EXHIBIT 99(c)
[First Union
logo appears here]
2nd Quarter 2001
Earnings Review
July 12, 2001
Second Quarter 2001 Financial [First Union
Highlights logo appears here]
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Versus 1Q 2001
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o Exceeded market expectations with EPS of $.73 per share on a cash operating
basis or $.66 per share on an operating basis
o Total revenue up 3%, 11% annualized, and up in all three core businesses
- 24% annualized increase in operating earnings versus 1Q01
- General Bank had an outstanding quarter, displaying continued improvement
o Continued strong expense control evident and FTEs declined over 1,900
o Low cost core deposits grew 4%
o Provided $30 million in excess of net charge-offs and provision for loans
sold or transferred to AHFS
o Continued proactive management of loan portfolio through loan sales
o Total NPAs declined 6% or $104 million
o Tier 1 capital ratio increased for the 4th consecutive quarter to 7.40%
o Completed strategic repositioning on time and on budget
1
[First Union
Summary Operating Results logo appears here]
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Operating Earnings Summary 2001 2000
------------------ ------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions, except per share data) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Net interest income (Tax-equivalent) $ 1,742 1,734 1,757 1,860 1,930 - %
Fee and other income 1,629 1,546 1,582 1,645 1,746 5
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Total revenue (Tax-equivalent) 3,371 3,280 3,339 3,505 3,676 3
Provision for loan losses 223 219 192 142 228 2
Noninterest expense 2,169 2,138 2,132 2,328 2,366 1
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Income before income taxes (Tax-equivalent) 979 923 1,015 1,035 1,082 6
Income taxes 299 281 309 307 343 6
Tax-equivalent adjustment 31 32 25 26 25 (3)
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Net income $ 649 610 681 702 714 6 %
Net income (Cash basis) $ 723 684 753 778 807 6 %
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Diluted earnings per share $ 0.66 0.62 0.69 0.71 0.73 6 %
Diluted earnings per share (Cash basis) $ 0.73 0.69 0.76 0.79 0.82 6 %
Return on average stockholders' equity 16.19 % 15.64 15.36 15.76 17.74 -
Return on average tangible
stockholders' equity (Cash basis) 23.35 % 22.91 21.55 22.15 30.18 -
Key Points
o Revenues grew 3% driven by a 5% increase in fee income - operating earnings
were up a solid 6%
o Focus on expenses continues
o Loan loss provision of $223 million exceeds net charge-offs by $66 million
and includes provisions of $36 million related to loans sold and transferred
to assets held for sale
-Net charge-offs $ 157 million
-Impact of sales and transfers to held for sale $ 36
-Additional provision $ 30
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Total $ 223 million
2
[First Union
Key Financial Measures logo appears here]
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Operating Basis Performance Highlights 2001 2000
-------------------- --------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions, except per share data) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Cash operating earnings
Net income $ 723 684 753 778 807 6 %
Diluted earnings per share $ 0.73 0.69 0.76 0.79 0.82 6
Return on average tangible assets 1.19 % 1.15 1.26 1.26 1.30 -
Return on average tangible stockholders' equity 23.35 22.91 21.55 22.15 30.18 -
Overhead efficiency ratio 62.06 % 62.80 61.46 64.17 61.64 -
Operating leverage $ 59 (67) 31 (154) (136) - %
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Other financial data
Fee and other income as % of total revenue 48.32 % 47.13 47.38 46.93 47.50 - %
Average diluted shares (In thousands) 978,185 975,847 990,445 986,763 981,940 -
Actual shares (In thousands) 979,205 981,268 979,963 986,004 986,394 -
Dividends paid per common share $ 0.24 0.24 0.48 0.48 0.48 -
Dividend payout ratio 36.36 % 38.71 69.57 67.42 65.75 -
Book value per share $ 16.49 16.39 15.66 15.00 14.14 1
Tier 1 capital ratio (a) 7.40 % 7.18 7.02 7.00 6.65 -
Total capital ratio (a) 11.48 11.33 11.19 11.32 10.57 -
Leverage ratio (a) 6.01 % 5.88 5.92 5.73 5.34 - %
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Other
FTE employees 67,420 69,362 70,639 70,533 72,890 (3)%
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(a) The second quarter of 2001 is based on estimates.
