EXHIBIT (20) LETTER FROM THE CHAIRMAN Our earnings in the first quarter of 1994 were $217 million, a 12 percent increase from $193 million in the first quarter of 1993 and 14 percent from $190 million in the fourth quarter of 1993. Net income per common share increased to $1.27 from $1.17 in the first quarter of 1993 and $1.12 in the fourth quarter of 1993. This strong first quarter reflects our ability to improve performance in a rising interest rate environment. Our focus is on providing the best service and a complete array of financial products for our customers, while improving our productivity and credit quality. We will continue to make selective investments in such areas as capital markets, capital management and card products to further our financial goals. Key factors in First Union's first quarter 1994 earnings performance since the fourth quarter of 1993 included continued growth in net interest income; improvement in credit quality, including a $120 million reduction in nonperforming assets since year-end, lower charge-offs and a lower loan loss provision; and a $48 million decline in noninterest expense. Tax-equivalent net interest income increased to $750 million from $696 million in the first quarter of 1993 and $733 million in the fourth quarter of 1993. Nonperforming assets declined to $796 million, or 1.70 percent of net loans and foreclosed properties, at March 31, 1994, compared with $1.268 billion, or 3.07 percent, at the end of the first quarter a year ago, and $916 million, or 1.95 percent, at December 31, 1993. Net loans at March 31, 1994, were $46.7 billion, compared with $40.9 billion at the end of first quarter of 1993 and $46.9 billion at year- end 1993. Since year-end, commercial and consumer loan growth has been partially offset by the planned runoff of acquired loans and lower balances of mortgages held for sale. Deposits were $52.1 billion at March 31, 1994, compared with $47.9 billion at the end of the first quarter a year ago and $53.7 billion at year- end 1993. Total stockholders' equity was $5.28 billion at March 31, 1994, compared with $4.66 billion at March 31, 1993 and $5.21 billion at year-end. Results for the first quarter of 1993 do not include the purchase accounting acquisitions of Georgia Federal Bank and First American Metro Corp. in June 1993. At March 31, 1994, First Union had assets of $72.2 billion and operated 1,308 banking offices in Florida, North Carolina, Georgia, Virginia, South Carolina, Tennessee, Maryland and Washington, D.C., and 206 nonbanking offices in 39 states. Thank you for your interest in First Union. Sincerely, (Signature of Edward E. Crutchfield Jr.) Edward E. Crutchfield Jr., Chairman and Chief Executive Officer FINANCIAL TABLES FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED) OTHER FINANCIAL DATA 1994 1993 (DOLLARS IN