FIRST UNION CORPORATION
THIRD QUARTER REPORT
(Logo - First Union)
1995
CONTENTS
Letter from the Chairman
3
News Highlights
4
Financial Tables
6
Board of Directors
16
LONG-TERM PERFORMANCE
DIVIDENDS PER COMMON SHARE
(DOLLARS PER SHARE)
*ANNUALIZED.
(Dividends per Common Share chart appears here. Plot points are as follows:)
0.4 0.8 1.2 1.6 2.0
1978 .29 1995 2.08
BOOK VALUE PER SHARE GROWTH
(IN DOLLARS)
ORIGINALLY REPORTED (ADJUSTED FOR STOCK SPLITS),
NOT RESTATED FOR POOLING OF INTEREST ACQUISITIONS.
(Book Value Per Share Growth chart appears here. Plot points are as follows:)
5 10 15 20 25 30 35
Dec 1978 6.63 September 1995 33.88
1
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BUSINESS PROFILE
FIRST UNION CORPORATION, A BANK HOLDING COMPANY WITH HEADQUARTERS IN CHARLOTTE,
NORTH CAROLINA, HAD ASSETS OF $86.8 BILLION AT SEPTEMBER 30, 1995. ON JUNE 19,
1995, FIRST UNION ANNOUNCED AN AGREEMENT TO ACQUIRE $35 BILLION-ASSET FIRST
FIDELITY BANCORPORATION. FIRST UNION CURRENTLY IS THE NATION'S NINTH LARGEST
BANK HOLDING COMPANY, BASED ON TOTAL ASSETS, WITH THE FOURTH LARGEST BANKING
NETWORK AND EIGHTH LARGEST AUTOMATED TELLER MACHINE NETWORK. FIRST UNION'S FULL-
SERVICE BANKING OFFICES IN FLORIDA, NORTH CAROLINA, GEORGIA, VIRGINIA, SOUTH
CAROLINA, TENNESSEE, MARYLAND AND WASHINGTON, D.C., PROVIDE A WIDE RANGE OF
COMMERCIAL BANKING, CONSUMER BANKING AND RETAIL INVEST MENT SERVICES. THROUGH
NEARLY 200 ADDITIONAL OFFICES IN 37 STATES, WE ALSO PROVIDE SUCH FINANCIAL
SERVICES AS MORTGAGE BANKING, HOME EQUITY LENDING, CAPITAL MARKETS PRODUCTS AND
SERVICES, INSURANCE AND SECURITIES BROKERAGE SERVICES.
TOTAL RETURN
IF YOU HAD INVESTED $1,000 IN FIRST UNION COMMON STOCK:
TOTAL DOLLAR VALUE PERCENT CHANGE IN COMPOUND ANNUAL
SEPTEMBER 30, 1995 DOLLAR VALUE GROWTH RATE
Three Years Ago... $ 1,577 58% 16%
Five Years Ago.... $ 4,145 315% 33%
Ten Years Ago..... $ 4,178 318% 15%
ASSUMES DIVIDENDS REINVESTED.
2
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LETTER FROM THE CHAIRMAN
Strong fee income growth highlighted First Union's record third quarter
earnings performance. We earned $255 million in net income applicable to common
stockholders for the third quarter of 1995, up from $235 million in the third
quarter a year ago. On a per common share basis, earnings increased 11 percent
to $1.50 per share, compared with $1.35 in the third quarter a year ago.
Earnings in the second quarter of 1995 were $249 million, or $1.45 per share.
In the first nine months of 1995, net income applicable to common
stockholders was $734 million, or $4.27 per share, compared with $675 million,
or $3.94, in the first nine months of 1994. The per-share increase was 8
percent.
Loan growth and credit quality also continued to be strong.
The strong increase in fee income helps validate our expectations for
renewed earnings momentum at First Fidelity after we combine our two companies.