Key Points
o Period-end actual shares declined with 2.1 million shares repurchased during
the quarter
o Average diluted shares increased due to the vesting of stock awards
o Tier 1 capital ratio improved for the 4th consecutive quarter to 7.40%
3
[First Union
Net Interest Income logo appears here]
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Interest Income Summary 2001 2000
-------------------- --------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Average earning assets $ 204,673 203,720 202,606 211,089 220,061 - %
Average interest-bearing liabilities 185,224 183,995 181,832 190,146 196,954 1
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Interest income (Tax-equivalent) 3,851 4,057 4,289 4,491 4,517 (5)
Interest expense 2,109 2,323 2,532 2,631 2,587 (9)
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Net interest income (Tax-equivalent) $ 1,742 1,734 1,757 1,860 1,930 - %
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Rate earned 7.54 % 8.03 8.44 8.48 8.24 -
Equivalent rate paid 4.13 4.61 4.98 4.96 4.73 -
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Net interest margin 3.41 % 3.42 3.46 3.52 3.51 -
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Key Points
o Margin remained relatively flat despite the declining rate environment as
higher spreads were offset by the 1Q01 securitization and sale of The
Money Store loans and growth in the equity derivatives business
4
[First Union
Fee and Other Income logo appears here]
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Fee and Other Income 2001 2000
-------------------- ------------------------------ 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Service charges and fees $ 486 468 481 508 491 4 %
Commissions 389 375 383 365 375 4
Fiduciary and asset management fees 384 381 387 384 374 1
Advisory, underwriting and other
investment banking fees 238 198 187 148 182 20
Principal investing (58) (43) (43) 34 205 (35)
Other income 190 167 187 206 119 14
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Total fee and other income $ 1,629 1,546 1,582 1,645 1,746 5 %
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Key Points
o Across-the-board increases in all fee categories except principal investing
o Service charges and fees up 4% on strong growth in both the General Bank and
o Corporate and Investment Banking
o Solid asset management and commissions
performance in a challenging market
o Corporate and Investment Banking fees up on increased activity in agency
businesses
o Other income up due to mortgage and home equity-related income
5
[First Union
Noninterest Expense logo appears here]
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Noninterest Expense 2001 2000
--------------------- ------------------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Salaries and employee benefits $ 1,363 1,329 1,243 1,381 1,396 3 %
Occupancy 155 163 150 157 155 (5)
Equipment 198 205 221 213 210 (3)
Advertising 11 9 16 14 31 22
Communications and supplies 111 110 123 117 122 1
Professional and consulting fees 69 73 97 87 82 (5)
Goodwill and other intangible amortization 77 78 80 79 100 (1)
Sundry expense 185 171 202 280 270 8
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Total noninterest expense $ 2,169 2,138 2,132 2,328 2,366 1 %
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FTE employees 67,420 69,362 70,639 70,533 72,890 (3) %
Overhead efficiency ratio (Cash basis) 62.06 % 62.80 61.46 64.17 61.64 -
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Key Points
o Total expenses remained virtually flat
o Personnel expenses up modestly due to impact of lower FTEs offset by incentive
payments on increased revenue
o Sundry expenses increased due to costs associated
with higher loan volume
o Remaining categories down $17 million in total
6
Consolidated Results [First Union
Operating Performance Summary logo appears here]
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First Union Corporation Three Months Ended June 30, 2001
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Performance Summary General Capital Corporate &
(In millions) Bank Management Investment Banking Parent Consolidated
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Income statement data
Net interest income $ 1,128 78 455 50 1,711
Fee and other income 390 771 333 135 1,629
Intersegment revenue 27 (11) (15) (1) -
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Total revenue 1,545 838 773 184 3,340
Provision for loan losses 98 - 93 32 223
Noninterest expense 935 667 490 77 2,169
Income taxes 169 58 37 35 299
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Operating earnings $ 343 113 153 40 649
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Performance and other data
Economic profit $ 251 82 (4) 79 408
Risk adjusted return on capital (RAROC) 38.93 % 45.32 11.74 34.82 25.39
Economic capital $ 3,744 986 6,112 1,382 12,224
Overhead efficiency ratio 59.29 % 79.47 59.93 9.32 62.06
Average loans, net $ 65,501 4,559 41,145 8,007 119,212
Average core deposits $ 99,424 7,976 10,202 1,433 119,035
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Key Points
o Earnings/Profit: General Bank earned over half of operating earnings and 62%
of economic profit
o RAROC: Capital Management reported very strong return; Corporate and
Investment Banking basically covered its cost of capital
o Efficiency Ratio: under 60% except Capital Management which is an inherently
high overhead business
7
General Bank [First Union
Operating Performance Summary logo appears here]
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General Bank 2001 2000
---------------------- --------------------------------- 2 Q 01 2Q 01
Performance Summary Second First Fourth Third Second vs vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01 2Q 00