THOUSANDS) 1Q 4Q 3Q 2Q RETURN ON AVERAGE ASSETS (A)(B) 1.28% 1.07 1.08 1.39 RETURN ON AVERAGE COMMON EQUITY (A)(C) 17.54 15.55 16.11 19.93 NET INTEREST MARGIN 4.79 4.61 4.65 4.92 ALLOWANCE AS % OF LOANS, NET 2.17 2.18 2.23 2.26 ALLOWANCE AS % OF NONACCRUAL AND RESTRUCTURED LOANS 168 147 112 110 ALLOWANCE AS % OF NONPERFORMING ASSETS 127% 111 85 81 LOAN LOSSES $ 56,067 86,602 78,797 87,620 LOAN RECOVERIES 24,877 27,406 21,419 15,306 LOAN LOSSES, NET $ 31,190 59,196 57,378 72,314 AS % OF AVERAGE LOANS, NET (A) .27% .51 .50 .69 NONPERFORMING ASSETS (D) COMMERCIAL NONACCRUAL $ 189,759 242,241 321,699 442,411 REAL ESTATE NONACCRUAL 412,748 425,101 580,508 483,428 TOTAL NONACCRUAL LOANS 602,507 667,342 902,207 925,839 RESTRUCTURED LOANS 2,742 26,544 18,617 18,613 FORECLOSED PROPERTIES 191,153 222,503 288,818 328,735 TOTAL NONPERFORMING ASSETS $ 796,402 916,389 1,209,642 1,273,187 AS % OF LOANS, NET AND FORECLOSED PROPERTIES 1.70% 1.95 2.60 2.75 SOUTHEAST SEGREGATED LOSS-SHARING NONPERFORMING ASSETS NONACCRUAL LOANS $ 234,907 254,496 282,239 327,301 FORECLOSED PROPERTIES 103,330 126,019 142,347 150,527 TOTAL 338,237 380,515 424,586 477,828 LESS FDIC LOSS-SHARING (E) (287,501) (323,438) (360,898) (406,154) TOTAL $ 50,736(F) 57,077 63,688 71,674 1Q (DOLLARS IN THOUSANDS) RETURN ON AVERAGE ASSETS (A)(B) 1.28 RETURN ON AVERAGE COMMON EQUITY (A)(C) 18.41 NET INTEREST MARGIN 5.00 ALLOWANCE AS % OF LOANS, NET 2.29 ALLOWANCE AS % OF NONACCRUAL AND RESTRUCTURED LOANS 98 ALLOWANCE AS % OF NONPERFORMING ASSETS 74 LOAN LOSSES 76,541 LOAN RECOVERIES 13,742 LOAN LOSSES, NET 62,799 AS % OF AVERAGE LOANS, NET (A) .61 NONPERFORMING ASSETS (D) COMMERCIAL NONACCRUAL 414,523 REAL ESTATE NONACCRUAL 527,052 TOTAL NONACCRUAL LOANS 941,575 RESTRUCTURED LOANS 14,529 FORECLOSED PROPERTIES 312,046 TOTAL NONPERFORMING ASSETS 1,268,150 AS % OF LOANS, NET AND FORECLOSED PROPERTIES 3.07 SOUTHEAST SEGREGATED LOSS-SHARING NONPERFORMING ASSETS NONACCRUAL LOANS 398,148 FORECLOSED PROPERTIES 137,136 TOTAL 535,284 LESS FDIC LOSS-SHARING (E) (454,991) TOTAL 80,293 (A) QUARTERLY AMOUNTS ANNUALIZED. (B) BASED ON NET INCOME. (C) BASED ON NET INCOME APPLICABLE TO COMMON STOCKHOLDERS AND AVERAGE COMMON STOCKHOLDERS' EQUITY EXCLUDING AVERAGE NET UNREALIZED GAINS ON DEBT AND EQUITY SECURITIES. (D) EXCLUDES NONPERFORMING ASSETS RELATED TO SOUTHEAST BANKS. (E) FOR A FIVE-YEAR PERIOD THAT BEGAN SEPTEMBER 19, 1991, THE FDIC WILL REIMBURSE FIRST UNION FOR 85 PERCENT OF ALL NET CHARGE-OFFS RELATED TO ACQUIRED SOUTHEAST BANKS LOANS EXCEPT INSTALLMENT LOAN REIMBURSEMENTS, WHICH WILL DECLINE 5 PERCENT PER YEAR OVER THE NEXT THREE YEARS FROM 75 PERCENT TO 65 PERCENT BY 1996. (F) ALLOWANCE FOR LOSSES ON SEGREGATED ASSETS AMOUNTED TO $31,308,000 AT MARCH 31, 1994. THIS AMOUNT IS NOT INCLUDED IN THE ALLOWANCE FOR LOAN LOSSES. FINANCIAL TABLES FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED) AVERAGE BALANCE SHEET SUMMARY 1994 1993 (IN THOUSANDS) 1Q 4Q 3Q 2Q LOANS, NET $46,222,187 46,221,733 45,527,753 41,700,679 EARNING ASSETS 62,907,917 63,495,402 62,567,359 57,645,461 TOTAL ASSETS 70,343,508 72,186,652 71,461,778 65,431,136 NONINTEREST-BEARING DEPOSITS 10,072,065 10,609,800 10,067,212 9,079,037 CONSUMER TIME DEPOSITS 39,534,757 39,837,463 40,282,564 36,944,334 OTHER TIME DEPOSITS 2,349,622 2,358,917 2,342,266 2,243,157 COMMON STOCKHOLDERS' EQUITY (A) 5,012,086 4,843,889 4,657,544 4,439,393 TOTAL STOCKHOLDERS' EQUITY (A) $ 5,296,126 5,127,929 4,941,584 4,732,645 1Q 1Q '94 (IN THOUSANDS) 1Q '93 LOANS, NET 40,997,224 12.7% EARNING ASSETS 55,834,237 12.7 TOTAL ASSETS 63,189,523 11.3 NONINTEREST-BEARING DEPOSITS 8,373,863 20.3 CONSUMER TIME DEPOSITS 36,810,038 7.4 OTHER TIME DEPOSITS 1,957,644 20.0 COMMON STOCKHOLDERS' EQUITY (A) 4,251,677 17.9 TOTAL STOCKHOLDERS' EQUITY (A) 4,547,935 16.5% CAPITAL RATIOS (B) TIER 1 CAPITAL 9.27% 9.14 8.63 7.97 TOTAL CAPITAL 14.99 14.64 13.78 12.21 LEVERAGE 6.57% 6.13 5.94 6.20 TIER 1 CAPITAL 9.20 TOTAL CAPITAL 14.58 LEVERAGE 6.45 INTANGIBLE ASSETS (IN THOUSANDS) INTANGIBLE ASSETS GOODWILL $ 703,559 712,485 728,107 738,284 DEPOSIT BASE PREMIUM 240,935 255,359 268,527 272,689 OTHER 9,817 10,468 11,172 11,830 TOTAL $ 954,311 978,312 1,007,806 1,022,803 MORTGAGE SERVICING RIGHTS $ 82,102 87,350 94,432 124,726 CREDIT CARD PREMIUM $ 71,538 75,588 79,893 73,836 (IN THOUSANDS) INTANGIBLE ASSETS GOODWILL 636,079 DEPOSIT BASE PREMIUM 161,765 OTHER 13,390 TOTAL 811,234 MORTGAGE SERVICING RIGHTS 151,348 CREDIT CARD PREMIUM 63,739 (A) AVERAGE COMMON STOCKHOLDERS' EQUITY AND AVERAGE TOTAL STOCKHOLDERS' EQUITY EXCLUDE AVERAGE NET UNREALIZED GAINS ON DEBT AND EQUITY SECURITIES OF $46,966,000. (B) 1994 RATIOS ARE BASED ON ESTIMATES AND EXCLUDE NET UNREALIZED LOSSES ON DEBT AND EQUITY SECURITIES OF $41,826,000. CONSOLIDATED STATEMENTS OF INCOME FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED) THREE MONTHS ENDED (IN THOUSANDS) MARCH 31, 1994 1993 INTEREST INCOME INTEREST AND FEES ON LOANS $ 946,151 891,221 INTEREST AND DIVIDENDS ON SECURITIES AVAILABLE FOR SALE 147,558 70,542 INTEREST AND DIVIDENDS ON INVESTMENT SECURITIES TAXABLE INCOME 18,829 100,717 NON-TAXABLE INCOME 24,610 20,308 TRADING ACCOUNT INTEREST 10,392 5,155 OTHER INTEREST INCOME 15,068 11,959 TOTAL INTEREST INCOME 1,162,608 1,099,902 INTEREST EXPENSE INTEREST ON DEPOSITS 318,684 322,085 INTEREST ON SHORT-TERM BORROWINGS 79,104 65,908 INTEREST ON LONG-TERM DEBT 38,215 39,574 TOTAL INTEREST EXPENSE 436,003 427,567 NET INTEREST INCOME 726,605 672,335 PROVISION FOR LOAN LOSSES 25,000 60,329 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 701,605 612,006 NONINTEREST INCOME TRADING ACCOUNT PROFITS 7,323 5,639 SERVICE CHARGES ON DEPOSIT ACCOUNTS 108,022 97,212 