We are seeing the results of our investments in capital markets, capital
management and other businesses that expand our traditional banking base, and we
are optimistic about our financial results for 1995 and 1996.
First Union and First Fidelity are well along in the planning processes for
the merger of our two companies. We already have identified ways to build
relationships in capital markets and other areas that will allow us to "hit the
deck running" when the acquisition is completed. We appreciate the support of
our stockholders, who overwhelmingly approved the merger on October 3, 1995.
Sincerely,
(Signature - Edward E. Crutchfield)
Edward E. Crutchfield
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
3
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NEWS HIGHLIGHTS
MCI AND FIRST UNION OFFER INTERNET ACCESS
MCI Communications Corporation and First Union joined forces to offer
customers a free software and service package to provide easy access to the
Internet global computer network. For their 18-month market test, the two
companies will put the power of the Internet directly into the hands of First
Union's retail and commercial customers by providing personal computer software
disks that connect customers directly into a custom-designed First Union
Internet home page.
From there, customers will be able to access a wide variety of First Union
banking applications, information and the bank's "virtual" shopping mall. Bank
customers will also be able to make secure transactions directly over the
Internet so that their account and credit card numbers are safe from electronic
eavesdroppers. The software package enables bank customers to browse the
Internet's World Wide Web -the fastest growing portion of the Internet. You can
reserve a copy of the free First Union Internet Access Package by calling 1-800-
WWW-FUNB.
FIRST UNION SELECTED AS ONE OF "100 BEST COMPANIES"
Working Mother magazine has selected First Union as one of the "100 Best
Companies" for working mothers. The magazine selects companies for its annual
list based on pay, opportunities for women to advance, support for child care
and family-friendly benefits. At First Union, women make up 40 percent of the
company's highest paid employees (top 20 percent). "As differences between
products, services and prices of financial institutions diminish, personal
relationships with customers and quality service will become increasingly
important," said CEO Edward Crutchfield. "Our employees cannot provide their
customers unsurpassed service if they are struggling with personal problems. It
makes sound business sense for First Union to help employees get the resources
they need to help balance competing responsibilities on and off the job."
First Union has instituted several programs to help promote family life.
For example, the company introduced a new employee resource and referral
service, called LifeWorks, in January 1995.
4
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By calling a toll-free number, First Union's more than 30,000 employees
nationwide can get free, practical advice from experts on topics ranging from
teenage peer pressure to affordable nursing care for elderly relatives. First
Union also offers a childcare resource and referral service to help employees
find child care. One of the company's most popular benefits is its
paid-time-away-from-work program, which gives employees four hours of paid
time per month to volunteer in schools and education programs.
FIRST UNION AND BLACK COLLEGES COLLABORATE
First Union has developed an affinity credit card program for historically
black colleges and universities designed to assist the fundraising efforts of
alumni associations and promote pride among constituents. The initiative is part
of a comprehensive study by the bank to establish long-term relationships with
black colleges and universities throughout the nation. "The affinity card is one
of many mutually beneficial programs we'd like to develop with historically
black colleges," Lenny Springs, First Union vice president and assistant
director of community reinvestment, said. "We hope we can expand these
relationships to include economic development projects, campus revitalization
and housing initiatives for faculty and staff." The affinity card program offers
each participating school a custom-designed Classic Visa for alumni, faculty,
staff and students. Each time the card is used, First Union will make a
contribution to the school and a portion of the annual fee will be donated to
the institution.
Elizabeth City State University in Elizabeth City, North Carolina; Fisk
University in Nashville, Tennessee; Prairie View A & M University in Prairie
View, Texas; LeMoyne-Owen College in Memphis, Tennessee; North Carolina Central
University in Durham, North Carolina; and St. Paul's College in Lawrenceville,
Virginia, are among the first institutions to participate in the program. First
Union's affinity program is endorsed by the Council of National Alumni
Associations, the National Black College Alumni Hall of Fame Foundation and
the National Alumni Council of the United Negro College Fund.