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Income statement data
Net interest income $ 1,128 1,085 1,093 1,097 1,086 4 %
Fee and other income 390 343 355 352 301 14
Intersegment revenue 27 25 25 24 25 8
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Total revenue 1,545 1,453 1,473 1,473 1,412 6 9 %
Provision for loan losses 98 101 74 52 51 (3)
Noninterest expense 935 908 992 948 966 3 -3 %
Income taxes 169 149 129 154 127 13
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Operating earnings $ 343 295 278 319 268 16 % 28 %
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Performance and other data
Economic profit $ 251 220 183 212 165 14 % 52 %
Risk adjusted return on capital (RAROC) 38.93 % 36.65 31.97 35.33 30.70 -
Economic capital $ 3,744 3,618 3,653 3,615 3,555 3
Overhead efficiency ratio 59.29 % 61.19 65.77 62.89 66.83 -
Average loans, net $ 65,501 63,771 61,735 60,029 58,105 3
Average core deposits $ 99,424 98,415 98,184 97,186 97,499 1 %
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Key Points
o Revenues up 6%; up 4% excluding mortgage contribution
o Fee growth driven by service charges and fees, which increased 7%
o Solid loan growth of 3% and deposits up 1%, driven by strong growth of 4% in
low cost core deposits (DDA, interest checking, savings, and money market
accounts)
o Efficiency ratio below 60% for the first time; 14% growth in economic profit
8
General Bank [First Union
Key Operating Measures logo appears here]
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General Bank Key Metrics 2001 2000
------------------------ ------------------------------------------ 2 Q 01
Second First Fourth Third Second vs
Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Customer overall satisfaction score (a) 6.32 6.29 6.27 6.22 6.19 - %
Online customers (In thousands) 2,903 2,640 2,367 2,149 1,868 10
Financial centers 2,162 2,164 2,193 2,253 2,258 -
ATMs 3,419 3,676 3,772 3,831 3,832 (7)%
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(a) Gallup survey measured on a 1-7 scale; 6.4 = "best in class".
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Key Points
o Financial Centers recorded 9th consecutive quarterly increase in customer
satisfaction measures
o Customer attrition remains stable at 13%, industry average estimated at
approximately 15%
o Online customers grew 263,000 or 10%
9
Capital Management [First Union
Operating Performance Summary logo appears here]
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Capital Management 2001 2000
------------------------ -------------------------------- 2 Q 01
Performance Summary Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Income statement data
Net interest income $ 78 78 89 86 90 - %
Fee and other income 771 765 777 761 752 1
Intersegment revenue (11) (12) (12) (13) (13) (8)
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Total revenue 838 831 854 834 829 1
Provision for loan losses - - - - - -
Noninterest expense 667 659 654 652 624 1
Income taxes 58 59 68 62 70 (2)
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Operating earnings $ 113 113 132 120 135 - %
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Performance and other data
Economic profit $ 82 82 101 90 105 - %
Risk adjusted return on capital (RAROC) 45.32 % 45.93 53.10 48.45 55.54 -
Economic capital $ 986 985 974 979 972 -
Overhead efficiency ratio 79.47 % 79.15 76.66 78.11 75.23 -
Average loans, net $ 4,559 4,497 4,424 4,295 4,250 1
Average core deposits $ 7,976 8,003 7,879 7,935 7,888 - %
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Key Points
o Solid revenue performance during continuing market volatility
o In Retail Brokerage, record bank annuity sales over $700 million drove
increased production
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Capital Management [First Union
Key Operating Measures logo appears here]
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Capital Management Key Metrics 2001 2000
------------------------ -------------------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Trust assets $ 81,879 81,576 85,933 87,922 83,499 - %
Mutual fund assets 90,279 86,767 84,797 85,223 82,131 4
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Total assets under management $ 172,158 168,343 170,730 173,145 165,630 2 %
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Gross fluctuating mutual fund sales $ 1,981 1,983 1,762 1,819 1,656 - %
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Assets under care (Excluding AUM) $ 499,847 489,380 485,516 500,962 507,193 2 %
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Registered representatives (Actual) 7,706 7,784 7,459 7,342 7,091 (1)
Brokerage offices (Actual) 2,690 2,695 2,568 2,623 2,604 - %
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Key Points
o Mutual funds surpassed $90 billion for the first time - equity increased 5%,
money market up 4%, and fixed income stable
o Despite unsettled market conditions, total assets under management increased
2% to $172 billion as both trust and mutual funds gained net new assets
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Corporate and Investment Banking [First Union
Operating Performance Summary logo appears here]
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Corporate and Investment Banking 2001 2000
Performance Summary ------------------------ -------------------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Income statement data
Net interest income $ 455 425 415 398 376 7 %
Fee and other income 333 312 268 363 533 7
Intersegment revenue (15) (12) (13) (12) (12) (25)
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Total revenue 773 725 670 749 897 7
Provision for loan losses 93 70 124 83 126 33
Noninterest expense 490 467 431 498 509 5
Income taxes 37 38 (53) 30 63 (3)