MORTGAGE BANKING INCOME 19,421 38,488 CAPITAL MANAGEMENT INCOME 50,949 50,395 SECURITIES AVAILABLE FOR SALE TRANSACTIONS 4,300 17,316 INVESTMENT SECURITY TRANSACTIONS 615 -- MERCHANT DISCOUNTS 14,361 14,440 INSURANCE COMMISSIONS 9,990 10,265 SUNDRY INCOME 65,715 37,566 TOTAL NONINTEREST INCOME 280,696 271,321 NONINTEREST EXPENSE PERSONNEL EXPENSE 309,640 271,697 OCCUPANCY 60,391 51,801 EQUIPMENT RENTALS, DEPRECIATION AND MAINTENANCE 56,700 45,643 POSTAGE, PRINTING AND SUPPLIES 25,282 19,324 FDIC INSURANCE 29,939 28,406 OWNED REAL ESTATE EXPENSE 5,296 9,823 AMORTIZATION 36,378 54,776 SUNDRY 116,215 96,825 TOTAL NONINTEREST EXPENSE 639,841 578,295 INCOME BEFORE INCOME TAXES 342,460 305,032 INCOME TAXES 120,001 105,040 NET INCOME 222,459 199,992 DIVIDENDS ON PREFERRED STOCK 5,726 7,004 NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 216,733 192,988 FINANCIAL TABLES FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED) FINANCIAL HIGHLIGHTS THREE MONTHS ENDED (IN THOUSANDS EXCEPT PER SHARE DATA) MARCH 31, 1994 1993 NET INCOME $ 222,459 199,992 DIVIDENDS ON PREFERRED STOCK 5,726 7,004 NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 216,733 192,988 NET INCOME PER COMMON SHARE $ 1.27 1.17 AVERAGE COMMON SHARES 170,314 165,272 COMMON STOCKHOLDERS' EQUITY (A) $5,033,846 4,359,091 TOTAL STOCKHOLDERS' EQUITY (A) 5,317,886 4,656,312 BOOK VALUE PER COMMON SHARE $ 29.71 26.23 ACTUAL COMMON SHARES 169,444 166,188 COMMON STOCK PERIOD-END PRICE $ 41.625 47.750 SERIES 1990 PREFERRED STOCK PERIOD-END PRICE $ 52.125 53.000 PERCENT INCREASE (DECREASE) NET INCOME 11.2% DIVIDENDS ON PREFERRED STOCK (18.2) NET INCOME APPLICABLE TO COMMON STOCKHOLDERS 12.3% NET INCOME PER COMMON SHARE 8.5% AVERAGE COMMON SHARES 3.1 COMMON STOCKHOLDERS' EQUITY (A) 15.5 TOTAL STOCKHOLDERS' EQUITY (A) 14.2 BOOK VALUE PER COMMON SHARE 13.3 ACTUAL COMMON SHARES 2.0 COMMON STOCK PERIOD-END PRICE (12.8) SERIES 1990 PREFERRED STOCK PERIOD-END PRICE (1.7)% EARNINGS SUMMARY 1994 1993 (IN THOUSANDS EXCEPT PER SHARE DATA) 1Q 4Q 3Q 2Q 1Q NET INTEREST INCOME (B) $ 750,409 733,280 728,773 708,186 696,422 PROVISION FOR LOAN LOSSES 25,000 49,973 50,001 61,450 60,329 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES (B) 725,409 683,307 678,772 646,736 636,093 SECURITIES AVAILABLE FOR SALE TRANSACTIONS 4,300 2,804 4,142 1,505 17,316 INVESTMENT SECURITY TRANSACTIONS 615 3,049 815 3,571 -- NONINTEREST INCOME 275,781 317,727 287,998 305,356 254,005 NONINTEREST EXPENSE 639,841 687,922 664,388 591,042 578,295 INCOME BEFORE INCOME TAXES (B) 366,264 318,965 307,339 366,126 329,119 INCOME TAXES 120,001 98,469 84,286 115,465 105,040 TAX-EQUIVALENT ADJUSTMENT 23,804 25,153 27,638 23,890 24,087 NET INCOME 222,459 195,343 195,415 226,771 199,992 DIVIDENDS ON PREFERRED STOCK 5,726 5,489 6,240 6,167 7,004 NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 