5
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FINANCIAL TABLES
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
.................................
FINANCIAL HIGHLIGHTS
(IN THOUSANDS EXCEPT PER SHARE DATA)
Net income
Dividends on preferred stock
Net income applicable to common stockholders
Net income per common share
Average common shares
Common stockholders' equity
Total stockholders' equity
Book value per common share
Actual common shares
Common stock period-end price
.................................
EARNINGS SUMMARY
(IN THOUSANDS EXCEPT PER SHARE DATA)
Net interest income (a)
Provision for loan losses
Net interest income after provision for loan losses (a)
Securities available for sale transactions
Investment security transactions
Noninterest income
Noninterest expense
Income before income taxes (a)
Income taxes
Tax-equivalent adjustment
Net income
Dividends on preferred stock
Net income applicable to common stockholders
Net income per common share
(a) Tax-equivalent.
6
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994
$ 255,016 241,752 741,061 693,831
- 6,595 7,029 18,522
$ 255,016 235,157 734,032 675,309
$ 1.50 1.35 4.27 3.94
170,272 174,417 171,921 171,265
$ 5,685,450 5,338,590 5,685,450 5,338,590
5,685,450 5,622,631 5,685,450 5,622,631
$ 33.88 30.37 33.88 30.37
167,795 175,785 167,795 175,785
$ 51.000 43.250 51.000 43.250
3Q '95
1995 1994 VS.
3Q 2Q 3Q 3Q '94
$ 860,460 836,373 799,339 7.6%
49,000 44,000 25,000 96.0
811,460 792,373 774,339 4.8
4,713 1,243 (2,946) 260.0
2,591 1,233 2,286 13.3
362,842 326,503 303,259 19.6
770,949 714,739 682,219 13.0
410,657 406,613 394,719 4.0
136,298 135,291 130,147 4.7
19,343 22,186 22,820 (15.2)
255,016 249,136 241,752 5.5
- - 6,595 (100.0)
$ 255,016 249,136 235,157 8.4%
$ 1.50 1.45 1.35 11.1%
7
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FINANCIAL TABLES
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
.................................
AVERAGE BALANCE SHEET SUMMARY
(IN THOUSANDS)
Loans, net
Earning assets
Total assets
Noninterest-bearing deposits
Consumer time deposits
Other time deposits
Common stockholders' equity (a)
Total stockholders' equity (a)
.................................
CAPITAL RATIOS (B)
Tier 1 capital
Total capital
Leverage
.................................
INTANGIBLE ASSETS
(IN THOUSANDS)
Intangible assets
Goodwill
Deposit base premium
Other
Total
Mortgage servicing rights
Credit card premium
(a) Average common stockholders' equity and average total stockholders'
equity exclude average net unrealized gains or losses on debt and equity
securities.
(b) The third quarter 1995 ratios are based on estimates and exclude net
unrealized gains or losses on debt and equity securities.
8
...
3Q '95
1995 1994 VS.
3Q 2Q 3Q 3Q '94
$ 62,333,477 57,873,346 50,012,757 24.6%
78,598,624 72,541,610 65,961,440 19.2
86,991,646 80,255,045 73,020,089 19.1
10,625,875 10,256,782 9,927,448 7.0
45,661,804 42,734,369 39,975,098 14.2
4,864,918 4,663,017 3,632,802 33.9
5,711,761 5,642,420 5,396,497 5.8
$ 5,711,761 5,642,420 5,680,537 0.5%
6.32% 6.86 8.84
10.70 11.58 14.20
5.10% 5.74 6.77
$ 1,028,619 945,295 763,832
453,934 443,830 319,522
5,650 6,243 8,134
$ 1,488,203 1,395,368 1,091,488
$ 101,928 101,024 89,666
$ 47,403 51,005 62,463
9
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FINANCIAL TABLES
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
.................................