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Operating earnings $ 153 150 168 138 199 2 %
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Performance and other data
Economic profit $ (4) (22) 28 (25) 72 82 %
Risk adjusted return on capital (RAROC) 11.74 % 10.60 13.81 10.38 16.91 -
Economic capital $ 6,112 6,278 6,259 6,167 5,940 (3)
Overhead efficiency ratio 59.93 % 60.85 53.28 62.99 54.36 -
Average loans, net $ 41,145 42,511 41,922 42,169 42,787 (3)
Average core deposits $ 10,202 9,465 9,251 9,099 8,928 8%
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Key Points
o Total revenue up 7%
o Net interest income up 7% as fixed income spreads widened in a lower rate
environment
o Fee and other income increased 7% on strong results in agency businesses,
primarily Loan Syndications and M&A, offset by lower trading profits after a
record first quarter
o Expenses up primarily due to higher incentive payments as a result of
increased revenue, especially in agency businesses
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[First Union
Loan and Deposit Growth logo appears here]
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Average Balance Sheet Data 2001 2000
------------------------ ------------------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Commercial loans $ 76,378 77,270 76,253 75,380 75,951 (1)%
Consumer loans 42,834 42,580 43,840 48,095 56,663 1
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Total loans $119,212 119,850 120,093 123,475 132,614 (1)%
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Core interest-bearing deposits $ 91,654 91,149 91,069 89,637 89,285 1 %
Noninterest-bearing deposits 27,381 27,043 27,875 28,437 28,971 1
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Total core deposits 119,035 118,192 118,944 118,074 118,256 1
Foreign and other time deposits 17,944 19,090 19,385 25,038 22,948 (6)
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Total deposits $136,979 137,282 138,329 143,112 141,204 - %
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Key Points
o Solid consumer loan growth of 2% and small business up 5%, excluding
divesitures and securitizations
o Core deposits up 1%, despite an average impact of $434 million from
divestitures; low cost core deposits up $2.6 billion excluding divestitures
o Reduced purchased deposits due to core deposit growth and lower cost
alternatives
13
[First Union
Restructuring Update logo appears here]
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Restructuring Charges and Other Charges/Gains 2001 2000
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Second First Fourth Third Second
(In millions) Quarter Quarter Quarter Quarter Quarter
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Restructuring charges
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Total restructuring charges $ (73) - - 30 2,099
Reversal of March 1999 and other accruals - (14) (1) (2) -
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Total (73) (14) (1) 28 2,099
Merger-related charges 4 16 34 24 11
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Total (69) 2 33 52 2,110
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Other charges/gains
Provision for loan losses - - - 180 802
Service charges and fees - - - 2 44
Other income (1) (28) (171) (540) 768
Other noninterest expense 97 69 212 68 27
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Total other charges/gains 96 41 41 (290) 1,641
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Total restructuring and other charges/gains 27 43 74 (238) 3,751
Income taxes (benefits) (11) (17) (38) 88 (838)
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After-tax restructuring, merger-related
and other charges/gains $ 16 26 36 (150) 2,913
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Key Points
o Completed June 2000 strategic repositioning efforts on schedule and on budget
o $73 million reversal due to favorable variances on occupancy and contract
termination costs, and lower severance costs
o $97 million other noninterest expense largely comprised of related personnel
expense to right-size staff and support functions, real estate consolidation
expenses, contract termination costs and professional fees
14
[First Union
Asset Quality logo appears here]
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Asset Quality 2001 2000
---------------------- -------------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Nonperforming assets
Loans $ 1,223 1,231 1,176 854 791 (1) %
Other real estate 104 106 103 97 93 (2)
Loans in assets held for sale 250 344 334 349 331 (27)
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Total nonperforming assets $ 1,577 1,681 1,613 1,300 1,215 (6) %
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as % of loans, net 1.08 % 1.09 1.03 0.77 0.69 -
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as % of loans, net, including assets held for sale 1.23 % 1.30 1.22 0.98 0.87 -
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Allowance for loan losses
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Balance, end of period $ 1,760 1,759 1,722 1,720 1,706 - %
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as % of loans, net 1.44 % 1.43 1.39 1.39 1.33 -
as % of nonaccrual and restructured loans (a) 144 143 146 202 215 -
as % of nonperforming assets (a) 133 % 132 135 181 193 -
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Loan losses, net $ 157 159 192 142 228 (1) %
Commercial, as % of average commercial loans 0.55 % 0.56 0.80 0.53 0.73 -
Consumer, as % of average consumer loans 0.48 0.48 0.36 0.35 0.63 -
Total, as % of average loans, net 0.52 % 0.53 0.64 0.46 0.69 -
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(a) These ratios do not include nonperforming loans included in other assets as
held for sale.