216,733 189,854 189,175 220,604 192,988 NET INCOME PER COMMON SHARE $ 1.27 1.12 1.12 1.32 1.17 1Q '94 vs. (IN THOUSANDS EXCEPT PER SHARE DATA) 1Q '93 NET INTEREST INCOME (B) 7.8% PROVISION FOR LOAN LOSSES (58.6 ) NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES (B) 14.0 SECURITIES AVAILABLE FOR SALE TRANSACTIONS (75.2 ) INVESTMENT SECURITY TRANSACTIONS -- NONINTEREST INCOME 8.6 NONINTEREST EXPENSE 10.6 INCOME BEFORE INCOME TAXES (B) 11.3 INCOME TAXES 14.2 TAX-EQUIVALENT ADJUSTMENT (1.2 ) NET INCOME 11.2 DIVIDENDS ON PREFERRED STOCK (18.2 ) NET INCOME APPLICABLE TO COMMON STOCKHOLDERS 12.3% NET INCOME PER COMMON SHARE 8.5% (A) COMMON STOCKHOLDERS' EQUITY AND TOTAL STOCKHOLDERS' EQUITY EXCLUDE NET UNREALIZED LOSSES ON DEBT AND EQUITY SECURITIES OF $41,826,000. (B) TAX-EQUIVALENT. BOARD OF DIRECTORS G. ALEX BERNHARDT President, Bernhardt Furniture Company Lenoir, North Carolina W. WALDO BRADLEY Chairman, Bradley Plywood Corporation Savannah, Georgia ROBERT J. BROWN Chairman and President, B&C Associates Inc. High Point, North Carolina EDWARD E. CRUTCHFIELD JR. Chairman and Chief Executive Officer, First Union Corporation Charlotte, North Carolina ROBERT D. DAVIS Chairman, D.D.I. Inc. Jacksonville, Florida R. STUART DICKSON Chairman, Ruddick Corporation Charlotte, North Carolina B.F. DOLAN Investor Charlotte, North Carolina RODDEY DOWD SR. Chairman, Charlotte Pipe & Foundry Co. Charlotte, North Carolina JOHN R. GEORGIUS President, First Union Corporation Charlotte, North Carolina WILLIAM H. GOODWIN JR. Chairman, AMF Companies Richmond, Virginia BRENTON S. HALSEY Chairman Emeritus, James River Corporation Richmond, Virginia HOWARD H. HAWORTH President, The Haworth Group Morganton, North Carolina TORRENCE E. HEMBY JR. President, Beverly Crest Corporation Charlotte, North Carolina LEONARD G. HERRING President and Chief Executive Officer, Lowe's Companies Inc. North Wilkesboro, North Carolina JACK A. LAUGHERY Investor Rocky Mount, North Carolina MAX LENNON President, Clemson University Clemson, South Carolina RADFORD D. LOVETT Chairman, Commodores Point Terminal Corporation Jacksonville, Florida HENRY D. PERRY JR. Physician Plantation, Florida RANDOLPH N. REYNOLDS President and Chief Executive Officer, Reynolds Metal Company Richmond, Virginia RUTH G. SHAW Vice President, Duke Power Company Charlotte, North Carolina LANTY L. SMITH Chairman and Chief Executive Officer, Precision Fabrics Group Inc. Greensboro, North Carolina DEWEY L. TROGDON Chairman, Cone Mills Corporation Greensboro, North Carolina JOHN D. UIBLE Investor Jacksonville, Florida B.J. WALKER Vice Chairman, First Union Corporation Jacksonville, Florida KENNETH G. YOUNGER Chairman, Carolina Freight Corporation Cherryville, North Carolina CONSOLIDATED BALANCE SHEETS FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED) (IN