OTHER FINANCIAL DATA
(DOLLARS IN THOUSANDS)
Return on average assets (a)(b)
Return on average common equity (a)(c)
Net interest margin (a)
Allowance as % of loans, net
Allowance as % of nonaccrual and restructured loans
Allowance as % of nonperforming assets
Loan losses
Loan recoveries
Loan losses, net
As % of average loans, net (a)
Nonperforming assets
Commercial nonaccrual
Real estate nonaccrual
Total nonaccrual loans
Restructured loans
Foreclosed properties
Total nonperforming assets
As % of loans, net and foreclosed properties
(a) 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
or losses on debt and equity securities.
10
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1995 1994 NINE MONTHS
3Q 2Q 3Q 1995 1994
1.16% 1.25 1.31 1.21 1.29
17.71 17.71 17.29 17.39 17.45
4.37 4.62 4.84 4.52 4.80
1.46 1.61 1.95 1.46 1.95
204 222 203 204 203
160% 170 154 160 154
$ 74,241 88,857 72,120 225,060 182,704
24,147 24,665 24,964 68,307 72,587
$ 50,094 64,192 47,156 156,753 110,117
.32% .44 .38 .36 .31
$207,703 210,464 154,861 207,703 154,861
232,990 225,802 339,881 232,990 339,881
440,693 436,266 494,742 440,693 494,742
606 630 674 606 674
120,585 132,204 158,234 120,585 158,234
$561,884 569,100 653,650 561,884 653,650
.91% .95 1.26 .91 1.26
11
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CONSOLIDATED STATEMENTS OF INCOME
First Union Corporation and Subsidiaries (Unaudited)
(IN THOUSANDS)
Interest Income
Interest and fees on loans
Interest and dividends on securities available for sale
Interest and dividends on investment securities
Taxable income
Nontaxable income
Trading account interest
Other interest income
Total interest income
Interest Expense
Interest on deposits
Interest on short-term borrowings
Interest on long-term debt
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest Income
Trading account profits
Service charges on deposit accounts
Mortgage banking income
Capital management income
Securities available for sale transactions
Investment security transactions
Fees for other banking services
Merchant discounts
Insurance commissions
Sundry income
Total noninterest income
Noninterest Expense
Personnel expense
Occupancy
Equipment rentals, depreciation and maintenance
Postage, printing and supplies
FDIC insurance
Professional fees
Owned real estate expense
Amortization
Sundry
Total noninterest expense
Income before income taxes
Income taxes
Net income
Dividends on preferred stock
Net income applicable to common stockholders
12
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994
$ 1,415,153 1,077,083 3,930,778 3,022,845
136,818 135,621 377,565 430,934
45,144 31,478 139,914 76,939
18,579 23,490 62,056 72,441
23,155 14,799 58,528 38,568
35,108 24,906 105,533 63,464
1,673,957 1,307,377 4,674,374 3,705,191
545,547 368,418 1,514,341 1,020,284
205,674 110,694 497,425 292,827
81,619 51,746 227,621 137,663
832,840 530,858 2,239,387 1,450,774
841,117 776,519 2,434,987 2,254,417
49,000 25,000 125,500 75,000
792,117 751,519 2,309,487 2,179,417
16,399 10,906 28,200 28,476
120,492 109,325 348,244 324,430
31,782 21,401 80,783 53,061
74,459 63,469 209,626 164,798
4,713 (2,946) 9,591 (1,581)
2,591 2,286 4,041 3,595
25,139 16,833 71,160 48,549
18,011 16,257 52,419 45,901
11,022 12,506 33,023 33,201
65,538 52,562 167,429 156,635
370,146 302,599 1,004,516 857,065
377,494 326,062 1,070,664 948,420
62,529 58,854 179,363 176,122
68,586 55,987 197,795 165,127
31,224 24,501 89,028 73,693
7,710 29,321 68,807 89,415
16,510 16,302 50,276 39,241
3,259 8,785 8,405 18,989
52,620 36,121 142,458 104,854
151,017 126,286 363,594 357,419
770,949 682,219 2,170,390 1,973,280