Loans 90 days past due were $213 million, $220 million, $183 million, $145
million and $84 million in the second and first quarters of 2001 and in the
fourth, third and second quarters of 2000, respectively.
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Key Points
o Total NPAs declined 6%
o Allowance increased to 1.44% of net loans
o Provision exceeded charge-offs by $66 million including the provision for
loans sold or transferred to held for sale
o Delinquencies 90 days past due were $213 million vs. $220 million at March 31;
consumer delinquencies were $187 million as of June 30
o Net charge-offs declined to $157 million or 52 bps
15
[First Union
Nonperforming Assets logo appears here]
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Nonperforming Assets (a) 2001 2000
---------------------- -------------------------------- 2 Q 01
Second First Fourth Third Second vs
(In millions) Quarter Quarter Quarter Quarter Quarter 1 Q 01
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Balance, beginning of period $ 1,337 1,279 951 884 1,270 5 %
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Commercial loan activity (over $5 million)
New nonaccrual loans and advances 314 266 487 223 242 18
Charge-offs (49) (69) (112) (27) (93) (29)
Transfers (to) from assets held for sale - - 11 (46) (223) -
Payments and return to accrual status (50) (59) (22) (29) (11) 15
Sales (54) - (15) - - -
Other (activity under $5 million) (100) (53) (69) (93) (78) -
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Commercial loan activity 61 85 280 28 (163) (28)
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Consumer loan activity
Transfers to assets held for sale (123) (90) - - (243) (37)
Other, net 52 63 48 39 20 (17)
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Consumer loan activity (71) (27) 48 39 (223) -
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Change in nonperforming assets (10) 58 328 67 (386) -
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Balance, end of period $ 1,327 1,337 1,279 951 884 (1) %
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(a) Excludes nonperforming loans included in assets held for sale, which in the second and first quarters of 2001 and in the
fourth, third and second quarters of 2000 were $250 million, $344 million, $334 million, $349 million and $331 million,
respectively.
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Key Points
o Transferred $123 million of consumer NPLs to assets held for sale; sale
expected to close in 3Q01
o NPAs including assets held for sale declined by $104
million or 6%
16
[First Union
Loans Held for Sale logo appears here]
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Loans Held for Sale 2001 2000
--------------------- ------------------------------
Second First Fourth Third Second
(In millions) Quarter Quarter Quarter Quarter Quarter
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2000 Strategic Repositioning
Balance, beginning of period $ 689 4,263 4,983 6,326 -
Loans transferred to (from) assets held for sale, net (98) - - 719 7,182
Allowance for loan losses related to
loans transferred to assets held for sale - - 2 (166) (856)
Lower of cost or market valuation adjustments (21) (50) (111) - -
Loans sold (190) (3,327) (289) (1,756) -
Other, net (a) (63) (197) (322) (140) -
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Balance, end of period 317 689 4,263 4,983 6,326
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Other (b)
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Balance, end of period 5,646 6,101 3,883 4,108 4,310
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Loans held for sale, end of period $ 5,963 6,790 8,146 9,091 10,636
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(a) Other, net represents primarily loan payments.