THOUSANDS) MARCH 31, 1994 1993 ASSETS CASH AND DUE FROM BANKS $ 3,054,037 2,711,928 INTEREST-BEARING BANK BALANCES 799,569 505,226 FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER RESALE AGREEMENTS 1,438,561 460,904 TOTAL CASH AND CASH EQUIVALENTS 5,292,167 3,678,058 TRADING ACCOUNT ASSETS 820,876 539,606 SECURITIES AVAILABLE FOR SALE 12,665,905 6,899,821 INVESTMENT SECURITIES 2,539,647 6,568,262 LOANS, NET OF UNEARNED INCOME 46,732,424 40,929,438 ALLOWANCE FOR LOAN LOSSES (1,014,001) (938,334) LOANS, NET 45,718,423 39,991,104 PREMISES AND EQUIPMENT 1,535,383 1,335,764 DUE FROM CUSTOMERS ON ACCEPTANCES 220,698 220,741 MORTGAGE SERVICING RIGHTS 82,102 151,348 CREDIT CARD PREMIUM 71,538 63,739 OTHER INTANGIBLE ASSETS 954,311 811,234 SOUTHEAST SEGREGATED ASSETS 306,929 493,359 OTHER ASSETS 2,040,394 2,199,608 TOTAL ASSETS $72,248,373 62,952,644 LIABILITIES AND STOCKHOLDERS' EQUITY DEPOSITS NONINTEREST-BEARING DEPOSITS 10,428,019 8,644,543 INTEREST-BEARING DEPOSITS 41,659,772 39,211,098 TOTAL DEPOSITS 52,087,791 47,855,641 SHORT-TERM BORROWINGS 10,058,342 5,833,296 BANK ACCEPTANCES OUTSTANDING 220,698 220,741 OTHER LIABILITIES 1,450,652 1,451,787 LONG-TERM DEBT 3,154,830 2,934,867 TOTAL LIABILITIES 66,972,313 58,296,332 STOCKHOLDERS' EQUITY PREFERRED STOCK CLASS A, AUTHORIZED 40,000,000 SHARES SERIES A, 11% CUMULATIVE PERPETUAL; $25.00 STATED AND LIQUIDATION VALUE -- -- SERIES A, $2.50 CUMULATIVE CONVERTIBLE, NO PAR VALUE; $25.00 STATED AND LIQUIDATION VALUE -- 13,181 SERIES B, NONE ISSUED -- -- SERIES 1990 CUMULATIVE PERPETUAL ADJUSTABLE RATE, NO PAR VALUE; $5.00 LIQUIDATION VALUE; AUTHORIZED 10,000,000 SHARES 31,592 31,592 COMMON STOCK, $3.33 1/3 PAR VALUE; AUTHORIZED 750,000,000 SHARES 564,812 553,914 PAID-IN CAPITAL 1,555,938 1,446,322 RETAINED EARNINGS 3,165,544 2,611,303 UNREALIZED LOSS ON DEBT AND EQUITY SECURITIES (41,826) -- TOTAL STOCKHOLDERS' EQUITY 5,276,060 4,656,312 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $72,248,373 62,952,644 (First Union logo) FIRST UNION Bulk Rate CORPORATION U.S. Postage Paid Two First Union Center Charlotte, NC Charlotte, NC 28288-0570 Permit No. 736 This First Union quarterly report includes information released to the public and the news media on April 14, 1994. You may obtain a copy of our First Quarter Financial Supplement, which contains more detailed financial and other information, by writing to Investor Relations, Two First Union Center, Charlotte, North Carolina 28288-0206. There is no charge. 1 9 9 4 FIRST UNION CORPORATION FIRST QUARTER REPORT (First Union logo) *************************APPENDIX****************************** There are two First Union logos, one on the front of the outside cover page of the second document and on the back cover (last page of second document) ***************************************************************