391,314 371,899 1,143,613 1,063,202
136,298 130,147 402,552 369,371
255,016 241,752 741,061 693,831
- 6,595 7,029 18,522
$ 255,016 235,157 734,032 675,309
13
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CONSOLIDATED BALANCE SHEETS
FIRST UNION CORPORATION AND SUBSIDIARIES (UNAUDITED)
(IN THOUSANDS)
Assets
Cash and due from banks
Interest-bearing bank balances
Federal funds sold and securities purchased under resale agreements
Total cash and cash equivalents
Trading account assets
Securities available for sale
Investment securities
Loans, net of unearned income
Allowance for loan losses
Loans, net
Premises and equipment
Due from customers on acceptances
Mortgage servicing rights
Credit card premium
Other intangible assets
Other assets
Total assets
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing deposits
Interest-bearing deposits
Total deposits
Short-term borrowings
Bank acceptances outstanding
Other liabilities
Long-term debt
Total liabilities
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
Series B, none issued
Series 1990 cumulative perpetual adjustable rate, no par value;
$5.00 liquidation value; authorized 10,000,000 shares
Common stock, $3.331/3 par value; authorized 750,000,000 shares
Paid-in capital
Retained earnings
Unrealized loss on debt and equity securities
Total stockholders' equity
Total liabilities and stockholders' equity
14
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SEPTEMBER 30,
1995 1994
$ 3,337,072 3,212,888
99,394 632,206
2,210,144 1,771,643
5,646,610 5,616,737
1,253,214 1,303,453
9,347,263 8,226,530
3,561,947 3,179,763
61,802,019 51,633,034
(901,616) (1,004,298)
60,900,403 50,628,736
1,956,863 1,617,933
407,010 133,928
101,928 89,666
47,403 62,463
1,488,203 1,091,488
2,123,269 2,292,421
$86,834,113 74,243,118
10,729,434 10,295,616
49,086,449 43,391,435
59,815,883 53,687,051
12,940,658 9,988,596
407,010 133,928
1,944,473 1,541,549
6,040,639 3,269,363
81,148,663 68,620,487
- -
- -
- -
- 31,592
559,317 585,948
1,056,946 1,693,389
4,080,495 3,482,620
(11,308) (170,918)
5,685,450 5,622,631
$86,834,113 74,243,118
15
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BOARD OF DIRECTORS
G. ALEX BERNHARDT
President and Chief Executive Officer,
Bernhardt Furniture Company
Lenoir, North Carolina
W. WALDO BRADLEY
Chairman, Bradley Plywood Corporation
Savannah, Georgia
ROBERT J. BROWN
Chairman, President and Chief
Executive Officer, B&C Associates, Inc.
High Point, North Carolina
EDWARD E. CRUTCHFIELD
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 of Executive Committee,
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
Charlotte, 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
Chairman, The Bagel Group, Inc.
Rocky Mount, North Carolina
MAX LENNON
President and Chief Executive Officer,
Eastern Foods, Inc.
Atlanta, Georgia
RADFORD D. LOVETT
Chairman, Commodores Point
Terminal Corporation
Jacksonville, Florida
HENRY D. PERRY JR.
Physician
Plantation, Florida
RANDOLPH N. REYNOLDS
Vice Chairman,
Reynolds Metals Company
Richmond, Virginia
RUTH G. SHAW
Senior Vice President, Corporate
Resources and Chief Administrative
Officer, 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
Transportation Consultant
Gastonia, North Carolina
16
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(Logo - First Union) FIRST UNION CORPORATION Bulk Rate
Two First Union Center U.S. Postage
Charlotte, NC 28288-0570 PAID
Charlotte, N.C.
Permit No.1
This First Union Quarterly Report includes information released to the public
and the news media on October 12, 1995. You may obtain a copy of our Third
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.