(b) Other includes primarily student, mortgage warehouse, home equity and
syndication loans.
Nonperforming loans included in assets held for sale in the second and first
quarters of 2001 and in the fourth, third and second quarters of 2000 were $250
million, $344 million, $334 million, $349 million and $331 million,
respectively.
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Key Points
o Sold $190 million of loans from strategic repositioning portfolio
o $317 million remains from repositioning; sale of $152 million of loans
expected to close in early 3Q01
o Strategic repositioning is now complete
17
[First Union
Summary and Outlook logo appears here]
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2001 - First Union has momentum
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o Strong revenue growth and expense control evident
- Revenue growth in all 3 core businesses
- General Bank has turned the corner
o Reduced NPAs 6% with proactive portfolio management
o Added $30 million to the allowance in excess of charge-offs and provision for
loans sold or transferred to held for sale
o Grew Tier 1 capital 22 bps; 4th consecutive quarter of improvement
2001 First Union Outlook
o Goal is to keep NPAs and coverage ratios consistent with 2Q01 levels
o Revised charge off guidance for full year 2001 from 60-80 bps to 55-65 bps
o Continue to build capital ratios
o Core operating earnings of $.66 per share provides foundation for continued
growth
o Wachovia merger integration planning proceeding on schedule
o Pending approvals, Wachovia merger close to completion; third quarter closing
targeted
18
Cautionary Statement
This presentation may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including, without
limitation, (i) statements about the benefits of the merger between First Union
Corporation and Wachovia Corporation, including future financial and operating
results, cost savings, enhanced revenues, and accretion to reported earnings
that may be realized from the merger; (ii) statements with respect to First
Union's plans, objectives, expectations and intentions and other statements that
are not historical facts; and (iii) other statements identified by words such as
"believes", "expects", "anticipates", "estimates", "intends", "plans",
"targets", "projects" and similar expressions. These statements are based upon
the current beliefs and expectations of First Union's management and are subject
to significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements.
Thefollowing factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements: (1) the risk that the businesses of First Union and
Wachovia will not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected revenue
synergies and cost savings from the merger may not be fully realized or realized
within the expected time frame; (3) revenues following the merger may be lower
than expected; (4) deposit attrition, operating costs, customer loss and
business disruption following the merger, including, without limitation,
difficulties in maintaining relationships with employees, may be greater than
expected; (5) the ability to obtain governmental approvals of the merger on the
proposed terms and schedule; (6) the failure of First Union's and Wachovia's
stockholders to approve the merger; (7) competitive pressures among depository
and other financial institutions may increase significantly and have an effect
on pricing, spending, third-party relationships and revenues; (8) the strength
of the United States economy in general and the strength of the local economies
in which First Union conducts operations may be different than expected
resulting in, among other things, a deterioration in credit quality or a reduced
demand for credit, including the resultant effect on First Union's loan
portfolio and allowance for loan losses; (9) changes in the U.S. and foreign
legal and regulatory framework; and (10) adverse conditions in the stock market,
the public debt market and other capital markets (including changes in interest
rate conditions) and the impact of such conditions on First Union's and the
combined company's capital markets and asset management activities. Additional
factors that could cause First Union's results to differ materially from those
described in the forward-looking statements can be found in First Union's
reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K) filed with the Securities and Exchange Commission
and available at the SEC's Internet site (http://www.sec.gov). All subsequent
written and oral forward-looking statements concerning the proposed transaction
with Wachovia or other matters attributable to First Union or any person acting
on its behalf are expressly qualified in their entirety by the cautionary
statements above. First Union does not undertake any obligation to update any
forward-looking statement to reflect circumstances or events that occur after
the date the forward-looking statements are made.
Additional Information
The proposed merger between First Union and Wachovia will be submitted to First
Union's and Wachovia's stockholders for their consideration. Stockholders are
urged to read the definitive joint proxy statement/prospectus regarding the
proposed transaction and any other relevant documents filed with the SEC, as
well as any amendments or supplements to those documents, because they contain
(or will contain) important information. You will be able to obtain a free copy
of the joint proxy statement/prospectus, as well as other filings containing
information about First Union and Wachovia, at the SEC's Internet site
(http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC
filings that have been or will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, by directing a
request to First Union, Investor Relations, One First Union Center, Charlotte,
North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor Relations,
100 North Main Street, Winston-Salem, North Carolina 27150 (888-492-6397).
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