2001 2000 Variance
----------- ---------------- ----------- ---------------- --------------- -----------
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income -
taxable equivalent $1,139,462 $1,167,899 (2.4) $ 2,349,465 $2,260,720 3.9
Interest expense 566,794 613,129 (7.6) 1,225,235 1,171,107 4.6
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Net interest income -
taxable equivalent 572,668 554,770 3.2 1,124,230 1,089,613 3.2
Taxable equivalent adjustment 7,325 9,554 (23.3) 15,988 18,855 (15.2)
----------- ---------------- ---------------- ---------------
Net interest income 565,343 545,216 3.7 1,108,242 1,070,758 3.5
Provision for loan losses 143,809 223,169 (35.6) 210,373 244,212 (13.9)
----------- ---------------- ---------------- ---------------
Net interest income after
provision for loan losses 421,534 322,047 30.9 897,869 826,546 8.6
Other operating revenue 411,125 383,215 7.3 833,185 769,455 8.3
Securities gains (losses) 97,180 59 106,256 226
----------- ---------------- ---------------- ---------------
Total other income 508,305 383,274 32.6 939,441 769,681 22.1
Personnel expense 338,599 321,485 5.3 660,225 650,937 1.4
Merger-related charges 11,670 8,872 11,670 17,030
Litigation settlement charge - - - 20,000
Restructuring charge - - 13,152 -
Other expense 235,362 231,946 1.5 470,927 454,719 3.6
----------- ---------------- ---------------- ---------------
Total other expense 585,631 562,303 4.1 1,155,974 1,142,686 1.2
Income from continuing operations
before income tax expense 344,208 143,018 140.7 681,336 453,541 50.2
Income tax expense 121,030 44,287 173.3 241,207 152,843 57.8
----------- ---------------- ---------------- ---------------
Income from continuing operations 223,178 98,731 126.0 440,129 300,698 46.4
Income from discontinued operations
(net of income tax) 21,935 38,840 (43.5) 47,076 81,580 (42.3)
----------- ---------------- ---------------- ---------------
NET INCOME $ 245,113 $ 137,571 78.2 $ 487,205 $ 382,278 27.4
=========== ================ ================ ===============
Net income per common share -
continuing operations
Basic $ 1.09 $ .49 122.4 $ 2.14 $ 1.48 44.6
Diluted $ 1.08 $ .48 125.0 $ 2.12 $ 1.47 44.2
Net income per common share:
Basic $ 1.19 $ .68 75.0 $ 2.37 $ 1.89 25.4
Diluted $ 1.18 $ .67 76.1 $ 2.35 $ 1.87 25.7
Cash dividends paid per
common share $ .60 $ .54 11.1 $ 1.20 $ 1.08 11.1
Average basic shares
outstanding 205,595 202,728 1.4 205,827 202,596 1.6
Average diluted shares
outstanding 207,123 204,572 1.2 207,345 204,392 1.4
PERFORMANCE RATIOS
(averages)
Annualized net yield on
interest-earning assets 3.69% 3.92% 3.67% 3.90%
Annualized return on assets (2) 1.27 .61 1.26 .95
Annualized return on
shareholders' equity (2) 14.50 7.27 14.41 11.20
Overhead ratio 59.53 59.95 59.06 61.47
OPERATING PERFORMANCE
EXCLUDING NONRECURRING
ITEMS (1)
Net income $ 230,763 $ 104,497 120.8 $ 458,163 $ 326,267 40.4
Net income per diluted
common share $ 1.11 $ .51 117.6 $ 2.21 $ 1.60 38.1
Annualized return on assets (2) 1.31% .65% 1.32% 1.03%
Annualized return on
shareholders' equity (2) 14.99 7.70 15.00 12.15
Overhead ratio 58.34 59.00 57.79 59.47
(1) Excludes the effects of nonrecurring merger-related, litigation settlement
and restructuring charges
(2) Computed as income from continuing operations divided by assets and equity
attributable to continuing operations
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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 CONSUMER CREDIT CARD BUSINESS
FINANCIAL SUMMARY PRESENTED AS DISCONTINUED OPERATIONS
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Quarter Ended Six Months Ended
June 30 June 30
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Percent Percent
2001 2000 Variance 2001 2000 Variance
-------------- ----------- ------------- --------------- --------------- ------------
SELECTED AVERAGE
BALANCES
(millions)
Total assets $ 70,613 $ 64,792 9.0 $ 70,042 $ 63,911 9.6
Loans - net of unearned income 52,225 47,451 10.1 51,762 46,586 11.1
Securities 8,744 8,323 5.1 8,823 8,331 5.9
Other interest-earning assets 1,286 1,206 6.6 1,247 1,214 2.7
Total interest-earning assets 62,255 56,980 9.3 61,832 56,131 10.2
Interest-bearing deposits 37,049 35,663 3.9 36,392 35,268 3.2
Short-term borrowed funds 6,845 5,376 27.3 7,014 5,504 27.4
Long-term debt 8,983 7,460 20.4 9,205 7,066 30.3
Total interest-bearing liabilities 52,877 48,499 9.0 52,611 47,838 10.0
Noninterest-bearing deposits 8,460 8,373 1.0 8,363 8,346 0.2
Total deposits 45,509 44,036 3.3 44,755 43,614 2.6
Shareholders' equity 6,528 5,833 11.9 6,484 5,760 12.6
CREDIT QUALITY DATA
(thousands)
Nonperforming assets $400,515 $297,472 34.6 $400,515 $297,472 34.6
Nonperforming loans 378,554 282,333 34.1 378,554 282,333 34.1
Net loan losses 85,717 22,762 276.6 146,998 43,464 238.2
Allowance for loan losses 756,768 644,445 17.4 756,768 644,445 17.4
Nonperforming assets to total
loans and foreclosed property .77% .61% .77% .61%
Annualized net loan losses to
average loans .66 .19 .57 .19
Allowance for loans losses to
total loans 1.45 1.33 1.45 1.33
Allowance for loan losses coverage
of nonperforming loans 2.00 x 2.28 x 2.00 x 2.28 x
SELECTED FINANCIAL DATA AT PERIOD-END
(millions, except per share data)
Total assets $ 70,303 $ 66,172 6.2
Interest-earning assets 61,832 58,491 5.7
Loans - net of unearned income 52,160 48,522 7.5
Deposits 44,278 42,586 4.0
Shareholders' equity 6,455 5,936 8.7
Shareholders' equity to total assets 9.18% 8.97%
Risk-based capital ratios:
Tier I capital 7.3(1) 7.4
Total capital 11.2(1) 11.1
Per share:
Book value $ 31.75 $ 29.20 8.7
Common stock closing price (NYSE) $ 71.15 $ 54.25 31.2
Common shares outstanding (thousands) 203,323 203,267
(1) Estimated